Revised set of Questions for Astral. Please see if these address all concerns raised so far
Forex fluctuation impact on outstanding ECB balances.
1). ECB Loan - As on Sep 30, debt is 53 Cr.
How much of this is ECB? And what are the interest costs and repayment terms.
2). You have mentioned a loss of ~8 Cr for 1HFY12 )- loss arising on foreign exchange rate fluctuation on outstanding balances, which will be accounted for at the end of the financial year.
This can at best account for 4-5 Cr of loss on ECB loan outstanding balances. Does this mean the 8 Cr loss includes notional losses from the Payables as well, how much?
As per AS-30, Astral would also have the flexibility to capitalise this (including interest outgo). Many companies spending on capex expansion have decided to capitalise this - Balkrishna Industries, PI industries, for example. Why is Astral not considering capitalising this part - Is that not an option at all?
Is partial hedging an option? Why, or why not?
3). Exceptional items (1.22 Cr) loss due to changes in Forex rates on repayment of borrowings accounted for in Q2FY12
Kindly elaborate on this. Is this on account of interest payments only, or? Similar impacts in Q3 or Q4?
4.Q2 concall mentioned raising another 15-20 Cr ECB at Libor +3%
What further tranches has the company drawn in Oct, Nov and so far in Dec? and at what rates respectively?
_5.___The Rupee has since appreciated to 52 to US$
Is it correct to surmise that if the Rupee remains at ~52 to US$ till the year end, there will be additional liability of another ~4cr that will need to be accounted for by 31st Mar 2012, on the loans till Sep 30 alone?
Forex fluctuation impact on Payables
1). Liabilities as on 30 Sep 2011 - 136.88 Cr. RM import is roughly 36% of Sales
Forex paybles are at what levels? 50-60 Crs?
2). 120 days credit terms with Lubrizol.This normally would work to Astral’s advantage. But in the face of the rapidly depreciating rupee this might be posing a challenging situation.
Kindly explain the hedging policies followed by Astral on Payables. Do you hedge fully your net outflows, or partially? How much?
3.Rupee has depreciated only starting Sep 2011). Implications on forex losses in FY12 on account of unhedged payables.
Since 120 days credit terms are in place, is it right to say that in Oct-Dec FY11, you will be paying for payables of Jun-Aug FY11? And since rupee had not depreciated till August, there is no impact on this front? Does this mean there will be a big impact in Q4 as the full impact of rupee depreciation from Sep till date will need to be accounted for?
4). Accounting norms
As per accounting norms, aren’t you required to account upfront -even if the payables are due months later? If so, what is the likely impact respectively in Q3 and Q4 FY12?
5.The Rupee has since appreciated to 52 to US$
Is it correct to surmise that if the Rupee remains at ~52 to US$ till the year end, there will likely be another hit of ~6-8 Cr on the payables front (if fully unhedged)?
Margin pressures from rupee depreciation
1). Raw material imports FY11 146 Cr. This is ~50% of RM and ~36% of Sales. Rupee has depreciated by more than 16% since Sep 2011. Astral had taken a 3.5%-4% price hike in Q2. In Oct you had taken a 2.5% hike and expected 3-3.5% in Nov.
_What is the cumulative price hike effected by the company in FY12 till date? Is it already at ~10% price hike levels! _
If Astral made sale of 100, Its RM import would be 36. Depreciated 16% (~42) would mean your margins reduce by 6%. Since you have affected a 10% price hike spread over Q2 & Q3, does this mean you are more or less protected on the margins front from the rupee depreciation effect so far? (Margins may well slide for other operational issues)
Should the Rupee depreciate further, is there room for more hikes, how much can you really pass on? Have you taken any more hikes beyond the 10% already?
Stable margins in foreseeable future
1). Margins have been on a declining trend over the last few years. From 18% in 2008 to 13-14% in FY11. And FY does not look to deliver more than 12%
Where do you seen margins stabilizing in the near to medium term?
Competition
1). Supreme tie up with Kaneka. Meghamani JV/factory wih Kaneka for 20000 MT
Please give us your sense of market developments. Who do you see as your most significant competition, and why? Howâs it on the pricing front with Kaneka sourced products? Do you see any margin pressures developing due to heightened competition?
Realty/Infrastructure slowdown
1). Have you seen any impact on the ground so far? How confident are you of delivering 30-35% growth in the coming 2 years?
Promoter Shares changing hands
1). Mr Nimish Dalal selling his stake to Mr Engineer in open market transaction.
Mr Nimish Dalal had also earlier tendered his resignation as a director of the company. Is this a fallout of the Lubrizol relationship? Kindly explain the reasons behind the transaction and the timing of these transactions.
Lubrizol relationship
1). Do you have anything to report on developments on this front? When can we expect a formal announcement of progress on this front?
