Triveni Engineering

The Directors have pleasure in presenting the 73rd Annual Report and
 audited accounts for the Financial Year ended September 30, 2008
 
                                                      (Rs. in Million)
                                               2007-08        2006-07
                                             12 months      18 months
 
 Sales (Gross)                                 17030.4        20537.7
 
 Sales (Net)                                   15930.1        19079.5
 
 Operating Profit ( EBITDA)                     3167.1         2397.8
 
 Finance cost                                    981.6          728.5
 
 Depreciation & amortisation                     839.9          862.7
 
 Exceptional items                                   -           21.4
 
 Profit before Tax (PBT)                        1345.6          785.2
 
 Tax                                             230.4           30.9
 
 Profit After Tax (PAT)                         1115.2          754.3
 
 Surplus Brought Forward                          92.5           78.7
 
 Available for appropriation                    1207.7          833.0 
 
 APPROPRIATIONS
 
 Equity dividend (incl. proposed dividend & 
 dividend distribution tax)                      181.0          178.4
 
 Transfer to Molasses reserves                     3.5            2.1
 
 Transfer to General Reserves                    923.0          560.0
 
 Surplus Carried forward                         100.2           92.5
 
 Earning per equity share 
 of Re.1 each (in Rs.)                            4.32           2.92
 
 
 - The financial year 2006-07 ended 30th September, 2007 was extended by
 six months with the permission of the Registrar of Companies
 
 PERFORMANCE
 
 During the year under review, there has been a major improvement in the
 performance of the company. Net sales and profit after tax increased by
 25% and 122% respectively over annualised sales and profitability of
 the previous accounting period. When compared with the 12 months period
 October 2006 to September 2007, the results are even better, and a
 clear turnaround in the operations of the Sugar Division is evident.
 Net Sales in the previous 12 months period were Rs. 13196.6 million
 (21% less) and PAT Rs. 123.2 million, about 1/8th of what was achieved
 this year. EBITDA for sugar operations excluding cogeneration and
 distillery rose to Rs. 904.2 million from a negative Rs. 462.3 million,
 while EBIT including cogeneration and distillery was Rs. 1011.4 million
 from a negative Rs.  428.9 million in the previous 12 months period.
 The sugar operations turnaround was primarily due to the reduced
 interim cane price of Rs.  1100 per MT announced by the Hon’ble Supreme
 Court as against the arbitrary cane price of Rs. 1250 per MT advised by
 the State Government.
 
 The production of sugar was 2% lower than the previous season as
 against a 14% lower production in the state of U P. Cane availability
 was impacted by the late start of the crushing season pending
 finalisation of the cane price, and lower yields due to climatic
 factors. In the last quarter of the accounting year, sugar prices have
 also improved in view of lower production in the sugar season 2007-08,
 and a much lower production estimate for the next two years. Two of our
 sugar units have commenced crushing operations for the season 2008- 09
 and the balance units are expected to start within the next 10 days.
 
 We have diversified our product offerings in all our engineering
 businesses, which has helped counter the contraction of business in the
 domestic market. In steam turbines and high speed gears, we continue to
 give increased focus to refurbishment, service, spares and exports. We
 expect this segment to contribute a larger share to the division’s
 overall sales in the coming year.
 
 Our Water Business Group secured two large breakthrough orders in the
 last year. One was for a desalination plant for a major power plant and
 the second a membrane based tertiary treatment plant for municipal
 waste. We expect enormous growth in both water and waste water projects
 for industrial and municipal customers all over the country, and with
 our access to appropriate technologies and a low cost manufacturing
 base, we are able to provide value for money projects for our
 customers.
 
 The current global financial turmoil has had its affect on the Indian
 economy, and various sectors are curtailing their growth plans owing to
 high interest rates and availability of funding both for debt and
 equity. However, the power and water sectors in which we operate are
 not as badly affected, and with our diversified product offerings and
 concentration on refurbishment, servicing and exports, we expect growth
 in the engineering business to continue with good margins.
 
 Segment wise reporting of the various business segments of the company
 has been provided in Note 16 of the Notes to Accounts to the audited
 financial statements and detailed comments on the performance of the
 various divisions are given in the financial review and management
 discussions and analysis.
 
 DIVIDEND
 
 Your directors have recommended a dividend of 60% (Rs. 0.60) per equity
 share (last year Rs. 0.60 per equity share for 18 months period) on
 257880150 equity share of Re. 1/- each for the financial year 2007-2008
 ended on September 30, 2008, subject to the approval of members at the
 ensuing Annual General Meeting, which will be paid to (i) all those
 equity shareholders holding shares in physical form and whose names
 appear in the Register of Members as on 26th December 2008 and (ii) all
 those equity shareholders holding shares in demat form and whose names
 appear as beneficial owners as at the close of business hours on 19th
 December, 2008 as per the details to be furnished by National
 Securities Depository Limited (NSDL) and Central Depository Services
 (India) Limited (CDSL). The total outgo on account of dividend
 (including Dividend Distribution Tax) for the Financial Year 2007-2008
 will be Rs. 181.0 million versus Rs. 178.4 million in 2006-2007 (18
 months).
 
 BUSINESS OUTLOOK
 
 In respect of sugar operations, while the production in the country in
 sugar season 2008-09 is estimated to be over 20% lower than last year,
 we hope to achieve around the same production as in the last season.
 This is the result of effective cane development and procurement
 initiatives and prompt payment to the farmers to curb diversion of the
 cane from our areas. Cane pricing is an issue which is extremely vital
 for the UP sugar industry.  The industry challenged the SAP announced
 by the State Government for the year 2006-07 and 2007-08 and the Apex
 Court has directed the interim payment of a lower cane price than the
 SAP. For the current season, 2008- 09, UP Government has announced an
 SAP of Rs. 1400 per tonne for normal variety cane and Rs. 1450 for
 early variety cane. The Industry has challenged the current year’s SAP
 on the same grounds as in the previous years.  We hope that a
 transparent and rational mechanism of cane pricing linked to sugar
 prices is evolved through the intervention of the judiciary. If
 achieved, it will be a major structural reform for the sugar industry
 and would significantly improve viability over the long term.
 
 All our engineering businesses are in sectors which are critical to the
 economic development of the nation viz., power and water. To meet the
 growing demand from these sectors, Triveni has already set up state of
 the art manufacturing facilities at our turbine and gear units.  During
 the current financial year, we have successfully commissioned a 27MW
 steam turbine and we expect to book more orders in these higher ranges.
 We are focusing on enlarging the share of exports, and with the
 increased installation base, we believe revenues from servicing and
 spares would go up significantly in the coming years.
 
 TECHNOLOGY
 
 We have installed state of the art machines at our engineering
 facilities at Bangalore and Mysore, and during the financial year,
 shifted our water business to company owned premises at Noida. With
 installation of these sophisticated equipments, we have attained world
 class manufacturing standards and we are attracting global
 manufacturers to use our facilities to outsource high precision
 components. In respect of the sugar units, we endeavor to better the
 industry benchmarks and achieve cost savings through improved
 efficiencies.  We are increasing our cane development efforts and
 investing in recruiting and training a better level of agricultural
 graduates.
 
 HUMAN RESOURCES
 
 The company considers human resources as one of its most important
 assets. Our success lies in our ability to recruit, train and retain
 high quality professionals. We believe that development of people is
 essential for the growth of the organisation. Our training and
 continuing education assistance programs are designed to ensure that
 our executives enhance their skill sets in alignment with their
 respective roles. During the financial year, 3952 man days of training
 /orientation programs were organised for officers in technical as well
 as managerial areas. Accordingly, 4.5 man-days training were imparted
 per officer during the year.
 
 The Company believes in inducting young trainees and grooming and
 developing them for middle and senior management positions by providing
 training and mentoring. Accordingly, during the year 100 trainees were
 recruited in the Engineering and Sugar businesses of the Company from
 campuses spread all over the country.
 
 Industrial Relations remained cordial and harmonious
 
 during the year except for the incident mentioned in last year’s annual
 report.
 
 CONSOLIDATED FINANCIAL STATEMENT
 
 In accordance with the Accounting Standard 21 on Consolidated Financial
 statement read with Accounting Standard ‘AS-23’ on Accounting for
 investment associates, your Directors have pleasure in attaching the
 consolidated financial statement which form a part of the Annual Report
 and Accounts.
 
 SUBSIDIARIES
 
 During the period under report, a new Company, Triveni Energy Systems
 Limited was incorporated as a wholly owned subsidiary of the Company on
 15th February, 2008. Upper Bari Power Generation Limited and Triveni
 Engineering Limited have yet to commence business activities. Triveni
 Retail Ventures Limited is engaged in the business of semi urban
 retailing. As stated in the previous Director Report, the company has
 divested its stake in Abohar Power Generation Limited which ceased to
 be a subsidiary during the year. Information on subsidiary companies
 required under section 212 of the Companies Act, 1956 is provided in
 Annexure C of the Report.
 
 In terms of approval granted by the Central Government under section
 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit
 and Loss Account, Reports of the Board of Directors and Auditors of the
 subsisting subsidiaries have not been attached with the Balance Sheet
 of the Company. The annual accounts of the subsidiary companies and
 related detailed information will be made available to investor of the
 Company/ Subsidiary companies seeking such information at any point of
 time. The annual accounts of the subsidiary companies will also be kept
 for inspection by any investor at the Company’s Corporate Office and
 that of concerned subsidiary companies. However, as directed by the
 Central Government, the prescribed financial data of the subsidiaries
 have been furnished in the Consolidated Financial Statements.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance is given in Annexure ’D’
 along with the Auditors’ statement on its compliance in Annexure ‘E’.
 
 AUDITORS
 
 M/s J.C. Bhalla & Co., Chartered Accountants, Auditors of the Company,
 who retire at the conclusion of the forthcoming Annual General Meeting,
 have consented to continue in office, if appointed. They have confirmed
 that their appointment, if made, will be in accordance with the limits
 specified in Section 224 (1B) of the Companies Act, 1956.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
 confirm that
 
 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 they have made judgements and estimates that are
 reasonable and prudent so as to give a true and fair view of the
 statement of affairs of the company as on September 30, 2008 and of the
 profit of the Company for the year ended as on September 30, 2008.
 
 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 and detecting fraud and other
 irregularities.
 
 iv. The Annual Accounts have been prepared on a going concern basis.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The particulars required under Section 217 (1) (e) of the Companies
 Act, 1956, read with Companies (Disclosure of Particulars in the Report
 of the Board of Directors), Rules, 1988 are given in Annexure ‘A’ to
 this Report.
 
 PARTICULARS OF EMPLOYEES
 
 As required under the provision of sub-section (2A) of section 217 of
 the Companies Act, 1956 read with the Companies (Particulars of
 Employees) Rules, 1975 as amended, particulars of employees are set out
 in the Annexure ‘B’ to the Directors’ Report. However, as per provision
 of section 219(1) (b) (iv) of the Companies Act, 1956, the report and
 the accounts are being sent to all the shareholders excluding the
 aforesaid information.  Any shareholder desirous of obtaining the same
 may write to the Company Secretary at the registered office of the
 Company.
 
 DIRECTORS
 
 Mr. R. C. Sharma and Mr. M. K. Daga retire by rotation at the
 forthcoming Annual General Meeting (AGM), and being eligible, offer
 themselves for reappointment.
 
 Mr. Tarun Sawhney and Mr. Nikhil Sawhney, Corporate Vice Presidents of
 the Company were appointed as Additional Directors of the Company by
 the Board effective 19th November, 2008 pursuant to the provisions of
 Section 260 of the Companies Act, 1956. Both Mr.  Tarun Sawhney and Mr.
 Nikhil Sawhney shall hold office upto the date of the forthcoming AGM.
 The Company has received notices in writing from members under Section
 257 of the Companies Act, 1956 signifying their intention to propose
 the appointment of Mr. Tarun Sawhney and Mr. Nikhil Sawhney as
 Directors of the Company. Both being eligible, offer themselves for
 appointment as Director.
 
 The Board also, subject to approval of the shareholders by a special
 resolution at the forthcoming AGM, appointed Mr. Tarun Sawhney and Mr.
 Nikhil Sawhney as Executive Directors of the Company effective 19th
 November, 2008 and fixed their remuneration.
 
 DEPOSITS
 
 Fixed Deposits accepted from shareholders and the public stood at Rs.
 114.71 million as on September 30, 2008 against Rs.112.82 million in
 the previous year.  Deposits amounting to Rs. 6.71 million remain
 unpaid, out of which Rs. 1.83 million have since been repaid/ renewed
 as on November 19, 2008.
 
 APPRECIATION
 
 Your Directors gratefully acknowledge the support given by our
 customers, shareholders, employees, farmers, the Central, Uttar Pradesh
 and Karnataka Governments, financial institutions and banks, and all
 other stakeholders, and we look forward to their continued support and
 encouragement.
 
                                                     For and on behalf
                                             of the Board of Directors,
 
                                                      Dhruv M. Sawhney
                                          Chairman & Managing Director
 Place: Noida (U.P.)
 Date : November 19, 2008