FINANCIAL APPRAISAL REPORT

FOR
EXPANSION AND BACKWARD INTEGRATION

AT

TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................................3
1 INTRODUCTION.............................................................................................................19
2 COMPANY DETAILS .....................................................................................................20
2.1 PROMOTERS PROFILE .............................................................................................................................................. 20
2.2 MANAGEMENT .......................................................................................................................................................... 21
2.3 BOARD OF DIRECTORS ............................................................................................................................................ 21
2.4 ORGANIZATION STRUCTURE ................................................................................................................................. 22
2.5 CAPITAL STRUCTURE OF THE COMPANY AS ON .............................................................................................. 22
2.6 SHAREHOLDING PATTERN AS ON ........................................................................................................................ 23
2.7 KEY EXECUTIVES AND CONSULTANTS OF THE COMPANY ........................................................................... 23
3 PROJECT ............................................................................................................................................................................. 24
3.1 PROPOSED EXPANSION ................................................................................................................................................. 24
3..2 LOCATION ................................... ... .............................................................................................................................. 24
3.3 TECHNICAL ARRANGEMENTS/ COLLABORATION .................................................................................................. 25
3.4 MANUFACTURING PROCESS ........................................................................................................................................ 25
3.5 TECHNICAL KNOW HOW ............................................................................................................................................... 35
3.6 INPUTS FOR PRODUCTION ............................................................................................................................................ 35
3.7 PLANT & MACHINERY ................................................................................................................................................... 37
3.8 EFFLUENT ......................................................................................................................................................................... 37
3. 9 TRANSPORTATION......................................................................................................................................................... 37
3.10 PROJECT IMPLEMENTATION SCHEDULE ................................................................................................................ 38
4 COST OF PROJECT ........................................................................................................................................................... 39
4.1 PROJECT COST SUMMARY ..................................................................................................................................... 39
4.2 LAND & SITE DEVELOPMENT ............................................................................................................................... 40
4.3 BUILDING & CIVIL WORKS .................................................................................................................................... 40
4.4 PLANT & MACHINERY ........................................................................................ ................................................... 41
4.5 MISS FIXED ASSETS ................................................................................................................................................ 41
4.6 CONTINGENCY ......................................................................................................................................................... 41
4.7 PRELIMINARY & PRE-OPERATIVE EXPENSES) .................................................................................................. 42
4.8 WORKING CAPITAL MARGIN ................................................................................................................................. 42
4.9 INTEREST DURING CONSTRUCTION ..................................................................................................................... 42
4.10 UPFRONT FEES......................................................................................................................................................... 42
4.11 MESH DEPOSIT......................................................................................................................................................... 42
5 COST COMPARISONS ...................................................................................................................................................... 44
5.1 EXPENDITURE INCURRED ON THE PROJECT ........................................................................................................... 45

6 MEANS OF FINANCE ....................................................................................................................................................... 46

6.1 EQUITY CONTRIBUTION... ........................................................................................................................................ 46
6.2 TERM LOAN............................................................... .... ............................................................................................. 46

6.3 WORKING CAPITAL FINANCE.............................................................................................................48

INDUSTRY ANALYSIS - STEEL INDUSTRY ...................................................... 50

7. 1 INTRODUCTION .................................................................................................................................... 50
7.2 DOMESTIC STEEL INDUSTRY............................................................................................................. 51
7.3 FUTURE STEEL DEMAND .................................................................................................................... 53
7.4 SPONGE IRON AND SCRAP ................................................................................................................. 54
7.5 STEEL BILLET INDUSTRY ................................................................................................................... 58
7.6 LONG PRODUCTS OVERVIEW ............................................................................................................ 59
7.7 CURRENT SCENARIO OF STEEL INDUSTRY .................................................................................... 62
7.8 FINANCIAL PERFORMANCE OF KEY PLAYERS ............................................................................. 62

MARKETING & SELLING ARRANGEMENTS ................................................................ 64

PROJECT STATUS ................................................................................................................. 65

9.1 CURRENT STATUS ............................................................................................................... 65
9.2 GOVERNMENT / STATUTORY APPROVALS REQUIRED & STATUS ...........................................65

10 PROFITABILITY PROJECTIONS ........................................................................................... 66

10.1 FINANCIALS OF THE PROPOSED PROJECT .................................................................. 66
10.3 FINANCIALS OF THE COMPANY AS WHOLE .............................................................. 67
10.3 SENSITIVITY ANALYSIS ................................................................................................... 68

11 SWOT ANALYSIS ......................................................................................................... 70

12 CONCLUSIONS & RECOMMENDATIONS ............................................................. 73
13 ANNEXURES .................................................................................................................. 74

The different heads of project cost are detailed in the table given below:
S.No:
1.
2.
3.
4.
5.
6
7
8
9
10

Description
Land & Site Devt.
Building & Civil Works
Plant & Machinery
Misc. Fixed Assets
Contingency
Total Hard Cost
Preliminary & Preoperative Exp.
WC Margin
IDC
Upfront Fees
Deposit to MSEB
Total Soft Cost
Total Project Cost

(Rs. in Cr.)

Means of Finance
The project is to be funded from promoter's equity contribution and term loans from banks and financial
institutions with a debt to equity ratio of------ The proposed means of finance for the project will be as

under:
S. No

Description

1.

Share capital Equity - Promoters

4.

Term Loan

Rs. In Crores.

Total
Debt Equity Ratio:
Promoter's Contribution:
Equity
The total equity requirement for the project is projected at Rs. crores.
The equity for the project is proposed to be raised by the promoters through profits achieved from their
personal property, internal cash accruals as well as through friends & relatives.
(Lenders may stipulate suitable pre-sanction and pre-disbursement conditions as regards raising
of Equity for the proposed Project.)

Government / Statutory Approvals Required & Status

Approval Consent

Agency Granting Approval

Status

Building Plan Approval

Town Planning Authority

Pollution Control Board

State Pollution Control Board

Clearance
Power Supply

State Electricity Board

Water Supply

Water Supply Authority

Fire and Safety

Fire & Safety Dept.

Registration under Factories Act

Chief Inspector of Factories

Registration of Industries

District Industrial Commissioner

Labor Law Registration under

Labour Commissioner

Contract Labour Law

Explosives

Chief Controller of Explosives

Any other applicable clearances

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Profitability Projections
Financials of the proposed project
(In Rs. Crores)
Particulars
Capacity
Gross sales
Excise duty
Net Sales
Other Income
Cost of Sales
EBIDTA
Depreciation
Amortisation of

3rd Year

4th Year

5th
Year

6th Year

7th Year

8th Year

9th Year

10th Year

preliminary expenses

Interest on:
Working Capital
2. Term Loan
EBT

Tax
Profit after Tax
Net cash accruals
?aid up capital
(including share
premium)
Current ratio
PAT/Net sales (%)

EBITDA/TT A (ROCE)
Net worth
Adj. Net worth
OPM (%)
Min. DSCR
Avg. DSCR