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MIRA
INFORM REPORT
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Report Date : |
30.07.2008 |
IDENTIFICATION
DETAILS
|
Name : |
STERLITE INDUSTRIES (INDIA) LIMITED |
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Registered Office : |
SIPCOT Industrial Complex, Madurai By Pass
Road, T V Puram P.O., Tuticorin -628 002, Tami Nadu, India |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
08.09.1975 |
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Com. Reg. No.: |
18-62634 |
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CIN No.: [Company
Identification No.] |
L65990TN1975PLC062634 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMS36821B/ MUMS22522D |
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PAN No.: [Permanent
Account No.] |
AABCS4955Q |
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Legal Form : |
Public limited liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturer of Telephone Cables, Copper Rods and Aluminium Rolled Products. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 220000000 |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established and reputed company and a part of Sterlite
Group. The company is progressing well. Directors are reported as experienced
and respectable businessmen. Trade relations are reported as fair. Business
is active. Payments are usually correct and as per commitments. Fundamentals are strong and healthy. The company can be considered fro business dealings at usual trade
terms and conditions. The company can be regarded as promising partner in a medium to
long-run. |
LOCATIONS
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Registered Office : |
SIPCOT Industrial Complex, Madurai By Pass
Road, T V Puram P.O., Tuticorin -628 002, Tami Nadu, India |
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E-Mail : |
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Website : |
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Head Office : |
B-10/4, Waluj MIDC Industrial Area, Waluj, Dist. Aurangabad – 431 133, Maharashtra, India |
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Tel. No.: |
91-240-2554583/2554589 |
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Fax No.: |
91-240-2554690 |
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E-Mail : |
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Area : |
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Regional Offices : |
Northern
Regional Office |
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Tel. No.: |
91-11-24366023 / 24365225 / 24366653 |
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Fax No.: |
91-11-24366023 |
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E-Mail : |
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Regional Offices : |
Southern
Regional Offices 705, 7th Floor, North Rear Wing, Manipal
Centre, Dickenson Road, Bangalore - 560001 |
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Tel. No.: |
9180-25559548 / 25559549 |
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Fax No.: |
9180-25559553 |
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E-Mail : |
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Regional Offices : |
Eastern
Regional Office Chatterjee International Centre, 20th
Floor, 33 A Jawaharlal Nehru Road, Kolkata - 700071. |
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Tel. No.: |
91-33-22465968 |
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Fax No.: |
91-33-22465968 |
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E-Mail : |
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Regional Offices : |
Western
Regional Office Vedanta, Business Square, C Wing, 2nd Floor.Andheri
Kurla Road, Chakala, Andheri (East), Mumbai - 400 093. |
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Tel. No.: |
91-22- 66434500 |
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Fax No.: |
91-22-66434530 |
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E-Mail : |
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Corporate Office : |
Dhanraj Mahal, 5th Floor, C.S.M. Road, Appollo Bunder, Colaba, Mumbai – 400 039, Maharashtra, India |
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Tel. No.: |
91-22-22855551/22854406 |
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Fax No.: |
91-22-22836474 |
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E-Mail : |
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Corporate Office : |
92, Maker Chamber III, Nariman Point, Mumbai – 400 021 |
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Tel. No.: |
91-22-22835261/22835316/22844864 |
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Fax No.: |
91-22-22845015 |
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E-Mail : |
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Corporate Office : |
Vedanta, 75 Nehru Road, Vile Parle (East), Mumbai-400099,
Maharashtra |
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Factory 1 : |
Sterlite Optical Fibres Unit: E-2, MIDC Industrial Area, Waluj, Dist - Aurangabad – 431 136, Maharashtra Tel. No. 91-240-2564599/2554079 Fax No. 91-240-2564598/2564066 E Mail sclof@giaspn01.vsnl.net.in Sterlite Telecom Cables Unit: Survey No. 209, Piparia Industrial Estate, Silvassa, (Dadra Nagar & Haveli), Union Territory Tel. No. 91-2638-241108/241113 Fax No. 91-2638-240394 Sterlite Aluminium Foils Unit: Aluminium Foils & Sheets Division Gate Nos. 924-927, Sanaswadi, Tal. Shirur, Dist. Pune – 412 208, Maharashtra Tel. No. 91-2137-252308/252309/252438/252439 Fax No. 91-2137-252407 E Mail sterlite@pn2.vsnl.net.in Jelly Filled Cables: Unit I : B-10/4, Waluj MIDC Industrial Area, Waluj, Dist. Aurangabad – 413 133, Maharashtra Unit II : Survey No. 209, Piparia Industrial Estate, Phase II, Silvassa – 396 230, Dadra & Nagar Haveli (Union Territory) Optical Fibre: E-1, MIDC Industrial Area, Waluj, Dist - Aurangabad – 431 136, Maharashtra Continuous Cast Copper Rods: Unit I : Bombay-Pune Highway, P.O. Takwe Khurd, Taluka Maval Lonavala, Dist. Pune – 410 405, Maharashtra Unit II : Survey No. 209, Piparia Industrial Estate, Phase II, Silvassa – 396 230, Dadra & Nagar Haveli (Union Territory) Copper Cathodes (Smelter): Zone A & B, Sipcot Industrial complex, Tuticorin – 628 002, Tamil Nadu Copper Cathodes (Refinery): Plot No. 1/1/2, Village Chinchpada, Silvassa – 396 230, Dadra & Nagar Haveli (Union Territory) Power
Transmission Line Aluminium Conductor: Karanjawane, Taluka Velhe, Dist. Pune – 412 305, Maharashtra Power
Transmission Line Aluminium Conductor: Rakholi, Madhuban Dam Road, Silvassa – 396 230, Dadra & Nagar Haveli (Union Territory) 7, Kirol, Vidyavihar, Mumbai-400086, Maharashtra, India SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin-628002, Tamilnadu, India |
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Secretarial Department : |
Solitaire Corporate Park, Business Square Centre, C Wing, 2nd Floor, Andheri Kulra Road, Chakala, Andheri (East), Mumbai-400093 |
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Tel. No.: |
91-22-66434500 |
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Fax No.: |
91-22-66434551 |
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E-Mail : |
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Branches : |
904-905, Tolstoy House, Tolstoy Marg, New Delhi – 110 001 |
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Tel. No.: |
91-11-23736941/23351393 |
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Fax No.: |
91-11-23355768/23736988 |
DIRECTORS
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Name : |
Mr. Anil Agarwal |
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Designation : |
Chairman and Director |
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Name : |
Mr. C. V. Krishnan |
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Designation : |
Additional Director |
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Name : |
Mr. Dwarka Prasad Agarwal |
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Designation : |
Director |
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Name : |
Mr. Ishwarlal Patwari |
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Designation : |
Director |
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Name : |
Ms. Suvalaxmi Chakraborty |
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Designation : |
ICICI Nominee Director |
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Name : |
Mr. Navin Agarwal |
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Designation : |
Executive Vice-Chairman |
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Name : |
Mr Berjis Desai |
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Designation : |
Director |
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Name : |
Mr. Sandeep Junnarkar |
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Designation : |
Director |
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Name : |
Mr. Gautam Doshi |
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Designation : |
Director |
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Name : |
Mr. Tarun Jain |
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Designation : |
Whole Time Director |
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Name : |
Mr. Kuldip Kumar Kaura |
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Designation : |
Managing Director |
KEY EXECUTIVES
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Name : |
Mr. S. Varadharajan |
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Designation : |
Company
Secretary
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MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on 31.03.2008
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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A) Shareholding of Promoters and promoter Group |
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1 Indian |
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Individuals/ Hindu Undivided Family |
5579280 |
0.79 |
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Bodies Corporate |
33307575 |
4.70 |
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2 Foreign |
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Bodies Corporate |
403715750 |
56.98 |
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B) Public Shareholding |
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1 Institutions |
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Mutual Funds/ UTI |
23908396 |
3.37 |
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Financial Institutions/ Banks |
707818 |
0.10 |
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Central Government/ State Government(s) |
700 |
0.00 |
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Insurance Companies |
20763368 |
2.93 |
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Foreign Institutional Investors |
53294112 |
7.52 |
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Non Institutions |
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Bodies Corporate |
13729176 |
1.94 |
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Individuals |
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i. Individual shareholders holding nominal share capital up to Rs. 0.100 Million |
20084938 |
2.83 |
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ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million |
1969650 |
0.28 |
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Non resident Indian |
1054242 |
0.15 |
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Trusts |
17766476 |
2.51 |
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Foreign Bodies Corporate |
1161573 |
0.16 |
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Clearing Members |
185291 |
0.03 |
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Share held by Custodian and against which Depository Receipts have been issued |
111266066 |
15.70 |
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Total |
708494411 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of Telephone Cables, Copper Rods and Aluminium Rolled Products. |
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Products : |
Generic Names of Three Principal Products/Services of the company are :
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PRODUCTION STATUS
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Particulars |
Unit |
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Installed
Capacity |
Actual
Production |
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Continuous Cast Copper Rods |
MT |
|
268000 |
177882 |
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Copper Cathodes |
MT |
|
405000 |
312720 |
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Aluminium Cold Rolled Products |
MT |
|
20000 |
-- |
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Sulphuric Acid |
MT |
|
1300000 |
946539 |
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Phosphoric Acid |
MT |
|
180000 |
172125 |
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Power Transmission Line Aluminium Conductors (AAC/ ACSR) |
KM |
|
-- |
17972 |
GENERAL
INFORMATION
|
Suppliers : |
v Vedant Resources
Plc v Copper Mines of Tasmania
Pty Limited v Bharat Aluminium
Company Limited v Konkola Copper
Mines Plc |
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No. of Employees : |
5000 |
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Bankers : |
v ABN Amro Bank v Credit Lyonnais v Credit Agricole Indosuez v HDFC Bank Limited v ICICI Bank Limited v State Bank of India v The Bank of Nova Scotia v Development Bank of Singapore v Bank of Maharashtra v Bank of India v Central Bank of India v Corporation Bank v Oriental Bank of Commerce v Standard Chartered Bank v State Bank of Bikaner and Jaipur v State Bank of Hyderabad v Syndicate Bank v The Hong Kong and Shanghai Banking Corporation Limited v The ING Vysya Bank Limited v The Karur Vysya Bank Limited v Union Bank of India v Citi Bank v Calyon Bank v IDBI Bank v Deutsche Bank |
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Facilities : |
Notes:
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
v Charturvedi and Shah Chartered Accountants Mumbai v Das and Prasad Chartered Accountants Kolkata, West Bengal |
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Memberships : |
Confederation of Indian Industry |
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Holding Companies : |
v Twinstar Holding
Limited v Vedanta
Resources Holdings Limited v Vedanta
Resources Ptc. v Volcan
Investments Limited |
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Subsidiaries : |
Subsidiaries : v Bharat Aluminium Company Limited v Sterlite Paper Limited v Copper Mines of Tasmania Pty Limited v Thalanga Copper Mines Pty Limited v Monte Cello BV v Sterlite Transmission Limited v Sterlite Opportunities & Ventures Limited v Sterlite Copper Limited v Hindustan Zinc Limited v Sterlite Optical Technologies Limited v The Madras Aluminium Company Limited v Sterlite International Limited v Twinstar Holding Limited |
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Associates : |
· India Foils Limited ·
Vedanta Alumina Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
925000000 |
Equity Shares |
Rs. 2/- each |
Rs. 1850.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
558494411 |
Equity Shares |
Rs. 2/- each |
Rs. 1117.000
Millions |
Notes:
of the above Equity Shares:
a)
210000 Equity Shares were allotted as fully
paid up pursuant to a contract without payment being received in cash before buy
back, extinguishment, subdivision and issue of bonus shares.
b)
321973026 Equity Shares of Rs. 2 each
(Previous) year 42824788 of Rs. 5 each) were allotted as fully paid up Bonus
Shares by way of capitalization of General Reserve and Security Premium)
c)
2733675 Equity Shares were allotted pursuant
to scheme of Amalgamation without payment being received in cash before buy
back, extinguishment, subdivision and issue of bonus shares.
d)
4099400 Equity Shares were allotted as fully
paid upon conversion of 50000 Foreign Currency Convertible Bonds before
subdivision and issue of bonus shares.
- During the year, equity shares having face value of Rs. 5 each
(fully paid up) have been subdivided into Rs. 2 each fully paid up
- Of the above equity shares, 429329150 Equity Shares of Rs. 218.800
Millions have been redeemed with a redemption premium of Rs. 78.50 per
share aggregating to Rs. 1717.200 Millions which has been adjusted against
Security Premium Account.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
1117.000 |
777.500 |
767.700 |
|
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
43462.300 |
40446.600 |
35029.700 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
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NETWORTH |
44579.300 |
41224.100 |
35797.400 |
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LOAN FUNDS |
|
|
|
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|
1] Secured Loans |
1000.000 |
1259.200 |
6269.100 |
|
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2] Unsecured Loans |
27097.500 |
19088.700 |
18125.900 |
|
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TOTAL BORROWING |
28097.500 |
20347.900 |
24395.000 |
|
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DEFERRED TAX LIABILITIES |
3192.700 |
3274.100 |
3089.900 |
|
|
|
|
|
|
|
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TOTAL |
75869.500 |
64846.100 |
63282.300 |
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APPLICATION OF FUNDS |
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|
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|
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FIXED ASSETS [Net Block] |
17172.400 |
17390.700 |
15617.800 |
|
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Capital work-in-progress |
322.300 |
710.000 |
2533.000 |
|
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|
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INVESTMENT |
29129.600 |
26717.800 |
29863.300 |
|
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
18491.600
|
10191.800
|
5716.700 |
|
|
Sundry Debtors |
9140.700
|
5758.000
|
4094.700 |
|
|
Cash & Bank Balances |
2320.700
|
7937.700
|
6154.100 |
|
|
Other Current Assets |
0.000
|
21.500
|
66.000 |
|
|
Loans & Advances |
13766.200
|
12520.500
|
4985.200 |
|
Total
Current Assets |
43719.200
|
36429.500
|
21016.700 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
11094.000
|
9078.700
|
4609.100 |
|
|
Provisions |
3380.000
|
7326.600
|
1146.200 |
|
Total
Current Liabilities |
14474.000
|
16405.300
|
5755.300 |
|
|
Net Current Assets |
29245.200
|
20024.200
|
15261.400 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
3.400 |
6.800 |
|
|
|
|
|
|
|
|
TOTAL |
75869.500 |
64846.100 |
65282.300 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
|
|
|
|
|
|
Sales Turnover |
118218.500 |
75039.000 |
39916.500 |
|
|
Other Income |
2054.100 |
3694.000 |
2286.300 |
|
|
Total Income |
120272.600 |
78733.000 |
42202.800 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
9123.000 |
6787.600 |
863.800 |
|
|
Provision for Taxation |
1282.700 |
1676.400 |
(200.400) |
|
|
Profit/(Loss) After Tax |
7840.300 |
5111.200 |
1064.200 |
|
|
|
|
|
|
|
|
Earnings in Foreign Currency : |
|
|
|
|
|
|
Export Earnings |
NA |
42382.100 |
16541.900 |
|
|
Management Fees |
NA |
59.000 |
89.800 |
|
|
Other Earnings |
NA |
0.000 |
26.100 |
|
Total Earnings |
|
42441.100 |
16657.800 |
|
|
|
|
|
|
|
|
Imports : |
|
|
|
|
|
|
Raw Materials |
NA |
61544.900 |
28035.800 |
|
|
Stores & Spares |
NA |
171.200 |
124.900 |
|
|
Capital Goods |
NA |
65.500 |
176.500 |
|
Total Imports |
|
61781.600 |
28337.200 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Purchases |
141.600 |
0.000 |
0.000 |
|
|
Manufacturing Expenses |
107796.400 |
67021.400 |
34721.800 |
|
|
Personnel |
574.400 |
0.000 |
0.000 |
|
|
Selling and Distribution |
717.800 |
0.0000 |
0.000 |
|
|
Increase or decrease in stock |
[3588.500] |
0.000 |
0.000 |
|
|
Administrative Expenses |
1040.900 |
1203.700 |
1026.600 |
|
|
Purchases made for re-sale |
0.000 |
0.000 |
1318.200 |
|
|
Salaries, Wages, Bonus, etc. |
0.0000 |
464.700 |
443.000 |
|
|
Interest and Financial charges |
1826.600 |
1203.700 |
1026.600 |
|
|
Depreciation & Amortization |
1332.000 |
1282.300 |
1140.600 |
|
|
Other Expenditure |
0.000 |
816.000 |
545.900 |
|
|
Less : Preoperative Expenses of projects |
[65.600] |
(65.800) |
(59.500) |
|
|
Other Expenditure |
2214.500 |
0.000 |
0.000 |
|
Total Expenditure |
113364.100 |
71945.400 |
42202.800 |
|
SUMMARISED RESULTS
|
PARTICULARS |
|
|
31.03.2008 Full Yearly |
|
Sales Turnover |
|
|
126719.800 |
|
Other Income |
|
|
6023.900 |
|
Total Income |
|
|
132743.700 |
|
Total Expenditure |
|
|
118664.700 |
|
Operating Profit |
|
|
14079.000 |
|
Interest |
|
|
1644.500 |
|
Gross Profit |
|
|
12434.500 |
|
Depreciation |
|
|
1389.800 |
|
Tax |
|
|
1322.700 |
|
Reported PAT |
|
|
9516.300 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.56 |
0.58 |
0.97 |
|
Long Term Debt-Equity Ratio |
0.56 |
0.56 |
0.93 |
|
Current Ratio |
2.13 |
1.91 |
1.65 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
4.67 |
3.16 |
1.87 |
|
Inventory |
8.61 |
9.73 |
8.74 |
|
Debtors |
16.58 |
15.71 |
11.58 |
|
Interest Cover Ratio |
5.99 |
6.60 |
3.01 |
|
Operating Profit Margin(%) |
9.95 |
11.99 |
10.46 |
|
Profit Before Interest And Tax Margin(%) |
8.87 |
10.33 |
7.70 |
|
Cash Profit Margin(%) |
7.43 |
8.26 |
8.05 |
|
Adjusted Net Profit Margin(%) |
6.35 |
6.60 |
5.29 |
|
Return On Capital Employed(%) |
16.32 |
13.14 |
6.45 |
|
Return on Net Worth (%) |
18.32 |
13.34 |
8.78 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
The company was incorporated on 8th September 1975 at
Aurangabad in Maharashtra under the name and style of Rainbow Investments Limited
having Company Registration Number 30217. Subsequently, the name of the company
was changed to Sterlite Cables Limited w.e.f. 19th October, 1976. On
28th February, 1986 the name of the company was changed to present.
Subject is a part of Anil Agarwal group is one of the major
players in Copper industry. Twinstar Holdings Limited, Mauritius is the parent
company of SIIL by holding 51% Equity in the latter. SIIL inturn controls
Bharat Aluminium Company Limited (Balco) and Hindustan Zinc Limited (HZL). The
Indian Promoters Madras Aluminium Company Limited (Malco) currently holds 7.13
percent in SIIL.
Originally incorporated as Rainbow Investments in 1975, the name of the company
was changed to Sterlite Cables in 1976. It acquired its present name - Sterlite
Industries (India), in 1986. The company manufactures polyethylene-insulated
jelly-filled (PIJF) telecommunication cables and continuous cast copper rods
(CCR). It caters to the requirements of the telecom, power, electrical and
cable industries. The PIJF plant at Aurangabad was set up in technical
collaboration with the Essex group, US. The CCR plant with an installed
capacity of 12,000 tpa was set up in 1990, with imported technology and
equipment from Continuous, Italy, and La Farga Lacambra, Spain, to manufacture
CCR from copper scrap.
The company also manufactures aluminium cold-rolled products with technical
know-how from J W Aluminium, US. During 1994, it entered into the manufacture
of optical fibres, the basic raw material for optical fibre cables. This
project was promoted through Sterlite Communications (SCL), a subsidiary, in
technical collaboration with the Nokia group, Finland - leaders in the
telecommunication sector. In 1998-99, the paper project was spun-off into a
100% subsidiary company - Sterlite Paper and the commissioning of new power
projects and development of the national grid increased the need for developed
power transmission network, increasing demand for aluminiumconductors.
The company's telecom business was transferred to the new telecom company
rechristened as Sterlite Optical Technologies Limited (SOTL). In terms of the
Scheme of arrangement, the Telecom company was alloted one equity share of the
face value of Rs 5/- each for every one fully paid-up equity share of Rs 10/-
held by every member of Sterlite Industries (India) Limited. It alloted
90,00,000 equity shares of Rs.10/- each at a premium of Rs.171/- per share
aggregating to Rs.1629.000 millions on preferential allotment of shares against
exercise of the warrants issued by the company in June, 1998.
The company had in its Rs 5515.000 millions bid for 51% stake of Balco. It
plans to make Balco the lowest cost aluminium producer over the next three
years. The company will make substantial investment to make Balco a world class
benchmark producer. Company's vision to acquire Balco is to convert it into a
platform to move on and take on the international market. The company will soon
appoint an international consultant to undertake a feasibility study for reaching
an exact estimate of quantum of investments to be made in Balco.
To reduce dependence on external sources and to ensure consistent supplies of
good quality copper concentrate, the company acquired two copper mines in
Australia through 100% of the equity of their holding company, Monte Cello
Corporation, B V, Netherlands. In the fiscal 2001, the company received ISO
14001 certification for environment management at copper smelter by Det Norske
Veritas B V, Netherlands and national award for "Excellence in Energy
Conservation" from the Confederation of Indian industry and National
Safety Award from the British Safey Council.
During March 2002, the company took a 26% stake in Hindustan Zinc from
Government of India at a price of Rs 4450 million acquired through Sterlite
Opportunities and Ventures Limited., a special purpose vehicle set up for the
same. The company had completed the debottlenecking of its facilities,resulting
in the expansion of Copper Capacity from 150,000 MT to 165,000 MT in 2001-02 and
is proposing to enhance the capacity to 3,00,000 MT. The project is expected to
be completed in the last quarter of 2003-04. Since the major global copper
players are having their capacities from 500,000 MT p.a.onwards the company is
very imperative in reaching the same.
Proposed expansion plan for enhancement of aluminium capacity from 100,000 MT
p.a to 355,000 MT p.a for BALCO,Captive power plant with an installed capacity
of 540 MW. In Hindustan Zinc Limited the zinc capacity will be enhanced from 170,000
MT p.a to 400,000 MT p.a approximately. SIIL is also planning to Restruturing
its business under the Scheme of Arrangement by which,the Company would
separate the copper business and carry the same business in a separate company.
For this a 100% subsidiary company was incorporated viz Sterlite Copper
Limited. The shareholders have approved the scheme of arrangement and the same
has been filed in the High Court of Mumbai and Chennai.
During 2001-02 the company embarked on a capital restructuring exerise whereby
the company will purchase from its existing shareholders upto 50% of its
existing equity share capital at a consideration of Rs.150 per fully paid up
equity share. The same was approved by the Board and Hon'ble High Court of
Mumbai and accordingly the company has purchased 2,00,68,004 equity shares and
the same has been cancelled on 26th August 2002.
Management
Discussion and Analysis
Business
outlook:
The global metal outlook continues to be healthy
backed by robust demand from China and other emerging markets (including
India), India demonstrated a GDP growth of slightly over 9% in FY 2007 with
corresponding industrial growth at 11%. This trend is likely to continue into
FY 2008 as the countries continue to invest in infrastructure development,
industrialisation and sectoral reform. At current estimates of growth, the
world will need an approximate additional 2 million tonnes per annum of
aluminium, 0.75 million tonnes of copper and 0.5 million tonnes of zinc, which
augur well for the growth.
Metal production across all the operations will improve in FY 2008 as a
result of a fuller capacity utilisation following expansion and debottlenecking
completed in FY 2007. Following an improvement in scale and productivity,
production costs per unit are expected to decline, enabling the company to
emerge in the top decile of the world in terms of cost competitiveness.
The company's various projects are progressing on schedule. The
progressive increase in volumes coupled with low production costs provides the
company with an opportunity to ride the global demand growth and relatively
insulate itself from a downslide in the commodity cycle.
Copper business:
Demand and markets:
Global refined copper consumption increased from 16.9 million
tonnes in CY 2005 to 17.5 million tonnes in CY 2006, an increase of 3.5%. This
rate is expected to sustain in CY 2007, driven mainly by a growing demand from
the construction and power sectors. Asia and Western Europe cumulatively
account for nearly 72% of the global refined copper consumption. With a
compounded annual growth rate of 7.6% between CY 2001-2006, Asia is currently
the fastest growing copper market in the world and is expected to report
stronger growth on account of a growing consumption of electric wires and
cables.
Global refined copper production increased from 16.6 million tonnes in CY
2005 to 17.4 million tonnes in CY 2006, an increase of 5.1%. Global production is
expected to further increase to 19.2 million in CY 2007, primarily due to the
commissioning of new smelters in China, Africa, India and Japan.
In India, refined copper consumption increased at a CAGR of 8.9% between
CY 2001 and 2006. It was supported by a strong growth in user segments such as
winding wires, power cables and other applications in construction,
infrastructure and alloy segments, offset by a decline in the demand for copper
used in jelly-filled telecom cables.
Refined copper consumption in India is expected to grow in line with GDP
growth.
Copper stock and price:
In CY 2006, global copper prices averaged around US$6,700 a tonne, 83%
higher than the average price of around US$3,700 a tonne in CY 2005. Global
copper production was constrained by labour disputes, natural disasters and
production disruptions, with the result that global copper stocks remained low,
particularly in the first half of 2006, However, after reaching a high in May
2006 of around US$8,800 a tonne, prices declined substantially in the latter
part of 2006. Stocks of copper held by metal exchanges (London Metal Exchange,
COMEX and the Shanghai Metal Exchange) increased by around 78,000 tonnes in the
second half of 2006 and again in early 2007, reaching over 260,000 tonnes in
mid-January, the highest since 2004. This extended the price decline from
December 2006 levels by around 10% in January 2007.
Copper segment:
Business overview The copper business comprises three major operations -
smelting, refining and by-product processing. Sterlite is the leading copper
producer in India, the operations comprising a smelter, refinery, phosphoric
acid plant, sulphuric acid plant and copper rod plant in Tuticorin (southern
India), a refinery and two copper rod plants in Silvassa (western India) and
Mt. Lyell copper mine in Tasmania (Australia).
Copper - India / Australia:
The performance of the copper India/Australia business in FY 2007 is set
out on following page:
Production performance:
Production of copper cathodes at the Indian operations was 313,000 tonnes
in FY 2007, an increase of 15% compared with FY 2006. This was largely on
account of the innovative debottlenecking of the Tuticorin smelter to 400,000
tpa. Production is steadily increasing and contributed 89,000 tonnes in the
fourth quarter of 2006-07 with a production close to rated capacity in March
2007. The Tuticorin smelter undertook a planned shutdown for eight days in
April 2007 for carrying out modifications and improvements in the sulphuric
acid unit. The smelter has resumed production at its rated capacity. The
production of copper rods was 178,000 tonnes in FY 2007, an increase of 7%
compared with FY 2006.
Mined metal production at the Australian mines was 28,000 tonnes in FY
2007 as against a production of 34,000 tonnes in FY 2006. Production in FY 2006
included the output of 4,000 tonnes from TCM, TCM's operations were closed in
the first half or FY 2006, The production at the CMT mine was impacted due to a
temporary two-week disruption in mining as a result of minor rock fall.
Following an investigation of the incident by an independent expert, the site
was declared safe and mining activities were restored in March 2007. Production
has now picked up to normal levels. CMT supplies 9% of the total concentrate
requirements of the Indian copper smelting operations.
Unit costs:
Unit conversion costs, which comprise smelting and refining costs,
remained at around 6.1 USc/lb. Higher energy prices, which impacted costs, were
offset by higher credit for free metal due to higher LME prices. Production
costs are expected to decline following increased volumes and
productivity.
Treatment charges and refining
charges (TCRC):
FY 2007 saw a yet another year of attractive TCRC, driven by the
highest-ever TCRC/PP package established under 2006 long-term frame contracts
and attractive spot TCRC during the early part of the year. Sterlite benefited
from high copper prices; TCRC realisations increased substantially to 31.1 c/lb
from 23.1 c/lb in FY 2007.
Sterlite was largely insulated by the volatility in the spot market
during the year due to the purchase of a large chunk of concentrate through
proactive long-term contracts with mines and captive feed.
The concentrate market is expected to be in a state of deficit for the
next couple of years, which could result in a softening of TCRC terms for the
company in the coming year.
Sales:
Sales in the domestic market increased 10.4% to 117,000 tonnes in FY
2007, primarily due to an increase in the demand from the electrical and power
sectors. The company exported 195,000 tonnes of copper cathodes and copper rods
to key overseas markets like the Middle East, China, Japan, the Philippines and
Thailand. The company continued to develop a growing customer base for the
export of copper rods. Tuticorin copper cathodes received the LME registration
as Sterlite-T.
Financial performance:
Revenues in the Copper India/Australia business increased 59% to
Rs.117270.000 Millions in FY 2007, with a corresponding EBIDTA of Rs.18140.000
Millions up by 70% over FY 2006. The increase in EBIDTA was attributable mainly
to better TCRCs, higher volumes and an increased contribution from CMT as a
result of high copper prices, which more than offset the reduction in import
tariffs on copper from 7.5% to 5%. This became effective from the last week of
January 2007.
Zinc business:
Demand and markets:
The global zinc consumption increased from 10.6 million tonnes in CY 2005
to 11.3 million tonnes in CY 2006, an increase of 6.6%. This trend is expected
to sustain on account of double-digit growth in China, India and other emerging
markets. This growth is being principally derived from the steel galvanising
sector, which is in turn being driven by the robust demand from the automotive
and automotive component industries.
The global zinc production increased from 10.1 million tonnes in CY 2005
to 10.6 million tonnes in CY 2006, an increase of 4.9%. This is expected to
increase to 11.6 million tonnes in CY 2007 due to the commissioning of new
smelters. The consumption of refined zinc in India increased at a CAGR of 9%
between CY 2003 and CY 2006, primarily on account of galvanising sector growth,
which currently accounts for an estimated 70% of total consumption. Galvanising
is primarily applicable in sheet, tube and structural products. Applications in
the construction and infrastructure sectors are also increasing, strengthening
the overall market growth.
Zinc segment:
Business overview The zinc business is operated by HZL, India's leading
and only fully integrated zinc-lead producer. HZL's zinc operations include
three lead-zinc mines, two zinc smelters, one lead smelter and one lead-zinc
smelter in Rajasthan (north-west India) as well as one zinc smelter in Andhra
Pradesh (south east India).
Production
performance:
Mined metal production from all the mines was 505,000 tonnes in FY 2007,
an increase of 7% from FY 2006, primarily due to an increase in output from the
Rampura Agucha mine. Total refined zinc metal production during FY 2007 was
348,000 tonnes, compared with 284,000 tonnes in FY 2006, up by 22.5%. The
increase in refined metal production was primarily due to the ramp-up of the
new Chanderiya hydro smelter, which produced 136,000 tonnes in FY 2007 and
achieved 13,500 tonnes in March 2007, close to its rated capacity.
The production of lead during the year was 45,000 tonnes compared with
the previous year's 24,000 tonnes. The Ausmelt plant has now been stabilised
and the company expects to achieve its rated capacity by the end of the second
quarter of the current financial year.
Unit costs:
The unit cost of production, excluding royalties, in FY 2007 was $606 per
tonne, higher by $31 per tonne compared with FY 2006. Unit costs rose primarily
due to lower realisations of by-products and higher manufacturing expenses,
which were largely offset by the benefits arising out of the stabilisation of
the power plant.
Royalties, which are LME-linked, were $256 per tonne in FY 2007 compared
with $116 per tonne in FY 2006. Overall costs were at $862 per tonne in FY 2007
compared with $691 per tonne in FY 2006.
Sales:
The company marketed 350,000 tonnes of zinc during the year in the
domestic and export markets, an increase of 8.3% over FY 2006, on the back of
increased production from the new Chanderiya hydro-smelter. In addition to
refined zinc metal, the company also marketed 254,000 dry metric tonnes of zinc
concentrate containing 133,000 tonnes of equivalent metal and 59,000 dry metric
tonnes of lead concentrate containing 28,000 tonnes of equivalent metal.
Financial performance Revenues from the zinc business more than doubled
to Rs 85600.000 Millions with a corresponding EBIDTA of Rs 66440.000 Millions
in FY 2007, primarily due to higher metal volumes and LIME zinc prices, which
more than doubled over the previous year.
Aluminium business:
Demand and markets
World primary aluminium consumption increased from 32.0
million tonnes in CY 2005 to 34.7 million tonnes in CY 2006, an increase of
8.4%. This growth is expected to sustain at similar levels on account of
increased demand in China.
The global production of primary aluminium increased from 32.0 million
tonnes in CY 2005 to 34.0 million tonnes in CY 2006, an increase of 6.3%. This
growth is expected to reach 38.0 million tonnes in CY 2007 due to the rapid
implementation of new capacities, ramp-up of idle capacities in China, smelter
restarts in the US and Germany as well as expansions in India, the Middle East,
Russia and South America.
The majority of aluminium produced in India is consumed in the building,
construction, transport, electrical appliance, equipment and packaging
industries. Indian demand for primary aluminium increased at a CAGR of 12%
between CY 2001 and CY 2006 on the back of high demand from the electrical,
construction and transportation sectors.
Electrical applications continue to be the largest end-use sector in
India, consuming approximately 35% of aluminium production in CY 2006 as a
result of the continuing drive to provide electricity throughout the
country.
The transportation sector is a major consumer, contributing approximately
22% of the demand, although average aluminium use in Indian-made automobiles is
still approximately a third of that in western-made automobiles.
The demand coming out of India is likely to be robust on account of an
impressive GDP growth being projected.
Aluminium segment:
Business overview The aluminium business comprises BALCO, a partially
integrated aluminium producer with two bauxite mines, one refinery, two
smelters, a fabrication facility and two captive power plants in Korba (central
India). The primary products comprise aluminium ingots, rods and rolled
products.
Production
performance:
Production of 313,000 tonnes of aluminium in FY 2007 was 80% higher than
the previous year's production of 174,000 tonnes. This was primarily due to an
increase in production arising out of the full ramp-up of the new Korba
smelter, which produced 208,000 tonnes during the year. The stabilisation
process of the new Korba smelter was quicker than estimated. As a result, the
plant consistently achieved rated capacity in the last two quarters, the fourth
quarter output being placed at 62,000 tonnes. The captive power plants in Korba
continued to operate at their rated capacities.
Unit costs:
The unit costs of BALCO's existing plant were broadly stable at $1,510
per tonne in FY 2007 compared with $1,497 per tonne in the previous year. The
increase was primarily on account of higher input prices of carbon and fluoride
which were largely offset by savings in power costs due to better operational
efficiencies achieved at the power plants. The unit cost of BALCO's new plant
was $1,687 per tonne in FY 2007, a significant reduction from $2,045 per tonne
in the previous year. This reduction was the result of a full ramp-up of the
new Korba smelter coupled with a softening in global alumina spot prices.
Manufacturing costs, excluding alumina, declined appreciably to $740 per tonne
compared with $885 per tonne in FY 2006, despite a pressure on input costs. The
reduction was mainly due to the stabilisation of operating parameters in the
smelter and operational efficiencies at the 540-MW captive power plant. The
company continued to source alumina from third party vendors and achieved an
average consumption cost of $947 per tonne of aluminium produced, a reduction
from $1,160 per tonne in the previous year, mainly due to a gradual softening
of global alumina prices.
Sales:
Following the ramp-up of the new Ko,ba smelter, the challenge was to
increase sales substantially in the domestic and export markets. The company
increased its share of the domestic market and also developed export markets in
South East Asia, the Middle East and Europe. It achieved export volumes close
to 100,000 tonnes in FY 2007. It also obtained the LME registration for
aluminium ingots of the new Korba smelter under the brand 'BHARATAL', which improved
product acceptability and realisations.
The company continued to enrich its sales mix with a higher proportion of
value-added products (rolled), which rose by 26.1% in FY 2007 to 58,000 tonnes,
including the export of hot rolled products. Sales of wire rods also increased
to 107,000 tonnes on the back of higher production.
Financial performance:
Revenues from the aluminium business in FY 2007 increased by 117% to
Rs.41000.000 Millions with the EBIDTA at Rs.16830.000 Millions, an increase of 209%
compared with FY 2006. The increase was primarily due to a substantial increase
in production volumes from the new Korba smelter, improved product mix and
higher realisations.
Commercial power generation
business
Industry
overview
The Electricity Act was enacted in 2003 to eliminate
multiple legislations governing the electricity generation, transmission and
distribution sectors; it also intended to address systemic sectoral
deficiencies. The key provisions of the Electricity Act allowed for the
de-licensing of power generation, providing an open access in power
transmission and distribution, unbundling of SEBs, compulsory metering of all
consumers and stringent penalties in electricity theft. It also included
provisions to facilitate captive power plants. The Electricity Act read with
the recently notified National Tariff Policy in January 2006 mandates that all
future power purchases by distribution licensees must be based on competitive
bidding to obtain the benefits of reduced capital costs and efficiency of
operations through competition.
Installed capacities:
As of March 31, 2007, India's power system had an installed generation
capacity of approximately 132,329 MW. The Central Power Sector Utilities
accounted for approximately 34.2% of total power generation capacity as of
March 31, 2007, while the various state entities and private sector companies
accounted for approximately 52.9% and 12.9% respectively.
Future capacity additions:
To sustain robust economic growth, the Ministry of Power in India set an
ambitious target of providing 'Power for All' by 2012, entailing an additional
generation capacity of approximately 100,000 MW. To accelerate this target, the
government proposed setting up nine Ultra Mega Power Projects, each of which is
expected to be commissioned between 2008 and 2012 (two already awarded).
Consumption:
Demand for electricity in India substantially exceeds supply. The
following tables show the gap between the total electricity required versus
total electricity made available from fiscal 1999 to 2006.
Financial review:
Sales and services Net sales and service revenue increased by
Rs.112600.000 Millions to Rs.243870.000 Millions in 2006-07, a growth of 86%
over the previous year. The Company was able to achieve this substantial
increase on account of higher volumes, better prices and improved efficiency.
Total exports revenues (FOB) increased by Rs.27930.000 Millions to
Rs.125360.000 Millions in 2006-07, a growth of 139% over the previous year.
Other income aggregated Rs.6820.000 Millions representing interest earned,
dividend income, profit from the sale of fixed assets and profit from the sale
of current investments.
Capital employed:
The total capital employed by the Company increased by 40% from
Rs.136760.000 Millions to Rs.191350.000 Millions in 2006-07. The ratio of
sales-to-capital employed increased significantly from 0.96 in the previous
year to 1.27 times on account of higher realisations and better terms of trade.
Capital structure:
Total shareholders' funds as at March 31, 2007 aggregated Rs 99820.000
Millions of which equity capital was Rs.1120.000 Millions comprising
55,84,94,411 shares of Rs.2 each. Of the above, 16,76,07,704 shares were
converted into equity shares on account of a subdivision of shares from a face
value of Rs.5 to Rs.2 each; 27,91,48,238 equity shares of Rs.2 each were
allotted as fully paid-up bonus shares by way of a capitalisation of General
Reserve and Share Premium reserves.
One per cent Cumulative Redeemable Preference Share capital comprising
2,18,75,000 shares of Rs218.800 Millions were redeemed with a redemption
premium of Rs.78.50 per share aggregating Rs.1717.200 Millions, adjusted
against the Security Premium Account.
Dividend The company paid an interim dividend of Rs.4 per share on a face
value of Rs.2 each (200%) aggregating Rs.2547.300 Millions (including dividend
distribution tax) which was declared in a meeting held on November 15, 2006.
The Directors recommend the same as final dividend for the year.
Reserves and Surplus:
As at March 31, 2007, Reserves and Surplus aggregated Rs.98700.000
Millions. Retained earnings accounted for 73% of the reserves and security
premium the balance. Reserves and surplus during the year increased 65% to
Rs.38730.000 Millions.
Debt The company's debt declined from Rs.51650.000 Millions in 2005-06 to
Rs.46100.000 Millions in 2006-07 due to repayment in the foreign currency loan
from Rs.11940.000 Millions to Rs.5330.000 Millions and term loans from
Rs.15900.000 Millions to Rs.11860.000 Millions. The company also repaid its
working capital loans from banks. However, buyers' credit increased from
Rs.17920.000 Millions to Rs.22620.000 Millions on account of an increase in LME
metal prices.
Gross block and investments:
During the year, the Company completed its copper smelter capacity
expansion from 3 lac MT to 4 lac MIT per annum and production capacity of
aluminium from 1.00 lac MT to 3.45 lac MT per annum. Gross block increased by
Rs.12010.000 Millions to Rs.126410.000 Millions and the company enhanced its
investments in subsidiaries. Total investments increased from Rs.24950.000
Millions to Rs.52220.000 Millions in 2006-07.
Inventories and debtors:
Inventories increased Rs.8580.000 Millions from Rs.119510.000 Millions as
on March 31, 2006 to Rs.28090.000 Millions as on March 31, 2007. This was
mainly on account of increased scale coupled with higher copper, precious
metals and zinc prices during the year. Debtors increased by Rs3040.000
Millions from Rs.13480.000 Millions as on March 31, 2006 to Rs.16520.000
Millions as on March 31, 2007 on account of increased operations and higher LME
prices.
Loan and advances:
Loans and advances increased by Rs.18580.000 Millions from Rs.16260.000
Millions as on March 31, 2006 to Rs.34840.000 Millions as on March 31, 2007,
mainly on account of an advance tax of Rs.20800.000 Millions (against
Rs.6940.000 Millions during the financial year ended March 31, 2006).
Raw Materials:
The total value of raw material consumed stood at Rs. 108670.000 Millions
witnessing an increase of 67% compared to Rs. 65190.000 Millions in the
previous year. The increase was due to higher production volumes and higher
prices of raw materials during the year in relation to the prevailing LME and
LBMA prices.
The copper and aluminum businesses depend upon third party suppliers for
a substantial portion of their copper concentrate and alumina requirements. Both
the market prices of the copper concentrate and alumina that they purchase and
the market prices of the copper and aluminium metals that they sell have
experienced volatility in the past.
The higher cost of raw material was offset by higher sales volume and
sale realisations. The company has a hedging/risk mitigation system in place to
cover the risk of price movements.
Other manufacturing charges:
Other manufacturing expenses (power, fuel, stores, spares and repairs
etc.) increased from Rs.25570.000 Millions in 200506 to Rs32170.000 Millions in
2006-07. This accounted for 13.19% of net sales compared with 19.48% in the
previous year, reflecting improved efficiency.
Overheads:
Overheads (personnel, selling, distribution, administrative and general)
accounted for 5.16% of the net sales compared with 7.44% in the previous year.
Interest, finance charges
Net interest costs increased by Rs.1440.000 Millions to
Rs.3790.000 Millions on account of:
* Higher working capital requirement due to higher volumes coupled with
higher LME prices
* Global increase in interest cost
* Commissioning of new capacities resulting in interest charging to
profit and loss account
Depreciation:
Depreciation increased by Rs.2770.000 Millions to Rs.8040.000 Millions
for 2006-07 (Rs.5270.000 Millions in 2005-06). The Company provides
depreciation on straight-line basis and written down value method based on the
nature of assets.
Corporate income tax:
Corporate income tax provision for 2006-07 was at Rs.23830.000 Millions
(excluding provision for deferred tax) compared with Rs8110.000 Millions in the
previous year.
Cash
Flow:
Cash flows generated from operations were utilised to repay
a part of the debt on the subsidiary's books, particularly in BALCO and HZL.
HZL is now a debt-free company. Strong cash flows resulting from robust
operational profits and better working capital management were partly used to
fund expansion projects and retire debt. The company focused on maintaining a
strong balance sheet to fund its growth.
Internal control procedures:
The principal aim of the system of internal control is the management of
business risks, with a view to enhancing the value of shareholders' investments
and safeguarding the Group's assets. It provides a reasonable assurance on the
internal control environment and assurance against material misstatement or
loss.
In addition, there is a dedicated committee focusing on the specific
risks of health, safety and environment, which provides assurance on these
matters. The Group operates a comprehensive annual planning, financial
reporting and forecasting process. The Board formally approves a strategic plan
and the annual budget.
The Group's performance is monitored against the budget on a monthly
basis by the Executive Committee and on a quarterly basis by the Board;
significant variances are reviewed. The audit observations are reported and
discussed by the senior management and the important ones are also presented to
the Audit Committee of the Board.
The audit observations are discussed with the operation teams and the
required feedback is given to them. The recommendations so generated are
implemented appropriately.
Quality management:
A Quality Management System is driving the company towards its Vision
2010 of 'To be the world's best-in-class copper producer and build a
progressive organisation that all stakeholders are proud to be associated
with'.
In response to this overarching goal, the entire business and activities
are monitored for compliance with the requirements of Quality Management,
Environment Management and Occupation Health and Safety Management System.
About 80 management programmes related to products and process improvements,
environment and safety improvements were completed this year.
Total Quality Management is a way of life at Sterlite. The company
launched 26 continuous improvement projects in 2006-07 through quality
improvement processes and cost saving programmes. Anode refining time
reduction, specific consumption of refractory reduction, improvement in arsenic
removal in the refinery's purification system were among the projects completed
in 200607. Extensive training programmes were conducted to facilitate TQM
projects, statistical process control and maintaining workplace orderliness.
Refresher programmes on quality, environment and safety management resulted in
a better awareness of quality needs among employees and contractors.
The company is implementing best 5S practices in its workplace as a part
of Total Productive Maintenance (TPM) implementation. A pre-assessment audit
was conducted by JIPM / CII executives and the company is progressively working
on preliminary activities for the implementation of TPM.
People:
For an organisation to deliver a consistently high performance, it must
follow a focused strategy. In the case, the vision is to achieve a production
of one million tonnes per annum in each of the metal businesses supported by a
low-cost, performance-oriented, fast, flexible and flat organisational
culture.
The company is optimistic of achieving this target on account of its rich
talent pool of around 16,000 employees, with over 4,000 professionals drawn
from the engineering, business management, human resources and finance
functions The company recruited nearly 1,700 engineers and over 200 management
and finance professionals in the last three years.
The company continues to emphasise on a defined process of leadership
development, wherein challenging assignments with commensurate responsibilities
are given to deserving young employees. The Stars of Business is one such
initiative which facilitates the creation of successful managers through a
spirit of empowerment far beyond their existing roles and responsibilities.
This will enable young managers to emerge as successful Business Leaders of
Tomorrow. In FY 2007, the company initiated a Global Leadership Programme
within the Group, providing challenging learning opportunities in an
international environment to young high-potential candidates. This initiative
was started with nearly 25 employees being exchanged between the Copper Zambia
and Indian operations.
The company commissioned several ongoing initiatives in the areas of
learning and development. These include deputations to leadership development
programmes at premier management institutes in India, supplemented by extensive
training in globally benchmarked plants and technology / equipment
suppliers.
The company invited project proposals from employees across all
organisationai levels to unleash an entrepreneurial spirit. A number of
proposals are already in different stages of implementation, The company offers
best-in-class compensation packages to facilitate people induction and retention
supplemented by variable pay and performance-linked bonus schemes.
A stock award programme called the Long-Term Incentive Plan of the parent
company Vedanta Resources Plc not only covers the senior management but extends
to relatively younger professionals. The first tranche of the LTIP programme
awarded in 2004 delivered an excellent performance on the Total Shareholder
Return scorecard with 100% vesting, creating wealth and enhancing employee
motivation. The LTIP scheme is an ongoing programme with options continuing to
be issued in FY 2006 and 2007 to employees.
Exploration:
The exploration team in India, comprising 22 geo-scientists with relevant
expertise, is focused on identifying and delineating near-mine resources which
have the potential to add significant value to the existing mining
operations.
As a part of the ongoing exploration efforts, they have revisited the
historical data and inducted expertise and talent together with relevant
technology advancements to enable a vigorous search for new discoveries in
greenfield areas. They constantly upgrade the technical skills for exploration
activities across all sites.
They also continued to increase the allocation of resources and funds in
the field of exploration. In FY 2007, they spent $6 million on the exploration
efforts compared with less than $3 million in FY 2006. The main exploration
activities in FY 2007 were conducted in the zinc business and to some extent at
the CMT mine in Australia.
Total zinc-lead reserves of 63.6 million tonnes as on 31 March 2007
including, 49.7 million tonnes at Rampura Agucha, have improved significantly
as a result of ongoing exploration activities, including 40,000 metre drilling
by HZL, post-depletion, to feed production during the year. The results are
currently being vetted by consultants and will be shared in the near future.
The ongoing exploration work at Sindesar Khurd site is showing encouraging
results, which is likely to add upon indicated resources significantly.
Profile
of the member of the Board of Directors:
Mr. Anil Agarwal
Mr. Agarwal, who founded the Vedanta/Sterlite group in 1976,
is the Chairman and was appointed to the Board of Directors in 1978. Based in the
United Kingdom, he is also the Executive Chairman of Vedanta and the Director
of BALCO, HZL, SOTL, SOVL, Vedanta Alumina, CMT, Sterlite Gold Limited, TCM,
VRHL, Finsider International Company Limited and Sterlite Paper Limited. Mr.
Agarwal was previously the Chairman, Managing Director and CEO from 1980 until
his term ended in October 2004. He has over 30 years of experience as an
industrialist and has been instrumental in the growth and development since the
inception
.
Mr. Navin Agarwal
Mr. Navin Agarwal, Executive Vice-Chairman, was appointed to
the Board of Directors in August 2003. His responsibilities include executing
the business strategy and monitoring the overall performance and growth of the
organisation. Mr. Agarwal has been with the Company since its inception. He is
also the Chairman of KCM and MALCO, Deputy Executive Chairman of Vedanta and
Director of BALCO, HZL, Vedanta Alumina, MALCO, SOTL, Sterlite Paper Limited,
Sterlite Iron and Steel Company Limited, Sterlite Infrastructure Private Limited,
Sterlite Infrastructure Holdings Private Limited, Sterlite Energy, Sterlite
Telecom Limited, Sterlite Telelink Limited, Finsider International Company
Limited and Sterlite Shipping Ventures Private Limited.
Mr. Agarwal has over 20 years of experience in strategic and
operational management. He holds a Bachelor of Commerce degree from Sydenham
College, Mumbai, and has also completed the Owner/President Management Program
at Harvard University.
Mr. Dwarka
Mr. Agarwal is one of the Non-Executive Directors and was
appointed to the Board of Directors in 1976. He is a trustee of the Sterlite
Foundation, which is a social and charitable organisation and a Director of
Anil Agarwal Foundation Trust, a non-profit organisation. He has contributed
significantly to the development since the inception.
Mr. Agarwal is also a Director of Volcan, Twin Star
Investments Limited, Twin Star Infrastructure Limited, Twin Star Overseas
Limited, Sterlite Paper Limited, Sterlite Iron and Steel Company Limited,
Sterlite Energy, Sterlite Shipping Ventures Private Limited, Sterlite Telecom
Limited, Sterlite Telelink Limited, Duratube Limited and Nagreeka Exports
Limited.
Mr. IshwarlalPatwari
Mr. Patwari is the Non-Executive Director and was appointed to
the Board of Directors in November 1976. He has over 45 years of experience as
an industrialist and is a Fellow Member of the Institute of Chartered
Accountants of India. He has been the Chairman of Nagreeka Exports Limited for
the last five years and is also Director of Nagreeka Capital and Infrastructure
Limited.
Mr. SandeepH. Junnarkar
Mr. Junnarkar is the Non-Executive Director and was
appointed to the Board of Directors in June 2001. He is a solicitor and a
partner of Messrs Junnarkar and Associates. Earlier, he was a partner at Messrs
Kanga and Co. from 1981 to 2002.
Mr. Junnarkar specialises in banking and corporate law. He
has a Bachelor of Law from the University of Mumbai and is a member of the
Bombay Incorporated Law Society. Mr. Junnarkar is also Director of Everest
Industries Limited, Excel Crop Care Limited, Indian Petrochemicals Corporation
Limited, Jai Corp Limited, Sunshield Chemicals Limited, Tilaknagar Industries
Limited, Reliance Industrial Infrastructure Limited, Reliance Industrial
Investments and Holdings Limited, Reliance Ports and Terminals Limited and
ILandFS Infrastructure Development Corporation Limited.
Mr.
Gautam Doshi
Mr. Doshi is the Non-Executive Director and was appointed to
the Board of Directors in December 2001. Since August 2005, he has been the
Managing Director of the Reliance ADA Group Private Limited. Before that, he
was a partner of RSM and Co. in India from September 1997 to July 2005. Mr.
Doshi has 24 years of experience in audit, finance and accounting.
Mr. Doshi is a Fellow Member of the Institute of Chartered
Accountants of India and a member of the Central Council and the Western India
Regional Council of the Institute of Chartered Accountants of India. He is also
Director of Reliance Communication Infrastructure Limited, Reliance ADA Group
Private Limited, Reliance Life Insurance Company Limited, Reliance Asset
Reconstruction Company Limited, Reliance Internet Services Limited, Reliance
Telecom Limited, Adlabs Films Limited, Garware Polyester Limited, Kojam
Fininvest Limited, Medi Assist India Private Limited and Sonata Investments
Limited.
Mr.
Berjis Minco Desai
Mr. Desai is a Non-Executive Director and was appointed to
the Board of Directors in January 2003. He holds a Masters Degree in law from
the University of Cambridge and has been the managing partner of Messrs J.
Sagar Associates since 2003. His expertise lies in laws relating to mergers and
acquisitions,securities, international
commercial arbitration and in financial and international business law.
Before 2003, he was a partner at Messrs Udwadia, Udeshi and Desai.
He is a Director of several companies including Reliance
Asset Reconstruction Company Limited, JSA Law Limited, JSA Lex Holding Limited,
CJ Schneider Engineering Co. Inc., The Great Eastern Shipping Company imited, BP Ergo Limited, Piramyd Retail
Limited, Praj Industries Limited, Adlabs Films Limited, Emcure Pharmaceuticals
Limited, Centrum Capital Limited and Vadhavan Port Private Limited.
Mr.
Kuldip Kumar Kaura
Mr. Kaura is the Managing Director and CEO. He was appointed
to the Board of Directors in October 2004. He is also the CEO of Vedanta, the
Vice-Chairman and Chief Executive Officer of KCM and a Director of HZL, Vedanta
Alumina, CMT, TCM and Vedanta.
Mr. Kaura was the Managing Director of HZL from April 2002
to March 2004, the COO of Vedanta from December 2003 to March 2005 and the CEO
of Vedanta from March 2005 to date. Prior to that, Mr. Kaura served at ABB
India as Managing Director and country manager from 1998 to 2002. He has a
Bachelor of Engineering degree from BITS, Pilani.
Mr.
Tarun Jain
Mr. Jain is the Whole Time Director and was appointed to the
Board of Directors in November 2004. He is also a Director of BALCO, HZL, Vedanta
Alumina, SOVL, Twin Star, MALCO, Westglobe Limited and Sterlite Shipping
Ventures Private Limited. He joined the Company in 1984 and has over 20 years
of experience in corporate finance, accounts, audit, taxation and secretarial
practice. He is responsible for the strategic financial matters including
finance and accounting, legal and regulatory compliance and risk management.
Mr. Jain is a graduate of the Institute of Cost and Works Accountants of India
and a Fellow Member of the Institute of Chartered Accountants of India and the
Institute of Company Secretaries of India.
Financial review
During the year, the gross turnover of the company increased
by 57% from Rs79230.000 Millions to Rs. 124580.000 Millions. The EBITDA for the
same period increased from Rs. 9270.000 Millions to Rs. 13660.000 Millions
representing an increase of 47%. The net profit increased by 53% from Rs.
5110.000 Millions to Rs7840.000 Millions
The increase in revenues can primarily be attributed to 15%
increase in Copper sales to 311,148 MT from 271,624 MT; 31% increase in
Sulphuric Acid sales to 483,018 MT from 369,440 MT and higher and better levels
of Treatment and Refinement charges. The improvement in profitability of the
company can be attributed to higher volumes and higher prices, which have
resulted in better realizations for the company. While there was a pressure on
the operating costs on the company due to steep increase in key inputs such as
fuels, consumables, Biannual shutdown but were able to offset these against higher
prices and volumes.
Strong market conditions and improved terms of contract lead
to better realizations. TC/RC realization increased
substantially to 31.1 cents/lb, from 23.1 cents/lb in the
previous year. LME prices also showed a substantial increase with average LME
for the year being US$ 6861 per MT against US$ 4177 per MT in the previous
year.
Operational review
The Board of Directors feels proud to inform that this year
has been a landmark year for the company. This year the company completed and
started major expansions, which included 100,000 MT of Copper Smelting. With
this expansion, the company has a capacity of 400,000 MT of Copper annually.
They produced 312,720 MT of cathodes, an increase of 15%
from the previous year of 273,048 MT. The value added product (CCR) they were
able to produce 177,882 MT of copper rods, an increase of 7% from the previous
year.
The bi-annual maintenance shut down of the Tuticorin Smelter
for a period of 21 days in April 2006 has been completed and the smelter is
running at its peak capacity. The production of Phosphoric Acid and Sulphuric
Acid,
increased from 171,893 MT to 172,125 MT and from 844,376 MT
to 946,539MT respectively.
During the year, the company consolidated its leadership
position in domestic Copper with record
sales of 116,523 MT of Copper with a market share of 42% in
Primary Market. The Company exported 194,625 MT of Copper (previous year
165,354 MT), a growth of 18%. Exports included 82,602 MT of Copper rods against
79,596 MT in the previous year. The Middle East, China,
Japan, Philippines and Thailand are the key markets and they continue to
develop a larger customer base for the export of copper rods.
During the year, the Company also hived off the Power
Transmission Line divisionon a going concern basis.
Dividend
The directors recommend the interim dividend of 200% (Rs. 4
per share on equity shares of Rs. 2/- each) paid on December 11, 2006 as final
dividend. The bonus shares allotted during the period were entitled to a full dividend,
irrespective of their date of allotment.
The Company also paid a sum of Rs.0.600 Millions towards
dividend on 21,875,000 10% Cumulative Redeemable Preference Shares of Rs. 10/-
each (redeemed during the year).
Share capital
The Board at its meeting held on November 15, 2006 approved
issue of Foreign Currency Convertible Bonds /
Global Depository Receipts / American Depository Shares, to
fund capacity expansions, investments in new projects or new line of
businesses, investments in acquisitions including capital expenditures and
working capital for reduction of debt and for possible acquisitions of
complementary businesses and consolidation of the ownership of subsidiaries and
to meet requirements of various projects being executed/or intended to be
executed by the Company. The Company obtained the approval of the shareholders
at an Extra-Ordinary General Meeting on December 11, 2006.
Sub-division
of Equity Shares and
Bonus
issue: During the year, equity shares having face value of Rs. 5
each (fully paid up) have been subdivided into Rs. 2 each fully paid up.
Further, Equity Shares were allotted as fully paid up Bonus Shares by way of
capitalisation ofGeneral Reserve and Security Premium in the ratio of 1 equity
share fully paid-up for every 1 equity share held.
Redemption
of Preference Shares:
During the year, the Company exercised its call option for
redemption of 1% Cumulative Redeemable Preference Shares amounting to Rs.
218.800 Millions together with the dividend on proportionate basis.
Awards and accolades
During the year the company received the following awards
- Tuticorin Unit Bagged International Safety award from British
Safety Council
- Tuticorin unit receives “Greentech Environment Excellence Award
2006”.
- Tuticorin unit receives the “National Award for Excellence in
Energy Management” by Confederation of Indian Industry for the 6th
Consecutive year.
- Bagged First Prize from Indian Institute of Metals – Non Ferrous
Best Performance Award 2006.
- Bagged Corporate Silver Award in the Metals Category (Large
Facilities) of India Manufacturing Excellence Awards (IMEA) 2006 from M/s.
Frost and Sullivan.
- Commendation Certificate in RBNQA 2006. In the rating scale the
scores have moved up from 52.80% to 65% (Year on Year).
- Tuticorin unit has Bagged Greentech Gold Award in the Metal and
Mining sector for Safety performance.
- They achieved the following laurels during the year
- NABL ISO-17025 achieved for Tuticorin and Silvassa Laboratories
- Achieved LME Registration for Sterlite Tuticorin brand ofcopper
cathodes.
Group structure
The Agarwal Group being a group defined under the Monopolies
and Restrictive Trade Practices Act, 1969, controls the Company. A list of its
group entities is given below :
- Volcan Investments Limited, Bahamas
- Twinstar Holdings Limited, Mauritius
- Vedanta Resources plc, United Kingdom
- Vedanta Resources Holdings Limited, United Kingdom
- Mr. Dwarkaprasad Agarwal
- Mr. Agnivesh Agarwal
Notes
on Accounts:
The Company offers equity-based award plans to its
employees, officers and directors through its parent company Vedanta Resources
plc, based on the performance conditions as set out in the scheme, duly
approved by the board of directors of the Company on December 24, 2003 and by
the shareholders of the company on January 20, 2004. The performance condition
attached to outstanding awards under the LTIP is that of Vedanta's performance,
measured in terms of Total Shareholder Return (“TSR”) compared over a three
year period or such period as the Board may determine with the performance of the
companies as defined in the scheme from the date of grant. The exercise price
of the awards is 10 US cents per share. Further Vedanta has issued awards in
February 2007 where Vedanta's TSR will be compared over one year period in
terms of the scheme The parent company Vedanta on the basis of number of shares
allotted to the Company employees charged a sum of Rs.45.600 Millions being the
proportionate cost which is charged to the Profit & Loss Account under the
head Personnel Expenses.
Fixed
Assets:
- Land
- Building
- Building (Lease hold)
- Plant and Machinery
- Furniture and Fixture
- Data Processing Equipments
- Office Equipments
- Electrical Fittings
- Vehicles
- Technical know how
Website
Details :
Subject is the principal subsidiary of the Vedanta
Resources Group. It was the first company in India to set up a Copper Smelter
and Refinery in Private Sector and operate the largest capacity continuous Cast
Copper Rod plants. SIIL’s main products, Copper Cathodes and Copper Rods meet
global quality benchmarks.
Subject’s performance makes it one of the fastest-growing companies with
sales increasing from Rs.9220 million (US$ 217 Mn) in 1997-98 to Rs.67,921
million (US$ 1,527 Mn) in 2005 - 2006, recording a CAGR of 28%.
Subject’s consistent product quality and high standard of customer
service has earned it an enviable 43% share in the domestic market by volume in
2005 - 06. The hallmark of its success has been the stress on quality and
constant benchmarking with the best in the world, giving it the distinction of
being a low-cost, high quality, high-efficiency producer by global standards.
Subject places a very strong emphasis on the
following:
Quality Assurance
All SIIL facilities are equipped with the latest technology backed by thorough
quality assurance systems. This is evident from the fact that SIIL is an ISO
14001 (1996), OHSAS 18001 (1999) and ISO 9001 (2000) certified organization.
People
At SIIL, people are its major strength, helping transform the SIIL
vision into reality. Attracting, nurturing and retaining the best and the
brightest are the cornerstone of its HR policy.
State-of-the-art-Technology
Subject constantly endeavours to keep ahead of the Technology curve. Constantly
investing in the latest in Technology and Innovation, SIIL facilities are
comparable with the best in the world.
Environmental Consciousness
As part of its growth, SIIL will focus on environment protection. Investing in
environment friendly technology, SIIL has carried out extensive work including
setting up a 5000 cubic meters capacity Rainwater Harvesting System and
extending the Green Belt around its facilities extensively.
Social Consciousness
Subject operates with a Social Consciousness. There are several initiatives
undertaken to give back to society. SIIL takes its role as a Responsible
Corporate Citizen very seriously.
Growth
Growth is a way of life at SIIL. This is visible in the achievements over the
last 5 years. SIIL has gone from strength to strength and continues to look for
new opportunities to achieve returns and active growth.
Mines
Subject
owns two mines which together supplied 127,196 tons of concentrate in 2005 -
06. However, one of its mines has closed since July 2005.
Smelter
The
Smelter at Tuticorin, Tamilnadu is based on a proven energy efficient and
environment friendly technology, IsaProcess™ from MIM, Australia.
Refinery
The
anode produced by the smelter is processed in the Refinery at Dadra Nagar
Haveli, Silvassa using IsaProcess™ sourced from MIM, Australia. The copper
cathodes produced are LME ‘A’ grade certified. A new refinery also using the
IsaProcess™ is being added at Tuticorin for scaling up operations.
Copper Rods Plant
State-of-the-art
continuous cast copper rod plant based on technology and equipment from
Continuous Properzi, Italy produces continuously cast copper rods, meeting
stringent quality and performance standards.
Sulphuric Acid Plant
The
Sulphuric Acid Plant, with designed capacity to produce 1,068,000 tonnes of
Sulphuric acid per annum, is set up with basic engineering from Kvaerner
Chemetics, Canada.
Phosphoric Acid Plant
The
phosphoric acid plant with HDH process has a production capacity of 180,000
tonnes per annum. Technology and basic engineering for this plant has been
sourced from Hydro Agri International, UK.
Highlights
v
First private sector smelter in India
v
Went on stream in a record period of two years, fully stabilized and
operating at rated capacity.
v
State-of-the-art technology. New ISA™ incorporates waste heat recovery
boiler.
v
ISA WHRB - Free Power Generation from Off gases, Low gas volume per ton
of concentrate, Good hygiene -Less Air Ingress
v
An ISO 9001:2000, ISO 14001 and OHSAS 18001 Certified Organization.
v
TQM as a way of life for Continual Improvements and Employee engagement
v
First Copper Smelter in the world to be accredited with “Five Star”
rating by British Safety Council.
v
Extensive use of TQM to constantly reach new frontiers of excellence and
maximize employee involvement.
v
Star Trading House status awarded for Export.
v
Currently 11% of copper requirement met by captive mines.
v
Zero-effluent discharge systems integrated at every plant.
v
First company in South India to go in for a secured land fill.
v
Dominant market shares in the various segments of copper consumption.
v
Won the National Award in Excellence in Energy Management for the last
six years in a row.
v
Winner of the Green Tech Safety Award-Silver for best practices in Fire
and Safety from Green Tech foundation in the Metals and Mining Sector for the
Year 2005
v
Winner of the International Safety Award from British Safety Council for
the Year 2005
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.42.54 |
|
UK Pound |
1 |
Rs.84.36 |
|
Euro |
1 |
Rs.66.95 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
10 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--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 |
|
81 |
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 |
|