mardia extrusions ltd Directors report

MARDIA EXTRUSIONS LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT To The Members, Your Directors have pleasure in presenting the 31st Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2011. FINANCIAL RESULTS: CURRENT YEAR PREVIOUS YEAR (Rs. in Lacs) (Rs. in Lacs) OPERATING PROFIT/ (LOSS) (PBIDT (38.52) 9.38 Interest & Financial Charges 0.59 0.35 PROFIT/ (LOSS) BEFORE DEPRECIATION & TAXATION (39.11) 9.03 Depreciation 4.83 4.87 PROFIT/ (LOSS) BEFORE TAXATION (43.94) 4.16 Provision for Taxation 0.09 0.31 NET PROFIT/(LOSS) AFTER TAX (43.85) 4.47 DIVIDEND: In view of companys present financial conditions, and carry forward losses, your Directors do not recommend any dividend for the year ended 31st March 2011. OPERATIONS AND PROSPECTUS: During the year under review the Gross income from operations amounted to Rs 904.75 lacs as compared to Rs. 321.99 Lacs for the year 2009-2010. The increase in the turnover has occurred mainly on account of general economic condition, increase in demand for the Companys Products, and good orders from defense and increase in the prices of copper & brass in international markets, which also affected the Companys business growth. After Considering the Provision for Depreciation of Rs. 4.83 lacs, and prior period adjustments thereto, the Net loss for the year under review has amounted to Rs. 43.94 lacs against a profit of Rs. 04.16 lacs for the previous year. REGISTRATION WITH HONBLE BIFR: As per the audited accounts as on 31.03.2001 the Companys net worth had been fully eroded and the Company filed a reference with BIFR u/s 15 (I) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company has been registered with BIFR and Union Bank of India, has been appointed as the Operating Agency. Under the directions of BIFR the Company has already filed its Draft Rehabilitation Scheme (DRS), which is presently pending with Honble BIFR for final approval. Barring unforeseen circumstances, your Directors are hopeful of improving the performance of the Company during the current year as-the company is merging with its group company Mardia Tubes Limited (MTL) & Mardia Samyoung Capillary Tubes Company Limited (MSL). PROPOSAL FOR MERGER OF GROUP COMPANIES: In order to improve the shareholders value and to augment the strength and achieve the synergy among the group companies, which are all registered with BIFR, the Board of Directors, subject to approval of the required authorities, have submitted a rehabilitation scheme to BIFR, including the possible turnaround of the group companies together by way of merger and provide liquidity to the stakeholders at large. PROPOSAL FOR DELISTING OF SHARES FROM AHMEDABAD STOCK EXCHANGE: The Companys shares are listed with Bombay Stock Exchange Limited (BSE) and Ahmedabad Stock Exchange and considering the trading of shares of the Company have taken place always at BSE and for improving the cost cutting measures; it is proposed to apply for delisting the shares of the Company from Ahmedabad Stock Exchange. APPOINTMENT / RE - APPOINTMENT OF DIRECTORS: The Brief profiles of Directors being appointed at the ensuing Annual General Meeting forms part of notice convening 31st Annual General Meeting. In accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company, Mr. Virendra Sinh Devda & Mrs. Omana Nayak who retires by rotation, at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment. AUDITORS: M/s SHYAMC. AGRAWAL & COMPANY, Chartered Accountants, auditors of the Company holds office until the conclusion of the ensuing Annual General Meeting. The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224 (IB) of the Companies Act, 1956. Accordingly, the Board recommends their re-appointment as Auditors of the Company at the ensuing Annual General Meeting. AUDITORS REPORT: Notes on Accounts referred to by the Auditors in their Report are self explanatory and therefore do not require any further clarification. FIXED DEPOSITS: The Company has not accepted any deposits during the year within the meaning of Sections 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975. PARTICULARS OF EMPLOYEES: No employee of the Company draws remuneration exceeding the limits under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companys (Particulars of Employees) Amendment Rules, 1988. DISCLOSURE OF PARTICULARS U/S 217 (I) (e) OF THE COMPANIES ACT, 1956: The Company has taken adequate steps to conserve energy at all levels. An in-house team comprising of experts, regularly keep a check on all the energy conservation systems applied by the Company at the work place. At regular intervals the reports and findings of this team are discussed by the senior management. The Energy Conservation system of the Company gives emphasis on: I. Personnel specially trained for this task. II. Research on use of such components in the equipments and final product which will maximize energy conservation. III. Proper maintenance of all machinery & other equipment and timely replacement of worn-out components. IV. Maximum utilization of available resources. In accordance with the provisions of Section 217 (I) (e) of the Companies Act, 1956 the required information relating to conservation of energy, technology absorption and Foreign Exchange earning and outgoing is annexed to the report. DIRECTORS RESPONSIBILITY STATEMENT: In terms of Section 217(2AA) of the Companies Act, 1956, we, the Directors of MARDIA EXTRUSIONS LIMITED, state in respect of Financial Year 2010-11 that: a) In the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; b) The Directors have selected such 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 Loss of the Company for that period; c) 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; d) The Directors had prepared the annual accounts on a going concern basis. AUDIT COMMITTEE: a) Pursuant to the provisions of Section 292A of the Companys Act, 1956, the Board has constituted an Audit Committee comprising of four independent Directors, and one executive Director, inter alia for holding discussions with the Auditors periodically, review of quarterly, half yearly and annual financial statements before submission to the Board, review of observations of Auditors and to ensure compliance of internal control systems; b) The Audit Committee has also been delegated with authority for investigation and access to full information and external professional advice for discharge of the function delegated to it by the Board; c) The Board agrees that the recommendations of the Audit Committee on any matter relating to finance and management including the audit report would be binding On the Board; and d) based on the above and the Internal Audit System, the Audit Committee, the Board opines that the Company has internal control system commensurate with the size of the Company and the nature of its business. CORPORATE GOVERNANCE: As required under clause 49 of the Listing Agreements with the Stock Exchanges, Corporate Governance and Management discussion and Analysis Report form part of this Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors certificate confirming compliance of the Corporate Governance is attached to the Report on Corporate Governance. ACKNOWLEDGMENT:: Your Directors are pleased to place on record their appreciation of the value, contribution, devotion and sense of commitment extended by the employees of the Company, which inspires confidence to plan for greater accomplishments in the current financial year. Your Directors would also like to place on record its sincere appreciation for the whole hearted support and contributions made by the various Financial Institutions, Banks, Central, State Government and Local bodies, Distributors, Suppliers and other business associates towards conduct of efficient operations of your company. For and on behalf of the Board of Directors Place: Mumbai Dated: 31st August, 2011. SURENDRA MARDIA Chairman ANNEXURE A TO THE DIRECTORS REPORT: PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988. FORM - A: A. Power and Fuel consumption CURRENT YEAR PREVIOUS YEAR 1) Electricity: a) Purchased Units (kwh) 0 0 Total Amount Rs. 0 0 Rate per unit Rs. 0 0 b) Own Generation: Through Diesel Generator Units 0 0 Total Amount 0 0 Rate per unit 0 0 FORM B: DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION: The Company has not imported any technology during the year. RESEARCH AND DEVELOPMENT: No Research and Development activities have been carried out separately by the Company during the year. However, product cost reduction; quality improvement and automation are ongoing process along with regular production. C. FOREIGN EXCHANGE EARNING AND OUTGOING: The Company is presently concentrating on the domestic market. The Exports efforts are being laid down to achieve desired exports in the future. Foreign Exchange Earning : Rs. Nil Foreign Exchange Outgoing : Rs. Nil CIF Value of import of Capital Goods : Rs. Nil Traveling : Rs. Nil For and on behalf of the Board of Directors Place: Mumbai. SURENDRA MARDIA Date: 31st August, 2011. Chairman MANAGEMENT DISCUSSION AND ANALYSIS The management is pleased to present herewith the Management & Analysis Report as per the provisions of Listing agreement entered into with the Stock Exchanges and the Code of Corporate Governance approved by the Securities & Exchange Board of India broadly touching the following aspects: 1. Industry structure and developments. 2. Material Developments during the year 3. Opportunities and Threats. 4. Segment-wise or product wise performance. 5. Outlook - Risks and concerns. 6. Internal control systems and their adequacy. 7. Discussion on financial performance with respect to operational performance. 8. Material developments in Human Resources / Industrial Relations front, including number of people employed. This management discussion and analysis report might contain certain forward looking statements which represent the managements vision for the future. The actual results may vary depending on various internal and external factors beyond the control of the management. The views mentioned herein are also subject to change as and when required to suit the future management policies and circumstances in the market or economy. Statement in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be forward- looking Statements within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. Further the discussions following herein reflects the perceptions on major issues as on date, and the opinions expressed here are subject to change without notice. The company undertakes no obligation to publicly update or revise any of the opinions or forward looking statements expressed in this report, consequent-to new information, future events or otherwise. The company has adopted the best and the most sophisticated technology to suit Indian needs. The company as a part of reducing manufacturing cost of products as also to strengthen the bottom line, has decided to adopt the policy of becoming backbone provider to the industry through focusing on various components. Industry Structure and Development: The companys products include Copper, Brass, Stainless Steel and alloys of Copper in form of Bars, Tubes, Wires, Ingots and Profiles. These products have applications in various engineering and electrical industries which manufacturing metal parts and components. Non-Ferrous Metal industries normally manufacture some of the above items and specialize in one of the items, however Mardia Samyoung Capillary Tubes Company Limited (MSL) produces all the above items and also specializes in irregular shapes and sizes of profiles and sections. The growth in non-ferrous metal industry is directly related to the growth of industries having engineering and electrical applications like automotive, gas valves, pumps, fans and industrial machinery. High volume segments are catered by domestic manufacturers. MSL primarily caters to Various Engineering and Electrical industries in the country. Material Developments: During the year 2004-05 ARCIL (Asset Reconstruction Company of India Limited) on behalf of ICICI the secured creditors had taken the possession of Plant and Machinery and other miscellaneous movable Assets under the Securitization Act, 2002, and had sold these movable assets. The company has now purchased back adequate machinery to continue and improve upon its day to day operations, as seen from the improved performance of the company. The Accounts have been drawn up based on the going concern, assumption based on the management perception of the future of the company. Opportunities and Threats: As mentioned above, the growth of metal industry is linked to the growth of the major engineering and electrical applications industry, i.e. the Automobile / Engineering / Railways. Demand growth in Non-Ferrous Metal industries will largely depend on growth of the original equipment manufacturers (OEM) in the automobile industry, engineering & electrical segment and opportunities in the international markets. The demand for MSLs growth will heavily depend on the growth in served industrial Engineering and Electrical industries business both in domestic and international markets. The growth in demand for Non-Ferrous Metals will depend on the growth of Industrial and infrastructural activities. Liberalization of industrial policy, WTO driven reductions in duty structure, growth in demand in export markets, and increasing demand for industrial products may result in an increase in demand for large Non-Ferrous Metals. Segment wise performance: The Management reviewed the disclosure requirement of segment wise reporting and is of the view that since the Company manufactures Non- Ferrous Metals and related products which is a single business segment in terms of AS-17, a separate disclosure on reporting by business segments is not required. The geographical segments however, have been determined on the basis of location of major customers of the Company. During 2006-07, 100% of the Companys turnover was to customers located in India. However the company is now poised to export some of its products to European countries. Outlook - Risks and Concern: MSL, being one of the leading manufacturer and part of large Surendra Mardia Group, enjoys several advantages which will become increasingly important in view of a globalizing Indian economy: * The possibility to export to other countries represents a good growth potential for MEL and provides a possibility to partially compensate variation in demand on the domestic Indian market. * With increase in growth of Industrial and infrastructural activities the demand for non-ferrous metals is likely to improve. * MSL enjoys the locational advantages as major consumers are located in this region of the country. It is centrally located with easy geographical access to rest of the country. * The Company has plans to improve the productivity, efficiency at all levels and mange expenses effectively. * MSL unit is well equipped with sophisticated facilities. With continuous upgradation of technology MARDIA has successfully developed several types of Copper based alloys & are geared up for mass production. * MSL offers prompt services, Professional Managers play a role of active participant in development activities of valued customers. Mardia has successfully reached all customers and sectors of Indian Industry and its products find appreciation in various Industrial like Aeronautics, Automobiles, Agriculture, bearing, Defense and Ordnance, Electrical, General Engineering, LPG/Industrial Gases, Refrigeration and Air conditioning, Sugar, Thermal power etc. * MSL unit is well equipped with sophisticated facilities. With continuous up gradation of technology MARDIA has successfully developed several types of Copper based alloys & are geared up for mass production. * MSL offers prompt services. Professional Managers play a role of active participant in development activities of valued customers. Mardia has successfully reached all customers and sectors of Indian Industry and its products find appreciation in various Industrial like Aeronautics, Automobiles, Agriculture, bearing, Defense and Ordnance, Electrical, General Engineering, LPG/ Industrial Gases, Refrigeration and Air conditioning, Sugar, Thermal power etc. With this background barring unforeseen circumstances the Company expects to report improved results during the current year. The main risks are: * Significant increase in raw material costs will impact production costs and if non-ferrous metal prices cannot be raised, will drastically impact profit margins unless operating costs can be reduced at unprecedented magnitude and speed. MSL needs to remain profitable for domestic sales and globally competitive for exports. * Quality of inputs with on time delivery remained a significant concern to the companys success in future. To uphold MARDIA Brand equity, MSL needs to ensure that the inputs being used to manufacture its products conform to the exact specification of global standard. * With growing Indian economy coupled with the reduction in import duties makes India increasingly a target market for many international manufacturers and therefore competitive pressures on the domestic market will continue to grow faster. In fact, imports from neighboring far eastern countries are increasing over the years. This trend is expected to lead to price pressure in domestic market. The management of MSL is aware of both, opportunities and threats, and will continue to work to maintain competitiveness by reducing costs and improving quality as well as on growth of sales in the domestic market. Internal Control Systems: The various internal control systems operating in the company are working satisfactorily. The internal Audit team continuously monitored the adequacy and effectiveness of these systems and the findings of these audits are reported to the Audit Committee of the Board and also to the Board of directors. The adequacy of the internal control system has also been examined by the Statutory Auditors and they have not received any major adverse comments from them on the adequacy of the internal control systems. The Company has an internal control system commensurate with its size and nature of business which provides for: * Accurate recording and custody of assets. * Compliance with applicable statutes, policies procedures, listing requirements, management guidelines and circulars. * Transactions being accurately recorded, cross verified and promptly reported. * Efficient use and safeguarding of resources. * Adherence to applicable accounting standards and policies. Internal checks and controls are exercised by strictly adhering to the various procedures laid at the time of Delegation of Authorities and other Procedures. The delegation clearly indicates the powers along with the monetary limits, where ever necessary, that can be exercised by various levels of the Managers in the Company. Financial Performance vis-a-vis Operational Performance: The Net Sales (with other income) grew from Rs. 1992.77 lacs in 2005-06 to Rs. 3227.24 in the year 2006-07. Due to the improvement in metal prices and increase in demand, the company could improve upon its working and achieve nearly 62% increase in Sales and the company has showed consistent improvement upon 100 % increase in the previous year. Moreover the interest burden on the company -is also now negligible. During the previous years the company had settled the dues of Dena Bank and Union Bank of India under One Time Settlement Scheme. The company has since purchased all the movable assets necessary for continuing day to day operations. Now the company is in a better position to improve upon its sales and profits. The company has also improved its product mix with higher margin of profits. Your Company has explored the possibilities of manufacturing other related products and your Directors are confident of achieving better production and sales of its new products. The Companys products have been highly appreciated by almost all its customers. However, the actual consumption of our products is very low in India and the Company is trying its best to create consumer awareness. During the period under review, production in terms of quantity has increased by 48% compared to last year due to better utilization of capacity. While production of stainless Steel tubes had been maintain at same level, the production of other items of Copper and Brass had been increased to meet the demand. Cautionary Statement. Statement in the Management Discussion and Analysis describing the companys objectives, projections, estimates, expectations may be forward- looking Statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes an other incidental factors. Further, the discussion following herein reflects the perceptions on major issues as on date and the opinions expressed here are subject to change without notice. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, and future events or otherwise. Human Resources & Industrial Relations: The Associates remained our most valuable assets & actively involved towards growth & progress. The relationship between the Associates of the company and the Management remained congenial ever time & any time. The company employed around 86 associates. (Including 8 Officers) as on March 31, 2007.