In this announcement dated 11th Feb 2017, the management seems to indicate that they will report income upon the registration of the “Sale Agreement” (as opposed to the registration of UDS which could take years).
For the management to start reporting JV revenue shouldn’t take several years, rather it should take only a couple of quarters. Any views?
Link to the old announcement…
https://www.bseindia.com/xml-data/corpfiling/AttachHis/6F81A79E_1628_4559_BAB0_03031C348FD5_144440.pdf
See this link for official construction updates on the township
A few words from the management… See attached annual report for details
Joint Development Agreement (JDA) With M/s.SPR Construction Pvt. Ltd.
You are aware that the Company is embarked upon development of a World-class Integrated Township on Joint
Development Model, in its main land area of 63.89 acres (previously used for CFS operations) at Perambur. For the same,
the Company has entered into a Joint Development Agreement (JDA) on 26.6.2015 on revenue sharing model with M/s.
SPR Construction Private Limited., Chennai.
The mixed use development is the first-of-its-kind township located in a prime location and is based on the concept of
building a destination “Where Business Meets Life”. Planned around combining professional workspaces and living spaces
into one gated arena, it includes a separate residential development, an organized wholesale center, along with a Retail
Mall, School, Convention Center and Entertainment Area. The joint venture between Binny Ltd. and SPR Group believes
it can utilize the opportunity presented by the current physical and social infrastructure bottlenecks faced in Sowcarpet
(South India’s largest wholesale market) located at just 3 kms from the Project Site. The Site has easy road access on all four
sides, and is the only private land of this scale in close proximity to the city’s wholesale markets. The development of the
wholesale center on the site will prove to be an extension/ alternative to the Sowcarpet market and is expected to become
a trading hub not only for the Chennai city, but also the entire South India, given its proximity to Chennai Port.
The Project has already received great levels of expression of interest from all quarters. Its residential phase and wholesale
market development has already received all the requisite approvals and RERA registration, with other developments
expected to obtain the same in the next few months. The Project shall be developed over a period of 7-9 years in a
phased manner. Work on the first phase has already begun and is proceeding at a steady pace. Recently, the launch of
the project’s residential towers was met with overwhelming response from the Chennai community and was successful
in selling a record number of units in a short span.
Binny Limited - Annual Report 2017-18.pdf (479.1 KB)
Looks like income in books is still far away.
Registration of UDS and Registration of the sale agreement for UDS seem to be two different things. Management has used both phrases in their announcements. The former may take years whereas the latter could mean be a few quarters. Pls. correct me if I’m wrong on this.
Relevant excerpt from the annual report.
Reasons for inadequate profits:
… Revenue from JDA
will be recognized upon transfer of all significant risk and rewards of ownership and title by way of registering
Undivided Share of Land (UDS) in favour of buyers. Money received under project is kept as long term liability
pending recognition of revenue as above
Notable changes in my viewpoint
1- Company has now taken fresh loan 130 crore at the cost of 18%. Company might have used this to pay tax (In my opinion 18% interest is very high. Surprising why minority shareholders (including LIC) are not raising any voice. Need to note company cash(nearly 200 crore) is lying with promoters(MBDL) currently)
2 - Preference share has now represented as Borrowing (213 crore). An ddition of 21 crore as interest yearly. Initial amount seems to be 117 crore
3- Advance to others is 265 crore. No idea what advance this is for?
Some doubt on the accuracy of Annual Report disclosed figures – If anybody can help whether this is a valid doubt on the figures
As per related party transaction in Page 77
Mohan Breweries & Distelleries Ltd (for Purchase of 12.43 Acres of Land) Interest Income 4,712.36 lakh (where note 39.10 shows the income 18 crore and P&L Note 26 shows 13 crore)
Mohan Breweries & Distelleries Ltd (for Purchase of Windmill) Interest Income 68.79 lakh
Interest expense on liability component of convertible preference shares Interest on Preference shares 2,131.61
This contradicting with
39.10. The Company has advanced a sum of Rs. 18335.13 lakhs for purchase of 12.43 acres of land from a related party. The shareholders have not approved the resolution for the same. (Only public shareholders excluding promoters have participated in the voting). Pending recovery, the Company has charged interest of Rs. 1871.69 lakhs during the financial year.
39.11. The company has cancelled the contract for the Windmill purchase and has recalled the advance paid of Rs.6000 lakhs from the related party. Pending recovery, the company has charged interest of Rs.76.43 lakhs during the financial year.
Interest on Preference Shares 2,131.61 (This from P&L Note 29 is matching with related party transaction)
Interest income on other financial assets carried at amortised cost as per P&L Note 26 is 1,387.00 (this match with 39.10 , but differ from related party transaction figure of 4712.36 lakh)
Hey! Great thread and great work done by you. I just wanted to know if your thesis is still intact or no? Also if you’ve come across any other headwinds Binny might have which isn’t mentioned here?
Company again in limelight as 40 crore revenue is booked in last quarter. AR 2019 was having one liner regarding due from others. It said these are advance given for building material, textile etc. The amount has gone to nearly 458 crore. And now another disclaimer in march result that company will recover the amount
Already nearly 400 crore was there to be recovered and now another 400
Discl : Holding with many doubts
I had reached out to company CS a few weeks back. They mentioned that they extended the advance recovery timeline by one year.
Though I am invested but I personally feel that the promoter is not someone who can be trusted with the advances given to related parties and they are not even able to recover (rather they intend not to recover??).
Promoters are paying interest for some of the advances that they received.
Hi Anand,
Though the company is realising interest from advances, you may want to check if they have actually received it. Long back the CS had said to me that they are realising the interest in PnL but have actually not received it.
Regards
Krishna
Binny Annual Report 2019-20.pdf (443.0 KB)
Status of the project from the above report.
…
The Project has already received great levels of expression of interest from all quarters. Its residential phase and wholesale
market development has already received all the requisite approvals and RERA registration, with other developments
expected to obtain the same in the next few months. The Project shall be developed over a period of 7-9 years in a
phased manner. Work on the first phase has already begun and is proceeding at a steady pace. The project’s residential
towers (Tower A, Tower B and H) has met with overwhelming response from the Chennai community and was successful
in selling a record number of units in a short span.
Current Status of Project:
Few points to be noted(as per my understanding/reading)
1- LIC reduced their holding from 2.02% to 1.92%
2-Company has received nearly 492 crore from project, but recognized only 39 crore due to accounting policy. Out of this 492 crore , 317 crore is given as advance to others which company has dispute and this may also go for recovery
Hi,
Feel something is not matching, are you clear on this?
As per AR 2019 note 38.5, the total amount received from JDA is 406.86 crore. As per AR 2020 note 37.5, same is 492.85 crore. So a net cashflow of 2019-2020 is 85.99 crore from this project.
But if you check the cashflow statement of AR 2020 net operating cashflow is 49.41 crore. But as there is no much real transaction other than the cashflow from this project, why is there such big difference?
Thanks in advance
AR 2020 NOTE 37.537.5 The company has entered in to ‘Joint Development Agreement’ (JDA) for development of land area of 63.89 acres into a
Township. As per JDA the company has received Rs. 25,000 lakhs, as interest free Security Deposit and a sum of Rs. 21721.11
lakhs has been received from JDA escrow account which are shown under ‘Revenue Received in Advance’. Further the
company is in the process of reconciliation of this account for any amounts adjustable against the permissible deduction like
Marketing fees etc as per the JDA. ‘Revenue Received in Advance’ also includes the advance received against sale of land of
Rs.2564.17 lakhs. The JDA Partner has obtained RERA Registration in the previous financial year.
Any idea? Did they settle the NCD’s?
Looks like promoters still own the debentures, only the pledge created on november 6th 2019 seems to have been released.
Don’t know the reason for the recent action in share price as well.
I have visited last month Binny SPR site and completely satisfied about the Progress of the Project, Construction Quality and Booking Response. The only thing irks me is Poor Corporate Governance and Non Transparency and Oppression of Minority Interest and Mismanagement by Promoters. Though company earned Rs500 Crores in 2017 by sell of small land parcel then it also received such a good response through booking but still promoters nicely enjoy huge haftic directors remuneration but neither share progress of the project to minority share holders nor has bothered to pay dividend. Hight of vested interest exhibited by the promoters !!!
