MIRA
INFORM REPORT
|
Report Date : |
24.04.2008 |
IDENTIFICATION
DETAILS
|
Name : |
REDINGTON INDIA
LIMITED |
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Registered
Office : |
SPL Guindy House,
95, Mount Road, Guindy, Chennai - 600032, Tamilnadu |
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Country : |
India |
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Financials (as
on) : |
31.03.2007 |
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Date of
Incorporation : |
02.05.1961 |
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Com. Reg. No.: |
18-28758 |
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CIN No.: [Company Identification No.] |
L52599TN1961PLC028758 |
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TAN No.: (Tax
Deduction & Collection Account No.) |
CHER00540B |
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PAN No.: (Permanent
Account No.) |
AABCR0347P |
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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 : |
Trading,
Importing and Distributing of Computers, Computer Peripherals, Printers,
Plotters and Spares including after sales service. |
RATING &
COMMENTS
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MIRA’s Rating
: |
Aa |
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RATING
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STATUS |
PROPOSED
CREDIT LINE |
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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 |
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Maximum Credit
Limit : |
USD 21400000 |
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Status : |
Very 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. Trade relations are fair.
Financial position is good. Payments are correct and as per commitments. The company is doing
very well. It can be regarded as a promising business partner in a medium to
long run. |
LOCATIONS
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Registered
Office : |
SPL Guindy House,
95 Mount Road, Guindy, Chennai - 600 032, Tamilnadu, India |
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Tel. No.: |
91-44-22353313/14/15/16/17/18/42243281/42243499/
52243535 |
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Fax No.: |
91-44-22352790 |
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E-Mail : |
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Website : |
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Sales And
Service Centers: |
Located at : ·
Chennai · Bangalore ·
Hyderabad ·
Trivandrum ·
Coimbatore · Visakhapatnam ·
Cochin ·
Madurai ·
Hubli ·
Calicut ·
Hyderabad |
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Branches : |
Located at : · New Delhi · Chandigarh · Uttar Pradesh · Punjab · Rajasthan · Uttaranchal · Kolkata · Orissa · Bihar · Guwahati · Gujarat · Karnataka · Goa · Mumbai · Pune · Gujarat · Tamilnadu |
DIRECTORS
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Name : |
Mr. M.
Raghunandan |
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Designation : |
Director |
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Address : |
22, First Street, Cenoataph Road, Chennai - 600 018, Tamilnadu |
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Date of Birth
: |
01.11.1947 |
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Qualifications
: |
B. E. MBA |
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Experience : |
36 years |
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Date of
Appointment: |
01.03.1999 |
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Name : |
Mr. R.
Jayachandran |
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Designation : |
Non Executive Director |
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Address : |
1 Belmont Road,
Singapore - 259 959 |
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Date of Birth
: |
27.04.1944 |
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Date of
Appointment: |
15.10.1993 |
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Name : |
Mr. R. Srinivasan |
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Designation : |
Managing Director |
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Address : |
15 Ardmore Park, #05-02, Singapore – 269 852 |
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Date of Birth
: |
28.06.1946 |
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Date of
Appointment: |
15.10.1993 |
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Name : |
Mr. R. Vijayaraghavan |
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Designation : |
Independent Director |
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Address: |
33 Warran Road, Mylapore, Chennai – 600 004, Tamilnadu, India. |
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Date of Birth
: |
02.01.1950 |
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Date of
Appointment: |
11.09.1995 |
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Name : |
Mr. HU Jia Lung |
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Designation : |
Non Executive Director |
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Address: |
19th Floor, 104 Songde Road, Sinyi District, Taipei,
Taiwan Country |
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Date of Birth
: |
23.02.1942 |
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Date of
Appointment: |
30.12.2004 |
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Name : |
Mr. Huang Chi Cheng |
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Designation : |
Non Executive Director |
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Address: |
2nd Floor, No. 9 Lane, 139 Sec 2 Bei Sin Road, Sie Tien,
Taiwan. |
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Date of Birth
: |
26.03.1957 |
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Date of
Appointment: |
30.12.2004 |
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Name : |
Mr. Raj Shankar |
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Designation : |
Non Executive Director |
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Address: |
65, Chulia Street, 49-04 OCBC Centre, Singapore. |
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Date of Birth
: |
19.06.1958 |
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Date of
Appointment: |
30.12.2004 |
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Name : |
Mr. Steven A Pinto |
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Designation : |
Independent Director |
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Name : |
Mr. J Ramachandran |
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Designation : |
Chairman |
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Name : |
Mr. William Adamopoulos |
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Designation : |
Additional Director |
KEY EXECUTIVES
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Name : |
T. G. Janakiraman |
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Designation : |
Company Secretary |
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Name : |
M. Muthukumarasamy |
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Designation : |
Company Secretary |
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Name : |
Mr. S. V. Krishnan |
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Designation : |
Secretary |
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Address: |
02 8th Streets, Flat No. C2, Ashreya Srinivas Apartments,
Nanganallur, Chennai – 600 064. |
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Date of Birth
: |
21.04.1973 |
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Date of
Appointment: |
30.11.2002 |
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Name : |
Mr. P S Neogi |
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Designation : |
President |
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Date of Birth
: |
49 years |
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Qualifications
: |
B. E. |
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Experience : |
21 years |
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Date of
Appointment: |
01.04.2000 |
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Name : |
Mr. E H Kasturi Rangan |
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Designation : |
President |
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Date of Birth
: |
43 years |
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Qualifications
: |
B. Sc., FCA, Graduate, CWA, CFA, BGL |
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Experience : |
15 years |
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Date of
Appointment: |
01.10.2002 |
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Name : |
Mr. Ramesh Natarajan |
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Designation : |
Vice President |
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Date of Birth
: |
39 years |
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Qualifications
: |
B. Com |
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Experience : |
17 years |
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Date of
Appointment: |
25.08.1997 |
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Name : |
Mr. J K Senapati |
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Designation : |
Vice President |
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Date of Birth
: |
41 years |
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Qualifications
: |
B.Sc., PGDM |
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Experience : |
15 years |
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Date of
Appointment: |
15.06.1998 |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
(As on 31.03.2006)
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Names
of Shareholders |
No. of Shares |
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Redington
(Mauritius) Limited |
38663197 |
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BTS Asset
Management Limited |
1895440 |
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R. Govindan |
10 |
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Aniruddha Joshi |
10 |
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P. S. Neogi |
10 |
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B Arunachalam |
10 |
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Sahara Mutual
Fund |
20 |
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M Raghunandan |
10 |
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S V krishnan |
10 |
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Synnex Mauritius
Limited |
22038188 |
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E H Kasturi
Rangan |
10 |
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A Sethuraman |
10 |
BUSINESS DETAILS
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Line of
Business : |
Trading,
Importing and Distributing of Computers, Computer Peripherals, Printers, Plotters
and Spares including after sales service. |
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Products : |
·
Computer
Peripherals ·
Services
income
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Agencies Held: |
· IBM · Intel · Avaya · HP · Epson · Compaq · Philips · Samsung · Microsoft · APC · CA · Microsoft · Kobian · Motorala |
GENERAL
INFORMATION
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No. of
Employees : |
350 |
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Bankers : |
· Hongkong and Shanghai Banking Corporation
Limited 30, Rajaji Salai, Chennai - 600 001, Tamilnadu · Indus Ind Bank 3 Village Road, Nungambakkam, Chennai – 600 001, Tamilnadu (Facility : Consolidating Limit Rs. 400 millions ·
Citi Bank NA 2 Club House Road, Chennai – 600002 ·
HDFC Bank
Limited 751-B, Anna Salai, Mariam Center, Chennai – 600 002. ·
State Bank
of India Commercial Branch, 232 NSC Bose Road, Chennai – 600 001. |
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Facilities: |
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Banking Relations : |
Good |
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Auditors : |
Deloitte Haskins
and Sells Chartered
Accountants |
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Address: |
2nd
Floor, “Temple Tower, 672, Anna Salai, Nandanam, Chennai – 600 035. |
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Tel. No.: |
91-44-52131124-28 |
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Fax No.: |
91-44-52131129 |
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Subsidiaries : |
· Redington (India) Investment Private
Limited – 50000 (100%) ·
Nook Holding
Private Limited – 50000 Shares (100%) ·
Redington
Gulf FZE ·
Redington
India Investment Limited |
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Holding
Company : |
· Redington (Mauritius) Limited III Floor, Les
Cascade, Edith Cavell Street, Mauritius · Redington Pte. Limited 1, Phillip Street, # 07-00, Singapore City · Chanrai Investment Corporation Limited |
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Associate
Companies: |
· Redington Singapore Pte Limited · Kewalram Singapore Limited |
CAPITAL STRUCTURE
Authorised Capital:
|
No. of Shares |
Type |
Value |
Amount |
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65000000 |
Equity Shares |
Rs. 10/- each |
Rs. 650.000 millions |
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Issued, Subscribed & Paid-up Capital:
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No. of Shares |
Type |
Value |
Amount |
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|
77865700 |
Equity Shares |
Rs. 10/- each |
Rs. 778.657 millions |
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FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
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 |
778.657 |
630.800 |
607.000 |
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2) Advance Share Capital |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
4571.567 |
3045.400 |
2556.300 |
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NETWORTH |
5350.224 |
3676.200 |
3163.300 |
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LOAN FUNDS |
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1] Secured Loans |
1243.215 |
805.200 |
375.400 |
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2] Unsecured Loans |
1927.419 |
1188.200 |
749.000 |
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TOTAL BORROWING |
3170.634 |
1993.400 |
1124.400 |
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DEFERRED TAX LIABILITIES |
10.622 |
0.000 |
0.000 |
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TOTAL
|
8531.480 |
5669.600 |
4287.700 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
305.814 |
206.400 |
149.100 |
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Capital work-in-progress |
0.000 |
5.100 |
0.900 |
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INVESTMENTS |
2380.773 |
1775.600 |
1589.300 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
2941.799 |
1779.500 |
951.900 |
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Sundry Debtors |
5288.968 |
3443.100 |
2538.600 |
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Cash & Bank Balances |
938.186 |
330.700 |
89.200 |
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Loans & Advances |
845.869 |
801.100 |
493.800 |
|
Total Current
Assets |
10014.822 |
6354.400 |
4073.500 |
|
Less : CURRENT LIABILITIES & PROVISIONS |
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|
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Current Liabilities |
3418.895 |
2236.500 |
1260.500 |
Provisions
|
751.034 |
435.400 |
264.600 |
Total
Current Liabilities
|
4169.929 |
2671.900 |
1525.100 |
Net Current Assets
|
5844.893 |
3682.500 |
2548.400 |
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TOTAL
|
8531.480 |
5669.600 |
4287.700 |
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
47125.641 |
36926.600 |
25025.400 |
|
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Other Income |
49.611 |
882.600 |
223.400 |
|
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Total Income |
47175.252 |
37809.200 |
25248.800 |
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Profit/(Loss) Before Tax |
656.293 |
453.300 |
272.100 |
|
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Provision for Taxation |
232.111 |
161.900 |
99.500 |
|
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Profit/(Loss) After Tax |
424.182 |
291.400 |
172.600 |
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Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses |
45120.116 |
26.600 |
23.400 |
|
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Administrative Expenses |
149.380 |
278.900 |
231.500 |
|
|
Raw Material Consumed |
404.628 |
36415.300 |
24295.900 |
|
|
Salaries, Wages, Bonus, etc. |
483.564 |
299.900 |
190.200 |
|
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Interest |
326.386 |
227.400 |
151.400 |
|
|
Depreciation & Amortization |
34.885 |
28.700 |
26.500 |
|
|
Other Expenditure |
0.000 |
79.100 |
57.800 |
|
Total
Expenditure |
46518.959 |
37355.900 |
24976.700 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 1st
Quarter |
30.09.2007 2nd
Quarter |
31.12.2007 3rd
Quarter |
|
|
|
|
|
|
Sales Turnover |
12960.200 |
14637.100 |
13520.600 |
|
Other Income |
26.900 |
25.900 |
25.900 |
|
Total Income |
12987.100 |
14663.000 |
13546.500 |
|
Total Expenditure |
12687.200 |
14316.300 |
13221.800 |
|
Operating Profit |
299.900 |
346.700 |
324.700 |
|
Interests |
105.600 |
100.100 |
102.200 |
|
Gross Profit |
194.300 |
246.600 |
222.500 |
|
Depreciation |
9.300 |
9.100 |
10.800 |
|
Tax |
66.100 |
83.600 |
73.700 |
|
Reported PAT |
118.900 |
153.900 |
138.000 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.57 |
0.46 |
0.43 |
|
Long Term
Debt-Equity Ratio |
0.00 |
0.09 |
0.26 |
|
Current Ratio |
1.36 |
1.55 |
1.97 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
102.21 |
103.19 |
83.36 |
|
Inventory |
19.96 |
27.04 |
28.76 |
|
Debtors |
10.79 |
12.35 |
12.90 |
|
Interest Cover
Ratio |
2.85 |
2.99 |
2.80 |
|
Operating Profit
Margin(%) |
2.22 |
1.92 |
1.80 |
|
Profit Before
Interest And Tax Margin(%) |
2.14 |
1.84 |
1.69 |
|
Cash Profit
Margin(%) |
0.97 |
0.87 |
0.80 |
|
Adjusted Net
Profit Margin(%) |
0.90 |
0.79 |
0.69 |
|
Return On Capital
Employed(%) |
14.24 |
13.67 |
14.05 |
|
Return On Net
Worth(%) |
9.40 |
8.52 |
8.20 |
LOCAL AGENCY
FURTHER INFORMATION
History
The company was
incorporated on 2nd May, 1961 at Mumbai in Maharashtra having
Company Registration Number 11998.
The Registered Office of the company was shifted from Mumbai in
Maharashtra to Chennai in Tamilnadu with effect from 28.09.1994 and a new
Company Registration Number 28758 of Chennai ROC was obtained.
Subject is a leading provider of IT products, logistics management and
other services ranked 9th by DQ Top 20 issue of 2002. Subject serves
more than 5500 IT resellers in India covering over 220 cities.
It represents more than 15 leading global brands covering product
categories like systems, software, peripherals, components, network products,
mobile phones, etc. The company generated as sales turnover of Rs. 13500
millions ($ 285 millions) in its last financial year ended 31st
March, 2002.
Subject is a part of 140 years old $2 billion Transnational Kewalram
Chanrai Group headquartered at Singapore.
The group has a very strong business history with operations spread over
40 countries covering USA, Asia, Europe and Africa. The group’s operations are highly diversified and cover areas
like IT products and services, international trading, property development,
textiles manufacturing, etc.
The group has IT products and service business in India, USA, Singapore,
Dubai, Iran, Egypt, Saudi Arabia, Jordan and Kuwait. The IT products and services business generated revenue of $ 525
millions in the financial year 2001-02.
The company started its’ Indian operations in 1993 at Chennai with a
vision to become a leading distributor of world class IT products with a clear
emphasis on supply chain excellence and operational efficiency.
Subject started with distribution of HP peripherals and continued adding
newer products / brands to its portfolio, growing from 5 employees, 3 branches,
25 dealers and Rs. 90 millions sales in 1994 to 350 employees, 28 branches,
over 5500 dealers and Rs. 13500 millions in the year ended 31st
March, 2002.
The company has emerged as the industry's most efficient distribution
company. The company evolved its business from a small manual operation to a
very large technology driven operation, which provides "Best value for
money" to its customers.
Performance:
The Company's revenues witnessed an impressive growth driven by the multi-
pronged strategy of introduction of new products across various segments; value
added services, aggressive marketing campaigns and leveraging long standing
relationship with its vendors/channel partners.
Despite operations in difficult-to-penetrate, price sensitive and diverse
geographies, the company has made its entire endeavor to grow its Sales and PAT
on a consistent basis.
The consolidated revenue of the Company was Rs.90671.400 Millions as against
Rs.67935.600 Millions in the previous year a growth of 33.47% with a CAGR of
56.06% for the last five years. The consolidated profit after tax was Rs.1017.000
Millions as against Rs.743.400 Millions in the previous year, a growth of
36.80% with a CAGR of 76.06% for the last five years.
The stand alone revenue of the Company was Rs.47175.300 Millions as against
Rs.36955.100 Millions in the previous year. The profit after tax was Rs.424.200
Millions as against Rs.291.400 Millions in the previous year.
The Consolidated Earnings per Share (EPS) on weighted average number of shares
increased to Rs.15.36 in the current year as compared to Rs.12.23 in the
previous year.
Distribution Business:
Robust growth in the IT products sale was observed in the country on the back
of above 8% growth in the country's GDP for last financial year. The Company
being a leading distributor of these products achieved a higher growth in its
sales, by increasing the sales in its existing product lines and by addition of
new product lines. In the process, your Company has partnered with more vendors
like Gigabyte, HCL Infosystems, Hitachi, View Sonic, Whirlpool, Kodak, 3COM for
distribution of their range of products in India. The Company's endeavor to
foray into new verticals other than IT, has enabled the Company to enlarge its
product offerings to its customers and increase its network of channel partners
(which includes large format retail stores). The Company is confident that the
core competencies that were developed in IT distribution space can be
replicated in other verticals too.
The Company continues to enjoy excellent relationship with all its long standing
suppliers like Hewlett Packard, Intel, IBM, Microsoft, Lenovo, Samsung, Epson,
Computer Associates, Systimax, APC, Wipro, Cisco and Seagate.
As a result of its long business partnership with IBM, a 'Tivoli Competency
Center' has been set up at the Company's premises at Mumbai, which would
provide Tivoli Partners across the country a platform for showcasing Tivoli
products besides demonstrating the product capabilities. This Centre of
Excellence will help partners who do not possess the requisite technical
knowledge and/or skills to engage a distributor or IBM in their business
transaction.
With the continuing growth of IT and ITES industries, the performance of
the Company is expected to grow in the ensuing financial years.
Service Business:
The demand for service providers is growing. Capitalising on this situation,
the Company forayed into the service arena with the background of IT
distribution. The Company has increased its reach by opening 80 service centres
through partners in addition to the existing 43 Redington Service
Centres.
The Company has maintained its leading position as an after sales service
provider. The Technical Call Centre of the Company efficiently supports and
manages the service of HP Presario range of PC products.
The financial year, the revenue from service business was Rs.579.500 Millions
compared to previous year of Rs.384.200 Millions. The Company could achieve
this growth owing to a strong and well established network of service centres
and good partner relationship coupled with online information system that
provides better control and enables accountability and performance.
As a part of the Company's plan to enter high-end Telecom repair space, the
Company has setup a High Level Repair Centre (HLRC). The company has also
continued to maintain service outlets in certain key metropolitan cities.
The repair and replacement activity being carried out by the Company's wholly
owned subsidiary in India, M/s Cadensworth (India) Private Limited had shown a
consistent growth in terms of both revenues and earnings during the last
financial year. The Company started servicing the products of Plantronics in
addition to its existing line of products.
Overseas operations:
The Company's international business is conducted through two key subsidiaries,
Redington Gulf FZE, Dubai and Redington Distribution Pte Limited., Singapore.
Its international operations in the Middle East, Africa, South Asia and
Singapore reflect the company's ability to seamlessly manage diverse
geographies.
Redington Gulf FZE, the wholly owned overseas subsidiary of the Company was
rated as No.1 Distributor in the Middle East for the second year in succession
by `Channel Middle East'.
The year, the revenue of Redington Gulf FZE and its subsidiaries grew by over
60% while the profit grew over 30%. Apart from the organic growth in the IT
vertical, the subsidiary's growth was enabled by addition of the telecom
vertical, which had its first full year of operation. The subsidiary has also
continued to grow organically by adding new vendors largely in the better
margin space like Cisco, Sonic Wall, etc.
Redington Gulf FZE is in the process of selecting a suitable space in Jebel Ali
Free Zone Area, Dubai for setting up an Automated Distribution Centre and is
exploring various options to quicken the process. Recently, Redington Gulf FZE,
has formed a new subsidiary in Bahrain and had invested a sum of Rs.4.100
Millions to start in-country operations in that country.
Redington Gulf demonstrated highest growth in West Africa for HP products and
bagged the Best Distributor Award. Redington Gulf was also awarded by NOKIA as
Best Domestic Value Capturer for Middle East and Africa.
MANAGEMENT
DISCUSSION AND ANALYSIS
In the last two years the Company has been transforming itself from a pure IT
products distribution Company to an end-to-end supply chain solution provider
across many verticals and geographies. While IT products still constitute a
large portion of the revenues, over the coming years, they expect the non-IT
products and services share to increase. Some of the verticals where the
Company has made a foray are telecom products, gaming consoles and titles,
digital lifestyle products and consumer durables.
The Company provides Supply Chain Solutions to over 40 international brands and
relationship with major brands have been for years. Some of these brands are
Hewlett Packard, Epson, Intel, Microsoft, IBM, Samsung, Acer, APC, HCL, Cisco,
Wipro, Xerox, Nokia, Lenovo, Linksys and Seagate. Through its network of over
57 warehouses, the Company distributes products to over 15,000 resellers across
the geographies in India, Middle East, Africa and Singapore.
The Consolidated turnover for the fiscal 2007 grew by 33.44% to touch
Rs.90613.900 Millions, while the Profit before Tax grew by 37.78% to
Rs.1272.500 Millions and the Profit after Tax was Rs.1017.000 Millions - an
increase of 36.80% over the previous year.
The discussion starts with the industry structure & the company's business,
strengths, risks & concerns followed by an analysis of the Company's
consolidated and stand alone financials.
INDUSTRY STRUCTURE & NATURE OF
BUSINESS:
Structure:
Globally the products distribution and services industry generally consists of traditional
distribution business, fee based supply chain services business and after sales
service business.
In the traditional distribution model, the distributor buys, holds title to and
sells products and /or services to resellers who, in turn, sell directly to
end-users or other resellers.
Fee based supply chain services encompass the end-to-end functions of supply
chain, taking a product from the point of manufacturing through delivery to the
customer, but not take market risk or inventory risk.
After-sales services are fee-based services provided to customers on
behalf of vendors during the warranty period and directly to the end customers
during the post warranty period.
Nature of Business:
The Company provides end-to-end supply chain solutions for all categories of IT
(Information Technology) products (PCs, Peripherals, PC building blocks,
networking products, software products and enterprise solution products) and
Non-IT products (telecom products, gaming consoles and titles, digital
lifestyle products and consumer durables).
IT PRODUCTS
PC consumption would be a good indicator of the demand for IT products. As the
demand for PC increases, the corresponding demand for other products viz.
peripherals, accessories, parts, components, etc. grow correspondingly. In the
geographies where the Company operates, the PC user base has increased at a
rapid pace driven primarily due to demand from large enterprises, small
&medium businesses, government enterprises and educational institutions.
This pace of growth is expected to continue in the ensuing years.
A recent IDC report predicts increased spending on IT products worldwide
(including markets where the Company does not operate). While the annual growth
on software and services are expected to be stable at 6% in fiscal 2007, the
growth in the hardware side is expected to increase by 50 basis points at
6.5%.
Indian Business Scenario:
India's economy grew by over 8% during the fiscal driven primarily by steady
domestic demand, growth across major sectors and fresh impetus to investments
in infrastructure.
The IT industry is witnessing steady and increasing growth driven primarily by
the investments in the IT/ITES sector and an increase in communication,
computing, infrastructure spending and increased internet usage.
The PC market witnessed a 20% growth in fiscal over the previous year driven
mainly by an 85.6% annual growth in notebook PCs, while Desktop PCs grew by
11%. Notebook PC's which contributed 6.1% of the PC market in 2005 now
contributes almost 20%.
The overall PC installed base in the country grew from 9.5 million units in
2004 to cross 22 million in 2007 - CAGR of 32.3%. The country now has one PC
for every 50 Indians. (Data Source: IDC)
The ongoing retail revolution in India with setting up of a number of large
format stores presents a good opportunity for supply chain service providers
like Redington.
The after-sales service market dominated by the service agents without
authorization from vendors is witnessing a shift to the authorized service
providers due to customers preferences of getting the products serviced by
trained and skilled specialists using genuine parts. In a competitive market
scenario, as part of their product offering, vendors generally offer extended
warranty support products and this has gained wide acceptability among
customers. Institutional Customers look for one-stop service providers to take
care of facility management services for their entire range of IT products,
which can be handled only by large authorized neutral service providers. This
shift in trend is expected to continue in the coming years. With increase in PC
sales, the after sales service markets are expected to grow in proportion to
the number of units sold.
Overseas
Business Scenario:
The Middle East and Africa market comprises of 20 major countries whose
economies are fuelled primarily by increasing oil prices. The economies of
these countries are also buoyant due to increased government spending and
foreign investments in the area of retail, constructions, and sports related
infrastructure, media, etc. All of this has resulted in large multinational
vendors setting up establishments in this part of the world.
However, the differences in country specific regulatory
environment, duty structures, currencies, trade terms, etc. have proved to be
an entry barrier to global vendors from setting up their own distribution
channel and this has provided an opportunity for the distributors with country
specific knowledge to make themselves an integral part of IT products
distribution chain and moving into supply chain space.
NON-IT
PRODUCTS:
Non-IT products that form part of their supply chain are predominantly gaming
devices, digital printing machines, consumer durables and telecom
products.
Indian Business Scenario:
- Gaming Device:
Gaming category is new to India and provides an opportunity to the Company and
its vendors to lead and define this category. Demand for gaming products are expected
to grow at around 30% annually due to rising income levels, the changing
preferences of young population and increased PC penetration.
The Company started distributing Microsoft's Xbox gaming consoles and gaming
titles / software during the year.
- Digital Printing Machines:
Digital printing machines are cost effective substitutes to
conventional offset printing machines for low print volumes, customized
solutions and variable data printing. Around 52 trillion pages get printed
worldwide, off which only 4% get printed through digital printing machines. 78%
of the printing jobs are less than 5,000 sheets and 33% of the Customers demand
that their print jobs be completed within 24 hours from order - all of which
points towards significant opportunities to the cost effective digital printing
way.
The Company has partnered with HP Indigo to offer total print solutions to the
printing industry. The Company has a demo center in Chennai and has installed
21 digital printing machines each costing over a Millions of rupees and
supports these machines.
- Consumer Durables:
The consumer durable industry can be broadly
categorized under consumer electronics and household appliances. The product
includes Colour televisions sets, refrigerators, washing machines, air
conditioners etc.
Rising income levels and replacement demand are the key
growth drivers of this industry.
The Company is currently distributing consumer durables in select regions in
India and views this as a potential opportunity for future growth.
Overseas Business Scenario:
- Telecom Products:
Presently the Company distributes Nokia mobile phones in Nigeria and Kenya.
In these two countries around 12% (Source:
http://www.mobileafrica.net) of the population own a mobile phone leaving ample
scope for the Company to tap the balance market.
SUPPLY CHAIN SERVICES MARKET
Manufacturers today across the globe look for supply chain solution partners
to ensure fulfillment of their customers' requirements. Going forward, with
manufacturing facilities shifting to low cost centers around the globe, supply
chain activities especially fee based and after sales services would be the
prime requisite for products to reach the end customer. A significant
proportion of these services are required in areas outside the IT products
space.
Currently small and regional players, who operate in niche markets or products,
dominate this space and do not have the capability to scale up their
operations. In the coming years we intend to focus on this segment.
STRENGTHS, RISKS AND CONCERNS
Strengths
Comprehensive range of product offering - wide spectrum of products sourced
from multiple vendors enables us to achieve economies of scale and provide our
customers a single sourcing point.
An IT distributor with a customer support presence - provides warranty and post
warranty services which is a significant value add to vendors and customers.
Provides other value added services like reverse logistics, high-level repair
services for mobile phones and computer mother boards.
FINANCIAL
PERFORMANCE & POSITION:
The Company and its Indian subsidiaries prepare financial statements
complying with the requirements under the Companies Act, 1956 and Generally
Accepted Accounting Principles (GAAP) in India. While the subsidiaries in
Middle East prepare financials under International Financial Reporting
Standards (IFRS), the subsidiary in Singapore prepares financials under
Singapore Financial Reporting Standards (SFRS).
Contingent
Liabilities:
|
|
31.03.2007 Rs. In Millions |
|
|
|
|
Guarantee by banks on behalf of the company |
288.351 |
|
Corporate Guarantee outstanding on behalf of subsidiaries |
4411.617 |
|
Bills Discounted |
275.928 |
|
Cliams against company not acknowledged as debts -
Claim from an erstwhile warehouse owner -
Other Sundry Claims |
6.700 4.705 |
Form 8:
|
Name of the
company |
REDINGTON
(INDIA) LIMITED |
||||||||
|
Presented By |
REDINGTON
(INDIA) LIMITED AND HSBC LIMITED, RAJAJI SALAI, CHENNAI. |
||||||||
|
1) Date and
description of instrument creating the change |
14.09.1995 Hypothecation agreement
of revolving stock and other movable assets and also present and future book
debts dated 14.09.1995 |
||||||||
|
2) Amount secured
by the charge/amount owing on the securities of charge |
Rs. 60.000
Millions |
||||||||
|
3) Short
particular of the property charged. If the property acquired is subject to
charge, date of the acquired of the property should be given |
The whole of the
company’s stocks viz. Raw Materials, Work-in-progress, Finished Goods (both
Present and Future) including stocks-in-transit and also present and future
book debts lying and/or situated any were in India. |
||||||||
|
4) Gist of the
terms and conditions and extent and operation of the charge. |
Rate of Interest
– Hongkong Bank Prime + 2% p.a. |
||||||||
|
5) Name and Address
and description of the person entitled to the charge. |
Hong Kong and
Shanghai Banking Corporation
Limited, 30, Rajaji Salai, Chennai. |
||||||||
|
6) Date and brief description of instrument
modifying the charge |
21.01.2003 Letter from
Hongkong and Shahghai Banking Corporation Limited, Rajaji Salai, Chennai –
600001, addressed to the company regarding the reduction in limit from
Rs.670.000 Millions to Rs.315.000 Millions. |
||||||||
|
7) Particulars of
modifications specifying the terms and conditions or the extent of operations
of the charge in which modification is made and the details of the
modification. |
The limit of
Rs.670.000 Millions already extended to the company has now been reduced to
Rs.315.000 Millions as detailed below:
The Securities
which are already hypothecated to the bank shall continue to secure the
present reduced limit of Rs.315.000 Millions, together with interest, costs, charges,
and all other expenses which may be debited to the appropriate account from
time to time. All other terms
and conditions remain the same. |
Fixed Assets:
· Land and Building,
· Plant and Machinery
· Furniture and Fixtures
· Office Equipment
· Computers and Software
·
Vehicles
AS PER WEBSITE
Subject established in 1993 is today positioned as one of the
leading Supply Chain service provider in Information Technology, Digital
Printing category, Digital lifestyle category, Telecom, Consumer Durable
products. With its corporate office in Chennai, it has 39 Branch offices, 51
warehouses, 43 own service centers and 113 partner managed service centers
across India. A team comprising of over 750 highly skilled and committed
professionals helps the Company deliver its products and services to every
corner of the country. The team is supported by a robust IT and Communication
infrastructure connecting 133 physical locations of the company and a state of
the art ERP and e-commerce back bone. Subject has built its business on very
strong ethical and commercial fundamentals which has not only helped it to
consistently exceed the industry growth rate, but has also enabled to firmly
establish it as the "partner of choice" with most of its vendors and business
partners. A compounded annual growth rate of 65% over the past 12 years has
enabled subject generate a revenue of over Rs.47175 million (over USD 1
billion) during fiscal 06-07, underlining the very strong foundation and
prudent practices on which the company's business practices have been built.
News:
12.01.2007
Redington
plans to raise Rs 14950 millions thru IPO
Redington (India), Chennai-based provider of IT products and
support services, is coming out with an initial public offering, IPO to raise
around Rs 14950
millions in the upper end of the price band of Rs 95-113 per share.
The proceeds will be used to part-fund setting up of automated distribution
centres, ADCs and service and repair centers, SRC in India and Dubai.
The company's offering of 13.200
millions equity shares of Rs.10 each comprises about 16.99% of the
fully diluted post-issue paid up capital of the company. The issue opens on
January 22 and closes on January 25.
Redington is a distributor of IT products and a provider of logistics, supply
chain management and other support services in India, West Asia and Africa. The
company is to set up four automated ADCs in India and Dubai, apart from 68 SRCs
in India.
"They will invest about Rs 425 millions in their wholly owned subsidiary
Redington Gulf FZE for establishing ADCs in Dubai and to install enterprise
resource and planning systems for operations in Middle East and Africa," R
Srinivasan, Managing Director, Redington said. Financial Consultants and Cameo
Corporate Services are the lead managers to the issue.
11.01.2007
Redington
to come up with Rs.1500 millions IPO
MD at Redington, R Srinivasan says that the money raised from
the new issue would go towards setting up a new distribution centers in India.
He adds that the company is looking to raise about Rs 1500 millions and
the price range is between Rs 95-113 per share.
Excerpts from CNBC-TV18`s exclusive interview with R Srinivasan:
Q: What kind of money are they looking to raise and what will be the
purpose?
A: They are looking to raise about Rs 1500 millions for
setting up new distribution centers in India. They are planning to set up four
distribution centrers in India.
The second objective of the issue is to set-up 68 service centres in India,
they already have 43 service centres. The third objective of the issue is to
set-up a repair facility for LCD panels, the market for which is growing quite
fast in India and repair at the moment is been done in Taiwan or in Korea.
Lastly, they intend setting up a very large distribution centre in Jebel Ali in
Dubai.
Q: How much of the revenues come from the Middle East and Africa?
A: 50% of their revenues are from the international business
and 50% from the domestic business. Last year their turnover was in the region
of about Rs 67000
millions, so approximately 50% of it is from Middle East and Africa.
Q: How much better will the margins be because of these service centres?
A: Their service margins are much higher than their product
distribution margins but in terms of their total revenue, the services do not
constitute more then 4% at this point in time.
Q: For the first half of 2007, they had done an EPS of just about Rs 5.
Would it be fair to annualize it for 2007 and say they will
close the year by about Rs 10?
A: No, on an annual basis it would be more prior to
dilution, post dilution it could be in the region of about Rs 10.3.
Q: They are
looking to raise about Rs 1500 millions and looking to issue about 13.200 millions
equity unless they are
looking to do pre IPO placement. Would it be fair to assume that they price
to IPO of about Rs 115?
A: Their price would between Rs 95-113 - that would be
correct.
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 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--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 |
|
72 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|