MIRA
INFORM REPORT
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Report Date : |
27.06.2007 |
IDENTIFICATION DETAILS
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Name : |
ABB LIMITED |
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Registered Office : |
Khanija Bhavan, 2nd Floor, East Wing, 49, |
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Country : |
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Financials (as on) : |
31.12.2006 |
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Date of Incorporation : |
24.12.1949 |
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Com. Reg. No.: |
08-32923 |
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CIN No.: [Company
Identification No.] |
U32202KA2003PLC032923 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMA19181B |
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PAN No.: [Permanent
Account No.] |
AAACA3834B |
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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 : |
Manufacturing of switchgears, pollution and environment control equipments and motors/alternators/generators. It is also into manufacture of electrical items such as motors, transformers, etc. |
RATING & COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 47834 |
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Status : |
Good |
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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 of Brown Boveri Group. Available information indicates high financial responsibility of the company. Financial position of the company is good. Payments are always correct and as per commitments. The company’s can be considered good for business dealings against usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Khanija Bhavan, 2nd Floor, East Wing, 49, |
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Tel. No.: |
91-80-22949150/54 |
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Mobile No.: |
91-80-22949148 |
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Fax No.: |
ashay.khandwala@in.abb.com |
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E-Mail : |
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Factory: |
v
Nos. 5 & 6, Peenya Industrial Estate,
Phase II, v
P. O. & Village Jalkhura, v
Plot No. 22A, Shah Industrial Estate, Off v
Plot No. 79, Street No. 17, MIDC Industrial
Estate, Satpur, Nashik - 422 007, v
Maneja, Vadodara - 390 013, v
32, Industrial Area, v
Village Numbal, 110, |
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Marketing and Service Centre: |
Located at : Chandigarh, Delhi, Jaipur, Udaipur, Vadodara, Mumbai, Pune, Bangalore, Coimbatore, Kochi, Lucknow, Kanpur, Bhopal, Nagpur, Hyderabad, Chennai, Visakhapatnam, Bhubaneshwar, Kolkata and Jamshedpur. |
DIRECTORS
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Name : |
Mr. Dinesh Paliwal |
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Designation : |
Chairman |
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Name : |
Mr. Ravi Uppal |
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Designation : |
Vice Chairman and
Managing Director |
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Age : |
49 years |
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Qualification : |
B.Tech
(Electrical & Electronics), M.B.A. |
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Experience : |
27 years |
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Date of Appointment : |
01.10.2001 |
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Previous Employment: |
Volvo India
Private Limited – Managing Director |
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Name : |
Biplab Majumder |
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Designation : |
Executive Director (w.e.f. 24/01/2006) |
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Name : |
Mr. N. S. Raghavan |
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Designation : |
Director |
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Name : |
D |
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Designation : |
Director (w.e.f. 21/07/2005) |
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Name : |
K Sridhar |
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Designation : |
Director (w.e.f. 21/07/2005) |
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Name : |
Mr. Nasser Munjee |
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Designation : |
Director |
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Name : |
Mr. Umesh Prasad Singh |
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Designation : |
Director |
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Name : |
Mr. Peter Smits |
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Designation : |
Director |
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Name : |
Mr. Tom E. Sjoekvist |
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Designation : |
Director |
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Name : |
Bernhard Jucker |
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Designation : |
Director (w.e.f.
24/01/2006) |
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Name : |
Mr. Peter Leupp |
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Designation : |
Director |
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Name : |
Mr. R. N. Bharadwaj |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. B. Gururaj |
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Designation : |
Company Secretary
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MANAGEMENT COMMITTEE : |
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Mr. I. K. Sadhu |
Power
Technologies – Systems |
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Age |
58 years |
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Qualification |
B. Sc.
(Engineering) |
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Experience |
38 years |
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Previous Employment |
Bharat Heavy
Electrical Limited (Commercial Engineer) |
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Corporate Management Committee |
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Mr. Amresh Dhawan |
Power
Technologies – Products |
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K Rajagopal |
Corporate Management Committee |
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Mr. Biplab Majumder |
Automation
Technologies |
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Mr. Bazmi Husain |
Automation –
Control Platform Products and Research and Development |
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Mr. V. Swamy |
Building Systems
and Group Service Centre |
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Corporate Management Committee |
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Mr. P. P. Gomes |
National Service Organization |
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Mr. K. S. S. Rajan |
Marketing |
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K. Rajagopalan |
Finance |
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Mr. P. C. Rajiv |
Human Resources |
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Prakash
Kanagalekar |
Corporate Management Committee |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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ABB Asea Brown Boveri Limited, Zurich & ABB |
2,20,84,057 |
52.11 |
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NRIs / OCBs |
53885 |
0.13 |
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Directors and their relatives |
472 |
0.00 |
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LIC / UTI / Other Insurance Companies |
5949298 |
14.04 |
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Nationalized Banks / Other Banks |
99288 |
0.23 |
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Mutual Funds |
1842558 |
4.35 |
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Foreign Institutional Investors |
6849582 |
16.16 |
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General Public |
5502535 |
12.98 |
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TOTAL |
42381675 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturing of switchgears, pollution and environment control equipments and motors/alternators/generators. It is also into manufacture of electrical items such as motors, transformers, etc. |
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Exports to : |
Asia Pacific, Europe, |
PRODUCTION STATUS
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Particulars |
Unit |
Installed Capacity |
Actual Production |
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Motors/Alternators/Generators upto 20 MW |
HP |
1464945 |
1322348 |
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Switchgear of all types |
Nos. |
4174000 |
4150963 |
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PLCC Equipment |
Nos. |
2850 |
1058 |
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Measurand Converters |
Nos. |
-- |
-- |
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Multiplexures |
Nos. |
100 |
66 |
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Telemetering Equipments |
Nos. |
150 |
26 |
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Turbochargers |
Nos. |
200 |
138 |
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Power Transformers |
MVA |
10000 |
5555 |
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Electronic Control and Supply Units for Variable Speed Drivers and other applications |
Nos. |
70000 |
55235 |
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Mini Computer/Microprocessor based Systems |
Value Rs. in ‘000 |
1000000 |
999564 |
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Non-Microprocessor Based Electronics (Analog and Digital) for Weighing, Batching and Force Measuring Systems and Sub Systems |
Value Rs. in ‘000 |
70000 |
36670 |
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Power Capacitors of all types |
MVAR |
3700 |
2810 |
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Robotics |
Nos. |
15 |
1 |
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Control Valves |
Nos. |
-- |
-- |
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Gas Analyzers and Systems |
Nos. |
300 |
184 |
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Process Control Instruments |
Nos. |
24975 |
22391 |
GENERAL INFORMATION
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No. of Employees : |
5187 |
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Bankers : |
v
ICICI Bank Limited
20, R v
Canara Bank v
IDBI Bank Limited v
HDFC Bank Limited v
Hongkong and Shanghai Banking Corporation Limited v
Union Bank of v Standard
Chartered Bank |
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Banking Relations : |
Good |
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Auditors : |
S. R. Batliboi & Company Chartered Accountants |
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Associates : |
v ABB ( v ABB (Hongkong)
Limited v ABB (Pty)
Limited, v ABB A/S, v ABB AG, v ABB AS, Automation
Technology Products, v ABB AS, v ABB Asia Pacific
Services Limited, v ABB Assist AB, v ABB Australia
Pty Limited v ABB Automation
Company Limited, v ABB Automation
E. C., v ABB Automation
Inc, v ABB Automation
Products, v ABB Automation
Technology Products, AB v ABB Beijing
Drive Systems Company Limited v ABB Business v ABB Calor Emag
Hochspannung GmbH v ABB Capacitors
AB, v v ABB Control
Valves Inc. v ABB Control,
Siege v ABB Corporate
Management Services AG, v ABB Distribution
Limited, v ABB EJF S.R.O. v ABB Electrical
Company S. A. L., v ABB Electrik v ABB Energy
Automation S. P. A., UAE v ABB Energy
Engineering AG v ABB Engineering
Technologies Company, v ABB Eutech
Limited, v ABB Group
Process Limited, v ABB Group
Services Center S.A.E., v ABB High Voltage
Company S.A.E., v ABB
Hochspannungstechnik, v ABB Holdings ( v ABB HongKong
Limited |
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Membership : |
Confederation of Indian Industry |
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Parent Company : |
ABB Asea Brown Boveri Limited, |
CAPITAL STRUCTURE
Authorized Capital :
|
No. of Shares |
Type |
Value |
Amount |
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42500000 |
Equity Shares |
Rs. 10 each |
Rs. 425.000 millions |
|
750000 |
11% Redeemable 10 year, Cumulative Preference Shares |
Rs. 100 Each |
Rs. 75.000 millions |
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TOTAL |
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Rs. 500.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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42381675 |
Equity Shares |
Rs. 10 each |
Rs.423.817 millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.12.2006 |
31.12.2005 |
31.12.2004 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
423.800 |
423.800 |
423.800 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
11534.600 |
8617.500 |
6822.800 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
11958.400 |
9041.300 |
7246.600 |
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LOAN FUNDS |
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1] Secured Loans |
15.400 |
27.000 |
14.300 |
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2] Unsecured Loans |
0.000 |
00.300 |
00.600 |
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TOTAL BORROWING |
15.400 |
27.300 |
14.900 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
11973.800 |
9068.600 |
7261.500 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3071.700 |
2266.600 |
1900.000 |
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Capital work-in-progress |
246.200 |
384.200 |
49.300 |
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INVESTMENT |
773.500 |
871.500 |
1069.700 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.00 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
3547.000
|
2015.800 |
1682.900 |
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Sundry Debtors |
15702.700
|
10292.600 |
6263.300 |
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Cash & Bank Balances |
5464.400
|
4009.700 |
4167.500 |
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Other Current Assets |
0.000
|
0.000 |
0.000 |
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Loans & Advances |
3418.300
|
3756.400 |
2102.700 |
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Total
Current Assets |
28132.4
|
20074.5 |
14216.4 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
19694.300
|
14016.100 |
9564.100 |
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Provisions |
555.700
|
512.100 |
409.800 |
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Total
Current Liabilities |
20250.000
|
14528.200 |
9973.900 |
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Net Current Assets |
7882.400
|
5546.300 |
4242.500 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
11973.800 |
9068.600 |
7261.500 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.12.2006 |
31.12.2005 |
31.12.2004 |
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Sales Turnover |
46045.600 |
31999.300 |
24458.000 |
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Other Income |
784.400 |
510.900 |
493.200 |
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Stock Adjustments |
530.100 |
78.000 |
235.800 |
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Total Income |
47360.100 |
32588.200 |
25187.000 |
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Profit/(Loss) Before Tax |
5232.100 |
3394.800 |
2403.200 |
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Provision for Taxation |
1829.000 |
1208.000 |
860.000 |
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Profit/(Loss) After Tax |
3403.100 |
2186.800 |
1543.200 |
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Expenditures : |
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Manufacturing Expenses |
19768.600 |
12975.000 |
9893.100 |
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Administrative Expenses |
2082.900 |
1620.700 |
1272.900 |
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Raw Material Consumed |
12655.000 |
8759.100 |
7194.800 |
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Interest |
100.900 |
134.000 |
70.100 |
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Power & Fuel |
190.100 |
149.100 |
121.800 |
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Depreciation & Amortization |
264.700 |
231.400 |
203.600 |
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Other Expenditure |
7065.800 |
5324.100 |
4027.500 |
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Total Expenditure |
4212800 |
29193.400 |
22783.800 |
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QUARTERLY RESULTS
|
PARTICULARS |
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|
31.03.2007 |
|
Type |
|
|
1st
Qtr |
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Sales
Turnover |
|
|
1,312.44 |
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Other
Income |
|
|
15.17 |
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Total
Income |
|
|
1,327.61 |
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Total
Expenditure |
|
|
1,184.26 |
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Operating
Profit |
|
|
143.35 |
|
Interest |
|
|
1.00 |
|
Gross
Profit |
|
|
142.35 |
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Depreciation |
|
|
8.62 |
|
Tax |
|
|
45.70 |
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Reported
PAT |
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|
86.63 |
200703 Quarter 1 --------------- Notes: Expenditure Includes (Increase) /
Decrease in Stock in Trade Rs (97.069) million Consumption of Materials &
Costs of Erection Services Rs 9847.801 million Personnel expenses Rs 698.031
million Other expenditure Rs 1393.848 million Tax Includes Provision for
Current Tax Rs 434.000 million Deferred Tax Rs 14.000 million Fringe Benefit
Tax Rs 23.000 million EPS is Basic and Diluted Status of Investor Complaints
for the quarter ended March 31, 2007 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.
This statement has been taken on record at the meeting of the Board of
Directors of the Company held on April 26, 2007. 2. Pursuant to Accounting
Standard 15 (revised 2005) 'Employee Benefits' (AS 15) issued by the Institute
of Chartered Accountants of India the impact of change on application of AS 15
as of January 01, 2007 amounting to Rs 35.40 million has been directly adjusted
to reserves in accordance with the transitional provisions of AS 15. The impact
of change in provision for leave during the quarter ended March 31, 2007 is
insignificant. 3. The company has changed its accounting policy for revenue for
certain complex products from recognition on dispatch basis to recognition on
achievement of milestone basis with effect from January 01, 2007. This has
resulted in additional revenues recognition and higher profit before tax of Rs
114.00 million and Rs 22.00 million respectively during the Quarter ended March
31,2007. 4. The auditors have conducted a 'Limited Review' of the above
financial results for the quarter ended March 31, 2007. 5. The figures of the
previous year / periods have been regrouped / reclassified, wherever necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt-Equity
Ratio |
0.00 |
0.00 |
0.01 |
|
Long
Term Debt-Equity Ratio |
0.00 |
0.00 |
0.01 |
|
Current
Ratio |
1.39 |
1.40 |
1.45 |
|
TURNOVER
RATIOS |
|
|
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Fixed
Assets |
10.25 |
8.63 |
7.63 |
|
Inventory |
16.55 |
17.30 |
16.76 |
|
Debtors |
3.54 |
3.87 |
4.21 |
|
Interest
Cover Ratio |
52.85 |
26.33 |
35.28 |
|
Operating
Profit Margin(%) |
12.16 |
11.75 |
10.94 |
|
Profit
Before Interest And Tax Margin(%) |
11.58 |
11.03 |
10.11 |
|
Cash
Profit Margin(%) |
7.97 |
7.56 |
7.14 |
|
Adjusted
Net Profit Margin(%) |
7.39 |
6.83 |
6.31 |
|
Return
On Capital Employed(%) |
51.42 |
44.04 |
37.78 |
|
Return
On Net Worth(%) |
32.88 |
27.36 |
23.78 |
LOCAL AGENCY FURTHER INFORMATION
Performance
Review:
Orders received during the year at Rs. 56,236 million were 50% higher
compared to Rs.37,645 million in the previous year. Orders backlog at the end
of 2006 was healthy at Rs.33,723 million compared to Rs.21,032 million at the end
of the previous year.
Sales and other income for the year were higher by 44% at Rs.43,477
million compared to Rs.30,141 million in the previous year. Profit before tax
was significantly higher at Rs.5,232 million compared to Rs.3,395 million in
the previous year. Growth in profit was mainly attributable to volume growth,
operational efficiencies and higher other income.
Profit after tax at Rs.3,403 million for the year has improved by 56%
compared to Rs.2,187 million in the previous year. Earning per equity share of
face value of Rs.10 correspondingly improved to Rs.80.30 compared to Rs.51.60
in the previous year.
Operating performance of all the segments, power products, power systems,
automation products and process automation was significantly better than
previous year. For detailed analysis of the performance, please refer to the
management's discussion and analysis section of the annual report.
Transfer to the Investor Education
and Protection Fund:
In terms of Section 205C of the Companies Act, 1956, the unclaimed
dividend amount aggregating to Rs.535,430/- lying with the Company for a period
of seven years pertaining to year ended on December 31, 1998, was transferred
during the year to the Investor Education and Protection Fund.
Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings and Outgo:
The particulars as prescribed under sub-section(1)(e) of Section 217 of
the Companies Act, 1956, read with the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, are given in Annexure-A, forming
part of this report.
Continuous efforts are made to integrate
R&D activities with reference to customers' requirement. Future plan
includes:
Numeric
relay designs, usage of 3D modeling techniques for design optimization of
components, development of higher rating Statcon (300/500) kVAR, Statcon for
3-phase application along with lower order harmonic cancellation technique and
load balancing, new M2BA motors for frames 160 - 250, new M3BPI motors for
frames 280-400, brake motors frame 71-132, development of oil immersed internal
breaker for transformer, 3600 Amps, 220 kV and 132 kV current transformers,
composite insulators for 132, 220, 420 kV current transformers, installation of
HV capacitor configurator and low energy drive for 400 kV breakers.
C) Foreign exchange earnings and outgo:
(a)
Activities related to Exports; initiative taken to increase exports;
development of new export markets for products and services; export plans:
Revenues
from exports at Rs.4,331 million were 85% higher than Rs.2,337 million in the
previous year. Power products segment consolidated its position in the export
markets with coverage of more than 85 countries so far. It also strengthen its
position as global focus feedter factory for 72 kV circuit breakers for the
group. This group had significant success in
(b)
Total foreign exchange used and earned:
(Rs. in Millions)
a)
Foreign Exchange earned (including deemed exports) 4,929b) Foreign Exchange
used 12,489
For and on behalf of the Board
Place:
Bangalore Dinesh PaliwalDated: February 16, 2007 Chairman
MANAGEMENT DISCUSSION AND ANALYSIS:
Operating
Results of the Company:
During
the year 2006, the Company secured orders worth Rs.56,236 million, 50 percent higher
than the previous year's orders of Rs.37,645 million. There had been
significant growth in orders across all the segments of the Company. Higher GDP
growth, focussed infrastructure development action taken by the
Government
and capacity built up in various industries has given overall favourable
economic environment in the country to operate. This coupled with strategic
initiatives on market and product portfolio front adopted by the
Company helped to realise this exceptional growth.
New business/product lines introduced during last few years have also
contributed significantly towards overall growth in orders. As a result of
healthy order intake, the Company's order backlog was further augmented by 60
per cent to Rs.33,723 million as compared to Rs.21,032 million at the beginning
of the year.
The
Company also achieved a strong top-line performance with revenues of Rs.43,477
million for the year, registering a growth of 44 per cent over the previous
year. Volume growth, operational efficiencies and higher financial income (net)
resulted in healthy profit improvement inspite of increase in material expense
due to increase in commodity prices. Profit before tax was Rs.5,232 million as
compared to Rs.3,395 million in the previous year.
Net
profit after tax at Rs.3,403 million for the year was 56 per cent higher than
last year. Earnings per equity share (face value Rs.10) were also significantly
higher at Rs.80.30 compared to Rs.51.60 in the previous year.
The
Company carried out significant expansion of manufacturing capacities and
continued to expand its range of offering, introducing several new products
during the year. In addition to capacity and range expansion, the Company also
upgraded and modernised many of its manufacturing, office and employee welfare
facilities in order to enhance efficiency and productivity.
Outlook for the Company:
Business Segment
Analysis:
To
bring focused attention to market and operational efficiencies, Company had
adopted a new segment structure from beginning of the 2006, in alignment with
ABB Group organization structure. The relative distribution of revenues amongst
these segments is as under.
2006 2005
Power
Systems (PS) 33% 34Power Products (PP) 27% 28Process Automation (PA) 20%
18Automation Products (AP) 20% 20
Power Systems Segment (PS):
The summarized performance of the segment is as under:
(Rs. in Millions) 2006 2005 Orders Received 20,141 14,698Order Backlog 14,796
9,752Revenues 15,097 10,633Result 1,631 829
Central
Government's focus on power sector reforms and introduction of national
electricity policy in past few years is reflected in increasing investment in
this sector. Capacity additions, development of transmission network and power
distribution improvements and reforms on domestic front resulted in strong
orders and revenue growth
during the year. Orders received grew by 37% and
revenues were higher by 42%. The market showed positive signs in most areas of
segment's operation and future outlook continues to remain promising.
Major
orders received includes for transmission and distribution substations on
turnkey basis from PGCIL for 400kV substations at
Major
projects commissioned during the year includes 220 kV substations at Guttur and
Puttur for KPTCL, 400kV substation for PGCIL at
Prices
of raw materials like structural steel, copper, aluminium, etc., continues to
remain area of concern. Numbers of strategic actions were implemented to
improve project management. This helped in improving profitability of the
segment.
Power Products Segment (PP):
The summarized performance
of the segment is as under:
(Rs. in Millions)
2006 2005 Orders Received 15,295 9,300Order Backlog 9,577 6,412Revenues 12,130
8,748Result 1,382 1,113
Due
to Governments policies, prospects from ultra mega power generation projects
and demand for electricity, investments in the transmission and distribution
sector remained buoyant. Significant capacity addition in industries and
service sector continued at a fast pace. This offers excellent prospects for
different products of the segment. Orders received grew by 64% and growth in
revenues was 39%. Products for improving power quality and energy efficient
technologies are also gaining demand. Large target has been proposed in the
Xlth five-year plan (2007-12) for power transmission (increase in
inter-regional capacity from 9000 MW to 30,000 MW), power generation (capacity
addition of around 86,500 MW). New opportunities have emerged in the field of
765 kV switchgear and transformer products as well as large volume low end
products.
Major
orders received during the year included an order from NTPC for 11 units of 260
MVA 400 kV GSU and 200 MVA 400 kV ICT and an order for HV circuit breakers from
MSEB.
Power
products exports consolidated its position in the export markets catering to
more than 85 countries with order booking of Rs.1,545 million. With order
intake of about 1,000 ED circuit breakers during the year, the segment
continued to consolidate its position as Global focused feeder factory for 72.5
kV circuit breakers for the ABB Group. Segment has won significant contracts
for 72.5kV SF6 circuit breakers from
The Transformer business consolidated its market
position in with doubling of orders during the year and growth in revenues. A
200 MVA 400 kV transformers successfully passed short-circuit testing at KEMA,
With
buoyancy in distribution sector and introduction of several new products,
significant growth continued for medium voltage switchgears. This business
recorded a number of successes during the year including a repeat order from
PSEB for 709 panels and a breakthrough order from Grasim for Unigear panels.
The distribution automation business secured important order for RE 500 relays
from HPCL. A new low cost relay, N140/41 was
Successfully type tested and is ready for
manufacturing and marketing. Focus on channel partners and retrofit business
continues to yield dividends for the MV business. The Ring Main Unit facility
produced over 5000 units in the first year of production and the business is
expected to grow significantly in coming years. Segment's R&D unit
continued to rise in the global value chain. It successfully developed new
products and participated in several global product development projects.
Anew mechanical testing laboratory for stringent
quality tests on TV circuit breakers was established during the year. This will
help in monitoring and improving product quality.
Several
new products and product ranges were introduced during the year. This included
245 kV and 400 kV LTB E circuit breakers, NI 40/41 relays, low-cost compact
sub-station and distribution transformers up to 100 KVA. Recent introduction of
GIS, GCB and PASS in the Indian market will cater to the growing demand for
modular solutions and new technologies.
To
support business growth, there are plans to augment capacities for power and
distribution transformers, HV and MV products. A global manufacturing facility
for low-end relays and new factory for the existing range of distribution
automation products is also planned at Vadodara.
Concerns for the segment includes lower demand for
HT capacitor, delivery schedules and prices for insulators for the HV products
and tanks for transformers and emerging competition from several local players
and Chinese manufacturers in the medium voltage segment.
Domestic
market for power products continues to remain on the ascent. This coupled with
increasing prospects for exports, capacity augmentation, introduction of new
products and range expansion, focuses on services and operational excellence,
offers extremely positive outlook for the segment.
Process Automation Segment
(PA):
The
summarized performance of the segment is as under:
(Rs. in Millions) 2006 2005 Orders Received 13,317 7,729Order
Backlog 8,312 4,135Revenues 9,140 5,549Result
983 581
during
the year, industrial climate in country remained buoyant with strong growth
across almost all the industries. With current low capita consumption of
several metals, paper and other industrial products and demand from
infrastructure development gives excellent growth opportunities to industries.
Most industries have announced investment plans for augmentation of capacities
and efficiency improvement. This environment augurs well for the Process
Automation Segment. Growth in orders during the year was 72% and growth in
revenues was 65%. A global sourcing and engineering centre established last
year has stabilized and contributed significantly to growth of the
segment.
Paper
Industry is investing in new machines to meet the growing demand. Segment
received several DCS and QCS orders during the year. Growth in crane business
is driven by Industrial sector in general and steel sector in particular. Steel
sector is poised for growth and proposed investments in this sector are
expected to exceed 80 BUSD in next 6 years. This includes investment in
Segment
has received several large and important orders during the year. This includes
a turn key order for SCADA (supervisory control and data acquisition system)
from Oil & Natural Gas Corporation (ONGC) at
Rs.4,300 million, for DCS and emergency shut down
(ESD) from ONGC and Essar Oil Limited, electrics and automation from Binani
Industries Limited, Welspun Gujrat Ltd., Thyssen Krupp
Major
projects commissioned during the year included electrics and automation of
Andhra Pradesh Paper Mills Limited and GPT Steels Limited, electrics for
Haldia's ship to shore cranes and Wire Rod Mill of Steel Authority of India
Limited.
With
several prospects emerging in the country, several local and international
players have become active. OEMs are also consolidating their offerings with
electrical solution to give a complete package to the customers. With several
project on hand, segment has challenge in timely execution of orders,
particularly from steel and cement sectors. Segment will continues to remain
customer focused to sustain its competitive advantage through constant
innovation and technology development. The overall outlook for the segment
remains positive.
Automation Products Segment
(AP):
The summarized performance
of the segment is as under:
(Rs. in Millions) 2006 2005 Orders Received 9,933 6,845Order Backlog 2,171
1,417Revenues 9,179 6,354Result 1,145 793
With
significant investments taking place for industrial capacity augmentation and
efficiency improvement, segment witnessed surge in demand for automation
products during the year. A positive market environment coupled with a
strategic thrust on product range and capacity expansion and market penetration
helped in registering 45% growth in orders and revenues compared to previous
year. During the year several orders for products were received from steel,
cement, paper, oil and gas industries and OEMs. Segment had break through
success from water and sewage application, opening up a new stream of revenues
with securing of orders for Bhima and Kalwakurthy Lift irrigation
projects.
During
the year new factories at Haridwar for
The
channel partner network was further expanded to over 700 compared to 530 at the
end of last year, helping in increase in business over 50 percent. The business
through the web increased by more than 75 percent to around Rs.2,700 million,
making it the largest B2B transaction volume through the web for this kind of
business in India. During the year central warehouse was established at
Increase in competition, bringing pressure on
volume and price realization, increase in metal prices and product design
piracy are some of the concerns for the segment. Several supply chain
management actions have been planned for reduction in material and other input
costs.
The
overall outlook for the segment continues to be positive.
Building Systems
(BS):
Building
systems business provides integrated building management solutions (IBMS)
covering lighting, networking, heating, ventilation, air conditioning,
electrical installations, energy management, fire alarm, protection system and
other building facilities and solutions to various customers across the
sectors, included
Under PS and PA segments, performed extremely well
during the year. Volumes continued to grow based on the growing infrastructure
spending in all major metros in the country and capacity expansion by
industries. Major growth sectors continue to be IT, corporate buildings,
shopping malls, hotels, pharma and health care. Based on per capita health care
spending and
Major
orders received during the year includes from ONGC, IBM for Noida facility,
Wipro for their Chennai facilities, Himmatsingka Linens, Vardhaman Fabrics,
Maruthi Udyog and BHEL. Growing installed base has opened up further
opportunities for repeat orders and after sales services. Major projects orders
commissioned during the year include BHEL, Rihand, NTPC Vindyachal, Wockhardt
Bangalore,
Increase
in competition, price level of metals and availability and retention of skilled
manpower are area of concern for the group. Focus on IBMS and services, certain
supply management actions and improvements in project management processes are
expected to improve margin and competitiveness for this group.
Finance:
The
Company continued to focus on optimizing its working capital, which resulted in
a further improvement in the cash position. Net cash position (cash and bank
balances less loan fund) at the end of the year had significantly increased to
Rs.5,449 million compared to Rs.3,982 million at the end of the previous year.
Surplus funds, not committed in operation, were deployed in tax-free bonds and
short term fixed deposits with reputed banks, ensuring security and liquidity
of the fund. The expenditure of Rs.933 million, on fixed assets, during the
year was fully financed from internal accruals. Net financial income during the
year was higher at Rs.210 million compared to Rs.166 million in the previous
year, primarily due to better interest rates on short term deposits. Foreign
exchange management arid valuation was further automated during the year. As in
the past, Company maintained excellent relationship with major banks operating
in
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources including
but not limited to: The Courts,
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.41.01 |
|
|
1 |
Rs.81.74 |
|
Euro |
1 |
Rs.55.04 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
|
69 |
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 |
|