HEG
BSE: 509631 | NSE: HEG | ISIN: INE545A01016 | Electrodes/Graphite
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors have pleasure in presenting their 36th Annual Report and
audited statements of accounts for the year ended 31st March, 2008.
We are glad to report a continued strong performance driven by focus on
our core business of graphite electrodes, enhanced overall operating
efficiencies, prudent financial management and a buoyant sector
outlook.
1) FINANCIAL RESULTS & APPROPRIATIONS
(Rs.in crore)
2007-08 2006-07
Turnover:
Domestic 359.13 485.67
Export 726.75 491.88
Less: Excise Duty 33.02 49.66
Inter Division Sales 106.88 110.02
Net Sales 945.98 817.87
Other Income 30.56 20.21
Total Income 976.53 838.08
Profit before Interest, Depreciation and
Amortization 303.90 194.82
Interest 50.37 46.06
Profit before Depreciation and Amortization 253.33 148.76
Depreciation and Amortization 46.13 48.69
Profit Before Tax 207.20 100.07
Provision for Taxation
Current Year 67.67 12.58
Deferred (9.88) 13.97
Provision for Fringe Benefit Taxes 0.43 0.36
Income Tax for earlier Years 2.62 (0.67)
Net Profit for the Period 146.35 73.84
EPS (Basic) 35.17 18.32
Appropriations
Amount available for appropriation 186.26 100.50
Dividend:
a) On Equity Shares
i) Interim Dividend 30.46
ii) Proposed Dividend 13.29 20.16
b) Corporate Dividend Tax 7.44 3.43
Transfer to :
a) Debenture Redemption Reserve - 12.00
b) General Reserve 25.00 25.00
c) Transfer to Capital Reserve 14.11
d) Balance carried forward 95.98 39.92
2. OVERALL PERFORMANCE
The Company during the year under review recorded strong growth in
graphite electrodes, where it benefited from value and volume
increments. Net Sales increased to Rs. 945.98 crore, higher by close to
16% from Rs. 817.87 crore in the previous year. The export turnover
increased approximately 48% as compared to previous year.The Net Profit
increased substantially to Rs. 146.35 crore from Rs. 73.84 crore.
Earning per share increased to Rs.35.17 (Previous year Rs.18.32).
3. DIVIDEND
Your Company had paid an interim dividend @ Rs. 7 per share on Equity
Shares in January, 2008.The Board is pleased to recommend a final
dividend @ Rs. 3 per share on Equity Shares for the financial year
ended March 31, 2008. Your Directors have proposed the dividend keeping
in mind the Companys capital expenditure undertaken for various
expansion plans, which are as per HEGs strategic initiatives. The
Companys initiatives include expansion of graphite and power plants.
4. OPERATIONS
GRAPHITE ELECTRODES
During the year under reporting, the production of Graphite Electrodes
at Mandideep was higher at 51,863 MT. Sales volume also increased in
tandem with the production. Higher realizations during the current year
coupled with increase in sales resulted in better earnings growth.
POWER GENERATION
HEG has a strategic advantage from availability of economical captive
power plants of hydro-electrical and thermal capacity of about 44 MW.
In order to support further increase in graphite capacity, the Company
is already in the process of implementing the expansion plan adding 33
MW, at an investment of Rs. 90 crore. This is likely to be
commissioned by March 2009, taking the total capacity to approximately
77 MW. In case of any surplus power, it will be sold to the State
Electricity Board.
5. PROPOSED CAPACITY EXPANSION OF GRAPHITE ELECTRODE PLANT AT
MANDIDEEP
Your Company had on 5th June, 2008, announced that its graphite
electrodes capacity will be augmented to about 80,000 TPA from the
current level of about 60,000 TPA, by way of Brownfield expansion and
de-bottlenecking of the existing capacities.This will give HEGs
Mandideep plant the distinction of becoming the worlds single largest
site for manufacturing graphite electrodes.The expansion will result in
high levels of operating efficiencies and production cost benefits,
resulting in improved volumes and realizations.
This capacity expansion will be carried out at a significantly
contained incremental capital cost of Rs. 190 crore, which is 40 per
cent less than the expansion cost undertaken two years ago, and will be
operational by the last quarter of 2009.This investment of Rs. 190
crore is expected to have a very attractive pay-back period. The
Company proposes to fund its expansion mainly through internal
accruals.
6. HIVE-OFF OF STEEL UNIT AT DURG UNDER SCHEME OF ARRANGEMENT
The Scheme of Arrangement to hive-off the Steel Division of the Company
at burg to M/s. Jai Balaji Industries Ltd., has been approved by both
the Honble High Courts at Jabalpur (vide its order dated May 16,2008)
and Kolkata (vide its order dated May 9,2008).The certified true copies
of these orders have been filed with the respective Registrars of
Companies and with this the scheme has become effective.The
consideration towards the transfer of the said Unit has been received
by the Company.
7. CORPORATE GOVERNANCE
A report on Corporate Governance is forming part of the Annual Report
along with the Auditors Certificate on its compliance.
8. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion & Analysis Report as required under the Listing
Agreements with the Stock Exchanges forms part of the Annual Report.
9. INTERNAL CONTROL SYSTEMS AND ADEQUACY THEREOF
The Company has an adequate internal control system commensurate with
the size and nature of its business.
Internal audit programme covers various areas of activities and
periodical reports are submitted to the management. The Audit Committee
reviews financial statements and internal audit reports along with
internal control systems. The Company has a well-defined organizational
structure, authority levels and internal rules and guidelines for
conducting business transactions.
10. PERSONNEL
A) INDUSTRIAL RELATIONS
The industrial relations during the period under review generally
remained cordial at all the plants of the Company.
B) PARTICULARS OF EMPLOYEES
The information of employees getting salary in excess of the limits as
specified under the provisions of sub section (2A) of Section 217 of
the Companies Act,! 956, who were employed throughout or for a part of
the financial year under review is given as an annexure forming part of
this report.
11. PUBLIC DEPOSITS
Your Company has not invited any deposits from public / shareholders in
accordance with Section 58A of the Companies Act, 1956.
12. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO.
The information with regard to Conservation of Energy,Technology
Absorption, Foreign Exchange Earnings and out go in accordance with the
provisions of Section 217(1 )(e) of the Companies Act, 1956 read with
the Companies (Disclosures of particulars in the Report of Board of
Directors) Rules, 1988, is given as an annexure forming part of this
Report.
13. DIRECTORS
Your Directors namely Shri Shekhar Agarwal, Dr. Kamal Gupta and Shri P.
Murari shall retire by rotation at the ensuing Annual General Meeting
and being eligible, have offered themselves for reappointment.The Board
recommends their appointment.
14. AUDITORS
M/s Doogar& Associates, Chartered Accountants and M/s S.S. Kothari
Mehta& Co.,Chartered Accountants, Auditors of the Company, will retire
from their office at the ensuing Annual General Meeting. They are,
however, eligible for re-appointment.They have furnished a Certificate
to the effect that their appointment will be in accordance with limits
specified in sub-section (IB) of Section 224 of the Companies Act,
1956. You are requested to consider their appointment.
The Auditors Report read alongwith notes to accounts is self
explanatory and therefore does not call for any further comments.
15. DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that:
(i) in preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the financial year ended 31st March, 2008 and of the
profit of the Company for that year;
(iii) they have taken proper and sufficient care for 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 frauds and other irregularities; and
(iv) they have prepared the annual accounts on a going concern basis.
16. ACKNOWLEDGEMENTS
Your Directors wish to place on record, their appreciation for the
valuable assistance and support received by your Company from Banks,
Financial institutions, Central Government, Govt, of Madhya Pradesh,
Govt, of Uttar Pradesh, Government of Chattisgarh and their
departments.The Board also thanks the employees at all levels, for the
dedication, commitment and hard work put in by them for Companys
achievements.
For and on behalf of the Board,
Place : Noida (RAVIJHUNJHUNWALA)
Dated : June 13,2008 Chairman & Managing Director |
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| Source : Religare Technova | |
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