VHCL Industries Ltd Directors Report

The Directors have pleasure in presenting their 23rd Annual Report on the business and operations of the Company for the year ended on 31st March, 2014.

Financial Results:		(Rs. In Lacs)
Particulars	For the year ended 31st March, 2014	For the year ended 31st March, 2013
Sales	49820.81	48017.21
Other Income	85.95	121.20
Total Revenue	49906.77	4813.41
Profit before Depreciation, Finance Cost,	3217.81	2235.45
Exceptional Items and Taxation
Less : Depreciation and amortization	126.74	148.09
Profit before Finance Cost,	3091.07	2087.36
Exceptional Items and Taxation
Less : Finance Cost	1254.18	816.65
Profit before Exceptional Items and Taxation	1836.89	1270.70
Less : Exceptional Items	1776.82	291.43
Profit (Loss) before Taxation	60.07	979.27
Less : Provision for Tax - Current Tax	42.00	317.52
(Including MAT Credit entitlement
and previous year tax)
Less: Provision for Tax - Deferred Tax	15.23	(32.34)
Profit for the year	2.84	694.09
Add: Balance of Profit for earlier years	3909.84	1605.64
Add: Shares Premium	--	1696.00
Profit available for appropriation	3912.68	3995.73
Less : Proposed Dividend	--	73.90
Less : Income tax on Proposed Dividend	--	11.99
Balance Carried Forward	3912.68	3909.84

Financial Performance :

Despite the bleak economic scenario and tight money market, the results for the financial year ended 31st March, 2014 were better than the previous financial year. The Sales of the Company increased to Rs. 49,820.81 Lacs from Rs. 48017.21Lacs in the previous year, at a growth rate of 3.76%. The Profit before Depreciation, Finance cost, exceptional item and Tax increased from Rs.2235.45Lacs in the preceding financial year to Rs. 3217.81Lacs in the year under Report.

The profit before tax and exceptional items increased from Rs.1270.70 Lacs for the financial year ended 31st March, 2013 to Rs.1836.89 Lacs for the current financial year. However, due to huge forex losses, the net profit came down from Rs.694.09 Lacs to Rs.2.84 Lacs in the corresponding period.

Future Outlook :

The Board of Directors of the Company at its meeting held on Monday, March 31, 2014, inter-alia decided to de-merge the Metal Division of the Company into a separate entity in order to invite industry specific investment as well as unlock shareholder value.

The metal division of the company has two on-going projects:

(1) 36,000 MTPA Aluminum Alloy Plant.

(2) 18,000 MTPA EOU project for production of Non-Ferrous alloys.

The Proposal outlined to the board was that the second phase expansion would require an investment to the tune of Rs. 400 Cr. in fixed assets and working capital which may not be possible for the company to generate from its existing shareholder base and internal accruals. The Proposal suggested that the Company may seek FDI for the project. Initial discussions with a few players indicate that the investment may come in only if the metal division is a separate entity. To achieve this, the metal division would have to be demerged from the plastic division through Court to retain the licenses obtained till date intact. The demerger would have the added advantage of unlocking shareholder value of the existing stakeholders as well as allow the metal division to grow faster.

The Board was also presented with a proposal to merge the plastics business of UIC Corporation Pvt. Ltd. (hereinafter referred as UIC), an Associate Company, with itself. UIC is engaged in similar business of reprocessing/recycling plastic materials and has achieved sales of Rs. 415 Cr. in the current financial year. The merger will provide the Company with operational synergy as well as a reduction in operational cost apart from adding to the revenue and profitability of the Company.

The Board was of the opinion that in order to enhance the Companys focus towards its core business of plastics recycling and increase its market share, the Company should proceed with the merger as this would be in line with the overall vision of the company to achieve greater value for all its stake holders.

Dividend :

Due to drastic reduction in the profitability of the Company, your Directors have decided not to recommend any dividend for the financial year ended 31st March, 2014.

Directors and Key Managerial Personnel :

Mr. Nimesh Joshi, Director of the Company has resigned from the Board with effect from 03rd December, 2013 The Board placed on record its appreciation for valuable service rendered by him to the Company during his tenure as Director of the Company.

Mr. Pradeep Soni, Company Secretary and Compliance officer has resigned from the Company with effect from 14th February, 2014. The Board placed on record its appreciation for valuable service rendered by him to the Company during his tenure as Director of the Company.

Directors Responsibility Statement :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors confirm as under:

a) that in the preparation of annual accounts, the applicable Accounting Standards have been followed and there has been no material departures;

b) that the Directors have selected such Accounting policies and applied them consistently and 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 profit or loss of the Company for that period;

c) that the Directors have taken proper and sufficient care for the 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) that the Directors have prepared the Annual Accounts on a going concern basis.

Management Discussion and Analysis Report :

In Compliance with Clause 49 of the Listing Agreement with the Stock Exchanges, a detailed Management Discussion and Analysis Report form part of the annual report.

Corporate Governance :

In Compliance with Clause 49 of the Listing Agreement with the Stock Exchange, a detailed Corporate Governance Report forms part of the annual report.

The requisite certificate from the Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of annual report.

Auditor and Auditors Report :

During the year under review M/s. Sarda Soni Associates, Chartered Accountants tendered their resignation due to preoccupation and M/s. Rakesh R. Agrawal & Associates, Chartered Accountants was appointed in the place of the retiring auditor to held office upto the conclusion of 23rd Annual General Meeting.

The Audit Committee recommends the re-appointment of M/s. Rakesh R. Agrawal & Associates, Chartered Accountants, as Statutory Auditors of the Company and accordingly board of directors proposed the reappointment of said auditors.

As required under the provisions of Sections 139(1) of the Companies Act, 2013, the Company has obtained a written Certificate from the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

The observations of the Auditors in their report, read with the accounts are self-explanatory and therefore dont require further explanation.

Audit Committee :

The Company constituted an Audit Committee under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement and the composition of it is given in the Report on Corporate Governance.

Shareholders / Investor Grievance Committee :

The company constituted a Shareholders / Investors Grievance Committee pursuant to Clause 49 of the Listing Agreement and the composition of it is as given in the Report on Corporate Governance.

Listing :

The shares of the Company are listed at BSE Limited and company is consistent in payment of listing fees as prescribed by the Exchange. As on 31st March, 2014, out of total share capital comprising of 36951970 shares, 35835633 shares i.e. 96.98% of the total capital have been Dematerialised by investors.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo :

Information in accordance with the provisions of Section 217(1)(e) 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 Annexure "A" to this report.

Public Deposits :

The Company has not accepted/invited any Public Deposits during the year under report.

Particulars of Employees :

The Company has no employee in the category specified under Section 217(2A) of the Companies Act, 1956.

Acknowledgements :

Your Board of Directors is pleased to place on record their appreciation for the cooperation and support extended by all India financial institutions, Banks, Central and State Government authorities, Customers, Vendors and Members during the year under review.

Your Directors also wish to place on record its appreciation for the valuable services rendered by the executives, staff and workers of the Company.

	For and on behalf of the Board
	Sd/-
	PANKAJ VALIA
	Chairman and Managing Director
Place : Mumbai
Date : 30th May, 2014

ANNEXURE A TO DIRECTORS REPORT

As required under Section 217(1)(e) of the Companies Act, 1956 and Section 134(3)(m) of the Companies Act, 2013, the particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are as under:

TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS PER FORM - A IS GIVEN HEREUNDER:

A. POWER AND FUEL CONSUMPTION		2013- 14	2012- 13
1. ELECTRICITY (FOR MANUFACTURING)
(a) Purchased
Unit	(KWH)	1222740	1668000
Total Amount	Rs.	56,12,551	69,41,003
Rate/Unit (average)	(Rs./ KWH)	4.59	4.16
(b) Own generation (Through Diesel Generator)
Through HSD (Unit) in ltrs.		86930.28	116620
Total Amount	Rs.	81,50,230	60,14,976
Rate per Litre of Diesel Oil	Rs/ litre.	93.76	51.59
Through Steam/ Turbine Generator		Nil	Nil
2. Coal		Nil	Nil
3. Furnace Oil
Quantity	MT	Nil	Nil
Total Cost	Rs.	Nil	Nil
Average rate	Rs./MT	Nil	Nil
4. Other/ internal generation
(a) Low Sulphur Heavy Stock (LSHS)
Quantity	MT	Nil	Nil
Total Cost	Rs.	Nil	Nil
Average rate	Rs./MT	Nil	Nil
(b) Internally Generated Fuel		Nil	Nil

B. Consumption per unit of Production

Product	Unit	Per Tonne	Per Tonne
Plastic Granules	KWH	77.97	53.58

RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Future plan of action :

We will focus on constant upgradation of Technology in recycling process and improvement of qualitative output.

B. Technology absorption :

1. Efforts in brief made towards technology absorption, adaption and innovation.

No new technology was introduced during the Year ended 2013-2014.

2. Benefits derived as a result of the above efforts : Nil

3. In case of imported technology technology (imported during the last 5 years reckoned from the beginning of the financial year) : Nil

C. Foreign Exchange Earnings and Outgo :

1. Earning- FOB value of Exports : Nil

2. Outgo- CIF Value of Imports : $39382660 (Rs.2327078938)

	For and on behalf of the Board
	Sd/-
	PANKAJ H. VALIA
	Chairman and Managing Director
Place : Mumbai
Date : 30th May, 2014