Aditya Gears Ltd. BSE Scrip Code: 53677 Auto Parts & Equipment March 5, 23 Last Traded Price* Rs. 52 Week High/Low Rs. Market Capitalisation* Free Float Dividend Yield % One Year Regression Beta Equity Statistics Rs. Crores Rs. Crores Times BSE Volumes Trend - 8.5 4.6 3.83 Company Summary Aditya Gears was incorporated on 2 August 995, promoted by Ashok Kumar Harlalka. The company is engaged in manufacturing and marketing of auto parts and equipments and is also the provider of aftermarket auto parts. The company had set up a plant with a capacity to manufacture 384 tonnes per annum of automobile transmission gears and shafts at Bhiwadi, Rajasthan, at a cost of Rs.557 lakh and started commercial production from July 997. The company reported meager revenues of Rs..4 lakh in FY through sale of inventory and NIL revenues in FY2. The company had been grappling with severe liquidity problems amid adverse market conditions. Its plant remained idle for the last 5 years and the company had been generating revenues by selling off its inventory. The plant was eventually sold off in FY for Rs.245 lakhs in order to meet its debt obligations. The company has reconstituted the board and plan to revive the company after thorough due diligence. 2 Relative Returns Aditya Gears shares were de-listed from BSE and the company is undertaking the process of getting the revocation of suspension. (The market price series for the company is discreet on account of infrequent trades) Returns M 3M 6M Yr Absolute Rel. to Sensex % 8% 6% 4% 2% % Shareholding Pattern Mar `2 Jun `2 Sep `2 Dec `2 Board of Directors Person Role Qualification Madanlal Harlalka Director Satyajit Mishra ID FCS Nitin Oza ID CA Ramesh Mishra Director FCS, LL.B, PGDCA Source: AR and CARE Research Note: ID: Independent Director Promoter DII FII Others Source: BSE, Capitaline and CARE Research * as on May 23, 997 Initiative of the BSE Investors Protection Fund
Background Aditya Gears was incorporated on 2 August 995, promoted by Ashok Kumar Harlalka. The company is engaged in manufacturing and marketing of auto parts and equipments and is also the provider of aftermarket auto parts. The company had set up a plant with a capacity to manufacture 384 tonnes per annum of automobile transmission gears and shafts at Bhiwadi, Rajasthan, at a cost of Rs.557 lakh. The promoter has 4 years trading experience in auto component market, having a network of over 375 dealers. The company started commercial production from July 997. Initially, the plant was being tested to manufacture gears for Tata brand vehicles and ambassador cars. The company however sold off its plant in Bhiwadi in FY for Rs.245 lakhs in order to meet its debt obligations amid adverse market conditions. The company had recorded a profit of Rs..5 crore on sale of its plant in FY. Business overview The company is engaged in manufacturing and marketing of auto parts and equipment and is also the provider of aftermarket auto parts. The company reported meager revenues of Rs..4 lakh in FY through sale of inventory and NIL revenues in FY2. Aditya Gears also wrote off liabilities no longer required to the tune of Rs.2.3 lakhs in FY2. The company had been grappling with severe liquidity problems amid adverse market conditions. Its plant remained idle for the last 5 years (the period under analysis) and the company had been generating revenues by selling off its inventory. The plant was eventually sold off in FY for Rs.245 lakhs in order to meet its debt obligations. Strengths and growth drivers Indian automobile components industry has emerged as one of India's fastest growing manufacturing sectors and a globally competitive one due to strong growth in demand for automobiles. A number of global auto majors source critical components from India like engine parts, drive transmission and steering parts, body and chassis, suspensions etc. As global recovery happens and if the company is able to revive back its operations, it can leverage its strong dealer network and experience of its promoters. Risk and concerns The company has sold off its only manufacturing plant in Bhiwadi to meet its debt payments amid severe liquidity crunch. This raises substantial doubt about the company's ability to revive back its operations in future. The Indian Auto component manufacturing industry is facing several challenges like fluctuating customer demands, high energy costs, strict environmental limits etc. Future strategy and expansion plans The company has reconstituted the board and plans to revive the company after thorough due diligence. The company has, for a time long, planning to enter the exports market. Industry outlook The Indian auto component industry is highly fragmented and valued at around Rs.2,4 billion in FY2. The industry has the resources to manufacture the entire range of components required for vehicle manufacturing approximating 2, components. The domestic market is valued at approximately Rs.,77 billion while the remaining Rs.334 billion worth auto components were exported in FY2. The industry mainly caters to two segments namely (i) Original Equipment Manufacturers (OEM) and (ii) Replacement market. OEM dominates the auto component market contributing around 85% of the market with the remaining being the replacement market. Unorganized players mainly dominate the replacement market, which were mostly Tier 3/4 component manufacturers. Indian Auto Component Industry is transforming itself from a low-volume, highly fragmented one into a competitive industry backed by strengths like technology, efficiency and evolving value chain. In terms of sales (Revenue), Bosch is the leading market player followed by battery maker Exide Industries and leading forging company Bharat Forge. Currently, India is one of the major outsourcing hubs for the auto components industry in the world. Developing technologically-intensive products and good distribution network are some of the key success factors for the industry. The industry is estimated to grow in the range of -2 per cent during the next five-years period (i.e. FY2-FY7) on a CAGR basis. However, a moderation in demand in near term from the OEMs is expected whereas replacement market will continue to post healthy growth. Nonetheless, in long term the automobile industry demand is expected to revive gradually along with continued healthy demand from replacement market. More expansion projects in the pipeline from both new as well as established automobile players would boost auto component demand in the medium term. Furthermore, low-cost destination advantage and availability of skilled labour makes India an attractive manufacturing destination for many global giants for meeting their overseas requirement. 2 Initiative of the BSE Investors Protection Fund
Quarterly financials Income statement (Rs. lakh) Q3FY3 Q2FY3 QFY3 Q4FY2 Q3FY2 Total income - - -.4 - Net sales - - - - - EBITDA (.4) (2.) (.8) (9.9) (.) Ordinary PAT (.4) (2.) (.8).6 (.2) Adjusted PAT (.4) (2.) (.8).6 (.2) Growth (Q-o-Q) (%) Growth in net sales NM NM NM NM Profitability ratio (%) EBITDA margin NM NM NM NM NM Adjusted PAT margin NM NM NM 4. NM Source: BSE, ACE and CARE Research 3 Initiative of the BSE Investors Protection Fund
Financial analysis The company reported meager revenues of Rs..4 lakh in FY through sale of inventory and NIL revenues in FY2. Aditya Gears also wrote off liabilities no longer required to the tune of Rs.2.3 lakhs in FY2. The company s plant remained idle for the last 5 years (the period under analysis) and had been generating revenues by selling off its inventory. The plant was eventually sold off in FY for Rs.245 lakhs in order to meet its debt obligations. Aditya Gears recorded a profit of Rs..5 crore on sale of its plant in FY. Through sale proceeds of its plant in Bhiwadi, the company paid off its entire debt obligation in FY of about Rs.2.5 crore and pending interest payment of Rs..7 crore. The company has not paid any dividends for the period under analysis. Annual financial statistics FY8 FY9 FY FY FY2 Income statement (Rs. lakh) Total income.5.8 33.7 5.2 2.3 Net sales.4.8 4.3.9 - EBITDA (7.76) (7.48) (24.5) (64.79) (2.68) Depreciation and amortisation 2. 2. 2. - - EBIT (27.7) (27.5) (44.5) (64.8) (2.7) Interest - - - 7.3. PBT (27.8) (27.5) (25.) (33.) (.4) Ordinary PAT (27.8) (27.5) (25.) (33.) (.4) Adjusted PAT (27.8) (27.5) (25.) (33.) (.4) Balance sheet (Rs. lakh) Adjusted networth 27.6 4. (32.2) (6.4) (6.8) Total debt 247.6 247.6 247.6 - - Cash and bank.4.6 22.6 4. 2. Investments..... Net fixed assets (incl. CWIP) 29.8 27.9 244.9 - - Net current assets (excl. cash, cash equivalents) (6.) (9.9) (52.) (65.6) (63.8) Per share data (Rs.) Adjusted BVPS.. (.) (.2) (.2) Diluted EPS (.7) (.68) (.62) (.8) (.) DPS - - - - - Growth (Y-o-Y) (%) Growth in total income 7.2 4,7.5 345. (9.8) Growth in net sales 95.,683.8 (93.7) (.) Growth in EBITDA NM NM NM NM Growth in adjusted PAT NM NM NM NM Growth in EPS NM NM NM NM Key financial ratio EBITDA margin (%) NM NM NM NM NM Adjusted PAT margin (%) NM NM NM NM NM RoCE (%) NM NM NM NM RoE (%) NM NM NM NM Gross debt - equity (times) 9. 62.4 NM - - Net debt - equity (times) 8.9 62.2 NM.. Interest coverage (times) NM NM NM NM NM Current ratio (times).8.8.7.. Inventory days NM NM NM NM Receivable days NM NM NM NM Source: BSE, ACE and CARE Research Note: Financial Year (FY) refers to period from April to March 3 NM: Not Meaningful 4 Initiative of the BSE Investors Protection Fund
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