MIRA INFORM REPORT
|
Report Date : |
05.02.2008 |
IDENTIFICATION DETAILS
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Name : |
FINOLEX CABLES LIMITED |
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Registered
Office : |
26/27, Mumbai – Pune Road, Pimpri, Pune – 411 018, Maharashtra |
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Country : |
India |
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Financials (as
on) : |
31.03.2007 |
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Date of
Incorporation : |
05.08.1967 |
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Com. Reg. No.: |
16533 |
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CIN No.: [Company
Identification No.] |
U31300MH1967PLC016531 |
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TAN No.: [Tax Deduction
& Collection Account No.] |
PNEF00515E |
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Legal Form : |
Public Limited
Liability Company. The company’s
shares are listed on the Stock Exchanges. |
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Line of Business
: |
Manufacturer of
Electrical Wires, Lan Cables, Coaxial Cables, Auto Battery Cables, Winding Wire
Score Flat Cables, Industrial Flexible Cables, Jelly Filled Telephone Cables
& Voice Grade 2P / 5P Telephone Cables. |
RATING &
COMMENTS
|
MIRA’s Rating : |
Aa |
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RATING |
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 24000000 |
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Status : |
Excellent |
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Payment
Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established and reputed company having fine track. Available information
indicates high financial responsibility of the company. Trade relations are fair.
Financial position is good. Payments are correct and as per commitments. The company can be
considered good for any normal business dealings. It can be regarded as a
promising business partner in a medium to long run. |
LOCATIONS
|
Registered
Office : |
26/27, Mumbai – Pune Road, Pimpri, Pune – 411 018, Maharashtra, India |
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Tel. No.: |
91-20-27475963 (5 Lines) |
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Fax No.: |
91-20-27472239 / 7470344 |
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E-Mail : |
sales@fclpun.gnpun.globalnet.ems.vsnl.net.in |
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Website : |
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Corporate Office : |
26/27, Mumbai – Pune Road, Pimpri, Pune – 411
018, Maharashtra |
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Tel. No.: |
91-20-27475963 (5 Lines) |
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Fax No.: |
91-20-27472239 / 27470344 |
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E-Mail : |
sales@fclpun.gnpun.globalnet.ems.vsnl.net.in sales.ldc@fclpun.gnpun.globalnet.ems.vsnl.net.in |
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Website : |
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Plants : |
Pimpri
26/27, Mumbai – Pune Road, Pimpri, Pune –
411 018, Maharashtra. Tel. No.
: 91-20-27475963 (5 Lines) Fax No.
: 91-20-27472239 / 27470344 /
27472224 E-Mail : sales@fclpun.gnpun.globalnet.ems.vsnl.net.in sales.ldc@fclpun.gnpun.globalnet.ems.vsnl.net.in Website
:http://www.finolex.com Urse Taluka Maval, Dist. Pune – 410 506, Maharashtra, India Tel. No. 91-2114-222391 / 222413
/ 237026 / 27 Fax No. 91-2114-222865 / 237025 Email: PM_Deshpande@finolex.com Goa( Communication Cables) Plot No. L123/9A, Verna Industrial Estates, Verna Salcette, South, Goa, India Tel No: 91-832-2782002/3/4 Fax No: 91-832-2783909 Email:
kd_shenoy@finolex.com |
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Branches : |
Located at : v Gujarat v Karnataka v West Bengal v Tamilnadu v Madhya Pradesh v Kerala v Mumbai v New Delhi v Andhra
Pradesh |
DIRECTORS
|
Name : |
Mr. P. P Chhabria |
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Designation : |
Chairman |
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Address : |
9, ICS Colony, Ganeshkhind Road, Pune - 411 007, Maharashtra. |
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Name : |
Mr. D. K. Chhabria |
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Designation : |
Managing Director |
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Name : |
Mr. V. K. Chhabria
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Designation : |
Dy, Managing Director |
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Name : |
Mr. B. J. Rathi |
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Designation : |
Director |
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Address : |
94/13-14 ‘Jayesh’ 11th Lane, Prabhat Road, Pune – 41 1004,
Maharashtra. |
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Name : |
Dr. H. S. Vachha |
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Designation : |
Director |
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Name : |
Mr. B. G. Deshmukh
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Designation : |
Director |
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Name : |
Mr. Atul C.
Choksey |
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Designation : |
Director |
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Name : |
Mr. Sanjay K.
Asher |
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Designation : |
Director |
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Name : |
Mr. P. G. Pawar |
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Designation : |
Director |
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Name : |
Dr. N. A. Kalyani |
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Designation : |
Director |
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Name : |
Mr. M. L. Jain |
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Designation : |
Assistant Managing
Director and Chief Operating Officer |
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Name : |
Mr. P. B. Paranis |
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Designation : |
Assistant Managing
Director and Chief Financial Officer |
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Name : |
Mr. S B Ravi (Pandit) |
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Designation : |
Director |
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Name : |
Mr. Pradeep R
Rathi |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. R. G. D’Silva |
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Designation : |
Company Secretary and General Manager (Legal) |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Promoters
holding |
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Indian Promoter |
49298575 |
32.23 |
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Non Promoters
holding |
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Institutional Investors |
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Mutual Funds and UTI |
11968789 |
7.83 |
|
Banks, Financial Institutions, Insurance Companies (Central / State
Government Institutions / Non Government Institutions) |
16725250 |
10.94 |
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FIIS |
15239064 |
9.96 |
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Others |
|
0.000 |
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Private Corporate Bodies |
25357316 |
16.58 |
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Indian Public |
33519380 |
21.92 |
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NRIs / OCBs |
830971 |
0.54 |
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Total
|
152939345 |
100.00 |
BUSINESS DETAILS
|
Line of Business
: |
Manufacturer of Electrical
Wires, Lan Cables, Coaxial Cables, Auto Battery Cables, Winding Wire Score
Flat Cables, Industrial Flexible Cables, Jelly Filled Telephone Cables &
Voice Grade 2P / 5P Telephone Cables. |
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Products : |
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PRODUCTION STATUS (As on 31.03.2007:-)
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Particulars |
|
Unit |
Installed
Capacity |
Actual
Production |
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Electrical Cables |
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TCKM |
1030.00 |
702.96# |
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Communication
Cables Optic Fibre Cables |
|
KM |
48000.00 |
20547.44 |
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Other
Communication Cables |
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TCKM |
10612.00 |
862.53 |
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PVC Sheets and
Accessories |
|
MT |
2100.00 |
1570.05 |
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Fibre |
|
KM |
600000.00 |
414028.00* |
|
Cross Linked Polyethylene
and other Compounds (Used for Captive Consumption) |
|
MT |
2500.00 |
---- |
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Poly coated FRP
Rod |
|
KM |
1500.00 |
---- |
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Continuous Cast
Copper Rods |
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MT |
60000.00 |
16653.79@ |
Notes:
Installed capacities are certified by the Managing Director and relied
upon by the Auditors.
# Equivalent tonnage 23211 MT (Previous
year 24636 MT)
* Includes captive consumption of 170762 Kms. (Previous year 145072 Kms)
@ Includes captive consumption of 13207 MT (Previous year 16090 MT)
5000 TCKM of Other Communication Cables Capacity is interchangeable with
332 TCKM of Electrical Cables Capacity.
GENERAL INFORMATION
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Suppliers: |
· Cotmac Electronics Private Limited · Navbharat Industries |
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No. of Employees
: |
1038 |
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Bankers : |
Ř
Central Bank
of India, Pimpri, Pune – 411 018, Maharashtra Ř
Standard
Chartered Grindlays Bank Limited, Pune, Maharashtra Ř
Bank of
Baroda, Pune, Maharashtra Ř
BNP Paribas, Pune,
Maharashtra Ř
Citibank
N.A., Pune, Maharashtra Ř
Corporation
Bank, Pune, Maharashtra Ř HDFC Bank Limited, Pune, Maharashtra Ř
State Bank of
India, Pune, Maharashtra Ř
The Bank of
Nova Scotia, Pune, Maharashtra Ř
ICICI Bank
Limited Ř
Standard
Chartered Bank |
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Facilities : |
Secured Loans :
Notes :
Unsecured Loans
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Banking
Relations : |
Good |
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Auditors : |
B. K. Khare & Company Chartered
Accountants 706/707, Sharda
Chambers, 7th Floor, New Marine Lines, Mumbai – 400020,
Maharashtra. |
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Membership : |
Confederation of Indian Industry |
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Associates/Subsidiaries
: |
Associates Ř Finolex Technologies Limited Ř
Finolex Essex
Industries Limited Ř
Finolex
Southern Gas Limited Ř
Finolex
Energy Corporation Limited Ř
Corrugated
Box Industries (India) Private Limited Ř
Plastro
Plasson Industries (India) Limited Ř
Finolex Industries Limited. Ř
Finolex Proprietary Limited. Subsidiaries Ř
Finolex Wire
Products Limited Ř
Creole
Holdings Company Limited Ř
Finolex
Finance Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
235000000 |
Equity Shares |
Rs. 2/- each |
Rs. 470.000 millions |
|
3000000 |
Unclassified Shares |
Rs. 10/- each |
Rs. 30.000 millions |
|
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Total
|
|
Rs. 500.000 millions |
Issued, Subscribed
& Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
152939345 |
Equity Shares |
Rs. 2/- each |
Rs. 305.879 millions |
Notes:
During the year
the Company has subdivided the Rs. 10/- share into 5 shares of Rs. 2/- each. Consequently 30587869 shares
of Rs.10/- each have become 152939345 shares of Rs.2/- each w.e.f 16th January,
2007.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
305.879 |
305.879 |
305.879 |
|
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
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3] Reserves & Surplus |
5494.818 |
5055.392 |
4702.358 |
|
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
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NETWORTH |
5800.697 |
5361.271 |
5008.237 |
|
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LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
1976.875 |
1361.035 |
937.450 |
|
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2] Unsecured Loans |
676.471 |
982.144 |
383.166 |
|
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TOTAL BORROWING |
2653.346 |
2343.179 |
1320.616 |
|
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DEFERRED TAX LIABILITIES |
208.449 |
213.072 |
184.352 |
|
|
|
|
|
|
|
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TOTAL |
8662.492 |
7917.522 |
6513.205 |
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APPLICATION OF
FUNDS |
|
|
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|
|
|
|
|
|
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FIXED ASSETS [Net
Block] |
3079.433 |
2287.839 |
2117.974 |
|
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Capital
work-in-progress |
0.000 |
0.000 |
0.000 |
|
|
|
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|
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INVESTMENT |
2833.152 |
2722.387 |
2490.649 |
|
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DEFERREX TAX
ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS,
LOANS & ADVANCES |
|
|
|
|
|
|
Interest Accrued
on Investments |
0.127
|
1.873
|
0.000 |
|
|
Inventories |
1923.026
|
2084.345
|
1209.087 |
|
|
Sundry Debtors |
788.046
|
759.138
|
431.083 |
|
|
Cash & Bank
Balances |
610.720
|
592.426
|
69.958 |
|
|
Other Current
Assets |
0.000
|
0.000
|
0.000 |
|
|
Loans &
Advances |
3271.743
|
2907.526
|
2983.493 |
|
Total Current Assets |
6593.662
|
6345.308 |
4693.621 |
|
|
Less : CURRENT LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current
Liabilities |
1014.781
|
939.774
|
445.086 |
|
|
Provisions |
2828.974
|
2498.238
|
2343.953 |
|
Total Current Liabilities |
3843.755
|
3438.012 |
2789.039 |
|
|
Net
Current Assets |
2749.907
|
2907.296 |
1904.582 |
|
|
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|
|
|
|
|
MISCELLANEOUS
EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
8662.492 |
7917.522 |
6513.205 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
10330.211 |
7477.843 |
5874.904 |
|
|
Other Income |
196.042 |
283.821 |
0.000 |
|
|
Total Income |
10526.253 |
7761.664 |
5874.904 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
970.307 |
616.508 |
371.312 |
|
|
Provision for Taxation |
280.377 |
112.820 |
63.605 |
|
|
Profit/(Loss) After Tax |
689.930 |
503.688 |
307.707 |
|
|
|
|
|
|
|
|
Export Value |
1169.770 |
368.402 |
464.899 |
|
|
|
|
|
|
|
|
Import Value |
672.659 |
1113.210 |
411.824 |
|
|
|
|
|
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|
|
Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses |
8027.519 |
5717.792 |
|
|
|
Personnel Expenses |
355.321 |
326.342 |
|
|
|
Finance charges |
159.247 |
127.867 |
5503.592 |
|
|
Depreciation & Amortization |
264.288 |
313.164 |
|
|
|
Other Expenditure |
749.571 |
659.991 |
|
|
Total Expenditure |
9555.946 |
7145.156 |
5503.592 |
|
QUARTERLY RESULTS
|
Year |
31.12.2007 |
30.09.2007 |
30.06.2007 |
|
Type
|
3rd
Quarter |
2ndQuarter |
1nd
Quarter |
|
Sales Turnover |
3241.200 |
3340.600 |
3023.800 |
|
Other Income |
94.100 |
107.700 |
246.500 |
|
Total Income |
3335.300 |
3448.300 |
3270.300 |
|
Total Expenditure |
2920.900 |
2949.500 |
2733.200 |
|
Operating Profit |
414.400 |
498.800 |
537.100 |
|
Interest |
51.700 |
42.300 |
45.900 |
|
Gross Profit |
362.700 |
456.500 |
491.200 |
|
Depreciation |
67.100 |
65.600 |
64.000 |
|
Tax |
102.400 |
120.000 |
115.900 |
|
Reported PAT |
203.100 |
268.000 |
318.100 |
KEY RATIOS
|
Year |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.45 |
0.35 |
0.31 |
|
Long Term Debt-Equity Ratio |
0.30 |
0.23 |
0.24 |
|
Current Ratio |
1.38 |
1.38 |
1.31 |
|
TURNOVER RATIOS |
|||
|
Fixed Assets |
2.51 |
1.97 |
1.67 |
|
Inventory |
5.92 |
5.23 |
5.52 |
|
Debtors |
15.33 |
14.48 |
16.01 |
|
Interest Cover Ratio |
7.09 |
5.30 |
4.52 |
|
Operating Profit Margin(%) |
11.75 |
11.50 |
11.26 |
|
Profit Before Interest And Tax Margin(%) |
9.52 |
7.86 |
7.30 |
|
Cash Profit Margin(%) |
8.05 |
8.84 |
8.67 |
|
Adjusted Net Profit Margin(%) |
5.82 |
5.20 |
4.71 |
|
Return On Capital Employed(%) |
13.98 |
9.66 |
7.02 |
|
Return On Net Worth(%) |
12.36 |
8.65 |
5.92 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Subject was
incorporated on 05.06.1967 at Delhi as a private limited liability company in
the name of the Alfa Rubber Company Private Limited. It became a public limited liability company on 30.11.1968. The Certificate of Incorporation was amended
by the Registrar of Companies, Delhi on 08.10.1969. The Registered Office of the company was transferred from New
Delhi to Pune, pursuant to the Special Resolution passed at the Annual General
Meeting held on 10.07.1972, which was confirmed by the Delhi High Court vide
its Order dated 19.01.1973. The company
changed its name to the present on 07.12.1972.
A fresh Certificate of Incorporation consequent on change of name was
issued by the Registrar of Companies, Maharashtra on 23.08.1973.
Subject is the
flagship company of the Finolex Group.
The group has interests in education, energy, irrigation, power,
petrochemicals and telecommunications.
Subject is India's largest manufacturer of a wide range of electrical
and telecommunication cables, with plants at Pimpri and Urse near Pune.
The company's
product range includes Lan cables and components, PVC insulated battery cables,
flamegard, thin wall auto cables, flexible cables, winding wires and 3 core
flat cables, jelly filled telephone cables and co-axial cables.
MERGER
During the year under review, the operations of the erstwhile subsidiary companies namely Finolex Wire Products Limited (manufacturing continuous cast copper rods (CCC rods) and certain varieties of optic fibre cables) and Finolex Finance Limited (a non banking financial company) were merged with the operations of the Company, pursuant to the Orders of the Honerable High Court of Judicature at Bombay passed on 21.10.2005. The merger came into effect on and from 01.04.2005.
Accordingly, the reporting and earlier years' financial results can not
be considered as fully comparable.
The financial statements for the reporting year have been prepared after
taking into consideration the merger effect (as per 'Pooling of Interest'
method) in accordance with Accounting Standard AS 14 - 'Accounting for
Amalgamation'
DIRECTOR REPORTS:
OPERATIONS
Income for the year under review was Rs. 10526.253 millions and
net profit was Rs. 689.930 millions. The income was higher by 36% and net profit
was up by 37% over the previous year. Segmentally, electrical cables
contributed 69%, communication cables contributed 15%, copper rods contributed
13% and other products contributed 3% to the total sale of products. The
sales-mix, which has emerged over the last few years, is in synch with the
overall business objectives of the Company.
The year under review will always be remembered for an important milestone
achieved by the Company. The Company crossed the prestigious Rs. 10 billion
sales benchmark. The Company witnessed good growth in profit for the year. The
conversion of JFTC (jelly filled telephone cable) capacity at Urse, mainly to
manufacture light duty electrical cables, started yielding results during the
year. Exports recorded a strong growth. There was no traditional JFTC business
with BSNL / MTNL due to lack of tenders from these two companies. The positive
effects of the system of Value Added Tax (VAT) (which was introduced in the
year 2004), though non-measurable, were noticed. A couple of important states
were still missing on the VAT map at the close of the year. Also, there is no
unanimity in VAT rates for many of the Company's products amongst states. As
and when the remaining states adopt VAT system and all the states attain uniformity
in VAT rates, business conditions will further improve for the Company.
The Company continued to pursue cost rationalization and containment measures
during the year.
PROJECTS
To leverage on high brand-equity and the existing well entrenched
distribution network, the Company had decided to undertake projects to
manufacture certain new products / expand production base.
Electrical Switches Project
An electrical switch is meant for controlling the flow of
power. The Company manufactures electrical cables which act as a conduit for
transmitting power. The electrical cables are made of wires which are
terminated at and connected to an electrical switch. Thus the flow of power is
controlled through an electrical switch. Therefore, the business of electrical
switches is complementary to the electrical cable business of the Company. The
Company has developed and introduced two ranges of electrical switches; premium
range for the niche market and classic range for the mass market. Characterised
by the superior quality of polycarbonate and silver coated contacts and
terminals used in the making of the most modern switches, 'Finoswitch' is safe,
durable find is tested to last over 60,000 clicks. The switches are marked with
a unique fluorescent strip that glows in the dark and acts as a guide.
Electrical switches were launched in June 2006. They have been well received by
the market.
Compact Fluorescent Lamps (CFLs)
Project
Expanding its reach to providing more products in electrical
solutions, the Company launcned 'Finoglow', its brand of CFLs, during August
2006.
Finoglow
is an energy saving lamp. It can save upto 80% energy as against an
incandescent lamp. Available in retrofit and non-retrofit range, CFLs are
available in different colours, wattage and sizes. Finoglow CFLs have a high
colour rendering index which gives true colour lighting. The market response to
CFLs has been positive.
The government is considering to ban use of GLS (incandescent) lamps to
help in reducing global warming. CFLs will substitute for GLS lamps.
Considering
the immense growth potential, the Company is planning for substantial expansion
of manufacturing capacity for CFLs.
High Voltage Power
Cables Project
The macro environment for power cable sector is very strong on the back of improved investment scenario in the country. Large investment is coming in power generation, distribution, rural electrification, upgrading existing distribution networks, industrial capacity expansion, construction and the like. These factors would drive demand growth for power cables in India. In order to cater to this market segment, the Company will manufacture insulated, underground usage power cables upto 66 KV rating. Manufacturing facility is under erection. Trial runs are expected to take place before September, 2007.
The manufacturing units for all of the above mentioned new products are set up
at the Urse location where the Company has adequate land and developed
infrastructure.
Uttaranchal (now called Uttarakhand)
Project
The main activities consuming electrical cables in bulk like
building industry, automobile industry, agricultural irrigation and electricity
distribution are in growth mode. The system of VAT is in place with many states
which is expected to generate accelerated business for organised sector. The
governmental thrust on development of infrastructure and power generation offer
a wide scope for the business of electrical cables. In order to capitalise on
the growing business opportunities, the Company decided to a setup a green
field manufacturing facility for light duty electrical cables and electrical
switches near Roorkee in the Uttarakhand State. Estimated capital expenditure
is Rs. 2 billion, planned to be incurred in two stages broadly in equal
proportion. The first stage of this project is under execution and the plant is
scheduled for trial runs before September, 2007. The Uttarakhand manufacturing
facility will enjoy fiscal incentives by way of excise duty exemption and
income tax benefit for defined periods. Besides enhancing the competitiveness
of the Company, this manufacturing facility will help the Company to stay close
and service the present and potential customers in the northern and eastern
regions of the country.
NEW PRODUCTS
The Company's initiative to launch new products continued this year also.
The
Company's R and D team designed and developed and the marketing team
successfully launched following state-of-art cables: 1.1 KV grade XLPE
insulated and heat resistant PVC jacketed flat cable for submersible pump motor
application; LAN Cat-6 cable with ring type marking for export as well as
domestic market; 50 ohm coaxial cable with conductor dia 2.75 mm for mobile
telephone antenna; 100 pair switchboard cable for ADSL transmission in short
range application; and RG11 coaxial cable with copper clad aluminium conductor
for cable TV network. The 1.1 KV flat cable has application in agricultural
sector which is focused by the government for development. The Company expects
market expansion to happen for newer type of communication cables due to
growing broadband usage.
EXPORTS
The Company has its presence in the international market for some
time now. The Company has been exporting electrical cables, LAN cables, optic
fibre cables and a variety of customised cables. During the year under review,
the Company started exporting communication cables to its customers in the
developed nations. FOB value of the exports for the year was Rs. 672.532
millions verses Rs. 368.402 millions for the previous year. With the best
technology products in its armoury, the Company is putting a greater thrust on
exports.
FINANCE
In order to meet a part of the funds requirement for the Projects,
the Company contracted an external commercial borrowing (ECB) in Japanese Yen
equivalent to USD 30 million. Of this, the Company took disbursement of USD 20
million equivalent of Japanese Yen loan before 31st March, 2007. The balance
amount has been drawn in the month of April 2007. The Company has hedged its exposures
to Japanese Yen prudently and has effectively converted the Yen loan into a USD
loan. The ECB was raised at competitive rates and is expected to save good
amount of interest cost for the Company, especially since the local interest
rates are showing hardening trends. The ECB was contracted for a period of five
years.
The
Company has been accorded P1+ rating, the highest rating for a Rs. 2 billion
short term debt program and AA+ / stable rating for a Rs. 500 million for a
long term non-convertible debenture program by CRISIL. The Company has already
issued non-convertible debentures and utilised the long term rating. The short
term rating is being used by the Company for judicious cash flow management.
For the year under review, the Company did well on cash flow management by
striking a balance between liquidity and borrowing, while timely meeting the
requirement of funds for the Projects and business expansion. Also, the Company
had been able to limit the interest cost inspite of rising interest rates.
SUPERBRAND
STATUS
It is a matter of pride that the Company has been selected as the 'Superbrand' in the exclusive and elite Superbrand category. Starting with Business Superbrand status, the Company has moved forward and has been awarded the Consumer Superbrand as well for 2006-07. The Company is the only Indian cable company to have achieved this distinction.
SIX SIGMA
During the second half of the year, the Company launched 'Six Sigma' initiative. Six Sigma is synonymous with the processes that produce only 3.4 defects per million opportunities. Six Sigma is a complete business system that will drive the Company through a disciplined methodology to focus on solving greatest business challenges before it. Six Sigma strongly supports the Company's Mission, Principles and Strategy. It is a system that will allow the Company to reduce costs, reduce defects, improve quality and reliability, lower administrative and operational cycle times and improve overall customer satisfaction. Six Sigma involves hard work; results will be well worth the effort and investment of resources. Six Sigma is scheduled to be implemented throughout the Company. It is intended to make Six Sigma 'A way of Life!' within the Company.
MANAGEMENT DISCUSSION
AND ANALYSIS
BUSINESS OF THE
COMPANY:
The Company currently operates in two main business segments, Electrical Cables and Communication Cables. The Company also manufactures Continuous Cast Copper Rods (CCC rods), essentially for captive consumption; however a part of the production of CCC rods is also sold. The Company manufactures PVC Sheets for various applications like roofing, signage and interiors.
The Company has recently added Electrical Switches and
Compact Fluorescent Lamps (CFLs) to its range of products.
REVIEW OF
OPERATIONS:
Production of metal based electrical and communication
cables during the year under review was at 1,565 TCKM (thousand core
kilometers) (previous year: 2,505 TCKM). Production of optic fibre cables
during the year was 20,547 cable kilometers (previous year: 21,733 cable
kilometers). The sale value of electrical cables increased by 47% and the sale
of communication cables was lower by 8% (due to moderate JFTC business) over
the earlier year.
The sale of CCC rods (net of interdivisional transfers) was at Rs.1526.408
millions.
Exports were higher at Rs. 672.532 millions as against Rs.
368.402 millions of the earlier year.
The income from operations (including excise duty) was higher at Rs. 11859.227 millions
for the year under review as compared to Rs. 8615.224 millions for the earlier
year.
Profit after tax was higher at Rs.689.930 millions against
Rs.503.688 millions for the earlier year.
To leverage on high brand equity and the existing well entrenched distribution
network, the Company launched two electrical products namely electrical
switches called 'Finoswitch' and CFLs called 'Finoglow' during the year.
The Company decided to set up a green field manufacturing facility for light
duty electrical cables and electrical switches near Roorkee in the State of
Uttarakhand.
ECB equivalent to USD 30 million was contracted to meet a part of the funds
requirement for capital expenditure.
The equity shares were subdivided into face value of Rs.2 each from the face
value of Rs.10 each, effective 16th January, 2007.
The Company received recognition as a Consumer Superbrand as well for 2006-07.
Six sigma initiative was launched.
BUSINESS
ENVIRONMENT:
The segment-wise discussion on the markets which are served by the Company is as follows:
Electrical
Cables
Electrical cables can be further categorised into light duty
electrical cables and power and control cables.
i) Light duty electrical cables include electrical wires used extensively for lighting.
The main product of this category is 1100 volts PVC insulated wires which find
application in electrification of residential, commercial and industrial
establishments, electrical panel wiring and consumer electrical goods. The
building industry is expanding. The growth in construction activity is fuelled
by demand created by rising income levels and availability of finance. Due to
higher personal income, people are wanting to spend money for betterment of
living standard. Thus, the demand for white goods is also on rise. There is a
favourable demographic effect in India which is causing spending to go up. The
spending within India is causing an economic upturn, which is attracting
foreign investment into the country. The legal framework is undergoing a change
to support growth momentum. In form and substance, the market place is growing
deeper and wider for this variety of electrical wires.
India has emerged as a manufacturing hub for auto components. The demand for
auto components is for domestic consumption as well as exports. The domestic
demand for automobiles is constantly increasing due to positive income effect.
India has low cost producer's advantage. Thus global companies have set up
auto-wire harness manufacturing capacity in India.
The Company
manufactures automobile wires according to international standards such as
German VDE Standards, Japanese JIS Standards, etc. Thus the Company has emerged
as a reliable and preferred source of automobile wires for auto-wire harness
manufacturers.
A large
population in India is still dependent for their living on agriculture. Farming
continues to depend upon monsoon. Monsoon water is harvested by trapping if
underground and is drawn for irrigation during non-monsoon period. The drawing
of water happens by virtue of a submersible pump. The motor of the submersible
pump is wound with the winding wire and the pump is powered through a 3 core
flat cable. Both these products are manufactured by the Company for sale within
the country as well as for exports.
UPS cables are
battery backup cables used for providing power from UPS to the consumption
points. In a power shortage economy like India, UPS has become a household
item.
The Company is
expanding its production base of light duty electrical cables by setting up
manufacturing facility near Roorkee in the Uttarakhand State.
ii) The other
category of electrical cables namely the power and control cables are also
manufactured by the Company. Currently, the Company manufactures power cables
upto 3.3 KV rating. These are heavy duty, low voltage cables meant for
underground application. They are used for connecting the user point to the
main supply of power. The Company has decided to expand its product portfolio
in this category and take a larger pie in the growing market. Thus the Company
is setting up a manufacturing unit for high voltage power cables upto 66 KV
rating. The high voltage power cables to be manufactured by the Company will be
insulated ones and are meant for use in underground application for intra-city
electricity distribution network. These cables will meet the requirements of
international standards.
Performance
For the year under
review, the electrical cables registered sales of Rs. 8132.680 million against
Rs. 5527.748 million of the previous year showing a growth of 47%0. The growth
is satisfactory; however, there exists scope for doing more business.
Outlook
Since
last few years, the electrical cables business has become the backbone of the
Company. It accounted for 69%0 of total sales for the year under review. The
demand for electrical cables has been stronger than ever before. The high rate
of economic growth is reflecting into accelerated growth of basic industry like
construction, agriculture, electricity manufacturing and distribution. The
economic growth is creating opportunities for jobs as well as for earning
higher levels of income.
Money earned is
either saved or spent. Spending is becoming a way of life especially with the
younger population whose proportion in the total population is quite sizeable.
Spending will keep the rate of economic growth high for times to come. There is
a favourable co-relation between economic growth and growth in electrical cable
business. The system of VAT has been embraced by many states. The Company
expects that the difference in VAT rates amongst states will be removed and a
uniform rate of VAT will be adopted for the entire nation. VAT has reportedly
benefited the state government with higher tax collection. Stricter is the
compliance of VAT, better it is for the organised sector, especially branded
products. Thus the business of electrical cables is expected to grow.
The Company is the leading manufacturer of electrical cables in the
country. Therefore, it acts responsibly and responsively with the customers.
The Company emphasises on product quality. It brings improved products and new
products to the customers, time and again. It believes in customer servicing.
To meet this objective, it is constantly upgrading and expanding its distribution
network. The Company reacts dynamically to business opportunities. It
endeavours to carve out niche market for its products by creating customer
preference not only domestically but in the overseas market also. The Company
understands the value of its brand 'Finolex'. It constantly acts in furtherance
of the brand value. The Company is confident of holding and furthering the lead
position in business.
The Company
faces two principal risks in this business. The Indian electrical cable
industry is characterised by a large unorganized sector.
Besides, there
are smaller, regional players creating electrical cables business to be highly
competitive. The first and foremost risk the Company faces is of competition
from unorganized sector and smaller and regional players. The Company has been
able to deal with the competition effectively due to its superior quality and
with the help of the goodwill enjoyed by it with customers. The Company has the
advantage of economies of scale and backward integration. The Company evolves
unique practices which set benchmarks in cable business. The system of VAT is
helping to curb unorganised sector. The other risk is of raw material price
movements which can occasionally be sharp. The Company has been fair in its
dealing with the customers. It takes appropriate pricing decisions for the
manufactured products in line with the variations in raw material prices.
However, there remains a time lag between movement in raw material price and
adjustment of sale price. The time lag could benefit or disbenefit the Company
for the lag period or otherwise.
Communication
Cables
The communication cables comprise of state of art, new generation communication cables and traditional telephone cables.
i) The state of art communication cables are either copper
based or glass based. The copper based cables include LAN cables, coaxial
cables, PE insulated switchboard cables and V-SAT cables. These cables are used
for last mile connectivity. LAN cables are used in high speed networks, coaxial
cables are used to provide content input to TV receiving sets, PE insulated
switchboard cables are used to connect telephone instruments to an EPABX system
and V-SAT cables find their application in V-SAT towers to connect the dish to
the base station.
Optic fibre cables are glass based cables and they have the maximum bandwidth
and speed. They are mainly used as trunk cables in long distance networks,
whether by telecom companies, multiservice organisations or other service
providers.
Communication cables which carry, voice data or images is the backbone of an
economic activity. The speed and bandwidth determine the capabilities of a
communication network.
ii) Traditional telephone cables include JFTCs which are laid underground and are
used for connecting land line telephones to exchanges. These are copper based
cables. With introduction of mobile telephones in India and due to substitution
by optic fibre cables, JFTC business has lost its value. Nevertheless, JFTC
continues to remain a preferred option for last mile connectivity in fixed line
telephones, penetration of which in India is low. The demand for JFTCs has
remained flat for last few years. In fact for the year under review, there was
no traditional JFTC business with public sector telecom companies due to lack
of tender from these companies.
However, the
Company continues to manufacture JFTCs especially with broadband features for
private sector telecom companies and to meet the export demand. The Company has
the capability to make JFTCs as per customer's needs.
Performance:
The
communication cables segment (including optic fibre) recorded sales of Rs.
1794.804 million for the year under review against Rs.1952.191 million for the
earlier year. The sales were lower due to moderate JFTC business.
Outlook:
India is marching towards achieving the status of a developed nation. While
in crusade for development, the economic activity is expected to improve on
year-on-year basis. It would mean GDP of the country would keep on growing.
The growth in
GDP will bring better living and higher income for the population. The economic
development presupposes availability of a stable, sturdy and dependable
communication network. The speed and bandwidth are the essence of a
communication network and determine the effectiveness thereof. The emerging
economic environment augurs well for the Company's domestic business of state
of art, new generation communication cables. On the export front, the Company's
communication cables conform to international standards and the LAN cables even
are accredited with UL (Underwriters' Laboratories Inc., USA) verification
status. There is good potential to grow on export business. The Company is
focusing on developed countries for export market development.
The risks of competition and copper price movements similar to the electrical
cables business are also applicable to the business of communication cables.
The global demand-supply equation of optic fibre and resultant price movement
thereof; availability of preforms and price thereof and the investment by
telecom companies / service providers into optic fibre network are the risk
factors for optic fibre cables business.
Copper Rods
The copper rods is the feed stock for copper based electrical and communication cables. The Company manufactures its own copper rods. The base material for producing copper rods is copper cathodes; the bulk of which are procured from local manufacturers under supply agreements. A smaller portion of the requirement of copper cathodes is imported as a risk diversification measure. After meeting the inhouse requirement of copper rods, the balance production of copper rods is allocated for third party sale.
Performance:
During the year under review, the CCC rods division recorded a production
volume of 16654 metric tonnes and sales of Rs. 6204.034 million, of which Rs.
4677.626 million were inter-divisional transfers and Rs. 1526.408 million were
sales to others. The year under review noticed a great deal of volatility in
copper prices. The monthly average LME copper price (CSP) varied between a high
of US dollars (USD) 8046 per metric tonne to a low of USD 5670 per metric
tonne.
Outlook:
It is the Company's intention to increase the copper rod production by
incrementing the captive consumption. The Company has already planned and will
keep on planning for cable capacity expansion to aid producing more copper rods
at the Usgaon plant. The Company is also preparing for increasing sales of
copper rods to other consumers.
OTHER INFORMATION:
Contingent
Liabilities:
a) Liability on
account of Sales Bills discounted with Bank Rs.308.277 million (Previous year Rs.300.000 million).
b) i) Disputed
demands in appeal towards excise Rs.
384.640 million (Previous year Rs. 461.057 million) customs Rs. 13.427 million (Previous year Rs. Nil) and
sales tax Rs.49.753 million (Previous
year Rs.32.162 million),
ii) Appeal
preferred by Customs Department against Appellate decision in favour of the
Company, wherein should the decision be unfavourable to the Company, the
liability is estimated to be Rs. Nil (Previous
year Rs. 21.030 million)
iii) In respect of
Octroi duty a demand of Rs. 8.623
million (Previous year Rs.8.623 million) has been raised against the
Company. However, in this regard, the industry is collectively contesting
similar demands and the matter is sub judice.
c) i) Disputed
Income Tax demands and matters in appellate proceedings Rs. 274.800 million (excluding consequential interest / penalty) (Previous
year Rs. 209.155 million).
ii) Appeals
preferred by Income Tax Department against Appellate decisions in favour of the
Company, wherein, should the ultimate decision be unfavourable to the Company,
the liability is estimated to be Rs.
487.225 million (Previous year Rs. 455.952 million).
Suppliers/Service
providers covered under the Micro, Small and Medium Enterprises Development
Act- 2006 in majority cases, have not furnished the information regarding
filling of necessary memorandum with appointed authority. In view of the above,
the information under Sec.22 of Micro, Small and Medium Enterprises Development
Act, 2006 is not given. 8. Based on the review as on 1 st April, 2004 the
Company has accounted for the impairment loss on the assets of "Optic
Fibre" cash generating unit forming part of Communication Cable segment.
Sharp decline in the prices of optic fibre for unforeseen reasons after the
project was undertaken and delay in commissioning of key assets due to
techno-commercial issues arising between the Company and supplier of the
equipment, although issues were settled eventually, have resulted in impairment
in value of the said assets. Accordingly the impairment loss of Rs.650.595 million and related
deferred tax effect of Rs.121.877 million
has been adjusted against the General Reserve in accordance with
transitional provision of Accounting Standard 28. On review there is no
indication of further increase or reversal in the impairment loss as on 31st March, 2007.
Dematerialisation
of shares
The company Equity
shares are included in the list of companies whose scrips have been mandated by
SEBI for settlement only in dematerialized form by all institutions and all
investors. The Company had signed agreements with National Securities Depository
Limited (NSDL) and Central Depository Services (India) Ltd (CDSL) to offer
depository services to its shareholders. As on 31st March 2007 64.47 % of the
equity share capital of the Company has been dematerialised.
The company’ fixed assets of important value
include
· Land,
· Buildings,
· Plant and Machinery,
· Furniture, Fittings
· Office Equipment,
· Computers
· Peripherals
· Dies and Moulds
· Vehicles.
· Exchange Fluctuation
· Intangible Assets
WEBSITE DETAILS:
Subject was
incorporated in 1981 and has been in the "Plastics" business since
then. Beginning as a modest rigid PVC (Poly Vinyl Chloride) pipe manufacturer,
FIL went on for backward integration and now manufactures PVC too.
FIL is the largest
PVC pipe manufacturer in India. The Pipes division of FIL is the first Indian
IS/ISO 9002 manufacturer. Production capacity of the Pipes division is 40,000
metric tonnes per annum spread over its two ultra modern plants at Pune and
Ratnagiri. FIL offers a wide range of PVC pipes and fittings, for diverse
applications in agriculture, housing, telecom, industry, etc., ranging between
20 mm diameter to 400 mm diameter. FIL also manufactures speciality pipes and
fittings, namely SWR (Soil, Waste and Rain Water) pipes and fittings for
construction industry. The Pipes division of FIL has won the PLEXCONCIL
"Top Exporter Award" on five occasions.
FIL has
commissioned its PVC plant near Ratnagiri (350 Kms. South of Mumbai) on the
West Coast of Maharashtra State. FIL is one of the largest PVC manufacturers in
India. The 130,000 metric tonnes PVC plant has been set up in technical
collaboration with Uhde GmbH of Germany under technology licence from Hoechst
AG. FIL manufactures suspension PVC as well as emulsion/paste PVC.
FIL's PVC plant
enjoys many locational advantages, the important one being proximity to the
market. Further, the Pipes division of FIL and FIL's associated concern
consumes captively about 45,000 metric tonnes of PVC per annum; a distinct
advantage available only to FIL.
As a part of its
PVC complex, FIL has set up an open sea cryogenic jetty. The Finolex jetty is
the first of its kind in the private sector in India. It is located near the
PVC plant and is presently utilised for importing the feedstock for manufacture
of PVC as well as for importing LPG.
The strength of
FIL lies in its quality products and satisfied customers. Over the years, FIL
has built a very large distribution net work which adds to it's strength. The
name "Finolex" is synonymous with "Quality" not only in
India but also with FIL's international customers
Press Release:-
Q2 sales up by 21% to Rs. 3340.6 million
while net profit up by 25% to Rs. 268.0 million.
Half yearly sales up by 30% to Rs. 634.4
million while net profit up by 33% to Rs. 586.1 million.
Half yearly EPS up by 33% to Rs. 3.83
Pune October 23, 2007:Finolex Cables limited (FCL) at the meeting
of its Board of Directors held today approved results for the second quarter
and six months ended 30th September 21007, of the year 2007-08.
Net Sales for the
quarter were Rs. 3340.6 millions (previous ears corresponding quarter Rs.
2761.0 million) up by 21%. The first six months sales were Rs. 6364.4 million
(previous year’s first half Rs. 4878.4 million), also up by 33%.
Net profit for the quarter
was Rs. 268.0 million (previous year’s corresponding quarter Rs. 215.0
million), up by 25%. Net profit for the first six months was Rs. 586.1 million
(previous year’s first half Rs. 440.6 million), also up by 33 %
Earning per share
(EPS) for the quarter was Rs. 1.75 and for the half year was Rs. 3.83
(corresponding quarter and half of the previous year Rs 1.41 and Rs. 2.88
respectively).
Highlights of the
business during the quarter ended 30th September 2007 are as under:
Sales were up by
21%. This quarter experienced some seasonality in sales of certain types of
light duty electrical cables consumed by agriculture and construction sectors,
due to long spells of monsoon, tightness in interest rates and credit norms for
person / consumption loans, etc. But for these factors, the sales for the
quarter could have been even better.
Copper prices which
recovered during the first quarter of the current financial years were varying
within an acceptable band. No need was felt to adjust the list prices to the
channel
Margin in the
electrical cable segments, the principal business segments of the company, were
stables as against corresponding quarter of the previous years.
Performance of the
communication cables segment has greatly improved. Future outlook is positive.
Other income
includes foreign exchange gain of Rs. 42.1 million on working capital loans and
project loans.
The company has been
successful in producing ribbon cable in fibre optic cable category of cables.
Ribbon cable is iun great demand for networking by BSNL and other telecom
companies. It is a specialised technology product and there are not many
manufacturers of the same our country. The Company has developed new varieties
of cables to cater especially to the export market, represented by advanced
nations of the world.
The newly introduced
electrical product namely energy saving compact fluorescent lamp (CFL) under
the brand name “finoglow” has established its presence in the bulk buyers as
well as retail markets. The retail visibility of CFL will get further
established with the advertisement campaign which is under planning. The
business of CFL should get a big boost with the government of India considering
to ban conventional GLS lamp and reduce on CFLs to promote its usage in support
of the efforts to control global warning.
Keeping in mind the
high future CFL demand, the Board of Directors has approved an expansion
capacity to 30 million. CFLs per year at an additional expenditure of Rs. 300
millions. The Company has intention to further expand capacity to 100 million
CFLs over medium term.
Trial runs at high
Voltage Power Cable plant (HVPC plant) at Urse are scheduled to take PLACE
EARLY November, 2007. The HVPC plant will be capable of producing power cables
for application upto 66KV rating. The process of product approval and thus
commercialization of the plant are planned for completion in the fourth quarter
of current financial year.
Manufacturing
facility for light Duty Electrical Cables is under creation near Roorkee in the
Uttarkhand State. Construction activity of the main plant, contracted on a
turnkey basis, has surpassed the scheduled completion date due to unforeseen
circumstances. As per the revised schedule of activities, the commercialization
of the plant is planned for April 2008. This will not affect availability of
light duty electrical cables for the market since the production schedules at
the existing manufacturing plants at pimpri, Urse and Verma (Goa) have been
reworked to ensure smooth and adequate flow of light duty electrical cables to
the market.
The Board of
Directors has approved expansion of various cable capacities at its Urse plant
at a capital expenditure of Rs. 300 million.
Commenting
on the performance of the Company, Mr. Deepak K Chhabria, managing Director
said, “There is
Is scope
for improving market share and we are working towards it. Volatitliy in copper
prices is unprecedented and we are dealing with it judiciously. We expect to
close the current financial year with good growth numbers”.
About FCL:
FCL is
the market leader in domestic cable industry. It offer a wide variety of cables
in Electrical Cables and Communication Cables categories. It product
application range is from lighting, cable TV, telephone and computers to
industrial applications, touching every person in his daily life. FCL has added
Electrical Switches and Compact Fluorescent Lamps to its range of products.
FINANCIAL HIGHLIGHTS:
|
|
Quarter Ended 30.09.2007 |
Quarter Ended 30.09.2007 |
|
|
(Rs. in millions) |
|
|
Net
Sales / income from operations |
3340.6 |
2761.0 |
|
Other
income |
107.7 |
9.6 |
|
Profit
before Interest, Depreciation and Tax |
498.8 |
405.3 |
|
Deduction
for |
|
|
|
Interest
|
42.3 |
38.3 |
|
Depreciation
|
65.6 |
64.7 |
|
Profit
before Taxation |
390.9 |
302.3 |
|
Profit
for Taxation |
122.9 |
87.3 |
|
Net
profit |
268.0 |
215.0 |
Pune, October 18, 2006 :
Finolex Cables Limited (FCL) at the meeting of its Board of Directors held today approved results
for the second quarter and half year ended 30.09.2006, of the year
2006-07.
Net
sales for the quarter were Rs. 2761.0 million (previous year’s corresponding
quarter Rs. 1681.2 million), up by 64%. The half yearly sales were Rs. 4878.4
million (previous year’s first half year Rs. 3111.4 million), also up by
57%.
Net profit for the quarter was Rs. 215.0 million (previous year’s corresponding
quarter Rs. 51.4 million), up by 318%. Net profit for the half year was Rs.
440.6 million (previous year’s first half year Rs. 185.6 million), also up by
137%.
Earnings per share (EPS) for the quarter was Rs. 7.0 and for the half year was
Rs. 14.4 (corresponding quarter and half year of the previous year Rs. 1.7
& Rs. 6.1 respectively)
FCL has introduced ‘premium range’ of Modular Electrical Switches to complement
the ‘classic range’ already in the market. The electrical switches have been
branded ‘Finoswitch’. They have been well received by the market.
During
August, 2006, FCL launched Compact Fluorescent Lamps (CFLs) in different
ranges. The CFLs are called ‘Finoglow’. The market response has been positive.
FCL has an established distribution network across India for its electrical cables and the same is being leveraged to market these two new
products.
The two projects on hand namely High Voltage Power Cable Project undertaken at
Urse near Pune and expansion of LDC capacity undertaken near Rurkee in the
Uttarakhand State (Uttaranchal State) are progressing as per the schedule.
FCL has done well on the export front during the first six months. Exports have
witnessed a sizable jump of 162%. (H1FY 07 - exports are Rs. 367.4 million v/s
H1 FY 06 - exports were Rs. 140.3 million). FCL had received export order from
Europe in Communication Cables
space and is negotiating for larger business in this regard.
At its meeting held today, the Board
of Directors of FCL has taken an
important decision to recommend splitting equity shares of the Company into
face value of Rs.2 per share. The present face value per equity share is Rs.10.
The split is expected to increase availability of the shares in the market. An
extra-ordinary general meeting
of the shareholders will be called soon to seek their approval to this
proposal.
Commenting
on the performance of the Company, Mr Deepak Chhabria, Managing Director said,
“Their quarterly performance has been remarkable and is in line with their
expectations. The products newly introduced and the projects on hand will help
them consolidate and enhance their leadership position in the market.”
About FCL :
FCL is
the market leader in domestic cable industry. It offers a wide variety of cables in Electrical Cables and Communication Cables categories. Its product application range is from lighting,
cable TV, telephone, and computers to industrial applications, touching every
person in his daily life. FCL has recently added Modular Electrical Switches
and Compact Fluorescent Lamps to its
range of products.
|
Financial
Highlights (Rs. in Million) |
||
|
|
Quarter Ended 30.09.2006 |
Quarter Ended 30.09.2005 |
|
Sales / Income
from Operations |
2761.0 |
1681.2 |
|
Other Income |
9.6 |
41.1 |
|
Profit before
Interest, Depreciation and Tax |
405.3 |
172.0 |
|
Deductions For: |
|
|
|
Interest |
38.3 |
26.2 |
|
Depreciation |
64.7 |
69.4 |
|
Provision before
Taxation |
302.3 |
76.4 |
|
Provision
after Taxation |
87.3 |
25.0 |
|
|
|
|
|
Net Profit |
215.0 |
51.4 |
Turnover at Rs.
2330 millions
Net profit at
Rs.200 millions
Pune, October 14,
2006:
Finolex Industries Limited [FIL], the leading PVC Pipes and PVC Resin manufacturer
has turned out excellent results for the quarter ended 30.09.2006 with a net
profit of Rs.199.9 millions, more than double, as compared to Rs.95.7 millions
in the corresponding quarter of the previous year. Net sales soared to
Rs.2328.8 millions indicating a 12.32 percent increase over the previous year’s
corresponding quarter level of Rs.2073.4 millions.
Earnings Per Share (EPS) for the quarter was Rs.1.61 (corresponding quarter of
the previous year Rs.0.77).
The Company’s net profit for the first six months of the current financial year
stood at Rs.295.5 millions as compared to Rs.122.7 millions in the corresponding
period of the last year. The sales too indicated a healthy rise to Rs.5016.9
millions during the latest period as compared to Rs.4116.6 millions in the
corresponding period of the previous year.
Commenting on the Q2 performance, Mr. S.S. Dhanorkar, Asst. Managing Director, Finolex Industries Limited, said “sustained demand pull
coupled with better cost efficiencies have resulted in better bottomline as
well as top line growth. The Company’s wide distribution network across the
country is enabling increasing the market share from all the regions”. PVC
Resin prices have witnessed an upward trend during the 2nd Quarter of financial
year 2006 resulting in better margins.
FIL is the largest manufacturer of PVC Pipes and second largest manufacturer of
PVC Resin in India. FIL has ISO/14001 Certification for Environmental
Management System for PVC Resin and PVC Pipes plants at Ratnagiri. The Company
has also been accredited with the new ISO Certification IS/ISO 9001:2000 for
PVC Pipes plant at Pune and Ratnagiri.
Outlook
PVC Resin
The long term
outlook for the industry continues to be bright. Global demand for PVC Resin is
growing at around 3.5% p.a. while demand in India is expected to show double
digit growth in the current year. The Company recently completed expansion of
PVC Resin capacity.
PVC Pipes
The demand for PVC
Pipes is expected to grow significantly in the coming years due to various
Government initiatives at Central and State levels. The strong demand growth
seen in the 2nd quarter is expected to continue in future.
|
Financial Highlights (Rs. in Million) |
||||
|
|
Quarter
ended 30th September, 2006 |
Quarter
ended 30th September, 2005 |
Half
Year ended 30th September, 2006 |
Half
Year ended 30th September, 2005 |
|
Net Sales / Income from Operations |
232.88 |
207.34 |
501.69 |
411.66 |
|
Profit before Interest, Depreciation and
Tax |
49.18 |
31.10 |
85.08 |
51.58 |
|
Deductions
For: Interest/Finance charges |
4.20 |
6.72 |
13.63 |
11.82 |
|
Depreciation |
13.64 |
11.49 |
27.06 |
22.77 |
|
Provision for Taxation |
11.35 |
3.32 |
14.84 |
4.72 |
|
Net Profit |
19.99 |
9.57 |
29.55 |
12.27 |
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.39.43 |
|
UK Pound |
1 |
Rs.77.74 |
|
Euro |
1 |
Rs.58.41 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
10 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--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 |
|
81 |
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 |
|