Acclaim Industries Ltd Directors Report

ACCLAIM INDUSTRIES LIMITED (FORMERLY KNOWN AS ELPRO PACKAGING LIMITED) ANNUAL REPORT 2010-2011 DIRECTORS REPORT TO THE SHAREHOLDERS Your Directors have great pleasure in presenting the 19th Annual Report together with the Audited Accounts for the year ended on March 31, 2011. FINANCIAL RESULT Year Ended Year Ended 31.03.2011 31.03.2010 Amt in Rs. Amt in Rs. Sales 2,877,158,145 1,236,847,240 Other Income 33,470,758 79,89,520 Less : Expenditure 2,879,936,330 1,235,129,755 Depreciation 653,779 179,650 Profit/(Loss) before tax and appropriations 30,038,794 9,527,355 Less : Provision for Tax 6,600,000 1,800,000 Less : Deffered Tax liability 722,883 - Profit/(Loss) after tax 22,715,911 7,727,355 Add: Balance brought forward from previous year (126,880,985) (134,608,340) Surplus / (Deficit) carried to Balance Sheet (104,165,074) (126,880,985) DIVIDEND Though the Company earned net profit of Rs. 22,715,911 during the year, but due to huge carry forward losses and deficit your directors did not recommend dividend for the year ended March 31, 2011 for both equity and preference shares. OPERATIONS The Company is presently trading in broad range of steel products, including C.R. Coils & Sheets, C.T.D. Bars, H.R. Sheets & Plates and Hot Rolled Steel Plates, Ingot irons M.S. Plates, Angles, Channels, Chequered Plates, Wires, T.M.T Bars, Rebars and Tor Steel, Stainless Steel and other Alloy Steels and importing & trading in Aluminum Scrap. The Company would be starting manufacturing activity shortly. The turnover of the Company rose from Rs. 1,236,847,240/- in the previous year to Rs. 2,877,158,145/- in the year under review. The Profit after tax marginally increased from Rs. 7,727,355/- in the previous year to Rs.22,715,911/- for the year ended March 31, 2011. CAPITAL The Companys present equity paid up capital stands at Rs.49,924,900/- comprising 50,00,000 equity shares of Rs. 10/-which is listed on Bombay Stock Exchange. The Companys paid up Preference Shares Capital stands at Rs. 131,600,000 comprising of 13,16,000 9% Cumulative Redeemable Preference Shares of Rs.100 each. BOARD OF DIRECTORS Mr. Ankit Pathak was appointed as Additional Directors by the board and his appointment as director liable to retire by rotation is being sought in the ensuing Annual General Meeting, on being demanded by members for which necessary notice have been received by the Company. Mr. Abhishek Mehta and Mr. Krishnat Desai, Directors of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. CORPORATE GOVERNANCE The Company has taken proactive steps to ensure that the conditions of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchange are complied with. A separate report on Corporate Governance together with Auditors Certificate on its compliance is included in the Annual Report. CHANGE OF NAME The Company has changed its name from Elpro Packaging Limited to Acclaim Industries Limited during the year in order to reflect its true business activities. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that: 1] In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures. 2] Appropriate accounting policies have been selected and applied consistently and judgments and estimates wherever made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the March 31, 2011. 3] Proper and sufficient care has been taken 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. 4] The Annual Accounts have been prepared on a going concern basis. AUDITORS Messrs. AMD & Co., Chartered Accountant, the retiring Auditors have expressed their willingness to be re-appointed. It has been proposed to reappoint Messrs. AMD & Co., Chartered Accountants as Auditors of the Company. The Company has received a Certificate from them that they are qualified under Section 224 (1) of the Companies Act, 1956 for appointment as Auditors of the Company. Members are requested to consider their appointment at a remuneration to be decided by the Board of Directors for the financial year ending March 31, 2011 as set out in the Notice convening the Meeting. AUDITORS OBSERVATIONS The observations of the Auditors contained in their Report are self explanatory and does not require any clarification. AUDIT COMMITTEE In accordance with the provisions of the Section 292A of the Companies Act, 1956 and the Corporate Governance requirements as per the Listing Agreement, the Company has re-constituted the Audit Committee comprising of the following Directors viz.,Mr. Krishnat Desai, as Chairman, Mr. Karsan Chitroda and Mr. Pandurang Nawghane as members. The Audit Committee acts in accordance with the terms of reference specified from time to time by the Board. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The Company has taken effective steps to conserve and minimize power and fuel consumption. The Company has not exported any goods during the year but the company has imported goods during the year. Foreign Exchange Earning was Nil and Outgoing was Rs. 84,39,212/-. PARTICULARS OF EMPLOYEES None of the employees of the Company come within the purview of the information required u/s 217[2A] of the Companies Act, 1956 read with the Companies [particulars of Employees] Rules, 1975 as amended from time to time. RESEARCH & DEVELOPMENT The Company has been arduously working to improve the R & D so as to provide quality and value for money to the customers in keeping with market trends. FIXED DEPOSITS Your Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 from Public and the rules made there under. SAFETY, ENVIRONMENTAL CONTROL AND PROTECTION The Company has taken all the necessary steps for safety and environmental control and protection. ACKNOWLEDGMENT The Directors wish to convey their appreciation to the Companys Shareholders, Customers, Suppliers, Bankers, and Distributors for their support they have given to the Company over the past years and the confidence, which they have reposed in its management and the employees for the commitment and dedication shown by them. For and behalf of the Board of Directors Registered Office Acclaim Industries Limited ACCLAIM INDUSTRIES LIMITED Flat No. 13, Saubhagya Apts., 3rd Floor, Pavananagar, Chinchwadgaon Sd/- Dist. Pune - 411033 Abhishek Mehta 30th July, 2011 Managing Director MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW During the financial year 2010-11, the Company has achieved healthy growth in sales and profitability and is poised to emerge as a stronger Company to deliver enhanced shareholder value over the coming years. Your Company registered a good performance during 2010-11 with a 293% growth in PAT to Rs. 22,715,911 which is exceptionally well and looking ahead to continue the same trend. (1) Global Economy The global economy has witnessed a sustained growth largely driven by the additional stimulus and bail out packages announced by various countries which has created liquidity and stimulated demand, leading to the recovery in the US and Europe. The Chinese and Indian economies have been the fastest economies. However, this has led to inflationary pressures which have forced central bank to raise interest rates. The steel industry has also seen a reasonable growth in demand and increase in production volumes especially in China and India. However, this has once again put pressure on raw material availability and prices. The floods in Queensland, Australia have put further pressure on the prices of Coking Coal which has increased from USD 200 per MT levels to USD 300 per MT levels. Due to the volatility in Coking Coal prices over the last couple of years, there has been a shift in pricing mechanism for Coking Coal from annual to quarterly to partly monthly benchmark prices. This has resulted in volatility in prices of iron and steel products as well. China continues to drive the global steel industry with a production of approx. 630 million tons in 2010 which equates to approx. 45% of global Steel production. Chinese Steel demand continues to be driven by large capital expenditure and government infrastructure projects across the country. However, it is expected that the production growth for steel in the current decade will slow down, which should reduce raw material prices. (2) The Indian Steel Industry The Indian economy grew at 8.6% in 2010-11 against 7.2% last year which shows a remarkable growth.The economy is likely to grow at over 8% over the next decade driven by the infrastructure (power, road, railways, ports etc.) and consumption (automobile, real estate etc.) sectors which will result in robust growth in demand for various iron and steel products. The States of Orissa, Chhattisgarh and Jharkhand which account for majority of the iron ore and coal reserves in the country will remain the most attractive locations for setting up iron and steel manufacturing capacity in the coming years. OPPORTUNITIES, THREATS, RISKS, CONCERNS AND OUTLOOK Opportunities Your Company is poised to seize the opportunities in the Iron & Steel Industry (both for steel & intermediary saleable products) through its strengths of locational and logistical advantages, raw material linkages, technology edge and management expertise. These opportunities will be linked directly to the growing demand from the automobile and auto components, infrastructure, construction and power sectors. Your Companys strategic location offer scope for seamless value addition in its manufacturing process from hot metal to stainless steel. Threats The threats for your Company would come from adverse fluctuations in input and capital costs, foreign exchange variations and taxes & duties. The buoyancy in the Iron & Steel Sector has attracted many players, resulting in reduced availability of skilled manpower and contractor workforce. Delay in implementation of project may lead to opportunity loss in revenue generation and rise in costs. Risk Management Your Company has identified major focus areas for risk management to ensure organisational objectives are achieved and has a well defined structure and proactive approach to assess, monitor and mitigate risks associated with these areas, briefly enumerated below: a) Project implementation - Project status is monitored on a regular basis by the project management team to counter slippages and reviewed on a monthly basis by the executive management. Consultants are present on-site for mitigating contingencies on the implementation front. Necessary coverage has been taken in the form of an extensive Erection All Risk Policy. b) Foreign Exchange - Your Company deals in sizeable amount of foreign exchange in imports of capital items and raw materials and exports of finished products. A comprehensive and robust forex policy has been formulated for insulating the Company by hedging foreign exchange exposure. c) Statutory compliances - Procedure is in place for monthly reporting of compliance of statutory obligations and is reported to the Board of Directors at its meetings. Outlook India has immense potential for creating new steel capacity. Indian per capita steel consumption is presently very low compared to world average which further re-confirms the opportunities for steel demand to continue accelerating in the times ahead. Your Company with a well diversified product portfolio is well poised to take advantage of the growth in the demand for Special Steel products, Coke and Ferro Chrome. PERFORMANCE OF THE COMPANY The Company had an overall good performance in the year ended March 31, 2011. The current business of the company is trading in steel and iron products including C.R. Coils & Sheets, C.T.D. Bars, H.R. Sheets & Plates and Hot Rolled Steel Plates, Ingot irons M.S. Plates, Angles, Channels, Chequered Plates, Wires, T.M.T Bars, Rebars and Tor Steel, Stainless Steel and other Alloy Steels. The Company is also importing and trading in Aluminum Scrap. The Company has established a Factory at Valsad, Gujarat during the year for manufacturing of Iron & Steel Products which will be operational shortly. This will help the Company for sustaining in the long run in the competitive steel industry. HUMAN RESOURCES The Company recognizes the need for continuous growth and development of its employees in order to provide greater job satisfaction and also to equip them to meet growing organizational challenges. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: Internal Control Systems are designed to ensure the reliability of financial and other record and accountability of executive action to the managements authorization. The Statutory Auditors have evaluated the system of internal controls of the Company and have reported that the same are adequate and commensurate with the size of the Company and nature of its business. The internal control systems are reviewed by the top Management and by the Audit Committee of the Board and proper follow up action ensured wherever required. CAUTIONARY STATEMENT Statement in the Management Discussion and Analysis describing the Companys objectives, expectations, estimates or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in Government regulations, tax laws, economic developments with in the country and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis, of any subsequent developments, events or information.