MIRA
INFORM REPORT
|
Report Date : |
28.03.2008 |
IDENTIFICATION DETAILS
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Name : |
BHARAT
FORGE LIMITED |
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Registered Office : |
Mundhwa, Pune Cantonment, Pune –
411 036, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
19.06.1961 |
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Com. Reg. No.: |
11-12046 |
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CIN No.: [Company
Identification No.] |
L25209PN1961PLC012046 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
PNEB0272E |
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Legal Form : |
A public limited liability company. The company’s shares are
listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing and Sale of Steel Forgings, Finished Machined Crankshafts,
Couplings, Front Axle Assembly and Components. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial
& operational base are regarded healthy. General unfavourable factors
will not cause fatal effect. Satisfactory capability for payment of interest
and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD
53071800 |
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Status : |
Good |
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Payment Behaviour : |
Regular
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Litigation : |
Clear |
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Comments : |
Subject
is a well-established and reputed company having fine track. 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 normal for business dealings at usual trade terms
and conditions. The
company can be regarded as a promising business partner in a medium to
long-run. |
LOCATIONS
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Registered Office : |
Mundhwa, Pune Cantonment, Pune –
411 036, Maharashtra, India |
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Tel. No.: |
91 - 20 – 26702777 / 26702476 / 26702440 |
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Fax No.: |
91 - 20 – 26822163 / 26822387 / 26820699 |
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E-Mail : |
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Website : |
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Factory
1 : |
Mundhwa, Pune Cantonment, Pune - 411 036, Maharashtra |
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Factory
2 : |
Gat No. 635, Kuruli Village, Chakan, District Pune – 410 501,
Maharashtra |
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Factory
3 : |
Opposite Jarandeshwar Railway Station, Vadhuth, District Satara –
415 011, Maharashtra |
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Factory
4 : |
Kusumbe, Jalgaon-Ajantha Road, Jalgaon – 425 003, Maharashtra |
DIRECTORS
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Name : |
Mr. B. N. Kalyani |
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Designation : |
Chairman and Managing Director |
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Qualification : |
B.E. (Mech.) (Hons.), M.S.
(M.I.T.) |
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Date of Appointment : |
01.04.1972 |
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Name
: |
Mr. P. H. Ravikumar |
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Designation
: |
ICICI Nominee Director |
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Name
: |
Mr. S. S. Marathe |
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Designation
: |
Director |
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Name
: |
Mr. S. M. Thakore |
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Designation
: |
Director |
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Name
: |
Mr. S. D. Kulkarni |
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Designation
: |
Director |
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Name
: |
Mr. Pratap Bhogilal |
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Designation
: |
Director |
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Name
: |
Mr.
Anil Rege |
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Designation
: |
Director
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Name
: |
Prof. Dr.
Uwe Loos |
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Designation
: |
Director
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Name
: |
Mr.
Pratap G Pawar |
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Designation
: |
Director
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Name
: |
Mrs. Lalita D Gupte |
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Designation
: |
Director |
KEY EXECUTIVES
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Name
: |
Mr. P. C. Bhalerao |
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Designation
: |
Executive Director |
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Qualification
: |
B.E. (Elect.), M.B.A., D.T.M. |
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Date
of Appointment : |
3rd March, 1987 |
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Previous
Employment : |
Bharat Steel Tubes Limited, Delhi – Dy. General Manager |
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Name
: |
Mr. G. K. Agarwal |
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Designation
: |
Deputy
Managing Director |
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Qualification
: |
B.E. (Mech.), M.B.A. |
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Date
of Appointment : |
1st November, 1976 |
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Previous
Employment : |
Guest Keen Williams Limited,
Howrah, West Bengal |
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Name
: |
Mr. Amit B. Kalyani |
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Designation
: |
Executive Director |
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Name
: |
Mr. B. P. Kalyani |
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Designation
: |
Executive Director |
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Name
: |
Mr. S. E. Tandale |
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Designation
: |
Executive Director |
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Name
: |
Mr. P. K. Maheshwari |
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Designation
: |
Executive Director |
MAJOR SHAREHOLDERS
(As
on 31.03.2007)
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Names
of Shareholders |
No. of Shares |
Percentage of Holding |
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Promoters |
87642073 |
39.36% |
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Financial
Institutions |
9498011 |
4.27% |
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Mutual Funds |
7710846 |
3.46% |
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Insurance
Companies |
11146336 |
5.01% |
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Nationalised Banks |
854053 |
0.38% |
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Foreign
Institutional Investors |
41549005 |
18.66% |
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Bodies Corporate |
21307650 |
9.57% |
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Non Resident
Indians |
968663 |
0.44% |
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Foreign Nationals |
2132521 |
0.96% |
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Indian Public |
39843113 |
17.89% |
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Total |
222652271 |
100.00% |
BUSINESS DETAILS
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Line of Business : |
Manufacturing and Sale of Steel Forgings, Finished Machined Crankshafts,
Couplings, Front Axle Assembly and Components. |
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Products : |
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Export: |
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Countries: |
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Imports: |
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Countries: |
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Terms : |
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Purchasing : |
L/C, D/A and D/P terms |
PRODUCTION
STATUS
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Particulars |
Unit |
Licensed Capacity |
Installed Capacity |
Actual Production |
Steel Forging
|
MT |
240000 |
240000 |
165239 |
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Finished Machined Crankshaft |
Nos. |
600000 |
408500 |
347795 |
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Couplings |
MT |
600 |
600 |
--- |
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Front Axle Assembly & Components |
Nos. |
600000 |
533500 |
423571 |
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Well Head Assembly and Parts |
Nos. |
5000 |
--- |
--- |
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Aluminium Road Wheel |
Nos. |
4000 |
4000 |
3641 |
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General Engineering Equipments |
Nos. |
1100 |
1100 |
5 |
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Material Handling Equipments |
Nos. |
1350 |
1350 |
--- |
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Hydraulic & Mechanical
Presses |
Nos. |
250 |
250 |
--- |
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Bandshaw Machines for cutting
Metallic Round & Square Bars |
Nos. |
50 |
50 |
10 |
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Front Axle Assembly at Dharwad |
Nos. |
50000 |
---- |
--- |
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Finished Machined Crankshaft
(Chakan) |
Nos. |
180000 |
241500 |
174270 |
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Front Axle Assembly and
Components at Chakan |
Nos. |
300000 |
219600 |
148482 |
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Transmission Parts |
Nos. |
3000000 |
2041000 |
2072881 |
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Seal Rings, Clamps and
Hubs |
Nos. |
50000 |
7000 |
350 |
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Rocker Arm Assembly |
Nos. |
100000 |
--- |
--- |
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Bonnets and Key Shaft |
Nos. |
50000 |
--- |
--- |
- Annual Capacity on maximum utilisation
basis.
Under Registration with Government Authority.
- Since the Company's installed capacity is dependent
on Product mix, which in turn is decided on the basis of actual demand for
various products from time to time, it is not feasible for the Company to
give exact installed capacity. The Company has, however, indicated
installed capacity on the basis of year's Product mix, as certified by the
Chairman and Managing Director and being a technical matter accepted by
the Auditors as correct.
- The installed capacities have been enhanced
on capitalization of expansion projects in a phased manner during the course
of the year.
- Includes captive consumption 69124 M.T.
(2005-06 - 58270 M.T.).
- Includes captive consumption Band Saws 10
Nos ( 2005-06 - 2 Nos.)
- The Company has applied for enhancement in
the Licensed capacity from 180000 Nos. M.T. to 300000 Nos
GENERAL INFORMATION
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Customers : |
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No. of Employees : |
2,521 |
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Bankers : |
“Lokmangal”, 1501 Shivajinagar (Head Office), Pune – 411 005,
Maharashtra, India
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Facilities : |
[figures are in Rupees
Millions]
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Banking Relations : |
Satisfactory
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Auditors : |
Dalal and Shah Chartered Accountants |
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Associates : |
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Subsidiaries : |
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Membership : |
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CAPITAL STRUCTURE
Authorised
Capital :
|
No.
of Shares |
Type |
Value |
Amount |
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|
300000000 |
Equity Shares |
Rs.2/- each |
Rs. 600.000 Millions |
|
43000000 |
Cumulative Preference Shares |
Rs.10/- each |
Rs. 430.000 Millions |
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2000000 |
Unclassified Shares |
Rs.10/-each |
Rs. 20.000 Millions |
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Total |
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Rs. 1050.000
Millions |
Issued :
|
No.
of Shares |
Type |
Value |
Amount |
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10000000 |
8.25% Redeemable Cumulative
Non-Convertible Preference Shares |
Rs.10/- each |
Rs. 100.000 Millions |
|
222828621 |
Equity Shares |
Rs.2/- each |
Rs. 445.666 Millions |
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Total |
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Rs. 545.666
Millions |
Subscribed
& Paid-up Capital :
|
No.
of Shares |
Type |
Value |
Amount |
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10000000 |
8.25% Redeemable Cumulative
Non-Convertible Preference Shares |
Rs.10/- each |
Rs. 100.000 Millions |
|
222652271 |
Equity Shares |
Rs.2/- each |
Rs.445.310 millions |
|
172840 |
Forfeited Shares |
|
Rs. 0.090 Millions |
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Total |
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Rs. 545.400
Millions |
Prior
to subdivision of shares:
9.50% Redeemable Cumulative
Non Convertible Preference Shares of Rs.10/-each were redeemed on due date
during the year, 8.25% Redeemable Cumulative Non Convertible Preference Shares
of Rs.10/- each are to be redeemed in cash on 10th February, 2008.
FINANCIAL DATA
[all figures are in Rupees
Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
545.400 |
544.620 |
595.600 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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|
3] Reserves & Surplus |
12722.550 |
11096.680 |
3829.990 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
13267.950 |
11641.300 |
4425.590 |
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LOAN FUNDS |
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1] Secured Loans |
3735.720 |
3816.020 |
3832.060 |
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2] Unsecured Loans |
10280.400 |
6108.610 |
346.680 |
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TOTAL BORROWING |
14016.120 |
9924.630 |
4178.740 |
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DEFERRED TAX LIABILITIES |
1127.830 |
966.560 |
811.680 |
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TOTAL |
28411.900 |
22532.490 |
9416.010 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
11513.000 |
7744.110 |
5264.160 |
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Capital work-in-progress |
2748.030 |
3707.040 |
2758.960 |
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INVESTMENT |
4507.060 |
4440.180 |
383.470 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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TECHNICAL KNOW-NOW |
6.260 |
8.340 |
10.420 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
3027.890
|
2542.660
|
1860.830 |
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Sundry Debtors |
2539.520
|
1885.540
|
1430.600 |
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Cash & Bank Balances |
7362.750
|
5054.120
|
281.270 |
|
|
Other Current Assets |
836.690
|
913.060
|
664.440 |
|
|
Loans & Advances |
4723.260
|
4957.090
|
3610.720 |
|
Total Current Assets |
18490.110
|
15352.470 |
7847.860 |
|
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
5756.900
|
5114.920
|
4318.230 |
|
|
Provisions |
3098.000
|
3617.260
|
2573.650 |
|
Total Current Liabilities |
8854.900
|
8732.180 |
6891.880 |
|
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Net Current Assets |
9635.210
|
6620.290 |
955.980 |
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MISCELLANEOUS EXPENSES |
2.340 |
12.530 |
43.020 |
|
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TOTAL |
28411.900 |
22532.490 |
9416.010 |
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PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales
Turnover |
18101.270 |
15114.500 |
12264.650 |
|
|
Operating
Income |
542.950 |
664.810 |
0.000 |
|
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Other Income |
808.750 |
530.190 |
0.000 |
|
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Total
Income |
19452.970 |
16309.500 |
12264.650 |
|
|
|
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|
|
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|
Profit/(Loss) Before Tax |
3598.090 |
3148.930 |
2480.790 |
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|
Provision for Taxation |
1188.560 |
1079.280 |
864.490 |
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Profit/(Loss) After Tax |
2409.530 |
2069.650 |
1616.300 |
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FOB
Value of Exports: |
8361.020 |
7187.510 |
5348.650 |
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Imports
: |
|
|
|
|
|
|
Raw Materials and
component for manufacturing |
369.120 |
266.590 |
1398.120 |
|
|
Die, block, Die Steel, Tool steel, and spares |
615.190 |
321.740 |
0.000 |
|
|
Capital Goods |
824.840 |
2234.570 |
0.000 |
|
Total
Imports |
1809.150 |
2822.900 |
1398.120 |
|
|
|
|
|
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|
|
Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses and other expenses |
14789.360 |
12430.160 |
0.000 |
|
|
Exceptional Item of expenditure |
67.500 |
0.000 |
0.000 |
|
|
Depreciation & Amortization |
998.020 |
730.410 |
0.000 |
|
Total
Expenditure |
15854.880 |
13160.570 |
9783.860 |
|
QUARTERLY
RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
|
|
1st Quarter
|
2nd
Quarter |
3rd
Quarter |
|
Sales
Turnover |
4968.700 |
5632.200 |
5567.300 |
|
Other
Income |
533.400 |
252.600 |
155.600 |
|
Total
Income |
5502.100 |
5884.800 |
5722.900 |
|
Total
Expenditure |
3956.500 |
4249.200 |
4203.500 |
|
Operating
Profit |
1545.600 |
1635.600 |
1519.400 |
|
Interest |
233.600 |
273.000 |
294.200 |
|
Gross
Profit |
1312.000 |
1362.600 |
1225.200 |
|
Depreciation |
329.000 |
351.100 |
353.300 |
|
Tax |
334.900 |
334.000 |
290.100 |
|
Reported
PAT |
648.100 |
677.500 |
581.800 |
KEY
RATIOS
|
Particulars
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.96 |
0.88 |
1.01 |
|
Long Term Debt-Equity Ratio |
0.70 |
0.63 |
0.76 |
|
Current Ratio |
1.29 |
1.08 |
0.86 |
|
TURNOVER
RATIOS |
|||
|
Fixed Assets |
1.33 |
1.49 |
1.42 |
|
Inventory |
7.15 |
7.50 |
7.89 |
|
Debtors |
9.00 |
9.96 |
10.35 |
|
Interest Cover Ratio |
5.38 |
6.74 |
8.39 |
|
Operating Profit Margin(%) |
27.19 |
26.78 |
26.54 |
|
Profit Before Interest And Tax Margin(%) |
22.17 |
22.36 |
22.36 |
|
Cash Profit Margin(%) |
17.12 |
16.96 |
17.02 |
|
Adjusted Net Profit Margin(%) |
12.10 |
12.53 |
12.84 |
|
Return On Capital Employed(%) |
18.08 |
24.52 |
40.65 |
|
Return On Net Worth(%) |
19.44 |
26.11 |
49.53 |
LOCAL AGENCY FURTHER INFORMATION
History
It was originally incorporated under the name and style of
subject, which was subsequently changed to the present.
Subject a part of the Kalyani group is the largest Forging Company
in India. The company emerged as world's second largest forging company with
the acquisition of Carl Dan Peddinghus GmbH(CDP) of Germany in Nov 21,
2003.
Subject promoted by Neelkanth A Kalyani was incorporated in Jun.'1961. The
company has a fully integrated facility with capabilities in design and
engineering, die and tool making, forging a wide range of products, machining
and testing and validation. It is the only company having this capability for a
complete range of engine and chassis components. Being a leader in steel
forging it has diversified presence in other areas such as finished machined
crankshafts, component assembly, sub-assembly of industrial machinery, etc. In
Feb.'1994, the company came out with a rights issue to part-finance the
connecting rod project, to expand financial services division and to augment long-term
resources, totalling Rs 642.900 millions.
Subject has technical tie-ups with Tokoyo Drop Forge, Japan, for the closed die
forging units; and with Judisha Buhin Kogyo, Japan, for a machine component
unit. It has a technical collaboration with Lemmerz-Werke, Germany, to
manufacture wheel rims for heavy and light commercial vehicles. The company has
been accredited with the ISO 9002 quality certificate.
The company has joint venture with Metalart Corporation, Japan and Nissho Iwai
Corporation, Japan for the manufacture of precision forgings. The company has
tied up with Cranfield University, UK, the foremost post-graduate centre of
Europe, to form Kalyani Cranfield Manufacturing Management Centre, for
technology, professional development and applied research. The centre was set
up at Pune.
In 1998-99, the company recalled the Forge expansion project for additional
capacity of 38,000 tpa at Mundhwa, Pune which was deferred for one year. It has
also set up facilities for generating 2 MW Wind Power at a cost of Rs 124.300
Millions, at Thoseghar in Satara Dist.
In 1999-2000, subject has successfully implemented modules of SAP R/3
Enterprise Resource Planning (ERP) package. It has introduced new computer
aided engineering (CAE) based metal flow simulation techniques which is an
important guide to die designers to achieve 'first time right' for new product
development.
The scheme of arrangement between the company and BF Utilites (BFUL) has been
approved. Under this scheme the Investment and Wind Mill division have been
demerged and transfered to BFUL from Mar.'01.
During January,2002 the company entered into an agreement with Dana Corporation
Spicer Europe Limited for supply of forgings. Under this agreement subject will
supply Dana with certain forgings used by its Kirkstall axle operations and its
commercial vehicle axle operations in North America. To supply transmission
components for their global operations the company entered into a contract with
Toyota.
The company has acquired CDP Aluminiumtechnik Gmbh during december 2004. CDPAT
belongs to the renowned CDP group and is a significant player in Europe in the
area of aluminium forged components used in passenger cars and other automotive
applicaitons and name of the company has been changed to Bharat Forge
Aluminiumtechnik. Further Bharat Forge America Inc., Delaware, USA has become a
subsidiary of the company with effect from 16th May 2005.
During July 2004 the company came out with rights issue of equity shares for
its shareholders in the ratio of 1:20 with a premium of Rs.550/- per share with
attached warrants on the basis of one warrant for every two rights equity
shares and in July 2005 the company has sub-divided its equity share face value
from Rs.10/- per share to Rs.2/- per share.
During 2004-05 the company has increased its installed capacity of Steel
Forging and Front Axle Assembly and Components at Chakan by 27,034 MT and
1,03,600 Nos. respectively. With this expansion the total installed capacity of
Steel Forging and Front Axle Assembly and Components at Chakan has increased to
1,30,000 MT and 1,77,600 Nos. respectively. Further the company has installed a
capacity for the manufacture of 4,13,000 Nos. of finish machined Crankshafts at
Mundhwa.
In 2005-06, the company continued to strengthen its position by
making further acquisitions and the following acquisitions have been made by
the company: Through its wholly owned subsidiary, Bharat Forge Beteiligungs
GmbH, Germany, the company, on September 21, 2005, acquired Imatra Kilsta AB,
Sweden along with its wholly owned subsidiary, Scottish Stampings Limited,
Scotland (together called Imatra Forging Group), which are now renamed as
Bharat Forge Kilsta AB (BF Kilsta) and Bharat Forge Scottish Stampings Limited,
respectively. BF Kilsta is the leader in the manufacturing of heavy-duty diesel
engine crankshaft for the European and Scandinavian truck markets.
On December 8, 2005, the company, through its wholly owned subsidiaries, Bharat
Forge Beteiligungs GmbH and Bharat Forge Hong Kong Limited, concluded a Joint
Venture agreement with FAW corporation of China (FAW). The subsidiaries own 52%
stake in the JV and the balance 48% is held by FAW. The JV Company, set up
under the name and style of FAW Bharat Forge (Changchum) Company Limited, has
commenced operations from 6th April 2006.
The company has increased its installed capacity of Steel Forging, Finished
Machined Crankshaft and Front Axle Assembly and Components by 70,000 MT, 50,000
Nos. and 2,00,400 Nos. during the year 2005-06. With this expansion the total
installed capacity of Steel Forging, Finished Machined Crankshaft and Front
Axle Assembly and Components increased to 2,00,000 MT, 4,63,000 Nos. and
6,78,000 Nos. respectively.
Fixed Assets
- Land, Free
hold
- Land, lease
hold
- Buildings
- Plant and
Machinery
- Railway
sidings
- Electrical
installations
- Factory
equipments
- Engineering
instruments
- Furniture
and fittings
- Office
equipments
- Vehicles
and Aircrafts
- Leased
assets ( Plant and Machinery)
- Leased assets
(Power line)
Business:
Highlights
- Consolidated revenue
surpassed USD 1 Billion mark, one year ahead of the target of FY 2008
- Consolidated earning per
share (EPS) reached Rs. 13.01 (Each share of the face value of Rs. 2)
- Completed the forging and
machining capacity expansion program at Mundhwa, Pune
- Established the global
manufacturing footprint with commencement of Join Venture operations in
China.
- Further strengthened
position with global customers with three large long term contract, each
in excess of USD 50 million annual value.
- Significantly de-risked the
US business, the largest export market for the Company
- Launched strategic foray
into non automotive component business. To address key sector such as
Aerospace, oil and Gas, Conventional and Non Conventional Energy, Rail and
Marine and Mining, Metals and infrastructure with initial long term
contracts already secured.
Management
Discussion and Analysis
Overview:
The world economy grew at a healthy rate in 2006-07. In its World Economic Outlook, the IMF estimated global economic growth of over 5.4% in 2006. On the domestic front, India continued to grow impressively clocking 9.4% GDP growth in 2006-07. After a robust 9% growth in 2005-06, India has now achieved a four-year CAGR in excess of 8.5%.
The overall economic environment has been positive for 2006-07. Moreover,
almost all regional and global macroeconomic indicators suggest that optimistic
sentiments and healthy global economic growth should persist over the next few
years. The IMF projects global real GDP growth in excess of 4.5% year-on-year
until 2012. For a global enterprise like Bharat Forge Limited ('Bharat Forge',
'BFL' or 'the Company') with its sizeable international business and a global
manufacturing footprint, this milieu of growth presents a great opportunity to
put into place world class capacities and strategically position itself to reap
even greater benefits in existing as well as new market segments.
Today, subject operates in three continents: Europe, North America and Asia. Over the last four years, the Company has successfully made several acquisitions: Carl Dan Peddinghaus and CDP Aluminiumtechnik (in Germany), Imatra Kilsta AB (in Sweden) together with its 100% subsidiary Scottish Stampings Limited (Scotland) and Federal Forge in the USA. subject also has a majority stake in a joint venture with First Auto Works (FAW) called FAW Bharat Forge (Changchun) Company Limited that operates in China.
These businesses, together with subject's Indian operations form the global
subject group - whose performance gets reflected in the consolidated accounts
of subject. Highlights of subject's financial performance for 2006-07
are:
* Total Revenue crossed USD 1 billion to reach Rs.42752.13 million in 2006-07 -
up by 38.6% over the previous year. The target of USD 1 billion revenue was
achieved a year ahead of their target of 2008.
* Operating profits (PBDIT) was Rs.7,432.72 million in 2006-07 - a growth of
26.2% over 2005-06.
* Profit after tax and minority interest (PAT) increased by 16% to Rs.2905.88
million in 2006-07.
* Earnings per share (EPS) Rs.13.01 (each share of the face value of
Rs.2/-).
While continuing to make the most of the strong prevailing demand conditions in
2006-07, subject laid great emphasis on further developing its internal
capabilities - especially in creating larger production and delivery
capabilities, and ramping up operations to strengthen its position as the
premier player in the global forgings business. In 2006-07, they not only
completed several of their earlier initiatives like the expansion programme in
Mundhwa, India and the foray into setting up manufacturing facilities in China,
but also strategised and launched a completely new set of initiatives to
sustain subject's growth in the future. One such key initiative has been the
foray into non-automotive forgings business to address a wide range of
geographies, markets and products with high value, high value added components
required for diverse applications such as Aerospace, Rail and Marine, energy,
oil and gas and mining, metals and infrastructure.
For 2006-07, the Company defined five
main thrust areas.
These
were:
* The stress on the consolidation process
that focuses on building capacities, ramping up production, developing flexible
production systems, optimising product mix and improving efficiencies across
group companies.
* Leverage overall subject capabilities to broaden the relationship with the
existing customers of the acquired entities, and enhance the level of client
support.
* Develop and commence implementation of the strategy to enter the
non-automotive forgings business.
* Focus on integration of China operations.
* Continue to focus on building a de-risked business model.
It is useful to discuss each as they go along.
The
Consolidation Process
Stabilising
new capacities and ramping up production:
During 2006-07 subject completed its forging and machining capacity expansion project at Mundhwa. This project involved setting up state-of-the-art production facilities that had flexible manufacturing capability across a wide range of products and applications. The entire forging capacity expansion program involved setting up two heavy duty press lines, and two additional press lines including a fully automatic transfer press line.
These have been installed and stabilised. This has taken their Indian forging capacity to 240,000 TPA whereas the annual crankshafts and chassis component machining capacity has reached 650,000 and 753,000 numbers respectively.
The ramp up of production on new capacities also progressed well with several
new programmes entering serial production mode. As a result, the company
achieved an overall utilization of 69% of its forging capacity and 80% of its
crankshaft machining capacity.
Launching
initiatives to develop flexible manufacturing processes:
Subject recognises that it operates in a very dynamic market. It is imperative to set up manufacturing facilities that can, at any point in time, manufacture the type of product that the market demands. This exercise is across two levels - within manufacturing facilities in each plant, as well as across plants in different geographies. To give an example, the units in Scotland and Sweden have been actively involved in transferring product manufacturing capabilities between one another and India.
Implementation of dual shore strategy and cross-fertilising 'best practices' within the subject group:
As a part of dual shore strategy, subject has transferred technologies both from and to some of the international subsidiaries. For instance, CDP-BF, with the support of subject, has started the process of extending its product range. This has broadened the scope of product deliverables across various geographies. It has also begun to improve operating efficiencies across a wide spectrum of parameters, ranging from design and engineering to production, utilities and services. The pool of engineering talent in the subject Group is actively involved in cross-fertilisation of best manufacturing and quality practices across all its units. The Centre for Excellence in Research and Development in Germany is coordinating across all units within the subject Group for benchmarking and exchanging ideas, information and projects.
Financial
Review:
Subject’s summarised financial performance for the year ended 31 March 2007 is shown in Table 2 and Table 3.
Subject’s consolidated financial performance for 2006-07 is not strictly comparable to 2005-06 as it for the first time includes the 9 month financials of its Chinese joint venture - FAW BF.
The addition of FAW-BF increases the revenues of subject (consolidated) by
Rs.1627 million. Although, subject had only nine months of operations of
FAW-BF, it has been able to contain the operating loss of the JV. Subject’s
share net of minority interest of operating losses of FAW-BF was Rs.74 million
in 2006-07. The net loss for the China operations (subject's share) is Rs.160
million, which includes one time and non operational charges of Rs.86 million,
incurred in respect of JV formation expenses and cost arising out of financial
structuring of the JV.
To get a better understanding of the performance of the company on a
consolidated basis they proceed to analyse the performance of subject and its
wholly owned subsidiaries (see table 4).
Table 4: Financial Performance (subject and wholly-owned subsidiaries): (Rs.
Millions) 2006-07 2005-06 Growth
Total Revenue 41,125 30,850 33.3%PBDIT 7,503 5,889 27.4%PBT 4,594 3,925
17.0%PAT 3,066 2,505 22.4%Key Ratios:PBDIT/Total Revenue 18.2% 19.1%PBT/Total
Revenue 11.2% 12.7%PAT/Total Revenue 7.5% 8.1%
Subject and its wholly-owned subsidiaries recorded a 33.3% increase in total revenues from Rs.30850 million in 2005-06 to Rs.41125 million in 2006-07.
The performance of 2006-07 incorporates the first full year of operations for their US, Swedish and Scottish subsidiaries. They wish to highlight that the US operations were acquired out of Chapter 11 proceedings under US Bankruptcy code and went into a turnaround mode immediately after the take over. For BF Kilsta group, the acquisition meant a complete rejuvenation of business focus under subject's leadership and management focus. These businesses have now got renewed focus and strategy and although, the full results may be visible after some time, they have already begun to see a strong trail of improvements, especially in the BF Kilsta group. It is thus important to factor these qualitative aspects while evaluating the consolidated results of the company. On a combined basis, subject has been able to achieve strong revenue growth and maintain PBDIT and PBT at healthy levels.
* Total revenues increased by 19.3% from
16,310 million in 2005-06 to Rs.19453 million in 2006-07.
* This top-line growth, coupled with an increase in PBDIT margins from 27.1% in
2005-06 to 28.2% in 2006-07, contributed to a 23.9% growth in PBDIT.
* Given the investments into capacity
expansions and an increase in USD LIBOR and domestic interest rates, the
interest and depreciation charge as a ratio to total revenues has gone up by
close to 1.5%.
* This increased interest and depreciation expenditure affected the PBT and PAT
margin. Consequently PBT and PAT grew by 14.3% and 16.4% to Rs.3598.09 million
and Rs.2409.53 million respectively in 2006-07.
* Diluted EPS increased from Rs.9.05 in 2005-06 to Rs.10.78 in 2006-07. subject
also successfully concluded its USD 300 million fund raising program with 2
tranches of FCCB offering in April 06 aggregating to USD 79.90 million.
This was in addition to USD 220 million raised in April 2005 through a combination of GDRs and FCCBs
BEL also successfully concluded its USD 300 million fund raiseing program with 2 tranches of FFCB offering in April 2006 aggregating to USD 79.90 millions. This was in addition to USD 220 millions raised in April 2005 through a combination of GDR’s and FCCB’s
Outlook:
Subject has firmly established itself as a global player in automotive
components Business. The company has taken several strategic initiatives and
made significant investments in the last few years, including in 2006-07
towards integrating itself into the global automotive supply chain. Now, the
company has put capacities in place, expanded to most geographies and built
strong client relationships across the board giving it significant competitive
advantage. With proximity to clients, multi-location operational presence and
design and engineering capabilities, the company is in a position to get large
orders from the global OEMs and grow rapidly.
Geographically, Europe is where subject has the largest presence today. The European commercial vehicle market is expected to maintain its growth momentum. The company is ramping up several medium and heavy duty engine component programs. In addition to this, the passenger car program in Europe is also going through a phase of ramp up. In India, in line with the strong growth of the economy, the automobile industry is expected to do well. However, the industry might not grow at the same pace as last year.
Moreover, the interest rates have hardened quite a bit and this may also affect the growth of the automobile market in India. The US truck market was a little soft in the last quarter of 2006-07. The company is fairly well insulated from any slowdown, since it has de-risked this geography by adding passenger car parts, heavy duty diesel engine parts and non-automotive components in its product portfolio and successfully started developing the businesses. While it has one of the largest opportunities for growth, the Chinese market remains a significant challenge for subject.
Though, the company has instituted significant operational improvements in China, the inventory overhang situation will only correct sometime during 2007-08. The company is also expanding its non-automotive forging and machining capacity. This is in line with their de-risked business strategy and the contribution of non-automotive business is likely to increase manifold as the new manufacturing facilities go on stream.
The company's de-risked business model along with strong global footprint in
automotive components will keep the company in good stead. Moreover, subject
continues to stress on emerging technologies, strong engineering, design and
delivery capabilities. The company has initiated a series of measures to hire
talented individuals and to retain existing talent. The benefits of a de-risked
business model, strong operational backbone and people focus are likely to
unfold in the coming few years.
PERFORMANCE OF THE COMPANY:
The financial year
2006-07 has been another year of robust overall growth for the Company. Like
the previous year, this year also, the Company has shown growth across various
parameters of performance. The factors which aided this sustained progress were
mainly growth in exports of medium and heavy duty engine parts and increased
presence in passenger car market and strong growth in commercial vehicle
business in India. Also, the factors which augmented the performance were
superior product mix with ramp up of value added products and sustained efforts
for reduction of costs.
During the year under
review, the total income of the Company touched Rs.19453 Million (Rs.16310
Million) representing an increase of 19%.
Exports Revenue (on a stand-alone basis):
2003-04: Rs.3331
Million
2004-05: Rs.5105
Million
2005-06: Rs.6555
Million
2006-07: Rs.7513
Million
During the year under review, exports turnover of the Company touched Rs.7513 Million
mark, an increase of 15% over previous year (Rs.6555 Million). This is
primarily attributable to:
- Ramp up of supplies
for machined, Heavy Duty Engine Crankshafts to US.
- Commencement of
serial production for new Medium Duty Truck Engine programme for Europe.
- Ramp up of supplies
of Passenger Car Crankshafts to US and Europe.
During the year under report, the Company continued its strategy of enhancing
its presence in Heavy Duty Engine and Passenger Car Crankshafts segments. The
Company bagged new orders for machined Crankshafts from the US and Europe
during the year under review, which will significantly increase its export
business.
Continued focus on the Non-Automotive sector yielded new business opportunities
during 2006-07.
The Company has been making constant efforts for upgradation in quality and
value addition for existing as well as new customers. As a result, the Company
is increasingly assuming the role of 'Preferred Supplier' with most large
global OEMs, which is likely to substantially strengthen the relationship and
enhance the turnover with each major OEM.
Overall, the Directors
look forward to a continued growth in exports.
OVERSEAS
SUBSIDIARIES OPERATIONS:
The Company has 3 subsidiary companies overseas which in turn have their respective subsidiaries. A summary of their performance is given elsewhere in the Annual Report.
During the year under report, the emphasis has been on improving the operating
efficiency of these direct and indirect subsidiary companies through bench
marking with the best in class manufacturing practices. The Directors are
pleased to report that during the year under review, all these subsidiary
companies have shown improved results across most parameters of performance. A
significant portion of the consolidated revenues is generated by the subsidiary
companies. Detailed analysis of the working of the subsidiary companies is
given in the Management Discussion and Analysis.
SUBSIDIARY COMPANIES' ACCOUNTS:
The Company has received an approval of the Central Government under Section 212(8) of the Companies Act, 1956, vide their letter No. 47/360/2006-CL-III dated 16th April, 2007, which exempts the Company from attaching to the Balance Sheet, the copies of the Balance Sheets, Profit and Loss Accounts, Directors' Reports and Auditors' Reports and other documents required to be attached under Section 212(1) of the Act of its subsidiary companies, namely:
i) CDP Bharat Forge GmbH, Germany,
ii) Bharat Forge Holding GmbH, Germany,
iii) Bharat Forge Aluminiumtechnik GmbH and Company K.G., Germany,
iv) Bharat Forge Aluminiumtechnik Verwaltungs GmbH, Germany
v) Bharat Forge Daun GmbH, Germany,vi) Bharat Forge America Inc., U.S.A.
vii) Bharat Forge Beteiligungs, GmbH, Germany
viii) Bharat Forge Kilsta AB, Sweden,ix) Bharat Forge Scottish Stampings Limited, Scotland
x) Bharat Forge Hong Kong Limited (Formerly, Lucrest Limited) andxi) FAW Bharat Forge (Changchun) Company Limited.
Accordingly, the said documents are not being attached to the Financial Statements
of the Company. A gist of the financial performance of the subsidiaries is
given in this Annual Report.
The annual accounts of the subsidiary companies are open for inspection by any
Member/Investor and the Company will make available these documents/details
upon request by any Member/Investor of the Company/subsidiaries of the Company
interested in obtaining the same.
CAPACITY
EXPANSION:
The Members are aware of the Expansion Plans underway at Company's factories at Mundhwa and Chakan. The work on the Expansion Projects has been progressing as per schedule and the status of implementation is as under:
A. CRANKSHAFTS:
The Company has set up state-of-the-art facility at Mundhwa to manufacture Medium and Heavy Duty Machined Crankshafts for the exports market. 2 Lines were commissioned last year and the 3rd Line has been productionised during the year under review. Equipment has been ordered for the 4th Line which will be commissioned during 2007-08.
Creation of this facility has given subject strong presence in the global
market of Machined Crankshafts for medium and heavy duty applications.
B. FORGINGS:
12500T Press has been fully productionised. Consequently, the installed forging capacity at Mundhwa Plant is now 240000 MTs per annum.
C. FRONT AXLE ASSEMBLY AND
COMPONENTS:
The new expansion programme for machining Axle Beams and Knuckles has been fully completed and has helped in increasing supply of more value added products.
The Company has received the necessary Industrial Licenses or the
acknowledgements in respect of the Industrial Entrepreneurs' Memorandum in
respect of expansion of capacities for the manufacture of
1) Steel Forgings from 200000 MTs. to 240000 MTs. per annum at Mundhwa, Pune;
2) Finished Machined Crankshafts from 400000 Nos. to 600000 Nos. per annum at Mundhwa, Pune;
3) Front Axle Assembly and Components thereof from 300000 Nos. to 600000 Nos. per annum at Mundhwa, Pune; and
4) Front Axle Assembly and Components thereof from 200000 Nos. to 300000 Nos. per annum at Chakan, Pune.
NON-AUTO
BUSINESS
MUNDHWA:
The Company is also installing a 4000T Open Die
Forging Press at its Pune Plant which will have capability to forge Ingots upto
70MT single piece weight and will cater to the requirements of Energy Sector,
Mining and Metal Industry, General Engineering Industry and Capital Goods
Industry. This Plant will be operational in 2008.
TERM
DEPOSITS:
As on March 31, 2007, 77 Depositors having deposits aggregating to Rs.0.884 millions did not collect the amounts due. However, deposits amounting to Rs.0.022 millions (2 Depositors) have been subsequently repaid.
Future
Plan of Action:
i) Manufacture of Aerospace forgings.
ii) Cutting tool life improvement.
iii) Development of software for prediction
of properties on heat treatment and controlled cooling for steels.
iv) Fixture design for full crankshaft torsion test.
|
Contingent
liabilities: |
31.03.2007 |
|
Sales Bills discounted Of which: |
3938.790 |
|
Bills since realized |
912.350 |
|
Matured , overdue and outstanding since close of the year |
587.560 |
|
b) guarantees given by the Company on behalf of other companies |
|
|
Balance Outstanding |
310.000 |
|
Maximum amount |
(740.000) |
|
c) Claims against the company not acknowledge as Debts to the extent
ascertained |
182.980 |
|
d) Disputed Income Tax matters |
206.670 |
|
e) Excise / Service Tax Demands – matters under dispute |
36.440 |
WEBSITE
DETAIL:
Subject, the flagship company of the USD 2.1 billion Kalyani Group, is a true world leader when it comes to delivering innovative auto-component solutions.
Since commencement of operations in 1966, BFL has achieved several milestones
and is today among the largest and technologically most advanced manufacturer
of Forged and Machined components. As one of India’s emerging multinationals,
the company has manufacturing operations across ten locations and six countries
– 3 in India, 3 in Germany and one each in Sweden, Scotland UK, USA and China.
Their customers include the top five Passenger Car and top five Commercial
Vehicle Manufacturers in the world. The list includes virtually every
automotive OEM and Tier I companies.
Backed by a full service supply capability and dual-shore manufacturing model, subject provides end-to-end solutions from product conceptualization to designing and finally manufacturing, testing and validation.
PRESS RELEASES:
35 Students pass out of the 1st
batch of B S (Manufacturing Engineering)
Pune 20th August 2007…The Convocation
Ceremony of the First Batch of the B.S.(Manufacturing Engineering) Programme
conducted by subject in collaboration with Birla Institute of Technology and
Science (BITS), Pilani was held at Hotel Le Meridien, on Saturday, 18th August
2007.
The degree was awarded to 35 students for the first batch of B.S.
(Manufacturing Engineering) for the year 2007 by Dr L K Maheshwari, Vice
Chancellor, BITS, Pilani. The ceremony began by awarding the best students of
the year Mr Santoshsingh Thakur, Mr Vishal Phaltankar and Mr Sunil Pawar who
had not only consistently excelled in their theoretical studies but also
obtained the overall 1st, 2nd and 3r d positions respectively. The winners were
then presented with the Gold, Silver and Bronze Medals and a gift cheque by the
Chief Guest Dr L K Maheshwari.
Speaking at the occasion, Dr L K Maheshwari, Vice- Chancellor, BITS
PIlani in his Keynote Address said that “Organisations of today cannot be
organizations of the 19th century. They have to be organizations of the 21st
century, which means that they have to be Learning Organizations”. Talking
about the rapid advances that are being made in technology, he said that it is
a prediction that technology is going to develop every 11 hours, which means
that each one of them has to be a student throughout their life.
Stressing on education he said that it is education and education alone
which can make a company proud and take it forward. It is education which has
always succeeded in the world and in days to come it will be education and
research that will ultimately lead technology, he added.
On March 30, 2004, subject signed a MoU with BITS, Pilani for a synergistic
relationship in Human Resource Development. As a part of the MoU, BITS was to
conduct a program at BFL which would primarily, enable BITS to offer a degree
course equivalent to BE to the Kalyani Group employees.
Earlier in his Opening Remarks, Mr B N Kalyani, Chairman and Managing
Director, subject, said that “I am extremely pleased and happy to see that this
day has arrived. It has been my dream to bring education into their company,
into their system and to provide opportunities to their colleagues for higher
learning”. Congratulating all the 35 graduates, he said that they have very
wonderfully balanced their work, their family and their studies and that’s not
an easy job.
Going ahead he explained the rationale behind this whole programme, where
he said that it was his endeavour to see as to how they could create more brain
power in their company by providing higher education opportunities to people
within the company. He was very convinced of the fact that there is no
substitute for good education and therefore started thinking on how to create
this infrastructure for learning and set up an educational process within the
company to create that enrichment that is required to produce talent in a group
of people who will lead subject in the years to come. And that’s where they
started their Bachelors Program in Manufacturing Engineering. My own vision and
forecast, he said, was that 10 years from now India with its talented human
capital which is the younger population should firmly be on the manufacturing
map of the world. What they have started in their company is only a beginning.
The future lies in the ability to globalize yourself, the ability to compete
and the ability to capture the global market.
Subject today spends a huge amount of money and resources on training.
The company started its 1st Batch of B.S. (manufacturing Engineering) in July
2004. Currently the company is running three batches simultaneously. A total of
169 employees have been covered under this programme. The company has also
collaborated with Warwick University for Post Graduation in Manufacturing
Management and over 76 high potential employees are currently undergoing this
programme.
Dr B R Natarajan, Dean, Distance Learning Programme Division, BITS
Pilani, in his concluding remarks thanked subject for giving them this
opportunity and said that here is a collaboration of perfect understanding.
Both organizations are driven by the passion to achieve excellence. Both
organizations are leaders in their own way. They know the way, go the way and
show the way to achieve excellence.
The Convocation Ceremony was attended by Dr L K Maheshwari,
Vice-Chancellor, BITS Pilani, Dr B R Natarajan, Dean, Distance Learning
Programme Division, BITS Pilani, Mr B N Kalyani, Chairman and Managing
Director, subject, Senior Exceutives of the Kalyani Group, Faculty Members of
BITS Pilani, family members of the passing out Grdauates and the 2nd batch of
B.S. (Manufacturing Engineering) Students.
Bharat Forge Limited
Clarifies on News Item
This is with reference to the article appearing in Business standard
dated March 10, 2008 titled ‘Hindujas, M&M, BFL in race for Thyssen Unit’.
Bharat Forge Limited denies any such developments as referred in the
said Article and the information published as pertaining to Bharat Forge is
incorrect and has no relevance.
Article/ New item on the referred to subject have appeared ealier also
and our position has been clarified earlier also.
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 records 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.40.15 |
|
UK
Pound |
1 |
Rs.80.54 |
|
Euro |
1 |
Rs.63.41 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
69 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit
history (10%) Market
trend (10%) Operational
size (10%)
RATING 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 |
|