shukun construction ltd share price Directors report

SHUKUN CONSTRUCTION LIMITED ANNUAL REPORT 2004-2005 DIRECTORS REPORT Members, Your Directors have great pleasure to present the Eleventh Annual Report together with Audited Financial Accountants for the year ended 31st March, 2005. FINANCIAL HIGHLIGHTS: Particulars (Rs. In Million) 2004-05 2003-04 Income from Operations 20.84 3.25 Other Income 60.72 1.13 Total Income 81.56 4.38 Total Expenditure 20.10 3.7 Operating Profits 61.46 0.68 Less: Interest NIL NIL Gross Profits 61.46 0.68 Less: Depreciation 0.21 0.09 Profits Before Tax 61.25 0.59 Less: Provision for Taxation 0.42 NIL Net Profits of the year 60.83 0.59 DIVIDEND: No dividend is declared or recommended by the Board of Directors of the company during the year. REVIEW & PROSPECTS: Though market was not active for the whole year, demand for the companys business was seen rising for the last six months especially for the last quarter of the year. Changed policies and taxes by budget will make the things more costly. Firstly indirect taxes on steel are raised and secondly service tax net was widened bringing construction services in respect of commercial or industrial buildings or civil structures into it. Again percentage of service tax was raised from current 8% to 10%. This will add to companys costs and similarly price offered to customers. STATUTORY DECLARATIONS: (1) FIXED DEPOSITS: During the year, no public deposits have been accepted by the company within the meaning of Section 58-A of the COMPANIES Act, 1956 and the rules made there under. (2) EMPLOYEES: There is no employee of the company whose remuneration is covered under the provisions of the section 214(2-A) of the Companies Act, 1956. INDUSTRIAL RELATIONS The industrial relations continue to be generally peaceful and cordial. (3) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND EXPENDITURE: (Information as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988. i. Energy Conservation Measures Taken: Energy efficient motors are included in the purchase specifications and are put to use. ii. Impact of measures taken for reduction of energy consumption and consequent impact on the cost of production of goods: Decrease in overall energy consumption due to adoption of energy efficient measures. No technology was absorbed and No Foreign Exchange was earned by the Company during the Year hence not given. The Company has not expended any sum in Foreign Exchange. AUDITORS: M/s Khese Associates, Chartered Accountants, Statutory Auditors of the company will be reappointed from conclusion of this AGM to conclusion of next AGM. AUDITORS REPORT: The comments in the Auditors Report with Notes of Accounts-and Schedules are Self-Explanatory. DIRECTORS: Mr. Aman Mehta is due to retire by rotation and offers himself for reappointment. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to provisions of Sec. 217(2AA) of the Companies Act, the Directors confirm (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 they had 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 2003-04 and of the profit earned for that year. (iii) That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. (iv) That the annual accounts are prepared on a going concern basis. ACKNOWLEDGMENT: Your Directors appreciate the contribution made by the employees of the company. Directors also hereby wish to place on record co-operation made by banks, various Govt. Department and Regulatory bodies, financial institutions, members and clients. For and on behalf of the Board Director Place : Ahmedabad Date : 25th July, 2005 MANAGEMENT DISCUSSION AND ANALYSIS There is a pronounced tendency for all construction companies to bid at extremely fine rates. Lower margins, per se, would not have been a cause of concern had there been very significant increase in the volume of projects. Infrastructure growth is on the upswing and lower margins will be partly compensated by higher volumes. Due to sustained thrust on improvement in the operational efficiency coupled with better product mix and management. It is evident from the above that your company is not only committed to achieve customer satisfaction but is also committed to take care of the surrounding and the community. Having said this, it is necessary to high light the fact that the year has seen a growth in margin pressures through out the industry. Well equipment, skilled manpower and expertise in various area is well positioned to take advantage of growth. During the year the Company had propelled to a new growth path. Companys competitive drive to get greater business than merely riding on an overall economic upswing. The Company has increased its revenue growth in a period when the industry witnessed a decrease in growth. Power is the other area where there ought to be considerable scope in the future. Supply outstripped demand and intense competition drove down price of works. There is a distinct change in the type of projects on offer. Construction companies have been adversely affected by the steep increase in steel prices. Recognizing that the external environment will continue to exert pressure oil margins, the company focuses on growth and continuous improvements in productivity and operational efficiencies. There is an increasing need to become more capital intensive and adopt stringent quality control. Since steel is a major raw material in the construction industry this has adversely affected the operations of the Company. The Company intends to maintain its existing capital assets at optimum levels. The company is exploring this opportunity by forming strategic joint ventures. It is necessary to secure new projects across various area to ensure that assets are not underutilized and adequate returns are maintained on these investments. As we approach higher thresholds of growth, explore new avenues and expand operations it has become imperative to sustain and enhance our human resource competencies. The Company has been working towards creating a culture of togetherness and teamwork amongst employees. The company believes in protecting the interest of all its stakeholders. Management Discussion and Analysis under specific heads is as under. (a) Industry Structure and Development The Construction industry in which your company is engaged is going through the crucial stage of sluggish demand. (b) Opportunities and Threats The demand was thin for initial period of the year however it improved in later part of the year. The competition which is already stiff has become caviar due to increased number of competitors in the market. (c ) Segment-wise or product-wise performance An average Indian family so far accustomed for living together has now almost changed to nuclear family concept. Small scale business units are also increasing adding to demand for construction. (d) Risk and Concern The budget presented by P. Chidambaram, Hon. Finance Minister has made steel costly and again service tax net has been widened besides increase in services tax rate with additional education cess. (e) Internal Control Systems and their adequacy In an effort to control costs the company has put checks everywhere possible. Keeping in view the principles of financial management the company has improved on costs cutting. (f) Material Development in Human Resources / Industrial Relations front During the year under review the relations with staff had been very cordial.