A CARE AA- (Double A minus) rating has been assigned to the NCD issue of Rs 150 million of Pentafour Products Limited (PPL). The NCDs will be repayable in three equal installments, at the end of the third, fourth and fifth year from the date of allotment.
PPL belongs to the Pentafour group whose combined networth was around Rs 2.4 billion, as on March 31, 1996. The group earned a PAT of Rs 678.6 million on a turnover of Rs 2970 million for FY 96. The other group companies are Pentafour Software and Exports Ltd., Pentafour Solec Ltd. And Pentafour Communications Ltd. PPL is a diversified company, with five divisions offering a wide range of products. The main products of the Electronics division are energy and charge control systems and power electronic devices. TheChemical division manufactures phosphoric acid, LABSA and other surfactants. The Auto component division manufactures several products for two wheelers.
Total income has grown from Rs 69 million for FY92 to Rs 1484 million for FY96 at a compounded annual growth rate of 115 per cent. The increase in income during FY 96 slowed down to 62.81 per cent, due to a downtrend in the food products business.PBILDT and PAT margins have shown wide fluctuatiuons over the last five years due to the additions of new products. In FY96, PBDILT and PAT margins were good at 31.7 per cent and 21.7 per cent respectively .
PPL's share capital has increased gradually from Rs 96 million as on March 31, 1993 to Rs 411 million as on March 31, 1996. The conversion of FCBs into equity resulted in decline in the debt equity ratio from 4.36 as on March 31, 1995 to 0.46 on March 31, 1996. Interest coverage ratio has improved from 2.71 for FY 93 to 4.67 for FY 96. Current ratio has been good over the past five years. Fixed asset turnover ratio and capital turnover ratio have shown a steady decline mainly on account of new investments which are yet to yield optimum returns.
The Chemical and Auto component subdivisions operate under highly competitive conditions and margins have been low but steady. The main product of the Auto component division, the four wheeler carburettor, faces possible obsolescence by the year 2000. In FY 96, 73 per cent of the sales of the Electronics division was to group companies. Because of intergroup synergy, PPL's electronics division is expected to do better. The sea food industry is presently going through a lean phase, which reduces the sales of this division.
