Monthly Archives: May 2016

Manappuram Finance Ltd
Finance (including NBFCs)

FV – Rs 2; 52wks H/L – 55.5/19.75; TTQ – 3.96 Lakhs; CMP (May 31, 2016) – Rs 53.5;

Market Cap – Rs 4500 Crs

Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

Valuation Parameters

1. EV/EBITDA: 3.54
2. EV/Share: Rs 65
3. EV/Sale: 2.3
4. Market Cap/ Sale: 1.89
5. Debt to Equity: 0.58
6. RoE: 12.8%

• March quarter PAT stood at Rs 130.7 Crs on a consolidated basis, up by over 86.6% Q-o-Q. PAT for FY 16 was Rs 353 Crs, up by 30% Y-o-Y. The improvement came on the back of margin improvement due to a reduction in the cost of funds and improvement in yields, along with a stronger than expected growth in overall AUM. Cost of funds came‐off 10 bps Q-o-Q and 150 bps Y-o-Y due to a rating upgrade earlier in the year and lower base rates during the year. Yield has improved 190 bps Y-o-Y as Manappuram has shifted to shorter duration loans because of which the quantum of auction was lower. Auctions this quarter stood just at Rs 190 Crs (1.9% of gold AUM) aided by higher gold prices.
• The company’s consolidated assets under management also rose to Rs 11433 Crs from Rs 9593 Crs recorded in the previous fiscal year.
• The recent diversification into new business areas has gained further traction with new businesses now contributing about 12% of its consolidated AUM. Microfinance subsidiary, Asirvad Microfinance Pvt Ltd, had ended the year with an AUM of Rs 82 Crs, representing a growth of 210% over Rs 322 Crs.
• Commercial vehicle loans and mortgage-based finance (housing loans and loans against property) have contributed Rs 52 Crs to the total AUM. Their contribution in FY 15 was Rs 44.80 Crs.
• Manappuram Finance fiscal net profit up 30%
• NBFCs including Manappuram Finance are now targeting short tenure (3 to 6 months) gold loans instead of earlier one year duration loans. By focusing on short-term loans, auction of gold deposited by defaulting customers could come down. And, this helps in protecting margins. Apart from protecting margins, these shorter duration gold loans also help companies by shielding them against the volatility in gold prices that get more pronounced in longer duration loans. NBFCs, banks focus on shorter tenure gold loans to boost margins
• The company is now looking at increasing its non-loan portfolio. It is aiming at organic and inorganic growth to grow the non-gold loan business, now Rs 1300 Crs. In the next two to three years, it aims to grow it to Rs 4000 Crs. This is being done to reduce concentration risk from gold loans. The Reserve Bank of India has also said it wants large companies to diversify their portfolio, as a single business will lead to this risk. Manappuram Finance looks at inorganic growth to diversify business

Bulk Deals:

Block Deals:

Overview:

• Manappuram Finance Limited is a non-banking financial company (NBFC).
• The Company provides a range of fund based and fee based services including gold loans, money exchange facilities, and others. It is also engaged in the housing finance owing to low loan defaults.
• It provides customers with credit primarily against their used gold jewellers.
• The Company’s business areas include gold loan, money transfer, housing finance and foreign exchange.
• It provides higher amount of loans depending upon the purity, net weight of the gold.
• The money transfer service is available in all the branches.
• The Company acts as a money changer, undertaking currency exchanges and sale of travellers’ cheques for a variety of purposes. It operates through 3,293 branches spread across the country.

Housing Finance: Manappuram Finance acquired Milestone Home Finance Company Pvt. Ltd. (Milestone), a company possessing a valid Certificate of Registration from National Housing Bank, as a wholly- owned subsidiary company. Subsequently, the name of company was changed to Manappuram Home Finance Pvt Ltd in September 2014.

Microfinance: Manappuram Finance acquired 85% stake in Asirvad Microfinance Private Limited. Asirvad Microfinance is an 8-year old NBFC – MFI (Non banking financial company – Microfinance Institution) headquartered in Tamil Nadu with operations in the states of Tamil Nadu, Kerala and Karnataka.

Management:

• Mr V P Nandakumar is the MD and CEO

Major Non – Promoter Holdings:

Financial Trends ~ Amt in Rs Crs

• *Note that ~ In FY 12, Company had issued 1:1 bonus shares which resulted in the increase of shares by 416874188 number of equity shares. Also, the Company issued 7404760 shares to its employees under the ESOP 2009 scheme of the Company, resulting in the paid up share capital increasing to Rs 1682306272 in FY 12.
• The fall in profits in FY 13 was on account of under-recovery of interest amounting to Rs 284 Crs on a specific pool of its portfolio that was booked during the latter half of FY12. The Company also made additional provision amounting to Rs 51 Crs being the reversal of interest booked in FY12. The Company has faced a higher incidence of defaults in this pool after it began realigning its portfolio under the new loan to value (LTV) regime brought into effect in March 2012.

Blue Star Ltd
Consumer Electronics
FV – Rs 2; 52wks H/L –444/306.1; TTQ – 5 K; CMP – Rs 416 (As On May 31st 2016; 11.00);                                  
Market Cap – Rs 3742 Crs

Consolidated Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

Standalone Financials and Valuations for Q4 FY16

Valuation Parameters:

1. Long Term Debt to Equity – 0.03
2. ROE % – 16.35
3. Market Cap/Sales – 1

Key Updates:

• Blue Star launches Inverter Room ACs with anti-corrosive copper condensers for Maldives.

http://www.equitybulls.com/admin/news2006/news_det.asp?id=186302

• Blue Star sold the 4.9 % stake Vigilant Applications to AA Management for a total sum of £220,000.

https://www.insidermedia.com/insider/southeast/blue-star-sells-vigilant-applications-stake

• Blue Star becomes 7th Indian company to achieve Verafirm Certification by BSA.

http://www.indiainfoline.com/article/news-business/blue-star-becomes-7th-indian-company-to-achieve-verafirm-certification-by-bsa-116051600218_1.html

Overview:

• Blue Star Ltd is an air-conditioning and commercial refrigeration company.
• The Company is also engaged in the business of plumbing and firefighting, IT services and into distribution and maintenance of imported professional electronics and industrial systems.
• The Company’s segments include Electro Mechanical Projects and Packaged Air-conditioning Systems, and Cooling Products.
• The Electro Mechanical Projects and Packaged Air-conditioning Systems segment is engaged in the design, manufacturing, installation, commissioning and maintenance of central air-conditioning plants, packaged/ducted systems and variable refrigerant flow (VRF) systems, as well as contracting services in electrification, plumbing and fire-fighting. It also provides after-sales services.
• The Company offers a range of room air conditioners for both residential, as well as commercial applications.
• It also manufactures and markets commercial refrigeration products and cold chain equipment.
• Blue Star exports its products to the Middle East, Africa, SAARC and ASEAN countries.

      Management:

• Ashok M Advani – Chairman
• Satish Jamdar – MD
• Neeraj  Basur – CFO

The Equity Capital is @ Rs  Crs consisting of 89936105 equity Shares of FV Rs 2 currently held as under

0.67% Of the Promoter’s Holding is pledged.

Major Non-Promoter Holdings:

Consolidated Financial Trends (In Rs. Crs) :

Consequent to amalgamation and subsequent sale of IT business, the Company has recorded a net gain of Rs 46.1 Crs in consolidated results which is disclosed in Exceptional item In the Profit & Loss statement.

APL Apollo Tubes Ltd
Manufacture of Infrastructure Products
FV – Rs 10; 52wks H/L – 899/367; TTQ – 2389; CMP (May 30, 2016) – Rs 888;
Market Cap – Rs 2081 Crs

Consolidated Financials and Valuations for 9MFY16 (Amt in Rs Crs unless specified)

Consolidated Financials and Valuations for FY15 (Amt in Rs Crs unless specified)

The share price has increased by 125% since we last covered the scrip on March 13, 2015 (Rs 394 per share).

It has moved up by 30% in the last two months from Rs 687 (30/3/16) to Rs 888 (30/5/16).

Recent Updates

• A new plant has been set up at Raipur, Chhattisgarh with total capital outlay upto Rs 75 Crs. The plant will manufacture galvanized steel tubes, hollow section and galvanized sheets having a total capacity of 60000 MTPA. The Company expects to commence operations at Raipur plant by Q1 of FY18.

Bulk Deals

Block Deals

Updates when the stock was last covered on March 13, 2015:

• HDFC Mutual Fund bought 196000 equity shares close to about 0.83% stake in APL Apollo Tubes on March 10, 2015 ~ APL Apollo Tubes hits record high; HDFC MF buys shares
• ICRA upgraded APL Apollo Tubes for long – term from [ICRA]A- to [ICRA]A and reaffirmed the short-term rating of [ICRA]A1 for Company’s credit facility.
• The Company launched a new product ~ steel door frames ~ which has a double life expectancy as compared to wooden door frames and costs 40% less. The product launch is in line with Prime Minister Narendra Modi’s affordable housing program. The Company has also taken the patent from the Patent Office of Govt. of India. ~ BSE Extracts

Overview

• APL Apollo Tubes Ltd is engaged in manufacturing and exporting of steel pipes and tubes. It was incorporated in the year 1986 and is headquartered in Delhi.
• It operates in the steel tubes and pipes market specifically in the Welded Segment.
• The Company manufactures a range of steel products ERW black tubes and pipes, such as hot-dipped galvanized and pre-galvanized tubes, hollow sections and structural. It is the only player manufacturing black, galvanized and pre-galvanized products.
• The current capacity of APL Apollo is about 1.05 million tonnes.
• The Company markets its product under the brand APL Apollo which covers MS Black, G.I. round pipes and hollow sections both in rectangular and square quality rolled on high frequency induct weld (HFIW) mills.
• The Company focuses on supplying tubes for applications in the engineering sector, idler tubes for conveyors, propeller shaft tubes and bobbin tubes for textile industry with applications where high precision diameter is required and other high rotational applications.
• The Company also manufactures CPVC pipes, uPVC pipes, uPVC SWR Drainage system, uPVC plumbing system, well casing and screen pipes and HDPE drip irrigation system, among others.
• It serves Metal Engineering & Fabrication, Electric Poles, Ports, Railways, Aviation, Oil & Gas, Metros, Solar Power, Automobile sectors.
• It has 300 stock keeping units (SKUs), largest in the industry. It has 6 manufacturing units including a new greenfield plant in Hosur, Tamil Nadu. It is also acquiring two units in Bangalore and Mumbai. Its plant in Hosur is close to JSW Steel, the market it serves.
• The Company has three wholly-owned subsidiaries ~ Shri Lakshmi Metal Udyog Limited, Lloyds Line Pipes Limited and Apollo Metalex Private Limited.
• Hollow sections form 35% of the revenue mix while MS-Black and Pre-galvanized contribute 25% each and the rest comes from Galvanized tubes. From a margin perspective, pre-galvanized tubes have the highest margin of about 13-15% while MS-Black have more modest margins in the region of 4-6%

Key Growth Drivers for the Steel industry:

1. Smart Cities
2. Ganga Action Plan
3. Agriculture
4. Infrastructure Buildout

Equity Unquoted Investments as on March 31, 2014:

Clientele:

• Infrastructure: Delhi Metro, Adani Group, Gammon, L&T, Afcons and B L Kashyap.
• Water: Jain Irrigation
• Corporates: Unicer, TATA
• Power & Gas: BHEL, Gujarat Gas, HP, IGL, Moser Baer, Suzlon, BP

Management:

• Sanjay Gupta is the CMD

 Shareholding Pattern as on March 31, 2016

The Equity Capital is @ Rs 23.44 Crs consisting of 23438636 Equity Shares of FV Rs 10 currently held as under

None of the promoters’ holding is pledged

Share Price Trend

Consolidated Financial Trend ~ Amt in Rs Crs

Net Sales grew at a CAGR of 30.37% while PAT grew at a CAGR of 13.46% over the last six years. Net worth has grown at a CAGR of 16.27% over the same period.

• *Note that ~ On August 13, 2013, the Company allotted 1115000 Equity Shares having a FV of Rs 10 each to Mr. Ashok Kumar Gupta, a person considered as promoter upon conversion of equal number of warrants.
• The Company had allotted 1500000 warrants to Mr. Ashok Kumar Gupta on a preferential basis on February 14, 2012 at a price of Rs 145 each wherein each warrant entitled Mr. Ashok Kumar Gupta to subscribe for one Equity Share of the Company.
• Out of these fifteen lakhs warrants, 385000 warrants were converted in to equity shares on March 23, 2013. The Equity share capital thus increased from Rs 22.32 Crs to Rs 23.44 Crs.
• In FY14, the fall in profit margin was due to sluggish demand scenario in the construction and infrastructure sector. Also the Company was not able to pass on the steel price hike fully to consumers in the later part of FY14.

Relaxo Footwears Ltd
Footwear
FV – Rs 1; 52wks H/L –614.55/360; TTQ – 2 K; CMP – Rs 460 (As On May 24 2016; 11:30) ;

Market Cap – Rs 5521 Crs

Standalone Financials and Valuations for Q4 FY16 (Amt in Rs.Crs unless specified)

Standalone Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

In 2013 there was a stock split from Rs.5 to Rs.1 and on 1/7/2015 the company issues bonus of 1:1 shares held on a face value of Rs.1 each.

The company added 8 stores in Q4 FY16 with a total of 250 retail stores as of 31/3/2016.

The company is aiming for a double-digit growth in the next quarter, with focus on sales transformation and better connection with retailers. http://www.moneycontrol.com/news/results-boardroom/aiming-for-double-digit-growthnext-quarter-relaxo-footwear_6687881.html

On Monday, April 4, 2016, Jwalamukhi Investment Holdings, a unit of WestBridge, purchased 1.87 million equity shares representing 1.55% of total equity of Relaxo Footwears for about Rs 80 crore through block deal on NSE. http://www.business-standard.com/article/markets/footwear-stocks-extend-rally-relaxo-footwear-surges-over-30-in-two-days-116040500196_1.html

VLS Finance sold 1.77 million shares at Rs 425 per share, data shows. VLS Finance (6.71%) and VLS Securities (6.79%) collectively held 13.5% stake in Relaxo Footwears at the end of December 2015 quarter.

This quarter was subdued mainly due to general market slowdown and wage hike in Haryana and statutory bonus ceiling impacted the bottom line. The employee benefit cost rose up by 19.6% at Rs.45.7 Crs.

The company introduced approximately 200 designs last year, spread across categories and brands.

As on 31st March, 2015 the total no of employees of the Company are 4655 against 3980 on 31st March, 2014.

Overview:

• Relaxo Footwears Ltd is engaged in the business of manufacturing and trading footwear and articles.
• The company’s brands include Hawaii, Flite, Sparx, Schoolmate, Elena and Casualz.
• Its sparx range includes sports shoes, Sandals and SFGs range.
• Its Schoolmate brand consists of a range of school shoes for boys and girls. Its Hawaii brand provides slipper.
• Its Flite brand provides women’s footwear.
• Its manufacturing facilities are located at Bahadurgarh, Haryana; Bhiwadi; Rajasthan, and Haridwar, Uttarakhand.

Industry Updates:

95% of the footwear industry in India is driven by domestic sales with approximately 5 % coming from exports.

India is a big market with a lot of potential with a focus for growth. However, the company plans to be relevant in international markets by building their own brand.

Management:

• Ramesh Dua is the Managing Director of the company.
• Susuhil Batra is the CFO of the company.

Major Non-Promoter Holdings:

Standalone Financial Trends (In Rs.Crs):

Genus Power Infrastructure Ltd
Other Electrical Equipment Products
FV – Rs 1; 52wks H/L –62.5/21.75; TTQ – 1.04 Lacs; CMP – Rs 52.65 (As On May 24 2016; 15:30) ;

Market Cap – Rs 1352.09 Crs

Standalone Financials and Valuations for 9Months FY16 (Amt in Rs.Crs unless specified)

Standalone Financials and Valuations for FY15 (Amt in Rs Crs unless specified)

Overview:

• Genus Power Infrastructures Ltd is an integral part of the US $400 million Kailash group and is engaged in manufacturing/providing metering and metering solutions and power backup.
• The Company also undertakes engineering, construction and contracts on turnkey basis.
• The Company’s metering solutions include a range of electricity meters, such as multi-functional single phase and three phase meters, current transformer (CT)-operated meters, availability based tariff (ABT) and grid meters, distribution transformer (DT) meters, pre-payment meters and smart meters, among others.
• The power back-up systems and solar solutions include uninterruptible power supply (UPS) and inverters, such as home UPS, static UPS, online UPS, high capacity inverters, solar inverters, batteries and solar power packs.
• The engineering construction and contracts division undertakes turnkey power projects, such as sub-station erection up to 420 kilovolts (kV), laying up of transmission and distribution lines, rural electrification, switchyards and network refurbishment.

Genus has installed around 31 million electronic energy meters across the country.

During the year the company has produced around 5.26 million meters and installed around 4.90 million meters.

Management:

• Rajendra Kumar Agarwal – CEO & MD
• Ishwar Chand Agarwal – Chairman

The Equity Capital is @ Rs 25.67 Crs consisting of 256807850 equity Shares of FV Rs 1 currently held as under

None of the Promoter’s Holding is Pledged.

Major Non-Promoter Holdings:

Standalone Financial Trends (In Rs.Crs):

Megasoft Ltd
IT Software Products
FV – Rs 10; 52wks H/L – 14/4; TTQ – 85000; CMP (May 24, 2016) – Rs 9.76;

Market Cap – Rs 43 Crs

Consolidated Financials and Valuations for 9MFY16 (Amt in Rs Crs unless specified)

*As of September 2015

Consolidated Financials and Valuations for 15 Months ended FY15 (Amt in Rs Crs unless specified)

• The company lost its biggest customer contract from Q3 of 2013, resulted in lower revenues and EBITDA in the FY15.
• The share price has moved up by 45.67% in the last two months from Rs 6.7 (24/3/2016) to Rs 9.76 (24/5/2016). However, the stock has breached Lower Circuit three times in the last one week.
• Company’s top five clients contribute to more than 50% of the revenues.

Recent Updates

• Megasoft was awarded a patent in Near Field Communication (NFC) technology in July 2015. The invention relates to a smart integration of dual architecture contactless SIM into mobile devices and describes the method of efficiently performing various financial transactions. The patent was filed in February 2010 and was awarded by the US Patent and Trademark Office in July this year.

Near field communication (NFC) is a set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a Smartphone, to establish communication by bringing them within 4 cm (2 in) of each other ~ Wikipedia

• In June 2015, the company was awarded patent pertaining to the method for performing authentication and service translation for Mobile Virtual Network Operators (MVNOs). The patented technology is at the core of the company’s XIUS Mobile Services Platform (MSP) and has been granted by the US Patent and Trademark Office.

A mobile virtual network operator (MVNO), or mobile other licensed operator (MOLO), is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, and then sets retail prices independently. An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler (MVNE) ~ Wikipedia

Bulk Deals

Overview:

• The Company is principally engaged in computer programming, consultancy and related activities. It was established in 1994. It operates in two key technology segments ~ Core network infrastructure and mobile payments.
• The Company focuses on the telecom sector through its XIUS brand.
• Through XIUS, the Company offers personalized and specialized services, including computer software design, computer systems analysis and systems integration, to bring solutions to its clients.
• With Headquarters in the USA, XIUS offers solutions in the areas of mobile infrastructure and services, and mobile banking and payments.
• Megasoft has offices in the US, Singapore, Malaysia and in Hyderabad & Chennai in India.
• The company has filed 120 patents, with 35 awarded to date.
• XIUS Infrastructure solutions process and manage in excess of 350 million calls a day and the mobile payments solutions manage over $US 1 billion worth of payment transactions monthly.
• The company has received the title and has completed the registration formalities on May 23, 2015 for lands situated at Madhapur (0.75 acres) and Nanakramaguda, Hyderabad (acquired through amalgamation of VisualSoft Technologies Limited in 2006) allotted by TSIIC (previously APMC).
• Out of 15.61 acres originally allotted at Nanakramguda, Hyderabad, as per the directions of Government of Telangana the Company surrendered an area of 7.29 acres and retained the balance land. The said land is located at Nanak Ram Guda abutting Hyderabad Financial District, which has become a centre for the back office operations of several premier Indian and global financial institutions. ~ Megasoft parts with land for Google campus
• The company has started investing in new products ~ 4G LTE, NFV (Network Function Virtualisation), Predictive Analytics, Mobile based Payments Bank etc.

Management:

• Mr  G. V  Kumar is the Managing Director & Compliance Officer

None of the promoter’s holding is pledged

Consolidated Financial Trends ~ Amt in Rs Crs

• *Certain advances made by the wholly owned subsidiary company prior to 2007 have been set-off to retained earnings by that wholly owned subsidiary.
• The Company lost its prepaid system contract with its largest customer by the end of 2011. The full year effect of this was felt in 2012, which resulted in a 22% decline in the revenues in FY 12 and further decline of 25% in revenues in FY 13.

R Systems International Ltd
IT Consulting & Software
FV – Re 1; 52wks H/L – 89/53; TTQ – 7736; CMP (May 23, 2016; 1.45 pm) – Rs 56.75;

Market Cap – Rs 720 Crs

Consolidated Financials and Valuations for Q1 FY16 (Amt in Rs Crs unless specified)

*As of December 31, 2015

Consolidated Financials and Valuations for December ended FY15 (Amt in Rs Crs unless specified)

Company’s MD on his outlook about R Systems ~ ‘I am extremely positive about the outlook for your company. The USA economy is giving mixed signals now but I feel that over the years IT industry has learnt to live in uncertainty’

Valuation Parameters

1. EV/EBITDA: 8.26
2. EV/Share: Rs 50
3. EV/Sale: 1.04
4. Market Cap/ Sale: 1.18
5. Debt to Equity: ~0

6. RoI: 40.26%

Recent Updates

• In its most recent Board Meeting held on April 30, 2015, the Board of Directors approved to Grant 150000 stock options at price of Rs 12.07 per option (i.e. the price at which the options were granted earlier on July 11, 2007) under existing R Systems International Limited Employee Stock Option Scheme 2007 as recommended by the Compensation Committee.
• The Board has also approved opening a subsidiary company of Computaris International Limited, U.K. (wholly owned subsidiary of the Company) in Philippines.
• In FY 15 , the Company issued 90,000 equity shares of Re 1 each at an exercise price of Rs 12.07 per share, pursuant to exercise of employee stock options under the R Systems International Limited Employee Stock Option Scheme 2007.

Other updates

• In 2015, R Systems acquired IBIZ, a Microsoft gold channel partner having ERP and Business Intelligence competencies. IBIZ is having presence in South East Asia. It also acquired a relatively small but strategic telecom IT business in Europe from a renowned telecom operator.
• On July 11, 2014, the Company had incorporated a wholly owned subsidiary in India ~ R Systems Products & Technologies Limited. It was later converted into R Systems Products & Technologies Private Limited (RSPTPL) on May 28, 2015. The shareholders of the Company by passing special resolution through postal ballot on September 23, 2014 had accorded necessary approval for transfer of the Company’s Indus Business Unit operated out of Pune and Chennai to RSPTPL.
• The Company had entered into ‘Business Transfer Agreement’ (BTA) with RSPTPL on June 27, 2015 for the aforesaid transfer on a going concern basis by way of slump sale, for consideration of Rs 78.39 Crs to be discharged by RSPTPL through issuance of 60,000,003 equity shares of Re 1 each at a premium of Rs 6.227 per share and 35,026 compulsorily redeemable debentures of Rs 10000 each, on the terms and conditions agreed in BTA.
• The Company also entered into Share Purchase Agreement (SPA) with BD Capital Partners Ltd. (BDC), a Mauritius based company on June 27, 2015 to sell 93% of its equity share in RSPTPL to BDC for a consideration of Rs 44.32 Crs. Subject to the satisfaction of certain conditions, BDC has also agreed to purchase the balance 7% equity shares for a consideration up to Rs.6.62 Crs. These conditions are under evaluation and yet to be concluded as at the quarter and year ended December 31, 2015. The Company will continue to hold the compulsorily redeemable debentures having an aggregate face value of Rs 35 Crs in accordance with the terms of the BTA. The closing (as defined in the agreements) under the BTA and SPA occurred on July 07, 2015.
• The gain on sale of Indus Business Unit amounting to Rs 56.61 Crs (net of related expenses) and gain on sale of aforesaid equity share in RSPTPL amounting to Rs 2.87 Crs (net of related expenses) is disclosed as ‘Exceptional items’ in the financial results for the year ended December 31, 2015. The name of RSPTPL has been changed to Indus Software Technologies Private Limited w.e.f. August 19, 2015.
• Accordingly, the aforesaid Indus Business Unit, being part of Information technology services and products segment, is considered as “Discontinuing Operations” till July 07, 2015.
• ECnet Limited, a subsidiary of the Company has recorded an impairment loss amounting to Rs 1.2 Crs related to the certain intangible assets acquired in earlier years which is included under ‘Exceptional items’ for the quarter and year ended December 31, 2015.

Overview:

• The Company is engaged in providing Information Technology (IT) Services and Solutions and IT-enabled Services to a range of global customers.
• The Company operates in two segments: Information technology services and products, and Business process outsourcing services.
• The Company’s portfolio of services include the following: Outsourced Product Development through Integrated Product Lifecycle Management (OPD-iPLM) services, application services, testing services, analytics services, business process outsourcing and knowledge process outsourcing services, and packaged services.
• The Company provides its IT services and solutions to a variety of services to organizations in the healthcare industry, telecom and digital media, banking and finance, manufacturing and logistics, and government services.

Consolidated Revenue by Geography in 2015

“SEAC” ~ South East Asian Countries

Management:

• Mr Satinder Singh Rekhi is the MD
• Gen. Baldev Singh (Retd.) is the President and Senior Executive Director

None of the promoter’s holding is pledged

Share Price Trend

Segment Results ~ Amt in Rs Crs

Consolidated Financial Trends ~ Amt in Rs Crs

• *There was a stock split in the year 20014 ~ sub-division of one equity share of face value of Rs 10 into ten equity shares of face value of Re 1 each fully paid up. The sub-division was effected as per record date of February 28, 2014.
• Net profit for 2015 contains an exceptional profit of Rs 54 Crs as against Rs 18.5 Crs in 2014. The exceptional profit for 2015 mainly relates to sale of Indus product division as against sale of Europe BPO in 2014.
• Revenues for FY15 decreased because of realignment of business activities and divestment of Indus Business Division.
• In FY 15, the Company bought back 678155 fully paid-up equity shares of face value Re 1 each from the open market through stock exchanges.
• Consolidated profits for FY14 include exceptional profit (net of tax) of Rs 18.5Crs. Out of this Rs 16.9 Crs pertains to profit on sale of Europe BPO Business and Rs 1.6 Crs on buy-back of shares of Computaris International Limited (a wholly owned subsidiary).
• Reserves declined in FY14 because the Company paid hefty dividends ~ the Board had recommended a final dividend of Re 0.95 per equity share of face value of Re 1 each. This is in addition to four interim dividends aggregating to Rs 4.90 per equity share of face value of Re 1 each declared during the year ended December 31, 2014. Based on Companies Act, 2013 provisions applicable on the aforesaid dividends, the Company has not transferred any amount to the general reserves as the dividends has been declared and paid after April 1, 2014.
• Proposed Dividend for FY14 was Rs 12.17 Crs which was in line with Rs 12.06 Crs of FY13. The Interim dividend in FY14 stood at Rs 62.43 Crs, way high from that of Rs 13.9 Crs in FY13.

Ashima Ltd
Textiles
FV – Rs 10; 52wks H/L – 21/6; TTQ – 54000; CMP (May 16, 2016; 11.30 am) – Rs 12.6;
Market Cap – Rs 54 Crs

Standalone Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

The Equity capital does not include ~ 4,50,000 (13%) redeemable cumulative preference shares of Rs 100 each fully paid amounting to Rs 4.5 Crs and 1600000 (11%) redeemable cumulative preference shares of Rs 100 each fully paid amounting to Rs 16 Crs. Total Share capital of the firm equals to Rs 53.87 Crs.

Valuation Parameters

1. EV/EBITDA: 12.86
2. EV/Share: Rs 31
3. EV/Sale: 0.48
4. Market Cap/ Sale: 0.25
   

Overview:

• Ashima Limited is engaged in the textiles business.
• The Company manufactures and sells denim fabrics, and yarn dyed cotton fabrics.
• The Company’s divisions include Denim Division, Spinfab Division and Attires Division.
• The Company offers its products under ICON and Frank Jefferson brand names.
• The Company’s products include denims, shirting, bottom weights and interlinings.
• It offers the denim variants, such as open end denim, ring denim, slub denim, cross-hatch denim, stretch denim, fashion denim, polyester denim, Floc coated denim, linen denim and over dyed denim, among others.
• Its shirting products include yarn dyed shirting, piece dyed shirting and fully bleached white shirting.
• Its bottom weights include twills, chinos, gabardine, tussore, canvass and bedford cord structured fabrics. Its shirting range includes poplins, twills, cord, satin, combination weaves and dobby weaves.
• The Company offers interlinings in soft, medium and stiff finishes.

Denim Division ~ Performance of Denim Division has further deteriorated, faced limitations in product offering in changing customer preferences in a market plagued with problem of oversupply.

Spinfab Division ~ has cut losses, saw lower volumes, but higher sales to brands, which as a segment offers better margins, which led to its improved performance.

Other Problems faced by the company ~ ageing machinery, Inability to meet demand of higher credit in the markets due to constraints of working capital.

Rights Issue

• The Rights Issue had opened on November 18, 2015 and closed on December 2, 2015. On December 3^rd, HDFC Bank had filed an Interim application seeking inter alia attachment from funds collected in the Rights Issue and on the same day Debt Recovery Tribunal – II had passed an order of status quo until December 17, 2015.
• Later on, the Company on December 09, 2015 filed an application praying inter-alia rectification/modification of the said Order with DRT-II, Mumbai to enable all concerned parties to complete all formalities as per time lines prescribed in SEBI Circular dated April 22, 2010, more particularly the refund of excess amount received from rights share applicants pursuant to Letter of Offer dated October 28, 2015. DRT-lI vide order dated December 11, 2015 rejected the company’s prayer.
• The Debt Recovery Tribunal-II, Mumbai (DRT) on December 23, 2015 passed an order for continuing the status-quo till January 11, 2016.
• The Company subsequently filed a writ petition in the High Court of judicature at Bombay seeking appropriate reliefs against the orders of DRT and DRAT.
• HDFC Bank on February 2nd filed a writ petition at Bombay High Court, seeking to quash and set aside the said DRAT orders of January 27, 2016. This petition was heard on February 9th and 11th. Since the DRAT Order dated January 27th was not clear on certain aspects, the Company put forth its view that it would also file a writ petition as due to ambiguity prevailing in the Order, bankers to the issue have refused to act on the order and sought more clarity on refund aspect.
• In late February, the case moved to another Division Bench of High Court.
• The Company has taken the matter with the Bankers to the Issue ~ ICICI Bank and Yes Bank. ICICI Bank on April 14, 2016 agreed to lift the freeze and instructions were accordingly given by the Registrars to the Issue to ASBA banks to transfer subscription monies to Rights Issue account with ICICI Bank and to unblock the balance money being the refund(s) amount.
• Accordingly, all ASBA banks have unblocked the ASBA accounts, except Yes Ban and the subscription monies were transferred to rights issue account with ICICI Bank. However, Yes Bank belatedly on April 18, 2016 came up with a stand that they were still not clear on the clarification provided by the High Court Order and did not lift the freeze on rights issue account.
• Thus, the Non ASBA refunds and unblocking of ASBA with Yes Bank has remained pending. Therefore, the procedure relating to completion of refunds and allotment could not take place.
• Rights Issue Details ~ 80085089 Equity Shares of Rs 10 each for cash at par for an amount aggregating to Rs 80.09 Crs on a rights basis to the existing equity shareholders in the ratio of 24 Equity Shares for every 10 fully paid up equity sharesheld by the existing Equity Shareholders.
• The entire Proceeds of the Rights Issue amounting to Rs 80.09 Crs would be utilized towards part repayment of outstanding principal secured debt as per proposed scheme of arrangement.

Scheme of Arrangement

• The Company had a draft scheme of arrangement for reconstruction and compromise between the Company and its equity shareholders, preference shareholders and secured creditors with the Stock Exchanges and is in the process of filing the same with the Hon’ble High Court of Gujarat.
• This Scheme of Arrangement is proposed as financial reconstruction of the Company pursuant to Re-organisation of preference share capital and settlement of Outstanding Secured Debts of the Secured Creditors of the Company.

Management:

Mr Chintan N. Parikh is the Chairman & Managing Director

Shareholding Pattern as on March 31, 2016

The Equity Capital is @Rs 33.37 Crs consisting of 33368787 Equity Shares of FV Rs 10 currently held as under

3% of the promoter’s holding is pledged

Share Price Trend

Standalone Financial Trends ~ Amt in Rs Crs

Ricoh India Ltd

The shares of Ricoh India Ltd are locked up at Upper circuit at a price of Rs 273 before hitting a Lower circuit early in the day. The share price has been vacillating between Lower circuits and Upper circuits alternatively for a number of days. The share price has fallen by 75% from its 52 week high of Rs 1072 made in July 2015.

Ricoh India is a subsidiary of Japanese multinational imaging and electronics company Ricoh Company, which directly holds 46.04% stake in its Indian arm. The parent company holds another 27.56% of Ricoh India through NRG Group, thus taking total holding to 73.6% in Ricoh India.

The Company has now filed a police against “suspected wrong-doers” ~ Ricoh files police complaint against suspected wrong-doers

The company has not yet reported it Quarter 2 results for the Financial Year ending 2016. The reason for the delay has been stated as a change of auditors which happened last year. Ricoh India’s auditors were originally a local firm called “M/s Sahni Natarajan and Bahl”. They were replaced by M/s BSR & Co. LLP, the Indian avatar of KPMG. The problems seem to be having started from then. Subsequently the company has also further delayed its reporting of quarter 3 results for FY16. Whereas when its parent company in Japan announced its third quarter results it sounded very much positive on the performance of its Indian IT service operations.

In January this year, India Ratings, a unit of Fitch, had upgraded its rating for Ricoh India’s Rs 200 Crs Long Ter Non-Convertible Debentures to Ind AA – from Ind A with a stable outlook and also that of Long Term Issuer Rating of Ricoh India to Ind AA- from Ind A with a stable outlook. Later, on March 15, the ratings agency placed the Company’s Long Term Issuer Rating, its Rs 200 Crs NCDs and its Commercial Papers on a Negative rating. The stock reacted by falling over 100 points from its day’s high of Rs 580.25 to Rs Rs 479.75 on March 16^th 2016.

In February it won an order worth Rs 344 Crs from Kerala State Electronics Development Corporation Ltd for Supply, Installation and Commissioning of Computer Hardware, Connected Accessories, Software, Maintenance of Equipments and provision of Computer Education Services in 2000 Government & Government Aided High Schools in the State of Odisha on 5 Years BOOT Model Project under ICT School Scheme.

In its March 29^th notification to the Stock exchange, the company communicated that it has “not yet received the signed limited review report from the auditors and the audit committee would take up again the matter with the Statutory Auditors to submit their limited review report on an immediate basis.” The notification also mentioned that “In order to assist the audit committee, the audit committee has sought the opinion of an Independent Agency in this regard”.

It is evident from the communication that the auditors have finished the audit but are refusing to issue a limited review report. A possible explanation to this could be that auditors must have pointed out severe objections on the accounts and are demanding a proper disclosure from Ricoh India. The communication also revealed that the “the review process is being coordinated by employees other than those who have been involved in the preparation, review, approval and signatures of the books and accounts.” and the excuse for this is “some of the employees in the latter category have been requested to avail leave with pay with effect on and from the 30th day of March, 2016”. The Company has called this a “standard practice” but the standard practice is that employees who prepare the accounts are at the forefront are supposed to answer the auditor’s queries. On April 1^st, the Company notified that it has appointed an independent agency, an independent Law firm and accountants to assist the Auditor committee. Further, Ricoh India has requested its Mr Manoj Kumar, MD and CEO, Mr Arvind Singhal, CFO and Mr anil Saini, Senior VP and COO to take leave with pay during the review process. On behalf of the above officers, Mr A.T Rajan would be in charge of CEO and COO duties and Mr Bibek Chowdhury would be in charge of CFO functions. Later on April 4^th Mr Manoj Kumar resigned from the Board of Directors with effect from April 2, 2016.

The scrip was transferred to ‘Z’ group from ‘B’ group on BSE due to non-compliance issues with effect from March 28th. The trades in these scrips executed in ‘Z’ group will be settled on trade for trade basis. If a company is shifted for settlement on trade-to-trade basis, selling or buying of shares in that scrip results into giving or taking delivery of shares at the gross level and no intra-day netting off/squaring off is permitted. The scrips which form part of the ‘Z’ group are compulsorily settled on a trade-to-trade basis.

The Company is now under regulatory glare amid allegations of financial irregularities that recently led to its top officials stepping down. The Securities and Exchange Board of India is looking into complaints including the lag in announcement of results by the company and the reasons that caused the delay.

Now, the BSE has issued notification on May 4^th that trading in Ricoh India will be suspended from May 26, 2016 on account of non –compliance with Regulation 33 of SEBI Listing Regulations, 2015 for two consecutive quarters. And the most recent update being Ricoh India’s board will meet on May 17, 2016 to discuss Q2 FY16 results.

Standalone Financial Results – Amt in Rs Crs

*TTM EPS for Q1 FY16

The Company has issued – Debentures from Related Party – Unsecured Redeemable Non Convertible Debentures in FY 15 – 2,000 units of 7.8% Debentures unsecured, non-cumulative, redeemable, taxable, listed, rated non-convertible of a face value of Rs. 10 lacs each privately placed at par during the year is redeemable in Financial Year 2017-18 for cash at par.

Trade Receivables for FY 15 have almost doubled to Rs 662 Crs from Rs 319 Crs in FY 14.

Cash and Cash equivalents have doubled as well for FY 15 to Rs 70 Crs from Rs 38 Crs. Balances with banks in this case have reduced to Rs 17 Crs from Rs 27 Crs, Cheques on hand have increased to Rs 40 Crs from Rs 2 Crs and Margin Money has also increased to Rs 13 Crs from Rs 9 Crs. Banks with balances includes blocked accounts amounting to Rs 3.17 Lakhs at the pre-devaluation rates of exchange.

Other short term loans and advances for FY 15 have increased 2.5 times to Rs 50 Crs from Rs 20 Crs in FY 14.

Ricoh India’s delisting offer had failed in 2014. Its Japanese parent had announced for delisting of the Indian arm in November 2013. The Share price had tripled in months after the news. The offer failed later on as the company’s Japanese promoters rejected the price discovered through the reverse book building (RBB) process and said Ricoh India would continue to remain listed.  The share price then dropped by 40% on the news. Ricoh India dips 36% in two sessions after delisting bid fails