MIRA
INFORM REPORT
|
Report Date : |
02.11.2007 |
IDENTIFICATION
DETAILS
|
Name : |
ASIAN PAINTS
INDIA LIMITED |
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Registered
Office : |
Asian Paints
House, 6A, Shanti Nagar, Santacruz (East), Mumbai - 400 055 |
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Country : |
India |
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Financials (as
on) : |
31.03.2007 |
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Date of
Incorporation : |
24.10.1945 |
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Com. Reg. No.: |
11-4598 |
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CIN No.: [Company
Identification No.] |
L24220MH1945PLC004598 |
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TAN No.: (Tax Deduction
& Collection Account No.) |
MUMA00665A |
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PAN No.: (Permanent
Account No.) |
AAACA3622K |
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Legal Form: |
Public Limited
Liability Company. The company’s shares are listed on the stock exchange. |
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Line of
Business : |
Manufacturers of Paints,
Enamels, etc. |
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 29760000 |
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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 having fine track.
Fundamentals of the company are strong and healthy. Payments are always
correct and as per commitments. The company can be considered good for any normal business dealings at
usual trade terms and conditions. |
LOCATIONS
|
Registered
Office : |
Asian Paints
House, 6A, Shanti Nagar, Santacruz (East), Mumbai - 400 055, India. |
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Tel. No.: |
91-22-56958000 |
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Fax No.: |
91-22-56958803 /
8888 / 8107 |
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E-Mail : |
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Website : |
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Head Office : |
Nirmal, 5th
Floor, Nariman Point, Mumbai - 400 021, Maharashtra, INDIA |
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Tel. No.: |
91-22-22024544 /
22024517 / 22024799 |
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Fax No.: |
91-22-22028993 |
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Accounts,
Materials & Phthalic Division : |
Plot No. 5,
Gaiwadi Industrial Estate, S. V. Road, Goregaon (West), Mumbai - 400 062,
Maharashtra, India |
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Penta
Division : |
Warehouse No. E -
89, GNT Road, Ponniammanmedu (P.O), Madhavaram, Chennai - 600 010, Tamilnadu,
India |
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Factory : |
Plot No.2702, GIDC Industrial Area, Ankleshwar 393 002, Gujarat.
B5-B10, Sipcot Industrial
Complex, Cuddalore 607 005, Tamil Nadu. |
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Sales Offices
: |
Agartala, Agra, Akola,
Ahmedabad - Narol, Sarkhej, Bangalore - Peenya, Bilekahalli, Baroda, Bhopal,
Chandigarh, Chennai - Madhavram, Guindy, Coimbatore, Cuttack, Faridabad,
Ghaziabad, Goa, Gurgaon, Guwahati, Gwalior, Halol, Hubli, Indore, Jabalpur,
Jaipur, Jalandhar, Jammu, Jamshedpur, Jodhpur, Kanpur, Kolkata, Kochi,
Kolhapur, Kozhikode, Lucknow, Ludhiana, Madurai, Mangalore, Mumbai - Dadar,
Kandivli, Mulund, Vashi, Nagpur, Nashik, New Delhi - Badarpur, Mayapuri,
Patparganj, Wazirpur, Panchkula, Patna, Pimpri, Pune, Raipur, Rajkot,
Saharanpur, Salem, Secunderabad, Siliguri, Surat, Thiruvananthapuram,
Tiruchirapalli, Tirupathi, Udaipur, Varanasi, Vijayawada, Visakhapatnam and
Zirakpur |
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Regional
Distribution Centres : |
Located at
Ahmedabad, Bangalore, Ghaziabad, Hyderabad, Mumbai and Raipur |
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Overseas
Offices : |
Located at Sri
Lanka, Solomon Islands, Nepal, Sultanate of Oman and New Zealand |
DIRECTORS
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Name : |
Mr. Ashwin C
Choksi |
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Designation : |
Chairman |
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Name : |
Mr. Ashwin S Dani |
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Designation : |
Vice Chairman & Managing Director |
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Name : |
Mr. Abhay A Vakil |
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Designation : |
Managing Director |
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Name : |
Mr. Mahendra C
Choksi |
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Designation : |
Director |
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Name : |
Mr. Amar A Vakil |
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Designation : |
Director |
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Name : |
Ms. Tarjani Vakil
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Designation : |
Director |
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Name : |
Mr. Dipankar Basu |
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Designation : |
Director |
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Name : |
Mr. Deepak M.
Satwalekar |
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Designation : |
Director |
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Name : |
Mr. R. A. Shah |
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Designation : |
Additional Director |
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Name : |
Dr. Swaminathan
Sivaram |
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Designation : |
Additional Director |
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Name : |
Mr. Mahendra M.
Shah |
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Designation : |
Additional Director |
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Name : |
Mr. Hasit Ashwin
Dani |
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Designation : |
Additional Director |
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Other
Personnel |
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Name : |
Mr. Jayesh
Merchant |
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Designation : |
Company Secretary |
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KEY EXECUTIVES
|
Name |
Mr. Ashwin C. Choksi |
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Designation |
Chairman |
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Age |
61 years |
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Qualification |
M. Com. |
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Experience |
38 years |
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Date of
Joining |
01.01.1965 |
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Name |
Mr. Ashwin S Dani |
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Designation |
Vice Chairman & Managing Director |
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Age |
61 Years |
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Qualification |
B.Sc (Hons.), B.Sc (Tech.), M.S. |
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Experience |
35 Years |
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Date of
Joining |
01.10.1968 |
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Previous
Employment |
Interchemical Corporation, Development Chemist |
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Name |
Mr. Abhay Vakil |
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Designation |
Managing Director |
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Age |
52 years |
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Qualification |
B.Sc., B.S. |
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Experience |
28 years |
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Date of
Joining |
05.08.1974 |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names
of Shareholders |
No. of Shares |
Percentage of Holding |
|
Directors, Relatives and associates |
41,111,965 |
42.86 |
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Other directors and their relatives |
2,923 |
0.00 |
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Individuals |
16,790,464 |
17.51 |
|
Domestic Companies |
843,881 |
0.88 |
|
Financial Institutions |
12,451,144 |
12.98 |
|
Mutual Funds and Banks |
2,261,262 |
2.36 |
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FIIs and OCBs |
20,287,955 |
21.15 |
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Non-Resident Individuals |
2,170,185 |
2.26 |
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Total |
95,919,779 |
100.00 |
BUSINESS DETAILS
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Line of
Business : |
Manufacturers of
Paints, Enamels, etc. |
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Products : |
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PRODUCTION STATUS
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Particulars |
Unit |
Installed Capacity |
Actual Production |
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(a) Paints,
enamels, varnishes and blacks |
MT/KL |
300150 |
220284 |
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(b) Synthetic
Resins (For mainly captive consumption) |
MT |
77880 |
84306 |
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(c) Phthalic
Anhydride |
MT |
24000 |
22183 |
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(d) Pentaerythritol
|
MT |
3000 |
4430 |
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(e) Sodium
Formate |
MT |
1800 |
2505 |
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(f) Formaldehyde
(50%)' |
MT |
13500 |
10598 |
GENERAL
INFORMATION
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No. of
Employees : |
2869 |
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Bankers : |
State Bank of
India, Mumbai, Maharashtra, India |
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Facilities : |
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Banking Relations : |
Good |
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Auditors : |
Shah & Company Chartered Accountants |
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Collaboration : |
v Nippon Paint Company, Japan |
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Subsidiaries : |
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Joint Venture : |
Asian PPG Industries Limited |
CAPITAL STRUCTURE
Authorised
Capital :
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No. of Shares |
Type |
Value |
Amount |
|
99,500,000 |
Equity Shares |
Rs. 10/- each |
Rs. 995.000 millions |
|
50,000 |
11% Redeemable
Cumulative Preference Shares |
Rs. 100/- each |
Rs. 5.000 millions |
Issued,
Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
95,919,779 |
Equity shares |
Rs. 10 each |
Rs.959.197 millions |
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a) 93,989,940
Bonus Shares of Rs. 1 0/- each fully paid up issued on capitalisation of
Share premium (Rs. 21 .91 million) and General Reserves (Rs. 91 7.98
million). b) 294,000 shares
of Rs. 1 O/- each issued as fully paid up pursuant to the Scheme of Rehabilitation
/ Amalgamation of Pentasia Chemicals Ltd., without payment received in cash. |
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FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
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 |
959.200 |
959.200 |
959.200 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
6481.600 |
5263.600 |
4763.000 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.00 |
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NETWORTH |
7440.800 |
6222.800 |
5722.200 |
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LOAN FUNDS |
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1] Secured Loans |
669.000 |
318.800 |
283.650 |
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2] Unsecured Loans |
587.700 |
592.000 |
555.120 |
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TOTAL BORROWING |
1256.700 |
910.800 |
838.770 |
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DEFERRED TAX LIABILITIES |
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TOTAL |
8697.500 |
7133.600 |
6866.350 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3349.100 |
3004.300 |
3112.310 |
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Capital work-in-progress |
116.200 |
233.400 |
82.780 |
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INVESTMENT |
3343.900 |
2745.500 |
2584.270 |
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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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|
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Inventories |
4340.700
|
3497.100 |
3307.890 |
|
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Sundry Debtors |
2359.600
|
1851.100 |
1489.630 |
|
|
Cash & Bank Balances |
424.900
|
283.900 |
210.420 |
|
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Other Current Assets |
0.000
|
0.000 |
0.030 |
|
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Loans & Advances |
1613.800
|
1297.400 |
727.250 |
|
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Other Receivables |
0.000
|
0.000 |
190.120 |
|
Total
Current Assets |
8739.000
|
6929.500 |
5925.340 |
|
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Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
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Current Liabilities |
6309.300
|
4706.200 |
4838.350 |
|
|
Provisions |
541.400
|
1072.900 |
0.000 |
|
Total
Current Liabilities |
6850.700
|
5779.100 |
4838.350 |
|
|
Net Current Assets |
1888.300
|
1150.400 |
1086.990 |
|
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|
|
|
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|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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|
|
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|
|
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TOTAL |
8697.500 |
7133.600 |
6866.350 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
33809.900 |
28007.400 |
23626.900 |
|
|
Other Income |
459.800 |
359.300 |
316.100 |
|
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Total Income |
34269.700 |
28366.700 |
23943.000 |
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|
|
|
|
|
|
Profit/(Loss) Before Tax |
4120.500 |
3038.600 |
2708.000 |
|
|
Provision for Taxation |
1400.000
|
1170.800
|
969.800
|
|
|
Profit/(Loss) After Tax |
2720.500 |
1867.800 |
1738.200 |
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|
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Expenditures : |
|
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Stock Adjustment |
[715.000] |
14.600 |
[743.600] |
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Raw Materials |
14293.800
|
11173.700
|
9862.600
|
|
|
Excise Duty |
4364.100
|
3592.800
|
3138.700
|
|
|
Power & Fuel Cost |
333.000
|
273.000
|
254.400
|
|
|
Other Manufacturing Expenses |
4713.800
|
3780.600
|
3264.400
|
|
|
Employee Cost |
1501.900
|
1250.700
|
1148.900
|
|
|
Selling and Administration Expenses |
4912.500
|
4215.000
|
3470.100
|
|
|
Miscellaneous Expenses |
137.700
|
490.800
|
297.700
|
|
|
Interest & Financial Charges |
153.300
|
81.600
|
65.700
|
|
|
Depreciation |
454.100
|
455.300
|
476.100
|
|
|
Other Expenditure |
0.000 |
0.000 |
0.000 |
|
Total Expenditure |
30149.200 |
25328.100 |
21235.000 |
|
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
|
30.06.2007 |
30.09.2007 |
|
Type |
|
1 Quarter |
2 Quarter |
|
Sales Turnover |
|
7402.100
|
8912.000
|
|
Other Income |
|
87.800
|
261.100
|
|
Total Income |
|
7489.900
|
9173.100
|
|
Total Expenditure |
|
6239.600
|
7400.400
|
|
Operating Profit |
|
1250.300
|
1772.700
|
|
Interest |
|
17.500
|
25.500
|
|
Gross Profit |
|
1232.800
|
1747.200
|
|
Depreciation |
|
104.300
|
107.500
|
|
Tax |
|
349.700
|
598.500
|
|
Reported PAT |
|
742.300
|
1084.400
|
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.16 |
0.15 |
0.14 |
|
Long Term Debt-Equity Ratio |
0.11 |
0.12 |
0.12 |
|
Current Ratio |
1.18 |
1.14 |
1.08 |
|
Fixed Assets |
4.38 |
3.87 |
3.46 |
|
Inventory |
8.63 |
8.23 |
8.71 |
|
Debtors |
16.06 |
16.77 |
16.47 |
|
Interest Cover Ratio |
27.88 |
42.32 |
42.22 |
|
Operating Profit Margin(%) |
13.98 |
13.96 |
13.75 |
|
Profit Before Interest And Tax Margin(%) |
12.64 |
12.33 |
11.74 |
|
Cash Profit Margin(%) |
9.39 |
9.04 |
9.37 |
|
Adjusted Net Profit Margin(%) |
8.05 |
7.41 |
7.36 |
|
Return On Capital Employed(%) |
53.99 |
50.28 |
43.94 |
|
Return On Net Worth(%) |
39.82 |
34.76 |
31.50 |
STOCK PRICES
|
Face Value |
Rs.10/- |
|
High |
Rs.625.00/- |
|
Low |
Rs.572.00/- |
LOCAL AGENCY
FURTHER INFORMATION
History
The company was
started as a partnership firm in 1942 and was converted into a private limited
company under the name of Asian Oil and Paint Company Private Limited in
1945. In 1965 the name of the company
was changed to Asian Paints (India) Private Limited. The company was converted into a public limited company in 1973.
It’s Company
Registration Number is 4598.
It is India's
largest paints company and the market leader in decorative paints. Asian Paints
(India) Limited's brands, Royal in the premium segment, Apcolite in the middle
segment, Gattu, Tractor, Utsav, 3-Mango, etc, in the lower segment, are all
well-established brands in their respective segments. Its one-stop colour shop
has software to choose and select 1,511 combinations of various colours. The
company enjoys the market share of 27% in the overall market.
Its product range
includes Wall Paints, Metal Paints, Wood Finishes, Primers and others. Vertical
integration has seen it diversify into specialty products such as Pentaerythritol
and Phthalic Anhydride. Apart from offering the customers a wide range of
decorative and industrial paints, it even custom-creates products to meet
specific needs.
The company boasts
of state-of-the-art manufacturing plants at Bhandup in the State of
Maharashtra; at Ankleshwar in the State of Gujarat; at Patancheru in the State
of Andhra Pradesh; and at Kasna in the State of Uttar Pradesh. The company has
been awarded the ISO 9001 certification for its Bhandup, Patancheru and
Ankleshwar plants. Its Phthalic Anhydride plant and Ankleshwar Plant have
received the ISO 14001 for Environment Management Standards.
To keep abreast of
world technology and to protect its competitive edge, the company has from time
to time entered into technology alliances with world leaders in the paint
industry. It has a 50:50 joint venture with PPG Industries, the world leader in
automotive coatings to meet the increasing demand of the Indian automotive
industry. It has also drawn on the world's latest technology for its
manufacturing capabilities in areas like coil coatings and high-tech resins -
thus ensuring that its product quality lives up to exacting international
standards, even in the most sophisticated product categories.
The company is
involved in an ongoing process of scanning the global environment for the
latest development in the paint technology, indigenising them and absorbing
them. Asian Paints (India) Limited gives thrust on its own in-house R & D,
creating new opportunities by effectively harnessing indigenous creativity.
The company is also
increasing its international presence. Currently it is exporting to about 22
markets in the Asia-Pacific region, the Middle East and Africa. It also has
nine overseas joint venture units and is looking to expand its presence in the
South Asian region. During 2000-2001 the company established tow units, one
each in Oman and Mauritius. It also acquired the controlling stake in Delmege
Forsyth & Company (Paints), one of the second largest paint company of Sri-Lanka.
Asian Paints (India) Limited aims to be amongst the top five decorative paint
manufacturers in the world, and the leading decorative paints company in the
emerging markets by the year 2007.
During 2001-02
Asian Paints Industrial Coatings Limited a wholly owned subsidiary of Asian
Paints, was incorporated in October, 2001.
The company has also acquired the powder coatings business of Hawcoplast
Chemicals Limited. the acquisition was
funded from equity of Rs. 80.000 millions and a loan of Rs. 60.000 millions,
financed by the company. the subsidiary
commenced operations with effect from 1st November, 2001. The 100% equity interest in Technical
Instruments Manufacturers (India) Limited was also made by the company by
investing Rs. 181.500 millions as quity and Rs. 117.700 millions towards taking
over of liabilities.
The company is in
the process of setting up a manufacturing unit in Bangladesh and a JV agreement
is in the process. The above unit is
expected to be operational in 2002-03. Pentasia
Investments Limited the subsidiary of the company is going to be amalgamated
with the company and the board has accepted the proposal made by the
company. The company has proposed to go
in for bonus issue in the ratio of 1:2 and the
same is subject to the consent of the shareholders. In November, 2002 th company has acquired
50.1% stake in Berger International Limited a listed company in Singapore stock
exchange. It has also acquired 60% of
shares of SCIB Chemical SAE, Egypt, the fifth largest paint company in that
country. The total consideration for
the combined acquisitions was approximately Rs. 819.000 millions.
All the company’s
paints plant have the ISO 9001 certification
Fixed Assets :
Freehold Land
Leasehold Land
Buildings
Plant and Machinery
Scientific Research
:
Equipment
Buildings
Furniture andOffice
Equipment
Vehicles
Leased Assets :
Equipment
RESULTS OF
OPERATIONS:
Total revenue for the standalone entity increased to Rs.28,213 million
from Rs.23,192 million in the previous year
a growth of 21.7%. The operating profit increased by 19.2%, from
Rs.3,878 million to Rs.4,622 million. The profit after tax and extraordinary
item increased to Rs.2,720 million from Rs.1,868 million, representing a growth
of 45.7%.
The consolidated sales and operating income increased to Rs.36,700 million from
Rs.30,210 million - a growth of 21.5%. Net profit after minority interest for
the group increased to Rs. 2,810 million from Rs.2,121 million, representing a
growth of 32.5%.
MANAGEMENT DISCUSSIONS AND
ANALYSIS
The Indian economy continued to grow strongly in the year 2006-2007,
driven by booming investment and consumption. Over the past four years, the
economy has clocked up an average annual growth of more than 8%, compared to
around 6% in the 1980s and 1990s and 3.5% during the three decades before 1980.
The government's advance GDP estimates for 2006-07 pegs growth at 9.2% driven
by a 11.2% growth in services, 10% in industries and 2.7% in agriculture.
While there are concerns with regard to overheating of the economy,
infrastructural bottlenecks, wage inflation and political scenario, the Company
believes that the growth rates would continue to be buoyant in the medium
term.
Given the circumstances, the Company has done well to capitalise on the buoyant
economic growth in the country and this is reflected in the financials during
the year under review.
I. PRODUCTS AND
MARKET
Paints:
The Company's paints business in India consists of Decoratives and
Industrial Coatings. Sales of Decorative paints constituted 80% of group sales.
It is estimated that the market for all paints produced by all companies big
and small would have been between Rs. 112 and 115 billion in 2006-2007. This
would be a growth of about 18% over the previous year. The industry is
estimated to have grown by about 16% in volume terms in 2006-2007.
Decorative Paints:
The Company has been the leader in the Decorative Paints segment
for about four decades now. Decorative paints account for over 75% of the
overall paint market in India. This segment includes wall finishes for interior
and exterior use, enamels, wood finishes and ancillary products such as
primers, putties etc. The Decorative paints market as a whole is estimated to
have grown by about 16% in volume terms equivalent to about 19% in turnover.
Turnover increase outpaced volume growth due to price increases.
Prices of raw materials increased sharply in the second and third quarter of
2006-2007. The major increases were in Xylene, Phthalic Anhydride, Acrylates
and other petroleum based products and vegetable oils.
Accordingly, the Company
had to raise prices four times during the year.
This raised the average
selling prices by about 4.25%. Availability of materials was, on the whole,
good throughout the year.
MANAGEMENT DISCUSSIONS AND
ANALYSIS
The Indian economy
continued to grow strongly in the year 2006-2007, driven by booming investment
and consumption. Over the past four years, the economy has clocked up an average
annual growth of more than 8%, compared to around 6% in the 1980s and 1990s and
3.5% during the three decades before 1980. The government's advance GDP
estimates for 2006-07 pegs growth at 9.2% driven by a 11.2% growth in services,
10% in industries and 2.7% in agriculture.
While there are concerns
with regard to overheating of the economy, infrastructural bottlenecks, wage
inflation and political scenario, the Company believes that the growth rates
would continue to be buoyant in the medium term.
Given the circumstances, the Company has done well to capitalise on the
buoyant economic growth in the country and this is reflected in the financials
during the year under review.
I
PRODUCTS AND MARKET
Paints:
The Company's paints business in India consists of Decoratives and Industrial
Coatings. Sales of Decorative paints constituted 80% of group sales. It is
estimated that the market for all paints produced by all companies big and
small would have been between Rs. 112 and 115 billion in 2006-2007. This would
be a growth of about 18% over the previous year. The industry is estimated to
have grown by about 16% in volume terms in 2006-2007.
Decorative Paints:
The Company has been the leader in the Decorative Paints
segment for about four decades now. Decorative paints account for over 75% of
the overall paint market in India. This segment includes wall finishes for
interior and exterior use, enamels, wood finishes and ancillary products such
as primers, putties etc. The Decorative paints market as a whole is estimated
to have grown by about 16% in volume terms equivalent to about 19% in turnover.
Turnover increase outpaced volume growth due to price increases.
Prices of raw materials increased sharply in the second and third quarter of
2006-2007. The major increases were in Xylene, Phthalic Anhydride, Acrylates
and other petroleum based products and vegetable oils.
Accordingly, the Company
had to raise prices four times during the year.
This raised the average
selling prices by about 4.25%. Availability of materials was, on the whole,
good throughout the year.
Market conditions were good
in most parts of the country. Trade was impacted in Delhi due to the
uncertainty prevailing on account of the Delhi Master Plan and the sealing
drive. It was also impacted in parts of North Eastern India on account of
disturbed conditions. Trade inventories in the Delhi area were at very low
levels. The Diwali season was slightly disappointing in parts of Northern and
Western India. However, robust growth after the Diwali season has provided
buoyant conditions on the whole. VAT has been introduced in Tamil Nadu from
January 1, 2007 and the amendment in Kerala ensures that a uniform VAT rate now
prevails over the entire country except in U.P where VAT is yet to be
implemented.
APL Paint Gross
Sales:
The Company has been
strongly committed to growth and accordingly, continued its policy of moving
purposefully on several fronts. Pricing was kept competitive. The sharp
increase in material cost forced us to raise prices, as described earlier, in
mid June, on 1st September, on 1st October and in mid January. The Company's
strong product range was further augmented by the addition of Royale Play
Metallics and Stucco, Luxury Ultra Gloss Enamel and other products. The Company
will continue to provide consumers with excellent choice at every price point.
The exterior range of products continues to grow strongly.
Share of Group Sales (Rs.
in Millions) %
International 6,572
(17.9%)Chemicals 927 (2.5%)Paints India 29,201 (79.6%)
The Company will continue
to face competition from lower priced products from large companies and from a
large number of regional players. However, considering the brand equity the
Company enjoys, its dominant market share and the range of products that it can
offer, the Company is confident of meeting these challenges effectively.
The Company continues to aggressively increase ColourWorld installation, which
would be about 8500 across the country. As reported last year, many of these
are now being installed in small towns, enabling consumers there to have a
choice of large range of shades in a wide product range.
Asian Paints Home Solutions
(APHS) was extended to Jaipur and Vadodara taking the total number of centers
where this service is offered to twelve.
APHS adds to the strength
of Asian Paints brand significantly by offering novelty finishes.
Manufacturing capacity:
As reported last year, the
capacity of the Sriperumbudur plant was raised to 50,000 KL per annum early in
2006-2007. This capacity came in handy as emulsion paints' sales grew well. The
Company is adding a polymer plant at Sriperumbudur which is expected to be
commissioned in the first quarter of 2007-2008.
The plant at Ankleshwar has received environmental and other clearances to
produce up to 1,00,000 KL per annum. Some additional facilities, especially for
storage and handling, need to be installed at Ankleshwar as well as Patancheru
and Kasna plant so as to produce at the rated capacity on consistent
basis.
Industrial Coatings:
Automotive Coatings:
Asian PPG Industries Limited.
Asian PPG Industries
Limited (APPG), a 50:50 joint venture between the Company and PPG Industries
Securities Inc., formed in 1997, services the Automotive OEM, Refinish and
certain industrial coatings market in India.
APPG is a supplier to almost every two wheeler maker in India and has a
significant position in this market.
APPG has benefited from the buoyant economic growth in the country and the
consequent robust performance of the automotive industry during the year.
With a sizeable and growing
working class that is seeing rapid increases in disposable income, the
country's automobile industry is on a high growth trajectory. Additionally,
auto components manufactures, besides benefiting from this growth, are
exporting to global automobile majors.
Industrial Paints
Sales*
As per the estimates, the
cumulative growth of the passenger vehicles segment during April-March 2007 was
20.70%. Passenger cars grew by 22.01%, utility vehicles by 13.21% and
multi-purpose vehicles by 25.20% in F.Y 2006-2007. The two wheeler market grew
by 11.42% during the same period.
These developments have
resulted in improved top line performance during the year under review. Total
sales increased to Rs. 3,405 million from Rs.
2,798 million in the
previous year - a growth of 21.7% while the consolidated sales were Rs.3,447
million. The joint venture Company also declared interim dividend of Rs. 1.40
(14%) per equity share on 26th March, 2007.
During the financial year 2006-2007, APPG has invested in 100% equity of
Faaber Paints Private Limited (Faaber) for a consideration of Rs. 40 million.
Faaber was a toll processor of APPG located near Chennai. Faaber has been
associated with APPG since the year 2001, when it started toll processing
thinners for APPG. Faaber's production contributes to about 25% of APPG OEM
production volume. The said acquisition has led to strengthening of APPG's
supply link servicing to Hyundai and other automotive customers and resulting
in additional industrial business.
Also, during the financial
year 2006-2007, PPG Industries Securities Inc., USA signed a definitive
agreement with ICI (India) Ltd. as a result of which a portion of ICI India's
auto refinish business comprising of its advanced refinish range (2K) was
acquired by APPG for a consideration of approximately Rs. 520 million, subject
to certain agreed adjustments. It had registered sales revenue of around Rs.
500 million for the financial year ended 31st March, 2006. The said acquisition
would enable APPG in garnering a leadership position within the premium
refinish segment.
During the year, APPG
acquired a plot of land admeasuring 10.43 acres on lease from the State
Industries Promotion Corporation of Tamil Nadu (SIPCOT) to establish a paint
plant in phases at Sriperumbudur, near Chennai. After obtaining requisite
consents, construction work on the plot has commenced. It is expected that the
facility would be commissioned in the course of the current year and enhance
the joint venture's supply capability to automotive OE customers.
This year, the Indian
automobile market will see at least 30 new launches, spanning from the
affordable hatchbacks to the mid-size models to the super luxury high-end cars
and SUVs
Growth prospects for the
automobile industry in the current year is expected to be similar to that
witnessed last year. APPG is in a position to continue to take advantage of the
growth in the market and is optimistic about the longer term prospects for the
Company.
Non-Auto Industrial
Coatings:
The non-auto industrial
coatings market, catered by the Company through its Strategic Business Unit and
a wholly owned subsidiary, Asian Paints Industrial Coatings Limited (APICL), is
estimated to have grown by 16% in value during the year 2006-2007. The Company
is present in most of the major product segments of this market, thereby
ensuring that growth opportunities are addressed adequately.
The Company continues to
maintain its position as the second largest player in the protective coating
segment and has made strides in the medium to high end product category. The
Company has made rapid gains in the general industrial liquid paints segment
and is expected to emerge as a dominant player in times to come. In floor
coatings, a selective approach was adopted in an effort to reorient the
business. In road marking segment, the Company has emerged as a leader and
would expect to maintain this position in the years to come.
The market of non-auto industrial coatings is expected to maintain its growth
momentum. Sustained and significant investment by the public and private sector
enterprises towards capacity creation and plant up-gradation would ensure
strong growth of the protective coating segment. Government spending on
infrastructure would also spur the market. Major investments are underway in
road infrastructure which has a direct bearing on the road marking segment.
Derived demand, both consumer and industrial, would continue to spur the growth
of powder coating and general industrial liquid paints in the years to
come.
The Company would continue
its strong focus in this segment and target emerging opportunities by way of a
structured business development process.
Product development would
be directed towards emerging categories and meeting the value aspiration of the
consumer.
Manufacturing Capacity:
Industrial Liquid Paints
Plant at Taloja:
First phase of the
greenfield industrial liquid paints facility at Taloja, Maharashtra was
commissioned during the last quarter of the financial year 2006-2007.
Production is being ramped up at the facility and it is expected to reach the
installed capacity of 14,000 KL by the month of September, 2007. This facility
will help the Company improve its service levels to industrial customers and
also bring about cost efficiencies associated with manufacturing the bulk of
industrial products at a single location.
Asian Paints Industrial
Coatings Limited:
APICL reported Profit Before
Tax of Rs. 9.85 million for the financial year ended 31st March, 2007 as
compared to Rs.5.71 million for the financial year ended 31st March,
2006.
During the financial year
2006-2007, the Company has further invested Rs.1,00,00,000/- (Rupees One Crore
only) in the share capital of APICL by subscribing to 10,00,000 Equity Shares
of Rs. 10% each, in order to facilitate completion of the civil construction
work and to enhance the capacity of its plant at Baddi, Himachal Pradesh.
The powder coating business, catered through APICL, continues to grow above the
market rate. It will continue to persist with its efforts to upgrade the market
through the technology of its collaborator, Protech Chemicals Limited.
Plants for Powder Coatings at Baddi and Sarigam:
The powder coatings
facility at Baddi, Himachal Pradesh which has an installed capacity of 1,200
MTs, was commissioned in April, 2006 and during the last quarter of the
financial year 2006-2007 the plant produced to its installed capacity. The civil
construction in the first phase has been designed to enable addition of further
lines to take the capacity to 3,000 MTs per annum.
To meet market
requirements, it is also planned to enhance the capacity of the plant at
Sarigam. Plans are being drawn up and work on the civil structure is expected
to commence from October, 2007. The enhanced capacity will be available during
the second quarter of the financial year 2008-2009. With these capacities at
Baddi and Sarigam, APICL will be well placed to service the powder coating
requirements.
Chemicals:
The Chemicals business of the Company comprises of Phthalic Anhydride and
Pentaerythritol with plants at Ankleshwar, Gujarat and Cuddalore, Tamil Nadu,
respectively These units were set up as backward integration initiatives in the
late eighties. They lack scale and hence, are not seen as growth drivers for
the Company. These facilities continue to be managed for value.
During the year 2006-2007,
the percentage of Company's production of Phthalic Anhydride and
Pentaerythritol consumed in-house was 48% and 53%, respectively.
Profitability of both
businesses has improved significantly over the previous years. Penta plant
could significantly increase the exports to meet the demand in the
international market resulting in higher profits.
With the change in catalyst
in April 2006, the Phthalic Plant had a first full year of operations with the
new catalyst, resulting in higher yields and operating efficiencies.
Due to rising oil prices,
margins in the Phthalic business improved significantly resulting in higher
profits inspite of reduction in the import duty on Phthalic Anhydride from 15%
to 12.5% in the Union Budget 2006-07.
Import duty on Phthalic Anhydride has been further reduced from 12.5% to 7.5%
in the Union Budget 2007-2008, without any change in duty on raw material which
will put some pressure on margins going forward. However, overall both the
chemical businesses are expected to perform well in 2007-2008, backed by
planned operation at higher production levels and further improved operating
efficiencies.
Technical Instruments
Manufacturers (India) Limited:
Technical Instruments
Manufacturers (India) Limited (TIM), is a 100% subsidiary of the Company It
owns the building which houses the Company's Corporate Office. It also owns the
land which was acquired in the financial year 2005-2006 for carrying on
research and development activities for the Company. It has no income except
the rent it receives from the Company.
International Business
Units:
The focus during the year
under review continued to be on increasing sales and gaining market share in
all overseas markets by increasing the number of dealer tinting systems,
expanding the dealer network, introducing new products, improving service
levels, increasing exports and minimizing price increases. New product sales
constituted approximately 14% of overseas sales and over 600 dealer tinting
systems have been installed so far by various subsidiaries.
Material prices were
buoyant and prices of inputs went up significantly.
However, by leveraging
economies of scale and the group's global sourcing capabilities, significant
economies have been realized and these have helped to reduce the impact of
material cost escalation. The impact of input cost increases has also been
limited by formulation engineering as well as reduction in material losses in
manufacturing.
The group has always attached a high degree of importance to safety, health and
environment standards. A program has been implemented in all the units to raise
these further.
Microsoft Navision, an ERP
software is running successfully at most of the subsidiaries. Steps have been
taken to enhance the usage of this software as a decision support system.
The group considers its
employees to be a key resource and ensuring that employees are committed and
engaged in their roles and drive innovation and change, is essential for
achieving sustainable growth and profitability.
Initiatives such as an
improved performance focused management system and a sales force effectiveness
training program to be rolled out across subsidiaries in the next few months
are expected to improve the quality of human capital and performance.
Technology is another
critical input essential to provide customers with products that satisfy their
needs at competitive prices. The group continues to invest in upgrading its
technological capability in Decorative as well as protective and industrial
coatings.
Financial Performance -
International Business:
During the year under
review, the volume of paint sold by the business unit increased by 22% to 94.18
million litres and revenue from paint sales increased by 21% to Rs. 6,240
million.
Material cost of paint sold
as a percentage to revenue from paint sales has remained almost flat during the
year despite a sharp increase in material prices. Improved efficiency in
sourcing, R&D efforts to optimize formulations and manufacturing
initiatives to reduce material wastage have helped mitigate the impact of
higher input costs. Strict control has also been exercised on working capital
as well capital and overhead expenditure.
For the year under review, the revenue from paint sales of Berger International
Limited (BIL), a subsidiary of the Company listed on the Singapore Stock
Exchange, increased by 8.1% to S$ 127.71 million (equivalent to Rs. 3,644
million). BIL has made an operating profit of S$ 0.31 million (equivalent to
Rs. 8.85 million) in the year 2006 as compared to loss of S$ 0.26 million
(equivalent to Rs. 7.42 million).
Another subsidiary of the
Company SCIB Chemical, S.A.E., Egypt has done well and has reported a profit of
US$ 3.65 million (equivalent to Rs.165.39 million) against a profit of US$ 1
million (equivalent to Rs.44.19 million) of last year.
During the year 2006-2007,
the Company invested Rs. 111.06 million in the equity capital of its wholly
owned subsidiary Asian Paints (International) Limited for onward investment in
Asian Paints (Bangladesh) Limited.
The group's stake in the subsidiary in Myanmar as well its associate company in
Philippines was divested during the year. These two companies were making
losses and the decision to divest was taken after a careful assessment of the
prospects of these companies.
Earnings Before Interest
and Tax (EBIT) for the overseas operations of the group during the year has
increased by 457% to Rs. 192 million. It may be noted that during the second
half of the year, the EBIT increased by 566% to Rs. 168 million.
The profitability of the
overseas operations of the group was impacted by the following items:
(i) Loss of Rs.71 million
arising from the disposal of the group's stake in its Associate Company in
Philippines;
(ii) Loss of Rs. 7 million
arising from the disposal of the group's stake in its subsidiary in Myanmar;
and
(iii) Tax expense was lower
by Rs.75 million mainly due to write-back of Rs.30 million in respect of prior
year
taxes as compared to a
provision of prior year taxes of Rs. 45 million made in 2005.
The group operates in five regions
across the world i.e. Caribbean, Middle East, South Asia, South East Asia and
South Pacific as
follows:
Operating regions and
countries in each region:
Regions Countries
Caribbean Barbados,
Jamaica, Trinidad & Tobago
Middle East Egypt, Oman,
Bahrain & UAE
South Asia Bangladesh,
Nepal & Sri Lanka
South East China, Malaysia,
Singapore, Thailand &Asia Hongkong
South Pacific Australia,
Fiji, Solomon Islands, Samoa, Tonga & Vanuatu
Percentage sales
contribution of each region to overall international operations for 2005-06 and
2006-07:
2005-2006 2006-2007
South Pacific 13% 11%SE
Asia 15% 13%South Asia 9% 10%Middle East 37% 42%Caribbean 26% 24%
Caribbean Region:
During the year under
review, the volume of paint sold in the region increased by 3.4% to 8.8 million
litres. The revenue from paint sales has increased by 12.0% to Rs. 1,523
million and EBIT has decreased by 58.9% to Rs. 28 million.
All the subsidiaries in the
region registered sales growth with the highest growth achieved by the Barbados
subsidiary. The revenue from paint sales in Jamaica, the largest subsidiary in
the region, increased by 8.5% to Rs. 893 million. However, a slowdown in the
construction sector due to acute cement shortage has resulted in lower sales
growth and has impacted the profitability of the unit. The Jamaican unit became
the first paint company in that country to receive the ISO 14001 certification.
The unit in Barbados has done well and the revenue from paint sales has
increased by 14.9% and the profitability has also improved. The revenue from
paint sales of the unit in Trinidad has increased by 20%. It has however
incurred a loss and steps have been taken to improve the performance of the
unit.
Middle East Region:
During the year under
review, the volume of paint sold in the region has increased by 31.2% to 62.6
million liters and the revenue from paint sales has increased by 31.5% to Rs.
2,606 million. EBIT has increased by 171.2% to Rs. 253 million.
The Middle East region is
the largest operating region for the group outside India and the performance of
the region is noteworthy. The region now contributes 42% of the sales from
international operations.
The subsidiaries in the region have performed well. Sales of the Egyptian,
Bahrain, UAE and Oman subsidiaries grew by 46%, 13%, 35% and 1% respectively.
The Egyptian subsidiary is now the largest unit in the group.
The Bahrain subsidiary has
made significant inroads in the institutional business segment and has
established a strong presence in this fast growing segment. The UAE subsidiary
has turned around during the year and has reported a net profit. It has
improved its market share, made significant inroads in the retail segment and
has established itself in the export market of Qatar. The sales of the Oman
subsidiary have grown marginally but profitability has improved.
South Asia Region:
During the year under
review, the volume of paint sold in the region increased by 40% to 9.6 million
liters and revenue from paint sales has increased by 31.9% to Rs. 621 million.
The EBIT for the region has increased to Rs.10 million from a loss of Rs. 19
million.
All the subsidiaries in the
region have performed well. The Sri Lanka, Bangladesh and Nepal subsidiaries
have registered sales growths of 28%, 62.1% and 12.6% respectively. The
Bangladesh and the Sri Lankan subsidiaries have recorded improvement in market
shares while the performance of the Nepal subsidiary has been impacted by the
adverse political situation prevailing in that country.
South East Asia Region:
During the year under
review, the volume of paint sold in the region decreased by 12.9% to 9.2
million litres. However, the revenue from paint sales has increased by 10.0% to
Rs. 843 million. Loss before interest and tax has reduced by 17% to Rs. 128
million.
The performance of the
Singapore subsidiary has been good and the Malaysian subsidiary has managed to
reduce losses substantially. However, the subsidiaries in Thailand and China
have underperformed and incurred losses.
Steps have been taken in Thailand
and China to increase sales and reduce losses.
South Pacific Region:
During the year under
review, the volume of paint sold in the region increased by 8.8% to 4.6 million
liters and the revenue from paint sales increased by 9.9% to Rs. 725 million.
EBIT for the region has decreased by 27.8% to Rs. 23 million.
Fiji, the largest unit in
the region performed well and the revenue from paint sales increased by 9.3%.
All the other units in the region have also performed satisfactorily during the
year. The political situation in Fiji and increases in input costs have
impacted profitability of the region.
In the year ahead, the
group will continue to take all feasible steps, as may be necessary, to increase
sales and gain market share in its international operations.
FINANCIALS:
Net Sales and
operating income of the standalone entity increased by 21.7% to Rs. 28,213
million. This is driven mainly on account of good paint volume sales growth of
17.8% and price revisions effected during the year.
For the group,
net sales and operating income has increased by 21.5% to Rs.36,700
million.
Raw material
prices continued to exhibit an upward trend resulting in pressures on the gross
margin. Material consumption as a percentage to sales for the standalone entity
increased to 58.9% against 58.3% in the previous year. Profit Before Tax and
extraordinary item as a percentage to sales has dropped marginally to 14.5%
from 14.6% in 2005-2006. Profit Before Tax and extraordinary item stands at
Rs.4,099 million as against Rs.3,385 million in the previous year, showing an
increase of 21.1%. For the group, Profit Before Tax and extraordinary item has
increased by 24% to Rs.4,349 million.
The
extraordinary item in the previous year's standalone accounts relates to
provision for diminution in the value of long term investment in Asian Paints
(International) Limited, the Company's wholly owned subsidiary, based on the
management's assessment of the fair value of the investment to the extent of
Rs.336 million.
As a result, net profit for the standalone entity shows an increase of 45.7% to
Rs. 2,720 million as against Rs. 1868 million in the previous year. Net profit
after minority interest for the group stands at Rs.2,810 million, an increase
of 32.5% over the corresponding figure of Rs.2,121 million in the previous
year.
As always, the
Company continues to exhibit tight control on its working capital employment.
The net core working capital turnover for the year has improved to 12 times
from 10 times in the previous year.
APL AP Croup Standalone (Consolidated) 2006-07 2005-06 2006-07 2005-06
PBDIT/SALES
16.4% 16.7% 14.0% 14.0%PBT before EOI/Sales 14.5% 14.6% 11.8% 11.6%PAT/SALES
9.6% 8.7% 7.7% 7.0%Net Sales/Total assets 3.2% 3.1% 3.1% 3.0%Return on average
capitalemployed 51.0% 47.8% 41.8% 38.0%Return on average net worth 39.8% 31.3%
39.5% 35.0%EPS (after EOI) (Rs.) 28.36 19.47 29.30 22.12Debt: Equity 0.17 0.15
0.37 0.37PBIT/Interest 61 89 24 32
Foreign
exchange earnings and outgo:
Your Company's exports are primarily to its overseas subsidiaries. The main
exported materials are raw materials, resins and tinting colorants. Going
forward, the exports will primarily be tinting colorants as the overseas
subsidiaries are focusing their activities towards increasing the number of
tinting machines. The exports of other raw materials to subsidiaries are
unlikely to increase in future as the raw material purchases are being directed
through group level tie up with suppliers and strategic sourcing by the units
purchases for both of which are directly done by the units from the suppliers.
During 2006-2007, an export of finished goods to a third party in Africa was
done for Rs.3.6 million.
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. 39.32 |
|
UK Pound |
1 |
Rs. 81.82 |
|
Euro |
1 |
Rs. 56.90 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
- |
|
--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 |
|
66 |
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. |
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 |
|