Sunday, July 22, 2012

Notes From GRP Limited Annual Report 2011-12

Financial Performance
• Sales & other income increased by 31% to 24,928 lacs
• Exports increased by 26% to 16,023 lacs
• PBDT increased by 47% to 4,532 lacs
• Profit before tax increased by 49% to 3,845 lacs
• Net Profit increased by 46% to 2,580 lacs
• EPS increased by 46% to Rs 192.91
• Dividend Rs. 33 per share (Rs. 10 one time)
• Debt to equity ration increased from 0.6 to 0.87
• Market price - 865 to 1620 - PE range based on FY 10-11 EPS - 6.55 to 12.27
Cash Flow
Net cash from Operating activities - 2612 lacs (greater than net profit)
Free Cash flow = 2612 - 4237.04 + 7.41 = -1617.63

Industry Structure
- Recycling of rubber out of waste and scrapped tyres, tubes and other such rubber products. The resultant product, commercially known as reclaim rubber, is a valuable ingredient used by the rubber industry for making various products by part replacement of virgin rubber.
Total rubber consumption for India is expected to reach 1.49 million tonnes and 1.64 million tonnes in years 2012 and 2013 respectively.
To meet this demand of rubber, natural & synthetic rubber source will not be sufficient. There are predicted shortages in availability on account of climate change (which is reducing yields of natural rubber plantations) and shortages in key ingredients like butadiene (which is a key raw material for production of commodity rubbers such as PBR, SBR, among others). With no short term solutions , reclaim rubber, at approximately 30-50% of virgin rubber prices and with 50% rubber content, is the best alternative to counter the supply constraints of virgin rubbers.
While historically the usage of reclaim in India as a percentage of virgin rubbers has been around 8%, the penetration has been rising and the Company is aggressively developing new grades to increase the usage of reclaim.

recessionary trends in Europe and weakening demand in the second half of the year.
An extremely volatile currency scenario, coupled with depressed prices of virgin rubbers led to substantial swings in margins on a monthly basis.
A high industrial inflation mainly on account of energy cost increases, pushed up input costs particularly during the last quarter of the year.
On December 30, 2011, there was a major fire at Company’s plant located at Akkalkot Road, Solapur, leading to loss of approximately 1000 tons of production.
Foreign exchange fluctuation could also pose a threat particularly at the time of repayment of foreign currency loans. However, Company’s export sales are about 67% of total turnover, which provides natural hedge against exchange risks.
The performance of the company in the industrial polymers and custom die forms business has been steady, yet continues to be promising. Capacity addition in these businesses has been steady and the businesses have become self reliant in the financial year 2011-12.
The export presence of the company continues to grow with exports now contributing 67% share of the total sales value of reclaim rubber.
While Europe continues to remain in recession mode, the Company has been able to spread its presence in other geographies, thereby continuing to maintain its leadership position across the world.
The domestic markets are going through an exciting phase, with new tyre capacity additions by domestic tyre majors and the entry of multinational tyre companies. The anticipated growth in the tyre capacity in India combined with the Company’s thrust in new geographies shall ensure that new capacities being commissioned in the current financial year shall find suitable end use.
The Company has set up new plant at Chincholi, Solapur and first phase was fully operational in the financial year 2011-12. Second phase has been partially commissioned during the financial year 2011-12 and will be fully operational in current financial year.
With bulk of new tyre capacities being commissioned in South India, the company has also set up new plant at Perundurai, Tamilnadu for the production of reclaim rubber, which started production in March, 2012 and will be fully operational in current financial year. The above two expansions would add approximately 25% more capacity compared to March 2012.
In spite of increased borrowings for new project, the Company has managed its funds well and maintained interest cost at 2% of the turnover.
- Chairman - K M Philip- The only 100 year old chairman in the country !!!
The company is focussing on sales of synthetic rubber reclaims which command higher value and realisation compared with the natural rubber based reclaims.

Saturday, July 14, 2012

Notes from Indag Rubber Annual Report 2011-12

Financial Performance
Sales and Operating income - 21634.40 from 15027.62 lacs - growth 44%
PBT- 2701 from 1364 lacs -  growth 98%
PAT - 2087 from 1075 lacs - growth 94%
Dividend - Rs 6 per share - 15% of PAT

Debt - Free

Stock price for last year - 82 to 205 - PE range 4 to 10 based on FY 10-11 earnings.
Cash Flow
Net cash flow from operating activities - 1470 lacs (70% of PAT)
Free Cash flow = 1009 (48% of PAT)


- With IT facility, the Company has faster and effective communication with its customers, which further strengthened sales, service and debt collection.

- The growth of tyre retreading industry is fuelled by a number of factors such as rise in prices of tyres, growth in vehicle population, increasing level of radialisation, development of national highways and increased hub & spoke transportation.

- However, the steep rise in the cost of raw materials has already affected the retreading industry.

- OPPORTUNITIES AND THREATS India is still a bias tyre market in the truck segment. However, radialisation is picking up with the fleet operators due to longer life and fuel efficiency. Radial tyres are driven longer before needing to be retreaded compared to bias-ply tyres, which would impact overall retread volumes. With the fast pace of radialisation, retreaders need to upgrade their technology. Indag is imparting its knowledge and experience to various retreaders to deal with new situation arising with radialisation.

Monday, July 9, 2012

Notes from VST Industries Annual Report FY 2011-12

- Revenue from Operation grew from 139654 to 159846 lacs - 14.4%
- PAT from 9501 to 14251 lacs - growth of 49.9%
- EPS from 61.53 to 92.29 - growth of 49.9%
- Dividend from 45 5o 65 - growth of 45%
Cash Flow
- Net Cash flow from operating activities - 15117 lacs
- Free cash flow = 15117.76 - 3438.68 + 522.59 =  12201 lacs (85% of PAT)
Market Price
- Between 635 to 1500 - PE of 10.32 to 24 times based on FY10-11
- Current price of 1700 roughly - PE of 18 times.

The Union Budget presented in February 2011, did not propose any changes in the excise rates, which was a welcome relief for the industry and your Company.
The industry as a result had a marginal growth in volumes of around 4%; however, your Company was able to beat the general industry trend and grow volumes by 12% when compared to same period last year.
Financial year 2011-12 was one of the best years in terms of volume growth. Filter volumes now cover virtually 98% of your Company's volume.
The increase in VAT rates across states continued with more states increasing the VAT rates during the current financial year. Two key states e.g. West Bengal and Andhra Pradesh, where your Company has sizeable presence, increased VAT rates to 20% each. This will impact margins and profitability both in the current year and in the future.
During the financial year 2011-12, increase in VAT rates were affected in 17 states ranging from 0.75% to
Stable tobacco prices and higher foreign exchange volatility were the other highlights for the current financial year.
-The new graphic health warnings have come into effect from 1st December, 2011.
Your Company's brands were stable during 2011-12, with most brands gaining volumes.
Brands like SPECIAL EXTRA FILTER, MOMENTS and CHARMS VIRGINIA FILTER were the key contributors to the growth in volume.
Your Company continued its strategic thrust of launching new brands in value for money segments in markets which provide opportunities as these continue to help grow the volumes.
During the year under review the cigarette volumes stood at 762 mns up by 12% when compared to 2010-11. The value realisations were higher at 1435 crore, up by 16.4% when compared to 1230 crore during the
previous year.
Competition has intensified with many brands now available at different price points where your Company's brands are present. This is apart from your Company's brands having to face the non-duty paid cigarettes which are available across markets in India. 
- Leaf TobbacoYour Company has recorded leaf export turnover of 154 crore, in the year 2011-12,  despite glut in the international market and volatility in exchange rate.
As on 31st March, 2012, your Company had a strength of 931 employees, with 296 management staff
and 635 workmen.