MVL Ltd 31 st May, 2016 TABLE 1 - MARKET DATA (STANDALONE) (As on 31 st May, 2016) NSE Code - MVL NSE Market Price ( ) 0.35 NSE Market Cap. ( Cr.) 18.04 Sector - Realty Face Value ( ) 1.00 Equity ( Cr.) 60.12 52-week High/Low ( ) 0.60/0.15 Net worth ( Cr.) 170.74 Business Group - Indian Private TTM P/E 1.03 Traded Volume (Shares) 17,048 Year of Incorporation - 2006 TTM P/BV 0.00 Traded Volume (lacs) 0.06 Source - Capitaline Corporate Office: 1201 B, 12 th Floor, Hemkunt Chamber, 89 Nehru place, New Delhi 110 019, New Delhi Company Website: COMPANY BACKGROUND MVL Ltd is one of the fastest growing real estate companies in India. The company is engaged in the developing Group Housing, Townships, Malls, IT Park and Hotel Projects. The company is operating in Residential, Township, Commercial, Retail and Hospitality verticals. The company has four wholly owned subsidiary company, namely MVL Developers Limited, Creative Pools Developers Private Limited, Parisar Property Developers Private Limited and Udyan Horticultures Private Limited. MVL Ltd was incorporated on October 18, 2006. The company came into existence as the de-merged realty arm of Media Video Ltd, a public limited company. The company was established with the objective of providing a bouquet of real estate solutions. During the year, the company launched MVL Coral, the first premium housing project at Bhiwadi. TABLE 2 - PRICE PERFORMANCE 30 th May, 2016 29 th May, 2015 30 th May, 2014 % Change CAGR for 2 years 2016 vs 2015 2015 vs 2014 Price ( ) 0.30 0.30 1.35 0.00% -77.78% -52.86% Trading Volume (Shares) (yearly avg.) 3,52,272 4,93,409 72,499-28.60% 580.57% - NSE Market Cap. (in Cr.) 18.04 18.04 81.16 0.00% -77.77% -52.85% Source - Money Control 1 P A G E
TABLE 3 - FINANCIALS ( Cr.) 2015 2014 2013 % Change CAGR for 2 years 2015 vs 2014 2014 vs 2013 Net Worth 170.05 169.62 161.4 0.25% 5.09% 2.64% Current Assets 379.86 335.92 348.62 13.08% -3.64% 4.38% Non-Current Assets 114.91 111.25 40.14 3.29% 177.15% 69.20% Total Assets 494.77 447.16 388.76 10.65% 15.02% 12.81% Investments 133.6 111.92 36.47 19.37% 206.88% 91.40% Finance Cost 12.56 14.46 5.36-13.14% 169.78% 53.08% Long Term Liabilities 87.5 187.11 134.08-53.24% 39.55% -19.22% Current Liabilities 237.23 90.44 93.27 162.31% -3.03% 59.48% Turnover 39.09 70.27 82.44-44.37% -14.76% -31.14% Profit After Tax (PAT, Cr.) 0.55 8.21 9.69-0.93-0.15-0.76 EPS ( ) 0.01 0.14 0.16-0.93-0.16-0.76 Source - Money Control/Annual Report Discussion as per Company: In Annual Report 2014-2015: Revenue from operations of the Company for year ended March 31, 2015 was down by 42.39% to 4147.88 Lacs. The decline in turnover reflects volatile market conditions in real estate during the year. Standalone Profit before Tax increased by 4.45% on a year on year basis from 52.81 Lacs to 55.16 Lacs. Standalone Profit after Tax was higher by 20.89% at 40.16 Lacs as against 33.22 Lacs in the previous year. There was some delay in getting the approvals from competent authorities and therefore some prominent projects of the Company could not be started on time. However, your Company will witness a growth oriented year 2015 as many new projects will commence during the year as their statutory approvals are likely to be obtained within current financial year. In Annual Report 2013-2014: Under review, despite volatile market conditions in real estate, Company recorded a Turnover of 7200.46 lacs and Profit after Tax of 821.46 lacs. There was some delay in getting the approvals from competent authorities and therefore some prominent projects of the Company could not be started on time. However, your Company will witness a growth oriented year 2014 as many new projects will commenced during the year as their statutory approvals are obtained. The financial projections of the company including its cash flows were majorly impacted because of this reason during the year. However, the operating margins of the company have improved because of better amortization of fixed and variable overheads during the year. In Annual Report 2012-2013: Under review, despite volatile market conditions in real estate, Company recorded a Turnover of 8539.26 lacs and Profit after Tax of 75.90 lacs. There was some delay in getting the approvals from competent authorities and therefore some prominent projects of the Company could not be started on time. However, your Company will witness a growth oriented year 2013 and many new projects will be added in its project list. Since, during the year under review, the Company has decided not to pursue its hospitality business activity and focus on its core Real Estate business, the land acquired for developing a 5-star hotel in Neemrana, Rajasthan shall be utilized for a residential project. The financial results of the Company for the year include only figures of Real Estate business. 2 P A G E
AUDIT QUALIFICATIONS Audit Qualifications in last 3 years: In Annual Report 2014-15 1. Note No. 37 in respect of non-availability of confirmations in respect of some debit and/or credit balances. In the absence of such confirmations, any provision to be made for the adverse variation in carrying amounts of these balances, are not quantified, as well as the quantum of adjustment if any, required to be made remain unascertained. 2. Note No. 38 in respect of non-provision of penal interest on loans declared as NPA. Liability for penal interest payable has also not been quantified on account of uncertainty and discretionary nature of penal interest, if any payable. 3. Note No. 39 in respect of non-provision of interest with retrospective effect from 01.04.2014 vide Board Resolution dated 17.02.2015 on loans from banks and financial institutions declared as Non Performing Account (NPA). As a result of non-provision of said interest of 32,39,14,890/- payable on NPA Account as per last agreed terms: - Revenue from operation has been understated by 26,14,60,650/- arising out of percentage of completion (POC) method of accounting, due to non-capitalization of interest directly attributable to project work-in-progress. Loss from operation has been understated by 6,24,54,240/-on account of non-provision of interest of 32,39,14,890/- and short booking of sales by 26,14,60,650/. 4. Note No. 40 regarding non provision of advance to an associate company considered doubtful of recovery and non provision of interest on the said loan. Management Response: 2014-15 Point no. 4 of Auditor Report per se is the opinion of the Auditor on certain points of notes to accounts attached to the financial statement for the period ended 31.03.2015. Since notes to accounts are part of financial statement prepared by the Company, the Company in the relevant points has explained each situation which has arisen this time. The relevant clauses of notes to accounts along with Board s response is as follows: - i. Note No. 37 regarding non-availability of confirmations in respect of some of the debit and/or credit balances: The Board is of the view that the company has its own internal audit system to monitor the reconciliations periodically; hence confirmations of all outstanding balances at the year-end are not taken. ii. Note No. 38 regarding non-provision of penal interest on loans declared as NPA: The Banks & Financial Institutions are not providing interest on NPA Loans as per prudential norms of Reserve Bank of India. These loans are under settlement/restructuring with the Banks/Financial Institutions. Therefore, the Board is of the opinion that interest and penal interest will be booked after such settlement/ restructuring only. The Board has decided to follow uniform policy on this matter w.e.f. 1st April, 2014. iii. Note No. 39 regarding non-provision of interest with retrospective effect from 01.04.2014 vide Board Resolution dated 17.02.2015 on loans from banks and financial institutions declared as Non Performing Account (NPA): The Board is of the opinion that as a result of non-provision of said interest of 32,39,14,890/- payable on NPA Account as per last agreed terms: - a) Revenue from operation has been understated by 26,14,60,650/- arising out of percentage of completion (POC) method of accounting, due to non-capitalization of interest directly attributable to project work-inprogress. b) Loss from operation has been understated by 6,24,54,240/-on account of non-provision of interest of 32,39,14,890/- and short booking of sales by 26,14,60,650/-. iv. Note No. 40 regarding non provision of advance to an associate company considered doubtful of recovery and non provision of interest on the said loan: The said loan was agreed to be provided to related company during financial year 2013-14, to clear their urgent liabilities towards Banks/ Financial Institutions. The Board is of the view that the Company is hopeful for their recovery during the ensuing year, so no provision has been created In Annual Report 2013-14 Note No. 37 regarding non-availability of confirmations in respect of some of the debit and/or credit balances of trade receivables, trade payable, loans, advances, bank account and deposits. In the absence of such confirmations, any provision to be made for the adverse variation in carrying amounts of these balances, are not quantified, as well as the quantum of 3 P A G E
adjustment if any, required to be made remain unascertained. Management Response: 2013-14 Point no. 6 of Auditor Report per se is the opinion of the Auditor on Note No. 37 regarding non-availability of confirmations in respect of some of the debit and/or credit balances of trade receivables, trade payable, loans, advances, bank account and deposits. The Board explains that the company has its own internal audit system to monitor the reconciliations periodically, hence confirmations of all outstanding balances at the year-end are not taken. Company Comment Frequency of Qualifications The Auditors have given qualified opinion in 2013-14 and 2014-15 last three years. Have the auditors made any adverse remark in last 3 years? No - Are the material accounts audited by the Principal Auditors? Yes - Do the financial statements include material unaudited financial statements? TABLE 4: BOARD PROFILE (As on 31 st March, 2015) No - Regulatory Norms Company % of Independent Directors on the Board 50% 50% % of Promoter Directors on the Board - 33% Number of Women Directors on the Board At least 1 1 Classification of Chairman of the Board - Not Disclosed Is the post of Chairman and MD/CEO held by the same person? - No Average attendance of Directors in the Board meetings (%) - 80.43% Source - Money Control/Annual Report Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board not disclosed. The Company as on 31 st March, 2015 has 50% of Independent Directors and hence, it meets the regulatory requirements. Board Diversity: The Company has 6 directors out of which 5 are male and 1 is female. The Company have a single woman Director on the Board. 4 P A G E
Trading Ratios Solven cy Ratios Liquidity Ratios Return Ratios Turnover Ratios TABLE 5 - FINANCIAL RATIOS Ratios 2015 2014 2013 % Change 2015 vs 2014 2014 vs 2013 Inventory Turnover 0.39 0.73 0.89-46.04% -17.67% Debtors Turnover 0.16 0.32 0.34-49.86% -7.80% Fixed asset Turnover 0.34 0.63 2.05-46.14% -69.25% Current Asset Turnover 0.10 0.21 0.24-50.81% -11.54% Operating Profit Margin 1.41% 0.75% 1.25% 86.55% -39.63% Net Profit Margin 1.41% 11.68% 11.75% -87.96% -0.60% Return on Assets (ROA) 0.11% 1.84% 2.49% -93.95% -26.34% Return on Equity (ROE) - - - - - Return on Capital Employed (ROCE) 4.14% 5.15% 3.46% -19.62% 48.90% Current Ratio 1.60 3.71 3.74-56.89% -0.63% Quick Ratio 1.18 2.65 2.74-55.36% -3.32% Cash Ratio 0.15 0.20 0.17-26.33% 16.91% Working Capital Turnover ratio 0.27 0.29 0.32-4.26% -11.34% Debt to equity ratio 1.51 1.36 0.77 10.81% 76.30% Interest Coverage Ratio 1.04 1.04 1.19 0.69% -13.04% Market Cap / Sales 0.58 0.33 0.28 79.76% 17.32% Market Cap/ Net Worth 0.13 0.13 0.14-0.25% -4.85% Market Cap/PAT 41.55 2.78 2.36 1,392.73% 18.03% Market Cap/EBITDA 30.99 36.43 20.29-14.94% 79.51% Trading Volume (shares) (avg. of 1 year) Trading Volume (shares) (high in 1 year) Trading Volume (shares) (low in 1 year) 5,25,606 3,11,083 72,920 68.96% 326.61% 41,66,928 35,39,532 18,94,511 17.73% 86.83% 20.00 25.00 1.00-20.00% 2,400.00% Ratio - High/low trading volume 2,08,346.40 1,41,581.28 1,894,511.00 47.16% -92.53% Ratio - High/average trading volume 7.93 11.38 25.98-30.32% -56.21% Source - Money Control 5 P A G E
Shareholding TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS Dec' 2015 Dec' 2014 Dec' 2013 Comments Promoter shareholding 55.12% 59.47% 58.63% No new equity shares were issued during the Public - Institutional Dec 13 to Dec 15. The promoter shareholding 4.86% 4.90% 4.89% shareholding decreased from 58.63% to 55.12% during Public - Others shareholding 40.03% 35.63% 36.47% same period. The shareholding of public others increased from 36.47% to 40.03% Non-Promoter Non Public - - - during the same period. The promoters have Shareholding pledged 30.89% of their shareholding. TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters The Promoters of the Company bought shares from secondary market in the FY 2014-15. Preferential issue to promoters Preferential issue to others GDRs issued by the Company Issue of ESOPs/Issue of shares other than Preferential allotment Source - Annual Report No preferential issue of shares was made to the promoters in last three years No preferential issue of shares was made to other shareholders during last three years The Company did not issue and GDRs during last three years The Company does not have any ESOP Scheme 6 P A G E
Glossary Equity: The equity shares capital of the Company Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders funds of the Company Turnover: The revenue earned from the operations of the Company EPS: Earning Per Share is net profit earned by the Company per share EPS = Profit After Tax Number of outstanding shares P/E ratio: It is the ratio of the Company s share price to earnings per share of the Company P/E ratio = Price of each share Earnings per share Current Assets: Cash and other assets that are expected to be converted to cash in one year Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment Total Assets: Current Assets + Fixed Assets Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges incurred during the year in relation to borrowed money. Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year. Current Liabilities: A company's debts or obligations that are due within one year. Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. Inventory Turnover ratio = Inventory Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period Debtors Turnover ratio = Accounts recievables Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets Fixed Asset Turnover ratio = Fixed Assets Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets Current Asset Turnover ratio = Current Assets 7 P A G E
Operating Profit Margin: Operating margin is a measurement of what proportion of a Company s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company s operating income (also known as operating profit ) during a given period by its sales during the same period. Operating Profit Margin = Operating profit Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net Profit Margin = Net profit Return on Assets: ROA tells you what earnings were generated from invested capital (assets) Return on Assets = Net profit Total Assets Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Return on Equity = Net profit Net worth Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Return on Capital Employed = Net profit Total Debt + Equity share capital Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. Current ratio = Current Assets Current Liabilities Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities. Quick ratio = Current Assets Inventories Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities. Quick ratio = Current Assets Inventories Account Recievables Current Liabilities Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a Company's effectiveness in using its working capital. Working Capital Turnover ratio = Current Assets Current Liabilities Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Debt to Equity ratio = Short Term Debt + Long Term Debt Net Worth Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a Company can pay interest on outstanding debt. Interest Coverage Ratio = Earning Before Interest and Tax Finance Cost 8 P A G E
Market Cap/Sales ratio: Market Cap/sales ratio, Price sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-share stock price by the per-share revenue. Market Cap Market Cap/Sales ratio = Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company s market cap to net worth. Market Cap Market Cap/Networth ratio = Networth Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company s market cap to net profit. Market Cap Market Cap/PAT ratio = net profit Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company s market cap to EBITDA. Market Cap/EBITDA ratio = Market Cap EBITDA Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year 9 P A G E
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