Piramal Glass - Latest Research Report

by GMNet on Thu Dec 01, 2011 12:46 pm

Please visit our Research Section
http://research.srilankaequity.com/t172-piramal-glass-ceylon-plc-company-update-2qfy12

by Kithsiri on Thu Dec 01, 2011 2:03 pm

Why it says that I am not authorized to download it?

by **slstock** on Thu Dec 01, 2011 2:15 pm

Kithsiri wrote:Why it says that I am not authorized to download it?

Need to register seperately for research section with username and password.

by Kithsiri on Thu Dec 01, 2011 2:44 pm

Thanks.

by greedy on Wed Mar 21, 2012 2:08 pm

I have not read the research report but would like to add my observation on this counter....

This was one of my favorite counter in the past and recently thought of entering when it comes below 5/-. However, I have few concerns now....

Permal Glass has USD dollar loans. I guess GLASS restructured its rupee loans to USD loans at the end of 2009 or beginning of 2010. As of 31/03/2011, GLASS had a USD loan amounting to USD11.1mn. After repayments during last 9 months (repayments approximately USD2mn), they may have a balance of USD9.1mn apprx. as of 31/12/2011.

The LKR/USD was 114.00 as of 31/12/2011 and as of yesterday it has reached 130. If this keep on increasing till 31 march, they may have a hit on USD loan revaluations. This pressure could extend from short to medium term. Current quarter impact could be around USD9mn*LKR16 =LKR144mn aprox. as per exchange rates of yesterday.

The positive side of the impact is that GLASS has a portion of export revenue. as per last annual report 25% of revenue aprox. appears to be from export.

if we apply same ratio to the current quarter ending 31/03/2012 based on revenue for quarter ended 31/12/2011....

Revenue Q/E31/12/2011 LKR1,375mn
25% of that LKR344mn
USD equivalent of the above LKR344mn/114 = USD3.01mn

The positive impact from the export revenue could be USD3.01mn*16 =LKR48mn.

Negative impact LKR144mn vs positive impact of LKR48mn, This is ignoring the cost of inputs from the import.

The above is a approximate estimate. Should not be taken as a fact.

Welcome your observations and comments

The above is not a buy/sell/hold recommendation.

by traderathome on Wed Mar 21, 2012 10:12 pm

I think if i am not mistaken,usually to reduce exposure on foreign exchange some companies use to have forward buying contracts.

Very Happy

Have no idea about piramal having such contracts

by greedy on Thu Mar 22, 2012 1:34 am

traderathome wrote:I think if i am not mistaken,usually to reduce exposure on foreign exchange some companies use to have forward buying contracts.

Have no idea about piramal having such contracts

As per last year annual report, I don't see any such contracts existing.

If you look at 2010/11 annual report, GLAS had a gain of "Exchange Difference Adjustment in respect of Interest Bearing Liabilities amounting to LKR31.5mn. In the previous year Rupee appreciated against USD so they had a gain. However, if we look at 9 months accounts ended 31/12/2011, they have a loss of LKR32.3mn on the same line item (because Rupee was depreciating this year (these numbers can be seen in the cash flow statement).

However, If LKR/USD rate stabilises at prevailing current rates, there wont be further impact on GLAS accounts & the current quarter exchange rate loss may become an one off item.

GLAS may not have obtained forward exchange contracts because it has a regular foreign exchange income to make the current payments. Therefore, there is a hedge for current payment of loans but not for the entire loan balance.

by greedy on Thu May 03, 2012 7:43 pm

I mentioned about exchange rate impact on GLASS (Refer my reply above). Today, You can see GLASS results...... as per the Quarterly accounts for the period ended 31/03/2012, Net Profit has dropped to LKR97,758K (Q/E 31/03/2012).

How were the quarterly results of GLAS during 2011/2012 financial year....

30/06/2011======> Net Profit LKR141,286K =====>Admin Exp LKR83,503

30/09/2011======> Net Profit LKR242,429K =====>Admin Exp LKR94,582

31/12/2011======> Net Profit LKR204,972K =====>Admin Exp LKR120,826K

31/03/2012======>Net Profit LKR97,758K ======>Admin Exp LKR211,108K

I guess, exchange rate gain/loss as per my reply above, should be under admin expenses!

by Vptilak on Thu May 03, 2012 10:52 pm

Yes greedy. this is the thing. MGT is eating our profits. No valid reason is given for huge increase of admin. cost. How can we trust these Director boards.

by **CSE.SAS** on Fri May 04, 2012 12:48 am

http://forum.srilankaequity.com/t17725-03-may-2012-audited-and-interim-financial-statements-31-03-2012#117055

by CHASE on Fri May 04, 2012 8:43 am

I don't think it's exchange loss. USD started to go up from march so for
a one month it cant be a huge amount. Also normally Exchange gain/Loss
comes under Finance Exp.

by greedy on Fri May 04, 2012 9:20 am

CHASE wrote:I don't think it's exchange loss. USD started to go up from march so for
a one month it cant be a huge amount. Also normally Exchange gain/Loss
comes under Finance Exp.

@CHASE,

Refer the annual audited financial statements for the year ended 31/03/2012 & refer to Note number 20, you will find what is included under finance expenses. If you go to note number 21, you will find Exchange Rate Loss of LKR134,368,786.

To find out what was exchange rate gain/Loss for the Q/E 31/03/2012, refer Accounts for the Q/E 31/12/2011 & 31/03/2012...... In the cash flow statements, you can find what was the exchange loss..

Exchange Rate Loss as of 31/03/2012 =====> LKR154,033K
Exchange Rate Loss as of 31/12/2011 =====> LKR32,395K

Exchange Rate Loss for this Quarter ======> LKR121,638K.

by greedy on Fri May 04, 2012 9:31 am

Vptilak wrote:Yes greedy. this is the thing. MGT is eating our profits. No valid reason is given for huge increase of admin. cost. How can we trust these Director boards.

I guess you are referring to "Technical Fees" LKR235.3mn (Y/E 31/12/2012) Vs LKR205.2mn (Y/E31/03/2011). That is a big amount of technical fees.

But the last quarter's admin fee increase was due to exchange rate loss. Management may have misjudged future forex rate movement like many of us did when they converted rupee loans to USD loans in 2009.

by greedy on Fri May 04, 2012 9:42 am

CHASE wrote:I don't think it's exchange loss. USD started to go up from march so for
a one month it cant be a huge amount. Also normally Exchange gain/Loss
comes under Finance Exp.

http://cse.lk/cmt/upload_report_file/666_1336042926294.pdf

From press release......

"The rupee depreciation too had a significant impact on the Foreign Exchange Loan the Company has obtained in 2009. A loss of over Rs. 100 Million has been booked under administrative costs by revaluing the closing balance of the US Dollar loan at 31st March 2012 rate."

by CHASE on Fri May 04, 2012 9:58 am

greedy wrote:
CHASE wrote:I don't think it's exchange loss. USD started to go up from march so for
a one month it cant be a huge amount. Also normally Exchange gain/Loss
comes under Finance Exp.

@CHASE,

Refer the annual audited financial statements for the year ended 31/03/2012 & refer to Note number 20, you will find what is included under finance expenses. If you go to note number 21, you will find Exchange Rate Loss of LKR134,368,786.

To find out what was exchange rate gain/Loss for the Q/E 31/03/2012, refer Accounts for the Q/E 31/12/2011 & 31/03/2012...... In the cash flow statements, you can find what was the exchange loss..

Exchange Rate Loss as of 31/03/2012 =====> LKR154,033K
Exchange Rate Loss as of 31/12/2011 =====> LKR32,395K

Exchange Rate Loss for this Quarter ======> LKR121,638K.