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TO THE SHAREHOLDERS
1. Your Directors submit their Annual Report together with the audited accounts for theyear ended 31st March, 2011.
2. The results for the year under review are given below :
| ||Rs. Crores |
| ||2010-2011 ||2009-2010 |
|Sales ||40.75 ||23.26 |
|Profit before interest and depreciation ||22.60 ||14.36 |
|Interest || || |
|Gross Profit ||22.60 ||14.36 |
|Depreciation ||(0.85) ||(0.86) |
|Profit before Tax ||21.75 ||13.50 |
|Taxation (MAT credit in respect of earlier year) ||1.93 ||(2.33) |
|Profit after taxation ||23.68 ||11.17 |
As can be seen from the above table, during the period under review, profit beforeinterest and depreciation amounted to Rs.22.60 crores and profit after tax amounted toRs.23.68 crores as compared to Rs.14.36 crores and Rs.11.17 crores respectively during theprevious year. A MAT credit of Rs. 1.93 crores against a debit of Rs.2.33 crores in theprevious year contributed Rs. 4.26 crores towards increase in PAT.
3. The Company continues to be in a consolidation mode, hence no dividend has beenconsidered for the year under review.
FINANCE & ACCOUNTS
4. As in the previous year, there were no borrowings during the year ended 31st March2011.
5. Capital Expenditure for the year amounted to Rs.8.54 Lakhs (2009-10 - Rs.42.91Lakhs) and value of assets put into use during the year amounted to Rs.8.54 Lakhs (2009-10-Rs.54.69 lakhs)
6. In compliance with Accounting Standard 21 of The Institute of Chartered Accountantsof India, consolidated accounts are annexed hereto.
MANAGEMENT DISCUSSION AND ANALYSIS ON OPERATIONS
7. Sales during the period under review increased mainly on account of supply of fullvalue components (including raw materials) by the Metal Pressings Division as againstconversion of customers materials in the previous year, and increase in income fromother sources.
8. As in the previous year, your Directors are pleased to report that this year too,the Company has registered increase in profit before tax mainly due to increase in otherincome and improved profitability of the Metal Pressings Division.
9. Metal Pressings Division at Pune registered an increase in turnover due to supply offull value components throughout the year under review. There was improvement in demand inthe automobile and tractor sector which resulted in sustained demand for the componentssupplied by the division. The improved margins on products supplied with Companysraw materials helped the division in achieving higher operating profit.
Although the growth in the automobile and tractor segments is expected to remain strongin the near term entry of a large number of players of repute in this field has resultedin keen competition in the highly price sensitive domestic market.There is tremendouspressure on component suppliers for price reduction. Hence cost control and productivityimprovement are under constant focus in the division.
10. Production and sale of steel wood screws from the recently started Screws andFasteners Division at the Pune plant of the Company has commenced during the year underreview. Since the product is entering the market after a lapse of time, it will take sometime for sales to stabilize at an acceptable level.In the meantime it is proposed to startthe manufacture of safety pins in the current year.
11. During the year under review, the Business Service Centre Agreement to providebusiness, administrative, communication and internet services from the Companysoffices at Kolkata and Mumbai was renewed for a period of one year with effect from 1stApril, 2010. Income from this activity has been reflected in the accounts for the yearunder review.
12. The process of business consolidation adopted by your Company is being pursuedvigorously. This will enable the Company to take advantage of emerging businessopportunities and also provide a strong base for utilization/ development of its assetsfor significant future growth.
RISKS AND CONCERNS
13. Your Directors recognize that there are uncertainties and risks attached to anybusiness. The risks could be external, internal, or a combination of both. External riskscan be intensification of competition, product substitution, technological obsolescence,changes in Government policy with regard to taxes and levies or economic slowdownadversely impacting demand and profitability. Such risks will be continuously monitoredand appropriate action taken by the Company to minimize the same. Internal risks compriseoperating risks, financial risks and business risk. The company will take effective stepsto deal with such risks.
An operating Division of the Company would identify any risks as perceived by them andtake immediate steps to minimize the impact and at the same time submit a report to thenext higher level of reporting.
The extremely small customer base of the Metal Pressings Division (MPD) and low costcompetition faced by Screws and Fasteners Division (S&F) constitute business risks.Steps are being taken to increase customer base in MPD and become more cost competitive inS&F Division.
14. The Company has adequate internal control system to ensure protection of assetsagainst loss from unauthorised use or disposal, proper maintenance of accounting recordsand adherence to Companys policies and procedures. The Company has an Internal Auditsystem which is commensurate with its size and nature of its business. An Audit Committeeof the Board of Directors periodically reviews the internal control systems to ensuretheir effectiveness and adequacy as also the annual financial statements with particularreference to major accounting entries, involving estimates based on the exercise ofjudgement by the management. Apart from this, audit reports and follow-up actions areperiodically reviewed by the Divisional heads at the unit levels.
15. During the year under review industrial relations in the Metal Pressings and Screwsand Fasteners Divisions at Pune were stable.
The total number of employees was 82 as on 31st March, 2011.
PARTICULARS OF EMPLOYEES
16. Information as required under Section 217(2A) of the Companies Act, 1956 read withthe Companies (particulars of employees) Rules, 1975, as amended, is not applicable as noemployee is covered under the said Rules.
17. i) As reported earlier GKW Infosystems Limited was not generating revenues. Hencepursuant to an application made under section 560 of the Companies Act, 1956, the saidsubsidiary company has been dissolved during the year under review.
ii) Accounts and Annual Reports of GKW (Overseas Trading) Limited, a subsidiarycompany, has been appended hereto.
INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
18. Particulars as prescribed under sub-section (1)(e) of Section 217 of the CompaniesAct, 1956 read with Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 are given below:
A. CONSERVATION OF ENERGY
Strict implementation of energy conservation measures such as sealing any leakages incompressed air supply lines and utilization of capacitor banks to improve power factor.
B. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION AND INNOVATION
The nature of business activity carried on by the Company at present does not entailany Research and Development and technology absorption and innovation as such. Howeverproduct development and process improvement is an on going exercise.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
Earnings in foreign exchange during the year amounted to Rs. NIL (2009/2010 Rs.Nil) and outgo was Rs. 4.70 lakhs (2009/ 2010 Rs. 1 lakh).
19. Mr. M. L. Lahoti, Director of the Company, retires by rotation and being eligible,offers himself for re-appointment.
20. Mr. N. K. Navalakha, Director of the Company, retires by rotation and beingeligible, offers himself for re-appointment.
21. Mr. J. D. Curravala, Managing Director was re-appointed as Managing Director of theCompany for a period of one year from 11th August, 2010 subject to approval of theShareholders in General Meeting.
22. Mr. G. Srinivasan, Director was re-appointed as Wholetime Director of the Companyfor a period of one year from 13th September, 2010 subject to approval of the Shareholdersin General Meeting.
23. Messrs. Lodha & Company, the retiring Auditors, have expressed theirwillingness to be re-appointed.
DIRECTORS RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIESACT, 1956
24. The Directors hereby confirm:
i) that in the preparation of the annual accounts, the applicable accounting standardshad been followed along with proper explanation relating to material departures;
ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;
iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the Directors had prepared the annual accounts on a going concern basis.
25. The Company has taken adequate steps to ensure compliance of the mandatoryprovisions of Corporate Governance as issued by Securities and Exchange Board of Indiavide Circular No. SEBI/CFD/DIL/CG/1/2004/12/10 dated 29.10.2004. A report on CorporateGovernance is appended hereto.
26. The Board of Directors would like to thank the Companys customers, employees,shareholders, bankers, financial institutions, suppliers and all others associated withthe Company for their continued support.
| ||For and on behalf of the Board |
|Kolkata 700 071 ||J. D. Curravala ||G. Srinivasan |
|10th May, ||2011 ||Managing Director Director |