MIRA
INFORM REPORT
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Report Date : |
24.04.2008 |
IDENTIFICATION
DETAILS
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Name : |
BEEYU OVERSEAS LIMITED |
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Registered Office : |
Fulhara (Bhimgachh), Post Office : Ramganj Block Islampur, District Uttar
Dinajpur – 733 207, West Bengal |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
04.03.1993 |
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Com. Reg. No.: |
57984 |
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CIN No.: [Company
Identification No.] |
L51109WB1993PLC057984 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CALB02960G |
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PAN No.: [Permanent
Account No.] |
AABCB3327K |
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Legal Form : |
Public Limited Liability Company. The company shares are listed on the
Stock Exchange. |
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Line of Business : |
Manufacturer of Tea |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
USD 870000 |
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Status : |
Satisfactory |
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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
satisfactory track. Trade relations are fair. Business is active. Payments
are reported as usually correct and as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
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Registered Office : |
Fulhara (Bhimgachh), Post Office : Ramganj Block Islampur, District
Uttar Dinajpur – 733 207, West Bengal, India |
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Mobile No.: |
91-9932469364 |
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E-Mail : |
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Website : |
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Corporate Office & Communication Address: |
Beeyu House , 64 A, Ballygunge Circular Road, Kolkata , West Bengal,
India |
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Tel. No.: |
91-33-2280-9267/68/69 / 2287 -7770 / 2290-7162 |
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Fax No.: |
91-33-2280 -9270 |
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E-Mail : |
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Factory : |
Ooty Rural , Doddabetta Panchyat Near Governemnt Chincona Plantations
Ooty – 643 002, India |
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Tel. No.: |
91-423-2507-058 / 577 / 578 |
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Fax No.: |
91-423-2507-576 |
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E-Mail : |
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Branches : |
Darragh Smail Centre, 3rd Floor, 5th Cross Road,
Willingdon Island, cochin – 682 003, India |
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Overseas Office: |
Russian Federation, 129110, City Moscow, Street Srednaya Pereslavskaya, House No. 14, Strone 1, Office 122 -123 Russia |
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Tel No.: |
0074956806424 |
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Mobile No.: |
0079262182363 |
DIRECTORS
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Name : |
Mr. Birendra Pratap Singh |
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Designation : |
Chairman and Managing Director |
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Qualification: |
M .Com, LLB |
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Name : |
Mr. Ravi Singh |
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Designation : |
Director |
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Profile: |
Director holds a
Bachelor's degree in Commerce and an MBA from Russian Management System in
Moscow. He oversees the entire export business of Russia and CIS countries. |
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Name : |
Ms. Rajinie Singh |
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Designation : |
Managing Director |
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Profile: |
Dy. Managing
Director of the company is an MBA from Australia and has gained sufficient
work experience in multinational companies. She has vast knowledge of the tea
business, particularly exports from South India and is responsible for
managing the entire South Indian operations of the company. |
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Name : |
Mr. Firoze Jal kapadia |
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Designation : |
Director - Finance |
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Profile: |
Director
Finance, is a Chartered Accountant. He has served in senior management positions
in various multinational companies and currently looks after finance and
ongoing projects in the company. |
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Name : |
Mrs. Lila Poonawalla |
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Designation : |
Director |
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Profile : |
Director was the
past Chairperson of Alfa Laval Indian Limited. and Tetra Pak India Limited.
Besides being awarded the Padmashree by the Government of India, she was also
conferred as Officer of this Royal Order by the Kind of Sweden for her
invaluable services to Sweden. Also as Chairperson Emeritus of Quality Circle
Forum of India - Maharashtra Chapter she is actively involved In the Quality
Circle Movement. |
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Name : |
Mr. Harish Parekh |
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Designation : |
Director |
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Date of Birth/Age : |
23.03.1937 |
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Qualification : |
B .com |
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Experience : |
44 years experience in Tea industry in various field |
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Date of Appointment : |
18.01.2002 |
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Profile: |
Director, is an
ex-chairman of Thomas and Company
Limited |
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List outside directorship Held: |
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·
Neelkanth Tea Company limited ·
Gujarat Tea Processors and Packers Limited ·
Rossell Tea Limited ·
Moran Tea Company (India) Limited ·
Diana Tea Company Limited ·
Tezpore Tea Company Limited ·
Grob Tea Company Limited ·
The Methoni Tea Company Limited |
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Name : |
Mr. Sharat Kumar Jain |
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Designation : |
Director |
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Date of Birth/Age : |
30.10.1933 |
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Qualification : |
Chartered Accountants |
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Experience : |
Eminent Chartered Accountants with an expertise in Finance |
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Date of Appointment : |
22.05.2001 |
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Profile : |
Director, is a
renowned Chartered Accountant practising for over 40 years. |
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Name : |
Mrs. Usha Singh |
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Designation : |
Director |
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Date of Birth/Age : |
04.11.1946 |
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Experience : |
Promoter Director |
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Date of Appointment : |
04.03.1993 |
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Profile: |
He is a promoter
Director. Ms Singh is ssociated with several NGOs involved in social
development projects. |
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Name : |
Mr. Binoy Krishna Banerjee |
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Designation : |
Director |
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Profile: |
Director, is by profession
an Engineer and has held the position of Executive Vice chairman and Managing
Director in various MNCs and large Indian Corporates. |
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Name : |
Mr. Arabinda Bose |
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Designation : |
Director |
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Prfoile: |
Director, has served
in several senior management positions in reputed tea companies and has vast
experience in the tea industry. |
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MANAGEMENT TEAM: |
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Mr. Birendra Pratap Singh |
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Mr. Ravi Singh |
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Mr. Firoze Jal Kapadia |
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Mr. Sudhir Kumar Kothari |
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Mr. Mahendra Kumar Dutia |
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Mr. Shoubik Ray |
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Mr. Sanjiv Singh |
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Mr. Shouvik Ghosh |
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Mr. Sidhartha Halder |
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Ms. Rajinie Singh |
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Mr. Apurba Basu |
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Mr. Uma Shnakar |
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Mr. Michael Harding |
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Ms. V Renuka |
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Mr. Ganeshmuethy |
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Mr. Elango Jhonson |
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Mr. Prem Chandran |
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BOARD COMMITTEES : |
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Audit committee:- |
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Mr. Harish Parekh – Chairman (Audit Committee) |
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Mr. Sharat Kumar Jain –Director |
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Mr. Arabinda Bose – Director |
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Remuneration Committee : |
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Mrs. Lila Poonawalla – Chairman |
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Mr. Harish Parekh |
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Mr. Sharat Kumar Jain |
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Investors Grievances Committee : |
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Mr. Arabinda Bose – Chairman |
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Mr. Birendra Pratap Singh |
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Mrs. Usha Singh |
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Share Transfer Committee: |
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Mr. Birendra Pratap Singh |
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Mer. Ravi Singh |
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Mr. Firoze Jal Kapadia |
KEY EXECUTIVES
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Name : |
Mr. Mahendra Kumar Dutia |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders (As on 31.03.2007) |
No. of Shares |
Percentage of
Holding |
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Shareholding of
Promoter and promoter Group |
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Individual / HUFs |
4465286 |
31.58% |
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Public
Shareholding |
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Bodies corporate |
953224 |
3.74% |
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Indian Public |
8034005 |
56.81% |
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NRIS |
688938 |
4.87% |
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Total
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14141453 |
100.00% |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of Tea |
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Products : |
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GENERAL
INFORMATION
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Bankers : |
· State Bank of India · Axis Bank Limited · ICICI Bank Limited |
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Banking Relations
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Satisfactory |
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Auditors : |
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Name : |
Price Waterhouse Chartered Accountants |
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Address : |
Plot No. Y-14, Block – EP, Sector –V, Bidhan Nagar, Kolkata – 700 019,
West Bengal, India |
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Joint Ventures : |
Alliance Coffee Limited |
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Associates/Subsidiaries : |
Neelkanth Tea company limited Alliance Coffee Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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15000000 |
Equity Shares |
RS. 10/- each |
Rs.150.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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14141453 |
Equity Shares |
Rs. 10/-
each |
Rs.141.414
millions |
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Add:- |
Forfeited Shares |
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Rs. 0.103
millions |
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Total |
Rs.141.517millions |
Of the above :
i) 3360000 Shares
were allotted as fully paid Bonus Shares by capitalisation of Share Premium
Account. Fixed Assets, Reserve and General Reserve during the year ended 31st
March, 2000.
ii) 531970 Shares were
allotted as fully paid Bonus Shares by capitalisation of General Reserve during
the year ended 31st March, 2003.
iii) 1170334
Shares were allotted as fully paid Bonus Shares by capitalisation of General
Reserve during the year ended 31st March, 2004.
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 |
141.517 |
141.463 |
70.200 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
77.029 |
95.126 |
65.900 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
218.546 |
236.589 |
136.100 |
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LOAN FUNDS |
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1] Secured Loans |
175.436 |
110.427 |
52.800 |
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2] Unsecured Loans |
0.000 |
0.000 |
0.000 |
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TOTAL BORROWING |
175.436 |
110.427 |
52.800 |
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DEFERRED TAX LIABILITIES |
8.891 |
3.091 |
0.000 |
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TOTAL |
402.873 |
350.107 |
188.900 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
226.356 |
133.856 |
142.200 |
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Capital work-in-progress |
0.000 |
111.978 |
12.300 |
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INVESTMENT |
35.185 |
6.425 |
0.100 |
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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 |
73.232
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35.564 |
46.300 |
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Sundry Debtors |
23.530
|
9.967 |
20.800 |
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Cash & Bank Balances |
4.948
|
4.214 |
2.400 |
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Other Current Assets |
0.000
|
0.000 |
0.000 |
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Loans & Advances |
55.936
|
52.127 |
12.200 |
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Total
Current Assets |
157.646
|
101.872 |
81.700 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
24.098
|
14.240 |
41.900 |
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Provisions |
0.000
|
0.000 |
7.900 |
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Total
Current Liabilities |
24.098
|
14.240 |
49.800 |
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Net Current Assets |
133.548
|
87.632 |
31.900 |
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MISCELLANEOUS EXPENSES |
7.784 |
10.216 |
2.400 |
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TOTAL |
402.873 |
350.107 |
188.900 |
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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 |
342.137 |
219.508 |
365.800 |
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Other Income |
4.675 |
12.745 |
3.400 |
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Total Income |
346.812 |
232.253 |
369.200 |
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Profit/(Loss) Before Tax |
[11.641] |
3.010 |
9.800 |
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Provision for Taxation |
3.750 |
1.864 |
2.300 |
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Profit/(Loss) After Tax |
[15.391] |
1.145 |
7.500 |
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Export Value |
275.605 |
159.554 |
NA |
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Import Value |
0.489 |
NA |
NA |
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Expenditures : |
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Administrative Expenses |
0.000 |
0.000 |
18.600 |
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Raw Material Consumed |
241.116 |
171.414 |
319.900 |
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Miscellaneous Expenditure |
0.000 |
0.000 |
11.600 |
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Increase/(Decrease) in Finished Goods |
0.000 |
0.000 |
[32.400] |
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Salaries, Wages, Bonus, etc. |
0.000 |
0.000 |
6.200 |
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Interest |
12.046 |
5.736 |
7.600 |
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Power & Fuel |
0.000 |
0.000 |
15.500 |
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Depreciation & Amortization |
20.153 |
9.805 |
10.400 |
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Other Expenditure |
85.138 |
42.286 |
2.000 |
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Total Expenditure |
358.453 |
229.241 |
359.400 |
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QUARTERLY RESULTS
|
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 |
43.100 |
65.700 |
38.900 |
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Other Income |
7.500 |
16.400 |
9.500 |
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Total Income |
50.600 |
82.100 |
48.400 |
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Total Expenditure |
48.900 |
68.000 |
50.600 |
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Operating Profit |
1.700 |
14.100 |
-2.200 |
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Interest |
4.300 |
3.900 |
3.200 |
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Gross Profit |
-2.600 |
10.200 |
-5.400 |
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Depreciation |
3.000 |
3.200 |
3.100 |
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Tax |
0.100 |
0.000 |
0.100 |
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Reported PAT |
-5.700 |
7.000 |
-8.600 |
KEY RATIOS
|
Year |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Debt-Equity Ratio |
0.67 |
0.48 |
0.43 |
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Long Term Debt-Equity Ratio |
0.23 |
0.19 |
0.08 |
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Current Ratio |
1.07 |
1.08 |
0.92 |
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TURNOVER RATIOS |
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Fixed Assets |
1.55 |
1.34 |
2.30 |
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Inventory |
6.29 |
5.36 |
12.28 |
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Debtors |
20.42 |
14.25 |
21.02 |
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Interest Cover Ratio |
-0.13 |
0.44 |
2.29 |
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Operating Profit Margin(%) |
5.41 |
5.60 |
7.60 |
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Profit Before Interest And Tax Margin(%) |
-0.47 |
1.14 |
4.76 |
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Cash Profit Margin(%) |
0.96 |
2.87 |
4.89 |
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Adjusted Net Profit Margin(%) |
-4.91 |
-1.59 |
2.05 |
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Return On Capital Employed(%) |
-0.46 |
1.02 |
10.35 |
|
Return On Net Worth(%) |
-7.93 |
-2.06 |
6.25 |
LOCAL AGENCY
FURTHER INFORMATION
SOCIO-ECONOMIC ENVIRONMENT
The Indian
Economy continues on its growth path over the last 4 years with increase in
foreign exchange reserves and GDP for 2006-07 that had recorded a level of 9.4%
despite interest rate hike and concern over strengthening rupee as-well-as
rising inflation rate. Corporates continue to remain flush with funds to
further propel the Indian growth story.
REVIEW OF OPERATIONS
Compared
to the previous year, the operating results of the current year were less
favourable owing to the various following reasons:
Tea turnover increased by 134% whereas volume growth was 82%, the average price
also increased by 29% to reach Rs. 53.98. However, the overall market was very
competitive and therefore in order to maintain market share for exports to
Pakistan where the Company has very large market share, exports have often to
be made at prices which were lower than the total cost of production.
Coffee turnover reduced by 22% whereas volume dropped by 16% compared to the
previous year. The average price realization per kg. also dropped by Rs. 20/-
owing to the extremely competitive market. It is also a fact that the
international prices of coffee do not show any proportionate increase despite
coffee beans prices rising substantially during the year. It may be noted here that
a large portion of the coffee business, which was earlier under the Beeyu
Overseas Limited banner, has now been shifted to Alliance Coffee Limited, a
Company formed by Beeyu Overseas Limited as a Joint Venture with Tata Coffee
Limited. This also had an impact on reducing the overall margins of the
Company. This impact was also evident in shortage in commission income of
Coffee sales by Rs. 4.000 millions compared to the previous year.
Other income during the year was at Rs. 4.700 millions compared to Rs. 12.700
millions in the previous year. The difference of Rs. 8.000 millions was due to
dividend and capital gain income on investment in PMS and Mutual Fund - Rs.
7.728 millions received during the previous year. This was a one-off receipt
which was not reflected in the Current Year income.
During the current year, Green Leaf price increased by 44% to reach an average
of Rs. 8.35 per kg. This was due to the rise in auction price during the year.
The Company's Ooty factory being a Bought Leaf Factory could not benefit from
the higher average selling price of made tea since the increase in Green Leaf
price neutralized the impact. Since production in the current year increased by
100% to 3.76 million kgs, variable expenses raised proportionately. Significant
increase was noticed in labour, power and fuel cost as-well-as selling expenses
such as freight and packaging.
Other two major factors for decrease in overall margins were interest and
depreciation. The interest expenses increased from Rs. 5.700 millions to Rs.
12.000 millions owing to the impact of increase in borrowings as-well-as hike
in interest rates. Depreciation also increased from Rs. 9.800 millions to Rs.
20.200 millions owing to the full year charge on machineries
purchased/installed for the new project at Ooty factory.
FUTURE PLANS
In
2007-08, the action plan is to ensure that the turnover picks-up, costs are
reduced and over-all margin shows substantial improvement as specified
hereunder:
It is proposed to manufacture high quality tea at Ooty factory in order to
ensure that the Company receives better selling price. Steps have already been
implemented in that direction and the impact will be seen in the current year.
Concerted efforts are in place to control expenses and optimize utilization of
all assets. In particular, stress will be given to reduce the procurement price
of Green Leaf as well as to closely monitor the conversion / production cost of
tea.
The Company is having its manufacturing facility at Ooty. Out of 46.95 acres of
land owned and occupied by the tea division of the Company at that location,
such portion of the vacant land measuring approximately 40 acres has remained
unutilized and is unproductive and is also unfit for cultivation. The directors
have proposed to sell off this land for an approximate amount of Rs. 100.000
millions. The sale will in no way affect the production, marketing or any other
operational activities of the Company.
It is
intended to utilize the sales proceeds of the said land to reduce the
borrowings and thereby improve the working capital of the Company. This would
substantially reduce the interest liability of the Company in the current
year.
The Company is also concentrating on enhancing the direct sales to customers
as-well-as through auction centers. Due to this effort, the net sales
realization has been found to be higher than export receipts. This will be
monitored on an ongoing basis to ensure that the Company receives highest
margins on its sales.
The Company's subsidiary Company, Neelkanth Tea Company Limited has now
stabilized its production and it is expected that in the current year it will
generate profit.
The Company has 26.60% investment in Alliance Coffee Limited, and as the
operations are already profitable in the current year, it is expected that
Alliance Coffee Limited will give improved margins in 2007-08. These results
would also impact favourably in the form of dividend distribution to Beeyu
Overseas Limited.
In the current year, Kenyan tea production has increased substantially during
the period from January 2007 to April 2007. The production was 139 million kgs.
compared to 80 million kgs. in the corresponding period of the previous year
reflecting an increase of 74%. Currently, the Kenyan tea is being sold at USD
1.76 per kg. compared to USD 2.13 per kg. in the previous year reflecting a
fall of 17.37 %. Thus over-supply from Kenya and other African countries has
resulted in lowering the international prices and therefore, the Indian market
has to gear up to face a very competitive market in 2007-08. Despite this
difficult situation in the tea industry, the Board of Directors would like to
stress that all-out effort are being made to ensure that the operations of the
Company are made profitable.
SIGNIFICANT DEVELOPMENTS
The
Directors are glad to report that the Registered Office of the Company stands
shifted effective from 12th July, 2007 to Fulhara (Bhimgachh), P.O. Ramganj,
Uttar Dinajpur, West Bengal, upon obtaining shareholders approval by means of
postal ballot voting process. However, for speedier disposal of queries and
other matters, all communications relating thereto may be addressed to the
Corporate Office of the Company at `Beeyu House', 64A, Ballygunge Circular
Road, Kolkata - 700 019, Tel.: (033) 2280 9267/68/69, Fax: (033) 2280 9270,
E-mail: Companysec@beeyuoverseas.com, beeyu@beeyuoverseas.com.
Moreover, about 40 acres of land near the factory site at Ooty Rural Village,
Nilgiris District in Tamil Nadu that was considered unutilized, unproductive
and was unfit for cultivation, for the disposal of which necessary approval of
the shareholders has been obtained by means of postal ballot, is in an advanced
stage of finalisation.
Upon obtaining shareholders approval by means of Postal Ballot voting
process.
EXPANSION PLAN AND UPDATE ON THE PUBLIC
ISSUE
The
Directors inform that a sum of Rs. 0.241 million relating to the public issue
proceeds which had remained unutilized as at 31st March, 2006 was fully
utilized during the year under review. The entire issue proceeds of Rs. 99.816
millions has been utilized to fund the expansion activities of the Ooty factory
and to meet the share issue expenses.
The Directors are aware of the market behaviour and seasonal nature of the tea
industry and have drawn up plans to achieve the objectives.
SUBSIDIARY COMPANY
A copy
of the Annual Report and Accounts of Neelkanth Tea Company Limited is annexed
to this report as required under Section 212 of the Companies Act, 1956. In
accordance with Accounting Standard 21, a Consolidated Financial Statement
incorporating the accounts of Neelkanth Tea Company Limited forms a part of
this Report and Accounts.
This was the first full year of operation for Neelkanth Tea Company Limited
since its acquisition in December 2005 and in a span of 15 months it has
registered higher turnover at Rs. 40.000 millions which is 3 times more than
the previous year and has also reported profit after tax of Rs. 0.135 millions
against a loss of Rs. 4.900 millions in the previous year.
During
the year under review, Neelkanth Tea Company Limited has increased its
authorized capital from Rs. 8.000 millions to Rs. 40.000 millions. Upon
increase in the share capital, it has issued 2900000 equity shares of Rs. 10/-
each fully paidup aggregating Rs. 29.000 millions to the Company by conversion
of loan due to it into equity shares.
JOINT VENTURE WITH TATA COFFEE
LIMITED
During
the year under review, the Company entered into a Joint Venture Agreement with
Tata Coffee Limited, by which, 51% of the Company's holding in Alliance Coffee
Limited, a subsidiary of the Company, was transferred to Tata Coffee Limited.
In effect, Alliance Coffee Limited became a Joint Venture Company of Beeyu
Overseas Limited and Tata Coffee Limited and also a subsidiary company of Tata
Coffee Limited. Beeyu Overseas Limited is holding 26.60% of the total paid-up
equity share capital of Alliance Coffee Limited.
As per the requirements of Accounting Standard 21, the Consolidated Financial
Statement of the Company that forms part of this Report and Accounts has been
prepared taking into consideration the operational results of Alliance Coffee
Limited to the extent of 26.60%, being the extent of interest of the Company in
Alliance Coffee Limited.
Alliance Coffee Limited is now fully operational for marketing and sales of
three grades of Coffee - Powder, Agglomerated and Freeze Dried. Therefore a
large portion of the coffee business, which was earlier under the Beeyu
Overseas Limited banner, has now been shifted to Alliance Coffee Limited.
MANAGEMENT DISCUSSION AND
ANALYSIS REPORT
Industry Structure and
Development:
The Tea
Industry is one of the major agro-industrial sectors contributing significantly
to the national economy of India through potential employment creation and
export earnings. India is one of the largest tea producing country in the world
accounting for nearly 28% of the global production. In 2006, tea production in
India was a record 955 million kgs, an increase of 3%, as compared to 928
million kgs in 2005. India is followed by China, Sri Lanka and Kenya in tea
production. Indonesia and Vietnam are also important producers of tea.
Tea is indigenous to India and is an area where the country takes lot of pride.
This is mainly because of its predominance as a foreign exchange earner and its
contribution to the Gross National Product. The total turnover of the tea
industry is more than Rs. 120000.000 millions. Exports went up by about 8
million kgs to 200 million kgs in 2006 compared to 2005. The total net foreign
exchange earned per annum is about Rs. 20000.000 millions
Tea is the reigning beverage in over 45 countries and is consumed in over 15
countries around the globe. The Irish are the world's leading consumers, each
person at an average consuming 8 cups a day. However, the largest producer and
over-all greatest consumer is India where at any time and anywhere `Chai' is an
essential part of the daily life.
Opportunities, Threats and Risks:
The tea
industry is a labour intensive industry that directly employs over 1.4 million
workers and generates income for about 12 million approximately. Women comprise
50% of the work force in the industry.
Although tea prices in 2006-07 increased compared to the previous year, it is
not enough for many plantation companies which have only tea as their main
business to break even. The productivity of some of the tea estates remained
low and hence have become unviable. To further aggravate the situation, the
increased availability of tea from other regions have been pushing the price
down. In this situation the only option that is left for Indian tea is to
increase the consumption internally which is expected to create additional
demand. The consumption of tea is also on the growth path. At present, the per
capita consumption of tea is 700 gms. per year and if the per capita
consumption reaches 1 kg. per year, the total output might not be enough to
meet the demand.
On the export front, during the last few years, India is trailing behind Kenya
and Sri Lanka owing to low international price realization. The increased
availability of Kenyan tea in the international market has negatively affected
exports of tea from India. The other major reasons that contribute to poor
exports are instability in prices of green leaf, strengthening of the Indian
Rupee against US Dollar leading to fierce competition in the international
market.
There is an increased interaction between South Indian tea producers / sellers
and Pakistan buyers in the recent past that is yielding positive results.
Exports to Pakistan have shown a significant increase. Delegates from Pakistan,
Iran and Egypt visited India last year which is expected to help improve export
of tea and give boost to the entire tea industry. Two delegations of small-tea
growers had been sponsored by the Tea Board to Sri Lanka and Kenya and the
Government is making efforts to register Assam orthodox tea for geographical
indication.
Segment wise or product wise
Performance:
|
Turnover |
2006-2007 |
2005-2006 |
||
|
Products Services |
Quantity (Kgs) |
Value (Rs. in millions ) |
Quantity (Kgs) |
Value (Rs. in millions ) |
|
Tea |
4757181 |
256.769 |
2618313 |
109.510 |
|
Coffee |
343445 |
80.599 |
406419 |
103.222 |
|
Others |
--- |
2.097 |
--- |
---- |
|
Services |
---- |
2.671 |
--- |
6.775 |
|
Total |
5100626 |
342.136 |
30247342 |
219.507 |
Discussion on financial
performance with respect to operational performance:
The
Financial Year 2006-07 had been difficult for the tea industry in general and
the Company in particular. Although, both tea turnover and volume of the
Company increased, the Company's Ooty factory being a Bought Leaf Factory could
not benefit from the higher average selling price of made tea since the
increase in Green Leaf price neutralized the impact.
Also the
rise in variable expenses neutralized the impact. Other major factors for
decrease of overall margins were interest and depreciation, owing to which the
Company has reported a loss during the current year.
Outlook:
For the period January to May 2007, production in India was flat at 226.4
million kgs. compared to 225.9 million kgs. the corresponding period of the
previous year. Average Auction Price during January to May, 2007 rose by 3-5%
to Rs.63.48 compared to Rs.60.13 in the corresponding period of the previous
year.
The Central Government has launched the first round of special purpose tea fund
(SPTF) loans to tea growers with a view to accelerating the pace of replanting
and rejuvenation of tea gardens to enhance their productivity.
This is
likely to improve the overall situation that is lacking in the tea industry in
the country. As against 40% subsidy, the Government has finally agreed to 25%.
The SPTF will help the industry, replant tea bushes and boost quality. The
scheme would be implemented from the current fiscal year till the end of the
11th Plan with a funding pattern of 25 per cent subsidy, 25 per cent promoters'
contribution and the balance 50 per cent by way of loans from the banks. The
maximum capital likely to be raised from the banking sector would be around Rs.
10800.000 millions for which the required capital infusion from the Government
at 12 per cent capital would be Rs.1300.000 millions.
The total corpus under SPTF is Rs 47600.000 millions, spread over 15 years. At
the end of the 15-year period, the average productivity is expected to go up
from 1.7 tonnes to 2.2-2.3 tonnes per hectare. It will also help the tea
industry to beef up quality and marketing efforts by making due use of the
facilities. Moreover, the Government was helping small tea growers through
selfhelp groups under which 50 per cent cost of transporting tea leaves from
growers to bought-leaf factories would be borne by the Tea Board.
FIXED ASSETS:
· Land
· Leasehold Land
· Factory Building
· Other Building
· Estates and Developments
· Plant and Machinery
· Furnitures and fixtures
· Vehicles
· Computers
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or investigation
registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.95 |
|
UK Pound |
1 |
Rs.79.46 |
|
Euro |
1 |
Rs.63.80 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
--- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
54 |
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 |
|