MIRA
INFORM REPORT
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Report Date : |
01.06.2008 |
IDENTIFICATION
DETAILS
|
Name : |
RICO AUTO INDUSTRIES LIMITED |
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Registered Office : |
69 K.M. Stone,
Delhi-Jaipur Highway, Mohindergarh, Dharuhera, District Rewari- 122 106,
Haryana |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
08.03.1983 |
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Com. Reg. No.: |
05-23187 |
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CIN No.: [Company
Identification No.] |
L34300HR1983PLC023187 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
RTKR01725D |
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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 : |
Manufacturing of
auto components for two-wheelers rear and front wheel hubs, clutches, brake
systems, engine housings, crank housings, etc. |
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 10238400 |
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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 satisfactory track. Trade relations are fair.
Payments are correct and as per commitments. The company can
be considered good for any normal business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered
Office / Dharuhera
plant : |
69 K.M. Stone,
Delhi-Jaipur Highway, Mohindergarh, Dharuhera, District Rewari- 122 106,
Haryana, India. |
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Tel. No.: |
91-1283-42411-42417
(7 Lines) / 91-1274-267314 to 319 |
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Fax No.: |
91-1283-42418 |
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E-Mail : |
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Website : |
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Head /
Corporate / Factory Office
: |
38 K.M. Stone, Delhi-Jaipur
Highway, Khandsa, Gurgaon- 122 001, Haryana, India |
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Tel. No.: |
91-124-6372911 /
6373212 / 2824000 / 2824221 / 2824000 |
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Fax No.: |
91-124-6372913 /
3359 / 2824200 |
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E-Mail : |
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Factory : |
69 K.M. Stone, Delhi-Jaipur Highway, Mohindergarh, Dharuhera, District
Rewari- 122 106, Haryana, India |
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Tel. No.: |
91-1283-42411-42417
(7 Lines) |
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Fax No.: |
91-1283-42418 |
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E-Mail : |
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Agroils division: |
Silor Road,
Kota-Jaipur Highway, Bundi - 323 001, Rajasthan, India |
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Overseas Office: |
USA Office:- 6338 Sashabaw Clarkston UK
Office The Royals Plantaganet House |
DIRECTORS
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Name : |
Mr. Chandra
Mohan |
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Designation : |
Chairman |
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Name : |
Mr. Anup Singh |
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Designation : |
Director |
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Name : |
Mr. Prof. V K
Bhalla |
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Designation : |
Director |
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Name : |
Mr. Kanwal Monga |
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Designation : |
Director |
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Name : |
Mr. Amarjit
Chopra |
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Designation : |
Director |
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Name : |
Mr. John T
Sheffler |
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Designation : |
Director |
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Name : |
Mr. Dr. Ashok
Seth |
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Designation : |
Director |
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Name : |
Mr. Rakesh Kapur |
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Designation : |
Director |
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Name : |
Mr. B M Jhamb |
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Designation : |
Company
Secretary |
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Name : |
Mr. Arun Kapur |
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Designation : |
Joint Managing
Director |
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Date of
Birth/Age : |
51 Years |
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Qualification
: |
B.A. |
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Experience : |
29 Years |
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Date of
Appointment : |
01st
May, 1985 |
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Last
Employment |
St Manager Rico
Industries, Ludhiana |
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Name : |
Mr. Arvind Kapur |
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Designation : |
Managing Director |
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Date of
Birth/Age : |
54 Years |
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Qualification
: |
B.sc President, Management Program from Havard Business School USA |
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Experience : |
35 Years |
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Date of
Appointment : |
16th December, 1984 |
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Last
Employment |
Partner Rico Industries, Ludhiana |
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Audit Committee |
Mr. Anup Singh Chairman Mr. Prof. V K
Bhalla Mr. Amarjit
Chopra |
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Shareholders' Grievance
Committee |
Mr. Anup Singh Chairman Mr. Prof. V K
Bhalla Mr. Amarjit
Chopra Mr. Rakesh Kapur |
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Designation : |
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Remuneration
Committee |
Mr. Anup Singh Chairman Mr. Kanwal Monga Mr. Amarjit
Chopra |
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Date of
Birth/Age : |
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Senior
Executives |
Mr. O P Aggarwal Mr. R S Kundi Mr. N K Sethi Mr. G S Bisht Mr. R M
Sabbarwal Mr. Rajiv Bajaj Mr. Dr. S
Chithambaram Mr. Arvind
Sharma Mr. S K Jain Mr. K G Ahuja Mr. Surendra
Singh Mr. Vivek Hazari Mr. Anuj Singhal Ms Shikha Kapur Mr. Rajiv
Miglani Mr. Rakesh
Nagpal |
KEY EXECUTIVES
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Name : |
Mr. B.M. Jhamb |
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Designation : |
Company Secretary |
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Address : |
Rico Auto
Industries Limited, 38KM, Stone, Delhi-Jaipur Highway, Gurgaon-122001,
Haryana, India |
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Tel. No.: |
91-124-2824221/
2824000 |
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Fax No.: |
91-124-2824200 |
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E-Mail : |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders (as on 31.03.2007):- |
No. of Shares |
Percentage of
Holding |
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Shareholding of
Promoter and Promoter group |
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Indian |
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Individuals / Hindu Undivided family |
27501148 |
21.90 |
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Bodies Corporate |
30459790 |
24.25 |
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Foreign |
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Individuals (Non resident
Individuals / Foreign Individuals) |
79000 |
0.06 |
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Public
Shareholding |
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Institutions |
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Mutual Funds / UTI |
21394037 |
17.03 |
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Financial Institutions / Banks |
8450 |
0.01 |
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Insurance Companies |
3189651 |
2.54 |
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Foreign Institutional Investors |
20167572 |
16.06 |
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Non Institutions
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Bodies Corporate |
2036886 |
1.62 |
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Individuals |
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Individuals shareholders holding nominal share capital upto Rs. 0.100
million |
13157211 |
10.48 |
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Individuals shareholders holding nominal share capital excess Rs.
0.100 million |
4713900 |
3.75 |
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Any other |
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NRI |
375028 |
0.30 |
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Foreign Companies |
1970000 |
1.57 |
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OCBs |
528790 |
0.42 |
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Trusts and Foundations |
3537 |
0.00 |
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Total
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125585000 |
100.00 |
BUSINESS DETAILS
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Line of
Business : |
Manufacturing of
auto components for two-wheelers rear and front wheel hubs, clutches, brake
systems, engine housings, crank housings, etc. |
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Products : |
v
Automotive
Parts v
Components
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PRODUCTION STATUS (as on 31.03.2007):-
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Particulars |
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Actual
Production |
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Auto Parts |
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44478199 |
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Dies and Moulds |
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784 |
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Others |
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|
5070 |
GENERAL
INFORMATION
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Suppliers : |
v Hero Honda Motors Limited, India v Hindalco, India v Balco, India v Nalco, India v FCC Company Limited, Japan v China Hu-Nun Enterprises, Hong Kong v Aaress Auto
Private Limited v Bansal Precision
Screws Private Limited v Dee Kay Plastics v Dinesh Packers v Jaycee Steels
Industries v K.L. Saw Mills v Karush Auto
Private Limited v Leo Fastners v Mech Well Tools
& Gauges Private Limited v Premier Plastics v Param
Engineering v Raga Engineers v Sidhartha Tools
Private Limited v Sharda Engineering
Works v Sanewal Auto
Engineers Private Limited v SPL Engineers
Private Limited v Survoday
Engineering Works v T.K.W. Fasteners v The Taj
Industries |
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Customers : |
v General Motors, USA v Eaton, UK v Cummins, UK v Cummins, USA v Matsusaka Engineering Company Limited,
Japan. v Maruti Udyog Limited, India v Shriram Honda Power Equipments Limited,
India v Hero Honda Motors Limited, India v Kinetic Honda Motors Limited, India v Amtek Auto Limited, India v GE Motors Limited, India v Aaress Auto Private Limited v Bansal Precision Screws Private Limited v Global Machine and Tool Company v JMK Soni Exports Private Limited v Nipman Fasteners Industries Private
Limited v Onasis Auto Products Private Limited v Pagan Paints & Chemical Private
Limited v Sidhartha Tools Private Limited v SPL Engineers Private Limited v Weldo Technology Private Limited v Tata v Perkins v Komatsu v Caterpillar v Volvo v Jaguar v Ford v GM v Honeywell v Magna v Q P Pump |
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No. of
Employees : |
1800 |
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Bankers : |
v State Bank of
India v ICICI Bank Limited v Standard
Chartered Bank v Citibank N.A. v IDBI Bank
Limited v Axis Bank
Limited v HDFC Bank
Limited v HSBC Bank
Limited v ABN Amro Bank v The Bank of Nova
Scotia v Kotak Mahindra
Bank Limited v Deutsche Bank AG v
DBS Bank Limited |
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Facilities : |
TERM LOANS i) Term Loan
from ICICI Bank Limited is secured by way of first pari-passu charge/mortgage
by way of deposit of Title Deeds in respect of the Company's immovable
properties both present and future and by way of hypothecation of the
Company's all movable assets (subject to banker's prior charges). Term Loan from
HDFC Bank Limited is secured against exclusive charge on industrial plot
measuring approximately 4 acres situated at Khandsa, Distt. Gurgaon
(Haryana). Charge satisfied on 31.07.2006. Term Loan from
DTI Bank Limited is secured by way of first pari-passu charge/mortgage by way
of deposit of Title Deeds in respect of the Company's immovable properties
both present and future and by way of hypothecation of the Company's all
movable assets (subject to banker's prior charges). Charge satisfied on
18.04.2007. Rupee Term Loan
from HSBC Limited is secured against first charge on pari-passu basis by way
of hypothecation of the Company's movable assets (subject to banker's prior
charges) and by way of mortgage of deposit of Title Deeds in respect of
Company's immovable properties both present and future. CHF Loan from
HSBC Limited is secured by way of first pari-passu charge by way of
hypothecation on movable assets and mortgage by way of Title Deeds of
immovable properties. ECB Loan from
Citibank N.A. is secured by way of exclusive charge on the Plant and
Machinery / Fixed and movable purchased out of the facility. Rupee Term Loan
from ABN Amro Bank is secured by way of first pari-passu charge on movable
fixed assets both present and future, ii) Loans and Advances
from Banks are secured by hypothecation of bills receivable and inventories.
IDBI Bank's facility upto Rs.170.000 millions is further secured by way of
second pari-passu charge over the immovable property of the Company. Standard
Chartered Bank facility upto Rs.200.000 millions is further secured by way of
first pari-passu charge over the machinery and immovable property. State Bank of
India facility upto Rs.150.000 millions is further secured by second
pari-passu charge over immovable properties of the Company. |
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Banking Relations : |
Good |
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Auditors : |
Gupta Vigg &
Company Chartered
Accountants, New Delhi, India |
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Associates/Subsidiaries
: |
v Rico Daewoo Precision Industries Limited v FCC Rico Limited v Inapex Limited v Rico Castings Limited, Ludhiana, Punjab v Rico Auto Industries Inc. USA v Rico Auto Industries (UK) Limited v FCC Rico Limited Subsidiaries: v Rico Softtech Limited v
Rico Auto
Industries Inc., USA |
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Joint Venture
: |
FCC Rico Limited |
CAPITAL STRUCTURE
(as on 31.03.2007)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
250000000 |
Equity Shares |
Rs. 1/- each |
Rs.250.000 millions |
|
5000000 |
Redeemable Preference Shares |
Rs. 10/-
each |
Rs.50.000
millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
125585000 |
Equity Shares |
Rs. 1/- each
|
Rs.125.600
millions |
Notes:
(Out of above Shares 5358500 Equity Shares of Rs.10/- each were allotted
as fully paid-up by way of Bonus Shares)
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
125.600 |
122.600 |
107.170 |
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2] Warrants |
0.000 |
21.000 |
0.000 |
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3] Reserves & Surplus |
2434.000 |
2085.000 |
862.805 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
2559.600 |
2228.600 |
969.975 |
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LOAN FUNDS |
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1] Secured Loans |
2378.100 |
1360.200 |
1171.316 |
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2] Unsecured Loans |
0.000 |
0.000 |
273.382 |
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TOTAL BORROWING |
2378.100 |
1360.200 |
1444.698 |
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DEFERRED TAX LIABILITIES |
347.700 |
277.500 |
237.639 |
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TOTAL |
5285.400 |
3866.300 |
2652.312 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
4143.000 |
3048.300 |
2307.551 |
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Capital work-in-progress |
153.100 |
268.100 |
54.702 |
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INVESTMENT |
42.400 |
42.400 |
42.442 |
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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 |
608.900
|
424.600 |
252.648 |
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Sundry Debtors |
906.100
|
801.000 |
899.854 |
|
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Cash & Bank Balances |
63.900
|
19.000 |
12.023 |
|
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Other Current Assets |
0.000
|
0.000 |
0.000 |
|
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Loans & Advances |
420.100
|
329.100 |
202.295 |
|
Total
Current Assets |
1999.000
|
1573.700 |
1366.820 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
1067.700
|
1087.000 |
999.297 |
|
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Provisions |
0.000
|
0.000 |
122.201 |
|
Total
Current Liabilities |
1067.700
|
1087.000 |
1121.498 |
|
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Net Current Assets |
931.300
|
486.700 |
245.322 |
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MISCELLANEOUS EXPENSES |
15.600 |
20.800 |
2.295 |
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TOTAL |
5285.400 |
3866.300 |
2652.312 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
7704.000 |
6681.800 |
6936.724 |
|
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Other Income |
118.000 |
97.600 |
0.000 |
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Total Income |
7822.000 |
6779.400 |
6936.724 |
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Profit/(Loss) Before Tax |
369.700 |
486.900 |
496.296 |
|
|
Provision for Taxation |
111.600 |
157.800 |
143.960 |
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|
Profit/(Loss) After Tax |
258.100 |
329.100 |
352.336 |
|
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Export Value |
1190.900 |
859.200 |
332.568 |
|
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Import Value |
869.400 |
700.100 |
835.998 |
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Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses |
6870.100 |
5875.600 |
|
|
|
Financial Charges |
151.600 |
77.500 |
6440.428 |
|
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Depreciation & Amortization |
425.400 |
331.900 |
|
|
|
Other Expenditure |
5.200 |
7.500 |
|
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Total Expenditure |
7452.300 |
6292.5 |
6440.428 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
31.03.2008 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
4th
Quarter |
|
Sales Turnover |
1800.800 |
1667.700 |
1758.100 |
1860.500 |
|
Other Income |
6.500 |
134.100 |
14.400 |
112.700 |
|
Total Income |
1807.300 |
1801.800 |
1772.500 |
1973.200 |
|
Total Expenditure |
1582.100 |
1481.100 |
1539.200 |
1739.900 |
|
Operating Profit |
225.200 |
320.700 |
233.300 |
233.300 |
|
Interest |
52.800 |
60.900 |
68.100 |
77.100 |
|
Gross Profit |
172.400 |
259.800 |
165.200 |
156.200 |
|
Depreciation |
121.400 |
118.000 |
118.200 |
115.600 |
|
Tax |
9.100 |
6.300 |
12.200 |
1.700 |
|
Reported PAT |
27.300 |
122.000 |
25.200 |
48.000 |
KEY RATIOS
|
Year |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.78 |
0.88 |
1.24 |
|
Long Term Debt-Equity Ratio |
0.56 |
0.61 |
0.86 |
|
Current Ratio |
0.92 |
0.82 |
0.75 |
|
TURNOVER RATIOS |
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|
Fixed Assets |
1.72 |
1.99 |
2.54 |
|
Inventory |
16.96 |
22.53 |
34.08 |
|
Debtors |
10.27 |
8.97 |
8.88 |
|
Interest Cover Ratio |
3.44 |
7.28 |
8.94 |
|
Operating Profit Margin(%) |
10.80 |
11.75 |
11.64 |
|
Profit Before Interest And Tax Margin(%) |
5.95 |
7.40 |
8.12 |
|
Cash Profit Margin(%) |
7.80 |
8.87 |
8.64 |
|
Adjusted Net Profit Margin(%) |
2.95 |
4.52 |
5.12 |
|
Return On Capital Employed(%) |
12.31 |
18.94 |
28.43 |
|
Return On Net Worth(%) |
10.84 |
21.70 |
40.05 |
LOCAL AGENCY
FURTHER INFORMATION
History:
The company incorporated in Mar.1983, was converted into a public limited company in Apr.1985. Subject manufactures auto components for two-wheelers rear and front wheel hubs, clutches, brake systems, engine housings, crank housings, etc. It has also diversified into the production of gears and oil pumps for Maruti and gear shift drums for two-wheelers and installed pressure die casting machines to manufacture diesel generating sets, engine frames and housings.
The company came out with a public issue of equity shares and NCDs with warrants and had financed the same for manufacturing and machining facilities for graded/spheroidal graphite machines, iron castings with automatic disamatic mould line with CNC machining facilities, and an installed capacity of 12,000 tpa for such castings in 1993.
The subsidiaries of RAI are Rico Auto Industries (UK) Ltd and Rico Auto Industries Inc., USA.
The company is moving towards QS 9000 accreditation. Company has entered into JV agreement with Daewoo Precision Industries (DPL), Korea, for OE supplies. Company has another joint venture with FCC Co. Ltd the largest manufacturers of clutches in Japan.
The company has proposed to form an independent project to manufacture Dies and Moulds under name of Rico Dies and Moulds Private Limited, the proposal has twin objective of becoming self-dependent for quality dies and moulds and to reduce the development time for new components.
Rico Agroils Limited (RAL) was merged with the company from Jan.1999. In
1999-2000, production capacities both at Dharuhera and Gurgaon plants were
expanded by investment of Rs. 280 millions.
The Company plans to amalgamate Rico Softech Limited, a wholly owned subsidiary of the company with itself on approval of Shareholders, creditors and other statutory authorities. The company has merged Rico Softech Limited a wholly owned subsidiary with itself with effect from 1st April 2004. Further it is also decided to sell its Agro Division at Bundi Rajasthan on Jan 14, 2004. The company has also disposed off its Agro unit at Silor Road, Bundi Rajasthan to Adani Wilmer Limited during 2004-05 for a consideration of Rs.78.3 millions.
Further the company has sold its 605000 equity shares of Hankook Motors Limited which were entirely written off during the 2004-05 and received a full consideration amount of Rs.0.060 millions.
During 2004-05 the company has planned to set up two new plants one each at Bangalore (Karnataka) and at Manesar (Haryana) to cater the needs of domestic and international OEMs.
The turnover of the Company grew by 14.92 per cent from Rs.7726.800 millions in the previous year to Rs.8879.800 millions in the year under report. The Company has earned a Profit before Interest, Depreciation and Tax (PBIDT) of Rs.946.700 millions which represents an increase of 5.62 per cent over the previous year's PBIDT of Rs.896.300 millions.
OUTLOOK FOR CURRENT YEAR:
The Unaudited Financial Results for the quarter ended 30th June, 2007, already announced, shows a turnover of Rs.2047.000 millions and PBIDT of Rs.223.700 millions for the first quarter of the current year against a turnover of Rs.2143.700 millions and PBIDT of Rs.231.700 millions of the corresponding quarter of the previous year, recorded reduction both in turnover and PBIDT by 4.5 per cent and 3.5 per cent respectively. The Directors are taking steps to improve the margin during the remaining part of the year.
EXPORT:
The export turnover of the Company during the period was Rs.1196.800 millions,
recording a growth of 35 per cent. The export turnover includes sale to Wholly
Owned Subsidiaries amounting to Rs.687.600 millions as against Rs.395.200
millions in the previous year.
During the quarter ended 30th June, 2007 of current year export turnover was Rs.330.100
millions as against Rs.268.100 millions in the corresponding quarter of the
previous year. Further details as regards efforts of the Company on this front
have been dealt with in the Management Discussion and Analysis section of this
report.
NEW PLANTS:
The Company is undertaking continuous endeavours for
expansion of its domestic and overseas customers by implementing new
facilities. For establishing manufacturing facilities, the Company during the
year has purchased:
i) In the State of Tamil Nadu approx. 25 acres of land in SIPCOT
Industrial Growth Centre, Oragadam, Chennai.
ii) In the State of Uttarakhand approx. 16.5 acres of land in Eldeco
Sidcul Industrial Park at Sitarganj.
iii) In the State of West Bengal approx. 10 acres of land in Singur,
Kolkata.
Bhoomi Poojan in Singur was performed on 11th July, 2007. This plant is
expected to start commercial production by September, 2008 to meet the
requirements of Tata Motors.
SUBSIDIARY COMPANIES:
The Company has two Unlisted Wholly Owned Overseas Subsidiaries.
A. Rico Auto Industries Inc. USA
This Company is engaged in the business of trading and manufacturing of Auto Components.
The Company earned a total revenue of Rs.600.600 millions during the financial
year ended 31st March, 2007 as against Rs.449.900 millions in the previous
year, an increase of 33.50 per cent. The net profit of Rs.14.800 millions as
against Rs.10.500 millions in the previous year, recorded a growth of 40.95 per
cent. This Company has not declared any dividend for the financial year ended
31st March, 2007.
This Subsidiary has achieved a turnover of Rs.231.000 millions for the quarter
ended 30th June, 2007 as against Rs.145.700 millions in the corresponding
quarter of the previous year, a growth of 58.55 per cent.
During the financial year and period the Company has not made any additional
investment in this Subsidiary.
The Subsidiary is expecting significant growth during the remaining part of the
current financial year.
B. Rico Auto Industries (UK)
Limited:
This Company is engaged in the business of trading of Auto Components.
The Company earned a total revenue of Rs.18.100 millions during the financial
year ended 31st March, 2007 as against Rs.17.200 millions in the previous year,
an increase of 5 per cent. The net profit of Rs.0.200 million as against
Rs.4.000 millions in the previous year recorded a decrease. This Company has
not declared any dividend for the financial year ended 31st March, 2007.
This Subsidiary has achieved a turnover of Rs.6.200 millions for the quarter
ended 30th June, 2007 as against Rs.1.800 millions in the corresponding quarter
of the previous year, a growth of 245 per cent.
During the financial year and period the Company has not made any additional
investment in this Subsidiary.
The Subsidiary is expecting significant growth during the remaining part of the
current financial year.
JOINT VENTURE COMPANY:
FCC Rico
Limited:
FCC Rico recorded a turnover of Rs.3305.100 millions for the financial year ended 31st March, 2007 as against Rs.2856.800 millions in the previous year, a growth of 16 per cent. The Board of this Company has recommended a dividend of 220 per cent for the year ended 31st March, 2007 and the Company has received an amount of Rs.86.900 millions by way of dividend on its investment.
NEW JOINT VENTURES:
The Company has entered into two new Joint Venture Agreements as follows:
To manufacture Aluminium Alloy Wheels for two wheelers, an agreement has been
signed with Zhejiang Jinfei Company Limited (JINFEI) of China. This Joint
Venture Company will have equity contribution of 92.50 per cent from RICO and
the balance by JINFEI.
JINFEI was founded in 1959, started the manufacturing of Aluminium Alloy Wheels
in 1995 and is now one of the largest manufacturers of Aluminium Alloy Wheels
in China. It is a major supplier of Aluminium Alloy Wheels to Honda, Suzuki,
Yamaha and other Two Wheeler OEMs. Its turnover in 2006 was approximately US$
280 million, with export sales of about US$ 43 million.
The production of this Joint Venture is scheduled to commence in early 2008.
For the purpose a Company has been incorporated under the name of Rico Jinfei
Wheels Limited on 16th July, 2007.
B. To manufacture Hydraulic Brake Systems (HBS), Rico and Continental AG
of Germany have entered into a Joint Venture with 50:50 equity participation.
The JV Company will produce hydraulic brake systems and services consisting of calipers, drum brakes, master cylinders, brake boosters and load sensing proportioning valves for vehicles of all classes. The planned annual production capacity is 1.0 million brake actuation units, 2.0 million brake calipers, 1.5 million drum brakes and 0.5 million load sensing proportioning valves.
Continental AG is a renowned International Automotive Component supplier,
having an Automotive Systems Division in the field of safety products.
Continental is one of the largest suppliers for conventional and electronic brake systems and automotive electronics globally. Continental AG's turnover in the year 2006 was around US$ 20 billion.
Investment in both the Joint Venture Projects is expected to contribute towards
growth and profitability of the Company in the coming years.
FINANCIAL STATEMENTS:
Pursuant to the Listing Agreements, the appended Audited Consolidated Financial Statements of the two Subsidiaries and the Joint Venture Companies, in accordance with Accounting Standards issued by the Institute of Chartered Accountants of India form a part of the Annual Report.
The Statement required under section 212 of the Companies Act, 1956 in respect
of the Subsidiaries of the Company is annexed to this Report along with a
summary of their financial performance. An exemption has been received from
Ministry of Company Affairs, Government of India from annexing the accounts and
other documents pertaining to the subsidiaries.
FIXED DEPOSITS:
During the year the Company has not accepted deposits from
the public under section 58A of the Companies Act, 1956.
MANAGEMENT DISCUSSION AND ANALYSIS
REPORT (MDA):
INDUSTRY STRUCTURE
AND DEVELOPMENTS:
Fiscal 2006-07 has been a good year for the Indian economy in general as GDP growth was above 9 per cent. The Automotive Industry also saw significant growth during this year, with the passenger cars segment growing at about 20 per cent and two wheelers segment growing at about 12 per cent. The Company is particularly involved in these two segments.
Automotive Components Industry in India is growing both on account of robust
domestic automobile volume growth and also on account of increased global
sourcing of auto components from best cost countries like India.
Indian auto components industry's turnover increased from US$ 12 billion in 2005-06 to US$ 15 billion in 2006-07 (growth of 25 per cent) within which auto component exports grew from US$ 2.1 billion in 2005-06 to US$ 2.9 billion in 2006-07 (growth of 40 per cent).
During the year Government of India in consultation with SIAM and ACMA,
published the Automotive Mission Plan 2006-2016 which envisions India:
'To emerge as the destination of choice in the world for design and manufacture
of automobiles and auto components with output reaching a level of US$ 145
billion, accounting for more than 10 per cent of the GDP and providing
additional employment to 25 million people by 2016'.
ACMA in its Vision 20:20:1 forecasts that the Indian auto component industry
will achieve domestic turnover of US$ 20 billion, export turnover of US$ 20
billion and in the process create additional 1 million jobs by 2016.
These figures show significant potential of growth in auto components industry
both for the domestic market and exports from India. Almost all major OEMs in
India are in a growth mode and several new global OEMs are entering the Indian
market. India is also becoming a global hub for compact cars. The Company
perceives a bright future for auto components industry.
OPPORTUNITIES, THREATS AND
OUTLOOK:
The Company sees opportunities both in the domestic and overseas markets with existing and new customers. To fully explore opportunities with all customers, the Company has developed dedicated account teams to focus on each customer. The Company has also taken steps to expand at various locations in India close to its new customers plants.
The rising interest rate is a matter of concern as it impacts the automotive
demand for vehicles (two wheelers and passenger cars) and also the cost
structure of auto component manufacturers.
Availability and cost of power is another area of concern for the industry.
The Company has been taking steps in this regard to improve both the availability and cost of power.
Rising input costs and volatility in material is a challenge that impacts
margins. The Company is pursuing appropriate indexation mechanisms with its
customers, however there is always a lag effect.
The Indian Rupee appreciation vis-a-vis the US$ is an area of concern for
exports. This impacts margin for export revenues.
China continues to be a challenge at a global level on account of its prices.
The Company is meeting the same by focusing on complex products and developing
its design and development capabilities. The Company is also developing
alliances and partnerships with leading global players.
Looking at the opportunities, the Company is implementing a strategic plan to
build global scale and capabilities to meet the requirements of its existing as
well as its new customers. In then current year two Joint Ventures have been
signed, one with Continental AG of Germany for Hydraulic Brake Systems and
other with Jinfei of China for Aluminium Alloy Wheels, which would contribute
towards growth and profitability of the Company in the coming years.
On export front the Company has taken initiatives to develop new export markets
for its products and services.
SEGMENT WISE PERFORMANCE:
The Company is operating mainly in the Auto Components business. Non-Auto Components business is BPM Division of the Company which has emerged out of the merger of the Wholly Owned Subsidiary namely Rico Softech Limited. This business contributes less than 1 per cent of the total turnover of the Company.
FINANCIAL PERFORMANCE:
- Revenue: The gross revenue of Rs.8879.800 millions was recorded in the financial year ended 31st March, 2007 as compared to Rs.7726.800 millions in the previous year. Auto Components revenue recorded growth at 15 per cent year on year.
- The total revenue for the financial year ended 31st March, 2007 includes export revenue of Rs.1196.800 millions as against Rs.889.700 millions, a growth of 35 per cent.
Profits:
The Company has earned Profit before Interest, Depreciation and Tax of
Rs.946.700 millions during the financial year ended 31st March, 2007 which
represents an increase of 6 per cent over the previous year's profit of
Rs.896.300 millions. Because of increase in interest cost and depreciation the
Profit before Tax of Rs.369.700 millions and Profit after Tax of Rs.258.400
millions respectively recorded no growth over the previous year Profit before
Tax of Rs.486.900 millions and Profit after Tax of Rs.344.700 millions.
OTHER DETAILS:-
CONTINGENT LIABILITIES
i) Estimated
amount of contracts remaining to be executed on capital account and not
provided for (net of advances) Rs.271.500 millions (Previous year Rs.575.400
millions).
ii) Banks have
given guarantees on behalf of the Company worth of Rs.1.000 millions (Previous
year Rs.1.000 millions).
iii) Letters of
Credit outstanding in favour of suppliers Rs. 184.900 millions (Previous year
Rs.407.600 millions).
iv) The Company
has executed General Surety Bonds for Rs.10.000 millions (Previous year
Rs.10.000 millions) in favour of The President of India, under Central Excise
Act, 1944 .
v) Disputed
demands contested in appeals :
a) Sales Tax
Rs.27.700 millions (Previous year Rs 0.900 million).
b) Local Area
Development Tax (LADT) Rs.0.100 million (Previous year Rs. Nil).
c) Central Excise
Rs.11.100 millions (Previous year Rs.11.000 millions).
vi) Surety Bonds
executed in favour of The President of India, under Export Promotion Capital
Goods Scheme (EPCG) for importing Capital goods at concessional rate of custom
duty, amounting to Rs.1221.900 millions (Previous year Rs.842.700 millions).
vii) The Company has
executed General Surety Bonds for Rs. Nil in favour of The President of India
for importing Equipments for a 100% Export Oriented Unit (Previous year
Rs.25.000 millions).
viii) Videsh
Sanchar Nigam Limited raised the demand of Rs.1.800 millions which is disputed
and liability for the same has not been provided for (Previous year Rs.1.800
millions). Based on favourable judgements is similar cases, legal opinion taken
by the Company, discussions with the solicrtors etc. the Company believe that
there is fair chance of decisions in favour in respect of the items listed at
(v) (a) (b) (c) and (viii) above and
hence no provision
has been considered necessary against the same.
FIXED ASSETS:
·
Land,
·
Land (Leasehold),
·
Buildings,
·
Furniture and Fixtures,
·
Plant and Machinery,
·
Office equipment and
·
Vehicles.
Website Details :
Company Profile:
Rico is a world-class engineering company supplying a wide range of high precision fully machined aluminum and ferrous components and assemblies to automotive OEMs across the globe.
Subject consolidated group total turnover is over US$ 285 Million (Rs 11000.000 millions).
Subject integrated services include design, development, tooling, casting, machining and assembly across ferrous and aluminum products.
RICO’s BPM division enables companies to generate value for their
customers and employees through the application of its customer and employee
care services. Its solutions offer a high-tech, human-touch approach that
couples highly skilled customer service representatives with advanced
information management technologies and superior business processes.
Business Process Management
RICO’s Engineering Services division focuses on CAD, CAM, CAE, tool and
product design, and also takes on full-service product design and development
projects which include: concept design, simulation, tool design, and
prototyping, all the way up to developing a robust manufacturing solution. The
company key strength is its ability to execute global projects, offering
world-class solutions at competitive costs and faster turn-around times.
PRESS RELEASES:-
1984-86
· Rico Auto Incorporated (1984-85) and Commercial Production Started (1986)
· Aluminum HPDC Plant set up in Dharuhera (40 Kms from Delhi, India)
· TC with FCC Japan for manufacturing of Clutch Assembly
1990-92
· Ferrous Casting and Machining Plant set up in Gurgaon (20 Kms from Delhi, India)
· Entered International Market as OEM Supplier to MEC Japan.
1994-96
· FCC RICO (50:50) JV formed
· Started supplying globally to USA and UK (Eaton, Cummins, GM etc.)
1998-00
· Second Aluminum HPDC and Machining Plant set up in Gurgaon
2000-02
· Set up full service Engineering, Design and Development function.
· Added Customers: Ford, Jaguar, Land Rover
· Certified TS 16949, ISO 140001, OHSAS 18001
2002-04
· Enhanced Ferrous and Aluminum Capacity
· Added Customers: Caterpillar, Honeywell, Detroit Diesel, Volvo
2004-06
· R and D Center started
· Added Customers: Nissan, Tata, Perkins
2007
· JV with CONTINENTAL Automotive Systems (Hydraulic Brakes)
· JV with JINFEI CHINA (Aluminum Alloy Wheels - 2 Wheelers)
· Acquired 25 acres land in Chennai.
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.42.59 |
|
UK Pound |
1 |
Rs.84.16 |
|
Euro |
1 |
Rs.65.99 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
----- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
69 |
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 |
|