MIRA INFORM REPORT

 

 

 

Report Date :

19.09.2008

 

IDENTIFICATION DETAILS

 

Name :

FINOLEX CABLES LIMITED

 

 

Registered Office :

26/27, Mumbai – Pune Road, Pimpri, Pune – 411018, Maharashtra

 

 

Country :

India

 

 

Financials (as on) :

31.03.2008

 

 

Date of Incorporation :

05.08.1967

 

 

Com. Reg. No.:

016531

 

 

CIN No.:

[Company Identification No.]

U31300MH1967PLC016531

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

PNEF00515E

 

 

Legal Form :

Public Limited Liability Company.  The Company’s Shares are Listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturer of Electrical Wires, Lan Cables, Coaxial Cables, Auto Battery Cables, Winding Wire Score Flat Cables, Industrial Flexible Cables, Jelly Filled Telephone Cables & Voice Grade 2P / 5P Telephone Cables.

 

RATING & COMMENTS

 

MIRA’s Rating :

Aa

 

RATING

STATUS

PROPOSED CREDIT LINE

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

 

 

 

 

 

Maximum Credit Limit :

USD 32000000

 

 

Status :

Excellent

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established and reputed company having fine track. Available information indicates high financial responsibility of the company. Trade relations are fair. Financial position is good. Payments are correct and as per commitments.

 

The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in a medium to long run.                         

 

 

LOCATIONS

 

Registered/ Corporate Office:

26/27, Mumbai – Pune Road, Pimpri, Pune – 411018, Maharashtra, India

Tel. No.:

91-20-27475963 (5 Lines)

Fax No.:

91-20-27472239 / 7470344

E-Mail :

sales@fclpun.gnpun.globalnet.ems.vsnl.net.in

sales.ldc@fclpun.gnpun.globalnet.ems.vsnl.net.in

info@finolex.com

sales@finolex.com

Website :

http://www.finolex.com

 

 

Factory 1:

L117/118, Verna Industrial Estate, Verna Salcette Goa – 403722, India

Tel No.:

91-832-2782002/ 03/ 04

Fax No.: 

91-832-2783909

 

 

Factory 2:

263/2A, Panjim Belgaum Road (NH 4A), Usgaon Tisk, Ponda Goa – 403406, India

Tel No.:

91-832-344376/78/79

Fax No.: 

91-832-344140

 

 

Factory 3:

Village Urse, Taluka Maval, Dist. Pune – 410506, Maharashtra, India

Tel No.:

91-2114-237021-4

Fax No.: 

 91-2114-237025

 

 

Branches :

Located at :

 

  • Ahmedabad
  • Bangalore
  • Chennai
  • Ernakulam
  • Goa
  • Indore
  • Kolkata
  • Coimbatore
  • Mumbai
  • New Delhi
  • Secunderbad
  • Raipur
  • Orissa
  • Jaipur
  • Luckno
  • Chandigarh

 

 

DIRECTORS

 

Name :

Mr. P. P Chhabria

Designation :

Chairman

Address :

9, ICS Colony, Ganeshkhind Road, Pune - 411 007, Maharashtra.

 

 

Name :

Mr. D. K. Chhabria

Designation :

Managing Director

 

 

Name :

Mr. V. K. Chhabria

Designation :

Dy, Managing Director

 

 

Name :

Mr. B. J. Rathi

Designation :

Director

Address :

94/13-14 ‘Jayesh’ 11th Lane, Prabhat Road, Pune – 41 1004, Maharashtra.

 

 

Name :

Dr. H. S. Vachha

Designation :

Director

 

 

Name :

Mr. B. G. Deshmukh

Designation :

Director

 

 

Name :

Mr. Atul C. Choksey

Designation :

Director

 

 

Name :

Mr. Sanjay K. Asher

Designation :

Director

 

 

Name :

Mr. P. G. Pawar

Designation :

Director

 

 

Name :

Mr. A. J. Engineer

Designation :

Director

 

 

Name :

Mr. M. L. Jain

Designation :

Assistant Managing Director and Chief Operating Officer

 

 

Name :

Mr. P. B. Paranis

Designation :

Assistant Managing Director and Chief Financial Officer

 

 

Name :

Mr. S B Ravi  (Pandit)

Designation :

Director

 

 

Name :

Mr. Pradeep R Rathi

Designation :

Director

 

 

KEY EXECUTIVES

 

Name :

Mr. R. G. D’Silva

Designation :

Company Secretary and General Manager (Legal)

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

(As on 31.03.2008)

Names of Shareholders

No. of Shares

Percentage of Holding

Promoters holding

 

 

Indian Promoter

50604919

33.09

Non Promoters holding

 

 

Institutional Investors

 

 

Mutual Funds and UTI

12178776

7.96

Banks, Financial Institutions, Insurance Companies (Central / State Government Institutions / Non Government Institutions)

15204395

9.94

FIIS

5145467

3.37

Others

 

 

Private   Corporate Bodies

26205333

17.14

Indian Public

36923863

24.14

NRIs / OCBs

533167

0.34

Any Others

6143425

4.02

 

 

 

Total

152939345

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer of Electrical Wires, Lan Cables, Coaxial Cables, Auto Battery Cables, Winding Wire Score Flat Cables, Industrial Flexible Cables, Jelly Filled Telephone Cables & Voice Grade 2P / 5P Telephone Cables.

 

 

Products :

Item Code No. (ITC Code)

Product Description

85444919

Jelly Filled Telephone Cables

8544

Electrical Cables – Light Duty

8544

Electrical Cables – Heavy Duty

900110

Fibre Optic Cable

854420

Co-Axial Cables

854459

LAN Cables

3920

PVC Sheets

7407.10

Continuous Cast Copper Rods

 

  • PVC Insulated Electrical Cables
  • Flameguard-FRLS Cables
  • PVC Single Core Flexible Cables
  • PVC Multicore Flexible Cables
  • Auto & Battery Cables
  • PVC Winding Wires
  • 3 Core Flat Cables
  • LT PVC/XLPE Power & Control Cables
  • Co-axial Cables
  • CATV (Trunk Coaxial Cables)
  • Jelly Filled Telephone Cables
  • Structured Cabling System
  • Switchboard Cables
  • PVC Corrugated Sheets
  • PVC Foam Sheets
  • PVC Rigid Sheets
  • Electrical Switches
  • CFL's

 

 

Brand Name :
  • "Fine"
  • "Flexibles"
  • "O"

 

 

PRODUCTION STATUS (As on 31.03.2007:-)

 

Particulars

 

Unit

Installed Capacity

Actual Production

Electrical Cables

 

TCKM

1030.00

702.96#

Communication Cables

Optic Fibre Cables

 

 

KM

48000.00

20547.44

Other Communication Cables

 

TCKM

10612.00

862.53

PVC Sheets and Accessories

 

MT

2100.00

1570.05

Fibre

 

KM

600000.00

414028.00*

Cross Linked Polyethylene and other Compounds (Used for Captive Consumption)

 

MT

2500.00

----

Poly coated FRP Rod

 

KM

1500.00

----

Continuous Cast Copper Rods

 

MT

60000.00

16653.79@

 

Notes:

Installed capacities are certified by the Managing Director and relied upon by the Auditors.

 

# Equivalent tonnage 23211 MT (Previous year 24636 MT)

 

* Includes captive consumption of 170762 Kms. (Previous year 145072 Kms)

 

@ Includes captive consumption of 13207 MT (Previous year 16090 MT)

 

5000 TCKM of Other Communication Cables Capacity is interchangeable with 332 TCKM of Electrical Cables Capacity.

 

GENERAL INFORMATION

 

Suppliers:

  • Cotmac Electronics Private Limited
  • Navbharat Industries

 

 

No. of Employees :

1316

 

 

Bankers :

·         Central Bank of India, Pimpri, Pune – 411 018, Maharashtra 

·         Standard Chartered Grindlays Bank Limited, Pune, Maharashtra 

·         Bank of Baroda, Pune, Maharashtra 

·         BNP Paribas, Pune, Maharashtra 

·         Citibank N.A., Pune, Maharashtra 

·         Corporation Bank, Pune, Maharashtra 

·         HDFC Bank Limited, Pune, Maharashtra 

·         State Bank of India, Pune, Maharashtra 

·         The Bank of Nova Scotia, Pune, Maharashtra 

·         ICICI Bank Limited

·         Standard Chartered Bank

 

 

Facilities :

Secured Loans :

 

Particulars

31.03.2008

 

(Rs. in millions)

Non-Convertible Debentures

 

7.60% L-Series

500.000

External Commercial Borrowings

1199.100

Short Term Loans from Banks :

 

Foreign Currency Demand Loan

-

Packing Credit

199.850

Other Working Capital Borrowing

213.671

 

 

Total

2112.621

 

Notes :

Particulars

 

Redemption

condition

 

Tenor

 

Repayment

schedule

 

Debentures - L Series

 

At par

 

5 years

 

Lumpsum on 11th August, 2010

 

External Commercial

Borrowings

 

At par

 

5 years

 

Lumpsum on 27th March, 2012

 

Security:

 

Debentures-L Series

 

First pari-passu charge on the immovable properties of JFTC Goa Division and premises

situated at Ahmedabad.

 

External Commercial Borrowings

 

First pari-passu charge on all the immovable / movable fixed properties of the Company,

both present and future, save and except properties to be excluded as agreed to by the

lenders. Security yet to be created.

 

Short Term Loans from Banks

 

Hypothecation of inventories and book debts.

 

 

 

 

 

 

 

Unsecured Loans

Particulars

31.03.2008

 

Rs. (in  millions)

Acceptance (Short Term) – Banks

739.657

Deferred Sales Tax Loan

23.793

Short term Foreign Currency Loans from Banks

-

 

 

Total

763.450

 

 

 

Banking Relations :

Good

 

 

Auditors :

 

Name :

B. K. Khare and Company

Chartered Accountants

Address:

706/707, Sharda Chambers, 7th Floor, New Marine Lines, Mumbai – 400020, Maharashtra, India

 

 

Membership :

Confederation of Indian Industry

 

 

Associates/Subsidiaries :

Associates

 

  • Finolex Technologies Limited
  • Finolex Essex Industries Limited
  • Finolex Industries Limited
  • Finolex Southern Gas Limited
  • Finolex Energy Corporation Limited
  • Corrugated Box Industries (India) Private Limited
  • Plastro Plasson Industries (India) Limited
  • Finolex Industries Limited.
  • Finolex Proprietary Limited.

 

Subsidiaries

 

  • Finolex Wire Products Limited
  • Creole Holdings Company Limited
  • Finolex Finance Limited

 

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

235000000

Equity Shares

Rs.2/- each

Rs.470.000 millions

3000000

Unclassified Shares

Rs.10/- each

Rs.30.000 millions

 

 

 

 

 
Total

 

Rs.500.000 millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

152939345

Equity Shares

Rs.2/- each

Rs.305.879 millions

 

 

 

 

 

 

Notes:

 

During the year the Company has subdivided the Rs.10/- share into 5 shares of Rs.2/- each. Consequently 30587869 shares of Rs.10/- each have become 152939345 shares of Rs.2/- each w.e.f 16th January, 2007.

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2008

31.03.2007

31.03.2006

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

305.879

305.879

305.879

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

6109.291

5494.818

5055.392

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

6415.170

5800.697

5361.271

LOAN FUNDS

 

 

 

1] Secured Loans

2112.621

1976.875

1361.035

2] Unsecured Loans

763.450

676.471

982.144

TOTAL BORROWING

2876.071

2653.346

2343.179

DEFERRED TAX LIABILITIES

174.729

208.449

213.072

 

 

 

 

TOTAL

9465.970

8662.492

7917.522

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

3783.724

3079.433

2287.839

Capital work-in-progress

0.000

0.000

0.000

 

 

 

 

INVESTMENT

3168.470

2833.152

2722.387

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Interest Accrued on Investments
0.029
0.127
1.873

 

Inventories
2360.758
1923.026
2084.345

 

Sundry Debtors
1075.537
788.046
759.138

 

Cash & Bank Balances
214.014
610.720
592.426

 

Other Current Assets
0.000
0.000
0.000

 

Loans & Advances
3729.111
3271.743
2907.526

Total Current Assets
7379.4490
6593.662

6345.308

Less : CURRENT LIABILITIES & PROVISIONS
 
 

 

 

Current Liabilities
1663.520
1014.781
939.774

 

Provisions
3202.153
2828.974
2498.238

Total Current Liabilities
4865.673
3843.755

3438.012

Net Current Assets
2513.776
2749.907

2907.296

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

9465.970

8662.492

7917.522

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2008

31.03.2007

31.03.2006

Sales Turnover

13837.667

10330.211

7477.843

Other Income

341.316

196.042

283.821

Total Income

14178.983

10526.253

7761.664

 

 

 

 

Profit/(Loss) Before Tax

1202.981

970.307

616.508

Provision for Taxation

313.740

280.377

112.820

Profit/(Loss) After Tax

889.241

689.930

503.688

 

 

 

 

Export Value

779.118

1169.770

368.402

 

 

 

 

Import Value

1565.970

672.659

1113.210

 

 

 

 

Expenditures :

 

 

 

 

Manufacturing Expenses

10976.637

8027.519

5717.792

 

Personnel Expenses

497.153

355.321

326.342

 

Finance charges

1033.346

159.247

127.867

 

Depreciation & Amortization

204.195

264.288

313.164

 

Other Expenditure

264.671

749.571

659.991

Total Expenditure

12976.002

9555.946

7145.156

 

QUARTERLY RESULTS

 

Year

 

 

30.06.2008

Type

 

 

1st Quarter

Sales Turnover

 

 

4018.100

Other Income

 

 

104.900

Total Income

 

 

4123.000

Total Expenditure

 

 

3884.700

Operating Profit

 

 

238.300

Interest

 

 

58.500

Gross Profit

 

 

179.800

Depreciation

 

 

65.500

Tax

 

 

40.000

Reported PAT

 

 

74.300

 

KEY RATIOS

 

Year

31.03.2008

31.03.2007

31.03.2006

Debt-Equity Ratio

0.45

0.45

0.35

Long Term Debt-Equity Ratio

0.34

0.30

0.23

Current Ratio

1.33

1.38

1.38

TURNOVER RATIOS

Fixed Assets

3.25

2.51

1.97

Inventory

7.44

5.92

5.23

Debtors

17.09

15.33

14.48

Interest Cover Ratio

6.89

7.09

5.30

Operating Profit Margin(%)

10.50

11.75

11.50

Profit Before Interest And Tax Margin(%)

8.83

9.52

7.86

Cash Profit Margin(%)

7.24

8.05

8.84

Adjusted Net Profit Margin(%)

5.58

5.82

5.20

Return On Capital Employed(%)

15.86

13.98

9.66

Return On Net Worth(%)

14.56

12.36

8.65

 

 

LOCAL AGENCY FURTHER INFORMATION

 

HISTORY:

 

Established in 1967 and promoted by P P Chhabria, the Pune-based Finolex Cables (FCL) produces a variety of cables and is the pioneer in jelly-filled telephone cables.  

 

In 1988-89, the company joined hands with Norddeutsche Seekable Werke, Germany, to manufacture hi-tech special submersible cables. In 1994-95, it transferred all the PIJC manufacturing equipment from Pimpri to Urse, to attain better economies. It has received the ISO 14002 / ISO 9002 system certification for all product lines and plants. 
 
The Company mainly focusing on a portfolio of products to serve the Information Age where convergence of technology is bringing voice, Data & Video into one network. Coupled with the high growth of Internet, the Company is concentrating on products which will carry and distribute information. The company has undertaken a restructuring exercise and implemented an Enterprise Resource Planning Software package (SAP) linking its network of branches with its traditional headquarters at Pune. 

 
Subject has acquired the 50% shareholding of SX Mauritius Holdings Inc, Mauritius held in the joint venture company Finolex Essex Industries and hence Finolex Essex Industries has now become a 100% subsidiary of Subject and has been renamed as Finolex Wire Products. In Dec. 2000, the company's equity reduced from Rs.361.100 Millions to Rs.343.400 Millions due to company's 5% buyback of its shares.  

 
In Oct. 2001, the Company's board approved the purchase of 51% in Finolex Technologies in order to make it a wholly owned subsidiary. Currently,the company holds 49% of the Equity Share Capital of Finolex Technologie, which is engaged in the manufacture of OpticFibre Cables (OFC).  

 
The Company's Optic Fibre Division has undertaken an expansion in 2001-02 and the Machinery installation is in progress. In the first stage,1.2 million fibre kilometer capacity p.a. will be created. An additional capacity of 1.2 million fibre kilometer will be added in the second stage. The first stage of the Optic Fibre project has not been flagged off due to some technical problems encountered by the supplier of machinery. The Project was commissioned in September 2004. But the Second Phase of the Optic Fibre Project has been dropped-off by the company. 

 
During 2002-03 the company has launched V-SAT cables for V-SAT application for connecting the Dish to the base station. 

 
The company successfully launched the CATV trunk cables in the market and this will be the first of its kind in the market. In June, 2002 the company made a open offer valuing Rs.750 million for buyback of equity shares. The price has been fixed at Rs.200 per share. It has completed second buyback of shares at a consideration of Rs.750 million. After the second buy back the equity capital stands reduced to Rs.305.88 million. 

 
During 2004-2005, the Company is in the process of setting up Electrical Switches plant and market them. Its has been planned to introduce two different ranges of electrical switches one for mass/rural Segment and the another one to the up-market modular switches segment. 

 
The company has developed and launched a variety of LAN Cables during this period. These are a high-end communication cable product, for multifarious network applications. 

 
During 2005-2006, the operations of erstwhile subsidiary namely Finolex Wire Products Limited and Finolex Finance Limited were merged with the Company, pursuant to the orders of the Hon'ble High Court of Bombay passed on 21st October 2005. The Merger came into effect from 1st April, 2005. 

 
The company developed two ranges of electrical switched one for niche market and the other for mass market during the year under review. 

 
The company is manufacturing CFLs in the range of 5 MW to 26 W and three coloured temperatures of 2700 K, 4000 K and 6500 K. 

 
The companies two project namely manufacturing High Voltage Power Cables (upto 66 KV) and MCBs/ ELCBs) are in different stages of progress during the year. The Power Cable Project is also progressing well. The MCB/ELCB Project is in inital stage of completion. 

 
During 2006-2007, the Company decided to a setup a green field manufacturing facility for light duty electrical cables and electrical switches near Roorkee in the Uttarakhand State. Estimated capital expenditure for the project is Rs.2 billion which is planned to be incurred in two stages in equal proportion. The first stage of this project is under execution and the plant is scheduled for trial runs before September, 2007. The manufacturing facility will help the Company to stay close and service the present and potential customers in the northern and eastern regions of the country. 

 
The company launched Finoglow brand of Compact Flourscent Lamps during August 2006.  

 
The company is also manufacturing insulated, underground usage power cables upto 66 KV rating. Trail Run is expected to take place before September 2007. 

 
The company has contracted external commercial borrowings in Japanese Yen for the above projects. 
 
The companies production capacity of Electrical Cables , Communication Cables Optic Fibre Cables, other Communication Cables, PVC Sheets and Accessories, Fibres expanded from 758.48 TCKM to 1030 TCKM, 21733 KM to 48000 KM, 1746.03 TCKM to 10612 TCKM, 1376.65 MT to 2100 MT and 213813.62 KM to 600000 KM respectively. The company has a new production capacity of 2500 MT of Cross Linked Polyethylene and other compounds and 1500 KM of Polycoated FRP Rod respectively.

 

 

GOLDEN JUBILEE YEAR:  

 
The Directors feel proud to state that the calendar year 2008 is the 50th year of glorious business presence. The manufacturing idea was conceived by the promoters and started in the year 1958 in the form of a partnership firm; albeit the business assuming corporate form sometime later. A meeting of the Board of Directors is planned to be held at appropriate time to make a special announcement with regard to Golden Jubilee Year. The Directors extend their warm greetings to the members for the Golden Jubilee Year and are grateful to them for the encouragement and support over the period of time. 

 

 

OPERATIONS 

 

Income for the year was Rs.14178.983 million and net profit was Rs.889.241 million. The income was higher by 34.7% and the net profit was up by 28.9% over the previous year. Segmentally, electrical cables contributed 59.9%, communication cables contributed 19.8%, copper rods contributed 18.2% and other products contributed 2.1% to the total sale of products. The sales mix, when compared to the previous year, underwent a change due to increase in jelly filled telephone cable (JFTC) orders. During the year under review, the Company received orders from different customers for supply of JFTCs. 

 
The sales of electrical cables and other communication cables were in line with the market conditions prevailing from time to time during the year. Copper prices once again experienced a great deal of volatility for most of the year. The Company had done product price revisions to effectively deal with the volatility in copper prices. The system of Value Added Tax (VAT) has now been adopted by all the states within the Union Territory. However, there continues to be disparity in VAT rates for many of the Company's products. Added to the divergence in rates is the variability in procedures for compliance. The state governments are working towards unifying the rates and procedures for VAT. The Union Government has made known its intentions to implement a single tax regime called Goods and Services Tax' (GST). The governmental initiatives should promote a better compliance environment and provide an impetus for business by organized sector companies like your Company. 

 
The Company witnessed good growth in profit for the year on account of increase in business activity coupled with cost management measures undertaken.  

 

 

PROJECTS: 
 
The Company had undertaken initiatives to manufacture new products and expand production base for the existing products in due consideration of the emerging market needs. 

 


COMPACT FLUORESCENT LAMPS (CFLS) PROJECT: 

 
CFLs have been branded Finoglow' by the Company. Finoglow is an energy saving lamp, can save energy consumption upto 80% as against an equivalent incandescent lamp. Finoglow is available in different color temperatures. wattages and sizes. Finoglow has a high color rendering index essential for true color lighting. Finoglow is available in retrofit and non-retrofit versions. The manufacturing facility went on stream during September, 2007. Keeping in mind the high future CFL demand, the Company has taken steps to expand the present CFL capacity by almost three times. 

 
The business of CFL should get a big boost with the Government of India considering to ban conventional GLS lamps and promote CFL in support of the efforts to control global warming. Keeping in mind the high future CFL demand. The Company has decided to expand the CFL capacity from 10 million units to 30 million units per year at an additional expenditure of Rs.300 million. The Company has intentions to further expand capacity to 100 million CFLs over medium term at a new location in the state of Gujarat or Andhra Pradesh. 

 


HIGH VOLTAGE POWER CABLES PROJECT: 

 
This project was undertaken to manufacture insulated, underground usage power cables upto 66 KV rating. The manufacturing facility has been set up at Urse near Pune. The plant has started trial runs during March, 2008. 

 
High voltage power cables are required at power generation station and in power transmission segment in lower quantum; however, major requirements come from power distribution segment for upgrading the existing network by replacing overhead transmission wires and underground power cables to cater to the ever growing demand for power caused by continuing urbanization process. 

 
UTTARAKHAND PROJECT: 

 
This project was conceived to expand the manufacturing base for light duty electrical cables for use in construction industry, electrical panel wiring and consumer electrical goods. This plant is fast nearing completion and expected to go on stream in May 2008. This Greenfield manufacturing facility would be capitalized in the books in the next financial year. 

 
The Uttarakhand manufacturing facility will enjoy fiscal incentives by way of excise duty exemption and income tax benefit in the defined manner for the defined period. The commissioning of this facility will enhance competitiveness of the Company; besides staying close to the current and potential customers in business-booming northern and eastern regions of the country. 

 
ELECTRICAL SWITCHES PROJECT: 

 
Branded as Finoswitch', the Company manufactures electrical switches of superior quality and aesthetics. Finoswitch is meant for controlling the flow of power. Finoswitch is safe, durable and tested to last over sixty thousand clicks. They are launched in two ranges; premium range for niche market and classic range for mass market. Premium range has a unique fluorescent stripe that glows in dark and acts as a guide. The intermediate manufacturing facility at Urse is fully operational. The Company has intentions to shift manufacturing operations to Uttarakhand state at the present location and manufacture electrical switches on full scale basis. 

 
The products manufactured / to be manufactured at the above plants have / will have the same assurance of Finolex quality and safety standards. The products will ride on the high brand equity enjoyed by the Company and are sold/will be sold through the existing country wide distribution network. 

 

FINOLEX J-POWER SYSTEMS PRIVATE LIMITED: 

 
On 13th December, 2007, the Company entered into a joint venture agreement with J-Power Systems Corporation of Japan to offer complete turnkey solutions in extra high voltage (EHV) cable systems in India and abroad. The joint venture will be equipped with state-of-the-art production facility such as vertical continuous vulcanizing (VCV) tower to produce high voltage cross linked polyethylene (XLPE) insulated power cables. Since such cables are installed in the trunk lines of high voltage power transmission grids in the urban areas, extreme quality and reliability are required. 

 
The joint venture has been named 'Finolex J-Power Systems Private Limited' and will manufacture and sale high voltage power cables upto 500KV capacity. The joint venture company shall also offer complete services of turnkey installation and connectorization of the complete circuit along with the manufacture and supply of power cables and accessories (jointing kits). 

 
J-Power Systems Corporation is a Japanese cable manufacturer specialized in high voltage power cables and systems, established in 2001 as an equally owned joint venture between Hitachi Cable Limited and Sumitomo Electric Industries Limited, the global leaders 6i to field of extra high voltage cable technology. The Company will hold 49% of the share capital of the joint venture company and the balance 51% will be held by the joint venture partner. However, the management control will be with your Company. 

 
The joint venture is a significant development for the Company. With it, the Company completes its electric cable product range from ripe lower voltage grade of 48 volts in auto cable to the highest voltage of 500,000 volts in power cable segment. The Company is the only company in India with this unique distinction. 

 
NEW PRODUCTS: 


Looking at the customer requirements, the Company adds new variety of cables to its product range. Accordingly during the year, the Company's Marketing team successfully launched various state-of-the-art cables designed and developed by the in-house R&D team. As part of its future plans, the Company is studying the market potential for manufacture of Aluminium Conductor Steel Reinforced (ACSR Conductor) and Enamelled Wires with a view to develop products to meet requirements of niche markets. 

 
EXPORTS: 
 
In January 2008 your Company was awarded the prestigious trophy by Engineering Export Promotion Council for Star Performer as medium enterprise in the product group of miscellaneous electrical machinery and apparatus (including electrical distribution and control apparatus) for outstarx' contribution to engineering exports during the year 2005-06. 

 
The Company's sustained efforts to improve its earnings from its business in the international markets have started yielding results. FOB value of exports for the year was Rs.779.118 million as against Rs.672.532 million for the previous year. The Company exports a variety of cables. With the manufacturing background for years, access to and availability of best breed technology and conformity with international standards the Company has been offering customized cable solutions to its international customers. The Company has initiated the process of establishing its maiden branch office in DUBAI. 

 
FINANCE: 
 
The Company has been accorded P1+ rating, the highest rating for a Rs.2.5 billion (enhanced from Rs.2 billion) short term debt program. The Company holds AAA - Stable rating for its Rs.500 million long term non convertible debentures outstanding. The Company has also obtained a similar rating for another Rs.500 million long term non convertible debentures to be issued at an appropriate time in future. All the debt ratings have been given by CRISIL. The Company follows a balanced policy to manage liquidity and borrowing. The Company has been able to meet its financial commitments in a timely manner. The Company has been able to contain its interest cost despite rising interest rates. 

 

 

MANAGEMENT DISCUSSION AND ANALYSIS 

 

BUSINESS OF THE COMPANY: 

 

The Company currently operates in two main business segments, Electrical Cables and Communication Cables. The Company has recently added High Voltage Power Cables to its range of Electrical Cables. The Company manufactures Continuous Cast Copper Rods (CCC rods), essentially for captive consumption; however a part of the production of CCC rods is sold. The Company has expanded its product range which includes Electrical Switches and Compact Fluorescent Lamps (CFLs) manufactured by it. The Company also manufactures PVC Sheets for various applications like roofing, signage and interiors. 

 

 

REVIEW OF OPERATIONS: 

 

Production of metal based electrical and communication cables during the year was at 2,640 TCKM (thousand core kilometers) (previous year: 1,565 TCKM). Production of optic fibre cables during the year was 38,265 cable kilometers (previous year: 20,547 cable kilometers). The sale value of electrical cables increased by 15% and the sale of communication cables was higher by 73% (due to better JFTC business) over the earlier year. 

 
The sale of CCC rods (net of interdivisional transfers) was at Rs.2869.468 million. Exports were higher at Rs.779.118 million as against Rs.672.532 million of the earlier year. 

 
The income from operations (including excise duty) was higher at Rs.15928.978 million for the year as compared to Rs.11859.227 million for the earlier year. 

 
Profit after tax was higher at Rs.889.241 million against Rs.689.930 million for the earlier year. 

 
The Company commissioned its high voltage power cables plant at Urse near Pune and thus added high voltage power cables upto 66 KV rating to its range of electrical cables. The Company signed a joint venture agreement with J-Power Systems Corporation, Japan for manufacturing extra high voltage power cables between 60 KV to 500 KV range and to offer complete services of turnkey installation and connectorization with supply of jointing kits.

 

The Company commissioned its CFL manufacturing facility at Urse near Pune. Keeping in mind the high future CFL demand, the Company has taken steps to raise CFL manufacturing capacity from 10 million units to 30 million units per year. 

 
A Greenfield manufacturing facility was conceived and set up at Roorkee, Uttarakhand to expand the manufacturing base for light duty electrical cables for use in construction industry, electrical panel wiring and consumer electrical goods. This plant is fast nearing completion and expected to go on stream in May 2008. 

 
A reference may please be made to the financial statements. 

 

 

KEY STRENGTH AREAS: 

 

 
The Company is India's leading manufacturer of electrical and communication cables with a wide product range. This status not only helps the Company in terms of economies of scale, but as a market leader it is well positioned to reach out to new customers. both domestic and international. 

 

·         Technical Superiority of Products: 

 
The Company lays a lot of emphasis on maintaining superiority status in terms of quality and product features through inhouse research and development. The Company has defined quality assurance processes and strives for improvement in products. This product advantage is key reason why the Company has been able to carve out a niche position for itself in the market. 

 

 
The Company has created a strong and dependable distribution network of channel partners and dealers, spreading across the country. The distribution network also includes commission agents/ dealers appointed in the overseas market. The intention is to service the customer at his doorstep. Not only has the distribution network been built, the Company undertakes a periodical review of it for upgradation and expansion. The domestic distribution network is well supported by branch offices and depots opened by the Company at a number of locations throughout the Country. 

 

 

 

OTHER INFORMATION:

 

Contingent Liabilities:

 

Liability on account of Sales Bills discounted with Bank Rs.749.000 million

 

Disputed demands in appeal towards excise Rs.387.022 million customs Rs.13.427 million and sales tax Rs.51.760 million

  

Disputed Income Tax demands and matters in appellate proceedings Rs.426.650 million (excluding consequential interest / penalty)

 

Appeals preferred by Income Tax Department against Appellate decisions in favour of the Company, wherein, should the ultimate decision be unfavourable to the Company, the liability is estimated to be Rs.498.560 million

 

 Guarantee given by company’s Bankers on behalf of the company, towards performance and other matters, amounting to Rs.679.725 Millions are secured by hypothecation of stock in trade, book debts stores and spares etc.

 

The company has imported capital bankers on behalf goods under the export promotion capital goods (EPCG) scheme, of the government of India, at concessional rates of duty on an understanding to fulfill quantified exports against which future obligation aggregates to Rs.798.170 Millions over a period of next eight years.

 

 

The company’ fixed assets of important value include

 

·         Land

·         Buildings

·         Plant and Machinery

·         Furniture, Fittings

·         Office Equipment

·         Computers 

·          Peripherals

·         Dies and Moulds

·         Vehicles.

·         Exchange Fluctuation

·         Intangible Assets 

 

 

 

 

WEBSITE DETAILS:

 

In July 1945, two young brothers P.P Chhabria and K.P Chhabria came to Pune from Karachi in search of a livelihood and within six months set up a small shop selling electrical cables. The retail business became quite successful. A sizeable order in the mid 1950's from the Defence Department for wire harnesses for trucks and tanks bolstered their confidence and they decided to manufacture Cables, themselves.

 

Starting as a small-scale industrial unit in 1957, they manufactured PVC insulated cables for the automobile industry. Company brand was born from "Fine" & "Flexibles" and "O" with an electric arc across it - signifying the electrical cable business the company was in. Their relentless search for growth and doughty perseverance saw them through some difficult times and in 1972 the enterprise turned into a limited company.

 

Since then, there has been no looking back and following a public offering in July 1983, Subject embarked on a continuous process of expansion and modernization which enabled it to become the most diversified largest cable manufacturer in the country.

 

Their relentless quest for growth saw the brothers establishing Finolex Industries Limited in 1981. The company sought to manufacture Rigid PVC Pipes and Fittings at Pune, which find large-scale application in the agriculture sector. In a shrewd move towards backwards integration, the company has set up a PVC resin manufacturing facility at Ratnagiri on the west coast of India.

 

The early nineties saw the Finolex Group expanding into new business domains to manufacture Optic Fibre Cables and Copper Rods. Today the Group turnover exceeds Rs.20 Billion (about US $ 450 million)

 

FCL and FIL are the two group companies whose equity shares are listed on the Bombay Stock Exchange and National Stock Exchange. Global Depository Receipts of FCL are also listed on the Luxembourg Stock Exchange. Professionally managed, with continuous updating of technology and strict quality controls, Finolex strives for maximum customer satisfaction. Over the years, it has attained a significant position on the industrial map of India.

 

 

PROFILE:

 

Subject the flagship company of the Finolex Group was established in 1956 in Pune. Today, it is India's largest and leading manufacturer of electrical and telecommunication cables with a turnover in excess of Rs.6275 million (about US $ 134 million).

 

The company started its operation with the manufacture of PVC insulated electrical cables for the automobile industry. Since then, the Company has constantly endeavored to augment its product range to include, PVC insulated electrical wires and Flame Retardant Low Smoke electrical wires, PVC insulated single core and multicore industrial flexible cables, PVC insulated winding wires and 3 core flat cables, power and control cables, polythene insulated jelly filled telephone cables, Auto & Battery cables, Co-axial and CATV cables, LAN Cables, Switchboard cables, Fibre Optic cables and others.

 

The company has manufacturing facilities at Pimpri and Urse in Pune as well as at Goa. The company has, over the years, established its reputation as an innovative leader and quality manufacturer by continuously upgrading technology, modernizing manufacturing facilities and maintaining highest standards of quality and services. Today, the name Finolex has become synonymous with Quality and enjoys overwhelming confidence of the customers. Investors have also fancied its stock in view of its phenomenal progress leading to a manifold increase on investment in stock through the years.

 

The company has received the ISO 9002 systems certification across all product lines and plants. Besides ISO 14001-quality certification has been accorded to its plants in Urse and Goa. Similar certification for its Pimpri operations is in process.

 

Every cable is manufactured using bright annealed electrolytic grade copper manufactured in house and is insulated with virgin grade PVC (manufactured by group company Finolex Industries Limited) that is formulated in-house.

 

The company has received several honors such as Harvard Business School Association of India - Economic Times award for "corporate excellence"; IIM - LIC award for 'marketing' and the Engineering Export Promotion Council's 'export performance certificate'. Recently, the company was awarded the Export House status by the Directorate General of Foreign Trade.

 

 

 

 

 

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.46.71

UK Pound

1

Rs.85.12

Euro

1

Rs.66.98

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

9

PAID-UP CAPITAL

1~10

9

OPERATING SCALE

1~10

9

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

10

--PROFITABILIRY

1~10

8

--LIQUIDITY

1~10

9

--LEVERAGE

1~10

9

--RESERVES

1~10

9

--CREDIT LINES

1~10

9

--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

 

81

 

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

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions