Bhoruka Aluminium at Rs 1.26 ~ Sold of Core Business to YKK ~ where to from here !?

This one is for blogreader Riyaz ~Bhoruka Aluminium closed at Rs 1.26 for a FV Rs 10 today,Friday,June 7,2013

Bhoruka Aluminium ,promoted by Aggarwals of  TCI Industries and TCI Finance  ,was severely stressed the past few years and was forced to exit and sell off  it’s core  Aluminium Extrusion Business to the Global Giant YKK Group’s Singapore Entity to pay off  Huge Debt

The Deal was reportedly at just over US $ 22 M or close to @ Rs 120 crs and was done on a slump sale basis and closed out  just last month in May 2013 though announced  in March 2013 and clearly being negotiated much before that

The Company was  primarily engaged in the aluminium extrusion business, with three state of art press, with installed capacity of 25000 M.T. per annum and also  its own inhouse powder coating and anodizing unit, for adding value  to mill finish products.

The Timing could not have been worse for setting up this New Plant at Metagalli in Mysore ~such heavy capex spend three to four years ago with bank borrowings ~ the Real Estate Sector simply collapsed and Demand shrunk considerably ~ Capacity Utilisation Levels were inevitably low ~high inflation, rising input cost, higher interest on borrowings, squeezed demand,working capital constraints all kicked in to add to the operating woes ~ the Company sold  7784 M.T. in the 18 months at September 30,2012 as compared to 8581 M.T in the previous 12 months year ended March 31, 2011

As on September 30,2012 Company’s Consolidated Networth had sunk to Rs 16.79 crs with Equity at Rs 54.94 crs (FV Rs 10) and Negative Reserves at Rs 38.15 having reported a Consolidated Loss of Rs 70.17 crs !~ It had become a potentially Sick Company and a BIFR Case ~ just the the audited Year before ending March 31,2011 it had declared a Bonus of 1: 1 ! and made a little Profit

On May 25,2013 they declared results for the Six months ended March 31,2013 and made no mention of how the YKK Deal was progressing but five days later they announced closure of this Deal !

Consolidated Networth has eroded more down to Rs 7.70 crs with losses of Rs 9.09 Crs that took Negative Reserves up to Rs  47.24 Crs

😯 What really intrigued me and raised by eyebrows most are two issues in The Audited Accounts for the 18 Months at September 30,2012 where I suspect Monies have been moved away from the Company :

  1. Long Term Loans and Advances given out have shot up to Rs 24.29 Crs from Rs 19.63 Crs in the previous Period FY 11 of which Loan to Associates is Rs 15.73 Crs ! (Previous Year Rs 13.67 crs)~ all interest free with no repayment schedule and also qualified by the Auditors  M/s R S Agrawala in their  Report
  2. Exceptional Item is a  Rs 29.82 Crs write off ! ! ! that constitutes Inventories and Receivable as below

(i) Correction of errors in the earlier years in valuation of inventories Rs 13.29 crs.
(ii)Write off of old outstanding receivables / payables found on reconciliation to be not actually realisable Rs16.53 Crs read more