MIRA
INFORM REPORT
|
Report Date : |
30.04.2008 |
IDENTIFICATION
DETAILS
|
Name : |
RASHTRIYA ISPAT
NIGAM LIMITED |
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Registered Office : |
Block A, Administrative
Building, Vishakhapatnam Steel Plant, Vishakhapatnam – 530 031, Andhra
Pradesh |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
18.02.1982 |
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Com. Reg. No.: |
01-3404 |
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CIN No.: [Company
Identification No.] |
U27109AP1982GOI003404 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
VPNR00283D /
VPNR00392A |
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Legal Form : |
Public Limited
Liability Company The company’s entire
capital is held by Government of India |
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Line of Business : |
Manufacturing and
Marketing of steel products |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 381528000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a
Government of India company having mediocre performance. Available
information indicates high financial responsibility of the company since it is
a Government of India company. Trade relations are fair. Financial position
is improving. The company has substantial accumulated losses but are expected
to be wiped out, soon due to steel sector doing well. Payments are usually
correct and as per commitments. The company can
be considered good for normal business dealings at usual trade terms and
conditions. Lenders and
Creditors can fell confidence of Government of India’s exposure to the
company. |
LOCATIONS
|
Registered
Office : |
Block A,
Administrative Building, Vishakhapatnam Steel Plant, Vishakhapatnam – 530
031, Andhra Pradesh, India. |
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Tel. No.: |
91-891-2518325 /
538 / 2888360 / 390 / 2888247 / 2518360 |
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Fax No.: |
91-891-2518753 /
756 / 2888316 /2518321 |
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E-Mail : |
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Website |
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Area: |
22685 sq. m. |
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Location: |
Owned |
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Regional
Office : |
1, Acharya J.C.
Bose Road, Kolkata - 700 020, West Bengal, India |
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Regional
Office : |
101, Free Press
House, Nariman Point, Mumbai - 400 021, Maharashtra, India |
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Regional
Office : |
184, Anna Salai, Chennai
- 600 006, Tamilnadu, India |
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Regional
Office : |
15, NBCC Tower,
UG Floor, Bhikaji Cama Place, New Delhi – 110 066, India |
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Factory 1 : |
Vishakhapatnam,
District Vishakhapatnam, Andhra Pradesh, India |
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Factory 2 : |
Jaggayyapeta,
District Krishna, Andhra Pradesh, India |
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Factory 3 : |
Madharam,
District Khamman, Andhra Pradesh, India |
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Guest House: |
1, Acharya J.C.
Bose Road, Kolkata - 700 020, West Bengal, India |
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Tel. No.: |
91-33-2242 2856 /
2242 1968 / 2334 4034 (Res.) |
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Fax No.: |
91-33-2242 7896 |
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Guest House: |
Khanji Bhavan,
10-3-311/A, Masab Tank, Ground Floor, NMDC Building, Hyderabad - 500 028,
Andhra Pradesh, India |
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Tel. No.: |
91-40-2353 5167 /
6267 / 2406 9207 (Res.) |
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Fax No.: |
91-40-2353 2167 |
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Northern
Region : |
Ø
6TH Floor, Prakash Deep Building 7, Tolstoy Marg, NEW
DELHI - 110 001 Ø
Block No.38/4-B, F-10 & 11, Near Punjab & Sind
Bank, Friends Centre, Sanjay Place, AGRA - 282 002 Ø
117/L/452,Channi House, 1st Floor, Naveen Nagar, Near
Double Pullia, KANPUR - 208 025 (UP) Ø
S.C.O.No.141-142, 2nd Floor, Sector 8-C, CHANDIGARH - 160
018 Ø SCO-3,
1st Floor, HUDA Complex,Sec-19, Mathura Road(NH-2), FARIDABAD - 121 001 Ø B-5, RDC, Shri Ravi Shankar Plaza, Rajnagar,
GHAZIABAD - 201 001 (U.P) Ø
Meghalaya Towers, 3rd Floor, Opp. All Saint Church, C-300,
Sansarvilla, MI Road, JAIPUR - 302 001 Ø
Master Chambers, 5th Floor, 19, Firoz Gandhi Market,
Ludhiana - 141 001 Ø 33/20,Ganapati
Kunj, Circular Road Dalanwala, Dehradun-248 001 |
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Eastern
Region: |
Ø 1, Acharya J.C.Bose Road,
KOLKATA - 700 020 Ø IPICOL House, Annexe Building,
2nd Floor ,Janpath, Bhubaneswar - 751 022 (ORISSA) Ø
West
Boring Canal Road, Patna - 800 001. |
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Western
Region: |
Ø
101, Free Press House, Free Press Journal Road, MUMBAI -
400 021 Ø
NBCC Hours, 1st Floor, Near Sahajanand College, Opp.
Kamadhenu, Complex, Ambawadi, Ahmedabad - 380 015 Ø 107-109, Rafael Towers, 812,Old Palasia, INDORE -
452 001 Ø
3025/8, Shreenidhi Chambers, 1st Floor, Senapati Bapat
Marg, PUNE - 411 016 Ø 317,
Rabindranath Tagore Road, Civil Lines, Nagpur - 440 001 |
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Southern
Region: |
Ø
India Garage Building, 184, Anna Salai, Chennai - 600 006 Ø
303, 3rd Floor, Mohan Towers, 50, Residency Road,
Bangalore - 560 025 Ø
Suguna Building,1st Floor, 707,Avanashi Road,
Coimbatore - 641 037 Ø Chakos Tower, 2nd Floor, Padma Junction, Padma
Pulleppady Road Ø
457/1B1, Deshpande Nagar, Hubli - 580 029 |
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Andhra Region:
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Ø 10-3-311/a, Khanij Bhavan, NMDC Building, Hyderabad
- 500 028 Ø
D-Block, Project Office Complex, Visakhapatnam - 530
031 |
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Ø D-Block, Project Office , Visakhapatnam - 530 031 |
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Ø Marketing Department |
DIRECTORS
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Name : |
Mr. Y. Siva Sagar Rao |
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Designation : |
Chairman cum Managing Director |
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Address : |
Steel House, D-3, Directors, Bungalow, sector-7 |
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Qualification
: |
BE |
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Name : |
Mr. P K Bishnoi |
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Designation : |
Director - Finance |
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Address : |
Bungalow No 2, sector – 7, Ukkunagaram |
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Qualification
: |
BE, MBA |
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Name : |
Mr. K A Naidu |
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Designation : |
Director |
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Address : |
D-1, Directors Banglow Sector – 6, Ukkunagaram |
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Qualification
: |
BE, PG Dim |
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Name : |
Mr. P. K. Misra |
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Designation : |
Director |
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Name : |
Mr. H S Chhatwal |
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Designation : |
Director |
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Address : |
6, Directors Bunglow, sector-7 |
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Qualification
: |
B. Sc. (Mech) |
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Name : |
Mr. P. K. Misra |
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Designation : |
Director – Operations |
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Date of Appointment : |
01.08.2006 |
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Name : |
Mr. A K Rath, IAS |
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Designation : |
Director – Min. of Steel and Director |
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Address : |
AS & FA, Ministry of Steel, Udyog Bhavan New Delhi-110011 |
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Qualification
: |
M. Sc. Physics. |
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Name : |
Mr. G. Elias |
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Designation : |
Jt. Secy, Min. of Steel and Director |
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Date of Appointment : |
13.04.2006 |
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Name : |
Mr. R.S.S.L.N. Bhaskarudu |
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Designation : |
Director |
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Name : |
Dr. V.K. Bhalla |
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Designation : |
Director |
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Date of Appointment : |
29.06.2006 |
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Name : |
Mr. J S. Mathur |
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Designation : |
Director |
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Date of Appointment : |
11.07.2006 |
KEY EXECUTIVES
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Name : |
Mr. P. Mohan Rao |
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Designation : |
Company Secretary |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and
Marketing of steel products |
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Products : |
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Brand Names : |
Rabars: Vizar TMT Strycturals:
Vizag Ukku |
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Agencies Held : |
Sold through own
Branches |
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Exports : |
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Countries : |
Nepal, Srilanka,
US, Malaysia, Indonesia |
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Imports : |
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Countries : |
Australia,
Thailand, UAE |
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Terms : |
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Selling : |
L/C, Cash, Credit
(30 days) |
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Purchasing : |
L/c, Credit |
PRODUCTION STATUS ( As on 31.03.2006)
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
|
Wire Rods |
Tonnes in ‘000s |
850 |
1043 |
|
Light &
Medium Merchant Products-Bar Mill |
Tonnes in ‘000s |
710 |
873 |
|
Saleable Billets |
Tonnes in ‘000s |
246 |
110 |
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Medium Merchant
Structural Mill |
Tonnes in ‘000s |
850 |
1058 |
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Pig Iron |
Tonnes in ‘000s |
556 |
439 |
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Granulated Slag |
Tonnes in ‘000s |
1440 |
1578 |
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Coke Ovens
By-products |
Tonnes in ‘000s |
186 |
152 |
GENERAL
INFORMATION
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No. of Employees : |
16610 |
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Bankers : |
·
State Bank
of India, Vishakhapatnam, Andhra Pradesh, India ·
Andhra Bank,
Vishakhapatnam, Andhra Pradesh, India ·
Bank of
Baroda ·
Canara Bank ·
UCO Bank ·
Central Bank
Of India ·
Dena Bank ·
Punjab and
Sind Bank ·
Oriental
Bank of Commerce ·
State Bank
of Hyderabad ·
State Bank
of Saurashtra ·
State Bank
of Mysore ·
Indian
Overseas Bank ·
Indian Bank ·
HSBC Bank ·
IDBI Bank ·
Allahabad
Bank |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Rao and Kumar Chartered Accountants |
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Address : |
Visakhapatnam |
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Associates/Subsidiaries : |
All Government of
India Undertaking Companies |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
48900000 |
Equity shares |
Rs. 1000/- each |
Rs. 48900.000 millions |
|
31100000 |
Preference Shares |
Rs. 1000/- each |
Rs. 31100.000 millions |
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Total |
|
Rs. 80000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
48898462 |
Equity shares |
Rs. 1000/- each |
Rs. 48898.462 millions |
|
29374700 |
Cumulative
Redeemable preference shares |
Rs. 1000/- each |
Rs. 29374.700 millions |
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Total |
|
Rs. 78273.162 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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|
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1] Share Capital |
78273.200 |
78273.200 |
78273.200 |
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2] Share
Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves &
Surplus |
17108.800 |
3463.800 |
(9060.000) |
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4] (Accumulated
Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH
|
95382.000 |
81737.000 |
69213.200 |
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LOAN FUNDS |
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|
1] Secured Loans |
6044.500 |
1738.700 |
889.400 |
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2] Unsecured
Loans |
3125.100 |
3694.400 |
4424.300 |
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TOTAL BORROWING
|
9169.600 |
5433.100 |
5313.700 |
|
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DEFERRED TAX
LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL
|
104551.600 |
87170.100 |
74526.900 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
|
17904.600 |
20782.600 |
24413.100 |
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Capital work-in-progress
|
5971.900 |
1807.400 |
588.500 |
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Investments
|
0.500 |
0.000 |
0.000 |
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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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|
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Inventories
|
12872.400 |
13361.600 |
14136.400 |
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Sundry Debtors
|
2168.000 |
1662.700 |
493.000 |
|
|
Cash & Bank Balances
|
71946.800 |
56217.000 |
39326.100 |
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Other Current Assets
|
0.000 |
0.000 |
0.000 |
|
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Loans & Advances
|
18958.400 |
13589.900 |
11862.300 |
Total Current Assets
|
105945.600 |
84831.200 |
65817.800 |
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
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Current Liabilities
|
13652.800 |
12158.000 |
12468.800 |
|
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Provisions
|
11767.700 |
8341.800 |
4253.800 |
Total Current Liabilities
|
25420.500
|
20499.800
|
16722.600
|
|
Net Current Assets
|
80525.100 |
64331.400 |
49095.200 |
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MISCELLANEOUS EXPENSES
|
149.500 |
248.700 |
430.100 |
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TOTAL
|
104551.600 |
87170.100 |
74526.900 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
91789.700 |
84991.400 |
81881.600 |
|
|
Other Income |
6356.800 |
4460.000 |
2863.800 |
|
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Total Income |
98146.500 |
89451.400 |
84745.400 |
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Profit/(Loss) Before Tax |
22223.400 |
18895.100 |
22537.600 |
|
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Provision for Taxation |
8589.100 |
6371.400 |
2456.700 |
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Profit/(Loss) After Tax |
13634.300 |
12523.700 |
20080.900 |
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Expenditures : |
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Raw Materials |
38605.500 |
35601.400
|
29954.100
|
|
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Excise Duty |
12407.000 |
11524.600
|
8939.600
|
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Power & Fuel Cost |
2576.500 |
2610.200
|
2260.300
|
|
|
Other Manufacturing Expenses |
5662.700 |
5294.700
|
4917.300
|
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Employee Cost |
7419.400 |
5730.700
|
4895.800
|
|
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Selling and Administration
Expenses |
4433.800 |
4109.400
|
3726.700
|
|
|
Miscellaneous Expenses |
568.600 |
543.600
|
642.000 |
|
|
Interest & Financial Charges
|
496.000 |
327.500
|
145.300
|
|
|
Depreciation |
3516.000 |
4155.700
|
9830.600
|
|
|
Stock Adjustments |
237.600 |
658.500 |
(3103.900) |
|
Total Expenditure |
75923.100 |
70556.300 |
62207.800 |
|
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity
Ratio |
0.08 |
0.07 |
0.05 |
|
Long Term
Debt-Equity Ratio |
0.06 |
0.05 |
0.04 |
|
Current Ratio |
3.83 |
3.78 |
3.01 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.04 |
0.97 |
0.94 |
|
Inventory |
7.00 |
6.18 |
7.42 |
|
Debtors |
47.92 |
78.85 |
121.38 |
|
Interest Cover
Ratio |
45.81 |
58.69 |
156.11 |
|
Operating Profit
Margin (%) |
28.58 |
27.51 |
39.71 |
|
Profit Before
Interest And Tax Margin (%) |
24.75 |
22.62 |
27.70 |
|
Cash Profit
Margin (%) |
18.68 |
19.62 |
36.53 |
|
Adjusted Net
Profit Margin (%) |
14.85 |
14.74 |
24.52 |
|
Return On
Capital Employed (%) |
23.75 |
22.60 |
28.14 |
|
Return On Net
Worth (%) |
23.04 |
24.74 |
41.07 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
The company was incorporated on 18th February 1982 at
Vishakhapatnam in Andhra Pradesh having Company Registration Number 3403.
A new company viz. Rashtriya Ispat Nigam Limited (RINL) was incorporated
in the year 1982 and Visakhapatnam Steel Project was separated out from Steel
Authority of India Limited and put under RINL. Project construction was
commenced on 2nd February 1982, which was considered as the Zero
date. The last unit of the plant was
commissioned in July 1992 and the plant dedicated to the Nation on 1st
August 1992 by the then Prime Minister.
The company's Vishakhapatnam Steel Plant, the most modern integrated
steel plant has capacity to produce 3 million tonnes of liquid steel and 560000
tonnes of pig iron.
PERFORMANCE
HIGHLIGHTS:
The performance of the Company in terms of both Production
and Sales Revenue has been satisfactory.
The Company surmounted various adverse situations during the past 25
years and has now been conferred the status of Mini Ratna by Government of
India. The Company's plan to expand its capacity to 6.3 mtpa of liquid steel
has been approved by Government of India and the project is under
progress.
PRODUCTION REVIEW:
The Company has surpassed its rated capacity for the 6th consecutive year. The Company continued to honour the commitments made in its MOU with Ministry of Steel in almost all shops i.e. in Oven Pushing (104%), Bar Products (106%), Wire Rods (112%), MMSM Products (115%), Saleable Steel (103%) & Liquid Steel (101%).
Other production related highlights are:
* Production of 30.10 lakh tonnes Finished Steel i.e., 1% growth over
last year.
* Value added production of 10,86,509 t is the highest ever with 22%
growth over 2005-06
* Value added production with reference to Saleable Steel is 33% and is
the best since inception.
* Metallurgical Waste consumption of 360,160t at Sinter Plant is the
highest so far.
* Yearly dispatch of 1052 rakes (2.337 Million tonnes of Iron, Steel
& Granulated Slag) is the best since inception.
* Gross Water consumption of 2.29 cum/tLS (1.1 reduction over last year)
is the best so far.
* Gross Power consumption of 456.55 kwh/tLS is the lowest so far.
* Hot metal & Liquid Steel crossed 50 Mt & 40 Mt of cumulative
production landmark on 07.01.2007 and 04.01.2007 respectively.
The Company has also implemented various Cost Reduction measures such as:
a) Utilization of waste products like:
i) LD Slag used in SP, BF and SMS to replace limestone
ii) Scrap was reclaimed from maintenance activities and used in Steel Melt Shop (SMS).
iii) Metallurgical Waste used in place of Iron Ore Fines at Sinter Plant
(SP).
b) Average converter life at SMS has been improved over previous
year.
In addition to the techno-economic parameters being focused and monitored by
Works Division, the other functional areas like Finance, Materials Management
and Marketing have also adopted various measures in order to achieve cost
reduction in freight, transportation and handling charges in respect of both
inward and outward movement of materials including export as well as reduction
in interest expenses.
FINANCIAL
REVIEW:
The Financial year 2006-07 saw a record turnover of Rs. 91505.700 millions as compared to Rs. 84908.800 millions of previous year. The Company has earned a Net Profit of Rs. 13634.300 millions as compared to Rs. 12523.7 millions in previous year. The Company incurred Income Tax of Rs. 8843.400 millions and Excise Duty of Rs. 12179.100 millions during the year. The Company continued to optimize expenditure on Interest, Bank charges and Insurance costs while improving interest earnings on surplus funds.
The Company has taken up with GOI for early Redemption of Preference Shares
Capital so as to bring down the capital base. The Board of Directors has
approved Redemption of Preference Shares of Rs. 3450.000 millions for the year
2005-06 and Rs. 7000.000 millions for 2006-07.
SALES AND MARKETING
REVIEW 2006-07:
Sales
Performance:
Best ever sales of Rs. 91510.000 millions since inception was registered during 2006-07 with MOU target fulfillment of 105% which is 8% more than the sales turnover of Rs. 84910.000 millions. in 2005-06. Domestic sales of Rs. 87260.000 millions in 2006-07 was also the best ever since inception.
During the year 2006-07, the total sale of steel in tonnes was 3.266 million of which the Domestic steel sales was 3.145 million and was the highest ever since inception and also registered a growth of 1% over previous year. Around 59% of the domestic steel sale was supplied to the actual user segment in 2006-07
E-MARKETING:
As against the quantity of 22,848 tons sold through 84 e-auctions in 2005-06,
during 2006-07, 32,740 tons of steel was sold through 95 e-auctions, thereby
registering a healthy growth of 43% in terms of volume.
VALUE ADDED STEELS:
Sale of value added steel products was Rs. 1.111 millions tons in 2006-07 against Rs. 0.927 million tons in 2005-06, representing a healthy growth rate of 20%. The percentage of value added steel sales in the total sales of saleable steel stood at 34% in 2006-07, which is the highest ever recorded till date. During the year, 62 new products were introduced in the market. Around Rs. 0.620 millions tons of special steel was supplied to the automobile sector against Rs. 0.500 million tons in 2005-06 registering a growth of 24%.
BY-PRODUCTS:
Sales of By-products at Rs. 2200.000 millions is the highest since
inception registering a growth of 47% over 2005-06.
During 2006-07, special emphasis was given for sale of granulated slag. As a
result, 12.48 lakhs tons of BF slags was sold in 2006-07, which is 84% of the
production.
EXPORTS:
A total of Rs. 0.279 million tons of Iron and Steel materials were exported
in 2006-07 as against Rs. 0.305 million tons in 2005-06. In terms of value, Rs.
4240.000 millions of iron and steel products were exported in 2006-07 as
against Rs. 4430.000 millions in 2005-06. Exports of iron and steel products
were contained to meet the domestic requirements, in line with the Government
of India policy to give priority to domestic sales.
RURAL MARKETING AND NEW OUTLETS:
(i) With a view to making steel available in rural areas, additional 60 nos. of
District Level Dealers (DLDs) were appointed in Southern States namely Andhra
Pradesh, Karnataka, Tamilnadu, Kerala and Pondichery, making VSP's presence in
each and every district in South, taking the total number of DLDs to 99
nos.
(ii) Three numbers of new Consignment Sales Agencies (CSA) were appointed in Raipur, Pondichery & Jamshedpur.
(iii) VSP is also experimenting with possibilities of transporting iron and steel products through coastal mode and for the first time, a consignment of 1,000 tons was shipped from Vizag to Kolkata on trial basis. Coastal transportation could help in improving the overall dispatches and reduce dependence on rail and road transport.
CRM
INITIATIVES:
(i) For the first time E-poll has been introduced in RINL/VSP portal vizagsteel.com for capturing on line customer feedback.
(ii) A number of activities during the year has been taken towards improving customer satisfaction, like quicker settlement of quality complaints, answering to customer queries through portal in 24 hours, monitoring customer delivery norms etc.
MATERIAL MANAGEMENT REVIEW:
During the year 2006-07, timely availability of bulk and other raw materials required for higher level of production was ensured.
Further to overcome uncertainties on availability of required quantum of materials, the Company, entered into MOUs with NINL/MMTC for LAM Coke, with NALCO for Aluminium Metal and with SAIL for supply of structural steel for expansion.
Other initiatives include the following:
* Joint Venture MOU was signed with MOIL for producing
Silico Manganese and Ferro Manganese.
* For widening coal supplier-base, expression of interest (EOI) of suppliers
(to deal with the Company on long term basis) was invited. The response was
satisfactory and follow-up actions were taken up. For Imported Coking Coal
(ICC) three new firms were short listed through Expression of Interest.
* The procurement policy for ICC and LAM coke was finalized during the
year.
* 5S was implemented in almost all areas of Stores for better house keeping and
service.
* A few large size coal vessels were engaged, diversion of vessels from one
port to the other for discharge operations, etc. were gone in to achieve cost
reduction.
* Efforts to reduce cost on account of logistics will continue.
* MOU with regard to "Integrity Pact" was signed with Transparency
International India and the same is being implemented in the tenders.
RAW MATERIALS &
CAPTIVE MINES:
The performance of Madharam Dolomite Mine for the year 2006-07 was satisfactory with production of 6,57,020 tons and all time despatch record of 6,50,363 tons of dolomite.
The performance of Jaggayyapeta Limestone Mine for the year 2006-07 was satisfactory with all time production record of 4,57,620 tons and despatch record of 4,54,026 tons of limestone. The % growth in respect of JLM production was 11.53% and despatch was 12.49% as compared to 2005-06.
The production of Manganese at Garbham Manganese Mine was
good i.e., 13,076 tons and despatch was 9,361 tons.
The despatch of River Sand from Sarepalli Sand Mine was 22,082 tonnes.
The Company submitted 5 mining lease applications for iron ore deposit in the State of Orissa (4415.8807 ha.) and two applications in the state of Chhattisgarh (4606.34 ha.). Out of 5 applications, 3 were rejected as RINL/ VSP does not have Value Addition Project in that State. One application was rejected by Chhattisgarh state Govt. as Rowghat area is not vacant due to pending of old PL/ ML applications by Private Agencies.
"Expression of interest for acquisition of hard coking coal mines
abroad" was placed in the Company's website. Responses from Australia, USA
and Canada were received. The Evaluation Committee constituted by the Management
is following and reviewing the linkages for all the raw material required for
expansion of steel plant to 6.5 MT stage. Similarly offers for Joint Ventures
participation for operating Low Silica Limestone Mine in the Sultanate of Oman
are in progress.
SAFETY:
During the year, the performance of the Company continued to give the required
attention with respect to Safety activities. Efforts in that direction include:
* Implementation of OHSAS:18001, proactive measures and monitoring of risk control measures have resulted in reduction/ elimination of potential hazards in the activities and also helped in achieving Zero accident in many departments and one million accident free man hours number of times.
* The Company achieved 2 million accident free man hours one time and 1 Million
accident free man hours ten times.
* Refresher safety training programme was organized for the Central Safety
Committee Members.
* Safety Training programme on 'Reliability and safety Engineering' in
association with IIT, Kharagpur was
conducted for the plant executives.
* External Safety Audit was conducted by an independent agency.
During the year, the company received the 'Safety Innovation Award 2006' from the Institution of Engineers (India) for implementing innovative safety management systems and "Leader Ship & Excellence Award - 2006" in
SHE for best presentation in the competition conducted by CII Southern Region.
* All the regular employees and contractor workers are imparted refresher
safety training. Control measures of Hazard Identification and Risk Assessment
are being implemented and monitored. Occupational Health and Safety objectives
are set for each department and corresponding management programmes are
prepared and implemented for achieving the objectives. Internal Safety Audits
were conducted in hazardous departments and points raised therein were
attended. On-site Emergency Plan was implemented and mock drills were conducted
for testing it. Road safety measures were implemented strictly.
ENVIRONMENT
MANAGEMENT REVIEW:
The commitment of the Company for preservation of the environment as an integral part of its products and services has always remained a guiding principle of its business strategy. Being an ISO-14001 certified company since May 2001, VSP has expressly included social and environmental responsibility in its corporate objective which is regularly reviewed and improved.
MAJOR ENVIRONMENTAL PROJECTS UNDER
IMPLEMENTATION
All statutory requirements are fulfilled and to further improve the
environmental standards in VSP, sixteen projects are under implementation at an
estimated cost of over Rs. 2724.800 millions (7 out of 16 were completed during
2006-07 at a cost of Rs. 71.000 millions). This indicates the Company's
commitment of putting people before profits.
VSP CERTIFIED TO ISO 14001:2004:
The Company was first certified to ISO 14001:1996 in May
2001 and recertified on 15.12.2004. However, the standard was upgraded to ISO
14001:2004 on 31st May, 2006 and VSP took rapid strides to comply with the new
standards.
MANPOWER:
During the period from 01-04-2006 to 31-03-2007, there was a net decrease
in the manpower by 173 i.e. from 16,574 as on 01-04-2006 to 16,401 as on
31-03-2007. As on 31-03-2007, the number of Displaced Persons on the rolls of VSP was 5505.
MANAGEMENT SERVICES
REVIEW:
During the year, the Company implemented 4185 Quality Circle projects with an employee involvement of 75%. Online QC management was implemented and all the implemented projects were fed by the respective departments through `Online'.
The Company bagged QCFI-NMDC trophy:2005 -06 for `Best QC implementing organization' under Public Sector category at NCQC 2006 convention held at IIT, Kanpur.
16 QC teams represented at Quality Circle convention at Kanpur. Four teams were rated as par-excellence, eight as excellent and four as distinguished.
One QC team was awarded first prize at State level by CII at Hyderabad and participation award at Regional level, Chennai.
* VSP bagged two Govt. of India Vishwakarma Rashtriya Puraskar awards for Steel
Melt Shop and Medium Merchant & Structural Mill departments involving
eleven employees.
* VSP has bagged gold medal in `best suggestors' contest at 17th INSSAN
national convention held at Jamshedpur during Feb.2007.
* VSP has bagged `FIRST' prize in the contest `INSSAN AWARD FOR ORGANISATIONAL
EXCELLENCE IN SUGGESTION SCHEME OPERATION' under large organisation
category.
* 33545 suggestions were received from employees and 8776 were implemented
leading to the financial savings of Rs. 180.200 millions.
* 5 S certification was awarded to four departments viz. Central Stores, WRM,
CMM, Utilities in 1st phase by QCFI during Feb'07. This is the first of its
kind in a Public Sector Steel Plant.
* Significant growth in 5S implementing departments i.e. 51 against 15 of
previous year as a result of creating more awareness and continuous monitoring
at departmental /divisional level steering committees.
* A Procedure was made and issued for consideration of export benefits for
procurement of materials, where ITT is issued to a mix of both indigenous and
import firms.
* A Procedure was made and Issued for project imports against both project import
scheme and EPCG scheme concurrently.
PROJECT MANAGEMENT REVIEW:
EXPANSION OF THE
PLANT TO 6.3 Mtpa OF LIQUID STEEL:
Keeping in view the upturn in global and domestic steel demand, the Company
decided that initially to increase its capacity to 6.3 Mtpa of liquid steel and
further to increase the capacity up to 16 Mtpa in phases. M/s MN Dastur &
Co, the Consultants engaged for preparation of Project Report for Expansion of
VSP, submitted the Report for Expansion of Plant to 6.5 Mt of hot metal and 6.3
Mtpa of liquid steel. The product mix is long products such as wire rods of
sizes 5.5mm to 20mm dia in coil, special bars of size 16mm to 40mm dia in coil
and straight length structurals to meet the infrastructure needs which are very
well accepted in the market. In addition, Seamless Tube Mill to produce
seamless pipes of dia up to 350 mm was included.
Govt. of India (GOI) approved the Expansion Project on 28th October 2005 at an estimated cost of Rs. 86920.000 millions (Base: II Quarter 2005). Construction schedule for completion of Stage-I- in 36 months & Stage-II- in 48 months respectively from the "Date of approval by GOI".
Up to 31.3.2007, LOI/Contracts worth Rs. 35010.000 millions have been placed including LOI for main technological process packages of Blast Furnace-3 & Sinter Plant-3 and work to the extent of Rs. 3122.700 millions has been executed. Preparation of balance specifications, tendering, placement of order for other packages and site work of Piling, Civil & Structural are in progress.
COKE OVEN BATTERY-4 (PHASE-I):
The Government of India approved setting up of Battery No.4 in December 2003 at a cost of Rs. 3030.000 millions to meet the Coke requirement of the Company. Construction of the Battery is in progress. Heating of the Battery is to commence in September 07. Expected completion cost of the project is estimated at Rs. 3550.000 millions. An amount of Rs. 2506.300 millions has been spent up to 31.03.2007.
COKE OVEN BATTERY-4
(PHASE-II):
MECON has been appointed as Consultant for coal handling side facilities. Engineering and tendering process for the Coal handling side packages are in progress. Further, tenders have been issued for long lead equipment of By- product facilities.
CORPORATE STRATEGIC MANAGEMENT
REVIEW:
MOU 2005-06:
The Company obtained a Composite Score of 1.40, corresponding to Excellent rating based on Audited Data for 2005-06 and has been getting Excellent rating from 2000-01 onwards and 2005-06 is the sixth consecutive year for getting Excellent rating.
MOU 2006-07:
Secretary, Ministry of Steel, Gol, and CMD of the Company signed MOU on 28.3.2006 for achieving the physical and fiscal targets for the year 2006-07. As per the performance evaluation based on provisional data, the company achieved a composite score of 1.46, which corresponds to Excellent Rating for the year.
BUSINESS EXCELLENCE:
For the second consecutive year in 2006-07, RINL has applied for CII-Exim Bank Award for Business Excellence and won the commendation certificate "Strong Commitment to Excel" for its efforts in promoting the concepts of excellence in Management System and sustain competitiveness. The certificate was presented to CMD during the 14th Quality Summit organized by CII in Bangalore.
MARKET SURVEY:
The Company conducted market Survey to assess the various specifications and grades in Wire Rods and Rounds around the country in various end use segments to assess the demand and the competitor's presence. This would be an input to implement the Sustainability Plan in 2007-08 to identify and increase presence in high value products and develop niche segment. This would also assist in marketing products from expansion mills catering to new special steel grades.
TECHNOLOGY UP-GRADATION
AND BENCHMARKING:
In order to have a structured mechanism in the company, wide implementation of
Technology upgradation, a Board level Sub-Committee has been formed. Sri
Bhaskarudu, Independent Director is the Chairman of the Committee. The
following are the broad objectives:
* To frame a policy for Technological up gradation and Benchmarking in VSP
* To identify latest technologies available in CO-BF-BOF route of Iron and steel making either through available literature or visits to other steel Plants.
* Identification of benchmarking parameters that will have large impact on Cost
and Quality of the Product.
* To tie up Partnerships for Technological Improvements and Benchmarking
purposes with Indian or International Steel Companies.
* To monitor implementation of Technological Upgradation and Benchmarking
Projects.
The Committee has taken up formulation of a Technology Policy for the
company to give direction for all technological development initiatives of the organization.
On the basis of technological scanning, various technical improvements have
been identified. These are being examined for suitability for implementation by
the respective shop level technical personnel.
CORPORATE PLAN
2020:
India has been witnessing a major transformation in the steel sector with surging demand for steel, which closely follows the enhanced growth rate of the economy. In order to meet the growing demand, it was decided to revise the Corporate Plan, which was prepared in the past aiming at expansion to 10 Mt by 2020.
In line with the decision to revise the Corporate Plan, different working groups were constituted. Initially, the Vision, Mission and Objectives were reviewed and revised. Subsequently Capacity Build Up Plan was prepared. Based on these, the Approach Papers were prepared by various working Groups. The Approach papers were integrated and the Corporate Plan 2020 was prepared.
The Corporate Plan envisages expansion of Plant capacity in four phases. In the Phase-1 and Phase-2, the capacity is planned to be raised to 6.8 Mt by 2008-09 and 8.5 Mt by 2010-11 respectively. Upto Phase-2, the Plant will continue to be in the long products segment. Subsequently, it is planned to diversify into flat products. In Phase-3 and Phase-4, the capacity will be increased to 13.0 Mt by 2014-15 and 16.0 Mt by 2017-18 respectively. The ballpark figure of investment for all the four Phases of expansion was placed at about Rs 26,000 cr. It was proposed to explore and adopt technologies like FINEX, AUSIRON, HISMELT, MIDREX etc. from Phase-3, if found cost effective. For raw material security, it was planned to have captive iron ore and coal mines. As far as Human Resource Management is concerned, it was planned to develop a highly motivated, innovative and competent workforce. Labour productivity of about 1000 tonnes per man-year has been envisaged by 2020.
The Corporate Plan 2020 was released by the Secretary, Ministry of Steel,
Government of India during the RINL Formation Day Silver Jubilee Celebrations
at Visakhapatnam.
The earlier objectives of the Company which includes "wiping out
accumulated losses by 2006-07" which was already achieved in 2005-06.
Further, "being among five lowest cost liquid steel producers of the
world" was also achieved in 2005 as per a study conducted by CRU; a London
based Research Group, amongst 50 major long product producers of the world. The
Corporate Plan of RINL was also being revised. The CSM Department coordinated
to form a cross functional team and formulated draft objectives keeping in view
SWOT analysis and other information relevant for the same. These objectives
were adopted by the Company in 2006-07.
VIGILANCE ACTIVITIES:
During the year, towing the line the following initiatives were taken in the
Company:
Observance of annual vigilance week, presentation cum interaction sessions where senior level and middle level executives of the Company, union leaders and office bearers, vendors, customers and contractors were participated. For the first time, in the Company, International Anti-corruption day was observed and on line submission of Annual Returns was launched.
Vigilance Department conducted 490 system checks including 39 quality checks
and 101 rake/road reweighments. The Vigilance observations were brought to the
notice of the concerned for taking corrective actions/improvement of the
existing procedures/systems, wherever required.
This year the company adopted a novel approach of reaching to all divisions of the organization. In addition to what has been already stated, Vigilance officials have gone to the captive mines at Jaggayyapeta and Madharam and conducted awareness sessions on Preventive Vigilance and Complaint Handling Policy etc. On this occasion, a booklet on "Disciplinary proceedings & CVC Guidelines" with a foreword by CVO was released by the CMD.
On the preventive vigilance front, greater thrust was laid on examination of tenders at the processing stage with a view to modifying certain restrictive tender clauses in line with CVC guidelines on the issue so as to bring in greater transparency and increased competition.
In line with the direction of MOS, RINL Vigilance had completed all the
formalities of getting ISO 9001: 2000 certifications and was issued the
Certificate of Compliance by the certifying agency M/s Intal Quality
Certification Pvt Ltd., Bangalore.
The Company is the first organisation under the Ministry of Steel and Second Public Sector Undertaking in India to enter into a Memorandum of Understanding with Transparency International (India) for implementation of Integrity Pact. The MOU was signed on an historic occasion organized at Visakhapatnam Steel Plant premises by Chairman-cum-Managing Director, Sri Y. Siva Sagar Rao and Chairman of Transparency International (India) Admiral (Retd.) R.H. Tahiliani.
Proactive Vigilance work was done in the areas of estimation, award and
execution of contracts pertaining to operation, maintenance, procurement and
marketing and management exhibited positive attitude towards the suggestions of
the Vigilance.
All the periodical statistical returns/reports were submitted to MOS, CVC, CBI
and DOPT in time.
MANAGEMENT DISCUSSION
AND ANALYSIS REPORT FOR 2006-07
1. INDUSTRY STRUCTURE & DEVELOPMENTS
AND OUTLOOK:
ECONOMY:
India's economy is on an increasing growth curve. During 2006-07, the
economy grew at 9.4 per cent on the back of a high growth base of 9 per cent in
2005-06. Spectacular performances by manufacturing and certain services
sectors, not only made up for the slowdown in construction and agriculture but
also helped the economy achieve the fastest growth rate in 18 years, next only
to the 10.5 per cent GDP (Gross Domestic Product) expansion clocked in
1988-89.
While manufacturing grew 12.3 per cent in 2006-07 as compared to 9.1 per cent
in the previous fiscal, trade, hotels, transport and communication services
grew 13 per cent as compared to 10.4 per cent a year earlier. Mining and
quarrying also grew 5.1 per cent during the year as against 3.6 per cent a year
ago.
Aided by the high growth along with a strengthening rupee in the forex market, the economy has graduated to a trillion dollar one, the 12th such nation globally to reach this milestone.
Exports surged by more than 35% and FDI inflows of US$ 12 billion are estimated
during 2006-07.
With positive indicators such as a stable annual growth, rising foreign
exchange reserves, active capital market, substantial FDI inflows, sustained
growth in exports during the last few years, it is clear that the Indian
economy has shifted to a higher growth trajectory and a high nine per cent
growth is possible this fiscal also.
STEEL SCENARIO:
A buoyant growth of 5.4% in the world economy spurred global steel demand in
2006. The world steel production increased to 1239.5 Mt, showing a robust
growth of 8.8% over 2005. Steel use during the year grew by 8.5% to reach 1113
Mt.
As per IISI, it is forecast that there will be a growth of 5.9% in steel use in
2007 and a further increase of 6.1% in 2008 bringing the total for the year to
1,250 million tons.
Forecasts, up to 2010, indicate a rise of 4.9% per year for steel use.
Projections from 2010 to 2015, suggest a 4.2% annual growth in steel demand for
the whole world, with growth in steel demand reaching 7.7% per year for
India.
The global steel demand projections indicate that India will be one of the
engines of the world steel industry in the future. The per capita consumption
of steel of around 33 kg in India, as against 242 kg in China and an average of
over 400 kg in the developed countries indicates that the potential for India
to raise its steel consumption is high.
India's finished steel production at 49 Mt, showed a remarkable growth of 10.8%
in 2006-07. Steel consumption improved from 39 Mt in 2005-06 to 44 Mt in
2006-07, increasing by 11.6%. While exports increased by 6% to 4.75 Mt, imports
grew by 6.5% to 4.1 Mt in 2006-07.
The International Iron and Steel Institute (IISI) ranked India as the seventh
largest steel producer in the world with an overall production of about 40
million tonne (Mt) in 2006.
Growth in manufacturing and infrastructure sector is even higher than the over
all growth of economy. From current level of 33 Kg per capita, the consumptions
of steel in the country is expected to double with in a decade. Demand growth
for longs would be pronounced for reinforcing the infrastructure growth.
OUTLOOK:
The Country is on a high growth path and the GDP growth is expected to be
8.5%. There is a demand for infrastructure development as a result of the
increased economic activity. It is expected that this trend will generate more
demand for steel. Further, there is ample scope for increased per capita
consumption of steel since the same is on the lower side for India as compared
to the world average consumption.
2. STRENGTH AND WEAKNESS:
Apart from being the first shore based integrated Steel Plant; RINL's strength
has been its high operational efficiency and its layout, which is well equipped
for brown-field expansion. It is the leader in the industry for quality and
customer satisfaction. The lack of captive raw material sources has been its
only major weakness.
3. OPPORTUNITIES & THREATS:
OPPORTUNITIES:
The growth in manufacturing and infrastructure in the economy and also its rate
of savings has been higher than even the rate of growth in the economy. Growth
in investment directly contributes to increasing in demand for long steel
products which is an immense opportunity for RINL. Towards seizing this
opportunity, VSP is already on its way for the expansion of the existing plant
from 3 MT to 6.3 MT liquid steel.
In view of investment in oil and gas pipelines and power sector, RINL has envisaged a seamless pipe mill in its Phase-1 of expansion. Keeping an opportunity arising out of growth in economy and consumption of steel, RINL had drawn Corporate Plan 2020 to reach 16 Mt capacity by 2020. The company will continue to be in the long products segment, consolidating its position as the leader of long products in the first two phases and considering the evolving scenario to decide upon the future beyond 2012.
The upcoming Gangavaram Port, adjacent to the plant premises, provides an opportunity to receive imported raw material through conveyors directly into the plant. This will eliminate movement of goods between Visakhapatnam Port Trust and the plant and also improve operational efficiency.
THREATS:
The industry world wide faces threat in supply of raw materials due to high degree of consolidation in both coking coal and iron ore suppliers. With oligopoly high market is ruling the prices, the steel industry is divided as `haves' and `have-nots' where the haves with captive mines have become more cost competitive and have-nots facing the increased cost for raw materials world wide.
Thus, lack of captive iron ore mines, resulting in increasing cost of iron ore
continues to be a threat for the company. In addition, RINL is dependent on a
single source for iron ore which is transported from Bailadilla to Vizag on KK
Line, a route which in recent past has seen disruptions. Hence depending on a
single source for iron ore is a matter of concern in case the supply chain gets
broken. Several actions are contemplated to over come it.
The secondary sector has been going in for capacity additions in the recent
times. They have capability to switch off and shut out depending upon the
market conditions. The integrated steel producers in the country in the long
steel products face competition from this sector and in case of slow down in
growth this would become a significant threat. To counter the threat from
secondary sector, RINL has been branding its products and developing value
added products.
The Indian Steel industry as a whole faces the problem of inadequacy of
infrastructure facilities related to rail, road and port which slows down
growth. With capacity build up of over 500 mtpa in China and its turning into a
net exporter has its ramifications for India, Asia and also world steel
industry in general.
BY-PRODUCTS:
Sales of By-products at Rs. 2200.000 millions. is the highest since inception
registering a growth of 47% over 2005-06. During 2006-07, special emphasis was
given for sale of granulated slag. As a result, Rs. 1.248 millions tons of BF
slag was sold in 2006-07, which is 84% of the production.
EXPORTS:
A total of Rs. 0.279 million tons of Iron and Steel materials were exported in
2006-07 as against Rs. 0.305 million tons in 2005-06. In terms of value, Rs.
4240.000 millions of iron and steel products were exported in 2006-07 as
against Rs. 4430.000 millions in 2005-06. Exports of iron and steel products
were contained to meet the domestic requirements, in line with the Government
of India policy to give priority to domestic sales.
5. RISKS AND CONCERNS:
The low customs duty on Steel items volatility in International prices would
have a direct impact on domestic steel prices as well.
Inadequate Infrastructure facilities and increase in cost of bulk raw materials like Iron Ore Imported Coking Coal, Boiler Coal, domestic coal and other raw materials / consumables are some of the key concern of Steel Industry as a whole and that of the Company in particular. Other infrastructure problems like availability of rakes /wagons from Railways, congestion of Port, restriction on entry of large vessels for bulk raw materials and inadequacy of Road transportation facilities with attendant increased costs of transport etc. would also impact the operations of the plant at Visakhapatnam and the Stockyards at various places across the country. All these factors will eventually affect the operating margins of the company.
With the economic development in the country, the demand for skilled manpower has been increasing. In this scenario, retaining trained manpower has become a challenge for the Industry. The Company recruits a large number of engineers every year, most of them in the engineering and technology areas. The Company invests substantial amounts on their training. A high attrition rate could impact the Company's future plans. The Company's performance may be affected by a number of risks and uncertainties. RINL's senior management identifies key risks and has processes in place to monitor, manage and mitigate these risks. Included in these processes is an annual review of RINL's Forex Risk Management Policy with the Audit Committee. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate will be material, may impair the Company's performance.
ECONOMIC CYCLES:
The Global steel industry experiences supply and demand
cycles relative to the general economic environment. The industry is also
impacted by the level of manufacturing activity in several key industries, such
as automotive, construction, packaging, consumer goods, and oil and gas. The
financial performance of Indian steel companies, including RINL, is impacted by
the effects of these cycles. A downturn in the economy generally, and in those
industries on which RINL relies for sales of steel in particular, would likely
have an adverse impact on the Company.
RINL mitigates the adverse impact of economic cycles by maintaining a
diversified mix of contract and spot business and a high-value product mix, and
by delivering industry-leading quality and customer service. This approach is
consistent with RINLs long-term focus on earning a return above its cost of
capital over the business cycle.
FOREIGN EXCHANGE RATES:
RINL is exposed to foreign exchange risk due to the impact of rate fluctuations on U.S. dollar-denominated sales and purchases. Periodically, the Company has entered into forward contracts to hedge some of its U.S. dollar-denominated payments. The Company reviews hedging policy once a quarter. The Company does not hold or issue derivative financial instruments for trading or for speculative purposes.
STEEL INDUSTRY
COMPETITION:
The Company's business faces significant competition from other steel
producers. The nature of steel industry competition continues to undergo
fundamental change globally. The consolidation of the global steel industry
continued in 2006, resulting in a larger proportion of total steel production
controlled by a fewer number of companies. While the Company has taken steps to
maintain its competitive advantage, the impact of future competition cannot be
determined. To maintain its performance advantage and improve productivity,
RINL continues to invest in its facilities to lower its operating costs and
improve its product mix.
Success in the steel industry is dependent on a company's ability to
differentiate itself in the market, often by developing or accessing
technological innovations. RINL's ability to innovate, and its financial
strength have enabled it to continue to develop and access world-class
technology.
STEEL TRADE:
RINL faces the risk of injury due to the pricing impact of steel traded in violation of international trade rules. High volumes of steel imports often tend to destabilize and disrupt markets. RINL relies on the application of Indian trade laws to prevent imports of "dumped" steel - steel sold at a price below either the cost of production or the selling price in the producer's home market-from injuring Indian steel producers. However, there can be no assurance the trade laws will be applied in a manner that provides RINL with adequate protection. RINL is a member of JCS. This committee includes industry and government representatives which meet monthly to address steel trade issues.
A Steering Committee has been constituted to monitor effective implementation
of Enterprise Risk Management (ERM) and M/s Deloitte Touche Tohmatsu (India)
Pvt Ltd. have been engaged as Consultants for training and implementation of
ERM in Materials Management and Marketing Departments to begin with.
6. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY:
The Company has well established Internal control systems
commensurate with the size of the Company. Internal Audit is conducted by a
team of experienced Chartered Accountants, Cost Accountants, Engineers, and
other employees. The Internal Audit Reports are thoroughly discussed by an
independent Audit Committee constituted by the Board. Annual Audit Plans based
on identification of Key-Risk Areas with thrust on System/Process Audits is
being done.
OPERATIONAL
PERFORMANCE:
The Company has surpassed its rated capacity for the 6th consecutive year. The Company continued to honour the commitments made in its MOU with Ministry of Steel in almost all shops i.e. in Oven Pushing (104%), Bar Products (106%), Wire Rods (112%), MMSM Products (115%), Saleable Steel (103%) & Liquid Steel (101%).
The Company has done well on Production front and the related highlights are as follows:
* Production of Rs. 3.010 millions tonnes finished steel i.e., 1% growth over last year.
* Value added production of 10,86,509 t is the highest ever with 22% growth
over 2005-06
* Value added production with reference to Saleable Steel is 33% and is the
best since inception.
* Metallurgical Waste consumption of 360,160t at Sinter Plant is the highest so
far.
* Yearly dispatch of 1052 rakes (2.337 Million tonnes of Iron, Steel &
Granulated Slag) is the best since inception.
* Gross Water consumption of 2.29 cum/tLS (1.1% reduction over last year) is
the best so far.
* Gross power consumption of 456.55 kwh/tLS is the lowest so far.
* Hot metal & liquid steel crossed 50Mt & 40Mt of cumulative production
landmark on 07.01.2007 and 04.01.2007
Respectively.
The Company has also implemented various Cost reduction measures such as:
a) Utilization of waste products like:
i) LD Slag used in SP, BF and SMS to replace limestone
ii) Scrap was reclaimed from maintenance activities and used in Steel Melt Shop (SMS).
iii) Metallurgical Waste used in place of Iron Ore Fines at Sinter Plant (SP).
b) Average converter life at SMS has been improved over previous year.
In addition to the techno-economic parameters being focused and
monitored by Works Division, the other functional areas like Finance, Materials
Management and Marketing have also adopted various measures in order to achieve
cost reduction in freight, transportation and handling charges in respect of
both inward and outward movement of materials including export as well as
reduction in interest expenses.
ACQUISITION
OF COAL MINES IN INDIA AND ABROAD
Government of India allotted 'Mahal Block' (Medium Coking Coal) to RINL/VSP.
Work Order is issued for 'Pre-Feasibility Study' to Central Mining Plan and
Design Institute Limited (CMPDIL), Ranchi. RINL/VSP applied for Tenughat
Jhirkhi Coking Coal Block to the Ministry of Coal and also applied for three
Non-coking coal blocks in Khammam District to the Ministry of Coal. Ministry of
Coal forwarded it to the Ministry of Steel for their comments.
'Expression of interest for acquisition of Hard Coking Coal Mines abroad' was
placed in VSP's website. Responses from Australia, USA and Canada have been
received and the Evaluation Process is continuing for selecting suitable mine
for Joint Venture. Consultant is proposed to be appointed by the Company for
further evaluation of the proposals.
SMS LIMESTONE JOINT VENTURES
RINL received proposals and samples from different agencies of Oman, Malaysia,
Thailand and Philippines. So far no agency is finalized for Joint Venture with
RINL/VSP due to non-matching of required specification. The processing is
continuing for selecting suitable Mine for Joint Venture.
SAFETY, ENVIRONMENT & HEALTH
CARE:
Safety
Visakhapatnam Steel Plant is the first integrated steel plant to be certified
for 'Occupational Health & Safety Management System' as per British
Standards Institute specification in the year 2002 and re-certified again in the
year 2005. Two Surveillance Audits were conducted in the year 2005-06.
Continuous efforts in implementation of safety standards, monitoring of hazards
in the activities had helped in achieving a 10.67% reduction of reportable
accidents.
HIGHLIGHTS AND ACHIEVEMENTS:
- 'Zero Accident' was achieved in 17 departments viz. ACVS, CED, CSD, Canteens,
EnMD, ETL, L&H, OHSRC, PPM, PEM, PD, RMD, StED, Systems, TELECOM, TS, and
T&DC.
- 10.67% reduction of Reportable accidents was achieved during the year 2005-06.
- First and Second Surveillance Audits of OHSAS- 18001 were successfully
completed and well appreciated by the external auditors.
- Internal Safety Audits were conducted in respect of 16 departments.
- Two plant level Mock Drills were conducted to check the
emergency preparedness and response of various agencies.
- National Safety Day was celebrated on 4th March, 2006 and in that connection
various competitions such as Quiz, Essay, Debate, Poster etc. were conducted.
Safety Playlet and First Aid Competitions were also held.
- Inter-departmental Safety Performance and House Keeping Competitions were
conducted.
VSP won the Leadership and Excellence Award for the efforts in Safety, Health
and Environment in the competition organized by CII, Southern Region.
OTHER IMPORTANT ACTIVITIES
- VSP imparted refresher Safety Training to about 5000 regular employees and
Safety Induction training and Job Specific Training was given to all contractor
employees.
- Control Measures for Hazard Identification and Risk Assessment were
implemented and monitored.
Measurable targets were set in respect of Safety and Occupational Health for
each department and corresponding management programs had been prepared and
monitored for achieving the objectives.
On site emergency
plan and Safety Report were updated.
- One training Program was organized for the Central Safety Committee members,
including a plant visit to NTPC Simhadri. Departmental Safety Committee
meetings were held in every month in various departments.
MAJOR
ENVIRONMENTAL PROJECTS UNDER IMPLEMENTATION
All statutory requirements are fulfilled and over a dozen projects to improve
the environmental standards further in VSP are under implementation at an
estimated cost of over Rs.2630 Millions. This is an enough evidence on the part
of VSP that it giving priority to people before profits.
WELFARE
ACTIVITIES
A) Welfare of SCs & STs:
a) Three parks in the Steel Township have been named after Dr. B R Ambedkar,
Babu Jagjeevan Ram and Ekalavya and a separate Library-cum- Reading Room was
named after Dr B R Ambedkar.
b) Jayanthi Celebrations of Dr. Babu Jagjeevan Ram and Bharat Ratna Dr. B R
Ambedkar were observed by garlanding functions followed by commemoration
meetings, which were organized at Babu Jagjeevan Ram Children's Park, Sector-5
on 05.04.2005 and at Dr. Ambedkar Park, Sector-6 on 14.04.2005
respectively.
c) A Sports and Cultural Festival was organized during the month of April 2005
at CWC, Ukkunagaram in connection with Bharat Ratna Dr. B R Ambedkar Jayanthi
Celebrations.
d) In connection with Vardhanthi Ceremony of Bharat Ratna Dr. B R Ambedkar,
Garlanding Function was organized on 06.12.2005 at Dr. Ambedkar Park, Sector-6.
e) RINL/VSP has increased the number of Scholarships from 3 Nos. to 6 Nos. per
year exclusively for the children of SC/ST employees from the academic year
2005-06. Under this Scholarship Scheme, 2 Scholarships of Rs.1,500/ - (Rupees
One Thousand and Five Hundred only) per month and 2 Scholarships of Rs.750/-
(Rupees seven hundred and (Fifty only) per month and 2 Scholarships of Rs.400/-
(Rupees four hundred only) per month will be awarded to the meritorious
students among SC/STs every year.
f) Besides, since the year 1991, coinciding with the Birth Centenary
Celebrations of Bharat Ratna Dr. B R Ambedkar, Annual Merit Cash Awards for
students belonging to SC/ST communities were introduced. Based on the pass
results of the Xth/SSC Examination held during March 2005, 10 nos. of Cash
Merit Awards of Rs.500/- (Rupees five hundred only) each and 9 nos. of Rs.250/-
(Rupees two hundred and fifty only) each were given to the 1st and 2nd rank
students of SC/ST communities respectively, from each of the schools of
VSP.
B) General:
a) RINL/VSP has increased the number of Scholarships from 11 Nos. to 30 Nos.
and also enhanced the scholarship amount for the children of VSP employees from
the academic year 2005-06 under 3 categories of its Scholarship Schemes i.e.
General, SC/ST and Physically Handicapped.
b) RINL/VSP has introduced the new schemes for grant of Dr. Sarvepalli
Radhakrishnan Merit Cash Awards @ Rs. 5,000/- each (one time) for the children
of VSP employees who secure admission and join IITs, IIMs and IISc or ISI
courses. Also Col. C K Nayudu Sports Cash Awards @ Rs. 5,000/- each (one time)
for the children, who have represented the country in any event or who has won
1st place in the Nationals conducted by respective Federations of India, or National
School Games and Sports conducted by School Games Federation of India or Ranji
or Inter-State Cricket Matches conducted by BCCI. These Cash Award schemes have
been implemented from the academic year 2005-06.
c) 435 cases have been covered upto 2005-06 under Employees Family Benefit
Scheme extending Monthly Benefit to the dependents of the deceased
employees/Medically Unfit cases.
4 INDUSTRIAL RELATIONS:
The overall IR situation at RINL/VSP during the year 2005-06 was peaceful and
helped in sustaining the targeted levels of production. Despite of hectic
activities on account of Union Elections, the Employees' Unions demand on work
related issues, various agitational activities by Regular and Contract Labour
unions, normal and safe levels of production could be maintained due to
proactive & preventive IR measures adopted by Personnel Department and
maintenance of harmonious Industrial Relations.
I. SETTLEMENTS:
a) Night Shift Allowance:
Record Notes of discussion was signed on 20.09.2005 between the representatives
of Management and Visakha Steel Employees Congress (INTUC)-Recognised Union on
the revision of 'Night Shift Allowance' to both Executives & Non-Executives
employees w.e.f. 01-01-2005.
b) MoU on Bonus/Ex-gratia
Following the persistent demand for payment of Bonus/Exgratia by the Unions, a
Memorandum of Understanding on payment of Adhoc Advance to all eligible
employees under Annual Performance Linked Reward Scheme (APLRS) was signed on
08.10.2005 with the representatives of Regd. Trade Unions.
PROJECT
MANAGEMENT
Expansion of the Plant to 6.3Mt :
Keeping in view the upturn in global and domestic steel demand, VSP has decided
to increase its capacity to 6.3 Mt of liquid steel per year in the beginning
and to increase the capacity upto 10 Mt per year in future phases. M/s MN
Dastur Co, the Consultants engaged for preparation of Project Report for
Expansion of VSP submitted the Report for Expansion of Plant to 6.5 Mt of hot
metal and 6.3 Mtpa of liquid steel. The product mix is long products such as
wire rods in coils 5.5 mm to 20 mm dia, special bars of size 16mm to 40 mm dia
in coil and straight length and light & structural to meet the
infrastructure needs which are very well accepted in the market. In addition,
Seamless Pipe Mill of 300,000 tpa capacity to produce seamless pipes of higher
dia is planned which will be first of its kind in India.
The salient features of the Expansion are as follows:
Capital cost:
Rs. 86920 Millions (Base: II Quarter 2005)
Construction schedule:
Stage-I - 36 months from 'Date of approval by GOI'
Stage-II - 48 months from 'Date of approval by GOI'
GOI approved the project on 28th October 2005 at an estimated cost of Rs.8692
Millions. Preparation of specifications and tender documents are under
progress. Some preliminary works such as roads, box culvert and lighting etc.
have already been ordered and work is under progress. An amount of Rs.66.900
Millions has been spent upto 31.03.06.
COKE OVEN BATTERY - 4 (PHASE-I)
Government of India approved setting up of Battery No. 4 in December 2003 at a
cost of Rs.3030 Millions to meet the coke requirement. Construction of the
battery is in progress and the project is likely to be commissioned by December
2006. An amount of Rs. 1656.600 Millions has been spent upto 31.03.06.
COKE OVEN BATTERY (PHASE-II)
Projects for construction of By Product Plant and Additional facilities on coal
side have been approved by the Board of Directors in June, 2006 at an estimated
cost of Rs.1093.900 Millions and Rs.888.300 Millions with a completion period
of 27 months and 24 months respectively.
PULVARISED COAL INJECTION SYSTEM
Proposals for installation of Pulverized Coal Injection system in Blast
Furnaces No.1 & 2 has since been approved by the Board in July, 2006. The
pulverized scheme enhances the capacity of hot metal production in BF-1 &
2. The salient features of the scheme are as follows:
Capital cost:
Rs. 1810 Millions (Base: IV Quarter 2004)
Construction schedule:
15 months from the date of GOI approval
CORPORATE STRATEGIC MANAGEMENT
1 MOU 2005-06
Secretary, Ministry of Steel, GoI, and CMD, RINL signed MOU on 28.3.2005 for achieving
the set physical and fiscal targets for the year 2005-06. As per the
performance evaluation based on provisional data, the company achieved a
composite score of 1.37, which corresponds to Excellent rating for the
year.
|
a) Contingent liabilities
not provided for: |
|
|
Contractors/ Suppliers/ customers |
646.500 |
|
Local Authorities - State Govt. |
22.000 |
|
Sales Tax matters |
|
|
Customs/ Excise duty |
|
|
R&DCess |
131.800 |
b) Claims in Courts in connection with Land Acquisition: — Amount not
ascertainable.
c) Liability towards reimbursement of excise duty on structural works
wherever applicable. — Amount not ascertainable.
FIXED
ASSETS
Plant and Machinery
Furniture and Fixture
Electrical Installations
Land
Railway lines and Sidings
Buildings
Vehicles
Water Supply and Sewerage Systems
TRADE REFERENCE:
Steel Exchange
India Limited
Suresh KR (Managing
Director)
103 Vizag profiles
Tower, kurmannapalem, VSp-46
Phone: 91-2587175
Narayan Steel
Private Limited
Sunil Chodhary
(Director)
31-15-138
20, 2nd
Floor, Dabagardens, VSp-20
Phone: 2587470,
91-891-3295548/49
Sarita Steel and
Indus Limited
S Ramesh, Rajiv
Nagar, Vishakhapatnam –46
Phone: 2587407
Business:
The company is
engaged in manufacturing and marketing of steel products mainly structurals and
coal chemicals as well as by products including hot metal, pig iron, liquid
steel, billets, wire rod, bar products and MMSM Products.
The company's product
mix comprises pig iron, wire rods, plain and deformed bars, light and heavy
structurals, rounds, squares, billets, blooms, etc. For the first time in the
country, a new generation high strength Ribbed Re-inforced Bars, having low
Carbon content and fully killed steel are being manufactured at VSP.
The company is popularly known as Vizag Steel. It is the
largest producer and exporter of iron and steel products.
Products
VSP's Product Mix comprises Wire Rods, Bars, Angles,
Channels, Beams, Rounds and Billets. The Plant also produces Pig Iron,
Granulated Slag and Coal Chemicals. The rolled products find extensive
usage in the Construction, Infrastructure, Railways, Power, Oil, defense,
Transport and Ship Building sectors. Bars and Rods are used mainly for
re-inforced concrete work for housing, construction of dams,
buildings & factories, manufacture of agricultural
implements, fabrication of light engineering components. The Wire Rods are
used in Wire Drawing industry for electrodes, transmission lines and weld
ability requirements. The structurals find application in engineering, house
building, agricultural implements, machinery, transmission towers, etc.
Out of the wide range of VSP's products a special mention about the Rebars.
Rebars: For the first time in the country, a new generation high
strength Ribbed Re-inforced Bars, having low Carbon content and fully killed
steel are being manufactured at VSP. The Rebars are manufactured rigid size
tolerance, have uniformity of sections and high strength with extremely good
bendability, weldability and ductility properties. The Rebars are manufactured
using the latest Thermo-mechanical treatment, namely the Tempcore Process. This
results in superior corrosion resistant properties.
- Retention of strength at higher
temperatures.
- Universal use for concrete structures
- Saving of 15% in steel consumption
compared cold twisted Bars.
For improving
the production and capacity utilisation following measures had been taken:
·
Introduction
of slag splashing system in LD converters of Steel Melting Shop
Commissioning of Gega-cutting Machine in
continuous casting shop
·
Introduction
of oil firing system in billet mill
·
Major repairs
in coke oven batteries
·
Increasing
production of value added products
·
Improvement in
technological discipline for improving converter lining life
·
Improving the
rolling hours in mills
Production facilities:
·
Coke Ovens
& Coal Chemical Plant
·
Sinter Plant
·
Blast Furnace
·
Steel Melt
Shop and Continuous Casting
·
Rolling Mills
Coke Ovens & Coal Chemical Plant:
Coking coal after
selective crushing and proper blending is subjected to destructive
deistillation in the Coke ovens. The
plant has 3 batteries of 7 mtr. tall ovens with each battery consisting of 67
ovens. By products like benzene,
toluene, xylene, napthalene, coal tar, creosote oil, pitch, ammonium sulphate
and benzol products are also recovered from the coke ovens gas. The plant produces, among other by-products,
pushkala a prime fertiliser based on ammonium sulphate.
Sinter Plant:
Iron Ore fines,
coke breeze, limestone and dolomite alongwith recycled metallurgical wastes are
converted into agglomerated mass at the Sinter plant. It comprises of two sinter machines each having 312 Sq.mtrs. of grate
area with a total production capacity of 5.256 million tonnes per annum.
Blast Furnace:
The company has two
blast furnaces with an effective volume of 3200 cu.m. each. It produces about 500 tonnes of molten iron
per day. The annual production capacity
is 3.4 million tonnes of liquid iron.
Steel Melt Shop & Continuous Casting:
Three Top blown
converters, each of 133 cu.m. Volume, produces a total of 2.7 million tonnes of
liquid steel per annum. This liquid steel thus produced is casted in six-4
strand bloom casters. A special feature in energy conservation is the
collection of Converter gas to be used as a fuel in the plant. The entire
molten steel at VSP is continuously cast at the radial type continuous casting
machines resulting in significant energy conservation and better quality steel.
100% continuous casting on such a large scale has been conceived for the first
time in India.
Rolling Mills:
The cast blooms
from continuous casting department heated and rolled in the three high speed
and fully automated rolling mills namely Light & Medium Merchant Mill, Wire
Rod Mill and Medium Merchant & Structural Mill to produce various long
products like reinforcement bars, rounds, squares, flats, angles, channels,
billets, wire rods, etc. Technologies adopted at Rolling Mills include
world-class Stelmor and Tempcore processes.
Press clipping:
New Delhi, July 30,
2004
RINL CHALKS OUT
EXPANSION PLAN FOR VISAKHAPATNAM STEEL Company plans to invest Rs 180000
Millions in 3 phases)
[Silverline Information
Systems Private Limited Source: Financial Times Limited]
INDIA BUSINESS
INSIGHT via New Edge Corporation: Rashtriya Ispat Limited (RINL) plans to
expand the capacity of the Visakhapatnam Steel (VSP) to 10 million tonnes. The
company intends to invest Rs 18,00 phases. RINL will invest Rs 3,000 to expand
the capacity from 3 million to 5 million tonnes in the first phase.
The company intends
to expand the capacity to 6.8 million tonnes in second phase and to 10 million
tonnes in the third phase. RINL registered net profit of Rs. 3500.000 million
during Apr-Jun 2004. The Company recorded growth of 31 percent in sales of Rs.
13830.000 million during the period.
The company has
been accredited with ISO 9002 Certification.
STATUE OF LATE.SRI.AMRUTHARAO UNVEILED
A life size statue
of Late.Sri.Amrutha Rao was unveiled to day i.e. 27.04.2008 by Sri. PK Bishnoi,
CMD, RINL at a newly constructed Amrutha Rao Parksituated at the side of
Smrityanjali Enclosure near Hill Top Guest Hose of
Visakhapatnam Steel
Plant.
Sri. Amrutha Rao,
Son of Smt. Annamma and Sri. Airappa of Visadala Village, Guntur Distt. AP was
born on 21.10.1920. He participated in Quit India Movement and went to jail. He
established Gandhi Mission and participated in various social activities.
During 1966 he was
on fast for 21 days for establishment of Visakhapatnam Steel Plant. He was
arrested and sent to karimnagar Jail for starting the hunger strike. He was
again arrested in Guntur and sent to warangal and
thereon to
Rajahmundry Central Jail. On the assurance from Smt.Indira Gandhi, he broke his
fast.
He was elected
member of Legislative Assembly from Thadikonda Constituency of Guntur District
in 1978. He died on 27th April, 1989.
Sri. T.Mohan Rao son
of Late.Sri.Amrutha Rao has expressed his gratitude to the Management of VSP.
Family members of Late Sri. Amrutharao were present at the occasion.
Sri. Bishnoi has
paid rich tributes to Late Sri. Amrutha rao and lauded his service to the
society. He also said that Sri. Amrutha rao established Gadhi Mission and
participated in various social activities. He got appreciations
from Sri. Jawaharlal
Nehru and Dr. Rajendra Prasad.
Along with CMD, Sri.
Y. Manohar, Director (Personnel), Sri. CG Patil, Director (Commercial)
andLeaders of Various Trade Unions were also present at the occasion.
SINTER PLANT MIS SOFTWARE SYSTEM INAUGURATED
Sri. PK Misra, Director (Operations) Visakhapatnnam Steel Plant inaugurated the ‘SP-MIS’ software system which takes care of the entire Sinter Plant MIS needs.
Sri. Misra appreciated the efforts put in by IT Department to develop avery good system.
The software was developed by a group of IT engineers consists Sri P. Chandra Sekhar, Sri JP Dash, Sri V Hema Sundara Rao, and Sri V Srinivasa Reddy.
Sri PVS Prasada Rao, Executive Director (Works), Sri NS Rao, DGM (BF&SP) I/C, and senior officials of VSP have attended the function.
Sri P Kondaiah, GM (IT) briefed the usefulness of the system.
The welcome address was given by Sri Karuppa Swamy, HOD(Sinter Plant) and Sri NNG Mastan Rao proposed the vote of thanks.
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 :
The 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.
The Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 40.22 |
|
UK Pound |
1 |
Rs. 79.94 |
|
Euro |
1 |
Rs. 62.83 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
67 |
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, they have no basis upon which to
recommend credit dealings |
No Rating |
|