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Directors Report of Pennar Industries Ltd.

Mar 31, 2015

The Directors are pleased to present the thirty ninth Annual Report and the Company's audited financial statement for the financial year ended 31st March, 2015.

FINANCIAL RESULTS

The Company's financial performance, for the year ended 31st March, 2015 is summarized below:

(Rs,in lacs)

Consolidated Standalone

Particulars 2014-15 2013-14 2014-15 2013-14

Gross sales 1,44,648 1,29,464 95,292 90,445

Operating profit (PBIDT) 12,086 9,347 7,038 5,309

Profit before tax (PBT) 6,660 4,816 3,337 1,934

Income Tax and Deferred Tax 2,347 1,742 1,204 676

Profit after tax (PAT) 3,590 2,594 2,133 1,258

Profit brought forward from previous year 18,883 16,289 15,273 14,015

Surplus available for appropriation 22,466 18,883 17,406 15,273

Appropriations

Dividend - - - -

Corporate tax on proposed dividend - - - -

Transfer to General Reserve - - - -

Transfer to Capital Redemption Reserve - - - -

Balance of profit carried to Balance Sheet 22,466 18,883 17,406 15,273

RESULT OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

The company has added several new products this year and progressively moved to higher margins in each vertical. The company successfully widened the customer base and developed sales in new geographies. The Consolidated gross sales of the company grew by 11.8% from Rs.1,290.69 Crores to Rs.1,442.42 Crores and the Consolidated Net Profit increased by 38.4% compared to the previous year.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report.

SUBSIDIARIES':

The following are two subsidiaries of the company as on 31 st March, 2015.

a. M/s. Pennar Engineered Building Systems Limited

b. M/s. Pennar Enviro Limited

THE PERFORMANCE OFTHE SUBSIDIARIES IS AS HEREUNDER:

(a) M/s. Pennar Engineered Building Systems Limited (PEBSL)

Your Company's subsidiary, M/s. Pennar Engineered Building Systems Limited (PEBSL), is among top five players in the Pre Engineered Building market. The company has achieved its highest turnover of Rs.485.57 crore and grew at 20.35 %. PEBSL recorded an EBIDTA of Rs.48.77 crore and a net profit of Rs.21.90 crore, representing 22.07% and 19.90% growth, respectively as compared to last year. The company's order book is atRs.356.18croreas on 30th June 2015.

(b) M/s. Pennar Enviro Limited (PEL)

The company has achieved a turnover of Rs.29.42 crore during the current year as against Rs.17.48 crore during the previous year. The order book position as on 31st March 2015 was Rs.26.80 crore. The new business segment dealing with Operation & Maintenance and Standard Plants have bagged several orders from prestigious clients.

The Company has successfully commissioned a Sea Desalination Plant, ZLD (Zero Liguid Discharge) effluent treatment plant and Sewage Treatment plants of various capacities and Tertiary Treatment Plants. Work is in progress for 6 MLD (Millions of liters per day) fully automatic DM (Dematerialized Water) Plant at Mangalore.

The company has received certification from Indian Institute of Toxicology Research, Luck now for its RO (Reverse Osmosis) product which allows the use of the product for drinking applications.

The financial position of each of the subsidiaries, as per the Companies Act, 2013 is annexed. The Policy for determining material subsidiaries may be accessed on the Company's website at the link: http://www.pennarindia.com/policy-determining-material.html.

The information on subsidiaries pursuant to Section 129(3) of the Act read with rule 5 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure-A in Form AOC-1.

DIVIDEND, FIXED DEPOSITS AND GENERAL RESERVES:

The company has undertaken capacity expansion and product diversification in Financial Year 2014-15 and shall continue the same for the Financial Year 2015-16. This will help the company to achieve margin and revenue growth in the coming years. The company is funding these activities through internal accruals. The company till date has not taken any term loan to fund these. Therefore your Directors are not recommending a dividend on eguity shares. However the company has redeemed the second annual installment of 0.01% Cumulative Redeemable Preference shares of Rs.3.34/- each at Rs.1.67/- per share along with Dividend at 0.01 % during the year 2014-15.

Your Company has not accepted any fixed deposits and no amount has been carried to General Reserves during the year.

CONTRACT AND ARRANGEMENT WITH RELATED PARTIES:

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had entered into contract/arrangement/transaction with material related party which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: http://www.pennarindia.com/policy-related-party-transactions. html.

The Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure - B in Form AOC-2.

CREDIT RATING:

CARE has reaffirmed the 'CARE A (Single A) rating assigned to the long term bank facilities of the Company. This rating is applicable to facilities having tenure of more than one year. Instruments with 'CARE A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Further, CARE has also reaffirmed the 'CARE AT (A One) rating to short term bank facilities of the Company. This rating is applicable to facilities having a tenure up to one year. Instruments with 'CARE Al' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk.

DIRECTORS RESPONSIBILITY STATEMENT: Your Directors state that:

a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2015 and of the profit of the Company for the year ended on that date;

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

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

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

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively

CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standard of corporate governance and adhere to the corporate governance requirements set out by Securities Exchange Board of India. The Report on corporate governance as stipulated under the Listing Agreement is annexed herewith as Annexure - C. The requisite certificate from Ms. Srivani Tyarla, Practicing Company Secretary confirming compliance with the conditions of corporate governance is annexed herewith as Annexure - D.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

In terms of section 135 and Schedule VII of the Companies Act, 2013, and the rules made there under the Board of Directors of your Company has constituted a CSR Committee. The Committee comprises of two Independent Directors and two Executive Directors. The Corporate Social Responsibility Committee (CSR

Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken, which has been approved by the Board. Your company has formed a foundation named'Pennar Foundation' for undertaking some CSR activities. The Annual Report on CSR activities is annexed herewith as Annexure - E.

NOMINATION AND REMUNERATION POLICY:

The Nomination and Remuneration Committee of the Company identifies the persons, who are qualified to become Directors of the Company / who may be appointed in Senior Management in accordance with the criteria laid down and recommend to the Board for their appointment and removal. The Committee also carries out evaluation of every Director's performance. The Committee has formulated the criteria for determining qualifications, attributes, independence of the Directors and recommend to the Board a Policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees.

RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013 and Clause 49 of the listing agreement, the company has formulated a policy on risk management. At present, the company has not identified any element of risk which may threaten the existence of the company.

INTERNAL FINANCIAL CONTROLS:

The details in respect of internal financial control and their adeguacy are included in the Management Discussions Analysis, which forms part of this report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

None of the directors of the company are disqualined under the provisions of the Actor under the Listing Agreement with the Stock Exchanges.

Mr. Nrupender Rao, and Mr. Ravi Chachra who retire by rotation and being eligible offer themselves for re-appointment. Your Board recommends their appointment.

Mr. J Ramu Rao, Non-Executive Director of the company was designated as Non-Executive Independent Director of the Company under Section 149 of the Companies Act, 2013 at the meeting of the Board of Directors held on 30th September, 2014.

Mr. Nrupender Rao, Mr. Aditya Rao and Mr. K Lavanya Kumar were re-appointed at the meeting of Board of Directors held on 11th February, 2015 as Executive Chairman, Vice-Chairman & Managing

Director and Whole-Time Director. Their appointments have to be ratified by the Members at the ensuing Annual General Meeting. Your Board recommends their appointment.

The Board of Directors appointed Ms. Sita Vanka as Additional Independent Director of the Company at its meeting held on 11th February, 2015. Her appointment has to be ratified by the Members at the ensuing Annual General Meeting. Your Board recommends her appointment.

Pursuant to the provisions of Clause 49 of the Listing Agreement, brief particulars of the directors who are proposed to be appointed/ re-appointed are provided as an annexure to the notice convening the Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Mr. C Parthasarathy, Non-Executive Independent Directors of the company resigned from the office of directorship on 29th January, 2015 the same was taken note by the Board of Directors at its meeting held 11th February, 2015. Your Board places on record their deep appreciation for the contribution made by him during his tenure as Director.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors. The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.pennarindia.com/policy- familiarization-programme.html

The Board of Directors at its meeting held on 13th May, 2015 appointed the following as Key Managerial Personnel of the Company:

Mr. J S Krishna Prasad as Chief Financial Officer

Mr. Mirza Mohammed Ali Baig as Company Secretary

STATUTORY AUDITORS:

Pursuant to the provisions of section 139 of the Act and the rules framed thereunder, M/s. Rambabu & Co., Chartered Accountants, were appointed as statutory auditors of the company from the conclusion of the 38th Annual General Meeting of the company held on 30th September, 2014 till the conclusion of the 41st Annual General Meeting to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting. The Notes on financial statements referred to in the Auditors' Report are self- explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

COST AUDITORS:

The Cost Audit Report for the year ended 31st March, 2014 was reviewed by the Audit Committee at its meeting held on 5th August, 2014 and has been filed with Registrar of Companies on 18th September, 2014.

The Cost Audit for the year ended 31st March 2015 is in progress and the Cost Audit Report will be filed with the Ministry of Corporate Affairs within the stipulated time. The Board of Directors at its meeting held on 13th May, 2015 appointed M/s. DZR & Co., Cost Accountants, Hyderabad - 500 007 as Cost auditors of the company for the year ending 31st March, 2016.

AUDITORTO CONDUCT SECRETARIAL AUDIT

The Board has appointed Ms. Srivani Tyarla, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith as Annexure - F. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

AUDIT COMMITTEE:

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY:

Pursuant to Section 177 of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014, the Company has established a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: http://www. pennarindia.com/vigil-mechanism.html

MEETINGS OFTHE BOARD:

Five meetings of the Board of Directors were held during the year.

For further details, please refer the same in Corporate Governance report in this Annual Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.

CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There is no material change in the nature of business affecting the financial position of the Company for the year ended 31st March, 2015.

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

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, is annexed herewith as Annexure - G.

EXTRACT OF ANNUAL RETURN:

Extract of Annual Return of the Company is annexed herewith as Annexure H.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the Statement under Section 134 of the Companies Act 2013 read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure-1.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has in place an Internal Complaints Committee which has been set up to redress complaints regarding sexual harassment. The following is the summary of sexual harassment complaints received and disposed off during the year: i) No. of complaints received : nil ii) No. of complaints disposed off: nil

LIQUIDITY:

The company has undertaken number of steps to maintain strong

liquidity levels. The company's consolidated net debt level is at Rs.137.76 crore. Your Company continues to focus on generating strong cash flows to meet its future growth plans. The Company is comfortable with its current liquidity position.

LISTING OF EQUITY SHARES:

The Company's equity shares are listed at the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Metropolitan Stock Exchange of India Limited. The Company's 0.01% Cumulative Redeemable Preference Shares are listed at Bombay Stock Exchange Limited.

DEMATERIALISATION OF SHARES:

98.50% of the company's paid-up Equity Share Capital is in Dematerialized for mason 31st March, 2015 and balance 1.50% is in physical form. 84.97% of the company's paid-up 0.01% Cumulative Redeemable Preference Share Capital is in dematerialized form as on 31st March, 2015 and balance 15.03% is in physical form.

REDEMPTION OF 0.01% CUMULATIVE REDEEMABLE PREFERENCE SHARES:

The company has redeemed the second annual installment of 1,66,49,119 Cumulative Redeemable Preference Shares of Rs.3.34/- each at a rate of Rs.1.67/- per share as per the terms and conditions of the 'Scheme of Reconstruction and Arrangement 'sanctioned by the High Court of Andhra Pradesh.

MANAGING DIRECTOR CERTIFICATION PURSUANTTO CLAUSE 49(IX) OF THE LISTING AGREEMENT:

The Vice-Chairman & Managing Director certification pursuant to clause 49(V) of the listing agreement is annexed herewith as Annexure-J.

PERSONNEL/ INDUSTRIAL RELATIONS:

The Company maintained cordial and harmonious relations at all levels at the offices and plants of the Company and its subsidiaries throughout the year under review.

THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

In terms of sub rule 5(vii) of Rule 8 of Companies (Accounts) Rules, 2014, there are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to the provisions of Clause 49 of the Listing Agreement, a report on Management Discussion & Analysis enclosed as Annexure-K.

APPRECIATION:

Your directors take this opportunity to express their appreciation for the co-operation to all the suppliers and customers who have been associated with the Company as partners. The Directors would also like to take this opportunity to thank the financial institutions, banks, regulatory and government authorities as well as the shareholders for their continued co-operation and support. The directors also wish to place on record their appreciation of the devoted and dedicated services rendered by all employees of the Company. We look forward to further support.

By Order of the Board

for Pennar Industries Limited

Place: Hyderabad NrupenderRao

Date : 12.08.2015 Executive Chairman


Mar 31, 2014

Dear Members,

The directors take pleasure in presenting the 38th Annual Report together with the audited accounts for the financial year ended 31st March, 2014. Financial Results:

The Company''s financial performance, for the year ended 31st March, 2014 is summarized below:

(Rs in lacs) Consolidated Particulars 2013-14 2012-13

Gross sales 1,23,244 1,27,437

Operating profit (PBIDT) 9,347 11,830

Profit before tax (PBT) 4,816 6,900

income Tax and Deferred Tax 1,742 2,337

Profit after tax (PAT) 2,594 4,186

Profit brought forward from previous year 16,289 13,766

Surplus available for appropriation 18,883 17,952

Appropriations

Dividend 0 1,220

Corporate tax on proposed dividend 0 207

Transfer to General Reserve 0 236

Transfer to Capital Redemption Reserve 0 -

Balance of profit carried to Balance Sheet 18,883 16,289

Standalone Particulars 2013-14 2012-13

Gross sales 85,170 97,213

Operating profit (PBIDT) 5,309 8,172

Profit before tax (PBT) 1,934 4,709

income Tax and Deferred Tax 676 1,595

Profit after tax (PAT) 1,258 3,114

Profit brought forward from previous year 14,015 12,564

Surplus available for appropriation 15,273 15,678

Appropriations

Dividend 0 1,220

Corporate tax on proposed dividend 0 207

Transfer to General Reserve 0 236

Transfer to Capital Redemption Reserve 0 -

Balance of profit carried to Balance Sheet 15,273 14,015

Review of Performance:

The year under review witnessed reduced demand from customers due to slow down in their businesses. Increase in sales of Tubes and Railways segment helped in offsetting the decline in Cold Rolled Steel Business. Pennar started the new business of Hydraulic Cylinders which has a huge opportunity in domestic and global markets. Profits were affected due to increase in input costs and reduced margin as a result of competition.

Subsidiaries'':

The following are the subsidiaries of the Company as on 31st March, 2014

(a) M/s. Pennar Engineered Building Systems Limited (PEBSL)

Your Company''s subsidiary, M/s. Pennar Engineered Building Systems Limited, one of the top players of pre-engineering

building solutions in India, recorded annual sales of H417.2 crore representing 28% growth compared with last year. PEBSL recorded an operating profit (PBIDT) of H37.14 crore and a net profit of H18.26 crore, representing 4.5% and 26.87% growth, respectively as compared to last year. PEBSL continued to build a strong order book including significant repeat orders from existing customers which demonstrates the trust that the Company has built in the short period of time. As at 31st March, 2014, PEBSL had an order book of H330 crore.

(b) M/s. Pennar Enviro Limited (PEL)

Pennar Industries subsidiary, M/s. Pennar Enviro Limited is engaged in water and waste water treatment, Fuel Additives, Water treatment chemicals and Water treatment projects. The company has recorded H17.48 crore gross sales with net profit of H0.12 crore. The company has order book of H40.00 crore. PEL received orders from the reputed customers like L&T, JSW, SLN Coffee, NSL Group and Kohinoor Group.

Credit Rating:

CARE has reaffirmed the ''CARE A'' (Single A) rating assigned to the long term bank facilities of Pennar. This rating is applicable to facilities having tenure of more than one year. Instruments with ''CARE A'' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Further, CARE has also reaffirmed the ''CARE A1'' (A One) rating assigned to the short term bank facilities. This rating is applicable to facilities having a tenure upto one year. Instruments with ''CARE A1'' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk.

Particulars pursuant to Section 212 of the Companies Act, 1956:

Your company has prepared the consolidated financial statements in accordance with the relevant accounting standards and the provisions of the Act. Pursuant to the provisions of Section 212 of the Act, documents in respect of the various subsidiaries viz., Directors'' Report, Auditors'' Report, Balance Sheet and Profit and Loss Account, are required to be attached to the Balance sheet of the Holding Company. However, in terms of the provisions of Section 212(8) of the Act, the Government of India, MCA, has vide Circular No. 2/2011, dated 8th February, 2011 granted exemption from the provisions of Section 212(1) of the Act. Accordingly, the annual report does not contain the financial statements of the subsidiaries of the company. However, the company will make available, the audited annual accounts and related detailed information of the subsidiaries, to the shareholders upon request in accordance with the applicable law. These documents are also available for inspection at the Registered Office of the company and also at the respective subsidiary companies during business hours.

A statement pursuant to Section 212(1)(e) of the Companies Act, 1956 containing the details of subsidiaries of the company forms part of the Annual Report.

Liquidity:

The operating efficiencies and prudent working capital management by the company resulted in its maintaining a conservative debt profile with consolidated net debt of 106.67 crore and a debt to equity ratio of 0.26 and net debt to EBITDA ratio of 1.14 as of 31st March, 2014. Your Company continues to focus on generating strong cash flows to meet

its future growth plans from internal accruals. The Company is comfortable with its current liquidity position and foreseeable funds requirement.

Listing of Equity Shares:

The Company''s equity shares are listed at the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and MCX Stock Exchange Limited.

The Company''s 0.01% Cumulative Redeemable Preference Shares are listed at Bombay Stock Exchange Limited.

Dematerialisation of Shares:

98.38% of the company''s paid-up Equity Share Capital is in dematerialized form as on 31st March, 2014 and balance 1.61% is in physical form.

84.78% of the company''s paid-up 0.01% Cumulative Redeemable Preference Share Capital is in dematerialized form as on 31st March, 2014 and balance 15.22% is in physical form.

Buyback of Equity Shares:

Pursuant to the resolution passed by the Board of Directors of the Company dated 10th June, 2013, the Company has bought back 16,74,486 Equity Shares of H5/- each and the same was informed to the Exchanges and the SEBI on 6th June, 2014.

Redemption of 0.01% Cumulative Redeemable Preference Shares:

The company has redeemed the first annual installment of 1,66,49,119 ''0.01% Cumulative Redeemable Preference Shares'' of H5/- each at a rate of H1.66/- per share along with 0.01% dividend on the redemption value of H1.66/- as per the terms and conditions of the ''Scheme of Reconstruction and Arrangement'' sanctioned by the High Court of Andhra Pradesh.

Secretarial Audit Report:

As a measure of good Corporate Governance practice, the Board of Directors of the Company appointed Mr. S Chidambaram, Practicing Company Secretary, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended 31st March, 2014, is enclosed as Annexure-A.

The secretarial audit covered the provisions of the Companies Act, 1956 and the Companies Act, 2013, the Depositories Act, 1996, the Listing Agreement with the Stock Exchanges and the SEBI guidelines/ regulations on Insider Trading and Takeover Code.

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

The particulars as prescribed pursuant to provisions of Section 217(1)(e) of the Act read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, is enclosed as Annexure-B.

Management Discussion and Analysis:

Pursuant to the provisions of Clause 49 of the Listing Agreement, a report on Management Discussion & Analysis enclosed as Annexure-C.

Corporate Governance:

The Company is committed to maintain the highest standard of corporate governance and adhere to the corporate governance requirements set out by Securities Exchange Board of India. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement is enclosed as Annexure-D.

The requisite certificate from the Statutory Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is enclosed as Annexure-E.

Directors:

None of the directors of the company are disqualified under the provisions of the Act or under the Listing Agreement with the Stock Exchanges.

Appointments

Mr. Vishal Sood, and Mr. J Ramu Rao who retire by rotation and being eligible offer themselves for re-appointment. Your Board recommends their appointment.

Mr. Aditya Rao was redesignated as Vice Chairman & Managing Director of the Company at the meeting of the Board of Directors held on 5th February, 2014.

Mr. K Lavanya Kumar was appointed as Whole-Time Director of the Company at the meeting of the Board of Directors held on 7th May, 2014.

Mr. C Parthasarathy, Mr. B Kamalakar Rao, Mr. Varun Chawla and Mr. Manish Mahender Sabarwal are appointed as Independent Directors of the Company under Section 149 of the Companies Act, 2013.

Pursuant to the provisions of Clause 49 of the Listing Agreement, brief particulars of the directors who are proposed to be appointed/re-appointed are provided as an annexure to the notice convening the Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Cessations

Mr. Ch Anantha Reddy, Whole-Time Director, Mr. C Rangamani, and Dr. G Vivekanand, Independent Directors of the company resigned from the office of directorship on 8th January, 2014, 10th January, 2014 and 28th July, 2014 the same was taken note by the Board of Directors at its meeting held 22nd January, 2014 and 6th August, 2014. Your Board places on record their appreciation for the contribution made by them during their tenure as Directors.

Statutory Auditors:

M/s Rambabu& Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re-appointed. The Audit Committee and the Board of Directors recommend their re- appointment as the Statutory Auditors for the Financial Year 2014-15.

Audit Observations:

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments..

Cost Auditors:

The Cost Audit Report for the year ended 31st March, 2013 was reviewed by the Audit Committee at their meeting held on 6th August, 2013 and has been filed on 26th September, 2013 well within the due date.

The Cost Audit for the year ended 31st March 2014 is in progress and the Cost Audit Report will be filed within the stipulated time.

M/s. DZR & Co., Cost Accountants have been reappointed as

the Cost Auditors of the Company for the year ending 31st March, 2015.

Directors Responsibility Statement:

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

1) In the preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanations relating to material departures;

2) 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 as at 31st March, 2014 and of the profit of the company for that period;

3) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4) The directors had prepared the annual accounts on a ''going concern'' basis.

Dividend, Fixed Deposits and General Reserves:

In order to conserve cash, your Directors are not recommending a dividend on equity shares. However the company has redeemed its first annual installment of 0.01% Cumulative Redeemable Preference shares of H5/- each at H1.66/- per share along with Dividend at 0.01% during the year 2013-14.

Your Company has not accepted any fixed deposits and no amount has been carried to General Reserves during the year.

Particulars of Employees:

The information required under Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the

Annexure to the Directors'' report. However pursuant to the provisions of Section 219(1)(b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitles thereto. Any member interested in obtaining such particulars may write to the Company Secretary for a copy.

Declaration by Vice-Chairman & Managing Director:

Pursuant to the provisions of clause 49(I)(D)(ii) of the Listing Agreement, a declaration by the Vice-Chairman & Managing Director of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed as Annexure-F.

The Vice-Chairman & Managing Director certification to the board pursuant to clause 49(V) of the listing agreement is enclosed as Annexure-G.

Acknowledgements:

Your directors take this opportunity to express their appreciation for the co-operation to all the suppliers and customers who have been associated with the Company as partners of growth. The Directors would also like to take this opportunity to thank the financial institution, banks, regulatory and government authorities as well as the shareholders for their continued co- operation and support. The directors also wish to place on record their appreciation of the devoted and dedicated services rendered by all employees of the Company. We look forward to further support.

By Order of the Board for Pennar Industries Limited

Date : 06.08.2014 Nrupender Rao Place : Hyderabad Executive Chairman


Mar 31, 2013

Dear Members,

The Directors are pleased to present the 37th Annual Report along with the audited accounts for the year ended March 31, 2013. The financial highlights of the Company are as follows:

(Rs. Lakhs)

Particulars Consolidated Standalone

2012-13 2011-12 2012-13 2011-12

Gross Turnover 1,27,437 1,38,148 97,213 110,662

Operating profit (PBIDT) 11,830 14,848 8,172 11,925

Profit before tax (PBT) 6.900 10,055 4,709 8,509

Income Tax and Deferred Tax 2,337 3,586 1,595 3,083

Profit after tax (PAT) 4,186 6,199 3,114 5,426

Profit brought forward from previous year 13,766 9,382 12,564 8,966

Surplus available for appropriation 17,952 15,594 15,678 14,392

Appropriations

Dividend 1,220 1,220 1,220 1,220

Corporate tax on proposed dividend 207 198 207 198

Transfer to General Reserve 236 410 236 410

Transfer to Capital Redemption Reserve - - - -

Balance of profit carried to Balance Sheet 16,289 13,766 14,015 12,564

Performance

The year under review witnessed reduced demand from customers due to slow down in Business verticals which the company services. Increase in sales of Tubes and solar power segment helped in offsetting the decline in Cold Rolled Steel Business. Profits were affected due to increase in input costs and reduced margin as a result of competition. Policy delays affected demand from infrastructure and capital goods sectors. The recovery in Automobile and Railway segments is awaited.

Subsidiary companies Pennar Engineered Building Systems Limited (PEBSL)

Your Company''s subsidiary, Pennar Engineered Building Systems Limited (PEBSL), one of the leading providers of pre-engineering building solutions in India, recorded annual sales off 325.8 Crores representing a 16.7% growth compared with last year. PEBSL recorded an operating profit (PBIDT) ofRs. 35.5 Crores and a net profit ofRs. 14.4 Crores, representing a 22.8 % and 38.2 % growth, respectively as compared to last year. PEBSL continued to build a strong order book including significant repeat orders from existing customers which demonstrates the trust that the Company has built in the short period of time. Your company holds 74% stake in PEBSL As at March 31, 2013, PEBSL had an order book of Rs. 230 Crores.

Pennar Enviro Limited (PEL)

Pennar Enviro Limited (PEL) became the subsidiary of Pennar Industries Limited with effect from November 30, 2012. Pennar Industries Limited holds 51% stake in Pennar Enviro limited. This investment is in line with the Company''s strategy of entering new areas of engineering services. Pennar Enviro Ltd is engaged in water and waste water treatment, Fuel Additives, Water treatment chemicals and Water treatment projects. PEL has a manufacturing unit at Mallapur in Hyderabad.

It produces Fuel Additives for industrial furnace fuels with a "know-how" provided by M/s. TOTAL, France, the fourth largest Oil/Gas Company in the World. PEL also has a technical collaboration with Tech Universal, which specialises in the field of desalinated water, sewage and industrial effluent treatment plants.

Consolidated Result

The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-lll dated 8th February, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet statement of profit and loss and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. Accordingly, annual accounts of the subsidiary companies Pennar Engineered Building Systems Limited and Pennar Enviro Limited and the related detailed information will be made available to the holding and subsidiary companies'' investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at its Head Office in Hyderabad and that of the subsidiary companies concerned. Details of the subsidiaries of the Company are covered in this Annual Report

Liquidity

The operating efficiencies and prudent working capital management by the company resulted in its maintaining a conservative debt profile with consolidated net debt of Rs. 122.52 Crores and a debt to equity ratio of 0.36 x and net debt to EBITDA ratio of 1.05 x as of March 31, 2013. Your Company continues to focus on generating strong cash flows to meet its future growth plans from internal accruals. The Company is comfortable with its current liquidity position and foreseeable funds requirement

Listing of equity shares

The Company''s equity shares are listed at the Bombay Stock Exchange Limited, the National Stock Exchange of India Limited and MCX Stock Exchange Limited. The company has obtained listing approval from MCX Stock Exchange and the shares are listed from May 3,2013.

Change of address of registered office of the Company

With effect from May 10, 2013, the address of the Registered Office of Pennar Industries Limited has been changed to Floor No. 3, DHFLVC Silicon Towers, Kondapur, Hyderabad-500084.

Dividend

Your Directors recommended a dividend of 20% i.e., Rs. 1 per equity share of Rs. 5 each. Directors have also recommended a dividend on cumulative redeemable preference shares of Rs. 5 each of the Company at a coupon rate of 0.01% p.a.

Secretarial Audit Report

As a measure of good Corporate Governance practice and as recommended by the Ministry of Corporate Affairs'' (MCA) Corporate Governance Voluntary Guidelines, 2009, the Board of Directors of the Company appointed Mr. S Chidambaram, Company Secretary in Practice, to conduct Secretarial Audit of records and documents of the Company.

The Secretarial Audit Report for the financial year ended March 31, 2013, is provided in the Annual Report

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act 1956, Depositories Act 1996, Listing Agreements with the Stock Exchanges, and SEBI guidelines/regulations on Insider Trading and Takeover Code.

Credit Rating

CARE has reaffirmed the ''CARE A'' (Single A) rating assigned to the long term bank facilities of Pennar.

This rating is applicable to facilities having tenure of more than one year. Instruments with ''CARE A'' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Further, CARE has also reaffirmed the ''CARE A1'' (A One) rating assigned to the short term bank facilities. This rating is applicable to facilities having a tenure upto one year. Instruments with ''CARE A1'' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk.

Directors

Mr. Varun Chawla a management graduate from Cornell University and having rich experience in Investment Banking, was inducted into the Board of Pennar Industries as an Additional Director with effect from November 9, 2012, and would hold office up to the conclusion of the ensuing Annual General Meeting. It is proposed to appoint Mr. Varun Chawla as the company''s Director.

Mr. C Parthasarathy, Mr Manish Sabharwal and Mr. J Ramu Rao retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment

The Board of Directors of the Company at its meeting held on November 9, 2012, accepted the request of Mr. A Krishna Rao to resign from the directorship of the Company. The board is thankful to Mr. A Krishna Rao for his guidance and support to the company during his Directorship.

For perusal of the shareholders, a brief resume of the Directors being appointed/re-appointed along with other necessary particulars are given in the explanatory statement to the notice. The Board of Directors recommend their appointment/re-appointment

Auditors

The Auditors, M/s Rambabu& Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re-appointed.

Cost Auditor

The Products classified as "Iron & Non-Alloy steel (Chapter 72) and Steel Products (chapter 73)" are subjected to Cost Audit in terms of Sec233B of the Companies Act read with the Central Government Rules.

M/S.DZR & Co., Cost Accountants have been reappointed as the Cost Auditors for the year ending 31st March 2014 having been appointed for the FY 2011-12 & 2012-13.

The Cost Audit Report for the year ended 31 st March 2012 was reviewed by the Audit Committee at their meeting held on 23rd July 2012 and has been filed on 31/01/2013 well within the due date of 28th February 2013.

The Cost Audit for the year ended 31 st March 2013 is in progress and the Cost Audit Report will be filed within the stipulated time.

Directors'' Responsibility Statement

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

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

ii. The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the Company''s state of affairs at the end of the financial year and of the profit or loss of the Company for 2012-13.

iii. The Directors took proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act 1956, for safeguarding the Company''s assets and for preventing and detecting fraud and other irregularities.

iv. The Directors prepared the Company''s annual accounts on a going concern basis.

Management Discussion and Analysis

The report on Management Discussion and Analysis forming part of Directors'' Report is annexed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed and forms a part of the Annual Report The Auditor''s Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement is also annexed.

Public deposits

The Company has no amount outstanding towards public deposit as on March 31, 2013.

Key Developments

Mr. Suhas Baxi joined the company as President & CEO from December 2012. Mr. Baxi, aged 46, has a diverse experience of over 24 years in different industries and geographies including India, North America and Asia Pacific.

Corporate Social Responsibility

Your Company has been involved in the Corporate Social Responsibility (CSR) activity over the past few years. You will be happy to know that the company has supported education and sanitation in schools in villages near our factory. At Govt High School, Ankanapalli Village, Sadashivpet Pennar had provided water pipe line villages in the backward regions of the Andhra Pradesh State. Following are the activities undertaken at a few villages in the State

1. Protein supplement to a few Government schools for their Mid Day Meals to the students

2. Pension to old aged people and widows

3. Developmental works like sanitation works and construction of toilets in the Schools

4. Providing drinking water pipelines in the villages.

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

In accordance with the provisions of Section 217(1 )(e) of the Companies Act 1956, the required information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed.

Awards and Recognitions

During the year under review, Mr. Nrupender Rao, Chairman, was conferred with the prestigious "Outstanding Entrepreneur Award" by the Council of State Industrial Development and Investment Corporations of India.

Particulars of Employees

The information required under Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Annexure to the Directors'' report Having regard to the provisions of Section 219(1 )(b) (iv) of the said Act the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitles thereto. Any member interested in obtaining such particulars may write to the Company Secretary for a copy.

Appreciation

Your directors take this opportunity to express their appreciation for the co-operation to all the suppliers, customers, distributors, sales channel and business partners who have been associated with the Company as partners of growth. The Directors would also like to take this opportunity to thank the financial institution, banks, regulatory and government authorities as well as the shareholders for their continued co-operation and support The directors also wish to place on record their appreciation of the devoted and dedicated services rendered by all employees of the Company.

For and on behalf of the Board

Place: Hyderabad Nrupender Rao

Date: 10th May 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 36th Annual Report along with the audited accounts for the year ended March 31, 2012. The financial highlights of the Company are as follows:

(Rs in Lacs)

Paticulars 12 months ended 12 months ended March 31, 2012 March 31,2011

Gross sales 1,16,158 1,21,523

Operating profit (PBIDT) 11,115 13,307

Profit before tax (PBT) 8,509 11,270

Income Tax and Deferred Tax 3,083 4,323

Profit after tax (PAT) 5,426 6,946

Profit brought forward from previous year 8,966 4,491

Surplus available for appropriation 14,392 11,437

Appropriations

Dividend 1,220 1,525

Corporate tax on proposed dividend 198 246

Transfer to General Reserve 410 700

Transfer to Capital Redemption Reserve - -

Balance of profit carried to Balance Sheet 12,564 8,966

Performance

Pennar continues to strengthen its product offerings and introduced several new product lines. For FY2012, your Company reported annual sales revenue of S 1,162 Crore compared with S 1,215 Crore recorded in FY2011. The Company recorded an operating profit (PBIDT) of S 111 Crore compared with S 133 Crore in the previous year and a net profit of S 54 Crore compared with S 69 Crore last year.

During the year, the Company continued its focus on transforming itself into an engineering Company by increasing the sale of value added products coupled with diversification of offerings. The Company introduced several new product lines including CDW/ERW tubes, sheet pilings and solar structurals. The expansion of manufacturing facilities at its Isnapur and Tarapur plants for value-added products also contributed to strong revenue growth. The expansion added new production capacity for CDW tubes and increased capacities for precision tubes for automobiles and fabrication facilities.

Pennar Engineered Building Systems Limited (PEBS)

Your Company's subsidiary, Pennar Engineered Building Systems Limited (PEBS), one of the leading providers of pre- engineering building solutions in India, recorded annual sales of S 279 Crore representing a 68.3% growth compared with last year. PEBS recorded an operating profit (PBIDT) of S 29.3 Crore and a net profit of S 10.4 Crore, representing a 58.4% and 60.2% growth, respectively as compared to last year. PEBS continued to build a strong order book including significant repeat orders from existing customers which demonstrates the trust that the Company has built in the short period of time. As at March 31, 2012, PEBS had an order book of S 215 Crore.

Consolidated result

For the year ended March 31, 2012, Pennar achieved on a consolidated basis, gross sales of S 1,438 Crore (S 1,371 Crore in FY2011), gross profit (EBIDTA) of S 135 Crore (S 149 Crore), profit before tax (PBT) of S 101 Crore (S 122 Crore) and a net profit of S 62 Crore (S 74 Crore in FY2011). Cash EPS for the year was S 6.7 (S 7.8) and the basic EPS was S 5.08 (S 6.06) per share of S 5 each.

Liquidity

Your Company's ongoing initiatives to improve operating efficiencies resulted in prudent working capital management. Pennar continues to maintain a conservative debt profile with consolidated net debt of S 174.8 Crore and a debt to equity ratio of 0.59X and net debt to EBIDTA ratio of 1.3x as of March 31, 2012. Your company continues to focus on generating strong cash flows to meet its future growth plans from internal accruals. The Company is comfortable with its current liquidity position and foreseeable funds requirement.

Listing of equity shares

The Company's equity shares are listed at the Bombay Stock Exchange Limited and in the National Stock Exchange of India Limited.

Dividend

Your Directors recommended a dividend of 20% i.e. S 1 per equity share of S 5 each. Directors have also recommended a dividend on cumulative redeemable preference shares of S 5 each of the Company at a coupon rate of 0.01% p.a.

Secretarial Audit Report

As a measure of good Corporate Governance practice and as recommended by the Ministry of Corporate Affairs' (MCA) Corporate Governance Voluntary Guidelines, 2009, the Board of Directors of the Company appointed Mr. S Chidambaram, Company Secretary in Practice, to conduct Secretarial Audit of records and documents of the Company.

The Secretarial Audit Report for the financial year ended March 31, 2012, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreements with the Stock Exchanges, and SEBI guidelines/regulations on Insider Trading and Takeover Code.

Credit Rating

CARE has reaffirmed the 'CARE A' (Single A) rating assigned to the long term bank facilities of Pennar. This rating is applicable to facilities having tenure of more than one year. Instruments with 'CARE A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Further, CARE has assigned an improved 'CARE A1' (A One) rating to the short term bank facilities. This rating is applicable to facilities having a tenure upto one year. Instruments with 'CARE A1' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk.

Directors

Mr. Vishal Sood, Partner, SAIF Partners, has been inducted into the Board of Pennar Industries as an Additional Director with effect from January 31, 2012, and would hold office up to the conclusion of the ensuing Annual General Meeting. It is proposed to appoint Mr. Vishal Sood as the company's Director.

Mr. C Rangamani, Mr. Ravi Chachara and Dr. G Vivekanand retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Board of Directors of the Company at its meeting held on September 12, 2011, accepted the request of Mr. P Bhaskara Rao to resign from the directorship of the Company. The Board is thankful to Mr. P Bhaskara Rao for his many contributions to the company during his long tenure as a Director.

For perusal of the shareholders, a brief resume of the Directors being appointed/re-appointed along with other necessary particulars are given in the explanatory statement to the notice. The Board of Directors recommend their appointment/re- appointment.

Auditors

The Statutory Auditors, M/s Rambabu & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and confirmed their eligibility and willingness to accept the office, if re-appointed.

Cost Auditors

The Central Government approved the appointment of M/s. DZR & Co., Cost Accountants, Hyderabad as the Cost Auditor of the Company for conducting Cost Audit for the financial year 2011-12.

The Cost Audit Report for the FY 2011-12 shall be submitted to the Central Government within the stipulated period. Directors' Responsibility Statement

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

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

ii. The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the Company's state of affairs at the end of the financial year and of the profit or loss of the Company for 2011-12.

iii. The Directors took proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the Company's assets and for preventing and detecting fraud and other irregularities.

iv. The Directors prepared the Company's annual accounts on a going concern basis.

Management discussion and analysis

The report on Management Discussion and Analysis forming part of Directors' Report, is annexed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed and forms a part of the Annual Report. The Auditor's Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Public deposits

The Company has no amount outstanding towards public deposits as on March 31, 2012.

Corporate Social Responsibility

Your Company believes that it should be a responsible corporate citizen and contribute to society. We encourage the following initiatives: health, social infrastructure, enriching human capabilities, and regularly organising welfare camps.

You will be happy to know that your Company supported education and sanitation in schools in villages near our plants and some backward areas. PIL is an active participant in the District Administration's drive for channelizing the CSR funds and had contributed to the District Administration for rural development activities (up-gradation of SC/ST/BC hostels) in remote areas in Medak Dist. like Narayankhed. PIL is also closely associated with the rural development/rural development programs and had contributed :

a) Towards augmenting drinking water supply to Bandalguda and other neighbourhoods

b) Towards construction of modern toilets at Govt. High School, Isnapur Village, Medak District

c) Initiated proposals to construct Anganwadi School at Bandlaguda village

d) Extending support for building of a temple at Bandalguda village

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

In accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956, the required information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed.

Awards and Recognitions

During the year under review, your Company has been chosen by FAPCCI (The Federation of Andhra Pradesh Chambers of Commerce and Industry) for the award of "Excellence in All Round Performance for the FY2011". The award reiterates our commitment to serve the interests of various stakeholders including our business associates, employees and the society at large.

Acknowledgement

Your directors wish to place on record their sincere gratitude to employees at all levels for their commitment, hard work and dedication. Their continuing support and unstinting efforts have resulted in an excellent all round operational performance. As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in Annexure-II to the Directors' Report.

The Board would also like to put on record appreciation to all the suppliers, customers, distributors, sales channel and business partners who have been associated with the Company as partners of growth. The Directors would also like to take this opportunity to thank all the financial institutions, banks, regulatory and government authorities for their continued co- operation and support.

We reiterate our commitment to enhance value in the hands of our shareholders. We are thankful for your continued confidence and support for the Company's growth and look forward to a bright future for your Company.

For and on behalf of the Board

Place: Hyderabad Nrupender Rao

Date: 29th May 2012 Executive Chairman


Mar 31, 2010

The Directors have pleasure in presenting the 34th Annual Report along with the audited accounts for the year ended March 31, 2010.The financial highlights of the Company are as follows:

Financial results (Rs. in Lacs)

Particulars 12 months ended 12 months ended March 31, 2010 March 31, 2009

Gross sales 86,114 73,051

Operating profit (PBIDT) 10,980 7,582

Profit before tax (PBT) 8,567 5,281

Income Tax and deferred tax 3,560 1,472

Profit after tax (PAT) 5,007 3,809

Profit brought forward from previous year 2,004 175

Surplus available for appropriation 7,011 3,984

Appropriations

Proposed dividend 1,532 1,265

Corporate tax on proposed Dividend 260 215

Transfer to General Reserve 505 500

Transfer to Capital Redemption Reserve 223 -

Balance of profit carried to Balance Sheet 4,491 2,004

Performance

For the financial year 2009-10, your Company reported its highest annual sales revenue of Rs. 861.14 crores against Rs. 730.51 crores recorded in 2008-09, registering an increase of 17.88%. This increase in sales was achieved despite a reduction in the price of steel. The increase in the sales tonnage was 37.60% over that of last year. The Company recorded an operating profit (PBIDT) of Rs. 109.80 crores against Rs. 75.82 crores in the previous year and a net profit of Rs. 50.07 crores compared with Rs. 38.09 crores reflecting a growth of 44.81 % and 31.45% respectively over the previous year.

The above excellent results were due to the Companys strategy to transform itself into an engineering company by manufacturing products for rail wagons and coaches, automobiles, buildings, pollution control, and road safety systems. The Companys continued focus on speciality profiles, sub-assemblies and fabricated components for transportation and infrastructure companies contributed to the increase in the Companys top line and bottom line.

Pennar Engineered Building Systems Limited (PEBS)

Your Company commissioned the Building Systems Project set up by its Subsidiary, Pennar Engineered Building Systems Limited (PEBS). PEBS is engaged in the business of design, manufacture and erection of pre-engineered steel buildings. Commercial production commenced effective January 1,2010. The subsidiary has technical collaboration for manufacturing weather resistant roofing systems with NCI Building Systems (USA), one of the worlds largest pre-engineered building solution providers.

Consolidated result

Pursuant to the Accounting Standards AS-21 issued by the Institute of Chartered Accountants of India, the consolidated financial statements presented by the Company include financial information of its subsidiary, Pennar Engineered Building Systems Limited. Pennar Industries Limited holds 74% stake in the subsidiary.

For the year ended March 31, 2010, Pennar achieved on consolidated basis Gross Sales of Rs. 890.11 crores, gross profit (EBIDTA) of Rs. 111.77 crores, Profit before Tax (PBT) of Rs. 85.57 crores and net profit of Rs. 49.77 crores. Cash EPS for the year was Rs. 6.06 and the basic EPS was Rs. 3.98 per share of Rs. 5 each.

Dividend

Your Directors declared interim dividend of 10% i.e. Re. 0.50 per equity share on January 29, 2010 and recommended a final dividend of 15% i.e., Re. 0.75 per equity share. Thus, the total dividend for the year was 25% amounting to Rs. 1.25 per equity share of Rs. 5 each. The confirmation of the members for dividend shall be sought during the ensuing Annual General Meeting.

Buyback of equity shares

Pursuant to the approval of the members at the last Annual General Meeting for the buyback of equity shares from the open market through stock exchange mechanism, the Company bought back 44,53,479 equity shares which were extinguished, and the reduced share capital was 12,20,24,000 shares as on March 31, 2010.

Directors

Mr. Ravi Chachra, Mr. C Rangamani and Mr. P. Bhaskara Rao retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

For perusal of the shareholders, a brief resume of the Directors being re-appointed along with other necessary particulars are given in the explanatory statement to the notice. The Board of Directors recommend their reappointment.

Auditors

The Auditors, M/s Rambabu & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and confirmed their eligibility and willingness to accept the office, if reappointed.

Directors Responsibility Statement

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

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

ii. The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the Companys state of affairs at the end of the financial year and of the profit or loss of the Company for 2009-10.

iii. The Directors took proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the Companys assets and for preventing and detecting fraud and other irregularities.

iv. The Directors prepared the Companys annual accounts on a going concern basis.

Management discussion and analysis

The Report, on management discussion and analysis forming part of Directors Report, is annexed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed and forms a part of the Annual Report. The Auditors Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Public deposits

The Company settled all the public deposits for which claims were received from the deposit holders. The amount of deposits outstanding as on March 31, 2010 was only Rs. 16.31 lacs. No fresh deposits have been accepted since 2000.

Personnel

Your Directors place on record, their sincere appreciation for the Companys employees whose dedication and commitment are responsible for the Companys excellent performance.

As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in Annexure-ll to the Directors Report.

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

In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, the required information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed.

The Board wishes to thank the State Bank of India, Axis Bank Limited, State Bank of Patiala, customers, suppliers and shareholders for their continued support.

For and on behalf of the Board

Place: Hyderabad Nrupender Rao

Date: May 27, 2010 Executive Chairman

 
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