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MIRA
INFORM REPORT
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Report Date : |
09.01.2008 |
IDENTIFICATION
DETAILS
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Name : |
ESSAR CONSTRUCTIONS (INDIA) LIMITED |
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Registered Office : |
Essar House,11 Keshavrao Khadye Marg, Mahalaxmi, Mumbai – 400034, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
01.09.1989 |
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Com. Reg. No.: |
11-53280 |
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CIN No.: [Company
Identification No.] |
U99999MH1989PLC053280 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUME03801A |
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PAN No.: [Permanent
Account No.] |
AAACE2358J |
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Legal Form : |
A closely held public limited liability company |
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Line of Business : |
Leading Engineering, Procurement and Construction (EPC) Contractors. |
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 10734416 |
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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 closely held company of Ruias /Essar Group. It undertake large construction contracts in the country. Trade relations are fair. Financial position is comfortable. Payments of Essar Group in general and subject in particular are reported as very slow but correct. The company can be considered normal for business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Essar House, 11 Keshavrao Khadye Marg, Mahalaxmi, Mumbai - 400034, Maharashtra, India |
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Tel. No.: |
91-22-24950606 / 56601505 |
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Fax No.: |
91-22-24954324 |
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E-Mail : |
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Website : |
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Corporate Office : |
Express Building, Opp. Churchgate Station, Mumbai - 400020, Maharashtra, India |
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Tel. No.: |
91-22-22044006 |
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Fax No.: |
91-22-22046763 |
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E-Mail : |
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Website : |
DIRECTORS
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Name : |
Mr. Shashikant N. Ruia |
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Designation : |
Director |
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Address : |
40-B, Ridge Road,
Malabar Hill, Mumbai - 400006, Maharashtra |
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Date of Birth/Age : |
25.12.1943 |
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Date of Appointment : |
01.03.2001 |
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Name : |
Mr. S. Venkataraman Venkatesan |
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Designation : |
Director |
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Address : |
F 401, The Atrium,
49, New No. 22, Kalakshetra Road, Thirunanmiyur, Chennai - 600041, Tamilnadu |
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Date of Birth/Age : |
09.10.1939 |
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Date of Appointment : |
01.03.2001 |
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Email: |
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Name : |
Mr. T. K. Nagaraj |
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Designation : |
Director |
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Address : |
403, Peace Court,
Opp. Country Club, Begumepet, Hyderabad - 500016, Andhra Pradesh |
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Date of Birth/Age : |
21.07.1944 |
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Date of Appointment : |
01.03.2001 |
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Name : |
Mr. Vishnoo N. Paradkar |
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Designation : |
Whole Time
Director |
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Address : |
N-13, Sector 7,
Vashi - 400703, Navi Mumbai, Maharashtra |
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Date of Birth/Age : |
18.10.1948 |
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Date of Appointment : |
02.04.2001 |
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Name : |
Mr. Ravikant N.
Ruia |
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Designation : |
Director |
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Name : |
Mr. Prashant S.
Ruia |
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Designation : |
Director |
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Name : |
Mr. Rewant Ruia |
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Designation : |
Director |
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Address : |
Villa No: 17, Bin
Hamoodah Villa, Plot No : 992, Jumeriah, Dubai |
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Date of Birth/Age : |
20.03.1983 |
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Date of Appointment : |
02.01.2007 |
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Email: |
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Other Directorship companies: |
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Name: |
Hazira Plate
Limited |
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Designation : |
Director |
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CIN of Company: |
U27100GJ2005PLC045786 |
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Name: |
Essar Shipping
Limited |
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Designation : |
Director |
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CIN of Company: |
U63090KA1975PLC002771 |
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Name: |
Futura Aviation
Limited |
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Designation : |
Director |
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CIN of Company: |
U74210MH2006PTC159709 |
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Name: |
Essar Power
Limited |
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Designation : |
Additional Director |
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CIN of Company: |
U40100MH1991PLC063852 |
KEY EXECUTIVES
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Name : |
Mr. R. B. Deb Purakayastha |
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Designation : |
Company Secretary
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Address : |
902-B, Balaji
Gardens, CHS, Plot No. 17, Sector 11,
Koparkhairne, Vashi, Navi Mumbai - 400709, Maharashtra |
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Date of Birth/Age : |
26/11/1957 |
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Date of Appointment : |
18/04/2001 |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
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No. of Shares |
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Bansari Investment and Finance Private Limited |
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1 |
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Arkay Holdings Limited |
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1 |
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Essar Projects Limited and Mr. B. V. Suryakumar |
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1 |
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Essar Projects Limited and B. R. Deb Purakayasths |
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1 |
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Essar Projects Limited and Mr. M. N. Hari Haran |
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1 |
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Essar Projects Limited and Ms. Swati Gurav |
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1 |
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Mr. N. B. Vyas |
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1 |
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Essar Investments Limited |
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8000000 |
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Total |
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8000007 |
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Category |
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Percentage |
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Bodies Corporate (Not mentioned above) |
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100.00 |
BUSINESS DETAILS
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Line of Business : |
Leading Engineering, Procurement and Construction (EPC)
Contractors. |
GENERAL
INFORMATION
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Customers : |
·
Director General Naval Projects,Mumbai ·
Mazgaon Docks Limited ·
Essar Oil Limited / Abb Lummus Crest ·
Mormugao Port Trust ·
Essar Power Limited ·
National Highway Authority Of India ·
Essar Steel Limited ·
New Mangalore Port ·
Gas Authority Of India Limited. ·
Nhava-Sheva Port Trust ·
Govt. Of Orissa ·
Oil And Natural Gas Commission ·
Govt. Of Srilanka ·
P.T. Essar Dhananjaya ·
Gujarat Heavy Chemicals Limited ·
Polyolefins Industries Limited ·
Gujarat Water Supply and Sewerage Board ·
Qatar General Petroleum Corporation ·
Hindustan Petroleum Corporation Limited ·
Royal Dutch Shell ·
Gujarat Water Infrastructure Limited ·
Sardar Sarovar Narmada Nigam Limited ·
Kakinada Port Trust ·
Tamilnadu Cement Corporation ·
Kandla Port Trust ·
Tuticorin Port Trust ·
Madras Port Trust ·
Vishakhapatnam Port Trust ·
Indian Oil Corporation ·
Gujarat State Petronet Limited ·
Tamilnadu Water Supply and Administration |
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No. of Employees : |
500 |
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Bankers : |
·
Dena Bank
(Lead Bank) Corporate
Business Branch, C-10, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai – 400051,
Maharashtra, India ·
UCO Bank 1st
Floor, Mafatlal Centre, Nariman Point , Mumbai – 400021 ·
United Bank
of India United Bank of India
Building, 25 Sir P. M. Road, Fort, Mumbai – 400001 ·
Central Bank
of India Corporate
Financial Branch, 1st Floor, MMO Building, Fort, Mumbai -400001 ·
ICICI Bank
Limited ICICI Towers,
Bandra Kurla Complex, Bndra (East), Mumbai - 400051 |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
B. P. Jain and Company Chartered Accountants |
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Address : |
A-16, Everest, 156, Tardeo Road, Tardeo, Mumbai - 400034,
Maharashtra, India |
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Name: |
Nisar and Kumar Chartered Accountants |
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Address: |
10 Khaitan Bhavan, 4th Floor, J Tata Road, Churchgate,
Mumbai – 400020, Maharashtra, India |
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Associates : |
· Essar Steel Limited · Ajitesh Estates Private Limited · Arkay Holdigs Limited · Bhargava Estates Private Limited · Essar Agrotech Limited · Essar Global Limited, Mauritius · Essar Gulf FZE, U.A.E · Essar House Limited · Essar Information Technology Limited · Essar Investments Limited · Essar Oil Limited · Essar Power Limited · Essar Projects Limited · Essar Properties Limited · Essar Shipping Limited · Essar Telecom Limited · Essar Teleholdings Limited · Futura Travels Limited · Hy-Grade Pellets Limited · India Securities Limited · Kartik Estates Private Limited · Marmagoa Steel Limited · P T Essar Dhananjaya, Indonesia · Hazira Plate Limited · Futura Aviation Limited |
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Parents Company : |
Essar Investment Limited |
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Holding Company: |
Essar Projects Limited |
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Address: |
Dubai |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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50000000 |
Equity Shares |
Rs.10/- each |
Rs. 500.000 millions |
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Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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10250007 |
Equity Shares |
Rs.10/- each |
Rs. 102.500
Millions |
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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 |
172.091 |
102.500 |
92.500 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
2511.513 |
1288.712 |
868.308 |
NETWORTH
|
2683.604 |
1391.212 |
960.808 |
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LOAN FUNDS |
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1] Secured Loans |
3173.436 |
1940.615 |
692.048 |
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2] Unsecured Loans |
237.362 |
303.222 |
279.828 |
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TOTAL
BORROWING |
3410.798 |
2243.837 |
971.876 |
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DEFERRED TAX LIABILITIES |
115.210 |
100.093 |
209.241 |
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Deferred Liabilities |
0.000 |
26.735 |
0.000 |
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TOTAL
|
6209.612 |
3761.877 |
2141.925 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3630.850 |
2084.584 |
1362.521 |
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Capital work-in-progress |
290.241 |
118.006 |
0.000 |
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INVESTMENTS |
0.000 |
99.900 |
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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Inventories |
3999.139 |
2820.662 |
1802.212 |
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Sundry Debtors |
971.656 |
829.422 |
673.283 |
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Cash & Bank Balances |
1159.855 |
717.402 |
359.309 |
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Other Current Assets |
0.000 |
0.000 |
0.000 |
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Loans & Advances |
4470.984 |
3770.406 |
945.055 |
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Total Current Assets |
10601.634 |
8137.892 |
3779.859 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
8298.869 |
6650.022 |
2916.071 |
Provisions
|
14.244 |
28.483 |
84.384 |
Total Current Liabilities
|
8313.113 |
6678.505 |
3000.455 |
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Net Current Assets |
2288.521 |
1459.387 |
779.404 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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GRAND TOTAL
|
6209.612 |
3761.877 |
2141.925 |
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
17168.338 |
12719.645 |
6941.800
|
|
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Other Income |
185.219 |
145.905 |
33.000
|
|
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Stock Adjustments |
0.000 |
0.000 |
443.700
|
|
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Total Income |
17353.557 |
1286.550 |
7418.500 |
|
|
|
|
|
|
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Profit/(Loss) Before Tax |
587.731 |
402.000 |
296.100 |
|
|
Provision for Taxation |
0.000 |
0.000 |
165.000 |
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|
Profit/(Loss) After Tax |
587.731 |
402.000 |
131.100 |
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Export Value |
N.A. |
N.A. |
N.A. |
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Import Value |
N.A. |
NA |
540.475 |
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Expenditures : |
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|
|
|
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Raw Materials |
7323.795 |
6911.059 |
260.700
|
|
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Power & Fuel Cost |
1122.425 |
468.274 |
148.700
|
|
|
Other Manufacturing Expenses |
6.874 |
3.801 |
5413.000
|
|
|
Employee Cost |
1.400 |
0.673 |
351.300
|
|
|
Selling and Administration
Expenses |
643.185 |
388.265 |
736.600
|
|
|
Miscellaneous Expenses |
79.520 |
41.117 |
3.300
|
|
|
Interest & Financial Charges
|
617.783 |
182.609 |
123.400
|
|
|
Depreciation |
456.546 |
203.953 |
85.400
|
|
|
|
6514.298 |
3993.082 |
|
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Total Expenditure |
16765.826 |
12463.536 |
7122.400 |
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KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
PAT / Total Income |
(%) |
3.39
|
31.25 |
1.77 |
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Net Profit Margin (PBT/Sales) |
(%) |
3.42
|
3.16 |
4.26 |
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Return on Total Assets (PBT/Total Assets} |
(%) |
4.13
|
3.93 |
5.76 |
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|
Return on Investment (ROI) (PBT/Networth) |
|
0.22
|
0.29 |
0.31 |
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|
|
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|
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|
Debt Equity Ratio (Total Liability/Networth) |
|
4.37
|
6.41 |
4.13 |
|
|
|
|
|
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|
Current Ratio (Current Asset/Current Liability) |
|
1.27
|
1.22 |
1.26 |
LOCAL AGENCY
FURTHER INFORMATION
Directors
Reports:
REVIEW
OF OPERATIONS
During the year under review, the turnover of the company has shown a
phenomenal increase as compared to that of the previous year figure by
67%.
The increase was mainly on account of substantial EPC Contracts, in terms of
value, undertaken and completed during the year by the company covering
industrial plants, Steel Plants, Power Plants, Supplying and laying of Gas
Pipeline and Water Pipelines. The company has managed to sustain its growth
pattern in highly competitive market, by continuously focusing on enhancing its
operational competence and cost reduction.
The Directors are happy to inform that the Company's EBIDTA for the year under
review has increased to 8.00% as compared to that of the previous year of 6.79%
thereby substantiating the claims of the Management for working towards
improvement of operational efficiency and reduction of operating costs.
CONTRACTS
The company continued its strong presence in Pipeline
Sectors and has bagged number of prestigious pipeline contract during the year
under review from the Public Sector Undertakings like Hindustan Petroleum
Corporation Limited, GAIL (India) Limited and Gujarat State Petronets
Limited.
The following contracts have been completed during the year under review;
·
Construction and Indigenous procurement for Iron Ore
Beneficiation Plant and laying of Iron Ore Fines Slurry Pipeline from Bailadia
to Vizag.
·
Contracts for laying of cross country pipeline of
approximately 680 KMs connecting Madras Refinery at Chennai with Trichy via
Madurai in the state of Tamilnadu.
·
Construction of Cold Rolled Mill Steel Complex at
Hazira.
·
Construction, Supply of Equipment and Commissioning of plant
for expansion of Pelletisation Plant at Vizag.
·
Contracts for expansion of Pellet Plant of 3.3 MTPA to 4
MTPA at Vizag.
·
Contracts for supply of indigenous machinery and equipment
as well as construction, erection of 150 MW combined cycle power plant at
Hazira, Gujarat
The total value of the revenue generated, during the year, for the aforesaid
completed contracts is Rs. 2570.900 Millions.
CONTRACTS
IN HAND UNDER EXECUTION
The turnover of the Company during the year, as reported also includes
construction work undertaken for the following ongoing projects.
·
Contract for indigenous supply, construction and erection of
30 MW Coal Fired Captive Power Plant at Vizag.
·
Contract for Engineering, Civil Works, Erection and
commissioning of various structures for expansion of HRC Steel Plant capacity
from 2.4 MTPA to 4.5 MTPA.
·
Widening and up-gradation of a portion of National Highway 4
in the State of Karnataka between Chitradurga and Haveri.
·
Supply and laying of 10 KM Offshore Effluent Treatment Steel
Pipeline from Kantiajal Landfall Point in Gulf of Khambhat in Arabian Sea near
Bharuch.
·
Construction and laying of MS Pipes and PSCC Pipes at
Rajasthan.
·
Contracts for operation and maintenance of Heavy Duty
Equipments at Hazira, Gujarat.
·
Contract for local procurement, fabrication, erection and
commissioning of 1.50 MTPA capacity Plate Manufacturing Plant at Hazira,
Gujarat.
·
Contract for supply, erection and commissioning of 200MW
Power Plant at Hazira, Gujarat.
CONTRACTS
SECURED DURING THE YEAR
The company has also secured the following major contracts during the year
under review.
·
EPC Contract awarded by Gujarat State Petronet Limited for
laying of pipeline between Anklav - Dhuvaran in the state of Gujarat for a
total contract value of Rs. 373.300 Millions which has already been completed
before 31st March 2006.
·
EPC Contracts awarded by Gujarat Water Resources Development
Corporation Limited for providing and laying 2350 mm dia M. S. Pipe line from
Narmada Main Canal Channel 218.10 (Adundra) to Sujlam Sufalam Spreading Canal
including civil, mechanical, electrical and instrumentation of pumping station
at Adundra for a total contract value of Rs. 1205.000 Millions.
·
EPC Contract awarded to the Consortium formed between JSC
Stroytransgaz, Russia and the Company for Anand - Rajkot Section - B Pipeline
Project i.e. from IPS-1 at Chuda to Rajkot, Gujarat ( 24' X 100 KM approx.)
including Morbi Spur line (18' X 68 KM approx.) awarded by Gujarat State
Petronet Limited for a total contract value of Rs. 2105.700 Millions
·
Drilling Contract worth of Rs. 95.000 Millions from Larsen
and Toubro Limited - ECC Construction Division (LandTECCD) for Horizontal
Directional Drilling Works associated with mainline of 30' and OFC 6' for three
rivers namely Daman Ganga River, Kolak River and Par River of Mora-Vapi
Pipeline Project awarded to L andTECCD by Gujarat State Petronet Limited.
·
Work Order from Essar Steel Limited for Engineering, Civil
Work, Fabrication, Erection and Commissioning of various Structures including
technological structures, Plant and Machinery for Steel Plant upgradation for a
total contract value Rs. 320 Millions.
·
Work order from Essar Steel Limited for OBL Project, Civil
Work, Erection and Commissioning of various outside Battery Limit Project
covering the following consisting of Civil Construction Work and other worksof
New Administrative Building at Hazira, Flats at Nand-Niketan Colony and
renovation of coil club at Hazira, Gujarat for a total contract value of Rs.
340 Millions.
·
Work order from Steel Corporation of Gujarat Limited for
Civil Works, Construction and Erection of the project facilities and certain
expansion activities namely Packaging Line, Electrolytic Cleaning Line, EDT
Line, 5th Stand for Continuous Mill, FIMI Cut to length line, Roll Grinder,
Recoiling and Trimming Line and other miscellaneous work for a total contract
value of Rs. 550 Millions.
·
Sub-Contract Agreement with JSC Stroytransgas, Russia for
laying of Pipeline and Associated Facilities (Part I and Part II) for Mundra -
Delhi Pipeline Project of Hindustan Petroleum Corporation Limited for a total contract
value of Rs. 1162.600 Millions.
·
EPC Contract awarded to the Consortium formed between DQE
International, Peoples Republic of China and the Company for laying of pipeline
and associated facilities of Spread II between Jalalpur (SV7) to Bhoirpada (IP
Station 3) covering distance of 147 KM and overall commissioning of the total
pipeline system for Dehaj - Uran Pipeline Project of GAIL (India) Limited for a
total contract value of Rs. 1298.800 Millions.
·
EPC Contract for Bhander Power Limited for 140 MW Gas Fired
Combined Cycle Power Plant in Hazira, Gujarat for a total contract value of Rs.
3000.500 Millions
During the year under the review, the total value of the work executed for the
ongoing projects and also the new contracts secured during the year is Rs.
9398.600 Millions
·
CONSTRUCTION
EQUIPMENTS AND MACHINERY
During the year under review, the company continued to acquire
large fleet of Construction Equipments and Machinery consisting of most modern construction
equipments namely Pipe layers, Excavators, Pile Drilling Rigs, Bending
Machines, High Capacity Crawler Cranes, Heavy Capacity Vehicles etc. The latest
project execution techniques are deployed towards improving efficiency and
quality resulting in decrease in operational cost and equipment hire charges.
The net assets base of the construction equipments and machinery has
substantially been increased to Rs. 2090 Millions as compared to the previous
year figure of Rs. 1210 Millions.
·
BUSINESS
PROSPECTS
The growth of Indian Economy has thrown challenges for creating proper
Infrastructure to sustain the growth envisaged. Government of India has
realized the importance of developing Infrastructure Sectors which has been
reflected by its increased focus on clearing investments in developing Road and
Expressways, Telecommunication Systems, Urban Infrastructures by way of
promoting Mass Rapid Transportation Systems (MRTS), Privatizing and Opening of
Sea Ports and Air Ports. To meet with the growing energy demand, numbers of
incentives have been offered for Mega Power Projects as well as the development
of Mines as a part of backward integration of Power Projects. The recent
findings of oil and gas fields in India have offered tremendous opportunities
for Pipeline Laying Companies for executing Cross Country Pipelines which would
be used for evacuating oil and gas and would avoid decongestion of surface
transport.
The consistent increase in crude oil price in International Market has created
a boom in the Middle East Market, as numbers of new green field projects in the
Refinery and Petro-Chemical Sectors are coming up with the latest technological
inputs.
The firming up of steel prices in the international markets and the growing
demands of Hot Rolled Coils, world over, has resulted in a number of existing
steel making companies, setting up of green field projects, mainly in the
eastern part of India, as well as overseas having close proximity of
mines.
The company has got its unique experience which can cater to most of the
business opportunities stated above, as it has demonstrated the ability to lay
cross country Oil and Gas Pipelines, setting up of Power Plants, setting up of
Steel Manufacturing facilities on EPC basis. It has already submitted a number
of Expression of Interest (EOI) to get qualified with the prospective clients
by providing expression of interest for the projects in the above fields. In
certain cases, it is joining hands with the International Leading Construction
Companies on Project to Project basis, for getting qualified for doing the
projects in Pipe Laying Sectors, Petro-chemical Sectors, Power Plants and Steel
Plants.
Currently, the company is having consortium arrangements with JSC
Stroystransgaz [STG] of Russia, DQE International of China, Harbin Power
Engineering Company Limited, China and SEPCO Electric Power Construction
Corporation, China for doing the Pipeline jobs and Power Plant Projects.
For MRTS Project, it has been short listed as one of the qualified bidders for
the Hyderabad Mass Rapid Transit System by bringing the Consortium of
Singaporean Companies comprising of Sembcorp Engineers and Constructions PTE
Limited, Singapore Technologies Engineering Limited, SMRT Engineering PTE
Limited, who have experience in the MRTS fields.
During the year, the company has done an exploratory business trip to Iran
where the opportunities for associating with construction of green fields Steel
and Power Projects are immense. One of the Essar Group company is in discussions
with the local Iranian Investment Company to set up a Steel Plant in Iran and
accordingly, a company by the name of Essar Pars Steel Company (EPSC) was
created in Iran with the participation of Iranian company and Essar Group.
Pending finalization of scope and EPC price, the client, EPSC has requested
Essar Constructions Limited to undertake some preliminary civil work and survey
at Iran for a contract value of US $ 1 Million which has been successfully
completed by the company during the year under review.
·
ACQUISITION
OF CONSTRUCTION BUSINESS OF ESSAR PROJECTS LIMITED
Essar Projects Limited [EPL] has been in existence from 1990, which is a part
of Essar Group. It has the distinction of completing a number of mega projects
namely Pelletization Plant at Vizag, 515 MW Power Plant for Essar Power Limited
at Hazira, 2.3 MT capacity HRC Plant for Essar Steel Limited at Hazira, Sponge
Iron Plant for Essar Steel Limited, on Engineering, Procurement and
Construction basis. Currently, EPL is also engaged in undertaking the total
Erectioning, Commissioning and Domestic Procurement of 12 MMTPA Grass Route
Refinery for Essar Oil Limited at Jamnagar, Gujarat which is at the advanced
stage of completion with first oil in by October 2006.
The Board of Directors of Essar Constructions Limited (ECL) were of the opinion
that there is a lot of synergy available between EPL and the Company as both
are associated with undertaking projects on EPC basis. It was felt that, to
capture the value of EPL's capabilities, the existing construction business of
EPL, if transferred to ECL, would be of great advantage for the company as, the
company can continue to get qualified and execute the Contracts for Refinery
and Petro-chemical Sectors which has tremendous growth potential in the current
scenario. With this aim in view, the Company has decided to acquire the
Construction Division of EPL, on a going concern basis, with effect from the
closing hour of 30th June, 2006 for a net consideration of Rs.10 Millions. As a
result of this transfer of business, as a going concern, the ongoing business
of EPL i.e. Oil Refinery of Essar Oil Limited, Terminal Project of Vadinar Oil
Terminal Limited, Road Construction Project of National Highways Authority of
India (NHAI), Davangere, Karnataka and Water Pipeline Project in Rajasthan has
been transferred to the Company with all its rights and obligations including
the experience, equipments, manpower and assets associated with the EPL
Construction Division.
Acquisition of Construction Division of EPL, by way of a going concern basis,
will substantially enhance the Company's business potentials and the execution
capabilities in the years to come and it can be on a competitive platform for
bidding for any projects of Oil Refinery, Petro-chemical Sectors, Power
Sectors, Road and Expressway Sectors, globally.
·
FINANCIAL
RESOURCES
During the year under review, the Company has been successful in enhancing the
working capital facilities of Rs.6130 Millions from the Consortium of Working Capital
Bankers by inducting ICICI Bank Limited into the existing consortium of working
capital bankers comprising Dena Bank, UCO Bank, United Bank of India, Central
Bank of India to meet with the working capital requirements for the execution
of the various ongoing EPC Contracts.
Besides, working capital facilities, the Company has also been successful in
securing following line of credit facilities from the Banks.
1. Rupee Term Loan / Foreign Currency Term Loan to the extent of Rs.630
Millions from Union Bank of India for acquisition of Plant and Machinery,
Vehicles, Capital Goods etc.
2. Capex Line of Credit facilities to the extent of Rs.50 Millions from ICICI
Bank Limited for procurement of Capital Goods, Machinery and Construction
Equipments.
Generic Name of Principal Product/Service of the company
are:
Construction and Project Related Activity
Form
8:
|
Name of the company |
ESSAR CONSTRUCTIONS LIMITED |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Presented By |
Mr. B. R. Deb
Purakayastha, Company Secretary |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1) Date and description of instrument creating the change |
Joint deed of
Hypothecation dated 5th August, 2005, executed in favour of
consumer Member Banks i. e. Dena Bank (Lead Bank), UCO Bank, United Bank of
India and Central Bank of India . |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2) Amount secured by the charge/amount owing on the securities of charge |
Rs.3000.000
Millions |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given |
All the current
assets of the company namely stocks of Raw Materials, Work in process, Stores and spares,
packing Material Used for manufacturer Bill Receivable and Book debts and all
other movable, Bill Receivable and Book debts All other movable
fixed assets of the company including plant and Machinery, Furniture and
fixture, Office Equipment, Commercial Vehicles etc. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
4) Gist of the terms and conditions and extent and operation of the charge. |
Consortium amongst
Dena Bank, UCO Bank, United Bank of India and Central Bank of India has been
formed with Dena Bank being the Lead Banker of the consortium for following
working capital facilities extended to the essar constructions Limited
Margin and
Commission are as stipulated by Bankers From time to time and also the
services charge as are applicable to the said facilities from time to time. In consideration
of the said credit facility extended by the Consortium Member Bankers to the
company, the company created a first Pari Passu Charge with SICOM Limited by
way of Hypothecation of all the current assets of the company namely stocks
of raw material, Work in process, Stores and spares, packing Material Used
for manufacturer Bill Receivable and Book debts and all other movable, Bill
Receivable and Book debts and first and exclusive charge on all other movable
fixed assets of the company including plant and machinery, Furniture and
fixture, Office Equipment, Commercial Vehicles etc. as a security for the due
repayment by the company to the consortium Member Bank of the amount that may
be paid by the consortium Member Bank under the said credit facilities,
together with payments of interest compound interest, additional interest, by
way of liquidated damage ( in case of default), Legal costs, charges,
expenses and all other monies payable by the company to the bank in terms of
the said agreements for Hypothecations. The said credit
facilities shall be collaterally secured by a corporate of essar Investments
Limited in favour of Member Bakers. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
5) Name and Address and description of the person entitled to the charge. |
Dena Bank (Lead
Bank) Corporate
Business Branch, C-10, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai – 400051, Maharashtra,
India UCO Bank 1st
Floor, Mafatlal Centre, Nariman Point , Mumbai – 400021 United Bank of
India United Bank of
India Building, 25 Sir P. M. Road, Fort, Mumbai – 400001 Central Bank of
India Corporate
Financial Branch, 1st Floor, MMO Building, Fort, Mumbai -400001 ICICI Bank
Limited ICICI Towers,
Bandra Kurla Complex, Bndra (East), Mumbai - 400051 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
6) Date and brief description of instrument modifying the charge |
Second
Supplemental Deed of Hypothecation Dated 30th December 2005, executed
by Essar Consructions Limited in favour consortium Member Bankers viz Dena
Bank (Lead Bank), UCO Bank, United Bank of India and Central Bank of India
and ICICI Bank Limited. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification. |
ICICI Bank
Limited has agreed to sanction Rs.1000.000 Millions non-funded credit
facilities to the company and accordingly, ICICI Bank Limited has been
inducted into the consortium of working capital Bankers of Essar Construction
Limited Comprising Dena Bank (Lead Bank), UCO Bank, United Bank of India and
Central Bank of India and ICICI Bank Limited. In this
Connection the company has executed second supplemental Deed of
Hypothecation on 30th
December 2005 in favour of consortium Member Bankers viz Dena Bank (Lead
Bank), UCO Bank, United Bank of India and Central Bank of India and ICICI
Bank Limited for enhancing the working capital facilities from Rs.5127.500
Millions to Rs.6127.500 Millions by including ICICI Bank limited for its
non-fund based credit facilities as detailed bellow:-
In consideration of
the said credit facility extended by the Consortium Member Bankers to the
company, the company created a first Pari Passu Charge with SICOM Limited by
way of Hypothecation of all the current assets of the company namely stocks
of raw material, Work in process, Stores and spares, packing Material Used
for manufacturer Bill Receivable and Book debts and all other movable, Bill
Receivable and Book debts and first and exclusive charge on all other movable
fixed assets of the company including plant and machinery, Furniture and
fixture, Office Equipment, Commercial Vehicles etc. as a security for the due
repayment by the company to the consortium Member Bank of the amount that may
be paid by the consortium Member Bank under the said credit facilities,
together with payments of interest compound interest, additional interest, by
way of liquidated damage ( in case of default), Legal costs, charges,
expenses and all other monies payable by the company to the bank in terms of
the said agreements for Hypothecations excluding the specific equipment /
Fixed Assets acquired under lease Finance / term loan availed / to be availed
by the company from Banks and financial institutions. The said credit facilities
shall be collaterally secured by a corporate of essar Investments Limited in
favour of Member Bakers. The Charge now
stands Secured at Rs.6127.500 Millions |
|
Name of the company |
ESSAR CONSTRUCTIONS LIMITED |
|||||||||||||||||||||||||||||||||||||||
|
Presented By |
Central Bank of
India and Essar Constructions Limited |
|||||||||||||||||||||||||||||||||||||||
|
1) Date and description of instrument creating the change |
Dated 29th
May 2003 Agreement of
Hypothecation |
|||||||||||||||||||||||||||||||||||||||
|
2) Amount secured by the charge/amount owing on the securities of charge |
Rs.300.000 Millions |
|||||||||||||||||||||||||||||||||||||||
|
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given |
First Charge on
Pari Passu basis on, both present and future: ·
Stock of
construction material, consumables, stores and spares ·
Book debts
outstanding monies, receivable and claims ·
All the
tangible movable properties, assets including plant and machinery furniture
and fixture, Office equipment, commercial Vehicles and other vehicles etc. |
|||||||||||||||||||||||||||||||||||||||
|
4) Gist of the terms and conditions and extent and operation of the charge. |
Central Bank of
India has extended the following credit facilities to the company:
In consideration of
the said credit facility extended by the Consortium Member Bankers to the
company, the company created a first Pari Passu Charge with to the extent of
Rs.300.000 Millions on it stocks of Construction material, Consumables,
Stores, Spares, Book debts receivable and movable construction equipment, and
other assets for the due repayable by
the company to the Bank of the amount that may be paid by the consortium
Member Bank under the said credit facilities, together with payments of
interest compound interest, additional interest, by way of liquidated damage
( in case of default), Legal costs, charges, expenses and all other monies
payable by the company to the bank in terms of the said agreements for
Hypothecations. |
|||||||||||||||||||||||||||||||||||||||
|
5) Name and Address and description of the person entitled to the charge. |
Central Bank of
India Corporate
Financial Branch, M G Road, Fort, Mumbai -400023 |
|||||||||||||||||||||||||||||||||||||||
|
6) Date and brief description of instrument modifying the charge |
Dated 20th
December 2004 Agreement of
Hypothecation (Goods, Book debts and other Movable assets) |
|||||||||||||||||||||||||||||||||||||||
|
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification. |
The Bank having
at the request of the borrower agreed to increased the credit facilities upto
Rs.594.000 Millions as show hereunder:
Against
hypothecation of goods, debts and all movable properties of the borrower. Margin : 25% on
Construction Materials Equipments. 40% on receivable 10% on stocks
under L/C 20% on stocks and
Receivable acquired out of the Guarantee. Thus the charge
now stand secured at Rs.594.000 Millions. |
Fixed
Assets
·
Plant and Machinery
·
Furniture and Fixture
·
Office Equipment
·
Commercial Vehicles
·
Motor Cars
Website details:
Trade
References
·
Agarwal Metal Sales Corporation
·
Goa Mining and Spare Parts Private Limited
·
MPL Parts And Services Limited
·
Parvalhi Conveyros and Constructions
·
Sri Sowmya Enterprises (India) Private Limited
·
Yavagal Electronics and Communications
·
Focus
Over the last 30 years, it has satisfied a long list of
clients with its expertise in major areas of industrial and infrastructure
construction. Subject is able to execute project on Engineering, Procurement
and Construction basis for any industrial or infrastructure project. Subject
has four main focus lines:
·
Road
and Highways:
As India upgrades its transport network, roads and highways are an important
future growth area. Subject has the capability to build world-class roads,
highways and expressways.
·
Pipelines:
Subject has significant expertise in cross-country and
industrial pipelines for oil, gas and water. Similarly it has considerable
experience in offshore pipelines and Hook-up and modification works. It is the
only Indian company which has laid maximum number of pipelines and carried out
the largest number of Platform modifications at offshore. It owns a multi-purpose
shallow water pipelay and Hook/ modification Barge-Scanlay.
·
Marine
and civil construction:
Marine construction is one of Subject special strengths. It has a unique
capacity for underwater rock blasting and dredging. It also has experience in
ports and harbours as well as in civil works, irrigation canals, siphons,
bridges and associated structures.
·
Industrial
projects:
It is well equipped for a range of industrial projects, with experience spanning
oil and gas, petrochemicals, iron and steel, and power plants. Subject was the
turnkey contractor for the group's major projects and supporting infrastructure
worth US$4.4 billion (Rs.200.000 Millions). That includes the world's biggest
gas-based sponge iron plant; a 2.4 MTPA steel mill and a 515 MW power plant at
Hazira, a 3.4 MTPA pelletisation plant at Vishakapatnam, a cold rolling mill in
Indonesia and a 10.5 MTPA oil refinery under construction at Vadinar, Gujarat.
Press Releases
Essar Constructions along with DQE bags Rs. 1290.000
Millions gas pipeline project from GAIL
25.05. 2006
The consortium of Essar Constructions Limited (ECL)
and DQE International, China has been awarded the contract for laying of high
pressure gas pipeline for Gas Authority of India Limited (GAIL). The contract
covers the laying of a 762 cm. diameter (30 inches) pipeline between Jalapur
and Boirpada covering a distance of 147 km. and is part of the 450 km. long
pipeline that GAIL is constructing between Dahej in Gujarat and Uran in
Maharashtra. The Dahej-Uran pipeline is a cross-country natural gas pipeline
that passes via Hazira (Gujarat) and Panvel (Maharashtra) and will transport
re-gassified LNG. This pipeline will augment the pipeline network in the states
of Gujarat and Maharashtra for supplying gas to customers of GAIL.
The project is scheduled to be completed in 11 months at a cost of Rs. 1290.000
Millions.
The scope of the project includes residual engineering, geotechnical survey,
pipe laying work, laying of Optical Fibre Cables, construction and installation
of related facilities like scrapper launching / receiving stations, terminals,
pre-commissioning, commissioning and "gas-in" of the pipelines. The
contract also covers the supply of bulk materials, casing pipes , HDPE ducts
and other consumables. The major feature of the project is Automatic welding
and Automatic UT.
Essar Constructions has a track record of laying over 2000 kms. of pipelines
for petroleum products for various clients including Indian Oil Corporation,
Hindustan Petroleum and Gujarat State Petronet Corporation. In addition, it has
laid cross country pipelines for drinking water and has extensive experience in
the construction of land and marine pipelines. It is the only Indian company to
have built and commissioned the world's second longest iron ore slurry pipeline
(267 kms.) in some of the most difficult terrain.
·
About
Essar Constructions
Essar Constructions is one of India's foremost construction companies offering
turnkey engineering, procurement and construction services for a wide range of
industries. The Company specialises in infrastructure projects, process plants,
marine projects and pipelines. Essar Construction has executed projects worth
over Rs. 140000.000 Millions in India and the neighbouring regions.
·
About
Essar Group
The Essar Group is one of India's largest corporate houses with interests
spanning the manufacturing and service sectors like Steel, Shipping, Power, Oil
and Gas, Telecom and BPO and Construction. The Group has an asset base of over
Rs.230000.000 Millions and employs over 15,000 people.
Essar
bags Rs.1860.000 Millions, 504-km pipeline project
September
20, 2007
Essar Constructions (India) Limited (ECIL), a subsidiary of Essar
Projects Limited, has secured a Rs1860.000 Millions contract from Bharat Oman
Refineries Limited (BORL) for laying 504 km of a 930-km, 24-inch crude oil
pipeline.
ECIL secured the contract against stiff competition from
nine Indian and foreign bidders. The complete length of the pipeline (930 km)
will stretch from Vadinar in Gujarat to Bina in Madhya Pradesh where BORL, a
joint venture of Bharat Petroleum Corporation Limited and Oman Oil Corporation
Limited, is putting up a refinery. ECIL will execute the longest section
comprising three spreads that add up to 504 km and stretch from Vadinar to the
Gujarat-MP border.
The scope of work includes residual engineering, laying of
the 24-inch pipeline, including building of dispatch terminal, intermediate
pumping stations and sectionalising valve stations.
ECIL, an ISO:9001 certified company, has executed various
oil and gas pipeline projects and laid over 2,000 km of hydrocarbon pipelines
in the past 3 years alone for various oil and gas majors, like Indian Oil
Corporation, Hindustan Petroleum and Gujarat State Petronet Corporation.
Currently, the company is executing an additional 900 km of pipeline projects.
In addition, it has laid cross-country pipelines for providing drinking water
and has extensive experience in the construction of land and marine pipelines.
It is the only Indian company to have built and commissioned the world’s second
longest iron ore slurry pipeline (267 km) across some of the most difficult
terrain.
About
Essar Projects
Essar Projects Limited (EPL) is a 4,000-strong global engineering procurement
and construction company headquartered in Dubai. It has offices in India and
China. It provides complete construction solutions under one roof. It operates
through four main divisions:
·
Essar
Engineering Centre: It specialises in detailed engineering
and design required for executing large projects. With four centres in Chennai,
Kolkata, Hazira and Mumbai, the centre has a specialised technical staff of
over 1,000 people, focused on the steel, power and hydrocarbon sectors.
·
Global
Supplies: The Global Supplies team specialises in procurement. It has
established excellent relationship with vendors across the globe, giving it the
ability to procure materials required for project execution. Besides timely
deliveries, the team can procure goods more economically.
·
Construction: This
division has over four decades of experience in executing projects in involving
industrial plants, civil and irrigation projects, laying of pipelines (both offshore
and onshore), marine construction, and highways and expressways. It has
executed projects worth more than USD 4 billion.
·
Heavy
Engineering Services: Has modern facilities for
manufacturing pressure vessels, reactors, Vacuum vessels, cranes etc. This is
strategically located on the waterfront at Hazira on the west coast of India.
EPL also owns a vast bank of sophisticated construction
equipment used in large projects.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.27 |
|
UK Pound |
1 |
Rs.77.44 |
|
Euro |
1 |
Rs.57.73 |
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 |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
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/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|