Home  »  Company  »  Orient Paper  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Orient Paper & Industries Ltd.

Mar 31, 2015

Dear Members,

We are pleased to present the annual report along with the audited accounts of your company for the year ended 31st March, 2015.

Financial results

The financial performance of the Company for the year ended 31st March 2015 is summarised below:

Rs. In crores

2014-15 2013-14

Gross sales 1796.72 1691.51

Total income (net of excise) 1689.00 1616.15

Earnings before interest, 45.34 85.39 depreciation, amortisation & taxation

Interest/Finance costs 43.78 37.12

Profit/(Loss) before 1.56 48.27 depreciation and taxation

Depreciation 43.70 46.81

net profit/(Loss) before taxation (42.14) 1.46

Taxation (13.49) (2.78)

Net profit/(Loss) (28.65) 4.24

Profit brought forward 127.27 130.43 from last year

Profit available for appropriations 98.62 134.67

Appropriations

Transfer to General Reserve - 5.00

Dividend on Equity shares 2.05 2.05

Corporate dividend tax 0.40 0.35

Balance carried to Balance Sheet 96.17 127.27

Total 98.62 134.67

EPS (C) (1.40) 0.21

Dividend

Subject to the shareholders'' and other requisite approvals, your Directors recommend payment of dividend of Rs.0.10 per equity share of Rs.1 each (10%) for the year ended 31 March 2015.

Economic climate and our performance

After almost three decades, we now have a Government with a firm mandate, which has generated renewed optimism and expectations for accelerated growth of the Indian economy. While expected results are not yet visible, we do believe that the Government is moving in the right direction. We are encouraged by the initiatives to promote ''Make in India'' and the progress being made towards introduction of GST in a time bound manner. Early implementation of these proposals will positively lead our Nation on the path of high GDP growth and welfare of all our citizens.

However, many of these initiatives are still in the work-in-progress stage and the economy is in the process of a gradual turnaround. As a result, demand for most products remained subdued.

In this background your company has taken concrete steps to prepare itself to take full advantage of the expected upturn.

In this process we have invested time and money in building a new brand identity for our electric products which has been widely appreciated and has resulted into Orient being recognised as a ''Master brand''.

While details of our performance in each of our businesses are shared in the Management discussion and analysis some of the major highlights have been:

Increase in our market shares for almost all products;

Improvements in our efficiencies and cost effectiveness;

Strengthening of our organisation structure and human resources;

However, our results for the year have been impacted by the substantial additional spend on brand promotion for the Electric business and continued pressure on margins being faced by the Indian paper industry as a whole.

We are also happy to inform you that our new low voltage switchgear manufacturing plant at Noida has started production in March and its products have been launched in April 2015. This is a new business segment with great potential for growth for our Electric division.

All in all, we are working on fairly aggressive plans to grow both our Electric and Paper divisions and are confident of achieving higher volumes and substantially improved profitability.

Sustainable Development and Environment

We consider sustainable development and environment protection as integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis. Details of our efforts and activities in this direction are provided in subsequent chapters in this report.

Cash Flow Analysis

In conformity with the provisions of Clause 32 of the Listing Agreement(s), the cash flow statement for the year ended 31 March 2015 is included in the annual accounts.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing flgreement(s). A report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Share capital

There was no change in the share capital of the Company during the financial year 2014-15.

Deposits

The Company has not accepted any deposit from public falling within the ambit of Section 73 of the Companies Act, 2013 and The Company''s (Acceptance of Deposits) Rules, 2014.

Particulars of Loans, Guarantee or Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 ore given in the notes to the Financial Statements.

Corporate Social Responsibility

Pursuant to the requirement of Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) Committee was constituted. Details of the CSR activities as required under Section 135 of the Companies Act, 2013 are given in the CSR Report os Annexure I.

Extract of Annual Return

The extract of Annual Return in form MGT 9 is annexed herewith as Annexure II.

Related Party Transactions

All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on arms length basis.

All the Related Party Transactions are presented to the Audit Committee and the Board. Prior omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions are presented before the Audit Committee and Board of Directors on quarterly basis specifying the nature, value and terms and conditions of the transactions. Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 have been given in the prescribed form AOC -2 as Annexure VII. The Related Party transactions Policy as approved by the Board is uploaded in the Company''s website www.orientpaperindia.com

Directors and Key Managerial Personnel

Directors

(i) Appointment

Ms. Gauri Rasgotra (DIN:06862334) has been appointed as an Additional Director of the Company in the category of Independent Director with effect from 26th September 2014 and shall hold office upto the date of the ensuring Annual General Meeting. The Company has received a notice as per the provisions of Section 160(1) of the Companies Act, 2013, from a member proposing her appointment as Director.

(ii) Appointment of Independent Directors

In terms of the provisions of Section 149 of the Companies Act, 2013 and Listing Agreement, the Board on the recommendation of the nomination and Remuneration Committee, appointed Shri Basant Kumar Jhawar (DIn:00086237), Shri Amitabha Ghosh (DIn:00055962), Mr. Michael Bastian (DIn:00458062) and Shri narendra Singh Sisodia (DIn: 06363951) as Independent Directors of the Company for a term of 5 years w.e.f. 22nd July 2014. The shareholders by Postal Ballot conducted by the Company approved their appointment on 10th December 2014.

All the Independent Directors have given their declaration that they meet the criteria of independence in terms of Section 149(6) of the Companies Act, 2013.

(iii) Retirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013, Shri C K Birla (DIn: 00118473), Director of the Company, retires by rotation and is eligible for re-appointment.

(iv) Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out on annual performance evaluation of its own performance, the directors individually as well as the evaluation of the various Committees of the Board. The manner in which the evaluation has been carried is explained in the Corporate Governance Report.

(v) Board Meetings

The details of meetings of the Board and its various committees are given in the Corporate Governance Report.

Key Managerial Personnel

In compliance with the provisions of Section 203 of the Companies Act, 2013, the Company has appointed Shri Manohar Lal Pachisia (DIn:00065431), Managing Director, Shri Pradeep Kumar Sonthalia, Chief Financial Officer (FCA 051030) and Shri Ram Prasad Dutta (ACS 14337), Company Secretary as the Key Managerial Personnel of the Company.

Auditors

(I) Statutory Auditors

The Shareholders of the Company at their Annual General Meeting held on 22nd August, 2014 appointed M/s. S. R. Batliboi & Co LLP, Chartered Accountants as the Auditors of the Company for a period of 3 years subject to ratification of the appointment by the Members at every Annual General Meeting.

Accordingly, members are requested to ratify appointment of M/s. S. R. Batliboi & Co LLP, Chartered Accountants, the Auditors of the Company to hold office from the conclusion of the ensuring Annual General Meeting till the conclusion of the next Annual General Meeting of the Company. The Auditors has confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company.

(II) Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, Shri Somnath Mukherjee, Cost Accountant (Membership no. M/5343) was appointed for the financial year ending 31st March 2015 to conduct cost audit for the products covered under the said rule.

(III) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Shri A. K. Labh, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Report of the Secretarial Auditor is annexed to this report as Annexure III.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure IV.

Directors'' responsibility statement

Directors'' responsibility statement pursuant to section 134(3)(c) of the Companies Act, 2013 are given in Annexure V to the annual report.

Note No. 35 appearing in Notes to Financial Statements referred to in the Auditors'' Report is self-explanatory.

Information of employees

The prescribed information of Employees required under Section 134(3)(q) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached herewith as Annexure VI .

Remuneration Policy

The Board has, on the recommendation of the nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Risk Management

Pursuant to Section 134 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has adopted a risk management policy. The policy comprises of a robust business risk management framework to identify and evaluate of business risks. The business risk framework defines the risk level including documentation and reporting.

Whistle Blower Policy

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. In line with these objectives the Company has adopted a Vigil Mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement.

Details of the Whistle Blower Policy are stated in the Corporate Governance Report.

Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operation.

Acknowledgements

Your Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, cooperation and support in the Company''s endeavours to achieve continuous growth and progress.

By Order of the Board

C. K. Birla new Delhi, 11th May, 2015 Chairman


Mar 31, 2014

Dear Shareholders,

I We are pleased to present the annual report along with the audited accounts of your company tor the year ended 31st March, 2014.

Financial results

The financial performance of the Company for the year ended 31st March 2014 is summarised below:

Rs In crores 2013-14 2012-13 Gross sales 1691.51 1386.05

Total income (net of excise) 1616.15 1287.19

Earnings before interest, depreciation, amortisation 6 taxation 85.39 10.58

Interest/Finance costs 37.12 19.19

Profit/(Loss) before depreciation and taxation 48.27 (8.61)

Depreciation 46.81 36.71

net profit/(Loss) before taxation 1.46 (45.32)

Taxation (2.78) (13.08)

net profit/(Loss) 4.24 (32.24)

Profit brought forward from last year 130.43 170.07

Profit available for appropriations 134.67 137.83

Appropriations

Transfer to General Reserve 5.00 5.00

Dividend on Equity shares 2.05 2.05

Corporate dividend tax 0.35 0.35

Balance carried to Balance Sheet 127.27 130.43

Total 134.67 137.83

EPS (Rs.) 0.21 (1.57)

Dividend

Subject to the shareholders'' and other requisite approvals, your Directors recommend payment of dividend of Re. 0.10 per equity share of Re. 1 each (10%) for the year ended 31 March 2014.

Economic climate and our performance

Hs is well known, the slowdown in the Indian economy continued during the year under review with GDP growth rate coming down to less than 5%. Growth in the manufacturing sector has been even much lower. On the other hand cost of most major inputs has continued to rise putting pressure on margins.

We are however happy to report that in spite of these challenges, your company has been able to achieve substantial growth in both our businesses of Electric products and Paper.

We have also steadfastly pursued improvements in our efficiencies and costs, while continuing new product developments. These efforts have been backed up by increased marketing efforts and aggressive promotion.

In this context, you must have noticed the launch of the new brand identity for our Electric products and the campaign to support it. We are happy to report that this has received enthusiastic response from the markets.

Our Paper division has also shown appreciable improvement through increased volumes and sustained cost containment efforts. This momentum is expected to be sustained.

Hs result of these initiatives, your company has recorded a growth of 24% in its net sales turnover, which is considered more than satisfactory under the circumstances.

Further details on these aspects are covered by the Management discussion and analysis, which forms a part of this report.

In addition to the product range already introduced in our Electric business, we are now in the process of introducing a range of switch gears which we hope to launch by the last quarter of this financial year.

Overall we are highly encouraged by the progress we have made during the year under review and are even more excited about the future growth potential once the economy regains momentum of growth, which in our opinion is inevitable.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing Hgreement(s). H report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Sustainable development and environment

We consider sustainable development and environment protection as integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis. Details of our efforts and activities in this direction are provided in subsequent chapters in this report.

Cash Flow analysis

In conformity with the provisions of Clause 32 of the Listing Hgreement(s), the cash flow statement for the year ended 31 March 2014 is included in the annual accounts.

Statutory matters

Directors

In compliance of the provisions of Section 152 of the Companies

Hct, 2013, Shri C K Birlo, promoter director of the company, retires by rotation and is eligible tor re-election.

Auditors

M/s. 5. R. Batliboi & Co. LLP, Chartered Rccountants and Ruditors ot the Company, retire and otter themselves tor reappointment.

Cost auditors

Rs required under the provisions ot Section 233B ot the Companies Ret, 1956, qualitied cost auditors mere appointed to conduct cost audits.

Conservation of energy, technology absorption. Foreign exchange earnings and outgo

Details regarding conservation ot energy, research and development, technology absorption, foreign exchange earnings and outgo are turnished in Rnnexure "H" to this report, pursuant to the provisions ot the Companies Ret, 1956 read with the Companies (Disclosure ot Particulars in the Report ot Board ot Directors) Rules, 1988.

Directors'' responsibility statement

Directors'' responsibility statement pursuant to section 217(2RR) ot the Companies Ret, 1956 are given in Rnnexure "B" to the annual report.

note no. 35 appearing in notes to Financial Statements referred to in the Ruditors'' Report is self-explanatory.

Particulars of employees

Particulars of employees pursuant to section 217(2R) of the Companies Ret, 1956 are given in Rnnexure "C" to the annual report.

Acknowledgements

Your Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, cooperation and support in the Company''s endeavours to achieve continuous growth and progress.

By Order of the Board New Delhi, 8th May, 2014 C.K. Birla Chairman


Mar 31, 2013

The are pleased to present the annual report along with the audited accounts of your Company for the year ended 31st March, 2013.

The demerger of Company''s cement business into a separate Company Orient Cement Limited was completed during the year. This has paved the way for shareholders of the Company to participate directly in a focussed entity engaged in the cement business. We are confident that this pragmatic step will yield rich dividends in the long run and lay a strong foundation for future growth.

Financial results

The financial performance of the Company for the year ended 31st March 2013 is summarised below:

(In crores)

2012-13 2011-12

Gross sales 1386.05 2763.79

Total income (net of excise) 1287.19 2512.93

Earnings before interest, depreciation, amortisation & taxation 10.58 449.08

Interest/Finance costs 19.19 42.33

Profit/(Loss) before depreciation and taxation (8.61) 406.75

Depreciation 36.71 88.40

Net profit/(Loss) before taxation (45.32) 318.35

Taxation (13.08) 106.07

Net profit/(Loss) (32.24) 212.28

Profit brought forward from last year 170.07 105.04

Profit available for appropriations 137.83 317.32

Appropriations

Transfer to capital Redemption Reserve 1.00

Transfer to General Reserve 5.00 100.00

Dividend on preference shares 0.02

Dividend on Equity shares 2.05 39.77

Corporate dividend tax 0.35 6.46

Balance carried to Balance Sheet 130.43 170.07

Total 137.83 317.32

EPS (1.57) 10.94

*Results for the year, being exclusive of the cement business, are not comparable with the previous year.

Dividend

Although your Company has incurred a loss during the year, your directors recommend payment of dividend of Rs. 0.10 per equity share of Rs. 1 each (10%) for the year ended 31st March 2013 out of surplus profits carried forward from previous year.

Economic climate and our performance

The Indian economy has been passing through a period of slow down with GDP growth coming down to close to 5.5% during the year under review.

In our view, the major factors responsible for slow-down in the economy have been the slow pace of infrastructure development and unprecedented increases in prices of vital inputs.

However, there have been some positive policy pronouncements recently, which if successfully implemented could result in restoration of the growth momentum.

Notwithstanding these difficult circumstances, we continued to invest in long term growth potential for both our Electricals and Paper businesses. Therefore, even though our performance in terms of profitability for the year has been unsatisfactory, mainly due to poor performance of the Paper business, we remain confident of significant improvement going forward because of several initiatives taken by us, details of which are being shared with you in subsequent chapters in this report.

During the year under review, the Indian Paper industry in general faced unprecedented cost increases particularly in cost of pulpwood. At the same time, Paper prices remained under pressure for most of the year because of substantial new capacities having been added in the previous year. While there has been some positive movement in Paper prices towards the end of the year, this has not been adequate to cover increases in costs. Therefore, margins in the Indian Paper industry in general are likely to remain under pressure for some time.

Additionally, for the past few years our Paper business had been facing two major internal problems due to prolonged shut down of operations during the summer months and unstable operation of our aging power generation facilities. We are happy to report that long term measures to mitigate both these challenges have now been put in place. As already reported last year, our recently constructed water reservoirs of 250 million gallons are now able to take care of the water shortage problem during summer months. The unstable power generation problem has also been resolved by commissioning of our new 55 MW power plant in December 2012. Apart from helping in stable operations of the Paper plant, this will also result in substantial cost reduction, as already evidenced by improved performance of the Paper division from February 2013.

While our Paper division achieved a growth of 5.5% in turnover, our losses from this division were higher. However, the division''s results for last quarter of the year have improved significantly since the stabilization of the new power plant and we expect this trend to continue. 1 In the Electricals business, the Indian Fan industry is estimated to have grown by approx. 7% during the year. Against this, we have achieved a growth of 10% in our Fan volumes and have thus gained market share. A number of new SKUs and high end models were introduced during the year and were backed up by a new ad campaigns.

Sales of Orient lighting also grew by 33% against the industry growth of around 12%. Thus our market share, particularly in CFLs and Consumer Luminaires increased. Going forward, we plan to further expand our market reach and lay greater focus on sales of Consumer Luminaires, LED Light Sources and Systems, which provide better margins.

It will be recalled that we had introduced a range of domestic electrical appliances last year. This year we achieved a turnover of Rs. 53 crores from these products. While this was below our expectations, we are pleased at the positive feedback from the customers about quality and designs of our products. With changing life style, these products provide a huge opportunity for growth, which we shall pursue aggressively.

Overall our electrical business achieved a growth of 21.5% in net sales and 8.6% in PBIT over the previous year.

Detailed business analysis, review and operational performance of each of our business segments are covered in the management discussion and analysis chapter, which forms a part of this report.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing Agreement(s). A report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Sustainable development and environment

We consider sustainable development and environment protection as integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis. Details of our efforts and activities in this direction are provided in subsequent chapters in this report.

Cash flow analysis

In conformity with the provisions of Clause 32 of the Listing Agreement(s), the cash flow statement for the year ended 31 March 2013 is included in the annual accounts.

statutory matters

Directors

Shri Narendra Singh Sisodia was appointed as an Additional Director of the Company during the year and holds office up to the ensuing Annual General meeting. A notice has been received from a shareholder pursuant to

Section 257 of the Companies Act, 1956 proposing Shri Sisodia as a Director of the Company.

Shri C K Birla and Shri Amitabha Ghosh, directors of the Company, retire by rotation and are eligible for re-election.

Auditors

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants and Auditors of the Company, retire and offer themselves for reappointment.

cost auditors

As required under the provisions of Section 233B of the Companies Act, 1956, qualified cost auditors were appointed to conduct cost audits.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

Details regarding conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo are furnished in Annexure "A" to this report, pursuant to the provisions of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Directors'' responsibility statement

Directors'' responsibility statement pursuant to Section 217(2AA) of the Companies Act, 1956 are given in Annexure "B" to the annual report.

Note No. 38 appearing in Notes to Financial Statements referred to in the Auditors'' Report is self-explanatory.

particulars of employees

Particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 are given in Annexure "C" to the annual report.

Acknowledgements

Your Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, cooperation and support in the Company''s endeavours to achieve continuous growth and progress.

By Order of the Board

C.K. Birla

New Delhi, 8th May, 2013 Chairman


Mar 31, 2012

The are pleased to present the annual report along with audited accounts of your Company for the year ended 31st March 2012.

Financial results

The financial performance of the Company for the year ended 31st March 2012 is summarised below:

(Rs.in crores)

2011-12 2010-11

Gross sales 2763.79 2,175.00

Total income (net of excise) 2512.93 1,996.64

Earnings before interest, depreciation, amortisation & taxation 449.08 332.77

Interest/Finance costs 42.33 41.78

Profit before depreciation and taxation 406.75 290.99

Depreciation 88.40 81.48

Net profit before taxation 318.35 209.51

Taxation 106.07 66.41

Net profit 212.28 143.10

Profit brought forward from last year 105.04 169.46

Profit available for appropriations 317.32 312.56

Appropriations

Transfer to Debenture Redemption Reserve - 23.75

Transfer to Capital Redemption Reserve 1.00 0.00

Transfer to General Reserve 100.00 150.08

Dividend on preference shares 0.02 0.06

Dividend on ordinary shares 39.77 28.93

Corporate dividend tax 6.46 4.70

Balance carried to Balance Sheet 170.07 105.04

Total 317.32 312.56

EPS 10.94 7.42

Dividend

Subject to the shareholders' and other requisite approvals, your Directors recommend payment of final dividend of Rs. 1/- per equity share of Rs. 1 each (100%) for the year ended 31 March 2012. This is in addition to the interim dividend of Rs. 1/- (100%) paid earlier during the year, bringing the total dividend for the year Rs. 2/- (200%). The cash outflow on account of dividend on equity capital(including interim dividend), Preference Shares and dividend tax works out to Rs. 4625 lacs, which constitutes 21.79% of our net profit for the year.

During the year, the Board of Directors decided to redeem 1,00,000 - 6% redeemable Non- convertible Debentures of Rs. 100/- each for an aggregate amount of Rs. 1,00,00,000 and the said shares were redeemed on 27th July, 2011.

Allotment of Equity Shares

During the year, 1,20,00,000 equity shares of Rs. 1/- each were allotted to the promoter group consequent upon conversion of convertible warrants issued by the company. Funds raised under the issue were utilised for the purpose as sanctioned.

Forfeiture of Equity shares

During the year 16010 partly paid up equity shares were forfeited consequent upon non payment of call money by the respective shareholders.

Demerger of Cement division

The Board, shareholders and creditors of Orient Paper & Industries Limited (OPIL) have approved a scheme for demerger of the Cement Undertaking of OPIL to Orient Cement Limited. OPIL and Orient Cement Limited have filed applications in Court seeking sanction for such demerger, which is now pending final hearing.

Economic climate and our performance

There has been a perceptible slow down in the Indian economy with GDP growth coming down to below 7% for the year under review as against over 8% growth achieved during past several years.

While slow-down in International economy caused by Euro zone crisis must have also contributed to this,

we believe that internal factors like slow pace of infrastructure development, high inflation, unprecedented increases in prices of vital input like coal and power, credit squeeze applied by RBI and general lack of policy direction were the major factors in bringing down the rate of growth.

However, India still continues to be one of the fastest growing economies of the world and we hope that the Government will take effective and pro-active steps to restore the growth momentum to above 8% soon.

It is a matter of satisfaction that even in the face of these challenges, we were able to achieve a growth of 27 % in our net sales turnover and 48 % in our net profit after tax.

Domestic cement demand grew by 6.6% during the year due to the good growth recorded during 2nd half of the year under review. However, there was no growth in the Southern region, mainly because of negative growth of -8% in Andhra Pradesh. We were however able to increase our cement sales volumes by 8% and gain market share in our core markets. We could also achieve a capacity utilisation of 77% compared to the industry average of 68% in South & West, where our plants are located. In spite of huge pressure on our costs because of factors totally beyond our control, we were also able to increase our PBIT from cement business by 62% through a combination of higher volumes, better product & market mix and cost reduction efforts.

Because of slow-down in construction activities, overall demand for Fans also came down by 2.8% compared to previous year. However, we were still able to achieve a 5.6% growth in our Fan volumes through introduction of new and exciting models and increasing our distribution reach. In lighting products, we increased our sales volumes by 38 % and introduced several new SKUs. Towards the end of this financial year, we also launched a wide range of household electrical appliances. Overall our electrical division achieved a growth of 18 % in net sales turnover for the year. Also, we were able to achieve similar profitability level in this division as the preceding year in spite of substantial cost and competitive pressures.

In our paper division also, we were able to increase our Paper volumes by 22 % in spite of 43 days shut down in the 1st quarter due to water scarcity and loss of 5 days output in December due to a minor fire incident in the power plant. Paper volume could have still been higher but for frequent break-down of our aging power plant. The Chemical plant performed satisfactorily. However, there were unprecedented increases in prices of pulp wood, coal and power which resulted in substantially increased losses from this business. Going forward, we expect this division's performance to improve once the new 55 MW power plant, now nearing completion, gets commissioned as it will not only bring down the cost of energy but will also contribute towards stabilizing operations. We also do not expect any water scarcity related shut down in 2012-13 as there is adequate water available in our water reservoirs. The proportion of value added Tissue papers is also expected to increase as the additional rewinder for the 2nd Tissue machine is now fully operational.

Detailed business analysis, review and operational performance of each of our business segments are covered in the management discussion and analysis chapter, which forms a part of this report.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing Agreement(s). A report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Sustainable development and environment

We consider sustainable development and environment protection as integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis. In new initiative, we have agreed to partner with Madhya Pradesh Government in all round development of 2 areas around our Paper plant under the Rajiv Gandhi water shed development project. Details of our efforts and activities in this direction are provided in the chapters covering detailed analysis of each of our businesses.

Carbon credits for cement division

We received 126317 CERs for the year 2008-09 during this year. Therefore, an income of only Rs. 3.33 cr has been recognised during this year based upon prevailing market prices as at 31st March 2012. Our claim for a further 47000 CERs for the year 2009-10 is presently under consideration of the CDM Board. No income from these expected CERs has been accounted for during the year under review. This will be taken into account on receipt of the approved CERs.

Cash flow analysis

In conformity with the provisions of Clause 32 of the Listing Agreement(s), the cash flow statement for the year ended 31 March 2012 is included in the annual accounts.

Statutory matters Debentures

The funds raised by issue of debentures from time to time were utilised for the purposes as sanctioned.

Directors

Shri P.K. Sen ceased to be a Director of the Company w.e.f. 8

August,2011. The Board places on record its appreciation of the valuable contribution made by Shri P.K. Sen during his long tenure as a member of our Board.

Mr. Michael Bastian and Shri B.K. Jhawar , directors of the company, retire by rotation and are eligible for re election.

Auditors

M/s. S. R. Batliboi & Co., Chartered Accountants and Auditors of the Company, retire and offer themselves for reappointment.

Cost auditors

As required under the provisions of Section 233B of the Companies Act, 1956, qualified cost auditors were appointed to conduct cost audits.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

Details regarding conservation of energy, Research and Development, foreign exchange earnings and outgo are furnished in Annexure "A" to this report, pursuant to the provisions of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Directors' responsibility statement

Directors' responsibility statement pursuant to section 217(2AA) of the Companies Act, 1956 are given in Annexure "B" to the annual report.

Note No.40 appearing in accounts referred to in the Auditors' Report is self-explanatory.

Particulars of employees

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 are given in Annexure "C" to the annual report.

Acknowledgements

Your Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, cooperation and support in the Company's endeavours to achieve continuous growth and progress.

By Order of the Board

New Delhi, C. K. Birla

2 May, 2012 Chairman


Mar 31, 2011

We are pleased to present the annual report along with audited accounts of your Company for the year ended 31st March 2011.

Financial results

The financial performance of the Company for the year ended 31st March 2011 is summarised below:

(Rs. in crores)

2010-11 2009-10

Gross sales 2,175.00 1,768.54

Total income (net of excise) 1,996.64 1,636.04

Profit before interest, depreciation and taxation 332.77 323.65

Interest 41.78 34.53

Profit before depreciation and taxation 290.99 289.12

Depreciation 81.48 55.01

Net profit before taxation 209.51 234.11

Taxation 66.41 74.80

Net profit 143.10 159.31

Debenture Redemption Reserve written back 18.75 25.00

Profit brought forward from last year 169.46 214.41

Profit available for appropriations 331.31 398.72

Appropriations

Transfer to Debenture Redemption Reserve 23.75 18.75

Transfer to General Reserve 150.08 176.70

Dividend on preference shares 0.06 0.06

Dividend on ordinary shares 28.93 28.93

Corporate dividend tax 4.70 4.82

Balance carried to Balance Sheet 123.79 169.46

Total 331.31 398.72

EPS (Rs.) 7.42 8.26

Dividend

Subject to the shareholders and other requisite approvals, your Directors recommend payment of dividend of Rs.1.50 per equity share of Re. 1 each (150%) for the year ended 31 March 2011. The cash outflow on account of dividend on equity capital and dividend tax works out to Rs. 3,362.63 lacs, which constitutes 23.51% of our net profit for the year.

Your Directors also recommend payment of dividend on 1,00,000 6% redeemable non-cumulative preference shares of Rs. 100 each. Total dividend pay out on the preference share capital and dividend tax works out to Rs. 6.97 lacs.

Economic climate and our performance

The Indian economy is expected to record an impressive growth of over 8% for the year under review. However, the year was marked by high inflationary pressures and some slowdown in implementation of the planned infrastructure projects.

The cement sector in particular registered a domestic demand growth of only 5% against widely expected growth of 10% to 12%. In fact, cement consumption in Andhra Pradesh, one of our major markets, was 15% lower than the previous year. As a result, cement realisation was under pressure for most of the year. At the same time, there were significant statutory increases in prices of almost all the major inputs.

In this back ground, we were able to achieve a growth of 12.7% in sales of our cement and clinker and increase our market share in both our primary markets of Andhra Pradesh and Maharashtra. However, our price realisation was lower and costs increased due to higher prices of inputs. Yet, it is a matter of satisfaction that we have been able to maintain our EBITDA for the cement segment at the same level as in the previous year.

Our electrical division continued to achieve impressive growth. Our sales of fans increased to 65.48 lacs this year from 50.37 lacs in the previous year. For lighting products also, our sales increased to 86.81 lac units from 81.82 lac units in the last year. However, costs increased steeply for all major inputs like copper, aluminium etc. As a result, in spite of the significant increase in volume, our EBITDA was marginally lower than the last year for this segment.

Regrettably, our paper division lost production for 93 days during the year due to water scarcity. Yet, we achieved sales of 54,150 MT of paper as against 51,893 MT in the last year. Here too there were steep increases in prices of all the raw materials as well as coal and chemicals. However, in spite of the longer shutdown and cost increases, we were able to restrict loss at EBITDA level to less than 50% of the last year. As a long-term measure to overcome the problem of water scarcity, we have constructed two water reservoirs to store around 250 million gallons of water, which would be adequate to sustain production for about 50 days.

Detailed business analysis, review and operational performance of each of our business segments are covered in the management discussion and analysis chapter, which forms a part of this report.

Growth plans

Having commissioned most of our previously planned projects last year, we have embarked upon further growth plans in all our divisions as follows:

- Setting up of a green field cement plant in the Gulbarga district of Karnataka with a capacity of 3 million tons per year at an estimated investment of Rs.1,720 crores. Land acquisition for the project is at an advanced stage.

- Setting up of 55 MW power plant at our paper division at Amlai to fully cater to the requirements of both the paper and caustic chlorine plants at an investment of Rs.174 crores.

- Increase in production capacity of fans to 90 lac units per year.

- Further diversify the range of our consumer electrical products by addition of household appliances such as mixers, geysers, coolers, room heaters etc in addition to fans and lighting products.

These projects will further enhance the Companys strength in all segments of our business and improve our cost competitiveness.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing Agreement(s). A report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Sustainable development and environment

We consider sustainable development and environment protection as integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis. Details of our efforts and activities in this direction are provided in the chapters covering detailed analysis of each of our businesses.

Carbon credits for cement division

Our claim for the year 2008-09 for issuance of 1,28,895 CERs is in the final stage of UNFCC approval. No income from these expected CERs has been accounted for during the year under review. This will be taken into account on receipt of the approved CERs.

Cash flow analysis

In conformity with the provisions of Clause 32 of the Listing Agreement(s), the cash flow statement for the year ended 31 March 2011 is included in the annual accounts.

Statutory matters

Issuance of warrants As approved at the Extraordinary General Meeting held on 7 March 2011, 1,20,00,000 (one crore twenty lac) warrants have been issued to the promoter group with each warrant convertible into one equity share of the Company of nominal value of Re.1 each at a price of Rs. 57.25 which includes a premium of Rs. 56.25 per share, 25% payment against these warrants has been received.

Merger of wholly owned subsidiary

Our wholly owned subsidiary, OPI Export Limited, has been merged with your Company w.e.f. 1st April 2010. Consequently, your Company has no subsidiaries now.

Debentures

The funds raised by issue of debentures from time to time were utilised for the purposes as sanctioned.

Directors

Shri P.K. Sen, a Director of the Company, who retires by rotation has expressed his desire not to be re-elected on health grounds.

Shri Amitabha Ghosh a Director of the Company, retire by rotation and is eligible for re-election.

Auditors

M/s. S. R. Batliboi & Co., Chartered Accountants and Auditors of the Company, retire and offer themselves for reappointment.

Cost auditors

As required under the provisions of Section 233B of the Companies Act, 1956, qualified cost auditors were appointed to conduct cost audits.

Conservation of energy, technology absorption, foreign exchange earnings and outgo Details regarding conservation of energy, Research and Development, foreign exchange earnings and outgo are furnished in Annexure "A" to this report, pursuant to the provisions of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Directors responsibility statement

Directors responsibility statement pursuant to section 217(2AA) of the Companies Act, 1956 are given in Annexure "B" to the annual report.

Note No.9 appearing in Schedule 22 to the accounts referred to in the Auditors Report is self-explanatory.

Particulars of employees

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 are given in Annexure "C" to the annual report.

Acknowledgements

Your Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, cooperation and support in the Companys endeavours to achieve continuous growth and progress.

By Order of the Board

New Delhi, C.K. Birla

27 April 2011 Chairman




Mar 31, 2010

We are pleased to present the annual report along with audited accounts of your company for the year ended 31st March 2010, during which your company has been able to further strengthen all its businesses to emerge stronger than ever before.

Homage to Late Shri G.P. Birla

At the outset, we wish to place on record our profound sorrow and grief on the sad demise of late Shri G.P. Birla on 5th March 2010.

As Chairman of the Company between 13th March 1957 to 25th November 1997. Shri G.P. Birla, a pioneering industrialist and a dedicated humanist, had guided the affairs of the Company from strength to strength. It was under his dynamic leadership that the company set up the paper mill at Amlai and diversified into cement & electrical businesses. Even after his voluntary retirement from our Board, he continued to provide guidance and assistance whenever needed by us.

Late Shri G.P. Birla was a great visionary. He was not only a doyen in the industrial world but also a noble soul and a great philanthropist. While he established a large number of industries in India and abroad in various fields like automobile, paper, cement, electrical, building products and precision engineering products etc, he also set up several large foundations, hospitals and institutions for charitable and educational purposes. Birla Institute of Technology , Modern High School, Rani Rukmini Girls High School. The Calcutta Medical Research Institute, B.M. Birla Heart Research Centre, Birla Institute of Scientific Research, B.M. Birla Science Centre etc are but only a few examples of his selfless service to the society.

He was awarded "Padma Bhushan" in the year 2006 by the Government of India for his outstanding services to the nation.

In his death, the country has lost a great industrialist and a philanthropist.

Commissioning of on-going expansion projects

We take pleasure in reporting that your company has, during the year under review, commissioned all its on-going major expansion projects as follows:-

- Expansion of our cement capacity from

3.4 million tons to 5 million tons per year.

- 50 MW power project at its cement plant at Devapur.

- Expansion of our Tissue paper capacity from 10000 tons to 25000 tons per year.

Expansion of our capacity for fans from

3.5 million to 5 million units per year.

We are already well on our way to achieving full utilisation of these expanded capacities and are well poised to take the next big leap in our growth trajectory.

Financial results (Rs. in crores)

2009-10 2008-09

Gross sales 1768.54 1690.63

Total income (net of excise) 1636.04 1525.99

Profit before interest, depreciation and taxation 323.65 365.52

Interest 34.53 20.68

Profit before depreciation & taxation 289.12 344.84

Depreciation 55.01 34.71

Net profit before taxation 234.11 310.13

Taxation 74.80 110.04

Net profit 159.31 200.09

Debenture Redemption Reserve written back 25.00 12.50

Profit brought forward from last year 214.41 143.02

Profit available for appropriations 398.72 355.61

Appropriations Capital Redemption Reserve - 7.00

Transfer to Debenture Redemption Reserve 18.75 50.00

Transfer to General Reserve 176.70 50.00

Dividend on preference shares 0.06 0.30

Dividend on ordinary shares 28.93 28.93

Corporate dividend tax 4.82 4.97

Balance carried to Balance Sheet 169.46 214.41

Total 398.72 355.61

EPS 8.26 10.36

Dividend

Subject to the shareholders and other requisite approvals, your Directors recommend payment of dividend of Rs.1.50 per equity share of Re. 1 each (150%) for the year ended 31st March 2010. The cash outflow on account of dividend on equity capital and dividend tax works out to Rs. 3373.81 lacs.

Your Directors also recommend payment of dividend on 100000 6% Redeemable Non-cumulative preference shares of Rs. 100/- each. Total Dividend pay out on the preference share capital and dividend tax works out to Rs. 7.00 lacs.

Management discussion and analysis for business segments

We achieved an increase of 11% in our cement & clinker sales volumes. However, cement realisations in our markets were adversely affected during the 2nd & 3rd quarter of the year under review largely because of disturbed situation in Andhra Pradesh. While prices started gradually improving during the last quarter, they were still to fully recover to the previous years levels. It is for this reason that our margins for the year under review have been lower than the previous year. Substantially higher volumes now available from our expanded capacity should enable us to achieve better results during the current year.

Our Electrical division achieved an impressive growth of 38% and its best ever profitability. We achieved full utilisation of our expanded capacity of 5 million fans during the year and are working on expanding this capacity further to 6 million units. Our 1st CFL production line, commissioned late last year, also achieved full capacity. In view of good market response, 2nd line for CFL has been ordered and should become operational during 2010-11.

However, our paper division did not perform to its potential as we lost production for 76 days during the year, due to pulp mill upgradation project as well as water scarcity. Regrettably, the production at the paper plant has been once again disrupted this year because of unprecedented water scarcity in spite of our having reduced our water consumption per ton of paper by 25%. As a long term measure to overcome this problem, we are now constructing large water reservoirs to store approx. 250 million gallons, which should be adequate to sustain around 2 months production. The upgraded fibre line which should result in significant cost savings and efficiency improvements will also become fully operational as soon as the plant restarts.

A detailed business analysis, review and operational performance of each of our business segments is covered in the Management discussion and analysis chapter, which forms a part of this report.

Corporate Governance

Your Company is in full compliance with the Corporate Governance requirements in terms of Clause 49 of the Listing Agreement(s). A report on Corporate Governance and a certificate from our auditors confirming compliance with the Corporate Governance requirements are attached and form part of this report.

Sustainable development and environment

Sustainable development and environment protection have always been integral parts of our management culture and philosophy. Significant work continues to be done in these areas on a consistent and sustainable basis and our efforts have been recognised by several National and International bodies.

Merger of wholly owned subsidiary

As approved earlier, our wholly owned subsidiary, Air conditioning corporation Limited, has been merged with your company w.e.f.1.04.09 pursuant to an approval from BIFR.

Carbon credits for cement division

Our claim for the year 2008-09 for carbon credits under our approved project is presently with UNFCCC. No

income from carbon credits for 2008-09 has been accounted for during the year under review. This will be taken into account on receipt of approved CERs.

Cash flow analysis

In conformity with the provisions of Clause 32 of the Listing Agreement(s), the cash flow statement for the year ended 31st March 2010 is included in the annual accounts.

Statutory matters

Debentures

The funds raised by issue of debentures from time to time were utilised for the purposes as sanctioned.

Directors

Shri D.N. Patodia ceased to be a Director w.e.f. 3rd September, 2009. The Board places on record its appreciation of the valuable contribution made by Shri D.N. Patodia during his long tenure as a member of our Board.

During the year IDBI withdrew its nominee Mr. Michael Bastian from the Board of Directors of the Company w.e.f. 22nd September, 2009.

The Company co-opted Mr. Michael Bastian as an Additional Director of the company w.e.f. 27th October, 2009. Mr. Bastian will hold office till ensuing Annual General Meeting of the Company. A notice has been received from a Shareholder for appointing Mr. Michael Bastian as a Director of the Company at the said Annual General Meeting.

Sarvashree B.K. Jhawar and C.K. Birla, Directors of the Company retire by rotation and are eligible for re-election.

Auditors

M/s. S. R. Batliboi & Co., Chartered Accountants and Auditors of the Company, retire and offer themselves for reappointment.

Cost auditors

As required under the provisions of Section 233B of the Companies Act, 1956, qualified cost auditors were appointed to conduct cost audits.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

Details regarding conservation of energy, Research and Development, foreign exchange earnings and outgo are furnished in Annexure "A" to the Report pursuant to the provisions of the Companies Act, 1956 read with the

Companies (disclosure of particulars to the Report of Board of Directors) Rules, 1988.

Consolidated financial statement

As stipulated by Clause 32 of the Listing Agreement(s), consolidated financial statement in accordance with Accounting Standard AS-21 are annexed to this Annual Report. However, since financials of Panpaper were not accessible to us in view of withdrawal of our management team and appointment of receivers, it was not possible to include Panpaper in the consolidated figures.

Directors responsibility statement

Directors responsibility statement pursuant to section 217(2AA) of the Companies Act, 1956 are given in Annexure "B" to the Annual Report.

Particulars of employees

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 are given in Annexure "C" to the Annual Report.

Acknowledgements

We place on record our sincere gratitude to our employees, shareholders, bankers, financial institutions, government agencies, customers and suppliers for their valuable contribution, co-operation and support, which played a significant role in making our achievements possible.

By Order of the Board

C.K. Birla

Chairman

New Delhi, 4th May 2010

 
Subscribe now to get personal finance updates in your inbox!