MIRA
INFORM REPORT
|
Report Date : |
24.11.2012 |
IDENTIFICATION DETAILS
|
Name : |
THE SOUTH INDIA PAPER MILLS LIMITED |
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Registered
Office : |
Chikkayana Chatra, P. O. Nanjangud, Nanjangud – 571301, Karnataka |
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Country : |
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Financials (as
on) : |
31.03.2012 |
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Date of
Incorporation : |
06.06.1959 |
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Com. Reg. No.: |
08-001352 |
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Capital
Investment / Paid-up Capital : |
Rs. 150.000 Millions |
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CIN No.: [Company Identification
No.] |
L85110KA1959PLC001352 |
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TAN No.: [Tax Deduction &
Collection Account No.] |
BLRT01173E |
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Legal Form : |
A Public Limited Liability company. The company’s Share are Listed on
the Stock Exchange. |
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Line of Business
: |
Manufacture of Paper, Paperboards, Cartons and power
generation. |
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No. of Employees
: |
303 (Approximately) |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba (50) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Maximum Credit Limit : |
USD 3000000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject is a Mysore-based company. It is an established company having
satisfactory track. It has achieved some growth in its sales and profits during 2012.
Financial position of the company appears to be good. Trade relations are reported as trustworthy. Business is active.
Payments are reported to be regular and as per commitment. The company can be considered 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 – June 30, 2012
|
Country Name |
Previous Rating (31.03.2012) |
Current Rating (30.06.2012) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
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Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
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Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
India is developing into an open-market economy, yet traces
of its past autarkic policies remain. Economic liberalization, including
industrial deregulation, privatization of state-owned enterprises, and reduced
controls on foreign trade and investment, began in the early 1990s and has
served to accelerate the country's growth, which has averaged more than 7% per
year since 1997. India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern industries,
and a multitude of services. Slightly more than half of the work force is in
agriculture, but services are the major source of economic growth, accounting
for more than half of India's output, with only one-third of its labor force.
India has capitalized on its large educated English-speaking population to
become a major exporter of information technology services and software
workers. In 2010, the Indian economy rebounded robustly from the global
financial crisis - in large part because of strong domestic demand - and growth
exceeded 8% year-on-year in real terms. However, India's economic growth in
2011 slowed because of persistently high inflation and interest rates and
little progress on economic reforms. High international crude prices have
exacerbated the government's fuel subsidy expenditures contributing to a higher
fiscal deficit, and a worsening current account deficit. Little economic reform
took place in 2011 largely due to corruption scandals that have slowed legislative
work. India's medium-term growth outlook is positive due to a young population
and corresponding low dependency ratio, healthy savings and investment rates,
and increasing integration into the global economy. India has many long-term
challenges that it has not yet fully addressed, including widespread poverty,
inadequate physical and social infrastructure, limited non-agricultural
employment opportunities, scarce access to quality basic and higher education,
and accommodating rural-to-urban migration.
|
Source
: CIA |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
ICRA |
|
Rating |
BBB + : TERM LOAN |
|
Rating Explanation |
Moderate degree of safety and moderate
credit risk |
|
Date |
March 2012 |
|
Rating Agency Name |
ICRA |
|
Rating |
A2 + : NON FUND BASED – BANK GUARANTEE |
|
Rating Explanation |
Strong degree of safety and Low Credit Risk |
|
Date |
March 2012 |
RBI DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter in
the publicly available RBI Defaulters’ list.
EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of
31-03-2012.
LOCATIONS
|
Registered Office/ Mill : |
Chikkayanachatra, P. O. Nanjangud, Nanjangud – 571301, Karnataka,
India |
|
Tel. No.: |
91-8221-228264/ 228265/ 266/ 267/ 228898 |
|
Fax No.: |
91-8221-228270/ 228263 |
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E-Mail : |
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|
Website : |
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Corporate and Marketing Office : |
# 1205/ 1206, Prestige Meridian II, M. G. Road, Bangalore – 560001,
Karnataka, India |
|
Tel. No.: |
91-80-41123605-06/ 41241175 |
|
Fax No.: |
91-80-41512508/ 2205531 |
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|
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Factory : |
Printing and Packaging Division, Sy No.18/1-2 25 and 27/1-3 4A, 4B and
28 Thandavapura, Nanjangud – 571302, India |
|
Tel. No.: |
91-8221-2283366/ |
DIRECTORS
As on: 31.03.202
|
Name : |
Mr. Manish M. Patel |
|
Designation : |
Chairman and Managing Director |
|
Date of Birth/Age : |
53 Years |
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Qualification : |
BE, MBA |
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Name : |
Mr. Dineshchandra C. Patel |
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Designation : |
Director |
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Qualification : |
Barrister-At-Law |
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Name : |
Mr. Jagdish M. Patel |
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Designation : |
Director |
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Qualification : |
DME |
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Name : |
Mr. S. R. Chandrasekara Setty |
|
Designation : |
Director |
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Qualification : |
B. Com, FCA, ACS |
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|
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Name : |
Mr. M. G. Mohan Kumar |
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Designation : |
Director |
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Qualification : |
B.Sc., LLB, FCA, Licentiate ICSI |
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|
|
|
Name : |
Mr. Ajay D. Patel |
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Designation : |
Director |
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Qualification : |
B.E., MBA |
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|
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|
Name : |
Mr. N. S. Kishore Kumar |
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Designation : |
Director |
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Qualification : |
B.Sc, MBA, CAIIB |
KEY EXECUTIVES
|
Name : |
Mr. N. S. Hegde |
|
Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on: 30.09.2012
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of
Promoter and Promoter Group |
|
|
|
|
|
|
|
|
4445544 |
29.64 |
|
|
4445544 |
29.64 |
|
|
|
|
|
|
2206120 |
14.71 |
|
|
2206120 |
14.71 |
|
Total shareholding
of Promoter and Promoter Group (A) |
6651664 |
44.34 |
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
23200 |
0.15 |
|
|
262000 |
1.75 |
|
|
4000 |
0.03 |
|
|
289200 |
1.93 |
|
|
|
|
|
|
239879 |
1.60 |
|
|
|
|
|
|
2044842 |
13.63 |
|
|
5512820 |
36.75 |
|
|
261595 |
1.74 |
|
|
180309 |
1.20 |
|
|
38000 |
0.25 |
|
|
42016 |
0.28 |
|
|
1270 |
0.01 |
|
|
8059136 |
53.73 |
|
Total Public
shareholding (B) |
8348336 |
55.66 |
|
Total (A)+(B) |
15000000 |
100.00 |
|
(C) Shares held by
Custodians and against which Depository Receipts have been issued |
0 |
0.00 |
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
Total (A)+(B)+(C) |
15000000 |
0.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacture of Paper, Paperboards, Cartons and power
generation. |
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Products : |
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PRODUCTION STATUS (AS ON 31.03.2010)
|
Particulars |
Unit |
Licensed Capacity |
Installed Capacity |
Actual Production |
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|
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|
Paper and Paper Boards |
Metric Tonnes |
NA |
56,000 |
49,452 |
|
Cartons/ Corrugated Boards |
Metric Tonnes |
NA |
30,000 |
12,582 |
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|
|
|
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GENERAL INFORMATION
|
No. of Employees : |
303 (Approximately) |
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Bankers : |
Vijaya Bank, Nanjangud, Karnataka, India |
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Facilities : |
(Rs.
In Millions)
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Banking Relations
: |
-- |
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Auditors : |
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|
Name : |
B. S. Ravikumar and Associates Chartered Accountants |
|
Address : |
Mysore, Karnataka, India |
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|
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Cost Auditors : |
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|
Name : |
Mr. Madhukar P. Nayak |
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Address : |
Bangalore, Karnataka, India |
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Internal Auditors: |
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Name : |
M/s Rau and Natahn |
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Address : |
Mysore, Karnataka, India |
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Associates : |
· Bhadra Packaids Private Limited (BPAL) [Till 30.09.2011, the Company held 50% (PY 50) of the equity share capital of BPAL. BPAL ceased to be an Associate of the Company from 30.09.2011] |
CAPITAL STRUCTURE
As on: 31.03.2012
A. Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
20000000 |
Equity Shares |
Rs.10/- each |
Rs. 200.000 Millions |
|
|
|
|
|
B. Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
15000000 |
Equity Shares |
Rs.10/- each |
Rs. 150.000
Millions |
|
|
[Above includes 75,00,000 Equity Shares alloted as fully
paid up Bonus Shares, by way capitalisation of Share Premium and General
Reserves, during the preceeding five years] |
|
|
|
15000000 |
Total |
|
Rs. 150.000 Millions |
C. Reconciliation
of Paid up Share Capital :
|
|
Number of shares |
Amount |
|
Opening Paid up Equity Share Capital Add: Bonus Shares Issued |
15000000 |
Rs. 150.000 Millions |
|
Add: Bonus Shares Issued |
- |
- |
|
Closing Paid up Equity Share Capital
Total |
15000000 |
Rs. 150.000 Millions |
D. List of Share
holders having 5% or more Shares
|
Name of Shareholders |
Number of shares |
In % age |
|
Anil Kumar Goel |
9,00,000 |
6.00% |
As per the of the Company, including its register of members/shareholders, the above shareholding represents both legal and beneficial ownership of the shares
E. Terms/Rights
attached to Equity Shares
1. The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
2. For the year ended 31st March 2012, the amount of per share dividend recommended by the Directors for distribution to equity shareholders is Rs. 2.20 (Previous Yr.: Rs.2/-).
3. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
150.000 |
150.000 |
75.000 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
737.946 |
622.335 |
593.591 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
887.946 |
772.335 |
668.591 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
95.492 |
162.636 |
164.707 |
|
|
2] Unsecured Loans |
16.644 |
16.318 |
13.819 |
|
|
TOTAL BORROWING |
112.136 |
178.954 |
178.526 |
|
|
DEFERRED TAX LIABILITIES |
113.238 |
109.400 |
108.400 |
|
|
|
|
|
|
|
|
TOTAL |
1113.320 |
1060.689 |
955.517 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
786.855 |
653.006 |
607.929 |
|
|
Capital work-in-progress |
2.748 |
21.195 |
12.311 |
|
|
|
|
|
|
|
|
INVESTMENT |
0.001 |
5.396 |
5.396 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
OTHER CURRENT ASSETS |
15.822 |
15.181 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
203.699
|
215.351
|
160.689
|
|
|
Sundry Debtors |
198.779
|
186.751
|
167.317
|
|
|
Cash & Bank Balances |
14.541
|
42.466
|
33.147
|
|
|
Other Current Assets |
0.089
|
0.306
|
0.000
|
|
|
Loans & Advances |
125.997
|
133.728
|
124.159
|
|
Total
Current Assets |
543.105
|
578.602
|
485.312
|
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditor |
127.200
|
86.081
|
84.131
|
|
|
Other Current Liabilities |
54.329
|
72.782
|
30.232
|
|
|
Provisions |
53.682
|
53.828
|
41.068
|
|
Total
Current Liabilities |
235.211
|
212.691
|
155.431
|
|
|
Net Current Assets |
307.894
|
365.911
|
329.881
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
1113.320 |
1060.689 |
955.517 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
1704.052 |
1666.608 |
1280.966 |
|
|
|
Other Income |
20.645 |
8.435 |
1.915 |
|
|
|
TOTAL (A) |
1724.697 |
1675.043 |
1282.881 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Materials Consumed |
861.514 |
877.409 |
|
|
|
|
Decrease/ (Increase) in Finished Goods
and Work in progress |
(3.001) |
0.119 |
|
|
|
|
Other Expenses |
496.299 |
117.973 |
|
|
|
|
Benefits to employees |
123.761 |
422.854 |
|
|
|
|
TOTAL (B) |
1478.573 |
1418.355 |
1035.203 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
246.124 |
256.688 |
247.677 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
22.619 |
20.523 |
18.618 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) |
223.505 |
236.165 |
229.059 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION |
61.436 |
48.213 |
45.707 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
EXCEPTIONAL ITEMS AND TAX |
162.069 |
187.952 |
0.000 |
|
|
|
|
|
|
|
|
|
Less/ Add |
EXCEPTIONAL
ITEMS |
38.794 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX |
200.863 |
187.952 |
183.352 |
|
|
|
|
|
|
|
|
|
Less |
TAX |
46.899 |
49.225 |
45.653 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
|
153.964 |
138.727 |
137.699 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
567.327 |
477.579 |
379.887 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
15.400 |
13.996 |
13.770 |
|
|
|
Proposed Dividend @ 22 % |
33.000 |
30.000 |
22.500 |
|
|
|
Dividend Tax Provision |
5.353 |
4.983 |
3.737 |
|
|
BALANCE CARRIED
TO THE B/S |
667.538 |
567.327 |
477.579 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
Export Earnings |
2.216 |
0.732 |
0.000 |
|
|
|
TOTAL EARNINGS |
2.216 |
0.732 |
0.000 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
483.125 |
468.784 |
315.802 |
|
|
|
Stores & Spares |
31.337 |
11.693 |
7.878 |
|
|
|
Capital Goods |
101.679 |
54.299 |
11.335 |
|
|
TOTAL IMPORTS |
616.141 |
534.776 |
335.015 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
10.26 |
9.25 |
18.36 |
|
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
30.06.2012 |
30.09.2012 |
|
Type |
1st
Quarter |
2nd
Quarter |
|
|
|
|
|
Net Sales |
488.910 |
442.330 |
|
Total Expenditure |
404.010 |
372.790 |
|
PBIDT (Excl OI) |
84.900 |
69.540 |
|
Other Income |
1.180 |
1.630 |
|
Operating Profit |
86.080 |
71.170 |
|
Interest |
4.660 |
4.340 |
|
Exceptional Items |
0.000 |
0.000 |
|
PBDT |
81.420 |
69.830 |
|
Depreciation |
18.000 |
18.000 |
|
Profit Before Tax |
63.430 |
48.830 |
|
Tax |
17.000 |
13.800 |
|
Provisions and contingencies |
0.000 |
0.000 |
|
Profit After Tax |
46.430 |
35.030 |
|
Extraordinary Items |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
|
Net Profit |
46.430 |
35.030 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
PAT / Total Income |
(%) |
8.93 |
8.28 |
10.73
|
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
11.77 |
11.28 |
14.31
|
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
15.10 |
15.26 |
16.77
|
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.23 |
0.24 |
0.27
|
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
0.39 |
0.51 |
0.50
|
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.31 |
2.72 |
3.12
|
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check List by Info
Agents |
Available in Report (Yes / No) |
|
1] |
Year of Establishment |
Yes |
|
2] |
Locality of the firm |
Yes |
|
3] |
Constitutions of the firm |
Yes |
|
4] |
Premises details |
No |
|
5] |
Type of Business |
Yes |
|
6] |
Line of Business |
Yes |
|
7] |
Promoter's background |
Yes |
|
8] |
No. of employees |
Yes |
|
9] |
Name of person contacted |
No |
|
10] |
Designation of contact person |
No |
|
11] |
Turnover of firm for last three years |
Yes |
|
12] |
Profitability for last three years |
Yes |
|
13] |
Reasons for variation <> 20% |
-- |
|
14] |
Estimation for coming financial year |
No |
|
15] |
Capital in the business |
Yes |
|
16] |
Details of sister concerns |
Yes |
|
17] |
Major suppliers |
No |
|
18] |
Major customers |
No |
|
19] |
Payments terms |
No |
|
20] |
Export / Import details (if applicable) |
No |
|
21] |
Market information |
-- |
|
22] |
Litigations that the firm / promoter involved in |
-- |
|
23] |
Banking Details |
Yes |
|
24] |
Banking facility details |
Yes |
|
25] |
Conduct of the banking account |
-- |
|
26] |
Buyer visit details |
-- |
|
27] |
Financials, if provided |
Yes |
|
28] |
Incorporation details, if applicable |
Yes |
|
29] |
Last accounts filed at ROC |
Yes |
|
30] |
Major Shareholders, if available |
Yes |
|
31] |
Date of Birth of Proprietor/Partner/Director, if available |
No |
|
32] |
PAN of Proprietor/Partner/Director, if available |
No |
|
33] |
Voter ID No of Proprietor/Partner/Director, if available |
No |
|
34] |
External Agency Rating, if available |
Yes |
OPERATIONS
Gross sales for the financial year 2011-12 increased to Rs. 1786.900 Millions as against Rs. 1731.800 Millions in the previous year.
Operating volumes in the Paper Plant as well as Printing and Packaging Division, were marginally higher. Capacity utilization in Paper Plant was 90.88% (last year 89.68%). Although the Average Net Selling Price (NSRP) could be increased by about 6%, cost of direct inputs such as waste paper, fuel, dyes, chemicals and stores and spares consumed increased by about 1 0% per MT, eroding the direct contribution margin by about 410 Rs/Mt. The bottom line impact of this on the performance of the paper division was about 21.000 Millions. Fuel prices were higher on supply constraints witnessed in the economy. Raw material prices increased sharply based on international trends and due a steep depreciation in the value of the rupee in the last two quarters of the financial year. The planned maintenance shutdown of Paper Machine No. 1 for 3 weeks for rebuilding as well as a critical breakdown of Co-generation plant for 3 weeks in Q3, affected production volumes. Replacement of old components, in paper plant and box plant led to increase in repairs & maintenance expenses.
During the year the Company sold shares held in Bhadra Packaids Private Limited, an Associate Company and realized a gain of Rs. 46.400 Millions (reported as exceptional item). Dividend received from Bhadra Packaids (P) Limited was Rs. 17.400 Millions and is reported as other income. Attention of members is drawn to the fact that this income is non-recurring as the shares have been sold as reported above. After making a higher depreciation provision of Rs. 61.436 Millions (Previous year – 48.000 Millions), net profit increased from Rs. 138.700 Millions to Rs. 153.900 Millions.
CURRENT PROSPECTS
During the first quarter of the current year, the output is similar to the trend in the previous year and operating profits are about the same. The market conditions for paper are extremely competitive with supply from new capacities outstripping demand. Whilst there has been a steep increase in raw material and fuel prices due to a steep depreciation in the rupee, it has been extremely difficult to push through an increase in selling prices due to demand-supply situation in the paper market. The bright spot on the horizon is the internal demand from the Printing and Packaging Division, which is seeing an encouraging response from box consuming Brand Owners. The combination of high inflation, poor growth in demand and a capacity overhang will ensure that capacity in this segment remains flat in the near term. The management however perceives an opportunity for growth by enhancing its box manufacturing capacity with a new plant at another location. Various site options are under evaluation. An increase in paper making capacity through brown-field improvements to support the higher conversion capacity planned is seen as the way forward.
Overall Turnover and operating profit is expected to be better, mainly due to higher volume of value addition through conversion.
During the year 2011-12 overall economic growth of India was lower at 6.5% as against 8.5% in the last year. Manufacturing sector growth was down at 2.9% (8.8%).
MANAGEMENT DISCUSSION
AND ANALYSIS
Industry Structure
and Developments :
The Indian Paper Industry has been historically segmented on a three dimensional matrix identified by size, grades manufactured and raw materials utilised. Government policies on indirect taxation rates applicable to output have relied on this segmentation. Generally, tariff rates have protected smaller units utilising "unconventional" raw material. Over the years, the growth of various segments, investment levels in specific segments, technological changes, industry fragmentation and intensity of competition have been significantly influenced by the Government's tariff policy.
Over 500 players currently populate the industry and the estimated output across all grades is about 10 million metric tonnes per annum (MTPA). Imports still do not supply any significant proportion of the total demand. The three broad segments of the market are Writing and Printing Grades (Cultural), Packaging Grades (Industrial) and Newsprint.
The "Industrial" Segment of the paper market broadly comprises of Corrugated Case Materials,(CCM) and Duplex Boards -white lined and coated or uncoated. Fragmentation is severe in this segment which constitutes about 50% of the total output of Paper and Board. This segment entirely relies upon "unconventional" raw material such as waste paper (imported and domestically sourced) and, to a limited extent, on agricultural residues. The average size of units in this segment is now about 15,000 MTPA and most units cater to local area demand from small semi-auto corrugated box factories and small printers. Although the other segments in the Indian paper industry are also fragmented by international standards, the degree of fragmentation is less severe.
Historically, the bulk of the output of "Cultural" grades - comprising of writing, printing, office stationery paper and specialty paper has been the preserve of the larger producers, who use forest based raw materials in integrated pulping facilities augmented by imported market pulp. This segment has been consistently taxed at higher rates due to its size and use of "conventional" forest based raw material. Investment in plant for these players has also been higher. With a relatively smaller number of players and high import tariff protection, prices of end products, generally perceived to be of higher quality, have been high. "Lower end cultural grades" manufactured by smaller players using unconventional raw materials in low investment, low-tech plants cater to consumers in the price sensitive sub-segment of this market. This sub segment has historically depended heavily on the tariff differential based on size and raw material for its viability. Some of the mid-sized players in the writing and printing segment are in the process of expansion and modernization and are installing wider/faster machines with full fledged de-inking plants to produce the higher quality that is increasingly preferred and for which consumers are willing to pay more. Several of the "large-integrated" forest based producers have also recently increased forest based pulping capacities The cultural paper segment contributes about 40% of the annual paper and paperboard production with a current demand growth rate of about 6 to 7% per annum. The high investment levels required and limited "conventional" fiber resources are the major deterrents to growth in this segment for both existing players as well as new entrants.
Newsprint, till about 1994, was the sole preserve of large public sector units and was well protected by high import tariff barriers. Nevertheless, imports contributed to about 40% of the domestic consumption. Since then, new domestic capacity with private investment has been "allowed" to be created. This growth has relied mainly on De-inked waste paper as a source of raw material. Currently, Newsprint is exempted from excise duty. This tariff structure for Newsprint has seen Indian Newsprint prices closely mapping international prices. Imports still constitute about 25% to 30% of consumption and newsprint constitutes about 10% of the total production of paper and paperboard. The number of players in the newsprint segment is relatively limited and manufacturing capacities are larger than in the packaging grades segment.
The Indian Paper industry which ranks 11th in production, globally, in recent times has registered faster growth rates of about 7%. The domestic demand is expected to grow at about 6 to 7% p.a. Paper industry plays an important role in the socio-economic development of the country.
Despite several infrastructural impediments there is a strong growth in demand in several sub-segments of the Indian Paper Industry. There is perceptible shift in preference for higher quality products in both the Industrial and Cultural Segments and players with the right grade-quality mix are seeing opportunities for profitable growth. As per their assessment, most of the dominant players in each industry segment are operating near to capacity and one can expect a round of capacity additions which will however be circumscribed by factors peculiar to individual units such as the ability to raise funds cost effectively, availability of raw material and low cost energy.
SEGMENT WISE OR
PRODUCT WISE PERFORMANCE:
Segment wise revenue, results and capital employed are furnished for
i) Paper and Paper products
ii) Power, in the notes on accounts.
OUTLOOK:
The Indian economy has grown by 6.5% during 2011-12 with manufacturing sector growth of 2.9%. Most forecasts for growth in paper industry for 2012 -13 are between 6% and 7%. The depreciating Indian Rupee, inflation and high interest rates have to some extent weakened consumer confidence and consumer purchasing power
Innovative cost containment and cost cutting will be required by paper mills to not only maintain business volumes but to capture a larger portion of a slowly growing pie.
CONTINGENT
LIABILITIES
(Rs. In Millions)
|
Claims not
acknowledged as debts : |
|
|
|
|
Particular |
|
31.03.2012 |
31.03.2011 |
|
Demands under the Central Excise Act: a) Excise duty and penalty in respect of sale of sludge b) Excise duty and penalty in respect of removal |
Duty Penalty Duty Penalty |
0.355 0.355 0.815 0.100 |
0.355 0.355 0.815 0.100 |
|
Demand of penalty on late payment of Service tax |
|
0.263 |
0.000 |
|
Demands under the Karnataka Electricity (Taxation on consumption) Act, 1959 |
|
0.000 |
7.481 |
FIXED
ASSETS:
· Freehold Land
· Building
· Plant and Machinery
· Furniture, Fixtures
· Office Equipments
·
Vehicles
·
Computers
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. 55.34 |
|
|
1 |
Rs. 88.30 |
|
Euro |
1 |
Rs. 71.37 |
INFORMATION DETAILS
|
Report Prepared
by : |
UDS |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
5 |
|
--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 |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
50 |
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.