MIRA
INFORM REPORT
|
Report Date : |
14.03.2011 |
IDENTIFICATION DETAILS
|
Name : |
HIKAL LIMITED |
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Registered Office : |
717/718, Maker
Chambers V, 7th Floor, Nariman Point, Mumbai – 400 021, |
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Country : |
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Financials (as on) : |
31.03.2010 |
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Date of Incorporation : |
08.07.1988 |
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Com. Reg. No.: |
11 – 48028 |
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CIN No.: [Company
Identification No.] |
L24200MH1988PTC048028 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMH07537F /
BRDH00497A |
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PAN No.: [Permanent
Account No.] |
AAACH0383A |
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Legal Form : |
Public limited
liability company The company’s
shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufactures and
sells bulk agro technicals and intermediates, and active pharma ingredients
(APIs). Also manufactures fine chemicals for the pharma ceuticals and
agrochemical industries. |
RATING & COMMENTS
|
MIRA’s Rating : |
A (58) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
|
Maximum Credit Limit : |
USD 15961964 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a
well-established and reputed company having fine track. Financial position of
the company appears to be sound. Trade
relations are fair. Payments are correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – April 1, 2010
|
Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
INFORMATION PARTED BY
Management is Non Co-operative
LOCATIONS
|
Registered
Office / Corporate Office : |
717/718, Maker
Chambers V, 7th Floor, Nariman Point, Mumbai – 400 021, |
|
Tel. No.: |
91-22-22301801 |
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Fax No.: |
91-22-22833913 |
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E-Mail : |
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Website : |
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Head Office : |
6, |
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Tel. No.: |
91-22-22301801 |
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Fax No.: |
91-22-22833913 |
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Administrative
Office : |
603 A, Great Eastern
Chambers, Sector 11, CBD – Belapur, Navi Mumbai – 400 614, |
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Tel. No.: |
91-22-27574276 /
27574336 / 27574991 |
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Fax No.: |
91-22-27574277 |
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Email : |
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Plant
Locations |
·
MAHAD : A-18, MIDC Industrial Area, Mahad – 402
301, ·
TALOJA : Plot No. T – 21, MIDC Industrial Area,
Taloja – 410 208, ·
PANOLI
: Plot Nos. 629/630, GIDC Industrial Area, Panoli – 394 116, ·
·
PUNE
: 3A, ·
R and D Unit Bannerghatta, Karnataka ·
Pharma Unit - I Jigani, Karnataka ·
Pharma Unit - II Jigani, Karnataka ·
Dombivli, ·
MIDC, Taloja, District Raigad, ·
MIDC, Mahad, District Raigad, ·
GIDC, Panoli, District Bharuch, ·
KIADB, Jigani, ·
Bannerghatta, ·
MIDC, Dombivli, |
DIRECTORS
|
Name : |
Mr. Baba N.
Kalyani |
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Designation : |
Chairman |
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Name : |
Mr. Prakash V.
Mehta |
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Designation : |
Director |
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Name : |
Mr. Shivkumar M.
Kheny |
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Designation : |
Director |
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Name : |
Mr. Bimal Raizada |
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Designation : |
Director |
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Name : |
Mr. Kannan K.
Unni |
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Designation : |
Director |
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|
Name : |
Mrs. Sugandha J.
Hiremath |
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Designation : |
Director |
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Name : |
Mr. Sameer J.
Hiremath |
|
Designation : |
Director |
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Name : |
Mr. Jai Hiremath |
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Designation : |
Managing Director |
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Name : |
Mr. Sham. V.
Wahalekar |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 31.12.2010
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of Promoter and Promoter Group |
|
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|
|
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|
1,574,863 |
9.58 |
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9,621,497 |
58.52 |
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115,500 |
0.70 |
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|
115,500 |
0.70 |
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11,311,860 |
68.81 |
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Total shareholding of Promoter and Promoter Group (A) |
11,311,860 |
68.81 |
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(B) Public Shareholding |
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|
1,082,569 |
6.58 |
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|
20,100 |
0.12 |
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|
36,205 |
0.22 |
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1,138,874 |
6.93 |
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|
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|
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|
306,126 |
1.86 |
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1,316,625 |
8.01 |
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|
182,027 |
1.11 |
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2,184,588 |
13.29 |
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|
17,329 |
0.11 |
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|
722,077 |
4.39 |
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|
60,872 |
0.37 |
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24,310 |
0.15 |
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1,360,000 |
8.27 |
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|
3,989,366 |
24.27 |
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Total Public shareholding (B) |
5,128,240 |
31.19 |
|
Total (A)+(B) |
16,440,100 |
100.00 |
|
(C) Shares held by Custodians and against which Depository
Receipts have been issued |
- |
- |
|
|
- |
- |
|
|
- |
- |
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|
- |
- |
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Total (A)+(B)+(C) |
16,440,100 |
- |
(1)
Indian
Individuals
/ Hindu Undivided Family
TrustsBUSINESS DETAILS
|
Line of Business : |
Manufactures and sells
bulk agro technicals and intermediates, and active pharma ingredients (APIs).
Also manufactures fine chemicals for the pharma ceuticals and agrochemical
industries. |
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Products : |
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PRODUCTION STATUS AS ON 31.03.2010
|
Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
|
Crop Protection
Products |
MT |
5560 |
5816 |
1638.68 |
|
Pharmaceutical
Products |
MT |
-- |
2500 |
-- |
** Installed capacity is as certified by the management and relied upon by the auditor, being a technical matter
** Computed on triple shift basis for 365 days production
GENERAL INFORMATION
|
No. of Employees : |
730
(Approximately) |
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Bankers : |
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Facilities : |
Secured Loan
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
RSM and Company Chartered
Accountants |
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Address : |
KPMG House, Kamala
Mills Compaund, 448, Senapati Bapat Marg, Lower Parel, Mumbai – 400013,
Maharashtra, India |
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Tel No.: |
91-22-30440800 |
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Fax No.: |
91-22-30440900 |
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Group Company
: |
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CAPITAL STRUCTURE
AS ON 31.03.2010
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
25000000 |
Equity Share |
RS.10/- Each |
Rs. 250.000 Millions |
|
5000000 |
Cumulative
Redeemable Preference shares |
Rs. 100/- Each |
Rs. 500.000 Millions |
|
|
Total |
|
Rs. 750.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
16440100 |
Equity Shares |
Rs. 10/- Each |
Rs. 164.401 Millions |
|
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Total |
|
Rs. 164.401 Millions |
Of the above:
- 150,000 equity shares of Rs.10/- each were allotted as fully paid-up without payment being received in cash.
- 10,647,326 equity shares of Rs.10/- each are allotted as fully
paid-up bonus shares by capitalisation of general reserve
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
164.401 |
164.401 |
150.800 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
3826.090 |
3138.140 |
1718.530 |
|
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
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NETWORTH |
3990.491 |
3302.541 |
1869.330 |
|
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LOAN FUNDS |
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|
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1] Secured Loans |
3965.550 |
3470.130 |
2687.640 |
|
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2] Unsecured Loans |
660.570 |
1347.770 |
1032.100 |
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TOTAL BORROWING |
4626.120 |
4817.900 |
3719.740 |
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DEFERRED TAX LIABILITIES |
12.910 |
49.640 |
21.110 |
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TOTAL |
8629.521 |
8170.081 |
5610.180 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
5623.730 |
4707.960 |
2026.170 |
|
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Capital work-in-progress |
353.470 |
1087.040 |
1092.750 |
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INVESTMENT |
181.671 |
181.671 |
596.490 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
1828.340
|
1677.940 |
1488.510 |
|
|
Sundry Debtors |
986.680
|
827.500 |
581.470 |
|
|
Cash & Bank Balances |
124.690
|
87.190 |
28.310 |
|
|
Other Current Assets |
0.000
|
0.000 |
0.000 |
|
|
Loans & Advances |
1152.440
|
802.300 |
668.310 |
|
Total
Current Assets |
4092.150
|
3394.930 |
2766.600 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
963.230 |
1007.560 |
603.960 |
|
|
Other Current Liabilities |
299.280
|
161.250 |
175.220 |
|
|
Provisions |
360.890
|
38.200 |
101.770 |
|
Total
Current Liabilities |
1623.400
|
1207.010 |
880.950 |
|
|
Net Current Assets |
2468.750
|
2187.920 |
1885.650 |
|
|
|
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|
|
|
|
MISCELLANEOUS EXPENSES |
1.900 |
5.490 |
9.120 |
|
|
|
|
|
|
|
|
TOTAL |
8629.521 |
8170.081 |
5610.180 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
5360.030 |
4780.050 |
3006.630 |
|
|
|
Other Income |
17.870 |
14.450 |
98.700 |
|
|
|
TOTAL (A) |
5377.900 |
4794.500 |
3105.330 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Materials and Manufacturing Cost |
2751.990 |
2729.010 |
1766.490 |
|
|
|
Personal Cost |
443.800 |
380.710 |
299.290 |
|
|
|
Administrative and other operating
Expenses |
392.060 |
358.950 |
315.080 |
|
|
|
TOTAL (B) |
3587.850 |
3468.670 |
2380.860 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
1790.050 |
1325.830 |
724.470 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
348.300 |
248.440 |
120.310 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
1441.750 |
1077.390 |
604.160 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
329.590 |
209.740 |
184.190 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEM |
1112.160 |
867.650 |
419.970 |
|
|
Less |
Exchange gain/loss |
263.720 |
243.840 |
(102.340) |
|
|
Less |
Reversal of cash flow hedge reserve |
283.520 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
|
|
Exceptional Item Adjustments Pursuant to Scheme of Arrangement for Amalgamation of Hikal Pharmaceutical Limited into the Company |
|
|
|
|
|
Less: |
Dimunition in value of investment in subsidiary |
0.000 |
651.240 |
0.000 |
|
|
Add: |
Withdraw! from General reserve |
0.000 |
(651.240) |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
564.920 |
623.810 |
522.310 |
|
|
|
|
|
|
|
|
|
Less |
TAX (I) |
(36.730) |
34.900 |
26.260 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-I) (J) |
601.650 |
588.910 |
496.060 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
1068.440 |
479.530 |
682.380 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
125.000 |
0.000 |
100.000 |
|
|
|
Interim Dividend on Equity Shares |
65.760 |
0.000 |
45.240 |
|
|
|
Proposed Dividend on Equity Shares |
65.760 |
0.000 |
60.320 |
|
|
|
Dividend Tax |
22.350 |
0.000 |
18.750 |
|
|
|
Dividend on Preferences Shares |
0.000 |
0.000 |
4.780 |
|
|
|
Transfer to capital redemption reserve |
0.000 |
0.000 |
469.820 |
|
|
BALANCE CARRIED
TO THE B/S |
1391.220 |
1068.440 |
479.530 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
4527.810 |
4393.440 |
2459.230 |
|
|
|
Commission Earnings |
0.000 |
3.470 |
4.010 |
|
|
TOTAL EARNINGS |
4527.810 |
4396.910 |
2463.240 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
952.860 |
1124.860 |
559.550 |
|
|
|
Stores & Spares |
35.110 |
65.560 |
61.550 |
|
|
|
Capital Goods |
3.580 |
7.080 |
5.250 |
|
|
TOTAL IMPORTS |
991.550 |
1197.500 |
626.350 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
36.60 |
37.33 |
-- |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2010 1st
Quarter |
30.09.2010 2nd
Quarter |
31.12.2010 3rd
Quarter |
|
Net Sales |
1331.800 |
1080.000 |
1007.900 |
|
Total Expenditure |
1006.200 |
798.000 |
753.900 |
|
PBIDT (Excl OI) |
325.600 |
282.000 |
254.000 |
|
Other Income |
6.700 |
7.500 |
7.800 |
|
Operating Profit |
332.300 |
289.500 |
261.800 |
|
Interest |
88.500 |
89.300 |
116.300 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
243.800 |
200.200 |
145.500 |
|
Depreciation |
92.800 |
94.800 |
94.200 |
|
Profit Before Tax |
151.000 |
105.400 |
51.300 |
|
Tax |
3.700 |
2.300 |
(0.400) |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
147.300 |
103.100 |
51.700 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
|
Net Profit |
147.300 |
103.100 |
51.700 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
PAT / Total Income |
(%) |
11.18
|
12.28 |
15.97 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
10.54
|
13.05 |
17.37 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
5.81
|
7.69 |
10.89 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.14
|
0.19 |
0.28 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.56
|
1.82 |
2.46 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.52
|
2.81 |
3.14 |
LOCAL AGENCY FURTHER INFORMATION
SUNDRY CREDITORS
DETAILS :
(Rs. in Millions)
|
Particulars |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
|
|
|
|
|
Micro, Small and Medium Enterprises |
64.240 |
36.920 |
NA |
|
Others |
898.990 |
970.640 |
NA |
|
Total |
963.230 |
1007.560 |
NA |
History:
Subject was
incorporated on 8th July 1988 at Mumbai in
The name of the
company has been changed to Hikal Limited with effect from 29th
September 2000.
Subject was incorporated with equity participation of Hiremaths, Kalyani
Group, and subsequently Sumitomo Corporation of
The company has expanded facilities of its existing products--MCA, PC, MNCB,
etc, and diversified into the production of metoxuron technical, a wheat
herbicide, which is being manufactured for the first time in the country.
Sumitomo Corporation,
During 1996, the company came with public issue to part finance the expansion project
of Thiabendazol. The company has been accorded Export House status by the
Government of India.
The company set up a new manufacturing facility near Mumbai in collaboration
with Merck & Co Inc,
A 100% EOU unit for the manufacture of Thiabendazole at Taloja has been
successfully commissioned and quality matches Merck & Company, Inc. USA
standard and is now being sold all over the world.
During the year 1999-2000, the company has acquired an Agrochemical
manufacturing site at Panoli,
OPERATIONS
Taloja Site:
Their recently constructed new multipurpose plant at Taloja has been commissioned and production of an on patent active ingredient is underway. Their Taloja site is also being used a manufacturing facility for some small scale high value products where the research and development is done at Acoris, Their 100% dedicated contract research center. This year they undertook four such scale up projects where the high value product was manufactured at the pilot plant in Taloja successfully.
Mahad Site:
Their Mahad site is being used for captive consumption for the manufacture of intermediates for Taloja. They are in the process of upgrading one of their plants at the Mahad site which would be able to manufacture additional intermediates for sale in the domestic market and other markets.
Panoli Site:
Their Panoli site has been primarily utilized for captive consumption this year due to the increased demand of existing API's. They have installed a multiple effect evaporator which recycles key materials in the manufacture of one of their best selling products. This has increased the gross margin of the product and has also considerably reduced the effluents which could potentially harm the environment.
They have introduced a new small volume high value product for a Japanese company in Panoli where the initial process development was done at Acoris. They expect the volumes of this product to eventually increase resulting in potential commercial manufacture.
They are in the process of upgrading some of Their API
plants in
The company has completed and commercialized a state-of-the-art Solvent Recovery Unit (SRU). From April of this financial year, the SRU has been brought on stream and is being fully utilized to recover valuable solvents and contributing to a greener environment.
The production of a veterinary drug from this site has been successfully commercialised, They expect higher sales for this product in the coming years.
As a signatory to the "Responsible Care"
initiative, Their
As a part of their future growth strategy, They have acquired additional land adjoining Their USFDA facility which will facilitate future expansion for manufacture of active ingredients.
Their existing R and D centre at
During the year 2009-10, they have been granted 5 patents which were applied for in the previous years. They have also applied for 4 additional patents in the US & Europe.
They have received 3 patents from the
During the year, the company also filed 1 process patent with the regulatory authorities, continuing its drive of creating intellectual property.
Management Discussion
and Analysis Report
SUMMARY ANALYSIS
As they slowly emerge from the global recession of 2007-2009, the chemical industry finds itself passing through a period of profound transformation. Profit margins, return on capital and revenues have seen a steady decline. Multinational pharmaceutical and crop protection companies with large facilities are struggling to face new challenges as competition from emerging markets is growing fiercer. In the aftermath of the recent recession, demand for agrochemicals in certain developed world end markets has dropped. Some companies have found themselves on bankruptcy watch, with share prices sinking to single digits!
The global pharmaceutical industry's main markets are under
severe pressure. North America, Europe and
Annual growth in the
European Union (EU) has slowed to 5.8%, and sales are increasing at an even
more sluggish rate in
Further, higher R and D costs, a relatively dry pipeline for new drugs, increasing pressure from payers and providers for reduced healthcare costs and a host of other factors are putting pressure on global pharmaceutical companies. Pharma companies are looking for new ways to boost drug discovery potential, reduce time-to-market and become more competitive with lean operating structures
These are opportunities for
FINANCIALS
Hikal revenues for the year 2009-10 were at Rs. 5,360 million as against Rs. 4,780 million for 2008-09; an increase of 12% over the previous year. In spite of a difficult financial environment, Hikal has posted reasonable growth in revenues. Their pharmaceutical division has led the increase in turnover.
After considering the operations in its subsidiary, the consolidated revenue for the year 2009-10 was at Rs. 5,390 million as compared to Rs 5,729 million in the previous year. The shortfall as compared to the previous year was due to the write off of Their European subsidiary, Marsing and Company.
Exports for the year were at Rs.4700 million as against Rs. 4,393 million in the previous year, an increase of 7%. As part of Their risk mitigation strategy, They have diversified the geographies where They are selling Their products and also concentrated on selling more in the domestic market as it is one of the fastest growing markets for pharmaceutical products in the world.
The EBITDA increased from Rs.1326 million to Rs.1790 million, which was an increase of 35%. However, profit after tax was up by only 2%, from Rs.589 million to Rs.602 million. This was mainly because of an exceptional item charge of reversal of 'cash flow hedge reserve1 of Rs.284 million on account of foreign exchange losses. This is a non cash entry on the profit and loss statement.
The shareholders' funds of the company increased from Rs. 3,303 million to Rs. 3,990 million, an increase of 21%. The overall long-term debt was reduced by Rs. 200 million and the debt to equity ratio improved from 1.11 to 0.99.
The overall financial ratios and balance sheet have improved after this financial year. They are actively reducing their debt levels from increased cash flow generation through Their businesses.
CROP PROTECTION
INDUSTRY
After a record double digit growth in 2008, the crop protection industry registered a 6% decline in 2009. Inventory destocking was a major concern for the suppliers of agrochemical companies.
Following the strong 2008 harvest across the globe (driven by generally favorable weather and a significant increase in farmers' adoption of yield enhancing technologies), global crop stock-to-use ratios for the key crops remained below average. This translated into lower global demand for herbicides and fungicides, two of the categories of products made by Hikal.
In 2009, crop output decreased resulting in lower yields due to a lower marginal fertilizer/ agrochemical applications of products resulting in inventory destocking by western agrochemical companies.
For 2010, growers in both
There is a global focus on generic markets of agrochemicals.
There is an opportunity for a contract manufacturer to serve large MNCs that
are keen to leverage the
CROP PROTECTION
OPERATIONS
In the year 2009-10, the revenues of the crop protection division were 2500 Rs.1,790 million as compared to Rs.2,020 million, a decline of 11%. the: 2000 company's sales were affected by customer's inventory destocking.
Their recently constructed new multipurpose plant at Taloja has been 1000 commissioned and production of an on patent active ingredient is 50Q| underway. They expect volumes of this product to increase over financial year.
They are in the process of upgrading one of their plants at the Mahad site which would be able to manufacture additional intermediates for sale in the domestic market and other markets.
They expect 2010 to yield better prospects for the crop protection division. They are in talks with several multinational companies for contract manufacturing of products globally.
PHARMACEUTICAL
INDUSTRY
The Indian economy is worth about US$ 1,243 billion and
rapidly getting bigger. Real GDP growth reached 9% in the year to March 2008.
The rate of increase has since slowed down due to the global financial crisis;
in the year to March 2009, growth eased to 6.7%. Even so, most forecasters
believe that
In 2009, the world went through a credit crunch, followed by a prolonged global economic downturn in the last quarter of 2008 and throughout 2009. The impact of the downturn, coupled with volatility in the Rupee, depleted the financial position of several Indian pharma companies, especially those which had substantial foreign borrowings on their balance sheets. That being said, both the Indian domestic market and the opportunities from outsourcing of contract research and manufacturing for Indian companies have grown substantially last year and are expected to continue to grow over the next few years.
CONTRACT
MANUFACTURING
Contract manufacturing is a strong segment of the market opportunity. Indian firms have several advantages over their Western rivals. The expertise gained in manufacturing generics through reverse engineering has helped some companies streamline the process for getting manufacturing contracts. Costs are very competitive. They are only two fifths of those involved in setting up and running a new manufacturing facility in the West. Indian companies can operate on significantly lower margins, given their lower development and labor costs.
Currently, their key area of strength in outsourcing is the manufacture of APIs. Some Indian pharma companies could probably benefit significantly by moving towards specialty APIs in the future such as high potency.
The Indian contract manufacturing segment was worth around
US$ 605 million in 2008 and is expected to reach around US$ 916 million in
2010. The US FDA has already approved over 100 manufacturing sites - more than
in any country except the
Indian manufacturers are currently facing scrutiny on
quality issues. In 2009, the US FDA took action against afew Indian companies
after conducting a series of inspections and issuing warning letters against
these drug makers. While such sanctions clearly pose significant challenges,
some analysts see an opportunity as well. Indian companies are aggressively
improving their manufacturing standards in response, and are likely to be
better positioned to take advantage of the upsurge in generics production and
contract manufacturing opportunities that arise from the West who are shutting
down plants due to competition from countries such as
PHARMACEUTICAL
OPERATIONS
In the year 2009-1 0, the revenues of the pharmaceutical division stood at Rs.3,569 million as compared to Rs.2,759 million in the previous year, an increase of 29%. Their pharmaceutical division accounts for 67% of their total sales up from 58% in the previous year.
They attribute this growth to the increase in demand of their existing products and new customers that have been added throughout the year. Their long-term supply contracts signed with multinational companies such as Pfizer and Alpharma are part of this increase.
The production of a veterinary drug from this site has been
successfully commercialized and they expect higher sales for this product in
the coming years. They are increasing the capacity at Their US FDA certified
site in
As a signatory to the 'Responsible Care' initiative, Their
As part of their future growth strategy, they have acquired additional land adjacent to Their USFDA facility which will facilitate future expansion for the manufacture of active ingredients.
UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2010
(Rs. in Millions)
|
Particulars |
Quarter
Ended |
Nine
Months Ended |
|
|
2010 |
2010 |
|
Sales / income from operations |
1059.100 |
3552.400 |
|
Less: Excise duty |
51.200 |
132.600 |
|
Net sales / income from operations |
1007.900 |
3419.800 |
|
Total expenditure |
|
|
|
a) Decrease /(Increase) in stock in trade and
work in progress |
(101.500) |
(235.100) |
|
b) Consumption of raw materials and utilities |
581.000 |
2018.400 |
|
c) Employees cost |
127.900 |
383.000 |
|
d) Depreciation |
94.200 |
281.800 |
|
e) Other expenditure |
142.900 |
350.100 |
|
f) Total expenditure |
844.500 |
2798.200 |
|
Profit from operations before other income, interest and
impact of forward contracts |
163.400 |
621.600 |
|
Other Income |
7.800 |
22.000 |
|
Profit Before Interest and impact of forward contracts |
171.200 |
643.600 |
|
Interest and finance charges |
116.300 |
294.000 |
|
Profit from ordinary activities before tax and impact of
forward contracts |
54.900 |
349.600 |
|
- Exchange loss |
25.600 |
100.100 |
|
- Reversal of cash flow hedge reserve |
(22.000) |
(58.500) |
|
Profit after impact of forward contracts but before tax |
51.300 |
308.000 |
|
Provision for taxation |
|
|
|
- Current taxes |
11.900 |
60.800 |
|
- Minimum Alternatives Tax credit |
(11.900) |
(60.800) |
|
- Deferred tax |
(0.400) |
5.600 |
|
Net Profit after tax |
51.700 |
302.400 |
|
Paid-up equity share capital |
164.400 |
164.400 |
|
Reserves excluding revaluation reserves |
|
|
|
Earnings per share ( face value Rs. 10/-) |
|
|
|
- Basic |
3.14 |
18.39 |
|
- Diluted |
3.12 |
17.89 |
|
- Cash |
8.87 |
35.54 |
|
Public shareholding |
|
|
|
- No of shares |
5,128,240 |
5,128,240 |
|
- Percentage of
shareholding |
31.19% |
31.19% |
|
Promoters and promoter group shareholding |
|
|
|
a) Pledged / Encumbered |
|
|
|
- No of shares |
|
|
|
- Percentage of shares (as a % of the total shareholding
of promoters and promoter group |
- |
- |
|
- Percentage of shares (as a % of the total share capital
of the company) |
- |
- |
|
b) Non-encumbered |
|
|
|
- No of shares |
11,311,860 |
11,311,860 |
|
- Percentage of shares (as a % of the total shareholding
of promoters and promoter group |
100.00% |
100.00% |
|
- Percentage of shares (as a % of the total share capital
of the company) |
68.81% |
68.81% |
Notes :
1. The
above results were reviewed by the Audit Committee and approved by the Board of
Directors at their meeting
2. The quarterly performance is affected due to continued inventory cut backs by
some of its major customers and appreciation of rupee against $US.
3. With effect from April 1, 2008 the company had early adopted the principles
of hedge accounting as set out in Accounting Standard 30 – Financial
Instruments Recognition and Measurement issued by the Institute of Chartered
Accountants of India. Accordingly, in respect of foreign currency loans
qualifying for hedge accounting, gain of Rs. 96.000 Millions on revaluation of
loans as at March 31 2010 were accounted for as a Cash flow Hedge Reserve. Out
of this amount (Rs. 22.000) Millions and (Rs.58.500) Millions has been reversed
during the quarter and nine months respectively (corresponding quarter and nine
months in the previous year Rs. 51.200 Millions and Rs. 240.400 Millions
respectively), recognised as (income)/expenditure and has been shown as
reversal of cashflow hedge reserve.
4. The Company has entered into forward/options contracts to hedge its exposure
to fluctuations in foreign exchange for approx 30% of future exports. These covers
have been staggered over the next three years as the major percentage of the
company's turnover is realized from exports. The Company is of the opinion that
the result of these transactions represent unrealised losses that are notional
in nature . The management is of the opinion that the fluctuation in currency
movements against hedged contracts gets compensated by realization of a higher
value of sales realizations and therefore, the actual profit/loss against such
outstanding contracts crystallizes only on maturity of such forward contracts.
The gain/ loss on these transaction will be recognised as and when they fall
due. The mark to market valuation loss is Rs. 340.900 Millions as on December
31, 2010
(corresponding
previous period as on December 31, 2009 Rs. 648.800 Millions)
5. The loss on realised forward contracts, amounting to Rs. 25.600 Millions and
Rs. 100.100 Millions , became due and were settled during the quarter and nine
months respectively (corresponding quarter and nine months in the previous year
Rs. 58.700 Millions and Rs. 226.300 Millions respectively).
6. The results for the quarter ended December 31, 2010 have been subjected to
"Limited Review" by the Statutory Auditors of the Company.
7. There were no investors complaints at the beginning of the quarter. During
the quarter two complaint were received and same were resolved during the
quarter, therefore no complaints were pending as on December 31, 2010.
8.
Figures for the previous period/year have been regrouped / reclassified
wherever necessary.
SEGMENT WISE REVENUE,
RESULTS AND CAPITAL EMPLOYED AS ON DECEMBER 31, 2010
(Rs. in Millions)
|
Particulars |
31.12.2010 Quarter Ended |
31.12.2010 Nine Months Ended |
|
1. Segment Revenue |
|
|
|
a) Pharmaceuticals |
679.900 |
2238.100 |
|
b) Crop Protection Products |
328.000 |
1181.700 |
|
Total |
1007.900 |
3419.800 |
|
Less : Inter segment revenue |
0.000 |
0.000 |
|
Net sales/income from operation |
1007.900 |
3419.800 |
|
|
|
|
|
2. Segment Results |
|
|
|
Profit Before Interest and Tax |
|
|
|
a) Pharmaceuticals |
210.500 |
673.600 |
|
b) Crop Protection Products |
13.600 |
89.400 |
|
Total |
224.100 |
763.000 |
|
Less : |
|
|
|
i) Interest |
116.300 |
294.000 |
|
ii) Other un-allocable expenditure net off un-allocable income |
56.500 |
161.100 |
|
Profit Before Tax |
51.300 |
308.000 |
|
|
|
|
|
3. Capital Employed |
|
|
|
a) Pharmaceuticals |
4892.500 |
4892.500 |
|
b) Crop Protection Products |
2921.700 |
2921.700 |
|
c) Unallocated capital |
(3610.100) |
(3610.100) |
|
Total |
4204.100 |
4204.100 |
FIXED ASSETS:
- Building
- Plant and Machinery
- Office Equipments
- Furniture and Fixtures
- Vehicles
- Ships
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject are
derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or investigation
registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.45.21 |
|
|
1 |
Rs.72.54 |
|
Euro |
1 |
Rs.62.43 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
6 |
|
--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 |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
58 |
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 |
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 |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.