MIRA
INFORM REPORT
|
Report Date : |
26.02.2013 |
IDENTIFICATION DETAILS
|
Name : |
JAY BHARAT MARUTI LIMITED |
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Registered
Office : |
601, Hemkunt Chambers, 89, Nehru Place, New Delhi – 110 019 |
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Country : |
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Financials (as
on) : |
31.03.2012 |
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Date of
Incorporation : |
19.03.1987 |
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Com. Reg. No.: |
55-027342 |
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Capital
Investment / Paid-up Capital : |
Rs.108.250
Millions |
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CIN No.: [Company Identification
No.] |
L29130DL1987PLC027342 |
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|
Legal Form : |
Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges. |
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Line of Business
: |
Subject is primarily engaged in the business of manufacturing of components
for automobiles. |
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No. of Employees
: |
Approximately 3600 (Permanent and Contractual) |
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 5648000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a part of JBM Group. Subject is a well established company having a good track record.
There appears slight dip in profitability during the current year. However, the general financial position of the company seems to be
strong. Liquidity position of the company is good. The ratings also take into consideration the financial linkages of
subject company with “Maruti Suzuki India Limited”. Trade relations are reported to be fair. Business is active. Payments
are reported to be regular ad as per commitment. The company can be considered for normal business dealings at usual
trade terms and condition. |
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) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
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Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
|
Source
: CIA |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
ICRA |
|
Rating |
Term Loan: A1+ |
|
Rating Explanation |
Having very strong degree of safety regarding timely payment of
financial obligation it carry lowest credit risk. |
|
Date |
December, 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/ Corporate Office : |
601, Hemkunt Chambers, 89, Nehru Place, New Delhi – 110 019, India |
|
Tel. No.: |
91-11-26427104-6 |
|
Fax No.: |
91-11-26427100 |
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E-Mail : |
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Website : |
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Factory 1 : |
Plot No.5, Maruti Joint Venture Complex, Gurgaon – 122 015, Haryana,
India |
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Factory 2 : |
Sector
36, Mohammadpur Jharsa, Near Khandsa Village, Gurgaon – 122 001, Haryana,
India |
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Factory 3 : |
Plot
No.15 and 22, Sector - 3A, Maruti Supplier Park, IMT Manesar, Gurgaon – 122
050, Haryana, India |
DIRECTORS
As on 31.03.2012
|
Name : |
Mr. S.K. Arya |
|
Designation : |
Chairman and Managing Director |
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|
Name : |
Mr. U.C. Aggarwal |
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Designation : |
Director |
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Name : |
Mr. D.P. Agarwal |
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Designation : |
Director |
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Name : |
Mr. R. Dayal |
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Designation : |
MSIL Nominee Director |
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Name : |
Mr. Achintya Karati |
|
Designation : |
Director |
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|
Name : |
Mr. Nishant Arya |
|
Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. Anand Swaroop |
|
Designation : |
President and Chief Financial Officer |
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|
|
|
Name : |
Mr. S. Kartik |
|
Designation : |
Company Secretary and Compliance Officer |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 31.12.2012
|
Category of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of Promoter and Promoter Group |
|
|
|
|
|
|
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|
3163850 |
14.61 |
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|
9516350 |
43.96 |
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|
12680200 |
58.57 |
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|
Total shareholding of Promoter and Promoter Group (A) |
12680200 |
58.57 |
|
(B) Public Shareholding |
|
|
|
|
|
|
|
|
7800 |
0.04 |
|
|
1200 |
0.01 |
|
|
400 |
0.00 |
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|
1000 |
0.00 |
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|
2129 |
0.01 |
|
|
12529 |
0.06 |
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|
|
|
|
|
4368049 |
20.18 |
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|
|
|
|
|
2825312 |
13.05 |
|
|
1575477 |
7.28 |
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|
188433 |
0.87 |
|
|
188433 |
0.87 |
|
|
8957271 |
41.37 |
|
Total Public shareholding (B) |
8969800 |
41.43 |
|
Total (A)+(B) |
21650000 |
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) |
21650000 |
0.00 |
BUSINESS DETAILS
|
Line of Business : |
Subject is primarily engaged in the business of manufacturing of
components for automobiles. |
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Products : |
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PRODUCTION STATUS (AS ON 31.03.2011)
|
Particulars |
Installed
Capacity ** |
Actual
Production NOS. |
|
Sheet Metal components,
Assemblies and sub assemblies * |
60000 MT |
37881832* |
|
Muffler assemblies |
- |
868315 |
|
Fuel Neck (Nos.) |
1280000 |
1170144 |
|
Rear Axle (Nos.) |
1160000 |
755517 |
|
Dies and Tools (Nos.) |
- |
67 |
Notes:
* Includes components
produced on job work 3713464 Nos. excludes components produced for interplant
21877831 nos.
** On 3 shift basis
GENERAL INFORMATION
|
No. of Employees : |
Approximately 3600 (Permanent and Contractual) |
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Bankers : |
·
Canara Bank ·
Citi Bank N.A. ·
DBS Bank ·
ICICI Bank Limited ·
IndusInd Bank ·
Standard Chartered Bank ·
The Bank of Tokyo Mitsubishi UFJ Limited ·
YES Bank Limited |
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Facilities : |
Notes: Long-term borrowings * Secured by first and exclusive charge on the movable fixed assets purchased/to be purchased including, without limitation, its movable plant and machinery, furniture and fixture, equipment, computer hardware, computer software, machinery spares, tools and accessories and others movables, so as to provide an asset cover of 1.5 times the loan amount at market valuation. ** Secured by Hypothecation of vehicle financed *** Secured by first and exclusive charge on the movable fixed assets purchased/to be purchased including, without limitation, its movable plant and machinery, furniture and fixture, equipment, computer hardware, computer software, machinery spares, tools and accessories and others movables. Terms of Repayment of Term Loans I In Foreign Currency
II Vehicle Loans from banks and other related parties are payable in 36 and 84 monthly equal installments respectively from the date of disbursements. Short term borrowings * Secured by first charge on book debts, stock and other current assets of the company ranking parri passu inter se between the company’s bankers and are further secured by second charge on movable fixed assets of the company. |
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
Mehra Goel and Company Chartered Accountants |
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Internal Auditors : |
Sahni Natrajan and Bahl Chartered Accountants |
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Associates/
Joint Venture Partner : |
·
Maruti Suzuki India Limited |
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|
|
Enterprises over which Key Management Personnel and
their relatives are able to exercise significant influence : |
·
Jay Bharat Exhaust System Limited ·
JBM Industries Limited ·
Neel Metal Products Limited ·
JBM Auto Limited |
CAPITAL STRUCTURE
As on 31.03.2012
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
24000000 |
Equity Shares |
Rs.5/- each |
Rs.120.000 millions |
|
3000000 |
Preference Shares |
Rs.10/- each |
Rs.30.000 millions |
|
|
Total |
|
Rs.150.000
millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
21650000 |
Equity Shares |
Rs.5/- each |
Rs.108.250
Millions |
|
|
|
|
|
Detail of
Shareholders holding more than 5% share capital as on the balance sheet date.
|
Name of Shareholders |
31.03.2012 |
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|
No. of Shares |
% of Holding |
|
|
Maruti Suzuki India Limited |
6340000 |
29.28 |
|
ANS Holding Private Limited |
2029000 |
9.37 |
|
Sanjay Singhal |
1400400 |
6.47 |
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 |
108.250 |
108.250 |
108.250 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
1303.871 |
1145.323 |
812.598 |
|
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
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NETWORTH |
1412.121 |
1253.573 |
920.848 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
1516.730 |
874.354 |
516.342 |
|
|
2] Unsecured Loans |
29.296 |
0.000 |
0.000 |
|
|
TOTAL BORROWING |
1546.026 |
874.354 |
516.342 |
|
|
DEFERRED PAYMENTS |
0.000 |
0.000 |
71.726 |
|
|
DEFERRED TAX LIABILITIES |
258.352 |
165.964 |
139.614 |
|
|
|
|
|
|
|
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TOTAL |
3216.499 |
2293.891 |
1648.530 |
|
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APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
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FIXED ASSETS [Net Block] |
3190.241 |
2442.235 |
2012.871 |
|
|
Capital work-in-progress |
245.094 |
157.482 |
9.989 |
|
|
|
|
|
|
|
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INVESTMENT |
23.855 |
23.855 |
23.856 |
|
|
DEFERRED TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
754.797
|
526.479
|
321.034
|
|
|
Sundry Debtors |
757.369
|
519.941
|
465.435
|
|
|
Cash & Bank Balances |
18.729
|
6.257
|
11.298
|
|
|
Other Current Assets |
585.465
|
314.376
|
0.000
|
|
|
Loans & Advances |
16.291
|
145.441
|
242.297
|
|
Total
Current Assets |
2132.651
|
1512.494
|
1040.064 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
1766.100
|
1216.091
|
1256.189
|
|
|
Other Current Liabilities |
531.979
|
518.326
|
130.961
|
|
|
Provisions |
77.263
|
107.758
|
51.100
|
|
Total
Current Liabilities |
2375.342
|
1842.175
|
1438.250
|
|
|
Net Current Assets |
(242.691)
|
(329.681)
|
(398.186)
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
3216.499 |
2293.891 |
1648.530 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
|
SALES |
|
|
|
|
|
|
|
Net revenue from operations |
10683.144 |
10605.560 |
8032.100 |
|
|
|
Other Income |
22.303 |
55.702 |
23.109 |
|
|
|
TOTAL (A) |
10705.447 |
10661.262 |
8055.209 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Material Consumed |
8591.177 |
8514.430 |
6323.815 |
|
|
|
Changes in inventories
of finished goods & work in progress |
(13.516) |
(73.245) |
(14.699) |
|
|
|
Employee benefits expense |
569.031 |
546.929 |
413.077 |
|
|
|
Other expenses |
674.283 |
612.450 |
501.285 |
|
|
|
TOTAL (B) |
9820.975 |
9600.564 |
7223.478 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
884.472 |
1060.698 |
831.731 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
215.056 |
143.407 |
122.736 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
669.416 |
917.291 |
708.995 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
380.178 |
350.858 |
380.830 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
289.238 |
566.433 |
328.165 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
92.947 |
183.384 |
118.063 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H)
(I) |
196.291 |
383.049 |
210.102 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
983.948 |
691.223 |
541.616 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Proposed Dividend |
NA |
43.300 |
32.475 |
|
|
|
Dividend Tax |
NA |
7.024 |
5.520 |
|
|
|
Transferred to General Reserve |
NA |
40.000 |
22.500 |
|
|
BALANCE CARRIED TO
THE B/S |
NA |
983.948 |
691.223 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
420.174 |
186.267 |
147.244 |
|
|
|
Stores & Spares |
1.065 |
0.961 |
6.368 |
|
|
|
Capital Goods |
279.770 |
474.221 |
47.812 |
|
|
TOTAL IMPORTS |
701.009 |
661.449 |
201.424 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
9.07 |
17.69 |
9.70 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2012 (1st
Quarter) |
30.09.2012 (2nd
Quarter) |
31.12.2012 (3rd
Quarter) |
|
Net Sales |
3062.600 |
2430.500 |
3018.900 |
|
Total Expenditure |
2789.800 |
2279.100 |
2787.800 |
|
PBIDT (Excl OI) |
272.800 |
151.300 |
231.100 |
|
Other Income |
4.200 |
4.900 |
2.200 |
|
Operating Profit |
276.900 |
156.200 |
233.300 |
|
Interest |
61.500 |
43.300 |
47.200 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
215.400 |
112.900 |
186.200 |
|
Depreciation |
116.800 |
105.300 |
117.700 |
|
Profit Before Tax |
98.600 |
7.700 |
68.400 |
|
Tax |
32.000 |
2.000 |
22.100 |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
66.600 |
5.600 |
46.300 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
|
Net Profit |
66.600 |
5.600 |
46.300 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
PAT / Total Income |
(%) |
1.83
|
3.59
|
2.61
|
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
2.71
|
5.34
|
4.09
|
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
5.43
|
14.32
|
10.75
|
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.20
|
0.45
|
0.36
|
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt/Networth) |
|
1.09
|
0.70
|
0.56
|
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
0.90
|
0.82
|
0.72
|
LOCAL AGENCY FURTHER INFORMATION
|
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 |
No |
|
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 |
|
Unsecured Loans |
31.03.2012 (Rs. in Millions) |
31.03.2011 (Rs. in Millions) |
|
Short term borrowings |
|
|
|
(Unsecured) |
|
|
|
Loans From Banks:- |
|
|
|
- Foreign Currency Buyers Credits |
29.296 |
0.000 |
|
Total |
29.296 |
0.000 |
BUSINESS PERFORMANCE
During the year
2011-12, the Company registered modest growth in turnover as compared to
previous year. However the profit after tax has significantly gone down due to
increase in financial cost and depreciation. The primary reason affecting the
growth during the year were – (i) unfavourable economic conditions affecting
demand for automobiles and (ii) Labour unrest in the Manesar plant of Maruti
Suzuki India Limited (MSIL) resulting into loss of production.
The financial year
2012-13 does not seems to be better as Government is unable to contain
inflation, rupee has depreciated against dollar at record low levels, paralysis
in Government decision making, petrol price hike and vast difference in diesel
and petrol price and global uncertainty.
AWARDS / ACCOLADES
The Company won
the following awards from MSIL for the year:
·
Overall Silver Award;
·
Spare Nagare Schedule Adherence Award;
·
Special Support Award;
·
Certificate for recognition of sincere efforts and superior
performance in the field of ‘VA-VE’;
·
Certificate for recognition of sincere efforts and
superior performance in the field of ‘Capacity Enhancement’
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
OVERVIEW
GLOBAL ECONOMY AND
DEVELOPMENTS
2011-12 represented
a year of painful surprises for the world: sluggish global economic growth,
political instability across the Middle East and North Africa, natural
disasters in Japan, deepening European crisis and fragile US recovery. Although
extensive liquidity infusions by the European Central Bank (ECB) have averted a
major financial catastrophe in Europe with global implications, an acceptable
solution to the Euro crisis is still not in sight.
As Europe looks up
to Germany as its only saviour, the emerging economies are also witnessing
economic hardships. The reason is simple: in an increasingly integrated world,
economic shockwaves travel far and wide, affecting investor confidence and
creating a cycle of low growth and unfulfilled aspirations. Besides, domestic
policy tightening also played a part in smothering growth.
The number of cars
manufactured worldwide has dropped significantly. According to some estimates,
it is close to 30% in the two months following the Japanese earthquake and
tsunami, because of supply-chain disruptions.
During the second
quarter of 2011, oil prices briefly rose more than 25% above the levels that
prevailed in January 2011. It is hard to determine the extent to which prices
were driven up by stronger demand or by lower supply (for example, from Libya).
Assuming that a significant share of the price hike reflected lower supply, it
may have reduced output in advanced economies by Ľ to ˝ percentage point of
GDP.
INDIAN ECONOMY
India’s economy
has also started showing signs of fatigue, after years of sterling performance.
It grew by 5.3% in the quarter ended March 2012, belying expectations. The
Economic Outlook for 2011-12, released by the Government of India, pegs the
country’s GDP growth rate for 2011-12 at 6.5% compared with 8.5% registered
last year.
With agriculture
and services continuing to perform well, India’s slowdown can be attributed
almost entirely to weakening industrial growth. The index of industrial
production (IIP) growth averaged 2.8% in 2011-12, compared with 8.2% in the
previous fiscal year. The manufacturing sector grew by 2.7% and 0.4% in the
second and third quarters of 2011-12, respectively. In March 2012 alone,
industrial production contracted by 3.5%, dragging the cumulative factory
output growth to the level 2008-09, the year of the global financial crisis.
In 2011-12, the
inflation rate averaged 8.84%, compared with 9.57% a year ago. Further
complicating policy choices for the Reserve Bank of India (RBI), headline
inflation, riding on high food prices in April 2012, unexpectedly touched 7.23%
from 6.89% a month ago. It further rose to 7.55% in May 2012 from 7.23% in
April 2012, led by higher inflation, related to primary food and non-food
products, along with fuel and power. This is a critical situation since the RBI
has to perform the unenviable task of taming inflation, without compromising
growth. With low expectations of a bountiful monsoon, food inflation may be
difficult to manage.
The monetary
policy was tightened by the Reserve Bank of India (RBI), during the year to
control inflation and curb inflationary expectations.
THE ROAD AHEAD
The global economy
is expected to take some time to return to normalcy, as there are significant
downside risks and fragility. The World Bank has predicted a modest global GDP
growth of 2.5% in 2012, increasing to 3% in 2013 and 3.3% in 2014.
With dented
investor confidence, capital flows to developing countries have declined by
almost half, compared with last year. Europe appears to have hit a ceiling, as
countries wrestle with each other for political and economic one-upmanship. The
recession in Europe is expected to adversely impact developing countries,
especially India, as the continent is India’s largest trading partner. Growth
in several major developing countries (Brazil, India, and to a lesser extent
Russia, South Africa and Turkey) has also slowed partly in response to domestic
policy tightening. Considering the sluggish external market and global economic
woes, China has also lowered its full-year growth target for 2012 to 7.5% in
early March, after its economy grew 9.2% in 2011 from the previous year.
Growth in
developed countries is now expected to touch 1.4% in 2012 (-0.3% for euro zone
countries and 2.1% for the rest) and 2.0% in 2013. Developing country growth is
expected to be 5.4% and 6.0% in 2012 and 2013 respectively.
Key drivers of
stronger global growth include the rebound of activity in Japan, the drop in
oil and food prices and solid demand growth in emerging markets.
THE INDIAN
AUTOMOTIVE INDUSTRY
India, the world’s
second fastest growing auto market, is also home to the sixth largest
automobile industry after China, the US, Germany, Japan and Brazil. India’s car
market is rapidly evolving, fuelled by rising consumer aspirations and
earnings. A passenger vehicle or a commercial vehicle represents the
aspirations and achievements of its owner. Hence, global auto giants are
foraying into the Indian market, offering luxury, value, utility and convenience
to the customer.
The automobile
industry, one of the core sectors, has undergone metamorphosis with the advent
of new businesses and manufacturing practices following liberalization and
globalization. The Indian automobile market is gearing towards international
standards to meet the needs of the global automobile giants and become a global
hub.
Nevertheless, the
industry reeled under various global and domestic macro-economic factors, which
led to the conclusion that 2011-12 was a ‘Not So Good’ year, especially for the
passenger car segment.
The Society of
Indian Automobile Manufacturers (SIAM) had, in the beginning of the fiscal year
2011-12, forecasted a 16%-18% sales growth for passenger cars. This estimate
was subsequently downgraded to 10%-12% in July 2011, and again downgraded to a
modest 2%-4% in October 2011.
KEY STATISTICS FOR
2011-12*
PRODUCTION
The cumulative
production data for April-March 2012 shows production growth of 13.83% over the
same period last year. In March 2012 vis-a-vis March 2011, production grew
6.83%. In 2011-12, the industry produced 20,366,432 vehicles, of which the share of two wheelers,
passenger vehicles, three wheelers and commercial vehicles were 76%, 15%, 4%
and 4%, respectively.
DOMESTIC SALES
The growth rate
for overall domestic sales for 2011-12 was 12.24% totaling 17,376,624 vehicles.
In March 2012, domestic sales grew by 10.11%, compared to March 2011.
The passenger
vehicles segment grew by 4.66% during April-March 2012 over the same period
last year. Passenger cars grew by 2.19 %, utility vehicles grew by 16.47% and
vans by 10.01% during this period. In March
2012, the domestic
sales of passenger cars grew by 19.66% over the same month last year. Also,
sales growth of total passenger vehicles in March 2012 touched 20.59% (compared
to March 2011). For the first time in history, car sales crossed two million in
a financial year.
The commercial
vehicles segment registered 18.20% growth during April- March 2012, compared to
the same period last year. While medium and heavy commercial vehicles
(M&HCVs) registered 7.94% growth, light commercial vehicles grew by 27.36%.
In March 2012, commercial vehicle sales grew by 4.82% over March 2011
EXPORTS
During April-March
2012, the industry exported 2,910,055 automobiles, registering 25.44% growth.
The passenger vehicles segment grew by 14.18% in this period. Commercial
vehicles, three wheelers and two wheelers segments grew 25.15%, 34.41% and
27.13%, respectively during April-March 2012. For the first time in history car
exports crossed half a million in a financial year.
In March 2012,
compared to March 2011, overall automobile exports grew 17.81%.
THE INDIAN AUTO
COMPONENT INDUSTRY **
The
Rs.1,600-billion Indian auto components industry has been witnessing a
moderation in its revenue growth, since the beginning of this fiscal, following
the deceleration in sales volume growth across all automobile segments.
According to industry estimates, out of the total turnover of the Indian auto
components industry, around 60% is derived from sales to domestic OEMs, around
25% comes from sales to the domestic replacement market and around 15% is
derived from exports. While the long-term industry prospects remain strong, in
line with the outlook for the OEM segment, it faces strong challenges (low-cost
imports, currency volatility and the ability to invest in innovation) to be
able to move up the value chain.
Since the
beginning of this fiscal, the prices of key commodities have been softening,
providing partial relief to the industry players, who had grappled with
commodity cost pressures throughout 2010-11. However, it did not rein in the
desired results due to inflation in other costs (employee costs, energy costs
and other overhead expenses), which are generally not passed through to OEMs
unlike raw material costs. Although international prices of key raw materials
declined, the landed costs, however, stayed firm due to sharp depreciation of
INR against US$ and
the industry’s
margin expansion was constrained due to (a) weaker INR against US$ that negated
the potential benefit arising from soft international commodity prices (b)
weaker INR against JPY that increased the cost of imports for ancillaries that
source component child parts and other inputs from Japan (c) combination of
higher overhead costs and sluggish growth in supplies to domestic OEMs.
GROWTH DRIVERS OF
THE INDIAN AUTOMOTIVE INDUSTRY
For any industry
to succeed, it is important to recognize and leverage the factors that drive
growth. The following drivers help stimulate India’s auto sector growth:
·
Unrestrained availability of credit and financing
options
·
Rising family income
·
Favourable duty structure
·
Improved infrastructure
·
Poor public transport system
·
Low car penetration
·
Popular vehicle exchange policies
·
Evolving quality of life
·
Government policy initiatives and impetus
·
R&D focus
·
Encouraging Foreign Direct Investment
GROWTH DRIVERS OF
THE INDIAN AUTO COMPONENT INDUSTRY
Since a majority
of revenues of the auto component industry are derived from supplies to the
domestic OEMs, the growth prospects of the former are largely determined by
performance of the user OEMs.
However, the
following are some of the factors that may be considered independently from the
OEMs:
·
Quality products at reasonable prices.
·
Expanding manufacturing base to include wide range
of products.
·
In-house R&D capabilities.
·
Quality Human Resources.
·
Prudent financial discipline and management.
Currently, India’s
auto components industry is around two-thirds* the size of the OEM segment.
This proportion is around one to two times in mature markets of Europe, America
and Japan, reflecting enormous imports of auto components in India by OEMs and
limited replacement market sales. Considering the robust, mediumterm growth
prospects of the Indian automobile industry, the industry size may grow at a
faster rate than the OEM segment. This will be driven by OEMs’ thrust on
localization and steadily growing replacement market demand.
BUSINESS OVERVIEW
India’s auto
sector was impacted by the Government’s policy initiatives to tame spiralling
inflation and crude oil prices. Interest rate hikes adversely affected
manufacturing and sales. While the availability of cheap working capital dried
up, customers postponed their purchases due to high cost of vehicle financing.
Undoubtedly, a double edged sword for the auto sector, hedging as a tool to
offset the cost of funds also failed to revive the situation, with a sliding
Rupee vis-a-vis the Dollar and the appreciation of the Japanese Yen.
The woes only
increased with the labour unrest in the Manesar production facility of the
Company’s Joint Venture Partner, MSIL. This unrest stopped production,
resulting in significant losses for both the partners. However, March 2012
brought some hope, when car sales touched record levels. The reason could be to
offset the impact of hike in excise duties in the Union Budget. Besides, global
economic volatility also scared off many potential buyers.
AUTO EXPO: A GRAND
SUCCESS
India’s 11th Auto
Expo jointly hosted by SIAM, Confederation of Indian Industry (CII) and
Automotive Component
Manufacturers
Association (ACMA) took place at Delhi’s Pragati Maidan, during 5th to 11th
January 2012. A grand success in terms of footfall, the exhibition attracted
1,500 participants from 24 countries and witnessed the launch of over 50 new
products. The Company participated in the Auto Expo.
GOVERNMENT
INITIATIVES
The Government of
India is in the process of forming a National Automotive Board (NAB), which
would become a formal set-up to look into the issue of recall of vehicles and
hence improve manufacturing standards. The prospective body, to oversee
technical and safety aspects of vehicles, will have representatives from all
the nodal ministries and automotive bodies, such as the Automotive Research
Association of India (ARAI).
Various State
Governments are providing incentives in order to establish automotive hubs in
their states. The Governments of Gujarat and Tamilnadu have announced various
measures to provide the necessary impetus to the automotive industry in their
respective states.
OUTLOOK
According to a
study by Rothschild, India would become the third largest auto industry by
volumes after China and the US by 2015. A three-fold increase in investments by
auto makers would boost car production capacity from 4.8 million units in 2010
to 12 million in 2018. The firm anticipates that the forecast would come to
reality through 30 new factories, which are estimated to come up in the next
eight years. The firm holds a bullish outlook on the Indian auto industry and
predicts multiple mergers and acquisitions in the coming years.
BUSINESS PERFORMANCE
The Company faced
a difficult situation due to a major labour unrest at the Manesar premises of
its joint venture partner, MSIL, which affected the operations of two
consecutive quarters. The situation was further aggravated due to an increase
in the borrowing cost, weakening of Rupee against the US Dollar and Japanese
Yen, along with other macro-economic factors. Net Sales increased from
Rs.10605.600 millions to Rs.10683.100 millions, a modest increase of 0.73%
(YoY). Profit After Tax (PAT) declined from Rs.383.000 millions in the previous
year to Rs.196.300 millions in 2011-2012. Earnings Per Share (EPS) declined
from Rs.17.69 per share in the previous year to Rs.9.07 per share in 2011-2012.
CONTINGENT
LIABILITIES NOT PROVIDED FOR:
|
Particulars |
31.03.2012 (Rs.
in Millions) |
31.03.2011 (Rs.
in Millions) |
|
- Central Excise (net of amount paid under protest) |
326.216 |
321.901 |
|
- Service tax |
1.571 |
1.211 |
|
- Income Tax Demand |
Nil |
86.209 |
External
development charges amounting to Rs.15.282 millions claimed by the Director Town
and Country Planning (TCP), Government of Haryana, relating to Company’s
property situated at Mohammadpur, Jharsa, Sector-36, Gurgaon. The company has
partly deposited the demand under protest and the balance amount of Rs.2.326
millions is pending.
The Company has
filed writ petition with Punjab and Haryana High Court against the order of the
Director General, Town and Country Planning, Haryana. The case is pending with
High Court. No provision is required.
FIXED ASSETS:
Tangible Assets
·
Land (Freehold)
·
Land (Leasehold)
·
Building
·
Plant and Equipment
·
Furniture and Fixtures
·
Office Equipments
·
Computer and Computer
Systems
·
Vehicles
·
Vehicle on Finance Lease
Intangible Assets
·
Technical Knowhow
·
Computer Software
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 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 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.54.04 |
|
|
1 |
Rs.81.80 |
|
Euro |
1 |
Rs.71.41 |
INFORMATION DETAILS
|
Report Prepared
by : |
SMN |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
DEFAULTER |
|
|
|
--RBI |
YES/NO |
NO |
|
--EPF |
YES/NO |
NO |
|
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.