MIRA
INFORM REPORT
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Report Date : |
04.05.2011 |
IDENTIFICATION DETAILS
|
Name : |
OCL INDIA LIMITED |
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Registered Office : |
AT/PO - Rajgangpur, Sundargarh – 770017, Orissa |
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Country : |
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Financials (as on) : |
31.03.2010 |
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Date of Incorporation : |
11.10.1949 |
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Com. Reg. No.: |
000185 |
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CIN No.: [Company Identification
No.] |
L26942OP1949PLC000185 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CALO00890B |
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PAN No.: [Permanent
Account No.] |
AAACP1354J |
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Legal Form : |
Public Limited Liability Company. The company's shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturing and Sale of Refractories of Basic, Silica and High Alumina Quality, Mag Carbox, Castable, Precast and CC Refractories, Portland and Slag Cement and also engaged in Furnace Refractory Maintenance. |
RATING & COMMENTS
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MIRA’s Rating : |
A (59) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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 31853816 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established company having satisfactory track. Directors are experienced, respectable and having satisfactory means of their own. Their trade relations are fair. Financial position is good. Payments are usually correct and as per commitments. The company can be considered good for normal 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
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Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
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A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
LOCATIONS
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Registered Office/Factory : |
AT/PO - Rajgangpur, Sundargarh District – 770 017, |
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Tel. No.: |
91-661-24221212/ 24220121 (4 Lines) |
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Fax No.: |
91-661-24220133/ 24220933 |
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E-Mail : |
oclrpg@cal.vsnl.net.in,
skjain@oclindia.com, sunilkumar@oclindia.com, ocl_rajgangpur@ocl.in |
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Website : |
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Branches : |
v
B-47, Narain Manzil, 11th Floor, 23, Barakhamba Road,
Connaught Place, New Delhi – 110 001, India Tel. No.: 91-11-23321177/
23321212/23321248/ 23329699 Fax No.:91-11-23325854/ 23731333 v
Stephen House, 4, BBD Bagh (East), Kolkata – 700
001, West Tel. No.:91-33-22214440 (5 lines) Fax No.: 91-33-22022393 |
DIRECTORS
AS ON 31.03.2010
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Name : |
Mr. Pradip Kumar Khaitan |
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Designation : |
Chairman |
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Name : |
Mr. D D Atal |
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Designation : |
Whole Time Director |
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Name : |
Mr. Puneet Dalmia |
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Designation : |
Jr. President |
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Name : |
Mr. D. N. Davar |
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Designation : |
Director |
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Name : |
Dr. S R Jain |
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Designation : |
Director |
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Name : |
Mr. V. P. Sood |
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Designation : |
Wholetime Director and Chief Executive Officer |
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Name : |
Mr. Ramesh C. Vaish |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. Amitav Ganguly |
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Designation : |
Company Secretary |
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Name : |
Mr. D D Atal |
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Designation : |
CEO |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 31.03.2011
|
Category of
Shareholder |
Total No. of
Shares |
% of total No.
of Shares |
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(A) Shareholding of Promoter and Promoter Group |
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2,189,808 |
3.85 |
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25,814,904 |
45.37 |
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9,371,151 |
16.47 |
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9,371,151 |
16.47 |
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37,375,863 |
65.69 |
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2,354,310 |
4.14 |
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2,354,310 |
4.14 |
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Total shareholding of Promoter and Promoter Group (A) |
39,730,173 |
69.82 |
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(B) Public Shareholding |
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18,000 |
0.03 |
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64,165 |
0.11 |
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454,079 |
0.80 |
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536,244 |
0.94 |
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8,330,321 |
14.64 |
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6,988,148 |
12.28 |
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1,078,331 |
1.90 |
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237,003 |
0.42 |
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159,189 |
0.28 |
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18,080 |
0.03 |
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59,234 |
0.10 |
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500 |
- |
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16,633,803 |
29.23 |
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Total Public shareholding (B) |
17,170,047 |
30.18 |
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Total (A)+(B) |
56,900,220 |
100.00 |
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(C) Shares held by Custodians and against which Depository Receipts
have been issued |
- |
- |
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- |
- |
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- |
- |
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- |
- |
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Total (A)+(B)+(C) |
56,900,220 |
100.00 |
(1) Indian
Individuals / Hindu Undivided Family
TrustsBUSINESS DETAILS
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Line of Business : |
Manufacturing and Sale of Refractories of Basic, Silica
and High Alumina Quality, Mag Carbox, Castable, Precast and CC Refractories, Portland
and Slag Cement and also engaged in Furnace Refractory Maintenance. |
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Products : |
v Silica
Refractories for coke ovens, High Temperature Blast Furnace Stoves and Glass
Industries. v Basic
Refractories. v Bricsk and Shapes
for Blast Furnace hot stoves v Bricks and
Shapes for Glass v Specific
Refractories v Silica
Refractories for Blast furnace stove |
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Exports to: |
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Imports from: |
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Terms : |
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Purchasing : |
L/C and credit |
GENERAL INFORMATION
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No. of Employees : |
1513 Approximately |
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Bankers : |
v
United Bank of v Punjab National Bank, Rajgangpur, Orissa v
State Bank of v UCO Bank, Rajgangpur, Orissa v Axis Bank Limited v International Finance Corporation v
Export- Import Bank of v PTC India Financial Services Limited |
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Facility: |
NOTE :- 1) Term loans are secured by way of first pari passu charge on fixed assets (present and future) of Cement Division of the Company. In some cases, term loans are further secured by way of second pari passu charge over current assets of the Company. 2) Working capital facilities (fund based & non fund based limits) are secured by first pari passu charge over stocks, stores, raw materials, inventories, work in progress, finished goods and also book debts, bills and Moneys receivable of the Company by way of hypothication. These facilities are further secured by second charge over the fixed assets of the Cement Division of the Company. The debentures are secured by way of first pari passu charge over fixed assets (present and future) (1.25 Times) of Cement Division of the Company, except for outstanding debentures Rs.110.000 Millions of Syndicate Bank (1.40 Times), which is additionally secured by way of first pari passu charge over fixed assets of Refractory Division of the Company.
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
V. Sankar Aiyar and Company Chartered Accountants |
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Membership: |
Confederation of Indian Industry |
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Collaborators : |
v Plibrico SA, France v
TYK Corporation, v
Tokyo Yogyo Company Limited, |
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Associates/Subsidiaries : |
v Konark Minerals Limited. v Kashmissa Industries Limited. v Hari Fertilizers Limited v Telecom Services India Limited |
CAPITAL STRUCTURE
AS ON 31.03.2010
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
100000 |
Equity Shares |
Rs.100/- each |
Rs.10.000 Millions |
|
70000000 |
Equity Shares |
Rs.2/- each |
Rs.140.000 Millions |
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Issued;
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No. of Shares |
Type |
Value |
Amount |
|
63631805 |
Equity Shares |
Rs.2/- each |
Rs.127.264
Millions |
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Subscribed:
|
No. of Shares |
Type |
Value |
Amount |
|
56900220 |
Equity Shares |
Rs.2/- each |
Rs.113.800
Millions |
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(i) 1,57,50,000 Ordinary Shares were allotted as bonus shares by capitalization from General Reserve (ii) 1,23,52,500 Ordinary Shares of Rs.2/- each, fully paid up were allotted during 2007-08, to the share holder of erstwhile Dalmia Cement (Meghalaya) Limited pursuant to a scheme of arrangement for merger |
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Add : Shares Forfeited Account |
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Rs.5.000
Millions |
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FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
113.850 |
113.850 |
113.850 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
7849.604 |
6478.040 |
5417.156 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
7963.454 |
6591.890 |
5531.006 |
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LOAN FUNDS |
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1] Secured Loans |
7947.387 |
6818.895 |
4922.710 |
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2] Unsecured Loans |
309.395 |
330.434 |
69.721 |
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TOTAL BORROWING |
8256.782 |
7149.329 |
4992.431 |
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DEFERRED TAX LIABILITIES |
1200.086 |
1001.564 |
588.283 |
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TOTAL |
17420.322 |
14742.783 |
11111.720 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
9776.596 |
8411.732 |
3259.326 |
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Capital work-in-progress |
3311.249 |
3765.912 |
6047.887 |
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INVESTMENT |
61.196 |
63.549 |
18.212 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
2028.812
|
1735.653 |
1395.748 |
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Sundry Debtors |
1046.036
|
1158.702 |
936.141 |
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Cash & Bank Balances |
3537.672
|
1185.446 |
966.459 |
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Other Current Assets |
11.672
|
6.394 |
14.622 |
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Loans & Advances |
718.747
|
815.573 |
861.419 |
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Total
Current Assets |
7342.939
|
4901.768 |
4174.389 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Sundry Creditors |
1673.457
|
1539.269 |
1535.612 |
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Other Current Liabilities |
974.737
|
665.183 |
542.791 |
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Provisions |
423.464
|
195.726 |
309.691 |
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Total
Current Liabilities |
3071.658
|
2400.178 |
2388.094 |
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Net Current Assets |
4271.281
|
2501.590 |
1786.295 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
17420.322 |
14742.783 |
11111.720 |
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PROFIT & LOSS
ACCOUNT
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|
PARTICULARS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
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SALES |
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Income |
13742.047 |
11186.913 |
7656.870 |
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Other Income |
345.932 |
119.504 |
270.689 |
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TOTAL (A) |
14087.979 |
11306.417 |
7927.559 |
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Less |
EXPENSES |
|
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Raw Materials Consumed |
3842.677 |
3216.300 |
1906.898 |
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Purchases |
97.551 |
122.068 |
25.819 |
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Freight, Clearing and Handling on Own Clinker |
87.295 |
45.323 |
0.000 |
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Salaries, Wages and Benefits to Employees |
710.493 |
519.996 |
370.402 |
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Power and Fuel |
1978.057 |
1642.461 |
1107.877 |
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Other Expenses |
3226.272 |
3142.924 |
2354.388 |
|
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|
Increase / (Decrease) in Stocks |
(51.504) |
(107.178) |
(103.702) |
|
|
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TOTAL (B) |
9890.841 |
8581.894 |
5661.682 |
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Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
4197.138 |
2724.523 |
2265.877 |
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Less |
FINANCIAL
EXPENSES (D) |
506.676 |
384.955 |
232.654 |
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PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
3690.462 |
2339.568 |
2033.223 |
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Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
1144.973 |
568.859 |
263.066 |
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PROFIT BEFORE
TAX (E-F) (G) |
2545.489 |
1770.709 |
1770.157 |
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Less |
TAX (I) |
908.522 |
613.281 |
608.702 |
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PROFIT AFTER TAX
(G-I) (J) |
1636.967 |
1157.428 |
1161.455 |
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Earnings Per
Share (Rs.) |
28.77 |
20.34 |
-- |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2010 |
30.09.2010 |
31.12.2010 |
|
|
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Net Sales |
3638.300 |
3445.400 |
3435.000 |
|
Total Expenditure |
2598.000 |
2775.700 |
2774.900 |
|
PBIDT (Excl OI) |
1040.300 |
669.700 |
660.100 |
|
Other Income |
34.500 |
39.800 |
38.800 |
|
Operating Profit |
1074.800 |
709.500 |
698.900 |
|
Interest |
150.600 |
155.900 |
169.200 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
924.200 |
553.600 |
529.700 |
|
Depreciation |
291.400 |
297.700 |
306.500 |
|
Profit Before Tax |
632.800 |
255.900 |
223.200 |
|
Tax |
210.000 |
85.000 |
10.800 |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
422.800 |
170.900 |
212.400 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
|
Net Profit |
422.800 |
170.900 |
212.400 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
PAT / Total Income |
(%) |
11.62
|
10.23 |
14.65 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
18.52
|
15.82 |
23.11 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
14.86
|
13.30 |
23.81 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.31
|
0.26 |
0.32 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.42
|
1.45 |
1.33 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.39
|
2.04 |
1.74 |
LOCAL AGENCY FURTHER INFORMATION
History:
The company was incorporated on 11th October, 1949 having Company Registration Number 185.
It was originally incorporated under the name & style of Orissa Cement Limited and obtained the Certificate of Commencement of Business on 10th February 1950. The company subsequently changed its' name to OCL India Limited.
The company is the manufacturer of the Konark brand Dalmia
The company is well known for the manufacture of
sophisticated world-class refractories and has earned laurels for its high-tech
new-generation refractories. The unit, which came into existence in 1956, has
an installed capacity of 0.141 million tpa of various refractories. In the
past, the company had manufactured a special kind of alumina carbon ladle
shroud, an import substitute, which enables it to produce clean steel. The
company received the Best Import Substitute award in 1992 in the 52nd
All-India Industrial Exhibition held at
The company has been awarded the ISO 9001 certification for
its silica products, Production of continuous casting refractories and
new-generation castables and pre-cast blocks set up in a separate section, both
in technical collaboration with TYK Corporation,
During the year 1996-97, the company received ISO 9001
certification for its magnesia carbon bricks, basic refractories, monolithics
and slide gate refractories. The company also made good progress in marketing
of its monolithics range of products like castables, Precast seating blocks,
rinsing lance, etc. manufactured in technical collaboration with TYK,
The company had entered into a Memorandum of Understanding (MOU) with Steel Authority of India Limited (SAIL) for supply of substantial quantities of refractory. Company has upgraded its products range & set up facilities for manufacture of purging elements. Company has introduced new high tech products as an import substitute & technical support for these products has been taken from M/S. PLIBRICO Germany. Company received Special Export Award for 1997-98, consecutively for 4th year by CAPEXIL for good performance in export. The company has the distinction of being the first refractory manufacturer to have ISO 9001 certificate for the widest range of refractories in the country.
OPERATIONS
The operational results of the current year in relation to the corresponding operations of the previous year have registered an increase of 23% in net sales, 54% in operating profit and 58% in profit before depreciation and tax.
For a detailed analysis of the performance of the Company for 2009-10 reference is invited to the chapter on Management Discussion and Analysis of this report.
EXPANSION AND FUTURE
PLANS
The Company is taking all steps for earliest setting up of
2X27 MW Coal based Captive Power Plant, which is expected during the financial
year 2010-11. The company has initiated steps for setting up a Cement
manufacturing unit in
The Company has received the Terms of Reference (TOR) from
the State Level Appraisal Committee, Orissa under the Ministry of Environment
and
ALLOTMENT OF CAPTIVE
COAL BLOCK AND PROGRESS THEREUPON
All the three joint allocatees to the captive coal block i.e. Ms. Rungta Mines Ltd., M/s. Ocen Ispat Pvt. Ltd and The Company, have agreed in terms of Option-I as set out in the Ministry of Coal, Government of India letter no. 13016/33/2005-CA-I dated February 02, 2006 to form a Joint Venture company for carrying out the mining activities at Radhikapur (West) Captive Coal Block, MCL and in this regard a Shareholders’ Agreement for Joint Venture has been entered on August 31, 2009 by all the three joint allocatees, which has also been approved by Ministry of Coal, Government of India. As per the Shareholders’ Agreement, a new Joint Venture Company named “Radhikapur (West) Coal Mining Private Limited” has been formed. All other necessary steps are being initiated by the JV Company for bringing the allotted captive coal mines into operation at the earliest.
Consequent upon de-merger of the Company’s erstwhile steel division operations and vesting of all assets and liabilities of the said division in OCL Iron and Steel Limited (OISL), The Company and OISL have jointly approached Ministry of Coal, Government of India for inclusion of the name of OISL as one of the allocatees of Radhikapur (West) Captive coal Block with proportionate share of coal allocation for its steel making operations. The share of coal allocation in favour of OISL will come out of bifurcation of coal allotment originally made by the Government in the name of OCL.
MANAGEMENT DISCUSSION
AND ANALYSIS
Economic Scenario and
Outlook
The year 2009-10, witnessed a steady recovery from economic slowdown that the world was experiencing for last couple of years. However, higher input costs remained a cause of concern.
As our growth has relatively strong domestic underpinnings, the fundamentals of our economy remained strong inspite of economic slow down across the Globe.
Confidence in the Global markets is restoring and economic
activity in
Financial Highlights
Cement operations scaled further to higher levels both in terms of revenues and earnings. The success story of the Company continued this year with the robust all round performance in its operations.
Company. EBITDA for the Company grew from Rs.2724.600 Millions in FY 2008-09 to Rs.4197.200 Millions in FY 2009-10, depicting a growth of 54%.
The net sales of cement business grew by 32.35% to Rs.11097.900 Millions in FY 2009-10. Net Sales from the refractory business of the Company decreased to Rs.2644.200 Millions in FY 2009-10, down by 5.6%.
In the Earnings before Interest, Tax and Depreciation, huge surge was witnessed in cement business in FY 2009-10 as compared to previous year. Cement EBIDTA has grown on account of higher volumes as well as improved realizations.
Cement Business
a)
Industry
Structure and Developments
FY 2009-10 was full of surprises for the Indian Cement
Industry as a whole. Amidst speculation of likely down fall as the global cue
suggested in the beginning of the year, the year witnessed a decent growth in
the cement industry. Eastern sector particularly ran through out the year with
deficit supply situation on a demand growth of around 20% whereas supply was
mainly coming from neighbouring regions to fulfill the demand. While South felt
heat of over capacity, impact was also felt in Eastern Region where prices
softened sharply in the areas bordering Andhra region, coming down to near
historical low from a level of Rs.240 per bag to a level of Rs. 140 per bag and
which caused a desperate need of searching unconventional markets to push
volume. Neighbouring states were the natural targets and saw hectic marketing
activities including sharp fall in prices. Capacity additions in the east could
not take place fully as planned hence the current year did see a positive
demand supply scenario. However the surplus capacities in bordering states,
which will continue to push volumes in the east, and stabilization of new
plants either already commissioned or in process of commissioning in the
eastern region is expected to cause a surplus scenario in the next financial
year which is expected to be more felt from second half the next financial
year. Despite likely demand growth of 11% or so on all
Coal, slag and other inputs remained in short supply. Even railways wagon supply also remained scarce at the time of peak demand. Government’s response towards Industry’s request for dual excise duty anomaly remained mute. The support needed from the Government in allowing abatement in Excise duty on MRP was also not considered. Restoration of Excise Duty on MRP from 8% to 10% has further pushed cost upward. Power availability in Orissa is worsening day by day which is likely to put pressure on cost of power and is likely to affect production from plants dependent on Grid power. Imposition of flat Rs.50 per Metric Tonne Clean Energy Cess on all grades of coal and increase in cost of petroleum product prices will further take the cost up.
b)
Operations/Performance
Cement operations contribute 81% to the revenues of the
Company. The plants are currently at Rajgangpur, District Sundargarh and at
The ability of The Company to react to growth opportunities and execute efficiently has helped it deliver a superior performance on a continuous basis. The volumes have grown and margins are at near historic highs. There has been a notable growth in the volume of cement business of the Company which has increased to 3 Million tones in FY 2009-10. The year was full of challenges especially in regard to availability of slag and rising input costs. Nevertheless, by focusing all strength on maximizing volume to reap the benefit of demanding market helped The Company to improve margins with higher realizations and better cost management.
To mitigate the increase in energy costs and threat on availability in the years to come, The Company is in process of setting up 2x27 MW Captive Thermal Power Plant (CPP) at Rajgangpur, Orissa. This will ensure un-interrupted captive power supply to its plants at relatively lower cost. The company is taking all necessary steps to install CPP at the earliest.
c)
Opportunities
and Threats
KCW plant near
Scarcity of slag was felt both at KCW and at Rajgangpur. Steps have been taken to enter into long term arrangement for sourcing slag for both the plants. In view of adequate availability of clinker due to commissioning of 2nd stream of Clinkerisation at Rajgangpur, The Company will have leverage of resorting to maximizing cement volumes by producing other types of cements like Ordinary Portland Cement (OPC), IRST-40 Sleeper grade Portland Cement and Portland Pozzolana Cement (PPC), etc. apart from manufacturing Portland Slag Cement (PSC). Steps are being taken to launch a new type of cement i.e. ‘Masonry cement’ which is a better alternative to cement for masonry and similar usages other than RCC.
d)
Risks
and Concerns
There is a possibility of cement prices getting softened due to demand supply mismatch likely in the second half of the next financial year due to full scale operation of the new capacity additions which took place during current year as well as expected in the first half of next financial year. Though demand of cement is likely to be good but because of surplus scenario particularly in the Southern market, supply pressure will be felt all across Eastern Region thereby putting pressure on the margins.
Budgetary impact of increase in Excise Duty, cess on coal and increase in diesel prices would affect all round increase in cost of production as well as dispatches of finished product. Dual rate of Excise duty on Institutional sales and consumer sales is still continuing on MRP without allowing any abatement. This would impact adversely on realization. Availability of Slag both at KCW and at Rajgangpur works has come under pressure because of new –cement manufacturing capacities put up by other manufacturers nearer to the source of slag and hence availability of slag has become a constraint having adverse impact on cost. As an alternative to PSC, Company may resort to manufacture of PPC utilizing fly ash from outside in addition to fly ash generated from its own CPP.
Availability and quality of coal is also a cause of concern due to increasing prices as well as due to higher percentage of Ash content in linkage coal. Further, linkage quantity of coal is getting reduced day by day which is likely to have adverse impact on cost.
Rake availability for transportation of cement as well as clinker is constrained by shortage of rake supply from the Railways. The company has made long term agreement for hiring around 100 numbers of dedicated lorries to take care of its road transportation need in order to mitigate the risk of bottleneck in rail supply.
Worsening Power availability in Orissa may affect volume both at KCW and Rajgangpur. Rajgangpur will become comfortable once CPP is set up. However, the risk will continue in case of KCW which is fully dependent on Grid power.
A notification issued by Ministry of Environment and Forests (MoEF) on 03rd November 2009 with a view to encourage usage of fly ash and hence making it compulsory to use fly ash based products in construction activities within a radius of 100 Kms from a coal or lignite based thermal power plant is also likely to have adverse impact on The company which is primarily a slag based cement manufacturing company. The company has already filed a writ petition before Hon’ble High Court of Orissa for inclusion of usage of Slag in addition to fly ash in the said notification.
e)
Outlook
FY 2010-11 seems to be promising so far cement demand growth in the country is concerned. Backed on the projected GDP growth numbers of near 8%, cement demand growth is likely to be in the range of 9%-11% in the country as a whole and around 10%-12% in the Eastern part of the country. This year also Eastern Region showed a growth of 20% and backed on the same growth path over and above current year’s growth, coming year growth is also likely to be around 12% which is mainly due to increasing cement consumption in the ongoing large infrastructure projects, roads and factories etc. Housing demand is also likely to be good due to economic revival taking place in the country. Demand in 2010-11 will largely be driven by the pass-through effect of the stimulus packages announced by the Government for housing and infrastructure sectors. While urban demand has slackened significantly, semi-urban and rural demands in the housing sector still show some robustness.
Despite likely good demand growth, due to additions in cement capacity and additions of Grinding Units in the market or near to the source of availability of Fly Ash/slag, there is going to be a surplus scenario in cement and thus there might be pressure on demand supply situation where supply is likely to exceed demand in most part of the country and Eastern Region will not be any exception hence prices are likely to come under pressure. This will be due to new capacities reaching to its full scale production. Despite all above, The Company is hopeful of maintaining profitability due to operational efficiencies, enhancement of sales volume and advantage of being nearer to market.
The Company continued to enjoy goodwill in its market place and its brand “Konark” continued to be preferred product and commanded premium over other products in the market. 4. R efractory Business
a)
Industry
Structure and Developments
The year started with a very positive sign as steel business was coming out of recession. The dampening effect of downturn however remained on projects which were deferred time and again. This led to unpredictable delivery of products manufactured against firm order. The refractory industry in general has only 60% capacity utilization and there are few which have joined hands with each other for working under one umbrella for the purpose of marketing.
The raw material prices also had a south ward direction
particularly those from
b)
Operations/Performance
The year 2009-10 has been an unpredictable year with respect to customer preferences. Therefore, this year operations were effected due to short order quantities in one order by same customer. The company took up the challenge in this changed business model and has maintained almost similar NSR as that of previous year.
Refractory production in terms of tonnage has declined in FY
2009-10 as compared to the FY 2008-09 due to lower demand of Silica bricks for
Coke oven project and lower exports due to low capacity utilization of European
and
On export front, this year The Company has achieved sales of Rs.34.04 crores against Rs.59.13 crores in previous year registering a decline of 42%.
In non-ferrous market The Company has retained its share in
copper and aluminium sectors by supplying refractories to domestic consumers.
The continuous casting refractories have performed well in Scandinevian
Countries and we expect good order next year.
c)
Opportunities
and Threats
The Company is looking at the potential in developing
international market for silica insulation refractories for which it has
received international recommendation by Glass Plant Designers. The technical
collaboration with M/s TYK Corp.,
The company has added Dolomite bricks in the product range and tried successfully in AOD application in 2 MINI steel plants and also used in secondary steel making ladle in one plant with encouraging results and expect to get good orders in future.
d)
Risks
and Concerns
1) Downward prices of product and increasing input costs are going to put pressure on the company finance. The company has therefore taken up strong cost reduction focus based on throughput increase by process innovation and re-engineering.
2) Chinese turn key projects of silica based coke oven will impact the market of silica refractories.
3) The continued closure of Talbasta Mine bas made fire brick not profitable business. The company has therefore taken a new focus on outsourcing these products.
4) Short term delivery requirement by the customers may sometimes deprive the company the business even from loyal ones. The company has therefore decided to stock the fast consumable items at three strategic locations in next year to handle this situation.
5) Last but the most important concern is of deferment of projects both in steel and aluminium. The trend is likely to continue. In future, therefore, the project customers may not take the material in time thereby disturbing the complete delivery and capacity booking schedule of the company.
e)
Outlook
The Company expects a growth of refractory consumables market due to addition of new steel making facilities in the country and thereby increases its share from its large basket of products. As a future strategy, The Company expects that even with moderate growth rate of 8-10% in steel production, refractory industry will be growing reasonably. There is lower demand of Silica bricks for rebuild of coke oven in SAIL units and new coke ovens in MINI steel sector are inclined towards Chinese Silica bricks hence the silica orders are expected to stagnant @ 70% capacity utilization during 2010-11. The addition of Dolomite bricks manufacturing has widened the product range further and expects good orders in future. Due to increase in steel production the technology driven products of continuous casting refractory, slide gate plates and purging refractories will keep the Company on good growth path in future.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
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.44.34 |
|
|
1 |
Rs.73.69 |
|
Euro |
1 |
Rs.65.75 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
59 |
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 |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.