Samtel Color Ltd. NSE Code - SAMTEL TABLE 1 - MARKET DATA (STANDALONE) (AS ON 2 ND AUGUST, 2017) Sector - Consumer Durables NSE Market Price (`) 0.55 NSE Market Cap. ( Cr.) 5.13 Face Value (`) 10.00 Equity (` Cr.) 85.49 Business Group - Kaura - Satish 52 week High/Low ( ) 0.70/0.40 Net worth ( Cr.)* -690.34 Year of Incorporation - 1986 TTM P/E (TTM) N.A. Traded Volume (Shares) 2,000 TTM P/BV N.A. Traded Volume (lacs) 0.01 Registered Office - Source - Capitaline, TTM - Trailing Twelve Month, N.A -Not Applicable *As on 30 th September, 2016 501 5 Flr Copia Corporate Suit, COMPANY BACKGROUND Plot 9 Dist Centre Jasola, New Delhi 110 025 Company Website: Samtel Color (SCL) was incorporated on 15 th May 1986, promoted by S K Kaura, Teletube Electronics and Samtel (India) and is managed by the chairman and managing director S K Kaura. SCL is engaged in the manufacture of colour picture tubes, colour Electron Guns, Black & White Electron Guns and Deflection Yokes. The Company is the largest integrated picture tube manufacturer in the country with a market shares in excess of 50%. The company is also the only CRT manufacturer in India. 5-5 -15-25 Quarterly revenue and Profit ( CRORE) 0.00 0.00 0.00-1.70-17.53 Revenue and Profit Performance -8.41 Sep'16 Mar'16 Sep'15 Revenue Profit The Company did not record any revenue during the period from Sept 15 to Sept 16. Other income of the Company increased by 0.16 Cr. from Sep 15 quarter to Sep 16 quarter. The Company made a loss of 1.70 crores in quarter ending Sep 16 vis-a-vis making a loss of 8.41 crores in quarter ending Sep 15. Source: Moneycontrol Performance vis-à-vis Market 1.50 TABLE 2- Returns 1.00 1-m 3-m 6-m 12-m Samtel Color Ltd 10.00% 9.09% 0.00% 10.00% 0.50 Nifty 4.16% 7.86% 14.93% 16.78% 0.00 NIFTY FMCG -6.66% 8.21% 12.53% 14.99% Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Samtel Color Ltd NIFTY NIFTY FMCG Source: Capitaline/ NSE 1 P A G E
TABLE 3 - FINANCIALS ( Cr.) Sep 16 Mar 16 Sep 15 % Change Sep 16 vs Mar 16 Mar 16 vs Sep 15 Net Worth -690.34-686.57-660.84 N.A. N.A. Current Assets 84.52 84.60 85.71-0.10% -1.29% Non-Current Assets 116.81 119.87 125.05-2.55% -4.15% Total Assets 201.33 204.46 210.76-1.54% -2.98% Investments 5.38 5.38 5.38-0.03% 0.03% Finance Cost 0.01 2.53 2.87-99.60% -11.85% Long Term Liabilities 57.71 57.65 118.62 0.10% -51.40% Current Liabilities 803.96 803.39 722.98 0.07% 11.12% Turnover - - - - - Profit After Tax -1.70-17.53-8.41 N.A. N.A. EPS ( ) -2.30-3.92-2.86 N.A. N.A. Source - Money Control/ Stock exchange filing AUDIT QUALIFICATIONS Audit Qualifications in last 3 years: For the period of 2014, 2015 and 2016 (Common issue observed by the Auditors for last three years): - (A) The Financial statements have been prepared by Company on the going concern basis as fully elaborated in Note 38 of the financial statements even though the proceedings are going on before the Board of industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act 1985. (B) We had reported in our audit report for the year ended 31 st March 2012 as under: - (i) The entire net worth of the Company has eroded completely; (ii) the Company has initiated the bidding process for the disposal of production lines 1 and 4 (non- core assets) out of 4 production lines at plant situated at Gautam Budh Nagar (Uttar Pradesh) after obtaining approval of CDR lenders and consequently impaired those production lines by 38.6691 crore and related stores & spares by 5.1228 crore; (iii) the manufacturing operations at other production lines at plants situated at Ghaziabad (Utter Pradesh) & Parwanoo (Himachal Pradesh) could not be resumed in the financial year due to non-participation of labour in production process reasoning to their over-dues; (iv) the Company has defaulted in repayment of loans as per CDR scheme and borrowings of other lenders, as elaborated in note no. 38 of the financial statements; (v) there is diminution in the value of long term investments; (vi) reconciliation and confirmations of balances of certain major creditors and acceptances are pending; (vii) non-redemption of 969,163, 0% redeemable preference shares of 100 each amounting to 9.6916 crore already due for redemption; and (viii) non-payment of preference dividend for the period from 31 st March 2008 to 31 st March 2012 aggregating to 7.7361 crore on 21,10,116 8% Non-Convertible Cumulative Redeemable Preference Shares. (C) We further reported in our audit report for the year ended on 31 st March, 2013 as under (i) In view of the continued failure of the Company to disburse the legitimate dues of the workmen, Hon'ble High Court of Himachal Pradesh (Shimla) has settled the dispute by passing an order for the closure of Deflection Yoke unit at Parwanoo (H.P) and thereby, pay off the corresponding outstanding dues by selling the industrial undertaking/company assets etc., (ii) the operations have been suspended in all locations by the mid of November 12, & have not been resumed till date and consequently, management has impaired the production lines 3&5, located at Gautam Buddh Nagar (UP) & Deflection Yoke unit located at Parwanoo (HP) by 27,9.7706 crore and related stores & spares by 4.1035 crore etc.; (Hi) the impairment of assets of production line 2, located at GautamBuddh Nagar (U.P.), and gun division at Meerut has not been considered by the management on the rationale of its revival plan of running the operations by restructuring them even though in our opinion considering the liquidity crunch, the probability of running these lines seems remote; (iv) the balances outstanding as on 31st March, 2013 of receivables & inventory are subject to confirmation & physical verification respectively due to temporary suspension of operations & non access to inventories, (v) raw materia! & finished goods inventory amounting to 3.1190 crore and 0.55 crore respectively have been seized by the excise authorities due to non-payment of excise dues; (vi) there is nonsubmission of various statutory returns acknowledged by the respective authorities, non provision/deposition of various 2 P A G E
overdue statutory liabilities like PF/Service Tax/TDS/Excise/Vat & CST/WCT/TCS/ESI/Gratuity/Bonus/ Preference dividend & related over dues (interest and penalty), non deduction of IDS on provisional expenses; and as explained by management exact amount of which could not be ascertained in present scenario; (viii)there is increase in diminution of investments in current year of Rs.841.48 lac;, (ix) Assets lying with the Provident Fund trust have been transferred to Regional Provident Fund Commissioner and those related to Gratuity Trust have been settled by adjustment of employees dues. However, as per the management, related liability has been accounted for completely and there will be no demand over and above the same; (x) Company has accounted for its gratuity and leave encashment liability on actual basis rather than on actuarial valuation method which has been prescribed in Accounting Standard AS-15, "Employee Benefits". (D) We further report that during the year ended 31 st March, 2014 the facts and situation mentioned above continues. Further the Company has not complied with the provisions of clause 35 of listing agreement (submission of shareholding pattern) and requirements of SEBI circular no. D & CC/ FITTC/CIR-16/2002 dated 31.12.2002 regarding Reconciliation of Share Capital Audit Report, for the quarter ended 31 st December 2013. Default still continues. On Annual Report 2015 stated that This default was made good on 23 June, 2014.However due to delay NSE has imposed a penalty of 0.0932 crore vide notice no. FINES/2013-14/230721-T dated 17 February, 2014 which is still unpaid. Audit Qualifications for the period of 2015 (E) We further reports that during the year ended 31st March, 2015 the facts and situation mentioned above continues Further (I) the Company has not appointed any Chief financial officer as per the requirement of section 203 of the Companies Act 2013, in respect of the key managerial personnel; (ii) the balances outstanding in banks (except one operative bank) are subject to confirmation; (iii) during the financial year 2013-14, the Company had provided further diminution in long term investment in Samtel Glass Limited of 9.3787 crore, diminution of investment in current year has not been considered by the management since, as explained to us, the realisation value of land during disposal of Samtel Glass Limited will be higher after setting off ail liabilities [refer note no. 37(g)j; (iv) the shares against subscription money received from Promoters Group Company of 30.00 crore, in terms ofcdr Scheme, could not be issued due to non-approval from Stock Exchange. After the lapse of extended period as provided in MCA N/N the Company may be in default of provision of section 73 to 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 and relevant Amendment Rules 2015. Audit Qualifications for the period of 2016 (A) The Financial Statements have been prepared by the Company on the going concern basis as fully elaborated in Note 37 of the Financial statements further we also draw attention on note no. 37 and (48) of Financial Statements (i) The declaration of the company as a sick industrial company under section 3(1) of sick Industrial Companies Act, 1985 via order of BIFR bench dated 3 rd December, 2014 against case no. 58/2012. During the year draft rehabilitation scheme in line with prescribed procedure & rules under SICA was filed and : (a) as per direction of BIFR dated 6 th October, 2015 Company has to submit the updated DRS after incorporation of all the observations made by ICICI (OA) and the Company has applied on behalf all the applicant under third provision the section 15 of SICA for abatement of reference filed by the Company on account of action taken by the OA under section 13(4) of SARFAESI Act, 2002. (b) ICICI bank authorised by other Banks/ financial Institutions has taken physical possession of immovable properties situated at R-9/10 Raj Nagar Gaziabad (U.P.) and plot no-6, sector II Parwanoo (H.P.) under section 13(4) of SARFAESI Act, 2002 as per the direction dated 14 th July, 2014 of District Magistrate Ghazibad for Rajnagar Property on the basis of symbolic possession of all the immovable properties of the Company pursuant to letter dated 16 th April 2014. (ii) The Deprecation where useful life and salvage value of assets is in variance with the useful life and salvage value given in Schedule II of Companies Act, 2013 as per the technical assessment by an independent professional valuer. Management Responses for the period of 2014, 2015 and 2016 (Common responses given for three years): - (A) The Company is taking necessary steps to streamline the restructured operations of some of the manufacturing facilities. Thus, the Company feels that it can operate as "Going Concern" in foreseeable future. (B) The Company will obtain the balance confirmation and reconciliation thereof from creditors/debtors in due course. (C) During the year, the fixed assets of the Company were not verified by the management. However, the management does not expect any major discrepancy. (D) Due to suspension of operations in all the locations the physical verification of inventory could not be done on March 31, 2014 3 P A G E
to March 31, 2016, However, the management is of the view that there are not any major discrepancies in inventory. (E) The Company has not booked the statutory liabilities on the provision for expenses made during the year as the quantum of exact statutory liability cannot be ascertained in the present scenario. Management Responses for the period of 2015 and 2016 (F) The statutory payments will be cleared on availability of the funds with the company. (G) With regard to provisions of clause 35 of listing agreement (submission of shareholding pattern) and requirements of SEBI circular no. D & CC/ FITTC/CIR-16/2002 dated 31.12.2002 regarding Reconciliation of Share Capital Audit Report, for the quarter ended 31st December 2013. The same has been complied with, the company has already filed the same reports with the stock exchanges. The company has also given representation to the stock exchange with regard to cause of delay and waiver of penalty. (H) The company has been declared as a Sick Industrial undertaking by BIFR, Further there is no significant business activities justifying appointment of CFO, however the company has been scouting the market for an qualified chartered accountant to be appointed as CFO of the company. Company expects to comply with the provisions of Companies Act, 2013 expeditiously. (I) In the view of the management the share application money of 30 crs. not refundable and doesn t fall in the category of deposit in pursuant to section 73 to 76 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 and relevant amendment Rules 2014. The warrants/shares have not been allotted to the applicant due to absence of requisite approval of the stock exchanges for which application had submitted. (J) The performance of the Company in the last few quarters has been impacted due to liquidity constraints resulting from lower sales volume in the domestic and international market. During the earlier years, operations at all the locations have been suspended due to severe financial constraints. In view of the present scenario of Colour Picture Tube business, the management is of the view that the existing demand of CPT can be serviced by operating some of the manufacturing facilities of the Company after approval of rehabilitation/revival scheme of BIFR. Accordingly, the Company s financial statements have been prepared on a going concern basis whereby realization of assets & discharge of liabilities are expected to occur in the normal course of business. (K) The company has provided for diminution in value of long term investments on the basis of applicable accounting standards. In respect of investment in Samtel Glass Ltd. (SGL) the management has the opinion that the realisation value of immovable properties of SGL will be much higher than the admitted liabilities. Thus, the long term value of the equity shares of SGL are expected to be higher and diminution of value at this stage is not called for. (L) Consequent to the declaration of NPA by the Lenders banks all the bank accounts have been declared non-operative. Hence thereafter there have been no transactions in the said bank accounts. Response Comment Frequency of Qualifications Yes For the year 2014, 2015 & 2016 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? No - 4 P A G E
Trading Ratios Solvency Ratios Liquidity Ratios Return Ratios Turnover Ratios STAKEHOLDERS EMPOWERMENT SERVICES TABLE 4: BOARD PROFILE (AS PER ANNUAL REPORT 2015-16) Regulatory Norms Company % of Independent Directors on the Board 50% 40% % of Promoter Directors on the Board - 40% Number of Women Directors on the Board At least 1 1 Classification of Chairman of the Board - Executive Promoter Director Is the post of Chairman and MD held by the same person? - Yes Average attendance of Directors in the Board meetings (%) - 85.71% Composition of Board: As per Regulation 17(1)(b) of the Listing Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board is an Executive Director. The Company has 40% of Independent Directors and hence, it does not meet the regulatory requirement. Board Diversity: The Company has 5 directors out of which 4 are male and 1 is female. TABLE 5 - FINANCIAL RATIOS Ratios Sep 16 Mar 16 Sep 15 Source - Money control Sep 16 vs Mar 16 % Change Mar 16 vs Sep 15 Inventory Turnover - - - - - Debtors Turnover - - - - -- Fixed asset Turnover - - - - - Current Asset Turnover - - - - - Operating Profit Margin - - - - - Net Profit Margin - - - - - Return on Assets (ROA) N.A. N.A. N.A. N.A. N.A. Return on Equity (ROE) N.A. N.A. N.A. N.A. N.A. Return on Capital Employed (ROCE) N.A. N.A. N.A. N.A. N.A. Current Ratio 0.11 0.11 0.12-0.17% -11.17% Quick Ratio 0.09 0.09 0.10-0.19% -11.35% Cash Ratio 0.02 0.02 0.02-0.72% -16.91% Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A. Debt to equity ratio N.A. N.A. N.A. N.A. N.A. Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. Market Cap / Sales - - - - - Market Cap/ Net Worth N.A. N.A. N.A. N.A. N.A. Market Cap/PAT N.A. N.A. N.A. N.A. N.A. Market Cap/EBITDA N.A. N.A. N.A. N.A. N.A. 5 P A G E
Shareholding (%) STAKEHOLDERS EMPOWERMENT SERVICES TABLE 6 - TRADING VOLUME TABLE 7 (A): OWNERSHIP & MANAGEMENT RISKS Jun 17 Dec 16 Jun 16 Jun 17 vs Dec 16 Jun'17 Dec'16 Jun'16 Comments % Change Dec 16 vs Jun 16 Trading Volume (shares) (avg. of 1 qtr) 3,932 7,672 7,648-48.75% 0.31% Trading Volume (shares) (high in 1 qtr) 32,266 1,01,268 89,800-68.14% 12.77% Trading Volume (shares) (low in 1 qtr) 2 1 35 100.00% -97.14% Ratio - High/low trading volume 16,133 1,01,268 2,565.71-84.07% 3846.97% Ratio - High/average trading volume 8.21 13.20 11.74-37.84% 12.43% Promoter shareholding 28.85 28.85 28.85 No new equity shares were issued during the period from Jun 16 to Jun 17. Public - Institutional shareholding 31.96 31.96 31.96 Public - Others shareholding 39.19 39.19 39.19 Non-Promoter Non-Public Shareholding 0.00 0.00 0.00 Promoter shareholding remains unchanged during the above period. No other changes were observed in the shareholding pattern during the said period. Promoters have pledged/ encumbered 99.23% of their shareholding. Source: NSE MAJOR SHAREHOLDERS (AS ON 30 TH JUNE, 2017) S. No. Promoters Shareholding S. No. Public Shareholders Shareholding 1 Samtel Machines & Projects Ltd. 10.55% 1 ICICI Bank Ltd. 9.99% 2 Samtel India Ltd. 6.93% 2 Punjab National Bank 7.85% 3 Cea Consultants Pvt. Ltd. 4.61% 3 Export Import Bank of India 5.65% 4 Lenient Consultants Pvt. Ltd. 2.49% 4 Union Bank of India 3.87% 5 Samtel Avionics Ltd. 2.14% 5 Amberley Estates Pvt. Ltd. 2.41% Source: NSE TABLE 7 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters Preferential issue to promoters Preferential issue to others GDRs issued by the Company Issue of ESOPs Source - Annual Report 2015-16 Promoters have not sold/bought any shares in last one year No preferential issue was made to the promoters in last one year No preferential issue was made to other shareholders in last one year The Company did not issue any GDRs in last one year The Company does not have any ESOP Scheme. Further, no new equity shares were issued by the Company other than the preferential allotment in last one year. TABLE 8: PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY - AS STATED BY THE COMPANY Sr. No. Name and Description of main products / services % to Total turnover of the Company All the business activities contributing 10% or more of the total turnover of the Company shall be stated - Not Applicable Source - Annual Report 2015-16 6 P A G E
Equity: The equity shares capital of the Company Glossary 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 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 7 P A G E
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 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 pershare 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. 8 P A G E
Market Cap Market Cap/EBITDA ratio = 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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