The Board of Directors of your Company takes pleasure in presenting
26th Annual Report and audited accounts of your Company for the
financial year ended 31st March, 2012.
(Rs. in Cr.)
31 March, 31 March, 31 March, 31 March,
2012 2011 2012 2011
sales and excise
duty 3920.16 3475.71 4932.00 4406.66
Less: Excise Duty 243.87 215.53 253.92 221.83
Less : Intercompany/
division sales 839.40 735.47 1317.26 1140.24
Net Sales excluding
excise duty and inter
division sales 2836.89 2524.71 3360.82 3044.59
Other Income 42.64 48.81 63.94 43.02
Net Sales and
Other Income 2879.53 2573.52 3424.76 3087.61
Depreciation & Tax 153.95 321.79 234.11 405.03
Depreciation 197.76 176.49 222.71 200.96
Profit Before Tax (-)43.81 145.30 11.40 204.07
deferred tax) (-)11.04 45.77 4.78 64.04
Profit After Tax (-)32.77 99.53 6.62 140.03
Minority Interest (-)3.01 (-)3.00
Profit after Taxation
and Minority interest 3.61 137.03
Profit Brought Forward
from Previous Year 55.44 41.11 263.86 212.14
made as under:
-General Reserve 50.00 50.01
Transfer to Capital
-Proposed Dividend on
Equity Shares and tax
thereon 35.20 0.09 35.30
to next year 22.67 55.44 267.38 263.86
Review of Operations
During the financial year 2011-12, the Company has faced challenges of
high cost of inputs which could not be passed on to customers due to
difficult business environment. In addition, Usha Siam Steel Industries
Public Company Limited, a subsidiary of the Company remained out of
operation for sizeable part in second half of year due to unprecedented
floods in Thailand.
As a result, the Company''s operating profit reduced to Rs.497.76 Crs.
on consolidated basis and Rs.408.80 Crs on standalone basis from
Rs.595.03 Crs and Rs.504.05 Crs respectively. The impact on profit
before and after tax was even more severe. On consolidated basis, the
Company could achieve profit after tax and minority interest of Rs.3.61
Crs. against Rs.137.03 Crs. in previous year. On standalone basis,
there was loss after tax of Rs.32.77 Crs against profit after tax of
Rs.99.53 Crs. in the previous year.
The turnover, however, increased to Rs.3360.82 Crs on consolidated
basis and Rs.2836.89 Crs on standalone basis during the year against
Rs.3044.59 Crs and Rs.2524.71 Crs respectively in the previous year.
Under the circumstances, the Board of Directors express their inability
to recommend payment of any dividend to shareholders for the year ended
31st March, 2012.
The capex plans undertaken by the Company to further perpetuate the
advantage of cost competiveness are under various stages of
implementation and are expected to be commissioned in phases over FY
2012-13 and 2013-14. The projects under implementation include
pelletisation plant, coke oven, 2 DRI plants and Waste Heat based 65 MW
Captive Power plants and other related projects. Upon completion, these
projects would significantly strengthen cost base, which in turn would
enhance profitability and competitiveness.
The business conditions continue to remain sub-optimal amidst global
and domestic challenges. While in inflationary economy, costs may rise
further, uncertain business environment (which disturbs chain of
economic activities) reduces ability to resist against such adverse
pressures. However, the Company believes that with the hope of
Government taking suitable initiatives to restore confidence and
environment conducive for growth, the inherent advantages of business
model, would enable the Company to improve its performance in FY 12-13
and subsequent years.
The international subsidiaries provide significant synergy and support
to the Company''s business and performance. All the operating
subsidiaries of the Company have continued to perform reasonably well
during the year under review.
The facilities of Usha Siam Steel Industries Public Company Limited
[USSIL], a key subsidiary of the Company became in-operational due to
unprecedented floods in Thailand in October''11 which inundated all
major industrial areas of Thailand for over 2 months. The Navanakorn
Industrial Area, where USSIL''s facilities are located, had water
accumulation of more than 6 ft. The industrial activities and other
operations suffered for over 4 months. After receding of water, the
restoration of normalcy in industrial activities is still under way in
other parts, USSIL could start partial operations in February''12. Full
level of activities are expected to be resumed by second quarter of FY
12-13. The insurance policy taken by USSIL covers consequential losses
to assets and profits out of flood and other perils.
The Statement under Section 212 of the Companies Act, 1956 in respect
of subsidiaries of the Company is given separately.
All the key joint ventures formed by the Company namely, Pengg Usha
Martin Wires Pvt. Ltd., Gustav Wolf Specialty Cords Ltd. and Dove
Airlines Pvt. Ltd., have done reasonably well in the year under review.
TPM & Quality
The Company attaches high importance to quality and TPM in all its
operations for achieving tangible and intangible benefits to ensure
Steel Division and Wire Ropes & Specialty Products Division continue
to have certification for its quality management systems being in
accordance with ISO 9001 2000 from BVQI.
Both Steel Division & Wire Ropes and Specialty Products Division had
received consistency awards for Total Productive Maintenance from JIPM.
All manufacturing plants have a focus on workplace health and safety.
Steel Division and Wire Ropes & Specialty Products Division continue
to enjoy Certification under ISO 14001 Environment Management Systems
(EMS) Standards from Det Norseke Veritas (DNV), of U.K. The
effectiveness of these systems is evident from reduced oil and water
consumption, reuse of waste oils and water, utilization of iron
containing wastes and improved green cover in steel plant site.
Wire Rope & Specialty Products Division has been achieving significant
improvements in effluent treatment plant to eliminate sludge carry over
by incorporation of filter press, the output of which is being used for
non critical applications, and continues to target zero discharge
condition. This Division has also reduced air pollution by converting
from oil to LPG and eliminating emission of un-burnt fuels in
The Board of Directors express their appreciation for sincere efforts
made by employees of your Company at all levels during 2011-12 and
their co-operation in maintaining cordial relations.
Your directors believe and affirm importance of development of human
resources, which is most valuable and key element in bringing all round
improvement and achieving growth of business.
USSIL, subsidiary of the Company, was awarded ''Outstanding
Establishment on Labour Relation & Welfare'' by Ministry of Labour,
Royal Thai Government for the years 2008, 2009, 2010 and 2011.
The information required under Section 217(2A) of the Companies Act,
1956 read with Companies (Particulars of Employees) Rules, 1975, forms
part of this Report.
As on 31st March, 2012, there are unclaimed deposits of Rs.0.04 Crs.
Your Company has complied with requirements of Clause 49 of Listing
Agreement and followed practice of getting disclosures from directors
and senior management personnel relating to any material financial and
commercial transactions where they have any personal interest with a
potential conflict of interest with the Company at large. Your Company
recognizes importance of good Corporate Governance as a step for
building stakeholders'' confidence, improving investor protection and
enhancing long-term enterprise value.
A detailed report on Corporate Governance is annexed.
Mr. B K Jhawar, Mr Brij K Jhawar, Mr P K Jain and Mr A K Chaudhri are
retiring by rotation.
Mr. A K Basu retired by rotation in last annual general meeting. Your
directors place on record their warm appreciation for contribution made
by him in progress and growth of the Company, During the year, Dr P
Bhattacharya, Jt Managing Director retired from the services of the
Company on attaining the age of superannuation. Your directors place
on record their warm appreciation for contribution made by him in
progress and growth of the Company, With effect from 1st February,
2012, Dr. Vijay Sharma and Mr. P K Jain, Executive Directors were
designated as Jt. Managing Director [Steel Business] and Jt. Managing
Director [Wire & Wire Ropes Business] respectively.
Directors'' Responsibility Statement
Pursuant to requirements under Section 217 (2AA) of the Companies Act,
1956 with respect to Directors Responsibility Statement, it is hereby
(i) the applicable accounting standards have been followed in
preparation of annual accounts for financial year ended 31st March,
2012 and proper explanations have been furnished relating to material
(ii) the accounting policies have been selected and applied
consistently and reasonably except to the extent of change in
Accounting Policy mentioned hereinafter, and prudent judgments and
estimates have been made so as to give a true and fair view of state of
affairs of the Company at end of financial year and of profit of the
Company for year under review ;
(iii) the proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with provisions of the
Companies Act, 1956 for safeguarding assets of the Company and for
preventing and detecting fraud and other irregularities; and
(iv) the annual accounts for financial year ended 31st March, 2012 have
been prepared on a going concern basis.
During the year, there has been a sharp depreciation in value of INR
against US $ and other global currencies. Recognizing severity of the
impact, Ministry of Corporate Affairs has amended AS-11, allowing an
option to corporate to account for change in value of long term loans
to respective fixed assets and depreciate over life of such assets if
the loan is for acquisition of fixed assets, and in case of other
loans, to Foreign Currency Monetary Item Translation Difference Account
and amortize over balance period of liability. The Company has decided
to exercise this option and accordingly there has been a change in
CEO / CFO Certification
The Managing Director and Chief Financial Officer of the Company
submitted a certificate to Board of Directors as required under Clause
49 of Listing Agreement for the year ended 31st March, 2012.
In line with requirements of Listing Agreements and Accounting
Standards issued by the Institute of Chartered Accountants of India,
your Company made additional disclosures in respect of Consolidated
Financial Statements, Related Party Transactions and Segmental
The auditors, M/s. Price Waterhouse, Chartered Accountants, retire at
conclusion of forthcoming Annual General Meeting and being eligible,
have offered themselves for re- appointment.
Your directors invite your attention to note 41 to the accounts,
referred to by Auditors in para 4 of their report. These notes are
self explanatory and along with explanations given hereinabove under
respective heads, provide required clarifications on references made by
During the year, Board appointed M/s. Guha, Ghosh, Kar & Associates,
Cost Accountants, to conduct cost audit of the Company. The Company
filed application with Central Government for financial year 2011-12
for appointment of Cost Auditor and the approval is deemed to have been
As required under Section 217(1)(e) of the Companies Act, 1956, details
regarding conservation of energy, technology absorption and foreign
exchange earning and outgo are given in the Annexure attached hereto
and form part of this Report.
Corporate Social Responsibility
Your Company has always been alive to its'' responsibility to the
society and accordingly been giving very high priority and commitment
towards discharge of the same.
USSIL was awarded TLS 8001-2010 Certificate for having achieved
requirements of Thai Corporate Social Responsibility by Ministry of
Labour, Royal Thai Government.
A detailed report on various initiatives in this regard is attached and
forms part of this Report.
Your directors place on record their appreciation for valuable
co-operation and support of customers, suppliers, contractors,
shareholders, investors, government authorities, financial
institutions, banks, partners and collaborators.
On behalf of the Board of Directors
Kolkata P Jhawar
10th May 2012 Chairman