Bellary Steels & Alloys Ltd liquidated Directors Report

BELLARY STEELS AND ALLOYS LIMITED ANNUAL REPORT 2008-2009 DIRECTORS REPORT Dear Shareholders, Your Directors have great pleasure in presenting the Twenty Fifth Annual Report on the performance of your Company for the financial year ended 31st March, 2009 along with Audited Statements of Accounts. Your directors are also pleased to inform you that the Company has successfully completed 25 years and is celebrating its Silver Jubilee this year. INDUSTRY SCENE: Indian Steel Industry has been posting a healthy growth for last five years. However, the Company has not been encashing on the market opportunities due its sick status. As you know your Company is under BIFR and because of the financial crunch, the Company is not achieving set targets. The turnover of the Company witnessed a decline by 20.83% as compared to the previous year. FINANCIAL RESULTS: The Sales for the year under review amount to Rs. 4013 Lacs as compared to Rs.5044 lacs for the previous year. The Company has incurred a loss of Rs. 14361 lacs after tax during the year under review as compared to a loss of Rs. 11557 Lacs for the previous year. Interest on the Working Capital and Term Loan has been provided on accrual basis even though the loan funds have eroded over a period. Therefore, huge loss is accumulated every year. The accumulated loss up to the year ended 31.03.2009 is Rs. 80292 lacs as compared to Rs. 65931 lacs for the previous year. The summarised financial results of the company are as under: Current year Previous year Rs. In Lacs Rs. In Lacs 2008-09 2007-08 Total Income 4013 5044 Gross profit/(Loss) 281 1040 Less : Indirect Expenses 950 847 Less: Financial charges 12686 11028 Profit/(Loss) before Depreciation and Income Tax (13355) (10835) Less: Depreciation 713 710 Net Profit /(Loss) before Tax (14068) (11545) Prior period items (net) 284 7 Less: Fringe Benefit Tax 9 5 Less: Income Tax for the year 0 0 Net Profit/(Loss) after tax (14361) (11557) Add: Balance from the Previous year (65931) (54374) Balance carried to balance sheet (80292) (65931) DIVIDEND: In view of the loss incurred by the Company during the year under review, your Directors have not recommended any dividend to the shareholders. ISP PROJECT: The Company is continuing its full efforts to obtain foreign investment from overseas investors and domestic investors towards additional equity/debt, so that the Blast Furnace Complex could be completed in the first phase. The Directors are hopeful of an early solution and implementation of the Integrated Steel Plant project which has been delayed due to financial crunch. BIFR: Your Company has become a Sick Industrial Company within the meaning of clause (O) of section 3 of SICA, 1985 on 07.12.2006 With BIFR, New Delhi. IDBI has been appointed as Operating Agency (OA) by BIFR. DIRECTORS: Shri S. Madhav, Director of your Company retires by rotation at the ensuing Annual General Meeting and is eligible for reappointment. Mr. C.N.B. Nair was appointed as Special Director of BIFR w.e.f. 20.08.2008 by the Honble BIFR, New Delhi and resigned from the Board w.e.f. 30.04.2009. The Board of Directors wishes to place on record the appreciation for the service rendered by him during his tenure. AUDITORS: M/s. Manohar Chowdhry & Associates, Chartered Accountants, Bangalore, Auditors of the Company retire at the conclusion of this Annual General Meeting and are eligible for reappointment. As required under section 224 (1-B) of the Companies Act, 1956, the present auditors have furnished the necessary certificate. FIXED DEPOSITS: Your Company has not accepted any deposits from the public during the period under review. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: Conservation of energy and Technology absorption: The information required to be furnished under section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1968, is given in Annexure-I forming part of this report. Foreign Exchange Earnings and Outgo: The foreign exchange earnings and outgo during the period are as under: Amount (Rs. In Lacs) Earnings: Nil Outgo: 1. Imports (CIF Value) NIL 2. Foreign Travel expenses 120.77 3. Consultancy NIL PARTICULARS OF EMPLOYEES: There are no employees drawing remuneration beyond the stipulated limit in accordance with section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975 as amended up to date. INFORMATION UNDER THE LISTING AGREEMENT: The statement containing details as required under Clause 49 of the Listing Agreement with the Stock Exchanges is appended hereto in Annexure -11 and forms part of this report. CORPORATE GOVERNANCE: The Company has implemented the Code of Corporate Governance as required by the Listing Agreement introduced by Securities & Exchange Board of India. The report of Directors on the particulars prevalent on Corporate Governance has been annexed as Annexure - III as part of the Annual Report. DIRECTORS RESPONSIBILITY STATEMENT: In accordance with the provisions of section 217 (2AA) of the Companies Act, 1956, your Directors state: (i) That in the preparation of the annual accounts, applicable accounting standards have been followed; (ii) That your Directors have selected such accounting policies and applied them consistently and made judgements 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 or loss of the Company for the period; (iii) That your Directors have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of this Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and (iv) That your Directors have prepared the annual accounts as a going concern basis. MANAGEMENT DISCUSSION AND ANALYSIS: Management discussion and analysis of the financial condition and results and operations of the Company for the period under review as required under Clause 49 of the listing agreement (i) FINANCIAL AND OPERATIONAL PERFORMANCE: The Companys financial operation has been already impacted due to non availability of working capital. There is 20.83% negative growth in the turnover compared to the previous year. The Company has to provide interest on the term loans and working capital loans on accrual basis as per the Accounting Standard. The net loss has been arrived after charging interest on term loans and working capital loans. (ii) OUTLOOK: Economic and Financial health of the country is strong in spite of global recession, which encourages infrastructure development. Special stress has been laid by the union Government on rural and semi rural infrastructure development. Steel is the major component required to support all infrastructure developments. The Company has taken up suitable steps to improve the production within the limited resources available and expects to reach higher turnover and profitability. The Company is also anticipating allotments of captive mines from Government of Karnataka to meet Iron ore requirements to Sponge Iron unit. (iii) OPPORTUNITIES, THREATS AND RISKS: There is continuous demand for Steel and steel products to meet the industrial growth in and around Bellary as well as in Karnataka. Main threats are from the unorganised small sponge iron units as also volatility in commodity prices - raw materials prices - Iron ore and coal. (iv) INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT: Your company engaged the services of an independent agency to carry out internal audit of the company. The Audit Committee of the Board approves the Audit plan as per the Listing Agreement in consultation wifh the Internal Auditors, the Statutory Auditors and the operative management. The findings of the Internal Auditors are placed before the Audit Committee for review. The process not only seeks to ensure the reliability of control systems and compliance with laws and regulations but also covers resources; utilization and system efficacy. Risk Management is an integral part of the business process. With the help of experts, the Company mapped the risks at the business processes and enterprise levels and evolved a risk management framework. HUMAN RESOURCE: Your company attaches considerable importance to Human Resource Development (HRD) and harmonious industrial relations. The management is continuously working on the development of human capital, vital in an ever changing business environment towards achieving the goals and realizing the Vision of the Company. Number of Employees on the rolls of the Company as on 31.03.2009 is 224. ACKNOWLEDGEMENT: The Board expresses its grateful appreciation of the assistance and co- operation received from Financial Institutions and Banks, State, and Central Governments and other Statutory Bodies, customers, suppliers, share holders. Your Directors are grateful for the support extended by them and look forward to receiving their continued support and encouragement. Lastly, your Directors place on record their appreciation for the dedicated efforts put in by the employees during the year under review. For and on behalf of the Board of Directors Place: Bangalore S. MADHAV S. PARVATHI Date : 31st August, 2009 Managing Director Director ADDENDUM TO DIRECTORS REPORT 1. The additional Deferred Tax Asset has been reviewed in view of the present financial position of the Company, vis-a-vis future earnings. Based on the reassessment, the company has not recognized the deferred tax asset due to uncertainty of sufficient future business income. However, the Directors are of the opinion that the company would be in a position to earn adequate income in future, in view of the improvement in operations of the company to continue the Deferred Tax Asset. 2. In respect of determining the value of impairment of assets as on 31.03.2009, The Company will take suitable steps to comply with the accounting standard in the subsequent year after the approval of Draft Rehabilitation Scheme by the BIFR. 3. Other comments are self-explanatory. For and on behalf of the Board of Directors Place: Bangalore S. MADHAV S. PARVATHI Date : 31st August, 2009 Managing Director Director ANNEXURE - I DIRECTORS REPORT PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY FROM 01.04.2008 TO 31.03.2009: POWER AND FUEL CONSUMPTION: Financial Year Financial Year 2008-09 2007-08 1 Electricity: Units Purchased (lacs) 26.23 36.00 Amount (Rs. In lacs) 177.48 246.00 Rate per Unit (Rs.) 6.77 7.00 2 Own Generation : D G SET Units (lacs) 2.02 1.50 Amount (Rs. in lacs) 44.19 38.00 Rate per Unit (Rs.) 22.00 25.00 3 Captive Power Plant Unit in (Lacs) 25.56 29.00 4 Furnace Oil / HSD/LDO/ SUPER KEROSENE Quantity Ltrs in Lacs 1440.00 132.00 Amount (Rs. in Lacs) 44.19 38.00 Average Rate per LTR (Rs.) 32.59 29.00 5 Liquid Oxygen: Purchase+Own Generation Qty. 000 Cu. M. Nil Nil Amount (Rs. in lacs) Nil Nil Average Rate (Rs.) Nil Nil 6 Coal: Qty. Tons 38554.00 58231.00 Amount (Rs. in lacs) 1873.00 2433.00 Average Rate Rs./Ton 4859.00 4178.00 7. Consumption per Unit of Production: Electricity Purchased (Units) 128.39 108.00 Own generation (Units) 135.00 92.00 Furnace Oil/HSD/LDO (Ltrs.) 7.05 4.00 Coal (MT.) 2.00 2.00 PRODUCTION Sponge Iron 20433 33284 ANNEXURE-II TO THE DIRECTORS REPORT INFORMATION UNDER CLAUSE 49 OF THE LISTING AGREEMENT: a) De-listing: No application for de-listing the Companys securities has been made in any of the Stock-Exchanges. b) Suspension in Trading: Trading in the Companys securities had not been suspended for any reason whatsoever, during the period under review. c) Listing Fees: The listing fees payable for the year 2009-10 have been paid.