sri vasavi industries ltd Directors report

SRI VASAVI INDUSTRIES LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT To Members, Your Directors are pleased to present their Twenty-sixth Annual Report of the Company together with the Audited Accounts for the year ended March 31, 2011. FINANCIAL RESULTS Rs In lakhs 2010-11 2009-10 Turnover 27015 23,205 Profit before depreciation (464) (819) Depreciation 459 554 Provision for Taxation 6.59 (104) Net Profit (814) (1269) Profit from previous year (10116) (8847) Balance carried to Balance Sheet (10930) (10116) DIVIDEND: Directors have not recommended dividend for the year 2010-11 in view of lossess incurred during the year. OPERATIONS During the year under review, the Company registered a turnover of Rs 27015 Lakhs as against Rs. 23205 Lakhs of previous year with a net loss of Rs. 814 Lakhs [previous year loss of Rs.1269 lakhs]. The turnover has increased due to increase in volume of sales quantity and marginally better price compared to the Previous Year OUTLOOK FOR THE FUTURE However in the post economic slow down scenario, the demand as well as prices of Ferro Alloys have been showing an increasing trend both at national and international levels. The company expects to put up a much better performance during the year 2011-12. Directors Smt G Saraswathi, Chairperson and Promoter Director ceased to be a Director consequent to passing away w.e.f. 09.07.2011. Sri G Buatchiraju and Sri BPM Vittal ceased to be directors consequent to their resignation w.e.f. 01.09.2010 and 01.12.2010 respectively. Sri N K Das, Executive Director ceased to be Director w.e.f. 01.09.2011 consequent to submission of resignation letter. Sri Bompada Janardhana Rao and Sri Kotla Chandrasekhara Rao were appointed in casual vacancies w.e.f. 01.09.2010 and 01.09.2011 respectively. In terms of Section 260 of the Companies Act, 1956, Sri YBMR Murthy was appointed as Additional Director w.e.f. 01.09.2011 and holds office until the date of the ensuing Annual General Meeting. Notices have been received from members, pursuant to Section 257 of the Companies Act, 1956, together with the prescribed deposit, proposing the appointment of Sri B Janaradha Rao, Sri YBVR Murthy and Sri Kotla Chandrasekhara Rao as Directors at the ensuing annual general meeting. The Board places its record of appreciation for outgoing Directors for their contribution and welcomes new directors. Corporate Governance As required under Clause 49 of the Listing Agreement, Report on Management Discussion and Analysis and Corporate Governance are given separately, which form part of this Annual Report. Directors Responsibility Statement Pursuant to Section 217[2AA] of the Companies Act, 1956, your Directors confirm that: i. in the preparation of the annual accounts for the year March 31, 2011, the applicable Accounting Standards have been followed and that there were no material departures. ii. the accounting policies selected by them have been applied consistently, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and the Loss of the Company for the period ended March 31, 2011. iii. they have taken proper and sufficient care 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. iv. the annual accounts have been prepared on a going concern basis. Auditors M/s. Nekkanti Srinivasu & Co, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment. They have confirmed their willingness to act as Auditors of the Company for the financial year 2011-12 and confirmed that their re- appointment, if made, would be within prescribed limits under Section 224 (1B) of the Companies Act, 1956. Fixed Deposits During the year under review, your Company neither invited nor accepted any fixed deposits from the public. AUDITORS OBSERVATIONS: i. Note No.6 to Notes on Accounts, regarding valuation of investments and non-provision of diminution in the value of the investments(un quoted) for the reasons stated therein. REPLIED TO AUDITORS OBSERAVATION: i. These investments are meant to be held as long term investments and any diminution in value, if any, will be a temporary phenomenon. AUDIT COMMITTEE: The Audit committee of the Company was constituted under Section 292A of the companies Act 1956. DEMATERIALISATION OF SHARES: The companys shares are in compulsory Demat mode under both National Securities Depository Limited [NSDL] and Central Depository Services Limited [CDSL]. LISTING OF SECURITIES & INVESTOR SERVICES: The equity shares of the Company are listed with the Stock Exchange, Mumbai. During the financial year, the companys shares were not traded as the trading was suspended. Company has complied with all listing agreement clauses. PARTICULARS OF EMPLOYEES: None of the employee is covered under Section 217 [2A] of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended. ENERGY CONSERVATION, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EEARNINGS AND OUTGO: The information under Section 217(1)(e) Companies Act, 1956 read with Companies [Disclosure of Particulars in the Report of the Board of Directors] Rules, 1988, is forming part of this report. INDUSTRIAL RELATIONS: Industrial relations remained cordial through out the year. Acknowledgement Your Directors acknowledge with gratitude and wish to place on record their appreciation for the valuable support and kind co-operation received from the Central and State Government authorities, Financial Institutions, Banks, Shareholders and staff at all levels during the year. On behalf of the Board of Directors Sd/- Bangalore G Eswara Rao September 01, 2011 CHAIRMAN AND MANAGING DIRECTOR FORM - A [See Rule 2] Conversation of Energy A. Power and fuel consumption Sl. Description Current Year Previous Year No. 2010-11 2009-10 1. Electricity a. Purchased Units 157264445 131838544 Total amount Rs 6582 4857 Rate per Unit - Rs. 4.18 4.00 b. Own Generation: i. Through Diesel Generator Units Units per ltr of diesel Cost/unit NIL NIL ii. Through steam turbing/generator - Units Units per ltr of fuel oil/gas cost/units NIL NIL 2 Coal NIL NIL 3 Furnace Oil Quantity [k ltrs] [Rolling Division] NIL 365 Total Amount Rs. 214 Average Rate Rs. 28.02 B Consumption per unit of production Electricity Units 3692 3169 Furnace Oil ltr [Rolling Division] 0 62 Coal [specify quality] NIL NIL FORM - B [See Rule 2] B. Technology absorption Efforts made in technology absorption : NIL C. Foreign exchange earnings / (outgo) USD. (9040) 2. RESEARCH AND DEVELOPMENT (R & D) Specific areas in which R & D carried out by the company NIL NIL 2. Benefits derived as a result of the above R&D NIL NIL i) NA 3. Future plan of action NIL NIL i) NIL 4. Expenditure on R & D (in Rs.) a) Capital expenditure NIL NIL b) Recurring Expenditure NIL NIL c) Total d) Total R & D Expenditure as a Percentage of Total Turnover NIL NIL TECHNOLOGY ABSORPTION,ADOPTION AND INNOVATION 1. Efforts in brief made towards absorption,adoption and innovation i) NIL ii) NIL 2. Benefits,derived as a result of the above efforts i) NA 3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) the following information may be furnished: a) Technology Imported NA b) Year of Import c) Has technology been fully absorbed d) If not fully absorbed, areas where this has not taken place, reason thereof and future plans of action. Bangalore G Eswara Rao September 01, 2011 CHAIRMAN AND MANAGING DIRECTOR MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure and Developments: The Companys core business is production of steel and metallurgical products. Post economic melt down, there has been an improvement in prices for the Companys products. The consumption of High Carbon Ferro Chrome (HCFC) is directly proportional to the consumption of stainless steel. The global stainless steel market which is estimated at 20 million Tonnes is expected to grow at a steady pace of 10% p.a. which will throw open vast opportunities HDFC manufacturers. Opportunities and Threats: A continuous demand for stainless steel in the international market is expected to throw significant opportunities to this business. How ever expansion of projects by existing players who are having both mines and power plants may lead to some negative impact, similarly, the existing monopolistic pricing is always considered a threat to this industry in addition to frequent changes in power tariff. Divisionwise Performance: There are two divisions in the Company i.e. Rolling mill division and Ferro Alloys division. , The performance of each division for the Financial Year 2010-11 is as following: a. Rolling Division - Installed Capacity - 108000 MT Actual Prod - 14 MT b. Ferro Division - Installed Capacity - 48000 MT Actual Prod - 42577 MT Out Look: As pointed out, the future looks very promising and the company expects to do much better. Risks and Concerns The price volatility of both raw material and finished goods coupled with competition is a major risk and concern. Financial Results: The Company registered a turnover of Rs. 27015 lacs for the year ended March 31,2011 (previous year Rs.23205 lacs) with a net loss of Rs. 814 lacs (previous year net loss 1269 lacs). The Companys performance due to the continuation of economic slow down up to the first half of the year and also stoppage of production at its rolling mill. Human Resources / Industrial Relations : Your Company continued its good record of industrial relations with its employees / workers. Your Company has dedicated man power at all levels. Internal Control Systems and Their Adequacy: Your Companys Internal Auditors and Audit Committee provide continuous and independent internal checks. Internal audit recommendations reviewed by the management and the Audit Committee continuously.