MIRA
INFORM REPORT
|
Report Date : |
21.06.2008 |
IDENTIFICATION
DETAILS
|
Name : |
J K TYRE AND INDUSTRIES LIMITED |
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Registered Office : |
7, Council House
Street, Kolkata - 700 001, West Bengal |
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Country : |
India |
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Financials (as on) : |
30.09.2007 |
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Date of Incorporation : |
14.02.1951 |
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Com. Reg. No.: |
21-19430 |
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CIN No.: [Company
Identification No.] |
L67120WB1951PLC019430 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
JDHJ01475F /
CALJ01643F |
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PAN No.: [Permanent
Account No.] |
AAACJ6716P |
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Legal Form : |
Public Limited
Liability Company. The company’s
shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing of
Automotive Tyres, Tubes and Flaps, Pharmaceuticals and Cane Sugar. |
RATING &
COMMENTS
|
MIRA’s Rating : |
Aa |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
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|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 26696000 |
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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. Directors are reported as
experienced, respectable and resourceful industrialists. Their trade
relations are fair. General financial position is satisfactory. Payments are
usually correct and as per commitments. The company can
be considered good for any normal business dealings at usual trade terms and
conditions. |
LOCATIONS
|
Registered
Office : |
7, Council House
Street, Kolkata - 700 001, West Bengal, India |
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Tel. No.: |
91-33-22484198 /
22486181 |
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Fax No.: |
91-33-22481641 |
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E-Mail : |
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Website : |
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Administrative
Office : |
3, Bahadurshah Zafar
Marg, New Delhi- 110 002, India |
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Plants
Locations : |
v
J K Tyre,
Kankroll, Rajasthan, India v
Banmore,
Madhya Pradesh, India v
Mysore Plant
I, Karnataka v
Mysore Plant
II, Karnataka, India v
J. K. Sugar,
Meerganj, Uttar Pradesh, India |
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Branch : |
3/Fl, Gulab
Bhavan, 3 Bahadur Shah Jafar Marg, New Delhi – 110 002, India |
DIRECTORS
|
Name : |
Mr. Raghupati
Singhania |
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Designation : |
Vice Chairman and
Managing Director |
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Name : |
Mr. Vikrampati
Singhania |
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Designation : |
Deputy Managing
Director |
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Name : |
Mr. Bharat Hari
Singhania |
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Designation : |
Managing Director |
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Name : |
Swaroop Chand
Sethi |
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Designation : |
Whole Time
Director |
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Name : |
Mr. Arvind
Narottam Lalbhai |
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Designation : |
Director |
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Age: |
83 Years |
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Qualification
: |
B. Sc. |
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Date of
Joining : |
07/04/1975 |
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Other
Directorships : |
v
The Arvind
Mills Limited- Chairman and Managing Director v
SRF Limited v
Atul Limited v
Birla VXL
Limited v
Tata
Chemicals Limited v
Arvind
Products Limited v
Lokprakashan
Limited v
Arvind
Overseas (M) Limited |
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|
Name : |
Mr. Arvind Singh
Mewar |
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Designation : |
Director |
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Age: |
57 Years |
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Qualification
: |
B. A. (English Literature,
Economics and Political Science), Hotel Management Course (U.K) |
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Date of
Joining : |
07/04/1975 |
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Other
Directorships : |
v
The Lake
Palace Hotels and Motels Limited -Chairman and Managing Director v
Historic
Resort Hotels Limited -Chairman v
Shikarbadi
Hotels Limited |
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|
Name : |
Mr. Bakul Jain |
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Designation : |
Director |
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Name : |
Mr. B. C. Bose |
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Designation : |
Director (LIC
Nominee) |
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Name : |
Mr. I M Vittala
Murthy, IAS, |
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Designation : |
Director |
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Name : |
Mr. Om Prakash
Khaitan |
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Designation : |
Director |
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Name : |
Dr. Vinayshi
Gautam |
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Designation : |
Director (IDBI
Nominee) |
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Name : |
Mrs. Sobha
Nambisan |
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Designation : |
Director |
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Name : |
Mr .Vikrampati
Singhania |
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Designation : |
Director |
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Name : |
Mr. Govind
Ballabh Pande |
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Designation : |
Nominee (LIC) |
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Name : |
Mr. Vinayshil
Gautam |
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Designation : |
Nominee (IDBI) |
KEY EXECUTIVES
|
Name : |
Mr. P. K. Rustagi |
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Designation : |
Company Secretary |
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Name : |
Mr. Hari Shankar
Singhania |
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Designation : |
Chairman |
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Age : |
68 years |
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Qualification
: |
B.Sc., F. Inst.
D. (London) |
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Date of
Joining : |
25/03/1974 |
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Other Directorships
: |
J. K. Corporation
Limited-Chairman and Managing Director The Central Pulp
Mills Limited- Chairman Atlas Copco
(India) Limited- Chairman J. K. Udaipur
Udyog Limited-Chairman |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As On 31.03.2006
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters'
Holdings |
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Indian Promoters |
16376700 |
43.72 |
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Non Promoter's
Holdings |
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Mutual Funds and
UTI |
3304248 |
8.82 |
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Banks, Financial
Institutions and Insurance Companies |
3587706 |
9.57 |
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FIIs |
2629787 |
7.02 |
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Others
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Private Corporate
Bodies |
3748225 |
10.01 |
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Indian Public |
3751796 |
10.02 |
|
NRIs / OCBs |
4060884 |
10.84 |
BUSINESS DETAILS
|
Line of
Business : |
Manufacturing of
Automotive Tyres, Tubes and Flaps, Pharmaceuticals and Cane Sugar. |
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Products with
ITC Code : |
v Tyres, Tubes & Flaps - 4011,12 &
13 v Pharmaceuticals - 3004 v
Cane Sugar -
1701 |
PRODUCTION STATUS
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|
UNITS |
INSTALLED CAPACITY PER ANNUM |
PRODUCTION |
|
QTY. |
QTY. |
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Automobile Tyres |
Millions Nos. |
8.700 (7.598) |
7.217 (6.785) |
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Automobile Tubes |
Millions Nos. |
2.545 (2.545) |
5.521 (5.207) |
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Automobile Flaps |
Millions Nos. |
-- |
2.832 (2.705) |
GENERAL
INFORMATION
|
No. of
Employees : |
Around 4000 |
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Bankers : |
v Bank of India v Canara Bank v Corporation Bank v Dena Bank v Indian Bank v Punjab National Bank v State Bank of Bikaner & Jaipur, G72, Connaught
Circus, New Delhi-110001, India v State Bank of India v State Bank of Mysore v Syndicate Bank v The Bank of Rajasthan Limited v The Federal Bank Limited v UCO Bank v Axis Bank v
Vijaya Bank |
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Facilities : |
Notes: 1. (a) 63389 Zero
Coupon Non-Convertible Debentures (ZCNCDs) of Rs.l 0,000 each issued to a
Bank, outstanding amount Rs. 376.900 millions, are secured by first pari
passu charge created on the specified property of Gujarat and movable and
immovable properties of Company's Plants in Rajasthan and Madhya Pradesh,
both present and future. These debentures are redeemable at premium based on
a YTM of 13.5% p.a. upto 30.06.2005 and a YTM of 9% p.a. w.e.f. 01.07.2005
with quarterly rests in five instalments at the end of 3 to 7 years from the
respective dates of payment of allotment money / call money. (b) 12856 Zero Coupon Non-Convertible
Debentures (ZCNCDs) of Rs. l 0,000 each issued to a Bank, outstanding amount Rs.
77.100 millions, are secured by first pari passu charge created on the
specified property of Gujarat and movable and immovable properties of
Company's Plants in Rajasthan and Madhya Pradesh, both present and future.
These debentures are redeemable at premium based on a YTM of 13.5% p.a. with
quarterly rests in five instalments at the end of 3 to 7 years from the
respective dates of payment of allotment money / call money. (c) 27353 Zero
Coupon Non-Convertible Debentures (ZCNCDs) of Rs. 10,000 each issued to a
Bank, outstanding amount Rs. 216.100 millions, are secured; by first pari
passu charge created on the specified property of Gujarat and movable and
immovable properties of Company's Plants in Karnataka, both present and
future. These debentures are redeemable at premium based on a YTM of 13.75%
p.a upto 30.06.2005 and a YTM of 9% w.e.f. 01.07.2005 with quarterly rests in
five instalments at the end of 3 to 7 years from the respective dates of
payment of allotment money / call money. (d) 9057 Zero Coupon
Non-Convertible Debentures (ZCNCDs) of Rs. 10,000 each issued to Financial
Institutions, outstanding amount Rs. 72.100 millions, are secured by first
pari passu charge created on the specified property of Gujarat and movable
and immovable properties of Company's Plants in Karnataka, both present and
future. 2656 ZCNCDs are redeemable at premium based on a YTM of 13.75% p.a.
and 6401 ZCNCDs are redeemable at premium based on a YTM of 13.75% p.a.
reduced to a YTM of 9% p.a. during January, 2006 to March, 2006 with
quarterly rests in five instalments at the end of 3 to 7 years from the
respective dates of payment of allotment money / call money. 2. Term Loan of Rs. 52.500
millions from a Bank is secured by a first pari passu charge created on
movable and immovable properties of Company's Plant in Madhya Pradesh, both
present and future. 3. Term Loans aggregating
Rs. 122.200 millions. from Financial Institutions and Rs. 331.000 millions.
from Banks are secured by a first pari passu charge created on movable and
immovable properties of the Company's Plants in Rajasthan and Madhya Pradesh,
both present and future. Loan of Rs. 210.000 millions. (comprised in Rs.
331.000 millions above) from a Bank is also secured by exclusive
hypothecation of specified Book Debt. 4. Term Loans aggregating
Rs. 996.600 millions. from Banks are secured by a first pari passu charge
created on movable and immovable properties of the Company's Plants in
Rajasthan, Madhya Pradesh and Karnataka, both present and future. 5. Term Loans aggregating
Rs. 277.400 millions from Financial Institutions and Rs. 381.500 millions.
from Banks are secured by a first pari passu charge created on movable and
immovable properties of Company's Plants in Karnataka, both present and
future. 6. Term Loan of Rs.
350.000 millions from a Bank is secured by an exclusive charge by way of
hypothecation of specified assets at Company's Plants in Rajasthan, Madhya
Pradesh and Karnataka. 7. Term Loan of Rs. 0.800
million from a Bank is secured by hypothecation of specified vehicles. 8. Other Loans from banks
represent Working Capital borrowings aggregating Rs. 2904.500 millions
secured by hypothecation of stocks and book debts etc., both present and
future of the Company (except specified book debt exclusively hypothecated to
a bank against Term Loan as referred to in note no. 3) and second charge
created on movable and immovable properties of the Company's Plants in
Rajasthan, Madhya Pradesh and Karnataka. 9. Term Loans carrying
first pari passu charge on the movable and immovable properties, are subject
to prior charge of banks on stocks and book debts for working capital
borrowings. 10. (a) Deferred Sales Tax
Loan aggregating Rs. 667.200 millions from Madhya Pradesh State Industrial
Development Corporation Limited is secured by first available charge on
movable and immovable properties created / to be created subject to charges
referred to in note 1 (a & b), 2, 3, 4 & 6 on movable and immovable
properties of Company's Plant in
Madhya Pradesh. (b) Deferred Sales Tax
Loan aggregating Rs. 42.300 millions. from Government of Karnataka
subordinated to loans from Financial Institutions, is secured by a second
charge on immovable properties of the Company's Plant in Karnataka. |
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Banking Relations : |
Satisfactory |
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Auditors : |
Lodha &
Company Chartered
Accountants |
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Memberships : |
Confederation of
Indian Industry |
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Associates : |
v J K Corp Limited v J K Paper Limited v Hari Shankar Singhania Elastomer and Tyre Research
Institute v J K Pharmachem Limited v
Valiant
Pacific LLC v
J K
Pharmachem Limited v
J K Lakshmi
Cement Limited |
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Subsidiaries : |
v J K Drugs & Pharmaceutical Limited v Hansdeep Investment Limited v Hidrive Finance Limited v Panchanan Investment Limited v Radial Finance Limited v Shivdham Properties Limited v J.K. International Limited, UK v J K Asia Pacific Limited, Hong Kong v J K Asia Pacific (S) Private Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
12,50,00,000 |
Equity shares |
Rs. 10/- each |
Rs. 1250.000 millions |
|
7,00,000 |
14% Cumulative Redeemable Preference Shares of Rs. 100/- each |
Rs. 100/- each |
Rs. 70.000 millions |
|
48,00,000 |
Preference Shares |
Rs. 100/- each |
Rs. 480.000 Millions |
|
|
Total |
|
Rs. 1800.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
3,07,94,510 |
Equity shares |
Rs. 10/-
each |
Rs. 307.945 millions |
Note:
Includes 33,750 Bonus shares by way of capitalization
of reserves and 86,51,639 shares issued to the shareholders of erstwhile
Vikrant Tyres Limited. Pursant to the scheme of arrangement and amalgamation
without payment being received in cash.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
30.09.2007 |
30.09.2006 |
30.09.2005 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
307.900 |
307.900 |
374.600 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
5031.300 |
5609.300 |
7451.400 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
5339.200 |
5917.200 |
7826.000 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
6868.200 |
7247.700 |
6712.800 |
|
|
2] Unsecured Loans |
2281.300 |
2191.000 |
1592.200 |
|
|
TOTAL BORROWING |
9149.500 |
9438.700 |
8305.000 |
|
|
DEFERRED TAX LIABILITIES |
1053.200 |
0.000 |
0.000 |
|
|
|
|
|
|
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TOTAL |
15541.900 |
15355.900 |
16131.000 |
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APPLICATION OF FUNDS |
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|
|
|
|
|
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|
FIXED ASSETS [Net Block] |
11988.000 |
12241.900 |
11739.800 |
|
|
Capital work-in-progress |
203.400 |
225.100 |
616.300 |
|
|
|
|
|
|
|
|
INVESTMENT |
626.000 |
614.600 |
2500.400 |
|
|
DEFERREX TAX ASSETS |
0.000 |
16.100 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
0.000
|
0.000
|
2440.300
|
|
|
Sundry Debtors |
0.000
|
0.000
|
4117.900
|
|
|
Cash & Bank Balances |
0.000
|
0.000
|
361.100
|
|
|
Other Current Assets |
0.000
|
0.000
|
0.000
|
|
|
Loans & Advances |
11001.800
|
10135.200
|
1349.200
|
|
Total
Current Assets |
11001.800
|
10135.200
|
8268.500 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
8359.500
|
7968.600
|
6864.400
|
|
|
Provisions |
0.000
|
0.000
|
259.000
|
|
Total
Current Liabilities |
8359.500
|
7968.600
|
7123.400 |
|
|
Net Current Assets |
2642.300
|
2166.600
|
1145.100 |
|
|
|
|
|
|
|
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MISCELLANEOUS EXPENSES |
82.200 |
91.600 |
129.400 |
|
|
|
|
|
|
|
|
TOTAL |
15541.900 |
15355.900 |
16131.000 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
30.09.2007 |
30.09.2006 |
30.09.2005 |
|
|
Sales Turnover |
28161.600 |
26092.100 |
23838.200 |
|
|
Other Income |
105.000 |
176.100 |
193.200 |
|
|
Total Income |
28266.600 |
26268.200 |
24320.000 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
1007.500 |
218.000 |
34.400 |
|
|
Provision for Taxation |
340.200 |
47.500 |
[133.200] |
|
|
Profit/(Loss) After Tax |
667.300 |
170.500 |
167.600 |
|
|
|
|
|
|
|
|
Exports: |
|
|
|
|
|
FOB Value of exports |
4810.400 |
4348.600 |
NA |
|
|
Royalty |
15.800 |
20.900 |
NA |
|
|
Total |
4826.200 |
4369.500 |
NA |
|
|
|
|
|
|
|
|
Imports: |
|
|
|
|
|
Raw Materials |
5126.500 |
4156.200 |
NA |
|
|
Capital Goods |
120.800 |
320.900 |
NA |
|
|
Spares |
28.100 |
24.400 |
NA |
|
|
Total |
5275.400 |
4501.500 |
NA |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Raw Material |
22025.400 |
21503.200 |
14248.900 |
|
|
Other Manufacturing Expenses |
1833.000 |
1553.800 |
813.400 |
|
|
Employee Cost |
1767.200 |
1557.000 |
1406.700 |
|
|
(Increase)/ Decrease in Finished Goods |
(931.300) |
(921.600) |
0.000 |
|
|
Selling And Administration Expenses |
920.000 |
887.000 |
1844.500 |
|
|
Interest And Financial Charge |
890.400 |
761.500 |
673.300 |
|
|
Depreciation |
1013.300 |
975.000 |
636.500 |
|
|
Other Expenditure |
258.900 |
265.700 |
4662.300 |
|
Total Expenditure |
27259.100 |
26050.200 |
24285.600 |
|
QUARTERLY RESULTS
|
Year |
31.12.2007 |
31.03.2008 |
|
Type |
1st
Quarter |
2nd
Quarter |
|
Sales Turnover |
7228.800 |
8299.600 |
|
Other Income |
25.900 |
39.400 |
|
Total Income |
7254.700 |
8339.700 |
|
Total
Expenditure |
6484.800 |
7523.600 |
|
Operating Profit |
769.900 |
815.400 |
|
Interest |
233.700 |
239.900 |
|
Gross Profit |
536.200 |
575.500 |
|
Depreciation |
194.200 |
192.300 |
|
Tax |
7.500 |
106.900 |
|
Reported PAT |
217.400 |
230.200 |
KEY RATIOS
|
Year |
30.09.2007 |
30.09.2006 |
30.09.2005 |
|
|
Debt-Equity Ratio |
2.42 |
2.28 |
1.96 |
|
|
Long Term Debt-Equity Ratio |
1.35 |
1.40 |
1.41 |
|
|
Current Ratio |
0.83 |
0.84 |
0.88 |
|
|
TURNOVER RATIOS |
|
|
|
|
|
Fixed Assets |
1.65 |
1.72 |
1.59 |
|
|
Inventory |
7.33 |
9.64 |
11.29 |
|
|
Debtors |
7.00 |
6.64 |
5.54 |
|
|
Interest Cover Ratio |
2.11 |
1.21 |
0.93 |
|
|
Operating Profit Margin(%) |
8.36 |
5.63 |
5.31 |
|
|
Profit Before Interest And Tax Margin(%) |
6.00 |
3.23 |
2.64 |
|
|
Cash Profit Margin(%) |
4.45 |
2.81 |
3.04 |
|
|
Adjusted Net Profit Margin(%) |
2.09 |
0.41 |
0.37 |
|
|
Return On Capital Employed(%) |
14.71 |
7.54 |
5.34 |
|
|
Return On Net Worth(%) |
17.38 |
3.10 |
2.21 |
|
LOCAL AGENCY
FURTHER INFORMATION
DIRECTOR REPORTS:
The turnover during the year was at an all-time high of Rs. 32060.000 millions as against Rs. 29700.000 millions in the previous year. The operating Profit for the year at Rs. 2650.000 millions registered an increase of 57% over the previous year, and after providing for cost of borrowings and depreciation, the Profit Before Tax was Rs. 1010.000 millions, an all-time high registering an increase of 362%. Profit After Tax for the year was Rs. 670.000 millions.
The Company has achieved this improved performance due to all-round improvement
in operations, drive on cost compression, plant efficiencies, stable input
prices and better sales realisation.
APPROPRIATIONS
The amount available for appropriation, including surplus from previous year
and debenture redemption reserve no longer required is Rs. 998.600 millions.
The Directors propose this to be appropriated as under: Rs. In Crores:
Debenture Redemption Reserve – Rs. 50.200 millions
General Reserve – Rs. 600.000 millions
Dividend – Rs. 83.200 millions
Corporate Dividend Tax – Rs. 14.100 millions
Surplus carried to Balance Sheet – Rs. 251.100 millions
MOVING UP THE
TECHNOLOGY LADDER
Several high performance tyres both in the Commercial Vehicle as well as the
Passenger Car Radial segment were launched, A new tyre, offering high mileage,
"JET ONE" introduced during the year is already enjoying a premier
position in the truck and bus segment. Apart from this, several new tyres
introduced both in the HCV as well as LCV range have received encouraging
consumer response.
New Semi-Lug and Rib pattern Truck Radial tyres launched during the year are
performing extremely well in their respective segments.
In the Radial Passenger Car tyre category, high performing "V-Rated" ZEPHYR, capable of speeds upto 240 Kms / hour, was introduced - a first of its kind.
The latest generation "VECTRA' tyre in a range of sizes has received
customer preference in the market place. Ultra high performance
"Z-Rated" tyres in speed rating of 300 Kms / hour or more, were
launched especially for Formula racing cars - yet another first in India. These
tyres shall be introduced for passenger cars in the coming years.
It is a matter of great satisfaction that JK Tyre is the exclusive supplier to
certain Original Equipment
Manufacturers (OEMs) for new Generation world cars such as Maruti-Suzuki's SX4
- ZXi, Swift, Mahindra –
Ranault's Logan and M&M's Scorpio for their export models.
EXPANSIONS
The pace of radialisation in the commercial tyre segment in India has
accelerated. The Company is seizing this opportunity and has taken on hand a
project for more than doubling the capacity of its Truck/Bus Radial Plant to
8.00 lac tyres from 3.67 lac tyres per annum. This expansion estimated to cost
Rs. 3150.000 millions will be completed by the end of calendar year 2008 and
will further strengthen JK Tyre's commanding position in the Truck/Bus Radial
segment.
During the year, JK Tyre also diversified into Special Application Tyres and commenced their exports. A project to scale up the manufacturing capacity of these tyres has been taken up. This niche tyre segment will also boost the exports to Central and South America, Europe and Australia.
With renewed emphasis being given in the country on infrastructure development,
they foresee growing demand for Off The Road (OTR) tyres. They have entered
into an arrangement with BEML for supply of OTR tyres on a long term basis.
Accordingly, the Company has undertaken a project for substantial expansion of
its OTR tyre capacity at a capital outlay of Rs. 1200.000 millions. This
project will also be completed by end of the calendar year 2008 and will add
significantly to the turnover and profitability in the years ahead.
With a view to contain the ever increasing energy costs, the Company is
undertaking several energy saving projects which will result in considerable
savings in energy costs across its plants.
All these expansion projects are estimated to cost Rs. 4800.000 millions and
the Company has already tied up the financing needs for the same.
DIVIDENDS
The Directors are pleased to recommend dividend of 27% (Rs.2.70 per Equity
Share) on the Equity Share Capital of Rs 307.900 millions. The dividend outgo
will be Rs. 97.300 millions (inclusive of dividend tax of Rs. 14.100 millions)
as against Rs. 87.800 millions in the previous year.
CONSERVATION OF ENERGY ETC.
The details as required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) rules, 1988 are annexed. The Board records its appreciation
that the Kankroli Tyre Plant has been awarded CII GBC Excellence Energy
Efficient Plant Award - the Green Tech Environmental Award (Gold
Category).
Subject is no. 1 in
Market:
1st in Truck and Bus Radials in India 70% Market Share
1st to introduce radials in India and the only one to manufacture the entire range – truck/ Bus, LCV, Tractor and Passenger Car Radials.
MANAGEMENT
DISCUSSION AND ANALYSIS
OVERVIEW
Indian economy continued to perform well and achieved a GDP growth of over 9%
The industrial production recorded by increase largely due to significant
growth in the manufacturing sector. Greater emphasis on inclusive growth and
higher infrastructure spends will lead to further growth momentum in the years
ahead.
Transport Sector, an important ingredient of the economic activity, has
performed well in the year. The Company is seizing this opportunity by
undertaking further capacity expansions which will help maintain its leadership
position in the Tyre Industry in India.
TYRE INDUSTRY SCENARIO
Tyre demand, being driven by the pace of economic activity, has shown
appreciable growth in the 4 Wheeler Tyre segment. The pace of radialisation in
the segment in India has accelerated during the year. The Company enjoys a
unique position in this growing segment and enjoys the No. 1 status in the
market.
JK TYRE - MARKET
LEADER
JK Tyre continues to maintain its leadership in the 4 Wheeler Tyres. All the
four Tyre plants of the Company operated at high capacities producing world
class tyres. The Company continues its relentless drive towards improvement in
productivity and operating efficiencies and launching of new products in the
market.
COMMERCIAL TYRE SEGMENT
Commercial tyres are major contributors - almost 80% of revenue for Tyre industry. The Company continues to be a dominant player in truck, bus and LCV tyre segments, New products were introduced in the HCV and LCV segments to meet the ever changing consumer needs. 'JET ONE', a new Lug tyre, offering high mileage, launched during the year, is already enjoying a premier position in the truck and bus segment. JET-R MILES', a premium depth Rib tyre offering high mileage and high retreadability is receiving very encouraging market response. In the LCV segment, the Company has introduced a wide range of tyres for various applications. 'JET ONE' range in LCV for high mileage and 'JET TRAK 39' for the heavy load segment are exceeding customer expectations and commanding premium status. The Company has also developed a new concept tyre for the sub one tonner LCVs which offers superior performance.
TRUCK RADIAL
The Company introduced All Steel Truck/Bus Radial tyres in India in the year
1999. This pioneering effort has started yielding rich dividends in terms of
increased demand for the JK Truck Radials in the market, New Semi Lug and Rib
pattern Truck Radials launched during the year, are performing extremely well
in their respective segments. Improvement in road infrastructure has led
to surge in demand for truck/bus radials. To meet this growing demand, the
capacity for these tyres is being more than doubled from 3.67 lac tyres to 8.00
lac tyres p.a. at an estimated cost of Rs. 315 crores. This expansion, upon
completion by end of calendar year 2008, will add significantly to the sales
and profitability growth in the years ahead.
The Company has launched several innovative programmes to enable customers
realize true benefits of usage of radial tyres. Some of these initiatives
include Fleet Management Programmes (FMP), Customer Relationship Management
(CRM) and Tyre Care Centres (TCC).
FMP is a complete tyre care solution where customers are offered an assurance
of reduction in Cost per Kilometer (CPKM) by constant monitoring and guidance,
A tyre expert is attached to the Fleet for exclusive tyre maintenance service
and data management. CRM programme "Radial Kings" launched in
January, 2007 was aimed at Customer Retention. Tyre Care Centres - 18 nos.,
strategically located along the Golden Quadrangle, provide the infrastructure
for Truck/Bus radial tyre repairs. These Tyre Care Centres offer round the
clock facilities such as Inflation Pressure check up, Tyre fitment and
rotation, Tyre cut repair facility, Service Tyre and Technical assistance and a
host of other services.
LIGHT COMMERCIAL VEHICLE SEGMENT
This segment is undergoing rapid change with the emergence of the sub - 1 ton
vehicles and a higher mileage application needs. Tyres for the successful Tata
Ace have been introduced both in the radial and bias constructions. These have
received excellent consumer response. Rapid radialisation is also taking place
in this segment and JK Tyrein anticipation, expanded in the recent past the LCV
production capacity to meet the emerging market needs.
CAR RADIALS
India is fast emerging as global Automobile hub. The automobile industry is
maturing and newer models are being introduced at a rapid pace. They have met
this challenge successfully by introducing tyres at a matching pace. Product aesthetics, introduction of
newer range, high performance tyres for new car models, continue to be an
important focus area for the car radial segment.
It is a matter of great pride that JK Tyre is the exclusive supplier of certain
OEMs for new generation world class cars such as Maruti-Suzuki SX4 ZXi, Swift,
Mahindra - Ranault's Logan and M&M's Scorpio.
As the pioneers of Radials in India, JK Tyre continued to increase their
product offering to the discerning customers and introduced directional V-rated
Zephyr range of tyres which are suitable for speeds of 240 Kms per hour. Latest
generation "Vectra" tyres won accolades from both OEMs and the
consumers alike, It is a matter of pride that Z-rated Formula Racing Tyres
capable of performing at 300 Kms and more per hour continued to be the delight
of the motor sports fraternity in the country.
The prominence of the JK Tyre brand was further enhanced through a nationwide
brand campaign in outdoor and select print media, An aggressive consumer
connect campaign branded as "Cool Wheel", was conducted whereby 3.5
lakh customers were contacted in leading cities of the country. In addition,
participative family events also enabled emotional bonding with the brand J K
Tyre.
OFF THE ROAD TYRES (OTR)
Large investments in infrastructure and road construction network has ignited
the demand for OTR tyres, Buoyancy in the mining industry has added further to
the demand for these tyres.
The Company has recently entered into an arrangement with BEML, the leading
OEM, to supply OTR tyres on a long term basis. For this purpose, the Company
has undertaken a Greenfield project at Mysore estimated to cost Rs. 1200.000
millions. This expansion is expected to be completed before the end of calendar
year 2008 and will further strengthen the presence in this growing
segment.
GLOBAL PRESENCE
During the year, the Company exported tyres worth Rs. 4810.000 millions - an
all time high. This has been made possible by continued thrust on offering
world class quality tyres and strengthening international network and building
"JK TYRE" brand in the overseas markets. The Company has established
an extensive distribution network spread across 75 countries over 6 continents.
The Company has further enhanced outsourcing activities from China and other countries for the international markets in its own brand. It is a matter of great pride that "JK Tyre" is rated amongst premium brands in highly quality conscious global bias markets.
TECHNOLOGY
Being a pioneer of Radial Technology in India, the Company continues its zeal
of maintaining technology leadership. Several world class models of cars have
been launched in India on JK Radial Tyre - a testimony of Company's leadership
in technology.
Z-rated Tyres capable of high speeds of 300 Kms/hour or more were launched
during the year for the first time in India.
HARI SHANKAR SINGHANIA ELASTOMER & TYRE RESEARCH INSTITUTE (HASETRI), an
independent institute dedicated to Elastomer and Tyre research, promoted by the
Company is the driving force behind the Company's endeavour for technological
advancement. Towards this endeavour, HASETRI is not only benchmarking
technological capabilities but also collaborating with various National and
International academic institutes to stay ahead on Technology front. The Centre
of Excellence for Tyre and Vehicle Mechanics set up by the Company jointly with
IIT- Madras, Chennai for predictive and simulative techniques using latest
computational system, is the first such Centre in this field of Tyre Vehicle
Mechanics and Dynamics technology and is actively involved in new development
as well as performance improvement actions.
To further strengthen its capabilities for evaluation, JK Tyre jointly with an
auto major, has established its own test track for Tyre Vehicle handling
tests,
As a continuous endeavour to enhance process technology, significant quality
improvement initiatives like process re-engineering, Total Productive
Maintenance, modernisation and upgradation have been implemented in all the
plants.
To significantly enhance state-of-the-art capability of high end product
testing and evaluation techniques, the Company has invested large funds to
create a facility, for the first time in India, by establishing infrastructure
and installation of Universal Tyre Testing machine, precision PR measurement
machine for entire range and various other latest physical and chemical
characterisation equipment.
MOTOR SPORTS
JK Tyre continued to pulsate the world of Motor Sports in India in every
sphere, be it Rallying, Racing or Karting.
A milestone was crossed with completion of the 10th year of JK Tyre National
Formula Racing Championship. The new format with Formula LGB Swift, Formula LGB
Hyundai, Rolon Formula Chevrolet completed the second year successfully and saw
the emergence of fresh talent. The Z - rated tyres introduced for Formula
Racing once again confirmed JK Tyre's technological prowess. For the second
year in succession, JK Tyre was crowned Indian National Rally Champions 2006.
JK Tyre National Rotax Karting Championship of which one round is a part of the
Asian International Series was successfully completed. JK Tyre Prodigies Karun
Chandhok, Armaan Ebrahim and Narain Karthikeyan unfurled Indian Tricolour with
pride across the world.
SERVICE WITH SMILE
JK Tyre is committed towards providing high satisfaction to all its customers
through several initiatives which transcend the entire pre-sales and post sales
processes.
It has made focussed efforts in offering superior services through all major
touch points to its customers. This has resulted in one to one interaction with
over 19,000 customers via various partnered campaigns and a number of
specialized outdoor training programmes,
The high end demanding car tyre customers are serviced through one of the
largest chain of Car Radial outlets - "Steel Wheels", while the
high-tech Truck/Bus Radial customers utilize the cutting edge services offered
by the "Truck Radial Tyre Care Centres" spread across the country.
The Company has also entered into various tie-ups with rural retail hubs for
reaching out to the Farm sector.
HUMAN RESOURCE
DEVELOPMENT
The Company has always believed in nurturing talent and made significant
investments in enhancing the skill sets of employees across all levels and has
also partnered with various academic institutions for formal education in
allied fields.
Formation of Young Leaders Forum and y Competency Based Assessment Process for
the Talent Pool and Leadership Development programmes are being pursued in the
Company.
Financial Statement
(Rs. in millions)
|
Particulars |
2006-07 |
2005-06 |
|
Sales and Other Income |
32062.100 |
29703.000 |
|
Operating Profit |
2652.000 |
1688.800 |
|
Interest |
890.400 |
761.500 |
|
Profit Before Tax |
1007.500 |
218.000 |
|
Provision for Tax |
340.200 |
47.500 |
|
Net Profit |
667.300 |
170.500 |
During the year operating profit of the company increased by 57% and net profit by 291%, The profits of the Company increased mainly due to continued efforts for aggressive cost reduction, improved internal operational efficiencies, product mix enrichment and better realization during the year, besides favourable input costs.
Contingent
Liabilities
Contingent Liabilities in respect of claims not accepted and not provided for Rs. 254.800 millions (Previous Year Rs. 316.400 millions). Details thereof are excise duty matters in appoint Rs. 35.200 millions, Service tax matters Rs. 14.700 millions Sales Tax matters in appeal Rs. 17.800 millions and other matters Rs. 187.100 millions (Previous Year Rs. 39.100 millions, Rs. 30.100 millions, Rs. 27.700 millions, and Rs. 219.500 millions respectively).
The Company has given guarantees / letter of comfort to certain Banks and Financial Institutions in respect of loans outstanding as at 30.09.2007 aggregating to Rs. 118.800 millions (Previous Year Rs. 148.000 millions). In respect of bodies corporate against counter indemnities from such bodies corporate for any liability that may arise.
Pursuant to the scheme of arrangement and demerger (the scheme) between the company and netflier technologies limited. (namer since changed to netflier Finco Limited) approved by hon’ble high court of Calcutta vide their order dated 08.11.2006 becoming effective from the appointed date i.e.01.10.2005, the necessary steps and formalities in respect of transfer of investments and assets in favour of Netflier Finco Limited are under implementation.
The company has worked out reversal of Modvat Credit availed on exports under value based advance licence in earl;ier years and had reversed the same in accounts. Pursuant to special scheme announced by the government, the company has also paid interest on such reversals. Further, the excise department has issued certain basis for reserval of Modvat, which is disputed and has been contested by the company in a Writpetition before the hon’ble delhi high court and directions have been issued to treat the reversal already made by the company as provisional.
Fixed Assets
v Freehold Leasehold Land
v Buildings
v Plant and Machinery
v Office Equipments
v Furniture and Fixtures
v Vehicles
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 :
The 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.
The 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. 42.97 |
|
UK Pound |
1 |
Rs. 84.75 |
|
Euro |
1 |
Rs. 66.72 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--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 |
|
73 |
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, they have no basis upon which to
recommend credit dealings |
No Rating |
|