MIRA
INFORM REPORT
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Report Date : |
06.04.2007 |
IDENTIFICATION
DETAILS
|
Name : |
SREI
INFRASTRUCTURE FINANCE LIMITED |
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Formerly Known As: |
SREI
INTERNATIONAL LIMITED |
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Registered Office : |
Vishwakarma, 86-C, Topsia Road (South), Kolkata – 700046, West Bengal |
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Country : |
India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
29.03.1985 |
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Com. Reg. No.: |
21-55352 |
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CIN No.: [Company
Identification No.] |
U29219WB1985PTC055352 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CALS11905F |
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PAN No.: [Permanent
Account No.] |
AAACS1425L |
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Legal Form : |
A Public Limited Liability
Company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Leasing and Hire
Purchase of Construction Equipments, Commercial Vehicles and Automobiles in
India. |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
USD 16420800 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established company having satisfactory track. Available information
indicates satisfactory financial responsibility of the company. Trade relations
are fair. Payments are usually correct and as per commitments. The company can
be considered normal for business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered Office : |
Vishwakarma, 86-C, Topsia Road (South), Kolkata – 700046, West Bengal,
India. |
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Tel. No.: |
91-33-22850112-15
/ 22850124-27 / 22870112 – 15 |
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Mobile No.: |
91-9830261703 |
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Fax No.: |
91-33-22857542 /
22858501 |
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E-Mail : |
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Website : |
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Regional
Office : |
v New Delhi v Mumbai v Bangalore v Hyderabad v Chennai v Bhubaneswar v Nagpur |
DIRECTORS
|
Name : |
Mr. Salil Kumar
Gupta |
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Designation : |
Chief Mentor |
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Address : |
538, Jodhpur
Park, Kolkata – 700068, West Bengal |
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Date of Birth/Age : |
76 years |
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Mobile No.: |
91-33-24732248 /
0147 |
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Experience : |
47 years |
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Name : |
Mr. M.S.Verma |
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Designation : |
Chairman |
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Address : |
A-55, Belvedere
Park, DLF City, Phase III, Gurgaon, Haryana
- 122002 |
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Date of Birth/Age : |
66 years |
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Qualification : |
M.A., CAIIB |
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Name : |
Mr. Hemant Kanoria |
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Designation : |
Vice Chairman and Managing Director |
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Address : |
32Q, New Road, Alipore, Kolkata – 700027, West Bengal |
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Date of Birth/Age : |
42 years |
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Tel. No.: |
91-33-24797705 |
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Experience : |
25 years |
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Name : |
Mr. Dhruba P
Gupta |
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Designation : |
Director |
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Address : |
S15, Greater
Kailash II, New Delhi – 110048 |
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Tel. No.: |
91-11-26439985 |
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Name : |
Mr. Vasantrai H.
Pandya |
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Designation : |
Director |
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Address : |
Park Side II Building,
Wing ‘B’, Raheja Chamber, Kulupwadi Road No.1, Borivali (East), Mumbai –
400066, Maharashtra |
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Date of Birth/Age : |
71 years |
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Qualification : |
B.A. (Economics)
CAIIB |
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Experience : |
43 years |
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Tel. No.: |
91-22-28863523 |
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Email: |
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Name : |
Mr. Satish C. Jha |
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Designation : |
Director |
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Address : |
G-61, Palam
Vihar, Gurgaon, Haryana – 122017, Punjab |
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Tel. No.: |
91-124-2360072 |
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Email: |
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Name : |
Mr. Sunil Kanoria |
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Designation : |
Director |
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Address : |
3, Middle Road,
Hastings, Kolkata – 700027 |
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Date of
Birth/Age : |
39 years |
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Qualification
: |
B. Com., FCA |
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Experience : |
16 years |
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Name : |
Mr. B.
Swaminathan |
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Designation : |
Director –
Nominated by Indian Renewable Energy Development Agency |
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Address : |
Flat 351B, Ranka
Colony, Bilekahalli, Bannerghatta Road, Bangalore - 560055 |
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Date of Birth/Age
: |
72 years |
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Qualification
: |
B.A. (Hons.),
MDPA |
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Name : |
Mr. S. Rajagopal |
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Designation : |
Director |
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Address : |
71/1, Margosa
Road, 3rd Main Malleswaram, Bangalore - 560055 |
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Date of
Birth/Age : |
65 years |
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Qualification
: |
B. Com., M.A.
LLB, CAIIB, Diploma in Industrial Finance |
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Experience : |
30 years |
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Name : |
Mr. R. Sankaran |
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Designation : |
Director |
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Address : |
401, Sand
Pebbles, Perry Cross Road, Bandra (W), Mumbai - 400050 |
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Date of
Birth/Age : |
58 years |
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Qualification
: |
M.A. (Eco.),
Diploma in Business and Financial Management |
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Experience : |
30 years |
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Name : |
Mr. Dr. Vasant H.
Karmarkar |
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Designation : |
Director –
Nominated by IFC – Washington, USA |
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Name : |
Mr. S. S. Chaturvedi |
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Designation : |
Whole-time
Director (Executive Director) |
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Name : |
Mr. P. K. Pandey |
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Designation : |
Whole-time
Director (Executive Director) |
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Address : |
54/1/2, Girish
Mukherjee Road, Kolkata – 700023 |
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Date of
Birth/Age : |
59 years |
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Qualification
: |
FCA |
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Experience : |
30 years |
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Name : |
Mr. K. K. Mohanty |
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Designation : |
Whole-time
Director (Executive Director) |
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Address : |
N/4, 181,
Nayapali, Bhubaneshwar |
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Date of
Birth/Age : |
47 years |
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Qualification
: |
M. Tech, MBA |
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Experience : |
16 years |
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Name : |
Mr. Suneet K.
Maheshwari |
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Designation : |
Executive
Director |
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Address : |
B13, Sumera Co.
op. Housing Society limited, MHADA Complex, SVP Nagar, Mumbai - 400053 |
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Date of Birth/Age
: |
47 years |
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Qualification
: |
B.Sc. (Hon), MBA |
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Experience : |
23 years |
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Name : |
Mr. K.C. Jain |
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Designation : |
Head Finance and
Company Secretary |
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Name : |
Mr. S. Rajagopal |
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. Sandeep
Lakhotia |
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Designation : |
Company Secretary |
SHAREHOLDING
PATTERN
As on 31.12.2006
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Shareholding of Promoter and Promoter Group2 |
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Indian |
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Individuals/ Hindu Undivided Family |
400596 |
0.37 % |
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Bodies Corporate |
21496689 |
19.83 % |
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Public shareholding |
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Institutions |
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Mutual Funds/ UTI |
119822 |
0.11 % |
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Financial Institutions / Banks |
26298 |
0.02 % |
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Foreign Institutional Investors |
44854546 |
41.37 % |
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Non-institutions |
14874565 |
13.72 % |
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Bodies Corporate |
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Individuals -i. Individual shareholders holding nominal
share capital up to Rs 1 lakh |
19100521 |
17.62 % |
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ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh. |
6834960 |
6.30 % |
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Any Other (specify) |
703401 |
0.65 % |
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Total |
108411398 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Leasing and Hire
Purchase of Construction Equipments, Commercial Vehicles and Automobiles in
India. |
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Products : |
·
Leasing ·
Hire
purchase ·
Full fledged
money changer |
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Imports : |
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Countries : |
Germany, Sweden,
USA, China and Singapore. |
GENERAL
INFORMATION
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No. of Employees : |
420 |
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Bankers : |
Allahabad Bank |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Deloitte Haskins
& Sells Chartered Accountants
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Address : |
Park Plaza, South
Block, Flat 4A, 71, Park Street, Kolkata – 700016. |
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Subsidiaries : |
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CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
|
400000000 |
Equity Shares |
Rs. 10/- each |
Rs. 4000.000 Millions |
|
30000000 |
Preference Shares |
Rs. 100/- each |
Rs. 3000.000 Millions |
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Total |
|
Rs. 7000.000 Millions |
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Issued,
Subscribed Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
109415345 |
Equity Shares |
Rs. 10/- each |
Rs. 1094.100 Millions |
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Paid-up
Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
108942518 |
Equity Shares |
Rs. 10/- each |
Rs. 1089.400 Millions |
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Add: Forfeited
Shares |
|
1.500 Millions |
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TOTAL: |
|
Rs. 1090.900 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
1090.900 |
534.500 |
534.500 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
3014.300 |
1104.800 |
912.300 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
4105.200 |
1639.300 |
1446.800 |
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LOAN FUNDS |
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1] Secured Loans |
13280.800 |
7991.800 |
6014.400 |
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2] Unsecured Loans |
2866.500 |
1053.400 |
1267.300 |
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TOTAL BORROWING |
16147.300 |
9045.200 |
7281.700 |
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DEFERRED TAX LIABILITIES |
644.700 |
478.200 |
382.500 |
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Mezzanine Capital |
796.500 |
810.100 |
797.000 |
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TOTAL |
21693.700 |
11972.800 |
9908.000 |
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APPLICATION OF
FUNDS |
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FIXED ASSETS [Net
Block] |
2237.500 |
178.000 |
163.200 |
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Capital
work-in-progress |
0.000 |
0.000 |
4.300 |
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INVESTMENT |
1038.900 |
495.000 |
235.100 |
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DEFERREX TAX
ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS,
LOANS & ADVANCES |
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Inventories |
108.200
|
88.100
|
89.700 |
|
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Sundry Debtors |
16.900
|
41.400
|
32.700 |
|
|
Cash & Bank
Balances |
36.800
|
436.600
|
484.900 |
|
|
Other Current
Assets |
18269.300
|
12003.500
|
9771.200 |
|
|
Loans &
Advances |
841.000
|
715.000
|
658.300 |
|
Total Current Assets |
19272.200
|
13284.600
|
11036.800 |
|
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current
Liabilities |
332.200
|
1577.400
|
2014.000 |
|
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Provisions |
582.300
|
420.900
|
370.600 |
|
Total Current Liabilities |
914.500
|
1998.300
|
2384.600 |
|
|
Net
Current Assets |
18357.700
|
11286.300
|
9484.300 |
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MISCELLANEOUS
EXPENSES |
59.600 |
13.500 |
21.100 |
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TOTAL |
21693.700 |
11972.800 |
9908.000 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Sales Turnover
[including other income] |
2272.500 |
1299.300 |
1157.000 |
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|
|
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Profit/(Loss) Before Tax |
682.000 |
398.000 |
287.000 |
|
Provision for Taxation |
33.000 |
19.300 |
17.700 |
|
Profit/(Loss) After Tax |
649.000 |
378.700 |
269.300 |
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|
Total Expenditure |
1530.000 |
838.800 |
824.000 |
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2006 (1st Quarter) |
30.09.2006 (2nd Quarter) |
31.12.2006 (3rd
Quarter) |
|
Sales Turnover |
856.300 |
954.300 |
934.900 |
|
Other Income |
1.000 |
2.700 |
4.400 |
|
Total Income |
857.300 |
957.000 |
939.300 |
|
Total Expenditure |
99.600 |
135.900 |
130.800 |
|
Operating Profit |
757.700 |
821.100 |
808.500 |
|
Interest |
481.900 |
522.800 |
532.000 |
|
Gross Profit |
275.800 |
298.300 |
276.500 |
|
Depreciation |
65.800 |
68.000 |
76.600 |
|
Tax |
18.900 |
19.100 |
20.700 |
|
Reported PAT |
150.200 |
148.100 |
179.200 |
200606 Quarter 1-
EPS is Basic 1. The above unaudited financial results were reviewed
by the Audit Committee and approved by the Board of Directors of the Company at
their respective meetings held on 31.07.2006 and approved for publication . The
Statutory Auditors of the Company have carried out a 'Limited Review' of the
said results. 2. The Company has raised Rs.0.034 Millions during the quarter
ended 30.06.2006 by way of issue of 880 Equity Shares of Rs.10/- each fully
paid-up at a premium of Rs.29/- per share. The shares are issued pursuant to
exercise of option by the holders of detachable tradable warrants issued along
with Unsecured Subordinated Bonds on 25.08.2000. 3. The number of shares used
in computing basic and diluted earnings per share EPS) is the weighted average
number of shares outstanding for the respective periods. 4. The Company has
challenged constitutional validity of Fringe Benefits Tax before the Hon'ble
Kolkata High Court and the Hon'ble Court has granted interim stay on levy of
such Fringe Benefits Tax on the Company. In view of this, the Company has not
provided for any liability against Fringe Benefits Tax. 5. The Business of the
Company falls within a single primary segment viz., 'leasing and financing' and
hence the disclosure requirement of Accounting Standard 17 - Segment Reporting
issued by The Institute of Chartered Accountants of India is not applicable. 6.
The Company has incorporated a wholly owned subsidiary namely 'SREI
Infrastructure Development Limited' on 13.06.2006. 7. Information on Investor
Complaints for the quarter ended 30.06.2006 (Nos,) Opening Balance = 0, New =
3, Disposed = 3, Closing Balance = 0. 8. Figures of previous year/quarters have
been rearranged/regrouped, wherever necessary.
200609 Quarter 2 -
EPS is Basic. 1.The above unaudited financial results were reviewed
by the Audit Committee and approved by the Board of Directors of the company at
their respective meetings held on 30.10.2006 and approved for publication. The
statutory auditors of the company have carried out a limited review of the said
results. 2.The number of shares used in computing basic and diluted earnings
per share (EPS) is the weighted average number of shares outstandin for the
respective periods. 3.The company has challenged constitutional validity of
Fringe Benefits Tax before the Hon'ble Kolkata High Court andthe Hon'ble Court
has granted interim stay on levy of such Fringe Benefits Tax on the cmpany. In
view of this the company has not provided for any liability against Fringe
Benefits Tax. 4.The business of the company falls within single primary segmnt
viz., 'Leasing and Financing' and hence the disclosure requirement of
Accounting Standard 17-Segment Reporting issued by the Institute of Chartered
Accountants of India is not applicable. 5.Information on investor complaints
for the quarter ended 30.09.2006 (Nos) Opening balance-0 New-16 Disposed-16
Closing balance-0 6.Figures of previous year/quarters have been
rearranged/regrouped wherever necessary.
200612
Quarter 3 –
Operating Expenses Includes Staff Cost Rs 49.00 million
Operating & Other Expenses Rs 81.80 million Tax Includes Provision for Tax
EPS is Basic Status of Investor Complaints for the quarter ended December 31,
2006 Complaints Pending at the beginning of the quarter Nil Complaints Received
during the quarter 05 Complaints disposed off during the quarter 05 Complaints
unresolved at the end of the quarter Nil 1. The above unaudited financial
results were reviewed by the Audit Committee and approved by the Board of
Directors of the Company at their respective meetings held on January 27, 2007
and approved for publication. The Statutory Auditors of the Company have
carried out a 'Limited Review' of the said results. 2. The number of share used
in computing basic and diluted earrings per share (EPS) is the weighted average
number of shares outstanding for the respective periods. 3. The Company has
challenged constitutional validity of Fringe Benefits Tax before the Hon'ble
Kolkata High Court and the Hon'ble Court has granted interim stay on levy of
such Fringe Benefits Tax on the Company. In view of this, the Company has not
provided for any liability against Fringe Benefits Tax. 4. The business of the
Company falls within a single primary segment viz., 'leasing and financing' and
hence the disclosure requirement of Accounting Standard 17 - Segment Reporting
issued by The Institute of Chartered Accountants of India is not applicable. 5.
In view of the sufficient existing provision for Deferred Tax Liability as per
Accounting Standard 22 issued by The Institute of Chartered Accountants of
India, no further provision has been made during the quarter under review. 6.
Provision for Bad and Doubtful Debts (NPA) shall be made at year end. 7.
Figures of previous year / quarters have been rearranged / regrouped, wherever
necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt-Equity Ratio |
4.67 |
5.81 |
5.48 |
|
Long Term Debt-Equity Ratio |
2.77 |
3.29 |
3.33 |
|
Current Ratio |
2.32 |
1.44 |
1.54 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.72 |
5.59 |
5.61 |
|
Inventory |
0.17 |
0.07 |
0.08 |
|
Debtors |
268.93 |
35.07 |
31.53 |
|
Interest Cover Ratio |
1.64 |
1.71 |
1.46 |
|
Operating Profit Margin(%) |
81.14 |
74.51 |
80.19 |
|
Profit Before Interest And Tax Margin(%) |
76.98 |
73.60 |
79.22 |
|
Cash Profit Margin(%) |
25.47 |
22.69 |
18.63 |
|
Adjusted Net Profit Margin(%) |
21.31 |
21.78 |
17.67 |
|
Return On Capital Employed(%) |
10.77 |
9.11 |
10.20 |
|
Return On Net Worth(%) |
16.86 |
18.34 |
14.71 |
STOCK PRICES
|
Face Value |
Rs.10/- |
|
High |
Rs.51.15/- |
|
Low |
Rs.48.05/- |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
The company was
incorporated on 29th March 1985 at Kolkata in West Bengal having
Company Registration Number 55352.
The company obtained
the certificate of commencement of business on 9th April 1985.
The company's name
was changed to Srei International Limited on 29th May 1992 and
further changed to SREI International Finance Limited with effect from 12th
April 1994 to reflect the focus on financial services.
The company
commenced its activities in the year 1989. The company is engaged in the
leasing and hire purchase of construction equipments, commercial vehicles and
automobiles in India. The company is also authorised to purchase foreign
currency notes and travellers cheques.
The company entered
into agreement with Citicorp Service Inc., USA to market Visa Travel Money
cards under its own brand name. The company tapped the capital market in July 1992
to set up a 100% EOU to manufacture acetate cigarette filter rods and commenced
production in March 1993.
In January 1994,
the company got approval as Category – I merchant banker. The merchant banking
division offers various services like corporate advisory services, project
counselling, preparation of project reports and appraisal, underwriting and
issue management, etc. The company extended its operations by venturing into
mutual funds, corporate stock broking housing finance and other related areas.
The company
achieved a capital adequacy of 21.93% towards the end of 2000-2001 as against a
minimum 12% recommended by Reserve Bank of India. The company entered into a
six year project with IFC, Washington to finance Rs. 650 millions of solar
energy systems across rural India. The project is being implemented on behalf
of the Global Environment Facility (GEF) of the World Bank under the Photo
Voltaic Market Transformation Initiative (PVMTI).
The company
financed for the Tanir Bavi Power Corporation Private Limited in 2000-2001. The
project envisages setting up of a Rs. 8800 millions and 220 MW barge-mounted
naptha-based combined cycle power plant on BOO basis at Mangalore, Karnataka.
BUSINESS
The company is
engaged in the business of leasing and hire purchase of construction
equipments, commercial vehicles and automobiles in India.
The company is also
authorised to purchase foreign currency notes and travellers cheques.
It imports heavy earthmoving equipments and
construction equipments from Germany, Sweden, USA, China and Singapore.
Generic names of
the principal products / services of the company are:
·
Leasing
·
Hire purchase
·
Full fledged
money changer
The company
provides the following nature of services:
·
Lease and Hire
Purchase
·
Financing
·
Heavy Equipment’s
on Operating Lease
·
Full fledged
money changer
·
Buy/Sell of
Bonds and Securities
·
Advisory
Services.
The company has
diverse range of Business Spanning:
·
Lease and Hire
Purchase
·
Construction
Equipment
·
Commercial
Vehicle
·
Auto Finance
·
Forex
·
Infrastructure
Finance
·
Fixed Deposit
·
Home Finance
·
Capital Market
·
Security
Trading
The Company’s
Vendors for Lease and Hire Purchase of Equipment’s are:
·
ACE Cranes
·
Atlas Copco
·
Bitelle
·
Bharat Earth
Movers Limited
·
Caterpillar
Asia Limited
·
Escort
Construction Equipment Limited
·
Escort JCB
Limited
·
Greaves
Limited
·
Gujarat Apollo
·
Hindustan
Motors Limited
·
Ingersoll-Rand
(India) Limited
·
Larsen &
Toubro Limited
·
Parker
·
Svedala
Industries India Private Limited
·
Telco
Construction Equipment Company Limited
·
Writgen
·
Tatra
·
Bharat Earth
Movers
·
Ditch Witch
·
Volvo
·
Nordberg
OPERATIONAL REVIEW:
The Government of India has continued to accelerate the pace of infrastructure
creation in the country leading to substantial growth in investments in this
sector. As the Company is deeply involved with the infrastructure sector, it
has continued to grow in strength and size. Its financial performance over the
years has continued to display good growth in earnings and disbursements even
in an increasingly competitive environment. The Company has maintained its
leadership position in the growing infrastructure equipment finance sector.
Some of the highlights of the Company's performance during the year under
review are:
Fresh disbursements were Rs.24807.600 Millions as compared to Rs.16099.700
Millions last year, an increase of 54 per cent.
The total asset under management of the Company increased to Rs.33930.600
Millions as against Rs.20921.100 Millions last year, a growth of about 62 per
cent.
The gross profit (before depreciation, bad debts, provision and tax) grew to
Rs.837.000 Millions from Rs.472.300 Millions last year, a jump of 77 per cent.
Profit before taxation increased to Rs.682.000 Millions as against Rs.398.000
Millions in the last year, an increase of around 71 per cent. Net profit after taxation increased to
Rs.484.200 Millions as against Rs.283.000 Millions in the last year, an
increase of around 71 per cent.
The Company has been able to successfully raise fresh funds through innovative
instruments resulting in lowering of its cost of funds and increase in
profits.
The Capital adequacy of the Company is 19.75 per cent, which is well above the
minimum level of 12 per cent prescribed by the Reserve Bank of India.
The Company has complied with all the norms prescribed by the Reserve Bank of
India including the newly introduced Anti money laundering & Know the
customer (KYC) guidelines and also all the mandatory accounting standards
issued by The Institute of Chartered Accountants of India. It has adopted a sound
and forward looking accounting policy of providing for non performing assets in
terms of the guidelines laid down by the Foreign Financial Institutions, which
are more stringent than the guidelines of the Reserve Bank of India.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
ECONOMIC REVIEW:
In the backdrop of high oil prices and domestic capacity
constraints and rising interest rate regimes in many countries, world GDP is
estimated to have increased by 3.2 per cent in 2005, down from 3.8 per cent in
2004. The slowdown that began in the second half of 2004 was experienced
throughout the industrialised world. Europe in particular has grown far below
its potential. In contrast, despite having slowed, the economies of Japan and
the United States are growing at a moderate pace. Among large developing
economies, China and India continued to expand rapidly in 2005.
The expansion of world trade slowed significantly during 2005. Most of the deceleration
concerned the exports of high-income economies, volumes of which grew by less
than 4 percent (annualised) in the first quarter of 2005, before strengthening
more recently. Merchandise export volumes of developing countries were
relatively robust.
Performance of the Indian economy in 2005-2006 was impressive. Defying global
trends, Indian economy is estimated to have grown at 8.4 percent over a high
base of 7.5 per cent growth registered in 2004-2005. The strong expansion is
reflected in the leading macro indicators, such as production and import of
capital goods, production of commercial vehicles, increased off-take in
non-food credit and strong growth in consumer durables.
Manufacturing and services sectors grew at 9.0 per cent and 10.0 percent
respectively, while agriculture grew at 3.9 per cent.
India's exports increased to USD 101 billion in 2005-2006, registering a growth
of 25 percent while imports increased to USD 140 billion, up 32 percent from
last fiscal, with oil imports accounting for USD 43 billion (up from USD 29
billion in 2004-2005). The current account deficit of balance of payments (BOP)
which emerged in the last fiscal after 3 consecutive years of surpluses,
assumed much larger dimensions in 2005-2006. During April-September 2005-2006,
the current account deficit enlarged to USD 13 billion, more than twice the
deficit of USD 5.4 billion for the entire 2004-2005. During April-September
2005-2006, the capital account surplus stood at USD 19.5 billion. In this
period, foreign investment to the tune of USD 7.4 billion had flown into India,
and within that FII investment (USD 4.2 billion) was higher than FDI (USD 2.3
billion). Notwithstanding the dominance of non-debt creating flows in the
capital account, the importance of debt flows increased in 2005-2006 in the
form of external aid, external commercial borrowings (ECBs), trade credit
availed by importers, etc.
In a marked departure from the trend observed in recent years, the pace of
accretion to India's forex reserves declined sharply in 2004-2005. It stood at
around USD 145 billion in March 2006, up from USD 141.5 billion in March 2005.
The redemption of India Millennium Deposit (IMD) bonds in December 2005 is
partly responsible for this slower growth in forex reserves.
With credit growing faster than deposits, India's interest rate regime has
hardened. While inflation is hovering around a benign 4 percent mark, it must
be kept in mind that the government has artificially kept the economy insulated
from the oil price hike. Interest rates are bound to further creep up in the
near future.
These apparent negative factors seem to have been adequately out-weighed by the
strong macrofundamentals of the economy. Government's focus on infrastructure
creation, especially rural infrastructure, coupled with brilliant performance
of the corporate sector have kept investors upbeat. This was reflected in the
performance of stock markets which continued to scale new heights throughout
the year 2005-06.
NBFIs IN INDIA:
The role of Non-Banking Financial Institutions (NBFIs) in asset creation and
infrastructure development is well acknowledged today, especially in sectors
which are considered to be growth engines of the economy, namely
infrastructure, transportation, small & medium enterprises (SMEs), rural
sectors, etc. For long, NBFIs have been the primary conduit for credit delivery
to the dispersed, underbanked and under-serviced sections of the economy. They
have thrived on their inherent strengths of wider reach, intimate local
knowledge, credit origination and appraisal skills, suitably trained collection
machinery, close monitoring of borrowers and customised client service.
The NBFIs have evolved over the years. Unlike in the past, presently they are
very well regulated and supervised by the RBI. The late 90s shakeout among the
Indian NBFIs witnessed the survival of few large conservatively operating
institutions. These weathered the crisis and since then have grown and expanded
their business notwithstanding keen competition Some multinationals too have
entered and set up NBFIs focusing on the areas of equipment and customer
finance. Stiff competition is also being encountered by the NBFIs from banks
and other financial institutions, both domestic and foreign, in their
traditional areas of retail lending.
In order to enable the NBFIs to gear up for future challenges, the RBI has
taken a number of steps. This is indeed a welcome trend. RBI is now keen on
creating a facilitating environment for NBFIs rather than just binding them
under strict regulations. To address their need for long term funding, RBI has
somewhat eased NBFIs' access to ECBs for infrastructure equipment
financing.
BUSINESS OUTLOOK AND FUTURE PLANS:
Despite signals of a global slowing down, the Indian economy is all set for yet
another year of strong growth.
The government, in order to maintain the momentum of growth, has taken up the
task of infrastructure creation in a massive way. Expansion in investment,
especially in infrastructure, holds the key to sustaining high growth over the
long run. However, the current rate of infrastructure investment at 3.5 percent
of GDP is way below what is required for an aggressive target of 8.0 percent
plus GDP annual growth. Thus, in a bid to boost investments and promote
public-private partnerships in specific areas of infrastructure, union
government has set up a special purpose vehicle (SPV) named Indian
Infrastructure Finance Corporation Limited., which will provide resources in
terms of additional borrowings with longer-term maturities.
A number of steps to this end are being taken with a special focus on extending
the benefits of reforms to rural India. The 'Bharat Nirman' programme, aimed at
developing rural infrastructure namely roads, housing, irrigation, water
supply, electrification and telecom, was launched last year. This year has
witnessed a massive jump of 54 percent in the budget outlay for Bharat
Nirman.
The progress of road development programme has been impressive. The Golden Quadrangle
is nearing completion and work is in full swing on the North-South and
East-West corridors. Budget support for National Highway Development Programme
(NHDP) has been enhanced to Rs.99.45 billion in 2006-07. This year's budget has
also introduced the Special Accelerated Road Development Programme spanning
7639 km of roads in North-East. The Rs.600 billion Pradhan Mantri Gram Sadak
Yojana (whose target deadline is 2010-11) seeking to connect habitations with
populations of more than 500 is also in full swing. Around 68 per cent of work
has been completed till June 2005. Hectic activity in road building is also
taking place at the state and city levels.
For power sector, the government has laid down 3 main missions - power
availability for all by 2012, electrification of all villages by 2010 and
access to electricity for all households by 2010. The above goals call for
integrating the regional grids into the national grid with 30000 MW of
inter-regional transfer capacity. Of an estimated 586000 villages about 150000
are yet to be electrified and of the 138.27 million households 78.09 million
are still to be electrified. The installed capacity by the end of Tenth Plan is
likely to be 137000 MW and capacity addition target for Eleventh Plan is 67500
MW. It is estimated that total investments worth USD 180 billion would be
required till 2012 toward generation, transmission & distribution of
electricity. This year's budget has announced 5 ultra mega power projects of
4000 MW each to be awarded by 31st December, 2006. This year's budget also
targets electrification of 40000 more villages in 2006-07 under Rajiv Gandhi
Grameen Vidyutikaran Yojana. Rs.5.7 billion has been allocated for use of
non-conventional energy resources this fiscal.
Development of ports is also very much on the government's radar. The
government has launched the national maritime Development Program. Under Phase
I of NMDP 276 port projects at a total investment of Rs.550-600 billion will be
taken up by 2012. Under Phase II, III shipping and inland water transport
projects entailing an investment of Rs.400 billion are expected to be
completed by 2025.
Government is equally committed towards building of urban infrastructure which
includes urban housing, sanitation, water supply and waste management. It now
also covers special economic zones (SEZs) and software parks. The housing
sector boom continues fuelled considerably by availability of cheap housing
finance and the ongoing urban reform process. Throughout the country several water
supply and sanitation programmes are taking place with World Bank assistance.
Several private sector water projects have been completed as in Vizag and
Tirupur. In waste management too, private sector involvement has started
playing a huge role and several cities like Delhi and Bangalore today boast of
state-of-the-art waste management projects.
The demand for rail services has grown in tandem with economic expansion.
Government is trying to adequately gear up railways to meet the emerging needs.
Indian Railways is implementing priority projects such as the Golden
Quadrilateral, port connectivity, corridor hinterland projects and construction
of 4 major bridges under the National Rail Vikas Yojana. Works for all the
sanctioned projects have been handed over to Rail Vikas Nigam Limited., an SPV.
The prestigious Delhi Metro Rail Transport Service has been extended while
metro projects are being undertaken in Hyderabad, Mumbai, Bangalore and other
cities. The Rail Budget 2006-07 has also approved construction of a freight
corridor at a cost of Rs.220 billion.
Civil aviation is another sector which is likely to witness a lot of
construction activity. With both passenger and cargo traffic slated to grow
exponentially in the coming years, government is keen to gear up the airport
infrastructure accordingly. Greenfield projects at Bangalore and Hyderabad are
in progress with private participation, while contracts for modernisation of
Delhi and Mumbai airports have been awarded to private players GMR and GVK
respectively. Apart from the impending modernisation of the 2 other metro
airports in Kolkata and Chennai, Greenfield airports are also likely to come up
in Pune, Navi Mumbai, Goa, Kannur, Gangtok and Ludhiana. In addition,
government plans to restructure 25 other nonmetro airports.
With an expected 8 percent plus GDP growth and government according top
priority to creation of physical infrastructure, the NBFI sector has another
year of hectic activity ahead of it. Despite hardening of interest rates, business
sentiment is buoyant and infrastructure sector projects are expected to drive
economic growth. And the Company's in-depth knowledge of the infrastructure
sector business, strong financial position, comfortable capital adequacy,
adoption of prudent business strategies and fostering of a culture of
innovation have enabled it to consistently post satisfactory performance and
stay ahead of competition. The directors are confident of continuing the growth
trend in future also.
INFRASTRUCTURE EQUIPMENT FINANCE:
During the previous year, the Company disbursed Rs.23030.000 Millions (approx.
USD 500 million) achieving a major landmark, with an overall growth of 77 per
cent, with a market share of approximately 30 per cent, further reiterating its
leadership position. This growth was achieved due to their continued focus on
the infrastructure sector, and improved customer service. The overall team grew
in numbers, which helped increase their customer base and improve the customer
service with the existing ones.
SREI's good relationships with major manufacturers of construction and mining
equipment helped in gaining volumes and increasing the profitability of the
business. During the previous year, some private and foreign banks have been
very aggressive in financing such equipment and despite this the Company has
been able to increase its market share at higher yields with innovative
products and value selling. The Company's operating strategies of single point
of contact for large customers, assistance in procurement, deployment and
disposal for the same equipment etc., have managed to create the
differentiation, helping create a loyal and substantial customer base.
In 2005, SREI's motto was 'They make tomorrow happen' and continuing its
tradition of innovation it conducted 'Paison Ki Nilami' at Hyderabad, and
introduced two unique schemes, 'Money Bag' and 'Lotto' at EXCON 2005, an
industry trade fair at Bangalore in December 2005. Both the events resulted in
SREI getting high mileage both with the customers and manufactures. These
programmes also helped the Company create a unique value proposition in the
market place and achieve higher spreads with volumes, in the face of intense
competition.
This increased focus, with an independent risk & control function created
in the earlier years helped the Company to maintain its delinquency levels at a
very low level. With periodic reviews of important functions, supervised from
the board level, introduction of new checks, and a strong compliance team, the
Infrastructure Equipment Finance division has created a robust model for
delivery in the market place.
The government has increased its focus on the infrastructure sector, and there
is an all round euphoria in this sector. New projects are being announced, and
pace of reforms has gained increasing momentum. Similarly the usage of general
and specialised equipment in the road, irrigation, power or civil construction
sectors has increased. The Company is geared to capitalise on the opportunities
and is building the capacities to deliver. They are adding manpower, attracting
bright talent and increasing their reach across India. They are approaching the
market in a prudent manner by not taking undue risks, but also evaluating all
avenues for deployment of resources, and expect reasonable growth from this
business, while maintaining their leadership position.
INFRASTRUCTURE PROJECT FINANCE:
With Indian economy poised to grow at over 8 per cent p.a., the importance of
developing a quality infrastructure has become even more critical. Private
Sector Participation (PSP) has now been well accepted by both the Central
government as well as the State governments.
Over past few years, the role of the Central government as well as State
governments has been changing from provider of infrastructure to a policy
maker, facilitator and regulator for development of quality infrastructure.
Government is also looking at the PSP in infrastructure sector to bring in managerial
efficiency. Continuation of tax incentives such as section 80- I and better
policy frameworks for channelising investments in infrastructure sector have
continued to incentivise PSP in infrastructure projects.
This positive environment has created a sufficient number of projects and
provided ample opportunities and choice to the Company to invest and grow in
the infrastructure sector.
As a part of its business strategy, SREI has continued its programme of
supporting the transformation of emerging construction companies and creating a
new class of infrastructure developers. It has thus supported several companies
as a financial partner in bids and is able to add value to these bids and help
the partnering units win these projects. For the next financial year SREI has
developed a good pipeline for road projects which will form a sizable part of
its total sanctions as well as contribute to fee incomes.
Fixed Assets:
Freehold Land,
Buildings, Furniture & fixtures, Motor Vehicles, Machinery etc.
SREI Assets Rs. 42000.000 Millions
New Delhi, 30.10.2006: SREI Infrastructure Finance Limited. (SREI), the leading Indian private
sector infrastructure equipment finance, infrastructure project finance and
renewable energy product financing institution registered
a 56% growth in the net profit before taxes for the half year ended 30.09.2006.
Riding on buoyant
market conditions, SREI maintained its robust show in the half year under
review, posting a rise in profit before tax to Rs. 440.300 Millions from Rs.
282.000 Millions in the corresponding half-year period last year. Net profit
after tax zoomed to Rs. 298.300 Millions up from Rs. 195.200 Millions in the
same period last year, a rise of 53%. The operating profit increased to Rs.
574.100 Millions in the first half-year period of the current financial year
from Rs. 301.800 Millions in the corresponding period last year, registering an
increase of 90%. The total income increased to Rs. 1814.300 Millions in the
first half year period of the current financial year from Rs. 833.900 Millions
in the corresponding period last year, registering an increase of 118%.
The net profit
after tax for this quarter touched Rs. 148.100 Mllions up from Rs. 85.800
Millions in the second quarter of last fiscal, registering an increase of 73%.
Disbursements for the first six months in this fiscal is Rs. 213.400 Millions
as against Rs. 115.500 Millions in the corresponding period last year, posting
a rise of 85%. The total asset under management of the Company is about Rs.
420.000 Millions.
Announcing the
results today, Mr. Hemant Kanoria, Vice Chairman and Managing Director, SREI
said, “They are on track where their target for business disbursements and
profits are concerned. This year they have also expanded their funding in the
railway sector and expect this business to expand in the future rapidly. With
this, they have now established ourselves in the road, power, ports, aviation
and urban infrastructure sectors.”
The Company’s
improved performance during the quarter has been the result of the numerous
opportunities in the infrastructure sector. SREI through its resources has been
able to strategically position itself in the Indian Infrastructure development
sector and capitalize on the huge business opportunities, as evident from the
announcements of the Government & National Highways Authority.
About SREI
Infrastructure Finance Limited
SREI, the country’s
leading private sector infrastructure equipment, infrastructure project and
renewable energy financing company commenced its operations in the year 1989.
SREI is operating across the country with a network of 43 branches and has also
expanded its operations overseas. SREI is the first Indian Infrastructure
Financing Company to be listed on the London Stock Exchange (LSE).
International Finance Corporation (IFC) Washington (World Bank Group), KfW
Germany & DEG Germany (Financial Institutions owned by the Government of
Germany), FMO the Netherlands, (Financial Institution owned by the Government
of Netherlands), BIO (Belgium Financial Institutions owned by the Government of
Belgium) and FINNFUND (Financial Institution owned by the Government of
Finland) are among the large stakeholders in the Company.
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 records 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.43.15 |
|
UK Pound |
1 |
Rs.85.22 |
|
Euro |
1 |
Rs.57.63 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
5 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
5 |
|
--CREDIT LINES |
1~10 |
5 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
NO |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
46 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
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 |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|