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Bedmutha Industries Ltd.

BSE: 533270 Sector: Metals & Mining
NSE: BEDMUTHA ISIN Code: INE844K01012
BSE LIVE 15:22 | 09 Dec 21.95 0.15
(0.69%)
OPEN

22.05

HIGH

22.50

LOW

21.55

NSE LIVE 15:31 | 09 Dec 21.55 -0.10
(-0.46%)
OPEN

22.25

HIGH

22.25

LOW

21.10

OPEN 22.05
PREVIOUS CLOSE 21.80
VOLUME 2000
52-Week high 30.25
52-Week low 9.45
P/E
Mkt Cap.(Rs cr) 53.84
Buy Price 21.55
Buy Qty 50.00
Sell Price 21.95
Sell Qty 60.00
OPEN 22.05
CLOSE 21.80
VOLUME 2000
52-Week high 30.25
52-Week low 9.45
P/E
Mkt Cap.(Rs cr) 53.84
Buy Price 21.55
Buy Qty 50.00
Sell Price 21.95
Sell Qty 60.00

Bedmutha Industries Ltd. (BEDMUTHA) - Director Report

Company director report

BEDMUTHA INDUSTRIES LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT TO THE MEMBERS Dear Shareholders, 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. Financial Results: 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) Standalone Consolidated 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 Dividend: 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. Project Implementation: 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 scheduled plan. 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. Subsidiary Company: 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 Total 9211.40 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 under Particulars of fund Utilisation as Actual Utilisation utilization per Prospectus up to the 31st March 2012 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 Credit (FLC 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 Total 4990.47 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 amended. Corporate Governance: 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 governance practices. 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. Directors: 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 and outgo: 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 basis. Fixed Deposit: 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. Auditors: 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 said Act. Cost Auditor: 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. Acknowledgment: 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 K.R. Bedmutha Chairman Date : 14/08/2012 Place: Sinnar 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. SEGMENT-WISE PERFORMANCE 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. FUTURE OUTLOOK 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% per annum. 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 movement. 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 quarter. 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 and integrity. 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 Revenue: 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 previous year. 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: 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 programmes. 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 programs. A. CONSERVATION OF ENERGY a) Energy conservation measure taken: 1. Variable frequency drive system is implemented for wire drawing M/CS to save power. 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 power saving. 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. FORM A A. Power and fuel consumption 2011-2012 2010-2011 1. Electricity A) Purchased 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 FuelOH/LDO 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 FORM B 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 footprint. 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 plans: * 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

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