MIRA
INFORM REPORT
|
Report Date : |
17.10.2007 |
IDENTIFICATION DETAILS
|
Name : |
ESSEL MINING AND INDUSTRIES LIMITED |
|
|
|
|
Registered Office : |
Industry House,
18th Floor, 10, |
|
|
|
|
Country : |
|
|
|
|
|
Financials (as on) : |
31.03.2006 |
|
|
|
|
Date of Incorporation : |
1st
April, 1950 |
|
|
|
|
Com. Reg. No.: |
21-18728 |
|
|
|
|
CIN No.: [Company
Identification No.] |
U51109WB1950PTC018728 |
|
|
|
|
TAN No.: [Tax
Deduction & Collection Account No.] |
CALS00358B |
|
|
|
|
Legal Form : |
A Closely Held
Public Limited Liability Company |
|
|
|
|
Line of Business : |
Manufacturing of
Low Carbon Ferro Alloys and HDPE/PP Woven Sacks |
RATING & COMMENTS
|
MIRA’s Rating : |
Aa |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
|
Maximum Credit Limit : |
USD 46075200 |
|
|
|
|
Status : |
Good |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Clear |
|
|
|
|
Comments : |
Subject is a well
established and reputed company of Aditya Birla Group. Available information indicates high
financial responsibility of the company.
Financial position is good.
Payments are usually correct and as per commitments. The company can
be considered good for any normal business dealings. It can be regarded as a promising business
partner in a long run. |
LOCATIONS
|
Registered Office/ Head Office : |
Industry House,
18th Floor, 10, |
|
Tel. No.: |
91-33-22828339/6378/6398 |
|
Fax No.: |
91-33-2824998 |
|
E-Mail : |
|
|
Website : |
|
|
|
|
|
Warehouse: |
ŕ
Ferro Chem Unit : Plot No. 165
& 166, G.I.D.C.,Vapi - 396 195, Dist. Valsad, Tel. No.
91-260-2423199/2436520 Fax No.
91-260-431099 E-Mail: info@emilvapi.com ŕ
HDPE / PP Woven Sacks Unit : Plot A-6, Sector
20, Industrial Area, Jagdishpur - 227 817, Mines : ŕ Post Barbil - 758035, Dist - Keonjhar,
Orissa-758035, Tel. No.: 91-6767-275224/237 ŕ Industry House, 45, ŕ 14/3 Mile Stone, ŕ
|
|
|
|
|
Branches : |
ŕ Industry House, 45, Tel. No.
91-80-2268441 Fax No.
91-80-2253920 E-Mail: hgi.blr@rme.sril.in ŕ Mittal Court, B Wing, 12th
Floor, 224, Nariman Point, Mumbai-400021, Tel. No. 91-22-282-6456/2844241/2822918 Fax No. 91-22-28844214 E-Mail: hgi.mum@rme.sril.in ŕ Tel. No. 91-11-3359634/3739657 Fax No. 91-11-3323022 E-Mail: hgi.del@rme.sril.in |
|
|
|
DIRECTORS
|
Name : |
Shri Kumar
Mangalam Birla |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Smt. Rajashree
Birla |
|
Designation : |
Vice Chairperson |
|
|
|
|
Name : |
Shri. A K Kothari |
|
Designation : |
Director |
|
|
|
|
Name : |
Shri S K Daga |
|
Designation : |
Director |
|
|
|
|
Name : |
Shri Manish Newar |
|
Designation : |
Director |
|
|
|
|
Name : |
Shri N C Shah |
|
Designation : |
Director |
|
|
|
|
Name : |
Shri Ravi Kastia |
|
Designation : |
Director |
|
|
|
KEY EXECUTIVES
|
Name : |
Shri H C Daga |
|
Designation : |
Senior President |
|
|
|
|
Name : |
Shri R P Pansari |
|
Designation : |
Senior President
& Chief Finance Officer |
|
|
|
|
Name : |
Shri Ramesh
Aggarwal |
|
Designation : |
Senior Vice President
(F&C) |
|
|
|
|
Name : |
Shri G K Ravinder |
|
Designation : |
Senior Vice
President – HR |
|
|
|
|
Name : |
Shri R S Sharme
(Mining Division) |
|
Designation : |
Jt. Executive
President |
|
|
|
|
Name : |
Shri Ravi Bansal
(Ferro Chem Division) |
|
Designation : |
Vice President |
|
|
|
|
Name : |
Shri M P Dhanuka
(Nitrogen Gas Division) |
|
Designation : |
Vice President |
|
|
|
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of Holding |
|
Ajanta Offset
& Packaging Limited |
|
30000 |
|
Digital Equipment
Limited |
|
100 |
|
Gold Motor Vyapar
Corporation Limited |
|
57500 |
|
Himachal
Futuristic Corporation Limited |
|
15180 |
|
J. J. Finance
Limited |
|
50000 |
|
Mangalam Carbide
Limited |
|
20000 |
|
M. K. J.
Enterprise Limited |
|
2000 |
|
Prag Jyoti
Construction Company Limited |
|
40000 |
|
|
|
|
BUSINESS DETAILS
|
Line of Business : |
Manufacturing of Low
Carbon Ferro Alloys and HDPE/PP Woven Sacks |
||||||||||||
|
|
|
||||||||||||
|
Products : |
|
||||||||||||
|
|
|
||||||||||||
|
Terms : |
|
||||||||||||
|
Selling : |
Cash, Contract,
Credit or L/C terms |
||||||||||||
|
|
|
||||||||||||
|
Purchasing : |
Cash, Contract,
L/C or Credit terms |
GENERAL INFORMATION
|
Customers : |
Manufacturers,
wholesalers and government bodies |
|
|
|
|
No. of Employees : |
2000 |
|
|
|
|
Bankers : |
˛
ICICI
Bank ˛
HDFC
Bank, Kolkata, ˛
Indian
Overseas Bank, Free 6, ˛
State
Bank of Commercial Branch, 24, Kolkata - 700 016, ˛
United
Bank of Kolkata, |
|
|
|
|
|
|
|
Banking
Relations : |
Satisfactory |
|
|
|
|
Auditors : |
|
|
Name : |
S. R. Batliboi
& Company Chartered
Accountant |
|
Address : |
36, |
|
|
|
|
Affiliates: |
|
|
|
|
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
3000000000 |
Equity Shares |
Rs.10/- each |
Rs.30000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
4,92,695 |
Equity Shares |
Rs. 10 each |
Rs. 4.927 millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
2.900 |
4.900 |
4.900 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
11515.900 |
5883.400 |
1029.600 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
11518.800 |
5888.300 |
1034.500 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
3236.500 |
710.300 |
150.100 |
|
|
2] Unsecured Loans |
1465.400 |
23.100 |
1.900 |
|
|
TOTAL BORROWING |
4703.900 |
733.400 |
152.000 |
|
|
DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
16222.700 |
6621.700 |
1186.500 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
4711.600 |
1438.300 |
272.500 |
|
|
Capital work-in-progress |
30.200 |
193.400 |
0.000 |
|
|
|
|
|
|
|
|
INVESTMENT |
3525.000 |
3710.300 |
509.600 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
1101.700 |
805.900 |
116.400 |
|
|
Sundry Debtors |
1365.000 |
1259.200 |
180.800 |
|
|
Cash & Bank Balances |
71.500
|
88.100 |
53.700 |
|
|
Other Current Assets |
0.000
|
0.000 |
0.000 |
|
|
Loans & Advances |
7378.100
|
671.300 |
252.700 |
|
Total
Current Assets |
9916.300
|
2824.500 |
603.600 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
1925.600
|
1520.700 |
184.700 |
|
|
Provisions |
34.800
|
24.100 |
14.500 |
|
Total
Current Liabilities |
1960.400
|
1544.800 |
199.200 |
|
|
Net Current Assets |
7955.900
|
1279.700 |
404.400 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
16222.700 |
6621.700 |
1186.500 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
|
Sales Turnover |
17740.600 |
11321.900 |
2224.900 |
|
|
Other Income |
388.400 |
124.100 |
52.200 |
|
|
Total Income |
18129.000 |
11446.000 |
2277.100 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
7536.100 |
5664.900 |
360.600 |
|
|
Provision for Taxation |
1895.200 |
2066.900 |
120.400 |
|
|
Profit/(Loss) After Tax |
5640.900 |
3598.000 |
240.200 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Cost of Goods Sold |
|
|
|
|
|
Manufacturing Expenses |
997.300 |
703.300 |
237.400 |
|
|
Administrative Expenses and Selling Expenses |
6146.900 |
3608.100 |
802.400 |
|
|
Raw Material Consumed |
2362.200 |
1345.600 |
473.800 |
|
|
Employees Cost |
218.200 |
186.900 |
125.100 |
|
|
Increase/(Decrease) in Finished Goods |
231.900 |
550.500 |
(29.50)0 |
|
|
Interest and Financial Charges |
147.500 |
21.700 |
18.400 |
|
|
Depreciation & Amortization |
178.900 |
57.400 |
28.000 |
|
Total Expenditure |
10282.900 |
6473.500 |
1655.600 |
|
KEY RATIOS
|
PARTICULARS |
|
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt Equity Ratio |
|
0.31
|
0.12 |
0.18 |
|
Long Term Debt Equity Ratio |
|
0.23
|
0.12 |
0.18 |
|
Current Ratio |
|
2.63
|
1.82 |
3.66 |
|
Turnover Ratios |
|
|
|
|
|
Fixed Assets |
|
5.23
|
6.79 |
5.36 |
|
Inventory |
|
18.60
|
14.05 |
16.59 |
|
Debtors |
|
13.52
|
8.99 |
11.08 |
|
Interest Cover Ratio |
|
52.09
|
262.06 |
20.60 |
|
Operating profit Margin (%) |
|
44.32
|
50.73 |
18.29 |
|
Profit before interest and Tax Margin (%) |
|
43.31
|
50.23 |
17.03 |
|
Cash Profit Margin (%) |
|
32.80
|
32.29 |
12.05 |
|
Adjusted Net Profit Margin (%) |
|
31.80
|
31.78 |
10.80 |
|
Return on Capital Employed (%) |
|
67.27
|
85.88 |
34.68 |
|
Return on Net Worth (%) |
|
64.80
|
61.10 |
25.90 |
LOCAL AGENCY FURTHER INFORMATION
Established
in 1950-
- Subject is today one of the
Subject is part of Aditya Birla
Group, which is among
- The Group has 40 state-of-the-art manufacturing units and sectoral
services, anchored by 72,000 employees.
- The Group has operations in 18 countries including
- A premium conglomerate, the Aditya Birla Group's annual revenues
today are in excess of US$ 5.6 billion with net earnings of US$ 500
million per annum.
- AV Birla Group is the world's largest producer of Viscose Staple
Fibre.
- It is among the world's largest producers of White Cement.
- It is the world's largest single location refiner of Palm oil.
- It is a leading producer of Insulators in the world.
- It is the fifth largest producer of Carbon Black in the world.
- It is among the lowest cost producers of Aluminium globally.
Subject
is driven by an endeavor to convert all waste produced during mining process to
usable form so that neighboring population is not affected by the waste. This
sums up our Mining Philosophy …… Mining
Beyond Mines... that is Generating Wealth from Waste.
Some
of the community development initiatives are:
School
- A model school which will have the highest standards of excellence.
- It will act as an important tool for the socio-economic development
of the region.
Mobile Health Club
Total beneficiary – 773 people
DDT Spraying
Total beneficiary – 14000 people
Sports Promotion
Total beneficiary – 160 people
Rest Shed
Total beneficiary – 3000 people
Tubewell repairing
Total beneficiary – 1050 people
Family Planning Camp
Total beneficiary – 55 people
Eye camp
Total beneficiary – 109 people
Dental Camp
Total beneficiary – 400 people
Malaria Awareness & Blood
Group
Total beneficiary – 500people
Wool Knitting Training
Total beneficiary – 16 people
Street Play for Social
Awareness
Total beneficiary – 8200 people
Director Report:
OPERATIONS
AND OVERALL PERFORMANCE
The Company has achieved its highest ever performance in terms of turnover,
production, dispatches, exports and profitability. The Net Turnover of the
Company at Rs. 17287.1 00 millions as against Rs. 11120.700 millions during the
last year reflects a growth of 55.45%.
The Export Turnover of the Company at Rs. 7595.900 millions vis-a-vis
Rs.4849.900 millions in the previous year has surged by 56.62%.
Domestic Net Turnover was up from Rs. 6270.800 millions in 2004-05 to
Rs.9691.200 million in 2005-06, amplified by 54.54%.
Operating Profit (PBDIT) - grew from Rs. 5744.300 millions in 2004-05 to Rs.7862.600
millions in 2005-06, advanced by of 36.88%.
The directors are pleased to inform you that the Company's Mining
Division was the star performer contributing Rs. 14459.400 millions (52.78%)
and Rs. 7565.600 millions (39.41%) to the top line and to Profit Before
Depreciation & Tax, respectively. The Ferro-Chem Division achieved its
highest ever-sales figure of Rs. 2654.400 millions (66.24%), with the PBDT
being Rs. 164.300 millions (-44-38%). The Nitrogen Gas Division of the Company
also contributed to the top line and bottom line (PBDT), significantly, with
Rs. 63.100 millions (6.19%) and Rs. 38.500 millions (10.63%),
respectively.
The Company has expanded its windmill capacity from the 15 MW to 75
MW.
The Management's Discussion & Analysis, which forms part of this Annual
Report, provides the strategic direction and a more detailed analysis on the
performance of individual businesses and their outlook.
FINANCING
The Company has raised Long Term Foreign Currency Loan of US$ 50.0 Million
for part financing the cost of 60 MW wind power capacity set up at Dhule,
Maharashtra. The amount raised has been fully utilized for the purpose for
which it has been raised.
SUBSIDIARIES
During the year, IGH Holdings Private Limited, an NBFC Company registered
with RBI, became a 100% subsidiary of the Company.
AWARDS AND RECOGNITION
The Company received several accolades both from government and non-government
organizations / associations.
A selective list is as follows:-
* Received IMC Ramakrishna Bajaj National Quality Commendation
Certificate for the year 2005
* Mines Environment and Mineral Conservation Week for the year
2005-06
* FIMI - Environment Award
* Mines Environment & Mineral Conservation Week - Awarded the first
prize for afforestation; waste dump management; air quality management; noise,
vibration reduction and scientific studies; second prize for management of sub
grade, and third prize for top soil management, sedimentation and water
management and air quality management
* The Company's Nitrogen Gas Division was honored by the Department of
Commercial Taxes,
* Green Tech Safety Silver Award for the Year 2005-06
* Rajiv Gandhi National Quality Award - 2005 Commendation
Certificate
* CII HRD Award 2005-06, Eastern Region
* CII Sustainability Award - 2006
* 2006 Commendation Certificate for Significant Achievement
* Star winner of 'Group wide WCM Case Study Competition - 2005
* 1st Prize 'Group wide WCM Team Competition - 2005' - Regional
Competition
* Won 'Best House Keeping Award - 2005' from
FUTURE PROSPECTS
With the Indian economy growing at a rate of around 8%, many new opportunities
are coming up in infrastructure, coal and iron ore sectors. The management is
constantly monitoring the macro economic scenario and is gearing itself for the
developments.
With double-digit growth predictions in steel and infrastructure sector the
outlook appears positive. Prospects of growth in the Mining Division and the
Ferro Chem Division seems buoyant. Chinese demand for iron ore will continue to
add to the export revenues of the Company.
The contract with MRPL for supply of nitrogen gas expires on 31st December
2006. With the expiry of the contract with MRPL, the Nitrogen Gas Division's
future prospects depend upon the renewal of the contract. Unless renewed, the
Company may have to take a strategic decision in this regard.
The 75 MW Wind Power Division of the Company is expected to achieve
the rated performance.
HUMAN RESOURCES DEVELOPMENT
They fully recognize that people are the lifeline of their Organisation. Hence,
they invest heavily in people, people processes and in skill development. In
the Chairman's letter, Group-wide initiatives to build a meritocracy have been
detailed. All these processes, such as Value Workshop, talent management, job
analysis and evaluation, and performance management, among others, have been
implemented at the Company as well.
The importance of continuous learning, re-learning is a thrust area. At
Gyanodaya, their Management Learning Institute, several executives underwent
training programmes that helped build new competencies and hone current
competencies.
Some of these programmes focus on keeping employees abreast of technological
and technical developments that take place, behavioural competencies and
Six-sigma as well.
They continue to make strides in HR ERP under the umbrella of 'Poornata'. It
aims at improving the service delivery time of the HR function by standardizing
and digitizing the way data is maintained for all HR processes spanning
recruitment, workforce administration and position management, talent
management, etc.
To strengthen the Performance Management Process, Performance Management
Workshops have been conducted based on Corporate H.R. guidelines, to cover all
management staff at various locations. Performance Champions have been
identified to strengthen the process.
In line with their people vision of being an achievement focused,
development oriented and people sensitive organization, the Company endeavours
to create an environment of holistic growth.
MAKING A DIFFERENCE:
THEIR COMMITMENT TO UNDERPRIVILEGED PEOPLE
The philosophy of caring, giving, developing and empowering an
under-served people is part of their Group's DNA. It is a common strain that
courses through the veins of all their Group Companies.
The Company's social projects in
The Company's work is based on the felt needs of the communities. It is in
tandem with the Group's social vision which is 'to make a qualitative
difference to the lives of the weaker sections of society in proximity to their
plants and in doing so improve the human development index of their nation'.
The Company organized Healthcare camps, inclusive of mother and childcare, oral
health, malaria prevention. The Company is engaged in sustainable livelihood
programmes to enable the weaker sections of society, make out a living,
extensive training is provided to hone people skills.
The Company also supports infrastructural projects such as repairing of roads,
check dams, bridges, panchayat halls and community buildings.
In these humanitarian endeavors, the Company partners with the
Government, District Authorities, Village Panchayats and other like-mined NGOs,
and above all the communities, who seek to serve. They believe only through
collective efforts can they usher in a more equitable society. The Board and
the Company's employees are committed to this process.
MANAGEMENT
DISCUSSION AND ANALYSIS
OVERVIEW
During the year, the Company attained new heights and set a new record in its
financial performance in terms of sales, exports, profits, net worth and
assets.
Net Sales at Rs. 17287.100 millions grew by 55.45% while Net Profit soared to
an all time high of Rs. 5640.900 millions, a 56.78% increase over the previous
year.
The Company's Mining Division was the star performer, and was major contributor
to the top line and bottom line, followed by the Ferro-Chem, Wind Power and the
Nitrogen Gas Divisions.
The Mining Division achieved a sales figure of Rs. 14459.400 millions, driven
by the domestic demand as well as exports to cater to the Chinese demand for iron
ore.
The Ferro-Chem Division contributed positively with a sales turnover of Rs.
2654.400 millions and PBDT of Rs. 164.300 millions. This division has achieved
its highest ever production and sales figures since its inception.
The Nitrogen Gas Division excelled as well.
The overall growth can be attributed to the domestic as well as international
macro economic trends. On the domestic front, the Indian GDP grew by 8.0%, led
by consumption, manufacturing and infrastructure sectors. Iron and Steel
industries gained the most. To meet the increasing demand, the Company enhanced
its iron ore production.
The domestic iron ore market also witnessed a growth rate of 21%, with
Sponge iron, an important segment of the steel industry, saw a significant
growth, with the production of Coal based (DRI) Direct Reduced Iron registering
a 33% rise. In 2006, the coal based DRI production is expected to register a
growth of 17%.
This augurs well for the Company, as it is a major supplier to the Sponge
Iron industry.
The international steel scenario also contributed to the revenues of the
Company. Global crude steel output rose to 1129 Million Tonnes at a rate of 6%,
driven by huge demand from China (Crude steel output - 349 Million Tonnes, a
growth of 25%), which is due to high growth in industrial and infrastructure
sectors. During the same period, the import of iron ore by the world's steel
making countries grew by 10% to reach 715 Million Tonnes compared to 2004's 650
Million Tonnes, with
The demand for steel from
India, one of the major exporters to China, has exported 68.5 Million
Tonnes of iron ore, up by 18 Million Tonnes over 2004, and registering a
tenfold increase since 1998.
In April 2005, there was a hike of 71.5% in the international iron ore
prices on FOB basis. The Company took this opportunity to increase its exports
by 45% in absolute quantity terms and registered an increase of 57% in export
turnover.
STRATEGIC INITIATIVES
Wind Power - Expansion
Encouraged by the prospects of the wind energy, the Company, has expanded the
capacity of its Wind Power Division located at Dhule in
SEGMENTAL ANALYSIS AND
REVIEW
Revenue Mix
PBDT Mix
MINING DIVISION
Review of operations
This division has been the star performer. It has achieved
new landmarks in the Production and Sales Turnover since inception. In terms of
profit too, it has clocked in the highest profits since inception.
The summary of operations of the Mining Division is as follows:-
Particulars FY 2006 FY 2005 % Change
Product - Iron OreProduction (MT.) 7492297 6176167 21.31
Sales Volume (MT.) 673339.000 478627.300 40.68
Sales (Rs. in millions) 14459.400 9464.400 52.78
Domestic (Rs. in millions) 6863.500 4614.500 48.74
Export (Rs. in millions) 7595.900 4849.900 56.62
PBDT (Rs. in millions) 7565.600 5426.800 39.41
The Mining Division has done exceptionally well on all fronts viz.,
operations, logistics, finance and marketing, resulting in highest PBT,
Revenues, Domestic Sales as well as Exports.
On the operational front, the Mining Division has taken every initiative to
enhance efficiencies, like implementation of 'Mine Planning & Ore Body
Modeling' through SURPAC Software, successfully commissioning Mobile Crusher
Plant at Jilling and a Crusher (OCU IV) at Kasia Mines, reducing the blasting
frequency from 8 Nos. to 5 Nos. per month. The exploration of Koira Mines has
been carried out. The results are quite encouraging with regard to reserve
indication. Therefore, further explorations are planned and accordingly
operations on full scale will be carried out.
On the logistics front, to improve the infrastructure at mines, the
Company's infrastructure division has set up its own independent rail system
(railway siding). It was commissioned in April 2005, resulting in speedy and
convenient movement of cargo, as well as savings in transportation costs. The
Company introduced four (4) new public sidings to boost the existing
infrastructure. To enhance dispatches through railway rakes, the Company has
signed an MOU with RVNL to set up a railway line between Haridaspur and
Paradeep, under a SPV.
Other infrastructure initiatives taken up by the division are VSAT connectivity
at Jilling & Kasia Mines, construction of administrative office, township
and market complex.
On the marketing front, the Company has expanded its customer base locally as
well as internationally to diversify the risk. It has explored new avenues for
iron ore fines in the domestic market.
Outlook
The outlook for the financial year 2006-07 is positive with the Chinese demand
expected to be buoyant and crude steel output slated to reach 410 Million
Tonnes, an increase of 16.5% over previous year. This will require an
additional 93 Million Tonnes of iron ore. It is estimated that
The recent hikes in export prices of iron ore, by 19% for long-term
contracts, as agreed by the Chinese importers would augur well for iron ore
exporters. However, Essel, being highly focused on short-term contracts (spot
prices), where the average price realization is higher, would be marginally
benefited by this hike.
As a strategic initiative, the Company intends to enter into export
contracts directly with the steel producers, thus eliminating the trading
channels, which will result in higher realization and better services to the
customers. To optimize the realization, they intend to continue with the same
product mix, which is dominated by the High and Medium Grade Iron
To diversify their risk, they are planning to enter into long-term contracts
with the Chinese steel mills. They are also scouting for export opportunities
in other South East Asian countries like
On the domestic front, with the economy growing at a rate of 8% plus, the
Indian steel sector will witness continuous growth, backed by domestic drivers
such as infrastructure spending and automobile demand. A high steel demand
growth with a predicted increase of 8% for 2006 and 2007 is forecasted.
FERRO-CHEM. DIVISION
Review of operations
The international market for raw material and finished goods surpassed
historical high levels. The market remained highly volatile. For a period of
almost two months, there was disparity in prices of Moly Oxide and Ferro
Molybdenum, the raw material and the finished product, respectively, where the
landed cost of final product was cheaper as compared to the input costs. The
prices of Ferro Vanadium in the domestic market were at discount compared to
international market prices.
This disparity in Ferro Melybdenum and discounting in Ferro Vanadium prices
affected the profitability of the division. The division constantly monitored
the international market developments and kept the cost under control resulting
in earning profits on its products despite the price disparity in raw material
and finished product. The division also focused on cost cutting measures.
Reduction in Custom duties on Ferro Alloys from 15% to 7.50% impaired the
division's profitability to a greater extent.
Volumes of Ferro Moly & Ferro Vanadium rose by 18% and 21%
respectively, while that of Ferro Titanium went down by 42% because of lower/negative
margin of the product.
The summary of operations of the Ferro-Chem Division is as
follows:-
Particulars FY 2006 FY 2005 % Change
Production Volume (MT.)* 1855 1784 3.98Sales Volume (MT.) 1534 1406
9.10Turnover (Rs. in millions) 2654.400 1596.7 66.24PBDIT (Rs. in millions)
177.500 303.100 (41.44)PBDT (Rs. in millions) 164.300 295.400 (44.38)PBT (Rs.
in millions) 162.400 293.700 (44.71)
* Production Figures include MT 368 (324) used for Captive
Consumption
Outlook
The growth of the steel and infrastructure sectors in the coming years,
will lead to better volumetric growth of the Company's products. The margins
may be affected in view of low import duties and anomaly by Chinese producers
between Ferro Molybdenum and Molybdenum prices. The present gap between raw
material and finished products will help to curb imports. The division is also
focusing for addition of new products, in synergy with the existing product
range.
NITROGEN GAS DIVISION
Review of operations
The Nitrogen Gas Division enjoys the unique distinction of rendering
uninterrupted supply of Nitrogen Gas to Mangalore Refinery & Petrochemicals
Limited (MRPL).
Equipped with minimal manpower, the division has optimized the installed
capacity through adoption of world class manufacturing processes to cater to
the highly fluctuating requirements of MRPL.
The summary of operations of the Nitrogen Gas Division is as
follows:-
Particulars FY 2006 FY 2005 % Change
Production (Lac Sm3.) 87.17 82.03 6.27Sales Volume (Lac Sm3.) 87.17 82.03
6.27Net Turnover (Rs. in millions)
6311.400 59.43100 6.20PBDT (Rs. in millions) 38.528 34.877
10.47PBT (Rs. in millions) 32.807 29.119 12.67
Outlook
This division will continue to supply Nitrogen Gas to MRPL. Its future
prospects will depend upon the renewal of the contract, which is going to
expire on 31st December 2006, with MRPL.
WIND POWER DIVISION
Review of operations
Encouraged by the prospects of the wind energy, the Company,
during the year, has expanded the capacity of its Wind Power Division located
at Dhule in
This division has contributed Rs. 110.100 million to the top line of the
Company.
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.39.31 |
|
|
1 |
Rs.80.19 |
|
Euro |
1 |
Rs.55.86 |
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. |
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 |
|