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Tamil Nadu Industrial Explosives Ltd.

BSE: 524028 Sector: Industrials
NSE: N.A. ISIN Code: INE398G01017
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Tamil Nadu Industrial Explosives Ltd. (TNINDLEXPLO) - Director Report

Company director report

TAMIL NADU INDUSTRIAL EXPLOSIVES LIMITED ANNUAL REPORT 2010-2011 DIRECTOR'S REPORT To The Members Your Directors have pleasure in presenting the 28th Annual Report together with the audited accounts of the Company for the year ended on 31st March 2011. PERFORMANCE REVIEW: A summary of your Company's performance during 2010-2011 is given below: Current year Previous year ended 31st ended 31st March 2011 March 2010 (a) PRODUCTION i. Explosives (MT) 4898.81 5018 ii. Detonators (M.Nos) 33.28 53.49 iii. Detonating Fuse 10.02 9.47 (M.Mtrs) (b) SALES i. Explosives (MT) 4828.51 5042 ii. Detonators (M.Nos.) 34.67 53.07 iii. Detonating Fuse 9.32 10.40 (M.Mtrs.) (Rs. in Lakhs) (c) Sales Revenue 3467.77 3976.26 (including Sales of by products) (d) Mis. Income 106.89 76.51 (e) Total expenses 4532.13 4517.04 (f) Net Profit (+)/Net loss(-) -957.47 -464.27 OPERATIONS: As informed in the last year report, due to the ban on NG explosives with effect from 01.04.2004, your company's turnover has gone down drastically as NG explosives were the main product of your company and more than 70% of sales income was derived from these products. To overcome this situation, your company has started manufacture of a range of Emulsion Explosives and established these new products in the market for the last few years. The Emulsion explosive products are being manufactured and sold through Small Private Explosives Manufaturers. The shelf life of the Emulsion Explosives Products is very low compared to the NG Explosive Products. Due to the plethora of Private Operators in the market, there is stiff competition. Further your company's performance was also affected due to strikes by both the workers and staff during Sep' and Oct' 10 demanding the implementation of new wage settlement and VI Pay Commission Scale of Pay which has resulted jn loss of production for about 45 days. There is an all-round increase in material cost without corresponding increase in the price of end products which also affected the performance. Further due to the implementation of 6th Pay Commission orders to the staff/officers w.e.f. 01.09.2010 and enhancement in the ceiling on gratuity from Rs. 3.50 lakhs to Rs. 10 lakhs, there is an abnormal increase in the establishment expenditure contributing substantially to the loss. EXPORT THROUGH TUTICORIN PORT: At present the company exports all its explosives to various foreign countries through Mumbai Port. This involves huge transportation cost as well as logistics problems in arranging suitable explosives vans. Due to such high cost, the company is not able to quote competitive rates to our importers, which often leads to losing the export business. In order to reduce this high transportation cost and other logistics problems the company has approached Tuticorin Port authorities, which is the only alternative port available in India for the export of Explosives. Once we get permission from the authorities of Tuticorin Port, the company will be able to increase its export to East Asian countries, as the freight charges for ships to these countries will be much cheaper compared to the exports through Mumbai Port. This will enable TEL to obtain more export orders from East Asian countries like Singapore, Philippines and Australia. DIVIDEND: In view of the loss incurred , your directors do not recommend any dividend for the year. EXPORT: Your Company during the year has exported explosives and accessories to the tune of Rs. 169.13 Lakhs (FOB value) as against Rs. 151 lakhs (FOB value) in the previous year. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. The particulars relating to conservation of Energy is enclosed as Annexure- A. The Foreign Exchange Inflow during the year under review was Rs. 169.13 lakhs (FOB Value). The Foreign exchange outflow (on CIF basis) was Rs. 4.51 lakhs towards import of raw materials and spares. As already informed in the earlier reports, the imported technology was fully absorbed by the Company. PARTICULARS OF EMPLOYEES: During the year none of the employees of the company drew remuneration in excess of the limit prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956. DIRECTORS: During the year under review and till the date of this report, Thiru G.Prakash, IAS, Joint Secretary to Government, Industries Dept., Dr.N. SundaradevanJAS, Principal Secretary to Government, Industries Dept. Thiru V. Sampath, IAS, Thiru M.S. Shanmugam, IAS, Joint Secretary to Government, Industries Dept., and Thiru M. Padmanabhan, Addl.Secretary to Government, Finance Dept., have been inducted on the Board of the Company. Thiru M.R. Mohan, IAS, Thiru Rajeev Ranjan, IAS. Selvi Apoorva, IAS, Thiru G.Prakash, IAS., Thiru K. Nanthakumar, IAS, and Thiru V.Sampath, IAS were Telieved from the Board of TEL. Your Directors wish to place on record their appreciation of the valuable services rendered by them. Prof. Bharat B Dhar will retire by rotation at the ensuing Annual General Meeting and he is eligible for reappointment. ' DIRECTORS RESPONSIBILITY STATEMENT: In compliance with the Provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors confirm: (i) That in preparing the Annual Accounts, all the applicable accounting standards have been followed; (ii) That the accounting policies are adopted and consistently followed and the judgements and estimates made 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; (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities. (iv) That the Directors have prepared the Annual Accounts on a going concern basis. CORPORATE GOVERNANCE: Your Company has taken adequate steps to comply with all mandatory provisions of 'Corporate governance' as provided in the Listing Agreements of the Stock Exchange. A separate Report on Corporate Governance along with a Compliance Certificate from the Auditors of the Company in this behalf is annexed with this report as Annexure-B. A report on Management Discussion & analysis is annexed as Annexure-C as a part of Director's Report. AUDITORS: In terms of Section 619(2) of the Companies Act, 1956, the Comptroller and Auditor General of India have appointed M/s. V. Ramaswamy Iyer & Co., Chartered Accountants, Vellore as Auditors of your Company for the year 2010-2011. With reference to the observations of the Statutory Auditors under Paragraph 4 of their report, the note No 9 and 17 of Schedule 21 forming part of the Annual Accounts of the company is self-explanatory and therefore do not call for any further comments. ACKNOWLEDGEMENTS: Your Directors take this opportunity to thank and acknowledge the co- operation and assistance received from various agencies of the Central Government, State Government of Tamil Nadu, Financial Institutions, Banks, Insurance Companies, valued customers and other agencies during the year under review. The Board of Directors also wish to place on record their appreciation of the continued support of the Shareholders of the company. For and on behalf of the Board of Directors Dr. N. SUNDARADEVAN, I.A.S., Chairman Place: Chennai - 02 Date : 20.03.2012 ANNEXURE TO DIRECTORS'REPORT ANNEXURE - A A. POWER AND FUEL CONSUMPTION: 1. ELECTRICITY Current Year- Previous Year- (2010-11) (2009-10) a. Purchased: Units 2006324 2082068 Total amount (Rs. in lakhs) 106.19 98.18 Rate/Units Rs. 5.29 per unit 4.72 per unit b. Own generation: I Through Diesel Generator: Units 179279 281001 Units per Ltr. of diesel oil 2.79 Unit/Ltr 2.93 Unit/Ltr Cost/Unit Rs. 13.35 per unit 11.70 per unit II. Through Steam turbine/generator -Units Nil Nil Units per ltr. of diesel oil/gas N.A N.A Cost/Unit N.A N.A 2. COAL: Quantity(Tonnes) Nil Nil Total Cost N.A N.A Average rate N.A N.A 3. FURNACE OIL: Quantity (Kilo litres) 558.79 592.12 Total amount (Rs. in lakhs) 159.23 142.63 Average rate (Rs.) 28495.26/K.L. 24088.79/K.L. 4. OTHER-INTERNAL GENERATION Quantity Nil Nil Total Cost N.A N.A Rate/Unit N.A N.A B. CONSUMPTION PER UNIT OF PRODUCTION Current Year (2010-11) Expl. Pet. D.F Unit (MT) 1000 Nos 1000 Mtrs Electricity 217.64 26.77 23.35 Furnace Oil 78.26 3.11 6.69 coal (Specify Qty) Nil Nil Nil Others (Specify) Nil Nil Nil Previous Year (2009-10) Expl. Pet. D.F Unit (MT) 1000 Nos 1000 Mtrs Electricity 187.74 23.09 20.14 Furnace Oil 85.49 1.87 6.93 coal (Specify Qty) Nil Nil Nil Others (Specify) Nil Nil Nil MANAGEMENT DISCUSSION AND ANALYSIS ANNEXURE-C INDUSTRY STRUCTURE AND DEVELOPMENTS: Tamilnadu Industrial Explosives Ltd (TEL) is engaged in the manufacture and marketing of commercial Explosives, Detonators and Detonating Fuses which are used for mining, well digging, tunnelling, stone blasting, earth moving etc to exploit the natural resources. OPPORTUNITIES AND THREATS: The phenomenal growth in the infrastructure sector in recent years has increased the scope for production of more explosives. However, ttie frequent strikes resorted to by workers and staff under one pretex or other and general fall in the economy and incessant rainfall may affect to some extent the sale of explosives. SEGMENT PERFORMANCE: The Segmentwise performance of the Company is as under: Indication Explosives Detonators Detonating (MT) (M Nos) Fuses (Mill.Mtrs) Production (Qty) 4898.81 33.28 10.02 Sales (Qty), 4828.51 34.67 9.32 Sales value (Rs. In Lakhs) 1740.30 1307.08 385.06 OUTLOOK, RISKS AND CONCERNS; TEL has taken all out efforts to improve its performance by increasing its export volumes and also through various cost reduction measures. INTERNAL CONTROL AND THEIR ADEQUACY As the Company is an ISO Certified Company, it has an adequate internal control system monitored by Internal Audit, Safety and Security Departments. Periodical Audits are conducted to review the adequacy and effectiveness of internal controls. FINANCIAL PERFORMANCE The financial performance of your Company continues to be critical. The Company has achieved the turnover of Rs. 34.67 Crores during the 2010- 11 when compared to Rs. 39.76 Crores of the previous year. HUMAN RESOURCES The Company has, under its employment, 554 numbers of personnel on the close of 31.03.2011. Industrial relations have generally remained peaceful, cordial and positive throughout the year. CAUTIONARY STATEMENT Estimates and expectations stated in this Management Discussion and Analysis may be 'forward-looking' statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Company's operations include economic conditions affecting demand/supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws, statutes and other incidental factors.