MIRA INFORM REPORT

 

 

 

Report Date :

23.06.2008

 

IDENTIFICATION DETAILS

 

Name :

BIRLA TYRES – DIVISION OF KESORAM INDUSTRIES LIMITED

 

 

Registered Office :

9/1, Birla Building, 8th Floor, RN Mukherjee Road, Kolkata – 700001, West Bengal

 

 

Country :

India

 

 

Financials (as on) :

31.03.2008

 

 

Date of Incorporation :

18.10.1919

 

 

Com. Reg. No.:

21-003429

 

 

CIN No.:

[Company Identification No.]

L17119WB1919PLC003429

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

CALK03134F

 

 

PAN No.:

[Permanent Account No.]

AABCK2417P

 

 

Legal Form :

Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturer of Textiles, under the name Kesoram  Industries Limited, Rayon and Transparent Paper  run  under Kesoram  Rayon, Spun Pipes & Foundries run under Kesoram  Spun  and Pipes  Foundries, Cement run under Kesoram Cement  and  Vasavadatta Cement, Refractory run under Kesoram Refractories.

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Aa

 

RATING

STATUS

PROPOSED CREDIT LINE

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

 

Maximum Credit Limit :

USD 49096000

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a B. K. Birla Group and a diversified Company having presence in Cement, Automobile tubes/tyres, Rayon, heavy Chemicals, Spun Pipes and Refractories. Their trade relations are reported as fair. Financial position is good. Payments are usually correct and as per commitments.

 

The company can be considered good for any normal business dealings at usual trade terms and conditions.

 

 

LOCATIONS

 

Registered Office :

9/1, Birla Building, 8th Floor, RN Mukherjee Road, Kolkata – 700001, West Bengal, India

Tel. No.:

91-33-22435453/ 22209454/ 22486607

Fax No.:

91-33-22109455

E-Mail :

kesocorp@cal3.vsnl.net.in

Website :

http://www.kesocorp.com

 

 

Factory  :

v      Cement Section

Basantnagar, District Karimnagar, Andhra Pradesh-505187

Tel No :- 91-8728-228122/8125/8156

Fax No :- 91-8728-228160

Email: kesoram3@hd2.dot.net.in

 

v      Sedam, District Gulbarga, Karnataka-585222

Tel No :- 91-8441-2676005/2677403

Fax No :- 91-8441-2676139

E-mail :- communication@vasavadattacement.com

 

v      Automobile Tyres and Tubes

P. O. Chanpur, Via Curuda, Balasore, Orissa-756056, India

Tel No :- 91-6782-254259/780/885

Fax No :- 91-6782-254225

E-mail :- btbls @cal2.vsnl.net.in

 

v      Heavy Chemicals

19, B. T. Road, Khardah, P. O. Balaram Dharma,

Sopan Kolkata – 700 116

Tel.No:91-33-25532879/5183

Fax No: 91-33-25533860/25839218

Email: hhcl_fac@vsnl.net

                  hhc_ho@vsnl.net

 

 

Branches :

v      10-3-316/A 1st Floor, S. D. Eye Hospital Road, Masab Tank, Hyderabad – 500 028, Andhra Pradesh, India

Tel.No: 91-40-23342296/8056

Fax No: 91-40-23344109/7821

Email: hyderabad@vasavadattacement.com

 

v      10-3-316/A, 2nd Floor, S. D. Eye Hospital Road, Masab Tank, Hyderabad – 500028, Andhra Pradesh, India

Tel.No: 91-40-23348896/7843/7613

Fax No: 91-40-23344109/7821

Email: kesoram2@hd2.dot.net.in

 

v      Shivam Chambers, 53, Syed Amir Ali Avenue, Kolkata-700019, West Bengal, India

Tel.No: 91-33-22814813/4717/18/19/20

Fax No: 91-33-2281-4874

Email: ho@birlatyre.com

 

v      8th Floor, Birla Building, 9/1, R. N. Mukherjee Road, Kolkata-700001, West Bengal, India

Tel.No: 91-33-22131680/89 (10 lines)

Extn: 1863/1854

Fax No: 91-33-22421931

 

 

DIRECTORS

 

Name :

Mr. Basant Kumar Birla

Designation :

Chairman

 

 

Name :

Mr. Krishna Gopal Maheshwari

Designation :

Director

 

 

Name :

Mr. Bhagwati Prasad Bajoria

Designation :

Director

 

 

Name :

Mr. Pesi Kushru Choksey

Designation :

Director

 

 

Name :

Ms. Neeta Mukerji

Designation :

Director  - Nominee [ICICI]

 

 

Name :

Mr. D. N. Mishra

Designation :

Director – Nominee [LIC]

 

 

Name :

Mr. Amitabha Ghosh

Designation :

Additional Director

 

 

Name :

Mr. Prasanta. Kumar Malik

Designation :

Director

 

 

Name :

Mrs. Manjushree Khaitan

Designation :

Director

 

 

Name :

Mr. Shiv Kumar Parik

Designation :

Director cum Company Secretary

Date of Birth/Age :

75 years

Qualification :

B.Com , FCA, FCS

Experience :

51 years

Date of Appointment :

14.07.1955

 

 

Name :

Mr. Govind Ballabh Pande

Designation :

Director

 

 

Name :

Mr. K C Jain

Designation :

Manager of the Company and Sr. President (Cement Sections)

Date of Birth/Age :

69 years

Qualification :

B.Com, FCA

Experience :

19.02.1966

Date of Appointment :

43 years

Previous Employment :

Singhi and Company

 

 

KEY EXECUTIVES

 

Name :

Mr. S. K. Parik

Designation :

Company Secretary

 

 

VASAVADATTA CEMENT SECTION :

Name :

Mr. D S Bindra

Designation :

President

 

 

Name :

Mr. P R Sharma

Designation :

Joint President

 

 

Name :

Mr. C K Jain

Designation :

Joint President (O and M and TPH)

 

 

Name :

Mr. P S Rao

Designation :

Joint President ( Projects)

 

 

Name :

Mr. Yashwant Mishra

Designation :

Senior Vice President and Marketing Head

 

 

Name :

Mr. O P Sharma

Designation :

Vice President (Commercial)

 

 

Name :

Mr. I K Purohit

Designation :

Vice President (Sales and Marketing)

 

 

Name :

Mr. R K Gandhi

Designation :

Vice President (Production and Quality Control)

 

 

Name :

Mr. A C Basak

Designation :

Vice President (Mines)

 

 

Name :

Mr. Ajit Kulkarni

Designation :

Vice President (HR)

 

 

KESORAM CEMENT SECTION :

Name :

Mr. S V Tapadia

Designation :

Joint President (Finance and Administration)

 

 

Name :

Mr. K L Narayana Rao

Designation :

Joint President (Technical)

 

 

Name :

Mr. Mahesh Agarwal

Designation :

Vice President (Technical)

 

 

Name :

Mr. K K Prasad

Designation :

Vice President (Mines)

 

 

Name :

Mr. Ashok Ostwal

Designation :

Vice President (Sales and Marketing)

 

 

BIRLA TYRES SECTION :

 

Name :

Mr. Deepak Tandon

Designation :

President

 

 

Name :

Mr. R K Shah

Designation :

Vice President (Commercial)

 

 

Name :

Mr. A K Uppal

Designation :

Vice President (Marketing)

 

 

Name :

Mr. Sujoy Sen

Designation :

Vice President (Purchase)

 

 

Name :

Mr. R C Singh

Designation :

Vice President (Production)

 

 

Name :

Mr. Anoj Agarwal

Designation :

Vice President (Commercial)

 

 

Name :

Mr. Anupam Dutta

Designation :

Vice President (Technical)

 

 

RAYON AND TRANSPARENT PAPER SECTION :

Name :

Mr. J D Palod

Designation :

President (Rayon, TP and Heavy chemicals Sections)

Date of Birth/Age :

62 years

Qualification :

BE (Mech. AMIE)

Experience :

40 years

Date of Appointment :

01.01.1988

Previous Employment :

Hindusthan Heavy Chemicals Limited

 

 

Name :

Mr. J P Bohra

Designation :

Joint President (Finance)

 

 

Name :

Mr. S C Tripathy

Designation :

Senior Vice President (Technical)

 

 

Name :

Mr. S S Singhania

Designation :

Vice President (Engineering)

 

 

Name :

Mr. S K Patodia

Designation :

Vice President (Commercial)

 

 

Name :

Mr. A K Kejriwal

Designation :

Vice President (Marketing)

 

 

SPUN PIPES SECTION :

Name :

Mr. P P Saha

Designation :

Senior General Manager

 

 

HINDUSTHAN HEAVY CHEMICALS SECTION :-

Name :

Mr. S Roy

Designation :

Senior Vice President (Commercial)

 

 

Name :

Mr. M L Bhattacharya

Designation :

Senior Vice President (Works)

 

 

Name :

Mr. U S Asopa

Designation :

Senior Vice President (Finance)

 

 

Name :

Mr. S R Chamaria

Designation :

Senior Vice President (Accounts and HRD)

 

 

Name :

Mr. Suresh Sharma

Designation :

Senior Vice President (Commercial)

 

 

Name :

Mr. G K Ojha

Designation :

Vice President (Secretarial)

 

 

Name :

Mr. Vikas Agarwal

Designation :

Vice President (Taxation)

 

 

Name :

Mr. O P Poddar

Designation :

President (Cement sections)

Date of Birth/Age :

61 years

Qualification :

B.Com, Visharad

Experience :

41 years

Date of Appointment :

03.05.1966

 

 

Name :

Mr. P K Goyenka

Designation :

President (Vasavadatta Cement)

Date of Birth/Age :

61 years

Qualification :

M Tech , MBA (USA)

Experience :

37 Years

Date of Appointment :

11.01.1978

Previous Employment :

Regional Engineering College

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 31.03.2008

 

Names of Shareholders

No. of Shares

Percentage of Holding

(A) Shareholding of Promoter and Promoter Group

 

 

1. Indian

 

 

Individuals/ Hindu Undivided Family

243948

0.63

Bodies Corporate

10073855

26.03

Sub Total (A) (1)

10317803

26.66

 

 

 

(B) Public Shareholding

 

 

1. Institutions

 

 

Mutual Funds/ UTI

7882978

20.37

Financial Institutions/ Banks

90769

0.23

Insurance Companies

7116390

18.39

Foreign Institutional Investors

2724323

7.04

Sub Total (B) (1)

17814460

46.03

 

 

 

B (2) Non Institutions

 

 

Bodies Corporate

2374046

6.13

Individuals

 

 

i. Individuals shareholders holding nominal share capital up to Rs. 1 lakh

5345111

13.81

ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

878252

2.27

NRIs

224719

0.58

OBC

1747052

4.52

Sub Total (B) (2)

10569180

27.31

 

 

 

Total Public shareholding (B)=(B)(1) + (B) (2)

28383640

73.34

 

 

 

Total (A) + (B)

38701443

100.00

 

 

 

(C) Shares held by Custodians and against which depository receipts have been issued.

7041875

--

Grand Total (A) + (B) + (C)

45743318

100.00

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer of Textiles, under the name Kesoram  Industries Limited, Rayon and Transparent Paper  run  under Kesoram  Rayon, Spun Pipes and Foundries run under Kesoram  Spun  and Pipes  Foundries, Cement run under Kesoram Cement  and  Vasavadatta Cement, Refractory run under Kesoram Refractories.

 

 

Products :

v      Cement

v      Rayon and Transparent Paper

v      Refractory

v      Spun Pipes and Foundries

v      Textile

 

Item Code No

Product Description

324101000

Portland Cement

540331.00

Artificial Filament Viscose Rayon Yarn

401120.00

Automobile Tyres (for bus and lorry)

401310.02

Automobile Tubes (for bus and lorry)

401290.04

Automobile Flaps (for bus and lorry)

 

 

GENERAL INFORMATION

 

No. of Employees :

Above 9000

 

 

Bankers :

v      State Bank of India

v      Citi Bank N.A

v      Allahabad Bank

v      The Hongkong & Shanghai Banking Corporation

v      UCO Bank

v      Central Bank of India

v      Canara Bank

v      Oriental Bank of Commerce

v      State Bank of Hyderabad

v      BNP Paribas

v      HDFC Bank Limited

v      ICICI Bank Limited

v      IndusInd Bank Limited

 

 

Facilities :

 

SECURED LOANS

 

 

Nature of loan

Nature of Facility

31.03.2007

(Rs. In millions)

Term loan from Bank

ICICI Bank Limited

First charge by way of hypothecation of pollution control equipment and other assets acquired/ to be _

acquired at Rayon Unit.

----

State Bank of India

Pari passu charge on immovable properties and — hypothecation of movable assets, save and except assets exclusively charged for specific loans.

----

Interest accrued and due

 

----

State Bank of India

Hypothecation/mortgage charge over the fixed assets of the Company (movable/ immovable) ranking pari passu with the existing charges save and except assets exclusively charged to others for specific loans

250.000

Interest accrued and due

 

1.433

State Bank of India

Hypothecation over all movable properties and first pan passu charge on immovable properties, both

present and future, of the Company.

1550.000

Interest accrued and due

 

9.766

State Bank of India

Hypothecation over all movable properties both

present and future and first pan passu charge to be created on immovable properties, both present and

future, of the Company.

2000.000

Interest accrued and due

 

5.673

State Bank of Hyderabad

 

 

Hypothecation over all movable properties and first pan passu charge on immovable properties, both

present and future, of the Company.

600.000

State Bank of Bikaner and Jaipur

Hypothecation over all movable properties and first par! passu charge on immovable properties, both

present and future, of the Company.

200.000

State Bank of Indore

Hypothecation over all movable properties and first pari passu charge on immovable properties, both

present and future, of the Company.

400.000

State Bank of Mysore

Hypothecation over all movable properties and first pari passu charge on immovable properties, both

present and future, of the Company.

150.000

Total

 

5166.872

 

 

 

Nature of loan

Nature of Facility

31.03.2007

(Rs. In millions)

 

 

 

From Scheduled Banks

Brought Forward

5166.872

Overdraft / Cash Credit

Hypothecation of current assets and second charge on movable and immovable fixed assets, both present and future of the Company

1021.628

Interest accrued and due

 

2.163

Packing Credit Loan

 

241.305

Foreign Currency non Repatriable Loan

 

----

Interest accrued and due

 

----

 

Total

6431.968

 

UNSECURED LOANS

31.03.2007

 (Rs. In millions)

 

 

Fixed deposit

16.232

Security deposits from selling agents and others

797.341

Interest accrued and due

26.720

Short Term Loans

 

Form banks

1452.245

Interest accrued and due

----

Temporary Bank overdraft

1.883

Other Loans

 

Interest accrued and due

----

Interest free loan from the State Industrial and Investment

Corporation of Maharashtra Limited

 

1.605

Total

2296.026

 

 

Banking Relations :

Good

 

 

Auditors :

 

Name :

Price Waterhouse

Chartered Accountants

 

 

Associates :

v      Mangalam Timber Products Limited

v      Birla Buildings Limited

v      Century Textiles & Industries Limited

v      HGI Industries Limited

v      Indian Rayon and Industries Limited

v      Jay Shree Tea & Industries Limited

v      Padmavati Investments Limited

v      Birla Century Finance Limited

v      ECE Industries Limited

v      Mangalore Refinery and Petrochemicals Limited

v      Mangalam Cement Limited

 

 

Subsidiaries :

v      Bharat General & Textile Industries Limited

v      KICM Investment Limited

v      Assam Cotton Mills Limited

v      Softshree Estates Limited

 

CAPITAL STRUCTURE

 

(As on 31.03.2007):-

 

Authorised Capital :

No. of Shares

Type

Value

Amount

5000000

Redeemable Cumulative Preference Shares

Rs. 100/- each

Rs. 500.000 millions

400000

Redeemable Cumulative Second Preference Shares

Rs. 100/- each

Rs.   40.000 millions

66000000

Ordinary Shares

Rs. 10/- each

Rs. 660.000 millions

 
Total

 

Rs. 1200.000

millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

45743318

Ordinary Shares

Rs. 10/- each

Rs. 457.433 millions

Less:

Allotment Money receivable

 

Rs. 0.018 millions

 
Total

 

Rs. 457.415 millions

 

 

 

 

 

 

 

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2008

31.03.2007

31.03.2006

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

457.400

457.416

457.416

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

9361.800

6086.928

3703.084

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

9819.200

6544.344

4160.500

LOAN FUNDS

 

 

 

1] Secured Loans

9710.600

6431.970

4133.684

2] Unsecured Loans

2437.500

2296.029

2079.861

TOTAL BORROWING

12148.100

8727.999

6213.545

DEFERRED TAX LIABILITIES

0.000

1124.092

1071.911

 

 

 

 

TOTAL

21967.300

16396.435

11445.956

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

10842.400

11051.901

5349.792

Capital work-in-progress

6345.900

0.000

2082.406

 

 

 

 

INVESTMENT

478.300

288.723

290.151

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
4421.700

3768.827
2551.852

 

Sundry Debtors
2730.700

2459.452
1843.725

 

Cash & Bank Balances
405.400

272.422
248.313

 

Other Current Assets
0.000

118.199
144.264

 

Loans & Advances
4563.900
2062.247
1309.977

Total Current Assets
12121.700
8681.147
6098.131

Less : CURRENT LIABILITIES & PROVISIONS
 
 
 

 

Current Liabilities
4482.100
2268.292
1612.330

 

Provisions
3338.900
1357.049
762.194

Total Current Liabilities
7821.000
3625.341
2374.524

Net Current Assets
4300.700
5055.806
3723.607

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

21967.300

16396.435

11445.956

 

 

 

 

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2008

31.03.2007

31.03.2006

Sales Turnover

34403.200

25164.600

18778.200

Other Income

397.600

499.300

544.300

Total Income

34800.800

25663.900

19322.500

 

 

 

 

Profit/(Loss) Before Tax

5525.300

3417.800

809.300

Provision for Taxation

1691.800

761.000

352.200

Profit/(Loss) After Tax

3833.500

2656.800

457.100

 

 

 

 

Expenditures :

 

 

 

 

Manufacturing Expenses

1381.700

989.700

832.500

 

Administrative Expenses

4759.000

3952.100

2921.800

 

Raw Material Consumed

11466.300

9489.800

7496.500

 

Excise Duty

4542.900

3123.700

2637.000

 

Increase/(Decrease) in Finished Goods

(408.900)

(280.100)

115.000

 

Salaries, Wages, Bonus, etc.

1527.800

1281.000

1154.600

 

Interest

540.600

335.100

327.500

 

Power & Fuel

3933.000

2281.500

2140.700

 

Depreciation & Amortization

892.700

583.100

515.700

 

Other Expenditure

630.400

490.200

371.900

Total Expenditure

29275.500

22246.100

18513.200

 

KEY RATIOS

 

PARTICULARS

 

31.03.2008

31.03.2007

31.03.2006

Debt Equity Ratio
1.29
1.41

1.45

Long Term Debt Equity Ratio
0.91
0.90

0.65

Current Ratio
1.11
1.08

0.95

TURNOVER RATIOS
 
 
 

Fixed Assets
1.93
1.75

1.60

Inventory
8.40
7.96

7.74

Debtors
13.26
11.70

9.73

Interest Cover Ratio
11.22
11.20

3.47

Operating Profit Margin (%)
20.23
17.23

8.80

Profit Before Interest and Tax Margin(%)
17.63
14.91

6.05

Cash Profit Margin(%)
13.74
12.87

5.18

Adjusted Net Profit Margin(%)
11.14
10.56

2.43

Return on Capital Employed(%)
32.68
29.43

11.95

Return On Net Worth(%)
47.20
50.31

11.78

 

 

 

 

 

 

 

 

LOCAL AGENCY FURTHER INFORMATION

 

History

 

The Company was incorporated on 18th October, 1919 under the Indian Companies Act, 1913, in the name and style of Kesoram Cotton Mills Limited. It had a Textile Mill at 42, Garden Reach Road, Calcutta 700024. The name of the Company was changed to Kesoram Industries and Cotton Mills Limited. on 30th August, 1961 and the same was further changed to Kesoram Industries Limited on 9th July, 1986. The said Textile Mill at Garden Reach Road was eventually demerged into a separate company.

 

General Review

The continued effective cost control measures, better treasury management, increase in capacities and improved realizations have resulted in current satisfactory results: 

 
 * With continued buoyancy in cement market due to sustained activities in construction and infrastructure development, the Cement Sections contributed handsomely to the bottom line of the annual result, particularly taking advantage of increased production facilities. 

 
 * Increased capacity utilization, satisfactory cost cutting measures, improved operating efficiencies coupled with better price realizations enabled the Tyre Section to contribute significantly to the annual profit. 

 
 * Inspite of adverse market competition, particularly due to cheap imports, the Rayon Section turned around with positive contribution to annual profit. 

 
 * Inspite of better inventory management, the bottom line of the Spun Pipes Section remained in the red. 

 
 * Due to improvement in market conditions, the realizations were better resulting in higher capacity utilization at Hindusthan Heavy Chemicals Section. 

 
 CEMENT SECTIONS; 


Vasavadatta Cement; 


Performance of Vasavadatta Cement has improved considerably due to increase in production as well as continued buoyancy in the Cement Industry. As mentioned in the last report, the commercial production from Unit-III started from March 2007. 

 

Particulars

2007-08

2006-07

 

(Quantity in MT)

Clinker

3111506

2169558

Cement

3278309

2483452

 
The above figures include production of 1088416 MT of Clinker and 923621 MT of Cement from Unit III. Production of Unit III would have been higher but for an unexpected breakdown in June 2007 resulting in production loss of about 2 lac MT of clinker. However it is heartening to note that Unit-I and Unit-II have achieved their highest ever production capacity utilization this year. Production of blended cement ('Birla Shakti') has risen by 37% from 11.73 lac MT to 16.02 lac MT. Consistent high quality of the product has enabled this Section to improve its market share. 

 
Captive power generation has increased from 182.05 million KWH last year to 280.56 million KWH during the year under review, thus meeting about 94% of the total power requirement of the Section. This has been possible due to the commissioning of third power plant of 17.5 MW capacity in April 2007. 

 
There has been an all round increase in the cost of raw materials as well as coal during the year. Due to the non-availability of coal both in quantity and quality, the section had to import more expensive coal with additional burden on the cost of production. 

 
As reported earlier, the Company has undertaken further expansion of Cement capacity by 1.65 million MT per annum and for this the civil work for Cement Plant as well as for Captive Thermal Power Plant are in advance stages of completion and supply of indigenous and imported machineries has started arriving; Erection of Plant and Machinery will commence shortly and the project is scheduled for commissioning in the first quarter of the calendar year 2009. 

 
This Section has got various awards, including 1st prize from Mines Safety Association of Karnataka. Industrial relations during the year were cordial and peaceful.

 
The Section has undertaken various social welfare activities such as construction of water tank at Sedam Town, tree plantation and water harvesting, health camps and vocational training centre, farmers training and rural development, etc.


This Section has achieved the highest ever production of both Clinker and Cement, since its inception. With up-gradation and modification of kilns, supporting process units etc., the capacity of this section has increased to 12 lac MT per annum during the year and it is expected to go upto 16 lac MT per annum during second half of the year 2008-09. 

 
Production of blended cement, under the brand name 'BIRLA SHAKTI' has increased from 6.01 lac MT during 2006-07 to 9.36 lac MT during the year under review, a growth of about 56% in order to match corresponding demand, due to aggressive advertisement campaign. Further efforts are on to increase the Blended Cement production since adequate Fly Ash is available in nearby areas. BIRLA SHAKTI brand has rapidly built-up the customer base with growing market share in Andhra Pradesh and also in other markets. 

 
This Section registered about 700 to of its total sales in its home market, i.e. Andhra Pradesh. By selling within smaller radius, the Company was able to notch higher net realization, thanks to lower logistic cost. 


There has been an all-round increase in the cost of raw materials and coal during the year under review.

However, the same could be set-off since cement prices have improved due to improvement in demand for the material.

  
Besides remunerative prices for Cement, the increase in Blended Cement production also helped. 

 
Captive Thermal Power Plant generated 1153:02 lac Units of Power, which is the highest generation ever achieved. This includes 42.84 lac Units supplied to APTRANSC. Captive Power Plant meets about 90% of the total power requirement of this Section. It also ensures continuous and consistent supply of Power at lower cost. 

 
The Suit challenging the validity of imposition of Electricity Duty on captive power generation @ 25 paise per Unit from 17/7/2003 by the Government of Andhra Pradesh continues to be pending before the Hon'ble High Court of Andhra Pradesh. 

 

The Federation of Andhra Pradesh Chamber of Commerce and Industry (FAPCCI) has chosen this Section for the state award for 'Excellence in Industrial Productivity' for the year 2005-06 presented by the Hon'ble Chief Minister of Andhra Pradesh, Dr. Y.S. Rajasekhara Reddy. 


All India Manufacturers' Organization (Andhra Pradesh State Board) conferred the 'Outstanding Achievement Award' for the year 2006 and was presented by H.E The Governor of Andhra Pradesh, Shri N.D. Tiwari on 17th September, 2007 at Hyderabad, which was received by Shri K.C. Jain, Sr. President of this Section. 

 
Basantnagar Limestone Mines bagged the 1st prize for Environmental and Health Management and Heavy Earth Moving Machinery and also 2nd prize for Loading and Transportation and Overall Performance, from the Director General of Mines Safety, Hyderabad during Mines Safety Week Celebrations. 

 
This Section is continuing its rural and community development activities in nearby villages and participating in all the social welfare programs of the State Government. The activities include Pulse Polio Programme, farmers' training, animal health camps, distribution of agriculture implements, promotion of self help groups of women for socio-economic development, running of a Vocational Training Centre for enhancement of skills of youth of surrounding areas. 

  
 BIRLA TYRES SECTION: 


The gross turnover of the Section this year is Rs.13890.400 millions, compared with Rs. 11122.100 millions thus showing a growth more than 24% over 2006-07.

 

Export sales for the year under review amounted to Rs. 1814.600 millions, against Rs. 1927.900 millions in the previous year. 


 Inspite of sharp increase in prices of natural rubber; butyl rubber and other petroleum-based raw materials, the Section has been able to bring about improvement in its bottom line due to enhanced capacity, better price realization, various cost cutting measures and improvement in operational efficiencies. 

 
The Section has completed all expansion programmes at Balasore factory except 19 MT per day project of Off the Road (OTR), which is going to be completed by July'08. A Greenfield project involving an estimated investment of Rs.7590.000 millions near Haridwar in Uttarakhand is under progress and the commercial production of the first phase of 70 MT per day is likely to be commissioned in May 2008. The total expansion of the said Haridwar Project should be in place by the 3rd quarter of 2008-09. 

 
The Board in principal has further approved an expansion at the same site for radial tyres with 100 MT per day capacity and bias tyres with 125 MT per day capacity involving an estimated aggregate capital outlay of Rs.840 crores. The project is likely to start commercial production by end 2009. 


 The Section continues to have the distinction of being certified for ISO-9001, TS-16949, ISO-14001, SA-8000, OSHAS-18001 and TPM. 

 
 Relations with employees have been cordial and conducive to growth. 

 
 RAYON and TRANSPARENT PAPER SECTIONS: 


The Viscose Filament Yarn (VFY) industry had to face challenges posed by growing imports from China as well as limited growth of VFY business itself. However, with increased domestic demand of super-fine denier category of VFY coupled with higher global demand, the inventory could be maintained at a reasonable level. Realisations improved to some extent but not in proportion to the increase in the cost of production. The Association of Man-Made Fibre Industry of India has filed a petition with the Government of India seeking review of Anti-Dumping Duty in view of appreciation of the Indian Rupee and global increase in cost of production.

 

The exports were 861 MT against 402 MT last year. 

 

The demand for Transparent Paper (TP) was under stress throughout the year due to cheaper substitutes and unregulated imports. Also, the fireworks industry which is the main consumer of TP is facing severe production  cut.

 

This resulted in further reduction of demand. All these combined factors compelled the section to restrict the production during the second half of the year under review. The exports were 357 MT against 294 MT last year.

 
Production of all classes of goods manufactured by the Section, which during the first quarter of 2006-07:was affected due to suspension of manufacturing operations, was satisfactory during the year except for transparent paper for the reasons mentioned above. 

 
The unprecedented escalation in international price of sulphur, which is the main raw material, from US $ 84 to US $ 585 a ton increased the cost of production substantially. Further increases in dearness allowance, coal and pulp. prices also affected the profitability of the section. However, the technical performance remained satisfactory. 
 
The market demand of various chemicals produced by the section was satisfactory.

  
SPUN PIPES SECTION: 

The Section had the improved inventory management and inspite of this, Section's bottom line remains in the red. The Section is under suspension of work since 2nd May, 2008. 

 
HINDUSTHAN HEAVY CHEMICALS SECTION: 

The production figures of the Section were asunder. 

 

Production 2007-08 2006-07 


Caustic Soda Lye 12,064 MT 11,991 MT Sulphuric Acid 17,640 MT 17,555 MTAlum 1,477 MT 1,878

MT Hydrogen Gas (Purified) 5,78,774 M3 7,00,497 M3

  
Demand for Caustic Soda was moderate throughout the year. However, the demand for joint products remained stable throughout theyear. 

 
In order to ensure better quality, the Section continues to enjoy the certification for Quality Management system by DNV Certification Agency as per ISO 9001:2000 and also for ensuring better environment management, the Company has renewed DNV Certification in respect of Environment Management System as per ISO 14001:2004. 
 
The Section has taken various measures on its own along with Factory Directorate, West Bengal Pollution Control Board to increase the awareness and importance of Environment and Pollution Control. The Company has organized various awareness programmes through Safety Slogan Contest, observation of Safety Week and giving of awards to ensure health and safety of workmen. 

 

REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS 

 

A. INDUSTRY STRUCTURE AND DEVELOPMENT: 

CEMENT: 
The Indian Cement Industry with capacity of 173 million tonnes is the world's second largest after China. It has 136 large Cement plants and over 350 mini plants. Much to its credit, it is making commendable progress in capacity creation, conforming to global benchmarks in technology and production of every variety of cement. The Industry is also utilizing growing volumes of by-products like fly ash and slag for making blended cement.  
 
 The Industry's overall capacity utilization improved from 94% to 96% during the year under review. 

 
TYRE:  
The Rs. 160000.000 millions Indian tyre industry has capacity of over 65 million tyres per annum. Five major tyre companies account for nearly 80% of the total turnover. Truck and bus tyres are the principal segments of the industry having a share of over 70010 of industry turnover. Radialisation has taken place in almost the entire passenger car segment. In the truck and bus segment too, radialisation is gaining in pace. The replacement segment dominates the industry as it constitutes about 65% of the market.

 

Around 23% of tyre production in India is exported to more than 65 countries. 

 
Tyre being a derived demand product, its prospects are linked to factors like Gross Domestic Product (GDP) growth, agricultural and industrial production and rise in vehicle demand. The industry's growth is also influenced by secondary factors, such as infrastructure development and interest rates. 

 
The Indian Tyre industry is equipped to meet the demand of the domestic market, besides generating surpluses for export. 

 
RAYAN and TRANSPARENT PAPER: 

The domestic Viscose Filament Yarn (VFY) industry is suffering cost disadvantage vis-a-vis its counterpart in China on account of fiscal levies and also due to higher cost of controlled inputs like power and fuel. While the appreciation of Rupee vis-a-vis Dollar has made imports highly competitive, domestic costs have gone up due to steep increases in prices of main raw materials. The anti-dumping duty imposed earlier also needs review due to adverse foreign exchange movement and rise in cost of production. 

 
Fall in domestic demand, stiff global competition and rise in illegal imports led to a rise in the inventory of Transparent Paper JP.). This coupled with high cost of production forced the industry to cut production. 

 
SPUN PIPES: 

The year was challenging for the pipe industry, as the prices of raw material turned volatile in the latter half of the year. The industry is still facing competition due to higher input costs compared to ductile pipes.

 
HEAVY CHEMICALS: 

Capacity utilization of Caustic Soda Industry during the year improved to around 850/a. With the commissioning of new aluminium smelter capacity, the gap between supply and demand of caustic soda lye has narrowed down.

 

However, the availability of joint products like chlorine and hydrochloric acid continues to be higher than the demand. Production of sulphuric acid in most of the plants was adversely affected due to very high prices and also non-availability of sulphur. 

 
B. OPPORTUNITIES AND THREAT: 

CEMENT: 
Aided by the growing emphasis on infrastructure development and house building, the, Indian cement industry is experiencing an annual demand growth of over 10%. Responding to market dynamics, cement manufacturers on their part are making optimum capacity utilization. Moreover, in order to meet the future utmaad for cement, the industry has embarked on massive capacity expansion of 110 million tonnes in the next seven years, through both Brownfield and Greenfield routes. Cement demand will be largely triggered by the proposed Rs. 1500000.000 millions investment earmarked for infrastructure development in the current 11th five year plan (2007-2012).

 

Capacity expansion that the cement industry is envisaging will call for massive capital expenditure as the investment cost for a Greenfield plant now is as much as Rs. 5,500 a tonne. In the circumstances, it is only natural that the capacity of existing units will be optimally expanded taking advantage of the available infrastructure and logistical back up.

 

While the industry is showing dynamism to create large new capacity, the supply of coal and its rising prices remain points of grave concem. Coal is an important input in cement making and it accounts for up to 20% of total cost of production. The industry uses both domestic and imported coal. As for domestic coal, not only it became expensive due to royalty revision and a hike. in pithead prices of all grades but the Ministry of  
Coal has reduced coal linkages to cement units, Last year saw the prices of imported coal rising well over 100%. What also is of concern to the industry is the continuing fall in the qulity of domestic coal. This has implications for cement productivity and cost. Besides the growing pressure on cost, the industry will have to contend with big capacities getting commissioned in batches. This may well put pressure on cost. 

 
TYRE: 
The continuing high rate of economic growth and the production of vehicles should support sustainable healthy demand for tyres, both in the original equipment and replacement markets. The continuing thrust on the road infrastructure development is also expected to have a positive effect on tyre demand. Automobile majors continue to operate at full capacity and they also have ambitious growth plans, which should in turn trigger growth of the tyre industry of around 10% in the next five years. 

 
Volatility in raw materials prices, especially natural rubber and petroleum products and rising imports of cheap tyres from China are threats that the industry will have to live with.

 
RAYON and TRANSPARENT PAPER: 

The rise in domestic demand for superfine deniers category of VFY has offered a good marketing opportunity. Exports of VFY have also shown a rising trend. However, cost inflation and the availability of other varieties of cheaper synthetic yams, including growing imports pose considerable threat and severe competition in the global market. 
 
A reduction in the effective rate of excise duty from 16.48% to 14.42% in the current year's budget may help TP to be marketed more aggressively. The cheaper substitutes Biaxially Oriented Polypropylene-Polyvinyl Chloride (BOPP-PVC) and the low cost unregulated imports, however, remain a major threat. 

 
The demand for C.I. Pipes is good. Accordingly, access to alternative low cost raw material and-technology improvement to achieve better quality and cost reduction should ensure improved results. 

 
Further, the possible shift and product base adaptation to market requirements should improve the position. However, competition from Ductile Iron Industry for which claims are made of higher strength and lower weight, including new capacities will remain a threat. 


HEAVY CHEMICALS: 

The commissioning of new expanded capacities of Caustic Soda in two plants may affect the balance in demand-supply of Caustic Soda and joint products, 

 
OUTLOOK: 

CEMENT: 
Cement consumption has a strong correlation with GDP growth rate and rise in per capita income. Consensus among analysts is that the cement sector will be seeing strong production and consumption growth of 10% a year in the medium term. Infrastructure and construction, the two strategic sectors for the cement industry, are performing well. The scope for consumption growth is underpinned by the fact that the Indian per capita cement consumption is only 135 kg against the world average of 320 kg. Similarly, India's annual per capita cement production of 0.14 tonne is significantly below the world average 0.4 tonne. These are all pointers to consumption and production growth opportunities in India. 

 
TYRE: 
The fortune of the tyre industry is linked to the automobile and transportation sectors and the outlook for the industry looks good primarily due to highly encouraging growth in vehicle demand. The world's leading automobile companies are all here to take advantage of the growing Indian market. 

 
RAYON AND TRANSPARENT PAPER: 

It is expected that the demand of end products made of VFY would be more or less steady and the industry would be able to maintain the growth momentum. But the outlook of Transparent Paper business is not that encouraging.

 

The demand for various chemical products will also be steady with improved realizations. 

 
SPUN PIPES: 

With emphasis on rural water distribution projects and thrust on investment in infrastructure development, the demand for spun pipe will continue to be buoyant. The market of C.I. Spun Pipe is good arid is expected to remain like that in the next financial year. Government bodies are, however, shifting from Cast Iron pipe to Ductile Iron pipe, which wilt adversely affect the long-term prospects of this industry. 

 
HEAVY CHEMICALS: 

Higher International price of Caustic Soda may push up price level and demand for the products in the new financial year. 
 
RISKS AND CONCERNS CEMENT: 

Availability of Coal both in quantity and quality is a major concern for the Cement Industry. Prices of imported coal are skyrocketing and that of coal from the open market are ruling very high. Growing cement and power capacity may further aggravate the situation. 

 
The Cement industry is heavily dependent on rail transport for outward movement of cement and clinker and for inward movement of coal and other raw materials. Hence, adequate availability of wagons from the Railways is also a cause of concern. 

 
The removal of import duty on cement import, when domestic manufacturers are loaded with heavy taxes, may affect the otherwise bright outlook for the Indian Cement Industry and put the domestic industry to disadvantage. 

 

Materialisation of new capacity in a short span and the recent ban on export of cement and clinker may put pressure on prices of Cement. 

 
TYRE: 
Continuing high prices of natural rubber and other petroleum-based raw materials, rise in imports of cheap tyres from China and downturn in world economy resulting in a cascading effect in the country have to be factored in. 

 
RAYON and TRANSPARENT PAPER: 

Availability of cheaper substitutes for both VFY and TP is a subject of concern. The recessionary trend in the textile and fireworks industries is also a roadblock to better price realizations. 

 
Continuing high prices of sulphur, competition and increased imports of cheap Chinese material are also of concern for the industry. 

 
SPUN PIPES: 

With the presence of larger players armed with consolidated plants having a different production route for liquid cast iron resulting in a much lower melting cost, the players with no consolidation/backward integration shall come under pressure in terms of input costs. 

 
HEAVY CHEMICALS: 

Commissioning of new plants in eastern India will result in excess supply of by-products resulting in poor realisations due to demand supply mismatch. 

 
E. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: 

The Company has adequate internal control in all areas of its operation by utilising the services of internal and external audits from time to time and also by its own competent and qualified personnel. 

 
F. MATERIAL, DEVELOPMENT INHUMAN RESOURCES AND INDUSTRIAL RELATIONS: 

 

CEMENT: 
Measures for safety of employees, training, welfare and development continue to get high priority at all level, which are reflected in the improved quality and efficiency. 

 
Industrial relations have been cordial during the year under review. 

 
 TYRE: 
 Relationship with employees during the year remained-cordial. 

 
RAYON and TRANSPARENT PAPER: 

Industrial relations during the year under review were cordial. 

 
SPUN PIPES: 

The section is under suspension of work since 2nd May, 2008. 

 
HEAVY CHEMICALS: 

Industrial relations during the year remained normal. 

 

CONSERVATION OF ENERGY:

(a) Energy conservation measures taken:

Installed on-off controller in cooling tower and high efficiency exhaust fans in spinning section. All chemical pumps in viscose department rationalized. (Rayon and TP Sections) Installed SPRS for Unit-1 ESP Fan, energy saving equipments like roller press for raw meal grinding, combiflex grinding with HR separator for clinker grinding and double hammer crusher for lime stone crushing in Unit-3, additional capacitor bank in LC 1and2, VVVF drives for main and PC firing bag filter fan and addition of gypsum to the Polycom Roller Press. (Vasavadatta Cement Section) Modified cooler, tyres in kiln 1, chamber lengths and grinding media in raw meal 3, installed 110 KW 2nos. of VVVF drives for raw meal 3 hot air fan and kiln -2 inert gas fan, 5 nos. of stack monitors for online continuous pollution monitoring. 2 nos. of cement wagon loading machines for Unit-2 packing plant and automated PLC system in raw meal 1,2 and 3. (Kesoram Cement Section) Installed VFD in boiler ID fans, condensate polishing unit for reduction of blow down loss, aerodynamic FRP fan in TG, chiller and curing cooling tower fans, vapor absorption chiller (VRM 600 TR), centrifugal compressor for MP air system, individual pumps with auto switchover and system of curing cooling water pumping system. (Tyre Section) Installed centralized main switches to switch off when not required, maximum demand controller to monitor and control, power factor meter at S/S# 2 for continuous monitoring of power factor, new capacitor banks (75 KV) in place of old ageing banks to maintain power factor 0.98. Reduced transformer tapping 6.6/0.44 KV to 6.6/0.415 KV at substation-2. (Spun Pipes. Section) Installed energy efficient lights and motors with variable frequency drives, switched over to TOD meter in Grid Supply and modified capacitor bank. (Hindusthan Heavy Chemicals Section)

 

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Installation of high efficiency fans for spin bath supply and conversion of kerosene burner to steam for sodium sulphate dryer. (Rayon and TP Sections) Additional investment of Rs.300 Lacs (approx.) is planned for up-gradation of Captive Power Plant DCS system, raw meal 1 and 2 by modifying chamber lengths and grinding media, installation of 2nos. of clinker weigh feeders in cement mill 1 and 2. Replacement and up-gradation of pollution control equipments. (Kesoram Cement Section) Proposal for installation of scroll package AC, suitable pumps in cooling towers, reduce water consumption in cooling tower by increasing COC, increase in power generation by increasing 2nd extraction in turbine no.2, solar system in canteen and to harvest rainwater. (Tyre Section) (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Reduction in electricity and coal consumed per unit of production was witnessed in general having favourable impact on the cost of production.

 

 

(d) Total energy consumption and energy consumption per unit of production as per Form "A" of the Annexure in respect of industries specified in the Schedule thereto.

 

Particulars 

31.03.2007

31.03.2006

 

(Rs. In millions)

Power and Consumption

 

 

Electricity

 

 

Purchased

 

 

Unit in Millions

92.187

64.434

Total amount (Rs. In millions)

391.588

283.292

Rate / Unit (Rs. In millions)

0.425

0.440

Own Generation

 

 

i) Through Diesel Generator

 

 

Units in millions

0.370

19.051

Unit per Ltr. Of diesel Oil

0.361

0.388

Cost / Unit (Rs.)

0.937

0.421

ii) Through Steam Turbine / Generator

 

 

Units (In millions)

396.553

365.097

Unit per kg of Coal

0.106

0.109

Cost / Unit (Rs.)

0.185

0.190

 

TRADE REFERENCE:-

v      AM Engineering and Chemical Company

v      AVR Chemical Private Limited

v      Acmechem Private Limited

v      Costal Ammonia Private Limited

v      Industrial Products

v      JG Chemicals

v      Jain Chemicals

v      Jaishil Sulphur and Chemicals industries

v      N. K. Enterprises

v      Petrochem India Limited

v      Pigments and Chemicals Industries Private Limited

v      Progresive Producers Corporation

v      RS Chemicals

 

FIXED ASSETS

·         Land

·         Buildings

·         Railway Siding

·         Plant and Machinery

·         Electric Power Sub-Station at Nangi

·         Furniture

·         Fixture

·         Office Equipment

·         Vehicles.    

 

AS PER WEBSITE DETAILS:

 

Growth

The First Plant for manufacturing of rayon yarn was established at Tribeni, District Hooghly, West Bengal and the same was commissioned in December, 1959 and the Second Plant was commissioned in the year 1962 enabling it to manufacture 4635 metric tons per annum (mtpa) of rayon yarn. This Unit has 6,500 metric tons per annum (mtpa) capacity as on 31.3.2007.

 
The plant for manufacturing of transparent paper was also set up at the same location at Tribeni, District Hooghly, West Bengal, in June, 1961. It has the annual capacity to manufacture 3,600 metric tons per annum (mtpa) of transparent paper.

 
The Company diversified into manufacturing of Cast Iron Spun Pipes and Pipe Fittings at Bansberia, District Hooghly, West Bengal, with a production capacity of 45,000 metric tons per annum (mtpa) of cast iron spun pipes and pipe fittings in December, 1964.

 
The Company subsequently diversified into the manufacturing of Cement and in 1969 established its first cement plant under the name 'Kesoram Cement' at Basantnagar, Dist. Karimnagar (Andhra Pradesh) and to take advantage of favourable market conditions, in 1986 another cement plant, known as 'Vasavadatta Cement', was commissioned by it at Sedam, Dist. Gulbarga (Karnataka). The cement manufacturing capacities at both the plants were augmented from time to time according to the market conditions and as on 31.3.2007 have annual cement manufacturing capacities of 0.9 million tons and 3.65 million tons respectively.

 
The Company in March 1992, commissioned a plant at Balasore known as Birla Tyres in Orissa, for manufacturing of 1000000 mtpa automotive tyres and tubes in the first phase in collaboration with Pirelli Limited., U.K., a subsidiary company of the world famous Pirelli Group of Italy - a pioneer in production and development of automotive tyres in the world. The company as on 31.3.2007 had the manufacturing capacities of 1.95 million tyres, 1.4 million tubes and 1.1 million flaps per annum in the said Plant.

 

It has small manufacturing capacities of various chemicals at Kharda in the State of West Bengal also. It has the annual manufacturing capacities of 12410 mtpa of Caustic Soda Lye, 5,045 mtpa of Liquid Chlorine, 6,205 mtpa of Sodium Hypochlorite, 8,200 mtpa of Hydrochloric Acid, 3,200 mtpa of Ferric Alum, 18,700 mtpa of Sulphuric Acid and 1620000 m3 of purified Hydrogen Gas.

 

The Company is a well-diversified entity in the fields of Cement, Tyre, Rayon Yarn, Transparent Paper, Spun Pipes and Heavy Chemicals with two core business segments i.e. Cement and Tyres.

 
The Company as of now is listed on three major Stock Exchanges in India i.e. Bombay Stock Exchange Limited, Mumbai, Calcutta Stock Exchange Association Limited, Kolkata and National Stock Exchange of India Limited, Mumbai and at the Societe de la Bourse de Luxembourg, Luxembourg.

 

Future

A further expansion upto 1.65 million tons of cement per annum in Vasavadatta Cement at Sedam in Karnataka at the same site is in progress, with a Captive Power Plant, involving a capital expenditure of about Rs. 5500.000 millions.
 
Further, after augmentation of the existing capacity of Tyre Plant at Balasore in Orissa, which has the total capacity of 252 metric tons per day as on date, the Board has sanctioned setting up of a Greenfield Project of 257 metric tons per day capacity in the State of Uttaranchal with a capex of about Rs. 7600.000 millions. The work on which is in progress.

 

PRESS RELEASES :-

 

KESORAM Industries Ltd has increased its holding in Mangalam Timber Products Ltd by acquiring 5.35 per cent from an Orissa Government outfit for Rs 20.000 millions.

 

Both Kesoram Industries and Mangalam Timber are B.K. Birla group companies. The former is one of the major promoters of Mangalam Timber. Prior to this acquisition, the promoters' stake in Mangalam Timber was 23.73 per cent.

 

The Industrial Investment Promotion and Investment Corporation of Orissa Ltd (IPICOL) held 0.980 million equity shares of Mangalam Timber. Kesoram Industries paid Rs 20.31 for an equity share of Rs 10 face value held by IPICOL.

 

According to Mr S.K. Parik, Managing Director of Kesoram Industries and Director of Mangalam Timber, the shares held by IPICOL were transferred only last week after several months of negotiations.

 

For the year ended March 31, 2005, the company registered its highest ever turnover of Rs 617.200 millions against Rs 436.600 millions in the previous financial year. Its net profit during 2004-05 is Rs 28.800 millions. Accumulated losses of Mangalam Timber (after adjustments of deferred tax assets worth Rs 78.900 millions) had dropped to Rs 641.000 millions from Rs 196.000 millions in March 2004.

 

Mr G.S. Gupta, Managing Director of Mangalam Timber, said that thanks to the latest trend of profitability, the rest of the accumulated losses is likely to wiped out during the current financial year.

 

The company, which was referred to BIFR (Board for Industrial and Financial Reconstruction) in 1998, is no longer a sick company. "We would seek a de-registration from BIFR in October, this year," he said.

 

With improving profitability, the company has revoked its earlier decision of reducing its paid-up share capital from Rs 10 per share to Rs 4 per share. However, the board is not paying a dividend this year, but Mr Gupta said that it would in a "few years' time".

 

As a move towards backward integration, the company had commissioned a 40-tonne-per-day formaldehyde plant, about a year ago, at Rs 20.000 millions. This plant is expected to generate 10 per cent of the company's revenues.

 

 

CMT REPORT (Corruption, Money Laundering & Terrorism]

 

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

 

1]         INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

 

2]         Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

 

3]         Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

 

4]         Record on Financial Crime :

            Charges or conviction registered against subject:                                                  None

 

5]         Records on Violation of Anti-Corruption Laws :

            Charges or investigation registered against subject:                                                          None

 

6]         Records on Int’l Anti-Money Laundering Laws/Standards :

            Charges or investigation registered against subject:                                                          None

 

7]         Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

 

8]         Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

 

9]         Compensation Package :

The market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

 

10]        Press Report :

            No press reports / filings exists on the subject.

 

 

 

 

 

 

 

 

 

 

CORPORATE GOVERNANCE

 

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

 

The Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

 

CONTRAVENTION

 

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs. 42.97

UK Pound

1

Rs. 84.75

Euro

1

Rs. 66.72

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

8

PAID-UP CAPITAL

1~10

8

OPERATING SCALE

1~10

8

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

9

--PROFITABILIRY

1~10

7

--LIQUIDITY

1~10

8

--LEVERAGE

1~10

8

--RESERVES

1~10

8

--CREDIT LINES

1~10

8

--MARGINS

-5~5

----

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

YES

--EXPORT ACTIVITIES

YES/NO

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

72

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

NR

In view of the lack of information, they have no basis upon which to recommend credit dealings

No Rating

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions