The Directors have pleasure in presenting their THIRTY SEVENTH Annual Report on theaffairs of the Company together with Audited Balance Sheet as at 31st March, 2010, and theProfit and Loss Account for the year ended on that date. The summarized financial resultsfor the year vis--vis the previous year are as follows:
|Particulars || ||(Rs. in Lacs) |
| ||31.03.2010 ||31.03.2009 |
|Gross Turnover ||193091 ||180553 |
|Net Turnover ||178740 ||161104 |
|Other Income ||3199 ||2031 |
|Total Income ||181939 ||163135 |
|Total Expenditure ||149719 ||142404 |
|Profit before Interest ||32220 ||20731 |
|Depreciation & Tax || || |
|Interest and Financial Charges ||13828 ||11327 |
|Profit before || || |
|Depreciation and Tax ||18392 ||9404 |
|Depreciation ||7890 ||6548 |
|Profit before tax ||10502 ||2857 |
|Tax including Fringe ||3517 ||140 |
|Benefit Tax || || |
|Profit after Tax for the year ||6985 ||2717 |
|Prior period items (Net) ||(07) ||(41) |
|Balance Brought forward and other adjustments ||3076 ||465 |
|Profit carried to || || |
|Balance Sheet ||10054 ||3141 |
With a view to conserve resources, the Directors do not recommend any dividend to theMembers of the Company.
2. MANAGEMENT DISCUSSION AND ANALYSIS:
A] Share Capital:
i ) Allotment of Shares pursuant to Schemes of Arrangement:
As reported last year, as a consequences of implementation of Scheme of Arrangement,the Company has allotted on 25th March 2010, 12,37,76,856 Equity Shares of Rs. 10/- eachcredited as fully paid up to the eligible shareholders of the Transferor Companies.Further, the Authorised Share Capital of the Company stands raised by Rs.16 Crore onaccount of the merger of erstwhile Inertia Iron and Steel Industries Private Limited underthe Scheme.
ii) Preferential Allotment of Equity Shares:
The Company has, with a view to augment its long term requirements of fund allotted on18th May 2010, 1,42,00,000 further Equity shares of Rs. 10 each for a cash of Rs. 33.80per share to Reliance Capital Trustee Co. Ltd. (A/c Reliance Infrastructure Fund, a Schemeof Reliance Mutual Fund).
iii) Redemption of Preference Share Capital:
Pursuant to the approval obtained from the Preference Shareholders of the Company atthe meeting held on 26.02.2010, the terms and conditions of preference Share Capital havebeen altered. Accordingly, the Company redeemed on 28th February 2010, entire 20,63,385,0.001% Cumulative Redeemable Preference Shares of Rs. 100/- each and 28,86,985, 10.00%Optionally Convertible Cumulative Redeemable Preference Shares of Rs. 100/- each atpremium. The Amount of premium paid on redemption of the Preference Shares has beenappropriated from out of the reserves of the Company pursuant to the provisions containedin the Scheme of Arrangement.
As a consequence of above, Authorised and Paid-up Share Capital of the Company as ofdate is Rs. 316 Crore and Rs. 250.86 Crore respectively.
B] Financial Performance:
The Members may be pleased to observe that the Company's performance for the year underreview has significantly improved over the previous year. The Company's gross turnover forthe year was Rs. 1930.91 Crore which is around 7% higher than the previous year's Rs.1805.53 Crore. The Net Profit for the year at Rs. 69.85 Crore is around 157% higher thanRs. 27.17 Crore of the previous year. The important contributory to the Net Profit washigher production, higher sales realization, lower cost of coke and foreign Exchange gainas compared to foreign Exchange loss in the previous year.
Increased interest and Financial Charges for the Company as a whole at Rs. 138.92 Croreas compared to Rs. 113.27 Crore arising out of increased Working Capital requirements ofthe Company has made a dent in the profitability of the Company.
Segment wise performance for the year under review is as under.
i) Steel Plant Division:
During the year under review the Steel Plant Division registered an overall increase inthe Production and Sale of around 21% and 30% respectively over the previous year. Thesales realisation also of the Pig Iron, Billets, Rolled Products and Sponge Iron improvedsignificantly to contribute the higher turnover. However the rising prices of Iron Orecoupled with shortage of good quality of this material made the day to day working of theDivision a difficult task. There was however, a respite since the coke prices during theyear showed a downward trend.
ii) Castings Division:
The Castings Division achieved a higher Production and Sale of around 8% and 9%respectively over the previous year; however as result of drop in the sales realisationsthe turnover has shown a negative growth of 5%. Despite this, the profitability was higherwhich has been achieved through reduced cost of production and various austerity measures.
There is an impressive growth in Automotive, Steel, Real estate and Infrastructuresectors which in turn is generating a good demand for castings. The Company continues tofocus on higher productivity, cost optimization and high quality of castings which are thekey drivers for maintaining the leadership in this business segment.
The fundamental drivers for growth in demand for steel in the country are majorinvestments in infrastructure and increased urbanization which leads to growth in demandfor Housing, Automobiles and White Goods. Timely availability of good quality materialsespecially Coal, Iron Ore and efficient logistics support play an important role inensuring major investments in infrastructure and increased urbanization.
During the year under review, the Company has commenced production in its Wire Rod Millas well as Bar Mill. The Company expects the performance of Bar Mill to further improve inthe current year. The Wire Rod Mill is in the process of stabilization. Additional WireRod Block at the cost of Rs. 60 Crore is being set up to widen the product range in thisMill. This additional facility is expected to be ready by September 2011.
The Company is also implementing 6 MW Waste Heat Recovery Based Power Plant at Raipurat the cost of Rs. 33 Crore. The gases generated from the Coke Oven Batteries would beused for generation of Power at this proposed Plant which would be ready for operation byFebruary 2012.
Blast Furnace performance during the last year has not been up to the high performancelevels and standards set by the Company. During the current year the Company plans to setright some of the technical issues in the Blast Furnace and expects its productivity andperformance to improve.
The Non Coking Coal Mine of the Company at Raigarh in Chhattisgarh is producing Coal tocater to the requirements for Sponge Iron Plants. The Company has Coking Coal Block atMoitra Coal Block near Hazaribagh in Jharkhand. On commencement of this Coking Coal Minethe Company's dependence on Import of this vital raw material would reduce considerably.
The Company has with a view to reap benefits of captive Coal and Iron Ore Mines,planned for further development of its Mines, setting up of Coal Washeries, enhancingcapacities in Sponge Iron Plants and their associated Power Plants, Steel Melt Shop andRolling Mill in its existing Steel Plant Complex. Necessary steps are being taken to forenhancement of the mining capacities also so as to cater future requirements of Coal forthe proposed expansions.
he Company is in discussions with Lenders and Investors for achieving financialclosures for the proposed expansions.
Statutory and Environmental clearances in respect of 2 Iron Ore Mines in Chhattisgarhare in hands. All efforts are being made to overcome the difficulties. However, theCompany is as a consequence of serious law and order problems arising out of NaxalitesMovement in the region, not in a position to operationlize these Iron Ore mines. OtherMines are at different stages of clearances and development. The Board is confident thatonce the Iron Ore Mines get commissioned, it would give a good quality material withconsiderable savings on account of its cost and in turn significant addition to the bottomlines of the Company; considering the fact that the Company consumes more than 1 MTPA ofIron Ore and Fines.
E] Internal Control Systems:
The Company has a risk focused, Internal Control System to analyze and report to themanagement on the day-to-day operations of the Company. Efforts are being made tocontinuously strengthen it further. The Company is in tune with the growing size of thebusiness, in the process of strengthening systems that improve the MIS and controls inrespect of day-to-day operations of the Company.
F] Industrial Relations:
Industrial Relations in all the Divisions of the Company remained cordial and peaceful.During the year, average number of persons working in the Company was about 7500approximately.
G] Labour and Community Welfare:
As a part of its social responsibility and as a good corporate citizen, the Companyregularly undertakes programmes for health check-up, free distribution of medicines,granting educational support and scholarships and other measures for the welfare of theworkers, their families and residents of the surrounding villages. Besides, sponsoringsports events in the nearby villages, activities of tree plantation, development of parksand gardens, are regularly undertaken with a view to promote and protect a congenial andeco friendly atmosphere in and around the plants.
The Company has adopted a few villages surrounding the plant for their all-rounddevelopment and general up-liftment of the underprivileged children, women and the poor.
3. AUDITORS' REPORT:
With reference to para ix (b) under Annexure to Auditors' Report dated 28th May, 2010,it is clarified that the dues under environment cess has been contested by the Company andhas referred the same to the Court for redressal. Other matters contained in the Report ofthe Auditors on the Financial Statements for the year ended 31st March, 2010 are selfexplanatory and do not call for any comments of the Directors.
IDBI Bank Limited has withdrawn the nomination of Shri Rakesh Awasthi from the Board ofDirectors of the Company with effect from 5th April, 2010 and appointed Shri Sanjeev KumarSachdev in his place. The Board appreciates and takes on record the services rendered byShri Rakesh Awasthi, during his tenure as Director of the Company.
Shri Basant Lall Shaw and Shri Ramesh Jayaswal Directors of the Company retire byrotation at the ensuing Annual General Meeting and offer themselves for re-appointment.Necessary information on the Director seeking reappointment is being given separately inthe Notice for the ensuing Annual General Meeting.
5. ADDITIONAL INFORMATION:
The information required to be furnished under Section 217(1) (e) of the Companies Act,1956, and The Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is attached and forms a part of this Report.
6. PARTICULARS OF EMPLOYEES:
Particular in relation of the employees drawing remuneration in excess of theprescribed limits and whose particulars need be given under Section 217 (2A) of TheCompanies Act, 1956, read with The Companies (Particulars of Employees) Rules, 1975, asamended, are enclosed as an annexure and forms a part of this report.
7. SUBSIDIARY COMPANY:
As reported last year Raigarh Energy Limited (REL), a Subsidiary Company has envisagedsetting up 2x300 MW Thermal Power Plants at the pithead of the Company's Non-coking CoalMines at Raigarh. Middlings, Rejects, Slurry generated by the Company in the process ofwashing of Coal would be supplied to REL for generation of Power. Necessary amendments asstipulated under Dispensation Guidelines issued by Ministry of Coal, Government of Indiain that behalf have been suitably incorporated in Memorandum and Articles of Associationof the Company and the Subsidiary Company. The Statement pursuant to section 212 of theCompanies Act, 1956 containing the prescribed particulars in respect of the SubsidiaryCompany, is attached and forms a part of this report.
8. CORPORATE GOVERNANCE REPORT:
As required under the provisions of Clause 49 of the Listing Agreement with StockExchanges, the Report on prescribed matters under Corporate Governance together with acertificate from Auditors of the Company thereon is appended and forms a part of thisReport.
9. DIRECTORS RESPONSIBILITY STATEMENT:
As required, under Section 217 (2AA) of The Companies Act, 1956, the Directors confirmand state that:
a. All the applicable accounting standards have been followed along with properexplanations relating to material departures in the preparation of accounts enclosedherewith
b. Annual accounts are prepared on the principle of a Going Concern.
c. Accounting policies selected, applied and Judgements and estimates made in thatbehalf to the extent necessary are reasonable and prudent so as to give true and fair viewof the state of affairs at the end of the financial year and of the profit or loss of theCompany for the year under review.
d. Sufficient care has been taken for maintenance of the adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the assets ofthe Company and the procedures, practices and control systems in the day-to-day managementare sound enough to prevent and detect
the occurrence of frauds and irregularities.
M/s Chaturvedi & Shah, Chartered Accountants, Mumbai, and M/s Agrawal Chhallani& Co., Chartered Accountants, Nagpur, the Auditors of the Company retire at theensuing Annual General Meeting. The Members are requested to appoint the Auditors and fixtheir remuneration for the current year.
The Directors place on record, their appreciation and gratitude for all theco-operation extended by Government Agencies, Bankers, Financial Institutions, BusinessAssociates and Shareholders. The Directors also record their appreciation for thededicated services rendered by all the Executive Staff and Workers of the Company at alllevels in all units for their valuable contribution in the working of the Company.
| ||For and on behalf of Board of Directors, |
|Place: Nagpur ||Basant Lall Shaw |
|Date: 12th August, 2010. ||Chairman |
ANNEXURES TO THE DIRECTORS' REPORT
(A) Particulars under the Companies (Disclosure of particulars in the report of Boardof Directors) Rules, 1988, as amended for the year ended 31st March, 2010.
I. CONSERVATION OF ENERGY:
A) The Company recognises the importance of savings in the cost of energy consumption.High efficiency, energy effective equipments for steam generation, water softening etc.,have been installed at various manufacturing units which ensure stabilised power supply,minimum interruptions and smooth operations.
B) Effective methods like, furnace cover, replacement of existing equipments with moreenergy saving devices, Installation of devices to plug the leakages and loss of energy,standardisation of processes and other steps have been taken wherever possible giving aconsiderable saving in consumption of energy.
C) The Blast Furnace Gases are extensively utilised for pre-heating of the hot blaststoves, blowing plant in the boilers and as a fuel for generation of Power for captiveconsumption and sale to others.
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY.
(A) Power and Fuel Consumption.
|PARTICULARS ||COAL/COKE || ||ELECTRICITY || ||FURNACE OIL || |
| ||UNITS ||AMOUNT ||RATE / ||UNITS ||AMOUNT ||RATE / ||UNITS ||AMOUNT ||RATE / |
| ||(MT) ||(Rs. in Lacs) ||Unit (Rs.) ||(KWHs in Lacs) ||(Rs. in lacs) ||Unit ||(KL) ||(Rs. in lacs) ||Unit (Rs.) |
|(1) Purchases: || || || || || || || || || |
|(a) Iron & Steel Castings ||16464.00 ||1428.05 ||8673 ||480.62 ||2418.46 ||5.03 ||- ||- ||- |
| ||(14040.05) ||(1425.83) ||(10155) ||(404.81) ||(1992.32) ||(4.85) ||(-) ||(-) ||(-) |
|(b) Pig Iron and Steel || || || || || || || || || |
|Products & Sponge Iron ||783722.64 ||57722.74 ||7365.20 ||481.44 ||1829.47 ||3.80 ||1457.64 ||389.37 ||26712.28 |
| ||(646644.31) ||(50774.97) ||(7852) ||(95.57) ||(363.17) ||(3.80) ||(852) ||(251.42) ||(29525.46) |
|(2) Own Generation: || || || || || || || || || |
|Pig Iron & Steel Products ||- ||- ||- ||1115.45 ||2955.95 ||2.65 ||- ||- ||- |
|& Sponge Iron ||(-) ||(-) ||(-) ||(920.31) ||(2438.81) ||(2.65) ||(-) ||(-) ||(-) |
(B) Consumption/Unit of Production.
|PARTICULARS ||COAL/COKE ||ELECTRICITY ||FURNACE OIL |
| ||KGs. ||KWHs ||LTRs. |
|Iron & Steel Castings ||226.40 ||660.92 ||- |
| ||(229) ||(659.55) ||(-) |
|Pig Iron & Steel Products ||587 ||237.950 ||1.779 |
| ||(614) ||(212.157) ||(1.482) |
|Sponge Iron ||2062 ||72.00 ||- |
| ||(2378) ||(78.00) ||(-) |
Note: Figures in brackets relate to previous year and are recast wherever necessary.
II. TECHNOLOGY ABSORPTION:
1. The Company has adopted the Chinese Technology at its Steel Plant Division for itsBlast Furnace, Pulverised Coal Dust Injection and Coke Oven and Rolling Mills.
2. During the current year the Company has commenced the work on setting up ofadditional Wire Rod Block at its Wire Rod Mill in technical collaboration with MorganShammard, a part of Dun and Lee, a Multinational Group from Sweden. The total cost of thisadditional facility is estimated to be Rs. 60 Crore and the same is expected to becommissioned in September, 2011.
3. The Company is also setting up Waste Heat Recovery Based 6 MW Power Plant based onhot gases generated from Coke oven Plant at Siltara Growth Centre, Raipur, at an estimatedcost of Rs. 33 Crore and is expected to be commissioned in February, 2012.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
| || ||(Rs. in Lacs) |
| ||2009-2010 ||2008-2009 |
|i) Foreign Exchange earned: || || |
|Export of goods on FOB basis ||1608.95 ||1413.32 |
|ii) Foreign Exchange used: || || |
|Purchase of Raw Materials, Stores & Components, traded goods and capital goods ||22043.79 ||39173.28 |
|Interest & Financial Charges ||232.09 ||1391.95 |
|Traveling ||9.40 ||9.32 |
|Salary ||25.37 ||27.08 |
|Rent ||7.06 ||- |
|Others ||3.63 ||8.46 |
|Total ||22321.34 ||40610.09 |
| ||For and on behalf of Board of Directors, |
|Place : Nagpur ||Basant Lall Shaw |
|Date : 12th August, 2010. ||Chairman |
PARTICULARS OF EMPLOYEES AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITHCOMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED.
Employed throughout the financial year under review and were in receipt of remunerationfor the financial year in the aggregate of not less than Rs.24,00,000/-.
|Names of Employee ||Designation ||Age/ Qualification ||Exp. ||Remuneration (Rs.) ||Last Employment ||Date of Appointment ||Equity Holding Percent |
|Shri Arbind Jayaswal ||Managing Director ||56 B.Sc. ||32 ||5034134 ||Managing Director, Jayaswals Neco Limited ||01.01.98 ||0.21 |
|Shri Ramesh Jayaswal ||Jt. Managing Director ||50 B.Com ||25 ||5031644 ||Whole Time Director, Nagpur Alloy Castings Limited ||01.01.98 ||0.21 |
|Shri M P Singh ||President ||53 B. E. (Metallurgy) ||28 ||3257640 ||Vice President (Blast Furnace), Ispat Industries Ltd., Mumbai ||12.02.05 ||Nil |
|Shri S K Swain ||President ||43 B. E. (Metallurgy) ||18 ||2495676 ||Shift Superintendent, Midwest Iron & Steel, Srikakulam ||11.09.95 ||Nil |
a) Gross remuneration comprises of salary, allowance, monetary value of perquisites,Company's contribution to Provident Fund etc.
b) The present terms of Shri Arbind Jayaswal, Managing Director and Shri RameshJayaswal, Joint Managing Director and their remuneration are contractual for a period of 3years from 1st January, 2008.
c) Shri Arbind Jayaswal and Shri Ramesh Jayaswal are related to Shri Basant Lall Shaw,Chairman of the Company.
| ||For and on behalf of Board of Directors, |
|Place : Nagpur ||Basant Lall Shaw |
|Date : 12th August, 2010. ||Chairman |