1_0_09062012Fullerton GPI Ltd 08th June 2012

8132019 1_0_09062012Fullerton GPI Ltd 08th June 2012

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June 08

wwfullertonsecuritiescoin Page | 1

ODAWARI POWER AND ISPAT LTD BUY

dawari Power and Ispat Ltd (GPIL) the flagship company of the Hira Group of Industries based in

hattisgarh is a mid size steel manufacturer The company has a wide range of products from sponge

n billets wire rods and ferro alloys Besides this GPIL has presence in power sector with consolidated

wer generation capacity of 103MW

GPIL is in process of becoming fully integrated steel player In iron ore mining space it has got

mining lease of iron ore mines at Ari Dongri and Boria Tibu in Chhattisgarh with total capacity of

12mn tonnes Of these Ari Dongri mine is operational whereas for Boria Tibu the company has

received all regulatory clearance and is awaiting surface right from forest department It is expected

that the mine will be operational in FY14 and the total output from both the mines would reach

around 12mn tonnes and would meet 100 captive requirement

The company has pellet production capacity of 12mn tonnes (including 06mn tonnes capacity of

its 75 subsidiary Ardent Steel) For both the plants the operational issues has been cleared and is

expected to operate at higher capacity utilization leading to higher pellet production The company

is expected to register pellet production growth of 79 over FY12-14

The company is expected to improve its operating margin from the fall in key raw material prices

like iron ore and coal Currently the company meets its iron ore short-fall from spot market Post

commencement of operation at Boria Tibu mine it will meet its iron ore requirement captively and

will be insulated from the fluctuation of iron ore prices in the spot market

GPIL is implementing 50MW solar power plant under Jawaharlal Nehru National Solar Mission and

the project is expected to be completed by Q1FY14 Power generated will be sold at Rs 122 per unit

or 25 years to NTPC Vidyut Vyapar Nigam Limited (NVVN) Moreover the company is planning to set

up a 13GW of thermal power plant in Chhattisgarh through its 100 subsidiary Godawari Energy

Ltd (GEL)

sed on a consolidated FY14 PE multiple of 4 the fair value for the company works out

Rs 142

STOCK DATA

BSE NSE Code

Bloomberg Code

No of Shares (Mn)

Sensex Nifty

PRICE DATA

CMP Rs (06th June 12)

Beta

Market Cap (Rs mn)

52 Week High-low

Average Daily Volume

STOCK RETURN ()

30D 3M

Godawari Power and Ispat Ltd -1 10

Sensex -2 -4

Nifty -2 -4

SHARE HOLDING PATTERN ()

Promoter

Institutional

Non Institutional

Total

1 Year Price Performance (Rel to Sensex)

GOD

Projections (Rs Mn) FY10A FY11A FY12A FY13E FY14E

Net Sales 8266 11274 20604 20145 21898

Y-o-Y Growth -24 36 83 -2 9

EBIDTA 1305 2323 2818 3099 3458

Y-o-Y Growth 6 78 21 10 12

Adjusted PAT 572 859 843 1032 1129

Y-o-Y Growth -8 50 -2 22 9

EPS Rs 18 27 27 33 36

BVPS Rs 160 215 243 276 311

EBIDTA 16 21 14 15 16

NPM 7 8 4 5 5

ROE 11 13 11 12 11

PER x 35 32

PB Ratio 04 04

Financial Snapshot

30

40

50

60

70

80

90

100

110

Sensex GPIL

Recommendations lt= 1 year 1 - 2 yrs

Strong Buy

Buy

Hold

Reduce

SellStrong Buy ndash Expected Returns gt 20 pa

Buy ndash Expected Returns from 10 to 20 pa

Hold ndash Expected Returns from 0 to 10 pa

Reduce ndash Expected Returns from 0 to 10 pa with possible down

Sell ndash Returns lt 0



June 08


Godawari Power amp Ispat Ltd (GPIL) formally Ispat Godawari Ltd (IGL) belonging to HIRA Group of Industries

pur was incorporated in 1999 to set up an integrated steel plant with captive power generation Today GPIL is an

egrated steel manufacturer and has dominant presence in the long product segment of the steel industry mainly into

d steel wire

GPIL is an end-to-end manufacturer of mild steel wires In the process the company manufactures sponge iron

ets ferro alloys captive power wires rods steel wires oxygen gas fly ash brick and pellets GPIL is also awarded rights for

al and iron ore mining for captive consumption as a result of which the company has managed to traverse the entire

ue chain (raw material to final product) in steel wires and is now a fully integrated manufacturer

In 2007 the company was allotted a coal mine in Chhattisgarh in JV with four other companies The total coal

erve is around 243mn tonnes of that GPILrsquos share is 26 (ie 63mn tonne) On iron ore mining front GPIL was awarded

ning lease in two iron ore mine with total reserves of 15mn tonnes For both GPIL has a mining license of 06MT having Fe

ntent of 62-64 and Lump to Fine ratio of 5050 Ari Dongri captive coal mine with reserve of 7mn tonnes is operational

ce Q1FY10 Another mine at Boria Tibu with reserve of 8mn tonnes is expected to be operational in FY13 Post

mmencement of operation at the Boria Tibu the company will meet its iron ore captively and will be insulated from the

ctuation of iron ore price in spot market Moreover due to mines located in the vicinity of the plant there will be

bstantial reduction in the cost of procurement These mines have lump concentration of 50 which will be used in the

nufacturing of sponge iron Before converting it into sponge iron lump mine is converted into pellet with the help of two

nts of 06mn tonnes each As a result of this process the landed cost of the ore for sponge production will be lower which

l increase the operating margin in the upcoming years

USINESS PROFILE

GPIL Pellets (mn Tonnes) 060

Ardent Steel Pellets (mn Tonnes) 060Sponge Iron (mn Tonnes) 050

Steel Billets (mn Tonnes) 040

HB Wire (mn Tonnes) 012

Ferro Alloys (mn Tonnes) 002

Iron ore Mine (mn Tonnes) 060

Power Capacity (MW) 10300

Current Production Capacity as on FY12

Hira Ferro Alloys Ltd (51 Subsidiary) 30

Thermal 20

Wind Mill 15

Bio Mass 85

GPIL 73

Thermal 11

Waste Heat recovery 42

Bio Mass 20

Consolidated Total 103

Electricity Capacity Portolio as on FY12

Resource Location Reserves (mn Tonnes) Capacity (mn Tonnes) Status

Iron Ore Ari Dongri Chhattisgarh 7 06 Operational

Iron Ore Boria Tibu Chhattisgarh 8 06Awaiting Surface Clearence from

Forest Ministry

Iron Ore 983107983144983144983137983156983156983145983155983143983137983154983144 100 -- Received Prospecting License

Coal Nakia (GPIampLs 26 stake) 243 --Waiting for Environment and Forest

Clearence

Mining Portfolio as on FY12

GPIL is the first comto utilize lump iron omanufacture sponge

GPIL has manufacturing capof 12mn tonnes

GPIL has pgeneration capacit73MW and is expectadd 50MW in FY14

From its subsidiaryAlloys Ltd it has pgeneration capacit30MW

The company has stfocusing on business from pbusiness due to volin merchant power r

Iron ore mine at Tibu is expected toperational by FY13



June 08


uctuation in prices of raw material amp fuel GPILrsquos major raw material is iron ore and coal On the iron ore front one of two

n captive mines commenced production The other mine ie Boria Tibu also received all regulatory clearances and should

rt production soon Hence GPIL will be insulated from the fluctuation of iron ore prices in the spot market However until

th the mines start production GPILrsquos operations will continue to be affected by fluctuation in the prices of iron ore to the

ent of dependence on market purchases

On the coal front GPIL is currently meeting its coal requirement through long-term linkages with Coal India

mited and imports The prices of imported coal depend upon the global market demand and supply and linkage prices as

termined by the Ministry of Coal The company shall be insulated from price fluctuations once captive mines startoduction GPIL awaits regulatory approvals from various departments for the coal blocks it has been allotted

anges in selling prices A specific feature of steel and mining industries is their liability to cyclical changes in steel prices

critical conditions where the selling prices were almost equal to the average cost of production of sponge iron

ofitability margins gets impacted So if prices of finished products fall to such a level margins cannot be maintained

edit interest and exchange fluctuation risk Financial crisis of the economy in 2008 has led to an interbank crisis of

st reducing the levels of interbank credits and liquidity of the financial system Simultaneously increased volatility and

certainties led to increased premium in the cost of external financing The increased cost of financing may negatively

ect GPILrsquos financial results and lead to lower profitability Fluctuation of interest rates may cause variation in the value ofsting foreign currency

The level of existing rupee debt as on March 31 2011 is Rs3bn and foreign currency term loans of USD 12mn out

which 10mn is un-hedged Hence change in interest rates may have significant impact on the financial results

USINESS PROFILE

pansions in steel business GPIL signed MoUs with the Government of Chhattisgarh to undertake

Setting up of a sponge iron plant of 06mn tonnes per annum (mtpa) pig iron of 02mtpa steel billets of 06mtpa steel

olled product of 05mtpa ferro alloys of 20ktpa calcinations plant of 01mtpa and iron ore pellet plant of 3mtpa

Setting up an iron ore pellet plant with an installed capacity of 12mtpa at the organizationrsquos existing plant location at

Siltara in Raipur

pansions in power business

GPIL is foraying into the renewable energy space by setting up 50MW Solar Thermal Power Project under the Jawaharlal

Nehru National Solar Mission (JNNSM) Scheme through its 100 subsidiary Godawari Green Energy Limited (GGEL)

The company is also planning a 13GW thermal power plant through its 100 subsidiary Godawari Energy Limited (GEL)

at Raigarh Chhattisgarh

SK amp CONCERNS

The company planning to increaspellet producapacity from 0tonnes to 12mn toat its existing plaRaipur

GPIL is also planni13GW of pcapacity in Chhattis

GPIL is exposed tvolatility in the spoore and coal pricesits captive mineoperational

The company is expto gain from the firon ore and coal pr

GPIL is expected taffected due to volin currency rates asexposure from fo

currency term loans



June 08


NANCIAL PERFORMANCE In Q4FY12 the company reported 53 Y-o-Y jump in consolidated top-line and a decline of 1 Y-o-Y in bottom-

e Operating revenue and net profit for the quarter stood at Rs 7bn and Rs 03bn respectively Growth in top-line was

ed by higher saleable volume and realization across the product portfolio Steel billets ferro alloys and pellets sales

reased by 45 19 and 18 Y-o-Y respectively However sales of sponge iron and power units declined by 11 and 39

pectively On realization front there was double digit growth on Y-o-Y basis for all products expect ferro alloys On

quential basis top-line and bottom-line increased by 37 and 210

Operating margin (EBITDA) declined by 520bps Y-o-Y due to 63 Y-o-Y increase in operating expenditure

erating expenditure was higher due to 66 31 and 36 increase in raw material employee expenses and other

pense Other expense includes exchange loss of Rs 02bn on account of foreign currency transaction Thus leading to

TDA of Rs 1bn with EBITDA margin of 15 as against 20 in the same quarter last year Other income declined by 97

d stood at Rs 3mn Bottom-line reported profit of Rs 03bn due to 11 and 8 increase in interest and tax expenses

pectively Tax expenses increased by 200bps leading to an increase in effective tax rate to 22

During the quarter the company has decided to issue and allot 5mn equity warrants convertible into 5mn equity

ares of Rs 10- each on preferential basis to the promoters andor promoters group at a price of Rs 130 per equity

rrants The holders of the said equity warrants shall have an option to convert the same into equity of the company on or

fore the expiry of 18 months from the date of allotment The fund raised would be used for funding the CAPEX of the

mpany

826611274

20604 2014521898

16

21

1415

16

7 8

45 5

0

5

10

15

20

25

-

5000

10000

15000

20000

25000

FY10A FY11A FY12A FY13E FY14E

Yearly Operating Margins

Revenue (Rs Mn) EBIDTA Margin PAT Margin

4298

4940

42874810

6568

20

1512

1215

86 2 2 5

0

5

10

15

20

25

0

3500

7000

Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12

Quarterly Operating Margins

Revenue (Rs mn) EBITDA Margins PAT Margins

61078383 8412 7814 7529

1424818281

2104616637 16592

30837

34437 37403 33761 3411250

35 29 35 35

00

10

20

30

40

50

0

10000

20000

30000

40000


Yearly Operating Performance

Pellets Realization (Rs per Tonne) Sponge Iron Realization (Rs per Tonne)

HB Wire Realization (Rs per Tonne) Power Realization (Rs per Unit)

7924 7956 7930 8571 9190

19445 19404 1987321464

23441

34811

35855 36415

37818

39525

25

29 29

30

26

24

26

28

30

0

10000

20000

30000

40000


Quarterly Operating Performance



In Q4FY12 toincreased by 53bottom-line declineY-o-Y

Top-line growth aided by growth involume and hrealization acrossproduct profile

Bottom-line was affdue to higher inand effective tax ra

On sequential operating mincreased 272bps d

correction in keymaterial prices

On Y-o-Y basis prealization increase4 and declined byon sequential basis

Pellet production dQ4FY12 increased dimprovement in capacity utilization



June 08


GPILrsquos top-line bottom-line expected to groCAGR of 3 andrespectively FY12-14

sed on the conservative estimated given below we estimate that GPILrsquos operating revenue to grow at a CAGR of 3 over

2012-14E to Rs 22bn Furthermore due to benefits arising from the backward integration process and increased capacity

lization we further estimate that net profit would grow at a CAGR of 16 to Rs 1bn over the same period Based on a

nsolidated FY14 PE multiple of 4 the fair value for the company works out to Rs 142

er Comparison Adhunik Metaliks Ltd (AML) is a diversified player having presence across steel mining and power

ors Moreover it has presence in merchant mining business It is trading at higher multiple due to highly integrated

ness and exposure to merchant mining business However the current valuation cannot be sustained due to falling

nganese ore prices Indian Metals and Ferro Alloys Ltd (IMFL) is one of the low cost producers of ferro alloys globally due to

tive mines and power units It is trading at higher PE multiple due to stable business model (earning stability as majority of

output is tied up for long term contracts) Major concern with IMFL is that it drives around 80 of the revenue from exportness and is subjected to risk related to subdued global demand and volatility in currency exchange rates GPIL is better

ced as compared to its peers because of the benefits arising from the integration process and improving capacity utilization

s plants

EER COMPARISION

ALUATION

Peer Group Comparison

CompaniesRevenue

(Rs mn)

EBIDTA

Margin ()

PAT

Margin ()ROE

PE

(x)

PB

(x)

CMP

(Rs)

FV

(Rs)

GODAWARI POWER amp ISPAT LTD 20604 14 41 109 4 05 113 10

ADHUNIK METALIKS LTD 19674 22 02 08 39 03 34 10

INDIAN METALS amp FERRO ALLOYS LTD 11927 19 52 76 12 09 280 10

FY12 Consolidated Figures

FY13E FY14E

Total Pellet Production (mn Tonnes) 079 116

Pellet realization (Rs per Tonne) 7814 7529

Sponge Iron Production (mn Tonnes) 037 040

Sponge Iron Realization (Rs per Tonne) 16637 16592

HB Wire Production (mn Tonnes) 010 010

HB Wire Realization (Rs per Tonne) 33761 34112

Steel Billet Production (mn Tonnes) 024 026

Steel Billet Realization (Rs per Tonne) 29060 29612

Ferro Alloy Production (mn Tonnes) 002 002

Ferro Alloy Realization (Rs per Tonne) 61861 63525

Power Generation Capacity (MW) 103 153

Merchant Power Realization (Rs per Unit) 350 350

Tax Rate () 20 20

Key Financial Assumptions

GPIL is expectebenefit from ongoing integrprocess and improplant cap

utilization



June 08


NANCIAL STATEMENTS AND RATIOS Particulars (Rs Mn) FY10A FY11A FY12A FY13E FY14E

Net Sales 8266 11274 20604 20145 21898

Operating Expenditure 6960 8950 17787 17046 18440

Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12

Interest Expenses 337 731 1158 1099 1321

Profit Before Tax 666 1193 1096 1417 1507

Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11

Valuation Ratios (x) FY13E FY14E

PER x 35 32

PB Ratio 04 04

Consolidated Profit amp Loss Statement

Particulars (Rs Mn) FY10A FY11A FY12E FY13E FY14E


Depreciation 342 554 677 731 813

Other Adjustments 328 624 1158 1099 1321

Direct Tax Paid (103) (189) (220) (283) (301)

Change in Working Capital (226) (1738) 1338 (1979) (219)

Cash Flow from Operations 1008 445 4049 984 3121

Change in Fixed Assets (2499) (2458) (1637) (1878) (2131)

Other Adjustments 2 56 126 86 (5)

Cash Flow from Investment (2497) (2402) (1511) (1792) (2137)

Proceeds from Debt 1632 3429 940 4662 5158

Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0

Cash Flow from Financing 1248 3124 (2911) 633 (1024)

Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815

Transferred to BS 196 1363 990 815 775

Consolidated Cash Flow Statement



June 08


Particulars (Rs Mn) FY10A FY11A FY12A FY13E FY14E

Current Ratio 28 49 19 32 30

Cash Ratio 02 11 03 04 03

Interest Coverage Ratio 03 04 05 05 05

Debt Equity Ratio 10 13 12 12 11

ROCE 7 9 9 9 9

Ratio Analysis


Application of Funds

Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162

Other Non Current Assets 0 0 89 17 23

Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993

Cash amp Bank Balance 196 1363 990 815 775

Loans amp Advances 587 1097 981 1247 1405

Other Current Assets 1 1 7 2 3

Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318

Reserves and Surplus 4713 5732 6463 7413 8466

Minority Interest 101 764 925 1026 1102

Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)

Sundry Creditors 354 727 1527 1131 1274

Other Current Liabilities 464 321 1588 796 933

Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615

Consolidated Balance Sheet

NANCIAL STATEMENTS AND RATIOS



June 08


OARD OF DIRECTORS Director Name Current Position Description

Biswajit Choudhuri Non-Executive Independent Chairman of the Board

Shri Biswajit Choudhuri has been appointed as Non-Executive Independent Chairman of the Board of Godawari Power And Ispat Ltd effe

November 09 2011 He is a Mechanical Engineer from the Indian Institute of Technology Kharagpur and is a Fellow Member of the Institut

Cost and Works Accountants of India He is an honorary fellow member ot the Indian Institute of Banking and Finance He has over forty fo

experience in the fields of engineering management banking and finance He was the Chairman and Managing Director of the United Ban

from 1996 to 2001 He was associated with UCO Bank as an Executive Director on its board from 1992 to 1993 He has also been associated

British Oxygen Company from 1963 to 1972 as part of their management cadre He is currently on the boards of Bihar Caustic and Chemica

Orind Exports Limited Aekta Limited DIC India Limited Bengal Sunny Rock Estate Housing Development Company Limited Hindusthan E

and Industries Limited Shalzip Industries Limited and A V Investments and Dealers Limited He is not holding any shares in the Company

Dinesh GandhiNon-Independent Whole Time Director - Finance

Director

Shri Dinesh Kumar Gandhi is Non-Independent Whole Time Director - Finance Director of Godawari Power And Ispat Ltd He is a qualified

Accountant and Company secretary Mr Gandhi has more than 18 years of post qualification experience in different Industries particularly

industry in areas like Accounts Finance Project Planning and Financing He started his career at Mepco Metal Powders Ltd as Manager Fin

worked there for 4 years He then worked as an independent financial consultant to various industrial houses in Madhya Pradesh Subsequ

worked at Indore Steel amp Iron Mills Ltd and Shri Ishar Alloy Steels Ltd for a period of 7 years as Vice President (Finance ) He then joined Re

comm as Commercial Head Raipur cluster and worked there for 3 years before joining the Company

Bajrang AgrawalManaging Director Non-Independent Whole Time

Director

Shri Bajrang Lal Agrawal is Managing Director and Non-Independent Whole Time Director of Godawari Power And Ispat Ltd He is an Elect

Engineer from Pandit Ravi Shakar Shukla University Raipur While his family concentrated on setting up a tyre trading business he sought

more challenging vocation of industrial entrepreneurship He is Chairman of All India Sponge Iron Manufacturers Association (SIMA) He is

Chairman of Confederation of Indian Industries Chhattisgarh Chapter

Abhishek Agrawal Additional Non-Independent Executive Director Shri Abhishek Agrawal is serving as Additional Non-Independent Executive Director in the Board

Vinod Pillai Non-Independent Whole Time Director

Shri Vinod Pillai is Non-Independent Whole Time Director of Godawari Power And Ispat Ltd since June 1 2011 He is a Commerce Gradua

Ravi Shankar Shukla University Raipur He serves on the Board of Ms Hira Cement Limited He has experience in purchase sales liasionin

administration and logistics management He joined Ms Hira Cement Limited as Marketing Executive in the year 1989 to look after sales

administration and liasioning activities In the year 1997 he joined Ms Hira Steels Limited as Deputy General Manager (Marketing amp Liasio

was looking after the purchase of various steel items required for setting up of the project and after commissioning of the project he was

after purchase of raw materials sale of finished goods liasioning with suppliers government agencies local authorities etc He was also lo

the logistics In the year 2000 he joined Ms R R Ispat Limited as General Manager (Marketing amp Liasioning) and subsequently promoted t

President (Marketing amp Liasioning) and has been looking after similar activities like purchase of steel items required for the project sale of

goods logistics management and liasioning with various outside authorities Ms R R Ispat Limited has now been merged with the Comp

Dine sh Agra wa l No n-Ind epe nd ent Non-E xe cuti ve Dire ctor

Shri Dinesh Kumar Agrawal has been appointed as Non-Independent Non-Executive Director of Godawari Power And Ispat Ltd effective

09 2011 He is an Electronic Engineer from Pune University He is a promoter of the Company and has been associated with the technical a

Ferro Alloys Unit and the Steel Rolling Mills in the past He was the Managing Director of the Companyrsquos 100 subsidiary Ms R R Ispat Lim

has been merged with the Company He is currently involved with the day to day administration of the technical aspects of the various pro

company He has been associated with the Company since incorporation

Shashi Kumar Non-Executive Independent Director

Shri Shashi Kumar is Non-Executive Independent Director of Godawari Power And Ispat Ltd He is a graduate from the Indian School of Min

Dhanbad and also holds an AISM Diploma in Mining He is a member of the Mining Geological and metallurgical Institute of India and the

Institute of Engineers He has around three decades of experience in the mining industry He was appointed as the technical director of Co

Limited (ldquoCILrdquo) in 2001 and from 2005 to 2006 he was appointed as CILrsquos the Chairman and Managing Director He is currently on the boar

Neyveli Lignite Corporation Limited Shyam DRI Power Limited Jessop and Company Limited and Rashmi Metahks Limited He is not hold

shares in the Company

Bhrigu Ojha Non-Executive Independent Director

Shri Bhrigu Nath Ojha is Non-Executive Independent Director of Godawari Power And Ispat Ltd He is Bachelor of Electrical Engineering froSindri and also holds a diploma in Senior Management Program from Cranford School of Management UK He has over 40 years of exper

Power sector in building developing managing and directing Power sector organizations to success He is fully capable of and representi

organizations and undertaking high level roles and in matters related to power industry government issues commerce and media He wa

Chairman of CIGRE India High Voltage Equipment Technical Committee and a member of CIGRE International Council on Electric System

was also associated with National Thermal Power Corporation from 1996-2003

Board Of Directors



June 08


Godawari Power amp Ispat Ltd (GPIL) formally Ispat Godawari Ltd (IGL) belonging to HIRA Group of Industries

pur was incorporated in 1999 to set up an integrated steel plant with captive power generation Today GPIL is an

egrated steel manufacturer and has dominant presence in the long product segment of the steel industry mainly into

d steel wire

GPIL is an end-to-end manufacturer of mild steel wires In the process the company manufactures sponge iron

ets ferro alloys captive power wires rods steel wires oxygen gas fly ash brick and pellets GPIL is also awarded rights for

al and iron ore mining for captive consumption as a result of which the company has managed to traverse the entire

ue chain (raw material to final product) in steel wires and is now a fully integrated manufacturer

In 2007 the company was allotted a coal mine in Chhattisgarh in JV with four other companies The total coal

erve is around 243mn tonnes of that GPILrsquos share is 26 (ie 63mn tonne) On iron ore mining front GPIL was awarded

ning lease in two iron ore mine with total reserves of 15mn tonnes For both GPIL has a mining license of 06MT having Fe

ntent of 62-64 and Lump to Fine ratio of 5050 Ari Dongri captive coal mine with reserve of 7mn tonnes is operational

ce Q1FY10 Another mine at Boria Tibu with reserve of 8mn tonnes is expected to be operational in FY13 Post

mmencement of operation at the Boria Tibu the company will meet its iron ore captively and will be insulated from the

ctuation of iron ore price in spot market Moreover due to mines located in the vicinity of the plant there will be

bstantial reduction in the cost of procurement These mines have lump concentration of 50 which will be used in the

nufacturing of sponge iron Before converting it into sponge iron lump mine is converted into pellet with the help of two

nts of 06mn tonnes each As a result of this process the landed cost of the ore for sponge production will be lower which

l increase the operating margin in the upcoming years

USINESS PROFILE

GPIL Pellets (mn Tonnes) 060

Ardent Steel Pellets (mn Tonnes) 060Sponge Iron (mn Tonnes) 050

Steel Billets (mn Tonnes) 040

HB Wire (mn Tonnes) 012

Ferro Alloys (mn Tonnes) 002

Iron ore Mine (mn Tonnes) 060

Power Capacity (MW) 10300

Current Production Capacity as on FY12

Hira Ferro Alloys Ltd (51 Subsidiary) 30

Thermal 20

Wind Mill 15

Bio Mass 85

GPIL 73

Thermal 11

Waste Heat recovery 42

Bio Mass 20

Consolidated Total 103

Electricity Capacity Portolio as on FY12

Resource Location Reserves (mn Tonnes) Capacity (mn Tonnes) Status

Iron Ore Ari Dongri Chhattisgarh 7 06 Operational

Iron Ore Boria Tibu Chhattisgarh 8 06Awaiting Surface Clearence from

Forest Ministry

Iron Ore 983107983144983144983137983156983156983145983155983143983137983154983144 100 -- Received Prospecting License

Coal Nakia (GPIampLs 26 stake) 243 --Waiting for Environment and Forest

Clearence

Mining Portfolio as on FY12

GPIL is the first comto utilize lump iron omanufacture sponge

GPIL has manufacturing capof 12mn tonnes

GPIL has pgeneration capacit73MW and is expectadd 50MW in FY14

From its subsidiaryAlloys Ltd it has pgeneration capacit30MW

The company has stfocusing on business from pbusiness due to volin merchant power r

Iron ore mine at Tibu is expected toperational by FY13



June 08



















USINESS PROFILE





Siltara in Raipur






SK amp CONCERNS






currency term loans



June 08


















mpany

826611274

20604 2014521898

16

21

1415

16

7 8

45 5

0

5

10

15

20

25

-

5000

10000

15000

20000

25000




4298

4940

42874810

6568

20

1512

1215

86 2 2 5

0

5

10

15

20

25

0

3500

7000




61078383 8412 7814 7529

1424818281

2104616637 16592

30837

34437 37403 33761 3411250

35 29 35 35

00

10

20

30

40

50

0

10000

20000

30000

40000





7924 7956 7930 8571 9190

19445 19404 1987321464

23441

34811

35855 36415

37818

39525

25

29 29

30

26

24

26

28

30

0

10000

20000

30000

40000














June 08














s plants

EER COMPARISION

ALUATION


CompaniesRevenue

(Rs mn)

EBIDTA

Margin ()

PAT

Margin ()ROE

PE

(x)

PB

(x)

CMP

(Rs)

FV

(Rs)





FY13E FY14E













Tax Rate () 20 20



utilization



June 08



Net Sales 8266 11274 20604 20145 21898


Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12



Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11


PER x 35 32

PB Ratio 04 04




Depreciation 342 554 677 731 813


Direct Tax Paid (103) (189) (220) (283) (301)







Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0


Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815





June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08



















USINESS PROFILE





Siltara in Raipur






SK amp CONCERNS






currency term loans



June 08


















mpany

826611274

20604 2014521898

16

21

1415

16

7 8

45 5

0

5

10

15

20

25

-

5000

10000

15000

20000

25000




4298

4940

42874810

6568

20

1512

1215

86 2 2 5

0

5

10

15

20

25

0

3500

7000




61078383 8412 7814 7529

1424818281

2104616637 16592

30837

34437 37403 33761 3411250

35 29 35 35

00

10

20

30

40

50

0

10000

20000

30000

40000





7924 7956 7930 8571 9190

19445 19404 1987321464

23441

34811

35855 36415

37818

39525

25

29 29

30

26

24

26

28

30

0

10000

20000

30000

40000














June 08














s plants

EER COMPARISION

ALUATION


CompaniesRevenue

(Rs mn)

EBIDTA

Margin ()

PAT

Margin ()ROE

PE

(x)

PB

(x)

CMP

(Rs)

FV

(Rs)





FY13E FY14E













Tax Rate () 20 20



utilization



June 08



Net Sales 8266 11274 20604 20145 21898


Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12



Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11


PER x 35 32

PB Ratio 04 04




Depreciation 342 554 677 731 813


Direct Tax Paid (103) (189) (220) (283) (301)







Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0


Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815





June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08


















mpany

826611274

20604 2014521898

16

21

1415

16

7 8

45 5

0

5

10

15

20

25

-

5000

10000

15000

20000

25000




4298

4940

42874810

6568

20

1512

1215

86 2 2 5

0

5

10

15

20

25

0

3500

7000




61078383 8412 7814 7529

1424818281

2104616637 16592

30837

34437 37403 33761 3411250

35 29 35 35

00

10

20

30

40

50

0

10000

20000

30000

40000





7924 7956 7930 8571 9190

19445 19404 1987321464

23441

34811

35855 36415

37818

39525

25

29 29

30

26

24

26

28

30

0

10000

20000

30000

40000














June 08














s plants

EER COMPARISION

ALUATION


CompaniesRevenue

(Rs mn)

EBIDTA

Margin ()

PAT

Margin ()ROE

PE

(x)

PB

(x)

CMP

(Rs)

FV

(Rs)





FY13E FY14E













Tax Rate () 20 20



utilization



June 08



Net Sales 8266 11274 20604 20145 21898


Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12



Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11


PER x 35 32

PB Ratio 04 04




Depreciation 342 554 677 731 813


Direct Tax Paid (103) (189) (220) (283) (301)







Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0


Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815





June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08














s plants

EER COMPARISION

ALUATION


CompaniesRevenue

(Rs mn)

EBIDTA

Margin ()

PAT

Margin ()ROE

PE

(x)

PB

(x)

CMP

(Rs)

FV

(Rs)





FY13E FY14E













Tax Rate () 20 20



utilization



June 08



Net Sales 8266 11274 20604 20145 21898


Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12



Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11


PER x 35 32

PB Ratio 04 04




Depreciation 342 554 677 731 813


Direct Tax Paid (103) (189) (220) (283) (301)







Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0


Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815





June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08



Net Sales 8266 11274 20604 20145 21898


Depreciation 342 554 677 731 813

EBIT 964 1769 2141 2368 2645

EBIT Margin () 12 16 10 12 12



Less Tax 106 198 220 283 301

Adjusted PAT 572 859 843 1032 1129

PAT Margin () 7 8 4 5 5

EPS (Rs) 18 27 27 33 36BVPS (Rs) 160 215 243 276 311

ROE 11 13 11 12 11


PER x 35 32

PB Ratio 04 04




Depreciation 342 554 677 731 813


Direct Tax Paid (103) (189) (220) (283) (301)







Debt Repayment 0 0 (2613) (2848) (4785)

Interest Paid (337) (731) (1158) (1099) (1321)

Dividends Paid (82) (96) (79) (82) (76)

Others 35 522 0 0 0


Net Cash Flows (242) 1166 (373) (175) (40)

Op bal of cash 438 196 1363 990 815





June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08




Cash Ratio 02 11 03 04 03



ROCE 7 9 9 9 9

Ratio Analysis



Fixed Asset (Net) 6341 9709 13355 14503 15821

CWIP 1938 936 0 0 0

Investments 117 220 177 162 162


Inventories 1728 2872 3461 4135 4433

Sundry Debtors 372 674 959 947 993




Total 11279 16872 20019 21828 23615

Sources of Funds

Share Capital 269 318 318 318 318



Total Debts 5181 8845 8998 10812 11186

Net Deferred Tax 9 (55) (67) (67) (67)



Provisions 187 221 269 400 404

Total 11279 16872 20019 21828 23615





June 08













Director








Director



































Board Of Directors



June 08













Director








Director



































Board Of Directors

1_0_09062012Fullerton GPI Ltd 08th June 2012

Documents

Transcript of 1_0_09062012Fullerton GPI Ltd 08th June 2012