MIRA INFORM REPORT
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Report Date : |
23rd May, 2006 |
IDENTIFICATION DETAILS
|
Name : |
KUDREMUKH
IRON & STEEL COMPANY LIMITED |
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Registered Office : |
II
Block, Koramangala, Bangalore – 560034, Karnataka, India |
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Country : |
India |
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Financials (as on) : |
31.03.2005 |
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Date of Incorporation : |
23rd June 1995 |
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CIN No.: |
U85110KA1995PTC018118 |
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Com. Reg. No.: |
08-18118 |
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TAN No.: (Tax Deduction &
Collection Account No.) |
BLRK01100B |
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Legal Form : |
A closely held public limited liability company |
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Line of Business : |
Manufacturers
of Pig Iron, Auxillary Products and Slag |
RATING & COMMENTS
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MIRA’s Rating : |
B |
RATING
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STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Unfavourable &
favourable factors carry similar weight in credit consideration. Capability
to overcome financial difficulties seems comparatively below average/normal. |
Small |
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Maximum Credit Limit : |
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Status : |
Government Company –
Moderate |
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Payment Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject
is a Government of India company and continue to incur substantial losses.
Its payment are usually correct and as per commitments. Trade
relations are fair. Lenders
and creditors can feel confident of Government’s exposure to the company and can be considered normal for
business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
II
Block, Koramangala, Bangalore – 560034, Karnataka, India |
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Tel. No.: |
91-80-5531483/5537968 |
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Fax No.: |
91-80-5537634 |
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Website: |
DIRECTORS
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Name : |
Mr.
P. Ganesan |
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Designation : |
Chairman |
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Name : |
Mr.
K. P. Pandian |
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Designation : |
Director |
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Name : |
Mr.
R. K. Gupta |
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Designation : |
Director |
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Name : |
Mr.
R. K. Zaroo |
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Designation : |
Director |
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Name : |
Mr.
P. N. Viswanathan |
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Designation : |
Director |
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Name : |
Mr.
M Sengupta |
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Designation : |
Director |
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Name : |
Mr.
K Chandrayya |
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Designation : |
Director |
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Name : |
Mr.
Navin Soi |
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Designation : |
Director |
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Name : |
Mr.
Sreeman NS |
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Designation : |
Director |
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Name : |
Mr.
N Kini |
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Designation : |
Director |
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Name : |
Mr.
K Swaminathan |
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Designation : |
Director |
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Name : |
Mr.
V Nanda Kumar |
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Designation : |
Director |
BUSINESS DETAILS
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Line of Business : |
Manufacturers
of Pig Iron, Auxillary Products and Slag |
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Products : |
v
Pig Iron – 7201.10 v
Auxillary Products v
Slag |
PRODUCTION STATUS
|
Particulars |
Unit |
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Installed Capacity |
Actual Production |
|
Pig
Iron |
Tonnes |
|
216,262.00 |
118,630.00 |
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Auxiliary
Products |
Tonnes |
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|
11,315.90 |
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Slag |
Tonnes |
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29,969.00 |
GENERAL INFORMATION
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No. of Employees : |
158 |
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Bankers : |
State
Bank of India,
Bangalore Commercial Branch, Hudson Circle, Bangalore
- 560 001 |
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Facilities : |
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Banking Relations : |
-- |
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Auditors : |
M/s
Dagliya & Company Chartered
Accountants |
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Address: |
'L'
Block Unity Buildings, JC Road, Bangalore - 560 002 |
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Associates/Subsidiaries
: |
Nil |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
135,000,000 |
Equity
Shares |
Rs. 10/- Each |
Rs. 1350.000 Millions |
Issued, Subscribed
& Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
220 |
Equity
Shares |
Rs. 10/- Each |
Rs. 0.002 Millions |
FINANCIAL
DATA
[all figures are in Rupees Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2005 |
31.03.2004 |
31.03.2003 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
0.002 |
0.002 |
0.100 |
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2] Share Application Money |
525.499 |
525.499 |
0.000 |
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3] Reserves & Surplus |
0.000 |
0.000 |
0.000 |
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4] (Accumulated Losses) |
(494.824) |
(309.400) |
(335.000) |
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NETWORTH
|
30.677 |
216.101 |
(334.900) |
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LOAN FUNDS |
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1] Secured Loans |
2561.707 |
2775.084 |
2849.000 |
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2] Unsecured Loans |
0.000 |
0.000 |
0.000 |
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TOTAL
BORROWING
|
2561.707 |
2775.084 |
2849.000 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL
|
2592.384 |
2991.185 |
2514.100 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
|
2493.120 |
2638.557 |
2786.100 |
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Capital work-in-progress
|
0.000 |
2.706 |
3.100 |
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INVESTMENT
|
0.000 |
0.000 |
0.000 |
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DEFERREX TAX ASSETS
|
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES
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Inventories
|
805.013
|
270.061 |
187.800 |
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Sundry Debtors
|
215.545
|
141.402 |
34.300 |
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Cash & Bank Balances
|
0.058
|
31.687 |
95.800 |
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Other Current Assets
|
0.000
|
0.000 |
0.000 |
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Loans & Advances
|
57.207
|
55.014 |
64.200 |
Total Current Assets
|
1077.823
|
498.164 |
382.100 |
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Less : CURRENT LIABILITIES & PROVISIONS
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Current Liabilities
|
939.980
|
142.152 |
648.900 |
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Provisions
|
42.399
|
12.162 |
15.000 |
Total Current Liabilities
|
982.379
|
154.314 |
663.900 |
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Net Current
Assets
|
95.444
|
343.850 |
(281.800) |
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MISCELLANEOUS EXPENSES
|
3.820 |
6.072 |
6.700 |
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TOTAL
|
2592.384 |
2991.185 |
2514.100 |
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PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2005 |
31.03.2004 |
31.03.2003 |
Sales Turnover [including other income]
|
2266.387 |
1576.470 |
1016.500 |
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Profit/(Loss) Before Tax
|
(185.424) |
25.589 |
(71.100) |
Provision for Taxation
|
0.000 |
0.000 |
0.000 |
Profit/(Loss) After Tax
|
(185.424) |
25.589 |
(71.100) |
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Export Value
|
78.357 |
109.977 |
NA |
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Import Value
|
1746.278 |
643.374 |
NA |
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Total Expenditure
|
2121.010 |
1517.553 |
105.370 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2005 |
31.03.2004 |
31.03.2003 |
PAT / Total Income
|
(%)
|
(8.18)
|
(1.62) |
(6.99) |
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Net Profit Margin
(PBT/Sales) |
(%) |
(8.18)
|
(1.62) |
(6.99) |
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Return on Total Assets
(PBT/Total Assets} |
(%) |
(5.19)
|
(0.81) |
(2.24) |
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Return on Investment (ROI)
(PBT/Networth) |
|
(6.04)
|
(0.11) |
(0.21) |
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Debt Equity Ratio
(Total Liability/Networth) |
|
115.52
|
13.55 |
(10.48) |
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Current Ratio
(Current Asset/Current
Liability) |
|
1.09
|
3.22 |
0.57 |
LOCAL AGENCY FURTHER INFORMATION
HIGHLIGHTS
Some
of the highlights of performance achieved by the Company during the financial
year 2004-05 despite several problems faced by the company, are as under: -
Hot
metal production of more than 600 tonnes per day for 18 days in the month of
February 2005.
Highest
domestic Sale in a month i.e. 20323.62
MT of Pig Iron sold in February 2005.
Conversion
from LDO to Furnace Oil as Fuel to the Boilers in the Captive Power Plant
resulted in a saving of 50 - 55 paise per unit from December 2004.
Lowest
oil consumption of 79 KL of LDO in September 2004. 24510 DMT of Iron Ore Fines
exported
to China and earned Foreign Exchange of Rs.77.600 Millions .
PHYSICAL
PERFORMANCE
During
the year 2004-05, the Pig Iron plant was to produce 145138 MT of Hot Metal and
131019 MT of saleable Pig Iron as per the Budget. However, the Company could
produce only 130058 MT of Hot Metal and 118630 MT of Pig Iron. The target for
production was kept low in the first quarter of the financial year under report
due to non-availability of metallurgical Coke and Iron Ore. During that period,
the Coke price also went up. With the high and fluctuating prices of Coke, it
was difficult to achieve proper Sales realization since the increase in the
price of Pig Iron was not in proportion to the hike in the price of Coke. In
fact, the plant was shut down for 95 days from mid April to mid July 2004 for
want of Metallurgical Coke. The problem with regard to fluctuation in the
Thermal regime of the Furnace persisted. One more temporary
gunning
work was carried out as a temporary measure during the shut down period in June
2004. The Thermal condition of the Furnace was better upto December 2004. From
December
2004, again the same problems such as Thermal imbalance, channeling, hanging
etc. were observed. It was, therefore, concluded that the permanent solution
for improving
the performance of the Furnace is only by taking up capital repair to reline
the refractories and bring back thermal profile of the Furnace. The Company has
accordingly, decided to take up the capital repair of the Furnace during the
next financial year 2005-06. After the capital repair, performance of the
Furnace is expected to improve.
During
the year under report, the saleable Pig Iron was produced in seven grades
differentiated on the basis of Silicon content in the Pig Iron in accordance
with the market requirement.
In the area of specific consumption of raw
material, the main parameters i.e. Dry Coke rate and Iron Ore rate were beyond
the Budgetted norms on account of frequent stoppages and
re-starting
of the Furnace and Thermal imbalance of the Furnace as indicated earlier.
FINANCIAL
ARRANGEMENTS
The
State Bank of India has sanctioned Fund & Non Fund based facilities to the
Company to an extent of Rs.1374.000 Millions , which is secured by lien on Term
Deposits of KIOCL. This includes Rs.100.000 Millions as Cash credit facility
and Rs.70 crores for Foreign Letter of Credit.
FINANCIAL
PERFORMANCE
During
the year under report, the saleable Pig Iron was produced in seven grades
differentiated on the basis of Silicon content in the Pig Iron During the year
under review, the Net Sales realization of Pig Iron was better than the
previous year. However, the company could not reap the full benefits of
improved prices, as there was shortage as well as increase in the price of
Coke, which affected production to a very great extent. During the year, the
company posted Net Loss of Rs. 185.400 Millions. This was due to high cost of
procurement of LAM Coke, lower production rate and higher Iron Ore Coke
consumption rate.
Fixed
Assets:
v
Land
v
Building
v
Office Equipment
v
Furniture & Fixture
v
Vehicles
v
Plant & Machinery
v
Electrical Fitting
As
per Website Details:
This is a joint venture company
promoted by Kudremukh Iron ore
company Limited (KIOCL) in association with MECON Limited (formerly
Metallurgical and Engineering Consultants Ltd) and MSTC Limited (formerly Metal
Scrap Trading Corporation Ltd) to implement a Pig Iron and a Ductile Iron Spun
Pipe Plant at Mangalore.
The
Pig Iron Complex of the Joint Venture was completed and commissioned in
February 2001 at Baikampady Industrial Area in
Mangalore. The Pig Iron Complex consists of Blast Furnace with a useful of 350
cubic meters which can produce upto 227,000 tonnes of
foundry grade pig iron per annum. The plant also
has a Captive Power Plant of 2 X 3.5 MW capacity which uses surplus blast
furnace gas as energy input and meets a substantial part of the power
requirement of the Pig Iron Plant. The company produces various grades of pig
iron catering to wide cross section of consumers located in various parts of
the country.
Profile:
Kudremukh
Iron Ore Company Limited, a
wholly owned Government of India Enterprise, was established in 1976 to develop
the mine and plant facilities to produce 7.5 million tonnes of concentrate per
year. The mine and plant facilities were commissioned in 1980 and the first
shipment of concentrate was made in October 1981. A pelletisation plant with a
capacity of 3 million tonnes per year was commissioned in 1987 for production
of high quality blast furnace and direct reduction grade pellets for export.
Legend and wild beauty, Kudremukh, in the State of Karnataka, is known to have
one of the largest deposits of iron ore in the world.
The idea of
beneficiating the ore deposits was first proposed when several Japanese
companies came together with the National Mineral Development Corporation
(NMDC), a Government of India undertaking, evincing an interest in such a
project. Pilot studies suggested that the surface ore with 38% iron could be
enriched to a concentrate of 67% iron with available new technologies. The
concentrate could be transported to Mangalore, on the coast of the Arabian Sea,
110 k.m. to the west of Kudremukh. But global steel industry went into decline
in the late sixties. The Japanese withdrew. Interest was revived in early 1970
when Iran drew up its plans for an ambitious domestic steel industry and was
looking for a reliable supplier of iron ore. Kudremukh seemed ideal, abundant
and just across the sea and an agreement was reached.
The
plant, set up with an annual capacity of 227,500 tonnes of hot metal,
translating to around 2,16,000 tonnes of saleable pig iron, as per the contract
with the Turnkey Contractor, SMS Demag, incorporates the technological features
of Mannesman Demag Germany, a world leader in blast furnace technology. In
addition, a 2X3.5 MW Captive Power Plant, which uses the surplus blast furnace
gas as energy input and an Overland Conveyor System, meant to above Iron Ore
Pellets from KIOCL and Imported Coke to the Raw Material Yard of the Plant,
form the other important facilities of the Pig Iron Project.
The
time overrun in the Pig Iron Plant is attributable to a host of factors which
included, amongst others, defective and ineffective interface between the
various turnkey contractors executing the various project components, the
Detailed Engineering Consultants, MELON and the Owner which led to long delays
in completion of works in certain critical areas. In addition, the associated
cash flow problems faced by KISCO on account of delays in disbursement of the
full quantum of term loan sanctioned by the Banks also accounted for slippages
in crucial areas, affecting the overall progress of the project. On these
accounts, the completion cost of the Pig Iron Plant went up to Rs. 3057.900
millions as against the estimate (as appraised by M/s SBI Capital Markets in
March 1996) of around Rs. 2580 millions. The Cost overrun in the Pig Iron Plant
mainly reflects the cost of time overruns on account of Interest during
Construction and Establishment Expenses during construction.
Initially Iran agreed to finance the project in the form
of US $630 million loan. 150 million tonnes of concentrate was to be delivered
over a 15 year period. The company was formed in April 1976. The 7.5 million
ton annual capacity project was to be completed in August 1980. Shipments were
to commence in September 1980.
A 110 km road through ghats was built, and a slurry
pipeline to Mangalore port, the port itself had to be deepened.
KIOCL delivered the project, in time, within the estimated
cost. But Iran did not lift the ore due to the changed political situation.
Hence KIOCL had to look for alternate markets.
The Winning habit
Iron ore trade in the world is fiercely competitive. KIOCL
has now established itself as a reliable supplier of iron ore concentrates and
iron oxide pellets for many a discerning customer in the international market.
On account of the marketing acumen and crisis management skills of KIOCL the
company could adapt itself admirably to the changed market situation caused by
loss of the Iranian market.
KIOCL's products are now exported to China, Japan, Iran
and Taiwan in the international market besides catering to a number of
consumers in the domestic market such as Ispat Industries, Vikram Ispat and
Jindal Vijayanagar Steel Limited.
Kudremukh
produces high grade ironore concentrate which is ideal
for use as sinter feed and for pelletisation. The concentrate is being used in the steel
plants in China and Japan for sintering and in Iran and
China as a blend in pellet feed. The outstanding feature of Kudremukh ore is
that it is very low in alumina, sulphur, phosphorous, vanadium and other
deleterious elements. Magnetite content of the ore
has an added advantage in that it requires relatively less
energy for sintering and pelletisation when compared with other types of iron
ore.
Pellets
Similarly, Kudremukh pellets
have excellent chemical, physical and reduction properties and are ideal feed
for blast furnaces and direct reduction plants.
Kudremukh blast furnace grade
pellets have been used in blast furnaces of steel mills in
Australia, China, Japan, Taiwan, Turkey and a host of other
countries. Their pellets have also been
used in steel plants of Hungary, Yugoslavia, USA, West
Germany, Poland,Czechoslovakia,Indonesia and in some of the direct reduction
plants in India.. In all an excellent material for steel production in blast
furnaces and direct reduction plants.
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 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.45.52 |
|
UK
Pound |
1 |
Rs.85.79 |
|
Euro |
1 |
Rs.58.46 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
1 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
1 |
|
--PROFITABILIRY |
1~10 |
- |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
- |
|
--CREDIT LINES |
1~10 |
6 |
|
--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 |
NO |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
30 |
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
|
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 |