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Apar Industries Ltd.

BSE: 532259 Sector: Engineering
NSE: APARINDS ISIN Code: INE372A01015
BSE 00:00 | 14 Nov 494.15 -14.85
(-2.92%)
OPEN

504.00

HIGH

505.45

LOW

488.60

NSE 00:00 | 14 Nov 493.25 -17.10
(-3.35%)
OPEN

502.90

HIGH

508.75

LOW

489.95

OPEN 504.00
PREVIOUS CLOSE 509.00
VOLUME 436
52-Week high 702.00
52-Week low 459.30
P/E 11.01
Mkt Cap.(Rs cr) 1,891
Buy Price 487.10
Buy Qty 1.00
Sell Price 494.15
Sell Qty 100.00
OPEN 504.00
CLOSE 509.00
VOLUME 436
52-Week high 702.00
52-Week low 459.30
P/E 11.01
Mkt Cap.(Rs cr) 1,891
Buy Price 487.10
Buy Qty 1.00
Sell Price 494.15
Sell Qty 100.00

Apar Industries Ltd. (APARINDS) - Director Report

Company director report

APAR INDUSTRIES LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT To, The Shareholders, Your Directors have pleasure in submitting the 23rd Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended 31st March, 2012. 1. Financial results Standalone results for the year 2011-12 include effect of amalgamation of erstwhile Uniflex Cables Ltd, Subsidiary Company (UCL) with the Company from 1st April, 2010 being Transfer Date. However, the same for the year 2010-11 are without such inclusion and therefore not comparable. For more details refer para 2(a) of this report. Consolidated results include the results of (a) Petroleum Specialities Pte. Ltd, Singapore (PSPL) and Marine Cables & Wires Private Limited (MCWPL), wholly-owned subsidiaries (WOS) of the Company (b) Apar ChemateK Lubricants Ltd., a Joint Venture Company and (c) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL. (Rs. in millions) Particulars Company Consolidated 2011-12 2010-11 2011-12 2010-11 Sales turnover (after deduction of excise duty) 34,545.38 27,233.41 35,966.28 30,330.33 Other income 7.09 1.27 7.09 1.35 PROFIT FOR THE YEAR BEFORE FINANCE COST, DEPRECIATION/ 1,969.30 1,988.65 2,160.08 2,188.88 AMORTISATION, TAXATION AND EXCEPTIONAL ITEMS Deducting therefrom: - Depreciation/ amortisation 212.79 137.09 217.71 205.16 Finance Costs 1,141.24 254.94 1,155.28 445.28 Profit before adjustment of exceptional items, Taxation and minority interest 615.27 1,596.62 787.08 1,538.44 Exceptional items 19.57 1.97 19.57 0.00 PROFIT BEFORE TAXATION FOR THE YEAR 595.70 1,594.65 767.52 1,538.44 Deducting there from: - Provision for taxation 2.56 536.12 26.53 578.03 Net profit for the year after taxation and before minority interest 593.14 1,058.53 740.99 960.41 Adjustment of: - Minority Interest (profit)/loss - - (10.61) (7.15) NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS 593.14 1,058.53 730.38 953.26 Add: Profit brought forward from previous year 1,735.41 1,027.96 1,550.82 948.64 (Less): Loss of Amalgamating Subsidiary (1,019.48) - (411.94) - Amount available for appropriations 1,309.07 2,086.49 1,869.26 1,901.90 Appropriation made by the Board of Directors: - General reserve (89.00) (110.00) (89.00) (110.00) Dividends on Equity shares: - Interim dividend at Nil {(Previous year Rs.2.50 (25%)} per share 0.00 (80.84) 0.00 (80.84) - Income tax on interim dividends 0.00 (13.43) 0.00 (13.43) - Proposed final dividend at (153.88) (125.90) (153.88) (125.90) Rs.4.00 (40%) {(Previous year Rs.3.50 (35%))} per share - Income tax on dividends (24.96) (20.91) (24.96) (20.91) - Leaving balance of profit carried to balance sheet 1,041.23 1,735.41 1,601.42 1,550.82 Earnings per equity share (EPS) - Basic & Diluted 15.55 32.74 19.15 29.48 2. a) Rehabilitation scheme of Uniflex Cables Limited, Subsidiary Company (UCL) through amalgamation with the Company: The Hon'ble Board for Industrial and Financial Reconstruction (BIFR) by its Order dated September 13, 2012 have sanctioned the Rehabilitation Scheme of Uniflex Cables Limited (UCL) envisaging amalgamation of UCL with the Company from Transfer date 01st April, 2010 and the Scheme became effective from September 18, 2012 upon filing necessary forms with the Ministry of Corporate Affairs (MCA). The Annual Accounts of the Company for the Financial Year 2011-12 are the amalgamated accounts. b) Issue of shares to the shareholders of UCL: In terms of the above Scheme , the Company shall allot 2,498,037 Equity Shares of Rs.10/- each, aggregating to Rs.24,980,370/- to the shareholders of UCL as per share exchange ratio of 1:10. Thus, Issued, Subscribed and Paid-up Equity Share Capital of the Company shall be increased to Rs.384,704,310/- divided into 38,470,431 Equity Shares of Rs.10/- each fully paid-up. 3. Dividend: Considering the financial results achieved during the year under review as compared to the previous year, the Board of Directors has recommended the dividend for financial year 2011-12 on the expanded capital of 38,470,431 Equity Shares of the face value of Rs.10/- each fully paid @ Rs.4.00 (40%) per share. This dividend amounting to Rs.153.88 million is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same. 4. Management discussion and analysis/Outlook (a) Industry structure, development, opportunities, threats, outlook and risk and concerns The Indian power sector is undergoing a significant change. Sustained infrastructure growth continues to drive power demand in the country. During the Eleventh Plan (2007-12) , an estimated 52,000 MW capacity has been achieved as against a target of 78,577 MW capacity addition (later scaled to 62,000 MW). Currently, the Indian power generation capacity stands at around 200,000 MW. The Power Ministry has set a target to add 76,000 MW in the Twelfth Plan (2012-17) and 93,000 MW in the Thirteenth Plan (2017-2022). There is a substantial supply-demand gap in all the three segments of the Power Sector. The demand for power continues to grow although the economy grows at a slower pace. This latent demand will sustain the long term investments in Power Infrastructure. However, it is only with the resolution of the coal issues that the sustained growth in infrastructure will happen. The Government's ability to resolve the present crisis on the long term Coal policy will have a huge impact on the future investments in the Power Sector. Our company is well positioned once the market revives since it is very well placed by virtue of its leadership position each of the segments it is present in. The Conductor & Cable divisions have their capacities, approvals & relationships with clients in place. The Company's Transformer Oil business is linked to the Power Transmission & Distribution Sectors; it will stand to gain when the short term issues are appropriately addressed by the Government. The Company continues to invest and grow the Automotive Oils & Industrial Oils businesses. After the close of accounting year, the Company has recently acquired 47.5% stake from Chematek SpA in the distribution JV company viz Apar ChemateK Lubricants Ltd. for Automotive Oils and the said Company has become Subsidiary of the Company. The Company's Transformer Oil, Conductors and Cables divisions are amongst the leaders in their respective fields and are expected to benefit significantly in the longer term from the investments that are being planned in the power sector. The year under review was a challenging year. The extreme volatility/ depreciation of the Indian Rupee, significant slowdown in the economy, acute tightness of the financial markets & increases of interest costs and inflationary pressures were amongst the main reasons for reduced Profit of the year. In spite of the challenges from the external circumstances, the company increased its revenue from Rs.27,233.41 million to Rs.34,545.38 millions (net of excise duty) on standalone basis. The Company's export was Rs.8,844.57 millions during the year which were 40.07% more than the exports of the previous year and were to over 81 countries. The Company has been focusing on increasing its value addition through introduction of new products. The products and businesses introduced in the past 5 years of the company constituted approx. 16% of the revenue of the Company. Margins from the manufacturing activities during the year under review were Rs.1,969.30 million as against Rs.1,988.65 million in the previous year. The segment-wise operations were as under: (i) Transformer and specialty oil segment This division contributed 52.6% of the Company's revenue. Details of Sales revenue and segment profit (standalone basis) are: Rs./million 2011-12 2010-11 Variation (%) Turnover 18,179.15 13,931.99 30.48 Segment profit 1,401.11 1,583.92 (11.51) Export 5,102.86 3,232.04 57.88 The year started off well, but was adversely impacted thereafter by market conditions besides unexpected and very steep depreciation/volatility of the Indian Rupee. The consequent increase in raw material costs could not be passed on fully to the customers, resulting in squeezed margins. This affected all the industry players. Exports for the Company continued to remain strong. The Company expects a similar trend to continue in FY13. The company has further broadened its overseas client base in both Transformer oils and White-oil sub-segments. The new products and business introduced in the past five years under this segment constitute approx. 27% of the revenue of the segment. There was a lag effect in terms of finished product prices in an environment where demand was slowing down on account of the various reasons mentioned above. In the backdrop of sluggish demand especially in the transformer oil segment, it was possible to increase the prices of finished products only marginally. The combination of these effects resulted in profit erosion for oil products. This was partly anticipated by the Company, but the severity of the impacts realised from these twin effects, was much higher. The Company has been concentrating on higher value-added products and applications rather than focus just on volume growth. As a result, growth in terms of volume has been modest at approximately 1.46%. Several new products have been introduced in the Passenger car, Diesel Engine oil and motorcycle market segments under the Agip brand, which are very high performance Synthetic oils. This has positioned Agip branded lubricants at the top end of the market in terms of performance levels. The Company expects its auto lube sales to grow at a faster pace than the other subsegments in FY13. The Net sales turnover of the 'Agip' brand Automotive Lubricants produced by the Company with License and Technical Know-how of ENI-S.p.A of Italy increased to Rs.1,632.47 millions as against Rs.1,212.08 millions in the previous year. Prospects going forward look stronger in the Power Transformer sector than in the distribution transformer sector. There are several transmission lines and sub-stations that are in the pipeline for building in the next 18 months, driving the demand for Transformer oils primarily in the 400 KV and 765 KV class, where the company has a relatively strong position. On the other hand, the distribution transformer market which has a strong dependence on the Electricity Boards is starved for funds, resulting in difficult circumstances both for transformer OEMs and ourselves. Overall, though, the Company is cautiously optimistic that shipments in FY13 will be higher than in FY12. The Company expects to sustain its leadership position in the market for Transformer Oils, and increase its penetration in the other segments. While the profitability in 2012-13 is expected to be affected due to the expected continuation of sluggish markets in the short time until structural reforms are undertaken, which would spur the growth in the Industry thereafter. In spite of steep depreciation in Rupee and consequent increase in raw material cost, this division has achieved Profit of Rs.1,401.11 millions as against Rs.1,583.92 millions in the previous year. Risk and concerns The company is exposed to the volatility in the prices of its raw materials & in foreign exchange rate. However, in order to mitigate its risks, the Company continues to exercise prudence in its inventory control & hedging strategies. The coal related issues are affecting the fresh investments in the Power sector. Hence, the Company is investing & growing its Automotive Oils & Industrial Oils businesses. (ii) Conductor division Rs./million 2011-12 2010-11 Variation (%) Turnover 13,627.27 13,258.66 2.78 Segment profit 583.93 515.11 13.36 Export 2,794.11 2,219.76 25.87 During the first Half of the year, operating results were subdued due to execution of low margin Orders. These Orders were booked last year when our main customer PGCIL was absent from the market. The reduction in the overall demand created a difficult market condition, and the industry was witnessing reduction in margins. The performance was also further affected on account of delays in off-take by customers since their projects' execution was undergoing delays. As a result, there was some idle capacity resulting in under recovery of overheads. During the year under review, on account of termination of sales contract for an overseas project on a mutually agreed basis, the company has provided Rs.57.29 million as loss on account of settlement of position taken on London Metal Exchange (LME) to book the loss pertaining to forward LME positions. The Company continues to hedge its exposure on the commodity risk, with increased due diligence on counter-party risk assessment. The Company has continued efforts to increase its sale of High Temperature Conductors, which gives better value addition. Also, the company continued its efforts in promoting its products in Export market, which increased by 25% over the previous year. The order book as of 1st April, 2012 stood at Rs.21,292 million and the orders in pipeline stood at Rs.720 million. Of this, Rs.7,218 million were received in Q4FY12. Based on interactions with Power Grid and other key buyers, there is expectation that the overall spend of our customers in FY13 should be about 10% higher than in FY12. Given the higher order position that the company is carrying, the Company expects better working in FY13 with a growth in sales volume of about 20% over FY12. Risks and concerns There is continued volatility in the raw material prices and in other input costs. The Company hedges the main raw materials on the London Metal Exchange & the foreign exchange exposure, in order to mitigate the risks of its operation. The Coal related issues are putting generation projects in trouble; consequently even the transmission line projects are going to get delayed. The main client Powergrid tends to finalise its business in a lumpy manner creating cyclical effects in the Industry. However, the Company has been developing clients in the private sector & in the export markets. (iii) Cables division (Operations from erstwhile Uniflex Cables Ltd.(UCL)) Rs./million 2011-12 2010-11* Turnover Rs./million 3,543.13 3,112.73 Segment profit 28.44 (128.03) Export 947.60 862.71 *as per published audited accounts of 2010-11 of erstwhile UCL Market prices continue to remain un-remunerative in the domestic market especially in HT Cables. Enquiry level was low. There was margin & cash flow pressure in the Cable Industry during the year under review. Margins were slightly better in Export market hence the Company focused more on the export front. Overall performance of the division has improved on account of Consultancy approvals for product and enhanced enquiry level. Company has also developed few new speciality Cables during the year where margins are better and got good response from the customers. Due to BIFR status of the erstwhile UCL, the business was affected by adverse propaganda by its' competitors about the sickness of UCL as its alleged weakness to deliver and to procure orders for themselves. Cabel business has converted/modified its' major equipments relating to telecom cables (which have no demand on account of mobile/wireless technology) to power cables which has better demand. Several steps have been taken for improvement of productivity, cost cutting,de-bottlenecking of manufacturing facilities, expansion of production lines and markets etc. Few old machines have been replaced by new machines which has resulted into better yield / output per machine and lower rejection. The reforms in the distribution segment have not happened in reality. Excess capacity was set up in the expectation of very strong growth in the Power distribution sector which is currently the most under invested, and has the maximum structural problems. Consequentially, margins are under pressure for the Power Cables. However, we are concentrating on specialty cables including investing in installing e-beam systems. The outlook for Telecom Cables , specially OFC seems to be good in the medium term with significant optical fiber capacity to be added in the country. Risks and concerns The excess capacity in the Industry & the lack of reforms in the distribution segment has caused the LT & HT Cables demand to be sluggish & the price levels to be depressed. The Company is concentrating on diversifying its product mix into Specialty Cables including electron-beam insulated cables for special & high performance applications. (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 was US$ 60.72 million as against US$ 60.20 million in the previous year and Profit after tax stood at US$ 2.29 million as against US$ 2.65 million in the previous year. Quantum Apar Speciality Oils Pty. Ltd, Australia where PSPL holds 65% equity has reported Net sales of AUD 9.29 million as against AUD 6.69 million and Profit after tax of AUD 0.28 million as against AUD 0.21 million. (ii) Marine Cables & Wires Private Limited (MCWPL), a Wholly Owned Subsidiary (WOS): Pursuant to amalgamation of UCL with the Company, MCWPL which was a WOS of erstwhile UCL has become WOS of the Company. During the year under review, MCWPL incurred loss of Rs.10.37 million as against loss of Rs.11.27 million in the previous year. As directed by BIFR, MCWPL has submitted Draft Rehabilitation Scheme (DRS), which include amalgamation of the MCWPL with the company with cut off date as 31st March, 2010 to BIFR. BIFR has appointed Syndicate Bank as Operating Agency (OA) to examine the DRS and submit its' report to BIFR. The OA has submitted it's report in this regard and Final approval from BIFR is awaited. (iii) Apar Chematek Lubricants Limited (ACLL), Subsidiary : ACLL, a 50:50 Joint Venture Company between the Company and ChemateK S.p.A. Italy is primarily engaged into marketing of Industrial Lubricants Oils and other Petroleum products manufactured by the Company under the reputed AGIP brand licensed by ENI, S.p.A., Italy. In September, 2012 Company purchased 47.5% Equity shares from Chematek S.p.A.. After the above purchase, shareholding of the company in ACLL has increased to 97.5% and ACLL has become subsidiary of the company. During the year under review, ACLL has reported Income of Rs.219.88 million as against Rs.228.49 million in the previous year and incurred Net Loss of Rs.15.71 million as against Net Profit after tax of Rs.44.62 million in the previous year mainly due to increase in cost of operations that could not be passed on to end customers. (c) Cautionary statement The statements made in the management discussion & analysis section, describing the Company's goals, expectations, or predictions etc. do contain some forward looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country etc. (d) Internal control system (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 saving in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution which was implemented by the Company at all business units (including cable unit) has been operating successfully. For tightening and more effective internal control systems and risk management, the Company continued the engagement of M/s. KPMG India Pvt. Ltd., Chartered Accountants as internal auditors of the Company. The system cum internal audit reports of the internal auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular interval. (e) Development of human resources The Company promotes open and transparent working environment to enhance teamwork and build business focus. The Company equally gives importance to the development of human resource (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company practices performance/production linked incentive schemes and introduced Employees Stock Option Scheme referred to in para 9 (c)(i) and as detailed in an attachment to this report. The main object of the Scheme is to create and maintain optimum performance level and profit driven culture and improve productivity. The Company also takes adequate steps for in-house training of employees and maintaining safety and healthy environment for workers working within the factory premises. 5. Expansion: a) E-beam Project: Pursuant to shareholders' approval, Company commenced the process for expanding its manufacturing activities in Electron Beam (E-beam) irradiation services for creating a service center for cables and other various products. The Company has acquired the land at Khatalwada, Taluka Umbergaon, District Valsad, Gujarat and the construction of factory building, Civil works and installation of plant and machinery are being undertaken. Necessary approvals/permissions from various Statutory Authorities for the purpose are being obtained. Barring unforeseen circumstances, the Trial Production is likely to commence by the 3rd quarter of FY 13. b) The various projects undertaken in conductor and oil segment were partially completed in the year, and are expected to be fully completed in the next financial year. This would result in additional capacities and capabilities for its various product groups. 6. Directors (a) Mr. Sanjiv Maheshwari was appointed as an Additional Director on the Board of the Company with effect from 24th August, 2011. In terms of the provisions of Section 260 of the Companies Act, 1956, he will hold office as Director of the Company upto the date of ensuing Annual General Meeting. The Company has received notice under Section 257 of the Companies Act, 1956 proposing his candidature as Director of the Company liable to retire by rotation. The Board therefore, recommends his appointment. (b) Mr. H. N. Shah and Mr. Chaitanya N. Desai, Directors shall retire by rotation at the ensuing annual general meeting of the Company and they, being eligible, offer themselves for reappointment. The Board recommends the re-appointment of these Directors. 7. Directors' responsibility statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with regard to directors' responsibility statement, it is hereby confirmed that:- i. In the preparation of the annual accounts for the financial year ended March 31, 2012, the applicable accounting standards were followed along with proper explanation relating to material departures, if any. ii. Appropriate accounting policies were selected and applied consistently and judgments and estimates were made that were 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 profit of the Company for the financial year under review. iii. Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv. The annual accounts were prepared on a going concern basis. 8. Audit M/s. Sharp & Tannan, Chartered Accountants, Mumbai, Statutory Auditors of the Company shall be retiring at the ensuing Annual General Meeting, and they being eligible, offer themselves for reappointment. The Audit Committee of Directors at its meeting held on September 27, 2012 recommended reappointment of M/s. Sharp & Tannan as Statutory Auditors of the Company for the financial year 2012-13. 9. Other information a. Green Initiative To support the 'Green Initiative' taken by the Ministry of Corporate Affairs (MCA), to contribute towards greener environment, the Company has already initiated / implemented the same from the year 2010-11. As permitted by Circular Nos. 17/2011 dated April 21, 2011 and 18/2011 dated April 29, 2011 issued by the MCA, delivery of notices / documents and annual reports etc. are being sent to shareholders by electronic mode whereever possible. Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to save the green environment and cost to the Company. b. Corporate Social Responsibility (CSR) With the strong belief in the principle of Trusteeship, Apar Group has served the community through focus on education, healthcare and mid-day meal initiatives. It has contributed to the Charitable Trust that carry the activities like running Senior Citizens' Centre catering to Health and Welfare of Senior Citizens living in Old People Homes, Education & upliftment of poor children and supporting higher education for very deserving boys/girls from economically challenged families etc. Apar Group has been an active participant in the free mid-day meal progrmmes across rural villages and schools in the Mumbai hinterland, feeding over 600,000 children a day and providing medical aid, clothing, books and education. c. Attached to and forming part of this report are the following: i) Particulars relating to Employee Stock Option Scheme. ii) Particulars of Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. iii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo. iv) Report on Corporate Governance and auditors' certificate regarding compliance of conditions of corporate governance. The Ministry of Corporate Affairs has issued 'Corporate Governance Voluntary Guidelines' in December, 2009. While these guidelines are recommendatory in nature, the Company is in the process of adopting these guideline gradually. v) Statement containing brief financial details of the subsidiaries. d. In accordance with the General Circular dated February 8, 2011 issued by Ministry of Corporate Affairs, granting exemption under Section 212(8) of the Companies Act, 1956, the Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiary Quantum Apar Speciality Oils Pty. Ltd., Australia, and Marine Cables & Wires Private Limited, wholly-owned subsidiary of the Company. As per the terms of Circular, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2012 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company. e. As on March 31, 2012, there was no fixed deposit remained unclaimed. 10. Acknowledgement Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company. For and on behalf of the Board Place: Mumbai Dr. N.D. Desai Date : 27th September, 2012 Chairman Annexure I to the Directors' Report EMPLOYEE STOCK OPTION Members' approval was obtained at the Annual General Meeting held on August 9, 2007 for introduction of Employees Stock Option Scheme to issue and grant upto 16,16,802 options and it was implemented by the Company. The options have been granted to employees in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines). The Employees Stock Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme. The disclosures stipulated under the SEBI Guidelines are given below: a. Options granted by the Compensation Committee : 175,150 b. Exercise price : Rs.207.05 per option c. Options vested : 175,150 d. Options exercised : Nil e. The total number of shares arising as a result of exercise of options : Nil f. Options lapsed : Nil g. Variation in terms of options : See note 1 below h. Money realised by exercise of options : Nil i. Total number of options in force : 175,150 j. Employee-wise details of options granted to: i. Senior Management Personnel/Directors (a) Mr. H. N. Shah : 7,500 (b) Mr. V. A. Gore* : 4,000 (c) Dr. N. K. Thingalaya : 4,000 (d) Mr. F.B.Virani : 4,000 ii. Any other employee who : Nil received a grant in any one year of options amounting to 5% or more of options granted during that year iii. Identified employees who : Nil were granted options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant k. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 Earnings Per Share : Rs. 15.55 Notes: 1) 175,150 options at the exercise price of Rs. 259.75 granted on January 23, 2008 were cancelled on May 27, 2008. The cancellation was necessary due to substantial reduction in the price of shares in the secondary market and simultaneously therewith the above detailed options were granted. The confirmation of the shareholders for the said cancellation and subsequent grant was sought at the 19th Annual General Meeting held on August 29, 2008. 2) As the exercise of options would be made at the market linked price of Rs. 207.05, the issuance of equity shares pursuant to exercise of options will not affect the profit and loss account of the Company. 3) The Company obtained in-principle approval for the listing of the entire 1,616,802 equity shares to be issued and allotted on exercise of options as and when exercised under the scheme. 4) *Mr. V. A. Gore expired on December 2, 2009. Options granted to him would vest with his legal heirs / beneficiary. Annexure III to the Directors' Report ENERGY STATEMENT INFORMATION AS PER 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 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2012. I. Conservation of Energy 1) Energy Conservation measures taken and continuing on regular basis: Conductor Division: * Improved the efficiency of electrical motors through automations and up gradations to latest technology . * Improved the lighting through replacement with energy efficient light fixtures. * Improved and maintained the power factor above 0.995, resulted in to power incentives. * Improved and maintained the efficiency of furnaces used in aluminium melting Oil Division: i. Installed power-saving devices for the air conditioners in the plant. ii. Replaced the inefficient light fitting with the efficient light fittings in the plant with same lumens output. iii. Maintained power factor above 0.95 throughout the year and received incentives in power bill. iv. Steam condensate recovery system is working efficiently. v. Installed timers in blender's circulation pump, to prevent wastage of power. vi. Rain water collected through water harvesting and uses the same in the boiler for steam generation. Cable Division: i. PD Chamber 500KVA transformer is replaced by 100KVA power transformer to reduce the transformer no-load and full load losses. ii. Dusk to dawn controller is provided for indoor plant lighting at Unit-3 for its automatic operation under controlled settings. iii. Change pulleys of ASACO tandem line, OFC sheathing line 2 and 3 to increase machine line speed. iv. Reduced MDI from 2000KVA to 1800KVA in order to reduce MD charges. v. Replaced two numbers inefficient monoblock five HP water pumps with energy efficient monoblock water pumps. vi. Replaced 250HP, 2500RPM DC motor of 120mm extruder of sioplas line with 150HP, 1500RPM DC motor to improve power factor and reduce harmonics. vii. Maintained power factor above 0.97 throughout the year and received a rebate in power bill. 2) Additional investment proposals, if any, being implemented for reduction of consumption of energy: i) Investment proposed for power conservation through available technology and automations. ii) Proposal for installation of power-saving devices for air conditioners. iii) Proposal for installation of solar street lights along the boundary walls. iv) Replacement of inefficient light fittings with the efficient/energy conservation light fittings in the plant. v) To carry out the energy audit in the plant and to implement the audit findings in the plant to save energy. vi) To provide more timers for the blender's pump so as to reduce power consumption. vii) Modifying the existing aluminium melting furnaces with energy efficient furnaces. 3) Impact of measures at (1) and (2) above: i) Electrical energy savings. ii) Less failure of equipments/motors iii) More uptime resulting into more productivity. 4) Total energy consumption and energy consumption per unit of production: (A) Power and Fuel Consumption 2011-12 2010-11 (i) Electricity (a) Purchased units 33,158,431 22,239,364 Total amount (Rs./million) 171.59 86.92 Rate/Unit (Rs.) 5.17 3.91 (b) Own generation Through diesel generator (Units) 730,591 703,643 Average units generated per litre of diesel oil 2.69 3.09 Average cost of unit (Rs.) 14.07 12.01 (ii) Furnace oil: Quantity (Kl.) 6,853 7,596 Total amount (Rs./million) 262.45 204.69 Average rate/Kl (Rs.) 38,298 26,948 (iii) Natural gas: Quantity (M3) 357,710 - Total amount (Rs./million) 9.20 - Average rate/M3 (Rs.) 25.73 - (B) Consumption per unit of production (Average per unit consumption on total production of each division is included in the table below): 2011-12 2010-11 Electricity Furnace Oil Natural Gas Electricity Furnace Oil (Units) (litres) (M3) (Units) (litres) (i) Refinery division: Per KL output of Oil 8.82 1.51 - 10.18 1.78 (ii) Conductors division : Per MT output of 229 72 - 200 70 aluminum/alloy conductors (iii) Cable division: Per km. of cable 112 - 140 - - Reasons for change in consumption: Electricity: Oil: Change in Product mix Conductors: Change in product mix Furnace Oil: Oil: Change in Product mix Conductors: Change in product mix II. Technology Absorption and Research and Development: 1. Research and Development (R&D): i) Specific areas in which R & D is carried out by the Company: a. Development of new types of up-rating conductors with utility in re- conductoring with enhanced power transmission capacity. b. Specialty elastomeric compounds, thin wall elastomeric cables, tow cables for underwater application for the Navy, pressure tight cables for underwater applications for defence, rodent and termite-proof telecommunication cables, hybrid rubber cables with integrated fibre optics, high-voltage windmill cables, solar cables. c. Company's recognised In-house R&D Oil unit at Rabale, Navi Mumbai is carrying out active work in development of new grades and upgradation of existing grades. The Department of Scientific & Industrial Research (DSIR) has accorded renewal of recognition of this in-house R&D unit for further three years upto 31.03.2015. d. The Company is actively following Six Sigma for improving the process efficiency, productivity improvement, energy conservation and customer satisfaction. e. Rabale laboratory was already NABL accredited now Silvassa laboratory is also NABL accredited. ii) Benefits derived as a result of the R&D: a) Product accepted by the customer. b) Commercial production has been commenced. c) Benefits in Custom Duty, Central Excise and Income Tax. d) Commercial orders received for underwater cables and thin wall elastomeric cables and its successful execution has opened up good opportunities during the year. Other products have also reached stage for commercial ordering. iii) Future plan of action: a) Development of new types of High Temperature Low Sag Conductors b) Creating and developing a technical team for conductor complete solutions for newly up-rated developed conductors and for these additional tests facilities will also be created for measurement and testing of new generation /types conductors. c) To explore business opportunities in high-voltage wind mill cables, solar cables, composite cables, high temperature cables, data logging cables. d) Development of electron beam cables and compounds. e) Development of new oil grades as well as upgradation of existing grades for better performance and for the benefit of customers. (iv) Expenditure on R&D: a) Capital = Rs.5.69 million b) Revenue = Rs.16.94 million c) Total = Rs.22.63 million d) Total R&D Expenditure as a percentage of total turnover = 0.07%. 2. Technology Absorption, Adaptation and Innovation: a) Technology imported (in last five years) License to use proprietary knowhow, formulae, trademarks and trade names relating to manufacture and sale of lubricating oils, greases and other special lubricants for industrial, automotive and marine applications. b) Year of Import 2007 c) Has technology been fully absorbed 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 (Rs. in million) 2011-12 2010-11 (i) Total foreign exchange used: (a) Raw materials (CIF) 17,691.54 12,363.03 (b) Stores and spares 2.38 2.12 (c) Capital goods 32.65 11.07 (d) Others 411.96 306.48 18,138.53 12,682.70 (ii) Total foreign exchange earned (a) Physical exports (FOB) 8,844.57 5,451.81 (b) Deemed exports (eligible for export incentives) 698.39 696.36 (c) Others 315.57 298.85 9,858.53 6,447.02