Elgi Ultra Industries Ltd Directors Report.

DIRECTORS

Dear Shareholders,

Your Directors have great pleasure to present the 33rd Annual Report of the company along with the Audited accounts for the year ended 31st March 2014.

Financial Results: The summary of the financial performance of the company for the year ended 31.03.2014 is furnished below.

(Rs. in lakhs)
Particulars Year ended 31.03.2014 Year ended 31.03.2013
Profit before depreciation interest and tax 1205.23 935.65
Less: Depreciation 178.47 122.55
Profit before interest and taxes 1026.76 813.10
Less: Interest and finance charges 147.93 121.85
Profit before tax 878.83 691.25
Less: Provision for taxes 209.58 168.52
Deferred tax liability 37.84 18.50
Profit after tax 631.41 504.23
Add : (Short) / Excess provision of Income Tax for earlier years 21.33 105.71
Add: Opening balance in Statement of Profit and Loss 805.58 571.93
Total amount available for appropriation 1458.32 1181.87
The Directors recommend the following Appropriations:
Dividend (including tax) 26.29 26.29
Transfer to General Reserve 450.00 350.00
Retained in Statement of Profit and Loss 982.03 805.58

DIVIDEND

Your Directors have recommended a dividend of Rs.1.20 per Equity Share for the year ended 31st March, 2014.

BUSINESS

During the year ended 31st March 2014 the Company recorded total turnover of Rs. 153.17 crores as against Rs. 134.82 crores during the previous year registering a growth of 13.61%. Your export turn over revenues aggregated to Rs. 9.28 Crores as against Rs. 6.37 crores registering a growth of 45.68% over the previous year.

Our Profit after Tax amounted to Rs. 6.31 crores as against Rs. 5.04 crores in the previous year registering a growth of, 25% over previous year. The Profit Before Interest, Depreciation, Taxes and Amortization (PBIDTA) amounted to Rs. 12.05 crore as against Rs. 9.35 crore in the previous year registering a growth of 28.88%.

CONSUMER DIVISION:

DOMESTIC PERFORMANCE:

Due to the overall economic sluggishness combined with poor monsoon & inflation there was only a marginal growth in sales. The southern markets were the highest hit and the impact was felt by the company. The positive is that in spite of the free Grinders and Mixers given by the Government of Tamil Nadu the company could maintain its numbers.

EXPORT PERFORMANCE:

During the year Ultra Table Top Wet grinders grew more than 100% in the export market. In US and Middle East the Company witnessed a strong demand for Ultra Wet Grinders.

INDUSTRIAL DIVISION:

INDUSTRIAL PRODUCTS-DOMESTIC PERFORMANCE:

The Industrial Product division has been consistently growing year after year. This year in spite of the economic sluggishness and the rupee getting weaker this division was able to register a growth of 18% over the previous year. The primary success was achieved by bringing in value added products and expanding the market.

AGRO & AUTO DIVISION:

Agro Division grew by 47% over the previous year. The growth was predominantly due to increase in reach and on time delivery. The subsidy by the Government of Tamil Nadu supported the farmers of the state in a dry year.

EXPORT PERFORMANCE:

During the year the exports grew by 15% over the previous year. Your company has identified new areas and increased the reach by adding few more countries.

CAPITAL EXPENDITURE

This year, the capital expenditure was to the tune of Rs. 563.71 lakhs. This comprises of Rs. 354.65 lakhs in Plant & Machinery, Rs. 118.95 Lakhs in Tools & Dies and balance in Computers, Building, Vehicles & Office Furniture and Equipments.

The company has setup internal facilities for manufacturing some critical components. This is expected to bring down the cost of manufacturing and reduce volatility in prices.

LIQUIDITY

The receivables during the year has been a big concern for the organization. Due to overall economic scenario we were forced to extend the credits to our dealers and Distributors. Since the government had to release the 100% subsidy, the cycle time for collection of agro receivables went up. Though the receivables has increased, we have been constantly working on the means and ways of reducing the exposure where ever possible. We clearly understand that the liquidity in the Balance Sheet has to balance between earning adequate returns and the need to cover financial and business risks. Liquidity also enables us to make a rapid shift in direction, should the market so demand.

AUDITORS

The Auditors M/s. Johendar & Co, Chartered Accountants, Coimbatore, retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Audit Committee and the Board of Directors have recommended the reppointment of M/s. Johendar & Co, Chartered Accountants as Statutory Auditors for a period of 5 years commencing from the conclusion of the ensuing 33rd Annual General Meeting upto the conclusion of 38th Annual General Meeting of the Company which ought to be held during the year 2019 subject to ratification by the shareholders annually.

COST AUDIT

Pursuant to provisions of the Section 233B of the Companies Act, 1956 the Board of Directors of your Company appointed Dr. G.L. Sankaran, as the Cost Auditor for conducting Cost Audit for the financial year 2013-14. Pursuant to Section 209(1)(d) of the Companies Act, 1956 and Rule 4 of the Companies (Cost Audit Records) Rules, 2011, the Cost Audit Report for the financial year ended 31st March, 2013 was submited to the Central Government in the prescribed form on 01.10.2013.

SECRETARIAL COMPLIANCE CERTIFICATE

In accordance with section 383 A of the Companies Act 1956 and the Companies (Compliance Certificate) Rules 2001, the company has obtained a certificate from a Secretary in whole time practice and a copy of such Certificate is annexed to this report.

DIRECTORS

In accordance with the provisions of Section 152 of the Companies Act, 2013, and the Articles of Association of the Company, Mr. Sumanth Ramamurthy and Dr. Jairam Varadaraj are liable to retire by rotation at the Annual General Meeting and being eligible offer themselves for re-appointment.

Dr. R. Subbayyan, Mr. M. Panchapakesan and Mr. Vidyasagar Ramdas, Directors of the Company, are proposed to be appointed as Independent Directors for a period of five consecutive years upto 25th September, 2019 as per provisions of Section 149 and other applicable provisions of the Companies Act, 2013.

Your Directors recommend their appointment/ reappointment.

DIRECTORS RESPONSIBILITY STATEMENT:

In compliance of Section 217 (2AA) of the companies Act 1956 as amended by the Companies (Amendment) Act 1956, the Directors of your Company confirm:

i) That in the preparation of the annual accounts, the applicable accounting standards has been followed along with proper explanations relating to material departure.

ii) That the directors have selected such accounting policies and applied them consistently and made judgments and estimate 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 of the company for that period.

iii) That the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) That the directors have prepared the annual accounts on a going concern basis.

FIXED DEPOSITS

The Company has not accepted any fresh fixed deposits and, as such, an amount of 412.35 Lakhs were outstanding as principal & interest as of the Balance Sheet date. There were seven unclaimed deposits as at 31.03.2014

PARTICULARS OF EMPLOYEES

None of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended.

INDUSTRIAL RELATIONS

Your Company firmly believes that people are its most valued resource and their efficiency plays a key role in achieving defined goals and building a competitive work environment. In its pursuit to attract, retain and develop best available talents, several programmes are regularly conducted at various levels across the Company. Employee relations continued to be cordial and harmonious across all levels and all the units of the Company.

On behalf of the board,
JAIRAM VARADARAJ B. BALAKRISHNAN
COIMBATORE Director Managing Director
25.06.2014 (DIN: 00058056) (DIN: 00005278)

ANNEXURE FORMING PART OF THE DIRECTORS REPORT 2013-2014

ANNEXURE- A

Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

A) Conservation of Energy:

Though the operations of the Company are not power intensive, the company is continuing its efforts to conserve energy wherever possible. In spite of severe power crisis in the state & increase in the cost of generation we were able to restrict the impact on the profitability by ensuring systematic production practices.

Technology Absorption

Wherever possible we try to adopt the latest technology so as to serve the customers in a better way.

B) Research & Development

CONSUMER PRODUCT DIVISION: Your Company is in the process of increasing the range in the existing products. Your company is in the process of developing various appliances which will suit Indian Kitchens.

INDUSTRIAL DIVISION:

Your company has developed new products in Polyester & Co Polyester Belts, Elastic Belts, Foundation cloth, Poly V belts & increased the range in the existing Belts.

FUTURE PLAN OF ACTION:

Your company is in the process of introducing new products in line with updated technology available to suit the Customer needs.

Expenditure on R & D:
Rs. in lakhs
Manpower Cost 204.00
Recurring 123.10

2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONS:

a) Efforts in brief made towards technology absorption, adaptation and innovation:

The company has not taken any technology that needs to be absorbed.

b) Benefits derived as a result of the above efforts: Not Applicable

C) FOREIGN EXHANGE & OUTGO

a) Activities relating to export, initiative taken to increase exports, Developments of new export market for products and service and export plans.

The company is trying to expand its activities to newer markets and expand its presence in the existing markets.

b) Total foreign exchange used and earned.

For particulars with regards to foreign exchange earnings and outgoing, please refer No.8 of notes forming part of the accounts for the year ended 31st March 2014.

On behalf of the board,
JAIRAM VARADARAJ B. BALAKRISHNAN
COIMBATORE Director Managing Director
25.06.2014 (DIN: 00058056) (DIN: 00005278)

CIN: U29253TZ1981PLC001104 Authorised Capital - Rs. 7,15,00,000/-

SECRETARIAL COMPLIANCE CERTIFICATE

To.

The Members

M/s. Elgi Ultra Industries Limited

"India House", New No.1443/1, Trichy Road

Coimbatore - 641 018.

I have examined the registers, records, books and papers of Messrs. Elgi Ultra Industries Limited (the Company) as required to be maintained under the Companies Act, 1956 and Companies Act, 2013 (Wherever Applicable) ("the Act") and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March 2014 (financial year). In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as stated in Annexure A to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has filed the forms and returns as stated in Annexure B to this certificate, with the Registrar of Companies, Coimbatore, Regional Director and Central Government within the time prescribed (except in two cases filed belatedly) under the Act and the rules made thereunder. However, no forms or returns were required to be filed with the Company Law Board or other authorities.

3. The Company, being a Public Limited Company, has the paid up capital of Rs. 1,87,26,500/-(Rupees One Crore Eighty Seven Lakhs Twenty Six Thousand and Five Hundred only).

4. The Board of Directors duly met 4 times respectively on 17.05.2013,14.08.2013,23.12.2013 & 28.03.2014 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.

5. The Company has closed its Register of Members from 15.09.2013 to 26.09.2013 and necessary compliance of Section 154 of the Act has been made.

6. The Annual General Meeting for the financial year ended on 31.03.2013 was held on 26.09.2013 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. No Extra-Ordinary General Meeting(s) was held during the financial year.

8. The Company has not advanced any loans to its directors or persons or firms or Companies referred to under Section 295 of the Companies Act, 1956 and Section 185 of the Companies Act, 2013.

9. The Company has duly complied with the provisions of Section 297 of the Act in respect of contracts specified in that Section.

10. The Company has made necessary entries in the register maintained under section 301 of the Act.

11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Board of directors, members or Central Government.

12. Duly constituted Committee of Directors (Share Transfer Committee) has approved the issue of duplicate share certificates.

13. The Company has:

(i) delivered all the certificates on lodgment thereof for transfer / transmission and issue of duplicate certificate or any other purpose in accordance with the provisions of the Act;

(ii) deposited the amount of final dividend declared in a separate Bank Account on 01.10.2013 with ICICI Bank, Coimbatore, which is within the stipulated time.

(iii) paid / posted warrants / Pay orders for dividends to all the members within a period of 30 (Thirty) days from the date of declaration and that all unclaimed / unpaid dividend have been kept in a separate Account.

(iv) no amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to be Transferred to Investor Education and Protection Fund.

(v) duly complied with the requirements of Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted and the appointment of Additional Director and Director has been duly made.

15. The Companys paid-up capital being less than the prescribed Rs.5 crores, it is not required to appoint a Managing Director/Whole- time Director / Manager. However, the Company has a Managing Director, who has been appointed on 14.08.2013 in compliance with the provisions of Section 269 read with Schedule XIII of the Act

16. The Company has not appointed any sole selling agents during the financial year.

17. The company has obtained necessary approvals of the Central Government and Regional Director, Chennai as prescribed under the various provisions of the Act as detailed below

(i) The Company has filed requisite application in e-Form 23C vide SRN No S21243845 dated 12th June 2013, pursuant to Section 233B (2) of the Companies Act, 1956, seeking approval of the Central Government for appointment of Cost Auditors for audit of cost records of the Company which was duly approved by the Central Government.

(ii) The Company filed an application before the Regional Director, Chennai pursuant to Section 297(1) of the Companies Act, 1956 for entering into contract with M/s. Ellargi & Co., for purchase of Petrol, Diesel lubricants, distilled water, waste cloth which was approved by the Regional Director vide their letter dated 22.01.2014.

Other than the above, the Company was not required to obtain any approvals of the Company Law Board and/or such other authorities prescribed under the various provisions of the Act during the financial year.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.

19.The Company has not issued any shares, debentures or other securities during the financial year.

20. The Company has not bought back any shares during the financial year.

21. The Company has not issued any preference shares/debentures and hence the question of redemption of preference shares or debentures during the financial year does not arise.

22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares.

23. The Company has complied with the provisions of Sections 58A read with Companies (Acceptance of Deposit) Rules, 1975 in respect of deposits accepted, during the year and the Company has filed the copy of Statement in lieu of Advertisement particulars as required with the Registrar of Companies Coimbatore on 13.09.2013. The Company has also filed return of deposit with the Registrar of Companies.

24. The amount borrowed by the Company from members, public, banks and others during the financial year ending 31.03.2014 are within the borrowing limits of the Company and that necessary resolutions as per section 293(1)(d) of the Act have been passed in duly convened Annual General Meeting held on 29.09.2000.

25. The Company has during the year, made loans to other Bodies corporate in compliance with the provisions of the Act and has made necessary entries in the register kept for the purpose. The Company has not made any investments or given guarantees or provided securities to other Bodies Corporate. However in respect of investments made in the prior years necessary entries have been made in the Register kept for the purpose.

26. The Company has not altered the provisions of the Memorandum with respect to situation of the Companys Registered Office from one State to another during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financial year.

31. There were no prosecution initiated against or show cause notices received by the Company, and no fines or penalties or any other punishment was imposed on the Company during the financial year, for offences under the Act.

32. The Company has not received any money as security from its employees during the financial year.

33. Since Employees Provident Fund Act, 1952 is applicable to the Company, compliance of Section 418 does not arise.

Place : Coimbatore Practicing Company Secretary: M.D. SELVARAJ
Date : 25.06.2014 C.P.No.: 411 (FCS.960)

ANNEXURE A - SECRETARIAL COMPLIANCE CERTIFICATE

Elgi Ultra Industries Limited

CIN: U29253TZ1981PLC001104

Authorised Capital - Rs. 7,15,00,000/-

Registers as maintained by the Company

1. Register of Deposits under Rule 7 of the Companies (Acceptance of Deposits) Rules 1975.

2. Register of Charges under Section 143 & Copies of Instruments creating Charge under section 136.

3. Register of Members under Section 150 and Index of Members under Section 151.

4. Register and Returns under Section 163.

5. Register of particulars of Contracts in which Directors are Interested under Section 301(1) and under Section 301(3).

6. Register of Directors under Section 303.

7. Register of Directors Shareholdings under Section 307.

8. Register of Investments or Loans, Guarantee given or Security Provided under Section 372A.

9. Register of Renewed and Duplicate Certificates under Rule 7 of the Companies (Issue of Share Certificates) Rules, 1960.

10. Minutes Book of Board Meetings under Section 193.

11. Minutes Book of General Meeting under Section 193.

12. Minutes Book of Share Transfer Committee.

13. Minutes Book of Remuneration Committee

ANNEXURE B - SECRETARIAL COMPLIANCE CERTIFICATE

Elgi Ultra Industries Limited

CINumber: U29253TZ1981PLC001104

Authorised Capital - Rs. 7,15,00,000/-

Forms and Returns as filed by the Company with Registrar of Companies, Coimbatore, Regional Director, Central Government or other authorities during the financial year ended 31st March 2014.

REGISTRAR OF COMPANIES, COIMBATORE

S. No. Form No. Return Filed under Section For Date of Filing Receipt No. Whether filed within prescribed time Yes/No If Delay in filing whether requisite Additional fee paid Yes/No
1. Form 8 Dt.30.03.2013 Section 135 Modification of Charges with Central Bank of India. (Charge ID 80047602) 27.04.2013 / B73765562 Yes Not applicable
2. Form 8 Dt.30.03.2013 Section 135 Modification of Charges with Corporation Bank. (Charge ID80035120) 29.04.2013 / B73896730 Yes Not applicable
3. Form 62 FD Return as on 31.03.2013 Section 58A Fixed Deposit Return 12.06.2013 / B76877257 Yes Not applicable
4. Form 66 Dt. 31.03.2013 Section 383(A) Secretarial Compliance Certificate 10.09.2013 / Q10976793 Yes Not applicable
5. Form 32 Dt. 14.08.2013 Section 303(2) Sri. B. Balakrishnan appointed as Additional Director of the Company 11.09.2013 B84041250 Yes Not applicable
6. Form 32 Dt.14.08.2013 Section 303(2) Sri. B. Balakrishnan appointed as Managing Director of the Company 12.09.2013 / B84141720 Yes Not applicable
7. Form 23 Dt.14.08.2013 Section 269 read with 198, 309 and 310 Sri. B. Balakrishnan appointed as Managing Director of the Company. 12.09.2013 / B84141829 Yes Not applicable
8. Form 25C Dt.14.08.2013 Section 269(2) read with Schedule XIII Sri.B.Balakrishnan appointed as Managing Director of the Company 12.09.2013 / B84142439 Yes Not applicable
9. Form 62 Statement in lieu of Advertisement Dt. 17.05.2013 Rule 4A of Companies (Acceptance of Deposits) Rules Fixed Deposit -Statement in lieu of Advertisement 13.09.2013 / B84252717 Yes Not applicable
10. Form 1 (Statement of Account credited to Investor Education Protection Fund) Section 205 Unclaimed dividend for the year 2005-2006 Rs. 61,630/- 11.10.2013 / B86602885 Yes Not applicable
11. Form 23 Dt.26.09.2013 Section 269 read with 198, 309 and 310 Sri. B. Balakrishnan appointed as Managing Director of the Company at the AGM. 12.10.2013 / B86655339 Yes Not applicable
12. Form 32 Dt.26.09.2013 Section 303(2) Sri. B. Balakrishnan appointed as Managing Director of the Company at the AGM. 12.10.2013 / B86655289 Yes Not applicable
13. Form 23 AC & ACA-XBRL Dt. 31.03.2013 Section 220 Balance Sheet as at 31.03.2013 17.10.2013 / Q13974530 Yes Not applicable
14. Form 8 Dt. 27.09.2013 Section 135 Modification of Charges with Central Bank of India. (Charge ID 80047602) 19.10.2013 / B87163200 Yes Not applicable
15. Form 20B Dt.26.09.2013 Section 159 Annual Return 19.11.2013 / Q23844533 Not applicable
*16. Form 5INV Dt.26.09.2013 Rule 3 of the Investor Education and Protection Fund Rules, 2012 Statement of unclaimed and unpaid amounts for the financial year 31.03.2013 30 12.2013 / S28799757 Yes Not applicable
17. Form 5 INV Dt.2c6.09.2013 Rule 3 of the Investor Education and Protection Fund Rules, 2012 Statement of unclaimed and unpaid amounts for the financial year 31.03.2013 23.01.2014 / S29085479

* Rejected

REGIONAL DIRECTOR

The Company filed an application in form 24A before the Regional Director, Chennai pursuant to Section 297(1) of the Companies Act, 1956 (vide SRN No B87497814 Dt.23.10.2013) for entering into contract with interested Firm which was approved by the Regional Director vide their letter dated 22.01.2014.

CENTRAL GOVERNMENT

S. No. Form No. Return Filed under Section Fa- Date of Filing Receipt No. Whether filed within prescribed time Yes/No If Delay in filing whether requisite Additional fee paid Yes/No
1. Form 23C Dt. 17.05.2013 Section 233B(2) Appointment of Cost Auditor for the year 31.03.2014. 12.06.2013 S21243845 Yes Not applicable
2. Forml-XBRL Dt. 31.03.2013 Rule 4 of Companies Cost Audit Report Rules, 2011 XBRL document in respect of cost audit report 01.10.2013 S22709810 Nd Nd

COMPANY LAW BOARD & OTHER AUTHORITIES

NIL

Place : Coimbatore Practicing Company Secretary: M.D. SELVARAJ
Date : 25.06.2014 C.P.No.: 411 (FCS.960)