MIRA INFORM REPORT
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Report
Date : |
25.09.2007 |
IDENTIFICATION DETAILS
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Name : |
SINTEX INDUSTRIES LIMITED |
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Registered
Office : |
Near Seven Garnala Kalol (Near
Gujarat) – 382721, |
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Country: |
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Financials
(as on): |
31.03.2007 |
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Date
of Incorporation : |
01.06.1931 |
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Com.
Reg. No.: |
04-454 |
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CIN
No.: |
L17110GJ1931PLC000454 |
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TAN
No.: (Tax
Deduction & Collection Account No.) |
AHMS00244G |
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PAN
No.: (Permanent
Account No.) |
AADCS0858E |
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Legal
Form : |
A Public Limited Liability Company. The company’s shares
are listed on the Stock Exchanges. |
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Line
of Business : |
Manufactures of
Poplin, Coats, Polyester Shirtings, Sarees, Dhotis, Corduroy Cloth, and Other
Fashion Fabrics. |
RATING & COMMENTS
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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 26034800 |
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Status
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Good |
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Payment
Behaviour : |
Regular |
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Litigation
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Clear |
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Comments
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Subject is a well-established company having fine track.
Available information indicates high financial responsibility of the company.
Trade relations are fair. Financial position is good. Payments are correct
and as per commitments. The company can be considered good for normal
business dealings. It can be regarded as a promising business partner in a
medium to Long-run |
LOCATIONS
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Registered
Office : |
Near Seven Garnala Kalol- 382721,
Gujarat, |
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Tel.
No.: |
91-2764-223731 (6 Lines), 220246
& 220793, 253000 |
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Fax
No.: |
91-2764 -220436, 222868, 253100 |
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E-Mail
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Website: |
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Manufacturing
facility : |
• Kalol Near. Seven Garnala Kalol - 382 721, (N.G.), District - Gandhinagar, • 61-C, Bommasandra Industrial Estate • Kolkata Plot No. 40&41, Near - Birsipur Railway Station, District - • Plot No. 34,39 & 40, Survey No. 168 Dabhel Industrial Company Society Limited. Dabhel, Daman ( • Baddi Near Raja Forging Gears Limited. District : Solan, • Plot No : B/124 Batti-Bori MIDC, Batti-Bori, Dist Nagpur, • 131, Sandhiyur Attayampatti, Behind • Bhachau Plot No. 1211/1, 1223/24/31 District – Kutch, Bhachau, |
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Factory
1 : |
Located at Kalol (N.G.), |
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Office
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HEAD OFFICE Bharat
Vijay Mills SINTEX
INDUSTRIES LIMITED SINTEX
INDUSTRIES LIMITED SINTEX
INDUSTRIES LIMITED |
DIRECTORS
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Name : |
Mr. Dinesh B. Patel |
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Designation
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Chairman and Whole Time Director |
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Name : |
Mr. Arun P. Patel |
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Designation
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Vice chairman and Whole Time
Director |
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Name : |
Mr. Ramnikbhai Ambani |
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Designation
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Director |
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Name : |
Mr. Ashwin Lalbhai Shah |
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Designation
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Director |
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Name : |
Mr. Rooshikumar Pandya |
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Designation
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Director |
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Name : |
Mrs. Indira Parikh |
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Designation
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Director |
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Name : |
Mr. Dr. Rajesh B. Parikh |
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Designation
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Director |
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Name : |
Mr. Dr. Lavkumar Kantilal |
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Designation
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Director |
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Name : |
Mr. Pulak Chandan Prasad |
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Designation
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Director |
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Name : |
Mr. Rahul A. Patel |
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Designation
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Managing Director |
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Name : |
Mr. Amit D. Patel |
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Designation
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Managing Director |
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Name : |
Mr. S.B. Dangayach |
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Designation
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Managing Director |
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Name : |
Mr. Niten Malhan |
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Designation
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Director |
KEY EXECUTIVES
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Name : |
Mr. L.M. Rathod |
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Designation
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President - Corporate Finance
& Com. Sec |
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Name : |
Mr. S. Vekatachalam |
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Designation
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President - Opr (Plastic
Division) |
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Name : |
Mr. B.R. Jayswal, President |
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Designation
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Fin. & Ace. (Plastic
Division) |
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Name : |
Mr. Sanjib Roy |
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Designation
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President - Marketing (Plastic
Division) |
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Name : |
Mr. Rajan Gulabani |
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Designation
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Vice President - Marketing
(Plastic Division) |
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Name : |
Mr. S.M.Anerao |
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Designation
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Vice President - Marketing
(Plastic Division) |
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Name : |
Mr. A.C.Saxena |
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Designation
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Vice President - Marketing
(Plastic Division) |
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Name : |
Mr. Ashoke Maitra, President |
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Designation
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Opr. (Textile Div.) |
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Name : |
Mr. A. Vaitheeswaran |
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Designation
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President - Admn. (Textile
Division) |
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Name : |
Mr. R.A. Sharma |
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Designation
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President - Proc. (Textile
Division) |
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Name : |
Mr. Shashidhar B.C |
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Designation
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President - Marketing. (Textile
Division) |
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Name : |
Mr. Rahul A. Patel |
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Designation
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Managing Director |
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Name : |
Mr. Amit D. Patel |
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Designation
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Managing Director |
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Name : |
Mr. S.B. Dangayach |
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Designation
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Managing Director |
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Name : |
Mr. L.M. Rathod |
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Designation
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Company secretary |
MAJOR
SHAREHOLDERS
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Names
of Shareholders |
No. of Shares |
Percentage of Holding |
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Promoters Holding |
32574195 |
33.02 |
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Residential
Individuals |
7739602 |
7.84 |
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Financial
Institutions |
225725 |
0.23 |
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Nationalised
Banks |
6950 |
0.01 |
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Mutual
Funds |
10244236 |
10.38 |
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NRIs /
OCBs |
403149 |
0.41 |
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Foreign
Investor |
24446625 |
24.78 |
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FFIS |
20370480 |
20.65 |
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Domestic
Companies |
2647358 |
2.68 |
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Total |
98658320 |
100.00 |
BUSINESS DETAILS
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Line
of Business : |
Manufactures of
Poplin, Coats, Polyester Shirtings, Sarees, Dhotis, Corduroy Cloth, and Other
Fashion Fabrics. |
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Products
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PRODUCTION STATUS
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Particulars |
Unit |
Licensed Capacity |
Installed Capacity |
Actual Production |
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Textile
Unit Looms |
Nos. |
592 |
322 |
140.56 |
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Plastics
Units (Kgs.) |
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Thermoplastic Powder Moulding |
Kgs |
410.00 |
369.00 |
228.24 |
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Extruded Thermo-Plastic Sections |
Kgs |
310.00 |
287.82 |
120.24 |
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SMC/Pultrusion
and Articlesmade thereof, thermoforming and Blow |
Kgs |
110.00 |
95.82 |
34.54 |
GENERAL INFORMATION
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No. of
Employees : |
2000 |
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Bankers
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State Bank of Bank of IDBI Bank Limited |
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Rs. in millions |
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Facilities : |
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Banking Relations : |
Satisfactory |
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Auditors
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Deloitte
Haskins & Sells Chartered
Accountants Ahmedabad |
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Associates/Subsidiaries
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Ř
Prism Finance Limited Ř
Som Shiva Impex Limited Ř
BVM Finance Limited Ř
Starline Leasings Limited Ř Sintex
International Limited |
CAPITAL STRUCTURE
Authorised
Capital : Rs. 500.000 Millions
Issued, Subscribed & Paid-up Capital :Rs. 221.900 Millions
FINANCIAL
DATA
[all
figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS
FUNDS |
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1] Share
Capital |
221.900 |
197.300 |
184.800 |
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2] Share
Application Money |
0.000 |
0.000 |
0.000 |
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3]
Reserves & Surplus |
6286.800 |
4297.300 |
4887.100 |
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4]
(Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
6508.700 |
4494.600 |
5071.900 |
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LOAN
FUNDS |
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1]
Secured Loans |
5060.000 |
3595.300 |
3382.200 |
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2]
Unsecured Loans |
1722.600 |
2231.300 |
1.900 |
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TOTAL BORROWING |
6782.600 |
5826.600 |
3384.100 |
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DEFERRED
TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
13291.300 |
10321.200 |
8456.000 |
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APPLICATION
OF FUNDS |
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FIXED
ASSETS [Net Block] |
6354.300 |
4706.500 |
4934.400 |
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Capital
work-in-progress |
387.900 |
190.200 |
296.200 |
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INVESTMENT |
2065.300 |
1568.300 |
1674.700 |
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DEFERREX
TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT
ASSETS, LOANS & ADVANCES |
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Inventories |
1455.400
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862.800 |
1068.500 |
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Sundry
Debtors |
2130.300
|
1506.700 |
1481.100 |
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Cash
& Bank Balances |
3853.100
|
3553.500 |
783.200 |
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Other
Current Assets |
0.000 |
0.000 |
0.000 |
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Loans
& Advances |
693.700
|
386.300 |
465.100 |
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Total Current Assets |
8132.500
|
6309.300 |
3797.900 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current
Liabilities |
3296.900
|
2329.800 |
2202.100 |
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Provisions |
373.000
|
157.300 |
106.100 |
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Total Current
Liabilities |
3669.900
|
2487.100 |
2308.200 |
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Net Current Assets |
4462.600
|
3822.200 |
1489.700 |
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MISCELLANEOUS
EXPENSES |
21.200 |
34.000 |
61.000 |
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TOTAL |
13291.300 |
10321.200 |
8456.000 |
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PROFIT & LOSS ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
12128.000 |
9139.800 |
7151.600 |
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Other Income |
664.000 |
213.200 |
292.600 |
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Total
Income |
12792.000 |
9353.000 |
7444.200 |
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Profit/(Loss) Before Tax |
1615.300 |
1142.900 |
706.100 |
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Provision for Taxation |
309.500 |
222.800 |
167.000 |
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Profit/(Loss) After Tax |
1305.800 |
920.100 |
539.100 |
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Expenditures : |
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Raw Materials |
6953.900 |
5105.400 |
4148.700 |
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Excise Duty |
972.800 |
589.800 |
574.700 |
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Power and Fuel Cost |
466.300 |
344.700 |
259.000 |
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Other Manufacturing Expenses |
755.600 |
587.000 |
514.800 |
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Employee Cost |
431.700 |
327.00 |
285.300 |
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Selling and Administration Expenses |
436.600 |
413.400 |
251.400 |
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Miscellaneous Expenses |
335.200 |
240.600 |
173.200 |
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Interest |
409.900 |
290.900 |
248.500 |
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Depreciation |
414.700 |
311.300 |
282.500 |
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Total
Expenditure |
11176.700 |
8210.100 |
6738.100 |
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QUARTERLY RESULTS
|
PARTICULARS |
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|
31.03.2007 |
|
Type |
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|
1st Quarter |
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Sales Turnover |
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|
2999.900 |
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Other Income |
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|
121.200 |
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Total Income |
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|
3121.100 |
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Total Expenditure |
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2472.600 |
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Operating Profit |
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|
648.500 |
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Interest |
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|
120.100 |
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Gross Profit |
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|
528.400 |
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Depreciation |
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|
129.500 |
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Tax |
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|
87.000 |
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Reported PAT |
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|
305.600 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Debt Equity Ratio |
|
1.15
|
0.96 |
0.74 |
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Long Term Debt Equity Ratio |
|
0.93
|
0.77 |
0.55 |
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Current Ratio |
|
1.70
|
1.52 |
1.14 |
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TURNOVER RATIOS |
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Fixed Assets |
|
1.56
|
1.36 |
1.10 |
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Inventory |
|
10.46
|
9.46 |
7.85 |
|
Debtors |
|
6.67
|
6.12 |
5.42 |
|
Interest Cover Ratio |
|
4.94
|
4.39 |
3.84 |
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Operating Profit Margin (%) |
|
20.12
|
17.37 |
17.30 |
|
Profit Before Interest And Tax Margin (%) |
|
16.70
|
13.97 |
13.35 |
|
Cash Profit Margin (%) |
|
14.19
|
12.07 |
11.49 |
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Adjusted Net Profit Margin (%) |
|
10.77
|
8.67 |
7.54 |
|
Return On Capital Employed (%) |
|
17.19
|
13.67 |
12.84 |
|
Return On Net Worth (%) |
|
23.73
|
16.56 |
12.55 |
LOCAL AGENCY FURTHER
INFORMATION
FIXED ASSETS:
Ř Land and Buildings
Ř Plant & Machinery
Ř Furniture and Fixture
Ř Office equipments
Ř Vehicles
Ř Bore-well
Ř Railway Sidings
Ř Live stock
Names of Small Scale
Industrial Undertakings to whom the Company owed any sum which was outstanding
for more than 30 days as at the end of the financial year are as under:
Ř
Pondy Oxide
& Chemicals Limited.
Ř
Chem Coat
Industries
Ř
Jewel Polymers
Private Limited.
Ř
K.K. Poonja
& Sons
Ř
Kromatiks &
Insulants Private Limited.
Ř
Satyen Polymers
Ř
Agarwal Fastners
Private Limited.
Ř
Apurva
Engineering Corpe
Ř
Expanded
Incorporation
Ř
Vishwakarma
Ř
Amptel Engg. Private Limited.
Ř
Essai Enterprises
Ř
Maruti Engineers
HISTORY:
Subject (formerly known
as Bharat Vijay Mills) has two divisions -- textiles and plastics. The textile
division manufactures poplin, coats, polyester shirtings, sarees, dhoties,
corduroy cloth and other fashion fabrics. Its plastic products are well known
by the Sintex brand. Water storage tanks, loft tanks, industrial containers and
material handling containers are some of the products manufactured in this
division. In 1988-89, it acquired Diamines & Chemicals from Cellulose
Products of India.
The company implemented a project to manufacture sheet-moulding compound (SMC)
in 1989-90. Its plastics division has been expanded to manufacture
thermoplastic powder mouldings, pultruded articles, pulverising mills and
rotational moulding machines. The plastics division has an ongoing
collaboration with
In 1995-96, the compmany installed wind turbine generators with an installed
capacity of 2310 kW. During 1998-99, the company's expansion project of plastic
division was successfully completed. Further the company has upgraded its
process house in its textile divsion by installing new imported processing
machinery which was completed in March, 2000.
During 2000-2001 the Textile Division had gone for expansion of looms.The total
weaving capacity has increased from 35000 mtrs/ day to 60000 mtrs/day.The
company's plastic division is working on developing of pallets,insulated
boxes,waste bins etc. The company is planning to install 4750 KVA Captive Power
Plant.
Subject has signed an agreement with Continental Solutions Inc of US for
purchase of the equipment, licence, technology and know-how on an exclusive
basis to manufacture and installation in the territory for fiber glass
reinforced plastic products such as above ground & underground storage
tanks, automotive oil & lubricant storage tanks, oil/ water separators and
interceptors, water/ waste water tanks, chemical storage tanks, retank
retrofitsystems, fiberglass manholes & wetwells and leak detection systems.
This will enable the company to cater the increasing demand for storage and
handling of hazardous and non-hazardous, flamable and combustible liquids by
existing as well as new players of petroluem products for their retail outlets,
refineries etc.
Review of
operations
The Company posted yet another year of impressive results testifying to the
robustness of this corporate strategy, competitive position and national
buoyancy notwithstanding a challenging business environment.
Gross turnover for 2006-07 grew by 32.69% to Rs.12128.000 millions, driven by
attractive growth across all the businesses of the Company.
* 34.41% growth in gross turnover of the plastic division to Rs.8887.400 millions
* 28.20% growth in gross turnover of the textile division to Rs.3240.700 millions
39.81% growth in EBIDTA to Rs.2439.900 millions
* 41.91% growth in post-tax profit to Rs.1305.800 millions
* Rs.12.15 basic earnings per share for the year under review
* Rs.11.97 diluted earnings per share for the year under review
Plastics
The Indian plastics industry is at an inflection point for important reasons:
under-penetration in the domestic markets, increasing availability of plastic
products, a booming Indian economy and a growing export market.
Despite a buoyant economy,
a growing affluence in
Performance
In 2006-07, the Company's plastics business delivered 32.67% revenue growth,
amounting to Rs.804905.600 millions. This was driven primarily by a sustained
robustness in the performance of pre-fabricated structures, custom-moulded
segment and BT shelters (BTS).
At subject, much of their competitive strength is derived from the interplay of
the right technology with high asset utilisation, leading to high efficiency,
one of the lowest product costs and a high quality. Their foresight in
identifying products with attractive market potential and successful market
place execution helped them acquire and maintain a leadership position in
various product segments.
The Company reinforced its brand equity across a wide range of products
(building construction materials, factory made doors and frames, wood
substitute plastic sections, water tanks, furniture and even material supplies
to original equipment manufacturers).
Subject also transitioned to higher value and service oriented offerings, which
progressively desensitised the Company to rising oil prices. As a result, the
cost of raw materials (crude, HDPE and LDPE granules) comprise a modest
proportion of the plastics business.
Pre-fabricated structures: The Company worked with several technologies leading
to cost-effective housing shortage solutions, one of them being prefabricated
construction. This is a growing area; the Urban Housing Department of the
The Company is attractively positioned to leverage this growing demand: it is a
prefabricated solutions company offering customisable, economic, efficient and
quicker alternatives of site built construction. It enjoys an expertise
developed over 30 years; its prefabricated structure manufacturing facility has
been certified for ISO 9000:2000.
The installation requires little or no use of machines; can be constructed with
ease in remote locations; remains easy to transport without any reduction in
the overall strength and can be used for creating multiple structures at
different locations.
The Company's prefab business continued to grow attractively across nine Indian
states in 2006-07. The Company manufactures 14 products in this category, enjoying
heavy orders for shelters (to house the BTS) from most players in the industry.
Equipment and solution providers are also committing large funds and orders for
such shelters.
This business is growing for another reason. Education is a priority for governments;
a number of states are accelerating the reach of education through the use of
prefabricated schoolrooms. Besides, the National Rural Health Mission (NRHM) is
a high-profile government programme, which envisages the creation of prefab
facilities to provide ayurveda, yoga, unani, siddha and homeopathy (AYUSH)
services. Besides, improved prefabricated toilets and modules are expected to
generate attractive spin-off demand.
Monolithic prefabs: The housing sector accounts for 3 to 5% of the GDP in most
developed economies; in
subject believes that the answer to
* Consistent quality; all the electrical, plumbing and related supports will be
integrated; the speed of construction is generally quicker than the
conventional method.
* These houses are designed to meet all precautions related to seismic,
waterproofing and fire etc.
* These houses have a longer life span compared to conventional construction
with negligible maintenance.
* These houses use fly ash as an ingredient in the construction, reducing
environmental pollution.
The Company constructed nearly 1,500 low-income group houses for the Ahmedabad
Urban Development Authority in 2006-07 and negotiations are on for similar
assignments in
Multi-storeyed transit homes: In many Indian cities, slum improvement /
rehabilitation is the critical need of the hour. The Company is in a position
to offer multi-storeyed transit homes made with suitable sandwich panels with a
life of over 25 years. With the government prioritising housing development for
the needy, the Company is positioned to act as a major catalyst.
New introductions: The Company developed PP profile for use in corner posts for
Poly John Portable Toilet Blocks; it will commence contract manufacture for
Poly John, which possesses a unique combination of roto moulding, thermo
forming and PP extrusion. The Company enjoys exclusive marketing rights of Poly
John in
Custom moulding and lightweight engineering products: subject essentially has
two sub-segments in the custom moulding business - auto components and
electrical - both of which are enjoying a healthy demand.
In custom moulding business, the Company is attractively placed as the
government is driving reforms in power distribution in several new states.
To reduce T&D losses, meter boxes, energy boxes, fuse
boxes and pillar boxes are needed, a pioneering area for the Company. The Rajiv
Gandhi Gramin Vaidyutikaran Yojana (RGGVY) is a high-priority programme and the
Company is supplying both products and undertaking turnkey jobs in certain
areas to the satisfaction of various distribution and utility companies.
Besides, the Company is working with several states and
supplying equipment like SMC enclosures, polymeric enclosures, polymeric
insulators and cross arms for power transmission grids. The Company is also
working on various government programmes like the Accelerated Power Development
and Reform Programme (APDRP) and Rajiv Gandhi Gramin Vaidyutikaran Yojana
(RGGVY) - in the area of rural electrification (SMC products).
Industrial custom-moulded products are also performing well. There is a growing
need for the Company's plastic pallets that provide totally hygienic and clean
solutions for material handling and logistics. Being a segment leader, the
Company expects to see a greater demand for pallets and related products in
retailing, warehousing, pharmaceuticals, fruit processing, fisheries and
related industries.
The auto components business, too, reported attractive growth, on the back of a
continuing strong relationship with Cummins and other multinationals.
subject continues to manufacture products specific to the
requirements of clients like Cummins, Siemens, Wasaukee, Coca-Cola, GE,
PepsiCo, New Holland Tractors and French Railways.
Water tanks: The Company launched a new range of products, namely underground
water tanks and horizontal tanks meant for the transportation of water and
other fluids. With a new emerging segment of sump tanks, septic tanks and transportation
tanks, the Company is eyeing a sizeable business over the next few years. The
implementation of VAT in line with global trends has also reduced competition
in this small scale sector.
The sale of Sintex Premium, Sintex and
However, underground tanks are yet to take off due to a tough year in the area
of oil distribution and retailing companies. A technical approval has been
secured and there are bright demand prospects from these sectors.
The Company is working on various government programmes like Rajiv Gandhi
Drinking Water and Sanitation Scheme and Indira Gandhi Water Supply
Scheme.
Textiles
The contribution of
The Indian textiles industry is poised for robust growth - both within and
outside the country - due to a strong presence across the textiles value chain,
government reform (for the benefit of organised textile manufacturers),
abolition of the quota regime and the integration of textile and clothing trade
under the WTO.
The last development is perhaps the most significant: the end of the
multi-fibre agreement (MFA) in 2005 has accelerated a shift in textile
capacities from the developed nations to low-cost Asian producers, with
India's trade data indicates impressive growth in textile and garment exports
to Europe and U.S.A. Rising domestic demand along with free international trade
have catalysed the growth of the Indian textile and apparel industries; going
ahead, the sector is set to grow into a $100-billion industry by 2010 (exports
50%).
The Company is attractively placed to capitalise on the industry upturn. A
9%-plus GDP growth and favourable international factors has resulted in a
healthy demand growth for the Company's products.
Correspondingly, the Company's production touched a record 191.9.8 millions
metres, a growth of 33% over the previous year. Besides, the Company's total
revenues from this business rose by 27.53% to Rs.3180.239 millions in 2006-07;
exports rose by 6.16% to Rs.14.1907 millions.
It would be pertinent to indicate that the Company is not just another textiles
player. It is among the most profitable companies in the Indian textile
industry. Even though input costs, particularly power and personnel, continued
to climb rapidly, the Company embarked on an aggressive capacity expansion,
wider product portfolio and global alliances to counter their impact.
For instance, the Company chalked out an ambitious phased four-year expansion
programme to expand the annual capacity of 21 million metres to 24 million
metres by FY08 (Phase I); it will add an additional 5 million metres by 2008-09
(Phase II).
This linear capacity expansion will be accompanied by a migration into high end
women's shirting. The Company is also strengthening its business through a
Rs.450.0 millions investment in a gasbased power plant in Kalol, which will
save Rs.144.0 millions per annum. The expansions in the Company's textile
division are being funded through the Technology Upgradation Fund Scheme
(TUFs).
New projects: The Company plans to extend into the high-end women's wear
segment and in this connection, embarked on a garmenting facility near Kalol (capacity
10,000 garments per day, scalable to 15,000) which will be commissioned by
September 2008. This forward integration will enable subject to emerge as a
one-stop solution provider for its premium customers.
International alliances: subject entered into collaborations with several
European design houses with a view to benefit them in marketing, keeping
abreast with the trends, higher realisation, technological direction,
international designs and an eminent clientele.
Spring-Summer collection 2008: The Company launched its Spring-Summer 2008 / 09
Dobby and Jacquard collections across
Marketing: In 2006-07, subject expanded its market footprint despite a decline
in export realisations as well as lower orders for yarn and dyed fabric. The
Company's innovative product line - Lycra Corduroy, 28
The Company strengthened its presence in the promising markets of
The Company plans to launch compact weaves in the 60s, 70s, 80s, double and 2 /
120s and yarn-dyed products. The Company also started a new range of 80s
collections with Canclini, testifying its capabilities in handing difficult
products; as an extension, the Company is the only one in India providing this
high-end range to Italian manufacturers.
Operations: During 2006-07, the Company reinforced its weaving section through
the following initiatives:
* Introduction of new counts / quality: Developed the skill to produce
fault-free structured fabric with super-fine yarn count in the 60s / 70s / 80s
and 2 / 120s; launched jacquard and high-end furnishing fabrics to diversify
exposure.
* Improved efficiency: Achieved a higher efficiency as production grew 33%
following the installation of new equipment and improved efficiency in the
weaving section.
* Environment-friendly activities: Improved housekeeping through the
installation of dust filtration and auto collection systems of waste, reducing
the incidence of loose fibres and micro dust.
* Customer service: Developed swatches identical to actual products; development
of swatches on auto sample looms (instead of usual handlooms) with the
objective to improve sample quality, reduce production time and samples.
* New products: Development of jacquard fabric on a trial basis; new finishes
comprised the following:
* Nano finish (water and oil repellent for a longer duration)
* 3X Dry (one-side water repellent and the other side quick dry to keep the
body fresh even in a moist environment)
* Active fresh (anti-microbial finish)
* Vitamin E (for health-conscious people)
* Coated fabric (polymer and other chemicals for style, can be an independent
line of business in the future)
* Cost control: Innovative approaches and efficient asset utilisation helps
reduce production cost; the introduction of alternative vendors helped reduce
the cost in loom sheds; hard waste dropped below 5%, though the order length
per design declined; the introduction of the modified process system increased
equipment utilisation, reducing double passage for yarn-
dyed and full white varieties (40% of product mix); reduced re-dyeing of yarn
and fabric without affecting
the colour-matching standards; old stock utilisation
increased 34% leading to a corresponding decline in cost and improvement in
service.
Subsidiary
In 2006-07, the Company acquired a 74% stake in Zeppelin Mobile Systems India
Limited, possessing an expertise in designing and commissioning world class
telecom shelters and featuring among the top two telecom shelter manufacturers
in
In terms of approvals granted by the Central Government under Section 212(8) of
the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss account,
Report of the Board of Directors and Auditors of the Subsidiary Company have
not been attached with the balance sheet of the Company. These documents will
be made available upon request by any member of the Company interested in
obtaining the same. However, as directed by the Central Government, the financial
data of the subsidiary has been furnished as a part of the Annual Report.
Issue of foreign currency convertible bonds (FCCB)
Pursuant to the approval of shareholders at the Extraordinary General Meeting
on October10, 2005, the Company accessed the international financial markets
with an issue of USD 50 million, Zero-Coupon Foreign Currency Convertible Bonds
due in 2010. The bonds are listed on the Singapore Stock Exchange.
The bond holders of USD 11 million have already exercised their option to convert
their FCCBs into equity shares and the Company has allotted 26,30,443 fully
paid-up ordinary shares of Rs.2 each convertible at a price of Rs.183.581 per
share.
Economic overview
Source: The Economic Survey
Advance GDP estimates for 2006-07, released by the Central Statistical
Organisation, place GDP growth at 9.2%.
For the first time in the last 10 years, industrial growth in
Going ahead, during the 11th Five-Year Plan, the Indian economy is expected to
report a 9% CAGR on the back of accelerating industrial and manufacturing
expansion. Industrial growth projected for the Plan period is expected to be
10.5% CAGR and manufacturing growth 12-14% CAGR.
Segment wise analysis
It was an eventful year strategically for the plastics and textile divisions of
the Company. In the plastics division the Company made a strategic investment
in Zeppelin Mobile Systems India Limited, a leading telecom shelter
manufacturing company in
Technologically too, the Company made a significant breakthrough in the
plastics division with a successful application of the monolithic concrete
construction concept.
Plastics division
Substitution and innovative application have been the key drivers for the
Indian plastic industry over the recent past, increasingly becoming a part of
every individual's daily life. As a result, the growth of
Industry opportunities
* Growing affluence in
* Demand growth from the packaging and consumer durable sectors.
* Increasing use of plastic in non-conventional applications like
building materials, road building, automotive components, housing complexes,
solar water heaters and waste management, providing a huge opportunity for the
industry.
* According to scientists at The University of Southern Mississippi (USM)
a new type of environmentally friendly plastic that degrades in seawater, could
release valuable storage space, making it safe and practical to toss plastic
waste overboard. The biodegradable plastics could replace conventional
materials used to make stretch wrap for large cargo items, food containers, eating
utensils and other plastics used at sea. This will ease pressure on ships as
typically large volumes of plastic waste generated aboard military, merchant
and cruise ships must be stored onboard, often for prolonged periods, until
they reach port.
Industry outlook
Spurred by internet expansion, the sale of computers and telecommunications
devices are driving a growth in plastics consumption. Apart from this, the use
of plastics is progressively increasing in the power sector (SMC meter boxes,
distribution pillar boxes, cross - arms, FRP aerial fuse boxes, moulded service
connection boards etc.), housing sector (monolithic concrete construction) and
building and construction sector (storage tanks, furniture, prefabs etc). In
addition, local production has increased, grades have widened and custom duties
have declined. Thus, the number of processors has increased and demand has
continuously grown.
As per the Union Budget 2007, customs duty on plastic
reduced from 12.5% to 7.5% and central excise duty on nylon chips reduced from
16% to 12%.
Despite this growth,
Overview of the plastics division
Subject is the leading player in the Indian plastics environment with multi-locational
operational presence. The Company has maintained its leadership by graduating
from product delivery to customising innovative solutions for its
customers.
As a progressive organization, subject capitalised on the favourable industry
environment through aggressive expansion of its geographical presence and
modification of its product categories to the demands of the industry and
consumer. The Company manufactures over 3,500 types of plastics and related
products of various shapes using 12 different processes, all under one roof. It
has graduated from a mere manufacturer to an integrated solutions
provider.
The Company's product mix primarily comprises:
* Pre-fabricated structures and monolithic concrete construction
* Custom moulding
* Water and liquid storage tanks
* Reinforced fiber glass storage tanks
Transmission and distribution accessories
Significant developments in
2006-07
Prefabricated structures: In this product category, the Company made
significant moves in the monolithic concrete construction sector.
Monolithic concrete construction: The Company and the Government of Gujarat,
represented by the Gujarat Urban Development Company, have entered into an
agreement for the construction of 50000 EWS (economically weaker section)
quarters with monolithic construction technology in Ahmedabad,
Monolithic prefabs: The Company constructed nearly 1,500 houses for Ahmedabad
Urban Development Authority (AUDA) for LIG. It is also in the process of
finalising similar jobs in
Monolithic prefabs: The Company constructed nearly 1,500 houses for Ahmedabad
Urban Development Authority (AUDA) for LIG. It is also in the process of
finalising similar jobs in
Portable toilet boxes: The Company developed PP profile for use in corner posts
for Poly John Portable Toilet Blocks. The Company will soon commence contract
manufacturing for Poly John, which has a unique combination of roto moulding,
thermo forming, and PP extrusion. The Company will have exclusive marketing
rights of Poly John in
Multi storied transit homes: In many Indian cities, slum improvement /
rehabilitation is the critical need of the hour. The Company is in a position
to offer multi-storeyed transit homes made with suitable sandwich panels
enjoying a life of over 25 years. With the government prioritising housing
development for the needy, the Company is positioned to act as a major
catalyst.
Custom moulded products: The custom moulding business has been the key growth
driver during the year under review. The Company has been making continuous
innovations in product design and styles to suit customer needs and has, over
the years, expanded its product basket significantly. There has been a
significant increase in the manufactured products in 2006-07.
Electrical custom moulding has been the fastest growing
product for subject.
With competition being limited in the domestic industry and
with a rising demand for auto plastics as well, the future looks promising for subject.
Liquid storage tanks: During the year, the Company launched a new range of
products, namely underground water tanks and horizontal tanks meant for the
transportation of water and other fluids. With the new segment of sump tanks,
septic tanks and transportation tanks, the Company is eyeing a sizable business
over next three to four years. Due to the implementation of VAT across the country
in line with global trends, competition from
Transmission and distribution accessories: subject possesses the capacity of
handling approximately up to 4,000 tonne of enclosures [annually] and has plans
to extend this to around 16,000 tonnes to meet the growing needs of the power
sector. Accordingly it has planned an investment of approximately Rs.70 cr.
towards increasing its electrical manufacturing capacity by 12,000 tonnes at
its Kalol and Bhachau plants. This expansion is likely to be completed by
December 2007. Recently, the Company has taken up contracts with parties for
laying electrical lines as well.
Growth plans: subject has begun due diligence for an overseas acquisition to
access the global market and its available technologies. A total spend of USD
400 mn has been estimated for the same and will be funded through the FCCB that
was issued by the Company in October, 2005 as well as through internal accruals
and external borrowings. The acquisition will be linked to the electrical
engineering industry and an auto-ancillary company in Europe and in the
Operational performance
During the year under review, the plastics business delivered 30.38% revenue
growth amounting to Rs. 8264.345 millions. This improvement was driven by
continued robustness in performance by pre-fabricated structures, custom
moulded segment as well as BT shelters. Increase in value added products
enabled the Company to strengthen its profitability - EBIDTA margin grew by 89
basis points over the 2005-06 level.
Textile division
Textiles, accounting for 14% of
The Indian textile industry is poised for robust growth globally and
domestically, with a strong presence across the value chain. With fresh
investments flowing at a rapid pace and encouraging government reforms for
organised textile manufacturers, the industry is set to grow attractively over
the coming years.
Vision 2010
The industry expects an investment of Rs.1,40,0000 millions in the post-MFA
phase. A Vision 2010 for textiles formulated by the Government following an
intensive interaction with the industry and Export Promotion Councils to
capitalise on the upbeat mood, aims to increase India's share in world's
textile trade from the current 4% to 8% by 2010 and achieve an export value of
USD 50 billion by 2010.
Vision 2010 also envisages growth in Indian textile economy from the current
USD 37 billion to USD 85 billion by 2010, creation of 12 million new jobs in
the textile sector and the modernisation and consolidation to create a globally
competitive textile industry.
Export potential
The US-China textile pact, which restricts the export of 34 items of clothing
and categories from
According to the European textile trade union ETUFTCL, this
market is estimated at Euro 1,500 billion per annum or 16% of the European GDP.
The annual requirements of the European Commission alone amounts to Euro 2
billion and
A number of global retailers have pledged to enhance their textile and clothing
requirement from
Export growth of Indian textiles
A quick analysis indicates that while exports out of India reported a de-growth
in 2004-05, the trend reversed with exports showing a significant improvement
in 2005-06 and 2006-07 (April to June) largely on account of a dismantling of
quotas, increasing recognition of India as a cost-effective textile sourcing
base and temporary restrictions imposed by the US and EU on China.
Outlook
The Indian textiles and clothing industry is expected to grow to USD 85 billion
by 2010 even as world trade grows from USD 354 billion in 2001 to an estimated
USD 65 billion by 2010 (source: CRISIL-CITI report titled Vision for the Indian
Textile and Clothing Industry, 2007-12), thanks to the following factors:
Robust Indian demand: Historically,
Demographic dividend:
Abolition of quotas: Even as
* Apart from
* Lowest cost producer after
* Predominance of small-scale units with skilled workmen, resulting in
increased production flexibility.
* Availability of low cost skilled labour resulting in a significant advantage
of increased productivity at a lower cost.
Active government support: Over the last few years, the Government of India
enhanced the industry's competitiveness through the Technology Upgradation Fund
Scheme (TUFS), which made it possible for rapidly expanding Indian textile
companies to borrow about 80% of their capital expenditure at concessional
debt. Under the TUFS, the borrowing companies get a 5% interest subsidy from
the government, reducing the net loan cost of 11% per annum to a mere 6% per
annum, at par with the lowest international benchmarks. The fact that these
loans are repayable across long tenures (maximum 10 years) including a two-year
moratorium, helps companies mobilise a large and stable source of funds, with
no immediate repayment obligations.
Opportunities in garmenting:
Garmenting is the way to go in future as predicted by most textiles analysts.
In garments,
6230 millions in 2005-06 (source: CMIE) because of cheaper
garmenting at Rs.2 per minute compared to
Liberalisation: South Asian Free Trade Area (SAFTA) is expected to more than
double from USD 6 billion to USD 14 billion within two years of the agreement;
textile trade will account for a major share of this market.
Overview of the textile division
In the textiles category, subject places itself in the niche category of
manufacturing high-end men's structured shirting fabrics addressing the premium
fashion segment marketed under the brand name BVM. The Company primarily deals
in the manufacture of yarn-dyed structured fabrics and corduroy fabrics.
In the structured fabric category, subject manufactures fabrics that are
difficult to replicate and in a variety of weaves like dobby, jacquard, leno,
double beam and double creel. The Company enjoys a market share of around 70%
in the domestic space of designed structured fabric manufacturers, selling most
of its products to premium brands manufacturing men's shirts in
In the corduroy segment, subject remains one of the largest producers in
Operational performance
The growth in Indian GDP above 9% and favourable international factors resulted
in a healthy demand for the Company's products. As a result, the production of
fabric touched a record high of 19.20 million metres reflecting a growth of 33%
over 2005-06 for the Company. Total revenue of the division rose to Rs.3180.239
millions in 2006-07 registering a growth of 27.53% compared to 2005-06. The
year 2006-07 remained a landmark for the Company's exports. Export sales saw a
sharp rise to Rs.141.907 millions recording a 6.16% growth in 2006-07, compared
to a marginal growth in 2005-06.
The Company is one of the most profitable companies in the textile segment in
the country, though the input cost particularly power and personnel, continued
to rise at a faster pace during the last financial year. A growing input cost
poses a challenge to their competitiveness. However, to combat this, the
Company has strategised an ambitious growth plan with a blend of capacity
expansion, additions to product portfolio and global alliances.
Significant developments in
2006-07
International alliances: subject entered into collaboration with several
European design houses for the following benefits:
* Marketing: They outsource the Company's product for onward marketing in
* Insight: These design houses work with leading designers of
CMT
REPORT [Corruption,
Money laundering & Terrorism]
The Public Notice information has been collected from
various sources including but not limited to: The Courts,
1] INFORMATION ON DESIGNATED PARTY
No
records exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for violation
of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that
subject is or was the subject of any formal or informal allegations,
prosecutions or other official proceeding for making any prohibited payments or
other improper payments to government officials for engaging in prohibited
transactions or with designated parties.
3] Asset Declaration :
No
records exist to suggest that the property or assets of the subject are derived
from criminal conduct or a prohibited transaction.
4] Record on Financial Crime :
Charges or
conviction registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l Anti-Money
Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with Government :
No record exists to
suggest that any director or indirect owners, controlling shareholders,
director, officer or employee of the company is a government official or a
family member or close business associate of a Government official.
9] Compensation Package :
Our market survey
revealed that the amount of compensation sought by the subject is fair and
reasonable and comparable to compensation paid to others for similar services.
10] Press Report
:
No press reports / filings exists on the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments
on Corporate Governance to identify management and governance. These factors
often have been predictive and in some cases have created vulnerabilities to
credit deterioration.
Our Governance Assessment focuses principally on the
interactions between a company’s management, its Board of Directors,
Shareholders and other financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local
laws, regulations or policies that prohibit, restrict or otherwise affect the
terms and conditions that could be included in the agreement with the subject.
FOREIGN
EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 39.70 |
|
|
1 |
Rs. 80.10 |
|
Euro |
1 |
Rs. 56.09 |
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 |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER
MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This
score serves as a reference to assess SC’s credit risk and to set the amount of
credit to be extended. It is calculated from a composite of weighted scores
obtained from each of the major sections of this report. The assessed factors
and their relative weights (as indicated through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit
history (10%) Market
trend (10%) Operational
size (10%)
RATING |
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 |