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Initiative of the BSE Investors Protection Fund

Alfred Herbert (India) Ltd

6 December 2012


CMP: Rs.230
Industry: Industrial machinery
BSE group/index: B


Promoters
AV Lodha
HV Lodha

Year of incorporation
1919


Registered office
13/3 Strand Road,
Kolkata 700001



Company website
http://www.alfredherbert.co.in






















Write to us at:
equity.research@outlook.com
Key Data (as on 6 Dec12)
BSE 505216 ISIN INE782D01027
Face Value 10 Mkt Cap (Rs.mn) 170
Current P/E 7.4 Current P/BV 0.55
52 week high-low 243.0-
162.1
30 day average daily
trading volume (nos.)
181
Equity capital (Rs.mn) 7.7 Net worth (Rs.mn) 311.0

Company business
Alfred Herbert India Ltd (AHIL) is a holding company. It was incorporated in
1919 and is based in Calcutta. During 1999-2000, the company was restructured
by transferring the manufacturing division to a wholly owned subsidiary, Alfred
Herbert Ltd (AHL) based in Bangalore. The subsidiary company manufactures
and trades industrial machines and spares in India. It primarily offers a range of
machineries for the tire and rubber industry. The machines include tire curing
presses, tire building machine, mixers, tube presses, rolling machines and plastic
processing machines etc. The parent company AHIL is currently engaged in the
business of developing, holding and letting out real estate.

AHIL has been promoted by AV Lodha and HV Lodha. AV Lodha is the non-
executive chairman and HV Lodha is a non-executive director of the company.

Peer group analysis Standalone financials
AHIL reported EBIDTA of Rs.9.0 mn in FY12. The company lagged behind the
peer set in almost all financial performance criteria as given in the table below.

Financials - Standalone
FY12, Rs.mn AHIL
1
Solitaire
1

Machine
Hittco
1

Tools
Texmaco
2

Infra
Total income 161.6 139.0 92.7 274.9
EBIDTA 9.0 29.6 17.1 241.9
EBIDTA margin 5.6% 21.3% 18.4% 88.0%
PBT 6.0 19.5 11.1 211.4
PAT 6.0 13.5 8.7 189.3
PAT margin 3.7% 9.7% 9.4% 68.9%
EPS 7.7 2.9 1.6 1.5
Cash accruals 8.3 21.0 13.8 219.2
BV/share 403.1 21.7 21.9 19.4
Debt/EBIDTA - 0.1 1.9 -
Debt/Equity 0.00 0.02 0.50 0.00
ROANW 1.9% 14.1% 14.6% 7.9%
ROACE 1.7% 13.4% 9.7% 7.8%
P/E 27.8 5.5 6.1 17.9
P/BV 0.5 0.7 0.4 1.4
Source: Moneycontrol, Company
1
FV Rs.10 per share
2
FV Rs.1 per share




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Initiative of the BSE Investors Protection Fund
Alfred Herbert (India) Ltd
Business capacity

Price Performance
Machines sold in 2011 81 Units






3 Years: 27 Nov 09 to 27 Nov 12
5 Years: 27 Nov 07 to 27 Nov 12



Public shareholders with >1% shareholding
Sl. No. Name of the Shareholder
No. of Shares
held
Shares as % of Total
No. of Shares
1 Oriental Insurance Company Ltd

15,628 2.03
2 Aravind Prabhu K V 7,726 1.00
Total 23,354 3.03
Source: BSE



Change in Shareholding Pattern (%)
Year
Promoters
DII FII Others
Sep-12 70.4 2.0 0.0 27.6
Jun-12 68.4 2.0 0.0 29.6
Mar-12
68.1 2.0 0.0 29.9
Mar-11 63.5 2.0 0.0 34.5
Mar-10 61.2 2.0 0.0 36.8
Mar-09 61.1 4.9 0.0 34.0
Mar-08 58.5 4.9 0.0 36.6
Mar-07 58.5 4.9 0.0 36.6
Source: BSE
Shareholding Pattern (%)

Source: BSE, as at 30 September 2012

* promoters have increased stake through open market purchase








30.6%
-4.3% -2.5%
-30.7%
-50.0%
0.0%
50.0%
3 YR 5 YR
AHIL BSE Smallcap
Promoter
70.4%
DII
2.0%
Others
27.6%




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Initiative of the BSE Investors Protection Fund
Alfred Herbert (India) Ltd


Key strengths
A debt free company The company continued to remain almost debt free for the last five years.

Key concerns
Declining business from main
operation

The companys operation predominantly relates to manufacturing and trading of
industrial machineries. Income from the division has declined by 40% from Rs.247 mn to
Rs.142 mn in FY12. In view of declining economic condition demand for machines has
delayed in the customer market.

Rising import of tyres from China

A spike in import of cheaper tyres from China is a concern for the tyre manufacturing
industry which is facing a demand slowdown. The taxi segment is increasingly shifting to
imported tyres attracted by lower price though their quality is said to be inferior to
indigenous tyres.


Industry overview
Rubber industry segmentation

The rubber product manufacturing industry in India is basically divided into two major
sectors: tyre and non-tyre. The tyre sector produces all types of automotive and non-
automotive tyres. The non-tyre sector produces high-technology sophisticated products.

Industry size
There are around 19 players for the manufacture of rubber machinery mainly required
for tyre/tube industry. The domestic installed capacity was about Rs10.0 bn as of FY11.
Healthy auto demand to drive demand
for tyres and related machineries

Passenger vehicle sales are expected to grow from 2.2 mn units in 2009 to 5.1 mn units in
2015 with a CAGR of 15.0%. Also commercial vehicle sales are expected to grow at a
CAGR of 20% from 0.5 mn units in 2009 to 1.4 mn units in 2015. The effect of this huge
growth would lead to increasing demand of tyres and tyre processing machineries.

Higher growth in non-tyre segment

In recent years the growth of the non-tyre rubber machinery market has been higher
than the growth of the tyre segment. Mainly the conveyor belt and hose industry has led
to a strong demand in non-tyre equipment segment.

Government initiatives
The industry is de-licensed and FDI up to 100% is allowed under automatic route.
Technology collaboration as well as import of old and new machineries are allowed
freely.

Company fundamentals
Entering into radial tyre machine
manufacturing segment

The penetration of radial tyre has started to increase rapidly in the light commercial
vehicle and truck & bus segment. The radial tyre market is expected to reach Rs.390 bn
by FY2015 growing at a CAGR of 21% during 2011-15. The company intends to enter into
the radial tyre machine manufacturing segment to tap the opportunity in the market.





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Initiative of the BSE Investors Protection Fund
Alfred Herbert (India) Ltd


Quarterly results
Particulars (Rs in mn) Apr12 to June12 Apr11 to Jun11 % Change
1
Jan12 to Mar12 % Change
2

Total income 5.3 4.1 29.3% 4.5 17.8%
Total expenditure 2.3 1.7 35.3% 2.0 15.0%
EBIDTA 3.0 2.4 25.0% 2.5 20.0%
EBIDTA margin 56.6% 58.5% - 55.6% -
PAT 2.7 1.9 42.1% 2.5 8.0%
PAT margin 50.9% 46.3% - 55.6% -
EPS 3.50 2.50 40.0% 3.60 -2.8%
1
compared to corresponding quarter in the previous year
2
sequential comparison














Product diversification
Besides catering to the rubber industry, the companys subsidiary, AHL, has diversified
into hydraulics. It offers hydraulic equipment systems related to automobile industry. The
company has received trial order for import substitution from the Indian railways and has
undertaken the casting development process for the related product.

Key financial indicators
Loss in subsidiary operation impacted
the bottom line of the company

The company earned around 90% of total revenue through its wholly owned subsidiary
Alfred Herbert Ltd (AHL). Hence standalone parameters dont reflect the overall
operations of the company.

On a consolidated basis the total income of the company decreased by 38.8% to Rs.161.6
mn in FY12 from Rs. 264.0 mn in FY11. This was mainly attributed to decline in sales of
machinery from its subsidiary operation at Bangalore. Domestic sales declined by 43.1%
to Rs.144.1 mn in FY12 (Rs.253.2 mn). Exports decreased to Rs.6.4 mn from Rs.13.2 mn in
FY11. The subsidiary posted a net loss of Rs.3.7 mn in FY12 as against a profit of Rs.28
mn in FY11.

Declined sales combined with increased material cost impacted EBIDTA of the company.
The consolidated EBIDTA was Rs.9.0 mn in FY12 as against Rs.42.7 mn in FY11. EBIDTA
margin declined from 16.2% in FY12 to 5.6% in FY11.

PAT of the company was at Rs.6.0 mn in FY12 (Rs.33.1 mn in FY11). PAT margin
decreased from 12.5% in FY11 to 3.7 % in FY12.





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Initiative of the BSE Investors Protection Fund
Alfred Herbert (India) Ltd
Segment-wise break-up towards total revenue Key ratios



Inner ring represents FY11 data: total revenue Rs.264 mn
Outer ring represents FY12 data: total revenue Rs.161.6 mn




Profitability ratios Leverage ratios






Financials
P&L (Rs. mn) FY10 FY11 FY12

Balance Sheet (Rs. mn) FY10 FY11 FY12
Total income 238.1 264.0 161.6

Share Capital 7.7 7.7 7.7
EBIDTA 32.3 42.7 9.0

Reserves & Surplus 270.0 299.3 303.3
EBIDTA margin 13.6% 16.2% 5.6%

Net worth 277.7 307.0 311.0
Depreciation 2.3 2.3 2.3

Borrowings 0.0 3.1 0.0
EBIT 30 40.4 6.7

Deferred tax liability 3.4 3.3 6.1
Interest 0.6 0.1 0.7

Current Liabilities (excluding borrowing) 0.0 85.9 98.1
PBT 29.4 40.3 6.0

Total Liabilities 281.1 399.3 415.2
Tax 6.9 7.2 0.0

Net fixed assets 46.9 45.3 50.0
PAT 22.5 33.1 6.0

Investments 172.5 222.1 221.2
PAT margin 9.4% 12.5% 3.7%

Current Assets 61.7 131.9 144.0
Cash accruals 24.8 35.4 8.3

Total Assets 281.1 399.3 415.2
Dividend /share (Rs.) 4.3 4.3 2.0


Dividend paid (Rs. mn
) (including tax) 1.5 1.5 1.8


93.7%
6.3%
88.3%
11.7%
Manufacturing
Realty
5.0
43
7.7
4.29
4.29
1.95
0
20
40
60
FY10 FY11 FY12
EPS
Dividend per
share
FY10 FY11 FY12
BV/share
13.8%
12.8%
1.7%
8.5%
11.3%
1.9%
FY10 FY11 FY12
ROACE
ROAE 0
0.02
0.04
0.06
0.08
FY10 FY11 FY12
Debt/EBIDTA
Debt/Equity




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Initiative of the BSE Investors Protection Fund
Alfred Herbert (India) Ltd
Valuation ratios FY10 FY11 FY12

Cash Flow (Rs.mn) FY10 FY11 FY12
P/E 5.6 4.6 27.8

PBT 29.4 40.3 6.0
P/BV 0.5 0.5 0.5

CF from Operation 28.7 7.1 23.4

CF from Investment (95.4) (40.3) (8.5)


CF from Financing (6.3) (0.5) (4.6)
Inc/(dec) Cash (73.0) (33.7) 10.3
Closing Balance 57.3 23.6 16.6

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