GRAND FOUNDRY LTD
CHAIRMAN SPEECH TO THE MEMBERS
STATEMENT OF THE CHAIRMAN AT THE ANNUAL GENERAL MEETING OF GRAND FOUNDRY LTD
HELD ON ;26TH SEPTEMBER 1994
Ladies & Gentlemen,
On behalf of my colleagues on the Board and on my behalf I welcome you to
this Annual General Meeting of the Company, the third AGM since its public
issue in February 1992.
PERFORMAANCE OF THE COMPANY:
Last year was not a very good year for the steel industry. The industry faced
world-wide recession. In India, the export support mechanism was changed from
IPRS to Advance Licensing Scheme, due to which the export turnover reduced in
value terms. Despite such recessionary trends in the developed countries,
your Company maintained the sales tonnage at 3569 tonnes as against the
previous year's figure of 3578 tonnes.
The Company has reported increase in profit after tax for the fifth
consecutive year. A two-for-five bonus issue was made during the year and the
Board has recommended a dividend of 12.5 per cent for the year on the
increased capital after capitalization of Rs.2.90 crores out of the Share
Premium Account. The dividend works out to 17.5 per cent on the pre-bonus
The Company is a major exporter to USA. According to the preliminary dumping
findings of the Department of Commerce of the USA, the dumping rate levied
for our Company of 2.67 per cent is the lowest among exporters from India,
Spain, Brazil, Japan and Italy (except for one Italian company). This has put
our Company in an advantageous position as regards exports to USA. The final
dumping findings are not likely to be significantly different. If so, Grand
Foundry is likely to emerge as the single largest exporter of bright bars
from among these countries to the USA.
Under these improved conditions, the current year appears very encouraging
and the Company should perform well as can be seen from the performance of
the first six months. The exports for the six months in the current year are
2955 tonnes valued at Rs.18.30 crores as compared to 1250 tonnes valued at
Rs.7.72 crores in the corresponding period of the previous year, indicating
an increase of 137 per cent. Further, the order book is very comfortable with
pending orders of about 3000 MT to be executed before the year end. The
Company is expected to do much better in the current year in regard to
turnover and profitability.
The Company has once aqain, for the fifth year in a row, bagged an export
award from the Engineering Promotion Export Council of India. The awards
that the Company has been receiving were from the Regional Council, but this year we have received the Certificate of Export Excellence at the all India
level for achieving the highest export performance in 1992-93 among non-
exporters in the panel "Steel Products, All Types"
ECONOHIC OUTLOOK .
The economic outlook seems promising going by what we read in the press. We
have had seven successive years of good monsoons. The decession has ended in
India and the western countries. Industrial production is picking up, and in
fact there has been a strong industrial revival during April-July 1994. The
inflation rate which touched 10.5 per cent on March 5 and remained in double
digits for 23 succesesive week & had caused much concern. However, it came
down to 9.90 on August 6 and has remained.in single digit since then.
Foreign exchange reserves are at an all time high, and this too has caused
anxiety due to problems caused by large reserves. These are being sought to
be tackled among other things by further liberalisation of imports.-
Criticism has been levelled at the Government for the 510 space at which
liberalisation has been taking place. On the other hand, it has been pointed
out that Margaret Thatcher's pace of liberalisation spread over a period of 8
to 10 years would be more suitable for our country and that a faster pace of
liberalisation adopted by some countries has not proved so very happy for
The Government at the Centre is far more stable now, and I would say that its
policies are bearing fruit. The Commerce Ministry has announced an
alternative scheme to the International Price Reimbursement Scheme under
which deemed export status would be granted to supplies by domestic iron and.
steel producers to exporters of engineering goods. This should give us the
benefit of obtaining raw materials at prices close to international prices.
Grand Bright Bars Ltd., the 100% subsidiary of the Company, which is taking
care of the domestic side of the business, achieved a turnover of Rs.8.64
crores during the first year of its operations, and is consolidating its
position in the domestic market.
The Company's project for Wire Rod and Bar Mill will become a prominent
milestone in the history of the Company when launched. Your Directors are
doing their best to see that the project is tied up at the earliest.
Negotiations with multinational companies are in progress for equity
participation as well as marketing and sourcing with buy-back arrangements
upto 35 per cent. The project will enhance the competitiveness of the Company
in India and abroad, and the sales turnover will increase manifold to Rs.300
crores in the next three to four years.
I take this opportunity to thank the Managing Directors Shri Kiran Jangla and
Shri Hiten Jangla, the executives and all our employees for the continued
success of the Company. I thank our bankers , Bank of India and Allahabad
Bank, for their support, the financial institutions for their assistance, the
shareholders for their trust and confidence in the Company, the customers of
the Company in the international and domestic markets, and my colleagues on
the Board for their valuable guidance and counsel.
DHIRAJLAL B JANGLA