a package of solutions - :: midfield industries ltd. :: discussion and analysis 28 corporate...

MiDFiELD iNDUSTRiES LiMiTED

A PAckAge of solutions

21st Annual Report 2010 11

Forward Looking Statement

In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend

our prospects and take investment decisions. This report and other statements – written and oral – that we

periodically make contain forward-looking statements that set out anticipated results based on the management’s

plans and assumptions. We have tried wherever possible to identify such statements by using words such

as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance

in connection with any discussion of future performance. We cannot guarantee that these forward-looking

statements will be realized, although we believe we have been prudent in assumptions. The achievements of

results are subject to risks, uncertainties, and even inaccurate assumptions. Should known or unknown risks or

uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially

from those anticipated, estimated, or projected. Readers should keep this in mind. We undertake no obligation

to publicly update any forward-looking statements, whether as a result of new information, future events or

otherwise.

contentsStatutory Reports

Directors’ Report 24

28Management Discussion and Analysis

36Corporate Governance Report

Company OverviewMidfield at a glance 02

06Milestones

08Financial highlights

22Board of Directors

Strategic Review

10MD’s review

12A Package of Solutions

46Financial Statements

1

At Midfield Industries, we have witnessed multi-fold growth, offering an interesting range of industrial packaging solutions and services.

We are engaged in the design and development of protective

packaging systems for products that undergo all means of

transport. We provide best packaging value to the customers

and render value-added services with technical, engineering

and maintenance resources.

Midfield ensures cost optimisation for clients, improves arrival

condition of products, makes packaging operations more

productive, provides on-site sales and engineering assistance

with supervised installation and imparts maintenance and

safety training.

We have streamlined business operations and are seeking

growth opportunities aggressively. Midfield is also focused on

innovation to ensure we continue to offer great products and

services to stay at the forefront of market trends.

MiDFiELD iNDUSTRiES LTD.21st Annual Report 10 11

2

Packaging wide-ranging innovations

Established in 1990, Midfield Industries Limited has emerged as one of the leading and

niche players in the organised segment of the Indian packaging industry, with a wide

range of packaging products marketed and distributed nationally and internationally.

These products are the result of its deep market insight and ceaseless innovations.

Accredited by ISO certifications, we enjoy 18 years of proven track record in providing

end-to-end packaging solutions, catering to 500 clients globally.

A specialised player in steel strapping in 1993

One stop shop packaging solutions in 2011

Global Visibility Midfield Industries is headquartered at Hyderabad

The organisation has installed plants at Hyderabad, Thane (Mumbai), Uttaranchal and upcoming plants will be built in

Orissa and the Middle East

The products are exported to USA, UK, Canada, South Africa, Australia, and the Middle East

3

Business operations

We provide diversified and customised packaging solutions that extend long-term value for the customers. We add value to the packaging services with our technical and engineering expertise and this customer-centric approach ensure high reliability and profitability for our clients.

Midfield Industries Limited

Manufactured products

High Tensile Steel Strapping

Seals & L-Plates

Angle Boards

Collated Nails

PET Straps

Outsourced products

Tools & Spares

Stretch Films

Volatile Corrosion Inhibitor

(VCI) Paper

Operational contract

packaging

Midfield Industries end-to end

packaging solutions (men,

materials and equipment)

enable customers to focus on

the core business.

Value-added services After sales services

Turnkey packaging contracts

Packaging Equipment Maintenance

Study existing packaging and recommend the

best system

Technical and engineering resources for ongoing

packaging needs

Designing optimum protective packaging

systems

Company overview Strategic review Financial sectionStatutory reports

Midfield at a glance


4

Manufacturing facilities

Midfield Industries has manufacturing facilities at Hyderabad, Roorkee (Uttaranchal) and Thane (Maharashtra). The recently installed manufacturing plant at Vasurikhurd, District Thane (Maharashtra) caters to western India, and is the export hub of the organisation.

HydErAbAdProducts Installed capacity in

2010-11Steel strapping 12,000 MT annually

Angle boards 75 lakhs meters annually

Seals 2,50,00,000 numbers

annually

Collated nails 8,40,000 coils annually

5

Products Installed capacity in 2010-11

Angle boards 25 lakhs meters annually

Products Installed capacity in 2010-11

Steel strapping 6,000 MT annually

Critical for diverse sectors

We provide a wide array of packaging solutions, which enjoy applications across diverse industries. Such a strategy creates diverse revenue streams, enhances brand visibility and de-risks the business model. The result is sustainable and profitable growth. The Company has wide customer base and serving various Industrial segments like Steel, Aluminum, Copper, Glass, Paper, Jute, Refractories, Automobile, Battery and White goods.

rOOrkEE (Uttaranchal)

VASurIkHurd, dISTrIcT THAnE (Maharashtra)


Midfield at a glance


6

A decade of consistent growth

1990 Incorporation of the organisation as Midfield Steels Private Ltd.

1993Commenced production of low tensile steel strapping with a capacity of

3600 MTPA in Hyderabad

1998Initiated the production of seals and L-plates with a capacity of 25 million

pieces a year

Mr. Madhu Mohan Reddy was appointed as the Managing Director

2000 Increased the capacity from 3,600 MTPA to 4,800 MTPA

Established a heat treatment plant with 3,600 MTPA capacity to facilitate the

processing of low-tensile strapping to high-tensile strapping

2001 Commenced the export business by shipping the consignment to Sri Lanka

2002Began the new business line of trading in VCI Paper and diversified the

scope of business with operational contracts

2005 Augmented the capacity of low-tensile steel strapping to 12,000 MTPA

2006

Instituted the production of angle boards and collated nails with a capacity

of 2.5 million metres a year and 1,20,000 coils annually respectively

Name of the Company was changed to Midfield Industries Limited and

became a Public Limited Company

7

2007

Increased the capacity of collated nails to 4,20,000 coils annually

A new plant was commenced at Roorkee, Uttaranchal to produce angle

boards that has a capacity of 25 lakhs meters annually

The capacity of the Hyderabad plant was increased to manufacture

5 million meters annually

2008Increased the cumulative capacity of angle boards to 10 million meters

annually

2009The capacity of heat treatment plant was increased to 12,000 MTPA to

process low tensile steel strapping to high tensile steel strapping

2010Installed a plant at Thane (Maharashtra) with a capacity of 6,000 MTPA

to manufacture steel strapping

Customer satisfaction To exceed customer expectations for packaging value

and service

To build and maintain customer relationships and ensure

continued satisfaction

Commitment to excellence To deliver excellent quality packaging products and

services.

Teamwork To inculcate strong team work within the organisation,

maintain team spirit with customer.

Integrity To consistently demonstrate principled and ethical

judgment and practice the highest standards of social

conduct

Continuous improvement To dedicate ourselves for improvement on a continuous

basis, with new technologies and innovations

Greener tomorrow Commitment to eco-friendly practices in operations to

conserve the environment.

Values


Milestones


8

Escalating numbers. Proven competence.

Sales Growth

(` in lakhs)

06-07 07-08 08-09 09-10 10-11

5325.66750.9

8347.19051.4

13225.7

cAGr 19.95%

Profit Before Tax (PBT)

(` in lakhs)

06-07 07-08 08-09 09-10 10-11

379.9

641.7819.9

1257.6

1879.1

cAGr 37.67%

Profit After Tax (PAT)

(` in lakhs)

06-07 07-08 08-09 09-10 10-11

245.9420.5

534.5

823.8

1255.7

cAGr 38.56%

EBITDA

(` in lakhs)

06-07 07-08 08-09 09-10 10-11

724.1

1073.1

1907.4

2661.2

cAGr 29.74%

1514.4

9

NET PROFIT MARGIN

(%)

06-07 07-08 08-09 09-10 10-11

4.61

6.22

9.089.47

6.39

EPS

(`)

06-07 07-08 08-09 09-10 10-11

3.58

5.21

9.909.79

6.42

EBITDA MARGIN

(%)

06-07 07-08 08-09 09-10 10-11

13.6

15.9

21.020.1

18.1


Financial highlights


10

Dear Shareholders

Most of you must be aware that Midfield Industries has faced multiple challenges to reach where we are today. Our firm conviction in our capabilities and the increasing market potential has enabled us to sustain profitable growth in a rapidly developing economy.

It does not need to be re-emphasised that the Indian

economy has maintained a steady pace of GDP

growth for the last three to four years, setting into

motion a virtuous cycle of growth across all industries.

However, the present ecosystem of persistent inflation

and policy slowdown may dent economic growth.

The recent global turbulence (especially in the US and

the Eurozone) can also have a short-term moderating

influence on our economic growth. The long-term

prospects are however bright, and India may well

surpass others as the fastest growing economy in a

few years from now.

From CMD’s Desk

Indian economy has maintained a steady pace of GDP growth for the last three to four years, setting into motion a virtuous cycle of growth across all industries.

11

This is the broad macroeconomic context in which we

have to evaluate our industry. The global packaging

industry today is estimated to be around $500 billion,

growing at a CAGR of 3.1%. The Indian packaging

industry contributes 3% to the global packaging market.

The key reasons for this trend include strong growth in

emerging markets Due to easy availability of raw materials

and low manufacturing costs, India is fast emerging as a

preferred hub for the packaging industry.

We were optimistic of growth in a liberalised economy and

that optimism encouraged us to invest around ` 2 crores

to commence the existing Hyderabad facility. We entered

the highly fragmented Indian packaging industry by

reducing the price of our offerings, so that we can acquire

clients and thus in five years following inception we had a

portfolio of 350 clients.

Today, Midfield Industries is one of the few organised

players in the highly fragmented Indian packaging

industry with a vision to drive multi-fold growth,

adding various packaging products & systems, global

competence, superior products and services. During

2010-11, our total revenue increased 46%, while EBIDTA

and PAT increased 20.1 and 9.47%, respectively. The

improved performance is the natural consequence of

our increasing business operation owing to capacity

expansions at multiple locations within India. Besides, we

are also focusing on exports to enhance global visibility.

We are continuously enriching our product portfolio to

cater to a widening fraternity of clients. A new plant is

being built at Rourkela that has 6,000 tons capacity for

steel strapping. We will be able to cater to the steel belt in

the eastern hub of the country..

One of the most valued offerings by Midfield Industries

is customised packaging solutions for our clients. We

have also forayed into the manufacture of polyester

strapping, PP strapping, VCI paper and stretch films. The

in-house production capabilities of a range of packaging

consumables would help arrest production cost and

ensure enhanced quality. With capacity enhancement,

enriched offerings and expansion of operational

contracts, Midfield Industries is poised to scale new

heights and emerge as one of the important players in the

national and international packaging industry.

Our commitment towards customer integrity and product

excellence, together with deep sensitivity towards

environment protection and ethical corporate governance

remain steadfast. I thank all of you for your unstinted

support and guidance, without which Midfield would

never be what it is today. You have made us a powerful

industry player to reckon with. We will continue to reward

your faith through our efforts.

Warm Regards,

M. Madhu Mohan Reddy Chairman and Managing Director

With capacity enhancement, enriched offerings and expansion of operational contracts, Midfield Industries is poised to scale new heights and emerge as one of the important players in the national and international packaging industry.


MD’s review

Our innovative packaging solutions reduce costs for clients, eliminate the wastage of materials and minimise in-transit damage. Midfield’s end-to-end operational contracts enhance reliability, reinforce client profitability and ensure complete peace of mind for clients.

Midfield Industries A total packaging solutions provider


14

High Tensile Steel Strapping, Midfield Industries’ flagship product, is used to ensure that the material is strapped well and it does not shift during transit.

Seals & L-Plates: Seals are used to ensure sealing of both ends of tensioned strap in the strapping process. L plates are used to prevent edge damages.

Advantages Used for heavy-duty packaging

Excellent shock resistance

Resists dust and chemicals

Weather resistant

Brands Supreme and Mega Supreme

Current capacity Midfield Industries has currently installed an annual

capacity of 18, 000 MTPA. Steel strapping has

contributed 65.21% of the total revenue in 2010-11.

Advantages Facilitates products shipment

Prevents pilferage

Safeguards damage of the edge of products

Current capacityWe have an installed 2.50 crores (numbers) per annum

capacity

15

Angle Boards are used to prevent any damage to the edges of the product during transit.

Collated Nails are the largest consumables in the packaging industry today.

Advantages Effective tension maintenance

Prevents sabotage

Current capacity Midfield Industries has an installed capacity of 100 lakhs

meters per annum

FunctionCollated Nails are used for uniformly fastening products,

while packaging. These are used with pneumatic nailers.

Advantages Large scale packaging

Mechanised nailing

Reliable clasp

CapacityMidfield Industries has an installed capacity of 8.4 lakhs

nail coils annually


A Package of Solutions


16

Outsourced products

Tools & SparesWe cater to the light and heavy industries with an enormous range of manual, pneumatic and seal-less packaging tools.

Manual tools The manual tools are sourced from Midwest Industrial Packaging Ltd (USA). We provide after sales service for the tools and

spares purchased.

Sealers are primarily used to fasten the steel strap and hold together the strap and seal after fastening.

Tensioners are used to derive adequate pressure on the strapped area. It is used prior to the application of seals.

Pneumatic nailer tools (sourced from Orgapack, Switzerland); a common example is the pneumatic nailing

machine, which exerts continual hammering force. This machine saves time and facilitates fabrication on wooden surfaces.

Stretch films (one of the most cost-effective packaging solutions) palletize goods of multiple sizes, weight and

configuration. The load integrity is maintained in rough shipping conditions as well. It is easily recycled and is resistant to dust.

Volatile Corrosion Inhibitor (VCI) Papers safeguard goods against corrosion and facilitates long-term

storage. The biggest advantage of VCI Paper is that it serves as the best defence mechanism against moisture, rust and

humidity while shipping goods.

17

Operational contractsMidfield Industries leverages its extensive experience and field engineering services to provide complete packaging solutions to clients. It involves the supply of packaging consumables, such as steel strapping, seals, angle boards, pneumatic packaging tools, L-plates, and VcI paper.

We handle the product from its finished state at the plant till it is dispatched at some other location (decided by the client).

We work in close coordination with the production and dispatch departments of clients to ensure smooth functioning of the

packaging activities.

Undertaking an operational contract entails capital outlay wherein an adequate inventory has to be built at the client’s site

and along with the requisite manpower to conduct the entire packaging activity. We are focusing on more operational

contracts to widen our product offerings, and create a ready market for our products. Essar Steel, NALCO, Vizag Steel

Plant, and Bhilai Steel Plant represent some of our key clients for whom we have undertaken operational contracts.



We are planning to expand our geographical reach by building new manufacturing facilities and adding new capacities.


20

Expansions and new facilities

HydErAbAdWe are investing an amount of ` 144.02 million to expand the existing manufacturing facility at Hyderabad to set up PET

strap, Stretch Films, collated nails and seals machines.

MuMbAIExpansion of the manufacturing facility near Mumbai (Dist. Thane) by setting up a capacity (25 lakhs mtrs annually) of angle

board, collated nails (4, 20,000 coils annually).

21

New manufacturing facilities

OrISSA An extensive manufacturing unit (6000 mtpa) is being planned to be set up in Rourkela (Orissa). This will help us cater to

the eastern region with steel strapping product.

dubAI Dubai is a strategic location and to tap the overseas market a manufacturing facility is being set up at Jabel Ali with a

capital of ` 127.87million to cater to the Middle East and African markets. The Company proposes to use indigenous

technology to set up the facility and this would position us as one of the most cost-effective suppliers.

New product linesWe are focusing on enriching our products range with aggressive foray into the manufacture of polyester strapping, VCI

paper and stretch films. Midfield Industries has a multi-product portfolio in the Indian packaging sector. The multi-product

dimension will help us in enhancing the global reach.




22

Board of Directors

Mr. M. Madhu Mohan Reddy

Mr. Madhu Mohan Reddy has a Master’s degree in Business Administration

from Andhra University. Mr. Reddy possesses twelve years of rich experience

at ITW Signode prior to joining Midfield Industries and his designation was

Divisional Manager (steel strapping). He developed an efficient and robust

team of professionals as he took over the mantle in mid 1998, paving a smooth

growth passage. Mr. Reddy is responsible for strategic decisions at Midfield

Industries and is responsible for formulating a vision for the organisation.

Mr. Ashok Sagar MudumbaMr. Ashok Sagar Mudumba holds a Bachelor’s degree in Commerce from the Osmania University and a Diploma in Management (marketing) from the Indira Gandhi National Open University (IGNOU), New Delhi. He commenced his tenure in the organisation in 1994 as a Divisional Manager and currently he is a Whole-Time Director and is heading marketing operations. He has a rich and comprehensive work experience at Nagarjuna Steel Limited (Sr. Assistant- Project Department), Foundation to Aid Industrial Recovery (Field Investigator) and ITW Signode (Regional Manager- Mumbai) prior to joining Midfield Industries. He is in charge of the business development activities.

Mr. Ashok Kumar KollaMr. Ashok Kumar Kolla has an extensive experience of twenty five years in the

film industry. He started his career as an exhibitor and then moved on to different

roles like distributor, producer and artiste. He was felicitated by the Open

University of Complementary Medicines, Colombo, Sri Lanka with the ‘Doctorate

of Honor in Business Management’ in 2008.

23

Mr. Raja Raju KothapalliMr. Raja Raju Kothapalli has a Bachelor’s degree in law from Andhra University

and Master’s in Business Administration (marketing and human resource)

from Sikkim Manipal University. He has worked as advocate for seven years,

representing clients in civil and criminal cases. He has also worked in the

marketing and legal division of Frontier Trading Company.

Mr. Kamlesh Kumar BhargavaMr. Bhargava is a Bachelor’s of Science from Osmania University and a qualified chartered accountant. He is a fellow member of the Institute of Chartered Accountants, India, New Delhi since 1979. Over the years, he has gained tremendous experience in the audit of public sector and private sector companies, educational institutes, charitable organisations and commercial banks. He is a partner at a practicing CA firm and advises clients on matters related to accounting, taxation and corporate affairs.

Mr. Vegulla Gopala Krishna RaoMr. Rao is a Bachelor of Engineering (Mechanical) from the Government College

of Engineering, Kakinada and Master of Technology in Industrial Engineering

from the Indian Institute of Technology (IIT), Chennai. He has over three decades

of work experience and has worked with companies like Carborundum Universal

Limited, Metal Box India Limited, Everest Building Products Limited, ITW

Signode India Limited, Surana Strips and so on.


Board of Directors

24


To,The Members,Midfield Industries Limited

Your Directors have pleasure in presenting the Twenty First Annual Report of your Company

together with the Audited Accounts for the financial year ended 31.03.2011 and the report

of the Auditors thereon.

Financial Highlights(in `)

Particulars FY 2010 – 11 FY 2009 – 10

Total Income 1,325,686,415 907,051,874

Expenditure 1,059,569,143 716,308,307

Profit before Tax, Interest and Depreciation 266,117,272 190,743,567

Less: Depreciation 16,557,611 15,116,617

Less: Interest 61,651,300 49,866,604

Profit before tax 187,908,361 127,760,346

Provision for Income Tax 55,600,000 44,000,000

Provision for Deferred Tax Liability 6,740,481 (620,064)

Net Profit after Tax 125,567,880 82,380,410

Profit Brought forward 229,769,286 147,388,876

Balance available for appropriation 355,337,166 229,769,286

Transferred to General Reserve 36,000,000 -

Provision for Dividend (` 2/- per Equity Share) 25,642,502 -

Provision for Tax on Dividend 4,259,220 -

Profit carried to Balance Sheet 289,435,444 229,769,286

Directors’ Report

25

Company overview Performance Strategic review Profile of the Board of Directors Financial sectionStatutory reports

Directors’ Report

OperationsYour Directors are pleased to inform you that the Company

has made a turnover of ̀ 132 crores compared to the turnover

of the previous year which stood at ` 90 crores and achieved

a growth of 46%.

The Company has achieved Net Profit after Tax of ` 12.55

crores compared to the Net Profit after tax of ` 8.24 crores

achieved during the previous year and recorded a growth

of 52%.

During the year under review the Company has come out with

an Initial Public Offer (IPO) and the IPO was a great success

and the Equity Shares of the Company got listed on the

Bombay Stock Exchange Limited on 4.08.2010.

Your Directors are happy to inform you that the manufacturing

facility at Sr. No. 5, Hissa No. 1, Vasurikhurd, Tal. Wada,

District – Thane, Maharastra has become operational during

the year.

New Manufacturing FacilitiesYour Company is in the process of setting up:

a. Manufacturing facility near Rourkela, Odisha to cater to

the requirements of the customers located in the Eastern

region.

b. Manufacturing facility for PET strapping and the same

would be operational during the second quarter of

financial year 2011 – 2012.

c. Plant at Dubai to cater Middle East and African countries.

Corporate GovernanceThe Corporate Governance Report regarding compliance of

the conditions of corporate governance by your Company as

stipulated in clause 49 of the Listing Agreement entered into with

The Bombay Stock Exchange Limited is annexed to this Report.

Material ChangesThere are no material changes affecting the business of the

Company after the date of the Balance Sheet.

DepositsDuring the year under review the Company has not accepted

any deposits from public as defined under the provisions of

Section 58 A of the Companies Act, 1956.

DividendYour Directors are pleased to recommend a dividend of

` 2/- per Equity Share of ` 10/- for the FY 2010 – 11. The

dividend, if approved at the ensuing Annual General Meeting

will be paid to those shareholders whose names appear on

the Register of Members of the Company as on 23.09. 2011.

The total outflow on account payment of dividend for the

FY 2010 –11 will be ` 299.02 lacs.

Transfer to ReservesYour Directors have proposed to transfer ` 360 lacs to the

General Reserve retaining ` 2894 lacs in the Profit and Loss

Account.

DirectorsSri K. Ashok Kumar and Sri Kamlesh Kumar Bhargava,

Directors retire by rotation and being eligible offer themselves

for re appointment. The Board recommends their re-

appointment.

Company SecretaryMr. A. Devi Prasad has resigned as the Company Secretary

of the Company due to his pre occupations with effect from

31.12.2010 and the Board has identified and appointed Mr.

Vivek Surana, a qualified member of the Institute of Company

Secretaries of India as the Company Secretary with effect

from 01.02.2011.

AuditorsM/s Sampath & Ramesh, Chartered Accountants, the

Statutory Auditors of the Company retire at the conclusion

of the ensuing Annual General Meeting and are eligible

for re-appointment. The Board recommends their

re-appointment

PersonnelDuring the year under review, there were no employees

drawing remuneration in excess of the limits laid down in

Section 217(2A) of the Companies Act, 1956 read with the

Companies (Particulars of Employee’s) Rules, 1975.

26


A. Conservation of Energy

1. Adequate measures have been taken to conserve

energy wherever possible.

2. Additional investments and proposals, if any, being

implemented for reduction of consumption of

energy: NIL

3. Impact of measures for reduction of energy

consumption / energy conservation: NIL

B. Research And Development

1. Specific areas in which research & development is

carried out: NIL

2. Benefits derived: NIL

3. Future plan of Action: NIL

4. Expenditure on R & D: NIL

C. Technology Absorption

a. Efforts in brief made towards Technology absorption,

adoption and innovation: NIL

b. Benefits derived as result of the above efforts e.g.,

product improvement, cost reduction, production

development, import substitution etc.: NIL

D. In case of imported technology, imported during

the last 5 years reckoned from the beginning of the

financial year, following information may be furnished

a. Technology Imported: N. A.

b. Year of Import: N. A.

c. Has technology fully absorbed areas where this has

not been taken place, reasons thereof and plan of

action: N. A.

DIRECTORS’ RESPONSIBILITY STATE-MENTPursuant to provisions of Section 217 (2AA) of the Companies

Act, 1956 we, the Board of Directors of the Company hereby

state:

(i) that in the preparation of the annual accounts for the year

ended 31.03.2011, the applicable accounting standards

had been followed along with proper explanation relating

to material departures;

(ii) that we 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 and of the profit of the

Company for that period;

(iii) that we had taken proper and sufficient care for the

maintenance of adequate accounting records in

accordance with the provisions of this Act for safeguarding

the assets of the Company and for preventing and

detecting fraud and other irregularities;

(iv) that we had prepared the annual accounts for the year

ended 31.03.2011 on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND

OUTGO:

The disclosures required under Section 217(1) (e) of the

Companies Act, 1956 read with Companies (Disclosure of

particulars in the Report of the Board of Directors) Rules,

1988, for the year ended March 31, 2011 are as follows:

27


Directors’ Report

ACkNowlEDgEmENTS :

The Board places a record of appreciation to the Bankers, Government and Non Government authorities, Members and

Employees of the Company for their continued support and confidence in the Company.

For and on behalf of the Board

For Midfield Industries Limited

Place: Hyderabad M. Madhu Mohan Reddy

Date: 06.08.2011 Chairman & Managing Director

(in `)

Sl. No. Particulars of the transaction FY 2010 – 11 FY 2009 – 10

1. Total Foreign Exchange earnings 2,95,47,406 3,02,16,486

2. Foreign Exchange outgo

a. on account of import of Equipment 2,48,49,365 17,30,909

b. on account of Travel 5,89,430 59,779

Total Foreign Exchange outgo 2,54,38,795 17,90,688

E. Foreign Exchange Earnings and outgo

1. Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and

services, and export plans:

The new manufacturing facility set up at Thane, Maharashtra would cater to the export market and the Directors are

confident of achieved good turnover in exports.

2. Total Foreign Exchange used and earned

28


Management Discussion and AnalysisImportance of PackagingPackaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale and use. Packaging is a coordinated system of preparing goods for transport, warehousing, logistics, sale and use.

Sustainable Growth of the Indian EconomyThe intrinsic strengths of the Indian economy, along with positive stimulatory measures introduced by the government, resulted in an impressive GDP growth of 8.6% in FY 2010-11. The six infrastructure industries crude oil, petroleum refinery products, coal, electricity, cement and finished steel have a 26.7% weight in the index for industrial production. With manufacturing activities picking up in line with the growth, there is a likely possibility of a rebound in the infrastructure segment.

Furthermore, with the rebound in the economy and the demand from the emerging economies, rising environmental concerns, governments’ initiatives towards waste management, rising demand for cost-effective, lightweight and recyclable material will drive the demand in the global packaging industry. The industry is projected to grow at 3.6% CAGR over the next five years.

Global Packaging IndustryThe global packaging industry today is estimated to be

around $500 billion, growing at a CAGR of 3.1% (Source:

World Packaging Organisation)

Geographical breakdown of the global packaging

industry

India’s GDP trend

(Source: CSO * Growth in GDP at factor cost at 2004-2005 prices)

8.68.0

6.8

9.39.69.5

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Asia US Europe

Latin America Other

(Source: World Packaging Organisation)

27%

8%

7%

28%

30%

29


Management Discussion and Analysis

The Asian packaging industry forms around 27% of global

packaging demand and it is pegged at US$115bn. The

Asian packaging industry has three main players namely

Japan, China and India. Japan leads the market with 48%

while India has 12% market share in the Asian packaging

industry.

The projected global packaging market trend from 2008 onwards is as follows:

2008

(Source: Pike Research)

2009 2010 2011 2012 2013 2014

(` in billion)

486503

521 559578 577

597

Indian Packaging IndustryThe Packaging Industry is one of the most unique industries

in India that has significant role in creating wealth for the

nation, by preserving and protecting the value of goods

created by other manufacturing companies. The Indian

packaging industry is highly fragmented in nature.

Quick facts

3% contribution to the global world packaging market.

11th rank in the world

15% growth in FY 2010-11 and reached ` 65,000 crores

Estimated to grow at 18% and become ` 82,500 crores

by 2015

Asian packaging industry

Japan China India

Others

(Source: www.iip-in.com)

12%

8%

48%

32%

The structure of the Indian packaging industry is as follows:

Wood

Rigid Packaging Flexible Packaging

Polyester film

Biopp filmPlastics

Glass

Metal

Paper & Paper boards

Laminated tubes

Indian Packaging Sector

Primary Converters

30


34%

40%

14%

12%

The low per capita consumption at present offers mammoth

business opportunity to packing companies. Another

factor, which has in recent past provided substantial

stimulus to the packaging industry, is the rapid growth of

exports, which requires superior packaging standards for

the international market. The business of packaging is not

seasonal and hence no major cyclical trends are observed

in this industry.

Plastic Paper Glass

Metal

(Source: Indian Institute of Packaging)

Indian packaging market (material consumption)

Industrial Packing

The growth in demand for industrial packaging is not only

forcing the companies to think about how to make the

packaging better and durable it is also finding the ways and

means to be cost-effective without hampering the quality of

packaging solutions.

Industrial packaging is a part of the packaging industry that

primarily deals with bulk and industrial packaging and it caters

primarily to the manufacturing sector.

Industrial Packaging can be broadly divided into two segments-

heavy industries and light industries.

Industrial Packaging

Heavy Industries Light Industries

Heavy Industries require packaging solutions that does not only sustain the heavy weight of products like steel, aluminum and so on but it should facilitate easy movement of the same. On the other hand Light industries require packaging as per the specifications of the products and the mode of transportation plays a crucial role as well.

A perceptible change has been witnessed in the industrial packaging industry. The Companies are now proffering complete packaging solutions instead of merely supplying packaging consumables. India’s flexible packaging segment will treble from 1000 kilotons (2007) to 3100 kilotons by 2014.

The Indian manufacturing sector has fuelled the demand for enhanced and easy packaging needs. Due to easy availability of raw materials and low manufacturing costs, India is fast emerging as a preferred hub for packaging production.

Currently, rigid packaging enjoys more than 65% market

share but the traditional rigid packaging users are

migrating to flexible packaging in a big way. According to

industry sources, the main reason for this is that flexible

packages are found aesthetically attractive, cost-effective

and sturdy. Consumer preference for the use of convenient

packaging and packaged products in affordable quantities

in laminates is also one of the main reasons being attributed

to this growth.

17%

10%

6%

5%

Others

Glass Bottles

FlexiblePackaging

Metal Cans

Rigid Plastics

Caps & Closures

Printed Cartons

Labels

Indian packaging market

19%

4%

21%

18%

(Source: Indian Institute of Packaging)

31



Growth Drivers

Rising population: India’s population is estimated to be

1.21 billion in 2011 as it is growing at 1.3%. The ‘young’

population of the country comprises over 50% people below

25 years. This age group is expected to continue seeing a

growth - and the good news is that these individuals like to

spend on lifestyle products.

Surging per capita income: Per capita income was

` 46,492 in FY 2009-10 and it is expected to grow by 17.3%

and reach ` 54,527 in FY 2010-11.

Expanding middle class: The middle class comprises

22% of the total population and by 2010; this class is

expected to grow to about 32% of the total population.

Urbanisation: Only 28% of India’s population today lives

in urban areas. This number is expected to reach 40 % by

2020, signaling a significant consumer, infrastructure and

retail expenditure.

Policy changes: The first of the fiscal in India will witness

multi-brand retailing for foreign players which would allow

players like Wall Mart, Carrefour and Target to develop fully

fledged set up in India.

Downstream Industry Optimism

Steel

India has been ranked the world’s fourth largest producer of

crude steel and is projected to become the world’s second

largest producer by 2015. The production of finished steel

in FY 2010-11 is 8.8% higher than 60.62 million tonnes

produced in FY 2009-10.

(Source: India Steel Market Watch)

Aluminum

India is the fifth largest producer of aluminum. India

produces only 1.318 million tonnes as compared to world

production of 40 million tonnes. The per capita consumption

of the aluminum metal in India is less than 1kg, whereas the

same is estimated at 25 - 30 kgs in US & Europe, 15 kgs in

Japan, 10 kgs in Taiwan and 3 kgs in China.

Despite the lower per capita demand for the metal in

India, there is a heavy demand for aluminum in the

domestic market on account of the metal being used in

large quantities across a number of industries including

packaging. Of the total volume required by the domestic

market, the power industry makes use of about 44% and

the consumer durables and transportation industries

consume about 10-12%, while the construction and

packaging sectors buy about 17%.

Glass

The glass industry in India is poised to grow rapidly,

owing to its extensive use in numerous sectors. The

glass packaging industry is growing at 10-12%. The glass

industry is divided into 2 broad segments- float glass

and container glass. The current capacity of float glass

segment is 4750 TPD and the per capita consumption is

only 1 kg and as this segment is still at a nascent stage a

growth of 13-15% is expected in the next 4years to come.

Copper

The copper ore production in India was 3.2 million tonnes

in 2010. India’s per capita copper consumption is 0.5 kg

which is significantly less than that of China (4.6 kg per

person) and substantially lower than the world average.

The main consumers of copper include electrical and

telecom industry.

Total volume break up

44%

10%

17%

17%

12%

Transportation Construction Packaging

Power industry Consumer durables

32


Paper

The Indian paper industry is estimated to be worth ̀ 25,000

crores. The Indian paper industry is poised to grow and

touch 11.5 million tonnes in 2011-12 from the current 9.18

million tonnes in 2009-10.

(Source: ASSOCHAM)

The Indian Paper industry generated a turnover of ` 30,000 crores and it contributed ` 3000 crores to the national exchequer and provided employment to around 1.5 million people in India.

Food products are the largest consumption category in

India as it accounts for nearly 21% of the GDP. The Indian

FMCG market segments constitute the following products:

2.4

0.5

IndiaWorld

(Source: CRU statistics)

4.6

Kg

per p

erso

n

China

Per Capita Copper Consumption

(Source: IMCAS)

Electrical Products

Engineering, Construction and Transport

Telecom

Others

36.0%

18.0%

20.0%

26.0%

Copper consumption pie

FMCG goods

The Indian FMCG sector is the fourth largest sector in the

economy. It is estimated to reach US$ 33.4 by 2015.

FMCG market size

2003

11.6

33.4

2015

$ bi

llion

(Source: IBEF)

FMCG market segments

2%

12%

43%

8%8%

4%

4%

5%

22%

Baby care

Hair care

Others

Fabric care

Household

Personal care

Food products

OTC products

(Source: Motilal global Investor conference 2010)

33



SWOT Analysis of Midfield IndustriesStrengths Weakness Opportunities Threats

1. Niche segment of industrial packaging

1. Capacity constraints

1. Surge in packaging demand

1. Peer competition

2. Established brands 2. Lack of infrastructure development

2. Untapped international export markets

2. Fluctuating prices of raw materials and Interest rates

3. Operational contracts: one stop solution

4. Diverse clients

5. Adherence to stringent quality parameters

6. Incessant focus on expansion and business growth

Risk ManagementRisk management is essential for sustainable stakeholder value creation. Effective risk governance will result in achievement of business objectives, protection of people, assets and reputation. We run our business by identifying, assessing and managing risks

Risk identification Risk assessment Risk management

Risk Mitigation

Health and safety One of the most important pre-requisites for the smooth functioning of our business operations is well being of workers. We have a comprehensive and well audited safety practice standards. This tremendously helps in reduction of accidents at the factories.

Raw material price fluctuations In line with the strategic priority, Midfield Industries manages its inventory very well. Maximisation of available resources and all the goods are manufactured in house. Backward integration is helping the Company to overcome raw material price fluctuations.

Changes in consumer behavior We incessantly monitor the market and carefully observe the consumer trends. The political developments and varying needs are mapped by our market research team and this helps us in serving the diverse sectors with customised packaging solutions.

Cost management Midfield Industries has a sound economic objective and a good corporate practice. The funding requirements are negotiated in a timely manner so that there is enough room to mitigate the risk related to foreign currency, interest rate and commodity prices rates.

34


Company Overview

Products

High Tensile Steel StrappingSeals & L-PlatesAngle BoardsCollated NailsTools & SparesPet StrapsStretch FilmsVolatile Corrosion Inhibitor (VCI) Paper

Midfield Industries Limited

Services

Operational contract

Industrial packaging solutions

It will also help in augmenting the long term working capital of the Company and achieve the benefits of listing on the Stock

Exchange.

Financial Highlights Financial performance

Midfield’s growing list of clientele and attractive order book has enabled it to report attractive numbers.

Particular 2010-11 2009-10 Growth (%)

Revenue (` in mn) 1325.69 907.05 46

EBIDTA (` in mn) 266.12 190.74 40

PAT (` in mn) 125.57 82.38 52

Human Resources (HR)The Company recognises the importance of the Human Resources team to achieve its goals. Midfield Industries has an

experienced and a dynamic HR team that ensures the implementation of significant HR policies for the Company’s growth

and credibility. The recruitment cell focuses on hiring new talent and implements the retainment policy for the existing

employees. There is a lot of emphasis on training and development so that there are emerging leaders and creation of

extensive talent pool.

Health and safety measuresWe have a policy in place for the health and safety for our workmen which have the following salient features:

1. Compliance with relevant safety and statutory regulations and rules both in letter and in spirit.

2. Maintenance of safe, healthy and congenial working atmosphere by constant monitoring of work place environment.

35



3. Ensuring cleanliness and proper lighting system at the work place

4. Providing helmets, gloves, appropriate tools, and other safety precautions to the workers.

5. Conducting workshops on safety, first-aid, fire fighting, safety audit and risk analysis studies.

We comply with applicable health and safety legislations to ensure that the workers enjoy a safe and a healthy work

environment.

OutlookIndian packaging industry with a growth of more than 11% p.a. is expected to continue recording high growth for a

prolonged period in the wake of low current per-capita consumption. Packaging today has grown in importance and the

large growing middle class, liberalisation and organised retail sector are the catalysts to growth in packaging.

Internal Control systemMidfield Industries has a comprehensive and consolidated internal control system to ensure authorised business

transactions. Internal audit is an independent function, which is carried out by internal auditors through intensive audits.

Regular internal audits determine the operational and financial efficiencies of the Company.

The Audit Committee of the Board of Directors conduct periodic reviews of pan-organisational effectiveness and

recommends improvement whenever required. The internal control system also formulates well documented policies,

guidelines, authorisations and approval procedures and ensures compliance with applicable policies and statues.

36


Corporate Governance

Company’s Philosophy on Code of GovernanceThe Company’s Corporate Governance philosophy is

woven around its total commitment to the ethical practices

in the conduct of its business.

The Corporate Governance polices of your Company

recognises the accountability of the Board vis-à-vis its

various constituents including Customers, Shareholders,

Investors, Employees, Government and other Regulatory

Authorities, with prime objective to deliver “Superior

Shareholder Value”.

The schedule of implementation of Corporate Governance

Code mentioned in Clause 49 of the Listing Agreement

lays down certain mandatory requirements, which your

Company has implemented. Your Directors are pleased to

report the same.

Board of DirectorsComposition and Functions

The Board consists of 6 Directors with considerable

professional experience and expertise in various fields. The

Board of Directors has the ideal composition with more

than half the Directors being Non-Executive Directors. Since

the Company has an Executive Chairman, the Board’s

composition meets the stipulated requirement of at least

one – half of the Board comprising independent Directors.

None of the Non-Executive Directors have any pecuniary

relationship or transactions with the Company, except

receiving sitting for attending each Board Meeting.

The number and dates of the Board Meetings held during

the year under review:

Eight (8) Board Meetings were held during the

FY 2010 – 2011 on the following dates:

1. 10.05.2010

2. 28.05.2010

3. 09.07.2010

4. 23.07.2010

5. 27.07.2010

6. 31.07.2010

7. 13.11.2010

8. 11.02.2011

During the year under review the time gap between any two

consecutive meetings did not exceed four months.

37


Corporate GovernanceReport

Name of the Director and category of Directorship

Attendance particulars No. of other Directorships and committee memberships

Board Meetings Last AGM Other Directorships

Committee membership

Sri M. Madhu Mohan Reddy, Chairman & Managing Director (Executive and Non-Independent Director)

8 YES 1 1

Sri M. Ashok Sagar, Whole Time Director (Executive and Non- Independent Director)

8 YES NIL 2

Sri Kamlesh Kumar Bhargava, Director (Non-Executive and Independent Director)

6 YES NIL 2

Sri K. Ashok Kumar, Director (Non- Executive and Non- Independent Director)

7 YES 2 NIL

Sri K. Raja Raju, Director (Non- Executive and Independent Director)

6 NO NIL 3

Sri V. G. Krishna Rao, Director (Non-Executive and Independent Director)

4 NO 1 1

Name of the Director and category of Directorship Other Directorship

Sri M. Madhu Mohan Reddy, Chairman & Managing Director (Executive and Non- Independent Director)

Centaur India Steels and Tools Private Limited

Sri M. Ashok Sagar, Whole Time Director (Executive and Non- Independent Director)

NIL

Sri Kamlesh Kumar Bhargava, Director (Non -Executive and Independent Director)

NIL

Sri K. Ashok Kumar, Director (Non- Executive and Non- Independent Director)

Srimaan Industries Private Limited Vishwas Construction Industries

Private Limited

Sri K. Raja Raju, Director (Non -Executive and Independent Director) NIL

Sri V. G. Krishna Rao, Director (Non- Executive and Independent Director) S. V. Components Private Limited

Shares held by Non – Executive Directors in the Company

Sl. No. Name of the Director No. of shares held

1. Sri Kamlesh Kumar Bhargava -

2. Sri K. Raja Raju -

3. Sri V. G. Krishna Rao -

4. Sri K. Ashok Kumar 10,23,000

Code of Business Conduct and EthicsThe Company has adopted a Code of Business Conduct and Ethics (the ‘Code’), which applies to all senior management

personnel, and Directors of the Company. It is the responsibility of all senior management personnel and Directors to

familiarise themselves with this Code and comply with its standards.

The Code of Business Conduct and Ethics have been posted on the Company’s website – www.midfieldindustries.com.

The details of the attendance of Directors at meetings of the Board and Annual General Meeting, held during the year (April

2010 to March 2011), along with the details of Committee memberships and their other Directorships are furnished below:

38


a. Audit Committee

Composition, Names of Members & Chairperson and

terms of reference

The Audit Committee of the Board comprises of

2 Non-Executive Independent Directors and 1

Non-Independent Director. Sri Kamlesh Kumar

Bhargava is the Chairman of the Audit Committee

As on date the members of the Audit Committee are:

Sl. No. Name of the Director No. of shares held

1. Sri Kamlesh Kumar

Bhargava

Chairman

2. Sri K. Raja Raju Member

3. Sri M. Ashok Sagar Member

Powers of the Audit Committee

a. To invite such of the executives, as it considers

appropriate (and particularly the head of finance

function) to be present at the meetings of the

Committee,

b. To investigate any activity within its terms of

reference,

c. To seek information from any employee

d. To obtain outside legal or other professional

advice, and

e. To secure attendance of outsiders with relevant

expertise if considered necessary.

Terms of Reference of the Audit Committee

1. Overseeing the Company’s financial reporting

process and the disclosure of its financial

information to ensure that the financial statement

is correct, sufficient and credible.

2. Recommending to the Board, the appointment,

re-appointment and, if required, the replacement

or removal of the statutory auditor and the fixation

of audit fees.

3. Approval of payment to statutory auditors for any

other services rendered by them.

4. Appointment, removal and terms of remuneration

of internal auditors

5. Reviewing, with the management, the annual

financial statements before submission to the

Board for approval, with particular reference to:

a. Matters required to be included in the

Director’s Responsibility Statement to be

included in the Board’s report in terms

of clause (2AA) of Section 217 of the

Companies Act 1956;

b. Changes, if any, in accounting policies and

practices and reasons for the same;

c. Major accounting entries involving estimates

based on the exercise of judgment by

management;

d. Significant adjustments made in the financial

statements arising out of audit findings;

e. Compliance with listing and other legal

requirements relating to the financial

statements;

f. Disclosure of any related party transactions;

g. Qualifications in the draft audit report.

6. Reviewing, with the Management, the quarterly

financial statements before submission to the

Board for approval.

7. Monitoring the use of the proceeds of the

proposed initial public offering of the Company.

Reviewing with the management the statement

of uses/application of funds raised through

initial public offering by major category, as well

as statement of funds utilised for purpose other

than those stated in the Prospectus and making

appropriate recommendations to the Board to

take up steps in this matter.

8. Reviewing, with the management, performance

of statutory and internal auditors, and adequacy

of the internal control systems.

9. Reviewing the adequacy of internal audit function,

if any, including the structure of the internal audit

department, staffing and seniority of the official

heading the department, reporting structure,

coverage and frequency of internal audit.

10. Discussions with internal auditors on any

significant findings and follow up thereon.

11. Reviewing internal audit reports and adequacy of

the internal control systems.

39



12. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

13. Reviewing management letters / letters of internal control weaknesses issued by the statutory auditors. Discussion with internal auditors any significant findings and follow up there on.

14. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

15. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

16. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of nonpayment of declared dividends) and creditors.

17. To review the functioning of the whistle blower mechanism, when the same is adopted by the Company and is existing.

18. Carrying out any other function as may be statutorily required to be carried out by the Audit Committee.

Four meetings were held during the year. The dates on which the meetings were held are:

1. 28.05.2010

2. 31.07.2010

3. 13.11.2010

4. 11.02.2011

The attendance of each member of the Committee is

given below:

Sl. No Name of the Director No. of Meetings

Attended

1. Sri Kamlesh Kumar

Bhargava

3

2. Sri K. Raja Raju 3

3. Sri M. Ashok Sagar 4

Remuneration CommitteeThe Remuneration Committee was constituted in the

Board Meeting held on 02.06.2008 with Mr. V. G. Krishna

Rao, Mr. K. Rajaraju and Mr. Kamlesh Kumar Bhargava as

the Members. The powers and duties of the remuneration

committee are:

i. To review, assess and recommend the appointment of

Executive and Non Executive Directors from time to time;

ii. To periodically review the remuneration package of the

Executive Directors and recommend suitable revision

to the Board;

iii. To recommend compensation to the non executive

Directors in accordance with the Companies Act, 1956

iv. To consider and recommend Employee Stock Option

Scheme, if any, from time to time and to administer

and superintend the same.

The remuneration committee did not meet during the year.

Details of Remuneration paid to the Directors for the year

2010 – 2011

Particulars M. Madhu Mohan Reddy, Chairman & Managing Director

M. Ashok Sagar, Whole Time Director

Remuneration paid from 01.04.2010 to 30.09.2010

` 90,000 per month ` 25,000 per month

Remuneration paid from 01.10.2010 to 31.03.2011

` 90,000 per month ` 65,000 per month

Non-Executive Directors receive sitting fee for attending

each Board Meeting.

Shareholders and Investors Grievance CommitteeThe Committee was constituted in the meeting held on

02.06.2008 and the members of the Committee are as

follows:

Sl. No Name of the Member Designation

1. K Raja Raju Chairman

2 M. Madhu Mohan Reddy Member

3. M. Ashok Sagar Member

40


The Share Transfer Committee approves the transfer of shares, where shares are held in physical form and issues duplicate share certificates as per the provisions of the Companies Act, 1956 read with the Securities Contract (Regulations) Act, 1956 and other applicable Acts/Rules in this regard. The Committee also reviews the status of shares dematerialised and all other matters related to shares.

The Committee meets as often as is required to approve various matters relating to transfers, transmissions, issue of duplicate share certificate etc. The Share Transfer Committee generally meets two times in a month. There are no requests for share transfers pending for the year under review.

This Committee also looks into the redressal of shareholder and investor complaints like transfer of shares, non-receipt of Dividends/rights/bonus/split share certificate, replacement of lost/stolen/mutilated share certificate, non-receipt of Annual report, other related issues. There are no investor complaints pending for the year under review.

Name and designation of the compliance officer: Mr. M. Laxminarayana, Compliance Officer.

CEO CertificationAs required by Clause 49 of the Listing Agreement, the CEO certification is provided elsewhere in the Annual Report.

1. Auditors’ Certification on Corporate Governance

As required by Clause 49 of the Listing Agreement, the Auditors’ certification is provided elsewhere in the Annual Report.

2. Compliance With Non-Mandatory Requirements of Clause 49 of The Listing Agreement:

The Company is presently complying only one non mandatory requirement enumerated in the provisions of Clause 49 of the listing agreement i.e., constitution of remuneration committee.

Number of shareholders complaints received: 19

Number not solved to the satisfaction of shareholders: NIL

Number of pending share transfers: No Pending

share transfers as on 31.03. 2011

3. General Body Meetings

Location and date/time of last three Annual General Meetings

Year Location Date Time

2009 – 2010 Registered Office: Plot No. 6, Phase IV Extension, IDA, Jeedimetla, Hyderabad – 500055

29.07. 2010 11:30 A.M.


25.09. 2009 11:30 A.M.


30.09. 2008 11:30 A.M.

No special resolution requiring a postal ballot was placed before the last AGM. Similarly, no special resolutions

requiring postal ballot is being proposed at the ensuing AGM.

4. Disclosures

Disclosures on materially significant related party

transactions i.e. transactions of the Company of

material nature, with its promoters, the Directors or

the management, their subsidiaries or relatives etc.

that may have potential conflict with the interests of

Company at large.

Details of related party transactions have been

disclosed under Note 12 on Schedule 21 on the

financial statements. There are no transactions, which

may have potential conflict with the interests of the Company at large.

Details of non-compliance by the Company, penalties, and strictures imposed on the Company by Stock exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years

No penalties have been imposed on the Company by Stock Exchanges or SEBI or any Statutory Authority on any matter related to capital markets, during the last three years.

41



5. Proceeds from Public Issue

The Company is placing before the Audit Committee

on a quarterly basis the application of funds raised

through the public issue as required under the

provisions of Clause 49 of the Corporate Governance.

6. Means of Communication

No half-yearly reports were sent to the shareholders.

Quarterly results are published in Financial Express

/ Business Line (in English) and Andhra Prabha (in

Vernacular Language)

The results of the Company are displayed on

www.midfieldindustries.com

Management Discussion and Analysis forms part of the

Annual Report and is provided elsewhere in this report.

7. General Shareholder Information

a. Details of the ensuing Annual General Meeting

Date Day Time Venue

23.09.2011 Friday 10.00 A.M.

Copper Hall, Expotel Hotel, Lower Tank Bund Road, Hyderabad – 500029

b. Financial Calendar: 1.04. 2011 to 31.03.2012

Date Day Time Venue1st Quarterly results

Half yearly results

3rd Quarter 4th Quarter

August, 2011

November, 2011

February, 2012

May, 2012

c. Date of Book Closure:

17.09. 2011 to 23.09.2011 (both days inclusive).

d. Dividend Payment Date:

On or before 15.10.2011

e. Listing on Stock Exchanges and Stock code:

The shares of the Company are listed on The

Bombay Stock Exchange Limited, Mumbai and

the Stock Code is 533220.

f. Market Price Date: High/Low during each

month in last financial year (2010 – 2011)

In `

Period The Bombay Stock

Exchange Limited, Mumbai

High Low

April 2010 N. A. N. A.

May 2010 N. A. N. A.

June 2010 N. A. N. A.

July 2010 N. A. N. A.

August 2010 257.50 150.00

September 2010 436.30 214.00

October 2010 455.00 385.30

November 2010 455.80 380.20

December 2010 433.90 90.70

January 2011 99.75 67.50

February 2011 70.50 45.85

March 2011 66.85 48.00

g. Performance in comparison to broad-based

indices such as BSE Sensex:

Comparitive Graph

20500

20000

19500

19000

18500

18000

17500

17000

16500

450400350300250200150100500

Sha

re P

rice

BS

E S

ense

x

Aug

ust 2

010

Sep

tem

ber 2

010

Oct

ober

201

0

Nov

embe

r 201

0

Dec

embe

r 201

0

Jana

rt 20

11

Febr

uary

201

1

Mar

ch 2

011

BSE Sensex Share Price

42


h. Registrar and Transfer Agents

Bigshare Services Private Limited is the Registrar and Share Transfer agents of the Company. For any queries regarding transfer of shares and demat of share, shareholders may contact:

Bigshare Services Private Limited,

E/2, Ansa Industrial Estate, Sakivihar Road,

Sakinaka, Andheri (E), Mumbai – 400072

Tel: 022 – 28470562

Fax: 022 – 28475027

email: [email protected]

i. Share Transfer System

Pursuant to the appointment of Bigshare

Services Private Limited as Common Agency for

j. Distribution of Shareholding

Distribution Schedule as on 31.03.2011 is furnished below:

Category No of Holders No of Shares % of shares to Total Equity

From To

01 5000 3,066 2,98,034 2.3245

5001 10000 164 1,33,375 1.0403

10001 20000 63 94,722 0.7388

20001 30000 28 73,151 0.5705

30001 40000 16 58,380 0.4553

40001 50000 19 89,129 0.6952

50001 100000 33 2,55,106 1.9897

100001 ABOVE 68 1,18,19,354 92.1857

TOTAL 3,457 1,28,21,251 100.0000

undertaking Company’s electronic and physical

share registry work, all the requests for share

transfers received by the Company are sent to

the Registrar. Similarly some of the shareholders

send the requests for share transfers directly to

the Registrar.

Normally the shares, without any technical

objections, are transferred and the certificates

are sent to the shareholders within 30 days from

the date of receipt of the request. The requests,

which contain technical objections are rejected

and rejection letters along with the requests are

sent to the shareholders within 15 days from the

date of receipt of the request.

Shareholding pattern as on 31.03.2011

Sl. No. Category No. of Shares held % to the Total Capital

1. Promoter & Promoter Group 66,37,075 51.77

2. FII’s 5,69,910 4.45

3. Bodies Corporate 27,16,852 21.19

4. Individuals 16,09,428 12.55

5. Directors and their relatives 10,94,209 8.53

6. Employees 1,44,000 1.12

7. NRIs 34,350 0.27

8. Clearing Members 15,427 0.12

TOTAL 1,28,21,251 100.00

43



k. Dematerialisation of shares and liquidity

Name of Demat Registrars:

Bigshare Services Private Limited,

E/2, Ansa Industrial Estate, Sakivihar Road,

Sakinaka, Andheri (E), Mumbai – 400072

Tel: 022 – 28470562

Fax: 022 – 28475027


International Securities Identification Number

(ISIN): INE091K01010

The Company has entered into Agreements

with NSDL and CDSL, and as on 31.03.2011,

54,15,499 Equity Shares have been

dematerialised, constituting 42.24% of the total

equity. As per the directives of Securities and

Exchange Board of India (SEBI), the Company’s

shares are covered under the compulsory

dematerialisation list and are transferable

through the depository system.

Registered Office and Address for correspondence:

Mr. M. Laxminarayana,

Compliance Officer

Plot No. 6, Phase IV Extension,

IDA, Jeedimetla, Hyderabad – 500055

Tel: 040 – 23098502

Fax: 040 – 23096493


Plant Locations:

1. Plot No. 4A & 4C Phase IV


2. Plot No. 6, Phase IV Extension,


3. Plot No. D16, Khasra No. 32, Bantakhedi,

Pargana – Bhagwanpur, Teshil – Roorkee

4. Sr. No. 5, Hissa No. 1, Vasurikhurd,

Tal. Wada, District – Thane

5. S3/119 & S3/120, Industrial Estate Kalunga,

Sanbrahmanitarang Revenue Village,

Orissa (Under Implementation – Expected

to commence commercial production

during fourth quarter of Financial Year 2011

– 2012)

l. Outstanding GDRs / ADRs / Warrants or any

Convertible instruments, conversion date and

likely impact on equity

The Company has not issued any GDRs, ADRs/

warrants or any convertible instruments.

Shareholders holding shares in electronic mode

should address all their correspondence to their

respective Depository Participant (DP)

44


Chief Executive Officer (CEO) Certification

I M. Madhu Mohan Reddy, Chairman and Managing

Director of MIDFIELD INDUSTRIES LIMITED to the

best of our knowledge and belief, certify that:

1. I had reviewed the Balance Sheet and

Profit and Loss Account (Consolidated and

Unconsolidated), and all its schedules and

notes on accounts, as well as the cash flow

statements and the Directors’ Report;

2. Based on my knowledge and information, these

statements do not contain any untrue statement

of a material fact or omit to state a material fact

necessary to make the statements made, in

light of the circumstances under which such

statements were made, not misleading with

respect to the statements made;

3. Based on my knowledge and information,

the financial statements and other financial

information included in this report, present in

all material respects, a true and fair view of, the

Company’s affairs, the financial condition, results

of operations and cash flows of the Company

as of, and for, the periods presented in this

report, and are in compliance with the existing

accounting standards and / or applicable laws

and regulations;

4. To the best of my knowledge and belief, no

transactions entered into by the Company

during the year are fraudulent, illegal or violative

of the Company’s code of conduct.

5. I am responsible for establishing and maintaining

internal controls over financial reporting for the

Company, and I have:

a) designed such disclosure controls and

procedures to ensure that material

information relating to the Company,

including its consolidated subsidiary, is

made known to us by others within those

entities, particularly during the period in

which this report is being prepared.

b) designed such internal control over

financial reporting, or caused such

internal control over financial reporting

to be designed under our supervision, to

provide reasonable assurance regarding

the reliability of financial reporting and

the preparing of financial statements for

external purposes in accordance with

generally accepted accounting principles;

c) evaluated the effectiveness of the

Company’s disclosure, controls and

procedures and

d) disclosed in this report any change in

the Company’s internal control over

financial reporting that occurred during the

Company’s most recent financial year that

has materially affected, or is reasonably

likely to materially affect, the Company’s

internal control over financial reporting.

6. I had disclosed based on our most recent

evaluation, wherever applicable, to the

Company’s auditors and the audit committee of

the Company’s Board of Directors.

a) significant changes in internal controls

during the year covered by this report;

b) significant changes in accounting policies

during the year and that the same have

been disclosed in the notes to the financial

statements;

c) instances of significant fraud of which they

have become aware and the involvement

therein, if any, of the management or an

employee having a significant role in the

Company’s internal control system.

For Midfield Industries Limited

M. Madhu Mohan Reddy

Chairman & Managing Director

Place: Hyderabad

Date: 06.08.2011

45

Auditors’ Certificate on Corporate Governance

To,

The Members

MIDFIELD INDUSTRIES LIMITED,

We have reviewed the implementation of Corporate Governance procedures by MIDFIELD INDUSTRIES LIMITED for the

year ended 31st March, 2011 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Bombay

Stock Exchange Limited.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was

limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of

the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of

the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency

or effectiveness with which the management has conducted the affairs of the Company.

On the basis of our review and according to the information and explanations given to us, the conditions of Corporate

Governance as stipulated in Clause 49 of the listing agreements with the stock exchanges have been complied with in

all material respect by the Company and no investor grievance is pending for a period exceeding one month against the

Company as per the records maintained by the Company.

For SAMPATH & RAMESH

Chartered Accountants

(Regd No. 005947S)

Date : 06.08.2011

Place : Hyderabad

A. Krishna Reddy

Partner

M. No. 204755


Corporate Governance

46

MiDFiELD iNDUSTRiES LTD.21st Annual Report 10 11MiDFiELD iNDUSTRiES LTD.21st Annual Report 10 1121st Annual Report 10 11

51Profit and Loss Account

52Cash Flow Statement

53Schedules

64Balance Sheet Abstract

47Auditors’ Report

50Balance Sheet

financialstatements

47


To

The Members

MIDFIELD INDUSTRIES LIMITED

Hyderabad

1. We have audited the attached Balance Sheet of

M/s MIDFIELD INDUSTRIES LIMITED as at

31.03.2011 and the Profit & Loss Account and the

Cash Flow Statement for the year ended on that

date annexed thereto. These financial statements are

the responsibility of the Company’s management.

Our responsibility is to express an opinion on these

financial statements based on our audit.

2. We conducted our audit in accordance with the

auditing standards generally accepted in India.

Those standards require that we plan and perform

the audit to obtain reasonable assurance about

whether the financial statements are free of material

misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also

includes assessing the accounting principles used

and significant estimates made by management,

as well as evaluating the overall financial statement

presentation.

3. We believe that our audit provides a reasonable

basis for our opinion, as required by the Companies

(Auditor’s Report) Order, 2003 issued by the Central

Government of India in terms of sub section (4A) of

section 227 of the Companies Act, 1956, we enclose

in the Annexure a statement on the matters specified

in the paragraphs 4 and 5 of the said order.

4 Further to our comments in the Annexure referred in

the paragraph 1 above, we report that:

i) We have obtained all the information and

explanations which to the best of our knowledge

and belief were necessary for the purposes of

our audit.

ii) In our opinion, proper books of account as

required by law have been kept by the Company

so far as appears from our examination of those

books.

iii) The Balance Sheet, Profit & Loss Account and

Cash Flow Statement dealt with by this report

are in agreement with the books of accounts.

iv) In our opinion, the Balance Sheet, Profit &

Loss Account and Cash Flow Statement dealt

with by this report comply with the accounting

standards referred to in sub-section (3C) of

section 211 of the Companies Act, 1956; to the

extent applicable.

v) On the basis of the written representations

received from the directors, as on 31.03.2011

and taken on record by the Board of Directors,

we report that none of the Director is disqualified

as on 31.03.2011 from being appointed as a

Director in terms of clause (g) of sub-section (1)

of section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information

and according to the explanations given to us,

the said accounts read with the notes thereon

give the information required by the Companies

Act, 1956, in the manner so required and

give a true and fair view in conformity with the

accounting principles generally accepted in

India;

a) In so far as relates to Balance Sheet, of

the state of affairs of the Company as on

31.03.2011.

b) In so far as relates to Profit and Loss

account of the Profit of the Company for

the year ended on that date.

c) In so far as relates to Cash Flow Statement,

of the cash flows of the Company for the

year ended 31.03.2011.

For Sampath & Ramesh


(Regd No.005947S)

A. Krishna Reddy

Partner

Place : Hyderabad

Date : 25.07.2011

M No. 204755

auditors’ Report

Auditors’ Report

48

MiDFiELD iNDUSTRiES LTD.21st Annual Report 10 11MiDFiELD iNDUSTRiES LTD.21st Annual Report 10 11

annexure to the auditors’ ReportReferred to as in Paragraph (1) of our report of even date

1. In Respect of its Fixed Assets

a) The Company has maintained proper records

showing full particulars including quantitative

details and situation of fixed assets on the basis

of available information.

b) As explained to us, the fixed assets have been

physically verified by the management during

the year in a phased periodical manner, which in

our opinion is responsible, having regard to the

size of the Company and the nature of its assets.

No material discrepancies were noticed on such

physical verification.

c) During the year, the Company has not disposed

of substantial part of the Assets. According to

the information and explanations given to us,

we are of the opinion that no transactions are

effected involving disposal of assets so as to

affects going concern status company.

2. In respect of its Inventories :

a) As explained to us, inventories have been

physically verified during the year by the

management at regular intervals. In our opinion,

the frequency of verification is reasonable.

b) In our opinion and according to the information

and explanations given to us, the procedures of

physical verification of inventories followed by

the management are reasonable and adequate

in relation to the size of the Company and the

nature of its business.

c) The Company had maintained proper records

of inventories. In our opinion and according to

the information and explanations given to us, the

discrepancies noticed on verification between

the physical stocks and the book records were

not significant, have been properly dealt with in

the books of accounts.

3. In respect of Loans secured or unsecured, granted or

taken by the Company to/from companies, firms or

other parties covered in the register maintained under

section 301 of the Companies Act, 1956:

a) During the year the Company has not taken loans

from parties covered in the register maintained

under section 301 of the Companies act, 1956.

The Company has not granted any loans to the

parties covered in the register maintained under

section 301 of the companies act, 1956.

4. In our opinion and according to the information and

explanations given to us, there are adequate internal

control procedures commensurate with the size of the

Company and the nature of its business, for the

purchase of inventory, fixed assets and for the sale

of goods. During the course of our audit, based on

our audit procedures applied, we have not observed

any continuing failure to correct major weakness in

internal controls.

5. As explained to us, and based on our verification and

examination of the books of accounts we are of the

view that there are no transactions that need to be

entered into the register in pursuance of section 301

of the act. In view of this, in our view, no comment

under clause (v) (b) in considered necessary

6. In our opinion, and according to the information

and explanations given to us, the Company has not

accepted any Deposits for which the provisions of

section 58A or 58AA of the Companies Act, 1956, and

the Companies (Acceptance of Deposits) Rules 1975

apply.

7. In our opinion, the internal audit function carried out

during the year by a firm of Chartered Accountant

appointed by the Management have been

commensurate with the size of the Company and the

nature of its business.

8. We were explained that the maintenance of cost

records has not been prescribed by the Central

Government under Section 209 (1) (d) of the

Companies Act, 1956 for the products manufactured

of the Company.

9. In respect of statutory dues:

a) According to the records of the Company

and as per the information and explanations

given to us, the Company is generally regular

in depositing with appropriate authorities,

undisputed Statutory dues including, Provident

fund, Employee’s state insurance, Custom

duty, Income tax, Excise duty, Cess and other

material statutory dues applicable to it with the

appropriate authorities.

49


b) According to the information and explanations

given to us, no disputed amounts payable in

respect of Income tax, Sales tax, Custom duty,

Excise duty and Cess were outstanding, as at

31.03.2011.

10. In our opinion, the Company neither has accumulated

losses at the end of the year nor incurred cash losses

during the financial year covered by our audit in the

immediately preceding financial year.

11. As per the records of the Company and according

to the information and explanations given to us, we

are of the opinion the Company has not defaulted in

repayment of dues to banks and financial institutions.

12. According to the information and explanations given

to us, the Company has not granted any loans and

advances on the basis of security by way of pledge of

shares, debentures and other similar securities.

13. In our opinion, the Company is not a chit fund or a

nidhi / mutual benefit fund/ society. Accordingly

the provisions of clause 4 (xiii) of the Companies

(Auditor’s Report) Order, 2003 are not applicable to

the Company.

14. In our opinion, the Company is not dealing in or

trading in shares, securities, debentures and other

investments. Accordingly the provisions of clause 4

(xiv) of the Companies (Auditor’s Report) Order, 2003

are not applicable to the Company.

15. In our opinion, according to the information and

explanations given to us, the Company has not given

any guarantee for loans taken by others from banks

or financial institutions.

16. In our opinion and according to the information and

explanations given to us, the term loans have been

applied for the purpose for which they were obtained.

17. In our opinion, and according to the information and

explanations given to us and on an overall examination

of statements and records of the Company, that the

funds raised on short-term basis have, prima facie, not

been used during the year for long-term investment.

18. In our opinion, the Company has not made any

preferential allotment of shares/securities during the

year to parties and companies covered in the register

maintained under section 301 of the Companies act,

1956.

19. The Company has not issued any debentures during

the year.

20. The Company has raised money by way of public

issue during the year.

21. In our opinion and according to the information

and explanations given to us and based on audit

procedures performed, no fraud on or by the

Company has been noticed or reported during the

year.

For Sampath & Ramesh


(Regd No.005947S)

A. Krishna Reddy

Partner

Place : Hyderabad

Date : 25.07.2011

M No. 204755

Auditors’ Report

50


`

Particulars Schedule Reference

As at 31.03.2011

As at 31.03.2010

I SOURCES OF FUNDSShareholder’s Funds

a Share Capital 1 128,212,510 83,212,500

b Reserves & Surplus 2 916,710,967 267,544,686

Loan Funds

a Secured Loans 3 458,554,448 409,528,354

b Unsecured Loans 4 15,894,264 13,762,643

Deferred Tax 5 6,497,227 (243,254)

TOTAL OF 1, 2 & 3 1,525,869,416 773,804,929

II APPLICATION OF FUNDS

Fixed Assets 6

a Gross Block 391,357,932 207,888,109

b Less: Depreciation 92,590,684 76,033,073

c Net Block 298,767,248 131,855,036

Investments 7 5,000,000 5,000,000

Current Assets, Loans and Advances

a Inventories 8 198,641,646 146,678,533

b Sundry Debtors 9 887,910,422 584,663,252

c Cash & Bank Balances 10 17,226,685 14,721,209

d Loans & Advances 11 293,920,888 107,820,098

1,402,699,641 858,883,092

Less: Current Liabilities & Provisions 12

a Current Liabilities 134,927,186 166,151,856

b Provisions 87,425,397 50,781,343

Net Current Assets 1,180,347,058 641,949,893

Miscellaneous Expenditure

( To the extent not writton off ) 13 46,755,110 -

TOTAL OF 1,2,3 & 4 1,525,869,416 773,804,929

Significant Accounting Policies 20

Notes to Accounts 21

As per our report of even date

For Sampath & Ramesh Chartered Accountants Regd No. 005947S For and on behalf of the Board

A. Krishna Reddy M Madhu Mohan Reddy M. Ashok Sagar Vivek Surana

PartnerM.No. 204755

Chairman & Managing Director Executive Director Company Secretary

Place : Hyderabad

Date : 25.07. 2011

Balance sheet as at 31.03.2011

51




A. Krishna Reddy M Madhu Mohan Reddy M. Ashok Sagar Vivek Surana

PartnerM.No. 204755


Place : Hyderabad

Date : 25.07. 2011

Profit and loss account for the year ended 31.03.2011

`

Particulars Schedule Reference

Year ended 31.03.2011


INCOMEa Sales

Domestic Sales 1,293,027,514 874,923,206

Export Sales 29,547,406 30,216,486

b Other Income 14 3,111,495 1,912,182

Total Income 1,325,686,415 907,051,874

EXPENDITURE

a Raw Material Consumed 15 882,748,409 584,853,583

b Personnel Cost 16 23,155,465 16,287,587

c Other Manufacturing Costs 17 14,527,729 12,958,551

d Administrative & Selling Expenses 18 133,942,528 102,208,586

e Preliminary Expenses Written off 5,195,012 -

1,059,569,143 716,308,307

Profit before Interest, Depreciation & Tax 266,117,272 190,743,567

f Financing Costs 19 61,651,300 49,866,604

g Depreciation 16,557,611 15,116,617

78,208,911 64,983,221

Profit/ (Loss) Before Tax 187,908,361 125,760,346

Provison for Current Tax 55,600,000 44,000,000

Provision for Deferred Tax 6,740,481 (620,064)

Net Profit after Tax 125,567,880 82,380,410

Balance brought forward 229,769,286 147,388,876

Balance available for appropriation 355,337,166 229,769,286

Transferred to General Reserve 36,000,000 -

Provision for Dividend 25,642,502 -

Tax on Dividend 4,259,220 -

Profit Carried to Reserves & Surplus 289,435,444 229,769,286

Earning per share (basic) (face value ` 10) 9.79 9.90

Earning per share (diluted) (face value ` 10) 9.79 9.90

Profit & Loss AccountBalance Sheet

52


`i(in lakhs)

Particulars Year ended 31.03.2011

A. CASH FLOW FROM OPERATING ACTIvITIES:Net Profit before Tax and Extraordinary items 1,879.08 Adjustments for:Depreciation 165.58 Finance and Interest Cost 616.51 Non Trade Income 31.11 Operating Profit before working capital changes 2,630.06 Inventories (519.63)Receivables (3,032.47)Loans & Advances (279.94)Other Current Assets (1,581.06)Current Liabilities (312.25)Provisions 6.76 Cash generated from operations (3088.54)Income -tax paid 635.07 Net Cash from Operating activities (3723.61)B. CASH FLOW FROM INvESTING ACTIvITIESPurchase of Fixed Assets (2,106.98)Sales of Fixed Assets - Capital WIP - Investment in Jv/ Others - Non trade income 31.11 Net Cash used in Investing Activities (2,075.87)C. CASH FLOW FROM FINANCING ACTIvITIESProceeds from issue of shares 450.00 Share Premium 5,535.00 Receipts / (Payments) of Secured Loans 490.26 Receipts / (Payments) of Unsecured Loans 21.32 Finance and Interest Cost (672.05)Net Cash used in Financing Activities 5,824.53 Net increase in cash and cash equivalents (A+B+C) 25.06 CASH AND CASH EQUIvALENTS:Opening balance 147.21 Closing Balance 172.27

cash flow statement for the year ending 31.03.2011

NOTES TO CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2011 1. Cash and cash equivalents include:

Cash and cheques in hand 0.61 Balances with scheduled banks:In Current Accounts 13.53

In Deposit Accounts 158.13 Total cash and cash equivalents 172.27

As per our report of even date For Sampath & Ramesh Chartered Accountants Regd No. 005947S For and on behalf of the Board

A. Krishna Reddy M Madhu Mohan Reddy M. Ashok Sagar Vivek SuranaPartnerM.No. 204755


Place : HyderabadDate : 25.07. 2011

53


schedules

`

As at 31.03.2011

As at 31.03.2010

SCHEDULE - 1 SHARE CAPITALAuthorised Capital

1,75,00,000 Equity Shares of `10 each 175,000,000 175,000,000

(Previous Year 175,00,000 Equity Shares

of ` 10 each)

SUBSCRIBED,CALLED UP & PAID UP

12,821,251 Equity Shares of ` 10 each 128,212,510 83,212,500

fully paid up (previous year 83,21,250 Equity Shares of ` 10 each)

128,212,510 83,212,500

20,50,000 shares out of the issued and subscribed were alloted as Bonus

Shares by capitalisation of Reserves during the Year Ending 31.03.2007

SCHEDULE - 2 RESERvES & SURPLUSCapital & General Reserves

- Share Premium 589,275,523 35,775,400

- Investment Subsidy Received from

Andhra Pradesh State Financial Corporation 2,000,000 2,000,000

- Profit & Loss Account 289,435,444 229,769,286

General Reserve 36,000,000 -

916,710,967 267,544,686

SCHEDULE - 3 SECURED LOANSFrom Bank

- On Cash Credit Account 366,451,265 273,119,620

- On Term Loan Account 90,139,205 108,142,404

- Loan's for vehicles & Others 192,103 569,888

- S.E. Investments Ltd 1,771,875 27,696,442

458,554,448 409,528,354

SCHEDULE - 4 UNSECURED LOANSSales Tax Deferment 15,894,264 13,762,643

15,894,264 13,762,643

SCHEDULE - 5 DEFERRED TAXATION ASSETDeferred Tax

UPTO 31-03-2010 (243,254) 376,810

For the YEAR 6,740,481 (620,064)

6,497,227 (243,254)

SchedulesCash Flow Statement

54


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ETS

schedules`

55


`

As at 31.03.2011

As at 31.03.2010

SCHEDULE - 7 INvESTMENTSCentaur India Steels & Tools Pvt. Ltd 5,000,000 5,000,000

( 50,000 Equity Shares of ` 100 each)

5,000,000 5,000,000

SCHEDULE - 8 INvENTORIESRaw Materials 59,506,070 73,249,379

Consumables 7,485,168 11,335,659

Finished Goods 117,111,890 44,898,190

Work in Process 14,538,518 17,195,305

198,641,646 146,678,533

SCHEDULE - 9 SUNDRY DEBTORS ( Un-secured,considered good )

Outstanding

For a period exceeding six months 116,738,876 42,928,863

Less than six months 771,171,546 541,734,389

887,910,422 584,663,252

SCHEDULE - 10 CASH AND BANK BALANCESCash in Hand 61,204 61,527

Cash at Bank

with scheduled bank on Current Accounts

1,353,148 400,594

Margin Money Deposit Account 15,812,333 14,259,088

17,226,685 14,721,209

schedules

Schedules

56


schedules

`

As at 31.03.2011

As at 31.03.2010

SCHEDULE - 11 LOANS AND ADvANCES (Un-secured,considered good)

Advances recoverable in cash for which value is to be received

- Capital Advances 105,711,632 80,658,865

- Others 6,174,359 3,232,654

Income Tax (TDS) 3,958,547 1,111,988

Deposits

- With Government Authorities 2,246,702 2,246,702

- With Others 169,375,648 14,887,347

- Security & Earnest Money Deposits 6,454,000 5,682,542

293,920,888 107,820,098

SCHEDULE - 12 CURRENT LIABILITIES & PROvISIONSCURRENT LIABILITES :

Sundry Creditors

- Small Scale Industrial Units - 467,833

- Others 134,927,186 165,684,023

134,927,186 166,151,856

PROVISIONS:

Provision for Gratuity 2,897,650 2,221,346

Provision for Tax 54,626,025 48,559,997

Provision for Dividend 25,642,502

Tax on Dividend 4,259,220

87,425,397 50,781,343

SCHEDULE - 13 MISCELLANEOUS EXPENDITUREPreliminary Expenses (IPO Expenses) 51,950,122 -

Less: Preliminary Expenses Written off 5,195,012 -

46,755,110 -

57


schedules

SCHEDULE - 15 RAW MATERIAL CONSUMEDA. Raw Material:

Opening Stock 73,249,379 71,949,483

Purchases 796,064,250 503,222,919

869,313,629 575,172,402

Less: Closing Stock 59,506,070 73,249,379

809,807,559 501,923,023

B. Stores,Spares, Consumables & Packing Material

Opening Stock 11,335,659 10,265,896

Purchases (Including Traded Goods) 138,647,272 77,268,644

149,982,931 87,534,540

Less: Closing Stock 7,485,168 11,335,659

142,497,763 76,198,881

C. Increase And Decrease In Stocks

Opening Stock:

Finished Goods 44,898,190 52,918,105

Work in Process 17,195,305 15,907,069

62,093,495 68,825,174

Closing Stock:

Finished Goods 117,111,890 44,898,190

Work in Process 14,538,518 17,195,305

131,650,408 62,093,495

Net Increase/(Decrease) (Other Than Raw Material) 69,556,913 (6731679)

Total Material Consumed 882,748,409 584,853,583

SCHEDULE - 16 PERSONNEL COST Director's Remuneration 1,478,400 1,260,000

Salaries & Wages 17,307,813 12,821,183

Staff Welfare 562,770 444,451

Other benefits 4,306,505 2,373,023

23,655,488 16,898,657

Less: Expenses Capitalised 500,023 611,070

23,155,465 16,287,587

`



SCHEDULE - 14 OTHER INCOME Interest On Term & Consumption Deposits 7,84,123 6,63,517

Others 23,27,372 12,48,665

31,11,495 19,12,182

Schedules

58


schedules

`



SCHEDULE - 17 OTHER MANUFACTURING COSTPower 12,168,870 10,578,477 Repairs & Maintanance:- for Plant & Machinery 787,548 891,495 - for Others 1,168,614 674,586 Job Work Charges 766,533 880,563

14,891,565 13,025,121 Less: Expenses Capitalised 363,836 66,570 14,527,729 12,958,551

SCHEDULE - 19 FINANCE COSTOn Cash Credit Accounts 41,019,324 38,731,103 On Term Loans Accounts 12,809,134 18,628,392 Others 13,376,831 8,958,872

67,205,289 66,318,367 LESS: Interest to be Capitalisied 5,553,989 16,451,763

61,651,300 49,866,604

SCHEDULE - 18 ADMINISTRATIvE & SELLING EXPENSESRent 117,400 197,400 Rates & Taxes 1,969,450 627,586 Advertisement & Sales Promotion Expenses 1,176,014 467,789 Printing & Stationary 457,665 379,856 Postage,Telegrams & Telephones 764,055 993,592 Travelling & Conveyance 2,513,003 1,726,415 Car Hire Charges 15,961 7,795 Legal & Professional Charges 1,113,212 873,719 Consultancy Charges 798,900 1,102,772 Transport Charges 13,839,731 12,535,400 Bad Debts 2,826,138 2,604,842 Bank Charges ,LC, & Processing Charges etc 7,857,568 5,435,364 Auditors Remuneration 1,103,000 200,000 Internal Audit Fee 300,000 - Sales Commission 533,037 704,986 Excise Duty 2,130,841 3,652,872 Custom Duty 1,577,176 717,806 Service Tax 4,116,840 1,017,442 Sales Tax 38,942,621 20,119,538 Other Expenses 51,912,629 49,090,865 134,065,241 102,456,039 Less: Expenses Capitalised 122,713 247,453

133,942,528 102,208,586

CALCULATION OF DEFERRED TAX FY 2010-2011 Depreciation as per the Income Tax Act. 3,63,88,389 Depreciation as per the Companies Tax Act. 1,65,57,611 Difference in Depreciation 1,98,30,778 Deferred Tax 67,40,481

59


schedulesSCHEDULE - 20 SIGNIFICANT ACCOUNTING POLICIES

1. Basis for preparation of Financial Statements:

The Financial statements have been prepared under the historical cost conventions in accordance with the generally

accepted accounting principles in India and the provisions of the Companies Act, 1956 as adopted consistently by the

Company. All income and expenditure having a material bearing on the financial statements are recognised on accrual

basis.

2. (A) Fixed Assets:

Fixed assets are recorded at historical cost of purchase and do not reflect current values. Cost includes interest

and other financial charges attributable to the acquisitions of fixed assets.

B. Intangible Assets:

The IPO Expenditure incurred is amortised over the period of 10 years.

3. Investments:

Long Term Investments are stated at cost.

4. Inventories :

Inventories have been valued as under:

i) Raw materials, work-in-progress, stores and spares and finished goods have been valued at cost or net realisable

value whichever is lower.

5. Foreign Exchange Transactions:

All the Foreign exchange transactions entered into during the current period are accounted at the exchange rate

prevailing on the date of contract/documentation. Foreign Exchange fluctuations on transactions entered into during

the period and received/paid during the period are accounted in the current financial year. The out standing accounts

in foreign currency are restated at the end of the year at the foreign currency rate prevailing on that date and any

fluctuation on the same is recognised and accounted at the end of the period.

6. Revenue Recognition:

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been

transferred to the buyer.

Revenue from Works Contracts is recognised by reference to the completion of the contract activity at the reporting

date, where the contract activity extended beyond the reporting date, on the basis of percentage of the completion

method.

7. Employee Benefits:

i) Provident Fund:

The Company contributes to the Employee Provident Fund maintained by the Central Government under the

Employees Fund Scheme. Both Employee and Company made make monthly contributions to this Provident

Fund plan to a specified percentage of the employees’ salary.

ii) Gratuity:

Provision has been made in the financial statements of the Company, in respect of gratuity on accrual basis.

8. Borrowing Costs:

Borrowing costs that are directly attributable or constructions of qualifying assets are capitalised as part of the cost

of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended

use. All other borrowings costs are charged to Profit and Loss Account.

Schedules

60


9. Provision for Current & Deferred Tax:

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax assets

and liabilities are recognised, subject to consideration of prudence, on “timing differences”, being the difference

between taxable incomes and accounting income, that originate in one period and are capable of reversal in one or

more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of

losses under tax laws are recognised only to the extent that there is virtual certainty supported by convincing evidence

that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred

tax assets on account of other timing differences are recognised to the extent that there is a reasonable certainty of its

realisaton.

10. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree if estimation in measurement is recognised when there is a present obligation

as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not

recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial

statements.

SCHEDULE - 21 NOTES TO ACCOUNTS1. Capital:

a) During the year Company has offered and allotted 45, 00,001 Equity Shares of `10 each at a premium of `123

per share to the public through prospects after obtaining the necessary statutory and regulatory approvals.

2. Secured Loans :

a) Term Loans by State Bank of India, Axis Bank Ltd. & State Bank of Hyderabad by joint mortgage by deposit of title

deeds of all immovable properties and first charge by way of hypothecation of all movable properties both present

and future.

b) Working Capital facilities sanctioned by State Bank of India, Axis Bank Ltd. & State Bank of Hyderabad are

secured by hypothecation of raw materials, stock in process, finished goods, stores and spares and book debts

both present and future on parri-passu basis. These are further secured by way of second charge on the fixed

assets of the Company.

c) The Company has availed loan of ` 350 lakhs from S.E. Investment Limited secured by charge on intangible

assets including Goodwill, Patent, Licence under patent, trademark, copyright or licence under copyright of the

Company. The said loan has further been secured by pledge of 500,000 equity shares by the promoter of the

Company, namely Mr. M. Madhu Mohan Reddy. The charge created in favour of S.E. Investments Limited was

satisfied and form No. 17 was filed with the Registrar of Companies, Andhra Pradesh on 01.07.2011.

3. Contingent Liabilities:

` (in lakhs)

As at As at

31.03.2011 31.03.2010i) Banks Guarantees given by Banks 107.00 111.10

4. Details of the disputed dues to customs & Sales Tax are given below

NIL

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61


5. Particulars of Managerial Remuneration:

` (in lakhs)

Year ended Year ended

31.03.2011 31.03.2010Salary 14.78 12.60Perquisites - -Provident Fund 0.60 0.50Medical Expenses - 0.10

15.38 13.20

6. Auditors Remuneration :

` (in lakhs)


31.03.2011 31.03.2010Audit Fees 5.03 1.50Tax Audit Fees 1.00 0.20Certification & other Tax matters 5.00 0.30

7. Additional information pursuant to the provision of paragraphs 3, 4C,& 4D of Part II of Schedule VI of the Companies Act, 1956.


31.03.2011 31.03.2010a) Installed Capacity (as certified by the Management)

(i) Steel Strapping (Tonnes per annum) 18000 12000

As on 31.03.2011

As on 31.03.2010

c) Opening Stock of Finished Goods 448.98 529.18

d) Closing Stock Finished Goods 1,171.11 448.98

Year ended 31-03-2011

Year ended 31-03-2010

e) Production :

(i) Steel Strapping ( MT’s) 9,289.62 8,484.05

(ii) Seals ( Nos) 14,951,900 13,093,100

(iii) Scrap (MT’s) 334.64 336.080

schedules

` (in lakhs)

As on 31-03-2011

AS on 31-03-2010

f) Sales

i) Steel Strapping, Seals, Tools, Spares, Angle Boards, Nails, Scrap,

Packing Services and all other packaging products etc.

13,325.74 9,051.39

13,325.74 9,051.39

g) Total Materials Consumed 8,827.48 5,848.53

Schedules

62


` (in lakhs)

Sl.No Particulars Year ended 31.03.2011


(a) Outflow in foreign currency

i) Foreign Travel Expenses 5.80 0.60

ii) Raw Material - -

iii) Capital Equipment & Components 248.50 17.30

iv) Repayment of Loan & Interest - -

v) Others - -

(b) Inflow in foreign currency

i) FOB value of exports 295.40 302.10

ii) Others 0.00 0.00

8. Foreign Currency Transactions:

9. Deferred Tax Liability:

` (in lakhs)



a. Deffered Tax Liability

On a/c of Accumulated Tax Losses

Deffered Tax Asset

On a/c of Depreciation (6.30)

On a/c of MAT Credit available

Net Deferred Tax Liability

b. General Reserve adjusted against 67.40

Deffered Tax Asset

schedules

10. Sales Tax Deferment Loan:

During the year, the Company has availed an amount of ̀ 32,31,621/- under sales tax deferment scheme and the sales

tax deferment availed till the current accounting period is due for repayment ` 1,58,94,264 as under.

Sl.No. Year of Repayment ` (in lakhs)

1 2014-15 1.392 2015-16 20.943 2016-17 17.854 2017-18 29.495 2018-19 16.346 2019-20 12.927 2020-21 16.728 2021-22 6.769 2022-23 9.2210 2023-24 2.9011 2024-25 25.20

63


11. Working for the earnings per share in terms of AS 20- “Earning per share”

`

31-03-2011 31-03-2010Net Profit for basis EPS

12,55,67,880 8,23,80,410Weighted Average No. of Shares

12821251 8321250Annualised Basic Earnings per share 9.79 9.90

12. Related Party Disclosures:

a) Related parties where control exists : Nil

b) Other Group Companies : Centuar Steels & Tools Pvt. Ltd. No transaction has taken place during the yearc) Key Management Personnel : Mr.M. Madhu Mohan Reddy,

Chairman & Managing DirectorMr. M. Ashok Sagar, Executive Director. Other than Remunaration the KM P’s does not have any related transactions.

13. Raw Materials purchases includes carriage inwards, material handling and clearing & forwarding charges etc

14. Confirmations are still to be received in respect of the amounts relating to Debtors, Creditors and Loans & Advances.

15. Figures for the previous year have been regrouped/ reclassified/ recast wherever necessary. Figures are rounded off

to the nearest rupee.



A. Krishna Reddy M. Madhu Mohan Reddy M. Ashok Sagar Vivek Surana

PartnerM.No. 204755


Place : Hyderabad

Date : 25.07. 2011

schedules

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64


l. Registration Details :

Registration No. U 2 7 1 0 9 A P 1 9 9 0 P L C 0 1 1 3 5 3

Balance Sheet Date 3 1 0 3 2 0 1 1 State Code 0 1

ll. Capital Raised during the year : (Amount in Rupees)

Public Issue 4 5 0 0 0 0 1 0 Right Issue N I L

Bonus Issue N I L Private Placement N I L

lll. Position of Mobilisation and Deployment of Funds : (Amount in Rupees)

Total Liabilities 1 7 4 8 2 2 1 9 9 9 Total Assets 1 7 4 8 2 2 1 9 9 9

Sources of Funds

Paid-up Capital - 1 2 8 2 1 2 5 1 0 Reserves & Surplus 9 1 6 7 1 0 9 6 7

Secured Loans - 4 5 8 5 5 4 4 4 8 Unsecured Loans 1 5 8 9 4 2 6 4

Application of Funds

Net Fixed Assets 2 9 8 7 6 7 2 4 8 Investments - 5 0 0 0 0 0 0

Net Current Assets 1 1 8 0 3 4 7 0 5 8 Miscellaneous

Expenditure

- - - - - N I L

Accumulated Losses - - - - - - N I L

lV. Performance of Company : ( Amount in Rupees)

Turnover 1 3 2 2 5 7 4 9 2 0 Total Expenditure 1 1 3 7 7 7 8 0 5 4

Profit/Loss before tax (+) 1 8 7 9 0 8 3 6 1 Profit/Loss after tax (+) 1 2 5 5 6 7 8 8 0

(Please tick appropriate box + for Profit, - for Loss)

Earning per Share in ` - - - - 9 . 7 9 Dividend rate % 2 0

V. Generic Names of Three Principal Products / Services of Company (as per monetary terms)

Item Code No. (ITC Code) 7 2 1 2 . 4 0 0 0

Product/Service Descripition C O L D R O L L E D S T E E L S T R A P P I N G

Item Code No. (ITC Code) 8 3 0 9 . 9 0 3 0

Product/Service Descripition S E A L S

Item Code No.(ITC Code) 4 8 2 3 . 9 0 1 8

Product/Service Descripition C O R N E R B O A R D S / E D G E B O A R D

NOTE : For ITC Code of Products please refer to the publication Indian Trade Classification based on harmonised

commodity descriotion and Coding system by Ministry of Commerce, Directorate General of Commercial Intelligence &

Statistics, Calcutta - 700 001

Balance sheet abstract & company’s General Business Profile

M. Madhu Mohan Reddy M. Ashok Sagar Vivek SuranaChairman & Managing Director Executive Director Company Secretary

Place : HyderabadDate : 25.07. 2011

Additional Information as required under Part Iv of Schedule vI to the Companies Act, 1956

corPorAte informAtion

Board of Directors

Mr. M. Madhu Mohan Reddy

Chairman & Managing Director

Mr. M. Ashok Sagar

Executive Director

Mr. K Ashok Kumar

Director

Mr. K Raja Raju

Independent Director

Mr. Kamlesh Kumar Bhargva


Mr. V G Krishna Rao


Company SecretaryMr. Vivek Surana

Bankers

State Bank of India

Axis Bank Ltd.

State Bank of Hyderabad

AuditorsM/s. Sampath & Ramesh


101 A, Sidhartha Harini Apartments

Besides DBR Mills

Lower Tank Bund Road

Hyderabad – 500 080

Email : [email protected]

Registrar & Share Transfer AgentM/s. Bigshare Services Private Limited

E/2, Ansa Industrial Estate, Sakivihar Road

Sakinaka, Andheri (E)

Mumbai – 400 072


Registered Office

Plot No.6, Phase – IV Extn

I.D.A., Jeedimetla

Hyderabad – 500 055


Plants1. Plot No. 6, Phase – IV Extension, I.D.A.,

Jeedimetla, Hyderabad – 500 055.

2. Plot No.4A & 4C, Phase – IV, I.D.A.,

Jeedimetla, Hyderabad – 500 055

3. Plot No.D-16, Khasra No.32, Bantakhedi,

Paragana-Bhagwanpur, Tehsil – Roorkee,

Dist:Haridwar, Uttaranchal.

4. Sy. No.5, Hissa No.1, Vasurikhurd,

Taluk – Wada, Dist : Thane, Maharasthra.

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