krishna ferro products ltd Directors report

KRISHNA FERRO PRODUCTS LIMITED ANNUAL REPORT 2011-2012 DIRECTORS REPORT To, The Members, Yours Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of the Company and the accounts for the financial year ended 31st March, 2012. FINANCIAL REVIEW: Particulars Current Year Previous Year (Rs. in Lac) (Rs. in Lac) (i) Sales and other income 3807.36 2781.32 (ii) Profit before depreciation 332.78 293.54 (iii) Depreciation 65.89 65.32 (iv) Profit for the year 266.89 228.22 (v) Provision for Current tax (Net) 68.00 52.00 (vi) Provision for Deferred tax 19.83 26.99 (vii) Profit after tax 179.06 149.23 (viii) Balance in Profit & Loss Account brought forward from the previous year 438.49 289.27 (ix) Amount available for appropriation & carried forward to Balance Sheet 617.55 438.49 * Regrouped figure of the previous year. OPERATIONAL REVIEW: Your Company produced/purchased 7129.89 MT of Castings and other items and 1898.17 MT of Ingots as compared to 852 MT of Castings & other items and 7402 MT of Ingots of previous year. The above figures show a net increase in production/purchase of 6277.89 MT in Castings and other items and a net decrease of 5503.83 MT in Ingots. This is because your company has concentrated more into production/purchase of high value addition items i.e. casting and other items as they are more revenue generating products. In terms of value, your Companys total income under the year under review was 3807.36 Lakhs against the previous year of 2781.32, thus recording a net increase in income of Rs. 1026.04 Lakhs. This has resulted in increase in profit by 29.83 Lakhs and the Earning Per Shares worked out to be Rs.3.98 as compared to Rs. 3.32 of previous year. DIVIDEND: Your Company is striving to accumulate some funds from internal sources to balance the financial position of the Company in view of growth in production and business. Thus, keeping in view the current conditions your Directors have considered it prudent not to recommend any dividend for the year. DEPOSITS: Your Company has not accepted any deposits from the public during the year under review and as such there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975. DEBENTURES: Your company has converted the unsecured loan from Krishna Re-Rollers Private Limited amounting to Rs.6,40,00,000/- (Rupees Six Crores Forty Lakhs only) into 0% Unsecured Non-Convertible Non-Transferable Debentures redeemable after a period of seven years. LISTING: The Shares of your Company are listed in the Bombay Stock Exchange. The listing fee for the year 2011-12 has been paid to the Bombay Stock Exchange. PARTICULARS OF EMPLOYEES: The Provision of section 217(2A) of the Companies Act, 1956 read with Companies (Particular of Employees) Rules 1975 as amended are not applicable to the company as no employee has drawn emoluments exceeding the specified limits. DIRECTORS: In accordance with the provisions of Section 256 of the Companies Act, 1956 and the Companys Article of Association, Mrs. Shweta Kishan Agarwal, Director of the Company retires by rotation. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The prescribed details as required under section 217(1)(e) of the Companies (Disclosure of Particulars on the report of Board of Directors) Rules 1988 are set out in Annexure A forming part of this report. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby Confirmed:- (i) In the preparation of annual accounts for the financial year ended 31st March, 2012, the applicable Accounting Standards as specified by the Institute of Chartered Accountants of India have been followed and that there are no material departures; (ii) That the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the year under review. (iii) That the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities. (iv) That the directors have prepared the accounts for the financial year ended 31st March, 2012 on a going concern basis. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT: In accordance with Clause 49IV(F)(i) of the Listing Agreement, Management Discussion and Analysis Report for the year under review is given as a separate statement, as Annexure B, which forms a part of this Annual Report. CORPORATE GOVERNANCE: In line to the companys commitment to good corporate governance practices, your company has complied with all mandatory provisions of corporate governance as prescribed under clause 49 of the listing agreement with the Stock Exchanges. A separate report on corporate governance and practicing Company Secretarys certificate thereon are included as Annexure C, which forms part of the Annual report. CEO/CFO CERTIFICATION: Pursuant to the provisions of clause 49 of the listing agreement, the CEO/CFO certificate is part of this Annual Report. AUDITORS AND AUDIT REPORT: M/s K.D Lath & Company, Chartered Accountants, Rourkela, Statutory Auditors of the company retires at the conclusion of the ensuing Annual General Meeting of the company. They have confirmed that their re*appointment, if made, will be within the prescribed limits under section 224(1 B) of the Companies Act, 1956. There are no qualifications or adverse remarks in Auditors Report which require any clarification/explanation. The notes to accounts forming part of the financial statements are self explanatory and needs no further explanation. ACKNOWLEDGMENT: The Directors place their sincere appreciation for the continued co- operation, guidance, support and assistance provided during the year by Bank, Financial Institutions, Government Authorities, Customers and Suppliers. Your directors wish to record their appreciation for the exemplary services rendered by the employees of the company. Above all, the directors thank the shareholders for their continued confidence in the management. On behalf of the Board of Directors sd/- Place: Mandiakudar H.K AGRAWAL Date : 04th September, 2012 Managing Director Annexure A ANNEXURE TO THE DIRECTORS REPORT: Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31st March 2012. (A) CONSERVATION OF ENERGY: FORM - A Particulars Current year Previous year 2011-12 2010-11 I. Power and Fuel Consumption 1. Electricity a. Purchased units (KWH) 17,15,640 22,46,790 Total Amount (Rs.) 1,21,50,500 1,12,71,766 Rate/Unit (Rs./KWH) 7.08 5.02 b. Own Generation Through Diesel Generator Unit (KWH) N.A. N.A. Unit per liter of Diesel oil (KWH) N.A. N.A. Cost/Unit (Rs./KWH) N.A. N.A. Through Steam Tubing/Generator Units N.A. N.A. Unit per Liter of Fuel/Oil/Gas N.A. N.A. Cost/Unit N.A. N.A. 2. Coal (Specify Quality and Where Used) Quantity (Tones) N.A. N.A. Total Cost N.A. N.A. Average Rate N.A. N.A. 3. Light Diesel Oil Quantity (K liters) N.A. N.A. Total Amount (Rs.) N.A. N.A. Average Rate (Rs./Liter) N.A. N.A. II. Consumption per Unit of Production Production (MT) 9028.06 8254 Electricity per MT 1345.86 1365.61 (B) TECHNOLOGY ABSORPTION FORM - B I. Research and Development (R & D) a. Specific areas in which R&D carried out by the Company: None. b. Benefits derived as a result of the above R&D: None. c. Future plans of action: None. d. Expenditure on R & D (Rs. in Lakhs): * Capital - Nil * Recurring - Nil * Total - Nil * Total R&D expenditure as percentage of total turn over - Nil II. Technology, Absorption, adoption and Innovation: a. Efforts in brief towards technology absorption, adaption and innovation: None. b. Benefits derived as a result of the above efforts: None. c. Imported Technology: No technology has been imported for the last five years. (C) FOREIGN EXCHANGE EARNING AND OUTGO: Earning : NIL Outgo (Purchase of Capital Goods) : NIL On behalf of the Board of Directors sd/- Place: Mandiakudar H.K AGRAWAL Date : 04th September, 2012 Managing Director Annexure B MANAGEMENT DISCUSSION AND ANALYSIS COMPANY OVERVIEW: Krishna Ferro Products Limited was incorporated in the year 1982 and started its commercial production in the year 1985. The Company has completed its twenty six successful years of operations in the month of December last year. The Company is engaged in the business of manufacturing and sale of ferrous casting. The Company has varied facilities which make it a unique foundry in the eastern part of the Country. The company aims to provide its customers, products and services consistently conforming to clearly established customer requirements at the right time and right cost. INDUSTRY STRUCTURE AND DEVELOPMENT: Metal Casting Industry is a Mother Industry. Most of the industries use cast metal components in some form or another. Industrial revival, after steep recession, has given boost to foundry industry. Improvement in infrastructure and power generation in particular shall further increase the demand of castings. After service sectors record growth in the last decade, manufacturing sector is poised to have accelerated growth now due to its potential to offer employment to growing population. This will obviously, result in increased demand of castings for sustained and increased growth of economy. BUSINESS OPPORTUNITIES AND THREATS: The foundry industry is a core industry producing castings which is basic input to almost all sectors like automobiles, textiles, engineering, cement, steel, mining etc. The Company is likely to maintain a steady growth oriented performance both in terms of top line and bottom line. The Company will focus its strength to develop new products in the niche market which will result in enhancing its margin. The combination of effective manufacturing costs along with quality systems would give an edge to the Company pricing and quality. Your Company will continue to focus on expanding market and developing new. The Company faces stiff competition with new foundries being established and also with the existing players in the sector. Further instability in the prices of metals & other inputs and rising interest rates is perceived as a threat. The continuing power cuts imposed during 2011-12 has badly affected the production during the year under review and also stands as severe threat for the coming year. SEGMENT WISE AND PRODUCT WISE PERFORMANCE: The company primarily operates in only one segment i.e. manufacturing of ferrous casting. It is not possible to classify the products into groups. OUTLOOK: With Indian economy on the upward trajectory and with the governments focus on infrastructure development, core sector industries are likely to show good growth. In the current year, overall market is expected to grow. RISKS AND CONCERNS: Risk is an integral part of the business process. Your company is exposed to risk arising out of government policies, investment decisions, inflation, timely payments by customer, increase in input costs and other operating risks usually associated with Foundry operations. Your company is aware of the risks associated with the business process and suitable risk mitigation measures are being taken from time to time. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The company has an adequate system of internal controls commensurate with its size and nature of operation to ensure efficiency of operation, financial reporting, statutory compliances and to ascertain operating business risks, which is mitigated by regular monitoring and corrective actions. Internal Audit of the company has been carried out by M/s SRB & Associates, Chartered Accountants, Bhubaneswar. A qualified and independent audit committee regularly reviews the observations and suggestions of the internal auditors and takes necessary corrective actions. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: The Company has performed considerable well during the year under review. Net Sales turnover and other income for the year was at Rs 3807.36 lakhs. The profit before depreciation and tax was Rs. 332.78 lakhs which is 13.37% higher than previous year. In the same manner the net profit for the year was Rs. 179.06 which is 19.99% higher than the previous year. SAFETY - HEALTH - ENVIRONMENT: Your Company is committed for the health and safety of the employees. The Safety Management System are constantly being monitored and improvised to compete with changing demands. Regular training and awareness programmes are also being conducted for the health, hygiene and safety of the employees. In addition, your Company is regularly complying with all the conditions of environmental clearance. HUMAN RESOURCES MANAGEMENT/INDUSTRIAL RELATIONS: The harmonious and cordial relations with workmen, employee and trade unions continued this year also. The company believes that the human resources are the most valuable assets of the company and it believes in preserving and nurturing these valuable assets. For being abreast with latest developments the company is maintaining regular interaction with business and industrial fraternity through prestigious institutions like The Confederation of Indian Industry (CM), Indian Foundry Association, All India Induction Furnace Association (AIIFA) and Last but not the least, Rourkela Chamber of Commerce and Industry. As on 31st March, 2012, the total number of employees on the rolls of the company was 62. QUALITY MANAGEMENT: Your company is committed to supply products and services confirming to the customers requirements by involving employees, vendors, contractors and customers, to achieve the vision of being a cost efficient supplier of quality product. Your Companys ISO 9001: 2008 certification has been revalidated after proper surveillance audit during the year. CAUTIONARY STATEMENT: Statement in this Management Discussion and Analysis Report, are based upon the data available with the company and on certain assumptions having regards to the economic conditions, government policies, political developments within and outside the country. The Management is not in a position to guarantee the accuracy of the assumptions and the projected performance of the company in the future. It is, therefore, cautioned that the actual results may differ from those expressed or implied herein. On behalf of the Board of Directors sd/- Place: Mandiakudar H.K AGRAWAL Date : 04th September, 2012 Managing Director