|
February 7, 2008
ICRA has assigned an LAA (pronounced L double A) rating, indicating high
credit quality, to the Rs.430 million term loan facility, Rs.570 million
fund based limits and Rs.50 million non-fund based limits of Shanthi Gears
Limited (SGL). ICRA has also assigned an A1+ (pronounced A one plus)
rating, indicating highest credit quality, to the Rs.50 million fund based
limits and Rs.150 million non-fund based limits of SGL.
The rating factors in SGL’s long standing presence as the second largest
player in the domestic industrial gears market and its diversified and
established customer base in India. SGL is protected to an extent from
demand cyclicality in individual customer segment by virtue of its
presence across various industries in the standard/non-standard gears
segment, and replacement markets. The rating also reflects the Company’s
consistent growth in revenues and healthy profitability over the past five
years. The rating is however constrained by SGL’s relatively moderate
scale of operation and the growing competition in the industrial gears
segment. Despite consistently healthy cash generation from operations,
high capital expenditure and a stretched working capital cycle has
resulted in moderately high leverage. The rating also factors in SGL’s
plans to focus on lower margin-higher volume standard gears and exports,
going forward.
Company profile
Commencing business as a gear manufacturer for the textile industry in
1969, SGL, over the years, diversified into manufacture of standard
(off-the-shelf) and customised (non-standard) gears, catering to a number
of industries including steel, compressors, power, earthmoving equipment,
cement and textiles. SGL is currently the second largest player in the
gear industry with market share of ~20% and has a product portfolio which
includes a range of customised gear boxes, loose gears, worm gear boxes
and helical gear boxes. SGL has six manufacturing facilities (including a
foundry) located in and around Coimbatore, Tamil Nadu.
Shanthi Precision Industries Limited, a group concern of SGL, engaged in
textile carding, was merged with SGL in 2003-04. In 2004-05, SGL’s
investment in wholly-owned subsidiary, Shanthi Sales Limited, engaged in
marketing activities for SGL, was sold off, subsequent to which SGL
recommenced its own marketing operations.
SGL was promoted by first generation entrepreneur, Mr. P Subramanian, who
is currently the Executive Chairman. As on 31st December 2007, the
promoters held 44.9% stake in the Company. The Company is listed with the
NSE and BSE.
Recent Results
The company ended nine months 2007-08 with a net profit of Rs.323 million
on operating income of Rs.1,763 million, a growth of 26.5% over the
corresponding period revenues of Rs.1,393 million.
For further details please contact:
Mr Jayanta Chatterjee, (Tel. No. 098 450 22459)
Mr. Subrata Ray, (Tel. No. +91 22 30470027)
http://www.icraratings.com/tickerdisplayhome.asp?id=5
|
