apex group final

8/9/2019 Apex Group Final

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Apex IndustriesBusiness Plan


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Mission Statement

To enhance value generating capability of the Company in a globalizing environment,

delivering superior and sustainable customer value.

To display highest commitment to excellence in product quality, service and

enriching customers through added value.

Build exceptional standards and systems for productivity, performance, safety,

environment and quality.

Expand manufacturing facility and distribution network to cater to all regions in the

country.

Be a socially responsible corporate, addressing need of community and

environment.

Empower and energise employees to embrace new ideas, learn continuously and

build HR processes for continual capability development of its talent.


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The Team

Prasun Pandey CEO and MD

Sajesh Nair

Bhavesh Mankani

Sunil Ledwani

Sagar Vartak

Nikesh Malhotra


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Company Profile

Apex is a Power Cable Company and has thepotential to greatly benefit from the replacement ofthe overhead conductors with the undergroundcables.


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Why in Red?

Loss in 2009 is due to low market request, deferredor cancelled orders and the ambiguity of Authoritieshow to invest.

Due to the impetus of setting up power generation

plants, most companies exceeded the capacity andthus lead to excess supply.

Hence, Management and Production team restructured.

Cost cutting measures have been taken.


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Opportunities

Benefit from replacement of overhead conductorswith underground cables

There is a potential replacement opportunity of10,000 Cr. in India.

Privatization of power transmission and distributioncompany.

Change in Government Policy

An amount of 35 Billion was budgeted for theAccelerated Power Development and ReformsProgramme (APDRP)


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Opportunities

In India, Transmission and Distribution loss aremainly due to theft and lack of maintenance.

Estimates of T&D loss is around 25% to 50%.

Government provides 50% subsidy on capitalinvestment meant to reduce T & D losses.

Tapping Top corporate, Indian Railways etc.

Entry into the HT cables segment gives accessibilityto the generation and distribution segment, wherethe market opportunity is estimated at Rs37,000crover the next 10 years.


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Balance Sheet and P-L Analysis

0

50

100

150

200

250

300

Mar 09 Mar 10E Mar 11E Mar 12E Mar 13E

INCOME :

Sales Turnover


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Balance Sheet and P-L Analysis

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00


Operating Profit

Profit Before Tax


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Financial Ratio

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00


Debt to Equity Ratio

Interest Cover Ratio


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Assumptions:

Sales growth rate 20% to 30%

Poised for high growth going ahead: Strong growth inthe existing LT cables segment and entry into the HTand extra high voltage (EHV) cables verticals. Increase

in demand of higher quality and branded wires.

Major capex already undertaken: The company hasalready incurred the major capex required to registergrowth over the next 4-5 years. Thus, on account ofhigh operating leverage and strong sales growth, we

expect the company to increase its net profit to Rs 3.41CR in FY2013E from loss of Rs32 CR in FY2009.

Sales to be driven by improvement in the economy

OPM to remain under pressure owing to high copper

prices


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Goals and Objectives

To raise the fund for Rs. 50 Crore

To diversify into another segment mainly in retail &trading, real estate development, hospitalityconstruction and infrastructure development


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Industry Analysis

Key Characteristics

Comparative low project risk.

The infrastructure segment is expected to see

investments of Rs 5356 billion till 2012, as comparedto Rs 3320 billion.

According to a recent report by Cris Infac on Indianconstruction industry, government's spending oninfrastructure has increased by 106 percent to Rs

8,163 billion in the tenth plan period compared to Rs3959 billion during the ninth plan period.

Competitive pricing due to competitive bidding ingovernment projects.


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Industry Analysis

Key Characteristics

Over Rs 380 billion will be spent on hydropowerprojects, resulting construction contracts worthalmost Rs 266 billion in the next five years.

Implementation of the build-operate-transfer(BOT), build-own-operate-transfer (BOOT)mechanism by the government has generatedinterest from the private sector and a lot of projectsin the road and hydropower segments are already

underway.

Roads, urban infrastructure are expected to be stillthe key for investment in infrastructure sector.


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Infrastructure Mix

0%

5%

10%

15%

20%

25%

30%

35%

40%

2001-02 to 2005-06

2006-07 to 2007-12


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Resource Requirements

Personnel

Technology

Finances

Material

Land


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Project Cost

Cost Structure of the Project:

Total Cost 75 Cr

Equity : 25 Cr

Debt : 50 Cr

Concession Period : TillM

arch 2020


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Assumptions Cash Flow

Method DCFE Discounted Cash Flow To Equity

FCFE=

Net Income + Depreciation

Expenditure-increase in Working

Cap+debt Infusion

Repayments

The FCFE is discounted at expected rate of return by equity capital provider

Discounting

Rate Risk Free Rate + Market Risk Premium

Risk Free Rate =7.75

Interest Rate on Long Term Govt. Securities

Source (www.rbi.org.in)

Risk Premium =4.25

Beta ( Expected market return of the similar

listed Company

Rate)

Average Int. volatility 0.65

Discounting rate lower limit of the sector 11.35

Discounting rate upper limit of the sector 12.65

For Valuation Discounting rate range is 10.5% to 14.0%


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Assumptions Cash Flow

The FCFE is projected after industry analysis, historicaldata and future potential estimates.

The discounting rate is 11.5%.


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FCFE Projections

FCFE Projections

Year End 31-Mar FCFE

2012 8.4

2013 11.9

2014 14.4

2015 18.5

2016 22.3

2017 25.7

2018 40.1

2019 61.25

2020 85.86


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Expected Financial Position

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00


Operating Profit

Profit Before Tax

Debt to Equity Ratio

Interest Cover Ratio


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Summary of the Project

IRR is more than 15 % and therefore the project isworthwhile

Average DSCR is satisfactory. DSCR is gradually

increasing.

Promoters contribution is fairly good

ROI (before tax) and ROI (after tax) are good

Profitability ratios show that the project would earn

sufficient returns on the capital employed over itsestimated life


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Bibliography

Rbi.org.in

Wikipedia.com

Indiainfoline.com

Angelbroking.com

Cmie.com


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Thank You

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