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Titagarh Steels Ltd merged Directors Report

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Titagarh Steels Ltd merged Share Price directors Report

TITAGARH STEELS LIMITED ANNUAL REPORT 2008-2009 DIRECTORS REPORT DEAR SHAREHOLDERS Your Directors are pleased to present the 26th Annual Report and Audited Accounts of the Company for the financial year ended the 31st March, 2009. Financials Your Companys financial performance was as follows: Rs./Lacs 2008-09 2007-08 Profit Before Interest, Depreciation and Tax 514,07 569.49 (Before Extraordinary Items) Less: Interest 332.00 200.02 Gross Profit for the year 182.07 369.47 Less: Depreciation 72.61 73.54 Profit Before Tax 109.46 295.93 Less: Provision for Current Tax - 126.18 Deferred Tax (265.76) 67.29 Fringe Benefit Tax 3.18 262.58 3.47 186.94 Profit After Taxation 372.04 108.99 Extra Ordinary Items (197.38) - Bad Debts written off (712.54) - Prior period Expenses (12.70) (15.25) Income Tax for earlier years - (57.44) (72.89) Balance Brought Forward from Last Account (206.38) (242.87) Balance Carried to Balance Sheet (756.86) (208.37) Profitability of the Company during the financial year ended 31st March, 2009 was affected due to Increased input costs. Loss after adjustment of extraordinary Items amounting to Rs. 550.59 Lacs. Dividend In the absence of any surplus your Directors do not recommend any dividend for the year under review. Merger of the Company with Titagarh Wagons Limited Your Company is under the same management as that of Titagarh Wagons Limited (TWL) and bulk of its production is supplied to TWL. In the increasingly complex business environment with global economy passing through the turbulent times, the Directors have reviewed all the aspects and considering the synergies, expected growth in business involved and better shareholder value creation, decided to merge the Company with TWL having fixed April 1, 2009 as the Appointed Date. Operations Production of Steel Castings declined by 14.31 % as compared to previous year mainly due to squeeze on working capital and higher input costs. Corporate Governance & Management Discussion and Analysis The Management Discussion & Analysis and Corporate Governance Report along with a certificate on its compliance are annexed to and form part of this Report. Directors Sri M. J. Z. Mowla and Sri R. N. Deogun, both Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for re-election. Directors Responsibility Statement The Directors state that * Appropriate Accounting Standards as are applicable to the Annual Statement of Accounts for the financial year ended 31st March, 2009 have been followed in preparation of the said accounts. * The Directors have followed the accounting policies as described in the Schedule 19 (Notes on Accounts) and applied them consistently to facilitate true and fair view of the state of affairs of the Company. * Sufficient care has been taken to maintain accounting records of the Company. * The statement of accounts has been prepared on a going concern basis. Auditors Messrs. Salarpuria & Partners, Chartered Accountants, Auditors of the Company retire at the conclusion of ensuing Annual General Meeting and willing to continue, have submitted the certificate pursuant to Section 224(1 B) of the Companies Act, 1956 about their eligibility for re- appointment. Promoter Group In accordance with the SEBI (Substantial Acquisition and Takeovers) Regulations, 1997, details of Promoter, Promoter Group and its constituents are disclosed in a statement annexed to this Report. Personnel The particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure to this Report. Industrial relations were cordial during the year under review. The Directors express appreciation of the efficient services rendered by the employees. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo A statement pursuant to section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 on conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed to and forms part of this Report. Cost Auditors In terms of the Notification of the Government of India, the Steel Casting is covered under Cost Audit. M/s. D. Radhakrishnan & Co., Cost Auditors, of your Company will submit their Report on Cost Audit in compliance with the provisions of the Companies Act, 1956. Listing Information The Equity Shares of your Company are listed at the Calcutta Stock Exchange Association Limited and Bombay Stock Exchange Limited and the Company has already paid the listing Fees to these Stock Exchanges for the current year. Acknowledgement Your Directors wish to place on record their gratitude to the Departments and Undertakings of Central and State Governments, Financial Institutions and Banks for their valuable co-operation and continued assistance and also the support extended by the shareholders, customers and vendors, which has always been a source of strength for your company. ANNEXURE TO THE DIRECTORS REPORT Financial year ended 31st March, 2009: As required under Clause 3(a) of the Securities and Exchange the meaning as defined in the Monopolies and Restrictive Trade Board of India (Substantial Acquisition of Shares and Takeovers) Practices Act, 1969) for the purpose of Regulations 10 to 12 of the Regulations 1997, the following entities constitute Group (within aforesaid SEBI Regulations: Promoter and Promoter Group Shareholding as on 31st March, 2009: Sl. Name of the Shareholders No. of Shares % of the total No. paid up equity Promoter 1 Shri J P Chowdhary 1127115 8.53 Promoter Group 1 Smt. Rashmi Chowdhary 1138819 8.62 2 Traco International Investment Pvt. Ltd. 1092679 8.27 3 Shri Umesh Chowdhary 557472 4.22 4 Smt. Savitri Devi Chowdhary 367790 2.78 5 Singhal Contractors & Builders Pvt. Ltd. 168910 1.28 6 Smt. Vinita Bajoria 180600 1.36 7 Shri Sanjay Kumar Bajoria 176400 1.34 8 Tecalemit Industries Ltd. 91140 0.69 9 Vivek Vinidhan Pvt. Ltd. 70000 0.53 10 Navyug Business Pvt. Ltd. 63050 0.48 11 TSL Exports Ltd. 22470 0.17 12 Simplex Developments Pvt. Ltd. 20440 0.15 13 Shri Saket Kandoi 7000 0.05 14 Shri Sushil Kumar Saraogi 3800 0.03 15 Shri Aditya Kumar Saraogi 700 0.01 Total Promoter Group Holding 5088385 38.52 The following entities although not holding any equity shares in the Company are Promoter group entities: Listed Promoter Group Companies: 1. Continental Valves Limited 2. Titagarh Wagons Limited Unlisted Promoter Group Companies: 1. Bhatpara Papers Limited 2. Sourenee Leaves Private Limited 3. Titagarh Logistics Infrastructures Private Limited 4. Titagarh Papers Limited 5. Titagarh Shipyd Limited Non-incorporated Promoter Group entities: 1. J.P. Chowdhary and Others HUF 2. Prithish Family Trust 3. Sree Kashi Nath Bhagwati Devi Chowdhary Charitable Trust 4. Umesh Chowdhary HUF ANNEXURE A Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 A. CONSERVATION OF ENERGY Energy Conservation measures taken: Replacement of old motors by new energy efficient motors. The proposed changeover from using overhead cranes to roller conveyer for shifting of moulds in last years report has been successfully implemented in the factory. The proposed procurement of new compressor in last years report has been completed by procuring a new AIR COOLED 1000 CFM compressor. The new compressor is totally air cooling and completely eliminates the water circulation through pipelines, sludge and contaminants disposal etc. Using Oxygen to assist melting in order to reduce the melting time. Standardization of the charge mix to be used in the furnace for quick and fast heats. Reducing power consumption per MT of liquid metal by using appropriate current & voltage of transformer and also an additional vacuum circuit breaker for better overall efficiency of the furnaces. Changing over from light diesel oil to comparatively cheap Low viscosity furnace oil. A new overhead 20 T EOT crane proposed last year has been procured from WMI and installed in our foundry section. A new spectrometer proposed in last years report has been procured and commissioned at works. Additional Investments and Proposals, If any, being implemented for reduction of consumption of energy A new overhead crane has already been ordered and will be installed in the factory within a few weeks. Two of the existing compressors are being completely overhauled for better efficiency Changeover from LDO to LVFO. Impact of measures (a) and (b) above for reduction of energy consumption and consequent Impact on the cost of production of goods Stability in the process Reduction of consumption of electricity per ton of Casting; Improvement in quality & productivity. d) Total energy consumption and energy consumption per unit of production Current Previous Year Year I. Power & Fuel Consumption 1. Electricity Purchased Units KWH (in thousands) 13,069.50 11,870.71 Total Amount (Rs. in Lacs) 601.47 561.86 Rate/Unit (in Rs.) 4.60 4.74 2. Furnace Oil/LDO Quantity (in KL) 871.07 929.41 Total Amount (Rs, in Lacs) 373,50 277.92 Average Rate/Litre (in Rs.) 42.88 29.90 LVFO Quantity (in KL) 571.00 398.50 Total Amount (Rs. in Lacs) 137.80 101.62 Average Rate/Litre (in Rs.) 24.13 25.50 II. Consumption per unit of Production Electricity (in KWH) per ton of castings 1,558.55 1,233.58 Fumace Oil (in litre) per ton of castings LDO 103.88 97.00 LVFO 68.09 41.00 B. TECHNOLOGY ABSORPTION Efforts made In technology absorption: Research & Development (R&D): 1. Specific areas In which R&D carried out by factory: - Special type of Bogies for Sudan Railways had been designed and developed. - Bogies for NTPC has been developed and delivered. - Mnufacturing of CMS Crossings (have been standardized and are regularly being poured in our foundry. - Manufacturing of Coco Bogies and Motor Truck Frames which were under development stage in last years report have been taken into our production system. - A large number of maintenance items have been developed in the foundry thereby reducing the lead time associated with such materials. - Increasing the use of no4bake sand in the moulding system for more accurate dimensions and better surface quality of the castings. 2. Benefits derived as a result of the above R&D - Lloyds prestige Certificate has been revalidated up to 2010. - ISO re-certification has been successfully completed and the Company has fulfilled all the criteria for achieving the ISO 9001-2000 version and the certificate has been revalidated up to 2010. - RDSOs Class A foundry Status has been granted. 3. Future Plan of action A tie-up is being followed up with a reputed Company in Europe for the manufacture of Bogies for 1435mm Gauge application. 4. Expenditure on R&D: An advanced level UTS machine is being procured for better and close control of the physical parameters of the castings made. An advanced level metallurgical microscope with photography facility is being procured. Technology absorption, adaptation and innovation: 1. Efforts In brief towards technology absorption, adaptation and Innovation Your Companys R&D efforts have been in step with various innovations and improvements in the field of technology development applied to the Companys products. This has resulted in the introduction of new material methods and production of items at competitive prices, including changing of high volume production, heat treatment from three stages to two stages system. 2. Benefits derived as a consequence of the above efforts: a) Development of new products b) Improvement of Quality Standards c) Cost Reduction d) Introduction of newer production methods C. FOREIGN EXCHANGE EARNING AND OUTGO a) Activities relating to export, initiatives taken to increase exports, development of new export markets for products and services and export plans Initiative has been taken to increase export, development of new export markets for products of the Company. b) Total foreign exchange used and earned: (Rs. in Lacs) Earned - Used - For and on behalf of the Board Kolkata J.P. CHOWDHARY The 29th day of June, 2009. Chairman & Managing Director MANAGEMENT DISCUSSION AND ANALYSIS REPORT (a) Industry Structure and Developments: The Engineering Industry to which your Company belongs, is one of the key sectors in the economy for industrial development of the country. Retaining the high quality, backed by ISO 9002 accreditation by RWTUV, Germany and most economical utilization of resources are considered to be favorable factors for the performance of the Company in future. (b) Opportunities and Threats: The performance of your Company has a direct relationship with the specific sectoral development i.e. goods traffic of the Indian railway. The market has witnessed positive growth, which is corelated with the performance of the Company. However, in view of stiff competition amongst the participants, margin of safety depend on internal cost economies along with efficiency in operations. (c) Segment-wise or Product-wise performance: The Company is operating in a single product segment, viz. Steel Casting. (d) Outlook In view of the present railway traffic position, it is expected that the Government will procure good numbers of railway wagons, which if happens, will help the Company to improve its performance to a great extent. (e) Risks and Concerns The performance of your Company is closely linked up with the quantum of order for railway wagons released by the Indian Railways. Any major dispersion in the procurement program of the Government will have an impact on the performance of the Company. (f) Internal Control Systems and their adequacy The Company has adequate internal control system to take care of its operations which in the opinion of the Board of Directors is commensurate with the nature and size of business of the Company. The Internal Auditor of the Company is regularly carrying out auditing in all the key areas of the operations. Additionally the Audit Committee is reviewing all Audit Plans and Reports with significant control issues raised by internal and external audit.. Regular Reports on the Business Development of the past and future plans are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of senior Management and issuance of appropriate directives to comply with the findings. (g) Discussion on financial performance with respect to operational performance The operations of the Company were impacted by Slowdown in the economy. However, the Company follows good management practices to bring improvement in the performance. (h) Material developments in Human Resources/industrial Relations front, including number of people employed The Company values continuous training and development of the human resources with the objective of promoting a professional and productive culture. The Company is maintaining good employee relations and no man-days were lost during the year due to employees unrest. The Company has 231 employees as on 31st March, 2009.

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