MIRA INFORM REPORT
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Report Date : |
31st May, 2006. |
IDENTIFICATION DETAILS
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Name : |
CHEMPLAST SANMAR LIMITED |
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Registered Office : |
No. 9, Cathedral Road,
Chennai – 600 086, Tamilnadu, India |
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Country: |
India |
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Financials (as on): |
31.03.2006 |
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Date of Incorporation : |
29.09.1962 |
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CIN No.: [Company Identification No.] |
U24230TN1985PLC011637 |
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Com. Reg. No.: |
18-11637 |
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TAN No.: [Tax Deduction & Collection Account No.] |
CHEC00051C |
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PAN No.: [Permanent Account No.] |
AAACC3000F |
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Legal Form : |
Subject
is a Public Limited Liability company. The company’s shares are listed on the
Stock Exchanges. |
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Line of Business : |
Manufacturer and Seller of
Polyvinyl Chloride and other chemicals, fabricating PVC Pipes, Fittings &
Other Extrusions & Moulding, etc. |
RATING & COMMENTS
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MIRA’s Rating : |
Ca |
RATING
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STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is
considered normal. Capable to meet normal commitments. |
Satisfactory |
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Maximum Credit Limit : |
EUR 7000000 |
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Status : |
Moderate |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Exist |
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Comments : |
Financial position is poor.
Payments are slow and delayed. Directors are reported as experienced,
respectable and resourceful industrialist. Their trade relations are fair. The company can be considered
for any business dealings on safe and secured trade terms and conditions. |
LOCATIONS
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Registered Office : |
No. 9, Cathedral Road,
Chennai – 600 086, Tamilnadu, India |
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Tel. No.: |
91-44-28118300 / 28273333 /
28273334 / 28273335 / 28273336/ 28128500 |
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Fax No.: |
91-44-28111902 /
28269359/282777411 |
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E-Mail : |
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Website : |
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Main Office: |
Bangalore Genei 6, VI Main, BDA Industrial Suburb, Near SRS Road,
Peenya, Bangalore - 560 058, India |
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Sales Office: |
Chemplast Sanmar Ltd. Harsha Bhavan, II Floor, E Block 302, III Floor, Ashoka Chambers 407, Swastik Chambers, Sion-Trombay Road EDC Installation, Behind SPIC Ammonia Plant Cabot Sanmar Ltd.
Harsha Bhavan, 2nd Floor, Block ‘E’, 407-412, Swastik Chambers Sion-Trombay Road,
Chembur, Mumbai - 400 071. Bangalore Genei
57, Vellalar Street, Adambakkam 106, S.R.Complex, Opp CCMB 407-412, Swastik Chambers C31, Mohammadpur, Near Bikaji Cama Place 'Chitralaya', C12, Ambanagar Vanchiyoor PO 701, Alkapuri Arcade, Tower B, 7th Floor 238A, Jodhpur Park, Shop No.28, 1st Floor, J13, West High Court Road, Laxmi Nagar 406-408, 4th Floor, Century Arcade,
Sanmar Engineering
Corporation Ltd.
M – 2 (Third Floor)
407, Swastik Chambers, Sion-Trombay Road
Chowringhee Court, IV Floor
701, Alkapuri Arcade Tower B, 7th Floor
406-408, 4th Floor, Century Arcade
302, III Floor, Ashoka Chambers
3, Sangna Society, I Floor, Gurukripa Buildings
Ratnaveni Complex 48-9-18/29, 1st Floor
39/2453, Neeti Nikethan Warriar Road
J-13, West High Court Road, Laxmi Nagar, |
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Corporate Office: |
Intec Polymers 407-412, Swastik Chambers, Sion-Trombay Road Sanmar Engineering Corporation Ltd. 147 Karapakkam Village 89/1, Vadugapatti Village |
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Regional Office : |
·
Harsha Bhavan, 2nd
Floor, Block ‘E’, Connaught Place, New Delhi – 110 001 Tel.
91-11-23413112 Fax.
91-11-23418164 ·
407-412, Swastik
Chambers, Sion-Trombay Road, Chembur, Mumbai – 400 071, Maharashtra Tel.
91-22-25973390 Fax.
91-22-25973395 |
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Plants : |
·
Plant II, Raman Nagar
PO, Mettur Dam – 636 403, Sales, Tamilnadu >
PVC : Tel.
91-4298-231982 Fax.
91-4298-231986 >
Chlorochemicals :
Caustic soda, chlorine, chlorinated solvents, refrigerant gases and silicon
wafers ·
Krishnagiri &
Panruti, Tamilnadu >
Industrial Alcohol ·
Vedaranyam, Tamilnadu >
Industrial Salt PVC
Plant II :
Karaikal Plant: Industrial Alcohol Plant II :
Caustic Chlor
Plant III : Karaikal Plant: Salt Works :
Metkem Silicon
Plant IV :
Mettron
Plant I :
Solvents
Plant III : Raman Nagar PO |
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Branches : |
Located at :- ·
Bangalore, Karnataka ·
Kolkata, West Bengal ·
Mumbai, Maharashtra ·
New Delhi |
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Other Office: |
Cabot Sanmar Ltd.
Raman
Nagar PO, Mettur Dam - 636 403, Salem, Tamil Nadu.
Sanmar
Speciality Chemicals Ltd.
No.44,
Suligunta Village, Theertham Road, Plot
Nos.: 16, 17, 31 & 32, SIDCO Pharmaceuticals Industrial Estate, Alathur
Village,
Research Centre 38,
Old Mahabalipuram Road, Perungudi,
Intec
Polymers
130/1,
Jayanthbhai Desai Marg
Sanmar
Engineering Corporation Ltd.
Asco
(India) Ltd.
147,
Karapakkam Village, Chennai - 600 096.
BS&B
Safety Systems (India) Ltd.
147,
Karapakkam Village, Chennai - 600 096.
Fisher
Sanmar Ltd.
147,
Karapakkam Village, Chennai - 600 096.
Flowserve
Sanmar Ltd.
147,
Karapakkam Village, Chennai - 600 096.
Sanmar
Engineering Services Ltd.
Survey
No. 38/2A, Old Mahabalipuram Road, Perungudi, Chennai - 600 096.
Sanmar
Foundries Ltd.
87/1,
Vadugapatti Village, Viralimalai - 621 316, Pudukottai District.
Sensortronics
Sanmar Ltd.
Survey No.38/2A, Old Mahabalipuram Road,
Perungudi, Chennai - 600 096.
Tyco
Sanmar Ltd.
88/1B,
Vadugapatti Village, Viralimalai - 621 316, Pudukottai District.
Xomox
Sanmar Ltd.
89/2,
Vadugapatti Village, Viralimalai - 621 316, Pudukottai District.
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DIRECTORS
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Name : |
Mr.
P. S. Jayaraman |
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Designation : |
Managing
Director |
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Name : |
Mr.
M. K. Kumar |
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Designation : |
Director
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Name : |
Mr.
C. H. Mahadevan |
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Designation : |
Director
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Name : |
Mr.
V. K. Parthasarathy |
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Designation : |
Director
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Name : |
Mr.
M.S. Sekhar |
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Designation : |
Director
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Name : |
Mr.
V. V. Subramanian |
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Designation : |
Director
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Name : |
Mr.
S V Money |
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Designation : |
Director |
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Name : |
Mr.
B Natraj |
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Designation : |
Director |
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Name : |
Mr.
M N Radhakrishnan |
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Designation : |
Director |
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Name : |
Mr.
P U Aravind |
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Designation : |
Company
Secretary |
KEY EXECUTIVES
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Name : |
Mr.
R. Sukumaran |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
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Names of Shareholders |
No. of Shares |
Percentage of Holding |
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Promoters Holdings |
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Indian Promoters |
35986458 |
75.00 |
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Foreign Promoters |
-- |
-- |
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Persons acting in
concert |
-- |
-- |
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Sub Total |
35986458 |
75.00 |
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Non- Promoters
Holdings |
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Institutional Inverstors |
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1] Mutual Fund and UTI |
10962 |
0.02 |
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2] Banks, Financial
Institutions, Insurance Companies |
5955826 |
12.42 |
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3] Foreign Institutional
Investors |
2260 |
-- |
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Sub Total |
5969048 |
12.44 |
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Others |
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1] Private Corporate Bodies
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1189851 |
2.48 |
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2] Indian Public |
4767817 |
9.94 |
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3] NRIs/ OCBs |
62931 |
0.13 |
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4] Foreign Nationals |
5839 |
0.01 |
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Sub Total |
6026438 |
12.56 |
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GRAND TOTAL |
47981944 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer and Seller of
Polyvinyl Chloride and other chemicals, fabricating PVC Pipes, Fittings &
Other Extrusions & Moulding, etc. |
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Products with ITC Code: |
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PRODUCTION STATUS
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Particulars |
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Unit |
Installed Capacity |
Actual Production |
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Caustic
soda |
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MT |
79200 |
78985 |
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Chlorine |
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MT |
70080 |
70421 |
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Chloromethanes |
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MT |
22000 |
34731 |
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Trichloroethylene |
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MT |
5000 |
2982 |
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Polyvinyl chloride |
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MT |
60000 |
48889 |
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Refrigerant gases |
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MT |
2500 |
1279 |
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Hydrogen gas |
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MT |
1386 |
1823 |
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Silicon ingots (kgs.) |
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MT |
12000 |
27118 |
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Silicon wafers (‘000 nos.) |
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MT |
2000 |
1134 |
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Ethyl silicate |
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MT |
600 |
374 |
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Bromine |
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MT |
120 |
61 |
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Silicon tetrachloride |
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MT |
600 |
513 |
GENERAL INFORMATION
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No. of Employees : |
Around
2021 |
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Bankers : |
>
Indian Overseas Bank,
Chennai, Tamilnadu >
State Bank of India,
Chennai, Tamilnadu >
Standard Chartered
Grindlays Bank, Chennai, Tamilnadu |
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Facilities : |
Secured Loan
2005 2004 Term
Loan from Banks 1167.198 617.197 Others
920.000 750.000 Cash
Credit and Working Capital Demand
Loan from banks
7.465 208.983 Total 2094.663 1781.180 Unsecured Loan Short
terms loan from banks -- 362.685 Total
-- 362.685 |
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Banking Relations : |
Satisfactory
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Auditors : |
Price Waterhouse &
Company Chartered Accountants Chennai,
Tamilnadu |
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Associates : |
˜
Chemplast Speciality
Chemicals Limtied ˜
Bangalore Genei
Limited ˜
Sanmar Shipping
Limited ˜
Sanmar Properties and Investments
Limited ˜
Sanmar Holdings
Limited ˜
Cabot Sanmar Limited ˜
Sanmar Engineering
Corporation Limtied ˜
Asco (India) Limited ˜
BS & B Safety
Systems (India) Limtied ˜
Fisher Sanmar Limtied ˜
FMC Technologie Sanmar ˜
Sanmar Engineering
Serives Limtied ˜
Sanmar Foundries
Limited ˜
Sanmar Weighing
Systems Limited ˜
Sensortronics Sanmar
Limited ˜
Tyco Sanmar Limited ˜
Xomox Sanmar Limited ˜
AMP Sanmar Assurance
Company Limited ˜
Atofina Peroxides
India Limited ˜
Cathedral Corporate
Finance ˜
Cathedral Properties
(Alpha) Limited ˜
Dragoco India Limited ˜
Indchem Software
Technologies Limited ˜
Kalamkriya Limited ˜
Epsilon Properties
Limited ˜
Fisher-Xomox Sanmar
Limited ˜
Flowserve Sanmar
Limited ˜
FMC Technologies
Sanmar Limited ˜
Pluto Consolidations
Limited ˜
Sanmar Alloy Castings
Limited ˜
Sanmar Electronics
Corporation Limited ˜
Sanmar Micropack
Limited ˜
Sanmar Industrial
Filters Limited ˜
Sanmar Securities
Trading Limited ˜
Sanmar Shipping
Limited ˜
Sanmar Speciality
Chemicals Limited ˜
Fortis Investments
(Beta) Limited ˜
Bay View Properties
Limited ˜
Sanmar Group Corporate
Finance ˜
Sanmar Realty Limited |
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Subsidiaries : |
>
Polygon Holdings
Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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75000000 |
Equity Shares |
Rs.10/- |
Rs. 750.000
millions |
|
3500000 |
Preference Shares |
Rs.100/- |
Rs. 350.000
millions |
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GRAND TOTAL |
|
Rs.1100.000 millions |
Issued, Subscribed
& Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
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47981944 |
Equity Shares |
Rs.10/- |
Rs. 479.819 millions |
FINANCIAL
DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
479.800 |
479.819 |
684.800 |
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3] Reserves & Surplus |
1803.400 |
1436.200 |
1183.900 |
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NETWORTH
|
2283.200 |
1916.019 |
1868.700 |
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LOAN FUNDS |
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1] Secured Loans |
2291.400 |
2094.681 |
1781.200 |
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2] Unsecured Loans |
421.400 |
0.000 |
362.700 |
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TOTAL
BORROWING
|
2712.800 |
2094.681 |
2143.900 |
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TOTAL
|
4996.000 |
4010.700 |
4012.600 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
|
3908.100 |
3671.100 |
3524.300 |
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Capital work-in-progress
|
822.600 |
249.800 |
89.300 |
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INVESTMENT
|
0.300 |
0.300 |
43.400 |
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CURRENT ASSETS, LOANS & ADVANCES
|
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Inventories
|
489.400
|
352.300
|
500.300 |
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Sundry Debtors
|
524.000
|
651.300
|
626.200 |
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Cash & Bank Balances
|
53.300
|
49.800
|
44.500 |
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Loans & Advances
|
917.500
|
696.100
|
542.200 |
Total Current Assets
|
1984.200
|
1749.500
|
1713.200 |
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Less : CURRENT LIABILITIES & PROVISIONS
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Current Liabilities
|
1452.400
|
1392.600
|
1099.500 |
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Provisions
|
271.000
|
278.600
|
267.900 |
Total Current Liabilities
|
1723.400
|
1671.200
|
1367.400 |
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Net Current
Assets
|
260.800
|
78.300
|
345.800 |
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MISCELLANEOUS EXPENSES
|
4.200 |
11.200 |
9.800 |
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TOTAL
|
4996.000 |
4010.700 |
4012.600 |
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PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
Sales Turnover [including other income]
|
7043.400 |
6138.500 |
5840.500 |
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Profit/(Loss) Before Tax
|
460.200 |
306.000 |
82.300 |
Provision for Taxation
|
|
49.200 |
36.000 |
Profit/(Loss) After Tax
|
367.100 |
256.800 |
46.300 |
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Export Value
|
NA |
173.013 |
236.941 |
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Import Value
|
NA |
465.799 |
921.356 |
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Total Expenditure
|
6058.400 |
5832.500 |
5758.200 |
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt
Equity Ratio |
1.14 |
1.12 |
1.39 |
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Long
Term Debt Equity Ratio |
1.06 |
0.97 |
1.08 |
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Current
Ratio |
1.00 |
0.96 |
0.87 |
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TURNOVER
RATIOS |
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|
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Fixed
Assets |
1.08 |
1.05 |
1.06 |
|
Inventory
|
16.06 |
14.15 |
12.66 |
|
Debtors |
11.50 |
9.44 |
9.19 |
|
Interest
Cover Ratio |
3.79 |
2.04 |
1.23 |
|
Operating
Profit Margin (%) |
14.57 |
12.89 |
13.41 |
|
Profit
Before Interest and Tax Margin (%) |
9.24 |
8.53 |
7.70 |
|
Cash
Profit Margin (%) |
10.76 |
8.01 |
6.51 |
|
Adjusted
Net Profit Margin (%) |
5.43 |
3.64 |
0.81 |
|
Return
on Capital Employed (%) |
13.90 |
12.85 |
11.46 |
|
Return
on Net Worth (%) |
17.48 |
12.06 |
1.78 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Subject was incorporated on
29th September, 1962 at Chennai in Tamilnadu having Company
Registration Number 4893 under the name & style of CHEMICALS & PLASTICS
INDIA LIMITED. The company merged with URETHANS (INDIA) LIMITED w.e.f. 1st
October, 1991 and the name was changed to CHEMPLAST SANMAR LIMITED.
A new Registration Number was
obtained by the company after the change of name. The new Company Registration
Number is 11637.
Subject was formerly known as
Chemicals & Plastics India Limited and was promoted by Urethanes India by
Chemplast, the flagship company of the Sanmar Group.
It became a fully owned
subsidiary of Chemplast in 1991 when the name was changed to the present one.
The company set up a 2500 tpa
thermoplastic polyurethane plant in Tamilnadu in technical collaboration with
BF Goodrich Company, USA. It
manufactures caustic soda, chlorine, chlorinated solvents, PVC, refrigerant gases
and industrial alcohol.
In 1991-92, the capacity of
PVC was enhanced to 48000 tpa making it the third largest manufacturer of PVC
resin in the country. The company
formed Peroxides India in collaboration with Atochem, USA for a wide variety of
polymerisation intitiators and Drechem Speciality Chemicals, in technical
collaboration with Dragoco, Germany to manufacture aromatic chemicals.
The PVC capacity is being
enhanced from 48000 tpa to 60000 tpa and that of chloromethanes is being
enhanced to 25000 tpa. In 1995-96,
Metkem Silicon, a subsidiary of the company manufacturing poly and mono
crystalline silicon was merged with the holding company. During the same period, the thermoplastics
polyurethane division of the company was spun off into a joint venture with
Bayer, Germany. It also has entered
into a joint venture with Cabot Corporation, USA for the manufacture of fumed
silica as a springboard.
The company is in advanced
stage of discussing raw material tie-ups for its proposed shore-based PVC
project. As a measure of conservation
of power, the company is replacing shell and tube acid cooler and condensers
with plate heat exchangers in the chlor-alkali process.
The company has taken on hand
a backward integration captive project for setting up an oxychlorination with
the capital outlay of over Rs. 600 millions.
This will help the company to improve captive feedstock (EDC) capacity,
leading to lower dependence on imported feedstock.
During 2000-01, the company
brought on stream an oxychlorination plant which would increase captive
production of EDC and reduce dependence on imports and also significantly
reduce the environmental impact of its operations.
Subject to necessary
approvals the company planned to amalgamate Sanmar Properties and Investments
(SPIL) excluding its investment and shipping business w.e.f. November 2, 2003.
SPIL’s investment and shipping division would be demerged to Sanmar Holdings
Limited effective from November 1, 2003. SPIL shareholders get one equity share
of company for every share in SPIL.
Chloromethane production had
registered an all time high at 32851 MT during the year 2001.
The
project to set up a 150000 TPA PVC plant in a Greenfield location is under
discussion with financial institutions.
Selection of technology and EPC contactor is in final stage. The project will be kick started after the
funding is tied up.
The company is engaged in
manufacture and sale of poly vinyl chloride (PVC) and chlorochemicals. While all its manufacturing facilities are
located at Mettur Dam near Salem in Tamilnadu, the PVC division has two
industrial alcohol plants at Panruti and Krishnagiri and the chlorochemicals
division a salt facility at Vedaranyam, both in Tamilnadu, demonstrating the
company’s forethought vis-à-vis achieving self-sufficiency in feedstock.
The company originally had an
installed capacity of 6,000 tpa of PVC that was expanded to 60000 tpa. The
company has may to its credit like one of the largest manufacturers of
polycrystalline silicone and among the top two largest manufacturer of chloromethanes.
Over the years, the company diversified into areas like manufactures of
Chloromethanes, refrigerant gases along with backward integration. The company
made a major diversification decision by getting into shipping business in 1994
to protect itself from the cyclical chlorochemicals business.
The company is in advanced
stage of discussing raw material tie-ups for its proposed share-based PVC
project. Project implementation would start once these arrangements are in
place.
With
the continued good performance of the PVC and Solvents businesses, the company
is maintaining its profitability in the current year. However, by its very
nature the Chlorochemicals business is cyclical and the management is therefore
engaged in an ongoing cost-reduction exercise in an effort towards “bottom of
the cycle” planning.
Biodata:
Chemplast Sanmar Ltd
(formerly knwon as Chemicals & Plastics India (CPIL)), incorporated in 1962
was promoted as Urethanes India by Chemplast, the flagship of the Sanmar group,
Tamilnadu. It became a fully-owned subsidiary of Chemplast in 1991 when the
name was changed to the present one.
The company set up a 2500 tpa thermoplastic polyurethane plant in
Tamilnadu in technical collaboration with BF Goodrich Company, US. It
manufactures caustic soda, chlorine, chlorinated solvents, PVC, refrigerant
gases and industrial alcohol.
In 1991-92, the capacity of PVC was enhanced to 48,000 tpa, making it the
third largest manufacturer of PVC resin in the country. The company formed
Peroxides India in collaboration with Atochem, US, for a wide variety of
polymerisation initiators; and Drechem Speciality Chemicals, in technical
collaboration with Dragoco, Germany, to manufacture aromatic chemicals.
The PVC capacity is being enhanced from 48,000 tpa to 60,000 tpa and that
of chloromethanes is being enhanced to 25,000 tpa. In 1995-96, Metkem Silicon,
a subsidiary of the company manufacturing poly and mono crystalline silicon was
merged with the holding company. During the same period, the thermoplastics
polyuerthane division of the company was spun-off into a joint venture with
Bayer, Germany. It also has entered into a joint venture with Cabot
Corporation, US, for the manufacture of fumed silica as a springboard.
The company is in advanced stage of discussing raw material tie-ups for
its proposed shore-based PVC project. As a measure of conservation of power,
the company is replacing shell and tube acid cooler and condensers with plate
heat exchangers in the Chlor-alkali process.
The company has taken on hand a backward integration captive project for
setting up an oxychlorination with the capital outlay of over Rs 600.000 Millions. This will help the company to improve
captive feedstock (EDC) capacity, leading to lower dependence on imported
feedstock.
During 2000-01, the company brought on stream an oxychlorination plant
which would increase captive production of EDC and reduce dependence on imports
and also significantly reduce the environmental impact of its operations.
Subject to necessary approvals the company planned to amalgamate Sanmar
Properties & Investments Ltd(SPIL) excluding its Investment and Shipping
business w.e.f. Nov 2, 2003. SPIL's Investment and Shipping division would be
demerged to Sanmar Holdings Ltd effective from Nov 1, 2003. SPIL sharehodlers
get one equity share of Chemplast sanmar for every share in SPIL.
The company continued to maintain its
all-round good performance during the year under review. Sales and other income
increased by 14% over the previous year. The Profit before tax for the year at
Rs.460.2 Millions inclusive of Montreal Protocol compensation receipts of
Rs.184.0 Millions registered a healthy growth of 50% over the previous year.
The performance of the company could have been substantially better but for the
increase in the fuel cost due to steep increase in oil prices which had a
negative impact of Rs.350.000 Millions on the profits for the year. The company
has drawn up plans to address this issue. With a view to conserving resources
to meet the capital expenditure programmes of the company, the Directors do not
recommend payment of dividend on equity shares for the year 2005-06.
MANAGEMENT DISCUSSION AND ANALYSIS:
The year under reference was a representative year demonstrating the
cyclical nature of the businesses your company is engaged in.
The uptrend seen in the realizations for the products manufactured such
as Poly Vinyl Chloride (PVC), Caustic Soda and Chloromethanes witnessed a
reversal of trends in the second half of the year. With escalating feedstock
prices, the margins came under pressure during this period. The focus laid by
the management in recent years on strengthening the backward integration
strategy, the acquisition of the Caustic soda facility at Karaikal which made
available low cost chlorine for operations, and the continuous investments
being made to bring in more flexibility in feedstock management, are all steps
in the right direction to manage efficiently the cyclical nature of the
business. Several investment proposals, discussed elsewhere in this report, are
now under implementation and these initiatives will further strengthen the
fundamentals of the company.
PVC Business:
The company has an integrated facility at Mettur Dam to produce 64,000
TPA of PVC. Ethylene Di-chloride (EDC), the feedstock required to manufacture
PVC is also produced in this location.
The company continues to be the only manufacturer with capability to
produce four major PVC product groups. This has given it the flexibility to
quickly change its product mix based on comparative contribution.
Suspension Resin:
Demand for Suspension resin in the country peaked to nearly 11.5 lac tons
in the year 2005-06, registering a high growth of 25% over the previous year.
During this year, the country imported nearly 2.50 lac tons of Suspension
resin. The main driver for PVC demand continues to come from the Pipes &
Fittings sector where nearly 70% of Suspension PVC is consumed in the country.
Implementation of several irrigation, water supply and sewerage schemes by
various Governments, and the boom in the housing, construction and
infrastructure sectors will continue to drive Pipes and PVC demand in the
coming years.
Paste Resin:
Demand for Paste resin (a speciality resin) in India is at present around
65,000 MT and growing at a modest rate of 5% per year. Leather cloth production
consumes a major portion of Paste resin. With the growth in the automobile
sector, increase in leather cloth production is expected to result in higher
demand for Paste resin. The Paste resin produced by your company continues to
remain the preferred grade and is in good demand.
Battery Separator Resin (BSR):
The country's BSR demand continues to be around 6000 MT per year. Your company
continues to be the sole manufacturer of BSR in India.
Copolymer Resin:
Growth in demand for Copolymer resins in the major sectors - inks and
adhesives - continues to remain modest. Your company is the only manufacturer
of Copolymer resin in South Asia.
Raw Materials and Intermediates:
EDC is the key intermediate to produce PVC. Though the company has an EDC
production facility at Mettur Dam to meet its entire requirement to produce
PVC, actual production of EDC depends on the price/cost of raw materials i.e.,
Denatured Spirit (DNS) and Chlorine. While the cost of chlorine has been
minimised with the enhanced captive production at the Karaikal facility, the
cost of DNS depends upon the vicissitudes of the sugar industry, which determines
availability of molasses for alcohol production, demand of alcohol from the
potable sector and the Gasohol programme of the Government of India. These
factors have posed a question mark on the availability of DNS to the industrial
sector on a sustained basis at affordable prices. Also, the international price
of DNS has increased to high levels making imports prohibitive. To find a
long-term solution to this problem and ensure availability of EDC at an
appropriate cost, the company, as informed, is setting up an 84,000 TPA EDC
production facility at Karaikal to produce EDC from imported ethylene, using
the chlorine available at this location. Towards this end, Ethylene storage and
Marine Terminal facilities are under construction. The project to be completed
by end of 2006 will make available about 84,000 tonnes of EDC at a low cost for
the PVC production at Mettur Dam. The balance requirement of EDC of around
25,000 TPA will be met from the Oxychlorination facility operating at Mettur
Dam, for which the required DNS will come from the company's Industrial Alcohol
plant.
As regards the Caustic soda facility at Karaikal, a shore based location
in the Union Territory of Pondicherry acquired in August '03, your company has
taken several initiatives. The capacity of Caustic soda was ramped up to 100
TPD last year and has been further expanded to 150 TPD in March '06. Power is
the predominant raw material in the manufacture of Caustic soda, and the
company has installed an 8.5 MW power plant with natural gas as fuel. The
captive power source through natural gas is being further augmented. Thus,
Chlorine is made available at this location for captive consumption at an
attractive low cost.
Risks and concerns:
a) The Government of India has been continuously reducing the customs
duty on PVC imports and the spread between import duty on PVC and the
intermediate (EDC) has reduced substantially as under:
Year Month Import Duty %
PVC EDC Spread %
2002 March 30 15 152003 March 25 15 102004 January 20 15 52004 September
15 10 52005 March 10 5 52006 March 5 2 3
b) Imported DNS prices have increased to unviable levels. The company is
now forced to depend on domestic DNS at least till commissioning of the EDC
facility at Karaikal.
c) High cost of power mainly due to increase in LSHS cost, which follows
the trend of International crude oil prices is putting pressure on
margins.
Review of operations:
PVC production during the year 2005-06 was 60,177 MT. During the
beginning of the year, PVC production was moderated by availability of EDC.
However, with the imported parcels of EDC landing from June '05, PVC production
volume was maintained to the capacity. In line with the international price of
Suspension PVC, domestic prices started falling substantially from October '05.
Such a drop in selling price and increase in feedstock cost affected the
margins during the year.
As stated earlier, the PVC Division was benefited by the low cost
chlorine from Karaikal facility and the timely import of DNS and EDC, but for
which the operations of the Division would have been severely affected.
As per web Details
About Group
The
Sanmar Group, with its corporate headquarters at Chennai, the capital city of
Tamil Nadu state in south India, has set the benchmark for global
partnerships—in chlorochemicals, speciality chemicals, and engineering.
These
businesses are grouped and managed in industry segmentFINANCE:
Your company has established a good track record with the
bankers and financial institutions, thereby enjoying their confidence fully.
The increase in interest cost in recent period is a matter of concern, however
with good standing of your company with the lenders, the company is confident
of securing loans at optimum costs.
With a view to enhance liquidity of company's shares on the stock
exchanges and facilitate easier accessibility to the company's equity shares by
small investors, during the year, the company carried out a stock split by
sub-dividing each equity share of Rs.10 of the company into 10 equity shares of
Re.] each.
s as follows:
>
Shipping
In
addition to significant or majority holdings in all these businesses, the group
has also made major investments in life insurance and cement manufacture.
Professionally managed
In
the course of its well planned professionalisation initiatives over the years,
the group has successfully separated ownership and management by establishing a
broad-based, empowered Group Corporate Board comprising eminent persons from
varied backgrounds. The GCB oversees all Sanmar businesses, but is involved
only on a strategic level, with the management of the businesses fully
delegated to professional managing directors and run by over 600 highly
qualified managers.
Group Strengths
The
Sanmar Group has over three decades of experience in running and managing a
large industrial organisation with multiple businesses. It is renowned for its
exceptional management skills covering diverse and complex businesses, strong
and conservative financial practices, and its ability to source, assimilate and
apply complex technologies in different fields.
Some
of the group’s major strengths are: Its leading edge HR practices and
reputation as a preferred employer; its high level of IT integration, with SAP
ERP in place in all the businesses; and its successful relations with the
government, based on professional merit and integrity.
A history of consistent profit making
The
group entered into its first international joint venture back in the 1960s when
it started Chemicals and Plastics India Limited to manufacture PVC resins in
joint venture with B F Goodrich of the USA.
Today,
it has a turnover of around Rs.10 billion and a presence in some 25 businesses,
with 25 manufacturing units spread over 10 locations in India.
Characterised
by strong and conservative financial practices, it has a track record of steady
growth and consistent profitmaking over the last three decades, enjoying an
excellent reputation in the financial markets. The group is known for its high
ethical standards and healthy respect for intellectual property rights.
At Chemplast Sanmar Limited, the flagship company of
the Sanmar Group, integration - forward and backward - is the key.
The company has two main businesses – PVC and
Chlorochemicals. The basic feedstock for its PVC plant, ethylene and chlorine,
come from its industrial alcohol plant at Panruti and its own chloralkali
facilities.
The Chlorochemicals Division of Chemplast, itself the
result of backward integration by the group, manufactures a wide range of
products using a highly integrated manufacturing process. These downstream
products are either chlorine derivatives or chlorine users in the production
process. The feedstock for the refrigerant gases is supplied by the solvents
division.
The salt needed for chlorine manufacture is supplied
by Chemplast's own salt fields at Vedaranyam. The process being capital
intensive, Chemplast is fully equipped to generate sufficient captive power to
meet its entire requirements, thus making it one of the most integrated
chemical plants in the country with a closed manufacturing loop.
Between the two main businesses, Chemplast's product
range falls into five distinct groups — PVC Resins, Caustic Soda/ Chlorine,
Chlorinated Solvents, Refrigerant Gases and Silicon Wafers.
The manufacturing facilities are located at Mettur in
Tamil Nadu and Karaikal in Pondichery.
The
Sanmar Group, with its corporate headquarters at Chennai, the capital city of
Tamil Nadu state in south India, has set the benchmark for global partnerships
in niche technology areas.
The
group has significant or majority holdings in all its businesses.
These
businesses are grouped and managed in industry segments as follows:
In addition, the group has also made major
investments in cement manufacture.
Professionally managed
Sanmar’s businesses are professionally managed,
thanks to the group’s ability to attract, motivate and retain high calibre
staff. Ownership and management have been separated through a series of top
level initiatives, including the formation of a broadbased, empowered Group
Corporate Board, which oversees all businesses, including strategies and
policies. The businesses are managed by professional managing directors, with
highly qualified managers working under them.
Group Strengths
The Sanmar Group has over three decades of
experience in running and managing a large industrial organisation with
multiple businesses.
The group’s innate strengths include:
An ability to
source, assimilate and apply complex technologies in different fields.
Leading edge HR
practices and a reputation as a preferred employer
A high level of IT
integration with an SAP ERP platform across businesses
A global outlook
highlighted by successful JVs with world leaders, and a high level of cross border
trade
Blazing a trail
The group entered into its first international
joint venture back in the 1960s when it started Chemicals and Plastics India
Limited to manufacture PVC resins in joint venture with B F Goodrich of the
USA.
Today, it has a turnover of over Rs.13 billion and
a presence in some 25 businesses, with manufacturing units spread over numerous
locations in India.
Characterised by strong and conservative financial
practices, it has a track record of steady growth and consistent profitmaking
over the last three decades, enjoying an excellent reputation in the financial
markets. The group is known for its high ethical standards and healthy respect
for intellectual property rights.
Where integration is the
key
At Chemplast Sanmar
Limited, the flagship company of the Sanmar Group, integration - forward and
backward - is the key.
The company has two main
businesses – PVC and Chlorochemicals. The synthesis that underlies the polymer
chemistry of PVC manufacture is also reflective of the company’s approach to
business. The basic feedstock for its PVC plant, ethylene and chlorine, come
from its industrial alcohol plant at Panruti and its own chloralkali facilities
at Mettur and Karaikal.
The Chlorochemicals
Division of Chemplast, itself the result of backward integration by the group,
manufactures a wide range of products using a highly integrated manufacturing
process. These downstream products are either chlorine derivatives or chlorine
users in the production process.
The salt needed for chlorine
manufacture is supplied by Chemplast’s own salt fields at Vedaranyam.
The electrolysis process of
manufacturing chlorine, is power-intensive, but Chemplast is fully equipped to
generate sufficient captive power to meet its entire requirements.
All this makes Chemplast
one of the most integrated chemical plants in the country with a closed
manufacturing loop.
Between the two main
businesses, Chemplast's product range falls into five distinct groups — PVC
Resins, Caustic Soda/ Chlorine, Chlorinated Solvents, Refrigerant Gases and
Silicon Wafers.
The manufacturing
facilities are located at Mettur and Panruti in Tamil Nadu and Karaikal in
Pondichery.
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.46.43 |
|
UK
Pound |
1 |
Rs.87.43 |
|
Euro |
1 |
Rs.59.80 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP
CAPITAL |
1~10 |
2 |
|
OPERATING
SCALE |
1~10 |
2 |
|
FINANCIAL
CONDITION |
|
|
|
--BUSINESS
SCALE |
1~10 |
2 |
|
--PROFITABILIRY |
1~10 |
2 |
|
--LIQUIDITY |
1~10 |
2 |
|
--LEVERAGE |
1~10 |
2 |
|
--RESERVES |
1~10 |
2 |
|
--CREDIT
LINES |
1~10 |
2 |
|
--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 |
YES |
|
--OTHER
MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
22 |
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 |