MIRA
INFORM REPORT
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Report Date : |
19.02.2008 |
IDENTIFICATION
DETAILS
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Name : |
SUNDARAM CLAYTON LIMITED |
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Registered Office : |
Jayalakshmi Estates No. 29 [Old No. 28], Haddows Road, Chennai 600006,
Tamilnadu |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
24.05.1962 |
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Com. Reg. No.: |
004792 |
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CIN No.: [Company
Identification No.] |
L35999TN1962PLC004792 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CHES00554B |
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PAN No.: [Permanent
Account No.] |
AAACS4920J |
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Legal Form : |
It is a Public Limited Liability Company. The company's shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturers and Sellers of air and air assisted braking system for medium / heavy commercial vehicles, vacuum product for light commercial vehicle and aluminium pressure and gravity die castings. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 13760000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and reputed company having fine
track. Trade relations are fair. Business is active. Payments are reported as usually correct
and as per commitments. The company can be considered good for any normal business dealings. |
LOCATIONS
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Registered Office : |
Jayalakshmi Estates No. 29 [Old No. 28], Haddows Road, Chennai 600006,
Tamilnadu, India |
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Tel. No.: |
91-44-28272233 |
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Fax No.: |
91-44-28257121 |
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E-Mail : |
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Website : |
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Factory 1 : |
Padi, Chennai 600 050 |
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Tel. No.: |
91-44-26258212 |
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Fax No.: |
91-44 -26257177 |
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E-Mail : |
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Factory 2 : |
No.3 III Main
Road, South Phase Off Ambattur Industrial Estate, Ambattur Chennai 600 058 |
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Tel. No.: |
91-44-42242000/2623800 |
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Fax No.: |
91-44-2623 8009 |
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E-Mail : |
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Factory 3 : |
Hosur - Thally Road, Belagondapalli, Hosur 635 114 |
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Tel. No.: |
91-4347-233445 Extn:1100 |
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Fax No.: |
91-4347-233014 |
DIRECTORS
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Name : |
Mr. Suresh Krishna |
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Designation : |
Chairman |
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Name : |
Dr. Christian Wiehen |
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Designation : |
Managing Director |
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Name : |
Venu Srinivasan |
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Designation : |
Director |
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Name : |
Mr. Nikhil Madhukar Varty |
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Designation : |
Director |
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Name : |
Mr. Gopal Srinivasan |
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Designation : |
Director |
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Name : |
Mr. Leon Liu |
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Designation : |
Director |
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Name : |
Mr. K. Mahesh |
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Designation : |
Director |
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Name : |
Mr. D. E. Udwadia |
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Designation : |
Director |
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Name : |
Mr. T K Balaji |
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Designation : |
Director |
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Name : |
Mr. Pascale F. Rahman |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. H. Lakshmanan |
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Designation : |
Executive Director |
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Date of Birth/Age : |
70 years |
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Qualification : |
S.S.L.C. |
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Experience : |
53 years |
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Name : |
Mr. C. N. Prasad |
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Designation : |
President – Automotive Products |
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Name : |
Mr. V. N. Venkatnathan |
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Designation : |
Senior Vice President – Finance |
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Date of Birth/Age : |
58 years |
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Qualification : |
B.Com., B.L., ACA,
ACS |
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Experience : |
34 years |
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Name : |
Mr. S. Muralidharan |
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Designation : |
Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Foreign collaborator |
7430000 |
39.17 |
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Indian promoters |
7744064 |
40.83 |
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Foreign institutional investors |
85776 |
0.45 |
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NRI – Individuals |
21740 |
0.11 |
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Public financial institutions |
26665 |
0.14 |
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Mutual funds |
1421443 |
7.50 |
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Banks |
357 |
-- |
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Other companies |
288961 |
1.53 |
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Public |
1948578 |
10.27 |
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Total |
18967584 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturers and Sellers of air and air assisted braking system for medium / heavy commercial vehicles, vacuum product for light commercial vehicle and aluminium pressure and gravity die castings. |
GENERAL
INFORMATION
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No. of Employees : |
1612 |
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Bankers : |
Ø State Bank of
India Corporate Accounts
Group Branch, Greams Dugar, Greams Road, Chennai 600 006, Tamilnadu, India Ø State Bank of
Mysore Whites Road Branch, Chennai 600014, Tamilnadu, India |
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Facilities : |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Sundaram & Srinivasan Chartered Accountants |
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Address : |
23 Sir C P Ramaswamy Road, Alwarpet, Chennai 600 018. |
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Membership : |
Confederation of Indian Industry |
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Associates: |
Ø T. V. Sundram Iyengar & Sons Limited, Madurai, Tamilnadu Ø Sundaram Industries Limited, Madurai, Tamilnadu Ø Southern Roadways Limited, Madurai, Tamilnadu |
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Subsidiaries : |
Ø Anusha Investments Limited, Chennai, Tamil Nadu, India Ø Harita Stocks Limited, Chennai, Tamil Nadu, India Ø TVS Investments Limited, Chennai, Tamil Nadu, India Ø TVS Electronics Limited, Chennai, Tamil Nadu, India Ø ICL Foundries Limited, Chennai, Tamil Nadu, India Ø Sundram Telematics Limited, Chennai, Tamil Nadu, India Ø AuctionIndia.com Limited, Chennai, Tamil Nadu, India Ø Harita Technical Services Limited, Chennai, Tamil Nadu, India Ø Harita Properties Limited, Chennai, Tamil Nadu, India Ø Sundram Infosel Limited, Chennai, Tamil Nadu, India Ø TVS eTechnology Limited, Chennai, Tamil Nadu, India Ø TVS Motor Company Limited (w.e.f. 15.11.2001), Chennai, Tamil Nadu, India Ø Lakshmi Auto Components Limited (w.e.f. 15.11.2001), Chennai, Tamil Nadu, India Ø TVS Finance and Services Limited, Chennai, Tamil Nadu, India |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
20000000 |
Equity Shares |
Rs. 10/- each |
Rs. 200.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
18967584 |
Equity Shares |
Rs. 10/-
each |
Rs. 189.675
Millions |
Of the above
[i] 94,460 equity
shares of Rs. 10/- each have been allotted for consideration other than cash
against supply of machinery.
ii) 1,70,09,529
equity shares of Rs.10/- each have been allotted as bonus shares by
capitalization of general reserve to the extent of Rs.158.714 Millions and
capitalisation of share premium of Rs.11.380 Millions.
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 |
189.700 |
189.700 |
189.700 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
3252.500 |
2704.600 |
2210.900 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
3442.200 |
2894.300 |
2400.600 |
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LOAN FUNDS |
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1] Secured Loans |
1168.500 |
834.000 |
342.500 |
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2] Unsecured Loans |
989.400 |
627.200 |
749.400 |
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TOTAL BORROWING |
2157.900 |
1461.200 |
1091.900 |
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DEFERRED TAX LIABILITIES |
193.500 |
154.000 |
0.000 |
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TOTAL |
5793.600 |
4509.500 |
3492.500 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3132.300 |
2851.400 |
2339.200 |
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Capital work-in-progress |
132.000 |
173.700 |
412.100 |
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INVESTMENT |
822.900 |
710.300 |
570.900 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
1029.200
|
726.600 |
417.200 |
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Sundry Debtors |
1384.700
|
1146.800 |
942.800 |
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Cash & Bank Balances |
97.100
|
147.800 |
26.100 |
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Other Current Assets |
1.700
|
4.800 |
0.000 |
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Loans & Advances |
612.900
|
353.700 |
464.700 |
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Total
Current Assets |
3125.600
|
2379.700 |
1850.800 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
975.600
|
1050.300 |
1271.900 |
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Provisions |
443.600
|
555.600 |
409.200 |
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Total
Current Liabilities |
1419.200
|
1605.900 |
1681.100 |
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Net Current Assets |
1706.400
|
773.800 |
169.700 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.300 |
0.600 |
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TOTAL |
5793.600 |
4509.500 |
3492.500 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
8161.900 |
6292.700 |
6225.900 |
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Other Income |
486.200 |
453.300 |
332.700 |
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Total Income |
8648.100 |
6746.000 |
6558.600 |
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Profit/(Loss) Before Tax |
1280.800 |
1063.200 |
763.300 |
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Provision for Taxation |
1012.500 |
848.600 |
230.700 |
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Profit/(Loss) After Tax |
268.300 |
214.600 |
532.600 |
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Expenditures : |
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Raw Material Consumed |
4309.700 |
3069.800 |
2863.400 |
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Traded Goods consumed |
18.000 |
20.900 |
862.900 |
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Power and Fuel Cost |
0.000 |
0.000 |
221.500 |
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Salaries, wages |
2559.300 |
2244.200 |
0.000 |
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Interest |
152.400 |
78.900 |
45.800 |
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Depreciation |
327.900 |
269.000 |
214.200 |
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Other Manufacturing Expenses |
0.000 |
0.000 |
493.800 |
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Employee Cost |
0.000 |
0.000 |
660.500 |
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Selling and Administration Expenses |
0.000 |
0.000 |
356.800 |
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Miscellaneous Expenses |
0.000 |
0.000 |
164.900 |
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Stock Adjustments |
0.000 |
0.000 |
[88.500] |
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Total Expenditure |
7367.300 |
5682.800 |
5795.300 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
|
Type |
1st Quarter |
2nd Quarter |
3rd Quarter |
|
Sales Turnover |
2013.700
|
2104.000
|
2475.900
|
|
Other Income |
80.600
|
125.600
|
100.300
|
|
Total Income |
2094.300
|
2229.600
|
2576.200
|
|
Total Expenditure |
1707.600
|
1779.300
|
2092.200
|
|
Operating Profit |
386.700
|
450.300
|
484.000
|
|
Interest |
47.400
|
38.800
|
38.100
|
|
Gross Profit |
339.300
|
411.500
|
445.900
|
|
Depreciation |
84.400
|
93.900
|
104.100
|
|
Tax |
54.000
|
84.100
|
107.400
|
|
Reported PAT |
182.300
|
233.500
|
234.400
|
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
PAT / Total Income |
(%) |
3.10
|
3.18 |
8.12 |
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|
Net Profit Margin (PBT/Sales) |
(%) |
15.69
|
16.89 |
12.26 |
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Return on Total Assets (PBT/Total Assets} |
(%) |
20.46
|
20.32 |
18.21 |
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Return on Investment (ROI) (PBT/Networth) |
|
0.37
|
0.36 |
0.31 |
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Debt Equity Ratio (Total Liability/Networth) |
|
1.03
|
1.05 |
1.15 |
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|
Current Ratio (Current Asset/Current Liability) |
|
2.20
|
1.48 |
1.10 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Subject was incorporated on 24th May, 1962 at Chennai in
Tamil Nadu having Company Registration Number 4792.
It was jointly promoted by T. V. Sundaram Iyengar & Sons and Clayton
Dewandre Holdings [CDH], U.K. was engaged in the manufacture of air brakes
actuation systems, which finds applications in automotive, non-automotive and
industrial segments. It enjoys a virtual
monopoly with a 75% market share in this particular product. The company was not only prominent in the
HCV segment but is also a supplier of castings to the passenger car segment.
The company had entered into a license and technical assistance agreement
with Clayton Dewandre Company [CDC], U.K. in June 1981 [which holds 39.17%
stake] to manufacture system protection valves. The company also entered into technical assistance agreements
with WABCO and Gahreugbremsesm, Germany, to manufacture dual brake valves,
trailer control valves and hand-operated brake valves. It entered into another technical assistance
agreement with the Union Switch and Signal Division of American Standard, US,
to manufacture signalling relays, point machines and related hardware. To meet the additional demand for scooter
project to TVS-Suzuki, the company set up a foundry unit at Belagondapalli,
Hosure, Tamil Nadu with an annual capacity of 1,100.
Brakes and foundry divisions were certified ISO 14001 accreditation
during 2001-02. The company is planning
to develop new technology products like drying and distribution unit,
redesigned Type 24*80 spring brake actuator, vacuum brake valve with zero dead
stroke and compressor with improved life.
PERFORMANCE
During the year the vehicle industry continued the positive growth. The
production of medium/heavy commercial vehicles (MCV/ HCV), passenger cars and
two wheelers registered a growth of 34%, 18% and 11% respectively over the
previous year 2005-06. The production of light commercial vehicles (LCV)
registered a growth of 31% during the same period.
Against this backdrop, the Brakes division of the company achieved a turnover
of Rs.4870 Millions as against Rs.409 crores during 2005-06. The increase was
mainly driven by continued increase in sales to original equipment
manufacturers, namely Tata Motors, Ashok Leyland and Eicher in view of their
increased production of HCV/MCV, increase in content per vehicle and sales to
after-market.
During the year 2006-07, the die casting division of the company sold 19,541
tonnes as against 16,320 tonnes in 2005-06 registering a growth of 20% (by
tonnage). The export sales also increased from Rs.76 crores in 2005-06 to
Rs.132 crores in 2006-07, recording a growth of 74%. This was due to the
increased export sales to Cummins, Volvo and their subsidiaries.
SCHEME OF
ARRANGEMENT
With the announcement of liberalization policies by the Government and
globalization of businesses, the foreign promoters of the company, namely the
American Standard Inc., are providing updated technology in air brake systems
required by Indian commercial vehicle manufacturers. They are also interested
in utilizing the Company as one of its sources for meeting their global
requirements.
Similarly, the Non-brakes business of the company, viz., aluminium die casting
business needs focused attention particularly considering the growing export
markets.
Taking these into consideration, the board of directors of the company decided
to reorganize the business activities by demerging the brakes business into a
wholly owned subsidiary of the company, presently named WABCO-TVS (INDIA)
LIMITED so that the two businesses will have independent management
attention.
The board of directors of the company, at their meeting held on 14th May 2007,
approved a Scheme of Arrangement in terms of section 391-394 of the Companies
Act, 1956 for demerging the brakes business with WABCO-TVS (INDIA) LIMITED,
from the appointed date, namely 1st January 2007, subject to the approval of
the shareholders of both the companies and other regulatory authorities and
approval of the Hon'ble High Court of Madras.
The Company has filed the draft Scheme of arrangement with the Stock Exchanges
and on their approval, will file the Scheme with the Hon'ble High Court of
Madras. On the directions of the Hon'ble High Court, a special shareholders
meeting will be held to consider and approve the Scheme of Arrangement.
OUTLOOK
The
HCV/MCV vehicle sale is expected to register a negative growth (-15%) during
2007-2008. The factors that are likely to impact the growth of the industry are
rising input costs of commercial vehicles, increase in interest rates, slowdown
in overall economy besides loss of share of freight transport to railways.
However, the following factors may help the growth of MCV/ HCV vehicle sale,
namely increased activity in construction and road sector (national highway
projects such as North-South and East-West corridors, port connectivity
projects) and effective implementation of ban on overloading'. Passenger car
and two wheeler segments are likely to register a growth of 10% and 2%
respectively over 2006-07.
The brakes business of the company is geared up to meet any extra demand that
would be generated by HCV/MCV segments both in respect of volume and upgraded
technology products. The business of the die casting division is expected to
grow by 14% due to increased sale of machined castings. This growth is mainly
to come from the ramp-up of new business from overseas customers.
SUBSIDIARIES
During
the year the company disinvested its entire investments held in M/s Harita
Stocks Limited (HSL) in favour of another wholly owned subsidiary of the
company, namely M/s Anusha Investments Limited (AIL). As both these companies
are engaged in similar business activities, namely investment, the board of
directors of these companies decided to amalgamate HSL with AIL to achieve
synergies in business activities and eliminate duplication of costs of
administration under a scheme of amalgamation.
After completing the required legal formalities in terms of section 391-394 of
the Companies Act, 1956, the Hon'ble High Court of Madras sanctioned the said
scheme of amalgamation vide its order dated 9th March, 2007 and dissolved HSL
in pursuance of the said scheme. Accordingly, the HSL ceased to be a subsidiary
of the company from the effective date, namely 30th March 2007.
During the year under review, AIL acquired the entire paid up capital of M/s
Padi Automotive Systems Limited (PASL) (formerly known as Padi Air Brake
Systems Limited) consisting of 50,000 equity shares of Rs.10/- each on 22nd
December 2006 and thereby it became a wholly owned subsidiary of AIL. PASL, by
virtue of the provisions of section 4(1)(c) of the Companies Act, 1956, became
a subsidiary of the company effective that date. PASL is yet to commence its
business activities.
During the year under review, the Company was allotted 46,25,000 equity shares
of Rs.10/- each at a premium of Rs.10/- per share, aggregating to Rs.92.500
Millions, by the wholly owned subsidiary of the company, namely TVS Investments
Limited (TVSI), for transfer of lands owned by the company.
M/s TVS Investments Limited and M/s TVS Electronics Limited, Chennai,
subsidiaries of the company, have promoted the following new companies as their
wholly owned subsidiaries, TVS-E Access India Limited effective 27th April 2007
and TVS-E Servicetec Limited effective 17th May 2007 respectively with an
initial capital of Rs.0.500 Millions each.
These newly promoted companies proposed to engage in the activities of customer
support services, distribution, trading and dealing, repair and maintenance and
other services relating to computers, electronic power, telecommunication,
software and other products. These companies are yet to commence their business
activities.
During the year, the name of the wholly owned subsidiary of the company, namely
Auto (India) Engineering Limited was changed to WABCO-TVS (INDIA) LIMITED effective
3rd May 2007, to which the brakes business of the company is planned to be
demerged as explained in this report earlier.
Industry Structure and
Development:
The Indian economy continued to record a good overall performance during
2006-07. GDP registered a 9.4% increase, facilitated by 10.9% improvement in
industrial production, 2.7% in agriculture and 11% growth in the services
sector.
The development of road infrastructure is a key factor that influences the
growth of the Indian commercial vehicle industry. The various projects
initiated by National Highway Authority of India (NHAI) are progressing in line
with the plan and following is the status of various projects as on 31st March
2007.
Besides growth in the Indian economy, the implementation of Supreme Court's ban
on overloading of vehicles and the
export growth of commercial vehicles (22%) have helped the commercial vehicle
industry to register a high growth rate.
The shift towards higher tonnage vehicles, which favour better operating
economy for the fleet operators, was more visible during the year. The sales of
higher tonnage vehicles such as multi-axle and tractor-trailer grew by 64% and
105%, much higher than the industry growth rate of 34%.
The growth in compact segment and the launch of new models in all segments
resulted in the sales growth in the domestic car market. India is emerging as
one of the preferred centres of small car manufacturing in the world, which
drives export-led manufacturing.
During the first half of 2006-07, the motorcycle industry saw sales soaring by
21% over the corresponding period of last year. However, there was a dramatic
slowdown during the second half with growth decelerating to 13% and 5%
respectively in the third and fourth quarters due to increased inflationary
pressure and rise in interest rates. For the full year, the motorcycles
registered a 15% growth un-geared scooters registered an increase of 10% and
mopeds continued at 4%.
With Indian companies gaining the recognition as manufacturers of high quality
automotive components in the international market, the component industry has
recorded a healthy growth through a combination of increased domestic and
exports sales. This trend is likely to continue as the economy grows further
and vehicle manufacturers increase their production. Exports will also grow,
driven by the urge of international manufacturers to source from low cost
countries. This trend will continue to benefit the Company's businesses.
Business outlook and overview
In 2007-08, the GDP is projected to grow at 8.2% with a growth of 6% in
per capita income. However, the increased interest rates and inflationary
pressures are likely to adversely impact the buying behaviour of the consumers
leading to reduction in demand. This trend is expected to continue, at least
till the first half of 2007-08
This subdued outlook of the economy will impact the automotive sector,
which will see a slowdown in growth rates in 2007-08 when compared to the high
growth rates registered in the past few years. Medium and heavy commercial
vehicle (M&HCV) industry is likely to decline by 15% in the year 2007-08.
The motorcycle industry is expected to grow at a marginal rate of 2%. Also
there is a likelihood of the motorcycle industry declining by 7% due to the
lower disbursement of loans by retail financiers and high trade stock levels.
Ungeared scooters segment will see a growth of around 13% due to a higher
number of product launches and greater availability. Mopeds are expected to
grow steadily at 5%. Passenger cars are expected to grow by about 10% over the
previous year.
The US truck market is seeing a transition from the US04 emission regulations
to the US07 emission regulations issued by the Environmental Protection Agency
(EPA) during the year. To beat the change in regulation norms, customers
resorted to pre-buy during the year 2006-07. Consequently sales of Class 8
trucks in the US market are projected to decline by 40% during 2007-08.
European heavy truck sales are expected to grow by 3%.
Opportunities & Threats
The Company caters to the requirements of commercial vehicle, passenger
car and two wheeler segments of the automotive industry and also to the diesel
engine segment.
With improved road infrastructure, the demand for faster vehicles that carry
higher payloads is increasing. To ensure road safety, Government of India had
introduced regulation for mandatory fitment of anti-lock braking systems (ABS)
for commercial vehicles carrying hazardous goods from October 2006. The
government plans to extend such regulation for other categories of commercial
vehicles during 2007.
ABS is expected to become mandatory for tractor-trailers and buses with
national permit, which are manufactured on or after 1st October 2007. The
Company has done extensive application engineering for the above category of
vehicles and has offered total solution to the domestic OEMs. This regulation
will further improve Company's sales opportunity. The company has made its test
track facility available for government agencies for certification testing,
which is the only test track of its kind available in the country today.
Product development and component manufacturing are being undertaken to cater
to the global requirement of our collaborators. This is expected to bring in
additional sales opportunities for the Company.
The Company has commissioned 106 authorized service centers at strategic
locations across the country, to provide quicker and better service on air
brake aggregates. Further, to improve availability of quality service in rural
areas, the Company has commissioned 53 certified workshops during the year
2006-07. These initiatives would result in improved service practices,
availability of genuine parts and generate additional revenue for the Company.
The projected growth of the domestic car industry and the ambitious export
programme of OEMs are likely to benefit the Company's aluminum casting
business. New orders that have been received from existing domestic customers
will be met during 2007-08, thus increasing the sales.
The sale of Class 8 trucks in North American market is expected to improve
during the second half of the year. Ramping-up of new products developed for
the US07 regulations and new orders received from international customers will
enhance the growth of aluminium castings business.
The Company's competitors, Knorr-Bremse Systems for Commercial Vehicles India
Private Limited, (a joint venture of Tata Auto Components (TACO) and
Knorr-Bremse AG), commenced their operations from their new plant in Pune in
2005 and has started regular supplies to Tata Motors. This development has led
to reduction in the Company's share of business from Tata Motors and will
impact the top line growth of the Company. However, the regulations for mandatory
fitment of ABS, product development and component exports to the collaborator
are likely to improve the Company's sales performance.
With the increasing opportunities for exporting aluminum castings from India,
many captive Indian die casting units and new manufacturers are setting up
facilities to enter into this market. This could result in increased
competition for export of castings in the future.
The import of components from China will be a threat to the Indian auto
component industry. The OEM customers across the world would continue their
pressure on price reduction from their suppliers. The increase in the cost of
raw materials such as steel and aluminium may not be fully compensated by the
OEM customers and these might affect the Company's profit performance.
Risks and concerns
The cyclical nature of the Indian commercial vehicle industry (Company's
major customer segment) might affect the demand. To control inflation, the
Government has initiated actions to control money supply such as hiking Cash
Reserve Ratio (CRR) through RBI. It is expected that money supply to industry
could become a constraint and in case of need, borrowers may have to pay higher
rate of interest to avail of bank credit. Restriction in money supply is likely
to cause lower off take of two wheelers and four wheelers. The rising crude oil
prices will further impact the profitability of the fleet operators and hence
the demand for commercial vehicles might be affected. These factors will affect
the company's domestic sales. The fluctuations in the prices of aluminium and
crude oil will increase the manufacturing cost of die casting components.
Also, the increase in raw material cost for the brake system aggregates might
not be fully compensated by the customer. The Company plans to mitigate this
risk through cost reduction initiatives such as value engineering and global
sourcing.
The Company follows a de-risked business model for the export market by widening
the customer base. The Indian rupee is appreciating to unprecedented levels in
recent times. The rupee has appreciated nearly 11% against the dollar in the
past six months, and approximately 5.6% against the pound and about 5.07%
against the euro. The losses, if any, in exports due to rupee appreciation is
partly offset by gains on the import of the raw material such as aluminium.
However, the continued hardening of the Indian Rupee will affect the Company's
competitiveness in the export market and profit performance. As the Company
predominantly imports their raw material viz., virgin aluminum/ aluminum
alloys, appreciating rupee would result in aluminum imports becoming cheaper.
The benefit of lower cost of imported aluminum, shall have to be passed to the
company's domestic customers as price reduction, which would affect the top
line of the company.
Delays in launch of new products at the customer-end might lead to short-term
excess capacities, resulting in lower utilization levels. The die casting
business being capital intensive, enough care is taken to protect the Company's
interests in case of delays and drastic changes in the new product design at
the customer-end.
Operations
review
A. Manufacturing
The Company's manufacturing facilities follow the best practices such as
TQM, TPM and Lean manufacturing and has best-in-class practices for safety,
work environment, water and energy conservation.
Continuous improvement actions are implemented to improve manufacturing quality
and productivity in all the manufacturing locations.
To avail of tax benefit for exports, the Company has commenced construction of
a new manufacturing plant in the Special Economic Zone (SEZ) in Mahindra City
in Chennai.
To meet the challenges of emerging competition and to serve the customers
better, the company proposes to have manufacturing facilities nearer to major
customers' plants.
B. Quality
The quality system at the factory aims at achieving total customer
satisfaction through its focus on improving product quality to World Standards.
This is achieved through total employee involvement and continuous improvement
culture. Rigorous usage of poka-yokes, utilization of statistical tools for
process optimization and control also contribute towards improving the product
quality.
The standardization of the quality procedures is aligned with QS 9000/ TS 16949
requirements. Both the divisions are certified for TS 16949.
Total Quality Management (TQM) is a way of life at SCL. 100% participation in
employee involvement has been successful for the past 8 years.
Employees have completed more than 479 projects by applying statistical tools
through QC Circles in 2006-07. The average number of suggestions implemented
per employee in 2006-07 is 39.
FIXED ASSETS
Ø Land
Ø Leasehold Land
Ø Building
Ø Plant and Machinery
Ø Furniture and Fixtures
Ø Vehicles
AS PER WEBSITE DETAILS:
[Rs. In Millions]
|
Sr. No. |
Particulars |
Three months
ended 31.12.2007 |
Corresponding
three months ended in the previous year 31.12.2006 |
Year to date
figures for current period 31.12.2007 |
Year to date
figures for previous ended 31.12.2006 |
Previous
accounting year ended 31.03.2007 |
|
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
|
|
[1] |
[2] |
[3] |
[4] |
[5] |
|
|
|
|
|
|
|
|
|
1 |
Net sales /
Income from operations |
2475.900 |
2047.200 |
6593.600 |
5979.400 |
8161.900 |
|
2 |
Dividend income |
-- |
72.400 |
21.500 |
140.200 |
157.300 |
|
3 |
Other income |
100.300 |
86.400 |
257.000 |
227.900 |
328.900 |
|
4 |
Total income
(1+2+3) |
2576.200 |
2206.000 |
6872.100 |
6347.500 |
8648.100 |
|
5 |
Expenditure |
|
|
|
|
|
|
|
a.
(Increase)/decrease in stock in trade and work in progress |
[93.400] |
[39.500] |
[150.000] |
[123.300] |
[147.300] |
|
|
b. Consumption
of materials |
1342.100 |
1110.900 |
3482.200 |
3277.800 |
4457.000 |
|
|
c. Purchase of traded
goods |
42.900 |
-- |
117.900 |
-- |
18.000 |
|
|
d. Employees
cost |
272.900 |
229.900 |
774.700 |
683.800 |
874.200 |
|
|
e. Depreciation |
104.100 |
81.900 |
282.400 |
239.800 |
327.900 |
|
|
f. Other
expenditure |
527.700 |
426.600 |
1354.300 |
1247.300 |
1685.100 |
|
|
Total |
2196.300 |
1809.800 |
5861.500 |
5325.400 |
7214.900 |
|
6 |
Interest and
finance charges (net) |
38.100 |
45.400 |
96.300 |
118.800 |
152.400 |
|
7 |
Exceptional
items |
-- |
-- |
-- |
-- |
-- |
|
8 |
Profit from ordinary
activities before tax |
341.800 |
350.800 |
914.300 |
903.300 |
1280.800 |
|
9 |
Tax expense |
107.400 |
111.000 |
264.100 |
253.300 |
369.200 |
|
10 |
Net profit from
ordinary activities after tax (8-9) |
234.400 |
239.800 |
650.200 |
650.000 |
911.600 |
|
11 |
Extraordinary
items(Net of tax |
- |
-- |
-- |
-- |
-- |
|
12 |
Net profit for
the period (10-11) |
234.400 |
239.800 |
650.200 |
650.000 |
911.600 |
|
13 |
Paid-up equity
share capital (Face value of
Rs.10/- each) |
189.700 |
189.700 |
189.700 |
189.700 |
189.700 |
|
14 |
Reserves
excluding revaluation reserves as per balance
sheet of previous accounting year |
-- |
-- |
-- |
-- |
3252.500 |
|
15 |
Earnings per
share (EPS) |
|
|
|
|
|
|
|
a. Basic and diluted
EPS before Extra- ordinary items for the period, for the last year to date
and for previous year (not annualised) |
123.600 |
126.400 |
342.800 |
342.700 |
480.600 |
|
|
b. Basic and diluted
EPS after Extra- ordinary items for the period, for the last year to date and
for previous year (not annualised) |
123.600 |
126.400 |
342.800 |
342.700 |
480.600 |
|
16 |
Public
shareholding |
|
|
|
|
|
|
|
Number of shares
of Rs.10/- each |
3793520 |
3793520 |
3793520 |
3793520 |
3793520 |
|
|
Percentage of
shareholding |
20.00 |
20.00 |
20.00 |
20.00 |
20.00 |
Notes:
1 The company
operates in only one segment viz., Automotive Components.
2. Interim
Dividend: At the meeting held on 30th
October 2007 the directors declared an interim dividend of Rs.7.00 per share
absorbing a sum of Rs.132.800 Millions for the year ending 31st March
2008. The same was paid on 7th November
2007.
3. Status of investor complaints: No. of complaints received and disposed
during the quarter - 9. No. of
complaints lying unresolved at the commencement and at the end of the quarter -
NIL.
4. Interest and
finance charges are net of a gain of Rs.0.400 Millions on restatement of foreign
currency loans for the three
months ended 31st December 2007 and a gain of Rs.28.400 Millions for the nine
months ended 31st December2007
5. The Hon’ble
High Court of Madras has heard the petitions for demerger filed by the company
and WABCO-TVS (India) Limited (WABCO) in the last week of December 2007. In terms of the scheme of arrangement,
Company is deemed to be carrying on the brakes business in trust for and on
behalf of WABCO until orders approving the demerger are received and filed
ie.the Effective Date. Current results,
therefore, include operations of the brakes business proposed to be demerged
into WABCO.
business
proposed to be demerged into
6. The above
unaudited financial results were reviewed by the audit committee and approved
by the board of directors on 28th January 2008 and a limited review of the same
has been carried out by the statutory auditors of the company.
7. The figures for
the previous periods have been restated wherever necessary to conform to the
current year's classification.
PRESS RELEASE:
Chennai, Friday, June 24, 2005 Sundaram-Clayton, a Joint Venture
between the renowned TVS Group and WABCO, a leading global
commercial vehicle control systems supplier today inaugurated their new
state-of-art facility for the manufacture of air brake systems for commercial
vehicles at Ambattur, Chennai, Tamil Nadu. WABCO is a business of American
Standard Companies, Inc. Mr. Ravi Kant, Executive Director, Tata Motors,
who was the Chief Guest, inaugurated this new facility in the presence of a
large gathering of invitees, well-wishers and industry leaders. Also among the
dignitaries were Mr. Frederic M. Poses, Chairman and CEO of American
Standard Companies, Mr.Jacques Esculier, President of WABCO and Mr.
Vinod K. Dasari, Chief Operating Officer, Ashok Leyland, who was the Guest
of Honour.
Speaking at the inauguration of the Plant, Mr. Suresh Krishna,
Director TVS & Sons and Chairman, Sundaram-Clayton said, “On this
momentous day, I would like to pay tribute to the excellent rapport, keen
understanding and total support we enjoy with our collaborators. Our success
today is testimony to that strong bond of trust and friendship that exists
between us. It has been a long and rewarding journey. A journey that carries on
based on mutual cooperation and admiration. I thank them once again for their
unstinted support”
Speaking at the function, Mr. Frederic M. Poses, Chairman and CEO,
American Standard Companies said, “This new facility owes its birth to a
history of successes that has earned Sundaram-Clayton a leadership position in
the national marketplace. He further added that, “For American Standard
Companies this new facility is a commitment to serving our customers better.
Investment in this plant recognizes the rich engineering talent resources India
offers and thus provides an attractive employment opportunity for people.”
Speaking at the inauguration, Mr. Venu Srinivasan, Managing
Director, Sundaram-Clayton said, “This new facility improves
Sundaram-Clayton’s ability to develop and deliver world class braking system
products.” He added, “Facilities on site will push our future product
development, as we continually seek to improve our range of products and their
performance capabilities,”
Mr. Jacques Esculier, President of WABCO in his address
said, “Already, this new facility manufactures a proven range of air brakes
system components to world class standards for India’s truck trailer and bus
vehicle manufacturers and for the growing aftermarket for parts and services.”
With
Infrastructural development being given high priority, the nation has seen
development of high quality roads linking cities and ports. Due to this, demand
for faster vehicles with capacity for carrying higher payloads, has seen an
increase. To ensure road safety, the Government of India has introduced
regulations stipulating that reduce braking distances and require more powerful
braking systems on commercial vehicles. Automatic slack adjuster and anti-lock
braking systems (ABS) will also become mandatory from October 2006.
The new facility has been built at a cost of Rs. 58 Crores,
with an objective to cater to emerging demand. This facility combines the
strengths of the two JV partners – the manufacturing capabilities of TVS and the
product technology of WABCO - to bring the Indian customers world class braking
products at affordable prices. Sundaram-Clayton has over 75 authorized service
centers spread all over India besides a well-organized distribution system
ensuring easy availability of genuine replacement parts.
Sundaram-Clayton established its die casting division to
produce quality and high precision aluminium castings for in house consumption.
The division's two plants, one at Chennai and the other at Hosur are equipped
with the latest technology in pressure die-casting, gravity die-casting and low
pressure die-casting.
Media Contacts:
For Sundaram-Clayton, TVS Group:
Vijay Chacko, Clea Public Relations: +91 944 033 675, vijay.chacko@cleapr.com
For WABCO:
Susanne Mickan, Klenk & Hoursch: + 49 (69) 719 16812 susanne.mickan@klenkhoursch.de
For American Standard
Lisa Glover, +1 (732) 980 6048, Lglover@americanstandard.com
Editors Notes
– American Standard
American Standard is a global manufacturer with market leading positions
in three businesses: air conditioning systems and services, sold under the
Trane and American Standard brands for commercial, institutional and
residential buildings; bath and kitchen products, sold under such brands as
American Standard and Ideal Standard; and vehicle control systems, including
electronic braking and air suspension systems, sold under the WABCO name to the
world’s leading manufacturers of heavy-duty trucks, buses, SUVs and luxury
cars. The company employs approximately
61,000 people and conducts business in more than 100 countries. American Standard is included in the S&P
500. Website: www.americanstandard.com.
Editors Notes
– TVS Group
The TVS Group, one of India’s most respected business conglomerates, is
a leading supplier to the automotive sector with a combined turnover of more
than US$2.2 billion. Founded in 1911 as a transport company, it aligned
business opportunities with steady growth, expansion and diversification. Today
the Group comprises over 30 operating companies with strong presence in manufacturing
Motorcycles, Scooters, Automotive Components, Automotive Dealerships,
Logistics, Finance, Insurance and Electronics.
These diverse business entities have taken the Group’s presence across
the globe and employ more than 40,000 people. www.tvsiyengar.com
Editors Notes – Sundaram-Clayton (Chennai, India)
Sundaram-Clayton
(SCL) is WABCO’s joint venture located in Chennai, (formerly Madras) the
capital of Tamil Nadu province, on the east coast of India. The joint venture
was formed in 1962 between leading Indian automotive component manufacturer TV
Sundram Iyengar & Sons Limited (TVS) and Clayton Dewandre Holdings
Limited. In 1977, WABCO acquired
Clayton Dewandre and today owns more than 39 percent of Sundaram-Clayton; 20
percent of the company has been listed on the National, Bombay and Madras stock
exchanges since 1983. Sundaram-Clayton develops and manufactures air brake
components and systems and aluminum castings, is a leading supplier to the national
original equipment (OE) manufacturers and aftermarket, and also serves some
export markets. The company currently employs more than 1200 employees,
including approximately 50 development engineers. The Chennai braking and
die-cast facilities are certified to ISO 9001 (quality); the die-cast facility
is also certified to ISO 14001 (environmental) standards. The nearby
Sundaram-Clayton test track was built in 2000 to standards certified by MIRA,
the independent UK automotive testing organization and TUV, the independent
German safety and quality accreditation group. Sundaram Clayton was the first
company in India to earn two prestigious quality awards: The Deming Prize in
1998 and the Japan Quality Medal in 2002.
www.sundaram-clayton.com
Editors Notes
- WABCO
WABCO, the vehicle control systems business
of American Standard Companies, is one of the world's leading producers of
electronic braking, stability, suspension and transmission control systems for
heavy duty commercial vehicles. WABCO
products are also increasingly used in luxury cars and sport utility vehicles
(SUVs). Customers include the world’s
leading commercial truck, trailer, bus and passenger car manufacturers. Founded
in the US 136 years ago as Westinghouse
Air Brake Company, WABCO was acquired by American Standard in 1968.
Headquartered in Brussels, Belgium, the business today employs nearly 6700
people in 30 office and production facilities worldwide. In 2004, WABCO contributed US$1.72 billion to American
Standard’s total sales of more than US$9.50 billion. Website: www.wabco-auto.com
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws, regulations
or policies that prohibit, restrict or otherwise affect the terms and
conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 40.07 |
|
UK Pound |
1 |
Rs. 77.98 |
|
Euro |
1 |
Rs. 59.02 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
68 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this report.
The assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|