MIRA
INFORM REPORT
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Report Date : |
18.03.2008 |
IDENTIFICATION
DETAILS
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Name : |
MICRO INKS
LIMITED |
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Formerly Known As : |
HINDUSTAN INKS
AND RESINS LIMITED |
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Registered Office : |
Bilakhia House,
Muktanand Marg, Chala, Vapi – 396191, Gujarat |
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Country : |
India |
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Financials (as on) : |
31.12.2006 |
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Date of Incorporation : |
13.11.1991 |
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Com. Reg. No.: |
04-16598 |
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CIN No.: [Company
Identification No.] |
L24220GJ1991PLC016598 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
SRTM01621E |
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PAN No.: [Permanent
Account No.] |
AAACH7063F |
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Legal Form : |
It is a public
limited liability company. The company's shares are listed on the Stock
Exchanges. |
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Line of Business : |
Manufacturing and
Marketing of Printing Inks, Resins, Adhesives, Wire Enamels, Pigments, Flush
Colors and Fine Chemicals. |
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 29000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Micro Inks
Limited, a Bilakhia Group Company has its US based wholly owned subsidiary
called – Micro Inks Corporation. It is engaged in
manufacturing and marketing of Printing Inks, Resins, Adhesives, Wire
Enamels, Pigments and fine chemicals. The company is progressing well.
Financial position is good. Payments are correct and as per commitments. It can be
considered normal for business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered
Office : |
Bilakhia House,
Muktanand Marg, Chala, Vapi – 396 191, Gujarat, India |
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Tel. No.: |
91-260-2462811 /
2460284 / 2460280 |
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Fax No.: |
91-260-2463932 /
2463733 |
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E-Mail : |
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Website : |
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Factory 1 : |
Plot No. 2803/2,
Phase III, GIDC, Vapi – 396 195, Gujarat |
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Factory 2 : |
Survey No. 137/1,
Jani Vankad, Daman (Union Territory) |
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Factory 3 : |
Survey No. 11,
Village Morkhal Silvassa (Union Territory of Dadra & Nagar Haveli) |
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Factory 4 : |
Plot No. 808/E,
Phase II, GIDC, Vapi – 396 195, Gujarat |
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Factory 5 : |
Plot No. 808/E/P,
305/6, 305/7 (100% Export Oriented Unit), II Phase, GIDC, Vapi – 396 195,
Gujarat |
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Factory 6 : |
Survey No.
8/1/2/P, 9/P, 10/3, 10/4, 10/5, 8/2
Village Morkhal, Unit II, Silvassa (U.T. of Dadra and Nagar Haveli), India |
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Branches : |
512/513, Midas,
Sahar Plaza Complex, J.B.Nagar, Andheri (East), Mumbai, Maharashtra 415, Patpargunj
Industrial Estate, New Delhi – 110 092, India 9, Transport
Depot Road, Kolkata – 700 088, West Bengal, India Plot No. 1418,
Phase III, GIDC, Vatva, Ahmedabad, Gujarat, India No. 15, Patullos
Road, Mount Road, Chennai – 600 002, Tamil Nadu, India F6, Naveen
Apartment, 10,13th Main, Off. Palace Road, Vasanth Nagar,
Bangalore – 460 052, Karnataka, India 716, Siddharth,
Near Hotel Express, R. C. Dutt Road, Alkapuri, Baroda, Gujarat, India C-13, Sector-3,
Phase-1, Noida – 201 301, Uttar Pradesh, India 4 & 5,
Rasoolpura, Behind Usha Godown, Secunderabad – 500 003, Andhra Pradesh, India A-2, Sussex
Industrial Estate, Dadoji Kondeo Cross Marg, Byculla, Mumbai – 400 027,
Maharashtra, India |
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Overseas
Office 1 |
2850, Festive
Drive, Kankakee, Illinois 60901, USA |
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Tel
No : |
1815 929 9293 |
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Fax No : |
1815 929 9298 |
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E-mail : |
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Overseas
Office 2 |
6, Corrin Court,
Wattle Grove, NSW, 2173, Australia |
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Tel
No : |
61 298252880 |
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E-mail : |
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Overseas
Office 3 |
1410 B, New Town
Centre, No. 83 Lou Shan Guan Road, Shanghai – 200336, China |
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Tel
No : |
861 3052419983 |
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E-mail : |
DIRECTORS
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Name : |
Mr. Anjum
Bilakhia |
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Designation : |
Chairman |
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Date of Appointment : |
31.01.2007 |
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Qualification : |
Mr. Yunus G.
Bilakhia |
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Experience : |
Chairman [Upto
31.01.2007] |
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Name : |
Mr. Heinrich
Ringer |
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Designation : |
Executive Vice
Chairman |
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Name : |
Mr. Ashwani Bhardwaj |
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Designation : |
Managing Director
[From 31.01.2007] |
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Name : |
Mr. M. L. Bhakta |
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Designation : |
Director |
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Name : |
Prof. Pradip N.
Khandwalla |
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Designation : |
Director |
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Name : |
Mr. Hasmukh Shah |
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Designation : |
Director |
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Name : |
Mr. K. K. Unni |
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Designation : |
Director |
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Name : |
Ms. Ursula
Borgmann |
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Designation : |
Director |
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Name : |
Mr. Shivram Angne |
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Designation : |
Whole Time
Director |
KEY EXECUTIVES
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Name : |
Mr. Rammohan
Chari |
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Designation : |
Director –
Finance |
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Name : |
Mr. Ramkrishna
Kamat |
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Designation : |
Director –
Domestic Sales |
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Name : |
Mr. Vimal Mehra |
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Designation : |
Director –
International Business |
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Name : |
Mr. Zainul Lakdawala |
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Designation : |
Director – Research |
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Name : |
Mr. Umesh Sharma |
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Designation : |
Senior Vice President
– Human Resources & IT |
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Name : |
Dr. L N Chaturvedi |
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Designation : |
Vice President – Technology |
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Name : |
Mr. Anil Jain |
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Designation : |
Vice President – Manufacturing |
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Name : |
Mr. Aniruddha Joshi |
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Designation : |
General Manager – Procurement |
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Name : |
Mr. Hitesh Parikh |
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Designation : |
Vice President and Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on 31.12.2007
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Indian : |
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Bodies Corporate |
1119237 |
4.50 |
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Foreign : |
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Bodies Corporate |
17534718 |
70.50 |
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Institutions : |
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Mutual Funds /UTI |
2144995 |
8.62 |
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Financial
Institutions / Banks |
1500 |
0.01 |
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Foreign
Institutional Investors |
1330403 |
5.35 |
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Non Institutions : |
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Bodies Corporate |
659143 |
2.65 |
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Individual
shareholders holding nominal |
1758321 |
7.07 |
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Share capital up
to Rs. 0.100 million |
288640 |
1.16 |
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Clearing Member |
14772 |
0.06 |
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Directors &
Relative of Directors |
2461 |
0.01 |
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NRIs &
Foreign Company |
17751 |
0.07 |
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TOTAL |
24871941 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer
and Marketer of Printing Inks, Resins, Adhesives, Wire Enamels, Pigments,
Flush Colors and Fine Chemicals. |
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Products : |
Item Code No. (ITC Code) 32151100 Product Description Printing
Inks Item Code No. (ITC Code) 32081001 Product Description Wire
Enamels Item Code No. (ITC Code) 35069100 Product Description Adhesives |
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Exports : |
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Countries : |
Europe, Asia
Pacific, Latin America, Africa, Middle East, USA, Germany, Japan, UK, France,
Italy, Spain and China |
PRODUCTION STATUS
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Particulars |
Unit |
Installed Capacity |
Actual Production |
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Printing Inks |
MT |
203000 |
67515 |
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Resins and
Varnish |
MT |
52600 |
30723 |
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Adhesives |
MT |
7800 |
202 |
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Wire Enamels |
MT |
3450 |
1204 |
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Pigments/Flush
Colours |
MT |
46500 |
10580 |
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Fine Chemicals |
MT |
640 |
138 |
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Press Chemicals |
MT |
5000 |
652 |
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By Products |
MT |
-- |
37 |
GENERAL
INFORMATION
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No. of Employees : |
1222 |
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Bankers : |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Deloitte Haskins
and Sells Chartered
Accountants |
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Holding Company : |
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Associates : |
-- Plot No. 303/6, II Phase, GIDC, Vapi, Gujarat, India -- Engaged in the manufacture of
Printing Inks, Flexo Gravire, Letter Press
Requisites, etc.
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Subsidiaries : |
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CAPITAL STRUCTURE
As on 31.12.2006
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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3000000 |
Equity Shares |
Rs. 10/- each |
Rs. 300.000 millions |
|
5500000 |
Preference Shares
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Rs. 100/- each |
Rs. 550.000 millions |
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Total |
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Rs. 850.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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24871941 |
Equity Shares |
Rs. 10/- each |
Rs. 248.719
Millions |
(Of the above
shares 6,831,000 shares are allotted as fully paid-up Bonus Shares by way of
capitalisation of security premium).
(Of the above
shares 17,534,718 (P.Y. 17,534,718) shares are being held by MHM Holding GmbH,
Germany, the Holding Company)
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF
FUNDS |
31.12.2006 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
248.720 |
248.720 |
683.720 |
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2] Share Application Moneys |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
6939.440 |
7476.900 |
7366.950 |
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4] Share Capital Suspense |
0.000 |
0.000 |
0.000 |
NETWORTH
|
7188.160 |
7725.620 |
8050.670 |
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LOAN FUNDS |
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1] Secured Loans |
1248.360 |
1716.650 |
1232.240 |
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2] Unsecured Loans |
584.110 |
100.000 |
530.000 |
TOTAL BORROWING
|
1832.470 |
1816.650 |
1762.240 |
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DEFERRED TAX
LIABILITIES |
339.010 |
413.700 |
386.200 |
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TOTAL
|
9359.640 |
9955.970 |
10199.110 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3201.830 |
3330.740 |
3018.190 |
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Capital work-in-progress |
219.590 |
74.660 |
91.870 |
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INVESTMENTS |
3710.340 |
3691.560 |
3655.930 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Interest Accrued on Investments |
0.010 |
0.010 |
0.010 |
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Inventories |
2100.080 |
1417.000 |
1271.340 |
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Sundry Debtors |
2505.730 |
2664.110 |
3003.650 |
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Cash & Bank Balances |
13.490 |
395.460 |
552.060 |
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Loans & Advances |
758.290 |
840.340 |
906.400 |
Total Current Assets
|
5377.600 |
5316.920 |
5733.460 |
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Less: CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
2954.210 |
2275.320 |
2114.500 |
Provisions
|
195.510 |
182.590 |
185.840 |
Total Current Liabilities
|
3149.720 |
2457.910 |
2300.340 |
Net Current Assets
|
2227.880 |
2859.010 |
3433.120 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL
|
9359.640 |
9955.970 |
10199.110 |
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.12.2006 |
31.03.2006 |
31.03.2005 |
|
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Sales Turnover |
7104.280 |
9181.020 |
8583.900 |
|
|
Other Income |
44.950 |
42.300 |
0.000 |
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Total Income |
7149.230 |
9223.320 |
8583.900 |
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Profit/(Loss) Before Tax |
[437.620] |
722.240 |
1296.010 |
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Provision for Taxation |
[57.190] |
113.210 |
220.310 |
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Profit/(Loss) After Tax |
[380.430] |
609.030 |
1075.700 |
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Earnings in Foreign Currency : |
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Total Earnings |
3493.100 |
4512.660 |
4227.150 |
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Imports : |
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Raw Materials |
2781.510 |
2746.820 |
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Stores & Spares |
43.980 |
35.360 |
2800.220 |
|
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Capital Goods |
0.000 |
3.350 |
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Others |
0.570 |
0.000 |
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Total Imports |
2826.060 |
2785.530 |
2800.220 |
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Expenditures : |
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Materials
Consumed |
5462.49 |
6083.840 |
|
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|
Manufacturing
and Other Expenses |
1824.70 |
2136.420 |
|
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|
lncrease/(Decrease)
in Semi-Finished and Finished Stock |
[301.630] |
[182.160] |
7287.890 |
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Interest |
230.06 |
216.670 |
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|
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Depreciation/Amortisation |
216.27 |
246.310 |
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Exceptional Items |
154.960 |
0.000 |
|
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Total Expenditure |
7586.850 |
8501.080 |
7287.890 |
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SUMMARISED RESULTS
|
PARTICULARS |
|
|
31.12.2007 |
|
Type |
|
|
Full Year |
|
Sales Turnover |
|
|
11488.000 |
|
Other Income |
|
|
38.600 |
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Total Income |
|
|
11526.600 |
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Total Expenditure |
|
|
10187.900 |
|
Operating Profit |
|
|
1338.700 |
|
Interest |
|
|
204.300 |
|
Gross Profit |
|
|
1134.400 |
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Depreciation |
|
|
310.300 |
|
Tax |
|
|
106.900 |
|
Reported PAT |
|
|
681.200 |
|
Dividend (%) |
|
|
600.000 |
KEY RATIOS
|
PARTICULARS |
31.12.2006 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
0.24 |
0.23 |
0.37 |
|
Long Term Debt Equity Ratio |
0.09 |
0.07 |
0.15 |
|
Current Ratio |
1.24 |
1.37 |
1.31 |
|
TURNOVER RATIOS |
|
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|
Fixed Assets |
2.29 |
2.40 |
2.44 |
|
Inventory |
5.79 |
7.42 |
8.22 |
|
Debtors |
3.95 |
3.52 |
3.54 |
|
Interest Cover Ratio |
[0.24] |
4.11 |
7.63 |
|
Operating Profit Margin (%) |
2.08 |
12.03 |
19.16 |
|
Profit Before Interest and Tax Margin (%) |
[0.75] |
9.56 |
16.83 |
|
Cash Profit Margin (%) |
[0.25] |
8.58 |
14.47 |
|
Adjusted Net Profit Margin (%) |
[3.08] |
6.11 |
12.14 |
|
Return on Capital Employed (%) |
[0.82] |
9.85 |
16.10 |
|
Return on Net Worth (%) |
[4.21] |
7.78 |
16.16 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Incorporated in 1991 Micro Inks Limited (Formerly known as
Hindustan Inks & Resins (HIRL)), is one of the largest ink companies in the
country. The company has made a presence in the market for liquid inks, resins,
adhesives and enamels. The company started its operations in the early 90s and
emerged as a market leader in India by 1999. Today the company has established
its presence in more than 70 countries and is one of the top 14 of the
World.
The company has a wide product portfolio and is the market leader in India. The
company has diversified into a number of related products and has undertaken a
backward integration programme for manufacturing pigments, flushes, resins and
additives - the critical raw materials for inks. The products are resins,
varnishes, pigments, waxes, flushes and printing inks. The company is the
second largest manufacturer of Alkali Blue, a special pigment. The main user
industries for printing inks are packaging, printing and publishing industry.
The printing ink industry essentially consists of four elements. These are
pigments, resins, additives and solvents.
The company has its manufacturing facilities at Silvassa, Vapi and Daman.
Silvassa manufacturing facility is one of the largest single-location ink
plants in the world, a backward integration plant at Vapi. The Silvassa plant
was commissioned in March 2000, while the Vapi plant was commissioned in August
2000.
In Oct. 2001, the company has commercially commissioned its 100% Export
Oriented Unit at Vapi having 30000 MT p.a. of flushed pigments and 100000 MT
p.a. of Inks manufacturing facilities. It has also commissioned Resins Plant at
Vapi-II unit having capacity of 25000 MT p.a. In September 2004 the company has
commissioned PLC controlled Liquid ink plant and Sheetfed ink plant at
Silvassa. Alkali Blue plant is one of the only three such plant in the
world.
All the plants of the company's are ISO 9001 certified for quality and four
plants are ISO 14001 certified for environment safty.
The subsidiaries of the company are Micro Inks Gmbh, Austria, Micro Inks
Corporation, USA, Micro Inks (Singapore) Pte Limited, Singapore, Micro Inks
International Trading (Shanghai) Co Limited, China, Micro Inks (Hong Kong)
Limited, Hong Kong and Hindustan Inks (Australia) Pty Limited, Australia.
It has the world's first ink ATM which gives printers access to small
quantities of ink.
The company has changed its name from Hindustan Inks and Resins to Micro Inks
Limited with effect from 3rd March 2004.
During 2005-2006, MHM Holding GmbH acquired 50.5% of the paid-up equity capital
of the company from the promoters of the company on February 3, 2006. Further in
accordance with applicable provisions of SEBI Regulations 1997, MHM Holding
GmbH acquired another 20% of the paid-up equity capital of the company. So at
present the aggregate holding of MHM Holding GmbH in the company stood at
70.5%. which has become the holding company of Micro Inks Limited
The companies production capacity of Printing Inks, Resins and varnish,
Adhesives, Wire Enamels, Fine Chemicals and Press Chemicals stood at 203000 MT,
52600 MT, 7800 MT, 3450 MT, 640 MT and 5000 MT respectively. The capacity of
Pigments/Flush Colours also expanded from 41500 MT to 46500 MT.
ECONOMIC
REVIEW
India has continued on its high growth path clocking in 8% growth in the past
three years. In the first half of the current fiscal (April to October) GDP grew
by 9.1% surpassing all forecasts. India has been seen as a knowledge driven
economy with a new breed of entrepreneurs and professionals aspiring to take
the big leap. What better opportune time and place to be in, given that this
nation is now at the threshold of economic resurgence.
Performance, across most industries, was good and moved in tandem with the
charged up economy. Subject is in, for sustained growth and importantly the
future looks equally optimistic.
The World Printing Ink Industry, mainly due to the increasing cost pressures,
both on manufacturing as well as on the raw materials, had remained under
pressure.
Ink Industry in India grew by nearly 12% p. a, during the year. U.S.A. and Euro
Zone had a flat growth in 2006. Asia was the fastes growing market, excluding
India it grew by nearly 7%.
PERFORMANCE REVIEW
Consolidated net revenue grew by 8% and stood at Rs. 8770 million led by 7%
growth in domestic market, 13% (in dollar terms) growth in US market and growth
of 6% in the Rest of World (other than U.S.A. and India) markets.
The Company's standalone net sales grew by 3%, on an annualised basis to Rs.
7104 million.
DOMESTIC SALES:
The Domestic Net Sales and Other Operating Income grew by 7% on an annualised
basis to Rs. 3554 million. The Company continues to maintain its leadership
position in the Indian printing ink market due to superior products and
efficient customer services.
EXPORTS:
Consolidated International Sales stood at Rs. 5216 million contributing 59% of
total net sales and other operating income.
The sales of US subsidiary stood at USD 72.3 million for the nine months period
compared to annual sales of USD 85.3 million of the previous full year.
Company's international sales to the Rest of World was Rs. 2112 million for a
period of nine months compared to Rs. 2660 million in the previous full
year.
PROFITABILITY:
During the period, the Company's consolidated EBITDA before exceptional items
of Foreign Currency fluctuation losses, provisioning for inventory and
receivables, termination of contractual obligation, provision for export
benefits, custom duty etc., aggregating to Rs. 712 million was lower at Rs. 765
million compared to Rs. 1523 million of twelve months of the previous year.
However, consolidated EBITDA after exceptional items was at Rs. 53 million. The
EBITDA was lower, primarily due to steep increase in raw material cost,
resulting from higher crude oil prices and previously mentioned exceptional
items. The Net Loss at consolidated level was Rs. 455 million for the nine
months period under review compared to Net Profit of Rs. 468 million of the
previous full year.
Clause (xi) of the Annexure to the Auditors' Report states that the Company has
incurred cash losses during the nine months period under review. If non-cash
and one-time transactions, like reversal of target plus benefits due to
reduction of rate from 10% to 5% as per government notification and provisions
for export benefits mainly due to conversion of one of the existing Domestic
Tariff Area into 100% Export Oriented Unit is taken into account, the Company
is in cash profit to the extent as stated in the Audited Cash Flow Statement
attached elsewhere in this Annual Report.
FINANCE
During the nine months period, the consolidated interest stood at Rs. 273
million compared to full year of Rs. 268 million mainly on account of:
* Translation and hedging losses of Rs. 70 million (Previous Year Rs. 59
million) on foreign currency borrowings; and
* Increase in LIBOR linked interest rates.
Overall debt reduced by Rs. 202 million and stood at Rs. 2,716 million as on
December 31, 2006, on improvement of sales to capital employed to 1.63 times
from 1.35 times and Net Working Capital to 3.99 times from 2.89 times.
The interest cost as a percentage of sales stood at 3.1% against 2.5% in the
previous financial year on increased sales.
Acquisition of Hostmann-Steinberg Inc., U.S.A.
Micro Inks GmbH, Austria, a wholly owned subsidiary of the Company, has
acquired 100% equity and preferred stocks in Hostmann-Steinberg Inc., U.S.A.,
from MHM Holding GmbH, Germany, the Holding Company of the Company, effective
January 01, 2007, for a total consideration of USD 4 million. Subsequently,
Hostmann-Steinberg Inc., U.S.A., has been merged with Micro Inks Corporation,
U.S.A., a wholly owned subsidiary of the Company; and the name of Micro Inks
Corporation, U.S.A. has been changed to Hostmann-Steinberg Inc., U.S.A. The
aforesaid acquisition and merger is expected to:
- Consolidate the hubergroup business of U.S.A. under one unified management
structure and common brand, which will lead to better price realisation, deeper
market penetration and customer service.
- Leverage manufacturing base of Hostmann-Steinberg Inc., U.S.A., to cater the
NAFTA region.
- Result in higher capacity utilisation;
apart from other usual benefits of rationalisation of fixed and operating
costs.
STRATEGIC INVESTMENTS
To finance the previously mentioned acquisition, the Company made further
contribution of USD 4.05 million (USD Four Million Fifty Thousand only) into
Micro Inks GmbH, Austria, as equity participation. During the nine months
period, the Company also made further investment of USD 0.5 million (USD Five
Hundred Thousand only) in Micro Inks (Singapore) Pte Limited and EURO 0.046
million (EURO Forty Six Thousand only) in Micro Inks GmbH, Austria, both wholly
owned subsidiaries of the Company. The statement pursuant to Section 212 of the
Companies Act, 1956, is annexed to this Annual Report.
Micro Inks GmbH, Austria and Micro Inks (Singapore) Pte Limited, Singapore
during the year, have not carried out any commercial activities except
investments.
OUTLOOK
Post alliance, integration and focus on achieving strategic, operational and
cultural fit remained a key priority. Various steps have been initiated to
derive synergy and achieve efficiency in areas like manufacturing processes,
technology, quality, branding and market positioning.
Integration with the hubergroup is expected to derive such benefits in time to
come. The results of integration, till date, have been very encouraging, and
further consolidation will continue during the current year. The Company will
not only grow steadily, but also will become more stable and safe against
adverse developments in the international markets.
The Company has rationalised its business strategy with the hubergroup's
strategy and restructured its businesses geographically in various parts of the
world to optimise sales and returns. The Company will benefit from the strong
sales network of the hubergroup by leveraging its manufacturing capabilities
predominantly through the captive supply in the coming years.
New technology has been developed for the Offset Inks, which has been named as
'!NKREDIBLE'. New Inks, which will be launched under '!NKREDIBLE' trademark
during the current year, will be distinctly superior to the earlier
technologies, and are expected to offer distinct quality edge to Micro Inks as
a member of the hubergroup.
Raw material prices continue to be an area of concern. Despite some respite in
crude oil prices compared to last year, prices of some of the key raw materials
continue to rise due to demand/supply pressures. Crude oil prices are still
volatile and might create further pressures on the cost structure.
International business, including the US business, is expected to grow steadily
but slowly on increased reach and depth derived through acquisition in US and
geographical rationalisation of various markets with an ultimate aim of
maximising sales and returns as one of the valuable Company of the
hubergroup.
CONSOLIDATION OF ACCOUNTS
The audited Consolidated Accounts and Cash Flow Statements, comprising of the
Company and its all Subsidiary Companies, appear on this Annual Report together
with the Auditors' Report on the Consolidated Accounts. The Consolidated
Accounts have been prepared in accordance with the Accounting Standard 21
prescribed by the Institute of Chartered Accountants of India.
The Government of India, Ministry of Company Affairs, New Delhi, vide its
letter No. 47/352/2006-CL-III dated January 11, 2007, has granted an exemption
under Section 212 of the Companies Act, 1956, to the Company from annexing to
this Report, the Annual Reports of all Subsidiaries of the Company for the
period ended on December 31, 2006. However, if any Member of the Company so
desires, the Company will make available copies of full accounts of the
subsidiaries of the company.
MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
Subject’s headquartered at Vapi (in the state of Gujarat) with manufacturing
units at Vapi (in the state of Gujarat), Daman (in the Union Territory of Daman
and Diu), Silvassa (in the Union Territory of Dadra and Nagar Haveli), through
whollyowned subsidiary, at Kankakee near Chicago, Illinois, manufactures
printing inks used in publishing (books, newspapers, magazines, catalogues,
yellow pages, brochures, pamphlets, calendars, etc.) and on packaging material
(labels, cartons, sachets, plastic bags, bottles, etc.) of fast moving consumer
goods, industrial goods and packaged foods. The Company has a fully integrated,
seamless ink manufacturing unit, and is present across the value chain of the
printing inks industry, viz., Pigments, Flush Pigments, Resins and Varnishes,
Additives and Printing Inks. The Company has a wide product portfolio and is
the market leader in India.
Subject is now apart of the hubergroup which has a history of more than 240
years in Ink business with a network of companies worldwide and over 200
international sales and delivery centres thru its subsidiaries, branches and
presence of local representatives achieved an annual sales of about USD 650
Millions in CY06 (excluding Micro Inks Limited).
The hubergroup is an international group of autonomous companies that is
focused on the manufacture and sale of printing inks, printing varnishes,
damping solution additives, printing auxiliaries, filler material for
telecommunication cables. The combined know-how of a global enterprise and its
intensive research and development work serve to ensure that their innovative
product line remains technologically at the leading edge, with consistent
quality. Together with its subsidiaries and affiliates in the hubergroup, the Company
is one of the world's leading printing ink manufacturers. This leading and
pioneering position has been achieved by implementing state-of-the-art research
and production facilities and an innovative product range and is a market
leader for sheet-fed and web offset inks and offers a comprehensive range of
products for the packaging printing industry.
The combined annualised sales of hubergroup including Micro Inks will be more
than USD 900 Millions.
2006 - The year of challenges
Year 2005-06 witnessed global consolidations in ink industry, changing the
landscape of the industry with notable major acquisitions/mergers including the
hubergroup's acquisition of majority stake in Micro Inks.
The global market was seen growing at about 3-4% annually. U.S.A. and Euro Zone
had a flat growth in 2006. Asia was the fastest growing market, excluding
India, it grew by about 6-7%. Indian market grew by about 12%.
Year 2006 witnessed unprecedented increase in raw material on back of peak
petroleum prices and its derivatives resulting in pressure on the margins. The
Inks industry countered this with price hikes but was not enough to ensure
reasonable margins.
During the nine months, Micro Inks realigned its global business, and has
prepared itself a solid platform to perform mother plant role for the huber
businesses worldwide apart from servicing its wholly owned subsidiaries in
U.S.A. and China. The Company has now changed the accounting period from
financial year to calendar year; hence all the figures for 2006 are for the
nine months period (April 2006 to December 2006). In order to make meaningful
comparison with corresponding previous full year (April 2005 to March 2006),
figures have been annualised wherever required.
Micro Inks consolidated net revenues grew by 8% on an annualised basis to Rs.
8770 Millions. compared to the corresponding previous full year; with a growth
of 7% in domestic market and 9% in international revenues. Net consolidated
loss for the period was Rs. 455 Millions., mainly on account of extraordinary
items amounting to Rs. 782 Millions. explained separately.
Hostmann-Steinberg Inc. (HST), U.S.A., formerly known as Micro Inks Corporation
U.S.A., a wholly owned subsidiary of Micro Inks Limited, India, witnessed a
growth of 13% on an annualised basis in dollar terms to USD 72 Millions. The
standalone net losses reduced by 49% annualised to USD 1.5 Millions.
REVENUES
Consolidated
Revenues:
Consolidated net revenues grew by 8% on an annualised basis and stood at Rs.
8770 Millions. (9 M) as compared to Rs. 10822 Millions. in previous full year
on higher volumes, better realisations and commencement of captive sourcing to
the hubergroup.
Revenues from General Inks grew by 8%, Liquid Inks remained flat, Resins by 61%
and Pigments by 24% compared to corresponding previous full year. Printing Inks
volumes grew by 4% compared to corresponding previous full year
Sales
Breakup:
India - 40%Exports - 60%
Domestic
Revenues:
Domestic net sales up by 7% on an annualised basis at Rs. 3554 Millions. (9 M)
compared to Rs. 4443 Millions. for previous full year.
Revenues from General Inks grew by 8%, Liquid Inks at 6%, Resins by 12% and
Pigments by 5% compared to corresponding previous full year.
The growth was driven by buoyancy in printing and publication sector, growth in
packaging and FMCG sectors on back of overall growth in economy. This was
further augmented by superior printing quality and colour penetration.
Top 50 customers contributed 43% while single largest customer contributed only
2.1% of the domestic sales.
Other income of Rs. 51 Millions, consisted mainly on account of scrap sales
(RY. Rs. 44 Millions.).
International Sales recorded growth of 9% on an annualised basis, stood at Rs.
5216 Millions. (9 M) as against Rs. 6379 Millions. in previous full year.
Sales in U.S.A. up by 13% in dollar terms and up by 6% in other international
markets including the hubergroup.
US Subsidiary sales to end customers were at USD 72.3 Millions. (9 M) as against
USD 85.3 Millions. for the previous full year up by 13% in dollar terms on an
annualised basis.
The US sales in the Heatset segment grew by 22% to USD 56.1 Millions. (9 M)
compared to previous full year.
Volumes in Heatset segment grew by 16% compared to previous full year on
increased off-take from existing customers.
Five key customers in HST contributed to 67% and single largest customer
contributed to 36% of total sales.
Captive Sales to the hubergroup in Europe and Canada stood at Rs. 931 Millions.
in the first year of supply and are expected to further increase in the coming
years.
China subsidiary registered a steady progress and achieved sales of RMB 25.3
Millions. (Rs. 139 Millions.) during the 9 M period Compared to RMB 32.8 Millions.
(Rs. 175 Millions.) in the previous full year registering a growth of about 6%
on an annualised basis.
International Sales to other markets in Netherlands, Turkey, Brazil, Mexico,
Belgium, Egypt, Australia and New Zealand stood at Rs. 1041 Millions.
Operations
* Due to the unprecedented increase in raw material prices during the year, the
Company has increased selling prices in all market segments, but was not enough
to completely offset the spiraling input costs due to peak crude prices.
* Raw material cost excluding extraordinary items stood at 65% of sales,
up 4% compared to previous full year impacting margins.
* Imports stood at 50% of total consumption on continued sourcing of raw
materials at internationally competitive prices.
* Other manufacturing and SGA costs excluding extraordinary items on
consolidated basis up by compared to previous full year.
* Selling price hikes and better cost management saw HST reduce its losses to
USD 1.5 Millions. (9M) from USD 3.9 Millions. in the previous full year, while
maintaining operating profits of USD 1.1 Millions.
* Discontinuation of subsidiary operations in Australia and in Hong Kong in
line with new strategy.
* Capacity utilisation of the plants for the year stood at 46%. R&D expenditure
during the year was Rs. 83 Millions.
* Overall growth in volume across market segments and captive sourcing by
the hubergroup is expected to significantly increase the capacity
utilisation.
* Conversion and merger of one of the DTA plants into EOU effective
January 2007 would enable seamless operations and improve production
efficiencies.
* Consolidated normal capital expenditure amounted to Rs. 246 Millions. during
the period for rationalisation and modification to enhance operational
efficiencies.
Key
Initiatives:
Geographical
Realignment
* As part of the hubergroup Micro Inks will now focus on key markets of South
East Asia, India, Middle East, Africa.
* Sales to markets in U.S.A. and China thru its wholly owned subsidiaries.
* Captive sourcing by the hubergroup companies in Europe, Canada, China and
Australia.
Mother
plant:
* Indian plants will act as the mother plants and supply flushes, alkali blue,
Resins and varnishes, waxes and driers to the hubergroup and to its wholly
owned subsidiaries. New technology from the hubergroup under
assimilation.
* Rationalisation and Debottlenecking of capacities by adding capacities in
flushers and vessels and building a new plant for critical raw materials used
in HIT bases is underway with an estimated capital outlay of Rs. 600 Millions.
likely to be completed in 2007.
Use of common huber brands for sales to external customers
Integration
of US operations
* In February 2007, the Company made an investment of USD 4 Millions. in Equity
and preferred stock of Hostmann-Steinberg Inc., U.S.A. thru its wholly owned
subsidiary Micro Inks GmbH, Austria and acquired HST U.S.A. from MHM Holding
GmbH, Germany, effective January 2007. Subsequently, in February 2007, MIC U.S.A.
and HST U.S.A. were merged and renamed Hostmann-Steinberg Inc., U.S.A. The
merged entity will provide:
* Unified single legal entity and brand 'Hostmann Steinberg'.
* Optimisation of manufacturing facilities in U.S.A. US plant to support
Heatset business in U.S.A. and Canada. All common bases to be supplied from
India.
* HST, U.S.A., has 15 branches and sales team with high focus on Sheetfed
business.
* Overall reduction in fixed cost thru optimum utilisation of infrastructure
and people.
Segmental Revenue,
Results, Assets and Liabilities:
In addition to the
significant accounting policies applicable to the business segment as set out
in Schedule-16 to the annual accounts, the accounting policies in relation to
the segment accounting are as under: The Company has considered Business
Segment as primary format for segment reporting, namely:
1. Inks and
Intermediates
2. Other Products
and Services (Wire Enamels, Adhesives, Ketonic Resins and Processing Income)
These Business Segments have been identified and reported taking into account
the product, nature of manufacturing process, industry profile, differences in
the risks and returns, the organisational structure and the internal management
reporting system.
Inks and
Intermediates and Other Products and Services have different manufacturing
process, risks and returns and internal reporting system. Each of this Business
Segment for the current period has profit/loss of more than 10% of the combined
profit segment/loss segment of the Company.
The geographical
segment is considered as secondary format for reporting and identified by
taking into account the location of customers, size and risks prevailing in the
market, internal organisational structure and the internal
management
reporting system.
TRADE TERMS
- Abhideep Chemicals
Private Limited
- Akry Organics Private
Limited
- Bharat Resins Limited
- Baijnath Plastic
Products Private Limited
- Bhabani Pigments
Private Limited
- Chemfilt
- Chemiefine
- Dakle Industrial
Plastics
- Delta Corporations
- Hans Chemicals
- Inmarco Industrial
Maintenance Private Limited
- Kangaroo Industries
- K. L. J. Polymers and
Chemicals Limited
- Mahalaxmi Wood
Industries
- Maximaa Systems
Limited
- Mechwell Industries
- Mehta Petro Refineries
Limited
- Mech Form
- Metal Shapers
- Newpar Aromatic Private
Limited
- NTP Tar Products
Private Limited
- Panorma Industries
- Pragati Industries
- Polygel Specialities
- Rahul Dyestuff Private
Limited
- Raj Lubricants
(Madras) Limited
- Selcan Packaging
Private Limited
- Shri Plastics
- Shyam Chemicals
Private Limited
- Silva Printing and
Packaging
- Spectra Specialities
- Sudish Chemicals
Private Limited
- Sun Bright Pigments
Private Limited
- Sun Colours and
Chemicals
- United Barrel Supply
Company
- Bell Hydromatics
- Elder Instruments
Private Limited
- Ideal Dye Chem
Industries
- Joy Closures Private
Limited
- Noble Polymers
- Polycab Wires Private
Limited
- Rishi Petro Chem
Private Limited
- Ratnagiri Chemicals
Private Limited
- Shah Enterprises
- Shri Plastics
- Stan Pack Industries
- Stoplik Services India
Private Limited
FIXED ASSETS
- Free Hold
Land
- Lease Hold
Land
- Buildings
- Plant and
Machineries
- Laboratory
Equipments
- Wind Mills
- Computers
- Furniture and
Fittings
- Vehicles
- Intangible
Assets (Software)
AS PER
WEB DETAILS
Subject is part of the Huber Group, Germany
Today, through the years of growth, MICRO has transformed itself into a
multi-dimensional, multi-national company offering a comprehensive range of
quality products, efficient customer service and a wide distribution network.
Micro Inks the market leader in
India commanding a market share of above 30% (and more than 40% share of the
organised sector). Total printing ink market in India is estimated to
around US $ 400 million p.a. In the process, it also created an enviable track
record of one of the fastest growing company. And took its annual sales figures
galloping from a mere US $ 5 million in 1993 - 94 to an astonishing increase to
US $ 240 million.
Through the years of growth, Micro
Inks has transformed itself into a multi-dimensional, multi- location company
offering a comprehensive range of quality products, efficient customer service
and a wide distribution network. In India, It is a marketing powerhouse with 12
branches, 5 technical centers and around 500 distributors.
Micro Inks is also the only
Printing Inks company in India, and amongst two or three companies in the
world, to have successfully implemented SAP / R3 ERP solution, integrating its
marketing offices through satellite links.
Together all the elements will
work as a single force to offer value to its customers.
Today the company with a modest
beginning has grown and consolidated its strengths, skills and people to
achieve a unique enterprise. One which is on its way to becoming a major player
in the global market. A reality, which it achieved through a well thought out
and executed business strategy.
Here the Company's core strategy
is to offer better value to its customers on the price quality matrix and
participating in their programs to deliver better value to the customers'
customer. At Micro Inks they starve for having customers' delight and not only
customers' satisfaction.
To make this strategy a success,
the Company has stepped up its R&D efforts in order to develop superior
products. On a parallel front, Micro Inks has developed technology for backward
integration into flushed colours, pigments, resins and additives - the key raw
materials for inks. By doing so, Micro Inks is today the only company in the
world to be self sufficient in all the critical raw materials of Printing Inks.
The next thing on its agenda was
to accelerate its inks manufacturing capacities to keep pace with the global
demand. This was done with by MICRO with the setting up of one of the world's
largest ink manufacturing facilities at a single location, in India.
This plant at Silvassa has a
world-size capacity of 60,000 metric tonnes. Here Micro Inks manufactures a
wide range of inks with innovative and unique process technologies that have
never been attempted before in the industry. Apart from this, another world
size plant has been set up at Vapi, which produces a wide range of flushed
colours, pigments and resins in a single-stream plant for 'seamless'
manufacturing of inks.
Finally, all this is to be backed
by the best of technical support and customer service. All translating
ultimately into one fact, Micro Inks is poised to make an indelible mark on the
world.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other financial
stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.40.77 |
|
UK Pound |
1 |
Rs.82.10 |
|
Euro |
1 |
Rs.64.48 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
5 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
9 |
|
--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 |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
66 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
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 |
|