Annual Report 2008-09

Lanco Industries Limited
corporate information
Directors Shri G. Maruthi Rao Shri Gouri Shankar Rathi Shri L. Madhusudhan Rao Shri G. Bhaskara Rao Shri L. Sridhar Shri D.R. Jawahar (Nominee of IDBI) Shri P. Rajeswara Rao (Nominee of APIDC) managing Director chief operating officer sr. general manager-finance & company secretary auDitors M/s. K.R. Bapuji & Co. Hyderabad solicitors Bankers Khaitan & Co. ICICI Bank Ltd. HDFC Bank Ltd. IDBI Bank Ltd. Standard Chartered Bank BNP Paribas Punjab National Bank Bank of India registereD office & Works Rachagunneri 517 641 Srikalahasthi Mandal Chittoor District Andhra Pradesh share transfer agents M/s. Karvy Computershare Private Limited Plot No. 17-24, Beside Image Hospital Vittalrao Nagar, Madhapur Hyderabad-500 081 Shri Mayank Kejriwal Shri Shirish Kurane Shri G.D. Saini
Directors report
Dear shareholders, Your Directors take pleasure in presenting the 17th Annual Report and Audited Accounts of your Company for the year ended 31st March, 2009. financial results
Net Sales & Other Income Gross Profit Depreciation Profit Before Taxation Less: Provision for Taxation (Including Deferred Tax) Profit After Tax Profit Brought Forward from Previous Year Prior Period Adjustment Balance Available for Appropriation Appropriations are made as under: Debenture Redemption Reserve General Reserve Proposed Dividend Dividend Tax Balance Carried Forward to Next Year
(rs. in lakhs) 2008-09 64,681.79 4,464.66 1,641.84 2,822.82 987.53 1,835.29 1,242.48 3,077.77 468.75 1,000.00 397.64 67.58 1,143.80
(Rs. in Lakhs) 2007-08 46,458.84 5,514.43 1,512.99 4,001.44 1,409.70 2,591.74 858.92 (55.46) 3,395.20 187.50 1,500.00 397.64 67.58 1,242.48
DiViDenD Your Directors recommend payment of dividend @ 10% on the equity shares of the Company for the year ended 31st March, 2009. If approved, the dividend will absorb Rs. 465.22 lakhs (including Rs. 67.58 lakhs towards dividend tax). reVieW of operations During the year, the Company achieved Sales (Gross) of Rs. 680.47 Crs., an increase of 37.55% over the previous years figure of Rs. 494.72 Crs. However due to spiraling cost of inputs especially the imported coal and freight, higher interest cost & foreign exchange loss, the Profit (PBT) for the year was lower at Rs. 28.23 Crs. as against Rs. 40.01 Crs. in the previous year. The quantity of Low Ash Metallurgical Coke produced in the Coke Oven Plant was marginally low at 1,13,052 MT in FY 200809 as against 1,17,438 MT in FY 2007-08. The units of power generated in the 12 MW Waste Heat Recovery Based Captive Power Plant of the Company were higher at 629 Lakh units in the year under review compared with 473 Lakh units in the preceding year. The production of Mini Blast Furnace (MBF) producing liquid metal mainly for Ductile Iron Pipe Plant, for the year was at 1,48,433 MT compared with 1,48,677 MT in the previous year, reflecting no major change. However, the production of D.I. Pipes was higher by about 9% at 1,23,422 MT compared with 1,13,471 MT in the preceding year. The production of Cement during the year was also higher by 24% at 86,812 MT compared to 70,002 MT in the previous year. During the year, the Company installed two new Induction Furnaces and an Annealing Furnace at an aggregate capital outlay of about Rs. 30 Crs. to overcome the capacity constraints in the Ductile Iron Pipe plant, thereby increasing its capacity from 1,20,000 TPA to 1,80,000 TPA, in last quarter of the year 2008-09. Apart from the above increase in the capacity of DIP Plant, the Company is also planning to install by June10, a higher capacity Mini Blast Furnace with hot blast stoves, which along with water, power and other infrastructure facilities will require an additional investment of about Rs. 100 Crs. To meet the requirement of funds for these investments and to augment longterm funds for working capital, the Company has obtained sanction of a Term Loan of Rs. 128 Crs. out of which Rs. 14.41 Crs. have been availed during the year 2008-09. current years prospects The market conditions are likely to remain challenging in the near future due to emerging domestic competition and the prevailing global economic recession. However the demand for D.I. Pipes is likely to be positive, in view of the thrust given by the Government of India to create infrastructure for drinking water across the country. This along with softening prices of imported coking coal a key input for the Company, indicates towards a positive outlook for the performance of your Company, during the current year.
Directors Shri Pradip Kumar Khaitan resigned from the Board on 29th January, 2009. Your Directors place on record their appreciation for the active participation and valuable services rendered to the Company by Shri Pradip Kumar Khaitan. Industrial Development Bank of India Limited (IDBI), Mumbai nominated Shri D.R. Jawahar on the Board of Directors of the Company with effect from 8th September, 2008 in place of Smt. Vatsala Krishnakumar. Your Directors place on record their appreciation for the active participation and valuable services rendered to the Company by Smt. Vatsala Krishnakumar. Shri Gouri Shankar Rathi and Shri G. Maruthi Rao retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. corporate goVernance The Corporate Governance report is set out as Annexure to this Report. management Discussion anD analysis Please refer to the management discussion and analysis section appearing elsewhere. particulars of employees Board of Directors express its appreciation for sincere efforts made by the employees of your Company at all levels during the year and their co-operation in maintaining cordial relations. The information required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, the report and accounts are being sent to all the shareholders of the Company excluding the above information. Those shareholders, who desire to obtain these particulars, would be provided the same upon receiving such request. statutory information Information as per Companies (disclosure of particulars in the Report of Board of Directors) Rules, 1988 related to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-A attached hereto and forming part of this report. Directors responsiBility statement The Board of Directors of the Company confirms: i) ii) That in the preparation of annual accounts the applicable accounting standards have been followed and there has been no material departure. That the selected accounting policies were applied consistently and the Directors 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 as at 31st March 2009 and of the profits of the Company for the year ended on that date. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities: and That the annual accounts have been prepared on a going concern basis.
iii)
iv)
auDitors The Auditors, M/s. K.R. Bapuji & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. acknoWleDgements The Board of Directors thank the Customers, Shareholders, Investors, Government Authorities, Financial Institutions and Banks for their continued co-operation and support to your Company. For and on behalf of the Board of Directors Place: Chennai Date: 27th April, 2009 g. Bhaskara rao Director mayank kejriwal Managing Director
annexure a to Directors report

Information as per Section 217(1)(e) of the Companies Act, 1956 read with 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 2009. a. conserVation of energy a. b. energy conservation measures taken Commissioned during the year a New Annealing Furnace with Blast Furnace Gas as fuel, which results in the Company not using LDO for Annealing Furnace. Reduction of Coke Consumption in MBF, by optimum utilization of the handling system. additional investments & proposals, if any, being implemented for reduction of consumption of energy Installation of high capacity Mini Blast Furnace with Hot Blast Stoves, which would result in high productivity with lower coke consumption. Variable frequency device (VFD) for slag drier & root blowers for energy conservation in Cement Plant. Energy conservation is an ongoing process and there is a continuous programme to create awareness and motivate the employees to conserve energy through small group activities. c. Benefits derived from the above initiatives (a) and (b) With implementation of above measures, cost of energy is likely to be reduced resulting in reduction of cost of production. B. technology aBsorption The Chinese Technology for Annealing Furnace and Stamp Charging in Coke Oven Plant has been fully absorbed. c. foreign exchange earning anD outgo Foreign Exchange Earning and outgo (Rs. in Lakhs): 2008-09 2007-08
i) Foreign Exchange Earning ii) Foreign Exchange Used

form-a a. poWer & fuel consumption Electricity a. Purchased: Units (KWH) Total amount (Rs.) Rate / Unit (Rs. / KWH) b. Own Generation: 1. Through Diesel Generator Units (KWH) Units / Ltr. of Diesel Oil Cost / Unit (Rs. / KWH) 2. a) 2.5 MW CPP (MBF) Units (KWH) Cost / Unit (Rs. / KWH) b) 12 MW CPP (COP) Units (KWH) Cost / Unit (Rs. / KWH) B. consumption per mt of proDuction Electricity (KWH) Pig Iron D.I. Pipe Cement Coke
27,968.87
2008-09
14,067.65
2007-08
14826230 8,02,32,190 5.41
20167134 6,90,37,809 3.42
528497 2.79 9.99 17348800 0.25 62907066 0.45
422320 3.66 8.96 18675200 0.26 47254326 0.55
180 360 101 23
175 327 94 20
corporate goVernance report

companys philosophy on corporate goVernance
It is a process that requires to be comprehensive for maximum effectiveness. The Company, therefore, follows a systematic and rigorous process encompassing all regulatory disclosures, transparency, proficient operational practices, well-built internal controls and risk management systems for enhancement of Stakeholders value. The Board of Directors seeks to discharge its operational, strategic and fiduciary responsibilities in all fairness to ensure good management practices; further, the Board represents the shareholders interest in terms of maximizing shareholders wealth and remain committed to its responsibilities for all the constituents of its business i.e., investors, customers, employees, suppliers and the general public. BoarD of Directors composition of Board Companys eight-member Board of Directors comprises: One Executive Director. Three Independent Non-Executive Directors. Four Non-Independent Non-Executive Directors.
The composition of the Board of Directors and the position they hold in other public companies including private companies which are subsidiaries of public companies are given in the following table: name of Director executive / nonexecutive / independent ChairmanNon-Executive Managing DirectorExecutive Non-ExecutiveIndependent Non-Executive Non-Executive Non-Executive Non-Executive Non-ExecutiveIndependent Non-ExecutiveIndependent Non-ExecutiveIndependent no. of other* Directorships held 14 12 15 14 15 1 3 other* committee# positions held as chairman 3 5 1 as member 11 5 2 1
Shri Pradip Kumar Khaitan (i) Shri Mayank Kejriwal Shri G. Maruthi Rao Shri Gouri Shankar Rathi Shri G. Bhaskara Rao Shri L. Madhusudhan Rao Shri L. Sridhar Smt. Vatsala Krishnakumar (ii) Nominee of IDBI (Lender) Shri D.R. Jawahar (ii) Nominee of IDBI (Lender) Shri P. Rajeswara Rao Nominee of APIDC (Equity Investor)
(i)
Resigned from the Board on 29th January, 2009.
(ii) IDBI nominated Shri D.R. Jawahar as its nominee in place of Smt. Vatsala Krishnakumar with effect from 8th September, 2008. * Excluding Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956.
# Only two Committees viz, Audit, and Shareholders / Investors Grievance Committees have been considered for this purpose. None of the Non-Executive Directors have any pecuniary relationship or transaction with the Company in their personal capacity. attenDance of each Director at the BoarD meetings anD the last annual general meeting Five Board Meetings were held during the year 2008-09. The dates of the meetings are as follows: 28th April08, 19th July08, 27th August08, 23rd October08 and 23rd January09. Agenda Papers along with explanatory statements were circulated to the Directors in advance for each of these meetings. All relevant information as recommended by the SEBI on Corporate Governance as well as items required under Clause 49 of the listing agreement was placed before the Board from time to time. the following table highlights the attendance of each Director at the respective meetings during the year 2008-09: name of Director Shri Pradip Kumar Khaitan Shri Mayank Kejriwal Shri G. Maruthi Rao Shri Gouri Shankar Rathi Shri G. Bhaskara Rao Shri L. Madhusudhan Rao Shri L. Sridhar Smt. Vatsala Krishnakumar Shri D.R. Jawahar Shri P. Rajeswara Rao auDit committee The Audit Committee, which was constituted on 30th January, 2001 presently comprises two Independent Non-Executive Directors and one Non-Executive Director. The Audit Committee is expected to review the Companys financial reporting process and its financial statements, review the accounting and financial policies and practices, review the efficacy of the internal control mechanisms and monitor the management of risk, review policies adopted by the Company and ensure compliance with the regulating guidelines, review reports furnished by the internal and statutory auditors and ensure that suitable follow ups are taken. The terms of the reference of the Audit Committee include the powers as laid out in Clause 49 II (C) of the Listing Agreement and role as stipulated in Clause 49 II (D) of the Listing Agreement. The Audit Committee during the year ended 31st March, 2009 had four meetings on 28th April08, 19th July08, 23rd October08 and 23rd January09. Board meetings held 5 5 5 5 5 5 5 5 5 5 attended 3 4 4 5 4 4 2 2 3 agm NO NO YES YES YES NO YES NO NO YES
the composition of the audit committee as on 31st march, 2009 and attendance during the year are as under:
sl. no. 1 2 3 4
name of Directors Shri G. Maruthi Rao Shri G. Bhaskara Rao Smt. Vatsala Krishnakumar (Nomination withdrawn w.e.f. 8.9.08) Shri D.R. Jawahar (Nominated w.e.f. 8.9.08)
position Chairman Member Member Member
executive / non-executive / independent Independent, Non-Executive Non-Executive Independent, Non-Executive Independent, Non-Executive
no. of meetings attended 3 3 2 1
The Audit Committee met on 27th April, 2009 for considering finalization of accounts for the year ended 31st March, 2009. The Managing Director, Chief Operating Officer, Sr. General Manager-Finance & Company Secretary, Statutory Auditors and Internal Auditors are generally present in the Audit Committee meeting as invitees. Company Secretary acts as the Secretary to the Audit Committee. Shri G. Maruthi Rao, Chairman of the Audit Committee attended the last Annual General Meeting of the Company held on 27th August, 2008. code of conduct In pursuance of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (as amended), the Board has approved the Code of Conduct for Prevention of Insider Trading and authorized the Audit Committee to implement and monitor the various requirements as set out in the Code. Pursuant to Clause 49 of the listing agreement, it is hereby affirmed that the Code of Conduct for Prevention of Insider Trading approved by the Board has been complied with during the year by the senior management of the Company. Whistle Blower policy Pursuant to Clause 49 of the listing agreement, the Company has put in place the Whistle Blower Policy duly approved by the Board. Further, it is hereby affirmed that the Company has not denied any personnel access to the Audit Committee of the Company (in respect of matters involving alleged mis-conduct) and that the Company has provided protection to Whistle Blowers from unfair termination and other unfair or prejudicial employment practices. remuneration committee The Remuneration Committee comprises of three Directors namely Shri. Gouri Shankar Rathi (Chairman Non-Executive), Shri G. Bhaskara Rao (Non-Executive) and Shri D.R. Jawahar (Independent Non-Executive) as its members. The Remuneration Committee reviews and recommends the terms of appointment and remuneration of the Executive Directors for approval by the Board as well as the shareholders. Presently the Non-Executive Directors do not receive any remuneration from the Company except by way of sitting fees for attending the meetings of the Board and its Committees. Moreover, Shri Mayank Kejriwal, Managing Director of the Company has also offered his services without any remuneration from the Company.
Details of remuneration to Directors, 2008-09 name of the Directors Shri Pradip Kumar Khaitan Shri Mayank Kejriwal Shri G Maruthi Rao Shri Gouri Shankar Rathi Shri G Bhaskara Rao Shri L Madhusudhan Rao Shri L Sridhar Smt. Vatsala Krishnakumar Shri D.R. Jawahar Shri P. Rajeswara Rao total shareholdings of non-executive Directors name Shri L. Madhusudhan Rao Shri G. Bhaskara Rao Shri L. Sridhar Shri G. S. Rathi shareholDers committee The composition of Shareholders / Investors Grievances Committee is as follows: Shri Gouri Shankar Rathi Shri G Bhaskara Rao Shri G. Maruthi Rao Chairman Member Member no. of shares held 2284724 2284674 2282935 10571 % of companys equity shares 5.75 5.75 5.74 0.03 sitting fee (rs.) 60,000 1,40,000 1,00,000 1,40,000 80,000 80,000 60,000 60,000 7,20,000 service contract / notice period / severance fees Resigned on 29th January, 2009 Retirement by rotation -do-do-do-doNomination withdrawn by IDBI w.e.f. 8.9.08 Nominated by IDBI w.e.f. 8.9.08 Nominee of APIDC
the shareholDers / inVestors grieVances committee aDministereD the folloWing a. Redress Shareholders and Investors complaints relating to non-receipt of balance sheet, transfer of shares, nonreceipt of dividends etc.
b. c. Consolidate and sub-divide share certificate(s). Approve transmission and issue of duplicate / fresh share certificate(s).
In accordance with Clause 49 para VI(D) of the Listing Agreement of the Stock Exchanges, the Board has delegated powers of share transfers to M/s. Karvy Computershare Private Limited (KCPL), Plot No. 17-24, Beside Image Hospital, Vittalrao Nagar, Madhapur, Hyderabad-500 081. KCPL reviews share transfers every fortnight. compliance officer G.D. Saini, Company Secretary, Rachagunneri-517641, Srikalahasthi Mandal, Chittoor District, AP., Ph: 08578-287650-55, Fax: 08578-287657, E-mail: gdsaini@lancoindustries.com general BoDy meetings Location and time for last three Annual General Meetings:
Date 31.08.2006 27.08.2007 27.08.2008
Venue Rachagunneri Village, Srikalahasthi Mandal, AP. Rachagunneri Village, Srikalahasthi Mandal, AP. Rachagunneri Village, Srikalahasthi Mandal, AP.
time 11.30 A.M. 11.30 A.M. 11.30 A.M.
No special resolution was put through postal ballot in the last year.
Disclosures The Company has generally complied with all the mandatory requirements as specified in the revised Clause 49 to the extent these apply and extend to the Company. Transactions with the related parties are disclosed in Note 10 of Schedule 19 of the Accounts in Annual Report. No transactions were made that may have potential conflict with the interests of the Company at large. The Managing Director has given declaration to the Board that he has no personal interest in any material, commercial and financial transactions that may have any potential conflict with the interest of the Company at large. There were no strictures or penalties imposed by either SEBI or the Stock Exchanges or any statutory authority for noncompliance of any matter relating to Capital Market during the last three years. The CEO (Managing Director) and the CFO (Sr. General Manager-Finance & Company Secretary) have furnished a Certificate to the Board for the year ended 31st March, 2009 in compliance with the revised Clause 49.V of the Listing Agreement(s) as amended.
means of communication The Company regularly intimates quarterly financial results to the Stock Exchanges immediately after they are taken on record by the Board. Further, coverage is given by publication of the financial results in the leading economic and vernacular daily newspapers. The quarterly financial results and other shareholder related information are also posted on Corporate Filing site and Companys website www.lancoindustries.com. Management Discussion and Analysis is covered in the Directors Report to the Shareholders, which forms a part of the Annual Report. general shareholDers information The following information would be useful to our shareholders:
sl. no 1 Annual General Meeting Date and Time Venue 28th August, 2009 at 11.30 AM At Registered Office: Rachagunneri Village-517641, Srikalahasthi Mandal, A.P. Tentative Schedule End July, 2009. End October, 2009. End January, 2010. End April, 2010. End August, 2010. 22nd August, 2009 to 28th August, 2009. 3rd September, 2009. Listed at Mumbai Stock Exchange Ltd & National Stock Exchange of India Ltd. Listed at Mumbai Stock Exchange Ltd. 513605 & Lancoin INE943C01027 INE943C07016 information
Financial Calendar Financial Reporting for the Quarter ended June 30, 2009 Financial Reporting for the Quarter ended September 30, 2009 Financial Reporting for the Quarter ended December 31, 2009 Financial Reporting for the Quarter ended March 31, 2010 Annual General Meeting for the year ending March 31, 2010.
3 4 5
Book Closure Date (Both days inclusive) Dividend Payment Date Listing Details: Equity Shares Non-Convertible Debentures
6 7
Stock Code (Mumbai & National Stock Exchange) Demat ISIN Number for NSDL & CDSL Equity Shares Non-Convertible Debentures
(The Company has voluntarily de-listed its shares from the Calcutta Stock Exchange Association Limited and the Hyderabad Stock Exchange Limited)
8.
stock market Data: month Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 mumbai stock exchange high (rs.) 48.75 49.00 42.40 35.60 38.25 37.50 30.10 22.95 21.00 21.85 19.40 18.00 low (rs.) 35.00 41.00 30.50 28.35 32.60 25.15 16.75 16.70 17.10 16.10 15.75 12.60 Volume 431822 250139 131821 324734 200421 111685 104798 44014 292326 224352 53158 91704 48.60 48.70 43.00 35.75 38.40 36.50 29.00 23.40 21.00 22.50 19.50 18.00 national stock exchange high (rs.) low (rs.) 35.10 40.70 30.75 28.00 32.30 25.40 16.60 16.85 17.10 16.00 15.05 12.00 Volume 441046 278997 149124 543982 182222 106631 122817 50981 300345 204082 59158 130516
Share Price Performance in comparison to BSE / NSE Sensex / Nifty % change in lil share price BSE Financial Year 2008-09. -63.80 NSE -62.41 % change in sensex / nifty BSE -48.98 NSE -36.21
9.
Registrar & Share Transfer Agents
10.
Karvy Computershare Private Ltd Plot No. 17-24, Beside Image Hospital, Vittalrao Nagar, Madhapur, Hyderabad-500 081 The turnaround time for completion of transfer of shares in physical form is generally 15 days from the date of receipt, if the documents are clear in all respects.
Share Transfer System
11. Details of queries / complaints received and resolved during the year 2008-09: The total number of complaints received and resolved during the year was: Total Complaints Received Total Complaints Resolved 41 41
As confirmed by M/s Karvy Computershare Private Ltd (RTA of the Company) the complaints are generally attended within 15 days from the date of receipt. 12. Distribution of Shareholding as on March 31, 2009: sl no. 1 2 3 4 5 6 7 8 category from 1 5001 10001 20001 30001 40001 50001 100001 to 5000 10000 20000 30000 40000 50000 100000 And above total number of shareholders 13654 681 317 108 55 43 62 106 15026 % of shareholders 90.87 4.53 2.11 0.72 0.37 0.29 0.41 0.70 100.00 no. of shares 1587037 572238 486805 264098 196141 205772 471326 35980178 39763595 % of amount 3.99 1.44 1.22 0.66 0.49 0.51 1.19 90.50 100.00
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13. sl. no. a. 1
Categories of Shareholding as on 31st March, 2009 category promoters holDing promoters a) Indian Promoters i) ii) 2 Electrosteel Castings Limited Others 19301218 498669 sub-total 19799887 48.54 1.25 49.79 no. of shares held percentage of shareholding
b) Foreign Promoters persons acting in concert non-promoters holDing institutional investors a) Mutual Funds and UTI b) Banks, Financial Institutions, Insurance Companies (Central / State Govt. Institutions / Non-Government Institutions) c) FIIs sub-total 4 others a) Private Corporate Bodies b) Indian Public c) NRIs / OCBs d) Any other (Clearing Members) sub-total granD total 14. Dematerialisation of Shares and Liquidity
B. 3
17325 394725 10050 422100 1910889 13060292 4564473 5954 19541608 39763595
0.04 0.99 0.03 1.06 4.81 32.84 11.49 0.01 49.15 100.00
Since the Company has entered into an agreement with both the depositories namely NSDL and CDSL for dematerialisation of its Shares, the Shareholders of the Company have the choice to dematerialize their shares and keep them in dematerialized form with any depository participant. As on 31.3.2009, there are no outstanding convertible instruments. Village: Rachagunneri-517641 Mandal: Srikalahasthi District: Chittoor, A.P., India. Ph.No: 08578-287650 (5Lines) As stated above. Besides constituting the Remuneration Committee, the Company has so far not implemented other Non-Mandatory requirements of the Code of Corporate Governance.
15. 16.
Outstanding convertible Instruments Registered Office & Works
17. 18.
Members can Contact us at our Registered Office: Adoption of requirements Non-Mandatory
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certificate of compliance With the coDe of conDuct Declaration under clause 49(i)(D) This is to certify that: 1) 2) 3) In pursuance of the provisions of Clause 49(I)(D) of the Listing Agreement, a Code of Conduct has been laid down by the Company for all the Board members and the Senior Management Personnel of the Company. The said Code of Conduct is also uploaded on the website of the Company at www.lancoindustries.com. All Board Members and Senior Management Personnel have affirmed having complied with the said Code of Conduct, during the year ended 31st March, 2009. For lanco industries limited Place: Chennai Date: 27th April, 2009 mayank kejriwal Managing Director
auDitors certificate on corporate goVernance To The Members of LANCO INDUSTRIES LIMITED We have examined the compliance of conditions of Corporate Governance by Lanco Industries Limited for the year ended on 31st March, 2009, as stipulated in clause 49 of the Listing Agreement of the said company with the stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with which the management has conducted the affairs of the company.
For k.r. Bapuji & co. Chartered Accountants Place: Chennai Date: 27th April, 2009 k.r. Bapuji Partner Membership No. 21169
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management Discussion & analysis

Back grounD Lanco Industries Limited (LIL) was promoted by Lanco Group in 1992 in Chittoor District, A.P. LIL setup a Mini Blast Furnace (MBF) in 1994 with a capacity of 90,000 TPA to manufacture and sell Pig Iron to the customers and foundry units across India. In 1998, LIL entered into an arrangement to supply Molten Iron and Pig Iron to Lanco Kalahasthi Castings Limited (LKCL) a company within the same campus engaged in the business of Iron Castings & Forging. LKCL later on added high technology Ductile Iron Pipes (DIP) manufacturing facilities to its portfolio. In March 2002, Indias leading D.I. Pipe manufacturer, Electrosteel Castings Limited (ECL) entered into a strategic alliance with LIL and LKCL by acquiring 46.43 and 48.89 percent stake in the companies respectively. In addition to technological support, ECL also infused fresh funds into LIL by way of equity participation and re-modeled the financial structure, thus reducing interest costs. In 2003, the capacity of MBF was increased from 90,000 TPA to 1,50,000 TPA and the capacity of D.I. Pipes was increased from 60,000 TPA to 90,000 TPA at a capital outlay of approx. Rs. 35 crores. In 2003, LKCL got merged with LIL (with effect from 1st April, 2003) to take advantage of the close synergy in the business model of the two companies, since a large part of Pig Iron in liquid form is consumed by LKCL for manufacture of Pipes. In 2004, a major backward integration project comprising of 1,50,000 TPA Coke Oven Plant and 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant at a capital outlay of Rs. 88 crores was started. In 2005, 1,50,000 TPA Coke Oven Plant was commissioned and commercial production was stabilized. The coke being produced is at par with international quality of LAM coke. In 2006, the capacity of D.I. Pipes was further increased from 90,000 TPA to 1,20,000 TPA and the 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant was setup, which started generating power from March, 2007. In 2007, Stamp Charging System was successfully implemented at Coke Oven Plant for producing quality Metallurgical coke at a lower cost. In 2008, the Company implemented ERP system (SAP) to support business process and effective resource planning & management. In 2009, capacity of D.I. Pipes was increased from 1,20,000 TPA to 1,80,000 TPA. Value aDDition LIL has a large value addition chain starting from iron ore to D.I. Pipes. Companys own Coke Oven Plant along with 12 MW Waste Heat Recovery Based Co-generating Captive Power Plant have strengthened the value chain. the year in retrospect (2008-09 Vs. 2007-08) The volumes of production and sales of Companys products reflected a healthy growth during the year 2008-09. production (mt) Dispatches (mt) product 2008-09 2007-08 2008-09 2007-08 Molten Metal / Pig Iron* 1,48,433 1,48,677 1,49,970 1,47,795 D.I. Pipes 1,23,422 1,13,471 1,23,345 1,14,749 Cement ** 86,812 70,002 87,008 69,633 * Dispatches include 1,36,137 MT (previous year 1,26,018 MT) used for captive consumption. ** Dispatches include 10,087 MT (previous year 9,066 MT) used for captive consumption.
13
1,13,052 MT coke was produced in the Coke Oven Plant for captive consumption during 2008-09 vis--vis 1,17,438 MT in 2007-08. The 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant of the Company produced 629 Lakh units during 2008-09 compared to 473 Lakh units in 2007-08. With the increase in volumes, the Company achieved a higher turnover of Rs. 646.82 Crores during the year under review compared to Rs. 464.59 Crores in the year 2007-08. Despite healthy growth in the top line, due to spiraling cost of inputs and higher interest cost, the profit (PBT) was lower at Rs. 28.23 Crores as against Rs. 40.01 Crores in the previous year. Consequently, the profit after tax also came down to Rs. 18.35 Crores as against Rs. 25.92 Crores for 2007-08. inDustry structure D.I. Pipes are generally preferred for water supply, sewerage and transmission applications. Superiority of D.I. Pipes lies in its ability to provide trouble free service against increasing traffic load and much longer life compared to other types of Pipes. Water supply in our country is mainly met through monsoons and needs significant investment in water infrastructure for conservation and re-use of water resources. Therefore, the Government is focusing on creation of urban and rural infrastructure, including water resource and sewage management. In these efforts, monetary support is being provided to the Government by International Development Finance Institutions such as the World Bank and the Asian Development Bank. This has generated good demand for D.I. Pipes that are increasingly being used for water and sewage transportation. Moreover, special thrust is being given by the Government for providing potable water through out the country. Business raw-materials As already discussed due to steep increase in the prices of the key raw-materials i.e., Coal and Iron Ore required for manufacture of molten Pig Iron, the ratio of raw-material cost to turnover increased to 63% in the year 2008-09 as against 55% in the previous year, reflecting a substantial hike in input cost. Quality The Company continues to focus on quality to ensure brand image and higher market share. Companys quality systems are ISO 9001:2000 accredited. BSI, UK has approved Ductile Iron Pipes manufactured by Company for using kite mark license. safety, health & environment The Company is committed to the safety and health of its employees and all stakeholders. The safety management systems in the company are regularly being improved and upgraded. Systems for monitoring activities relating to health, hygiene and safety have been setup at every plant. Training and awareness programmes are conducted regularly on safety, health and environment. The Companys environment management systems are ISO 14001:2004 certified. The Company has sponsored various social activities for spreading awareness of environment and safety issues in the neighboring villages. corporate social responsibility (csr) CSR activities are considered to be an integral part of Companys business. With this guiding principle, the Company has initiated various CSR activities to address the needs and issues of the people living in the area. Such activities include education, health care and vocational trainings. information technology The Company believes that Information Technology is an important tool to support its business functions to align them with best industry practices. The Company has successfully implemented SAP as ERP System during 2008-09.
14
opportunities anD threats The rising prices of raw-materials and logistics coupled with competitive market have created pressure on the margins. However higher capacity utilization, cost control measures and long-term planning for raw-material availability (including backward integration) will enable the Company to protect margins on its end product and achieve sustained growth. outlook The Company is continuously moving forward to achieve operational excellence and value addition for the stakeholders through operational synergy, higher capacity utilization, backward integration, cost reduction and continual improvement in shop floor operations. Backward integration by setting up Coke Oven Plant and Captive Power Plant has further strengthened the value addition chain of the Company. The growth in demand for D.I. Pipes offers positive outlook for the Company in the coming years. risks anD concern Please refer to Risk Management section appearing elsewhere in the Annual Report. internal control system anD its aDeQuacy The Company has an established Internal Control System, the compliance of which is periodically assessed by internal audit and regularly reviewed by the statutory auditors and the audit committee of the Board. Any change that is recommended is assessed and implemented. human resources The Company firmly believes in the development of human resources, which is its key asset to achieve sustainable competitive advantage and enhance shareholders value. The Company undertook several steps towards development of human resources including training at various levels, safety and performance appraisal. Industrial relations were cordial throughout the year. cautionary statement Statements in this report on management discussion and analysis, describing the Companys objectives or projections, may be forward-looking statements within the meaning of applicable laws or regulations. Actual results could, however, differ materially from those expressed or implied.
15
risk management
The Company is committed to strengthen its Risk Management capability on continuous basis with the aim to protect and enhance shareholder value. The Companys risk management ensures compliance with the requirements of amended Clause 49 of the Listing Agreement. economic risk Due to increase in the cost of inputs and raw-materials used by it, the Company is faced with the threat of pressure on margins. To counter this risk, Company has taken various steps including setting up Coke Oven Plant, Power Plant from Waste Heat Recovery & upgrading and expanding manufacturing capacities. Apart from this, cost control measures have been initiated at all plants. competitor risk As the Companys market is highly competitive in view of increasing domestic capacity and lowering of duty barriers, it is exposed to the risk of competitors. To counter this risk, the Company is focusing on increasing its market share and taking various marketing initiatives. The Company is also taking steps to establish the brand image of its product. Considering the thrust given by the Government of India on water projects, the demand of D.I. Pipes is expected to grow. enVironment risk As the Company is engaged in Steel Industry, it is exposed to the risk of environment and pollution controls. The Company is an ISO 14001:2004 certified and strictly follows the applicable norms. The company is committed for conservation of environment and development of greenery. inDustrial risk Labour unrest may affect the production and the Company is exposed to such risk. Since inception the Company is maintaining excellent labour relations and there have been no loss of man-days on this account. The Company believes that labour relations will continue to remain excellent. foreign exchange risk Considering the large imports and borrowings in foreign exchange, the Company is exposed to the risk of fluctuation in the foreign exchange rates. The Company reviews its exposure in foreign exchange on a regular basis and takes appropriate actions with the aim to minimize the risk of fluctuation in exchange rates. payment risk The Company is exposed to risk of default in payment by its customers. As the water projects are Government funded or foreign aided, the risk of default is minimum. In case of other customers, credit worthiness is evaluated before supply to minimize such risk.
16
auDitors report
To The members of LANCO INDUSTRIES LIMITED 1. We have audited the attached Balance Sheet of Lanco Industries Limited as at 31st March, 2009, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4 A) of the Companies Act, 1956 (hereinafter referred to as the said Order) and on the basis of such examination of the books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we enclose in the annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books; c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956; e) On the basis of written representations received from the directors of the company, as on 31st March, 2009 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the Significant Accounting Policies and other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; ii) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For k.r. Bapuji & co. Chartered Accountants Place: Chennai Date: 27th April, 2009 k.r. Bapuji Partner Membership No. 21169
2.
3.
4.
17
annexure to auDitors report re: lanco industries limited (Referred to in paragraph 3 of our report of even date) (i) (a) In our opinion, the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailed program drawn for the said purpose, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification. (c) No substantial part of the fixed assets of the Company has been disposed off during the year. (ii) (a) As explained to us, inventories were physically verified during the year by the management. In our opinion, the frequency of the said verification is reasonable. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material. (iii) (a) According to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) In view of the above, reporting on items (b), (c) and (d) of clause (iii) of paragraph 4 of the Companies (Auditors Report) Order, 2003 is not applicable to the Company. (c) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (d) In view of the above, reporting on items (f) and (g) of clause (iii) of paragraph 4 of the Companies (Auditors Report) Order, 2003 is not applicable to the Company. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls. (v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rs. 5 lakh with any party during the year have been made at the prices which are reasonable having regard to the prevailing market prices at the relevant time. (vi) The company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provision of the Companies Act, 1956 and Rules framed there under. (vii) In our opinion, the Companys internal audit system is commensurate with its size and nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company relating to the products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete. (ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.
18
(b) According to the information and explanations given to us, the disputed statutory dues that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2009 are as follows: sl. no. 1. 2. 3. 4. 5. nature of dues Sales tax Central Sales Tax -doAct, 1956 -do-do-doAPGST Act, 1957 -doCentral ExCentral Excise Act, cise Duty/ 1944 Interest -do-doname of the statute amount (rs. in lakhs) 97.61 75.53 60.61 47.70 67.52 26.00 61.00 period to which forum where the it relates dispute is pending 1999-00 2003-04 Sales Tax Appellate Tribunal. 2004-05 2005-06 Appellate Dy. Commissioner (CT). 2002-03 Sales Tax Appellate Tribunal. 2005-06 CESTAT, Bangalore.
2004-05 & -do2005-06 6. -do-do17.00 2005-06 Commissioner (Appeals). 2006-07 & 7. -do-do79.00 -do2007-08 (x) The Company does not have accumulated losses as at 31st March, 2009 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks or debenture holders. (xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. (xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. (xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks and Financial Institutions. (xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained. (xvii) Based on the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion, the funds raised by the Company on short term basis have prima facie not been used for long term investment. (xviii) The Company has not made any preferential allotment of shares during the year. (xix) According to the information and explanations given to us, the Company has created necessary securities in respect of secured debentures. (xx) The Company has not raised any money by way of public issue during the year. (xxi) According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported. For k.r. Bapuji & co. Chartered Accountants k.r. Bapuji Place: Chennai Date: 27th April, 2009 Partner Membership No. 21169
19
Lanco Industries Limited Balance sheet as at 31st march, 2009

schedule i. source of funDs 1. shareholders funds a) Share capital b) Reserves & Surplus 2. loan funds a) Secured Loans b) Unsecured Loans 3. Deferred tax liability (net) total ii. application of funDs 1. fixed assets a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work in Progress 2. investments 3. current assets, loans & advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans and Advances less current liabilities & provisions a) Current Liabilities b) Provisions net current assets notes on accounts total 19 31st mar09 (rs. in lakhs) 31st Mar08 (Rs. in Lakhs)
1 2 3 4
3,976.36 8,549.77 22,645.54 15,460.46 3,123.73 53,755.86
3,976.36 7,179.70 17,832.33 12,271.32 2,576.95 43,836.66
5 38,974.86 10,734.88 28,239.98 425.37 14,436.48 11,966.16 3,463.66 6,107.54 35,973.84 10,108.38 774.95 10,883.33 25,090.51 53,755.86 35,516.23 9,127.88 26,388.35 862.01 12,092.91 8,814.31 420.10 5,289.66 26,616.98 9,319.38 711.30 10,030.68 16,586.30 43,836.66
6 7 8 9 10 11
As per our report attached For K.R. Bapuji & Co. Chartered Accountants K.R. Bapuji Partner Membership No. 21169 Place: Chennai Date: 27th April, 2009
For and on behalf of the Board
G. Bhaskara Rao Mayank Kejriwal G.D. Saini
Director Managing Director Company Secretary
20
Lanco Industries Limited profit anD loss account for the year enDeD 31st march, 2009
schedule income Sales (Gross) Less: Excise Duty Sales (Net) Other Income Increase / (Decrease) in Stocks 31st mar09 (rs. in lakhs) 68,046.95 3,575.34 64,471.61 210.18 (246.82) 64,434.97 31st Mar08 (Rs. in Lakhs) 49,472.02 3,106.39 46,365.63 93.21 14.16 46,473.00
12 13 total
expenDiture Raw Materials Consumed Manufacturing Expenses Cost of Material Sold Salaries, Wages and Other Allowances Other Expenses Financial Charges Depreciation
14 15 16 17 18 total
39,775.51 10,091.71 607.33 2,142.75 2,745.53 4,607.48 1,641.84 61,612.15 2,822.82 318.20 108.14 546.78 14.41 1,835.29 1,242.48 3,077.77
24,779.93 8,874.80 659.16 1,862.53 2,479.56 2,302.59 1,512.99 42,471.56 4,001.44 453.41 (453.41) 1,392.16 17.54 2,591.74 858.92 (55.46) 3,395.20
profit Before tax Provision for Tax Current MAT Credit Utilised / (Entitlement) Provision for Deferred Tax Provision for Fringe Benefit Tax profit after taxation Balance brought forward from previous year Prior period adjustment profit available for appropriation appropriations Transfer to Debenture Redemption Reserve Transfer to General Reserve Proposed Dividend Tax on Dividend Balance Carried to Balance Sheet Basic & Diluted Earning per Share (Rupees) No. of Shares used in computing Basic & Diluted EPS notes on accounts 19
468.75 1,000.00 397.64 67.58 1,143.80 3,077.77 4.62 3,97,63,595
187.50 1,500.00 397.64 67.58 1,242.48 3,395.20 6.52 3,97,63,595
21
Lanco Industries Limited cash floW statement for the year enDeD 31st march, 2009
2008-09 (rs. in lakhs) a. cash flow from operating activities Net Profit Before Tax Adjustments for: Interest & Financial Charges Depreciation Miscellaneous Expenditure Written off Loss on Sale of Fixed Assets Provision For Doubtful debts (Profit) / Loss on sale of Investments Leave Encashment benefit obligation for prior years Operating Profit before working Capital changes Adjustments for: (Increase) / decrease in Loans & Advances (Increase) / decrease inTrade& Other Receivables (Increase) / decrease in Inventories Increase / (decrease) in Trade Payables Cash Generated from Operations Direct Taxes Paid Cash from Operating Activities B. cash flow from investing activities Purchase of Fixed Assets Sale of Fixed assets Income on Investments Net Cash From Investing Activities c. cash flow from financingactivities Long Term Borrowings-Receipts / (Repayments)[Net] Short Term Borrowings-Receipts / (Repayments)[Net] Interest Paid Dividend Paid Tax on Dividend Net Cash From Financing Activities Net Increase / (Decrease) in Cash & Cash Equivalents (A+B+C) Cash & Cash Equivalent as at Beginning of Year Cash & Cash Equivalent as at End of Year 2,822.82 4,607.48 1,641.84 4.22 (21.27) 2,302.59 1,512.99 3.59 47.81 7.06 (14.50) (55.46) 2007-08 (Rs. in Lakhs) 4,001.44
6,232.27 9,055.09
3,804.08 7,805.52
(817.88) (3,151.85) (2,343.57) 787.51
(5,525.79) 3,529.30 (440.77) 3,088.53
405.43 (1,153.45) (1,456.05) (510.21)
(2,714.28) 5,091.24 (470.95) 4,620.29
(3,077.19) 16.14 21.27 (3,039.78)
(3,908.89) 10.26 14.50 (3,884.13)
(288.77) 8,291.13 (4,542.33) (397.64) (67.58) 2,994.81 3,043.56 420.10 3,463.66
(861.63) 848.71 (2,488.29) (397.64) (67.58) (2,966.43) (2,230.27) 2,650.37 420.10
22
Lanco Industries Limited scheDules annexeD to anD forming part of accounts

31st mar09 (rs. in lakhs) 1. share capital Authorised Capital 5,30,00,000 Equity Shares of Rs. 10/- each Issued, Subscribed and Paid up Capital 3,97,63,595 Equity shareof Rs. 10each fully Paid up. (Including 2,67,85,500 Equity shares allotted as fully paid up pursuant to the Scheme of Amalgamation without payment being received in cash.) total 2. reserVes & surplus Opening Balance Additions During the Year a. reserves Capital Reserves: Share forfeiture account State Subsidy Debenture Redemption Reserve General Reserve B. surplus Profit & Loss Account Transfer/ Adjustments During the Year as at 31st mar 2009 31st Mar08 (Rs. in Lakhs)
5,300.00 3,976.36
5,300.00 3,976.36
3,976.36
3,976.36
0.97 55.00 281.25 5,600.00 5,937.22 1,242.48
468.75 1,000.00 1,468.75 1,143.80
1,242.48
0.97 55.00 750.00 6,600.00 7,405.97 1,143.80
total
7,179.70
2,612.55
1,242.48
8,549.77
Security as per note 3. secureD loans Debentures: 500 G-Sec Linked Secured Redeemable NonConvertible debentures of Rs. 10 lakhs each (redeemable in 20 equal quarterly instalments starting from 30th September 2008 redeemed during the Year Rs. 750 Lakhs) Term Loans from: Banks Rupee Loan Foreign currency Loans Working CapitalLoan from Banks total
31st mar09 (rs. in lakhs)
31st Mar08 (Rs. in Lakhs)
4,250.00
5,000.00
2 3 4
6,841.00 845.33 10,709.21 22,645.54
6,000.00 1,332.33 5,500.00 17,832.33
23
security notes: 1. G-Sec Linked Privately Placed Secured Redeemable Non-Convertible Debentures are secured by a Joint Mortgage by deposit of title deeds in respect of certain immovable properties and by English Mortgage on certain immovable properties and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Companys Bankers on specified movable assets for working capital requirements and by corporate guarantee of a group company upto fifty percent of the outstanding amount. Rupee loans from Banks are secured by way of joint mortgage by deposit of title deeds on certain immovable properties ranking pari-passu with existing lenders and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Companys Bankers on specified movable assets for working capital requirements and by corporate guarantee of a group company upto fifty percent of the outstanding amount. Foreign Currency Loans from Banks are secured by way of joint mortgage by deposit of title deeds on certain immovable properties ranking pari-passu with existing lenders and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Companys Bankers on specified movable assets for working capital requirements. Working Capital facilities are secured by hypothecation of raw material, semi-finished goods and finished goods, consumable, stores and spares, book debts, both present and future of the Company. 31st mar09 (rs. in lakhs) 4. unsecureD loans Sales Tax Deferment (Payable within one year Rs. Nil, Previous Year Rs. Nil) Short Term Loans from Banks Rupee Loans Foreign Currency Loans Non-Convertible Debentures a) 15 Privately placed Mibor linked debentures of Rs. 100 Lakhseach aggregating to Rs. 1500 Lakhs redeemed during the year) b) 20 Privately placed Mibor linked debentures of Rs. 100 Lakhseach aggregating to Rs. 2000 Lakhs redeemed during the year) total 31st Mar08 (Rs. in Lakhs)
2.
3.
4.
4,878.54
4,771.32
10,581.92
4,000.00
1,500.00
2,000.00
15,460.46
12,271.32
24
5.
sl. no.
fixeD assets
particulars cost 1-apr-08 1,482.65 5,388.46 580.79 24,537.05 2,506.52 317.17 145.14 558.45 35,516.23 31,824.32 total Capital work in progress Previous year figures 3,801.33 109.42 35,516.23 7,666.24 1,512.99 51.35 gross Block additions During the year 1.13 4.25 30.36 3,144.98 39.82 37.69 8.35 16.08 231.16 3,513.82 Deletions/ sales During the year 0.41 54.78 55.19 1,483.78 5,392.71 611.15 27,682.03 2,546.34 354.45 153.49 519.75 231.16 38,974.86 1,103.01 75.79 6,538.95 892.08 128.86 85.70 303.49 9,127.88 180.10 9.79 1,232.14 121.84 23.76 8.42 40.74 25.05 1,641.84 0.14 34.70 34.84 1,283.11 85.58 1,013.92 152.48 94.12 309.53 25.05 cost 31-mar-09 as on 1-apr-08 for the year adjustments total Depreciation
(Rs. in Lakhs)
net Block as on as on
name of the asset
31-mar-09 31-mar-09 31-mar-08 1,483.78 4,109.60 525.57 1,532.42 201.97 59.37 210.22 206.11 425.37 1,482.65 4,285.45 505.00 1,614.44 188.31 59.44 254.96 862.01
1 2 3 4 5 6 7 8 9
Land Factory Buildings Non-Factory Buildings Plant & Machinery Electrical Installation Office Equipment Furniture Vehicles Intangible Assets
7,771.09 19,910.94 17,998.10
10,734.88 28,239.98 26,388.35 9,127.88 26,388.35 24,158.08
6.
inVestments total
31st mar09 (rs. in lakhs)
Units of Mutual Funds purchased and sold during the year (Face value Rs. 10/- each except otherwise stated): purchase sales particulars Value nos. nos. rs. in lakhs DSP Black Rock Money Major Fund(Units of Rs. 1000/- each) HDFC Cash Management Fund Saving Plan Growth ICICI Prudential Liquid Plan Daily Dividend Option total 846723.52 6735631.12 1286727.80 8869082.44 8,455.00 700.00 150.00 9,305.00 846723.52 6735631.12 1286727.80 8869082.44
31st mar09 (rs. in lakhs) 7. inVentories (Note 1 (F)on Schedule 19) Stores & Spares Raw Materials Work in process Finished Goods and By-Products total
2,882.46 9,662.19 998.48 893.35 14,436.48
2,501.86 7,452.40 927.17 1,211.48 12,092.91
25
31st mar09 (rs. in lakhs) 8. sunDry DeBtors-unsecureD Exceeding six months: Considered Good Considered Doubtful Other Debts Less: Provision for doubtful debts total 9. cash anD Bank Balances Cash on hand Balance with Scheduled Banks: Current Accounts Deposit Accounts Unpaid Dividend Account total loans anD aDVances Advances recoverable in cash or in kind or for value to be received Unsecured Considered good Deposit for Iron Ore Purchase Less: Received from Associate company Advance Income Tax [Net of Provision for taxation aggregating to Rs. 318.20 Lakhs (Previous Year Rs. 453.41 Lakhs)] MAT Credit Entitlement Add/(Less): Entitlement/(Utilised) during the year Balance with Excise authorities total current liaBilities anD proVisions a. current liabilities Sundry Creditors (Note 5 on Schedule 19) Advances from Customers Interest Accrued but not due Unclaimed Dividend * B. provisions Staff Benefit Proposed Dividend Tax thereon total
226.97 162.81 389.78 11,739.19 12,128.97 162.81 11,966.16
102.50 232.02 334.52 8,711.81 9,046.33 232.02 8,814.31
4.28 3,446.48 12.90 3,463.66
3.15 407.14 9.81 420.10
10.
1,993.15
1,588.73
7,575.80 4,545.48
3,030.32 29.97
5,975.80 3,585.48
2,390.32 66.99
749.12 (108.14)
640.98 413.12 6,107.54
295.71 453.41
749.12 494.50 5,289.66
11.
9,343.88 665.07 86.53 12.90 10,108.38 309.73 397.64 67.58 774.95 10,883.33
8,617.74 670.45 21.38 9.81 9,319.38 246.08 397.64 67.58 711.30 10,030.68
*The same is not due for payment to Investors Education and Protection Fund.
26
31st mar09 (rs. in lakhs) 12. other income Profit on Sale of Current Investments Miscellaneous Income total 13. increase / (Decrease) in stocks Closing Stock Work in process Finished Goods Less: Opening Stock Work in process Finished Goods 21.27 188.91 210.18
31st Mar08 (Rs. in Lakhs) 14.50 78.71 93.21
998.48 893.35
1,891.83
927.17 1,211.48
2,138.65
927.17 1,211.48
2,138.65 (246.82)
870.88 1,253.61
2,124.49 14.16
14. raW material consumeD Opening Stock Add: Purchases Less: Cost of materials sold Less: Closing Stock total 15. manufacturingexpenses Power & Fuel Stores & Spares Consumed Handling & Transport charges total 16. salaries, Wages & other alloWances Salaries, Wages, Bonus & Other Benefits Staff Welfare Expenses Contribution to and provision for Provident Fund & Other Funds total
7,452.40 42,592.63 50,045.03 607.33 49,437.70 9,662.19 39,775.51
6,050.08 26,841.41 32,891.49 659.16 32,232.33 7,452.40 24,779.93
1,034.68 8,026.71 1,030.32 10,091.71
1,044.47 7,107.49 722.84 8,874.80
1,823.54 168.87 150.34 2,142.75
1,654.86 96.13 111.54 1,862.53
27
31st mar09 (rs. in lakhs) 17. other expenses Directors Remuneration-Sitting Fees Rent Rates & Taxes (including Wealth Tax Rs. 0.30 Lakhs Previous year 0.39 lakhs) Insurance Travelling & Conveyance Directors Travelling Communication Expenses Freight, Packing, Forwarding & LD Charges Commission to Selling Agents Loss on sale of fixed Assets Repairs & Maintenance Plant & Machinery Buildings Others Provision for doubtful debts Printing & Stationery Vehicle running & maintenance Auditors Remuneration: Audit fee Tax Audit Certification fee Out of Pocket Expenses Service Tax Advertisement & Business Promotion Bad debts written off Less: Transferred from Bad Debts Provision Legal & Consultancy Charges Miscellaneous Expenses Preliminary Expenses written off total 7.20 31.93 87.59 109.47 116.20 4.38 41.24 62.31 929.39 4.22 556.10 57.78 8.09 11.75 309.21 2.75 1.25 0.30 0.28 0.41 90.15 69.21 (69.21) 217.78 95.75 2,745.53 474.49 (474.49)
31st Mar08 (Rs. in Lakhs) 5.35 31.67 88.77 134.69 149.23 3.56 44.25 53.18 536.30 47.81 626.57 69.23 82.61 7.06 29.50 254.35 2.00 1.00 0.18 0.31 0.39 44.12 185.70 78.14 3.59 2,479.56
18. interest & financial charges Interest on Debentures Interest on Term loans Interest on Working Capital Financial Charges (Gain) / Loss on Foreign Exchange Sub Total Less: Interest Earned (TDS Rs. 4.24 Lakhs, Previous Year Rs. 3.95 Lakhs) total
533.98 721.47 2,510.19 288.17 714.10 4,767.91 160.43
504.72 756.80 1,405.38 59.60 (366.66) 2,359.84 57.25
4,607.48
2,302.59
28
19. notes on accounts 1. significant accounting policies
a) general The financial statements are prepared under the historical cost convention in accordance with the provisions of the Companies Act, 1956 and materially comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India except to the extent disclosed in the following notes. B) use of estimates The preparation of financial statements require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and the reported amounts of income and expenses during the year.
Contingencies are recorded when it is probable that a liability will be incurred and the amounts can reasonably be estimated. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized.
c) fixed assets and Depreciation 1) tangible assets i) gross Block

a) Fixed Assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition with due adjustments for Cenvat / Vat credits. b) Capital Work-in-progress includes Machinery to be installed, Construction & Erection Materials and Advances and unallocated pre-operative expenses etc. ii) Depreciation a) Depreciation is provided on fixed assets used during the year under Straight Line Method at the rates specified in the Schedule XIV of the Companies Act, 1956. b) Assets acquired and costing Rs. 5000 or less are being depreciated fully in the year of addition / acquisition.
2) intangible assets Intangible assets are stated at cost of acquisition less accumulated amortization. Computer software packages (ERP and others) are amortized over a period of 5 years. Amortization is done on straight line basis. D) sales Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment sales etc., are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of account sales from the respective consignee. e) investments Long Term Investments are stated at cost less permanent diminution, if any in value. Current Investments are carried at lower of cost or fair value.
f) inventories i) Inventories are valued at lower of the cost or net realizable value. Cost in respect of raw materials, Stores and Spares have been calculated on weighted average basis, which includes expenses incidental to procurement of the same.
ii) By-Products are valued at net realizable value. iii) Cost in respect of finished goods includes manufacturing expenses, factory and administrative overheads and excise duty. iv) Cost in respect of work in progress represents, cost incurred upto the stage of completion.
29
g) revenue recognition All expenses and income to the extent considered payable and receivable respectively unless specifically stated to be otherwise are accounted for on mercantile basis. h) foreign currency transactions Foreign currency assets and liabilities are translated at exchange rates prevailing at the year end. The loss or gain thereon and also on exchange differences on settlement of the foreign currency transactions during the year are adjusted to the Profit and Loss Account under respective heads of accounts. The difference between the forward rate and exchange rate at the date of transaction is recognized as income or expense over the life of the contracts. i) retirement Benefits i) Provident & Family Pension Fund: In accordance with the provisions of the Employee Provident Funds and Miscellaneous Provisions Act, 1952, eligible employees of the company are entitled to receive benefits with respect to provident fund, a defined contribution plan in which both the company and employee contribute monthly to Provident Fund Scheme by the Central Government at a determined rate and the companys contribution is charged off to the Profit & Loss Account.
ii) Leave Encashment Benefits: Leave encashment benefits payable to employees while in service, retirement, death while in service or on termination of employment with respect to accumulated leaves outstanding at the year end are accounted for on basis of actuarial valuation at the balance sheet date. The present value of such obligation is determined by the projected unit credit method as at the balance sheet date through which the obligations are settled. The resultant actuarial gain or loss on change in present value of defined benefit obligation or change in return of the plan assets is recognized as an income or expense in the Profit and Loss Account.
iii) Gratuity: Contributions under the scheme for defined benefit under the Payment of Gratuity Act, 1972, is determined on the basis of actuarial valuation and are funded to Life Insurance Corporation of India and recognized as years expenditure.
J)
miscellaneous expenses Preliminary Expenses and expenditure in connection with issue of shares are being written off over a period of ten years or earlier.
k) Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred. l) contingent liabilities Contingent liabilities are generally not provided for and are disclosed by way of notes to the accounts. m) segment reporting The accounting policies adopted for segment reporting are in line with the accounting policies adopted in financial statements. n) export Benefits Export benefits arising on account of entitlement for duty free imports are accounted for through import of materials. Such benefits under Duty Entitlement Pass Books are accounted for on accrual basis. o) government grants & other claims Revenue grants including subsidy / rebates, refunds, claims etc., are credited to Profit and Loss Account under Other Income or deducted from the related expenses. Grants relating to fixed assets are credited to Capital Reserve Account or adjusted in the cost of such assets as the case may be, as and when the ultimate realizability of such grants etc., are established / realized. 30
p) income tax Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing differences, which are capable of reversal in subsequent periods are recognized using tax rates and tax laws, which have been enacted or substantively enacted. Q) Derivative instruments Derivative transactions of Interest and Foreign Currency Swap and Option contracts are accounted for on their settlement and accordingly the gains / losses arising there from are recognized under respective heads of accounts as and when the settlement takes place in accordance with the terms of respective contracts.
2. contingent liabilities not provided for 2008-09 (rs. in lakhs) a) Guarantees given by banks on behalf of the Company. b) Bills discounted with banks c) Various demands raised, which in the opinion of the management are not tenable and are pending with various forums / authorities: i) Sales Tax ii) Excise Custom Duty & Service Tax iii) Income Tax 3. 4. estimated amount of capital contracts not provided for (net of advances) 713.41 4,313.00 3.07 385.88 561.93 288.00 3.07 992.10 1,214.16 591.58 2007-08 (Rs. in Lakhs) 922.24
In the opinion of the Management, Current Assets and Loans & Advances have the value at which these are stated in the Balance Sheet, if, realized in the ordinary course of business, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required Disclosure of Sundry Creditors under current liabilities is based on the information available with the company regarding the status of the suppliers as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding at the Balance Sheet. Based on the above the relevant disclosure u/s 22 of Act are as follows:-
5.
rs. in lakhs Principal amount outstanding at the end of the year Interest amount due at the end of the year Interest Paid to suppliers
6.
Nil Nil Nil
interest during construction and pre-operative expenses allocated to fixed assets added during the year is as follows
2008-09 (rs. in lakhs) Interest Salaries, Wages, Gratuity & other Benefits Bank Charges 131.75 27.13 64.00
2007-08 (Rs. in Lakhs) 13.13
31
7.
the disclosures required under accounting standard 15 employee Benefits notified in the companies (accounting standards) rules 2006, are given below (Rs. in Lakhs)
Defined contribution plan: Employers Contribution to Provident Fund
31.3.2009 105.45 Benefits gratuity (funded) leave (unfunded) 137.93 27.29 10.57 -11.53 5.50 169.76 0.00 0.00 0.00 11.53 -11.53 0.00 0.00 169.76 169.76 27.29 10.57 0.00 5.50 43.36 0% 0% 0%
31.3.2008 83.80 Gratuity (Funded) 101.79 17.55 8.14 -8.46 5.31 124.33 76.52 10.19 0.00 42.82 -8.47 121.06 121.06 124.33 3.27 17.55 8.14 -10.19 5.31 20.81 100% 0% 100% Leave (Unfunded) 99.67 19.49 7.66 -7.81 18.92 137.93 0.00 0.00 0.00 7.81 -7.81 0.00 0.00 137.93 137.93 19.49 7.66 0.00 18.92 46.07 0% 0% 0%
present Value of obligations: Balance as at the beginning of the year Service Cost Interest Cost Benefits Paid Actuarial (Gain) / Loss Balance as at the closing of the year fair Value of plan of assets: Balance as at the beginning of the year Expected Return of Plan Assets Actuarial (Gain) / Loss Contributions Benefits Paid Balance as at the closing of the year reconciliation of fair value of assets and obligations: Fair Value of Plan of Assets Present Value of Obligations Amount recognized in Balance Sheet expenses recognized during the year: Current Service Cost Interest Cost Expected Return of Plan Assets Actuarial (Gain) / Loss Net Cost investment Details: Funds Managed by the Insurer Others Total actuarial assumptions: Mortality Table (LIC) Discount Rate (per annum) Expected Return of Plan Assets (per annum) Rate of escalation in salary (per annum) 1994-96 (ultimate) 8% 8% 7% 8% 0% 15% 1994-96 (ultimate) 8% 8% 7% 8% 0% 15% 100% 0% 100% 22.01 9.95 -13.08 23.09 41.97 149.61 169.56 19.95 121.06 13.08 0.00 25.28 -9.81 149.61 124.33 22.01 9.95 -9.81 23.09 169.57
32
8. 9.
Balances of Sundry Debtors / Creditors are subject to confirmation and reconciliation, if any. Segment Reporting The Companys main business is manufacturing and selling pipes. In addition, the Company is also manufacturing& selling cement, Producing power for captive use which does not qualify as a reportable segment as per Accounting Standard 17 on segment reporting issued by the Institute of Chartered Accountants of India. Accordingly, in the opinion of the management Pipes is the only reportable segment.
10. Disclosure of Related Parties / Related Party Transactions Name of the Related Parties with whom transactions were carried out during the year and description of relationship: a. Associate Company: M/s Electrosteel Castings Limited b. Key Management Personnel & their relatives (KMP): Shri. Mayank Kejriwal, Managing Director* c. Enterprise where KMP / relatives of KMP have significant influence or control Lanco Hills Technology Park Private Limited+ Disclosure of Related Party Transactions (Rs. in Lakhs): Sl. No. 1. 2. 3. 4. 5. 6. 7. Nature of Transactions Sale of Goods Trade Receivables Purchase of Goods Trade Payable Interest Paid Interest Payable Deposit received & outstanding Associate Company 8,619.11 146.30 15,216.74 4,637.26 1,300.84 17.66 4,545.48 Key Management Personnel Nil Nil Nil Nil Nil Nil Nil KMP have control 46.80 19.31 Nil Nil Nil Nil Nil
* Shri Mayank Kejriwal, Managing Director has offered his services without any remuneration from the company. + Shri L. Madhusudhan Rao, Shri L. Sridhar and Shri G. Bhaskara Rao the Directors of the Company are interested in Lanco Hills Technology Park Private Limited. 11. Provision for Tax is made for both current and deferred taxes. Deferred Tax Assets and Liabilities arising on account of timing differences, which are capable of reversal in subsequent periods, are recognized using tax rates and tax laws, which have been enacted or substantially enacted at the balance sheet date. Break up of deferred tax assets and deferred tax liabilities:
(Rs. in Lakhs)
Particulars Deferred Tax Assets Deferred Tax Liabilities Net Deferred Tax Assets / (Liabilities) Opening as on 01.04.2008 490.30 (3,067.25) (2,576.95) (Charge) or Credit During the year (132.45) (414.33) (546.78) Closing as on 31.03.2009 357.85 (3,481.58) (3,123.73)
33
12. As stipulated in AS-28, the Company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing business are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly, the management is of the view that no impairment provision is called for in these accounts. 13. (a) category wise outstanding derivatives contracts entered for hedging as on 31st march 2009 sl. no. 1 2 current year category Forward Option currency USD/INR USD/INR no. of Deals 7 2 amount in us$ 1,65,89,689 40,00,000 previous year no. of Deals amount in us$ underlying purpose Buyers Credit Buyers Credit
(b) un-hedged foreign currency exposures as on 31st march 2009 sl. no. 1 2 3 ECB Imports Buyers Credit & interest nature currency USD USD USD current year 16,66,667 1,94,114 5,67,924 previous year 33,33,334
14. information in respect of goods produced / manufactured (in mt) 2008-09 items D.I. Spun Pipes Pig Iron * Cement + Coke ** $ * + As certified by the Management. includes 1,36,137 M.T. (Previous year 1,26,018 M.T.) used for captive consumption. Includes 10,087 M.T. (Previous Year 9,066 M.T.) used for Captive Consumption. installed capacity $ 1,80,000 1,50,000 90,000 1,50,000 production 1,23,422 1,48,433 86,812 1,13,052 2007-08 Installed Capacity 1,20,000 1,50,000 90,000 1,50,000 Production 1,13,471 1,48,677 70,002 1,17,438
** For captive consumption. Licensed Capacity is not applicable in terms of Government of Indias Notification No. S.O. 477 (E)dated 25th July 1991.
34
15. Turnover, Closing and Opening Stocks Product D.I. Spun Pipes Pig Iron & Molten Metal Cement Scrap & By Products Castings Others Total Year 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 Turnover MT 1,23,345 1,14,749 1,49,970* 1,47,795* 87,008+ 69,633+ Rs. Lakhs 53,143.92 35,307.82 3,994.73 4,341.52 2,816.52 1,919.47 5,909.86 5,644.12 2,181.92$ 2,259.09$ 68,046.95 49,472.02 Closing Stock MT 2,036 1,959 133 1,670 552 748 Rs. Lakhs 720.59 573.38 15.75 289.90 12.63 13.09 144.38 335.11 893.35 1,211.48 Opening Stock MT 1,959 3,237 1,670 788 748 379 19 Rs. Lakhs 573.38 955.85 289.90 124.04 13.09 6.17 335.11 163.82 3.73 1,211.48 1,253.61
* Includes 1,36,137 M.T. (Previous Year 1,26,018 MT) used for Captive Consumption + Includes 10,087 M.T. (Previous Year 9,066 MT) used for Captive Consumption $ Includes sale of purchased coke Rs. 595.80 lakhs (2369 M.T.), others Rs. 39.12 lakhs {Previous Year Coal: Rs. 371.40 lakhs (6936 MT), Iron Ore: Rs. 503.27 lakhs (35,034 M.T.)}. 16. Raw Materials Consumed 2008-09 MT Coke Iron Ore Coking Coal Others Total 7,524 3,02,064 1,72,456 Rs. in Lakhs 1,539.67 10,076.04 20,720.35 7,439.45 39,775.51 2007-08 MT 28,207 2,73,203 1,39,342 Rs. in Lakhs 2,816.10 7,804.95 9,008.24 5,150.64 24,779.93
17. Value of Imported & Indigenous Raw Materials, Spare Parts, Components Consumed 2008-09 Rs. in Lakhs Imported Indigenous Total 18. CIF Value of Imports 2008-09 Rs. in Lakhs Raw Materials Stores & Spares Capital Goods 24,714.56 2,218.92 763.46 2007-08 Rs. in Lakhs 11,450.95 1,837.63 621.74 24,494.78 23,307.44 47,802.22 % 51.24 48.76 100.00 2007-08 Rs. in Lakhs 13,344.22 18,543.20 31,887.42 % 41.85 58.15 100.00
35
19. expenditure in foreign currency 2008-09 rs. in lakhs a) b) c) d) Interest & Financial Charges Traveling Expenses Legal & Professional Charges Payment of Dividend on Equity Shares in Foreign Currency No. of Non-Resident shareholders No. of shares held Dividend (Rs. in Lakhs) 20. earnings in foreign exchange 2008-09 rs. in lakhs FOB value of Exports nil 2007-08 Rs. in Lakhs Nil 47 4558691 45.59 47 4765442 47.65 188.13 0.42 37.79 2007-08 Rs. in Lakhs 102.63 3.84 3.21
21. Disclosure of loans and advances as per the requirement of Clause 32 of the listing agreement with the Stock Exchanges in India. (i) The Company does not have any subsidiary and it has not given any loans and advances in the nature of loans to its associates. (ii) Interest free loans as per general rules of the Company have been given to its employees. Aggregate amount of such advances and loans outstanding at the year end is Rs. 36.66 lakhs (Previous year Rs. 27.74 lakhs) 22. Previous Years Figures have been re-grouped / re-arranged wherever necessary. The Schedules referred to above form an integral part of the Balance Sheet.
36
scheDule-Vi part-iV
Balance sheet aBstract anD company Business profile

I. Registration Details Registration No. Balance Sheet Date State Code 1 3 3 9 1 0 1 3 1 0 3 2 0 0 Date Month Year Capital raised during the year (Amount in Rs. Thousands) Public Issue Right Issue N I L N Bonus Issue Private Placement N I L N Position of Mobilisation and Development of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 5 3 7 5 5 8 6 5 3 7 5 5 SOURCES OF FUNDS Paid-up Capital Reserves & Surplus 3 9 7 6 3 6 8 5 4 9 Secured Loans Unsecured Loans 2 2 6 4 5 5 4 1 5 4 6 0 Deferred Tax Liability (Net) 3 1 2 3 7 3 APPLICATION OF FUNDS Net Fixed Assets Investments 2 8 6 6 5 3 5 N Net Current Assets Misc. Expenditure 2 5 0 9 0 5 1 N Profit & Loss Account N Performance of the Company (Amount in Rs. Thousands) Turnover (Gross Revenue) Total Expenditure 6 8 2 5 7 1 3 6 5 4 3 4 4 4 Profit / Loss before Tax Profit / Loss after Tax +/+/2 8 2 2 8 2 1 8 3 5 4 4 (Please tick appropriate box (+) for Profit, (-) for Loss) Earning per share in Rs. Dividends Rate % 4 . 6 2 Generic Name of principal product / Service of Company (as per monetary terms); Item Code No.: (ITC Code) Production Description 7 3 0 3 . 0 0 D . I . P I P 2 5 0 2 . 2 9 C E M E N For and on behalf of the Board 9
II.
I I
L L
III.
8 6
7 7 4 6
I I I
L L L
IV.
3 1
2 9
1 0
V.
E S T
37
Lanco Industries Limited lanco inDustries limiteD

Regd. Office: Rachagunneri 517641, Srikalahasthi Mandal, Chittoor District, A.P. India
notice
Notice is hereby given that Seventeenth Annual General Meeting of Lanco Industries Limited will be held at the Registered Office of the Company at Rachagunneri, Srikalahasthi Mandal, Chittoor District, Andhra Pradesh on Friday, the 28th day of August, 2009 at 11.30 A.M. to transact the following business: orDinary Business 1. 2. 3. 4. 5. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2009 and Profit & Loss Account for the year ended as on that date, together with the Auditors Report and Directors Report thereon. To declare dividend. To appoint a Director in place of Shri Gouri Shankar Rathi who retires by rotation and being eligible offers himself for reappointment. To appoint a Director in place of Shri G. Maruthi Rao who retires by rotation and being eligible offers himself for reappointment. To appoint Statutory Auditors and fix their remuneration and for this purpose to consider and if thought fit to pass with or without modification(s), the following resolution as an Ordinary Resolution:Resolved that M/s K.R. Bapuji & Co, Chartered Accountants, Hyderabad be and are hereby re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting of the Company at a remuneration to be decided mutually between the Board of Directors and the Auditors including reimbursement of out of pocket expenses.
By Order of the Board For lanco industries limited
Place: Chennai Dated: 27th April, 2009
g. D. saini Sr. General Manager-Finance & Company Secretary
38
notes: 1. A Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote, instead of himself / herself. The proxy, so appointed, need not be a member of the Company. In order to be effective, the proxy form(s) duly completed and signed should reach the registered office of the Company at least 48 hours before the commencement of the meeting. The dividend, if declared, will be payable within 30 days from the date of declaration to those members whose names appear on the Register of Members of the Company as on 28th August, 2009. The register of members will remain closed from 22.08.09 to 28.08.09 (both days inclusive). The transfer books of the Company will also remain closed during the aforesaid period. Members are requested to notify any change in their addresses to the Company. Members desiring to seek any information / clarification on the annual accounts are requested to write to the Company at least 7 days before the Annual General Meeting.
2. 3. 4. 5.
intimation required to be furnished as per the listing agreement: As required under the listing agreement, the particulars of Directors who are proposed to be appointed / re-appointed are given below: Name of Director(s) Date of Birth Date of Appointment Qualifications Special Expertise Directorship in other Public Limited Companies. Audit Committee Remuneration Committee Shareholders / Grievances Committee Shri Gouri Shankar Rathi 9th January, 1950 8th June, 2005 B. Com. (Hons), F.C.S., L.L.B. Expert in General Management and Marketing. Shri G. Maruthi Rao 14th April, 1939. 30th March, 2002. B.Sc (Hons). Expert in Administrative & General Management.
39
notes
40

Annual Report 2008-09

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Annual Report 2008-09

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Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

annexure a to Directors report

i) Foreign Exchange Earning ii) Foreign Exchange Used

14826230 8,02,32,190 5.41

20167134 6,90,37,809 3.42

528497 2.79 9.99 17348800 0.25 62907066 0.45

422320 3.66 8.96 18675200 0.26 47254326 0.55

180 360 101 23

Lanco Industries Limited

corporate goVernance report

Lanco Industries Limited

Resigned from the Board on 29th January, 2009.

Lanco Industries Limited

position Chairman Member Member Member

no. of meetings attended 3 3 2 1

Lanco Industries Limited

Date 31.08.2006 27.08.2007 27.08.2008

time 11.30 A.M. 11.30 A.M. 11.30 A.M.

Lanco Industries Limited

Lanco Industries Limited

Registrar & Share Transfer Agents

Share Transfer System

Lanco Industries Limited

13. sl. no. a. 1

Outstanding convertible Instruments Registered Office & Works

Members can Contact us at our Registered Office: Adoption of requirements Non-Mandatory

Lanco Industries Limited

Lanco Industries Limited

management Discussion & analysis

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited

Lanco Industries Limited Balance sheet as at 31st march, 2009

3,976.36 8,549.77 22,645.54 15,460.46 3,123.73 53,755.86

3,976.36 7,179.70 17,832.33 12,271.32 2,576.95 43,836.66

For and on behalf of the Board

G. Bhaskara Rao Mayank Kejriwal G.D. Saini

Director Managing Director Company Secretary

468.75 1,000.00 397.64 67.58 1,143.80 3,077.77 4.62 3,97,63,595

187.50 1,500.00 397.64 67.58 1,242.48 3,395.20 6.52 3,97,63,595

For and on behalf of the Board

G. Bhaskara Rao Mayank Kejriwal G.D. Saini

Director Managing Director Company Secretary

(817.88) (3,151.85) (2,343.57) 787.51

(5,525.79) 3,529.30 (440.77) 3,088.53

405.43 (1,153.45) (1,456.05) (510.21)

(2,714.28) 5,091.24 (470.95) 4,620.29

(3,077.19) 16.14 21.27 (3,039.78)

(3,908.89) 10.26 14.50 (3,884.13)

(288.77) 8,291.13 (4,542.33) (397.64) (67.58) 2,994.81 3,043.56 420.10 3,463.66

(861.63) 848.71 (2,488.29) (397.64) (67.58) (2,966.43) (2,230.27) 2,650.37 420.10

For and on behalf of the Board

G. Bhaskara Rao Mayank Kejriwal G.D. Saini

Director Managing Director Company Secretary

Lanco Industries Limited scheDules annexeD to anD forming part of accounts

0.97 55.00 281.25 5,600.00 5,937.22 1,242.48

468.75 1,000.00 1,468.75 1,143.80