MIRA INFORM REPORT
|
Report
Date : |
29.07.2008 |
IDENTIFICATION
DETAILS
|
Name : |
ESSAR OIL LIMITED |
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|
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Registered
Office : |
Khambhalia
Post, Post Box No. 24, District Jamnagar - 361 305, Gujarat. |
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Country
: |
India |
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|
Financials
(as on) : |
31.03.2007 |
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Date
of Incorporation : |
12.09.1989 |
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Com.
Reg. No.: |
04-32116 |
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CIN
No.: [Company Identification No.] |
L11100GJ1989PLC032116 |
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TAN
No.: [Tax Deduction
& Collection Account No.] |
RKTE00150D |
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Legal
Form : |
It is a Public Limited Liability company. The company’s
shares are listed on the Stock Exchanges. |
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Line
of Business : |
Main objective
to provide Development, Exploration, Production and related services in the
Oil & Gas Sector. The company is engaged in Contract Drilling and Offshore
Construction. |
RATING & COMMENTS
|
MIRA’s
Rating : |
A |
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
|
Maximum
Credit Limit : |
USD
120000000 |
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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 part of the Essar Group of M/s Shashi Ruia,
Ravi Ruia and Prashant Ruia. It is in the process of implementation of 10.5 MMTPA Crude
Oil Refinery, which was affected due to cyclone in June 1998. The group is not faring well and defaulted to government
owned financial institutions in making their interest payments. However It can be considered for normal business dealings
at usual trade terms and condition with some caution. |
LOCATIONS
|
Registered
Office : |
Khambhalia Post, Post Box No. 24, District Jamnagar - 361
305, Gujarat, India. |
|
Tel.
No.: |
91-2833-241444 |
|
Fax
No.: |
91-2833-241818
/ 241666 / 241414/ 241616 |
|
E-Mail
: |
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|
Website
: |
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Corporate
Office : |
Essar House, P. O. Box No. 7945, 11, Keshavrao Khadye
Marg, Mahalaxmi, Mumbai – 400 034, Maharashtra, India |
|
Tel.
No.: |
91-22-24950606/ 66601100 |
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Fax
No.: |
91-22-24954281 |
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E-Mail
: |
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Area : |
DIRECTORS
|
Name : |
Mr. Shashi Ruia |
|
Designation
: |
Chairman |
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|
|
Name : |
Mr. Ravi Ruia |
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Designation
: |
Vice Chairman |
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Name : |
Mr. Prashant Ruia |
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Designation
: |
Director |
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|
Name : |
Mr. Anshuman Ruia |
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Designation
: |
Director |
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|
Name : |
Mr. Awadhesh N. Sinha |
|
Designation
: |
Managing Director and CEO |
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|
|
|
Name : |
Mr. Hari L. Mundra |
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Designation
: |
Dy. Managing Director and Director (Finance) |
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|
Name : |
Mr. Dilip J. Thakkar |
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Designation
: |
Director |
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|
Name : |
Mr. K. N. Venkatasubramanian |
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Designation
: |
Director |
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|
Name : |
Dr. G. Goswami |
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Designation
: |
Nominee of IDBI Limited |
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|
Name : |
Mr. N. S. Kannan |
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Designation
: |
Nominee of ICICI Bank Limited |
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|
Name : |
Mr. Sanjeev Ghai |
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Designation
: |
Nominee of IFCI Limited |
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|
Name : |
Mr. V. K. Sinha |
|
Designation
: |
Nominee of LIC of India |
KEY EXECUTIVES
|
Name : |
Mr.
Sheikh S Shaffi |
|
Designation
: |
Company
Secretary |
MAJOR SHAREHOLDERS
As on
30.09.2007
Equity Shares
|
Category of Shareholders |
No. of Shares |
Percentage of Holding |
|
Shareholding
of Promoter and Promoter Group |
|
|
|
Indian |
|
|
|
Individuals/
Hindu Undivided Family |
|
|
|
Central
Government/ State Government(s) |
|
|
|
Bodies
Corporate |
325969383 |
28.60 |
|
Financial
Institutions/Banks |
|
|
|
Any Other
(specify) |
|
|
|
Sub-Total
(A)(1) |
325969383 |
28.60 |
|
Foreign |
|
|
|
Individuals
(Non-Resident Individuals/Foreign Individuals) |
|
|
|
Bodies
Corporate |
666600784 |
58.48 |
|
Institutions |
|
|
|
Any Other
(specify) |
|
|
|
Sub-Total
(A)(2) |
666600784 |
58.48 |
|
Total Shareholding
of Promoter and Promoter Group (A)= (A)(1)+(A)(2) |
992570167 |
87.08 |
|
Public
Shareholding |
|
|
|
Institutions |
|
|
|
Mutual
Funds/UTI |
1673595 |
0.15 |
|
Financial
Institutions/Banks |
4485902 |
0.39 |
|
Central Government/
State Government(s) |
|
|
|
Venture
Capital Funds |
|
|
|
Insurance
Companies |
3673941 |
0.32 |
|
Foreign
Institutional Investors |
23759291 |
2.09 |
|
Foreing
Venture Capital Investors |
|
|
|
Any Other
(specify) |
190 |
0.00 |
|
Sub-Total
(B)(1) |
33592919 |
2.95 |
|
Non-institutions |
|
|
|
Bodies
Corporate |
35254527 |
3.09 |
|
Individuals
– i. Individual shareholders holding
nominal share capital up to Rs. 0.100 million. |
62219550 |
5.46 |
|
ii. Individual
shareholders holding nominal share capital in excess of Rs. 0.100 million |
13747524 |
1.21 |
|
Any Other
(specify): NRIs |
2426201 |
0.21 |
|
Sub-Total
(B)(2) |
113647802 |
9.97 |
|
Total
Public Shareholding (B)= (B)(1)+(B)(2) |
147240721 |
12.95 |
|
Total
(A) + (B) |
1139810888 |
100.00 |
As on
30.09.2007
Preference Shares
|
Category of Shareholders |
No. of Shares |
Percentage of Holding |
|
Shareholding
of Promoter and Promoter Group |
|
|
|
Indian |
|
|
|
Individuals/
Hindu Undivided Family |
|
|
|
Central
Government/ State Government(s) |
|
|
|
Bodies
Corporate |
6169400 |
3.04 |
|
Financial
Institutions/Banks |
|
|
|
Any Other
(specify) |
|
|
|
Sub-Total
(A)(1) |
6169400 |
3.04 |
|
Foreign |
|
|
|
Individuals
(Non-Resident Individuals/Foreign Individuals) |
|
|
|
Bodies
Corporate |
119110611 |
58.70 |
|
Institutions |
|
|
|
Any Other
(specify) |
|
|
|
Sub-Total
(A)(2) |
119110611 |
58.70 |
|
Total Shareholding
of Promoter and Promoter Group (A)= (A)(1)+(A)(2) |
125280011 |
61.74 |
|
Public
Shareholding |
|
|
|
Institutions |
|
|
|
Mutual
Funds/UTI |
415380 |
0.21 |
|
Financial
Institutions/Banks |
529852 |
0.26 |
|
Central Government/
State Government(s) |
|
|
|
Venture
Capital Funds |
|
|
|
Insurance
Companies |
3631182 |
1.79 |
|
Foreign
Institutional Investors |
48382 |
0.02 |
|
Foreing
Venture Capital Investors |
|
|
|
Any Other
(specify) |
460 |
0.00 |
|
Sub-Total
(B)(1) |
4625256 |
2.28 |
|
Non-institutions |
|
|
|
Bodies
Corporate |
10640287 |
5.24 |
|
Individuals
– i. Individual shareholders holding
nominal share capital up to Rs. 0.100 million. |
48708310 |
24.00 |
|
ii. Individual
shareholders holding nominal share capital in excess of Rs. 0.100 million |
11762213 |
5.80 |
|
Any Other
(specify): NRIs |
1908755 |
0.94 |
|
Sub-Total
(B)(2) |
73019565 |
35.98 |
|
Total
Public Shareholding (B)= (B)(1)+(B)(2) |
77644821 |
38.26 |
|
Total
(A) + (B) |
202924832 |
100.00 |
BUSINESS DETAILS
|
Line
of Business : |
Main
objective to provide Development, Exploration, Production and related
services in the Oil & Gas Sector. The company is engaged in Contract Drilling and Offshore
Construction. |
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Products
with ITC Code : |
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GENERAL INFORMATION
|
No. of
Employees : |
About 1542 |
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Bankers
: |
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Facilities : |
Secured Loans As on 31.03.2007
(Rs. In millions)
Unsecured Loan (Rs. In millions)
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Banking Relations : |
Satisfactory |
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Auditors
: |
Deloitte Haskins & Sells Chartered Accountants |
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Address
: |
12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate, Worli,
Mumbai-400018, Maharashtra, India |
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Associates/Subsidiaries
: |
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Subsidiaries
: |
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CAPITAL STRUCTURE
Authorised
Capital :
|
No. of
Shares |
Type |
Value |
Amount |
|
5,000,000,000 |
Equity Shares |
Rs. 10/- each |
Rs. 50000.000 Millions |
Issued,
Subscribed Capital :
|
No. of
Shares |
Type |
Value |
Amount |
|
1201456638 |
Equity Shares |
Rs. 10/- each |
Rs. 12014.600 millions |
Paid-up
Capital :
|
No. of
Shares |
Type |
Value |
Amount |
|
1156133764 |
Equity Shares |
Rs. 10/- each |
Rs. 11561.337 Millions |
|
|
|
Total |
Rs. 11561.337 Millions |
Notes: Of
the above equity shares:
a)
65,370,000 equity shares were allotted as fully paid-up equity shares pursuant
to a contract for consideration other than cash during the financial year
1992-1993.
b) 784,386,324
equity shares (Previous year 728,433,000) are represented by 5,126,708
(Previous year 4,761,000) global depository shares (GDS). GDS issued during the
year 365,708 (Previous year 4,761,000) represented by 55,953,324 equity shares
(Previous year 728,433,000).
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 (12 months) |
31.03.2006 (12 months) |
31.03.2005 (15 months) |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share
Capital |
11561.300 |
11001.800 |
9559.000 |
|
|
2] Advance towards issue of global
depository shares |
1893.900 |
0.000 |
0.000 |
|
|
3]
Reserves & Surplus |
16496.100 |
14205.500 |
14489.200 |
|
|
4]
(Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
NETWORTH
|
29951.300 |
25207.300 |
24048.200 |
|
|
LOAN
FUNDS |
|
|
|
|
|
1]
Secured Loans |
77390.800 |
56029.600 |
48330.600 |
|
|
2]
Unsecured Loans |
8323.600 |
4646.200 |
2816.500 |
|
TOTAL
BORROWING
|
85714.400 |
60675.800 |
51147.100 |
|
|
DEFERRED
TAX LIABILITIES |
321.000 |
330.800 |
322.400 |
|
|
|
|
|
|
|
TOTAL
|
115986.700 |
86213.900 |
75517.700 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
1962.700 |
1843.600 |
1448.900 |
|
Capital work-in-progress
|
43599.800 |
36863.400 |
30220.900 |
|
|
|
|
|
|
|
Expenditure during Constructions
|
40957.900 |
28732.500 |
29318.100 |
|
Advances on Capital Account
|
21778.600 |
17444.800 |
13580.800 |
|
|
|
|
|
|
|
INVESTMENT
|
1093.700 |
896.500 |
730.500 |
|
DEFERREX TAX ASSETS
|
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES
|
|
|
|
|
|
|
Inventories
|
34179.700
|
364.900
|
1346.100
|
|
|
Sundry Debtors
|
1768.400
|
811.200
|
1020.600
|
|
|
Cash & Bank Balances
|
6429.700
|
5199.300
|
6993.100
|
|
|
Loans & Advances
|
3991.200
|
3052.300
|
2752.200
|
Total Current Assets
|
46369.000
|
9427.700
|
12112.000
|
|
Less : CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
39704.800
|
8979.600
|
6711.700
|
|
|
Provisions
|
70.200
|
15.000
|
5181.800
|
Total Current Liabilities
|
39775.000
|
8994.600
|
11893.500
|
|
Net
Current Assets
|
6594.000
|
433.100
|
218.500
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
TOTAL
|
115986.700 |
86213.900 |
75517.700 |
|
PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 (12 months) |
31.03.2006 (12 months) |
31.03.2005
|
|
|
Sale of traded petroleum products |
4739.800 |
6366.300 |
11465.800 |
|
|
Other income |
103.900 |
625.900 |
||
|
Total |
4843.700 |
6992.200 |
11465.800 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
(545.500) |
(920.500) |
143.600 |
|
|
Provision for Taxation |
129.400 |
163.000 |
45.000 |
|
|
Profit/(Loss) After Tax |
(674.900) |
(936.800) |
98.600 |
|
|
|
|
|
|
|
|
Earnings
in Foreign Currency : |
|
|
|
|
|
|
Interest |
0.200 |
71.900 |
NA |
|
|
FOB value of exports |
22721.600 |
0.000 |
NA |
|
Total
Earnings |
22721.800 |
71.900 |
NA |
|
|
|
|
|
|
|
|
Imports
: |
|
|
|
|
|
|
Raw Materials |
57960.800 |
0.000 |
NA |
|
|
Stores & Spares |
113.000 |
9.400 |
NA |
|
|
Capital Goods |
4560.600 |
5073.800 |
NA |
|
|
Others |
0.000 |
1.100 |
NA |
|
Total
Imports |
62634.400 |
5084.300 |
NA |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Cost of traded petroleum products
sold |
4660.800 |
|
|
|
|
Payments to and provisions for
employees |
123.200 |
183.200 |
|
|
|
Administrative and other expenses |
99.500 |
200.100 |
|
|
|
Selling and distribution expenses |
134.700 |
243.100 |
11322.200 |
|
|
Marketing infrastructure expenses |
219.400 |
353.700 |
|
|
|
Interest and other finance charges |
106.500 |
211.400 |
|
|
|
Depreciation / Amortisation |
45.100 |
46.600 |
|
|
Total
Expenditure |
5389.200 |
7912.700 |
11322.200 |
|
SUMMARISED
RESULTS
|
PARTICULARS |
|
|
31.03.2008 [Full Year] |
|
Type |
|
|
Full Year |
|
Sales Turnover |
|
|
5624.200 |
|
Other Income |
|
|
143.700 |
|
Total Income |
|
|
5767.900 |
|
Total Expenditure |
|
|
6159.400 |
|
Operating Profit |
|
|
[391.500] |
|
Interest |
|
|
20.100 |
|
Gross Profit |
|
|
[411.600] |
|
Depreciation |
|
|
25.200 |
|
Tax |
|
|
[20.300] |
|
Reported PAT |
|
|
[416.500] |
|
Dividend (%) |
|
|
0.000 |
KEY
RATIOS
|
PARTICULARS |
31.03.2007 (12 months) |
31.03.2006 (12 months) |
31.03.2005 (15 months) |
|
Debt
Equity Ratio |
2.65 |
2.27 |
2.76 |
|
Long Term
Debt Equity Ratio |
2.74 |
2.27 |
2.76 |
|
Current
Ratio |
1.11 |
1.00 |
0.75 |
|
TURNOVER
RATIOS |
|
|
|
|
Fixed
Assets |
1.63 |
2.48 |
3.71 |
|
Inventory
|
0.27 |
7.44 |
11.17 |
|
Debtors |
3.67 |
6.95 |
10.45 |
|
Interest
Cover Ratio |
[4.12] |
[2.76] |
1.84 |
|
Operating
Profit Margin (%) |
[8.31] |
[8.42] |
3.60 |
|
Profit
Before Interest and Tax Margin (%) |
[9.26] |
[9.15] |
3.00 |
|
Cash
Profit Margin (%) |
[13.29] |
[12.02] |
1.54 |
|
Adjusted
Net Profit Margin (%) |
[14.24] |
[12.75] |
0.94 |
|
Return on
Capital Employed (%) |
[0.44] |
[0.72] |
0.33 |
|
Return on
Net Worth (%) |
[2.53] |
[3.30] |
0.39 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Company has three main divisions – energy, offshore exploration
and petroleum products – in addition to the new refinery being set up. Its offshore division undertakes
construction related to the oil industry of oil and / or gas reserves. The oil and gas exploration division will
undertake exploration activities.
The company has entered into a MoU with Indian Oil
Corporation (IOC), the giant government owned public sector oil company which
has the largest network of sales outlets.
According to the MoU, IOC has agreed to accord top priority to all
petroleum products produced by Essar Refinery after meeting the requirements of
its refineries in terms of facilities owned/operated in IOC. Company also has access to the Kandla
–Bhatinda pipeline, which is owned by IOC.
Further the company has secured a drilling contract for the
first time in Saudi Arabia amongst stiff competition from international
companies. In Oman it received
extension for an existing contract of two rings.
The company is having off the 'Energy Division’ contract
drilling business and the 'Exploration & Production Division’ of the
company as 100 % wholly owned subsidiaries.
The board of directors of the company has constituted an Asset Transfer
Committee of Directors and authorised it to take necessary steps for the same.
Incorporated in 1989, Essar Oil (EOL) has three main
divisions -- energy, offshore exploration and petroleum products - in addition
to the new refinery being set up. Its offshore division undertakes construction
related to the oil industry for extraction of oil and/or gas reserves. The oil
and gas exploration division will undertake exploration activities.
Currently the company is setting up a 10.5 million mtpa oil refinery project at
Jamnagar, Gujarat. The project was reappraised to Rs.80000 Millions out of which Rs.52500
Millions was
spent as on December,2002. Erstwhile ICICI Limited (Financial Institution) has
reappraised the project to Rs.80000
Millions. The
project was delayed to severe cyclone in 1998 which has damaged some of the
facilities under construction and causing delay in implementation of the
project. Once commissioned the project is expected to be completed within a
period of 18 to 24 months.
Further the company has secured a drilling contract for the first time in Saudi
Arabia amongst stiff competition from international companies. In Oman it
received extension for an existing contract of two rigs.
The company is hiving-off the 'Energy Division' (contract drilling business'
and the 'Exploration & Production Division' of the company as 100% wholly owned
subsidiaries. In July 2002 the company was awarded Coalbed Methane exploration
block in Raniganj measuring 500 sq.km.
The work would commence on grant of the petroleum exploration license.
Increase in the Share
Capital
During
the year, the paid up capital of the Company increased from 108,35,77,314
equity shares of Rs.10/- each to 113,95,30,638 equity shares of Rs.10/- each
upon issue of 5,59,53,324 equity shares of Rs.10/- each to the overseas
depository for Global Depository Shares (GDSs) on allotment of GDSs aggregating
to USD78 million to Promoters on preferential issue basis pursuant to approval
granted by the shareholders at the 15th Annual General Meeting held on 30th
September, 2005. The issue proceeds have been utilised for the implementation
of the Refinery Project.
Information on Status of Company's
Affairs
Information on operational and financial performance,
status of construction activities at project site, etc. is given in the
Management Discussion and Analysis which is setout as Annexure B to the
Directors' Report and has been prepared in compliance with the terms of clause
49 of the Listing Agreement with Stock Exchanges.
MANAGEMENT DISCUSSION AND ANALYSIS
REPORT
Industry Outlook
MANAGEMENT DISCUSSION AND ANALYSIS
Industry Outlook
As the global demand for
energy continues to grow, oil is expected to remain the main determinant of
world economic growth in the foreseeable future. OPEC has indicated that based
on a global economic growth rate of 3.5% per annum (purchasing power parity
basis), the demand for oil is set to rise to 118 million barrels per day by
2030 from the current level of 85 million barrels per day.
The transportation
sector is expected to be the main demand driver as more and more developing
countries are expected to grow in terms of commercial vehicle and passenger car
volumes. The non transportation sector will also grow, mainly in the developing
nations of Asia and Africa, as petrochemical industry takes stronger roots
there.
Based on the projections
of demand for petroleum products, the total investment in refinery processing
by the year 2020 is estimated to be around USD 450 billion including the cost
of capacity expansion, new projects and ongoing maintenance and replacement.
The Asia Pacific region will require the highest level of investments with
China accounting for a major portion.
Environmental
regulations will also play a critical role in terms of technology as well as
product quality specifications of end products. The search for alternative fuels,
though gathering pace and usage is not expected to have a significant impact on
the demand for oil and its end products.
Almost the entire
reserves in the world of "easy oil" have already been found and are
being exploited. Those which are now increasingly being made available are
"difficult oil"-difficult in geographical reach stretching logistics
and sour, heavy and acidic which are difficult to refine and more difficult to
manage environmentally.
The opportunity for the Company to increase refining capacity based on
the above scenario is exciting. The need for ultra clean transport fuels to
meet stringent environmental specifications for petroleum products is an
opportunity that new refineries based on contemporary technology can take
advantage of. These technologies offer not only product quality and
specifications to the most stringent standards, but are also able to deal with
heavier or highly sour crude. This enables maximum utilisation of crude input
and allows for production of the most stringent end products translating into
higher margins.
The Indian Scenario
The consumption of
petroleum products in India during the year under review stood at 119.85
million metric tonnes (MMT), an increase of 5.9% as compared to the previous
year, contributed by growth in demand for transport fuels.
However, many
refineries, especially those in the private sector are exporting petroleum
products as global demand continues to be robust.
Against
domestic refining capacity of close to 150 MMTPA and consumption of around 120
MMTPA, the country continues to have surplus refining capacity.
With
several refineries planning capacity expansion, the surplus is expected to
continue. Exports of petroleum products have reached a level of 32.4 MMT during
the year under review. There are some strong reasons for private refineries in
India looking outside their domestic markets and exporting a fair proportion of
their products to protect their margins.
Although
international prices have being rising, domestic prices were not allowed to be
increased and this has had a substantial adverse impact on the profitability of
the oil marketing companies during 2006-07, given the fact that domestic
production of crude oil was only 31.5 MMT against imports of 111 MMT during
this year.
The
sharp increases and more critically the wide fluctuations in crude oil prices
in the last two years have made it virtually impossible for oil marketing
companies to sustain margins. In spite of severe constraints in feeding their
retail outlets with products, the private marketing organisations added over
700 outlets last year. Despite all efforts to convince Government to bring
about a level playing field, these companies do not receive the kind of
Governmental support that Public sector companies get in the form of Oil Bonds.
The private sector oil marketing companies had made aggressive marketing
efforts and in the last two years had gained a market share of close to 12% in
a market dominated by the public sector. The Government's discriminatory
approach in favour of public sector oil companies (by subsidising retail
prices) has now resulted in the market shares of the private oil marketing
companies dwindling to a mere 2%.
The Rangarajan Committee, constituted by the Government to look into
various aspects of pricing and taxation of petroleum products, submitted its
report in February 2006. The Committee has given recommendations relating to
the pricing of MS, HSD, domestic LPG and SKO for supply through the Public
Distribution System. Besides, it has also recommended restructuring of excise
duties to make it a pure specific levy, instead of the current Ad valorem. Some
of these recommendations have already been implemented, including the change in
the basis of pricing of petrol and diesel from import parity to trade parity
and reduction in customs duty from 10% to 7.5% on these products. This has,
however, failed to make any significant impact on the under recoveries in the
domestic marketing of transportation fuels.
Marketing
Retail sales
The
Company is faced with an extremely challenging situation in relation to
expansion of its retail outlets. However, as a long-term strategy and in the
hope that the anomaly in pricing has to find a correction in the near future,
the Company has strengthened its retail network to 1178 (as on March 31, 2007)
from 700 last year. The Company has managed to reduce the impact of anomaly in
pricing by higher prices in certain markets to contain demand coupled with a
suitable compensation package for fanchisees to compensate lower thruput
through their outlets. Subject operate on the principle of quality, optimum
cost and reasonable operating returns and in the current adverse context, the
low cost franchisee based model subject have chosen for the retail business is
considered the most appropriate.
The
emphasis during the year was on selective network expansion and
standardization. The Company commissioned 513 new retail outlets, representing
16% of the 3200 new retail outlets commissioned by the industry during
2006-2007.
Direct sales
The
year 2006-2007 has been a year of diversification for the Direct Sales business
as, for the first time, the Company commenced marketing of Furnace Oil, from
the refinery in the domestic market. The Company also commenced sale of LPG to
PSUs from the refinery. It is pertinent to note that the Company is not allowed
to sell these products directly since they are subsidised and can be sold only
to the public sector companies.
A
number of new initiatives were undertaken during the year in the area of
customer service and technical support. These initiatives are expected to help
retain the existing customers and facilitate tying up of new business.
Intense
competition and aggressive marketing by the Public Sector and private marketers
will, however, continue to be the order of the day.
The
Company is seeking a level playing field between the PSUs and the private
sector and has made representations to the Government for further
liberalization and deregulation of the industry and restoration of a market
determined pricing mechanism. This will enable the industry to invest in world
class refining, retailing and exploration facilities and ensure the integration
of India with the global Hydrocarbon industry. In this endeavour, subject are
one with other oil companies in the private sector like Reliance Industries
Limited and Shell.
The Refinery
The
Directors are proud to report that 2006-2007 will be remembered as the landmark
year in which the primary units of the refinery commenced trial operations
along with various utilities and offsite facilities. This was achieved in
November 2006 when crude was introduced into the crude and vacuum distillation
units, the refinery's primary process facility. This was followed by the trial
start-up of the Vis-breaker in January and the Continuous Catalytic Reformer
and the Naphtha Hydro Treator in February.
Construction of the balance units of the Refinery is at an advanced stage.
The
major challenge facing the project team was in securing timely delivery of
materials and equipment as a consequence of very strong world-wide construction
activity which has resulted in delay in commissioning of the balance units.
Subject expect the balance units to be commissioned in the next quarter.
In response to changes in current and forecasted product demand patterns, the
refinery's processing capability has been adjusted to maximize production of
middle distillates (Aviation Turbine Fuel and diesel). This change will ensure
that the refinery will be positioned at the upper end of the "gross
refinery margin" range when full operation is achieved.
To
further optimize performance, the creation of additional treating capability,
storage facilities and coastal despatch facilities are being expedited and
construction is well underway. Construction of the GAIL pipeline for LPG from
the Refinery to their existing Jamnagar-line System is also well underway
providing us this most cost effective transportation mode to the high growth
demand centres in North India.
During the trial run till 31st March, 2007 the Refinery produced 1.32 million
metric tonnes of finished petroleum products. The expenses relating to trial
runs are being capitalised pending completion of the Project.
Quality Assurance
The
company has a state-of-the-art laboratory which is well-equipped to monitor the
quality of intermediate streams and certify the quality of final products
before dispatch. It tests all samples from the consumer end to provide quality
assurance. This Lab is well on its way to getting ISO accredition.
The laboratory is staffed by a highly skilled and experienced team that
provides round the clock support to operations. It has been inspected and
certified by DGCA (Director General of Civil Aviation).
As
of 31st March, 2007, the laboratory had certified, without a single error over
a Million tonnes of shipped product and over 10,000 road tanker loads of
product.
International Supply and
Trading
Oil
prices were strong in the last year due to a number of reasons like robust
world economic growth, supply disruptions, and geopolitical tensions. Dated
Brent was stronger by over USD 6 per barrel over the last year averaging about
USD 64.14 per barrel. Global oil demand growth however slowed slightly to 0.8
mbpd in 2006 from 1.2 mbpd in 2005. The premium for light products over fuel
oils remained high, favouring complex refineries over less complex sites.
Product quality continued to tighten worldwide; this is one of the last stages
to virtual elimination of sulphur from transportation fuels.
Crude
price movement of the past year can be divided into two distinct time periods
viz. July to January and February onwards. In the first period, prices reached
an all time high of USD 78.64 in July followed by a move to a low of USD 50.75
in January. For the past three years, oil prices have regularly dropped in this
period by significant amounts. In the second period, prices retraced to its
highs.
The
first crude oil cargo for the company arrived at the SBM on 6th September,
2006. During the financial year, the Company contracted 26 mbls of crude oil on
spot basis. Most of these grades were contracted from the West African and
Mediterranean region. The Company exported 8 mbls of product valued around USD
517 million from the trial runs of some of the units. The export markets are
mainly in Far East Asia, Europe, Africa, Middle East and the US Gulf Coast. The
Company has also commenced risk management activity and are judiciously hedging
crude imports, product exports and foreign exchange.
With the commissioning of the FCCU and DHDS during 2007-2008, the crude
diet and product specifications will change substantially. The Company will be
able to process sour, heavy and acidic grades and will explore the
possibilities of terming up crude contracts through an optimum mixture of spot
and term cargoes. The Company is already exploring new export markets for
product evacuation. The aim will be to term up an optimum percentage of the
product cargoes to mitigate off take risks. With the inclusion of more VLCC
shipments and Middle Eastern crudes the freight bills are also expected to
reduce considerably.
The
combination of rising consumption, the continued effects of production cuts by
members of the OPEC, and only modest increases in non-OPEC production is
expected to pull the inventories down. Consequently, the prices are expected to
remain strong. World oil consumption is projected to grow by 1.3 million bbl/d.
But, slowdown in economic growth in the US may contribute towards weakening of
oil prices.
Upstream Activities
Upstream
oil and gas sector continues to be buoyed by high international crude oil and
gas prices driven by astronomical growth in the emerging economies.
Accordingly, market sentiment continues to be very positive for the Exploration
& Production business worldwide. However, intense competition for resources
has led to increased costs across all areas of manning, equipment and
exploration and development services.
In the Indian context, several public and private sector companies and
international companies are actively pursuing opportunities in oil and gas, as
the Government continues to encourage investment in exploration activity. The
Government conducted bidding rounds NELP-VI and CBM-III successfully, for award
of acreage for exploration. NELP-VII is expected to be announced around
September 2007.
The Company has 11% participating interests in Mehsana (Gujarat) block.
Commercial
production has just commenced and further exploration activity in the same block
continues in Phase II.
A
Consortium comprising the Company (with 10% Participating Interest) and other
parties was awarded two new blocks in the Assam (Arakan basin) under NELP-VI
round of bidding.
The
Company expects to receive the long awaited final approval for the Production
Sharing Contract (PSC) shortly for the "Ratna and R Series Fields"
from the Government of India, in which the Company has a 50% share with ONGC
having 40% and Premier Oil 10%.
Premier
Oil, the field Operator in the existing exploration Block in Cachar District,
Assam is currently drilling an exploratory well (Masimpur-3) where the Company
has a 16% "carried interest".
The
Company has almost completed a program of drilling 12 core-wells in CBM Block,
Raniganj East in West Bengal, where it has 10% participating interest. This has
resulted in delineation of an area of about 100 sq. kms. where existence of
adequate gas resources has been established. The Company will next undertake
test drilling in this area to establish commercial reserves.
The
Company has a 25% "carried" participating interest in one onshore and
one offshore exploration block in Myanmar, operated by Essar Exploration &
Production South East Asia Limited (EEPSEAL). Seismic acquisition has been completed
in both blocks. Data is currently under processing and interpretation to
establish drilling locations in each block. EEPSEAL will next undertake
drilling of wells, expected to commence by year end 2007.
Planning for the
future
The
Company has begun the implementation of the up-gradation of base refinery by
addition of the following units i.e. Delayed Coker, VGO Hydrotreater, second
Diesel Hydrotreater (High Pressure), ATF Hydrotreater and three small units
Amine Regeneration Unit, Sour Water Stripper Unit and ATF Merox Units. This
will enable the Refinery to process very heavy and sour crudes to produce
products meeting exacting current international standards. In petroleum
terminology this would translate into increasing the "Nelson's complexity
index from 6 to 12". Simultaneously, the Company would also be
de-bottlenecking the primary units (CDU/VDU) which will increase the refining
capacity to 16 MMTPA. All these actions are expected to have a significant
positive impact on margins.
World
renowned Technology providers and consultants, UOP have completed the
configuration study with the objective of processing heavy, sour crudes to
produce international quality petroleum products while expanding minimum energy
and protecting and preserving the environment. The Company has already executed
contracts with key process licensors (UOP, Jacobs and ABB) who have made
significant strides in completing the Basic Engineering work for these Units.
Contracts have also been executed for Detailed Engineering, Procurement of
Equipment and Construction of the Refinery, and the Contractors have received
firm bids for equipment with long lead delivery periods. The cost of the
proposed expansion and up-gradation is estimated at USD1.2 billion and is
proposed to be funded with a debt to equity of 2.85:1. The Company has
targetted to complete the expansion project by December 2009.
Financial Highlights
The
Company earned a total income of Rs 4843.700 Millions in the twelve months
ended 31st March 2007 as against Rs 6992.200 Millions in the twelve months ended March 31, 2006. The
under-recoveries in the marketing of transport fuels on account of Government's
retail pricing policy forced the Company to further curtail its sales during
the year, resulting in steep decline in total income. This has helped the
Company to contain the loss before tax excluding nonrecurring other income to
Rs. 649.400 Millions in the twelve months
ended 31st March, 2007 as against Rs 1546.400 Millions in the corresponding period last year.
|
Contingent liabilities |
Rs in Millions As on 31.03.2007 |
|
a)
Income tax / sales tax and other demands of various periods against which
appeals have been filed/are being filed |
330.400 |
|
b)
Claims against the Company not acknowledged as debts : |
|
|
i) In
respect of customs duty |
20.500 |
|
ii) In
respect of encashment of performance guarantee |
79.800 |
|
iii)
Others |
|
|
- On
capital account (including income tax demand of Rs. 62.000 Millions) |
273.300 |
|
- On
revenue account |
1004.400 |
|
c) In
respect of custom duty, where the Customs Department has gone in appeal |
201.300 |
|
Guarantees
/ Bonds |
|
|
a)
Guarantees given by the Company on behalf of others (to the extent of
liabilities as at balance sheet date) |
5794.800 |
|
b)
Guarantees given by banks / others on behalf of the Company {excluding
guarantees and confirming bank guarantees given as security Rs. 10402.500
Millions in respect of liabilities existing in the books of accounts} |
932.500 |
|
The possibility
of any outflow of resources relating to the above contingent liabilities is
remote. The claims by parties in respect of which the management has been
legally advised that the same are frivolous and not tenable, have not been
considered as contingent liabilities as the possibility of an outflow of
resources embodying economic benefits is highly remote. |
|
Fixed Assets
n Land
n Building
n Plant and Machinery
n Furniture and Fixtures
n Office Equipments
n Vehicles
n Barge
The construction
activities at the Refinery Project site at Vadinar, Gujarat were disrupted due
to a cyclonic storm, which hit the Gujarat coast in June 1998. The said
disruption resulted in increase in (he project cost requiring reappraisal of
the funding requirements. The lenders to the Project had approved in August
2003, under RBI's corporate debt restructuring scheme, a debt restructuring
package ("the Package"), which was further modified in December, 2003
and November, 2004. The Package provided for substantial relief in interest,
restructuring of existing loans, waiver of liquidated damages, disbursement of
further loans, etc. The Package was formalized and a Master Restructuring
Agreement ("MRA") was entered into on 17th December, 2004.
The Company
complied with the relevant conditions as on January 31,2005 as required under
MRA entailing disbursement of new loans and restructuring of the existing loans
/ interest dues. The interest for the period October, 1998 to December, 2003 in
respect of the loans covered by MRA, has been converted into funded interest
facilities amounting to Rs. 25281.200 Millions. The MRA gives an option to the
Company to repay the said funded interest facilities at any point in time
during their term at a reduced amount computed in accordance with the mechanism
provided in the MRA or in full by one bullet payment in March, 2026. The
Company has plans to discharge earlier the funded interest facilities. Under
the said mechanism provided in the MRA, the funded interest facilities of Rs.
25281.200 Millions would stand fully discharged if Rs. 3870.700 Millions, is
paid on or before 24" April, 2007.
Should
the Company opt to discharge the funded interest facilities subsequent to 24*
April, 2007 then the expected economic outflow of Rs. 3870.700 Millions being
the present obligation under the mechanism, would gradually increase at a rate
and as per the mechanism provided in the MRA.
In order
to give accounting effect to reflect the substance of the transaction, the
Company has followed principles laid down in International Financial Reporting
Standard (IAS) 39 (Revised) - Financial Instruments - Recognition and
Measurement and Statement of Financial Accounting Standard (SFAS) 15 -
Accounting by Debtors and Creditors for Troubled Debt Restructuring under
United States Generally Accepted Accounting Principles (US-GAAP), in the
absence of specific guidance available under Indian Generally Accepted
Accounting Principles to cover the above-mentioned situation. In view of the
above, an amount of Rs. 21410.500 Millions has been shown as deduction from the
funded interest facilities of the financial institutions and the banks (Refer
Schedule III) to reflect in substance the present obligation under the
mechanism on the balance sheet date, with consequential deduction from
"Expenditure during Construction" (Refer Schedule VII).
The loan
balances (including funded interest facilities) covered by MRA (hereinafter
referred to as "the loan balances") have been considered in the books
of account in accordance with the bilateral agreements, wherever signed. Where
the same are yet to be signed, the loan balances have been considered based on
the confirmation of the balances as on 31" March, 2007, wherever received
and agreed by the Company, or as per MRA, where the confirmations have not been
received or have not been agreed pending reconciliation with the lenders. The
loan balances exclude a claim of Rs. 2068.800 Millions from a lender, which is
not payable as per MRA.
WEBSITE DETAILS
ATTACHED:
Press releases
Essar Steel agrees to
acquire Esmark Inc.
for an enterprise
value of appox. USD 1.1 Billion (Approx.Rs.45000 Millions)
May 01,
2008
Essar Steel Holdings Limited (ESHL), part of Essar
Global Limited, today announced that it has agreed to acquire Esmark Inc. at an
estimated enterprise value of USD 1.1 billion. ESHL has agreed to the material
terms of a proposed tender offer for cash purchase price of USD 17 per share of
all outstanding shares of Nasdaq listed Esmark Inc.
The proposed tender offer was unanimously
accepted by the Board of Esmark and is subject to customary approvals including
those of the US government and United Steel Workers.
Esmark plans to enter into definitive documentation upon expiration or waiver
of the approximate 52 day “right to bid” period set forth in the collective
bargaining agreement with the United Steelworkers. Esmark is a steel production
and distribution company with a capacity of 2.4 MTPA and steel distribution
centres across USA.
Commenting on the deal, Mr Shashi Ruia,
Chairman, Essar Global said,” This is one more step in realizing our global
steel vision of having world class low cost assets, with a global footprint.
Having acquired Algoma and Minnesota Steel last year, this acquisition provides
us with an excellent platform for the Canadian and North American markets. With
the above acquisitions of Esmark and projects under implementation in Trinidad
and Tobago, Essar Steel Holdings will have a 10 million tonnes of flat steel
production in the Americas”
Within ten days of entering into definitive
documentation, a wholly-owned subsidiary of Essar will effectuate the two-step
acquisition by means of a front-end, cash tender offer for all of the
outstanding shares of Esmark’s common stock, at $17.00 per share in cash. If
greater than 50% of the outstanding shares are tendered, then a second-step,
cash-out merger would follow in which all remaining shares of Esmark common
stock will be converted into the right to receive $17.00.
About Essar Steel Holdings Limited (ESHL)
ESHL is a global producer of steel covering
India, Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon
steel manufacturer - from iron ore to ready-to-market products - supplying
highly discerning customers in the automotive, white goods, construction,
engineering and shipbuilding industries. With a current capacity of 8.5 million
tons, Essar’s expansion in India, Asia and North America will see capacity rise
to 20 to 25 million tons by 2012.
About Esmark Incorporated
Esmark Incorporated is a vertically integrated
steel producer and distributor, combining steel production capabilities through
both blast furnace and electric arc furnace technologies with the just-in-time
delivery of value-added steel products to a broad customer base concentrated in
the Ohio Valley and Midwest regions. Currently headquartered in Wheeling, WV,
the Company is a producer of carbon flat-rolled products for the construction,
container, appliance, converter/processor, steel service center, automotive and
other markets. The company's products include various sheet products such as
hot rolled, cold rolled, hot dipped galvanized, electro-galvanized, black plate
and electrolytic tinplate.
About Essar Global
Essar Global is a diversified international conglomerate. It has offices
world-wide and employs approximately 38,000 people, including over 6500 persons
in the United States.
Essar Steel registers
highest EBIDTA and sales volume growth;
EBIDTA rises by 35% at Rs. 12520.700 Millions and sales
volume by 25% at 1.626 Millions tonnes for the half year ended September 30,
2007
October
31, 2007
Financial Performance
Essar Steel Limited (ESTL) registered a growth of 23% in total income at
Rs.25628.500 Millions for the quarter ended September 30, 2007 compared to
Rs.20815.800 Millions in the corresponding period of the previous year. The net
profit for the quarter under review was Rs.1520.100 Millions ( Rs. 1543.400
Millions) after providing for Finance Cost at Rs.1599.600 Millions (Rs.1368.600
Millions), Depreciation at Rs. 1864 Millions (Rs.1490.100 Millions), Provision
for Fringe Benefit Tax at
Rs.23.800 Millions (Rs.11.300 Millions), Deferred Tax at Rs. 901.700 Millions
(Rs. 788.100 Millions), Provision for current Tax at Rs. 194.300 Millions (Rs.
70.600 Millions (Credit))
Essar Steel Limited (ESTL) registered a growth
of 35% in total income at Rs.51282.100 Millions for the half year ended
September 30, 2007 compared to Rs.38018.100 Millions in the corresponding
period of the previous year. EBIDTA rose by 35% at Rs. 12520.700 Millions
(Rs.9286.500 Millions). The net profit for the period under review registered a
growth of 96% at Rs.3830.700 Millions ( Rs. 1954.700 Millions) after providing
for Finance Cost at Rs.2533.200 Millions (Rs.3175.400 Millions), Depreciation
at Rs. 3734.900 Millions (Rs.2982 Millions), Provision for Fringe Benefit Tax
at Rs.38 Millions (Rs.19.100 Millions), Deferred Tax at Rs.1894.400 Millions
(Rs. 939.400 Millions), Provision for current Tax at Rs. 489.500 Millions (Rs.
12.200 Millions credit)
Manufacturing
The production of hot rolled coils steel increased by 14% to 0.78 Million
tonnes for the quarter ended September 30, 2007 as compared to 0.686 Million
tonne. in the corresponding period of the previous year.
The production for the half year ended September
30, 2007 registered a growth of 16% at 1.613 Millions tonnes (1.392 Millions
tonnes).
Marketing
Total sales registered a growth of 19% at 0.827 Millions tonnes for the quarter
ended September 30, 2007 as compared to 0.692 Millions tonnes in the
corresponding period of the previous year.
Total sales for the half year ended September
30, 2007 registered a growth of 25% at 1.626 Millions tonnes (1.303 Millions
tonnes)
Apparent consumption in the country grew 11%
y-o-y in Q2 of this year and this growth rate is expected to increase going
forward on the back of renewed activity in construction, automotive &
energy In order to take advantage of rising domestic demand, Essar Steel
focused on the domestic market. The exports focused only on value added
segments and products.
The domestic sales registered a growth of 54.75%
at 0.619 Million tonnes for the quarter as compared to 0.4 Million tonnes in
the corresponding period of the previous year. The export sales stood at 0.208
Million tonnes (0.292 Million tonnes) The Essar Steel Hypermart clocked a sales
of 0.13 Million tonnes for quarter ended September 30, 2007 accounting for 21%
of total domestic sales. .
About Essar Steel
Essar Steel, part of Essar Steel Holdings Limited, is the largest integrated
producer of steel in Western India with a capacity of 4.6 million tonnes per
annum. It is also India’s largest exporter of flat steel products. It has
manufacturing facilities at Hazira, Gujarat, a pelletisation plant at
Visakhapatnam, and a iron ore beneficiation plant at Bailadila, Chhattisgarh.
All the facilities use state-of-the-art technology and are supported by an
end-to-end infrastructure setup, including captive power and oxygen plants,
pipelines and port facilities.
About Essar Steel Holdings Limited (ESHL)
ESHL is a global producer of steel covering
India, Canada, USA, the Middle East and Asia. It is a fully integrated flat
carbon steel manufacturer - from iron ore to ready-to-market products -
supplying highly discerning customers in the automotive, white goods,
construction, engineering and shipbuilding industries. With a current capacity
of 8 million tonnes, Essar’s expansion in India, Asia and North America will
see capacity rise to 20 to 25 million tonnes by 2012.
About Essar Global
Essar Global Limited (EGL) is a large business corporation with a balanced portfolio
of assets straddling the manufacturing and services sectors: Steel, Energy,
Power, Communication, Shipping & Logistics, and Construction. EGL, through
its six sectoral holding companies, has an enterprise value of over USD 20
billion (INR 800 billion) and employs 20,000 people worldwide. The Company has
operations and investments in India, Canada, North America, Africa, the Middle
East, the Caribbean and South East Asia.
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. 42.30 |
|
UK Pound |
1 |
Rs. 84.03 |
|
Euro |
1 |
Rs. 66.42 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP
CAPITAL |
1~10 |
7 |
|
OPERATING
SCALE |
1~10 |
7 |
|
FINANCIAL
CONDITION |
|
|
|
--BUSINESS
SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--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 |
YES |
|
--OTHER
MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
69 |
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 |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the
strongest capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for
credit transaction. It has above average (strong) capability for payment of
interest and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet
normal commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight
in credit consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and
principal sums in default or expected to be in default upon maturity |
Limited with full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be
exercised |
Credit not recommended |
|
NR |
In view of the lack of information, we have no basis upon
which to recommend credit dealings |
No Rating |
|