MIRA INFORM REPORT

 

 

Report Date :

11.11.2006

 

IDENTIFICATION DETAILS

 

Name :

LML LIMITED

 

 

Registered Office :

C-10, Phase-II, C-3 Panki Industrial Estate, Kanpur – 208 022, Uttar Pradesh

 

 

Country :

India

 

 

Financials (as on) :

31.03.2005

 

 

Date of Incorporation :

29.09.1972

 

 

Com. Reg. No.:

20-3612

 

 

CIN No.:

[Company Identification No.]

L34101UP1972PLC003612

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

KNPL01093B / MUML04359F

 

 

PAN No.:

[Permanent Account No.]

AAACL0141N

 

 

Legal Form :

Public  limited liability company. 

The company’s shares are listed on the Stock Exchanges

 

 

Line of Business :

Manufacturer  of automobile two wheelers and spare parts for two-wheelers.

 

RATING & COMMENTS

 

MIRA’s Rating :

B

 

RATING

STATUS

PROPOSED CREDIT LINE

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.

Small

 

Maximum Credit Limit :

-

 

 

Status :

Moderate

 

 

Payment Behaviour :

Slow and delayed

 

 

Litigation :

Unknown

 

 

Comments :

The company’s financial position is moderate as it continues to incur heavy losses. Payments are reported as slow and delayed.

 

The company can be considered for normal business dealings at usual trade terms and conditions with same caution

 

LOCATIONS

 

Registered Office :

C-10, Phase-II, C-3 Panki Industrial Estate, Kanpur – 208 022, Uttar Pradesh, India

Tel. No.:

91-512-2692464 / 2691381 to 85

Fax No.:

91-512-2691391/2691985/2691393

E-Mail :

lmlknp@lml-india.com / lml12@lml-india.com

Website :

http://www.lml-india.com

 

 

Administrative  Office :

714, Raheja Chambers, Nariman Point, Mumbai, Maharashtra

 

 

Regional Office :

B-17, Greater Kailash Part – I, New Delhi

Tel. No.:

91-11-26234401-07 / 26486909

 

 

Overseas Offices :

Located at :

 

Mexico, Central American Republic, Rica, Venezuela, Colombio, Ecuador, Argentina, Uruguay, Senegal, Cyprus, Turkey, Egypt, Nigeria, Uganda, Tanzania, Madagascar, South Africa, Dubai, Bangladesh, Hongkong, Sri Lanka, Singapore, Australia, Sudan, Uganda and Kenya.

 

 

Sales Office :

Ø       103-A, Kalpita Enclave, Swami Nityanand Marg, Andheri (East), Mumbai, Maharashtra

Ø       Tel. 91-22-28244411/28244412

 

Ø       56, Mission Road, Bangalore, Karnataka

 

Ø       5A, Hazra Road, Kolkata, West Bengal

 

Ø       61, Geekini House, Parkland Apartments, Law Garden, Ellis Bridge, Ahmedabad, Gujarat

 

Ø       Plot No. 165-A, Star Arcade Zone-1, Opposite Vijai Sthamb, M.P. Nagar, Bhopal, Madhya Pradesh

 

Ø       SCO 84-85, 1st Floor, Sector 17-C, Chandigarh

 

Ø       24, Nagarjuna Housing Society, Punjagutta, Hyderabad, Andhra Pradesh

 

Ø       B-192, University Marg, Bapu Nagar, Jaipur, Rajasthan

 

Ø       1st Floor, Surya Apartment, Fraser Road, Patna, Bihar

 

Ø       110, Nelson Manikam Road, Aminjikarai, Chennai, Tamilnadu

 

Ø       Hema Ram Keot, Nilomani Thukan Path, Christian Basti, Guwahati, Aasam

 

Ø       256-D, 1st Floor, Forest Park, Bhubneshwar, Orissa

 

Ø       OS-15, 3rd Floor, GCDA Complex, Marine Drive, Ernakulam, Kochi, Kerala

 

 

 

Factory 1 :

Ø       Unit - 1 : 72-A, Co-Operative Industrial Estate, Dada Nagar, Kanpur-208 022

 

Ø       Unit- 2 : 10-B, Co-Operative Industrial Estate, Dada Nagar, Kanpur-208 022

 

Ø       Unit-3 : 82-A, Co-Operative -Industrial Estate, Dada Nagar, Kanpur-208 022

 

Ø       Site No. I and II, Panki Industrial Estate, Kanpur-208022

Tel. No.           91-512-2211181

Fax No.            91-512-2211985

 

Ø       895, Udyog Vihar, Phase I, Gurgaon, Haryana

 

DIRECTORS

 

Name :

M. R. B. Punja

Designation :

Chairman

 

 

Name :

Mr. Deepak K. Singhania

Designation :

Managing Director

 

 

Name :

Mr. Kulwant Singh

Designation :

Director (IDBI Nominee)

 

 

Name :

Mr. Shiromani Sharma

Designation :

Director

 

 

Name :

Mr. S. K. Aggarwal

Designation :

Director

 

 

Name :

Mr. Lalit Kuma Singhania

Designation :

Whole Time Director

 

 

Name :

Mr. Sanjeev Shriya

Designation :

Whole Time Director

 

 

Name :

Mr. K. A. Najmi

Designation :

IFCI, Nominee

 

 

Name :

Mr. D. G. Prasad

Designation :

Exim Bank Nominee

 

 

Other  Personnel :-

 

Name :

Mr. K. C. Agarwal

Designation :

Executive Director (Commercial) & Company Secretary

 

 

KEY EXECUTIVES

 

Name

Mr. K. C. Agarwal

Designation

Executive Director (Commercial) & Company Secretary

Age

56 years

Qualification

B.Com., MBA, FCS

Experience

35 years

Date of Joining

29.01.1997

Previous Employment

Willard India Limited, New Delhi

 

 

Name

Mr. Subodh Kumar

Designation

Executive Director (Technical)

Age

54 Years

Qualification

B.Sc. (Engineering) (Hons.)

Experience

32 Years

Date of Joining

03.12.1979

Previous Employment

Eicher Tractors (India) Limited, Faridabad, Haryana

 

 

Name

Mr. Sumant Pathak

Designation

Executive Adviser

Age

54 Years

Qualification

B. Sc. (Engineering), M. Technical

Experience

33 Years

Date of Joining

13.05.2000

Previous Employment

TVS Suzuki Limited, Hosur, Tamilnadu

 

 

Name

Mr. A. K. Sinha

Designation

Joint Executive Director (Manufacturing)

Age

54 Years

Qualification

B. Sc. (Engineering Mechanical) MBA

Experience

32 Years

Date of Joining

14.08.1997

Previous Employment

TELCO Limited, Jamshedpur

 

MAJOR SHAREHOLDERS

 

Names of Shareholders

No. of Shares

Percentage of Holding

Resident Individuals

1,55,36,691

31.74 %

2. Indian Companies

30.33,256

6.20 %

3. FTs/ Mutual Funds/ Banks

8,26,073

1.69 %

4. Indian Promoters/ Directors and their relatives

2,17,94,726

44.53 %

5. NRIs/ OCBs/ Flls/ FCs •

76,33,940

15.60 %

6. Clearing House(s) / Members

1,16,373

0.24 %

Total

4,89,41,059

1 00.00 %

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer  of automobile two wheelers and spare parts for two-wheelers.

 

 

Products :

Item Code No. (ITC Code)                         Product Description

871120-02                                                   Two Wheeler

871410-00                                                   Spares for Two Wheeler
 
 
PRODUCTION STATUS

 

Particulars

Unit

Installed Capacity

Actual Production

Motorised Two-Wheeler

No.

690000

181935

 

 

 

 

Spare Accessories and Miscellaneous

 

--

--

 

GENERAL INFORMATION

 

Suppliers :

Ø       J. O. Cables (Private) Limited

Ø       Ailga Rubber Works

Ø       Net Plast Limited

Ø       Alpha Toyo Limited

Ø       Kilpco Private Limited

Ø       Mars Auto Private Limited

Ø       Ajit Chemicals Private Limited

Ø       Krishna Moulders Private Limited

Ø       Vansal Electricals Private Limited

Ø       Oberoi Timber Company

Ø       Nikko Auto Automotive Private Limited

Ø       Satluz Engg. Private Limited

 

 

No. of Employees :

5000

 

 

Bankers :

v      State Bank of India

v      Bank of India

v      Bank of Baroda

 

 

Facilities :

Secured Loans

31.03.2005

Term loans

 

Rupee Loans from Banks

 

Bank of India

197.773

State Bank of India

244.950

Corporation Bank

89.436

ICICI Bank Limited

31.095

Bank of Baroda

13.434

 

576.688

 

 

From Financial Institutions

 

Rupee Loans

 

IFCI Limited

192.642

Stressed Assets Stabilization fund

189.771

Industrial Development Bank of India

0.00

Export-Import Bank of India

116.540

Industrial Investment Bank of India Limited

4.478

 

503.431

 

 

Hire Purchased Credits

4.301

 

 

Unsecured Loans

 

Foreign Currency Convertible Bonds

879.600

Short Term Loans and Other

54.440

Other Loans and Advance

0.00

Security Deposits

106.414

 

1040.454

 

 

                       Total

2124.874

 

 

Notes:

A. During the period, the amounts relating to Debentures Series - II & III have been deposited in the Investor Education and Protection Fund by way

of abundant caution. The charges created in favour of the Agents & Trustees for the holders of Debenture Series II & III have since been satisfied.

B. (i) Term Loans from Banks and Financial Institutions included in Serial Number (iii), except Industrial Investment Bank of India and Bank of Baroda,

represent the settled amounts outstanding as on 3 1 .03.2005 under the Negotiated .Settlement reached with these Lenders. These are secured

by (i) a first mortgage and charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures

of the Company existing as on 3 1 .03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site — I, Panki Industrial Estate, Kanpur) and (ii) first charge by way of hypothecation of all movable assets of the Company (save and except book debts), including movable machinery, tools, accessories, etc., existing as on 3 1 .03.2005, subject however, to the prior charges created in favour of (a) banks/others over certain specified equipment purchased by the Company on Hire Purchase basis, (b) SASF over the specified equipment acquired out of its erstwhile EFS Loan, (c) Exim Bank over the specified equipment acquired by the Company out of its erstwhile Rupee Loan under PEFP, |d]

IIBI over the specified equipment acquired out of its erstwhile Rupee Loan under ACS, and (e) Stocks of Raw Materials, Components, Stores

& Spares, Work-in-process, Finished Goods, Book Debts etc. The aforesaid first mortgage and charges rank pari-passu, inter-se, in all respects amongst the aforesaid Financial Institutions/Banks. These Loans are further secured by Personal Guarantee(s) of three Directors of the Company. Equitable Mortgage on some of the properties is yet to be created.

(iij Term Loans against erstwhile Rupee Loan from IDBI under EFS, erstwhile Rupee Loan from Exim Bank under PEFP and erstwhile Rupee Loan from IIBI under ACS, included in Serial Number (iii) represent the settled amounts outstanding as on 31.03.2005 under the Negotiated Settlement reached with these Lenders. These Loans are secured by (i) an exclusive first charge by way of hypothecation of specified equipments acquired out of the said erstwhile loans and (ii) Personal Guarantee(s) of three Directors of the Company. C. Term Loans against erstwhile working capital facilities from SBI, BOI and BOB included in Serial Number (iii] represent the settled amounts outstanding as on 3 1 .03.2005 under the Negotiated Settlement reached with these Lenders. These Loans are secured by (i) a first charge on the Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur by way of Equitable Mortgage, ranking pari passu, interse, in all respects amongst these Banks and (ii) Personal Guarantee(s) of three Directors of the Company. These are further secured by a Second

Charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31 .03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur). Second charge on some of the properties is yet to be created.

D. Fixed Assets purchased under Hire Purchase arrangement are secured by hyppthecation of respective assets.

E. Installments of Term Loans repayable within one year are Rs 25.000 millions (qs at 30.09.2003 Rs. 89.932 millions including debentures and deferred

payments)

 

 

 

 

Banking Relations :

Unknown

 

 

Auditors :

Ø       Bansi S. Mehta & Company

Chartered Accountants

Mumbai

 

Ø       Parikh & Jain

Chartered Accountants

Kanpur, Uttar Pradesh

 

 

Subsidiary :

Perfect Polycons Limited

 

 

Membership :

Confederation of Indian Industry

 

 

Associates :

v      VCCL Limited

v      Trident Auto Components (Private) Limited

v      Smart Chips Limited

v      Suryodaya Investment and Trading Company Limited

v      Mahalaxmi Holding Limited

v      Payal Investments and Trading Limited

v      Mimosa Finance and Trading Limited

v      Bina Fininvest Private Limited

v      Ginideep Finance and Investment Private Limited

v      Gold Rock Investment Limited

v      Gold Rock Metals Limited

v      Gold Rock World Trade Limited

v      Blue Point Leasing Limited

v      Gold Rock Agro-Trading Limited

v      Tridhar Finance and Trading Limited

v      Picanova Investment Private Limited

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

100000000

Equity Shares

Rs. 10/- each

Rs. 1000.000 millions

15000000

Cumulative / Non Cumulative Redeemable Preference Shares

Rs. 100 each

Rs. 1500.000 millions

 

Total

 

Rs. 2500.000 millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

48941059

Equity Shares

Rs. 10/- each

Rs. 489.410 millions

11842519

0.001% Non Cumulative, Non Convertible  Redeemable Preference Shares

Rs. 100 each

Rs. 1184.252 millions

 

Total

 

Rs. 1673.662 millions

 

 

 

 

 

 

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2005

30.09.2003

31.03.2002

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

1673.662

436.556

436.556

2) Share Application Money

40.412

--

--

3] Reserves & Surplus

656.477

448.760

877.134

4] (Accumulated Losses)

(1533.660)

(570.558)

--
NETWORTH

836.891

314.758

1313.690

LOAN FUNDS

 

 

 

1] Secured Loans

1084.420

2678.117

2210.548

2] Unsecured Loans

1040.454

97.900

--
TOTAL BORROWING

2124.874

2776.017

2210.548

DEFERRED TAX LIABILITIES

--

--

--

Warrants

13.311

--

--
 

 

 

 
TOTAL

2975.076

3090.775

3524.238
 

 

 

 
APPLICATION OF FUNDS

 

 

 
 

 

 

 
FIXED ASSETS [Net Block]

2211.650

2385.800

2444.236
Capital work-in-progress

190.923

220.793

178.541
 

 

 

 
INVESTMENT

0.386

2.031

26.209
DEFERREX TAX ASSETS

782.263

299.039

 
 

 

 

 
CURRENT ASSETS, LOANS & ADVANCES

 

 

 
 
Inventories

 

1609.547

1636.505
 
Sundry Debtors

 

207.377

219.991
 
Cash & Bank Balances

2824.567

438.642

759.718
 
Loans & Advances

 

742.788

593.178
Total Current Assets

2824.567

2998.354
3209.392
Less : CURRENT LIABILITIES & PROVISIONS

 

 
 
Current Liabilities

3141.508
3097.551

2503.402
 
Provisions

 
 

51.241
Total Current Liabilities

3141.508

3097.551
2554.643
Net Current Assets

(316.941)

(99.197)
654.749
 

 

 

 
MISCELLANEOUS EXPENSES

106.795

282.309

220.503
 

 

 

 
TOTAL

2975.076

3090.775

3524.238

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2005

30.09.2003

31.03.2002
Sales Turnover [including other income]

6281.484

9698.474

5529.557
 

 

 

 
Profit/(Loss) Before Tax

(1446.326)

(611.825)

(686.146)
Provision for Taxation

483.224

225.012

--
Profit/(Loss) After Tax

(963.102)

(386.813)

(686.146)
 

 

 

 
Export Value

552.063

373.201

246.361
 

 

 

 
Import Value

217.137

503.283

256.232
 

 

 

 
Total Expenditure

7921.124

10310.299

6215.703

 

 

QUARTERLY RESULTS

 

PARTICULARS

 

 

 

31.03.2006

[Full Year]

 Sales Turnover

 

 

3202.900

 Other Income

 

 

21.300

 Total Income

 

 

3224.200

 Total Expenditure

 

 

4097.000

 Operating Profit

 

 

[872.800]

 Interest

 

 

173.200

 Gross Profit

 

 

[1046.000]

 Depreciation

 

 

268.500

 Tax

 

 

[188.600]

 Reported PAT

 

 

[881.200]

 

 
KEY RATIOS

 

PARTICULARS

 

31.03.2005

30.09.2003

31.03.2002

Equity Ratio

4.41

5.16

2.32

Long Term Debt-Equity Ratio

3.83

4.06

1.83

Current Ratio

1.00

0.93

1.01

TURNOVER RATIOS
 

 

 

Fixed Assets

0.91

1.52

1.18

Inventory

3.27

5.04

3.66

Debtors

26.42

24.44

17.53

Interest Cover Ratio

-7.31

-0.16

-0.58

Operating Profit Margin(%)

-14.92

3.04

-0.34

Profit Before Interest And Tax Margin(%)

-20.80

-0.76

-4.67

Cash Profit Margin(%)

-10.76

0.30

-3.91

Adjusted Net Profit Margin(%)

-16.64

-3.50

-8.23

Return On Capital Employed(%)

0.00

0.00

0.00

Return On Net Worth(%)

0.00

0.00

0.00

 

STOCK PRICES

 

Face Value

Rs. 10/-

High

Rs. 42.50

Low

Rs. 40.55

 

 

LOCAL AGENCY FURTHER INFORMATION

 

Lml Limited (LML) a Deepak Singhania group Company, is a leading two wheeler manufacturer. Currently it has capacity to produce 0.63 million two wheelers.

 
Established in 1972, and went to public in 1980 and had five divisions -- engineering, synthetic yarn processing, twister machines, nylon-6 chips and scooters. The synthetic yarn processing division was set up in 1978-79. In 1982, the nylon-6 chips division was established.


The scooter division, was started in 1981-82 in technical collaboration with Piaggio, Italy. Later Vespa Car Company was set up in 1984-85 to manufacture 2,00,000 scooters and 50,000 three-wheelers annually. After restructuring, LML continued with the manufacture of scooters (other operations were divested or discontinued)and Piaggio took up a 23.60% stake in the equity of the company, on par with the original promoters, the Singhanias. The joint venture with Piaggio came to an end in Nov.'99. 

 
LML is adding a host of products to its range, including vehicles of 2-stroke and 4-stroke engines, having geared variomatic transmission. It plans to float a finance company to provide easy funding to the buyers of its two-wheelers. It introduce catalytic converter (CC) in its 150 cc range of scooters, to meet the year 2000 emission norms. LML has launched `Sensation', a highly fuel-efficient 125cc two-wheeler in Bangalore. It has started many new activities in the customer care area such as 24 hours helpline facility, mobile service van for supporting customers located in distant locations, fast track service and warranty and rationalisation of spare parts prices and achieving over 90% despatch efficiency is about 10 days of receipt of order. 
 
The company is a late entrant in the motorcycles market. The company manufactures two versions of a four-stroke, 100-cc bike -`Energy' and `Adreno' in technical collaboration with Daelim, the Korean collaborator. LML had introduced these vehicles in a phased manner in Nov.'2000 in the states of UP, Bihar and West Bengal. The two bikes offer contemporary style, stability and road grip. While both the bikes feature a four-stroke, three-valve engine, Adreno comes with a five-speed gearbox and Energy has a four-speed gearbox. Currently 70% of its turnover is generated from Motor Cycles. 

 
LML has introduced advanced front and rear suspension systems manufactured in collaboration with Bitubo of Italy. It plans to offer disc brakes, digital ignition and an auto lube system. The company is also planning to introduce four-stroke scooters and is working towards developing engines based on alternate fuels such as liquefied petroleum gas(LPG).

 

Beat

 

LML will leverage the power of collaborations (see box) and in-house research for the most contemporary standards leading to the manufacture of the most revolutionary products.

LML's technical collaborations

» Daelim Motor Company Limited (South Korea)

» Young Shin Industrial Company Limited (South Korea)

* Sun Electric Company Limited (South Korea)

* CTE Corporation (Taiwan)

* Fujitech Inc. (JaPan)

* Hidaka Engineering Company Limited (japan)

« CDA Bitubo f.n.c. (Italy)

* Esanastri (Italy)

« Mitsuba snc (Italy)

* Bastra Engineering (Italy)

» Ugolini Design (Italy)

* Engines Engineering (Italy)

flem itamiards

 

LML will build on its pioneering development of new suspension systems, ignition systems, gear trains and vehicle performance (fuel efficiency, power, drivability, ergonomics,

comfort and safety). The Company has been recognised by the Ministry of Science and Technology (Government of India) for its technological breakthroughs for fuel-efficient engines, new generation auto electronic systems, compliance of emission norms etc.

 

The Company has embarked on a number of initiatives to retain this brand appeal through the evolution of its product from the functional to the emotional, from one used for transportation to an extension of the customer's personality.

 

Drivability

 

LML is strengthening its position as India's only two-wheeler manufacturer to offer a wide product range under the LML marquee, delivering innovation, quality superiority, performance, driveability, youthfulness, dynamism and vibrancy.

 

Innovation

 

LML will build confidence and safety, essential for driving pleasure and peace of mind. Besides, it will continue to enhance product quality and brand distinctiveness in even shorter development tenures. LML will continue to package its products with innovative features,

design and technology. For instance, Freedom Topper comes with the Delta 4 engine, leading to superior pick-up and mileage. The uniquelyengineered T-control frame provides unmatched stability and control, reducing fatigue and enhancing drivability.

 

Quality Excellence

 

LML will extend its reputation for innovation and agility that it enjoyed for scooters to motorcycles as well. In doing so, it will position itself as a provider of quality, stylish and innovative two-wheelers; it will provide an alternative that is individual, aspirational and differentiated, instead of competing across platforms and mind share already occupied.

 

Performance

 

LML will capitalise on its engineering breakthroughs like digital ignition systems, rocker arm with bearings and the Torpedo to create a stronger brand.

* The digital ignition system's advanced microprocessor permits the automatic adjustment of speed with the firing timing, resulting in combining high mileage with high power.

» The rocker arm with a roller bearing changes sliding contact to rolling contact, thereby reducing friction, improving driveability at low • speeds and reducing the effort required to kick-start the vehicle.

* The Torpedo system (port divider) accelerates the air fuel mixer, increasing combustion and improving mileage.

 

Outlook

 

CVT scooters comprise the only other growing two-wheeler category in India. It is expected that CVT scooters will continue to groweven as the sales of geared scooters plateau / decline.

 

Performance review

 

The Company could not adequately leverage its rich technological strengths during the period under review due to financial difficulties and other constraints. As a result, the number of motorcycles sold declined from 3 15534 in 2002-03 to 190561 in 2003-05 Even in this challenging period, the Company launched new variants of its Freedom model — Freedom Prima and Freedom Topper. The Company also launched two models — Graptor and Beamer — in the lifestyle 150 CC segment.

 

Financial review

 

RBVBIlUeB: Gross revenues during the year amounted to Rs. 689.600 millions compared with Rs. 1 104.2 in the previous period, a decline of 38 per cent. This decline occurred in the

face of decreased volumes, which resulted due to a severe working capital constraint, preventing the Company from leveraging its technical and manufacturing excellence.

 

Operating IOBBBB: The Company reported a net operating loss of Rs. 1069.600 millions, against an operating profit of Rs. 29.31 millions for the previous period. The lower volumes did not allow it to recover its fixed costs. Also the Company faced the pressure of a steep input cost regime - both in terms of steel and aluminium, which could not be passed on to the consumer. The lower volumes also resulted in reduced bargaining power with vendors, all of which impacted the operating performance of the company adversely.

 

Interest: The interest outgo was Rs. 164.000 millions as compared with Rs. 48.5 millions in the previous period. This is a reduction of almost 67 per cent made possible by the waiver of the accrued interest by the financial institutions and also a reduced rate of interest on existing loans.

 

Depreciation: The depreciation on the Company's assets remained largely unchanged during the year, due to no significant change in the gross block. Depreciation for the current period was at Rs. 405.700 millions compared to Rs. 419.600 millions in the previous period.

 

PrflFIt beFOCe tax: The Company reported a loss before tax of Rs. 1446.300 millions as compared with Rs. 611.800 millions in the previous period. The increased losses were a result of the poor

operating performance but was partially offset by write backs on account of exceptional items.

 

TaXBtlOlI: In view of the loss reported, the Company does not have any liability of current tax. However, in accordance with the rules, it reported a deferred tax credit of Rs. 483.200 millions.

 

Profit aftBI" tax: As a result of the deferred tax credit, the net loss for the Company stood at Rs. 963.100 millions compared with Rs. 386.800 millions in the previous period.

 

SharB Capital: The share capital increased from Rs. 436.6 millions to Rs. 1673.700 millions. due to two primary reasons. Firstly, the issue of 11842519, 0.001 per cent Non-comXilative, Nonconvertible Redeemable Preference Shares of Rs. 100 each, as part of the financial restructuring programme. Second, the allotment of 785423 Equity shares of Rs. 10 each, to the

banks, financial institutions and foreign investors at a premium of Rs. 39.30 per share. Apart from this there was no other change in the share capital account of the Company.

 

RBSerVeS and BUrplUS: The Company's reserves and premium have increased from Rs. 448.800 millions to Rs. 656.500 millions due to an increase in the share premium account arising from the preferential allotments.

 

BOITOUJiniJB: As a part of the restructuring programme, the Company received a waiver of Rs. 550 millions on account of its financial restructuring. Further, 50 per cent of core principal

dues (Rs. 2360 millions) were converted into 0.001 per cent noncumulative and non-convertible preference shares, redeemable at par in three annual installments beginning from the end of the tenth year. A part of the loan was also converted into equity shares issued at Rs. 49.30. The balance was settled through a debt repayment programme comprising three installments of Rs. 25.000 millions, each payable in March 2005, 2006 and 2007, the remaining Rs. 1030 millions payable in quarterly instalments at an interest of 6.5 per cent (YTM), with interest rates being zero per cent for the first six months, increasing to three per cent thereafter and ultimately balancing. As a result total secured loans declined from 2678.100 millions to Rs. 1084.400 millions. The Company has issued foreign currency convertible bonds (unsecured) to the tune of Rs. 880 millions as part of its financial ! restructuring programme. After these changes, the total loans of the Company stood at and Rs. 21 24.90 millions, down from Rs.. 2776.000 millions from the previous period.

 

Outlook

 

Even as the past few years have been difficult for LML, the Company has taken effective steps for growth. With the financial restructuring in place, immediate resource concerns have been addressed. Besides, capacity expansion, increased professionalism and a renewed branding focus are expected to result in profitable growth, to be kickstarted by the launch of a new entry-level motorcycle expected in August 2005.

 

Operations

 

The dominance of motorcycles in the overall sales profile of the Company continued, with motorcycles contributing 74% of the turnover for the period ended March 31, 2005. Owing to very sever resource constraints, the company could not even sustain its performance of the previous period. As a result, the number of vehicles sold declined by almost 40% during the period. The company's products, mainly the Freedom motorcycle and its variants, are well accepted by the consumer. The company has taken effective steps towards reviving its business, primarily through financial and organisational restructuring, together with a strategy to launch new products to span all the segments in the motorcycle market. The company expects to report improved operating results in the coming years.

 

Exports

 

Company exported 19969 units during the period under report as against 1 2393 units during the previous period. The Company's export now cover over 32 countries, and includes even developed countries. During the current financial year, Company expects to better its performance in exports. Restructuring As members are aware the Company has been going through a major restructuring which includes financial, dealer network, industrial portfolio and cost control etc. The Company has during the last month of the period under report completed the financial restructuring which includes settlement / reschedulement of dues of the Financial Institutions, and Banks by way of certain payment, issuance of equity and preference shares and reschedulement of the balance amount. The Company has issued 785423 Equity Shares of Rs. 10 each at a premium of Rs. 39.30 to some of the FIs / Banks and 11842519, 0.001% Noncumulative, Non convertible Redeemable Preference Shares of Rs. 100 each to all the FIs and Banks as per negotiated settlement between the FIs & Banks and the Company. Further in order to meet the needs of resources for its project and other business requirements, the Company has raised funds from the Foreign Investors by way of issuance of :

(i) 4500000 Equity shares of Rs. 10 each at premium of Rs. 39.30 per share.

(ii) 2700000 Warrants of Rs. 49.30 each (paid-up Rs 4.93 each) having an option for conversion of each warrant into one equity share of Rs. 10 each at a premium of Rs. 39.30 within a period of 1 2 months from the date of Issue of the Warrants.

(iii) 20000, 5%, Foreign Currency Convertible Bonds (FCCBs) Series A, due 2008, of US$ 1000 each for an aggregate amount of US$ 20 million having an option for conversion into equity shares of the Company at a price of Rs 44.43 per share, including premium of Rs. 34.43 per share, at any time before due date for redemption.

 

Further FCCBs Series B,. due 2010, of US$ 1000 each for an aggregate amount of US$ 6 million having an option for conversion into equity shares of the Company at a price of Rs. 44.43 per share including a premium of Rs. 34.43 per share at any time before the due date is

presently foreseen to be issued during the current financial year by the end of August, 2005 in accordance with the project needs.

 

The other part of the restructuring i.e. dealer network, industrial product portfolio, cost reduction etc. has been taken up by the Company and is expected to be substantially completed during the Current Fiscal 2005-06.

 

The company’s fixed assets of important value include land, building, lease hold improvement, plant & machinery, electric installations, furniture & fixtures, office equipments and vehicles.

 

The company is in trade terms with :

 

Ø       Ambe Polymers Private Limited

Ø       Alpha Toyo Limited.

Ø       Assab Sripad Steels Private Limited

Ø       A.K.Enterprises

Ø       Accurate' Springs

Ø       AFG Engineering Company

Ø       Ailga Rubber Works

Ø       Ajit Chemicals Private Limited

Ø       Akash Hi-Tech. Inds. Private Limited

Ø       Akshay Insulated

Ø       Anant Automats Private Limited

Ø       Ancee Industries

Ø       Auto metal Industries

Ø       Bemco India   Private Limited

Ø       Himgiri Auto Electrotech

Ø       Imanes  Private Limited

Ø       Indication Instruments Limited

Ø       Innovative Arts

Ø       J.S.Auto Parts Private Limited

Ø       Jain Auto Parts Mfg. Company

Ø       jaguar Packaging Private Limited

Ø       Jai Bhagwati Enterprises

Ø       Jain Chemical & Allied Inds.

Ø       Krishna Plastics

Ø       Kavita Enterprises

Ø       Kunj Enterprises

Ø       Laxmi Industries

Ø       Master Tools (India)

Ø       MM Engineering Works Private Limited

Ø       Minimax Engineers

Ø       Plastometal Engineering

Ø       Pooja Forge Limited

Ø       Prolific Tools

Ø       Paramjyoti Movers Private Limited

Ø       Parwati Automotive Private Limited

Ø       Perfect Fasteners

Ø       Rajat Moulders. Limited

Ø       Satluz Engg. Private Limited

Ø       Seqronics(lndia) Private Limited

Ø       Spinn India

Ø       Shakun Products

Ø       Shirshu Industries

Ø       Surfine Tools

Ø       Swastik Enterprises

Ø       Sigma Enterprises

Ø       Super Precision Products

Ø       Bansuri Poly Pack (Private) Limited

Ø       Chaitanya Dip Moulding

Ø       Carbo Tools and Gauges India Pvt. Limited

Ø       Classic Industries «

Ø       Crimpson Electronics

Ø       Crafts Men tools

Ø       Deusch Mediqip (Private) Limited

Ø       Dynamic Transmission Limited

Ø       Elegance Engg.Works

Ø       ES Engineering Private Limited

Ø       Forgifin Fastners

Ø       Goodrich Industries

Ø       Micro Turners

Ø       Modern Industries

Ø       Micro Precision

Ø       Mars Auto Private Limited

Ø       Mutha Founders Private Limited

Ø       Marshall Auto Cast Private. Limited

Ø       Metal Craft Engg. & Spring

Ø       Micron Precision Screws Limited

Ø       Net Plast Limited (Unit -2)

Ø       Neelkanth Poly Packings

Ø       Nicks (India) Tools

Ø       Nicks Auto Industries

Ø       Oberoi Timber Company

Ø       Precision Springs Works

Ø       Super Screws Private Limited

Ø       Terminal Tech (I) Private Limited

Ø       Time Rubber Factory

Ø       Tool Aids Private Limited

Ø       Unicorn Electricals & Fuses Company

Ø       Universal Engg.& Mfg. Ind.

Ø       Vansal Electricals Private Limited

Ø       Vertax Enterprises Private Limited

Ø       Vibrant Industries

Ø       Virak Switchgears Private Limited

Ø       Ya Fidelity Engg. Private Limited

 

 

CMT REPORT [Corruption, Money laundering & Terrorism]

 

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

 

1]         INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

 

2]         Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

 

3]         Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

 

4]         Record on Financial Crime :

            Charges or conviction registered against subject:                                                   None

 

5]         Records on Violation of Anti-Corruption Laws :

            Charges or investigation registered against subject:                                                           None

 

6]         Records on Int’l Anti-Money Laundering Laws/Standards :

            Charges or investigation registered against subject:                                                           None

 

7]         Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

 

8]         Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

 

9]         Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

 

10]       Press Report :

            No press reports / filings exists on the subject.

 

 

CORPORATE GOVERNANCE

 

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

 

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

 

 

CONTRAVENTION

 

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.44.90

UK Pound

1

Rs.85.91

Euro

1

Rs.57.78

 

                                                               

SCORE & RATING EXPLANATIONS

 

 

RATING

STATUS

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

Credit not recommended

 

 

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions