Bilcare’s funny accounting figures for FY2014

During FY2014, Bilcare added Rs685 crore as fixed assets under tool & equipment, which is about 20% of the company's total assets, even as its sales tumbled 45% and the company reported a loss of  Rs121.5 crore

 

Pune-based Bilcare Ltd, which once counted ace investor and trader Rakesh Jhunjhunwala as an investor, reported a net loss of Rs121.5 crore for FY2014 compared with a net profit of Rs6.57 crore previous year. However, despite suffering heavy losses, mainly on 45% fall in sales at Rs401.4 crore, the company has added a massive Rs685.4 crore under tool and equipment in fixed assets. Incidentally, this amount is about 20% of its total fixed assets.

Source: Bilcare Annual Report for FY2013-14

In addition, during FY13, Bilcare added Rs810 crore to loans and increased capital and work in progress (WIP), accordingly. The WIP was shifted to fixed assets in FY2014. This raises serious question on the book keeping at Bilcare, especially, when the company had the same 'technology' in 2010, then what value addition it had done in FY2013-14?

In an email reply, the packaging solutions provider said, "The nomenclature ‘Tools & Equipment' has been used to describe the investment in software and related hardware integration for developing of technological solutions/ development projects, including few pilot projects for Indian Government and PSUs. Further, these ongoing investments on technological solution and projects have now been capitalised in the current year. These project investments were made in last 2-3 years keeping in mind that each one would result into significant revenue when commercialised and fully implemented. This in turn will act as key growth drivers for the Company and therefore, such investments were continued even during difficult times."

Talking about the increase in loans, the company said, "During FY13 Bilcare showed Rs625 crore as increase in loans, which is basically part of overall borrowings done in two and half years for the Group and towards business development. These borrowings resulted in business growth globally for Bilcare Group."

However, this raises further questions on Bilcare's accounting practice. Especially, software and such intangible assets are generally not valued and the valuation is given by the management - hence it's much easier for them to fudge. So the question is was this 'technology' developed by Bilcare through in-house research or bought out and how the valuation was arrived at?

Bilcare said, it was working on 17 projects over the past 2-3 years. This includes, 1) Non clonable ID for security forces, 2) securitisation of election voting machines (EVMs), 3) medical product securitisation (in partnership with CSIR) under New Millennium Indian technology Leadership initiative (NMITLI), 4) National Jute Board on secured Identification and Authentication of Jute Bales for Department of Supplies and Disposables (DGS&D), 5) Securitisation of fertiliser supply chain control and direct to Farmer subsidy Management System for department of Fertiliser, Ministry of Chemical and Fertiliser, 6) Security solution for counterfeit currency- development of demo 7) Development of target public distribution management system (TPDMS), 8)       Securitisation of documents - degree, mark sheet etc (HRD ministry- CBSC and State Board), 9) Secured liquor revenue control management systems, 10) Wine securitisation project 11) Petroleum products securitisation project, 12) FMCG products securitisation project 13) Mobile application customisation product, 14) Authenticate application system customisation product, 15) Point of sale development of nonClonable readers 16) Development of consumer friendly nonClonable readers and 17) Development of nCiD chip application systems- (Applicator).

Bilcare talks about 17 technological solutions and all were 'work in progress' over the past 2-3 years. And what a coincidence, it declared all these as commercially viable at the same time!  

During 2010, Dr Praful Naik, chief scientific officer, Bilcare, told Moneylife that his company's product uses a non-clonable technology, which covers identification, authentication and track-and-trace from origin to point of sale with usage in myriad sectors like pharmaceuticals, security services and agrochemicals.

 
In the same interview, Dr Naik, conceded that it may not be a cake-walk to sell the technology to the pharma industry. The cost of each digitised image stored with a bar code is Rs1.50 and pharma companies were not too keen on spending such amounts of money on this technology. He also told us that time about clients, like a Europe-based museum, a US-based wine producer and even security department of one Asian country, which had shown interest in Bilcare's non-clonable technology.

However, the company result for FY2014 does not even reflect any of this. During the 12 months that ended in March 2014, Bilcare's sales fell 44.83% to Rs401.35 crore as against Rs727.43 crore during the previous year ended March 2013. So, where is the growth for which the company has shown huge expenditure for tools and equipment?

In addition, according to the auditor's report (page31), Bilcare has defaulted in repayment of dues to financial institutions and banks. The delay had been of six to 17 months (as on 31st March 2014) with the principal loan amount of Rs490.2 crore and interest accumulated of Rs86.33 crore.   
 
In FY13, Bilcare had shown Rs785.1 crore as capital work in progress (WIP). This WIP was shifted to fixed assets in FY14. Due to this, Bilcare's tangible assets increased to Rs1,228.2 crore in FY14 from Rs600.9 crore a year ago period. This, however, raises question if the packaging solutions provider shifted personal loans of promoters to its balance sheet with similar book entry on the fixed asset side?


Source: Bilcare Annual Report for FY2013-14

Bilcare, however, denied this. "No personal Loan of the promoter is reflected in the Bilcare balance sheet," it said in the email reply.

There are too many questions about Bilcare: huge loans, large losses and now dubious additions to fixed assets.

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COMMENTS

ML BIYANI

4 years ago

Is it a new SATYAM in making?

R Balakrishnan

4 years ago

So many ways to take the cash out.

Vaibhav Dhoka

4 years ago

Bilcare has defaulted on FD too.CLB Mumbai has allowed them to increse duration by two years.

Should Coal India be allowed to carry on e-auctions?

Coal India need to honour the commitment given to power producers by supplying them coal first and only resort to e-auction of any excess production

 

The Cabinet Committee on Economic Affairs wants Coal India Ltd (CIL) to complete the 172 FSAs (fuel supply agreements) so as to cover the requirement to generate 78,000 MW capacity. Dutifully, in line with this directive, Coal India Ltd (CIL) has, so far, signed, 161 FSAs to reach 73,675 MW. Only 11 more to go and this will probably be completed over next four-six weeks.

 

In the last fiscal, CIL had e-auctioned 58 million tonnes of coal and recently, Power Minister Goyal had asked them to reduce this to 25 million tonnes for 2014-15, so as to enable power generators to get more coal. However, even before the Minister's order could reach CIL, they had offered 17 million tonnes in the open market.

 

This reduction in coal offered under the e-auction method has resulted in an indefinite call for a strike by agitated truck drivers. It is reported in the press that these 5,000 truckers belong to the Brajrajnagar Truck Owners Association.

 

As has been the practice, Coal India arranges for supplies by rail to those under the FSAs and all the coal sold under the e-auction category are moved by truckers. Now, the trucking community wants the restoration of their right to move the coal or share part of the rail moved-cargo.

 

At the moment, these 5,000 truckers move some 40,000 tonnes of coal daily to far flung places like Tamil Nadu, Andhra Pradesh, Maharashtra and to various sites of NTPC. Meanwhile, this agitation, according to the press, has already affected the movement of coal from mines in the IB valley, resulting in piling up of coal at the pitheads.

 

Odisha, which accounts for 110 million tonnes of coal per year, supplies 25% of this to CIL but this disruption, due to inadequate rail connectivity is causing anxiety and loss of money. Many FSA signatories, in order to ensure supplies and to prevent disruption of their work, also depend upon e-auctions to maintain good inventory and continuity of production.

 

In the meanwhile, press reports show that Babu Pradhan, BJD MLA from Talcher, who controls several unions in coal and allied sectors, has "warned" Coal India of a similar agitation in the Talcher coalfields. There is fear and apprehension that the sympathetic strike may spread to other areas and the striking workers may secure support from mines in the locality.

 

Coal India supplies coal to cover 60% of electricity generators in the country. Often, there are issues of short supply of railway support to move the cargo from pitheads. Besides, there are bureaucratic hurdles in opening new mines. It is well known that environmental clearances, land acquisitions and other related matters retard their progress.

 

In a recent conference, Minister Goyal is reported to have said: "I want to see a diesel generator and inverter free India within the term of our government". This is a great aspiration to reach. However, a lot needs to be done to achieve this.

 

Coal India, being a cash cow, with cash reserves of over Rs52,700 crore (as at 31 March 2014) has begun to seriously consider building up solar power projects in different locations, for a total combined capacity of 1,000 MW, which is estimated to require a minimum of 5,000 acres of land. At the moment, India's solar power capacity is only 2,800 MW and there are plans to achieve a total of 10,000 MW by 2017, according to renewable energy ministry.

 

Because of the continued uncertainty associated with coal supplies, most power generators, factories resort to imports, and participate in e-auctions, besides signing the FSAs. Organisations like NTPC, for example, have signed an accord with Andhra Pradesh for setting up a 1,000 MW solar power project, and it is likely that the state government will make available the required acreage to set up the project.

 

Finally, the question is: whether this e-auction should continue or not? In order to sanctify the FSAs, it is imperative that Coal India honours the commitment made by supplying the coal first and only resort to e-auction of any "excess" coal mined over the planned targets in given mines. In any case, the coal truckers’ threat to go on a strike reflects on the inability of railways to supply the wagons when needed. This needs to be corrected with active support of the railway ministry. Coal movement must be treated as an "essential service" and truckers cannot hold the country to ransom.

 

As for the threat by the MLA, Babu Pradhan, this needs to be handled by appropriate authorities. Such threats must be nipped in the bud.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

Dr Anantha K Ramdas

4 years ago

Mr Ravindra: Thanks for your down to earth comment. Actually, the organization is too large and unwieldy. It controls 7 independent (on paper) coal companies, each of which is a Limited company, but I am sure that they cannot do any major work relating to the company themselves, until it is "cleared" by CIL Board or whatever control mechanism they employ as the coordinating point, and then, have the same "approved" by Ministry of Coal.

If you look up the website, you will find IAS officers handling the units, whose term of office is at the "will and pleasure of the President" because, they may be transferred from one place to another. I would be glad if someone with knowledge of the exact working can correct the position.

What the Government can do is to first take an experimental shot at the declaration of independence for these 7 companies. Let the CMDs propose specific target and plans, with specific terms of reference for achievement. Give them the opportunity to perform, free of control from CIL, Ministry of Coal and let them be answerable to the shareholders.

Now for doing this, CIL disinvestment programme must start with a spin-off so that current shareholders get certain allotment of shares from these 7 companies. Second, qualified mining engineers with experience should be appointed as technical directors in charge of actual production and expansion, because IAS officers or nominated officials may not have the needed experience or qualification.

The independent directors must be appointed from related organizations, such as Railways, so that they take care of the perennial bottle neck faced by coal companies. CIL has always had issues with getting rakes/wagons etc. Similarly, if inland waterways are to be used for moving coal, let someone from that area be given the position in the Board.

In otherwords, all the directors involved, excepting one or two who may be nominated by the Bankers and shareholders in a AGM, should be well versed in the coal industry/mining etc.

No kith and kin of politicians to hold such important portfolio. We need those who can serve, not those who want to come in at 9 and go at 5 and have no personal interest or stake in the company. That is the only way, we can expect delivery from this mammoth company.

Other suggestions would be appreciated.

Ravindra

4 years ago

It is high time that Coal India itself is auctioned

India has potential to add 2,000MW through solar energy each day!

With its ample sunshine, India could easily add power generation capacity by using more solar energy and less fossil fuels.

 

Among the fresh bright minds that Rajiv Gandhi brought into government in the first flush of his landslide victory was PS Deodhar, who was appointed technology advisor to the prime minister and the chairman of the Electronics Commission of the government. Mr Deodhar was among those techies who worked at making panchayati raj a reality by harnessing technology for growth. In the early 1980s, Mr Deodhar was involved in building low-cost computers and making them available to people. He says, “I got Rajiv  the ZX80 computer kit and later ZX81 and Spectrum with 128K RAM  for hands-on computing.” Later, he made available an  IBM PC XT clone at Rs10,000 via ET&T Corp, which was at half the prevailing price.

Now, at the age of 80, he believes that if solar energy were utilised in rural areas, technology could become a binding tool for the entire country by reaching areas that have no stable power supply. With this in mind, Mr Deodhar has made pioneering efforts in solar-powered gadgets through MITRAMAX Energy Private Limited.


He says, “Do you know that 350 million Indians (around 80 million homes) do not get electricity from the power grid at all? Most homes in India get bad quality of power.

 

Voltage swings from 150V to 270V causing bulbs to fuse, gadget failures and motors burning out.”

Extending the grid power to these homes is expensive and our government has subsidy schemes for companies to sell solar products at a reasonable price. This entire process is corrupt; agencies swallow the subsidy and sell sub-standard solar lights which work for just a few days. Worse, most of these are sold at Rs8,000 to Rs10,000 or more, to get higher percentage subsidy.

Solar power, Mr Deodhar says, is an ideal solution for them. With this in mind, he set up MITRAMAX Energy as an Indo-German joint venture company in 2009 which has created a hi-tech long-life product that is simple to use and maintenance-free. “I realised that one can give a better product much cheaper without even bothering about the government subsidy,” says Mr Deodhar. His focus is to enable the family to live safely and for children to study or play after dark and add a few more productive hours to their life.

SUNGRACE 25 has a 25Wp PV solar panel with a current controller that harvests peak power, the SOLARPOT that stores 168WH of energy and two 5W LED lights. One is a uniquely designed portable 5W LED light that can be used at home and while venturing outdoors with its built-in battery. The other is a bright 5W pendent bulb, USB port and a multi-plug cellular phone charger cable.

How is any of this relevant to this particular section of the magazine, which looks at issues beyond money? Well, because Mr Deodhar gives away hundreds of these products to NGOs who, in turn, give them to people in need. Interestingly, those who use these solar power gadgets have actually managed to save up to Rs200 a month on kerosene. He is also working with a professor of sociology to study the impact of solar power on the lives of people.

For those who can afford solar power, Mr Deodhar has started an advisory service at MITRAMAX Energy to tell them what kind of plant they should ideally purchase for their specific needs based on a complex energy calculation.

 Mr Deodhar now wants to give each one of us the opportunity to participate in empowering rural people through solar energy. While solar lamp sells at Rs6,650 (list price), the company is willing to offer it at Rs5,000 to donors (for an order of 50 pieces) or at Rs5,300 for those who wish to make individual donations.

MITRAMAX is a commercial organisation with a social purpose, so its big challenge is to spread the word about the product without advertising, to keep the cost low. This requires public participation and support. You can help make this happen through donations or by telling people about these solar lamps.

Mitramax Energy Pvt Ltd
Deodhar Centre, 424, Marol Maroshi Road,
Andheri East, Mumbai 400059
Tel: +91-22-28290059, 28292055
Fax: +91-22-28290470
E-mail : [email protected]
www.mitramax.com

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COMMENTS

Kanaga

4 years ago

There are many more cheaper options to suit the individuals is smaller capacity and very much lower costs ideal for poor rural public.
These are being sold by Chennai Post offices - http://chennaipost.gov.in/solar.aspx
Priced at IRs. 2699 and IRs. 549. Depending on the requirement more number of this lamps could be purchased depending on the requirement.

J Thomas

4 years ago

Mitramax should come out with a public issue so that it can grow and reach more regions in India

Dr Anantha K Ramdas

4 years ago

One of the most sensible and down to earth article I have read in recent times. The great pity and tragedy is that it needs a good "sponsorer" to move the project so that it can take off in right spirit.

The only way this can be done, and done well is to present the facts to both the Shiv sena Chief in Maharashtra and the BJP leadership in that State. Make a presentation of how it works and how, you can bring "light" and "enlightenment" thru the Sun via your equipments at the cheapest possible cost.

Tell them to sponsor the project in the state of Maharashtra and prove it to them that it can work, and, in fact, bring a miracle for Suryadevata to shine in our homes even at night!

Take this as a challenge, and tell them that this can be done by block by block, in small townships and districts. Only the result would make them realize how we are missing the boat and depend so much on imported fuel.

Good luck and god speed.

REPLY

Kanaga

In Reply to Dr Anantha K Ramdas 4 years ago

There are many more cheaper options to suit the individuals is smaller capacity and very much lower costs ideal for poor rural public.
These are being sold by Chennai Post offices - http://chennaipost.gov.in/solar.aspx
Priced at IRs. 2699 and IRs. 549

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