MIRA INFORM REPORT

 

 

Report Date :

7th June, 2006.

 

IDENTIFICATION DETAILS

 

Name :

BHUWALKA STEEL INDUSTRIES LIMITED

 

 

Registered Office :

No. 71, III Cross, Residency Road, Bangalore – 560 025, India.

 

 

Country :

India

 

 

Financials (as on) :

31.03.2005

 

 

Date of Incorporation :

18.08.1981

 

 

Com. Reg. No.:

08-4343

 

 

CIN No.:

[Company Identification No.]

U27209ka1981PLC004343

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

BLRB00287A

 

 

Legal Form :

A Public Limited Liability Company. The company’s shares are listed on the Stock Exchange.

 

 

Line of Business :

The company is engaged in the business of Manufacturing Rolled Products and Steel Ingots

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Maximum Credit Limit :

USD 750000

 

 

Status :

Satisfactory

 

 

Payment Behaviour :

Slow but Correct

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established company having satisfactory track. General financial position is satisfactory. Payments are reported as slow to the local suppliers.

 

The company can be considered normal for business dealings at usual trade terms and conditions.

 

LOCATIONS

 

Registered Office :

No. 71, III Cross, Residency Road, Bangalore – 560 025, India.

Tel. No.:

91-80-25599797

Fax No.:

91-80-25596030

 

 

Factory  :

v      At 10th Mile Old Madras Road, Bangalore – 560 049.

 

v      At 23/B – 2, II Stage Industrial Suburb, Yeshwanthpur, Bangalore – 560 049.

 

v      At Plot No. 18 & 19, Tamaka Industrial Area, Kolar – 563 101

 

v      At Sadarmangla Village, Hoody – Whitefield Road, Bangalore – 560 049.

 

v      At Melambi Vilage, Kanchipuram, Changalapattu Distriat, Tamilnadu – 631 501.

 

v      At 204, Mauji Khupri, Taluka Wada District Thane, Mumbai – 421 312.

 

DIRECTORS

 

Name :

Mr. Suresh Kumar Bhuwalka

Designation :

Chairman & Managing Director

 

 

Name :

Mr. Sajan Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. Sushil Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. Kamal Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. Kishan Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. Ajay Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. Saurav Bhuwalka

Designation :

Director

 

 

Name :

Mr. Sanjay Kumar Bhuwalka

Designation :

Director

 

 

Name :

Mr. N. Srinlvasan

Designation :

Director

 

 

Name :

Mr. S. K. Gupta

Designation :

Director

 

 

Name :

Mr. T. N. Vidyasagar

Designation :

Nominee Director  - IIBI

 

 

Name :

Mr. Mothi Sayeeram A

Designation :

Nominee Director  - Exim Bank

 

 

Name :

Mr. P. K. Chamaria

Designation :

Vice President & Company Secretary

 

MAJOR SHAREHOLDERS

 

Names of Shareholders

No. of Shares

Percentage of Holding

Promoters and Promoter’s group

3680000

70.94%

Mutual Funds

3200

0.07%

Banks, Financial Institutions Insurance Companies

200

0.00

Private Bodies Corporate

122235

2.36%

Indian Public

1381614

26.63%

TOTAL:

5187249

100.00%

 

BUSINESS DETAILS

 

Line of Business :

The company is engaged in the business of Manufacturing Rolled Products and Steel Ingots

 

 

Products :

 

ITC Code No.

Rolled Products

7326

Steel Ingots

720610

 

GENERAL INFORMATION

 

No. of Employees :

1500

 

 

Bankers :

Canara Bank in consortium with

Karnataka Bank Limited

 

 

Facilities :

Secured Loan

Amount (in Millions)

TERM LIABILITIES:

 

From IFCI Limited

50.380

From Industrial Development Bank of India

239.542

From Export Import Bank of India

63.994

0% 45 Non-Convertible Debentures of Rs. 100,0007- each placed with IFCI Limited (Redeemable at par on 15.07.2008)

 

These loans are secured by way of pari passu charge with respective financial institutions over all the Fixed

assets of the Company and Investment in ordinary shares

of wholly owned subsidiary, i.e., Bhuwalka Steel Industries

(Srilanka) Limited except properties/assets exclusively

charged to other banks and institutions mentioned below.

4.500

Term Loan from Industrial Investment Bank of India Ltd.

Secured by way of mortgage of Company's Corporate Office Building at Bangalore and an exclusive charge by way of hypothecation of Assets purchased under the scheme.

26.000

Term Loan from Escort Finance Ltd.:

Secured by an exclusive charge by way of hypothecation of Assets purchased out of this loan.

51.138

Term Loan from ICICI Bank Ltd.,:

Secured by an exclusive charge by way of hypothecation of Assets purchased out of this loan.

3.822

Term Loan from Kotak Mahindra Primus Ltd.,:

Secured by an exclusive charge by way of hypothecation of Assets purchased out of this loan'.

0.262

Term Loan from Standard Chartered Bank:

Secured by and exclusive charge by way of hypothecation of Assets purchased out of this loan.

0.199

Interest Accrued & Due on above Loans

4.431

WORKING CAPITAL :

 

From Banks:

Secured by hypothecation of Inventories and Book Debts and First charges on a property at Indiranagar & Second charge on all the fixed assets of the Company. These loans are also personally guaranteed by the directors.

323.724

 

 

Unsecured Loan

 

Sales Tax Deferrment

9.751

TOTAL:

777.743

 

 

 

Banking Relations :

Satisfactory

 

 

Auditors :

P. K. Rungta & Company, Bangalore

Qualification:

Charted Accountant

 

 

Subsidiaries :

Bhuwalka Steel Industries (Srilanka) Limited

 

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

15000000

Equity Shares

Rs. 10/- each

Rs. 150.000 Millions

500000

Preference Shares

Rs. 100/- each

Rs. 50.000 Millions

5000000

Unclassified Shares

Rs. 10/- each

Rs. 50.000 Millions

 

 

 

 

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

5187249

Equity Shares

Rs. 10/- each

Rs. 51.872 Millions

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

 

31.03.2005

31.03.2004

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

 

54.672

54.672

2] Share Application Money

 

0.000

0.000

3] Reserves & Surplus

 

143.769

123.517

4] (Accumulated Losses)

 

0.000

0.000

NETWORTH

 

198.441

178.189

LOAN FUNDS

 

 

 

1] Secured Loans

 

716.908

752.230

2] Unsecured Loans

 

9.751

8.705

TOTAL BORROWING

 

726.659

760.935

DEFERRED TAX LIABILITIES

 

74.670

60.905

 

 

 

 

TOTAL

 

999.770

1000.029

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

 

394.325

407.890

Capital work-in-progress

 

14.954

0.993

 

 

 

 

INVESTMENT

 

119.092

120.577

DEFERREX TAX ASSETS

 

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
 

316.740

371.819

 

Sundry Debtors
 

186.778

92.202

 

Cash & Bank Balances
 

31.972

9.273

 

Other Current Assets
 

0.000

0.000

 

Loans & Advances
 

101.079

93.346

Total Current Assets
 

636.569

566.640

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Current Liabilities
 

165.324

96.350

 

Provisions
 

0.000

0.000

Total Current Liabilities
 

165.324

96.350

Net Current Assets
 

471.245

470.290

 

 

 

 

MISCELLANEOUS EXPENSES

 

0.154

0.279

 

 

 

 

TOTAL

 

999.770

1000.029

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

 

31.03.2005

31.03.2004

Sales Turnover [including other income]

 

4604.183

3771.155

 

 

 

 

Profit/(Loss) Before Tax

 

35.959

23.741

Provision for Taxation

 

15.372

8.361

Profit/(Loss) After Tax

 

20.587

15.380

 

 

 

 

Export Value

 

9.988

15.302

 

 

 

 

Import Value

 

4.325

0.813

 

 

 

 

Total Expenditure

 

4568.224

3747.413

 

QUARTERLY / SUMMARISED RESULTS

 

PARTICULARS

 

30.06.2005

(1st Quarter)

30.09.2005

(2nd  Quarter)

31.12.2005

(3rd  Quarter)

Sales Turnover

 1140.2

 1224.4

 1215.4

 Other Income

 03.0

 03.1

 01.4

 Total Income

 1143.2

 1227.5

 1216.8

 Total Expenditure

 1099.6

 1186.0

 1175.5

 Operating Profit

 43.6

 41.5

 41.3

 Interest

 24.0

 23.2

 21.5

 Gross Profit

 19.6

 18.3

 19.8

 Depreciation

 11.2

 11.9

 11.6

 Tax

 01.0

 00.8

 00.7

 Reported PAT

 07.4

 05.6

 07.5

 

200506 Quarter 1 –

 

 Notes: Expenditure Includes (Increase)/Decrease in Stock in Trade Rs (56.749) million Consumption of Raw Materials Rs 1043.867 million Staff Cost Rs 18.072 million Trading Purchases Rs 4.757 million Other Expenditure Rs 89.576 million Provision for Taxation (include Fringe benefit Tax) EPS is Basic and Diluted Status of Investor Complaints for the quarter ended June 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter Nil Complaints disposed off during the quarter Nil Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board of Directors at their Meeting held on July 30, 2005 and subjected to limited review by the auditors of the Company. 2. The Company has only single reportable segment in terms of requirements of Accounting Standard 17. 3. In accordance with Accounting Standard 22, Deferred tax liability shall be determined and considered in the accounts at the year end.

 

200509 Quarter 2 –

 

Notes: Expenditure Includes (Increase)/Decrease in Stock in Trade Rs 8.049 million Consumption of Raw Materials Rs 1034.911 million Staff Cost Rs 19.626 million Trading Purchases Rs 29.074 million Other Expenditure Rs 94.380 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended September 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 01 Complaints disposed off during the quarter 01 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board of Directors at their Meeting held on October 31, 2005 and subjected to limited review by the auditors of the Company. 2. The Company has single reportable business segment in terms of requirements of Accounting Standard 17. 3. In accordance with Accounting Standard 22, Deferred tax liability shall be determined and considered in the accounts at the year end.

 

200512 Quarter 3 –

 

 Notes Expenditure Includes (Increase)/Decrease in Stock in Trade Rs 44.093 million Consumption of Raw Materials Rs 987.576 million Staff Cost Rs 21.532 million Trading Purchases Rs 4.084 million Other Expenditure Rs 118.256 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended December 31, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 01 Complaints disposed off during the quarter 01 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board of Directors at their Meeting held on January 31, 2006 and subjected to limited review by the auditors of the Company. 2. The Company has single reportable business segment in terms of requirements of Accounting Standard 17. 3. In accordance with Accounting Standard 22, Deferred tax liability shall be determined and considered in the accounts at the year end. 4. Previous periods figures have been regrouped / rearranged wherever necessary.

KEY RATIOS

 

PARTICULARS

 

 

31.03.2005

31.03.2004

Debt-Equity Ratio

 

3.95

4.61

Long Term Debt-Equity Ratio

 

2.37

2.84

Current Ratio

 

1.21

1.28

TURNOVER RATIOS

 

 

 

Fixed Assets

 

6.67

5.43

Inventory

 

13.59

9.78

Debtors

 

33.54

44.36

Interest Cover Ratio

 

1.35

1.20

Operating Profit Margin(%)

 

3.84

4.84

Profit Before Interest And Tax Margin(%)

 

3.00

3.78

Cash Profit Margin(%)

 

1.28

1.48

Adjusted Net Profit Margin(%)

 

0.44

0.42

Return On Capital Employed(%)

 

15.04

14.38

Return On Net Worth(%)

 

10.94

8.77

 

 

STOCK PRICES

 

Face Value

Rs.10/-

High

Rs.31.00/-

Low

Rs.30.50/-

 

 

LOCAL AGENCY FURTHER INFORMATION

 

OPERATIONS REVIEW 
 
 Total income from operations during the year under review was Rs. 4704.6 Millions as compared to Rs. 3713.9 Millions in the previous year showing a year on year growth of 26.67% and consequently Profit Before Tax (PBT) shows a phenomenal growth to Rs. 35.959 Millions as against Rs. 23.742 Millions in the last year. This could happen due to company's marketing efforts, reduction in interest cost and higher capacity utilisation.  
 
 In the current year, the Company has installed TMT facilities at its Hoskote Unit under licence from Hennigsdorfer Stahl Engineering Gmbh, Germany, for manufacture of Thermo Mechanically Trated Reinforcement Bars under Thermex Brand. 
 
 Further, Company is widening the range of structural steel rolled products at its Wada Unit. It will enable the Company to substantially improve its top-line and bottomline. The implementation of VAT w.e.f. 1st April,2005 will have positive impact on the operations of the Company. 
 
 Company has reduced its overall debt burden by Rs. 35.322 Millions leading to reduction in interest cost. During the current year, steel prices are very volatile. Company is facing challenges in the short term of managing market and price risks. Due to thrust on Housing and Infrastructure, Steel industry is expected to do well in the next 3 years and Bhuwalka is poised to realize the benefits of its strengths and market position for future business growth. 
 
 Overall re-structuring of business of the Company is under way which will enable the Company to improve liquidity and profitability. 
 
  DIVIDEND 
 
 The Directors have proposed a Dividend @ 12.5% on Cumulative Redeemable Preference Shares placed with IDBI. Your Directors express their inability to recommend any dividend on equity shares with a view to conserve resources and service long term debts. 

 

FIXED ASSETS:

 

Land, Buildings, Plant& Machineries, Electrical Installation, Weighing Machines, Furnitures & Fixtures, Office Equipments, Vehicles ETC.

 

 

CMT REPORT [Corruption, Money laundering & Terrorism]

 

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

 

1]         INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

 

2]         Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

 

3]         Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

 

4]         Record on Financial Crime :

            Charges or conviction registered against subject:                                                  None

 

5]         Records on Violation of Anti-Corruption Laws :

            Charges or investigation registered against subject:                                                          None

 

6]         Records on Int’l Anti-Money Laundering Laws/Standards :

            Charges or investigation registered against subject:                                                          None

 

7]         Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

 

8]         Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

 

9]         Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

 

10]        Press Report :

            No press reports / filings exists on the subject.

 

 

CORPORATE GOVERNANCE

 

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

 

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

 

 

CONTRAVENTION

 

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.45.92

UK Pound

1

Rs.84.62

Euro

1

Rs.58.03

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

5

PAID-UP CAPITAL

1~10

5

OPERATING SCALE

1~10

5

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

5

--PROFITABILIRY

1~10

4

--LIQUIDITY

1~10

4

--LEVERAGE

1~10

4

--RESERVES

1~10

4

--CREDIT LINES

1~10

4

--MARGINS

-5~5

-

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

41

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)                  Ownership background (20%)                         Payment record (10%)

Credit history (10%)                            Market trend (10%)                                             Operational size (10%)

 

RATING EXPLANATIONS

 

 

RATING

STATUS

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

Credit not recommended

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions