uttam galva steels limiteduttam galva steels limited directors' report to, the members your...
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Uttam Galva Steels Limited
DIRECTORS ' REPORT
To,
The Members
Your Directors have pleasure to present Twentieth Report on the business and operations of the Company, along with the Audited Statemenof Accounts for the Financial Year ended 31 a' March, 2005.
1. FINANCIAL RESULTS:
PARTICULARSYear ended
31°' March , 2005Year ended
31•' March, 2004(Rs. in Millions ) (Rs. in Millions)
Sales & Other Income21561.12 12205.49
Gross Profit before Depreciation and Interest 1994.03 1296.03Less : Interest & Financial Charges
644.83 499.84Restructuring Financial Cost - Term Loans
- 237.83Cash Profit
1349.20 558.36Less : Depreciation
322.05 304.01Profit before Tax
1027.15 254.35Less : Provision for Tax - MAT
80.54 15.60Profit after tax
946.61 238.75Add : Balance Carried from earlier year
148.91 (89.84)Balance Carried to Balance Sheet
1092.36 148.91
Notes:-
1. The figures of the previous year have been re-grouped to bring these in line with this years figures , wherever required.2. OPERATIONS:
Your Company has achieved higher turnover of Rs.21561.12 millions in comparison to As. 12205.49 millions during the previous yeari.e. an increase of 76.65 %. Your Company has also recorded higher gross profit of Rs.1 994.03 millions in comparison to Rs.1 296.03millions during the previous year i. e. an increase of 53.86 % and recorded 403.83% growth in Profit Before Tax of Rs. 1027.15 millionsas compared to Rs.254.35 millions during the previous year.
Your Company have embarked on very ambitious growth plans to double capacity and diversify product base. This will significantly
and very positively impact Earning Per Share (EPS) in coming years and will enable the Company to thrive in any downturn in Steelcycle due to better product mix and lower long term costs.
Owing to ambitious expansions and importance of timely executions of projects, your Board feels it unwise to disturb cash flow andhas decided to plough back earnings for time being.
3. EXPORTS :
The gross export turnover was increased by 94.33 % to Rs.14421.66 millions compared to Rs.7421.10 millions during the previous
year due to higher volumes and better price realisation in stable scenario in the International Market during the year under review:
Your Company foresees volatile demand for steel worldwide and will therefore continue to focus both on exports and domesticmarket.
4. MANAGEMENT DISCUSSION AND ANALYSIS:
Pursuant to Clause 49 (V) (A) & (B) of the Listing Agreement
your Directors wish to report as follows:
a. Industry Structure and Development
The Steel cycle is at the peak and global outlook in short
term is unpredictable. However value added product
mix and continuous efforts to control costs will ensure
our progress in years to come.
b. Opportunities and Threats
Opportunities will exist with the increase in higher valueadded steel consumption on a steady growth path in thecountry and the expectation of strengthening of theIndian economy. However, the Indian Steel Industry isa still primarily export based.
c. Segment - wise or Product - wise Performance
Segment wise or product wise analysis or performanceis not applicable to your Company under AccountingStandard -17.
d. Outlook
The long term outlook for the industry and consequentlyfor your Company is stable and reasonably good.Demand for our products will grow continuously as theAutomobile and White Goods Industries are doing well.
e. Risks and Concerns
Ever changing scenario in international and domesticmarkets could be the only risk which may be faced bythe Steel Industry. Other risks or concerns related tofinance, production, stocks, insurance, etc. are beingmanaged adequately and efficiently by your Company.
f. Internal Control Systems and their adequacy
Effective internal operational control systems and regularinternal audit mechanism to monitor and review thesame under the overall control and supervision of theInternal Auditor and the Audit Committee of Directorsare in place and functioning well. This has substantiallycontributed to the better management. Efforts forcontinued improvements are being consistently madein this regard.
Discussion on Financial Performance with respect toOperational Performance
The financial performance with respect to the operational
performance during the year under review was reasonably
good. 53.86 % increase in gross profit over the previous
year i.e. from Rs. 1296.03 millions to Rs. 1994.03millions indicates the same.
9.
0oh. Material Development in Human Resources / industrial
Relations Front , including Number of PeopleEmployed
Implementation of healthy practices of HRD activities foroverall development of human assets and induction of
professionally qualified and skilled manpower including
internal and external training programmes are the constant
features of cur Company. Presently, your Company is
employing about 700 employees. Your Company isproud of healthy industrial relations.
i. Material Financial and Commercial Transactions :
There are no materially significant financial and
commercial transactions with the related parties conflicting
with the interest of the Company during the financial year
under review. The Promoters and the Directors are notdealing in the Equity Shares of the Company.
5. CORPORATE GOVERNANCE:
Your Company has been very active in implementation andpractice of corporate governance norms. Your Company hasimplemented all the mandatory requirements pursuant to
Clause 49 (as amended) of the Listing Agreement well in
advance. A detailed report on Corporate Governance along
with a certificate from the Auditors confirming the compliance
is annexed hereto and forms part of the Directors' Report andAnnexure-III
6. AUDIT COMMITTEE :
The Meetings of the Audit Committee of Directors asrequired under Section 292A of the Companies Act, 1956and Clause 49 of the Listing Agreement which consists ofthree Non-Executive Independent Directors took place on15th May, 2004, 21st July, 2004, 30th October, 2004 and15th January, 2005 during the year under review. The saidCommittee is discharging its due obligations andresponsibilities diligently as required.
7. DIRECTORS:
During the year under review Shri. V Prakash (Nominee ofICICI Bank Ltd) ceased to be Director on the Board w.e.f.from 23" June, 2004 and Smt. Shaila Sarpotdar has joinedthe Board on 240i June, 2004 in his place and Shri M. S.Natarajan (Nominee of LIC of India) ceased to be Director onthe Board w.e.f. 19'" September, 2004 and Shri S. R.Krishnaswamy has joined the Board on 20' September,2004 in his place.
In accordance with the provisions, Section 255 & 256 of theCompanies Act, 1956, Shri P. G. Kakodkar and Dr. N. S.Datar, retire by rotation and being eligible have offeredthemselves for re-appointment. The Board of Directorsrecommend their re-appointment.
Uttam Galva Steels Limited
Shri Ankil Miglani, relative of Shri Rajinder Miglani-CMD andShri Anuj Miglani DMD & COO of the Company wasappointed as Additional Director by the Board on 29'" July,2005 and holds office upto the ensuing Annual GeneralMeeting. In accordance with the provisions of section 257 ofthe Companies Act, 1956, the Company has received noticeform a member proposing Shri Ankit Miglani to be appointedas a Director at the ensuing Annual General Meeting. He isalso appointed by the Board on 29'' July, 2005 as a Whole-Time Director designated as Director (Commercial) subjecthowever, to the approval of the members at the ensuingAnnual General Meeting and prior approval of the CentralGovernment pursuant to Section 314(1 B) of the CompaniesAct, 1956.
8. DIRECTORS ' RESPONSIBILITY STATEMENT :
Pursuant to Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:
i) In the preparation of the annual accounts, the applicableaccounting standards have been followed;
ii) Appropriate Accounting Policies have been selectedand applied consistently, and have made judgementsand estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of theCompany as at 31 " March, 2005 and of the Profit andLoss Account for the financial year 2004-05.
iii) Proper and sufficient care has been taken for the
maintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956. for safeguarding the assets of the Company andpreventing and detecting fraud and other irregularities;
iv) The Annual Accounts have been prepared on a'goingconcern basis'.
9. AUDITOR:
Notes to the Accounts as referred in the Auditors' Report areself - explanatory and therefore, do not call for any furthercomments or explanations.
Shri Yogesh B Mehta, Chartered Accountant, StatutoryAuditor of the Company will retire at the ensuing 201 AnnualGeneral Meeting and is eligible for re-appointment. The saidAuditor has confirmed that his appointment if made, shall bewithin the limits of Section 224(1 B) of the Companies Act,1956. The Board of Directors recommend appointment ofShri Yogesh 8 Mehta, Statutory Auditor of the Company andfix his remuneration for the Financial Year 2005-2006, tohold office till the conclusion of the 21" Annual GeneralMeeting of the Company.
10. FIXED DEPOSITS :
Your Company has not accepted Deposits from Publicu/s.58A of the Companies Act. 1956 and Companies(Acceptance of Deposits ) Rules, 1975.
11. INSURANCE :
Your Company has taken adequate insurance cover forall itsAssets.
12. LISTING OF SECURITIES;
7,99,56,373 Equity Shares of Rs. 10/- each are listed withand trading permissions received from the Stock Exchangesat Mumbai, Delhi and National Stock Exchange.
Approval for de-listing of aforesaid Equity Shares is awaitedfrom The Calcutta Stock Exchange Association Ltd.
13. DEMAT OF SECURITIES :
Nearly 76.48% of total Equity Share Capital is held indematerialized form with NSDL/CDSL.
14. SUSIDIARYCOMPANY:
There is no Subsidiary Company.
15. DISCLOSURES:
Information of conservation of energy, technology absorption,foreign exchange earnings and outgo required to be givenpursuant to section 217(1)(e) of the Companies Act, 1956read with Companies (Disclosure of Particulars in theReport of the Board of Directors) Rules, 1988 is annexedhereto (Annexure - 1) and forms part of this report.
Information required to be given pursuant to the provisionsof Section 217(2A), of the Companies Act, 1956 is enclosedherewith, marked Annexure-II and forms part of this report.
16. ACKNOWLEDGEMENT:
Your Directors take this opportunity to express their deepsense of gratitude to the Central, State Governments andLocal Governments. Financial Institutions and Banks fortheir continued support, co-operation and guidance.
At this point your Directors like to place on record theirsincere appreciation for the total commitment, dedicationand hard work put in by every member of the Uttam Family.
And to you our Shareholders, we are deeply grateful for theconfidence and faith that you have always placed in us.
Your Directors express their deepest gratitude to the esteemedcustomers of the Company for their continuous confidenceand faith, which they have in the products and services ofyour Company.
Place : Mumbai RajinderMiglaniDate : 29'^ July, 2005 Chairman & Managing Director
For and on behalf of the Board
Uttam Galva Steels Limited
5 YEARS' HIGHLIGHTS
SALES & EARNINGS
LOCAL SALES
EXPORT SALES
GROSS SALES.,==
OTHER INCOME
TOTAL INCOME
LESS : CENTRAL EXCISE DUTY II
LESS : SELLING & DISTRIBUTION EXPENSES !
SALES AND OTHER INCOME ( EFFECTIVE )
MATERIAL COST ( INCL. STOCK VARIATION)f
OTHER EXPENDITURE
PSIDT'si
INTEREST & FINANCIAL CHARGES
PROFIT BEFORE DEPRECIATION & TAX (PBDT)
DEPRECIATION
PROFIT BEFORE TAX
PROFIT AFTER TAX <
CASH ACCRUALS
ASSETS & LIABILITIES
FIXED ASSETS: GROSS
F2004-05
7139
14422
21561
54
21615
644
1306 I
19665
16507
1164
1994
645
1349
322
1027
947
1269
NET 6335
TOTAL ASSETS : NET 7691
REPRESENTED BY
NET WORTH 2639 ISHARECAPITAL -EQUITY 800 i
-PREFERENCE 54
SHARE / WARRANT APPLICATION MONEY 7RESERVES 1779
BORROWINGS 5052
LONG TERM SECURED 3882LONG TERM - UNSECURED 66SHORT TERM 1104
TOTAL FUNDS 7691
RATIOS
EARNING PER EQUITY SHARE RS. 12 . 57BOOK VALUE PER EQUITY SHARE RS . 32.92DEBT : EQUITY RATIO C 1.47: 1
2003-04 2002-03 2001-02 2000-0)^
(Rs in Millions)4784 3254 3532 4190F7421 5279 2392 2474
'12205 b533 '', 666440 23 7 9
12246 8557 5931 6674580 448 456 551630 526 373 336
11035 7583 5102 5787
8738 5721 4041 44601001 809 655 700
1296 1052 `x106 627738 672 341 744
558 381 65 (117)304 278 274 270
254 10:3 209) (386)
239 103 (209) (386)543 381 65 (117)
669 6117 5706 56234622 4348 4215 4404
5533 5000 4701 4953
I1533 1300 1116 1297695 670 670 53254 54 54
1 63 356783 634 634 476
4000 3701 3586 36563012 2978 2891 2927
224 227 241 252763 495 454 478
5533 5000 4701 4953j
f1 )
1.44I (3.12) (7.26)
22.04 18.45 16.64 17.68
i 96:1 2.29:1 1 '2.59: 1 2.26: 1
ON SECURED LONG TERM BORROWINGS
5 YEARS' HIGHLIGHTS
350
300
250
NOW
0(1)41 a
KIM
7(100
NAM
-V))
401x)
3150)
2)55)
1(X1)
SALEABLE PRODUCTION
Otyin'000 M.T.
227
2000-01
2(1111-(1
p GALVANISED PRODUCTS n COLD ROLLED PRODUCTS 1
VALUE ADDITION
Ill,. In Millions)
2111111.11 1
IXY(11
'002-03
2004-05
2003-04 2(11)4-115
®'111X1111 2lM(l-112 ®21111`-03 II(NNI,,,IW ®' 11111-(IS
FIXED ASSETS
111-0_ 11' ,li 014" 11405
DGROSS FINED ASSET'S ONi:T FIXED ASSETS
25000 T
20000
15000
10000 410444
TOTAL SAI.F.S
4190 S 5924 527950003532 n
2474MJ 2392
0 EXPORT SALES n LOCAL SALES q TOTAL SALES
(Rs. In Millions)
2000.01 2001-02 2002-03 2003-04 2004-05
I'll IDT/PBDT/PROFIT BEFORE TAX
2500 -I
2000
1500
(Rs. In SI iIIlnnn)
2000.01 2001-02 200203 2003.04 200405
I D q PAT
NETWORTII AND BORROWINGS
Will
5(100
4()410 1 365n
0I-1(2 02-01
(Rs. in Milli is)
-AN03 114 (14.05
1127 NET W OR Ill ®H ( IRR(4SV
Uttam Galva Steels Limited
BALANCE SHEET AS AT 31ST MARCH, 2005
SOURCES OF FUNDSSHAREHOLDERS' FUNDSShare CapitalShare/Warrants Application MoneyReserves & Surplus
LOAN FUNDSSecuredUnsecured
TOTAL
APPLICATION OF FUNDSFIXED ASSETSGross BlockLess: Depreciation
NET BLOCKCapital Work- in-Progress
INVESTMENTSCURRENT ASSETS , LOANS & ADVANCES
InventoriesSundry DebtorsCash & Bank BalancesLoans & Advances
As at 31.03.2005 As at 31.03.2004Rupees Rupees Rupees
Schedule (Millions) (Millions) (Millions)
A
B
CD
E
853.25 748.966.95 0.90
1778.85 783.25
4986.2165.64
2639.05 1533.11
3775.30224.44
3999.74
7690.90 5532.85
5051.85
6827.52 6397.302393.56 2072.69
4433.96 4324.611901.20 297.03
6335.16 4621.640.65 1.05
3302.45 3619.32564.55 555.01591.85 66.952117.77 884.47
Less : CURRENT LIABILITIES & PROVISIONS HCurrent LiabilitiesProvisions:
NET CURRENT ASSETS
TOTAL
ACCOUNTING POLICIES & NOTES TO ACCOUNTS P
As per my report attachedFor Yogesh B. MehtaChartered Accountant
6576.62 5125.75
5140.99 4199.9980.54 15.60
5221.53 4215.591355.09 910.16
7690.90 5532.85
For and on behalf of the Board
Rajinder Miglani Praveen MiglaniChairman & Managing Director Director
Yogesh B . Mehta Rajendra Kumar HaranProprietor Company SecretaryPlace : MumbaiDated : 20th May, 2005
0PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005
For the Year Ended31.03.2005
For the Year Ended31.03.2004
Schedule Rupees ( Millions ) Rupees ( Millions)
INCOMESales 7139.46 4784.39
Local 14421.66 7421.10Export
21561.12 12205.49Gross Sales (644.01) (580.22)Less: Excise Duty
20917.11 11625.27
Other IncomeOperational 53.78 40.09Non Operational
53.78 40.09
20970.89 11665.36TOTAL
EXPENDITURE 16456.09 9264.01Materials Cost 50.58 (526.17)(Increase)/Decrease in Stock K 886 .68 718.09Other Manufacturing Expenses L 1305.97 630.33Selling & Distribution Expenses M 170 ,33 148.32Payment to Employees N 107.21 134.75Administrative Cost
18976.86 10369.33
1994.03 1296.03Profit before Interest & Depreciation 644 83 499 84Interest & Financial Charges 0 . .
237.83Restructuring Financial cost - Term Loans(Refer Note 7.0 in Notes on Accounts) 1349.20 558.36Profit/(Loss ) before Depreciation 322.05 304.01Depreciation 151027 254.35Profit/ ( Loss ) before TaxLess : Provision for Tax - MAT
.80.54
115.60
238 75Profit/ ( Loss ) after Tax
946.6 .84)(89
Add: i) Balance C/F from earlier years - P&L A/C148.91
2.
91148Profit/(Loss) available for Appropriations
1095.5 .
Appropriated as under:(i) Credits / (Debits) pertaining to prior years - Taxes (3.16)
1092 36 148 91(i) Balance Carried to Balance Sheet
. .433
Basic & Diluted Earnings Per share (in Rs.)12.57 .
ACCOUNTING POLICIES & NOTES TO ACCOUNTS P
As per my report attachedFor Yogesh B. MehtaChartered Accountant
Yogesh B. MehtaProprietor
Place : MumbaiDated : 20th May. 2005
For and on behalf of the Board
Rajinder Miglani Praveen MiglaniChairman & Managing Director Director
Rajendra Kumar HaranCompany Secretary