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|
MIRA
INFORM REPORT
|
Report No. : |
491459 |
|
Report Date : |
12.02.2018 |
IDENTIFICATION DETAILS
|
Name : |
ESSAR OIL LIMITED |
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Registered
Office : |
Khambhalia Post,
Post Box No. 24, District Jamnagar-361305, Gujarat |
|
Tel. No.: |
91-2833-241444 |
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|
Country : |
India |
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Financials (as
on) : |
31.03.2017 |
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Date of
Incorporation : |
12.09.1989 |
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Com. Reg. No.: |
04-032116 |
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Capital
Investment / Paid-up Capital : |
INR
15071.600 Million |
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|
|
CIN No.: [Company Identification
No.] |
U11100GJ1989PLC032116 [New] L11100GJ1989PLC032116 [Old] |
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IEC No.: |
Not Divulged |
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GST No.: |
Not Divulged |
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TAN No.: [Tax Deduction &
Collection Account No.] |
Not Available |
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PAN No.: [Permanent Account No.] |
AAACE0890P |
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Legal Form : |
A Closely Held Public Limited Liability Company |
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Line of Business
: |
Subject
is engaged in the business of Refining of crude oil and Marketing of
petroleum products in domestic and overseas markets. It is also engaged in
oil and gas exploration and production activities. [Registered Activity] |
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|
|
|
No. of Employees
: |
1873 (Approximately) |
RATING & COMMENTS
(Mira Inform has adopted New Rating mechanism w.e.f. 23rd
January 2017)
|
MIRA’s Rating : |
D |
|
Credit Rating |
Explanation |
Rating Comments |
|
D |
High Risk |
Business dealing not recommended or on
secured terms only |
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Status : |
Sick Company |
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Payment Behaviour : |
Slow and Delayed |
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Litigation : |
Clear |
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Comments : |
Subject was incorporated in the year 1989 and it is part of the "Essar Group". The company is a fully-integrated oil and gas company with a strong presence across the hydrocarbon value chain from exploration and production to refining and oil retail. Rating is constrained on account of weak financial profile of one Essar group entity 'Essar Steel Limited'. Essar Steel has been classified as an NPA (Non-Performing Asset) by HDFC Bank Limited and Bank of India. Essar group with debt INR 1.5 lakh crore, will use a majority of INR 860000.000 million to repay the $5 billion debt of Essar Oil. Another $5 billion will be used to repay debts of the holding company Essar Global Funds. Furthermore, as per the investigation the company was found as wilful defaulter and defaulted hefty amount of its debt with The Unit Trust Of India Limited and the amount charged is INR 1501.553 million dated 31-03-2005 and Bank of Baroda and the amount charged is INR 31.7 million dated 31-12-2006 and Specified Undertaking of Unit Trust of India and the amount charged is INR 959.5 million dated 31-03-2006 and Island Bank Limited and amount charged is INR 1738.2 million dated 30-09-2008 and (List enclosed in the report and latest updated for the same is not available). Payments are reported to be slow and delayed. In view of aforesaid, we do not recommend any business dealings with the subject. No clear credit ever be granted. |
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
|
Country Name |
Previous Rating (30.06.2017) |
Current Rating (30.09.2017) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low Risk |
A2 |
|
Moderately Low Risk |
B1 |
|
Moderate Risk |
B2 |
|
Moderately High Risk |
C1 |
|
High Risk |
C2 |
|
Very High Risk |
D |
EXTERNAL AGENCY RATING
NOT AVAILABLE
RBI DEFAULTERS’ LIST STATUS
Subject’s name has been found enlisted as a
defaulter in the publicly available RBI Defaulters’ list and the details of the
same are as under :
SUIT-FILED ACCOUNTS OF INR 10.000
MILLION AND ABOVE AS ON
12-FEB-2018
BORROWERS DETAILS
|
Borrowers’ Name : |
Essar Oil Limited |
|
Address : |
Khambalia Post, P.B. No. 24, District Jamnagar, Gujarat : 361305 |
|
Name of Individual : |
|
|
Name of Credit Grantors / Bank & Branch: |
IndusInd Bank Limited [Mumbai Main] |
|
Amount (INR In Million) : |
INR 1738.200
Million |
SUIT-FILED ACCOUNTS OF INR 10.000 MILLION AND ABOVE
AS ON 20-JUL-2017
BORROWERS DETAILS
|
Borrowers’ Name : |
Essar Oil Limited |
|
Address : |
141, Maker Chamber IV, Nariman Point, Mumbai 400021, Maharashtra |
|
Name of Individual : |
|
|
Name of Credit Grantors / Bank & Branch: |
Bank of Baroda [Nariman Point Mumbai] |
|
Amount (INR In Million) : |
INR 31.700 Million |
SUIT-FILED
ACCOUNTS OF INR 10.000 MILLION AND ABOVE AS ON 21-JUL-2017
BORROWERS
DETAILS
|
Borrowers’ Name : |
Essar Oil Limited |
|
Address : |
Essar House, P.O Box No 7945, Mahalaxmi Maharashtra |
|
Name of Individual : |
SPECIFIED UNDERTAKING OF UNIT TRUST OF INDIA
|
|
Name of Credit Grantors / Bank & Branch: |
Specified Undertaking of Unit Trust of India [Mumbai] |
|
Amount (INR In Million) : |
INR 959.500
Million |
SUIT-FILED
ACCOUNTS (WILLFUL DEFAULTERS) OF INR 2.500 MILLION AND ABOVE AS ON 21-JUL-2017
BORROWERS DETAILS
|
Borrowers’ Name : |
Essar Oil Limited |
|
Address : |
Essar House, P.O. Box No.7945, Mahalaxmi, Mumbai - 400 034 |
|
Name of Individual : |
UNIT TRUST OF INDIA Limited
|
|
Name of Credit Grantors / Bank & Branch: |
Unit Trust of India Limited [Mumbai] |
|
Amount (INR In Million) : |
INR 1501.553 Million |
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
31-03-2016.
BIFR (Board for Industrial & Financial Reconstruction) LISTING
STATUS
Subject’s name is listed as a Sick Unit in the
publicly available BIFR (Board for Industrial & Financial Reconstruction)
list as of 13.11.2017.
IBBI (Insolvency and Bankruptcy Board of India) LISTING STATUS
Subject’s name is not listed in the publicly
available IBBI (Insolvency and Bankruptcy Board of India) list as of report date.
INFORMATION DECLINED
MANAGEMENT NON-COOPERATIVE
(Contact No: 91-22-67335000)
LOCATIONS
|
Registered/ Head Office : |
Khambhalia Post,
Post Box No. 24, District Jamnagar-361305, Gujarat, India. |
|
Tel. No.: |
91-2833-241444 |
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Fax No.: |
Not Available |
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E-Mail : |
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Website : |
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Corporate
Office 1 : |
Essar House 11,
Keshavrao Khadye Marg, Mahalaxmi, Mumbai – 400034, Maharashtra, India |
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Tel. No.: |
91-22- 66601100 |
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Fax No.: |
91-22-66601809 |
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Corporate
Office 2 : |
Equinox Business Park, 4th Floor, Tower-2, Off Bandra Kurla Complex, L.B.S. Marg, Kurla (West), Mumbai – 400070, Maharashtra, India |
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Tel. No.: |
91-22-67335000 |
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Fax No.: |
91-22-67082183 |
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Branch Offices
: |
Located at: · Ahemdabad · Kolkata · Chennai · Hazira · Kolkata · New Delhi · Saalya · Visakhapatnam · Paradip |
DIRECTORS
AS ON: 31.03.2017
|
Name : |
Mr. Dilip Jayantilal Thakkar |
|
Designation : |
Director |
|
Address : |
Little Gibbs Road, 12/B Acropolis Malabar Hill, Mumbai – 400006, Maharashtra, India |
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Date of Birth/Age : |
01.10.1936 |
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Date of Appointment : |
03.11.1994 |
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DIN No.: |
00007339 |
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Name : |
Naina Kidwai Lal |
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Designation : |
Additional Director |
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Address : |
Mustail-29, Killa No 13, Opp Dig Farm Village Jaunapur, Mehrauli, New Delhi-110047, India |
|
Date of Appointment : |
09.10.2017 |
|
DIN No.: |
00017806 |
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|
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|
Name : |
Mr. Chakrapany Manoharan |
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Designation : |
Whole time Director |
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Address : |
G-15, Essar Nandniketan Township, Opposite Baid Village Jamnagar Khambhalia Highway, SH 25 Jamnagar 361006 |
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Date of Birth/Age : |
21.11.1953 |
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Date of Appointment : |
29.03.2012 |
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DIN No.: |
00184471 |
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PAN No.: |
ACEPM1907G |
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|
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|
Name : |
Mr. Sudarsan Raghuraman |
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Designation : |
Nominee Director |
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Address : |
12, Jeevan Anand, Rajabali Patel Lane, Opposite Breach, Candy Hospital Mumbai – 400025, Maharashtra, India |
|
Date of Appointment : |
15.01.2013 |
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DIN No.: |
06443250 |
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|
Name : |
Marcus George Cooper |
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Designation : |
Nominee Director |
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Address : |
Route De Suisse 15 Vaud Founex 1297 CH |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07686158 |
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|
|
Name : |
Krzysztof Zielicki Antoni |
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Designation : |
Nominee Director |
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Address : |
25, Creffield Road, London W53RR GB |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07692730 |
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|
|
Name : |
Andrew James Balgarnie |
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Designation : |
Nominee Director |
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Address : |
36 Connaught Square London W22HL GB |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07692748 |
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|
Name : |
Chin Hwee Tan |
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Designation : |
Nominee Director |
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Address : |
28 Grove Crescent Singapore 279161 SG |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07703660 |
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|
|
|
Name : |
Elena Sapozhnikova |
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Designation : |
Nominee Director |
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Address : |
Tvardovskogo Street House 31, Bld. 2, Aprt. 362 MOSCOW NA RU |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07703689 |
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Name : |
Jonathan Kollek |
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Designation : |
Nominee Director |
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Address : |
67-3-2 Usacheva Street Moscow 119048 RU |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07710920 |
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Name : |
Charles Anthony Fountain |
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Designation : |
Nominee Director |
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Address : |
Little Pell Farm Blacksmiths Lane, Wadhurst East Sussex TN56DN GB |
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Date of Appointment : |
19.08.2017 |
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DIN No.: |
07719852 |
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Name : |
Alexander Romanov |
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Designation : |
Nominee Director |
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Address : |
8 Istrinskaya Street, Building 3, Apartment 154, Moscow 121467 RU |
|
Date of Appointment : |
19.08.2017 |
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DIN No.: |
07731508 |
KEY EXECUTIVES
|
Name : |
Mr. Mayank Bhargava |
|
Designation : |
Company Secretary |
|
Address : |
204, Phoenix-B, Hiranandani Estate, Patlipada, Thane-400607, Maharashtra, India |
|
Date of Appointment : |
19.10.2016 |
|
PAN No.: |
AFBPB9032P |
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|
|
|
Name : |
Mr. Anand Balasundaram |
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Designation : |
Chief Executive Officer (KMP) |
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Address : |
D 814 Paradise, Raheja Vihar, Powai, Mumbai-400072, Maharashtra, India |
|
Date of Appointment : |
19.08.2017 |
|
PAN No.: |
AAEPB9965H |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON: 31.03.2017
|
Names of Shareholders |
|
No. of Shares |
|
Essar Energy Holdings Limited |
|
396607443 |
|
Oil Bidco (Mauritius) Limited |
|
116581496 |
BUSINESS DETAILS
|
Line of Business : |
Subject
is engaged in the business of Refining of crude oil and Marketing of
petroleum products in domestic and overseas markets. It is also engaged in
oil and gas exploration and production activities. [Registered Activity] |
|
|
|
|
Brand Names : |
Not Available |
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Agencies Held : |
Not Available |
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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 : |
1873 (Approximately) |
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Bankers : |
· State Bank of India · ICICI Bank Limited · Axis Bank Limited · IDBI Bank Limited · Punjab National Bank · Indian Overseas Bank · Bank of India · Central Bank of India · State Bank of Mysore · Oriental Bank of Commerce · Allahabad Bank · Yes Bank Limited ·
Indian Bank |
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Facilities : |
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Auditors : |
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|
Name : |
Deloitte Haskins and Sells Chartered Accountants |
|
Address : |
Ahmedabad, Gujarat, India |
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Memberships : |
Not Available |
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Collaborators : |
Not Available |
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Holding Company : |
· Essar Oil and Gas Limited, Mauritius (EOGL) upto February 15, 2016 · Essar Energy Holdings Limited (EEHL) w.e.f. February 16, 2016 |
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Ultimate Holding Company : |
Essar Global Fund Limited, Cayman (EGFL) |
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Intermediate holding Companies : |
· Essar Energy Limited (Formerly Known as Essar Energy PLC)(EEL) · Essar Oil & Gas Limited, Mauritius (EOGL) w.e.f. February 16, 2016 |
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Associates Company : |
· Vadinar Power Company Limited (VPCL) · Vadinar Liquid Terminals Limited (VLTL) w.e.f. March 27, 2015 |
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Subsidiaries
Company : |
· Essar Oil Trading Mauritius Limited(EOTML) · Vadinar Properties Limited (VPL) w.e.f. February 18, 2015 · Essar Oil and Gas Exploration and Production Limited w.e.f. May 10, 2016 |
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Other related party
: |
Essar Oil Limited Employees Provident Fund (Controlled Trust) |
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Fellow Subsidiaries Company : |
· Aegis Limited(AEGIS) · AGC Networks Limited(AGCNET) · AGC Networks Pte. Ltd.(AGCNETPTE) · Bhander Power Limited(BPL) · Equinox Business Parks Private Limited(EBPPL) · Essar Bulk Terminal Limited(EBTL) · Essar Bulk Terminal Paradip Limited(EBTPL) · Essar Bulk Terminal (Salaya) Limited(EBTSL) · Essar Energy Overseas Limited(EEOL) · Essar Electric Power Development Corporation Limited(EEPDCL) · Essar Exploration & Production Limited(EEPL) · Essar Exploration & Production Limited, Nigeria(EEPLN) · Essar Energy Services (Mauritius) Limited(EESML) · Essar Exploration & Production (India) Limited(EEXPIL) · Essar Gujarat Petrochemicals Limited(EGPL) · Arkay Logistics Limited (FKA Essar Logistics Limited) (ELL) · Essar Oil (UK) Limited(EOLUK) · Essar Oilfields Services India Limited(EOSIL) · Essar Power Gujarat Limited(EPGL) · Essar Power Hazira Ltd(EPHL) · Essar Project (India) Limited(EPIL) · Essar Ports Limited(EPL) · Essar Power (Jharkhand) Ltd(EPJL) · Essar Power MP Limited(EPMPL) · Essar Power Limited(EPOL) · Essar Power Orissa Ltd(EPOLL) · Essar Power Transmission Company Limited(EPTCL) · Equinox Realty & Infrastructure Private Limited(ERIPL) · Essar Shipping Limited(ESL) · Essar Steel Logistics Limited(ESTLL) · Essar Steel (Jharkhand) Limited (From October 19, 2016 upto March 19, 2017)(ESTLR) · Essar Steel India Limited(ESTL) · Energy Transportation International Limited(ETIL) · Ibrox Aviation And Trading Pvt Ltd (From December 1, 2016)(IBROX) · Brahmani Thermal Power Private Limited (FKA Navbharat Power Private Limited)(NPPL) · Peak Trading Overseas Limited(PTOL) · Vadinar Oil Terminal Limited(VOTL) · Vadinar Ports & Terminal Limited(VPTL) · Essar Refinery Projects Limited, India (FKA Essar · Road Projects Limited) upto February 26, 2015(ERPL) · Essar Power Hazira Holdings Limited(EPHHL) · Essar Energy Holdings Limited Upto February 15, 2016(EEHL). |
CAPITAL STRUCTURE
AS ON 31.03.2017
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
5000000000 |
Equity Shares |
INR 10/- each |
INR 50000.000 Million |
|
|
|
|
|
Issued and Subscribed Capital:
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
1552487155 |
Equity Shares |
INR 10/- each |
INR 15524.900
Million |
Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
1490561155 |
Equity Shares |
INR 10/- each |
INR 14905.600
Million |
|
61926000 |
Add : Forfeited shares - Equity shares of INR 10 each |
|
INR 166.000
Million |
|
|
|
|
|
|
|
Total |
|
INR 15071.600 Million |
a) Reconciliation of the number of shares
outstanding at the beginning and at the end of the year :
|
Particulars |
As at March 31, 2017 |
|
|
|
Number of shares |
Amount |
|
Shares outstanding at the beginning of the year |
1450668359 |
14506.700 |
|
Add : Equity shares issued |
39892796 |
398.900 |
|
Shares outstanding at the end of the year |
1490561155 |
14905.600 |
The above includes 951,463,854 underlying equity shares represented by 6,218,718 outstanding global depository shares (GDS). Each GDS represents 153 underlying equity shares.
b) The rights, preferences and restrictions
attached to each class of shares including restrictions on the distribution of
dividends and the repayment of capital:
The Company has only one class of equity shares having a par value of INR 10 per share. Each holder of an equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Holders of GDS are entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of shares, less the fees and expenses payable under the Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDS had no direct voting rights in respect of shares, which underlie the GDS. With the amendment of the Depository Agreement on February 14, 2017, the holders of GDS are entitled to instruct the Depository to exercise the voting rights, arising under the equity shares represented by the GDS at general meetings and through postal ballot.
c) Shares held by holding / ultimate and
Intermediate holding company and / or their subsidiaries / associates and
shareholders holding more than 5% shares (including GDS) in the Company:
|
Particulars |
As at March 31, 2017 |
|
|
|
Number of shares |
% of share |
|
6,218,718 (6,218,718 as at March 31, 2016 and 1,457,718 as at April 01, 2015) GDS held by Essar Energy Holdings Limited, Mauritius |
951463854 |
63.83% |
|
Equity shares held by Essar Energy Holdings Limited, Mauritius |
396607443 |
26.61% |
|
Equity Shares held by Oil Bidco (Mauritius) Limited, a promoter entity as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009 |
116581496 |
7.82% |
FINANCIAL DATA
[all figures are
in INR Million]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
I.
EQUITY AND LIABILITIES |
|
|
|
|
(1)Shareholders' Funds |
|
|
|
|
(a) Share Capital |
15071.600 |
14672.700 |
14661.200 |
|
(b) Reserves & Surplus |
175476.000 |
168458.200 |
158135.900 |
|
(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) + (2) |
190547.600 |
183130.900 |
172797.100 |
|
|
|
|
|
|
(3)
Non-Current Liabilities |
|
|
|
|
(a) Long-term borrowings |
140566.100 |
178681.400 |
163045.600 |
|
(b) Deferred tax liabilities (Net) |
45223.100 |
48799.100 |
39590.500 |
|
(c)
Other long term liabilities |
2529.000 |
20576.600 |
20934.900 |
|
(d)
long-term provisions |
0.000 |
51.400 |
51.400 |
|
Total
Non-current Liabilities (3) |
188318.200 |
248108.500 |
223622.400 |
|
|
|
|
|
|
(4) Current Liabilities |
|
|
|
|
(a)
Short term borrowings |
101516.600 |
112541.000 |
100693.600 |
|
(b)
Trade payables |
261590.400 |
253095.600 |
210966.400 |
|
(c)
Other current liabilities |
108905.700 |
68754.300 |
78992.800 |
|
(d)
Short-term provisions |
246.300 |
276.800 |
240.600 |
|
Total
Current Liabilities (4) |
472259.000 |
434667.700 |
390893.400 |
|
|
|
|
|
|
TOTAL |
851124.800 |
865907.100 |
787312.900 |
|
|
|
|
|
|
II.
ASSETS |
|
|
|
|
(1) Non-current assets |
|
|
|
|
(a)
Fixed Assets |
|
|
|
|
(i)
Tangible assets |
388356.000 |
402369.900 |
404864.000 |
|
(ii)
Intangible Assets |
282.800 |
300.700 |
254.800 |
|
(iii)
Capital work-in-progress |
4000.400 |
36248.200 |
33334.100 |
|
(iv) Intangible assets under development |
0.000 |
0.000 |
0.000 |
|
(b) Non-current
Investments |
1470.200 |
1047.500 |
10755.800 |
|
(c) Deferred tax assets
(net) |
0.000 |
0.000 |
0.000 |
|
(d) Long-term Loan
and Advances |
0.000 |
0.000 |
3123.200 |
|
(e)
Other Non-current assets |
75201.100 |
27013.600 |
36233.300 |
|
Total
Non-Current Assets |
469310.500 |
466979.900 |
488565.200 |
|
|
|
|
|
|
(2) Current assets |
|
|
|
|
(a)
Current investments |
0.000 |
10344.800 |
13096.000 |
|
(b)
Inventories |
69856.200 |
39425.000 |
51308.900 |
|
(c)
Trade receivables |
174649.100 |
156265.400 |
123964.600 |
|
(d)
Cash and cash equivalents |
33667.500 |
15878.900 |
20442.700 |
|
(e)
Short-term loans and advances |
2573.400 |
75982.700 |
15881.500 |
|
(f)
Other current assets |
101068.100 |
101030.400 |
74054.000 |
|
Total
Current Assets |
381814.300 |
398927.200 |
298747.700 |
|
|
|
|
|
|
TOTAL |
851124.800 |
865907.100 |
787312.900 |
PROFIT
& LOSS ACCOUNT
|
|
PARTICULARS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
|
|
SALES |
|
|
|
|
|
|
|
Revenue from Operations |
720845.700 |
623811.700 |
832058.100 |
|
|
|
Other Income |
28492.600 |
22883.000 |
10264.100 |
|
|
|
TOTAL |
749338.300 |
646694.700 |
842322.200 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Materials Consumed |
419657.500 |
366635.300 |
703364.000 |
|
|
|
Purchases of Stock-in-Trade |
78885.200 |
50302.400 |
29193.500 |
|
|
|
Changes in inventories of finished goods, work-in-progress
and Stock-in-Trade |
(12445.800) |
7251.400 |
14790.100 |
|
|
|
Employees benefits expense |
4217.000 |
3193.200 |
2292.100 |
|
|
|
Other expenses |
34992.500 |
41402.800 |
35044.800 |
|
|
|
Excise Duty |
112155.200 |
97843.100 |
0.000 |
|
|
|
Exceptional Items |
52511.900 |
7127.700 |
9180.000 |
|
|
|
TOTAL |
689973.500 |
573755.900 |
793864.500 |
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION |
59364.800 |
72938.800 |
48457.700 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES |
37656.800 |
26821.700 |
25671.800 |
|
|
|
|
|
|
|
|
|
|
PROFIT/
(LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION |
21708.000 |
46117.100 |
22785.900 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION |
16809.900 |
15731.900 |
7571.200 |
|
|
|
|
|
|
|
|
|
|
PROFIT/ (LOSS) BEFORE
TAX |
4898.100 |
30385.200 |
15214.700 |
|
|
|
|
|
|
|
|
|
Less |
TAX |
16108.500 |
17499.300 |
0.000 |
|
|
|
|
|
|
|
|
|
|
PROFIT/ (LOSS) AFTER
TAX |
(11210.400) |
12885.900 |
15214.700 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN FOREIGN
CURRENCY |
|
|
|
|
|
|
|
Interest |
|
|
967.900 |
|
|
|
FOB value of exports |
|
|
369819.900 |
|
|
|
On commodity hedging |
|
|
23878.300 |
|
|
|
Income from technical services |
|
|
248.000 |
|
|
|
Overseas Trading of Crude |
|
|
2481.200 |
|
|
|
Others |
|
|
25.100 |
|
|
TOTAL EARNINGS |
NA |
NA |
397420.400 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
|
|
581117.400 |
|
|
|
Components and spare parts (including other consumable spares and coal) |
|
|
6137.400 |
|
|
|
Capital Goods |
|
|
2950.100 |
|
|
TOTAL IMPORTS |
NA |
NA |
590204.900 |
|
|
|
|
|
|
|
|
|
|
Earnings/ (Loss)
Per Share (INR) |
|
|
|
|
|
|
Basic
|
(7.70) |
8.89 |
10.50 |
|
|
|
Diluted |
(7.70) |
8.87 |
10.48 |
|
CURRENT MATURITIES OF LONG TERM DEBT DETAILS
|
PARTICULARS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
Current Maturities of Long term Borrowings |
25229.300 |
15866.700 |
17031.100 |
|
|
|
|
|
|
Net Cash generated from operating activities |
94128.200 |
72356.300 |
29388.800 |
|
|
|
|
|
|
Net cash generated from operating activities |
91696.300 |
71500.200 |
29913.800 |
KEY
RATIOS
EFFICIENCY RATIOS
|
PARTICULARS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
Average Collection Days (Sundry
Debtors / Income * 365 Days) |
88.43 |
91.43 |
54.38 |
|
|
|
|
|
|
Account Receivables Turnover (Income / Sundry Debtors) |
4.13 |
3.99 |
6.71 |
|
|
|
|
|
|
Average Payment Days (Sundry Creditors / Purchases * 365 Days) |
191.52 |
221.57 |
105.11 |
|
|
|
|
|
|
Inventory Turnover (Operating Income / Inventories) |
0.85 |
1.85 |
0.94 |
|
|
|
|
|
|
Asset Turnover (Operating Income / Net Fixed Assets) |
0.15 |
0.17 |
0.11 |
LEVERAGE RATIOS
|
PARTICULARS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
Debt Ratio ((Borrowing
+ Current Liabilities) / Total Assets) |
0.75 |
0.73 |
0.73 |
|
|
|
|
|
|
Debt Equity Ratio (Total Liability / Networth) |
1.40 |
1.68 |
1.62 |
|
|
|
|
|
|
Current Liabilities to Networth (Current Liabilities / Net Worth) |
2.48 |
2.37 |
2.26 |
|
|
|
|
|
|
Fixed Assets to Networth (Net Fixed Assets / Networth) |
2.06 |
2.40 |
2.54 |
|
|
|
|
|
|
Interest Coverage Ratio (PBIT / Financial Charges) |
1.58 |
2.72 |
1.89 |
PROFITABILITY RATIOS
|
PARTICULARS |
|
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
Net Profit Margin ((PAT / Sales) * 100) |
% |
(1.56) |
2.07 |
1.83 |
|
|
|
|
|
|
|
Return on Total Assets ((PAT / Total Assets) * 100) |
% |
(1.32) |
1.49 |
1.93 |
|
|
|
|
|
|
|
Return on Investment (ROI) ((PAT / Networth) * 100) |
% |
(5.88) |
7.04 |
8.80 |
SOLVENCY RATIOS
|
PARTICULARS |
31.03.2017 |
31.03.2016 |
31.03.2015 |
|
Current Ratio (Current
Assets / Current Liabilities) |
0.81 |
0.92 |
0.76 |
|
|
|
|
|
|
Quick Ratio ((Current Assets – Inventories) / Current
Liabilities) |
0.66 |
0.83 |
0.63 |
|
|
|
|
|
|
G-Score Ratio Financial (Networth / Total Assets) |
0.22 |
0.21 |
0.22 |
|
|
|
|
|
|
G-Score Ratio Debt (Debts / Equity Capital) |
17.74 |
20.93 |
19.15 |
|
|
|
|
|
|
G-Score Ratio Liquidity (Total Current Assets / Total Current Liabilities) |
0.81 |
0.92 |
0.76 |
Total
Liability = Short-term Debt + Long-term Debt + Current Maturities of Long-term
debts
FINANCIAL ANALYSIS
[all figures are
in INR Million]
DEBT EQUITY RATIO
|
Particular |
31.03.2015 |
31.03.2016 |
31.03.2017 |
|
|
INR
In Million |
INR
In Million |
INR
In Million |
|
Share Capital |
14661.200 |
14672.700 |
15071.600 |
|
Reserves & Surplus |
158135.900 |
168458.200 |
175476.000 |
|
Share Application money
pending allotment |
0.000 |
0.000 |
0.000 |
|
Net
worth |
172797.100 |
183130.900 |
190547.600 |
|
|
|
|
|
|
long-term borrowings |
163045.600 |
178681.400 |
140566.100 |
|
Short term borrowings |
100693.600 |
112541.000 |
101516.600 |
|
Current Maturities of Long
term Borrowings |
17031.100 |
15866.700 |
25229.300 |
|
Total
borrowings |
280770.300 |
307089.100 |
267312.000 |
|
Debt/Equity
ratio |
1.625 |
1.677 |
1.403 |
YEAR-ON-YEAR GROWTH
|
Year
on Year Growth |
31.03.2015 |
31.03.2016 |
31.03.2017 |
|
|
INR
In Million |
INR
In Million |
INR
In Million |
|
Sales |
832058.100 |
623811.700 |
720845.700 |
|
|
|
-25.028 |
15.555 |
NET PROFIT MARGIN
|
Net
Profit Margin |
31.03.2015 |
31.03.2016 |
31.03.2017 |
|
|
INR
In Million |
INR
In Million |
INR
In Million |
|
Sales |
832058.100 |
623811.700 |
720845.700 |
|
Profit/ (Loss) |
15214.700 |
12885.900 |
(11210.400) |
|
|
1.83% |
2.07% |
(1.56%) |
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check list by
info agents |
Available in
Report (Yes/No) |
|
1 |
Year of establishment |
Yes |
|
2 |
Constitution of the entity -Incorporation
details |
Yes |
|
3 |
Locality of the entity |
Yes |
|
4 |
Premises details |
No |
|
5 |
Buyer visit details |
-- |
|
6 |
Contact numbers |
Yes |
|
7 |
Name of the person contacted |
No |
|
8 |
Designation of contact person |
No |
|
9 |
Promoter’s background |
Yes |
|
10 |
Date of Birth of Proprietor / Partners /
Directors |
Yes |
|
11 |
Pan Card No. of Proprietor / Partners |
No |
|
12 |
Voter Id Card No. of Proprietor / Partners |
No |
|
13 |
Type of business |
Yes |
|
14 |
Line of Business |
Yes |
|
15 |
Export/import details (if applicable) |
No |
|
16 |
No. of employees |
No |
|
17 |
Details of sister concerns |
Yes |
|
18 |
Major suppliers |
No |
|
19 |
Major customers |
No |
|
20 |
Banking Details |
Yes |
|
21 |
Banking facility details |
Yes |
|
22 |
Conduct of the banking account |
-- |
|
23 |
Financials, if provided |
Yes |
|
24 |
Capital in the business |
Yes |
|
25 |
Last accounts filed at ROC, if applicable |
Yes |
|
26 |
Turnover of firm for last three years |
Yes |
|
27 |
Reasons for variation <> 20% |
-- |
|
28 |
Estimation for coming financial year |
No |
|
29 |
Profitability for last three years |
Yes |
|
30 |
Major shareholders, if available |
Yes |
|
31 |
External Agency Rating, if available |
No |
|
32 |
Litigations that the firm/promoter
involved in |
-- |
|
33 |
Market information |
-- |
|
34 |
Payments terms |
No |
|
35 |
Negative Reporting by Auditors in the
Annual Report |
No |
INDEX OF CHARGES
|
SNO |
SRN |
CHARGE ID |
CHARGE HOLDER NAME |
DATE OF CREATION |
DATE OF MODIFI CATION |
DATE OF SATIS FACTION |
AMOUNT |
ADDRESS |
|
1 |
G502 80700 |
100115540 |
IDBI TRUSTEESHIP
SERVICES LIMITED |
29/06/2017 |
- |
- |
30600000000.0 |
ASIAN BUILDING,
GROUND FLOOR, 17,R. KAMANI MARG, BALLARD ESTATEMUMBAIMH400001IN |
|
2 |
G46730354 |
100105116 |
IDFC BANK LIMITED |
17/05/2017 |
- |
- |
3050000000.0 |
KRM TOWER, 7TH
FLOOR, NO. 1,HARRINGTON ROAD, CHETPET,CHENNAITA600031IN |
|
3 |
G60435013 |
100131707 |
POWER FINANCE
CORPORATION LIMITED |
11/05/2017 |
- |
- |
16958900000.0 |
'URJANIDHI',
1,BARAKHAMBA LANE,CONNAUGHT PLACE,NEW DELHIDE110001IN |
|
4 |
G57786188 |
100128997 |
POWER FINANCE
CORPORATION LIMITED |
09/05/2017 |
- |
- |
20533900000.0 |
'URJANIDHI',
1,BARAKHAMBA LANE,CONNAUGHT PLACE,NEW DELHIDE110001IN |
|
5 |
G04079828 |
100028181 |
YES BANK LIMITED |
29/03/2016 |
- |
- |
12500000000.0 |
9TH FLOOR, NEHRU
CENTRE, DISCOVERY OF INDIA,DR. ANNIE BESANT ROAD, WORLI,MUMBAIMH400018IN |
|
6 |
G01471838 |
100019556 |
YES BANK LIMITED |
21/12/2015 |
- |
- |
14500000000.0 |
9TH FLOOR, NEHRU
CENTRE, DISCOVERY OF INDIA,DR. ANNIE BESANT ROAD, WORLI,MUMBAIMH400018IN |
|
7 |
G37750684 |
10581141 |
IDBI TRUSTEESHIP
SERVICES LIMITED |
25/06/2015 |
21/12/2016 |
- |
11000000000.0 |
ASIAN BLDG.,
GROUND FLOOR, 17, R.KAMANI MARG,BALLARD ESTATE,MUMBAIMH400001IN |
|
8 |
C57136343 |
10574162 |
IDBI TRUSTEESHIP
SERVICES LIMITED |
02/06/2015 |
02/06/2015 |
- |
57820000000.0 |
ASIAN BLDG.,
GROUND FLOOR, 17, R.KAMANI MARG,BALLARD ESTATE,MUMBAIMH400001IN |
|
9 |
C60989712 |
10559579 |
IDBI TRUSTEESHIP
SERVICES LIMITED |
20/03/2015 |
14/07/2015 |
- |
34291723440.0 |
ASIAN BLDG.,
GROUND FLOOR, 17, R.KAMANI MARG,BALLARD ESTATE,MUMBAIMH400001IN |
|
10 |
C21597612 |
10520436 |
IDBI TRUSTEESHIP
SERVICES LIMITED |
11/09/2014 |
11/09/2014 |
- |
4650000000.0 |
ASIAN BLDG.,
GROUND FLOOR, 17, R.KAMANI MARG,BALLARD ESTATE,MUMBAIMH400001IN |
UNSECURED LOANS
|
PARTICULARS |
31.03.2017 (INR
In Million) |
31.03.2016 (INR
In Million) |
|
LONG-TERM BORROWINGS |
|
|
|
Finance lease
obligation |
|
|
|
From related parties |
12024.300 |
12134.900 |
|
From others |
0.000 |
3.200 |
|
Other loans |
|
|
|
Conditional grant from a bank |
0.000 |
82.000 |
|
Amount included under Other financial liabilities (Current) |
(66.100) |
(113.800) |
|
|
|
|
|
Total |
11958.200 |
12106.300 |
GENERAL BACKGROUND:
Essar Oil Limited (the Company) is a public limited company incorporated under the provisions of the Companies Act, 1956. It is primarily engaged in the business of refining of crude oil and marketing of petroleum products in domestic and overseas markets. It was also engaged in oil and gas exploration and production activities, which activity has been discontinued from 31st March, 2017.
On October 15, 2016 the majority shareholders of the Company had entered into agreements (SPAs) to sell their shares following which, inter alia, the Company initiated and is presently in the final stages of completing the following actions:
(a) Sale of its Exploration and Production (E&P) business
(b) L iquidating amounts due from certain entities
(c) A cquisition of Vadinar Oil Terminal Limited (VOTL) and Vadinar Power Company Limited (VPCL)
The financial statements were approved for issue by the board of directors on 1st August, 2017.
The financial statements are presented in Indian Rupees (`) and all values are rounded to the nearest Crore, except where otherwise indicated.
STATE OF COMPANY’S
AFFAIRS
Their Refinery has delivered excellent operating and financial performance for the financial year ended March 31, 2017 post successful completion of a shut-down in the mid of FY 2015-16. They have generated an impressive momentum in expanding our retail network for sale of petroleum products as well as leveraging the potential of our existing network. Their retail network reached to 6,130 as of March 31, 2017 out of which 3,499 retail outlets were operating and balance sites were under various stages of implementation.
They operate in an industry that involves heavy machinery, chemical processes that have the potential for hazards. Essar Oil is committed to the health and safety of its employees, contractors and customers. Keeping their employees safe, healthy and secure is their highest priority. They believe our safety culture starts with organizational leaders and extends to all who work for their organization and by actively caring for each other, their customers and the community. They are happy to share that the refinery has set a benchmark with 3,286 LTI free days as on March 31, 2017.
GLOBAL MARKETS AND INDUSTRY OVERVIEW
Global growth is expected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018 led by stronger economic activity in last quarter of 2016, resulting in higher growth expectations in the coming years.
The oil demand growth registered in 2016 was 1.6 million bpd including unexpected growth in the mature Organisation for Economic Co-operation and Development (OECD) markets partly due to colder than normal weather and higher demand from industrial fuel users. More than 75% of the global growth in output and consumption will be contributed by emerging markets and developing economies like India and China.
During the year, Dubai crude prices moved higher from USD 35/bbl in March 2016 to USD 51/bbl by March 2017, partly due to the agreement by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut oil production. While question-marks remain over the adequacy and duration of the production cuts, compliance has been good and the agreement has provided price support. Stronger activity and expectations of more robust future global demand also contributed to strengthening of oil prices since their lows in early 2016 despite higher production of shale oil.
The energy markets would continue to be impacted by the geo-political developments around the globe. US instance on climate change, as well as US policy with respect to infrastructure spending, international trade and Iran are likely to impact global energy markets. In Europe, the impact of Brexit and the rise of populist parties also
will have an impact on the political stability and the economies of the Europe while China’s ‘One Belt, One Road’ programme and India’s ‘Make in India’ initiative should add new impetus to economic growth in the major East of Suez markets.
On the oil products markets, gasoline demand remained strong in the wake of lower oil prices even though the pace of growth was not as high as previous year. Demand growth in the US, India and China has supported gasoline prices and margins though they were not as high as previous year due to high stock levels. Distillate demand which had been at a low ebb, impacted by the slowdown in Chinese economic growth, picked up towards the end of the year with increased mining and oil drilling activity in US. Cleaner fuels mandates in the US, China
and India will tighten the market for ultra-low Sulphur grades of gasoline and diesel. Naphtha margins also remained supported due to high petrochemical margins and resultant increased demand from Far East Asia.
A significant development that has occurred in the previous year is the decision by the International Maritime Organization (IMO) to proceed with lowering sulphur bunker fuel emissions standards in 2020. This will serve to transform bunker fuel from a low quality residual product to a much higher quality blended fuel. Responses to ‘IMO 2020’ will transform both the shipping and refining industries, and are likely to have a significant impact on crack spread relationships both for fuel oil and for middle distillates.
INDIA PERSPECTIVE:
India has become the world’s sixth largest economy by GDP, overtaking United Kingdom during the previous financial year. The country is also the world’s fastest growing large economy, surpassing China, and would retain the title for foreseeable future as per the International Monetary Forum.
India’s high growth trajectory coincides with oil demand growth far outpacing any other country in the region. The country is gradually becoming the focus of attention as Chinese demand growth slows. Indeed, India has overtaken Japan and South Korea as the second largest consumer of oil in Asia-Pacific. Indian per capita oil consumption is expected to grow from the current 1.2 barrels per year to 1.5 barrels per year over the next 5 years.
To meet its energy requirements, the country is dependent on a mix of Coal, Oil and Gas. While the government is providing impetus to the renewable sources of energy, India remains the third largest crude importer in the world, behind US and China. The country is dependent on imports to meet nearly 80% of its oil needs.
The country has benefited immensely from the current low oil price environment, which has aided the government in removing obstacles to investment in energy supply while also focusing on energy efficiency and pricing reforms. The initiatives towards use of cleaner fuels like LPG and low-emission transportation fuels has benefitted
millions of domestic consumers, apart from helping the environment.
REFINERY OPERATIONS
The refinery made a remarkable step forward in its journey during the year 2016-17 where the Company achieved several significant milestones. The Company could scale up its performance and reach new heights due to committed hard work, excellent coordination, focus on execution and innovation. This gives huge satisfaction and confidence that our Refinery will achieve greater heights in future.
Continuing its record of operating beyond its rated capacity, the Refinery processed 20.94 MMT of crude during the year, highest ever, against its nameplate capacity of 20.00 MMTPA. Other major performance highlights include highest ever production of HSD (10,053 kT), MS (3,498 kT) and highest ever crude receipt through SPM (18.7 MMT). Another major successful achievement has been processing alternate Crudes for Mangala in CDU – 2.
The highest reliability & availability of units is the main factor for achieving the best refinery performance so far. All process units at the Refinery were operated with high level of capacity utilization with excellent reliability & safety. The Company achieved 100% availability of primary units and 99.5% average availability of all refinery units.
In order to sustain and further improve reliability, Project “Vishisht”, Asset Performance Management for Risk Based Inspection and Reliability Centric Maintenance was successfully operationalised.
MARKETING PERFORMANCE
The Company continued to expand its retail network. In FY 2016- 17, the Company added 1,400 new retail outlets to reach 3,499 operational retail outlets across the country and 2,631 retail outlets were under various stages of implementation as of March 31, 2017. The sales from retail operations grew by 69% from 1.64 million KL in financial year 2015–16 to 2.80 million KL in FY 2016–17. This growth can mainly be attributed to expansion of Company’s retail network as well as opportunity presented to the private players in the retail segment by deregulation of diesel prices, thereby linking the price of diesel to the global markets.
The Company continues to be the preferred supplier to a wide range of customers in diverse industrial segments such as cement factories, power plants, chemical industries, fertilizer plants and construction companies. Essar Oil sells its products in both domestic and international markets. During financial year 2016-17, the Company sold 8.97 MMT of products in the domestic market, representing 47% of our total sales and the remaining 53% products were sold in the International market. Public sector oil marketing companies continued to be their major customers, contributing to around 38% of their entire domestic sales volumes.
In another landmark reform, the Government of India has implemented daily pricing for Motor Spirit and High Speed Diesel. Initially, it was implemented on pilot basis in 5 cities namely Udaipur, Vizag, Puducherry, Jamshedpur and Chandigarh effective from May 1, 2017 and from June 16, 2017, the same was implemented
across the country, thus, aligning the prices at the Retail Outlets to the international markets on daily basis.
PERFORMANCE OF
EXPLORATION & PRODUCTION DIVISION
The Company had a portfolio of six E&P assets out of which five blocks were in the unconventional coal bed methane (CBM) space at various locations across the country. CBM production from their flagship CBM Project, located at Raniganj East, Durgapur in West Bengal registered a significant growth during this year, with production of close to 920,000 scmd as of March 31, 2017.
As part of the Company’s plans to move out of Exploration & Production business and to focus on Refining and Marketing activities, the Company had obtained approval of the Shareholders by way of postal ballot on January 9, 2017 for hiving off of E&P Business, to its wholly owned subsidiary, Essar Oil and Gas Exploration and Production Limited (EOGEPL). The Company entered into a Business Transfer Agreement (BTA) with EOGEPL. The E&P Business has been transferred to EOGEPL on March 31, 2017 pursuant to the BTA. As approved by Shareholders, the investment in EOGEPL was subsequently sold to Essar Exploration and Production Limited, Mauritius.
CONTINGENT
LIABILITIES:
|
Particulars |
31.03.2017 (INR
In Million) |
31.03.2016 (INR
In Million) |
|
a) Claims against
the Company not acknowledged as debts |
|
|
|
(i) In respect of income tax |
738.600 |
709.300 |
|
(ii) In respect of sales tax / VAT{ includes likely reimbursement of INR 19282.500 million (as at March 31, 2016 INR 13781.200 million and as at April 01, 2015 INR Nil) } |
24946.100 |
16327.500 |
|
(iii) In respect of custom duty / excise duty / service tax {includes likely reimbursement of INR 472.200 million (as at March 31, 2016 INR Nil and as at April 01, 2015 INR Nil)} |
5676.400 |
4949.400 |
|
(iv) Others {including INR Nil (as at March 31, 2016 INR 5.400 million and as at April 01, 2015 INR 5.100 million) pertaining to joint venture} |
2246.700 |
2107.700 |
|
Others includes certain arbitration matters INR 55.500 million (as March 31, 2016 INR 55.500 million and INR 987.600 million as at April 01, 2015), Insurance related claim INR 1237.000 million (as March 31, 2016 INR 1099.900 million and INR 1029.900 million as at April 01, 2015), Gujarat entry tax INR 35.100 million (as March 31, 2016 INR 35.100 million and INR 35.100 million as at April 01, 2015), additional compensation in land acquisition matter INR 7.900 million (as March 31, 2016 INR 7.700 million and INR 7.400 million as at April 01, 2015), E & P legal disputes/claims INR Nil (as March 31, 2016 INR 292.300 million and INR 280.900 million as at April 01, 2015), Green cess matter INR 162.700 million (as March 31, 2016 INR 131.000 million and INR 101.000 million as at April 01, 2015), Renewable Purchase Obligation of INR 189.200 million (as March 31, 2016 INR 131.200 million and INR Nil as at April 01, 2015) and Other miscellaneous claims of INR 559.300 million (as March 31, 2016 INR 355.000 million and INR 2.400 million as at April 01, 2015). |
|
|
FIXED ASSETS:
Tangible Assets
- Land
- Building
- Plant and equipment
- Aircrafts helicopters
- Office equipment
- Motor vehicles
- Furniture and Fixture
- Computer
- Vehicles
Intangible assets
- Computer software
PRESS RELEASES:
DEFAULTERS MAY FOLLOW ESSAR ROUTE TO BLOCK BANKRUPTCY
Jul 06, 2017
MUMBAI: A number of large loan defaulters may follow the footsteps of Essar Steel by approaching courts to block bankruptcy proceedings against them, after the steelmaker got a stay on hearings on an insolvency petition moved by a bank.
Essar Steel is among a dozen defaulting companies identified by the Reserve
Bank of India for speedy recovery under the Insolvency and Bankruptcy Code,
after the regulator was empowered by the government to direct lenders to take
action against defaulters. Hearings in the RBI-identified cases started at the
National Company Law Tribunal (NCLT) last week.
On Tuesday, Essar Steel filed a ‘special civil application’ in the Gujarat High Court challenging the proceedings initiated by Standard Chartered, seeking its intervention on grounds that the company was discriminated against by the RBI and lenders since they have given other defaulters six months to come up with a restructuring plan. On the plea, the high court stayed further hearings in the Essar Steel case before NCLT’s Ahmedabad bench.
Lawyers said while the new recovery law does not give powers to civil courts to stall bankruptcy proceedings, the companies may approach courts alleging discrimination, as Essar has done.
"I think each company has different circumstances but these borrowers can challenge the RBI circular because the RBI has handpicked these 12 companies over other defaulters,” said Nishit Dhruva, managing partner at law firm MDP & Partners.
In a communication on June 15, the RBI advised banks to initiate insolvency proceedings against Bhushan Steel BSE -2.17 % (INR 444780.000 Million), Lanco Infra (INR 443650.000 Million), Essar Steel (INR 372840.000 Million), Bhushan Power (INR 372480.000 Million), Alok Industries (INR 220750.000 Million), Amtek Auto (INR 140750.000 Million), Monnet Ispat (Rs 12,115 crore), Electrosteel SteelsBSE -4.99 % (INR 102740.000 Million), Era Infra (INR 100650.000 Million), Jypaee Infratech (INR 96350.000 Million), ABG Shipyard (INR 69530.000 Million) and Jyoti Structures (INR 51650.000 Million). The NCLT has so far admitted Jyoti Structures' case for insolvency proceedings.
People dealing with some of the defaulters on the RBI list said they may also consider approaching courts. The companies themselves didn’t make any comment.
All of Essar Steel’s lenders have classified their loans to the company as bad.
State Bank of India BSE -1.80 %, the lead bank, has received consent from 89%
of the lenders to initiate insolvency resolution proceeding on Essar Steel.
StanChart has opted to pursue its case separately.
In its petition, Essar Steel contended that it had cleared INR 34670.000
Million of dues and argued that an admission by the NCLT of the insolvency
application would transfer the administration of an otherwise healing company
into the hands of an interim resolution professional.
The steel company also challenged setting March 2016 as the cut-off date for
defaults as it does not take into development thereafter. While bankers say
that as long as the company is classified as in default they have the right to
approach the NCLT for recovery of arrears, lawyers say that the resolution of
these non-performing assets may happen only after a long protracted battle.
“Other borrowers short-listed by the RBI will also take this opportunity; why
not? Soon we may start seeing others also challenging the RBI circular,” said
Meenakshi Iyer, partner at Advaya Legal. “This is a question of an entire
company being wound up so these borrowers are likely to fight tooth and nail
against it.”
ESSAR GROUP, TATAS, ARCELORMITTAL EYEING ESSAR STEEL
Oct 29, 2017
Top global players including Tata Steel,
Essar Group and ArcelorMittal are learnt to have submitted bids to acquire
debt-laden Essar Steel which is going through the insolvency resolution
process.
Essar Steel India Ltd, an integrated steel
producer with an installed capacity of 10 million tonnes per annum (MTPA) is
undergoing Corporate Insolvency Resolution Process (CIRP) under the provisions
of Insolvency and Bankruptcy Code.
The expression of interest (EoI) for the
company was invited by October 23.
"Essar Group has submitted EoI for Essar
Steel. A resolution plan will be submitted to IRP within the scheduled time
frame," an Essar Group Spokesperson said.
Asked about the rationale for bidding, the
spokesperson said IBC allows promoters to bid for their company at the
NCLT and there are no limitations.
He added that the entire process is on a
purely commercial basis and the final selection is done based on the highest
bid offered for the NCLT company.
"This practice of promoters being
permitted to bid in bankruptcy/insolvency cases is prevalent in the US, UK and
many developed and developing countries," the spokesperson said.
Meanwhile, a source said: "Essar Group,
participating in the bid has submitted EoI for Essar Steel along with a letter
of comfort from Russia's VTB capital which is a financial services company. It
is the investment arm of the VTB group.
A global financial services provider, the VTB
group comprises over 20 credit institutions and financial companies operating
across all key areas of the financial markets.
The group operates a large international
network and the majority shareholder of the VTB Bank is the Russian government,
which owns 60.9 percent of the voting shares.
When contacted with regard to participation
in the bid, a Tata Steel spokesperson said, "We keep looking at these
options, these are all stressed assets in the country. And as a process...we
keep looking at these assets."
A query sent to world's largest steelmaker
ArcelorMittal, however, remained unanswered.
A Vedanta spokesperson, when asked in this
regard, said the company has not shown any expression of interest.
Essar Steel is among the largest single
location steel producers with a 10 MTPA liquid steel capacity.
Besides, it has beneficiation and pellet making capacity of
20 MTPA spread across Vizag and Paradeep.
The company said it has made a gross
investment of over INR 50000.000 Million to set up the facilities. Besides,
shareholders have infused equity of over INR 160000.000 Million till date.
It employs approximately 4,500 persons
directly and more than 30,000 people indirectly.
Among state-owned firms, when contacted, a
SAIL spokesperson, denied having any knowledge of the steel PSU submitting any
expression of interest.
Steel Minister Chaudhary Birender Singh had
last month, when asked about plans for PSUs acquiring stressed assets of
companies in the sector recommended for insolvency, had told PTI that "As
far as stressed assets are concerned, only a few companies are from the steel
sector... One of the PSUs made a request (for acquiring) to the Finance
Ministry in this regard."
Promoted by Ruias, who recently exited Essar
Oil, Essar Steel was among the initial 12 companies identified by the Reserve
Bank of India (RBI) for insolvency proceedings.
Led by SBI, lenders in June this year had
decided to begin insolvency proceedings against Bhushan Steel, Essar Steel and
Electrosteel Steels by referring them to the National Company Law Tribunal
(NCLT) for recovery under IBC.
The decision was taken at a marathon meeting
chaired by the State Bank of India.
Essar Steel owes about INR 450000.000 Million to lenders.
ESSAR STEEL INSOLVENCY: REAL DEAL OR WINDOW SHOPPING
October 26, 2017
In India, important economic legislation has
a habit of jumping off the deep end.
The rules to operationalise the Companies
Act, 2013, the first big company law rewrite in over 50 years, were being
finalised on the midnight before the law came into force.
The Goods and Services Tax, rates for which were
announced barely a month before implementation, has plunged small Indian
businesses into sink-or-swim mode.
And now the Insolvency and Bankruptcy Code
(IBC) will pass one* of its first important tests by attempting to resolve an
asset with no less than INR 440000.000 Million in debt. In just over a year of
its enactment.
The Essar Steel matter is trial by fire.
It has all the ingredients of a potboiler.
- A promoter that is a large Indian
business family group reluctant to let go of the asset despite its
inability to repay the debt.
- A large clutch of Indian lenders led by
State Bank of India and a foreign lender too in Standard Chartered.
- A resolution process that's begun, with five big metal companies and Essar's promoter
family, the Ruias, expressing interest in the asset.
- And an outcome that virtually no one
can foresee.
The Bid Process
The 5 interested parties (the bidders)—Tata Steel Ltd.,
Arcelor Mittal, Vedanta India Ltd., Sumitomo and SAIL—will now have to present
resolution plans to the resolution professional.
Before that, an information memorandum will
have to be circulated, site visits organised, books opened up. As it's an
unlisted company, limited current information is available on Essar Steel.
Who will ensure the bidders get all the
information they need to present competitive resolution plans (bids)? After
all, they are competing with an insider—the Ruias.
- What are the asset parameters?
- Are there any poison pills?
- Who takes responsibility of the data
provided?
- Who will offer reps and warranties?
These are just some questions bidders will
grapple with.
From financial statements to material
litigation to liquidation value, the IBC regulations list all the information
to be provided in the memorandum. Some resolution professionals are also
creating a data room to give bidders access to more meaningful information,
says bankruptcy lawyer Alok Dhir in a phone chat. But he agrees that in cases
where the promoter is permitted to bid, other bidders will be at a disadvantage
and this may hurt bid pricing.
In cases where promoters are also permitted to bid, they clearly have
more information as against the unconnected resolution applicants and due to
this information asymmetry, the other resolution applicants may discount their
bid prices, due to which values achieved under the IBC are not necessarily the
best value for the assets/corporate debtor.
Alok Dhir, Managing Partner, Dhir & Dhir
Associates
The promoter is an insider, one can’t help
that. It’s like that everywhere, says a financial sector expert who didn’t want
to be identified.
He believes the promoter has an advantage
only when taking a point of view on contingencies. Otherwise, bid prices will
be similar he says, drawing a distinction only between strategic and financial
players.
Price Rules?
Conventional wisdom
suggests the bidder that offers the best price for the company i.e.: smallest
haircut for the lenders, should prevail.
But will the resolution
professional and thereafter the committee of creditors consider other criteria?
The law doesn’t require it. All it says is the committee may “approve any
resolution plan” with or without modifications and that the plan needs 75
percent approval.
The
committee of creditors may approve a resolution plan by a vote of not less than
seventy five percent of voting share of the financial creditors.
The
committee may approve any resolution plan with such modifications as it deems
fit.
Will Ruias Let Go Easily?
More scenario gazing, more questions. What if
the Ruias offer to match the best bid? Sure, they'd have to explain how they
now have the money to support this if till March they didn't. And maybe they'll
cite the Essar Oil Ltd. sale to explain their new-found financial
might.
But would a resolution professional and the
committee of creditors make room for such a situation? Will they lean towards
the comfort of returning the company to the hands that built it?
If such a possibility were to arise, would it
be necessary for the bid to beat the restructuring plan which the Ruias claim the company was close
to finalising with lenders before it ended up in the insolvency process?
If the terms of the bid, which would necessarily
include an upfront payment and debt repayment plan, are no better than the
half-finalised restructuring plan, would this process be considered a failure?
The proposed restructuring plan details are
not in the public domain. So only the company and its lenders would be able to
make that comparison. The Ruias, of course, know how to better the
restructuring plan. Other bidders don't.
The Litmus Test
As it unfolds, this resolution process will
answer some critical questions, setting precedent for all the other large
insolvencies the RBI has lined up.
In the face of promoter reluctance to sell,
can the lenders prevail?
How many bidders will eventually show
keenness to tangle with the Ruias in seeking to capture control?
Will the Ruias participation vitiate, or at
least complicate, the process?
Will price be the final determinant in such a
bid process or will "other factors" come into play?
Will the bid necessarily better the claimed
restructuring terms?
If the Ruias make the best bid and win back
the asset, no matter the legitimacy of the process, will it be deemed a farce?
Will this end up being a window shopping
exercise for the other bidders?
Many lawyers don’t share that cynicism.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international anti-terrorism
laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
INR |
|
US Dollar |
1 |
INR 64.37 |
|
UK Pound |
1 |
INR 89.71 |
|
Euro |
1 |
INR 78.89 |
INFORMATION DETAILS
|
Information
Gathered by : |
PUJ |
|
|
|
|
Analysis Done by
: |
VAR |
|
|
|
|
Report Prepared
by : |
IND |
SCORE FACTORS
|
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 |
RATING EXPLANATIONS
|
Credit Rating |
Explanation |
Rating Comments |
|
A++ |
Minimum Risk |
Business dealings permissible with minimum
risk of default |
|
A+ |
Low Risk |
Business dealings permissible with low
risk of default |
|
A |
Acceptable Risk |
Business dealings permissible with
moderate risk of default |
|
B |
Medium Risk |
Business dealings permissible on a regular
monitoring basis |
|
C |
Medium High Risk |
Business dealings permissible preferably
on secured basis |
|
D |
High Risk |
Business dealing not recommended or on
secured terms only |
|
NB |
New Business |
No recommendation can be done due to
business in infancy stage |
|
NT |
No Trace |
No recommendation can be done as the
business is not traceable |
NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.
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 are as follows:
·
Financial
condition covering various ratios
·
Company
background and operations size
·
Promoters
/ Management background
·
Payment
record
·
Litigation
against the subject
·
Industry
scenario / competitor analysis
·
Supplier
/ Customer / Banker review (wherever available)
This report is issued at
your request without any risk and responsibility on the part of MIRA INFORM
PRIVATE LIMITED (MIPL) or its officials.