MIRA
INFORM REPORT
|
Report Date : |
04.10.2011 |
IDENTIFICATION DETAILS
|
Name : |
GUJARAT STATE FERTILIZERS AND CHEMICALS LIMITED |
|
|
|
|
Registered
Office : |
P. O. No. Fertilizer Nagar, District Vadodara 391 750, Gujarat |
|
|
|
|
Country : |
India |
|
|
|
|
Financials (as
on) : |
31.03.2011 |
|
|
|
|
Date of
Incorporation : |
15.02.1962 |
|
|
|
|
Com. Reg. No.: |
001121 |
|
|
|
|
Capital
Investment / Paid-up Capital : |
Rs.796.955 millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L99999GJ1962PLC001121 |
|
|
|
|
Legal Form : |
Public Limited
Liability Company. The company shares are listed on the Stock Exchange. |
|
|
|
|
Line of Business
: |
Manufacturers of Fertilizers
and Chemicals including Synthetic Filament Yarn / Tyre Cord and Nylon Chips. |
|
|
|
|
No. of Employees
: |
4862
Approximately |
RATING & COMMENTS
|
MIRA’s Rating : |
A (69) |
|
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 113146188 |
|
|
|
|
Status : |
Good |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Clear |
|
|
|
|
Comments : |
Subject is a well established company having fine track. Financial position
of the company appears to be sound. Trade relations are reported as fair.
Business is active. Payments are reported to be regular and as per
commitments. The company can be considered good for normal 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 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
INFORMATION DECLINED BY
|
Name : |
Mr. Damodia |
|
Designation : |
Finance Executive |
|
Contact No.: |
91-265-2242651 / 2532 |
LOCATIONS
|
Registered Office : |
P. O. No.
Fertilizer Nagar - 391 750, District Vadodara, |
|
Tel. No.: |
91-265-2242451 /
651 / 751 |
|
Fax No.: |
91-265-2372966 /
2240097 |
|
E-Mail : |
|
|
Website : |
|
|
|
|
|
Plants/ Units: |
Ř
Main Plant Fertilizer Nagar, District Vadodara, Ř
Polymers Unit Nandesari, District Vadodara, Ř
Sikka Unit Moti Khavdi, Sikka, District Ř
Fibre Unit
Kuwarda, Kosamba, District |
|
|
|
|
Branches : |
102/103, Raheja
Centre, 214, Free Press Journal Marg, Nariman Point, Mumbai - 400 021, |
|
Tel. No.: |
91-22-2282 4030 /
2283 1903 / 894 / 915 |
|
Fax No.: |
91-22-2283 1899 |
DIRECTORS
AS ON 31.03.2011
|
Name : |
Mr. A. K. Joti |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. D. C. Anjaria |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Vasant P. Gandhi |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Ajay N. Shah |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Vijai Kapoor |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. P. N. Roy Chowdhury |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. M. M. Srivastava |
|
Designation : |
Director |
|
|
|
|
Name : |
D. J. Pandian |
|
Designation : |
Director |
|
|
|
|
Name : |
H V Patel |
|
Designation : |
Managing Director (upto 13.07.2011
forenoon) |
|
|
|
|
Name : |
Mr. Atanu Chakraborty |
|
Designation : |
Managing Director (upto 13.07.2011 afternoon) |
KEY EXECUTIVES
|
Name : |
Mr. V V Vachhrajani |
|
Designation : |
Company Secretary |
|
|
|
|
Name : |
Mr. B M Bhorani |
|
Designation : |
General Manager in Finance |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 30.06.2011
|
Category of
Shareholder |
Total No. of
Shares |
% of total No.
of Shares |
|
|
|
As a % of
(A+B+C) |
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
|
|
|
|
|
30,159,981 |
37.84 |
|
|
30,159,981 |
37.84 |
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
30,159,981 |
37.84 |
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
13,002,437 |
16.32 |
|
|
106,138 |
0.13 |
|
|
7,937,862 |
9.96 |
|
|
7,576,363 |
9.51 |
|
|
28,622,800 |
35.92 |
|
|
|
|
|
|
8,018,606 |
10.06 |
|
|
|
|
|
|
8,760,619 |
10.99 |
|
|
2,906,486 |
3.65 |
|
|
1,227,014 |
1.54 |
|
|
2,292 |
- |
|
|
551 |
- |
|
|
371,071 |
0.47 |
|
|
504,473 |
0.63 |
|
|
348,627 |
0.44 |
|
|
20,912,725 |
26.24 |
|
Total Public
shareholding (B) |
49,535,525 |
62.16 |
|
Total (A)+(B) |
79,695,506 |
100.00 |
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
- |
- |
|
|
- |
- |
|
|
- |
- |
|
|
- |
- |
|
Total
(A)+(B)+(C) |
79,695,506 |
100.00 |
SHAREHOLDING
BELONGING TO THE CATEGORY :
"Promoter and Promoter Group"
|
Sl. |
Name of the
Shareholder |
Total Shares
held |
|
|
Number |
As a % of |
||
|
1 |
Gujarat State Investments Limited |
30,159,981 |
37.84 |
|
|
Total |
30,159,981 |
37.84 |
SHAREHOLDING BELONGING TO THE CATEGORY:
"Public" and holding more than 1% of the Total No.of Shares
|
Sl. No. |
Name of the
Shareholder |
No. of Shares |
Shares as % of
Total No. of Shares |
|
1 |
Life
Insurance Corporation of India |
5,494,692 |
6.89 |
|
2 |
Reliance Capital
Trustee Company Limited A/c Reliance Growth Fund |
4,599,118 |
5.77 |
|
3 |
Fidelity
Puritan Trust Fidelity Low Priced Stock Fund |
2,300,000 |
2.89 |
|
4 |
SBI Mutual
Fund Magnum Tax Gain 1993 |
2,298,529 |
2.88 |
|
5 |
Reliance Capital
Trustee Company Limited A/c Reliance Natural Resources Fund |
2,271,500 |
2.85 |
|
6 |
Gujarat
Narmada Valley Fertilizers Company Limited |
1,500,000 |
1.88 |
|
7 |
Gujarat
Alkalies and Chemicals Limited |
1,500,000 |
1.88 |
|
8 |
Gujarat Mineral
Development Corporation |
1,000,000 |
1.25 |
|
9 |
Sunderam
Mutual Fund A/c Sundaram Select Thematic Funds PSU Opportunities |
827,114 |
1.04 |
|
10 |
General
Insurance Corporation of India |
800,822 |
1.00 |
|
|
Total |
22,591,775 |
28.35 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturers of
Fertilizers and Chemicals including Synthetic Filament Yarn / Tyre Cord and
Nylon Chips. |
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|
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|
Products : |
|
PRODUCTION STATUS
AS ON 31.03.2011
|
Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
|
Ammonia |
MT |
150000 |
150000 c |
2281 |
|
Ammonia
(Expansion) |
MT |
445500 |
445500 c |
465000 |
|
Urea |
MT |
364000 |
364000 |
245490 |
|
Ammonium Sulphate
Phosphate or Ammonium Sulphate And i) Di-Ammonium
Phosphate |
MT |
256000 -- -- |
256000 -- 10800 |
280071 -- 0 |
|
Caprolactam |
MT |
70000 |
70000 |
79577 |
|
Ammonium Sulphate
Caprolactam |
MT |
202000 |
196000 |
290696 |
|
Nylon-6 Chips |
MT |
-- d |
7000 |
9520 |
|
Sulphuric Acid |
MT |
132000 |
132000 |
135670 |
|
Styrene
Acrylonitrile |
MT |
500 |
300 |
-- |
|
Melamine |
MT |
-- d |
15000 |
13938 |
|
MEK Oxime |
MT |
-- d |
4450 |
2721 |
|
Methyl
Methacrylate Monomer |
MT |
5000 |
5000 c |
4547 |
|
Polymethyl
Methacrylate Sheets |
MT |
2000 |
2000 |
721 |
|
Polymethyl
Methacrylate Pellets |
MT |
1500 |
1500 |
1710 |
|
Ammonium Sulphate
(Polymers) |
MT |
10000 |
10000 |
12762 |
|
Acetone Cyano
Hydrine |
MT |
5150 |
5150 c |
6522 |
|
Methacrylic Acid |
MT |
500 |
500 |
1136 |
|
DAP [A+B Train] |
MT |
150000 f |
150000 f |
709682 |
|
DAP [C Train] |
MT |
-- |
396000 |
|
|
NPK |
MT |
-- f |
-- f |
0 |
|
Synthetic
Filament Yarn Including Industrial
Yarn / |
MT |
6000 |
6000 |
4361 |
|
Nylon Chips –
Fibre |
MT |
2000 |
2000 |
5399 |
a] Installed
capacities and projects under execution are as certified by the Managing Director.
b] Quantities of
production and stock of the products other than Ammonia, Sulphur Dioxide,
Oleum, Sulphuric Acid, Monomer, Acetone Cyano Hydrine are in packed form.
Caprolactam production is inclusive of molten caprolactam.
c] Mainly for
captive consumption.
d] Licence not
applicable/exempt from compulsory licencing.
e] Production and
Stock of Oleum and Sulphur Dioxide obtained from the Plant are expressed in
terms of Sulphuric Acid.
f ] Licenced and
installed capacities of A+B trains are in terms of P2O5, whereas installed
capacity of C train is in terms of DAP. However the production and stock of all
the trains are in terms of DAP/fertilizers and in packed form. APS and NPK also
produce from Sikka DAP plants.
g] Information at Sl. No. 5 and 6 includes Caprolactam and Ammonium
Sulphate produced from “Caprolactam (Expansion Phase I)”.
GENERAL INFORMATION
|
No. of Employees : |
4862
Approximately |
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|
Bankers : |
·
Bank of Baroda ·
Central Bank of
India ·
Bank of India ·
Dena Bank ·
Indian Bank ·
Vijaya Bank ·
Yes Bank Limited ·
State Bank of India ·
Indian Overseas
Bank ·
Axis Bank Limited ·
ICICI Bank Limited ·
Punjab National
Bank |
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|
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|
Facilities : |
Rs. In Millions
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
Banking
Relations : |
-- |
|
|
|
|
Auditors : |
|
|
Name : |
STATUTORY AUDITORS Prakash Chandra
Jain and Company Chartered
Accountants Address:
Vadodara, Gujarat BRANCH AUDITORS (Polymers and
Fibre Units) Sanjay Soni and
Associats Chartered Accountants Address:
Vadodara, Gujarat COST AUDITORS Diwanji and
Associates Cost Accountants Address:
Vadodara, Gujarat |
|
|
|
|
Joint Venture : |
Tunisian Indian Fertilizers, S.A. (TIFERT) |
|
|
|
|
Associates/Subsidiaries : |
Effluent Channel Project Limited |
CAPITAL STRUCTURE
AS ON 31.03.2011
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
200000000 |
Equity Shares |
Rs. 10 each |
Rs. 2000.000 millions |
|
16000000 |
Redeemable Cumulative Preference Shares |
Rs. 100 each |
Rs. 1600.000 millions |
Issued Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
79824370 |
Equity Shares |
Rs. 10 each |
Rs.798.244 millions |
|
|
|
|
|
Subscribed Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
79813937 |
Equity Shares |
Rs. 10 each |
Rs.798.139 millions |
|
|
|
|
|
Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
79695506 |
Equity Shares |
Rs. 10 each |
Rs.796.955 millions |
|
|
|
|
|
|
118431 |
Equity Shares
forfeited and amount transferred to Capital Reserve in earlier years |
|
|
|
|
|
|
|
Notes :
Out of the Equity Shares mentioned above :
(a) Under the scheme of amalgamation with the Company
(i) 5,86,390 shares of Rs.10 each were issued to the shareholders of
erstwhile Polymers Corporation of Gujarat Limited.
(ii) 18,57,600 shares of Rs.10 each were issued to the shareholders of
erstwhile Gujarat Nylons Limited.
(b) 3,12,41,915 shares of Rs.10 each were issued as fully paid-up bonus
shares by capitalisation of Reserves and Share Premium Account.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
796.955 |
796.955 |
796.955 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
27489.592 |
20644.262 |
18517.761 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
28286.547 |
21441.217 |
19314.716 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
980.792 |
1747.511 |
1547.894 |
|
|
2] Unsecured Loans |
2942.471 |
5128.315 |
1692.056 |
|
|
TOTAL BORROWING |
3923.263 |
6875.826 |
3239.950 |
|
|
DEFERRED TAX LIABILITIES |
3084.032 |
2821.712 |
3122.165 |
|
|
|
|
|
|
|
|
TOTAL |
35293.842 |
31138.755 |
25676.831 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
12612.855 |
10814.835 |
12023.186 |
|
|
Capital work-in-progress |
512.032 |
116.452 |
205.073 |
|
|
Projects Under Execution |
2700.025 |
1702.555 |
304.385 |
|
|
|
|
|
|
|
|
INVESTMENT |
4249.794 |
4249.824 |
6060.869 |
|
|
DEFERREX TAX ASSETS |
1040.740 |
1324.665 |
1405.848 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
5647.888
|
6110.969 |
7455.846 |
|
|
Sundry Debtors |
8881.048
|
6215.786 |
4806.787 |
|
|
Cash & Bank Balances |
6126.724
|
601.179 |
381.384 |
|
|
Other Current Assets |
0.000 |
0.000 |
0.000 |
|
|
Loans & Advances |
1862.359
|
8109.050 |
1987.350 |
|
Total
Current Assets |
22518.019
|
21036.984 |
14631.367 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
4650.314
|
3622.395 |
4078.178 |
|
|
Other Current Liabilities |
733.500
|
594.814 |
611.438 |
|
|
Provisions |
2955.809
|
3889.351 |
4264.281 |
|
Total
Current Liabilities |
8339.623
|
8106.560 |
8953.897 |
|
|
Net Current Assets |
14178.396
|
12930.424 |
5677.470 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
35293.842 |
31138.755 |
25676.831 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
|
SALES |
|
|
|
|
|
|
|
Sales |
47550.512 |
40191.929 |
58807.959 |
|
|
|
Other Income |
1011.970 |
1130.098 |
712.962 |
|
|
|
TOTAL (A) |
48562.482 |
41322.027 |
59520.921 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Materials |
30475.162 |
29357.210 |
43424.324 |
|
|
|
Increase/(Decrease) in Finished Goods |
227.832 |
779.227 |
(393.110) |
|
|
|
Purchase of Finished Products |
192.995 |
264.418 |
276.224 |
|
|
|
Administrative Expenses |
2294.453 |
2392.335 |
3109.439 |
|
|
|
Personnel Expenses |
2641.213 |
2901.894 |
3890.160 |
|
|
|
TOTAL (B) |
35831.655 |
35695.084 |
50307.037 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
12730.827 |
5626.943 |
9213.884 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
137.874 |
306.184 |
391.696 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
12592.953 |
5320.759 |
8822.188 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
1464.025 |
1409.317 |
1430.388 |
|
|
|
|
|
|
|
|
|
|
Prior Period
Adjustments |
(4.407) |
(20.250) |
7.686 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
11124.521 |
3891.192 |
7399.486 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
3630.807 |
1346.482 |
2405.850 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
7493.714 |
2544.710 |
4993.636 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
904.067 |
477.566 |
473.524 |
|
|
|
|
|
|
|
|
|
Less |
Balance
reduced due to rounding off difference on Dividend and Dividend Tax |
0.015 |
0.015 |
0.015 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
6400.000 |
1700.000 |
4570.000 |
|
|
|
Dividend |
557.869 |
358.630 |
358.630 |
|
|
|
Tax on Dividend |
90.500 |
59.564 |
60.949 |
|
|
BALANCE CARRIED
TO THE B/S |
1349.397 |
904.067 |
477.566 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
836.793 |
833.321 |
NA |
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
13559.004 |
13493.835 |
NA |
|
|
|
Stores & Spares |
118.491 |
225.373 |
NA |
|
|
|
Capital Goods |
261.321 |
0.000 |
NA |
|
|
TOTAL IMPORTS |
13938.816 |
13719.208 |
NA |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
94-03 |
31.93 |
62.66 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2011 |
|
|
1st
Quarter |
|
Net Sales |
12076.800 |
|
Total Expenditure |
9338.600 |
|
PBIDT (Excl OI) |
2738.200 |
|
Other Income |
238.600 |
|
Operating Profit |
2976.800 |
|
Interest |
58.300 |
|
Exceptional Items |
(526.300) |
|
PBDT |
2392.200 |
|
Depreciation |
310.500 |
|
Profit Before Tax |
2081.700 |
|
Tax |
660.900 |
|
Provisions and contingencies |
0.000 |
|
Profit After Tax |
1420.800 |
|
Extraordinary Items |
0.000 |
|
Prior Period Expenses |
0.000 |
|
Other Adjustments |
0.000 |
|
Net Profit |
1420.800 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
PAT / Total Income |
(%) |
15.43
|
6.15 |
8.38 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
23.39
|
9.68 |
12.58 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
31.66
|
12.21 |
27.76 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.39
|
0.18 |
0.38 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
0.54
|
0.83 |
0.79 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.70
|
2.59 |
1.63 |
LOCAL AGENCY FURTHER INFORMATION
OPERATIONAL
PERFORMANCE
It is heartening to
report that for the F.Y. 2010-11, the Company has achieved highest ever Profit
before Tax (PBT) and Net Profit (Profit After Tax). PBT has increased from
Rs.3890 Millions in 2009-10 to Rs.11120 Millions, registering an increase of
186%. Similarly, the Net profit was Rs.7490 Millions which is almost three
times the previous year’s net profit of Rs.2540 Millions. During F.Y. 2010-11,
there was constraint in availability of imported Phosphoric Acid at Sikka Unit,
which affected production and availability of DAP. Inspite of this, the Company
witnessed a rise of 18% in net sales. The net sales increased from Rs. 40190
Millions in 2009-10 to Rs.47550 Millions in 2010-11. The Company achieved
higher sales turnover as a result of better price realization in both the
business segments viz. Fertilizer and Industrial Products. The EBIDTA for
2010-11 was 12730 Millions as compared to Rs.5630 Millions in the previous F.Y.
2009-10, thus showing stride of 126%. Better margins in Fertilizer and
Industrial Product segments have improved the overall EBIDTA margin from 14% to
26.77%. The interest cost has decreased from Rs.310 Millions in previous year
to Rs.14 Millions in F.Y.2010-11.
CURRENT
PERFORMANCE
The Directors are
pleased to report that during the First Quarter (Q1) of Financial Year (F.Y.)
2011-12 also, the Company has achieved Net Profit of Rs.1420 Millions which is
ever highest in the Q1 of any Financial Year ever since its inception. The
EBIDTA margin has improved from 19% during Q1 of F.Y. 2010-11 to 25% during the
Q1 of the current Financial Year. The above results are after making the
provision for exceptional items aggregating Rs.526.3 Millions. The operational
performance of the Company during Q1 of the current Financial Year is
encouraging when the fertilizer production increased from 0.358 million Tons
during Q1 of 2010-11 to 0.377 million Tons during the Q1 of 2011-12. Similarly,
the production of major Industrial Products viz. Caprolactam, Nylon-6,
Melamine, etc., during the same period, remained above the capacity levels and
when compared, it is higher than the production of the corresponding period of
the previous Financial Year. The Net Sales of the Company during the Q1 of F.Y.
2011-12 is Rs.12080 Millions which is higher by Rs.1410 Millions (up by 13%) as
compared to the Net Sales of Rs.10670 Millions during Q1 of F.Y. 2010-11. The
sales price of major Industrial Products like Caprolactam, Melamine and Nylon-6
were tuned in line with international prices. Similarly, price realization in
Fertilizer segment was also higher. The prices of major raw materials showed a
rising trend, thus affecting the cost of production.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
1 MACRO ECONOMIC
OVERVIEW
The Indian economy
showed robust economic growth during 2010-11. The country faced many structural
challenges like economic governance, building of infrastructure and efficiency
in delivery of subsidies. Addressing these challenges, initially helped to
moderate inflation, improve economic inclusion, boost investment and increase
the growth rate of agriculture during 2010-11. Inflation continued to be high
though it reduced slightly over the fiscal year. The growth rate in GDP at
factor cost with constant prices in 2010-11 was estimated to be 8.6% as
compared to 8.0% in 2009-10. The growth rates were 5.4% in agriculture and
allied activities, 8.1% in industry and 9.6% in services, as compared to 0.4%,
8.0% and 10.1% respectively during 2009-10. The agriculture sector got a boost
due to good rains during Kharif 2010. The rainfall received was 912.8 mm, which
was 2% above average. Out of 36 meteorological sub-divisions, 31 received
excess/normal rainfall and 5 received deficient rainfall. The food-grain
production increased substantially from 218.11 million tones in 2009-10 to 232.07
million tons in 2010-11, a rise of 6.4%. Gujarat, where all the production
units of the Company are located, showed a spectacular economic growth rate of
10.14%. Gujarat’s share in India’s export was 20.8%. Since 2002-03, Gujarat’s
GDP has shown an annual growth rate of 10.62% which is substantially above the
national growth rate of 7.77%. During the Vibrant Gujarat Global Summit
- 2011, Gujarat
attracted investments worth Rs. 20.83 Lac Millions. In agriculture, Gujarat
showed outstanding performance
- it became the
largest producer of cotton and contributes 12% to India’s textile exports.
Gujarat continues to be one of the most industry friendly states of the
country.
Thrust on
Agriculture :
The agriculture
sector is crucial for India’s economic development and a very important driver
of macro-economic
performance. It is
a critical element of the national growth strategy. In line with the process of
economic development, the share of the agricultural sector in the GDP shows
change over the years, but even today about 52% of the population depend on the
agriculture for livelihood. The Eleventh Five Year Plan lays greater emphasis
on the reversal of decline in agricultural growth rates and has identified the
areas whereby 4% annual growth can be achieved. Thrust on increasing area under
irrigation, favorable terms of trade to farmers, better and cheaper access to
credit, more investment in agriculture, use of latest technology including the
use of new and specialty fertilizers for application based on soil report would
certainly help in giving momentum to the agricultural growth. Gujarat is the
primary market for Fertilizers manufactured by the Company. The programs
implemented by the State Government have helped immensely in improving the
agricultural productivity and out of the Company’s fertilizer sales in India
aggregating 1.569 millions Tons, 0.842 million Tons were sold in the State of
Gujarat, which constitutes 53.7% of its total Fertilizer sales. The performance
of Gujarat in the agricultural sector has been one of the best in the Country.
Helped by the Krushi Mahotsav and other initiatives of Gujarat Government, the
State leads in agricultural growth. The Gujarat Green Revolution Company Ltd.
(GGRC) has helped to cover 0.324 million Hectares of land under drip irrigation
in Gujarat. During the Golden Jubilee year of Gujarat (April 2010 to March
2011), an additional area of 0.130 million Hectares was brought under drip
irrigation by GGRC. GSFC sold 1.569 million Tons of Fertilizers, as compared to
the last year’s sales of 1.778 million Tons, which was lower by 11.75%. This
was mainly due to constraints in the availability of raw materials,
particularly imported phosphoric acid, for the Sikka Plant. Out of the total
sales of 0.707 million Tons of DAP, the Company sold 0.407 million Tons in
Gujarat, thus maintaining the highest market share of 50%, followed by IFFCO
(25%) and Indian Potash Limited (12%). In case of Ammonium Phosphate Sulphate
(APS), the Company could attain the highest market share of 51% in Gujarat,
followed by Gujarat Narmada Valley Fertilizers Company Limited (GNFC) at 46%.
OPPORTUNITIES and
THREATS
Nutrient Based
Subsidy Policy (NBS) :
Government of
India has introduced a Nutrient Based Subsidy (NBS) scheme w.e.f. April 1,
2010. Under this new regime, for phosphatic and potassic and certain other
Fertilizers, the subsidy was given based on the amount of nutrients contained in the fertilizers sold. The rates
announced were viz. Nitrogen Rs.23.227/Kg, Phosphorus Rs.26.276/Kg, Potash Rs.24.487/Kg
and Sulphur Rs.1.784/Kg. The Government allowed the selling prices of these
Fertilizers to be determined by the companies/ suppliers based on the market
forces. Thus, a regime of fixed subsidies and floating prices was introduced
for products covered under the NBS policy. However, Urea remained under the
retention price scheme, but its MRP was raised by 10%, i.e. from Rs 4,830/MT to
Rs. 5,310/MT from April 1, 2010. The implementation of NBS was meant to
encourage the use of Fertilizers by farmers as per the balanced nutrient
requirements of the crop/soil, as well as bring control on the amount of
subsidy given. The balanced nutrient application would help in restoring soil
health. The farmers have also been encouraged to use complex Fertilizers in a
big way. Special subsidies on Zinc and Boron fortified Fertilizer have boosted
their use by farmers. The Government modified NBS in January, 2011 and
accordingly from 1st January, 2011 to 31st March, 2011, the subsidy on DAP was
reduced by Rs.300/MT (-1.8%). For other NPK grades also, the subsidy was
reduced. The Government has again modified the NBS from April 1, 2011 and
accordingly from 1st April, 2011 till 31st March 2012, the subsidy on DAP has
been increased from Rs.16268/MT to Rs.19763/MT, an increase of
Rs.3495/MT(+21%). Subsidies for other Phosphatic Fertilizers were also
increased. GOI also declared that the secondary freight from last point to
retailing point will be given separately. Secondary freight for the PandK
Fertilizers will be paid in line with the “Uniform Freight” applicable for
urea. Freight for direct road movement (primary movement) would be subject to
lower of actual claim and equivalent of rail freight. Freight rates for
different distance slabs have been announced by DOF.
Areas of Concern -
Raw Material Utility Prices :
Due to political
unrest in Middle East and African Countries, supply of raw material especially
phosphoric acid and rock phosphate has been affected and this has adversely
affected the production of fertilizers using Phosphoric Acid (PA) as raw
material, in the country. Any increase in the gas price would also have an
impact on the cost of production. The international prices of raw materials and
fertilizers showed a spurt during F.Y. 2010-11. The average CFR price of
phosphoric acid which was USD 580/MT during 2009-10 rose to USD 791/MT (+36%)
during 2010-11. Sulphur price experienced a steep rise during 2010-11, from
around USD 95/MT to USD172/MT, i.e. an increase of 81%. Average rock phosphate
price also increased from USD 115/MT to USD 145/MT. Ammonia price also
increased by USD 100/MT during 2010-11 as compared to 2009-10. CFR price of PA
in the International market which was USD 830/MT in Q4 of 2010-11 rose to USD
980/MT in Q1 of 2011-12. The price of imported Sulphur and Ammonia also rose
substantially. The continued increase in crude oil prices is a matter of
concern, which is impacting the road freight. This rise in raw material prices
in the international market had an impact on the finished DAP price. The
average DAP prices during 2009-10 was about USD 404/MT and went up to USD
589/MT. Substantial imports of DAP around 7.411 millions MT took place during
the year 2010-11. All India DAP sales increased to 11.102 millions MT but the
Company could sell 0.708 million MT as against last year sales of 0.948 million
MT due to non-availability of imported phosphoric acid for Sikka Unit.
Average Prices of
Raw materials and Finished Products (USD / MT)
|
Product |
2009-10 |
2010-11 |
%
Increase / Decrease |
|
DAP (C and F) |
404 |
589 |
+46 |
|
PA (C and F) |
580 |
791 |
+36 |
|
Rock Phosphate (C and F) |
115 |
145 |
+25 |
|
Sulphur (C and F) |
95 |
172 |
+81 |
|
Ammonia (C and F) |
303 |
401 |
+32 |
Industrial
Products :
The year as a whole
showed consistent growth in demand for industrial products of the Company as
the market was very favorable. The improvement experienced in the end-product
markets of major industrial products of the Company led to a strong demand and
increased levels of sales as compared to the previous year. Globally, the raw
material prices rose to new heights which partly resulted into all time high
prices of the major industrial products such as Caprolactam and Nylon-6 with
better realizations. The prices were complemented by robust demand of finished
goods. This helped sales of the major industrial products, especially
Caprolactam, Nylon-6, Ammonia and Polymer products. The demand across all the
end use segments like Automobile, Textile, Infrastructure, Housing, Consumer
Durables etc. was strong, resulting in increased sale. Caprolactam accounts for
approximately 51% of the total industrial products sales of the Company. The
net sales of industrial products for the F.Y. 2010-11 rose by more than 25%
over 2009-10. During the year under review, the Rupee remained fairly stable,
thus having no major impact on the sales realization. The growth prospects for
the financial year 2011-12 may be dampened in part because of the high
inflation. The GDP growth forecast for the Indian economy has been revised
downwards to 8% as against 8.5% projected earlier. The world economy is also
under pressure due to increase in oil prices and various factors including the
political unrest in Middle East Countries. The world economy, which is
currently growing at 2%, may again go under recession, if the oil prices rise
to levels such as USD 150/barrel. The end use industries of Caprolactam viz.
Automobiles and Textiles may no longer be in a position to absorb further
increase in prices and hence downward trend in prices of Caprolactam and
Nylon-6 is
likely. Thus, the volumes, margins and sales are likely to come under
pressure in 2011-12 as compared to 2010-11.
OUTLOOK FOR
2011-12
With the
announcement of NBS policy and the resultant fixation of subsidy on per ton
basis on phosphatic/ potassic fertilizers, maximum retail price of the product
can be altered by the manufacturers in relation to the raw material prices in
the international markets and other costs. The policy may increase the volatility
in the profit margins of the fertilizer industry, and cost efficient players
will be better placed to combat the impact of this volatility. NBS policy on
PandK fertilizers has been well received by all stake holders and the
availability of fertilizers has also improved. Considering the encouraging NBS
policy for use of NP/NPK fertilizers, GSFC has a good and appropriate product
mix, and the Company can benefit substantially by adding facilities to produce
DAP and NP/NPK fertilizers preferably at Sikka Unit. This is being considered
by the Company. Further, with subsidy provided on micronutrient fortified
fertilizers, the manufacturers also benefit from the production of such
fertilizers. The Company is also examining the possibilities to manufacture such
type of customized fertilizers. The Union Budget-2011-12 has now accorded an
infrastructure status for investment in fertilizer projects, and this is a
major policy advance in encouraging investment in the fertilizer sector which
can be used by the Company to its benefit.
Other measures
such as better access to credit, extra emphasis on irrigation, micro-irrigation
and soil testing, and
improvement in
rural infrastructure would further improve growth opportunities in the
agriculture sector. The extension of NBS regime to cover urea is under active
consideration of the Government, and the provision of direct transfer of
fertilizer subsidy to farmers is being explored. Under NBS policy, there was a
cap prevailing on pricing of phosphatic fertilizers. Recently, the Department
of Fertilizers, GOI has issued a notification whereby the pricing cap has been
lifted and accordingly, the market price of subsidized P and K fertilizers is
open for fixation by the manufacturers at reasonable level. Farmers of Gujarat
generally prefer indigenous fertilizers to imported material and besides NP/NPK
complexes, the demand for DAP is likely to rise. Considering the Company’s good
presence in these potential markets and the good brand preference enjoyed,
there may not be much problem in the sale of DAP it produces. Inclusion of
ammonium sulphate in the subsidy fold has also significantly helped the Company
to increase its sales volume. The Company has well established market for APS
and since subsidy is considered on the sulphur content, the policy has a
favorable impact on the Company. With wide spread monsoon, the Company should
do well on fertilizer sales front. Sizable imports of DAP/NP/NPK have been
planned by GOI during 2011-12 but due to sharp increase in prices in the international
markets, the actual imports
so far were less
than the projected quantity and hence availability at present remains tight. It
is expected that with the arrival of fresh shipments of imported fertilizers,
the situation may improve.
FINANCIAL PERFORMANCE
The Directors are
pleased to present, in the Table below, a brief highlights of Company’s
financial performance:
|
|
Performance |
Increase |
|
Sales Turnover |
Rs. 47550 millions |
+18% |
|
EBIDTA |
Rs. 12730 millions |
+126% |
|
Profit Before
Tax |
Rs. 11120 millions |
+186% |
|
Net Profit (PAT) |
Rs. 7490 millions |
+194% |
As can be seen,
the Company has attained new heights in financial performance and this has
improved across all the key performance parameters. The sales turnover achieved
for the year ended March 31, 2011 was Rs. 47550 Millions, which registered a
growth of 18% over the previous year. The EBIDTA increased by 126% from Rs.
5630 Millions to Rs.12730 Millions. The profit before tax increased by 186% to
Rs. 11120 Millions and the profit after tax by 194% to Rs. 7490 Millions. The
Company has recorded highest ever Net Profit of Rs.7490 Millions which is
almost three times the Net Profit of Rs. 2540 Millions achieved during the
previous year. The Compounded Annual Growth rate of Net Profit for the last
five financial years is 29%. The earning per share (EPS) for the year was Rs.
94.03. The Directors have recommended 70% dividend aggregating Rs. 640 Millions
including Dividend Distribution Tax. Thus, the retained earnings of Rs. 6850
Millions have increased the net-worth of the Company from Rs. 21440 Millions at
the close of previous year to Rs. 28290 Millions during 2010-11. At the end of
financial year 2010-11, the Company had the net borrowing of Rs. 3920 Millions
as against Rs. 6880 Millions as on March 31, 2010. During the year, the Company
has liquidated deposits with limited companies amounting to Rs. 5380 Millions
and has parked surplus funds amounting to Rs. 5580 Millions with Banks in Short
Term Deposit at the end of March 2011. The Directors are pleased to inform that
the Company continues to be a debt free Company. The Company maintains a
healthy credit rating of ‘PR1+’ for short term borrowings and ‘Care
AA’ for long term borrowings from CARE and ‘F1+’ for short term
borrowing and ‘AA’ with ‘stable’ outlook from FITCH.
FIXED ASSETS:
·
Land
·
Building
·
Railway Sidings
·
Plant and Machinery
·
Furniture, Fittings and Equipments
·
Vehicles
·
Library Books
·
Computer Software
·
Assets retired from use and held for disposal
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.49.42 |
|
|
1 |
Rs.76.72 |
|
Euro |
1 |
Rs.65.85 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
|
69 |
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.