MIRA INFORM REPORT
|
Report Date : |
27.10.2008 |
IDENTIFICATION DETAILS
|
Name : |
ESSAR STEEL LIMITED |
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Registered Office : |
27 Km, |
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Country : |
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Financials (as on) : |
31.03.2008 |
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Date of Incorporation : |
01.06.1976 |
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Com. Reg. No.: |
013787 |
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CIN No.: [Company
Identification No.] |
L27100GJ1976FLC013787 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
SRTE00025E |
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Legal Form : |
Public Limited Liability company. Company’s shares are listed on the
Stock Exchanges. |
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Line of Business : |
Manufacturers of Hot Briquetted Iron, Hot Rolled Coils/ Sheets and
Pellets. |
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 230000000 |
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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 an important company of Essar Group managed and controlled
by Ruia brothers. The company’s shares are listed on the stock exchange. Due to
overall improvement in steel industry in India and internationally the
company has improved its results. Its domestic suppliers are paid on an
average 60 days beyond terms. Payments to overseas suppliers are regular and
as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
|
Registered Office : |
27 Km, Surat Hazira Road, Hazira, Surat – 394 270, Gujarat, India. |
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Tel. No.: |
91-261-28326260 / 26682400 / 2872400 |
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Fax No.: |
91-261-28326462 / 26698296 / 6682796 |
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E-Mail : |
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Website : |
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Corporate Office : |
Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi, Mumbai – 400 034,
Maharashtra, India |
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Tel. No.: |
91-22-24950606 / 66601100 |
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Fax No.: |
91-22-24954283 / 66602748 |
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E-Mail : |
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Factory : |
HRC Plant, 27 Km, Surat Hazira Road, Post Hazira, District Surat – 394
270, Gujarat, India |
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Tel. No.: |
91-261-6682400 |
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Fax No.: |
91-261-6682796 |
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Email : |
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Branch : |
Ahmedabad 172/2 Premchand Annexe, Behind Popular House, Ashram Road, Telephone: 91-79-26580277/
3628 Fax: 91-79-26581917/ 5717 Chennai 77, C.P. Ramaswamy Road, Abhiramapuram, Chennai 600018, Tamilnadu,
India Telephone: 91-44-24991992/
1206 Fax: 91-44-24994922 New Delhi 21 Phiroze Gandhi Road, Lajpat Nagar III, New Delhi 110 024, India Telephone: Group : 91-11-29842563
/ 9503 Essar Oil :
91-11-29836079 / 51727378 Fax: Group : 91-11– 29844370 Essar Oil : 91-11- 51017349
/ 51716580 Email: corporatecommunications@essar.com Vadinar Essar Oil Limited Refinery Project Site Head Post Office, Post Box No. 24 Khambhalia 361 305, District
Jamnagar, India Telephone: 91-2833-241444 Fax: 91-2833-241414 Vizag Hy-Grade Pellets Limited Telephone: 91-891-2559901-10 |
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Overseas Offices : |
China Name: Mr. Deep Banerjee Company: Essar Steel Limited / Essar - Beijing Representative Office Unit 1509, China World Tower 1, China World Trade Centre, No 1 Jian
Guo Men Wai Avenue, Beijing 100004, P R CHINA Telephone: 86-10-58669923
(Board)
86-10-58669925 (Direct) Fax: 86-10-58669924 Email: deepessar@hotmail.com Doha - Qatar P. O. Box 24086, Doha - State of Qatar Telephone: 974- 467 4343 Fax: 974- 467 0535 Indonesia Company: PT Essar Dhananjaya. Graha Essar, Bekasi Fajar Industrial Estate, Industri 3 , Area Kav # B1
Cibitung, Bekasi 17520 West Java, Indonesia. Telephone: 62- 21- 8980152/
53/ 54, 8980203/ 4/ 6/ 7 Tlx: 64827 ESSAR IA Fax: 61 -21- 8980150/ 51 Email: marketing@essar.co.id United Arab Emirates Name: Essar Gulf FZE LOB 6, G-18, Post Box No. 61078, Jabel Ali, Dubai, UAE Telephone: 9714- 881 7278 Fax: 9714- 881 7281 USA - New York 36th Floor, 145, E 48th Street, New York, NY 10017 Telephone: 1- 212-7585520 Fax: 1- 212-7585860 |
DIRECTORS
|
Name : |
Mr. Shashi Ruia |
|
Designation : |
Chairman |
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Name : |
Mr. Ravikant
Ruia |
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Designation : |
Vice-Chairman |
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Name : |
Mr. Prashant
Ruia |
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Designation : |
Managing
Director |
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Name : |
Mr. Vikram Amin |
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Designation : |
Director –
Marketing |
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Name : |
Mr. V. G.
Raghavan |
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Designation : |
Director -
Finance |
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Name : |
Mr. Jatinder
Mehra |
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Designation : |
Director |
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Name : |
Mr. S. V.
Venkatesan |
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Designation : |
Director |
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Name : |
Mr. Sanjeev
Shriya |
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Designation : |
Director |
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Name : |
Mr. Rewant Ruia |
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Designation : |
Director |
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Name : |
Mr. Robin
Banerjee |
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Designation : |
Director –
Finance |
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Name : |
Mr. K. V.
Krishnamurthy |
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Designation : |
Director |
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Name : |
Mr. G. D.
Goswami |
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Designation : |
Nominee - ICICI
Bank |
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Name : |
Mr. Dilip Oommen
|
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Designation : |
Chief Executive
Officer |
KEY EXECUTIVES
|
Name : |
Mr. Narottam B.
Vyas |
|
Designation : |
Company
Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(As on 30.09.2007)
EQUITY SHARES
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Indian |
|
|
|
Bodies Corporate |
325969383 |
28.60 |
|
Foreign |
|
|
|
Bodies Corporate |
666600784 |
58.48 |
|
Institutions |
|
|
|
Mutual Funds / Axis Bank |
1673595 |
0.15 |
|
Financial Institutions/Banks |
4485902 |
0.39 |
|
Insurance Companies |
3673941 |
0.32 |
|
Foreign Institutional Investors |
23759291 |
2.09 |
|
State Finance Corporation |
190 |
0.00 |
|
Non-Institutions |
|
|
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Bodies Corporate |
35254527 |
3.09 |
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Individuals |
|
|
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Individual shareholders holding nominal share
capital up to Rs. 0.100 Million |
62219550 |
5.46 |
|
Individual shareholders holding nominal
share capital in excess of Rs. 0.100 Million |
13747524 |
1.21 |
|
Non Resident Individuals |
2426201 |
0.21 |
|
Total
|
1139810888 |
100.00 |
PREFERENCE SHARES
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Indian |
|
|
|
Bodies Corporate |
6169400 |
3.04 |
|
Foreign |
|
|
|
Bodies Corporate |
119110611 |
58.70 |
|
Institutions |
|
|
|
Mutual Funds / Axis Bank |
415380 |
0.21 |
|
Financial Institutions/Banks |
529852 |
0.26 |
|
Insurance Companies |
3631182 |
1.79 |
|
Foreign Institutional Investors |
48382 |
0.02 |
|
State Finance Corporation |
460 |
0.00 |
|
Non-Institutions |
|
|
|
Bodies Corporate |
10640287 |
5.24 |
|
Individuals |
|
|
|
Individual shareholders holding nominal
share capital up to Rs. 0.100 Million |
48708310 |
24.00 |
|
Individual shareholders holding nominal
share capital in excess of Rs. 0.100 Million |
11762213 |
5.80 |
|
Non Resident Individuals |
1908755 |
0.94 |
|
Total
|
202924832 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturers of Hot Briquetted Iron, Hot Rolled Coils/ Sheets and Pellets.
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Products : |
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Exports : |
·
Middle East Asia ·
South East Asia including China ·
U.S.A. ·
Western Europe |
PRODUCTION STATUS
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
|
Iron Ore Pellet
Plant |
MT |
8000000 |
5363395 |
|
Hot Briquette
Iron Plant |
MT |
5000000 |
4179304 |
|
Hot Rolled
Coil/Sheet Plant |
MT |
3600000 |
3368764 |
|
Cold Rolled Coil
Plant |
MT |
1400000 |
- |
GENERAL INFORMATION
|
No. of Employees : |
2732 |
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Bankers : |
·
State Bank of India ·
Punjab National Bank ·
Bank of India ·
Allahabad Bank ·
IDBI Bank ·
State Bank of Patiala ·
State Bank of Mysore ·
Indian Bank ·
State Bank of Saurashtra ·
State Bank of Indore ·
State Bank of Bikaner and Jaipur ·
Standard Chartered Bank ·
Export Import Bank of India |
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Facilities : |
Note Rupee Notes
aggregating to Rs. 1561.000 millions is repayable up to March 31, 2018 carrying
interest @ 8% p.a. payable semi-annually. Dollar Notes aggregating to Rs.
1266.700 millions is repayable on March 31, 2018 carrying interest @ 0.25%
p.a. payable semi-annually. |
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Banking
Relations : |
Satisfactory |
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Auditors : |
S. R. Batlibai
and Company Chartered
Accountants |
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Address : |
6th
Floor, Express Towers, Nariman Point, Mumbai – 400021, Maharshtra, India |
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Solicitors : |
Crawford Bayley and Company |
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Address : |
State Bank Buildings, NGN Vaidya Marg, Fort, Mumbai - 400 023,
Maharshtra, India |
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|
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Group Companies : |
·
Click For Steel Services Limited (CFS) ·
Essar Agrotech Limited (EAL) ·
Essar House Limited (EHL) ·
Essar Information Technology Limited (ElTL) ·
Essar Investment Limited (EIL) ·
Essar Projects Limited (EPL) ·
Essar Properties Limited (EPRL) ·
Futura Travels Limited (FTL) ·
India Securities Limited (ISL) ·
Aegis BPO Service Limited (AEGIS) ·
PT Essar Indonesia (PTEI) ·
S'.G. Chemicals and Dyes Trading Limited ·
Imperial Consultants Private Limited (ICPL) ·
Essar House Services Limited (EHSL) [formerly
known as Essar World Trade Limited] ·
Asia Motor Works(AMW) ·
Essar USA ·
Teletech Investments (India) Limited |
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|
|
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Subsidiaries : |
·
Essar Steel (Jharkhand) Limited (ESJLJ ·
Essar Steel (Orissa) Limited (ESOL) ·
Essar Steel Trading (FZE), Dubai |
|
|
|
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Fellow Subsidiaries : |
·
Essar Steel (Chattisgarh) Limited (ESCL) ·
Hazira Plate Limited (HPLT) ·
Essar Oil Limited (EOL) ·
Essar Logistics Limited (ELL) ·
Essar Shipping Limited (ESL) ·
Essar Construction Limited (ECL) ·
ETHL Global Capital Limited(ETHL) ·
Essar SEZ Hazira Limited (Essar SEŁ) ·
Essar Telecom Infrastructure Private Limited ·
Essar Steel (Hazira) Limited (ESHL) ·
Essar Shipping and Logistics Limited (ESLL) ·
Hazira Pipe Mill Limited (HPML) |
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Membership : |
·
Confederation of Indian Industry |
|
|
|
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Collaborators : |
·
Voest Alpine, Austria |
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|
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Associates : |
·
Essar Power Limited (EPOL) ·
Bhander Power Limited (BPOL) ·
Essar Telecom Infrastructure Private Limited ·
Essar Steel (Hazira) Limited (ESHL) ·
Essar Bulk Terminal Limited (EBTL) |
|
|
|
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Holding Company : |
·
Essar Steel Holdings Limited, Mauritius ·
Essar Global Limited, Cayman - Holding Company of
Essar Steel Holdings Limited |
CAPITAL STRUCTURE
(As on 31.03.2008)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
3520000000 |
Equity Shares |
Rs.10/- each |
Rs. 35200.0000
millions |
|
60000000 |
0.01% Cumulative Preference Shares |
Rs.90/- each |
Rs. 5400.000
millions |
|
60000000 |
1% Cumulative Redeemable Preference Shares |
Rs.90/- each |
Rs. 5400.000 millions |
|
100000000 |
10% Cumulative Redeemable Preference Shares |
Rs.10/- each |
Rs. 1000.000 millions |
|
300000000 |
0.01 % Cumulative Redeemable Preference Shares |
Rs.10/- each |
Rs. 3000.000 millions |
|
65000000 |
7% Compulsory Convertible Preference Shares |
Rs.350/- each |
Rs. 22750.000
millions |
|
|
GRAND
TOTAL |
|
Rs. 72750.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1139810888 |
Equity Shares |
Rs.10/- each |
Rs. 11398.100 millions |
|
|
Add : Shares Forfeited |
|
Rs. 6.700 millions |
|
43598951 |
10% Cumulative Redeemable Preference Shares |
Rs.10/- each |
Rs. 436.000
Millions |
|
|
GRAND
TOTAL |
|
Rs.
11840.800 millions |
Of the above:
(a) 39,87,538 (Previous
year 39,87,538) Equity Shares of Rs. 10 each were allotted as fully paid up
Bonus Shares by capitalisation of General Reserve.
(b) 1,50,000
(Previous year 1,50,000) Equity Shares of Rs. 10 each were allotted as fully
paid up for consideration other than cash.
(c) 71,60,49,226
(Previous Year 58,46,41,861) Equity shares of Rs. 10 each are held by Essar
Steel Holding Limited, Mauritius, the holding Company.
(d) 100 (Previous
Year 100) Equity Shares of Rs. 10 each are held by ETHL Global Capital Limited,
subsidiary of ultimate holding company.
(e) 25,50,00,000
(Previous Year 25,50,00,000) Equity Shares of Rs. 10 each are held by Essar
Power Limited, subsidiary of ultimate holding company.
(f) 7,09,18,556
(Previous Year 7,06,65,726) Equity Shares of Rs. 10 each are held by Teletech
Investments (India) Limited, subsidiary of ultimate holding company.
(g) Nil (Previous
Year 100) Equity Shares of Rs. 10 each are held by Essar Global Limited, Cayman
Islands.
(h) Nil (Previous
Year 100) Equity Shares of Rs. 10 each are held by Essar Power holdings Ltd,
subsidiary of ultimate holding company.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
11840.800 |
13870.000 |
27852.900 |
|
|
2] Redeemable Preference Shares |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
34472.500 |
30809.500 |
12461.800 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
NETWORTH
|
46313.300 |
44679.500 |
40314.700 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
53831.100 |
65333.200 |
75346.400 |
|
|
2] Unsecured Loans |
7334.700 |
4099.200 |
6504.600 |
|
TOTAL BORROWING
|
61165.800 |
69432.400 |
81851.000 |
|
|
DEFERRED TAX LIABILITIES |
297.400 |
0.000 |
0.000 |
|
|
Long-term Advances from Customer |
1445.600 |
1664.200 |
0.000 |
|
|
|
|
|
|
|
TOTAL
|
109222.100 |
115776.100 |
122165.700 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
92738.900 |
88895.900 |
63984.500 |
|
Capital work-in-progress
|
5751.200 |
11077.800 |
28873.600 |
|
|
|
|
|
|
|
INVESTMENT
|
5152.200 |
4334.300 |
1829.700 |
|
DEFERREX TAX ASSETS
|
0.000 |
2382.300 |
0.000 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS &
ADVANCES
|
|
|
|
|
|
|
Inventories
|
21081.100
|
23287.700
|
14853.400
|
|
|
Sundry Debtors
|
3604.000
|
5468.500
|
5401.600
|
|
|
Cash & Bank Balances
|
3994.900
|
4328.600
|
7257.900
|
|
|
Other Current Assets
|
45.100
|
45.100
|
0.000
|
|
|
Loans & Advances
|
10626.800
|
10844.200
|
24970.600
|
Total Current Assets
|
39351.900 |
43974.100 |
52483.500
|
|
Less : CURRENT
LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
32408.900
|
34532.700
|
25005.600
|
|
|
Provisions
|
1363.200
|
355.600
|
--
|
Total Current Liabilities
|
33772.100 |
34888.300 |
25005.600
|
|
Net Current Assets
|
5579.800 |
9085.800 |
27477.900
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000
|
|
|
|
|
|
|
|
TOTAL
|
109222.100 |
115776.100 |
122165.700 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
|
Sales Turnover |
107433.200 |
81943.500 |
61825.800 |
|
|
Other Income |
162.100 |
192.200 |
2081.400 |
|
|
Total Income |
107595.300 |
82135.700 |
63907.200 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
8313.800 |
6834.600 |
6959.800 |
|
|
Provision for Taxation |
4027.600 |
2469.700 |
1658.000 |
|
|
Profit/(Loss) After Tax |
4286.200 |
4364.900 |
5301.800 |
|
|
|
|
|
|
|
|
Earnings in Foreign Currency : |
|
|
|
|
|
|
Export Earnings |
29701.000 |
29154.500 |
16827.500 |
|
|
Freight Recovered |
2527.200 |
1903.800 |
919.300 |
|
|
Other Earnings |
22.500 |
26.000 |
0.000 |
|
Total Earnings |
32250.700 |
31084.300 |
17746.800 |
|
|
|
|
|
|
|
|
Imports : |
|
|
|
|
|
|
Raw Materials |
1453.600 |
3327.800 |
4965.300 |
|
|
Stores & Spares |
7067.200 |
5127.700 |
5389.000 |
|
|
Capital Goods |
1965.600 |
2583.000 |
4290.700 |
|
Total Imports |
10486.400 |
11038.500 |
14645.000 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Materials
Consumed |
67508.400 |
57477.400 |
37252.800 |
|
|
Decrease/(lncrease)
in Stocks |
1687.200 |
(8726.600) |
(897.400) |
|
|
Personnel
Expenses |
2258.000 |
1528.000 |
997.500 |
|
|
Manufacturing
and Asset Maintenance |
8593.900 |
7460.400 |
6013.300 |
|
|
Administrative
Expenses |
2159.800 |
1461.400 |
1306.600 |
|
|
Selling and Distribution
Expenses |
2145.000 |
3382.600 |
2343.300 |
|
|
Finance Costs (net) |
7264.000 |
6179.400 |
4226.700 |
|
|
Depreciation |
7665.200 |
6310.400 |
4821.000 |
|
Total Expenditure |
99281.500 |
75073.000 |
56063.800 |
|
KEY RATIOS
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
Debt-Equity Ratio |
1.47 |
1.69 |
2.1 |
|
Long Term Debt-Equity Ratio |
1.17 |
1.45 |
1.89 |
|
Current Ratio |
0.91 |
1.09 |
1.38 |
|
TURNOVER
RATIOS |
|
|
|
|
Fixed Assets |
0.83 |
0.74 |
0.79 |
|
Inventory |
5.31 |
4.68 |
5.66 |
|
Debtors |
25.97 |
16.43 |
13.55 |
|
Interest Cover Ratio |
1.96 |
1.92 |
2.06 |
|
Operating Profit Margin(%) |
20.93 |
23.08 |
23.8 |
|
Profit Before Interest And Tax
Margin(%) |
14.43 |
16.01 |
16.76 |
|
Cash Profit Margin(%) |
10.14 |
11.96 |
13.59 |
|
Adjusted Net Profit Margin(%) |
3.64 |
4.89 |
6.55 |
|
Return On Capital Employed(%) |
15.13 |
12.51 |
12.93 |
|
Return On Net Worth(%) |
9.47 |
14.43 |
29.7 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Promoted
by the Bombay-based Essar group controlled by the Ruias, Subject initially
commenced operations of specialised construction in Jun.'76 as Essar
Constructions. Its name was changed to Essar Offshore and Explorations in May
'87 and later to Essar Gujarat in Aug.'87. It became Essar Steel in 1995. The
company is a integrated producer with end-to-end control of all operations
related to steel making.
Its energy division was operating the largest fleet of rigs in the private
sector. In 1987-88, it diversified into sponge iron and set up a 8,80,000 tpa
gas-based plant at Hazira, Gujarat. The plant incorporating technology
innovated by Midrex Corporation, US, commenced production in Aug.'90 with two
4,40,000 tpa modules. A third module, of similar capacity, commenced operations
in 1993. The total capacity was increased to 1.6 mtpa in 1993, with a
capability to reach 1.76 mtpa. The company again diversified into the
manufacture of steel by setting up a 2-mtpa hot-rolled strip plant which was
part-financed by a rights issue in Oct.'92. The plant commenced production in
Sep.'95. Later the company transferred its energy and offshore divisions to
Essar Oil.
A pelletisation project was set up at Visakhapatnam as a strategic backward
integration in collaboration with Lurgi, Germany, which commenced trial run
production in Nov'96. It has a joint venture namely PT Essar Dhananjaya in
Indonesia with technology from Hitachi, Japan, to produce cold rolled products
with a capacity of 2,00,000 tpa was commissioned.
In 1996-97, the company also commissioned its downstream complex with a
plateline capacity of 4,00,000 metric tonnes comprising two slitting lines, one
light gauge shear line and one heavy gauge shear line to cater to the lucrative
plates market.
The company has become the country's first integrated steel plant to receive
both ISO 9002 and TUV certifications. During 1998-99, Essar Minerals Limited
presently Hy-Grade Pellets Limited (HGPL) has become wholly owned subsidiary of
the company.
To enhance brand equity for 'Essar 24 Carat Steel brand and to ensure long term
relationship with customers, the company plans to launch more campaigns during
the fiscal 2002. HGPL is ceased to be a subsidiary of the company consequent to
allotment of 51% of its equity capital to Stemcor Minerals.
The company has acquired the balance 51% equity stake in Hy-Grade pellets Ltd
and 100% equity stake in Steel Corporation of Gujarat Limited Further the
company proposed amalgamation of both these subsidiaries with the Company with
effect from 1st April 2005 and this is suject to approvals.
The Company has planned to increase the capacity to 4.6 Million MTPA in next 2
years. The company has planned to increased the pellet making capacity at Visakhapatnam
from 4 to 8 Million tonnes in the current year. The company has initiated
production and sales of HR Pickled and Oiled, Cold Rolled and Galvanised
Products. Further the company has launched shot blasted and primer coated
plates for shipbuilding and general engineering applications.
The company has increased its installed capacity of Hot Briquette Iron Plant by
1400000 MT during 2004-05 and with this expansion the total installed capacity
of Hot Briquette Iron Plant has increased to 3400000 MT.
OPERATIONS
AND PERFORMANCE HIGHLIGHTS
Manufacturing
Company has made
efforts to increase its operational efficiency and quality of products at Essar
Steel, Hazira during FY 2007-08
The major steps
taken in this regard were:
·
Physical and chemistry improvement in the quality
of pellets at the pelletisation plant.
·
All the HBI modules were run efficiently and the
process was stable.
·
Increase in usage of Hot DRI by 20% and saving
power in Steel Melt Shop.
·
Utilisation Index of HSM increased by 0.7%, from
83.7 in 2006-07 to 84.4 in 2007-08.
·
Quality improvement programme with Kobe Steel Japan
was implemented to supply to Auto majors and the white goods sector.
The major benefits
derived from the above steps are:
·
HBI production has been increased by 16% over what
was achieved in the last financial year.
·
Natural gas consumption in the HBI process was
reduced by 5 sm3/tonne compared to what was consumed in the last financial
year.
·
Steel production was increased by 19% over what was
achieved in the last financial year.
·
Power consumption was reduced by 23 kwh/tonne
compared to what was consumed in the last financial year.
·
Hot Strip Mill production was increased by 15
percent over what was achieved in the last financial year.
Sales and marketing
·
Sales of flat rolled products were up 20% y-o-y to
3.36 million tonnes
·
Revenues were up 32% to Rs.119110 millions and net
sales realisation per tonne was up 5% y-o-y
·
34% of sales were made in value added segments --
up from 27% in 2006-07.
·
Domestic sales at 2.57 million tones grew 41%
y-o-y. Domestic market share was 12.4% in 2007-08 -- up from 10.5% in 2006-07.
·
Subject moved into 2nd position in flats production
in India from a single-unit-single-location.
·
Export volumes, at 0.92 million tonnes, dropped 9%,
a deliberate strategy to reduce exposure to the rising rupee. Despite a 9%
rupee appreciation during the year, the realisation in flat rolled exports
increased by 2%. This was achieved by rationalisation of geographies and a
better product mix.
·
PLATES, which is India’s fastest growing product
segment in the flat products basket in India because of the infrastructure and
construction boom, registered a record 1 million tonnes of sales, a growth of
more than 50% over the previous year. This was achieved through augmenting the
Hazira service centre with third-party processors.
·
The Steel Hypermart business took off in 2007-08
and at 0.53 million tonnes registered a 243% growth in volumes. Revenues of
Steel Hypermart has crossed more than Rs.19000 millions. Consolidation of
business processes through JDA (a retail ERP software), real time pricing
mechanisms and rationalization of Steel Hypermart locations through express
marts together contributed to delivering higher volumes and realisations with a
leaner setup.
·
Better planning and inventory management led to a
38% reduction in year-end closing stocks.
Finance
The Company
concluded its steel making capacity enhancement programme of 4.6 million tonnes
per annum in the previous financial year. In the current financial year, it has
focussed on de-leveraging the balance sheet. This has resulted in an
improvement in the Company’s credit profile which is evidenced in the ratings
published by ICRA Limited (an associate of Moody’s Investors Service).
ICRA Limited has assigned an
‘LA’ rating to the
fund based bank facilities and to the Rs. 60000 millions Long Term Debt
programme of the Company, recognising the improvement in the credit quality of
the Company’s Long Term Debt.
ICRA has also assigned an
‘A1’ rating to the
non fund based bank facilities of the Company, indicating highest credit
quality in the short term.
The above ratings
reflect the Company’s established position in the value-added segments in the
steel industry, a diversified export base, integrated nature of operations,
healthy operating profitability and improving capital structure.
During the year,
the Company has made efforts to significantly reduce the total debt burden with
a reduction in the term debt position by over Rs. 10000 millions. Further, with
an increase in the Net Worth of over Rs. 3000 millions, the Company has seen a
significant improvement in the gearing ratio for FY 08 over the previous
financial year. The net cash accrual to term debt ratio has also improved from
18% to 25%. The company has therefore been prudently managing its financials,
thus helping it to grow from strength to strength.
In light of the
growth in business and plans for setting up Steel Hypermarts (75 Hypermarts/Express
Marts commissioned till date with a plan to increase the same to 100
Hypermarts/ Express Marts in the near term) and steel service centres in
various regions, the Company is in the process of enhancing its working capital
limits from Rs. 26000 millions to Rs. 31500 millions.
SUBSIDIARIES
As on March 31,
2008 the Company had following subsidiaries:
·
Essar Steel Jharkhand Limited
·
Essar Steel Orissa Limited
·
Essar Steel Trading FZE, Dubai
HOLDING COMPANY
Essar Steel
Holdings Limited (which in turn is a subsidiary of Essar Global Limited)
continues to be the Holding Company of the Company. The ultimate holding
company viz. Essar Global Limited, along with its other subsidiaries, as of
date holds 93.05% equity shares in the total paid up equity capital of the
Company.
CONTINGENT LIABILITIES NOT PROVIDED FOR
|
|
(As
on 31.03.2008) Rs.
In millions ) |
|
(i) (a) Bills discounted |
596.600 |
|
(b) Claims against the company not acknowledged as debt in respect of: |
|
|
Disputed sales tax matters in respect which the Company has gone in
appeal [including amount already paid Rs. 2269.700 millions |
5028.400 |
|
Disputed Excise duty matters in respect which the Company has gone in
appeal |
15.200 |
|
Disputed Custom duty / export duty matters in respect which the
Company has gone in appeal |
2079.300 |
|
Tax of sale of electricity demanded by sales tax authorities on Essar
Power Limited |
459.100 |
|
Electricity duty charged on Essar Power Limited by Gujarat Electricity
Board |
4656.200 |
|
Wheeling Charges demanded by Gujarat Electricity Board [including
amount already paid Rs. 272.300 millions |
1499.600 |
|
Others [including amount already paid Rs. 1.500 millions |
29.800 |
|
|
|
|
Future cash outflows in respect of above matters are determinable only
on receipt of judgments / decisions pending at various forums / authorities. |
|
|
|
|
|
(c) Guarantees given to various banks, financial institutions, finance
companies, etc. on behalf of others [Balance outstanding as on 31.03.2008 is
Rs. 14238.700 millions |
15170.500 |
*Out of the total Guarantees
of Rs. 15170.500 millions given to various banks, financial institutions,
finance companies, etc. on behalf of others, Rs. 5950.000 millions has been
discharged subsequent to balance sheet date. Post this discharge, corporate
guarantee balance will stand reduced by Rs. 5950.000 millions.
The Company and
Essar Power Limited (EPOL) has provided corporate guarantee of Rs. 15370.000
millions each, on behalf of Loop Telecom Private Limited (LOOP), favouring
State Bank of India (SBI) against (a) Term loan of Rs. 7250.000 millions and
(b) Bank guarantee of Rs. 8120.000 millions, availed by LOOP.
Of the said
guarantee, LOOP has utilised guarantee of Rs. 7250.000 millions against the
term loan availed from State Bank of India. As the Company and EPOL, issued the
corporate guarantees simultaneously, the Company has considered Rs. 3625.000
millions being 50% of Rs. 7250.000 millions as its contingent liability. The
bank guarantee will be utilised against the licence fees payable by LOOP, after
it starts operation.
Further, the
Company has also received counter guarantee for the same from BPL
Communications Limited for Rs. 15370.000 millions.
|
(ii) Arrears of
fixed dividend on Cumulative Redeemable Preference Shares |
25.600 |
FIXED ASSETS
·
Freehold Land
·
Leasehold Land
·
Buildings
·
Plant and Machinery
·
Furniture and Fixtures
·
Office Equipment
·
Vehicles
·
Ships and Vessels
·
Railway Sidings and
·
Wagons
·
Aircraft
·
Softwares
The company is the second largest private sector steel company.
AS PER
WEBSITE
Overview
Subject is a global producer of steel with a footprint covering India, Canada,
USA, the Middle East and Asia. It is a fully integrated flat carbon steel
manufacturer—from iron ore to ready-to-market products. Subject has a current
capacity of 9 million tonnes per annum (MTPA). With its aggressive expansion
plans in India as well as Asia and the Americas, its capacity will go up to 20
to 25 MTPA by 2012. Its products find wide acceptance in highly discerning
consumer sectors, such as automotive, white goods, construction, engineering
and shipbuilding.
No wonder they are India's largest exporter
of flat products, selling almost one-third of the production to the highly
demanding US and European markets, and to the growing markets of South East
Asia and the Middle East. A number of major client companies have approved the
steel for their use, including Caterpillar, Hyundai, Swaraj Mazda, the Konkan
Railway and Maruti Suzuki. Subject has acquired extensive quality
accreditations. The lean team gives them one of the highest productivities and
lowest manpower costs among steel plants internationally.
Seamless integration
A major strategic advantage is the high level of forward and backward
integration. They are totally integrated - from raw material to finished products,
adding value at every stage of the manufacturing process.
Bailadilla Facility: Iron ore
beneficiation
At
Bailadilla, where some of the world's richest and finest ore is available,
Subject has set up a beneficiation plant of 8 million tonnes per annum (MTPA)
capacity, which ensures the highest quality iron ore. The iron ore slurry is
pumped through a 267 km. pipeline (the second longest in the world) to the
pellet plant, yielding advantages of quality, cost and real time inventory
management.
Visakhapatnam
Facility: Pelletisation
The slurry is
received at the Pellet plant at Visakhapatnam, which has a capacity of 8 MTPA,
providing vital raw material for the steel plant at Hazira.
Hazira Facility
Overview: The steel complex at Hazira, Gujarat, houses a 5.0
MTPA sponge iron plant, the world's largest gas-based HBI producer. The plant
provides raw materials for the state-of-the-art 4.6 MTPA hot rolled coil (HRC)
plant, the first and largest of India's new generation steel mills. This plant
is fed with inputs from three electric arc furnaces and three casters. The
complex's sophisticated infrastructure includes independent water supply and
power, oxygen and lime plants, a township and a captive port capable of
handling up to 8 MTPA of cargo with modern handling equipment like barges and
floating cranes.
Cold Rolling Complex: At the other end of the value chain, the Company's
downstream facilities include a 1.4 MTPA Cold Rolling Complex, adds further muscle
to the steel making facilities. The complex comprises two pickling lines of 1.4
MTPA capacity, a reversing mill and a 1.2 MTPA Tandem Mill, two Galvanizing
lines of 0.5 MTPA, Batch Annealing Furnace of 0.5 MTPA, a Skin Pass Mill of 1.0
MTPA. This enables subject to get into the genre of products that are
tailor-made for automotive, white goods, shipbuilding, agriculture and
construction industries - segments that were the exclusive domain of a few
international manufacturers.
Canada Facility: Essar Steel Algoma
Established
in 1901, Essar Steel Algoma is an integrated steel producer based in Sault Ste.
Marie, Ontario, Canada. The plant's current production capacity is 4 million
tonnes per annum (MTPA). Some of the key equipment at the plant include a low-cost,
technologically advanced Direct Strip Production Complex (DSPC), a slabcaster,
a 106-inch strip mill (one of the widest in North America), a 166-inch plate
mill, a cold mill and blanking facility that helps produce steel customised for
client requirements, and a welded beam division.
Indonesia Facility: PT Essar Indonesia
PT Essar is Indonesia's largest private sector flat products company, with a domestic market share of 35% and a history of process and product innovation. After a major expansion drive, its CR capacity has been enhanced to 400,000 TPA and its newly set up galvanising capacity is 1,50,000 TPA.
Subject is the first steel company to set up the only retail chain
for steel products under the brand name Essar Steel Hypermart.
It has a strong network of over 80 Steel Hypermarts. The outlets are
conveniently located across the length and breadth of the country to cater to
the customised requirements of small and medium enterprises.
The Hypermarts offer a comprehensive range of flat
steel products for a variety of applications. Other product lines, like longs,
structural, and tubular, are also being developed to make subject Hypermart a one-stop-shop for steel products.
Subject
actively participates in the Essar Group's, an online Asian steel vortal
through which we have been able to reduce multiple distribution layers, making
transactions transparent and extending the reach to various small users across
the country.
ESSAR GLOBAL: A
PROFILE
Essar Global Limited (EGL) is a diversified business corporation with a balanced portfolio of assets in the manufacturing and services sectors of Steel, Energy, Power, Communications, Shipping Ports and Logistics, Construction and Mining and Minerals. Essar employs more than 40,000 people across offices in Asia, Africa, Europe and the Americas.
With a firm
foothold in India, the Essar Group has been focusing on global expansion with
projects and investments in Europe, North America, the Caribbean, Africa, the
Middle East and South East Asia. Privately owned and professionally managed,
the Group is judiciously invested in the commodity, annuity and services
businesses. Forward and backward integration, as well as the use of state-of-the-art
technology and in-house research and innovation have made Essar Global a
leading player in each of its businesses. EGL’s abiding philosophy is to be a
low cost, high quality, technology driven group with innovative customer
offerings.
Steel
Subject is a global producer of steel with a footprint covering India, Canada,
USA, the Middle East and Asia. It is a fully integrated flat carbon steel
manufacturer—from iron ore to ready-tomarket products. Subject has a current capacity of 9 million tonnes per annum
(MTPA). With its aggressive expansion plans in India as well as Asia and the
Americas, its capacity will go up to 20 to 25 MTPA by 2012. Its products find
wide acceptance in highly discerning consumer sectors, such as automotive,
white goods, construction, engineering and shipbuilding.
In 2007, Subject acquired Algoma Steel in
Canada, which has a capacity of 4 MTPA, and Minnesota Steel, which has iron ore
reserves of over 1.4 billion tonnes. While the company is building a 4.1 MTPA
steel plant in Minnesota, it is also setting up a 2 MTPA hot strip mill in
Vietnam and a 2.5 MTPA integrated steel plant in Trinidad and Tobago. In
Indonesia, it operates a 400,000 TPA cold rolling complex with a galvanising
line of 150,000 TPA, making it the largest private steel company in that
country.
Subject is the largest steel producer in western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this to 10 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadilla, Chattisgarh, and an 8 MTPA pellet complex at Visakhapatnam. Additionally, Subject is setting up a 6 MTPA integrated steel plant in Paradip, Orissa.
Subject complex at Hazira in Gujarat, India, houses the world’s largest
gas-based single location sponge iron plant, with a capacity of 5.5 MTPA. The
complex also houses the steel plant and the 1.4 MTPA cold rolling mill. The
steel complex has a complete infrastructure setup, including a captive port,
lime plant and oxygen plant. The company is also building a 1.5 MTPA plate mill
and a 0.6 MTPA pipe mill in Hazira to make further value addition to its
product portfolio.
Subject produces highly customised products catering to a variety of product segments and is India’s largest exporter of flat products to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. It has invested in downstream capabilities to evolve from being a product based company to becoming a value added service provider. It has a global network of retail steel outlets, called Steel Hypermarts, and offers services, like cutting, slitting and blanking of steel sheets, through specialised Steel Service Centres worldwide.
Energy
Essar Oil Ltd (EOL, NSE:
ESSAROIL) operates a fully integrated oil company. Its assets include
developmental rights in proven exploration blocks, a 12 MTPA refinery in the
west coast of India and over 1,000 oil retail stations across India. Plans are under
way to increase its exploration acreage in various parts of the globe, expand
its refinery capacity to 34 MTPA (680,000 barrels per day) and open 5,000
retail outlets.
The Exploration
and Production (EandP) business of the company has participating interests in
several hydrocarbon blocks for exploration and production of Oil and Gas. This
includes the Ratna and R-Series blocks on Bombay High and an EandP block in
Mehsana, Gujarat, which has currently started commercial production. It has
also been awarded a Coal Bed Methane (CBM) block at Raniganj in West Bengal,
and two more EandP blocks in Assam, India. The overseas EandP assets include
three onshore oil and gas blocks in Madagascar-Africa, and one offshore block
each in Vietnam and Nigeria.
Essa Oil’s 10.5 MTPA refinery at Vadinar in Gujarat started commercial production on May 1, 2008. It has been built with state-of-the-art technology and has the capability to produce petrol and diesel suitable for use in India as well as advanced international markets. It will also produce LPG, naphtha, light diesel oil, aviation turbine fuel (ATF) and kerosene. The refinery has been designed to handle a diverse range of crude—from sweet to sour and light to heavy. It is supported by an end-to-end infrastructure setup including SBM (Single Buoy Mooring), crude oil tankage, water intake facilities, a captive power plant (currently 125 MW, being expanded to 1,200 MW), product jetty and dispatch facilities by both rail and road. The refinery is strategically located in Vadinar, a natural all-weather, deep-draft port that can accommodate very large crude carriers (VLCCs). Vadinar also receives almost 70 percent of India’s crude imports. Post its expansion to 34 MTPA, the refinery will run at a Nelson Complexity of 12.8. This means it will be able to refine all varieties of crude, producing Euro 5 grade fuels. It will also be among the largest single location refineries in the world thus leveraging on economies of scale. The company plans to achieve a daily refining capacity of 1 million barrels per day through organic and inorganic growth.
Essar Oil supplies to bulk consumers and has already opened more than 1,000 retail outlets. The first private Indian company to enter petro retailing, it has product offtake and infrastructure sharing agreements with oil PSUs, namely Bharat Petroleum, Hindustan Petroleum and Indian Oil. It has also received the Certificate of Type Approval, a prerequisite to supplying ATF to the Indian Armed Forces.
Power
Essar Power operates five
power plants with a combined capacity of 1,200 MW in three locations across
India. This includes two gas-based plants, of 500 MW and 515 MW capacities, and
one liquid fuel based 32 MW power plant in Hazira, a 120 MW co-generation plant
in Vadinar and a 25 MW coal-based plant in Visakhapatnam.
Work is currently
under way to increase generation capacity to 6,000 MW. The company will set up
three coal-based plants of 1,200 MW each in Gujarat, Madhya Pradesh and
Jharkhand, aggregating 3,600 MW. An additional 1,200 MW (co-generation plant of
equivalent capacity) is also under development in Vadinar to supply power and
steam to the expanded refinery.
With a license to enter the transmission, distribution and power trading segments, Essar Power is now a fully integrated, end-to-end player in the Power sector. By using the latest technology and equipment, Essar Power can generate and supply power at very competitive price points. The company also has the capability to execute power projects for other companies.
Essar Power is
exploring opportunities for new projects based on thermal, wind and hydro
energy. It is also committed to reducing emissions from its plants and earning
carbon credits. The 500 MW combined cycle power plant at Hazira is eligible for
Certified Emission Reductions (CERs) under the Kyoto Protocol’s Clean
Development Mechanism (CDM).
Communications
Essar
Communications operates in four business segments: Telecom, telecom retail, telecom
infrastructure and Aegis Services.
· Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group. It is one of India’s largest cellular service companies, with a subscriber base of over 50 million.
·
Essar operates integrated IT enabled services
through the Aegis brand name, with a presence in interaction services, back
office services and value-added services. Aegis has a global delivery model
with 20 centers across USA and India. It employs over 20,000 employees in India
and the U.S who have expertise in the Telecom, Insurance, Banking and
Healthcare domains.
·
Essar has launched India's first national chain of
multi-brand and multi-service outlets in the telecom retail space. The
MobileStore Ltd currently runs over 1,000 “The MobileStore” outlets. Over 2,500
stores outlets are expected across 650 cities.
·
Essar Telecom Infrastructure is one of the largest
independent telecom infrastructure service provisioning companies in the
country. It builds telecom tower infrastructure and shares it with several
telecom operators in India. It has already set up over 3,500 towers in India,
with plans to build 20,000 towers.
Shipping and Logistics
Essar Shipping
Ports and Logistics Ltd (NSE: ESSARSHIP) is an end-to-end logistics
provider with sea and surface transportation services, oilfield drilling
services, dry and liquid terminals, tankage and associated pipelines. It
provides complete supply chain management services to clients in oil and gas,
steel and power generation industries.
·
The Sea
Transportation business provides transportation management services for
crude oil and petroleum products, and dry bulk cargo to the global energy,
steel and power industries. With an experience of more than 220 ship years, it
owns a diverse fleet of 26 vessels, which is being expanded to 38 vessels.
·
The Ports
and Terminals business is among India’s largest owners and operators of
ports and terminal facilities. The operations include an oil terminal in
Vadinar and bulk terminals in Hazira and Salaya, all in the state of Gujarat.
Vadinar, which is an all-weather, deepdraft port, serves major oil refineries
and independent cargo traders in the region. The terminal has crude receiving
capacity of 32 MTPA and sea-based product dispatch capacity of 14 MTPA. The
port at Hazira has a capacity to handle 8 MTPA of bulk cargo. This will be
enhanced to 25 MTPA through building a shipping channel that can berth larger
vessels. The enhanced capacity will not only serve the expansion in the Hazira
steel plant, but also cater to the needs of the upcoming Essar SEZ units. The
business is also building a port, of about 20 MTPA capacity, at Salaya
comprising a bulk and liquid terminal with container handling facilities.
·
The Logistics
business provides end-to-end logistics services – from ships to ports,
lighterage services, intra-plant logistics and dispatch of finished products.
It owns transshipment assets to provide lighterage support services, and
onshore & offshore logistics services. It also operates a fleet of 4,200
trucks (of which 38 are owned) to provide inland transportation of steel and
petroleum products.
·
Essar Oilfields Services offers onshore and
offshore contract drilling, and offshore construction services. It has invested
USD 400 million in purchasing drilling equipment and owns 12 onshore rigs, and
an offshore semi-submersible rig.
Construction
Essar Projects is a 4,000 people
strong global engineering procurement and construction company headquartered in
Dubai. It has offices in India, China and the Czech Republic. It provides
complete construction solutions under one roof. It operates through five main
businesses:
·
Essar Constructions: This division has
over four decades of experience in executing projects involving industrial
plants, civil & irrigation projects, laying of onshore pipelines, and highways
and expressways. With a pipeline division certified at ISO 9001, it has
developed capabilities to undertake turnkey projects.
·
Essar Offshore Subsea: The marine
construction expertise within Essar Oil, Essar Shipping, Essar Projects and
Essar Construction has now demerged into a single entity namely Essar Offshore
Subsea Ltd (EOSSL). The business provides Engineering, Procurement,
Construction & Installation (EPCI) services in this sector in domestic as
well as overseas markets. In the high-growth oil & gas sector, EOSSL
provides EPC services for offshore logistics support and marine construction
projects.
·
Global Supplies: The Global Supplies team specialises in
procurement, with a presence in India, China, the Middle East and Europe. It
has excellent relationships with vendors across the globe, giving it the
ability to procure materials in a timely manner and at competitive prices.
·
Heavy Engineering Services: Has modern
facilities for manufacturing pressure vessels, reactors, vacuum vessels,
cranes, etc. The business is strategically located on the waterfront at Hazira
on the west coast of India.
·
Project Management Consultants: An independent
team of Project Management Consultants ensures compliance to processes in
project execution. The team is also pitching for third-party projects.
The Projects
business leverages on the capabilities of Essar’s Engineering Centres that
specialize in detailed engineering and design required for executing large
projects. With a presence in Chennai, Kolkata, Hazira and Mumbai, the centres
have specialised technical staff of over 1,000 people, focused on the steel,
power and hydrocarbon sectors.
Essar Projects
also owns a vast bank of sophisticated construction equipment used in large
projects.
Mining and
Minerals
Essar Minerals has
a dedicated team of well qualified and experienced mining engineers, geologists
and surveyors who are involved in evaluating mining deposits worldwide and
critically analysing the techno-economic feasibility of such properties. The
team is also equipped to initiate mineral exploration. The company is
associated with internationally reputed mining companies for quality and
quantity projections, mine planning, process development, environment
management, adoption of the state-of-the-art mining technology, logistics, etc.
Essar Minerals used advanced software for carrying out computerised geological
resource estimation and mine planning, including pit-optimisation. Essar is
actively engaged in the acquisition and operations of coal and
metal mines in
India and overseas.
News
Economic Times - October 09,
2008
Canada-based Essar Steel Algoma, part of $5-billion Essar
Steel Holdings (ESH), plans to invest close to Rs 12000 millions in expanding
its steel capacity and setting up a power plant. It will also upgrade air
pollution control technology over the next 18 months. The expansion would be
primarily funded through internal accruals. At the same time, the firm is
scouting for acquisition of coal and iron ore blocks in Africa, Indonesia, Middle
East and North America to meet its raw material requirement.
Essar
Steel Holdings, which also has presence in the Middle East, Asia and the US,
had acquired Canada-based Algoma Steel for $1.85-billion last June.
Post-acquisition, the company invested Rs 8000 millions in upgrading the entire
facility and enhancing the capacity of steel plant located at Sault Ste. Marie
to 2.8 million tonnes per annum (mtpa) this year from 2.1 mtpa last year.
Looking
at the growing demand for flat steel products in the Canadian market, primarily
in the construction and general engineering sector, the company would make
additional investments in scaling up the capacity to 3.6 mtpa over the next one
year. For this, it has commissioned a blast furnace, which had been idle since
1995. So far, the company was dependant on a blast furnace that has 2.5 mtpa
capacity of liquid iron.
“Majority
of the expansion would be funded through self-generated cash. Continued strong
cash flow will enable the company to further reduce debt while maintaining an
active capital investment program, said Essar Steel Algoma vice-president
(finance) Sandeep Dixit. Globally, Essar is targeting 20-25 mtpa steel capacity
by 2012 as against 7.4 mtpa currently. At present, Essar Steel Algoma purchases
iron ore and coal for steel making from the open market.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
India Prisons Service, Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
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.49.95 |
|
UK Pound |
1 |
Rs.79.56 |
|
Euro |
1 |
Rs.63.65 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
|
63 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history (10%) Market
trend (10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|