RPG Cables Ltd merged Directors Report

RPG CABLES LIMITED ANNUAL REPORT 2008-2009 DIRECTORS REPORT To The Members Your Directors hereby present the twenty-seventh Annual Report together with Statement of Audited Accounts of the Company for the year ended March 31, 2009. FINANCIAL RESULTS: (Rs. in Lacs) 2008-2009 2007-2008 Turnover (Inclusive of other income) 38782.41 35552.11 Gross Profit/(Loss) (before depreciation, interest & tax) 2426.16 2323.77 Less: Depreciation 359.39 346.61 Interest 2757.67 2685.70 Profit/(Loss) before Tax (690.90) (708.54) Add/(Less): Provision for Taxation (including fringe benefit tax) (14.27) (13.91) Profit/(Loss) after Tax (705.17) (722.45) Balance brought forward from previous year (15247.00) (14524.55) Balance carried to Balance Sheet (15952.17) (15247.00) REVIEW OF OPERATIONS: The Companys business volumes & profitability continue to improve. During the year, the Company has increased the exports business to Rs. 10,990.65 Lacs and converted a part of its Jelly Filled Telecom Cables facility at Mysore to manufacture Low Tension Power Cables. CHANGE IN EQUITY SHARE CAPITAL: During the year, 61,01,511 equity shares of Rs. 10/- each were allotted to Deutsche Bank, AG, Hong Kong Branch upon exercise of option for conversion of 500 Fully Convertible Debentures of Rs. 5,65,000/- at a premium of Rs. 36.30 per share, aggregating to Rs. 28250 Lacs The promoters also exercised the option to convert the balance 20,58,500 warrants into equivalent number of equity shares of Rs. 10/- each at a price of Rs. 46.30 per share out of the total 33,33,500 optionally convertible warrants allotted to them on March 30, 2007. Accordingly, 20,58,500 equity shares were allotted to the promoters. The Share Capital of the Company as on March 31, 2009 stands increased from Rs.3330.13 Lacs to Rs. 4146.13 Lacs. PARTICULARS OF EMPLOYEES: In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Members who are desirous of obtaining such particulars are requested to write to the Company. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988: The information relating to energy conservation, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure to this Report. DIRECTORS: Mr. R.A. Naik would retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Necessary resolution relating to his reappointment is included in the Notice of Annual General Meeting. The Board of Directors recommends the reappointment of Mr. R.A. Naik as Director of the Company. Brief resume of Mr. R.A. Naik along with other particulars as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges, are provided in the Report on Corporate Governance forming part of the Annual Report. In terms of the Sanctioned Scheme, Mr. Ajai Singh has been appointed as a special Director on the Board of the Company by the Board for Industrial and Financial Reconstruction (BIFR) for a period of three years. DEPOSITS: The Company has not accepted any fixed deposits during the year under review. REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR): BIFR vide its Order dated January 27, 2009 sanctioned the rehabilitation scheme for the Company. Necessary steps are being taken to implement the provisions of the scheme. DIRECTORS RESPONSIBILITY STATEMENT: The Directors confirm that: a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. Appropriate accounting policies have been selected and applied consistently and have 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 as at March 31, 2009 and the loss of the Company for the year ended on that date; c. Proper and sufficient care has been taken 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; and d. The annual accounts have been prepared on a going concern basis. CORPORATE GOVERNANCE: Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges along with a certificate from Auditors of the Company confirming compliance of Corporate Governance and Managing Directors declaration regarding compliance with the Code of Conduct by Board of Directors and Senior management personnel forms part of this Annual Report. AUDITORS AND AUDITORS REPORT: M/s. N.M. Raiji & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letter from M/s. N.M. Raiji & Co., Chartered Accountants to the effect that their reappointment, if made, would be within the limits under section 224(1B) of the Companies Act, 1956. Note no. 12 of the Notes to the Accounts is self explanatory in respect of the comment made by Auditors in their report. Members are requested to appoint M/s N.M. Raiji & Co., Chartered Accountants as the Statutory Auditors of the Company. As per the requirement of Central Government and pursuant to Section 233B of the Companies Act, 1956, your Company carries out an audit of cost records relating to electrical cables every year. Subject to the approval of Central Government, the Company has appointed M/s. P. D. Dani & Co., Cost Auditors to audit the cost accounts for the financial year 2009-10. MANAGEMENT DISCUSSION AND ANALYSIS: INDUSTRY STRUCTURE AND DEVELOPMENTS: The Company operates in two segments viz., Power Cables and Telecom Cables. The respective industry scenario is as under: Power Cables: Slowdown in orders is observed due to global meltdown and financial constraints. Government of India is planning Infrastructure projects with 80000 MW power generation in next five years. Many new capacities would be generated in near term in view of continuous demand of cables. The Company obtained certain short term credit facilities for working capital requirements, thereby resulting in improved turnover and margins during the year under report. The Company commenced manufacturing of LT Cables at its Mysore factory with an installed capacity of 5000 km per annum. The Company successfully executed a single export order of about Rs. 110 crores for supply of Power Cables to Afghanistan. Telecom Cables: There is a steady improvement in the off-take of both Jelly Filled and Optical Fibre Telecom Cables, due to the expansion in the networks of the State owned Telecom companies, as well as the private telecom operators. The above trends are likely to continue in the near future, resulting in substantive growth, particularly for Power Cables. SEGMENT WISE & PRODUCT WISE PERFORMANCE: Financial Highlights: Income Statement: (Rs. in Lacs) Particulars 31.03.2009 31.03.2008 Profit before Depreciation, Interest and Tax 2426.16 2323.77 Financial Expenses 2757.67 2685.70 Depreciation 359.39 346.61 Profit before tax (690.90) (708.54) Tax (Net) 14.27 13.91 Profit after Tax (705.17) (722.45) Segment wise performance: (Rs. in Lacs) Sales 31.03.2009 31.03.2008 Telecom Cables 2227.11 5919.85 Power Cables 36250.16 29004.98 Others 28.45 63.75 Total 38505.72 34988.58 RISKS, CONCERNS AND THREATS: The company is experiencing continuous delay in realisation of dues from customers. Increase in cycle time from receipt of order to realization of cash affecting cash flow of the company. Economic situation globally as well as raw material and forex volatility are impacting business and the same is likely to impact next financial year. The Company has been sanctioned a suitable rehabilitation scheme from the BIFR. However, one of the parties has challenged the said scheme before the Appellate Authority and the same is pending. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an effective system of internal audit to ensure that there exists a proper control over all the transactions across all the units of the Company, safeguarding the assets/resources, protecting them from loss or unauthorized use. Transactions are authorized, recorded and reported in compliance with various laws and Accounting Standards. The internal audit programme comprises well-documented policies, guidelines, authorities and approval procedures. The Internal Audit Department periodically conducts audits of the key areas of business and systems and reports to the Audit Committee. Significant audit observations, follow-up actions and audit plans are reported to the Audit Committee of the Directors. TOTAL QUALITY MANAGEMENT & HUMAN RESOURCES AND INDUSTRIAL RELATIONS: Quality Management is given utmost importance. All the plants of the Company have ISO Certification. An Employee Engagement Survey was conducted in order to obtain the views of the employees and their suggestions for the Company to become the Preferred Employer. Regular Induction Programs are being carried out by the Company to enable every new employee to understand the organization culture. Industrial Relations continue to be cordial. Employees are involved in Small Group Activities (SGAs) which helps in bringing cohesion, togetherness and sense of belonging to the organization which in turn results in greater productivity. The total numbers of employees as at March 31, 2009 were 411. FORWARD LOOKING STATEMENT: This report contains forward looking statements that involve risks and uncertainties. Actual result may vary from those expressed or implied depending upon economic conditions affecting demand, supply and price conditions, government policies and other incidental factors. ACKNOWLEDGEMENT: Your Directors express their gratitude to the Companys customers, shareholders, business partners, distributors and Banks for their understanding and support in difficult times. Your Directors also wish to place on record appreciation of the committed services rendered by all employees of the company. For and on behalf of the Board Nikhil Gupta R.A. Naik Managing Director Director Place : Mumbai Dated : June 30, 2009 ANNEXURE TO THE DIRECTORS REPORT: PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO AS PER SECTION 217 (1) OF THE COMPANIES ACT, 1956 AND THE RULES MADE THEREIN AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH 2009: A. CONSERVATION OF ENERGY: (a) Energy Conservation Measures Taken: * Power Factor maintained near unity. * Use of screw compressor instead of reciprocating compressor for plant Air requirement. * Monitoring of electrical energy enhanced to have more control on energy consumption. * Replacement of conventional Tube lamps and Compact Fluorescent Lamps (CFL) with LED lamps in phased manner. * Major steps taken in electrical energy conservation through lighting load & other modifications. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: * Installation of AC drives and Thyrestorised Temperature control system to reduce Energy consumption. * Installation of Solar street lights and solar emergency lighting. (c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: * Saving of approximately Rs.1 crore in plant expenses. * About 30% reduction in Lighting Energy costs. B. TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT (R&D): 1. Specific areas in which R & D is carried out by the company: * Development of water tight conductors. * Improve manufacturing processes for better product quality and reduction of wastes. * Reduction of conductor diameter. 2. Benefits derived as a result of the above R & D: * Saving of about Rs. 50 Lacs/annum in material cost. * Above efforts have helped the company to diversify its product portfolio and establishing presence in emerging technology sectors, stay competitive and achieve greater customer satisfaction 3. Future Plan of Action: * To take up development of power cables for voltages upto 220 KV. Plans are afoot also to develop new types of cables for diverse applications. 4. Expenditure on R & D: (a) Capital : Nil (b) Recurring : Nil (c) Total : Nil (d) Total R & D expenditure as a percentage of total turnover is : Nil Technology Absorption, Adaptation and Innovation: 1. Efforts, in brief, made towards technology absorption, adaptation and innovation : * Active efforts were made to optimize material consumption in cable manufacturing. * We are in consultation with Waste Heat recovery Boiler manufacturers to explore possibilities of utilising heat generated in Incinerator for heating curing tank. * Alternate method for on line curing to minimise the usage of hot water generator is under trial. 2. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution, etc.: * The above initiatives have resulted in reducing material consumption in cables. * The above initiatives will save atleast 8 to 10 KL Diesel consumption per month. 3. No new Technology is imported during the financial year. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: Earnings: F.O.B. Value of exports : Rs.10,990.65 Lacs Outgo: CIF value of imports : Rs. 1,781.01 Lacs Expenditure in foreign currency : Rs. 214.95 Lacs For and on behalf of the Board Nikhil Gupta R.A. Naik Managing Director Director Place : Mumbai Dated : June 30, 2009.