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Directors Report of Nelcast Ltd.

Mar 31, 2015

DEAR MEMBERS,

The Directors are pleased to present the Thirty Third Annual Report along with the Audited Accounts for the financial year ended 31st March, 2015:

PERFORMANCE (Rs. in Lakhs)

FINANCIAL RESULTS 2014-15 2013-14

Net Sales 54,488.65 51,516.08

PBIDT 4,688.17 5,099.03

Profit Before Tax (PBT) 2,954.74 3,629.44

Less: Provision for Tax 760.41 1,379.89

Profit After Tax (PAT) 2,194.33 2,249.55

Add: Profit brought forwarded 4,181.81 4,144.77 from previous years

Profit Available for Appropriation 6,376.14 6,394.32

Less: Appropriations

Final Dividend on Equity Shares 609.01 609.01

Distribution Tax on Final Dividend 121.77 103.50

General Reserve 1500.00 1500.00

Surplus Carried to Balance Sheet 4,145.36 4,181.81

DIVIDEND

Your Directors recommend a final dividend of 35% (Rs. 0.70 per share) for the financial year 2014-15. Payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

OPERATIONS

During the year, the Company recorded Net Sales of Rs. 544.89 crores as against Rs. 515.16 crores in 2013-14, an increase of about 5.77%. Profit After Tax made during the year is Rs. 21.94 crores compared with Rs. 22.50 crores in 2013-14, a marginal reduction compared with previous year. The production during the year was 71875 MT, compared to the previous year's 70025 MT.

During the year, the Company has increased its sales marginally due to moderate increase in Medium and Heavy Commercial Vehicle industry. However, there was no significant increase in total sales due to slow down in the Tractor sector during the second half of the year.

OUTLOOK

The automotive industry was growing consistently over the past decade, but with Indian GDP slowing over the couple of years, the auto industry has been going through challenging times with both production and domestic sales declining due to weakening economic sentiments caused by slowing economy. However the outlook for the Indian automobile sector is positive. The sector is expected to resurge in the coming years on the back of revival in demand both from domestic and export markets. Driven by a renewed confidence in the economy and general improvement in sentiments, the demand is expected to rise. India is now a supplier of a range of high value and critical automobile components to global auto market.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements of Nelcast Limited and its subsidiary NC Energy Limited as at 31st March, 2015, in accordance with Accounting Standard 21 on "Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India. As required by Clause 41 of the Listing Agreement with Stock Exchanges, the audited Consolidated Financial Statements are circulated with the Annual Report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

In terms of proviso to sub section (3) of Section 129 of the Companies Act, 2013 the salient features of the financial statement of subsidiary company is set out in the prescribed form AOC-1, which is annexed with this report as Annexure-B. The Company will make available the audited annual accounts and related information of its subsidiary, upon request by any of its shareholders. The annual accounts of the subsidiary company will also be kept for inspection, by any member at the Registered Office of the Company and its subsidiary company. The consolidated financial statements presented by the Company, which form part of this annual report, include financial results of its subsidiary company.

QUALITY AND CUSTOMER SATISFACTION

The Company adheres to the TS 16949 norms, and continuously strives to achieve world class quality by strictly adhering to the quality standards. The Company has been awarded ISO 14001 & 18001 for Environmental Management Systems.

The Company has been receiving continuous support from its OEM customers like Tata Motors, Ashok Leyland, TAFE, Eicher Tractors (TMTL), Mahindra & Mahindra, Volvo-Eicher Commercial Vehicles, SAME Tractors, Escorts Tractors, Sonalika Tractors (ITL), Daimler India, Ashok Leyland John Deere, Caterpillar, etc., from Tier I customers like Automotive Axles, American Axles, Dana, Rane Madras, Rane-TRW, ZF India, Simpson & Co., etc., and export customers like Meritor and ZF Industries. The Company is closely working with all customers in terms of new product development, improvement in quality & delivery performance etc., to meet their expectations.

DEPOSITS

The Company has not accepted any public deposits during the year and as such, no amount on account of principal or interest on deposits from public was outstanding as at 31st March, 2015.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Ms. P. Divya, Director is due to retire by rotation and being eligible offers herself for re-appointment.

Mr. P. Deepak, Managing Director was re-appointed as Managing Director by the board of directors at their meeting held on 29th May 2015 for a further period of three years. Your approval is sought for his re-appointment.

Mr. P. Deepak, Managing Director, Mr. P. Vijaya Bhaskar Reddy, Dy. Managing Director & CFO and Mr. S.K. Sivakumar, Head - Group Finance & Company Secretary hold the office of Key Managerial Personnel.

Declaration of Independent Directors

The Independent Directors have fulfilled the criteria of Independence as defined under Section 149(6) of the Companies Act, 2013 and requisite declarations in terms of Section 149(7) of the Act have been received.

COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The provisions of Section 178(1) relating to constitution of Nomination and Remuneration Committee are applicable to the Company and hence the Company has devised a policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013. The said policy is posted in the website of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors hereby make the following statement in terms of Section 134 (3)(c) and 134 (5) of the Companies Act, 2013 with respect to Directors' Responsibility.

We confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors 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 ended 31st March, 2015 and of the profit of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

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

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied within letter and spirit. A certificate issued by the auditors of the Company regarding compliance of conditions of Corporate Governance is also annexed. The matters relating to Corporate Governance as per the Listing Agreement are attached to this report. A management discussion and analysis report as required by Listing Agreement is also annexed which forms part of this report.

RELATED PARTY TRANSACTIONS

All transactions entered by the Company with related parties were in the ordinary course of business and at Arm's Length basis. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The details of the transactions with related parties are given in the financial statements.

BOARD MEETINGS

During the year, five meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached to this report.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

REMUNERATION POLICY

The Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to the provisions of the Act and Clause 49 of the Listing Agreement. The said policy is posted in the website of the Company

PARTICULARS OF EMPLOYEES AND REMUNERATION AND RELATED DISCLOSURES

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting.

In terms of the provisions of Section 197 of the Companies Act, 2013 read with Rules 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report.

Having regard to the provisions of Section 136(1) read with its relevant provisio of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

AUDITORS

Your Company's Auditors, M/s. REDDY A V & CO (Formerly J.B.REDDY & CO.,) Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and they have consented to be re-appointed for the further term of two years i.e, till the conclusion of the Thirty Fifth Annual General Meeting subject to ratification of their appointment at every AGM. The Company has received a letter from M/s. REDDY A V & CO stating that their re-appointment as auditors, if made, would be in accordance with Section 139 read with Section 141 of the Companies Act, 2013.

SECRETARIAL AUDITOR

The Company has appointed M/s. L.D.Reddy & Co, Company Secretaries to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed with this report in Annexure-D.

COST AUDITORS

As per Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors of your Company has appointed M/s. Jayaram & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16 on the recommendations made by the Audit Committee.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Details of the same are provided in the Management Discussion and Analysis Report attached to this report.

The Internal Auditors reviews the efficiency and effectiveness of the systems and procedures. The Audit Committee approves and reviews the internal audit plan for the year.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed with this report in Annexure-E.

INDUSTRIAL RELATIONS

The employee relations have remained cordial throughout the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors wish to place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

RISK MANAGEMENT POLICY

The Company has an adequate Risk Management Policy Commensurating with its size and operations. The risk management includes identifying types of risks and its assessment, risk handling, monitoring and reporting.

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

The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the financial statements.

CORPORATE SOCIAL RESPONSIBILITIES (CSR)

The CSR Policy of the Company and details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed as part of this report in Annexure-C. Further details of composition of the Corporate Social Responsibility Committee and other details are provided in the Corporate Governance Report which forms part of this report.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors. Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings.

Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.

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

The information pertaining to conservation of energy, technology absorption, research and development, 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 given in the Annexure-A forming part of this Report.

ACKNOWLEDGEMENTS

The Directors place on record their sincere appreciation for the dedicated efforts of the employees and co-operation of associates, suppliers and customers. We also express our sincere thanks to Company's Bankers namely State Bank of India, Standard Chartered Bank, HSBC Ltd., Kotak Mahindra Bank Ltd. and HDFC Bank Ltd. for their trust and continued support.

For and on behalf of the Board



Place: Chennai D. Sesha Reddy Date: 29th May 2015 Chairman


Mar 31, 2014

Dear members,

The Directors are pleased to present the Thirty Second Annual Report along with the Audited Accounts for the financial year ended 31st March 2014:

PERFORMANCE (Rs. in Lakhs) FINANCIAL RESULTS 2013-14 2012-13

Net Sales 51,516.08 50,759.82

PBIDT 5,099.03 3,486.30

Profit Before Tax (PBT) 3,629.44 2,070.19

Less: Provision for Tax 1,379.89 679.04

Profit After Tax (PAT) 2,249.55 1,391.15

Add: Profit brought forwarded from previous years 4,144.77 3,759.20

Profit Available for Appropriation 6,394.32 5,150.35

Less: Appropriations Final Dividend on Equity Shares 609.01 435.01

Distribution Tax on Final Dividend 103.50 70.57

General Reserve 1500.00 500.00

Surplus Carried to Balance Sheet 4,181.81 4,144.77

DIVIDEND

Your Directors recommend a final dividend of 35% (Rs. 0.70 per share) for the financial year 2013-14 against 25% for the previous year.

OPERATIONS

During the year, the Company recorded Net Sales of Rs. 515.16 crores as against Rs. 507.60 crores in 2012-13, a marginal increase of about 1.50%. Profit Before Tax made during the year is Rs. 36.29 crores compared with Rs. 20.70 crores in 2012-13, a significant increase of about 75% compared with previous year. The production during the year was 70025 MT, compared to the previous year''s 67953 MT.

During the year, the Company has increased its sales from Tractor industry compared with Commercial Vehicle segment. This has resulted in marginal increase in sales. However, there was no significant increase in total sales due to slow down in the economy especially in the auto sector.

The automotive industry was growing consistently over the past decade, but with Indian GDP slowing over the couple of years, the auto industry growth also witnessed a corresponding slow down. However, the long term prospects for the industry remain strong and the industry expects moderate growth in the coming year. The entry and growth of new generation commercial vehicles where the Company enjoys a strong position will further aid the Company’s growth. Our entry in to this new generation of vehicles with MNC OEMs will also increase the opportunities for exports. India is now a supplier of a range of high value and critical automobile components to global auto market.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements of Nelcast Limited and its subsidiary NC Energy Limited as at 31st March 2014, in accordance with Accounting Standard 21 on "Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India. As required by Clause 41 of the Listing Agreement with Stock Exchanges, the audited Consolidated Financial Statements are circulated with the Annual Report.

In accordance with the general exemption granted by Ministry of Corporate Affairs vide circular No. 2/2011 dated February 8, 2011, the Company has not attached the financial statements of the subsidiary company. However, the financial information of the subsidiary company, duly audited by the auditors is disclosed in the annual report. The Company will make available the audited annual accounts and related information of its subsidiary, upon request by any of its shareholders. The annual accounts of the subsidiary company will also be kept for inspection, by any member at the Registered Office of the Company and its subsidiary company. The consolidated financial statements presented by the Company, which form part of this annual report, include financial results of its subsidiary company.

QUALITY AND CUSTOMER SATISFACTION

The Company adheres to the TS 16949 norms, and continuously strives to achieve world class quality by strictly adhering to the quality standards. The Company has been awarded ISO 14001 & 18001 for Environmental Management Systems.

The Company has been receiving continuous support from its OEM customers like Tata Motors, Ashok Leyland, TAFE, Eicher Tractors (TMTL), Mahindra & Mahindra, Volvo-Eicher Commercial Vehicles, SAME Tractors, Escorts Tractors, Sonalika Tractors (ITL), Daimler India, Ashok Leyland John Deere, Caterpillar, etc., from Tier I customers like Automotive Axles, American Axles, Dana, Rane Madras, Rane-TRW, ZF India, Simpson & Co., etc., and export customers like Meritor, Bauer Gears and ZF Industries. The Company is closely working with all customers in terms of new product development, improvement in quality & delivery performance etc., to meet their expectations.

DEPOSITS

The Company has accepted public deposits during the year. Its deposits as at 31st March 2014 stand at Rs. 177.64 lakhs. There are no overdue of deposits as on 31st March 2014.

DIRECTORS

As per the provisions of Section 149 of the Companies Act, 2013, which has come into force with effect from 1st April, 2014, an Independent Director shall hold office for a term up to five consecutive years on the Board of a company and is not liable to retire by rotation. In compliance with the provisions of Section 149 read with Schedule IV of the Act, Mr. D. Sesha Reddy, Mr. R. Mohan Reddy and Mr. A. Balasubramanian have been recommended to be appointed as Independent Directors of the Company for a term of five years by the Nomination and Remuneration Committee and Board of Directors at their respective meetings held on 24th May 2014 with effect from the date of the forthcoming Annual General Meeting. In the opinion of the Board, they fulfill the conditions specified in the Act and the Rules made there under for appointment as Independent Directors and are Independent of the Management. Details of the proposal for appointment of Independent Directors are mentioned in the Explanatory statement under Section 102 of the Companies Act, 2013 of the Notice of the 32nd Annual General Meeting.

The Independent Directors have fulfilled the criteria of Independence as defined under Section 149(6) of the Companies Act, 2013 and requisite declarations in terms of Section 149(7) of the Act have been received.

Mr. P. Vijaya Bhaskar Reddy is due to retire by rotation and being eligible offers himself for re-appointment. He was reappointed as Deputy Managing Director by the board of directors at their meeting held on 10th February 2014 for a further period of three years. Your approval is sought for his re-appointment.

Consequent to appointment of Ms. P. Divya as Managing Director of our subsidiary "NC Energy Limited", she has resigned as Whole-Time Director of the Company and will continue as Director of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors hereby make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 with respect to Directors’ Responsibility.

We confirm that:

* The Annual Accounts for the year ended 31st March 2014, have been prepared with the Revised Schedule VI applicable to the Company with all the applicable Accounting Standards.

* Such Accounting Policies have been selected and applied consistently supported by management 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 and Loss of the Company for that period.

* Proper and sufficient care had been taken 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.

* The Accounts for the year ended 31st March 2014 have been prepared on a "going concern" basis.

CORPORATE GOVERNANCE

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied within letter and spirit. A certificate issued by the auditors of the Company regarding compliance of conditions of Corporate Governance is also annexed. The matters relating to Corporate Governance as per the Listing Agreement are attached to this report. A management discussion and analysis report as required by Listing Agreement is also annexed which forms part of this report.

AUDITORS

Your Company''s Auditors, M/s. J.B. REDDY & CO., Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and they have consented to be re-appointed for the financial year 2014-15. The Company has received a letter from M/s. J.B. REDDY & CO., stating that their appointment as auditors, if made, would be within the limits specified under the Companies Act, 2013.

As per Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors of your Company has appointed M/s. Jayaram & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2014-15 on the recommendations made by the Audit Committee.

INDUSTRIAL RELATIONS

The employee relations have remained cordial throughout the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors wish to place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

CORPORATE SOCIAL RESPONSIBILITIES

The Company believes in sharing its prosperity with the society. The Company has been doing CSR activities by providing books and other necessary things for the nearby schools, which covers mostly weaker sections of the society. The Company offers medical facilities free of cost to villagers near to the factory. Health education programmes being conducted to create awareness among the employees.

DISCLOSURE OF PARTICULARS

The information required as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of the Board of Directors'') Rules, 1988 is given in the Annexure - I forming part of this report.

PARTICULARS OF EMPLOYEES

Particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, are set out in Annexure II and form part of this report. However, pursuant to Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent to shareholders excluding the aforesaid annexure. The said particulars will be made available to a member upon request and also made available for inspection at the Registered Office of the Company. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENTS

The Directors place on record their sincere appreciation for the dedicated efforts of the employees and co-operation of associates, suppliers and customers. We also express our sincere thanks to Company’s Bankers namely State Bank of India, Kotak Mahindra Bank Ltd., Standard Chartered Bank and HSBC Ltd. for their trust and continued support.

For and on behalf of the Board

Place : Chennai D. Sesha Reddy Date : 24th May 2014 Chairman


Mar 31, 2011

The Directors are pleased to present the Twenty Ninth Annual Report along with the Audited Accounts for the financial year ended 31st March 2011:

PERFORMANCE

FINANCIAL RESULTS 2010-11 2009-10

(Rupees in Lakhs)

Net Sales 50,740.71 31,960.79

PBIDT 14,381.33 2,311.01

Profit Before Taxes (PBT) 12,920.12 999.01

Less: Provision for Taxes 4,228.55 309.32

Profit After Taxes (PAT) 8,691.57 689.69

Less: Prior Year Adjustments 2.19 0.63

Add: Profit brought forward from

previous years 2,149.07 1,825.37

Profit Available for appropriation 10,838.45 2,514.43

Special Dividend on Equity Shares 2,088.03 -

Dividend Tax on Special Dividend 346.80 -

Final Dividend on Equity Shares 522.00 261.00

Dividend Tax on Final Dividend 86.70 44.36

Transfer to General Reserve 5,000.00 60.00

Surplus Carried to Balance Sheet 2,794.92 2,149.07

DIVIDEND

Your Directors recommend a dividend of 30% (Rs.3.00 per share) for the financial year 2010-11 against 15% (Rs. 1.50 per share) of previous year. During the year, the Company has already declared and paid a special silver jubilee dividend of Rs. 12.00 per share, thereby the total dividend for the year amounts to Rs. 15/- per share.

OPERATIONS

During the year, the Company recorded Net Sales of Rs.507.40 crores as against Rs.319.61 crores in 2009-10 registering a growth of 59%. Profit Before Tax (excluding extra-ordinary items) increased to Rs. 20.43 crores during the year 2010-11 from Rs. 9.99 crores in 2009-10 representing an increase of 104%. The production during the year was 76734 MT, compared to the previous years 60761 MT.

Buoyancy in the domestic market especially in the Automobile sector helped the Company to achieve this excellent growth. The Company has utilized the full opportunity available in the market and registered substantial growth both in Turnover & Profit.

EXTRA-ORDINARY ITEM

During the year the company has made a substantial profit after tax of Rs. 75.09 Cr due to sale of shares held in Nelcast Energy Corporation Ltd. This extra-ordinary item has helped the Company to increase its net worth substantially.

OUTLOOK

The Indian economy is strongly on track and expected to grow continuously. The Company is expected to maintain a steady growth and use the opportunity available in the Automobile industry. The combination of effective manufacturing costs with good quality systems would give an edge to the Company in terms of pricing and quality.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an Audit Committee to oversee the Companys financial reporting process, disclosure of financial information, related party transactions, and internal control system etc. The Company has well defined internal control systems which aim at better efficiency of operations, compliances with legal obligations and Companys policies and procedures.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements of Nelcast Ltd and its subsidiary Nelcast USA Inc as at March 31, 2011, in accordance with Accounting Standard 21 (AS 21) on "Consolidated Financial Statements", issued by the Institute of Chartered Accountants of India. As required by Clause 41 of the Listing Agreement with the Stock Exchanges, the audited Consolidated Financial Statements are circulated with the Annual Report.

QUALITY AND CUSTOMER SATISFACTION

The Company totally adheres to the TS 16949 norms, and continuously strives to achieve world class quality by strictly adhering to the quality standards. During the year the Company has been awarded ISO 14001 & 18001 for Environmental Management Systems.

The Company has been receiving continuous support from its customers like Tata Motors, Ashok Leyland, TAFE, Mahindra & Mahindra, VE Commercial, ITL etc., and in exports Arvin Meritor, Dobbie Dico, Danfoss and ZF Industries. The Company is closely working with all customers in terms of new product development, improvement in quality levels etc. to meet the expectation of customers.

DEPOSITS

The Company has accepted public deposits during the year. Its deposits as at 31st March 2011 stand at Rs.115.31 lakhs.

DIRECTORS

Mr. D. Sesha Reddy, is due to retire by rotation and being eligible offers himself for re-appointment.

During the year Mr. S. Radhakrishnan has been appointed as Additional Director of the Company and he would hold office till the date of the ensuing Annual General Meeting. The Company has received a notice from a shareholder signifying his intention to propose the appointment of Mr. S. Radhakrishnan as Director of the Company at the ensuing Annual General Meeting. He has also been appointed as Managing Director of the Company in the Board Meeting held on 17.01.2011.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors hereby make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility.

We confirm that:

In the preparation of the Annual Accounts for the year ended 31st March 2011, all the applicable Accounting Standards had been followed.

Such Accounting Policies have been selected and applied consistently supported by management 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 and Loss of the Company for that period.

Proper and sufficient care had been taken 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.

The Accounts for the year ended 31st March 2011 have been prepared on a going concern basis".

CORPORATE GOVERNANCE

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing agreements with the Stock Exchanges are complied in its letter and spirit. The matters relating to Corporate Governance as per the Listing Agreement are attached to this report. A management discussion and analysis report as required by listing agreement is also enclosed which forms part of this report.

AUDITORS

Your Companys Auditors, M/s. J.B.REDDY & CO., Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and they have consented to be re-appointed for the financial year 2011-12. The Company has received a letter from M/s. J.B.REDDY & CO., stating that their appointment as auditors, if made, would be within the limits specified under Section 224 (1-B) of the Companies Act, 1956.

INDUSTRIAL RELATIONS

The employee relations have remained cordial through out the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

PARTICULARS OF EMPLOYEES

Information required as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rule 197, as amended from time to time is given in the Annexure.

DISCLOSURE OF PARTICULARS

The information required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENTS

The Directors again would like to express their sincere appreciation for the dedicated efforts of the employees and co-operation of associates, suppliers and customers. We also express our sincere thanks to Companys Bankers namely State Bank of India, IDBI Bank Ltd and Kotak Mahindra Bank Ltd for their trust and continued support.

For and on behalf of the Board

P. Radhakrishna Reddy

Chairman

Date : 13th May 2011

Place: Chennai


Mar 31, 2010

The Directors are pleased to present the Twenty - Eighth Annual Report along with the Audited Accounts for the financial year ended 31 st March 2010:

PERFORMANCE

FINANCIAL RESULTS 2009-10 2008-09

(Rupees in Lakhs)

Net Sales 31960.79^ 29031.03

PBIDT 2311.01 2297.07

Profit before Taxes (PBT) 999.01 593.29

Less: Provision for Taxes 309.32 203.48

Profit After Taxes (PAT) 689.69 389.81

Less: Prior Year Adjustments 0.63 12.03

Add: Profit brought forward from previous years 1825.37 1751.16

Profit Available for appropriation 2514.43 2128.94

Dividend on Equity Shares 261.00 174.00

Provision for Tax on Dividend 44.36 29.57

Transfer to General Reserve 60.00 100.00

Surplus Carried to Balance Sheet 2149.07 1825.37

DIVIDEND

Your Directors recommend a dividend of 15% (Rs. 1.50 per share) for the financial year 2009-10 against 10% (Re. 1.00 per share) of previous year.

OPERATIONS

During the year, the Company recorded Net Sales of Rs.319.61 crores as against Rs.290.31 crores in 2008-09 registering a growth of 10%. Profit Before Tax increased to Rs. 9.99 crores during the year 2009-10 from Rs. 5.93 crores in 2008-09 representing an increase of 68%. The production during the year was 60761 MT, compared to the previous years 48961 MT.

Subsequent to the economic recession in 2008-09, the economy has picked up in 2009-10; especially in automobile sector we could see some recovery. Due to this improved economy the Company registered growth both in Turnover and Profit.

OUTLOOK

During the year 2009-10 the automobile industry in India started showing recovery. We expect this momentum to continue and lead to overall growth during the current year. Your Company will utilize every opportunity to its best and will be part of this growth.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate internal controls to ensure all the assets are protected and transactions are recorded and reported expeditiously. The Audit Committee reviews the Internal Audit Report submitted by the Internal Auditors and implementation of suggestions and measures arising therefrom.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements of Nelcast Ltd and its subsidiary Nelcast USA Inc as at March 31. 2010, in accordance with Accounting Standard 21 (AS 21) on "Consolidated Financial Statements", issued by the Institute of Chartered Accountants of India. As required by Clause 41 of the Listing Agreement with the Stock Exchanges, the audited Consolidated Financial Statements are circulated with the Annual Report.

QUALITY AND CUSTOMER SATISFACTION

The Company totally adheres to the TS16949 norms, and continuously strives to achieve world class quality by strictly adhering to the quality standards.

The Company has been receiving continuous support from its customers like Tata Motors, Ashok Leyland, TAFE, Mahindra & Mahindra, Eicher Motors, ITL, Eicher Tractors etc., and in exports Arvin Meritor, Dobbie Dico and Wartsila. The growing association with Commercial Vehicle and Tractor majors and the widening spread of the customer base, both in India and abroad, are encouraging the Company to increase its manufacturing facilities and intensify its quality thrust while moving its products up the value chain.

DEPOSITS

The Company has accepted public deposits during the year. Its deposits as at 31st March 2010 is Rs.129.83 lakhs.

DIRECTORS

Mr. R. Mohan Reddy, is due to retire by rotation and being eligible offers himself for re-appointment.

During the year Mr. A. Balasubramanian has been appointed as Additional Director of Company and he would hold office till the date of the ensuing Annual General Meeting. The Company has received a notice from a shareholder signifying his intention to propose the appointment of Mr. A. Balasubramanian as Director of the Company at the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors hereby make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility.

We confirm that:

In the preparation of the Annual Accounts for the year ended 31st March 2010, all the applicable Accounting Standards had been followed.

Such Accounting Policies have been selected and applied consistently supported by management 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 and Loss of the Company for that period.

Proper and sufficient care had been taken 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.

The Accounts for the year ended 31 st March 2010 have been prepared on a "going concern basis".

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing agreements with the Stock Exchanges are complied in its letter and spirit. The matters relating to Corporate Governance as per the Listing Agreement are attached to this report. A management discussion and analysis report as required by listing agreement is also enclosed which forms part of this report.

AUDITORS

Your Companys Auditors, M/s. J.B.REDDY & CO., Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and they have consented to be re-appointed for the financial year 2010-11. The Company has received a ietter from M/s. J.B.Reddy & Co., stating that their appointment as auditors, if made, would be within the limits specified under Section 224 (1 -B) of the Companies Act, 1956.

INDUSTRIAL RELATIONS

Overall industrial relations during the year were cordial. The Directors place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

PARTICULARS OF EMPLOYEES

Information required as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rule 1975, as amended from time to time is given in the Annexure.

DISCLOSURE OF PARTICULARS

The information required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENTS

The Directors again would like to express their sincere appreciation for the dedicated efforts of the employees and co-operation of associates, suppliers and customers. We also express our sincere thanks to Companys Bankers namely State Bank of India, IDBI Bank Ltd. and Kotak Mahindra Bank Ltd for their trust and continued support.

For and on behalf of the Board

Date : 30th May 2010 P. Radhakrishna Reddy

Place : Chennai Chairman & Managing Director

 
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