Vas Animation(Infrastructure) Ltd.

Vas Infrastructure ltd.

The stock is recommended by Mathew Easow on moneycontrol.com

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The company earlier known as Vas Animation Ltd. was set up in 1997.The company was not doing any business over the last few years. In April’06 the company has announced the change in name to Vas Infrastructure Ltd. In line with the change in name the company is now pursuing business in development of real estate. It is already doing housing projects in Borivali and Goregaon in western suburbs of Mumbai and also commercial property development in Malad.

Over the next two years the company hopes to get aggressive in development of real estate and more so in construction of luxurious flats/commercial property in the suburbs.

Borivali project:

The company has purchased a plot of 125000 sq.ft. land from the promoters for a consideration of Rs190 mln. The plot already has some buildings on it. As per existing development rules the company can construct about 28000 sq ft. However the company has already purchased about 12000 sq ft of TDR and hopes to purchase another 0.5 mln. sq ft of TDR at Rs1400-1500 per sq ft. This together with purchase of about 0.4 mln. sq ft of TDR rights at an average cost of Rs1000/sq ft will entail it to construct about 0.425mln lac sq ft of carpet area in the form of 3 towers over the next 3 years. The company has already contracted with the neighbouring Societies to purchase the TDR rights of 0.5 mln. sq ft at an average rate Rs.500-700per sq ft.

The carpet area of 0.425 mln. sq ft will enable it to sell about 0.720 mln. sq.ft of built up area at an average rate of Rs4500/sq.ft.

The first tower is likely to be completed by Mar’08, the second tower by Mar’09 and the third tower by Mar.’10.

The construction cost will be Rs2300/sq ft and the profit on 0.720 mln. sq ft of saleable area will result in a profit of Rs1600 mln in 3 years time. The profit for ’07 is likely to be Rs110 mln, Rs750 mln in’08 and Rs725 mln in ’09 from this project.

Goregaon

The project in Goregaon entails construction of 4 towers of 20 floors each. The project however necessitates the rehabilitation of the existing slums. This requires rehabilitation and construction of tenements for these dwellers. On completion of this the company would be entitled to use the available 0.860 mln. sq ft. of carpet area or 1.127 mln.sq. ft. of carpet area.

Being a SRA project(Slum Rehabilitation ) the project does not involve any purchase of TDR’s or TDR rights.

At the moment no cost has been finalised for payment to the owners of the land for transferring the development rights. But in our estimate there would be a cost of Rs700-750 mln on this 500,000 sq ft of land to be paid to the owners. The project will start in Sep.’07 and be completed by Mar’10.On a area of 11.27 lac sq ft available for sale we expect a profit of Rs.20 bln to flow to the bottom line from ’08 onwards.

Malad:

The Malad project is a pure commercial property where the company hopes to build a shopping complex of 43000 sq ft of carpet area. Since the commercial properties enjoy a 2 times multiple , the sale will be of 86000sq ft. The project will require purchase of about 22000 sq ft of TDR .

The commercial complex to be built on a land of 43000 sq ft will commence in ’08 and will be completed by ’10. The profits likely to accrue over this period from this project is Rs400 mln. The company has not yet finalised the consideration to be paid for the purchase of land which we estimate will be about Rs.100-150 mln.

Future prospects: The company plans to slowly move into development of real estate and construction of luxury apartments /commercial property in the suburbs .

Financials: (Rs.Mln.)

	Mar'07	Mar'08	Mar'09
	(Projections)	(Projections)	(Projections)
Net sales	80	2125	3069
O.Income	0.2	2	5
Exp	29.50	955	1738
Land cost	----	150	50	(Borivali land cost)
		500	250	Goregaon Land
		80	70	Malad Land
Opt. Profit	50.70	442	966
Int	0.10	20	20
Deprn	0.10	5	5
PBT	50.50	417	941
Tax	0.50	130	300
PAT	50	287	641
Equity	100	100	100
EPS	10	28.7	64.1

# Provision for land costs for Goregaon and Malad property has been made in these projections on an approximate basis.

The share has the potential to touch Rs.250 by June 2008.

General Disclaimer : - Mathew Easow Financial Services, Mathew Easow and their relations, business associates and clients have a vested interest in Vas Infrastructure Ltd. and will benefit if the prices move up or down. Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading opportunities and it does that to the best of its abilities. However, prices can move up as well as down due to number of factors, all of which are impossible for anyone to foresee . THEREFORE, MATHEW EASOW FINANCIAL SERVICES and matheweasow.com and Mathew Easow cannot accept any responsibility for any investment decision or trading decision taken by readers and clients on the basis of information contained herein. Sometimes Mathew Easow Research Securities Ltd, Mathew Easow Fiscal Services Ltd., Mathew Easow and their clients, relations ,Business Associates etc. may hold contrary positions to the above recommendations.

Yashraj Containers- Money Multiplier

E. Mathew's latest Research Report

YASHRAJ CONTAINEURS LTD. Business Profile: The company is in the business of manufacturing steel barrels/drums and plastic barrels. Started in 1993 it was originally known as Vasparr Containeurs Ltd. The barrels are made in the sizes ranging from 180-235 lts. The chief users are IOC ( 28% of the output), HPCL(32%), BPCL(15%), and Micro Inks(7%) apart from Reliance Inds., United Phosphorous, Mother Diary, Amul Ltd and the defence units. The barrels are mainly used for storing and transportation of paints, lubes, oils, food and pesticides. The steel barrels have thickness varying from 0.8mm to 1.25mm. The process involves cutting of CR sheets to various sizes, rolling, welding (with a 2.2mm overlap, fixing the base and lid with vents and painting and coating the inside as desired by the customers. The company is the second largest producer of barrels after M/s. Balmer Lawrie Ltd. and the largest in Private Sector. The steel barrels contribute about 98% of the turnover and the balance is contributed by plastic cans/containers. The contribution of oil companies to the turnover is presently 65% and non-oil 35% which will in 07-08 be 55% and 45% respectively. The company had to write-off bad debts amounting to Rs16crs. This included clients like Rinki Petro. Improvements The rejection rate of drums have fallen from 3.2% in 02-03 to 0.45% in 05-06( six months). Similarly wastage in steel cutting which was 9% has been reduced to 3% after introduction of stagger blanking machines. Manufacturing The conversion time of raw materials to finished products is 7 days. The average debtors is outstanding for 90 days. All purchase of raw materials is by way of advance payments. The raw materials constitute about 60% of the cost of a barrel and other overheads another 10%. The cost of a 200 ltr barrel is Rs550 and selling price Rs775 at a profit of Rs.225 The conversion time of raw materials to finished products is 7 days. The average debtors is outstanding for 90 days. All purchase of raw materials is by way of advance payments. The raw materials constitute about 60% of the cost of a barrel and other overheads another 10%. The cost of a 200 ltr barrel is Rs550 and selling price Rs775 at a profit of Rs.225 RESTRUCTURING The company after passing through a lean phase and downturn in business in 03-04 and 04-05 is in the process of restructuring. The total accumulated losses of Rs35 crs. is likely to be set-off against profits of Rs.17.44 crs. Due to reversal of interest provision against borrowings from IDBI and GSFC, share premium on preferential allotment of warrants of Rs.12crs. and better profitability. The company has an interest outstanding of Rs11.38 crs. to IDBI and principal of Rs.12.30 crs. The company has entered into a one time settlement of Rs.13.10 crs thus saving Rs.10.58 crs. Similarly the outstanding of principal and interest of Rs.10.80 crs to GSFC is being settled at Rs3.94 crs. thus saving Rs.6.86 crs. The company will do a turnover of Rs.70 crs for 06-07 and a bottom line of Rs9.60 crs and a estimated turnover of Rs.110 crs for ’08 with a bottom line of Rs15 crs. The equity will move up from Rs.4.80 crs to Rs.7.80 crs on conversion of warrants in Aug.’07 Constraining factor The constraining factor in any expansion is the welding capacity of the unit which is 350 barrels per hours shift. The capacity of assembly line is 400 barrels per hour. The company presently working on a single shift, plans to raise it by half a shift to increase the welding capacity to match the total capacity of other machines. Growth driver The company has issued 30 lac warrants worth Rs.15 crs to promoters. The money will be brought in by the promoter over the next 12 to 18 months. The money received will be used to pay i the liability that it has towards IDBI where it has to repay about Rs0.33 cr per month spread over 36 months. The promoters have already invested Rs.605 lakhs by way of application money towards preferential allotment against which the company has already installed an additional barrel line at Chennai with an investment of Rs.300 Lakhs and also has opened and LC in support of additional barrel line to be installed in east zone with a total investment of Rs.3.25 Lakhs. The Rs.21 crs. pumped in will be used to repay Rs12crs to IDBI and about Rs3.94 crs to GSFC. The two assembly lines- one each in Chennai and Kanpur will manufacture 30000 barrels per month from each of these locations. The two units are expected to contribute about Rs.14 crs each to the topline beginning April’07 The remaining Rs.3 crs. will be used for enhancing working capital for the 3 units. The output of Daman plant will be increased by one more shift wherein drums will be compressed and dispatched to the two new assembly units. These compressed drums will be blown back to original size, base and top with vents fixed, painted and dispatched. The company also proposes to import a barrel pressing machine which will compress the barrels. Financials(Rs. in crores) ==================================================== 06-07 (Projected) Turnover* 70 Other income 0.30 Material cost 53 Administrative cost 6.20 Interest 4 Depreciation 2 PBT 10.20 Tax 2.04 PAT 8.16 Equity 4.8 EPS 17.00 ===================================================== General Disclaimer : - Mathew Easow Financial Services, Mathew Easow and their relations, business associates and clients have a vested interest in Yashraj Containeurs Ltd. and will benefit if the prices move up or down. Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading opportunities and it does that to the best of its abilities. However, prices can move up as well as down due to number of factors, all of which are impossible for anyone to foresee . THEREFORE, MATHEW EASOW FINANCIAL SERVICES and matheweasow.com and Mathew Easow cannot accept any responsibility for any investment decision or trading decision taken by readers and clients on the basis of information contained herein. Sometimes Mathew Easow Research Securities Ltd, Mathew Easow Fiscal Services Ltd., Mathew Easow and their clients, relations ,Business Associates etc. may hold contrary positions to the above recommendations.