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1 | P A G E

SECTOR: STEEL REPORTING DATE: 6TH DECEMBER, 2017

PRAKASH STEELAGE LTD www.prakashsteelage.com

Prakash Steelage Ltd NSE Code - PRAKASHSTL TABLE 1 - MARKET DATA (STANDALONE) (AS ON 04TH DECEMBER, 2017)

Sector - Steel NSE Market Price (`) 0.25 NSE Market Cap. ( Cr.) 5.78

Face Value (`) 1.00 Equity (` Cr.) 17.50

Business Group N.A. 52 week High/Low () 2.00/0.10 Net worth ( Cr.)* -293.23

Year of Incorporation - 1991 TTM P/E (TTM) 0.31 Traded Volume (Shares) 70,349

TTM P/BV N.A. Traded Volume (lacs) 0.18

Registered Office - Source - Capitaline, TTM - Trailing Twelve Months, N.A. - Not Applicable,* As on 30th September, 2017

101, 1st Floor Shatrunjay Apts, COMPANY BACKGROUND

28, SindhiLane Nanubhai Prakash Steelage Limited is engaged in manufacturing and trading of stainless steel tubes

and pipes. The Company produces pipes and tubing in stainless steel, duplex, titanium and

other high nickel alloy tubing. The Company produces Pressure Tubing in a variety of alloys

and sizes. Its products are available in various conditions, such as as welded,

Annealed/Unanneled, Bright Annealed, Annealed and Pickled, U-Bent, Bead Rolled and

Straight Lengths. Its tubing is available in a range of grades and specifications. It is used in a

variety of applications in industries, such as automotive, pulp and paper, food, semi-

conductor manufacturing, petro-chemicals, oil and gas, pharmaceutical and sugar industry.

The Company has an advanced tube bending facility with a capacity to cold bend tubes of

19.05-millimeter (mm) outer diameter (OD) to 38.10mm OD and up to approximately

3.38mm wall thickness with 22.20mm to 1,220mm center line radius.

Desai Rd, Mumbai 400 004

Maharashtra

Company Website:

www.prakashsteelage.com

Revenue and Profit Performance

The revenue of the Company decreased from 35.50 crores to

14.24 crores from quarter ending Sep16 to quarter ending

Sep17. The Company made a profit of 3.27 crores in quarter

ending Sep17 vis-a-vis making a loss of 20.15 crores in quarter

ending Sep16.

Source: Money control

Performance vis--vis Market

TABLE 2- Returns

1-m 3-m 6-m 12-m

Prakash Steelage Ltd -16.67% -20.00% -70.59% -81.48%

Nifty -3.10% 1.91% 4.98% 23.95%

NIFTY METAL -8.12% -0.61% 23.05% 27.04%

Source - Capitaline/NSE

14.24 6.7635.50

3.27

-77.64

-20.15

-100

-50

0

50

Sep'17 Mar'17 Sep'16

Quarterly revenue and Profit ( CRORE)

Revenue Profit

0.00

0.50

1.00

1.50

2.00

Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17

Prakash Steelage Ltd NIFTY NIFTY METAL

http://www.prakashsteelage.com/http://www.prakashsteelage.com/



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TABLE 3 - FINANCIALS

( Cr.) Sep17 Mar17 Sep16 % Change

Sep 17 vs Mar17 Mar17 vs Sep16

Net Worth -293.23 -40.89 47.47 N.A. -186.14%

Current Assets 50.86 307.01 375.85 -83.43% -18.32%

Non-Current Assets 23.32 24.82 47.64 -6.02% -47.90%

Total Assets 74.18 331.83 423.49 -77.64% -21.64%

Investments 3.25 3.25 3.35 0.00% -2.99%

Finance Cost 0.01 -11.77 7.97 N.A. -247.68%

Long Term Liabilities 6.94 54.59 67.08 -87.29% -18.62%

Current Liabilities 360.48 318.13 308.93 13.31% 2.98%

Turnover 14.24 7.16 33.07 98.88% -78.35%

Profit After Tax 3.27 -77.64 -20.15 N.A. N.A.

EPS () 0.19 -4.44 -1.15 N.A. N.A.

Source - Money Control/Stock exchange filing

AUDIT QUALIFICATIONS

Audit Qualifications in last 3 years: The Auditors have raised qualification in FY 2016-17. The Auditors have raised concern over

certain matter under Emphasis of matters in their Report for FY 2014-15.

Basis for Qualified Opinion for FY 2016-17 (As stated in Annual Report FY 2016-17):

1.During the current financial year, the account of the Company with its consortium Banks had turned Non-Performing Asset on

various dates. In view of uncertainty the Company has not provided interest including penal interest and other dues for the year

on borrowings, to the extent the same have remained unpaid. Had the interest been provided, loss of the year would have been

higher by 19.53 Cr with a corresponding increase in liabilities towards interest. Also, the Reserves & Surplus have been

overstated to that extent.

2. The Financial Statement indicates that the Company has accumulated losses resulting in erosion of Net Worth and has

incurred net cash losses in the current and immediately preceding Financial Year. These conditions cast serious doubt about the

company's ability to continue as a going concern. However, the financial statements of the Company has been prepared on a

going concern basis.

Management Response:

1.Due to adverse condition in steel industries on account of drastic fall in the prices of steel, the Company has been suffering

losses since couple of years which is impacting the net worth of the Company. Loan account had been classified as NPA by the

consortium of the banks and Company is not generating revenue to service the loans. Hence in view of uncertainty the Company

has not provided interest including penal interest and other dues for the year on borrowings, to the extent the same have

remained unpaid.

2.The erosion of net worth of the Company should not be constituted as doubt on the continuity of the Company as going

concern. The steel industries is on the revival path. The Company is in the process of coming out of the crisis through business

restructuring and financial arrangement.

http://www.prakashsteelage.com/



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Response Comment

Frequency of Qualifications Not Applicable

Have the auditors made any adverse

remark in last 3 years? Yes

The Auditors has raised qualification and raised concern about the

Company's ability to continue as a going concern.

Are the material accounts audited by

the Principal Auditors? Yes

-

Do the financial statements include

material unaudited financial

statements?

No

-

TABLE 4: BOARD PROFILE (AS PER ANNUAL REPORT - FY 2016-17)

Regulatory Norms Company

% of Independent Directors on the Board 50% 50%

% of Promoter Directors on the Board - 50%

Number of Women Directors on the Board At least 1 1

Classification of Chairman of the Board - Executive Promoter Director

Is the post of Chairman and MD/CEO held by the same person? - Yes

Average attendance of Directors in the Board meetings (%) - 87.50%

Composition of Board: As per Regulation 17(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 "Listing Regulations, 2015", the Company should have at least 50% Independent Directors as the Chairman of the Board is

a Promoter Executive Director. The Company has 50% of Independent Directors and hence, it meets the regulatory

requirements.

Board Diversity: The Company has 6 directors out of which 5 are male and 1 is female.

Holding of position of MD/ CEO & Chairman by same person: The Company has appointed Mr. Prakash Kanugo as the Chairman

and Managing Director of the Company. Appointment of a single person as the Chairman and Managing Director of the

Company is not a good governance practice as this may lead to concentration of power in a single person.




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TABLE 5 - FINANCIAL RATIOS

Ratios Sep17 Mar17 Sep16

% Change

Sep 17 vs

Mar17

Mar17 vs

Sep16

Turn

ove

r

Rat

ios

Inventory Turnover 1.31 0.38 1.40 244.91% -72.92%

Debtors Turnover 1.07 0.05 0.12 1931.67% -56.16%

Fixed asset Turnover 0.61 0.29 0.69 111.63% -58.44%

Current Asset Turnover 0.28 0.02 0.09 1100.52% -73.49%

Ret

urn

Rat

ios Operating Profit Margin 8.64% -18.99% -18.02% N.A. N.A.

Net Profit Margin 22.96% -1,084.36% -60.93% N.A. N.A.

Return on Assets (ROA) 4.41% N.A. N.A. N.A. N.A.

Return on Equity (ROE) -1.12% N.A. N.A. N.A. N.A.

Return on Capital Employed (ROCE) -1.14% N.A. N.A. N.A. N.A.

Liq

uid

ity

Rat

ios

Current Ratio 0.14 0.97 1.22 -85.38% -20.68%

Quick Ratio 0.11 0.91 1.14 -87.76% -20.56%

Cash Ratio 0.07 0.48 0.25 -84.52% 94.22%

Working Capital Turnover ratio -0.01 N.A. N.A. N.A. N.A.

Solv

ency

Rat

ios Debt to equity ratio N.A. N.A. 5.16 N.A. N.A.

Interest Coverage Ratio 123.00 N.A. N.A. N.A. N.A.

Trad

ing

Rat

ios

Market Cap / Sales 0.31 3.18 0.85 -90.32% 275.27%

Market Cap/ Net Worth N.A. N.A. 0.59 N.A. N.A.

Market Cap/PAT 1.34 N.A. N.A. N.A. N.A.

Market Cap/EBITDA 3.56 N.A. N.A. N.A. N.A.

Source - Money Control/Stock exchange filing

TABLE 6 - TRADING VOLUME

Particulars Sep17 Mar17 Sep16

% Change

Sep 17 vs

Mar17

Mar17 vs

Sep16

Trading Volume (shares) (avg. of 1 qtr) 89,164 3,82,371 14,42,429 -76.68% -73.49%

Trading Volume (shares) (high in 1 qtr) 3,25,298 34,44,909 1,30,39,449 -90.56% -73.58%

Trading Volume (shares) (low in 1 qtr) 334 28,955 57,637 -98.85% -49.76%

Ratio - High/low trading volume 973.95 118.97 226.23 718.62% -47.41%

Ratio - High/average trading volume 3.65 9.01 9.04 -59.51% -0.34%

Source - Capitaline

TABLE 7 (A): OWNERSHIP & MANAGEMENT RISKS

Sep-17 Mar-17 Sep-16 Comments

Shar

eho

ldin

g (%

)

Promoter shareholding 48.18 48.18 49.59 No new equity shares were issued during the

period from 1st Oct, 2016 to 30th Sept 17.

The promoter shareholding decreased from

49.59% as on Sept 16 to 48.18% as on Sept 17 due

to sale of shares.

The shareholding of others increased from

43.11% to 44.52% during the same period.

The promoters have pledged 32.09% of their

shareholding.

Public - Institutional

shareholding 7.30 7.30 7.30

Public - Others shareholding 44.52 44.52 43.11

Non-Promoter Non-Public

Shareholding 0.00 0.00 0.00

Source - NSE




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MAJOR SHAREHOLDERS (AS ON 30TH SEPTEMBER 2017)

S. No. Promoters Shareholding S. No. Public Shareholders Shareholding

1 Prakash C Kanugo 20.19% 1 General Insurance Corporation of India 3.08%

2 Seth Iron and Steel Private Ltd 7.14% 2 Avani Impex Private Limited 2.62%

3 Kirti P Kanugo 3.33% 3 LTS Investment Fund Limited 2.18%

4 Hemant Prakash Kanugo 3.21% 4 Emerging India Focus Funds 2.04%

5 Kamal Prakash Kanugo 3.19% 5 Logisys Advisors Private Limited 2.05%

Source - NSE

TABLE 7 (B): OWNERSHIP & MANAGEMENT RISKS

Market Activity of Promoters The Promoters of the Company sold 3,29,46,667 shares in the secondary market during FY

2016-17.

Preferential issue to promoters No preferential issue of shares was made to the promoters during FY 2016-17.

Preferential issue to others No preferential issue of shares was made to other shareholders during FY 2016-17.

GDRs issued by the Company The Company did not issue any GDRs during FY 2016-17.

Issue of ESOPs/Issue of shares

other than Preferential allotment

The Company did not issue any shares to the employees under its ESOP Scheme during FY

2016-17.

Source - Annual Report FY 16-17

TABLE 8: PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

Sr. No. Name and Description of main products / services % to Total turnover of the Company

1 Manufacturing and trading of stainless steel tubes and pipes 98.62%

2 Others 1.38%

Source - Annual Report FY 16-17




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Glossary

Equity: The equity shares capital of the Company

Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders funds of the Company

Turnover: The revenue earned from the operations of the Company

EPS: Earning Per Share is net profit earned by the Company per share

=Profit After Tax

Number of outstanding shares

P/E ratio: It is the ratio of the Companys share price to earnings per share of the Company

/ =Price of each share

Earnings per share

Current Assets: Cash and other assets that are expected to be converted to cash in one year

Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land,

buildings, and equipment

Total Assets: Current Assets + Fixed Assets

Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in

the future.

Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges

incurred during the year in relation to borrowed money.

Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year.

Current Liabilities: A company's debts or obligations that are due within one year.

Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced

over a period.

=Sales Turnover

Inventory

Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business

can turn its accounts receivable into cash during a period

=Sales Turnover

Accounts recievables

Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets

=Sales Turnover

Fixed Assets

Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets

=Sales Turnover

Current Assets

Operating Profit Margin: Operating margin is a measurement of what proportion of a Companys revenue is left over after

paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Companys operating

income (also known as operating profit) during a given period by its sales during the same period.

=Operating profit

Sales Turnover

Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales

=Net profit

Sales Turnover




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Return on Assets: ROA tells you what earnings were generated from invested capital (assets)

=Net profit

Total Assets

Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders

equity.

=Net profit

Net worth

Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability

and the efficiency with which its capital is employed.

=Net profit

Total Debt+Equity share capital

Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts

over the next 12 months. It compares a firm's current assets to its current liabilities.

=Current Assets

Current Liabilities

Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities.

=Current AssetsInventories

Current Liabilities

Cash ratio: The ratio of the liquid assets of a Company to its current liabilities.

=Current AssetsInventoriesAccount Recievables

Current Liabilities

Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates

a Company's effectiveness in using its working capital.

=

Current AssetsCurrent Liabilities

Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of

shareholders' equity and debt used to finance a company's assets.

= +

Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a

Company can pay interest on outstanding debt.

=

Market Cap/Sales ratio: Market Cap/sales ratio, Pricesales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is

calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-

share stock price by the per-share revenue.

/ =

Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Companys market cap to net worth.

/ =

Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Companys market cap to net profit.

/ =

Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Companys market cap to EBITDA.

http://www.prakashsteelage.com/http://www.investopedia.com/terms/i/invested-capital.asphttp://www.investopedia.com/articles/stocks/05/04405.asphttps://en.wikipedia.org/wiki/Stockhttps://en.wikipedia.org/wiki/Market_caphttps://en.wikipedia.org/wiki/Stock



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/ =

Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year

Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year

Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year




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Research Analyst: Sumit Tank
http://www.prakashsteelage.com/mailto:[email protected]:[email protected]://www.sesgovernance.com/