Kanchan International Ltd Directors Report

KANCHAN INTERNATIONAL LIMITED ANNUAL REPORT 2011-2012 DIRECTORS REPORT To, The Members, KANCHAN INTERNATIONAL LIMITED Your Directors present the 18th Annual Report together with the Audited statement of Accounts of the Company for the year ended 31st March 2012. 1) FINANCIAL RESULTS: The Financial performance of your Company for the year under review is summarized below: (In Rs.) YEAR ENDED YEAR ENDED PARTICULARS 31.03.2012 31.03.2011 Revenue from operations (net) 394,452,303 430,112,159 Other Income 13,489,685 33,398,652 Less: Expenditure (excluding Depreciation) 401,792,553 442,380,327 Profit/(Loss) Before Depreciation and Taxation 6,149,435 21,130,484 Less: Depreciation 4,688,966 4,829,417 Less: Prior period items - - Profit/(Loss) before Taxation 1,460,469 16,301,067 Less: Extra-ordinary item - 32,304 Less: Provision for Taxation (1,81,960) 22,290,812 Net Profit/(Loss) after Taxation 16,42,429 (6,022,049) 2) REVIEW OF OPERATION: During the year, the Companys revenue from operations has decreased from Rs.430,112,159/- in previous year to Rs. 394,452,303/- in current year due to unstable market conditions. The expenditure of the Company excluding Depreciation has also decreased from Rs. 442,380,327/- in previous year to Rs.401,792,553/- in current year. The profit after tax of the Company has increased to Rs.16,42,429/- as compared to loss of Rs.6,022,049/-in the previous year Your Company could achieve marginal profit of Rs. 16.42 Lacs during the year as compared to loss of Rs. 60.22 lacs in the previous year. Your Directors are hopeful to achieve a better result during the current financial year. 3) DIVIDEND: Due to meagre profit, your Directors do not recommend any dividend for the financial year ended 2011-12. 4) ISSUE OF EQUITY SHARES: In the Board Meeting held on 31st March 2012 and 9th May 2012, the Board issued 4,76,300 and 13,42,608 equity shares respectively pursuant to conversion of equity warrants issued on preferential basis to Promoters and independent investors. 5) DELISTING OF SECURITIES FROM ASE AND MSE: As decided by the Members in the 15th Annual General Meeting, your Company has completed all the procedure for delisting of the securities from the Madras as well as Ahmedabad Stock exchanges. However, formal letters of delisting of the securities from the said Stock exchanges are awaited. 6) SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENT: The Company has a Subsidiary in the name of Kanchan International Middle East F.Z.E in UAE. Pursuant to Listing Agreement, the Consolidated Financial Statement of the Company alongwith its Subsidiary forms part of Annual Report. Also the Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956 i.e. attaching the Balance Sheet and Profit & Loss Account of the Subsidiary Company, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements. The Company will make available the Annual Accounts of the Subsidiary Company to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the Subsidiary Company will also be kept open for inspection at the Registered Office of the Company between 10.30 a.m. to 12.30 p.m. on all working days except Saturdays, Sundays and Public Holidays. The Government of Ajman (UAE) has not prescribed any format for preparation of accounts of the Company. But the Company had prepared the accounts as per the provisions of Companies Act, 1956 and other provisions of applicable Accounting Standards. 7) FIXED DEPOSITS: The Company has not accepted any Deposits under Section 58A of the Companies Act, 1956 during the year under review. 8) DIRECTORS: The Board of Directors of a Company provides leadership, strategic guidance & objective judgment, independent from the management of the Company, while remaining at all times accountable to the shareholders. During the year under review, Mr. K.S. Raman, Director of the Company did not opt for re-appointment for the Directorship of the Company from 24th November 2011 and Mr. Bharat Pipalia, Whole-time Director of the Company, resigned from the directorship of the Company from 30th November 2011. The Board places on record its appreciation for the services rendered by Mr. K.S. Raman and Mr. Bharat Pipalia during their respective tenure as Directors of the Company. In accordance with the provision of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ashok Khimavat, Director of the Company retire by rotation and being eligible, offer himself for re- appointment at the ensuing Annual General Meeting. 9) CORPORATE GOVERNANCE: Your Company is committed to maintain the highest standard of Corporate Governance and adhere to the requirements set out by SEBI. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement, including the shareholders information and auditors certificate on its compliance, forms a part of this Annual Report. 10) DEPOSITORIES: The Company is registered with both the Depositories viz, the National Securities Depository Limited and Central Depository (Services) Limited. As of March 31, 2012, 84.15% of the equity shares of your Company were held in demat form. 11) INSURANCE: All the assets of the Company wherever necessary and to the extent required have been insured. 12) DIRECTORS RESPONSIBILITY STATEMENT: In compliance to the requirements of Section 217 (2AA) of the Companies Act 1956, your Directors confirm that: a) the Company has followed the applicable accounting standards in the preparation of the Annual Accounts and there had been no material departure except accounts drawn as per revised Schedule VI as per the Companies Act, 1956. b) Directors had selected the accounting policies and applied them consistently and made judgments 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 of the Company for the year under review. c) the Directors have taken proper and sufficient care for 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. d) the Directors have prepared the Annual Accounts on a going concern basis. The Directors of your Company further confirm that proper systems are in place to ensure compliance of all laws applicable to Company. 13) AUDITORS AND AUDITORS REPORT: M/s. M.B. Ladha & Co., Chartered Accountants, retires as Statutory Auditors of the Company at the conclusion of the ensuing Annual General Meeting and has confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed. The retiring Auditors have furnished a Certificate of their eligibility for reappointment under section 224( 1 -B) of the Companies Act, 1956. Your Directors recommend appointing M/s. M.B. Ladha & Co., Chartered Accountants as Statutory Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting. With reference to the Auditors Observations in the Auditors Report & Corporate Governance Certificate, your Directors have to state as under: * The Company being a small company and involved in few transactions, decided to provide retirement benefits and leave encashment on accrual basis. However, the management is exploring possibility to appoint recognized institution such as LIC for availing services of retirement benefit offered by LIC. * Due to urgency in finalizing accounts, the Company could not send letters to the said parties. However, management does not expect any material changes. * Your Director state that the Company is passing through acute cash crunch position due to that reason the Company could not pay some of the Government dues as mentioned by the auditors such as Fringe Benefit Tax, Sales Tax etc. 14) COMPLIANCE CERTIFICATE: The Company is required to obtain Compliance Certificate from the Practicing Company Secretary as provided under section 383A (1) of the Companies Act, 1956. Accordingly the Company has appointed M/s. Hemanshu Kapadia & Associates, Practicing Company Secretary to issue compliance certificate and his certificate is attached herewith. 15) MANAGEMENTS DISCUSSION AND ANALYSIS REPORT: Managements Discussion and Analysis Report for the year under review, as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in separate Section forming part of the Annual Report. 16) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars pursuant to requirements under Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is given in the annexure of the report. 17) PARTICULARS OF EMPLOYEES: As on date, none of the employees of the Company fall within the purview of the provisions of 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. Therefore, the statement for the same is not attached. 18) INTERNAL AUDITOR: During the year under review, the management has considered recommendations made by the Internal Auditor, Mr. Anil Jain, Chartered Accountant. The Audit committee members reviewed and discussed in detail the scope of audit and audit schedule. Your Company is and shall be immensely benefited from his appointment. 19) APPRECIATION: The Board of Directors expresses their deep gratitude for the co-operation and support extended to your Company by its customers, suppliers, Bankers and various Government agencies. Your Directors also place on record the commitment and involvement of the employees at all levels and looks forward to their continued co-operation. For and on behalf of the Board, Dinesh C. Khimavat (Chairman & Managing Director) Date : 1st September 2012 Place: Mumbai ANNEXURE TO THE DIRECTORS REPORT Disclosure under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 l. A. CONSERVATION OF ENERGY: (a) Energy conservation measures taken by the Company: (i) The Company has been taking continuous steps to conserve the energy and minimize energy cost at all levels as per the past experience. (ii) Monitoring the overall energy consumption, by reducing losses and improving efficiency. (iii) Maximum demand of electricity is being reduced by evenly distributing the loads throughout the day and increasing efficiency of plants and machineries. (iv) Energy audit has been carried out by outside consultants and their suggestions are being implemented by the Company. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: The Company takes necessary steps for investment in energy saving devices from time to time. (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of goods: (I) However, per unit Energy consumption has increased from Rs. 5.131 to Rs. 5.251 due to increase in rate of fuel and per unit electricity COSt.@singhviji: Please insert the figures for this year (ii) Rejection has gone down substantially due to improvement in quality of products. B. TECHNOLOGY ABSORPTION: Disclosure of particulars with respect to Technology Absorption as per Form B FORM-B 1. Research and Development (R&D): (I) Specific area in which R&D carried out by the Company: The Company is developing and introducing various new sizes, designs and pattern of household utensils under its continuous R&D programs as per changing market needs. (ii) Benefit derived as a result of the above R&D: (a) The quality of products of the Company has improved and showed marked improvement in its desired properties. (b) The R&D activities resulted into development of new designs and products and also acceptability of the products in the market. (iii) Future plan of Action: (a) Continuation of the measures already initiated by the Company. (b) Introduction of more process control and detailed quality control as well as cost reduction techniques. (c) Development of new value added products (d) Technology up gradation and modernization. (iv) Expenditure on R & D: The Company does not account for R&D expenses separately but treat them as revenue expenses and accounts in respective head of revenue accounts. There was no capital expenditure incurred on imported technology during the year. 2. Efforts in brief made towards technology absorption, adaptation and innovation: (i) The Company has been developing in house modification/improvement in process technology in its various manufacturing Sections, which when and if found suitable have been integrated in the manufacturing process. (ii) These have been resulted in improving efficiency, quality & design of the Companys products. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: The information of foreign exchange earning & outgo is as follows. (Rs. In Lacs) Particulars 2011-12 2010-2011 A. Foreign Exchange Earnings: FOB Value of Exports 210.52 514.14 B. Foreign Exchange Outgo: C.I.F. Value of Imports 98.32 29.50 C. Foreign Traveling Expenses 0.70 0.06 D. Bank Charges & Commission 0.03 0.89 The Company is taking efforts to increase the exports. For and on behalf of the Board, Dinesh C. Khimavat (Chairman & Managing Director) Date : 1st September 2012 Place : Mumbai COMPLIANCE CERTIFICATE CIN of the Company: L29301MH1994PLC078695 Nominal Capital: Rs.80,000,000/- To, The Members, Kanchan International Limited 41, Mid Town, S. V.Road, Borivali (W), Mumbai - 400 092. We have examined the registers, records, books and papers of Kanchan International Limited as required to be maintained under the Companies Act, 1956 (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 31st March 2012. In our opinion and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we 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 the Annexure B to this certificate, with the Registrar of Companies within the time prescribed/with additional fees under the Act and Rules made thereunder. However, no forms or returns were filed with the Regional Director, Central Government, Company Law Board or other authorities. 3. The Company being Public Limited Company, comments are not required with reference to maximum no. of members, invitation to public to subscribe for its shares or debentures and acceptance of deposits from persons other than its members, directors or their relatives. 4. The Board of Directors met Nine (9) times during the year i.e. on 30th May 2011, 10th June 2011, 12th August 2011, 30th September 2011, 13th October 2011, 14th November 2011, 13th February 2012, 30th March 2012 and 31st March 2012 (Adjourned meeting which was originally held on 30th March 2012) respectively and in respect of which meetings proper notices were given and the proceedings including circular resolutions were recorded in the Minutes Book maintained for the purpose. 5. The Company has closed its Register of Members from Saturday, 17th November 2011 to Saturday, 24th November 2011 and necessary compliance of Section 154 of the Act has been made. 6. The Annual General Meeting for the financial year ended 31st March 2011 was held on 24th November 2011, 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. One Extra-Ordinary General Meeting was held during the financial year after giving the due notice to the member of the Company and the resolution passed thereat were duly recorded in the Minutes book maintained for the purpose. 8. The Company has not advance any loan to its Directors or persons or firms or Companies covered under section 295 of the Act. 9. The Company has entered into contracts falling within the preview of Section 297 at prevailing market rate. However, compliance under Section 297 is in process. 10. The Company has made necessary entries in the register maintained under Section 301 of the Act. 11. As there were no instances of falling within the purview of Section 314 of the Act, the Company was not required to obtain any approval from Board of Directors or Members of the Company or Central Government u/ s 314 of the Act. 12. The Share Transfer Committee /Board of Directors of the Company has approved the issue of duplicate share certificates during the financial year. 13. (i) The Company has delivered all the certificates on allotment of Securities in accordance with the provisions of the Act. However, in few instances delay was noticed. (ii) The Company has not deposited any amount in a separate Bank Account as no dividend was declared during the financial year under review. (iii) The Company was not required to post warrants to any member of the Company as no dividend was declared during the financial year under review. (iv) The Company was required to transfer the amounts in unpaid dividend account which have remained unclaimed or unpaid for a period of seven years to Investors Education and Protection Fund. However, due to non availability of record the same could not be transferred. (v) The Company has complied with the requirements of Section 217 of the Act. 14. The Board of Directors of the Company is duly constituted. There was no appointment of Additional Director, Alternate Directors and directors to fill casual vacancy during the financial year. 15. The Company has not appointed any Managing Director/Whole-time Director/Manager during the financial year. 16. The Company has not appointed any sole-selling agents during the financial year. 17. The Company was not required to obtain any approval from Central Government, Company Law Board, Regional Director and/or such other authorities as prescribed under the various provisions of the Act except approval under Section 297 of the Companies Act, 1956 during the financial year. However, the same is in process. 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 issued 4,76,300 Equity Share pursuant to conversion of 4,76,300 fully convertible Equity Share Warrants out of total outstanding Fully convertible Equity Share Warrants during the financial year and complied with the provisions of the Act. 20. The Company has not bought back any shares during the financial year. 21. There was no redemption of Preference Shares or Debentures during the financial year under review. 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 not invited/ accepted any deposits including any unsecured loans falling within the purview of Section 58A during the financial year. 24. The amount borrowed by the Company from bank during the financial year ending 31/03/2012 is within the borrowing limits of the Company. 25. The Company has not made any loans or advances or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose, during the financial year. 26. The Company has not altered the provisions of the Memorandum of Association 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 of Association with respect to the objects of the Company during the year under scrutiny. 28. The Company has not altered the provisions of the Memorandum of Association 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 and complied with the provisions of the Act. 30. The Company has not altered its Articles of Association during the financial year. 31. There was 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 deposit from its employees during the year. 33. The Company has not constituted a separate provident fund trust for its employees or class of its employees as contemplated under Section 418 of the Act. For Hemanshu Kapadia & Associates Hemanshu Kapadia Proprietor CP. No. 2285 Date : 1st September 2012 Place: Mumbai Annexure A Registers as maintained by the Company Statutory Registers 1. Register of Charges u/s 143 2. Register of Members and Transfers u/s 150 3. Register of Contracts u/s 301. 4. Register of Directors, Managing Director, Manager and Secretary u/s 303. 5. Register of Directors Shareholding u/s 307. 6. Minutes Book of General Meeting u/s 193. 7. Minutes Book of Board Meeting u/s 193. 8. Register of Application & Allotment u/s 75. 9. Books of Accounts u/s 209. 10. Registers and Returns u/s 163. Other Registers 1. Register of Directors Attendance. 2. Register of Shareholders Attendance. 3. Register of Proxies. 4. Register of Fixed Assets Note: The Company has not maintained the following registers as it was informed that there were no entries/transactions to be recorded therein: 1. Register of Debenture holders u/s 152 2. Register of Deposits under Rule 7 of the Companies (Acceptance of Deposits) Rules, 1975 3. Register of Securities Bought Back u/s 77A 4. Foreign Registers of Members or Debenture holders u/s 157 Annexure B Forms and Returns filed by the Company with Registrar of Companies during the financial year ending 31st March 2012. Form No./ Filled For Date of Whether If delay Return under filing/ filed in filing section (SRN) within whether prescribed requisite time addit- Yes/No -ional fee paid Yes /No 1. Form No.20B 159(1) A.G.M. 22/02/2012 No Yes (Annual held on 24/11/11 Return) 2. Form No. 220 For the FY 21/02/2012 Yes - - 23 AC, ending 23ACA (In 31/03/11 XBRL, Format (Annual Report) 3. From No.66 383(A) Compliance 25/01/2012 No Yes Certificate for the FY ending 31/03/2011 4. Form No.32 303(2) Particulars 07/12/2011 Yes - 264(2) of Changes among the Director 5. Form 8 125,127 Particulars 05/05/2011 Yes - 130 & for creation 132 or modification of charge MANAGEMENT DISCUSSION & ANALYSIS 1 INDUSTRY STRUCTURE & DEVELOPMENTS The Consumer Electronics and Appliance Manufacturers Association (CEAMA) has put its growth estimates, for the home appliances industry at 20 per cent for 2011-12. Over the last five years, most companies in the home appliances basket have seen sales grow at a compounded rate of 25-30 per cent annually. Changing demographics in society, with more nuclear families and increasing percentage of floating population is one-key reason for the growing demand for home appliances. The growing rural demand is another factor that is helping home appliance makers grow sales. The CEAMA opines that over the next five years, rural India will consume 20 per cent of the consumer durable industrys production. On the profit side too, the picture has been quite good for home appliance makers. However, during the year serious inflationary trends were continued to be felt at consumer price levels. The rupee also depreciated sharply which had an adverse impact I across all sections of the economy. Rising cost of inputs such as steel, aluminium, copper, etc. have added to the production cost significantly over the last one year. Maintaining profit margins has been a tough job & there has been a clear dip in operating margins. The Central Government has increased the excise duty on various products including your Companys products. The increase is between 1% and 2%. This will have a cascading effect and push up the end prices of the products. Increase in cost of fuel & electricity and inputs required for production of home appliances add to the cost of the products. However, your Company continues to focus on producing new products of high quality of different price range, penetration in rural markets, exploring global markets, improvement in sales strategy and in turn building brand image leading to the path of profitability. Reduction in excise duty on pressure cooker, brand building and electrification of rural markets shall lead to better performance in upcoming years. 2 OPPORTUNITIES & THREATS Opportunities * Strong Brand. * Strong distribution network * Global presence * Established leadership position in home appliance segment. * The implementation of VAT should help to remove the disadvantage due to activities of unorganized sector. Rise in purchasing power of people Threats * Cheap imports from China and Far East * Uncertain Monsoon * A large number of players in the unorganized sector enjoy price advantage either due to tax concessions or SSI status. Increase in cost of fuel & electricity 3 RISK & CONCERNS Penetration in rural markets: The industry fortunes are linked to the rural income, which is depending to some extent on agricultural production, government off take and monsoon in the country. Globally competitive market: The Indian Market is facing tuff competition from global markets including new entrants. Due to high technology support and Research and Development, Global competitors are able to produce innovative and value-for-money products. Indian appliance producers have failed to focus on harnessing the power of theirbrands in smaller town markets and lower price points. Small town customers today are equally bitten by the consumerism bug and global players have successfully banked on this opportunity to drive penetration of their products into these untapped areas. The domestic, regional and global macroeconomic environment directly influences the demand of consumer durable products. Any economic slowdown can adversely impact demand supply dynamics and profitability of all industry players, including Kanchan. However, the Companys operations have historically shown significant exposure to the resilience to the fluctuations of economic and industry cycles, with demand for most of its key products continue to grow at healthy rates even at times of an overall economic slowdown. Kanchan has insured its assets and operations against a wide range of risks, as part of its overall risk management strategies. The export constitute a very small part of Companys sales and is also not dependant on global markets for imports and since Indian economy is not badly hit due to global slowdown, your company does not see any negative growth. Currency fluctuation related risk: The falling of Indian Rupee in the International Market has impacted our import. The Fluctuation in the Indian Currency has adversely impacted our buying Costs. 4 INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY We have always believed that transparency, systems and controls are important factors in the success and growth of any organization. Your Company has a proper and adequate system of Internal Controls, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and that transaction are authorized, recorded and reported correctly. Your Company has appointed Mr. Anil Jain as Internal Auditor of the Company. Mr. Anil Jain carries out the internal audit and internal control/systems on periodic basis, close monitoring thereof to strengthen and modify the same from time to time to meet the changing requirement of the Company. The deviation from the norms are first informed to the concerned operating person for corrective actions and in case of need, these are brought to the notice of the concerned head of the unit or the department, as the case may be. The Internal Auditor constantly looks into the areas where there is a possibility of saving in cost and submits his suggestions to the concerned operating departments. All major findings and suggestions are complied and reported to the Audit Committee of the Directors on a quarterly basis or earlier if so required. It operates at all the Plants at Daman and other business locations but centrally controlled from the corporate office at Mumbai. We believe that we have a sound internal control system in our Company. 5. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: Management Discussion and analysis of the Companys operations and financial consolidation together with discussion on financial performance with respect to operational performance should be read with conjunction with the financial statements as given below: FINANCIAL PERFORMANCE: (Rs. in Lacs) Financial Year ended 2011-12 2010-11 2009-10 2008-09 2007-08 Sales 4085.76 4419.73 3703.61 3466.43 2852.00 Profit before depreciation, Interest & Tax (EBD1T) 1364.74 469.73 170.93 242.21 (262.97) Depreciation 46.89 48.29 48.24 45.08 44.92 Profit After Tax 16.42 (60.22) (109.13) 3.59 (437.41) Equity Share Capital 36.864 321.01 321.01 321.01 321.01 Reserves & Surplus - - - - - Earnings per Share 0.51 (1.88) (3.40) 0.11 (13.63) Sales per Share (Rs.) 110.83 1137.66 115.37 107.99 88.86 6. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES/INDUSTRIAL RELATIONS The biggest strength of the Company has always been its people. Only with their participation we have managed to achieve a healthy work culture, transparency in working, fair business practice and a passion for efficiency. The Company follows a unique, homegrown philosophy of allowing people to set their own targets and give them the freedom to achieve them: I can. This philosophy has spread across all our employees and has been a constant source of motivation for our people. Further, to enhance their skills and enrich their experience, the Company provides continuous training. This includes workshops, courses, seminars and visit to the Companys plants. Of late, we have also started in-house conferences for various disciplines. Employees from all our offices are invited to participate. It is a useful forum for sharing experiences, ideas, innovations and developmental work undertaken in their respective work places. From the beginning, we have followed a progressive policy of taking keen interest in the well-being and progress of our people. All of this, we believe, has nurtured a strong sense of belonging among our people. 7. CAUTIONARY STATEMENT Statement in the Management discussion & analysis describing the Companys objectives, projections, estimates & exceptions may be forward looking statements within the meaning of applicable securities laws & regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the companys operations include economic conditions affecting demand/ supply and price conditions in the domestic & overseas markets in which the company operates changes in the Government regulations, tax laws & other statutes & other incidental factors. 8. FUTURE OUTLOOK: Our focus, as in the past has always been to continuously strengthen our competitive position through aggressive test management, excellent operational efficiencies without sacrificing the long term growth of the potential of our business. We expect to deliver higher volume in all our businesses. We also expect the market to stabilize in the near future. We further expect that our intensified focus on cost control will yield result and that we derive additional benefit from our going programme to reduce our operating cost. We aim to complete our ongoing projects on or ahead of schedule and within budgets. Despite negative market condition and extremely competitive market, we remain focused on our basic objectives of achieving a least cost position and developing low capital cost position and developing low capital cost projects. We have responded decisively to current market conditions and remain very well placed to prosper through the commodity cycle. For and on behalf of the Board, Date : 1st September 2012 Dinesh C. Khimavat Place: Mumbai Chairman & Managing Director