MUKAND Share price

History Background & Present Activities of the CompanyThe company was incorporated as Mukand Iron & Steel Works Ltd. on 29thNovember 1937 under the Indian Companies Act VII of 1913 in Bombay withthe object inter alia of acquiring and taking over the business ofLala Mukand Lal and his sons carried on under the styles of MessersMukand Iron Works Mukand Steel' Rolling Mills and Mukand Steel Foundryat Lahore (now in Pakistan) and the business of Hindustan Iron & SteelProducts Ltd Bombay. The company started its activities with amodest foundry and a re-rolling mill each at Lahore (now in Pakistan)and Reay Road Bombay in 1937. The business of the Company wascommenced on 9th February 1938.The Company's name was changed on 23rdMarch 1989 to Mukand Ltd. as the name was not reflecting Company'sactivities at that point of time. The Company had also changed itsregistered office from Kurla to Bajaj Bhawan with effect from 1stSeptember 2001 as most of the offices/departments of the Company wereshifted from Kurla.)Subsequent to the partition of the country in 1947 the Government ofWest Punjab (Pakistan) requisitioned the Lahore factory. In exchangefor the Lahore factory the Company received shares of BatalaEngineering Company Limited Batala Punjab which became a subsidiaryof the Company and was renamed as BECO Engineering Company Ltd.In 1950 the Company started setting up a modern factory at KuriaMumbai for making alloy steel castings. The factory commencedproduction in 1953. Also the factory of Reay Road was shifted to Kuriafactory in 1953. At that time its steel foundry was the largest in theprivate sector. It manufactured alloy steel castings for tinycomponents weighing one Kilogram to large steel castings. Over theperiod the foundry was modernised and the capacity was enhanced formanufacture of steel castings weighing up to 6 tonnes per piece. Itsupplied high speed cast steel bogies and couplers to the IndianRailways and Steel plant Sugar plants Paper Plants Power plantsCement Plants Petrochemical plants Oil refineries etc.The foundry division executed export orders for USA Malaysia RussiaRomania. It manufactured and supplied track links for battle tanks forthe Indian Army. The division was supported by a comprehensive qualitycontrol facilities which were approved by Rail India Technical &Economic Services (RITES) Indian Registrars of Shipping and AmericanBureau of Shipping. The division was awarded the ISO 9002 certificationfor quality standards in 1994.The Company set up another foundry plant at Dighe for manufacture ofsteel/alloy steel castings. While Kurla plant had facilities formanufacture of castings ranging from one kilogram to 6 tonnes (MT)Dighe has facilities to manufacture heavy castings upto 95 MT perpiece.The foundry division of the Company in 1989 developed both railwayand non-railway castings like side frames bolsters specialty couplersand track pads for USSR and wear resistant castings for American andJapanese markets.In view of the adverse business conditions the Company was compelledto cut-back the production completely at the foundry at Kuriaeffective June 2000 to reduce losses. The Company proposes to disposeoff the land plant and machinery at Kuria plant. Meanwhile thefoundry operations at Dighe plant would continue.In 1965 the Company set up a Mini Steel Plant using Electric ArcFurnace (EAF) route and a wire rod mill at Dighe Distt. - ThaneMaharashtra. The Company was first in India to install continuouscasting mill way back in 1965. The plant consist of EAF ContinuousCasting Hot Rolling Mill Bar Mill and Wire Rod Mill capable ofproducing concast Blooms and Billets Hot Rolled Billets Rounds BarsWire Rods of various sizes & grades of alloy steel carbon steelspecial steel and stainless steel.Industrial Machinery Division was started in 1967 at Dighe tomanufacture EOT cranes. In 1980s the division expanded its activitiesto manufacture various types of Cranes viz. Gantry Cranes Port cranesEOT cranes upto 250 T capacity; equipment for Steel Cement AluminiumCopper Plants; bulk material handling equipment; turnkey projects forsteel and non-ferrous industries etc.In 1982 the Company undertook comprehensive steel plant modernizationprogramme at approximate cost of Rs. 20 Crores. The modernizationprogramme was completed in two phases. Phase I cost about Rs. 14Crores and was financed by Rights Issue of Secured ConvertibleDebentures totaling Rs. 7 Cr. and the balance by deferred credit andinternal accruals. The phase I of the modernization programme wascompleted in 1984-85 and consisted of:* Rehabilitation and modernization of Bar mill.* Installation of a Bloom Caster to cast blooms of 160 mm sq. to 250 mmsq.* Installation of Ladle furnace and Vacuum Degassing Furnace.* Installation of modern equipment for electric steel makingcontinuous casting and rolling which include water cooled panels watercooled roofs facilities for continuous charging of sponge iron andlime as well as fume extraction programme.* Installation of balancing equipmentPhase II of the Steel plant modernisation programme consisted ofsetting up of an oxygen plant and allied facilities at Dighe in theyear 1983-84.In 1984 the Company established its Research & Development division toemphasize on the manufacture of new grades of steel and castings etc.In 1986 R & D introduced super steel - 60 bars. The coloured surfacelayer (CSL) process developed for colouring stainless steel and alloysteel components for decorative purposes was developed.In 1985 the company revalued its plant and machinery and the resultingincrease of Rs. 27.49 Cr. was credited to revaluation reserve.In 1987 the Company went for another modernization programme forinstalling top and bottom converter and additional roughing stand forthe Bar Mill. The converter was the first of its kind to be used forthe bulk production of stainless steel. In 1988 oxygen top and bottomblown converter and dust collection system was installed andcommissioned.On 23rd March 1989 the name of the Company was changed from `MukandIron & Steel Works Ltd.' to `Mukand Ltd.'. This was done to reflect thecorporate identity of the Company in view of its diverse businessoperations.To further add value to steel products and to improve the productivityand quality the Company carried out modernisation rehabilitation andimprovement of the existing machinery from time to time such asinstallation of electro magnetic stirrer and an auto mould levelcontroller in bloom caster installation of bell furnace to spheriodiseannealing of wire rods pollution control equipment.In 1991 the Industrial Machinery Division manufactured and suppliedMedium Merchant and Structural Mill to Visakhapatnam Steel Plant. Overtime the division supplied over 100 Steel Mill Duty Cranes upto 250 Tcapacity Gantry Cranes upto 80 T capacity and span of 60 mtrs. GrabType Barge Unloaders and Ship Loaders Continuous Barge Unloaders of1250'tons per hour capacity equipment for steel cement plants etc.In 1992 the Company undertook modernization of its Steel plant atDighe. The modernisation programme cost was about Rs. 216 Crores andwas financed by way of Rights Issue of equity (Rs. 77.58 Crores)Non-Convertible Debentures (Rs. 126 Crores) and balance from internalaccruals. The shares of Rs. 10 each were issued at a premium of Rs. 90per share. The modernization programme consisted of the following:* Installation of additional refining facility casting facilities andmodification of necessary infrastructure with a view to improveutilisation of the excess melting capacity available in Ultra HighPower furnace.* Installation of billet grinding machines to produce high qualityalloy and stainless steel wire rods.* Installation of material handling facilities.* Installation of Wire Rod Mill No. 2 to broad base the product rangeand improve the quality of rolled products to international standardsto improve yield to achieve direct rolling right down to 5.5 mmdiameter without intermediate cogging or re-heating.In mid 90s annealing furnaces were installed for the annealing of ColdHeaded Quality Steel for Fastener industry import substitutionproducts were developed for the fastener industry and fine wire drawingunits break through was achieved in new markets such as Syria SouthAfrica South East Asian countries two short time cycle furnacesimported from USA were installed for the heat treatment of Wire Rods.In 1995 the Company realized that with the increase in the cost ofscrap and power steel making by the EAF route is becoming increasinglyun-competitive. In order to reduce the cost of production and remainglobally competitive the Company decided to adopt the iron-ore basedcoke fired Blast Furnace route to manufacture steel.The Kalyani Group of Pune Maharashtra who are also into manufacture ofspecialty grades of alloy steel/carbon steel under Kalyani Steels Ltd.(KSL) had manufacturing facilities based on the EAF route tomanufacture about 100000 TPA of carbon/alloy steel at Mundhwa Pune.Like the Company this group also decided to shift from the EAF routeto iron ore based Blast Furnace route for manufacturing steel.In order to achieve better economies of scale and sharing of investmentcosts both KG and the Company joined hands to form a strategicalliance to set up an integrated steel plant of a total capacity of320000 TPA of alloy/carbon steel at Ginigera Distt. RaichurKarnataka. The investment pattern was based on the sharing of theproducts of the steel plant by the two groups. KG has set up the Blastfurnace Rolling Mill and Air Separation Unit (ASU) and the Company hasset up the steel making and casting facilities. The Company and KGshare the total production of steel billets/blooms in the ratio of58.62% and 41.38% respectively. The capital investment was shared inthis ratio and the conversion costs expenses are also shared in thesame ratio.As part of this strategy Kalyani Group promoted a new company KalyaniFerrous Industries Limited (KFIL) to set up mini blast furnaces (MBF)to manufacture hot metal which is being entirely supplied to theCompany's steel plant at Ginigera. The Company processes the hot metalin its steel plant and manufactures the various grades of steel billetsand blooms which are shared in ratio mentioned above.The first MBF was commissioned by KFIL in May 1998. However due to thepoor demand for steel products and delay in stabilisation of the EOF(Energy Optimising Furnace) technology KFIL delayed the commissioningof the MBF-II and it was finally commissioned in May 2000. KSL hadcommissioned the rolling plant in March 1999.The Company implemented the Phase-l of the Ginigera Steel Plant projectcomprising installation of EOF one ladle furnace and bloom caster inAugust 1998. The Phase II of the project comprising the billet castervacuum degassing and the second ladle furnace was commissioned by April1999. With the commissioning of MBF-II by KFIL in May 2000 and thestabilisation of the EOF technology the Company commenced commercialproduction on October 1 2001.BECO Engineering Company Ltd. (BECO) a subsidiary of the Companyengaged in the manufacturing of machine tools was merged with theCompany in 1992 as per the scheme of Rehabilitation-cum-Merger approvedby the Board for Industrial and Financial Reconstruction (BIFR). Itmanufacturing facility was re-christened as Machine tools Division(MTD) of the Company. It has two major product lines: (a) Medium Dutyand Heavy Duty lathes and (b) Planners and Planomillers. The machinetools manufactured by this division are supplied to a wide range ofindustries such as Heavy Engineering General Engineering SteelPlants Cement Plants And Power Plants. The Company obtained ISO 9001certification for this division. In view of recession in the industryold equipment at Plant the Company scaled down the operations of thedivision from January 2001 and stopped booking fresh orders. TheCompany now proposes to dispose off the land and equipment during FY2004-05.During 2001-02 the company revalued its land situated at Kuria Mumbaiand Dighe Thane to reflect the current fair market value and theresulting increase of Rs. 218.73 Cr. was credited to revaluationreserve.During 2001 the Company diversified into Road and HighwaysConstruction business (Road Construction Division). JSC Centrodorstroy('CDS') a Russian company specialising in execution of infrastructureprojects in roads highways and airports sector was awarded the roadconstruction project on contract basis by National Highway Authorityof India (NHAI).The project is for strengthening and four-laning of twosections of National Highway-2 ('NH-2') aggregating to approximately150 KM.The total contract value of the project is approximately Rs 561 Crores.The project is funded by the World Bank. The Company entered into aco-operation agreement with CDS and under the agreement entire work isto be executed by the Company on co-operation and sub-contract basis.The work on the project has started and is expected to be completed byDec 2004.On account of recessionary conditions in domestic and internationalmarket till recently coupled with the cost and time overrun inimplementation of its new. steel making project at Ginigera Karnatakaheavy interest burden & subsequent squeeze of the working capital theperformance of the Company was hampered and it incurred losses during1998-99 2000-01 2001-02 and 2002-03.The Company approached the Corporate Debt Restructuring (CDR) Cellunder lead institution ICICI Bank for financial restructuring. The CDRCell has approved the financial restructuring package vide its letterdtd. July 22 2003. Sanction of Individual banks and financialinstitutions is proposed to be sought by the Company as per the terms &conditions of the AFRP. One of the terms & conditions of the AFRP is toraise Rs. 50 Crores from the promoters/shareholders and to adhere tothe same; the Rights Issue has been planned.