MIRA INFORM REPORT

 

 

Report Date :

23.02.2013

 

IDENTIFICATION DETAILS

 

Name :

NEC CORPORATION

 

 

Registered Office :

5-7-1 Shiba Minatoku Tokyo 108-8001

 

 

Country :

Japan

 

 

Financials (as on) :

31.03.2012

 

 

Date of Incorporation :

Jul 1899

 

 

Com. Reg. No.:

0104-01-022916 (Tokyo-Minatoku)

 

 

Legal Form :

Limited Company (Kabushiki Kaisha)

 

 

Line of Business :

Manufactures communications/IT equipment, offering solutions services

 

 

No. of Employees :

110,105

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Satisfactory

Payment Behaviour :

No Complaints

Litigation :

Clear

 

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 30th, 2012

 

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

japan - ECONOMIC OVERVIEW

 

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self-sufficient in rice, Japan imports about 60% of its food on a caloric basis. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2011 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2011. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Electricity supplies remain tight because Japan has temporarily shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami. Estimates of the direct costs of the damage - rebuilding homes, factories, and infrastructure - range from $235 billion to $310 billion, and GDP declined almost 0.5% in 2011. Prime Minister Yoshihiko NODA has proposed opening the agricultural and services sectors to greater foreign competition and boosting exports through membership in the US-led Trans-Pacific Partnership trade talks and by pursuing free-trade agreements with the EU and others, but debate continues on restructuring the economy and reining in Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

 

 

Source : CIA

 

 

COMPANY NAME

 

NEC CORPORATION

 

REGD NAME 

 

Nihon Denki KK

 

MAIN OFFICE

 

5-7-1 Shiba Minatoku Tokyo 108-8001 JAPAN

Tel: 03-3454-1111     Fax: 03-3457-7249

 

URL:                 http://www.nec.co.jp/

E-Mail address: info@nec.co.jp

 

ACTIVITIES

 

Mfg of communications/IT equipment; offers IT/Networking solutions

 

BRANCHES

 

Sapporo, Sendai, Fuchu, Kawasaki, Yokohama, Abiko, Saitama, Shizuoka,

Nagoya, Kanazawa, Osaka, Hiroshima, Takamatsu Fukuoka, other (Tot 15)

 

OVERSEAS

 

USA, Europe (20), Latin America (6), Africa (4), Asia (14), Russia, other (Tot 52)

 

FACTORIES  

 

NEC subsidiary mfrs

 

CHIEF EXEC

 

NOBUHIRO ENDO, PRES

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY    

 

FINANCES        FAIR                             A/SALES          Yen 3,036,836 M

PAYMENTS      NO COMPLAINTS          CAPITAL           Yen 397,199 M

TREND SLOW                           WORTH            Yen 777,614 M

STARTED         1899                             EMPLOYES      110,105

 

COMMENT    

 

PROVIDER OF COMMUNICATIONS/IT EQUIPMENT & SOLUTIONS. 

FINANCIAL SITUATION COSIDERED FAIR AND GOOD FOR ORDINARY

BUSINESS ENGAGEMENTS.

                       

 

                        Notes: Unit: In Million Yen

Forecast (or estimated) figures for 31/03/20139 fiscal term

 

HIGHLIGHTS

 

The subject company is one of representative high-tech power houses, and top-ranked player in communications infrastructure facilities in Japan.  Focusing emphasis on IT services.  Carried out integration between NEC Electronics and Renesas Technology in 2010, and shifted semiconductor and PC businesses to equity-applied firm.  In the unprofitable mobile phone businesses, the firm intends to streamline the production system in the domestic market.  It will shift focus to expansion of the cloud and big data businesses.

 

FINANCIAL INFORMATION

 

            The sales volume for Mar/2012 fiscal term amounted to Yen 3,036,836 million, a 2.5% down from Yen 3,115,424 million in the previous term.  Business declined mainly because the major upheaval in the economic environment due to fiscal crisis in various European countries, the appreciation of the Yen, and the impact of the Great East Japan Earthquake and the flooding in Thailand.  Consolidated operating income improved, but the bottom line was impacted by several factors, including a review of deferred tax assets reflecting Japan’s tax reforms and financial results for fiscal 2012, and the recording of business structure improvement expenses.  Smartphone business struggled to compete and the company was burdened by restructuring costs and asset write-offs.  Local media has reported that NEC, Sony Corp and Nissan Motor Co are studying the possibility of integrating their lithium-ion battery operations to better compete overseas.  As a result, the recurring profit was posted at Yen 32,050 million and the net losses of Yen 110,267 million, respectively, compared with Yen 41 million recurring profit and Yen 12,518 million net losses, respectively, a year ago.

           

            (Apr/Dec/2012 results): Sales Yen 2,169,840 (up 2.7%), operating profit Yen 71,805 million (previously Yen 1,416 million loss), recurring profit Yen 51,762 million (previously Yen 21,988 million loss), net profit Yen 11,458 million (previously Yen 97,518 million losses).  It returned to net profit in the period, helped by increased sales of its IT-solutions and carrier-network businesses.  (% & figures compared with the corresponding period a year ago).

 

For the current term ending Mar 2013 the recurring profit is projected at Yen 70,000 million and the net profit at Yen 20,000 million, respectively, on a 3.7 rise in turnover, to Yen 3,150,000 million.  Sales of system construction services for telecom carriers and makers are holding steady.  Orders for network equipment from telecom carriers are also increasing.  Operating profit will rise, due to profit on sale of a patent and substantial cut in personnel expenses.  Workforce reduction in indirect divisions will decrease costs by Yen 40 billion in the current term.

 

            The financial situation is considered FAIR and good for ORDINARY business engagements.       

 

REGISTRATION

 

Date Registered:　        Jul 1899

Regd No.:                      0104-01-022916 (Tokyo-Minatoku)

Legal Status:                 Limited Company (Kabushiki Kaisha)

Authorized:                  7,500 million shares

Issued:                         2,604,732,635 shares

Sum:                            Yen 397,199 million

           

Major shareholders (%): Japan Trustee Services T (4.6), Master Trust Bank of Japan T    (4.2), SSBT OD05 Omnibus Acct Treaty (2.9), Employees’ S/Holding Assn (2.0), Nippon Life Ins (1.6), Sumitomo Life Ins (1.5), Japan Trustee Services T4 (1.2), Tam Two (1.1), Chase Manhattan GTS Escrow (1.0); foreign owners (23.6)

           

No. of shareholders: 251,942

 

Listed on the S/Exchange (s) of: Tokyo

 

Managements: Kaoru Yano, ch; Nouhiro Endo, pres; Takashi Inui, v pres; Junji Yasui, v pres; Toshiyuki Mineno, s/mgn dir; Kuniaki Okada, mgn dir; Masaki Fukui, mgn dir; Takemitsu kunio, mgn dir; Fujio Okad, mgn dir; Manabu Kinoshita, mgn dir; Tomonori Nishimura, mgn dir

           

Nothing detrimental is known as to the commercial morality of executives.

 

Related companies: NEC Electronics, NEC Personal Products, NEC Fields, other

           

OPERATION

           

Activities: Manufactures communications/IT equipment, offering solutions services:

 

(Sales Breakdown by Divisions):.

IT/Network Solutions (27%): Provides solutions for networking era, mainly to government                       agencies, communications service providers and other private-sector enterprises;

 

Mobile/Personal Solutions (21): Provides mobile handsets, PC’s & other terminals,                                channeling individuals to ubiquitous networking society and Internet services, underpinning NEC brand;

 

Electron Device Business (12%): Provides semiconductors, LCD’s, other electronic                                components & products;

 

Other (40%); PSL, social infrastructure, platforms, others

 

Overseas Sales Ratio (16%).

           

(Products): PC & servers (PC’s (desktop PCs, Notebooks, workstations); servers, super       computers, virtual PC center); Storage (NAS/SAN, tape storage); Software (middleware,     ERP software); semiconductors & components (system LSI, IC & Discrete semiconductor,      compound semiconductor); Peripherals (monitors, projectors, optical disc drives, floppy disk       drives, printers); Networking (for Network service provider, for enterprise & small/medium             business firms, unified communication, key telephone systems); Broadcasting (digital broadcast products); Home Appliances, others.

 

Clients: [Governments, telecommunications carriers, business firms, wholesalers] NTT Corp, KDDI Corp, Defense Ministry, JR group firms, other

No. of accounts: 3,000

Domestic areas of activities: Nationwide

 

Suppliers: [Mfrs, wholesalers] Supplied from group subsidiary firms: NEC Saitama, NEC                  Personal Products, NEC Fielding, NEC Communication Systems, NEC Computer Techno,                  NEC Soft, NEC System Technology, NEC Infrontia, NEC Networks & System Integration                         Services, NEC Engineering, other. .

 

Payment record: No Complaints

 

Location: Business area in Tokyo.  Office premises at the caption address are owned and maintained satisfactorily.

 

Bank References:

 

SMBC (Tokyo)

Mizuho Corporate Bank (H/O)

Relations: Satisfactory

 

 

FINANCIALS

FINANCES: (Consolidated in million yen)

 

　

　

Terms Ending:

31/03/2012

31/03/2011

INCOME STATEMENT

 

 

 

  Annual Sales

　

3,036,836

3,115,424

 

  Cost of Sales

2,128,920

2,199,973

 

      GROSS PROFIT

907,916

915,451

 

  Selling & Adm Costs

834,174

857,631

 

      OPERATING PROFIT

73,742

57,820

 

  Non-Operating P/L

-31,692

-57,779

 

      RECURRING PROFIT

42,050

41

　

      NET PROFIT

-110,267

-12,518

BALANCE SHEET

 

 

 

 

  Cash

　

195,443

184,662

 

  Receivables

 

810,579

726,355

 

  Inventory

 

249,917

264,743

 

  Securities, Marketable

58,407

20,757

 

  Other Current Assets

200,091

246,063

 

      TOTAL CURRENT ASSETS

1,514,437

1,442,580

 

  Property & Equipment

315,895

341,175

 

  Intangibles

 

201,662

208,202

 

  Investments, Other Fixed Assets

525,576

636,974

 

      TOTAL ASSETS

2,557,570

2,628,931

 

  Payables

 

466,177

464,529

 

  Short-Term Bank Loans

28,990

48,780

 

　

 

　

　

 

  Other Current Liabs

563,445

667,219

 

      TOTAL CURRENT LIABS

1,058,612

1,180,528

 

  Debentures

 

230,000

200,000

 

  Long-Term Bank Loans

263,160

137,846

 

  Reserve for Retirement Allw

182,735

182,022

 

  Other Debts

　

45,449

53,094

 

      TOTAL LIABILITIES

1,779,956

1,753,490

 

      MINORITY INTERESTS

 

 

 

Common stock

397,199

397,199

 

Additional paid-in capital

192,834

192,837

 

Retained earnings

82,659

192,943

 

Evaluation p/l on investments/securities

16,273

4,167

 

Others

 

117,577

115,485

 

Treasury stock, at cost

(28,928)

(27,190)

 

      TOTAL S/HOLDERS` EQUITY

777,614

875,441

　

      TOTAL EQUITIES

2,557,570

2,628,931

CONSOLIDATED CASH FLOWS

 

 

 

 

Terms ending:

31/03/2012

31/03/2011

 

Cash Flows from Operating Activities

　

83,857

33,660

 

Cash Flows from Investment Activities

-49,706

-146,244

 

Cash Flows from Financing Activities

14,692

73,075

　

Cash, Bank Deposits at the Term End

　

251,843

203,879

ANALYTICAL RATIOS            Terms ending:

31/03/2012

31/03/2011

 

 

Net Worth (S/Holders' Equity)

777,614

875,441

 

 

Current Ratio (%)

143.06

122.20

 

 

Net Worth Ratio (%)

30.40

33.30

 

 

Recurring Profit Ratio (%)

1.38

0.00

 

 

Net Profit Ratio (%)

-3.63

-0.40

 

 

Return On Equity (%)

-14.18

-1.43

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.54.42

UK Pound

1

Rs.83.20

Euro

1

Rs.71.90

 

INFORMATION DETAILS

 

Report Prepared by :

NLM

 

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 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%)

 

 

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.