MIRA INFORM REPORT
|
Report Date : |
17.01.2008 |
IDENTIFICATION DETAILS
|
Name : |
PRATIBHA
INDUSTRIES LIMITED |
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Registered Office : |
101, Usha Kamal, 574, Chembur Naka, Chembur, Mumbai 400071,
Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
19.07.1995 |
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Com. Reg. No.: |
11-90760 |
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CIN No.: [Company Identification No.] |
L45200MH1995PLC090760 |
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TAN No.: [Tax Deduction & Collection Account
No.] |
MUMP08929E |
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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 : |
Company is engaged in the business of Infrastructure Development
with Focus on Water Supply, Sewerage, Road Construction, Mass Housing
including Commercial Public utilities like Railway Station Complexes, EPC
Contracts for Oil and Gas transmission and pre-cast design cum construction.
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RATING & COMMENTS
|
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
3800000 |
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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 and progressing well. It has come out with
IPO fund expansion programmes. Trade relations are fair. Financial position
is satisfactory. Payments are reported as slow but correct. However,
the company can be considered normal for business dealings at usual trade
terms and conditions. |
LOCATIONS
|
Registered Office : |
101, Usha Kamal, 574, Chembur Naka, Chembur, Mumbai 400071,
Maharashtra, India |
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Tel. No.: |
91-22-66414499 |
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Fax No.: |
91-22-25201135 |
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E-Mail : |
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Website |
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Corporate
Office : |
Shrikant Chambers, Phase-ll, 5th Floor, Sion - Trombay Road, Next to
R.K. Studio, Chembur, Mumbai 400071, Maharashtra, India |
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Tel.
No.: |
91-22-66414499 |
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Fax
No.: |
91-22-25201135 |
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E-Mail
: |
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Factory
: |
Plot No. 215, Vijaypur, P O Kone, Bhiwandi-Wada Road, Taluka Wada,
District Thane 421 303, Maharashtra, India |
DIRECTORS
|
Name : |
Mrs. Usha B. Kulkarni |
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Designation : |
Chairperson |
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Name : |
Mr. Ajit B. Kulkarni |
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Designation : |
Managing Director |
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Name : |
Mr. Vinayak B. Kulkarni |
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Designation : |
Whole time Director |
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Name : |
Mr. Anilkumar G. Karkhanis |
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Designation : |
Independent Director |
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Name : |
Mr. Awinash M. Arondekar |
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Designation : |
Independent Director |
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Name : |
Mr. Shrikant T. Gadre |
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Designation : |
Independent Director |
KEY EXECUTIVES
|
Name
: |
Mr. Pankaj S. Chourasia |
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Designation
: |
Company Secretary |
MAJOR SHAREHOLDERS
|
Names
of Shareholders |
No. of Shares |
Percentage of Holding |
|
Shareholding of Promoter and Promoter Group |
|
|
|
Indian
n Individuals / Hindu Undivided
Family n Central / State Government(s) n Bodies Corporate n Financial Institutions / Banks n Any Other |
10033942 -- 2008 -- -- |
70.2411 -- 0.0141 -- -- |
|
Sub Total (A) (1) |
10035950 |
70.2552 |
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|
|
|
|
Foreign
n Individuals (NRI/ Foreign
Individuals) n Bodies Corporate n Institutions n Any Other (specify) |
-- -- -- -- |
-- -- -- -- |
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Sub Total (A) (2) |
-- |
-- |
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|
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|
Total Shareholding of Promoter and Promoter Group (A) = (A) (1) + (A) (2) |
10035950 |
70.2552 |
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|
Public Shareholding Institutions n
Mutual Funds / Axis Bank Limited n
Financial Institutions / Banks n
Central / State Government(s) n
Venture Capital Funds n
Insurance Companies n
Fll’s n
Foreign Venture Capital n
Any Other |
298482 -- -- -- -- 235744 -- -- |
2.0895 -- -- -- -- 1.6503 -- -- |
|
Sub Total (B) (1) |
534226 |
3.7398 |
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|
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|
|
Non Institutions n Bodies Corporate n Individuals – individual Shareholders holding nominal share capital
upto Rs. 0.100 million n Individuals – individual Shareholders holding nominal share capital in
excess of Rs. 0.100 million |
864367 2353760 331903 |
6.0509 16.4771 2.3234 |
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|
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Any Other (Specify) n Clearing Member n NRI’s (Repatriation) n OCBs |
15828 148966 -- |
0.1108 1.0428 -- |
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Sub Total (B) (2) |
3714824 |
26.0050 |
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|
|
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Total Shareholding (B) = (B)
(1) + (B) (2) |
4249050 |
29.7448 |
|
Shares
held by Custodians and against which Depository Receipts have been issued |
-- |
-- |
|
Grand Total (A) + (B) + (C) |
14285000 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Company engaged in the business of Infrastructure Development
with Focus on Water Supply, Sewerage, Road Construction, Mass Housing
including Commercial Public utilities like Railway Station Complexes, EPC
Contracts for Oil and Gas transmission and pre-cast design cum construction.
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Products : |
Building and Construction |
GENERAL INFORMATION
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No. of Employees : |
700 |
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Bankers : |
v
Bank of Baroda v
Bank of India v
ICICI Bank Limited v
Punjab National Bank v State Bank of
India |
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Facilities : |
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Banking Relations : |
Satisfactory
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Auditors : |
Jayesh Sanghrajka and Company Chartered Accountants |
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Internal Auditors : |
Chokshi
and Chokshi Chartered
Accountants |
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Associates/Subsidiaries : |
v
Pratibha Pipes & Structural Private Limited. v
Pratibha Precast & Concrete Industries Private Limited. v
Teknoworks (India) v
Muktangan Developers Private Limited. v
Pratibha Ispat Private Limited. (Formerly known as Chimanlal
Vijaykumar Steel Private Limited). v
Pratibha & Heng Structural Private Limited (Formerly Known as
Pratibha Ispat Private Limited.) v
Pratibha Shareholding Private Limited. v
Petron Pratibha Joint Venture v
Unity Pratibha Multimedia Joint Venture v
Pratibha Unity Joint Venture v
Pratibha Infrastructure Private Limited. v Rahul Associates |
CAPITAL STRUCTURE
Authorised
Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
25,
000, 000 |
Equity
Shares |
Rs. 10/- Each |
Rs. 250.000 Millions |
Issued,
Subscribed & Paid-up Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
14,285,000 |
Equity
Shares |
Rs. 10/- Each |
Rs. 142.850 Millions |
|
(Of the above 8000000 shares have been issued
as bonus shares a on 21.06.2005 being issued for consideration other than
cash) |
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FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
142.850 |
142.850 |
20.000 |
|
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
805.766 |
679.489 |
165.390 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
948.616 |
822.339 |
185.390 |
|
|
LOAN FUNDS |
|
|
|
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|
1] Secured Loans |
1028.590 |
350.617 |
251.388 |
|
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2] Unsecured Loans |
299.706 |
87.558 |
19.345 |
|
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TOTAL BORROWING |
1328.296 |
438.175 |
270.733 |
|
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DEFERRED TAX LIABILITIES |
4.486 |
0.960 |
0.748 |
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|
|
|
|
|
|
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TOTAL |
2281.398 |
1261.474 |
456.871 |
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APPLICATION
OF FUNDS |
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|
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|
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|
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FIXED
ASSETS [Net Block] |
212.694 |
134.035 |
83.304 |
|
|
Capital
work-in-progress |
279.833 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
INVESTMENT |
119.000 |
294.587 |
4.868 |
|
|
DEFERREX
TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT
ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
216.375
|
361.933
|
208.758 |
|
|
Sundry
Debtors |
1538.435
|
478.692
|
322.082 |
|
|
Cash
& Bank Balances |
396.350
|
28.659
|
11.815 |
|
|
Other
Current Assets |
0.000
|
0.000
|
0.000 |
|
|
Loans
& Advances |
231.773
|
444.869
|
287.664 |
|
Total Current
Assets |
2382.933
|
1314.153
|
830.319 |
|
|
Less : CURRENT LIABILITIES &
PROVISIONS |
|
|
|
|
|
|
Current
Liabilities |
539.626
|
411.568
|
349.888 |
|
|
Provisions |
173.436
|
112.804
|
111.732 |
|
Total Current
Liabilities |
713.062
|
524.372
|
461.620 |
|
|
Net Current Assets |
1699.781
|
789.781
|
368.699 |
|
|
|
|
|
|
|
|
MISCELLANEOUS
EXPENSES |
0.000 |
43.071 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
2281.398 |
1261.474 |
456.871 |
|
PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales
Turnover |
2952.440 |
1567.050 |
906.371 |
|
|
Other Income |
3.510 |
13.263 |
0.000 |
|
|
Total
Income |
2955.950 |
1580.313 |
906.371 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
235.558 |
136.872 |
86.421 |
|
|
Provision for Taxation |
31.267 |
14.123 |
5.524 |
|
|
Profit/(Loss) After Tax |
204.291 |
122.749 |
80.897 |
|
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|
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Expenditures : |
|
|
|
|
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Cost of Goods Sold |
2375.522 |
1277.577 |
|
|
|
Administrative Expenses |
136.072 |
64.797 |
|
|
|
Financial Expenses |
116.773 |
62.285 |
819.949 |
|
|
Salaries, Wages, Bonus, etc. |
80.732 |
21.437 |
|
|
|
Depreciation & Amortization |
11.206 |
6.573 |
|
|
|
Other Expenditure |
84.750 |
10.771 |
|
|
Total
Expenditure |
2805.055 |
1443.440 |
819.949 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
30.09.2007 (2nd Quarter) |
30.06.2007 (1ST Quarter) |
|
Sales Turnover |
|
715.200 |
659.400 |
|
Other Income |
|
4.800 |
5.600 |
|
Total Income |
|
720.000 |
665.000 |
|
Total Expenditure |
|
568.500 |
578.500 |
|
Operating Profit |
|
151.500 |
86.500 |
|
Interest |
|
64.200 |
7.800 |
|
Gross Profit |
|
87.300 |
78.700 |
|
Depreciation |
|
9.500 |
3.900 |
|
Tax |
|
10.300 |
13.600 |
|
Reported PAT |
|
67.500 |
59.900 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
1.00 |
0.70 |
1.47 |
|
Long Term Debt Equity Ratio |
0.74 |
0.43 |
0.82 |
|
Current Ratio |
2.13 |
1.70 |
1.41 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
14.73 |
12.33 |
9.52 |
|
Inventory |
10.21 |
5.49 |
5.78 |
|
Debtors |
2.93 |
3.91 |
3.65 |
|
Interest Cover Ratio |
2.71 |
3.02 |
2.71 |
|
Operating Profit Margin (%) |
13.03 |
13.48 |
16.10 |
|
Profit Before Interest and Tax Margin (%) |
12.65 |
13.06 |
15.57 |
|
Cash Profit Margin (%) |
7.30 |
8.25 |
9.72 |
|
Adjusted Net Profit Margin (%) |
6.92 |
7.83 |
9.20 |
|
Return on Capital Employed (%) |
21.38 |
24.45 |
38.25 |
|
Return on Net
Worth (%) |
23.07 |
24.35 |
55.81 |
LOCAL AGENCY FURTHER INFORMATION
History
Pratibha Industries Limited was incorporated as
a public limited company on July19, 1995. The Company obtained Certificate of
Commencement of Business on July 19, 1995.
The Company was promoted by Mr. Ajit B. Kulkarni who has very vast experience
in the construction industry. The Company has taken over the existing running
business of M/s Pratibha Industries, a registered partnership firm in the year
1999-2000
Pratibha is a medium sized ISO 9001:2000 certified company engaged in the
business of infrastructure development with focus on water supply, sewerage,
road construction, mass housing including commercial public utilities like
railway station complexes, EPC contracts for oil and gas transmission and
pre-cast design cum construction.
The Company has been awarded more than 50 projects in last 7 years. The Company
has executed various projects for clients like Brihanmumbai Municipal
Corporation (BMC), Maharashtra Jeevan Pradhikaran, Maharashtra Industrial
Development Corporation (MIDC), City and Industrial Development Corporation
(CIDCO), Delhi Jal Board, Akola Municipal Corporation, Pune Municipal
Corporation (PMC), Army Housing Welfare Organisation, Indian Railway Welfare
Organisation, National Thermal Power Corporation Limited (NTPC), Public Work
Department - Government of Maharashtra, Karnataka Urban Water Supply and
drainage Board, Gujarat Water Supply and Sewerage Board, Maharashtra State Road
Development Corporation (MSRDC), Maharashtra Metropolitan Region Development
Authority (MMRDA), to name a few.
Their Company is professionally managed by well qualified and experienced
personnel in all areas including engineering, tendering & estimation,
execution & monitoring, finance, administration and human resource.
PERFORMANCE REVIEW:
The consolidated
turnover of the company has substantially increased from Rs. 1741 millions in
2005-06 to Rs. 3007.800 millions in 2006-07.
Also the Company has been awarded the following contracts during the period
covered by this report.
(Rupees in millions)
|
Sr. No. |
Name of work |
Client |
Value of Work Order |
|
1 |
2 |
3 |
4 |
|
1 |
Work
of construction of inlet facilities, Raw water pumping, Raw Water reservoir,
filter plant, Clear Water Reservoir, Clear water pipe line upto Nagaur, Intermediate
pumping station, CWR and pumping Station at Nagaur with allied electrical,
instrumentation, mechanical works and civil work including road construction
for bypass of village and towns under Nagaur lift water supply project
Phase-I The works also includes construction of 33KV Switchyard at inlet,
intermediate pumping stations, Nagaur pumping station and O & M of
complete system for 5 years on single responsibility turnkey basis i.e.
Design, build, operation & maintenance. |
Public
Health Engineering Department Region Ajmer, Ajmer (Rajasthan) |
Rs. 3316.454 |
|
2 |
Construction
of New International Terminal Building at SVPI Airport, Ahmedabad. In Joint
Venture with M/s ITD.
|
Airports
Authority of India, New Delhi |
Rs. 1220.637 |
|
3 |
Development
of Independent Water Source, Augmentations of Existing Water Supply Scheme
upto & Including Service Reservoris and Operation and Maintenance of same
on Built, Operate and Transfer (BOT) basis, 'Letter of Intent (LOI)' for the
tender notice no. 1 for year 2004-05. In Joint Venture with Unity
Infraprojects Limited. |
Ulhasnagar
Municipal Corporation, Ulhasnagar (Maharashtra) |
Rs. 640.050 |
|
4 |
Modular
expansion of terminal building at Amritsar International. Airport, Amritsar.
(Phase-II). In Joint Venture with Unity Infraprojects Limited. |
Airports
Authority of India, New Delhi |
Rs. 655.882 |
|
5 |
Providing,
Laying and commissioning of ISI Mark RCC NP3 Pipe gravity sewer alonwith
construction of manhole for sewarage network
under sewarage zone for PS4, PS9 & PS10 in Vartaknagar part, Chilasar
Manpada part Ward Committee areas in Thane City. In Joint Venture with
Pratibha Rohit JV |
Thane
Municipal Corporation, Thane (Maharashtra) |
Rs. 362.240 |
|
6 |
Providing,
Laying, Jointing, Testing and Commissioning of Water Supply Pipe line under
Rangil Water Supply Scheme, Srinagar, Package No. Urban Srinagar WS/01 |
J
& K Economic Re- Construction Agency, Srinagar (J&K) |
Rs. 271.517 |
|
7 |
Widening
and Construction of Andheri-Kurla Link Road (Saki Naka to LBS Road and Jari
Mari Road) Part of works of works of Original Package No. 2 of ASIDE Road. |
MMRDA
Bandra (East), Mumbai (Maharashtra) |
Rs. 244.534 |
|
8 |
Cement
Concrete Road Project - Bid II: Concretization of road from Kharegaon chowk
to Retibunder chowk. In Joint Venture with Pratibha Rohit JV |
Thane
Municipal Corporation, Thane (Maharashtra) |
Rs. 70.851 |
|
9 |
Package
III 'Cement Concrete Road Project- Bid III, Concretization of road from Kalwa
Bridge to Wadia Hospital to Dagadi School to Teen Petrol Pump. In Joint
Venture with Pratibha Rohit JV |
Thane
Municipal Corporation, Thane (Maharashtra) |
Rs. 38.542 |
|
|
|
Total |
Rs. 7120.707 |
The Company has successfully completed
(including virtual completion) the following major projects during the period
covered by this report.
(Rs. in
millions)
|
Sr. No. |
Particulars of Site & Details of Client |
Tender
Amount |
|
|
GWSSB - Chorvadala, Gujarat Water Supply
Sewerage Board, Chorwadala, Gujarat |
Rs. 167.857 |
|
|
GWSSB - Package III WTP, Gujarat Water Suply
Severage Board, Amreli, Gujarat |
Rs. 42.631 |
|
|
GWSSB - Package IV WTP, Gujarat Water Suply
Severage Board, Amreli, Gujarat |
Rs. 27.677 |
|
|
IFFCO Ahmedabad, IFFCO, Ahmedabad, Gujarat |
Rs. 84.850 |
|
|
KUWSSB - Gulbarga, KUWSSB, Gulbarga, Karnataka |
Rs. 113.026 |
|
|
PMC Holkar, Puna Municipal Corporation, Pune,
Maharashtra |
Rs. 18.392 |
|
|
KBL Kahalgaon, Kirloskar Brother Ltd.
Kahalgoan, Bihar |
Rs. 299.393 |
|
|
AMC Ahmedabad, Ahmedabad Municipal
Corporation, Ahmedabad, Gujarat |
Rs. 189.900 |
|
|
KWSDB Dharwad-Karnataka |
Rs. 315.245 |
|
|
MJP-Nagpur, Maharastra |
Rs. 29.449 |
|
|
MCGM-Amne Bridge,Maharastra |
Rs. 213.786 |
|
|
Petron TMC, Thane Municipal Corporation,
Thane, Unity Infraproject Ltd. |
Rs. 92.757 |
|
|
Others |
Rs. 174.177 |
|
|
Total
|
Rs.
1769.140 |
MANAGEMENT DISCUSSION AND ANALYSIS
Industry Structure - General
Strong political
will and solid macroeconomic fundamentals has ensured robust all-round growth of
the Indian economy during the immediate past thee years. The economy recorded a
growth of 9.0% & 9.2% in 2006-07 and 2005-06 respectively. Entrenchment of
the higher growth trends, particularly in manufacturing and infrastructure has
boosted sentiments, both within the country and abroad. The overall
macroeconomic fundamentals are robust, particularly with tangible progress
towards fiscal consolidation. With an upsurge in investment, the outlook is
distinctly upbeat. There is a sharp increase in the investment rate supported
by gross domestic capital formation to the extent of 33.08 per cent during
2006-2007 fiscal that has sustained the industrial performance and reinforces
the outlook for growth.
Government has expressed through the economic survey 2006-2007 that provision
of quality and efficient infrastructure is essential to realize the full
potential of the growth impulses surging through the economy.
There is
now a widespread consensus with government and allied sectors that exclusive
dependence on government for the provision of all infrastructure services
introduces difficulties concerning adequate scale of investment, technical
efficiency, proper enforcement of user charges, and competitive market
structure. Hence a government sector has contemplated the upsurge of Public
Private Partnership principles.
As a policy, Government is actively pursuing public-private-partnerships
(PPP's) to bridge the infrastructure deficit in the country. Government has
taken several initiatives during the last three years to promote PPP's in
sectors like power, ports, highways, airports, tourism and urban
infrastructure. Under the overall guidance of the Committee of Infrastructure
headed by the Prime Minister, the PPP programme has been finalized and the
implementation of the various schemes is being closely monitored by the
constituent Ministries/Departments under this programme.
Massive deficits in infrastructure services are in the process of wiping out,
by the government. Despite becoming the second fastest growing and the fourth
largest economy of the world, India continues to face large gaps in the demand
and supply of essential social and economic infrastructure and services.
Rapidly growing economy, increased industrial activity, burgeoning population pressure,
and all-round economic and social development have led to greater demand for
better quality and coverage of water and sanitation services, sewerage and
drainage systems, solid-waste management, roads and seaports, and power supply.
Increased demand has put the existing infrastructure under tremendous pressure
and far outstripped its supply.
In the water sector, 90% of the urban population has access to potable water
supply; the actual availability of water in the cities is only 5-6 hours a day.
Less than 60% of the households have sanitation and less than half have tap
water on their premises. About 40 million people are estimated to be living in
slums. Poor urban development is not only undermining the quality of life for
India's urban citizens but also constraining local and national growth. As much
as 70% of irrigation and 80% of domestic water requirement is met from
groundwater, which has meant haphazard and rampant use of aquifers and
depleting water table.
In the Roads and ports, India's road network continues to suffer from low
capacity, low coverage, and low quality. 40% of villages do not have access to
all weather roads. Only 12% of the national highways are four-lane. The traffic
situation in the cities has worsened due to a massive increase in personal
vehicles, inadequate city roads, and poor quality of public transport. Airport
and seaport infrastructure and train corridors are strained under capacity
constraints.
Hence Government has increased its spending on infrastructure through a series
of national programs such as the National Highway Development Program (NHDP),
Bharat Nirman, Providing Urban Services in Rural Areas (PURA), Jawaharlal Nehru
National Urban Renewal Mission (JNNURM), the Prime Minister's Rural Roads
Program, National Rail Vikas Yojana, National Maritime Development Program
(NMDP), airport expansion programs, etc. The government acknowledges through
various policy documents that investment in infrastructure will have to be at
the same rate as the economic growth that is being targeted. In other words,
gross capital formation in infrastructure (GCFI), which has remained around 4%
of GDP during 1997-98 up to 2003-04, needs to be increased progressively and
rapidly.
INDUSTRY STRUCTURE - SPECIFIC TO
PRATIBHA INDUSTRIES LIMITED
Pratibha Industries Limited has significantly increased its presence in the
infrastructure sector as a whole and more specifically in the segments of core
competence, which includes water supply and urban infrastructure. Their Company is committed to further strengthen
its presence in these segments by focussing on all the sub segments falling
under urban infrastructure, as has been the case in water supply and water
management. Following are the segments, which their Company will focus on during the current fiscal:
1. Water Projects including treatment, re-cyclanation, storage &
distribution
2. Urban
Infrastructure
* Airports, * Malls [retail sector requirements], * Construction of new age high
rise buildings, * Mass rapid transit systems, * Sea Links, * Car Parks, *
Tunneling Projects related to Water Supply, MRT, etc. * Construction of Modern
Railway Stations
3. EPC
contracts in thermal power plants
4. EPC
Contracts in oil and gas distribution, including supply of HSAW Pipes
5. Road
Projects
Technical expertise gained over the years, strategic alliances [joint ventures]
with overseas construction companies and increased net-worth ensures that
their Company is much better placed to
qualify for the projects which are more complex in nature and significantly
bigger in terms of value.
Opportunities
The economic survey of India 2006-07 envisages an investment of Rs.14500000
millions or about US$320 billion for the infrastructure sector during the
Eleventh Five Year Plan. These investments are to be achieved through a
combination of public investment, public-private-partnerships (PPP's) and
exclusive private investments, wherever feasible. Investment requirements by
2012 estimated by the Committee on Infrastructure, headed by the Prime
Minister, in some of the key sectors are: Rs.2200000 millions for modernization
and up-gradation of highways; Rs.400000 millions for civil aviation; Rs.500000
millions for ports; and Rs.3000000 millions (of which 40 per cent is expected
to come from the private sector through PPP route) for the Railways.
In the context of such government policies, their company stands in a much better position to enhance its capacity
utilisation and optimum utilisation of available resources. Their company is in the process of business
process reengineering & implementation of ERP project during last &
current fiscal which has vast potential to enhance operating margins of the
company along with supporting to the competitive bidding & efficient
information system.
The order book position of the Company has substantially increased to more than
Rs. 11000 millions. In view of Company's technical expertise, ability to form
strategic alliances, enhanced financial strength and most importantly given the
huge business opportunity for the entire Infrastructure Industry, their Company further foresees substantial
increase in its presence in allied segments of infrastructure.
INDUSTRY CONCERNS AND COMPANY'S
PERSPECTIVE
Financial institutions on various occasions have expressed following concerns
relating to companies operating in the infrastructure sector.
Pratibha
Industries Limited is committed to operate in the overall interest of its
investors and therefore shall be bidding for projects where proper financial
and technical tie-ups are in place [in case of EPC contracts] and proven
funding mechanism [escrow mechanism] is established in case of annuity/
deferred payment / BOT / BOOT projects.
1. Concern
The Company is a strong player in water supply segment. Slow down in this
segment could impact the Company's future growth prospects, as also the
operating margins.
Company's Perspective
Company, which started as a water laying player in the water supply segment,
has graduated into a full fledged water supply and management company which
provides its clients with one stop solution for design, engineering,
construction, commissioning and operation of mega water supply projects. It has
extremely strong presence in this sector and with the added qualifications, the
high entry barriers for new players and huge potential yet to be explored in
this segment, their Company foresees an
extremely healthy and sustained growth in this segment, in the years to come.
Apart from water segment, their Company
has also established itself in the following segments of urban
infrastructure:
a. Modern mega retail segment projects like construction of malls, hotels,
etc.,
b.
Airports,
c.
Tunneling Projects,
d.
Railway Stations,
Company also has documented presence in inter-city road / flyover / bridge
projects and with the SAW pipe division starting its spiral mill in the first
quarter of 2007-08, their Company is
poised to entering the lucrative oil and gas EPC segment. All the above sectors
are validly believed to provide their
Company with enormous future business potential, with enhanced operating
margins and the same can be substantiated by its current order book position in
these sectors.
2. Concern
The construction sector is now open to global competition from Companies which
are highly skilled and possess strong technical qualifications and extremely
high financial capabilities. Entry of such players could possibly increase
competition and may present enhanced entry barriers. This could result in
putting pressures on net margins of the Company, in the projects it intends to
bid in future.
Company's Perspective
Documentary evidence proves that the Indian economy is witnessing development
of mega sized projects, which necessitates availability of suitable technical
qualifications, availability of past experience coupled with financial
strength, with the construction companies wishing to bid for such projects.
Their Company has remained focused on
its core segments and over the years developed expertise in the segments in
which it operates.
Further,
their Company could also identify the
future technology proposed to be used for development of mega projects in its area
of operation, resultant of which were the strong consortiums / joint ventures
formed during the financial year under reference. Ostu-Pratibha J V,
ITD-Pratibha Consortium and various other sector / project specific
partnerships have ensured that their
Company has already addressed the valid concern raised.
They are happy to inform that the targets set by
their Company last year, of making a
strong entry into segments like tunneling; urban-infrastructure and development
of airports have been achieved. Their
Company now will focus on the lucrative oil and gas EPC segment to
further propel growth.
3. Concern
Rise in interest cost:-
The infrastructure projects are getting more complex and capital extensive, which
required huge capital investment. The current trend of increase in the interest
rates may adversely affect the margins of the Companies in infrastructure as
the debt is major source of finance for the companies operating in the segment.
As part of financing such huge projects is undertaken through combination of
debts and internal sources, the rise in the interest cost will increase the
cost of funds to a great extent and may impact profitability adversely.
Company's Perspective
The Company has been very conservative when it comes to finance planning and
capital resource deployment. The Company is and will continue to strive hard to
maintain the desired level of debt equity ratio, which indirectly will negate
the impact of rise in interest rates. Similarly, their Company is looking at other debt
instruments, like buyers credit to ensure that the impact of interest rates is
minimal. Last but not least, their
Company is currently executing only one project on PPP basis which had
provisioning for rise in interest rates and all the future projects of similar
nature will be bid, keeping in mind the current interest scenario. As such, the
impact of interest rates will be extremely minimal to the Company bottom-line,
as is visible from the financial results under review.
4. Concern
Rise in input cost might affect the
Company's margin assumption.
Unprecedented
rise in prices of major raw materials like steel, cement, which form the major
cost of construction work, might affect margins. On an average, material cost
account for 40% of operating cost. Though most of the projects have price
escalation clause for increase in inputs, these clauses do not cover the
incremental cost for industry players without long term agreement for supply of
cement and steel. This is mainly due to linking of price escalation clause with
the Wholesale Price Index (WPI) in most public funded projects. Therefore the
rise in prices of these materials has to be borne by construction companies
which might affect margins.
Company's Perspective
All the projects save and except the PPP project, being executed by their Company for the Government Sector have the
price variation clause, which insulates the Company from such variations as
mentioned above. Moreover, the projects being executed for the private sector
have star price mechanisms in place, which ensures that any and every rise in
inputs is passed / made good by the client, thereby keeping their Company's estimated profit unaltered. Worth
mentioning is the fact that substantial spurt in infrastructure project in all
segments and more specifically in the segments their Company operates, as ensured fair pricing, which provides for
such variations in the commodity prices. Also, the main commodities consumed by
their Company are cyclical in nature
and the projects having an execution period ranging from one year to three
years, provide their Company with an
opportunity to even out its purchases of the commodity under reference. Thus,
their Company is fairly protected from
increase in price of main inputs / commodities.
Outlook
Company has an extremely strong order book position, which comfortably places
it to achieving the targeted revenues and the bottom-line. With big size
projects from water supply, environmental engineering, urban-infrastructure
already in its fold and the proposed entry in the oil and gas EPC sector,
their Company is confident of bettering
its EBITDA in the coming years. The key reasons are:
1. All the projects of the Company are linked to a pre-determined index [price
variation clause] and star price mechanism, which will help improve EBITDA
margins of the Company.
2. There has been a significant change in the order mix of their Company.
Even
though the water supply segment will continue to add revenue and grow in
absolute sense, projects from urban infrastructure segment like airports,
malls, tunneling and allied projects, will be the added growth engines which
will boost the top line and significantly improve the EBITDA margins. The share
of such segments was negligible in the order backlog of immediate previous
year, with roads and water supply projects contributing to a significant chunk.
However, their Company's current order
backlog exhibits that the booking from these apparently new segments is in
excess of 30% to the total order book.
3. Margins are also improving at the bidding stage: Over the past couple of
years, the Company has noticed a perceptible improvement in the margins for
infrastructure projects. They believe
the following reasons are the key drivers:
* Increase in average order size, limiting the number of players.
*
Increased number of orders, permitting companies to pick and choose
* Large
part of the orders is being awarded on `Public Private Partnerships', BOT, BOOT
and annuity basis, which restricts competition from unorganized players.
* More
complex projects in segments like airports, water and effluent treatment and
hydro power are picking up. Such projects yield higher margins. They notice that most construction companies are
enhancing their role as developers by taking minority stakes in several
projects.
4. The year under reference saw their
Company enter into consortiums with a reputed global Construction
Companies and bag big size projects in the new segments of operation.
Their Company also was awarded with big
size projects in the water supply and management segment. It is interesting and
heartening to note that their Company
which till 2005 had to its credit of having executed a Rs.450..00 million project,
as its biggest project, today is executing 80% percent of projects which are of
size Rs.1000.00 million and above. This exhibits their Company's success in building up
prequalifications, both in terms of size of contracts and also across segments.
Further, enhancement in pre-qualifications will result in margin improvement,
as typically, companies have to otherwise share 1.5-3.5% of the project cost
with the joint venture partners.
Fixed
Assets
v
Goodwill
v
Office
Premises
v
Plant
& Machinery
v
Furniture
& Fixture
v
Electrical
Installation
v
Office
Equipment
v
Vehicles
v
Computer
Software
As Per Web:
Profile
Subject is the flagship company of the Pratibha Group
is dedicated and committed to providing the society at large with quality
infrastructure in its field of expertise which currently include design,
engineering and execution/construction of complex & integrated water
transmission & distribution projects, water treatment plants, elevated and
underground reservoirs, mass housing projects, commercial complexes, pre-cast
design & construction, road construction and real estate.
The company which started with pre-cast products in just over two decades, has
created a technical niche for itself graduating into a multifunctional
construction and infrastructure development company of repute with annual turn
over of INR 3250 million (~USD 75 million) and an order book position of INR
7000 million (~USD 150 million). Our rapid and consistent growth over the years
bear testimony to focus on dedication, quality of production and services
through continuously evolving technologies along with timely execution of
projects which has won us accolades and repeated business from clientele.
Origin and Growth
Pratibha Industries was established in 1982, by a dynamic young
entrepreneur Mr. Ajit B. Kulkarni. The firm started its foray with
manufacturing of SFRC manhole covers and frames, which were designed and
introduced as a replacement to the conventional cast iron manholes cover and
frames. Substantial saving on costs and elimination of theft vis-ŕ-vis the
conventional cast iron product ensured huge acceptability with practically all
government clients throughout the country. Success in launch of the initial
product saw the then partnership firm graduate from strength to strength, by
developing and marketing various other pre-cast products.
Till the early ninety’s the firm was focusing only on pre-cast products.
In 1992, the firm decided to extend its presence in the civil construction
industry and started participating in bids invited for such projects by
Government / Semi- government Departments. In-depth technical knowledge and
sound management ethics ensured that the company received its first major
mass-housing project [INR125.00 million] from CIDCO of Maharashtra Limited in
the same year. Being the first project and an opening towards various similar
projects, the firm completed the work successfully in seven months against the
scheduled completion period of nine months. Timely implementation of this
project provided the company opportunities and subsequent orders from IRWO
(Indian Railway Welfare Organization), AWHO (Army Welfare Housing Organization)
and reputed clients.
In 1994, the Company realized that water supply projects hold great
potential. However, it did not possess any established expertise in execution
of such projects. Inorganic route through formation of Joint Venture with a
competent fellow contractor was the only way out and therefore, the first
strategic alliance with Coromandal Prescrete (P). Limited, a Hyderabad based
Contractor was inked. The Joint Venture successfully bid and was awarded one
package from the prestigious Hitawne Water Supply Scheme. Thus, started the
journey of Pratibha in water supply projects, a segment from which the Company
derives more than 70% of its revenues.
While the company was bidding for the various small schemes in the water
supply segment, a fact dawned that without established source of the major
input [steel pipes], it was not possible to hold a competitive edge over its
competitors. This insight saw the birth of the mechanical division of the
Group. The Company took over Teknoworks (India), a Mumbai based firm engaged in
manufacture of mechanical equipments and structures, in 1995. Takeover of this
firm provided the mechanical expertise which Pratibha was looking for to equip
itself with the much sought competitive edge.
Since, the firm Teknoworks (India) was situated in proper Mumbai; there
were restrictions as regards the open space and expansion. Further, it was not
entitled to any backward area benefits. It was then in 1996, that Pratibha
Pipes and Structural (P). Limited [PPSPL] was incorporated. Initially, the new
group company was set-up as a backward integration to support the growing pipe
and allied requirements of Pratibha Industries Limited. Today, ten years later,
the industry recognizes PPSPL as one of the better established players in the
field of SAW pipe manufacturing and design / construction of specialized custom
built structures, apart from manufacture of heavy walled thickness pipes. The
Company has a turnover of nearly INR 1000 million and derives 30% of its
revenues from exports.
Till 2001, the operations of PIL were restricted to the State of
Maharashtra alone. The next challenge for Pratibha was to consolidate and
strengthen its engineering department to make its presence felt in more complex
and integrated Water Supply projects, as also to form alliances with fellow
contractors of repute to ensure fulfillment of this goal. The Company started
working towards this by establishing a design department and bidding for
projects of complex nature, which also involved designing, in Joint Venture
with reputed contractors like Petron Civil Engineering (P). Limited and Unity
Infra-projects Limited. The efforts bore fruits in 2003, when the company was
awarded multi-million projects by Mumbai Municipal Corporation, Gujarat Water
Supply and Sewerage Board, and Delhi Jal Board, along with other Governmental
Agencies. It was during this period that the company also expanded the segments
of operation by entering and receiving work orders for intra-city road projects.
Though, it saw opportunity in NHAI, it consciously decided to abstain from
bidding in view of the heavy capital intensive nature of these projects. It
maintained its presence in mass-housing and allied construction activities by
building modern age railway stations, plant buildings and residential complexes
on pure contractual basis.
By 2005, the company had established an inherent expertise in design,
construction, operation and maintenance of reasonably sized complex water
supply projects, water treatment plants and distribution systems, as also in
the other segments in which it was operating. It was realized that there was
shift in the government mindset and certain other project implementing agencies
and there was determined focus to promote projects on PPP [Public Private
Partnership] basis. Though the company was executing mid sized projects on
annuity and deferred payment models, the then net-worth and accessibility to
debt funds was limited and could prove to be detrimental to the Company’s
future growth. There were two paths available – either to maintain the then
existing status and subsequently to act as a sub-contractor to bigger
contractors or to strengthen its financial position in quest for a place
amongst the top construction companies. The Management of the company opted for
the latter. It was decided to approach the capital market to raise requisite
funds through dilution of 30% of the company’s existing equity base. The
Company’s maiden issue hit the market in the first quarter of 2006 and received
overwhelming response and was subscribed by over 24 times. The funds raised
from the IPO were to be deployed for long term working capital requirements,
equity funding for BOOT / PPP projects and setting up of an API accredited
spiral pipe manufacturing plant. The Company’s initial and established success
in the water segment, due to the availability of proper back up, strengthened
the belief that back up of an API accredited pipe manufacturing unit would add
as a fillip to its future plans of foray into the lucrative oil and gas pipe
transmission EPC projects.
Currently, the order book position of the Company reads in excess of INR
6500 million and it has drawn ambitious growth plans. The company over the next
few years [2010-2011] on standalone basis or through Joint Ventures, strategic
alliances and acquisitions [if a
suitable opportunity arises] proposes to have strong presence in road, retail,
urban, oil and gas transmission and power segments of the infrastructure
sector, apart from water supply segment. It also proposes to be global player
in pipe segment and market spill over capacities after accounting for in-house
consumption. The said projects will be executed on both, EPC and PPP basis.
In line with the
details provide hereinabove, the Saw Pipe Division of Pratibha Industries
Limited is being set-up with the view of providing competitive edge and
facilitating smooth and successful entry of Pratibha Industries Limited in Oil
and Natural Gas Distribution segment.
The facility would also enhance the company’s competitive in the water
distribution segment in which, it already has a deep rooted and well documented
presence. Steel Pipes have been recognized as life-lines in developed and
developing economies. Pipes have apart from water and oil and gas; have utility
in sewerage, interplant piping ands allied infrastructure activities.
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 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.39.27 |
|
UK
Pound |
1 |
Rs.77.33 |
|
Euro |
1 |
Rs.57.51 |
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 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--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 |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
66 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial condition (40%) Ownership background
(20%) Payment record (10%)
Credit history (10%) Market trend (10%) Operational size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses
an extremely sound financial base with the strongest capability for timely
payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses
adequate working capital. No caution needed for credit transaction. It has above
average (strong) capability for payment of interest and principal sums |
Large |
|
56-70 |
A |
Financial
& operational base are regarded healthy. General unfavourable factors
will not cause fatal effect. Satisfactory capability for payment of interest
and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall
operation is considered normal. Capable to meet normal commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable
& favourable factors carry similar weight in credit consideration. Capability
to overcome financial difficulties seems comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse
factors are apparent. Repayment of interest and principal sums in default or
expected to be in default upon maturity |
Limited with full security |
|
<10 |
C |
Absolute
credit risk exists. Caution needed to be exercised |
Credit not recommended |
|
NR |
In
view of the lack of information, we have no basis upon which to recommend
credit dealings |
No Rating |
|