MIRA INFORM REPORT
|
Report No. : |
319852 |
|
Report Date : |
05.05.2015 |
IDENTIFICATION DETAILS
|
Name : |
TECHNOFAB ENGINEERING LIMITED |
|
|
|
|
Registered
Office : |
507, Eros Apartment, |
|
Tel No.: |
91-11-26415961 |
|
|
|
|
Country : |
India |
|
|
|
|
Financials (as
on) : |
31.03.2014 |
|
|
|
|
Date of
Incorporation : |
20.07.1971 |
|
|
|
|
Com. Reg. No.: |
55-005712 |
|
|
|
|
Capital Investment
/ Paid-up Capital : |
Rs.104.900 Million |
|
|
|
|
CIN No.: [Company Identification
No.] |
L74210DL1971PLC005712 |
|
|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
Not Available |
|
|
|
|
PAN No.: [Permanent Account No.] |
AAACT3829R |
|
|
|
|
Legal Form : |
A Public Limited Liability Company. The company’s Shares are Listed on
the Stock Exchanges. |
|
|
|
|
Line of Business
: |
Subject is Engaged in the Business of Providing Engineering Procurement
and Construction Services, Executing a Wide Range of Balance-of-plant and
Electro-mechanical Projects on a Complete Turnkey Basis. |
|
|
|
|
No. of Employees
: |
Not Available |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba (49) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
|
|
|
|
Payment Behaviour : |
Usually Correct |
|
|
|
|
Litigation : |
Clear |
|
|
|
|
Comments : |
Subject is well established company having satisfactory track. Management has reported 4.5% decrease in sales turnover in fiscal
2014. The decrease in revenue was on account of the unexpected cessation in
funding of one of the subjects overseas project. Also finance cost which
amounted to Rs. 73.28 Million in the year 2013 increased significantly to
Rs.119.63 million in the year ended 31 March 2014. As per the management, the
increase was mainly due to the need to take recourse to enhance bank credit
to take care of delays in payment from customers. Thus net profit after tax
decreased by 79% to Rs.69 Million in FY 2014 from Rs.325 Million in FY 2013. However overall financial position of the company seems to be fair. Trade relations are fair. Business is active. Payment terms are
reported to be usually correct. The concern can be considered for business dealing 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 – December 31, 2014
|
Country Name |
Previous Rating (30.09.2014) |
Current Rating (31.12.2014) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CRISIL |
|
Rating |
Long Term Rating – CRISIL A- |
|
Rating Explanation |
Adequate degree of safety and Low Credit Risk. |
|
|
|
|
Rating |
Short Term Rating - CRISIL A2+ |
|
Rating Explanation |
Strong degree of safety and Low Credit Risk. |
|
Date |
06.03.2014 |
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
31-03-2014.
LOCATIONS
|
Registered Office : |
507, Eros Apartment, |
|
Tel. No.: |
91-11-26415961 |
|
Fax No.: |
91-11-26221521 |
|
E-Mail : |
|
|
Website : |
|
|
|
|
|
Corporate Office : |
Plot 5, Sector 27-C, Mathura Road, Faridabad – 121003, |
|
Tel. No.: |
91-129-2270202 |
|
Fax No.: |
91-129-2270201 |
|
|
|
|
Overseas Office : |
Located at: |
DIRECTORS
AS ON 31.03.2014
|
Name : |
Mr. Avinash Chander Gupta |
|
Designation : |
Chairman and Managing Director |
|
Address : |
S- 481, Greater Kailash - II, New Delhi –
110048, India |
|
Date of Birth/Age : |
26.10.1940 |
|
Date of Appointment : |
06.10.2006 |
|
DIN No.: |
00012077 |
|
|
|
|
Name : |
Mr. Arjun Gupta |
|
Designation : |
Whole Time Director |
|
Address : |
S- 481, Greater Kailash - II, New Delhi – 110048, India |
|
Date of Birth/Age : |
07.08.1970 |
|
Date of Appointment : |
30.09.2004 |
|
DIN No.: |
00012092 |
|
|
|
|
Name : |
Mr. Nakul Gupta |
|
Designation : |
Whole Time Director |
|
Address : |
S-481, Greater Kailash - II, New Delhi –
110048, India |
|
Date of Birth/Age : |
30.08.1971 |
|
Date of Appointment : |
01.12.1999 |
|
DIN No.: |
00012106 |
|
|
|
|
Name : |
Mr. Arun Mitter |
|
Designation : |
Non-Executive, Independent Director |
|
Address : |
C-29, May Fair Garden, New Delhi – 110016, India |
|
Date of Birth/Age : |
27.11.1962 |
|
Date of Appointment : |
08.06.2009 |
|
DIN No.: |
00022941 |
|
|
|
|
Name : |
Mr. Pawan Chopra |
|
Designation : |
Non-Executive, Independent Director |
|
Address : |
C-1/39, Pandara Park, New Delhi – 110003,
India |
|
Date of Birth/Age : |
22.05.1944 |
|
Date of Appointment : |
08.06.2009 |
|
DIN No.: |
00417967 |
|
|
|
|
Name : |
Mr. Viresh Shankar Mathur |
|
Designation : |
Non-Executive, Independent Director |
|
Address : |
B-70, Sector - 14, Noida – 201301, Uttar Pradesh, India |
|
Date of Birth/Age : |
09.03.1946 |
|
Date of Appointment : |
08.06.2009 |
|
DIN No.: |
01382982 |
KEY EXECUTIVES
|
Name : |
Mr. Sandeep Kumar Vij |
|
Designation : |
Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 31.03.2015
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of promoter
and Promoter Group |
|
|
|
1) Indian |
|
|
|
a) Individuals / Hindu Undivided Family |
4754553 |
45.32 |
|
b) Bodies corporate |
303473 |
2.89 |
|
2) Foreign |
|
|
|
|
|
|
|
(B) Public Shareholdings |
|
|
|
1) Institutions |
|
|
|
a) Foreign Institutional Investors |
15097 |
0.14 |
|
|
|
|
|
2) Non – Institution |
|
|
|
a) Bodies corporate |
2879216 |
27.45 |
|
|
|
|
|
b) Individuals |
|
|
|
i. Individual Shareholders holding nominal share capital upto Rs.0.100
Million |
941572 |
8.98 |
|
ii. Individual Shareholders holding nominal share capital in excess
Rs.0.100 Million |
471913 |
4.50 |
|
|
|
|
|
c) Any other |
|
|
|
i) Clearing Member |
64243 |
0.61 |
|
ii) Non Resident Indians |
208061 |
19.98 |
|
iii) Trusts |
40 |
0.00 |
|
iv) Foreign Corporate Bodies |
851832 |
8.12 |
|
|
|
|
|
Total |
10490000 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Subject is Engaged in the Business of Providing Engineering
Procurement and Construction Services, Executing a Wide Range of Balance-of-plant
and Electro-mechanical Projects on a Complete Turnkey Basis. |
|
|
|
|
Brand Names : |
Not Available |
|
|
|
|
Agencies Held : |
Not Available |
|
|
|
|
Exports : |
Not Available |
|
|
|
|
Imports : |
Not Available |
|
|
|
|
Terms : |
Not Available |
GENERAL INFORMATION
|
Suppliers : |
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Customers : |
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No. of Employees : |
Not Available |
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Bankers : |
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Facilities : |
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|||||||||||||||||||||||||||||||||||||||
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|
|
|
Banking
Relations : |
-- |
|
|
|
|
Auditors : |
|
|
Name : |
Rajesh Suresh Jain and Associates Chartered Accountant |
|
Address : |
E-3/38, Sector-7, Rohini, |
|
Tel. No.: |
91-11-65819990 |
|
Mobile No.: |
91-9811020899 |
|
PAN N Income-tax PAN of auditor or auditor's firm : |
AAOFR7645G |
|
|
|
|
Memberships : |
-- |
|
|
|
|
Collaborators : |
-- |
|
|
|
|
Enterprises under Common Control /
enterprises where persons described in “A” above is able to exercise significant
influence.: |
|
|
|
|
|
Wholly owned
Subsidiary Company: |
|
CAPITAL STRUCTURE
AS ON 31.03.2014
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
15000000 |
Equity Shares |
Rs.10/- each |
Rs.150.000 Million |
|
|
|
|
|
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
10490000 |
Equity Shares |
Rs.10/- each |
Rs.104.900
Million |
|
|
|
|
|
Note : (i)
Reconcilation of the number of shares outstanding at the beginning and at the end
of the reporting period.
|
Particulars |
31.03.2014 Rs. In Million |
|
Shares at the beginning of the year |
104.900 |
|
|
|
(ii) List of share holders holding more
then 5% of the total shares of the Company.
|
Particulars |
As At 31.03.2014 No of Shares |
As At 31.03.2014 % of holding |
|
Avinash Chander Gupta |
2299096 |
21.92 |
|
Meera Gupta |
1502602 |
14.32 |
|
Emerging India Focus Fund |
752153 |
7.17 |
FINANCIAL DATA
[all figures are
in Rupees Million]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
|
|
|
|
|
I.
EQUITY AND LIABILITIES |
|
|
|
|
(1)Shareholders' Funds |
|
|
|
|
(a) Share Capital |
104.900 |
104.900 |
104.900 |
|
(b) Reserves & Surplus |
1,989.680 |
1,920.623 |
1,625.966 |
|
(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) |
2,094.580 |
2,025.523 |
1,730.866 |
|
|
|
|
|
|
(3) Non-Current Liabilities |
|
|
|
|
(a) long-term borrowings |
4.828 |
0.000 |
3.690 |
|
(b) Deferred tax liabilities
(Net) |
14.263 |
14.284 |
7.239 |
|
(c) Other long term
liabilities |
211.927 |
21.313 |
1.491 |
|
(d) long-term provisions |
15.141 |
15.379 |
12.478 |
|
Total
Non-current Liabilities (3) |
246.159 |
50.976 |
24.898 |
|
|
|
|
|
|
(4) Current Liabilities |
|
|
|
|
(a) Short term borrowings |
799.677 |
699.756 |
439.304 |
|
(b) Trade payables |
1,436.771 |
1,524.149 |
960.598 |
|
(c) Other current liabilities |
336.308 |
165.314 |
276.995 |
|
(d) Short-term provisions |
36.865 |
170.812 |
175.173 |
|
Total
Current Liabilities (4) |
2,609.621 |
2,560.031 |
1,852.070 |
|
|
|
|
|
|
TOTAL |
4,950.360 |
4,636.530 |
3,607.834 |
|
|
|
|
|
|
II.
ASSETS |
|
|
|
|
(1) Non-current assets |
|
|
|
|
(a) Fixed Assets |
|
|
|
|
(i) Tangible assets |
291.932 |
269.270 |
169.624 |
|
(ii) Intangible Assets |
0.790 |
0.000 |
0.000 |
|
(iii) Capital work-in-progress |
59.129 |
0.000 |
3.790 |
|
(iv) Intangible assets under
development |
0.000 |
0.000 |
0.000 |
|
(b) Non-current Investments |
90.077 |
91.077 |
101.345 |
|
(c) Deferred tax assets (net) |
0.000 |
0.000 |
0.000 |
|
(d) Long-term Loan and Advances |
60.202 |
52.248 |
37.184 |
|
(e) Other Non-current assets |
56.632 |
83.195 |
44.980 |
|
Total
Non-Current Assets |
558.762 |
495.790 |
356.923 |
|
|
|
|
|
|
(2) Current assets |
|
|
|
|
(a) Current investments |
119.550 |
495.153 |
377.416 |
|
(b) Inventories |
511.138 |
453.537 |
115.106 |
|
(c) Trade receivables |
2,725.234 |
2,120.081 |
1,667.880 |
|
(d) Cash and cash equivalents |
464.449 |
466.284 |
634.156 |
|
(e) Short-term loans and
advances |
571.227 |
605.685 |
456.353 |
|
(f) Other current assets |
0.000 |
0.000 |
0.000 |
|
Total
Current Assets |
4,391.598 |
4,140.740 |
3,250.911 |
|
|
|
|
|
|
TOTAL |
4,950.360 |
4,636.530 |
3,607.834 |
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
|
SALES |
|
|
|
|
|
Income |
4,072.373 |
4,263.005 |
3,773.316 |
|
|
Other Income |
40.808 |
19.333 |
43.332 |
|
|
TOTAL
(A) |
4,113.181 |
4,282.338 |
3,816.648 |
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
Cost of Materials Consumed |
2,997.730 |
2,894.201 |
2,702.406 |
|
|
Expenditure on contracts |
539.873 |
419.083 |
221.360 |
|
|
Changes in inventories of
finished goods, work-in-progress and Stock-in-Trade |
(153.970) |
(50.375) |
18.574 |
|
|
Employees benefits expense |
288.716 |
310.955 |
236.666 |
|
|
Other expenses |
150.103 |
127.915 |
85.762 |
|
|
TOTAL
(B) |
3,822.452 |
3,701.779 |
3,264.768 |
|
|
|
|
|
|
|
Less |
PROFIT/
(LOSS) BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION (C) |
290.729 |
580.559 |
551.880 |
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
119.631 |
73.276 |
37.125 |
|
|
|
|
|
|
|
|
PROFIT
/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
171.098 |
507.283 |
514.755 |
|
|
|
|
|
|
|
Less/
Add |
DEPRECIATION/
AMORTISATION (F) |
63.074 |
35.474 |
21.149 |
|
|
|
|
|
|
|
|
PROFIT/
(LOSS) BEFORE TAX (E-F) (G) |
108.024 |
471.809 |
493.606 |
|
|
|
|
|
|
|
Less |
TAX
(I) |
38.967 |
146.470 |
151.934 |
|
|
|
|
|
|
|
|
PROFIT/
(LOSS) AFTER TAX (G-I)
(J) |
69.057 |
325.339 |
341.672 |
|
|
|
|
|
|
|
|
EARNINGS
IN FOREIGN CURRENCY |
|
|
|
|
|
F.O.B. Value of Exports |
1,822.885 |
1,293.500 |
NA |
|
|
TOTAL
EARNINGS |
1,822.885 |
1,293.500 |
NA |
|
|
|
|
|
|
|
|
Earnings
/ (Loss) Per Share (Rs.) |
6.58 |
31.01 |
32.57 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
Net Profit Margin (PAT / Sales) |
(%) |
1.70
|
7.63 |
9.05 |
|
|
|
|
|
|
|
Operating Profit Margin (PBIDT/Sales) |
(%) |
4.20
|
11.90 |
13.64 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
2.25
|
10.38 |
14.08 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.05
|
0.23 |
0.29 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt /Networth) |
|
0.38
|
0.35 |
0.26 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.68
|
1.60 |
1.76 |
FINANCIAL ANALYSIS
[all figures are
in Rupees Million]
DEBT EQUITY RATIO
|
Particular |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
(INR
in Mln.) |
(INR
in Mln.) |
(INR
in Mln.) |
|
Share Capital |
104.900 |
104.9 |
104.9 |
|
Reserves & Surplus |
1625.966 |
1920.623 |
1989.68 |
|
Net
worth |
1,730.866 |
2,025.523 |
2,094.580 |
|
|
|
|
|
|
long-term borrowings |
3.690 |
0 |
4.828 |
|
Short term borrowings |
439.304 |
699.756 |
799.677 |
|
Total
borrowings |
442.994 |
699.756 |
804.505 |
|
Debt/Equity
ratio |
0.256 |
0.345 |
0.384 |
YEAR-ON-YEAR GROWTH
|
Year
on Year Growth |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
(INR
in Mln) |
(INR
in Mln) |
(INR
in Mln) |
|
Sales |
3773.316 |
4263.005 |
4072.373 |
|
|
|
12.978 |
-4.472 |
NET PROFIT MARGIN
|
Net
Profit Margin |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
(INR
in Mln) |
(INR
in Mln) |
(INR
in Mln) |
|
Sales |
3773.316 |
4263.005 |
4072.373 |
|
Profit |
341.672 |
325.339 |
69.057 |
|
|
9.05% |
7.63% |
1.70% |
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 |
No |
|
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 |
No |
|
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 |
No |
|
30] |
Major Shareholders, if
available |
Yes |
|
31] |
Date of Birth of
Proprietor/Partner/Director, if available |
Yes |
|
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 |
REVIEW OF OPERATIONS
Financial
Highlights
The Subject has achieved a gross operating turnover of Rs.4072.000
Million for the year ended 31st March, 2014 as against Rs.4263.000 Million for
the previous financial year. This amounts to a 4.5% decrease over the previous
year. The EBIDTA at Rs.290.730 Million decreased by 49.92% in comparison to the
previous year. The profit after tax in the period under review was Rs.74.000
Million as compared to Rs.326.900 Million in the previous year.
The net worth of the Subject, which has been steadily increasing, stands
at over Rs.2095.000 million as on 31st March 2014.
The growth momentum created in the period 2006 to 2011 had been
sustained, though at a more moderate rate, till FY 2013, despite the severe
slowdown in the investment cycle in the country. The slight fall in turnover
and the severe decrease in the profitability have been mainly due to a one of
reason which has been covered in the Management Discussion and Analysis
accompanying this Report.
Sectoral Overview
The Subject has in recent years developed capabilities to undertake
turnkey EPC Services across diverse sectors and geographies. The contribution
of various sectors towards the Subject’s business is therefore continuosly
varying. In the previous year, the water sector had the maximum contribution at
40% followed by the power sector at 27% and by the Oil & Gas Sector which
contributed 13%. In the year under review the Water Sector‘s contribution got
further enhanced to 58%, whereas the power sector’s contribution remained
steady at 25%. These two sectors accounted for around three quarter of the
Subject turnover.
Major customers during the year included Ministry of Water, Zimbabwe,
West Bengal State Electricity Distribution Subject, Ministry of Water,
Tanzania, South Bihar Power Distribution Subject and Government of Liberia.
Geographical
Spread
The Subject has continued to maintain a strong focus on geographical
diversity. Apart from sub Saharan Africa, the other geographies of interest are
in Fiji and closer home in South Asia. During the year the Subject continued to
execute business secured in Ethiopia, Fiji, Ghana, Kenya, Liberia Mozambique
and Tanzania. Slightly over half of the Subject’s revenue came from overseas
assignments.
Fresh business
Secured
The Subject continued to put great emphasis on securing new business
from existing as well as new customers and new geographies. During the year,
the Subject secured fresh business of around Rs.8630.000 Million. The largest
share of orders were received from the domestic water Sector followed by the
Rural Electrification Sector. The traditional Power and Industrial Sectors did
not contribute any fresh business and this is a reflection of the severe
impairment of the project investment cycle in their country.
At present the Subject has outstanding proposals worth over Rs.40
billion, 60% of which pertain to domestic business and the remaining overseas.
ECONOMIC AND
BUSINESS OUTLOOK
For the third year in a row, the economic and business outlook in the
country has been gloomy. The economic growth has dipped below 5%, and a
turnaround cannot yet be seen. Reproduced below (in italics) is a paragraph
from last year’s Annual Report:
The previous year had seen a dip in
confidence of their country’s economic outlook, and this has deepened.
Investment in the main sectors that are
crucial to us viz. the thermal power, nuclear power and the industrial sectors
is reduced to a bare trickle. Even though there is no dearth of viable
projects, several factors which are not in the control of project developers
have resulted in many of these projects coming to a virtual standstill.
With the project investment pipeline thus
severely impaired, the outlook is compounded by the absence of any realistic
hopes of an upturn during the current fiscal year.
The scenario is adversely impacted by many
factors, which are well known. There seems to be no end to the uncertainties
faced on fuel for power plants, the difficulties in obtaining environmental
clearances and in land acquisition. The continuous high fiscal and balance of
payments deficits have caused a severe denting of confidence apart from the
steady erosion in the value of the rupee.
As a result, the slowdown in enquiries and
longer than normal gestation in converting enquiries to orders and
orders to revenue, which was visible last
year has continued unabated.
The foregoing continues to be valid a year later. Many of their
customers continue to be financially stressed.
Not only is there a delay in receiving payments, the standstill or
slowdown on many of their projects means that retention money which is linked
to project completion continues to pile up. of course there has recently been a
significant improvement in sentiment. However this is yet to translate into any
movement on the ground in terms of resumption of stalled projects or fresh
enquiries. Having said that, they are happy to convey that early in FY 2015 the
Subject has received one modest order from the Thermal Power Sector (after a
gap of over 30 months).
As far as the overseas market is concerned, the Subject continues to
maintain a strong focus particularly in sub Saharan Africa. While the Subject
largely pursues funded projects mainly in the water infrastructure, non funded
projects are also pursued though with a degree of caution. In fact during the
year the Subject has dropped two fairly large private overseas projects from
its order book, as they did not seem to have any prospect of achieving
financial closure.
Even in this market there has been a significant increase in
competition, as competitors facing dwindling orders in home countries try to
make up by targeting projects in Africa, which being mainly linked with basic
social issues and/ or funded have not been so adversely affected by the general
economic slowdown.
The combination of a significant decrease in bidding opportunities and
increase in competition, both domestically, and to a lesser extent, in the
overseas markets has had the inevitable impact of adversely affecting margins.
The fact that the Subject still has a decent order book, is on account of its
strategy of diversying its customer base by targeting newer sectors and
geographies, whilst sticking to its domain competence of undertaking turnkey
EPC Projects. This has helped us to cope with the slowdown in the traditional
Power and Industrial Sectors. As a result they continue to remain in decent
shape and revenue for next two years is visible from existing orders. Hence the
Subject is expected to be in a healthy shape to take advantage of the upturn
which hopefully should occur by FY 2016.
MANAGEMENT
DISCUSSION AND ANALYSIS REPORT
BUSINESS OVERVIEW
As a pure service EPC Subject, their business opportunities are linked
with investments taking place in the sectors that they operate in.
For the third successive year, the investment in their country remained
severely impaired and there was no fresh business opportunities in their
traditional Power and Industrial sectors. This was compounded by a slowdown in
several ongoing projects in the power sectors as their customers faced severe
problems across the business spectrum - on account of raw material and
environmental issues, land acquisition issues or financial closure. The last
factor even made its presence felt in some of their overseas assignments.
Previous similar experiences had resulted in the Subject evolving a
business strategy of diversifying market opportunities by focussing on newer
sectors and geographies whilst adhering to its core domain competence of
undertaking EPC projects on turnkey basis. This strategy aimed at insulating
the Subject from any downturn in the traditional power and industrial sectors
and compensating the same through business in newer sectors and geographies.
The benefits of this strategy became obvious in the last three years, as the
Subject’s success in securing business in the rural sectors and in newer
geographies in sub Saharan Africa ensured a reasonably healthy order book
throughout this period. However in part due to increase in competition and in part
due the intrinsic nature of some of these newer sectors, there has concurrently
been a pressure on margins.
This has been emphasised in their previous Annual Reports and
Information updates. Hence whilst a dip in profits was expected the mild dip in
turnover along with a steep fall in profits in FY 2014 need some explanation.
This has been on account of the unexpected cessation of funding in one of the
Companies Overseas projects. This resulted in losses on account of several
factors like inability to realise adequate value for the substantial
inventory/Work in Progress, non recovery of the substantial investment in Plant
and Machinery and of fixed costs, along with expenses associated with closing
their various subcontracts and some loss on account of exchange rate variation
associated with unadjusted advances.
As a direct consequence, instead of a modest increase in turnover and
slight fall in profit, they had a slight fall in turnover and a steep fall in
profit. Remaining business went fairly well.
BUSINESS
ENVIRONMENT AND OUTLOOK
The problems besetting virtually all the sectors where their customers
operate; in particular the thermal and nuclear power sectors and the industrial
sector are well known and don’t need repetition here.
When they objectively scan the horizon looking for an upturn, no
concrete steps are yet visible. Despite the absence of any such concrete steps,
the atmosphere has begun to turn optimistic, particularly after their recent
general elections. While the Board hopes that this optimism translates into
positive action, the impact may take considerable more time to translate into
an upturn.
The Subject‘s order book is healthy, thanks to the record intake of
orders in FY 2014 and amounts to almost three times trailing revenue. This
gives visibility of steady increase in turnover, whilst preparing to take
advantage of the expected upturn which may occur in FY 2016.
The Subject continues to see the Water Sector as a major contributor to
its business, both domestically and overseas. They maintain their focus on
enhancing qualifications so as to increase the addressable market in this
sector. Internationally they remain focussed on Sub Saharan Africa and South
Asia, and while they give highest importance to projects funded by multilateral
funding agencies, they also pursue privately funded projects, albeit in a
cautious manner.
CONTINGENT
LIABILITIES:
a) Claims against the Subject not acknowledged as debt (net) amount to Rs.15.538 Million (Previous year Rs.1491 Million).
b) The Bank guarantees/letters of credit/Bill discounted given by the Banks for and on behalf of the Company outstanding at the end of the year amounted to Rs.5760.258 Million (Previous year Rs.4694.418 Million).
c) In respect of demand against Sales Tax amounting to Rs.9.282 Million (Previous year Rs.137.382 Million) raised by the authorities, appeals are pending before the authorities.
d)
Capital commitment (Net of advances) Rs.29.113
Million (Previous year Rs.23.113 Million).
FIXED ASSETS
- Factory Land
- Building
- Plant and Machinery
- Office Equipment’s
- Furniture and Fixtures
- Vehicles
- Computers
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No 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 Subject 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 Subject’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.63.58 |
|
|
1 |
Rs.97.99 |
|
Euro |
1 |
Rs.70.53 |
INFORMATION DETAILS
|
Information
Gathered by : |
-- |
|
|
|
|
Analysis Done by
: |
SAN |
|
|
|
|
Report Prepared
by : |
SDA |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL
CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
5 |
|
--PROFITABILITY |
1~10 |
6 |
|
--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 |
NO |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
DEFAULTER |
|
|
|
--RBI |
YES/NO |
NO |
|
--EPF |
YES/NO |
NO |
|
TOTAL |
|
49 |
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.