MIRA
INFORM REPORT
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Report Date : |
28.06.2007 |
IDENTIFICATION DETAILS
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Name : |
STERLING GELATIN
– DIVISION OF STERLING BIOTECH LIMITED |
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Registered Office : |
43 |
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Country : |
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Financials (as on) : |
31.12.2006 |
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Date of Incorporation : |
23.03.1985 |
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Com. Reg. No.: |
11-35738 |
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CIN No.: [Company
Identification No.] |
L51900MH1985PLC035738 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMS16116C |
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PAN No.: [Permanent
Account No.] |
AABCS1946H |
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Legal Form : |
Public Limited Liability Company. Company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Subject is engaged in the business as Manufacturers and
Dealers of Gelatine. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 40000000 |
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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 and reputed company. Available information indicates high financial responsibility of the company. Directors are reported as experienced, respectable and resourceful businessmen. Their trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
43 |
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Tel. No.: |
91-22-56306732/56306733 |
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Fax No.: |
91-22-22041954 |
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Area : |
600 Sq. mtrs.
(Large) |
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Administrative
Office : |
Sandesara Estate, |
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Tel. No.: |
91-261-2321720/2321730 |
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Fax No.: |
91-261-2335257 |
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Factory 1 : |
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Factory 2 : |
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Factory 3 : |
Sandyanalla, Sholur Gram Panchayat, Ottacamund, Dist. The Nitgirles, Tamilnadu |
DIRECTORS
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Name : |
Mr. Nitin J. Sandesara |
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Designation : |
Chairman and Managing Director |
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Name : |
Mr. C. J. Sandesara |
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Designation : |
Director |
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Address : |
43, |
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Name : |
Mr. Vilas D. Joshi |
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Designation : |
Director |
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Name : |
Mr. P. B. Mehta |
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Designation : |
Director |
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Name : |
Mr. N. B. Patel |
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Designation : |
Director |
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Name : |
Mr. R. B. Dixit |
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Designation : |
Director |
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Name : |
Mr. Nitin J. Sandesara |
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Designation : |
Chairman and Managing Director |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Indian Promoters |
70221980 |
31.58 |
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FIs/MFs/ Banks |
19100 |
0.01 |
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Indian Companies |
71662744 |
32.23 |
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Resident Individuals |
39875478 |
17.93 |
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Clearing Members |
1073668 |
0.48 |
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NRIs/ OCBs/ FIIs/ FCs |
11999640 |
5.39 |
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Underlying shares out of GDR’s |
27495339 |
12.37 |
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Total |
222347949 |
100.00 |
KEY EXECUTIVES
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Name : |
Mr Kirtidev J
Khatri |
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Designation : |
Company Secretary |
BUSINESS DETAILS
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Line of Business : |
Subject is engaged in the business as Manufacturers and
Dealers of Gelatine. |
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Products : |
Gelitna |
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Imports : |
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Products : |
Raw materials |
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Countries : |
Europe and |
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Terms : |
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Purchasing : |
L/C |
GENERAL INFORMATION
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No. of Employees : |
250 |
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Bankers : |
v
State Bank of v Standard Chartered Bank, Mumbai v
ICICI Bank, Valsad, |
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Facilities : |
Secured Loans (As
on 31.12.2006) : (Rs.
In millions)
Unsecured Loans
:
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
H. S. Hathi & Company Chartered Accountants |
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Associates/Subsidiaries : |
Sandesara Group |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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50,00,00,000 |
Equity Share |
Rs 1/ each |
Rs 500.000 Millions |
Issued Capital :
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No. of Shares |
Type |
Value |
Amount |
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228077009 |
Equity Shares |
Rs 1/- each |
Rs 228.077 Millions |
Subscribed Capital :
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No. of Shares |
Type |
Value |
Amount |
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226071949 |
Equity Shares |
Rs 1/- each |
Rs 226.072 Millions |
Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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222347949 |
Equity Shares |
Rs 1/- each |
Rs 222.348 Millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.12.2006 |
31.12.2005 |
31.12.2004 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
222.348 |
221.249 |
171.300 |
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2] Share Application Money |
0.000 |
450.000 |
0.000 |
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3] Reserves & Surplus |
9904.880 |
8612.251 |
3785.300 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
10127.228 |
9283.500 |
3956.600 |
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LOAN FUNDS |
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1] Secured Loans |
8062.114 |
8991.988 |
4006.600 |
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2] Unsecured Loans |
8240.250 |
8221.396 |
3132.300 |
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TOTAL BORROWING |
16302.364 |
17213.384 |
7138.900 |
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DEFERRED TAX LIABILITIES |
1083.200 |
798.200 |
0.000 |
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TOTAL |
27512.792 |
27295.084 |
11095.500 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
13163.038 |
7459.014 |
4867.300 |
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Capital work-in-progress |
2060.521 |
5296.183 |
1710.600 |
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INVESTMENT |
50.942 |
124.000 |
0.000 |
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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 |
2613.788
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2458.230
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2162.100 |
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Sundry Debtors |
1419.068
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1296.330
|
1128.600 |
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Cash & Bank Balances |
8167.242
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10651.458
|
2393.500 |
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Other Current Assets |
0.000
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0.000
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0.000 |
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Loans & Advances |
495.052
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303.021
|
189.700 |
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Total Current Assets |
12695.150
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14709.039
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5873.900 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
347.644
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328.628
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1331.100 |
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Provisions |
319.841
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242.784
|
143.100 |
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Total Current Liabilities |
667.485
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571.412
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1474.200 |
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Net Current Assets |
12027.665
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14137.627
|
4399.700 |
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MISCELLANEOUS EXPENSES |
210.626 |
278.260 |
117.900 |
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TOTAL |
27512.792 |
27295.084 |
11095.500 |
PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.12.2006 |
31.12.2005 |
31.12.2004 |
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Sales Turnover |
6058.536 |
4818.269 |
4165.700 |
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Other Income |
177.333 |
222.851 |
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Total Income |
6235.869 |
5041.121 |
4165.700 |
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Profit/(Loss) Before Tax |
1826.035 |
1456.514 |
1138.000 |
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Provision for Taxation |
478.075 |
335.703 |
355.000 |
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Profit/(Loss) After Tax |
1347.960 |
1120.811 |
783.000 |
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Total Earnings |
1932.932 |
1524.826 |
NA |
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Total Imports |
54.474 |
45.110 |
NA |
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Expenditures : |
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Manufacturing Expenses |
1213.636 |
1056.737 |
NA |
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Raw Material Consumed |
2099.760 |
1710.636 |
NA |
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Interest |
411.670 |
363.824 |
NA |
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Depreciation & Amortization |
620.254 |
418.173 |
NA |
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Total Expenditure |
4345.320 |
3549.370 |
NA |
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QUARTERLY RESULTS
|
PARTICULARS |
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31.03.2007 (1st Qtr.) |
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Sales
Turnover |
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1740.300 |
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Other Income |
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|
23.200 |
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Total Income |
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1763.500 |
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Total
Expenditure |
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933.900 |
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Operating
Profit |
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|
829.600 |
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Interest |
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|
105.400 |
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Gross Profit |
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|
724.200 |
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Depreciation |
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|
191.600 |
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Tax |
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|
57.000 |
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Reported PAT |
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|
380.600 |
200703 Quarter 1
Notes
Expenditure Includes (Increase)/Decrease in Stocks Rs
(41.478)million Consumption of Raw Material Rs 595.153 million Staff Cost Rs
45.886 million Other expenditure Rs 318.269 million Tax Includes Provision for
Current Tax Rs 56.500 million Deferred Tax Rs 95.000 million Fringe Benefit Tax
Rs 0.587 million EPS is Basic Status of Investor Complaints for the quarter
ended March 31, 2007 Complaints Pending at the beginning of the quarter 11
Complaints Received during the quarter 40 Complaints disposed off during the
quarter 44 Complaints unresolved at the end of the quarter 07 1. The company's
operations fall under single segment hence segment reporting as defined in
Accounting Standard 17 is not applicable. 2. The above financial results were
reviewed by the audit committee and taken on record by the Board of Directors
at its meeting held on April 19, 2007. 3. The Statutory Auditors have carried
out a limited review of the financial results for the quarter ended March 31,
2007. 4. During the quarter, the company has commenced production of CoQ10 at
its manufacturing facilities at Masar, Dist. Baroda,
KEY RATIOS
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PARTICULARS |
|
31.12.2006 |
31.12.2005 |
31.12.2004 |
|
PAT / Total
Income |
(%) |
21.62
|
22.23 |
18.80 |
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Net Profit Margin (PBT/Sales) |
(%) |
29.28
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28.89 |
27.32 |
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Return on Total Assets (PBT/Total Assets} |
(%) |
7.06
|
6.57 |
10.59 |
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Return on Investment (ROI) (PBT/Networth) |
|
0.18
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0.16 |
0.29 |
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Debt Equity Ratio (Total Liability/Networth) |
|
1.67
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1.91 |
2.18 |
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Current Ratio (Current Asset/Current Liability) |
|
19.02
|
25.74 |
3.98 |
LOCAL AGENCY FURTHER INFORMATION
Sterling Biotech Limited.,
formerly known as Sterling Tea & Industries (STIL) is in the business of
tea processing and trading. The company was incorporated in the year 1985. The
company has chalked out a plan to expand its tea producing facilities. The
company diversified into the manufacture of gelatine, a product which is in
short supply worldwide. This will enable the company to further strengthen its
base and carve a niche in the bio-engineering field.
During 1995-96, the company has commenced a new Tea Plant with a installed
capacity of 3000 TPA. In 2001-02 the second pharma grade gelatin manufacturing
facility was commissioned, doubling the capacity at Vadodara and the Vadodara
facility is an Ultra modern world class gelatin manufacturing facility.
The company has
completed its acquisition of the Gelatine Division of Rallis India Limited, a
TATA Enterprise, at Udhagmandalam in all cash deal for Rs.470 Million and this
had a capacity of 2200 MTPA with effect from 1st April 2004. As a result of,
this acquisition the total installed capacity of Gelatine has increased to
10400 TPA.
During March 2005, the company has
sub-divided its equity share face value from Rs.2/- per share to Re.1/- per
share.
Operations
During the year under review, sales were at Rs. 6058.500 millions
compared to Rs. 4818.200 millions during the previous year, an increase by 25.74%.
Total income reached Rs.6235.900 millions as against Rs. 5041.100 millions growth
of 23.70%. Gross profit (i.e. EBIDTA) increased to Rs.2922.400 millions as
compared to Rs. 2273.700 millions in the previous year, an increase by 28.53%.
During the year under review, net profit increased to Rs. 1347.900 millions
as compared to Rs. 1120.800 millions in the previous year, an increase of 20.26
%. The growth in sales and profitability for the year was attributable to
various factors such as- higher realizations, optimum utilization of capacities
and resources, economies of scale and strengthening the Company's position in
the operating market.
The Company, continues to be a significant player in the international
gelatin market through successive expansion of capacities and acquisitions
resulting in Y-o-Y growth in capacities. In addition to increased turnover and
profitability,
Acquisition
As informed in the last Director's Report,
Subsidiary
companies
During the year under review, the Company formed a 100% subsidiary
company, China Gelatin Limited, under the laws of Hong Kong Special
Administrative Region of the People's Republic of
pursuant to the provisions of Section 212 of the Companies Act, 1956.
Accolades
The very high standards of quality maintained by
Industrial
Perspective
Gelatin
Gelatin is sourced from the natural protein of birds, fish and animals.
Commercially, it is produced from pigs, cattle and fish. This specialized product
is manufactured to exacting specifications and used In a
wide variety of applications. The principal end-users Of gelatin are in the food and nutraceutlcal, pharmaceutical,
and photographic Industries,, with uses in technical applications
Gelatin
Applications
The gelatin industry at present consists of three large players who
account for more than two-thirds of the global market share and a small group
of about 25 to 30 companies who share the balance of the world market. The
global gelatin market has achieved a CAGR of 2.94 percent over the past five
years, the total world market for gelatin In 2006 to be around 315,000 tons,
GWE has estimated that the world gelatin market will grow at 2 to 3 percent per
annum. The largest market for gefatin is the food and food processing Industry,
The consumption of gelatine for this industry (edible gelatine) is estimated to
constitute 61 percent (about 192,000 mtpa) of the total market. This market
also Includes the outraceutical segment, which Is the market for health supplements,
vitamin capsules and tablets. The second largest market for gelatine Is the
pharmaceutical industry with an estimated consumption of around 21;, percent (about
96,OfiQ mtpaj of the total market. In addition t».aie "food arid
pharmaceutical industries, > gelatin ts also used; extensively in the photography
industry, A small percent of the global gelatin production also 'finds
technical applications, C6Q10 ' Coenzyme Q10 (CoQIO) is a fat soluble vitamin substance
which is produced naturally in the human body. It serves as a coenzyme for
several of the key enzymatic steps in the production of energy and has anttoxldant
effects. As a dietary supplement, CoQIO has been shown to be effective in
improving memory, boosting immunity and energy as well as enhancing exercise
performance.
The Gelatin Manufacturers of Europe (GME) estimated The market for CoQIO
as a dietary supplement is growing In the United States,
Q10. It has manufacturing capacities at Vadodara in
Gelatin Sterling Biotech is the leading manufacturer of gelatin In
India. Its principal product, pharmaceutical grade gelatin, has a wide range of
applications such as capsules, tablets, health supplements, surgical aids, suppositories,
as a blood plasma expander and in the treatment of arthritis, Weeding disorders
and cartilage related diseases.
CoQlO
Company has already started commercial production for CoQlO at its Masar
Facility in March 2007.
Key Strengths
High quality
production techniques and products
Lower production
costs
The Company operates in a low cost environment and will continue to
exploit its lower production costs vis-a-vis its global peer group. The
location of the Company's facilities in Vadodara enables it to take advantage
of the regular and low cost supply of raw materials.
Additionally, Sterling sells DCP (Oicalcium Phosphate),a by-product of
the gelatin manufacturing process, to poultry feed manufacturers in India, who
use It In poultry feed to protect poultry against rickets. DCP may also be used
in products such as talcum powder, fertilizers and toothpaste.
At present, Sterling Biotech is Asia's largest pharmaceutical grade
gelatin producer operating (n a premium niche market with relatively no
substitute, it has a leadership position in India and since its entry into the
gelatin industry, the Company has consolidated its position as a major producer
of pharmaceutical grade gelatin by investing in capacity and quality standards.
Sterling Biotech has achieved a significant presence and a rapidly
growing market position by developing high quality production techniques and
products, leveraging its low production costs relative to producers in the
North America, Europe and
Facilities
The Company's manufacturing facilities are situated in the Western
Indian state of
Quality
Certifications
In accordance with the Company's policy to achieve and maintain the
highest standards of quality the Company has the following quality certifications.
Kosher Certifications - this certifies that the Jewish population can
consume
Ifanka Certification - this is'required for Halal certification, which
certifies that the gelatin is manufactured using Halal-defined processes and
can be used by the Muslim population.
HACCP (Hazardous Analysis and Critical Control Point) Certification -
certifies the manufacturing process with the highest and most consistent
quality and safety of product.
ISO 9001 - this certifies that the production process is in accordance
with standards laid down by the International Standards Organizations.
ISO 14001 - this certifies that the environment management system
conforms to the Environmental Management System Standard.
EDQM (European Directorate for the Quality of Medicine) - this is a
certification issued by the European Directorate for the Quality of Medicine
that Is essential for selling pharmaceutical gelatin in the European Union, Financial
Review During the year under review, Sterling witnessed a 25.74 percent
increase in sales, primarily driven by the expansion of capacities and
acquisitions, The Company, over the past year, increased its production
capacity 28.13 percent to 16,400 mtpa compared to the previous year. The
increase in capacity propelled
The Company has its facilities approved as an Export Oriented Unit
(EOU). Additionally,
Financial
Performance
Income
The total income of
Expenditure
The total expenditure of
Profit before Taxes
December, 2005 to Rs. 1890.500 millions for the year ended 31 December
2006.
Net Profit
Opportunities
The various opportunities the Company plans to leverage are:
Increased demand for pharmaceutical grade gelatin driven by growth in
global and local markets;
-.Customer requirements for quality gelatin produced according to
certain specifications;
- Surplus demand in the nutraceutical industry, especially for Coenzyme
Q10, a fat soluble vitamin substance that is produced naturally in the human body.
Fixed Assets :
v
Land & Development
v
Building
v
Plant & Machinery
v
Office Equipments & Furniture
v
Vehicles
profile
In 1995, Sterling Gelatin and CRODA
Colloids, a world leader in Gelatin technology, entered into collaboration
agreement to set up brand new Gelatin manufacturing facility in
Subject is a major operating division of the diversified Sandesara Group of companies. Its core business is the manufacture of gelatin for pharmaceutical and edible uses where it has established a worldwide reputation for supplying high quality products against very demanding specifications.
Note :
v
The Company has acquired manufacturing
facilities of Torrent Gujarat Biotech Limited at Masar, Dist. Baroda,
v Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31st December, 2006 is Rs. 1914.968 Millions [Previous year RS. 616.087 Millions].
v Contingent liabilities not provided for on account of letters of credit as on 31st December, 2006 are of Rs.108.721 Millions [Previous year Rs. 227.604 Millions].
v
During the year under review, the Company formed
a 100% subsidiary company, China Gelatin Limited, under the Laws of Hong Kong
Special Administrative Region of the People's Republic of
China Gelatin Limited also formed a 100% subsidiary company,
Hebei Gai Le Ting Gelatin Co. Ltd. in
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
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.40.75 |
|
|
1 |
Rs.81.63 |
|
Euro |
1 |
Rs.54.79 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
9 |
|
--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 |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
64 |
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 |
|