The Directors are pleased to present their 44th Annual Report and
Audited Accounts for the year ended 31st March, 2012.
(Rs. in million)
Income 21,003.5 20,618.4
Profit Before Interest,
Exceptional Items and Tax 2,102.0 1,983.6
Less : Interest 251.0 179.6
Less : Depreciation 394.7 387.8
Profit Before Exceptional
Items and Tax 1,456.3 1,416.2
Less : Exceptional Items 363.6 344.4
Profit Before Tax 1,092.7 1,071.8
Less : Provision for Taxation
(a) Current Tax and Prior
year refund adjustment 174.3 212.8
(b) MAT Credit (79.2) -
(c) Deferred Tax 15.7 (8.7)
Add: Excess Provision for
dividend tax written back - 0.4
Profit After Tax 981.9 868.1
The global economy saw a lower growth rate in the year under review for
the calendar year 2012, global growth was estimated at below 3%
compared to the 3.8% and 5.2% clocked in the years 2011 and 2010. While
Europe continued to reel under debt pressure, the news from USA has
also not been very positive. Most of the Middle East has been
experiencing difficulties the past year, resulting in high oil prices
oil prices have increased almost 15% in the January/March quarter with
consequential effects on inflation. Meanwhile China has moderated its
growth prospects for the upcoming years.
On the domestic front, inflation has been ruling high for well over a
year now - while the core inflation seems to have cooled down in the
last quarter to around 6%, for most of the year inflation averaged at
almost 9%. The high interest rate situation had its negative impact on
the economy, with most sectors reporting negative or at best a modest
growth. Additionally the high level of government''s fiscal deficit at
5.9% continues to trouble the economy. Real economic growth has fallen
sharply to 6.5% from the previous year''s level of 8.5%. Against this
backdrop the Rupee has depreciated sharply against the US Dollar - from
a level of 44.50 in April 2011 to 50.88 in March 2012 - a depreciation
of 14% in one year.
In its recent budget, the government expects the economy to pick up
after faltering last year - GDP is expected to grow at over 7% in the
coming financial year, fiscal deficit is expected to be contained to
less than 5.1% of GDP and inflation is expected to be reined in at
under 6.5%. However, this will depend on how some elements of the
global economy play out - such as oil and commodity prices, the debt
situation in Europe as well as the political situation in the Middle
East. Business confidence in the rest of Asia too seems low as China
moderates its own growth projections.
During 2011-12 your Company saw a very modest growth in the top line
with sales registering about 2% growth in value terms. This increase
was primarily in the Electrical Cables segment. In volume terms growth
was visible again only in the Electrical Cables segment with star
performances from product offering to the following customer sectors -
automotive, agriculture and construction. In the Communication Cables
segment, however, the level of investment in capital expenditure by
Telecom service providers was even lower than the previous year
resulting in lower sales volumes of Communication Cables. As was
indicated in the previous year, the Sheets Division was wound up in the
year under review.
Competition, as in the past years, has been keen. Coupled with a year
of modest growth and volatile price levels the pressure on margins was
continuous. Hence adjustments to the selling prices were kept minimal
and to levels that were appropriate.
Income for the year under review was marginally higher at Rs. 21,003.5
million (previous year Rs. 20,618.4 million) representing a growth of
2% over the previous year. Your Company has recorded a Net Profit after
Tax of Rs. 981.9 million as against a Net Profit of Rs. 868.1 million
in the previous year. Improved capacity utilization, better product mix
allocation between the various manufacturing units, growth in sales
volumes across the product lines mentioned above, tight monitoring of
costs and working capital requirement all have contributed to the
improvement in the financials for the year under review.
Considering the business situation, your Directors have pleasure in
recommending a dividend on equity shares of 40%. The amount thereof per
equity share will be Rs.0.80. The total dividend outgo will be Rs.142.2
million (including dividend tax Rs.19.8 million).
EXPANSION & CONSOLIDATION
Looking forward, the Pune manufacturing operations would be
consolidated at the Urse site. This will help further improve the cost
competitiveness in the Low Duty Electrical Cables offered by your
Company. The upgradation of the High Voltage Cable plant has now been
completed, resulting in enhanced capacity availability from 2012-13 -
this will help in adding to the overall revenues of your Company.
The Roorkee facility will be expanded over the next 18 months at a cost
of approximately Rs.1,000 million. This expenditure will double the
current capacity at Roorkee and will further help improve profitability
in view of the fiscal benefits that will accrue.
Finolex J-Power Systems Private Limited, Shirval near Pune
As at 31st March 2012, your Company''s investment in the JV stands at
Rs. 480.2 million. This includes an additional investment of Rs. 98
million made in January 2012 to finance the enhanced capital needs of
Your Directors are happy to report that the JV commenced its
manufacturing operations towards the end of September 2011 and has
since been able to supply electrical cables of the 66 KV range. The JV
has been active in participating in tenders both locally and overseas
with a view to secure business. As is common with products being
offered by the JV, pre-qualification requirements are very stringent
and no effort is being spared in ensuring that the JV obtains all the
Corning Finolex Optical Fibre Private Limited
During the year under review, the marketing JV with Corning of USA was
established and an investment of Rs. 0.5 million was made. The JV will
market Optical Fibre to cable makers within India and it is expected
that the JV will commence its operations in the upcoming fiscal.
Your Company is continuously developing new products to expand its
portfolio as well as adapt to changing needs of the market. For the
year under review, your Company launched a new range of Speaker
Wires in the Communication Cable segment. In the Lighting Division,
the latest version of the T5 tube lights and fittings were launched by
During the year under review (in November 2011), your Company was
awarded the Special Trophy for large enterprise in the product group of
Highest Exporter in Thrust Markets for Thrust Products for outstanding
contribution to Engineering Exports in the year 2008-09.
Despite the depressed market situation overseas FOB value of exports
for the year was Rs. 483.9 million (higher by 22% than the previous
year''s export value of Rs. 393.7 million).
Your Company''s short term debt programs continue to enjoy the highest
ratings from CRISIL. Since the last few years these have been accorded
the P1 rating. The Company also holds AA/Stable rating for its Rs.500
million long term non convertible debentures program as well as on the
long term loans currently outstanding.
In March 2012, the Company repaid an External Commercial Borrowing of
JPY 3.5 billion which was originally drawn in 2007. The loan was repaid
in full and on time out of internal accruals and without resorting to
either a roll over or substitute loans.
The Company follows a balanced policy to manage liquidity and
borrowing. Despite the increase in value of operations, owing to tight
controls on the working capital cycles, your Company has managed to
control financial expenses to the minimum required levels. The Company
has been able to meet all its financial commitments in a timely manner.
Your Company continues to hold the Consumer Superbrand status
since many years now. The Company is the only Indian cable company to
have achieved this enviable distinction.
Your Company neither invites nor accepts deposits from the public or
from its members and accordingly no deposits were held by the Company
as at 31st March 2012.
Your Company recognizes the importance of a motivated and skilled human
resource. Your Company endeavors to create a challenging and favorable
work environment that encourages entrepreneurial behavior, innovation
and the drive towards business excellence.
Industrial relations continued to be cordial during the year.
The Company had 1,487 permanent employees on its roll as on 31st March,
2012 (previous year 1,484 permanent employees as on 31st March 2011).
The statement on Corporate Governance is annexed hereto and forms a
part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
The focus during the year under review continues to be the field of
education. International Institute of Information Technology or I2IT as
it is known is also patronized by the Company. I2IT offers BE and post
graduate MS courses with various specializations in Advanced
The Company discharges its duties as a responsible corporate citizen
and accords importance to legal compliances. It also handsomely
contributes to the exchequer.
All plants are environment compliant and hold ISO14001 (Environment
Management System) certification.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) appropriate accounting policies have been selected and applied
consistently and have made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at 31st March, 2012 and of the Statement of Profit
and Loss for the year ended 31st March, 2012;
iii) proper and sufficient care has been taken 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;
iv) the annual accounts have been prepared on a going concern basis.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy, technology absorption, foreign
exchange earning and outgo required to be given pursuant to Section
217(1) (e) of the Companies Act, 1956 read with the Companies Rules,
1988 (Disclosure of Particulars in the Report of the Board of
Directors) is annexed hereto and forms part of this Report.
PARTICULARS OF EMPLOYEES
Information as required under the provisions of Section 217(2A) of the
Companies Act, 1956 (the Act) and the rules framed there under forms
part of this Report. However, as per the provisions of Section
219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
shareholders, excluding the statement of particulars of employees under
Section 217(2A) of the Act. Any shareholder desirous of obtaining a
copy of the said statement may write to the Company Secretary & Vice
President (Legal) at the Registered Office of the Company.
LISTING OF SECURITIES
The Company''s equity shares are listed on the two premier stock
exchanges of the country namely Bombay Stock Exchange Limited and
National Stock Exchange of India Limited, amongst other stock
exchanges. The Company has issued Global Depository Receipts which are
listed on the Luxembourg Stock Exchange. The Company''s non-convertible
debentures are listed on wholesale debt market segment of the National
Stock Exchange of India Limited.
Mr. B. G. Deshmukh, a long time Director on your Company''s Board,
expired on 7th August 2011 after period of illness. Your Directors wish
to place on record his valuable contribution to the growth of the
Company over his tenure of Directorship.
At its meeting held on 8th November 2011, the Board appointed Dr. Vikas
G. Pai as an Additional Director on the Board. He holds office of
Additional Director till conclusion of the ensuing Annual General
Meeting of the Company. Further at its meeting held on 3rd May 2012,
the Board has recommended his reappointment to the shareholders as a
Director of the Company which is reflected in the Notice for the said
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Dr. H. S. Vachha, Mr. Atul C.
Choksey and Mr. S B (Ravi) Pandit retire by rotation at the ensuing
Annual General Meeting and are eligible for reappointment. The Board of
Directors recommends their reappointment as Directors of the Company.
M/s B.K. Khare & Company, Chartered Accountants, Auditors of the
Company, hold office until conclusion of the ensuing Annual General
Meeting and being eligible, offer themselves for reappointment.
The Board of Directors at its meeting held on 8th February 2011 has
appointed M/s. Joshi Apte & Associates, Cost Accountants for carrying
out audit of the relevant cost accounting records maintained by the
Company. The Central Government has approved the appointment of the
said Cost Auditors for conducting cost audit for the financial year
Your Directors are grateful to the Central and State Governments,
Statutory Authorities, Local Bodies, Banks and Financial Institutions
for their cooperation and support. Your Directors warmly acknowledge
the faith and confidence reposed in the Company by its channel
partners, dealers, customers and construction organizations in
supporting its business activities and growth. Your Directors express
their gratitude to the other business associates of the Company for
their unstinting support. Your Directors value the commitment of the
employees towards the Company and appreciate their valuable
contributions for the progress and growth of the Company. Last but not
the least your Directors are thankful to the Members for extending
trust and for the confidence shown.
For and on behalf of the Board of Directors
P. P. Chhabria
Dated : 3rd May, 2012