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Nifty 8433.4 -0.25 (-0%)01-Jun-15 00:00
BSE: 500464 | NSE: UCALFUEL | ISIN: INE139B01016
Market Cap: [Rs.Cr.] 222.21 | Face Value: [Rs.] 10
Industry: Auto Ancillaries
The Directors hereby present the Twenty Eighth Annual Report together with the auditedaccounts of the company for the year ended 31st March 2014.
The performance of the company for the year ended 31st March 2014 is as follows:
(Rs in lakhs)
For the year ended
|Net Revenue (excluding Excise Duty)||46,563||50,435|
|Profit before Interest, Tax & Depreciation||6,330||6,802|
|Deferred Revenue Expenses||417||417|
|Profit before Tax & Exceptional item||1,007||1,263|
|Profit after Tax/Net Profit||822||958|
|Balance of profit brought forward from last year||8,815||8,316|
|Amount Available for Appropriations||9,637||9,274|
|Transfer to General Reserve||200||200|
|Tax on Dividend||33||38|
|Balance Carried to Balance Sheet||9,183||8,815|
The Board recommends a dividend of 10% i.e. Rs 1 per equity share, aggregating to Rs221 lakhs (exclusive of tax on dividend) for the financial year 2013-2014.
TRANSFER TO GENERAL RESERVE
A sum of Rs 200 lakhs has been transferred to the general reserve of the company forthe financial year 2013-2014.
The turnover of the company decreased by 8% from Rs 50,435 lakhs in the financial year2012-2013 to Rs 46,563 lakhs in the financial year 2013-2014. This was mainly because ofthe continued recessionary trend in the auto sector and consequent low off take by thecustomers. This decrease in turnover was in spite of the efforts put in by the managementto identify new markets and new business. The Earnings before Interest, Tax andDepreciation (EBITDA) also decreased from Rs 6,802 lakhs in the financial year 2012-2013to Rs 6,330 lakhs in the financial year 2013-2014. The decrease can be mainly attributedto the reduction in the volume of business and the high fixed expenditure cost.
In spite of considerable efforts the exports reduced to Rs 2,069 lakhs during thefinancial year 2013-2014 from Rs 2,589 lakhs in the financial year 2012-2013. Thisdecrease is again a reflection of the global trends in the auto sector. The spares salesof the company during the financial year 2013-2014 was Rs 3,164 lakhs as against that ofRs 3,048 lakhs in the financial year 2012-2013 showing a marginal increase.
The Profit After Tax (PAT) for 2013-2014 was less than that of the financial year2012-2013 by 14%. The Company's earning per share was Rs 3.72 during the financial year2013-2014.
The economy continued its downward trend in 2013-2014 and the automobile segment didnot show any signs of improvement. The companys manufacturing plants worked at lessthan optimum capacity as the customer off take was low. However the company's efforts tocut costs through various new initiatives, close monitoring and control of projects andsteps to increase productivity continued unabated during the financial year 2013-2014.Rearranging the production facilities did yield some savings in the form of increasedefficiency of operations but that was not substantial enough to make up for the low offtake and the constant demand by the customer for price discounts. The supply chainmanagement continued to be a challenge in terms of price and quality.
The reduced turnover resulted in a limited capital expenditure in 2013-2014 keeping inmind the low demand in the automobile segment. The company continued its emphasis onupdating its facilities and spent Rs 534 lakhs in capital investments in the financialyear 2013-2014 as compared to Rs 734 lakhs spent in the financial year 2012-2013. Thecompany strengthened its R&D by spending Rs 907 lakhs on R&D in the financial year2013-2014 as against an amount of Rs 1,013 lakhs spent in the previous financial year.
Mr.R.Sundararaman stepped down as Joint Managing Director on 01.04.2014. The Boardplaces on record its appreciation for the services rendered by him during his tenure.Mr.R.W.Khanna's nomination as director was withdrawn by Exim bank and he ceased to beNominee Director with effect from 23.01.2014. In his place Exim Bank nominated Mr K.AjitKumar and he was appointed Nominee Director with effect from 23.01.2014. Subsequently EximBank withdrew his nomination too and he ceased to be Nominee Director with effect from19.06.2014. The Board places on record its appreciation for the services rendered byMr.R.W.Khanna and Mr.K.Ajit Kumar during their tenure as Directors. Mr. S.Muthukrishnandid not seek re-appointment at the previous Annual General Meeting.
The Board in its meeting held on 30th August 2014 appointed Mr.Ram Ramamurthy asAdditional Director with immediate effect. His appointment will be confirmed at theensuing Annual General Meeting of the company. Subject to the approval of the shareholdersand Central Government, the Board also appointed Mr.Ram Ramamurthy as Whole time Directorfor a period of two years with effect from 4th September 2014. Apppropriate resolutionsfor his appointment and remuneration have been set out in the Notice convening the AnnualGeneral Meeting.
Mr.S. Natarajan retires by rotation and being eligible offers himself forreappointment. However in terms of Section 149 of the Companies Act 2013, Mr.S.Natarajan,Dr.V.Sumantran and Dr.M.S.Ananth are seeking appointment as Independent Directors for aconsecutive term of five years from the conclusion of this Annual General Meeting.
Brief resume/details of Directors who are to be appointed/reappointed as mentionedherein has been furnished along with the explanatory statement in the Notice convening theAnnual General Meeting.
Padma Vibhushan Dr. V. Krishnamurthy continues to guide the management in all areas andthe Board is grateful to him for his continued guidance and support.
The statutory auditors of the company M/s. G Balu Associates, Chartered Accountants,Chennai, will retire at the conclusion of the ensuing Annual General Meeting and beingeligible offer themselves for reappointment. The necessary resolutions in this regard willbe passed at the ensuing Annual General Meeting. The company has received a certificatefrom the auditors to the effect that their reappointment if made will be in accordancewith the provisions of the Companies Act, 2013. The auditors have also confirmed that theyhold a Peer Review Certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India. Mr. V. Kalyanaraman was appointed cost auditor of thecompany for the financial years 2013-2014 and 2014-2015. The cost audit report for thefinancial year 2013-2014 will be filed within the due date. The company has however comeout of the purview of cost audit for the year 2014-2015.
Dr.V.Sumantran was appointed member of the audit committee on 11.08.2014. Mr.S.Natarajan, Dr. M.S. Ananth and Mr. Jayakar Krishnamurthy continue to be the othermembers of the Audit Committee. Mr. S.Natarajan continues as Chairman of the Auditcommittee. The committee met five times during the year.
The company has two wholly owned subsidiaries.
Ucal Polymer Industries Limited (UPIL) - UPIL continues to perform well and support thecompany by expanding its scope of supply of plastic and rubber components to the company.The turnover for the financial year 2013-2014 was Rs 2,598 lakhs compared to that of Rs2,357 lakhs in the financial year 2012-2013. The net profit after tax was higher at Rs 248lakhs in the financial year 2013-2014 thereby recording an increase of 9% as against Rs228 lakhs in the financial year 2012-2013. This has been achieved mainly due to theintroduction of new products and improved efficiency of operations. A dividend of 20% hasbeen declared by UPIL. UPIL's objective of expanding its customer profile beyond UCAL FuelSystems Limited (UFSL) is proceeding at a rather slow pace but its attempts to diversifyits product portfolio has succeeded to a large extent in the financial year 2013-14.
Amtec Precision Products Inc, USA (Amtec) - The turnover of Amtec was Rs 17,561 lakhsduring the financial year 2013-2014 up from Rs 14,832 lakhs in the financial year2012-2013 thereby recording an increase of 18% in rupee terms. In US dollar terms, theturnover was $ 37.51 million during financial year 2013-2014 compared to $ 29.01 millionin the financial year 2012-2013 showing an increase of 9%. Amtec has earned a cash profitof Rs 400 lakhs during the financial year 2013-2014. The company's growth has beenreasonable considering the fact that the global auto industry had not really picked up in2013-2014. Amtec's efforts to gain entry into original equipment manufacturers and Tier 1suppliers by obtaining minority certification did not materialize to the extent expectedin the financial year 2013-2014. This is in spite of the fact that Amtec enjoys a highcredibility amongst its customers. Capacity utilization continues to be low and inaddition Amtec has not been able to take advantage of low cost sourcing from India. Theemployee costs continues to be high and an increase in the customer portfolio seems to bethe only solution to increase profitability.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements for the year ended 31st March 2014 of the companyand its subsidiaries together with the auditor's report thereon is enclosed. The statementpursuant to Section 212 of the Companies Act, 1956 relating to the subsidiary companiesforms a part of the accounts. A summary of the key financials of the company'ssubsidiaries is also included in the Annual Report.
The consolidated results of the company and its subsidiaries show that a net profitafter tax of Rs 685 lakhs has been achieved during the financial year 2013-2014 as againstthat of Rs 598 lakhs in the financial year 2012-2013. Efforts are on to improve theoverall performance of the company and its subsidiaries in all respects.
The Ministry of Corporate Affairs vide its General Circular No. 2/2011 dated February8, 2011 has granted a general exemption subject to certain conditions to holding companiesfrom complying with the provisions of Section 212(1) of the Companies Act, 1956 whichrequires the attaching of the balance sheet, profit and loss statement and other documentsof its subsidiary companies to its Annual Report. The Board in its meeting held on 30thAugust 2014 passed the necessary resolution for complying with all the conditionsregarding the circulation of the annual report of the company without attaching all thedocuments of the subsidiary companies referred to in Section 212(1) of the Companies Act,1956. Accordingly, the said documents are not being included in this Annual Report. Theannual accounts, reports and other documents of the subsidiary companies will be availablefor inspection during business hours, by any shareholder of the company at the registeredoffice of the company and also at the registered office of the concerned subsidiary. Theannual accounts, reports and other documents of the subsidiary companies will bedespatched to the shareholders upon receipt of a request from them.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956 , theDirectors confirm that,
(a) In the preparation of the annual accounts, the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) Such accounting policies have been selected and applied consistently and suchjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company at the end of the financial year31st March 2014 and of the profit of the company for the year ended 31st March 2014;
(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) The annual accounts have been prepared on a "going concern" basis.
The company has not accepted any fixed deposits from the public during the financialyear 2013-2014 and there is no outstanding fixed deposit as on date.
Particulars of employees as required under sub-section (2A) of Section 217 of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 form apart of this report. In terms of section 219(1)(b)(iv) of the Companies Act 1956, theAnnual Report and accounts are being sent to the shareholders of the company excluding thestatement of particulars of employees under section 217(2A) of the Companies Act 1956. Thestatement will be available for inspection by the shareholders at the registered office ofthe company during business hours. Any shareholder interested in obtaining such statementmay write to the Company Secretary at the registered office of the company.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information required under Section 217(1) (e) of the Companies Act 1956 read with theCompanies (Disclosure of Particulars in the report of the Board of Directors) rules 1988,on energy conservation, technology absorption, foreign exchange earnings and outgo, isgiven in Annexure-A and forms an integral part of this report.
The Company adheres to all the requirements of the code of corporate governance asstipulated in clause 49 of the listing agreement with the stock exchanges as well as tothe standards set by the Securities and Exchange Board of India. A report on corporategovernance along with certification of the chairman and managing director and the chieffinancial officer is attached in Annexure-B. A certificate from the auditors of thecompany regarding compliance of the conditions of corporate governance as stipulated byclause 49 of the listing agreement is attached in Annexure-C. The Management Discussionand Analysis Report is attached in Annexure-D.
The Board acknowledges with gratitude the support of its employees, customers andbankers, the cooperation of its vendors and suppliers and the assistance of governmentalagencies. The Board is particularly grateful to the shareholders for continuing to reposetheir confidence in the company.
|For and on behalf of the Board|
|Place : Chennai||JAYAKAR KRISHNAMURTHY|
|Date : 30.08.2014||Chairman and Managing Director|
ANNEXURE-A TO THE DIRECTORS REPORT
A. CONSERVATION OF ENERGY
a. Energy conservation measures undertaken
The company is continuously engaged in energy conservation activities. During the year2013-2014, the company commissioned the separate high tension cable feeder line directlyfrom the electricity board sub station to the manufacturing locations at plant 1, plant 6and plant 8. This has benefited the company by way of savings in energy cost and hashelped the company avail purchase of third party power through the feeder line atcompetitive rates per unit, as otherwise the company would have had to generate the powerrequired by running captive gensets during power cuts and load shedding. The hydraulicpump motor in the die casting machines were made to cut off with a timer based circuitwhen there is no work in the die casting machine due to certain interruptions therebyresulting in considerable savings in energy costs. The same was horizontally deployed onmachines working with power pack and scrubber unit. CFL lights were introduced in the mainmanufacturing areas where general lighting was provided. The company continues to generateenergy through its windmills.
b. Additional investments and proposals if any being implemented for energyconservation
In the current financial year 2014-2015, there is a proposal to implement controlledheating and melting of aluminum alloy in the furnace used for pressure die castingmachines which can bring considerable savings in cost. The process of phasing out oldoutdated machines and replacing them with energy efficient ones is continuing. The companyis on the exercise of optimizing the plant power load to meet the demand and has alsoreduced peak hour load. The company is planning an energy audit this financial year toidentify areas and various methods of energy conservation. Activities like solar panelinstallations are proposed to be carried out after a detailed energy audit.
c. Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods
The measures undertaken to conserve energy have resulted in an annual savings of Rs16.32 lakhs. The proposed measures are estimated to result in an annual savings of morethan Rs 60 lakhs. d. Total Energy consumption and energy consumption per unit ofproduction.
B. TECHNOLOGY ABSORPTION
RESEARCH AND DEVELOPMENT
1. Specific areas in which R&D is carried out by the company
Development of technology and products for the automotive, aerospace and defencesegments.
Development of the existing products for existing and new customer requirementsto suit their Vehicle / Engine upgrades.
Development of products to address the automotive and non-automotive segmentwith the domain area on air-fuel management, exhaust management and pumps.
Continuous performance improvement of the existing products with variousadditions of features through upgradation of technology.
Enhancing the In-house competency with the required theoretical and virtualsimulation capability to meet the customer requirements.
Reducing the import content in the product and cost reduction through valueengineering efforts.
2. Benefits derived out of R&D
Enhancing the product range to suit various requirements from the customer.
Product development for new applications and new customers.
Product and Technology readiness for the organization to meet the marketchallenges.
Demonstration of technical capability has given rise to new businessopportunities.
Product cost reduction through validation of parts from new sources and valueengineering.
Customers are approaching the company for new developments in appreciation ofthe R&D skill sets, support system.
Improvements in manufacturing process and quality.
Building knowledge capital within the organization.
3. Future Plans
To develop products and technologies in view of the future emission regulationsand market trends in the domain area of air-fuel management system, exhaust managementsystem and pumps.
To study the requirements in product improvement / new designs addressing theenvironmental factors.
To explore the products / services with the existing technology.
To explore opportunities on the engineering services and for the defenceresearch organization.
To explore opportunities in the non-automotive segment.
4. Expenditure on R&D
|Particulars||Rs in Lakhs|
|b. Revenue (Recurring) (includes amount transferred to|
|Deferred revenue expenses)||863.96|
|d. Total R&D expenditure as a percentage of total turnover||1.94%|
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts made in brief towards technology absorbtion, adaptation andinnovation
The company has fully absorbed the technologies in the areas of carburettors, airsuction valves, two stroke direct injection system, four stroke port injection system andpumps and is continuously improving them to adapt them to new customers preferences andnew applications through innovative features in these products. The product range and newcustomer additions have been mainly due to the company's initiative and focus on R&D.The company is proposing to enter into the testing and engineering services segment withOrbital Australia PTY Limited and the defence segment with Jahagirdar Aero Products. Thetechnology absorption in both these segments is likely to commence this financial year.The company is constantly exploring new technology options keeping in view the markettrends and environment regulations.
The new developments through indigenous efforts include
Constant Depression (CD) carburettor for the executive segment (125cc engine)and premium segment (500cc engine) motorcycles of 2 major Two-Wheeler manufacturers.
Air Suction Valve for (110cc engine) scooter for a major Two-Wheelermanufacturer.
Variable Depression (VD) carburettor for scooter application (110cc engine) fora major Two-Wheeler manufacturer.
Variable Depression (VD) carburettor for the upgraded engines of a major3-Wheeler manufacturer.
Vacuum pump for 1.1, 1.4, 1.6 L diesel engine for a major passenger carmanufacturer.
2. Benefits derived as a result of the above efforts
The company has been able to provide an engineering solution to meet thechallenging performance and emission targets through innovative features in the product.
The company has been able to approach the customer with new products withsuperior price performance for various applications.
The company has widened its product portfolio thereby accessing new markets andsegments.
The company has been able to enter into engineering services that will also helpin the development of new technologies.
The company has been able to enter into aerospace, defence and othernon-automotive markets.
3. In case of imported technology (imported during the last five years reckoned fromthe beginning of the financial year) the following information may be furnished
(a) Technology imported - technology has been imported in the areas of pumps,carburettors and direct injection systems (b) Year of import 20062007 to20092010 (c) Has technology been fully absorbed - Yes (d) If not fully absorbedareas where it has not taken place, reasons therefor and future plan of actionNotapplicable
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The earnings of foreign exchange were on account of export of carburettors, MPFI partsand pumps during the year. The foreign exchange outgo was mainly on account of purchase ofcomponents, capital goods and foreign travel. During the financial year 2013-2014, thetotal foreign exchange outgo was Rs 3,646 lakhs while the foreign exchange earned was
Rs 2,069 lakhs resulting in a net foreign exchange outgo of Rs 1,577 lakhs.
|For and on behalf of the Board|
|Place : Chennai||JAYAKAR KRISHNAMURTHY|
|Date : 30.08.2014||Chairman and Managing Director|
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Jayakar Krishnamurthy , Chairman & Managing Director
V Sumantran , Director
S Natrajan , Director
M S Ananth , Director
Company Head Office / Quarters:
Raheja Towers 177 Anna Salai,
Delta Wing-Unit 705,
Phone : Tamil Nadu-91-044-42208111 / Tamil Nadu-
Fax : Tamil Nadu-91-044-28605020 / Tamil Nadu-
E-mail : email@example.com
Web : http://www.ucalfuel.com
Integrated Enterprises (I) Ltd
Kences Tower,2nd Floor No 1,Ramakrishna Street,Chennai - 600 017
|Scheme Name||No. of Shares|
|Sahara Wealth Plus - Fixed Pricing (G)||16,660|
|Sahara Midcap Fund (G)||12,000|
|Sahara R.E.A.L Fund (G)||8,000|
|Sahara Wealth Plus - Fixed Pricing (G)||16,660|
|Sahara Midcap Fund (G)||12,000|