MIRA INFORM REPORT

 

Report Date :

29.05.2007

 

IDENTIFICATION DETAILS

 

Name :

TATA CUMMINS LIMITED

 

 

Registered Office :

Telco Township Jamshedpur – 831004, Jharkhand

 

 

Country :

India

 

 

Financials (as on) :

31.03.2006

 

 

Date of Incorporation :

20.10.1993

 

 

Com. Reg. No.:

005546

 

 

CIN No.:

[Company Identification No.]

U34101JH1993PLC005546

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

RCHT00119A

 

 

PAN No.:

[Permanent Account No.]

AAACT6353L

 

 

Legal Form :

Closely Held Public Limited Liability Company

 

 

Line of Business :

Manufacturer of Diesel Engines

 

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

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

 

Maximum Credit Limit :

USD 8782536

 

 

Status :

Satisfactory

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established and reputed company having satisfactory track. Directors are reported as experienced and respectable businessmen. Trade relations are fair. Business is active. Payments are usually correct and as per commitments.

 

The company can be considered normal for business dealings at usual trade terms and conditions.

 

 

LOCATIONS

 

Registered Office :

Telco Township Jamshedpur, Jharkhand – 831004, Jharkhand

Tel. No.:

91-657-268555

Fax No.:

91-657-2268241

E-Mail :

pkbanerjee@tata.cummins.com

Website :

www.tatacummins.com

 

DIRECTORS

 

Name :

Mr. Ravi Kant

Designation :

Director

Address :

144 B, NCPA, NCPA Complex, Backbay Reclamation, Nariman Point, Mumbai – 400021, Maharashtra

Date of Birth/Age :

01.06.1944

Date of Appointment :

12.06.2001

 

 

Name :

Mr. Anant J. Talaulicar

Designation :

Director

Address :

2101, Sterling Tower, Goregaonkar Road, Mumbai – 400007, Maharashtra

Date of Birth/Age :

11.07.1961

Date of Appointment :

08.04.2004

 

 

Name :

Mr. Prakash Atah Arya

Designation :

Director

Address :

G – 5, Golmuri House, Hildih, Jamshedpur – 831003, Jharhedpur

Date of Birth/Age :

15.10.1947

Date of Appointment :

25.09.1996

 

 

Name :

Mr. Praveen Puroshotam Kadle

Designation :

Director

Address :

220, Samudra Mahal, Dr. Annie Deshni Road, Worli, Mumbai – 400018, Maharashtra

Date of Birth/Age :

21.01.1957

Date of Appointment :

24.01.1997

 

 

Name :

Mr. Prakash M. Telang

Designation :

Director

Date of Birth/Age :

21.06.1947

Date of Appointment :

11.08.2000

 

 

Name :

Mr. Sumantran Venkatramani

Designation :

Director

Address :

Plot No. 10, Visava, Telco SR Co-Operative Housing Society, Pune – 411018, Maharashtra

Date of Birth/Age :

27.09.1958

Date of Appointment :

24.06.2003

 

 

Name :

Mr. Sean Miloy

Designation :

Director

Address :

2785, Shepherd Road, Nashuille, USA

Date of Birth/Age :

24.08.1957

Date of Appointment :

30.07.2003

 

 

Name :

Mr. Bharat S. Vedar

Designation :

Director

Address :

955, Beywood Code, Columbus - 47201, USA

Date of Birth/Age :

09.07.1948

Date of Appointment :

01.06.2004

 

 

Name :

Mr. Rajiv Batra

Designation :

Director

Address :

3rd Floor Iris Lane, 3 Koresaon park Road, Pune, Maharashtra

Date of Birth/Age :

30.09.1955

Date of Appointment :

30.07.2004

 

 

Name :

Mr. Samik Kumar Biswas

Designation :

Director

Address :

G – 34, Nildih Road, Nildih Colony, Jahshedpur – 831003, Jharkhand

Date of Birth/Age :

17.06.1963

Date of Appointment :

18.04.1997

 

 

Name :

Mr. Glyn Price

Designation :

Director

Address :

100 Bayside Court, Columbus – IN47201, US

Date of Birth/Age :

15.03.1953

Date of Appointment :

28.09.2005

 

 

Name :

Mr. Steven Chapman

Designation :

Director

Address :

3545, Woodside Drive, Columbus – 047203, US

Date of Birth/Age :

10.02.1954

Date of Appointment :

10.11.2000

 

 

Name :

Mr. Chandrasekaran Ramakrishnan

Designation :

Director

Address :

322, Samudra Mahal, Dr. Anne Besant Road, Worli, Mumbai – 400018, Maharashtra.

Date of Birth/Age :

27.06.1955

Date of Appointment :

15.06.2006

 

 

Name :

Mr. David L. B.

Designation :

Director

Address :

3800, Lakeside Drive, Columbus  - 47203, USA

Date of Birth/Age :

20.08.1946

Date of Appointment :

25.10.1999

 

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

Names of Shareholders

 

No. of Shares

Tata Motors

 

89999995

Cummins Engine Company INC

 

90000000

Tata Motors Jointly with Mr. A.P. Arya

 

1

Tata Motors Jointly with Mr. R.T. Singh

 

1

Tata Motors Jointly with Mr. M.L. Bapna

 

1

Tata Motors Jointly with Mr. S.M. Sharma

 

1

Tata Motors Jointly with Mr. D.K. Thakur

 

1

 

 

 

Category

 

Percentage of Holding

Foreign holdings (Foreign institutional investor(s), Foreign companies(s) Foreign financial institution(s), Non-resident Indian(s) or overseas corporate bodies or Other

 

50.00

Bodies corporate

 

50.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer of Diesel Engines

 

 

 

 

GENERAL INFORMATION

 

No. of Employees :

850

 

 

Bankers :

Not Applicable

 

 

 

 

 

Banking Relations :

 -

 

 

Auditors :

 

Name :

SB Billimoria and Company

Chartered Accountants

Address :

8B, Circuit House Area, North East, Road No.11, Jamshedpur – 831001, Jharkhand

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

180000000

Equity Shares

Rs.10/- each

Rs.1800.000 millions

7000000

Preference Shares

Rs.100/- each

Rs.700.000 millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

180000000

Equity Shares

Rs.10/- each

Rs.1800.000 millions

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

 

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

 

31.03.2006

31.03.2005

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

 

1800.000

1800.000

2] Share Application Money

 

0.000

0.000

3] Reserves & Surplus

 

395.634

219.833

4] (Accumulated Losses)

 

0.000

0.000

NETWORTH

 

2195.634

2019.833

LOAN FUNDS

 

 

 

1] Secured Loans

 

0.000

19.862

2] Unsecured Loans

 

0.239

72.267

TOTAL BORROWING

 

0.239

92.129

DEFERRED TAX LIABILITIES

 

0.000

0.000

 

 

 

 

TOTAL

 

2195.873

2111.962

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

 

1615.556

1693.168

Capital work-in-progress

 

76.953

58.344

 

 

 

 

INVESTMENT

 

1255.009

401.936

DEFERREX TAX ASSETS

 

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
 

570.593

531.114

 

Sundry Debtors
 

259.334

269.125

 

Cash & Bank Balances
 

53.537

24.476

 

Other Current Assets
 

0.000

0.000

 

Loans & Advances
 

680.674

371.238

Total Current Assets
 

1564.138

1195.953

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Current Liabilities
 

1321.550

875.571

 

Provisions
 

994.233

361.868

Total Current Liabilities
 

2315.783

1237.439

Net Current Assets
 

(751.645)

(41.486)

 

 

 

 

MISCELLANEOUS EXPENSES

 

0.000

0.000

 

 

 

 

TOTAL

 

2195.873

2111.962

 

 

 

 

 

 

 

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

 

31.03.2006

31.03.2005

Sales Turnover

 

9463.166

8508.235

Other Income

 

116.466

96.457

Total Income

 

9579.632

8604.692

 

 

 

 

Profit/(Loss) Before Tax

 

945.421

640.738

Provision for Taxation

 

316.243

203.266

Profit/(Loss) After Tax

 

629.178

437.47

 

 

 

 

Expenditures :

 

 

 

 

Consumption of Power and fuel

 

100.405

110.269

 

Raw Material Consumed

 

7356.552

6752.671

 

Purchases made for re-sale

 

226.307

238.017

 

Salaries, Wages, Bonus, etc.

 

228.259

268.093

 

Payment to Auditors

 

1.939

1.263

 

Interest

 

2.645

2.838

 

Insurance Expenses

 

5.923

8.665

 

Other Expenditure

 

712.181

582.138

Total Expenditure

 

8634.211

7963.954

 

 

KEY RATIOS

 

PARTICULARS

 

 

 

31.03.2006

31.03.2005

PAT / Total Income

(%)
 

6.56

5.08

 

 
 

 

 

Net Profit Margin

(PBT/Sales)

(%)
 

9.99

7.53

 

 
 

 

 

Return on Total Assets

(PBT/Total Assets}

(%)
 

29.73

22.17

 

 
 

 

 

Return on Investment (ROI)

(PBT/Networth)

 
 

0.43

0.31

 

 
 

 

 

Debt Equity Ratio

(Total Liability/Networth)

 
 

1.05

0.61

 

 
 

 

 

Current Ratio

(Current Asset/Current Liability)

 
 

0.67

0.96

 

 

 

LOCAL AGENCY FURTHER INFORMATION

 

Company details:

Subject is a 50:50 Joint Venture between Tata Motors Limited, India's largest Automobile manufacturer and Cummins Engine Company Inc. of USA, world leaders in design and manufacture of diesel engines. The Rs 300 Crore project with an authorized share capital of Rs 250 Crore has been set up at Jamshedpur for the manufacture of Diesel engines to power Tata Motors Limited's commercial vehicles. The decision to locate at Jamshedpur was based on the desire to be near the customer.Commercial production of engines from kits commenced in January 1996 and the machining lines for in-house manufacture of components started in March 1997.

Tata Cummins currently employs about 850 people and has a capacity of 72,000 engines per annum & has plans to increase its capacity up to 1,20,000 in recent period.

Product   

The low emission Diesel Engines manufactured by subject are for use in a new generation of Tata Motors Ltd's Medium and Heavy Commercial Vehicles. The engines conform to EURO - I , EURO - II & EURO - III standards for emissions. The 78 to 235 Horsepower engines have a high power to weight ratio and will enable Tata Motors Ltd. access new markets worldwide with its advantage of emissions, power, oil consumption and durability.

 

Plant   

Subject has a modern manufacturing facility located adjacent to Tata Motors Ltd., designed by Kevin Roche, John Dinkeloo Associates of USA and C P Kukreja Associates of Delhi. The unique plant comprises a fully air-conditioned 182 x 186 m building with pre-cast concrete coffer roofing and 15 x 15 m bays. The North and South walls are of glazed curtain glass. Features such as a PLC controlled Fire Detection/Suppression System, Skylights and Building Management System ensure high levels of Safety and Energy efficiency.

 

Manufacturing System   

The world class manufacturing systems of subject are benchmarked against the best internationally and comprise facilities for machining 5 major engine components, and facilities for Assembly, Test and Paint of engines.

Assembly of engines is performed on a state-of-the-art Automated Electrified Monorail System, which is roof, mounted for clean floor assembly. The system is fully PLC controlled and linked to a computerized Assembly Management System. It incorporates Failsafing at each station and In-Process-Verification Systems at critical points for defect free assembly. Laser Pulse Tools, Pneumatic Manipulators and Ergonomically designed workstations and facilities are provided to reduce operator fatigue.

Dedicated Machining lines are commissioned for each of the 5 components which are manufactured in-house viz. cylinder block, cylinder head, crankshaft, camshaft and connecting rods. Equipment has been sourced from leading suppliers in India and overseas to ensure very high levels of capability and reliability. This includes latest gauges, three Coordinate Measuring Machines and sophisticated equipments such as Topometer, Incometer for cylinder bore measurement.

 

Management System   

The company's efforts in achieving manufacturing excellence are guided by the principles and practices of the Cummins Operating System (COS), and the Customer Led Quality objectives. The Company has a flat organization structure. The level of first line Supervisors has been eliminated with the operatives (known as Associates) being organized in Teams. The formally structured Team Based Work System constitutes an integral part of the COS and is a key initiative to involve / empower shop level employees to work towards continuous improvement and customer delight. Total Quality systems or TQS has been adopted from the early stages in the company, in line with Cummins Quality Systems. The latest communications and computing systems have been

 

installed for connectivity internally and with Cummins systems in USA to provide real-time on-line information integrating the manufacturing and management information / control systems.

 

Milestones :

  YEAR

CHRONOLOGY OF EVENTS

9th July 1993

Foundation stone laid

27th April 1994

Construction started

31st March 1995

First Engine Built

4th July 1995

Inauguration Of the plant

12th September 1995

Dispatch of first engine

1st January 1996

Commercial Production started

21st December 1996

Inauguration of Machining area

28th January 1997

5,000th Engine Built

29th November 1997

10,000 th engine built

17th February 1998

ISO-9002 certification

22nd September 1998

First Wage Settlement signed

19th January 1999

Inauguration of TCL spares parts warehouse

21st January 1999

Launch of new range of TATA vehicles with TCL engines

14th May 1999

QS-9000 certification

27th May 2000

50,000th engine built

30th June 2000

Launch of B-to B applications for Supply Chain Management

18th July 2000

TPM Kick Off

10th April 2001

Certificate of Appreciation from CII for HR & Quality for 2000-2001

25th May 2001

Export of first consignment of 792 blocks to Cummins, China

23rd August 2001

100,000th Engine built

12th November 2001

Rajiv Gandhi Quality Award for 1999-2000

13th January 2003

Launch of 4B engine & Cummins Road Inauguration

15th July 2003

ISO 14001(EMS) Certification

16th October 2003

First Bonus Agreement

27th November 2003

200,000th Engine built

15th April 2005

300,000th Engine Built

24th April 2005

Cummins EBU Environmental Award

16th Sep 2005

Up gradation to ISO 14001-2004 version

7th Oct 2005

Awarded " TPM Excellence Award-First category " by JIPM, Japan

2nd Dec 2005

TS 16949 certification

9th Dec 2005

IMEA:2005-Won Silver Award in Automotive category

 


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.40.45

UK Pound

1

Rs.80.30

Euro

1

Rs.54.37

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

5

PAID-UP CAPITAL

1~10

7

OPERATING SCALE

1~10

5

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

9

--PROFITABILIRY

1~10

4

--LIQUIDITY

1~10

7

--LEVERAGE

1~10

7

--RESERVES

1~10

6

--CREDIT LINES

1~10

6

--MARGINS

-5~5

-

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

NO

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

NO

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

56

 

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

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions