MIRA INFORM REPORT

 

 

Report Date :

27.05.2008

 

IDENTIFICATION DETAILS

 

Name :

EMCO LIMITED

 

 

Formerly Known As :

EMCO TRANSFORMERS LIMITED

 

 

Registered Office :

N-104, MIDC Area, Jalgaon – 425 003, Maharashtra

 

 

Country :

India

 

 

Financials (as on) :

31.03.2007

 

 

Year of Establishment :

19.09.1964

 

 

Com. Reg. No.:

11-13011

 

 

CIN No.:

[Company Identification No.]

L31102MH1964PLC013011

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

NSKE00379B

 

 

Legal Form :

Public limited liability company. The company’s shares are listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturing and marketing of Transformers

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Aa

 

RATING

STATUS

PROPOSED CREDIT LINE

71-85

Aa

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

Large

 

Maximum Credit Limit :

USD 11000000

 

 

Status :

 Very Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established company having fine track. Available information indicates high financial responsibility of the company.

 

Trade relations are fair. Financial position is good. Payments are correct and as per commitments.

 

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

 

It can be regarded as a promising business partner in a medium to medium to long run.

 

 

 

LOCATIONS

 

Registered Office :

N-104, MIDC Area, Jalgaon – 425 003, Maharashtra, India

Tel. No.:

91-257-2272492/2272572/2210362 / 2210872

Fax No.:

91-257-2210098/2272598

E-Mail :

emco@emcoindia.com

Website :

http://www.emcoindia.com

 

 

Head Office :

Plot No. F-5, Road No. 28, Wagle Industrial Estate, Thane – 400 604, Maharashtra, India

Tel. No.:

91-22-25830517-24

Fax No.:

91-22-25820571

E-Mail :

1. corporate@emcoindia.com

2. bombay.emco@axcess.net.in 

3. emcomumb@bom2.vsnl.net.in

4. emco@emcoindia.com

Website :

http://www.emcoindia.com

 

 

 

Regional Office :

Mumbai

41/43 Nariman House, Police Court Lane, 4th Floor, Fort, Mumbai – 400 001

Tel. No.: 91-22-22656399 / 22656400

Fax No.: 91-22-22622991

 

Delhi

Office No. E-6, 2nd Floor, J-Block Market, Saket, New Delhi – 110 017

Tel. No.: 91-11-26852239 / 26963575 / 26963576

Fax No.: 91-11-26963574

 

Kolkata

16-A Shakespeare Sarani, Kolkata – 700 017, West Bengal

Tel. No.: 91-33-22428697 / 22103401

Fax No.: 91-33-22481322

 

Chennai

Bhattad Complex, 3rd Floor, No. 30, West Cott, Royapettah, Chennai – 600 014, Tamilnadu

Tel. No.: 91-44-28552986 / 28552987

Fax No.: 91-44-28533423

 

 

Factory :

v      Plot No. F-5, Road No. 28, Wagle Industrial Estate, Thane – 400 604, Maharashtra

 

v      N-104, MIDC Area, Jalgaon – 425 003, Maharashtra

 

v      8, Nand Ghanshyam Industrial Estate, Mahakali Caves Road, Andheri (East), Mumbai – 400 098, Maharashtra

             Tel. 91-22-26873752

             Fax. 91-22-26871343

 

v      Gala No. A/17-19, Zero Tax Industrial Estate, Vapi – Silvassa Road, Dadra, Dadra and Nagar Haveli, Union Territory

       Tel. 91-260-2668177-80

 

 

Branches :

Located at :-

v      Secunderabad, Andhra Pradesh

v      Bangalore, Karnataka

v      Indore, Madhya Pradesh

v      Baroda, Gujarat

v      Nagpur, Maharashtra

 

 

DIRECTORS

 

Name :

Mr. Rajesh S. Jain

Designation :

Chairman & Managing Director

Date of Birth/Age :

38 years

Qualification :

B.E. (Electrics)

Experience :

13 years

Date of Appointment :

29.06.1990

Previous Employment :

Entrepreneur and Youngest Ex-President of IEEMA

 

 

Name :

Mr. Shailesh S. Jain

Designation :

Joint Managing Director

Date of Birth/Age :

37 years

Qualification :

B.E. (Chemical)

Experience :

10 years

Date of Appointment :

19.10.1993

 

 

Name :

Mr. R. S. Shah

Designation :

Director – Technical

Qualification :

Transformer Technology Export

Previous Employment :

Ex-President of ERDA

 

 

Name :

Mr. T. N. V. Ayyar

Designation :

Independent Director

Qualification :

B.Com, ACA

Previous Employment :

Director on GE Capital TFSL, Tata Ceramics, Crest Animation, Sahara India Life Insurance

 

 

Name :

Mr. Bheru Choudhary

Designation :

Independent Director

Previous Employment :

Solicitor, Partner of IC Legal

 

 

Name :

Mr. Vinod Chandsarkar

Designation :

Director

 

 

Name :

Mr. S. V. Deo

Designation :

Independent Director

Qualification :

B.E. (Electrical), PGDBA

Previous Employment :

Ex- Technical Member-MSEB

 

 

 

 

Name :

Mr. K. N. Shenoy

Designation :

Independent Director

Qualification :

B.E. (Electrical), PGDBA

Previous Employment :

Ex-President of CII, IEEMA and ERDA

Ex-Chairman ABB, India

 

 

KEY EXECUTIVES

 

Name :

Mrs. Priti Alkari

 

Designation :

Company Secretary

 

 

 

 

Name :

Mr. Sunil Rustagi

 

Designation :

Chief Financial Officer

 

 

 

 

Name :

Mr. William Fernandes

 

Designation :

Company Secretary

 

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 31.03.2008

 

Category of Shareholder

No. of Shares

Percentage of Holding

Shareholding of Promoter & Promoter Group

 

 

Indian

 

 

Individual / Hindu Undivided Family

16065140

27.30

Bodies Corporate (See note 1)

3592310

6.11

Public Shareholding

 

 

Institutions

 

 

Mutual Funds / UTI

15574025

26.47

Insurance Companies

700820

1.19

Foreign Institutional Investors

2268459

3.86

Any Others (Specify)

 

 

Foreign Mutual Fund

3447025

5.86

Non-Institutions

 

 

Bodies Corporate

13094136

22.25

Individuals

 

 

Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million

3131935

5.32

ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million

577105

0.98

Any Others (Specify)

 

 

i. Clearing Member

18688

0.03

ii. Directors/Relatives

57575

0.10

iii. Market Maker

8791

0.01

iv. NRI (Repatriate)

122844

0.21

v. NRI (Non- Repatriate)

70203

0.12

vi. HUF

107804

0.18

GRAND TOTAL (A)+(B)+(C)

58836860

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturing and marketing of Transformers

 

 

Products :

Product Description

ITC Code

Transformers

85.04.23

Electronic Energy Meters

90.28.00

 

 

Exports :

 

Countries :
  • Dubai
  • Gulf Countries
  •  Russia
  • Vietnam

 

 

Imports :

 

Countries :
  • Austria
  • Brazil
  •  Italy
  • Japan
  • U.K.
  • U.S.A.

 

PRODUCTION STATUS

 

Particulars

Unit

 

Installed Capacity

Actual Production

Transformers

KVA

 

10000000

8406278

Electronic Energy Meters

Nos.

 

1300000

743990

Wind Power Generation

KVA

 

1500

8237.50

 

 

GENERAL INFORMATION

 

Suppliers :
  • Alpha Engineering Company
  • Amba Conductor
  • Atvys Industries
  • B.K. Enterprises
  • Fibre Glass Insulation
  • Grand Polycast Company Private Limited
  • J.S. Enterprises
  • Jay Engineering Company
  • Jaywanti Industries
  • K.D. Enterprises
  • Nova Lubricants and Chemicals
  • P.K. Engineering
  • Pragati Electrical Private Limited
  • Rational Engineers Private Limited
  • Saicon Systems
  • Shree Ganraj Industries
  • Shrikant Wood Works
  • Sigma Plastic Industries
  • Sukurat Udyog
  • Supreme Metel Components Private Limited
  • Techno Electricals
  • Trafo Electrical Institution
  • Vinayak Transmission Products Private Limited
  • Yash Highvoltage Insulators Private Limited
  • Yogesh Engineering Corporation
  • Guru Daya Engineers

 

 

No. of Employees :

1000

 

 

Bankers :

·         Dena Bank

·         Development Credit Bank Limited

·         The Federal Bank Limited

·         Sumitomo Mitsui Banking Corporation

·         ING Vysya Bank Limited

·         Bank of India

·         State Bank of Hyderabad

·         State Bank of India

·         Andhra Bank

·         Union Bank of India

·         Vijaya Bank

 

 

Facilities :

SECURED LOANS

As on 31.03.2007

1) Foreign Currency Loan Exchange fluctuation on above

--

2) Corporate Loan

--

3) Vehicle Loans

4.978

4) Term Loans

 

a) Working Capital Term Loan From Financial Institution

220.000

b) Long Term Working Capital Loan From Financial Institution

50.000

c) From Bank

262.510

5) Working Capital from Banks

 

a) Working Capital Demand Loan

234.000

b) Foreign Currency Demand Loan

 

272.872

Exchange fluctuation on above

0.802

c) Cash Credit / Packing Credit

601.572

 

1852.770

Notes :

A Corporate Loan referred in (2) above is secured by way of first charge on the residential flats.

B Vehicle Loans referred in (3) above are secured by way of charge of respective vehicles financed.

C Term Loan referred to in 4 (a) , 4 (b) & (c) are secured by a first pari-passu charge on all the Company's immovable properties situated at Thane and Ml DC, Jalgaon except ownership flats purchased or to be purchased and a first charge by way of hypothecation of all the Company's movables (save and except book debts) subject to prior charges created and/or to be created in favour of Company's bankers for working capital requirements in the ordinary course of business and also subject to exclusive charges and/or to be created on specific items of plant and machinery/equipments/ownership flats purchased/to be purchased.

 

D Working capital loans from Banks referred in 5 (a), 5(b) & 5(c) above and Bank Facilities mentioned in 2 (a) and (b) of Schedule 15, are secured against  ypothecation and charges by way of first charge on Raw Materials, Stocks-in-process, Finished Goods, Consumable Stores and Spares, Book Debts, Outstanding and Claims both present and future and all the tangible movable properties and assets subject to prior charges. This is further secured by Second Charge on the Company's immovable properties situated at Thane and MIDC, Jalgaon except ownership flats purchased or to be purchased.

 

 

 

 

Banking Relations :

Good

 

 

Auditors :

 

Name :

P. Raj and Company

Chartered Accountants

 

 

Memberships :

Confederation of Indian Industry

 

 

Associates :

v      Jain Irrigation Systems Limited

v      Jain Plastics & Chemicals Limited and several Jain Group companies

v      Purna Properties and Investments Private Limited

v      Energy Equipment Distributors

v      Unity Chemicals

v      India Energy Investments Private Limited

 

 

Wholly owned Subsidiary :

Emco Energy Limited

 

 

Subsidiaries :

Verticalbiz.com (India) Limited

 

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

15,000,000

Equity Shares

Rs. 10/- each

Rs. 150.000 Millions

500000

Cumulative Redeemable preference Shares

Rs. 100/- each

Rs. 50.000 Millions

 

Total

 

Rs. 200.000 Millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

10209372

Equity Shares

Rs. 10/- each

Rs. 102.093

 

Out of the above Equity Shares :-

 

a) 177,620 Shares represent after sub-division of 17,762 shares of the face value of Rupees 100 per share allotted as fully paid up pursuant to a contract without payment being received in cash.

b) 148,800 Shares represent after sub-division of 14,880 shares of the face value of Rupees 100 per share which were issued as fully paid bonus shares by Capitalisation of Reserves.

c) 38,730 Shares represent after sub-division of 3,873 shares of the face value of Rupees 100 per share which were issued as fully paid up to shareholders of the erstwhile Emco Esta Capacitors Limited on its amalgamation with the Company, for consideration other than cash.

d) NIL (900,000) Equity Shares of Rupees 10 each, fully paid-up Rupees 10 • (Previous year Rupees 7) per share.

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2007

31.03.2006

31.03.2005

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

102.094

76.394

61.129

2] Share Warrents

21.750

8.550

2.565

3] Reserves & Surplus

2868.474

1256.964

668.627

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

2992.318

1341.908

732.321

LOAN FUNDS

 

 

 

1] Secured Loans

1852.770

982.797

915.226

2] Unsecured Loans

0.000

80.000

253.329

TOTAL BORROWING

1852.770

1062.797

1168.555

DEFERRED TAX LIABILITIES

34.607

71.288

81.742

 

 

 

 

TOTAL

4879.695

2475.993

1982.618

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

687.666

593.973

574.881

Capital work-in-progress

150.768

1.390

40.281

 

 

 

 

INVESTMENT

295.949

9.781

5.573

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
1571.082

1070.851

633.089

 

Sundry Debtors
3634.805

2144.270

1305.415

 

Cash & Bank Balances
1000.041

82.242

172.813

 

Other Current Assets
0.000

0.000

0.000

 

Loans & Advances
544.471

248.545

152.437

Total Current Assets
6750.399

3545.908

2263.754

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Current Liabilities
2935.623

1643.092

885.080

 

Provisions
69.464

31.967

16.791

Total Current Liabilities
3005.087

1675.059

901.871

Net Current Assets
3745.312

1870.849

1361.883

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

4879.695

2475.993

192.618

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

 

 

 

 

Sales Turnover

6558.856

4053.701

2360.243

Other Income

1.345

0.133

 

Total Income

6560.201

4053.834

2360.243

 

 

 

 

Profit/(Loss) Before Tax

609.127

283.939

120.576

Provision for Taxation

203.160

93.229

24.516

Profit/(Loss) After Tax

405.967

190.710

96.060

 

 

 

 

 

Export Earnings

668.554

632.665

N.A.

 

 

 

 

Imports :

 

 

 

 

Raw Materials

653.995

204.716

136.655

 

Capital Goods

9.713

3.130

0.000

Total Imports

663.708

207.846

136.655

 

 

 

 

Expenditures :

 

 

 

Raw Material Consumed

5019.340

3067.702

 

 

Employee Cost

201.700

135.959

 

 

Interest

198.072

117.510

2239.667

 

Depreciation & Amortization

59.810

56.540

 

 

Other Expenditure

472.152

392.184

 

Total Expenditure

5951.074

3769.895

2239.667

 

QUARTERLY / SUMMARISED RESULTS

 

PARTICULARS

 

30.06.2007

1st Quarter

30.09.2007

2nd Quarter

31.12.2007

3rd Quarter

 Sales Turnover

1543.200

1841.700

2433.600

 Other Income

0.000

0.000

0.000

 Total Income

1543.200

1841.700

2433.600

 Total Expenditure

1341.500

1590.900

2105.700

 Operating Profit

201.700

250.800

327.900

 Interest

46.700

73.700

69.200

 Gross Profit

155.000

177.100

258.700

 Depreciation

17.300

18.300

22.900

 Tax

45.700

55.200

84.700

 Reported PAT

90.100

103.600

151.100

 

 

 

KEY RATIOS

 

PARTICULARS

 

30.03.2007

30.03.2006

31.03.2005

Debt-Equity Ratio

0.68

1.08

1.39

Long Term Debt-Equity Ratio

0.23

0.49

0.62

Current Ratio

1.52

1.46

1.40

TURNOVRRATIO

TURNOVER RATIOS

 

 

Fixed Asset

6.35

4.28

2.77

Inventory

5.54

5.23

4.92

Debtors

2.53

2.58

2.31

Interest Cover Ratio

2.91

2.56

1.68

Operating Profit Margin(%)

13.50

11.72

13.39

Profit Before Interest And Tax Margin(%)

12.68

10.45

11.39

Cash Profit Margin(%)

6.36

5.55

5.67

Adjusted Net Profit Margin(%)

5.54

4.28

3.67

Return On Capital Employed(%)

25.72

21.67

17.55

Return On Net Worth(%)

18.87

18.49

13.51

 

 

 

LOCAL AGENCY FURTHER INFORMATION

 

HISTORY

 

The company was incorporated on 19th September, 1964 at Jalgaon in Maharashtra having Company Registration Number 13011 under the name & style of Emco Transformers Limited. The name was subsequently changed to present.

 

Subject was promoted by Mr. C. D. Gandhi and in July 1979, EMCO Esta Capacitors was amalgamated with the company. Later in September 1986, the company changed hands to Mr. B. H. Jain and Mr. R. S. Jain family and in 1991, Mr. B. H. Jain and his family withdrew from the management of the company. Their stake had been partly taken over by the S. B. Jain family in October, 1990 at a price of Rs. 204/- per share.

 

The company went public in March, 1995 with PCDs on a right basis to part-finance the expansion plan which entailed setting up an additional manufacturing plant with state-of-the-art equipment.

 

During 1995-96, the company was awarded the ISO 9001 Accreditation form BVQI. The company had diversified into manufacturing SCADA and Electronic Energy Meters and providing turnkey projects during the period 1997-2000. The project of manufacture 500000 nos. of Electronic Energy Meters was completed in 1998-99.

 

During the year 1999-2000, the company had diversified into two areas – IT Services in the power sector and a vertical portal for electrical industry called www.electricmedia.com which was a comprehensive source of information and e-commerce for the electrical industry.

 

The company had allotted 9,00,000 equity shares of Rs.10/- each to promoters on preferential allotment basis on March 25, 2000.

 

BUSINESS

 

The company is engaged in manufacturing and marketing of Transformers.

 

The company manufactures all transformers above 10 MVA 66kV upto 200 MVA 220 kV at its’ Thane plant. The company is the market leader in 132 kV voltage segment and also in the special Furnace Transformers (for steel industry) and Rectifier Transformer (for chemical industry). The company had modernised its existing plant where it will manufacture power transformers upto 160 MVA 220 kV, rectifier transformers upto 900 KVA D C. Its’ technical collaboration with ABB Secheron of Switzerland for a period of 20 years, expired in November, 1994 after being fully absorbed. Presently, the installed capacity is 7500000 KVA.

 

It is in trade terms with :-

 

v      Amba Conductors

v      Ajarekar Battery Plates

v      Alfa Lamination

v      Akshay Industries

v      ATVUS Industries

v      Avani Adhechem

v      Abhishek Packaging Industries

v      Aloke Rub Plast Private Limited

v      Alsthom Instruments Transformers Private Limited

v      Beta Instruments Company (India) Private Limited

v      Bombay Waste Suppliers

v      B. R. Enterprises

v      Mahendra Electrical Works

 

 

Review of Operations: 

 
 During the year, Income from Sales and Services were higher by 64.38.% at Rs. 7322.666 Millions compared to Rs. 4454.776 Millions in the previous year. Profit before taxation was significantly higher by 114.53% at Rs. 6091.127 Millions from Rs. 283.939 Millions in the previous year. Growth in profit was mainly attributable to higher sales and operational efficiencies. 

 

 Profit after tax at Rs.405.967 Millions for the year has improved by 112.87% compared to Rs.190.710 Millions in the previous year. Earning per equity share improved by 72.63% at Rs. 45.92 as compared to Rs. 26.60 in the previous year. The detailed discussion of operations for the year ended 31st March, 2007 is given in Management Discussion and Analysis section. 


 Scheme of Amalgamation: 

 

During the year, the Board of Directors have pursuant to the provisions of Sections 391 to 394 of the Companies Act, 1956 approved a proposed scheme of Amalgamation of India Energy Investments Private Limited and Urja Engineers Limited with the Company subject to necessary approvals, permissions and sanctions.


 Subsidiary: 
 
As required under Section 212 of the Companies Act, 1956, the Audited Statement of Accounts along with the reports of the Board of Directors of Emco Energy Limited and Auditors' Report thereon for the period ended 31st March, 2007 are annexed. 

 The Consolidated Financial Statements of the Company and its subsidiary Company, prepared in accordance with Accounting Standard 21 prescribed by The Institute of Chartered Accountants of India, forms part of the Annual Report and Accounts. 

 
 The Company has not accepted any deposits during the year. 


 
 Qualified Institutional

 
Pursuant to the approval of the Shareholders at the 41st Annual General Meeting held on 15th September, 2006 the Company issued and allotted 20,00,000 Equity Shares of Rs.10/- each at an issue price of Rs. 600/- per share to Qualified Institutional Buyers under the Qualified Institutional Placements (QIP) route.


 Directors: 
 
 In accordance with the Articles of Association of the Company, Mr. R. S. Shah and Mr. T. N. V. Ayyar, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of the retiring Directors and seeking re-appointment is furnished in the Corporate Governance section annexed to this report.

 
 
 Management Discussion and Analysis. 

 
 The Management Discussion and Analysis forms part of the Directors' Report and is annexed thereto. 


 
 Corporate Governance Report- 


 As required by clause 49 of the Listing Agreement of Stock Exchange(s), a report on Corporate Governance and a certificate confirming compliance with requirements of Corporate Governance forms part of this report.

 

 Industry Structure and Development 

 
 The Company operates in the Power Industry, which constitutes of Generation, Transmission, Distribution and manufacture of Power Equipment viz Generation Equipment and T & D Equipment. The development of the power industry is the key to economic development as it provides one of the most critical inputs for economic development of the Country. The Ministry of Power ('the MoP'), the Ministry for Non-Conventional Energy Sources of the Government, the State and Central government entities are primarily responsible for the development of the power industry in the Country. The Power sector has registered significant progress and growth, since the process of planned development of the economy began post independence. Even with such growth the Power sector has not been able to meet with the growing demand basically due to inadequate investment and the poor financial health of the SEBs. In recent years, in light of persistent power shortages, the Government has taken significant measures to restructure the industry and attract investment. The measures include the following:


 * Passing of the Electricity Act, 2003; 


 * Implementing Programmes such as APDRP / RGGVY; 

 
 * Promotion of Power Trading activity; 

 
 * Formation of and empowerment of the Electricity Regulatory Commission (ERCs); 

 
 * Dismantling of the loss making SEBs; 

 
 With these measures it is expected that the power industry will grow rapidly in the near future. 

 

 

Transformer division 


 This is the oldest division and contributes the most to the top as well as the bottom line of the Company. The division manufactures widest range of transformers used in the power industry in India including power and distribution transformers, furnace, rectifier, traction and locomotive transformers and is also in the niche segment of manufacturing generator transformers. During the year the division received a number of prestigious orders from Karnataka Power Transmission Corporation Limited (KPTCL), Uttar Pradesh Power Corporation Ltd., Tamil Nadu Electricity Board and Andhra Pradesh Transmission Company Ltd. to name a few. The order from KPTCL was the single largest order for transformers, ever placed by any entity in India for Rupees 275 crores on the Company, which indicates the customers' confidence in the execution capability of the Company and size of opportunity which is available for the Company. 

 
 The Transformer division's turnover grew by 70%.

 
 Project division 


 The Project Division focuses on turnkey projects in the T & D area, mainly catering to extra high voltage and high voltage substations and strengthening the substation and distribution network. The Project division has successfully executed a number of projects for up to 220 Kv substations. Amongst other achievements for the year the project division added two feathers in their cap this year, one being completion of a 220 Kv substation for the new international airport coming up at Bangalore in a record time and the other being a break through order for 400 Kv substation from PGCIL for Roorkee. 

 
 The Project division turnover grew by 37%.

 
 Meter Division 


 This division manufactures single phase and high-end electronic energy meters and provides energy and revenue management solutions to customers in the distribution business. The Company has state of the art facilities for manufacturing electronic energy meters at Thane and Dadra & Nagar Haveli (Union Territory) with an annual capacity of 1.3 million meters.

 
 The Meter division turnover grew by 85%.

 
 International Division 


 This division provides a platform for offering our products and services to global customers. Currently we export to around 25 countries throughout the world. It is the continuous endeavour of this division to increase this number so that a significant portion of our sales come from exports and we have a good geographical mix of our customers and not dependent on only one market. We are a recognized export house and have won a few export awards in the last couple of years from some prestigious Associations. 

 

 Export sales grew by 27%.


 Opportunities and Challenges 

 

 India has one of the lowest electricity consumption levels in the world, partly due to inadequate generation and distribution networks. There is high correlation between generation capacity and transmission capacity. There is no reason to believe that the correlation might go down. The demand for power equipment is directly linked to the growth of infrastructure and growth of the economy which is one of the features of the Indian Economy. These factors point towards huge growth prospects in the power sector. The Company with technical expertise and manufacturing set up is well poised to wrestle its share of growth and prosperity. 


 The Company faces business challenges from its competitors and other risks and threats normally associated with business.

 
 Technical Tie up 

 
 The Company has recently entered into a Technical Assistance and Know-How agreement with Baoding Tianwei Baobian Electric Co. Ltd. to manufacture diverse range of 400 Kv Class Transformers. Under the agreement, the Company will be entitled to Design, Drawing, Manufacturing Know-How and the technical support required to manufacture wide range of 400kv Class Transformers which are used by large SEBs in India. The Baoding Tianwei Baobian Electric Co. Ltd. is a main part of Baoding Tianwei Group Co. Ltd. It was set up in 1958 and has capability to manufacture up to 1100 Kv, with a capacity of 80,000 MVA. It has a zero failure record for 500kv class Transformers for the last 24 years.

 
 Acquisitions 
 
 During the year the Company acquired management control of Urja Engineers Limited (UEL), a Baroda based Transmission line Company capable of manufacturing and executing turnkey transmission line projects upto 400 Kv. The business of the Company and UEL are complimentary to each other and there exist operational synergies in integration of the business. The Transmission Line business fits well with the Company's Transmission and Distribution (T&D) sector focus as it is already a major player in the Transmission business and Turnkey sub-station business. The Company intends to merge UEL with it, for which necessary approvals are being sought. 

 

Particulars

 

31.03.2007

Rs. In Millions

Bank Guarantees outstanding as at the year end (Gross)

2368.986

Letters of Credit outstanding (net) as at the year end (Secured)

868.280

Letters of Credit outstanding (net) as at the year end (Unsecured)

149.870

Disputed amount of Sales Tax in respect of which appeals have been filed.

11.859

Claims made by workmen for re-instatement. Matters Subjudice.

Amount not Ascertainable

Disputed amount of Excise duty and Service tax in respect of which the Company is in appeal.

85.817

Claim of about Rupees 2,454,922 by two suppliers against the Company. The matter is Subjudice.

 

Summary suit of Rupees 1 ,012,605 filed by one supplier against the Company. The matter is Subjudice.

 

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances):

152.279

 

 

Fixed Assets :

 

Tanjible Assets

 

Intangible Assets:

 

 

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.42.56

UK Pound

1

Rs.84.32

Euro

1

Rs.67.08

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

8

PAID-UP CAPITAL

1~10

8

OPERATING SCALE

1~10

8

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

9

--PROFITABILIRY

1~10

7

--LIQUIDITY

1~10

8

--LEVERAGE

1~10

8

--RESERVES

1~10

8

--CREDIT LINES

1~10

8

--MARGINS

-5~5

--

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

72

 

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

 

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

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

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

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

 

Unlimited

71-85

Aa

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

 

Large

56-70

A

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

 

Fairly Large

41-55

Ba

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

 

Satisfactory

26-40

B

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

 

Small

11-25

Ca

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

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

NR

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

No Rating

 

 

 

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