MIRA
INFORM REPORT
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Report Date : |
18.01.2008 |
IDENTIFICATION
DETAILS
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Name : |
SINTEX INDUSTRIES
LIMITED |
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Formerly Known As : |
THE BHARAT VIJAY MILLS LIMITED |
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Registered Office : |
Near Seven Garnala, Kalol – 382721, Gujarat |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
01.06.1931 |
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Com. Reg. No.: |
04-454 |
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CIN No.: [Company
Identification No.] |
L17110GJ1931PLC000454 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
AHMS00244G |
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PAN No.: [Permanent
Account No.] |
AADCS0858E |
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Legal Form : |
A Public Limited Liability
Company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufactures of Poplin, Coats, Polyester Shirtings,
Sarees, Dhotis, Corduroy Cloth, and Other Fashion Fabrics. |
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 26034800 |
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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
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 normal business dealings. It can be
regarded as a promising business partner in a medium to Long-run |
LOCATIONS
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Registered Office : |
Near Seven Garnala Kalol- 382721, Gujarat, India |
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Tel. No.: |
91-2764-223731 (6 Lines), 220246 and 220793, 253000 / |
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Fax No.: |
91-2764 -220436, 222868, 253100 |
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E-Mail : |
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Website : |
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Manufacturing
facility : |
·
Kalol Near.
Seven Garnala Kalol
- 382 721, (N.G.), District - Gandhinagar, Gujarat
State, India. ·
Bangalore 61-C,
Bommasandra Industrial Estate Hosur
Road, Bommasandra - 562 158 Karnataka
State, India. ·
Kolkata Plot No.
40/41, Uluberia
Growth Center, Near
- Birsipur Railway Station, District - Howrah, West Bengal State, India. ·
Daman Plot
No. 34,39 / 40, Survey No. 168 Dabhel
Industrial Company Society Limited. Dabhel,
Daman (Union Territory), India. ·
Baddi Pillanvali
Road, Near
Raja Forging Gears Limited. District
: Solan, Himachal Pradesh, India. ·
Nagpur Plot
No : B/124 Batti-Bori MIDC,
Batti-Bori, Dist
Nagpur, Mahashtra, India. ·
Salem 131,
Sandhiyur Attayampatti, Behind
S.V.T. School, Via-Mallur, Trichy
Main Road, Salem - 636 203. ·
Bhachau Plot
No. 1211/1, 1223/24/31 Bhachau
Gandhidham Highway, District
– Kutch, Bhachau, Gujarat - 370140 |
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Head Office : |
Kalol (N.
G.) 382 721,India Phone :
91-2764 - 223 731 - 36, 220 246, 220 793 Fax :91-2764-220
436 Email : bvm@sintex.co.in No. 18,
Ground Floor, The Arcade, World Trade Centre Mumbai –
400005 Phone :
91-22-221 65617, 2216 5618, Fax :
91-22-221 88670 Email: bvmbombay@vsnl.net
166, Anna
Salai, Little Mount, Chennai-600 015 Ph.: 91-44-
220 0302, 220 0405, 220 0230, 235 3222, Fax:
91-44-235 3225 E-mail: chennaisintex@eth.net No. 7,
Community Centre, Mezzanine floor, "Vanishree"
Building, East of
Kailash, New Delhi-110065 Ph.:
91-11-264 45911, 264 64182, 264 25911 Fax:91-11-264
68000 E-mail: bvmdelhi@now-india.net.in
No. 1066,
Ground Floor, 11th Main, West of
Chord Road, 2nd Stage Mahalakshmipuram,
Bangalore-560 086 h.:91-80-
359 5110, 359 5165 Fax:91-80-359
5139 E-mail: bvmbangalore@vsnl.net |
DIRECTORS
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Name : |
Mr. Dinesh B. Patel |
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Designation : |
Chairman and Whole Time Director |
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Name : |
Mr. Arun P. Patel |
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Designation : |
Vice chairman and Whole Time Director |
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Name : |
Mr. Ramnikbhai Ambani |
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Designation : |
Director |
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Name : |
Mr. Ashwin Lalbhai Shah |
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Designation : |
Director |
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Name : |
Mr. Rooshikumar Pandya |
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Designation : |
Director |
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Name : |
Mrs. Indira Parikh |
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Designation : |
Director |
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Name : |
Mr. Dr. Rajesh B. Parikh |
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Designation : |
Director |
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Name : |
Mr. Dr. Lavkumar Kantilal |
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Designation : |
Director |
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Name : |
Mr. Pulak Chandan Prasad |
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Designation : |
Director |
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Name : |
Mr. Rahul A. Patel |
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Designation : |
Managing Director |
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Name : |
Mr. Amit D. Patel |
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Designation : |
Managing Director |
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Name : |
Mr. S.B. Dangayach |
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Designation : |
Managing Director |
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Name : |
Mr. Niten Malhan |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. L.M. Rathod |
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Designation : |
President - Corporate Finance and Com. Sec |
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Name : |
Mr. S. Vekatachalam |
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Designation : |
President - Opr (Plastic Division) |
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Name : |
Mr. B.R. Jayswal, President |
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Designation : |
Fin. and Ace. (Plastic Division) |
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Name : |
Mr. Sanjib Roy |
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Designation : |
President - Marketing (Plastic Division) |
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Name : |
Mr. Rajan Gulabani |
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Designation : |
Vice President - Marketing (Plastic Division) |
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Name : |
Mr. S.M.Anerao |
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Designation : |
Vice President - Marketing (Plastic Division) |
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Name : |
Mr. A.C.Saxena |
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Designation : |
Vice President - Marketing (Plastic Division) |
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Name : |
Mr. Ashoke Maitra, President |
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Designation : |
Opr. (Textile Div.) |
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Name : |
Mr. A. Vaitheeswaran |
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Designation : |
President - Admn. (Textile Division) |
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Name : |
Mr. R.A. Sharma |
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Designation : |
President - Proc. (Textile Division) |
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Name : |
Mr. Shashidhar B.C |
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Designation : |
President - Marketing. (Textile Division) |
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Name : |
Mr. S.B. Dangayach |
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Designation : |
Managing Director |
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Name : |
Mr. L.M. Rathod |
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Designation : |
Company secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters Holding |
32574195 |
33.02 |
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Residential
Individuals |
7739602 |
7.84 |
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Financial
Institutions |
225725 |
0.23 |
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Nationalised
Banks |
6950 |
0.01 |
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Mutual Funds |
10244236 |
10.38 |
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NRIs / OCBs |
403149 |
0.41 |
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Foreign Investor |
24446625 |
24.78 |
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FFIS |
20370480 |
20.65 |
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Domestic
Companies |
2647358 |
2.68 |
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Total |
98658320 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufactures of Poplin, Coats, Polyester Shirtings,
Sarees, Dhotis, Corduroy Cloth, and Other Fashion Fabrics. |
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Products : |
·
Building and
Construction ·
Prefabs ·
Electrical
Engineering ·
Industrial ·
Consumer ·
Custom
Molding |
PRODUCTION STATUS
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Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
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Textile Unit
Looms |
Nos. |
592 |
322 |
140.56 |
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Plastics Units
(Kgs.) |
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Thermoplastic Powder Moulding |
Kgs |
410.00 |
369.00 |
228.24 |
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Extruded Thermo-Plastic Sections |
Kgs |
310.00 |
287.82 |
120.24 |
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SMC/Pultrusion
and Articlesmade thereof, thermoforming and Blow |
Kgs |
110.00 |
95.82 |
34.54 |
GENERAL
INFORMATION
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No. of Employees : |
2000 |
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Bankers : |
·
State
Bank of India ·
Bank
of Baroda · IDBI Bank Limited |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Deloitte Haskins
and Sells Chartered
Accountants |
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Address : |
Ahmedabad |
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Associates/Subsidiaries : |
·
Prism Finance Limited ·
Som Shiva Impex Limited ·
BVM Finance Limited ·
Starline Leasings Limited ·
Sintex International Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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50000000 |
Equity shares |
Rs.10/- each |
Rs.500.000 Millions |
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Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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22190000 |
Equity shares |
Rs.10/- each |
Rs.221.900
Millions |
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FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
221.900 |
197.300 |
184.800 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
6286.800 |
4297.300 |
4887.100 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
6508.700 |
4494.600 |
5071.900 |
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LOAN FUNDS |
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1] Secured Loans |
5060.000 |
3595.300 |
3382.200 |
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2] Unsecured Loans |
1722.600 |
2231.300 |
1.900 |
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TOTAL BORROWING |
6782.600 |
5826.600 |
3384.100 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
13291.300 |
10321.200 |
8456.000 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
6354.300 |
4706.500 |
4934.400 |
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Capital work-in-progress |
387.900 |
190.200 |
296.200 |
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INVESTMENT |
2065.300 |
1568.300 |
1674.700 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
1455.400 |
862.800 |
1068.500 |
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Sundry Debtors |
2130.300 |
1506.700 |
1481.100 |
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Cash & Bank Balances |
3853.100 |
3553.500 |
783.200 |
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Other Current Assets |
0.000 |
0.000 |
0.000 |
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Loans & Advances |
693.700 |
386.300 |
465.100 |
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Total
Current Assets |
8132.500 |
6309.300 |
3797.900 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
3296.900 |
2329.800 |
2202.100 |
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Provisions |
373.000 |
157.300 |
106.100 |
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Total
Current Liabilities |
3669.900 |
2487.100 |
2308.200 |
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Net Current Assets |
4462.600 |
3822.200 |
1489.700 |
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MISCELLANEOUS EXPENSES |
21.200 |
34.000 |
61.000 |
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TOTAL |
13291.300 |
10321.200 |
8456.000 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
12128.000 |
9139.800 |
7151.600 |
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Other Income |
664.000 |
213.200 |
292.600 |
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Total Income |
12792.000 |
9353.000 |
7444.200 |
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Profit/(Loss) Before Tax |
1615.300 |
1142.900 |
706.100 |
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Provision for Taxation |
309.500 |
222.800 |
167.000 |
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Profit/(Loss) After Tax |
1305.800 |
920.100 |
539.100 |
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Export Value |
N.A. |
N.A. |
N.A. |
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Import Value |
N.A. |
N.A. |
N.A. |
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Expenditures : |
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Raw Materials |
6953.900 |
5105.400 |
4148.700 |
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Excise Duty |
972.800 |
589.800 |
574.700 |
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Power and Fuel Cost |
466.300 |
344.700 |
259.000 |
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Other Manufacturing Expenses |
755.600 |
587.000 |
514.800 |
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Employee Cost |
431.700 |
327.00 |
285.300 |
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Selling and Administration Expenses |
436.600 |
413.400 |
251.400 |
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Miscellaneous Expenses |
335.200 |
240.600 |
173.200 |
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Interest |
409.900 |
290.900 |
248.500 |
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Depreciation |
414.700 |
311.300 |
282.500 |
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Total Expenditure |
11176.700 |
8210.100 |
6738.100 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
30.12.2007 |
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|
1st
Quarter |
2nd
Quarter |
3rdQuarter |
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Sales Turnover |
2999.900 |
3204.000 |
3879.300 |
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Other Income |
121.200 |
82.100 |
67.400 |
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Total Income |
3121.100 |
3286.100 |
3946.700 |
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Total Expenditure |
2472.600 |
2476.100 |
2995.900 |
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Operating Profit |
648.500 |
810.000 |
950.800 |
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Interest |
120.100 |
136.000 |
172.900 |
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Gross Profit |
528.400 |
674.000 |
777.900 |
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Depreciation |
129.500 |
127.200 |
129.500 |
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Tax |
87.000 |
126.900 |
94.600 |
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Reported PAT |
305.600 |
419.900 |
553.800 |
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KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity
Ratio |
|
1.15 |
0.96 |
0.74 |
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Long Term Debt Equity Ratio |
|
0.93 |
0.77 |
0.55 |
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Current Ratio |
|
1.70 |
1.52 |
1.14 |
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TURNOVER
RATIOS |
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Fixed Assets |
|
1.56 |
1.36 |
1.10 |
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Inventory |
|
10.46 |
9.46 |
7.85 |
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Debtors |
|
6.67 |
6.12 |
5.42 |
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Interest Cover Ratio |
|
4.94 |
4.39 |
3.84 |
|
Operating Profit Margin (%) |
|
20.12 |
17.37 |
17.30 |
|
Profit Before Interest And Tax Margin (%) |
|
16.70 |
13.97 |
13.35 |
|
Cash Profit Margin (%) |
|
14.19 |
12.07 |
11.49 |
|
Adjusted Net Profit Margin (%) |
|
10.77 |
8.67 |
7.54 |
|
Return On Capital Employed (%) |
|
17.19 |
13.67 |
12.84 |
|
Return On Net Worth (%) |
|
23.73 |
16.56 |
12.55 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY:
Subject (formerly known as The Bharat Vijay Mills Limited)
has two divisions -- textiles and plastics. The textile division manufactures poplin,
coats, polyester shirtings, sarees, dhoties, corduroy cloth and other fashion
fabrics. Its plastic products are well known by the Sintex brand. Water storage
tanks, loft tanks, industrial containers and material handling containers are
some of the products manufactured in this division. In 1988-89, it acquired
Diamines and Chemicals from Cellulose Products of India.
The company implemented a project to manufacture sheet-moulding compound
(SMC) in 1989-90. Its plastics division has been expanded to manufacture
thermoplastic powder mouldings, pultruded articles, pulverising mills and
rotational moulding machines. The plastics division has an ongoing
collaboration with Atochem, France, for the manufacture of foamed PVC sections.
In 1994-95, DCW entered into an agreement with Lego Overseas, Denmark, to
market their educational toys in India. SIL undertook an
expansion-cum-balancing scheme at its textile division in 1994-95. It entered
into a joint venture in Dubai to establish Sintex Middle East for marketing
fabric and plastics.
In 1995-96, the company installed wind turbine generators with an installed
capacity of 2310 kW. During 1998-99, the company's expansion project of plastic
division was successfully completed. Further the company has upgraded its
process house in its textile division by installing new imported processing
machinery which was completed in March, 2000.
During 2000-2001 the Textile Division had gone for expansion of looms. The
total weaving capacity has increased from 35000 mtrs / day to 60000 mtrs/ day.
The company's plastic division is working on developing of pallets, insulated
boxes, waste bins etc. The company is planning to install 4750 KVA Captive
Power Plant.
Subject has signed an agreement with Continental Solutions Inc of US for
purchase of the equipment, licence, technology and know-how on an exclusive
basis to manufacture and installation in the territory for fiber glass
reinforced plastic products such as above ground and underground storage tanks,
automotive oil and lubricant storage tanks, oil/ water separators and
interceptors, water/ waste water tanks, chemical storage tanks, retank retrofit
systems, fiberglass manholes and wetwells and leak detection systems. This will
enable the company to cater the increasing demand for storage and handling of
hazardous and non-hazardous, flamable and combustible liquids by existing as
well as new players of petroluem products for their retail outlets, refineries
etc.
FIXED ASSETS:
·
Land and Buildings
·
Plant and Machinery
·
Furniture and Fixture
·
Office equipments
·
Vehicles
·
Bore-well
·
Railway Sidings
·
Live stock
Names of Small
Scale Industrial Undertakings to whom the Company owed any sum which was
outstanding for more than 30 days as at the end of the financial year are as under:
·
Pondy Oxide and
Chemicals Limited.
·
Chem Coat Industries
·
Jewel Polymers Private
Limited.
·
K.K. Poonja and Sons
·
Kromatiks and Insulants
Private Limited.
·
Satyen Polymers
·
Agarwal Fastners
Private Limited.
·
Apurva Engineering
Corpe
·
Expanded Incorporation
·
Vishwakarma Eng. Works
·
Amptel Engg. Private
Limited.
·
Essai Enterprises
·
Maruti Engineers
Review of operations
The Company posted yet another year of impressive results testifying to the
robustness of this corporate strategy, competitive position and national
buoyancy notwithstanding a challenging business environment.
Gross turnover for 2006-07 grew by 32.69% to Rs.12128.000 millions, driven by
attractive growth across all the businesses of the Company.
·
34.41% growth
in gross turnover of the plastic division to Rs.8887.400 millions
·
28.20% growth
in gross turnover of the textile division to Rs.3240.700 millions 39.81% growth
in EBIDTA to Rs.2439.900 millions
·
41.91% growth
in post-tax profit to Rs.1305.800 millions
·
Rs.12.15 basic
earnings per share for the year under review
·
Rs.11.97
diluted earnings per share for the year under review
Plastics
The Indian plastics
industry is at an inflection point for important reasons: under-penetration in
the domestic markets, increasing availability of plastic products, a booming
Indian economy and a growing export market.
Despite a buoyant economy, India's per capita plastic consumption was a low
4.10 kg compared to a global average of 19.70 kg. To encourage consumption, the
Union budget 2007 reduced the customs duty on plastics from 12.5% to 7.5%,
while the central excise duty on nylon chips was rationalised from 16% to 12%.
Going ahead, plastic consumption is expected to increase due to
a growing affluence in India and the increasing use of plastics in
non-conventional applications (building materials, road building and automotive
components).
·
Performance
In 2006-07, the
Company's plastics business delivered 32.67% revenue growth, amounting to Rs.804905.600
millions. This was driven primarily by a sustained robustness in the
performance of pre-fabricated structures, custom-moulded segment and BT
shelters (BTS).
At subject, much of their competitive strength is derived from the interplay of
the right technology with high asset utilisation, leading to high efficiency,
one of the lowest product costs and a high quality. Their foresight in
identifying products with attractive market potential and successful market
place execution helped them acquire and maintain a leadership position in
various product segments.
The Company reinforced its brand equity across a wide range of products
(building construction materials, factory made doors and frames, wood
substitute plastic sections, water tanks, furniture and even material supplies
to original equipment manufacturers).
Subject also transitioned to higher value and service oriented offerings, which
progressively desensitised the Company to rising oil prices. As a result, the
cost of raw materials (crude, HDPE and LDPE granules) comprise a modest
proportion of the plastics business.
Pre-fabricated structures: The company worked with several technologies leading
to cost-effective housing shortage solutions, one of them being prefabricated
construction. This is a growing area; the Urban Housing Department of the US
identified manufactured homes as a low-cost viable solution for meeting mass
housing needs; several structures - walling, roofing - can be mass-built in a
factory. This concept is rapidly gaining acceptance in India as well, on
account of the growing demand originating from government agencies and
corporates across telecom, education, sanitation and power sectors.
The Company is attractively positioned to leverage this growing demand: it is a
prefabricated solutions company offering customisable, economic, efficient and
quicker alternatives of site built construction. It enjoys an expertise
developed over 30 years; its prefabricated structure manufacturing facility has
been certified for ISO 9000:2000.
The installation requires little or no use of machines; can be constructed with
ease in remote locations; remains easy to transport without any reduction in
the overall strength and can be used for creating multiple structures at
different locations.
The Company's prefab business continued to grow attractively across nine Indian
states in 2006-07. The Company manufactures 14 products in this category,
enjoying heavy orders for shelters (to house the BTS) from most players in the
industry. Equipment and solution providers are also committing large funds and
orders for such shelters.
This business is growing for another reason. Education is a priority for
governments; a number of states are accelerating the reach of education through
the use of prefabricated schoolrooms. Besides, the National Rural Health
Mission (NRHM) is a high-profile government programme, which envisages the
creation of prefab facilities to provide ayurveda, yoga, unani, siddha and
homeopathy (AYUSH) services. Besides, improved prefabricated toilets and
modules are expected to generate attractive spin-off demand.
Monolithic prefabs: The housing sector accounts for 3 to 5% of the GDP in most
developed economies; in India, it accounts for a mere 1% [source: Assocham].
With housing emerging as a critical component of the construction sector, India
will require investments worth $25 billion over the next five years [Source:
CII].
India remains one of the attractively growing markets for housing in the world
- about 25 lac houses are built in the country each year, despite a widening
demand-supply gap. The Indian housing sector faces a shortage of 20 million
dwelling units for its lower middle and low income groups, expected to increase
to 22.50 million by the end of the 10th Plan period [Source: Assocham].
Subject believes that the answer to India's extensive housing shortage is the
development of low cost-yet-durable houses. The company's monolithic houses are
a relevant solution. The Company evolved a state-of-the-art form work system
that enables the casting of concrete walls along with slab in one shot. Its
advantages comprise:
·
Consistent
quality; all the electrical, plumbing and related supports will be integrated;
the speed of construction is generally quicker than the conventional
method.
·
These houses
are designed to meet all precautions related to seismic, waterproofing and fire
etc.
·
These houses
have a longer life span compared to conventional construction with negligible
maintenance.
·
These
houses use fly ash as an ingredient in the construction, reducing environmental
pollution.
The Company constructed nearly 1,500 low-income group houses for the Ahmedabad
Urban Development Authority in 2006-07 and negotiations are on for similar
assignments in Delhi, Chandigarh and other places. The Company's order book
stood at more than Rs.1,0000 millions for monolithic prefabs towards the close
of 2006-07.
Multi-storeyed transit homes: In many Indian cities, slum improvement /
rehabilitation is the critical need of the hour. The Company is in a position
to offer multi-storeyed transit homes made with suitable sandwich panels with a
life of over 25 years. With the government prioritising housing development for
the needy, the Company is positioned to act as a major catalyst.
New introductions: The Company developed PP profile for use in corner posts for
Poly John Portable Toilet Blocks; it will commence contract manufacture for
Poly John, which possesses a unique combination of roto moulding, thermo
forming and PP extrusion. The Company enjoys exclusive marketing rights of Poly
John in India and is working on various government programmes such as
Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Sarva Siksha Abhiyan
(SSA) and Mid-day Meal Scheme and National Rural Health Mission. The prefab
business enjoys a healthy order pipeline from Mumbai and Delhi.
Custom moulding and lightweight engineering products: subject essentially has
two sub-segments in the custom moulding business - auto components and
electrical - both of which are enjoying a healthy demand.
In custom moulding business, the company is attractively placed as the
government is driving reforms in power distribution in several new states.
To reduce T and D
losses, meter boxes, energy boxes, fuse boxes and pillar boxes are needed, a
pioneering area for the Company. The Rajiv Gandhi Gramin Vaidyutikaran Yojana
(RGGVY) is a high-priority programme and the Company is supplying both products
and undertaking turnkey jobs in certain areas to the satisfaction of various
distribution and utility companies.
Besides, the
company is working with several states and supplying equipment like SMC
enclosures, polymeric enclosures, polymeric insulators and cross arms for power
transmission grids. The company is also working on various government
programmes like the Accelerated Power Development and Reform Programme (APDRP)
and Rajiv Gandhi Gramin Vaidyutikaran Yojana (RGGVY) - in the area of rural
electrification (SMC products).
Industrial custom-moulded products are also performing well. There is a growing
need for the Company's plastic pallets that provide totally hygienic and clean
solutions for material handling and logistics. Being a segment leader, the
Company expects to see a greater demand for pallets and related products in
retailing, warehousing, pharmaceuticals, fruit processing, fisheries and
related industries.
The auto components business, too, reported attractive growth, on the back of a
continuing strong relationship with Cummins and other multinationals.
Subject continues
to manufacture products specific to the requirements of clients like Cummins,
Siemens, Wasaukee, Coca-Cola, GE, PepsiCo, New Holland Tractors and French
Railways.
Water tanks: The Company launched a new range of products, namely underground
water tanks and horizontal tanks meant for the transportation of water and
other fluids. With a new emerging segment of sump tanks, septic tanks and
transportation tanks, the Company is eyeing a sizeable business over the next
few years. The implementation of VAT in line with global trends has also
reduced competition in this small scale sector.
The sale of Sintex Premium, Sintex and Reno brands remained stable. The focus
of the division is shifting from low-value water tanks to specialised
applications in the infrastructure space.
However, underground tanks are yet to take off due to a tough year in the area
of oil distribution and retailing companies. A technical approval has been
secured and there are bright demand prospects from these sectors.
The Company is working on various government programmes like Rajiv Gandhi
Drinking Water and Sanitation Scheme and Indira Gandhi Water Supply
Scheme.
·
Textiles
The contribution of
India's textile sector to the national economy is visible in its significant
contribution to industrial production, employment generation and foreign
exchange earnings capability, inspiring favourable government policies.
The Indian textiles industry is poised for robust growth - both within and
outside the country - due to a strong presence across the textiles value chain,
government reform (for the benefit of organised textile manufacturers),
abolition of the quota regime and the integration of textile and clothing trade
under the WTO.
The last
development is perhaps the most significant: the end of the multi-fibre
agreement (MFA) in 2005 has accelerated a shift in textile capacities from the
developed nations to low-cost Asian producers, with India and China emerging as
principal beneficiaries.
India's trade data indicates impressive growth in textile and garment exports
to Europe and U.S.A. Rising domestic demand along with free international trade
have catalysed the growth of the Indian textile and apparel industries; going
ahead, the sector is set to grow into a $100-billion industry by 2010 (exports
50%).
The Company is attractively placed to capitalise on the industry upturn. A
9%-plus GDP growth and favourable international factors has resulted in a
healthy demand growth for the Company's products.
Correspondingly, the Company's production touched a record 191.9.8 millions
metres, a growth of 33% over the previous year. Besides, the Company's total
revenues from this business rose by 27.53% to Rs.3180.239 millions in 2006-07;
exports rose by 6.16% to Rs.14.1907 millions.
It would be pertinent to indicate that the Company is not just another textiles
player. It is among the most profitable companies in the Indian textile
industry. Even though input costs, particularly power and personnel, continued
to climb rapidly, the Company embarked on an aggressive capacity expansion,
wider product portfolio and global alliances to counter their impact.
For instance, the Company chalked out an ambitious phased four-year expansion
programme to expand the annual capacity of 21 million metres to 24 million
metres by FY08 (Phase I); it will add an additional 5 million metres by 2008-09
(Phase II).
This linear capacity expansion will be accompanied by a migration into high end
women's shirting. The Company is also strengthening its business through a
Rs.450.0 millions investment in a gasbased power plant in Kalol, which will
save Rs.144.0 millions per annum. The expansions in the Company's textile
division are being funded through the Technology Upgradation Fund Scheme
(TUFs).
New projects: The Company plans to extend into the high-end women's wear
segment and in this connection, embarked on a garmenting facility near Kalol
(capacity 10,000 garments per day, scalable to 15,000) which will be
commissioned by September 2008. This forward integration will enable subject to
emerge as a one-stop solution provider for its premium customers.
International alliances: subject entered into collaborations with several
European design houses with a view to benefit them in marketing, keeping
abreast with the trends, higher realisation, technological direction,
international designs and an eminent clientele.
Spring-Summer collection 2008: The Company launched its Spring-Summer 2008 / 09
Dobby and Jacquard collections across Europe in March 2007 comprising over
3,000 designs in the men's and women's wear ranges.
Marketing: In 2006-07, subject expanded its market footprint despite a decline
in export realisations as well as lower orders for yarn and dyed fabric. The
Company's innovative product line - Lycra Corduroy, 28 Wales and yarn-dyed
shirting - helped raise exposure among domestic brands and exporters. Besides,
the Company increased the depth in its product range to cater to high-end
clients.
The Company strengthened its presence in the promising markets of Turkey and
South America. It introduced new fabric range comprising pigment coating
(especially in Dobbies), deriving attractive value-addition; it launched super-fine
shirting for the Indian market with a distinctive European touch, which was
successfully accepted.
The Company plans to launch compact weaves in the 60s, 70s, 80s, double and 2 /
120s and yarn-dyed products. The Company also started a new range of 80s
collections with Canclini, testifying its capabilities in handing difficult
products; as an extension, the Company is the only one in India providing this
high-end range to Italian manufacturers.
Operations: During 2006-07, the Company reinforced its weaving section through
the following initiatives:
·
Introduction
of new counts / quality: Developed the skill to produce fault-free structured
fabric with super-fine yarn count in the 60s / 70s / 80s and 2 / 120s; launched
jacquard and high-end furnishing fabrics to diversify exposure.
·
Improved
efficiency: Achieved a higher efficiency as production grew 33% following the
installation of new equipment and improved efficiency in the weaving
section.
·
Environment-friendly
activities: Improved housekeeping through the installation of dust filtration
and auto collection systems of waste, reducing the incidence of loose fibres
and micro dust.
·
Customer
service: Developed swatches identical to actual products; development of swatches
on auto sample looms (instead of usual handlooms) with the objective to improve
sample quality, reduce production time and samples.
·
New products:
Development of jacquard fabric on a trial basis; new finishes comprised the
following:
·
Nano finish (water
and oil repellent for a longer duration)
·
3X Dry
(one-side water repellent and the other side quick dry to keep the body fresh
even in a moist environment)
·
Active
fresh (anti-microbial finish)
·
Vitamin E (for
health-conscious people)
·
Coated fabric
(polymer and other chemicals for style, can be an independent line of business
in the future)
·
Cost control:
Innovative approaches and efficient asset utilisation helps reduce production
cost; the introduction of alternative vendors helped reduce the cost in loom
sheds; hard waste dropped below 5%, though the order length per design
declined; the introduction of the modified process system increased equipment
utilisation, reducing double passage for yarn-
dyed and full white
varieties (40% of product mix); reduced re-dyeing of yarn and fabric without
affecting
the colour-matching
standards; old stock utilisation increased 34% leading to a corresponding
decline in cost and improvement in service.
·
Subsidiary
In 2006-07, the
Company acquired a 74% stake in Zeppelin Mobile Systems India Limited,
possessing an expertise in designing and commissioning world class telecom
shelters and featuring among the top two telecom shelter manufacturers in India
with a market share of 25%. Zeppelin is now a subsidiary of subject.
In terms of approvals granted by the Central Government under Section 212(8) of
the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss account,
Report of the Board of Directors and Auditors of the Subsidiary Company have not
been attached with the balance sheet of the Company. These documents will be
made available upon request by any member of the Company interested in
obtaining the same. However, as directed by the Central Government, the
financial data of the subsidiary has been furnished as a part of the Annual
Report.
Issue of foreign currency convertible bonds (FCCB)
Pursuant to the approval of shareholders at the Extraordinary General Meeting on
October10, 2005, the Company accessed the international financial markets with
an issue of USD 50 million, Zero-Coupon Foreign Currency Convertible Bonds due
in 2010. The bonds are listed on the Singapore Stock Exchange.
The bond holders of USD 11 million have already exercised their option to
convert their FCCBs into equity shares and the Company has allotted 26,30,443
fully paid-up ordinary shares of Rs.2 each convertible at a price of Rs.183.581
per share.
Economic
overview
India is the second fastest
growing nation in the world.
India is on the global map; it is one of the fastest growing economies of the
world and a preferred investment and outsourcing destination for products and
services, which is primarily reflected in its GDP growth. The Indian GDP has
been averaging a growth in excess of six per cent for the last eight years,
among the few countries across the globe to do so.
Source: The
Economic Survey
Advance GDP estimates for 2006-07, released by the Central Statistical
Organisation, place GDP growth at 9.2%. India's GDP at market prices is
officially estimated to be just over Rs.41,00,0000 millions for 2006-07,
translating into a little more than USD 1 trillion, placing the economy in the
elite club of 10 economic powerhouses that enjoy this distinction.
For the first time in the last 10 years, industrial growth in India has
exceeded 10%. Also, for the first time ever, the manufacturing sector, which
accounts for 80% of India's industrial production, has witnessed a growth rate
exceeding 12% in the six months April-September 2006.
Going ahead, during the 11th Five-Year Plan, the Indian economy is expected to
report a 9% CAGR on the back of accelerating industrial and manufacturing
expansion. Industrial growth projected for the Plan period is expected to be
10.5% CAGR and manufacturing growth 12-14% CAGR.
·
Segment wise analysis
It was an eventful year strategically for the plastics and textile divisions of
the Company. In the plastics division the Company made a strategic investment
in Zeppelin Mobile Systems India Limited, a leading telecom shelter
manufacturing company in India with an estimated market share of 25%. In its
textiles division, subject entered into an agreement with a reputed UK-based
design and marketing company.
Technologically too, the Company made a significant breakthrough in the
plastics division with a successful application of the monolithic concrete
construction concept.
·
Plastics division
Substitution and innovative application have been the key drivers for the
Indian plastic industry over the recent past, increasingly becoming a part of
every individual's daily life. As a result, the growth of India's plastics
industry is directly dovetailed with the growth of the Indian economy.
Industry opportunities
·
Growing
affluence in India, the second most populous nation, providing a ready domestic
market for plastic products.
·
Demand growth
from the packaging and consumer durable sectors.
·
Increasing
use of plastic in non-conventional applications like building materials, road
building, automotive components, housing complexes, solar water heaters and
waste management, providing a huge opportunity for the industry
·
According to
scientists at The University of Southern Mississippi (USM) a new type of environmentally
friendly plastic that degrades in seawater, could release valuable storage
space, making it safe and practical to toss plastic waste overboard. The
biodegradable plastics could replace conventional materials used to make
stretch wrap for large cargo items, food containers, eating utensils and other
plastics used at sea. This will ease pressure on ships as typically large
volumes of plastic waste generated aboard military, merchant and cruise ships
must be stored onboard, often for prolonged periods, until they reach
port.
·
Industry outlook
Spurred by internet expansion, the sale of computers and telecommunications
devices are driving a growth in plastics consumption. Apart from this, the use of
plastics is progressively increasing in the power sector (SMC meter boxes,
distribution pillar boxes, cross - arms, FRP aerial fuse boxes, moulded service
connection boards etc.), housing sector (monolithic concrete construction) and
building and construction sector (storage tanks, furniture, prefabs etc). In
addition, local production has increased, grades have widened and custom duties
have declined. Thus, the number of processors has increased and demand has
continuously grown.
As per the Union
Budget 2007, customs duty on plastic reduced from 12.5% to 7.5% and central
excise duty on nylon chips reduced from 16% to 12%.
Despite this growth, India's per capita plastic consumption remains relatively
low compared to the global figures: 4.10 kgs compared to 19.70 kgs global
average. However, this skew is expected to correct itself and the country
expects to increase the consumption of plastic products to 12.5 MT by 2010.
Thus, the outlook on the industry appears optimistic.
·
Overview of the plastics division
Subject is the leading player in the Indian plastics environment with
multi-locational operational presence. The Company has maintained its
leadership by graduating from product delivery to customising innovative
solutions for its customers.
As a progressive organization, subject capitalised on the favourable industry
environment through aggressive expansion of its geographical presence and
modification of its product categories to the demands of the industry and
consumer. The Company manufactures over 3,500 types of plastics and related
products of various shapes using 12 different processes, all under one roof. It
has graduated from a mere manufacturer to an integrated solutions
provider.
The Company's product mix primarily comprises:
·
Pre-fabricated
structures and monolithic concrete construction
·
Custom
moulding
·
Water and
liquid storage tanks
·
Reinforced
fiber glass storage tanks
·
Transmission
and distribution accessories
Website details :
Subject (Earlier known as The Bharat Vijay Mills Limited) has two
divisions – textiles and plastics. In the area of textiles, we have been
pioneers in high value fabrics. For more details on textile division operations
please visit sintex-india.com
The Plastics Division started in the year 1975 and today they have most
diversified manufacturing capabilities in plastic processing in the world, with
10 plants spread across the country, more than twelve manufacturing processes under
one roof, having more than 500,000 Sq. meter area and a more than 1000 strong
work force. They have also created extensive finishing, assembling, metal
fabrication and concrete products facilities. Combination of such varied
capabilities along with their state-of-the-art design and tool room facilities
enables them to give vast array of products and solutions.
Capabilities
·
Thermoplastics:
Rotational Moulding | Extrusion | Blow Moulding | Injection Moulding |
Twin Sheet Thermoforming | Single Sheet Thermoforming
· Thermosets:
Sheet Moulding Compound (SMC) | Dough Moulding Compound (DMC) | Compression Moulding |Spray up |Hand lay up | Resin-Transfer Moulding | Chop Hoop Filament Winding |
·
Sandwich
Panels:
With Metal/Plastic/FRP Facings with core of
PUF, EPS, Mineral Wool etc. |
·
Post
Moulding:
Welding | Finishing | Assembling | Painting |
·
Metal
Fabrications:
Metal forming | Metal Fabrication | Powder
Coating |
·
Civil
Engineering and Concrete facility:
Design | Pre-casting | Plastocrete | Cellular
Concrete | Light Weight Concrete Panels
| Monolithic Concrete Construction | Plastic Formwork |
Plant
Locations:
Subject has an effective network of 10 manufacturing plants,
12 branch offices, over 500 distributors and around 10,000 retailers spread
across India
Achievements
Major landmarks Along the Journey
1975 : Moulded Polyethylene Industrial Containers and Tanks
of sizes up to 10,000 liters
1977 : Material Handling Containers for Industries and Institutions
1978 : Water Tank
1985 : Plastic Sections for Conversion into Partitions,
False Ceilings, Wall Panellings, Cabins, Cabinets, Furniture etc.
1988 : Plastic Doors, Windows and Frames
1989 : Insulated Containers, Sandwich Panels, Agri
Containers and Biogas Holders
1990 : SMC and SMC Moulded Products, Pultruded Products,
Resin Transfer Moulded (RTM) Products, Blow
Moulded
Products, Injection Moulded Products etc.
1995 : Water Filters cum Purifiers
2000 : Solar Water Heaters
2001 : Prefabs
2002 : Turnkey Blow Moulding and Profile Extrusion Plants
2004 : FRP Underground Storage Tanks
2005 : ISO 9001 Certification
Monolithic
Concrete Construction Technology
2006 : UL Listed for FRP Underground Petroleum Tanks
Significant developments in
2006-07
Prefabricated structures: In this product category, the Company made
significant moves in the monolithic concrete construction sector.
Monolithic concrete construction: The Company and the Government of Gujarat,
represented by the Gujarat Urban Development Company, have entered into an
agreement for the construction of 50000 EWS (economically weaker section)
quarters with monolithic construction technology in Ahmedabad, Baroda, Rajkot,
and Surat. The proposed investment is about Rs.7500 millions.
Monolithic prefabs: The Company constructed nearly 1,500 houses for Ahmedabad
Urban Development Authority (AUDA) for LIG. It is also in the process of
finalising similar jobs in Delhi, Chandigarh and many other areas.
Monolithic prefabs: The Company constructed nearly 1,500 houses for Ahmedabad
Urban Development Authority (AUDA) for LIG. It is also in the process of
finalising similar jobs in Delhi, Chandigarh and many other areas.
Portable toilet boxes: The Company developed PP profile for use in corner posts
for Poly John Portable Toilet Blocks. The Company will soon commence contract
manufacturing for Poly John, which has a unique combination of roto moulding,
thermo forming, and PP extrusion. The Company will have exclusive marketing
rights of Poly John in India.
Multi storied transit homes: In many Indian cities, slum improvement /
rehabilitation is the critical need of the hour. The Company is in a position
to offer multi-storeyed transit homes made with suitable sandwich panels
enjoying a life of over 25 years. With the government prioritising housing
development for the needy, the Company is positioned to act as a major
catalyst.
Custom moulded products: The custom moulding business has been the key growth
driver during the year under review. The Company has been making continuous
innovations in product design and styles to suit customer needs and has, over
the years, expanded its product basket significantly. There has been a
significant increase in the manufactured products in 2006-07.
Electrical custom
moulding has been the fastest growing product for subject.
With competition
being limited in the domestic industry and with a rising demand for auto
plastics as well, the future looks promising for subject.
Liquid storage tanks: During the year, the Company launched a new range of
products, namely underground water tanks and horizontal tanks meant for the
transportation of water and other fluids. With the new segment of sump tanks,
septic tanks and transportation tanks, the Company is eyeing a sizable business
over next three to four years. Due to the implementation of VAT across the
country in line with global trends, competition from India's small scale sector
is declining.
Transmission and distribution accessories: subject possesses the capacity of
handling approximately up to 4,000 tonne of enclosures [annually] and has plans
to extend this to around 16,000 tonnes to meet the growing needs of the power
sector. Accordingly it has planned an investment of approximately Rs.70 cr.
towards increasing its electrical manufacturing capacity by 12,000 tonnes at
its Kalol and Bhachau plants. This expansion is likely to be completed by
December 2007. Recently, the Company has taken up contracts with parties for laying
electrical lines as well.
Growth plans: subject has begun due diligence for an overseas acquisition to
access the global market and its available technologies. A total spend of USD
400 mn has been estimated for the same and will be funded through the FCCB that
was issued by the Company in October, 2005 as well as through internal accruals
and external borrowings. The acquisition will be linked to the electrical
engineering industry and an auto-ancillary company in Europe and in the USA
respectively.
·
Operational performance
During the year under review, the plastics business delivered 30.38% revenue
growth amounting to Rs. 8264.345 millions. This improvement was driven by
continued robustness in performance by pre-fabricated structures, custom moulded
segment as well as BT shelters. Increase in value added products enabled the
Company to strengthen its profitability - EBIDTA margin grew by 89 basis points
over the 2005-06 level.
·
Textile division
Textiles, accounting for 14% of India's industrial production, contributed to
nearly 30% of the total exports and remained the second largest employment
generator after agriculture.
The Indian textile
industry is poised for robust growth globally and domestically, with a strong
presence across the value chain. With fresh investments flowing at a rapid pace
and encouraging government reforms for organised textile manufacturers, the
industry is set to grow attractively over the coming years.
·
Vision 2010
The industry expects an investment of Rs.1,40,0000 millions in the post-MFA
phase. A Vision 2010 for textiles formulated by the Government following an
intensive interaction with the industry and Export Promotion Councils to
capitalise on the upbeat mood, aims to increase India's share in world's textile
trade from the current 4% to 8% by 2010 and achieve an export value of USD 50
billion by 2010.
Vision 2010 also envisages growth in Indian textile economy from the current
USD 37 billion to USD 85 billion by 2010, creation of 12 million new jobs in
the textile sector and the modernisation and consolidation to create a globally
competitive textile industry.
·
Export potential
The US-China textile pact, which restricts the export of 34 items of clothing
and categories from China, has strengthened India's export presence. The
European public procurement market is a large buyer.
According to the
European textile trade union ETUFTCL, this market is estimated at Euro 1,500
billion per annum or 16% of the European GDP. The annual requirements of the European
Commission alone amounts to Euro 2 billion and India stands to benefit.
A number of global retailers have pledged to enhance their textile and clothing
requirement from India. For instance, Wal-Mart expects to source at least 5% of
its USD 11 billion textile and apparel requirement from India; JC Penney plans
to double the sourcing from India every four years starting from USD 140
million, while prominent retailers like Tesco, Carrefour and HandM plan to
enter into long-term strategic alliances with a number of Indian textile
companies.
India is capitalising on this industry inflection point: As against China
registering a growth of around 6.5% in exports to the US and 12% to the EU
following the lifting of the textiles quota two years ago, India increased its
exports to the US by 13% and to the European market by 27%. Indian apparel
exports are slated to grow at 15-18% annually and capture 5% of the global
apparel export market by 2010.
·
Export growth of Indian textiles
A quick analysis indicates that while exports out of India reported a de-growth
in 2004-05, the trend reversed with exports showing a significant improvement
in 2005-06 and 2006-07 (April to June) largely on account of a dismantling of
quotas, increasing recognition of India as a cost-effective textile sourcing
base and temporary restrictions imposed by the US and EU on China.
·
Outlook
The Indian textiles
and clothing industry is expected to grow to USD 85 billion by 2010 even as
world trade grows from USD 354 billion in 2001 to an estimated USD 65 billion
by 2010 (source: CRISIL-CITI report titled Vision for the Indian Textile and
Clothing Industry, 2007-12), thanks to the following factors:
Robust Indian
demand: Historically, India was an under-penetrated geography from the
perspective of textiles consumption: a per capita consumption of 2.5 kg against
a global average of 7.7 kg. India has now arrived at a demographic sweet spot
that is expected to accelerate fabric offtake faster than at any point in the
country's history.
Demographic dividend: India's working population is growing, the average age of
this working population is declining (median age - 24 years), household incomes
are rising and there is a near 30% growth in the country's organised retail. The
result is that India's apparel market growth from Rs.777 billion (2004) to
Rs.883 billion (2005) was larger than the size of the apparel market in a
number of countries; its 13.6% growth was higher than the growth in a number of
sectors within the country.
Abolition of quotas: Even as India is addressing one of the most attractive
periods of growth in the textiles industry from within its own country, it is
facing a development of paradigm importance abroad as well. From January 1,
2005, WTO removed all textile quotas, making it possible for one country to
export to another in an unhindered way. While global retailers were earlier
required to source varying quantities of fabric and yarn from different
countries based on their unused quotas (not necessarily cost and quality
considerations), they will now be encouraged to source the best material at the
lowest cost. India has already begun to emerge as one of the biggest
beneficiaries of this development for the following reasons:
·
Apart from
China, India is the only large textile manufacturing nation with a captive
access to a comprehensive range of raw materials (natural and man-made)
·
Lowest cost
producer after China, with strengths in cotton-based textile products and
short-run manufacture.
·
Predominance
of small-scale units with skilled workmen, resulting in increased production
flexibility.
·
Availability
of low cost skilled labour resulting in a significant advantage of increased
productivity at a lower cost.
Active government support: Over the last few years, the Government of India
enhanced the industry's competitiveness through the Technology Upgradation Fund
Scheme (TUFS), which made it possible for rapidly expanding Indian textile
companies to borrow about 80% of their capital expenditure at concessional
debt. Under the TUFS, the borrowing companies get a 5% interest subsidy from
the government, reducing the net loan cost of 11% per annum to a mere 6% per
annum, at par with the lowest international benchmarks. The fact that these
loans are repayable across long tenures (maximum 10 years) including a two-year
moratorium, helps companies mobilise a large and stable source of funds, with
no immediate repayment obligations.
·
Opportunities in garmenting:
Garmenting is the way to go in future as predicted by most textiles analysts.
In garments, China's global market share is way ahead at 33% with Mexico at 13%
and India trailing at a paltry 3%. Taking the message from these figures,
almost every textile company in the country is moving up the value aisle. The
sector saw a 35% surge in investments from Rs.5,6050 millions in 2004-05 to
Rs.86230 millions in 2005-06 (source: CMIE) because of cheaper garmenting at
Rs.2 per minute compared to Sri Lanka's Rs.2.5 and Korea and Taiwan's Rs.6 to
Rs.7. An integrated textile facility (fibre to garments) helped reap economies
of scale and reduced the response time to and from clients.
Liberalisation: South Asian Free Trade Area (SAFTA) is expected to more than
double from USD 6 billion to USD 14 billion within two years of the agreement;
textile trade will account for a major share of this market.
Japan intends to
propose the formation of an Asian Economic Free Trade Zone, comprising half the
global population across 10 members of ASEAN, Australia, China, India, Japan,
New Zealand and South Korea, providing Indian textile exports a significant
boost as well.
·
Overview of the textile division
In the textiles category, subject places itself in the niche category of
manufacturing high-end men's structured shirting fabrics addressing the premium
fashion segment marketed under the brand name BVM. The Company primarily deals
in the manufacture of yarn-dyed structured fabrics and corduroy fabrics.
In the structured fabric category, subject manufactures fabrics that are
difficult to replicate and in a variety of weaves like dobby, jacquard, leno,
double beam and double creel. The Company enjoys a market share of around 70%
in the domestic space of designed structured fabric manufacturers, selling most
of its products to premium brands manufacturing men's shirts in India like
Zodiac, Wills Lifestyle, Louis Philipe, Arrow and Van Heusen. In the export
field, the Company sells this product to number of international buyers in
Europe and USA.
In the corduroy segment, subject remains one of the largest producers in India
and the third largest in Asia. The range of corduroy fabrics manufactured by
the Company comprises yarn-dyed corduroy and ultima cotton yarn-based corduroy.
Here too, exports to Turkey, UAE, Sri Lanka and Bangladesh constitute a
significant part of total corduroy sales of the Company.
·
Operational performance
The growth in Indian GDP above 9% and favourable international factors resulted
in a healthy demand for the Company's products. As a result, the production of
fabric touched a record high of 19.20 million metres reflecting a growth of 33%
over 2005-06 for the Company. Total revenue of the division rose to Rs.3180.239
millions in 2006-07 registering a growth of 27.53% compared to 2005-06. The
year 2006-07 remained a landmark for the Company's exports. Export sales saw a
sharp rise to Rs.141.907 millions recording a 6.16% growth in 2006-07, compared
to a marginal growth in 2005-06.
The Company is one of the most profitable companies in the textile segment in
the country, though the input cost particularly power and personnel, continued
to rise at a faster pace during the last financial year. A growing input cost
poses a challenge to their competitiveness. However, to combat this, the
Company has strategised an ambitious growth plan with a blend of capacity
expansion, additions to product portfolio and global alliances.
·
Significant developments in 2006-07
International alliances: subject entered into collaboration with several
European design houses for the following benefits:
·
Marketing:
They outsource the Company's product for onward marketing in Europe, creating a
globally benchmarked product for the former and growing demand for
subject.
·
Insight: These
design houses work with leading designers of Europe who dictate fashion trends,
resulting in an informed insight for subject in staying ahead.
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.39.29 |
|
UK Pound |
1 |
Rs.77.17 |
|
Euro |
1 |
Rs.57.60 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
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 |
|