You are here » Home » Companies » Company Overview » Apar Industries Ltd

Apar Industries Ltd.

BSE: 532259 Sector: Engineering
NSE: APARINDS ISIN Code: INE372A01015
BSE LIVE 12:55 | 13 Dec 783.00 -11.75
(-1.48%)
OPEN

790.00

HIGH

790.55

LOW

783.00

NSE 13:11 | 13 Dec 786.10 -8.15
(-1.03%)
OPEN

794.25

HIGH

800.40

LOW

782.10

OPEN 790.00
PREVIOUS CLOSE 794.75
VOLUME 461
52-Week high 909.00
52-Week low 552.50
P/E 18.90
Mkt Cap.(Rs cr) 2,997
Buy Price 783.30
Buy Qty 11.00
Sell Price 790.00
Sell Qty 2.00
OPEN 790.00
CLOSE 794.75
VOLUME 461
52-Week high 909.00
52-Week low 552.50
P/E 18.90
Mkt Cap.(Rs cr) 2,997
Buy Price 783.30
Buy Qty 11.00
Sell Price 790.00
Sell Qty 2.00

Apar Industries Ltd. (APARINDS) - Director Report

Company director report

Dear Shareholders

Your Directors have immense pleasure in submitting the 28th Annual Report of theCompany together with the audited annual financial statements showing the financialposition of the Company for the year ended 31st March 2017. Consolidated accounts includeit's subsidiaries. Financial Statements have been prepared in accordance with theCompanies (Indian Accounting Standard) Rules 2015 (as amended) (Ind AS) prescribed underSection 133 of the Companies Act 2013 and other recognized accounting practices andpolicies to the extent applicable. Beginning 1st April 2016 the Company has for thefirst time adopted Ind AS with a transition date of 1st April 2015. Consequently thefigures for the year ended 31st March 2016 have been restated to comply with Ind AS tomake them comparable.

1. Financial results

( Rs in crore)

Particulars Company Consolidated
2016-17 2015-16 % of Increase 2016-17 2015-16 % of Increase
Sales turnover (after deduction of excise duty ) 4775.58 5024.36 (4.95) 4831.98 5078.49 (4.85)
Other income 15.80 9.92 15.96 10.09
Profit for the year before finance cost depreciation and tax expenses. 436.56 367.65 18.74 432.73 372.62 16.13
Deducting therefrom:
- Depreciation / amortisation 43.45 37.69 44.97 37.76
Finance Costs 113.66 157.33 114.36 157.32
PROFIT BEFORE TAXATION FOR THE YEAR 279.45 172.63 61.88 273.40 177.54 53.99
Deducting therefrom:
- Tax expenses 97.13 56.93 97.15 57.26
Net profit for the year after taxation and before minority interest 182.32 115.70 57.58 176.25 120.28 46.53
Adjustment of:
- Share in Profit (Loss) of JV 0 0 0.32 1.41
NET PROFIT AFTER TAXATION AND ABOVE 182.32 115.70 176.57 121.69
ADJUSTMENTS
Add: Profit brought forward from previous year 274.18 218.45 364.51 310.44
Amount available for appropriations 456.50 334.15 541.08 432.13
- Reserves (20.00) (15.00) (20.00) (22.64)
- Dividend (including tax ) *- (44.98) *- (44.98)
- Refund of dividend tax 0.93 0.93
- Capital Redemption Reserve (0.23) 0 (0.23) 0
Leaving balance of profit carried to balance sheet 437.20 274.18 521.78 364.51
Earnings per equity share (EPS)
- Basic & Diluted before & after extraordinary items 47.38 30.88 45.88 32.48

*Note: In accordance with Ind AS final divided of Rs. 10/- (100%) per sharerecommended by the Board of Directors for FY 16-17 (refer para 2 below) is recognized as aliability in the period in which it is declared by shareholders in a general meeting andpaid.

2. Dividend:

The Board of Directors of the Company have approved the Dividend Distribution Policy on5th August 2016 in line with the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The Policy is available on Company's website www.apar.com Consideringthe financial results achieved during the year under review as compared to the previousyear the Board of Directors has recommended the dividend for FY 2016-17 on the capital of38268619 Equity Shares of the face value of Rs. 10/- each fully paid @ Rs. 10/- (100.00%) per share [(previous year Rs 6.50 (65.00 %) per share that included special dividend ofRe. 1 per share.)] This dividend amounting to Rs 38.27 Crores is payable after declarationby shareholders at the ensuing Annual General Meeting (AGM) and you are requested todeclare the same.

3. BUYBACK OF COMPANY'S EQUITY SHARES

During the year under review the Company had offered to buyback upto 450000 EquityShares of face value of Rs. 10/- each at a price of Rs. 660/- per Equity Share("Buyback Price") (including premium of Rs. 650/- per Equity Share) payable incash for an aggregate amount of up to Rs. 29.70 Crores through Tender Offer.

Against the offer 228150 Equity Shares were tendered by the shareholders for anaggregate amount of Rs. 15.06 Crores and buyback was completed . Consequently IssuedSubscribed and Paid-up Share Capital of the Company has thus reduced to Rs. 382686190/-divided into 38268619 Equity Shares of Rs. 10/- each and Rs. 0.23 Crores being thenominal value of the shares bought back were transferred to Capital Redemption Reservefrom General Reserve.

4. Transfer to Reserves:

The Company proposes to transfer an amount of Rs. 20 Crores to the General reserves. Anamount of Rs. 521.78 Crore is proposed to be retained in the Consolidated Statement ofProfit and Loss. As stated above Rs. 0.23 Crores being the nominal values of the sharesbought back were transferred to Capital Redemption Reserve from General Reserve.

5. Management Discussion and Analysis

Financial Year 2016-17 was a year of profitable growth for your Company as allsegments showed strong progress. Your Company's focus on building a future-oriented basketof new-generation products and expanding global presence while managing costs haveeffectively helped buoy profitability.

The year gone by was one full of promise and progress for the Indian power sector. Thisis evident from the number of States which joined the Ujwal DISCOM Assurance Yojana (UDAY)going up to 27; power generation capacity crossing the 300-GW milestone; power deficitdropping to a historical low of less than 1%; renewable energy cost falling drastically(tariff for solar energy down to Rs. 2.97 per unit and Rs. 3.46 per unit for wind energy)and an $840-million mega project of 800-KV ultra-high-voltage DC transmission line beingawarded.

As we move into FY18 the momentum seems set to grow with the initiation of the 13thElectricity Plan which estimates an investment of Rs. 2.6 trillion in the Indian powertransmission sector by the end of 2022 and total generation capacity addition of 187821MW. Power Grid Corporation of India Ltd. (PGCIL) is expected to spend Rs. 1 trillion overthe next 4 years to expand its Transmission & Distribution (T&D) network. On theexports front FY17 saw a revival as commodity prices stabilised; going forward theseexports markets are expected to grow well in FY18. As the benefits of the above-mentioneddevelopments gradually percolate down Apar Industries Ltd. with leading presence inIndia's T&D sector and 70% of its revenue coming from the power sector is poised togrow. Apar is the fourth-largest manufacturer of transformer oil in the world and is amongthe world's top 3 largest conductor manufacturers. Your Company is a leading player incables and the largest in cables for the renewables sector. Apart from being a marketleader in India your Company has a formidable global presence exporting to over 100countries. Apar's in-house R&D initiatives and strategic tie-ups with global firmssuch as CTC Global USA and ENI S.p.A Italy have resulted in a portfolio ofnew-technology products such as extra-high-voltage transformer oils high-temperatureconductors Elastomeric E-Beam and optical fibre cables (OFC). The strong basket ofnew-generation value-added products developed by your Company is already garnering risingtraction. Going forward Apar is positioned well to gain from the Government's increasedfocus on building high-quality T&D infrastructure and increasing efficiency inT&D as depicted in the 13th Electricity Plan.

The year gone by also saw your Company's expansion plan and capacities go live. Theconductor plant in Jharsuguda and the Oils Plant in Sharjah became operational during theyear. Your Company's cable expansion plan also moved forward as per schedule.

Your Company's strong leadership position across businesses higher-value-added productofferings strong global presence technical capabilities continued focus on R&D andsizeable capacities following the recent expansions along with higher industryopportunities will take Apar to a higher profitable growth path.

The opportunities and outlook that exist for your Company are as follows:

Global scenario

Investment in the Global Power sector rose to a record $690 bn in 2015 drivenprimarily by the expansion of renewables and networks. The global power sector is expectedto attract investments worth $19 trillion from 2016 to 2040. Global renewable energycapacity additions in 2016 reached record levels at 138.5 GW up from 127.5 GW in 2015accounting for 55% of all new generating capacity. New investment in the solar segment wasat $113.7 bn and investment in wind stood at $112.5 bn.

Thus there is a requirement for massive investment in T&D infrastructure toaccommodate these projects to meet the growing demand for electricity and replace agingT&D assets. Over the next decade electric utilities are expected to invest $3.2trillion globally in new and replacement T&D infrastructure. The largest newinvestments over the next decade will be in China and India as they seek to meet risingelectricity demand while also modernising their grids. Developed countries will also beinvesting significantly particularly in smart grid infrastructure and renewable energyintegration. '

India's power plan

India's Power sector will require investment of Rs. 10.3 lakh crore during the period2017-22 for generation capacity addition of 187821 MW during which no coal-basedcapacity addition is expected. As on March 2017 installed capacity of Power Plants hasincreased to about 319606 MW and total installed capacity from Renewable segmentreached 42849 MW. The target for Renewable Energy capacity to be achieved by 2021-22has been revised to 175 GW. For the year ended 2021-22 the projected Peak Demand isestimated at 235 GW and Energy requirement at 1611 BU. The T&D segment also witnessedmany positive developments and achievements in FY17 including commissioning of 26300 ckmof transmission lines which is 112.5% of the annual target. Similarly transformationcapacity addition during the year increased by 30.2%YoY to 81816 MVA equivalent to181.1% of the target. The transmission system capacity of 220 kV and above voltage levelsat the end of the year was 367851 ckm of transmission lines and 740765 MVA oftransformation capacity of substations. The total transmission capacity of theInter-Regional Links was 75050 MW at the end of the year.

Now with the start of the 13th Plan (2017-2022) the future augurs well. The Plan isestimated to involve T&D investment of Rs. 2.6 lakh crore including an estimated Rs.30000 crore in transmission systems of under 220 kV. About Rs. 1.6 lakh crore would comefrom States and another Rs. 1 lakh crore from PGCIL. About 105580 CKM of transmissionlines 292000 MVA (220 kV and above voltage levels) and 14000 MW (HVDC) oftransformation capacity is expected to be added during the period. Also about 45700 MWof inter-regional capacity addition is planned during the period to take the capacity to118050 MW by the end of the 13th Plan from the current capacity of 72350 MW.

The flagship project of the Indian government UDAY continues to garner positiveresponse. As on March end 27 states have joined the scheme. UDAY aims at fixing theweakest link in the Indian Power sector; the scheme aspires to financially turn arounddistribution companies. However there are still execution issues and some delays continueto be seen at the implementation level. Other initiatives in the T&D sector includeschemes such as

Deen Dayal Upadhyaya Gram Jyoti Yojana (Rs. 75893 crore) and Integrated PowerDevelopment Scheme (Rs. 65424 crore). In the current Budget allocations under theseschemes have been increased by over 25% to Rs. 10635 crore for the current fiscal.

Conductors: It is estimated that during the 13th Plan period transmission lines of105580 CKM including 4280 ckm of HVDC 27300 ckm (765 kV) 46000 ckm (400 KV) and28000 ckm (200 KV) would be added.

Transformers: Transformation capacity of 292000 MVA including 114000 MVA(765 KV) 103000 MVA (400 KV) 75000 MVA (200 KV) and 14000 MW (HVDC) is expected tobe added during the 13th Plan period.

Cables: The Indian Electric Wire and Cable market is expected to grow steadilyat a CAGR of 16% till 2020. This is mainly due to the lack of T&D infrastructure atlocations where renewable energy resources are set up.

Auto Lubes: FY17 ended on a positive note for the automobile industry whichfaced slowdown for a few months as a result of demonetisation. Sale of passenger vehiclesin India crossed the three million mark for the first time growing at the fastest rate in6 years. SIAM expects sales growth to be in the range of 7-9% for FY18 driven by lowerfinance costs the economy's recovery from the effects of demonetisation and improvedconsumer confidence. Sale of two-wheelers grew 6.9%; going forward it is expected to growin the range of 9-11% in FY18. The roll-out of GST is expected to impact short-term salesvolumes across segments. However the Indian automotive market is expected to witnessgrowth in several pockets in FY18 as the various reforms and increasedspending/investments kick in.

(a) Overall Business performance

We are happy to report that Apar has delivered strong performance during FY17 backed bysturdy show across all the 3 businesses. Profitability increased significantly driven byincreased contribution from higher-value-added products across businesses. Thisimprovement in profitability is actually a testimony to the efforts that the company hasput in by way of bringing in higher-value-added products. The EBITDA margin increased to8.8% during the year from 7.2% in the previous year primarily led by improvement inprofitability in the Conductors and Cables business. Profit after tax (PAT) came in at Rs.176 crore up from Rs. 121 crore in the previous year. Revenue however was marginallyimpacted largely due to lower input prices. Your Company reported consolidated revenue ofRs. 5289 crore (gross of excise) in FY17 compared to Rs. 5551 crore in FY16. YourCompany commenced production of Conductors and Specialty Oils at its new facilities.Apar's overall outlook remains positive as your Company expects all the planned capex inthe domestic T&D segment to start getting converted into new orders in FY18 even asthe exports market continues to do well. Post the recently commenced capacities yourCompany is very well placed to monetise this growth opportunity.

Business Segments

(i) Conductor segment reports significant expansion in Profitability

( Rs in crore)
Particulars 2016-17 2015-16 Variation (%)
Turnover* (Gross 2462 2785 -12%
of Excise)
Segment profit / 179 131 37%
(loss)
Exports 819 1054 -22%

*Turnover includes Interest Income of Rs 0.09 Cr. for FY17 and Rs 1 Cr. for FY16.

Robust growth in profitability: EBITDA per metric tonne post forex adjustmentcame in at Rs. 11882 compared to Rs. 7469 in FY16. This is on account of increasedcontribution from high efficiency conductors (HEC) which came in at 11% of the overallsales revenue from conductors compared to 6% a year ago. Apar won the award for the BestCompany for HTLS given by PGCIL for 2016-17. Your Company executed some challengingRe-conductoring projects in Kerala and Telangana among others.

Revenue and Volumes declined on account of higher share of HEC: Sales Revenuecame in at Rs. 2462 crore compared to Rs. 2784 crore in the previous year the declinebeing on account of slightly lower commodity prices and increased share of HEC. Exportsaccounted for 37% of revenue. Volumes for the year were lower at 158835 MT compared to172257 MT in the previous year as the company produced more of the high temperatureconductors which carry a larger value per unit of volume.

Exports market revived while Domestic market remained subdued: Demand in thedomestic market was slightly subdued as some of the T&D projects awarded were yet toresult in orders for conductors which is witnessing increased competitive intensity inthe domestic market. However at Apar we have been able to shift our focus to the exportsmarket which has helped us to counter the effect in the short to medium term.

Jharsuguda plant ramping up quickly; GST to have further positive impact: YourCompany's new plant at Jharsuguda which commenced production during the year is rampingup. Your Company has started bidding for new business with Jharsuguda as a source ofsupply. GST is expected to kick in from July 2017 and this will have positive impact onprofitability.

Strong order book with higher contribution from exports: Your Company's orderbook stood at Rs. 1519 crore as of March 31 2017 marginally lower than the Rs. 1751crore as on March 31 2016. However this order book contains a much shorter deliverycycle as the T&D project developers have tighter delivery cycles than of traditionalorders. Export orders have contributed 48% to the order book compared to 29% in FY16 asthe company witnessed better traction in exports compared to domestic business. Apar haswon orders in new geographies and also received its first large export order for hightemperature conductors. This order worth Rs. 100 crore was received in Q3 from an EPCcontractor in North America.

FY18 expected to be promising year: Going forward demand for conductors isexpected to grow with a big surge in orders coming in from UDAY in the domestic market andexport growth led by commodity price stabilisation.

Risks and concerns

Competition from China along with Midal in Export business and from other Indiancompanies for local business may impact the business. Any further delay in UDAY-drivenorders is expected to have an impact on performance. The cyclical nature of the powerbusiness has an obvious impact on your Company's performance. Project delays from thecustomers' side may result in under-utilisation of capacity even though the order book mayremain robust. There can be delay in debtor collections due to stress at the customers'end. Regional political instability and changes in the external environment in certainexport markets affect execution of delivery. Volatility in Aluminium premiums has been anarea of concern mainly with respect to exports and is a challenge in the absence of anyhedging mechanism. Efforts by various aluminium manufacturers may result in imposition ofSafeguard Duty which will increase the raw material prices and have a negative impact onfixed price contracts in the short to medium term.

Particulars Company Consolidated
2016-17 2015-16 Variation (%) 2016-17 2015-16 Variation (%)
Turnover* (Gross of Excise) 1827 1957 -7% 1883 2011 -6%
Segment profit / (loss) 174 192 -10% 169 197 -14%
Exports 517 558 -7% 573 612 -6%

*Turnover includes Interest Income of Rs 2 Cr. for FY17 and Rs 3 Cr. for FY16. ii)Specialty Oil profitability in line with the long-term average

Profitability in line with expectation: EBITDA per KL after forex adjustment forthe year was at Rs. 4931 compared to the higher base of Rs. 5439 in the previous year.This is very much in line with the expectation for the year.

Volumes up 4% but Revenue down due to lower raw material prices: Aggregatevolumes were up by 4% at 352655 KL led by increase in Transformer Oils (domestic)Transformer Oils (export) White Oil Rubber Processing Oils and Auto Oils whileconsolidated Sales revenue for the year was Rs. 1881 crore 6% lower than last yearprimarily due to lower raw material prices.

Sharjah plant commences production: Your Company's plant in Hamriyah (Sharjah)Port has commenced commercial production and is gradually ramping up.

Auto Lubes delivers strong performance despite demonetisation: The Auto Lubessegment delivered 6% volume growth to reach 24893 KL from 23480 KL despite the impactof demonetisation which hit both the aftermarket segment as well as OEM sales in theshort term. Net sales stood at Rs. 222 crore compared to Rs. 263 crore in the previousyear. Your Company's product lines across all segments consist of top-performance productscomparable to the best offered in the Indian market. Apar's strong focus on expanding thedistribution network and increasing the share of higher-margin products will further drivegrowth in this segment.

FY18 expected to be promising year: In FY18 your Company expects good growth involumes; especially if UDAY starts picking up Apar will see a significant uptick indistribution transformer volumes as well as HVDC projects. Profitability is expected toincrease further aided by benefits arising out of GST implementation.

Risks and Concerns

Your Company is exposed to volatility in raw material prices and foreign exchangerates. However in order to mitigate these risks your Company continues to exerciseprudence in its inventory control and hedging strategies. Also addition in globalrefining capacities has resulted in a mismatch in demand and supply which has an effecton base oil prices. The prices of long-term buy contracts take time to correct in case offluctuations in crude prices as formula prices are always backward looking. Debtors'collection period can increase on account of stressed financial condition of customers.Your Company had to implement strict credit controls to limit exposure to customers facingcash flow issues. Rapid commoditisation taking place at the lower end especially intechnical grade white oils may have an impact on margins.

iii) Cables business delivers its best performance

( Rs in crore)
Particulars 2016-17 2015-16 Variation (%)
Turnover* (Gross 929 746 25%
of Excise)
Segment profit / 61 29 110%
(loss)
Exports 129 100 29%

*Turnover includes Interest Income of Rs 3 Cr. for FY17 and Rs 2 Cr. for FY16.

Robust revenue growth: Sales Revenue was up 25% at Rs. 926 crore led by 44% and31% growth in Elastomeric Cables and Power Cables respectively.

Significant expansion in profitability: EBITDA margin post forex adjustment hasincreased by 288 basis points to 8.6% in FY17 from 5.7% in FY16. This is also thanks tovarious cost control measures and the strategic focus on the specialty cables segment.

Order book up 13% Y-o-Y led by strong traction in Renewables Defence and Railways:Your Company's order book as on March 31 2017 stood at around Rs. 224 crore compared toRs. 199 crore as on March 31 2016. The increase has come from Elastomeric cables andPower Cables. Apar has continued to see further growth in the non-conventional energy sideof the business — windmill and solar segments — during the year. Currently Aparis the largest supplier of specialty cables in this segment in India. The power cablessegment also witnessed increased demand. While margins have remained stagnant because ofcompetitive pressures volumes have clearly expanded. Going forward your Company expectsthe renewables segment to continue to grow. Your Company has also started seeing moretraction in orders from the Defence sector and Railways.

Expansion going ahead as per plan: Your Company's capex in the segment isfocused around debottlenecking the Elastomeric cables side of the business and on thepower cable's side where Apar is putting up significant new machinery. The expansion isgoing ahead as per schedule.

FY18 expected to be promising year: Your Company expects the growth momentumseen in the current year to continue in FY18. Profitability should also grow driven byorders from high-profitability segments such as Defence.

Risks and concerns.

The excess capacity in the power cables segment impacts pricing. Collection periods canget extended and delivery schedules can get delayed due to lack of financial arrangementsby key customers in the renewable energy sector and by EPC contractors. In optical fibrecables the clientele is concentrated among a handful of telecom companies and BBNL wherethe capex spending has been severely impacted. The cyclical nature of their tenderingtoo has a bearing on the order situation in the industry.

(b) Operations of subsidiaries:

(i) Petroleum Specialities Pte. Ltd Singapore (PSPL) a Wholly-Owned Subsidiary (WOS):

During the year under review net sales of PSPL stood at $9.31 million compared to$7.93 million in the previous year. Profit after tax (PAT) stood at $0.82 millioncompared to $0.65 million in the previous year. Operations of its downstream subsidiariesare as follows:

Quantum Apar Specialty Oils Pty. Ltd. Australia (Quantum)

PSPL holds 65% equity in Quantum. Pursuant to the resolution passed by theshareholders your Company completed the process of closing down Quantum and made anapplication for voluntary de-registration with the Registrar of Companies. During theperiod it reported net sales of AUD 1.78 million compared to AUD 8.27 million in theprevious year and PAT of AUD 0.01 million compared to AUD 0.41 million in the previousyear. Total Retained Profit of AUD 0.82 million was distributed as dividend toshareholders.

Petroleum Specialities FzE (PSF)

PSF was registered in November 2014 as a Free Zone Establishment under an IndustrialLicense issued by the Hamriyah Free Zone Authority Government of Sharjah UAE forsetting up manufacturing facility for a comprehensive range of Specialty Oils andLubricants. PSPL holds 100% equity in PSF. During the year under review net sales of PSFstood at $1.07 million and gross profit at $0.22 million and loss for the year stood at$1.01 million.

(ii) Apar Transmission & Distribution Projects Private Limited (ATDPPL) :

The Company was incorporated as a Wholly-owned Subsidiary of Apar Industries Limited onAugust 26 2016 with the main objective of construction and installation re-conductoringand erection of overhead & underground T&D lines among others. The Company is setto commence commercial activities shortly.

During the year under review the Company incurred a loss of Rs. 0.08 million.

A statement containing salient features of the financial statements of the Company'ssubsidiaries in Form AOC-1 is attached along with the financial statements of AparIndustries Ltd.

(c) Cautionary statement

The statements made in the Management Discussion & Analysis section describing theCompany's goals expectations and predictions among others do contain some forward lookingviews of the management. The actual performance of the Company is dependent on severalexternal factors many of which are beyond the control of the management viz. growth ofIndian economy continuation of industrial reforms fluctuations in value of Rupee in theforeign exchange market volatility in commodity prices applicable laws / regulationstax structure domestic / international industry scenario movement in internationalprices of raw materials and economic developments within the country among others.

(d) Internal control systems (ICS) and their adequacy

The Company established adequate ICS in respect of all the divisions of the Company.The ICS are aimed at promoting operational efficiencies and achieving savings in cost andoverheads in all business operations. The System Application and Product (SAP) a worldclass business process integration software solution which was implemented by the Companyat all business units (including Cable unit) has been operating successfully. The Companychanged the Internal Auditors M/s KPMG India Pvt. Ltd. and appointed

M/s Deloitte Haskins & Sells. The system cum internal audit reports of the InternalAuditors are discussed at the Audit Committee meetings and appropriate corrective stepshave been taken. Further all business segment prepare their annual budget which arereviewed along with performance at regular intervals.

(e) Development of human resources

The Company promotes an open and transparent working environment to enhance teamworkand build business focus. The Company equally gives importance to the development of humanresource (HR). It updates its HR policy in line with the changing HR culture in theindustry as a whole. In order to foster excellence and reward those employees who performwell the Company practices performance / production linked incentive schemes andintroduced Employees Stock Option Scheme. The Company also takes adequate steps forin-house training of employees and maintaining a safe and healthy environment.

6. BUSINESS RESPONSIBILITY REPORT :

Business Responsibility Report as stipulated under Regulation 34 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed and forms a part ofthis Annual Report. – Annexure - VIII

7. SALE OF SHARES BY TEMPLETON AND CONSEQUENTIAL ALTERATION OF ARTICLES OFASSOCIATION OF THE COMPANY :

During the year under review Templeton Strategic Emerging Markets Fund III L.D.C.(Templeton - Investor) sold the entire 3636363 Equity Shares held by it in the Company.Templeton thereupon withdrew the nomination of Mr. Rajesh Sehgal as Investor Director ofthe Company and ceased to be Investor Director w.e.f. March 30 2017.

The existing Articles of Association (AoA) contain several specific articles pertainingto rights of the Templeton under the Subscription & Investor Rights Agreement (SIRA)dated March 31 2011 entered into between the Company and Templeton. Consequent upon thetermination of the said Agreement these specific articles are no longer required. It istherefore proposed to adopt a new set of Articles of Association (AoA) by replacing theexisting AoA by members and a Special Resolution to this effect is included at Item No. 7in the Notice of the Annual General Meeting (AGM). The Board recommends the Resolution foradoption by members.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Dr. Narendra D. Desai Chairman and Founder Promoter of the Company expired on 17thOctober 2016. Dr. Desai was not only a chief architect of Apar's success but also a keystalwart in the Indian electrical industry. He was a true visionary leader an amazinghuman being and an inspiring mentor always ready to help. Under his leadership the AparGroup had grown up by leaps and bounds. His contribution towards the Company's growth cannot be measured but can be felt. The Board of Directors places on record their sincereappreciation for the valuable guidance and leadership provided by late Dr. Desai duringhis tenure as a Chairman and Managing Director till 2004 and thereafter as Non-ExecutiveChairman of the Company and as a Chairman and Member of various Committees of theDirectors of the Company. The Board of Directors have appointed Mr. Kushal N. Desai theManaging Director and Chief Executive Officer of the Company as Chairman and ManagingDirector who will also act as Chief Executive Officer of the Company.

(b) Mr. Kushal N. Desai Director shall retire by rotation at the ensuing annualgeneral meeting of the Company and he being eligible offers himself for re-appointment.

(c) During the year under Review -i. As stated above Mr. Rajesh Sehgal ceased to beInvestor Director w.e.f. 30th March 2017. ii. Mr. Sehgal was appointed as an AdditionalDirector of the Company w.e.f. 24th April 2017 in the category of Independent DirectorMr. Sehgal will hold office upto the date of the ensuing Annual General Meeting. TheCompany has received notice under Section 160 of the Companies Act 2013 from a memberproposing his appointment as Director of the Company. The Board proposes to appoint himfor a period of five consecutive years upto the conclusion of 33rd Annual General Meetingof the Company to be held in the calendar year 2022.

In accordance with Section 149(7) of the Act all Independent Directors have givendeclarations that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013 and SEBI Regulations. Details of the proposal forre-appointment / appointment of Mr. Kushal N. Desai and Mr. Rajesh Sehgal are mentioned inthe Statement pursuant to Regulation 36(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as annexed to the Notice of the 28th Annual GeneralMeeting. The Board recommends re-appointment / appointment of all the above Directors.

(d) Dr. N. K. Thingalaya resigned as Chairman of Audit Committee on 23rd May 2017 dueto health constraint. However he continues to be a member of the Audit Committee. In hisplace Mrs. Nina Kapasi was appointed as Chairman of the Audit Committee w.e.f. 30th May2017.

BOARD EVALUATION :

Pursuant to the provisions of the Companies Act 2013 and SEBI Regulations the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Committee Nominationand Compensation-cum-Remuneration Committee Corporate Social Responsibility (CSR)Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders RelationshipCommittee. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.

REMUNERATION POLICY :

The Board has on the recommendation of Nomination and Compensation-cum-RemunerationCommittee framed a policy for selection and appointment of Directors Senior Managementand their remuneration. The Remuneration Policy is stated in the Corporate GovernanceReport.

MEETINGS :

During the year five Board Meetings and four Audit Committee Meetings were convenedand held the details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.

9. DEPOSITS :

Company has not accepted deposits during the year. There were no outstanding depositsand no amount remaining unclaimed with the Company as on 31st March 2017.

10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

11. DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013 :

i. that in the preparation of the annual accounts for the financial year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any

ii. that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been selected and applied consistently and judgments and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2017 and of the profit of the Company for thefinancial year ended on that date.

iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities. iv. that the annual accounts have been prepared on a going concern basis.v. that proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively. vi. that systems to ensure compliance withthe provisions of all applicable laws were in place and were adequate and operatingeffectively.

12. RELATED PARTY TRANSACTIONS :

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. Form AOC-2 (Disclosure of particulars ofcontracts / arrangements entered into by the company with related party) is annexed hereto and forming part of Directors' Report.

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for the transactions which are of a foreseen and repetitive nature. A statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis. The policy on RelatedParty Transactions as approved by the Board has been uploaded on the Company's website.None of the Directors has any pecuniary relationships or transactions vis--vis theCompany.

13. AUDITORS :

STATUTORY AUDITORS :

M/s. Sharp & Tannan (Firm Registration No. 109982W) Chartered Accountants havebeen Statutory Auditors of the company since Financial Year 2010-11. As a part of theirinternal reorganization they are not seeking reappointment at the ensuing Annual GeneralMeeting and they seek appointment in the name of Sharp & Tannan (Firm Registration No.127145W) for the remaining term upto the conclusion of the Annual General Meeting of theCompany to be held in the year 2020 as available under provisions of Companies Act 2013.Based on the recommendation of the Audit Committee the Board of Directors of the Companyat their meeting held on 30th May 2017 approved such appointment and recommended themembers to approve the same.

The Company has received necessary eligibility certificate from Sharp & Tannan(Firm Registration No. 127145W) under Section 141 of the Companies Act 2013. Accordinglyan Ordinary Resolution at Item No. 4 of the Notice of AGM is included in respect ofseeking the approval of the Shareholders for their appointment. The Board recommends thesaid Resolution.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.

. COST AUDITORS :

Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of Conductors Oils and Cables Divisions of the Company are required to beaudited by a Cost Accountant. Your Directors on the recommendation of the AuditCommittee appointed Mr. T. M. Rathi to audit the cost accounts of the Company for thefinancial year 2017-18 on a remuneration of

Rs. 120000/-. A Resolution seeking members' ratification for the appointment andremuneration payable to Mr. T. M. Rathi Cost Auditor is included at Item No. 6 of theNotice convening the AGM and Board recommends the said Resolution.

SECRETARIAL AUDITORS :

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Hemang M. Mehta of H. M. Mehta & Associates Company Secretary inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis annexed herewith as "Annexure - I".

The Secretarial Audit Report does not contain any qualification reservation or adverseremarks.

14. OTHER INFORMATION

a. Green Initiative

To support the "Green Initiative" undertaken by the Ministry of CorporateAffairs (MCA) to contribute towards a greener environment the Company has alreadyinitiated / implemented the same from the year 2010-11. As permitted delivery of notices/ documents and annual reports etc. are being sent to the shareholders by electronic modewherever possible.

Further the Company has started using recyclable steel drums in place of woodenpallets in its Conductors Divisions in order to protect the environment and reduce costsfor the Company.

b. Corporate Social Responsibility (CSR)

The Corporate Social Responsibility (CSR) Committee constituted by the Board ofDirectors in terms of the provisions of Section 135(1) of the Companies Act 2013 reviewsand restates the Company's CSR policy in order to make it more comprehensive and alignedwith the activities specified in Schedule VII of the Companies Act 2013. With the strongbelief in the principle of Trusteeship Apar Group continues to serve the communitythrough a focus on healthcare and upliftment of poor sections of society education Foodand mid-day meal for children Environmental sustainability and Health and Welfare ofSenior Citizens initiatives. The Annual Report on CSR activities is annexed herewith as "Annexure- II".

c. Employee Stock Options :

Members' approval was obtained at the Annual General Meeting held on August 9 2007 forintroduction of Employee Stock Option Scheme to issue and grant upto 1616802 options andit was implemented by the Company. Out of the above options 175150 Options have beengranted in 2008 of which 26338 Options were exercised upto May 2015 and balance optionswere lapsed. Please refer Annexure IX forming part of this Report.

d. Attached to and forming part of this report are the following inter alia :

i) Particulars of Information as per Section 197 of the Companies Act 2013 readwith Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 - a Statement showing the names and other particulars of the Employees drawingremuneration in excess of the limits set in the Rules – "Annexure –III" and Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 - "Annexure – IV."

ii) Particulars relating to conservation of energy technology absorption research& development and foreign exchange earnings and outgo – "Annexure –V".

iii) Report on Corporate Governance and auditors' certificate regarding compliance ofconditions of corporate governance. "Annexure – VII".

iv) Statement containing brief financial details of the subsidiaries in FormAOC-1 which is attached to the financial statements of the Company. v) disclosure ofparticulars of contracts / arrangements entered into by the Company with related partiesreferred to in sub-section (1) of Section 188 of the Companies Act 2013 in Form AOC– 2.

e. Extract of Annual Return :

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as "Annexure - VI". f. The Company has not attached the BalanceSheet Profit & Loss Accounts and other documents of its four subsidiaries. As per theprovisions of Section 129(3) read with Section 136 of the Companies Act 2013 a statementcontaining brief financial details of the subsidiaries for the year ended March 31 2017in Form AOC – 1 are included in the annual report and shall form partof this report. The annual accounts of the said subsidiaries and the related informationwill be made available to any member of the Company seeking such information at any pointof time and are also available for inspection by any member of the Company at theregistered office of the Company. Further pursuant to provisions of Section 136 of theAct the financial statements of the Company

Consolidated Financial Statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.

15. General :

No disclosure or reporting is required in respect of the following items as there wereno transactions on these items during the year under review:

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

2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOP referred to in this Report.

3. No Managing Director of the Company receives any remuneration or commission from anyof its subsidiaries.

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

5. The Company has in place the Policy on Prevention of Sexual Harassment at Workplace(POSH) in line with the requirements of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

During the year under review the Company received one complaint which was investigatedand closed.

16. Acknowledgement :

Your Directors wish to place on record their sincere appreciation for continuouscooperation support and assistance provided by stakeholders financial institutionsbanks government bodies technical collaborators customers dealers and suppliers of theCompany. Your Directors also wish to place on record their appreciation for the dedicatedservices rendered by the loyal employees of the Company.

For and on behalf of the Board
Kushal N. Desai
Place : Mumbai Chairman & Managing Director
Date : May 30 2017. DIN - 00008084

To

The Members

Apar Industries Limited 301 Panorama Complex R. C. Dutt Road Vadodara-390 007Gujarat

Our Secretarial Audit Report of even date is to be read along with this letter.

Management's Responsibility

1. It is the responsibility of the management of the Company to maintain secretarialrecords devise proper systems to ensure compliance with the provisions of all applicablelaws and regulations and to ensure that the systems are adequate and operate effectively.

Auditor's Responsibility

2. Our responsibility is to express an opinion on these secretarial records systemsstandards and procedures based on our audit.

3. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

4. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.

5. Wherever required we have obtained the management's representation about thecompliance of laws rules and regulations and happening of events etc.

Disclaimer

6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.

For H. M. Mehta & Associates
Company Secretaries
Hemang M. Mehta- Proprietor
Place: Vadodara FCS No.: 4965
Date: 19.05.2017 C. P. No.: 2554

Annexure III to the Directors' Report

Information pursuant to Section 197 of the Companies Act 2013 read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended 31st March 2017.

Names Age (Years) Designation / Nature of Duty Qualifications Experience (Years) Remuneration Rs ( ) Date of Commencement of Employment Last Employment and Designation
Mr. Kushal N. Desai 50 Chairman & Managing Director B.Sc. (Hons.) (Ele.Engg.) U.S.A. B.S.Eco. (Hons) (Wharton) U.S.A. 28 40166302 24.03.1999 GE Lighting (India) Ltd. - President
Mr. Chaitanya N. Desai 45 Managing Director B.Sc. (Hons.) (Chem.Engg.) U.S.A. B.S.Eco. (Hons) (Wharton) U.S.A. 23 40423083 29.05.1993 __

Notes :

1. The Remuneration includes salary allowances commission paid to Directorsreimbursement of leave travel and medical expenses / benefits company's contribution toprovident fund leave encashment and other perquisites in respect of motor caraccomodation and telephone etc.

2. Above directors are related to each other. None of the employees of the Company isrelated to any of the Directors.

3. All appointments are contractual and terminable by notice on either side.

4. Information regarding remuneration and particulars of other employees of the Companywill be available for inspection by the members at the Corporate Office of the Companyduring business hours on working days upto the date of the ensuing Annual General Meetingof the company. If any member is interested in obtaining a copy thereof such member maywrite to the Company Secretary where upon a copy would be sent.

Annexure IV to the Directors' Report

Details Pertaining to Remuneration as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended to date

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2016-17 ratio of the remuneration ofeach Director to the median remuneration of the employees of the Company for the financialyear 2016-17 and the comparison of remuneration of each Key Managerial Personnel (KMP)against the performance of the Company are as under:

Sr. No. (-) in Remuneration in the Financial Year 2016-17 of each Director / to median remuneration of employees
1. Dr. N. D. Desai Non-Executive Chairman (expired on October 17 2016) -33% 29:1
2. Mr. Kushal N. Desai Chairman & Managing Director 49% $ 75:1
3. Mr. Chaitanya N. Desai Managing Director 48% $ 75:1
4. Dr. N. K. Thingalaya Independent Director * -51% 0.22:1
5. Mr. F. B. Virani Independent Director * 11% 0.58:1
6. Mr. Suyash Saraogi Independent Director * 29% 0.60:1
7. Mrs. Nina Kapasi Independent Director * 20% 0.49:1
8. Mr. Rajesh Sehgal Investor Director (upto March 30 2017) ** NA NA
9. Mr. V. C. Diwadkar 13%
Chief Financial Officer
10. Mr. Sanjaya R. Kunder 13%
Company Secretary

$ Increase in remuneration is due to increase in commission amount calculated on netprofit before tax which is higher by 61.88 %.

* Independent directors are paid only sitting fees.

** No remuneration and sitting fees paid to the Investor Director. ii) The medianremuneration of employees of the Company during the financial year was Rs 5.39 lakh. iii)In the financial year there was an increase of 6 % in the median remuneration ofemployees; iv) There were 1274 permanent employees on the rolls of Company as on March31 2017; v) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2016-17 was 14% whereas the increasein the managerial remuneration for the same financial year was 48%. vi) Remuneration paidis as per the Remuneration Policy for Directors Key Managerial Personnel and otherEmployees.

Annexure V to the Directors' Report

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as per Section 134(3) (m) of the Companies Act 2013 read with Rule 8(3) ofThe Companies (Accounts) Rules 2014 and forming part of the Directors' Report for theyear ended 31st March 2017.

I. CONSERVATION OF ENERGY:

1) Energy Conservation measures taken and continuing on regular basis: ConductorDivision:

i. Conversion to AC drives for better energy savings through enhanced energy efficiencyat various stages of manufacturing.

ii. Melting and holding furnaces LPG ignition has been modified into starting withfurnace oil to save LPG.

iii. Installed Turbo Ventilator and transparent shed on the roof of shed forventilation cooling and better illumination.

iv. Installed Automatic Power factor control panel for improvement of Power factor.

v. Installed capacitor near motors to reduce cable loss in plant.

vi. Installed LED light fittings in place of HPSV/HPMV lamps.

vii. Modified/upgraded wire drawing machines for better productivity per machine perperson viii. VFD drive panels provided for Casting Inlet and Outlet Pumps.

Oil Division:

i. 24929 KWH solar power generated through 30KWp Roof top PV solar power plant andreduced the carbon emissions.

ii. Roof Top PV Solar power plant expanded additional 330KWp installed.

iii. Occupancy sensor installed in the plant and in the office.

iv. Replaced the inefficient light fitting with the efficient light fittings in theplant with same lumens output.

v. Maintained power factor above 0.995 throughout the year.

vi. Steam condensate recovery system is working efficiently.

vii. Rain water collected through water harvesting and utilize in the boiler for steamgeneration.

viii. Compressed air leakages monitored regularly and maintained the leakages below10%. ix. Installed 300CFM screw compressor with VFD in place of reciprocating compressor.

Cable Division:

i. Various machines at Power Rubber OFC and Conductor Division converted from DCto AC.

ii. Maintain power factor more than 0.99 through out the year at all locations.

iii. APFC panel installed for new transformer unit at Khatalwada.

iv. By arresting air leakage in air compressor line and modifying water pipe line ofcooling tower able to reduce energy consumption at Umbergaon.

v. Two Wire Drawing machines modified with dual wire output at U-153 plant. vi.Modification done in Copper taping machine caterpillar and head to increase the linespeed.

2) Additional Investment proposals if any being implemented for reduction ofconsumption of energy:

i. Conversion of RST-DC drive into VFD AC drive system for energy saving.

ii. Skip machines take-up DC motor & drive conversion in AC VFD drive & motorfor energy saving.

iii. Air compressor conversion from star-delta starter to AC VFD drive for energysaving.

iv. Cooling tower CT fan 7.5kw controlled through PID temperature controller for energysaving.

v. Plant office lights conversion from CFL 72 watt into 36 watt LED lights for energysaving.

vi. 1500 watt open area light to be changed for solar lights.

vii. Screw Compressor in place of Reciprocating Compressor.

viii. Street lights & plant shed lights installed LED lights in place of HPSV/HPMVlamps.

ix. Replacement of inefficient light fitting with the efficient/energy conservationlight fitting in the plant.

x. Installation of additional 35KWp Roof top solar power generation system.

xi. Installation of Occupancy sensors in the remaining areas.

xii. Installation of motor power optimizer for the under loaded motors.

xiii. Investment proposed for up gradation of extrusion lines for energy saving byconverting DC system to AC system.

xiv. Investment proposed for lighting MHL to LED at U-153 plant.

xv. Investment proposed for up gradation of wire drawing machines at U-153 plant forenergy saving by converting DC system to AC system.

xvi. Loader & Dryer System to be installed at Extruders in Umbergaon

3) Impact of measures at (1) and (2) above: i. Impact on energy saving isapproximately 10%.

ii. Saving approximately 5% in energy consumption of Aging furnace.

iii. Energy saving by replacement of street lights and plant lightswith LED lights.

iv. Saving in energy by 10 % by providing VFD panels for Casting Pumps.

v. Saving in energy by 20 % by replacing screw compressors in place of reciprocatingcompressors.

4) Total Energy Consumption and Energy Consumption per unit of production:

(A) Power and Fuel Consumption:

(i) Electricity:

2016-17 2015-16
(a) Purchased units 64657404 59127483
Total Amount (Rs/crore) 37.51 33.53
Rate/Unit (Rs) 5.80 5.67
(b) Own Generation
Through Diesel Generator (Units) 567726 759216
Average Units generated per liter of diesel oil 2.81 3.24
Average Cost of Unit (Rs) 17.00 13.63
(ii) Furnace Oil:
Quantity (Kl.) 7038 7026
Total Amount (Rs/crore) 14.97 14.92
Average Rate/Kl. (Rs) 21267 21232
(iii) Natural Gas:
Quantity (M3) 2477389 2177714
Total Amount (Rs/crore) 6.02 6.53
Average Rate/M3. (Rs) 24.29 29.99
(iv) LPG:
Quantity (Kl.) 28548 68780
Total Amount (Rs/crore) 0.10 0.28
Average Rate/Kl. (Rs) 34.82 40.30

(B) Consumption per unit of production (Average per unit consumption on totalproduction of each division is included in the table below):

2016-17 2015-16
Divisions Electricity (Units) Furnace Oil (liters) Natural Gas (M3) LPG (liters) Electricity (Units) Furnace Oil (liters) Natural Gas (M3) LPG (liters)
(i) Oil Division : 9.11 1.33 - - 9.12 1.23 - -
Per KL output of Oil
(ii) Conductors Division: 218 38 25 0.38 213 40 14 1.39
Per MT output of
Aluminum/Alloy
Conductors
(iii) Cable Division: 98 - 108 - 143 - 93 -
Per Km. of cable

Reasons for change in consumption: change in Product mix

II. TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT:

1. Research and Development (R&D):

(i) Specific areas in which R & D is carried out by the Company:

a) Development and establishment of special Aluminum Alloy wire rod for highperformance (high conductivity) conductor for power transmission and distribution.

b) Development and manufacturing of Aluminum clad steel wires.

c) Upgrade software support in design and development of all type of HTLS conductors.

d) Development of additional critical test facility for testing and evaluation of bareOHTL conductor and special materials.

e) High capacity computerized tensile testing machine for testing of new series alloy.

f) Specialty elastomeric Recycling of PTFE scrap Pressure Tight cables Hybrid Rubbercables with integrated Fiber optics Electron Beam irradiated Solar and Windmill cables.

g) Development of defense railway and ship wiring cables through electron beamtechnology.

h) Development and field trials of :

i) Semi-synthetic metal working fluids for high speed and multi machining applications.

ii) Rust preventive oils for hot rolled/cold rolled steel protection precisioncomponents.

i) Field trials of spray oils developed for applications in cotton fields at Akola andbioefficacy and phyto toxicity studies at AAU Anand (in progress) and chili trials inKheda district with farmers.

j) Development of applications for the PTFE Micronized powders produced by the Cablesdivision in ink lubricant and coating applications. Stability studies and productperformance studies are in progress.

k) Development of high flash and long life transformer oils and evaluation completed.

l) Evaluation at independent laboratories completed for biodegradable transformer oilswith high flash meeting special requirements of safety and biodegradability. Processadaptability trials are in progress.

m) Optimization of Petroleum jelly formulations for various applications such asointments and ophthalmic applications. Customer approval trials are in progress.

n) Development of White oils for various grades of polymer applications.

o) Collaborative research work with Dharmsinh Desai University Nadiad TaylorsUniversity Malaysia and University of Nottingham Malaysia in nano lubricants/PTFE andother areas of research.

(ii) Benefits derived as a result of the R&D:

a) Development establishment and commercialization of all type of 4th and 5thgeneration high performance smart aluminum conductors for all power utilities.

b) These new R&D and test facilities support conductor testing behavior and outputsare being applied in design optimization and risk mitigation towards building confidenceto achieve performance of conductor in respect to various criteria (Raw material sourcingproduct manufacturing process setting and various type test requirements).

c) Optimum designing and conductor parameters to remain competitive.

d) Rapport towards market leader in HTLS for indigenous development.

e) Rapport in Power Producers Power Utilities various institutes (IEEMA CEA BISCBIP Power Ministry CPRI ERDA NABL ) and stake holders.

f) Test facilities and NABL accreditation supporting acceptance of various type testand complete conductor test (in-house).

g) Competency enhancement of the team on design manufacture supply and installationof Bare OHTL conductors and competing global market.

h) Improvement in quality and reliability of product and services.

i) New orders awaited for specialty submarine cables.

j) Cost Reduction of various compounds.

k) Energy Saving.

l) Field trials completed and commercialized the products for rust preventive oils

m) Field trials and customer approvals/acceptance for metal working fluids for autocomponent segment established.

n) Papers presented at NLGI conference/Korea Tribology conference on PTFE applicationsin greases. New customers developed in greases ink industry for PTFE micronized waxes.

o) New grade of petroleum jelly for ophthalmic ointment has been approved by customersand regular supplies in progress.

p) GMP certification from Foods and Drug Authority -Maharashtra is obtained for pharmagrade products.

q) White oils for thermoplastic applications have been obtained and field trialscompleted and product commercialized.

(iii) Future plan of action:

a) Development of Sheave test facility for Overhead conductors and OPGW cables.

b) Additional test facilities for OPGW cables.

c) To continue to carry on the R&D activity and try to absorb it in above mentionedareas to reduce cost especially the E-beam cables.

d) To further develop finer particle PTFE powder and explore PTFE recycling business inthe paint printing ink moulding applications etc.

e) Production of Natural ester based transformer oils for commercial trials will becompleted.

f) Certification for the additive for Selective Catalytic Reduction (SCR) will beobtained once the plant is commissioned.

g) Commissioning of new testing equipment such as DGA analysis simulated distillationand Noaks volatility will be completed and RRT will be taken up.

h) Increase the strength of R&D team to focus on new projects such ashydrogenation development and commissioning of facility for additive used in selectivecatalytic reduction (SCR) emissions reductions as per the Bharat VI guidelines

i) To represent company in International committees such IEC and Cigre.

j) Obtaining GMP certification by WHO and USP for the Food grade White oil/petroleumjelly product line once the expansion project is completed.

(iv) Expenditure on R&D:

a) Capital = Rs1.16 crore

b) Revenue = Rs 6.08 crore

c) Total = Rs 7.24 crore

d) Total R&D Expenditure as a percentage of total turnover (Net of Excise) = 0.15%.

2. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:

Technology imported (in last five years) Year of Import Has technology been fully absorbed
License to use proprietary knowhow formulae trademarks and trade names 2013 Yes
relating to manufacture & sale of lubricating Oils greases and other special
Lubricants for industrial automotive and marine applications
License to manufacture high performance conductor (ACCC) 2012 Yes

III. FOREIGN EXCHANGE EARNINGS AND OUTGO:

1. Activities related to exports:

Efforts are continuing to increase exports of all products.

2. Total Foreign Exchange used and earned:

(i) Total foreign exchange used:

( Rs in crores)
2016-17 2015-16
(a) Raw Materials (CIF) 2340.84 2228.44
(b) Stores & Spares 2.28 3.33
(c) Capital Goods 20.20 12.73
(d) Others 62.80 73.20
2426.12 2317.70

(ii) Total foreign exchange earned:

( Rs in crores)
2016-17 2015-16
(a) Physical Exports (FOB) 1252.97 1541.70
(b) Deemed Exports 121.43 114.90
(eligible for export incentives)
(c) Others 42.27 56.50
1416.67 1713.10