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MIRA
INFORM REPORT
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Report Date : |
05.02.2007 |
IDENTIFICATION
DETAILS
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Name : |
DALMIA
CEMENT (BHARAT) LIMITED |
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Registered Office : |
P. O. Dalmiapuram,
Tiruchirapalli District - 621651, Tamilnadu |
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Country : |
India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
01.04.1951 |
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Com. Reg. No.: |
18-640 |
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CIN No.: [Company Identification No.] |
U26942TN1951PLC000640 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CHED03385E |
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Legal Form : |
Public limited liability company. The company's shares are listed on the
Stock Exchanges |
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Line of Business : |
Engaged in manufacturing of cement,
magnesites, sugar, electronics, wind energy and refractories with an
installed capacity of 1034000 tons of cement per annum. |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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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
17000000 |
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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 a well-established and reputed company, having fine track. Available information indicates high financial responsibility of the company. Their trade relations are fair. Financial position is good. Payments are correct and as per commitments. Subject can be considered good for normal business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
P. O. Dalmiapuram,
Tiruchirapalli District - 621651, Tamilnadu, India |
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Tel. No.: |
91-4339- 235123 |
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Fax No.: |
91-4329-235111 |
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E-Mail : |
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Website : |
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Head
Office : |
11th & 12th Floors, 'Hansalaya’, 15, Barakhamba Road, New Delhi – 110 001, India |
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Corporate
Office : |
P. O. Dalmiapuram, Tiruchirapalli Dist - 621651, Tamilnadu, India |
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Tel.
No.: |
91-4329-235123 |
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Fax
No.: |
91-4329-235111 |
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E-Mail
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Factory
1 : |
P. O. Dalmiapuram, Tiruchirapalli Dist - 621651, Tamilnadu, India |
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Tel.
No.: |
91-4329-235123 |
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Fax
No.: |
91-4329-235111 |
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E-Mail
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Plant
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Ø
Dalmiapuram
(Tamil Nadu) Dalmiapuram -621651, Dist.
Tiruchirapalli, Tamil Nadu Ø
Salem (Tamil
Nadu) Vellakkalpatti, P.O. Karuppur,
Salem-636012. Ø
Muppandal
(Tamil Nadu) Aralvaimozhy -629301 District
Kanyakumari (Tamil Nadu) Ø
Ramgarh (Uttar
Pradesh) Village Ramgarh - 261403, Tehsil Misrikh, District Sitapur (Uttar Pradesh) Ø
Bangalore
(Karnataka).
Plot No. 53, 54A, Electronics City, Hosur Road, Bangalore - 560100 |
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Branches
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Dalmia Cement
(Bharat) Limited Ramgarh Chinni
Mills Dalmia Cement
(Bharat) Limited Dalmia Cement
(Bharat) Limited |
SOLE PROPRIETOR/PARTNERS/DIRECTORS
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Name : |
Mr. P. K. Khaitan |
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Designation : |
Chairman |
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Name : |
Mr. N. Gopalaswamy |
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Designation : |
Whole Time Director |
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Name : |
Mr. Nilratan Khaitan |
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Designation : |
Director |
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Name : |
Mr. M Sankaranarayanan |
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Designation : |
Nominee of Unit Trust of India |
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Name : |
Mr. M. Raghupathy |
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Designation : |
Director |
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Name : |
Mr. Jagdish Sharan Baijal |
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Designation : |
Director |
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Name : |
Mr. M. H. Dalmia |
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Designation : |
Director |
MAJOR SHAREHOLDERS
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Names
of Shareholders |
No. of Shares |
Percentage of Holding |
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Promoters |
17341780 |
45.33 |
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Central/State Governments |
128155 |
0.33 |
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Mutual Funds |
72500 |
0.19 |
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Foreign Institutional Investors |
997338 |
2.61 |
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Banks |
81826 |
0.21 |
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Insurance Companies |
1779100 |
4.65 |
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Bodies Corporates |
5175963 |
13.53 |
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Overseas Body Corporates |
2466593 |
6.45 |
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NRI/Foreign National |
127823 |
0.33 |
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Individuals/Others |
10087027 |
26.37 |
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Total |
38258105 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Engaged in manufacturing of cement,
magnesites, sugar, electronics, wind energy and refractories with an
installed capacity of 1034000 tons of cement per annum. |
PRODUCTION
STATUS
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Particulars |
Unit |
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Installed Capacity |
Actual Production |
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Cement |
(‘000 Tonnes) |
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3500.00 |
1569.03 |
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Dead Burnt Magnesite |
(‘000 Tonnes) |
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72.00 |
19.85 |
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Multilayer Ceramic Chip Capacitors |
(Million Nos.) |
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120.000 |
6.40 |
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Chip Resistors |
(Million Nos.) |
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100.000 |
3.35 |
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Sugar |
(‘000 Tonnes) |
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7.50 |
84.15 |
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Mgo-C Bricks |
(‘000 Tonnes) |
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7.50 |
1.72 |
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Refractories |
(‘000 Tonnes) |
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N.A. |
29.21 |
GENERAL
INFORMATION
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No. of Employees : |
5000 |
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Bankers : |
Ø Punjab National Bank Ø Canara Bank Ø Corporation Bank Ø United Bank of India Ø State Bank of Travancore Ø BNP Paribas Ø ICICI Bank Limited Ø UTI Bank Limited |
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Facilities : |
Secured Loans :
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Banking Relations : |
Satisfactory |
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Auditors : |
S. S. Kothari Mehta & Company Chartered Accountants |
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Memberships : |
Confederation of Indian Industry |
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Associates/Subsidiaries : |
Associates Ø Rama Investment Company Private Limited Ø Puneet Trading & Investment Company Private Limited Ø Kavita Trading & Investments Company Private Limited Ø Sita Investment Company Limited Ø Mayuka Investments Limited Ø Kanodia Commercial Limited Ø Ankita Pratishtan Limited Ø Kajal (India) Limited Ø Himgiri Commercial Limited Ø Valley Agro Industries Limited Ø Jorthang Holdings Limited Ø Alirox Abrasives Limited Ø Shri Natraj Ceramic and Chemical Industries Limited Ø Shri Chamundeswari Minerals Limited Ø Shree Nirman Limited Ø Florence Pipes Limited Ø Dalmia Eletrodyne Technologies Limited Ø Webneuron Services Limited Ø ZipAhead. Com Limited Subsidiaries Ø Anupama Investment Limited Ø Kanika Investment Limited Ø Ishita Properties Limited Ø D.I.Properties Limited Ø Geetee Estates Limited Ø Avnija Properties Limited Ø Shri Rangam Properties Limited Ø Hemshila Properties Limited Ø Himshikhar Investment Limited Ø Dalmiya Sugars Limited Ø Dalmiya Minerals and Properties Limited Ø Arjuna Brokers and Minerals Limited Ø Shri Rangam Brokers & Holdings Limited Ø Seeta Estates & Brokers Limited Ø Shri Radha Krishna Brokers & Holdings Limited |
CAPITAL STRUCTURE
Authorised
Capital :
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No.
of Shares |
Type |
Value |
Amount |
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76516210 |
Ordinary Shares |
Rs. 2/- each |
Rs.153.032 millions |
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123483790 |
Unclassified
Shares |
Rs.2/- each |
Rs.246.968 millions |
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Total |
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Rs.400.000
millions |
Issued,
Subscribed & Paid-up Capital :
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No.
of Shares |
Type |
Value |
Amount |
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38258105 |
Ordinary Shares |
Rs.2/- each |
Rs.76.516 millions |
FINANCIAL DATA
[all figures are in Rupees
Millions]
ABRIDGED
BALANCE SHEET
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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 |
76.516 |
76.516 |
76.516 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
4206.137 |
3520.070 |
3428.817 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
4282.653 |
3596.586 |
3505.333 |
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LOAN FUNDS |
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1] Secured Loans |
6246.071 |
4483.905 |
2371.042 |
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2] Unsecured Loans |
585.714 |
504.519 |
453.642 |
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TOTAL BORROWING |
6831.785 |
4988.424 |
2824.684 |
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DEFERRED TAX LIABILITIES |
729.983 |
590.719 |
606.737 |
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TOTAL |
11844.421 |
9175.729 |
6936.754 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
6305.535 |
3908.407 |
3550.423 |
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Capital work-in-progress |
1580.318 |
2250.943 |
97.137 |
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INVESTMENT |
1752.832 |
873.293 |
1484.889 |
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DEFERREX TAX ASSETS |
6.737 |
13.473 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
1916.817
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1927.916 |
1633.876 |
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Sundry Debtors |
597.536
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516.999 |
261.489 |
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Cash & Bank Balances |
589.000
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228.048 |
278.838 |
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Other Current Assets |
0.000
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0.000 |
0.000 |
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Loans & Advances |
1459.426
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999.007 |
549.841 |
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Total Current Assets |
4562.779
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3671.970 |
2724.044 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
2037.927
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1239.955 |
603.053 |
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Provisions |
325.853
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302.402 |
338.355 |
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Total Current Liabilities |
2363.780
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1542.357 |
941.408 |
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Net Current Assets |
2198.999
|
2129.613 |
1782.636 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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Deferred Revenue Expenditure |
0.000 |
0.000 |
21.669 |
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TOTAL |
11844.421 |
9175.729 |
6936.754 |
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PROFIT
& LOSS ACCOUNT
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PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2003 |
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Sales Turnover [including other income] |
7207.998 |
5549.666 |
4928.521 |
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Profit/(Loss)
Before Tax |
1089.384 |
357.300 |
308.918 |
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Provision
for Taxation |
240.928 |
48.600 |
55.207 |
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Profit/(Loss)
After Tax |
848.456 |
308.700 |
253.711 |
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Export
Value |
434.049 |
772.024 |
22.033 |
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Import
Value |
37.907 |
41.764 |
251.510 |
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Total
Expenditure |
6118.614 |
5192.368 |
4619.603 |
QUARTERLY
RESULTS
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PARTICULARS |
30.06.2006 |
30.09.2006 |
31.12.2006 |
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Sales Turnover |
2077.400 |
2496.200 |
2310.500 |
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Other Income |
459.900 |
221.200 |
636.500 |
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Total Income |
2537.300 |
2717.400 |
2947.000 |
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Total
Expenditure |
1674.200 |
1784.000 |
1878.800 |
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Operating
Profit |
863.100 |
933.400 |
1068.200 |
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Interest |
127.600 |
77.700 |
141.700 |
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Gross Profit |
735.500 |
855.700 |
926.500 |
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Depreciation |
123.700 |
130.700 |
133.300 |
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Tax |
69.100 |
149.500 |
110.600 |
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Reported PAT |
502.800 |
520.000 |
648.400 |
200606 Quarter 1
Notes
Expenditure Includes
(Increase)/Decrease in stocks Rs 304.00 million Raw Materials Consumed Rs
266.30 million Salaries & Wages Rs 93.50 million Power and Fuel Rs 339.00
million Other Expenses Rs 671.40 million Tax Includes Provision for Current Tax
Rs 67.50 million Deferred Tax Rs 39.90 million Fringe Benefit Tax Rs 1.60
million EPS is Basic Status of Investor Complaints for the quarter ended June
30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints
Received during the quarter 62 Complaints disposed off during the quarter 62
Complaints unresolved at the end of the quarter Nil 1. The above results have
been taken on record by the Board of Directors in their meeting held on July
26, 2006 and have been reviewed by the Statutory Auditors of the Company. 2.
Proceeds from issue and allotment of 44,70,588 Equity Shares of Rs 2/- each at
a premium of Rs 260.43 per share on a preferential basis have been fully
utilized for the stated purpose for which it was raised. 3. Figures for
corresponding previous year / quarter have been regrouped and rearranged
wherever considered necessary.
200609 Quarter 2
Notes
Expenditure Includes
(Increase)/Decrease in stocks Rs 331.20 million Raw Materials Consumed Rs 272.10
million Salaries & Wages Rs 103.90 million Power and Fuel Rs 622.60 million
Other Expenses Rs 454.20 million Tax Includes Provision for Current Tax Rs
147.60 million Deferred Tax Rs 55.50 million Fringe Benefit Tax Rs 1.90 million
EPS is Basic Status of Investor Complaints for the quarter ended September 30,
2006 Complaints Pending at the beginning of the quarter Nil Complaints Received
during the quarter 76 Complaints disposed off during the quarter 76 Complaints
unresolved at the end of the quarter Nil 1. The above results have been taken
on record by the Board of Directors in their meeting held on October 12, 2006
and have been reviewed by the Statutory Auditors of the Company. 2. Figures for
corresponding previous year/periods have been regrouped and rearranged wherever
considered necessary.
200612 Quarter 3
Notes
EPS is Basic Status of Investor Complaints for the quarter ended 31.12.2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 41 Complaints disposed off during the quarter 41 Complaints unresolved at the end of the quarter Nil 1. The above results have been taken on record by the Board of Directors in their meeting held on January 15, 2007 and have been reviewed by the Statutory Auditors of the Company. 2. Results for the current quarter include the results of erstwhile subsidiary Dalmia Sugars Ltd which has been amalgamated with the Company in terms of the scheme of amalgamation approved by the Honorable Delhi High Court and Madras High Court. 3. Figures for corresponding previous year/periods have been regrouped and rearranged wherever considered necessary.
KEY
RATIOS
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PARTICULARS |
30.03.2006 |
30.03.2005 |
31.03.2004 |
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Debt-Equity Ratio |
1.95 |
1.52 |
1.17 |
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Long Term Debt-Equity Ratio |
1.87 |
1.47 |
1.04 |
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Current Ratio |
1.44 |
1.62 |
1.38 |
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TURNOVER RATIOS |
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Fixed Assets |
0.80 |
0.81 |
0.73 |
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Inventory |
3.39 |
2.91 |
2.82 |
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Debtors |
11.68 |
13.33 |
17.53 |
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Interest Cover Ratio |
3.16 |
2.59 |
1.56 |
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Operating Profit Margin(%) |
15.68 |
15.14 |
14.57 |
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Profit Before Interest And Tax Margin(%) |
11.39 |
11.23 |
9.81 |
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Cash Profit Margin(%) |
10.28 |
9.86 |
7.97 |
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Adjusted Net Profit Margin(%) |
5.98 |
5.95 |
3.22 |
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Return On Capital Employed(%) |
8.29 |
9.02 |
8.25 |
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Return On Net Worth(%) |
12.82 |
12.01 |
5.85 |
STOCK PRICES
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Face
Value |
Rs.10.00/- |
|
High |
Rs.404.90 |
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Low |
Rs.390.20 |
LOCAL AGENCY
FURTHER INFORMATION
Subject incorporated in 1951, is into manufacture of Cement, Sugar and Dead Burnt Magnetics. Apart from these the company is also into manufacture of Colour Television sets, radios, tape recorders and allied instruments.
Cement Division with 1.2 million tonne cement plant in Tamilnadu contributes
around 62% of the sales. Subject is one of the oldest players in Cement
Industry in Tamilnadu is known for the manufacture of special cements. These
basically find applications in airstrips, railway sleepers and oil wells. The
company has well known brands such as Dalmia Super Roof, Dalmia Foundations and
Vajram. Further the company is also in talks with couple of Cement Companies
operating mini cement plant in and around Andhra Pradesh, TamilNadu and Kerala
to market their products under its portfolio. In last two years the Company has
increased the proportion of its blended cement production to 53%. The rest is
split between OPC (ordinary portland cement), PPC (pozzolan portland cement),
slag and oil well cement. The company is also contemplating to expand the
cement capacity to 3.5 million tonne by setting up a brownfield project near
its existing facility at Dalmiapuram, Trichy and a 29 MW captive thermal power
plant at a total cost of Rs.5000 millions.
Sugar Division of the company is contributing around 30 % to the top line. The
sugar unit of the company with 5000 tonnes/ day crushing capacity is located at
Ramgarh in Uttarpradesh.
The Magnetic Division of the Company, which manufactures Dead Burnt Magnesite,
Monoliths and Magnesia Carbon Bricks. The demand for all the above three
products are closely linked to the fate of Steel Industry as the latter is the
exclusive consumer of Monoliths and Magnesia Carbon Bricks and major consumer
of Dead Burnt Magnesite. This division's contribution to the company’s topline
is mere 3 percent. The magnesite ore benefication plant of the company was
installed during FY 1984-85.
Other business operation of the company which includes Travel Agency(Govan
Travels), Electronic Goods, Multilayer Ceramic Chip Capacitors, Chip Resistors
etc contributes around 5 percent to the topline of the company. The Govan
Travels, an diversification of operation was started in 1970 in New Delhi. The
diversification into manufacture of Electronic Goods under the name of Dalmia
Electronics Corp was made in 1980 but commercial production starete in 1981.
The company has roped in Palomer System and Machines of USA as its technical
Collaborator for manufacture of Multi-layer Ceramic Chip Capacitors (MCCC), the
letter of intent is obtained in this regard on 1987-98, DCBL has also purchased
a Cashew factory at Kundara(in Kerala) in 1965 and renamed it as Dalmia
International.
The R&D of the company, through its own research, developed oil well
cement, class 'G' and also obtained rights to use the API (American Petroleum
Institute) monogram on its oil well cement.
During 1999-2000, Shri Rangam Investment ceased to be the subsidiary of the company due to merger of the same with Mayuka Investments.
BUSINESS
Subject is engaged in manufacturing of cement, magnesites, sugar, electronics, wind energy and refractories with an installed capacity of 1034000 tons of cement per annum.
Its fixed assets of important value include land, land (leasehold), buildings, plant and machinery, railway slidings, vehicles, furniture and fixtures and other assets.
CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES
The Company decided to infuse more equity by issuing forty four lakh
seventy thousand five hundred eighty eight (44,70,588) shares of face value Rs.
2 each at a premium of Rs. 260.43 per share to Actis and/or their nominees, a
leading private equity investor in emerging markets. Formal agreement to this
effect was signed on 24.04.2006
and the entire amount of approximately Rs.1173 million has been received by the
Company.
In terms of the resolution passed by the Shareholders in the Annual
General Meeting held on 27.09.2003, the Company applied for delisting of its securities
from dealings on the Calcutta Stock Exchange. The Company has received an 'in
principle' approval from the' Calcutta Stock Exchange in response to its
application for delisting of the securities.
INDUSTRIAL RELATIONS
The industrial relations during the year under review remained
harmonious and cordial, except for some minor incidents at Salem. The Directors
wish to place on record their appreciation for the excellent cooperation
received from all employees at various units of the Company.
SUBSIDIARIES
The Directors' Report and audited accounts of Anupama Investment
Limited, Kanika Investment Limited, Ishita Properties Limited, Shri Rangam
Properties Limited, Geetee Estates Limited, D.I. Properties Limited, Avnija
Properties Limited, Hemshila Properties Limited, Himshikhar Investment Limited,
Dalmia Sugars Limited, Arjuna Brokers & Minerals Limited, Shri Radha
Krishna Brokers & Holdings Limited, Shri Rangam Brokers & Holdings
Limited, Dalmia Minerals & Properties Limited, Seeta Estates & Brokers
Limited, Sri Kesava Mines & Minerals Limited, Sri Shanmugha Mines &
Minerals Limited, Sri Subramanya Mines & Minerals Limited, Sri Swaminatha
Mines & Minerals Limited, and Sri Madhava Minerals & Properties
Limited, subsidiaries of your Company, for the year ended 31.03.2006 are
enclosed in this annual report.
The Economy: On a High Growth Path
Fiscal 2005-06 has been the third consecutive year of excellent economic
performance for India. After a GDP growth of 8.5 per cent in 2003-04 and 7.5
per cent in 2004-05, India has achieved 8.1 per cent during the year. This is
the early estimate of growth by the Central Statistical Organization of the
Government of India. If the last few years are any indication, the final growth
figures for 2005-06 ought to
be in the region of 8.3 per cent.
This 8 per cent plus growth has been driven by industry as well as
services, and has resulted in an unprecedented improvement in demand across all
sectors, coupled with renewed business and consumer confidence. In 2005-06, manufacturing
grew at 9.4 per cent and construction, which is the end-use industry for the
company's cement operations, grew at 12.1 per cent. Growth in production of
cement is expected to exceed 11 per cent.
India, therefore, is clearly poised on a higher growth path. And while
it is too early to make a firm forecast about 2006-07, the general
consensus among economists is that India ought to again achieve 8 per cent
growth.
Their Businesses: Where Good has Got Even Better
Strong performance of the economy benefited the company in terms of
significantly increased demand for its products. There was a healthy growth in
demand for both cement and sugar, and realizations improved significantly in
the second half of the year.
Cement is the company's largest business with sales of Rs.3946 million
in 2005-06. It grew by 21.3 per cent over the previous year. After cement comes
sugar, which accounted for sales worth Rs.1,911 million in 2005-06, and grew by
43.1 per cent over 2004-05. Together, these businesses accounted for 90 per
cent of the company's turnover in 2005-06.
Other business, which includes magnesite, refractories and wind-farm,
registered Rs.650 million of sales in 2005-06, and accounted for the remaining
10 per cent of the company's overall turnover for the year.
Although 2005-06 saw an unprecedented increase in the prices of raw
materials and energy, the company successfully leveraged its scale and
production efficiencies — subject is one of India's most efficient companies in
both cement and sugar — to withstand these pressures and achieve significantly
higher profits as well as profit growth compared to the previous year.
The Cement Business
With a total capacity of 157 million metric tones (MMT) in 2005-06, the
Indian cement industry is the second largest after China, surpassing developed
nations like the USA and Japan. Although the per capita consumption has
increased from 28 kg in 1980-81 to around 120 kg in 2005-06, India's average
consumption is still very low. Thus, as incomes increase with India's economic
growth, the inevitable process of catching up with international averages will
drive future growth of the industry.
Capacity Production
2005-06 was an excellent year for the cement industry in India.
Consumption grew at over 12 per cent from 121 MMT to 136 MMT — as much as four
percentage points higher than the 8 per cent compound annual growth in domestic
cement consumption in the last decade.
This growth was accompanied with better capacity utilization, which has
steadily increased from 78.9 per cent in 2001-02 to 86.4 per cent in 2005-06.
The industry enjoyed favourable prices and impressive profit growth,
especially during the second half of 2005-06. Subject leveraged the
construction boom in India to achieve excellent results, which are given below.
Ø
Sales of the company's cement operations increased by 21.3 per cent —
from Rs.3254 million in 2004-05 to Rs.3946 million in 2005-06.
Ø
In terms of volume, sales grew by 12.4 per cent — from 1.40 million MT
to 1.58 million MT during the same period.
Ø
Capacity utilization increased from 93.5 per cent to over 100 per cent.
Indeed, the company was constrained by its capacity to further service its
markets and increase market shares. That is the reason for its proposed
capacity expansion, which is discussed later.
Cement Production
Cement: Manufacturing Capacity and Expansions
Their cement plant is located in Dalmiapuram, in the southern Indian
state of Tamil Nadu, with a total capacity of 1.5 million MT of finished cement
during 2005-06. This capacity no longer suffices to meet the region's growing
demand. To better leverage growth opportunities in the domestic market, subject
implemented an brown-field expansion plan of an additional 2 million MT. This
extra cement capacity was commissioned in April 2006 and will stabilize by the
end of the first quarter of 2006-07. Once fully operational, it will add
substantial scale to the current cement operations by taking the company's
manufacturing capacity to 3.5 million MT.
In order to meet the energy requirements of the expanded operations, the
company also commissioned a thermal power plant with a capacity of 27 MW during
2005-06. Around 85 per cent of the current power requirement of 35 MW for the
entire capacity of 3.5 million MT will be met by captive power generation. This
includes approximately 4 MW from the company's wind farm operations which has
an installed capacity of 16.5 MW. Captive power will not only ensure assured
electricity supply to the plant, but will also be more cost effective compared
to the tariff paid for power from the state grid.
Cement: Product Mix and Markets
Subject produces a diverse mix of cements, which include ordinary
Portland cement (OPC) and Portland pozzolana (fly ash blended) cement (PPC. The
company has well established brands such as Dalmia Superoofand Vajram, which are known for their
quality and command market premium.
The company also produces high-value special cements used in the
construction of oil wells, railway sleepers and air strips. These cements are
well established and respected brands in these product segments. In fact,
subject is one of the few manufacturers in the country that has the capability
of manufacturing such products.
Used for cementing walls of both on-shore and off-shore oil wells of
companies like ONGC and Oil India, oil well cenient manufactured by the company
was the first cement in India to receive the prestigious American Petroleum
Institute (API) certification, and continues to be the market leader in the
segment. Railway sleeper cement manufactured by the company is considered the
best. Pioneered by the company, it has been extensively used to replace wooden
railway sleepers for high speed trains, and is supplied to all major railway
sleeper manufacturers in India.
Going forward, Subject will continue to focus on its premium pricing
strategy by maintaining its focus on the high margin retail segment and further
building a pipeline of specialized product offerings.
A defining feature of the cement industry is it is clustered around
limestone deposits, which is the basic raw material in the manufacturing
process. Moreover, given prohibitive costs of long range transporting cement,
markets get geographically segmented and competition becomes localized. Since
the company's cement plant is located in the southern part of the country, it
is not surprising that Tamilnadu and Kerala are its main markets. With the
expected increase in capacity, subject will focus on also developing the
Karnataka market.
Given that their plant is located in Tamil Nadu, their medium term
strategy to concentrate on being a key regional player in South India,
especially in the markets of Tamil Nadu, Kerala and Karnataka. These are states
which are clocking GDP growth in excess of 6.5 per cent per annum; they are in
the midst of a construction boom; and they believe that the company has a
strong market and brand position to further leverage this regional growth.
Cement: Operations
Coal and power costs constitute the major share of total cement
manufacturing cost and, thus, are the most important determinants of operating
costs. The company has continuously taken initiatives to improve its energy
efficiencies. Power consumption in manufacturing cement has come down from 84
Kwh/MT in 2001-02 to 76 Kwh/MT in 2005-06. Overall energy consumption,
including coal used to fire the
kiln, has come down from 806 MKcal/MT in 2001-02 to 755 MKcal/MT in
2005-06.
Fuel prices have been ruling very high during the last couple of years.
Thus, despite greater efficiencies, energy costs have gone up. To economize on
such costs, efforts have been made to substitute higher priced fuel with
cheaper alternates such as pet-coke and lignite.
It is precisely to reduce the dependence on astronomically priced
furnace oil that the company commissioned its 27 MW captive thermal power plant
based on lignite during 2005-06.
Cement: Outlook
Growth of the cement business is inextricably linked to construction and
overall growth of the economy. As the economy continues to grow at over 8 per cent,
the company expects the cement industry to witness high growth in the future.
At the regional level, cement consumption in Tamil Nadu and Kerala has also
picked up during the year — growing at 12.6 per cent compared to 4.7 per cent
during the previous year and a CAGR of 7.5 per cent over the last decade.
As mentioned earlier, Subject commands a significant market share in its
key markets, and is confident of leveraging this growth with its recently
concluded expansion in cement capacity, excellent brand image and effective
distribution channels. They expect to carry forward their expertise,
efficiencies and profitability of their current operations over the much larger
capacity. Thus, they are optimistic about the outlook for the cement business
in 2006-07.
The Sugar Business
India is the largest consumer and the second largest producer of sugar
in the world with a total production of over 18 million MT in 2005- 06. The
outlook for sugar remain as bullish for 2006-07 as in 2005-06. This needs
explanation.
Sugar: A Bullish Global Scenario
Being the largest producer of sugar in the world, Brazil wields
significant influence over global prices. High oil prices have made it more
attractive to convert cane into ethanol, which is widely used in Brazil as an
automobile fuel. Flexi-fuel vehicles, which allow drivers to vary the amount of
gasoline or ethanol they use, account for 48 percent of car sales in the
country. In 2005-06, almost half of Brazil's cane output was directed to the
country's ethanol industry, which is the world's largest. Growth in ethanol
output has, in turn, reduced the production and export of sugar from Brazil.
This has sharply accentuated the demand-supply gap in the global sugar market,
and appreciably raised sugar prices, which have increased from US$275 in
September 2005 to US$480 in March 2006. Indeed, Brazil's biggest challenge in
2006-07 will be to allocate its cane output between meeting the growing
domestic ethanol demand and producing sugar at significantly higher world prices.
There are other factors that augur for a relatively long period of firm
sugar prices. The subsidised export of 6 to 7 million MT of beet-root based
white sugar by the European Union is also coming to an end. The EU has to
reduce its sugar subsidies by 36 per cent over the next four year beginning May
2006, in line with their commitments with the WTO. Consequently, the EU has
declared a much lower intervention price for 2006-07, with the aim to
discourage further planting of beet. This is expected to further widen the
demand-supply gap in the global sugar market, and hence maintain a high floor
on sugar prices.
Moreover, the most significant increase in demand for sugar is now
coming from the rapidly growing Asian countries, notably India and China. Sugar
consumption in developing countries is estimated to reach 100 million MT in
2006-07, with Chinese consumption forecastedto increase by 2.5 per cent to
reach 13.7 million MT, thanks to the increased demand from the processed food
sector and declining production of artificial sweeteners.
Further, with global supply deficits for 2005-06 and declining stocks in
China, India and Russia, all international sugar agencies and councils have
confirmed that prices are expected to be even firmer in 2006-07, as sugar consumption
continues to outstrip production for the third consecutive year.
The domestic market, too, is going through a similar demand-supply
imbalance. After two continuous years of poor performance due to drought
conditions and pest attacks in the sugar belts of the country, production of
sugar increased significantly during 2005-06, with output estimated at 19
million MT — a growth of 48 per cent over the previous season. Even so, as
Chart F shows, domestic sugar offtake was higher still, realisations were at an
all-time high. Going forward, all the factors mentioned here presents the
Indian sugar industry excellent growth opportunities in 2006-07.
Sugar: The Company's Achievements
Not surprisingly, therefore, the company's sugar business achieved significant
increase in capacity utilisation and highest ever recovery rates during the
season. At 10.3 per cent, the company's recovery rate was among the best in the
industry. Sales of the sugar business grew at 43.1 percent —from Rs. 1,336
million in 2004-05 to Rs.1,911 million in 2005-06.
Sugar: Manufacturing Capacity and Expansions
The company's sugar mill is located at Ramgarh in Uttar Pradesh. It has
a total capacity of 7,500 TCD (tonnes crushed per day). During 2005-06,
Subject, along with its subsidiary Dalmia Sugars, formalised a comprehensive
programme for expanding its sugar operations with a total outlay of Rs.6,300
million spread across three locations.
This expansion plan entails setting up of two new sugar plants with a
capacity of 7,500 TCD each at Ramnagar and Nigohi, both in Uttar Pradesh. The
Ramnagar plant will also have a 27 MW bagasse-based co-generation power plant
and a 80 kilolitre per day distillery to produce ethanol from molasses. Bagasse
and molasses are by-products of the sugar manufacturing process. The new sugar
factory at Nigohi, too, will have a bagasse-based power pic nt with a capacity
of 25 MW. Surplus power generated by the business will be supplied to the Uttar
Pradesh State Electricity Board grid. These capacities are expected to be
commissioned shortly, and should begin contributing to the company's financial
performance in 2006-07.
Once this expansion is complete, total capacity will increase to 22,500
TCD or approximately 300,000 MT of sugar per annum. Moreover, the company will
have a 80 kilolitre per day capacity of ethanol, and 79 MW of power generation
capability, of which approximately 52 MW will be surplus power sold to the
grid. In carrying out this plan, the company will also benefit from attractive
schemes for investment in sugar and related businesses announced by the
Government of Uttar Pradesh, under which companies investing over.5,000 million
are to receive attractive fiscal concessions for period ten years.
With this expansion, the company's sugar business will escalate to a new
level in terms of both scale and integration. By using byproducts of sugar
manufacturing to generate additional revenue streams, the company expects to
diversify and de-risk itself from the cyclical nature of the sugar industry. Furthermore,
with anticipated future increases in demand for ethanol as alternate fuel, they
will have the expertise to upscale their ethanol operations to benefit from
such opportunities.
Sugar: The Regulatory Environment
Sugar is a highly regulated industry in India, where the government
controls the price and availability of sugarcane and, albeit to a lesser
extent, the price and target market for the sugar.
In 2004-05, the Supreme Court of India upheld the right of state
governments to announce State Advised Prices (SAP) for procurement of sugarcane
from the farmers that could be above the Statutory Minimum Price (SMP) declared
by the central government. In response, most northern states have been
announcing their SAP which significantly exceed the SMP. For the sugar season
2005-06, the SAP in Uttar Pradesh was Rs.1,150 per MT compared to the SMP of
Rs.795, both linked to a sugar recovery rate of 9 per cent. As a result, sugar
mills in Uttar Pradesh have ended up paying significantly more for their cane.
Moreover, state governments also allocate the catchment area for each mill to
procure its sugarcane requirement during the season.
Imposing higher than statutory minimum cane prices and creating
constraints in sourcing supply are significant risk factors in the sugar
industry. To be sure, in good years such as the last three, higher input prices
have not hurt sugar producers. But in the event of a downturn — and the sugar
industry is notoriously cyclical — these can affect margins.
The only way to mitigate the negative effect of such policies is to
improve efficiency. On that score, the company is well placed by having a cane
recovery rate of 10.3 per cent, which ranks among the best in the industry.
Going forward, the company will have to maintain, if not enhance, its
efficiency, productivity and recovery rate to further immunise itself from a
potential downturn.
There are some regulatory constraints in the distribution of output as
well. Regulations decree that 10 per cent of the entire sugar production is to
be sold to the government at a lower than market rate for public distribution.
The remaining 90 per cent is free to be sold at market determined prices
according to a release mechanism determined by the government. While in the
ideal world this constraint ought to be removed, it is fair to say that its
effects are not as potentially detrimental as the regulations determining cane
pricing and cane supply.
Sugar: The Outlook
The Indian sugar industry is fragmented and regulated, with minimal
pricing power in the hand of the manufacturers. Given the large increase in
domestic sugar manufacturing capacities and good realisation in the export
market, the government is considering liberalizing sugar exports — which, at
present, occurs in an on-off basis depending on ad hoc government
policies as well as the balance between supply and domestic demand. If exports
were to be liberalised, then sugar realisations will certainly continue to
reign at their current levels in the near future. Otherwise, too, price
expectations are bullish for at least 2006-07.
On the positive side, the new tariffs announced by the Uttar Pradesh
Electricity Regulatory Commission for buying power from cogeneration plants
have met the industry's expectation, and make co-gen a profitable opportunity
for sugar manufacturers. And while the government has been slow in implementing
the use of 5 per cent ethanol as an additive to petrol, as oil prices continue
to remain high, its coverage is expected to be expanded to all states from the
current nine. When it happens, this will substantially increase the demand for
ethanol.
Their strategy for the sugar business is to build scale with an
integrated production model that uses the by-products of sugar manufacturing
process to diversify and de-risk the company from the cyclical nature of the
industry. Their current expansion of capacities of sugar, power and ethanol,
and the modernisation plan for the business are in line with this strategy.
Given the current market situation and bullish future expectations, the
expansion should significantly contribute to both revenues and profits of the
company in the next few years. Consequently, their outlook for the sugar
business is also optimistic.
Other Businesses
Other businesses of Subject accounted for 10 per cent of the company's
revenues in 2005-06, and comprise wind farm, refractory and the magnesite
division.
Performance of magnesite business — the manufacturing of dead burnt
magnesite, monoliths and magnesia carbon bricks — is closely linked to that of
the steel industry. After a few years of relatively poor performance, the
demand situation improved thanks to growth in steel output and demand.
Consequently, sales of the magnesite division increased from Rs.250 million in
2004-05 to Rs.280 million in 2005- 06. However, high price of furnace oil and
the ongoing voluntary retirement scheme for rationalisation of manpower
resulted in poor profitability, and the business made a loss during the year.
The refractory business faced a healthy demand situation during the
year. Sales increased by over 20 per cent from Rs.211 million in 2004- 05 to
Rs.255 million in 2005-06. The business also registered a surplus during the
year. Overall, the company's other businesses generated a small surplus during
the year.
Information Technology
Leveraging information technology (IT) tools to improve productivity and
profitability of its operations is a key focus areas for Subject. The role of
IT is to ensure a seamless information architecture for multi-users throughout
all locations the company — be it through voice, video or high speed data
interchange.
All current locations benefit from a fully functional IT infrastructure.
The ERP is a customised solution built on the Oracle 10G platform.
During the year, it was upgraded to a web enabled application, which has
resulted in significant improvement in the accessibility and operational
efficiency. For the cement business, the ERP has five key modules — sales
distribution system, finance and accounting system, purchase information
system, stores information system and personnel management system. For sugar,
the company uses a specialised solution for the sector which includes modules
on planning and scheduling procurement of cane, actual procurement, and
financial accounting.
Given the increasing scale and complexity of their operations,
additional focus has been on ensuring greater securi'.y of the IT
infrastructure, especially the web enabled applications. They have deployed a
multi-layer security arrangement which consists of advanced firewalls,
intrusion detection systems and anti-virus solutions.
During the year, the company initiated multi-point video conferencing
across its various locations. Apart from improving the operating efficiencies,
this has resulted in substantial savings in time and travelling costs.
Awards and Recognitions
Ø
Dalmia Cement has won numerous awards from the government and
independent agencies such as National Council for Cement and
Ø
Building Material (NCCBM) and Confederation of Indian Industry (Cll) for
energy efficiency and energy conservation in its cement business.
Ø
The company also received awards for environment excellence in plant
operations and limestone mining from NCCBM, and acclaim for its initiatives in
the area of safety, health and environment from the Cll.
Website
Details :
In the pre-independence year of 1939, DCBL established one of
India’s first cement plants with an installed capacity of 250 tonne cement per
day that has grown to multifolds today. From cement they went on to the
harnessing of the bounty of iron-ore and magnesite in the country contributing
again to the development of basic industrial materials. Further they
diversified into the area of Travel and export activities. In the mid nineties
they forayed into the Sugar business with an installed capacity of 2500 TCD and
are potentially growing.
Today, they are one of the most profitable players in the
industry, with sustainable high margins and strong financials. Due to the
harmonious balancing of changing needs with corporate imperatives, their
organization has grown over the years taking us to new achievements and greater
strength. They have cemented this way of growth on their underlying principle
of high organizational values and business ethics. All this has laid a very
strong foundation, which is craving for leveraging to reach roaring heights.
Their business has year on year moved up the value chain with a consistent
record of making profits and paying dividends, making the company financially
strong and stable. They have evolved into a 600 crore – plus organization with
an objective to grow further and be among the top manufacturing industries
today. In this course, their cement business has grown with an increased
production capacity from 1.5 million tonnes [MT] last year to more than 3.5 MT
before the mid of this year. Also their sugar business, since its commencement
in 1994 has shown an expansion from an installed capacity of 2500 TCD to 7500
TCD and is potentially growing with a proposed expansion capacity to 22500 TCD
this year. All this parabolic growth in last 1-2 years is a proof of their
determination to grow into leadership position.
History
Founded in 1935 by Jaidayal Dalmia; the cement
division was established in 1939 and enjoys a heritage of 70 years of expertise
and experience. The company is headquartered in New Delhi with cement,
sugar, travel agency, magnesite, refractory and electronic operations spread
across the country.
The Dalmia Group
established four cement plants in pre-independence years, two
of which were affected by partition and Independence. The two remaining plants
operate as Dalmia Cement and the other as an independent company called Orissa
Cements Limited. Managed by a professional team,
DCBL sustained has the path to innovation and growth for seven
decades.
Early in their history they learnt the importance of strong
relationships. They learnt that the key to maintaining relationships with their
– employees, shareholders and customers was to learn from each other, to enjoy
a spirit of camaraderie, and to understand and to empathize with their needs.
Understanding their needs led subject to broaden its horizon to include a
holistic approach to best practices in the industry.
Subject prides itself on having been at the forefront of
pioneering and introducing many new technologies, which exist today, which are
followed by others in the industry. Subject has been and continues to be an
industry leader in the niche market segments.
This timeline highlights some of the significant moments that took
place over the years and shows how their business has evolved.
Pioneer in cement manufacturing since 1939, DCBL has been
synonymous with super specialty cements. Undoubtedly the leader, Dalmia Cement
with an ISO 9002 certification for its products has always stood for the
highest quality cements for over seven decades. All from a highly modernized
plant with R&D backup, has elevated Subject to the status of the best in
the industry today.
Over the years, they have been at the forefront of innovation and
technological advances in the cement.
Sugar is a key focus area of the company and has been potentially
growing.
At Dalmia Cement, special emphasis is placed on Research &
Development facilities to augment product quality.
Corporate Announcements
Dalmia Cements -
Outcome of Board Meeting
Dalmia Cements Bharat
Ltd has informed BSE that the Board of Directors of the Company at its meeting
held on October 12, 2006, has decided the following:
To set up a greenfield cement plant of upto 4 million Tonne per annum capacity
in Andhra Pradesh. For this purpose, the Company is proposing to take over
Eswar Cements P Ltd., with a view to expand its South Indian footprint. The
Company currently has 400 acres of land and adequate limestone reserves.
The Company currently operates a 3.5 Million Tonne per annum plant in Tamil
Nadu and is a key supplier of cement in the South India markets.
It is working towards a close strategic alliance with OCL India Ltd (OCL). The
alliance will include the Company taking a stake in OCL. The Board of the
Company is taking independent professional advice on the structuring of this
alliance which is expected to be concluded by February 2007.
It is also the intention of the promoters of the Company to substantially
consolidate their holding in OCL into the Company the intentions of making the
Company their primary vehicle for investment in the Cement business.
Actis set to pick up stake in Dalmia Cements
M&A action
The cement sector has been seeing much M&A action over the last
couple of years, as growth in the sector is being fuelled by increased
infrastructure development projects and the real estate boom.
New
Delhi , March 12
Private
equity investor Actis is set to pick up stake in cement manufacturer Dalmia
Cements (Bharat) Ltd at an investment of about $25 million.
According
to sources, the UK-based equity firm will pick up about 11 per cent stake in
the company, which had a turnover of Rs 519 crore in the last fiscal year.
Actis
has raised funds of approximately $500 million for investments in the Indian
market and its past/current investments in India include Punjab Tractors, UTI
Bank and Glenmark. This is the equity firm's first investment in the cement
sector in India. The cement sector has been seeing much M&A action over the
last couple of years, as growth in the sector is being fuelled by increased
infrastructure development projects and the real estate boom.
The
beginning of the year has already seen one of the largest deals being struck in
the sector, with Swiss cement major Holcim buying controlling stake in Gujarat
Ambuja. Late 2005 also saw two significant deals in the sector. Hong Kong-based
Asia Debt Management made an investment of $57 million in India Cements while
Prudential ICICI and DSP Merrill Lynch together acquired a 7.4 per cent stake
in Orissa-based cement manufacturer, OCL India.
Indian
cement companies have been ramping up capacity to meet increased demand. In
fact, data shows that cement production in India has recorded a CAGR of 8.2 per
cent between 1994 and 2003, while the world average is 3.5 per cent.
Analysts
point out that the future for the cement sector looks bright. In fact the
Indian cement industry is expected to cross 150 million tonnes in dispatches,
including domestic consumption and exports, during 2005-06 with a large
percentage of sales coming from the South where Dalmia Cement's facility is
located.
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.44.13 |
|
UK
Pound |
1 |
Rs.86.46 |
|
Euro |
1 |
Rs.56.99 |
SCORE &
RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
-- |
|
--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 |
|
54 |
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 |
|