Comparison report on HIL, Everest and Visaka Industries

Comparison(Rs in Lakhs)

HIL Everest Visaka

Building Products

Capacity 1343200 880000 931750

Production 924080 756894 837219

Utilization 69% 86% 90%

Revenue for the year 125656 82125.05 87291.8

Growth in Revenue
from Building 6% 4.0% -3.80%
products

EBIDTA Growth 41% 111% 33%

ROE 13.99% 14.09% 15.79%

ROCE 18.65% 15.59% 19.76%

Debt to Equity 0.12 0.16 0.63

Days Receivable 28 19 54

Inventory Days 94 105 133

Interest Coverage 38 7 8

Fixed Assets
3 4 3
Turnover

 When we compare all the three companies, it can be seen that the total capacity of HIL
for manufacturing Building products is highest among the peers at 1343200 MT. Everest
Industries has the lowest capacity to manufacture building products at 880000 MT.
 When it comes to utilization Visaka is operating at 90% utilization in building products
segment which is their core business and Everest is at 86%. The utilization level of HIL is
low because they have the excess capacity to produce Roofing products. Also, they have
large capacity to produce which can be a reason for low utilization.
 HIL has witnessed 6% growth in revenue from operations in Buildings products segment
whereas Everest has also witnessed 4% growth. On the other hand Visaka has witnessed
a decline in revenue from operations from Building products segment. This shows that
Visaka is not able to compete with the products of HIL and Everest.
 Everest has witnessed highest EBIDTA growth of 111% and HIL and Visaka have
witnessed a growth of 41% and 33% respectively. The reason for high EBIDTA growth is
lower excise duty and lower finance cost in addition to Revenue growth.
 The ROCE and ROE are highest for Visaka at 19.8% and 15.7% in comparison to Everest
and HIL. The revenue is highest HIL but because of high capital their ROE is less. Everest
is able to generate good ROE but ROCE is low. This will improve as the company has
started to pay off the debts.
 HIL has the lowest Debt to equity ratio at 0.12 and Everest also is at a level of 0.16. This
is very good for both the companies as this means low finance cost and low risk. The
debt level of Visaka is high in comparison to other two companies as Visaka has added
an amount of 3629 lakhs of Non-Current borrowings in the year 201-18.
 Days receivable for everest is lowest among the three companies at a level of 19 days
which shows that the credit policy of the company is strict and debtors are paying the
company early because they are able to sell the products to the end customers early.
This is a very good sign for everest. Visaka on the other hand has the highest Days
receivables which means lenient credit policy and that may be the reason for higher
sales than Everest. HIL also has impressive Days receivables at a level of 28 days. This
shows that the products of Everest are more preferred in the market.
 The inventory days are lowest for HIL at 94 days and Everest has Inventory holding
period of 105 days. Inventory holding period of Visaka is at 133 days which is very high
 and a negative sign as it shows that the company is having problem to sell the inventory.
The inventory is getting piled up.
 Interest coverage ratio is highest for HIL which means that the company has 38 times
more profit than the interest cost for the company. It is very impressive. The interest
coverage is at same levels for Visaka and Everest.

CAPEX Plans

 Everest Industries have no CAPEX plans for Building segment as of now. They are
planning to expand the business of Steel building.
 HIL has no plan to expand the capacity of the existing products as they are already at
69% utilization they have the enough capacity to utilize. HIL is coming up with new
product which is a Non-Asbestos product and will be targeted towards institutional
segment. They have the CAPEX plan for that product after the testing is finished.
 Visaka has a CAPEX plan of INR 125 Crores for the next two years for its Building
products business. After that there is no plan for CAPEX in building products segment.
All the CAPEX will be towards new products.

Quality of Management

 The management is having good work experience. Mr somani has morwe than 25 years
of experience in real estate, construction, building products and textile industry. The
managing director of the company has done his Post graduation from IIM-A and has a
great work experience. The management seems to be honest as they have mentioned
about all the risks they can face in their business and also delivered what they have
mentioned in their reports. Also, they have attended all the meetings which show their
involvement. However, one concern is that the Managerial Remuneration has increased
by 24% in the current year. Also, the management has not mentioned any reason why
they are not doing CAPEX in the buildings segment. The management little aggressive in
forecasting the growth of business. They know about the industry they are in and the
problems they are facing.
 The management of HIL is having good experience in managing businesses. The
management seems to be true. They know about the industry and know that the growth
in their existing Building segment market is not that high and they have the capacity to
meet the demand. Also, they are not in a hurry to expand the existing capacities as they
first want to study the market. Also, they are instead planning to do CAPEX for new
products. This shows that the management is not aggressive. They have not made any
estimates regarding the growth of their business which cannot be achieved by them.
Company has also performed well during the tough times in the economy. Therefore
management quality is very good.
 The company is an established player. The management is having a good background
and is in the business since the inception of the company. The company has performed
well during the tough times. The management seems to be little more aggressive than
the management of above two companies as they have mentioned that they will
outperform the segment growth. Also the remuneration of management has increased
by a significant percentage.