The Directors take pleasure in presenting the 19th Annual Report and
Audited Accounts of your Company for the year ended 31st March, 2011.
financiaL results
Particulars rs. in Lakhs
2010-11 2009-10
Gross Turnover 75,015.37 71,051.85
Net Turnover 72,485.63 69,057.96
Other income 324.66 71.93
Total Revenue 72,810.29 71,123.78
Earning Before Interest, Depreciation,
Taxation & Amortisation (EBITDA) 8,923.50 12,654.05
Interest 1,467.37 2,061.82
Depreciation 1,871.61 1,794.60
Proft Before Taxation (PBT) 5,584.52 8,797.63
Less: Tax including Deferred Tax 1,381.89 3,003.66
Proft After Taxation (PAT) 4,202.63 5,793.97
Proft Brought Forward from Previous Year 1,657.94 1,143.80
Prior Period Adjustment – Taxation (59.08) 67.99
Debenture Redemption Reserve written back – 750.00
Amount available for Appropriation 5,801.49 7,755.76
Appropriations are made as under:–
– General Reserve 3,500.00 5,400.00
– Proposed Dividend including tax thereon 693.21 697.82
Balance Carried Forward to Next Year 1,608.28 1,657.94
DIVIDEND
Despite lower profts during the year, your Directors recommend to
maintain the dividend at Rs. 1.50 (i.e.15%) per share on the equity
shares of the Company for the year ended 31st March, 2011 as in the
earlier year. If approved, the dividend will absorb Rs. 693.21 lakhs
(including Rs. 96.76 lakhs towards dividend tax).
REVIEW OF OPERATIONS
The Company achieved Gross Sales of Rs. 750.15 Crores during the year
under review as against Rs. 710.52 Crores in the previous year
refecting an increase of 5.6%. However the quantity of D. I. Pipes sold
during FY 2010-11 was lower by 9.72% at 1,35,246 MT as compared to
1,49,805 MT sold during FY 2009-10. The lower volume of sales coupled
with increase in cost of inputs resulted in lower profts (PBT) for the
year under review at Rs. 55.85 Crores as against Rs. 87.98 Crores
earned during FY 2009-10.
During the frst quarter of the year under review, your Company took a
planned shutdown of its Mini Blast Furnace (MBF) from 9th May 2010 to
27th June, 2010 for repairing the MBF and for installation of Hot Blast
Stoves. Apart from this, chilling-in of MBF at the time of restart,
took further three – four weeks time to stabilize the operations after
the long shutdown. During this period of about two and half months,
while there was no production of liquid metal/pig iron, the Ductile
Iron Pipe Plant (DIP) was also under shut-down for some time for annual
preventive maintenance and operated at a very low capacity, due to non
availability of metal. Consequently, the production of all the
Divisions during the financial year 2010-11 was lower compared to the
production achieved during FY 2009-10.
The quantity of Low Ash Metallurgical Coke produced in the Coke Oven
Plant was lower by 8.5% at 94,092 MT in FY 2010-11 as against 1,02,862
MT in FY 2009-10, due to shutdown of some ovens for major repair, which
continued till July, 2010. Accordingly, the units of power generated,
in the 12 MW – Waste Heat Recovery Based Captive power Plant of the
Company, were marginally lower at 518 Lakh units during the year under
review compared with 536 Lakh units in the preceding year.
The production of Mini Blast Furnace (MBF), producing liquid metal
mainly for Ductile Iron Pipe Plant, was lower at 1,46,285 MT for the
financial year 2010-11 compared to 1,58,503 MT in the previous year,
refecting a decrease of about 8%. The production of D. I. Pipes during
FY 2010-11 was lower by about 10% at 1,34,779 MT compared with 1,49,604
MT in the preceding year.
The production of Cement during FY 2010-11 was lower by about 10% at
61,384 MT compared to 68,476 MT in the previous year, due to curtailed
operations, as the market for slag cement started improving from
December, 2010.
Consequent to repair of Mini Blast Furnace (MBF) and installation of
Hot Blast Stoves, as aforesaid, the manufacturing capacity of MBF for
liquid metal/pig iron has gone up to 2,25,000 TPA. Similarly, with the
installation of balancing equipments, the capacity of Ductile Iron
Pipes Plant (DIP) also stands increased to 2,25,000 TPA.
future prospectS
Your Company has taken steps for cost reduction and expansion of
capacities in Coke Oven, Power Generation, Liquid Metal and Ductile
Iron Pipes. While, these steps will help in volume growth, the pressure
on selling prices may continue, due to intense competition in the
domestic market in view of further capacities being added by the
existing players and new entrants.
The installation of Sinter Plant along with regular upgradation and
addition of balancing equipments in the Ductile Iron Pipe Plant (DIP)
will increase the capacity of Ductile Iron Pipes to 2,75,000 TPA by end
of Financial Year 2011-12. To cater to the increased requirement of
coke, your Company is in the process of installing additional Battery
at its Coke Oven Plant, which is expected to be commissioned by
December, 2011. With this, the capacity of the Coke Oven Plant will
increase to 2,25,000 TPA. In addition, for effective utilization of
higher quantum of waste heat generated from the Coke Oven Plant after
expansion, it is planned to add one more boiler to increase the power
generation in the existing Captive Power Plant.
As a further measure of cost reduction, the Company envisages to set up
a Ferro Alloys Plant at a capital outlay of Rs. 40 Crores partly to
cater to its captive requirement and to serve the growing demand of
Ferro Silicon, to support the proftability of the Company.
The Company plans to fnance the above investments through internal
accruals and Term Loans.
CREDIT RATING
Credit Analysis and Research Limited (CARE), a leading rating agency
has reviewed and upgraded the rating to CARE A+ (Single A plus) from
CARE A (Single A). This rating is applicable to facilities having
tenure of more than one year. CARE A+ rating indicates adequate safety
for timely servicing of debt obligations and carry low credit risk.
The rating for short term facilities has been reviewed and reaffrmed as
PR1+ (PR One Plus), the highest rating in the category and indicates a
strong capacity for timely payment of short term debt obligations and
carry lowest credit risk.
DIRECTORS
Andhra Pradesh Industrial Development Corporation (APIDC), Hyderabad
nominated Shri V. Nagi Reddy, IAS on the Board of Directors of your
Company with effect from 25th August, 2010 in place of Shri Vinod Kumar
Agrawal, IAS. Your Directors place on record their appreciation for the
active participation and valuable services rendered to the Company by
Shri Vinod Kumar Agrawal.
Shri Gouri Shankar Rathi and Shri G. Maruthi Rao retire by rotation at
the ensuing Annual General Meeting and being eligible, offer themselves
for re-appointment.
Shri S.Y. Rajagopalan was appointed as an additional Director on the
Board of Directors of the Company from 7th May, 2011. He will hold
offce upto the conclusion of ensuing Annual General Meeting. The
Company has received a notice from a member of the Company to appoint
Shri S.Y. Rajagopalan as a Director, liable to retire by rotation.
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate
Governance. A report on Corporate Governance Practices, the Auditors
Certifcate on compliance of mandatory requirements thereof and
Management Discussion and Analysis are given as annexure to this
report.
MANAGEMENT DISCUSSION AND ANALYSIS
Please refer to the Management Discussion and Analysis section
appearing elsewhere.
EMPLOYEES
Board of Directors expresses its appreciation for sincere efforts made
by the employees of your Company at all levels during the year and
their co-operation in maintaining cordial relations. Your Directors are
pleased to inform that a long term Wage Settlement for a period of four
years under Section 12 (3) of Industrial Disputes Act, 1947 was signed
with the Unions of the workmen in November, 2010.
The information required under Section 217(2A) of the Companies Act,
1956 read with Companies (Particulars of Employees) Rules, 1975, as
amended, forms part of this Report. However, the report and accounts
are being sent to all the shareholders of the Company excluding the
above information. Those shareholders, who desire to obtain these
particulars, would be provided the same upon receiving such request.
Statutory information
Information as per Companies (disclosure of particulars in the Report
of Board of Directors) Rules, 1988 related to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in
Annexure-‘A attached hereto and forming part of this report.
Directors responsibility Statement
The Board of Directors of the Company confirms:
i) That in the preparation of annual accounts the applicable accounting
standards have been followed and there has been no material departure.
ii) That the selected accounting policies were applied consistently and
the Directors 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 as at 31st March, 2011 and of the profts of the Company for
the year ended on that date.
iii) That proper and suffcient 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: and
iv) That the annual accounts have been prepared on a going concern
basis.
AUDITORS
The Auditors, M/s. K.R. Bapuji & Co., Chartered Accountants, retire at
the conclusion of the forthcoming Annual General Meeting and being
eligible, offer themselves for re-appointment.
COST AUDITORS
The Central Government vide its order dated 16th December, 2010 has
directed the Company to conduct cost audit for its cement division.
Accordingly, the Board of Directors of your Company appointed M/s.
Narasimha Murthy & Co., Cost Accountants, Hyderabad, as Cost Auditors
for the financial year 2010-11, which has been approved by the Central
Government.
ACKNOWLEDGEMENTS
The Board of Directors thanks the Government Authorities, Financial
Institutions, Banks, Customers, Vendors, Shareholders & Investors, for
their continued co-operation and support to your Company.
For and on behalf of the Board of Directors
Place: Chennai G. maruthi rao mayank Kejriwal
Date: 7th May, 2011 Director Managing Director
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