BEDMUTHA INDUSTRIES LIMITED
ANNUAL REPORT 2011-2012
TO THE MEMBERS
The Board of Directors are pleased to present their 22nd Annual Report of
your Company on the business and the operation along with the standalone
and consolidated financial statement for the year ended 31st March 2012.
The year that has gone by was a tough year, full of turbulence and
volatility. It was a testing time to navigate the Company through all odds
like ups and downs in foreign exchange, high inflation forcing the Reserve
Bank of India to increase the interest rates through repeated, through
necessary policy and regulatory prescriptions. Mining issues had resulted
in huge fluctuation in raw material prices. These external circumstances
led to Industrial slow down, which was evident from the Index of industrial
production numbers for the year 2011 -2012, which resulted into curtailed
the demand for the products, steep fall in spending on the infrastructure
projects by the Governments, slackness in automobile segment. The global
scenario was no less discouraging and the gloom thereof cast its shadow on
the domestic industry. In view of all the odds the Company could not
achieve positive bottom line.
The silver lining during the period, had been the initiation of Business
Process Reengineering (BPR) activity in the company, which helped the
Company to restrict the loss for the year which otherwise could have been
more than the reported loss. The BPR imitative has made it possible for the
Company to reorganize itself in meeting the Business Objectives in a more
scientific manner. The whole team in the company is working hard with zeal
to counter the adverse market volatilities by reducing cost of production,
segmenting the product to niche market and exploring new market by
expanding its geographical reach.
The financial results of the Company for the year ended on 31st March, 2012
as compared with the previous year are as under:
(Rs. in Lacs)
Particulars 2011-2012 2010-2011 2011-2012 2010-2011
Income from Operations 20,874.62 19,002.55 23,785.38 21,477.02
Operating Profit 1,039.53 1,592.42 1,495.64 2,292.29
Add: Other Income 284.31 247.59 237.60 166.01
Profit before Interest,
Depreciation and Taxes 1,323.84 1,840.01 1,733.24 2,458.30
Less: Finance Cost 928.69 847.75 1,152.76 1,033.73
Profit before Depreciation
and Taxes 395.15 992.26 580.48 1424.57
Less: Depreciation 511.27 504.58 513.34 508.22
Profit Before Taxes (116.12) 487.68 67.14 916.35
Less: Provision for
Current Taxation - 185.00 61.40 327.00
Less: Provision for
Deferred Taxation (51.20) 37.37 (51.10) 38.68
Less: Taxes in respect
of earlier years (30.88) - (16.29) -
Profit/Loss after Taxes (34.04) 265.31 73.13 550.67
In view of the loss for the year, the Board does not recommend any dividend
for the financial year 2011 -12. Management Discussion and Analysis:
The management discussion and analysis on the operations and financial
position of the Company is provided in a separate section forming part of
the annual report.
Pursuant to the provisions of Section 61 of the Companies Act, 1956 and
other applicable rules, regulations, guidelines and other statutory
provisions which were then in force, the members of the Company, in the
21st Annual General Meeting held on 12th August 2011, have accorded their
consent to vary the terms referred to in the Prospectus of the Company
dated 05th October 2010, filed with the Registrar of Companies,
Maharashtra, Mumbai (the prospectus) including to vary and/or revise the
utilization of the proceeds of the Initial Public Offering (IPO) of the
Equity Shares allotted in pursuance of the said prospectus and to utilise
the proceeds from the IPO including, but not limited to, change in
allocation intended for implementation of identified projects and towards
any other project(s) considered beneficial to the Company including change
in location, changes in amount and / or schedule of deployment for the
projects and/or also for general corporate purposes, as the case may be.
It was stated in the said Annual General Meeting that the Company has
acquired lands at Rashegaon in Tehsil Dindori, Dist. Nashikand Nardana,
M.I.D.C., Dist. Dhuliaand your company will decide one of these locations
or any other location where such benefit is available and the Company
proposes to utilise such land for the Mega Project. Accordingly, the
directors took a decision to implement the Project at Nardana MIDC.
Greenfield Project at Nardana:
During last year we had embarked upon the expansion program and came out
with maiden IPO which was well received by investors and oversubscribed by
more than 7 times. Our company has received the Mega Project status from
Government of Maharashtra and in response to the same, we had dovetailed
the Project envisaged in IPO along with the Mega Project. As explained Due
to change in Government Policy we had to reshift our Project from Rasegaon
in District Nashik to Nardana MIDC in District Dhulia. The total Project
cost is now Rs. 311 cr. and we are pleased to inform that a consortium of
Banks have sanctioned a Term Loan of Rs. 200 crs for this Green Field
Project. Thus the Financial Closure is achieved.
The Company has already acquired 50.26 acre land in MIDC Nardana, and has
taken the possession in November 2011. The work of site development
activity was commenced in January 2012 and the same got completed in May
2012. Now the work of construction of factory premises is in full swing.
Your company is hopeful, that, barring unforeseen circumstances phase-1 of
the project, i.e. High speed Galvanizing Line for manufacture of wire
products will be operational early next year and the total project would be
completed by the third quarter of the next calendar year.
Milestones achieved till July 2012.
I. Land Acquired and Possession taken
II. Land development activity completed.
III. Boundary wall construction in progress.
IV. Important statutory approvals obtained.
V. Renowned consultants appointed.
VI. Building construction work started.
VII. Majority Plant and Machinery identified order placed.
VIII. Market development activities initiated.
To closely monitor the implementation of project and to provide onside
guidance, a Project Monitoring Committee (PMC) of all directors has been
formed and PMC is meeting every month at the site. The top management
executives are visiting the site every week to closely monitor the project.
The Directors are pleased to inform that the project is moving as per the
Your Company has adopted the best of the technologies and process in the
new expansion, which will help the Company to be cost effective and deliver
a product of world class quality and packaging. Once the expansion of the
Company fully implemented at the Naradana MIDC then your company will be
able to provide employment to more than 300 People in the region.
Further, in order to manage the activities at different locations and to
process huge information flow effectively and efficiently, we have decided
to implement ERP across all the locations and functions of the Company and
have taken steps to identify the right ERP software and have placed the
order for the same. Your Management is confident with various steps taken,
the Company is geared up to meet the challenges of the future in the best
interest of the stake holders.
In accordance with the Direction issued under Section 212(8) of the
Companies Act, 1956 by the Ministry of Corporate Affairs, Government of
India, the balance sheet as on and Profit And Loss Account of the
Subsidiary Company, M/s. Kamalasha Infrastructure and Engineering Private
Limited for the year ended on 31st March 2012 have not been attached to
this report. However, the financial information of subsidiary company is
disclosed in the attached Annual Report in compliance with the said
circular. The consolidated financial statements presented by the Company
include the financial result of its subsidiary company
The turnover of the Kamalasha Infrastructure and Engineering private
Limited, increased by 18% to Rs. 2957.98 lacs as compared to Rs. 2513.05
lacs in the previous year. The Company achieved the operating profit (PBIT)
of Rs. 470.99 as compared to 714.74 in the previous year.
Utilization of Funds from IPO
Your Company had the following objects of IPO as stated in the Prospect
Particulars Rs. in Lacs
Setting up of new plant at Sinnar, Nashik for
manufacturing of new product LRPC Wire and
Spring Steel Wire 8494.40
General Corporate Purpose 175.00
Issue Expenses 542.00
Note: The Shareholder have approved deferment of the manufacture of LRPC
wire in the future, in view of the changes in market conditions due to
recent developments in the economy and industry.
During the year under review, your company utilized the proceeds of IPO as
Particulars of fund Utilisation as Actual Utilisation
utilization per Prospectus up to the 31st
Expansion Project 8494.00 3798.92
General Corporate Purpose 175.00 -
Share Issue Expenses 542.00 394.90
Total 9211.40 4193.82
As on 31st March 2012,unutilized amount in the Company amounting to
Rs.4990.47lacs have been temporarily invested in Company's Cash credit
Account and Advance given against project and FDR against Foreign Letter of
Unutilised fund as on 31st March 2012 is as follows Rs. in Lacs
Advance against Project 1989.27
Available in Current Assets 313.92
Loans (Interest bearing) Jenil's ICDs 775.00
Available in cash credit 365.78
Expansion at Sinnar Unit 1546.5
Particulars of Employees:
There were no employees during the year drawing remuneration more than the
limits specified under the provisions of Section 217(2A) of the Companies
Act 1956, read with the Companies (Particulars of Employees) Rules 1975 as
Company is committed to maintain the highest standards of corporate
governance and adhere to the corporate governance requirement set out by
SEBI. The Board is driven by a philosophy of implementing best corporate
A report on the Corporate Governance as stipulated under clause 49 of the
listing agreement forms part of the Annual Report.
The requisite certificate from auditors ofthe Company confirming compliance
with the conditions of corporate governance as stipulated under the
aforesaid clause 49 is attached to this report.
Shri Balasubramanian A. and Shri. Kachardas Ratanchand Bedmutha retires by
rotation at the ensuing Annual General Meeting and being eligible, offer
them for re-appointment.
Conservation of Energy, Technology absorption and Foreign exchange earnings
The information required under section 217(1 )(e) of the Companies Act 195,
read with Companies (Disclosure of particulars in the Report of Board of
Directors) Rules 1988 is annexed to this report.
Directors Responsibility statement:
Pursuant to Section 217 (2AA) of the Companies Act 1956, the Board of
Directors hereby state that:
i) In the preparation of the Annual accounts for the year ended 31s1 March
2012, the applicable accounting standards have been followed.
ii) The directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2012 and of the loss of the company for the year
ended on that date.
iii) That the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of Companies Act 1956 for safeguarding the assets of the Company
and for preventing and detecting fraud and other irregularities; and
iv) That the directors had prepared the annual accounts on a going concern
The Company has not accepted any fixed deposit during the year under review
falling within the purview of Section 58A of the Companies Act 1956.
Cash Flow Statements
A cash flow statement for the year ended on 31st March, 2012 is attached
with the Annual Audited Accounts.
M/s. Patil Hiran Jajoo & Co. Chartered Accountants, the Statutory Auditors
(Firm Registration No. 120117W) of the Company, hold office until the
conclusion of ensuing Annual General Meeting and are eligible for
reappointment. The Company has received a letter from them to the effect
that their reappointment if made, would be within the prescribed limits
under section 224(1 B) of the Companies Act, 1956,, and they are not
disqualified for reappointment within the meaning of section 226 of the
During the year Board appointed M/s DBK & Associates, Cost Accountants to
conduct the cost audit of the Company. The Company has received the
approval from the Central Government for the appointment of M/s DBK &
Associates as a Cost Accountants for the financial year 2011 -2012.
Your Directors wish to thank and acknowledge the Financial Institutions,
Banks, Government Authorities, dealers, suppliers, business associates,
consultants and the Company's valued customers for their assistance and
cooperation and the esteemed shareholders for their continued trust and
support. The Directors also wish to acknowledge team of Bedmutha group, at
all levels for their spirit of commitment, dedication and support extended
in challenging times.
For and on behalf of Board of Directors Of
BEDMUTHA INDUSTRIES LIMITED
Date : 14/08/2012
ANNEXURE TO DIRECTORS REPORT:
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
INDUSTRY STRUCTURE AND DEVELOPMENT
Economic Environment and Industry overview:
After a smart recovery in 2010, growth in global economic output slowed
down considerably in 2011. As per the International Monetary Fund's report
in April 2012, a growth rate of 5.3% was recorded in 2010 against a
forecast of 4.4% at the beginning of the year, while global output is
estimated to have grown by only 3.9% in 2011, with growth in advanced
economies slowing down to 1.6% in 2011 against 3.2% in 2010 primarily due
to the sovereign debt crisis in the euro zone, contraction of Japanese
economy and sluggish recovery in the USA.
As per the RBI's First Quarter Review of Monetary Policy 2012-13 released
on 31st July 2012, the growth projections of Indian economy for the current
year (2012-13) has been revised downwards from 7.3 per cent to 6.5 per cent
in view of monsoon has been deficient and uneven so far and also due to the
fact that the industrial production for April-May 2012 suggest that
industrial activity remains weak. Significant downside risks to this
baseline forecast include the outlook for global commodity prices
especially crude oil, and slippage on the fiscal front which could stoke
inflation and unsustainable current account deficit levels.
Indian Steel wire industries:
Established in India in 1920s, the Steel Wire Industry has progressed
remarkably and has successfully developed and manufactured various types of
high carbon, alloy steel and special steel wires in addition to mild steel
wires. The industry has become versatile enough to meet the requirements of
numerous consuming sectors. This sophistication has been possible due to
continuous and well-planned R&D efforts on part of the manufacturers.
The Steel Wire Industry in India is quite competitive in its production
costs compared to other developed and developing countries. This cost
competitiveness needs to be maintained by adoption of new and clean
technologies, with lower specific energy consumption and which generate
much lesser pollutants. We need to automate processes and focus on product
quality and packaging to produce wires internationally acceptable.
Manufacturing of steel wire is the only segment of the Company. The Company
does not have any other segment along with manufacture of steel wire.
The steel wire industry is a basic infrastructure industry producing
various types of steel wires, which have high-end critical applications in
infrastructure, auto industry, power distribution, defence and other
critical industries. Growth of this industry is directly linked to the
growth of the infrastructure, automobile and power sectors. It is seen that
this wire industry has been growing about 5-6% during last two years. The
demand of wires is expected to increase in leaps and bounds in the years to
come. Out of the total steel consumed in India wire constitutes only 5%.
However, if pace of development picks up the domestic consumption of wires
will increase from 2%-3% to 7%-8% of the steel consumption.
The industry caters to both the domestic and export markets. To accelerate
growth there is an urgent need to devise policies that will increase the
export of wires. If such policies can be put in place, the wire industry
has potential to grow at a rate much higher than the current rate of 5-6%
With the growth in steel production India is projected to be a net exporter
of steel in the near future. The abundant availability of raw materials
will provide a tremendous growth opportunities for the steel wire industry
RISK, OPPORTUNITIES AND THREATS
Bedmutha Industries Limited aims to address the opportunities offered and
threats posed by its business environment strategically by maintaining
sustainable and robust business models & further improving on them.
The risks which the Company may face are discussed as follows.
i) Raw material price volatility:
During the year 2011-2012 there was increase in the raw material prices due
to mining issues and shortage of raw material availability. Management is
working with the suppliers to achieve competitive prices
ii) Health, Safety and Environment Risk:
The manufacture of steel wire involves processes that are potentially
hazardous if not executed with due care. The Business of the Company are
subject to numerous laws, regulations and contractual commitments relating
to health, safety and the environment in the country and these rules and
regulations are becoming more stringent.
Regarding the health and safety the philosophy of management is that the
Injuries can be prevented. The aim of the management is to reduce the risk
of health and safety and considering this aim, extra efforts are being
taken to ensure safety measures at the work place.
iii) Technology Risk:
A key challenge before the Company is to ensure that its plants are
equipped with updated technologies in order to serve clients better and
secure cost competitiveness. To that effect the management of the Company
have continued to be geared at improving existing process to advance the
groups cost competitive position.
iv) Foreign Exchange Risk:
Volatility in the currency markets can adversely affect the outcome of
commercial transaction and cause trading uncertainties. Company have some
foreign exchange hedging policies in place to protect its trading and
manufacturing margins against rapid and significant foreign exchange
v) Financing Risk:
The expansion of Bedmutha Industries Limited at the Nardana, District Dhule
is sufficiently depend upon the fund raised through Initial public offer
and term loan availed from the various banks. So financial planning of the
Company is affected by fluctuation in the interest due to volatility
conditions in the market which is evident from the RBI's move during the
financial year 2011 -2012 by increasing the rate of interest quarter on
vi) Regulatory and Compliance Risk:
There are number of complex laws and regulation and multiple compliance to
be complied with by the Company. Further unstable political system and
frequent changes in investment and economic policies are common and any
unforeseen change can expose the Company's business. Management of the
company is keen to avoid such kind of risk and taking various steps to save
the company from adverse effect of such risk.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has appointed M/s N. K. Muni & Co., Chartered Accountant as
Internal Auditor to have check on the adequacy of controls in the overall
operations and functioning of various departments. The quarterly reports of
the Internal Audit are placed before the Audit committee. It is a key
component which assists the management in discovering control, weaknesses,
regulatory violations, policy violations and operational inefficiencies.
This self-discovery of issues provides the management the ability to take
corrective action in order to maintain the safety, soundness, profitability
Further your Company has initiated ERP implementation. The purpose for ERP
implementation is to make system more transparent and efficient with
accountability and real time availability of information to the management.
These measures will benefit the organization in optimum utilization of its
resources and building strong and automated internal control mechanism.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The Company's Standalone income which comprises of income in form of
operating and other income increased by 9.92% to Rs. 21158.94 lacs as
compared to Rs. 19250.15 lacs of the previous year. The consolidated
income increased by 11% to Rs. 24022 .99 lacs from 21643.00 lacs in
Raw Material & Direct Cost:
Raw Material consumption had increased by 12% to Rs. 16394.44 during the
year under review was compared to 14681.18 in previous year. This was
because of increase in domestic steel mills prices due to mining issue and
shortage of raw material. Further there was extreme volatility in forex
rate which increased by 13% from April 2011 to March 2012 and the highest
increase during the year was 17%.
Manufacturing and operating cost increased by 28.37% over last year, due to
increase in power and fuel cost. The personal cost increased by 3.54% over
the last year, indirect cost:
Sales and administration expenses for the year constituted 2.19% of the net
saies against 1.72% lor the previous year 2010-11.
Finance Cost for the year increased by 10% to Rs. 928 lacs from Rs. 847
lacs. During the year, the percentage of interest cost to the sale during
the Financial year 2011-2012 was 4.45% of the net sales as against 4.46%
during the previous year, due to frequent and steep hikes in the interest
rates of banks.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED.
Bedmutha Industries Limited recognizes people as its key strength. The
company is on a growth path and the Human Resource team has been
continually focusing on the means to achieve the company's goal of meeting
such growth targets through external recruitment and right skilling and by
improving the capabilities of existing people through employee development
With the coming expansion of Bedmutha Industries Limited at Nardana, there
is a need of highly skilled and qualified workforce to support the growth.
Your Company is geared up to meet the challenge of growth by recruiting
technically qualified persons and maximizing utilization of the existing
employees by upgrading skills in them through appropriate training
programs. Leadership development will be the core part of our training
A. CONSERVATION OF ENERGY
a) Energy conservation measure taken:
1. Variable frequency drive system is implemented for wire drawing M/CS to
2. Cooling tower fan automation is implemented to save energy.
3. Air Compressor loading & unloading pressure settings are adjusted as per
air consumption requirement in plant which result in energy saving.
4. Replacement of conventional V-belts of wire drawing motors by Cogged
belts which results in power saving.
5. Installed Automatic wire length marker system, which avoids the starting
high current every time at the time of machine startup and resulting in
b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:
1) Retrofitting of energy efficient factory lighting to conserve energy.
2) Installed Automatic Power Factor control panel to save energy.
3) Comprehensive Energy Audit has been carried out by Bureau of Energy
Efficiency accredited Energy Auditor Agencies and action plan for energy
conservation has been drawn up and is being implemented in phases.
c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods :
With the implementation of the above measures, energy cost is expected to
be reduced and consequently there will be impact on the cost of production.
A. Power and fuel consumption 2011-2012 2010-2011
Unit (Thousand KWH) 84,52,965.00 82,24,349.00
Total amount (Rs. in Lacs) 550.79 474.86
Rate/unit 6.52 5.77
B) Own Generation Not available
i) Through diesel generator -
Unit (Thousand KWH) 65,936.00 -
Units per Liter of diesel oil (KWH) 3.20 -
Cost/unit 13.13 -
ii) Through steam turbine/generator NIL Nil
Units - -
Units per Liter of fuel oil/gas - -
Cost/Unit - -
2. Coal NIL Nil
Quantity - -
Total cost - -
Average rate - -
3. Furnace oil
Quantity (MT) 1,607.52 1,787.00
Total amount (Rs. in Lacs) 582.62 465.30
Average Rate 36,243.67 26,043.41
4. Others/Internal generation
Quantity (Ltr.) 2,04,607.00 2,38,935.00
Total Cost (Rs. in Lacs) 107.08 101.63
Rate/unit 52.34 42.53
B. Consumption per Unit of Production
I. Wire Drawing (Unit: MT) 38,869.13 41,004.57
i. Electricity 433.29 332.25
ii. Furnace Oil N A N A
iii. Others 275.49 247.85
II. Galvanising (Unit: MT) 26,468.52 27,410.27
i. Electricity 111.98 69.62
ii. Furnace Oil 2,201.20 1,697.56
iii. Others N A N A
B) TECHNOLOGY ABSORPTION
Research and Development (R &D)
1. Specific areas in which R&D carried out by the company.
i. Energy & Environment
2. Benefit derived as a result of the above R&D.
i. Replacement of old motor & its DOL starter by latest PLC based Variable
Frequency Drive panel in stripmill, WWD and MWD sections resulting in
conservation of power
ii. Replaced conventional V-belts of wire drawing motors by Cogged belts
resulting in conservation of power
iii. Installed Automatic wire length marker system in High Speed wire
drawing machine which mark ink on wire when the length is achieved without
stopping high speed machine resulting into conservation of power
iv. Water fuel emulsion technology has been adopted which ensures efficient
fuel consumption resulting in a saving of 8-10% of fuel and lower carbon
3. Future Plan of action.
We will develop system for sustainable Power Generation and will continue
replacing old machinery with energy saving device wherever possible.
4. Expenditure on Research & Development: Nil
Technology Absorption, Adoption and Innovation, Efforts made, Benefit
derived , Import of Technology : Nil
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to exports, initiatives taken to increase exports,
development of new export markets for products and services, and export
* The Company is laying out strategies for exports.
2. Total foreign exchange used and earned:
- Foreign Exchange Earnings: Rs. Nil
- Foreign Exchange Used(Value of Imports on C.I.F. basis)
1. Raw Material: Rs.1806.44 lacs,
2. Plant & Machinery: Rs.830.88 lacs
Total: Rs.2637.32 lacs
Exchange incurred in Foreign Currency on Tour STravelling: Rs.7.64 lacs