MIRA INFORM REPORT

 

 

Report Date :

19.07.2014

 

IDENTIFICATION DETAILS

 

Name :

SHIN-ETSU CHEMICAL CO LTD

 

 

Registered Office :

Asahi Tokai Bldg, 2-6-1 Ohtemachi Chiyodaku Tokyo 100-0004

 

 

Country :

Japan

 

 

Financials (as on) :

3.03.2014

 

 

Date of Incorporation :

September 1926

 

 

Com. Reg. No.:

0100-01-008680

 

 

Legal Form :

Limited Company

 

 

Line of Business :

Manufacturing of PVC, semiconductor wafers, silicon

 

 

No. of Employees

17,892

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Satisfactory

Payment Behaviour :

No complaints

Litigation :

Clear

 

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 – March 31, 2014

 

Country Name

Previous Rating

(31.12.2013)

Current Rating

(31.03.2014)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low Risk

 

A2

Moderate Low Risk

 

B1

Moderate Risk

 

B2

Moderate High Risk

 

C1

High Risk

 

C2

Very High Risk

 

D

 

 

 

JAPAN ECONOMIC OVERVIEW

 

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A small agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. While self-sufficient in rice production, Japan imports about 60% of its food on a caloric basis. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession three times since 2008. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake and the ensuing tsunami in March disrupted manufacturing. The economy has largely recovered in the two years since the disaster, but reconstruction in the Tohoku region has been uneven. Prime Minister Shinzo ABE has declared the economy his government's top priority; he has overturned his predecessor's plan to permanently close nuclear power plants and is pursuing an economic revitalization agenda of fiscal stimulus, monetary easing, and structural reform. Japan joined the Trans Pacific Partnership negotiations in 2013, a pact that would open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2013 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. The new government will continue a longstanding debate on restructuring the economy and reining in Japan's huge government debt, which is exceeding 230% of GDP. To help raise government revenue and reduce public debt, Japan decided in 2013 to gradually increase the consumption tax to a total of 10% by the year 2015. Japan is making progress on ending deflation due to a weaker yen and higher energy costs, but reliance on exports to drive growth and an aging, shrinking population pose other major long-term challenges for the economy

 

Source : CIA

 

 

 

Company name and address

 

SHIN-ETSU CHEMICAL CO LTD

 

REGD NAME:    Shin Etsu Kagaku Kogyo KK

MAIN OFFICE:  Asahi Tokai Bldg, 2-6-1 Ohtemachi Chiyodaku Tokyo 100-0004 JAPAN

Tel: 03-3246-5011     Fax: 03-3246-5358

 

URL:                 http://www.shinetsu.co.jp/

E-Mail address: info@shinetsu.co.jp

 

 

ACTIVITIES  

 

Mfg of PVC, semiconductor wafers, silicon

 

 

BRANCHES

 

Osaka, Nagoya, Fukuoka, Sapporo, Gunma

 

 

FACTORIES  

 

Naoetsu, Takefu, Gunma (Isobe, Matsuida), Kashima

 

 

OVERSEAS  

 

USA (9), Mexico, Portugal, UK, Netherlands (4), Hungary, Germany, Malaysia (5), Korea (2), China (4), Taiwan (4), Singapore (2), Indonesia (2), Thailand (2), Philippines, Australia (2) (--subsidiaries)

 

 

CHIEF EXEC

 

SHINZO MORI, PRES & CEO

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY

 

FINANCES        FAIR                             A/SALES          Yen 1,165,819 M

PAYMENTSNO COMPLAINTS    CAPITAL           Yen 119,419 M

TREND UP                                WORTH            Yen 1,822,135 M

STARTED         1926                             EMPLOYES      17,892

 

 

COMMENT

 

MFR SPECIALIZING IN PVC & ELECTRONIC MATERIALS. 

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS.

                       

 

Business

Terms Ending

Annual Sales*

R.Profit*

N.Profit*

S.Growth

Net Worth*

   Results:

31/03/2011

1,058,257

160,338

100,119

(%)

1,469,429

(Consolidated)

31/03/2012

1,047,731

165,237

100,643

-0.99

1,494,573

 

31/03/2013

1,025,409

170,207

105,714

-2.13

1,623,176

 

31/03/2014

1,165,819

180,605

113,617

13.69

1,822,135

 

31/03/2015

1,200,000

201,000

129,000

2.93

..

 

Notes: Unit: In Million Yen

Forecast (or estimated) figures for 31/03/2015 fiscal term

 

 

HIGHLIGHTS

 

The subject company was established originally as mfr of chemical fertilizer and limestone nitrogen, and has since developed business operations into silicone production and PVC in 1950s.  Now is known one of the world’s largest mfrs of vinyl chloride, silicon resin and semiconductor silicon.  Expanding into electronics materials, including rare earths & synthetic quartz.  Has many excellent subsidiaries both in Japan & abroad.  Noted for high earnings power.　Production of rare-earth kept rising for 31st consecutive month in value terms in spring 2008, climbing 19% from a year earlier to Yen 8.51 billion, according to a study by the Japan Electronics & Information Technology Industries Association.  Considering start of in-house production of poly-silicon; technical development already completed, but location of plant & construction schedule unfixed yet.  Planned capacity buildup of 300mm wafers & release of solar cell-use products possible put off for some time, the firm says.  The firm is building a rare-earth magnet alloy plan in Fujian, China, aiming for stable material procurement, the new plant is scheduled to start up in Jan 2013.  Water-soluble materials will be produced in the US as well as in Japan & Europe, when a new US plant goes into operation in early 2014.  The PVC subsidiary in the US has large growth potential in up-and-coming countries, fueled by increased infrastructure demand.  Semiconductor wafer business is still in a state of oversupply, the company is cautious about investment in capacity expansion and next-generation products.  It is eager for M&A, with a view to expanding new businesses.  In the US, the company is studying in-house production of ethylene as PVC materials with an aim to gear up comprehensive production system and enhance price competitive edge.  In functional chemical business, it is constructing a plant for cellulose production at cost of Yen 12 billion for start up in 2014.

           

FINANCIAL INFORMATION

 

The sales volume for Mar/2014 fiscal term amounted to Yen 1,165,819 million, a 13.7% up from Yen 1,025,409 million in the previous term.  Depressed sales of PC-use silicon wafers were covered by brisk smartphone and tablet PC-use products.  Demand for rare-earth magnet grew from hybrid vehicle makers.  The recurring profit was posted at Yen 180,605 million and the net profit at Yen 113,617 million, respectively, compared with Yen 170,207 million recurring profit and Yen 105,714 million net profit, respectively, a year ago..

 

For the current term ending Mar 2015 the recurring profit is projected at Yen 201,000 million and the net profit at Yen 129,000 million, respectively, on a 2.9% rise in turnover, to Yen 1,200,000 million.  Sales of silicones and functional chemicals will be steady. 

 

The financial situation is considered FAIR and good for ORDINARY business engagements. 

 

 

REGISTRATION

 

Date Registered:      Sept 1926

Regd No.:                 0100-01-008680 (Tokyo-Chiyodaku)

Legal Status:   Limited Company (Kabushiki Kaisha)

Authorized:      1,720 million shares

Issued:             432,106,693 shares

Sum:                 Yen 119,419 million

 

Major shareholders (%): Master Trust Bank of Japan, T (8.6), Japan Trustee Services Bank T (6.3), Nippon Life Ins (5.3), Hachijuni Bank (2.7), Japan Trustee Services t4 (2.6), Meiji Yasuda Life Ins (2.4), SSBT OD05 Omnibus Acct Treaty Cl (2.0), Company’s Treasury Stock (1.6), State Street Bank & Trust 505225 (1.5), Mellon Bank Mellon Omnibus US P (1.3); foreign owners (41.1)

 

No. of shareholders: 59,439

 

Listed on the S/Exchange (s) of: Tokyo

 

Managements: Chihiro Kanagawa, ch; Shunzo Mori, pres & CEO; Fumio Akiya, v pres; Yasuhiko Saitoh, v pres; Toshinobu Ishihara, s/mgn dir; Norikazu Fukud, mgn dir; Akiji Takasugi, mgn dir; Masahiko Todorogi, mgn dir; Toshiya Akimoto, mgn dir; Fumiaki Arai, mgn dir; Yukihiro Matsui, mgn dir

 

Nothing detrimental is knows as to the commercial morality of executives.

 

Related companies: Shintech Inc (USA), Shin-Etsu Polymer, Shin-Etsu Handotai, other

 

 

 

 

OPERATION

 

Activities: Manufactures industrial chemicals:

 

(Sales Breakdown by Divisions):

 

Vinyl Chloride & Chemicals Div (37%): PVC, silicones, methanol, chloromethane, cellulose derivatives, caustic soda, silicon metal;

 

Silicones Div (13%): semiconductor silicone, organic materials for electronics industry, rare earth magnets for electronics industry, photo-resists;

 

Functional Materials Div (9%): synthetic quartz products, oxide single crystals, rare earths, rare earth magnets, construction of plants engineering, information processing, export of technology & plants, import of goods, others.

 

Semiconductor Silicones Div (18%);

Others (23%);

Overseas sales ratios (71%)

 

Clients: [Mfrs, wholesalers] Shin-Etsu Handotai (meaning semiconductor), Mitsubishi Corp, Shin-Etsu Electronics Materials Singapore, Mitsui & Co, Shin-Etsu Astech, Toshiba Corp, other.

No. of accounts: 3,000

Domestic areas of activities: Nationwide

 

Suppliers: [Mfrs, wholesalers] Shin-Etsu Handotai, Naoetsu Electronics, Mitsui & Co, Kashima PVC Monomer, Mitsubishi Chemical, Shintech Inc, other.

 

Payment record: No complaints

 

Location: Business area in Tokyo.  Office premises at the caption address are leased and maintained satisfactorily.

 

Bank References:

 

MUFG (H/O)

Mizuho Bank (H/O)

Relations: Satisfactory

 

 

FINANCES

 

(In Million Yen)

FINANCES: (Consolidated in million yen)

 

　

　

Terms Ending:

31/03/2014

31/03/2013

INCOME STATEMENT

 

 

 

  Annual Sales

　

1,165,819

1,025,409

 

  Cost of Sales

873,879

769,427

 

      GROSS PROFIT

291,939

255,981

 

  Selling & Adm Costs

118,130

98,938

 

      OPERATING PROFIT

173,809

157,043

 

  Non-Operating P/L

6,796

13,164

 

      RECURRING PROFIT

180,605

170,207

　

      NET PROFIT

113,617

105,714

BALANCE SHEET

 

 

 

 

  Cash

　

363,339

252,881

 

  Receivables

 

267,243

243,785

 

  Inventory

 

273,136

269,377

 

  Securities, Marketable

274,282

214,380

 

  Other Current Assets

57,829

52,090

 

      TOTAL CURRENT ASSETS

1,235,829

1,032,513

 

  Property & Equipment

720,799

649,650

 

  Intangibles

 

19,408

14,637

 

  Investments, Other Fixed Assets

222,876

224,103

 

      TOTAL ASSETS

2,198,912

1,920,903

 

  Payables

 

109,401

100,197

 

  Short-Term Bank Loans

7,524

5,507

 

　

 

　

　

 

  Other Current Liabs

137,236

93,931

 

      TOTAL CURRENT LIABS

254,161

199,635

 

  Debentures

 

　

　

 

  Long-Term Bank Loans

7,557

7,709

 

  Reserve for Retirement Allw

28,127

20,185

 

  Other Debts

　

86,931

70,198

 

      TOTAL LIABILITIES

376,776

297,727

 

      MINORITY INTERESTS

 

 

 

Common stock

119,419

119,419

 

Additional paid-in capital

128,625

128,234

 

Retained earnings

1,541,127

1,470,015

 

Evaluation p/l on investments/securities

10,439

11,591

 

Others

 

57,479

(66,916)

 

Treasury stock, at cost

(34,954)

(39,167)

 

      TOTAL S/HOLDERS` EQUITY

1,822,135

1,623,176

　

      TOTAL EQUITIES

2,198,912

1,920,903

CONSOLIDATED CASH FLOWS

 

 

 

 

Terms ending:

31/03/2014

31/03/2013

 

Cash Flows from Operating Activities

　

259,734

235,622

 

Cash Flows from Investment Activities

-246,894

-119,254

 

Cash Flows from Financing Activities

-41,361

-44,011

　

Cash, Bank Deposits at the Term End

　

362,560

363,028

ANALYTICAL RATIOS            Terms ending:

31/03/2014

31/03/2013

 

 

Net Worth (S/Holders' Equity)

1,822,135

1,623,176

 

 

Current Ratio (%)

486.24

517.20

 

 

Net Worth Ratio (%)

82.87

84.50

 

 

Recurring Profit Ratio (%)

15.49

16.60

 

 

Net Profit Ratio (%)

9.75

10.31

 

 

Return On Equity (%)

6.24

6.51

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.60.33

UK Pound

1

Rs.103.18

Euro

1

Rs.81.58

 

INFORMATION DETAILS

 

Analysis Done by :

RAS

 

 

Report Prepared by :

NIS

 

               

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 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%)

 

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