MIRA
INFORM REPORT
|
Report Date : |
23.11.2013 |
IDENTIFICATION DETAILS
|
Name : |
ESSEL PROPACK LIMITED |
|
|
|
|
Registered
Office : |
P.O. Vasind, Taluka Shahapur, Thane – 421604, Maharashtra |
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|
|
|
Country : |
India |
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|
|
Financials (as
on) : |
31.03.2013 |
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|
|
|
Date of
Incorporation : |
22.12.1982 |
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|
|
|
Com. Reg. No.: |
11-028947 |
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|
|
Capital
Investment / Paid-up Capital : |
Rs.314.131 Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L74950MH1982PLC028947 |
|
|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
MUME01100B/ MUME5540D/ MUME05539C/ MUME05385C/ MUME04861D |
|
|
|
|
PAN No.: [Permanent Account No.] |
AAACE1568L |
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|
Legal Form : |
A Public Limited Liability Company. The Company’s Shares are Listed on
the Stock Exchanges. |
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|
|
Line of Business
: |
Manufacturer and Seller of Composite Laminated Collapsible
Tubes, Laminates and Plastic Films. |
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|
|
|
No. of Employees
: |
865 (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 28000000 |
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|
Status : |
Satisfactory |
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|
|
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Payment Behaviour : |
Usually correct |
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Litigation : |
Exist |
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Comments : |
Subject is a part of ESSEL GROUP. It is a well-established and reputed company having satisfactory track
record. Financial position of the company appears to be sound. Directors are
reported to be experience and respectable businessman. Trade relations are reported as fair. Business is active. Payments are
reported to be regular and as per commitments. The company can be considered good for normal business dealings at
usual trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
The current downturn
provides an opportunity to push ahead with reforms to accelerate growth, says
the latest India Development Update report released by the World Bank. The
report says that the adverse effects of rupee depreciation are likely to be
offset by the gains in the exports performance due to improved external
competitiveness. Since May this year, the local currency has depreciated
substantially and fell to a record level of Rs 68.85 to a dollar on August, 28.
A stagflation like
situation appears to have arisen as inflation jumped to an eight month high of
6.46 % for the month of September. It is up from 6.10 % in August. Growth
continues to be muted with factory output plunging to 0.6 % in August.
Onion prices have risen nearly 300 % from last September. Vegetables cost
nearly 90 % more than they did last year. Wake up to the economic contribution
of slum dwellers. They contribute more than 7.5 % to the country’s gross
domestic product, according to a recent study conducted in 50 top cities.
136000 estimated number
of jobs created during the second quarter of the current financial year. 50000
estimated number of additional jobs in the field of corporate social
responsibility in the coming years.
The International
Finance Corporation expects to come out with its rupee linked bonds issue
before the end of 2013 as a part of its plan to raise $ 1 billion. The Apple
iPhone 5c (Rs 41900 for 16 GB variant) and 5s (Rs 53500 for 16GB variant) has
been launched in India from 1st November.
The Land Acquisition
Act to provide just and fair compensation to farmers will come into force from
January 1 next year, said Rural Development Minister Jairam Ramesh. The Act
replaces a 119 year old registration. The Securities and Exchange Board of
India has approved the trading of currency futures on the Bombay Stock
Exchange. The exchange plans to launch the currency futures platform with
advanced trading technology by the end of November.
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CARE |
|
Rating |
BBB+ (Long Term Bank Facilities) |
|
Rating Explanation |
Moderate degree of safety and moderate
credit risk. |
|
Date |
March 18, 2013 |
|
Rating Agency Name |
CARE |
|
Rating |
A3+ (Short Term Bank Facilities) |
|
Rating Explanation |
Moderate credit quality and higher credit
risk. |
|
Date |
March 18, 2013 |
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 : |
P.O. Vasind, Taluka Shahapur, Thane – 421604, Maharashtra,
India |
|
Tel. No.: |
91-22-24933280/ 3281/ 24939686 / 9689 |
|
Fax No.: |
91-22-24963137/ 24935188 |
|
E-Mail : |
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|
Website : |
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|
Corporate Office : |
10th Floor, |
|
Tel. No.: |
91-22-24819000/ 24819200 |
|
Fax No.: |
91-22-24963137/ 24914649 |
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|
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|
Units : |
Located at: · Vasind · Murbad · Wada · Goa · Silvassa, · Nalagarh ·
Chakan |
DIRECTORS
As on: 31.03.2013
|
Name : |
Mr. Subhash Chandra |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. Tapan Mitra |
|
Designation : |
Director |
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|
|
|
Name : |
Mr. Boman Moradian |
|
Designation : |
Director |
|
Date of Appointment : |
14.03.2006 |
|
|
|
|
Name : |
Mr. Mukund M. Chitle |
|
Designation : |
Director |
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|
|
|
Name : |
Mr. Ashok Kumar Goel |
|
Designation : |
Vice Chairman and Managing Director |
|
Qualification : |
B.Com. |
|
Date of Appointment : |
01.07.1988 |
KEY EXECUTIVES
|
Name : |
Mr. Aashay S. Khandwala |
|
Designation : |
Vice President (Legal) and Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on: 30.09.2013
|
Category
of Shareholder |
No. of Shares |
Percentage of
Holding |
|
|
|
|
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
(1) Indian |
|
|
|
|
334750 |
0.21 |
|
|
92165335 |
58.67 |
|
|
92500085 |
58.88 |
|
|
|
|
|
|
89305 |
0.06 |
|
|
89305 |
0.06 |
|
Total shareholding
of Promoter and Promoter Group (A) |
92589390 |
58.94 |
|
(B) Public Shareholding |
|
|
|
|
|
|
|
|
2809182 |
1.79 |
|
|
70044 |
0.04 |
|
|
2197927 |
1.40 |
|
|
14474603 |
9.21 |
|
|
19551756 |
12.45 |
|
|
|
|
|
|
17163668 |
10.93 |
|
|
|
|
|
|
19149581 |
12.19 |
|
|
7312189 |
4.65 |
|
|
1000 |
0.00 |
|
|
1333701 |
0.85 |
|
|
1291758 |
0.82 |
|
|
1218 |
0.00 |
|
|
40725 |
0.03 |
|
|
44960139 |
28.62 |
|
Total Public
shareholding (B) |
64511895 |
41.06 |
|
Total (A)+(B) |
157101285 |
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) |
157101285 |
0.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturer and Seller of Composite Laminated Collapsible
Tubes, Laminates and Plastic Films. |
GENERAL INFORMATION
|
No. of Employees : |
865 (Approximately) |
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Bankers : |
· Axis Bank Limited · Bank of India · DBS Bank Limited · IDBI Bank Limited · ING Vysya Bank Limited · Punjab National Bank · Ratnakar Bank Limited · Standard Chartered Bank · State Bank of India ·
Yes Bank Limited |
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Facilities : |
(Rs.
In Millions)
Notes: Nature of security
and terms of repayments for long-term borrowings
a) Rs. 151.624 Millions (Rs. 260.542 Millions) are secured by first pari-passu charge on current assets and second pari-passu charge on fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units. These loans are also collaterally secured by security provided and guarantee issued by related party. b) Rs. 392.346 Millions (Rs. 391.541 Millions) are secured by first pari-passu charge on current assets and second pari-passu charge on fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units. c) Rs. Nil (Rs. 81.740 Millions) are secured by first pari-passu charge on current assets of the Company. |
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Banking
Relations : |
-- |
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Auditors : |
|
|
Name : |
MGB and Company Chartered Accountants
|
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|
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Subsidiary
Companies : |
Direct Subsidiaries · Arista Tubes Inc. · Lamitube Technologies Limited · Lamitube Technologies (Cyprus) Limited · Packaging India Private Limited · Essel Packaging (Nepal) Private Limited Step down
Subsidiaries · The Egyptian Indian Company for Modern Packaging S.A.E · Essel Propack MISR for Advanced Packaging S.A.E. · Essel Packaging (Guangzhou) Limited · Essel Propack Philippines, Inc · MTL de Panama S.A. · Packtech Limited · Arista Tubes Limited · Essel Propack UK Limited · Essel Propack de Venezuela, C.A. · Essel de Mexico, S.A. de C.V. · Tubo pack de Colombia S.A. · Essel Propack LLC · Essel Propack Polska Sp. Z.O.O. ·
Essel Propack America, LLC |
|
|
|
|
Joint Venture
/Associate Companies : |
· P.T. Lamipak Primula · Essel Deutschland GmbH and Company KG Dresden ·
Essel Deutschland Management GmbH |
|
|
|
|
Other Related
Parties : |
· Aqualand (India) Limited · Ayepee Lamitubes Limited · Churu Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012) · Continental Drug Company Private Limited · Essel Corporate Resources Private Limited · Ganjam Trading Company Private Limited · Pan India Paryatan Private Limited · Prajatma Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012) · Rama Associates Limited · Zee Entertainment Enterprises Limited · Sprit Textiles Private Limited |
CAPITAL STRUCTURE
As on: 31.03.2013
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
200000000 |
Equity Shares |
Rs.2/- each |
Rs.400.000 Millions |
|
|
|
|
|
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
157101285 |
Equity Shares |
Rs.2/- each |
Rs.314.202 Millions |
|
|
Less: Calls in arrears |
|
Rs.0.071
Million |
|
|
|
|
|
|
|
Total |
|
Rs.314.131 Millions |
a) Reconciliation of number of shares outstanding
|
Particulars |
31.03.2013 |
|
|
Number of equity shares |
Rs. In millions |
|
|
At the beginning of the year |
156601130 |
313.202 |
|
Issued during the year |
500155 |
1.000 |
|
Outstanding at the end of the year |
157101285 |
314.202 |
b) Terms / rights
attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.
c) Calls in arrears
|
Particulars |
31.03.2013 |
|
|
Number of equity shares |
Rs. In millions |
|
|
Aggregate amount of calls unpaid - others |
71650 |
0.071 |
d) Details of each
shareholder holding more than 5% equity shares
|
Name of Shareholder |
31.03.2013 |
|
|
Number of equity shares |
Percentage (%) of holding |
|
|
Ganjam Trading Company Private Limited |
56349550 |
35.87% |
|
Rupee Finance and Management Private Limited |
28429710 |
18.10% |
e) No bonus shares have been issued and no shares bought back during five years preceding 31 March 2013.
f) 500155 equity shares of Rs.2 each fully paid up were allotted on 14 September 2012 for consideration other than cash.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2013 |
31.03.2012 |
31.03.2011 |
|
EQUITY AND LIABILITIES |
|
|
|
|
(1)Shareholders' Funds |
|
|
|
|
(a) Share Capital |
314.131 |
314.131 |
313.131 |
|
(b) Reserves & Surplus |
6696.062 |
6355.091 |
6128.804 |
|
(c) Money received against share warrants |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
(2) Share Application money pending allotment |
0.000 |
0.000 |
0.000 |
|
Total Shareholders’
Funds (1) + (2) |
7010.193 |
6669.222 |
6441.935 |
|
|
|
|
|
|
(3) Non-Current
Liabilities |
|
|
|
|
(a) long-term borrowings |
2312.215 |
2050.983 |
2419.887 |
|
(b) Deferred tax liabilities (Net) |
224.226 |
165.607 |
159.731 |
|
(c) Other long term liabilities |
0.000 |
1.375 |
0.000 |
|
(d) long-term provisions |
150.588 |
204.012 |
47.770 |
|
Total Non-current
Liabilities (3) |
2687.029 |
2421.977 |
2627.388 |
|
|
|
|
|
|
(4) Current
Liabilities |
|
|
|
|
(a) Short term borrowings |
1129.059 |
2137.983 |
871.563 |
|
(b) Trade payables |
319.356 |
327.899 |
350.642 |
|
(c) Other current liabilities |
1264.519 |
1506.813 |
1182.683 |
|
(d) Short-term provisions |
171.974 |
135.541 |
124.334 |
|
Total Current Liabilities
(4) |
2884.908 |
4108.236 |
2529.222 |
|
|
|
|
|
|
TOTAL |
12582.130 |
13199.435 |
11598.545 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
(1) Non-current
assets |
|
|
|
|
(a) Fixed Assets |
|
|
|
|
(i) Tangible assets |
2582.189 |
2299.072 |
1766.589 |
|
(ii) Intangible Assets |
49.585 |
53.945 |
50.030 |
|
(iii) Capital work-in-progress |
11.608 |
160.215 |
176.528 |
|
(iv) Intangible assets under development |
12.851 |
9.518 |
5.882 |
|
(b) Non-current Investments |
5635.346 |
5635.346 |
5685.937 |
|
(c) Deferred tax assets (net) |
0.000 |
0.000 |
0.000 |
|
(d) Long-term Loan and Advances |
348.902 |
368.250 |
1028.271 |
|
(e) Other Non-current assets |
27.440 |
25.965 |
18.343 |
|
Total Non-Current
Assets |
8667.921 |
8552.311 |
8731.580 |
|
|
|
|
|
|
Foreign currency monetary items translation difference account |
0.000 |
0.000 |
7.282 |
|
|
|
|
|
|
(2) Current assets |
|
|
|
|
(a) Current investments |
0.000 |
0.000 |
0.000 |
|
(b) Inventories |
638.277 |
546.726 |
625.122 |
|
(c) Trade receivables |
1012.657 |
1011.713 |
761.395 |
|
(d) Cash and cash equivalents |
145.973 |
26.854 |
22.581 |
|
(e) Short-term loans and advances |
1616.884 |
2717.571 |
1266.262 |
|
(f) Other current assets |
500.418 |
344.260 |
184.323 |
|
Total Current
Assets |
3914.209 |
4647.124 |
2859.683 |
|
|
|
|
|
|
TOTAL |
12582.130 |
13199.435 |
11598.545 |
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2013 |
31.03.2012 |
31.03.2011 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
5791.282 |
4966.166 |
4183.374 |
|
|
|
Other Income |
392.144 |
452.610 |
569.922 |
|
|
|
TOTAL (A) |
6183.426 |
5418.776 |
4753.296 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of materials consumed |
2737.645 |
2335.599 |
1886.585 |
|
|
|
Other expenses |
1332.228 |
1206.491 |
994.536 |
|
|
|
Employee benefits expense |
568.850 |
484.732 |
431.658 |
|
|
|
Changes in inventories of finished goods and goods-in-process |
2.303 |
2.971 |
(29.097) |
|
|
|
TOTAL (B) |
4641.026 |
4029.793 |
3283.682 |
|
|
|
|
|
|
|
|
Less |
PROFITBEFORE
INTEREST TAX DEPRECIATION AND AMORTISATION
(A-B) |
1542.400 |
1388.983 |
1469.614 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
549.897 |
587.359 |
593.943 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX DEPRECIATION AND AMORTISATION (C-D) (E) |
992.503 |
801.624 |
875.671 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
330.848 |
286.117 |
243.052 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAX
(E-F) (G) |
661.655 |
515.507 |
632.619 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
163.231 |
24.761 |
191.792 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
498.424 |
490.746 |
440.827 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
930.442 |
1059.258 |
771.717 |
|
|
|
|
|
|
|
|
|
Less |
Pursuant to the
Scheme of Merger |
0.000 |
451.805 |
0.000 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
49.850 |
49.075 |
44.083 |
|
|
|
Dividend |
20.024 |
16.566 |
15.242 |
|
|
|
Proposed Dividend |
117.826 |
102.116 |
93.961 |
|
|
BALANCE CARRIED
TO THE B/S |
1241.166 |
930.442 |
1059.258 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
456.785 |
336.671 |
348.272 |
|
|
TOTAL EARNINGS |
456.785 |
336.671 |
348.272 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
1413.011 |
1185.253 |
1104.143 |
|
|
|
Stores & Spares |
48.913 |
82.294 |
54.780 |
|
|
|
Capital Goods |
392.284 |
418.517 |
359.798 |
|
|
TOTAL IMPORTS |
1854.208 |
1686.064 |
1519.721 |
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
(Rs.) |
3.17 |
3.12 |
2.80 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
30.06.2013 |
30.09.2013 |
|
Type |
|
1st Quarter |
2nd Quarter |
|
Net Sales |
|
1570.400 |
1677.600 |
|
Total Expenditure |
|
1266.800 |
1320.800 |
|
PBIDT (Excl OI) |
|
303.600 |
356.800 |
|
Other Income |
|
94.800 |
65.500 |
|
Operating Profit |
|
398.400 |
422.300 |
|
Interest |
|
120.200 |
117.100 |
|
Exceptional Items |
|
0.000 |
(7.700) |
|
PBDT |
|
278.200 |
297.500 |
|
Depreciation |
|
92.800 |
71.700 |
|
Profit Before Tax |
|
185.400 |
225.800 |
|
Tax |
|
53.500 |
67.600 |
|
Provisions and contingencies |
|
0.000 |
0.000 |
|
Profit After Tax |
|
131.900 |
158.200 |
|
Extraordinary Items |
|
0.000 |
0.000 |
|
Prior Period Expenses |
|
0.000 |
0.000 |
|
Other Adjustments |
|
0.000 |
0.000 |
|
Net Profit |
|
131.900 |
158.200 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2013 |
31.03.2012 |
31.03.2011 |
|
PAT / Total Income |
(%) |
8.06
|
9.06
|
9.27
|
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
11.43
|
10.38
|
15.12
|
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
9.56
|
6.97
|
11.07
|
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.09
|
0.08
|
0.10
|
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt/Networth) |
|
0.49
|
0.63
|
0.51
|
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.36
|
1.13
|
1.13
|
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 |
Yes |
|
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 |
|
LITIGATION DETAILS |
|||||||
|
Bench:- Bombay |
|
||||||
|
Lodging No:- |
ITXAL/1761/2012 |
Failing Date:- |
02/11/2012 |
Reg. No.:- |
ITAX/213/2013 |
Reg. Date:- |
28/01/2013 |
|
|
|||||||
|
Petitioner:- |
COMMISSIONER OF INCOME TAX - 6 |
Respondent:- |
ESSEL PROPACK LIMITED |
||||
|
Petn.Adv:- |
S. V. BHARUCHA |
Resp.Adv.:- |
SANJIV M. SHAH |
||||
|
District:- |
MUMBAI |
||||||
|
|
|||||||
|
Bench:- |
DIVISION |
Category:- |
TAX APPEALS |
||||
|
Status:- |
Pre-Admission |
Stage:- |
|
||||
|
Next Date:- |
18/11/2013 |
|
|||||
|
Coram:- |
ACCORDING TO SITTING LIST ACCORDING TO SITTING LIST |
||||||
|
|
|
||||||
|
Act:- |
Income Tax Act 1961 |
Under Section :- |
260A |
||||
UNSECURED LOAN
(Rs. In Millions)
|
Particular |
As on 31.03.2013 |
As on 31.03.2012 |
|
LONG-TERM
BORROWINGS |
|
|
|
Term loan from banks |
88.125 |
280.625 |
|
Buyers credit from banks |
237.210 |
329.079 |
|
Deferred sales tax loan |
254.522 |
320.442 |
|
SHORT-TERM
BORROWINGS |
|
|
|
Short term loan from banks |
250.000 |
645.268 |
|
Working capital loan from banks |
50.000 |
32.137 |
|
Buyers credit from banks |
97.089 |
88.255 |
|
Inter-corporate deposits |
188.000 |
638.500 |
|
|
|
|
|
Total |
1164.946 |
2334.306 |
Notes:
|
a) Out of unsecured term loan and buyers credit from banks Rs. 611.205 Millions (Rs. 1135.504 Millions), Rs. 517.835 Millions (Rs. 707.322 Millions) are against security provided and guarantee issued by related party |
Term loan carry interest rate ranging from 15% to 16% p.a. and are repayable in monthly / quarterly installments by 2014-15. Buyers credit carrying interest rate ranging from 1.08% to 2.02% p.a. and are repayable in maximum period of three years from the date of transaction. |
|
b) Deferred sales tax interest free loans are repayable after a period of 10 to 14 years upto 2024-25. |
|
Unsecured short term loan from banks of Rs.250.000
Millions (Rs.250.000 Millions) are against security provided and guarantee
issued by related party.
RESULTS OF
OPERATIONS:
The year’s revenues reflect a strong sales growth of 16.6% over the previous year driven by robust volume and increasing share in the sales of high value non oral-care category. Tight control on costs and higher asset productivity has helped the profit before depreciation interest other income and tax to grow at a healthy 22.9% reflecting a margin gain of 100 bps over the previous year. In a year marked by high interest rates the finance cost has been reduced by 6.3% compared to the previous year by active management of the debt portfolio. The tax incidence during the previous year was lower on account of the merger with the Company of Ras Propack Lamipack Limited (RPLL) and Ras Extrusions Limited (REL) pursuant to a Merger Scheme forming part of the Modified Scheme approved by the Hon’ble BIFR on 10 May 2012. Consequently the profit after the tax for the year is seen at same level as in the previous year. The profit before tax has recorded a healthy growth of 28% over the previous year.
REVIEW OF BUSINESS
AND OPERATIONS:
The Company is a leading global manufacturer of laminated and plastic collapsible tubes and laminates. Its products are extensively used by industry in packaging of their products spanning categories such as cosmetics foods pharmaceuticals and toothpaste. The packaging industry continues to grow given its symbiotic linkage to Fast Moving Consumer Goods (FMCG). The FMCG industry is a key driver of economic growth globally and will continue in future too given the major demographic shift in the developed world and fast improving standards of living in the developing markets. As a leader in the tube space the Company is constantly striving to grow the market and gain share through innovative offerings and efficient supply chain.
INDIA:
India accounts for approx. 30% of the company’s global revenues and continues to be a key market where the Company has been a market leader since its inception in the 1980’s. The fast growing non oral care category powered by increasing disposable income growing young population and expanding modern retail present the Company with a great opportunity to pursue value growth over and above the potential offered by the large oral care category.
During the year the Company has leveraged its world class capability for decoration and new product development to drive a strong growth in the cosmetic category offering packaging solutions with both laminated and plastic tubes. The Company’s plants in Silvassa and Wada have reached high levels of utilization catering to demand of the cosmetic category. The Company continues to pursue opportunities in the pharma category and this is evident in the number of new customer acquisitions achieved during the year. The contribution to revenue of non oral care category thus increased by 5 percent points (pp) over the previous year. As the various stage gate processes get completed in their creative and innovation Centre and at the customers this pharma category will add to the Company’s sales.
During the year the Company completed the expansion of capacity for laminated tubes and the new capacity has been significantly ramped up. The Company also implemented number of programs to reduce scrap and improve productivity at its various plants. The plants of the erstwhile RPPL and REL were revamped and the capacity utilized to meet the increasing demand.
MANAGEMENT DISCUSSION
AND ANALYSIS
BUSINESS OVERVIEW:
The Company is in the business of plastic packaging materials manufacturing and marketing a range of products spanning plastic tubes both laminated and extruded caps and closures and flexible laminates.
Tubes are eminently suited for packing viscous products such as pastes gels and creams. Besides preserving and protecting the product tubes as a packaging offer superior value proposition in terms of ease of dispensing product hygienic storage in a multiple usage situation and excellent brand visibility on retail shelves. Tubes therefore are fast becoming a favoured packaging material worldwide for a range of consumer products such as face creams hair conditioners shaving creams cosmetics pharmaceutical ointments and toothpaste.
Caps and closures are integral part of tubes that help keep the products safe free from contamination and unexposed to air after each use. There are variously designed specially in case of cosmetics pharmaceuticals skin and personal products so as to enhance the aesthetics of the pack improve the convenience of storing and provide novelty of dispensing the product. Typical designs include stand-up caps flip top caps etc. Closures become additional brand differentiators.
Flexible Plastic laminates on the other hand find use as pouches sachets and wrappers for packing solid powder and liquid products. They offer excellent brand visibility at low cost. A number of products use these laminates such as detergent powders soap tablets food products oils shampoos biscuits chocolates pharmaceuticals etc.
The Company pioneered plastic laminated tubes in India. Over the last 29 years the Company has transformed into a leading global player in laminated tubes manufacturing and selling 5.5 billion tubes across 12 countries. Of course the products that get packed into the company’s tubes touch the lives of billions of consumers in many more countries across the world. In fact the Company’s tubes provide the consumers with the first look and feel experience of the brands they package. The plastic extruded tubes and the flexible plastic laminates are relatively recent forays for the Company targeting select markets viz. India Europe and the USA in the case of plastic extruded tubes and India based in the case of flexible plastic laminates. The Company’s key strengths include a strong domain knowledge of polymers and plastic structures proven innovation and research and development capability global customer network and a fully integrated manufacturing. The market for the Company’s products is huge in the developed markets of Europe and America. It is growing rapidly in the emerging markets of Asia Africa and Latin America driven by a booming Fast Moving Consumer Goods (FMCG) industry. As the disposable income in these markets grows both the usage and sophistication of packaging is witnessing a sea change. Plastic laminated and extruded tubes in a sense are a more evolved form of packaging and in the long term stand to benefit from conversion from other packaging forms such as bottles and sachets. With its scale global reach and innovation capability the Company is strategically well-placed to benefit from this symbiotic linkage to the FMCG sector.
OPERATIONAL
PERFORMANCE REVIEW:
During FY13 the Company’s global sales grew 15.7%
and operating profits 24.9% helped by a number of key initiatives:
• Pursuing opportunities in the higher value
non-oral care categories.
• Strong customer engagement leading to new
business with existing and new customers.
• Fixing the performance issues of the plastic
extruded tube business in the USA.
• Implementation of a number of cost saving
projects targeting material and machine efficiencies.
• Conserving cash by driving up asset productivity.
Highlights
of the year include:
1. Sales and profitability improvement across all
the regions with operating margin improving by 70 basis points (bps).
2. Strong increase from 35.2% to 40.8% of the overall
share in revenues of the non-oral care category products.
3. Quick ramping up of the large capacity
expansion implementation in India for laminated tubes.
4. Reduction by over 53 % in the operating losses
at the US plastic tube and the Polish units.
5. Reduction of Finance costs by 6.4% from the
previous year in India.
SEGMENT PERFORMANCE
REVIEW:
The Company’s key business is in plastic packaging
materials. The business is managed by four geographical segments viz.
1. Americas - (with operations in the USA Mexico
and Colombia)
2. Europe - (with operations in the UK Germany
Poland and Russia)
3. AMESA - Africa Middle East and South Asia (with
operations in Egypt and India)
4. EAP - East Asia Pacific (with operations in
China Philippines and Indonesia)
OUTLOOK:
Having successfully faced the last few years of the global financial crisis the Company only sees opportunity presenting across the globe in different forms. The emerging markets of Asia Africa and Latin America present newer categories and niches where the Company can innovate and grow business even as the traditional categories here continue to grow driven by increasing incomes changing consumer lifestyle and intense marketing activity of the FMCG firms both local and multinational. In the developed markets the Company is seeing opportunity for wallet share gain helped by the intrinsic strength of its business model partnering approach to customers and the stresses faced by smaller local and regional competition. The Company is pro-actively energizing its organization through major changes in the processes leadership and ways of working that should make it agile and quick in seizing opportunities in the times to come. These along with new innovations and capabilities built by the Company and its well acknowledged large scale global presence and long term commitment to all its stake holders should help in growing the business profitably through the challenging times.
CONTINGENT
LIABILITIES:
(Rs. in millions)
|
PARTICULARS |
31.03.2013 |
31.03.2012 |
|
Unexpired Letters of Credit (net of
liability provided) |
26.160 |
260.288 |
|
Guarantees and counter guarantees given by the Company [includes Rs. 5673.306 millions (Rs. 5133.822 millions) for loans taken by Subsidiaries]. Loans outstanding against these guarantees are Rs. 3635.493 millions (Rs. 2788.793 millions) |
5676.306 |
5148.598 |
|
Disputed Indirect Taxes
* |
245.882 |
276.119 |
|
Disputed Direct Taxes |
109.706 |
79.381 |
|
Claims not acknowledged
as debts |
4.997 |
4.997 |
|
Deferred Sales Tax
Liability assigned |
68.608 |
84.497 |
|
Duty
benefit availed under EPCG scheme, pending export obligations |
114.658 |
117.430 |
Notes:
* Does not include disputed excise duty of Rs. 115.429 Millions (Rs. 115.429 Millions) for alleged undervaluation in inter unit transfer of web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company’s favour) of High Court is pending before the Hon’ble Supreme Court.
^ Without considering relief granted by the Appellate Authorities in favour of the Company, tax effect Rs. 53.584 Millions (Rs. 50.576 Millions) (approx.), which is pending.
FIXED ASSETS
Tangible Assets
· Freehold Land
· Leasehold Land
· Leasehold Improvements
· Buildings
· Plant and Machinery
· Equipments
· Furniture and Fixtures
· Vehicles
Intangible Assets
· 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 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.63.02 |
|
|
1 |
Rs.102.04 |
|
Euro |
1 |
Rs.84.92 |
INFORMATION DETAILS
|
Report Prepared
by : |
VRN |
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 |
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 |
YES |
|
--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.