MIRA INFORM REPORT
|
Report Date : |
28.11.2007 |
IDENTIFICATION
DETAILS
|
Name : |
ESSAR STEEL LIMITED |
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Registered Office : |
Post - Hazira, District Surat – 394 270, Gujarat |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
01.06. 1976 |
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Com. Reg. No.: |
04-13787 |
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CIN No.: [Company
Identification No.] |
L27100GJ1976FLC013787 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
SRTE00025E |
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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 : |
Manufacturers of Hot Briquetted Iron, Hot Rolled Coils/ Sheets and
Pellets. |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
RATING
|
STATUS |
PROPOSED CREDIT LINE |
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|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
USD 180000000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject is an important company of Essar Group managed and controlled
by Ruia brothers. The company’s shares are listed on the stock exchange. Due to
overall improvement in steel industry in India and internationally the
company has improved its results. Its domestic suppliers are paid on an
average 60 days beyond terms. Payments to overseas suppliers are regular and
as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
|
Registered Office : |
Post : Hazira, District Surat – 394 270, Gujarat, India |
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Tel. No.: |
91-261-28326260 / 26682400 / 2872400 / 6682400 |
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Fax No.: |
91-261-28326462 / 26698296 / 6682796 |
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E-Mail : |
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Website : |
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Corporate Office : |
Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi, Mumbai – 400 034,
Maharashtra, India |
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Tel. No.: |
91-22-24950606 / 66601100 |
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Fax No.: |
91-22-24954283 / 66602748 |
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E-Mail : |
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Factory : |
HRC Plant, 27 Km, Surat Hazira Road, Post Hazira, District Surat – 394
270, Gujarat, India |
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Branch : |
Ahmedabad 172/2 Premchand Annexe, Behind Popular House, Ashram Road, Telephone: 91-79-26580277/
3628 Fax: 91-79-26581917/ 5717 Chennai 77, C.P. Ramaswamy Road, Abhiramapuram, Chennai 600018, Tamilnadu,
India Telephone: 91-44-24991992/
1206 Fax: 91-44-24994922 New Delhi 21 Phiroze Gandhi Road, Lajpat Nagar III, New Delhi 110 024, India Telephone: Group : 91-11-29842563
/ 9503 Essar Oil :
91-11-29836079 / 51727378 Fax: Group : 91-11– 29844370 Essar Oil : 91-11- 51017349
/ 51716580 Email: corporatecommunications@essar.com Vadinar Essar Oil Limited Refinery Project Site Head Post Office, Post Box No. 24 Khambhalia 361 305, District
Jamnagar, India Telephone: 91-2833-241444 Fax: 91-2833-241414 Vizag Hy-Grade Pellets Limited Telephone: 91-891-2559901-10 |
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Overseas Offices : |
China Name: Mr. Deep Banerjee Company: Essar Steel Limited / Essar - Beijing Representative Office Unit 1509, China World Tower 1, China World Trade Centre, No 1 Jian
Guo Men Wai Avenue, Beijing 100004, P R CHINA Telephone: 86-10-58669923
(Board) 86-10-58669925
(Direct) Fax: 86-10-58669924 Email: deepessar@hotmail.com Doha - Qatar P. O. Box 24086, Doha - State of Qatar Telephone: 974- 467 4343 Fax: 974- 467 0535 Indonesia Company: PT Essar Dhananjaya. Graha Essar, Bekasi Fajar Industrial Estate, Industri 3 , Area Kav #
B1 Cibitung, Bekasi 17520 West Java, Indonesia. Telephone: 62- 21- 8980152/
53/ 54, 8980203/ 4/ 6/ 7 Tlx: 64827 ESSAR IA Fax: 61 -21- 8980150/ 51 Email: marketing@essar.co.id United Arab Emirates Name: Essar Gulf FZE LOB 6, G-18, Post Box No. 61078, Jabel Ali, Dubai, UAE Telephone: 9714- 881 7278 Fax: 9714- 881 7281 USA - New York 36th Floor, 145, E 48th Street, New York, NY 10017 Telephone: 1- 212-7585520 Fax: 1- 212-7585860 |
DIRECTORS
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Name : |
Mr. Shashi Ruia |
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Designation : |
Chairman |
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Name : |
Mr. Ravikant
Ruia |
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Designation : |
Vice-Chairman |
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Name : |
Mr. Prashant
Ruia |
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Designation : |
Managing Director |
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Name : |
Mr. Vikram Amin |
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Designation : |
Director –
Marketing |
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Name : |
Mr. V. G.
Raghavan |
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Designation : |
Director -
Finance |
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Name : |
Mr. Jatinder
Mehra |
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Designation : |
Director |
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Name : |
Mr. S. V. Venkatesan |
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Designation : |
Director |
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Name : |
Mr. Sanjeev
Shriya |
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Designation : |
Director |
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Name : |
Mr. Rewant Ruia |
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Designation : |
Director |
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Name : |
Mr. Robin
Banerjee |
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Designation : |
Director –
Finance |
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Name : |
Mr. K. V.
Krishnamurthy |
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Designation : |
Director |
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Name : |
Mr. G. D.
Goswami |
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Designation : |
Nominee - ICICI
Bank |
KEY EXECUTIVES
|
Name : |
Mr. Narottam B.
Vyas |
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Designation : |
Company
Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names
of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Promoters &
Associates |
992570167 |
87.08 |
|
Fin.
Institutions/ Banks/ Mutual Funds |
9947554 |
0.87 |
|
Other Companies |
34737546 |
3.05 |
|
Non Domestic
Companies , -. |
309114 |
0.03 |
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Foreign
Institutional Investors |
23110425 |
2.03 |
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Non Resident
Individuals |
2524549 |
0.22 |
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Public |
76611533 |
6.72 |
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TOTAL |
1139810888 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturers of Hot Briquetted Iron, Hot Rolled Coils/ Sheets and
Pellets. |
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Products : |
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Exports to : |
Middle East Asia, South East Asia including China, U.S.A. and Western
Europe |
PRODUCTION STATUS
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
|
Iron Ore Pellet
Plant |
MT |
8000000 |
4509745 |
|
Hot Briquette
Iron Plant |
MT |
5000000 |
3590302 |
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Hot Rolled
Coil/Sheet Plant |
MT |
3600000 |
2951578 |
|
Cold Rolled Coil
Plant |
MT |
1200000 |
-- |
GENERAL
INFORMATION
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No. of Employees : |
2732 |
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Bankers : |
v State Bank of
India v Punjab National
Bank v Bank of India v Allahabad Bank v IDBI Bank v State Bank of
Patiala v State Bank of
Mysore v Indian Bank v State Bank of
Saurashtra v State Bank of
Indore v State Bank of
Bikaner and Jaipur v Standard
Chartered Bank v Export Import
Bank of India |
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Secured Loan : |
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Banking Relations
: |
Satisfactory |
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Auditors : |
S. R. Batlibai
and Company Chartered
Accountants |
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Address : |
6th
Floor, Express Towers, Natiman Point, Mumbai - 400021 |
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Group Companies : |
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Subsidiaries : |
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Fellow Subsidiaries : |
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Membership : |
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Associates : |
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Holding Company : |
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CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
3520000000 |
Equity Shares |
Rs.10/- each |
Rs. 35200.0000
millions |
|
60000000 |
0.01% Cumulative Preference Shares |
Rs.90/- each |
Rs. 5400.000
millions |
|
60000000 |
Redeemable Cumulative Preference Shares |
Rs.90/- each |
Rs. 5400.000 millions |
|
100000000 |
10% Cumulative Preference Shares |
Rs.10/- each |
Rs. 1000.000 millions |
|
300000000 |
0.01 % Cumulative Preference Shares |
Rs.10/- each |
Rs. 3000.000 millions |
|
65000000 |
8 % Cumulative Preference Shares |
Rs.350/- each |
Rs. 22750.000
millions |
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GRAND
TOTAL |
|
Rs. 72750.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
113,98,10,888 |
Equity Shares |
Rs.10/- each |
Rs. 11398.100 millions |
|
|
Add : Shares Forfeited |
|
Rs. 6.700
millions |
|
20,29,24,832 |
0.01% Cumulative Preference Shares |
Rs.10/- each |
Rs. 2029.200
millions |
|
4,35,98,951 |
10% Cumulative Preference Shares |
Rs.10/- each |
Rs. 436.000
Millions |
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GRAND
TOTAL |
|
Rs. 13870.000 millions |
FINANCIAL DATA
[all figures are in
Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
|
|
|
|
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1] Share Capital |
13870.000 |
27852.900 |
10049.800 |
|
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2] Redeemable Preference Shares |
0.000 |
0.000 |
332.700 |
|
|
3] Reserves & Surplus |
30809.500 |
12461.800 |
6866.100 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
NETWORTH
|
44679.500 |
40314.700 |
17248.600 |
|
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LOAN FUNDS |
|
|
|
|
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1] Secured Loans |
65333.200 |
75346.400 |
41263.200 |
|
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2] Unsecured Loans |
4099.200 |
6504.600 |
6842.700 |
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TOTAL BORROWING
|
69432.400 |
81851.000 |
48105.900 |
|
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
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Long-term Advances from Customer |
1664.200 |
0.000 |
660.500 |
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TOTAL
|
115776.100 |
122165.700 |
66015.000 |
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APPLICATION OF FUNDS
|
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FIXED ASSETS [Net Block]
|
88895.900 |
63984.500 |
32489.000 |
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Capital work-in-progress
|
11077.800 |
28873.600 |
5896.400 |
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INVESTMENT
|
4334.300 |
1829.700 |
7683.800 |
|
DEFERREX TAX ASSETS
|
2382.300 |
0.000 |
4809.600 |
|
|
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CURRENT ASSETS, LOANS &
ADVANCES
|
|
|
|
|
|
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Inventories
|
23287.700
|
14853.400
|
9332.200
|
|
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Sundry Debtors
|
5468.500
|
5401.600
|
4713.000
|
|
|
Cash & Bank Balances
|
4328.600
|
7257.900
|
2531.500
|
|
|
Other Current Assets
|
45.100
|
0.000
|
0.000
|
|
|
Loans & Advances
|
10844.200
|
24970.600
|
7380.100
|
Total Current Assets
|
43974.100 |
52483.500
|
23956.800 |
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
34532.700
|
25005.600
|
8820.600
|
|
|
Provisions
|
355.600
|
--
|
--
|
Total Current Liabilities
|
34888.300 |
25005.600
|
8820.600 |
|
Net Current Assets
|
9085.800 |
27477.900
|
15136.200 |
|
|
|
|
|
|
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MISCELLANEOUS EXPENSES
|
0.000 |
0.000
|
0.000 |
|
|
|
|
|
|
|
TOTAL
|
115776.100 |
122165.700 |
66015.000 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
81943.500 |
61825.800 |
61212.700 |
|
|
Other Income |
192.200 |
2081.400 |
|
|
|
Total Income |
82135.700 |
63907.200 |
61212.700 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
6834.600 |
6959.800 |
7941.000 |
|
|
Provision for Taxation |
2469.700 |
1658.000 |
2039.500 |
|
|
Profit/(Loss) After Tax |
4364.900 |
5301.800 |
5901.500 |
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Earnings in Foreign Currency : |
|
|
|
|
|
|
Export Earnings |
29154.500 |
16827.500 |
|
|
|
Freight Recovered |
1903.800 |
919.300 |
20753.300 |
|
|
Other Earnings |
26.000 |
0.000 |
|
|
Total Earnings |
31084.300 |
17746.800 |
20753.300 |
|
|
|
|
|
|
|
|
Imports : |
|
|
|
|
|
|
Raw Materials |
3327.800 |
4965.300 |
|
|
|
Stores & Spares |
5127.700 |
5389.000 |
7373.600 |
|
|
Capital Goods |
2583.000 |
4290.700 |
|
|
Total Imports |
11038.500 |
14645.000 |
7373.600 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Materials
Consumed |
57477.400 |
|
|
|
|
Decrease/(lncrease)
in Stocks |
[8726.600] |
[897.400] |
|
|
|
Personnel
Expenses |
1528.000 |
997.500 |
|
|
|
Manufacturing
and Asset Maintenance |
7460.400 |
6013.300 |
41845.200 |
|
|
Administrative
Expenses |
1461.400 |
1306.600 |
|
|
|
Selling and
Distribution Expenses |
3382.600 |
2343.300 |
|
|
|
Finance Costs (net) |
6179.400 |
4226.700 |
|
|
|
Depreciation |
6310.400 |
4821.000 |
|
|
Total Expenditure |
75073.000 |
56063.800 |
41845.200 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
30.06.2007 [1st
Quarter] |
30.09.2007 [2nd
Quarter] |
|
Sales Turnover |
|
25632.800
|
25613.400
|
|
Other Income |
|
20.800
|
15.100
|
|
Total Income |
|
25653.600
|
25628.500
|
|
Total Expenditure |
|
19236.400
|
19525.000
|
|
Operating Profit |
|
6417.200
|
6103.500
|
|
Interest |
|
933.600
|
1599.600
|
|
Gross Profit |
|
5483.600
|
4503.900
|
|
Depreciation |
|
1870.900
|
1864.000
|
|
Tax |
|
309.400
|
218.100
|
|
Reported PAT |
|
2310.600
|
1520.100
|
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
1.69 |
2.27 |
4.41 |
|
Long Term Debt-Equity Ratio |
1.45 |
1.93 |
3.89 |
|
Current Ratio |
1.09 |
1.43 |
1.41 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
0.75 |
0.79 |
0.95 |
|
Inventory |
4.72 |
5.66 |
8.03 |
|
Debtors |
16.56 |
13.55 |
15.11 |
|
Interest Cover Ratio |
1.92 |
2.06 |
2.75 |
|
Operating Profit Margin(%) |
22.89 |
23.80 |
29.88 |
|
Profit Before Interest And Tax Margin(%) |
15.88 |
16.76 |
23.84 |
|
Cash Profit Margin(%) |
11.86 |
13.59 |
17.32 |
|
Adjusted Net Profit Margin(%) |
4.85 |
6.55 |
11.28 |
|
Return On Capital Employed(%) |
12.51 |
12.28 |
22.70 |
|
Return On Net Worth(%) |
14.43 |
30.44 |
46.88 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Promoted
by the Bombay-based Essar group controlled by the Ruias, Essar Steel initially
commenced operations of specialized construction in Jun.'76 as Essar
Constructions. Its name was changed to Essar Offshore and Explorations in May
'87 and later to Essar Gujarat in Aug.'87. It became Essar Steel in 1995.
Its
energy division was operating the largest fleet of rigs in the private sector.
In 1987-88, it diversified into sponge iron and set up a 8,80,000 tpa gas-based
plant at Hazira, Gujarat. The plant incorporating technology innovated by
Midrex Corporation, US, commenced production in Aug.'90 with two 4,40,000 tpa
modules. A third module, of similar capacity, commenced operations in 1993. The
total capacity was increased to 1.6 mtpa in 1993, with a capability to reach
1.76 mtpa. The company again diversified into the manufacture of steel by
setting up a 2-mtpa hot-rolled strip plant which was part-financed by a rights
issue in Oct.'92. The plant commenced production in Sep.'95. Later the company
transferred its energy and offshore divisions to Essar Oil.
A
pelletisation project was set up at Visakhapatnam as a strategic backward
integration in collaboration with Lurgi, Germany, which commenced trial run
production in Nov'96. It has a joint venture namely PT Essar Dhananjaya in
Indonesia with technology from Hitachi, Japan, to produce cold rolled products
with a capacity of 2,00,000 tpa was commissioned.
In
1996-97, the company also commissioned its downstream complex with a plateline
capacity of 4,00,000 metric tones comprising two slitting lines, one light
gauge shear line and one heavy gauge shear line to cater to the lucrative
plates market.
The
company has become the country's first integrated steel plant to receive both
ISO 9002 and TUV certifications. During 1998-99, Essar Minerals Limited
presently Hy-Grade Pellets Limited (HGPL) has become wholly owned subsidiary of
the company.
To
enhance brand equity for "Essar 24 Carat Steel brand and to ensure long
term relationship with customers, the company plans to launch more campaigns
during the fiscal 2002. HGPL is ceased to be a subsidiary of the company
consequent to allotment of 51% of its equity capital to Stemcor Minerals.
The company has acquired the balance 51% equity stake in
Hy-Grade pellets Limited and 100% equity stake in Steel Corporation of Gujarat
Limited. Further the company proposed amalgamation of both these subsidiaries
with the Company with effect from 1st April 2005 and this is subject to
approvals.
The Company has planned to increase the capacity to 4.6 Million MTPA in next 2
years. The company has planned to increase the pellet making capacity at
Visakhapatnam from 4 to 8 Million tonnes in the current year. The company has
initiated production and sales of HR Pickled and Oiled, Cold Rolled and
Galvanised Products. Further the company has launched shot blasted and primer
coated plates for shipbuilding and general engineering applications.
The company has increased its installed capacity of Hot Briquette Iron Plant by
1400000 MT during 2004-05 and with this expansion the total installed capacity
of Hot Briquette Iron Plant has increased to 3400000 MT.
OPERATIONS
AND PERFORMANCE HIGHLIGHTS
Manufacturing:
The Company's production of liquid steel at its plant at Hazira was 3.05
million tonnes, an increase of 20% from the 2.54 million tonnes produced in the
last financial year. The production of HR coils was up 15% to 2.95 million
tonnes from 2.57 million tonnes last year.
During the year, the Company completed its capacity expansion to 4.6 million
tonnes per annum at Hazira. The pellet plant capacity at Visakhapatnam was also
increased to 8 million tonnes per annum to cater to the increased requirements
at the steel plant. The Company also made additions to plant and equipment in
the Cold Rolling Complex as part of its efforts to further strengthen its
product offering. The Company spent Rs.31220 Millions during the year for
assets that were created in the manufacturing and other support
functions.
Sales and marketing:
The
year under review saw some significant developments in the marketing of the
Company's products. Exports crossed the 1 million tonne mark and the company
continued to be the highest exporter of flat steel from India.
Overall sales volumes grew 13% to 2.8 million tonnes and revenues grew by 31%
to Rs 90000 Millions from Rs 68500 Millions in the previous year. Domestic
sales accounted for Rs 60120 Millions and export sales were Rs 29880
Millions.
Net
average realisation across all products went up by 19% from Rs.23,380 per tonne
to Rs 27,820 per tonne.
The
Company's strategy to increase net sales realisation per tonne of steel
involved action in three areas:
- Selling closer to low freight areas in
the domestic market
- Increasing the proportion of value
added grades in the sales portfolio
- Rationalising the customer base to
optimise order quantity service levels.
The
success of the implementation of these policies is outlined below:
- Close to 70% sales in the domestic
market were in the West zone and 40% of their exports were to the Middle
East - markets close to their manufacturing facilities at Hazira.
- 60% of total sales were to value added
segments like API (for oil & gas pipelines), HSLA (high strength low
alloy steels for the auto sector), IF (interstitial free steel for
critical components of automobiles), CORTEN (corrosion resistant steel),
plates for Boilers and Ship building, etc.
- The average sales quantity per customer
went up by more than 100% leading to better planning and delivery
schedules The Company began a new initiative in the year to address the
large and untapped potential in the retail market for steel products. In a
bid to reach out to end users directly, the Company began commissioning
Essar Steel Hypermarts in April 2006 and in 12 months was able to setup
more than 80 retail outlets which, clocked more than 1.1 lakh tonnes of
sales valued at over Rs. 3500 Millions.
This
business is expected to grow multifold in the current fiscal. The introduction
of the most advanced communication tools for placing steel orders, such as
mobile messaging, and exclusive in-bound and out-bound call centers has met
with tremendous response from small customers. The company believes that this
move will bring proximity, speed and higher customer satisfaction to a market
that has been exclusively catered to by traders.
MANAGEMENT DISCUSSION &
ANALYSIS:
Global outlook:
Driven
by buoyant steel - intensive economic activity including construction and
infrastructure building in many developing economies, global apparent
consumption of steel increased at an average rate of more than 7% per annum
since 2002, to reach a record level of 1.11 billion tonnes in 2006.
This
growth rate is expected to continue in 2007. Global crude steel production grew
8% from 1.15 bn tonnes in 2005 to 1.24 bn tonnes in 2006.
This
is faster than the 6% growth in production seen last year.
Global
steel markets continued to remain firm in the first quarter of the calendar
year with domestic demand in China rising sharply. Chinese exports dropped 21
percent in January 2007, in comparison to December 2006.
Globally,
restocking activity was under way in the last quarter of the fiscal leading to
higher apparent demand. Most global mills operated at maximum capacity in
January 2007.
The
global steel demand outlook for 2007 remains favourable. From a macro point of
view the key factor is rising fixed asset investment as a share of global GDP,
which is good news for the steel industry and the company.
The most significant developments in the global steel industry were the two
mega mergers of the last year: Arcelor-Mittal and Tata-Corus. The two deals are
fine examples of the wave of consolidation that is sweeping the steel industry.
Consolidation of this kind is not just restricted to regional amalgamation but
also gives rise to wider product mix, higher capacity utilisation, increased
competition and reduced cyclicality in steel prices.
The US economy seems poised for a rebound form the 4th quarter of this year (October
07 onwards) with improving market conditions, decreasing import levels and the
continued decline of excess inventory levels at service centers. Recession
fears receded in the US market, and barring the automobile industry, most
sectors are expected to pick up. The EU and Japanese economies are still
expanding. Middle East countries fuelled by income from sustained global oil
and gas demand and elevated prices are experiencing explosive growth in steel
demand on the back of investments in oil and gas pipelines and real estate.
Global steel prices are expected to be firm over the next 12 months despite a
dip in Q2 of the current fiscal. This is mainly because Chinese steel exports,
which were at an unrealistic annual rate of 96 mtpa, are expected to decline to
an annual rate of 50 mtpa with the Chinese government imposing significant
tariff and non-tariff restraints in an effort to correct trade
imbalances.
On the input front, iron ore prices which has averaged a 9.5% increase this
year, are expected to tighten further due to soaring freight rates, rapid
escalation in cost of new mine developments leading to slowing down of green
field mine projects. Coking coal fundamentals are also strong and prices are
expected to remain firm accentuated by the severe port congestions in
Australia. Zinc after a brief period of stability is expected to be firm
through FY 07-08.
India Outlook:
India
produced 48 million tonnes of finished steel in FY07, a 9% increase over last
year. Exports also grew 6.5% to 4.1 million tonnes. With GDP growing at 8.2%,
steel consumption sectors that grew and fuelled steel demand were Construction
(19%), Automobile (18%), Oil & Gas (30%) and Power (40%). Robust growth in
industrial projects, favourable government policies and private participation
in infrastructure, favourable demographics, rising incomes, and availability of
cheap finance, contributed to this growth.
However,
at 40 kg, India's per capita consumption remains abysmally low when compared to
China (270 kg per capita). Forward looking steelmakers the world over are
beginning to realise the value of partnering with their customers to offer
total solutions and ensure long-term stability and profitability. Partnering,
collaboration and consolidation will help the industry tap into a shared pool
of resources, from procurement to R&D and customer retention.
In the first half of 2007 steel prices are expected to be under pressure from a
rising rupee which has spiked the availability of cheaper imports and higher
interest rates which have slowed consumption of steel consuming products.
Increased availability of steel due to expansions of existing capacities and
coming on stream of new capacities are also expected to keep downward pressure
on the prices. But with sustained growth in consumption and no sign of
abatement in the near future, the overall outlook for 2007 looks stable.
FINANCE:
During the year, the Company achieved the financial closure for its capex
programme of increasing its steel making capacity from 2.4 million tonnes to
4.6 million tonnes per annum at Hazira. The Company also tied up the required
loans for other capital expenditure projects including loans required for
setting up of service centers. The Company deployed the required internal
accruals and raised debt of Rs. 13380 Millions for funding the various capital
expenditure programmes. A portion of these loans was raised in the form of
External Commercial Borrowings (ECBs) of USD 155 mio i.e. equivalent to Rs.
6950 Millions (out of the sanctioned amount of USD 190 mio). The 4.6 mtpa
expansion programme was completed and the increased capacity was commissioned
during the year. The Company expects the full benefits of the expansion
projects to accrue in the coming years.
In addition to the term loans, the Company also raised Export Advances
aggregating to USD 100 mio i.e. equivalent to Rs. 4570 Millions. These export
advances show the commitment of the buyers towards purchasing of steel products
from the Company. One such export advance of USD 75 mio was awarded the 'BEST
DEALS of 2006' by Global Trade Review (GTR).
As a
result of merger of pelletisation unit and cold-rolling unit with Essar Steel
Limited and ramping-up of the steel making capacity, the Company enhanced its
working capital banking limits from Rs. 17300 Millions to Rs. 26000 Millions,
thereby enhancing the liquidity position.
The company is in trade terms with :
Ř MIDREX
Corporation, U.S.A./Voest Alpine, Austria
Ř METCHEM Inc.
Canada
Fixed Assets:
Ř Land
Ř Buildings
Ř Plant and
Machinery
Ř Furniture and
Fixtures
Ř Office Equipment
Ř Vehicles
Ř Ships and Vessels
Ř Railway Sidings
Ř and Wagons
The company is the second largest private sector steel company.
The company has technical collaboration with :
v
Voest Alpine, Austria
AS PER
WEBSITE
The Essar Group
is one of India's largest corporate houses with interests spanning the
manufacturing and service sectors in both old and new economies: steel, oil
& gas, power, telecom & BPO, shipping and construction. The group’s
enterprise value is approximately US$ 15 billion (Rs. 670000 millions) and a
turnover of over US$ 2.2 billion (Rs. 100 billion). Strategic investments made
by the group over the past decade have resulted in the creation of tangible and
intangible assets that are at the heart of the Indian economy.
The Group takes pride in being a high-performance multinational organization,
providing world-class services and products. Manned by a highly efficient and
dynamic team of employees, the Group is growing stronger every day. A committed
corporate citizen, the group provides unwavering support to the community as
well as initiates various social and ecological drives that have a positive
impact on society.
World - class standards
They insist on setting
and surpassing world-class benchmarks in everything they do. No wonder they
have the world’s largest gas-based sponge iron plant and are one of the world’s
largest integrated sea logistics companies that owns India’s largest double
hull, double bottom VLCC. All their businesses are highly integrated across the
value chain and use the latest technology to stay strong and agile. They have
invested several billion dollars on exclusive state-of-the-art technology
because they believe that it confers strong strategic advantages.
History
The Essar group was founded over three decades ago by the Ruia family
and is headed by Chairman Shashi Ruia and Vice-Chairman Ravi Ruia. The Ruia
family has been in business and trading since the 1800s, when the family first
moved to Mumbai from Rajasthan in Western India. In 1956, Nand Kishore Ruia,
the group founder, moved south to Chennai to begin independent business
activities. In 1969, following the untimely demise of Nand Kishore Ruia, his
sons Shashi and Ravi Ruia took over the group. Along with a team of seasoned
professionals, the Ruias have built the perfect platform for Essar's
accelerating growth. With a strong foundation at India’s industrial core and in
the sunrise services sector, Essar has stayed firmly in the forefront of new
opportunities. An early start has made them a key player in India's exploding
telecom market. Similarly, they set up India’s first independent power plant
and its first new generation private steel plant.
Touching millions of lives
For decades, they have quietly touched the lives of millions of people
with the steel to build cars, the oil to fuel factories, the power to light up
thousands of lives and the pipelines to bring drinking water to remote
villages. Today, they have come closer by connecting customers with their
cellular phone services and talking to thousands of people through their call
centers, a countrywide chain of fuel outlets and marketing steel at the retail
level.
Mission
To create enduring value for customers and stakeholders
in core manufacturing and service businesses,
through world-class operating standards,
state-of-the-art technology and the 'positive attitude' of their people.
Management Team
Corporate Functions
Mr. Suresh Sundaram Director -
Corporate Aviation
Mr. S. V.
Venkatesan Resident
Director - Chennai
Mr. J. Mehra Resident
Director - New Delhi
Mr. Harsh Shah Resident Director -
Gujarat
Mr. Madhu S. Vuppuluri Resident Director - New York
Mr. Sunil Bajaj President - Corporate Affairs
Mr. V Krishnan Head
- Corporate Communications
Mr. Y. M. Shivamurthy Head - Legal
Mr. N. S. Paramasivam Head - Forex & Treasury
Mr. Dinyar M. Jivaasha Head - Corporate Risk & Ins. Management
News Room
Essar to set up Rs 15k cr refinery in Jamnagar SEZ
Economic Times - August 28, 2006
Tushar Prabhune
Another big-ticket
investment is being lined up in petro-town Jamnagar. The Essar group has
decided to set up a Rs 150000 millions, 16-20 million tonne greenfield refinery
in its upcoming SEZ near Jamnagar. This will be in addition to Essar's new
10.5-MT Vadinar refinery, which will go on stream in October this year.
Jamnagar already
boasts of the world's largest grassroots refinery built by Reliance Industries
(RIL). RIL is also setting up a Rs 25,0000 millions, 27-MT refinery in its SEZ
in the district. Essar has set a target of touching a cumulative refining
capacity of 32 MT by '09-10.
The capacity
expansion will be carried out in a phased manner. While the refinery at Vadinar
in Jamnagar is ready for commissioning, the new capacities will be a part of
Essar's 1,000-hectare SEZ in the same district.
The conglomerate is
planning to commission the Vadinar refinery in the first week of October as
construction work on the Rs 160000 millions refinery has been completed, a
source said. An Essar spokesperson told ET: "They are looking at various
growth opportunities. But it is too premature to comment.
Essar has already
got a formal approval for developing the 1,000-hectare SEZ, for which it would
pump in an estimated Rs 15,0000 millions - most of which would be invested in
constructing the new refinery.
Essar Oil, the
group company executing the refinery project, has already begun the groundwork
for construction of the new refinery as well as other downstream petrochemicals
units that would be set up in the SEZ.
Executives of Essar
Oil have begun parleys with the state ports regulatory authority, asking the
latter to suggest suitable locations for putting up single buoy moorings (SBMs)
in Gujarat waters.
The company has
sought approval for two SBMs. The company is preparing a detailed project
report for the new refinery as well as the two SBMs, the source added.
Press Releases
Essar Oil signs two production
sharing contracts with Myanmar Govt. for oil exploration
May 09, 2005
Essar Oil Limited
(EOL) signed a Production Sharing Contract with the Government of Myanmar for
exploration of oil exploration in two Blocks - one each for onshore and
offshore blocks. The contracts were signed by Mr. U.San Lwin- Managing Director
of Myanmar Oil & Gas Enterprise, on behalf of the Government of Myanmar.
The Minister for Energy, Brigadier General Lun Thi was also present. Mr. A. N.
Sinha signed the contracts on behalf of Essar Oil Limited.
Essar is the first Indian private sector company to sign an agreement in this
area in Myanmar
EOL's bid for the two contiguous exploration blocks in offshore (Block A2) area
and adjoining on land area (Block L).was made after detailed examination of
geo-scientific data at MOGE office in January 2005 by the EOL team.
The blocks are ideally located between proven gas blocks and aligned along the
regional corridor of gas discoveries south of Bangladesh, including the highly
productive Sangu Gas field in Bangladesh. The Rakhine coast lies along the
eastern side of these blocks, providing favourable logistic support.
Essar Oil is a fully integrated oil company with operations covering the entire
value chain of oil exploration to retailing of petroleum products. It is
currently setting up a 10.5 mmtpa refinery at Vadinar, Gujarat on the West
Coast of India. It plans to set up 2500 retail outlets by mid 2006 which will
further be increased to 5000 retail outlets by 2008. The company has commissioned
over 500 retail outlets across the country.
EOL is a part of the Essar Group, one of India's largest corporate houses, with
interests spanning the manufacturing and service sectors - steel, shipping,
power, oil and gas, telecom and construction. The Group has an asset base of
over Rs. 200000 millions (USD 4.4 billion).
Essar Forays Into Wind Power Signs Licence
Agreement with REpower AG, Germany
September 15, 2006
Essar Global's
Power business today signed a Licensing Agreement with REpower Systems AG for
the design and manufacture of 1.5 MW (and 2 MW) Wind Turbines in India and
marketing in South East Asia. The two corporations have agreed to set up a
joint venture in the near future which will allow access to 3MW and 5 MW
turbines as well other future developments and wider market reach.
Commenting on the
occasion, Mr. Anshuman Ruia Director, Essar Power said, "They are happy to
be associated with Re-power for their foray into the wind energy business. They
are confident that this is the beginning of a long and mutually beneficial
relationship. The agreement comes at a time when there is a huge demand for
power in India and it also fits in perfectly with their strategy of
diversifying into renewable energy sources."
This wind turbine
technology is widely accepted for usage Europe for generation of power.
REpower's 1.5 megawatt turbine installations in Germany operate with an average
availability of approx. 99%. This technology is ideally suited for Indian wind
conditions.
Essar proposes to
set up the manufacturing plant in a port based location which the Group hopes
to finalize soon. The initial investment required to set up the plant is in the
region of Rs. 500.000 Millions and this will be financed through internal
resources. Essar expects to start commercial production by the middle of next
year.
India with approx.
5300 megawatts of installed wind power capacity (as on March 2006) will see
additional capacity of 1700 MW -1800MW in the current financial year. The
Indian market for wind energy is the largest in Asia and the fourth largest on
a global scale. India has wind resources to harvest around 45000 MW of power.
About Essar's power business :
Essar has been in
power generation business for the last one decade. It currently operates four
power plants with a capacity of over 1000 MW. Essar, with its proven experience
of developing power projects is well positioned to implement large sized power
projects.
About REpower :
REpower Systems AG is one
of the leading manufacturers of onshore and offshore wind turbines. The
international engineering company develops, produces and sells wind turbines
with outputs ranging from 1.5 to 5 megawatts and rotor diameters of 70 to 126
metres for almost all locations. It also provides a comprehensive service and
maintenance range. The high performance, reliable turbines are designed at the
REpower development centre in Rendsburg and produced at the sites in Husum
(North Frisia) and Trampe (Brandenburg).
Listed on the German stock exchange since March 2002 and with around 700
employees worldwide, the Hamburg-based company relies on its experience in the
production and installation of more than 1,400 wind turbines worldwide. REpower
is represented in European markets such as France, the United Kingdom, Italy,
Portugal and Spain and in the international markets of Japan, China and
Australia through its subsidiaries and investments.
Essar Global consolidates its Shipping and
Logistic business under ESLL
August 17, 2006
Essar Global
Limited (EGL) has investment interests in the Infrastructure sector,
Telecommunication & Technology and Industrial Construction and Engineering.
The group has its offices in. U.S.A, U.K., Middle East, India, Singapore and
China. Essar Global employs over 15,000 people and has an asset base in excess
of US $ 6 billion.
EGL announced the
restructuring of its businesses in shipping, terminalling and logistics. In
order to provide a sharper focus to its business and increase shareholder
value, the Company has formed a fully owned subsidiary, Essar Shipping and
Logistics Limited (ESLL), registered in Cyprus.
As per the
re-organization plan of the shipping business, ESLL will have three operating
companies under its umbrella:
Essar Shipping
Limited. (ESL) - 77% owned by ESLL, Essar Shipping is a leading sea
transportation company, with a special focus on transportation solutions for
the global energy business. A strong management team of experienced marine
professionals steers the company, maintaining intense customer focus, world
class operations, an impressive safety record and consistent financial
performance. The Company owns a modern fleet of 27 vessels, including VLCCS,
tankers and bulk carriers. The Company has long standing relationships with
major global and Indian oil companies like Shell, Exxon Mobil, Chevron BP
Aramco, Texaco, Bharat Petroleum and Indian Oil Corporation. The Company is ISO
9000:2000 and ISO 140001 certified and has been recognized as the "Safest
Indian Shipping Company" by DG Shipping, India in 2004.
Essar Logistics
Limited (ELL) - Fully owned subsidiary of ESLL will carry out the business of
logistics management, transshipment and port services. The Company specialises
in the handling, storage distribution and movement of cargo by sea, road and
rail.
Vadinar Oil
Terminal Limited (VOTL) - Fully owned subsidiary of ESLL will focus on ports
and terminals. VOTL has set up a 32 million tonne terminal facility in Vadinar,
Gujarat, India, which will be operational by the end of September,2006. Vadinar
port is an all weather, deep draft port, and will serve major oil refineries
and traders in the region.
The reorganization
will make ESLL a leading integrated logistics provider for steel mills, oil
refineries and thermal power generation companies across the world.
Mr. Sanjay Mehta
will assume the responsibility of CEO of Essar Shipping & Logistics
Limited. and continue as Managing Director of ESL. Mr. A.R. Ramakrishnan who is
currently Chief Operating Officer has been inducted into the Board of ESL as an
Executive Director and will be designated CEO.
About Essar Global
Essar Global Limited investments in Infrastructure portfolio comprises of
investments in :
Essar Steel Limited
: The largest integrated producer of steel in Western India, with a capacity of
4.6 million tonnes per annum, with plans to set up manufacturing facilities in
Qatar, Sharjah and Trinidad.
Essar Oil Limited :
A leading integrated oil major involved in Exploration & Production,
Refining and Retailing of petroleum products.
Essar Power Limited
: Power generation capacity close to 1000 MW with plans to increase capacity to
2500 MW and enter transmission and distribution
Essar Shipping and Logistics
Limited : Leading sea logistics solutions provider involved in sea
transportation, ports and terminalling activities.
Telecommunication
& Technology : Investment portfolio comprises of investments in Hutchison
Essar provides cellular services in association with Hutchison Whampoa, Hong
Kong.
Aegis
Communications is an integrated customer solutions provider in BPO and IT.
Industrial
Construction and Engineering : Investment portfolio comprises of investment in
Essar Construction - one of India's foremost engineering, procurement and
construction specialists.
Essar Steel Completes expansion to 4.6 million
tones is now the largest producer of Flat Steel in India’s Private Sector
Essar Steel
announced today that it had completed the expansion of steel manufacturing
capacity at its Hazira Complex in Gujarat, India to 4.6 million tonnes. The
expansion project was completed in 18 months with an investment of Rs.
19750.000 Millions Company said that this is the culmination of Essar Steel's
strategy to be a low cost, high quality and value added producer for the niche,
high end markets in India and abroad.
The expansion makes
Essar Steel India's largest producer of flat steel in the private sector,
accounting for close to 23% of the country's flat steel capacity. The Company
also installed two more modules for HBI/DRI production, increasing total
capacity to 5.5 million tonnes per annum. This makes Essar Steel the largest,
single location producer of HBI in the world.
It also increases
the share of value added products in Essar Steel's portfolio to 75% from the
existing 45% and will contribute significantly to reduction in imports of
critical special grades of steel meant for sophisticated applications. The
Company also said that it expects a quantum jump in exports of its products and
this will consolidate its pre-eminent position as India's largest exporter of
flat steel.
Mr. Prashant Ruia,
Director, Essar Group said, "They are extremely pleased that this capacity
expansion will make India an even more potent force in international steel
markets. This expansion and modernisation puts Essar Steel in the premium
league of high end steel producers. They are privileged to be at the core of
India's economic development at a time when the country is being recognized as
one of the fastest growing economies in the world."
The expansion
entailed adding a new electric arc furnace, a third caster, RH degasser and
allied equipment. In order to meet the requirements of the expanded steel
capacity, infrastructure facilities have also been enhanced. This includes a
captive power plant of 500 MW capacity, increase in capacity of the port to 12
MTPA and allied machinery and equipment workshops.
The Company's R
& D centre has also been modernized and expanded and houses
state-of-the-art equipment and highly qualified and trained scientists and
engineers.
About Essar Steel
Essar Steel is the
largest integrated producer of steel in Western India, with a capacity of 4.6
million tonnes per annum. Its seamless integration ensures total control at
every stage of manufacture - from iron ore to finished products. It is also
India's largest exporter of flat steel products. Essar Steel has manufacturing
locations in Hazira, Visakhapatnam and Bailadilla in India.
About Essar
The Essar Group is
one of India's largest corporate houses, with interests spanning the core and
infrastructure sectors of industry - steel, oil & gas, power, telecom &
BPO, shipping & logistics and construction. It has an asset base in excess
of US $ 6 billion (Rs. 270000.000 Millions). It employs 15,000 people and has
offices in over 50 locations world-wide
Essar Global to acquire Minnesota Steel;
invest USD 1.65 billion to build an integrated steel plant
April 18, 2007
London, United Kingdom and St.
Paul, MN: April 18, 2007
Essar Global Limited, through its
wholly owned subsidiary - Essar Steel Holdings Limited, (“Essar”) and Minnesota
Steel LLC. (“Minnesota”) today announced that an agreement has been executed to
acquire Minnesota Steel LLC; a US based steel company which controls iron ore
resources of over 1.4 Billion tonnes.
Minnesota Steel plans to set up an
integrated steel plant at an estimated cost of USD 1.65 billion. The steel
plant will have an annual capacity of 2.5 million tonnes when completed.
Construction is expected to begin
in the third quarter subject to necessary environmental and regulatory
approvals.
The steel plant will be built in
phases with the first phase expected to go on stream in 2009 and produce up to
1.5 million tonnes of thick steel slab per year.
Minnesota Governor Tim Pawlenty
hailed the closing of Minnesota Steel’s strategic partner. “This
investment is a tremendous milestone, not only for the company but also for the
State,” Governor Pawlenty said. “It moves us much closer to the goal of making
steel on the Iron Range.”
Essar Global Chairman, Shashi Ruia
said his company is looking forward to expanding operations into North America.
“Our investment in Minnesota Steel is exciting as it gives us a cornerstone in
the North American market. From this we will further expand our global
steel business,” he said.
“By developing this significant
iron ore resource Minnesota Steel has the opportunity to be one of the low cost
producers of steel in the world” Mr. Ruia added.
“We are very pleased to have
Essar as our partner going forward,” said Joseph C. Bennett, chairman of
Minnesota Steel. “Essar bring remarkable experience and expertise in Direct
Reduced Iron (DRI)/Electric Arc Furnace (EAF) steelmaking.
“Essar has a track record of
building projects of this scale in India. In addition, the Company is very
environmentally aware,” Mr. Bennett said. “Their commitment to be good stewards
of the environment echoes our own.”
John Elmore, president and CEO of
Minnesota Steel, highlighted Essar’s commitment to the communities in which it
operates. “They have shown in their operations around the world that it’s very
important to them to work with the local community and with local individuals,
which fits well with our philosophy,” Mr. Elmore said. “They are a strong
partner for us and for the state.”
Essar has recently executed an
agreement to acquire Algoma Steel, Canada subject to approvals. Together,
Minnesota Steel and Algoma Steel form the corner stone for Essar’s North
American strategy in line with the global steel vision of having world class
low cost assets, with a global footprint.
NOTES TO EDITORS:
About Minnesota Steel
Minnesota Steel is planning to develop, finance and construct a new steel
production facility located on the Mesabi iron range in northeast
Minnesota. The Company will combine a high-quality orebody with modern
and commercially proven technology to develop a vertically integrated steel
mill. It will be the first facility in North America to include
iron ore mining, ore processing, direct reduction and steelmaking on a single
site.
In addition to the 2,000
construction jobs, Minnesota Steel will create up to 700 full-time jobs and
generate 2,100 spin-off jobs.
Earlier this month, the 45-day
public comment period on the project’s draft environmental impact statement
ended. Once the environmental impact statement is found to have addressed all
potential impacts, Federal and State environmental officials can issue permits
which are anticipated this summer. Construction will begin thereafter.
In December, the State of
Minnesota approved a 7,000-plus acre land swap to ensure Minnesota Steel will
have enough acreage for its operation.
In November, Minnesota Steel
secured capacity to transport low-cost natural gas from Alberta, Canada, via
the Great Lakes Gas Transmission Co.—locking in transport capacity, which is
extremely limited, and saving up to 70% on transmission rates.
About Essar
Essar Global is an international conglomerate operating in six business areas –
steel, oil & gas, power, communications, shipping & logistics and
construction. It has offices world-wide and employs approximately 20,000 people,
including over 3500 persons in the United States. The group has built a
portfolio of assets with expected revenues of US$ 10 billion in the year to
March 2008.
Essar Steel Holdings Limited is an
emerging global steel company. It is a fully integrated manufacturer and one of
the lowest cost producers of steel globally. Essar Steel Holdings Limited,
along with its subsidiaries, operates an integrated steel plant of 4.6 million
tones per annum (tpa) in India, which is expected to be increased to an 8.5
million tpa steel complex for flat products by 2009. The complex also
comprises a cold rolling plant, down stream facilities and a 5 meter wide plate
mill. It is India’s largest exporter of flat steel.
Essar Steel Holdings Limited also
operates a cold rolling complex in Indonesia and has now finalized plans to
setup an integrated steel plant for flat products in Trinidad and Tobago and a
hot strip mill in Vietnam.
Essar Steel registers highest EBIDTA and sales volume
growth;
EBIDTA rises by 35% at Rs. 12520.700 Millions and sales
volume by 25% at 16.26 lakh tonnes for the half year ended September 30, 2007
October
31, 2007
Financial Performance
Essar Steel Limited (ESTL) registered a growth of 23% in total income at
Rs.25628.500 Millions for the quarter ended September 30, 2007 compared to
Rs.20815.800 Millions in the corresponding period of the previous year. The net
profit for the quarter under review was Rs.1520.100 Millions (Rs. 1543.400
Millions) after providing for Finance Cost at Rs.1599.600 Millions (Rs.1368.600
Millions), Depreciation at Rs. 1864 Millions (Rs.1490.100 Millions), Provision
for Fringe Benefit Tax at Rs.23.800 Millions (Rs.11.300 Millions), Deferred Tax
at Rs. 901.700 Millions (Rs. 788.100 Millions), Provision for current Tax at Rs.
194.300 Millions (Rs. 70.600 Millions (Credit)) Essar Steel Limited (ESTL)
registered a growth of 35% in total income at Rs.51282.100 Millions for the
half year ended September 30, 2007 compared to Rs.38018.100 Millions in the
corresponding period of the previous year. EBIDTA rose by 35% at Rs. 12520.700
Millions (Rs.9286.500 Millions). The net profit for the period under review
registered a growth of 96% at Rs.3830.700 Millions (Rs. 1954.700 Millions)
after providing for Finance Cost at Rs.2533.200 Millions (Rs.3175.400
Millions), Depreciation at Rs. 3734.900 Millions (Rs.2982 Millions), Provision
for Fringe Benefit Tax at Rs.38 Millions (Rs.19.100 Millions), Deferred Tax at
Rs.1894.400 Millions (Rs. 939.400 Millions), Provision for current Tax at Rs. 489.500
Millions (Rs. 12.200 Millions credit)
Manufacturing
The production of hot rolled coils steel increased by 14% to 7.80 lakh tonnes
for the quarter ended September 30, 2007 as compared to 6.86 lakh tonne. in the
corresponding period of the previous year.
The
production for the half year ended September 30, 2007 registered a growth of
16% at 16.13 lakh tonnes (13.92 lakh tonnes).
Marketing
Total sales registered a growth of 19% at 8.27 lakh tonnes for the quarter ended
September 30, 2007 as compared to 6.92 lakh tonnes in the corresponding period
of the previous year.
Total
sales for the half year ended September 30, 2007 registered a growth of 25% at
16.26 lakh tonnes (13.03 lakh tonnes) Apparent consumption in the country grew
11% y-o-y in Q2 of this year and this growth rate is expected to increase going
forward on the back of renewed activity in construction, automotive &
energy In order to take advantage of rising domestic demand, Essar Steel
focused on the domestic market. The exports focused only on value added
segments and products.
The
domestic sales registered a growth of 54.75% at 6.19 lakh tonnes for the
quarter as compared to 4 lakh tonnes in the corresponding period of the
previous year. The export sales stood at 2.08 lakh tonnes (2.92 lakh tonnes)
The Essar Steel Hypermart clocked a sales of 1.3 lakh tonnes for quarter ended
September 30, 2007 accounting for 21% of total domestic sales. .
About Essar Steel
Essar Steel, part of Essar Steel Holdings Limited, is the largest integrated
producer of steel in Western India with a capacity of 4.6 million tonnes per
annum. It is also India’s largest exporter of flat steel products. It has
manufacturing facilities at Hazira, Gujarat, a pelletisation plant at Visakhapatnam,
and a iron ore beneficiation plant at Bailadila, Chhattisgarh. All the
facilities use state-of-the-art technology and are supported by an end-to-end
infrastructure setup, including captive power and oxygen plants, pipelines and
port facilities.
About Essar Steel Holdings Limited (ESHL)
ESHL is
a global producer of steel covering India, Canada, USA, the Middle East and
Asia. It is a fully integrated flat carbon steel manufacturer - from iron ore
to ready-to-market products - supplying highly discerning customers in the
automotive, white goods, construction, engineering and shipbuilding industries.
With a current capacity of 8 million tonnes, Essar’s expansion in India, Asia
and North America will see capacity rise to 20 to 25 million tonnes by 2012.
About Essar Global
Essar Global Limited (EGL) is a large business corporation with a balanced
portfolio of assets straddling the manufacturing and services sectors: Steel,
Energy, Power, Communication, Shipping & Logistics, and Construction. EGL,
through its six sectoral holding companies, has an enterprise value of over USD
20 billion (INR 800 billion) and employs 20,000 people worldwide. The Company
has operations and investments in India, Canada, North America, Africa, the
Middle East, the Caribbean and South East Asia.
Unaudited
Financial Results for the Period from 1st April, 2007 to 30th September, 2007
Rs. In Millions
|
Particulars |
Quarter ended |
Half year ended |
Year ended |
|||
|
|
30.09.2007 |
30.09.2006 |
30.09.2007 |
30.09.2006 |
31.03.2007 |
|
|
|
[Unaudited] |
[Unaudited] |
[Unaudited] |
[Unaudited] |
[Audited] |
|
|
Gross Sales /
Income from Operations |
28568.100 |
22499.800 |
56818.000 |
41528.300 |
90004.600 |
|
|
Less : Excise
Duty |
[2954.700] |
[1707.300] |
[5571.800] |
[3544.900] |
[8061.100] |
|
|
Net Sales /
Income from Operations |
25613.400 |
20792.500 |
51246.200 |
37983.400 |
81943.500 |
|
|
Other Income |
15.100 |
23.300 |
35.900 |
34.700 |
192.200 |
|
|
Total Income |
25628.500 |
20815.800 |
51282.100 |
38018.100 |
82135.700 |
|
|
Expenditure |
|
|
|
|
|
|
|
(a) (Increase) /
Decrease in Stock in trade and Work-in-Progress |
3053.600 |
[2418.400] |
2631.800 |
[4474.100] |
[8726.600] |
|
|
(b) Consumption
of Raw Materials, Stores & Spares etc |
7017.500 |
10056.600 |
16751.600 |
18340.600 |
37015.500 |
|
|
(c) Energy Cost |
6956.800 |
5493.800 |
14675.800 |
10772.000 |
25394.000 |
|
|
(d) Employee
Cost |
588.200 |
360.400 |
1092.200 |
607.500 |
1528.000 |
|
|
(e) Other
expenditure |
1908.900 |
2001.800 |
3610.000 |
3485.600 |
7372.300 |
|
|
Gross profit
before Interest, Depreciation and Tax (EBIDTA) |
6103.500 |
5321.600 |
12520.700 |
9286.500 |
19552.500 |
|
|
(a) Finance Cost
(net) |
1599.600 |
1368.600 |
2533.200 |
3175.400 |
6179.400 |
|
|
(b) Depreciation |
1864.000 |
1490.100 |
3734.900 |
2982.000 |
6310.400 |
|
|
(c) Prior period
expenses and exceptional item (net) |
-- |
190.700 |
-- |
228.100 |
228.100 |
|
|
Profit before
Tax (PBT) |
2639.900 |
2272.200 |
6252.600 |
2901.000 |
6834.600 |
|
|
Tax Expense |
|
|
|
|
|
|
|
Fringe Benefit
Tax |
23.800 |
11.300 |
38.000 |
19.100 |
56.600 |
|
|
Current Tax
(MAT) |
194.300 |
254.900 |
489.500 |
325.500 |
550.100 |
|
|
MAT Credit |
-- |
[325.500] |
-- |
[325.500] |
-- |
|
|
Reversal of
Excess provision of earlier years |
-- |
-- |
-- |
[12.200] |
[12.200] |
|
|
Deferred Tax |
901.700 |
788.100 |
1894.400 |
939.400 |
1875.200 |
|
|
Net Profit after
tax (PAT) |
1520.100 |
1543.400 |
3830.700 |
1954.700 |
4364.900 |
|
|
Paid-up Equity
Share Capital (Face value of Rs.10 each) |
11398.100 |
11398.100 |
11398.100 |
11398.100 |
11398.100 |
|
|
Reserves
excluding revaluation reserves |
|
|
|
|
30809.500 |
|
|
Earnings Per
Share (EPS) |
|
|
|
|
|
|
|
Basic EPS (not
annualised) (in Rupees) |
1.32 |
1.84 |
3.34 |
2.32 |
4.38 |
|
|
Diluted EPS (not
annualised) (in Rupees) |
1.32 |
1.84 |
3.34 |
2.32 |
4.38 |
|
|
Public
Shareholding |
|
|
|
|
|
|
|
Number of Shares |
147240720 |
147223894 |
147240721 |
147223894 |
147225151 |
|
|
Percentage of
Shareholding |
12.92 % |
12.92 % |
12.92 % |
12.92 % |
12.92 % |
|
Notes :
The Auditors of
the Company have carried out limited review of the above financial results for
the quarter ended 30th September, 2007 in compliance with Clause 41 of the Listing
Agreement. The results were reviewed by the Audit Committee in it's meeting
held on 31st October,2007 and approved at the meeting of Board of Directors
held on that date.
The Company is
engaged in only one segment viz. Steel, hence there are no reportable segments
as per Accounting Standard "AS-17".
In respect of
deferred tax assets recognition, the auditors had earlier opined that they were
unable to comment upon the creation of deferred tax asset on unabsorved
depreciation and carried forward losses for the year ended 31st March, 2007 and
quarter ended 30th June, 2007. During the current quarter, the auditors have
dropped this comment on deferred tax asset creation, based on company's
performance / profitability till date and orders on hand.
The number of
investors complaints received during the quarter, resolved and pending are
Received during
the Quarter : 191
Disposed off
during the Quarter : 191
Finance cost (Net)
for the quarter ended 30th September, 2007 is net of exchange gain of Rs.308.500 Millions arising on
monetary items as against exchange gain of Rs. 101.700 Millions during
corresponding quarter ended 30th September, 2006 and exchange gain Rs. 502.800 Millions for the year
ended 31st March, 2007. Further, Finance cost (Net) for the half year ended
30th September,2007 is net of exchange gain Rs.1445.400 Millions as against
exchange loss of Rs.203 Millions during corresponding half year ended 30th September,2006.
In accordance with
the consent of the members for delisting the equity shares of the company from
BSE and NSE, the process of Reverse Book Building (RBB) as per SEBI (Delisting)
Guidelines, has been successfully completed and an exit price of Rs.48/- per
equity share has been discovered. The promoters’ shareholding went up from
87.08% to 90.70% at the closure of RBB process. Further 27,95,778 equity shares
(0.25%) have been received from the shareholders holding equity shares in
physical form within the stipulated period. As the company is now legally
eligible to apply for delisting, upon completion of certain formalities, it
shall shortly make formal application to BSE/NSE for delisting the shares. In
accordance with SEBI Guidelines, the promoter shall allow a further period of
six months for any of the remaining shareholders to tender shares at the same
price of Rs.48/- per equity share.
The figures have
been regrouped / reclassified wherever necessary.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The
Courts, India Prisons Service, Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair and
reasonable and comparable to compensation paid to others for similar services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.68 |
|
UK Pound |
1 |
Rs.82.11 |
|
Euro |
1 |
Rs.58.81 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
5 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
5 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
5 |
|
--CREDIT LINES |
1~10 |
5 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
45 |
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 |
|