ORISSA INDUSTRIES LIMITED
ANNUAL REPORT 2007-2008
Your Directors have pleasure in presenting the Annual Report and the
Audited Balance Sheet as at 31st March, 2008 & the Profit and Loss Account
for the year ended 31st March, 2008 and Auditors' report thereon.
(Rs. In lac)
Sales& other income 1496.02 1708.53
Interest 142.09 176.44
Profit & loss (-) before
Depreciation & taxes (2011.13) (1879.09)
Depreciation 35.09 33.72
Fringe benefit Tax 10.79 14.45
(Provision) 45.88 48.17
Net profit/ (Loss) (2057.01) (1842.78)
Deficit from Pr. year (12530.05) (10687.27)
Balance carried forward (14587.06) (12530.05)
The remarks made in the Auditors Report are self explanatory & do not
require any further classification.
The losses of Lathikata unit are mounting due to underutilisatian of
capacity which is contributing to the deterioration of the financial
position of the company. After grueling efforts on the part of management
it has been possible to chalk out a revival plan involving de-merger of
Lathikata unit and merge the same with Shashwat International Limited, a
company promoted by Mr. Ravin Jhunjhunwala. The fixed assets of Lathikata
unit have been valued by an approved valuer. The reports have been examined
by the Monitoring Agency, IDBI. The proposal of de-merger in the form of a
Draft Modified Rehabilitaion Scheme has been examined by Hon'ble BIFR and
was circulated to all the parties as well as advertised in the newspapers
as per the standard procedures adopted by it. The hearing of the Draft
Modified Rehabilitation Scheme was made on the 27th March, 2008 and has
been duly approved. The de-merger has been approved with effect from 1st
October, 2008. Towards the consideration of de-merger Shashwat
International Limited will pay Rs. 58 crores and allot 2,00,000 shares of
Rs. 10 each at a premium of Rs. 50 each to the shareholders of Orissa
Industries Limited. It may be noted that Rs. 39 crores has already been
paid by Shashwat International Limited to Orissa Industries Limited. But,
as certain formalities are remaining to be completed the necessary effect
in respect of transfer of the assets and liabilities could not be given
effect to in the accounts for the year ending on the 31st March, 2008.
Steps are being taken to take appropriate decision in the matter.
Your directors are constantly examining and monitoring the revival of the
company for which support and goodwill of bankers, workers, creditors and
Hon'ble BIFR are forthcoming without which it would have restulted in a lot
of chaotic situation. The promoters have beerf supporting the survivasl of
the unit against all odds.
Directors' Responsibility Statement:
Pursuant to sub-sec (2AA) of sec 217 of the Companies Act, 1956, basedbn
the representation received from the operating management, directors state:
* That in the preparation of annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
* That the directors have selected such accounting policies in consultation
with the statutory auditors and applied them consistently and made
judgments and estimates that are reasonable and prudent, so as to give a
true and fair view of the state of affairs of the company at the end of the
financial year and of the loss of the company for the financial year.
* That the directors have taken proper and sufficient care to the best of
their knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956and
confirm that there are adequate systems and controls for safeguarding the
assets of the company and for preventing and detecting fraud and other
* That the Annual Accounts have been prepared on a going concern basis.
Conservation of Energy, Technology and foreign exchange earning & outgo
A. Cost effective measures have been taken to conserve energy, to upgrade
state of the art technology. The detail including foreign exchange earning
& outgo is available in the schedules & notes on accounts.
B. Research & Technology
1. Due to liquidity crunch, limited R&D work is carried out by the company
to upgrade the exiting products which include the following area of
* High Alumina Bricks
* Clay body products
* Effective utilization of siliceous Talbasta
* Development of low BD insulation Bricks
* Improvement in castable strength
* Effective utilization of G.P. waste in making refractory bricks
2. Benefits derived as a result of aforesaid activities.
* Longer refractory life
* Cost reduction
* Achieving special thermal properties of high alumina bricks
* Clay body product for low temp. appliction etc.
3. Technology Imported : Nil
4. Expenditure on R&D : Detail has been provided in Schedule & notes on
Audited Accounts 2007-08.
Corporate Governance & Management discussion and analysis report:
Enclosed vide Annexure-A to Directors' report.
None of the employees falls under the purview of sec.217 (2A) of the
companies Act, 1956 read with the companies (Particulars of employees)
Shri Praveen Reehl retires by rotation and being eligible, offers himself
Auditors M/S. H. NAIK & Co, Chartered Accountants, retire at the conclusion
of this Annual General Meeting and being eligible, offer themselves for re-
The Directors take this opportunity to thank the Government, Banks,
Financial Institutions and employees of the company for their continued
support towards the revival efforts of your company.
For and on behalf of the Board of Directors
Dated: 24th July, 2008 Prof. S.C. Kuchhal
MANAGEMENT DISCUSSION AND ANALYSIS
Industry structure and developments
Fortunes of your company are- directly linked to the performance of steel
industry as it is the largest consumer of refractory products. There is
strong forecast of demand of steel in the country in days to come.
Multinational companies like Arcelor Mittal, Sterlite group and POSCO and
many industrial houses have announced plans to set-up steel plants in
India. You will be glad to know that most of these units are being located
in the State of Jharkhand and Orissa. The other consumers of refractory
products are Cement, Copper, Glass, Aluminum & Petro-chemical industries,
etc. poised for substantial growth and are pushing the demand of refractory
products in India. The export front also presents a positive outlook. All
these factors will have. a very positive impact on the growth of refractory
Your company has two manufacturing units in the State of Orissa - one in
Lathikata near Rourkela and the other in Barang near Cuttack. Besides
Rourkela Steel Plant, a number of other steel manufacturing units have come
up in last 2-3 years in the State of Orissa. As already stated elsewhere,
the States of Orissa and Jharkhand have recently attracted a number of
industrial houses of India and overseas multinational companies to set up
steel plants in these mineral rich states. The capacity of steel making is
likely to go up by over 35 million tons in these two states. Our company
hopes to take advantage of the strategic location of its units to encash
the boom in steel industry. You will be glad to note that with''the strong
brand image enjoyed by your company and quality of its products and the
plans in place, the company is hopeful of an early revival.
Strength of the company lies in the fact that its products are of
international standard and the demand has been increased substantially due
to increased steel production in India. The company has also strategically
located near the steel manufacturing units which is a big advantage. The
company also enjoys a strong brand image.
Weakness lies in working capital constraints, high manpower costs and delay
in getting approval in respect of relief and concessions duly approved by
BIFR. Further the market is now dominated by buyers.
Opportunity lies in the fact that the market is increasing day by day and
growth India story coupled with cost reduction measures already taken by
The threat is competition and lot of consolidation and reorganization that
are taking place in refractory industry. The rising input cost is also
cause of concern. However, your directors are hopeful in making revival of
Internal control system and their adequacy
There is proper internal audit system in the company. The company has
always placed a lot of emphasis on a strong internal control system
commensurate with the size and nature of its business. The internal control
system has been reviewed from time to time by the Audit Committee at Board