MIRA
INFORM REPORT
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Report Date : |
17.05.2008 |
IDENTIFICATION
DETAILS
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Name : |
KALYANI FORGE LIMITED |
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Formerly Known As : |
ELLORA ENGINEERING COMPANY PRIVATE LIMITED |
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Registered Office : |
Shangrila Gardens, 1st Floor, ‘C’ Wing, Opposite Bund Garden, Pune – 411 001, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
29.01.1979 |
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Com. Reg. No.: |
11-20959 |
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CIN No.: [Company
Identification No.] |
L28910MH1979PLC020959 |
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Legal Form : |
Public Limited Liability Company. The company shares are listed on the
Stock Exchange. |
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Line of Business : |
Manufacturer of Precision Closed Die Forgings. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
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Maximum Credit Limit : |
USD 2600000 |
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Status : |
Very Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established company having satisfactory track. Directors are reported as experienced, respectable and having satisfactory means of their own. Their trade relations are reported as fair. Payments are usually correct and as per commitments. |
LOCATIONS
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Registered Office : |
Shangrila Gardens, 1st Floor, ‘C’ Wing, Opp. Bund Garden, Pune – 411 001, Maharashtra, India |
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Tel. No.: |
91-20-26136446 / 26127645 |
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E-Mail : |
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Website : |
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Factory : |
Koregaon Bhima, Taluka Sirur, District Pune – 412 207, Maharashtra, India |
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Tel. No.: |
91-2137-252335 |
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Fax No.: |
91-2137-252344 |
DIRECTORS
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Name : |
Mr. Neelkanth A. Kalyani |
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Designation : |
Executive Chairman |
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Name : |
Mrs. R. G. Kalyani |
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Designation : |
Executive Director |
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Name : |
Mr. D. C. Agashe |
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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 : |
Mr. Balaji Swaminathan |
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Designation : |
Director – Nominee ICICI |
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Name : |
Mr. Umesh R. Lahoti |
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Designation : |
Director |
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Name : |
Mr. R. G. Shende |
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Designation : |
Director |
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Name : |
Mr. R Ramkumar |
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Designation : |
Company Secretary |
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Name : |
Mr. C H Naniwadekar |
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Designation : |
Director |
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Name : |
Mr. Pradeep Nadkarni |
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Designation : |
Director |
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Name : |
Mr. A R Jamenis |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. D. S. Gade |
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Designation : |
Company Secretary |
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Name : |
Mr. R Ramkumar |
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Designation : |
Company Secretary |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of Precision Closed Die Forgings. |
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Exports : |
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Countries : |
USA, Germany, UK, Japan, Italy and Saudi Arabia. |
GENERAL
INFORMATION
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Customers : |
· Ashok Leyland Limited · Automotive Axles · Bajaj Auto Limited · Gabriel India Limited · The Tata Engineering & Locomotive Company Limited (TELCO) |
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No. of Employees : |
560 |
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Bankers : |
· Bank of Maharashtra · Dena Bank · The Shamrao Vithal Co-operative Bank Limited |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Dalal & Shah Chartered Accountants |
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Address : |
Mumbai, Maharashtra, India |
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Associates/Subsidiaries : |
Nil |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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15000000 |
Equity Shares |
Rs. 10/- each |
Rs.150.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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3639000 |
Equity Share |
Rs. 10/-
each |
Rs.36.390
millions |
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 |
36.400 |
36.400 |
36.400 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
607.900 |
507.000 |
413.000 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
644.300 |
543.400 |
449.400 |
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LOAN FUNDS |
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1] Secured Loans |
299.700 |
175.000 |
109.800 |
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2] Unsecured Loans |
125.200 |
127.800 |
123.600 |
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TOTAL BORROWING |
424.900 |
302.800 |
233.400 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
1069.200 |
846.200 |
682.800 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
635.600 |
450.200 |
380.400 |
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Capital work-in-progress |
38.300 |
143.700 |
12.800 |
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INVESTMENT |
0.100 |
0.100 |
0.100 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
203.500
|
140.100 |
159.200 |
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Sundry Debtors |
435.900
|
310.100 |
284.100 |
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Cash & Bank Balances |
14.300
|
20.200 |
62.100 |
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Other Current Assets |
0.000
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0.000 |
0.000 |
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Loans & Advances |
329.000
|
255.600 |
188.500 |
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Total
Current Assets |
982.700
|
726.000 |
693.900 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
334.400
|
272.400 |
244.800 |
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Provisions |
253.100
|
201.400 |
159.600 |
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Total
Current Liabilities |
587.500
|
473.800 |
404.400 |
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Net Current Assets |
395.200
|
252.200 |
289.500 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
1069.200 |
846.200 |
682.800 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
2082.200 |
1716.100 |
1500.200 |
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Other Income |
18.500 |
10.000 |
8.300 |
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Total Income |
2100.700 |
1726.100 |
1508.500 |
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Profit/(Loss) Before Tax |
168.100 |
162.600 |
158.300 |
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Provision for Taxation |
57.600 |
59.200 |
55.400 |
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Profit/(Loss) After Tax |
110.500 |
103.400 |
102.900 |
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Export Value |
233.325 |
NA |
NA |
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Expenditures : |
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Manufacturing Expenses |
206.900 |
185.900 |
161.900 |
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Administrative Expenses |
75.400 |
60.600 |
55.900 |
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Raw Material Consumed |
790.800 |
576.100 |
504.200 |
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Excise duty |
260.800 |
231.100 |
195.800 |
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Salaries, Wages, Bonus, etc. |
170.200 |
137.100 |
115.300 |
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Increase/(Decrease) in Finished Goods |
[29.200] |
2.100 |
[8.900] |
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Interest |
18.600 |
10.200 |
2.900 |
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Power & Fuel |
169.800 |
119.600 |
89.100 |
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Depreciation & Amortization |
240.200 |
219.700 |
206.200 |
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Other Expenditure |
29.100 |
21.100 |
27.800 |
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Total Expenditure |
1932.600 |
1563.500 |
1350.200 |
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QUARTERLY RESULTS
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PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
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TYPE |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
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Sales Turnover |
449.200 |
458.100 |
488.600 |
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Other Income |
1.000 |
1.000 |
2.800 |
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Total Income |
450.200 |
459.100 |
491.400 |
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Total Expenditure |
393.700 |
412.400 |
419.600 |
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Operating Profit |
56.500 |
46.700 |
71.800 |
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Interest |
6.100 |
8.900 |
12.600 |
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Gross Profit |
50.400 |
37.800 |
59.200 |
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Depreciation |
19.800 |
21.100 |
20.900 |
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Tax |
13.900 |
5.200 |
13.000 |
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Reported PAT |
20.000 |
10.600 |
25.300 |
KEY RATIOS
|
Year |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Debt-Equity Ratio |
0.61 |
0.54 |
0.44 |
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Long Term Debt-Equity Ratio |
0.43 |
0.44 |
0.35 |
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Current Ratio |
1.34 |
1.45 |
1.55 |
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TURNOVER RATIOS |
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Fixed Assets |
2.11 |
2.15 |
2.27 |
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Inventory |
12.12 |
11.47 |
9.94 |
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Debtors |
5.58 |
5.78 |
6.13 |
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Interest Cover Ratio |
10.04 |
16.94 |
55.59 |
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Operating Profit Margin(%) |
12.43 |
13.40 |
13.94 |
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Profit Before Interest And Tax Margin(%) |
8.97 |
10.07 |
10.75 |
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Cash Profit Margin(%) |
8.77 |
9.35 |
10.05 |
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Adjusted Net Profit Margin(%) |
5.31 |
6.03 |
6.86 |
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Return On Capital Employed(%) |
19.49 |
22.60 |
27.87 |
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Return On Net Worth(%) |
18.61 |
20.83 |
25.59 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Subject was incorporated on 29th January 1979 at Pune in Maharashtra having Company Registration Number 20959.
The company was originally incorporated under the name and style of Ellora Engineering Company Private Limited and was converted into public limited company in 1992. The name of the company was changed to present in the same year. It commenced commercial production in 1981.
The company has commercialised its metal forms division’s 1000 tons press out of the total 3500 tons press capacity in 1998-99.
The company has completed a small project in 1995-96, at a cost of Rs. 40 milions for manufacturing machined components and axle tube assemblies. This project is undertaken with an object to supply to Telco and Export Market.
The company has undertaken a second expansion project in 1997-98, at a capital outlay of Rs. 180 millions at the land adjacent to existing site of the company at Koregaon Bhima.
The company has commercialised its metal forms division’s 1000 tons press out of the total 3500 ton press capacity in 1998-99. The company has also started commercial production from its warm forging plant and cold forging plant in 1999-2000 and 2000-01, respectively.
The development of warm and cold forgings has enabled the company to get into manufacture of tulip for the CV joint assembly and all four stroke items for 2 wheelers.
Subject is the first company of its kind in the country to use press forging technology to manufacture precision closed die forgings in the small weight range (upto a maximum of 8 kg). Its products include complex profile items, extrusion forgings, besides shafting and gear items.
OPERATIONS
The Directors
are report that the Company has achieved a turnover of Rs.2100.700 millions as
against last year's turnover of Rs. 1726.000 millions which shows an increase
of 21.7% over the previous year. Exports of the Company during the year has
more than doubled from Rs. 114.800 millions last year to Rs.250.500 millions
during the current year, The Company has earned good amount of Foreign Exchange
due to this. The net profit after tax for the year has gone up marginally to
Rs.110.500 millions from Rs 103.400 millions last year.
MANAGEMENT DISCUSSION AND
ANALYSIS
Industry Structure and
Developments :-
India's
economic fundamentals have been strongly established over the last many years
and the world has bought the INDIA GROWTH STORY for the many years to
come.
Very recently, world's largest rating agency Standard and Poors has upgraded
India's rating to Investment Grade. This is in addition to that of Moody's and
Fitch's who had earlier upgraded India's rating to Investment Grade This is the
reflection of the country's economic prospects.
The Indian automotive industry has grown at a staggering pace over the last few
years. The US$ 6.8 billion industry has registered a CAGR of 17% between
1998-2003 and is projected by ACMA (Auto Components Manufacturers Association
of India) to grow at a 15% CAGR till fiscal 2012.
The opening up of the sector over the last decade has caught the attention of
global auto majors as the only market rivaling China in terms of potential
market size and growth opportunity. As the automobile industry has grown and
matured, the Indian auto components industry has also grown tremendously, and is
rapidly achieving global competitiveness both in terms of cost and quality.
Infact, industry observers think that while Indian automobile market will grow
at a measured pace, the auto components industry is poised for a take-off and
is one of the handful of industries where India has a distinct competitive
advantage.
As these companies developed and stabilized their Indian operations, they
realized the cost advantage of manufacturing components in India - typically
lower by about 30%. They began to explore the possibility of exporting back
these low cost, high quality components to their global factories and thus
reduce their overall costs.
Opportunities and Threats
Currently,
the Company is supplying its various products to almost all major two wheelers
as well as four wheelers manufacturers in India. There are many Forging
Companies who are trying to be more competitive than Kalyani Forge. Automobile
OEMs are likely to take advantage of this by way of not fully compensating
steel price increase and conversion cost increase, which has been happening for
the last one year too frequently.
However,
Company is confident of managing this since they are into manufacture of
critical components like connecting rod and they have also forayed into
precision machining, which was their handicap few years back.
Also the
Company is diversifying into non-automotive segments like defence projects,
valves, mining products and railway products, in which volumes would be less,
but there are good margins.
In addition, Company is seeking lot of export opportunities and with export as
a thrust area, the Company would be able to survive and grow amidst intense
competition.
Segment:
Company has only
one segment viz. Forging.
Outlook:-
Company
has finalized its business plan for Financial Year 2007-08, which is likely to
scale up the gross turnover to about Rs. 3000.000 millions.
The
Company has added many machine lines in its 3rd Unit at Sanaswadi, Pune like
machining line for Cummins connecting rod, machining line for nozzle rings for
Turbocam USA and Taylor and Whitely UK, machining line for supplying gear
blanks to VCST Belgium and machining line for supplying fracture-split
connecting rod for MAN Trucks of Force Motors.
The Company has plan to set up fracture-split connecting rod machining line
catering to two more Companies for export. The supplies after PPAP lot would
start during the III and IV Quarter of the F.Y. 2007-08. Company is already
delivering machined connecting rods to Cummins USA, which will reach a level of
2250 Nos. per month from July, 2007 onwards.
BUSINESS
Subject is engaged in manufacturing of precision closed die forgings.
Generic Names of the
Principal Products of the company are :
Product Description
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Item Code No.
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High Quality Close Tolerance Die Forgings |
732690 |
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Rear Axle Support Tube Assembly |
87085000 |
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Finished Machined Connecting Rods, etc. |
87089900 |
The company’s
products range includes :
· Complex Profile Items
· Extrusion Forgings
· Besides Shafting
· Gear Items
The company has completed a small project in 1995-96, at a cost of Rs. 40 millions for manufacturing machined components and axle tube assemblies. This project was undertaken with an object to supply to TELCO and export market.
The company has undertaken a second expansion project in 1997-98, at a capital outlay of Rs. 180 millions at the land adjacent to existing site of the company at Koregaon Bhima.
The company has been accredited with ISO 9002 certification.
CMT REPORT (Corruption,
Money Laundering and 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.42.64 |
|
UK Pound |
1 |
Rs.83.00 |
|
Euro |
1 |
Rs.66.00 |
SCORE and RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
--- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial and 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 and favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|