Vijay Shanthi Builders Ltd · COMPANY BACKGROUND No 20/43 Kasturi Rangan Road, Engaged in...

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STAKEHOLDERS EMPOWERMENT SERVICES

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SECTOR: CONSTRUCTION REPORTING DATE: 1ST JUNE, 2016

Vijay Shanthi Builders Ltd www.vijayshanthibuilders.com

Vijay Shanthi Builders Ltd 1st June, 2016 TABLE 1 - MARKET DATA (STANDALONE) (As on 31st May 2016)

NSE Code - VIJSHAN NSE Market Price (₹) 8.55 NSE Market Cap. (₹ Cr.) 22.52

Sector - Construction Face Value (₹) 10.00 Equity (₹ Cr.) 26.19

52 week High/Low (₹) 14.45/7.65 Net worth (₹ Cr.) 121.19

Business Group - Indian Private TTM P/E 22.05 Traded Volume (Shares) 3,115

Year of Incorporation - 1992 TTM P/BV 0.07 Traded Volume (lacs) 0.27

Source - Capitaline

Corporate Office: COMPANY BACKGROUND

No 20/43 Kasturi Rangan Road, Engaged in residential construction activity in Chennai, Vijay Shanthi Builders also has a few

commercial complexes in Chennai to its credit. Their corporate clients include State Bank of

India employees and BHEL employees. It has diversified into other areas. It has a herbal

mineral water processing plant (cap.: 50,000 ltrpd). The company is marketing its mineral

water under the brand name Vijay Shanthi Mineral Water.

The company also ventured into civil construction. It has also taken over a sick cement unit,

Vivekananda Cements, based at Gulbarga. It has been renamed Vijay Shanthi Cements and

will remain a 100% subsidiary of the company. The cement produced by the cement division

will be utilised in their construction activity and the balance, if any, would be sold in the

local market.

Alwarpet,

Chennai, 600018, Tamil Nadu

Company Website:

www.vijayshanthibuilders.com

TABLE 2 - PRICE PERFORMANCE

31st May,

2016

29th May,

2015

30th May,

2014

% Change CAGR for 2

years 2016 vs 2015 2015 vs 2014

Price (₹) 8.40 9.45 13.70 -11.11% -31.02% -21.70%

Trading Volume (Shares)

(yearly avg.) 13,625 27,919 43,827 -51.20% 36.30% -

NSE Market Cap. (In ₹ Cr.) 22.00 24.75 35.88 -11.11% -31.02% -21.70%

Source - Money Control

http://www.vijayshanthibuilders.com/




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TABLE 3 - FINANCIALS

(₹ Cr.) 2015 2014 2013 % Change CAGR for

2 years 2015 vs 2014 2014 vs 2013

Net Worth 121.19 119.45 115.38 0.01 0.04 0.02

Current Assets 221.59 202.65 208.30 0.09 -0.03 0.03

Non-Current Assets 10.66 10.40 11.49 0.03 -0.09 -0.04

Total Assets 232.26 213.06 219.79 0.09 -0.03 0.03

Investments 18.62 10.70 9.78 0.74 0.09 0.38

Finance Cost 0.50 1.47 0.65 -0.66 1.26 -0.12

Long Term Liabilities 75.24 24.07 14.39 2.13 0.67 1.29

Current Liabilities 35.83 69.54 90.02 -0.48 -0.23 -0.37

Turnover 64.57 76.17 138.35 -0.15 -0.45 -0.32

Profit After Tax (PAT, ₹ Cr.) 1.88 4.07 8.45 -0.54 -0.52 -0.53

EPS (₹) 1.00 2.00 3.00 -0.50 -0.33 -0.42

Source - Money Control/Annual Report

AUDIT QUALIFICATIONS

Audit Qualifications in last 3 years: The Auditors have not raised qualification, however they have emphasosed on the

following matters, in Annual Report 2014-15:

“Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

I. Refer No. 27.1 in Financial Statements: The Appeal filed before the Commissioner of Income Tax has been

dismissed during the year. In our opinion, provisioning needs to be made against the outstanding tax demand.

Had the same been provided for, the profit for the year would have been decreased by Rs. 1,10,17,350/-

Vijay Shanthi Builders Ltd. Financial Statements | 49

II. The Company has adopted selective accounting policy by deviating from Guidelines prescribed by

ICAI in respect of revenue recognition of Accounting for Real Estate transactions, in the matter of one of its

projects. In this regard, all significant risks & rewards are transferred to the buyers and it is not unreasonable

to expect ultimate collection with no significant uncertainty existing regarding the amount of consideration.

Despite this fact, the Company has not accounted for Sale of Constructed Flats. Had the accounting policy

been followed consistently and revenue is accounted for, the profit for the year would have been increased by

Rs.14,54,11,378/-

III. Refer No. 18 (a) (ii) in Financial Statements: In absence of confirmation from the concerned Bank(s), we are

unable to comment about the correctness of balances grouped under Bank Accounts. The said value amounts

to Rs.2,66,796/- Our opinion is not modified in respect of the matters mentioned above

Note 18 (a) (ii) No balances with banks is shown in the financial statement

Management Response:

“1. As regards non-provisioning of estimated liability for outstanding tax demand, the Company has filed an appeal against the

decision of CIT to Income Tax Tribunal and firmly believes that the company has reasonable chances of winning at appeal

against the order of CIT, and hence no provisioning in this regard is necessary.

2. As regards the statement regarding deviation in the guidelines issued by ICAI regarding revenue recognition of accounting for

real estate transaction in respect of certain project, the Audit committee and the Board is of the considered opinion, that the

Company has not violated the guidelines issued by ICAI. The said project being High End Apartments is not fully complete, as the

Completion is based on delivery of individual customized requirements of each of the prospective buyer. Hence the Board is of

the opinion that sales can be accounted for only after completion of such pending works which may vary depending on

prospective customer needs and cannot be generalized. Further the amount to be spent on this project towards completion is

substantial.

3. The said bank accounts are non-operative, though the Company has approached the banks for obtaining the statements, the




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banks are not responsive in this regard and thus the same shall be closed in the financial Year 2015 –2016.”

Response Comment

Frequency of Qualifications Emphasis of matters appeared in last financial year 2014-15.

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 -

TABLE 4: BOARD PROFILE (As on 31st March, 2015)

Regulatory Norms Company

% of Independent Directors on the Board 50% 60%

% of Promoter Directors on the Board - 20%

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/CEO held by the same person? - Yes

Average attendance of Directors in the Board meetings (%) - 84.29%

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 is a Promoter/Executive Director. The Company as on 31st March, 2015

has 60 % of Independent Directors and hence, it meets the regulatory requirements.

Board Diversity: The Company has 5 directors out of which 4 are male and 1 is female

Holding of position of MD/ CEO & Chairman by same person: The Company has appointed Mr. Chandan Kumar as the Chairman

and Managing Director of the Company. Appointment of a single person as the Chairman and Managing Director of the

Company is not a good governance practice as this may lead to concentration of power in a single person.




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TABLE 5 - FINANCIAL RATIOS

Ratios 2015 2014 2013 % Change

2015 vs

2014

2014 vs

2013

Turn

ove

r

Rat

ios

Inventory Turnover 0.33 0.43 0.79 -23.60% -46.05%

Debtors Turnover 8.39 4.90 4.74 71.19% 3.42%

Fixed asset Turnover 6.06 7.32 12.04 -17.30% -39.17%

Current Asset Turnover 0.29 0.38 0.66 -22.47% -43.41%

Ret

urn

Rat

ios

Operating Profit Margin 4.44% 7.94% 10.63% -44.04% -25.30%

Net Profit Margin 2.91% 5.34% 6.11% -45.51% -12.52%

Return on Assets (ROA) 0.81% 1.91% 3.84% -57.63% -50.31%

Return on Equity (ROE) 1.55% 3.41% 7.32% -54.47% -53.48%

Return on Capital Employed (ROCE) 3.49% 8.48% 20.22% -58.78% -58.08%

Liq

uid

ity

Rat

ios

Current Ratio 6.18 2.91 2.31 112.22% 25.94%

Quick Ratio 0.67 0.36 0.38 89.76% -5.70%

Cash Ratio 0.46 0.13 0.05 248.76% 151.76%

Working Capital Turnover ratio 0.35 0.57 1.17 -39.26% -51.08%

Solv

ency

Rat

ios Debt to equity ratio 0.58 0.52 0.43 10.75% 21.36%

Interest Coverage Ratio 6.74 5.12 23.63 31.75% -78.35%

Trad

ing

Rat

ios

Market Cap / Sales 0.41 0.34 0.19 17.96% 81.63%

Market Cap/ Net Worth 0.22 0.22 0.23 -1.44% -3.41%

Market Cap/PAT 13.93 6.43 3.10 116.49% 107.62%

Market Cap/EBITDA 8.27 5.30 2.34 55.93% 126.62%

Trading Volume (shares) (avg. of 1 year) 13,645 38,380 33,638 -64.45% 14.10%

Trading Volume (shares) (high in 1 year) 2,26,527 4,20,527 5,10,867 -46.13% -17.68%

Trading Volume (shares) (low in 1 year) 100 745 21 -86.58% 3447.62%

Ratio - High/low trading volume 2,265.27 564.47 24,327.00 301.31% -97.68%

Ratio - High/average trading volume 16.60 10.96 15.19 51.52% -27.85%

Source - Money Control




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TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS

Dec' 2015 Dec' 2014 Dec' 2013 Comments

Shar

eho

ldin

g

Promoter shareholding 49.82% 49.82% 54.12% No new equity shares were issued during the

period from 31st March, 2013 to 31st March,

2015. The promoter shareholding decreased

from 54.12 % as on 31st December 2013 to 49.82

% as on 31st December, 2014 due to sale of share

by Promoters in the open market. No other

major change was observed in the shareholding

pattern during the said period.

The promoters have not pledged any shares

Public - Institutional

shareholding 0.01% 0.01% 0.01%

Public - Others

shareholding 50.17% 50.17% 45.87%

Non Promoter Non Public

Shareholding 0.00% 0.00% 0.00%

TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS

Market Activity of Promoters

The Promoters of the Company sold their shares in the secondary market once in last

three years. Total number of shares sold by promoter and promoter group during the

three year period is 11, 25, 200.

Preferential issue to promoters No preferential issue of shares was made to the promoters in last three years

Preferential issue to others No preferential issue of shares was made to other shareholders during last three

years

GDRs issued by the Company The Company did not issue and GDRs during three years

Issue of ESOPs/Issue of shares other

than Preferential allotment

The Company does not have any ESOP Scheme. Further, no other preferential

allotment has been done in the last three years.

Source - Annual Report




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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 =Sales Turnover

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 =Sales Turnover

Accounts recievables

Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets

𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Fixed Assets

Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Current Assets




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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

Sales Turnover

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

Sales Turnover

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 =𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

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


http://www.investopedia.com/terms/i/invested-capital.asp

http://www.investopedia.com/articles/stocks/05/04405.asp



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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/𝑆𝑎𝑙𝑒𝑠 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ

Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑃𝐴𝑇 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

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


https://en.wikipedia.org/wiki/Stock

https://en.wikipedia.org/wiki/Market_cap

https://en.wikipedia.org/wiki/Stock



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A 202, Muktangan,

Upper Govind Nagar,

Malad East,

Mumbai – 400 097

Tel +91 22 4022 0322

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[email protected]

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