MIRA INFORM REPORT

 

 

Report Date :

26.09.2007

 

IDENTIFICATION DETAILS

 

Name :

SHERVANI INDUSTRIAL SYNDICATE LIMITED

 

 

Registered Office :

332 Shervani Nagar, Sulem Sarai, Harwara, Allahabad – 211 001, Uttar Pradesh

 

 

Country :

India

 

 

Financials (as on) :

31.03.2007

 

 

Date of Incorporation :

25.02.1948

 

 

Com. Reg. No.:

20-1891

 

 

CIN No.:

[Company Identification No.]

L45202UP1948PLC001891

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

ALDS01043A

 

 

PAN No.:

[Permanent Account No.]

AAHCS3869D

 

 

Legal Form :

It is a public limited liability company.  The company’s shares are listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturing of Flash Lights, Lamps and Battery

 

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

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

 

Maximum Credit Limit :

USD 2400000

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established and reputed company having satisfactory track records. Directors are reported as experienced and respectable businessmen. Trade relations are fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

 

 

LOCATIONS

 

Registered Office :

332 Shervani Nagar, Sulem Sarai, Harwara, Allahabad – 211 001, Uttar Pradesh

Tel. No.:

91-532-2636772/ 2637296

Fax No.:

91-532-2637300/ 2436928

E-Mail :

shervaniind@rediffmail.com

 

 

Head Office :

28, South Road, Allhabad – 211 001, Uttar Pradesh, India

Tel. No.:

91-532-624135 / 624152 / 624538 / 623064

Fax No.:

91-532-624251

E-Mail :

sisli@vsnl.com

 

 

Factory 1 :

q                 Lamp Unit:

28, South Road, Allahabad, Uttar Pradesh, India

 

q                 Torch Unit:

Shervani Nagar, Harwara, Allahabad, Uttar Pradesh, India

 

q                 Battery Units:

-          Shervani Nagar, Harwara, Allahabad, Uttar Pradesh, India

-          Belagola Industrial Area, Metagalli, Mysore, Karnataka, India

 

 

 

Factory 2 :

Located at:

New Delhi, Allahabad, Calcutta, Mumbai and Bangalore

 

 

DIRECTORS

 

Name :

Mr. Azhar Nisar Shervani

Designation :

Chairman

Date of Birth/Age :

15.08.2007

Qualification :

B. Com.

Date of Appointment :

31.10.2000

Other Directorships :

s         Shervani Hospitalities Limited

s         Shervani Sugar Syndicate Limited

s         Shervani Fabrics Private Limited

 

 

Name :

Mr. Tahir Hasan

Designation :

Vice Chairman

 

 

Name :

Mr. Saleem Iqbal Shervani

Designation :

Managing Director

Qualification :

B.S. (Hons.) AMIMA

Date of Appointment :

03.04.1998

 

 

Name :

Mr. Raju Verghese

Designation :

Whole Time Director

 

 

Name :

Mr. Saeed Mustafa Shervani

Designation :

Director

Date of Birth/Age :

29.05.1959

Qualification :

Diploma in Hotel Management

Date of Appointment :

09.01.1986

Other Directorship :

s         Shervani Hospitalities Limited

s         S P S Propmart Private Limited

s         Beans Estates Private Limited

s         Cherry Auto Industries Private Limited

 

 

Name :

Ms. Salma Hasan

Designation :

Director

 

 

Name :

Mr. Kush Bhargava

Designation :

Director

 

 

Name :

Mr. Gopal Swaroop Chaturvedi

Designation :

Director

 

 

Name :

Dr. Kamal Kumar

Designation :

Director

Date of Birth/Age :

30.10.1955

Qualification :

M. D., MICC

Date of Appointment :

12.10.2003

Other Directorship :

Shervani Hospitalities Limited

 

 

KEY EXECUTIVES

 

Name :

Mr. B. K. Misra

Designation :

Company Secretary and Accounts Manager

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

Names of Shareholders

No. of Shares

Percentage of Holding

Promoters, Directors and Relatives

1634200

50.12

Public Financial Institutions

400602

12.29

Nationalised Bank

6040

0.19

Bodies Corporate

66769

2.05

Public

1147689

35.20

NRI’s / OCB’s

4030

0.12

Others

920

0.03

Total

3260250

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturing of Flash Lights, Lamps and Battery

 

 

Products :

Production Description

Item Code No. (ITC Code)

 

 

Flashlight Cases (Torches)

85131005

Dry Cell Batteries

85068009

Miniature/Electrical Lamps

85392901

 

 

 

PRODUCTION STATUS

 

(Quantities in Million Numbers)

Particulars

 

 

Installed Capacity

Actual Production

 

 

 

 

 

Flashlight Cases

 

 

    5.0 p.a.

1.26

Miniature Lamps

 

 

    6.0 p.a.

0.01

Dry Cell Batteries

 

 

153.0 p.a.

0.00

 

 

GENERAL INFORMATION

 

No. of Employees :

--

 

 

Bankers :

s         Central Bank of India, Allahabad, Uttar Pradesh

s         State Bank of India, Allahabad, Uttar Pradesh

s         Union Bank of India

s         ICICI Bank Limited

s         HDFC Bank Limited 

 

 

Facilities :

Secured Loan

(Rs. In millions)

 

31.03.2007

31.03.2006

Union Bank of India

(against pledge of Fixed Deposit Receipts)

94.099

83.481

Central Bank of India

(against pledge of Fixed Assets Receipts)

0.000

3.651

Total

94.099

87.132

 

Unsecured Loan

(Rs. In millions)

 

31.03.2007

31.03.2006

Fixed Assets

2.240

4.208

Security Deposit

0.817

1.073

Total

3.057

5.281

 

 

 

Banking Relations :

Satisfactory

 

 

Auditors :

 

Name :

P. L. Tandon and Company

Chartered Accountants

Address :

Westcott Building, Mahatma Gandhi Road, Kanpur – 208 001, Uttar Pradesh, India

 

 

Associates :

s         Shervani Hospitalities Limited

 

 

Subsidiaries :

s         Shervani Fabrics (Private) Limited

s         Rocklite Plastic Company Limited

s         Tara Snacks and Foods Limited

 

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

6,280,000

Ordinary Shares

Rs. 10/- each

Rs. 62.800 millions

20,000

Cumulative Redeemable Preference Shares

Rs. 100/- each

Rs.   2.000 millions

8,000

Deferred Shares

Rs. 25/- each

Rs.   0.200  million

 
Total

 

Rs. 65.000 millions

 

 

 

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

3,260,250

Ordinary Shares

Rs. 10/- each

Rs. 32.603 millions

8,000

Deferred Shares

Rs. 25/- each

Rs.   0.200  million

 
Total

 

Rs. 32.803millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2007

31.03.2006

31.03.2005

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

32.800

32.800

32.800

2] Reserves & Surplus

567.100

564.900

563.400

NETWORTH

599.900

597.700

596.200

LOAN FUNDS

 

 

 

1] Secured Loans

94.100

87.100

103.300

2] Unsecured Loans

3.100

5.300

7.400

TOTAL BORROWING

97.200

92.400

110.700

 

 

 

 

TOTAL

697.100

690.100

706.900

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

81.400

72.000

75.900

Capital work-in-progress

0.000

0.000

0.000

 

 

 

 

INVESTMENT

164.800

185.800

235.200

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
12.700

13.200

14.100

 

Sundry Debtors
6.400

9.800

9.700

 

Cash & Bank Balances
179.800

185.700

164.800

 

Loans & Advances
334.300

327.400

285.600

Total Current Assets
533.200

536.100

474.200

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Current Liabilities
35.700

57.200

74.400

 

Provisions
46.600

46.600

4.000

Total Current Liabilities
82.300

103.800

78.400

Net Current Assets
450.900

432.300

395.800

 

 

 

 

TOTAL

697.100

690.100

706.900

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

Sales Turnover

41.300

83.400

98.300

Other Income

48.700

43.900

33.500

Total Income

90.000

127.300

131.800

 

 

 

 

Profit/(Loss) Before Tax

3.900

31.200

15.600

Provision for Taxation

(2.200)

26.000

3.400

Profit/(Loss) After Tax

6.100

5.200

12.200

 

 

 

 

Total Expenditure

80.400

90.100

110.100

 

 

 

 

QUARTERLY RESULTS

 

PARTICULARS

 

 

 

30.06.2006

Type

 

 

1st Quarter

Sales Turnover

 

 

0.900

Other Income

 

 

12.900

Total Income

 

 

13.800

Total Expenditure

 

 

10.900

Operating Profit

 

 

2.900

Interest

 

 

(4.000)

Gross Profit

 

 

6.900

Depreciation

 

 

1.400

Tax

 

 

0.100

Reported PAT

 

 

5.400

 

 

KEY RATIOS

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

Debt Equity Ratio

0.16

0.17

0.17

Long Term Debt Equity Ratio

0.01

0.01

0.03

Current Ratio

2.91

2.71

2.57

TURNOVER RATIOS

 

 

 

Fixed Assets

0.23

0.47

0.48

Inventory

3.19

6.11

6.83

Debtors

5.10

8.55

10.68

Interest Cover Ratio

(2.69)

5.15

1.99

Operating Profit Margin (%)

(11.62)

41.13

21.36

Profit Before Interest and Tax Margin (%)

(25.42)

33.93

15.16

Cash Profit Margin (%)

(14.29)

4.32

12.11

Adjusted Net Profit Margin (%)

(28.09)

(2.88)

5.90

Return on Capital Employed (%)

(1.51)

4.05

2.15

Return on Net Worth (%)

(1.94)

(0.40)

0.98

 

 

LOCAL AGENCY FURTHER INFORMATION

 

HISTORY

 

The company was incorporated on 26th October, 1948 at Allahabad in Uttar Pradesh having Company Registration Number 1891. 

 

The company has entered into an agreement with wilkinson Sword India Limited for transfer of intellectual property asset, sale of asset, non-compete agreement, etc.

 

Consequent to the deal with Gillette and pursuant to the special resolution passed in the extra-ordinary general Meeting of the company held on January 6, 1999 and the approval of the Central Government thereon, the name of the company has been changed from 'Geep Industrial Syndicate Limited’ to ‘Shervani Industrial Syndicate Limited’ with effect from 17th March, 1999 vide the Fresh Certificate of Incorporation issued by the Registrar of Companies, Uttar Pradesh.

 

 

OPERATIONS REVIEW

 
During the year under review the production of Torches reduced drastically from 3.10 million to 1.26 million causing 51 % reduction in income. Your Company continued the contract manufacturing of 'Eveready' and 'Salora' brand Torches. Requirement of both these brands reduced significantly due to steep decline in demand of expensive and conventional Brass Torches in Indian market. In fact the Indian Metal Flashlight Industry as a whole suffered a setback as cheap and energy saving LED (Light Emitting Diode) Torches largely occupied the place. 
 
SUBSIDIARY COMPANIES 


SHERVANI SUGAR SYNDICATE LIMITED 


In the reporting period, the subsidiary company has utilised its capacity very well. However the productivity improvement could not convert to profitability due to sugar price crash in the market saddled with sugarcane price hike declared by the Government. The subsidiary company is expected to suffer cash loss during the sugar season 2006-2007 in line with sugar industry in the country. 


SHERVANI HOSPITALITIES LIMITED

  
The Company has invested Rs.30 millions in the Equity Shares of the subsidiary Company for opening of new restaurants and refurbishing of existing hotels.

 

Unfortunately, the business of Cafe Masala and Base Kitchen the new restaurants for which the investment were mainly made has not been successful and closed down by the subsidiary company. The Accumulated losses as on 31st March 2006 were increased to Rs.44.786 millions against paid up capital of Rs.41.667 millions. In view of the losses the Board decided for sale of the 15,00,000 Equity Shares at par to minimise its exposure in subsidiary company without incurring any loss. After the transfer of these Shares M/s Shervani Hospitalities Limited ceased to be subsidiary of the company. 


TARA SNACKS AND FOODS LIMITED 


The Board has deferred its earlier decision of amalgamation of the subsidiary company for one year from 01.04.2006 to 01.04.2007 to survey the market and also negotiate with various companies who are producing and marketing the Biscuits, for 'Contract manufacturing. 

 

MANAGEMENT DISCUSSION AND ANALYSIS

 
Industry Structure and Development: 


Brass Flashlight was the largest segment of Indian Flashlight Industry. It suffered a set-back in the market because of tremendous increase in product cost, and wide range acceptance of low priced and energy saving LED (Light Emitting Diode) Torches by the consumers. Growth of the market for conventional Brass Flashlights is not expected in the near future.

 
Outlook on Opportunities, Threats, Risks and Concern: 


The Company is undertaking only 'contract manufacturing' and as such the capacity utilization is dependent on Job Work Orders which are presently not adequate due to adverse market conditions. Presently the LED Torches available in the market are not of superior quality and these are either imported from China or produced locally by un-organized sector. The Company has taken-up designing and development of LED version of Brass Flashlights for their major customer Eveready. It is expected that the introduction of quality LED models at competitive price may revive the Brass Flashlight market. 


Financial Performance:

 
The income from Job charges has reduced in comparison to previous years due to erratic and inconsistent ordering pattern of the principal purchasers.

 

The substantial interest income and profit on sale of investment together with other income improved the profit before exceptional items by 6.67% compared to previous year.

 
Subsidiary Companies: 


Company has very high exposure in its subsidiary company Shervani Sugar Syndicate Limited. The productivity has shown significant improvement during the year in this subsidiary. However sharp decline in the prices of sugar coupled with increase in cane prices has spoiled the profitability of the industry. According to industry reports the profitability will be under stress for at least next 2-3 years. 

 

The Company’s Fixed Assets of important value includes:

 

s         Land

s         Building

s         Furniture and Fixtures

s         Plant and Machinery

s         Electric Appliances and Installations

s         Office Equipments

s         Laboratory Equipments

s         Vehicles

s         Tube Wells

s         Data Processing Machines 

 

 

 

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.39.81

UK Pound

1

Rs.80.30

Euro

1

Rs.56.02

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

9

PAID-UP CAPITAL

1~10

6

OPERATING SCALE

1~10

6

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

8

--PROFITABILIRY

1~10

5

--LIQUIDITY

1~10

7

--LEVERAGE

1~10

7

--RESERVES

1~10

6

--CREDIT LINES

1~10

6

--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

 

60

 

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

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions