Mar 31, 2013
To the Members,
The Directors have pleasure in presenting the 17th Annual Report on
the business and operations of your Company for the year ended 31st
March 2013. In compliance with Clause 49 of the Listing Agreement, a
separate section on Management Discussion and Analysis Report forms
part of this Annual Report.
1 FINANCIAL PERFORMANCE:
(Rs.in Crore)
Year ended Year ended
31" March 2013 31s''March 2012
Income 339.99 3132.27
Profit before Tax (35.72) (157.76)
Less: Provision for Taxation (1.24) 0.04
Profit after Tax (34.48) (157.80)
Add: Balance brought forward (62.96) 94.83
Disposable Profit (97.44) (62.96)
Appropriations:
Transfer to General Reserve
Proposed Dividend Tax on Dividend
Balance carried to Balance Sheet (97.44) (62.96)
2. PERFORMANCE REVIEW:
In view of the worldwide recessionary factors, the Company''s financials
have been affected to a greater extent resulting in approach to the
Consortium of Bankers for approving Corporate Debt Restructuring (CDR)
package for the Company.
In view of several constraints, there was delay in complying with the
requirements of CDR mechanism. This has result in adverse financial
results primarily arising out of the low level of operations of the
Company.
However, efforts are under way to revive the operations including
exports of the Company.
3. FUTURE OUTLOOK: - '' ''
The Company is hopeful of improving its financial position. The Company
is also undertaking all necessary efforts to reduce costs and increase
profitability.
4. DIVIDEND.
In view of the net loss incurred by the Company in the financial year
2012-13, the Directors do not recommend any dividend. 5- PLEDGE OF
PROMOTER & PROMOTER GROUP SHAREHOLDING IN THE COMPANY.
As on March 31, 2013, Promoter & Promoter Group were holding
1,14,63,518 shares representing 39.37% of the equity share capital of
the Company, out of which 1,14,56,579 shares representing 39.35% of the
Promoter & Promoters Group holding were pledged.
6. CORPORATE DEBT RESTRUCTURING:
The Company was referred to the Corporate Debt Restructuring Forum, a
non-statutory voluntary mechanism set up under the aegis of the Reserve
Bank of India ("RBI"), for the efficient restructuring of corporate
debt (hereinafter referred to as the "CDR"). Pursuant thereto, the CDR
Empowered Group ("CDR EG") approved a restructuring package in terms of
which the existing facilities were restructured as set out in the
Letter of Approval (LOA) dated 28th December, 2012 issued by Corporate
Debt Restructuring Cell ("CDR Cell").
7. EXTRA ORDINARY GENERAL MEETING FOR ISSUE OF SHARfc.S ON
PREFERENTIAL BASIS TO MR. KIRAN H MEHTA. PROMOTER DIRECTOR OF THE
COMPANY:
The Company has held an Extra Ordinary General Meeting of Members on
18lh April, 2013 for issuing shares on preferential basis to Mr. Kiran
N. Mehta, Promoter Director of the Company as per CDR Scheme as
approved by the CDR EG on 28,h December, 2012. The Company has made an
application to BSE Ltd. and National Stock Exchange of India Limited
for their In Principal Approval. The Company will allot the equity
shares to said Mr. Kiran N. Mehta only after getting BSE & NSE
approval.
S CORPORATE GOVERNANCE:
A Report on Corporate Governance as per the requirements of Clause 49
of the Listing Agreement with the stock exchanges.forms part of the
Annual Report.
As per the requirements of the said Clause, a Certificate from the
Auditors of the Company, M/s. Chunnilal & Company, Chartered
Accountants conforming compliance to the conditions of Corporate
Governance is annexed to this Report.
9. SUBSIDIARY COMPANIES
During the year under review, Varun Petroleum SARL, Oil and Gas
Incorporation SARL, Varun International SARL, Madagascar Energy
Corporation SARL, Varun Energy Corporation SARL, Varun SARL and Varun
Torian International SARL, Madagascar ceased to be subsidiaries of the
Company.
During the year, the investments in the aforesaid subsidiary Companies
were disposed of at cost due to non-payment of share application money
and subsequent cancellation of the Share Purchase Agreement between the
Parties and the disposal proceeds were set off against the amount due
to related party. Hence the Company did not prepare consolidated
financial statements for the aforesaid subsidiary companies for the
year under review.
In accordance with the general circular issued by the Ministry of
Corporate Affairs (MCA), Government of India (GOI), Balance Sheet,
Statement of Profit and Loss and other documents of the subsidiary
companies are not attached with the Balance Sheet of the Company. The
Company shall make available the copies of annual accounts of the
subsidiary companies and related detailed information to the
shareholders of the Company seeking the same. The annual accounts of
the subsidiary companies will also be kept for inspection by any
shareholder at the Registered Office of the Company and that of
respective subsidiary companies.
Further, pursuant to Accounting Standard (AS)-21 prescribed under the
Companies (Accounting Standards) Rules, 2006 and the Listing Agreement,
Consolidated Financial Statements presented herein by the Company
include financial information of subsidiary companies, which forms part
of this Annual Report.
10. DIRECTORS'' RESPONSIBILITY STATEMENT:
In terms of the provisions of Section 217(2AA) of the Act, your
Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures; ii) 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 your Company at the end of the financial year
and of the profit of your Company for that year;
iii) the Directors had 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 your Company and
for preventing and detecting fraud and other irregularities; and
iv) the Directors had prepared the annual accounts on a ''going concern''
basis.
11. DIRECTORS:
Mr. Kiran N. Mehta, Chairman & Managing Director, Mr. Kailash S.
Agarwal, Managing Director and Mr. Varun K. Mehta, Whole-Time Director
of the Company have informed the Company that in view of the current
financial difficulties being faced by the Company, they will render
services to the Company free of any remuneration w.e.f. 1st March 2012
till the improvement in the financial position of the Company.
Mr. Varun K. Mehta ceased to be a director and wholetime director of
the Company w.e.f. 25th March, 2013. In accordance with the act and
the Articles of Association of the Company, Mr. Raaja Jain and Mr.
Mahender Tahilramani retire by rotation and being eligible offer
themselves for re-appointment.
As required by Clause 49 of the Listing Agreement, brief profiles of
the above referred Directors, nature of their expertise in specific
functional areas and names of companies in which they are directors,
are provided in the Corporate Governance Report forming part of the
Annual Report.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
Pursuant to the provisions of Section 217(1)(e) of the Act, read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, particulars relating to energy conservation,
technology absorption and foreign exchange earnings and outgo, are
given in Annexure ''A'' to this Report.
13. FIXED DEPOSITS:
During the year under review, the Company has not accepted any fixed
deposits.
14. AUDITORS:
The Auditors of the Company, M/s. Chunnilal & Company, Chartered
Accountants, Mumbai holds office until the conclusion of the ensuing
Annual General Meeting and being eligible, offers themselves for
re-appointment. The Company has received a letter from the Auditors to
the effect that their re-appointment, if made, would be within the
prescribed limits under Section 224(1 B) of the Companies Act, 1956 and
that they are not disqualified for such re-appointment within the
meaning of Section 226 of the said Act.
15. AUDITORS''RFMAnK/O0fRs.EI(VATICN:
Auditors have remarked on the following aspect, which are being
explained hereunder:
a) Short Provisions of Rs.51.33 Crore towards bank interest: The
Company''s proposal for CDR has been approved by CDR EG vide its letter
dated 28th December, 2012 and confirming minute''s letter dated 23rd
January, 2013. Before the CDR Scheme becoming effective, the Master
Restructuring Agreement (MRA) has been executed and signed between the
Company and the Consortium of Bankers on 29th March, 2013 upon certain
terms and conditions to be complied with by the Company and therefore
there is a short provision of Rs.51.33 Crore towards bank interest. The
Company has already given effect as per MRA dated 29th March, 2013
signed with Consortium of Bankers.
b) Increase in Company''s Borrowing Powers U/s. 293(1 )(d): The
Company''s Board has approved the increase in limit of Borrowing Powers
U/s. 293(1 )(d) of the Companies Act, 1956 from Rs.20,00,00,00,000/- to
Rs.30,00,00,00,000/- subject to approval of Members at the ensuing 17th
Annual General Meeting. The enabling resolution for the same has
already been included in the Notice calling Annual General Meeting to
be held on 26th September, 2013 for the approval of Members.
c) Settlement deed dated 15th April, 2012 with two overseas debtors
agreeing to allow the discount of n 60.60 Crore and to defer the
balance export realization of Rs.1460.97 Crore for five years: The
Company is in the process. of seeking permission for the deferment of
export receivables.
d) Confirmation of balances of debtors, creditors, loans & advances,
deposit, other receivables and payables: There are differences in
balances due to the ongoing litigations of the Company. Certain
balances are in the process of reconciliation and the same shall be
completed in due course of time.
e) Ascertainment of Coftingent liabilities on account of ongoing
litigations in various courts/tribunals: The explanation given by the
Auditor is self-explanatory and need not require any further
explanation by the Management.
16. COSr AUDITORS:
In pursuance of Section 233-B of the Companies Act, 1956 and directives
of Central Government, your Directors have appointed M/s. Joshi Apte &
Associates, Cost Accountants, as the Cost Auditors to conduct cost
audit of the product "Steel" for the years 2012-13 and 2013-14 in place
of M/s. Mehta N. & Associates who have expressed their inability to
continue as Cost Auditors due to their pre-occupation. The Company has
received confirmation from M/s. Joshi Apte & Associates that their
appointment, if made, will be within the limits prescribed under
Section 224(1 B) of the Companies Act, 1956. The Cost Audit Report for
the year ended 31.3.2013 will be filed on or before 27.9.2013, the due
date.
17. LISTING OF SECURITIES:
Your Company''s shares are listed on the BSE Ltd. (BSE) and National
Stock Exchange of India Ltd. (NSE) and the listing fees for these two
exchanges have been paid by the Company.
18 PARTICULARS OF EMPLOYEES:
Information as prescribed by Section 217(2A) of the Act, read with
Companies (Particulars of Employees) Amendment Rules, 2011 is given as
an annexure to this Report. However, pursuant to the provisions of
Section 219(1)(b)(IV) of the Act, the Report and Accounts are being
circulated to all the Members without the said annexure. Members
interested in the said information may write to the Company Secretary
at the Registered office of the Company.
19, ACKNOWLEDGEMENTS:
Your Directors would like to express their sincere appreciation to the
Company''s Bankers and Financial Institutions, Government Authorities,
Regulatory Bodies, Customers,Vendors and Investors for their continued
assistance and co- operation during the year under review. Your
Directors also wish to place on record their deep sense of appreciation
of the committed services displayed by all the executives, staff and
workers of the Company at all levels and also highly appreciate their
hard work and co-operation to take the challenge in order to accomplish
the Company''s mission.
For and on behalf of the Board of Directors
Sd/-
Place : Mumbai Kiran N. Mehta
Date : May 30,2013 Chairman &'' Managing Director
Registered Office:
13, Shankheshwar Darshan, A. G. Pawar Cross Lane, Byculla (East),
Mumbai - 400 027.
Mar 31, 2011
To the Members,
The Directors have pleasure in presenting their Fifteenth Annual
Report on the business and operations of your Company for the year
ended 31st March 2011. A detailed Management Discussion and Analysis
report forms part of this Annual Report.
1. FINANCIAL RESULTS
(Rs. in crore)
Year ended Year ended
31st March 2011 31st March 2010
Income 2955.43 1541.17
Profit Before Tax 59.56 35.83
Less: Provision for Taxation 20.22 12.01
Profit after Tax 39.34 23.82
Add: Balance brought forward 64.53 45.77
Disposable Profit 103.87 69.59
Appropriations:
Transfer to General Reserve 2.95 1.19
Proposed Dividend 5.24 3.32
Tax on Dividend 0.85 0.55
Balance carried to Balance Sheet 94.83 64.53
2. PERFORMANCE REVIEW
The global economy, with the exception of a few European countries, is
on the path of recovery. The GDP growth rate of our country continues
to accelerate and is likely to exceed 8%. Most of the macro economic
indicators, barring manufacturing activity, recorded improved
performance during the financial year.
With normal monsoon in the offing, the domestic business environment is
expected to show improvement. Inflation and consequent hike in interest
rates however, continue to be the causes of concern.
Varun Industries Limited achieved an improved performance on account of
better market conditions. Profit improved substantially. Reduction in
export incentives however, had an adverse impact on export realization.
During the year, your Company commenced trading activities which
fundamentally reflect high turnover and low margins.
During the year under review, your Company recorded an income of Rs.
2955.43 crore, as against Rs. 1541.17 crore in the previous year,
representing an increase of 92%. This paradigm change is due to the
result of trading activities undertaken by the Company during the year.
The profit before tax was higher by 66% at Rs. 59.56 crore as against
Rs. 35.83 crore for the previous year. The profit after tax at Rs.
39.34 crore was higher by 65%, as against Rs. 23.82 crore for the
previous year.
3. FINANCIAL RESOURCES
a) Conversion of 70,00,000 Convertible Equity Warrants
As approved by the members at their Extra Ordinary General Meeting held
on 5th August 2009, the Board of Directors, at their meeting held on
21st February 2011, allotted 70,00,000 equity shares of Rs. 10/- each
in the Company on conversion of equal number of warrants at a price of
Rs. 43.20 per share. The proceeds of the said issue aggregating Rs.
30.24 crore were fully utilised for the purpose for which they were
raised, namely, normal working capital needs of the Company.
b) Loan Funds
In order to meet the growing business needs, the Company availed of
enhanced working capital limits from the Company's Bankers during the
year under review. The Company also availed of a term loan, which was
utilized for the wind mill project at Tirunelveli, Tamil Nadu.
4. PROJECTS
I) Domestic
a. Rohat, Rajasthan
As a step towards further backward integration, the Board of Directors
have approved setting up of a new state-of-the- art Stainless Steel cum
Alloy Steel complex at Rohat to manufacture flats, structurals, angles,
rounds, wire rods, channels and long products. The plant will be set up
in two phases. The cost of the first phase is estimated at Rs. 230
crore, which will have a capacity of 1,20,000 MT per annum. Land to the
extent of 94 acres has already been acquired and various licences and
clearances are being sought and actively pursued. The work is expected
to commence during the current year.
b. Bagalkot, Karnataka
The Government of Karnataka has approved the Company's proposal to set
up a Pig Iron plant of 5,00,000 MT per annum capacity at Bagalkot in
Karnataka. The process of land acquisition to the extent of 500 acres
is in full swing and the Company's application for the sanction of
mining lease is under active consideration of the Government of
Karnataka. The work is expected to commence during the current year.
c. Power Generation
The Company has successfully implemented at Tirunelveli in Tamil Nadu,
a Wind Mill project with capacity of 4 Mega Watts. With this, the total
power generating capacity of the Company's power plants has gone up to
8.95 Mega Watts. Thus, Varun's desire is to diversify its strength as
a serious energy player.
II) International
a. A step down subsidiary of the Company has entered into a Joint
Venture Agreement with a renowned Australia based company, viz., Cluff
Resources Pacific NL ("Cluff"), for the exploration, development and
exploitation of gold, platinum and precious stone mining on the highly
prospective tenements in Southern Madagascar region. However, a Special
Purpose Vehicle company, viz. Varun Cluff International SARL has been
established in this context to run the said joint venture. It has been
agreed that Cluff will have a right over 35% of the produce against 75%
of the underlying expenses to be borne by Cluff. Preliminary
investigations have indicated the presence of alluvial sediments
containing gold, platinum and precious stones. The preliminary
evaluation as well as rock sample collection process has already been
started and the detailed mapping and assessment of the area will be
done through highly qualified Australian geologists after the initial
assessment work.
b. The Company's wholly owned subsidiary viz., Varun Holdings Limited,
based at Mauritius has incorporated two step down subsidiaries at Dubai
and Singapore by the names Varun International Trading FZE and Varun
Global Trading Pte. Ltd., respectively. The said companies are engaged
in Agri-business and commodity trading and expected to contribute
substantially to the parent Company's bottom line in the coming days.
This is a success story for the entire Varun group and the result is
huge from the arena in the trading / commodity business.
5. DIVIDEND
Keeping in view the improved performance, all the Directors have
recommended for your approval, a higher dividend of Rs.1.80 per equity
share of Rs. 10/- each, i.e., @18% (15% for the previous year) on
2,91,13,945 fully paid equity shares, including 70,00,000 equity shares
allotted during the year on conversion of warrants. The total cash
outflow on account of the dividend including tax thereon would be Rs.
6.09 crore. The proportion of dividend against equity capital is
significant and we hope that it will boost the confidence of the
investors.
6. SUBSIDIARY COMPANIES
The Company has 14 direct and step down subsidiaries, namely, Varun
Jewels Private Limited, Shri Sai Jewels Private Limited, Varun
Petroleum Corporation Private Limited, Varun Minerals Corporation
Private Limited, Varun Holdings Limited, Mauritius, Varun Mines and
Minerals Limited, Mauritius, Varun Petroleum Limited, Mauritius, Varun
International SARL, Madagascar, Madagascar Energy Corporation,
Madagascar, Varun Petroleum SARL, Madagascar, Oil & Gas Incorporation
SARL, Madagascar, Varun Energy Corporation SARL, Madagascar, Varun
International Trading FZE, Dubai, U. A. E. and Varun Global Trading
Pte. Ltd., Singapore.
The Ministry of Corporate Affairs had, vide a General Circular No.
2/2011 dated 8th February 2011, granted general exemption from
attaching to the holding company's Balance Sheet, the accounts and
other information specified in Section 212 (1) of the Companies Act,
1956 ("the Act") pertaining to its subsidiary companies, subject to
fulfillment of certain conditions. Accordingly,as decided by the
Board of Directors, the Balance Sheets, Profit and Loss Accounts
and Reports of the Board of Directors and Auditors of the
subsidiaries have not been attached to the Balance Sheet of the
Company. These documents will be made available upon request by any
member of the Company. In compliance with the conditions for exemption,
financial data of the subsidiaries is furnished under the heading
ÃInformation on the financials of the subsidiary companies', forming
part of the Annual Report.
A Statement containing particulars pursuant to the provisions of
Section 212(1) (e) of the Act, in respect of the above subsidiaries
forms part of this Annual Report. In compliance with Clause 32 of the
Listing Agreement, audited consolidated financial statements of the
Company and its subsidiaries also form part of this Annual Report.
7. CORPORATE GOVERNANCE
A Report on Corporate Governance as per the requirements of Clause 49
of the Listing Agreement forms part of the Annual Report.
As per the requirements of the said Clause, a Certificate from the
Auditors, M/s. Chunnilal & Company, confirming compliance with the
conditions of Corporate Governance is annexed to this Report.
8. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of the provisions of Section 217(2AA) of the Act, your
Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
ii) 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 your Company at the end of the financial year and of the profit of
your Company for that year;
iii) the Directors had 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 your Company and
for preventing and detecting fraud and other irregularities; and
iv) the Directors had prepared the annual accounts on a Ãgoing concern'
basis.
9. DIRECTORS
Shri S. K. Srivastav and Shri K. L. Gopalakrishna retire by rotation at
the 15th Annual General Meeting and are eligible for re-appointment.
Pursuant to the provisions of Section 260 of the Act and Article No.
115 of the Articles of Association, Shri M. S. Sundara Rajan was
appointed as an additional director with effect from 6th May 2011 and
holds office up to the date of the forthcoming Annual General Meeting.
The Company has received notices from members proposing his appointment
as a director.
As required by Clause 49 of the Listing Agreement, brief profiles of
the above referred Directors, nature of their expertise in specific
functional areas and names of companies in which they are directors,
are provided in the Corporate Governance Report forming part of the
Annual Report.
10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO
Pursuant to the provisions of Section 217(1)(e) of the Act, read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, particulars relating to energy conservation,
technology absorption and foreign exchange earning and outgo, are given
in Annexure ÃA' to this Report.
11. FIXED DEPOSITS
The Company has not accepted fixed deposits.
12. AUDITORS
M/s. Chunnilal & Company, Chartered Accountants, Statutory Auditors,
retire at the conclusion of the forthcoming Annual General Meeting and
are eligible for re-appointment.
13. PARTICULARS OF EMPLOYEES
Information as prescribed by Section 217(2A) of the Act, read with
Companies (Particulars of Employees) Amendment Rules, 2011 is given as
an annexure to this Report. However, pursuant to the provisions of
Section 219(1) (b) (IV) of the Act, the Report and Accounts are being
circulated to all the members without the said annexure. Members
interested in the said information may write to the Company Secretary
at the registered office of the Company.
14. ACKNOWLEDGEMENTS
The Directors would like to thank sincerely the Company's bankers and
financial institutions, Government authorities, customers, vendors and
investors for their continued assistance and co-operation during the
year under review. The Directors also wish to place on record their
appreciation of the committed services of the executives, staff and
workers of the Company and also highly appreciate their hard work to
take the challenge in order to accomplish the Company's mission.
For and on behalf of the Board of Directors
Kiran N. Mehta
Chairman & Managing Director
Mumbai, 6th May 2011
Registered Office:
13, Shankheshwar Darshan,
A. G. Pawar Cross Lane,
Byculla (East),
Mumbai - 400 027
Mar 31, 2010
The Directors have pleasure in presenting their Fourteenth Annual
Report on the business and operations of your Company for the year
ended 31st March 2010. A detailed Management Discussion and Analysis
report forms part of this Annual Report.
1. FINANCIAL RESULTS
(Rs. in crore)
Year ended Year ended
31st March 2010 31st March 2009
Income 1,541.17 1,193.27
Profit Before Tax 35.83 20.07
Less: Provision for Taxation 12.01 7.25
Profit after Tax 23.82 12.82
Add: Balance brought forward 45.77 35.54
Disposable Profit 69.59 48.36
Appropriations:
Transfer to General Reserve 1.19 0.00
Proposed Dividend 3.32 2.21
Tax on Dividend 0.55 0.38
Balance carried to Balance Sheet 64.53 45.77
2. PERFORMANCE REVIEW
A global slow down was witnessed by the world economy during the last
two years; however, India has emerged relatively
unscathed from the global financial crisis. The country recorded a
healthy GDP growth rate of 7.2%. Several macro economic indicators
revived especially during the second half of the financial year.
The manufacturing industry grew at 8.9% during the year.
In spite of the volatile financial and currency markets, your Company
achieved a better performance. Markets improvedslowly, but reduction
in export incentives had an adverse impact on export realization.
Efforts were made to contain costs, as a result of which, your
Company recorded higher operative profit. It has also undertaken
diversification programmes which will bring about overall growth
in its business and profitability.
With a better monsoon in the offing, the per capita income is likely to
grow, which will have a positive impact on the business
environment.
During the year under review, your Company recorded an income of Rs.
1,541.17 crore, as against Rs. 1,193.27 crore in theprevious year,
representing an increase of 29%. The profit before tax was higher by
79% at Rs. 35.83 crore as against Rs. 20.07 crore for the previous
year. The profit after tax at Rs.23.82 crore was higher by 86% as
against Rs. 12.82 crore for the previous year.
3. FINANCIAL RESOURCES
a) Convertible Equity Warrants
On 27th August 2009, the Board of Directors allotted 70,00,000 warrants
convertible into equal number of equity shares at a price of Rs. 43.20
per warrant. The details of the said allotment are as under:
S. Names of warrant
allottees No. of warrants Amount paid per
warrant on
No. application (@25% of
Rs.43.20 per warrant)
1. Shri Kiran N. Mehta 41,40,803 Rs.4,47,20,673/-
2. Shri Kailash S.Agarwal 28,59,197 Rs.3,08,79,328/-
TOTAL 70,00,000 Rs. 7,56,00,001/-
The said warrants can be converted into equal number of equity shares
within 18 months from the date of allotment. If the option to convert
the warrants into equity shares is not so exercised, the money paid on
application shall be forfeited. The application money was utilised for
the purpose for which it was raised, namely, working capital
requirements.
b) Utilization of internal accruals and IPO proceeds
The Company had, vide its Prospectus dated 9th October 2007, made an
Initial Public Offering (IPO) of 90,00,000 Equity Shares of the face
value of Rs. 10/- each at a premium of Rs. 50/- per share. The amount
of internal accruals and IPO proceeds was finally utilised as follows,
for which, your approval is being sought at the Forthcoming Annual
General Meeting:-
(Rupees in Lac)
S. Particulars Utilization-Projected, Utilization-Actual,
No as per Prospectus as on 31-3-2010
(j) Brand Building
and launching of
products in the
domestic markets 1,000 647.50
(ii) Margin money
for Working Capital
requirements 4,074 3,967.02
(iii) Public Issue
Expenses 450 550.17
(iv) Investments/Deposits/
Working capital - 360
4. PROJECTS
a) Stainless Steel Kitchenware/Houseware Manufacturing Plant &
Warehouse Project
At the state-of-the art manufacturing facility set up by the Company at
Vasai, further expansion of the facilities is being undertaken. This
will allow the Company to focus more on customization and enhancement
of quality and also improve upon the supply chain efficiency which is
very vital to give the Company a competitive edge in the export market.
The Retail division is re-inventing itself to be more cost effective
and to widen its exposure pan India. Varun is now opting for the
concept of shop-in-shop and mall-in-mall rather than its own boutique
stores. It will also focus on institutional and bulk sales, while
concentrating on fast moving items.
b) Backward Integration Projects
i) Jodhpur, Rajasthan
The second phase of expansion was successfully implemented at the
Companys Steel Re-Rolling Plant at Jodhpur, thereby increasing the
capacity to 18,000 tonnes per annum. The Re-Rolling facilities consist
of two Hot Rolling Mills, three Annealing Furnaces and 21 Cold Rolling
Mills. The plant which was set up as a step towards backward
integration to manufacture sheets exclusively for captive use has also
started selling Re-Rolling products which has received an encouraging
market demand.
As a step towards further backward integration, the Board of Directors
have approved setting up a new state-of-the-art Stainless Steel cum
Alloy steel complex at Rohat, Jodhpur to manufacture flats,
structurals, angles, rounds, wire rods, channels and long products. The
plant will be set up in two phases. The cost of the first phase is
estimated at Rs. 230 crore, which will have a capacity of 1,20,000 MT
per annum. Land to the extent of 150 acres has already been acquired
and at present actions have been initiated to obtain various licenses
and approvals.
ii) Bagalkote, Karnataka
The Company had made an application to the Government of Karnataka to
set up a Steel Plant at Bagalkote, which was approved at a high level
Steering Committee of the Government. The cost of the Plant is
estimated at Rs. 304 crore. The Government of Karnataka has also
allotted to the Company land admeasuring 500 acres at Bagalkote to set
up the unit.
The Company is committed to optimize on its core area of competence
which is steel and these plants will catapult it into the elite league
of large steel manufacturers.
c) Power Generation
Wind power generation resulted in income of Rs. 2.82 crore during the
year. The Company plans to set up a few more windmills during the year.
d) Iron Ore Mining
The Memorandum of Understanding signed with the Government of Karnataka
for setting up a plant there makes the Company eligible for
preferential allotments of mining licenses in the state of Karnataka.
e) Oil & Natural Gaa
The charter hire contract for a mobile drilling rig with ONGC is
running smoothly. Maintenance contract with ONGC for Ankleshwar and
Karaikal sites is also running smoothly. The Company is making efforts
to secure business from ONGC, GAIL and IOC for supply of materials and
services.
f) International Ventures
The Varun Group has understood that to grow, it must cross boundaries
and look at emerging economies for opportunities.
In order to acquire major interest In the areas of uranium, oil and
natural gas, the Company has recently set up three subsidiaries in
Mauritius, namely:
- Varun Holdings Limited
- Varun Mines & Minerals Limited
- Varun Petroleum Limited
Varun Petroleum Limited, Mauritius has entered into an Agreement to
acquire majority shares in Varun Petroleum SARL, Madagascar.
Varun Mines & Minerals Limited has entered into Agreements to acquire
majority shares in Madagascar Energy Corporation and Varun
International SARL, Madagascar.
Uranium prospects
The Varun Group has acquired majority shares in certain companies which
are engaged in exploration, exploitation and out-put sale of 1,011
blocks (100 in process) covering about 6,900 sq. kms., with estimated
reserves of 17,00,000 tons of uranium, 43,50,000 tons of thorium and
traces of gold and gems.
The preliminary research work has been completed and the evaluation of
reserves will commence shortly. The Group is optimistic of completion
of the exploration phase before the estimated 3-5 years.
The demand for uranium is outstripping supply and the continuous need
for alternative fuels to meet the tremendous energy demands has
resulted in several companies across the world racing to be part of
uranium exploration in the few remaining mineral rich countries. India
in particular, is looking for suppliers and the Varun Group sees itself
as a forerunner among Indian companies in the mining and production of
uranium.
Oil & Natural Gas Prospects
Varun Group has acquired majority shares in certain companies which
have acquired block 3101 covering about 6,600 sq. kms. in the highly
prospective Morondava Basin which has established hydrocarbon reserves
and oil production.
Varun also has an offshore Natural Gas block admeasuring 13,200 sq.
kms. on the basin of the Indian Ocean which is possibly among the
largest in the world.
Joint Venture In the Republic of Poland
Recently, it has been decided to form a Joint Venture company by the
name Varun Sp. Zoo in the Republic of Poland in which the Company would
hold 50% share capital. The new venture would undertake export-import
of several Items including stainless steel kitchenware, hardware,
tools, cookware sets, non-stick, electronics and electrical Items etc.
5. DIVIDEND
Your Directors have recommended a dividend of Rs.1.50/- per share, on
2,21,13,945 fully paid equity shares of Rs. 10/- each. The total cash
outflow on account of the dividend including tax thereon would be Rs.
3.87 crore.
6. SUBSIDIARY COMPANIES
Earlier, the Company had four subsidiaries in India, viz., Varun Jewels
Private Limited, Shri Sal Jewels Private Limited, Varun Petroleum
Corporation Private Limited and Varun Minerals Corporation Private
Limited. Recently, the Company acquired the entire equity share capital
of Nagina Hotel Private Limited, thereby making it a wholly owned
subsidiary. The said company was amalgamated with the Company w.e.f. 1"
January 2010, as per the orders of the Honble Bombay High Court.
The Company has three wholly owned subsidiaries in Mauritius viz.,
Varun Holdings Limited, Varun Mines & Minerals Limited and Varun
Petroleum Limited.
Varun Petroleum Limited, Mauritius, had entered into an agreement to
acquire majority shares in Varun Petroleum SARL, Madagascar. Further,
Varun Mines & Minerals Limited, Mauritius, had entered into agreements
to acquire majority shares In Madagascar Energy Corporation, Madagascar
and Varun International SARL, Madagascar.
In terms of approval granted by the Government of India pursuant to
Section 212(8) of the Companies Act, 1956, the Balance Sheets, Profit
and Loss Accounts and Reports of the Board of Directors and Auditors of
the subsidiaries have not been attached to the Balance Sheet of the
Company. These documents will be made available upon request by any
member of the Company. As directed by the Central Government, the
financial data of the subsidiaries is furnished under the heading
Information on the financials of the subsidiary companies, forming
part of the Annual Report.
A Statement containing particulars pursuant to the provisions of
Section 212(1)(e) of the Companies Act, 1956, in respect of the above
subsidiaries forms part of this Annual Report. In compliance with
Clause 32 of the Listing Agreement, audited consolidated financial
statements of the Company and its subsidiaries also form part of this
Annual Report.
7. CORPORATE GOVERNANCE
A Report on Corporate Governance as per the requirements of Clause 49
of the Listing Agreement forms part of the Annual Report.
As per the requirements of the said Clause, a Certificate from the
Auditors, M/s. Chunnilal & Company, confirming compliance with the
conditions of Corporate Governance is annexed to this Report.
8. DIRECTORS RESPONSIBILITY STATEMENT
In terms of the provisions of Section 217(2AA) of the Act, your
Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
ii) 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 your Company at the end of the financial year and of the profit of
your Company for that year;
iil) the Directors had 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 your Company and
for preventing and detecting fraud and other Irregularities; and
iv) the Directors had prepared the annual accounts on a going concern
basis.
9. DIRECTORS
Shri S. Rajagopal retires by rotation at the 14,h Annual General
Meeting and is eligible for re-appointment.
Shri D. K. Mukhopadhyay, who retires by rotation at the 14th Annual
General Meeting, is not seeking re-appolntment. It Is proposed not to
fill-in the casual vacancy caused by his retirement at the said meeting
or any adjournment thereof.
The Board places on record its sincere appreciation of the valuable
advice and guidance rendered by Shri Mukhopadhyay during his
association with the Company.
Pursuant to the provisions of Section 260 of the Act and Article No.
115 of the Articles of Association, Shri Varun Mehta was appointed as
an additional director and Whole Time Director with effect from 31"
October 2009 and holds office up to the date of the forthcoming Annual
General Meeting. The Company has received notices from members
proposing his appointment as a director.
As stipulated by Clause 49 of the Listing Agreement, brief profiles of
the Directors seeking appointment/re-appointment, nature of their
expertise in specific functional areas and names of companies In which
they are directors are provided In the Corporate Governance Report
forming part of the Annual Report.
10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Pursuant to the provisions of Section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, particulars relating to energy
conservation, technology absorption and foreign exchange earnings and
outgo, are given in Annexure A to this Report.
11. FIXED DEPOSITS
The Company has not accepted fixed deposits.
12. AUDITORS
M/s. Chunnllal & Company, Chartered Accountants, Statutory Auditors,
retire at the conclusion of the forthcoming Annual General Meeting and
are eligible for re-appolntment.
13. PARTICULARS OF EMPLOYEES
Information as prescribed by Section 217(2A) of the Act, read with
Companies (Particulars of Employees) (Amendment) Rules, 2002 is given
as an annexure to this Report. However, pursuant to the provisions of
Section 219(1)(b)(IV) of the Act, the Report and Accounts are being
circulated to all the members without the said annexure. Members
interested in the said information may write to the Company Secretary
at the registered office of the Company.
14. ACKNOWLEDGEMENTS
Your Directors would like to express their appreciation of the
assistance and co-operation received from the banks, financial
Institutions, Government authorities, customers, vendors and investors
during the year under review. Your Directors also wish to place on
record their appreciation of the committed services of the executives,
staff and workers of the Company.
For and on behalf of the Board of Directors
Klran N. Mehta
Chairman & Managing Director
Mumbal, 22nd July 2010
Registered Office:
13, Shankheshwar Darshan,
A. G. Pawar Cross Lane,
Byculla (East),
Mumbal - 400 027