Varun Industries Ltd

BSE: 532917 | NSE: VARUN | ISIN: INE032G01012 
Market Cap: [Rs.Cr.] 5.85 | Face Value: [Rs.] 10
Industry: Steel - Medium / Small

Director's Report

To the Members,

Your Directors have pleasure in presenting the 17th Annual Report on thebusiness and operations of your Company for the year ended 31st March 2013. Incompliance with Clause 49 of the Listing Agreement, a separate section on ManagementDiscussion and Analysis Report forms part of this Annual Report.


(Rs. in Crore)
Year ended 31st March 2013 Year ended 31st March 2012
Income 339.99 3132.27
Profit before Tax (35.72) (157.76)
Less: Provision for Taxation (1.24) 0.04
Profit after Tax (34.48) (157.80)
Add: Balance brought forward (62.96) 94.83
Disposable Profit (97.44) (62.96)
Transfer to General Reserve -
Proposed Dividend - -
Tax on Dividend - -
Balance carried to Balance Sheet (97.44) (62.96)


In view of the worldwide recessionary factors, the Company's financials have beenaffected to a greater extent resulting in approach to the Consortium of Bankers forapproving Corporate Debt Restructuring (CDR) package for the Company.

In view of several constraints, there was delay in complying with the requirements ofCDR mechanism. This has result in adverse financial results primarily arising out of thelow level of operations of the Company.

However, efforts are under way to revive the operations including exports of theCompany.


The Company is hopeful of improving its financial position. The Company is alsoundertaking all necessary efforts to reduce costs and increase profitability.


In view of the net loss incurred by the Company in the financial year 2012-13, theDirectors do not recommend any dividend.


As on March 31, 2013, Promoter & Promoter Group were holding 1,14,63,518 sharesrepresenting 39.37% of the equity share capital of the Company, out of which 1,14,56,579shares representing 39.35% of the Promoter & Promoters Group holding were pledged.


The Company was referred to the Corporate Debt Restructuring Forum, a non-statutoryvoluntary mechanism set up under the aegis of the Reserve Bank of India ("RBI"),for the efficient restructuring of corporate debt (hereinafter referred to as the"CDR"). Pursuant thereto, the CDR Empowered Group ("CDR EG") approveda restructuring package in terms of which the existing facilities were restructured as setout in the Letter of Approval (LOA) dated 28th December, 2012 issued byCorporate Debt Restructuring Cell ("CDR Cell").


The Company has held an Extra Ordinary General Meeting of Members on 18thApril, 2013 for issuing shares on preferential basis to Mr. Kiran N. Mehta, PromoterDirector of the Company as per CDR Scheme as approved by the CDR EG on 28th December,2012. The Company has made an application to BSE Ltd. and National Stock Exchange of IndiaLimited for their In Principal Approval. The Company will allot the equity shares to saidMr. Kiran N. Mehta only after getting BSE & NSE approval.


A Report on Corporate Governance as per the requirements of Clause 49 of the ListingAgreement with the stock exchanges. forms part of the Annual Report.

As per the requirements of the said Clause, a Certificate from the Auditors of theCompany, M/s. Chunnilal & Company, Chartered Accountants conforming compliance to theconditions of Corporate Governance is annexed to this Report.


During the year under review, Varun Petroleum SARL, Oil and Gas Incorporation SARL,Varun International SARL, Madagascar Energy Corporation SARL, Varun Energy CorporationSARL, Varun SARL and Varun Torian International SARL, Madagascar ceased to be subsidiariesof the Company.

During the year, the investments in the aforesaid subsidiary Companies were disposed ofat cost due to non-payment of share application money and subsequent cancellation of theShare Purchase Agreement between the Parties and the disposal proceeds were set offagainst the amount due to related party. Hence the Company did not prepare consolidatedfinancial statements for the aforesaid subsidiary companies for the year under review.

In accordance with the general circular issued by the Ministry of Corporate Affairs(MCA), Government of India (GOI), Balance Sheet, Statement of Profit and Loss and otherdocuments of the subsidiary companies are not attached with the Balance Sheet of theCompany. The Company shall make available the copies of annual accounts of the subsidiarycompanies and related detailed information to the shareholders of the Company seeking thesame. The annual accounts of the subsidiary companies will also be kept for inspection byany shareholder at the Registered Office of the Company and that of respective subsidiarycompanies.

Further, pursuant to Accounting Standard (AS)-21 prescribed under the Companies(Accounting Standards) Rules, 2006 and the Listing Agreement, Consolidated FinancialStatements presented herein by the Company include financial information of subsidiarycompanies, which forms part of this Annual Report.


In terms of the provisions of Section 217(2AA) of the Act, your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

ii) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent, so as to give a true andfair view of the state of affairs of your Company at the end of the financial year and ofthe profit of your Company for that year;

iii) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of your Company and for preventing and detecting fraud and other irregularities;and

iv) the Directors had prepared the annual accounts on a 'going concern' basis.


Mr. Kiran N. Mehta, Chairman & Managing Director, Mr. Kailash S. Agarwal, ManagingDirector and Mr. Varun K. Mehta, Whole-Time Director of the Company have informed theCompany that in view of the current financial difficulties being faced by the Company,they will render services to the Company free of any remuneration w.e.f. 1stMarch 2012 till the improvement in the financial position of the Company.

Mr. Varun K. Mehta ceased to be a director and wholetime director of the Company w.e.f.25th March, 2013.

In accordance with the act and the Articles of Association of the Company, Mr. RaajaJain and Mr. Mahender Tahilramani

retire by rotation and being eligible offer themselves for re-appointment.

As required by Clause 49 of the Listing Agreement, brief profiles of the above referredDirectors, nature of their expertise in specific functional areas and names of companiesin which they are directors, are provided in the Corporate Governance Report forming partof the Annual Report.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO: Pursuant to the provisions of Section 217(1)(e) of the Act, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988,particulars relating to energy conservation, technology absorption and foreign exchangeearnings and outgo, are given in Annexure 'A' to this Report.


During the year under review, the Company has not accepted any fixed deposits.


The Auditors of the Company, M/s. Chunnilal & Company, Chartered Accountants,Mumbai holds office until the conclusion of the ensuing Annual General Meeting and beingeligible, offers themselves for re-appointment. The Company has received a letter from theAuditors to the effect that their re-appointment, if made, would be within the prescribedlimits under Section 224(1 B) of the Companies Act, 1956 and that they are notdisqualified for such re-appointment within the meaning of Section 226 of the said Act.


Auditors have remarked on the following aspect, which are being explained hereunder:

a) Short Provisions of Rs. 51.33 Crore towards bank interest: The Company'sproposal for CDR has been approved by CDR EG vide its letter dated 28thDecember, 2012 and confirming minute's letter dated 23rd January, 2013. Beforethe CDR Scheme becoming effective, the Master Restructuring Agreement (MRA) has beenexecuted and signed between the Company and the Consortium of Bankers on 29thMarch, 2013 upon certain terms and conditions to be complied with by the Company andtherefore there is a short provision of Rs. 51.33 Crore towards bank interest. The Companyhas already given effect as per MRA dated 29th March, 2013 signed withConsortium of Bankers.

b) Increase in Company's Borrowing Powers U/s. 293(1)(d): The Company's Boardhas approved the increase in limit of Borrowing Powers U/s. 293(1)(d) of the CompaniesAct, 1956 from Rs. 20,00,00,00,000/- to Rs. 30,00,00,00,000/- subject to approval ofMembers at the ensuing 17th Annual General Meeting. The enabling resolution forthe same has already been included in the Notice calling Annual General Meeting to be heldon 26th September, 2013 for the approval of Members.

c) Settlement deed dated 15th April, 2012 with two overseas debtorsagreeing to allow the discount of Rs. 160.60 Crore and to defer the balance exportrealization of Rs. 1460.97 Crore for five years: The Company is in the process, ofseeking permission for the deferment of export receivables.

d) Confirmation of balances of debtors, creditors, loans & advances, deposit,other receivables and payables:

There are differences in balances due to the ongoing litigations of the Company.Certain balances are in the process of reconciliation and the same shall be completed indue course of time.

e) Ascertainment of Contingent liabilities on account of ongoing litigations invarious courts/tribunals: The

explanation given by the Auditor is self-explanatory and need not require any furtherexplanation by the Management.


In pursuance of Section 233-B of the Companies Act, 1956 and directives of CentralGovernment, your Directors have appointed M/s. Joshi Apte & Associates, CostAccountants, as the Cost Auditors to conduct cost audit of the product "Steel"for the years 2012-13 and 2013-14 in place of M/s. Mehta N. & Associates who haveexpressed their inability to continue as Cost Auditors due to their pre-occupation. TheCompany has received confirmation from M/s. Joshi Apte & Associates that theirappointment, if made, will be within the limits prescribed under Section 224(1 B) of theCompanies Act, 1956. The Cost Audit Report for the year ended 31.3.2013 will be filed onor before 27.9.2013, the due date.


Your Company's shares are listed on the BSE Ltd. (BSE) and National Stock Exchange ofIndia Ltd. (NSE) and the listing fees for these two exchanges have been paid by theCompany.


Information as prescribed by Section 217(2A) of the Act, read with Companies(Particulars of Employees) Amendment Rules, 2011 is given as an annexure to this Report.However, pursuant to the provisions of Section 219(1)(b)(IV) of the Act, the Report andAccounts are being circulated to all the Members without the said annexure. Membersinterested in the said information may write to the Company Secretary at the Registeredoffice of the Company.


Your Directors would like to express their sincere appreciation to the Company'sBankers and Financial Institutions, Government Authorities, Regulatory Bodies,Customers,Vendors and Investors for their continued assistance and co-operation during theyear under review. Your Directors also wish to place on record their deep sense ofappreciation of the committed services displayed by all the executives, staff and workersof the Company at all levels and also highly appreciate their hard work and co-operationto take the challenge in order to accomplish the Company's mission.

For and on behalf of the Board of Directors
Place : Mumbai Kiran N. Mehta
Date : May 30, 2013 Chairman &' Managing Director
Registered Office:
13, Shankheshwar Darshan,
A. G. Pawar Cross Lane,
Byculla (East),
Mumbai - 400 027.


Pursuant to the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988.


(a) Energy conservation measures taken:

Jodhpur Plant

1. Installation of Fuel Saving Instrument for improvement of Oil Consumption.

2. Using Metal Saver Chemical for improvement of Acid Consumption as well as MetalLoss.

3. Variable Frequency Drives are provided for all rolling mills, blowers & furnacesto reduce energy consumption.

4. Air cooling system has been installed for Electric panels to minimize the breakdownof VFD & other electric parts.

5. Using Energy efficient Gear Oil in Gear Box.

6. Power Capacitor has been installed to improve power factor.

7. Installation of energy efficient lighting & optimizing the ventilation system.

8. Timely maintenance of machinery & equipment to ensure that energy consumption isas minimal as possible.

9. High efficiency AC Motors have been installed.

10. Using Copper Cable for Control & Power System for energy efficiency as well aslow maintenance.

Vasai Plant

1. Installation and commissioning of voltage stabilizer for APFC panel to control thepower factor automatically and hence avoided the probability of paying penalty charges dueto drop in power factor.

2. All new purchased motors are energy efficient motors.

3. Timely maintenance of machines and equipment to ensure optimum energy consumption.

4. Replacement of underloaded/overloaded motors with proper size motors andinstallation of high efficiency motors.

5. All new electrical installations are of copper cables for control and power systemthereby achieving energy efficiency and low maintenance.

6. Prevented idle running of motors by providing limit switches for auto cut-off.

7. All newly purchased hydraulic power machines are of Revised Hydraulic Circuit Systemand with low capacity motors thereby consuming less power for same desired work.

8. Implemented so many energy saving suggestion and ideas recommended by EnergyManagement Committee and brought awareness among the workers about energy saving.

Nasik Plant

1. Maximum use of natural light by providing transparent panels on roof has done.

2. Automatic power factor control panel is installed to get the maximum power factor.

3. Hard anodised plant blower will be repaired, thus reduce the power consumption ofcompressor.

4. Maximum use of turbo ventilation to save the energy.

5. Regular checking of capacitor & capacitor bank.

6. Installed pic controlled compressor to achieve maximum efficiency.

(b) Additional investments and proposals for reduction of energy consumption beingimplemented: N. A.

(c) Impact of measures in (a) & (b):

The above energy conservation measures undertaken by Vasai, Jodhpur and Nasik Plantshave ensured uninterrupted power supply and improvement in quality of power productivity.The cost of energy has also been optimized to the extent feasible. Our efforts continue tofurther optimize energy productivity & efficiency.

(d) . Total energy consumption and energy consumption per unit of production:

Details are given in Form A.

FORM 'A' (See Rule 2)


Year ended 31st March 2013 Year ended 31st March 2012
1. Electricity
a) Purchased Units Thousand KWH 2,588.31 3,003.74
Total amount Rs. in Thousand 17,361.66 17,530.70
Rate/unit (KWH) 6.71 5.84
b) Own Generation
i) Through Diesel Generator (HSD)
Units Thousand KWH 76.59 87.06
Total Amount Rs. in Thousand 1,138.07 1,269.33
Cost/Unit (KWH) 14.86 14.58
ii) Through Generator (furnace oil)
Units Thousand KWH - -
Units per liter of furnace oil KWH - -
Cost/Unit (KWH) , - -
iii) Through Generator (gas) -
Units Thousand KWH - -
Units per M3 of Natural gas KWH - -
Cost/Unit (KWH) Rs. - -
2. Coal - -
3 i) Furnace oil (Hot Mill)
Quantity KL 253.40 330.97
Total amount Rs. in Thousand 10,151.55 13,565.72
Rate/unit (KL) Rs. 40.06 40.99
ii) CBFS oil (Hot & Cold Furnace)
Quantity KL 457.83 604.33
Total amount Rs. in Thousand 20,246.00 24,337.46
Rate/unit (KL) Rs. 44.22 40.27
4. Natural gas
Quantity Cu. mts. - -
Total amount Rs. in Thousand - -
Rate/unit (Cu. mt.) - -
Unit 2012-13 2011-12
Electricity / Own Generation KWH 347.07 257.82
Furnace Oil Litres 34.72 34.76
CBFS Oil Litres 62.73 63.47



Year ended 31st March 2013 Year ended 31st March 2012
1. Total Foreign Exchange Earned:
i) FOB Value of export 4,657.02 2,91,488.17
ii) Rig Hiring Charges 273.44 1,567.72
Total 4,930.46 2,79,650.02
2. Total Foreign Exchange Used:
i) On Import of Raw Material / Finished Goods - 1,09,435.55
ii) On Import of Capital Goods, Spares and Components - -
iii) Expenditure in Foreign Currencies for business travels,
Subscription, commission on exports etc. 32.83 165.74
Total 32.83 1,09,601.29


For and on behalf of the Board of Directors
Place : Mumbai Kiran N. Mehta
Date : May 30, 2013 Chairman & Managing Director
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Kiran N Mehta , Chairman & Managing Director

Kailash S Agarwal , Managing Director

Kuresh Taherbhai Rajkotwala , Director

Jitendra J Gandhi , Company Secretary

Company Head Office / Quarters:

13 Shankeshwar Darshan,
A G Pawar Cross Lane Byculla-E,
Phone : Maharashtra-91-22-23727400 / Maharashtra-
Fax : Maharashtra-91-22-23748686 / Maharashtra-
E-mail :
Web :


Bigshare Services Pvt Ltd
E-2/3 Ansa Indl Est,Saki Vihar Road,Sakinaka Andheri(E),Mumbai - 400072

Fund Holding
Scheme Name No. of Shares
Mon Tue Wed Thu Fri Sat Sun
06 07 08 09 10 11 12