MIRA
INFORM REPORT
|
Report Date : |
06.04.2007 |
IDENTIFICATION
DETAILS
|
Name : |
UNITED PHOSPHORUS LIMITED |
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Formerly Name |
Chem Industries Limited |
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Registered Office : |
3-11, GIDC, Vapi Valsad 396195, Gujarat, India |
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Country : |
India |
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Financials (as
on) : |
31.03.2006 |
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Date of Incorporation : |
02.01.1985 |
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Com. Reg. No.: |
04-25132 |
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CIN No.: [Company
Identification No.] |
U24219GJ1995PLC025132 |
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TAN No.: [Tax Deduction
& Collection Account No.] |
MUMU03710A |
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PAN No.: [Permanent
Account No.] |
AABCS1698G |
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Legal Form : |
Subject is a public limited liability company. The company's shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing of Chemicals such as Phosphorus Trichloride, Caustic Soda, Chlorine, etc. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
RATING
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STATUS |
PROPOSED
CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 43000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
The company has turned the corner and wiped out all its previous losses during the year 2003-04. Directors are reported as experienced and respectable businessmen. 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. It can be regarded as a promising business partner in the
long-run. |
LOCATIONS
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Registered Office : |
3-11, GIDC, Vapi Valsad 396195, Gujarat, India |
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Tel. No.: |
91-260-232716/232720/2400717 |
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Fax No.: |
91-260-24946974/2401823 |
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E-Mail : |
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Website : |
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Administrative Office : |
Uniphos House, Madhu Park Centre, Opp. Madhu Park, Chitraker Dhurandar Marg, Khar (West), Mumbai - 400 052, Maharshtra, India |
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Tel. No.: |
91-22-26041111 |
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Fax No.: |
91-22-2401823 |
DIRECTORS
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Name : |
Mr. R. D. Shroff |
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Designation : |
Chairman & Managing Director |
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Date of Birth/Age : |
66 years |
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Qualification : |
B.Sc. |
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Date of Appointment : |
29.05.1969 |
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Name : |
Mrs. S. R. Shroff |
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Designation : |
Vice Chairperson |
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Date of Birth/Age : |
59 years |
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Date of Appointment : |
29.05.1969 |
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Name : |
Mr. J. R. Shroff |
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Designation : |
Executive Director |
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Date of Birth/Age : |
35 years |
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Qualification : |
B.Sc. |
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Date of Appointment : |
01.01.1990 |
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Name : |
Mr. A. C. Ashar |
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Designation : |
Director – Finance |
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Qualification: |
B.Com, ACA |
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Last Employment: |
Finance Controller Excel Industries Limited |
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Name : |
Mr. K. Banerjee |
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Designation : |
Wholetime Director |
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Date of Birth/Age : |
57 years |
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Qualification : |
B.Tech. |
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Date of Appointment : |
21.10.2003) |
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Name: |
Mr. Pradeep Goyal |
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Designation: |
Director |
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Name: |
Dr. P. V. Krishna |
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Designation: |
Director |
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Name: |
Dr. (Mrs.) R. Ramachandran |
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Designation: |
Director |
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Date of Appointment: |
21.10.2003 |
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Name: |
Mr. Pradip Madhavji |
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Designation: |
Director |
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Date of Appointment: |
29.01.2004 |
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Name: |
Mr. A. L. Bongirwar |
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Designation: |
Nominee Director |
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Date of Appointment: |
21.10.2003 |
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Name: |
Mr. A. A. Panjwani |
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Designation: |
Director |
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Date of Appointment: |
21.10.2003 |
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Name: |
Mr. P. N. Devarajan |
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Designation: |
Director |
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Date of Appointment: |
21.10.2003 |
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Name: |
Dr. Nitish Sengupta |
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Designation: |
Director |
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Date of Appointment: |
21.10.2003 |
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Name: |
Mr. D. A. Anandpura |
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Designation: |
Director |
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Date of Appointment: |
21.10.2003 |
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Deceased On: |
4.11.2003 |
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Name: |
Mr. Vikram R Shroff |
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Designation: |
Director |
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Name: |
Mr. Vinod Sethi |
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Designation: |
Director |
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Name: |
Mr. Chirayu R Amin |
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Designation: |
Director |
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Name: |
Mr. M B Trivedi |
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Designation: |
Company Sectary |
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Other Personnel: |
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Name: |
K. R. Srivastva |
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Designation: |
Chief Operating Officer |
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Qualification: |
B.Chem, PGDBMA (IIM), DSM |
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Last Employment: |
Predident- Pharmaceutical Products of India Limited |
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Name: |
Vishnu Bhat |
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Designation: |
President Profit Center |
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Qualification: |
B.Tech (Chemical Engineering) |
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Last Employment: |
CEO-Shaw Wallace Agrochemical Limited |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
Percentage of
Holding |
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Indian Public |
11.96% |
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NRIs /OCB |
11.72% |
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Promoter |
33.45% |
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FIIs |
21.06% |
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Corporate Bodies |
2.67% |
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Mutual Funds/LIC/Banks |
19.12% |
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Total |
100.00% |
BUSINESS DETAILS
|
Line of Business : |
Manufacturing of Chemicals such as Phosphorus Trichloride, Caustic Soda, Chlorine, etc. |
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Export to: |
Europe, Italy, Korea, Malaysia, South Korea, Sri Lanka, UK and USA. |
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Import From: |
Europe and China. |
PRODUCTION STATUS
|
Particulars |
Unit |
Licensed Capacity |
Installed Capacity |
Actual Production |
|
Speciality Chemicals |
Tonnes |
5470 |
5318 |
486 |
|
Chloro-Alkaline Products |
Tonnes NM3 |
101700 |
112500 |
105637 |
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Industrial Chemicals |
Tonnes |
44600 |
36720 |
31097 |
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Power |
MW |
48.50 |
48.50 |
2941 (Lacs KWH) |
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Pesticides |
Tonnes (Nos ) KL LB |
34886 -- -- -- |
36456 -- -- -- |
27789 -- -- -- |
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Mercury Salts |
Tonnes |
100 |
100 |
-- |
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Pesticides Intermediates |
Tonnes KL |
24701 |
25002 |
15944 323 |
GENERAL
INFORMATION
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No of Employees: |
1500 |
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Bankers : |
v Dena Bank v Bank of Baroda v State Bank of India v Union Bank of India v Canara Bank, 84, Dr. Annie Besant Road, Worli – 400018, Mumbai v Indian Overseas Bank. Sir P M Road, P O Box – 354, Mumbai – 400001 v Centurion Bank Limited v IDBI Bank Limited v Punjab & Sind Bank v Global Trust Bank Limited v Karur Vysya Bank Limited v UTI Bank Limited v Andhra Bank Limited v State Bank of Hyderabad v Oriental Bank of Commerce v Export Import Bank of India v ICICI Bank Limited v ING Vysya Bank Limited |
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Facility |
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Banking Relations
: |
Good |
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Auditors : |
S. V. Ghatalia And Associates Chartered Accountant |
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Subsidiaries : |
v Agrodan A/S v Biowin Corporation Limited v Enviro Technology Limited v Bharuch Enviro Infrastructure Limited v United Phosphorus De Mexico S.A.DE.C.V. v United Phosphorus Limited, Australia v United Phosphorus Limited, Hong Kong v United Phosphorus Limited, Russia v United Phosphorus Limited, Shanghai v United Phosphorus Inc, USA v United Phosphorus Limited, Japan v United Phosphorus Limited, UK v United Phosphorus Limited, Zambia v United Phosphorus De Argentina S.A. v United Phosphorus Belgium S P R L v United Phosphrous Zimbabwe Limited v United Phosphorus South Africa Limited v United Phosphorus (Korea) Limited v United Phosphorus Limited, New Zealand v PT. United Phosphorus Indonesia v Shroffs United Chemicals Limited v United Phosphorus Limited Gibraltar v Inventa Corporation v Agvalue Enterprise, Inc. v Agvalue, Inc. v Agvalue Etho, LLC v Agvalue D.P, LLC v Agvalue Oryza, LLC v Agvalue Metri, LLC v Agvalue, Bromacil, LLC v Agvalue, Propyzamide, LLC v Agvalue- Propargite, LLC v Agvalue-Picloram, LLC v United Phosphorus Do Brazil Limited v United Phosphorus Limited Gautemala |
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Associate Company: |
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Joint Venture Company: |
United Phosphorus Limited Bangladesh |
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Membership: |
Confederation of Indian Industry |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
55000000 |
Equity Shares |
Rs. 10 Each |
Rs. 550.000 millions |
|
14000000 |
Preference Shares |
Rs. 10 Each |
Rs.1400.000 millions |
|
5000000 |
Preference Shares |
Rs. 10 Each |
Rs. 50.000 millions |
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Total |
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Rs.2000.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
187134807 |
Equity Shares |
Rs. 10 Each |
Rs. 374.300 millions |
|
117978 |
7% Non-Convertible Non Cumulative Redeemable Preference Shares |
Rs. 10 Each |
1.200 Millions |
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Total |
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Rs. 375.500 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES
OF FUNDS |
31.03.2006 |
31.03.2005 (12 months) |
31.03.2004 (12 months) |
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SHAREHOLDERS
FUNDS |
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1] Share Capital |
375.500 |
369.079 |
531.199 |
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2] Reserves &
Surplus |
10329.700 |
6310.825 |
3996.555 |
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4] (Accumulated
Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH
|
10705.200 |
6679.904 |
4527.754 |
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LOAN FUNDS |
|
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|
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1] Secured Loans |
3535.100 |
3330.110 |
3431.996 |
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2] Unsecured
Loans |
7773.700 |
2312.156 |
1375.522 |
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TOTAL BORROWING
|
11308.800 |
5642.266 |
4807.518 |
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DEFERRED TAX
LIABILITIES |
659.500 |
423.559 |
432.270 |
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TOTAL
|
22673.500 |
12745.729 |
9767.542 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
|
4864.700 |
4782.234 |
4937.788 |
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Capital work-in-progress
|
350.900 |
368.401 |
179.924 |
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Intangible Assets
|
1554.100 |
1113.008 |
135.496 |
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INVESTMENT
|
8597.500 |
413.596 |
397.882 |
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DEFERREX TAX ASSETS
|
40.800 |
344.282 |
579.382 |
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CURRENT ASSETS, LOANS &
ADVANCES
|
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Inventories
|
1985.000 |
1510.662 |
1004.669 |
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Sundry Debtors
|
3873.100 |
3816.783 |
3414.538 |
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Cash & Bank Balances
|
3419.200 |
46.502 |
32.275 |
|
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Other Current Assets
|
451.700 |
458.467 |
347.291 |
|
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Loans & Advances
|
2974.800 |
3963.484 |
1506.499 |
Total Current Assets
|
12703.800 |
9795.898 |
6305.272 |
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
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|
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Current Liabilities
|
5220.400 |
3929.356 |
2656.327 |
|
|
Provisions
|
222.500 |
157.969 |
151.440 |
Total Current Liabilities
|
5442.900 |
4087.325 |
2807.767 |
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Net Current Assets
|
7260.900 |
5708.573 |
3497.505 |
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MISCELLANEOUS EXPENSES
|
4.600 |
15.635 |
39.565 |
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TOTAL
|
22673.500 |
12745.729 |
9767.542 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 (12 months) |
31.03.2004 (12 months) |
Sales Turnover [including other
income]
|
13251.100 |
10847.465 |
8399.997 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
1494.600 |
972.305 |
579.930 |
Provision for Taxation
|
|
669.705 |
537.830 |
Profit/(Loss) After Tax
|
329.500 |
302.600 |
42.100 |
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|
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Export Value
|
NA |
5941.759 |
4716.605 |
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Import Value
|
NA |
2176.172 |
1771.928 |
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|
|
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Total Expenditure
|
11756.500 |
9875.16 |
7753.929 |
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2006 (1ST
Quarter) |
30.09.2006 (2nd
Quarter) |
30.12.2006 (3rd
Quarter) |
|
Sales Turnover |
2889.800 |
3631.400 |
3633.700 |
|
Other Income |
106.700 |
278.900 |
232.000 |
|
Total Income |
2996.500 |
3910.300 |
3865.700 |
|
Total Expenditure |
2156.600 |
2959.900 |
2949.200 |
|
Operating Profit |
839.900 |
950.400 |
916.500 |
|
Interest |
486.400 |
138.700 |
(51.700) |
|
Gross Profit |
353.500 |
811.700 |
968.200 |
|
Depreciation |
205.400 |
211.200 |
218.700 |
|
Tax |
4.000 |
4.100 |
5.300 |
|
Reported PAT |
93.100 |
395.200 |
491.000 |
200606 Quarter 1 -
EPS is Basic Status
of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at
the beginning of the quarter Nil Complaints Received during the quarter 170
Complaints disposed off during the quarter 170 Complaints unresolved at the end
of the quarter Nil 1. The above Unaudited Financial Results were reviewed by
the Audit Committee and thereafter approved at the Meeting of the Board of
Directors held on 28.07. 2006. The Statutory Auditors have carried out a
Limited Review for the quarter ended 30.06. 2006. 2. The Company made an issue
of Foreign Currency Convertible Bond (FCCB's) aggregating to US $ 75 million,
on 06.10.2004 and US $150 million on 06.01.2006. FCCB's aggregating to US $
143.96 million have been converted into equity shares resulting in increase in
the paid up capital of the Company to Rs 374.40 million. 3. Interest and Other
Finance Charges include exchange difference of Rs 338.40 million arising due to
valuation of outstanding foreign currency loans. The amount for the
corresponding quarter was income of Rs 2.90 million. 4. In accordance with the
Guidance Note on Accounting for Credit Available in respect of Minimum
Alternative Tax (MAT) under the Income-Tax Act, issued by the Council of the
Institute of Chartered Accountants of India on 23.03.2006, the Company has
charged payment of MAT for the current quarter to the Profit and Loss Account
and recognised this MAT credit as an asset in the current quarter under the
head 'Loans and Advances'. Similar adjustment has been made for the previous
quarter (April to June 2005) due to which the profit after tax is higher by Rs
18.500 million than reported in the April to June 2005 results. 5. Previous
period / year's figures have been regrouped / rearranged wherever necessary.
200609 Quarter 2 -
Expenditure Includes
(Increase)/Decrease in Stock in Trade Rs (164.500) million Consumption of Raw
Materials & Purchase of Traded Goods Rs 1980.100 million Staff Cost Rs
168.600 million Other Expenditure Rs 971.100 million Interest indicates
Interest and Other Finance Charges (net) Depreciation indicates Depreciation /
Amortisation Tax Includes Provision for Current Tax Rs 66.300 million Mat
Credit Entitlement Rs (66.300)million Deferred Tax Rs 201.200 million Fringe
Benefit Tax Rs 4.100 million EPS is Basic Status of Investor Complaints for the
quarter ended 30.09.2006 Complaints Pending at the beginning of the quarter Nil
Complaints Received during the quarter 147 Complaints disposed off during the
quarter 147 Complaints unresolved at the end of the quarter Nil 1. The above
Unaudited Financial Results were reviewed by the Audit Committee and thereafter
approved at the Meeting of the Board of Directors held on 31.10.2006. The
Statutory Auditors have carried out a Limited Review of the said results. 2.
The Company made an issue of Foreign Currency Convertible Bond (FCCB's)
aggregating to US $ 75 million, on 06.10.2004 and US $150 million on
06.01.2006. FCCB's aggregating to US $ 143.96 million have been converted into
equity shares resulting in increase in the paid up capital of the Company to Rs
374.40 million. 3. Other Income includes Rs 164.30 million for the quarter and
Rs 213.40 million for the half year ending September 2006 respectively toward
income arising due to foreign exchange fluctuations at the time of redemption
of investments is subsidiaries. 4. In accordance with the Guidance Note on
Accounting for Credit Available in respect of Minimum Alternative Tax (MAT)
under the Income-Tax Act, issued by the Council of the Institute of Chartered
Accountants of India on 23.03.2006, the Company has charged MAT for the current
quarter to the Profit and Loss Account and recognised this MAT credit as an
asset in the current quarter under the head Loans and Advances. Similar
adjustment has been made for the previous half year (April to September 2005)
and previous quarter (July to September 2005) due to which the profit after tax
is higher by Rs 36.90 million and Rs 18.40 million respectively than reported
in the previous period. 5. During the quarter, the Company has through its
subsidiary i. Increased its shareholding to 1.00% in Corpserve (pty) Limited,
South Africa. ii. Purchased certain Crop protection products from Bayer
Cropscience, Germany. iii. acquired Bensulfuron- methly business from Du Point
USA. 6. Previous period / year's figures have been regrouped / rearranged
wherever necessary.
200612 Quarter 3
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 169 Complaints disposed off during the quarter 169
Complaints unresolved at the end of the quarter Nil 1. The above Unaudited
Financial Results were reviewed by the Audit Committee and thereafter approved
at the Meeting of the Board of Directors held on January 30, 2007. The
Statutory Auditors have carried out a Limited Review of the said results. 2.
The Company made an issue of Foreign Currency Convertible Bonds (FCCB's)
aggregating to U S $ 75 million, on October 06, 2004 and US $150 million on
January 06, 2006. FCCB's aggregating to US $ 145.46 million have been converted
into equity shares resulting in increase in the paid up capital of the Company
to Rs 374.90 million. 3. In accordance with the Guidance Note on Accounting for
Credit Available in respect of Minimum Alternative Tax (MAT) under the
Income-Tax Act, issued by the Council of the Institute of Chartered Accountants
of India on March 23, 2006, the Company has charged MAT for the current quarter
to the Profit and Loss Account and recognised this MAT credit as an asset in
the current quarter under the head Loans and Advances .Similar adjustments have
been made for the previous period (April to December 2005) and previous quarter
(October to December 2005) due to which the profit after tax is higher by Rs
69.80 million and Rs 32.90 million respectively than those reported in the
previous periods published results. 4. During the quarter the Company has
through its subsidiary: (i) agreed to buy Arkema's 100% share holding of
Cerexagri Group of Companies, France. (ii) acquired Propanil business from Dow
Agrosciences LLC, USA. 5. Interest and Other Finance Charges for the current
quarter are after accounting for exchange difference income of Rs 404.60
million arising due to revaluation of foreign currency loans. The amount for
the corresponding quarter was an expense of Rs 15.30 million. 6. Previous
periods/ years figures have been regrouped/ rearranged wherever necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt Equity Ratio |
1.04 |
1.01 |
1.49 |
|
Long Term Debt
Equity Ratio |
0.96 |
0.88 |
0.99 |
|
Current Ratio |
2.00 |
1.91 |
1.27 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.29 |
1.21 |
1.34 |
|
Inventory |
7.79 |
8.78 |
15.04 |
|
Debtors |
3.54 |
3.05 |
4.77 |
|
Interest Cover
Ratio |
2.70 |
2.28 |
1.79 |
|
Operating Profit
Margin (%) |
23.21 |
21.12 |
23.56 |
|
Profit Before
Interest and Tax Margin (%) |
17.41 |
15.67 |
17.52 |
|
Cash Profit
Margin (%) |
14.35 |
11.51 |
13.20 |
|
Adjusted Net Profit
Margin (%) |
8.55 |
6.07 |
7.17 |
|
Return on Capital
Employed (%) |
13.40 |
15.41 |
19.86 |
|
Return on Net
Worth (%) |
13.42 |
12.00 |
18.66 |
STOCK PRICES
|
Face Value |
Rs.2/- |
|
High |
Rs.331.05/- |
|
Low |
Rs.320.00/- |
LOCAL AGENCY
FURTHER INFORMATION
History
United Phosphorus
Limited(formerly Search Chem Industries Limited), a subsidiary of erstwhile
United Phosphorous Limited(presently Unipros Enterprises Limited) is into
manufacture of Chlor alkali products, Industrial chemicals and speciality
chemicals. The company is a leading manufacturer of chlorine and Phosphorous
based industrial chemicals and speciality chemicals like Phosphorus
Pentachloride, Phosphorus Trichloride, Phosphorus Oxychloride, HEDP, Tri Phenyl
Phosphite, Tri Phenyl Phosphate, ATMP etc. The comapany is also into power
generation. The surplus power after captive consumption is sold to Gujarat
Electricity Board.
The company incorporated as Vishwanath Commercials on 02.01.1985 was
originally promoted by Debisingh Shekhawat, Lalit Kumar Sharma and Associates
and went public in Feb 1985.
R D Shroff (alongwith his family and investment companies), acquired
majority stake in erstwhile Viswanath Commercials in Feb 1994 and changed its
name to Search Chem Inds Limited. As a result of reorganisation with in the
group, United Phosphorus(UPL) acquired 75% equity in Search Chem in March 1995
and UPL acquired further shares in August 1995 and became the promoter of the
company.
The company until the takeover was engaged in the business of trading in
shares/debentures. Subsequent to takeover it diversified into manufacture of
chemicals. The company's plants are located at Vapi and Jhagadia in Gujarat.
The company entered into manufacture of Chlor-alkali products by
commercialisation of Phase I of its Caustic and Chlorine and Phosphorus
Trichloride plants in 1995-96. During 1998-99, the company has installed a new
plant to manufacture POCI (Phosphorus Oxychloride) and also installing a plant
to manufacture Elemental Phosphorus, which is main input of the company.
The company has entered an agreement with General Electric Energy Plant
Operations LP for operation and maintenance of power plant.
The company has been referred to BIFR as the networth was fully eroded. The
capacity utilisation of both Speciality Chemicals and Industrial Chemicals was
higher compared to 1999-2000.
In attempt to restructure the business in the group, the manufacturing
facilities of erstwhile United Phosphorous is transferred to this company
(formerly Search Chem Industries Limited). The High Court of Gujarat has
approved this scheme of demerger effective from March 31, 2003. According to
the scheme of demerger the company has reduced its share capital and has issued
to its shareholders one equity share of Rs.10/- each for every twelve equity
share of Rs.10/- each held by them in the company. Further one equity share or
14 preference shares of Rs.10/- each of the company were alloted to the
shareholders of Uniphos Enterprises Limited for every one equity share of
Rs.10/- each held by them in Uniphos Enterprises Limited.
During the 2004-05 the company has enhanced its installed capacity of
Pesticides and Pesticides Intermediates by 9940 Tonnes and 890 Tonnes. With
this expansion the total installed capacity of Pesticides and Pesticides
Intermediates has increased to 28040 Tonnes and 17546 Tonnes
respectively.
In June 2005 the company has acquired 100% stake of SWAL (Formerly known
as Shaw Wallance Agrochemicals Limited) for a consideration of Rs.234 Million
and also acquired CEQUISA, a distributor and registrant of crop-protection
products located in Barcelona Spain & its subsidiaries . In October 2005
the company sub-divided its equity share face value from Rs.10/- per share to
Rs.2/- per share. Further the company has acquired 100% stake through its UK
subsidiary of REPOSO S.A.I.C. (REPOSO) a manufacturer and distributor of crop
protection products located in Buenos Aires, Argentina. The company has also
acquired Agvalue in USA during November 2004.
OPERATIONAL
PERFORMANCE
During the year under
review, rainfall had been very good in India. In fact, in some parts, there
were heavy floods. U.S.A. suffered two devastating hurricanes. The bountiful
rains resulted in increase in agriculture activity throughout the world. Rabi
and Kharif crops yielded more agriculture output. The local sales of
agrochemicals and other chemicals increased and stood at Rs.6009.200 Millions.
Like last year, the exports again surged ahead to Rs. 7154.100 Millions. The
increase in sales was about 34%. Sale of caustic soda and chlorine were higher.
In the later part of the year the prices of caustic soda and chlorine came
down. However, in the current year, it has again started moving up. The
Company's total sales stood at Rs. 13621.200 Millions, Profit before taxes were
at Rs. 1494.600 Millions which is 50% higher as compared to last year.
FUTURE OUTLOOK
The preliminary weather
forecast indicate almost normal monsoon in India for the year 2006-2007. This
is a good indication and near-normal monsoons should result into overall better
performance of the Company. Exports are also expected to go up significantly.
With the new acquisitions in recent times, the Company expects that exports
should go up in next year. The Company has recently ventured into seeds
business. There is a very good demand for genetically developed seeds and it is
expected that this business will also do very well. Overall, barring unforeseen
circumstances, the Company should perform well in the year 2006-2007.
SUB-DIVISION OF
SHARES
The face value of the
Company's equity share was Rs.10 per share. In order to facilitate easy
accessibility to the Company's equity shares by the small investors and to
enhance the liquidity of the shares on the stock exchanges, the Company has
sub-divided its equity shares from a face value of Rs.10.per share to Rs.2 per
share. The Record Date for the sub-division was kept on 05.10.2005
DIVIDEND
The Directors have
recommended dividend of Re.1/- per Equity Share of Rs. 21- each and
paise 70 per Preference Share on 1,17,978 - 7 % Preference Shares of Rs.
107-each for the financial year ended 31.03.2006, which if approved at the
forthcoming Annual General Meeting, will be paid to (i) all those Equity and
Preference Shareholders of the Company whose names appear in the Register of
Members as on 19.09.2006 and (ii) to those Equity and Preference Shareholders
of the Company whose names appear as beneficial owners as per list furnished by
National Securities Depository Limited and Central Depository Services (India)
Limited.
FINANCE
It has always been constant
endeavour on part of the Company to save interest cost by availing of low-cost
debt and replacing the same in place of debts carrying higher interest burden.
During the year the Company issued Foreign Currency Convertible Bonds of US $
150 million. Of this, bonds worth US $ 70 million have been converted into
equity shares. This issue was made for raising finance for acquiring overseas
businesses / registrations, working capital requirements of overseas
subsidiaries and meeting capital expenditure requirements of the Company.
SAFETY, HEALTH
PERFORMANCE AND ENVIRONMENT
The Company has taken initiatives at all its units in
protection of environment and to keep safe working environment. All units are
certified under Environmental Management System standards ISO 14001. During the
year, some of the units have availed re-certification. Focus in the
environmental management system is on reduction on waste generation and
recovery, reuse of available resources, etc. In all the manufacturing units,
the Company has achieved considerable reduction in the consumption of raw
materials and utilities which is helpful in better environmental compliance and
helps in achieving sustainable growth. The Company has upgraded pollution
treatment system provided at various units as per requirements. The entire
incinerable wastes generated at the Company's units which need thermal
treatment are sent to the Common Incineration system at Ankleshwar. The Company is having valid
Consent / Authorization from Pollution Control Board for all the units. All
statutory returns like Environmental Statement and Hazardous Waste Return ace
submitted well in time. Solar evaporation ponds are avoided and Forced
Evaporation System / Multiple Effect Evaporation System have been introduced.
The Company's associate viz. Bharuch Enviro Infrastructure Limited (BEIL) has streamlined
the operation of the Common Incineration System. The Common Incineration System
is first of its kind in India and as per international standards. This facility
is helpful to various industries in the region in treafingthe organic wastes
generated by them. BEIL has also taken possession of additional 50 acres of
land for expansion and the land has been notified. Enviro Technology Limited
(Common Effluent Treatment Plant) at Ankleshwar has adopted energy efficient
Diffused Aeration System and replaced the surface aerators. All the
manufacturing sites are certified under Occupational Health and Safety
Assessment Standards OHSAS 18001. In all the units, emergency rescue teams are
available in all shifts which are helpful in case of any emergency situation in
the Company's units or outside the units. Company's ERT team performance in
emergency situation of flood situation in Damanganga river at Vapi was
appreciated by District Collertor also. The Company has received award from
Gujarat Safety Council for 1 million accident free man-hours. It also bagged
National Energy Conservation award at the hands of President of India Dr.
A P J Kalam.
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE
AND DEVELOPMENT
The core business of United Phosphorus Limited (UPL) is
agrochemicals. UPL is the biggest player in this field in India. Globally, it
is among the first five companies of generic agrochemical manufacturers. UPL
also manufactures industrial chemicals and specialty chemicals. Apart from
this, it has a chlor-alkali plant. At UPL chlorine is mainly used for captive
consumption and caustic soda is sold off through dealers. UPL also has a
captive power generation plant, having capacity of 53 MW. Power generated is
mainly used in chlor-alkali and white phosphorus
plants. Surplus power is sold off to Gujarat Electricity Board. With changes in
power policy on anvil in Gujarat, it may be possible for UPL to sell power to
other companies directly. UPL's area of operations is spread throughout the
world. It has business activities in more than 100 countries in the world.
Agrochemicals usage is there throughout the world. The consumption of
agrochemicals is very high in countries like USA, UK, Japan, etc. as compared
to India. UPL's manufacturing plants are at Vapi, Ankleshwar, Jhagadia, Halol
and Jammu. Some of the subsidiaries have manufacturing facilities at Haldia and
Bangalore (India), Sandbach (U.K), Argentina, Australia, Thailand, etc.
Monsoons play an important role for agrochemical industry. Good rainfalls in
the country and in the world result into substantial increase in the activity
of agrochemical business. For sale of agrochemicals, registrations are
required. UPL holds product registrations for various products throughout the
world. UPL has made some of the acquisitions in the recent past and thereby got
new product registrations. This will help in pushing its products in new
markets. UPL's endeavour is to provide complete solution to all the
requirements of the farming community. It has now ventured into seeds business,
and seeds germplasm. This business has tremendous growth potential. At present,
UPL is trying to develop seeds for rice, sunflower and cotton. To increase its
exports, UPL has entered into various strategic alliances in different parts of
the world. In domestic markets, innovative ways to enhance the sales are
followed. Superior quality, full customer satisfaction, providing complete
solution for agro issues, farmers education and advisory services, new product
development, introducing new compounds, etc are steps taken by the company to
achieve commendable growth in business in last few years. Agrochemical industry
in India was predominantly the domain of few multinational companies. However,
UPL has strived hard to become leader in this field, becoming one of the
biggest Indian multinational company.
OPPORTUNITIES AND
THREATS:
Agrochemical industry in India has lots of potential for growth. In India, there is a pool of very good scientists and engineers. It is in a position to manufacture some of the most complicated products at very economical prices and having few superior quality. This is the main reason for increase in country's exports of agrochemicals for last years. In India, every year crops worth crores of rupees is lost due to pest and disease attack. If this trend has to stop, farmers are required to be trained and properly educated. As consumption of agrochemicals is much less in India, lots of opportunities are available for growth outside India, the Indian agrochemicals industry can capture a much larger market share in the world. The seeds business also provides very good opportunities. It is set to change the pattern of farming in India. UPL's venturing into this business should also turn out to be a big opportunity for growth in this field. Another threat is from manufacturers in China. Substandard material is supplied by them at ccynpetitive prices in big volumes. In India, the manufacturers have taken various step to adjust to these threats. Another threat is vagaries of monsoon - either too much or too little resulting in floods or droughts. Agrochemicals usage can be less in both the situations. However, increase in exports will provide a hedge to this threat. Another threat is negative perception in the minds of the people and government about the industry. This is further fuelled by some environmentalists. The industry is taking all steps, legal or otherwise, to give right picture of usefulness of the persticide industry. Renowned scientists have also opined that pesticides are blessings for human race and green revolution could not have taken place in the absence of pesticides.
BUSINESS OUTLOOK:
Business outlook is favourable for the company. Last year, monsoon in India had been fairly widespread and this year too, it is expected to be good. This should augur well for the company. There is a good demand for company's products in India and abroad. There is good network of dealers in India. The company is entering into strategic alliances, coupled with global acquisitions. Overseas subsidiaries are marketing arms and they have also performed well. Company is carrying on research in few new products, especially herbicides. This will help in introduction of new products in India and abroad. Overall, the -business outlook is very encouraging.
RISKS AND CONCERNS:
Adequate risk
management steps are taken by various departments. The agrochemical industry
has inherent risks such as weather conditions, or regulatory restrictions on
manufacture or use of certain agrochemicals. At UPL, the global operations
provide protection against vagaries of nature. Broad product portfolio enables
the company to manage the risks effectively. Health, Safety and Environment is
another area of risk. The same is managed by not only compliance of all
regulations but also upgrading the system beyond regulatory needs, Constant
safety audits are carried out. Treasury management risks are taken care of by
monitoring receivables, proper credit control, credit insurance cover of all
domestic and international receivables, non-recourse factoring and efficient
supply chain management. Foreign exchange fluctuations are taken care by future
covers and other derivatives continuously. As company's export goes up year
after year, it provides adequate natural cover for servicing its external
borrowings. Product and public liability insurance covers are taken by the
company.
FINANCIAL AND
OPERATIONAL PERFORMANCE:
The year 2005-2006
was another year of excellent performance.
The turnover of the company increased from Rs.11041.400 Millions to Rs. 13621.200 Millions, registering a growth of 23%. Profit before taxes went up by 54% from Rs.972.300 Millions to Rs. 1494.600 Milions. On the export front also the performance was excellent. During the year, export on FOB basis were Rs.7154.100 Millions as against Rs.5925.300 Millions.
Website details are attached herewith:
United Phosphorus Limited (formerly Search Chem Industries Limited), a subsidiary of erstwhile United Phosphorous Limited(presently Unipros Enterprises Limited) is into manufacture of Chlor alkali products, Industrial chemicals and speciality chemicals. The company is a leading manufacturer of chlorine and Phosphorous based industrial chemicals and speciality chemicals like Phosphorus Pentachloride, Phosphorus Trichloride, Phosphorus Oxychloride, HEDP, Tri Phenyl Phosphite, Tri Phenyl Phosphate, ATMP etc. The company is also into power generation. The surplus power after captive consumption is sold to Gujarat Electricity Board.
The company incorporated as Vishwanath Commercials on Jan 2, 1985 was
originally promoted by Debisingh Shekhawat, Lalit Kumar Sharma and Associates
and went public in Feb 1985.
R D Shroff ( alongwith his family and investment companies), acquired
majority stake in erstwhile Viswanath Commercials in Feb 1994 and changed its
name to Search Chem Inds Limited. As a result of reorganisation with in the
group, United Phosphorus(UPL) acquired 75% equity in Search Chem in March 1995
and UPL acquired further shares in Aug 1995 and became the promoter of the
company.
The company until the takeover was engaged in the business of trading in
shares/debentures. Subsequent to takeover it diversified into manufacture of
chemicals. The company's plants are located at Vapi and Jhagadia in Gujarat.
The company entered into manufacture of Chlor-alkali products by
commercialisation of Phase I of its Caustic and Chlorine and Phosphorus
Trichloride plants in 1995-96. During 1998-99, the company has installed a new
plant to manufacture POCI (Phosphorus Oxychloride) and also installing a plant
to manufacture Elemental Phosphorus, which is main input of the company.
The company has entered an agreement with General Electric Energy Plant Operations LP for operation and maintenance of power plant.
The company has been referred to BIFR as the networth was fully eroded. The capacity utilisation of both Speciality Chemicals and Industrial Chemicals was higher compared to 1999-2000.
In attempt to restructure the business in the group, the manfufacturing
facilities of erstwhile United Phosphorous is transferred to this
company(formerly Search Chem Industries Limited). The High Court of Gujarat has
approved this scheme of demerger effective from March 31, 2003.
EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 198 Complaints disposed off during the quarter 198 Complaints unresolved at the end of the quarter Nil 1. The above Unaudited Financial Results were reviewed by the Audit Committee and thereafter approved at the Meeting of the Board of Directors held on July 22, 2005. The Statutory Auditors have carried out a Limited Review for the quarter ended June 2005. 2. The Company made an issue of Foreign Currency Convertible Bonds (FCCB's), aggregating to US $ 75 million on October 06, 2004, Bond holders holding FCCB's aggregating to US $ 58.23 million have converted Bonds into equity shares resulting into increase in the paid up capital of the Company to Rs 335.20 million. 3. During the quarter, the Company has acquired, through it subsidiary, the business of M/s CEQUISA, located in Spain, for a price of Euro 11.50 million. 4. During the quarter, the Company has acquired all the shares of M/s SWAL Corporation Limited (formerly known as Shaw Wallace Agrochemicals Limited) for a consideration of Rs 234 million. 5. The Board of Directors have recommended sub-division of 1(one) Equity Share of Rs 10/- each to 5 (five) Equity Shares of Rs 2/- each. 6. Previous period / year's figures have been regrouped / rearranged wherever necessary.
FIXED ASSETS
The company's fixed assets of important value include leasehold land, factory building, plant & machinery, furniture, fixtures & office equipment and vehicles.
UNITED PHOSPHORUS LIMITED ACQUIRES ADVANTA’S SEED
BUSINESS FROM FOX PAINE & COMPANY
Mumbai, India (February 14, 2006) United Phosphorus Limited (UPL) announced today that its subsidiary, Biowin Corporation Limited based in Mauritius, has acquired Advanta Netherlands Holdings BV, based in the Netherlands, in an all cash transaction from the US-based private equity firm, Fox Paine & Company, LLC. UPL will finance the transaction with funds raised through the recent foreign currency convertible bond (FCCB) issues and bank borrowings. YES Bank served as the exclusive financial and strategic advisor to UPL.
Advanta is a leading supplier of seeds and seed
technologies to major global and regional markets, providing added value to
farmers, downstream industries and consumers by combining superior genetics
with essential technologies and techniques. With operations in Australia, Asia
and South America, the Company’s research and development consists of superior
breeding programs and bioscience techniques that have driven the development of
a portfolio of elite, proprietary and highly differentiated germplasm. Advanta
had total sales of EUR 61 million in [FY] 2005. Established in 1996 through the
combination of Royal Vanderhave Group of the Netherlands and Zeneca Seeds of
the United Kingdom, Advanta’s corporate heritage extends back to the 19th century
with important R & D programs in rice, maize, sunflower, sorghum and
canola. Commenting on the transaction, Mr. Jai Shroff, Executive Director of
UPL, said, “The acquisition of Advanta allows
UPL to jump start their entry in the high end of the seeds business where the
future of agriculture growth lies. This transaction not only makes us the
largest player in some segments but also gives us leadership position in many
important products. At the same time, it allows us further their relationship
with distributors and farmers in these markets. They welcome the Advanta
employees to the UPL family of companies, and will look for a smooth, quick
integration.” Mr. Kevin Schwartz, Managing Director of Fox Paine, said, "They
believe the combination of Advanta and UPL will help both companies accelerate
their corporate strategies for growth. This transaction successfully concludes
their investment work with Advanta, which was to develop and invest in its
market positions, product portfolio and technologies and ultimately find the
strategic acquirers best positioned to further develop Advanta's diverse global
business units. The success of this endeavor is due to the substantial efforts
of many people within Advanta and Fox Paine who shared this vision."
United Phosphorus Limited (UPL) is the largest Indian
agrochemical company and among the top five generic companies globally in this
industry. It is engaged in research, manufacture and distribution of
agrochemicals and specialty chemicals across the globe. The Company’s revenue’s
for the last 12 months ending Dec 2005 were in excess of USD 375 mm.(Rs.
16610.000 Millions)
About UPL
Through acquisitions, strategic alliances and network of
over 36 subsidiaries, UPL has built a marketing network across the globe and
its international revenues account for over 70% of its total revenues. It
exports to over 100 countries, with primary markets in Europe and North
America. UPL has over 2400 employees and has 10 operating plants (8 in India
and 1 in UK and Argentina) all of them are ISO compliant to the highest
standards of Quality, Safety, Environment and Occupational Health.
UNITED PHOSPHORUS
LIMITED (UPL) SIGNS AGREEMENT FOR PRODUCTION OF CERTAIN AGROCHEMICALS WITH
ISHIHARA SANGYO KAISHA LIMITED. (ISK)
Ishihara Sangyo Kaisha, LIMITED (ISK) has signed the agreement for the production of certain agrochemicals with United Phosphorus LIMITED (UPL) Mumbai, India and furthermore is exploring the possible business alliance of distribution in India and certain other countries.
UPL has been entrusted by ISK with manufacture of certain products developed by ISK . ISK, UPL and Mitsui & Co., Limited.(Mitsui) have a plan to establish a joint venture company for the development, registration and distribution of ISK products in India. In addition, the companies continue the discussion about the possible co-operation in the countries other than India.
ISK is intending to continue to focus on the Research and Development, especially creating the new novel molecules and more than ninety (90) percentage of the total turnover for agrochemical sales (turnover of 41.0 Billion Japanese Yen and net earning of 8 Billion in March, 2006 as consolidated basis) is coming from their proprietary products. ISK’s target for its agrochemical business is turnover of 48.0 Billion Japanese Yen and net earning of 9 Billion Japanese Yen on a consolidated basis in March 2009 expecting contribution of new products (IKF-916/cyazofamid and IKI-220/flonicamid). ISK has commenced on full-scale development work of its new fungicide (powdery mildew fungicide) IKF-309 ( a common name to be proposed).
With this venture, ISK will be able to access the world class manufacturing base of UPL as well as UPL’s domestic marketing network. UPL presently has 8 manufacturing facilities in India, one each in UK and Argentina. UPL currently has a 8% market share in India.
This partnership will continue to allow UPL to grow organically, inorganically and through business alliances. Current revenue of UPL for the year, 2005-2006 have been USD 480 million.
As stated by Mr. Jai Shroff, CEO of United Phosphorus Limited “They believe that this alliance is of strategic importance and this business model will differentiate UPL from other generic companies as being the most cost competitive manufacturer with an access to new patented chemistries which can be leveraged by the global distribution network set up by us. This will also compliment some of the recent brand acquisitions”
ISK intends to implement their new manufacturing business model for their agrochemicals products as their one of the business strategies in addition to the R & D aiming at increasing its global competitiveness and profitability.
ISK, therefore, is strengthening the stability and global competitiveness of their production through establishing the multi- production sites of technical materials. Most of its agrochemical products already have been locally produced not only in Japan but also in Europe, North America, Korea, China and Brazil.
It is currently estimated that 70 percentage of total products used globally are off-patent products while the cost of the development and commercialization with new molecule have been increased significantly. UPL has been recognized as one of the most competitive producer of agrochemicals in India and the fastest growing Generic company in Agrochemical industry with direct presence in 35 countries and a sales in more than 80 countries
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.43.15 |
|
UK Pound |
1 |
Rs.85.22 |
|
Euro |
1 |
Rs.57.63 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
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 |
|