MIRA INFORM REPORT

 

 

Report Date :

20.08.2014              

 

IDENTIFICATION DETAILS

 

Name :

NEC CORPORATION

 

 

Registered Office :

5-7-1 Shiba Minatoku Tokyo 108-8001

 

 

Country :

Japan

 

 

Financials (as on) :

31.03.2014

 

 

Date of Incorporation :

July 1899

 

 

Com. Reg. No.:

0104-01-022916

 

 

Legal Form :

Limited Company

 

 

Line of Business :

Manufactures communications/IT equipment, offering solutions services

 

 

No. of Employees :

100,914

 

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 :

Good

Payment Behaviour :

Regular 

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 01, 2014

 

Country Name

Previous Rating

(31.03.2014)

Current Rating

(01.06.2014)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low Risk

 

A2

Moderate Low Risk

 

B1

Moderate Risk

 

B2

Moderate High Risk

 

C1

High Risk

 

C2

Very High Risk

 

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 small agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. While self-sufficient in rice production, Japan imports about 60% of its food on a caloric basis. 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. Modest economic growth continued after 2000, but the economy has fallen into recession three times since 2008. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan 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 and the ensuing tsunami in March disrupted manufacturing. The economy has largely recovered in the two years since the disaster, but reconstruction in the Tohoku region has been uneven. Prime Minister Shinzo ABE has declared the economy his government's top priority; he has overturned his predecessor's plan to permanently close nuclear power plants and is pursuing an economic revitalization agenda of fiscal stimulus, monetary easing, and structural reform. Japan joined the Trans Pacific Partnership negotiations in 2013, a pact that would open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2013 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 2012. The new government will continue a longstanding debate on restructuring the economy and reining in Japan's huge government debt, which is exceeding 230% of GDP. To help raise government revenue and reduce public debt, Japan decided in 2013 to gradually increase the consumption tax to a total of 10% by the year 2015. Japan is making progress on ending deflation due to a weaker yen and higher energy costs, but reliance on exports to drive growth and an aging, shrinking population pose other major long-term challenges for the economy

Source : CIA

Company name and address

 

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 3,043,114 M

PAYMENTS      REGULAR         CAPITAL           Yen 397,199 M

TREND SLOW              WORTH            Yen 767,663 M

STARTED         1899                 EMPLOYES      100,914

 

 

COMMENT    

 

PROVIDER OF COMMUNICATIONS/IT EQUIPMENT & SOLUTIONS. 

FINANCIAL SITUATION COSIDERED FAIR AND GOOD FOR ORDINARY

BUSINESS ENGAGEMENTS.

 

Business

Terms Ending

Annual Sales*

R.Profit*

N.Profit*

S.Growth

Net Worth*

   Results:

31/03/2011

3,115,424

41

-12,518

(%)

875,441

(Consolidated)

31/03/2012

3,036,836

42,050

-110,267

-2.52

777,614

 

31/03/2013

3,071,609

92,024

30,434

1.15

836,147

 

31/03/2014

3,043,114

69,152

33,742

-0.93

767,663

 

31/03/2015

3,000

90,000

35,000

-99.90

..

Notes: Unit: In Million Yen

Forecast (or estimated) figures for 31/03/2015 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/2014 fiscal term amounted to Yen 3,043,114 million, a 0.9% down from Yen 3,071,609 million in the previous term.  Transfer of mobile phone mfg and selling business eroded sales.  Orders for system construction services from financial institutions performed well, but those from communications and power utilities slumped.  The recurring profit was posted at Yen 69,152 million and the net profit at Yen 33,742 million, respectively, compared with Yen 92,024 million recurring profit and Yen 30,434 million net losses, respectively, a year ago.

           

            (Apr/Jun/2014 results): Sales Yen 598,701 million (down 6.5%), operating loss Yen 7,059 million (previously Yen 21,813 million loss), recurring loss Yen 9,991 million (previously Yen 28,167 million loss), net loss Yen 10,100 million (previously Yen 21,476 million losses).  (% & figures compared with the corresponding period a year ago).

 

For the current term ending Mar 2015 the recurring profit is projected at Yen 90,000 million and the net profit at Yen 35,000 million, respectively, on a 1.4% fall in turnover, to Yen 3,000,000 million.  Transfer of the mobile phone mfg & selling the Internet service provider business to other companies eroded sales by Yen 150 billion, while boosted operating profit by Yen 9 billion.

 

            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 (%): Master Trust Bank of Japan T (5.4), Japan Trustee Services T (4.8), Employees’ S/Holding Assn (2.0), Nippon Life Ins (1.6), Sumitomo Life Ins (1.5), Japan Trustee Services T4 (1.3), State Street Bank West Treaty (1.3), Japan Trustee Services T6 (1.1), Japan Trustee Services T5 (1.0), Japan Trustee Services T1 (1.0); foreign owners (32.0)

           

No. of shareholders: 207,162

 

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

 

Managements: Kaoru Yano, ch; Nouhiro Endo, pres; Takashi Nino, v pres; Junji Yasui, v pres; Hideichi Okada, v pres; Kuniaki Okada, mgn dir; Manabu Kinoshita, mgn dir; Tomonori Nishimura, mgn dir; Masato Yamamoto, mgn dir; Takayuki Morita, 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 (26%): Provides solutions for networking era, mainly to government               agencies, communications service providers and other private-sector enterprises;

Mobile/Personal Solutions (24): Provides mobile handsets, PC’s & other terminals,                                 channeling individuals to ubiquitous networking society and Internet services, underpinning                   NEC brand;

Electron Device Business (24%): Provides semiconductors, LCD’s, other electronic                                  components & products;

Other (26%); PSL, social infrastructure, platforms, others

Overseas Sales Ratio (19%).

 

(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: 2,000

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: Regular

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

 

Bank References:

SMBC (Tokyo)

MUFG (H/O)

Relations: Satisfactory

 

 

FINANCIALS

 

FINANCES: (Consolidated in million yen)

　

　

　

Terms Ending:

31/03/2014

31/03/2013

INCOME STATEMENT

 

　

　

  Annual Sales

　

3,043,114

3,071,609

　

  Cost of Sales

2,128,457

2,142,243

　

      GROSS PROFIT

914,657

929,366

　

  Selling & Adm Costs

808,464

814,719

　

      OPERATING PROFIT

106,193

114,647

　

  Non-Operating P/L

-37,041

-22,623

　

      RECURRING PROFIT

69,152

92,024

　

      NET PROFIT

33,742

30,434

BALANCE SHEET

 

 

　

　

  Cash

　

192,668

174,295

　

  Receivables

 

842,308

834,052

　

  Inventory

 

214,395

242,639

　

  Securities, Marketable

16,291

24,666

　

  Other Current Assets

237,247

238,154

　

      TOTAL CURRENT ASSETS

1,502,909

1,513,806

　

  Property & Equipment

346,186

294,767

　

  Intangibles

 

198,781

233,786

　

  Investments, Other Fixed Assets

457,453

538,607

　

      TOTAL ASSETS

2,505,329

2,580,966

　

  Payables

 

46,494

458,724

　

  Short-Term Bank Loans

32,415

26,590

　

　

 

　

　

　

  Other Current Liabs

906,676

638,342

　

      TOTAL CURRENT LIABS

985,585

1,123,656

　

  Debentures

 

140,000

160,000

　

  Long-Term Bank Loans

333,534

237,028

　

  Reserve for Retirement Allw

220,457

178,868

　

  Other Debts

　

58,090

45,267

　

      TOTAL LIABILITIES

1,737,666

1,744,819

　

      MINORITY INTERESTS

 

　

　

Common stock

397,199

397,199

　

Additional paid-in capital

148,402

148,405

　

Retained earnings

182,570

157,771

　

Evaluation p/l on investments/securities

34,292

18,333

　

Others

 

8,176

117,385

　

Treasury stock, at cost

(2,976)

(2,946)

　

      TOTAL S/HOLDERS` EQUITY

767,663

836,147

　

      TOTAL EQUITIES

2,505,329

2,580,966

CONSOLIDATED CASH FLOWS

 

　

　

 

Terms ending:

31/03/2014

31/03/2013

　

Cash Flows from Operating Activities

　

94,124

143,748

　

Cash Flows from Investment Activities

-38,893

-101,742

　

Cash Flows from Financing Activities

-49,983

-98,807

　

Cash, Bank Deposits at the Term End

　

206,637

197,132

ANALYTICAL RATIOS            Terms ending:

31/03/2014

31/03/2013

　

 

Net Worth (S/Holders' Equity)

767,663

836,147

　

 

Current Ratio (%)

152.49

134.72

　

 

Net Worth Ratio (%)

30.64

32.40

　

 

Recurring Profit Ratio (%)

2.27

3.00

　

 

Net Profit Ratio (%)

1.11

0.99

　

　

Return On Equity (%)

4.40

3.64

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.60.73

UK Pound

1

Rs.101.48

Euro

1

Rs.81.04

 

INFORMATION DETAILS

 

Analysis Done by :

KAR

 

 

Report Prepared by :

PDT

 

               

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.