ASIL INDUSTRIES LIMITED
Speech delivered by Shri S.N. Khaitan, Chairman, at the 27th Annual General
Meeting of the Company held in Jaipur on the 17th day of June, 1995.
Reaching Higher. Aiming Higher.
Ladies & Gentlemen,
I take the pleasure in welcoming you to the 27th Annual General Meeting of
your Company The notice convening this meeting, the audited accounts for
the year 1994-95 and the Directors' Report have been with you for sometime,
and with your permission, I take them as read.
FINANCIAL PERFORMANCE DURING THE YEAR UNDER REVIEW
In the Financial year under review, your Company put up another commendable
performance by showing steep increase in income, profit and overall growth.
While the turnover has registered a 25% increase - from Rs. 27.42 crores in
1993-94 to Rs. 34.38 crores in 1994-95 the cash profit and the net profit
after tax has shot up to Rs. 4.30 crores from Rs. 2.74 crores and Rs. 3.38
crores from Rs. 1.26 crores, an Increase of 57% and 168% respectively over
the last year This incredible performance has been achieved through a
relentless effort of upgradation of the quality of the product. The
decision to maintain the dividend at 30% has been envisaged by the long-
term consideration of expanded capital base of your company through the
conversion of fully Convertible Debentures issued during the year under
THE RIGHT-CUM-PUBLIC ISSUE
During the year under review, your Company came out with a Rights cum
Public Issue of Fully Convertible Debentures of Rs. 1019.40 lacs. The
debentures were issued in the ratio of 1:1 on right basis to the tune of
Rs. 384.87 lacs, RS. 157.53 lacs firm allotment to the promoters,
directors, their friends, relatives and associates and the remaining
portion of Rs. 477.00 lacs was offered to the public who reciprocated with
overwhelming confidence in the future of your Company by oversubscribing by
EXPANSION AND DIVERSIFICATION UNDERTAKEN
The Company has attained a breakthrough in the closely-held International
technology for hardening and tempering the steel strips. This will place
your Company in the international map and will enable the user industries
to come up with products which are on par with the international standard.
The Plant has already been commissioned to manufacture Steel Strips and
various types of Engineering Steel Strips, Granite Cutting and Marble
Cutting Knives, Circular saws with various kinds of tips. All these,
manufactured with the latest technology will save precious foreign exchange by reducing imports and will also be exported to the industrially advanced
West. The Company has also commissioned a project for manufacture of
Circular Saws for increasing value addition. This will give the Company its
first product in the tool industry which will be directly supplied to the
In keeping with the national priorities, exports were earmarked as the
thrust area on the eve of the country's embarking on the New Economic
Policy. From an initial Rs. 3 lacs, the Company's exports have grown to Rs.
100 lacs during the year under review. The exports will take a quantum leap
once the switch to new technology is complete.
THE ECONOMIC SCENARIO
The Government's astute management of inflation during the current
financial year and bringing it down gradually to single digit level,
deserves commendation from all sections.
However, stabilising and lowering the interest rate so vital for industrial
growth - requires a more cautious handling of the prime lending rates
which, in recent past, seems to be framed from a narrow stabilisation
perspective rather than from a holistic long-run growth objective.
Reducing import duties in a phased manner is a step in the right direction.
We take a special note of the fact that during the current year the Import
tariffs on HR and CR Coils have been reduced from 50% and 40% to 40% and
30% respectively. This reinforces the Government's commitment to the
principle of consumer sovereignty and the will to make Indian Industries
internationally competitive -- a process in which we look forward to
However, the Government's hesitation is manifested in their foot-dragging
over the vital issues of PSU disinvestment, liberalisation of labour laws
and subsidizing low productivity in the Government-run Infrastructural
sectors. since the outputs of these sectors enter as cost components into
the private sector's output, artificially maintained levies, freights and
prices would have the effect of escalating the costs of the commodities
produced by the industry. Apart from reducing the Indian industries'
competitiveness and rendering them vulnerable these have the baleful effect
of distorting the structure of prices in both the product and factor
markets. The effect of low productivity of Indian labour due to
institutional impediments to mobility not just acts as a closure for
attaining higher employment, but also acts as a constraint for adapting
innovations, upgrading technology and investment on human resources.
Therefore, without taking necessary steps in these directions, the
Government's unilateral thrust on disciplining the credit market and
slashing down import tariffs would merely aggravate stagflation and make
the country a happy dumping ground for cheap imports. The industrial sector
and the investing public expect the Government to take things to their
logical end, not only out of 'patriotism' but out of the need to be
consistent in its policies and priorities.
CURRENT YEAR'S OUTLOOK
For several reasons, the outlook for the current year appears to be rather
favourable. On the demand side the market for consumer durables,
automobiles included, is increasing at an unprecedented rate, against a 12%
growth in industrial production envisaged during the current year, the
automobile and the white good sector is expected to grow by 25%, raising
the demand for steel strips pro tanto. On the supply side new capacities
are being created for our raw material as Hot Rolling Mills are stepping up
their production and new plants are being commissioned. This will reduce
our dependence on imported raw material.
The prospects generally speaking, are thus excellent and your Company will
take full advantage of these factors in optimizing their output and
maximising returns. The Indian Railways has converted the Jaipur- Bombay
route into broadgauge and since the line shares a common boundary with our
factory, the event Will benefit the Company by reducing transportation
The Company has entered into a technical collaboration agreement with a
world wide renowned manufacturer of Germany for Supply and commissioning of
a most modern Cold Rolling Mill with a capacity of 30,000 MT per annum
which will produce Cold Rolled Steel Strips with very close tolerance. The
Company is also putting additional H&T lines with the new technology in
order to expand the capacity of H&T The total capital outlay involves In
acquiring and installing the above C Mill Project and H&T line is about Rs.
65 crores, which, will be partly financed by All India Term Lending
Institutions and for balance the Company will approach shareholder for
right issue sometime during October-December 1995._
The project is expected to be commissioned by June, 1996 and the enhanced
output will cater to the captive domestic demand for DD/ EDD Steel strips
emanating from the quality conscious segment of the consumer durables and
automobile industries which are gearing up to make big strides in near
future. Out of 30,000 MT, around 10,000 MT strips shall be used inhouse for
hardening and tempering Division. With such high quality of hardened and
tempered strips we shall be comparable with the best in the world. We would
also be able to make inroads in advanced countries as our price will be
cheaper. This, in turn, will enhance Company's turnover and profitability
manifold over the coming years.
For this impressive performance and the promise of a brighter future, I
wish to thank the shareholders of the Company and the investing public, who
have shown their faith in the management. I would also like to thank the
Financial Institutions, the Government of Rajasthan, the Bankers to the
Company and the employees for their immense support.
Place : JaipurDated : 17th June, 1995.