RATNAMANI METALS AND TUBES LIMITED
ANNUAL REPORT 2011-2012
The Board of Directors is pleased to present the 28th Annual Report with
audited accounts of the Company for the year ended 31st March, 2012.
1. Financial Results:
(Rs. in Lacs)
1. Financial Results 2011-2012 2010-2011
Revenue from operations (Net) 1,22,174.02 81,367.28
Profit before depreciation and tax 18,165.26 15,268.97
Less : Depreciation 4,249.15 3,999.46
Profit before tax 13,916.11 11,269.51
Less: Provision for taxation 4,484.79 3,058.16
(including Deferred Tax Credit)
Profit After Tax and before prior period items 9,431.32 8,211.35
Add: Prior period items 1,712.87 106.00
Net Profit 11,144.19 8,317.35
Add: Balance brought forward from previous year 7,187.35 5,217.46
Amount available for appropriations 18,331.54 13,534.81
General reserve 5,000.00 5,000.00
Proposed dividend with dividend tax 1,618.36 1,347.46
Balance carried to balance sheet 11,713.18 7,187.35
Total 18,331.54 13,534.81
Your Directors are pleased to recommend a dividend of Rs.3 (150%) per
equity share having face value of Rs. 2 each.
3. Review of Operations:
The financial year 2011-12 has been challenging for the Indian economy. It
witnessed a slowdown due to weak industrial activity coupled with a
contraction in investments. Factors such as persistent and high inflation,
monetary tightening, expansion of trade deficits, weakening of the rupee,
negative global developments and domestic political uncertainty have also
contributed to it. There has been slowdown in the advanced economies as
well. Despite of the challenges, your company has outperformed during the
year under review and posted encouraging results. The performance had
established a new milestone for the Company. The Company's efforts for all
round improvement helped in increasing the profitability.
B. Financial Performance:
The Company could achieve revenue from operations of Rs.1,221.74 crores
with a PBT of Rs.139.16 crores and PAT before prior period item of Rs.94.31
crores during the year under review as compared to revenue from operations
of Rs. 813.67 crores with a PBT of Rs.112.70 crores and PAT before prior
period item of Rs. 82.11 crores during the previous financial year. The Net
Profit post addition of prior period item is Rs. 111.44 crores for the year
under review as compared to Rs. 83.17 crores during the previous financial
The Company's products enjoy applications in various industries including
oil and gas explorations, refineries and petrochemicals, power industries
i.e. thermal, nuclear and solar power plants, chemical, fertiliser,
desalination, aerospace and atomic energy, water and sewerage, paper and
pulp industries, etc. During the year under review, there has been good
demand for both stainless steel tubes and pipes as well as carbon steel
pipes from various sectors resulted into optimum utilisation of capacities
and robust performance during the year under review.
4. Management Discussion And Analysis:
A management discussion and analysis report is annexed and forms an
integral part of the annual report.
In accordance with the requirement of the Companies Act, 1956 and Article
170 of the Articles of Association of the Company, Shri D.C. Anjaria and
Dr. V.M. Agrawal are liable to retire by rotation and being eligible,
offers themselves for reappointment at the ensuing Annual General Meeting.
Shri D.C. Anjaria and Dr. V.M. Agrawal are not related to any Director of
6. Credit Rating:
CRISIL has reaffirmed AA-(AA minus) rating for the Company's long-term
borrowings and A1+ (A1 plus) for short-term borrowings.
Your company has not invited or accepted any deposits from the shareholders
and public during the year within the meaning of Section 58(A) of the
Companies Act, 1956.
8. Particulars of Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo:
The information pertaining to conservation of energy, technology
absorption, foreign exchange earnings and outgo, as required under Section
217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure
of Particulars in the Report of the Board of Directors) Rules, 1988 is
given as per Annexure 'A' forming part of this Report.
The Company has commissioned windmills at various places for 'Green Energy
Generation'. Thus contributing in every way possible towards a greener and
9. Particulars of Employees:
The particulars of employees under the Companies (Particulars of Employees)
Rules, 1975 as amended up to date, which is required to be included in the
Directors' Report pursuant to Section 217 (2A) of the Companies Act, 1956
is attached herewith as Annexure 'B' forming part of this Report.
M/s. Mehta Lodha & Co. and M/s. S.R. Batliboi & Associates, Chartered
Accountants, joint statutory auditors of the Company, hold office until the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment. Your Directors recommend their reappointment as statutory
auditors of the Company until the conclusion of the next Annual General
Meeting of the Company on such remuneration as may be fixed by the members.
The Company has received letters from both of them to the effect that their
reappointment, if made, would be within the prescribed limits under Section
224(1B) of the Companies Act, 1956 and that they are not disqualified for
reappointment within the meaning of Section 226 of the said Act.
The Notes on annual accounts referred to in the Auditors' Report are self-
explanatory and do not call for any further comments.
11. Cost Auditors:
In pursuance of Section 233B of the Companies Act, 1956 and an order no.
F.No.52/26/CAB-2010 dated 03.05.2011 issued by Cost Audit Branch, Ministry
of Corporate Affairs; your Directors have appointed N.D. Birla & Co., Cost
Accountants, Ahmedabad as a cost auditor to conduct the cost audit of
'Steel Tubes & Pipes Products' for the financial year 2011-12. The said
appointment has been approved by the Central Government.
The Board of Directors has reappointed M/s. N.D. Birla & Co, Cost
Accountants, the cost auditors for conducting the cost audit for the
business as stated above for the financial year 2012-13 subject to approval
of the Central Government.
12. Directors' Responsibility Statement Pursuant to Section 217 (2AA) of
the Companies Act, 1956:
The Board of Directors hereby state and confirm:
a. That in the preparation of the annual accounts, the applicable
Accounting Standards have been followed, along with proper explanation
relating to material departures;
b. That the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that 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 profits of the Company
for that period;
c. That 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;
d. That the Directors have prepared the Annual Accounts on a 'going
13. Corporate Governance Report:
Your company has been practising principles of good Corporate Governance
over the years. The Board of Directors supports the broad principles of
Corporate Governance. In addition to the basic governance issues, the Board
lays strong emphasis on transparency, accountability and integrity.
The Board has formed Code of Conduct for all Board members and Senior
Management of the Company and they have affirmed compliance during the year
The Board has received CEO/CFO Certification under sub-clause V of the
Clause 49 of the Listing Agreement.
The Company has formulated Code of Conduct for prevention of Insider
Trading as required by SEBI (Prohibition of Insider Trading) Regulations
1992 as amended from time to time. The code ensures prevention of dealing
in the Company's shares by persons having access to unpublished price
A separate report on Corporate Governance is enclosed as part of this
Annual Report and marked as Annexure 'C'. Requisite certificate from M/s M.
C. Gupta & Co., practising Company Secretaries regarding compliance of
Corporate Governance as stipulated under the Clause 49 of the Listing
Agreement is annexed to the report of Corporate Governance.
14. Employees Stock Option Scheme (ESOS-2006):
As required by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines 1999, detailed disclosure is enclosed as per
Annexure 'D' and forms part of this report.
During the year under review, the Company has allotted 40,650 Equity Shares
to the employees under the Employees Stock Option Scheme 2006.
Equity shares of your company continue to be listed on Bombay Stock
Exchange Ltd. and National Stock Exchange of India Ltd and Listing Fees for
the year 2012-13 have been paid to them.
16. Green Initiative:
Your Directors would like to bring it to your notice that the Ministry of
Corporate Affairs (MCA) has taken a 'Green Initiative in Corporate
Governance' allowing paperless compliance by Companies through electronic
mode and the Companies are now permitted to send various notices/documents
(including annual report) to its shareholders through electronic mode at
the registered e-mail address of shareholders.
To support this green initiative, we hereby once again appeal to all
members who have not registered their e-mail addresses so far are requested
to register their e-mail addresses, in respect of electronic holdings with
their concerned Depository Participant and in respect of shares held in
physical form with Registrar and Share Transfer Agent of the Company.
Your company has outperformed in a challenging year and continues to build
shareholder value. Your Directors are hopeful of a good performance going
Your Directors would like to express their sincere gratitude for the
unstinted support from all stakeholders, Banks, Central and State
The Directors would also like to place on record their heartiest
appreciation for the outstanding contribution by the employees in achieving
remarkable performance during the year under review.
For and on behalf of the
Board of Directors
Place: Village: Indrad, Taluka Kadi Prakash M. Sanghvi
Date : 29th May, 2012. Chairman
ADDITIONAL INFORMATION AS REQUIRED UNDER SECTION 217(1)(e) OF THE COMPANIES
(A) Conservation of Energy:
The Company is constantly striving towards high degree of optimisation,
conservation of energy and absorption of technology. Some of the
initiatives taken by the Company during the financial year 2011-2012 are
(a) Energy Conservation measures taken;
1) Changed 150 watt lamp instead of 250 watt resulted into saving of 11
2) Installation of A.C. VF drives for smooth operation resulted in to
saving of 2.96 KWH/day.
3) Replacement of old low efficient L.T. Motor by Energy Efficient
Induction Motor resulted in to saving of 3.4 KWH/day.
4) Maintained unity power factor during the whole year so the maximum
demand has decreased.
5) Installed Translucent Sheets to ensure availability of natural light in
plant, it saves electricity.
6) Installed Air turbo Ventilator-decreased inside plant temperature so
working efficiency increased.
7) Roofing of the plant changed. Old A.C sheet roof changed with new pre-
coated and FRP Transparent Sheet.
8) Replacement of high power consuming halogen lamps by energy efficient
metal halide lamps.
9) Automatic power factor cum harmonic filter system installed for
efficient use of electrical energy by reduction of heating loss in
distribution system and reduction of immature failure of electrical
10) ERW and Spiral Plants Hydro Tester-ACVF drive has been put in operation
to control heavy current kicks at the time of starting which in directly
control of maximum demand from grid power.
11) All Heat treatment furnaces has been switched over from LPG to CNG from
July 2011, which has resulted in to a substantial savings to the Company.
12) Though there has been 15% (approx) increase in the per unit electricity
cost during the year 2011-12, the unit consumption for despatched finished
goods has been brought down by 3.5%. This reduction is without taking into
account the multi-process products, which were manufactured in higher
quantities, which if accounted for, will result in higher savings.
13) Installed a Fully Automatic Billet Heating system with a very narrow
range of temperature control, for billets heated by induction heating for
the Hot Extrusion Press. This resulted in a drastic decrease of the billet
drops on the furnace thereby increasing the quality of the hot extruded
pipes and saving of electricity for reheating the dropped billets.
14) Replaced the Mono-block pump with submersible pump and installed auto
with control, through water temperature in cooling bath at Bright Annealing
Furnace No: 01 resulted in to saving of 66 KWH per day.
15) Renovation of the Furnace with changing new brick lining and high-
temperature resistant ceramic tiles in Heat Treatment Furnace No: 01
resulted in to saving of 6 SCM per hours resulted in to saving of 144 KWH
16) Replacement of heater in Degreasing water tank at Instrumentation
Pilger mill by common tank in place of individual.
17) Power consumption is brought down by monitoring and controlling of
compressors resulted into saving of 78 KWH per Day.
(b) Additional investment and proposals, if any, being implemented for
reduction of consumption of energy;
No separate accounts are maintained.
(c) Impact of measures (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods;
Substantial energy saving, reduction of energy consumption, saving of LNG
consumption. Savings/rebate on cost.
(d) Total energy consumption and energy consumption per unit of production
as per form 'A':
(B) Technology Absorption:
(e) Efforts made in technology absorption as per Form B:
Form B enclosed.
(C) Foreign Exchange Earnings and Outgo:
(f) Activities relating to exports:
The Company has exported tubes and pipes to the U.K., the U.S., the U.A.E,
Spain, South Korea, Saudi Arabia, Qatar, Oman, Mexico, Malaysia, Kuwait,
Kenya, Japan, Italy, Iran, Indonesia, Germany, France, Bahrain, Australia,
Peru, Brazil, Bangladesh.
(g) Total foreign exchange earnings used and earned:
Foreign exchange earnings (FOB) Rs. 28,858.70 Lacs (P.Y. Rs. 5000.79 Lacs)
Foreign exchange outgo Rs. 2,610.50 Lacs (P.Y. Rs. 845.40 Lacs).
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION, RESEARCH AND
Research and Development (R & D):
1) Specific areas in which R & D is carried out by the Company:
Installation and commissioning of new RTR Machine.
2) Benefits derived as a result of the above R & D:
Better control of weld process as testing result is accurate.
3) Future plan of action:
The Company would continue research and development work in manufacturing
of smaller diameter and higher thickness pipes.
4) Estimated expenditure on R & D:
No separate record of expenditure is maintained.
Technology absorption, adaptation and innovation.
1) Efforts, in brief made towards technology absorption, adaptation and
a. Developed Alloy Steel SAW Welded Pipes.
b. Surface Grinding Machine-New machine was purchased and developed in-
house facility for sample preparation.
c. Notch Broaching Machine-New machine was purchased for preparing notches
2) Benefits derived as a result of the above efforts:
(a) Saving of time
(b) Better quality of samples.
(D) Information on Pollution Control Measures Forming Part of Directors'
Installed Online Bright Annealing Induction Heating equipments to avoid
pickling of tubes after the annealing process thus resulting into no usage
of acids and saving of water.
Installed New Air Scrubber system at Pickling Area, which reduces the
pollution arising due to acid and chemical fumes.
The Company monitors and maintains environment and pollution control
parameters at its plant site. The Company is maintaining proper effluent
treatment plants and the treated water gets used for plantation of trees.
DISCLOSURES REGARDING STOCK OPTIONS:
During the year 2006-07, the Company had introduced Employee Stock Option
Scheme (ESOS 2006) for the benefit of employees of the Company. Pursuant to
the applicable requirements of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 ('the SEBI Guidelines'), following disclosures are made in
connection with Employees Stock Option Scheme (ESOS 2006).
The details of options granted under Employee Stock Option Scheme 2006 are
given in the table.
Particulars ESOS 2006
a. Total options authorised 22,50,000
by the plan
b. The pricing formula Rs.59.40/- (plus applicable taxes) which is
75% of the average of daily closing price of
equity shares of the Company during 30 days
preceding the date of grant of options as
quoted on the Stock Exchange, Mumbai
c. Options vested 22,50,000
d. Options exercised 14,15,609
e. Total number of shares 14,1 5,609
arising as a result of
exercise of options
f. Options lapsed NIL
g. Variation of terms Exercise Period extended from 5 years to
of options 8 years at 27th AGM held on 18.08.2011
h. Money realised by Rs. 28,31,218/- share capital
exercise of options
Rs.8,12,55,957/- share premium
i. Total number of options 8,34,391
j. Employee-wise details Name Options granted
of options granted to
(a) Senior Management Shri D.C. Anjaria 25000
Dr. V.M. Agrawal 25000
Shri P.M. Mehta 25000
Shri A.J. Vora 25000
Shri D.N. Patel 25000
Shri R.S. Patel 25000
Shri P.H. Bhat 25000
Shri Vimal Katta 25000
Shri B. Ranganath 17500
Shri M.S. Randhawa 25000
Shri T. Venugopal 25000
Shri V.C. Bhagat (Since Retired) 20000
(b) Any other employee who No employee has received grant of options
receives a grant in any amounting to 5% or more.
one year of option
amounting to 5% or more
of options granted during
(c) Identified employees There is no employee who has been granted
who were granted options, during 1 year equal to or exceeding 1% of
during one year, equal to the issued capital
or exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the
Company at the time
k. Diluted Earning Per Rs. 23.90
Share (EPS) pursuant to
issue of shares on
exercise of Option
calculated in accordance
with Accounting Standard
(AS) 20 'Earnings per
The Company has used 'intrinsic value' method as defined in SEBI
Guidelines. The disclosure under clause (l), (m) and (n) are not required
to be made as the fair value of the options is less than intrinsic value.
Note: The number of options granted and vested, and the price per option
are adjusted on account of sub-division of Equity Share having face value
of Rs. 10/- each into five equity shares of face value Rs. 2/- each.
MANAGEMENT DISCUSSION AND ANALYSIS
The global economy contracted in 2009 and recovered in 2010 even as there
was financial uncertainty in the Euro zone, slower recovery in advanced
economies, high unemployment, tightening credit and rising risk premia.
While most businesses in mature markets focused on cost savings, investment
sentiment remained better in emerging economies. The global economy is
forecast to expand by around 4% in 2012, growth being driven by emerging
The manufacturing sector remained volatile with seven out of the 22
industry groups responding negative growth during April-February 2011-12.
The services sector increased its GDP share from 58% in 2010-11 to 59% in
Global steel tubes and pipes:
The performance of the steel pipes and tubes industry are intertwined with
the performance of the construction, oil and gas and infrastructure
sectors. The increasing energy security investments of global governments
are likely to catalyse the demand for steel pipes. Driven by increased
activity in the oil and gas and construction sectors and the rise in
infrastructure development projects, the global demand for steel tubes and
pipes is forecast to reach 151 million tonnes by 2017 (Source: Global
Strategic Business Report).
Indian steel tubes and pipes:
In 2010, the Indian stainless steel melt production reached 2.9 million
tonnes and finished products touched 2.6 million tonnes. The volume of
production was 162 times higher than in 1978, 13 times higher than in 1990
and almost three times higher than in 2000. India is at the fourth position
in stainless steel production behind China, the European Union and Japan;
it is the third largest stainless steel consumer after China and the
European Union. Demand and production are expected to grow at 10% annually
in the five years till 2016; production capacity is expected to grow to
around 6.8 million tonnes by 2016. Most of this additional capacity will go
on stream between 2011 and 2013 (Source:
Steel Market Intelligence Report, GmbH).
Carbon steel: In India, the carbon steel pipes market (large diameter) is
around one million tonnes per annum; globally this market is estimated at
between 12-15 million tonnes per annum. The supply of the product in India
is around six million tonnes per annum, resulting in an oversupply. The
market is growing by 10% per year.
Oil and gas: India's gas demand is projected to rise from 290 million
standard cubic meters a day (mmscmd) in 2012-2013 to 470 mmscmd in 2016-17.
Against this, domestic supply is estimated to increase from 124 mmscmd to
220-230 mmscmd only (Source: Indian Infrastructure, February 2012)
The demand for petroleum products is projected to cross 300 million tonnes
of oil equivalent (mtoe) by 2017, up from the present 175 mtoe. (Source:
Indian Infrastructure, March 2012)
Gas pipeline infrastructure:
Currently, India has a gas pipeline network of 11,900 km with a gas
transmitting capacity of 304 mmscmd. Various pipeline projects currently
under implementation will add another 14,500 km of pipeline by the end of
FY16, designed to carry around 426 mmscmd of gas (Source: Ambit Research).
India's refining capacity of 194 million tonnes per annum is set to
increase to 238 million tonnes by 2013-a 22% rise. India has a surplus oil
refining capacity with fuel demand pegged at 141.785 million tonnes in
2010-11. Fuel demand is projected to rise by four to five per cent per
annum in the Twelfth Five Year Plan (2012-2017). With India being the
fourth-largest oil importer, oil and gas constitute 45% of country's
primary energy basket, leaving tremendous scope for domestic growth
(Source: Financial Express, December 25, 2011).
The Indian pharmaceutical market has grown at a CAGR of 15% over the past
five years and is expected to reach USD 20 billion by 2015. The Indian
pharma industry has grown at an average of 15-18% for the last couple of
years, while MNCs have grown only at about 8-12%. With strong growth in
domestic and US formulation segments, the sector is expected to witness
healthy growth (Source: Karvy Research).
India has 439 nuclear reactors in operation, providing almost 16% of the
world's electricity. The country is expected to reach 20,000 MW nuclear
capacity by 2020 and 63,000 MW by 2032. With increased foreign technology,
India aims to supply 25% of electricity through nuclear power by 2050. The
Twelfth Plan estimated an additional capacity addition requirement of
1,00,000 MW during 2012-17; of this, around 70% is expected to be thermal.
After a 7.6% contraction in 2008-09, global fertiliser consumption started
to recover (+5.4%) in 2009/10, reaching 163.9 Mt. Global fertiliser demand
is expected to reach 191 million tonnes by 2015-16, growing at an average
annual growth rate of 2.6% . Regional demand growth in South Asia is seen
as remaining strong, driven by India, where demand is expected to increase
by 3.4% owing to a fast-expanding regional population (Source: 79th
International Fertiliser Industry Conference, Montreal).
India is the world's largest consumers of sugar, accounting for 15% of the
world's consumption and second-largest producer after Brazil. In the last
decade, sugar consumption in India increased at a CAGR of 3.5%. Going
ahead, India's sugar consumption is expected to double in 20 years and by
2030, India will account for 18% of the world's consumption (Source: SKP
Massive investments in airport infrastructure have led to world class
airports, the symbol of India's growth story. In addition, the Ministry of
Civil Aviation released Vision-2020 document, an assessment of the overall
outlook of the aviation sector in 2020. It highlights that the aviation
sector has a growth potential to absorb upto USD 120 billion of investment.
Furthermore, the fleet size of commercial airlines sector is expected to
grow to approximately 1,000: domestic passenger numbers could reach 150-180
million, helicopter fleet is expected to be 500, while the air cargo
movement is expected to reach nine million metric tonnes (MMT).
Atomic energy: With the prospect of conventional energy sources diminishing
drastically in the next two decades, nuclear energy is gaining ground as a
viable energy source. India is the sixth largest producer of nuclear energy
in the world with installed capacity of 4,780 MW of electric power. With
six new nuclear reactors to come up in five years, the total capacity will
increase to 9,580 MW. At present, India obtains 2.6% of its total energy
requirements from nuclear energy. The government is planning to increase
this share to 10% by 2020 and 25% by 2050. This translates into a
substantial rise in installed nuclear power generation capacity from the
current level to 20,000 MW by 2020. To meet these targets, the government
has announced investments of USD 77 billion in new nuclear power plants
between 2010 and 2020.
The Company is equipped to convert sectoral optimism into opportunities.
INTERNAL CONTROL SYSTEMS:
The Company has adequate Internal Control Systems to ensure that all assets
are safeguarded and transactions are authorised, recorded and reported
properly. The Internal Controls are periodically reviewed to enhance
efficiency and to ensure statutory compliances. The Internal Audit plan is
designed in consultation with the Statutory Auditors and Audit Committee.
Regular operational and transactional audits are conducted by
professionally qualified and technical persons and the results are used for
effective control and improvements.
INDUSTRIAL RELATIONS AND HUMAN RESOURCES:
As the Company continues to grow, the focus has been on enhancing morale
and capabilities of employees. An exercise was initiated to take a fresh
look at the organisational structure to make it more functionally aligned
with business requirements. We continue to provide orientation and training
for the development of soft and hard skills.
Our industrial relations remained cordial at all organisational levels and
The statement given in this report, describing the Company's objectives,
estimates, and expectations and future plans may be construed as forward
looking statements within the meaning of applicable laws and/or
regulations. Actual performance may differ materially from those either
expressed or implied. Important factors that could affect the working of
the Company include economic conditions, domestic as well as international,
affecting demand and price conditions; raw material prices, interest costs,
changes in the government policies affecting investments, changes in the
government regulations tax laws, and other statutes, high prices of petro
products affecting energy and transportation cost among others.
The information and opinion expressed are forward looking statements, which
the management believes are true to the best of its knowledge at the time
of its preparation. The management will not be liable for any loss, which
may arise, as a result of any action taken on the basis of the information
contained herein. The information contained herein may not be disclosed,
reproduced or used in whole or in part for any purpose or furnished to any
other persons without the express written permission of the Company.
BUSINESS DIVISION 1:
STAINLESS STEEL TUBES AND PIPES:
The Company's SS division comprises two main products-seamless and welded
tubes and pipes. The Company is one of the largest SS tube and pipe
manufacturers in India with a market share of around 55% for tubes and
pipes used in critical applications. The Company's SS production is carried
out in Indrad and Kutch. Over the years, the Company invested in high-end
equipment, widening the product range and addressed segments.
The Company emerged as the only Indian company approved by Nuclear Power
Corporation of India Limited for the manufacture of the critical heat
exchanger and instrumentation tubes used in nuclear reactors.
+ High tensile strength
+ High corrosion resistance
+ Light weight
+ Wide range of sizes
+ Quality surface (inside and outside)
Ratnamani invested in the best imported equipment and testing facilities.
The Company is among few global manufacturers with a hot extrusion
facility, empowering the Company to manufacture tubes and pipes of higher
outer diameter and harder tube finish.
The Company possesses the competence to manufacture low-pressure feed water
tubes, high pressure feed water tubes and condenser tubes in welded and
seamless construction. It can manufacture tubes upto 36 metres single
length in a bright annealed condition across grades.
The Company specialises in the manufacture of ferratic grade tubes.
Oil and gas:
The Company's instrumentation tubes in bright annealed condition are used
in the oil and gas and nuclear sectors.
+ Focus on value-added products of higher grades, catering to niche and
+ Lay the foundation for cold finishing line expansion in Indrad and Kutch.
+ Ensure higher value engineering.
+ Replace manual tube loading with automation leading to increased
+ Increase share in the markets of presence.
+ Increase product range in high-end application requirements.
BUSINESS DIVISION 2:
CARBON STEEL PIPES:
This division specialises in the manufacture of carbon steel pipes. The
division makes submerged arc welded (SAW) and high-frequency electric-
resistant welded (ERW) pipes. The division also manufactures API 5L up to X
80 grade pipes or their equivalent.
Over the years, the Company strengthened its value proposition through
superior quality, the ability to cater to wide sectoral requirements and
the graduation from line piping to projects piping. The Company
strengthened its performance through a higher order booking and a
corresponding increase in capacity utilisation.
+ Manufactured alloy steel pipes of ASTM-A6 91 quality for the first ever
+ Executed a 200 km pipeline order for a client.
+ Increased ERW pipe yield by modifying the welder and coil feeding unit.
+ Added clients for 64'x19.1' SAW pipe of X-70 grade.
+ Applicable across a number of downstream sectors.
+ High tolerance level.
+ Mechanically and technically tested.
+ Generate additional revenues through the manufacture of ERW pipes (18'
+ Increase productivity.
+ Expand the domestic and global presence.
Oil and gas pipelines * Cross country oil and gas pipeline * Spur lines
* City gas distribution * Refinery and petrochemical
Power plants * Cooling water line and auxiliary cooling
water line * Ash handling line
Water and sewerage * Distribution and transmission lines for irrigation
systems * Pipes for potable water * Drainage pipes
Structural * Piling and casing pipes * Structural columns
Other industrial * Pipes for fertiliser plant * Mining pipes
* Dredging pipes * Air duct piping * High mass pipes
for wind mill towers
BUSINESS DRIVER 1:
In a business where the competitive edge is derived from the ability to
make a superior product, the strength of the Company lies in the quality of
its people. The Company's employee base comprises people with the desired
At Ratnamani, we inculcate a sense of teamwork and belonging among our
employees through the initiatives:
+ The Company organised various events at multiple locations to facilitate
+ The Company established a system with streamlined talent requisition,
sourcing methodologies with a clear focus on the talent needs vis-a-vis
+ The Company reintroduced Employees Performance Management System
facilitating an alignment of functions towards meeting the Company's goals.
+ The Company strengthened training and induction around business and
functional orientation through specialised faculty.
+ The Company implemented steps to enhance the welfare and motivation of
team members, including helping survivors of the deceased.
The Company is on the verge of an integration of the HR function through an
BUSINESS DRIVER 2:
In a business where success is derived from informed decision-making, the
strength of the Company lies in its ability to draw information from
various sources and provide it on tap for onward planning, reconciliation,
visibility and strategic accuracy. The Company kept itself abreast with
prevailing business requirements and accordingly aligned its IT
BUSINESS DRIVER 3:
RAW MATERIAL MANAGEMENT:
In a business where a commoditised raw material needs to be adequately
available and comprehensively enriched to manufacture a specialised end
product, success is derived from the ability to manage this input in a
consistent manner for predictable results.
At Ratnamani, our supply chain sources adequate raw material of the right
quality at the lowest possible cost with the objective to keep its
production lines running at all times.
+ The Company sources raw material from some of the largest and most
respected carbon steel and stainless steel manufacturers globally.
+ The Company is engaged in relevant value-engineering to strengthen the
input-output ratio and reduce waste.
+ The Company eliminated non value-adding processes, reduced processes and
+ The Company's just-in-time sourcing reduced material accumulation.
BUSINESS DRIVER 4:
QUALITY AND TESTING:
In a business where the end product is manufactured in large quantities,
success is derived from the ability to ensure that a high quality is
consistent from batch to batch in line with precise customer needs.
At Ratnamani, a high quality consistency is derived from its comprehensive
quality and testing discipline without interrupting production/sales flow.
Over the years, the Company invested in stringent testing procedures
benchmarked with international standards, progressively raised the bar and
complied with a number of process certifications.
Key initiatives, 2011-12:
+ The Company strengthened the nondestructive testing process to ascertain
pipe cracks, pin holes, dents and laminations.
+ The Company manufactured alloy steel pipes adhering to the ASTM-AS-91
+ The Company streamlined quality checks, reducing rework to less than one
RISK MANAGEMENT AT RATNAMANI:
RISKS AND ITS EFFECTS ARE POSSIBLE EVENTS OR POSSIBILITIES THAT COULD HAVE
AN IMPACT ON THE COMPANY'S PERFORMANCE. RATNAMANI ANALYSES BUSINESS RISKS
FOLLOWED BY A DETAILED MITIGATING APPROACH AS UNDER:
The Company may not be able to capitalise on growing business
opportunities: The Company enjoys enduring business relationships with
large global and Indian customers with repeat engagements. The Company is
present in growing business spaces (oil and gas, petrochemicals and
refineries, power industries-Thermal, nuclear and solar power plants,
fertiliser and chemical industries, paper and pulp, sugar industries, line
pipes for LNG Terminals, desalination plants, aerospace, atomic energy,
among others) with a comprehensive product range supported by three
manufacturing facilities (Indrad, Chhatral and Kutch) and two mobile
plants. The Company's manufacturing facilities are proximate to Kandla and
Mundra ports, helping exports with speed.
The business may cease to be attractive:
The Company's products form an integral part of several sectors. The
Company provides products to several sectors. Some of these sectors (oil
and gas, nuclear and thermal power, engineering, water management and
pharmaceutical sectors, among others) are expected to grow attractively.
Volatile raw material could affect the bottomline:
The Company enters into short and long-term contracts to reduce the impact
of price volatility. Its proximity to raw materials (being close to ports)
and multi-vendor support helped control costs.
Quality aberrations could affect the order book and revenues:
The Company is consistently committed to continuous quality control process
monitoring. Its plants are certified across safety and environment
certifications. It received quality approvals from demanding clients,
leading to order inflows. Its stringent quality and testing resulted in
long-term relationships with customers and introduction of new customers.
The depreciation in the value of the Indian currency relative to foreign
currency can affect earnings:
The Company imports a substantial requirement of its mother hollows, flats
and coil on one hand, while exports comprise a considerable part of the
total revenue thereby providing a natural hedge. Efforts are on to increase
Obsolete technology could affect customer attrition:
The Company invested in specialised imported equipment. It is one of the
few, globally, into manufacture of titanium tubes used in nuclear reactors.
Its SS plant of Kutch is a complete automated plant considered among the
three leading manufacturing plants in the world. Its proposed cold
finishing line in the SS division at Indrad will be the largest cold
finishing line at a single location in India.
Inadequate liquidity could affect growth:
The Company is adequately supported by cash reserves comprising 11.59% of
the total capital employed. The Company borrowed loans in 2008, following
which it funded its working capital and capex requirement largely through
accruals. The Company's average debt cost is less than 10%; its debt-equity
ratio was 0.51 at the close of 2011-12.
For and on behalf of the
Board of Directors
Place: Village: Indrad, Taluka Kadi Prakash M. Sanghvi
Date : 29th May, 2012. Chairman