MIRA
INFORM REPORT
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Report Date : |
27.03.2008 |
IDENTIFICATION
DETAILS
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Name : |
KALYANI STEELS LIMITED |
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Registered Office : |
Mundhwa, Bombay-Pune Road, Pune-411 036, Maharashtra. |
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Country : |
India. |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
28.02.1973 |
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Com. Reg. No.: |
11-16350 |
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CIN No.: [Company
Identification No.] |
L27104MH1973PLC016350 |
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TAN No : |
PNEK05371C |
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Legal Form : |
A public limited
liability company. The company’s shares are listed on the stock exchanges |
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Line of Business : |
Manufacturers of
Steel and Steel Products. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 18159432 |
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Status : |
Very Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established and reputed company having five track. Directors are reported as experienced, respectable and
resourceful industrialists. Their trade relations are fair. Payments are
reported as usually correct and as per commitments. The company can
be considered normal for business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered Office : |
Mundhwa, Bombay-Pune Road, Pune-411 036, Maharashtra, India |
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Tel. No.: |
91-20-26715000 / 66215000 |
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Fax No.: |
91-20-26821124 |
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E-Mail : |
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Website : |
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Factory 1 : |
Carbon &
Alloy Steel project located at: Hospet Road, Ginigera, Taluka & District
Koppal, Karnataka – 583 228, India. |
DIRECTORS
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Name : |
Mr. B. N. Kalyani |
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Designation : |
Chairman |
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Name : |
Mr. Amit B
Kalyani |
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Designation : |
Director |
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Name : |
Mr. S. S.
Hiremath |
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Designation : |
Director |
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Name : |
Mr. S. M. Kheny |
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Designation : |
Director |
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Name : |
Mr. Ajeet Prasad |
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Designation : |
UTI Nominee |
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Name : |
Mr. C. G.
Patankar |
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Designation : |
Executive Director |
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Name : |
Mr. Suresh Pandey
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Designation : |
Wholetime
Director |
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Name : |
Mr. B. B.
Hattarki |
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Designation : |
Wholetime Director |
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Name : |
Mr. S. S. Vaidya |
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Designation : |
Director |
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Name : |
Mr. M. U. Takale |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. D. R. Puranik |
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Designation : |
Company Secretary |
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Name : |
Mr. Sanjay Nath |
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Designation : |
Vice President Marketing |
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Name : |
Mr. R. Murali |
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Designation : |
I.T. Incharge / AVP MIS & Costing |
MAJOR SHAREHOLDERS
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Names of Shareholders (AS on 31.03.2007) |
No. of Shares |
Percentage of
Holding |
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Promoters |
23,155,194 |
53.04 |
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Mutual Funds |
2,705,969 |
6.20 |
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Insurance Companies |
410918 |
0.94 |
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Banks |
13512 |
0.03 |
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FIIs |
1990565 |
4.56 |
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Bodies Corporate |
6446693 |
14.77 |
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NRIs / OCBs |
143062 |
0.33 |
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Foreign Companies |
1600666 |
3.67 |
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Indian Public |
7186481 |
16.46 |
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Total |
43653060 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturers of
Steel and Steel Products. |
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Products : |
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PRODUCTION STATUS
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Particulars |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
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Pig Iron / Liquid Pig Iron |
240000 |
(a) 240000 |
(b) 210136 |
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Blooms and Rounds |
-- |
-- |
169495 |
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Rolled Products |
-- |
250000 |
(c)145250 |
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Power |
8 MW |
8 MW |
(d) 8.00 MW |
(a) Production has surpassed initially
certified installed capacities, as a result of constant modifications, better
efficiencies and refinements to manufacturing processes over the past years.
(b) Includes 47,944 MTs pig iron produced in
Siruguppa Plant/ facility taken on lease.
(c) Includes material sent for manufacture at
third party on “Conversion Basis” 47,943 MTs (Previous Year 20,759 MTs).
(d) Net Power generated and captively
consumed.
GENERAL
INFORMATION
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Client : |
v
Alcan
Iceland , Iceland v Forging v
Aluminium
Bahrain B. S. C. (C) Alba-Bahrain v Forging v
Alcan Steg.
Switzerland v Forging v
Bharat Forge
Limited. India v Forging v
BHEL ,
Trichy , India v Forging v
Comalco
Bellbay , Australia v Forging v
CVG Venalum
, Venezuela v Forging v
Dubai
Aluminium Company Limited ( Dubal ), Dubai v Forging v
Echjay
Industries Limited. , India v Forging v Indian Seamless Metal Tubes Limited. ,
India v Seamless Tube
Maharashatra Seamless
Limited. , India v Seamless Tube
Mahindra & Mahindra ,
India v
Auto
Milltech Private Limited. ,
Australia v Forging v
M M Forgings
Limited. , India v Forging v
National
Forge , Australia v Forging v
PT . Prekasa
Indobaja, Indonesia v Forging v
Sadhu
Forgings Limited. , India v Forging v
Tata Moters. Auto TomagoAl
Al. , Australia v
Forging |
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No. of Employees : |
890 |
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Bankers : |
v
Bank of
Baroda v
Union Bank
of India v
Canara Bank v
HDFC Bank
Limited v
State Bank
of India v
The Jammu
and Kashmir Bank Limited |
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Facilities : |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Dalal and Shah, Chartered Accountant |
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Address : |
49-55, Bombay Samachar Marg, Fort, Mumbai – 400 023. |
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Associates/Subsidiaries : |
v
Hospet
Steels Limited v
Kalyani
Mukand Limited v
Hikal
Limited v
Kalyani
Ferrous Industries Limited SUBSIDIARIES
v
Chakrapani
Investments & Trades Limited v
Suraj Mukhi
Investments & Finance Limited v
Gladiolla
Investments Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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47,500,000 |
Equity Shares |
Rs.10/- Each |
Rs. 475.000 millions |
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3,010,000 |
Cumulative Redeemable Preference Shares |
Rs. 100/- Each |
Rs. 301.000 millions |
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2,400,000 |
Unclassified Shares |
Rs. 10/- Each |
Rs. 24.000 millions |
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Total |
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Rs. 800.000 millions |
Issued,
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No. of Shares |
Type |
Value |
Amount |
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43,759,380 |
Equity Shares |
Rs.10/- each |
Rs. 437.593 Millions |
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Subscribed
& Paid-up Capital : |
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43,653,060 |
Equity Shares, fully paid Total Subscribed and fully paid up |
Rs.10/- each |
Rs. 436.530 Millions |
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**Add : Forfeited Equity Shares (Amount Paid up) |
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Rs. 0.379 Millions |
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Total |
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Rs. 436.909 Millions |
Of the above shares –
(a) 3,843,750 Equity Shares of Rs.10/- each were issued as fully paid
bonus shares by way of Capitalisation of Reserves.
(b) 12,000,000 Equity Shares allotted on 13th March, 2004 to
shareholders of erstwhile Kalyani Ferrous Industries Limited, pursuant
to a Scheme of Arrangement, constituting an amalgamation in the nature of a
merger of Kalyani Ferrous Industries Limited with the Company as approved by High Court of
Judicature at Bombay, vide its Order dated 15th January, 2004.
(c) 1,600,000 Equity Shares of Rs. 10/- Each allotted on 29th
November, 2006 on Preferential Allotment Basis, at a Premium of Rs. 320/- per
Equity Share, to AMIF I Limited, a Foreign Body Corporate.
** Amount received on Equity Shares forfeited on 25th February, 1997 on
account of non-payment of allotment / call money.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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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 |
436.909 |
420.909 |
420.909 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
4102.949 |
2896.815 |
2031.416 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
4539.858 |
3317.724 |
2452.325 |
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LOAN FUNDS |
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1] Secured Loans |
721.049 |
849.696 |
1317.598 |
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2] Unsecured Loans |
90.877 |
105.969 |
85.981 |
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TOTAL BORROWING |
811.926 |
955.665 |
1403.579 |
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DEFERRED TAX LIABILITIES |
438.977 |
461.358 |
237.926 |
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TOTAL |
5790.761 |
4734.748 |
4093.830 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
1786.790 |
1895.998 |
1999.374 |
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Capital work-in-progress |
469.612 |
95.838 |
104.673 |
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INVESTMENT |
1931.227 |
911.931 |
807.970 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
916.268
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999.685
|
587.317
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Sundry Debtors |
1672.440
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1103.840
|
1328.572
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Cash & Bank Balances |
47.546
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85.432
|
81.082
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Other Current Assets |
96.376
|
62.037
|
55.771
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Loans & Advances |
2304.154
|
1737.634
|
914.667
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Total
Current Assets |
5036.784
|
3988.629 |
2967.409
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
2723.115
|
1833.921
|
1627.367
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Provisions |
710.537
|
323.728
|
158.229
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Total
Current Liabilities |
3433.652
|
2157.649 |
1785.596
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Net Current Assets |
1603.132
|
1830.980 |
1181.813
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
5790.761 |
4734.748 |
4093.830 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
8682.712 |
5438.777 |
7715.894 |
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Other Income |
427.703 |
633.793 |
0.000 |
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Total Income |
9110.415 |
6072.570 |
7715.894 |
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Profit/(Loss) Before Tax |
1251.544 |
1353.506 |
645.185 |
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Provision for Taxation |
352.719 |
343.331 |
215.098 |
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Profit/(Loss) After Tax |
898.825 |
1010.175 |
430.087 |
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Expenditure in Foreign Currency : |
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Interest |
76.354 |
50.952 |
0.000 |
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Traveling |
366.758 |
412.713 |
0.000 |
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Other Earnings |
534.807 |
2029.322 |
18.357 |
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Legal and Professional Fees |
56.056 |
51.084 |
0.000 |
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Earnings in Foreign Currency : |
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FOB Value of Exports |
401.193 |
48.151 |
0.000 |
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Insurance and Frieght on Exports |
1.316 |
765.635 |
0.000 |
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Carbon Emission Reduction – (Carbon Credits)
|
83.326 |
0.000 |
0.000 |
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Total Exports |
1519.810 |
3357.857 |
18.357 |
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Imports : |
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Raw Materials |
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Coke |
287.617 |
773.108 |
0.000 |
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Coal |
799.714 |
646.697 |
0.000 |
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Ferro Alloys |
9.890 |
87.892 |
0.000 |
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Goods Traded in : |
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Coke |
1453.619 |
103.407 |
0.000 |
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Others |
0.000 |
0.000 |
1949.579 |
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Total Imports |
2550.840 |
1611.104 |
1949.579 |
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Expenditures : |
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Raw Material Consumed |
6716.781 |
3782.571 |
0.000 |
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Employees emoluments |
214.343 |
170.870 |
0.000 |
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Interest |
65.055 |
46.227 |
0.000 |
|||
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Depreciation & Amortization |
178.498 |
181.609 |
0.000 |
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Other Expenditure |
684.192 |
537.407 |
7067.137 |
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Less : Trial run Income net of expenditure |
0.000 |
(0.380) |
0.000 |
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Total Expenditure |
7858.870 |
4719.064 |
7067.137 |
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QUARTERLY /
SUMMARISED RESULTS
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PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
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Type |
1st
Quarter |
2nd Quarter |
3rd Quarter |
|
Sales Turnover |
2483.400 |
2289.400 |
2732.800 |
|
Other Income |
6.500 |
3.200 |
3.000 |
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Total Income |
2489.900 |
2292.600 |
2735.800 |
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Total Expenditure |
2084.400 |
1945.100 |
2395.000 |
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Operating Profit |
405.500 |
347.500 |
340.800 |
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Interest |
46.600 |
29.800 |
33.400 |
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Gross Profit |
359.900 |
317.700 |
307.400 |
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Depreciation |
45.500 |
45.700 |
46.500 |
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Tax |
70.600 |
59.600 |
35.600 |
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Reported PAT |
232.300 |
201.900 |
206.600 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
0.22 |
0.41 |
0.61 |
|
Long Term Debt
Equity Ratio |
0.22 |
0.40 |
0.57 |
|
Current Ratio |
1.39 |
1.45 |
1.33 |
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TURNOVER RATIOS |
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|
Fixed Assets |
3.65 |
2.64 |
3.47 |
|
Inventory |
11.17 |
9.51 |
19.52 |
|
Debtors |
7.71 |
6.20 |
8.26 |
|
Interest Cover
Ratio |
8.39 |
8.65 |
5.65 |
|
Operating Profit
Margin (%) |
14.90 |
17.16 |
10.55 |
|
Profit Before
Interest and Tax Margin (%) |
13.28 |
14.82 |
8.49 |
|
Cash Profit
Margin (%) |
10.03 |
12.12 |
6.72 |
|
Adjusted Net
Profit Margin (%) |
8.40 |
9.78 |
4.66 |
|
Return on Capital
Employed (%) |
29.52 |
27.51 |
20.48 |
|
Return on Net Worth (%) |
22.88 |
25.57 |
18.11 |
LOCAL AGENCY
FURTHER INFORMATION
History
Kalyani Steels (KSL), promoted by B N Kalyani, was
established in 1973 and has its works at Mundhwa, Pune. The company is one of
the leading mini steel plants manufacturing forging quality carbon and alloy
steels using the electric arc furnace route. KSL produces engineering and alloy
steel ingots, blooms and billets conforming to international standards. Its
products range between 36 mm and 140 mm in diameter. KSL has absorbed various
technologies from Aichi Steels, Japan; Mann, Germany; Inteco, Austria; and
Concast, Switzerland.
KSL has also set up an electro-slag refining (ESR) plant to manufacture
ingots with a maximum diameter of 800 mm. The company went public in Sep.'92
with an issue of FCDs and NCDs with warrants attached to part-finance its
seamless pipe project at Baramati near Pune.
In Jan.'95, the company transferred its 90,000-tpa carbon and alloy steel
seamless tubes plant at Baramati Pune, to Kalyani Seamless Tubes, a company
promoted especially to take over this project. During the year 1999-2000,
Kalyani Seamless Tubes, a company promoted by Kalyani Steels merged with Indian
Seamless Tubes Ltd.
The subsidiaries of the company are Chakrapani Investments and Trade Ltd,
Surajmukhi Investments and Finance Ltd & Gladiolla Investments Ltd.Kalyani
Steels Ltd (KSL), has teamed up with the US-based Carpenter Technology
Corporation(26% stake) to set up a joint venture, Kalyani Carpenter Special
Steels Ltd to manufacture high value-added steels. Carpenter and Kalyani have
established a second joint venture, Kalyani Carpenter Metal Centres Ltd, for
opening distribution centres.
For captive consumption purposes the company intends to set up a 7.5 MW
capacity power plant by using blast furnace gas generated by the mini blast
furnaces. By setting up the power plant the company expects to bring down the
input cost of steel prodcution and increase the competitiveness of the end products.
The project cost is pegged to be around Rs.270 million and would be financed by
way of internal accruals and debts. During April 2005 the company has
commissioned the power plant which uses the blast furnace gases generated by
mini blast furnaces at a total capital expenditure of Rs.251 million.
The Company has entered into an agreement with Gujarat NRE
Coke Ltd for setting up of coke oven batteries project. The company has
contributed to 40% equity stake in Bharat NRE Coke Ltd (BNCL). BNCL has planned
to set up eight coke oven batteries at Dharwad, Karnataka. During April 2005
the company has commissioned the first coke oven battery and the second battery
is in process and both the batteries taken together are expected to produce
5400 tonnes per month of coke. The project is expected to be completed by
November 2005.
In the 2004-05 the company has commenced a project for integrated steel
manufacturing project of 30000 TPA at village Ginigera, Koppal, Karnataka. The
company will commission 350m3 capacity Mini Blast Furnace, Coal based Sponge
Iron Plant of 350 TPD capacity and Power plant to utilise the engery of the
flue gases generated in the above processes in the first phase and in the
second phase it will commission steel melting shop and Rolling Mills.
Further the company has entered into lease agreement with Shree Ram Electrocast
Pvt Ltd to lease the pig iron making facilites consisting of one mini blast
furnace of 175m3 capacity, pig casting machine, raw material handling system,
electrical facilites including 2.5 MW captive power plant etc. This facility is
located at Village Honarhalli and Halekote, Bellary, Karnataka and it is
expected to produce 108000 TPA of Pig Iron. The facility is expected to
commence its operations from July 2005.
Kalyani Ferrous Industries Ltd (KFIL) was merged with the company through
a scheme of Amalgamation. According to the Scheme of Merger the company has
issued 2 equity shares of Rs.10/- each of the company to the shareholders of
KFIL for every 9 equity shares of Rs.10/- each held by them in KFIL.
YEAR EVENTS 1973 - The company was incorporated
on 28th February, at Pune. The company was promoted by Mr. B.N. Kalyani. The
Company manufacture mild steel/carbon/alloy steel ingots and billets and chemicals.
1979 - The company entered into a
technical and management consultancy contract with the Gulf Venture, Company at
Doha, in the State of Qatar for processing scrap.
1981 - The Company promoted a new
company under the name and style of Kalyani Brakes Ltd., to manufacture
1,00,000 sets of hydraulic air and air over hydraulic brakes and brake systems
in collaboration with Bendix Group of Companies, U.S.A.
1982 - The Company received a letter
of intent for the manufacture of additional 18,000 tonnes of steel per annum.
The Company negotiated with Hiremates Chemicals Ltd. (HCL), to run its chemical
manufacturing unit for a period of 5 to 7 years.
- The
Company undertook to set up a seamless pipe project at Baramati, Dist. Poona in
Maharashtra.
1983 - Chakrapani Investment &
Trader Ltd. and Suryamukhi Investment & Finance Ltd. became wholly owned
subsidiaries of the Company.
-
Surajmukhi Investment & Finance Ltd. and Hikal Chemical Industries Ltd. are
subsidiaries of the Company.
- 3,
00,000 Bonus Equity shares allotted in the prop. 1:2 on 7th November.
1984 - The Manufacture of chemicals
was undertaken on a pilot project basis.
-
2,25,000 No. of equity shares offered at par for public subscription during
April.
1985 - Laddle Furnace Vacuum Degassing
Equipment was installed.
- In April,
50,000-15% secured non-convertible redeemable debentures of Rs 100 each were
privately placed with Army Group Insurance Directorate. These debentures are
redeemable at a premium of 5% after 7 years from the date of allotment.
- In
April, the Company issued 1,12,500-15% secured, non-convertible redeemable
debentures of Rs 100 each as rights in the proportion 1 debenture for every 10
shares held. These debentures are redeemable at a premium of 5% at the end of 7
years from the date of allotment. 1986 - The company installed on ultra high
power furnace to commence ferrous and non-ferrous casting manufacturing
activity.
1987 - During the year, the Company
undertook installation of electro-slag refining facility and continuous casting
unit with a view to modernising and upgrading the manufacturing technology.
-
56,250 No. of equity shares issued at par for the benefit and welfare of Senior
Executives of the Company.
1989 - Dandakaranya Investment &
Trading Ltd., Dronacharya Investment & Trading Ltd., Hastinapur Investment
& Trading Ltd., Cornflower Investment & Finance Ltd. and Campamela
Investment & Finance Ltd. ceased to be subsidiaries with effect from 12th
October, 1989.
-
11,81,250 bonus equity shares issued in prop. 1:1 on 4th April.
1990 - The Company offered
33,07,500-14% Secured Redeemable Partly convertible debentures of Rs 150 each
to the equity shareholders and employees on rights basis in the proportion of 2
debentures: 3 equity shares held all were taken up. 11,66,666 debentures were
issued to the public through the prospectus (all taken up).
- These
debentures consist of part A of Rs 60 and part B of Rs 90. Part A of Rs 60 will
be automatically and compulsorily converted into one equity share of Rs 10 each
at a premium of Rs 50 per share on the expiry of 6 months from the date of
allotment. Part B of Rs 90 will be a non-convertible portion of the debentures
redeemable at par in three equal annual instalments at the end of the 6th, 7th
and 8th year from the date of allotment.
- The
Company also issued 19,90,000-14% secured redeemable non-convertible debentures
of Rs 100 each on rights basis in the proportion of 21 debentures: 50 No. of
equity shares held (81,462 debentures were taken up). The balance 18,84,890
debentures were allotted to financial institutions. These debentures are
redeemable at a premium of 5% at the end of 7 years from the date of allotment.
-
12,62,500 bonus equity shares issued in prop. 1:1 on 1st December.
1991 - The Company allotted
5,00,000-19% secured redeemable non-convertible debentures of Rs 100 each and
12,00,000-19% secured redeemable debentures of Rs 100 each to financial
institutions on private plant basis.
- These
are redeemable at a premium of Rs 5 per debentures at the end of 6th, 7th &
8th year from the date of allotment i.e. 3.2.1992 and 14.2.1992 respectively.
1992 - The Cold Pilger mill HPT 90
and HPT 55 were installed.
- The Company
undertook to set up facilities for carrying out threading and coupling of
seamless pipes to enable the Company explose oil country tubular goods market
more effective.
-
During September, the company had offered 46,00,000-16% fully convertible
debentures of Rs 155 each on Rights basis in prop. 1 deb: 2 equity shares held.
-
Another 2,30,000 debentures were issued to the employees' on an equitable basis
(only 54,050 debs. taken up).
- Each
debenture was to be converted into one equity sum of Rs 10 each at a premium of
Rs 145 per share on expiry of 6 months from date of allotment of debentures.
Accordingly 46,54,060 No. of equity shares were allotted.
- The
Company also offered 12,88,000-16% non-convertible debentures on Rights basis
in proportion 7 debs: 50 equity share held.
-
Another 64,400 debentures were issued to employees on equitable basis (only 100
debs. taken up). Each debenture had a warrant attached entitling the holder to
apply for 1 equity share at a premium of Rs 165 per share.
1994 - During February-March the
Company offered 90,85,000 Rights equity shares of Rs 10 each at a premium of Rs
50 per share in prop. 3:5 (all were taken up) on 19th April.
1995 - The Company embarked upon an
integrated steel making project of 2,90,000 tpa at village Ginegera, dist.
Raichur in Karnataka. The entire project has been divided into two parts and
was being set up in technical arrangement with Tata Korf Engineering Services
Ltd. for usage of korf technology from Brazil.
- The
first part of the project for manufacturing of pig iron is being set up by
Kalyani Ferros Industries Ltd. (KFIL) with a capacity 2,40,000 tpa.
- The
second part of the project i.e. more cost effective carbon and alloy steel
plant having a capacity of 2,90,000 tpa was being set up for which the hot
metal was to be provided by KFIL, as an input for production of billets and
rounds.
1997 - The Company entered into a
joint venture agreement with Carpenter Technology Corporation, USA for
manufacture and marketing of speciality steels. The joint venture entails
transfer of Mundhwa plant into a separate company viz Kalyani Carpenter Special
Steels Pvt. Ltd. It also envisages promotion of another company viz Kalyani
Carpenter Metal Centres Pvt. Ltd. to look after the marketing and distribution
of the licensed products in India.
1998 - The company has fully
implemented the cost effective Carbon and Alloy Steel project through the Mini
Blast Furnace route at Ginigera. Trial runs of the Hospet Project have shown
good results.
1999 - Crisil today undertook a
four-category downgrade of the BBB+ (moderate safety with relatively higher
standing within the category) rating assigned to two non-convertible debenture
(NCD) issues of Kalyani Steels Ltd. for an aggregate amount of Rs 56.90 crore,
to D (default grade).
-
Kalyani Steels, has exported its first consignment of high value-added special
steel to the US.
- The
company has been formed to manufacture high value-added steels like stainless
steel, tool steel, and die steel for the world markets. These products will
find high-tech applications in the automotive, electronics and engineering
industries.
2000 - Kalyani Steels Ltd is setting
up a new plant at Ranjangaon to manufacture higher alloy steel grades.
-
Kalyani Carpenter, a joint venture between Kalyani Steels and Carpenter
Technology USA has opened its first steel services centre in Pune district to
provide rapid delivery of stock anywhere throughout India.
-
Private sector steel majors Tisco, Kalyani Steel and the public sector Steel
Authority of India are all set to form a three-way joint venture for
undertaking e-commerce activities in the steel sector.
- The
Company intend to acquire 18,64,700 No. of equity shares of Rs 10 each of Hikal
Chemical Industries Ltd. together with 18,64,700 No. of equity shares proposed
to be issued by HCIL as bonus shares for a total consideration of Rs 71,048,690
from the company's wholly-owned subsidiary Surajmukhi Investments & Finance
Ltd.
2001 - Kalyani Steel has sold
43,53,472 No. of equity shares of Bharat Forge Ltd and 22,231,052 No. of equity
shares of Kalyani Carpenter Special Steel for a consideration of Rs 96 crore to
KSL Holdings. - The management of the Pune-based Kalyani Steels has transferred
its entire holding in Bharat Forge and in its joint venture, Kalyani Carpenter
Special Steels, to a newly formed company, KSL Holdings, for a total
consideration of Rs 96 crore.
2003
-Shareholders
approve the scheme of arrangement between Kalyani Ferrous Industries Ltd. with
the Company
The company’s fixed
assets of important value include leasehold land, buildings, plant &
machinery, electrical installation, furniture\office equipments, vehicles and
Aircraft’s
MANAGEMENT DISCUSSION
AND ANALYSIS;
Industry Structure and Development:
Steel is vital to the development of any modern economy. The level of per
capita consumption of steel is treated as one of the important indicators of
socio-economic development and living standard of the people in any country.
The growth of all major industrial economies has been largely shaped by the
strength of their steel industry.
Steel Industry is backbone of Indian Economy and plays vital role in the
development process of the economy. Soaring demand by sectors like
infrastructure, construction and automobiles, at home and abroad, has put
India's steel industry on the world map. International Iron and Steel Institute
(IISI) has ranked India as the seventh largest steel producer in the world with
an overall production of about 40 million tones in 2006. The steel sector in
the country is set to move upward and overall scenario is positive with
accelerated rate of growth in steel sector.
While steel continues to have a stronghold in traditional sectors such as
construction, housing, ground transportation, special steels is also
increasingly used in hi-tech engineering industries such as power generation,
petrochemicals, fertilisers etc. With the expected growth in demand for steel,
many business houses have announced Brownfield as well as Greenfield expansion
programmes which will substantially increase the steel production capacity.
Along with this, down the line facilities like rolling, galvanizing,
fabrication are also coming up.
Indian Companies are also expanding overseas to increase their size and
reach. The increasing presence of the Indian steel companies in the global
market is a pointer to the increased competitiveness of this industry. This is
mainly due to improvement in the operational parameters of the Indian plants
effected through establishment of new state-of-the-art plants and technology upgradation
schemes in the older plants. The average techno-economic parameters of an
Indian plant vis-a-vis international benchmarks show that the Indian plants are
fast catching up with the best in the world.
Company Performance:
* Gross Turnover - Rs.10700 Million* Profit before Taxation - Rs.
1252 Million* Profit after Taxation - Rs.899 Million
Turnover includes Trading Turnover of Rs.2050 Million and Manufacturing
Turnover of Rs.8650 Million. Trading Turnover was mainly on account of buying and
selling of coke and pig iron.
Manufacturing turnover includes sale of Rolled Products, As Cast Blooms, Pig Iron, Misc. Sales and Conversion Charges received. The Company sold 142,296 tonnes of 'Rolled Products' aggregating Rs.5549 Million, 20,373 tonnes of 'As Cast Blooms' aggregating Rs.594 Million and 35,856 tonnes of Pig Iron aggregating Rs.623 Million. Misc. Sales amounted to Rs.452 Million and Conversion Charges received were Rs.1432 Million. The Manufacturing Turnover includes exports of 1,528 tonnes of steel, aggregating Rs.70 Million.
As on 31st March, 2007 the Company has 183 employees. 854
employees are on the role of Hospet Steels Limited, which is a Joint Venture
Company formed with the specific purpose of managing and operating the composite
steel making facility at Ginigera, in terms of Strategic Alliance between the
Company and Mukand Limited.
Opportunities, Threats and Future
Outlook:
With abundant iron ore resources and well-established base for
steel production in the country, steel industry is poised to growth in the
coming decades. As the average per capita consumption of steel in India is only
38 kg. Compared to the global average of 170 kg., there is huge scope for
increasing steel production in India.
On the demand side, the strategy should be adopted to create incremental
demand through promotional efforts, creation of awareness and strengthening the
delivery chain, particularly in rural areas. On the supply side, the strategy
would be to facilitate creation of additional capacity, remove procedural and
policy bottlenecks in the availability of inputs such as iron ore and coal,
make higher investments in R & D and HRD and encourage the creation of
infrastructure such as roads, railways and ports.
While there have been concerted efforts to control the fragmented
nature of the industry through consolidation and closures, the problem
continues to persist. Further, the biggest threat to the industry remains from
the cyclicality of the sector, which could put immense pressure on steel prices
if steel consumption shows signs of faltering or supply exceeds the demand
considerably.
Another possible threat to the domestic steel sector continues to be from
dumping by international companies. With wide spread capacity expansions taking
place across the globe and the protection to domestic steel companies being
progressively reduced with consistent reduction in custom duties, international
steel companies might look at markets to dump their products. In such a
scenario, Indian companies stand to lose due to lack of competitiveness in
terms of size, which now they are scaling up.
Proposed Expansion:
Members are aware of a Brownfield Expansion of the existing facilities at
Ginigera, Taluka & District Koppal, in the State of Karnataka, undertaken
by the Company. The expansion is at advanced stages of implementation and the
Company expects to reach full-enhanced incremental capacity by 2008-09.
* 350m3 capacity Mini Blast Furnace (MBF) is under erection and expected to be commissioned in September, 2007. This would increase the hot metal capacity by 250,000 MTs per year.
* Steel Melting Shop (SMS) and Rolling Mill Shop (RMS) upgradation is well underway, to process extra liquid metal produced by aforesaid MBF. This would increase steel availability / capacity by 250,000 MTs per annum from Ginigera plant, out of which your Company's share will be 100,000 MTs.
Although commissioning of enhanced capacity in SMS and RMS, would be achieved by September, 2007, the actual production ramping would take some time.
* Development of Railway Siding at Ginigera, is already started and
scheduled for completion by December,- 2007. This would not only reduce the
freight cost for major inputs and finished goods, but also reduce fines generation
arising out of multiple handing of Coal / Coke.
The total capital expenditure incurred for expansion by the Company upto
31st March, 2007 amounted to Rs.336 Million, financed by way of internal
accruals and borrowings.
4. Coke Oven Batteries
Project:
Bharat NRE Coke Limited (BNCL), a company incorporated, in terms of
an agreement between Kalyani Steels Limited (KSL) and Gujarat NRE Coke Limited
(GNCL), has commissioned Stamp Charging Equipment at Dharwad. With stamp
charging equipment, BNCL would be able to use soft coal upto 30% of the total
charged mix, resulting into reduction in manufacturing cost of Coke as well as
enhanced productivity of the unit.
Railway siding at Dharwad is scheduled for completion by December,
2007.This would help reducing fines generation. Transportation of Coke to the
Company's Plant at Ginigera will be made by using the railway siding, resulting
in saving in time and cost of transportation.
Construction work of 12 MW Power Plant by using flue gases generated by
coke oven batteries will commence from August, 2007 and expected to be
completed by April, 2009. The total cost of the Power Plant is estimated at
approx. Rs.600 Million, to be financed by Equity of Rs.300 Million and Debt of
Rs.300 Million. The share of the Company in the Equity will be Rs.120
Million.
All these initiatives will facilitate assured supply of coke to the
Company, at the reduced costs.
5. Agreements with SJK Steel Plant
Limited:
The Company has entered into an Agreements, with SJK Steel Plant
Limited (SJK Steel) and its Promoter and other shareholders to acquire
substantial control of SJK Steel, through purchase of Equity and Preference
Share Capital of SJK Steel, after restructuring of its capital as per Corporate
Debt Restructuring Scheme (CDR Scheme) sanctioned by Financial Institutions /
Banks and fulfillment of certain terms and conditions, detailed in the
Agreements.
SJK Steel is presently engaged in the business of manufacture of pig iron
and operates a Plant at Tadipatri, in Anantpur District of Andhra Pradesh
having a capacity to manufacture 250,000 MTs of Steel per annum. The Company
will be providing technical and financial support to upgrade the existing
manufacturing facilities of SJK Steel for manufacturing value added products
viz. Special Alloy Steel catering to the forging and automobile industry.
Fixed Assets:
v
Leasehold land
v
Buildings
v
Plant and Machinery
v
Power Line
v
Electrical Installation
v
Furniture / Office Equipments
v
Vehicles and Air Crafts
(Rs in million)
|
Contingent
Liabilities |
31.03.2007 |
31.03.2006 |
|
Claims against the company not acknowledged as debts |
34.408 |
14.388 |
|
Excise Demands, matter under dispute |
64.463 |
64.156 |
|
Service tax Demands, matter under dispute |
1.182 |
0.000 |
|
Mysore Minerals Limited has during the
year, raised an illegitimate claim aggregating to Rs. 281.552 for price of
calibrated iron ore purchased by the company over and above the agreed
contracted purchased by the company over and above the agreed contracted
price. The Company has repudiated the said claim as the same is in
ultra-vires to the contract. |
||
Facilities:
Rupee Term Loans:
(i) Canara Bank – Term Loan
(ii) Bank of Baroda – Term Loan
(iii) Union Bank of India – Term Loan
(iv) The Jammu and Kashmir Bank Limited – Term Loan
(v) HDFC Bank Limited – Term Loan
(vi) State Bank of India – Term Loan
Above loans are secured by mortgage of Company’s immoveable properties
consisting of land together with all buildings and structures thereon and all
plant and machinery, attached to the earth or permanently fastened to anything
attached to the earth, both present and future hypothecation of whole of the
moveable fixed assets / Properties of the company, including its movable plant
and machinery, machinery spares, tools and accessories and other movable fixed
assts, both present and future, ranking pari passu with charges created and /
or to be created in favour of the true less for debenture holders and banks/
Financial Institutions for their term / foreign currency loans.
Guarantees aggregating Rs. 900.000 (previous year Rs. 900.000) given by
the Company’s Bankers under the Non-Fund based Working Capital Limits are
secured together with the fund based Working Capital Limits against
hypothecation of stores, raw materials, stock in progress, finished goods and
book debts.
The Company has entered into an “Equity Share Purchase, Share
Subscription and Shareholders Agreement and Preference Share Purchase
Agreement” with SJK Steels Plant Limited, its Promoter and other shareholders
to acquire substantial control though purchase of existing Equity and
Preference Shares held by “Selling Shareholders”, post and subject to
restructuring of SJK Share Capital and fulfillment of certain terms and
conditions, detailed in the Agreement. In terms with the said agreement the
company has paid advance of Rs. 2.4000 millions towards the purchase of Equity
Shares and Rs. 3.000 millions towards the purchase of Preference Shares.
Scheme of Companies / Arrangement between SJK and its Secured Creditors,
Equity and Preference Shareholders has been filled with The High Court of
Judicature at Andhra Pradesh at Hyderabad for restructuring of the capital of
SJK and compromise with Secured Creditors which is pending adjudication.
Pending Fulfillment of conditions precedent to acquisition, the amount of
Rs. 5.400 millions paid by the company has been disclosed as “Advance for
purchase of Shares”.
The Company has entered into agreements in the nature of lease/ leave and
license agreement with different lessors / licensors for the purpose of
establishment of premises and accommodation of executives. These are generally
in the nature of operating lease / leave and license and period of agreements
is generally for one year and renewable / cancelable at the option of the
lessee or lessor. In view of above there are no disclosures required as per
Accounting Standard 19 “Leases” issued by the institute of Chartered
Accountants of India.
However, the Company has entered into agreement in the nature of lease
with regard to assist taken on lease.
Disclosure required as per Accounting Standard 19 with regard to the
assets taken on lease are as under:
i. There are no transactions in the nature of sub-lease.
ii. Payments recognized in the profit and loss Account for the year ended
31.03.2007 is Rs.113.191
As per Website Details:
About the Kalyani Group:
Apart from Kalyani Steels, the 2000 cr. Pune
based Kalyani Group encompasses:
- Bharat Forge
- The flagship company of the group was established in 1961.
It is the largest forging company in Asia and one of the three largest and most technologically advanced commercial forge shops in the world. Bharat Forge manufactures a wide range of forgings and machined components for automotives, diesel engines, railways, earthmoving, cement, sugar, steel, coal, ship building and oilfield industries. - Kalyani Brakes Ltd. - Established in 1982, when the
automative revolution in India was about to take-off, Kalyani Brakes
Ltd.(KBX) is today, a leading manufacturer of brakes in the country.
Kalyani Brakes is a joint venture between Robert Bosch, Germany- a Fortune
500 company, and world leader in brake systems, Nippon Air Brake Co. Ltd.
of Japan and the Kalyani Group.
- Kalyani Lemmerz Ltd. - The Kalyani Group had promoted
Kalyani Wheels as a part of its diversification plan. At that time they
had collaboration with Lemmerz Werke, Germany. Subsequently, Lemmerz Werke
became a joint venture partner and the new company was christened as
Kalyani Lemmerz Ltd.(KLL). The company manufactures wheel rims for utility
vehicles, light and heavy commercial workers and tractors.
- Kalyani Sharp India Ltd. - Was established in 1986 as a joint
venture between Sharp Corporation, Japan and the Kalyani Group. It is a
leading manufacturer and exporter of consumer electronic items from India.
- Kalyani
Thermal Systems Ltd. - Established in 1979, this company specialises
in design, construction and installation of custom engineered Industrial
Heat Processing Systems. To stay apace with the latest technology, the
company has a technical tie-up with Flinn & Dreffein Engineering Co.,
USA.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 39.95 |
|
UK Pound |
1 |
Rs. 79.41 |
|
Euro |
1 |
Rs. 62.49 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
|
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
YES |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
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. |
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 |
|