MIRA
INFORM REPORT
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Report Date : |
11.10.2008 |
IDENTIFICATION
DETAILS
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Name : |
EMAMI LIMITED |
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Formerly Known
As : |
HIMANI LIMITED |
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Registered Office : |
Emami Tower, 687, Anandapur, Kasba Golpark, EM Bypass,
Kolkata 700107, West Bengal |
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Country : |
India |
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Financials (as on) : |
31.03.2008 |
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Date of Incorporation : |
11.03.1983 |
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Com. Reg. No.: |
21-36030 |
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CIN No.: [Company Identification
No.] |
L63993WB1983PLC036030 |
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TAN No.: [Tax Deduction &
Collection Account No.] |
CALE01693G |
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PAN No.: [Permanent Account No.] |
AAACH7412G |
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Legal Form : |
A Public Limited Liability Company. The Company’s Shares
are Listed in the Stock Exchanges. |
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Line of Business : |
Manufacturing and Marketing of personal and healthcare
products. |
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 14000000 |
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Status : |
Good |
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Payment Behaviour : |
Usually correct |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established company having satisfactory track. Trade relations are fair. Financial position is good. The company is doing well. Its 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. It can be regarded as a
promising business partner in a medium to long run. |
LOCATIONS
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Registered Office : |
Emami Tower, 687, Anandapur, Kasba Golpark, EM Bypass,
Kolkata 700107, West Bengal, India |
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Tel No.: |
91-33-66136264 |
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Fax No.: |
91-33-66136600 |
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Email : |
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Website : |
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Head Office : |
Stephen House, 6-A, R. N. Mukherjee Road, Kolkata –
700001, West Bengal, India |
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Tel. No.: |
91-33-22487651/54/22486035/29/22482679 |
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Fax No.: |
91-33-22481568/22100879 |
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E-Mail : |
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Website : |
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Corporate
Office : |
18, R.N. Mukherjee Road, Calcutta – 700001, West Bengal, India |
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Tel. No.: |
91-33-248-2679/2748/4416/9602/5190/7281/7284/6064 |
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Fax No.: |
91-33-2482773/2106 |
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E-Mail : |
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Factory 1: |
13 B T Road
Kolkata - 700 056, West Bengal, India |
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Tel No.: |
91-2564-4047/8621/1509 |
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Fax No.: |
91-2564-25648754 |
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Factory 2: |
EPIP Complex, Amingaon, Guwahati, Assam - 781031 |
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Tel No.: |
91-361-2682847, 2682852, 2682853, 2682901 |
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Fax No.: |
91-361 -2682852 |
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Factory 3: |
CS-47&48, PIPDIC Industrial Estate, Mettupalayam, Pondicherry - 605 009, India |
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Tel No.: |
91-413-2277364 |
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Fax No.: |
91-4132271691 |
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Zonal Offices: |
North Zone Office 2E/26, Jhandewala Extn. New Delhi-110055 Phone: 91-11-23544583 Fax: 91-11-3544583
Emami Limited, R.O. Door
No: 3-D, No: 18, Vijaya Towers, Third Floor, Halls Road,
Kilpauk, Chennai–60001, India
Golden Chambers, 5th Floor, New Link Rd,
Andheri(West), Mumbai – 400053 Fax:
91-22 40390020 /2673 3820 East Zone Office 8, Bentinck Street, 10th Floor, Taher Mansion,
Kolkata 700001 Phone: 033-22488654 / 8592 |
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Overseas
Office : |
Emami UK Limited 14
Drummond Drive, Stanmore, Middlesex, HA7 3PD, UK Phone No:+44 (0) 20 89549748 Emami International FZE Bel
Rasheed Towers, Office No.- 1203, Sharjah UAE, Post Box. No 66333 Fax No: 97165754775 |
DIRECTORS
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Name : |
Mr. R. S. Agarwal |
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Designation : |
Managing Chairman |
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Name : |
Mr. R. S. Goenka |
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Designation : |
Director |
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Name : |
Mr. Sushil Kumar Goenka |
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Designation : |
Managing Director |
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Name : |
Mr. K. K. Kherma |
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Designation : |
Director |
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Name : |
Mr. Viren J. Shah |
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Designation : |
Director |
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Name : |
Mr. S. N. Jalan |
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Designation : |
Director |
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Name : |
Ms. Vaidya S.
Chaturvedi |
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Designation : |
Director |
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Name : |
Mr. Mohan Goenka |
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Designation : |
Whole Time
Director |
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Name : |
Mr. A. V. Agarwal |
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Designation : |
Whole Time
Director |
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Name : |
Mr. H. V. Agarwal |
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Designation : |
Whole Time
Director |
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Name : |
Mr. S. K. Todi |
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Designation : |
Director |
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Name : |
Mr. K. N. Memani |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. A. K. Joshi |
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Designation : |
Company Secretary |
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Name : |
Mr. G M Legal |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(As on
31.03.2008)
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Names of Shareholders |
No. of Shares |
Percentage of Holding |
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PROMOTER HOLDING |
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Indian Promoters |
54591253 |
87.84 |
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NON PROMOTERS HOLDINGS |
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Institutional
Investors Mutual Funds and
Axis Foreign
Institutional Investors |
1732482 1023372 |
2.79 1.65 |
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OTHER INVESTORS |
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Private Corporate
Bodies |
3361455 |
5.41 |
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Indian Public |
1423214 |
2.29 |
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NRI’s / OCB’s /
Foreign Others |
13401 |
0.02 |
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TOTAL |
62145177 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and Marketing of personal and healthcare
products. |
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Products : |
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Brand Name : |
·
Navratna
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GENERAL
INFORMATION
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No. of Employees : |
1000 |
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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 : |
S K Agarwal and Company Chartered Accountant |
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Group Companies: |
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Associates : |
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Subsidiaries : |
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CAPITAL
STRUCTURE
Authorised
Capital :
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No. of Shares |
Type |
Value |
Amount |
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75000000 |
Equity Shares |
Rs.2/- each |
Rs.150.000 millions |
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Issued,
Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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62145177 |
Equity Shares |
Rs.2/- each |
Rs.124.290
millions |
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NOTE:
- Includes 28075000 Equity Shares issued as fully paid Bonus Shares
by capitalisation of Capital Redemption Reserve - Rs.25.000 Millions - and
Revenue Reserves - Rs.31.150 Millions
- Includes 27825177 (26830000) Equity Shares allotted for consideration
other than cash.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
124.290 |
124.290 |
122.300 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
2765.732 |
2169.943 |
3229.900 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
2890.022 |
2294.233 |
3352.200 |
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LOAN FUNDS |
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1] Secured Loans |
351.946 |
228.135 |
312.400 |
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2] Unsecured Loans |
30.636 |
26.057 |
9.300 |
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TOTAL BORROWING |
382.582 |
254.192 |
321.700 |
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DEFERRED TAX LIABILITIES |
21.290 |
25.817 |
0.000 |
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TOTAL |
3293.894 |
2574.242 |
3673.900 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
778.186 |
468.026 |
1931.700 |
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Capital work-in-progress |
134.748 |
344.854 |
92.800 |
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INVESTMENT |
1029.653 |
781.791 |
871.000 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
400.997
|
411.985
|
366.200
|
|
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Sundry Debtors |
340.293
|
457.719
|
366.800
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Cash & Bank Balances |
28.027
|
184.181
|
8.200
|
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Other Current Assets |
0.000
|
0.000
|
0.000
|
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Loans & Advances |
1526.763
|
535.226
|
468.000
|
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Total Current Assets |
2296.080
|
1589.111
|
1209.200
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Less
: CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
944.773
|
609.540
|
244.700
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Provisions |
0.000
|
0.000
|
186.100
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Total Current Liabilities |
944.773
|
609.540
|
430.800
|
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Net Current Assets |
1351.307
|
979.571
|
778.400
|
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MISCELLANEOUS EXPENSES |
0.000
|
0.000
|
0.000
|
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|
|
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TOTAL |
3293.894 |
2574.242 |
3673.900 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
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Sales Turnover |
5837.104 |
5157.982 |
3073.700 |
|
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Other Income |
26.603 |
34.885 |
38.100 |
|
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Total Income |
5863.707 |
5192.867 |
3111.800 |
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Profit/(Loss)
Before Tax |
1049.287 |
744.938 |
503.100 |
|
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Provision for Taxation |
121.800 |
85.725 |
9.400 |
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Profit/(Loss)
After Tax |
927.487 |
659.213 |
493.700 |
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Export Value |
361.329 |
378.130 |
NA |
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Import Value |
32.074 |
31.785 |
NA |
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Expenditures : |
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Cost of Goods Sold |
2483.624 |
2258.020 |
0.000 |
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Manufacturing, Administrative and Selling Expenses |
2393.302 |
2245.122 |
471.200 |
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Raw Material Consumed |
0.000 |
0.000 |
1735.900 |
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Excise Duty |
0.000 |
0.000 |
64.900 |
|
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Salaries, Wages, Bonus, etc. |
0.000 |
0.000 |
144.700 |
|
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Interest and Financial Charges |
(62.506) |
(55.213) |
14.100 |
|
|
Power & Fuel |
0.000 |
0.000 |
12.000 |
|
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Depreciation & Amortization |
0.000 |
0.000 |
66.900 |
|
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Other Expenditure |
0.000 |
0.000 |
99.000 |
|
Total
Expenditure |
4814.420 |
4447.929 |
2608.700 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
|
30.06.2008 [1st Quarter] |
|
Sales Turnover |
|
|
1227.900 |
|
Other Income |
|
|
6.600 |
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Total Income |
|
|
1234.500 |
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Total Expenditure |
|
|
1121.000 |
|
Operating Profit |
|
|
113.500 |
|
Interest |
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|
(29.800) |
|
Gross Profit |
|
|
143.300 |
|
Depreciation |
|
|
17.100 |
|
Tax |
|
|
15.000 |
|
Reported PAT |
|
|
111.700 |
KEY RATIOS
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
Debt Equity Ratio |
0.12 |
0.18 |
0.38 |
|
Long Term Debt
Equity Ratio |
0.10 |
0.10 |
0.27 |
|
Current Ratio |
1.99 |
2.13 |
2.56 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
6.72 |
6.83 |
3.73 |
|
Inventory |
14.41 |
13.34 |
8.38 |
|
Debtors |
14.68 |
12.59 |
8.55 |
|
Interest Cover
Ratio |
20.32 |
69.97 |
36.68 |
|
Operating Profit
Margin (%) |
20.08 |
15.45 |
19.00 |
|
Profit Before
Interest and Tax Margin (%) |
18.84 |
14.55 |
16.83 |
|
Cash Profit
Margin (%) |
17.07 |
13.59 |
18.24 |
|
Adjusted Net
Profit Margin (%) |
15.83 |
12.70 |
16.06 |
|
Return on Capital
Employed (%) |
37.92 |
39.40 |
42.78 |
|
Return on Net
Worth (%) |
35.80 |
40.46 |
56.46 |
LOCAL
AGENCY FURTHER INFORMATION
HISTORY:
In the Seventies, Kolkata based industrialists R S Agarwal
and R S Goenka was jointly promoted the business of Himani Limited. Over the
last three decades, Himani has not only emerged as a leading player in the field
of personal and health care products in India and also changed its name as
Company. Toiletries, Medicines and Food products are the main Products of the
company. The company is headquartered in Kolkata with a multi locational
manufacturing presence in Kolkata, Pondicherry, Jabalpur, Guwahati and Mumbai.
The company has offices across 27 Indian cities. Subject has also markets its
products in over 30 countries.
During the year 1995 the company increased the installed capacity of medicines
from 1440 MT to 1760 MT. During the same year the company initiated steps for
modernisation and technological upgradation in order to combat competition and
retain its market share.
Kolkata High Court has sanctioned the Scheme of Amalgamation. Accordingly
Subject has been amalgamted with Himani Limited, with effect from 1st April,
1998. Board has alloted 8,86,000 equity shares of the company to the Company,
as per amalgamation. Company's name has been changed from "Himani
Limited" to "Emami Limited” as on 1st Sept. 1998.
The company has expanded the installed capacity of Medicine during the year
2002-03 by 1000 MT and with this expansion the total capacity has been
increased to 15261 MT.
The total capacity of Toiletries, Medicines and Food products at the end of
financial year 2002-03 are 2391.70 MT, 15261 MT & 500 MT respectively.
MILESTONES
In the year 1978 Himani Limited a 70-year-old company was acquired. Today the successful Boroplus Cream is from Himani, a pioneer in herbal cosmetics in the country. After years of experimentation, Boroplus Antiseptic Cream was launched.
Sensing success in the field of plastics, the Group incorporated Classic Plastics Private Limited, which manufactures blow moulding containers and bottles for the cosmetics industries and jerry cans for oil companies.
Due to Emami’s overwhelming success in India its products received ready acceptance in Russia. It is also being continuously exported to Middle East, South East Asia and countries of EEC.
The Emami Group has taken a giant step into a field not ventured by them so far – the field of medicine. The former Frank Ross Limited is now a member of the Emami Group, and manufactures ethical life saving drugs.
CRI Limited today is recognized as the leader in manufacturing Tips and Refills for ball Point Pen in India.
Capitalizing Exports on the liberal economic policy of the Government of India, the Emami Group is making successful ventures into the foreign market with increased momentum. The Emami Group has overseas representation in the following countries such as USA, Canada, South Asian Countries, South East Asia, Russia, Ukraine, Australia, Middle East Countries and East and West Africa.
· Personal and Health Care
· Paper
· CRI Tips
· Wright Pens
· Marketing Activities
· Hospital
· Shopping Centres
THE
CONSUMPTION-LED ECONOMY
India is the second largest emerging market economy, fourth
largest global economy and the second fastest growing economy. India emerged as
a trillion-dollar economy in the first quarter of 2007-08 with its GDP hovering
around USD 1,100 billion, graduating it to the elite list of 10 economic
powerhouses to enjoy this distinction. By the end of the Eleventh Plan, India’s
annual GDP growth is expected to be in double-digits, reinforcing its position
as an economic superpower. The country recorded an estimated GDP growth of 9%
in 2007-08.
INDIAN
ECONOMY (GDP)
There are a number of reasons supporting India’s optimism
story
POPULATION:
The uninterrupted population growth of the country indicates
a sustainable increase in consumer demand, benefiting FMCG manufacturers. The
1.1-billion strong Indian population is growing annually at 1.19% [Source: Businessworld, April 7, 2008] and is expected
to touch 1.33 billion by 2020-21.
INCOMES:
Incomes are rapidly rising in India, strengthening
consumption prospects across various products, including FMCG. Indian salaries
reported a double-digit hike of 14.5% for the fourth year running in 2007, the
highest in the Asia-Pacific region [Source:
Hewitt Associates]. The average Indian today is twice richer than in
1985 and in another 20 years, this pace is likely to accelerate; by 2025, per
capita income is expected to almost treble from the 2005 level, graduating
India from the 12th largest consuming economy to the fifth [Source: McKinsey Global].
Correspondingly, India’s consumer market will grow to USD
8.2 trillion, raising the level of water for all FMCG companies.
IN
SYNC WITH INDUSTRY DYNAMICS
The Indian FMCG industry grew about 16% in 2007-08, almost
twice the national GDP growth. Going ahead, the USD 17.36-billion Indian FMCG
sector is projected to grow to USD 33.4 billion by 2015 [Source: FICCI].
Subject is attractively placed to capitalise on this
transition. Just consider: personal care accounts for a 22% share of the
country’s FMCG pie. This is precisely one of the segments – accounting for a
significant portion of the country’s FMCG offtake – where company is present.
Boroplus Antiseptic Cream is the market leader with a 73% market share;
Navratna Oil is also a market leader with a 54% market share. Company’s other
power brands are also either number two or three in their respective segments.
Around USD 9 billion of India’s retail consumption is rural,
a little more than half of the country’s overall figure. Company generated
substantial revenues from India’s rural markets through consistent capacity
creation in distribution, supply chain, product customisation and
value-for-money productisation. The Company added additional rural districts to
its marketing footprint in 2007-08.
India’s rural market represents a rich retail potential for
some good reasons: 70 of 100 Indians live there, constitute a population of 790
million, equivalent to the size of a number of countries combined. However,
only a marginal portion of this vast market is tapped by the FMCG companies.
Going ahead, if company can capture even 5% of India’s rural market, its
revenues could increase significantly, indicating the potential of the market
and opportunity for the Company.
During 2007-08, the Indian FMCG sector invested Rs.4427.200
Millions. In advertising and promotion. Company invested aggressively in
promotions and the launch of new products. To carve out a distinctive
mindshare, the Company enlisted the support of leading national icons: Amitabh
Bachchan, Shah Rukh Khan, Kareena Kapoor and Sunny Deol, as well as regional
celebrities like Tamil superstar Surya and Bengal’s ace cricket Sourav Ganguly.
The Budget 2008 strengthened the overall FMCG industry
sentiment through tax incentives pertaining to locational presence and overall
infrastructure development. While company will leverage tax incentives to
reduce costs, the national infrastructure development will translate into an
increased number of malls where the Company’s products will be merchandised.
To respond fittingly to this opportunity, the Company
enlisted the consulting support of advisory firm Ernst & Young. Besides,
the Project Navodaya will help company accelerate growth through distribution
and working capital efficiencies.
GROWTH
DRIVERS:
The FMCG industry is driven by the following realities:
Increasing households: The number of rural households using
FMCG products increased from 136 million in 2004 to 143 million in 2007.
HIGHER
INCOMES:
Rural India's monsoonal dependence progressively declined
due to better irrigation. Interestingly, around half of rural India’s GDP is
derived from nonagricultural activity, making the offtake of various products
and services more stable. India’s per capita income increased from Rs. 11,672
in 2003-04 to Rs. 24,321 in 2007-08. Rural India accounted for a 34% offtake of
FMCG products and grew 17% in 2007 due to the following reasons:
RISING
ASPIRATIONS:
Due to higher incomes and stronger television promotion,
there is now a visible shift to higher-value branded products. A rise in
disposable incomes has encouraged a higher spending on personal hygiene and
grooming.
DEMOGRAPHICS:
The FMCG growth in rural and semi-urban markets is catalysed
by a decisive youth segment (estimated at 180 million), marked by a substantial
increase in first-time earners. The Company responded to this reality through
the launch of relevant products and endorsements by youth icons.
RETAIL
BOOM:
India’s retail industry growth has grown FMCG volumes. The
Indian retail sector is dominated by more than 12 million small outlets – one
of the highest in the world in any single country – even as there is a growing
influence of the modern organised retail format (malls). Only 4% of India’s
retail industry is reportedly organised, limiting the reach of FMCG companies.
With modern retail space now being commissioned faster than before and
supermarkets, department stores and hypermarkets emerging as futuristic
formats, Indian FMCG companies are partnering with retail outlets for
distribution and lastmile advantages. The country is expected to have 400 malls
by 2015 [Source: Cushman and Wakefield
2008], creating a vast
potential for its FMCG sector. Company products catered to both formats,
leveraging value-for-money pricing through scale, efficiency, supply chain and
distribution advantages.
INCOME-CONSUMPTION
CYCLE:
The Indian FMCG sector is enjoying the positives arising out
of a virtuous circle between consumption and income growth. India’s lower level
of investment relative to GDP reflects that consumption played a bigger role in
the Indian growth story than other developing Asian nations. At 62% of GDP,
India’s consumption is proportionally closer to developed economies like Japan
and the US.
INDIA'S
CONSUMPTION SHARE OF GDP IS CLOSER TO JAPAN AND THE US THAN IT IS TO CHINA
- UNTAPPED RURAL AREAS:
The government has invested more than USD 1 billion in
Bharat Nirman, a fouryear plan for strengthening India’s rural infrastructure
by building roadways, electrification, telecom and sanitation infrastructure.
This will enhance rural employment opportunities and reduce the legacy
dependence on agriculture. In turn, average household incomes in India are set
to increase at 3.8% annually over the next 20 years.
- NEWER PRODUCTS:
FMCG companies are focusing on key brands, cost efficiencies
and rural markets, indicating market sophistication from the manufacturers and
consumers’ perspective.
DRIVERS
OF VALUE
SALES
AND DISTRIBUTION
In the FMCG business, the most successful company is
inevitably the one that is best dispersed. This makes it possible for companies
to be proximate to consumers, resulting in the most effective capture of sales from
different regions and products.
During 2007-08, the Company strengthened its sales and
distribution network through the following initiatives:
- Opened three new depots in Varanasi, Siliguri and Jabalpur
- Divided large areas into smaller territories for enhanced control
- Introduced ASMs exclusively for metro towns like Hyderabad,
Bangalore, Mysore, Mumbai, Kolkata and Chennai
- ncreased frontline salesmen and frontline supervisors for expanding
direct coverage
- Appointed managers for modern trade (new retail formats)
accelerating mall sales; undertook mall promotions in metro cities
- Tied up with the Indian Oil rural petrol pumps for extending its
reach to untapped rural markets
- Participated in the Sonepur mela, Meerut mela, Srawan mela, Rath
Yatra and others for promoting products through demonstrations and
activities
- Provided professional training to frontline sales employees and
assistant sales managers
- Increased new channel activities such as Emami Mobile Traders and
Emami Small Village Shops to enhance rural distribution. Jharkhand and
Tamilnadu were the two new states where these activities were implemented
These initiatives translated into the following
achievements: the Company widened its coverage through direct distributors,
increased distributor strength to 2,700, sub-distributors to around 200 and van
routes to around 450, resulting in a direct outlet coverage of 4,00,000
outlets. Revenues from modern trade increased by 107% and outlet coverage
doubled to 2100.
Looking ahead, the Company expects to widen its distribution
network, increase direct outlet coverage to 6,00,000, deepen rural market
coverage and create an energized marketing team that emerges as an industry
model.
DRIVERS
OF VALUE
RAW
MATERIAL MANAGEMENT
In a world marked by volatile raw materials movement, their
ongoing management is critical to protect profitability, generate adequate
resources for reinvestment and sustain organisational growth.
- KEY INPUTS:
Company the principal raw materials during the year under
review comprised petroleum-based LLP, vegetable oils (crude and refined til
oil, rice bran oil) and agricultural products (herbs and menthol). Besides, the
Company consumed commodities like sugar, mentha, gold and silver foil.
- COSTS:
An unprecedented price rise in crude oil hardened the cost
of petroleum-based LLP and vegetable oils as well as packaging material; a rise
in the cost of raw materials like wax, menthol, soap stone powder, gold, herbs,
etc. also increased input costs.
- HEDGING POLICY:
The Company’s pricebased commodity hedging policy offset raw
material cost fluctuations. For instance, an efficient mentha price discovery
due to the delivery-based settlement system protected the Company from cost
spikes.
- COST MANAGEMENT:
As opposed to an ad hoc and arbitrary response, the Company
institutionalised its raw material cost management. The result was an intensive
study of all existing cost influences, leading to proactive alterations and
adaptations in raw material sizes and specifications. This was reflected in the
prudent use of input substitutes without affecting product yield or quality.
For instance, the Company graduated to the use of alternative packaging plastic
grades enjoying higher availability and lower costs. It switched from single
blow mould to multi-cavity moulding, resulting in improved productivity and
quicker bottle changeover.
- PURCHASING POLICY:
As a deliberate strategy, the Company procured its raw
materials from vendors in nonexcisable areas i.e. Assam, Uttranchal and
Himachal Pradesh at affordable costs. It leveraged its insight into global
price-value opportunities through the timely import of nearly 12% of its total
raw material requirements – micro crystal wax (MC wax), stearic acid,
gultheriya oil (methyl salicylate), perfumes and liquid paraffin oil (LLP) –
from China, Malaysia, Hungary, the US, UK and Germany, among others.
- VENDOR RELATIONSHIPS:
The Company created a dedicated vendor community in
non-excisable zones, protecting its interests through assured offtake. It
graduated from a multi-vendor to single-vendor focus within plant proximity,
reducing freight. Consequently, inventory costs declined and working capital
efficiency improved.
- FARM FORESTRY:
The Company engaged in farm forestry initiatives to secure
its raw material requirements of herbs in Orissa, UP and MP. Going ahead, this
backward integration will protect the Company during volatile commodity
periods. Going ahead, the Company intends to institute a green channel system
of star suppliers where the quality assurance will be completed at the vendor’s
site, making it possible for the raw material to be sent directly to the
Company’s production line.
Besides, the Company expects to counter raw material cost
increases with a corresponding cost reduction through the use of alternative
inputs and packaging adaptations.
DRIVERS
OF VALUE
OPERATIONS
In a business marked by competitive margins, there was an
ongoing priority to leverage operational efficiency and circumvent rising
costs.
The Company responded through a number of initiatives: an
increase in the number of manufacturing plants as well as an increase in their
respective production capacities, an increasing preference to manufacture in
tax-free zones, focus on operational efficiency, vendor proximity to production
units, absorption of upgraded technologies and superior working capital
management.
- TAX BENEFITS:
The proportion of Emami’s products manufactured in notax
zones increased to around 80% as the Company strengthened its manufacturing
presence in non-taxable zones.
- EXPANSION:
Company is investing Rs.400.000 Millions in a new plant at
Abhoypur (Guwahati), a tax-free zone. The Company enlarged the capacities of
its other manufacturing units as well. Contract manufacturing: The Company
outsourced the production of talcum powder from units located near raw material
manufacturing units, saving freight, capital investment and manpower.
Going ahead, the Company will continue to benchmark its cost
management with the most demanding parameters like waste reduction, new
technology, wider manufacturing base and graduation from single-cavity to
multi-cavity equipment (reducing labour and processing time).
The Company conducted complete research on 20 new products
and launched products like Keshkala, Navratna Extra Thanda Oil, Navratna Oil
Lite, Malai Kesar Cold Cream and Hair Life.
BOARD
OF DIRECTORS
MR.
RADHE SHYAM AGARWAL,
Mr. Radhe Shyam Agarwal, Executive Chairman, 62, is a Chartered Accountant,
Company Secretary and LLB. Started career as a senior executive of the Birla
Group. Started a joint venture with Shri R.S. Goenka by setting up an ayurvedic
medicine and cosmetic manufacturing unit in Kolkata, West Bengal. Eminent
industrialist with experience in strategic planning, corporate affairs and
finance. Board member of several companies like Emami Paper Mills Limited,
Emami Realty Limited, Advance Medicare & Research Institute Limited,
Susruta Clinic & Research Institute for Advance Medicine Private Limited,
South City Projects (Kolkata) Limited, Bengal NRI Complex Limited, Rupa &
Company Limited, Committee Member of Shree Vishudhanand Hospital & Research
Institute, Nagrik Swastha Sangha and the trustee of Emami Foundation, Maa
Foundation and Banshilal Janki Devi Agarwal Trust. Served Director on the Board
of the West Bengal Industrial Development Corporation and president of MCC.
MR.
RADHE SHYAM GOENKA,
Mr. Radhe Shyam Goenka, Director, 61, is an M.Com and LLB. Started career in 1970 with
the Birla Group of Industries. Expert in taxation, strategic planning,
corporate affairs and financial planning. Started a joint venture with Mr. R.
S. Agarwal by setting up an ayurvedic medicine and cosmetic manufacturing unit
in Kolkata, West Bengal. Board member of several companies such as Emami Paper
Mills Limited, Susruta Clinic & Research Institute for Advance Medicine
Private Limited, Advance Medicare & Research Institute Limited, South City
Projects (Kolkata) Limited, Khaitan (India) Limited and others. Trustee in
Emami Foundation, Maa Foundation, Shree Vishudhanand Hospital Trust, Keshardeo
Ratni Devi Goenka Trust, Banshilal Janki Devi Agarwal Trust and Bhagatram
Charitable Trust. Chairman (Research & Seminar) of Shree Vishudhanand
Hospital & Research Institute and committee member of Shri Shikshayatan
Secondary School, Nagrik Swastha Sangha and the Indian Cancer Society.
MR.
SUSHIL KUMAR GOENKA,
Mr. Sushil Kumar Goenka, Managing Director,
52, is a commerce graduate, who joined the Emami Group following graduation.
Rich industry experience. Secretary of Aradhana Trust, Vishwa Jagriti Mission
Trust (Kolkata) and Vivekananda Hospital and Research Centre, Kolkata. Former
president of the Lions Club of North Calcutta and a member of Shri Ramkrishna
Matrimangal Pratishthan, Ariadaha. Drives production, operation, human resource
management, distribution and public relations of Company.
MR.
VIREN J. SHAH,
Mr. Viren J. Shah, Director,
82, is an AMP from the Harvard Business School, USA, with a special
expertise in general business management. Served as West Bengal Governor from
December 1999 to December 2004. He was the Chairman of Mukund Limited for 27
years. Former President of ASSOCHAM, IMC and other associations. Member of the
Parliament for 16 years in the Lok Sabha and Rajya Sabha and of several
parliamentary committees. Served as a Director on the Boards of several
companies, besides being a member on the Board of Trustees of the Asiatic Society.
Non-Executive Independent Director of Company.
Mr.
K.N. Memani,
Mr. K.N. Memani, Director,
69, is a senior chartered accountant. Former Chairman and country
managing partner of Ernst & Young, India. Was the member of Ernst &
Young Global Council for a decade. Specialises in business and corporate
advisory, foreign taxation, financial consultancy, etc. and is consulted on
corporate matters by several domestic and foreign companies. Was associated
with several MNCs establishing businesses in India. Member of several Boards of
public and private limited companies. Chairman of the Audit Committee and other
committees in DLF Limited, Hindustan Times, ICICI Venture Funds Management
Company Limited, HEG, Indo Rama, NEI, Aegon, etc. Former member of the Expert
Committee constituted by the Ministry of the Company Law for the amendment of
the Companies Act for two consecutive years. Served in the External Audit
Committee (EAC) of the International Monetary Fund and was appointed the
Chairman of EAC for 1999-2000 — the only Indian appointed in this committee by
the IMF. He is Chairman of Quality Review Board constituted by Ministry of
Company Affairs. Associated with various chambers of commerce. Former president
of the PHD Chamber of Commerce and Industry, former Chairman of the American
Chamber of Commerce in India, former President of FIEO and Indo- American
Chamber of Commerce. Member of managing committees of the PHD Chamber of
Commerce, Assocham, FICCI, American Chamber of Commerce, Indo-American Chamber
of Commerce, Foundation for Innovation and Technology Transfer and IIT, Delhi.
MR.
SHRAWAN KUMAR TODI,
Mr. Shrawan Kumar Todi, Director, 67, is an M.Com. Chairman of the Shrachi Group
of Companies and Board member of Advance Medicare & Research Institute Limited,
Bengal NRI Complex Limited, Bengal Shrachi Housing Development Limited, Bengal
Tools Limited, Emami Paper Mills Limited, Bhaskar Shrachi Alloys Limited, South
City Kolkata Projects Limited, Khaitan (India) Limited, Pratidin Prakashani (P)
Limited, Shrachi Securities Limited and Web Development Company Limited, among
others. Member of the managing committee of Associated Chamber of Commerce and
Industries, New Delhi, Executive Committee Member of Merchants’ Chamber of
Commerce (MCC) and the Chairman of the Development Committee of Marwari
Hospital. Trustee of Manovikas Kendra Rehabilitation & Research Institute
for handicapped, a government body. Non- Executive Independent Director of
company.
MR.
SHYAMANAND JALAN,
Mr. Shyamanand Jalan, 74, is a commerce graduate and LLB.
Attorney and member of the Incorporated Law Society, India, and the Bar Council
of India. Authority in real estate, property matters, finance and
infrastructure projects. Won prestigious National Awards. Former Vice-Chairman
of the Central Sangeet Natak Academy. Formal Chairman of the Science City and
the Birla Industrial & Technological Museum. Director of many other
prominent companies. Non- Executive Independent Director of Subject.
MR.
KRISHNA KUMAR KHEMKA,
Mr. Krishna Kumar Khemka, Director, 75, is a science graduate. Set up many mega
projects in the fields of tyres, pulp and paper, heavy chemicals, etc. Former
Chairman of the Indian Paper Mills Association, former president of the Rotary
Club of Calcutta, Indo-American Chamber of Commerce, Indo-Italian Chamber of
Commerce, etc. Committee member of the Bharat Chamber of Commerce and
associated with other chambers. Honorary Consul General of the Philippines.
Served as a Director of several companies with around 40 years of industrial
experience. Associated with many cultural organisations like Anamika Kala
Sangam, Sangeet Kala Mandir, Padatik, etc. Non- Executive Independent Director
of company.
MRS.
VAIDYA SURESH CHATURVEDI,
Mrs. Vaidya Suresh Chaturvedi, Director, 80, is a Kaviraj, Ayurvedacharya, BIMS and
MAMS. Held key positions in the Rastriya Ayurveda Mandal, India Academy of
Sexology and the Indian Association of Traditional Asian Medicines. Member of
Occult India, All India Ayurveda Congress, Medvisa International, Bharata
Kalyan Manch and the National Institute of Ayurveda. Honorary physician to the
Governor of Maharashtra, consultant physician of the Bombay Hospital. Awarded
the Padmashree by the Government of India and the Bharat Nirman Conference on
alternative medicines. Authored authoritative articles in leading newspapers
and wrote books on diet and health. Non-Executive Independent Director of
Company.
MR.
MOHAN GOENKA,
Mr. Mohan Goenka, Wholetime
Director, 35, is a commerce graduate with an MBA from UK. Director
of several companies. Possesses extensive knowledge and experience in marketing
and brand development. Vice- Chairman of the Marketing Committee of the
Confederation of Indian Industry (CII), eastern region. Member of the
Merchants’ Chamber of Commerce (MCC) and Young Entrepreneur Organisation, an
international forum of entrepreneurs.
MR.
ADITYA VARDHAN AGARWAL,
Mr. Aditya Vardhan Agarwal, Wholtime Director, 33, is a commerce graduate. Director
of several companies. Extensive knowledge and experience in marketing and brand
development. Past Ex. Director, Committee Member and Chairman (FMCG) of
ASSOCHAM, vice-president of West Bengal Basketball Association and an advisor
of the Academy of Ayurvedic Doctors of India, Kolkata.
MR.
HARSH VARDHAN AGARWAL,
Mr. Harsh Vardhan Agarwal, Wholetime Director, 31, is a commerce graduate. Possesses
extensive knowledge in marketing and brand development and served as a Director
of several companies.
REVIEW
OF OPERATIONS
During the year, the turnover of the Company grew to Rs.5837.000 Millions
representing an overall increase of 13.2% in turnover in comparison with the
last year. However, the profit after tax of the Company rose to Rs.927.000
Millions, showing an increase of 40.7% over the last year's profit.
Despite high inflationary and cost pressures throughout the year, company
capitalised on every available opportunity. Company consolidated its operations
and undertook strategic initiatives coupled with a robust marketing strategy to
exploit the full industry potential, besides making efforts towards cost
reduction and improved efficiency at the plant level which enabled the Company
to grow reasonably well.
In continuation of its efforts towards offering innovative, more effective and
value- added products to the consumers for providing them with value for money,
Company continued combining traditional Ayurvedic science with adoption of the
modern manufacturing technology, achieving a growth of 13.2% in net sales. The
Company also emphasises on brand equity and the sales and distribution network
to expand its coverage and make a leeway for new products in the
pipeline.
To diversify its activities, the Company is also considering introduction of
brand extensions and new products to widen is product portfolio. It is always
seeking suitable opportunities for growing inorganically through acquisition in
India and abroad, for which the Company has plans of iorganic growth in the
pipeline.
Realising its growth potential, the Company has ventured into the realty
business through its wholly owned subsidiary company. The progress of the
realty business is quite satisfactory and the Company is optimistic about
overall growth in the years to come, enhancing the overall profitability as
well as maximisation of shareholders' wealth.
A detailed analysis of the performance of the Company during the year under
review and its analysis for the coming year are given under the heading
Management Discussion and Analysis Report.
FIXED ASSETS:
- Land
- Building
- Plant and Machinery
- Furniture, Equipment and Computers
- Motor Vehicles
WEBSITE
DETAILS
PROFILE:
Subject is one of the fastest growing FMCG companies in
India which takes pride in endowing people with good health. Using its
unequalled knowledge base and effectively fusing age old ayurvedic wisdom with
modern scientific practices company has developed innovative and effective
products. Its power brands include Boroplus Antiseptic Cream , Navratna Oil ,
Sona Chandi Chyawanprash, Fast Relief, Mentho Plus and Fair & Handsome.
Engaged in the production of most dependable herbal personal care and health
care products, the company has built its brands on a heritage of quality,
innovation and dynamism. Company brands are available in 58 countries with
focus on key markets like UK, Middle East, CIS countries, South Asia and
Africa.
The employees responsible for building company’s reputation
as a brand, that can be relied up on, have also made the company unique in
devising its products based entirely on people’s needs. The company has been
able to script its success in a short span of a little over three decades,
transforming to Rs.6000.000 Millions business behemoth.
Company is listed on the Bombay Stock Exchange (BSE) (Code 531162) & on the
National Stock Exchange (NSE) (Code “EMAMILTD”).
While company is known for its FMCG business, it has also carved strong
presence in other business segments as well.
RESEARCH
AND DEVELOPMENT:
In view of the fact that innovation represented the
company’s principal driver, the company continued to strengthen its R&D
Infrastructure.
The R&D department, located in Kolkata and Mumbai,
follows an extensive process, introducing products that are safe and effective.
PRIORITIES
THE
COMPANY’S RESEARCH FOCUS COMPRISED THE FOLLOWING PRIORITIES:
- Successful completion of a series of tests required to develop safe
and effective products.
- Extensive study of a database of age-old tomes (granths) leading to
the identification of effective ayurvedic formulations.
- Innovative introduction of differentiated or improved products,
offering a superior value-for-money proposition.
- Adherence to specifications (raw material use, formulation
development, flavour development, shelf-life testing, finished goods specification,
validation protocols) apart from external certifications from the Drug
Control Board.
- Updated equipment in the laboratory certified by NABL.
- cGMP compliant laboratory practices.
- Conduct of clinical trials in association with renowned ayurvedic
hospitals and colleges.
R&D
STRENGTHS
- 20,000 Sq. feet of R&D Space.
- Laboratories with state-of-the-art equipment.
- Highly qualified and respected scientists and ayurvedic doctors.
Himani
Ayurvedic Science Foundation (HASF): Himani Ayurvedic Science
Foundation brings the best of Ayurveda through scientific ways of herb
collection, total quality control methods and latest production processes to
ensure that the natural property and goodness of precious herbs and ingredients
are naturally preserved.
SALES AND DISTRIBUTORS:
Company covers all the states with 28 depots across India
and enjoys a wide distribution network comprising 2500+ distributors and a
direct coverage of 4 lacs outlets. Apart from the distribution strength, company
has 1200+ strong and motivated Sales Force including both direct & indirect
manpower operating in the market.
Modern Trade: With the change of scenario in retail market
the Company has drawn an extensive coverage plan for targeting customers in modern
format outlets effectively selling in the market directly or through exclusive
distributors. A specialized Sales Force has also been developed to service
these ever growing Modern Retail outlets. Currently, the Company is covering
over 2000+ Key Accounts and is expected to double the sales in 2008–09
In order to bring in complete retail focus to the business
through direct reach and distribution, the Company has also undertaken an
aggressive plan to identify Focus Sates in the country. The objective behind
this is to increase strong numeric distribution, reduce dependency on
wholesale, initiate extensive BTL activities, strengthen rural coverage and
introduce smart sales force to counter any competition.
Company covers all the states with 28 depots across India
and enjoys a wide distribution network comprising 2700+ distributors and a
direct coverage of 4 lacs outlets and over 2100 modern retail outlets.
INFORMATION TECHNOLOGY:
Company is investing in its future by further building
integrity into its information systems. It has implemented SAP. With the
implementation, the following benefits are in the process of being accrued:
- Standardized
Work Processes
Company is a global company, offering a diverse portfolio of products to markets
in more than 58 countries. With the SAP implementation, we-ll be able to manage
their entire global supply chain more efficiently, enabling to make the best
possible business decisions ranging from capacity planning to production
scheduling.
Imagine a scenario in which they can analyze and evaluate their global
inventory with a few strokes of the keyboard. That scenario is now within reach
because their new applications and processes allow to apply a simplified and
standardized approach to doing business.
The SAP implementation is helping to reduce the amount of time and effort it
takes to fulfill customer requests and transactions. Having a robust, online
transactional system with a single data base is making that happen.
- Improved
Timeliness
Operational efficiency to respond quickly to fast changing market realities is
a strength we built in their IT department.
- Strengthen
Relationships
Companywide access to accurate information about customers, production and
distribution will form the backbone of our customer care concept—ultimately
integrating disparate touch points, raising the quality of customer
interactions, and focusing business processes across the enterprise around
customer needs. Business process will streamline and automation across all
locations.
Accuracy of Information
The new system will serve as a repository of information and allow to build
accurate customer profiles based on the products we sell and the services they
offer.
But it-s not only about having the right data. It-s about having that data
presented in the right format, at the right time and in the right place. And
it-s about carrying that customer information all the way through the product
cycle, from order commitment to production scheduling to delivery to invoicing.
The business information system enables to gather, store, analyze, and provide
easy access to the most up-to-date information they have—all updated in
real-time. Enhanced management control and online user-friendly management
reporting.
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.48.72 |
|
UK Pound |
1 |
Rs.82.17 |
|
Euro |
1 |
Rs.65.90 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
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 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--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 |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
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 |
|