MIRA INFORM REPORT

Report Date :

11.10.2011

Website :

http://www.facorsteel.com

IDENTIFICATION DETAILS

Name :	FACOR STEELS LIMITED
Formerly Known As :	FERRO ALLOYS CORPORATION LIMITED
Registered Office :	46-A and B, MIDC Industrial Estate, Hingna Road, Nagpur – 440028, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	13.05.2004 (From 1978 taken on lease by Facor and Formerly known as Ferro Alloys Corporation Limited, Steel Division)
Com. Reg. No.:	11-146283
Capital Investment / Paid-up Capital :	Rs.356.524 Millions
CIN No.: [Company Identification No.]	L27100MH2004PLC146283
IEC No.:	0304030279
TAN No.: [Tax Deduction & Collection Account No.]	NGPF00181G
PAN No.: [Permanent Account No.]	AAACF8077D
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Manufacturer of Carbon Steel, Alloy Steel, Stainless Steel in Bar Form (Rounds, RCS, Hexagons and Rolled Products).
No. of Employees :	678 (Approximately) (Office -140, Factory- 522, Branch- 16)

RATING & COMMENTS

MIRA’s Rating :

B (28)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 1500000
Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is an established company having moderate track. There appears some accumulated losses recorded by the company. However, trade relations are reported as fair. Business is active. Payments are reported to be slow. The company can be considered for business dealings with some caution.

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

INFORMATION PARTED BY

Name :	Mr. Sushant Chandra Parija
Designation :	Executive Vice President
Contact No.:	91-9371222213
Date :	08.10.2011
Name :	Mr. Amit Pandey
Designation :	Company Secretary
Date :	08.10.2011

LOCATIONS

Registered /Corporate Office 1/ Factory :	46-A and B, MIDC Industrial Estate, Hingna Road, Nagpur – 440028, Maharashtra, India
Tel. No.:	91-7104-235701 to 235708
Mobile No.:	91-9371222213 (Mr. Sushant Chandra Parija)
Fax No.:	91-7104-235709
E-Mail :	info@facorsteel.com exports@facorsteel.com (Export Marketing) marketing@facorsteel.com (Domestic Marketing)
Website :	http://www.facorsteel.com
Area :	106192 sq. Mtr.
Location :	Leased
Corporate Office 2/ Head Office :	Shreeram Bhawan, Tumsar, District Bhandara- 441 912, Maharashtra, India
Tel No.:	91-7183-232251/ 232233/ 233090/ 232341
Fax No.:	91-7183-232271
E-Mail :	facorho@facorgroup.in
Regional Offices :	Located at : · Mumbai · Kolkata · Chennai · New Delhi
Branch Office 1 :	168, C.S.T. Road, Kalina, Santacruz East, Mumbai-440098, Maharashtra, India
Tel No.:	91-22-66910822- 24
Fax No.:	91-22-26526079
Email :	fslmumbai@facorsteel.com
Branch Office 2:	Corporate One, Suite 401, Plot No. 5, Jasola, New DelhI-110 044, India
Tel No.:	91-11-40701000
Fax No.:	91-11-41624880
Email :	facordelhi@facorgroup.in
Branch Office 3 :	17^th Floor, Everest House, 46-C, Chowringhee Road, Kolkata-700 071, West Bengal, India
Tel No.:	91-33-40103400
Fax No.:	91-33-40103434
Email :	facorkol@dataone.in
Branch Office 4 :	37-F, Whites Road, 2^nd Floor, Chennai -600 014, Tamilnadu, India
Tel No.:	91-44-28411092-96
Fax No.:	91-44-28411097
Email :	fslchennai@facorsteel.com
Branch Office 5 :	Managanese House, Harbour Road, Visakhapatnam-530 001 Andhra Pradesh, India
Tel No.:	91-891-2569011
Fax No.:	91-891-2564077
Email :	facoralloys@eth.net
Branch Office 6 :	Shreeram Bhavan, Ramdaspeth, Nagpur-440 010, Maharashtra, India
Tel No.:	91-712-2436920-23
Fax No.:	91-712-2432295
Branch Office 7 :	GD-2/10, Chandrasekharpur, Bhubaneswar-751 023, Orissa
Tel No.:	91-674-2302881-82
Fax No.:	91-674-2302612
Email :	facorbbsr@dataone.in
Branch Office 8 :	Office No. 11, 1^st Floor, Orion Computer Services Building, Parswanath Industrial Premises, T-71/1A/1, B. G. Block, MIDC Bhosari, Pune-411026 Maharashtra, India
Tel No.:	91-20-30780744
Fax No.:	91-20-230780743
Email :	fslpune@facorsteel.com

DIRECTORS

(AS ON 31.03.2011)

Name :	Mr. Narayandas Saraf
Designation :	Chairman and Whole Time Director
Address :	B-42, Maharani Bagh, New Delhi, India
Date of Birth/Age :	72 years
Qualification :	B. Com, 1^st Year
Experience :	30 years
Name :	Mr. M. D. Saraf
Designation :	Vice Chairman and Managing Director
Address :	Shreeram Bhawan Ramdaspeth, Nagpur, Maharashtra, India
Date of Birth/Age :	62 years
Qualification :	B. Com, LLB
Experience :	30 years
Name :	Mr. Vinod Saraf
Designation :	Managing Director
Address :	Shreeram Bhawan Ramdaspeth, Nagpur, Maharashtra, India
Date of Birth/Age :	55 years
Qualification :	B. Com, LLB
Experience :	30 years
Name :	Mr. Anurag Saraf
Designation :	Joint Managing Director
Address :	Shreeram Bhawan Ramdaspeth, Nagpur, Maharashtra, India
Date of Birth/Age :	40 years
Qualification :	BE (Electronics)
Experience :	17 years
Name :	Mr. M. B. Thaker
Designation :	Director
Address :	9 Giripeth, Nagpur, Maharashtra, India
Date of Birth/Age :	72 years
Qualification :	B. com
Experience :	40 years
Name :	Mr. A. S. Kapre
Designation :	Director
Address :	A-103, Gulmohar Apartment Ceasar Road, Amboli, Andheri (West), Mumbai, Maharashtra, India
Date of Birth/Age :	61 years
Qualification :	B. Tech., LLB
Experience :	37 years
Name :	Mr. Arye Berest
Designation :	Director
Address :	Hacienda 40-41, Can Furnestr, Spain
Date of Birth/Age :	71 years
Qualification :	Business Studies Polytechnic London
Experience :	37 years
Name :	Mr. P. K. Kukde
Designation :	Director
Address :	122 Telecom Nagar Main Road, Nagpur, Maharashtra, India
Date of Birth/Age :	67 years
Qualification :	MEPHD.
Experience :	35 years
Name :	Mr. Vibhu Bakhru
Designation :	Director
Address :	W-129, Ground Floor, Greater Kailash Part II, New Delhi – 110048, India
Date of Birth/Age :	44 years
Qualification :	C.A.LLB
Experience :	19 years
Name :	Mr. R. V. Dalvi
Designation :	Director (Technical)

KEY EXECUTIVES

Name :	Mr. Amit Pandey
Designation :	General Manager (Legal) and Company Secretary
Name :	Mr. Sushant Chandra Parija
Designation :	Executive Vice President
Name :	Mr. C. V. Raghavan
Designation :	Chief Finance Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(AS ON 30.09.2011)

Category of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	9,587,122	4.64
Bodies Corporate	32,320,783	15.65
Any Others (Specify)	45,038,149	21.81
Directors/Promoters & their Relatives & Friends	45,013,149	21.80
Trusts	25,000	0.01
Sub Total	86,946,054	42.10
(2) Foreign
Bodies Corporate	49,731,044	24.08
Sub Total	49,731,044	24.08
Total shareholding of Promoter and Promoter Group (A)	136,677,098	66.18
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	2,869	-
Financial Institutions / Banks	19,438	0.01
Insurance Companies	4,110	-
Foreign Institutional Investors	60	-
Any Others (Specify)	2,023	-
State Finance Corporation	2,023	-
Sub Total	28,500	0.01
(2) Non-Institutions
Bodies Corporate	7,395,772	3.58
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	49,773,080	24.10
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	9,798,086	4.74
Any Others (Specify)	2,851,143	1.38
Clearing Members	1,214,739	0.59
Non Resident Indians	1,443,394	0.70
NRIs/OCBs	184,119	0.09
Directors & their Relatives & Friends	2,647	-
Trusts	6,244	-
Sub Total	69,818,081	33.81
Total Public shareholding (B)	69,846,581	33.82
Total (A)+(B)	206,523,679	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	206,523,679	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Carbon Steel, Alloy Steel, Stainless Steel in Bar Form (Rounds, RCS, Hexagons and Rolled Products).

Products :

Products Description	Item Code No.
722830-00	Other Bars and Rods not further worked than Hotrolled, Hot - Drawn for Extruded of Other Steel
722210-00	Bars and rods not further worked than hot-rolled, Hot-Drawn or Extruded of Stainless Steel
721800-00	Semi Finished Products of Stainless Steel

· Stainless steel

· Alloy Steel

· Valve Steel

· Free Cutting Steel

· Semi Free Cutting

· Silico Manganese Steel

· Carbon Manganese Steel

· Carbon Steel

Terms :

Selling :

L/C, Cash and Credit (60 days)

Purchasing :

L/C, Cash and Credit (60 days)

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Carbon Alloys and Stainless Steel	MT	--	60000	--
Blooms/ Ingots	MTPA	--	--	410
Rolled Products	MTPA	--	--	32973

GENERAL INFORMATION

Customers :

End Users

No. of Employees :

678 (Approximately) (Office -140, Factory- 522, Branch- 16)

Bankers :

· Bank of India

· Central Bank of India

· State Bank of India

· Syndicate Bank

· Indian Overseas Bank

· State Bank of Bikaner and Jaipur

Facilities :

Secured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
PLR-4% Funded Interest Term Loan Accounts (FITL)	11.275	19.747
Add: Interest accrued and due	0.107	0.244
0% Funded Interest Term Loan Accounts (FITL)	18.420	17.163
Cash Credit Accounts	245.313	211.718
Export Packing Credit Accounts	27.617	4.032
Total	302.732	252.904
NOTES: Secured by hypothecation of stocks of raw-materials, finished products, book debts and other receivables and by way of first charge on fixed assets of the company and guaranteed by two Directors. These are also secured by Inter-company guarantees by Ferro Alloys Corpn. Limited and Facor Alloys Limited as well as by pledge of promoters’ shareholding.
Unsecured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Hire Purchase Credits	0.679	5.716
Inter Corporate Deposits / Loans	175.400	295.400
Add: Interest accrued and due	3.075	14.288
External Commercial Borrowings	134.519	135.689
Total	313.673	451.093

Banking Relations :	--
Auditors :
Name :	Salve and Company Chartered Accountants
Address :	G-3, Yashodhan, Gorepeth, Nagpur, Maharashtra, India
Tel. No.:	91-712-2532354
Email :	Paranjpesatish@bsnl.in
Internal Auditors :
Name :	M. M. Jain and Associates Chartered Accountants
Solicitors :	· Mulla and Mulla · Craige Blunt and Caroe
Group/ Associates Companies :	· Ferro Alloys Corporation Limited · Facor Alloys Limited · Investar Private Limited · Facor Power Limited · Supervision Private Limited · Facor Realty and Infrastructure Private Limited · Precisetec Private Limited · Facor Energy India Limited · Teracota Consultancy Services Private Limited · Facor Electric Limited · Imagetec Private Limited · Facor Solar Limited · Globalscale Investments Private Limited · Rai Bahadur Shreeram and Company Private Limited · Tusta Trading Company Inc. · Shreeram Durgaprasad Ores Private Limited · Trusta Trading Company AG · Saraf Bandhu Private Limited · Cornell Corporation SA. · Best Minerals Limited · FAL Employees Welfare Trust · GDP Infrastructure Private Limited (Formerly Saraf Mor and Company Private Limited) · FACOR Employees Welfare Trust · Vidharba Iron and Steel Corporation Limited · Metique Marketing (India) Private Limited · Shreeram Shipping Services Private Limited · NDS Minerals Private Limited · Suchitra Investment and Leasing Limited · ARK Mercantile Private Limited · Dass Papers Private Limited · Vanita Enterprises Private Limited · Premier Commercial Corporation · Raghavendra Sarkar Venture Private Limited · Geedee Sales Services · YMR Enterprise Private Limited · Godavaridevi Saraf and Sons · V and G Commercial Private Limited · BEC Power Private Limited · Mezeron Enterprises Private Limited · Deepee Sales Corporation

CAPITAL STRUCTURE

(AS ON 31.03.2011)

Authorised Capital :

No. of Shares	Type	Value	Amount
250000000	Equity Share	Re.1/- each	Rs.250.000 Millions
1500000	5% Redeemable Cumulative Preference Shares	Rs.100/- each	Rs.150.000 Millions
	Total		Rs.400.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
206523679	Equity Share	Re.1/- each	Rs.206.524 Millions
1500000	5% Redeemable Cumulative Preference Shares	Rs.100/- each	Rs.150.000 Millions
	Total		Rs.356.524 Millions

Note:

The Authorised Share Capital of the company has been reclassified and increased from Rs.300.000 Millions divided into 2400 lacs Equity shares of Re. 1/- each and 6 lacs 0.01% redeemable Preference Shares of Rs.100/- each to Rs.4000 lacs divided into 2500 lacs Equity Shares of Re. 1/- each and 15 lacs 5% Redeemable Cumulative Preference Shares of Rs. 100/-each.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		356.524	206.524	206.524
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		26.915	26.915	26.915
4] (Accumulated Losses)		(138.045)	(102.645)	(36.698)
NETWORTH		245.394	130.794	196.741
LOAN FUNDS
1] Secured Loans		302.732	252.904	321.546
2] Unsecured Loans		313.673	451.093	471.639
TOTAL BORROWING		616.405	703.997	793.185
DEFERRED TAX LIABILITIES		46.560	19.570	12.960
TOTAL		908.359	854.361	1002.886
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		596.228	345.723	328.637
Capital work-in-progress		4.238	306.329	252.384
INVESTMENT		44.000	44.001	44.001
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	706.900	526.344	588.789
	Sundry Debtors	272.110	314.152	194.726
	Cash & Bank Balances	37.896	25.249	39.690
	Other Current Assets	30.507	0.125	0.010
	Loans & Advances	132.821	123.572	134.454
Total Current Assets		1180.234	989.442	957.669
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	756.125	666.458	456.423
	Other Current Liabilities	154.428	157.714	116.393
	Provisions	5.788	6.962	6.989
Total Current Liabilities		916.341	831.134	579.805
Net Current Assets		263.893	158.308	377.864
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		908.359	854.361	1002.886

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	2681.406	2195.458	3651.070
		Other Income	101.266	121.333	64.356
		TOTAL (A)	2782.672	2316.791	3715.426
Less	EXPENSES
		Manufacturing and Other Expenses	2663.851	2261.126	3621.603
		TOTAL (B)	2663.851	2261.126	3621.603
Less	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		118.821	55.665	93.823
Less	FINANCIAL EXPENSES (D)		72.218	74.628	98.801
	PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		46.603	(18.963)	(4.978)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		54.780	39.711	37.108
	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)		(8.177)	(58.674)	(42.086)
Less	TAX (H)		27.223	7.273	10.652
	PROFIT/ (LOSS) AFTER TAX (G-H) (I)		(35.400)	(65.947)	(52.738)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		(102.645)	(36.698)	16.040
	BALANCE CARRIED TO THE B/S		(138.045)	(102.645)	(36.698)
	EARNINGS IN FOREIGN CURRENCY		380.246	207.951	649.795
	IMPORTS
		Raw Materials	112.393	119.993	225.490
		Capital Goods	0.000	0.000	29.605
		Stores & Spares	2.708	1.832	0.000
	TOTAL IMPORTS		115.101	121.825	255.095
	Earnings/ (Loss) Per Share (Rs.)		(0.17)	(0.32)	(0.26)

QUARTERLY RESULTS

PARTICULARS	30.06.2011
Type	1^st Quarter
Net Sales	781.550
Total Expenditure	771.970
PBIDT (Excl OI)	9.580
Other Income	3.790
Operating Profit	13.370
Interest	19.950
Exceptional Items	0.000
PBDT	(6.580)
Depreciation	13.590
Profit Before Tax	(20.170)
Tax	(0.600)
Provisions and contingencies	0.000
Profit After Tax	(19.570)
Extraordinary Items	0.000
Prior Period Expenses	0.000
Other Adjustments	0.000
Net Profit	(19.570)

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	(1.27)	(2.85)	(1.42)
Net Profit Margin (PBT/Sales)	(%)	(0.30)	(2.67)	(1.15)
Return on Total Assets (PBT/Total Assets}	(%)	(0.46)	(4.39)	(3.27)
Return on Investment (ROI) (PBT/Networth)		(0.03)	(0.45)	(0.21)
Debt Equity Ratio (Total Liability/Networth)		6.25	11.74	6.98
Current Ratio (Current Asset/Current Liability)		1.29	1.19	1.65

LOCAL AGENCY FURTHER INFORMATION

INFORMATION REQUIRED

1. What are your Products? Approximate idea of Quantity produced per year.

Carbon Steel, Alloy Steel, Stainless Steel in Bar form (Rounds, RCS, Hexagons and Rolled Product).

As Cast – Blooms of different sizes

Approx. qty per year :- 38,500 MT

2. What Production-Processes used in the Factory. What kind of Facilities you have :

(For example, continuous casting, ingot, slab thickness, hot and cold mill, process line etc. process summary）

(a) Electric Arc Furnace – 20 to 24 MT Liquid Metal

(b) Ladle Refining Furnace – For refining Steel

(c) Vacuum Degassing Unit – For controlling gas level )2, N2 and H2

(d) Continuous Casting – For casting Blooms and Slab

(e) Pit side facility – For casting Ingots of various sizes

(f) Open Die Forging Unit – For forging Ingots of various sizes and shapes

(g) 24” and 16” Rolling Mill – For rolling various sizes and in Rounds, Billets Hexagons, Angles.

3. Who are your main customers?

Main Customers :-

• Ordnance Factory, Ambajhari, Nagpur
• Ordnance Factory, Kanpur
• BHEL, Haridwar
• BHEL, Govindwal
• BHEL, Tirchi
• BHEL, Hyderabad
• BHEL, Ranipet
• Rifle Factory, Ishapore

• M/s. BOSCH, Nasik

• M/s. Force Motors, Pune
• Dephi TVS, Chennai

4. What “make” are facilities on your Production.

The facilities on your production line are Procured which Manufacturer (which Country).

	Name of Equipment	Model	Make
1	Electric Arc Furnace	SSKD 340	HBB,India
2	Induction Furnace	Medium Frequency 500 Hz	Electrotherm Make
3	Ladle refining furnace	SSKD30	HBB,India
4	Vacuum degassing Unit	Technometals, Germany	SMS/05
5	Bloom caster	2 strand	ISPL
6	Auto mold level controller(AMLC)		SERT France
7	Mold EMS		Rotolec France
8	Forge Shop Press	Hydraulic open die forging press	DAVY, UK
9	Manipulator	Manipulator	GAMA, UK
10	Turn Table	-	GAMA, UK
11	Rolling Mill	24”-3Hi Mill 16”-3 Hi Mill	SSS SSS
12	Heat treatment Normalizing, Annealing, stress relieving (Electrically heated)	6 meter long bogie furnaces	India Furnace
13	Hardening and Solution annealing Furnace(Oil fired)	Batch type	Econe
14	Peeling Machine-4 Nos.		Sai Bhamra and Kieserling
15	Centreless Grinding Machine-8 Nos		Cincinati Bhagwansons

5. Do you have any plan to “invest” in new facilities in the future?

Will you go for high-technology production equipment or you will target low-cost equipment.

Pollution control related facilities will be installed in near future.

6. What kind of trouble / limitations / challenges you have with your existing facilities?

There is no trouble with our existing facilities but some of the technologies of the World are yet to be incorporate which require heavy investments by installing the same we may be able to compete with the best producers of Alloy, Special Steels of the Country.

7. What is your “Future” plan Will you go for :

a) High Production volume

b) More variety of products.

Our future plan is to more variety of products since we are high volume plant

8. Do you plan to collaborate with other Steel Producers, and thus expand Business together?

Yes. We are in the process of discussion.

9. How do you procure your “Input” materials?

We procure input material 90% from domestic sources and 10% by way of Import.

10. From where do you buy your infrastructure?

We do not buy Infrastructure but for our expansion and various products the same is given on contract.

11. How do you dispose-of factory “wastes”.

Solid waste is being disposed off out of factory in the quarry and Hazardous waste is being sent to CHWTSD facility at Butibori.

12. Do you plan to introduce Japanese Production Equipment in future :

Will you like to buy Japanese Equipment?

No plans

13 Will you also be interested in getting Japanese “Technology” for Production?

No plans

14. Are you exporting your products? Please name the countries being exported to.

Yes. We are exporting our steel products to our customers of following Countries.

o U.S.A.

o Italy

o Germany

o U.A.E.

o Saudi

o Taiwan

OVERALL PERFORMANCE

The year 2010-11 saw increase in domestic demand as compared to 2009-10 and there were increased orders from Automobile and Non automobile sectors. The competition grew with more Steel Plants coming up especially with backward integration route with Blast Furnaces, Sponge Iron and Captive Power, with lower rates which has affected our qualities and also net realization. There was an increase in raw material prices by almost 30% over the previous year which resulted in further increase in our working capital requirement to meet the targeted production. The production level in Steel Melting Shop remained almost the same i.e. 38585 MT as compared to 38715 MT of 2009-10. The Rolling Mill production was slightly higher at 36657 MT excluding conversion as compared to 33795 MT in 2009-10. However, there was reduction in the conversion tonnage which was at 17052 MT as compared to previous year’s 22251 MT. The most encouraging feature was increase in production of Forged Round Bars which almost doubled as compared to previous year as the stabilization period of Forging Plant was almost complete. In the Domestic Sales front the tonnage was lower due to steep competition from new Steel producers with backward integration. On the Export front the tonnage increased by almost 40% as European and U.S. markets opened up after a deep recession in 2008-09 and part of 2010.

The Working capital gap created by losses in the first half coupled with increase in working capital demand due to rising Raw Material prices created further problems in achieving targets, resulting in a net loss of Rs.36.100 Millions in a Sales Turnover of Rs.2681.406 Millions during the financial year 2010-11 as compared to net loss of Rs.65.947 Millions in a Sales Turnover of Rs.2195.458 Millions during the year 2009-10.

The company in order to tide over this situation has decided to focus over niche products by higher capacity utilization of Forging Plant. Looking into the market size and demand, the company in the financial year 2011-12 expects to achieve consistent production of 500 MT per month for the first six months and thereafter increase it production to 750 MT per month for the remaining part of the financial year.

PROSPECTS:

The company has entered into the Forged product material in a big way after receiving approval from following customers in 2009-10.

· M/s. Elecon Engineers, Gujarat

· SIEMENS, Kharagpur

· BHEL, Tirchy

· Nuclear Power Corporation Limited

· ThyssenKrup Industries, Pune

· Sugar Industries

· Defence Sector

Apart from normal shafts the company has entered into step shafts, Eccentric shafts, special shafts and dies.

· The company has bagged order of approximately 120.000 Millions from Ordnance Factory Ambajhari, Nagpur in Feb, 2011 which will be executed during the period April to September, 2011.

· Development of new products continues to remain a major thrust of your company for critical end applications and import substitution.

· Number of special grades were developed during the year both for Domestic and Export market. With the Indian economy maintaining its growth momentum by posting 8.6% growth for the year under review and the auto industry in good shape the outlook for Special and Alloy Steel industry is expected to be good ahead.

FINANCE:

The Company has not accepted any fixed deposit from the public during the yea. During the year the promoters of the company were allotted 15,00,000 5% Redeemable Cumulative Preference Shares of Rs.100/- each by converting their interest bearing ICD of equivalent amount. This has not only reduced the debt and interest burden of the company but has also improved the net worth of the company, which got significantly eroded due to continued losses posted by the company during the last three years. In order to enable the company to convert the ICD into Preference shares the Authorised Share Capital of the Company has also been increased from Rs.300.000 Millions to Rs.400.000 Millions. The Authorised Share Capital of the Company now constitutes of Equity shares of Rs.250.000 Millions of Re. 1/- each and % Redeemable Cumulative Preference Shares of Rs.150.000 Millions having a face value of Rs.100/- each.

MANAGEMENT DISCUSSIONS AND ANALYSIS

INDUSTRY STRUCTURE, DEVELOPMENT AND OTHER RELATED MATTERS

The Alloy and Special Steel industry is largely dependent on major industry segment like automobiles, railways, power and engineering. The steel demand growth in the financial year 2010-2011 was mainly driven by the high growth in the automobile, infrastructure and engineering segment in the country. The order booked position of the company showed signs of improvement, particularly in the last quarter, based on the strong demand in the automobile sector, which is growing at a rapid pace. The total vehicle production of 2010-11 as compared to 2009-10 showed growth of 27.45%. The non auto sector is also growing after recessionary period of November, 2008 to December, 2009 as most of the projects are on the up swing. There has been significant change in the demand for Open Die Forged Products in non auto sector and with less competition in this sector, the company has been successful in securing more orders in this segment. The industry, however, is saddled with increased cost of raw materials such as scrap. There was increase of almost 25%-30% in scrap and other raw material prices from September, 2010 to March, 2011. The Alloy and Special Steel industry was however, partially successful in getting price increase of approx. 15% to 18% from February / March, 2011 onwards from its customers. The fluctuation in the price of nickel in London Metal Exchange was also quite strong during the year, which affected Stainless Steel scrap prices.

The Export sector has grown significantly over last 3 months and there is sizeable demand in Stainless Steel and Alloy Steel from Europe, U.S. and other South East Asian Countries. This growth has helped your company in increasing its Export Tonnage from level of 2200 MT in 2009-10 to 3900 MT in 2010-11 and demand is predicted to be sustained in future since European and other Market have picked up after 2 years of dull period.

The passenger vehicle segment continuous to boom and is expected to reach 3 Million vehicle sales in the current fiscal, ahead of the industry’s original target for 2012-13. Maruti, Hundai, Tata Motors are the growth. The major global auto manufacturers have significant and long term investments in India and the industry is hopeful to achieve 10%-12% growth in 2011-12.

OPERATIONAL PERFORMANCE:

Year	Steel Melting Shop Production	Rolling Mill Shop Production	Total Sales
			Quantity	Value (Rs. In Millions)
2010-2011	38585	53709**	32655	2681.406*
2009-2010	38715	56046**	33864	2195.458*

* Includes Value Of By-Product Sale

**Includes Conversion Job Work

TRADE REFERENCE:

· Shubham Steels,

New Iron Market, Itwari, Nagpur, Maharashtra, India

Contact Person: Mr. Kapil Agarwal

Tel No.: 91-712-2760002

FIXED ASSETS:

· Goodwill

· Building

· Plant and Machinery

· Office and Other Equipments

· Furniture and Fixtures

· Vehicles

WEBSITE DETAILS:

PROFILE:

Subject is a Carbon, Alloy, Stainless and Special steel manufacturer in Central India with varied and broad product range, having the most modern state-of-the-art steel processing and quality assurance technologies. It has established updated and modernized manufacturing facilities for achieving consistency of product quality to ensure full customer satisfaction both in domestic and international markets. Its products are well accepted all over the globe and always looking for the implementation of new technique whether it is technical or work environment. The Stainless steel and other specialty critical grade products cater to the most stringent requirements of automobiles, railways, Defence and engineering sectors in India as well as the global markets in developed countries.

To achieve this, a team of qualified and dedicated engineers is striving hard to meet and exceed the stated and implied needs of the customers.

Subject is part of FACOR group established in 1956. It began its operations with Ferro Manganese production and slowly diversified into the production of Ferro Chrome and Charge Chrome. As a major step towards forward integration, it took over took over a mini stainless steel plant in 1978 for manufacturing Carbon, Alloy, Special and Stainless Steels as FACOR (Steel Division). Thereafter, through innovative and sophisticated technological developments, it has been able to develop and manufacture critical grades of alloy and stainless steel to meet stringent requirements of customers both in India and abroad. Erstwhile FACOR (Steel Division) is now known as Subject, an independent Company and is now a alloy steel producer in the country and has been successful in exporting stainless and special stainless steel products all over the world with a focus on developed countries, apart from catering to critical requirements of Automobile, Railways, Defence, Chemical, Heavy Machinery and Engineering sectors in the domestic market.

Subject as part of market oriented product development plan has entered open die forged product market in July 2009 by commissioning advanced DAVY make hydraulic open die forging press of 2000T for catering to the growing demands in Non auto sector industries.

The range of steel grades it produces mostly in the form of hot rolled round bars and squares;

· Carbon Steel, Low Carbon Steel, Medium Carbon Steel, High Carbon Steel.

· Carbon Manganese Steel

· Silico Manganese Steel

· Semi-Free cutting Steel

· Free Cutting Steel

· Tool Steel, Carbon Grade, Alloy Grade.

· Valve Steel

· Alloy Steel

• Plain Chrome Steel,
• High Carbon High Chrome (Ball Bearing Steel)
• Chrome Manganese Steel
• Chrome Nickel Steel
• Chrome Nickel Moly Steel
• Chrome Moly Steel
• Chrome Silicon Steel
• Manganese Moly Steel
• Nickel Moly Steel

· Stainless Steel

o Ferritic Stainless Steel

o Austenitic Stainless Steel

o Martensitic Stainless Steel

o Duplex stainless steel

o Blade quality steel

o Precipitated Hardenable stainless steel.

Apart from the rolled bars, it also manufactures bright bars, in peeled, ground and drawn condition for domestic and export markets, in carbon, alloy and stainless steel grades. Further it also has started supply of forged products like rounds and squares in size range of 160 mm to 600 mm in various supply conditions like as forged, heat treated and proof machined. In addition to that Profiles such as hexagons; angles; flats; trapezium and squares in stainless steels are also produced.

BUSINESS DESCRIPTION

Subject is an India-based company engaged in the production of steel products. Its primary activity is the manufacture and sale of stainless steels and specialty steels. The Company uses a number of technological equipments during the process, including electric arc furnace, induction furnace, cored wire injection and electromagnetic stirrer, among others. Subject caters for such industries as automobile and auto component industry, boilers, construction, engineering components, fasteners industry, forging, petrochemical, railway springs, surgical equipment industry, as well as tool, valve and sugar industries. The Company’s product portfolio includes stainless steel, alloy steel, valve steel, free cutting steel, semi free cutting steel, silico manganese steel, carbon manganese steel and carbon steel. For the nine months ended 31 December 2010, Subject revenues increased 20% to RS2.07B. Net loss decreased 67% to RS27.3M. Revenue reflects an increase in income from operations and higher other operating income. Lower loss also reflects a decrease in interest expenses and an increase in operating margin. Subject is engaged in the business of steel products, manufacturing carbon, alloy, stainless and special steel.

BOARD OF DIRECTORS

Mr. Vibhu Bakhru

Mr. Vibhu Bakhru serves as Non-Executive Independent Director of Subject. He is an Advocate. He is member of the Bar Council of India and is also a member of the Institute of Chartered Accountants of India. Mr. Bakhru practices as an Advocate in the Delhi High Court and the Suprenie Court of India. He has experience in dealing with legal aspects of commercial, corporate and taxation lawn. He has over 15 years Experience in Legal and Accounts. He serve as Director of Hindustan Everest Tools Limited and Filatex India Limited.

Mr. A. S. Kapre

Mr. A. S. Kapre is the Non-Executive Independent Director of Subject. He has over 34 years experience mainly in Project and Corporate lending, Rehabilitation Finance and Risk Management. He holds B. Tech., LLB. He has been a director of Ferro Alloys Corporation Limited Facor Alloys Limited.

Mr. Anurag Saraf

Mr. Anurag Saraf serves as the Joint Managing Director, Whole Time Director of Subject. He holds a B.E. degree. He has experience in Business Administration. He is a Director of FACOR Power Limited, FACOR Realty and Infrastructure Limited, Vidarbha Iron and Steel Corpn. Limited.

Mr. M. B. Thaker

Mr. M. B. Thaker serves as the Non-Executive Independent Director of Subject. He has over 47 years business experience in Manganese Mining. He holds a B.Com Degree. He has been a Director of Ferro Alloys Corporation ltd.

Mr. Arye Berest

Mr. Arye Berest serves as the Non-Executive Non-Independent Director of Subject. He has experience in metals and minerals as well as finance and international trade. He is Qualified Business studies Polytechniques from London. He is a Director of Ferro Alloys Corporation Limited and FACOR Alloys Limited.

Mr. P. K. Kukade

Mr. Prabhakar Keshaorao Kukde, Ph.D. serves as Non-Executive Independent Director of Subject. He is a qualified professional with Master degree in Electrical Engineering and is also a Ph.D. Research Scholar in Electrical Engineering from University of Roorkee. He has worked in the capacity of Executive Director of Tata Power Limited and has more than 35 years of experience in Power Generation, Transmission and Distribution. Mr. Kukde has been actively associated with many Power projects and has also headed many committees formulated by Central and State Governments on issues such as Renovation, Modemization, Operation and Maintenance of Power Plants. He is also the recipient of CBIP's prestigious “Diamond Jubilee Award” for Contribution in Energy Sector in India.

NEWS:

WITHDRAWAL OF NOMINATION BY BANK OF INDIA IN THE BOARD OF THE COMPANY

02 August 2011

India, Aug. 02 -- Facor Steels Limited has informed BSE that, the Bank of India vide its letter dtd. July 13, 2011 addressed to the Company has informed that Mr. G. L. N. Sastry has retired from the service of the Bank on attaining Superannuation on June 30, 2011. As a consequence of his retirement from the service of the Bank, Mr. G. L. N. Sastry ceases to be the Nominee Director for the Bank on the Board of the Company. The Board of Directors accordingly, based on the letter received from the Bank acknowledged the services rendered by Mr. G. L. N. Sastry during his tenure as Nominee Director for the Bank, in the Board of the Company and passed resolution to this effect. Published by HT Syndication with permission from Accord Fintech BSE.

OUTCOME OF BOARD MEETING

25 April 2011

India, April 25 -- Facor Steels Limited has informed BSE that the Board of Directors of the Company at its meeting held on April 20, 2011, has approved the re-appointment of Mr. N. D. Saraf as Whole-time Director of the Company for a further period of 5 year w.e.f. May 01, 2011. The existing term of Mr. N. D. Saraf as Whole-time Director is expiring on April 30, 2011. His re-appointment would be subject to the approval of the members in the ensuing Annual General Meeting. Published by HT Syndication with permission from Accord Fintech BSE.

FACOR STEELS INCHES UP ON ICRA REAFFIRMING ITS RATING

15 December 2010

India, Dec. 15 -- Facor Steels is currently trading at Rs.2.20, up by 0.01 points or 0.46% from its previous closing of Rs.2.19 on the BSE. The scrip opened at Rs.2.20 and has touched a high and low of Rs.2.24 and Rs2.16 respectively. So far 11601 shares were traded on the counter. The BSE group 'B' stock of face value Re 1 has touched a 52 week high of Rs.3.42 on 08-Oct-2010 and a 52 week low of Rs.2.00 on 19-Aug-2010.Last one week high and low of the scrip stood at Rs.2.24 and Rs.2.05 respectively. The current market cap of the company is Rs.454.400 Millions. The promoters holding in the company stood at 66.18% while Institutions and Non-Institutions held 0.01% and 33.81% respectively. The credit rating agency, ICRA has reaffirmed LBB+ rating assigned to Rs.369.500 Millions fund based limits of FACOR Steels. The rating agency has also reaffirmed the A4+ rating assigned to Rs.410.000 Millions non-fund based bank limits of the company. The long term rating has been assigned a stable outlook. The ratings reaffirmation takes into account the continued losses on account of moderate profitability, high gearing, and weak debt protection indicators. The company is involved in manufacturing of steel products from its unit located in Nagpur in Maharashtra. The company manufactures stainless steel as well as alloy/carbon steel products, which largely caters to the requirement of automobile component-makers, forgers and Bright bar exporters. Published by HT Syndication with permission from Accord Fintech.

ICRA REAFFIRMS LBB+ RATING TO FACOR STEELS' BANK FACILITIES

14 December 2010

India, Dec. 14 - The credit rating agency, ICRA has reaffirmed LBB+ rating assigned to Rs.369.500 Millions fund based limits of FACOR Steels. The rating agency has also reaffirmed the A4+ rating assigned to Rs.410.000 Millions non-fund based bank limits of the company. The long term rating has been assigned a stable outlook. The ratings reaffirmation takes into account the continued losses on account of moderate profitability, high gearing, and weak debt protection indicators. The company is involved in manufacturing of steel products from its unit located in Nagpur in Maharashtra. The company manufactures stainless steel as well as alloy/carbon steel products, which largely caters to the requirement of automobile component-makers, forgers and Bright bar exporters. Published by HT Syndication with permission from Accord Fintech.

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.49.07
UK Pound	1	Rs.76.65
Euro	1	Rs.66.17

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	4
--PROFITABILIRY	1~10	2
--LIQUIDITY	1~10	3
--LEVERAGE	1~10	3
--RESERVES	1~10	2
--CREDIT LINES	1~10	2
--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		28

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.