The Directors are pleased to present the Annual Report and the Audited
Accounts for the financial year ended March 31, 2008.
The highlights of the financial performance of the Company are as
(Rs. In Lacs)
Particulars 2007-08 2006-07
Sales & Other Income 14472.50 15172.05
Profit before Depreciation and Interest 3276.73 3777.49
Depreciation 1176.51 1039.93
Interest 292.22 331.69
Profit before Taxation 1768.53 2445.34
Provision for Taxation (Deferred & Current) 622.38 849.07
Profit after Taxation 1146.15 1596.27
Profit available for appropriations 1146.15 1596.27
Amount transferred to General Reserve 300 300
Proposed Dividend on Equity Shares 150 250
Tax on Dividend 25.49 42.49
Profit after Appropriations 670.66 1003.78
During the year, the Sales of the Company were Rs. 14438.45 Lac.
Operating Profit (PBDIT) of the company for the year was Rs. 3276.73
Lac. The Profit before Tax (PBT) was Rs. 1768.53 Lac and Profit after
Tax (PAT) was Rs. 1146.15 Lac. Considering the pressure on commodities
prices, which remained all through the year and impacted the input
costs considerably, the performance achieved by the company during the
year can be regarded as satisfactory.
The Year 2007-08 was sluggish for the Automobile Industry in India in
general and the Motorcycles Industry in particular. According to the
figures released by the Society of Indian Automobile Manufacturers
(SIAM) motorcycles sales in India during 2007-08 were down by 11.90
percent at 5.77 million units, against 6.55 million units in the
previous year. High interest costs & squeeze on the financing of
motorcycles by banks/NBFCs across the country were major contributory
factors to the decline of sales in motorcycles during the year 2007-08.
To add to the woes, last years trend of hardening of the commodities
and intermediate goods continued this year as well and almost entire
chunk of the increased processing costs were absorbed in the cost of
production resulting in severe squeeze on the Gross Margins of almost
all automotive sector companies across the sectors/segments.
The Directors recommend a Dividend of Rs. 1.5 per equity share for the
year (previous year Rs. 2.50 per share). If approved by the
shareholders in the forthcoming Annual General Meeting, the Dividend
will absorb Rs. 1.50 Crores. The Dividend Distribution Tax borne by the
Company will amount to Rs. 25.49 Lacs.
Indian economys juggernaut continued to roll in year 2007-08 like it
has been doing for the last few years. Its overall GDP growth of 9.1%,
which is still one of the best amongst major economies of the world.
Albeit some areas of concern have emerged towards the end of the fiscal
2007-08 with rising inflation and food / oil prices.
Amidst this challenging environment on both marketing front and rising
input prices, your company has taken a strong initiative on expanding
the base of the customer and cost containment measures. This will help
the company to steer its growth in the coming year.
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a Management Discussion and Analysis Report and a Report on
Corporate Governance are given as Annexures A and B respectively to
this Report. All the board members and senior managerial personnel have
affirmed compliance with the code of conduct for the F.Y. 2007-08.
A certificate from the Statutory Auditors of the Company regarding the
compliance of the conditions of Corporate Governance by the Company
stipulated under Clause 49 of the Listing Agreement is also attached to
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the requirements of Section 217(2AA) of the
Companies Act, 1956, the Board of Directors confirm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same;
(ii) the accounting policies which have been selected have been applied
consistently and judgments and estimates made are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2008 and of the profits of the Company for
the year ended on that date;
(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; and
(iv) the annual accounts have been prepared on a going concern basis.
During the year, the Company has not accepted any deposit under Section
58A and Section 58AA of the Companies Act, 1956 read with Companies
(Acceptance of Deposits) Rules, 1975.
The company has met with its working capital requirement largely from
internal resources during the year. In order to part-finance its new
Haridwar Plant in Uttarakhand, the company has tied up 20 million
dollar ECB loans from HSBC & ICICI Bank during the year. These ECB
loans have fully been hedged for both principal and interest cost and
thereby the company has insulated itself from the fluctuation in the
foreign currency market.
During the year the company has commenced the work to set up a
greenfield manufacturing facility at Haridwar, Uttarakhand to
manufacture cold & warm forging components, Gears & Shafts for the
Automobile and other Industries. This new plants construction is on
course and is slated go on stream in the second half of current year
2008-09. It will have state of the art technology and machinery,
equipped to cater to the in most exacting requirement for the cold/warm
forging components for automobile and other industries.
Haridwar plant will also have improved logistics on account of being in
proximity of its most important customer viz. Hero Honda Motors Ltd.,
which has just commenced its new Two-Wheeler plant at Haridwar. On
account of special fiscal incentives announced by the Central
Government for new industrial units in Uttarakhand, the Haridwar unit
of the company will be able to avail various fiscal / concessional
benefits under the excise, income-tax and sales tax, etc.
Pursuant to Section 256 of the Companies Act, 1956 and Articles of
Association of the Company, Mr. Vijay Munjal and Mr. Bhagwan Dass
Narang retire by rotation at the ensuing Annual General Meeting and
being eligible offer themselves for re-appointment.
Shareholders are requested to re-appoint M/s S. S. Kothari Mehta & Co.,
Chartered Accountants as Auditors of the Company and authorize the
Audit Committee to fix their remuneration. They have furnished to the
Company requisite Certificate under Section 224(1 B) of the Companies
Act, 1956 and are therefore eligible for re-appointment as Auditors of
The observations of Auditors in their Report, read with the relevant
notes to the accounts are self-explanatory and therefore do not require
any further explanation.
The Audit of the Cost Accounts of the Company for the F.Y. 2007- 08,
has been conducted by the Cost Auditor and the Cost Audit Report will
be submitted to the Ministry of Corporate Affairs, Government of India.
The Directors have appointed M/s Gurdeep Singh & Associates, Cost
Accountants, as Cost Auditors to audit the accounts relating to
Engineering Industries for the year ending 31st March 2009.
Your Company is committed in maintaining the highest standards of
environment compliances and therefore has adopted a systematic approach
towards environment management. Companys all operational decisions
continue to be taken keeping in mind their sensitivity to the
surrounding environment, which help in maintaining and improving the
overall environment in and around Companys plant.
Your company takes pleasure to inform that during the year it has
become a constituent of a very important and responsible initiative of
Hero Honda Motors Limited toward the commitment to environment, viz.
GREEN SUPPLY-CHAIN MANAGEMENT PROGRAMME.
Your Company has complied with the applicable environmental
regulations; its effluents & wastes are treated properly and monitored
constantly before safely disposing them off in conformity with the
environmental regulations prescribed by statutory authorities. During
the year, Company has received necessary environmental
consents/approvals for air, water and hazardous waste discharge from
the Pollution Control Authority.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information 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 is given as per Annexure - D and
forms an integral part of this Report.
PARTICULARS OF EMPLOYEES
As required under the provisions of section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules,
1975, as amended, the names and other particulars of employees are set
out in the Annexure - C included in this report.
Industrial relations have remained cordial throughout the year in the
HEALTH AND SAFETY
Safety is a prime responsibility and concern. Your Company is committed
for safety and health of its employees and other persons who may be
affected by its operations. Its companys belief that safe working
practice leads to motivated workforce and higher productivity and to
that end, all possible safety measures are put in place to eliminate
accidents at its factory, and improve upon safety record. Safe working
culture across the company is ensured by:
- Integrating safety and health in all activities.
- Ensuring compliance with all applicable legislative requirements.
- Encouraging employees to ensure safety at their workplaces.
- Continuous improvements in safety performance through precautions
besides participation & training of employees.
Company would like to thank its clients, vendors, investors and bankers
for their continued support during the year. In particular to its
principal customer Hero Honda Motors Limited, the company is thankful
for continuing to repose faith as an direct online supplier and
including it as an integral part of the supply chain management.
We would like to place on record our appreciation of the contribution
made by employees at all levels. Their diligent hard work, cooperation
and support is a backbone of all endeavors of the company.
We also thank the Government of India, and Customs and Excise
Departments, the Income Tax Department, the Industrial & Labour
Department, Government of Haryana and other government agencies for the
support company has been receiving over the years, and is looking
forward to their continued support/guidance in times to come.
For and on behalf of the Board
SUNIL KANT MUNJAL
Place : New Delhi
Date : July 25, 2008