MIRA
INFORM REPORT
|
Report Date : |
12.03.2013 |
IDENTIFICATION DETAILS
|
Name : |
ELECTROSTEEL STEELS LIMITED |
|
|
|
|
Registered
Office : |
801, Uma Shanti Apartments, Kanke Road, Ranchi – 834008,
Jharkhand |
|
|
|
|
Country : |
India |
|
|
|
|
Financials (as
on) : |
31.03.2012 |
|
|
|
|
Date of
Incorporation : |
20.12.2006 |
|
|
|
|
Com. Reg. No.: |
012663 |
|
|
|
|
Capital
Investment / Paid-up Capital : |
Rs.20347.350 Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L27310JH2006PLC012663 |
|
|
|
|
Legal Form : |
A Public Limited Liability company. The company’s Shares are Listed on
the Stock Exchange. |
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|
|
|
Line of Business
: |
Manufacturer of Integrated Steel, Pig Iron and D I Pipe Plant |
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|
|
|
No. of Employees
: |
1000 (Approximately) |
RATING & COMMENTS
|
MIRA’s Rating : |
B (32) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
Maximum Credit Limit : |
USD 77000000 |
|
|
|
|
Status : |
Moderate |
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|
|
|
Payment Behaviour : |
Slow but correct |
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|
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Litigation : |
Clear |
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|
Comments : |
Subject is an established company having a moderate track record. It has
recorded loss during 2012. External borrowings appear to be increasing
tremendously over years. However, trade relations are reported as fair. Business is active.
Payment terms are slow but correct. 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 – June 30, 2012
|
Country Name |
Previous Rating (31.03.2012) |
Current Rating (30.06.2012) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
India is developing into an open-market economy, yet traces
of its past autarkic policies remain. Economic liberalization, including industrial
deregulation, privatization of state-owned enterprises, and reduced controls on
foreign trade and investment, began in the early 1990s and has served to
accelerate the country's growth, which has averaged more than 7% per year since
1997. India's diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a multitude of
services. Slightly more than half of the work force is in agriculture, but
services are the major source of economic growth, accounting for more than half
of India's output, with only one-third of its labor force. India has
capitalized on its large educated English-speaking population to become a major
exporter of information technology services and software workers. In 2010, the
Indian economy rebounded robustly from the global financial crisis - in large
part because of strong domestic demand - and growth exceeded 8% year-on-year in
real terms. However, India's economic growth in 2011 slowed because of persistently
high inflation and interest rates and little progress on economic reforms. High
international crude prices have exacerbated the government's fuel subsidy
expenditures contributing to a higher fiscal deficit, and a worsening current
account deficit. Little economic reform took place in 2011 largely due to
corruption scandals that have slowed legislative work. India's medium-term
growth outlook is positive due to a young population and corresponding low
dependency ratio, healthy savings and investment rates, and increasing
integration into the global economy. India has many long-term challenges that
it has not yet fully addressed, including widespread poverty, inadequate
physical and social infrastructure, limited non-agricultural employment
opportunities, scarce access to quality basic and higher education, and
accommodating rural-to-urban migration.
|
Source
: CIA |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CARE |
|
Rating |
LONG TERM BANK FACILITIES : CARE BBB |
|
Rating Explanation |
Moderate degree of safety and moderate credit risk |
|
Date |
23.04.2012 |
|
Rating Agency Name |
CARE |
|
Rating |
SHORT TERM BANK FACILITIES : CARE A3 |
|
Rating Explanation |
Moderate degree of safety and higher credit risk |
|
Date |
23.04.2012 |
RBI DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available RBI Defaulters’ list.
EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter in
the publicly available EPF (Employee Provident Fund) Defaulters’ list as of
31-03-2012.
LOCATIONS
|
Registered Office : |
801, Uma Shanti Apartments, Kanke Road, Ranchi – 834008, Jharkhand,
India |
|
Tel. No.: |
Not Available |
|
Fax No.: |
Not Available |
|
E-Mail : |
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|
Website : |
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Head Office : |
G K Tower, 2nd & 3rd Floor, 19, Camac Street, Kolkata - 700 017, West Bengal, India |
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|
Factory : |
Village Siyljori, PO: Jogidih, PS: Bangaria, District Bokaro – 828303,
Jharkhand, India |
|
E-Mail : |
DIRECTORS
As on 31.03.2012
|
Name : |
Mr. Binod Khaitan |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. Umang Kejriwal |
|
Designation : |
Directors |
|
|
|
|
Name : |
Mr. Naresh Pachisia |
|
Designation : |
Directors |
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|
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|
Name : |
Mr. Lalit Kumar Singhi |
|
Designation : |
Directors |
|
|
|
|
Name : |
Mr. Sunil V Diwakar |
|
Designation : |
Nominee Director |
|
|
|
|
Name : |
Mr. Lawrence M Roy |
|
Designation : |
Alternate Director to Mr. Sunil V Diwakar |
|
|
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|
Name : |
Mr. Nigam Chander Bahl |
|
Designation : |
Whole-time Director |
KEY EXECUTIVES
|
Name : |
Mr. Vikram Saraogi |
|
Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 31.12.2012
|
Category of
Shareholder |
Total
No. of Shares |
%
of Total No. of Shares |
|
|
|
|
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
|
|
|
|
|
866750000 |
39.64 |
|
|
866750000 |
39.64 |
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
866750000 |
39.64 |
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
13502696 |
0.62 |
|
|
1113318 |
0.05 |
|
|
15305000 |
0.70 |
|
|
9699791 |
0.44 |
|
|
39620805 |
1.81 |
|
|
|
|
|
|
354282912 |
16.20 |
|
|
|
|
|
|
65387450 |
2.99 |
|
|
140894117 |
6.44 |
|
|
719799739 |
32.92 |
|
|
21533217 |
0.98 |
|
|
2735368 |
0.13 |
|
|
694939383 |
31.78 |
|
|
591771 |
0.03 |
|
|
1280364218 |
58.55 |
|
Total Public
shareholding (B) |
1319985023 |
60.36 |
|
Total (A)+(B) |
2186735023 |
100.00 |
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
0 |
0.00 |
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
Total (A)+(B)+(C) |
2186735023 |
0.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturer of Integrated Steel, Pig Iron and D I Pipe
Plant |
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Products : |
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GENERAL INFORMATION
|
No. of Employees : |
1000 (Approximately) |
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Bankers : |
· State Bank of India · Allahabad Bank · Andhra Bank · Oriental Bank of Commerce · Bank of Baroda · Punjab and Sind Bank · Bank of India · Punjab National Bank · Bank of Maharashtra · State Bank of Hyderabad · Canara Bank · State Bank of Mysore · Central Bank of India · State Bank of Patiala · Corporation Bank · State Bank of Travancore · Dena Bank · Syndicate Bank · The J and K Bank Limited · ICICI Bank Limited · UCO Bank · Union Bank of India · Indian Bank · United Bank of India · Indian Overseas Bank ·
Vijaya Bank |
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Facilities : |
(Rs.
In Millions)
Notes: Long Term Loan 1) The Senior Debts and External Commercial Borrowings from Bank and others are secured by: (a) First ranking pari passu mortgage and charge on all immovable and movable properties including fixed assets, plant and machinery (both tangible & intangible), present and future, on all bank accounts in relation to the Project and assignment of project agreements, subject to charges created / to be created in favour of working capital lenders on the current assets for securing Working Capital Facilities; and (b) Pledge of 500,000,000 Equity Shares of the Company held by Electrosteel Castings Limited. 2) The Subordinate Debts from Bank and others are secured by a second charge, which shall be subject to and subsurvient to the first charge created / to be created as in (1) above. 3) Securitization Loan is secured by : (a) Assignment of receivables pertaining to sale of two of the products; and (b) Second charge over the fixed assets both present and future of the Company ranking pari passu with existing term lenders as in (1) & (2) above and the working capital lenders. 4) Buyers Credit (appearing under current liabilities) are secured by letter of credit issued by lenders. 5) Loan from Others - Rs.5000.000 Millions is secured by : (a) Second charge on all movable assets (including all receivables and intangibles) both present and future; and (b) Second charge over the rights, titles and interest of the Company in, to and under all the assets of the project and all the project documents, contracts, insurance policies, clearances, permit/approvals; and (c) First mortgage of a piece of land with factory building thereon owned by Electrosteel Castings Limited. 6) Other Loan of Rs.1380.000 Millions is secured by way of Corporate Guarantee from Electrosteel Castings Limited. Short Term Loans Working Capital facility from a Bank is secured by way of first charge over current assets and second charge over the fixed assets of the company, both present and future, pari-passu with other Lenders. The facility carries interest of base rate plus spread (being 3.90%) of the Lending Bank. |
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Banking
Relations : |
-- |
|
|
|
|
Financial Institution : |
· IL and FS Financial Services Limited · HUDCO · LIC of India |
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|
|
|
Auditors : |
|
|
Name : |
B Chhawchharia and Company Chartered Accountants |
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|
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Related Parties : |
· Akshara Manor Private Limited · Global Export Limited · Avalokiteshwar Vallnv Limited · Greenchip Trexim Private Limited · Badrinath Industries Limited · Malay Commercial Enterprises Limited · Bose Estates Private Limited · Murari Investment and Trading Company Limited · Calcutta Diagnostics Centre Private Limited · Oxford Heights Private Limited · Cubbon Marketing Private Limited · Quinline Dealcomm Private Limited · Electrocast Sales India Limited · Resina Developers Private Limited · Electrosteel Aviation Limited · Sigma Commercials Private Limited · Electrosteel Thermal Coal Limited · Sri Gopal Investments Ventures Limited · Ellenbarrie Chemical Allied Private Limited · Tulsi Enclave Private Limited · Ellenbarrie Developers Private Limited · Tulsi Highrise Private Limited · Escal Finance Services Limited · Utkal Investments Limited · Gaushree Enterprises Uttam Commercial Co. Limited · G. K. Investments Limited · Wilcox Merchants Private Limited · G. K. and Sons Private Limited · Electrosteel Castings Limited · Electrosteel USA LLC · Electrosteel Europe SA · Lanco Industries Limited · Electrosteel Algeria SPA · Singardo International PTE Limited · Electrosteel Castings (UK) Limited · Waterfab LLC ·
Electrosteel Thermal Power Limited |
CAPITAL STRUCTURE
After 07.08.2012
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
3000000000 |
Equity Shares |
Rs.10/- each |
Rs.30000.000 Millions |
|
|
|
|
|
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
2186735023 |
Equity Shares |
Rs.10/- each |
Rs.21867.350
Millions |
|
|
|
|
|
As on 31.03.2012
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
3000000000 |
Equity Shares |
Rs.10/- each |
Rs.30000.000 Millions |
|
|
|
|
|
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
2034735023 |
Equity Shares |
Rs.10/- each |
Rs.20347.350
Millions |
|
|
|
|
|
Notes:
Particulars of Equity
Shareholders holding more than 5% Shares at Balance Sheet date
|
Name of Shareholders |
No. of Shares |
% Holding |
|
|
|
|
|
Electrosteel Castings Limited |
708,000,000 |
34.80% |
|
Stemcor Cast Iron Investments Limited |
400,909,646 |
19.70% |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
20347.350 |
20347.350 |
16657.630 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
(1160.188) |
337.982 |
0.000 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
19187.162 |
20685.332 |
16657.630 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
52323.393 |
32831.567 |
24693.559 |
|
|
2] Unsecured Loans |
0.000 |
0.000 |
0.000 |
|
|
TOTAL BORROWING |
52323.393 |
32831.567 |
24693.559 |
|
|
DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
71510.555 |
53516.899 |
41351.189 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
15045.377 |
6689.000 |
2016.327 |
|
|
Capital work-in-progress |
67299.923 |
52433.933 |
36856.002 |
|
|
|
|
|
|
|
|
INVESTMENT |
225.316 |
671.318 |
1606.037 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
1948.589
|
369.146 |
0.000 |
|
|
Sundry Debtors |
9.337
|
5.077 |
0.000 |
|
|
Cash & Bank Balances |
790.834
|
834.311 |
943.206 |
|
|
Other Current Assets |
54.529
|
37.281 |
0.000 |
|
|
Loans & Advances |
4992.684
|
5821.356 |
793.008 |
|
Total
Current Assets |
7795.973
|
7067.171 |
1736.214 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
1213.289
|
45.204 |
0.000 |
|
|
Other Current Liabilities |
17604.661
|
13282.288 |
845.303 |
|
|
Provisions |
38.084
|
17.031 |
18.265 |
|
Total
Current Liabilities |
18856.034
|
13344.523 |
863.568 |
|
|
Net Current Assets |
(11060.061)
|
(6277.352) |
872.646 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.177 |
|
|
|
|
|
|
|
|
TOTAL |
71510.555 |
53516.899 |
41351.189 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
606.876 |
74.319 |
0.000 |
|
|
|
Other Income |
4.181 |
2.200 |
0.000 |
|
|
|
TOTAL (A) |
611.057 |
76.519 |
0.000 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Materials Consumed |
880.468 |
119.659 |
|
|
|
|
Changes in Inventories of Finished Goods, Work-in-Progress |
(128.803) |
(23.289) |
|
|
|
|
Employee Benefits Expense |
75.370 |
1.388 |
|
|
|
|
Other expenses |
240.106 |
13.886 |
|
|
|
|
TOTAL (B) |
1067.141 |
111.644 |
0.000 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
(456.084) |
(35.125) |
0.000 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
802.283 |
15.778 |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
(1258.367) |
(50.903) |
0.000 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
239.455 |
10.432 |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAX
(E-F) (G) |
(1497.822) |
(61.335) |
0.000 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
0.348 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
(1498.170) |
(61.335) |
0.000 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN FOREIGN
CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
9.423 |
0.000 |
0.000 |
|
|
TOTAL EARNINGS |
9.423 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
807.438 |
0.000 |
0.000 |
|
|
|
Stores & Spares |
52.935 |
0.000 |
0.000 |
|
|
|
Capital Goods |
6059.031 |
14718.741 |
10438.991 |
|
|
TOTAL IMPORTS |
6919.404 |
14718.741 |
10438.991 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
(0.74) |
(0.03) |
0.00 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2012 |
30.09.2012 |
31.12.2012 |
|
|
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Net Sales |
128.800 |
03.500 |
625.900 |
|
Total Expenditure |
226.400 |
141.300 |
788.200 |
|
PBIDT (Excl OI) |
(97.600) |
(137.800) |
(162.300) |
|
Other Income |
00.800 |
00.400 |
00.200 |
|
Operating Profit |
(96.800) |
(137.500) |
(162.100) |
|
Interest |
229.900 |
205.200 |
341.000 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
(326.800) |
(342.600) |
(503.100) |
|
Depreciation |
135.300 |
136.800 |
136.800 |
|
Profit Before Tax |
(462.000) |
(479.400) |
(639.900) |
|
Tax |
0.000 |
0.200 |
0.000 |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
(462.000) |
(479.600) |
(639.900) |
|
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 |
(462.000) |
(479.600) |
(639.900) |
KEY RATIOS
|
PARTICULARS |
|
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
PAT / Total Income |
(%) |
(245.18) |
(80.16) |
0.00 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
(246.81) |
(82.53) |
0.00 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
(6.56) |
(0.45) |
0.00 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
(0.08) |
0.00 |
0.00 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt/Networth) |
|
2.73 |
1.59 |
1.48 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
0.41 |
0.53 |
2.01 |
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check List by Info
Agents |
Available in Report
(Yes / No) |
|
1] |
Year of Establishment |
Yes |
|
2] |
Locality of the firm |
Yes |
|
3] |
Constitutions of the firm |
Yes |
|
4] |
Premises details |
No |
|
5] |
Type of Business |
Yes |
|
6] |
Line of Business |
Yes |
|
7] |
Promoter's background |
No |
|
8] |
No. of employees |
No |
|
9] |
Name of person contacted |
No |
|
10] |
Designation of contact person |
No |
|
11] |
Turnover of firm for last three years |
Yes |
|
12] |
Profitability for last three years |
Yes |
|
13] |
Reasons for variation <> 20% |
-- |
|
14] |
Estimation for coming financial year |
No |
|
15] |
Capital in the business |
Yes |
|
16] |
Details of sister concerns |
Yes |
|
17] |
Major suppliers |
No |
|
18] |
Major customers |
No |
|
19] |
Payments terms |
No |
|
20] |
Export / Import details (if applicable) |
No |
|
21] |
Market information |
-- |
|
22] |
Litigations that the firm / promoter involved in |
-- |
|
23] |
Banking Details |
Yes |
|
24] |
Banking facility details |
Yes |
|
25] |
Conduct of the banking account |
-- |
|
26] |
Buyer visit details |
-- |
|
27] |
Financials, if provided |
Yes |
|
28] |
Incorporation details, if applicable |
Yes |
|
29] |
Last accounts filed at ROC |
Yes |
|
30] |
Major Shareholders, if available |
Yes |
|
31] |
Date of Birth of Proprietor/Partner/Director, if available |
No |
|
32] |
PAN of Proprietor/Partner/Director, if available |
No |
|
33] |
Voter ID No of Proprietor/Partner/Director, if available |
No |
|
34] |
External Agency Rating, if available |
Yes |
OPERATIONS
The Company is setting up a 2.2 MTPA integrated steel and Ductile Iron (DI) Pipe project, at Siyaljori village, in Bokaro District, in the state of Jharkhand, which is about 22 kms from Bokaro city, a well developed industrial town of Jharkhand.
During the project implementation process, some modifications were suggested by the technical experts to meet the technical superiority and efficiency improvement of the plant. Hence, for better balancing of the product with optimized product mix and better value addition, the Company is contemplating to enhance the plant capacity from 2.2 MTPA to 2.51 MTPA. The enhanced capacity of the plant is based on Blast Furnace (BF) - Basic Oxygen Furnace (BOF) - Billet Caster and Hot Rolling Route.
One of the Blast Furnaces (350 M3) out of the three, has commenced operation of pig iron in September, 2010. The Company has taken shut down of the above Blast Furnace for synchronization with other facilities and the same was restarted subsequently. Currently, the said furnace is giving sales to the Company. The Company has also started production of Ductile Iron Pipes from its plant.
The Company's plant is at its advance stage of completion and its operations are currently in a nascent stage. Due to a variety of technical reasons, the plant has undergone improvements and changes, which will in turn benefit the operations of the Company in the long run.
The target completion date of the balance facilities have been extended by few months. The main reason for the delay was due to sudden decrease in availability of Chinese manpower, due to guidelines issued by the Central Government of India on Visa Policy restricting the Chinese manpower with work visa. This was beyond the control of Company's management. However, the Company made significant efforts to mitigate the effect of this Force Majeure situation with the following alternative plans;
· Appointment of local Sub-contractors under the supervision of Chinese Contractors.
· Reducing the scope of Chinese Contractors and offloading the same to Indian Contractors.
Subsequently, the Central Government of India has allowed work permits to a specified number of Chinese manpower, since then the work at the site is going on smoothly. The Company is confident in achieving the revised completion target in the current financial year.
The project cost for the earlier 2.2 MTPA plant was Rs.72620.000 Millions and the revised project cost for the 2.51 MTPA plant is estimated at Rs.95620.000 Millions. The revised cost of the project has been verified by Lenders Independent Engineer and vetted by Mecon Limited. The estimated additional capital expenditure required for capacity enhancement would be around Rs.12360.000 Millions and for infrastructural/other facilities and efficiency improvement Rs.10640.000 Millions. The above additional cost of Rs.12360.000 Millions is proposed to be funded in the debt to equity ratio of 2:1. Out of the above debt requirement of Rs.8240.000 Millions, their Lead Banker, State Bank of India has sanctioned Rs.2500.000 Millions with a provision of interim disbursement of 40% of the sanctioned amount. Proposal with other banks is at an advance stage and they are hopeful to complete the same very soon.
The Company had also proposed to raise Rupee Term Loan of around Rs.22000.000 Millions by securitizing the future receivables from the sale of DI pipe and Pig iron with various banks. For securitisation of the above, the Company has entered into an Off-take agreement with Stemcor India Private Limited and Electrosteel Castings Limited for off-taking DI Pipes and Pig Iron for a period of 12 years. Out of the above requirement, State Bank of India has sanctioned Rs.6000.000 Millions and also disbursed 40% of the sanctioned amount as interim disbursement pending full tie-up. The proposal with other banks is at an advance stage and they are hopeful to complete it very soon. A part of the proceeds from the securitization of future receivables will be utilised in meeting expenditure towards other capital expenditures/implementing systems, ensuring efficiency improvement and redundancies improvement in Feeder sections like Sinter Plant, Pellet Plant, Coke Oven, Control Systems, Material Handling and other allied facilities
OVERVIEW
The Company is promoted by Electrosteel Castings Limited (ECL) to setup a 2.2 MTPA Integrated Steel and Ductile Iron (DI) Pipes project in the district of Bokaro, Jharkhand. Pursuant to group's strategy of focusing on identification of opportunities for backward integration, new DI pipe capacity as well as investment in the steel sector, ECL has been allotted mining blocks of iron ore and coking coal in the state of Jharkhand and has promoted this Company for implementing the integrated steel and DI pipe plant.
ECL, the Promoter of the Company, is a premier manufacturer of Cast Iron pipes for over four decades and DI Pipes since last 16 years. For the fiscal year 2010-11, ECL recorded consolidated net sales of Rs.18725.597 Millions. ECL has four manufacturing facilities, two located at Khardah and Haldia, both in the State of West Bengal, one at Elavur in the State of Tamil Nadu and one Coal washery plant at Parbatpur in the State of Jharkhand.
During the project implementation process, some modifications were suggested by the technical experts to meet the technical superiority and efficiency improvement of the plant. Hence, for better balancing of the product with optimized product mix and better value addition, the Company is contemplating to enhance the plant capacity from 2.2 MTPA to 2.51 MTPA. The enhanced capacity of the plant is based on Blast Furnace (BF) - Basic Oxygen Furnace (BOF) - Billet Caster and Hot Rolling Route.
The enhanced capacity of the plant will produce 1.45 MTPA of long steel products, comprising 0.60 MTPA wire rods and 0.85 MTPA of reinforcement bars in straight lengths, bundles and plain rounds. The plant will have a 0.33 MTPA DI pipe production facility in the same complex and will be provided with hot metal from the Blast Furnaces. The plant will also have production facilities for 0.33 MTPA of Commercial Billets and 0.40 MTPA of Pig Iron.
The Company will be manufacturing basically the long steels which will be used as construction steel along with intermediary products like commercial billets and pig iron. The Company will also produce DI Pipes.
The Company has acquired approximately 2,187.82 acres of land for the proposed plant, taking into account the scope for future expansion.
INDUSTRY STRUCTURE
The Indian steel industry is broadly classified into two groups: Primary steel producers and Secondary steel producers.
Primary steel producers has backward integration and normally has a higher capacity over 1.0 MTPA. The manufacturing process starts with steel making from Iron ore. The investment needed is also much higher as compared to secondary producers.
Secondary producers essentially have mini steel plants with capacities below 1.0 MTPA. This category mainly employs Electric Arc Furnace (EAF) or Induction Furnace (IF) route, which use scrap and sponge iron or a mix of both as raw materials to produce steel. This group also consists of processors and re-rollers of steel products. Secondary producers primarily manufacture long products and the route adopted by them is highly energy intensive for which they have to depend upon the purchased power.
Although, there are over 3,500 varieties of regular and special steel available, steel products can be broadly classified into two basic types according to their shape viz. flats and longs. All finished steel products are made from semifinished steel that comes in the form of slabs, billets and blooms.
GLOBAL STEEL INDUSTRY
Based on World Steel Association data, the world's crude steel production has reached a level of 1527 MTPA in the CY 2011. The crude steel production in India has reached 72.2 MTPA . The steel production has increased by 6.8 % as compared to the CY 2010. This was the 2nd consecutive year where the growth was positive after negative growth in 2009. China has maintained its leadership position with the production of 695.5 MTPA followed by Japan with 107.6 MTPA. India's steel production has registered a growth of 5.7% in CY 2011 as compared to previous CY while china has shown growth of 8.9 %. Asian countries have a lion's share of 64% of total world's steel production. This is also visible from the economic growth of these countries as compared to western countries.
India's steel industry is likely to grow at similar rate in the next few years. The steel production is increasing in line with the projection made in Annual Budget and the infrastructure investments planned by the government. Sectors like Roads, Highways, Airports, Power Generation, Power distribution etc are expected to have a robust growth.. The targeted steel production in India by 2019-2020 is over 100 MTPA. The steel production in India is likely to grow at a CAGR of 7-8% per annum as indicated by the government and external research.
INDIAN STEEL INDUSTRY
India has moved to 4th position among the top steel producing nations in the world. Considering the substantial increase in outlay for construction sector, the demand for steel is going to be strong. Per capita consumption of steel in India is low at 56.3 kg as compared to 445 Kg for China and world average of 220.8 kg. As India is on a growth path, steel which is the basic ingredient will be needed for achieving the desired growth in GDP.
FINANCIAL PERFORMANCES
Since
the project is under implementation and only one Blast Furnace (i.e a part of
the entire facility) had commenced its operation and started to produce pig
iron and D.I Pipes. The Company had only recorded the net turnover of
Rs.577.881 Millions in the year ended 2012. After the adjustment of other
expenditures, the earnings before Interest, depreciation, taxation and
amortization is Rs.(456.084) Millions. The Profit after Tax for the year 2012
is Rs.(1498.170) Millions.
CONTINGENT
LIABILITIES
(Rs. In Millions)
|
Particulars |
31.03.2012 |
31.03.2011 |
|
Show cause notice from Central Excise Authorities alleging wrong availment of Cenvat credit |
158.664 |
158.664 |
|
Contested demand of Income Tax (AY 2008-09 & AY 2009-10) |
27.025 |
0.000 |
|
Bills Discounted with Bank Sales Tax litigation |
89.221 |
0.000 |
|
Civil and criminal proceedings pending against the Company, the financial liability thereof, if any, is unascertainable. |
7.839 |
7.839 |
UNAUDITED
FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2012
(Rs.
In Millions)
|
Particulars |
Three months ended |
Nine months ended |
||
|
31.12.2012 |
30.09.2012 |
31.12.2012 |
||
|
|
Unaudited |
Unaudited |
Unaudited |
|
|
1 |
Income from
Operations |
|
|
|
|
|
(a) Net sales/income from operations (Net of excise duty) |
550.593 |
2.916 |
673.277 |
|
|
(b) Other Operating Income |
75.343 |
0.557 |
84.948 |
|
|
Total income from operations (net) |
625.936 |
3.473 |
758.225 |
|
2 |
Expenses |
|
|
. |
|
|
(a) Cost of materials consumed |
952.574 |
8.126 |
1019.211 |
|
|
(b) Purchases of stock-in trade |
- |
|
|
|
|
(c) Changes in inventories of finished goods. work-in-progress and stock in trade |
(244.005) |
0.097 |
(150.269) |
|
|
(d) Employee benefits expense |
16.223 |
16.083 |
49.951 |
|
|
(e) Depreciation and Ammortisation Expenses |
136.762 |
136.756 |
408.794 |
|
|
(f) Other Expenses (Any item exceeding 10% of total expenses relating to continuing operations to be shown separately) |
63.401 |
116.986 |
237.030 |
|
|
Total expenses |
924.955 |
278.048 |
1564.717 |
|
3 |
Profit/ (Loss) from
operations before other income, finance costs. and exceptional items (1-21 |
(299.019) |
(274.575) |
(806.492) |
|
4 |
Other Income |
0.197 |
0.366 |
1.354 |
|
5 |
Profit/ (Loss) from
operations before other income, finance costs. and exceptional items (3+4) |
(298.822) |
(274.209) |
(805.138) |
|
6 |
Finance Costs |
341.042 |
205.172 |
7,76.150 |
|
7 |
Profit/ (Loss) from
ordinary activities after finance cost but before exceptional items (5-6) |
(639.864) |
(479.381) |
(1581.288) |
|
8 |
Exceptional items |
- |
|
- |
|
9 |
Profit/ (Loss) from
ordinary activities before tax (7+8) |
(639.864) |
(479.381) |
(1581.288) |
|
10 |
Tax expenses |
|
0.170 |
0.170 |
|
11 |
Net Profit / (Loss)
from ordinary activities after tax (9-10) |
(639.864) |
(479.551) |
(1581.458) |
|
12 |
Extraordinary item (net of tax expense) |
|
- |
- |
|
13 |
Net Profit / (Loss)
for the period (11-12) |
(639.864) |
(479.551) |
(1581.458) |
|
14 |
Share of profit/ (loss) of associates |
NA |
NA |
NA |
|
15 |
Minority Interest |
NA |
NA |
NA |
|
16 |
Net Profit/ (Loss)
after taxes, minority interest and share of profit(loss) of associates
(13+14+15) |
(639.864) |
(479.551) |
(1581.458) |
|
17 |
Paid up equity share capital (Face Value of Rs1 OA-each) |
21867.350 |
21867.350 |
21867.350 |
|
18 |
Reserve excluding Revaiuation Reserve as per Balance Sheet of previous accounting year |
- |
- |
- |
|
19 i |
Earnings per share (before extraordinary items) of Rs.10/- each (not annualised): |
|
|
|
|
|
(a) Basic |
(0.29) |
(0.22) |
(0.72) |
|
|
(b) Diluted |
(0.29) |
(0.22) |
(0.72) |
|
19ii |
Earnings per share (after extraordinary items) of Rs 10/- each (not annualised) |
|
|
|
|
|
(a) Basic |
(0.29) |
(0.22) |
(0.72) |
|
|
(b) Diluted |
(0.29) |
(0.22) |
(0.72) |
|
|
|
|
|
|
|
PART II |
|
|
|
|
|
A |
PARTICULARS OF
SHAREHOLDING |
|
|
|
|
1 |
Public Shareholding |
|
|
|
|
|
- Number of shares |
1,319,985,023 |
1,326,735,023 |
1,326,735 023 |
|
|
- Percentage of shareholding |
60.36% |
60.67% |
60.67% |
|
2 |
Promoters and
Promoter group shareholding |
|
|
|
|
|
a) Pledged / Encumbered |
|
|
|
|
|
- Number of shares |
500,000.000 |
500,000,000 |
500,000,000 |
|
|
- Percentage of shares (as a % of the total shareholding of Promoter & Promoter group) |
57.69% |
58.14% |
58.14% |
|
|
- Percentage of shares (as a % of the total Share Capital of the Company) |
22.87% |
22.87% |
22.87% |
|
|
b) Non Encumbered |
|
|
|
|
|
- Number of shares |
366,750.000 |
360,000,000 |
360,000,000 |
|
|
- Percentage of shares (as a % of the total shareholding of Promoter & Promoter group) |
42 31% |
41.86% |
41.86% |
|
|
- Percentage of shares (as a % of the total Share Capital of the Company) |
16.77% |
16.46% |
16.46% |
|
B INVESTOR COMPLAINTS |
Three months ended 31.12.2012 |
|
Pending at the beginning of the quarter |
0 |
|
Received during the quarter |
4 |
|
Disposed off during the quarter |
4 |
|
Remaining unresolved at the end of the quarter |
0 |
NOTES
1. Corresponding previous year figures have been reclassified as per revised schedule VI wherever appropriate, to confirm the current year's presentation
2. The Company's Integrated Steel & Dl Pipe Plant in the State of Jharkhand, India, s under construction & erection. A part of plant facility has commenced production and accordingly the proportionate expenditure related to #ie project has been accounted as 'Project Development Expenditure' pending capitalization under 'Capital work-in-Progress'
3. There is no reportable segment in accordance with AS-17 since the part of the Company's project is under construction stage.
4. The above unaudited results were reviewed by the Audit Committee and thereafter approved by the Board of Directors at its meeting held on 11.02.2013.
FIXED ASSETS
· Freehold Land
· Leasehold Land
· Buildings
· Plant and Equipment
· Furniture and Fixtures
· Vehicles
· Office Equipment
· Railway Sidings
· Computer Software
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 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 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.54.29 |
|
|
1 |
Rs.81.09 |
|
Euro |
1 |
Rs.70.61 |
INFORMATION DETAILS
|
Report Prepared
by : |
BSN |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
3 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
4 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
- |
|
--LIQUIDITY |
1~10 |
4 |
|
--LEVERAGE |
1~10 |
4 |
|
--RESERVES |
1~10 |
2 |
|
--CREDIT LINES |
1~10 |
4 |
|
--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 |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
32 |
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 |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.