Dear Members,
The Board of Directors hereby presents the 26th Annual Report on the
business and operations of your Company along with the financial
statements, consolidated and standalone, for the year ended March 31,
2011.
Performance
Your Company recorded a significant growth during the financial year
under review. The consolidated gross sales grew to Rs. 98,514.83 lacs,
registering a growth of 47.93% over the previous year''s sales of Rs.
66,594.83 lacs. Earnings before depreciation, interest and taxation
[EBIDTA] stood at Rs. 8,926.69 lacs for the current year, whereas net
profit is Rs. 4,309.43 lacs, as compared with Rs. 2,977.50 lacs in the
previous year. During the year under report, consolidated sale of steel
tubes was 225,142 MT, compared with 156,584 MT in the preceding year.
Dividend
As a part of the Silver Jubilee celebrations, the Company declared two
interim dividends at 10% each during the financial year 2010-11 on the
2,02,96,683 outstanding equity shares. The total dividend payout works
out to Rs. 4,05,93,366, i.e. Rs. 2 per equity share.
Further, with a view to conserve resources to support the increased
level of activities and ongoing capital expenditure, your Directors
considered it prudent not to recommend final dividend on the equity
shares, hence, the aforesaid interim dividends be considered and
approved as final dividend for the financial year under discussion.
Overview
During the financial year 2010-11, the world continued on a path to
regain economic stability. Emerging markets like India, China and other
Asian countries, as also certain countries in Latin America, continued
to register high levels of growth and continued to be centres of
significant economic activity as compared with the developed countries,
which experienced modest economic activities, and accordingly, in
contrast with its global counterparts, the Indian steel industry
continued to enjoy strong demand from several sectors resulting in
increased volumes and a richer product mix.
The Indian steel industry, the fourth- largest producer of steel in the
world after China, Japan and the US, diversified its product mix to
include sophisticated value-added steel used in the automotive sector,
heavy machinery and physical infrastructure. The steel pipe industry,
which forms a major segment of the steel industry by virtue of its
various critical and non-critical uses, showed robust growth on account
of strong demand from the domestic and export market. Additionally, the
industry''s impressive performance also owes a great deal to the
economic stimulus packages mooted by the government towards sustaining
infrastructure spending and measures to promote spending on consumer
durables and transportation.
Continued steel usage growth in India not only ensured the Company''s
phenomenal performance during the year under review but also encouraged
it to deliver more and more via continuous improvement, consolidation,
magnification of its operations and enrichment of its product mix.
In the recent past, we focused on brand strengthening, entered into new
territories, increased our market penetration by reaching smaller
consumption centers which enabled us to cut intermediaries'' margin and
make our products more competitive. We are continually endeavouring to
invest in new technologies resulting into new and better products to
create unprecedented value for our stakeholders.
However, inflation has now emerged as the new global economic
challenge, driven by a substantial rise in the prices of almost all
commodities, mineral resources and energy, impacting almost all
industrial sectors. Consequently, the years ahead could be challenging,
as the Indian government endeavours to curb inflationary growth.
Central Banks'' anti- inflation measures will affect access to credit
and could slow down investment levels as also consumer demand. The most
significant impact will however be from the slowdown in major
infrastructure projects in the areas of road construction, mass transit
systems and power generation. These would have further impact on per
capita disposable income and the demand for goods and services.
Detailed analysis covered in the ''Management Discussion and Analysis''
pages forms part of this Directors'' Report.
Acquisition
To strengthen your Company''s position in the emerging markets,
especially in the high-end segment, and in the western part of India
and for the accelerated pace of growth in the market expansion
geographically, your Company strategically acquired 100% shares of M/s
Lloyds Line Pipes Limited (hereinafter known as LLPL) from its
erstwhile shareholders in all cash deal, inter-alia making it the
Company''s wholly-owned subsidiary on November 11, 2010.
The ready to use manufacturing facilities of LLPL are API certified and
being proximate to ports, these facilities will not only ensure savings
in logistics cost, but would also enable higher exports. This will
further help the Company in extending its presence into potential
markets and to take advantage of the increased demand for all its
products. Besides these visible benefits, some yet unidentified
synergies are also anticipated from, among other things, the new
customer franchise, product development, the impact of consolidation,
bidding synergies and other financial synergies.
Operations
There was a turnaround since outburst of recession, for the economy at
large and the Company witnessed the effects of the same. In line with
the growth plans of the Company, your Directors continued making
constant efforts towards enhancement of value for all stakeholders. The
Company is the only player having nationwide distribution network
supported by multi-location manufacturing facilities, thus leveraging
the benefits of chain economics. With the full operation of Phase II
and III of the Hosur manufacturing facility during the year, the
Company significantly enhanced its product offerings and witnessed
improvement in its overall margins. Five additional warehouses-
cum-branches were opened at Nagpur, Goa, Bengaluru, Hyderabad and
Cochin to cater to the burgeoning demand in various industrial
applications, thereby, strengthening the APL Apollo brand.
Further, with an objective towards continuous growth coupled with
achieving leadership footprint, the Company is focused on expanding its
capacity through both organic and inorganic routes and entering into
adjacent business spaces via various initiatives. Post acquisition of
LLPL, having API certified manufacturing lines, the consolidated
production capacity was augmented to 490,000 MTPA against 274,000 MTPA
in FY10 and the Company is targeting emerging demand in the city gas
distribution, tubing and casing, a niche area which is under penetrated
at present. Efforts are being made to break through into manufacture of
low dia high thickness seamless equivalent tubes and dynamically
balanced special tubes through the implementation of RSM technology.
Your Directors are confident that these efforts will reap huge benefits
in future.
Capital
There was no change in the Company''s issued, subscribed and paid-up
capital and it stands at Rs. 2,029.67 lacs as on date. The authorised
share capital of the Company remained at Rs. 25 crores, comprising 250
lac shares of Rs. 10 each.
Preferential Issue
With a view to raise funds for financing the Company''s growth and
expansion projects, acquisitions, investment in subsidiaries, working
capital requirements and general corporate purposes, the Company
allotted 16,41,953 Compulsorily Convertible Warrants, to APL
Infrastructure Private Limited, a promoter group entity, on
preferential basis, on December 22, 2010.
Each warrant entitles the holder thereof, to subscribe to one ordinary
share of the Company at a price of Rs. 176 per share. In compliance with
the provisions of SEBI (Issue of Capital and Disclosure Requirements)
Regulations 2009, an amount equivalent to 25% of the price aggregating
to Rs. 7,22,45,932 (Rupees seven crores twenty two lacs forty five
thousand nine hundred thirty two only) was received from the allottee
and the option to convert the warrants into ordinary shares is
exercisable before June 22, 2012. The aforesaid warrants are
outstanding for conversion till date.
Consolidated financial statements
The consolidated financial statements presented by the Company include
financial information of its subsidiaries prepared in compliance with
applicable Accounting Standards. The audited consolidated financial
statements and the Auditor''s Report thereon form part of this annual
report.
Subsidiaries
The Company has three wholly-owned subsidiaries namely, Apollo Metalex
Private Limited, Shri Lakshmi Metal Udyog Limited and Lloyds Line Pipes
Limited. The Ministry of Corporate Affairs, Government of India, vide
its general circular No. 2/2011 dated February 8, 2011 granted general
exemption under Section 212(8) of the Companies Act, 1956 from
attaching the balance sheet, profit and loss account and other
documents of the subsidiary companies to the balance sheet of the
Company, provided certain conditions are fulfilled. Accordingly, the
annual accounts of the subsidiary companies are not being attached with
the balance sheet of the Company.
As per the terms of the said circular, a statement containing brief
financial details of the Company''s subsidiaries, for the year ended
March 31, 2011 is included in the annual report. The Company will make
available the annual accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same.
The annual accounts of the subsidiary companies will also be kept open
for inspection at the Registered Office of the Company and that of the
respective subsidiary companies.
Directors
In accordance with the Companies Act, 1956, and pursuant to Article No.
89 of the Articles of Association of the Company, Mr. Sameer Gupta and
Mr. Chandra Shankar Johri retire by rotation at the ensuing Annual
General Meeting and being eligible, offer themselves for reappointment.
Necessary resolutions for the appointment/reappointment of the
aforesaid Directors have been included in the notice convening the AGM.
None of the Directors are disqualified from being appointed as
Directors as specified in the terms of Section 274(1) (g) of the
Companies Act, 1956.
Further, Mr. Mukesh K. Jain, an Independent Non-Executive Director on
the Board of the Company, left for his heavenly abode on July 2, 2010.
The Board places on record, its since appreciation for his leadership
and contribution to the growth of the Company.
Auditors and Audit Report
The Auditors M/s VAPS & Co., Chartered Accountants, retire at the
Annual General Meeting and have confirmed their eligibility and
willingness to accept office, if reappointed.
Notes to Accounts, referred in the Auditors Report, are
self-explanatory and therefore do not require any further comment.
Directors'' responsibility statement Pursuant to Section 217 (2AA) of
the Companies (Amendment) Act, 2000, your Directors confirm that:
- In the preparation of the annual accounts for the financial year
ended March 31, 2011 the applicable accounting standards were followed
by the Company and there has been no material departures from the same,
- They have selected such accounting policies and applied them
consistently and made judgment and estimates that are reasonable and
prudent so as to give a true and fair view of the Company''s state of
affairs and profits at the end of financial year,
- They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities,
- They have prepared the annual accounts for the financial year ended
March 31, 2011 on a going-concern basis.
Energy conservation, technology absorption, R&D and foreign exchange
earnings and outgo
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988, in respect of conservation of energy,
technology absorption and foreign exchange earnings and outgo is as
follows:
I. Conservation of Energy
(a) Energy conservation measures taken:
The Company gives the highest priority for conservation of energy by
using a mix of technology changes, process optimisation methods and
other conventional methods, on an ongoing basis. Various energy
conservation measures taken by the Company are:
i. Use of energy saving devices like TFT monitors, CFL tubes, LED
lights, among others.
ii. Optimisation of load factor.
iii. Defined AC working hours and temperature to suit seasonal changes
iv. Optimisation of processes to enhance production.
(b) Additional Investment and proposals, if any, being implemented for
reduction of consumption of energy: The Company is making constant
efforts to locate all the possible areas where additional investment
can be considered for conservation of energy. Also, the Company is
contemplating use of Liquefied Natural gas (LNG) for captive power
generation.
(c) Impact of the measures taken above and consequent impact on the
cost of production of goods: Use of LNG would contribute in substantial
saving in fuel expenses thus, reducing per metric tonne power cost and
will also ensure environmental protection.
The above measures resulted in substantial saving in the consumption of
energy and consequent saving in the cost of production.
(d) Total energy consumption and energy consumption per unit of
production:
II. Technology Absorption Research and Development (R&D)
1. Specific areas in which R&D carried out by the Company: The
research and development activities were focused towards improvement in
products and processes and consequent reduction in cost. With the
introduction of RSM technology, we are developing dynamically balanced
tubes which find applications in high speed conveyors and various other
applications. In addition to this, the Company installed a new process
named ''cold sawing'' which enables to produce round and hollow sections
with burr free ends. R&D was also carried out for development of
different varieties of steel tubes to meet the specific requirements of
customers in various sectors.
2. Benefits derived as a result of the above R&D: The research and
development activity resulted in process
optimisation, cost saving, reduction in manpower and in time as well as
product development. The Company stepped towards the development of
special tubes, thus gaining a competitive edge.
3. Future plan of action: The Company will further improve the quality
of its products and continue with its activities in the field of
research and development with a view to introduce new and innovative
products.
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation
and innovation: The Company continues to lay emphasis on development
and innovation of in-house technological and technical skills. Constant
efforts are being made to upgrade the existing standards and to keep
pace with the advances in technological innovations.
The Company is implementing Rotary Sizing Mill (RSM) technology, from
Kusakabe, Japan, world leader in tube making industry with a view, to
develop high precision dynamically balanced steel tubes.
2. Benefits derived as a result of the above efforts: The
implementation of RSM technology will contribute towards improving the
existing products, thus enabling the Company to cater to the needs of
diverse industrial applications.
III. Foreign exchange earnings and outgo:
(a) Activities relating to exports, initiatives taken to increase
exports, development of new export markets for products and services
and export plans:
The Company is presently exporting its products to more than 35
countries across the world. It has a constant watch on the developments
in the global steel tubes and pipes Industry with focus on untapped
markets by providing value- added products customised around customer
requirements. The Company''s representatives also participate in various
trade fairs and exhibitions concerning the industry, from time to time.
With an objective to increase our presence in new geographies and
territories, the Company acquired LLoyds Line Pipes Limited during
FY11, having manufacturing facilities contiguous to the ports in
western part of the country, thus providing an opportunity to augment
export sales.
Particulars of Employees
There is no employee whose particulars are required to be furnished in
terms of Section 217(2A) of the Companies Act, 1956 and rules made
there under.
Corporate Governance Report
The Company is committed to maintain the highest standards of Corporate
Governance and adhere to the Corporate Governance requirements set out
by SEBI. The Company also implemented several best Corporate Governance
practices as prevalent globally.
Pursuant to Clause 49 of the Listing Agreements with the stock
exchanges, a Management Discussion and Analysis, Corporate Governance
report, Managing Director''s and Auditors'' Certificate regarding
compliance of conditions of Corporate Governance are made a part of the
annual report.
Fixed deposits
We have not accepted any fixed deposits till date and, hence, no amount
of principal or interest was outstanding as on the date of balance
sheet.
Health & Safety
The Company is strongly committed to providing and maintaining a safe,
healthy workplace for the employees and anyone else likely to be
affected by hazards in the workplace. Initiatives that ensure a
working environment that minimises incidents of risks or personal
injury, ill health or damage to property include employee and workplace
inductions, appropriate training for all employees, effective
supervision, safe plants, equipment and systems of work and regular
consultation on health and safety issues.
The development of a safe working culture is the responsibility of
everyone and can be best achieved through the cooperative efforts of
employees. A safe culture will be reinforced through continual risk
assessment, provision of information concerning such risks and the
promotion, instruction, training and supervision of employees to ensure
safe work practices.
Environment
The Company is committed to minimising the environmental impact of its
operations and its products by adopting sustainable practices and
continuous improvements in environmental performance. Climate change is
one of the most important issues facing the world today. APL Apollo
aims to contribute positively to the communities around or near its
operations and actively participates in community initiatives,
encourages biodiversity and nature conservation.
The Company is committed to ensuring the incorporation of environmental
responsibility as a part of its normal business practice.
Personnel
The Company believes that its employees are key contributors to its
business success and efficiency operations. With prime focus on
attracting and retaining the talent in the industry, the Company offers
an excellent working environment and compensations. The Company has a
rich pool of technical and managerial skills required for the efficient
growth of operations. Your Company enjoys very cordial relations with
all its employees.
Acknowledgement
The Directors take this opportunity to place on record their thankful
appreciation for the assistance and co- operation received from the
Company''s shareholders, customers, suppliers, bankers, government and
all other concerned authorities. The Board also wishes to place on
record its sincere appreciation of the employees of all levels, for
their hard work, dedication and commitment.
For and on behalf of the Board
Sanjay Gupta
Chairman-cum-
Managing Director
Delhi 110092 Vinay Gupta
August 30, 2011 Director
Regd. Office:
37, Hargobind Enclave,
Vikas Marg, Delhi - 110092 |