MIRA INFORM REPORT

 

 

Report No. :

350774

Report Date :

23.11.2015

 

IDENTIFICATION DETAILS

 

Name :

STEEL RECON INDUSTRIES SDN. BHD.

 

 

Registered Office :

308, Block A, Kelana Business Centre, 97, Jalan Ss7/2,Kelana Jaya, 3rd Floor, 47301 Petaling Jaya, Selangor

 

 

Country :

Malaysia

 

 

Financials (as on) :

30.09.2014

 

 

Date of Incorporation :

03.12.1973

 

 

Com. Reg. No.:

16592-W

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Manufacturing of fire fighting equipments.

 

 

No. of Employee :

200 [2015]

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

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

Satisfactory

 

Status :

Satisfactory

 

 

Payment Behaviour :

No complaints

 

 

Litigation :

Clear

 

 

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List – March 31, 2015

 

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

Malaysia

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 


 

MALAYSIA ECONOMIC OVERVIEW

 

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. Gross exports of goods and services constitute more than 80% of GDP. The oil and gas sector supplied about 29% of government revenue in 2014. As an oil and gas exporter, Malaysia has previously profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. Falling global oil prices in the second half of 2014 have strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is trying to lessen its dependence on state oil producer Petronas.

Bank Negara Malaysia (the central bank) maintains healthy foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. In order to attract increased investment, NAJIB raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays.

Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

 

Source : CIA

 

 

EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

16592-W

COMPANY NAME

:

STEEL RECON INDUSTRIES SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

03/12/1973

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

308, BLOCK A, KELANA BUSINESS CENTRE, 97, JALAN SS7/2,KELANA JAYA, 3RD FLOOR, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

BUSINESS ADDRESS

:

8, LOT 836, JALAN SUBANG 7, TAMAN PERINDUSTRIAN SUBANG, 47610 SUBANG JAYA, SELANGOR, MALAYSIA.

TEL.NO.

:

03-80232323

FAX.NO.

:

03-80232828

EMAIL

:

INFO@SRI.COM.MY

WEB SITE

:

WWW.SRI.COM.MY

CONTACT PERSON

:

ONG YOW SIANG ( MANAGING DIRECTOR )

INDUSTRY CODE

:

28

PRINCIPAL ACTIVITY

:

MANUFACTURING OF FIRE FIGHTING EQUIPMENTS

AUTHORISED CAPITAL

:

MYR 5,000,000.00 DIVIDED INTO
ORDINARY SHARE 5,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 2,550,000.00 DIVIDED INTO
ORDINARY SHARES 1,790,925 CASH AND 759,075 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 73,485,250 [2014]

NET WORTH

:

MYR 35,907,868 [2014]

STAFF STRENGTH

:

200 [2015]

BANKER (S)

:

PUBLIC BANK BHD
RHB BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

STRONG

PAYMENT

:

NO COMPLAINTS

MANAGEMENT CAPABILITY

:

GOOD

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

SATISFACTORY

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

 

 

HISTORY / BACKGROUND

 

The Subject is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the Subject is insolvent. The Subject is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies

.

The Subject is principally engaged in the (as a / as an) manufacturing of fire fighting equipments.

 

The Subject is not listed on Bursa Malaysia (Malaysia Stock Exchange).

 

The immediate holding company of the Subject is SRII BERHAD., a company incorporated in MALAYSIA.

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

31/03/2015

MYR 5,000,000.00

MYR 2,550,000.00

15/02/1992

MYR 2,000,000.00

MYR 924,078.00

 

The major shareholder(s) of the Subject are shown as follows :


Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

SRII BERHAD.

308, BLOCK A, KELANA BUSINESS CENTRE, 97, JALAN SS 7/2, KELANA JAYA, 3RD FLOOR, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

315653A

2,550,000.00

100.00

---------------

------

2,550,000.00

100.00

============

=====

+ Also Director



DIRECTORS


DIRECTOR 1

 

Name Of Subject

:

MR. TAN JEE YEE

Address

:

274, PJS 10, LORONG SENA 5, 46000 PETALING JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

5648085

New IC No

:

590417-10-6031

Date of Birth

:

17/04/1959

Nationality

:

MALAYSIAN

Date of Appointment

:

15/04/2001

 

DIRECTOR 2

 

Name Of Subject

:

MR. WEE CHEW KIAT

Address

:

7, JALAN KEMUNING INDAH 32/142, KEMUNING UTAMA, SECTION 32, 40460 SHAH ALAM, SELANGOR, MALAYSIA.

IC / PP No

:

A2874816

New IC No

:

741018-03-5171

Date of Birth

:

18/10/1974

Nationality

:

MALAYSIAN

Date of Appointment

:

15/07/2009

 

DIRECTOR 3

 

Name Of Subject

:

MR. LAI CHENG KUAN

Address

:

R-22-03, BLOCK D'AMAN RIA, 3, JALAN PJU 1A/41, ARA JAYA, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

A3821971

New IC No

:

771112-06-5745

Date of Birth

:

12/11/1977

Nationality

:

MALAYSIAN

Date of Appointment

:

06/03/2014

 

DIRECTOR 4

 

Name Of Subject

:

DATO' ONG YOW SIANG

Address

:

29, PUNCAK DESA, TAMAN DESA, 3RD MILE, OFF OLD KLANG ROAD, 58100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

New IC No

:

420802-10-5797

Date of Birth

:

02/08/1942

Nationality

:

MALAYSIAN

Date of Appointment

:

03/12/1973

 

DIRECTOR 5

 

Name Of Subject

:

MR. ONG WEI MENG

Address

:

29, JALAN PUNCAK DESA, TAMAN DESA, JALAN KLANG LAMA, 58100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

IC / PP No

:

A0825591

New IC No

:

670622-10-5759

Date of Birth

:

22/06/1967

Nationality

:

MALAYSIAN

Date of Appointment

:

25/04/2014

MANAGEMENT

 

 

 

1)

Name of Subject

:

ANDREW THAM

Position

:

SENIOR DIRECTOR

 

2)

Name of Subject

:

ONG YOW SIANG

Position

:

MANAGING DIRECTOR

 

3)

Name of Subject

:

BRENDA LEE

Position

:

FINANCE MANAGER

 

4)

Name of Subject

:

KUEK SIAH YEAR

Position

:

SALES MANAGER

 

5)

Name of Subject

:

TAN JEE YEE

Position

:

FACTORY DIRECTOR

 

 

 

 

AUDITOR

 

Auditor

:

SJ GRANT THORNTON

Auditor' Address

:

SHERATON IMPERIAL COURT, JALAN SULTAN ISMAIL, LEVEL 11, 50250 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MS. WU SIEW HONG

IC / PP No

:

A2188706

New IC No

:

720515-01-5064

Address

:

17, JALAN ANGGERIK LIPARIS 31/150, KOTA KEMUNING, 46460 SHAH ALAM, SELANGOR, MALAYSIA.

 

2)

Company Secretary

:

MR. HO MENG CHAN

IC / PP No

:

4916488

New IC No

:

560104-10-5479

Address

:

5, JALAN 2/28, 46000 PETALING JAYA, SELANGOR, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

PUBLIC BANK BHD

 

2)

Name

:

RHB BANK BHD

 

3)

Name

:

 

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

29/10/1976

N/A

UNITED ASIAN BANK BERHAD

MYR 25,000.00

Satisfied

2

08/12/1989

N/A

BANK INDUSTRI MALAYSIA BERHAD

MYR 220,000.00

Satisfied

3

13/03/1991

N/A

UNITED MALAYAN BANKING BHD

MYR 700,000.00

Satisfied

5

11/11/1994

N/A

RHB BANK BERHAD

MYR 1,500,000.00

Satisfied

4

14/11/1994

N/A

BANK INDUSTRIE MALAYSIA BERHAD

MYR 850,000.00

Satisfied

 

 

LITIGATION CHECK AGAINST SUBJECT


* A check has been conducted in our databank againt the Subject whether the Subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

 

DEFAULTER CHECK AGAINST SUBJECT


* We have checked through the Subject in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection.

No blacklisted record & debt collection case was found in our defaulters' databank.

 

PAYMENT RECORD

 

 

SOURCES OF RAW MATERIALS:

Local

:

YES

Overseas

:

YES

Import Countries

:

CHINA,EUROPE



The Subject refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

]

Good 31-60 Days

[

]

Average 61-90 Days

[

X

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

 

 

CLIENTELE

 

Local

:

YES

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

EUROPE

ASIA

MIDDLE EAST

Credit Term

:

30 - 60 DAYS

Payment Mode

:

CHEQUES
TELEGRAPHIC TRANSFER (TT)

Type of Customer

:

DEALERS,DISTRIBUTORS,AGENTS

 

 

OPERATIONS

 

Products manufactured

:

FIRE FIGHTING EQUIPMENT

Certification of Products

:

1) MS 1539:PT.1:2002

Member(s) / Affiliate(s)

:

FEDERATION OF MALAYSIAN MANUFACTURERS (FMM)

SMI ASSOCIATION OF MALAYSIA

Ownership of premises

:

OWNED

 

Total Number of Employees:

 

YEAR

2015

2014

2013

2012

2011

2010

GROUP

N/A

N/A

N/A

N/A

N/A

N/A

COMPANY

200

200

200

200

200

200

 

Branch

:

NO

Other Information:


The Subject is principally engaged in the (as a / as an) manufacturing of fire fighting equipments.

The Subject's producses a wide range of products as follows:

* Fire Hose Reel Equipment
* Wet and Dry Riser Equipment
* Hydrant Equipment
* Nozzles
* Adaptors and Couplings
* Foam Station Equipment
* Fire Extinguishers and etc.

The Subject's full range of fire fighting products are manufactured to international standards such as British standards (BS); European standards (EN); Australian standards (AS); Singapore standards (PSB); Underwriter Laboratories standards (UL); and Malaysian standards (MS).

The Subject's production line is equipped with modern CNC machinery such as milling machine center, turning lathe and turret punching.

The Subject's modern facility allows to manufacture high quality products by using advanced computer aided manufacturing methods, a CAD/CAM operated sheet metal machine, automated paintshop for surface pre-treatment and powder painting.


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

0380232323

Current Telephone Number

:

03-80232323

Match

:

YES

Address Provided by Client

:

8, LOT 836, JALAN SUBANG 7, TAMAN PERINDUSTRIAN SUBANG,47610,SUBANG JAYA,SELANGOR.

Current Address

:

8, LOT 836, JALAN SUBANG 7, TAMAN PERINDUSTRIAN SUBANG, 47610 SUBANG JAYA, SELANGOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


On 20th November 2015 we contacted one of the staff from the Subject and she provided some information.


FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Increased

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Increased

[

2010 - 2014

]

Return on Shareholder Funds

:

Favourable

[

55.23%

]

Return on Net Assets

:

Favourable

[

61.90%

]

The Subject's turnover increased steadily as the demand for its products / services increased due to the goodwill built up over the years.The higher profit could be attributed to the increase in turnover. Generally the Subject was profitable. The favourable return on shareholders' funds and return on net assets indicate that the Subject's management was efficient in utilising the assets to generate returns.

Working Capital Control

Stock Ratio

:

Favourable

[

18 Days

]

Debtor Ratio

:

Favourable

[

30 Days

]

Creditors Ratio

:

Favourable

[

40 Days

]

The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. The favourable debtors' days could be due to the good credit control measures implemented by the Subject. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

Liquidity

Liquid Ratio

:

Favourable

[

4.03 Times

]

Current Ratio

:

Favourable

[

4.38 Times

]

A minimum liquid ratio of 1 should be maintained by the Subject in order to assure its creditors of its ability to meet short term obligations and the Subject was in a good liquidity position. Thus, we believe the Subject is able to meet all its short term obligations as and when they fall due.

Solvency

Interest Cover

:

Nil

[

0.00 Times

]

Gearing Ratio

:

Favourable

[

0.00 Times

]

The Subject's interest cover was nil as it did not pay any interest during the year. The Subject had no gearing and hence it had virtually no financial risk. The Subject was financed by its shareholders' funds and internally generated fund. During the economic downturn, the Subject, having a zero gearing, will be able to compete better than those which are highly geared in the same industry.

Overall Assessment :

Generally, the Subject's performance has improved with higher turnover and profit. The Subject was in good liquidity position with its total current liabilities well covered by its total current assets. With its current net assets, the Subject should be able to repay its short term obligations. The Subject did not make any interest payment during the year. The Subject was dependent on its shareholders' funds to finance its business needs. The Subject was a zero gearing company, it was solely dependant on its shareholders to provide funds to finance its business. The Subject has good chance of getting loans, if the needs arises.

Overall financial condition of the Subject : STRONG

 

 

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2011

2012

2013

2014*

2015**

Population ( Million)

28.7

29.3

29.8

30.3

30.5

Gross Domestic Products ( % )

5.1

5.6

5.3

6.0

6.0

Domestic Demand ( % )

8.2

9.4

5.6

6.4

6.2

Private Expenditure ( % )

8.2

8.0

8.6

7.9

6.9

Consumption ( % )

7.1

1.0

5.7

6.5

5.6

Investment ( % )

12.2

11.7

13.3

12.0

10.7

Public Expenditure ( % )

8.4

13.3

4.4

2.3

4.2

Consumption ( % )

16.1

11.3

(1.2)

2.1

3.8

Investment ( % )

(0.3)

15.9

4.2

2.6

4.7

Balance of Trade ( MYR Million )

116,058

106,300

71,298

52,314

-

Government Finance ( MYR Million )

(45,511)

(42,297)

(39,993)

(37,291)

-

Government Finance to GDP / Fiscal Deficit ( % )

(5.4)

(4.5)

(4.0)

(3.5)

(3.0)

Inflation ( % Change in Composite CPI)

3.1

1.6

2.5

3.2

4.0

Unemployment Rate

3.3

3.2

3.0

2.9

3.0

Net International Reserves ( MYR Billion )

415

427

-

417

-

Average Risk-Weighted Capital Adequacy Ratio ( % )

3.50

2.20

-

4.00

-

Average 3 Months of Non-performing Loans ( % )

14.80

14.70

-

-

-

Average Base Lending Rate ( % )

6.60

6.53

6.53

6.85

-

Business Loans Disbursed( % )

15.3

32.2

-

56.0

-

Foreign Investment ( MYR Million )

23,546.1

26,230.4

38,238.0

43,486.6

-

Consumer Loans ( % )

-

-

-

-

-

Registration of New Companies ( No. )

45,455

45,441

46,321

49,144

-

Registration of New Companies ( % )

3.0

(0.0)

1.9

6.1

-

Liquidation of Companies ( No. )

132,485

17,092

26,430

21,753

-

Liquidation of Companies ( % )

417.8

(87.1)

54.6

(17.7)

-

Registration of New Business ( No. )

284,598

324,761

329,895

332,723

-

Registration of New Business ( % )

5.0

14.0

2.0

1.0

-

Business Dissolved ( No. )

20,121

20,380

18,161

21,436

-

Business Dissolved ( % )

1.9

1.3

(10.9)

18.0

-

Sales of New Passenger Cars (' 000 Unit )

535.1

552.2

576.7

598.4

610.3

Cellular Phone Subscribers ( Million )

35.3

38.5

43.0

43.8

-

Tourist Arrival ( Million Persons )

24.7

25.0

25.7

28.0

-

Hotel Occupancy Rate ( % )

60.6

62.4

62.6

63.2

-

Credit Cards Spending ( % )

15.6

12.6

-

13.5

-

Bad Cheque Offenders (No.)

32,627

26,982

28,876

-

-

Individual Bankruptcy ( No.)

19,167

19,575

21,984

-

-

Individual Bankruptcy ( % )

5.8

2.1

12.3

-

-



INDUSTRIES ( % of Growth ):

2011

2012

2013

2014*

2015**

Agriculture

5.8

1.0

2.1

3.8

3.1

Palm Oil

10.8

(0.3)

2.6

6.7

-

Rubber

6.1

(7.9)

(10.1)

(10.4)

-

Forestry & Logging

(7.6)

(4.5)

(7.8)

(4.2)

-

Fishing

2.1

4.3

1.6

2.7

-

Other Agriculture

7.1

6.4

8.2

6.2

-

Industry Non-Performing Loans ( MYR Million )

634.1

-

-

-

-

% of Industry Non-Performing Loans

3.2

-

-

-

-

Mining

(5.4)

1.4

0.9

(0.8)

2.8

Oil & Gas

(1.7)

-

-

3.0

-

Other Mining

-

-

-

46.6

-

Industry Non-performing Loans ( MYR Million )

46.5

-

-

-

-

% of Industry Non-performing Loans

0.1

-

-

-

-

Manufacturing #

4.7

4.8

3.4

6.4

5.5

Exported-oriented Industries

4.1

6.5

3.3

5.6

-

Electrical & Electronics

(4.0)

12.7

6.9

13.3

-

Rubber Products

20.7

3.0

11.7

(0.3)

-

Wood Products

(5.1)

8.7

(2.7)

5.1

-

Textiles & Apparel

13.2

(7.1)

(2.6)

11.5

-

Domestic-oriented Industries

10.7

1.7

6.8

9.4

-

Food, Beverages & Tobacco

4.80

2.70

3.60

6.13

6.13

Chemical & Chemical Products

10.0

10.8

5.6

1.4

-

Plastic Products

3.8

-

-

2.7

-

Iron & Steel

2.2

(6.6)

5.0

0.1

-

Fabricated Metal Products

21.8

13.8

9.9

2.9

-

Non-metallic Mineral

12.1

2.9

(2.0)

5.4

-

Transport Equipment

12.0

3.4

13.8

22.9

-

Paper & Paper Products

9.5

3.1

1.8

4.7

-

Crude Oil Refineries

9.3

-

-

13.0

-

Industry Non-Performing Loans ( MYR Million )

6,537.2

-

-

-

-

% of Industry Non-Performing Loans

25.7

-

-

-

-

Construction

4.7

18.6

10.9

12.7

10.7

Industry Non-Performing Loans ( MYR Million )

3,856.9

-

-

-

-

% of Industry Non-Performing Loans

10.2

-

-

-

-

Services

7.1

6.4

5.9

5.9

5.6

Electric, Gas & Water

3.5

4.4

4.2

3.6

3.9

Transport, Storage & Communication

6.50

7.10

7.30

7.50

7.15

Wholesale, Retail, Hotel & Restaurant

5.2

4.7

5.9

6.9

6.5

Finance, Insurance & Real Estate

6.90

9.70

3.70

4.65

4.25

Government Services

12.4

9.4

8.3

6.1

5.6

Other Services

5.1

3.9

5.1

4.8

4.5

Industry Non-Performing Loans ( MYR Million )

6,825.2

-

-

-

-

% of Industry Non-Performing Loans

23.4

-

-

-

-

* Estimate / Preliminary

** Forecast

# Based On Manufacturing Production Index 



INDUSTRY ANALYSIS

 

MSIC CODE

28 : MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C

INDUSTRY :

MACHINERY

Malaysia is presently the leading manufacturer of automation machinery and equipment (M&E) in the ASEAN region with a total of 22 companies in production. The machinery and equipment industry has expanded and produce a diverse range of machinery which give importance to the overall industrial development of the country, due to its cross cutting linkages with all industrial sectors.

Growth of the domestic-oriented industries such as machinery and transportation equipment is expected to remain favourable in 2014, in line with resilient domestic consumption and robust private investment. However, the output of general-purpose machinery decreased 8.8% in the first seven moths of 2014 (January - July 2013: -1.8%) due to the decline in manufacture of air-conditioning machine (-17.9%) as well as lifting and handling equipment (-8.2%).

Besides, shipments of machinery, appliances and parts continued to expand rapidly by 12.5% in the first seven months of 2014 (January - July 2013: 1.4%) with stronger demand from Singapore, the US, China and Australia. Growth was mainly contributed by specialized machinery for specific industries (16.3%), particularly for civil engineering and manufacture of semiconductors as well as general industrial machinery and equipment (9.2%) such as heating and cooling equipment and parts as well as mechanical handling equipment and parts.

According to the World Bank's Doing Business 2014 Report, Malaysia improved to 15th from 25th position in the 2014 Foreign Direct Investment Confidence Index, with highlighted Malaysia's efforts in building its competitive position in electronics, automotive, and machinery manufacturing to move up the value chain into high technology and skill-intensive segments.

The Government has identified the M&E industry to be one of the key areas for growth and development. The growth will focus on the manufacture of high value-added and high technology M&E. For the further development of the M&E industry, six strategic thrusts have been set during the Third Industrial Master Plan (IMP3), 2006 - 2020 period:-

- Promoting Malaysia as a regional production, trading and distribution centre for M&E

- Rising the development and promotion of selected specialized and high technology M&E

- Strengthening the engineering support industries and support services

- Developing Malaysian Standards for machinery and equipment

- Developing sufficient highly skilled workforce

- Strengthening the institutional support for the further development of the industry

OVERALL INDUSTRY OUTLOOK : Average Growth

 

 

CREDIT RISK EVALUATION & RECOMMENDATION

 

 


Incorporated in 1973, the Subject is a Private Limited company, focusing on manufacturing of fire fighting equipments. The Subject has been in business for over two decades. It has built up a strong clientele base and satisfactory reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. A paid up capital of MYR 2,550,000 allows the Subject to expand its business more comfortably. With a strong backing from its holding company, the Subject enjoys timely financial assistance should the needs arise.

Over the years, the Subject has penetrated into both the local and overseas market. The Subject has positioned itself in the global market and is competing in the industry. Its stable clientele base will enable the Subject to further enhance its business in the near term. The Subject is a fairly large and rapidly growing company with over 200 staff in its operations The Subject has a good  management capability. Its capable management team has enabled the Subject to keep its business on going. Hence, the future prospect of the Subject is bright.

We noted that both the turnover and profits have increased compared to the previous year. The higher profit could be due to increase in turnover and better control over its operating costs. Based on the higher profitability, the Subject has generated a favourable return based on its existing shareholders' funds which indicated that the management was efficient in utilising its funds to generate income. The Subject is in good liquidity position with its current liabilities well covered by it current assets. Hence, it has sufficient working capital to meet its short term financial obligations. Being a zero geared company, the Subject virtually has no financial risk as it is mainly dependent on its internal funds to finance its business. Given a positive net worth standing at MYR 35,907,868, the Subject should be able to maintain its business in the near terms.

The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

The Subject's payment habit is average. With its adequate working capital, the Subject should be able to pay its short term debts.

The industry shows an upward trend and this trend is very likely to sustain in the near terms. Hence, the Subject is expected to benefit from the favourable outlook of the industry.

In view of the above favourable condition, we recommend credit be proceeded to the Subject with favourable term.

 



PROFIT AND LOSS ACCOUNT

 

 

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING STANDARDS(FRS)

 

Financial Year End

2014-09-30

2013-09-30

2012-09-30

2011-09-30

2010-09-30

Months

12

12

12

12

12

Consolidated Account

Company

Company

Company

Company

Company

Audited Account

YES

YES

YES

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

YES

YES

YES

Financial Type

FULL

FULL

FULL

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

73,485,250

65,623,341

65,309,032

59,505,838

50,898,680

Other Income

16,874,233

3,343,748

-

-

311,453

----------------

----------------

----------------

----------------

----------------

Total Turnover

90,359,483

68,967,089

65,309,032

59,505,838

51,210,133

Costs of Goods Sold

(53,150,864)

(47,564,779)

(50,846,296)

(46,383,756)

(36,786,972)

----------------

----------------

----------------

----------------

----------------

Gross Profit

37,208,619

21,402,310

14,462,736

13,122,082

14,423,161

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) FROM OPERATIONS

22,228,735

10,351,056

8,094,689

7,537,531

1,985,332

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) BEFORE TAXATION

22,228,735

10,351,056

8,094,689

7,537,531

1,985,332

Taxation

(2,395,095)

(2,045,473)

(1,550,191)

(2,277,018)

(264,758)

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) AFTER TAXATION

19,833,640

8,305,583

6,544,498

5,260,513

1,720,574

----------------

----------------

----------------

----------------

----------------

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

17,094,228

26,638,645

20,094,147

14,833,634

17,163,161

----------------

----------------

----------------

----------------

----------------

As restated

17,094,228

26,638,645

20,094,147

14,833,634

17,163,161

----------------

----------------

----------------

----------------

----------------

PROFIT AVAILABLE FOR APPROPRIATIONS

36,927,868

34,944,228

26,638,645

20,094,147

18,883,735

DIVIDENDS - Ordinary (paid & proposed)

(3,570,000)

(17,850,000)

-

-

(4,050,101)

----------------

----------------

----------------

----------------

----------------

RETAINED PROFIT/(LOSS) CARRIED FORWARD

33,357,868

17,094,228

26,638,645

20,094,147

14,833,634

=============

=============

=============

=============

=============

INTEREST EXPENSE (as per notes to P&L)

DEPRECIATION (as per notes to P&L)

37,592

645,433

689,699

705,687

814,240

AMORTIZATION

-

71,652

71,652

71,652

71,656

----------------

----------------

----------------

----------------

----------------

37,592

717,085

761,351

777,339

885,896

=============

=============

=============

=============

=============

 

 

 

BALANCE SHEET

 

 

 

ASSETS EMPLOYED:

FIXED ASSETS

702,313

8,895,343

9,155,893

9,478,555

10,008,980

LONG TERM INVESTMENTS/OTHER ASSETS

Subsidiary companies

5,354

5,354

-

-

-

Deferred assets

63,000

-

-

-

-

Others

-

3,864,273

3,935,925

4,007,577

4,079,229

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

68,354

3,869,627

3,935,925

4,007,577

4,079,229

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM ASSETS

770,667

12,764,970

13,091,818

13,486,132

14,088,209

Stocks

3,605,953

2,368,872

3,481,015

3,268,200

6,784,394

Trade debtors

6,046,725

7,678,215

7,751,290

6,902,308

6,889,912

Other debtors, deposits & prepayments

338,042

1,145,372

381,765

524,272

315,759

Short term deposits

3,243,992

12,077,320

19,318,198

10,314,048

7,522,399

Amount due from holding company

27,395,148

-

-

-

-

Amount due from subsidiary companies

10,263

-

-

-

426,967

Amount due from related companies

6,500

-

-

2,981,499

-

Cash & bank balances

4,894,732

8,194,756

3,799,689

2,066,145

5,085,981

Others

-

-

-

-

522,060

----------------

----------------

----------------

----------------

----------------

TOTAL CURRENT ASSETS

45,541,355

31,464,535

34,731,957

26,056,472

27,547,472

----------------

----------------

----------------

----------------

----------------

TOTAL ASSET

46,312,022

44,229,505

47,823,775

39,542,604

41,635,681

=============

=============

=============

=============

=============

CURRENT LIABILITIES

Trade creditors

5,867,570

3,610,183

4,386,706

3,200,057

3,019,450

Other creditors & accruals

923,125

583,794

2,146,305

2,807,939

3,216,030

Deposits from customers

2,076,925

1,667,796

-

-

-

Amounts owing to holding company

-

9,424,852

9,217,362

9,517,362

12,867,362

Amounts owing to subsidiary companies

-

5,354

-

-

-

Amounts owing to related companies

432,683

7,384,295

1,261,515

-

4,867,700

Amounts owing to director

-

-

-

-

60,000

Provision for taxation

1,103,851

1,033,003

747,242

497,099

-

----------------

----------------

----------------

----------------

----------------

TOTAL CURRENT LIABILITIES

10,404,154

23,709,277

17,759,130

16,022,457

24,030,542

----------------

----------------

----------------

----------------

----------------

NET CURRENT ASSETS/(LIABILITIES)

35,137,201

7,755,258

16,972,827

10,034,015

3,516,930

----------------

----------------

----------------

----------------

----------------

TOTAL NET ASSETS

35,907,868

20,520,228

30,064,645

23,520,147

17,605,139

=============

=============

=============

=============

=============

SHARE CAPITAL

Ordinary share capital

2,550,000

2,550,000

2,550,000

2,550,000

2,550,000

----------------

----------------

----------------

----------------

----------------

TOTAL SHARE CAPITAL

2,550,000

2,550,000

2,550,000

2,550,000

2,550,000

Retained profit/(loss) carried forward

33,357,868

17,094,228

26,638,645

20,094,147

14,833,634

----------------

----------------

----------------

----------------

----------------

TOTAL RESERVES

33,357,868

17,094,228

26,638,645

20,094,147

14,833,634

----------------

----------------

----------------

----------------

----------------

SHAREHOLDERS' FUNDS/EQUITY

35,907,868

19,644,228

29,188,645

22,644,147

17,383,634

Deferred taxation

-

876,000

876,000

876,000

221,505

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM LIABILITIES

-

876,000

876,000

876,000

221,505

----------------

----------------

----------------

----------------

----------------

35,907,868

20,520,228

30,064,645

23,520,147

17,605,139

=============

=============

=============

=============

=============

 

 

 

FINANCIAL RATIO

 

 

 

TYPES OF FUNDS

Cash

8,138,724

20,272,076

23,117,887

12,380,193

12,608,380

Net Liquid Funds

8,138,724

20,272,076

23,117,887

12,380,193

12,608,380

Net Liquid Assets

31,531,248

5,386,386

13,491,812

6,765,815

(3,267,464)

Net Current Assets/(Liabilities)

35,137,201

7,755,258

16,972,827

10,034,015

3,516,930

Net Tangible Assets

35,907,868

20,520,228

30,064,645

23,520,147

17,605,139

Net Monetary Assets

31,531,248

4,510,386

12,615,812

5,889,815

(3,488,969)

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

22,228,735

10,351,056

8,094,689

7,537,531

1,985,332

Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)

22,266,327

11,068,141

8,856,040

8,314,870

2,871,228

BALANCE SHEET ITEMS

Total Borrowings

0

0

0

0

0

Total Liabilities

10,404,154

24,585,277

18,635,130

16,898,457

24,252,047

Total Assets

46,312,022

44,229,505

47,823,775

39,542,604

41,635,681

Net Assets

35,907,868

20,520,228

30,064,645

23,520,147

17,605,139

Net Assets Backing

35,907,868

19,644,228

29,188,645

22,644,147

17,383,634

Shareholders' Funds

35,907,868

19,644,228

29,188,645

22,644,147

17,383,634

Total Share Capital

2,550,000

2,550,000

2,550,000

2,550,000

2,550,000

Total Reserves

33,357,868

17,094,228

26,638,645

20,094,147

14,833,634

LIQUIDITY (Times)

Cash Ratio

0.78

0.86

1.30

0.77

0.52

Liquid Ratio

4.03

1.23

1.76

1.42

0.86

Current Ratio

4.38

1.33

1.96

1.63

1.15

WORKING CAPITAL CONTROL (Days)

Stock Ratio

18

13

19

20

49

Debtors Ratio

30

43

43

42

49

Creditors Ratio

40

28

31

25

30

SOLVENCY RATIOS (Times)

Gearing Ratio

0

0

0

0

0

Liabilities Ratio

0.29

1.25

0.64

0.75

1.40

Times Interest Earned Ratio

0

0

0

0

0

Assets Backing Ratio

14.08

8.05

11.79

9.22

6.90

PERFORMANCE RATIO (%)

Operating Profit Margin

30.25

15.77

12.39

12.67

3.90

Net Profit Margin

26.99

12.66

10.02

8.84

3.38

Return On Net Assets

61.90

50.44

26.92

32.05

11.28

Return On Capital Employed

61.90

50.44

26.92

32.05

11.28

Return On Shareholders' Funds/Equity

55.23

42.28

22.42

23.23

9.90

Dividend Pay Out Ratio (Times)

0.18

2.15

0

0

2.35

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

0

0

0




 

FOREIGN EXCHANGE RATES

 

Currency

Unit

Indian Rupees

US Dollar

1

Rs.66.09

UK Pound

1

Rs.101.04

Euro

1

Rs.70.86

 

 

INFORMATION DETAILS

 

Analysis Done by :

KAS

 

 

Report Prepared by :

ANK

 


 

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%)

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

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