MIRA INFORM REPORT

 

 

Report No. :

317172

Report Date :

14.04.2015

 

IDENTIFICATION DETAILS

 

Name :

KAWASAKI HEAVY INDUSTRIES LTD

 

 

Registered Office :

Kobe Crystal Tower, 1-1-3 Higashi-Kawasakicho Chuoku Kobe 560-8680

 

 

Country :

Japan

 

 

Financials (as on) :

31.03.2014

 

 

Year of Establishment :

October 1986

 

 

Com. Reg. No.:

1400-01-003719

 

 

Legal Form :

Limited Company

 

 

Line of Business :

Subject is Manufacturer of heavy electric machinery & engineering works.

 

 

No. of Employee :

34,620

 

 

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 :

Good

 

 

Payment Behaviour :

Regular

 

 

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 – December 31, 2014

 

Country Name

Previous Rating

(30.09.2014)

Current Rating

(31.12.2014)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

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

 

KAWASAKI HEAVY INDUSTRIES LTD

 

REGD NAME:   Kawasaki Jyukogyo KK

MAIN OFFICE:  Kobe Crystal Tower, 1-1-3 Higashi-Kawasakicho Chuoku Kobe 560-8680 JAPAN

                                    Tel: 078-371-9530     Fax: 078-371-9566

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

E-Mail address: (through the URL to each division)

 

 

ACTIVITIES

 

Mfg of heavy electric machinery & engineering works

 

 

BRANCHES

 

Tokyo, Sapporo, Sendai, Hyogo, Akashi, other (Tot 28)

 

 

OVERSEAS

 

China (2), Taipei, Seoul, Jakarta, Singapore, Kuala Lumpur, Bangkok, USA (2), Brazil, UK, Netherlands, other

                         (Subsidiaries): USA (6), Canada, Brazil (2), UK (3), Germany (4), Netherlands (3), Korea, China (4, including Hong Kong), Thailand, Philippines, Indonesia, Australia, other

 

 

FACTORIES

 

Kobe, Akashi, Hyogo, Gifu, other (Tot 11)

 

 

OVERSEAS

 

USA (4), Brazil, UK, China (2), Philippines, Indonesia, Thailand

 

 

CHIEF EXEC

 

SHIGERU MARUYAMA, PRES & CEO

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY

 

FINANCES        FAIR                 A/SALES          Yen 1,385,482 M

PAYMENTSREGULAR   CAPITAL           Yen 104,484 M

TREND STEADY           WORTH            Yen 376,686 M

STARTED         1896                 EMPLOYES      34,620

 

 

COMMENT

 

MFR OF HEAVY ELECTRIC MACHINERY & ENGINEERING WORKS. 

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR

ORDINARY BUSINESS ENGAGEMENTS. 

 

                       

            Unit: In Million Yen

            Forecast figures for the 31/03/2015 fiscal term

 

 

HIGHLIGHTS

 

The subject company was established originally in 1878 by Shozo Kawasaki for mfg Western-style oceangoing steel ships, on his account, and was incorporated in 1986.  This is a comprehensive heavy electric machinery mfg & engineering company, with strength in railroad rolling stocks, motorcycles and medium-sized gas turbines.  Also major shipbuilder.  Since incorporated spun off various divisions, such as steel, transportation, etc into independent firms, which now constitute its main group firms.  In Oct 2006, spun off its environmental operations (handling refuse incineration facilities & recycling facilities for natural resources).  Because construction of major refuse incineration facilities peaked the firm decided to restructure operations.  Highly competitive in railway rolling stock & medium-size gas turbines.  Purchased cement business from IHI.  Joined environmental equipment production in China.  New shipbuilding yard in Dalian (China) completed in 2010.  In rolling stock, the firm puts hopes in North America, rich with a number of railway projects.  It won orders for an LNG ship in June 2012 for the first time in five terms.  It is constructing a new motorcycle plant in S/E Asia.  It plans to start the direct production of sports motorcycles in India.  Currently, Kawasaki consigns production there to Bajaj Auto Ltd, a local firm, but plans to complete the switch to its own production using its own workers within this year.

Intra-company Organizations: Ship & Offshore Structure Company, Rolling Stock Company, Aerospace Company, Gas Turbine & machinery Company, Plants & Infrastructure Company, Motorcycles & Engine Company, Precision Machinery Company.

Business merger with Mitsui Engineering & Shipbuilding wound up, but the company will possibly consider tie-ups in marine resource business.  In the energy business, it will sell distributed power systems using small gas turbines, including to S/E Asia.

 

           

FINANCIAL INFORMATION

 

The sales volume for Mar/2014 fiscal term amounted to Yen 1,385,482 million, a 7.4% up from Yen 1,288,881 million in the previous term.  The recurring profit was posted at Yen 60,605 million and the net profit at Yen 38,601 million, respectively, compared with Yen 39,328 million recurring profit and Yen 30,864 million net profit, respectively, a year ago.

 

(Apr/Dec/2014 results): Sales Yen 1,016,447 million (up 10.3%), operating profit Yen 60,357 million (up 30.9%), recurring profit Yen 64,772 million (up 67.2%), net profit Yen 44,928 million (up 92.8%).  (% as compared with the same period last year). 

 

For the current term ending Mar 2015 the recurring profit is projected at Yen 84,000 million and the net profit at Yen 66,000 million, respectively, on an 8.9% rise in turnover, to Yen 1,510,000 million.  Improvement in earnings in large motorcycles and assigned manufacturing of aircraft parts.  Profits of hydraulic equipment and industrial robot business will grow.

 

The financial situation is considered FAIR to GOOD and good for ORDINARY business engagements.  Max credit limit is estimated at Yen 23,027.3 million, on 30 days normal terms. 

 

 

REGISTRATION

 

            Date Registered:           Oct 1986

            Regd No.:                     1400-01-003719 (Kobe-Chuoku)

            Legal Status:                Limited Company (Kabushiki Kaisha)

            Authorized:                  3,360 million shares

            Issued:                         1,669,629,122 shares

            Sum:                            Yen 104,484 million

           

Major shareholders (%):

Master Trust Bank of Japan T (6.5), Japan Trustee Services T (4.7), Mizuho Bank (3.5), Nippon Life Ins (3.4), JFE Steel (3.3), Company’s Kyusaikai Assn (2.0), Employees’ S/Holding Assn (1.8), Tokio Marine & Nichido Fire Ins (1.6), SMBC (1.6), Japan Trustee Services T9 (1.2); foreign owners (24.1).

 

No. of shareholders: 109,440

 

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

 

Managements: Shigeru Maruyama, pres; Kyohei Matsuoka, v pres; Hiroshi Takata, v pres; Joji Iki, s/mgn dir; Joji Inoue, s/mgn dir; Yoshinori Kanehana, s/mgn dir; Akio Murakami, s/mgn dir; Munebiru Ishikawa, s/mgn dir;; Kazuo Hida, s/mgn dir; Shigehiko Kiyama, s/mgn dir

 

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

 

Related companies: Kawasaki Shipyard, Kawasaki Precision Machinery,

NIPPI Corp, Kawasaki Thermal Engineering, Kawasaki Motors Corp, Kawasaki

Safety Service Ind, Kawaju Shoji, other

           

 

OPERATION

 

Activities: Comprehensive heavy electric machinery mfg & engineering works:

(Sales breakdown by divisions):

Shipbuilding (6%): new-building ships, ship repairs, ship remodeling, other;

Railway Rolling Stock (11%): railway rolling stocks, civil-engineering machinery & equipment, snow plow, crushing machines;

Aerospace (20%): aircraft, spacecraft, other;

Gas Turbine & Machinery (14%): jet engines, multi-purpose gas turbines, generating machinery;

Industrial Plants, Environment & Steel Structure (7%): industrial machinery & plants, boilers, environmental machinery & equipment, steel structures;

Others (42%): hydraulic equipment, fire-preventive equipment, medical equipment,          management of welfare facilities, other. 

Overseas Sales Ratio (56%)

Clients: [Mfrs, wholesalers, airlines, ministry] Sojitz Corp, Marubeni Corp, Sumitomo Corp, Itochu Corp, JR West Japan, Kawasaki Machine Systems, Kawasaki Motors Corp USA, Ministry of Defense, other

            No. of accounts: 3,000

            Domestic areas of activities: Nationwide

Suppliers: [Mfrs, wholesalers] Sojitz Corp, Sumitomo Corp, Sojitz Aerospace, Itochu Corp, Marubeni Corp, Kawasho Corp, Fujitsu Ltd, Maeda Construction, Itochu Aviation, Kawaju Finance, Mitsubishi Heavy Ind, Fuji Heavy Ind, other.

 

Payment record: Regular

 

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

 

Bank References:

                        Mizuho Bank (Uchisaiwaicho)

                        SMBC (Kobe)

                        Relations: Satisfactory

 

FINANCES

 

(In Million Yen)

FINANCES: (Consolidated in million yen)

　

　

　

Terms Ending:

31/03/2014

31/03/2013

INCOME STATEMENT

　

　

  Annual Sales          

　

1,385,482

1,288,881

　

  Cost of Sales

1,140,293

1,085,469

　

      GROSS PROFIT

245,189

203,412

　

  Selling & Adm Costs

172,837

161,349

　

      OPERATING PROFIT

72,351

42,062

　

  Non-Operating P/L

-11,746

-2,734

　

      RECURRING PROFIT

60,605

39,328

　

      NET PROFIT

38,601

30,864

BALANCE SHEET

　

　

  Cash

　

47,949

38,525

　

  Receivables

415,664

432,649

　

  Inventory

458,032

460,104

　

  Securities, Marketable

　

　

　

  Other Current Assets

84,109

85,535

　

      TOTAL CURRENT ASSETS

1,005,754

1,016,813

　

  Property & Equipment

383,912

305,792

　

  Intangibles

17,262

19,446

　

  Investments, Other Fixed Assets

147,502

124,239

　

      TOTAL ASSETS

1,554,430

1,466,290

　

  Payables

252,107

281,062

　

  Short-Term Bank Loans

190,757

213,510

　

　

　

　

　

  Other Current Liabs

352,551

287,968

　

      TOTAL CURRENT LIABS

795,415

782,540

　

  Debentures

110,000

70,000

　

  Long-Term Bank Loans

141,343

184,362

　

  Reserve for Retirement Allw

97,048

62,300

　

  Other Debts

　

33,938

17,207

　

      TOTAL LIABILITIES

1,177,744

1,116,409

　

      MINORITY INTERESTS

　

　

Common stock

104,484

104,484

　

Additional paid-in capital

54,393

54,393

　

Retained earnings

217,449

198,528

　

Evaluation p/l on investments/securities

2,652

4,524

　

Others

(2,249)

(12,021)

　

Treasury stock, at cost

(43)

(27)

　

      TOTAL S/HOLDERS` EQUITY

376,686

349,881

　

      TOTAL EQUITIES

1,554,430

1,466,290

CONSOLIDATED CASH FLOWS

　

　

Terms ending:

31/03/2014

31/03/2013

　

Cash Flows from Operating Activities

　

151,721

28,101

　

Cash Flows from Investment Activities

-77,559

-81,160

　

Cash Flows from Financing Activities

-62,505

57,671

　

Cash, Bank Deposits at the Term End

　

45,431

36,971

ANALYTICAL RATIOS            Terms ending:

31/03/2014

31/03/2013

　

Net Worth (S/Holders' Equity)

376,686

349,881

　

Current Ratio (%)

126.44

129.94

　

Net Worth Ratio (%)

24.23

23.86

　

Recurring Profit Ratio (%)

4.37

3.05

　

Net Profit Ratio (%)

2.79

2.39

　

　

Return On Equity (%)

10.25

8.82

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.62.39

UK Pound

1

Rs.91.05

Euro

1

Rs.66.16

 

INFORMATION DETAILS

 

Analysis Done by :

KAR

 

 

Report Prepared by :

ASH

 

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.