ASIAN BEARING LIMITED
ANNUAL REPORT 2001-2002
Your Directors have pleasure in presenting the Twenty Seventh Annual Report
together with the Audited Accounts of the Company for the year ended 30th
During the year under review the production was 12.70 lakh Nos. of Ball
Bearings, 0.54 lakh Nos. of Taper & Cylindrical Roller Bearings and 7.08
lakh Nos. of Auto Components. The Sales and other income was Rs.2487.89
lakhs for the 12 months ended 30th June 2002. as against Rs.3072.30 lakhs
for 15 months ended 30th June 2001.
The performance of the Engineering Industry witnessed considerable decline
especially after September 11, 2001 incident. As stated in the previous
report, your company concentrated more on, auto components. The performance
of the auto component division is satisfactory.
MANAGEMENT DISCUSSION AND ANALYSIS
Industrial Structure and Development
The bearing Industry can be divided primarily into two sectors, the
Organised and the Unorganised Sector. While the Organised Sector consists
of 12 players with almost all the major manufacturers in the world present
either through their own subsidiaries or by way of Collaborations, the
Unorganised sector mainly consists of the Small Scale manufacturers and the
manufacturers of spurious bearings.
The Organised Sector caters to almost 60% of the Countries requirements.
These are basically Ball and Roller Bearings. Besides these bearings, Heavy
duty applications like those for the Steel Plants, Cement Plants, Heavy
Machinery, Agricultural Machinery, Machine Tools and other Bearings for
special applications are met by imports.
The Bearing Industry's growth is directly related to the growth of the user
Industries like Automobiles, Motors and Pump sets, Agriculture, Material
Handling Industry, Fans etc.
The two major markets for Bearings are the OEM (Original Equipment
Manufacturers) market and the Replacement market on roughly a 50- 50 ratio.
Opportunities and Threats
The phased reduction in Customs Duties has had considerable impact on the
domestic industry. The major threat to the Industry in general is that from
the spurious and cheap imports from Countries like China, Czchekoslovakia
affecting especially the replacement market which constitutes around 50% of
the Bearing Market.
The growth of the Bearing Industry has also been affected by the acute
recession which has plauged the Engineering Industry for the past few
years. This has led to over production and thereby a price War leading to
However your Company is now taking steps to move away from the highly
competitive segments like small Bearings into high contribution products,
and also moving into its core strength - closed die forgings.
The other major effort the Company has taken is to diversify into more
profitable auto components. With the growing new generation auto makers in
the Country, your Company expects a healthy growth in this sector.
Besides the Company is now tapping the International Market. Its exports
have been steadily growing in the last two years. The Company is expecting
to increase its export performance substantially in the next few years.
This would pave the way for the Company to reduce the dependence on the
price sensitive domestic market for bearings and will be poised to become a
foreign exchange earner in the near future.
The core strength of the Company is Closed Die Forgings. The Company is
tapping the spare capacity of this facility to sell various components
fastners, textile rings including bearing rings to customers.
As per the prevailing product mix the Company has only one primary segment
i.e. Ball and Taper Roller Bearings.
However the Company through its diversification into auto components
expects to tap this segment in the coming years as the automobile industry
is poised for a healthy growth. In addition the Company expects a
substantial growth from the export market for its auto components.
Besides, the Company is; also giving thrust to its core strength closed die
As of now the major contribution is from that of Ball and Roller Bearings.
As per the current indications, the growth in the Automobile Industry is
expected to have an impact on the Bearing Industry. The Company expects to
make a major headway in the auto components sector in the coming years.
The export performance of the Company has been steadily increasing. The
Company is making all out efforts to aggressively improve its export
performance in this segment.
The Company expects to consolidate its market in Contract manufacturing
i.e. sale of hot die forgings.
The Company is also concentrating on cost rationalisation in an attempt at
shoring up its bottom lines. The Company expects to make a major headway in
areas like Interest cost, labour cost etc., which will have an impact on
the Company's future performance.
Risks and Concerns
The Management perceives the threat from illegal imports as also cheap
imports from Countries like China and other Communist Countries to affect
the domestic Bearing Industry.
The phased reduction in Customs Duties which is expected to continue will
certainly affect the Bearing Industry's performance.
The high interest and labour cost will have a telling impact on the
Company's performance in future unless it is addressed at the earliest.
The Bearing Industry has been severely hit in the past years by the
unprecedented recession. The downturn in the economy will affect the
Industry unless reversed.
Just as in the last couple of years, the continuing pressure on sales on
the Bearing Companies on account of the demand recession is bound to affect
the pricing of the product in order to maintain or gain market share. This
will have an adverse impact on the bottom lines of Companies.
Internal Control Systems
The adequacy of the Company's internal control system is being periodically
monitored through a qualified Chartered Accountant commensurate with the
size and operations of the Company.
The Audit Committee of the Board of Directors periodically reviews the
internal audit reports of the Internal Auditors for the adequacy of
Financial Performance with respect to Operations
During the year under review sales reduced Rs.2487.89 lakhs as against
Rs.3072.30 lakhs in the previous period.
The fierce competition in the after market has had a tremendous impact in
reducing the demand thereby leading to drop in production in order to
prevent stock piling.
The fierce competition both in the OE market as well as the Replacement
Market has affected the Company's Operations. The Company greater
dependence on the after market has almost crippled the Company's operations
due to illegal and cheap imports.
Added to this was the monsoon failure and the unexpected unseasonal rains
in various parts of the Country which affected sales for the major portion
of the year. This led to stock piling and a corresponding cutback in
The Company is now making all out efforts to peg this trend by switching
over to the more profitable auto components with the thrust on the export
market. The Company has now received substantial enquiries from Europe, USA
and other Asian Countries and is trying to convert all these enquiries into
Human Resources and Industrial Relations
The Company has had a cordial relationship with its employees who have
extended their co-operation during this trying period.
Proposal for Revival
The modified scheme of BIFR vide its order dated 11-06-1997 could not be
implemented by the company. Consequent to this BIFR in the order dated 15th
April, 2002 has stated that incase both : Financial institutions and
promoters agree, the promoters may submit a revised comprehensive revival
proposal based on One Time Settlement (OTS) of Financial Institutions dues
with means of finance fully tied up.
In this context, the company has sought time from the operating agency
viz., IDBI for the payment of OTS dues. The Company is in the process of
submitting the revised revival proposal based on the present scenario.
Based on this assumption the accounts are prepared on the "Going Concern"
Tamil Nadu Industrial Development Corporation Ltd (TIDCO) withdrew
Mr.Hemant Kumar Sinha IAS from the Board on 30th January 2002. Mr. Mutia
Kalaivanan IAS was nominated by TIDCO as the Chairman of the Company on
26th April 2002 and later was withdrawn on 30th July 2002.
Dr. R.Vijaykumar Ph.D. IAS was nominated by TIDCO as the Chairman of the
Company on 30th July 2002 in the causal vacancy caused by withdrawl of
Mr.Mutia Kalaivanan IAS.
Mr.Ramanathan Palaniappan resigned from the Board on 26th April 2002. The
Board wishes to place on record its sincere appreciation for the valuable
contribution made by Mr.Hemant Kumar Sinha, IAS, Mr.Mutia Kalaivanan IAS
and Mr.Ramanathan Palaniappan during their tenure as Directors of the
In terms of Section 256 of the Companies Act, 1956, Mr.N. Bagavathy retire
by rotation and being eligible offer himself for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 217(2AA) of the Companies Act,
1956 with respect to Director Responsibility Statement, the Directors
1) In preparation of the accounts for the year, the applicable Accounting
Standards have been followed along with proper explanation relating to
2) The Directors have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of the
at the end of the year and of the loss of the company for that year.
3) The Directors have taken proper and sufficient care 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.
4) The Directors have prepared the accounts for the year on a going concern
Your directors are happy to report that your company is fully compliant as
on June 30, 2002 with the SEBI Guidelines on Corporate Governance as
incorporated in Clause 49 of the Listing Agreement with the Stock
Exchanges. A detailed report on this subject forms part of this report.
The Statutory Auditors of the Company have examined the company's
compliance and have certified the same as required under the SEBI
guidelines. Such certificate is reproduced and forms part of this report.
M/s. Itta Parthasarathy & Co. Chartered Accountants, Chennai retire at the
conclusion of the ensuing Annual General Meeting and are eligible for re-
With reference to the remarks of the Auditors regarding Capitalisation of
interest, and non-provision of depreciation, the Directors wish to state
that this was done as a measure of Tax Planning and non-provision of
depreciation for earlier years is due to inadequacy of profits. Also your
Directors invite reference to schedule 15 (b) & (c) which are self-
The Company was not able to remit PF, ESI and TDS in time, due to acute
financial condition. Subsequently the company has remitted a portion of the
PF, ESI & TDS overdues. Steps are being taken to remit the balance at the
The Company is taking efforts to raise funds for setting the dues to the
PARTICULARS OF EMPLOYEES
None of the employees are covered under Section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules 1975.
CONSEREVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE
EARNINGS AND OUTGO.
As required under Section 217(1)(e) of the Companies Act, 1956, read with
Companies (Disclosure of particulars in the report of Board of Directors)
Rules, 1988, a statement containing the required particulars are given in
Annexure 'A' which is attached hereto and forms part of the Directors'
The Board of Directors thank the Institutions viz., Industrial Development
Bank of India, The Industrial Finance Corporation of India Ltd, Industrial
Investment Bank of India, State Industries Promotion Corporation of Tamil
Nadu Ltd and consortium of banks viz., Indian Bank, State Bank of India,
Canara Bank, ICICI Bank and our Joint Venture partner M/s.Tamilnadu
Industrial Development Corporation Ltd for the valuable Guidance and
support extended to the Company, and last but not the least the employees
of the company for their co-operation and efforts during this critical
On behalf of the Board of Directors
Dr.R.VIJAYKUMAR Ph.D. IAS
Date : 22.11.2002
ANNEXURE (A) TO DIRECTOR'S REPORT
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Section 217(1)(e) of the Companies Act, 1956
(A) CONSERVATION OF ENERGY
The Company has taken the following steps.
1. Regular monitoring of Power Consumption.
2. "Switching Off: the machines during the rest period
3. Tight control on lighting and illumination.
4. Additional capacitor banks installed to improve power factor
5. Connection of motors that were not fully loaded to its capacity were
changed from delta to star on selected motors and that resulted in good
6. Treated sewage water is used for factory gardens to reduce the use of
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
Power and fuel consumption:
Current Year Previous Year
(12 months) (15 months)
a) Purchased Units 40,14,670 55,90,710
Total Amount Rs.2,38,21,044 Rs.2,94,03,110
Rate per Unit Rs.5.93 Rs.5.26
b) Own Generation
Through diesel generator Units 1,18,764 7,29,446
Units per Ltr. Of diesel oil 2.59 3.18
Cost per Unit Rs.8.70 Rs. 5.91
2. Coal (Specify quality and
where used) Not Applicable Not Applicable
3. Furnace Oil Not Applicable Not Applicable
4. Others/Internal generation Not Applicable Not Applicable
Consumption per unit of Production
Ball Bearing (in lakh Nos.) 12.70 26.73
Tapered & Cylindrical
Roller Bearing (in lakh Nos) 0.54 1.01
Auto Components 7.08 5.01
Electricity Unit Consumption per No. 2.03 1.93
FORM - B
(A) TECHNOLOGY ABSORPTION, ADAPTATION, INNOVATION AND RESEARCH &
a) We have developed wheel nuts for leading fastners manufactures.
b) We are also in the process of developing other auto components other
than C.V. Cages where market potential is very encouraging for domestic as
well as export.
c) We are in the process of developing some special bearings for import
d) In addition to absorbing the technology from erstwhile German
collaborator, the Company has developed in house know-how for manufacture
of auto components.
1. FOREIGN EXCHANGE INFLOW AND OUT GO
(Rs. in lakhs)
(12 months) (15 months)
(i) CIF VALUE OF IMPORTS
Capital goods --- 21.22
Components & Spare Parts 3.63 11.21
Travelling expenditure 4.36 0.89
(ii) FOREIGN EXCHANGE EARNINGS
Export Sales (FOB) Value 83.31 18.44
On behalf of the Board of Directors
Dr. R. VIJAYKUMAR Ph.D. IAS.,