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Directors Report of Magna Electrocastings Ltd.

Mar 31, 2016

DIRECTORS'' REPORT

Dear Shareholders,

The Directors have pleasure in presenting the 26th Annual Report and Audited Accounts of the Company for the year ended 31st March 2016.

FINANCIAL RESULTS

The highlights of the performance of the company during the fiscal are given under:

(rs in jakhs)

For the financial year ended

31-03-2016

31-03-2015

Total Revenue

9433.61

10188.98

Gross Profit before interest, depreciation, and income tax

1528.32

1510.33

Interest

156.03

231.79

Depreciation

462.57

441.58

Profit before tax

909.72

836.96

Provision for Income tax

210.00

225.00

for Deferred tax

34.97

87.93

for Prior year tax

--

(18.81)

Profit for the period

664.75

542.84

Proposed transfer to General Reserve

200.00

200.00

Proposed dividend

91.64

82.48

Provision for Corporate tax on Dividend

18.65

16.78

Balance brought forward

1017.98

774.40

Surplus carried over

1372.43

1017.98

FINANCIAL HIGHLIGHTS

The financial summary /highlights for the last five years is furnished vide Annexure A to this Report OPERATIONS

The net turnover (exclusive of taxes and duties) has decreased by 8.07 % from Rs.10021.20 lakhs to Rs. 9212.59 lakhs. This was mainly because of the weak global and domestic markets which are still reeling under recessionary conditions. The demand for castings has therefore been subdued.

The Wind Energy Division of the Company recorded lower revenue again during the current financial year because of non evacuation of energy for administrative reasons as in the previous year coupled with low wind velocity during the peak wind season.

The various cost saving initiatives taken by the Company during the year and the sharp decline in material costs enabled the Company to post a Profit before Tax of Rs.909.72 lakhs which is an increase of 8.7% over the previous year''s profit of Rs.836.96 lakhs.

There has been no change in the nature of business of the Company.

OUTLOOK FOR CURRENT YEAR

The export as well as the domestic markets are yet to show signs of any recovery. It is hoped that the various initiatives being taken by the Central Government will be beneficial to the industry and thereby lead to revival of the markets.

PROJECTS IMPLEMENTED

The Company has installed during the year under review the Furan Thermal Reclamation Sand Plant at a cost of Rs.200 lakhs for reclamation of sand. Apart from meeting the Statutory requirements, this installation will enable the Company to reduce dependence on the availability of sand, which is a precious natural resource.

The Company also installed during the year the Furan No Bake Continuous Mixer for achieving consistency in casting dimension and 3D Printing Technology for shorter development time and reduction in sampling time. The Paint shop was modernized with the installation of a new high tech Painting booth to supply ready to assemble products to the customers.

All the above initiatives will go a long way in satisfying the customer needs and satisfaction.

FUTURE EXPANSION PLANS

The Company has been constantly upgrading its production capabilities to be in line with the latest in the Industry. Keeping this in mind , the Company is planning to upgrade its Core shop activities and installation of a Heat Treatment Furnace during the current year . The total outlay for this being very minimal, the same will be funded from out of internal sources

QUALITY RECOGNITIONS

The Company received during the year the re-certification from the Performance Review Institute, USA, as an Accredited Manufacturer of Ductile and Gray Iron Castings which is mandatory for supply of castings for applications in locomotives, railway engines etc in the USA. The Company also received re-certification for ISO/TS 16949 standards and Pressure Equipment Directive standards.

FINANCE

The Company''s long term debt stands at Rs.459.47 lakhs . The debt-equity ratio continues to remain at a healthy level of 0.10.

TRANSFER TO RESERVES

An amount of Rs.200 lakhs has been transferred to General Reserves and an amount of Rs.1372.43 lakhs is retained in the statement of profit & loss.

DIVIDEND

Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs.2.00 per share, i.e. at the rate of 20 % for the year on the paid-up equity share capital of the Company as against Rs.1.80 per share (18%) paid last year. The dividend, if approved, will absorb an amount of Rs. 110.29 lakhs, inclusive of Corporate tax on Distribution of dividends.

SHARE CAPITAL

The paid-up capital of the Company as at 31.03.2016 stood at Rs.4,58,22,000. During the year under review the Company has not made any fresh issue of shares.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure B and is attached to this report.

BOARD MEETINGS AND ITS COMMITTEES CONDUCTED DURING THE PERIOD UNDER REVIEW

The Company had conducted (5) Board meetings, (5) Audit Committee meetings, (2) Nomination and Remuneration committee meetings, (4) Stakeholders Relationship committee meetings, (1) Corporate Social Responsibility Committee Meeting and (1) Independent Directors meetings during the period under review. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013, with respect to Directors'' Responsibility Statement, the Directors confirm that -

a) In the preparation of the annual accounts, the applicable accounting standards have been followed;

b) they have 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;

c) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) they had devised proper system to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and SEBI (Listing obligations and disclosure Requirements) Regulations, 2015.

COMPANY''S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Remuneration policy of the Company is annexed herewith as Annexure C and can also be accessed on the Company''s website at the link http://www.magnacast.com/financial/229.pdf

COMMENTS ON AUDITORS'' REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.S.Krishnamoorthy & Co, Statutory Auditors and Mr.M.D.Selvaraj, Secretarial Auditor in their respective reports.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year 2015-16 were on an arms'' length basis and in the ordinary course of business. The requirement of furnishing the particulars of contracts or arrangements entered into by the Company with related parties in Form AOC-2 does not arise.

The policy with regard to Related Party transactions can be accessed on the Company''s website at http:/www.magnacast.com/financial/224.pdf

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO

The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure D and is attached to this report.

RISK MANAGEMENT

The Company continues to focus on the Risks areas identified by the Company. These can be classified under (a) Economic risks (b) Marketing risks and (c) Financial risks. The Company continues to focus attention on the risk areas identified and in case of any adverse situation, suitable mitigation steps are taken. The Company also established risk management plan and assessment and the same has been reviewed by the Audit committee and the Board on quarterly basis.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

During the year under review, the Company has incurred an expenditure of Rs.15.80 lakhs towards CSR activities. The details of CSR activities are furnished separately vide Annexure E to this Report. The policy relating to CSR has been displayed on the Company''s website and can be accessed at http://www.magnacast.com/financial/223.pdf

ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Companies Act, 2013, the Board of Directors evaluated the annual performance of the members of the Board and its Committees vis a vis the nature of business of the Company, its performance during the year and the contribution of each of the Directors based on the criteria laid down by the Nomination and Remuneration Committee.

The Independent Directors held a meeting during the year and inter-alia, reviewed the performance of the non-independent Directors and the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company and the Board.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under review, Sri.V.Rajendran, Director, who has been associated with the Company right from its inception, resigned from the Board due to ill- health. Sri.V.Rajendran, with his wide experience in the Foundry industry, had always been a source of inspiration to the Company with his valuable guidance and wise counsel. The Directors place on record their appreciation of the services rendered by Sri.V.Rajendran to the Company, especially during its initial stages of formation.

As per the provisions of the Companies Act, 2013, Sri.J.Vijayakumar, Director, retires at this Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiaries, Joint ventures or Associate Companies.

FIXED DEPOSITS

The Company has not accepted any fixed deposits and hence there are no unclaimed deposits as on 31st March 2016.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATION IN FUTURE

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operation in future.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the internal financial control systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.

The directors confirm that the Internal Financial Control (IFC) are adequate with respect to the operations of the company. A report of Auditors pursuant to Section 143(3)(i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.

AUDITORS

STATUTORY AUDITORS

M/s. S. Krishnamoorthy & Co, Chartered Accountants, Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Certificate required under Section 139 read with Section 141 of the Companies Act, 2013 informing their eligibility to act as the Statutory Auditors of the Company has been furnished by them. The re-appointment proposed is within the time frame for transition under Section 139 of the Companies Act, 2013.

The tenure of office of M/s. S. Krishnamoorthy & Co as Statutory Auditors of the Company will expire with the conclusion of the 26th Annual General meeting of the Company.

The Directors, based on the recommendation of the Audit -committee and subject to the approval of the members at the ensuring Annual General Meeting, have approved the appointment of M/s. Srikishen & Co, Chartered Accounts (Firm Regn. No. 004009 S) as the Statutory Auditors for a period of 5 years from the conclusion of the 26th Annual General Meeting till the conclusion of the 31st Annual General Meeting of the Company. Necessary certificate of eligibility under Section 139 of the Companies Act, 2013 has been received from M/s. Srikishen & Co.

SECRETARIAL AUDITORS

The Board has appointed Mr.M.D.Selvaraj, FCS of M/s.MDS & Associates, Coimbatore, based on the recommendation of the Audit Committee, as the Secretarial Auditors of the Company for the year 2016-17 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013. The report of the Auditors for the financial year 2015-16 is annexed as Annexure F to this Report.

COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and audits) Rules, 2014, the products manufactured by the Company, viz., Iron Castings falling under the specified Central Excise Tariff heading are covered under the mandatory cost audit from the financial year commencing from 1st April, 2015. The Board, based on the recommendations of the Audit Committee has appointed M/s. SBK & Associates, Chennai as the Cost Auditors for the financial year 2016-17. Necessary consent has been received from M/s. SBK & Associates for their appointment. Pursuant to Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable to the Cost Auditors of the Company is subject to the approval of the shareholders at the Annual General Meeting. The Board recommends their remuneration.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has been continuously focusing its attention on nurturing the talent of its employees by recognizing their performance and creating enough opportunities for their growth in the Company. This has ensured to retain talent within the organization.

The relationship between the management and the employees at all levels during the year under review has been cordial and productive.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2015-16.

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure G attached to this report.

CORPORATE GOVERNANCE

The report on Management Discussion and Analysis, Corporate Governance as well as Auditor''s Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

CEO/CFO CERTIFICATION

As required under Regulation 33 (2) (a) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations,2015, the Managing Director and the Chief Financial Officer have furnished necessary certificate to the Board on the financial statements presented.

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Company''s code of conduct. The policy can be accessed on the Company''s website at http://www.magnacast.com/financial/227.pdf

DETAILS IN RESPECT OF FRAUDS REPORT BY THE AUDITORS UNDER SECTON 143(12) OF THE COMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE RESPONSIBLE TO THE CENTRAL GOVERNMENT:

There were no instances of frauds identified or reported by the statutory auditors during the course of their audit pursuant to section 143(12) of the companies Act, 2013.

ACKNOWLEDGEMENT

Your Directors thank the shareholders, customers and suppliers for their continued support during the year. The Directors wish to place on record their appreciation of the support and co-operation extended by the Company''s Bankers M/s. Corporation Bank and M/s. Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

By order of the Board

For MAGNA ELECTRO CASTINGS LIMITED

C.R. Swaminathan N. Krishna Samaraj

Coimbatore Director Managing Director

28th May 2016 DIN : 00002169 DIN : 00048547


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the 25th Annual Report and Audited Accounts of the Company for the year ended 31st March 2015.

FINANCIAL RESULTS (Rs. in lakhs)

For the financial year ended 31-03- 2015 31-03-2014

Total Revenue 10,188.98 7,605.18

Gross Profit before interest, 1,510.34 1,524.62 depreciation, and income tax

Interest 231.79 258.01 Depreciation 441.58 695.55 Profit before tax 836.96 571.06 Provision for Income tax 225.00 200.00 for Deferred tax 87.93 (91.11)

for Prior year tax (18.81) - Profit for the period 542.84 462.18

Proposed transfer to General Reserve 200.00 200.00

Proposed dividend 82.48 73.31

Provision for Corporate tax on Dividend 16.79 12.45

Balance brought forward 774.40 597.99

Surplus carried over 1,017.98 774.40

FINANCIAL HIGHLIGHTS

The financial summary /highlights for the last five years is furnished vide Annexure A to this Report

OPERATIONS

The net turnover (exclusive of taxes and duties) increased by 34.63 % from Rs.7,443.56 lakhs to Rs.10,021.20 lakhs. This is the first time in the history of the Company, the turnover has crossed the Rs. 100 Crores mark. The export turnover increased by 44.65 % from Rs.4,461.05 lakhs to Rs. 6,453.21 lakhs, and the domestic turnover increased by 19.64 % from Rs.2,982.50 lakhs to Rs. 3,568.25 lakhs. The Company was able to achieve this turnover in spite of subdued market conditions, especially in the domestic market.

The Wind Energy Division of the Company recorded lower revenue again during the current financial year because of non evacuation of energy for administrative reasons, as in the previous year.

The Profit before tax at Rs. 836.96 lakhs shows an increase of 46.56 % over the previous year's profit of Rs.571.06 lakhs. The Company has provided depreciation on fixed assets based on the useful lives in accordance with the Companies Act, 2013. Consequently the depreciation charge is lower by Rs.253.97 lakhs when compared to the amount arrived at in the previous year.

There has been no change in the nature of business of the Company.

OUTLOOK FOR CURRENT YEAR

There seems to be a marginal improvement in business volumes during the financial year 2015-2016 when compared with the previous year, as the market sentiments improved and it is hoped that the market will pick up momentum gradually during the course of the year.

PROJECTS IMPLEMENTED

The Company has installed during the year under review a new Energy efficient Melting Induction Furnace, replacing the old and worn out furnaces. Apart from substantial savings in the power costs, this installation with the latest technology, will improve the overall productivity and efficiency at the shop level.

FUTURE EXPANSION PLANS

The Company will be installing during the financial year 2015-16 the Thermal Reclamation and Green Sand Reclamation Plants. Apart from meeting the requirements of the pollution norms, these installations will enable the Company to use the reclaimed sand, thereby conserving precious natural resources.

QUALITY RECOGNITIONS:

The Company continues to be recognized for its sustained quality and technological innovations, meeting the customers' requirements to their satisfaction. During the year, the Company received "Best in Continuous Improvement" Award for technical involvement in new product processes to meet customer specific requirements and "Best Supplier Award for Commitment and Dedication to Excellence" from two of its customers.

FINANCE

The Company's long term debt stands at Rs. 565 lakhs out of which Rs.85 lakhs pertains to the Wind Energy Division and the balance Rs.480 lakhs pertains to the Foundry Division. The debt-equity ratio remains at a healthy level of 0.20.

TRANSFER TO RESERVES

An amount of Rs.200 lakhs has been transferred to General Reserve and an amount of Rs.1017.98 lakhs is retained in the Statement of Profit & Loss

DIVIDEND

The Directors, after taking into consideration the results for the year ended under review, have recommended a dividend of Rs.1.80 per share (i.e. @18%) as against Rs.1.60 per share (16%) paid last year. The dividend, if approved, will absorb an amount of Rs.99.26 lakhs, inclusive of Corporate tax on Distribution of dividends.

SHARE CAPITAL

The paid-up capital of the Company as at 31.03.2015 stood at Rs.4,58,22,000. During the year under review the Company has not made any fresh issue of shares.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure B and is attached to this report.

BOARD MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW

The Company had conducted Four (4) Board meetings during the period under review. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013, with respect to Directors' Responsibility Statement, the Directors confirm that

a) In the preparation of the annual accounts, the applicable accounting standards have been followed;

b) they have 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;

c) they have taken Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) they had devised proper system to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules and Clause 49 of the Listing Agreement entered with the Stock Exchanges.

COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Remuneration policy of the Company is annexed herewith as Annexure C and can also be accessed on the Company's website at the link http://www.magnacast.com/financial/229.pdf

COMMENTS ON AUDITORS' REPORT:

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.S.Krishnamoorthy & Co, Statutory Auditors and Sri. M.D. Selvaraj, Secretarial Auditor in their respective reports.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year 2014-15 were on an arms' length basis and in the ordinary course of business. Earlier, the approval of the Regional Director, Chennai had been obtained for such transactions entered into with the companies falling within the purview of Section 297 of the Companies Act, 1956. The policy with regard to Related Party transactions can be accessed on the Company's website at http://www.magnacast.com/financial/224.pdf

The particulars of contracts or arrangements entered into by the Company with related parties are furnished in Form AOC-2, (Annexure D) forming part of this Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure E and is attached to this report.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Company identifies and evaluates business risks and opportunities at periodic intervals. The Company is aware that these risks need to be managed and mitigated to protect the interest of various stakeholders in order to achieve the business objects and goals. The risk management framework provides not only identify the business risks but also provides effective control measures.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Board has constituted a Corporate Social Responsibility Committee comprising of the following directors as its Members:

1. Sri.C.R.Swaminathan (Chairman)

2. Smt.R.Nandini (Member)

3. Sri.N.Krishna Samaraj (Member)

The Committee met on 30th October 2014 and laid out the policy for undertaking CSR activities by the Company. As per the policy, the Committee laid emphasis for undertaking activities in healthcare and medical facilities, promoting education and undertaking activities for improvement of schools, especially government run primary schools, ensuring environmental sustainability and ecological balance. During the year under review, the Company has incurred an expenditure of Rs.12.56 lakhs towards CSR activities covering the above areas. The details of CSR activities are furnished separately vide Annexure F to this Report. The policy relating to CSR has been displayed on the Company's website and can be accessed at http://www.magnacast.com/financial/223.pdf

ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing agreement, the Board of Directors evaluated the annual performance of the members of the Board and its Committees vis a vis the nature of business of the Company, its performance during the year and the contribution of each of the Directors based on the criteria laid down by the Nomination and Remuneration Committee.

The Independent Directors held a meeting during the year and inter-alia, reviewed the performance of the non-independent Directors and the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company and the Board.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under review, the Members at their Meeting held on 25th September 2014 have approved the appointment of Sri.C.R.Swaminathan, Smt.R.Nandini, Dr.Jairam Varadaraj and Sri.K.Gnanasekaran as Independent Directors of the Company for a period of five years.

As per the provisions of the Companies Act, 2013, Sri.V.Rajendran, Director, retires at this Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiaries, Joint ventures or Associate Companies.

FIXED DEPOSITS

The Company has not accepted any fixed deposits and hence there are no unclaimed deposits as on 31st March 2015.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operation in future.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the internal financial control systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.

AUDITORS

STATUTORY AUDITORS

M/s. S. Krishnamoorthy & Co, Chartered Accountants, Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Certificate required under Section 139 read with Section 141 of the Companies Act, 2013 informing their eligibility to act as the Statutory Auditors of the Company has been furnished by them. The re-appointment proposed is within the time frame for transition under Section 139 of the Companies Act, 2013.

SECRETARIAL AUDITORS

The Board has appointed Sri.M.D.Selvaraj, FCS of M/s.MDS & Associates, Coimbatore, based on the recommendation of the Audit Committee, as the Secretarial Auditors of the Company for the year 2014-15 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013. The report of the Auditors is annexed as Annexure G to this Report.

COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and audits) Rules, 2014, the products manufactured by the Company, viz., Iron Castings falling under the specified Central Excise Tariff heading are covered under the mandatory cost audit from the financial year commencing from 1st April, 2015. The Board, based on the recommendations of the Audit Committee has appointed M/s. SBK & Associates, Chennai as the Cost Auditors. Necessary consent has been received from M/s. SBK & Associates for their appointment. Pursuant to Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable to the cost Auditors of the Company is subject to the approval of the shareholders at the Annual General Meeting.

The Cost Audit Report for the year ended 31.03.2014 has been filed on 27.09.2014

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has been continuously focusing its attention on nurturing the talent of its employees by recognizing their performance and creating enough opportunities for their growth in the Company. This has ensured to retain talent within the organization.

The relationship between the management and the employees at all levels during the year under review has been cordial and productive.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2014-15.

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure H attached to this report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditor's Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

CEO/CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing Director and the Chief Financial Officer have furnished necessary certificate to the Board on the financial statements nresenterl

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Company's code of conduct. The policy can be accessed on the Company's website at http://www.magnacast.com/financial/226.pdf

ACKNOWLEDGEMENT

Your Directors thank the shareholders, customers and suppliers for their continued support during the year. The Directors wish to place on record their appreciation of the support and co-operation extended by the Company's Bankers M/s. Corporation Bank and M/s. Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

By order of the Board For MAGNA ELECTRO CASTINGS LIMITED

C.R. Swaminathan N. Krishna Samaraj Coimbatore Chairman of the Meeting Managing Director 28th May 2015 DIN : 00002169 DIN : 00048547


Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting the 24th Annual Report and Audited Accounts of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS (Rs. in lakhs)

For the year ended 31st March 31-03- 2014 31-03-2013

Total Revenue 7605.18 8763.32

Gross Profit before interest, depreciation, and income tax 1524.62 1457.49

Interest 258.01 237.39

Depreciation 695.55 616.30

Profit before tax 571.06 603.80

Provision for Income tax 200.00 125.00

for Deferred tax (91.11) (46.16)

Net Profit after tax adjustments 462.18 524.96

Proposed transfer to General Reserve 200.00 200.00

Proposed dividend 73.31 82.48

Provision for Corporate tax on Dividend 12.45 14.01

Balance brought forward 597.99 369.52

Surplus carried over 774.40 597.99

DIVIDEND

Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs.1.60 per share, i.e. at the rate of 16 % for the year on the paid-up equity share capital of the Company . The Directors, after taking into consideration, the results for the year ended under review, the prevailing subdued market conditions and also in order to conserve funds to meet the increased working capital requirements, have recommended a reduced dividend of Rs.1/60 per share (i.e. @16%) as against Rs.1/80 per share paid last year. The dividend, if approved, will absorb an amount of Rs.85.76 lakhs, inclusive of Corporate tax on Distribution of dividends.

OPERATIONS

The net turnover (exclusive of taxes and duties) decreased by 12.68% from Rs.8524.33 lakhs to Rs.7443.56 lakhs. While the export turnover decreased by 14.65 % from Rs.5226.47 lakhs to Rs. 4461.05 lakhs, the domestic turnover decreased by 9.56 % from Rs.3297.85 lakhs to Rs.2982.50 lakhs. The main reason for the decline in turnover was due to the subdued global market conditions which prevailed for most part of the financial year with many of the industries still under recessionary trend.

The Wind Energy Division of the Company also recorded lower revenue during the current financial year, mainly because of non evacuation of energy generated. Consequently there was a decline of about 24% in units generated by the Division when compared with the previous financial year. This contributed to substantial decline in Net Profits .

The Profit before tax at Rs.571.06 lakhs shows a decrease of 5.42 % over the previous year''s profit of Rs.603.80 lakhs, mainly because of increase in material cost, power cost and other overheads. However in spite of decline in turnover and increase in input costs, there is a slight improvement in margins during the current year due to better utilization of available resources.

OUTLOOK FOR CURRENT YEAR

The general recessionary trend, both in the international as well as the domestic markets, continued to affect most of the industries, especially auto, pump and valves, who were the most affected . There seems to be a marginal improvement during the last quarter of the financial year and it is hoped that the market will pick up momentum gradually during the current financial year.

PROJECTS IMPLEMENTED:

During the year under review, the Company commissioned the fully automated Sand Plant in Green Sand Line. The plant, apart from ensuring that the consistency of materials is maintained at a high quality level, helps in improving the quality of casting surface finish. There will also be a significant reduction in wastage, leading to improved margins.

The Company also installed the Adaptive Thermal Analysis System during the year. This system helps in improving the quality of metal by monitoring and controlling the metal treatment process. This will ensure that the rejection rates are significantly reduced and the customer is assured of defect free castings.

FUTURE EXPANSION PLANS:

The investments made during the last couple of years has resulted in technology upgradation of the Machinery. The Company is also planning to upgrade its existing Furnaces in the next couple of years to be in line with the latest technology available in the market. This will enable the Company to be more energy efficient and result in conservation of power.

QUALITY RECOGNITIONS:

The Company was awarded Sustainability Award by one of its prestigious overseas customer who conducted an audit on various focus areas and the Company met most of the criteria stipulated by the customer. This recognition will enable the Company to procure more export orders in future not only from the customer from across all its business units spread throughout the world but also from other overseas customers.

FINANCE

The Company''s long term debt stands at Rs.875 lakhs out of which Rs.212 lakhs pertains to the Wind Energy Division and the balance Rs.663 lakhs pertains to the Foundry Division. The debt-equity ratio remains at a healthy level of 0.24.

LABOUR

The relationship between the management and the employees during the year under review has been cordial and productive.

DIRECTORS

Sri.J.Vijayakumar, Director, retires at this Annual General Meeting and being eligible, offers himself for reappointment.

Sri.C.R.Swaminathan and Smt.R.Nandini, Directors, retire at the ensuing Annual General Meeting . It is proposed to appoint them as Independent Directors, pursuant to provisions of Sections 149,150 and 152 of the Companies Act, 2013. Notice has been received from members proposing the names of Sri.C.R.Swaminathan and Smt.R.Nandini as Directors.

It is also proposed to appoint Sri. K.Gnanasekaran and Dr. Jairam Varadaraj, Directors as Independent Directors of the Company pursuant to section 149 of the Companies Act 2013. Notices have been received from members proposing their names for the office of Director of the Company.

The Directors of the Company have furnished necessary declarations as required and the same have been taken on record.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditor''s Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INFORMATION PURSUANT TO SEC.134 OF THE COMPANIES ACT,2013

The information required under Sec.134 (3) (m) of the Companies Act,2013 is appended hereto in Annexure I and forms part of this Report.

PARTICULARS OF EMPLOYEES:

None of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act,1956.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the Directors state that

i. In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

iii. The Directors have 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. The Directors have prepared the annual accounts on a going concern basis.

v. The Directors have laid down internal financial controls and such internal financial controls are adequate and operating effectively.

vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

CEO/CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing Director and the Head of Finance function have furnished necessary certificate to the Board on the financial statements presented.

AUDITORS

M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The certificate required under Section 139 of the Companies Act, 2013 has been furnished by them.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the support and co-operation extended by the Company''s Bankers M/s Corporation Bank and Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

By order of the Board

Coimbatore N.Krishna Samaraj

19th May 2014 Managing Director


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting the 23rd Annual Report and Audited Accounts of the Company for the year ended 31st March 2013.

FINANCIAL RESULS (Rs. in lakhs) 31-03-2013 31-03-2012

Total Revenue 8763.32 8558.96

Gross Profit before Interest, Depreciation and Income Tax 1457.49 1402.70

Interest 237.39 232.84

Depreciation 616.30 549.47

Profit before tax 603.80 620.39

Provision for Income tax 125.00 275.00

for Deferred tax (46.16) (80.62)

for Prior Year Tax 8.02

Net Profit aftertax adjustments 524.96 417.99

Proposed transfer to General Reserve 200.00 200.00

Proposed dividend 82.48 91.64

Provision for Corporate tax on Dividend 14.01 14.87

Balance brought forward 369.52 258.04

Surplus carried over 597.99 369.52



DIVIDEND

Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs 1.80 per share, i.e. at the rate of 18 % for the year on the paid-up equity share capital of the Company . The dividend is being reduced from 20% (Rs. 21- per share ) paid last year in view of the prevailing subdued market conditions and the consequent drop in profits and also in order to conserve funds to meet the increased working capital requirements. The dividend, if approved, will absorb an amount of Rs.96.49 lakhs, inclusive of Corporate tax on Distribution of dividends.

OPERATIONS

The net turnover (exclusive of taxes and duties) increased from Rs.8321.74 lakhs to Rs.8524.33 lakhs, an increase of 2.44 %. The export turnover increased from Rs.5059.55 lakhs to Rs.5226.47 lakhs, an increase of 3.3%. The domestic turnover increased from Rs.3587.46 lakhs to Rs.3678.87 lakhs, an increase of 2.5%.

The availability of power was a major issue during this financial year also and the severe power cut imposed by the Tamil Nadu Generating and Distribution Co. Ltd ( TANGEDCO) affected the operations of the Company during the financial year under review. The Company had to resort to usage of high cost power through Diesel Generators, especially during the last quarter of the financial year, in order to meet the requirements of the customers.

The Profit before tax at Rs.603.80 lakhs shows a decrease of 2.70 % over the previous year''s profit of Rs.620.39 lakhs, mainly because of increase in material cost, power cost and other overheads. The decrease in volume of sales during the last quarter of the financial year also forced the Company to manage its cash flows better through quicker realization of receivables, decrease in inventory levels and current liabilities and optimum utilization of its cash credit facilities.

OUTLOOK FOR CURRENT YEAR

The general recessionary trend, both in the international as well as the domestic markets, had a severe impact on the operations of the Company, especially during the last quarter of the financial year. The rate of growth appears to be slow, both in the developed and developing economies. Consequently the demand for castings has come down across all industries. However we are confident that the markets will improve by the third quarter of the financial year and that there will be no adverse impact on the turnover and profitability during this financial year.

PROJECTS IMPLEMENTED :

The Company commissioned the new Hunter Molding machine during the last quarter of the financial year. The machine is a new generation series machine with the latest advancements in Match Plate Molding technology. This machine will enable in the production of high quality molds more efficiently, with closer tolerances. With a high productivity ratio, this machine will enable the Company to offer its customers better quality castings.

During the year under review, the Company augmented its Diesel Power Generating capacity, with the installation of two 1500 KVA generators. Capable of parallel operation through an automatically computer controlled synchronized panel, the sets can provide 3000 KVA power. The total Diesel Power generating capacity now stands at 4400 KVA, which will enable the Company to become self sufficient in power. Consequently the Company will be in a position to become a reliable supplier of castings, meeting the delivery schedules of the customers without fail.

The Company is also modernizing its existing Sand Plant and the work is under progress . The work is expected to be completed by the first quarter of the current financial year 2013-14.

The Company has also acquired 1.5 acres of land, adjacent to its existing facility. This will enable the Company to expand its operations at a later date.

FUTURE EXPANSION PLANS

The investment made during the year under review in the new molding machine and sand plant is for technology upgradation and capacity enhancement to 1200MT per month. Consequent upon the upgradation of the furnaces at an approximate cost of Rs.200 lakhs, the Company''s installed capacity will go up from the existing 900 MT per month to 1200 MT per month. The installation of the new furnaces will be taken up at an appropriate time.

QUALITY RECOGNITIONS

The products of the Company have been approved by Germanischer Lloyd ,one of the leading auditors for marine certification in the World, for use in marine applications.

Similarly the Company''s facilities have been approved by Performance Review Institute, USA, one of the leading Third Party Auditors, as Accredited Manufacturer of Ductile and Gray Iron Castings, certification of which is mandatory for supply of castings for applications in locomotives, railway engines, etc in the USA.

The above recognitions will enable the Company to procure more export orders in future.

FINANCE

The Company has been sanctioned by Indian Bank a Term Loan of Rs.320 lakhs to part finance the capital expenditure program for purchase and installation of Diesel Generators during the current financial year.

The Company''s long term debt stands at Rs. 1260 lakhs out of which Rs.370 lakhs pertains to the Wind Energy Division and the balance Rs.890 lakhs pertains to the Foundry Division.

LABOUR

The relationship between the management and the employees during the year under review has been cordial and productive.

DIRECTORS

Sri.V.Rajendran and Sri.K.Gnanasekaran , Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-election.

The Directors of the Company have furnished necessary declarations required in terms of Section 274(1 )(g) of the Companies Act, 1956 and the same have been taken on record.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditor''s Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT.1956

The information required under Sec.217(1)(e) of the Companies Act, 1956 is appended hereto in Annexure I and forms part of this Report.

INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956

None of the employees were in receipt of remuneration in excess of the limits prescribed in this regard. DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, the Directors state that

i. In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

iii. The Directors have 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. The Directors have prepared the annual accounts on a going concern basis.

CEO/CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing Director and the Head of Finance have furnished necessary certificate to the Board on the financial statements presented.

AUDITORS

M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The certificate required under Section 224(1B) of the CompaniesAct, 1956 has been furnished by them.

COST AUDITORS:

The Company has appointed M/s. SBK Associates, Cost Accountants, as Cost Auditors in terms of Section 233B(2) of the Companies Act, 1956 to audit the cost records and submit their compliance report for the year 2012-13. The Cost Audit Report for the year 2011-12, which had to be filed before 31st January 2013 was filed on 29th January 2013.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the support and co-operation extended by the Company''s Bankers M/s Corporation Bank and Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

On behalf of the Board of Directors

Place: Coimbatore V. Rajendran N.Krishna Samaraj

Date: 30th May, 2013 Director Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 22nd Annual Report and Audited Accounts of the Company for the year ended 31st March 2012.

FINANCIAL RESULTS (Rs. in lakhs)

31-03-2012 31-03-2011

Total Revenue 8558.96 6275.54

Profit before Finance costs, Depreciation and Income Tax 1402.70 1212.72

Finance costs 232.84 174.33

Depreciation & Amortisation 549.47 479.02

Profit before tax 620.39 559.37

Provision for Income tax 275.00 112.00

for Deferred tax (80.62) 97.68

for Prior Year Tax 8.02 9.92

MAT Credit Entitlement - (35.76)

Net Profit after tax 417.99 375.52

Proposed transfer to General Reserve 200.00 200.00

Proposed dividend 91.64 91.64

Provision for Corporate tax on Dividend 14.87 14.87

Balance brought forward 258.04 189.03

Surplus carried over 369.52 258.04

DIVIDEND

Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs 2.00 per share, (20%) on the paid-up Equity share capital. The dividend is being maintained at the same rate as in the previous two years in order to conserve funds for the proposed expansion/ modernisation plans and additional working capital requirements. The dividend, if approved, will absorb an amount of Rs 106.51lakhs, inclusive of Corporate tax on Distribution of dividends.

OPERATIONS

The total turnover for the year increased by 37% over the previous year. The demand for castings has increased consequent upon the improvement in market conditions, both in the international and domestic markets. The net turnover (exclusive of taxes and duties) has increased from Rs. 6077.79 lakhs to Rs. 8321.74 lakhs. The export turnover also showed a substantial improvement at Rs. 5059.55 lakhs during the current year, an increase of 60% over the previous year. This can be attributed to the all round improvement in global business economies across all industries.

The availability of power was a major issue during the financial year and the severe power cut imposed by the Tamil Nadu Electricity Board of more than 70% affected the operations of the Company during the last quarter of the financial year under review. In order to honour its commitments to the customers, the Company resorted to purchase of third party private power, use of extensive diesel based fuel and also had to bear substantial air freight during the last quarter. In spite of the severe controls in operations due to the power cut, the Company was able to break even during the last quarter of the year under review.

The Profit before tax at Rs. 620.39 lakhs shows an increase of 11 % over the previous year's profit of Rs.559.37 lakhs.

OUTLOOK FOR CURRENT YEAR

The general industrial climate in both international and domestic markets looks very promising. Even though the rate of growth appears to be slow, the volumes are picking up and this augurs well for the industries. The demand for castings is also increasing across all industries . Hence we are confident of posting a decent growth rate in the current year 2012-13 and it is anticipated that the turnover will cross Rs.100 crore mark for the first time since the inception of the Company and commencement of commercial production in 1995, subject to improved power position in the State.

PROJECTS IMPLEMENTED :

The Company installed/commissioned during the year the Automatic Grinding cell which was imported from Italy for fettling operations. This machine has been helpful in achieving a better quality finish for the castings , apart from reducing the lead time in the operations and inventory levels.

During the year under review, the Company also commissioned the additional factory building measuring about 30,000 Sq.Ft. which will accommodate the machining activities of the Company.

FUTURE EXPANSION PLANS:

The Company had originally planned to expand the capacity from 900 MT per month to 1200 MT per month to be implemented with the financial year 2011-12. Due to the emerging power scenario during the second half of the FY 2012, the Company decided to push back this expansion to the first half of the FY 2013. This is in conjunction with the improving power scenario in Tamil Nadu. This expansion project will be implemented at a cost of Rs 5 crores as against Rs.3 crores planned earlier and which will be funded by a mix of debt and internal generations.

FINANCE

The Company has been sanctioned by Indian Bank a Term Loan of Rs.425 lakhs to part finance its modernisation program for the current financial year and additional working capital of Rs.500 lakhs.

The Company's long term debt stands at Rs.1030 lakhs out of which Rs.519 lakhs pertains to the Wind Energy Division and the balance Rs. 511 lakhs pertains to the Foundry Division.

LABOUR

The relationship between the management and the employees during the year under review has been cordial and productive.

DIRECTORS

Dr.Jairam Varadaraj and Sri. J.Vijayakumar, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-election.

Sri. C.R.Swaminathan was co-opted as an Additional Director by the Board of Directors at its Meeting held on 25th January 2012. He holds office until the date of the ensuing Annual General Meeting. Nomination along with necessary deposit has been received from a shareholder proposing the name of Sri. C.R.Swaminathan for appointment as a Director of the Company.

The Directors of the Company have furnished necessary declarations required in terms of Section 274(1)(g) of the Companies Act, 1956 and the same have been taken on record.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditor's Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT,1956

The information required under Sec.217(1)(e) of the Companies Act,1956 is appended hereto in Annexure I and forms part of this Report.

INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956

None of the employees were in receipt of remuneration in excess of the limits prescribed in this regard. DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, the Directors state that

i. In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

iii. The Directors have 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. The Directors have prepared the annual accounts on a going concern basis.

CEO/CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing Director and the Head of Finance function have furnished necessary certificate to the Board on the financial statements presented.

AUDITORS

M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The certificate required under Section 224(1B) of the Companies Act, 1956 has been furnished by them.

COST AUDITOR:

The Company has appointed Sri.K.Suryanarayanan, Cost Accountant, as the Cost Auditor in terms of Section 233B(2) of the Companies Act, 1956 to audit the cost records and submit his compliance report for the year under review to the Central Government.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the support and co-operation extended by the Company's Bankers M/s Corporation Bank and Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

On behalf of the Board of Directors

Place: Coimbatore R. Nandini N.Krishna Samaraj

Date : 21st May, 2012 Director Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the 20th Annual Report and Audited Accounts of the Company for the year ended 31st March 2010.

FINANCIAL RESULTS

For the year ended 31st March 2010 2009 (Rs. in lakhs) (Rs. in lakhs)

Total Revenue 4076.38 6405.29

Gross Profit before interest, depreciation ,tax and loss on Foreign currency fluctuations 1032.02 1324.15

Interest 134.00 200.59

Depreciation 413.67 390.69

Profit from Operations 484.35 732.87

Profit/(Loss) on Forex rate fluctuation 70.10 (365.21)

Profit before tax 554.45 367.66

Provision for Income tax 205.00 175.00

for Deferred tax 19.94 33.56

for Fringe Benefit Tax 0.00 4.00

Net Profit after tax 329.50 155.10

Proposed transfer to General Reserve 200.00 150.00

Proposed dividend 91.64 68.73

Provision for Corporate tax on Dividend 15.22 11.68

Prior Year Taxation & Expenses 18.88 34.55

Balance brought forward 185.27 295.13

Surplus carried over 189.03 185.27

DIVIDEND

Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs 2.00 per share, i.e. at 20 % for the year on the paid-up equity share capital of the Company as against Rs.1.50 per share (15 % ) dividend paid last year. This will absorb an amount of Rs 106.86 lakhs, inclusive of Corporate Distribution tax on dividends.

OPERATIONS

The global recession had an impact on the turnover of the Company, with sales declining by 37% as exports to USA and Europe were affected considerably. However with suitable steps taken to tap the domestic market and implementation of various cost reduction and control measures, the Company was able to realize better margins . This is evident from the fact that the Profit before tax has increased by 50% to Rs.554.45 lakhs during the current financial year from Rs. 367.67 lakhs in the previous year.

Prices of crucial raw materials like Steel Scrap, Pig Iron, Ferro Alloys and other consumables were stable for most part of the financial year but increased sharply by 20% during the last quarter of the financial year. The frequent disruptions in power affected the production schedule during the financial year. Non- availability of labour was another major issue during the year.

The performance of the Company when viewed against the above background, is satisfactory, given the recessionary market conditions.

OUTLOOK FOR CURRENT YEAR

The outlook for the current year appears to be positive as the global economy is just recovering after going through a severe recessionary phase over the past year or so. It is heartening to note that the consumer confidence and market sentiments have improved in the US. In the European market, the Company has successfully gained customers and is in the process of developing products, which will provide a substantial percentage of revenue in the coming years.

The Company has also increased its business of value added castings in the domestic market and expects in the following years an increase in the percentage of domestic value added revenue.

The Company is confident that by the above actions, the Company is diversifying its markets so that its dependence on any one geographical market is reduced.

The following chart shows the market diversification achieved by the Company:

PROJECTS IMPLEMENTED AND FUTURE PLANS :

During the year the Company commissioned the third Wind Energy Generator of capacity 800 kw, thus taking the overall installed capacity to 3.2 MW. With this installation, the Company will be in a position to meet about 65% of its requirement at the current operating capacity. The Directors are also examining the possibility of installing another generator during the current fiscal 2010-11 so that the entire power requirement at the current capacity levels is met from the wind energy generation itself. This will to an extent insulate the Companys production from the prevailing power situation.

FINANCE

The Company is repaying the Term loan instalments to the Banks and the Interest -free Sales Tax Deferral loan to the Commercial Tax Department, Govt. of Tamil Nadu as per schedule.

The Company has been sanctioned a fresh Term Loan of Rs.300 lakhs by Corporation Bank for meeting its regular capex programme and another Rs.320 lakhs by Indian Bank for funding the Wind Energy project.

The Company has availed a total of Rs.470 lakhs out of the sanctioned amount.

The Companys long term debt for the Wind energy Division is Rs.437 lakhs and the balance Rs.343 lakhs pertains to the Foundry Division.

NEW PRODUCT LINES:

The Company has successfully developed the special Silicon Molybdenum Alloy Castings . These castings are used in high temperature applications in the Automotive and Power industries. The Company is one of the very few in India with this capability. The market for this segment is expected to grow substantially with the new environmental regulations for the automotive and Power industries coming into place.

LABOUR

The relationship between the management and the employees during the year under review has been cordial and productive.

DIRECTORS

The Directors record with profound sorrow the demise of Sri. L.G. Varadarajulu, Past Chairman of the Board of Directors of the Company on May 19, 2010. As one of the Founder - Directors and the First Chariman of the Company, late Sri. L.G. Varadarajulu was instrumental in guiding the Company during the formative years of the Company. The Directors place on record the yeomen services rendered by late Sri. L.G. Varadarajulu during his tenure as Chairman and Director of the Company.

Sri.J.Vijayakumar and Sri.K.Gnanasekaran, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-election.

The Directors of the Company have furnished necessary declarations required in terms of Section 274(1)(g) of the Companies Act, 1956 and the same have been taken on record.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditors Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT,1956

The information required under Sec.217(1)(e) of the Companies Act,1956 is appended hereto in Annexure I and forms part of this Report.

INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956

None of the employees were in receipt of remuneration in excess of the limits prescribed in this regard.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, the Directors state that

i. In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

iii. The Directors have 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. The Directors have prepared the annual accounts on a going concern basis.

CEO/CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing

Director and the Head of Finance function have furnished necessary certificate to the Board on the financial statements presented.

AUDITORS

M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The certificate required under Section 224(1B) of the Companies Act, 1956 has been furnished by them.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the support and co-operation extended by the Companys Bankers M/s Corporation Bank and Indian Bank, the various Government Agencies and in particular the Tamilnadu Electricity Board and the employees of the Company at all levels.

We pray for the grace of the Almighty for further growth of the Company.

On behalf of the Board of Directors

Place : Coimbatore N. KRISHNA SAMARAJ

Date : 27th May 2010 Managing Director

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