MIRA
INFORM REPORT
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Report Date : |
12.04.2007 |
IDENTIFICATION
DETAILS
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Name : |
HINDUSTAN CONSTRUCTION COMPANY LIMITED |
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Registered Office : |
Hincon House, Lai Bahadur Shastri Marg, Vikhroli (West), Mumbai 400 083, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
27.01.1926 |
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Com. Reg. No.: |
1228 |
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CIN No.: [Company Identification No.] |
L45200MH1926PLC001228 |
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TAN No.: [Tax Deduction & Collection Account No.] |
MUMH00179E |
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Legal Form : |
Public limited liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Undertakes projects for the construction of roads and bridges, dams, barrages, power projects, tunnels & underground works, industrial structures & buildings, marine works, railway bridges and environmental business. |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
RATING
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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 35000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established company of Walchand Hirachand Group. Directors are reported as experienced, respectable and resourceful industrialist. Their trade relations are reported as fair. Financial position is satisfactory. Payments are reported as slow but correct. The company can be considered normal for business dealing at usual trade terms and conditions |
LOCATIONS
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Registered Office : |
Hincon House, Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai – 400 083, Maharashtra, India |
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Tel. No.: |
91-22-25775959 |
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Fax No.: |
91-22-25777568/ 25781850 |
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E-Mail : |
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Website : |
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Factory 1 : |
Ř Rajasthan Ř Himachal Pradesh Ř Delhi Ř Madhya Pradesh |
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Branches : |
Located at:- Jammu & Kashmir, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Goa, Karnataka, Kerala, Tamilnadu, Andhra Pradesh, Orissa, West Bengal, Assam, Bihar (Jharkand), Madhya Pradesh (Chattisgarh), Uttar Pradesh (Uttaranchal), Delhi, Himachal Pradesh and Bhutan |
DIRECTORS
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Name : |
Ajit Gulabchand |
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Designation : |
Chairman & Managing Director |
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Name : |
Y. H. Malegam |
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Designation : |
Director |
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Name : |
Rajas R. Doshi |
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Designation : |
Director |
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Name : |
Bhalchandra R. Sule |
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Designation : |
Director |
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Name : |
D. M. Popat |
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Designation : |
Director |
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Name : |
Ram R Gandhi |
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Designation : |
Director |
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Name : |
Dr. N. A. Kalyani |
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Designation : |
Director |
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Name : |
Fred Moavenzadeh |
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Designation : |
Director |
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Name : |
Sharad M. Kulkarni |
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Designation : |
Director |
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Name : |
Nirmal P. Bhogilal |
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Designation : |
Director |
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Name : |
K. G. Tendulkar |
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Designation : |
Executive Director, Operations |
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Name : |
M. D. Khattar (upto 01.08.2005) |
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Designation : |
Executive Director, Technical &
Business Development |
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Name : |
R. G. Vartak |
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Designation : |
Director |
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Name : |
Mr. S K Fotedar (w.e.f.29.09.2005) |
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Designation : |
Executive Director and President
(Construction) |
KEY EXECUTIVES
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Name : |
Vithal R Kulkarni |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters, directors, relatives and associates |
120532030 |
47.04 |
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Foreign institutional investors/mutual funds |
32466448 |
12.67 |
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Public financial institutions/State Financial Corporation |
445847 |
0.17 |
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Mutual funds (Indian ) and UTI |
24921742 |
9.72 |
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Nationalised and other banks |
67271 |
0.03 |
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NRIs/ OCBs |
1199443 |
0.47 |
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GDSs |
26954200 |
10.52 |
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Public |
49662619 |
19.38 |
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Total |
256249600 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Undertakes projects for the construction of roads and bridges, dams, barrages, power projects, tunnels & underground works, industrial structures & buildings, marine works, railway bridges and environmental business. |
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Products : |
· Civil Engineering & Construction |
GENERAL
INFORMATION
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No. of Employees : |
14,869 |
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Bankers : |
v
ICICI Bank
Limited v
Canara Bank v
Punjab
National Bank v
Oriental
Bank of Commerce v
Indian Bank v
State Bank
of India v
IDBI Bank
Limited v
Federal Bank
Limited v
State Bank
of Patiala v
Union Bank
of India v
ING Vysya
Bank Limited v
Exim Bank v
UTI Bank
Limited v
Bank of
India v
Bank of
Bahrain & Kuwait B.S.C. v
HDFC Bank
Limited v
Citibank
N.A. v
J.P. Morgan
Chase Bank N.A. |
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Facilities : |
Notes: Privately Placed
Non Convertible Debentures i) 13.6% Non
Convertible Debentures "B" Series : Secured by an exclusive charge
by way of hypothecation of specific movable properties as specified in part
"B" of second schedule of the trust deed executed on 5th November,
2001 in favour of UTI Bank Limited., the trustees to the debentureholders.
These debentures having a face value of Rs. 100/- each aggregating Rs. 50
millions are to be redeemed in five equal half yearly installments at the end
of 36th, 42nd, 48th, 54th and 60th month from the date of allotment i.e. 10th
August, 2001. Four Installments of Rs.10.000 millions each paid on due dates
i.e.10th August, 2004, 10th February, 2005, 10th August, 2005 and 10th
February, 2006 respectively. ii) 10% Non
Convertible Debentures "E" Series : Secured by first charge by way
of hypothecation of specific movable properties as specified in second
schedule of the trust deed executed on 20th January, 2003 in favour of UTI
Bank Limited., the trustees to the debentureholders. These debentures having
a face value of Rs.100/- each aggregating Rs. 1500.000 millions are to be
redeemed in seven half yearly installments at the end of 48th, 54th, 60th,
66th, 72nd, 78th and 84th month from the date of allotment i.e. 25th October,
2002. iii) 9% Non
Convertible Debentures "F" Series : Secured by first charge by way
of hypothecation of specific movable properties as specified in second
schedule of the trust deed executed on 20th January, 2003 in favour of UTI
Bank Limited., the trustees to the debenture holders. These debentures having
a face value of Rs.100/- each aggregating Rs.200.000 millions are to be
redeemed in three annual installments at the end of 36th, 48th, and 60th
month from the date of allotment i.e.17th January, 2003. First installment of
Rs. 66.700 millions paid on due date i.e. 16th January, 2006. iv) 7.5% Non
Convertible Debentures : Secured by first charge by way of hypothecation of
specific movable properties as specified in second schedule of the trust deed
executed on 17th December, 2004 in favour of UTI Bank Limited., the trustees
to the debenture holders. These debentures having a face value of
Rs.10,00,000/- each aggregating Rs.600.000 millions are to be redeemed in
five half yearly equal installments commencing from the end of the 8th year
from the date of allotment i.e.28th September, 2004. The above debentures (i)
to (iv) are also secured by way of mortgage on a flat situated at Lok Gaurav
Complex, Vikhroli. Banks: Cash credit
limits are secured against hypothecation of work in progress, stores, book
debts, dues and advances and residual charge/mortgage on plant & machinery and certain land
situated at Vikhroli and land and buildings at village Tara, district Raigad.
2. Bank of India Secured by first
charge by way of hypothecation of specific fixed assets described under
deed of hypothecation executed on 15th Januan/,2002. The entire loan
is repaid during the year. 3. Canara Bank Secured by first
charge by way of hypothecation of specific fixed assets described under
deed of hypothecation executed on 21st February, 2002. The entire loan
is repaid during the year. 4. Bank of
Bahrain & Kuwait F.C. Term Loan Secured by first
exclusive charge by way of hypothecation of specific equipments described
under deed of hypothecation executed on 18th July, 2003. 5. EXIM Bank
F.C.Loan Secured by first
pari passu charge by way of hypothecation over entire movable assets
including current assets and receivables relating to the project, charged to
EXIM Bank and ICICI Bank for the non -fund based facility issued for
Allahabad Bypass- ABP-2 Project as described in schedule II to the joint deed
of hypothecation executed on 28th May, 2004. 6. ICICI Bank Car
Loan Secured by first
charge by way of hypothecation of Cars purchased under the scheme in favour
of ICICI Bank. From HDFC Corporate Loan Secured by way of
oral charge on 6th June, 2003 on non residential premises being all the piece
and parcel of land admeasuring 202505 sq. meters at village Tara, district
Raigad together with buildings and other structures thereon, land appurtenant
thereto both present and future. Contractees Secured by
hypothecation /pledge of certain plant and machinery. |
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Banking Relations
: |
Good |
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Auditors : |
K. S. Aiyar & Company Chartered Accountants |
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Joint Ventures : |
Ř Nathpa Jhakri Joint Venture Ř HCC Pati Joint Venture Ř Kumagal Skanska – HCC- Itochu Group Ř HCC-L&T Purulia Joint Venture |
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Associates: |
Ř Hincon Holding Limited Ř Gulabchand Investments Limited Ř The Premier Automobiles Limited Ř Acron (India) Limited Ř Walchandnagar Industries Limited Ř Levasa Corporation Limited |
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Subsidiaries |
Ř Hincon Technoconsult Limited (Formerly known as Ganga Construction Limited) Ř Ucchar Investment Limited Ř Western Securities Limited Ř Hincon International Limited Ř HCC Infotech Limited Ř HCC Infotech Inc. Ř Pune – Paud Toll Road Company Limited Ř Hincon Realty Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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50,000 |
9.5% Redeemable Cumulative Second Preference Shares |
Rs. 100/- each |
Rs. 5.000 millions |
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4,950,00,000 |
Equity Shares |
Rs. 1/- each |
Rs. 495.000 millions |
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Total |
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Rs. 500.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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256249600 |
Equity Shares |
Rs. 1/- each |
Rs. 256.250 millions |
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Add : Forfeited Shares |
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Rs. 0.066 millions |
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Total |
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Rs. 256.316 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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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 |
256.316 |
229.361 |
200.306 |
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3] Reserves &
Surplus |
8641.893 |
3300.480 |
1438.718 |
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NETWORTH
|
8898.209 |
3529.841 |
1639.024 |
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LOAN FUNDS |
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1] Secured Loans |
1973.235 |
2181.870 |
1959.253 |
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2] Unsecured
Loans |
11005.151 |
2074.947 |
2236.229 |
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TOTAL BORROWING
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12978.386 |
4256.817 |
4195.482 |
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DEFERRED TAX
LIABILITIES |
677.327 |
724.581 |
748.381 |
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TOTAL
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22553.922 |
8511.239 |
6582.887 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
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4920.648 |
3902.582 |
3608.513 |
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Capital work-in-progress
|
1074.263 |
477.839 |
85.800 |
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INVESTMENT
|
1264.723 |
1899.181 |
485.856 |
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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
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10987.231
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5833.250
|
5212.882 |
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Sundry Debtors
|
28.045
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31.007
|
12.708 |
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Cash & Bank Balances
|
10060.068
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874.624
|
406.990 |
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Other Current Assets
|
0.830
|
0.304
|
4.372 |
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Loans & Advances
|
1991.108
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981.806
|
684.105 |
Total Current Assets
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23067.282
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7720.991
|
6321.057 |
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Less :
CURRENT LIABILITIES & PROVISIONS
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Current Liabilities
|
7400.550
|
5206.051
|
3695.787 |
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Provisions
|
372.444
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283.303
|
222.552 |
Total Current Liabilities
|
7772.994
|
5489.354
|
3918.339 |
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Net Current Assets
|
15294.288
|
2231.637
|
2402.718 |
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MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000 |
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TOTAL
|
22553.922 |
8511.239 |
5834.510 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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Sales Turnover |
19869.852 |
|
10596.182 |
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Other Income |
61.425 |
55.618 |
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Total Income |
19931.277 |
14928.986 |
10596.182 |
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Profit/(Loss) Before Tax |
1382.613 |
750.063 |
604.537 |
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Provision for Taxation |
134.632 |
9.867 |
247.739 |
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Profit/(Loss) After Tax |
1247.981 |
740.196 |
356.798 |
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Expenditures : |
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Administrative Expenses |
715.862 |
551.246 |
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Salaries, Wages, Bonus, etc. |
1314.210 |
948.927 |
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Interest |
413.888 |
394.600 |
9960.138 |
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Depreciation & Amortization |
524.455 |
452.783 |
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Other Expenditure |
16011.094 |
11814.435 |
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Total
Expenditure |
18979.509 |
14161.991 |
9960.138 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2006 (1st
Qtr.) |
30.09.2006 (2nd
Qtr.) |
31.12.2006 (3rd
Qtr.) |
|
Sales
Turnover |
5735.400 |
4202.400 |
5361.300 |
|
Other
Income |
69.400 |
10.700 |
83.100 |
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Total
Income |
5804.800 |
4213.100 |
5444.400 |
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Total
Expenditure |
5281.600 |
3808.400 |
4778.800 |
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Operating
Profit |
523.200 |
404.700 |
665.600 |
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Interest |
74.200 |
157.800 |
175.400 |
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Gross
Profit |
449.000 |
246.900 |
490.200 |
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Depreciation |
161.500 |
186.000 |
205.500 |
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Tax |
38.300 |
13.800 |
37.900 |
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Reported
PAT |
251.200 |
41.700 |
219.900 |
200606 Quarter 1
Notes
Net Sales Includes
Net Sales/Income from Operations Rs 5806.212 million Less: Company's share of
turnover in integrated joint ventures Rs (70.779) million Expenditure Includes
Consumption of Materials Rs 1865.424 million Staff Cost Rs 418.386 million Construction
Expenses Rs 2816.928 million Other Expenditure Rs 180.884 million Tax Includes
Provision for Current Tax Rs 32.30 million Deferred Tax Rs (2.00) million
Fringe Benefit Tax Rs 6.00 million Extraordinary Items Indicates Profit/Loss n
Integrated JV's (net) EPS is Basic and Diluted 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 04 Complaints disposed off
during the quarter 04 Complaints unresolved at the end of the quarter Nil 1.
The Company is engaged in Engineering & Construction activities which are
substantially seasonal in Character. Claims made are accounted as income on
receipt of arbitration award or acceptance by the client. Therefore, the
financial results for three months ending June 30, 2006 are not necessarily
indicative of annual results. 2. The Company has a single Segment namely
'Engineering and Construction'. Therefore, the Company’s business does not fall
under different business segments as defined by AS-17- 'Segmental Reporting
issued by ICAI'. 3. The total balance value of work on hand as on June 30, 2006
is Rs 91430.00 million including Company's share in the Integrated Joint
Venture Projects (Rs 53010 million as on June 30, 2005). 4. Other income for
the quarter ended June 30, 2006 includes exchange gain amounting to Rs 59.862
million. 5. Previous period figures have been regrouped/ recast wherever
necessary. 6. The above results were reviewed by Audit Committee on July 20,
2006 and were approved by the Board of Directors at its meeting held on July
21, 2006.
200609 Quarter 2
Notes
Net Sales Includes
Net Sales/Income from Operations Rs 4256.60 million Company's share of turnover
in integrated joint ventures Rs (54.20)million Expenditure Includes Consumption
of Materials Rs 1391.70 million Staff Cost Rs 421.80 million Construction
Expenses Rs 1778.70 million Other Expenditure Rs 216.20 million Tax Includes
Provision for Current Tax Rs 6.80 million Deferred Tax Rs 5.40 million Fringe
Benefit Tax Rs 7.00 million Extraordinary Items Indicates Profit/Loss on
Integrated JV's (net) EPS is Basic and Diluted Status of Investor Complaints
for the quarter ended September 30, 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 Company is engaged in Engineering & Construction activities which are
substantially seasonal in Character. Claims made are accounted as income on
receipt of arbitration award or acceptance by the client. Therefore, the
financial results for six months ending September 30, 2006 are not necessarily
indicative of annual results. 2. The Company has a single Segment namely
'Engineering and Construction'. Therefore, the Company's business does not fall
under different business segments as defined by AS-17 'Segmental Reporting'
issued by ICAI. 3. The total balance value of work on hand as on September 30,
2006 is Rs 98190.00 million including Company's share in the Integrated Joint
Venture Projects (Rs 78950.00 million as on September 30, 2005). 4. Previous
period figures have been regrouped / recast wherever necessary. 5. The above
results were reviewed by Audit Committee on October 18, 2006 and were approved
by the Board of Directors at its meeting held on October 19, 2006.
200612 Quarter 3
Notes
Net Sales Includes
Net Sales/Income from Operations Rs 5406.50 million Company's share of turnover
in integrated joint ventures Rs (45.20)million Expenditure Includes Consumption
of Materials Rs 1570.10 million Staff Cost Rs 632.70 million Construction
Expenses Rs 2365.30 million Other Expenditure Rs 210.70 million Tax Includes Provision
for Current Tax Rs 31.90 million Deferred Tax Rs 26.90 million Fringe Benefit
Tax Rs 6.00 million EPS is Basic and Diluted 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 03 Complaints disposed off
during the quarter 03 Complaints unresolved at the end of the quarter Nil 1.
The Company is engaged in Engineering & Construction activities which are
substantially seasonal in Character. Claims made are accounted as income on
receipt of arbitration award or acceptance by the client. Therefore, the
financial results for nine months ending December 31, 2006 are not necessarily
indicative of annual results. 2. The Company has a single Segment namely
Engineering and Construction. Therefore, the Company's business does not fall
under different business segments as defined by AS-17 Segmental Reporting
issued by ICAI. 3. The total balance value of work on hand as on December 31,
2006 is Rs 96040.00 million (Rs 74780.00 million as on December 31, 2005)
including Rs 19400.00 million being the Company's share of an order secured by
a Joint Venture which is subject to the decision of a High Court. 4. Previous
period figures have been regrouped / recast wherever necessary. 5. The above
results were reviewed by Audit Committee on January 18, 2007 and were approved
by the Board of Directors at its meeting held on January 19, 2007.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt-Equity Ratio |
1.39 |
1.64 |
2.62 |
|
Long Term
Debt-Equity Ratio |
0.99 |
1.17 |
2.03 |
|
Current Ratio |
1.50 |
1.05 |
1.09 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
2.85 |
2.54 |
2.04 |
|
Inventory |
2.12 |
2.26 |
1.93 |
|
Debtors |
672.42 |
680.70 |
742.41 |
|
Interest Cover
Ratio |
2.62 |
2.49 |
2.26 |
|
Operating Profit
Margin(%) |
10.18 |
11.48 |
14.40 |
|
Profit Before
Interest And Tax Margin(%) |
7.54 |
8.44 |
10.26 |
|
Cash Profit
Margin(%) |
6.83 |
8.02 |
7.51 |
|
Adjusted Net
Profit Margin(%) |
4.19 |
4.98 |
3.37 |
|
Return On Capital
Employed(%) |
10.10 |
18.42 |
19.75 |
|
Return On Net
Worth(%) |
13.40 |
28.64 |
23.52 |
STOCK PRICES
|
Face Value |
Rs. 10.00/- |
|
High |
Rs.96.95 |
|
Low |
Rs.92.75 |
LOCAL AGENCY FURTHER
INFORMATION
Incorporated
in 1926 by Seth Walchand Hirachand, Hindustan Construction Company (HCC) is a
subsidiary of the Walchand Hindustan group (erstwhile Premier Construction).
The company is one of the largest construction and infrastructure building
company in the country. Subject specializes in the construction of
technologically complex & Long-gestation period projects.
The Company executes various projects from diversified areas like Hydel, Power,
Roads, Bridges, Dams, Barrages, Marine Works, Buildings & Environmental
Projects. The company has also undertaken several projects in Bhutan, Saudi
Arabia, Iraq, Myanmar, Tanzania, Sri Lanka etc.
The company also specializes in construction techniques like pre-cast units for
industrial structures and jetties, slip forming for tall structures and
underground shafts, bridge builders for segmented construction of long-span
bridges, three-dimensional computer-aided design technology for bridges, and
dredgers for speedy sinking of monoliths, etc.
The company has executed the following Joint Ventures:
|
JV partner |
Project |
|
Bechtel Water Technology Limited |
Tirpur Water Supply Project, UP |
|
Hyundai Engineering and Construction |
Cable Stayed bridge at Naini, Allahabad |
|
Samsung, Korea |
Dhauliganga hydro electric project |
The company has joint ventures with :-
· Nathpa Jhakri
· HCC-Pati
· Kumagai-Skanska-HCC-Itochu Group
· HCC-L & T Purulia
It is in trade terms with :-
v The Structural Waterproofing Company Private Limited
v Eagle Cement Pipe Private Limited
v S N Precas Company
v Roy Engineering Works
Management Discussion and Analysis
It is widely
acknowledged that the Indian economy is on a new growth trajectory. Riding on
the back of 7.5% and 8.5% GDP growths in the last two years, the Indian economy
is expected to grow by 8.1% in 2005-06. In fact, the Indian economy has grown
by over 6% in 8 of the last 15 years.
Unlike in the
nineties, India's economic success in the last three years has had a distinct
trend - a strong focus on public as well as private investment in
infrastructure and construction industries. Indeed, it is not easy to ignore
the recent successes in India's infrastructure development. Be it power,
highways, airports, ports, telecommunication or urban infrastructure, the capex
commitments in most of these sectors in the last few years have been
unprecedented.
Being a leading
infrastructure Company, Subject has not only participated in this growth phase
but has also aggressively capitalised on the business opportunities that have
come its way. 2005-06 has been another such milestone year for the Company.
This year, for the
first time, the Company's annual income from operations has surpassed Rs.20000
millions. This is indeed a proud moment for all of us, as it was only two years
ago when Subject first crossed Rs. 10000 millions in revenues. The rapid
increase in the . I top-line in the last three years has no doubt helped
consolidate
Subject's leadership position in its businesses and propelled Subject into a
higher growth orbit.
However, they
believe that this is just the beginning and the potential for growth in
infrastructure and construction sectors in India is enormous. In the roads
sector, under the North-South and East-West Corridors (ISIS-EW) or NHDP Phase II,
only about 16% of the total road length of 7,274 km, had been fouror- six laned
by 30 November 2005. There is also NHDP Phase III, earlier known as the Pradhan
Mantri Bharat Jodo Prayojana (PMBJP) which involves fourlaning about 10,000 km
of those stretches of national highways that connect to state capitals. In the
first phase, (NHDP Phase-IIIA), 4,000 km is being taken up. As of September
2005, 13 packages covering 811 km had been awarded of which one project is
nearing completion. The targeted date for completion of NHDP Phase-IIIA is
December 2009.
For the remaining
6,000 km NHDP-III B the Detailed Project Report (DPR) has been approved though
approval is yet to be granted on 4-6 laning of these 6,000 km.
In the power
sector, on an average, India faces a shortfall of over 7% of energy
requirements and over 11% of peak demand annually. In fact, in the 10- month
period between April 2005 and January 2006, India faced a shortfall of 8.3% of
energy requirements and 13.3% of peak demand. The policy directive - 'Mission
2012: Power on Demand' envisages power for all villages (by the year 2007} and
all households (2012). This requires an additional 100,000 MW capacity - an
extra 41,000 MW in the Tenth Plan (2002-2007) period and the remaining 59,000
MW in the Eleventh Plan (2007- 2011) along with the requisite balancing
investments needed for transmission and distribution. It is estimated that
private sector investments of about Rs.181 billion with an aggregate capacity
of 5,000 MW have achieved financial closure. Another 10 projects with a total
capacity of 11,432 MW involving an investment of Rs.400 billion, are under
consideration.
The Government of
India has also taken many initiatives to raise and channel investments in
infrastructure. In particular, the Government has set-up a Special Purpose
Vehicle (SPV) to tap domestic and foreign savings for investments in
infrastructure.
It is also
providing Viability gap' funding to assist those infrastructure projects that
are socially and nationally desirable, but may not generate the requisite rate
of return on pure financial calculus.
To sum-up,
investments in infrastructure in India which had been long neglected, have just
started to pick up. The requirements are massive and.
However, given the increased
focus on public sector spending in this area and a framework for operational
zing, suitable public-private partnerships (PPP), investments in infrastructure
and construction
sectors, are
expected to remain buoyant.
Having said that,
it is also important to recognize that profit margins continue to be under
pressure in this industry. Given the current and potential demand growth, there
has been a rapid increase in the number of players in this business. This
intense competition has resulted in lower margins. In addition, the bulk of the
projects in infrastructure is coming from sectors such as roads and pipelines,
which typically are low value-added and low margin businesses.
Recognizing these
market pressures, SUBJECT has formulated a two-pronged strategy. First, is to
focus on increasing the quantum of profits through faster growth. Second, is to
focus on return on investments by bringing about greater construction
efficiencies and extra-ordinary income) increased by 17.1 per cent from Rs.1614
millions in 2004-05 to Rs.1890 millions in 2005-06
• Profit after tax
(PAT) increased by 68.6 per cent from Rs.740 millions in 2004-05 to Rs. 1248
millions in 2005-06. However this includes extra ordinary income from transfer
of development rights
• Return on net
worth (RONW without GDR) decreased from 33.3 per cent in 2004-05 to a still
healthy level of 27.3 per cent in 2005-06
• Earnings Per
Share (EPS) increased from Rs.3.7 in 2004-05 to Rs.5.4 in 2005-06
During the year
2005-06, Company after studying various options decided to look at aggressively
tapping growth sectors like realty development. The strong economic growth of
the country has predictably augured well for the Indian real estate market.
Such robust growth has opened many business opportunities in real estate
development segment and, particularly, in the development of townships.
To capitalise on
these opportunities, Subject through its wholly-owned subsidiary, Hincon Realty
Limited. (HRL), plans to foray into construction of large integrated townships
targeting middle and upper-middle class income households. As a first step,
Subject has transferred development rights to Hincon Realty for a portion of
its land in Vikhroli (West), Mumbai.
This has remained
their strategy for the year under review and the financial performance speaks
for itself.
• Revenue from
operations increased by 28.7 per cent from Rs.15765 millions in 2004-05 to Rs.
20282 millions in 2005-06
• Operating profit
(PBDIT excluding profits from JVs The Company is currently exploring various
options
for developing this
land.
Subject has also
transferred its entire stake in Lavasa Corporation Limited to Hincon Realty.
Lavasa Corporation Limited is currently developing a 10,000 acre integrated
township in Warasgaon, situated between the cities of Pune and Mumbai.
Operations
The turnover of the
company at Rs. 20281.500 millions has shown an increase of 28.65 % as compared
to Rs.15765.400 millions in the previous year. The profit before tax is Rs.
1382.600 Millions (including exceptional item) as compared to Rs.
750.100 millions for the previous year.
The Directors are
pleased to inform that during the year under report, the company has secured
the following contracts.
• Chamera Hydroelectric
Project, Stage-Ill, Lot-1, Himachal Pradesh-Rs.5048.700 millions
• Uri-ll H.E
Project (Uri-ll: Lot -1), J&K Rs.574.99 millions Teesta low Dam HEP Stage
IV, 160 MW, Lot 1,
West Bengal -
Rs.3959.000 millions
• Sawalkote
Hydroelectric Project, J&K Rs. 43125.000 millions
• Lucknow
Muzaffarpur National Highway Project, Package LMNHP-EW II (WB)-1-Rs. 1980.700
millions
• Lucknow
Muzaffarpur National Highway Project, Package LMNHP-EW II (WB)-2-Rs.2123.300
millions
• Lucknow
Muzaffarpur National Highway Project, Package LMNHP-EW II (WB)-3-Rs.2499.500
millions
• Lucknow
Muzaffarpur National Highway Project, Package LMNHP-EW II (WB)-4-Rs.2552.100
millions
• Mughal Road from
Bafliaz (Poonch) to Shopian (Pulwama) in J&K -Rs.2144.000 millions
• East-West Corridor
Project- Package-EW-ll(RJ-7) Rajasthan-Rs.3759.800 millions. Project is to be
executed in joint venture with Continental Engineering Corporation Taiwan. Four
laning of NH-54. Package EW-II (AS-23), Assam-Rs.3172.000 millions
• Pir Panjal Tunnel
(Zone-VA) on Laole-Qazigund section of Udhampur-Srinagar-Baramulla New BG
Railway Line Project in J&K-RS.2183.500 millions
• Pir Panjal Tunnel
(Zone-VB) on Laole-Qazigund section of Udhampur-Srinagar-Baramulla New BG
Railway Line Project in J&K-Rs. 1730.100 millions
• Kalol Mehsana Gas
Pipeline Project, Gujarat-Rs. 549.700 millions. Project is to be exectutre in
joint venture with Nova Joint Stock Co. Russia The total balance value of works
on hand as on March 31, 2006 is Rs. 96720 millions, including company's share
in integrated joint venture projects.
Decisions are
awaited from various clients for tenders submitted by the company for five
packages amounting to over Rs. 22750 millions. Tenders for various packages for
23 projects worth about Rs. 122460 millions are expected to be submitted in the
near future. The company has also submitted prequalification bids for 11
projects worth over Rs. 65720 millions, which are currently under evaluation.
Pre-qualification
bids for five projects worth over Rs. 55000 millions are expected to be
submitted in the near future.
The company is
confident of securing a sizable share of these new projects.
Real Estate
Business
The strong economic
growth of the country has predictably augured well for the Indian real-estate
market. Such robust growth has opened many business opportunities in real
estate development segment and, particularly, in development of townships.
To capitalise on
these opportunities, the company through its wholly-owned subsidiary, Hincon
Realty Limited., plans to foray into construction of large integrated townships
targeting middle and upper-middle class income households. As a first step, the
company has entered into a development rights agreement with Hincon Realty
Limited., for a portion of its land in Vikhroli (West), Mumbai. The company is
currently exploring various options for developing this land.
Hincon Realty
Limited., as on date holds 60.47% equity stake in Lavasa Corporation Limited., which
is currently developing a 10,000 acre integrated township in Warasgaon,under
the Government of Maharashtra Hill Station, Regulation 1 of the Special
Regulations for Develpoment of Resorts/ Holiday Homes/Townships in Hill Station
Type Areas dated November 26,1996. Going forward, realty development will be a
key focus area for the company through its subsidiary Hincon Realty Limited.
Sub-division of
Equity Shares
At the
Extraordinary General Meeting held on October 28, 2005, the members passed a
resolution thereby subdividing each equity share of Rs.10/- in the capital of
the Company into ten equity shares of Re.1/- each. The equity shares of face
value of Rs. 10/- each are no longer tradable on the stock Exchanges.
International
Offering of Securities linked to Equity Shares
At the
Extraordinary General Meeting of the Company held on February 8, 2006 and March
10, 2006, the
members had
approved the issue and allotment of various securities linked to equity shares
of the Company in the international capital market for an amount not exceeding
US$150 million and US$100 million respectively, thereby aggregating to US$250
million in the aggregate.
In terms of these
resolutions, the Company made a combined international offering of Global
Depository Shares (GDSs) and Foreign Currency Convertible Bonds (FCCBs) for an
aggregate amount of US$200 million.
The FCCBs and the
equity shares underlying the GDSs were allotted by the Company on March 29,
2006.
As a consequence,
the Company's paid-up capital stands increased from Rs.229.300 Millions to
Rs.256.300 Millions. The share premium account of the Company stands increased
from Rs. 1435.900 Millions to Rs. 5733.900 Millions.
Considering a
situation where the Bondholders exercise their option for conversion of all the
outstanding FCCBs, the equity capital would increase by a further Rs.18.000
Millions. In the given circumstance, the share premium account of the Company
would also stand increased by Rs. 4440 Millions.
Management
System:
The Company has
established, implemented and maintained an Integrated Management System
comprising of three International Standards ISO 9001:2000, ISO 14001:2004 and
OHSAS 18001:1999. First surveillance audit of HCC IMS after the recertification
audit has been conducted by M/S RWTUV and successfully completed during January
2006.
Leadership,
commitment and active involvement of the management are vivid for developing
and maintaining the integrated management system to achieve the benefits for
interested parties. The management provides evidence of its commitment for
establishing the management system and continually improving its effectiveness
by :
• Determining the
needs and expectations of all interested parties,
• Establishing
policies, objectives, core values, ethics, strategic goals and targets by
translating the needs and expectations of interested parties, Establishing a
framework of systems and processes to achieve the established policies and
objectives, and targets
• Defining the
responsibilities, authorities and communicating the same throughout the
organization,
• Providing
resources, and
• Periodic review
of established objectives, systems and processes for its effectiveness.
The approach to develop
and implement an effective management system is intended to become customers'
most preferred choice by attaining excellence in quality and timely completed
value added projects. The System also aims to continually innovate, develop and
adopt state of- the-art technology in methods and materials to enhance
productivity and cost effectiveness. One of the prime objectives of the system
is to build safety culture aimed at continually reducing the frequency severity
rate towards achieving zero accident and to identify and mitigate all the
environmental impacts arising from their activities and comply with applicable
environmental norms.
Subsidiary
Companies
Hincon Realty
Limited, a new wholly owned subsidiary was incorporated on June 15, 2005 for
undertaking real estate business.
HCC Infotech
Limited has made an application to the Register of Companies, under Section 560
of the Companies Act, 1956 to strike off its name from the Register of
Companies.
Subsequent to close
of the financial year ending March 31, 2006, Hincon Realty Limited, the wholly
owned subsidiary of the Company, has increased its equity holding in Lavasa
Corporation Limited from 49.98% to 60.47%, thereby making Lavasa Corporation
Limited its subsidiary as well as the subsidiary of the Company.
Fixed Assets :
v
Freehold Land
v
At Book Value
v
Buildings
& Sheds
v
Plant &
Machinery
v
Heavy Vehicles
v
Light
Vechicles
v
Furniture and
Office
v
Equipments
v
Computers
As per website
Subject
has been building large and complex structures for the last 80 years. Known for
taking giant strides in technology and innovation, they are now recognized as a
spearheading force in engineering construction, both in India and the rest of
the world.
They are one of the largest private sector construction companies in India and
specialize in pioneering large-scale civil constructions and developing new age
construction technologies.
Subject has been entrusted with the construction of high value projects across
segments like transportation, power, marine projects, oil and gas pipeline
constructions, irrigation and water supply, utilities and urban infrastructure.
They are the first construction company in India to be certified for ISO 9001,
ISO 14001 and OHSAS 18001 for its Quality, Environmental and Occupational
Health & Safety Management System.
The future is lined with ambitious projects across the country. Project
assignments are being secured across diverse sectors like transportation,
nuclear and hydro power generation, water supply and irrigation.
The order book of SUBJECT has grown at a CAGR of 20% since 2002 and currently
stands at over Rs 9692 millionss, which is almost five times its FY 2005-06
turnover.
Subject's current Project Portfolio consists of 6 Hydel Project contracts, 4
Nuclear Project contracts, 20 Transportation Project contractsand 4 Water
Supply and Irrigation Project contracts amongst many others.
Press Releases
Hindustan Construction Company awarded two Hydroelectric projects jointly valued at Rs 10800 millions
Mumbai, September
23, 2005 : Hindustan Construction Company Limited (HCC), India’s foremost
infrastructure building company, today announced that it has been awarded two
Hydroelectric projects by the National Hydroelectric Power Corporation Limited.
The projects are the Uri –II Hydroelectric Project in Jammu & Kashmir and
the Chamera Hydroelectric Project (Stage III) in Himachal Pradesh.
The Uri-II hydroelectric scheme is located in Jammu and Kashmir. The project awarded to HCC comprises of the Dam, Underground Power House (240 MW), Head Race Tunnel, Tail Race Tunnel, Diversion Tunnel, Surge Shaft and Pressure Shaft and is valued at Rs 5749.900 millions. The completion period is 48 months.
The Chamera Hydroelectric Project (Stage
III) is located in the Chamba district of Himachal Pradesh on the banks of the
river Ravi. The project comprises of the Dam, Underground Power Houses (3 units
of 77 MW each), Diversion Tunnel, Intake Tunnels, Underground Desilting
Chambers, Head Race Tunnel, Surge Shaft, Pressure Shaft, and Tail Race Tunnel.
The project is valued at Rs 5048.700 millions and has a completion period of 52
months. Incidentally, HCC has also built the 540 MW Chamera Hydel Power Project
(one of the earlier stages) in the Himalayan region in the year 1994.
About Hindustan Construction Company
Limited.
HCC is a leader in the Heavy Engineering and Civil Construction business. With several landmark projects to its credit, HCC today has a significant leadership presence in widely divergent areas, including power, roads and bridges, dams and barrages, marine works, buildings and environmental projects. In addition to India, the company has also undertaken several projects in Tanzania, Sri Lanka, Iraq, Myanmar, Qatar, Bhutan, Saudi Arabia and other countries. HCC has entered into a number of technical collaborations as well as joint ventures with overseas companies, bringing the latest technical know-how into the execution of its projects, both in India and overseas.
Hindustan Construction Company Limited awarded Rs 2183.500 millions contract for Pir Panjal Railway Tunnel, Jammu & Kashmir (Zone VA)
Mumbai, August 11,
2005 : Hindustan Construction Company Limited (HCC), India’s foremost
infrastructure building company, today announced that it has been awarded the
contract for construction of one section of the Pir Panjal Tunnel on the
Laole-Qazigund Section of Udhampur-Srinagar-Baramulla New BG Railway line
project. The section of the tunnel project awarded to HCC (Zone VA), is valued
at Rs 2183.500 millions and has been awarded by IRCON International Limited.
The Pir Panjal Tunnel forms part of an ambitious 120 km long rail project across the Pir Panjal range. The railway line will connect the Kashmir valley with the rest of the country.
According to Mr. KG Tendulkar, Executive Director (Operations), Hindustan Construction, “The construction of the railway tunnel through the Pir Panjal range forms an integral part of the new railway line between Udhampur and Baramulla. The railway line is expected to significantly boost trade and industry in the region and it is a matter of pride for us to be involved in a significant new infrastructure initiative of this nature.”
About Hindustan Construction Company Limited.
HCC is one of the largest private sector construction companies in India and the foremost in infrastructure building. With several landmark projects to its credit, HCC today has a significant leadership presence in widely divergent areas, including power, roads and bridges, dams and barrages, marine works, buildings and environmental projects. In addition to India, the company has also undertaken several projects in Tanzania, Sri Lanka, Iraq, Myanmar, Qatar, Bhutan, Saudi Arabia and other countries. HCC has entered into a number of technical collaborations as well as joint ventures with overseas companies, bringing the latest technical know-how into the execution of its projects, both in India and overseas.
Hindustan Construction Company Limited awarded Rs 1730 millions contract for Pir Panjal Railway Tunnel, Jammu & Kashmir (Zone VB)
Mumbai, August 30, 2005 : Hindustan Construction Company Limited (HCC), India’s foremost infrastructure building company, today announced that it has been awarded the contract for construction of a section of the Pir Panjal Tunnel on the Laole-Qazigund Section of Udhampur-Srinagar-Baramulla New BG Railway line project. The section of the tunnel project awarded to HCC (Zone VB) is valued at Rs 1730 millions and has been awarded by IRCON International Limited. The company had also received the Zone VA package of the Pir Panjal tunnel valued at Rs 2183.500 millions earlier this month.
The Pir Panjal Tunnel forms part of an ambitious 120 km long rail project across the Pir Panjal range. The railway line will connect the Kashmir valley with the rest of the country.
According to Mr. KG Tendulkar, Executive Director (Operations), Hindustan Construction, “Having bagged both Zone VA and VB of the Pir Panjal Tunnel effectively means that HCC will be constructing the entire 10.96 km length of the Pir Panjal Tunnel. In addition to the Tunnel, HCC had also earlier bagged the order for construction of part of the railway line and they are proud to be playing a significant role in this railway project which will have a positive impact on the trade and economy of the region.”
About Hindustan Construction Company Limited.
HCC is one of the largest private sector construction companies in India and the foremost in infrastructure building. With several landmark projects to its credit, HCC today has a significant leadership presence in widely divergent areas, including power, roads and bridges, dams and barrages, marine works, buildings and environmental projects. In addition to India, the company has also undertaken several projects in Tanzania, Sri Lanka, Iraq, Myanmar, Qatar, Bhutan, Saudi Arabia and other countries. HCC has entered into a number of technical collaborations as well as joint ventures with overseas companies, bringing the latest technical know-how into the execution of its projects, both in India and overseas.
Hindustan Construction Company Limited awarded Rs 214.40 millions contract for Mughal Road, Jammu & Kashmir
Mumbai, August 18, 2005 : Hindustan Construction Company Limited (HCC), India’s foremost infrastructure building company, today announced that it has been awarded the contract for construction of Mughal Road (89 kms) from Bafliaz (Poonch) to Shopian (Pulwama) in Jammu & Kashmir. The client is Government of Jammu & Kashmir and the value of the contract is Rs 2144.000 millions.
The Mughal Road highway is of great historical importance across the Pir Panjal range and serves as an alternate highway between Srinagar & Jammu. The construction of Mughal Road forms part of the state plan with support from Government of India. It is a two lane flexible pavement, Jammu Division (from Bufliaz to Pir ki Gali - 46 Km) and Kashmir Division (from Shopian to Pir Ki Gali - 43 Km)
About Hindustan Construction Company Limited
HCC is one of the largest private sector construction companies in India and
the foremost in infrastructure building. With several landmark projects to its
credit, HCC today has a significant leadership presence in widely divergent
areas, including power, roads and bridges, dams and barrages, marine works,
buildings and environmental projects. In addition to India, the company has
also undertaken several projects in Tanzania, Sri Lanka, Iraq, Myanmar, Qatar,
Bhutan, Saudi Arabia and other countries. HCC has entered into a number of
technical collaborations as well as joint ventures with overseas companies,
bringing the latest technical know-how into the execution of its projects, both
in India and overseas.
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.42.30 |
|
UK Pound |
1 |
Rs.84.11 |
|
Euro |
1 |
Rs.57.33 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
NO |
|
TOTAL |
|
53 |
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 |
|