MIRA INFORM REPORT

 

 

Report Date :

17.03.2011

 

IDENTIFICATION DETAILS

 

Name :

GRAPHITE INDIA LIMITED

 

 

Registered Office :

31, Chowringhee Road, Kolkata-700016, West Bengal

 

 

Country :

India

 

 

Financials (as on) :

31.03.2010

 

 

Date of Incorporation :

02.05.1974

 

 

Com. Reg. No.:

21 - 94602

 

 

CIN No.:

[Company Identification No.]

L10101WB1974PLC094602

 

 

Legal Form :

Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.

 

 

Line of Business :

Producer of Graphite Electrodes, Anodes and Other Miscellaneous Carbon and graphite Products.

 

 

RATING & COMMENTS

 

MIRA’s Rating :

A (62)

 

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

 

 

Maximum Credit Limit :

USD 47300000

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established and a reputed company having fine track. Financial position of the company appears to be sound. Fundamentals are strong and healthy. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments.

 

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

 

 

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

 

ECGC Country Risk Classification List – April 1, 2010

 

Country Name

Previous Rating

(31.12.2009)

Current Rating

(01.04.2010)

India

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

LOCATIONS

 

Registered Office :

31, Chowringhee Road, Kolkata-700016, West Bengal, India

Tel. No.:

91-33-22265755/2334/4942 / 40029600

Fax No.:

91-33-22496420

E-Mail :

gilbakt@graphiteindia.com

corp_secy@graphiteindia.com

 

 

Factory  1:

P.O. Sagarbhanga Colony, Burdwan Durgapur 713211, West Bengal, India

Tel. No.:

91- 343 - 2556641 – 45/2557743

Fax No.:

91-343-2550896

 

 

Factory 2:

88 MIDC Industrial Area, Satpur, Nashik 422 007, Maharashtra, India

Tel. No.:

91-253-2203300/2203328/2361472/2351143

Fax No.:

91-253-2350676

 

 

Factory 3:

Visveswaraya Industrial Area, Whitefield Road, Bangalore 560048, Karnataka, India

Tel. No.:

91-80-43473300

Fax No.:

91-80-43473372

 

 

Factory 4:

GRP Division, Gut No. 523/524, Gonde, Igatpuri, Nashik-422403, Maharashtra, India

Tel. No.:

91-2553-229400

Fax No.:

91-2553-229500

 

 

Factory 5:

IGE Division, C-7, MIDC Industrial Area, Ambad, Nasik-422010, Maharashtra, India

Tel. No.:

91-253-2302100

Fax No.:

91-253-2302300

 

 

Factory 6:

Coke Division, Village Phulwari, P.O. and District Barauni-851112, Bihar, India

Tel. No.:

91-6279-232252/232844

 

 

Factory 7:

Hydel Power Plant, Mysore, K.R. Nagar Taluka, District Mysore-571617, Karnataka, India

Tel. No.:

91-8223-281116/7-221400

 

 

Factory 8:

Mini Hydel Plant, Mandya, Peehalli, Arekere Hobli, Sriangapatna Taluka, District Mandya-571415, Karnataka, India

Tel No.:

91-8236-258079/89

 

 

Sales Office :

407 Ashoka Estate, 24, Barakhamba Road, New Delhi 110 001, India

Tel. No.:

91-11-23314364

 

 

DIRECTORS

 

AS ON 31.03.2010

 

Name :

Mr. K. K. Bangur

Designation :

Chairman

 

 

Name :

Mr. M. B. Gadgil

Designation :

Executive Director

 

 

Name :

Mr. Bhaskar Mitter

Designation :

Director

 

 

Name :

Mr. P. K. Khaitan

Designation :

Director

 

 

Name :

Mr. S. Goenka

Designation :

Director

 

 

Name :

Mr. N. S. Damani

Designation :

Director

 

 

Name :

Mr. A. V. Lodha

Designation :

Director

 

 

Name :

Dr. R. Srinivasan

Designation :

Director

 

 

Name :

Mr. D. J. Balaji Rao

Designation :

Director

 

 

Name :

Mr. J. D. Curravala

Designation :

Director

 

 

Name :

Mr. N. Venkataramani

Designation :

Director

 

 

KEY EXECUTIVES

 

Name :

Mr. B Shiva

Designation :

Company Secretary

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

AS ON 31.12.2010

 

Names of Shareholders

Total No. of Shares

Total Shareholding as a % of total No. of Shares

(A) Shareholding of Promoter and Promoter Group

 

 

(1) Indian

 

 

Individuals / Hindu Undivided Family

1,170,828

0.60

Bodies Corporate

95,630,581

48.95

Sub Total

96,801,409

49.55

(2) Foreign

 

 

Bodies Corporate

15,015,450

7.69

Sub Total

15,015,450

7.69

Total shareholding of Promoter and Promoter Group (A)

111,816,859

57.23

(B) Public Shareholding

 

 

(1) Institutions

 

 

Mutual Funds / UTI

10,181,406

5.21

Financial Institutions / Banks

788,222

0.40

Insurance Companies

8,105,696

4.15

Foreign Institutional Investors

27,729,427

14.19

Sub Total

46,804,751

23.96

(2) Non-Institutions

 

 

Bodies Corporate

12,523,565

6.41

Individuals

 

 

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

17,162,709

8.78

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

4,027,481

2.06

Any Others (Specify)

3,040,229

1.56

Clearing Members

103,898

0.05

Foreign Nationals

48,031

0.02

Trusts

4,293

-

Non Resident Indians

2,884,007

1.48

Sub Total

36,753,984

18.81

Total Public shareholding (B)

83,558,735

42.77

Total (A)+(B)

195,375,594

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Producer of Graphite Electrodes, Anodes and Other Miscellaneous Carbon and graphite Products.

 

 

Products :

 

ITC Code

Product Descriptions

854519.01

Graphite Electrodes

722810.00

High Speed Steel

841950.01

Impervious Graphite equipment and Spares

 

 

GENERAL INFORMATION

 

Bankers :
  • Bank of India
  • Canara Bank
  • Corporation Bank
  • Citibank N.A.
  • HDFC Bank Limited
  • ICICI Bank Limited
  • IDBI Bank Limited
  • ING Vysya Bank Limited
  • Punjab National Bank
  • State Bank of India
  • UCO Bank

 

 

Facilities :

 

SECURED LOAN

31.03.2010

Rs. In Millions

Working Capital Loans from Banks

(includes Foreign Currency Loan Rs. 84.209 millions, Previous Year - Rs. 158.227 millions)

809.782

Total

809.782

Note :

Working Capital Loans from Banks are secured by first charge by way of hypothecation of certain stocks and book debts, both present and future, and secured/to be secured by creation of second charge by way of mortgage/charge on certain other movable and immovable assets of the Company, both ranking pari-passu amongst the chargeholders.

 

UNSECURED LOAN

31.03.2010

Rs. In Millions

Short Term Foreign Currency Loans from a Bank

321.981

1.00 per cent Convertible Bonds due 2010 of US$ 1000 each ('Bonds') aggregating US$ 30,200,000 (Previous Year - US$ 30,875,000) (Note below)

1360.812

Total

1682.793

 

Note:

The Bonds are convertible into Equity Shares of the Company at any time before 13th October, 2010 at a price to be determined from time to time in keeping with the Offering Circular dated 18th October, 2005 at the option of the bondholders. The Company also has the option of early redemption of the Bonds at any time as per terms and conditions specified in the said Offering Circular. Outstanding Bonds, if any, will be due for redemption on 20th October, 2010 at 122.116 per cent of the principal amount of US$ 1000 per Bond. During the year, Bonds aggregating US§ 675,000 (Previous Year - Nil) have been converted into Equity Shares and US$ Nil (Previous Year - US$ 3,875,000) have been bought back and cancelled.

 

 

 

Banking Relations :

--

 

 

Auditors :

 

Name :

Price Waterhouse

Chartered Accountant

 

 

Solicitors :
  • Khaitan and Company
  • Orr, Dignam and Company

 

 

Subsidiaries :
  • Bavaria Carbon Holdings GmbH
  • Bavaria Carbon Specialities GmbH
  • Bavaria Electrodes GmbH
  • Carbon Finance Limited
  • Carbon International Holdings N.V.
  • Graphite Cova GmbH
  • Graphite International B.V.

 

 

CAPITAL STRUCTURE

 

As on 31.03.2010

 

Authorised Capital :

 

No. of Shares

Type

Value

Amount

200000000

Equity Shares

Rs. 2 each

Rs.400.000 millions 

 

 

Issued, Subscribed & Paid-up Capital :

 

No. of Shares

Type

Value

Amount

171510110

Equity Shares

Rs. 2 each

Rs.343.020millions

 

Add: Forfeited Shares

 

Rs. 0.017 million

 

Total

 

Rs.343.037 millions

 

Notes:

Out of the above Equity Shares, 11,54,58,486 (Previous Year - 9,55,70,150) Equity Shares of Rs.2/- each have been allotted as fully paid up pursuant to the Schemes of Amalgamation/Arrangement, without payments being received in cash. In terms of the Offering Circular dated 18th October, 2005, 5,36,973 (Previous Year - Nil) Equity Shares of Rs.2/- each at a premium of Rs.53.31 per share have been allotted as fully paid up during the year ended 31st March, 2010 upon conversion of 675 Foreign Currency Convertible Bonds aggregating US§ 675,000.

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2010

31.03.2009

31.03.2008

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

343.037

341.963

302.187

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

11492.221

9841.937

6676.867

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

11835.258

10183.900

6979.054

LOAN FUNDS

 

 

 

1] Secured Loans

809.782

1693.761

2503.524

2] Unsecured Loans

1682.793

1828.609

2226.937

TOTAL BORROWING

2492.575

3522.370

4730.461

DEFERRED TAX LIABILITIES

737.621

627.621

700.121

 

 

 

 

TOTAL

15065.454

14333.891

12409.636

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

4659.296

4896.557

4888.146

Capital work-in-progress

195.493

139.663

94.511

 

 

 

 

INVESTMENT

2527.600

1664.153

1470.729

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
5764.640

5306.322

3375.706

 

Sundry Debtors
2505.874

1999.136

3665.702

 

Cash & Bank Balances
755.678

1440.899

483.641

 

Other Current Assets
64.095

105.727

95.550

 

Loans & Advances
1077.893

1422.482

1169.350

Total Current Assets
10168.180

10274.566

8789.949

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Sundry Creditors
1203.527

1093.622

1019.579

 

Other Current Liabilities
389.214

804.235

1174.242

 

Provisions
892.374

743.191

639.878

Total Current Liabilities
2485.115

2641.048

2833.699

Net Current Assets
7683.065

7633.518

5956.250

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

15065.454

14333.891

12409.636

 

 

PROFIT & LOSS ACCOUNT

 

 

PARTICULARS

31.03.2010

31.03.2009

31.03.2008

 

SALES

 

 

 

 

 

Sales

11311.873

11258.774

10990.539

 

 

Other Income

305.808

289.050

362.092

 

 

TOTAL                                     (A)

11617.681

11547.824

11352.631

 

 

 

 

 

Less

EXPENSES

 

 

 

 

 

Cost of Materials

3416.879

4957.632

4740.639

 

 

Manufacturing Expenses

2610.318

4381.058

3428.933

 

 

Employees Remuneration

743.106

749.872

759.354

 

 

Increase/(Decrease) in Finished Goods

754.612

(1151.137)

(338.175)

 

 

TOTAL                                     (B)

7524.915

8937.425

8590.751

 

 

 

 

 

Less

PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B)      (C)

4092.766

2610.399

2761.880

 

 

 

 

 

Less

FINANCIAL EXPENSES                         (D)

104.876

259.344

356.994

 

 

 

 

 

 

PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D)                                       (E)

3987.890

2351.055

2404.886

 

 

 

 

 

Less/ Add

DEPRECIATION/ AMORTISATION                     (F)

395.369

343.520

334.960

 

 

 

 

 

 

PROFIT BEFORE TAX (E-F)                               (G)

3592.521

2007.535

2069.926

 

 

 

 

 

Less

TAX                                                                  (H)

1270.878

71.842

733.473

 

 

 

 

 

 

PROFIT AFTER TAX (G-H)                                (I)

2321.643

1935.693

1336.453

 

 

 

 

 

Add

PREVIOUS YEARS’ BALANCE BROUGHT FORWARD

443.951

108.348

414.630

 

 

 

 

 

 

Transfer From Debenture Redemption Reserve

39.004

0.000

0.000

 

 

 

 

 

Less

APPROPRIATIONS

 

 

 

 

 

Transfer to General Reserve

1000.000

1000.000

1000.000

 

 

Transfer to Debenture Redemption Reserve

0.000

0.000

112.450

 

 

Dividend

600.285

512.919

453.254

 

 

Tax on Dividend

99.700

87.171

77.031

 

BALANCE CARRIED TO THE B/S

1104.613

443.951

108.348

 

 

 

 

 

 

EARNINGS IN FOREIGN CURRENCY

 

 

 

 

 

Export Earnings

5191.687

5881.147

6352.733

 

 

Royalty

31.295

56.954

40.477

 

 

Interest

8.639

20.560

37.428

 

 

Dividend

0.000

13.468

12.626

 

 

Service Charges

0.315

0.521

1.562

 

 

Discount on Buyback of FCCB

0.000

41.485

0.000

 

 

Other Earnings

0.000

0.000

4.830

 

TOTAL EARNINGS

5231.936

6014.135

6449.656

 

 

 

 

 

 

IMPORTS

 

 

 

 

 

Raw Materials

2918.798

2922.536

2274.753

 

 

Stores & Spares

25.267

8.672

12.418

 

 

Capital Goods

29.355

0.000

0.000

 

TOTAL IMPORTS

2973.420

2931.208

2287.171

 

 

 

 

 

 

Earnings Per Share (Rs.)

13.58

12.55

9.03

 

 

QUARTERLY RESULTS

 

PARTICULARS

 

30.06.2010

30.09.2010

31.12.2010

Type

1st Quarter

2nd Quarter

3rd Quarter

Net Sales

2582.400

3238.600

3374.500

Total Expenditure

1988.300

2394.000

2642.500

PBIDT (Excl OI)

594.100

844.600

732.000

Other Income

28.800

136.500

37.1000

Operating Profit

622.900

981.100

769.100

Interest

5.200

8.500

8.800

Exceptional Items

0.000

(127.300)

0.000

PBDT

617.700

845.300

760.300

Depreciation

98.400

98.400

98.700

Profit Before Tax

519.300

746.900

661.600

Tax

175.400

255.000

219.600

Profit After Tax

343.900

491.900

442.000

Net Profit

343.900

491.900

442.000

 

 

KEY RATIOS

 

PARTICULARS

 

 

31.03.2010

31.03.2009

31.03.2008

PAT / Total Income

(%)
19.98

16.76

11.77

 

 
 

 

 

Net Profit Margin

(PBT/Sales)

(%)
31.75

17.83

18.83

 

 
 

 

 

Return on Total Assets

(PBT/Total Assets}

(%)
24.22

13.23

7.17

 

 
 

 

 

Return on Investment (ROI)

(PBT/Networth)

 
0.30

0.20

0.30

 

 
 

 

 

Debt Equity Ratio

(Total Liability/Networth)

 
0.48

0.66

1.18

 

 
 

 

 

Current Ratio

(Current Asset/Current Liability)

 
4.09

3.89

3.10

 

 

LOCAL AGENCY FURTHER INFORMATION

 

COMPANY BACK GROUND

 

Graphite India (group) is one of the Major manufacturers of graphite electrodes in the world. Its manufacturing capacity of approximately 78000 tonnes per annum is spread over four plants at Durgapur, Bangalore, Nashik and Rothenbach in Germany. The company has over 40 years of expertise in the industry and is globally competitive. With its Corporate Office in Kolkata, India, the company services its clients in over fifty countries. Graphite India manufactures the full range of graphite electrodes but stays focussed on the higher margin, large diameter, ultra-high power (“UHP”) electrodes. 

 

Graphite India is poised well in the global graphite electrode industry through its quality, scale of operations and low cost production base. The company’s competitive edge was particularly evident during the last decade, when low prices for graphite electrodes resulted in many of the leading players generating losses, but Graphite India however remained consistently profitable and declared dividends.

 

The company’s strategy is to become further vertically integrated, continue its penetration of new markets and clients as well as pursue value enhancing inorganic growth opportunities. It is also enhancing its presence in value added graphite products for the auto, aerospace, chemical, pharmaceutical, metallurgical and machine tool industries.

 

Graphite India is currently rationalizing production operations between plants. The company is further targeting focused reductions in its manufacturing costs. A capacity expansion plan has been initiated in its Durgapur (West Bengal) plant, to increase capacity by 10,500 tonnes per annum, taking the total capacity towards 90000 tonnes per annum.

The company has facilities designed for the manufacture of impervious graphite equipment and glass reinforced plastic pipes and tanks. It has an installed capacity of 33 MW of power generation through hydel and multi-fuel routes, which will be enhanced to 83 MW with installation of a 50 MW thermal power plant.

 
BUSINESS REVIEW:
 
The Indian economy as a whole has shown remarkable resilience in containing the ill-effects of the continuing global economic crisis. While there was a significant decline in the economic activity across the globe, in the  year 
gone by the major relief however is that the worst of the economic slowdown apparently  seems  to  be behind us. Demand in  the  domestic  economy  has witnessed  positive growth since the Q2 of current fiscal and is likely  to gain  further  momentum-going  forward. The Global  recovery  too  is  more pronounced  than  earlier  expectations,  bolstered  by  the  emerging  and developing economies-especially China, Russia and Brazil - driven mainly by their buoyant internal demand. IMF has projected the US economy to grow  by 3% and world economic growth to be around 4% for the year 2010. This augurs well  for  the  year  ahead and corporates which had  put  their  plans  of capacity  expansion  'on hold' are once again looking  at  expansions  with renewed hope and vigour.
 
The  Indian GDP Growth rate which had gone down from 9% in 2007-08 to  6.7% in  2008-09 has risen to 7.2% in 2009-10. The real turnaround came  in  the second  quarter  of  2009-10, when the economy grew by 7.9  per  cent.  The industrial and service sectors grew by 8.2 and 8.7 percent respectively, while growth in the manufacturing sector more than doubled from  3.2  per cent in 2008-09 to 8.9 per cent in 2009-10. Riding on the strong industrial growth, India's GDP is expected to grow at 8.5% for the year 2010-2011 and 9% for the year 2011-2012.

 

MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
(i) Industries structure and developments:
 
A. GRAPHITE ELECTRODE BUSINESS:
 
Capacity  utilization of this segment was 52% as compared to  the  previous year  of 85%. Production was attuned to demand, while keeping  some  buffer stock  for  across  the  counter sale. Procurement  of  key  raw  materials continued  as  per  commitment made to the suppliers.  In  these  times  of unpredictable  condition, customers resorted to quarterly  purchase  cycle, instead of the earlier practice of annual contracts.
 
Graphite Electrode is used in electric arc furnace (EAF) based steel  mills for conducting current and is a consumable item for the steel industry. The estimated  world capacity for manufacture of Graphite Electrode in  EAF  is over 1 million metric tonnes. The principal manufacturers are based in USA, South America, Europe, India, China and Japan.
 
Graphite Electrode demand is primarily linked with the global production of steel  in  electric arc furnaces. Between the two basic  routes  for  steel production  - (1) Blast Furnace (BF); and (2) Electric Arc Furnace (EAF) the  EAF route to steel production has increased over the last two  decades from 26% to about 32% at the global level. The share of EAF is expected  to grow   further   in  years  to  come  due  to   its   inherent   favourable  characteristics   of  (a)  an  environment  friendly  and  less   polluting production   process;  (b)  low  capital  cost;  and  (c)  faster   project commissioning time. Fresh investments in EAF steel mills are  characterised  by large furnace capacities requiring large diameter UFIP Electrodes. It is expected that the demand for UFIP Electrodes will grow in proportion.
 
The  global production of steel during 2009 at 1.2 billion  metric  tonnes, was less by 8.1% as compared to 1.31 billion metric tonnes in 2008.
 
Thus the relatively weak demand in the steel consuming sectors and a  sharp destocking of inventory in the steel supply chain resulted in steep fall in demand of crude steel as well as Graphite Electrodes. Their production  plans for  Graphite  Electrodes were accordingly rationalised  across  plants  to derive  the optimal benefit from the respective operating efficiencies  and manufacturing costs.
 
Graphite  India signaled its international debut in the 750 mm  (30')  dia. electrodes  by receiving two export orders during the year. Production  and sale  of  Graphite Electrodes, and Speciality Graphite Products  in  volume terms  were  lower  during the financial year, owing to  the  weak  demand. However, the price realization was higher, resulting in higher revenues.
 
Though developed economies like Europe, USA & Japan continue to reel  under recessionary  pressure, steel production and electrode demand in India  and some Asian economies have recovered back to pre-recession levels or in some cases, even more. As a result, American, European and Japanese suppliers of graphite  electrode  are aggressively entering the Indian and  other  Asian markets  to  garner volumes. Hence prices in the international as  well  as domestic market have softened during Q3 & Q4 of 200910. It is expected that there  will be further softening of electrode prices in Q1 & Q2 of  2010-11 followed by firming up of the prices due to expected recovery in the global steel production.
 
Due to this limited visibility into FY 2010-11, it is difficult to make a realistic projection of the Company's performance in the next year.
 
Nevertheless, it is expected that by mid 2011-12 the steel industry would revive  to  its  full potential. As a result the Company  has  revised  its expansion plan at Durgapur from the initial 10,500 MTPA to 20,000 MTPA. The additional  capacity  of  9,500 MT will be commissioned  with  a  very  low incremental  cost  of Rs. 675.000 millions. This capacity of 20,000 MT  will  be installed  with eco-friendly, energy efficient advanced technology  leading to a more cost efficient and sustainable operation in the long term.
 
Coke Division:
 
The  Coke  Division  in Barauni, engaged in  the  manufacture  of  Calcined Petroleum Coke (CPC), Electrode Paste and Tamping Paste is one of the  many backward integration initiatives of the Company Two grades of CPC -aluminium and graphite -  are produced here. CPC is a raw material used in the manufacture of regular and high power grade Graphite Electrodes. This is also a critical raw  material for fine grained high density graphite used in speciality graphite products and  Impervious Graphite Equipment. Electrode Paste is used in ferro  alloy smelters  and  Tamping  Paste is used as a lining  material  in  steel  and aluminium smelters.Production and sale of Calcined Petroleum Coke and Carbon Paste were higher in  volume  terms during the year in comparison with that of  the  previous year. Led by the buoyant domestic market, this Division has performed  well during the year.
 
B. GRAPHITE EQUIPMENT BUSINESS:
 
The   Impervious   Graphite  Equipment  (IGE)  Division   is   engaged   in manufacturing  and marketing heat exchangers, ejectors, pumps  and  turnkey plants  at  its Nashik Works. The Graphite Equipments have  wide  range  of applications  in  corrosive chemicals industries  such  as  pharmaceutical, agro-chemical, chloro alkali and fertilizer industries.
 
This Division too was under demand pressure due to the low levels of  fresh investment in new projects, both within the country and overseas.  Majority of  projects were kept on hold due to recession. While domestic  market  is showing  some  signs  of revival, there is no sign of  improvement  in  the export market and the export order book position continues to be around 50% less than the previous year. Modernisation  and  expansion  work of this  division  to  improve  overall manufacturing efficiency has been completed.
 
The  regulatory requirement of export licences and the delay  in  obtaining the same, has to some extent affected the delivery lead times resulting  in loss  of  some  business  from  the  overseas  customers.  New   regulation  formulated  by  DGFT  requiring permissions to be obtained  for  visits  of overseas  customers is likely to result in certain impediments in  pursuing export business, effectively
 
C. GRP PIPES & TANKS BUSINESS:
 
Glass  Reinforced  Plastic  (GRP) Pipes and Tanks Division  is  engaged  in manufacturing  and marketing of  RP Pipes and Tanks. The  Company  converts users  of  conventional  pipes to  GRP  through  re-engineering, strategic marketing,  superior product quality, competitive pricing and  value  added services.
 
Second  manufacturing  line which will enable production of pipes up  to  a diameter of 3000 mm has been commissioned during the year.
 
D. POWER:
 
The Company has an installed capacity of 33 MW of power generation  through  Hydel (19.5 MV) and Multifuel routes (13.5 MV).
 
Generation  through hydel route was higher by 22% during the year owing  to  good rainfall in the region.
 
Power  supply  from Wardha Power Company (WPC), with whom the  Company  had  entered into a long term agreement and had made a commitment to invest  Rs.  9 crore in WPC, is expected to commence later in the year 2010-11.
 
Multi-fuel  generating  capacity was not operational for most part  of  the  year  due to high cost of generation as well as lower capacity  utilization  in Graphite Electrode Plants.
 
Power  is a major cost input in the manufacturing of  Graphite  Electrodes.  The  cost  of power from grid ontinues to rise year-over-year.  The  power  requirement  at Durgapur Plant will go up with the on going  expansion.  In order to reduce dependence on grid power and ensure availability of quality power  at economical rate, the Company is setting up a coal  based  thermal power plant of 50 MW capacity at Durgapur. This will enable Graphite  India to further optimise its cost of production and increase its competitiveness in the global market.
 
E. POWMEX STEELS DIVISION (PSD):
 
Powmex steels is engaged in the business of manufacturing high speed  steel and alloy steel having its plant at Titilagarh in the State of Orissa.  PSD is  the  single  largest  manufacturer of High Speed  Steel  (HSS)  in  the country.  Its current market share is estimated at around 60%. HSS is  used in the manufacture of cutting tools such as drills, taps, milling  cutters, reamers,  hobs,  broaches  and special form tools. HSS  cutting  tools  are  essentially utilized in - (a) automotive; (b) machine tools; (c)  aviation; and  DIY  market.  The  industry is categorized  by  one  dominant  quality manufacturer of HSS viz. PSD and other small manufacturers who cater to the lower  end  of the quality spectrum in the retail segment.  On  the  demand side,  the  industry is broadly divided into large and small  cutting  tool manufacturers who use both domestic and imported HSS. PSD faces competition from   small   domestic   producers  and  imports   from   large   overseas manufacturers.

 

OUTLOOK:
 
The  global  Graphite Electrode industry is reported to  have  operated  at approximately  50%  of  its installed capacity in the  FY  2009-10  in  the backdrop  of  weak  demand  due to reduced  steel  production  as  well  as destocking throughout the value chain of the industry as a result of global recession.  While, the global economy is recovering from the crisis,  there still  persists  weak  end-user requirement in  the  steel  using  sectors,  resulting  in  weak demand for steel. The outlook for FY 2010-11  for  this segment  is  that in spite of growth in demand, steel  production  may  not reach pre-recession level.
 
It is expected that the domestic demand for steel and as a consequence  for Graphite  Electrodes  will  increase moderately.  Faced  with  unfavourable business  conditions, the global players have turned to Asian  markets  and have started aggressive pricing policy to capture volumes. In view of  this situation,   Electrode   prices  of  the  current   year   (2009-10)   seem unsustainable in the FY 2010-11.
 
However,  the Company is confident of meeting this challenge by  virtue  of increased  sales volume, higher capacity utilization and  better  operating efficiencies.

 

FIXED ASSETS:

 

  • Freehold Land
  • Leasehold Land
  • Buildings
  • Plant and Machinery
  • Office Equipment
  • Furniture and Fittings
  • Vehicles

 

CONTINGENT LIABILITIES

 

Particulars

31.03.2010

Rs. In Millions

A) Claims not acknowledged as debts

 

(i) Disputed Excise Duty for which appeals are pending

39.842

(ii) Disputed Customs Duty for which appeals are pending

106.897

(iii) Disputed Service Tax for which appeals are pending

30.489

(iv) Disputed Sales Tax for which appeals are pending

49.164

(v) Disputed Entry Tax for which appeals are pending

24.604

(vi) Others

39.004

 

 

B) Corporate Guarantees given to banks to secure the financial assistance/

accommodation extended to Subsidiary Companies

453.750

 

 

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND THE NINE MONTHS ENDED 31.12.2010

 

Rs. In Millions

Particular

Quarter Ended

Nine Months Ended

 

 

 

Gross Sales/ Income from Operation

3517.500

9616.500

Less: Excise Duty on Sale

143.000

421.000

(a) Net Sales / Income from operations

3374.500

9195.500

(b) Other Operating Income

0.000

0.000

Total Income

3374.500

9195.500

Expenditure

 

 

(Increase) / Decrease in stock in trade and work in progress

(293.400)

(608.100)

Consumption of raw materials

1650.300

4250.700

Consumption of stores and spare parts

367.700

945.300

Purchase of traded goods

0.000

0.000

Employees cost

240.100

627.300

Electricity Charges

363.000

927.300

Depreciation

98.700

295.500

Other expenditure

314.800

849.000

Total

2741.200

7287.000

Profit from operations before other income, interest and exceptional Items

633.300

1908.500

Other income

37.100

169.100

Profit before interest and exceptional Items

670.400

2077.600

Interest

8.800

22.500

Profit after Interest but before Exceptional Items

661.600

2055.100

Exceptional Items

0.000

127.300

Profit (+)/Loss(-) from Oridinary Activities before tax

661.600

1927.800

Tax expense

 

 

Current

219.600

650.000

Earlier years

0.000

0.000

Net Profit (+)/Loss(-) from Ordinary Activities after tax

442.000

1277.800

Extraordinary items

0.000

0.000

Net Profit (+) / Loss (-) for the year period

442.000

1277.800

Paid up equity share capital (Face value of Rs.2/- per share)

390.800

390.800

Reserves excluding revaluation reserves as per balance sheet of previous accounting year

--

--

Earning per share (EPS)

 

 

 (a) Basic and diluted EPS before Extraordinary items

for the period, for the year to date and for the

previous year (not to be annualised)

2.39

6.91

(a) Basic and diluted EPS before Extraordinary items

for the period, for the year to date and for the

previous year (not to be annualised)

2.26

6.54

Public shareholding

 

 

          Number of shares

83558735

83558735

          Percentage of shareholding

42.77

72.77

 

 

 

Promoters and Promoters group Shareholding-

 

 

a) Pledged /Encumbered

 

 

Number of shares

--

--

Percentage of shares (as a % of total shareholding of the promoter and promoter group)

--

--

Percentage of shares (as a % of total share capital of the company)

--

--

 

 

 

b) Non  Encumbered

 

 

Number of shares

111816859

111816859

Percentage of shares (as a % of total shareholding of the promoter and promoter group)

100.00

100.00

Percentage of shares (as a % of total share capital of the company)

57.23

57.23


SEGMENT REPORTING AS PER CLAUSE 41 OF LISTING AGREEMENT

 

Rs. in Millions

Particular

Quarter Ended

Nine Months Ended

 

 

 

Segment Revenue

 

 

Graphite and Carton

2937.000

7802.100

Power

88.100

239.900

Steel

255.000

704.800

Unallocated

214.500

750.300

Total

3494.600

9497.100

Less: Inter Segment Revenue

120.100

301.600

Sales / Income from Operations Net

3374.500

9195.500

 

 

 

Segment Results

 

 

Profit before tax and Interest

 

 

Graphite and Carton

544.900

1554.500

Power

71.400

186.6000

Steel

7.800

12.200

Unallocated

62.400

200.500

Total

686.500

1953.800

Less: Interest

8.800

22.500

Other Unallocable Expenditure / Income

16.100

3.500

Total profit before tax

661.600

1927.800

 

 

 

Capital Employed

 

 

Segment Assets – Segment Liabilities

 

 

Graphite and Carton

11721.900

11721.900

Power

549.900

549.900

Steel

1777.800

1777.800

Unallocated

989.000

989.000

Total

15038.600

15038.600

 

Note:

 

  1. The above results have been reviewed by the Audit Committee and approved by the Board at its meeting held on 4th February, 2011. The Auditors of the Company have carried out a Limited Review of the financial results for the quarter and the nine months ended 31st December, 2010 in terms of Clause 41 of the Listing Agreement with Stock Exchanges.

 

  1. Other income for the quarter and the nine months ended 31st December, 2010 includes exchange loss of Rs. 3.600 Millions and exchange gain of Rs. 43.500 Millions respectively and that for the corresponding quarter and the nine months ended 31st December, 2009 includes exchange gain of Rs. 14.200 Millions and Rs. 125.300 Millions respectively. Such gain for the year ended 31st March, 2010 was Rs. 100.400 Millions.

 

  1. Generation of power at hydro electrical plants is seasonal in nature.

 

  1. No investor complaint was pending at the beginning of the quarter ended 31st December, 2010. During the quarter, eleven complaints were received. All the complaints were disposed off / attended to and no complaint was pending as on 31st December, 2010.

 

  1. Tax expense comprises current tax and deferred tax.

 

  1. Figures for the previous year/period have been re-grouped / re-arranged wherever necessary.

 

ACHIEVEMENTS AND MILESTONES 

 

2009-2010

The Company signaled its international debut in 750 mm (30”) diameter electrodes by receiving trial orders from two overseas customers.                   

 

2006-2007

Annual consolidated turnover crossed Rs. 1000 crore for the first time.                  

 

2005-2006

The expansion module of 20,000 MT of Graphite Electrodes with the state-of-the-art technology was fully commissioned in the fourth quarter of the financial year taking the production capacity of  Durgapur Plant in West Bengal from 14000 MT to 34000 MT.

 

2004-2005

The Company has been selected for the second year in succession by Forbes Global as one amongst the ‘World’s 200 BEST UNDER A BILLION’ companies for 2004 outside the United States with annual sales of less than USD 1 billion.

           

In August 2004 the company through its wholly owned foreign subsidiary acquired Graphite Electrode, Graphite specialties and Electrode coating operations in Nuremberg, Germany, of the Conradty Group from the Insolvency Administrator.

 

This acquisition enabled the company to add approximately 18000 MT of Graphite Electrode capacity and to move closer to its European customers to facilitate quicker delivery and improved services.

 

2003-2004

The Company has been recognized as one of the ‘World’s 200 BEST UNDER A BILLION’ companies for 2003 outside the United States with annual sales of less than USD 1 billion by Forbes Global.                   

 

 

2001-2002

The company embarked on the development of new specialty products like flexible graphite sheets and tubes.

           

The company achieved an average capacity utilization of nearly 100 per cent in its electrodes division.

           

The company had an export presence in over 50 countries.

           

Bombay Municipal Corporation Project, GRP pipe for Sewerage Out Fall into the Arabian Sea, carrying sewerage water into the deep sea. This project is First of its kind in India and third in the entire world.

 

 

 

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.45.18

UK Pound

1

Rs.72.58

Euro

1

Rs.63.13

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

6

PAID-UP CAPITAL

1~10

7

OPERATING SCALE

1~10

7

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

7

--PROFITABILIRY

1~10

7

--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

 

62

 

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

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

-

NB

                                       New Business

-

 

 

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.