MIRA
INFORM REPORT
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Report Date : |
06.12.2007 |
IDENTIFICATION
DETAILS
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Name : |
KIRLOSKAR OIL ENGINES LIMITED |
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Registered Office : |
Laxmanrao Kirloskar Road, Khadki, Pune – 411 003, Maharashtra |
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Country : |
India |
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Financials (as
on) : |
31.03.2007 |
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Date of Incorporation : |
13.06.1978 |
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Com. Reg. No.: |
11-88972 |
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CIN No.: [Company
Identification No.] |
L29112MH1978PLC088972 |
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TAN No.: [Tax Deduction
& Collection Account No.] |
NSKK00041G |
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Legal Form : |
A Public Limited Liability Company. The company's shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing and Selling of Internal Combustion Diesel Engines, Bimetal Bearings and Generating Sets. |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
RATING |
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 : |
USD 34000000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is an old established company of Kirloskar Group. Available information indicates high financial responsibility of the company. Financial position of the company is good. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealing at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Laxmanrao Kirloskar Road, Khadki, Pune – 411 003, Maharashtra, India |
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Tel. No.: |
91-20-25815341/ 0341/2310341 |
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Fax No.: |
91-20-25813208/ 0209 /2313208/9 |
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E-Mail : |
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Website : |
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Head Office : |
C-13, Pannalal Silk Mills Compound, Lal Bahadur Shastri Road, Bhandup, Mumbai – 400 078, Maharashtra |
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Tel. No.: |
91-22-25923837/25963838 |
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Fax No.: |
91-22-25672693/25946969 |
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E-Mail : |
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Factory : |
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Area : |
595735 sq.mtrs (owned) and 394041sq.mtrs. (Leased) |
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Branches : |
Located at : Pune |
DIRECTORS
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Name : |
Mr. Atul C. Kirloskar |
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Designation : |
Chairman and Managing Director |
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Profiles : |
He has began his
career with the erstwhile Kirloskar Cummins Limited in the year 1978, where he
started out as a trainee. In December, 1981 he was appointed as the Chief
Executive of Cummins Diesel Sales and Service. On 1st
November, 1984 he was appointed as the Executive Vice President of Company. He was co-opted
on the Board of company on 6th August, 1985 wherin he took over as
the Managing Director. In 1988, he became the Vice Chairman of company and
held the position till 25th July, 1988 when he was appointed
Chairman of the Company. He is a member of
the World Economic Forum Chairman of the Defence Sub-Committee and National
Committee Member of Confederation of Indian Industries (CIIS). In September,
2002 he was elected as President of Mahratta Chamber of Commerce Industries
& Agriculture (MCCIA) for a period of two years. |
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Name : |
Mr. Sanjay C. Kirloskar |
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Designation : |
Vice Chairman |
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Name : |
Mr. Gautam A. Kulkarni |
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Designation : |
Joint Managing Director |
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Age : |
45 years |
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Profile : |
He has started his career in 1978 as a trainee in the Company. He underwent extensive training in the servicing department, production and techcentre (R & D) until 1983. In 1983, he was assigned to took after Kirloskar Filters Limited (KFL) and appointed its’ Chief Executive. Soon after on 2nd April 1984, he was appointed as the Managing Director of KFL. During his tenure at KFL the sales income grew from 125 mm to 600 mm. On 1st May, 1992, he was appointed as the Vice President of Kirloskar Brothers Limited. While in KBL, he was attached to the corporate office of the group. In 1998, he resigned as the Vice President of Kirloskar Brothers Limited. On 20th August, 1998 he was appointed as the Joint Managing Director of Kirloskar Oil Engines Limited, Wherein he focused on three major aspects in turning around the company.
In July 2000, he has been co-opted as a director on the Board of Kirloskar Brothers Limited and had been appointed the Vice Chairman. |
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Name : |
Mr. Rahul C. Kirloskar |
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Designation : |
Director (Exports) |
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Qualification: |
B. S. (Mechanical Engineering), USA |
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Profile : |
He is a top notch technocrat and has been associated with the Kirloskar Group of Companies for more than twelve years at senior levels in different capacities. Presently, he is working as the Director (Export) of the company. He actively participated in weeklong course of top management professionals of major international companies on Total Quality Management (TQM) in Japan, conducted by Japanese Union of Scientists and Engineers (JUSE). The course exposes professionals, who are quality conscious, to the latest methods prevailing in Japan in TQM. |
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Name : |
Mr. V. K. Bajhal |
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Designation : |
Director |
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Name : |
Dr. N. A. Kalyani |
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Designation : |
Director |
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Name : |
Mr. H. M. Kothari |
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Designation : |
Director |
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Name : |
Air Marshal Y. V. Malse (Retd.) |
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Designation : |
Director |
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Name : |
Mr. P. G. Pawar |
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Designation : |
Director |
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Name : |
Mr. A. N. Alwani |
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Designation : |
Director (Finance) [upto 31.08.2005] |
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Name : |
Mr. U. V. Rao |
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Designation : |
Director (w.e.f. 6th May 2002) |
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Name : |
Mr. D. R. Swar |
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Designation : |
Director (Large Engines, Auto Components Business Groups and HR) |
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Age: |
58 years |
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Qualification: |
B.E. (Mech.) |
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Experience: |
34 years |
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Date of Joining: |
25.08.87 |
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Previous Employment: |
Purchase Manager,
Ruston and Hornsby (India) Limited |
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Profile: |
He has started
his career in the Company from 25th August, 1987 as Associate Vice
President (Materials). After few years in company, he was assigned to took
after manufacturing, marketing and services of medium enginees as Vice
President (Engines & SBU Head) |
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Name : |
Mr. R. R. Deshpande |
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Designation : |
Director [Medium and Small Engines] |
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Name : |
Mr. Vikram S. Kirloskar |
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Designation : |
Director (w.e.f. 19th May, 2004) |
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Other personnel |
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Name : |
Mrs. Aditi Chirmule |
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Designation : |
Assistant Company Secretary |
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Name: |
Mr. R. Shrinivasan |
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Designation: |
Director |
KEY EXECUTIVES
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Name: |
Mr. Sanjay D.
Parande |
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Designation: |
Chief Financial
Officer |
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Name: |
Ms. Aditi
Chirmule |
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Designation: |
Company Secretary
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SHAREHOLDING
PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters |
59214695 |
60.99 |
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Resident Individuals |
15484405 |
15.95 |
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Private Corporate Bodies |
5971004 |
6.15 |
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Financial
Institutions |
12161720 |
12.53 |
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Nationalized
and other Banks |
81890 |
0.08 |
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FIIs and NRIs |
4172476 |
4.30 |
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TOTAL |
97086190 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and Selling of Internal Combustion Diesel Engines, Bimetal Bearings and Generating Sets. |
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Products : |
Products Description - ITC Code Internal Combustion Diesel Engines 84.08 Bimetal Bearings 85.09 Generating Sets 85.02 Cast Iron Castings and Investment/Steel Castings 732599.09 Medium/Small/ Large Engines -- Valves -- Bearings and Bimetal strips -- Auto Components -- |
PRODUCTION STATUS
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Particulars |
Unit
|
Licensed Capacity |
Installed Capacity |
Production meant for sale |
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Engines between 2.5 HP to 740 HP ( a ) |
Nos. |
271400 |
113394 |
113394 |
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Engines above 2400 HP to 10000 HP(a) |
Nos. |
26 |
5 |
5 |
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Generating Sets between 5 KVA to 600 KVA (
a ) |
Nos. |
11800 |
5474 |
5474 |
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Generating Sets between 1 .6 MW to 4.4 MW
( a ) |
Nos. |
14 |
6 |
6 |
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Bimetal Bearings & Engine Valves ( a )
and ( j ) |
Nos. [ooo’s] |
105050 |
42707 |
42707 |
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Bimetal Strip-( a ) and © |
MT |
11981 |
2809 |
2808 |
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C.I. Castings |
MT |
26200 |
12889 |
12889 |
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Investment Steel Castings |
MT |
100 |
106 |
106 |
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Electricity |
Kwh [ooo’s] |
135000 |
54822 |
54822 |
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Pump Sets |
MT |
40300 |
- |
- |
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R Type Engines ( f ) |
Nos. |
8000 |
8000 |
- |
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Air Compressors up to 1 000 cfm |
Nos. |
500 |
500 |
- |
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Diesel/electric compressors 30 to 2500 cfm |
Nos. |
500 |
500 |
- |
|
Garage compressors above 5 HP and parts |
Nos. |
250 |
250 |
- |
|
Air receiver, inter coolers, heat
exchangers and parts thereof |
Nos. |
500 |
500 |
- |
|
Car lifts, washers and lubricants
equipments |
Nos. |
300 |
300 |
- |
|
Aluminium Castings |
MT |
NA |
300 |
- |
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Agricultural Implements |
MT |
200 |
200 |
- |
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Self Priming Pumps |
Nos. |
3500 |
3500 |
- |
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Camshafts |
Nos. |
49500 |
- |
- |
GENERAL
INFORMATION
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No. of Employees : |
2684 persons (1581 persons in factory, 601 persons in office and 502 others.) |
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Bankers : |
Tel. No. 91-22-22810962 Facility : Fund and Non fund based
Tel. No. 91-20-5538470 Facility : Fund and Non fund based
Tel No. 91-20-6215284 Facility : Fund and Non fund based
Tel No. 91-20-5673008 Facility : Fund and Non fund based
Tel No. 91-20-5817225 Facility : Fund and Non fund based
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Facilities : |
-- |
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Banking Relations
: |
Satisfactory |
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Auditors : |
Dalal and Shah Chartered Accountants |
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Associates/Subsidiaries : |
- Pig Iron and Castings
- Electronic goods - Kirloskar Brothers Limited - Pumps
- Bearings
- Machinery
- Compressors
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CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
110000000 |
Equity Shares |
Rs. 2/- each |
Rs. 220.000 millions |
|
5000000 |
Preference Shares |
Rs. 10/- each |
Rs.
50.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
19420000 |
Equity Shares |
Rs.10/- each |
Rs.194.200 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
SHAREHOLDERS
FUNDS |
|
|
|
|
1] Share Capital |
194.200 |
194.173 |
197.173 |
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2] Reserves &
Surplus |
8319.300 |
6989.572 |
5426.582 |
NETWORTH
|
8513.500 |
7183.745 |
5623.755 |
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Deferred Tax |
0.000 |
97.492 |
66.671 |
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LOAN FUNDS |
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1] Secured Loans |
994.200 |
668.350 |
514.922 |
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2] Unsecured
Loans |
68.900 |
1.657 |
2.321 |
TOTAL BORROWING
|
1063.100 |
670.007 |
517.243 |
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TOTAL
|
9576.600 |
7951.244 |
6207.669 |
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APPLICATION OF
FUNDS |
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FIXED ASSETS [Net
Block] |
2749.200 |
1693.772 |
1318.126 |
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Capital
work-in-progress |
572.800 |
228.433 |
128.746 |
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INVESTMENTS |
5173.900 |
4998.882 |
3784.148 |
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CURRENT ASSETS,
LOANS & ADVANCES |
|
|
|
|
Inventories |
1483.600 |
1109.364 |
866.122 |
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Sundry Debtors |
3892.500 |
3084.304 |
2197.738 |
|
Cash & Bank
Balances |
413.000 |
176.389 |
66.926 |
|
Other Current
Assets |
0.000 |
206.511 |
275.001 |
|
Loans &
Advances |
2909.800 |
687.905 |
517.447 |
|
Total Current Assets |
8698.900 |
5264.473 |
3923.234 |
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|
|
|
|
|
Current
Liabilities |
5057.200 |
3642.098 |
2452.746 |
Provisions
|
2561.000 |
592.218 |
496.839 |
Total Current
Liabilities
|
7618.200 |
4234.316 |
2949.585 |
Net Current Assets
|
1080.700 |
1030.157 |
973.649 |
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|
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|
|
|
MISCELLANEOUS
EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
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TOTAL
|
9576.600 |
7951.244 |
6204.669 |
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
Sales Turnover [including other income]
|
22001.000 |
14712.073 |
12060.157 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
2392.800 |
2459.695 |
2012.778 |
Provision for Taxation
|
608.700 |
453.821 |
273.832 |
Profit/(Loss) After Tax
|
1784.100 |
2005.874 |
1738.946 |
|
|
|
|
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Export Value
|
NA |
1302.198 |
917.599 |
|
|
|
|
|
Import Value
|
NA |
2833.005 |
2230.542 |
|
|
|
|
|
Total Expenditure
|
19790.000 |
13227.319 |
11043.806 |
QUARTERLY RESULTS
|
PARTICULARS |
|
30.06.2007 1st
Quarter |
30.09.2007 2nd
Quarter |
|
Sales Turnover |
|
5019.500 |
5560.200 |
|
Other Income |
|
26.900 |
46.400 |
|
Total Income |
|
5046.400 |
5606.600 |
|
Total Expenditure |
|
4503.200 |
4931.800 |
|
Operating Profit |
|
543.200 |
674.800 |
|
Interest |
|
35.300 |
30.700 |
|
Gross Profit |
|
507.900 |
644.100 |
|
Depreciation |
|
99.000 |
103.400 |
|
Tax |
|
89.400 |
204.100 |
|
Reported PAT |
|
273.600 |
336.600 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.11 |
0.09 |
0.08 |
|
Long Term Debt -Equity Ratio |
0.09 |
0.06 |
0.03 |
|
Current Ratio |
1.12 |
1.17 |
1.25 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
4.08 |
3.38 |
3.12 |
|
Inventory |
15.96 |
15.50 |
15.70 |
|
Debtors |
5.93 |
5.80 |
6.18 |
|
Interest Cover Ratio |
15.17 |
15.88 |
13.53 |
|
Operating Profit Margin (%) |
12.51 |
12.01 |
9.60 |
|
Profit Before Interest and Tax Margin (%) |
10.55 |
10.11 |
7.48 |
|
Cash Profit Margin (%) |
9.30 |
9.58 |
8.10 |
|
Adjusted Net Profit Margin (%) |
7.34 |
7.67 |
5.99 |
|
Return On Capital Employed (%) |
25.06 |
22.11 |
17.83 |
|
Return on Net Worth (%) |
19.35 |
18.34 |
15.47 |
LOCAL AGENCY
FURTHER INFORMATION
Company Profile:
The 1940s era heralded the end of princely patronage for enterprise, Mr. Shantanurao Kirloskar, the eldest son of the founder of Kirloskar Group travelled to Pune to initiate a new aspect of group's activities - diesel engines. Mr. Shantanurao had to face the tangle of red tape and public resistance for acquisition of land for industrial purposes. He had to convince that factories have a longer life than humans and he managed to get a place for the subject, twelve months after signing an agreement with Associated British Oil Engines Export Limited, UK. The company was inaugurated in 1946.
Incorporated in January 1978 as private limited company, Prashant Khosla Pneumatics (PKPL) became a public limited company in October 1980. The company was a wholly owned subsidiary of the Delhi based K. G. Khosla Compressors, a pioneer in the air compressor industry.
Subject, the Pune based Kirloskar Group Company, acquired PKPL in 1994, as per the BIFR-approved rehabilitation package. The company reverse merged with Prashant Khosla Pneumatics, which enabled the company to make tax saving, which would otherwise have been difficult. After the reverse merger, the company's name was changed to the present.
The company has two manufacturing units in Nashik, Maharashtra. One is a 100% EOU and the other caters to the domestic market. The company started off with the manufacture of air and gas compressor and their accessories. In 1990, it diversified into the manufacture of diesel gensets in technical collaboration with Man B and W Diesel, Germany.
Recession set in soon after the company started manufacturing diesel gensets in 1990. The problems intensified and the company was referred to the BIFR. The problems were caused mainly due to the investments the company had made in the building and plant & machinery, which it could not commercialise.
In 1996-97, Kirloskar Filters was merged with the company and transferred to a new company, Kirloskar Knecht Filters, which is a joint venture promoted in technical and financial collaboration with Knecht Filterwerke GmbH, Germany. The company has also joined hands with Toyoda Automatic Loom Works, Japan for the manufacture of textile machinery.
During the year 1999-2000, the company shifted the small engines business unit from its’ factory at Khadki to Fursungi, on the outskirts of Pune.
The company received order worth Rs. 643.0 millions from the shipyard making vessels from Indian Navy and Coast Guard as the companies 1600 HP to 7200 HP were well accepted by them. The new plant at Fursungi received the ISO 9001 certification in the first year of its operations. The company terminated its agreement with Mahle Filtersystemse GmbH from May, 2002 and accordingly the company sold its shareholding in KMFSPL to MAHLE and the management of KMFSPL rest with MAHLE.
The engines developed by the company is according to Tier II norms and its engines were approved by the Emission Protection Agency of United States.
Director’s Report
-
Management
Discussion and Analysis:
The operations of the Company comprise of Engines and Auto Components. This business
segmentation forms the basis for review of operational performance.
Industry Overview:
During the year under review, the growth in the Indian economy
continued. Some sectors like services and construction grew more than the
average economic growth. As a result, the capital goods sector continued to
grow steadily.
The Central and State Governments continued to give priority to agriculture,
road construction, housing and other infrastructure development. The effect of
such investments was noticeable in the economy.
This vibrant economic scenario generated good demand for power. As supply from
the grid was inadequate and with frequent interruptions, users were required to
rely on standby powerfrom generating sets. The rising living standard in semi-urban
and rural areas is also resulting in demand for generating sets. The telecom
industry's need for power increased remarkably and the industry will continue
to require standby generating sets. The demand for construction and material
handling machinery and automobile components will also continue to be
robust.
The demand for irrigation pumpsets was stagnant in last two years. However, the
year under review saw the demand grow by 12%. The portable and compact pumpsets
at affordable prices are driving the growth of the sector. New product
development targeted at this growing segment is nearly complete and launch of
these new products is scheduled in near future.
The revised emission and noise regulation issued by Ministry of Shipping, Road
Transport and Highways concerning diesel engine driven Construction Equipment
Vehicles is scheduled to come in effect starting 1 October 2007. The industry
is required to complete the development of engines and obtain certification for
its products by conducting tests of engines as fitted on Construction Equipment
Vehicles.
The overall demand from all sectors of economy in which the Company operates,
continues to grow robustly. However, one needs to be watchful of the impact of
the rising interest rates.
Company Performance:
During the year under review the Company achieved sales of Rs.18,830 Million
(Rs.13,953 million) resulting in increase in sales by 35% over the previous
year.
The profit before tax is Rs.2,395 million (Rs.2,460 million) after providing
for depreciation of Rs.318 million (Rs.280 million). Analysis for both
segments, Engines and Auto Components is presented below.
Segment-wise Operational Performance
Engines:
The sales of engines registered an increase of 45% at Rs.16,500 million in the
year under review (Rs.11,412 million), crossing the Rs.15 billion mark for the
first time.
In the agricultural sector, the engines are used in the farm machinery and farm
tractors. In the lower end of the range, there is competition from domestic players
and from Chinese imports, while in the upper end of the range, the Company
faces competition from the domestic players. The Company continues to expand
its market share by in-depth and effective marketing activities in the
potential villages, and offer products for each user segment while improving
distribution network in depth, as well as quality and service. The Company's
sales grew in line with the market at 12%.
The Company introduced two new engines and pumpsets in this market. These were
very successful and captured share of 19% in the very first year of the market
introduction.
Affordable, compact and portable pumpsets drive the growth in this market.
Thus, two years ago the Company had started the design of less material
intensive products to meet the price levels desired by farmers. These products
are being tested in field for market launch in near future.
The Farm Tractor market grew by 8% in the year under review. However, the
market share of the Company's principal customer, Punjab Tractors Limited,
stagnated. As the supply of engines to other tractor manufacturers has also
started in previous year, sales to this segment are expected to grow in coming
years.
The Company is the leading player in the Power Generation
segment with the widest range in the industry - 3 to 6300 kVA. The growing
economy is pushing up the demand for power but the grid is already starved of
power. Thus, there is growing dependence on standby power from Diesel
Generating Sets. As a result, the Power Generation market experienced high
growth in the year under review mainly due to demand from manufacturing,
telecommunication, retail, Information Technology Enabled Services (ITES), and
services sector, resulting in an increase in sales to the power generation segment
by over 66% as compared to the previous year.
The 'Kirloskar Green' brand under which gensets are marketed continues to be
the most preferred brand in India, and is also selling in selected countries.
In the year under review, the Company introduced 'Kirloskar Green' generating
sets in 3 potential countries. The exports of generating sets also grew in the
year under review.
Due to its intense marketing and sales efforts, the Company sold 7 generating
sets in 1600 to 6300 kVA range in the year under review, and the Company has a
healthy order board for these.
The engines are also used for industrial and construction machinery. The
Directors assess that the manufacture of the Construction and Material Handling
Equipment has good growth prospects in the country. The exports of these
equipments by OEM customers have also started. In the year under review, there
was robust demand from this sector. While the market grew by about 40%, the
Company's sales to this sector grew by 52%.
The Company is an established supplier to the Indian Armed Forces for decades
and the sales to the Armed Forces continue to register steady increase
The engines in the output range 2400 to 11000 hp are sold for marine propulsion
and marine power generation applications in addition to land based
power-generating sets in 1600 to 6300 kVA. The Company has healthy order board
from marine sector as a result of the order worth Rs. 2,500 million received in
the year under review. This order is to be executed in 3 years.
The Company manufactured for the first time, a 20 cylinder, model PA6STC engine
for Offshore Vessel of Indian Coast Guard. The engine delivers 11,000 hp and
the first ship set consisting of 2 engines was delivered to the shipyard ahead
of schedule.
Another engine model manufactured with the latest technology, 12 cylinder,
model PA6STC was successfully tested in presence of representatives of Indian
Navy, Garden Reach Shipbuilders and Engineers, Kolkatta and DCN, France. This
is the first of the 16 engines on order, and stringent tests included recording
of structure borne and airborne noise at various poweroutputs and speeds.
A significant breakthrough was achieved by the Company in securing orders
for standby diesel generating sets for Nuclear Power Plants being installed by
Nuclear Power Corporation Limited This breakthrough is expected to provide
growing business in coming years due to the Nuclear Power programme of the
Government of India.
The implementation of the world class Customer Relationship Management (CRM)
solution at Service Dealers and field service personnel has now reached large
percentage of Indian population of the engines. The CRM has started resulting
in increased satisfaction of customers with the Company's products and
services, which in turn will lead to sustainable long-term market leadership.
Coupled with the CRM initiative, the Company made specific efforts to improve
spare parts availability and also took focussed programmes to improve service
network and customer contact. Due to these efforts, the sales on engine spare
parts grew by 28% as compared to the previous year.
Auto Components:
The buoyant automobile market, especially commercial vehicle and
car markets, grew robustly in the year under review. However, the 'after-market'
continues to stagnate. Thus, the Company's sales to OEM market increased by 37%
as compared to industry growth of 15% and sales to 'after-market' reduced due
to reduced overhauling activity of heavy and light commercial vehicles. The
overall growth in sales was 17% at Rs.1,292 million over the previous year
(Rs.1,103 million).
It is noteworthy that seven leading Automotive OEM customers
have increased purchases from the Company due to superior service, near zero defects,
and quicker product development. Additionally, the Company has secured orders
for four new vehicles.
The sales of engine valves registered a growth of 17% in the year under review.
Three new OEM customers were also secured in the year.
Other Businesses:
The Company is also in the business of trading in oil and power generation and
was in the business of manufacture of grey iron castings for part of the year
under review.
The oil trading business caters to engine and furnace users who require fuel
oil and also lubricants. The volatile oil prices in the year impacted this
business, and it registered a decrease of 9% in the year under review.The
casting business is in need of new technology and has synergy with the business
of Kirloskar Ferrous Industries Limited Thus, effective 1 January 2007, the
Company exited gray iron casting business by selling it to Kirloskar Ferrous
Industries Limited for a consideration in cash of Rs.210 million.
The Power business is being de-emphasized for last few years, as it is not
viable. Investments in Engines Segment On 26 March 2007, the Company executed a
Memorandum of Understanding with Government of Maharashtra to set up an engine
manufacturing plant and Export Oriented Unit (EoU) for generating sets at MIDC
Kagal in Kolhapur district. The capacity of the plants will be 100,000 engines
and 12,000 generating sets per year. This capacity addition to the engine
manufacturing capacity of 80,000 engines per year at Khadki, Pune will result
in total capacity to manufacture 180,000 engines in 20 to 720 hp range. The
Company expects to fully utilise the engine and generating set manufacturing
capacity in 3 to 4 years.
The total investment of Rs.5,500 million at Kagal is funded from internal
accruals and debt.
Research and Engineering:
The Company keeps the engines up to the mark by meeting emission norms required
for domestic and export markets. Starting January 2007, new emission norms are
applicable for the power generation engines in Europe. The Company has
successfully upgraded selectfamilies of engines to the required emission
standards and will continue to export to Europe.
The revised emission and noise regulation by Ministry of Shipping, Road
Transport and Highways concerning diesel engine driven Construction Equipment
Vehicles is scheduled to come in effect starting 1 October 2007. The Company is
well prepared to obtain the required certification in time.
To meet requirements of new high performance diesel engines and 'lead free'
legislative norms coming up in different parts of world, new bearing materials
are to be developed. The required infrastructure for development of such
materials is being put in place and will be operational soon.
The Company has been selected as design partner for a new engine valve
development initiated by one of the big three automobile manufacturers in the
world. This partnership starts from engine's conceptual design stage.
Exports:
In the year under review, there was growth of 8% at Rs.1,390 million (Rs.1,286
million) in exports of the Company. The dip in export growth was due to certain
Institutional Orders not materialising in time. The Company believes that
growth momentum in exports established by the Cumulated Annual Growth Rate
(CAGR) of 32% over last 3 years will continue.
While the Institutional Orders were delayed, the Company's initiative to
increase exports by developing OEM customers continues and the growth in sales
to OEM customers was 88% in the year under review over the previous year. In
the coming years, sales to OEMs will form a larger share of exports.
The sales through distributors in the traditional markets of the Company grew
by 8% in the year under review as compared to the previous year.
The Company sees good opportunities for growth in sales of Kirloskar GREEN
branded generating sets. These products are now selling in 42 countries.
Telecom segment is one of the targets of the Company to sell generating sets.
The sales have already started to customers in South East Asia, Africa and the
Indian Sub-Continent. An Export Oriented Unit (EoU) with capacity to
manufacture 12,000 generating sets per year is being set up to cater to the
growing sales.
While sale of engines to OEM Customers and sales of generating sets increase,
the essential and time-consuming activity of creating after - sales service
network in chosen overseas markets continues. In the year under review, the
Company strengthened its presence in South Africa, Saudi Arabia, Iran, Nigeria
and United Arab Emirates.
The Auto component business recorded a growth of 40% over the previous year and
increased its presence in the after market segment in Middle EastAsia and
Europe.
To meet the growing demand for engine valves, the Company is
setting up Export Oriented Unit (EoU). It expects to start invoicing from the
EoU in the current year.
The Company has created a Strategic Business Unit for Exports to have a focused
attention on this important growth market.
The Board is confident that growth in exports will continue in the coming
years.
It is in trade terms with:-
v Aashish Enterprises
v Aask Engineers
v Accuferrous
v Accumax Industries
v Accure Machine Tools Reconditioners
v Admant Tools and Designers
v Adroit Engineers
v Advance Diesel Engines Private
Limited
v A D Wills Rowat (India) Private
Limited
v Advance Mechanical Works
v Advin Diesels
v Akar Tools Limited
v Ambaji Metal Industries
v Arun Engineering Works
v Ashok Enterprises
v B A Traders
v B. J. Enterprises
v Bharat Machine Tools
v C. P. Engineers
v Ishan Enterprises
v Itw Signode India Limited
v J. J. Filters
v Jay Casting Company
v K. T. Industries
v Kinetic Pistons
v Laxmi Engineering Works
v Laxmi Industries
v Leena Engineering Works
v Lonavala Engineering & Castings
v New Laxmi Industries
v Nirmitee Engineers
v Om Enterprises
v Paresh Enterprises
v Poona Coupling Private Limited
v Pore Industries
v Quality Castings
v Radhe Enterprises
v Raj Engineering works
v Rajavir Industries
v Rico
v Rocket Engineering Corporation
Private Limited
v S. B. Founders
v Sai Castings Private Limited
v Samir Castings Private Limited
v Santosh Engineering Works
v Shivkrupa Enterprises
v Shivshakti Engineering Works
v Shree Engineering Works
v Shree Kartik Engineering Works
v Shree Padma Engineers
v Shree Rameshwar Engineering Works
v Shri Ganesh Enterprises
v Shri Industries
v Sita Foundry
v Sri Laxmi Spares Private Limited
v Super industries
v Suyash Castings Private Limited
v Talab Engineering Company
v Tulsi Industrial Corporate
v V I N Enterprises
v Victor Enterprises
v Vikas Industries
v Vinayak Industries
The company’s fixed assets of important value include land (freehold and leasehold), buildings, plant and machinery including computer, air conditioning plant, electrical installation, furniture and fixture, vehicles and aircrafts and drawings and designs.
AS PER WEBSITE
Incorporated in Jun.'78 as a private limited company,
Prashant Khosla Pneumatics (PKPL) became a public limited company in Oct.'80.
The company was a wholly-owned subsidiary of the Delhi-based K G Khosla
Compressors, a pioneer in the air-compressor industry.
Kirloskar Oil Engines (KOEL), the Pune-based Kirloskar group company,
acquired PKPL in 1994, as per the BIFR-approved rehabilitation package. KOEL
reverse-merged with Prashant Khosla Pneumatics, which enabled KOEL to make tax
savings, which would otherwise have been difficult. After the reverse merger,
the name of the company was changed to Kirloskar Oil Engines.
The company has two manufacturing units in Nashik, Maharashtra. One is a 100%
EOU and the other caters to the domestic market. The company started off with
the manufacture of air- and gas-compressors and their accessories. In 1990, it
diversified into the manufacture of diesel gensets in technical collaboration
with Man B and W Diesel, Germany.
Recession set in soon after the company started manufacturing diesel gensets in
1990. The problems intensified and the company was referred to the BIFR. The
problems were caused mainly due to the investments the company had made in the
building and plant and machinery, which it could not commercialise.
In 1996-97, Kirloskar Filters was merged with the company and transferred to a
new company, Kirloskar Knecht Filters, which is joint venture promoted in
technical and financial collaboration with Knecht Filterwerke Gmbh Germany. KOEL
has also joined hands with Toyoda Automatic Loom Works, Japan for the
manufacture of textile machinery. During 1999-2000, the company shifted the
small engines business unit from the its factory at Khadki to Fursungi, on the
outskirts of Pune
The company received orders worth Rs.634 Million from the shipyard making
vessels from Indian Navy and Coast Guard as the companies 1600 HP to 7200 HP
were well accepted by them.The new plant at Fursungi received the ISO 9001
certification in the first year of its operations. The company terminated its
agreement with Mahle Filtersysteme GmbH from May 2002 and accordingly the
company will sell its shareholding in KMFSPL to MAHLE and the management of
KMFSPL will rest with MAHLE.
The engines developed by the Company is according to Tier II norms and its
engines were approved by the Emission Protection Agency of United States.
During 2003-04, the Company obtained license to trade in Power.
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.39.47 |
|
UK Pound |
1 |
Rs.80.09 |
|
Euro |
1 |
Rs.57.65 |
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 |
5 |
|
--RESERVES |
1~10 |
5 |
|
--CREDIT LINES |
1~10 |
5 |
|
--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 |
|
43 |
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 |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|