MIRA
INFORM REPORT
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Report Date : |
10.04.2008 |
IDENTIFICATION
DETAILS
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Name : |
HINDUSTAN COMPOSITES LIMITED |
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Registered Office : |
B-11, Paragon
Condominium, Pandurang Budhkar Marg, Worli, Mumbai - 400 013, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
01.07.1964 |
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Com. Reg. No.: |
012955 |
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CIN No.: [Company
Identification No.] |
L29120MH1964PLC012955 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMH07342G |
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PAN No.: [Permanent
Account No.] |
AAACH0973N |
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Legal Form : |
Subject is a Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturers and Sellers of brake and clutch linings for automobiles and industrial application, asbestos, yarns and textiles, asbestos packing, etc. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 1230000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and reputed company having fine track.
Available information indicates high financial responsibility of the
company. Trade relations are
fair. Business is active. Payments are reported as usually correct
and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
B-11, Paragon
Condominium, Pandurang Budhkar Marg, Worli, Mumbai - 400 013, Maharashtra,
India |
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Tel. No.: |
91-22-66530101/2/3/4 |
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Fax No.: |
91-22-66530105 |
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E-Mail : |
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Website : |
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Factory 1 : |
D-2/1, MIDC Industrial Area, Aurangabad |
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Factory 2 : |
C-10/1, Bhandara Industrial Area, Gadegaon, Nagpur |
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Factory 3 : |
C-11, Additional Jalna Industrial Area, Aurangabad |
DIRECTORS
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Name : |
Mr. Raghu Mody |
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Designation : |
Chairman |
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Name : |
Mr. P. K. Choudhary |
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Designation : |
Managing Director |
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Name : |
Mr. Vinay Sarin |
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Designation : |
Director |
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Name : |
Mr. V. D. Ingle |
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Designation : |
Director |
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Name : |
Mr. Varunn Mody |
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Designation : |
Director |
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Name : |
Mr. Keith M. Robinson |
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Designation : |
Director |
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Name : |
Mr. D. Lawson Lyon |
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Designation : |
Director |
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Name : |
Mr. V. B. Haribhakti |
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Designation : |
Director |
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Name : |
Mr. A. B. Vaidya |
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Designation : |
Director |
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Name : |
Mr. Haigreve Khaitan |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Amit Goenka |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
[As on 31.03.2007]
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters |
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Indian |
3416082 |
62.111 |
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Persons acting in concert |
250 |
0.005 |
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Indian Institutional Investors |
823 |
0.014 |
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Bodies Corporate |
565777 |
10.287 |
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Indian Public |
1505650 |
27.376 |
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NRIs |
6349 |
0.115 |
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Clearing Members |
5069 |
0.092 |
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Total |
5500000 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturers and Sellers of brake and clutch linings for
automobiles and industrial application, asbestos, yarns and textiles,
asbestos packing, etc. |
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Products : |
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PRODUCTION STATUS
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Particulars |
Unit |
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Installed
Capacity |
Actual
Production |
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Brake Linings |
Tones |
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4850 |
4616 |
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Clutch facings |
Nos. 000 |
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2760 |
2020 |
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Industrial Textiles |
Tones |
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480 |
370 |
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Jointings/Limpet sheets |
Tones |
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1800 |
1196 |
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Compestos |
Tones |
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30 |
15 |
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Others |
Tones |
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150 |
130 |
GENERAL
INFORMATION
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Suppliers : |
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No. of Employees : |
1600 |
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Bankers : |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Lodha and Company Chartered Accountants |
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Associates/Subsidiaries : |
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CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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5500000 |
Equity Shares |
Rs. 10/- each |
Rs. 55.000 Millions |
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500000 |
Unclassified Shares |
Rs. 10/- each |
Rs. 5.000 Millions |
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Total |
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Rs. 60.000
Millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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5500000 |
Equity Shares |
Rs. 10/-
each |
Rs. 55.000
Millions |
Of the above:
(a) 1,449,992
Equity Shares were allotted as fully paid-up pursuant to a contract without
payment having been received in cash.
(b) 1,985,362
Equity Shares were allotted as fully paid-up bonus shares by capitalisation of
Securities Premium and General reserve.
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 |
55.000 |
55.000 |
55.000 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
252.706 |
123.708 |
123.300 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
307.706 |
178.708 |
178.300 |
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LOAN FUNDS |
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1] Secured Loans |
238.783 |
218.673 |
241.800 |
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2] Unsecured Loans |
161.918 |
51.134 |
37.500 |
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TOTAL BORROWING |
400.701 |
269.807 |
279.300 |
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DEFERRED TAX LIABILITIES |
14.073 |
23.775 |
0.000 |
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TOTAL |
722.480 |
472.290 |
457.600 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
465.067 |
260.054 |
258.900 |
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Capital work-in-progress |
16.308 |
10.850 |
7.400 |
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INVESTMENT |
64.681 |
32.237 |
32.300 |
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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 |
97.784
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91.107 |
112.800 |
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Sundry Debtors |
159.020
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154.956 |
158.200 |
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Cash & Bank Balances |
8.052
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9.935 |
4.700 |
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Other Current Assets |
0.000
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0.000 |
0.000 |
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Loans & Advances |
22.246
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31.017 |
32.800 |
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Total
Current Assets |
287.102
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287.015 |
308.500 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
208.263
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106.167 |
151.400 |
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Provisions |
6.293
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35.565 |
32.900 |
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Total
Current Liabilities |
214.556
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141.732 |
184.300 |
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Net Current Assets |
72.546
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145.283 |
124.200 |
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MISCELLANEOUS EXPENSES |
103.878 |
23.866 |
34.800 |
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TOTAL |
722.480 |
472.290 |
457.600 |
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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 |
658.720 |
615.570 |
681.000 |
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Other Income |
28.485 |
7.814 |
5.600 |
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Total Income |
687.205 |
623.384 |
686.600 |
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Profit/(Loss) Before Tax |
[46.675] |
11.115 |
19.200 |
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Provision for Taxation |
[10.465] |
4.388 |
4.900 |
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Profit/(Loss) After Tax |
[36.210] |
6.727 |
14.300 |
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Earnings in Foreign Currency : |
82.761 |
81.488 |
NA |
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Total Imports |
73.756 |
57.649 |
NA |
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Expenditures : |
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Stores and spare parts consumed |
16.725 |
16.867 |
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Consumption of Raw material |
298.729 |
244.359 |
248.200 |
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Increase/(Decrease) in Finished Goods |
13.764 |
15.620 |
[18.900] |
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Salaries, Wages, Bonus, etc. |
76.665 |
84.556 |
97.200 |
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Interest |
19.170 |
22.087 |
21.800 |
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Power & Fuel |
57.274 |
59.439 |
59.600 |
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Depreciation & Amortization |
27.671 |
25.985 |
25.400 |
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Other Expenditure |
146.035 |
132.460 |
234.100 |
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Employees Separation Cost |
77.847 |
10.896 |
0.000 |
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Total Expenditure |
733.880 |
612.269 |
667.400 |
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QUARTERLY RESULTS
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PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
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Type |
1st Quarter |
2nd Quarter |
3rd Quarter |
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Sales Turnover |
188.700
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191.600
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167.500
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Other Income |
1.500
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0.700
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5.600
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Total Income |
190.200
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192.300
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173.100
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Total Expenditure |
177.900
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180.200
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161.600
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Operating Profit |
12.300
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12.100
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11.500
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Interest |
12.000
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12.800
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10.900
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Gross Profit |
0.300
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-0.700
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0.600
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Depreciation |
8.000
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7.900
|
8.300
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Tax |
0.400
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0.500
|
0.600
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Reported PAT |
-5.500
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-6.100
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-5.400
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KEY RATIOS
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Debt-Equity Ratio |
2.09 |
1.54 |
1.49 |
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Long Term Debt-Equity Ratio |
1.01 |
1.11 |
1.37 |
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Current Ratio |
0.79 |
1.18 |
1.54 |
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Fixed Assets |
1.39 |
1.36 |
1.38 |
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Inventory |
8.01 |
6.89 |
5.91 |
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Debtors |
4.82 |
4.49 |
4.72 |
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Interest Cover Ratio |
1.33 |
1.95 |
2.76 |
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Operating Profit Margin(%) |
8.51 |
9.93 |
12.57 |
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Profit Before Interest And Tax Margin(%) |
4.85 |
6.23 |
8.84 |
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Cash Profit Margin(%) |
6.25 |
5.54 |
7.93 |
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Adjusted Net Profit Margin(%) |
2.59 |
1.84 |
4.20 |
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Return On Capital Employed(%) |
8.50 |
10.34 |
14.87 |
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Return On Net Worth(%) |
12.20 |
7.23 |
16.41 |
LOCAL AGENCY
FURTHER INFORMATION
Note:
The company’s registered office at “Crystal”, 79, Dr. Annie Besant Road, Worli, Mumbai - 400 018, Maharashtra has been shifted to the B-11, Paragon Condominium, Pandurang Budhkar Marg, Worli, Mumbai - 400 013, Maharashtra, India w.e.f. 23.04.2004.
It is in trade terms with:-
· A. K. Engineering Works
· Anant Chemical Industries
· A. K. Packaging
· Cognis Ahura Private Limited
· Akshay Heaters
· A to Z Steel Industries
· Aishwarya Press computers Private Limited
· Chirag Engineering
· Deva Metal Powders
· Damodar Chemicals
· Exclusive Diamond Products
· Golden Products
· Hind Hydraulics & Engineering
· Kalson Hydromatic Machine Tools
· K. K. Industries
· Kailash Corrugators Private Limited
· Labie Chemie (India) Private Limited
· Marvel Thermosets Private Limited
· Makson Engineering Works
· Nargolkar Heavy Pressings
· Puneet Resins Limited
· Pearl Industries
· Prathvi Agrotech Private Limited
· P. K. Packs
· Quality Chemical Industries
· Raigad Dye-Chem Industries
· Rehan Fastners
· Suyash Engineering Works
· The Integrators
· Vandana Tools
· Vardhaman Cartoons
· Xpro India Limited
· Sunrise Packaging Industries
· Shewta Print Pack Private Limited
· Swastik Ferro Alloy
· Super Industries
· Suvarna Industries
· Sona Meta Chem
· Modern Engineering & Traders
· S. N. Engineering Works
Fixed Assets
- Land:
- Freehold
- Leasehold in
perpetuity
- Leasehold-long
term
- Buildings
- Plant and
Machinery
- Furniture
& Fixtures
- Motor
Vehicles
- Technial
Know-How
Contingent Liabilities not provided for in respect of:
a) Claims against the Company not acknowledged as debts, estimated at Rs
0.237 Million (Rs. 0.237 Million)
b) Certain Sales tax matters, mainly on account of pending concessional
forms (excluding interest): Rs. 0.980 Million (Rs. 0.685 Million).
c) Disputed Income Tax matters: Rs. Nil (Rs. 0.317 Million).
Loan from Banks:
a) Foreign
Currency Term Loan and Rupee Term Loans are secured by way of hypothecation of
certain machinery, machinery spares, tools and accessories.
b) Rupee Term
Loans for Equipment finance are secured by way of hypothecation of machinery,
machinery spares, tools and accessories purchased there against and by way of
charge on immovable properties at Jalna Unit.
c) Rupee Term
Loans other than stated above are secured by equitable mortgage on immovable
properties at Paithan Unit.
d) Working Capital
Rupee Loans and Foreign Currency Loans are secured by hypothecation of stocks,
debtors and all liquid assets and charge on immovable properties at Bhandara
Unit.
e) Housing Term
Loans are secured against equitable mortgage of two residential flats and an
office premises situated at Mumbai.
f) Vehicle Loans are secured by way of hypothecation of motor vehicles
purchased there against.
PERFORMANCE:
The net turnover of the Company increased by 7% to Rs. 658.700 Millions from
Rs.615.600 Millions in the previous year. The company's focus towards OEM
business and the resultant investment in Fixed Assets and Technology have now
started yielding results with high volume manufacturing.
Despite an increase in the company's turnover, operating margins remain under
Pressure, primarily on account of major cost escalations in Raw Materials and
other input costs, that could not be passed on to the customers, due to
competitive market conditions. Higher than normal expenses necessitated on
account of the company's focus on OEM business, was an additional causative
factor impacting on profitability.
As reported in the earlier years, the company's Ghatkopar unit became unviable
due to high operating costs, poor worker productivity and lower price
realisations due to highly competitive market conditions. The management,
having exhausted all avenues of resurrecting viable operations at the Ghatkopar
plant, was left with no alternative, but to close this unit. Accordingly,
pursuant to the settlement with the Worker's Union in November 2006, ratified
by the Honourable Mumbai. High Court, the company's Ghatkopar Plant was
closed, effective 3rd August 2006. All Workmen were separated under the
company's Voluntary Retirement Scheme (VRS). The terminal benefits payable to
these Workmen have been accounted as per the Accounting Policy consistently
followed by the company.
During the year, a new manufacturing facility to produce Asbestos Free Heavy
Commercial Vehicle and Passenger Car Brake Linings was set up at the company's
Paithan Plant, resulting in additional turnover from this unit, The Plant now
manufactures the entire range of Asbestos-Free Heavy duty Commercial Vehicle
and Passenger Car Brake Linings, Dis Brake Pads, Roll Linings and Railway Brake
Blocks.
The performance of the Bhandara Plant was generally satisfactory with increased
production of Industrial Braze Linings.
The working of the Jalna Plant, although improved, the profitability remained
under pressure due to major escalation in input costs and price realisation not
commensurate with manufacturing cost increase.
Although, the overall position in the current year remains competitive, the
company hopes to post better results in the coming years, with major
investments being undertaken for capacity expansion and technology upgradation.
The Company will continue to provide a major thrust towards growth in the OEM
business with a focus on R & D.
The Company has revalued all its Residential Premises as on 31.03.2007 on their
fair market value, using standard indices as assessed and valuation reports
submitted by approved valuers. This has resulted in a net increase in the book
value by Rs.165.600 Millions, which has been transferred to Revaluation
Reserve.
The company participated at the Automechanika Fair Frankfurt in September 2006,
thus increasing its exposure to new products and markets globally.
MANAGEMENT
DISCUSSION AND ANALYSES REPORT:
OVERALL REVIEW:
Indian economy continues to grow during 2006 - 2007. The manufacturing
sector in general and the auto/auto component segment in particular, has been
witnessing a phenomenal demand. However cost increases in essential raw
materials are causing pressures on margins.
PRODUCTION RANGE:
The Company is engaged in the manufacturing and marketing of fibre based
composite materials, consisting of Friction and Sealing products. Friction
Materials include Brake Liners, Roll Linings, Clutch Facings, Disc Brake Pads
used in Heavy and Light Trucks, Motor Cars, 2/3 wheelers, of the roadvehicles,
Construction & Mining equipment. Composition Brake Blocks are used in
Railways. Sealing materials include Jointings, Textile and Insulation Board
used in automobiles and various industries.
OPPORTUNITIES AND THREATS:
With positive economic environment, the Company has positioned itself
for a major growth. Technologies and focus on OEM business continue to be a
driving force for the Company. Several new products in Asbestosfree segment
have been developed at its technology centre. However, with too many small
players in the Indian Market, more particular in small scale sector, prices
have been under constant pressure resulting in lower realization. This threat
is being overcome by constant product upgradation, cost reduction, value
engineering and finding new markets both locally and globally.
BUSINESS OUTLOOK:
With the buoyancy in the auto component segment, increase in marketing
activity, cost rationalization measures, improvement in quality and
introduction of new products, the Company is hopeful of achieving better
results in the coming years with continuous investment in modern equipments and
process technology and focus on R & D.
AS PER WEBSITE DETAILS:
PROFILE
Subject is a pioneer in the development,
manufacture & marketing of Asbestos Industrial Products and Friction
Materials in India for over 45 years.
Composites, with its wide range of products
suitable for a number of general and specialised applications, has been
catering to the diversified needs of core sector industries, such as Railways,
Engineering, Mining, Aerospace, Steel, Chemical, Petrochemical, Fertilizer,
power generation, Ship building, Atomic Energy, Electrical, Oil exploration,
Automotive, etc.
A technology driven Company, Composites is
committed to continuous upgradation, development of materials and processes, to
ensure the highest quality standards.
The firm belief in 'Investment for the Future'
has led to continuous upgradation of their R & D facilities. The Company's
R & D Centre has been accorded recognition by the Department of Science
and Technology, Government of India.
Their other major strengths, besides quality
products and service, are multi-location production facilities and a wide
network of Distributors and Wholesale Dealers.
PRODUCTS
·
Automotive Brake Linings
·
Automotive Roll Linings
·
Automotive Clutch Facings
·
Automotive Disc Brake Pads
·
Railway Brake Blocks
·
Friction Sheets
·
Industrial Roll Linings
·
Jointing sheets
·
Asbestos Yarns
·
Rubber Proffed Sheets
·
Compestos
·
Limpet Sheets
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. 40.02 |
|
UK Pound |
1 |
Rs. 78.77 |
|
Euro |
1 |
Rs. 62.97 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--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 |
|
64 |
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 |
|
