31 st May, 2016 TABLE 1 MARKET DATA (STANDALONE) (As on 31 st May, 2016) NSE Code PVP NSE Market Price ( ) 4.50 NSE Market Cap. ( Cr.) 118.85 Sector Realty Face Value ( ) 10.00 Equity ( Cr.) 245.05 52 week High/Low ( ) 7.90/4.05 Net worth ( Cr.) 647.71 Business Group Indian Private TTM P/E N.A. Traded Volume (Shares) 57,002 Year of Incorporation 1991 TTM P/BV 0.01 Traded Volume (lacs) 2.57 Corporate Office: KRM Centre 9th Floor Chetpet, Door No 2 Harrington Road, Chennai 600 031, Tamil Nadu Company Website: TABLE 2 PRICE PERFORMANCE Source Capitaline COMPANY BACKGROUND PVP Ventures Limited, formerly SSI Limited, is an India based company. The Company is engaged the development of urban infrastructure. The company was incorporated on 1 st January, 1994 with the name Software Solution Integrated Pvt Ltd. The company was changed into public limited on 10 th May, 1995 and the name was changed to Software Solution Integrated Ltd. In the initial stage, the company was mainly engaged in the specialized area of RDBMS training development and consulting in India. Their major operations were software development training and consulting. During the year 2008 2009, the company set up wholly owned subsidiaries namely, Cuboid Real Estates Pvt Ltd and PVP Business Towers Pvt Ltd. 30 th May, 2016 29 th May, 2015 30 th May, 2014 % Change 2016 vs 2015 2015 vs 2014 CAGR for 2 years Price ( ) 4.80 5.05 8.45 4.95% 40.24% 24.63% Trading Volume (Shares) (yearly avg.) 1,21,554 2,74,212 1,14,895 55.67% 138.66% NSE Market Cap. (in Cr.) 117.62 123.75 207.07 4.95% 40.24% 24.63% Source Money Control TABLE 3 FINANCIALS ( Cr.) 2015 2014 2013 % Change CAGR for 2 2015 vs 2014 2014 vs 2013 years Net Worth 647.71 661.28 668.44 2.05% 1.07% 1.56% Current Assets 7.95 12.52 11.64 36.50% 7.56% 17.36% Non Current Assets 940.78 1,017.52 1,053.31 7.54% 3.40% 5.49% Total Assets 948.73 1030.04 1064.95 7.89% 3.28% 5.61% Investments 824.03 879.75 893.38 6.33% 1.53% 3.96% Finance Cost 19.65 19.40 0.44 1.29% 4309.09% 568.27% Long Term Liabilities 226.6 268.71 267.81 15.67% 0.34% 8.02% Current Liabilities 74.42 100.05 128.7 25.62% 22.26% 23.96% Turnover 53.36 63.47 47.77 15.93% 32.87% 5.69% Profit After Tax (PAT, Cr.) 1.61 8.02 36.29 79.93% 77.90% 78.94% EPS ( ) 0.07 0.33 1.00 78.79% 67.00% 73.54% Source Money Control/Annual Report 1 P AGE
AUDIT QUALIFICATIONS Audit Qualifications in last 3 years: The Auditors have not made any qualifications, however they have emphasised on the following matters in last three annual reports. Emphasis of Matters for the year 2015 We draw the attention of members notes to the financial statements in Note 12 with regard to the Unquoted investment of equity shares in Subsidiary Companies Rs.54365.90 lakhs with provision for diminution in carrying value provided for Rs.30000.00 lakhs and Note 13 unsecured and good advances to subsidiaries Rs.218180.51 lakhs with provision for diminution in carrying value provided for Rs.5160.16 lakhs. The management is of the view that considering market value of the assets, present value of investments and expected cash flows and expected development of projects the provision already made are adequate (also refer note 21.13) which describes the uncertainty related to the outcome of the future events. Our opinion in respect of these matters is not modified. Management Response: Notes on Accounts are self explanatory and therefore do not call for any further comments. Emphasis of Matter for the year 2014 Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies at cost Rs.54357.20 lakhs with provision for diminution in carrying value provided for Rs.30000.00 lakhs, (b) investment in Redeemable Nonconvertible Debentures of subsidiary company of Rs.24832.00 lakhs, and (c) Note 13 in notes to the financial statements with regard to Unsecured Loans to subsidiary companies of net of provision Rs.3650.09 lakhs. The management is of the view that considering the market value of the assets, present value of investments and expected cash flows from the business of these subsidiary companies and the expected development of projects, the provision already made are adequate (Note 24.9) which describes the uncertainty related to the outcome of future events. Our opinion is not qualified in respect of these matters. Management Response: Notes on Accounts are self explanatory and therefore do not call for any further comments. Audit Qualifications for the year 2013 Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies at cost C54718.10 lakhs with provision for diminution in carrying value provided for C30358.10 lakhs, (b) investment in Redeemable Non Convertible Debentures of subsidiary company of C24832.00 lakhs, and (c) Note 13 in notes to the financial statements with regard to Unsecured Loans to subsidiary companies of C43660.75 lakhs with provision for doubtful advances made for C5160.16 lakhs. The management is of the view that considering the market value of the assets and expected cash flows from the business of these subsidiary companies the provision already made are adequate. However, considering the net worth of the subsidiary companies are negative, dependence on the parent to continue as a going concern and other related factors indicate that the existence of material uncertainty in carrying the value of investments and loans and advances at cost less provision already made. Hence we were unable to determine whether any adjustments to these amounts were necessary. Management Response for the 2013 The Management is of the opinion that considering the market value of the assets and expected cash flows from the business of these subsidiary companies, the provisions already made are adequate. Hence, no additional provision is made during the current year. However, regular review on quarterly basis of the provisions and cash flows from these companies will be made and presented to the Board, for consideration of any additional provisions/write off as it may warrant based on which, the Management would take decision of additional provision /write off with the recommendation of Audit Committee. 2 P AGE
Frequency of Qualifications Have the auditors made any adverse remark in last 3 years? Are the material accounts audited by the Principal Auditors? Do the financial statements include material unaudited financial statements? Response Comment FY 2014 15 (Emphasis Matters): Appearing since financial year ending 31 st March, 2014 FY 2013 14 (Emphasis Matters): Appeared First Time FY 2012 13 (Qualified opinion): The qualification is a continuing qualification since FY2011 No Yes No TABLE 4: BOARD PROFILE (As on 31 st March, 2015) 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 Atleast 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 (%) 95.45% Source Money Control/Annual Report Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board is a Promoter Director. The Company as on 31 st March, 2015 has 50% of Independent Directors and hence, it meets the regulatory requirements. Board Diversity: The Company has 4 directors out of which 3 are male and 1 female. Holding of position of MD/ CEO & Chairman by same person: The Company has appointed Mr. Prasad V. Potluri 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. 3 P AGE
TABLE 5 FINANCIAL RATIOS Ratios 2015 2014 2013 Turnover Ratios Return Ratios Liquidity Ratios Solvency Ratios Trading Ratios % Change 2015 vs 2014 2014 vs 2013 Inventory Turnover Debtors Turnover 17.67 25.39 26.84 30.40% 5.40% Fixed asset Turnover 0.06 0.06 0.05 9.07% 37.54% Current Asset Turnover 6.71 5.07 4.10 32.40% 23.53% Operating Profit Margin 0.82% 21.82% 86.92% 96.22% 74.89% Net Profit Margin 3.02% 12.64% 75.97% 76.12% 83.37% Return on Assets (ROA) 0.17% 0.78% 3.41% 78.20% 77.15% Return on Equity (ROE) 0.25% 1.21% 5.43% 79.50% 77.66% Return on Capital Employed (ROCE) 5.17% 7.73% 9.84% 33.14% 21.45% Current Ratio 0.11 0.13 0.09 14.63% 38.36% Quick Ratio 0.11 0.13 0.09 14.63% 38.36% Cash Ratio 0.07 0.10 0.08 33.85% 30.72% Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A. Debt to equity ratio 0.22 0.28 0.27 20.75% 3.19% Interest Coverage Ratio 1.02 1.71 95.36 40.35% 98.20% Market Cap / Sales 2.17 1.83 2.43 18.95% 24.74% Market Cap/ Net Worth 0.18 0.18 0.17 2.10% 1.08% Market Cap/PAT 71.99 14.45 3.19 398.14% 352.49% Market Cap/EBITDA 131.10 27.64 3.22 374.25% 758.08% Trading Volume (shares) (avg. of 1 year) 129,091 302,925 81,116 57.39% 273.45% Trading Volume (shares) (high in 1 year) 16,73,778 29,35,027 13,14,741 42.97% 123.24% Trading Volume (shares) (low in 1 year) 7,602 28,321 2,655 73.16% 966.70% Ratio High/low trading volume 220.18 103.63 495.19 112.45% 79.07% Ratio High/average trading volume 12.97 9.69 16.21 33.82% 40.22% Source Money Control 4 P AGE
TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS Shareholding Promoter shareholding Public Institutional shareholding Public Others shareholding Non Promoter Non Public Shareholding TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters Dec' 2015 Dec' 2014 Dec' 2013 Comments 57.56% 0.18% 42.26% 57.56% 0.87% 41.57% 57.56% 1.25% 41.19% No new equity shares were issued during the period from Dec' 2013 to Dec' 2015. There was no major change observed in the shareholding pattern during the said period. Promoter shareholding has been constant from last 3 years. The promoters have pledged 5.59% of their shareholding. No Preferential issue to promoters Preferential issue to others GDRs issued by the Company Issue of ESOPs/Issue of shares other than Preferential allotment Source Annual Report No No The Company did not issue any GDRs during last three years The Company does not have any ESOP Scheme 5 P AGE
Equity: The equity shares capital of the Company Glossary 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 Company s 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. 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 Accounts recievables Fixed Asset Turnover: The fixed asset turnover ratio is a financial ratio of net sales to fixed assets Fixed Assets Current Asset Turnover: The current asset turnover ratio is a financial ratio of net sales to fixed assets Current Assets 6 P AGE
Operating Profit Margin: Operating margin is a measurement of what proportion of a Company s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company s operating income (also known as operating profit ) during a given period by its sales during the same period. Operating profit Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net profit 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 Assets Inventories Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities. Current Assets Inventories Account 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 Assets Current 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. 7 P AGE
Market Cap/Sales ratio: Market Cap/sales ratio, Price sales 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 Company s market cap to net worth. / Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company s market cap to net profit. / Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company s market cap to EBITDA. / 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 8 P AGE
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