stakeholders empowerment services sterling … · stakeholders empowerment services 3 | p a g e...

Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory

STAKEHOLDERS EMPOWERMENT SERVICES

1 | P A G E

SECTOR: CHEMICALS REPORTING DATE: 14TH AUGUST, 2017

STERLING BIOTECH LTD. www.sterlingbiotech.in

Sterling Biotech Ltd. NSE Code - STERLINBIO TABLE 1 - MARKET DATA (STANDALONE) (AS ON 10TH AUGUST, 2017)

Sector - Chemicals NSE Market Price (`) 3.65 NSE Market Cap. (₹ Cr.) 100.16

Face Value (`) 1.00 Equity (` Cr.) 27.22

Business Group - Sandesara 52 week High/Low (₹) 6.80/3.25 Net worth (₹ Cr.) * 1,476.62

Year of Incorporation - 1985 TTM P/E (TTM) N.A. Traded Volume (Shares) 190,682

TTM P/BV 0.08 Traded Volume (lacs) 6.96

Registered Office - Source - Capitaline, TTM - Trailing Twelve Month, N.A -Not Applicable *As on 30th September, 2016

43, Atlanta Building, COMPANY BACKGROUND

Nariman Point, Sterling Biotech Limited (SBL) was incorporated in 23rd March of the year 1985 in Mumbai

as Pluto Exports & Consultants Limited and obtained its Certificate of Commencement of

Business in 19th April of the same year 1985. SBL is engaged in producing pharmaceutical

and nutraceutical gelatin in India and Asia. Additionally, Sterling sells dicalcium

phosphate (DCP), a by-product of the gelatin manufacturing process, to poultry-feed and

fertilizer industry in India. Sterling began its operations as a trading company, changed its

focus to the manufacture of tea in the year 1991 and further changed its name to Sterling

Tea and Industries Limited in 24th June of the year 1991. Its name was subsequently

changed to Sterling Biotech Limited.

Mumbai – 400 021, Maharashtra

Company Website:

www.sterlingbiotech.in

Revenue and Profit Performance

The revenue of the Company decreased from ₹ 108.02 crores

to ₹ 87.61 crores from quarter ending Sep’15 to quarter

ending Sep’16. The Company made a loss of ₹ 109.51 crores

in quarter ending Sep’16 vis-a-vis making a loss of ₹ 94.21

crores in quarter ending Sep’15.

Source: Moneycontrol

Performance vis-à-vis Market

TABLE 2- Returns

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

Sterling Biotech Ltd -14.12% -30.14% -17.98% -5.19%

Nifty -0.72% 3.00% 12.56% 13.63%

Nifty Pharma -13.79% -20.08% -16.02% -25.45%

Source: Capitaline/ NSE

0.00

0.50

1.00

1.50

2.00

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

Sterling Biotech Ltd NIFTY NIFTY PHARMA

87.61116.20 108.02

-109.51-91.85 -94.21

-150

-100

-50

0

50

100

150

Sep'16 Mar'16 Sep'15

Quarterly revenue and Profit (₹ CRORE)

Revenue Profit

http://www.sterlingbiotech.in/




2 | P A G E



TABLE 3 – FINANCIALS

(₹ Cr.) Sep’16 Mar’16 % Change

Sep ’16 vs Mar’16

Net Worth 1,476.62 2,411.96 -38.78%

Current Assets 1,027.43 1,051.03 -2.25%

Non-Current Assets 7,327.52 6,214.96 17.90%

Total Assets 8,354.96 7,265.98 14.99%

Investments 1,562.73 168.98 824.80%

Finance Cost 95.31 82.90 14.97%

Long Term Liabilities 4,116.65 2,313.04 77.98%

Current Liabilities 2,761.69 2,530.41 9.14%

Turnover 86.89 113.12 -23.19%

Profit After Tax (PAT) -109.51 -91.85 N.A.

EPS (₹) -2.53 -2.12 N.A.

Source - Money Control/ Stock exchange filing

AUDIT QUALIFICATIONS

Audit Qualifications: The Auditors have not raised any qualifications in last three (3) years Viz. FY 2015-16, FY 2014-15 & FY

2013-14.

Response Comment

Frequency of Qualifications Not applicable

Have the Auditors made any adverse remark in last 3 years? No -

Are the material accounts audited by the Principal Auditors?

Not Applicable The Company does not have any subsidiary,

joint venture or associate. Do the financial statements include material unaudited

financial statements?

TABLE 4: BOARD PROFILE (AS PER ANNUAL REPORT 2015-16)

Regulatory Norms Company

% of Independent Directors on the Board 50% 67%

% of Promoter Directors on the Board - 33%

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 (%) - 81.48%

Source - Money Control/Annual Report

Composition of Board: As per Regulation 17(1)(b) of the 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 67% 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 female.




3 | P A G E



TABLE 5 - FINANCIAL RATIOS

Ratios Sep’16 Mar’16 % Change

Sep ’16 vs Mar’16

Turn

ove

r

Rat

ios

Inventory Turnover 0.12 0.16 -21.86%

Debtors Turnover 2.42 2.68 -9.48%

Fixed asset Turnover 0.01 0.02 -34.85%

Current Asset Turnover 0.08 0.11 -21.42%

Ret

urn

Rat

ios Operating Profit Margin -7.41% 15.18% -148.83%

Net Profit Margin -126.03% -81.20% N.A.

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

Return on Equity (ROE) N.A. N.A. N.A.

Return on Capital Employed (ROCE) N.A. N.A. N.A.

Liq

uid

ity

Rat

ios

Current Ratio 0.37 0.42 -10.43%

Quick Ratio 0.12 0.13 -11.52%

Cash Ratio 0.10 0.12 -9.96%

Working Capital Turnover ratio N.A. N.A. N.A.

Solv

ency

Rat

ios Debt to equity ratio 3.39 1.38 146.34%

Interest Coverage Ratio N.A. 0.21 N.A.

Trad

ing

Rat

ios Market Cap / Sales 1.21 0.96 25.31%

Market Cap/ Net Worth 0.07 0.05 57.22%

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

Market Cap/EBITDA N.A. 6.34 N.A.

Source - Money Control

TABLE 6 - TRADING VOLUME

Jun’17 Dec’16 Jun’16

% Change

Jun’17 vs

Dec’16 Dec’16 vs Jun’16

Trading Volume (shares) (avg. of 1 qtr) 2,38,029 1,04,306 1,57,724 128.20% -33.87%

Trading Volume (shares) (high in 1 qtr) 32,87,372 5,15,124 13,90,970 538.17% -62.97%

Trading Volume (shares) (low in 1 qtr) 22,037 18,622 30,012 18.34% -37.95%

Ratio - High/low trading volume 149.18 27.66 46.35 439.28% -40.32%

Ratio - High/average trading volume 13.81 4.94 8.82 179.65% -44.00%

Source: Capitaline

TABLE 7 (A): OWNERSHIP & MANAGEMENT RISKS

Jun'17 Dec'16 Jun'16 Comments

Shar

eho

ldin

g (%

)

Promoter shareholding 28.62 28.62 28.62 • No new equity shares were issued during the

period from Jun’ 16 to Jun’ 17.

• Promoter shareholding remains unchanged

during the above period.

• The shareholding of ‘public institution’ increased

from 13.95% to 14.41% and that of ‘public others’

decreased from 57.43% to 56.97% during the

same period.

• Promoters have pledged/ encumbered 66.25% of

their shareholding.

Public - Institutional shareholding 14.41 13.95 13.95

Public - Others shareholding 56.97 57.43 57.43

Non-Promoter Non-Public

Shareholding 0.00 0.00 0.00

Source: NSE




4 | P A G E



MAJOR SHAREHOLDERS (AS ON 30TH JUNE, 2017)

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

1 Chetan Sandesara 2.11% 1 Albula Investment Fund Ltd 6.48%

2 Helicopter Service Pvt Ltd 2.02% 2 Lotus Global Investments Ltd 5.66%

3 Jaico Textiles Private Limited 1.96% 3 Traub Automatics Private Limited 2.24%

4 Prabal Investrade Pvt. Ltd. 1.59% 4 Bank J Safra Sarasin Ltd 1.82%

5 Bullworth Investrade Pvt. Ltd. 1.35% 5 Amin Technology Services Private 1.82%

Source: NSE

TABLE 7 (B): OWNERSHIP & MANAGEMENT RISKS

Market Activity of Promoters Promoters have sold 2,03,14,045 shares in last one year.

Preferential issue to promoters No preferential issue was made to promoters in last one year.

Preferential issue to others No preferential issue was made to other shareholders in last one year.

GDRs issued by the Company The Company did not issue any GDRs in last one year.

Issue of ESOPs/Issue of shares other than

Preferential allotment The Company does not have any ESOP Scheme.

Source - Annual Report 2015-16

TABLE 8: PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

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

1. Manufacture of gelatine and its derivatives, retinoids, glues 85.06%

2. Manufacture of allopathic pharmaceutical preparations 11.27%

Source - Annual Report 2015-16




5 | P A G E



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

𝐸𝑃𝑆 =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

𝑃/𝐸 𝑟𝑎𝑡𝑖𝑜 =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 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =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

𝐷𝑒𝑏𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Accounts recievables

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

𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Fixed Assets

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

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Current Assets

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 𝑀𝑎𝑟𝑔𝑖𝑛 =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 𝑀𝑎𝑟𝑔𝑖𝑛 =Net profit

Sales Turnover




6 | P A G E



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

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 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.

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 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.

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 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 𝑟𝑎𝑡𝑖𝑜 =Current Assets

Current Liabilities

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

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories

Current Liabilities

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

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =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.

𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

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.

𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =𝑆ℎ𝑜𝑟𝑡 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 + 𝐿𝑜𝑛𝑔 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡

𝑁𝑒𝑡 𝑊𝑜𝑟𝑡ℎ

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.

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 =𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥

𝐹𝑖𝑛𝑎𝑛𝑐𝑒 𝐶𝑜𝑠𝑡

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/𝑆𝑎𝑙𝑒𝑠 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

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

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ

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

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑃𝐴𝑇 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡

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


http://www.investopedia.com/terms/i/invested-capital.asp

http://www.investopedia.com/articles/stocks/05/04405.asp

https://en.wikipedia.org/wiki/Stock

https://en.wikipedia.org/wiki/Market_cap

https://en.wikipedia.org/wiki/Stock



7 | P A G E



𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝐸𝐵𝐼𝑇𝐷𝐴 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

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 A G E



DISCLAIMER

Sources Company Information

Only publicly available data has been used while making the factsheet. Our data sources include: BSE, NSE, SEBI, Capitaline, Moneycontrol, Businessweek, Reuters, Annual Reports, IPO Documents and Company Website.

Analyst Certification

The analysts involved in development of this factsheet certify that no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the contents of this factsheet.

Disclaimer

While SES has made every effort and has exercised due skill, care and diligence in compiling this factsheet based on publicly available information, it neither guarantees its accuracy, completeness or usefulness, nor assumes any liability whatsoever for any consequence from its use. This factsheet does not have any approval, express or implied, from any authority, nor is it required to have such approval. The users are strongly advised to exercise due diligence while using this factsheet. This factsheet in no manner constitutes an offer, solicitation or advice to buy or sell securities, nor solicits votes or proxies on behalf of any party. SES, which is a not-for-profit Initiative or its staff, has no financial interest in the companies covered in this factsheet except what is disclosed on its website. The factsheet is released in India and SES has ensured that it is in accordance with Indian laws. Person resident outside India shall ensure that laws in their country are not violated while using this factsheet; SES shall not be responsible for any such violation. All disputes subject to jurisdiction of High Court of Bombay, Mumbai.

SEBI Reg. No. INH000000016

This factsheet or any portion hereof may not be reprinted, sold, reproduced or redistributed without the written consent of Stakeholders Empowerment Services

Contact Information

Stakeholders Empowerment Services

A 202, Muktangan, Upper Govind Nagar,

Malad East, Mumbai – 400 097

Tel +91 22 4022 0322

[email protected]

[email protected]

www.sesgovernance.com

Research Analyst: Waheed Shaikh


mailto:[email protected]

mailto:[email protected]

http://www.sesgovernance.com/