MIRA
INFORM REPORT
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Report Date : |
27.07.2007 |
IDENTIFICATION DETAILS
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Name : |
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Registered Office : |
3rd Floor Coromandel House, |
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Country : |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
17.12.1981 |
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Com. Reg. No.: |
01-3325 |
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CIN No.: [Company
Identification No.] |
L24239AP1981PLC003325 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
HYDG01826G |
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PAN No.: [Permanent
Account No.] |
AAACG7479G |
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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 : |
Manufacturing and Marketing of Di-Ammonium Phosphate (DAP) and Pesticides. |
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 5300000 |
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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 having satisfactory track. Available information indicates high financial responsibility of the company. Trade relations are fair. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in medium to long run. |
LOCATIONS
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Registered Office : |
3rd Floor Coromandel House, |
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Tel. No.: |
91-40-27701871/27702522/27704219 |
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Mobile No.: |
91-9848193450/9848350366 |
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Fax No.: |
91-40-27701541 |
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Telex : |
0425-6335 |
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E-Mail : |
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Website : |
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Factory 1 : |
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Tel. No.: |
91-884-2372341/2372342/2372343/2372344/2372345/ 2379046 |
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Fax No.: |
91-884-2361069 |
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Telex : |
0473-272 |
DIRECTORS
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Name : |
Mr. A. Vellayan |
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Designation : |
Chairman |
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Name : |
Mr. K. Anil Nair |
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Designation : |
President and
Whole time Director |
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Qualification : |
B. Tech (Chem.),
MBA Business Administration |
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Experience : |
31 years |
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Date of Appointment : |
17/09/2003 |
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Name : |
Mr. K. Srinivasa Gowda |
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Designation : |
Director |
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Name : |
Mr. U. S. Awasthi |
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Designation : |
Director |
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Name : |
Mr. Rakesh Kapur |
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Designation : |
Director |
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Name : |
Mr. M. H. Avadhani |
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Designation : |
Director |
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Name : |
Mr. B. V. R. Mohan Reddy |
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Designation : |
Director |
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Name : |
Mr. Partho S Datta |
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Designation : |
Director |
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Name : |
Mr. Santosh Reddy |
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Designation : |
Director |
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Name : |
Mr. Surinder
Kumar Jakhar |
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Designation : |
Director |
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Name : |
Mr. Sheesh Pal
Singh |
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Designation : |
Director |
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Name : |
Mr. V.
Ravichandran |
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Designation : |
Managing Director
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Name : |
Mr. K.
Balasubramanian |
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Designation : |
Director |
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Name : |
Mr. N. Srinivasan |
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Designation : |
Additional
Director |
KEY EXECUTIVES
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Name : |
Mr. P. Varadarajan |
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Designation : |
Company Secretary |
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Name : |
Mr. S. J. Naidu |
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Designation : |
General Manager
(Projects) |
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Name : |
Mr. V. C. Rao |
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Designation : |
General Manager
(Technical) |
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Name : |
Mr. K. V. Nayak |
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Designation : |
General Manager
(Marketing) |
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Name : |
Mr. C. V. N. Sastry |
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Designation : |
Deputy General
Manager (Finance) |
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Name : |
Mr. Govinda Rajan |
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Designation : |
Deputy General
Manager (Commercial & Distribution) |
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Name : |
Mr. U. S. Subba Rao |
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Designation : |
Deputy General
Manager (Maintenance) |
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Name : |
Mr. V. K. Rao |
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Designation : |
Deputy General
Manager (P&A, HR) |
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Name : |
Mr. S. V. Raghavendra |
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Designation : |
Chief Financial
Officer |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 31.03.2007
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Sr. No. |
Names of
Shareholders |
No. of Shares |
Percentage of
Holding |
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(A) |
Promoter’s
Holding |
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1 |
Promoters
(Indian Promoters) |
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Coromandel Fertilizers Limited (CFL) |
14422252 |
45.07 |
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Indian Farmers Fertilizer Co-operative Limited (IFFCO) |
8001000 |
25.00 |
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2 |
Persons acting
in Concert |
- |
- |
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Sub-Total |
22423252 |
70.07 |
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B |
Non-Promoters
Holding |
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3 |
Institutional
Investors |
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a |
Mutual Funds and UTI |
4400 |
0.01 |
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b |
Banks, Financial Institutions, Insurance Companies (Central / State
government Institutions / Non Government Institutions) |
3200 |
0.01 |
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c |
FIIs |
52356 |
0.16 |
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Sub-Total |
59956 |
0.18 |
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4 |
Others |
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a |
Private Corporate Bodies |
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Indian |
1568704 |
4.90 |
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Foreign |
3200000 |
10.00 |
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b |
Indian Public |
4048200 |
12.66 |
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c |
NRIs / OCBs |
699888 |
2.19 |
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Sub-total |
9516792 |
29.75 |
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GRAND TOTAL |
32000000 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and Marketing of Di-Ammonium Phosphate (DAP) and Pesticides. |
PRODUCTION STATUS
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Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
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Nitrogen |
MT |
54000 |
149760 |
141896 |
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Phosphorous Pentoxide |
MT |
138000 |
382720 |
373032 |
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Fertilizers |
MT |
-- |
-- |
888447 |
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Pesticides |
KLs |
1200 |
1200 |
-- |
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DAP @ |
MTs. |
-- |
-- |
615729 |
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Complexes |
MTs. |
-- |
-- |
272718 |
GENERAL INFORMATION
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No. of Employees : |
533 |
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Bankers : |
˜
State Bank of ˜
State Bank of ˜ Andhra Bank, Secunderabad, Andhra Pradesh. ˜ UTI Bank Limited ˜ ICICI Bank Limited |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Deloitte Haskins & Sells Chartered Accountants |
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Associates/Subsidiaries : |
Ø Indian Farmers & Fertilizers Co-operative Limited Ø Krishak Bharati Co-operative Limited (KRIBHCO) Ø Murugappa Group Companies Ø Coromandel Fertilizers Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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100,000,000 |
Equity Shares |
Rs.10.00 each |
Rs.1,000.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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|
32,000,000 |
Equity Shares |
Rs.10.00 each |
Rs.320.000 millions |
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FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
320.000 |
320.000 |
320.000 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
1022.200 |
686.300 |
498.283 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
1342.200 |
1006.300 |
818.283 |
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LOAN FUNDS |
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1] Secured Loans |
3170.600 |
2549.800 |
2164.859 |
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2] Unsecured Loans |
1961.100 |
1952.800 |
279.585 |
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TOTAL BORROWING |
5131.700 |
4502.600 |
2444.444 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
222.354 |
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TOTAL |
6473.900 |
5508.900 |
3485.081 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
995.100 |
823.100 |
844.532 |
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Capital work-in-progress |
6.700 |
26.200 |
13.213 |
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INVESTMENT |
75.400 |
75.400 |
225.375 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
109.659 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
2176.200
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1949.700
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1158.670
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Sundry Debtors |
1255.800
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1277.300
|
1201.171
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Cash & Bank Balances |
34.400
|
54.200
|
48.955
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Other Current Assets |
0.000
|
0.000
|
0.000
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Loans & Advances |
4941.300
|
4227.300
|
2251.709
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Total
Current Assets |
8407.700
|
7508.500 |
4660.505 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
2829.500
|
2832.000
|
2316.671
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Provisions |
181.500
|
92.300
|
51.532
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Total
Current Liabilities |
3011.000
|
2924.300 |
2368.203 |
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Net Current Assets |
5396.700
|
4584.200 |
2292.302 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
6473.900 |
5508.900 |
3485.081 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
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Sales Turnover |
18046.000 |
15239.700 |
12000.500 |
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Other Income |
40.700 |
173.400 |
114.800 |
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Stock Adjustments |
106.100 |
(103.800) |
(563.700) |
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Total Income |
18192.800 |
15309.300 |
11551.600 |
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Profit/(Loss) Before Tax |
743.900 |
420.300 |
259.100 |
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Provision for Taxation |
251.000 |
159.300 |
88.200 |
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Profit/(Loss) After Tax |
492.900 |
261.000 |
170.900 |
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Expenditures : |
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Raw Materials |
15157.500 |
12941.500 |
9606.400 |
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Power and Fuel Cost |
126.700 |
131.000 |
102.600 |
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Other Manufacturing Expenses |
337.000 |
270.600 |
233.400 |
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Employee Cost |
225.900 |
191.900 |
227.700 |
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Selling and Administration Expenses |
1046.500 |
831.300 |
722.600 |
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Miscellaneous Expenses |
129.700 |
259.800 |
156.200 |
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Interest and Financial Charges |
359.100 |
183.100 |
168.600 |
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Depreciation |
66.500 |
79.800 |
75.000 |
|
Total Expenditure |
17448.900 |
14889.000 |
11292.500 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
|
30.06.2007 |
|
Type |
|
|
1st
Quarter |
|
Sales Turnover |
|
|
1729.700 |
|
Other Income |
|
|
8.900 |
|
Total Income |
|
|
1738.600 |
|
Total Expenditure |
|
|
1415.800 |
|
Operating Profit |
|
|
322.800 |
|
Interest |
|
|
103.800 |
|
Gross Profit |
|
|
219.000 |
|
Depreciation |
|
|
18.600 |
|
Tax |
|
|
70.700 |
|
Reported PAT |
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|
129.700 |
200706 Quarter 1 –
Notes: Expenditure Includes (Increase)/ Decrease in Stock in
Trade Rs (3338.398) million Consumption of Raw Materials Rs 4228.834 million Purchase
of Goods for resale Rs 29.048 million Staff Cost Rs 57.017 million Other
Expenditure Rs 439.309 million Tax includes Provision for Current Tax Rs 70.00
million Fringe Benefit Tax Rs 0.650 million EPS is Basic & Diluted Status
of Investor Complaints for the quarter ended June 30, 2007 Complaints Pending
at the beginning of the quarter Nil Complaints Received during the quarter 02
Complaints disposed off during the quarter 02 Complaints unresolved at the end
of the quarter Nil 1. The above financial results are drawn up in accordance
with the accounting policies consistently adopted by the Company. 2. The above
results were reviewed by the Audit Committee and approved by the Board of
Directors at their meeting held on July 20, 2007. 3. The Statutory Auditors of
the Company have carried out a ¦Limited Review¦ of the above unaudited
financial results. 4. Net sales and operating revenue for the current quarter
ended June 30, 2007 include subsidy income for DAP and complex fertilizers
amounting to Rs 237.492 million (Previous Year Rs 75.208 million) relating to
previous year arising on account of announcement of final rates of subsidy by
Government of India. Subsidy income for the current quarter has been recognized
having regard to the existing subsidy scheme and according to the management
estimate of subsidy receivable. 5. The Company is engaged in the business of
manufacturing and trading of phosphatic fertilizers which in the context of
Accounting Standard 17 is considered the only business segment. 6. Fertilizer
industry being seasonal, profit for a quarter may not proportionately reflect
the annual performance of the company. 7. The Company has become a subsidiary
of Coromandel Fertilizers Ltd with effect from April 12, 2007. 8. Figures have
been regrouped / reclassified and recast wherever necessary. V Ravichandran
Managing Director
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
|
4.10
|
3.81 |
3.54 |
|
Long Term Debt Equity Ratio |
|
0.62
|
0.98 |
2.48 |
|
Current Ratio |
|
1.13
|
1.15 |
1.45 |
|
TURNOVER RATIOS |
|
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|
Fixed Assets |
|
8.98
|
7.72 |
5.96 |
|
Inventory |
|
8.75
|
9.81 |
7.49 |
|
Debtors |
|
14.25
|
12.30 |
8.21 |
|
Interest Cover Ratio |
|
3.07
|
3.30 |
2.12 |
|
Operating Profit Margin |
(%) |
6.48
|
4.48 |
3.61 |
|
Profit Before Interest and Tax Margin |
(%) |
6.11
|
3.96 |
2.98 |
|
Cash Profit Margin |
(%) |
3.10
|
2.24 |
1.66 |
|
Adjusted Net Profit Margin |
(%) |
2.73
|
1.71 |
1.04 |
|
Return on Capital Employed |
(%) |
18.41
|
13.76 |
10.50 |
|
Return on Net Worth
|
(%) |
41.98
|
28.61 |
16.62 |
STOCK PRICES
|
Face Value |
Rs. 10.00 |
|
High |
Rs. 118.40 |
|
Low |
Rs.115.75 |
LOCAL AGENCY FURTHER INFORMATION
The company shifted its office from 50,
HISTORY
Subject promoted jointly
by the Andhra Pradesh State Co-operatives (APSC) and The Indian Farm &
Fertilizer Co-operative (IFFCO) is one of the leading players in the Fertiliser
industry in
The company manufactures di-ammonium phosphate (DAP), Fertiliser, with an
installed capacity of 30 millions tpa. Apart from manufacturing, it also trades
in fertilizers and chemicals. It is now extending its sphere of operations to
designing, construction supervision, project management, etc, in the form of
consultancies. It also manufactures bio-fertilisers for cotton, groundnut and
soyabean. By retrofitting one of the plants with a pipe reactor, the installed capacity
has gone up to 50 millions tpa.
In 1995-96, the company commissioned a 1200 kl capacity formulator unit
to produce ten varieties of pesticides that include endosulfan, monocrotophos,
quinolphos, acephate, etc. The bio-Fertiliser unit has been shifted from its
present location at
In 1997 company took up construction of 2nos of 1500 MTs Horton sphere
for storage of Ammonia along with a pipeline of about 2.5 kms connecting
Kakinada port to DAP plant for direct receipt of ammonia from ships which has
been completed.
The company had commissioned retrofitted production trains during the
year 2001 and due to this the company is expecting a million tonnes of
fertilizer production from 2002 onwards. To reduce the emission of sulfur
dioxide and make its environment friendly, the company has opted for natural
gas and had entered a contract with M/s GAIL for supply of natural gas. This
system will be in effect from July, 2001. For upgrading its Pipe Reactor
Technology in Train A and also providing services for construction of required
balancing facilities, the company had entered into contract with M/s Udhe India
Ltd during 2000 and it has been completed mechanically during June 2001.
The company has constructed 4 sulphuric acid storage tanks each having a
capacity of 2400 MT at a cost of Rs.1.15 millions. The tanks were constructed
at Kakinada.It has shifted the edible oil tanks from Visakhapatnam Storage
Terminal.
The company is the third largest producer of P2 O5 (Nutrient Content) in
Performance:
The Company achieved a net turnover of Rs.18005.400 millions, including
subsidy, for the year 2006-07, representing a growth of 18.46% over the previous
year. The Profit before Tax was Rs.743.900 millions and Profit after Tax was
Rs.492.900 millions. The PBT and PAT increased by 76.97% and 88.85%,
respectively, over the previous year. The EPS was Rs.15.40 as against Rs.8.16
in the previous year.
Operations:
The production during the year was at an all time high at 1.135
millions tonnes, recording a growth of 10.8% over the previous year. Phosphoric
Acid, one of the key raw materials, was in short supply in the international
market. The Company lost approximately 45,000 MTs of potential production due
to non availability of phosphoric acid.
The average output of the plant has increased to 72 MT per hour as
against 65 MT per hour in the previous year, which was achieved through
fine-tuning of equipment and de-bottlenecking in certain areas of
operations.
Projects:
The Company has successfully completed construction of a 10,000 MT
atmospheric ammonia storage tank at the Kakinada Plant, at a cost of Rs.192.500
millions, in March 2007. This would help in improving the ammonia storage
capacity and save procurement cost.
During the year, the Board has approved an expansion project to increase
the capacity of the Kakinada Plant by 0.425 million MT per annum at a cost of
Rs.824.100 millions. At a public hearing held by APPCB, as required under the
Environmental Regulations, the project proposal was well supported by the
participants, including environmentalists. The proposal is pending before the
Ministry of Environment & Forests, Central Government, for approval. The
project is expected to be commissioned by early 2009.
Safety, Health and
Environment:
The
operations at the Plant at
Marketing:
During the year under review, the Company has recorded highest sales of
manufactured products of 1.128 millions tonnes, registering a growth of 10.5%
in volume over the previous year. The market share of Godavari DAP was 9% on all
Company's efforts to educate the farmer on the benefits of increased and
balanced use of P2O5 as nutrient have resulted in reducing the imbalance in use
of phosphatic and nitrogenous fertilisers to some extent. Company's market
share in terms of 'P' nutrient increased from 37% to 45% in Andhra
Pradesh.
With a large number of irrigation projects under implementation in the States
of Andhra Pradesh, Karnataka and Maharashtra, which are the main markets of the
Company, the demand for
The Company's Rural Girl Child Education program for extending financial
assistance to girl children with good academic record, introduced last year in 6
districts of Andhra Pradesh, was extended during the year to other districts
and also to neighboring States of Karnataka and
During the year, the Company has introduced Rythu Puraskaram Awards, under
which farmers who have achieved higher yields in specified crops were given
awards. The Awardees were selected in consultation with the officials of the
Department of Agriculture, based on pre-determined criteria. This has also been
well received by the farming community and the officials of the agriculture
department.
Subsidy:
The recommendations of Prof. Abhijit Sen Committee was proposed to be partially
implemented effective 1st April 2006, whereby the Government was expected to
derive the phosphoric acid price from the price movements of DAP in
international markets. Pending announcement of the final rates of concession
for second, third and fourth quarter of the year, the Company has accounted for
subsidy income on a conservative basis and on the basis of price actually paid
for phosphoric acid imports at US $ 461.25 per MT.
The policy for next year (2007-08) is yet to be
notified.
Further, there have been abnormal delays in release of subsidy even at the
provisional prices notified by the Government, due to inadequate provisioning
in the Union Budget for fertiliser subsidy. This has exerted enormous pressure
on working capital of the Company.
Finance:
During the year, the Company had to resort to increased level of borrowings on
account of inordinate delay and non-release of subsidy by Government. Further,
the interest rates had hardened during the year on account of tight liquidity
because of the measures taken by RBI and Government to contain inflation. As a
result, the interest costs have increased from Rs.183.100 millions to
Rs.359.100 millions
Dividend:
The Directors are pleased to recommend a dividend of 40% (Rs.4/- per equity
share of Rs.10 each) for the year.
Divestment of shareholding by IFFCO:
Coromandel Fertilisers Limited (CFL) has acquired the entire
shareholding of IFFCO in the Company, representing 25% of the equity share
capital of the Company, on 12th April 2007. CFL had also made an Open Offer under
SEBl (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and
acquired shares aggregating to 4.85% of the equity share capital of the
Company, which were tendered by the public under the Open Offer. Consequent to
these acquisitions, the shareholding of CFL in the Company, has increased to
74.92% and the Company has become a subsidiary of CFL with effect from 12th
April 2007.
MANAGEMENT
DISCUSSION AND ANALYSIS
Organization:
Subject incorporated in 1981 has completed 25 years and has been in the
business of manufacturing and distributing DAP and other complex fertilizers
under the
Subject became part of the Murugappa Group in July 2003 after Coromandel
Fertilisers Limited (CFL) acquired the 26% stake of Government of Andhra
Pradesh in the process of disinvestment. IFFCO, the other major shareholder and
co-promoter of the Company divested its shareholding in favour of CFL on 12th
April, 2007. With this GFCL has become a subsidiary of CFL which holds
currently 74.92% of the share capital.
The Company has its manufacturing facility in
The plant is strategically located at
In view of the increasing demand for DAP and complexes in the primary
markets, the Company has embarked upon an expansion project to add 0.425
million MT of additional capacity by June 2009 at a total capital outlay of
Rs.820.000 millions. Work on this project will commence once the Environmental
Clearance from Central Government is received.
Raw material availability is one of the major factors in the successful
operation of a fertiliser company. GFCL has strong raw material supply linkages
through long term supply agreements with major international suppliers.
The Company is one of the low cost producers of DAP and complex fertilizers
using imported phosphoric acid and ammonia and has built in flexibility to
change the product mix with ease - both in terms of production and
marketing.
Economic Situation:
The cumulative effect of
In the past five year plans, agriculture has been given significant
importance and several reforms and revolutions have been planned and
implemented successfully. The process of reforms in the agricultural sector is
definitely to be speeded up and the need of the hour is to have absolute
clarity about the agricultural, farming and food policies. The second green
revolution should be accomplished at the earliest.
Fertiliser Industry in
India's current fertilizer production is 35 million MT
-Nitrogenous, Phosphatic and Potassic combined, while the demand is nearly 43
million MT. Currently, Urea, DAP and MOP imports are in the range of 8 million
MT. A record quantity of 2.8 million MT of DAP was imported during the year by
various agencies. Approximately 5 million MT of urea was also imported during
the year by Indian companies.
During the year, the fertiliser industry showed a positive growth in
consumption of nutrients at 22 million MTs as compared to 20 million MTs in the
previous year. The phosphatic fertilizer industry recorded a growth of 6% and
the complex fertilizers usage has grown at 7% during the year 2006-07. However,
the fertilizer consumption and yield per acre across almost all crops and all
regions is significantly lower in
By the end of the 11th plan period in 2012 the demand for fertilizers in
Currently, no
The stagnant food production has become a point of concern for the
Government and the policy makers and many proposals to encourage balanced
fertiliser utilization, nutrient based subsidy, micronutrients impregnated
complexes etc., have been proposed by the Government.
Indian agriculture and specifically the Indian fertiliser industry has become a
victim of low budgetary provision in the Union Budget for 2006-07 leading to a
severe cash crunch resulting in shutting down of capacities. The budgetary
provisions for subsidy during the year 2006-07 fell short by nearly Rs.120.000
millions and inspite of repeated representations no significant additional
financial allocation was given to the industry. By modest estimates, an amount
of Rs. 120.000 millions is yet to be paid by the Government of India to the
fertilizer industry as at the end of March 2007.The issue of steady raw
material availability for the Indian phosphatic fertiliser producers continues
to trouble the industry. In spite of overseas investments, inadequate
availability of rock phosphate and phosphoric acid curtailed the production of
phosphatic fertilisers in
In addition to raw material price increases, prices of other inputs/ services
like energy, freight, wages, warehousing expenditure, service tax, education
cess etc., have escalated during the year. Government of
Opportunities
and Threats
Budget presentations by Central and State governments, Planning Commission,
Ministry of Finance, Agriculture, Chemicals and Fertilizers and various
authorities are indicating increased thrust and outlay on agriculture. In the
next decade large acreage of land is planned to be brought under cultivation
and several irrigation projects are expected to be taken up and completed. This
opens up good opportunities for fertilizer consumption.
Opportunities for consolidation and take over of sick and ailing units are
possible at viable acquisition price.
The Company has started marketing products like micronutrients and water
solubles, G Sulphur etc., which are not dependent on subsidy and for which
demand is steadily growing.
There are no new threats for the fertilizer industry excepting the risk of
closure/under production due to working capital / profitability related
pressures, inadequate returns on investment. Several players - especially in
South India are in the red due to severe liquidity problems and because of huge
investments made in assets that have turned out to be unproductive due to
various reasons including non availability of raw material at economic prices
or at prices that are adequately remunerative.
Further opportunities are being explored by the Company on a regular basis to
increase the market share especially in the southern markets by increasing
product promotional activities, farmer education and support.
Continuous efforts are being put in to improve production efficiencies
further.
Financial
Performance
The Company has, during the year, achieved highest performance in terms of
production, sales and profits since inception. Total Income increased from
Rs.15256.400 millions in 2005-06 to Rs.1 8035.400 millions in 2006-07 showing
an increase of 18%. Profit before Tax for the year was Rs.743.900 millions as
against Rs.420.300 millions in the previous year showing an increase of
77%.
The collections from customers of the Company against sales improved during the
year 2006-07. However subsidy from Govt. of India was not released effective
July 06 to March 07 which has resulted in steep increase in borrowings and
coupled with hike in interest rates due to liquidity squeeze by RBI to contain
inflation, the interest cost has increased to Rs.359.100 millions as compared
to Rs.183.100 millions in the previous year. Working capital was under severe
strain during the year. However, with efficient planning, the funds and
borrowings have been managed adequately.
The Company has received 'on account' subsidy payments for two months on the
last day of the year, despite which the subsidy receivable from Govt. of India
at the year end was, still an all time high.
The average cost of borrowings of the Company rose to 7.8% during 2006-07 from
6.2% in the previous year due to tight liquidity and hardening of interest
rates.
Various forex hedging tools like Interest rate swaps, coupon swaps, forward
covers and option contracts have been used to minimize the forex fluctuation
risk.
Operational performance
During the year 2006-07, the Company has been able to consolidate its position
further with improved performance. The Company achieved production of 1.135
millions tonnes during the year as against 1.024 millions tonnes during the
previous year - an increase of 10.84%. Sales during 2006-07 increased to 1.128
millions tonnes as compared to 1.020 millions tonnes in the previous year,
representing an increase of 10.59%. The share of NPKs has increased to 0.512
million tonnes from 0.380 million tones during the previous year, representing
an increase of 34.74%.
During the year, the Company marketed 3,229 tonnes of water soluble
fertilisers, micronutrients and G-Sulphur.
The market share in various States have been consolidated and improved.
However, increased emphasis was on sale of NPK fertilizers which have grown
significantly during the year in almost all markets where the Company
operates.
Human
Resources and Industrial Relations
The Company continues to maintain cordial industrial relations. Increased focus
on training and counseling and a collaborative approach with the employees has
yielded good results. The Company has achieved a continuous accident free
record of more than 4 million man-hours.
The Company had 533 permanent employees at the end of the year.
Outlook for 2007-08
Inadequate application of balanced fertilisers to improve the farm productivity
is one of the main causes for the drop in food grain output. Govt. of India is
intending to rectify the situation and is expected to announce a clear policy
on agriculture that would be WTO compatible and at the same time encourage the
domestic industry to attempt fresh and increased investments which would be
essential to increase the domestic production of fertilizers and reduce
dependence on imported fertilizers as well as food grains.
The government is proposing to implement the recommendations of the National
Commission on Farmers. The recommendations, inter alia, emphasizes on
maintaining soil health, implementation of planned expenditure on medium and
small irrigation projects, seed development, balanced fertiliser usage, Bt
seed, rural credit, insurance for farmers, technological information
dissemination, organic farming, exports of agriculture produce, information
technology intensification, micronutrient promotion, integrated nutrient and
pest management, crop loans, forecasting of monsoon etc. During the next plan
period growth in agricultural sector is planned at 4% against the existing
2.5%. Rs.2250000.000 millions has been allocated towards farm credit for the
year 2007-08 as a first step in this direction.
Fertiliser production is expected to increase in the phosphatic sector
and the NPK production is expected to gain importance. However production of
phosphatics will solely depend on the outcome of Government policy on
phosphoric acid pricing. Micronutrient usage and consumption is expected to
increase.
In line with the current situation of the industry, the Company will be
focusing on maximization of production and sale of NPK products in nearby
markets thus reducing logistics cost, simultaneously promoting balanced
fertiliser application leading to higher contribution.
Not to miss the overall growth in other areas like micronutrients,
water-solubles etc., the Company is embarking on in-house manufacture of water
soluble fertilisers. The impetus on widening the distribution channel, delivery
by road and brand building exercises will continue. Cash management through
least cost funding will continue. Training and retaining talent will be an
on-going exercise.
The government has indicated that it would explore the possibility of
delivering the subsidy on fertilizers directly to the farmers instead of the
companies. The fertilizer industry is willing to work along with the Department
of Fertilisers to explore this possibility. The government is planning to
implement a pilot project in one district in each State in 2007-08. Accordingly,
over a period of time, it is expected that the fertilizer prices would be
decontrolled.
Subject is in trade terms with:
˜
A Subba Raju,
˜
Larsen & Toubro,
˜
Elecon Engineering Company Limited,
˜
Indiana Conveyors Limited, Mumbai
˜
Binder & Company,
˜
Radiant Fire Protection Engineers,
Mumbai
˜
Rieco Industries Limited, Pune,
Fixed Assets
- Land
(Freehold)
- Roads
- Buildings:
Non-Factory and Factory
- Temp,
structure
- Railway
siding
- Plant &
Machinery
- Rolling
Stock & Locomotives
- Furniture
& Fixtures
- Office
Equipment
- Air
Conditioners,
- Coolers
& Refrigerators
- Vehicles
- Other
Equipment
Website details attached:
Press Release
The Board
of Directors of Subject today has approved the audited financial results for
the year ended 31st March 2007.
Subject
reported an impressive performance during the year 2006-07. This is the fourth
successive year of profitable growth since its take over from Government of
Andhra Pradesh in July 2003. Continuous efforts of the management on all fronts
have benefited the Company resulting in a significant growth in Profit before
Tax. However, the Company’s operations were affected by a) shortage in phosphoric
acid, b) delay in receipt of subsidy and c) non reimbursement of freight
increases. To achieve a reasonable return in this business the Company has
appealed to the Government to expedite release of subsidy payments and
reimburse the actual increase in freight cost.
The
Company has set new milestones and production volume touched all time high
record 1.135 millions MT (previous year1.024 millions MT). At the time of
takeover of the Company in 2003, production was 0.743 million tones. Higher
production was achieved by de bottlenecking and process changes, without any
major capital expenditure during the last four years. Higher productivity has
been accompanied by significant improvement in efficiencies of raw material and
energy usage.
Sales
turnover increased by 18% to Rs.18000.000 millions (previous year Rs.15200.000
millions), During the year, the Company has entered and strengthened its market
presence in water soluble fertilisers, micronutrients and G-Sulphur which are
complementary to the DAP and complexes manufactured and marketed by the
Company. The Company has a wide retail dealer network comprising of over 8000
dealers in 6 States.
Innovative
schemes launched by the Company to support rural Girl child education and to
recognize best practices adopted by farmers (Rythu Puraskaram) have been widely
appreciated by government agencies as well as the press and media.
Financials
EBITDA
achieved for the year Rs.1169.500 millions (previous year: Rs.683.200 millions)
was higher by 71%. This is an all time high since the Company’s inception in
1981. Interest and Depreciation accounted for Rs.359.100 millions (previous
year: Rs.183.100 millions) and Rs.66.500 millions (previous year: Rs.79.800
millions), respectively. Higher borrowings consequent to delays in subsidy
inflows and higher interest rates have adversely affected the Company and also
the industry as a whole.
Earnings
before Tax improved consecutively for four years in a row to Rs.743.900
millions (previous year Rs.420.300 millions) recording an increase of 77%. The
Company had reported a loss of Rs 202.400 millions at the time of acquisition
in 2003.
Provision
for Taxes stood at Rs.251.000 millions (previous year: Rs.159.300 millions) and
Profit after Tax increased by 89% to Rs.492.900 millions (previous year
Rs.26.11cr). Earning per Share significantly increased to Rs.15.40 (previous
year Rs. 8.16).
The Board has recommended
payment of dividend at 40% (previous year 20%).
New Projects
A new
ammonia storage tank of 10,000 MT capacities was commissioned during the year
at a cost of Rs.192.500 millions. This would augment the ammonia storage
capacity and reduce procurement cost.
During
the year the Board has approved an expansion project at an estimated cost of
Rs.820.000 millions to increase the production capacity by 0.425 million
tonnes. The project proposal received support from all quarters, including
environmentalists, at the public hearing conducted by APPCB. The proposal is
pending before the Ministry of Environment & Forests, Government of India.
This project is expected to be commissioned during early 2009.
During
the year, the Company has migrated to an improved ERP System (SAP 4.7
Increase in stake by
Murugappa Group
Coromandel
Fertilisers Limited (CFL), part of Murugappa Group, has increased its stake in
the Company from 45.07% to 74.92%, by acquiring IFFCO’s shareholding in the
Company and also from public through an Open Offer under SEBI Takeover Code.
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 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. 40.48 |
|
|
1 |
Rs. 82.59 |
|
Euro |
1 |
Rs. 55.55 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--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 |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
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 |
|