MIRA
INFORM REPORT
|
Report Date : |
31.10.2007 |
IDENTIFICATION
DETAILS
|
Name : |
VIDEOCON
INDUSTRIES LIMITED |
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Formerly Known
as: |
ADHIGAM TRADING, VIDEOCON LEASING AND INDUSTRIAL FINANCE |
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Registered
Office : |
Auto Cars Compound, Adalat Road,
Aurangabad – 431005, Maharashtra |
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Country: |
India |
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Financials (as
on): |
30.09.2006 |
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Date of
Incorporation : |
29.10.1996 |
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Com. Reg. No.: |
11-103624 |
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CIN No.: [Company Identification
No.] |
L99999MH1996PTC103624 |
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TAN No.: (Tax Deduction
& Collection Account No.) |
MUMV09411D NSKV01616G |
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PAN No.: (Permanent
Account No.) |
AABCV4012H |
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Legal Form : |
A Public Limited Liability
Company. The company’s shares are listed on the stock exchange. |
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Line of
Business : |
Manufacturing and trading activity of Electronic\Electric
Consumer Durables and home appliances all kinds of electric and Electronic goods
as well as telecommunication equipments, office equipments, games and gaming
solutions including lotteries etc., |
RATING &
COMMENTS
|
MIRA’s Rating
: |
A |
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 201562400 |
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Status : |
Good |
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Payment
Behaviour : |
Usually correct |
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Litigation : |
Clear |
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Comments : |
Subject is an
established company having satisfactory
track. Company’s profitability is improving. The company was successful
in wiping-off all its previous losses . Payments are reported as slow but
correct. The company can
be considered for business dealings at usual trade terms and conditions. |
LOCATIONS
|
Registered
Office/Factory : |
Auto Cars Compound,
Adalat Road, Aurangabad – 431005, Maharashtra |
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Tel. No.: |
91-240-2320750 |
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Fax No.: |
91-240-2333704 |
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Plant 1: |
14 Km Stone, Aurangabad-Paithan Road, Village
Chitegaon, Tq- Paithan, Dist: Aurangabad-431105 |
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Tel. No.: |
91-2642-240803 |
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91-2642-240391 / 251551 |
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Plant 2: |
15 Km Stone, Aurangabad-Paithan Road, Village
Chitegaon, Tq- Paithan |
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Plant 3: |
Gut No 350, Bhalgaon, Dist: Aurangabad – 431210 |
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Plant 4: |
Survey No-6 To 11, Krishna Sagar Village, Attibele,
Hosur Road |
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Plant 5: |
Plot No-72 (Phase -1), Sipcot Industrial Complex,
Hosur – 635126 |
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Plant 6: |
Sector –V, Block B.P, Salt Lake City, Kolkata – 700 091 |
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Plant 7: |
Hardwar Park,
Survey No-1/1, Village Imarat Kancha, Maheshwaram Mandal, Dist. Ranga Reddy –
500 005 |
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Plant 8 : |
P.O Box
No-68, Videocon House, Village Chhavaj, Bharuch – 392002 |
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Branch 1 : |
Videocon International Limited |
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Tel. No.: |
86-755-25833-845
Upto 850 |
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Branch 2 : |
Thomson |
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Tel. No.: |
33-141-86-54-11 |
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Branch 3 : |
Thomson Displays Polska Sp. Z O O |
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Tel. No.: |
(48 22) 7571112 |
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Branch 4 : |
Thomson Displays Italy |
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Tel. No.: |
39-775-701275 |
DIRECTORS
|
Name : |
Mr. Pradeepkumar
N Dhoot |
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Designation : |
Director |
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Name : |
Mr. Venugopal Nandlal
Dhoot |
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Designation : |
Director |
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Address : |
Fort House, 2nd
Floor, 221, Dr. D.N. Road, Mumbia – 400001, Maharashtra |
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E-Mail : |
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Date of Birth
: |
30.09.1951 |
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Qualification
: |
B.E.
(Electrical), FIE |
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Name : |
Mr. S K Shelgikar |
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Designation : |
Director |
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Name : |
Mr. K C
srivastava |
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Designation : |
Director |
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Name : |
Mr. Kuldeep Drabu |
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Designation : |
Director |
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Name : |
Mr. S Padmanabhan |
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Designation : |
Director |
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Name : |
Mr. S C N Jatar |
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Designation : |
Director |
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Name : |
Mr. Arun Laxman
Bongirwar |
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Designation : |
Director |
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Name : |
Mr. Satya Pal
Talwar |
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Designation : |
Director |
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Name : |
Mr. Didier Trutt |
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Designation : |
Nominee |
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Name : |
Mr. Johan Fant |
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Designation : |
Nominee |
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Name : |
Mr. Ajay Saraf |
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Designation : |
Nominee (ICICI) |
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Name : |
Mr. B
Ravindranath |
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Designation : |
Nominee (IDBI) |
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Name : |
Mr. Peter Birch |
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Designation : |
Director |
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KEY EXECUTIVES
|
Name : |
Mr. Vinod Kumar Bohar |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of Promoter and Promoter Group 2 |
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(1) Indian |
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(a) Individuals / Hindu undivided family |
1819838 |
0.82 |
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© Bodies Corporate |
153623583 |
69.52 |
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(B) Public Shareholding 3 |
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(1) Institutions |
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(a) Mutual Funds / UTI |
36571 |
0.02 |
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(b) Financial Institutions / Banks |
346051 |
0.16 |
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(e) Insurance Companies |
5599682 |
2.53 |
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(f) Foreign Institutional |
13877390 |
6.28 |
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(2) Non – Institutions |
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(a) Bodies Corporate |
4720780 |
2.14 |
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(b) Individuals – i. Individual shareholders holding nominal share capital up to
Rs.0.100 million ii. Individual shareholders holding nominal share capital excess of
Rs.0.100 million |
4748299 1065922 |
2.15 0.48 |
|
© Shares held by custodians and against which depository receipts have
been issued |
35148133 |
15.91 |
|
Grand Total |
220986249 |
100.00 |
BUSINESS DETAILS
|
Line of
Business : |
Manufacturing and trading activity of Electronic\Electric
Consumer Durables and home appliances all kinds of electric and Electronic goods
as well as telecommunication equipments, office equipments, games and gaming
solutions including lotteries etc., |
GENERAL
INFORMATION
|
No. of
Employees : |
About 10000 |
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Bankers : |
v
State Bank
of India v
Indian Bank |
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Banking Relations : |
Unknown |
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Auditors : |
Khandelwal Jain
& Company/ Kadam & Company Chartered
Accountant |
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Associates/Subsidiaries : |
v
Videocon Appliances Limited Manufacturing washing
machines. v
Applicomp India Limited v
Epitome Components Limited v
Videocon Housing Finance Limited v
Videocon Properties Limited v
Mecne Spa, Italy v
European Refrigeration Components SRL v
Videocon Industries Limited v
Videocon
Communications Limited v
Indian
Refrigerator Company Limited v
Kitchen
Appliances India Limited v
Millennium
Appliances India Limited v
Videocon
Narmada Glass |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
350000000 |
Equity Shares |
Rs. 10/- Each |
Rs. 3500.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
2668500000 |
Equity Shares |
Rs. 10/- Each |
Rs. 2668.500 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
30.09.2006 |
30.09.2005 (15 months ) |
30.06.2004 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
2668.500 |
2622.100 |
328.900 |
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|
2] Share
Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves &
Surplus |
47722.100 |
43724.100 |
0.000 |
|
|
4] (Accumulated
Losses) |
0.000 |
0.000 |
(412.200) |
|
NETWORTH
|
50390.600 |
46346.200 |
(83.300) |
|
|
LOAN FUNDS |
|
|
|
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|
1] Secured Loans |
36083.900 |
27761.000 |
0.000 |
|
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2] Unsecured
Loans |
13528.000 |
4734.700 |
900.700 |
|
TOTAL
BORROWING
|
49611.900 |
32495.700 |
900.700 |
|
|
DEFERRED TAX
LIABILITIES |
|
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|
|
|
|
|
|
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TOTAL
|
100002.500 |
78841.900 |
817.400 |
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APPLICATION OF FUNDS
|
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FIXED ASSETS [Net Block]
|
43313.600 |
33497.500 |
1099.300 |
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Capital work-in-progress
|
6082.800 |
6153.700 |
0.000 |
|
|
|
|
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INVESTMENT
|
17811.700 |
3387.900 |
82.900 |
|
DEFERREX TAX ASSETS
|
0.000 |
0.000 |
0.000 |
|
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CURRENT ASSETS, LOANS & ADVANCES
|
|
|
|
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Inventories
|
12998.600
|
8730.200
|
0.000
|
|
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Sundry Debtors
|
11172.900
|
9971.200
|
6.800
|
|
|
Cash & Bank Balances
|
11362.500
|
13960.100
|
2.800
|
|
|
Other Current Assets
|
0.000
|
0.000
|
0.000
|
|
|
Loans & Advances
|
9416.700
|
12091.300
|
1049.600
|
Total Current Assets
|
44950.700
|
44752.800
|
1059.200 |
|
Less : CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
10468.300
|
8253.100
|
1423.800
|
|
|
Provisions
|
1688.000
|
696.900
|
0.200
|
Total Current Liabilities
|
12156.300
|
8950.000
|
1424.000
|
|
Net
Current Assets
|
32794.400
|
35775.800
|
(364.800)
|
|
|
|
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|
MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
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TOTAL
|
100002.500 |
78841.900 |
817.400 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
30.09.2006 |
30.09.2005 (15 months ) |
30.06.2004 |
Sales Turnover [including other income]
|
77472.500 |
57706.500 |
207.800 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
9136.600 |
2616.500 |
(18.900) |
Provision for Taxation
|
951.600 |
(1660.300) |
(1.500) |
Profit/(Loss) After Tax
|
8185.000 |
4276.800 |
(17.400) |
|
|
|
|
|
Total Expenditure
|
69369.200 |
55466.800 |
167.800 |
QUARTERLY RESULTS
|
PARTICULARS |
31.12.2006 1st Quarter |
31.03.2007 2nd Quarter |
30.06.2007 3rd Quarter |
|
Sales Turnover |
20586.700 |
21529.700 |
22047.300 |
|
Other Income |
469.200 |
414.800 |
606.200 |
|
Total Income |
21055.900 |
21944.500 |
22653.500 |
|
Total Expenditure |
16820.500 |
17332.500 |
17790.300 |
|
Operating Profit |
4235.400 |
4612.000 |
4863.200 |
|
Interest |
724.100 |
747.900 |
786.700 |
|
Gross Profit |
3511.300 |
3864.100 |
4076.500 |
|
Depreciation |
1099.700 |
1149.800 |
1175.400 |
|
Tax |
350.000 |
400.000 |
450.000 |
|
Reported PAT |
2061.600 |
2314.300 |
2451.100 |
KEY RATIOS
|
PARTICULARS |
30.09.2006 |
30.09.2005 (15 months) |
30.06.2004 |
|
Debt-Equity Ratio |
1.05 |
0.91 |
0.00
|
|
Long Term Debt-Equity Ratio |
1.02 |
0.88 |
0.00
|
|
Current Ratio |
3.55 |
3.80 |
0.79
|
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.39 |
1.88 |
0.18
|
|
Inventory |
6.98 |
10.36 |
0.00
|
|
Debtors |
7.17 |
9.07 |
61.12
|
|
Interest Cover Ratio |
4.59 |
2.84 |
0.75
|
|
Operating Profit Margin(%) |
19.84 |
16.40 |
38.50
|
|
Profit Before Interest And Tax Margin(%) |
15.41 |
12.29 |
27.48
|
|
Cash Profit Margin(%) |
15.22 |
14.73 |
2.65
|
|
Adjusted Net Profit Margin(%) |
10.80 |
10.62 |
(83.700)
|
|
Return On Capital Employed(%) |
14.60 |
15.85 |
0.00
|
|
Return On Net Worth(%) |
21.18 |
26.45 |
0.00
|
LOCAL AGENCY
FURTHER INFORMATION
Company Details:
Formerly known as Adhigam Trading, Videocon Leasing and
Industrial Finance was incorporated in 1986. In 1990-91, the management
underwent a change by way of transfer of equity shares to the Videocon group.
The company is been engaged in lease financing, hire-purchase, bill discounting
and merchant banking. It had diversified into corporate financing and
investment operations. It became a category-I merchant banker and played an
active role in issue management, underwriting, advisory services and loan syndication.
During 1994-95, it floated a 100% subsidiary Popup Properties and Investments,
to deal with investments, and to advise on investments, and also to provide
corporate finance advisory services as well as arrange and deal in the areas of
corporate finance.
Videocon Energy Holdings Limited (VEHL) and consequently Goa Energy Private
Limited (Formerly Talchar Minings Private Limited), which is a subsidiary of
VEHL, ceased to be the subsidiaries of the company with effect from 31st
March 2004. On 15th June 2004, Videocon Securities Limited has become a
subsidiary of the company and On 5th June 2004 Petrocon India Limited (PIL) has
become a subsidiary of the company. Further Popup Properties & Investments
Private Limited and Videocon (Mauritius) Infrastructure Ventures Limited are
also the subsidiaries of the company.
During December 2005 the Company has acquired 81% equity stake in Eagle
Corporation Limited (ECL) and consequently ECL became a subsidiary of the
company.
Banganga Investments Private Limited, New Design Finance & Investments
Private Limited, Wide Range Credit & Investments Private Limited and Verka
Investments Private Limited, were merged with the company under the scheme of
amalgamation.
The name of the company has been changed during September 2004, from Videocon
Leasing and Industrial Finance Limited to Videocon Industries Limited.
During 2003-04 the company had successfully launched the business of
Manufacturing and trading activity of Electronic\Electric Consumer Durables and
home appliances all kinds of electric and Electronic goods as well as
telecommunication equipments, office equipments, games and gaming solutions
including lotteries etc., and the company has also started the online lottery
business as distributors and commerical launched the business in April 2004.
Further the company has decided to merge Petrcon India Limited (Formerly
Videocon Petroleum Limited), which is subject to approval.
Director’s Report -
OPERATIONS:
Some of the highlights of the year
under review are as under:
1. Acquisition:
On December 13, 2005, Eagle Corporation Limited became a Wholly Owned
Subsidiary of the Company after the Company acquired the balance 81% equity
stake in Eagle Corporation Limited.
Eagle Corporation Limited is an offshore entity which acquired Colour
Picture Tube businesses from Thomson S.A. having manufacturing facilities in
Poland, Italy, Mexico and China along with support research and development
facilities. In pursuit of mission to become a global major in consumer
electronics and home appliances with large scale and low cost base for critical
components, the company made its first footprint in acquiring global sized
colour picture tube manufacturing facilities across the world from Thomson SA.
It was also an exercise to complete the value chain in CTV vertical as the
Company had already a critical mass of glass panel manufacturing facility, a
substantial part of bill of material of CPT in India. By adding this
acquisition the Company become a major player with total vertical integration
in the CPT vertical. Amongst others, the principal philosophy behind this
acquisition was to make this acquisition yield handsome gains by adopting a
three fold strategy viz.
1. Cost cutting2. Vertical
Integration3. Rationalisation of Product Profile
So far in the past four quarters, the Company had been successful in making
substantial dent in all these three aspects. the Company had been in a position
to reduce the costs by relocation of certain activities from high cost
countries to low cost countries, also by reshuffling the material procurement
from more efficient sources and by effectively leveraging the capability to
integrate glass panel facility back home to the CPT manufacturing facilities so
acquired from Thomson S.A. The Company also made decent progress in reshuffling
the product profile to match the needs of the market by shifting the production
of very large size picture tubes to medium and smaller size picture tubes,
thereby reducing the impact of the pressure of competition on VLS. The pursuit
of threefold strategy of rationalization of cost, capacity and production
profile has given decent dividends in last year by converting the cash losing
acquired business into cash surplus, albeit in a token way. The company intends
to further pursue the same strategy of cost cutting and rationalizations and
product profile rationalizations such as launch of Slim and Extra Slim versions
of Colour Picture Tubes and garner more strength by integrating its activities and
operations covering all aspects of value chain. The company believes that the
pursuit of these strategies would go along, to further its aim of becoming a
globally integrated player in the CTV vertical.
2. Merger:
On July 21, 2006, EKL Appliances Limited (formerly: Electrolux Kelvinator
Limited) amalgamated with the Company, with retrospective effect from January
01, 2005, pursuant to the Scheme of Amalgamation of EKL Appliances Limited with
Videocon Industries Limited, as sanctioned by the Hon'ble High Court of
Judicature at Bombay on 30th June 2006. The Scheme resulted in all of the
assets and liabilities of EKL Appliances Limited being transferred to the
Company.
3. Issue/Allotment of Securities:
On December 21, 2005, the Company issued 217,200 GDRs representing 217,200
equity shares of the Company ('equity shares') at a price of US$10 each to
Gallo SAS, a Thomson Group entity against subscription money received on
September 30, 2005.
On January 31, 2006, the Company has allotted 14,242,488 equity shares to the
shareholders of erstwhile Videocon International Limited pursuant to Scheme of
Amalgamation of Videocon International Limited with the Company, as sanctioned
by Hon'ble High Court of Judicature at Bombay on November 25, 2005.
On February 7, 2006, the Company issued Foreign Currency Convertible Bonds
('FCCBs') of an aggregate amount of US$ 90,000,000 (United States Dollar Ninety
Million). These FCCBs are listed on Singapore Exchange Securities Trading
Limited.
On March 31, 2006, the Company has allotted 4,158,870 preference shares of Rs.
100/- each to the Preference shareholders of erstwhile Videocon International
Limited pursuant to Scheme of Amalgamation of Videocon International Limited
with the Company, as sanctioned by Hon'ble High Court of Judicature at Bombay
on November 25, 2005.
On July 24, 2006, the Company issued Foreign Currency Convertible Bonds
('FCCBs') of an aggregate amount of US$105,000,000 (United States Dollar One
Hundred Five Million). These FCCBs are listed on Singapore Exchange Securities
Trading Limited.
On July 31, 2006, the Company has allotted 441,990 preference shares of
Rs.100/- to Life Insurance Corporation of India.
SUBSIDIARY COMPANIES:
On December 13, 2005, Eagle Corporation Limited became a
Wholly Owned Subsidiary of the Company after the Company acquired the balance
81% equity stake in Eagle Corporation Limited.
During the year under review, Sky Billion Trading Limited, Trend Limited,
Videocon Industrial Finance Limited, Gruhaupyogi Electronics Appliances Private
Limited and Videocon (Cayman) Limited ceased to be subsidiaries of the Company.
Further, during the year under review, Venus Corporation Limited became a
subsidiary of the Company.
As such, as on 30th September 2006, the Company had 11 subsidiaries viz.,
Paramount Global Limited, Middle East Appliances LLC, Mars Overseas Limited,
Videocon Global Limited, Powerking Corporation Limited, Gajanan Electronics and
Supply Pvt. Ltd., Mayur Household Electronics Appliances Pvt. Ltd., Godavari
Consumer Electronics Appliances Pvt. Ltd., Videocon (Mauritius) Infrastructure
Ventures Limited, Eagle Corporation Limited and Venus Corporation
Limited.
The Company has received an exemption from the Central
Government under Section 212(8) of the Companies Act, 1956 with regard to
attaching of the Balance Sheet, Profit and Loss account and other documents of
the subsidiaries for the year 2005-2006. The Company undertakes that annual
accounts of the subsidiary companies and the related detailed information will
be made available to any member of holding and subsidiary Company seeking such
information at any point of time upon receipt of request for the same. Further,
the annual accounts of subsidiary companies will also be kept for inspection at
its registered office and also at registered office of the respective
subsidiary.
A summary of the key financials of the Company's subsidiaries is included
in this Annual Report.
INDUSTRY,
STRUCTURE AND DEVELOPMENTS
CONSUMER ELECTRONICS & HOME APPLIANCES
The Indian consumer electronics products and household appliances industry has
an annual turnover of approximately Rs.190 billion.
The Industry can be broadly categorized into two segments.
a. the consumer electronic products segment includes products such as
TVs, video products and home entertainment products and
b. the household appliances segment includes products such as
refrigerators, washing machines, air conditioners, microwave ovens, vaccum
cleaners, dishwashers and small appliances such as irons, heaters, vaccum
cleaners, fans, mixers and water purifiers.
The key products in the Indian consumer electronics products
and household appliances industry are colour TVs, refrigerators, air
conditioners and washing machines. At the product level, within the Consumer
Electronic and household appliances Industry in India, the penetration level of
CTVs is the highest, followed by Refrigerators, Washing Machines and Air
Conditioners.
The Key growth drivers of the Industry are:
* rising income levels and increasing affordability; fuelling consumerism
and growth in demand for aspirational goods
* change in perception of Consumer goods as 'basic necessities' as
opposed to 'luxuries', largely driven by increased awareness and
advertising.
* rationalizing of prices by key players, due to a conducive tariff
policy by the Government.
* increasing demand for technology driven replacement of consumer goods
and household appliances.
Colour TVs
Colour TVs are the dominant product in the Indian consumer electronics
products and household appliances market both by volume and by value. The
leading brands in the colour TV market are Videocon, Philips, Onida, Samsung,
LG and Sony.
As per company, top six brands in the Indian colour
CRT TV market have consolidated their dominance during the past few years and
accounts for about 75% of the market share.
The Indian CTV market is predoniminantly a small-to-medium segment market(14',
20' and 21'). The large CTV segment ( >21'), though growing rapidly,
accounts for around 5% of the total demand.
The market demand for colour CRT TVs is expected to have increased around
17%-20% in the year ending 31 December 2006. The key trend in the industry has
been the increasing demand for flat colour CRT TVs. Flat colour CRT TVs now
account for approximately 60% of the total colour CRT TV market. The growth in
demand in this sector of the colour CRT TV market has been driven by a reduction
in the price differential between 21' conventional colour CRT TVs and flat
colour CRT TVs, and increasing consumer preference for flat colour CRT TVs. It
is expected that the growth in the CTV segment in India will be mainly seen in
the 29' & 21 Flat CTV segment.
A key trend that differentiates the Indian CRT TV market from the
developed world is the fact that unlike the developed western markets, where
the demand is shifting from the Cathode Ray Tube (CRT) based technology to
LCD/Plasma-based technology; in India, the demand for CTVs will mainly come
from CRT based technology. The high technology costs associated with hi-end TVs
result in a very high price tag which acts as a key barrier to its demand
growth. Globally, the TV industry is moving technologically from black and
white to CTVs and CTVs to PDP(Plasma Display Panel) and LCD (Liquid Crystal
Display) CRT TVs.
The key growth drivers of
CRT TV business in India are likely to be:
* Low penetration levels- The penetration level of CRT TVs in India is
more lower when compared to other countries, worldwide.
* Electrification in rural India and increasing aspirations of people in
rural India.
* Replacement of TVs due to ageing.
* Multiple TV demand from Middle and high income categories.
* Price erosion and easy and inexpensive finance availability.
* Sports events/festivals
* Products innovations.
Refrigerators
The growth in the refrigerators sector is minimal in recent years largely
on account of rising input prices, shrinking margins and the poor financial
health of the refrigerator divisions of most of the major consumer electronics
products and household appliances manufacturers.
Air Conditioners
Globally, split air conditioners account for 80 per cent. of
room air conditioner sales. In India, window air conditioners are thought to
have been preferred to split air conditioners because of their lower price.
According to industry sources, the demand for split air conditioners has
increased considerably in the year ended March 2006, due to a reduction in the
price differential between split and window air conditioners, increased
affordability and because split air conditioners require less space, have low
noise levels and are better looking than window air conditioners. The ratio
between window and split AC's in India is now approximately 1:1.
Increasing affordability, acceptance of air conditioners as a utility
product rather than a luxury item and historic low penetration of air
conditioners in India have been the key demand drivers in the industry.
Washing Machines
The Washing Machines industry has witnessed slow growth on account of a low
acceptance among masses due to availability of cheap manual labour as a
substitute. Despite the aggressive pricing policy adopted by the players,
demand remained largely inelastic to price. The growth was restricted to urban
areas, whereby the rising number of working women offers growth potential.
Washing machines still feature down below on the average consumer's purchase
list.
Glass Shells
Glass Shells (glass panels and funnels), account for nearly
60% of CRT costs. The manufacturing process for glass shells is
capital-intensive. Videocon is one of the major players in the glass shell
business in India.
INDIAN OIL AND GAS INDUSTRY
Per capita consumption of primary energy and hydrocarbons of India is
among the lowest in the world. Developed countries such as the UK, Germany and
Japan have a per capita consumption of primary energy and hydrocarbons which is
more than ten times that of India.
Demand
for Crude Oil:
Demand for crude oil is derived from the demand for petroleum products, which
is largely determined by the growth in the economy. High speed diesel oil,
motorspirit, liquefied petroleum gas, naphtha and fuel oil account for the bulk
of the consumption of petroleum products in India. While domestic production of
crude oil and natural gas has increased over the past decade, it has not kept
pace with growth in domestic consumption over the same period.
As the gap between demand and production continues to widen, India
has increasingly become a significant net importer of crude oil. It is against
this background that the Government of India has stressed the importance of
exploration of hydrocarbons in India. However, India has adequate refining
capacity. The refining capacity has grown from 62 MMT in April 1998 to 126 MMT
in April 2004 and the overall capacity is expected to exceed demand.
Recent Developments in Oil
Exploration in India
Since the early 2000's, oil majors such as OIL, IOC and ONGC have actively
commenced exploration abroad. ONGC has floated an international arm, ONGC
Videsh Limited, which has a presence in Russia, Sudan, Vietnam, Iran, Libya, Syria,
Myanmar, Iraq, Australia and Ivory Coast.
Recently, the Government of India, under the National Common Minimum Programme,
has placed greater emphasis on increasing indigenous production and on
acquiring equity and gas abroad. The government is planning to increase
indigenous production through the accelerated domestic exploration of oil and
gas, through improved oil recovery from existing fields and diversification of
the fuel base with an increased reliance on gas.
Natural gas has gained tremendous importance, both as a fuel and a feedstock
over the past 20 years. Natural gas is used as a feedstock in fertiliser and
petrochemical units. It is also used as a fuel in power plants using combined
cycle technology, and in other industries such as glass, ceramics, sponge iron
and tea estates. In western countries, natural gas is used as a heating fuel
(for residential and commercial buildings) and as a domestic fuel. India has a
total natural gas production of around 90 MMSCMD, out of which ONGC alone
produces 65.5 MMSCMD, while OIL produces 6.5 MMSCMD.
Recent significant developments in
the Exploration & Production Sector
* The area under exploration has increased over three times in the last
four years as a result of implementation of New Exploration Licensing
Policy.
* Major/significant discoveries have been made through sustained
exploration efforts. These discoveries include large gas discoveries in
Krishna-Godavari deep water and oil discoveries in Rajasthan and significant
gas discoveries in North-East Coast.
* In line with the objective of National Energy Security, ONGC Videsh
Ltd., and other Oil PSUs are pursuing opportunities to acquire equity oil and
gas abroad. Today, Indian Oil PSUs have presence in E&P sector in 13 countries.
NELP
India today remains one of the lesser explored regions in the world with
well density per thousand sq. km. being among the lowest. NELP was formulated
by the Government of India in 1997 to boost the level of exploration activity
both in on land and offshore including deep water in the country.
OPPORTUNITIES
AND THREATS
STRENGTHS
* The Company manufactures, assembles and distributes a wide range of
consumer electronics products and household appliances including CRT TVs, Home
entertainment systems, PDP and LCD TVs, Refrigerators, Washing Machines, Air
Conditioners, Small appliances and Components such as Glass Shell (Panels and
Funnels)
* The Company has strategically located manufacturing bases, both
internationally and domestically. Domestically and Internationally, the Company
is close to key target markets, thus reducing distribution, transportation and
warehousing expenditure and allowing them to benefit from localised sales tax
exemptions by supplying goods that are sold in the same state in which they are
manufactured. Internationally, the Company's manufacturing facilities are
strategically located to supply goods to targeted emerging markets of Eastern
Europe and Russia, Central and South America and China, where the Company
anticipate there will be significant demand for the Company's products.
* The Company has one of the most extensive sales and distribution
networks in India, which are located in cities, towns and villages throughout
India. These branch offices are supported by a logistics infrastructure which
comprises key warehouses in separate regions across India.
* The Company has adopted multibrand strategy which is more effective in
acquiring a greater aggregate share of the market than a strategy focusing on
the promotion of only one key brand, as the Company is able to target different
socio-economic market segments with each brand.
* The Company through Eagle Corporation Limited, a wholly owned
subsidiary, an offshore entity which acquired various companies engaged in the
manufacture of CPTs from Thomson during 2005, has established operations in
markets that the Company is targeting for consumer electronics products and
household appliances. This gives the Company new technologies and production
methods and also enables them to reduce the time and expenditure involved in
the development of these markets.
* The Company has manufacturing advantages based on mass production and
integration of processes. The Company is able to control the production costs
effectively on account of Mass production scale, Vertical Integration of
manufacturing process, leading positions in the manufacture of glass shells and
CPTs.
* The Oil and gas business provides the Company with a stable income
stream. This income provides a ready supply of funds for working capital and
future expansion plans.
* The Oil produced by the Company is of high quality. The Rawa field
yields Rawa crude, a premium light crude with a sulphur content below 0.01 per
cent. which therefore is able to command a price amongst the highest in the
crude oil market. Rawa crude is priced with reference to Tapis and Minas crude,
which is a high priced basket of oils.
WEAKNESSES:
* The Videocon Brand is popular in the Domestic Market only. It is yet to
be established as a full fledged Brand in International Market.
* The Working Capital Cycles are longer in nature.
OPPORTUNITIES:
* There are opportunities to increase penetration in the Indian consumer
electronic products and household appliances market. This can be achieved
through growth of customer base and enlargement of the Company's product
portfolio.
* There are opportunities to further develop the multibrand strategy.
Through the addition of the Electrolux and Kelvinator brands following the EKL
Merger, the Company expect to further expand the use of such strategy in the
household appliances market.
* There are opportunities to improve level of service to network of
dealers and distributors for example by providing more frequent deliveries in
order to reduce the dealers inventory levels and therefore costs.
* The Large scale operations can improve the margins of the Company
* There are opportunities to outperform in Domestic Market with Innovative
Products such as Slim Televisions. LCDs & PDPs etc.,
* To make forays into Flat Panel Display & Segment.
* There is scope to identify additional oil and glass blocks that are
suitable for exploration and have potential for production. The Company plan to
bid for the rights to exploit the hydrocarbons blocks which shall be open for
bidding in future.
THREATS:
* Due to stiff competition, prices are continuously reducing. If the
costs are not controlled then it may prove to be a threat and margins will be
under pressure.
* The Cost of marketing, advertising and after sale services are
increasing tremendously.
* The Cost and interest rates continue to be the key issues that are likely
to shape the growth rates of the Industry. There was no change in the Interest
rates in the past two years; however, the interest rates have started
increasing.
OUTLOOK
* The Company has adopted the best and the most sophisticated technology
to suit Indian needs. The company as a part of global diversification has been
planning international forays in the same industry and has successfully forayed
into international market either directly or indirectly.
* The consumer electronics sector is undergoing a major transformation.
The analog technologies are giving way to digital technologies. Digitalization
in turn is leading to convergence of consumer, computer, communication,
broadcast cable technologies and the contents. A digital signal can be far more
easily processed than an analog one. The company is planning to tap this.
* The Company as a part of reducing manufacturing cost of products has
explored the possibility of manufacturing various components at the in-house
facility by setting up standalone facilities.
Corporate Profile
The Videocon group emerges as a USD 2.5 Billion global conglomerate continuing
to set trends in every sphere of its activities from a conference room sized
assembly line in 1979.
Today
the group operates through 4 key sectors:
v
Consumer
Durables
v
Thomson
CPT
v
CRT
Glass
v
Oil
& Gas
Consumer Electronics, Home Appliances & Compressor
manufacturing in India
They enjoy a pre-eminent position in terms of sales and customer satisfaction in
many of their consumer products like Colour Televisions, Washing Machines, Air
Conditioners, Refrigerators, Microwave ovens and many other home appliances,
selling them through a Multi-Brand strategy with the largest sales and service
network in India. Refrigerator manufacturing is further supported by their
inhouse compressor manufacturing technology in Bangalore.
Display
industry and its components
With the Thomson
acquisition Videocon has emerged as one of the largest Colour Picture tube
manufacturers in the world operating in Mexico, Italy, Poland and China,
continuing to lead through new innovative technologies like slim CPT, extra
slim CPT and High Definition 16:9 format CPT.
Colour Picture Tube Glass
Videocon is one of the largest CPT Glass manufacturers in the world with a high
level of experience and technical expertise operating through Poland and India.
Videocon will leverage on this synergy after the Thomson acquisition to
internally source glass for its CPT manufacturing increasing efficiencies and
lowering costs.
Oil
and Gas
An important asset
for the group is its Ravva oil field with one of the lowest operating costs in
the world producing 50,000 barrels of oil per day. The group has ambitious
plans for expansion in this sector globally.
Videocon’s
Lifestyle Expo set to make a Big Splash
Videocon, India’s
leading Consumer Electronics & Home Appliances brand, has launched a
nation-wide series of roadshows, called Videocon Lifestyle Expo 05. Organized
to showcase Videocon’s product range superiority and to bring the Videocon
experience close to the consumers’ homes, the Lifestyle Expo promises to create
a sensation as it showcases in different parts of the country over the next few
months.
The Videocon Lifestyle
Expo will run for 3 days and along with the product showcase, there is a
shopping festival organised, where consumers can purchase Videocon products at
attractive prices, with 0% finance options also being available. Lucky Draws
and entertainment for ladies & kids are also part of the event.
Also launched at
this time is Videocon’s mega consumer offer, the Hum-Tum Offer. A celebration
of the spirit of togetherness, the Hum-Tum Offer gives the consumers many
exciting product combinations to choose from, across the product categories of
Colour TVs, Refrigerators, Washing Machines, DVD Players & Home Theatres.
The combination offer is unique in that it allows the consumer to choose from
among 15 combinations according to his needs, at extremely attractive
prices.
The product
combinations in Hum-Tum have been created with special care. “Videocon is known
for always keeping the customer’s best interests in mind, and this time is no
different. Hum-Tum combinations are tailored to suit every need, at prices that
are irresistible”, said Mr. Sunil Tandon, Vice-President, Marketing,
Videocon.
This is reconfirmed
by Mr. Pawan Kalra, VP, HA Sales, who says, “The combination prices are truly
amazing. For example, where else can one avail of a combination of a
fully-automatic washing machine and a 250-litre frost-free refrigerator for
just Rs. 18990? Other combination prices are equally challenging, both in
electronics and appliances.” With combinations of TVs with DVD players, TV with
refrigerator, washing machines with refrigerator, TVs with different mobile
phones, and many others, the list seems endless.
Scheduled to travel
all over the country, including Maharashtra, Gujarat, Uttar Pradesh, Punjab,
Madhya Pradesh & Tamil Nadu, the Videocon Lifestyle Expo promises to give
the customers a truly unique experience.
This is the first
time that the company has launched a countrywide series of exhibitions on such
a grand scale. According to Mr. Sunil Mehta, VP, CE Sales, Videocon, the
Lifestyle Expo is basically a fun-fair for the whole family – “One can come and
have a look at the latest technologies on offer, experience the Videocon
products hands-on, and be entertained in a variety of other ways. They have
special Plasma TV and Home Theatre displays & demonstrations, which will
enable you to truly feel the movie theatre experience; and with the exciting
Hum-Tum combinations also on offer at the Expo, it is the opportunity of a
lifetime, as well as an unforgettable experience”, he said.
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.39.40 |
|
UK Pound |
1 |
Rs.81.12 |
|
Euro |
1 |
Rs.55.35 |
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 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--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 |
NO |
|
--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 |
|