Hello,
I have attached PDF of Annual report :PDF version of XBRL Document for FY ending on 31-03-2015 (Filed-04 January 2016).pdf (584.3 KB)
My takeaways:
We can assume that 145 cr is for both the phases as major expense i.e. land buying have been done assumed because
Regarding interest:
3.Railway deposits:
Would add more tomorrow?
Hi smetha,
Thanks for the inputs. What i understand from the agreement between govt and kesar is that the land will be provided by govt. (Mandi) at Rs.1 (nominal value so as to record some amount in the books). They call it “Project Land”. Other then this company has to pay 1.2 cr annually as royalty to the govt. So, this 145 cr of total capex does not include land. It should include buildings, infrastructure and other such facilities. They have taken loan from DENA bank and have incurred a capex of 108 cr. Total capital employed in KML should be 128cr. (50cr from KTIL and 75 cr of long term loans and 3 cr of current maturity of long term loans- assuming that KTIL has not invested more than 50 cr till date). So, 128cr - 108cr = 20cr should be in working capital - including deposits of railway, telephone, etc.
Land is not part of 108 cr of assets mortgaged because the PPP agreement clearly states that land cannot be mortgaged.
Debt/equity ratio should be - 78 cr of debt / 50 cr of equity. = 1.56 times.
Waiting for further inputs from you. Have you got the financials of KML?
I have assumed asset turnover ratio of 0.4 only. (sales of 50 cr and assets of 128cr). Business of other logistics player do not have such low asset turnover ratios. We should expect sales to increase and cross 100cr + in some years. I didnt have much info about the finance charges, interest rates, etc. so assumed 11% flat rate for total borrowings.
Do provide your inputs/suggestions and correct me if I am wrong anywhere.
They Have capitalized all the expenses as the business was not in operational so the balance sheet has been attached
Thanks Smehta,
Private companies do not have obligation to disclose their profit and loss statements. We can only get BS.
—> So, the share capital tallies with the non current investments made by KTIL. - tallied.
—> Long term borrowings are 83 cr - (75cr + (8cr.- from KTIL). -** tallied.**
—> Current liabilities of 12.61 cr should include 3 cr of current maturity of long term borrowings. Other liability should be business liability like lease rentals.
—> Fixed assets incl. work in progress is 133 cr.
—> Total capital employed in business - 83cr(long term) + 3cr(short term) + 42cr (equity). = 128cr. Debt - 86cr (78 cr from DENA bank by mortgaging 108 cr of tangible assets) and equity of 42 cr.
—> Debt/Equity ratio is 2.04 times. (86/42)
—> Deposits made to railways,telephone, etc tallies with long term loans and advances. -** tallied.**
Breakeven sales required is - 86*11/100 = 9.46 cr/0.60 (60% OPM) = 15.76cr.
Financing cash outflow - 3cr (current maturity) + 9.46cr (interest). = 12.46cr.
Operating cash inflow (before working capital) - PAT of 14cr. + Interest cost of 9.46 cr. + depreciation of 13cr.(133cr of assets depreciated on straight line basis as per PPP agreement). = 36.46 cr.
Company should report profit and should generate positive operating cash flow for the first year. It will be able to easily pay off its loans and interest on it. Surplus cash would be deployed in phase 2 facilities.
Please provide suggestions and correct me if wrong.
These are just assumptions. Please do your own due diligence.
No Abhishek Bhai they have to show to MCA and they will show after operations of phase 1 is started till the time being they will capitalize the cost as per Accounting Standards.(If I am not wrong)
2nd thing interest has to be checked in KTIL annual report in the annual report they have taken this interest as interest accrued but not due on loans of holding company "page 86"and 108 confused again
3rd thing I am not able to understand is the Land that is being leased for Re 1 as per your comment.
May seniors join and help us
Hi smehta,
Query 1 -
As per IFRS (which now Indian companies need to follow) -
1). Pre operating expenses related to PPE (property, palnt and equipment) should be capitalized in PPE.
2). Pre operating expenses not related to PPE should be expensed in P&L account.
133 cr of fixed assets have been booked on asset side. 108 cr has been mortgaged. 25 cr (not mortgaged can be assumed to be pre operating expenses). This may include salary, legal and registration expenses, etc related to PPE.
You are correct - now MCA has made it open. We can have access to P&L of private companies also. Earlier this was not allowed.
So, no P&L means no expense booked. All the expense has to be capitalized.
Query 2 -
Could not understand the 2nd one. Please elaborate.
Query 3 -
yes the land is given at nominal value of Re 1. This project is on BOLT scheme, where land is provided by govt. and other infra is built by private player. This is transferred to govt. after 30 years. Royalty has to be paid to govt. of 1.2 cr annually.
It’s an accounting treatment…in related party transactions total interest of 8 odd lacs has been shown (both paid and not paid yet). But in the stmt attached regarding current liabilities only interest accrued and not due is reported…so 1lac odd amout of interest should have been paid by kml to ktil…kml would have capitalised the total interest of 8 odd lacs in fixed assets…
Check out @RailMinIndia’s Tweet: https://twitter.com/RailMinIndia/status/720297114065047552?s=09
An article in BS
Rail Terminals operations start at KMLL.
http://www.bseindia.com/corporates/ann.aspx?scrip=533289&dur=A&expandable=0
This is a significant development for the business. Expecting earning growth from June quarter
Mr H R Kilachand resigns as executive chairman and director of the company.
Next generation Rohan Kilachand appointed as executive director.
Mr A S Ruia is the new chairman.
Added more today. It looks like a blind buy if management walks the talk. Can be a secular compounder for next 10 years because of 2 more projects already in pipeline (Kakinanda and Kandla). The cash from KMLL can be deployed in other projects. I like the timing as the company would not have to take more debt and would be able to execute. Lets hope that the earning projections from the KMLL comes true.
I am cautiously optimistic and Invested 
@NikhilJain
Is Mr A S Ruia the new chairman related to Essar Group?
In that case we may not take pain to analyse the co.
You are correct. A S Ruia is Anil Kumar S Ruia of Essar securities ltd.
Please elaborate on why do you think this is so negative that all the other positive factors do not count.
@NikhilJain
Thanks.I am having some reservation over certain groups including Essar.
Deposits with Essar oil were settled partially.(30% if my memory is correct.)You know the fate of erstwhile AGC Network well managed co. after acquired by Essar. Reliability of the management is the most prime factor for me to consider investment.In fact I was tracking and intented to buy Kesar.
This is purely my personal opinion.
Again thanks.
Management quality is absolutely necessary, I agree.
I have been unable to find any major negatives related to A S Ruia, himself. Neither have I found much against essar securities. If you have found any, please share.
On top of that, Kilachands are the promoters and not Ruia.
@NikhilJain
Sorry.I have not followed Essar Securities.Once I tracked Essar Gujarat,Essar Shipping,
Essar Oil etc.With limited resources and there is an opportunity to invest in so many
potential shares I do not want to take a chance.This is my policy.
Thanks.
I have been tracking Kesar since some time now.
The appointment of A S Ruia as the chairman doesnt give much comfort & has made me think again.
Management quality plays a very crucial role in our investment.
I would appreciate if other investors on the forum can share their views on this.
