MIRA INFORM REPORT
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Report No. : |
310825 |
|
Report Date : |
07.03.2015 |
IDENTIFICATION DETAILS
|
Name : |
SESA RESOURCES LIMITED (w.e.f. 19.11.2010) |
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Formerly Known
As : |
V. S. DEMPO AND COMPANY LIMITED V. S. DEMPO AND COMPANY PRIVATE LIMITED |
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Registered
Office : |
Sesa Ghor, 20 EDC Complex, Patto, Panaji, Goa - 403001 |
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Country : |
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Financials (as
on) : |
31.03.2014 |
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Date of
Incorporation : |
22.04.1965 |
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Com. Reg. No.: |
24-000030 |
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Capital
Investment / Paid-up Capital : |
Rs.12.500 Million |
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CIN No.: [Company Identification
No.] |
U13209GA1965PLC000030 |
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TIN No.: |
Not Available |
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IEC No.: |
Not Available |
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TAN No.: [Tax Deduction & Collection
Account No.] |
Not Available |
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PAN No.: [Permanent Account No.] |
AAACV7160R |
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Legal Form : |
A Closely Held Public Limited Liability Company |
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Line of Business
: |
The Company is engaged in the business of mining and export
of iron ore. |
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No. of Employees
: |
Information denied by management s |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba (49) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
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Payment Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject is a 100 % subsidiary of “Sesa Sterlite Limited” was acquired
in June 2009 by Sesa Sterlite for Rs.17.13 Billion. It is an established
company having satisfactory track. Management has not performed any activity during the year under review
as the government has suspended iron ore mining operations in Goa with effect
from September 11, 2012. Moreover, the mining ban is being lifted by the supreme court in April
2014 and in January 2015 the Goa State Government has renewed the mining lease
of the subject and the company is in the process of obtaining other necessary
approvals for resumption of the operations which are likely to be resumed in
2015-16. However, trade relations are fair. Business is active. Payment terms
are reported as usually correct. In view of strong holding, the company can be considered for long term business dealings at usual trade terms and conditions. |
NOTES:
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CRISIL |
|
Rating |
Short Term Rating = A1+ |
|
Rating Explanation |
Very strong degree of safety and lowest credit risk |
|
Date |
03.02.2015 |
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
31-03-2014.
INFORMATION DENIED BY
|
Name : |
Ms. Lalita Correia Fonso |
|
Designation : |
Account Head |
|
Contact No.: |
91-832-2960601 |
|
Date : |
04.03.2015 |
LOCATIONS
|
Registered Office : |
Sesa Ghor, 20 EDC Complex, Patto, Panaji, Goa – 403001, India |
|
Tel. No.: |
91-832-2460601 |
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Fax No.: |
91-832-2460721 |
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E-Mail : |
DIRECTORS
As on 01.07.2014
|
Name : |
Mr. Gurudas Kamat |
|
Designation : |
Director Appointed In Casual Vacancy |
|
Address : |
12/UG-1, Kamat Kinara,, Nomoxim, Caranzalem, Goa - 403002, India |
|
Date of Birth/Age : |
05.01.1935 |
|
Date of Appointment : |
19.07.2013 |
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DIN No.: |
00015932 |
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|
|
|
Name : |
Mr. Bajaj Shyam Lal |
|
Designation : |
Director Appointed In Casual Vacancy |
|
Address : |
D 1, Ambav Garh, Udaipur - 313022, Rajasthan, India |
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Date of Birth/Age : |
14.11.1953 |
|
Date of Appointment : |
01.12.2011 |
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DIN No.: |
02734730 |
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|
|
|
Name : |
Mr. Pramod Muralidhar Unde |
|
Designation : |
Additional Director |
|
Address : |
Amit Apartments, S. No. 91.2, 42 Krishna Colony, Paud Road, Kothrud,
Pune - 411038, Maharashtra, India |
|
Date of Birth/Age : |
02.06.1963 |
|
Date of Appointment : |
20.10.2009 |
|
DIN No.: |
02821250 |
KEY EXECUTIVES
|
Name : |
Mrs. Tina Kishore Lakhani |
|
Designation : |
Secretary |
|
Address : |
New Adarsh Residency, 1st Floor, Flat No Ii, Near Vidya Mandir School,
Adarsh Nagar, Chi-Air Road, Chicalim, Goa - 403711, India |
|
Date of Birth/Age : |
11.07.1986 |
|
Date of Appointment : |
20.04.2012 |
|
PAN No.: |
AEQPL1299A |
MAJOR SHAREHOLDERS
As on 01.07.2014
|
Names of Shareholders |
|
No. of Shares |
|
P.K. Mukherjee jointly with Sesa Sterlite Limited, India |
|
1 |
|
A.K. Rai jointly with Sesa Sterlite Limited, India |
|
1 |
|
S. L. Bajaj jointly with Sesa Sterlite Limited, India |
|
1 |
|
D.D. Jalan Jointly with Sesa Sterlite Limited, India |
|
1 |
|
Tarun Jain Jointly with Sesa Sterlite Limited, India |
|
1 |
|
M.S. Melrta Jointly with Sesa Sterlite Limited, India |
|
1 |
|
Sesa Sterlite Limited, India |
|
1249994 |
|
Total |
|
1250000 |
Equity Share Break up (Percentage of Total Equity)
As on 01.07.2014
|
Category |
Percentage |
|
Bodies corporate |
100.00 |
|
Total |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
The Company is engaged in the business of mining and
export of iron ore. |
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Products : |
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Brand Names : |
-- |
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Agencies Held : |
-- |
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Exports : |
Not Divulged |
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Imports : |
Not Divulged |
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Terms : |
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Selling : |
Not Divulged |
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Purchasing : |
Not Divulged |
PRODUCTION STATUS – NOT AVAILABLE
GENERAL INFORMATION
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Suppliers : |
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Customers : |
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No. of Employees : |
Information denied by management |
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Bankers : |
Not Divulged |
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Facilities : |
-- |
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Auditors : |
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Name : |
Deloitte Haskins and Sells Chartered Accountants |
|
Address : |
Tower 52, Venkat Narayana Road, T Nagar, Chennai – 600017, Tamilnadu, India |
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PAN No.: |
AACFD4815A |
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Memberships : |
-- |
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Collaborators : |
-- |
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Holding Company : |
CIN No.: L13209GA1965PLC000044 |
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Ultimate Holding
company : |
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Intermediaries : |
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Subsidiary of the
Company : |
CIN No.: U13209GA1969PLC000091 |
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Fellow subsidiaries
: |
CIN No.: L11101MH2006PLC163934
CIN No.: U40105GA1996PLC007246
CIN No.: L27204RJ1966PLC001208
CIN No.: L11101MH2006PLC163934
|
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Jointly Controlled
Entity : |
CIN No.: U61200GA2003PTC003250 |
CAPITAL STRUCTURE
As on 01.07.2014
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
14950000 |
Equity Shares |
Rs.10/- each |
Rs.149.500 Million |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
1250000 |
Equity Shares |
Rs.10/- each |
Rs.12.500 Million |
FINANCIAL DATA
[all figures are
in Rupees Million]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
I.
EQUITY
AND LIABILITIES |
|
|
|
|
(1)Shareholders' Funds |
|
|
|
|
(a) Share Capital |
12.500 |
12.500 |
12.500 |
|
(b) Reserves & Surplus |
16,599.300 |
16,995.700 |
16,300.600 |
|
(c) Money
received against share warrants |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
(2) Share Application money pending
allotment |
0.000 |
0.000 |
0.000 |
|
Total
Shareholders’ Funds (1) + (27) |
16,611.800 |
17,008.200 |
16,313.100 |
|
|
|
|
|
|
(3)
Non-Current Liabilities |
|
|
|
|
(a) long-term borrowings |
0.000 |
0.000 |
71.600 |
|
(b) Deferred tax liabilities (Net) |
0.000 |
103.500 |
114.300 |
|
(c) Other long term
liabilities |
0.000 |
0.000 |
0.000 |
|
(d) long-term
provisions |
8.000 |
8.000 |
7.800 |
|
Total Non-current
Liabilities (3) |
8.000 |
111.500 |
193.700 |
|
|
|
|
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(4)
Current Liabilities |
|
|
|
|
(a) Short
term borrowings |
0.000 |
0.000 |
1,278.900 |
|
(b) Trade
payables |
323.600 |
374.500 |
1,163.200 |
|
(c) Other current
liabilities |
930.900 |
360.000 |
163.200 |
|
(d) Short-term
provisions |
30.700 |
30.300 |
1,488.300 |
|
Total Current
Liabilities (4) |
1,285.200 |
764.800 |
4,093.600 |
|
|
|
|
|
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TOTAL |
17,905.000 |
17,884.500 |
20,600.400 |
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II.
ASSETS |
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|
(1)
Non-current assets |
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(a) Fixed
Assets |
|
|
|
|
(i)
Tangible assets |
1,444.700 |
1,600.100 |
1,722.800 |
|
(ii)
Intangible Assets |
8.900 |
12.800 |
0.000 |
|
(iii)
Capital work-in-progress |
130.400 |
128.200 |
58.900 |
|
(iv)
Intangible assets under development |
0.000 |
0.000 |
0.000 |
|
(b) Non-current Investments |
0.000 |
0.000 |
0.000 |
|
(c) Deferred tax assets (net) |
12,276.100 |
12,276.100 |
12,276.100 |
|
(d) Long-term Loan and Advances |
537.200 |
561.800 |
693.600 |
|
(e) Other
Non-current assets |
0.000 |
0.000 |
0.000 |
|
Total Non-Current
Assets |
14,397.300 |
14,579.000 |
14,751.400 |
|
|
|
|
|
|
(2)
Current assets |
|
|
|
|
(a)
Current investments |
0.000 |
378.200 |
3,082.100 |
|
(b)
Inventories |
1,247.600 |
1,325.900 |
749.700 |
|
(c) Trade
receivables |
12.900 |
44.200 |
1,064.600 |
|
(d) Cash
and cash equivalents |
4.800 |
4.300 |
144.000 |
|
(e)
Short-term loans and advances |
2,241.800 |
1,550.100 |
807.800 |
|
(f) Other current
assets |
0.600 |
2.800 |
0.800 |
|
Total
Current Assets |
3,507.700 |
3,305.500 |
5,849.000 |
|
|
|
|
|
|
TOTAL |
17,905.000 |
17,884.500 |
20,600.400 |
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2014 |
31.03.2013 |
31.03.2012 |
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SALES |
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||
|
|
|
Income |
113.500 |
3,654.700 |
18,379.000 |
|
|
|
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Other Income |
451.100 |
395.800 |
354.900 |
|
|
|
|
TOTAL (A) |
564.600 |
4,050.500 |
18,733.900 |
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Less |
EXPENSES |
|
|
|
||
|
|
|
Purchase of Stock-in-trade |
0.000 |
771.400 |
2,357.800 |
|
|
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|
Changes in Inventories of finished goods, work-in-progress and
stock-in-trade |
31.900 |
-534.300 |
54.000 |
|
|
|
|
Employee Benefits Expenses |
247.300 |
325.300 |
419.200 |
|
|
|
|
Other Expenses |
437.100 |
2,208.500 |
7,238.300 |
|
|
|
|
Exceptional Items |
147.100 |
70.700 |
0.000 |
|
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|
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TOTAL (B) |
863.400 |
2,841.600 |
10,069.300 |
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PROFIT/(LOSS)
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
(298.800) |
1,208.900 |
8,664.600 |
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Less |
FINANCIAL
EXPENSES (D) |
8.200 |
53.200 |
123.100 |
||
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|
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|
PROFIT/(LOSS)
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D)
(E) |
(307.000) |
1,155.700 |
8,541.500 |
||
|
|
|
|
|
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||
|
Less |
DEPRECIATION/
AMORTISATION (F) |
174.800 |
243.100 |
141.400 |
||
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|
PROFIT/(LOSS)
BEFORE TAX (E-F) (G) |
(481.800) |
912.600 |
8,400.100 |
||
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|
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Less |
TAX (H) |
(85.400) |
224.700 |
2,620.100 |
||
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PROFIT/(LOSS)
AFTER TAX (G-H) (I) |
(396.400) |
687.900 |
5,780.000 |
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Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
16,015.700 |
15,320.600 |
13,929.800 |
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Less |
APPROPRIATIONS |
|
|
|
||
|
|
|
Interim Dividend |
0.000 |
0.000 |
1,875.000 |
|
|
|
|
Proposed Final Dividend |
0.000 |
0.000 |
1,250.000 |
|
|
|
|
Corporate Dividend Tax |
0.000 |
(7.200) |
514.200 |
|
|
|
|
General Reserve |
0.000 |
0.000 |
750.000 |
|
|
|
BALANCE CARRIED
TO THE B/S |
15,619.300 |
16,015.700 |
15,320.600 |
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EARNINGS IN
FOREIGN CURRENCY |
|
|
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|
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Export Earnings |
0.000 |
3527.600 |
18114.600 |
|
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TOTAL EARNINGS |
0.000 |
3527.600 |
18114.600 |
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IMPORTS |
|
|
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||
|
|
|
Stores & Spares |
0.000 |
4.600 |
32.200 |
|
|
|
|
Capital Goods |
0.100 |
13.400 |
131.700 |
|
|
|
TOTAL IMPORTS |
0.100 |
18.000 |
163.900 |
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|
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|
Earnings /
(Loss) Per Share (Rs.) |
(317.12) |
550.32 |
4624.00 |
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KEY RATIOS
|
PARTICULARS |
|
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
Net Profit Margin (PAT/Sales) |
(%) |
(349.25) |
18.82 |
31.45 |
|
|
|
|
|
|
|
Operating Profit Margin (PBDIT/Sales) |
(%) |
(263.26) |
33.08 |
47.14 |
|
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|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
(8.76) |
16.65 |
101.63 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
(0.03) |
0.05 |
0.51 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt /Networth) |
|
0.00 |
0.00 |
0.08 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.73 |
4.32 |
1.43 |
FINANCIAL ANALYSIS
[all figures are
in Rupees Million]
DEBT EQUITY RATIO
|
Particular |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
Rs.
In Million |
Rs.
In Million |
Rs. In
Million |
|
Share Capital |
12.500 |
12.500 |
12.500 |
|
Reserves & Surplus |
16300.600 |
16995.700 |
16599.300 |
|
Share Application money pending allotment |
0.000 |
0.000 |
0.000 |
|
Net
worth |
16313.100 |
17008.200 |
16611.800 |
|
|
|
|
|
|
Long Term borrowings |
71.600 |
0.000 |
0.000 |
|
Short Term borrowings |
1278.900 |
0.000 |
0.000 |
|
Total
borrowings |
1350.500 |
0.000 |
0.000 |
|
Debt/Equity
ratio |
0.083 |
0.000 |
0.000 |
YEAR-ON-YEAR GROWTH
|
Year
on Year Growth |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
Rs.
In Million |
Rs.
In Million |
Rs.
In Million |
|
Sales |
18,379.000 |
3,654.700 |
113.500 |
|
|
|
(80.115) |
(96.894) |
NET PROFIT MARGIN
|
Net
Profit Margin |
31.03.2012 |
31.03.2013 |
31.03.2014 |
|
|
Rs.
In Million |
Rs.
In Million |
Rs.
In Million |
|
Sales
|
18,379.000 |
3,654.700 |
113.500 |
|
Profit |
5,780.000 |
687.900 |
(396.400) |
|
|
31.45% |
18.82% |
(349.25%) |
LOCAL AGENCY FURTHER INFORMATION
CURRENT MATURITIES
OF LONG TERM DEBT DETAILS
Rs.
In Million
|
PARTICULARS |
31.03.2014 |
31.03.2013 |
31.03.2012 |
|
Current maturities of long term debt |
0.000 |
76.100 |
71.600 |
|
Total |
0.000 |
76.100 |
71.600 |
|
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 |
Yes |
|
8] |
No. of employees |
No |
|
9] |
Name of person contacted |
Yes |
|
10] |
Designation of contact
person |
Yes |
|
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 |
No |
|
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 |
Yes |
|
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 |
COMPANY
INFORMATION
The Company is engaged in the business of mining and export of iron ore. The Company's mining operations are all situated in Goa.
BUSINESS
PERFORMANCE
During the year, the Company continued to face significant external challenges which began in the previous financial year. In September/October 2012, the iron ore mining operations in Goa were brought to a complete halt by an abrupt imposition of ban on mineral extraction and transportation by the State Government and subsequently by Honourable Supreme Court of India.
The parent company had filed an application before the Supreme Court seeking modification or vacation of the aforesaid order. The hearings in the Court were completed on 27 th March, 2014 with the matter reserved for judgement by the Court.
The Supreme Court had passed its interim order on 11 th November, 13 wherein the Court had appointed a 3 member Monitoring Committee (MC) to verify the existing stock and to sell the ore through e-auction. Two e-auctions were conducted during the year in which the Company also participated. 15,000 tonnes of stock was sold under the auctions; however, it was not dispatched till 31 st March 2014.
The court has also constituted a 6 member expert committee to conduct macro Environment Impact Assessment (EIA) study and to arrive at a ceiling on annual excavation capacity for the State of Goa considering the iron ore reserves and carrying capacity. The Expert Committee report suggests a maximum capacity of 27 million tonnes with the existing infrastructure which can be upgraded with interventions such as dedicated mining freight corridors. However, as an interim measure, while the committee studies the capacities in depth, it has recommended capping the production at 20 million tonnes per annum.
The Honorable Supreme Court vide its order dated 21st April, 2014 has conditionally lifted the ban on mining in the State of Goa with cap of 20mtpa.
In 2013-14, no production or sales were registered as a result of the continuing suspension of the mining operations. The Iron ore prices were range bound during the year fluctuating between $90-130 (62% Fe, FOB India) range. Prices declined from US$120-130 at the start of the year to a low of $98 in June 2013 before recovering above $120 in August. The prices witnessed a significant decline in March 2014 back to the $90-95 range with concerns on Chinese demand before posting a moderate recovery.
The average spot iron ore price for 2013-14 was ~5% lower at $115/t (63% grade FOB price) level, compared to ~$120/t in 2012-13. Due to cessation of operations, the sales revenue decreased from Rs.3527.600 Million in 2012-13 to Rs. NIL in 2013-14. The Company posted a loss of Rs.396.400 Million in 2013-14 as against a profit of Rs.687.900 Million in 2012-13. The loss is mainly due to lower volume.
OUTLOOK
The Iron ore mining industry continues to face increasing challenges with social licensing as a result of the competition for resources and high prices increasing social pressure on the extractive industries to share more and more benefits with the society.
The Company’s capacities are expected to be curtailed as a result of the recommendations of the Expert Committee. The Outlook on the iron ore prices continues to look subdued. Notwithstanding these concerns, with the Court proceedings nearing the end, the Company is looking forward to recommencing iron ore operations at the earliest. During FY2014-15, the Company will be focused on reviving the operations and in optimizing the operations in the new environment.
FIXED ASSETS:
·
Land
·
Building
·
Plant and Machinery
·
Computer
·
Vehicles
·
Furniture and Fixture
NEWS:
VEDANTA RESOURCES' LOAN BURDEN MAY
WEIGH HEAVY ON SESA STERLITE
The restructuring at London-based Vedanta Resources, which had been promised
for some time now, finally came into effect last month. Vedanta Resources merged its bigger group company,
Sterlite Industries, with the smaller iron ore miner, Sesa Goa, to create a new
entity called Sesa Sterlite. It also demerged its oil and gas and aluminium
businesses and incorporated them in the new entity.
These changes
have created the world's seventh largest global diversified natural resources
company by earnings before interest, tax, depreciation and amortisation
(Ebitda). What's more, the overhaul has made the diversified conglomerate with
its varied interest more immune to fluctuations due to commodity price
variations. Metal prices have been languishing for some time now due to the
slump in demand from China and the prolonged economic slowdown in Europe. In
the quarter ended March, the contribution of the traditional mining division to
Vedanta Resources steeply declined, leaving the company to depend on its oil
and gas business, where earnings increased to $2.4 billion in oil and gas from
$713 million in the same quarter in the previous year to buoy profits.
In that sense,
the new structure is designed to help Sesa Sterlite decrease the impact of
metal price fluctuations on earnings and create a steady source of income.
After the merger, the company in a statement said Sesa Sterlite would be a
low-cost metal producer and miner with close proximity to high-growth markets.
The statement added the new entity would be a cash-generative business
supported by a strong balance sheet.
However, the
good news for Sesa Sterlite ends there. With the oil and gas business it has
now got, the new entity would also inherit almost 87 per cent of Vedanta Resources
debt of $16.59 billion, which the company had accumulated in order to fund its
purchase of Cairn India in 2011. In other words, a debt of Rs.1026755.100
Million (at current valuations) would get transferred to Sesa Sterlite once it
is listed. With most of the companies under its ambit not doing too well,
analysts say repayment of this debt won't be easy.
In addition,
Sesa Sterlite will be the holding company for all Vedanta Resources companies
except Kankola Copper Mines in Zambia. The new entity will include Zinc
International, Talwandi Sabo Power, Australian Copper mines, and power
divisions of Vedanta Aluminium and MALCO, besides Cairn India and Hindustan
Zinc where it will hold 58.9 per cent and 64.9 per cent, respectively. Sesa
Sterlite will also hold 51 per cent in Balco and Western Cluster in Liberia,
which can be raised to 100 per cent.
In the earlier
structure, Sterlite Industries operated the aluminium business
(Balco), zinc business (Hindustan Zinc and Zinc International), copper business
(its smelter in Tuticorin) and commercial energy projects in Odisha (Sterlite
Energy). Sesa Goa, on the other hand, was only into iron ore mining and
exporting with operations in Goa and Karnataka in India and in Liberia in West
Africa. Recently, the company had also diversified into producing pig iron and
metallurgical coke.
At the time of
the overhaul proposal in February last year, Vedanta Resources had stated that
the bulk of the Ebitda contribution for the new entity, nearly 40 per cent,
would come from its oil and gas business, 29 per cent from Hindustan Zinc and
the rest from copper, silver, aluminium and energy businesses.
However, lower commodity
prices have altered that equation. The weak market pushed down Vedanta's Ebitda
from its mining divisions in every category bar aluminium in the first quarter
of the year. The diversified miner reported a slight dip in pre-tax profit for
the year to March from $ 1.74 billion to $ 1.7 billion on revenues that rose
from $14 billion to $ 14.9 billion.
At present
cash-rich Cairn India and Hindustan Zinc are the only two subsidiaries that can
help lower the Sesa Sterlite debt. As of June 30, Hindustan Zinc had cash
reserves worth Rs.220000.000 Million, while Cairn India had cash reserves close
to Rs.150000.000 Million. Hindustan Zinc could help the new entity generate
another Rs.40000.000-50000.000 Million per annum if the government, which holds
29.5 per cent in the company, decides to sell its stake. A proposal in this
regard is pending before the Cabinet Committee on Economic Affairs and it is
expected to be taken up soon.
"The
company (Sesa Sterlite) needs sole ownership and the government needs the
money. So, this looks like the right time for the stake sale to happen,"
says Giriraj Daga, senior analyst with Nirmal Bang Institutional Equities.
"It (the government) can also negotiate for higher price," he adds.
Analysts have
their hopes pinned on the stake sale as apart from Hindustan Zinc and Cairn
India, none of the other assets with Sesa Sterlite is seen as significant
contributors to the Ebitda in the near-term. The iron ore assets of Sesa
Sterlite have been hit by the ban on mining in Goa while the loss-making
Vedanta Aluminium has been further crippled by unavailability of captive coal
and bauxite mines. Other companies are also unlikely to help shore up earnings
in the face of slowing demand for metals.
The new entity
may face another challenge from the depreciating rupee which is set to increase
the company's debt burden. In this scenario, the future for the new entity
certainly looks far less bright than what was proposed during the restructuring
deal. Analysts say even if the company succeeds in generating cash flow to
lower its debt, there will be challenges aplenty on the operational front.
NO
RESPITE FOR GOA MINERS DESPITE LIFTING OF BAN
Goa’s state government may have lifted the two year-old ban on mining in the state but miners are still facing the heat
from a 30% export duty. Thus viability fears still persisit.
Their main
grouse is that though the centre is focusing on implementing a new mining ordinance
to auction mining permits, it is ignoring other major issues like taxation.
"Auction
is fine but our main issues are with taxation and mining ban. Increasing
the exports is the only way to give a fillip to this
industry,” a senior executive of a large mining firm in Goa told Business Standard. He added the industry is
demanding abolishing the export duty, particularly on low grade of iron ore, to
make business viable again.
The government
had imposed a blanket ban on all mining activities in Goa, India’s
third-largest iron ore producer, in September 2012 on allegations of
large-scale illegality. The Supreme Court had partially lifted the ban in April
2014 with a cap of 20 million tonne on output. The state government last week
lifted the ban that had been impacting the government’s export earnings.
The iron ore
produced in Goa is of low quality – less than 56 Fe grade. The entire output
has to be exported in the absence of domestic demand for the low quality ore.
The high export duty on iron ore was imposed when prices had sky-rocketed to
over $190 per tonne in 2011. The prices have now plummeted to a five year low.
Currently, even
the best grade of iron ore of above 63 Fe is fetching a price of $56 per tonne
in the international market. The Goan ore is fetching not more than $35 per
tonne. Goan miners claim they have to shell out over a half of the sale price
as taxes and duties including 30% export duty, 15% royalty, 10% to Goa
Permanent Ore Fund (as directed by Supreme Court).
India was the
world’s third-largest exporter of iron ore until 2012 when the high 30% export
duty was imposed. The high duty, along with the mining ban, impacted exports
that came down to 15 MT last fiscal (2013-14) from a high of 117 MT in 2009-10.
Thanks to the domestic shortage, steel companies have so far imported over 8 MT
of the ore. India’s total ore imports are expected to reach 15 MT in the
current fiscal.
GOA
MINERS SEEK ABOLITION OF EXPORT DUTY ON IRON ORE
NEW DELHI: Goa miners today demanded complete withdrawal of export duty
on iron ore produced
in the state saying its low-grade variant has few takers in the country and
outward shipments are also not profitable given the current subdued global
prices.
"There is a need for withdrawal of export duty on iron ore from Goa
as in the current market conditions the export of low grade ores which form 80
per cent of the Goan export is unviable," Goa Mineral
Ore Exporters' Association said in a release.
With few takers of its low-grade produce, miners from Goa generally
exports their entire produce to China. As the global price for the steel-making
raw material tumbled, miners from the state find exports not a profitable
proposition especially with the existing 30 per cent duty on outward shipments.
Due to lower demand from China, world's largest
consumer of iron ore, prices of benchmark iron ore grade have crashed by over
50 per cent in last six months. The prices of lower grades of ore, the type
which Goan miners produce, is hovering in the range of around $35-40 per tonne.
"In the current scenario where the prices of low grade ores have
collapsed drastically, export duty has not generated any revenue either for the
State or the Central Government," it said.
Earlier, Union Steel and Mines Minister Narendra
Singh Tomar had written to Finance Minister Arun Jaitleyseeking
to introduce a different duty structure for exports of low-grade iron ore from
Goa in the Budget.
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 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.62.20 |
|
|
1 |
Rs.94.71 |
|
Euro |
1 |
Rs.68.60 |
INFORMATION DETAILS
|
Information
Gathered by : |
PPT |
|
|
|
|
Analysis Done by
: |
SUB |
|
|
|
|
Report Prepared
by : |
VNT |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL
CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
3 |
|
--PROFITABILITY |
1~10 |
3 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
5 |
|
--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 |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
DEFAULTER
|
|
|
|
--RBI |
YES/NO |
NO |
|
--EPF |
YES/NO |
NO |
|
|
|
|
|
TOTAL |
|
49 |
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.