Académique Documents
Professionnel Documents
Culture Documents
Vol. XXIX/02
CAPITAL MARKET
ReadersReact
An important component of
the last season of buoyancy
was cheap money in search of
yields. With its likely absence,
the debatable question is if the
emerging markets will be able
to ride on the American
Lack of depth
The outlook for
emerging
markets such as
India seems
hazy if one
considers the
fact that India is
a shallow market and a few
billion dollars can move the
market either way (The markets:
Dazed and confused, Feb 17 Mar 02, 2014). Any significant
Questioning volatility
There are problems with beta as
a tool (Preparing for volatility:
Shaken and stirred, Feb 17 Mar 02, 2014). Beta is a plain
number that only reveals how
much volatile a stock is in
comparison with the market. It
does not give any indication
about the valuation of a stock.
Also, it provides no indication
about the direction of the market.
Further, the beta value of a
company could vary based on
the benchmark or based on the
duration taken into consideration
for calculating beta.
Ashwin Dalal, via e-mail
Inside
12 | In Focus
07 | Cover Story
Restructuring
Losing weight
Auto Ancillaries
Cash crunch
Benchmarks
Tale of two exchanges
Developed markets v emerging
markets
Problems v results
Momentum stocks
Stepping on the gas
28 | IPO Centre
Loha Ispaat
Working capital-intensive
69 | Market Watch
89 | Commodity Watch
71 | Economy
Black Pepper
Output down, prices flare up
72 | Off Focus
90 | Capitaline Corner
Japanese food
Whats cooking?
74 | Apna Money
29 | Stock Alert
Orchid Chemicals and
Pharmaceuticals
In the woods
68 | Stock Watch
National Building Construction
Corporation
On a strong foundation
Addition v alterations
Oneoff presence
Swinging fortunes
Are preference shares good posttax option?
What care should be taken while
using a portfolio manager?
32 | Corporate Scoreboard
61 | Consolidated Scoreboard
62 | Company Index
66 | Bulletin
67 | Watch List
IPO Ratings
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CoverStory
CoverStory
Stocks
Stocks
Sentiment boosters
The gloom surrounding small- and mid-cap stocks seems excessively pessimistic
as some of them have issued bonus shares on a consistent basis
The Indian economy had a dream run, with
its gross domestic product (GDP) growing
by over 9% in three consequent fiscal years
ending March 2006 (FY 2006), FY 2007 and
FY 2008. The growth witnessed a sudden
blip in FY 2009 owing to the global financial crisis triggered by the debacle in the US
mortgage market.
Subsequently, the domestic economy
recovered to report growth of 8.6% in FY
2010 and 8.9% in FY 2011. Though this
recovery looks laudable, economic
sentiments hardly improved during this
period and continue to remain weak till date.
Later, economic growth slowed to
6.7% in FY 2012 and further to a mere
4.5% in FY 2013, a decade-low for a once
high-flying economy. The current fiscal is
expected to be challenging as well with
the Central Statistics Office (CSO)
predicting growth of 4.9%. The future
looks hazy for the economy unless a stable
and decisive government takes over the
reins of power post general elections to
be held in May 2014.
The National Council of Applied
Economic Research expects economic
growth to accelerate to 5.6% in FY 2015.
Rating agency Crisil has predicted growth of
6% for FY 2015 with a few positive
Mar 17 30, 2014 CAPITAL MARKET
CoverStory
could become even grave. Forget about
growth, survival is their first priority in
times of economic slowdown. A couple of
difficult years could erode their net worth
and make them vulnerable.
No wonder, the S&P BSE Small-Cap
and the S&P BSE Mid-Cap index continue
to remain floored despite the fact that the
S&P BSE Sensex, which represents largecap stocks, is reporting all-time highs in
recent times. The Sensex reported a high of
22023.98 in March 2014. It continues to
remain at striking distance of its historic
peak. The Mid-Cap index is a good 3,700
points away from its all-time high of 10,113
reported in January 2008. Similar is the story
with the Small-Cap index, which is down
over 7,600 points from its all-time peak in
January 2008.
The Mid-Cap index is down 37% from
its historic high and the Small-Cap index
54%. Clearly, these two important segments,
the favorites of the small individual investors,
are severely bleeding on the trading floor.
In terms of valuation, it is the Mid-Cap
index that has taken the maximum hit. In
January 2008, when equities across the
board were bubbling with enthusiasm, the
Mid-Cap index was commanding a price
to book value (P/BV) ratio of six times.
This has now come down a mere 0.72
Stocks
Feel-good action
Bonus issues do not create any wealth but they send out positive vibes
In bonus issues, reserves become part
of the equity capital. It is also termed as
the reserves moving one line above.
Thus, this corporate action does not
have any impact on ratios such as return
on equity.
Bonus and stock-split is similar in
many ways. For instance, for bonus
issue in the ratio of 1:1 and stock-split
from face value of Rs 10 to Rs 5, the
stock price is adjusted and reduced by
half once the counter goes ex-bonus or
ex-split. The basic principle is the
market value of an enterprise remains
the same and is not going to change
overnight just because a firm has opted
for bonus or stock-split. The adjusted
price for ex-bonus stock can be
calculated as market capitalisation
divided by new outstanding shares.
A bonus issue turns a stock
affordable and, hence, attracts more
CoverStory
Capital Market has attempted to cherrypick quality small- and mid-cap stocks for
investors to explore. Out here, the simple
criterion of bonus issue was deployed. That
is, only those small- and mid-cap companies
to have issued bonus shares on two or more
occasions over the last two decades, that is,
since 1994, were selected as a first step.
Small and mid caps are defined as those with
market capitalization below Rs 10000 crore.
After arriving at such companies with
multiple bonus issues, their current financial
position was evaluated.
Multiple financial filters were deployed
to ensure that only companies with robust
financials emerged in the short-list. The
track record in terms of profitability and
dividend was screened. Additionally,
companies with strong balance sheet with
moderate quantum of debt were selected.
This way, there were 20 companies.
In a big move, Thomas Cook India
(TCI) acquired Sterling Holiday Resorts in
February 2014 and now is in the process of
merging Sterling with itself. Based on the
equity investments and merger ratios, the
aggregate value of the two companies is
approximately Rs 3000 crore. Incorporated
in 1986, the pioneer in vacation ownership
has a network of 19 resorts, with 1,512 rooms.
New resorts are planned at 15 additional sites.
Present in India since 1881, the leading
travel and travel-related financial services
company offers services such as foreign
exchange; corporate travel; meetings,
incentives, conferencing, exhibitions;
leisure travel; insurance; and visa and
passport services. Footprint extends to over
242 locations in 99 cities across India,
Mauritius and Sri Lanka. The network is
supported by 134 partners and 165 preferred
sales agents in over 150 cities. Owned by
Fairfax Financial Holdings, a Toronto-based
financial services holding company, with
presence in insurance and reinsurance with
portfolio of assets in excess of $30 billion,
Bonus shares were issued on six occasions
between FY 1987 and FY 2000. Bonus
shares form 65% of the equity capital.
Navneet Education is another company
with a strong history of bonus issues. Since
its public issue in 1994, shareholders have
been enriched with three bonus shares, the
latest being in FY 2009. The bonus component
is as high as 86% to the total equity capital.
Formerly known as Navneet
Publications, the publisher of educational,
children and general books and scholastic
Mar 17 30, 2014 CAPITAL MARKET
Stocks
CoverStory
Stocks
Past perfect
Profit-making and dividend-paying small- and mid-cap stocks with track record of bonus issues
COMPANY
NO OF
BONUS
ISSUES
CMP
(Rs)
MKT
CAP
(Rs cr)
52-WEEK
HIGH
LOW
(Rs)
(Rs)
Atul Auto
303.7
333.1
Bajaj Electricals
261.4
2608.3
267
149.9
201303
5.03
0.27
Berger Paints
208.2
7214.1
256.3
185.4
201303
25.06
0.56
Elgi Equipments
88
1393.9
95.6
73.6
201303
14.48
0.36
Engineers India
151.1
5091.2
197.4
121.2
201303
30.15
Grindwell Norton
248
1372.9
289.8
217
201303
19.77
0.04
201312
85.9
-16.2
Hercules Hoists
111.4
356.5
134.5
75
201303
19.16
0.02
201312
21.7
-32.5
Hi-Tech Gears
77.9
146.1
89.3
57.1
201303
12.38
0.5
201312
16.1
-27.3
636.1
6944.9
707
285
201303
9.88
201312
101.2
1043
5621.3
1300
975.3
201303
16.08
0.07
201312
Navneet Education
54.4
1295.8
64.9
50
201303
27.47
0.4
201312
NESCO
794.7
1119.7
861.9
560
201303
22.29
201312
PI Industries
276.1
3757.7
278.7
110.2
201303
22.81
0.54
201312
Poly Medicure
415.8
915.9
459.9
200.1
201303
22.6
0.46
201312
Praj Industries
43.4
769.3
50.7
30
201303
12.19
0.03
Thomas Cook
76
1882.5
92
47.6
201212
12.16
0.5
Unichem Laboratories
217.1
1966.5
225.5
138
201303
16.32
0.05
800.2
691.3
859
330
201303
21.68
0.04
Wendt India
1075
215
1350
922
201303
15.87
Zodiac Clothing
198
383.9
227.4
146.7
201303
5.92
0.23
315
139.9
YEAR
ENDED
ROE
(%)
DEBTEQUITY
RATIO
TTM
ENDED
201303
39.76
0.03
201312
TTM CHG IN
RPAT
TTM
(RS CR) RPAT(%)
BV
(Rs)
P/BV
P/E
DY
(%)
67.52
4.5
11.5
1.98
28.9
28.5
201312
-94
72.15
3.62
435.6
0.76
201312
237.9
8.5
27.49
7.57
30.3
0.86
201312
57.3
-6.2
27.37
3.22
24.3
1.2
201312
556.9
-12.7
68.12
2.22
3.97
92.59
2.68
15.1
2.62
49.96
2.23
16.5
1.57
72.51
1.07
9.1
3.21
-25.5
55.73
11.41
100.8
0.16
284.4
39.1
238.81
4.37
28.6
1.05
110.2
8.6
17.58
3.09
13.1
3.31
80.5
0.4
255.22
3.11
13.9
0.44
161.6
70.1
38.94
7.09
39.4
0.36
40.9
105.3
51.05
8.14
38.9
0.48
201312
50.6
-17.7
32.15
1.35
15.2
3.74
201312
62.2
23.4
27.78
2.74
30.3
0.42
201312
177.5
45.7
80.25
2.7
18.8
2.07
201312
73.1
52.5
282.09
2.84
9.5
1.13
201312
12.4
-12.7
432.1
2.49
17.4
1.4
201312
18.8
35.8
124.91
1.59
20.4
1.77
CMP: (current market price) is closing as on 5 March 2014. No of bonus issues: Bonus issued between 1994 and 2014. DY (%): Dividend yield. P/BV: Price to book value. TTM RPAT: Trailing 12 months reported
profit after tax. Change in TTM RPAT is over the corresponding previous period. ROE (%): Return on equity.
Source: Capitaline Databases
10
CoverStory
and commercial production. Here, too,
there are exclusive tie-ups with leading
global agro-chemical, pharmaceutical and
fine chemical companies.
Over the past 10 years, turnover
increased 5.1 times and profit 16.2 times.
The good run continues, with turnover
spurting 50% and profit 89% in the nine
months ended 31 December 2013 over a
year ago. Banking on robust cash flows, the
focus is on reducing debt. The aim is to
achieve compounded annual revenue growth
of over 25% for the next three years and an
even higher growth in operating profit.
Unichem Laboratories issued bonus
shares in the ratio of 1:1 in FY 2000 and
FY 2004. Prior to this, bonus shares had
been issued on three occasions between FY
1980 and FY 1994. The range of
pharmaceutical formulations manufactured
and marketed include branded generics as
well as generics in India and several other
overseas markets.
A little over one-third of the revenue
comes from the overseas market. Around
90% of the revenue comes from
formulations and remaining 10% from active
of one of pharmaceutical ingredients (APIs).
Leading brands of one of the main players
in the therapy areas of cardiology, neurology,
orthopedics and anti-infectives in the
domestic market include Losar in the antihypertensive segment and Ampoxin, Telsar,
Unienzyme, Trika, Olsar, Serta, Metride,
Zyncet, and Lezyncet.
With negligible debt on the balance
sheet, the debt-to-equity ratio is 0.05. In a
windfall, in October 2013, the new
formulations manufacturing unit located in
the Indore special economic zone in Madhya
Pradesh was sold on a slump-sale basis to
Mylan Laboratories for Rs 160.5 crore. The
proceeds will be deployed to fund expansion
of the Goa facility. Opportunities are also
being explored to acquire API facilities.
Elgi Equipments issued bonus shares in
the ratio of 1:1 in FY 2000 and FY 2010. The
leading air compressor manufacturer offers a
range of compressed air solutions from oillubricated and oil-free rotary screw
compressors, oil-lubricated and oil-free
reciprocating compressors, and centrifugal
compressors to dryers, filters and downstream
accessories. The portfolio of over 400 products
have applications across several industries.
The compressor business contributed 83% to
sales while the automotive equipment
accounted for 13% in FY 2013.
Mar 17 30, 2014 CAPITAL MARKET
Stocks
least-leveraged balance sheet in the sector.
Capital expenditure of around Rs 12 crore
was incurred in FY 2013 as against Rs 18.5
crore in the previous year.
Conclusion
Bonus is an often-repeated demand of minority shareholders at annual general meetings even if the company has a good record
of profit, dividend and bonus issue. Some
companies have declared bonus issues within
a short span of time, while many have not
done so for a very long period. The next bonus announcement from those which have issued bonus shares recently could take sometime. It is impossible to predict when a company will announce a bonus issue.
Bonus shares issued in the past may not
have a bearing on future. Many companies
issuing bonus shares in the past have
reported disappointing numbers in recent
times. Economic slowdown is one of the
major reasons. Of the 20 shortlisted
companies, nine have reported decline in
profit in the trailing 12 months ended 31
December 2013. Bajaj Electricals, Hercules
Hoists, Hi-Tech Gears, and Info Edge
(India) have reported fall in profit in excess
of 25%. This also means these companies
could take time to bounce back and deliver.
As these companies have issued bonus
shares on two or more occasions in two
decades, they have a philosophy of creating
shareholder wealth. Further, these are profitmaking and dividend-paying companies.
Most have debt-to-equity ratio below 0.60
times and, indeed, half of them have
insignificant or even zero debt on their
balance sheets.
Investors should focus on the ability of
companies to keep dividend payouts at a
healthy level on expanded capital post
bonus issues. Reduction in dividends after
bonus is not good news for long-term
investors. The overriding factor is to focus
on a companys financial performance,
corporate governance, size of opportunities
and outlook for the industry before taking
the plunge.
These stocks are certainly not for shortterm trading. Investment in these companies
can be contemplated with medium- to longterm horizon. Only surplus funds not needed
over the next few years can be invested in
these stocks. Nonetheless, these companies
hold promise and can be monitored at
regular intervals.
S Khedekar
11
InFocus
InFocus
Restructuring
Losing weight
Many firms are undertaking cost-cutting or de-leveraging their
balance sheets to better prepare for economic reality
The Indian economy continues to struggle.
It reported a growth of 4.7% in the third
quarter ended 31 December 2013. This is
the seventh straight quarter when the
economy recorded sub-5% economic expansion. It is expected to clock a growth of
4.9% in the current fiscal ending 31 March
2014 (FY 2014).
Now even the estimate of 4.9% released
by the Central Statistics Office (CSO) a few
weeks ago for the current fiscal looks optimistic. The Indian economy expanded a mere
4.5% in FY 2013 a decade-low growth
rate. This is really a sorry state of affairs for
a country dreaming about double-digit
growth not too long ago.
There are several companies that have
been caught offguard by the economic slowdown, with no sign of revival. Indeed, the
economic situation is so grim that a few
companies are struggling to survive the
present crisis.
No wonder, many firms are in a restructuring mode. This exercise could be tagged
as consolidation or integration of businesses,
organisational revamp and so on. But, in
essence, the idea is to restructure the group
to better prepare for economic reality.
Cost-cutting is one of the focus areas
for companies to improve profitability.
Several companies are de-leveraging their
12
InFocus
in the telecommunications infrastructure industry. Sintex has an equity investment of
Rs 111 crore in and outstanding advance of
Rs 67.8 crore to Zep. The company has
already received a few offers and negotiations are on. Sintex does not envisage any
loss at this stage. The leading manufacturer
of plastic water tank will be making any
adjustment that may be necessary to the
carrying value of investment upon
finalisation of the terms.
Alstom India is another case. The board
of directors in January 2014 approved the
sale and transfer of its transportation system undertaking to group company Alstom
Transport India as a going concern on a
slump-sale basis. The sale will fetch a total
consideration not less than Rs 176.9 crore
in cash as enterprise value. This transfer is
subject to adjustment for change in the net
asset value excluding cash and debt and other
terms and conditions.
The transport segment was considered
as discontinuing operations by Alstom India in the quarter ended 31 December 2013.
The division reported revenue of Rs 209.3
crore and profit before tax of Rs 14.7 crore
in the nine months ended 31 December 2013.
In November 2013, Mahindra Holidays
& Resorts India divested its entire
shareholding in subsidiaries BAH
Hotelanlagen AG, Austria, and MHR Hotel
Management GmbH, Austria. Thus, these
two firms have ceased to be subsidiaries of
Mahindra Holidays. Further, Mahindra Holidays is in the process of amalgamating wholly
owned subsidiary Bell Towers Resorts Pvt
Ltd with itself. The board of directors approved the amalgamation in September 2013
and the company is in the process of obtaining other necessary approvals.
Delhi-based HT Media, the publisher
of Hindustan Times, is focusing on improving profitability and reshaping the balance
sheet. HT Digital Media Holdings (HT Digital) in the December 2013 quarter filed a
petition with the High Court (HC) of Delhi
under Section 100 to 105 of the Companies
Act, 1956, for reduction in its equity capital
by Rs 159.4 crore. HT Digital is a subsidiary of HT Media. After the HCs nod, the
equity share capital of HT Digital will be
reduced from Rs 176.6 crore to Rs 17.2 crore.
Accordingly, parent company HT Media
will pave its equity investment in HT Digital by writing off the investment by Rs 159.4
crore. The company has already recorded
diminution in the value of investment in FY
Mar 17 - 30, 2014 CAPITAL MARKET
Turning lighter
DLF bought down consolidated debt of
Rs 24801 crore on 31 March 2013 to Rs
23502 crore on 31 December 2013. Net debt
stood at Rs 17400 crore mid February 2014
Relative performance of
DLF v BSE Sensex
13
InFocus
the assets and liabilities along with relevant
long-term loans.
In October 2013, DLFs subsidiary
DLF Home Developers transferred DLF
Homes business comprising 33-MW capacity wind turbines situated in Rajasthan
to Violet Green Power Pvt Ltd by way of
slump-sale for Rs 67.4 crore.
In 2014, DLF entered into a final settlement with the Delhi Development Authority
(DDA) for the Dwarka Convention Centre
project. As per the settlement agreement, the
company received a refund of Rs 675.8 crore
from the DDA as full and final settlement after
forfeiture of 25% of the earnest money. The
company returned a 35-acre plot of land it
acquired in Dwarka in 2007 to build a convention centre. It recorded foreseeable loss of Rs
411.4 crore in the December 2013 quarter.
In October 2013, DLFs two subsidiaries, DLF Home Developers along with DLF
Projects, offloaded their entire 60%
shareholding in subsidiary DLF Star Alubuild
Pvt Ltd at an enterprise value of Rs 79.8
crore. Also, DLF sold its entire 74% equity
stake in its life insurance joint venture, DLF
Pramerica Life Insurance Company, to
Dewan Housing Finance Corporation.
Another company for whom trimming
high debt is the among the top priorities is
Larsen & Toubro (L&T). Debt stood at
Rs 65947.7 crore end FY 2013, with the
debt-to-equity ratio of 1.74. It has transferred its hydrocarbon business along with
assets and liabilities to wholly owned subsidiary L&T Hydrocarbon Engineering
(LTHE). After necessary formalities like approvals of shareholders and creditors, the
Mumbai HC okayed the transfer in December 2013. The certified copy of the HC order was filed with the Registrar of Companies in January 2014. The effect to the
scheme was given from 1 April 2013. L&T
seems to have larger plan for LTHE. Once
this business scales up, the company could
go ahead and list LTHE.
Further, L&T transferred at book value
to its wholly owned subsidiaries the business of manufacturing and marketing of industrial valves from 1 July 2013 and cutting
tools business from 15 July 2013. These
two businesses were as part of the machinery and industrial products segment
In December 2012, Ranbaxy Laboratories approved the proposal to integrate
the business operations and management of
subsidiary Ranbaxy Unichem Co (Unichem)
with Daiichi Sankyo (Thailand), a subsid-
14
Turning red
TVS Electronics incurred loss of Rs 23
lakh in the quarter ended 31 December
2013 arising out of restructuring of two
manufacturing plants into one
Relative performance of
TVS Electronics v BSE Sensex
InFocus
gamation of Homefield International Pvt
Ltd with itself. Homefield is a wholly
owned subsidiary of Tata Chemicals, with
registered office in Mauritius. No equity
shares were issued in this transaction and,
thus, no rights of the existing shareholders diluted. The appointment date of the
scheme was 1 April 2013. The manufacturer of inorganic chemicals and fertilisers
has filed a petition under Sections 391 to
394 of the Companies Act, 1956 with the
HC of Mumbai.
Shriram EPC obtained the shareholders approval through postal ballot in August 2008 for transfer of the 250-MW
wind-turbine business to its erstwhile joint
venture, Leitwind Shriram Manufacturing,
from 1 April 2008. The transfer is in process as Leitwind is still to obtain the necessary statutory approvals. Consequently,
the company has not recognized the gain
or loss on this particular transaction in the
books of accounts.
The board of directors DB Realty in
February 2014 approved the scheme of arrangement for amalgamation of subsidiary
Gokuldham Real Estate Development Company Pvt Ltd from 1 April 2013 and subsidiary Real Gem Buildtech Pvt Ltd from 1
April 2014. These amalgamations are subject to necessary approvals. DB Realty is a
Mumbai-based real estate developer.
Lumax Auto Technologies received
two approvals from the HC of Delhi in January 2014 for scheme of arrangements. First,
the court approved the scheme of arrangement of Lumax DK Auto Industries, a wholly
owned subsidiary, to de-merge its gear shifter
division including the research and development facilities to Lumax Mannoh Allied Technologies Pvt Ltd. Lumax Mannoh Allied is
also a subsidiary of the company. The demerger is effective from the appointed date
of 1 October 2013.
Second, the HC sanctioned the merger
of Lumax DK Electric Engineering India Pvt
Ltd with its holding company, Lumax DK
Auto Industries, a wholly owned subsidiary of Lumax. This merger is effective from
the appointed date of 1 April 2013. Lumax
makes automobile components like frame
assemblies, gear shifters, parking brakes, and
petrol tanks.
NCCs wholly owned subsidiary NCC
Infrastructure Holdings and Gayatri Energy
Ventures Pvt Ltd jointly own NCC Power
Projects (NCC Power), which is implementing a 1,320-MW thermal power project near
Mar 17 - 30, 2014 CAPITAL MARKET
Reorganising
The functional solutions segment of
BASF India is now functional material
and solutions and includes parts of
engineering plastics and polyurethanes
Relative performance of
BASF v BSE Sensex
InFocus
Auto Ancillaries
Cash crunch
May companies have used short-term funds for long-term
purposes and not provided for decline in the value of investment
The domestic automobile industry is facing
headwinds. So do their suppliers: the auto
component manufacturers. Sales of passenger vehicles declined 5.7% and commercial
vehicles 18.4% between April and December 2013 over a year ago.
Several auto component manufacturers, particularly small caps, are available
at substantial discount to their book values (BVs). The difficult time faced by the
auto industry islso evident from the statutory auditors reports of many companies
for the latest financial year ending March
2013 (FY 2013).
One of the key challenges that emerge
from the auditors report is the cash crunch
faced by the auto industry, particularly the
mid- and small-sized companies by turnover. Several firms have lagged in depositing
statutory dues like provident fund, income
tax, and sales tax. This slight delay is something that could be unusual and may need
close scrutiny. Further, companies can be
seen utilising funds raised on short-term basis
for long-term purposes such as investment
in fixed assets.
In a few cases, companies have declined
to acknowledge the decline in the carrying
value of investment. Out here, the balance
sheet remains inflated. Also, a few instances
16
InFocus
ther, trade payables are under reconciliation
process. Necessary adjustments, if needed,
will be accounted when the reconciliation is
complete. For trade receivables and other
debt and credit balances, balance confirmations have not been obtained and, thus, subject to reconciliation.
Rico Auto Industries reported delay
in repayment of an installment of Rs 92
lakh to a financial institution for 37 days
by 31 March 2013. This installment was
paid on 12 April 2013. Also, there was
slight delay in depositing undisputed statutory dues in FY 2013.
As per the auditors, Rico Auto has used
funds raised on short-term basis for longterm investment. It had raised funds amounting to Rs 33.2 crore from short-term borrowings in FY 2013. These would fall due
for repayment within one year from the date
of their receipt. These funds have been invested for acquiring long-term investments
and fixed assets.
The auditors of Autoline Industries
have drawn attention to non-provision
for diminishing in the value of investment in wholly owned subsidiary Koderat
Investments (Cyprus). In turn, Koderat
utilised the funds for investment in SZ
Design SRL and Zagato SRL Milan Italy.
Koderat reported losses in the last two
financial years.
Autoline has deposited Maharashtra Vat
of Rs 78.8 lakh and Central sales tax of Rs
55877 with a delay of more than six months.
Further, the funds raised on short-term basis were used for long-term purposes.
The auditors have not audited the financial statements of three subsidiaries of
Autoline. The financials statements have
been provided by the company. These subsidiaries include Autoline Industries USA
(total assets Rs 61.8 crore), Koderat Investments (total assets Rs 33.8 crore), and
Autoline Stampings, South Korea (total assets Rs 11.4 crore).
The auditors of Alicon Castalloy had
put two issues as emphasis of matter without qualifying the books of accounts. First,
it has no dues payable to suppliers covered
under the Micro, Small and Medium Enterprises Development Act, 2006. The auditors have relied on management confirmations. Second, the company maintained that
all trade receivables were good and realisable
in the ordinary course of business and, thus,
no provision was called for doubtful debts.
In the absence customer confirmations at
Mar 17 30, 2014 CAPITAL MARKET
Black hole
Financial statements of certain subsidiaries of Ucal Fuel Systems have not been
audited and the books of accounts were considered on the management's certification
Debt blow
Ucal is a profit-making and dividendpaying company for the last three years
but is reeling under high debt with debtto-equity ratio over six
Relative performance of Ucal Fuel Systems
v BSE Sensex
* 07 March 2014
17
InFocus
large, the auditors have relied on
managements confirmation.
The auditors of JBM Auto have noticed
several delays in repayment of term-loan
installment and interest to bank in FY 2013.
Delay of 91 days in the payment of second
installment and 20 days in the payment of
third quarterly installment of Rs 1.05 crore
each was noticed. Further, delay of interest
payment on term-loans ranged from 20 days
to 91 days, with the amount involved ranging from Rs 10 lakh to Rs 21.6 lakh. These
were duly paid in FY 2013.
Funds of Rs 6 crore raised on shortterm basis by JBM were temporarily employed for a project. There was replenished in FY 2013. In their report for consolidated financial statements, the auditors have drawn attention to the fact that
the accounting policies followed by the
subsidiaries and joint ventures were different from the accounting policies of JBM
on inventory accounting.
Further, the audit report on consolidated
accounts mentioned that the financial statements of two joint ventrues JBM MA
Automotive Pvt Ltd and Indo Toolings Pvt
Ltd were unaudited. The total assets of
these two subsidiaries were Rs 301.4 crore
and total revenue Rs 328.2 crore in FY 2013.
The auditors Harita Seating Systems
reported defalcation of Rs 6 lakh by alter-
Clutch Auto provided depreciation of Rs 5.9 crore instead of Rs 17.99 crore in FY 2013
ation of vouchers. The amount was written off as recovery was not possible. The
company has since then taken adequate
measures to prevent recurrence of such instances in future. Further, there have been
marginal delays in depositing service tax.
Automotive Stampings & Assemblies
used funds raised on short-term basis for longterm investment. It obtained short-term borrowings and trade payables of Rs 35.5 crore
on a short-term basis. These funds have been
used for fixed assets and other long-term assets. There was a slight delay in a few cases
in payment of statutory dues in FY 2013.
Challenging times
Several auto component stocks, particularly small caps, are available at substantial discount to their book values
Alicon Castalloy
Autoline Industries
Autolite (India)
Automotive Stampings
Bharat Gears
Clutch Auto
Harita Seating Systems
Hella India Lighting
Jamna Auto Industries
Jay Ushin
JBM Auto
Phoenix Lamps
Rico Auto Industries
Setco Automotive
Ucal Fuel Systems
CMP
MKT CAP
52-WEEK
(Rs )
(Rs cr)
HIGH
(Rs)
76.3
64.6
17.4
28.8
42.5
13.0
76.9
120.5
52.6
66.1
72.1
109.8
10.5
70.5
42.5
83.9
79.4
16.4
45.6
33.2
24.3
59.7
38.2
207.9
25.5
73.5
307.7
142.2
188.1
94.0
85.0
133.7
22.0
42.8
53.9
24.0
98.0
152.6
89.8
86.9
72.1
134.0
14.1
120.0
64.0
YEAR
TOTAL
DEBT-
BOOK
P/E
DIVIDEND
P/BV
LOW
(Rs)
Ended
DEBT
(Rs cr)
RATIO
(Rs cr)
VALUE
Rs)
RATIO
YIELD
(%)
PAT
(Rs cr)
42.0
46.1
10.1
22.5
23.3
12.1
62.6
104.0
50.1
48.6
39.0
26.9
4.2
62.0
34.3
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
105.14
246.09
14.77
52.80
72.95
226.27
53.88
0.00
166.19
81.89
374.71
165.51
499.09
180.83
378.16
1.29
0.85
0.42
0.55
0.96
1.59
0.64
0.00
1.06
2.46
2.02
1.35
1.43
1.20
6.22
83.2
226.0
33.6
46.7
91.7
65.3
85.8
44.5
43.3
95.8
165.4
33.3
25.4
56.9
26.7
5.0
0.0
32.7
0.0
10.3
0.0
5.3
0.0
78.2
2.6
1.9
0.0
13.8
7.6
17.2
2.62
1.54
0.00
0.00
4.25
0.00
3.25
0.00
3.81
3.03
4.54
0.00
1.43
3.80
2.35
0.92
0.29
0.52
0.62
0.46
0.20
0.90
2.71
1.22
0.69
0.44
3.29
0.41
1.24
1.59
CMP (current market price) is closing as on 19 February 2014. Select stocks discussed in the article are given in this table.
Source: Capitaline Databases
18
InFocus
mary suit against the agencies for indemnification of the loss caused.
In FY 2013, Hella India Lighting
implemented a new integrated system. During data migration, the company observed
discrepancies in inventory records uploaded in the new system and conducted
complete physical verification at all its units
except for stock lying with third parties.
Based on the physical verification, the closing inventory was updated in the books. It
has not performed reconciliation between
inventory initially uploaded in the new
system and inventory considered as per
physical verification.
Further, Hella noticed discrepancies in
the valuation of the inventory of finished
goods and work in process. It is in the process of reconciling these differences. The
auditors were unable to comment on the
financial impact on finished goods and
work in process on 31 March 2013. The
auditors have expressed qualified opinion
on this matter.
The auditors of Hella noticed multiple
significant delays in depositing provident
funds, employees state insurance and sales
tax. The company incurred cash losses in
FY 2013 and FY 2012.
In FY 2013, Rs 22.8 crore of the funds
raised by Bharat Seats on short-term basis
were used for long-term investment. Similarly, Triton Valves used Rs 77.4 lakh raised
on short-term basis for long-term investment
including acquisition of fixed assets and repayment of long-term loan.
The remuneration paid by Bharat
Gears to the joint managing director for FY
2013 included provision of Rs 50.8 lakh
made on the basis of shareholders' approval
in excess of the limit specified under Section
198 read with Section 309, and Schedule XIII
to the Companies Act, 1956. The excess remuneration is subject to the approval of the
Central government. The company is in the
process of seeking it.
Clutch Auto provided depreciation of
Rs 5.9 crore instead of Rs 17.99 crore, as
calculated according to the Schedule XIV of
the Companies Act, 1956. Had the company
provided depreciation of Rs 17.99 crore, the
loss would have increased to Rs 46.3 crore
instead of Rs 34.2 crore reported in FY 2013.
The auditors of Clutch were appointed
for FY 2013 after conclusion of the 41th
annual general meeting in FY 2012. Due to
labour problem and other shifting-related
issues, the auditors have not been able to
Mar 17 30, 2014 CAPITAL MARKET
The auditors of Autolite (India) have expressed qualified opinion on multiple counts
So do Indian leaders SEBI, Motilal Oswal Financial Services, J M Financial, IDBI, Angel,
HDFC Securities, India Infoline, Geojit BNP Paribas, DBS Cholamandalam and many more
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InFocus
Benchmarks
Divergence
The CNX NSE Nifty, available at P/E of 18.38, is at par with the S&P BSE Sensexs P/E
of 18.1. However, there is considerable drift between the valuations of the mid-cap indices
Index level
52-week high
52-week low
All-time high
All-time low
P/E
P/BV
DY (%)
No of companies
Market cap (minimum)
Market cap (maximum)
SENSEX
NIFTY
BSE
MID-CAP
CNX
BSE
CNX
MID-CAP SMALL-CAP SMALL-CAP
21,919.8
21,960.9
17,448.7
21,960.9
947.1
18.10
2.68
1.36
30
18,628.8
438,974.1
6,526.7
6,537.8
5,118.9
6,537.8
284.0
18.38
3.09
1.43
50
9,675.1
438,895.7
6,693.4
6,802.6
5,118.7
10,245.8
2,547.9
8.14
0.77
1.70
216
594.0
15,503.0
8,126.2
8,242.7
6,330.8
9,853.5
2,930.8
14.65
1.71
1.68
99
576.8
52,098.0
6,612.5
6,716.8
5,085.6
14,239.2
2,864.2
70.81
1.11
1.52
437
65.2
3,119.5
3,427.2
3,506.1
2,509.0
3,925.4
2,509.0
45.54
0.97
1.75
101
237.3
10,726.6
Index level is closing as on 7 March 2014. P/E: Price to earning. P/BV: Price to book value. DY: Dividend yield.
Market cap (minimum) and market cap (maximum) are in Rs crore. This represents the minimum and maximum market cap of respective index
constituents. In case of the S&P BSE Sensex, the market cap (minimum) refers to Tata Power and the market cap (maximum) refers to TCS.
Source: BSE, Capitaline
InFocus
Controlling information
Data about index constituents like weight are not available on both the NSE
and the BSE web sites
To remain competitive, the BSE
There is increasing trend of stock
exchanges selling data, whether it is the
and the NSE have launched a slew of
indices like broader and industryNational Stock Exchange (NSE) or the
specific indices. Among them, indusBombay Stock Exchange (BSE). On one
try-specific indices actually make a
hand, capital market regulator Securities
mockery of the very concept of index.
and Exchange Board of India is nudging
companies to disclose more information,
In case of the real estate or consumer
durables index, a couple of companies
while, on the other hand, the BSE and
can swing their fortunes. The domestic
the NSE are progressively curtailing data
market lacks depth. However, in
available on their websites. The stock
addition, lack of data on the indices
exchanges view this as an opportunity
makes life difficult for investors.
to garner additional revenue.
In the country, where equity culture
is non-existent, stock exchanges should
encourage investment in equities. In this
endeavor, easy availability of information is a key. Ironically, the BSE and the
NSE are going exactly the opposite way.
For instance, historical data on
various indices are available for a
maximum of five years on the BSE
website. Data about index constituents
like weight are not available on both the
NSE and the BSE web sites.
Where is the visibility?
In case of the BSE, mid caps are available at 23% discount to their BVs or net
worth. On the contrary, on the NSE, mid
caps are quoting at a premium of 71%.
Similar, is the case with the small-cap
counters. The BSE Small-Cap index is
commanding a premium of 11% to its BV,
while the NSE Small-Cap index is available at a discount of 3%.
Again the question is whether mid-caps
hold greater value compared with the largecap stocks. As per the BSE, mid-caps are
available at discount to their BVs, while the
NSE data reveal exactly the opposite. Which
is correct? Data thrown by these two stock
exchanges is confusing. The answer is hidden in the index constituents or the index
composition (see table: Divergence).
In the BSE Mid-Cap index, the most
valuable company is Aurobindo Pharma,
with market cap of Rs 15502 crore, while
in the NSE Mid-Cap, Hindustan Zinc is
the most valuable stock, with market value
of Rs 52097 crore, followed by Bharti
Infratel (Rs 39025 crore) and Adani Ports
(Rs 37084 crore). The question in case of
the NSE Mid-cap index is whether it is
fair to classify these companies as midMar 17 - 30, 2014 CAPITAL MARKET
23
InFocus
Problems v results
The valuation of Indian stocks is cheaper compared with those
in developed economies despite both facing balancesheet woes
Emerging markets (EMs) are struggling. This
trend is across asset classes of equity, debt
and currency. The Bank of America Merrill
Lynch (BofA-ML) Fund Manager Survey for
February 2014 provides some interesting insights and broader future trends. Growing
fears of a hard landing for Chinas economy
have further marginalized EM equities, says
the survey. However, sentiment toward developed world equities remains positive.
As per the survey, optimism towards
Europe and the US remains strong, while
allocations to global EMs have reached a
record low, with a 29% of asset allocators
are underweight on the region. A record 40%
of the global investor panel says that the
eurozone is the region they most would like
to overweight in the coming 12 months. US
equities are becoming more popular, with
11% of asset allocators overweight on the
US compared with 5% a month ago.
These are certainly not positive indicators for investors in EMs. However, valuations favour EMs. Also, this seems to be a
short to medium term trend if one looks at
the hardcore numbers. Moreover, there are
contradictions that are amply visible.
The war of words between developed
economies and EMs makes interesting read.
The Reserve Bank of India (RBI) governor,
Raghuram Rajan, has been quoted as saying
24
InFocus
Growth story at a discount
The S&P BSE Sensex crossed its all-time high in March 2014, commanding P/E of 18.1
compared with 28 when the Sensex had hit a historic high during the bull-run in January 2008
INDEX
COUNTRY
INDEX
52-WK
LOW
HIGH
ONE YEAR
CHANGE
P/E
CAC 40
France
4,366.42
3,575.00
4,431.00
13.82%
24.9
Sensex
India
21,919.79
17,449.00
22,024.00
12.91%
18.1
US
16,452.72
14,373.00
16,588.00
14.80%
15.8
US
4,336.22
3,155.00
4,372.00
33.40%
24.7
FTSE 100
Euronext 100
DAX
Swiss Market Index
S&P 500
Bovespa Stock Index
TSX 60
Santiago Index IPSA
IPC
ASX All Ordinaries
UK
6,712.67
6,023.00
6,876.00
4.09%
30.9
Europe
822.35
675
833
14.90%
25.3
21.9
Germany
9,350.75
7,418.00
9,794.00
17.80%
Switzerland
8,378.58
7,247.00
8,544.00
8.50%
22.4
US
1,878.04
1,536.00
1,884.00
21.00%
19.7
Brazil
46,244.07
44,107.00
59,031.00
-21.42%
7.0
Canada
818.55
678
821
11.10%
16.2
Chile
3,119.05
2,842.00
3,911.00
-31.10%
*15.3
Mexico
38,913.04
37,034.00
44,467.00
-12.80%
*22.64
Australia
5,477.01
4,611.00
5,477.00
6.21%
17.4
China
2,057.91
1,850.00
2,352.00
-11.46%
*10.22
Hang Seng
Hong Kong
22,660.49
19,426.00
24,112.00
-1.48%
1.6
Nikkei 225
Japan
15,274.07
11,806.00
16,320.00
22.01%
*42.48
TSEC 50 Index
Taiwan
8,713.96
7,663.00
8,719.00
8.60%
*24.03
RTS
Russia
1,164.63
1,087.46
1,556.58
-24.36%
*4.67
South Africa
47,786.77
37,717.78
48,002.23
23.40%
*19.75
Kospi
South Korea
1,974.68
1,771.00
2,063.00
-2.57%
*25.98
*P/E based on end January 2014 closing. Index (current) represents index closing as on 7 March 2014.
Source: CNN Money, FT, Sebi
25
InFocus
Momentum stocks
Buzzing
L&T bagged Rs 1000-crore hydrocarbon
services orders in January 2014 and Rs 5220crore construction orders and Rs 1550-crore
Oman road project order in February 2014
140
120
BSE Sensex
100
80
60
Jan
2014
10
Mar
2014
InFocus
Momentum stocks
33 companies outperforming the S&P BSE Sensex 18 times or more out of the latest 30 trading sessions
COMPANY
25
24
24
22
20
20
20
20
20
19
19
19
19
19
19
19
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
49.3
54.1
18.1
34.8
19.5
43.8
4.7
11.1
4.6
12.7
20.1
12.6
17.3
14.8
63.2
11.4
14.5
14.6
10
11.2
12.5
16.7
41.7
37
13.4
12.4
6.7
71.1
21.8
4
33.2
26.9
MKT CAP
(Rs cr)
1877.5
2876.2
863.2
1872.5
36474.3
2231.9
4874.4
104118.7
256878.3
1945.9
37769.2
3865.8
1896.3
15642.8
3610.8
51947.9
9232.9
27954.3
15605.4
3652.2
9817.5
2982.3
3221.3
1045.9
4494
21846.7
1385.6
2043.3
2686.4
44378.8
1802.6
1363.3
52-WEEK
HIGH
LOW
(Rs)
(Rs)
769
535.1
71.9
134.5
178.6
103.6
282.5
1152.4
353
166.8
214
1370.1
402
612
1170
2066.3
402.2
428.5
825
65.8
143.3
1802
325
496
1158.1
209.5
129
668.6
505
1930
688
279.5
P/E
DY
(%)
99.6 1502.1
12.3 361.15
14.9
542.3
66
6.43
118
19
58.7
5.93
188
29.29
678.1
22.57
234.4
10.61
60
12.58
126.1
28.34
599
16.15
198.1
21.56
458
23.49
183 1097.46
1405
20.72
185.6
43.02
256
14.05
636.7
16.77
43.3
67.55
99.1
17.87
1100
24.48
81
38.46
200
20.44
477
19.21
97.4
4.93
52
0
156.1
34.9
347.6
15.45
895.3
16.79
380.7
17.62
74
17.04
0.04
0
0.1
0.96
0.55
0.62
0.92
1.09
3.16
0.97
2.65
1.93
0.25
0.41
0
0.48
0.86
2.95
1.46
1.52
1.39
0.28
0.57
0.91
0.8
4.23
0.65
0.76
3.28
0.14
1.03
0.91
P/BV
TTM CHG IN
RPAT TTM PAT
(Rs cr)
(%)
69.44
1.3
51.54
8
47.05
1.6
1.35
355.2
4.1 1920.2
0.36
429
8.62
166.4
3.08 4649.3
1.68 20594.5
1.1
154.6
2.06 1332.8
6.51
239.4
3.52
87.9
5.48
666
105.17
3.3
3.41 2032.7
4.09
331
1.67 4789.8
2.51
964.6
1.54
85.6
3.23
501.4
3.02
121.8
18.14
83.8
7.49
51.2
3.89
234
0.9 5300.5
1.14
81.7
9.1
58.6
1.31
179.5
5.97 2791.8
2.32
102.3
4.93
80
-8
LP
137.3
NA
66.6
52.5
20.3
-7.8
-11.2
-27.9
43.5
55.6
40
11.3
LP
-27.3
6.6
164.9
2.5
24
-3.4
-23.5
102.3
22.2
32.2
34.4
-25.3
173.3
5.1
355.4
13.3
18.6
YEAR
END
201303
201303
201303
201303
201303
201206
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
201212
201303
201303
201303
201303
201303
201303
201303
201303
201303
201303
2.2
0.06
0
0.42
2.54
1.08
9.97
1.74
0.13
0.48
0.2
0
0
0.96
0.02
0.47
1.16
1.88
0.01
0.27
0.01
0
3.13
0.14
0
5.56
3.15
0.24
0
0.26
0.15
0.96
* Outperformed (No of days). CMP (current market price) as on 5 March 2014. NA: Not available. Consolidated figures wherever available. LP: Loss to profit. Change (%) refers to change over the last 30 trading sessions. P/E:
Price to earnings ratio. DY: Dividend yield (%). P/BV: Price to book value. TTM ended December 2013. TTM RPAT (Rs cr): Trailing 12-month reported profit after tax. Change in TTM PAT is over the previous corresponding period.
Source: Capitaline Database
InFocus
component manufacturer, with manufacturing facilities spread across the world.
Gruh finance, a subsidiary of HDFC,
moved north by 4.7%. The housing finance
company has managed to outperform on 20
occasions. Steady performance continues to
be its specialty. Revenue increased 26.3% and
profit 20.2% in the TTM ended 31 December
2013. Its loan portfolio rose 31% to Rs 6544.6
crore on 31 December 2013 over a year ago.
Similar is the case with Adani Ports &
Special Economic Zone. The stock beat the
Sensex 20 out of 30 trading sessions. The
companys turnover spurted 36%. Even
more impressively, the bottom line jumped
66.6% in the TTM ended 31 December
2013. Its port at Mundra continues to hold
the number one position among all commercial ports by cargo by handling (74.73 million tonnes or mt) in the period April to
December 2013, outperforming the Kandla
Port, which handled 66.08 mt. Adani Port
develops, operates and maintains ports and
related infrastructure facilities including a
IPOCentre
Loha Ispaat / CM Rating 35/100
Working capital-intensive
Weaknesses
The business is low tech, low value-addition, and volume-driven.
Risks include raw material price fluctuations, customer default, high working capital requirement, high inventory and a very
thin margin. The profit after tax (PAT) margin hovers around 1.7-2%.
ISSUE HIGHLIGHTS
Offer size (in Rs crore)
- On lower price band
205.63
213.64
2.67 crore
77-80
101.0
11/3/2014
20/03/2014
Listing
BSE,NSE
Valuation
Consolidated net sales were Rs 3429.02 crore
and PAT Rs 70.45 crore in the fiscal ended
March 2013 (FY 2013). Consolidated net
sales stood at Rs 2021.65 crore and PAT Rs
38.90 crore in H1 of FY 2014. On fully diluted post-IPO equity share capital of Rs
101 crore, EPS for FY 2013 was Rs 7 and
annualised H1 of FY2014 EPS Rs 7.7.
At the lower price band of Rs 77, the
offer price discounts FY 2014 annualised
earning by 10 times and at the higher price
band of Rs 80 by 10.4 times. There is no
listed comparable player with focus on the
SSC business. Such low value-addition and
high working-capital-intensive business deserves P/E lower than 10.
Mar 17 - 30, 2014 CAPITAL MARKET
StockAlert
In the woods
The loss-making and debt-ridden company with several
adverse auditors remarks hopes to gain from sale of assets
Orchid is described by the Oxford
Dictionary as a plant with complex flowers
that are often showy or bizarrely shaped,
having a large specialized lip and frequently
a spur. This description is very much
relevant to Orchid Chemicals &
Pharmaceuticals.
The
Chennai-headquartered
pharmaceutical
procedure
active
pharmaceutical ingredients (APIs) and
formulations is struggling. It is making losses
and reeling under huge debt. The statutory
auditors of the company have raised several
issues, putting a question mark over the
quality of the books of accounts. Moreover,
the company has either not responded or
has given unconvincing responses. On the
positive side, it is expecting windfall gains
from the impending sale of assets, which
will help to significantly cut debt.
Orchid came out with its annual report
for the 18 months ended 30 September 2013
end February 2014. Earlier, the company
used to close its books of accounts in March.
It has put forth sale and transfer of its unit
as a reason for the extension. From here on,
Orchid will be closing its books of accounts
as on 31 March 2014. As per the new
Companies Act, 2013, a company is required
to close its books of accounts in March every
year. This is in bid to introduce
In the crossfire
IDBI Bank wants to convert Rs 30.1-crore
loan to Orchid Chemicals and Pharma
into equity shares. Three-fourth of
promoters 32.28% equity stake is pledged
140
120
BSE Sensex
100
80
60
40
Jan F 10
2014
Mar
2014
29
StockAlert
received confirmation of balance relating to
loans and other funded and non-funded dues
from banks. The books have been closed on
the basis of the information provided by
various banks to the CDR-empowered
group. Moreover, interest has been
accounted for to the extent debited by banks
or information provided by banks. No
provisions have been made for of dues to
banks where such debit or information have
not been made or provided by banks.
Additionally, the auditors have put two
issues as emphasis of matter. Orchid has
paid remuneration of Rs 7.3 crore to the
managing director and a wholetime director.
This excess of minimum remuneration
prescribed under the Schedule XIII of the
Companies Act, 1956. This is subject to the
approval of the Central government. The
government approval for excess
remuneration for FY 2012 is still awaited.
Second, IDBI Bank has given notice to
Orchid to convert term loan of Rs 30.1 crore
into equity shares at par as per the loan
agreement. The conversion has been
disputed by the company. The matter is with
the High Court of Madras. This development
needs to be closely monitored. This is
because of several reasons like debt
restructuring, financial woes, and promoters
relatively lower stake. A significant portion
of this is pledged with lenders.
Promoters Raghavendra Rao and others
held 32.28% equity stake at end December
2013. Of this three-fourth is pledged. A year
In red
Orchid Chemicals and Pharmaceuticals slipped into cash losses in the 18 months ended 30
September 2013 as against cash profit in FY 2012
YEAR END
Equity (Rs cr)
Net Worth (Rs cr)
Total debt
Sales (Rs cr)
Other Income (Rs cr)
RPAT (after Minority Interest) (Rs cr)
APAT (Rs cr)
Cash profit (Rs cr)
Book Value (Rs)
Payout (%)
Debt-Equity ratio (times)
Interest Cover
PBIDTM (%)
APATM (%)
ROCE (%)
RONW (%)
201309*
FY 2012
FY 2011
FY 2010
FY 2009
70.45
379.98
3414.07
1947.70
147.99
-558.03
-609.27
-306.11
53.94
0.04
3.58
-0.10
10.31
-28.58
0.00
0.00
70.44
1132.30
2005.23
1873.60
136.19
97.48
101.27
251.22
160.74
17.63
1.85
1.42
21.66
5.16
8.03
8.83
70.44
1069.24
2079.45
1781.79
77.29
156.19
155.62
289.69
151.79
16.82
1.85
2.47
23.44
8.68
9.96
15.53
70.44
937.66
1643.65
1343.45
1023.90
339.25
-543.72
494.15
133.11
27.36
2.71
-1.24
-10.84
-40.21
-10.34
-69.17
70.44
633.80
2615.85
1296.85
86.05
-48.99
-47.72
85.00
89.98
-18.12
3.53
0.78
19.61
-3.74
0.00
0.00
RPAT: Reported profit after tax. APAT: Adjusted profit after tax. Year end March. * Eighteen months ended September 2013.
Source: Capitaline Databases
30