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Directors Report of Visaka Industries Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 33rd Annual Report of the Company with Audited Financial Statement for the year ended March 31, 2015. The financial highlights are as follows:

PARTICULARS (Rs. in lakhs)

2014-15 2013-14

Total Revenues 102355 89746

Profit before depreciation and Taxes 7630 4125

Profit before taxes 3321 1880

Provision for taxes (Incl. Deferred Tax) 1197 683

Profit for the year after taxes 2124 1197

Balance brought forward from previous year * (114) 1040

Profit available for appropriation 2010 2237

Dividend on Equity Share Capital 794 397

Corporate Dividend Tax 162 68

Transfer to General Reserve - 600

Balance carried to Balance Sheet 1054 1172

* the amount shown is after the adjustment for depreciation on Fixed Assets of which the useful life expired as on 1st April, 2014 against the opening retained earnings.

Performance review or results of operations and the State of Company's affairs

Your company has entered into growth path once again with the improved market conditions. The Net Turnover touched Rs.1013 crores which is 14.7% more than last year and the Profit before depreciation and taxes was Rs.76.30 Crores against Rs.41.25 Crores of previous year Segment-wise/product- wise details are provided in Management Discussion and Analysis as appended hereunder.

The highlights of the Company's performance are as under:

* Revenue from operations increased by 14% to 1021 Crores from 892 Crores.

* PBDIT increased to Rs.98.33 Crores from Rs.62.65 crores

* Cash Profit increased to Rs.76.30 Crores from Rs.41.25 Crores

* Net Profit increased to Rs.21.24 crores from Rs.11.97 crores.

* The capital expenditure for 2014-15 was Rs.41 Crores, which was principally on account of setup of 2.5 MW Solar Power Plant at V-Boards & V-Panels Division, Miryalaguda and modernization cum expansion at AC Division, Raebareli and other normal capital expenditure at various units.

There is no change of business occurred during the year under review.

During the year under review, Visaka Thermal Power Limited (VTPL) ceased to be an associate Company of your Company.

Your Company's shares are listed on the National Stock Exchange (NSE) and Bombay stock exchange Limited (BSE). The variations in the market capitalisation of the company, price earnings ratio is provided hereunder:

Parameter As at March 31,2015 As at March 31, 2014

Market Capitalisation* (in Rs. Crores) 146.10 115.69

P/E ratio 6.88 9.66

(* based on closing price at Bombay Stock Exchange Limited, being the higher of two exchanges, as on the respective dates)

Your Company has made its initial public offer of equity shares in 1984-85. The closing price quoted on stock exchanges of your Company's share of Rs.10/- each fully paid up as at March 31, 2015 and March 31, 2014 are 460% and 364% over the price of last public offer made in the year 1991-92.

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

DIVIDEND:

Your Directors recommend payment of Final Dividend of Rs.5/- (i.e. 50%) Per Share of Rs.10/- each for the Financial Year ended on March 31, 2015 as against the previous year of Rs.2.50 per share (i.e. 25%). The Company is absorbing Corporate Dividend Tax of Rs.161.65 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders.

The dividend will be paid to members whose names appear in the Register of Members as on July 18, 2015 and in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate Financial Reporting, if any are dealt with immediately.

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company believes that Human Resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains.

The total number of people employed in the company as on 31.03.2015 is 4350. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company's employees.

FIXED DEPOSITS:

During the year under review, your Company has accepted deposits of Rs.5.17 Crores from the public and shareholders. The amount of deposits outstanding as on March 31, 2015 was Rs.7.24 Crores out of which Rs.5.10 Crores was accepted under the provisions of Chapter V of the Companies Act, 2013 (new Act) and the balance of H2.14 Crores was accepted as per the provisions of the Companies Act, 1956 (old Act).

In this regard, it is further stated that

a) there were no deposits lying unpaid or unclaimed at the end of the year i.e. 31.03.2015;

b) There has been no default in repayment of deposits or payment of interest thereon during the year;

c) There are no deposits lying with the Company which are not in compliance with the requirements of Chapter V of the new Act other-than the deposits accepted under the provisions of old Act as aforesaid and

d) As provided under the new Act, the outstanding deposits accepted under the provisions of previous Act are being repaid as per the terms of each deposit.

UNCLAIMED DIVIDEND:

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of Rs.6,89,811/- in respect of the year 2006 - 2007 has been transferred to Investor Education and Protection Fund on 05.08.2014 upon expiry of the mandatory 7 years period.

BANKS AND FINANCIAL INSTITUTIONS:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company, as a responsible Corporate Citizen has established in the year 2000 a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity to support initiatives that benefit the society at large. The Trust has already undertaken various activities like provision of Drinking Water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers and supply of class room furniture and conducting of health camps.

In terms of section 135 of the Companies Act, 2013 (the Act), the Board of Directors of your Company have constituted a CSR Committee and framed a CSR Policy to undertake various initiatives contemplated under Schedule VII of the Act which has been uploaded on the website of the Company at www.visaka.biz under investors/ policy documents/ CSR Policy link. A report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is enclosed herewith as Annexure - 1.

Keeping in view the various CSR initiatives undertaken through Visaka Charitable Trust as detailed above, your Board has thought it appropriate to spend CSR expenditure for 2014-15 as mandated under Section 135 of the Companies Act, 2013 through the same trust i.e., Visaka Charitable Trust. The Charitable Trust amended its objects incorporating the CSR activities as contemplated under Schedule VII of the Companies Act, 2013. Accordingly to meet the requirements of the Act in this regard, your company has contributed the prescribed CSR expenditure of 2% of average net profits of the company for last three preceding financial years amounting to Rs.97.00 Lacs to Visaka Charitable Trust.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

At the 32nd Annual General Meeting of the Company held on 25th July, 2014;

i. Shri. Bhagirat B Merchant, Shri. V.Pattabhi, Shri. P. Abraham and Shri. Gusti J Noria were appointed as Independent Directors of the Company to hold office as such for period upto 5 years from 01.04.2014; so long as their appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV.

ii. Smt. G. Saroja Vivekanand was reappointed as Managing Director of the Company for a period of 5 years effective from 24.10.2014.

iii. Shri. G Vamsi Krishna was appointed as Wholetime Director of the Company for a period of 5 years effective from 01.06.2014.

All the aforesaid independent Directors have given declarations stating that for the financial year 2015-16; they meet the criteria of Independence as contemplated under Section 149(6) read with Schedule IV to the Act and clause 49 (II)(B)(e) of the listing agreement and the same was taken on record by your Board in its meeting held on 7th May, 2015.

During the year under review, Shri. P. Srikar Reddy was appointed as Additional Director of the Company effective from September 6, 2014 and holds the office as such until the date of ensuing Annual General Meeting of the Company.

Shri. P Srikar Reddy has furnished a declaration under Section 149(7) to the effect that he meets the criteria of independent Director and in the opinion of Board of Directors, he fulfils the criteria of independence as mentioned under Companies Act, 2013 read with Schedule IV and relevant rules made thereunder and is independent of Management of the Company. In view of the same, he is eligible for appointment as Independent Director of the Company to hold the office as such for a period upto 5 years effective from the date of ensuing Annual General Meeting, so long as his appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV to the Act.

Shri. V. Vallinath, who was working as President (Finance) and CFO has been appointed as Whole-time Director and CFO of the Company effective from 09.09.2014 for a period of 3 years.

Further, Shri J. P. Rao, who was working as President (Marketing - AC Sheets Division) has been appointed as Whole-time Director of the Company effective from 07.05.2015 for a period of 3 years.

The Company has received notices in writing from members along-with the deposit of requisite amount under Section 160 of the Act read with Articles of Association of the Company, proposing the candidatures of Shri.P.Srikar Reddy for the office of Independent Director for a period of 5 consecutive years effective from the date of ensuing Annual General Meeting of the Company and Shri.V.Vallinath and Shri. J. P. Rao as Directors of the Company.

The aforesaid appointment of Independent Director and Whole-time directors are subject to your approval and appropriate resolutions are included in the notice calling ensuing Annual General Meeting of the Company for seeking your approval.

Shri. Nagam Krishna Rao, is retiring at the ensuing Annual General Meeting and is eligible for reappointment.

Shri. M P V Rao, who was reappointed as Whole-time Director to hold the office from 01.04.2014 to 31.07.2014 in the last Annual General Meeting of the Company, resigned from the Board effective from closing hours of 31st July, 2014 and the Board places on record its word of appreciation in recognition to the valuable contributions made by Shri. Rao during his long stint of 30 years with the Company in various positions of the Company.

Pursuant to obtaining your approval under postal ballot by way of special resolution, clause 130(e) of the Articles of Association is amended and now Whole-time Directors are liable to retire by rotation. In view of the same, your company complies with all the requirements relating to composition of Board including the one stipulated under Section 152(6)(a) of the Companies Act, 2013 as to having sufficient number of Directors liable to retire by rotation on the Board.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company here by state and confirm that:

a. in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013.

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and

fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

e. they have laid down internal financial controls in the company that are adequate and were operating effectively.

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

CORPORATE GOVERNANCE:

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS AND AUDITORS' REPORT:

Statutory Audit:

M/s. M. Anandam & Co., Chartered Accountants were appointed as Statutory Auditors of the Company to hold the office for a period three years from the conclusion of last Annual General Meeting of the Company held on 25.07.2014. The said appointment needs to be ratified by the members of the Company at every annual general meeting during the said period and the Statutory Auditors have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment.

As required above, the Board has, after considering the recommendations of its Audit Committee, incorporated a suitable resolution for your consideration and approval in the notice calling ensuing Annual General Meeting of the Company.

The Notes on financial statement 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 Audit:

As per the Companies (Cost Records and Audit) Rules, 2014, issued on 30th June, 2014 under Companies Act, 2013, Company's products were not included under the purview of Cost Audit. However, Ministry of Corporate Affairs vide their Notification dated 31st December, 2014 amended the said rules, pursuant to which, the requirement of cost audit of cost accounting records is applicable to the Company as follows:-

Building Products - From Financial Year 2014-15.

Textiles Products - From Financial Year 2015-16.

In View of the same, the Company had appointed M/s. Sagar & Associates, Cost Accountants, Hyderabad as cost auditors of the Company for conducting cost audit of Synthetic Yarn Division as well as Building Products Division of the Company for the financial year 2014-15 at a remuneration of Rs.1,50,000/- exclusive of out of pocket expenses and applicable taxes subject to your ratification in the ensuing Annual General Meeting of the Company.

Further, the Board has after considering the recommendations of its Audit Committee, resolved to appoint the aforesaid firm as cost auditors for the financial year 2015-16 and appropriate resolutions in above connection seeking your approval, have been included in the notice calling ensuing Annual General Meeting of the Company.

Pursuant to section 233B(4), 600(3)(b) of the Companies Act, 1956 read with Companies (Cost Audit Report) Rules, 2011; cost audit report for the financial year ended 31st March, 2014 was filed with the Central Government on 26th September, 2014.

Secretarial Audit:

Pursuant to Section 204 of the Companies Act, 2013, your Board has appointed M/s Tumuluru & Co., Practicing Company Secretaries, Hyderabad as Secretarial Auditors for the financial year 2014-15 and Secretarial Audit Report for the Financial Year ended 31st March, 2015 is enclosed herewith as Annexure-2.

As regards the comments made in the said report, it is stated that pursuant to obtaining your approval under postal ballot by way of special resolution, clause 130(e) of the Articles of Association is amended and now Whole-time Directors are liable to retire by rotation. In view of the same as on the date of this report, your company complies with all the requirements relating to composition of Board including the one stipulated under Section 152(6)(a) of the Companies Act, 2013 as to having sufficient number of Directors liable to retire by rotation on the Board. Further, constant up- gradation of e-forms on certain technical grounds caused the delay in filing of e-forms.

CRITERIA FOR IDENTIFICATION, APPOINTMENT, REMUNERATION AND EVALUATION OF PERFORMANE OF DIRECTORS:

Your Company as required under the provisions of Section 178 of the Companies Act, 2013 and clause 49 of the listing agreement entered with Stock Exchanges, constituted a Board level committee titled "Nomination and Remuneration Committee" (herein after referred as the "Committee") to oversee, inter-alia, matters relating to

a) identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

b) formulate the criteria for determining qualifications, positive attributes and independence of a director;

c) recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees;

d) carry out evaluation of every director's performance including that of Independent Directors and

e) devise a policy on Board Diversity

Your Company's Board of Directors, after considering the recommendations of its Nomination and Remuneration Committee in above connection, have approved a document setting out criteria to be followed by nomination and remuneration committee for identification, appointment, remuneration and evaluation of performance of directors including Company's Board diversity.

The aforesaid criteria of appointment, qualifications and positive attributes along-with remuneration policy as applicable to Directors, KMPs and other Senior management personnel and criteria to be followed for performance evaluation of each director including Independent Directors of the Company is enclosed herewith as Annexure - 3

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS:

Keeping in view the various provisions of the Companies Act, 2013 and listing agreement dealing with powers, duties and functions of the Board of the Company your Company has adopted criteria for evaluating the performance of its Board, Committees and other Directors including Independent Directors applicable from the financial year 2014-15. The said criteria contemplates evaluation of Directors based on their performance as directors apart from their specific role as independent, non-executive and executive directors as mentioned below:

a. Executive Directors, being evaluated as Directors as mentioned above, will also be evaluated on the basis of targets / Criteria given to executive Directors by the board from time to time as well as per their terms of appointment.

b. Independent Directors, being evaluated as a Director, will also be evaluated on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV to the Companies Act, 2013.

The criteria also specifies that the Board would evaluate each committee's performance based on the mandate on which the committee has been constituted and the contributions made by each member of the said committee in effective discharge of the responsibilities of the said committee.

The Board of Directors of your company has made annual evaluation of its performance, its committees and directors for the financial year 2014-15 based on afore stated criteria.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-4

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of loans given by the Company, covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements (Please refer Note No.17.1) pertaining to the year under review. During the year under review, your Company did not give any other loans or guarantees, provide any security or made any Investments.

RELATED PARTY TRANSACTIONS:

Related party transactions entered during the financial year under review are disclosed in Note No.30 of the Financial Statements of the company for the financial year ended March 31,2015. These transactions entered were at an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed herewith as Annexure-5

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.visaka.biz/vilrptpolicy.pdf

RISK MANAGEMENT FRAMEWORK:

In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Company's Board believes that to ensure sustainable business growth with stability of affairs and operations of the Company periodical review of various risks having a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Further, it is also belief of your management that Risk Management Framework enables a systematic approach to risk identification, leverage of any opportunities and provides treatment strategies to manage, transfer and avoid or minimize the impact of the risks.

Keeping in view of the above, your Company's risk management is embedded in the continuous business processes and as a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However there are certain risks which cannot be avoided but the impact can only be minimized. The risks and concerns associated with each segment of your company's business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profiatability Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; Changes in technology / up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rates risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/ Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/ Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks

g. Disaster Risk this includes Natural calamities like fires, floods, earthquakes etc.; Man made risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co-ordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc.

Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework.

OTHER DISCLOSURES:

Board Meetings:

Seven meetings of the Board of Directors were held during the year For further details, please refer report on Corporate Governance on page no. 58 of this Annual Report.

Audit Committee:

The Audit Committee comprises Independent Directors namely Shri B.B.Merchant (Chairman), Shri. V.Pattabhi and Shri. Gusti j. Noria apart from Smt. G. Saroja Vivekanand, Managing Director. All the recommendations made by the Audit Committee were accepted by the Board.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure-6.

Vigil Mechanism:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.visaka.biz under investors/policy documents/Vigil Mechanism Policy link.

Particulars of Employees and related disclosures:

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed herewith as Annexure-7.

Remuneration ratio of the Directors / Key Managerial Personnel/ Employees:

Statement showing disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed herewith as Annexure-8

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

i. Issue of equity shares with differential rights as to dividend, voting or otherwise.

ii. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

iii. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

iv. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

On behalf of the Board of Directors

Date: 07.05.2015 BHAGIRAT B. MERCHANT Place: Secunderabad Chairman


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 32nd Annual Report of the Company with Audited Financial Statement. The financial highlights are as follows:

(Rs. in lakhs)

Particulars 2013 - 2014 2012 - 2013

Total Revenue 89746 91816

Profit for the year before taxation 1880 7464

Provision for taxation 683 2395

Profit for the year after taxation 1197 5069

Balance brought forward from previous year 1040 1083

Profit available for appropriation 2237 6152

Dividend on Equity Share Capital 397 953

Corporate Dividend Tax 68 159

Transfer to General Reserve 600 4000

Balance carried to Balance Sheet 1172 1040

DIVIDEND

Your Directors recommend payment of Dividend of H2.50 (i.e. 25 %) Per Share of H10/- each for the Financial Year ended on 31st March, 2014. The Company is absorbing Corporate Dividend Tax of H67.48 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS:

Your Company is in the Business of Manufacture and Sale of Cement asbestos Sheets, V – Boards (Fiber Cement Sheets), Panels and Spinning Yarn.

A. BUILDING PRODUCTS

i. Cement Asbestos Business:

Industry Structure and Developments:

This industry exist in India for the last 80 years.

Cement Asbestos Products continue to be in demand because of the efforts made in making inroads into rural markets for the product, its affordability, and other qualities such as corrosion resistance, weather and fire proof nature.

Currently there are about 20 entities in the Industry with about 68 manufacturing plants throughout the Country. The products are marketed under their respective brand names mainly through dealers for the retail segment and directly for projects and government departments.

Opportunities and Threats:

Cement asbestos Sheets are mainly used as roofing materials in rural and semi-urban housing and by industries and poultry sector.

Cement asbestos Sheets are popular as they are inexpensive; need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanized iron sheets.

According to the information gathered by us, almost 75 - 80% of rural people use thatched roof/tiles for the shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever the economic conditions improve, the first choice of the rural poor to replace the roof over their head is the affordable and relatively durable product Cement asbestos Sheets. Therefore, we see increased potential for usage of Cement asbestos Sheets in rural areas.

Presence of increased alternative products in the recent past has created some impact on the sales volumes of this product.

Risks and Concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business. Closure of Canadian and Zimbabwe asbestos mines are matter of concern.

Increase in input costs: The continuous increase in cost of inputs is a matter of concern.

Activities of Ban Asbestos Lobby: The activities of the Ban Asbestos Lobby instigated by the manufacturers of substitute products continue to be a matter of concern.

Production and sales Volumes:

As against a production of 743624 tonnes during the previous year, the production during the Financial Year ended 31st March, 2014 was 599011 tonnes. The sales during the Financial Year Ended on 31st March, 2014 was 640184 tonnes as against 683008 tonnes sold during the Financial Year 2012 – 2013 recording a decrease of 6%.

Financial Performance:

The net turnover of Cement asbestos Division during the year was H629 crores as compared to H684 crores during the previous year, due to overall economic slowdown and availability of alternative products at competitive price.

Outlook:

Due to slow down of economy, market has not improved and alternate products have made some inroad in to the market. However, news that is coming suggest that bottoming out of economic slow-down is taking place. Hence, we may expect improved performance in the near future.

ii. Boards:

Industry Structure and Developments:

The Capacity of the Industries producing same or similar product is 396000 Metric Tonnes per Annum with totally 8 players.

Opportunities and Threats:

The product is environmental friendly, saves time and cost effective as well as a good substitute for wood and helps in reducing deforestation. It has aesthetics appeal and can take paint of choice. It can be used both internally and externally. It is also durable and can stand for over 25 years or more with proper maintenance. Further, it has Triple advantage of Fireproof, Water resistant and termite resistant. It is being widely accepted in residential Segment, especially wet areas. It is also finding good acceptance in Hotels, Hospitals and Colleges due to its fire rating and acoustic properties.

On the negative side, Cellulose pulp has to be imported. Compared to wood/plywood workability is a matter of concern. Further, initial handling is comparatively difficult. While the consumers are preferring this product, the applicators like Carpenters would not find convenient due to difficulty in working on this product compared to Plywood. We are in the process of educating the applicators to ensure acceptance.

Risks and Concerns:

Lack of entry barriers: Import of Cement board materials from Philippines/Thailand / China and Malaysia is a matter of concern.

Production and sales Volumes:

The total production for the year ended 31st March, 2014 was 56249 Metric tonnes as against production for the year ended 31st March, 2013 of 45810 Metric Tonnes, and sales for the year ended on 31st March, 2014 was 48892 Metric Tonnes (including export of 12568 Metric Tonnes) as against 40365 (including export of 11062) Metric Tonnes for the previous year.

Financial Performance:

The net turnover from this division during the year was H 66 crores as compared to H53 crores during the previous year. During the later part of the year the Board unit at Daund, Pune has commenced its commercial operations, which is expected to result in increased production and turnover.

Outlook

The industry is growing at an average rate of 13% to 15% annually. Export opportunities in African and GCC countries is encouraging. Australian / Sri Lankan and Maldives markets are also opening up. New applications such as Tile Underlay and Kitchen cabinets are gaining popularity. In areas of Acoustics like Theatres and Hospitals, use of Cement boards is increasing.

iii. Panels

Sandwiched Panels are in demand in the market, for use as Partition Material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at factory and are ready for installation. These panels are cheaper compared to masonary partitions / wood partitions and are also easy to fix and takes comparatively less time for installation.

The production during the year was 9176 metric tonnes as against 7514 during the previous year. Sales was 8638 metric tonnes as against 6875 metric tonnes during the previous year.

The net turnover was H12.47 crores as against H9.90 crores during the previous year.

B. SYNTHETIC YARN BUSINESS: Industry structure and development

The demand for textiles and clothing in our country is on a steady upward trend resulting from increased disposable income. This growth and our efforts to increase our presence in the niche markets helped our company to command a premium in the market place, thus improving the profits. Weak Indian Rupee helped us gain better margins from the export earnings. In the first half of the year, there had been good amount of cotton yarn export to China. The power shortage situation in Tamil Nadu still continues. These factors also have helped us maintain the sales without undue seasonal fluctuations. The addition of 10% capacity and effective energy management have helped us reigning the costs. We have been certified for ISO 50001 for energy management.

Opportunities and Threats

Our country''s growing economy with expected GDP growth of 6 to 7% will create new avenues of demand for textiles and clothing.

The power shortage in the Country is expected to continue and may keep the yarn supply position tight. If the export of cotton yarn to China is revived, it will bring an opportunity to improve yarn prices in general.

The strengthening of Indian Rupee against USDollar may reduce our export margins in the months ahead.

Many spinning mill projects have been initiated in Maharashtra and Gujarat. Once these mills start the production in full swing, there could be an imbalance of supply demand position.

Risks and Concerns

The strengthening of Indian Rupee against US Dollar may reduce our export margins in the months ahead.

Production and Sales Volumes:

The production in the spinning unit during the year 2013-14 was 8614 metric tonnes as compared to 7897 metric tonnes during the previous year. The sales were 8522 metric tonnes of yarn (including export of 1609 metric tonnes) during the year 2013 - 2014 as compared to 8252 metric tonnes (including export of 2094 metric tonnes) in the previous year.

Financial Performance:

The net turnover of this division during the current year was H178 crores compared to H165 crores during the previous year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate Financial Reporting, if any, are dealt with immediately.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company believes that Human Resource is its most valuable resource, which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains.

The total number of people employed in the company as on 31.03.2014, is 4119. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

FIXED DEPOSITS:

Your Company has been inviting and accepting deposits from the public and shareholders. The amount of deposits outstanding as on March 31, 2014 was H7.37 Crores.

Due to change of procedure for accepting public deposits under new Companies Act, 2013; effective from 01.04.2014, your company is not accepting nor renewing deposits. Further as provided under the new Act, the aforesaid outstanding deposits, which were raised under the provisions of previous Act will be repaid as per the terms of each deposit. Further, your Company has already sought your approval under Postal Ballot mode for accepting the deposits as per the provisions of the new Act and once the said approval is obtained, your Company would be initiating steps for accepting the public deposits.

There are no unclaimed deposits, which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956.

UNCLAIMED DIVIDEND:

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of H4,95,033/- in respect of the year 2005 – 2006 has been transferred to Investor Education and Protection Fund on 4.07.2013 upon expiry of the mandatory 7 years period.

BANKS AND FINANCIAL INSTITUTIONS:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company, as a responsible Corporate Citizen established in the year 2000, a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit the society at large. The Trust supports programs devoted to the cause of destitute, rural poor and providing the basic necessities of life to the rural poor. This has helped to enhance the image of the Company.

Main area of activity of the Trust is to provide Drinking Water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting of health camps.

Further, as required under the new Companies Act, 2013; commencing from financial year 2014-15, your Company, each year, has to spend at least 2% of its average profits during three immediately preceding financial years towards Corporate Social Responsibility (CSR) Policy. Your Board of Directors have constituted CSR Committee to formulate and recommend CSR Policy and to comply with other requirements as mandated under the new Companies Act.

DIRECTORS:

In terms of the provisions of the new Companies Act, 2013; your Company need to have at least one-third of the total number of directors as independent directors, who shall hold the office for term up to 5 consecutive years. Section 149 of the new Act further provides that any tenure of Independent Director on the date of commencement of the Companies Act, 2013 i.e. 01.04.2014 shall not be counted as term for aforesaid period of 5 years and also lays down additional criteria apart from the criteria specified under clause 49 of listing agreement with stock exchanges for becoming an Independent Directors of the Company.

Shri. Bhagirat B Merchant, Shri. Gusti J Noria, Shri. P Abraham, Shri. Nagam Krishna Rao and Shri. V. Pattabhi were earlier appointed as Director liable to retire by rotation under erstwhile Companies Act, 1956 and holds office as Independent Director of the Company under clause 49 of the listing agreement with stock exchanges. They have held the positions as such for more than 5 years.

Shri. Bhagirat B Merchant, Shri. P. Abraham, Shri. V. Pattabhi and Shri. Gusti J Noria have furnished declarations under Section 149(7) of the new Act to the effect that they meet the criteria of independent Directors and in the opinion of the Board of Directors, the said independent Directors fulfil the conditions specified in the Companies Act, 2013 and rules made thereunder and they are independent of the Management. In view of the same, they are eligible for appointment as Independent Directors of the company to hold office as such for a period upto 5 years effective from 01.04.2014; so long as their appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV.

The Company has received notices in writing from members along with the deposit of requisite amount under Section 160 of the Act, proposing the candidatures of Shri. Bhagirat B Merchant, Shri. Gusti J Noria, Shri. V. Pattabhi and Shri. P Abraham respectively for the office of Independent Directors of the Company for a period of 5 consecutive years effective from 01.04.2014.

Effective from 01.04.2014, pursuant to new criteria under the new Companies Act, 2013; Shri. Nagam Krishna Rao had become non-Independent non-executive Director, whose office is liable to retire by rotation. Shri. Nagam Krishna Rao is retiring at the ensuing Annual General Meeting and is eligible for reappointment.

Smt. G. Saroja Vivekanand is proposed to be reappointed as Managing Director of the Company for a period of 5 years effective from 24.10.2014.

Shri. M. P. V. Rao, is re-appointed as Whole-time Director of the Company to hold office from 01.04.2014 to 31.07.2014.

Further, Mr. G. Vamsi Krishna is appointed as Whole-time Director of the Company effective from 01.06.2014 for a period of 5 years.

The aforesaid appointment/reappointment of Independent Directors, Managing Director and Whole-time directors are subject to your approval.

DIRECTORS'' RESPONSIBILITY STATEMENT:

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is appended hereto and forms part of this Report.

CORPORATE GOVERNANCE:

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS:

M/s. M. Anandam & Co., Chartered Accountants, retire as Auditors in this Annual General Meeting and are eligible for reappointment.

Your Company would comply with the requirement of Rotation of Auditors within 3 years as permitted under the new Companies Act, 2013.

COST AUDITORS:

In terms of Cost Audit Orders issued by Ministry of Corporate Affairs in 2012, M/s. Sagar & Associates, Cost Accountants were appointed as cost auditors of the Company for conducting cost audit of Synthetic Yarn Division as well as Building Products Division of the Company for the financial year 2013 -14 at a remuneration of H1,50,000/- exclusive of out of pocket expenses and applicable taxes. The Cost Auditor is expected to give his report by end of September, 2014.

As regards the Cost Audit for the financial year 2014-15; your company awaits the rules to be issued in this connection under the new Companies Act, 2013 and your Directors undertake to comply with the same in due course. The remuneration to be payable in that connection to the cost auditors would be placed before the shareholders in the ensuing Annual General Meeting for ratification, to comply with the requirements of Companies Act, 2013.

GENERAL:

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings / outgo is appended hereto and forms part of this Report.

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975, as amended, forms part of this Report.

On behalf of the Board of Directors

Date: 24.05.2014 BHAGIRAT B. MERCHANT

Place: Secunderabad Chairman


Mar 31, 2013

Visaka Industries Limited

The Directors are pleased to present the 31st Annual Report of the Company with Audited Balance Sheet and Statement of Accounts. The financial highlights are as follows

(Rs.lakhs)

PARTICULARS 2012-2013 2011-2012

Total Revenue 91816 75512

Profit for the year before taxation 7464 5124

Provision for taxation 2095 1690

Profit for the year after taxation 5069 3434

Balance brought forward from previous year 1082 1570

Profit available for appropriation 6151 5004

Dividend on Equity Share Capital 953 794

Corporate Dividend Tax 159 128

Transfer to General Reserve 4000 3000

Balance carried to Balance Sheet 1039 1082

Dividend:

Your Directors Declared Interim Dividend of Rs.2.50 (i.e. 25%) per share of Rs.10 each during the Financial Year 2012 -2013 Your Directors recommend payment of Final Dividend of Rs.3.50 (i.e. 35 %) Per Share of Rs.10 each for the Financial Year ended on 31st March, 2013. With the above the total Dividend Paid will be Rs.6 (i.e. 60%) per Share of Rs.10 each. The Company is absorbing Corporate Dividend Tax of Rs.158.87 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders

Management Discussion and Analysis:

Your Company is in the business of manufacturing and selling cement asbestos sheets, V - Boards (fibre cement sheets), panels and spinning yarn

a) BUILDING PRODUCTS BUSINESS:

Cement Asbestos division:

This industry is more than 75 years old in India

Cement asbestos products continue to be in demand because of the industry''s efforts in making more roads in rural regions, its affordability, and other qualities such as corrosion resistance, weather resistance and fire-proof nature.

Currently there are about 20 entities in the industry with about 68 manufacturing plants throughout the country. The products are marketed under their respective brand names mainly through dealers for the retail market and directly for projects and Government departments.

Opportunities and threats:

Cement asbestos sheets are mainly used as roofing materials in rural and semi-urban housing and by industries like the poultry sector.

Cement asbestos sheets are popular as they are inexpensive, need no maintenance and last longer when compared to competing products such as thatched roofs, tiled roofs and galvanised iron sheets.

According to the information gathered by us almost 80 - 85% of rural people use thatched roof/tiles for shelter. Thatched roofs need regular replacement and tiled roof needs continued maintenance. Therefore whenever the economic conditions improve the first choice of the rural population is to replace the roof over their head with the affordable and relatively durable product namely, cement asbestos sheets. Therefore, we see increased potential for usage of Cement asbestos Sheets in rural areas

The Central and State Governments have been giving lot of thrust on housing for the rural population and cement asbestos sheets are widely used for this purpose.

Both the existing and new manufacturers are venturing into setting up of new cement asbestos sheet producing plants This could increase the competition and will have an effect on the margins.

The increased input cost is also a matter of concern

Risks and concerns:

Lack of entry barriers is attracting new entrants into this line of business. Closure of Canadian and Zimbabwean asbestos mines is a matter of concern

The continuous increase in cost of inputs is a matter of concern

The activities of the ''Ban Asbestos'' lobby instigated by the manufacturers of substitute products continue to be a matter of concern

Production and sales volumes:

As against a production of 654198 tonnes during the previous year the production during the financial year ended 31st March, 2013 was 743624 tonnes. The sales during the financial year ended on 31st March, 2013 were 683243 tonnes as against 654439 tonnes sold during FY 2011-12 recording an increase of 4.4%.

Financial performance:

The net turnover of the cement asbestos division during the year was Rs.684 cr as compared to Rs.558 cr during the previous year.

Outlook:

The arrival of new entrants have caused the competition to become more acute.

BOARDS DIVISION AND PANELS DIVISION:

Industry structure and developments:

The capacity of the industries producing same or similar product is 281000 metric tonnes per annum with total of seven players

Opportunities and threats:

These are environmentally-friendly products which save time and are cost-effective. They are a good substitute for wood and helps in reducing deforestation. They have an aesthetic appeal and can be painted in any colour and can be used both internally and externally. They are durable and can stand for over 25 years or more with proper maintenance.

They bring in the triple advantage of being fireproof, water- resistant and termite-resistant.

Cellulose pulp needed to manufacture these boards and panels have to be imported. Compared to wood/plywood workability is a matter of concern, moreover initial handling is comparatively difficult as well

Risks and concerns:

There is a lack of entry barriers. Import of cement board materials from Philippines/Thailand/China and Malaysia is a matter of concern

Production and sales volumes:

The total production for the period ended 31st March, 2013 was 45,810 metric tonnes as against production for the year ended 31st March, 2012 of 40,047 Metric Tonnes, and sales for the year ended on 31st March, 2013 was 40,365 metric tonnes (including export of 11,062 metric tonnes) as against 36,377 (including export of 16,966) metric tonnes for the previous year.

Financial performance:

The net turnover from this division during the year was Rs.53 cr as compared to Rs.44 cr during the previous year.

Outlook

The industry is growing at an average rate of 13% to 15% annually. Export opportunities in African and GCC countries are encouraging. Australian/Sri Lankan and Maldivian markets are also opening up. New applications such as tile underlay and kitchen cabinets are gaining popularity. In areas like acoustics in theatres and hospitals, use of cement boards is increasing

Sandwiched panel unit

Sandwiched panels are in demand in the market, for use as partition material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at the factory and are ready for installation. These panels are cheaper compared to masonary partitions/wood partitions and are also easy to fix and takes comparatively less time for installation

The production during the year was 7,514 metric tonnes as against 5,957 metric tones during the previous year. Sales were 6.875 metric tonnes as against 5,279 metric tonnes during the previous year.

The net sales turnover was Rs.9.89 cr as against Rs.7.40 cr during the previous year.

b) SYNTHETIC YARN BUSINESS:

Industry structure and development

Spinning division did well during the year 2012-13

The drastic increases in power tariff in our country coupled with higher polyester fibre prices have made our yarns uncompetitive in the international market place. Also, rampant usage of recycled polyester fibre by the ring spinning industry has taken away the market for commodity products

Price of synthetic yarns from South-East Asian nations continue to be much lower than the Indian yarn prices in the international marketplace.

Opportunities and threats

With about 50% of installed spinning capacity in our country, with severe power shortage during the year 2012-13, Tamil Nadu has virtually paralysed the spinning activity in our country.

Our spinning mill, which is strategically located in power- surplus Vidharba region has worked with 95.2% utilisation, thus we have enjoyed the second best performing year in our spinning history.

The introduction of TUFS (Technological Upgradation Fund Scheme), will bring in unprecedented facilities for investment in textiles. Gujarat and Maharashtra are poised to increase the spinning capacity by about two million spindles during 2013-14. As the capacity addition in weaving and knitting is not commensurate with spinning, there could be an over supply of yarn for a while, till a balance is achieved

Risks and concerns

The major concerns include currency fluctuations and fall in fibre prices

Outlook for 2013-14

Our yarns are used for the manufacture of high-end garments in India. The continued strong growth in per capita consumption of textiles in our country, especially in the readymade garments sector should augur well for further growth and ensure profits for our spinning division. Also, the current surge in demand for Indian cotton yarns from China has created a shortage of yarn in India, which should help us to do well in 2013-14 as well.

Production and sales volumes:

The production in the spinning unit during the year 2012 - 2013 was 7,897 metric tonnes as compared to 8,030 metric tonnes during the previous year. The sales were 8,252 metric tonnes of yarn (including export of 2,094 metric tonnes) during the year 2012 - 2013 as compared to 7,717 metric tonnes (including export of 2,416 metric tonnes) in the previous year.

Financial Performance:

The net turnover of this division during the last fiscal was Rs.165 cr compared to Rs.137 cr during the previous year.

Internal control systems and their adequacy:

Your Company has in place adequate systems of interna control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate financial reporting, if any, are dealt with immediately.

Material developments in human resources / industrial relations front:

The Company believes that human resource is its most valuable resource which has to be nurtured well so that it is equipped to meet the challenges posed by the changing dynamics of business developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the Company maintains.

The total number of people employed in the Company as on 31.03.2013 is 3,970. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

Fixed deposits:

Your Company has been inviting and accepting deposits from the public, shareholders and others. The amount of deposits outstanding as on March, 31, 2013 was Rs.7.86 cr. There are no unclaimed deposits, which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956.

Unclaimed dividend

As per the provisions of Section 205C of the Companies Act, 1956, unclaimed dividend amount of Rs.4,82,243 in respect of the year 2004 - 2005 has been transferred to Investor Education and Protection Fund on 27.09.2012 upon expiry of the mandatory seven year period

Banks and Financial Institutions:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and financial institutions continue to give their unstinted support. The Board records its appreciation for the same.

Corporate Social Responsibility:

Your Company, as a responsible corporate citizen had established in the year 2000, a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit the society at large. The Trust supports programmes devoted to the cause of the destitute, the rural poor by providing the basic necessities of life to them. This has helped to enhance the image of the Company.

The main areas of activity of the Trust include providing drinking water by digging bore wells, construction of irrigation tanks in remote villages, building of class rooms in schools and colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting of health camps.

Directors:

Shri M P V Rao, Whole-time Director is reappointed for a period of two Years with effect from 01.04.2012.

As per Article 120 of the Articles of Association of the Company, Shri Bhagirat B. Merchant, Shri Gusti J. Noria and Shri P. Abraham retire by rotation and being eligible offer themselves for reappointment.

Directors'' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is appended hereto and forms part of this Report.

Corporate Governance

As a listed Company, necessary measures have been taken to comply with the Listing Agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

Auditors

M/s. M. Anandam & Co., Chartered Accountants, retires as

Auditors in this Annual General Meeting and are eligible for reappointment.

Cost Auditors

Ministry of Corporate Affairs vide Order No. F. No. 52/26/ CAB - 2010 dated 24th January, 2012 has ordered for auditing of cost records for those industries which are specified in the order. In the said order blended fibres/ Textiles are required to get the cost records audited by a Practicing Cost Accountant or a Firm of Cost Accountants.

M/s. Sagar & Associates, Cost Accountants were appointed as cost auditors of the Company for cost audit of Synthetic Yarn Division of the Company for the financial year 2012 - 2013 who is expected to give his report for the year 2012-2013 by September.

General

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is appended hereto and forms part of this Report.

Information as per Section 217(2A) of the Companies Act, 1956 read with The Companies (particulars of employees) Rules, 1975, as amended, forms part of this Report.

On behalf of the Board of Directors

Date: 20.05.2013 Bhagirat B. Merchant

Place: Secunderabad Chairman


Mar 31, 2010

The Directors are pleased to present the 28th Annual Report of the Company with Audited Balance Sheet and Statement of Accounts.

The financial highlights are as follows:

(Rs. in lakbs) Particulars 2009-2010 2008-2009 Gross Income 63841.07 55451.79 Profit for the year before taxation 8636.82 5543.02 Provision for taxation 2915.68 1949.18 Profit for the year after taxation 5721.14 3593.84 Balance brought forward from previous year 695.45 644.81 Profit available for appropriation 6416.59 4238.65 Divisiond on Equity Share Capital 794.05 476.43 Special Silver Jubilee Year Dividend - 158.81 Corporate Dividend Tax 133.72 107.96 Transfer to General Reserve 4000.00 2800.00 Balance carried to Balance Sheet 1488.82 695.45

Dividend

Your Directors declared an interim dividend of Rs. 3 (i.e. 30%) per share of Rs. 10 each during the financial year 2009-2010. Your Directors recommend a payment of final dividend of Rs. 2 (i.e. 20%) per share of Rs. 1 0 each for the financial year ended on 31st March, 2010. With the above, the total dividend paid will be Rs. 5 (i.e. 50%) per share of Rs. 10 each. The Company is absorbing a Corporate Dividend Tax of Rs. 133.72 lakhs on the equity dividend. The dividend declared and paid this year is not taxable in the hands of shareholders.

Management discussion and analysis:

Your Company is in the business of the manufacture and sale of

Asbestos Cement Sheets, V-Boards (Fiber Cement Sheets) and Spinning Yarn.

A. Asbestos cement business

Industry structure and developments: This industry is more than 72 years old industry in India.

Asbestos Cement Products continue to be in demand because of the industrys effort in making inroads into Indias rural markets, affordability and other qualities such as corrosion resistance, weather and fire-proof nature.

Currently there are 1 7 entities in the industry with about 63 manufacturing plants throughout the country. The products are

marketed under their respective brand names mainly through dealers for the retail market and directly for projects and government departments. The total production for the year 2009-2010 was estimated at 42 lakh metric tonnes. The industry demand as measured by the total sales of the industry has been growing considerably over the years, the growth for the last year being 5% i.e sales increased from 39 lakh metric tonnes in 2008-2009 to 41 lakh metric tonnes during the year 2009- 2010.

Opportunities and threats: Asbestos Cement Sheets are mainly used as roofing material in rural and semi-urban housing and by general industries and the poultry sector.

Asbestos Cement Sheets are popular as they are inexpensive, need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanised iron sheets.

According to the information gathered by us, almost 80-85% of rural people use thatched roof/tiles for shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever economic conditions improve, the first choice of the rural poor to replace the roof over their head are the affordable and relatively durable Asbestos Cement Sheets. Therefore, we see increased potential for the use of Asbestos Cement Sheets in rural areas.

The Central and State Governments have been giving a lot of thrust for housing for rural poor. Asbestos Cement Sheets are widely used for this purpose.

Both the existing and new manufacturers are venturing into setting up new Asbestos Cement Sheet producing plants and some eight new units are expected to be commenced. This could increase competition and will have an effect on margins. However, being an established company, your Company will have an advantage.

Risks and concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business. However it takes a lot time for a new entrant to establish in the market.

Increase in input costs: The continuous increase in cost of inputs is a matter of concern. We are confident of passing on increases to customers.

Ban asbestos lobby: The activities of the Ban asbestos lobby instigated by the manufacturers of substitute products continue to be a matter of concern. We are educating users that this is a misrepresentation campaign.

Production and sales volumes:

As against a production of 550438 tonnes during the previous year the production during the financial year ended 31st March 2009 was 6,01,973 tonnes, an increase of 9.00%. Sales during the financial year ended on 31st March 2010 was 5,58,001 tonnes as against 5,85,084 tonnes sold during the preceding year.

Financial performance: The gross turnover of Asbestos Cement Division during the year 2009-2010 was Rs. 502.76 crores as compared to Rs. 479.67 crores during the previous year. The profit before tax for the year was Rs. 77.05 crores as compared to Rs. 57.03 crores in the previous year.

Outlook: As stated earlier, there are still vast number of tiled and thatched roof houses waiting for replacement with durable and affordable roofing. Hence, subject to raw material prices remaining within reasonable limits, the demand for asbestos cement products is expected to remain firm.

Future plans Expansion of Pune project:

For expanded capacity of 1 20,000 TPA Public Hearing was over on 6.1.2010. Environmental clearance is expected by May end, after which we can pursue our expansion.

Asbestos Cement Sheets project at Sambalpur district, Orissa.

After Ministry of Environment and Forests (MOEF) approved our site at Sambulpur, we acquired the land. In the meanwhile for obtaining environmental clearance, a public hearing has been fixed on 12th May 2010. We hope to commence work after MOEF clearance. The plant and machinery for this unit has already been ordered. The contract has been awarded for civil construction work. The proposed capacity of this plant is 21 6,000 tonnes per annum for which MOEF has given Terms of Reference (TOR) clearance.

Boards Division

The total production for the period ended March 2010 was 1 9,1 74 metric tonnes as against a production for the year ended March, 2009 of 1 2,760 metric tonnes. Sales for the year ended on 31st March, 2010 was 16,806 metric tonnes (including export of 1 131 metric tonnes) as against 10,050 metric tonnes sales for the previous year. The turnover from this division was Rs. 1 5.80 crores for the year ended 31st March 201 0 compared to Rs. 9.32 crores in the previous year. This division is expected to make profits in the current year.

Outlook

The market characteristics for cement boards over the coming year look positive because of intense construction activity and shift of consumers from particle boards and plywood to cement reinforced sheets. This is a product of the future.

Sandwiched Panels Unit

Sandwiched Panels are in demand, for use as partition material. The Reinforced Building Board Sandwiched Panels are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at the factory and ready for installation. These panels are cheaper compared with masonry partitions / wood partitions, are easy to fix and take a comparatively lower time for installation.

The unit commenced commercial production on 1st January, 2010. Commercial production upto 31st March, 2010 was 1021 tonnes and sales was 838 tonnes. Sales turnover was Rs. 1.12 Crores. Our major customers are GMR, Punj Llyod, Shapoorji Pallonji & Co. Ltd., Soma Enterprises, TCS, Gujarat Ambuja Port, Eenadu Group, Coastal Projects Pvt. Ltd., Uranium Corporation, Larsen & Toubro, etc.

B. Synthetic Yarn Business

Industry structure and developments: The demand for Synthetic Yarn was good during the year 2009-201 0 due to high cotton fibre / yarn prices, short supply of yarn due to power cuts in various parts of the country, and a good demand for Indian fabrics in international markets.

Opportunities and threats: The continued growth in GDP and demand for the Indian fabric in the domestic and international market is an opportunity for us. The expected reduction in cotton fiber and yam prices is a threat to the synthetic industry. However, in such a case, we expect synthetic fiber prices to come down.

Risks and concerns: Fluctuating Rupee and crude oil prices are likely to affect the divisions performance. The likely shrinking of demand for Indian fabrics in the international market is a matter of concern. However, since the domestic market is growing, we should be able to cover this.

Outlook: We have introduced several measures to improve performance. Barring unforeseen circumstances, we hope to do better in this Division in the coming year.

Product-wise performance: The production in the spinning unit during the year 2009-2010 was 8,705 metric tonnes as compared to 8,741 metric tonnes during the previous year. The sales were 8,883 metric tonnes of yarn during the year 2009- 2010 as compared to 9,283 metric tonnes in the previous year.

Financial performance: The turnover of this division during 2009-2010 was Rs. 119.61 crores compared to Rs. 117.35 during the previous year. The profit before tax during the year was Rs. 14.97 crores as compared to Rs. 4.32 crores during the previous year, recording an increase of 246%.

Internal control systems and their adequacy:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate financial reporting, if any, are dealt with immediately.

Material developments in human resources/ industrial relations

The Company believes that human resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges posed by the dynamics of business development. The Company has a policy of continuous training of employees, both in-house as well as through reputed institutes. The staff is highly motivated due to a good work culture, training, remuneration packages and values, which the Company maintains.

The total number of people employed in the Company as on 31.03.2010 is 3128. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Companys employees.

Fixed deposits

Your Company has been inviting and accepting deposits from the public, shareholders and others. The amount of deposits outstanding as on 31st March 2010 was Rs. 4.85 crores. Deposits amounting to Rs. 10.65 lakhs remained unclaimed as on 31.03.2010. There are no unclaimed deposits which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1 956.

Unclaimed dividend

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of Rs. 4,27,321.00 in respect of the year 2001-2002 has been transferred to the Investor Education and Protection Fund on 22.08.2009 upon the expiry of seven years period.

Banks and financial institutions

The Company has been prompt in making the payment of interest and repayment of loans to financial institutions and also interest on working capital to banks. Banks and financial institutions continue to give their unstinted support. The Board records its appreciation for the same.

Corporate Social Responsibility

Your Company, as a responsible corporate citizen established in the year 2000 a charitable trust in the name of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit society at large. The Trust supports programs devoted to the cause of destitute and in providing the basic life necessities to the rural poor. This has helped enhance the image of the Company.

The main activity of the Trust is to provide drinking water by digging bore wells, construction of irrigation tanks in remote villages, building class rooms in schools and colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting health camps.

Directors

Dr. G. Vivekanand stepped down as Managing Director effective from 26th October, 2009. The Board records deep appreciation for the services rendered by Dr. G. Vivekanand. He has now been re-designated as Non-Executive Vice Chairman of the Company.

The Board welcomes Smt. G. Saroja Vivekanand as Managing Director.

As per Article 120 of the Articles of Association of the Company, Shri B. B Merachant and Shri V. Pattabhi retire by rotation. Shri Bhagirath B. Merchant and Shri V. Pattabhi being eligible offers themselves for reappointment.

Directors Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors Responsibility Statement is appended hereto and forms part of this Report.

Corporate Governance

As a listed Company, necessary measures have been taken to comply with the Listing Agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

Auditors

M/s. M. Anandam & Co., Chartered Accountants, retire as Auditors in this Annual General Meeting and are eligible for reappointment.

General

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings / outgo is appended hereto and forms part of this Report.

Information as per Section 21 7(2A) of the Companies Act, 1 956 read with The Companies (particulars of employees) Rules, 1 975, as amended, forms part of this Report.

On behalf of the Board of Directors Place: Secunderabad Bhagirath B. Merchant Date: 10.05.2010 Chairman

 
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