MIRA
INFORM REPORT
|
Report Date : |
16.05.2008 |
IDENTIFICATION
DETAILS
|
Name : |
JINDAL
SAW LIMITED |
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Registered Office : |
A-1
UPSIDC Industrial Area, Nandgaon Road, Kosi Kalan, District Mathura – 281 403,
Uttar Pradesh |
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Country : |
India |
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Financials (as on) : |
31.12.2007 |
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Date of Incorporation : |
31.10.1984 |
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Com. Reg. No.: |
20-23979 |
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CIN No.: [Company
Identification No.] |
L27104UP1984PLC023979 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
AGRS10410B |
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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
of Thick Walled Pipes, Submerged-Arc-Welded Pipes, Cold-Rolled Steel Coils
and Seamless Tubes. |
RATING &
COMMENTS
|
MIRA’s Rating : |
A |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 79400348 |
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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 records. Trade relations
are fair. Financial position is good. The company is doing very well. It’s
payments are correct and as per commitments. It can be
considered good for any normal business dealings. It can be
regarded as a promising business partner in a medium to long run. |
LOCATIONS
|
Registered Office : |
A-1 UPSIDC
Industrial Area, Nandgaon Road, Kosi Kalan, District Mathura – 281 403, Uttar
Pradesh, India |
|
Tel. No.: |
91-5662-252277/252224/232426/232001/02/03 |
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Fax No.: |
91-5662-232577 |
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E-Mail : |
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Website : |
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Corporate
Office : |
‘Jindal
Centre’, 12 Bhikaji Cama Place, New Delhi – 110 066 |
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Tel. No.: |
91-11-26188360–74/26188345 |
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Fax No.: |
91-11-26170691
/ 41659575 |
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E-Mail : |
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Factory : |
MUNDRA - IPU Village: Samaghogha, Pragpar - Mandvi Road, Taluka: Mundra
MUNDRA - JCO S.No. 94/1, 94/2 & 96, Village: Nanakapaya Taluka:
Mundra, Distt. Kutch - 370 415 (Gujarat) KOSI KALAN A-1, UPSIDC Industrial Area, Nandgaon Road, Kosi Kalan,
Distt. Mathura - 281 403 (U.P) NASHIK A-59-60 Malegaon MIDC, Sinnar - 422 103, Distt. Nashik,
Maharashtra |
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Regional Offices : |
MUMBAI Jindal Mansion, 1st Floor 5-A, G., Deshmukh Marg (Peddar
Road), Near Jaslok Hospital, Mumbai - 400 026. AHMEDABAD 601, Saffron Building, Near Panchvati Char Rasta,
Ambawadi, Ahmedabad - 380 006. HYDERABAD H.
No. 8-2-618/2/2/A, Plot No. 25, Road No. 10 , Classic Emerald Lane Phone
: 91-40-55778694 / 95 BANGALORE 6th Floor, East Wing, Raheja Towers, M.G. Road ,
Bangalore-560 001. CHENNAI 4-B, Century Plaza 560-562, Anna Salai Teynampet , Chennai
- 600 018 |
DIRECTORS
|
Name : |
Mr.
P. R. Jindal |
|
Designation : |
Vice Chairman |
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|
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|
Name : |
Mr.
Sminu Jindal |
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Designation : |
Managing
Director |
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Name : |
Mr.
A. J. A. Tauro |
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Designation : |
Director |
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Name : |
Ms. Devi Dayal |
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Designation : |
Director |
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Name : |
Mr.
Kuldip Bhargava |
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Designation : |
Director |
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Name : |
Mr.
H. S. Chaudhary |
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Designation : |
Whole
Time Director |
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Name : |
Mr. S K Gupta |
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Designation : |
Director |
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Name : |
Mr. R K Agarwal |
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. Sunil Jain |
|
Designation : |
Company Secretary |
MAJOR SHAREHOLDING
PATTERN
As on 31.12.2007
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Promoters |
22811100 |
44.60 |
|
NRI |
6303642 |
12.33 |
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|
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Non Promoters |
|
|
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Mutual Funds and
UTI |
8623818 |
16.86 |
|
FIIS |
6353842 |
12.42 |
|
Corporate Bodies |
3595699 |
7.03 |
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|
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Others |
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|
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Indian Public |
3454442 |
6.76 |
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Total |
51142543 |
100.00 |
Dematerialization of
shares and liquidity
|
Physical Form |
24154324 |
47.23 |
|
Demat Form |
26988219 |
52.77 |
|
Total |
51142543 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturing
of Thick Walled Pipes, Submerged-Arc-Welded Pipes, Cold-Rolled Steel Coils
and Seamless Tubes. |
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Products : |
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PRODUCTION STATUS
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
||
|
31.12.2007 |
30.09.2006 |
31.12.2007 |
30.09.2006 |
||
|
Iron and Steel Pipes |
MT |
1,400,000 |
1,400,000 |
994776 |
644101 |
|
Anti- Cprrosion Coating on Pipes |
Sq. Mtr |
10000000 |
10000000 |
3680863 |
3089977 |
|
Cold Rolled Strips (Thinner Gauge) |
MT |
-- |
-- |
-- |
1753 |
|
Steel Plates |
MT |
-- |
-- |
228600 |
223006 |
|
Pig Iron |
MT |
200000 |
200000 |
97655 |
100521 |
|
Bevelling and End Finishing |
MT |
40000 |
40000 |
-- |
-- |
|
Chemfering |
MT |
50000 |
50000 |
-- |
-- |
GENERAL
INFORMATION
|
Customers : |
Domestic
Clients v Assam Gas Company Limited v Bharat Petroleum Corporation
Limited v British Gas v Cairn Energy Limited v Dodsal Limited v Engineers India Limited v Essar Construction Limited v Gammon v Gas Authority Of India Limited v Gujarat Adani Energy Limited. v Gujarat Gas Company v Gujarat State Petrnet Limited v Hindustan Petroleum Company
Limited v Indian Oil Company Limited v Indraprastha Gas Limited v Larsen & Toubro v Mahanagar Gas Limited v Oil & Natural Gas Company
Limited v Oil India Limited v Petronet MBH Limited v Punj Lloyd Limited v Reliance Petroleum Limited v Reliance Ports & Terminals
Limited v Shell Hazira International Clients v AGIP Gas BV, (Libya) v AGIP Oil Company, (Libya) v Bechtel Intec Consortium, UK v Burullus Gas Company, Egypt v China National v East Gas Company (Egypt) v FIMCO F2E, Iran v Gasco (Egypt) v Hyundai Heavy Industries Limited, Korea v Iranian Offshore Oil Company
(IOOC), Iran v Joannou &
Paraskevaides (Overseas) Limited, Greece v Kalanaft, Iran v Mediterranean Oil Company,
(Germany) v National Iranian Gas Company
(Iran) v Nigerian Agip v North Oil Company, Iraq v PEDCO, Iran v PEDEC, Iran v Petroleum Develoopment Omam,
Omam v PTTE&P, Thailand v Qatar Petroleum, Qatar v Repsol Oil Operations v Saipem (Italy) v Saipem / CCC – JV, Omam v Saudi Arabian Oil Company v Shell Petrleum Development
Company (Nigeria) v Shell, Brunie v Shell, The Netherlands v Sichuan Petroleum v Sirte Oil Company (Libya) v State
Company for oil Projects (SCOP), Iraq v Total E&P Indonesie,
Indonesia v Vietsovpe Tro, Vietnam v Zueitina Oil Company (Libya) |
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No. of Employees : |
2,000 |
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Bankers : |
v
State
Bank of Patiala, 8th Floor, Chandralok Building, 36 Janpath, Delhi
– 110 001, India v
Canara
Bank, 6, Bhagwandas Road, Delhi – 110001, India v
State
Bank of India, Delhi, India v
Standard
Chartered Grindlays Bank, Delhi, India v
ICICI
Bank Limited v
UTI
Bank Limited v
State
Bank of Mysore v
Calyon
Bank Limited v
Karnataka
Bank v
Punjab
National Bank v
ING Vyasa
Bank Limited v
Bank of
Baroda v
Axis bank
Limited v
Bank of
India v
HDFC Bank
Limited v
Syndicate
Bank v
State Bank
of Travancore v
United Bank
of India |
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Facilities : |
Notes : A. 1. Debentures referred to in above are secured by pari-passu
charge by way of English mortgage on the Company’s specific Immovable
properties located in the State of Gujarat and by way of equitable mortgage
of Company’s other Immovable properties and hypothecation of movable Fixed
Assets in favour of debenture trustees. 2. Debentures referred to the A above are privately placed
and consist of: (i)_ 9.75% Debenture of Rs. 100/- each aggregating to Rs.
500.000 millions are redeemable in two equal annual Instalments on 30th
September, 2008 and 30th September, 2009. (ii) 7.75% Debenture of Rs. 10,00,000/- each aggregating
to Rs. 750.000 millions are redeemable in three equal annual instalments
commencing from 26.03.2008 (iii) Debentures referred to in (ii) above are also
secured by personal guarantee of directors. B. 1. Term Loans from Banks include Loans of Rs. 12.921
millions (Previous Year Rs. 9.394 millions) for purchase of vehicles and
secured by way of hypothecation of vehicles. 2. Term Loans from Banks include loans of Rs. 1675.374
millions (Previous Year Rs. 2109.141 millions) which are secured by way of
mortgage of Company’s Immovable properties and hypothecation of movable
assets (save and except book debts) both present and future, subject to
charges created in favour of Company’s bankers for securing Working Capital
Facilities. 3. Term Loans from Banks / Financial Institutions include
loans of Rs. 1143.234 millions (Previous Year Rs. 1443.750 millions) for
which Directors) Personal Guarantee has been provided. 4. Term Loans from Banks include a house Property loan of
Rs. 55.723 millions (Previous Year Rs. 59.982 millions) which is secured by
way of exclusive charge on the Company’s House Property situated in Delhi. C. Working Capital Loans are Secured /to be hypothecation of
finished goods , raw materials, work in progress, stores and spares, book
debts and to be secured by second charge in respect of other movable and
immovable properties of the Company. D. External Commercial Borrowings are secured by way of
mortgage of Company’s immovable properties and hypothecation of movable
assets (save and except book debts) both present and future, except those
charged in favour of Company’s bankers for Securing Working Capitasl
Facilities. These are also guaranteed by directors.
|
Notes :
(i) Deferred Sales Tax loan and Unsecured Loan from Banks are guaranteed
by one of the Directors.
(ii) Unsecured loans from Banks, Includes amount of Rs. 112.572 millions
(Previous Year Rs. 175.092 millions) payable within one year.
(iii) External Commercial Borrowings are repayable on 29th
September, 2010.
(iv) The Foreign Currency Convertible Bonds (FCCB) are convertible at
any time up to the close of business on 24th June, 2011 by holders
of the bonds into newly issued equity shares of Rs. 10/- each of the company at
the option of the Bondholder, at a base conversion price of Rs. 675 per share
with a fixed rate of exchange on conversion of 2.533 = Re. 1.00 after
adjustments as per terms and conditions of the issue of Bonds. Unless
previously converted redeemed or repurchased and cancelled the bonds will
mature on 1st July, 2011 at 117.928% of their principal amount.
|
Banking Relations : |
Satisfactory |
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|
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Auditors : |
Statutory Auditors N. C. Aggarwal & Company Chartered Accountants New
Delhi, India Internal Auditors Axis
Risk Consulting Services Private Limited Chartered
Accountants Habitat
India, C-3,
Qutab Institutional Area, Tower- I, New Delhi, India ASP
and Company, Chartered Accountants Suite
– 13 – A, Gobind Mansion, Indra Place, H- Block, Connaught Place, New Delhi –
110001, India. |
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|
|
|
Associates : |
v
Jindal
Strips Limited v
Jindal
Iron & Steel Company Limited v
Saw
Pipes Inc., U.S.A. v
Jindal
Overseas Pte Limited, Singapore v
Jindal
Vijay Nagar Steel Limited v
Jindal
Ferro Alloys Limited |
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|
|
|
Subsidiaries : |
v
Hexa
Securities & Finance Company Limited v
Jindal
Enterprises LLC v
IUP
Jindal Metal and Alloys Limited v
High
gate Consultants Limited v
Jindal
Saw USA, LLC (Indirect Subsidiaries Company) v
S
V Trading Company Limited (Indirect Subsidiaries Company) v
Stainless
Investments limited v
Goswamis
Credit and Investments Limited v
Renuka
Financials Services Limited v
Manjula
Finances Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
10,00,00,000 |
Equity Shares |
Rs. 10/- each |
Rs. 1000.000 millions |
|
1,00,00,000 |
Redeemable
Preference Shares |
Rs. 100/- each |
Rs. 1000.000 millions |
|
|
Total |
|
Rs. 2000.000 millions |
Issued &Subscribed:
|
No. of Shares |
Type |
Value |
Amount |
|
5,11,43,193 |
Equity Shares |
Rs. 10/- each |
Rs. 511.431 millions |
|
1,00,00,000 |
7.85% Redeemable
Non Convertible Cumulative Preference Shares |
Rs. 100/- each |
Rs. 1000.000 millions |
|
|
Total |
|
Rs. 1511.431 millions |
Paid-up Capital:
|
No. of Shares |
Type |
Value |
Amount |
|
5,11,42,393 |
Equity Shares |
Rs. 10/- each |
Rs. 511.423 millions |
|
800 |
Equity Shares |
Rs. 5/- each |
Rs. 0.004 millions |
|
1,00,00,000 |
7.85% Redeemable
Non Convertible Cumulative Preference Shares |
Rs. 100/- each |
Rs. 1000.000 millions |
|
|
Total |
|
Rs. 1511.427 millions |
Note:
1. of the above Equity Shares
(a) 20,08,000 and 6613936 were allotted
pursuant to contract and schemes of Amalgamation respectively without payment
being received in cash
(b) 2,57,96,172 were allotted as bonus shares by
capitalisiung Reserves and Share Premium.
(c) 650 have been held in abeyance and not
allotted as a result of attachment orders by Government authorities lost share
certificates and other disputes.
2. During the Year
(a) 24,12,542 equity shares were allotted to
holders of Equity share warrants at Rs. 483/- per equity share.
(b) 3,65,543 equity shares were allotted to
the holders of 6250 FCCB of JPY 100000/- each upon exercising the option of
conversion at a base conversion price of Rs. 675/- per equity share with a
fixed rate of exchange on conversion of JPY 2.533=Rs. 1.00 after adjustments as
per terms and conditions of issue of bonds.
3. Options on Un-Issued Share Capital
Foreign currency convertible bond holders
holding bonds for aggrewgate amount of JPY 8,465,000,000 can convert the same
upto 24.06.2011 into equity shares of Rs. 10/- each at a base conversion price
of Rs. 675/- per equity share with a fixed rate of exchange on conversion of
JPY 2.533= Re. 1.00 after adjustments as per terms and conditions of issue of
Bonds.
4. Preference shares are redeemable in three
yearly installments in the ratio of 30:30:40 at the end of fifth, sixth and
seventh year from the date of allotment i.e. 22.09.2005 These also carry
put/call option at the end of 5th Year from the date of allotment.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.12.2007 |
30.09.2006 |
30.09.2005 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
1511.428 |
1483.647 |
1471.100 |
|
|
2] Share Application Money |
0.000 |
116.526 |
0.000 |
|
|
3] Reserves & Surplus |
18338.659 |
8718.029 |
7003.500 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
19850.087 |
10318.202 |
8474.600 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
5903.665 |
7196.283 |
5731.200 |
|
|
2] Unsecured Loans |
5690.186 |
6603.255 |
4245.700 |
|
|
TOTAL BORROWING |
11593.851 |
13799.538 |
9976.900 |
|
|
DEFERRED TAX LIABILITIES |
936.661 |
766.164 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
32380.599 |
24883.904 |
18451.500 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
8119.123 |
7151.097 |
6390.100 |
|
|
Capital work-in-progress |
4131.001 |
1666.388 |
894.600 |
|
|
|
|
|
|
|
|
INVESTMENT |
2269.717 |
964.720 |
962.200 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
11655.967
|
13741.279
|
9262.500 |
|
|
Sundry Debtors |
10936.526
|
7526.292
|
3334.600 |
|
|
Cash & Bank Balances |
2694.694
|
3909.830
|
1508.600 |
|
|
Other Current Assets |
0.000
|
0.000
|
0.000 |
|
|
Loans & Advances |
2553.449
|
1827.889
|
1721.000 |
|
Total Current Assets |
27840.636
|
27005.290
|
15826.700 |
|
|
Less : CURRENT LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
8589.948
|
11004.830
|
5250.700 |
|
|
Provisions |
1389.930
|
898.761
|
371.400 |
|
Total Current Liabilities |
9979.878
|
11903.591
|
5622.100 |
|
|
Net Current Assets |
17860.758
|
15101.699
|
10204.600 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
32380.599 |
24883.904 |
18451.500 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.12.2007 |
30.09.2006 |
30.09.2005 |
|
Sales Turnover |
67877.540 |
38556.657 |
26026.700 |
|
Other Income |
90.939 |
177.855 |
0.000 |
|
Total Income |
67968.479 |
38734.512 |
26026.700 |
|
|
|
|
|
|
Profit/(Loss) Before Tax |
11712.147 |
2633.380 |
1514.700 |
|
Provision for Taxation |
2948.330 |
871.371 |
507.400 |
|
Profit/(Loss) After Tax |
8763.817 |
1762.009 |
1007.300 |
|
|
|
|
|
|
Earnings in Foreign Currency : |
|
|
|
|
Export Earnings |
23046.371 |
9596.745 |
|
|
Commission Earnings |
26.120 |
40.206 |
|
|
Other Earnings |
26442.729 |
14825.485 |
5993.892 |
|
Total Earnings |
49515.220 |
24462.436 |
5993.892 |
|
|
|
|
|
|
Imports : |
|
|
|
|
Raw Materials |
23684.437 |
9431.306 |
|
|
Stores & Spares |
261.272 |
100.704 |
|
|
Capital Goods |
540.571 |
315.609 |
|
|
Total Imports |
24486.280 |
9847.619 |
0.000 |
|
|
|
|
|
|
Expenditures : |
|
|
|
|
Cost of Goods Sold |
42531.955 |
27131.823 |
|
|
Manufacturing Expenses |
10188.027 |
6989.537 |
|
|
Administrative Expenses |
1069.938 |
355.912 |
|
|
Selling Expenses |
3105.288 |
2279.729 |
0.000 |
|
Salaries, Wages, Bonus, etc. |
1303.613 |
816.315 |
|
|
Insurance Expenses |
1726.621 |
1124.696 |
|
|
Depreciation & Amortization |
721.728 |
519.013 |
|
|
Increase/(Decrease) in Finished Goods |
1550.263 |
(3115.893) |
|
|
Other Expenditure |
5941.101 |
0.000 |
24512.000 |
|
Total Expenditure |
56256.332 |
36101.132 |
24512.000 |
SUMMARISED RESULTS
|
PARTICULARS |
|
|
31.03.2008 Full Year |
|
Sales Turnover |
|
|
9521.400 |
|
Other Income |
|
|
29.200 |
|
Total Income |
|
|
9550.600 |
|
Total Expenditure |
|
|
8055.900 |
|
Operating Profit |
|
|
1494.700 |
|
Interest |
|
|
203.600 |
|
Gross Profit |
|
|
1291.100 |
|
Depreciation |
|
|
152.100 |
|
Tax |
|
|
285.000 |
|
Reported PAT |
|
|
854.000 |
KEY RATIOS
|
PARTICULARS |
31.12.2007 |
30.09.2006 |
30.09.2005 |
|
Debt-Equity Ratio |
0.85 |
1.30 |
1.30 |
|
Long Term Debt-Equity Ratio |
0.66 |
1.00 |
1.04 |
|
Current Ratio |
1.86 |
1.80 |
1.67 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
5.30 |
4.54 |
3.72 |
|
Inventory |
4.30 |
3.46 |
3.41 |
|
Debtors |
5.91 |
7.33 |
6.31 |
|
Interest Cover Ratio |
3.95 |
2.82 |
2.52 |
|
Operating Profit Margin (%) |
12.33 |
11.56 |
12.21 |
|
Profit Before Interest & Tax Margin (%) |
11.28 |
10.26 |
10.71 |
|
Cash Profit Margin (%) |
7.36 |
5.73 |
5.80 |
|
Adjusted Net Profit Margin (%) |
6.30 |
4.43 |
4.29 |
|
Return on Capital Employed (%) |
22.33 |
19.41 |
18.18 |
|
Return on Net Worth (%) |
24.21 |
20.69 |
18.26 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Subject
was promoted by the O P Jindal group in 1984 is into manufacturing and coating
of Submerged Arc Welded pipes (SAW Pipes). The company is the largest producer
of Saw Pipes, which is widely used in the energy sector for the transporation
of oil and gas. The company is a market leader and a global major in providing
'Total Pipe Solutions' to the industry.
The Company has an integrated facilities at multiple locations. Further the
company gas diversified from a single product company to a multi-product company,
manufacturing large diameter Submerged Arc Welded pipes & Sprial pipes and
bends for energy transportation sector. Carbon, alloy and stainless steel
seamless tubes manufactured by conical piercing process are used for industrial
applications and Ductile iron pipes for water and sewage transportation.
The business operations of the company are structured as Saw Pipes, Seamless
Tubes, Ductile Iron Spun Pipes and the US Operations.
The company has obtained technical assistance from US Engineers and Consultants,
a subsidiary of US Steel Corporation for its products. Further company has nine
manufacturing facilities located at 4 places in India i.e KosiKalan (UP),
Mundra (Gujarat), Nashik(Maharashtra), Swastik Foils(New Delhi) and through
affiliates it also manages the largest pipe mill in the US, supported by a
plate mill with a matching capacity. The Nashik facility produces
stainless/Carbon steel seamless tubes and pipes and the New Delhi unit produces
CR stainless steel precision coils of thin and ultra thin gauges.
The Subsidiaries of JSL are Hexa Securities & Finance Company Limited,
Jindal Enterprises LLC and IUP Jindal Hexa Metals Limited
The company has continually expanded and consolidated its operations. It
has amalgamated Swastik Foils in 1988-89 with itself and as part of backward
integration the Swastik Udyog, a subsidiary of Jindal Strips which produces
thicker gauge steel stripes was merged with the company in 1991-92. It
commissioned its composite coating project at Kandla, Gujarat in 1998-99 and
the 100% EOU for manufacture of Longitudinal Welded SAW Pipes at Mundra,
Gujarat has been completed and commenced trial production. Its seamless tube
division is under lock out, long term viable solutions are worked out for the
operations of the division.
The modernisation plan was completed for its Nashik plant and the production is
expected to commence very soon. Since United States is the largest market for
large diameter pipes, the company plans to benefit from the synergies available
from the market, it has opened branch office in US. It has got a significant
stake in SAW pipes Inc USA, which is having a largest pipe manufacturing
capacity in US.
During 2003-04, the company established, IUP Jindal Hexa Metals Limited a joint
venture company between the company and Imphy Ugine Precision, IUP, France, one
of the divisions of Arcelor group for manufacturing of high precision metal to
be used in electronics industry and other applications. The Company has
transferred its Swastik Foils Division into the joint venture company and it is
holding 73% in the joint venture company. The company has strated its Trial
Production with effect from 7th October 2005 and raised its first invoice on
24th October 2005. Further the company has also decided a dispatch plan of
14000 MT from the year 2006.
The company has increased the installed capacity of Iron & Steel Pipes by
700000 MT during 2004-05 and with this expansion the total installed capacity
of Iron & Steel Pipes has increased to 1250000 MT. Further the company has
installed a new capacity of Pig Iron with a capacity of 200000 MT.
The name of the company has been changed from Saw Pipes Limited to Jindal Saw
Limited (JSL) with effect from 11th January 2005.
Review Of Operations:
For the year ended December 31, 2007, gross turnover increased by 38% to Rs. 70171.253 millions against Rs. 40614.895 millions for 12 months accounting year ended September 30, 2006. The profit after tax also increased by 87% to Rs. 4126.016 millions from Rs 1762.009 millions in the above period. In 2006-07, pipe sale, in quantity terms, also increased by app. 53%.
In order to increase focus on the Indian operations and to bring more financial
discipline in the system, the Company, in November 2007, divested its entire
equity stakes in the USA Subsidiary. The Company realized gain of Rs. 4637.801
millions (Net of tax of Rs 13033.000 millions) from such divestment.
The funds so received are being utilized for creation / addition of manufacturing facilities in India and also for improvement of financials of the company.
SUBSIDIARY
COMPANIES:
The Company had 5 subsidiary companies as on 31st December, 2007. The members may refer to the Statement under Section 212 of the Companies Act, 1956 and the information on financial of subsidiaries appended to the above Statement in this Annual Report for the further information on these subsidiaries. The Ministry of Corporate Affairs vide its letter No.
47/34/2008-CL-III dated 18.2.2008 granted the approval to
the Company for not attaching the Annual Reports of the subsidiary companies
with the Annual Report of the Company for the financial year ended 31st
December, 2007.
The members, if they desire, may write to Company Secretary at Jindal Centre,
12, Bhikaiji Cama Place, New Delhi - 110 066 to obtain the copy of the Annual
Report of the subsidiary companies.
MANAGEMENT
DISCUSSIONS AND ANALYSIS:
Booming economy to boost pipe
demand:
Globally, the role of infrastructure in economic development can hardly be
over emphasized. Majority of the advanced economies in the world developed
their infrastructure first. Closer home, the South-East Asian countries &
China have done the same thing. Good infrastructure is not something that flows
out of economic progress, but rather something that comes before it.
From roads and railways to ports and airports, and from power plants to
hydrocarbon infrastructure, India lacks significantly in terms of
infrastructure availability. The catching up, which has just begun, will go on
for years to come and is set to drive India Inc's future growth. India is set
to emerge as one of the world's largest economies. This is not achievable
unless infrastructure improves, and the process has already begun evidenced
through a sustained GDP growth of around 8 percent over last few years.
However, increased economic activities have led to higher demand of energy
resources.
Demand for steel pipes is expected to be higher in the medium term on account
of increased exploration activities and thrust on setting up infrastructure to
transport oil and gas. In India, rapid economic growth faces an need to develop
and improve water supply, which would also increase demand for SAW pipes.
Depleting oil reserves have led to increased exploration efforts, resulting in
more wells in the exploratory rig. Demand for seamless pipes is directly
proportional to the increase in digging of wells which is also expected to
remain high.
India is expected to see a spurt in construction of pipeline infrastructure as
the country's spending on exploration and production (E&P) and gas related
pipeline capex increases. It is expected that water and irrigation offer a very
strong business opportunity in India, which will benefit Indian HSAW, ERW and
DI pipe manufacturers, in addition to the opportunity from the energy
sector.
Submerged Arc Welded Pipes:
Natural gas is now seen as an emerging fuel - it has been the fastest growing
source of energy over the last 25 years. The Energy Information Administration
(EIA) forecasts natural gas to form 24% of total energy usage by 2030, with the
share of oil falling to 34%. Increased use of natural gas would require
building the infrastructure needed to transport the gas from the point of
production/import to end users. This would mean construction of more large
diameter pipelines, benefiting SAW pipe manufacturers. Also, the inter-regional
gas trade is expected to be robust. According to EIA forecasts, the
inter-regional gas trade will expand faster than output, and the main gas-consuming
regions will become increasingly dependent on imports. Global supply of SAW
pipes is likely to remain tight in coming couple of years. India is set to
benefit from the supply demand imbalance.
As per CRU Analysis 2007 report (The Five-Year Outlook for API Pipe Steel),
demand for line pipe products to remain strong in the coming years due to
strong demand in energy consumption. The report expects that the market will
continue to grow going forward, reaching 24m tonnes in 2011, from 21m tonnes in
2007. Much of the growth in line pipe will come from growth in large diameter
pipes. Given the increase in production and exploration of natural gas,
pipelines above 20" in diameter will see an increasing share of the total
line pipe market, as demand for LSAW and spiral welded pipes outstrips growth
for small diameter pipes. The increasing number of pipeline projects
constructed to transport natural gas will see increased growth for LSAW line
pipe over spiral weld line pipe.
On a regional basis, Asia currently accounts for the majority of world line
pipe consumption at around 30%, followed by North America at 11%, and Europe at
9%. However, looking forward, CRU 2007 report expects to see the Middle East and
the CIS increasing their shares of world consumption.
Report currently estimate that the Middle East accounts for approximately 13% of total world line pipe demand, and expect its share to increase to 15% by 2011. Likewise, it expects the CIS to increase its share of consumption from 13% in 2006 to around 15% in 2011.
As per CRU Report 2007, over the forecast period to 2011, investment in crude
oil pipelines will remain a major component of overall pipeline construction,
alongside the growing component of gas pipeline investment.
Based on recent years' pipeline investment patterns, this suggests that a substantial share of line pipe consumption will be in the 20"-30" diameter range, for crude oil transportation. This would support demand for both LSAW and spiral-welded pipe and - below 25" - some ERW and seamless line pipe orders also. Overall, however, large-diameter pipe appears to offer the best volume prospects over the medium term. Of the four main competing types of line pipe, suppliers of platebased SAW pipe may be the best placed to take fullest advantage of current project demand trends.
Seamless Pipes:
Increase in oil and gas usage is putting pressure on energy companies to search
for newer reserves onshore and offshore. With oil prices sustaining long-term
highs, increase in profits has also translated into higher capex budgets for
exploration. A leading indicator of exploration is the rig count published by
Baker Hughes, which shows rig counts at multiyear highs.
A higher exploration activity does not translate into demand for SAW pipes but is expected to increase demand seamless pipes which are part of the Oil Country Tubular Goods (OCTG) segment. As per estimates of Tenaris, global consumption of OCTG (Oil Country Tubular Goods) is pegged at 11 million tonnes out of which seamless pipes constitute the major chunk of 70%.
On a regional basis, North America is currently the largest consumer of OCTG,
accounting for an estimated 48% of total world consumption in 2006.
After North America, the next largest consuming region is Asia, where consumption in 2006 is estimated at 18% of total world consumption. CRU Report 2007 regional forecast does foresee some change, notably in North America, the Middle East and the CIS. Its forecast suggests that the proportion of global OCTG consumption accounted for by North America will fall from 48% in 2006 to 45% in 2011. Although it expects Europe's proportion of global consumption to remain relatively stable over the same period, the region is expected to see an absolute decline as oil production from the North Sea falls. The CRU report expect to see the share of world consumption of OCTG products to increase in the Middle East and the CIS by around 2% by 2011 as oil production from these regions increases, particularly in the Middle East.
Ductile Iron Pipes - for water a big
domestic market opportunity:
Water and irrigation is a potentially limitless opportunity in India. Low
levels of water availability, dependence on rainfall for agriculture, urban
growth throws up investment opportunities in this space. The government is also
turning its focus on creation of urban and rural infrastructure (including
water resources and sewage management), and has increased budgetary allocation
for the same. In these efforts, international development finance institutions
such as the World Bank and the Asian Development Bank are extending monetary
support to the government. The World Bank plans a large increase in lending for
water-related sectors (including water resources management, irrigation, hydro
power, and water supply and sanitation), with aggregate lending for these
sectors set to rise from US$200 million to US$800 million a year. The Indian
government has also launched major schemes, such as accelerated irrigation
benefit plan, and has outlined plans in urban development to take care of the
water scarcity. Private participation in the water transportation segment has
also provided a fillip to infrastructure spend. Various business models have
emerged, which have made private sector participation viable. This includes the
subsidy/concession model, wherein a private player is allowed to create and run
the infrastructure with the shortfall being met by the government. A numbers of
projects, which are viable without any concessions from the government, are
witnessing private investments. Another model emerging is that for captive
clients. This has generated a strong demand for DI pipes that are increasingly
being used for water and sewage transportation.
Opportunities and Threats to the Sector/
Industry:
Opportunities:
Submerged Arc Welded
Pipes (SAW Pipes):
Rising crude prices and the depletion of global crude reserves has lead to
massive investments in creating oil & gas transportation infrastructure.
This has stimulated a huge demand for submerged arc welded
(SAW) pipes and seamless pipes, which are used in oil & gas exploration.
USA, Middle East and the domestic market would be key volume drivers for Indian
pipe manufacturers. The three geographies account for over 40% of the total
global demand of SAW pipes. Indian pipe companies are expected to corner around
20% of total demand which is a big opportunity to the Indian pipe makers.
According to Simdex (May 2007 update) besides worldwide projects about 90
projects for 81736 kms are being planned in Asia. India is considered to have
low penetration of the pipelines of about 15,000 km. According to an estimate
by CRIS INFAC, project for 23,643 km of pipes lines have been planned till
2010. Such expansion in the pipe lines both by Public as well as private sector
companies would generate sizable demand for the entire segment that comprises
pipe manufacturing.
Seamless Pipes:
Depleting oil reserves have led to increased exploration efforts, resulting in more exploratory wells. Demand for seamless pipes is directly proportional to the increase in digging of wells. Additional demand for about 35 million tonne of seamless pipes is expected to emerge in the next 5 years.
Water Pipes:
Water resource management is another major area where huge demand is likely to kick in. Rapid economic growth in India has thrown up an urgent need to develop and improve water supply systems in urban areas. Water resources management has been one of the major focus areas of the government in the last few budgets.
Threats/ Risks to
Industry:
Following are major threats/ risks which may be faced by the Indian Pipe
Industry:
* Slowdown in energy
capex : A negative outlook on oil and gas prices could potentially slowdown
the order flow for the SAW Pipe Industry. In the event of a global economic
slowdown, energy prices would come down, possibly slowing down the capex
programs. This is particularly relevant for the North American market, where
energy capex is driven by the private sector, which is more sensitive to energy
prices and more important the near-medium- term outlook. The spending in the
Middle East, China and the CIS will be driven by national companies and
therefore the capex programs are less sensitive to energy prices and their
short-term outlook.
* Raw material availability :
Given that plate prices have more than doubled in the last four years due to
increased demand and a lack of significant capacity additions, a shortage of
plates/ raw material could affect the industry.
* Overcapacity resulting in
pressure in Margins : Further, Capacity expansion by players worldwide, or
by new entrants, may put pressure on realizations.
* Increased global Competition : Global Competition especially in seamless and ductile iron (DI) pipes, though at an early stage, could pose problems for Indian pipe manufacturers in the medium to long term.
* Sharp increase in freight rates
: Freight costs are approximately 5-7% of the SAW pipes operating costs. A
sharp increase in freight costs can affect the profitability if the charter
agreements have not been entered to hedge the ocean freights.
OUTLOOK- Jindal Saw Limited:
The Company follows a multi-product approach to pipes -
offering a full product portfolio of LSAW (longitudinal submerged arc welded),
HSAW (helical submerged arc welded), seamless, DI pipes, anti-corrosion
coatings, connector casings and Hot reduction Bends. Its product portfolio
allows it to comfortably straddle between value-driven products (DI and
seamless pipes, which are high-margin segments) and volume-driven ones (SAW
pipe business).
Besides LSAW and HSAW, it is increasing its focus on the water infrastructure
sector in India. The company is currently one of the very few pipe
manufacturers capable of offering a complete pipe solution to the water sector
(ie, spiral pipes, ductile pipes and accessories). The DI pipe business gives
the company an opportunity to take advantage of the strong domestic capital
expenditure cycle seen in the water transportation segment in India. A
combination of increasing government focus to build water infrastructure and
rising support from multilateral agencies (such as the World Bank and the Asian
Development Bank) is likely to result in a strong demand for the DI pipes. The
company is implementing capacity expansion in all the three key segments with
expectation and targets for overall margin expansions.
The company has firmly established itself as a creditable supplier in the international market. This is further reflected in the large and reputable client accreditations that the company has been able to garner in the past few years. The current order book stands exceeds US$1bn which includes export orders of more than 65%.
In the domestic market, the company has bagged the prestigious and unique
project from Cairn Energy India Private Limited. (Cairn) involving supply of
LSAW line pipes for worlds' longest underground pre-insulated heat traced
pipeline. The order value exceeding USD 200 million is for supply of line
pipes, Tracer Tube, Insulation and Bends for Barmer Salaya Pipe Line (BSPL)
project of Cairn.
The Company divested its economic interest in USA subsidiary in the financial
year ended December 2007. The consideration allow the company to pursue its
expansion and debottlenecking plans and making other investments to yield
better margins/ returns in USA subsidiary.
Risk Factors - Jindal Saw Limited:
The key risks are:
* Company's inability to win large orders from non-US regions. However, currently also the company has an order book in excess of USD one billion.
The company has secured orders of more than USD 450 million
from December 2007- February 2008. The company keeps participating in various
tenders and also develops new customers and territories.
* Delay in ramp up capacity expansions in all the three segments. However
this remains a general risk to the entire sector. In the past, the company has
demonstrated timely execution of projects.
* A rapid decline in oil and gas prices would mean a slowdown in spending
by energy companies and a reduction in the order flow. However, the diversified
product portfolio of the company insulates it from these uncertainties.
* Increased competition in the seamless/ductile segments from other
players. The company believes that competition is healthy for the industry. The
company is investing in technology and quality improvement which enables it to
get better productivity and profitability and allows to compete globally.
FINANCIAL AND PRODUCT
WISE PERFORMANCE:
The Company reports record performance with gross sale growing by 38% and profit after tax rising by 87% on pro-rata basis during the 15 months year ended Dec. 31, 2007.This demonstrates the company's focus in improvement in overall profitability.
The financial results for the period ended December 31, 2007 demonstrate the
strength of the Company in the "Pipe Sector" it operates.
The Company has been accredited with various certifications including American Petroleum Institute (API), ISO 9001:2000, ISO 14001 and ISO 18001 in the field of quality control, environmental management and occupational health and safety system management. These certifications ensure due compliance to well-documented procedures and systems and continuous improvement thereon for their continuous validity.
CORPORATE OVERVIEW
The Genesis
Subject is a part of the USD $4 billion Jindal Group, one of the country's topmost industry houses and the foremost indigenous steel producers and exporters. It started operation in the year 1984, when it became the first company in India to manufacture Submerged Arc Welded (SAW) Pipes using the internationally acclaimed U-O-E technology.
About Jindal Saw Limited (JSL)
Subject is one of the country's largest producers of SAW pipes, which is widely used in the energy sector for the transportation of oil and gas. With integrated facilities at multiple locations and an ever expanding market opportunity, JSL has diversified from a single product company to a multi-product company, manufacturing large diameter submerged arc pipes and spiral pipes and bends for the energy transportation sector; carbon, alloy and stainless steel seamless pipes and tubes manufactured by conical piercing process used for industrial applications; and Ductile iron (DI) pipes for water and sewage transportation.
Subject has established itself as a market leader, and a global major in
providing total pipe solutions to the industry.
Quality at par with the best in the
world
The company boasts of an inimitable, innovative and process driven business environment with the highest level of quality commitment, which is reassured through the ISO 9001, ISO 14001 and ISO 18001 certifications, amongst others.
A Structured Organisation
At subject, the business operations are highly structured with four strategic business units: Large Diameter Pipes, Seamless Tubes, DI (Ductile Iron) Pipes and the US Operations. Every SBU has its own dedicated sales and marketing targets and operations. While the first three SBU’s manufacture and market Large Diameter Pipes, Seamless Tubes and Ductile Iron Pipes respectively, the last SBU acts as a dedicated marketing arm catering to the American market. In effect, the US Operations markets the products manufactured by all other SBUs. It also gets raw material converted to finished goods supplied to the US Affiliates under a toll conversion arrangement, and further markets the product in the American market.
Besides these, JSL also provides various value added products like pipe
coatings, bends and connector castings to its clients.
Manufacturing Facilities
The state-of-the-art manufacturing facilities of Jindal Saw Limited are located at three places in India. The first plant was set up in Kosi Kalan in UP to manufacture SAW Pipes using U-O-E technology. Later, a coating plant was also added here. At Nashik (Maharashtra), the company has one plant, engaged in the manufacture of Seamless pipes. There are two manufacturing bases in Mundra (Gujarat). Mundra-I, which is fully export oriented, has two plants to manufacture SAW Pipes and one plant for coating. Mundra-II, the second base, has three more plants.
FIXED ASSETS
v
Freehold
and Leasehold Land (including site development expenses)
v
Buildings
v
Plant
& Machinery
v
Furniture
& Fixtures
v Vehicles
v Intangible Assets
v Computer Software
Contingent Liabilities
Contingent
Liabilities are not provided for in the accounts but are separately disclosed
by way of a note.
|
|
31.12.2007 |
30.09.2006 |
|
Counter
Guarantee given to Company’s bankers for Guarantee given by them on behalf of
the Company |
4088.592 |
3092.159 |
|
Letter
of Credit Outstanding (Net of Liabilities provided in the books) |
5946.831 |
6966.028 |
|
Disputed
Excise duty and Custom Duty |
8.212 |
1.414 |
|
Disputed
Sales Tax |
129.897 |
105.285 |
|
Guarantees
given to Bank for Credit facilities to Jindal Enterprises LLC (Wholly Owned
Subsidiary Abroad). |
-- |
192.948 |
|
Corporate
Guarantees for availing various export based incentives. |
817.007 |
569.977 |
PRESS RELEASE
JINDAL SAW posts net
operating profit of Rs 4130.000 millions for 2006-07
Subject is a key player in global hydrocarbon and water infrastructure sector has posted an increase of 87% (pro-rata) net operating profit at Rs 4130.000 millions for the 15 months year ended December 31, 2007 as against Rs. 1760.000 millions over last financial year ended 30th September, 2006.
The Company’s gross turnover increased by 38% to Rs. 70170.000 millions for the 15 months period ended 31st December, 07 from Rs. 40610.000 millions for 12 months period ended September, 2006. The total operating profit (EBIDTA) increased by 59% to Rs. 8130.000 millions from Rs. 4100.000 millions, operational profit after tax increased by 87% to Rs. 4130.000 millions from Rs. 1760.000 millions in the aforesaid period. Fully diluted EPS for 15 months period is Rs 747.600 millions per share as against Rs 332.000 millions per equity share in the above period
The above net operating profit of Rs 4130.000 millions does not include extra-ordinary profit of Rs 4640.000 millions (net of tax of Rs 1300.000 millions) received for divestment of entire shareholding of USA Subsidiary Company.
Profile
A Part of Company’s USD 10 billion Jindal Group, the fourth largest industrial house in India Jindal SAW Ltd. is one of the country’s largest producers of SAW pipes, which is widely used in the energy sector for transportation of oil and gas. With integrated facilities at multiple locations and an ever-expanding market opportunity, it has diversified from a single to a multi-product company, manufacturing Submerged Arc Welded Pipes, Spiral Pipes and bends for the energy transportation sector; carbon, alloy and stainless steel Seamless Pipes and tubes for industrial applications; and Ductile Iron pipes for water and sewage transportation.
Besides this Jindal SAW Ltd. provides value added products and services like anti-corrosion coatings for pipe and bends, induction bends and connector casings.
Jindal SAW Ltd. today is an established market leader and global major providing Total Pipe Solutions spanning continents.
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 :
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. 42.40 |
|
UK Pound |
1 |
Rs. 82.57 |
|
Euro |
1 |
Rs. 65.84 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
70 |
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 |
|