Maharashtra Elektrosmelt Ltd merged Directors Report

MAHARASHTRA ELEKTROSMELT LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT To The Members, The Directors have pleasure in presenting the 37th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2010. FINANCIAL REVIEW: The financial year 2009-10 started with uptrend in demand for iron and steel products and buoyancy in the steel prices during the year after the unprecedented global economic slow down in the second half of the previous year. Sinceferro alloys are exclusively utilized as raw materials in steel industry, the ferro alloys industry witnessed uptrend in the demand and better prices for ferro alloys during the year. Your Company has achieved a turnover of Rs.382.06 crores (including conversion income of Rs.310.61 crores) as compared to Rs.425.06 crores (including conversion incomeof Rs.353.02 crores) in the previous year. The Company has achieved an improved performance in terms of financial results and earned a net profit (before tax) of Rs.79.23 crores despite considerable increase in power tariff. This is due to strategic measures taken by the Management viz. increasein production and sales, better product mix, improved technoeconomic parameters, optimization in procurement and continuous emphasis on cost reduction, prudent funds management. The financial results are as summarized below : 2009-2010 2008-2009 (Rs.in crores) (Rs.in crores) Turnover (Gross) 382.06 425.06 Operating Profit/Loss (-) 81.89 64.53 Interest 0.18 0.26 Depreciation 2.48 2.19 Net Profit/Loss(-) before Tax 79.23 62.08 Income Tax Provision 31.33 21.19 Net Profit/Loss(-) after Tax 47.90 40.88 Proposed Dividend 9.60 8.40 Tax on proposed dividend 1.63 1.43 Considering the consistency in performance of the Company, the Directors have recommended dividend @ Rs.4/- per share on the paid up capital of the Company subject to approval of the Shareholders. A sum of Rs. 4.80 crores has been transferred to the General Reserve during the year. PRODUCTION REVIEW: The Companys production of different grades of ferro alloys was as under: Material 2009-10 2008-09 (MT) (MT) High Carbon Ferro Manganese 71062 68789 Silico Manganese 42149 35640 Medium/ Low Carbon Ferro Manganese 1605 1763 Company had to operate Furnace-ll for ten months and Fumace-l for one month for Silico Manganese production. In order to meet enhanced demand for SAIL Plants. Furnace-l was operated for producing Ferro Manganese for eleven months and Furnace-ll for two months for production Ferro Manganese. SALES & MARKETING REVIEW: SAIL STEEL PLANTS: During the financial year 2009-10 the Company continued conversion arrangements with SAIL Steel Plants in order to have secured market. Vigorous efforts were made by the Company to find market outside SAIL. Despatches of ferro alloys to SAIL steel plants under conversion arrangements during the year were as under: Material 2009-10 2008-09 (MT) (MT) High Carbon Ferro Manganese 66850 61015 Silico Manganese 33542 29662 Medium/Low Carbon Ferro Manganese (Direct Sales) 1204 1448 Silico Manganese (Direct Sales) 192 - OTHER CUSTOMERS: The Company continued to achieve a growth in terms of sales realization through sale of ferro alloys to customers other than SAIL Plants. The details of sales performance in 2009-10 vis-a-vis 2008-09 are as under: 2009-2010 2008-2009 Material Quantity Value quality Value (MT) (Rs.in (MT) (Rs.in Lacs) Lacs) High Carbon Ferro Manganese 5275 2102.74 3127 2122.95 Sico Manganese 7054 3292.13 4710 2785.43 Medium Carbon Ferro Manganese 214 143.51 16 22.88 Others (Slaq& others) - 325.83 - 257.78 Total 12543 5864.21 7853 5189.04 RESEARCH & DEVELOPMENT: Major in-house development projects undertaken in the technical area were : * Installation and commissioning of new booster blower (Booster D) in Booster House resulting in energy saving. * Upgradation of SAF Automation System by replacing S5135U by S7-300 system. * Modification and installation of new scale discharge vibrators and energy efficient vibrators in Bunker House. * Digitalization of all the drawings with soft copy and computerization of Drawing Office with facility of A-4 size drawing, scanning and printing of drawing upto A-0 size on plotter. / Development of indigenous source of supply for membrane housing seal. * Mechanization of product handling/breaking to improve the labour productivity and yield. * Construction of additional storage bunkers to feed low cost raw materials to furnaces. HUMAN RESOURCES MANAGEMENT REVIEW: Human Resources has been MELs greatest strength. Considering the increased activities the focus and thrust has been on optimum manpower utilization and improvement in production and productivity. Redeployment of employees has been carried out during the year considering the cross sectional requirement in the Company. The Human Resource Development (HRD) activities have been focused on enhancement of Technical and Managerial skills with thrust on multi-skill training and exposure to modern management techniques. During the year 353 employees were trained in various areas. The Company continues to recognize excellence in performance and innovation and has awarded 3 Executives and 14 Non-Executives for their individual contribution with 9 groups awards on Republic Day, 2010. The Companys Scholarship for Meritorious wards has been awarded to 5 children during the year. The Company has also motivated 76 Bright Pupils by honouring them with awards for their best performance in academics. The Company in association with the National AIDS Control Organisation (NACO) has actively participated and promoted the Information, Education and Communication (IEC) under the campaign for HIV/Aids awareness programme. The manpower strength of MEL as on 31st March, 2010 was 714 comprising 589 Non-executives and 125 Executives. The Presidential directives for Scheduled Caste and Scheduled Tribe continued to be implemented and monitored on regular basis. Out of total manpower, 13.45% were Scheduled Caste, 7.84% Scheduled Tribes and 56.61% Other Backward Castes. The Company has been continuing thrust on the implementation of Official Language Policy of Government of India. The Company has been continuously focusing on improving safety standards in the Company by conducting safety workshop/programme to inculcate safety awareness amongst the employees and workers in the factory premises. Several safety measures have been introduced with intensive safety awareness drives to make the work place safe and hazard free. Harmonious Industrial Relations has been the support behind the high production and high productivity. During the year the Industrial Relations remained harmonious and peaceful with full support and co-operation of the Trade Union and Officers Association. ENVIRONMENT: Environment Management and Pollution Control is always accorded top priority in companys activities to comply with applicable legal and other requirements related to its environmental aspects and try to go beyond. To keep environment clean for ecological protection, focused attention was given in the areas of green belt development in and around the plant premises, solid waste management, monitoring of liquid effluent and air ambient for various environmental parameters. Following special efforts were taken during the financial year for enhancing the effective environment management at MEL: a) Consent to operate under the Air (P&CP) Act, The Water (P&CP) Act and The Hazardous Waste (Management, Handling and Trans boundary Movement) Rules is valid upto 31/12/2011. b) Major breakthrough achieved in disposal of solid waste SiMn Granulated slag to WCL for stowing in underground coal mines. About 3.80 lakhs MT of slag has been disposed of. c) Installation work has been started for Dry Fog Dust Suppression system at raw materials charging system to control dust emission at various transfer points during charging of raw materials to furnace. d) Monthly monitoring of environment parameters for exercising better control over working of Pollution control equipment. e) Spraying water on plant roads with mist spray system for controlling fugitive emission due to vehicular movement on plant roads. f) Cleaning of effluent pond in record time for controlling Suspended Solids in discharge effluent. CARPORATE SOCIAL RESPONSIBILITY: MEL has been serving the community located in the periphery of its premises which includes 14 villages in Mul Tahsil, Chandrapur District. In the year 2009-10 the focus of its activities remain on the benefit to the community at large for development of Villages in terms of education, health, self employment and infrastructural facilities, etc. In the year 2009-10, your Company has conducted six medical camps covering Gynaeco and General Health for ladies, eye check-up camps for men and women, plastic surgery for children and facilitating heart patients referred to Nagpur for heart surgery. This benefited 1500 residents of nearby villagers and mofussil around MEL. The Company has continued to distribute school bags and stationery items to 16 Schools and 7 Anganwadies benefiting 1717 children. It has also reached out Aikal Vidyalayas located inside the forest and distance villages. For upliftment of the sports, the Company has sponsored Badminton, Chess, Cricket, Throwball, Football, Kabaddi, Aquatics, Tennis & Volleyball tournaments during the year. The Company has contributed for cleaning and beautification of Ramala Talav a major water reservoir at Chanrdapur, construction of compound wall before the Community Center of Neharu Nagar, bifurcator on Chandrapur - Nagpur Road and providing drinking water facilities in the District Stadium towards community development. The Company has provided material support, basic necessities and medical check- up to blind, orphanages, physically challenged persons. The Company has also extended support for self employment scheme like providing training for stitching and cutting classes to 28 ladies each of Borda and Valani village and training and Driving Licenses for Light Motor Vehicle to 20 residents of Borda and Valani village. The development activities carried out during the year have benefited the villagers and also enhanced the image of the Company. TOTAL QUALITY & INDUSTRIAL SAFETY: Quality Management System (QMS) in accordance with ISO-9001-2000 International Standard was successfully maintained in MEL during 2009-10. Transaction Audit of ISO-9001-2008 QMS of MEL was carried out successfully by certifying agency M/s.LRQA, Mumbai, on 22nd to 23rd September, 2009 and they recommended for ISO-9001-2009 for the next two years with additional three departments - Sinter Plant-l & II and 4.2 MW Power Plant. HIGHLIGHTS OF SAFETY PERFORMANCE: * No fatal accident during the year. Reduction in reportable accidents by 75% over the previous year. * Out of 23 departments, 22 departments maintained Zero Reportable Accident level. * Eleven months were celebrated as Zero Accident Months except June, 2009. * 100% use of Crash Helmets by two wheeler riders. * Fire, Safety and Yoga training programmes were organized by HRD which has resulted in improving health, moral and positive attitude and safety awareness of employees. MERGER OF MEL WITH SAIL: The Expert Group constituted by the Ministry of Steel, Govt. of India, to evaluate the Feasibility of proposals for merger of PSUs, has recommended for merger of MEL with SAIL. MEL Board in its Meeting held on 26th May, 2006, approved in principle for merger of MEL with SAIL subject to the provisions of Companies Act, 1956. The Board in its Meeting held on 27th August, 2009 has approved the draft Scheme of Amalgamation of MEL with SAIL. The Ministry of Steel, Govt. of India, has accorded approval to the draft Scheme of Amalgamation of MEL with SAIL. MEL has submitted Application U/s 391 to 394 of the Companies Act, 1956, for Amalgamation of MEL with SAIL to the Ministry of Corporate Affairs, Govt. of India. The Honble Joint Secretary, Ministry of Corporate Affairs, Govt. of India, has held hearing on this Application on 5th May, 2010, and passed Order on 1st June, 2010 for convening meeting of the equity shareholders of MEL and SAIL for consideration and approval of the Scheme of Amalgamation of MEL with SAIL. FUTURE PLAN: * Installation of one number 45 MVA Submerged Arc Furnace for production of Ferro Alloys. * Installation of Dust Suppression System at Raw Materials charging system. * Parallel operation of Sinter Pots in Sinter Plant No.ll for increasing sinter production. * Acquisition of Mining Lease for Manganese Ore. * Electrification of MEL Railway Sidings. * Use of CO gas in place of fire wood for baking of Carbon Paste. * To reduce the cost of production of Ferro Alloys by: a) Partial replacement of charcoal by coal. b) Exploring Mn Ore mines from Gua mines and use thereof. c) Production of LGHS Mn Ore Sinter and use in Silico Manganese production. Special Projects at MEL: Installation of 67.5 x 2 MW Power Plant: Techno-economic/pre-feasibility report for 67.5 x 2 MW Captive Power Plant at MEL, Chandrapur, prepared by MECON, Ranchi, has been received from NSPCL, New Delhi. The report is under examination. REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC. Information in accordance with the provisions of Section 17(1)(e) of the Companies Act, 1956 read with the ompanies (Disclosure of Particulars in the Report of Board f Directors) Rules, 1988 regarding Conservation of Energy, echnology Absorption and Foreign Exchange Earnings and utgo, is given at Annexure - I, II & III respectively to this Report. Your Company is a designated consumer and Energy Audit is mandatory for designated consumers through Accredited Energy Auditors. Energy Audit was conducted on Submerged Arc Furnaces and its Auxiliaries in March, 2009, according to Energy Conservation Act, 2001, by Accredited Energy Auditors M/s. Petroleum Conservation Research Association, Mumbai. MEL has complied with the provisions of Energy Conservation Act, 2001. PARTICULARS OF EMPLOYEES: There was no employee of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. DIRECTORS: Shri B.B. Singh has been appointed as Director w.e.f. 12th November, 2009. Shri P.K. Bajaj ceased to be Director w.e.f. 20th November, 2009. Shri R. Ramaraju ceased to be Director w.e.f. 1st April, 2010. Shri S.N. Singh has been appointed as Director w.e.f. 22nd April, 2010. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed : i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; ii) that the directors had 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 that period; iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) that the directors had prepared annual accounts on a going concern basis. CORPORATE GOVERNANCE: In terms of listing agreement with the Stock Exchange a compliance report on Corporate Governance is given at Annexure-IV to this report. The Management Discussion & Analysis Report is given at Annexure-V. A certificate from Auditors of the company regarding compliance of conditions of Corporate Governance is placed at Annexure-VI to this report. In terms of Listing Agreement, the Board has laid down a Code of Conduct for all Board Members and SeniorManagement of the Company. All the Board Members and Senior Management personnel have affirmed compliance with the Code. AUDITORS REPORT: The Statutory Auditors Report on Accounts of the Company for the financial year ended 31st March, 2010 along with Managements replies are enclosed. The comments of Comptroller and Auditor General of India under the Section 619(4) of the Companies Act, 1956 on the accounts of the Company for the year ended 31st March, 2010 are enclosed at Annexure-VI I. ACKNOWLEDGEMENT: The Board of Directors take this opportunity to express their appreciation for the support, Co-operation and loyalty extended by every employee of the Company. They wish to acknowledge the continued support extended by Steel Authority of India Limited. The Directors also greatly appreciate the excellent support the Company received from Shareholders, Auditors, Bankers, Financial Institutions, Central & State Governments, Local Authorities, Maharashtra Electricity Regulatory Commission (MERC), Maharashtra State Electricity Distribution Company Limited (Maha Vitaran) and the Suppliers and Customers. For & on behalf of the Board Sd/- (S.N. Singh) Chairman Place: Rourkela. Date : 24th June, 2010 PARTICULARS REQUIRED UNDER THE COMPANIES: (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988. CONSERVATION OF ENERGY: Major areas of energy conservation include: * Optimization of electric power cost. * Gainful utilization of waste gas of submerged arc furnaces for generation of power through 4.2 MW gas based Power Plant. * Operation of electrical system at unity power factor to improve utilization of electrical energy and obtain incentive. * Optimum operation of submerged arc furnaces to achieve consistent incentive against Load Factor. * Statistical Process Control for control of critical elements in Ferro alloys. * Replacement of old reciprocating type air compressors with new screw type air compressors having better efficiency. * Installation of closed impeller type energy efficient gas blower in Booster House. * Installation of energy efficient electromagnetic vibrators in Bunker House. * Conservation of water by re-circulation after effluent treatment. * Gainful utilization of waste water for mechanized jigging. * Compliance of energy conservation measures as identified during Energy Audit. ANNEXURE - II FORM A CONSERVATION OF ENERGY POWER & FUEL CONSUMPTION 2009-2010 2008 2009 ELECTRICITY 1. PURCHASED Unit Million / kwh 337.42 314.42 Total Amount Rs/Lakhs 15259.47 13079.02 Rate Rs./kwh 4.52 4.16 2. OWN GENERATION Million/kwh (Gross) 24.75 21.77 3. COAL Tonne 1121.85 NIL 4. FURNACE OIL Unit KL 102.12 228.67 Total Amount Rs./Lakhs 29.50 66.40 Rate Rs./KL 28889.30 29038.67 CONSUMPTION PER UNIT OF PRODUCTION: Product Electricity Furnace Oil Coal (Kwh/Tonne) (KL) (Tonne) 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 Ferro Manganese 2620 2630 - - - - Silico Manganese 3836 3870 - - - - Medium Carbon 1169 1150 - - - - ANNEXURE - III FORM B RESEARCH & DEVELOPMENT (R&D): 1. SPECIFIC AREA IN WHICH R&D CARRIED OUT BY THE COMPANY. * Use of Si MnO Slag in Coal Mines to replace sand in stowing. 2. BENEFITS DERIVED AS A RESULT OF ABOVE R&D. * Use of Si MnO Slag in Coal Mines paves way for disposal of Si MnO Slag and conserves sand which is a depleting natural resource. 3. FUTURE PLAN OF ACTION: * Installation of one number 45 MVA Submerged Arc Furnace for production of Ferro Alloys. * Installation of 67.5 x 2 MW Power Plant by NSPCL. * To reduce power cost, wheeling of power from BSP, Bhilai or other agencies. * Reduce the cost of production of Ferro Alloys by: a) Partial replacement of charcoal by coal. b) Use of Manganese Ore from Gua Mines of Steel Authority of India Limited. c) Use of LGHS Sinter for SiMn production. * To acquire Manganese Ore Mines on Lease. * Electrification of MEL Railway Sidings. 4. EXPENDITURE ON R&D: Research work is undertaken in house as such no specific expenses on R&D are apportionable. TECHNOLOGY ABSORPTION. ADAPTATION AND INNOVATION * Utilisation of iron ore fines for production of iron ore sinter and subsequent usage in SAF-II for SiMn production. * Maintain unity power factor and load factor above 80% by optimizing utilization of power. FORM C FOREIGN EXCHANGE EARNINGS & OUTGO: Rs. / Lakhs EARNINGS : NIL OUTGO : NIL MANAGEMENT DISCUSSION & ANALYSIS REPORT (MDAR): The Management of Maharashtra Elektrosmelt Limited presents its analysis report covering performance and outlook of the Company. INDUSTRY STRUCTURE & DEVELOPMENT: General Economic Environment: Recovery in the global economy picked up momentum in the fourth quarter of 2009. The speed of recovery however remains significantly divergent a tepid recovery in many advanced countries and a much stronger one in most emerging and developing economies. World output growth for 2010 projected at 4.2%, signals a strong recovery compared to recessionary trend in 2009 when the global output shrank by 0.6%. The reason for optimism is attributable to - expected strong performance by the merging economies, recovery in the developed world, restocking of inventories and rebound in global trade which had shrunk by 10.7% in 2009. During 2010 and 2011, the world trade volume of goods and services is expected to increase by more than 6% per annum. While the emerging and developing economies are performing strongly, emerging and developing nations registered a growth of 2.4% during 2009 which is expected to increase to 6.3% and 6.5% respectively for 2010 & 2011. The challenge to the emerging economies is mainly management of inflation. The Indian economy has maintained the path of momentum in recovery for 2009-10. RBI has projected a GDP growth of 7.2% compared to 6.7% for the previous year. The impact of bad monsoon is visible on performance of agriculture sector which has declined by 0.2%, however, strong growth of 8.2% for industry and 8.7% for services have led to the recovery of overall GDP. IMF has projected a growth of 8.8% of Indian economy for 2010 and 8.5% for 2011. The recovery in the global steel industry became evident from June 2009 when the crude steel production crossed 100 million tonnes after a gap of eight months. The capacity utilization which had dropped from 86% in July 2008 to 58% in December 2008, recovered to 80% in February 2010. World Steel Association (WSA) in its latest demand forecast has projected a world wide steel consumption growth of 10.7% during 2010 and 5.3% in 2011. The emerging economies which remained positive in growth through the crises will be driving the world growth. The year 2011 is projected to take the global steel consumption to a new peak of 1.3 billion tonnes. The consumption of finished carbon steel in India 2009-10 has been estimated at 53 million tonnes - a growth of 7.8% over the previous year. Overall saleable carbon steel production has been estimated at 56.8 million tonnes for the year 2009-10. WSA has projected a growth of more than 13% for India during 2010 and 2011, with the overall consumption reaching 72 million tonnes by 2011. Since ferro alloys are exclusively utilized as raw materials in steel making, the growth in ferro alloy consumption is directly related to the growth in steel consumption. Demand for ferro alloys in India: The demand for ferro alloys largely depends on the production of steel in the country and export potential. With the present production level of 55 million tonnes of crude steel in the country, the demand of manganese based ferro alloys hovers around 8,50,000 tonnes. The production of manganese based ferro alloys is, however, more to meet the requirement of export market also. The steel industry in Asian region is poised for growth in immediate future and the trend may continue for some more years. The impacts of the current global financial crisis on India shows that our economy is not decoupled from the mature market economies of the West. However, the Indian Steel Industry is poised for a massive growth in production capacity to cater to the growing transportation, infrastructure, capital goods and consumer goods sector in the country. Thus, assuming that Indias steel production capacity will grow at much higher rate than indicated in the National Steel Policy, the growth potential for manganese based ferro alloys is expected to be high. Capacity for ferro alloys production: As on date, there exists over capacity in the ferro alloys production. With the gradual increase in requirement of ferro alloys in the domestic market as well as export market, the industry is likely to operate at its rated capacity utilization level only if no raw material constraints are faced. Exports: Since export of ferro alloys is not profitable, export of ferro alloys was not carried out during the year 2009-10. Position of MEL: MEL continues to be one the largest producers of manganese based ferro alloys in the country with about 15% share in the domestic market. It caters mainly to the requirement of its Holding Company viz. SAIL. OPPORTUNITIES & THREATS FOR MEL: Opportunities: MEL has integrated large-scale facilities for the production of manganese based Ferro-alloys. It has, therefore, competitive edge in terms of specific consumption of inputs and operational efficiency. MEL has a track record of achieving furnace capacity utilization of more than 100% of its rated capacity and achieved capacity utilization of 135% in 2009-10. In order to meet the growing requirement of Ferro alloys at SAIL, MEL has taken up an ambitious project for installation of another 45 MVA capacity Submerged Arc Furnace to cater the requirement of SAIL Plants. MEL has 4.2 MW Power Plant using furnace waste gas as a fuel. This has provided good scope for savings on account of power and fuel expenses. To reduce increasing power tariff, MEL has taken up with NSPCL for installation of Captive Power Plant and wheeling of power from BSP, Bhilai, MEL has taken up cost reduction measures particularly through waste utilization, improvement in productivity, reduction in purchase price, right sizing of manpower and electrical power management through load management. Threats: MEL has no captive power plant. There has been steep hike in power tariff. The company may face adversity affecting the techno-economics. MEL has no captive mines for basic input like Manganese Ore and it has to depend mainly on MOIL for high grade ore. SEGMENT WISE OR PRODUCTWISE PERFORMANCE: The production has been increased during the year and the capacity utilization was 135%. The production performance of ferro alloys viz. HC FeMn, MC FeMn, SiMn and other areas like Mn Ore Sinter, Power Generation, etc. was satisfactory. OUT LOOK: With the increase in production of steel in the country, the domestic demand of Ferro alloys is expected to increase. The company has a good potential with motivated and dedicated workforce. It has maintained its quality standard. It has the capacity to cater to the SAIL Plants in addition to supply to non-SAIL customers including exports. However, it needs help from State Government by allocating prospecting licenses for Iron Ore & Manganese Ore, which are the major raw materials for ferro alloys production. RISK AND CONCERNS: Availability and quality of raw materials particularly Manganese Ore is the major concern for MEL. The Companys operation may get adversely affected due to scarcity of Manganese Ore and deterioration in its quality. Also area of concern for MEL is high power tariff and dependence on Maharashtra State Electricity Distribution Company Limited. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE. MEL has conversion contract with SAIL. Major raw materials i.e. Manganese Ore and Coke are provided by SAIL for conversion of the same into Ferro Alloys. Conversion charges are paid by SAIL to MEL based on negotiated rate on yearly basis. During the year the company has achieved a turnover of Rs.382.06 crores as against Rs.425.06 crores in the previous year. Value of sales through conversion arrangement was Rs.310.61 crores as against Rs.353.02 crores during the previous year. On the operational front, company has achieved a capacity utilization of 135%. Sales of ferro alloys (all sizes) during the year were 114332 tonnes as against 99978 tonnes during the previous year. The company has achieved improved performance and earned a post tax net profit of Rs.47.90 crores as against the profit of Rs.40.88 crores in the previous year. This is due to strategic measures taken by the Management viz. increase in production and sales, better product mix, improved techno- economic parameters, optimization in procurement and continuous emphasis on cost reduction, prudent funds management, etc. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS: The Human Resource at MEL has always been the foundation behind its success. During the year the thrust has been on increasing the production and productivity through optimum manpower utilization. The Human Resource Development (HRD) activities have been focused on enhancement of Technical and Managerial skills with thrust on multi-skill training and exposure to modern management techniques. During the year 353 employees were trained in various areas. MEL continued its contribution to the society as a socially responsive organisation through various initiatives. MEL in association with National AIDS Control Organisation (NACO) has actively participated and promoted the Information, Education and Communication (IEC) under the campaign for HIV/Aids awareness programmes. The manpower employed by MEL as on 31st March, 2010 was comprising of 125 Executives and 589 Non-executives out of which 13.45% were Scheduled Caste, 7.84% Scheduled Tribes and 56.61% Other Backward Castes. CARPORATE SOCIAL RESPONSIBILITY: MEL has been carrying out activities under caption Reaching out to the Society in the area of Corporate Social Responsibility (CSR). It has been structuring and implementing the CSR initiatives in line with Holding Company viz. SAIL with the underlying philosophy and credo to make a meaningful difference in the lives of people. The Companies business philosophy encompasses in triple bottom line approach covering the economic, environmental and social dimensions reflecting MELs commitment to building natural, human and societal capital. The focus of the activities remained on benefit to the community at large for long and healthy life, having a decent standard of living. By systematically addressing issues such as village upliftment in terms of education, health and medical welfare, access to water, sanitation, power and roads, womens empowerment, self employment, generation of local employment and infrastructural facilities, etc., MEL has contributed to the development of neighbouring villages and communities in and around MEL at Chandrapur. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY: The Company has an adequate system of internal controls for achieving the following business objectives of the Company. * Efficiency of operations. * Protection of resources. * Accuracy and promptness of financial reporting. * Compliance with laid down policies and procedures. * Compliance with laws and regulations. In MEL, Internal Audit is a multi disciplinary function which reviews, evaluates and appraises the various systems, procedures/ policies laid down by the Company and suggests meaningful and useful improvements. It helps management to accomplish its objectives by bringing a systematic and disciplined approach to improve the effectiveness of management towards good corporate governance. The Company has taken a number of steps to make the audit function more effective. The Internal Audit is subjected to overall control environment supervised by Board Level Audit Committee, providing independence to the Internal Audit function, emphasizing transparency in the systems and internal controls. Annual Audit Plans are based on identification of key- risk areas with thrust on system/process audits and bench marking of the best practices followed in the Plants so as to achieve over all efficiency improvement including cost reduction in operation of the Company. Development of Internal Audit Executives, bringing awareness amongst Auditees, converging on the pro-active role of Internal Audit remained other focused area during the year. The Internal Audit system is supplemented by well-documented policies, guidelines and procedures and regular reviews are being earned out by our Internal Audit Department. The reports containing significant audit findings are periodically submitted to the management and Audit Committee of the Company. CAUTIONARY STATEMENT: Statement in the Management Discussion and Analysis, describing the Companys objective, projections and estimates are forward looking statement and progressive within the meaning of applicable security laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors.