Bobshell Electrodes Ltd Directors Report.

DIRECTORS

TO,

THE MEMBERS,

BOBSHELL ELECTRODES LIMITED

Dear Shareholders,

Your directors have pleasure in presenting herewith the 20th Audited Annual Report for the year ended on 31st March, 2014 of your Company.

FINANCIAL HIGHLIGHT :

The Financial performance of the company during the year is as under:

PARTICULARS FOR THE YEAR ENDED ON 31/03/2014 FOR THE YEAR ENDED ON 31/03/2013
Income From Sales(Net) 2,67,86,479 3,08,33,565
Other Income 8,52,679 8,17,445
Total Income. 2,76,39,158 3,16,51,010
Total Expenses 2,81,83,401 3,23,81,709
Profit Before Tax (5,44,243) (7,30,699)
Depreciation 9,30,138 7,90,717
Adjustment For Tax 0 0
Provision for FBT. 0 0
Profit / (Loss) After Tax. (6,22,242) (8,17,485)
Deferred Tax (Assets) Liability 77,999 86,786
Net Profit / (Loss) for the Year (6,22,242) (8,17,485)
Previous Year Balance B/F (2,36,20,799) (2,28,68,086)
Balance Carried to Balance Sheet (2,50,60,526) (2,44,38,284)
Earning Per Share (In Rupees) (0.10) (0.14)

DIVIDEND :

Due to negative Earning Per share, loss brought forward from the last year and loss after differed tax provision, your Directors do not recommend any amount to be paid as a dividend.

TRANSFER OF UNPAID/ UNCLAIMED DIVIDEND :

The Company does not have any outstanding unpaid/ unclaimed dividend which is required to be transferred to the Investors Education and Protection funds as per the provision of Section 205C of the Companies Act, 1956. The Company does not have any outstanding liability on account of Interest and Principal on Deposits, Debentures or Share Application Money.

BUY BACK OF SHARES :

The Company had not made any Buy Back of its paid up equity shares during the year in terms of section 77A, 77AA and 77B of the Companies Act 1956. Hence no specific disclosure is required to be made in this report.

SHARE CAPITAL STRUCTURE :

There was no change in total value of Authorized, Issued, Subscribed and Paid up Share Capital Structure of the Company.

YEAR UNDER REVIEW :

During the year under review your company has earned a Total income of Rs 2,76,39,158 (Previous Year of Rs. 3,16,51,010), After deduction of all Expenses of Rs. 2,81,83,401 (Previous year Rs. 3,23,81,709) your company has incurred a net loss of Rs. 6,22,242/- (Previous Year Operating Loss of Rs. 8,17,485/-) which is carried to balance sheet. At the year end, total accumulated losses were at Rs. 2,50,60,526/-(Previous year were at Rs. 2,44,38,284). The Company still holds positive net worth and is not a sick Industry. During the year, the company has repaid all its bank’s liabilities and there is no interest liability for next financial year. This will add the profitability of the company. Further the improved cash flow in the company will entitle it negotiate further for raw material cost and ultimately improve the possibilities of earning profit margin on per unit of production.

COMPLIANCE TO CODE OF CORPORATE GOVERNANCE (CLAUSE 49 OF THE LISTING AGREEMENT)

The present Board of Directors consists of 4 directors out of which two are the Promoter directors and two are Independent non-executive directors. Accordingly the present Board of Directors now complies with the provisions of clause 49 of the Listing Agreement. The detailed report on Corporate Governance is annexed.

INFORMATION PURSUANT TO THE LISTING AGREEMENT AND SEBI CIRCULAR NO SMDRP / CIR-14 / 98 DATED APRIL 29TH, 1998

The Company’s shares are at present listed on Bombay Stock Exchange. The complete address is given elsewhere in this report. The Company has made all compliances of the Listing Agreement with the Bombay Stock Exchange during the year.

DEMATERIALISATION OF THE SECURITIES OF THE COMPANY :

The company has already signed Tripartite Agreement with NSDL & CDSL for Dematerializing of its Equity Shares. The Equity shares are now available for Dematerialization by investors. The company has paid the dues of depositories i.e. NSDL and CDSL and Registrar and Transfer Agent up to the date.

ENVIRONMENT PROTECTION :

The Company is engaged in the business of manufacture of welding rods. The process does not generate any type of Air or water pollution. The water is being used only for sanitation purpose. The metal scrap is being disposed off in regular manner as per practice prevailing in the industry. The manufacturing process does not generate any type of pollution.

INSURANCE AND PROTECTION OF ASSETS :

The Company’s all fixed assets and tangible movable assets are properly insured against all available commercial risks like fire, flood, earthquake and other extraneous perils from the approved and reputed insurance companies.

DEPOSITS :

During the year under review your company has neither invited nor accepted any public deposit or deposits from the public as defined under section 73(1) of Companies Act 2013 (section 58A of Companies Act, 1956).

DIRECTORS :

During the year under review Shri Shailesh M. Joshi shall retire by rotation. He is eligible for reappointment as director and has offered himself for directorship of the company. Your directors recommend reappointing him by passing the required resolution. Shri Manshanker T. Joshi has resigned from the post of Director w.e.f. 20/05/2014 due to old age and ill health and the Board has passed resolution on 30/05/2014 to give effect to his resignation. Your Directors put on record the word of appreciation for the valuable time and services provided by Shri Manshanker T. Joshi during his tenure as Director with the company and also thank him for the valuable guidance provided by him. Except this during the year there was no change in the constitution of the directors.

DIRECTORS RESPONSIBILITY STATEMENT (SECTION 217(2AA)) :

Pursuant to the provision contained in section 217(2AA) of the Companies Act 1956 the Directors of your Company Confirm :

(A) That as far as possible and except for AS-15 on making provision for retirement benefits for Gratuity for employees, in the preparation of the annual account, the applicable accounting standards have been followed and no material departures have been made from the same;

(B) That they have selected such accounting policies and applied them consistently and made judgments and estimated that are reasonable and prudent so as to give a true and fair view of the state of affair of the company for that period:

(C) That they 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 the company for preventing and detecting fraud and other irregularities.

(D) That they have prepared the annual account on a going concern basis.

(E) The Directors, in the case of Listed Company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operative effectively.

(F) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION AS TO INDEPENDENT DIRECTORS: (Pursuant to Provisions of section 149(6) of the Companies Act 2013).

All the Independent Directors of the Company do hereby declare that: (1) All the Independent Directors of the Company are neither Managing Director, nor a Whole Time Director nor a Manager or a Nominee Director.

(2) All the Independent Directors in the opinion of the Board are persons of integrity and possesses relevant expertise and experience.

(3) Who are or were not a Promoter of the Company or its Holding or subsidiary or associate company.

(4) Who are or were not related to promoters or directors in the company, its holding, subsidiary or associate company.

(5) Who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company or their promoters or directors, during the two immediately preceding financial years or during the current financial year.

(6) None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary, or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year,

(7) Who neither himself, nor any of his relatives, (a) Holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of three financial years immediately preceding the financial year in which he is proposed to be appointed.

(b) Is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial years in which he is proposed to be appointed of (i) A firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; OR

(ii) Any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent, or more of the gross turnover of such firm; (iii) Holds together with his relatives two per cent, or more of the total voting power of the company; OR

(iv) Is a Chief Executive or director, by whatever name called, or any non-profit organization that receives twenty five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; OR

(v) Who possesses such other qualifications as may be prescribed.

STATUTORY AUDITOR :

M/s. DJNV & CO., Present Statutory auditors of the company have given their letter of consent and confirmation under section 224(1B) of the Companies Act 1956 for reappointment as Statutory Auditors of the Company. The Board has now proposed to appoint the Statutory Auditors for a period of 3 years as per requirements of section 139 (1) of the Companies Act 2013 read with Companies (Audit and Auditors) Rules 2014. Necessary Resolution for their appointment as the Statutory Auditors and fixing their remuneration is proposed to be passed at the Annual General Meeting.

AUDITORS OBSERVATION :

The Auditor’s Report for the Year ended 31st March 2014 and the notes forming part of accounts referred to in the Auditor’s Report are self explanatory and give complete information.

EMPLOYEES: (SECTION 217 (2A)) :

There are no employees of the company who were in receipt of the remuneration of Rs.60,00,000/- in the aggregate if employed for the year and in receipt of the monthly remuneration of Rs. 5,00,000/- in the aggregate if employed for a part of the year under review. Hence the information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975 and Companies (Particulars of Employees) Amendment Rules, 2011 is not applicable to the Company.

FORMATION OF AUDIT COMMITTEE IN COMPLIANCE TO SECTION 292 A OF THE COMPANIES ACT, 1956 AND CLAUSE 49 OF THE LISTING AGREEMENT ON CORPORATE GOVERNANCE :

In Compliance with the provisions of Section 292A of the Companies Act 1956 your company has formed an Audit Committee within the Organization consisting of 2 independent directors and one promoter director. The area of operations and functional responsibilities assigned to the committee are as per the guidelines provided in Clause 49 of the Listing Agreement for implementation of code of corporate governance. The Committee meets at least once in a quarter and gives its report of each meeting to the Board for its approval, record and information purposes. The detail of powers, responsibilities and system of functioning of this committee is given in report on Corporate Governance forming part of this report.

MATERIAL DEVELOPMENT :

Except the information given in this report, no material development has taken place in the Company from the closure of the financial year till the date of this annual report and the same does not have any material impact on the financial conditions or operation of the Company.

STATUTORY INFORMATION: (SECTION 217 (1) (E)) :

The information required to be disclosed as per the provisions of Section 217 (1) (E) of the Company Act –1956 and the Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988 are given in the annexure to this report.

APPRECIATION :

Your directors take this opportunity to acknowledge the trust reposed in your Company by its Shareholders, Bankers and Clients. Your Directors also keenly appreciate the dedication & Committee of all our employees, without which the continuing progress of the Company would not have been possible.

ON BEHALF OF THE BOARD OF DIRECTORS

OF BOBSHELL ELECTRODES LIMITED

SD/-
DATE : 27th May, 2014 (SHAILESH M. JOSHI)
PLACE : AHMEDABAD CHAIRMAN AND
MANAGING DIRECTOR

ANNEXURE-A TO DIRECTORS REPORT

DETAILS ON ENERGY CONSUMPTION, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND ADOPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO.

[A] ENERGY CONSUMPTION AND CONSERVATION.

Sr. No. Particulars For the Yr. ended 31/03/2014 For the Yr. ended 31/03/2013
(1) CONSUMPTIONOF
ENERGY/POWER
(a) Electricity Purchased
No. of Units consumed 65002 68452
Total Amount of Electricity Rs.593661.52 Rs.605904.26
Cost per unit of Electricity Rs.9.13 Rs. 8.85
(b) Electricity Generated
No. of Units Generated. NIL NIL
Total Amount of Power Generation. NIL NIL
Cost per Unit of Power Generated. NIL NIL
[c] CONSUMPTIONOFFUEL
Type& Nature of Fuel Consumed
Coal/ Firewood/ Bio Mass/
Furnace Oil/Others N.A. N.A.
Total Quantity of Fuel Used N.A. N.A.
Total Amount of Fuel Used N.A. N.A.
Cost per Unit of Fuel Used N.A. N.A.
Cost per Unit of Product
Manufactured N.A. N.A.
[d] Unit of Production Kgs. Kgs.
Total Units of Products
Produced 85237 101086
Total Cost of Power/ Fuel per unit of Production. Rs.6.96 Rs.5.99

RESEARCH AND DEVELOPMENT :

The Company is running an in house small Research & Development unit for Quality testing of the products manufactured. In fact the Company’s entire process of manufacturing right from the raw material procurements to dispatch of finished goods is ISO Certified. The Company is following strict quality control norms as per requirements of ISO Certification. The ISO Certificate granting authorities are also conducting operational audit of the Company’s entire process flow system. The Company is continuously making research for reduction of manufacturing cost by improvement in quality of products, flux used, quality of wire bars used in manufacture of welding rods. All successful research and innovations are immediately implemented in the manufacturing process.

TECHNOLOGY UPGRADATION AND ADOPTION :

As stated above, the Company is continuously making Research & Development within its own Quality Control Lab. All the successful research for quality control, quality improvement, cost control measures are immediately implemented within the manufacturing units of the Company. The results are that, the Company despite continuous increase in the cost of raw materials, steel prices in the world, able to control the cost of operations and has yet not drawn in to cash operational losses.

FOREIGN EXCHANGE EARNINGS AND OUTGO :

(Amount in Rupees)
Sr. No. Particulars For the Year 31/03/2014 For the year 31/03/2013
[A] FOREIGN EXCHANGE EARNED
(1) On Export of Revenue
Goods & Services NIL NIL
(2) On Export of Technology/
Research and IPRs NIL NIL
(3) On Export of Capital Goods NIL NIL
(4) On Any Other Matters NIL NIL
[A] FOREIGN EXCHANGE USED
(1) On Import of Revenue
Goods & Services NIL NIL
(2) On Import of Technology/
Research and IPRs NIL NIL
(3) On Import of Capital Goods NIL NIL
(4) On Manpower Training or
Remuneration paid to Foreign
Technicians. Etc. NIL NIL
(5) On Any other Matters NIL NIL

ON BEHALF OF THE BOARD OF DIRECTORS

OF BOBSHELL ELECTRODES LIMITED

SD/-
DATE : 27th May, 2014 (SHAILESH M. JOSHI)
PLACE : AHMEDABAD CHAIRMAN AND
MANAGING DIRECTOR