PRADEEP METALS LIMITED
ANNUAL REPORT 2010-2011
It is my pleasure to present the performance of your Company during the
last fiscal year 2010-2011.
After facing one the most difficult year in 2009 - 2010 due to global
turmoil, the Company has swiftly come back on the growth path. Your Company
has not only recovered the lost ground but also achieved the best
performance in terms of turnover and profitability, with the growth of 70%
in revenues and more than 4 fold increase in profit before taxation. The
Company has been able to pay dividend of 10% p.a. on Optionally Convertible
Cumulative Redeemable Preference Shares (OCCRPS) for 2 V years and to
recommend payment of dividend of 10% on Equity Shares. Your Company has
negligible long term debt and enjoys healthy relationship with Union Bank
of India, sole bankers, who have provided credit facilities of Rs.41.77
crores. The Return on Equity (RoE), before deferred tax liability, stood at
22%, which is above the industry standard. With the planned growth in the
business, the expected lag effect of the current fiscal economic recovery
in domestic, USA and European countries and our strenuous production
efficiencies, we are confident of achieving higher growth in the coming
As per the economists, India expects to grow at a rate of 8% to 9% in the
next 5 years. However, maintaining this kind of growth consistently in the
long run is not easily achievable without facing certain challenges. The
major challenges are inflation of over 8% and fiscal deficit. With improved
focus of the Government on reforms in agriculture sector, monitory policies
adopted by Reserve Bank of India and good monsoon during the current fiscal
year, the inflation should settle at comfortable levels.
Expected cash flows from disinvestment in pipeline coupled with good growth
in the economy, the Government should achieve the target set for fiscal
deficit of 4.6% during the current fiscal.
Let me take you through the Company's journey in the last three decades of
its presence in the business of forging. When we started our business, we
were predominantly catering to the automobile industry. This sector has
undergone lot of changes in the last two decades. The auto forging business
is cyclical in nature, highly cost competitive and low margin business.
Accordingly, your Company had taken a conscious decision to diversify the
focus to alternative industrial forging market. We were one of the early
players to recognize the opportunity in non-automotive segment of the
forging business in the country.
Your Company has always excelled in technology adoption since inception.
Being a technologically advanced and precision design Company, we have
decided to concentrate our focus towards the niche segment of non-
automotive forging business. There is a tremendous opportunity in this
segment. Your Company has been recognized as one of the leading players in
this segment. Our strategy of diversifying focus towards the non automotive
segment has served us very well over the years.
Your Company has been exporting predominantly to developed countries with
good mix of customers from USA, Europe and Asia. Your Company has new
esteemed customers also in South America. Multinational engineering
companies are our major customers. We have maintained good relationship
with all our customers across the world. Because of this, your Company has
significant repetitive orders from customers.
Your Company's products have received accolades across the world,
especially on the grounds of design, technology and dependability. Whoever
has visited our state of the art manufacturing facilities situated at MIDC,
Rabale, Navi Mumbai, has expressed their desire to work with us. Your
Company is also planning an expansion of its manufacturing capacity by
setting up a new unit in the state of Gujarat in order to meet the rising
demand for its products.
During the year, the exports of the Company have grown by 68% over the last
year. This has been achieved mainly due to high end value added products,
timely execution of the orders, greater consumer satisfaction and improved
market conditions in USA and Europe. Your Company is confident to deliver
consistent growth on exports front in the coming years.
Your Company's focus on maintaining high level of quality consciousness is
evident from its continued certification as an ISO 9001:2008 Company. Your
Company makes concerted efforts for constant improvement in quality of its
products. It is a matter of pride that the Company has also been approved
to supply Nuclear Quality forgings to Europe and USA.
Your Company has added several machines for precision machining of forged
products and also enhanced its die making capability by installing modern
CNC/VMC machines and Analyses software for die design. These measures will
further improve the quality of finished components.
Your Company has been professionally managed and is under the guidance of
esteemed personalities on the board of directors.
I would like to take this opportunity to place on record the efforts of our
employees and each every stakeholder for the confidence imposed in the
management and our sole bankers, Union Bank of India who have contributed
in this commendable growth of the Company.