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Contents
Board of Directors 2
Five years at a Glance 3
Performance Indicators 4
Management Insight 5
Material Handling Equipment Division 8
Gear Division 12
Directors’ Report 14
Management Discussion & Analysis 17
Secretarial Audit Report 23
Corporate Governance Report 24
Auditor’s Report 37
Balance Sheet 40
Profit and Loss Account 41
Cash Flow Statement 42
Schedues Forming Part of the Balance Sheet 44
Schedules Forming Part of the P&L A/c. 51
Notes Forming Part of the Accounts 54
Notice 66
Elecon Engineering Company Limited - Annual Report 2008-09 1
2 Elecon Engineering Company Limited - Annual Report 2008-09
BankersState Bank of India Bank of BarodaState Bank of SaurashtraEXIM BankAxis Bank LimitedCiti Bank N.A.
Chief Financial OfficerShri Hemendra C. Shah
Company SecretaryShri Paresh M. Shukla
Bankers State Bank of IndiaBank of BorodaEXIM BankAxis Bank LimitedCiti BAnk N.AHDFC Bank Limited
AuditorsThacker Butala DesaiChartered AccountantsNavsari
Registered OfficeAnand Sojitra RoadVallabh Vidyanagar 388120Gujarat, India
The Company is managed by the Board of Directors, which formulates strategies, policies and reviews its performance periodically. The Chairman & Managing Director manages the business of the Company under the overall supervision, guidance and control of the Board.
Board of Directors
Shri Prayasvin B. Patel Chairman & Managing Director
Shri Upendra M. PatelUpto 17-04-2009
Dr. Amritlal C. Shah
Shri Pradip M. Patel
Shri Chirayu R. Amin
Shri Ashok J. PatelUpto 29-04-2009
Elecon at a Glance
Elecon Engineering is one of the India’s leading manufacturers of power transmission and material handling equipment with technology based products. Elecon has left its enduring mark in various industries like mining, power generation, plastic, sugar and cement across the world.
We at Elecon believe that great is to dream but greater is to achieve that dream.
Corporate Social Responsibility (CSR):
As every year passes by, Elecon has shown a tremendous growth. What makes us happier at the end of the day, when we look back at the journey of growth is that, along with the companies’ growth, we have always enriched the life of the community. This joy parallels no other joy. The corporate social responsibility is the need for a brighter tomorrow and we at Elecon are a strong believer of this fact. A small effort done now reaps a better future tomorrow, so why not be a part of the development.
Medical support:
As a part of CSR, the recent activity done by the Elecon group was the setting up of Bhanubhai and Madhuben Patel Cardiac Center at the Shree Krishna Hospital, Karamsad. This unit has come as a boon to many, as earlier for a proper cardiac treatment one had to travel to Baroda or Ahmadabad which is nearly 40 and 75 km respectively, away from Anand. The hospital has a facility for two operation theaters and a provision for an additional theater to be built in the future. Other facilities include an 8 Bed CICU, a cath- lab. The most interesting thing is that all these facilities come at an affordable rate to the needy.
Education:
Elecon has always provided platform to budding talented youngsters of engineering colleges and business institutes by sponsoring technical programmes and management events. By providing such opportunities to the youngsters, Elecon intends to spark imaginations in the minds of the future of tomorrow and also encourage them to come up with their innovative ideas.
Elecon Engineering Company Limited - Annual Report 2008-092
Shri Hasmukhlal S. Parikh
Shri Prashant AminFrom 29-07-2008
Elecon Engineering Company Limited - Annual Report 2008-09 3
Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn.
TURNOVER 188.3 9,551 8,264 7,206 4,424 2,777
TOTAL INCOME 190.2 9,646 8,362 7,289 4,507 2,807
EARNING BEFORE DEPRECIATION, 29.4 1,490 1,305 1,078 596 379INTEREST & TAX
DEPRECIATION 4.4 221 142 122 94 82
PROFIT AFTER TAX 11.3 575 672 549 278 100
EQUITY DIVIDEND 2.7 139 139 46 30 14
DIVIDEND (%) - 75% 75% 75% 50% 25%
EQUITY SHARE CAPITAL 3.7 186 186 61 57 56
RESERVE & SURPLUS 50.6 2,568 2,181 1,817 969 676
NET WORTH 54.0 2,737 2,358 1,874 1,003 682
GROSS FIXED ASSETS 89.9 4,559 3,165 2,511 2,133 1,732
NET FIXED ASSETS 61.3 3,110 1,931 1,267 952 620
TOTAL ASSETS 262.6 13,320 10,131 7,441 5,349 3,351
NUMBER OF EMPLOYEES - 889 801 746 680 682
KEY INDICATORS US $
BASIC EARNINGS PER SHARE (Rs.) 0.12 6.19 7.24 18.30 9.87 3.56
DEBT EQUITY RATIO (TOTAL DEBT:EQUITY) - 2.16 1.73 1.51 2.05 1.41
EBIDTA*/ TURNOVER (%) - 15.61 15.79 14.95 13.48 13.65
NET PROFIT MARGIN (%) - 6.02 8.13 7.62 6.30 3.61
RETURN ON NET WORTH (%) - 20.99 28.39 29.29 27.78 14.70
RETURN ON CAPITAL EMPLOYED (%) - 6.47 10.13 11.44 8.94 5.00
Exchange Rate: 1 US $ = Rs. 50.72 (as on 31-03-2009). *Extraordinary items and other income are not considered for calculating EBIDTA. Figures are rounded of to nearest US $ Mn. / Rs. in Mn.
Rs. in Mn.
Five years at a glance
4 Elecon Engineering Company Limited - Annual Report 2008-09
Performance Indicators
Elecon Engineering Company Limited - Annual Report 2008-094
increase from 2008
2005-2009
Net SalesRs.in Mn
15.57%
Rs. 9,551 2009
Rs. 8,264 2008
Rs. 7,206 2007
Rs. 4,424 2006
Rs. 2,777 2005
increase from 2008
2005-2009
EBIDTARs.in Mn
Rs.1,490 2009
Rs.1,305 2008
Rs.1,078 2007
Rs. 596 2006
Rs. 379 2005
14.19%
2005-2009
Dividend In %
75% 2009
75% 2008
75% 2007
50% 2006
25% 2005
Elecon Engineering Company Limited - Annual Report 2008-09 5
“Along with the expertise in the engineering industry,
deep rooted in us is the commitment to innovation
and a focused future growth. With this quest for
growth, we are heading towards expanding our global
presence and creating enduring relationship.”
- Prayasvin Patel
Chairman & Managing Director
“Elecon is committed to be a total solution provider by
promoting entrepreneurship, team spirit and adopting
environment friendly practices leading to value
enhancement for our customers and stakeholders.”
- Prashant Amin
Elecon- Group Director
“Prudently managing capital, controlling expenses, reducing cost of funds and containing
risks will be our focus for a long term corporate sustainability and enhancement of
stakeholders’ value.”
- Hemendra Shah Vice-President (Commercial) & CFO
“ELECON with its dedicated team of professionals is always seeking new vistas and also
augment existing product range. The core competence acquired in Design, Engineering
and Manufacturing enables us to quickly adapt to ever changing market conditions.”
- G.S. Kalra, CEO, MHE Division
“We change as per the Market Demand and always remain in frontline in Product
Development and in supply of Custom-built Gearboxes.”
- Vilas Kalyankar, CEO, Gear Division
Management Insight
6 Elecon Engineering Company Limited - Annual Report 2008-09
While performing beyond our capabilities, while dreaming higher than the set targets, while breaking our own records, we are developing an aptitude for excellence and an attitude that drives us towards continuous improvement.
Corporate Office - MHE Division
Elecon Engineering Company Limited - Annual Report 2008-09 7
8 Elecon Engineering Company Limited - Annual Report 2008-09
From elevators and conveyors to full blown bulk material handling solutions, Elecon has moved up the value chain. Over the years Elecon has supplied hi-tech material handling equipment to core industry sectors in Steel, Fertilizer, Cement, Power, Coal, Lignite & Iron ore Mines and Port Mechanization across the globe.
Milestones• Elecon has cast itself into the mould of a visionary pioneer at all operational
fronts- from technology to quality standards, to product, to value addition, remaining- always a step ahead in technology.
• Elecon also executed the 3rd Lignite handling system at Mae Moh mine of Electricity Generation Authority of Thailand.
Manufacturing StrengthThe division has a manufacturing facility spread over 1,17,000 sq. mts., housing CNC machine tools for manufacturing and state of the art test equipment for quality control.
• Have the technology and experience to design, build and erect robust reliable Material Handling solutions for diverse industrial segments.
Stacker Reclaimer
Material Handling Equipment Division
Elecon Engineering Company Limited - Annual Report 2008-098
Elecon Engineering Company Limited - Annual Report 2008-09 9
The Power sector was the highest contributor with almost
74% share followed by Cement with 11% share
Sales Industrywise
Wind Mill 0.98 %
Port 0.22 %
Others 1.60 %
Mines 4.15 %
Cement 10.88 %
Steel 8.52 %
73.65 % Power
Noteworthy Achievements
• Order worth Rs. 4000 Mn from Bramhani Industries Limited for the supply of plant and equipment for raw material handling system. The scope is revised and new revised order value is Rs. 3235.40 Mn.
• Order worth Rs.1200 Mn from Mundra Port & Special Economic Zone Ltd., Ahmedabad for supply of design, Supply, Erection, Testing and Commissioning of Material Handling System for West Port, Mundra Project.
• Order worth Rs. 724.00 Mn from Bharat Heavy Electricals Limited, Commissioning & PG test of Mechanical Equipment for 2 X 250 MW SIKKA TPS Project.
• Order worth Rs. 312.40 Mn from Tecpro Systems Limited for supply of equipment for integrated Coal Handling Plant Unit 3 & $ for 2X300 MW Rosa Thermal Power Project.
• Order worth Rs. 219.90 Mn from Adani Power Ltd. Mundra Ahmedabad for Material Handling System for Adani Power Ltd., Mundra Project
Growth Drivers
The demand for the material handling solution has always been high and is still on a rise, thanks to the tremendous growth in the mining and power industry in India. More and more investments are expected to pool in with the implementation of mega projects.
An equal contribution in the growth of the MHE is from the power, steel, coal, ports and similar industries.
Increase in the pending
order for MHE division from
Rs.10850 Mn in 2007-08 to
Rs.13110 Mn in 2008-09,
a rise by 21%.
Orderbook Industrywise
2007-2009
28.20%
Rs. 5,607 2009
Rs. 4,373 2008
Rs. 4,096 2007
Net SalesRs.in Mn
increase from 2008
Port 17.23%
Cement 1.49%
Power 22.35%
58.51% Steel
Mining 0.37%Others 0.05%
10 Elecon Engineering Company Limited - Annual Report 2008-09
We are building strong and everlasting bond with our customers. We understand their business and help achieve their goals and create a bond for a everlasting journey.
Front view of Elecon Gear Division
Elecon Engineering Company Limited - Annual Report 2008-09 11
12 Elecon Engineering Company Limited - Annual Report 2008-09
Elecon is Asia’s largest manufacturer of industrial gears and was the first Company in
India to introduce modular design concept, case hardened and ground gear technology.
Elecon is the gear supplier of choice to core sectors like Sugar, Cement, Steel, Fertilizer,
Plastic Extrusion and Rubber. Elecon was the first industrial gear manufacturer in India to
achieve ISO 9001 in 1994 and again the first to achieve ISO 9001:2000 in 2001.
Manufacturing InfrastructureThe manufacturing facility spread over 173,098 sq. mts., populated with CNC machine
tools, quality control and testing equipment, for gear components to AGMA/DIN
specifications. The gear grinding facility at Elecon is acknowledged as one of the most
modern in the Gear industry.
Gear casing of VRM gear KAPV-180 under boring process
Gear Division
Elecon Engineering Company Limited - Annual Report 2008-0912
Elecon Engineering Company Limited - Annual Report 2008-09 13
Growth DriversVarious industries have demands for diverse gearing
solutions. We at Elelcon, exactly understand this need
and that’s how we stand out as the leader in the industry.
With a blend of the experience and the latest technology
Elecon has successfully emerged as a champion.
Increase in the pending
order for Gear division
from Rs.2020 Mn in 2007-
08 to Rs.2390 in 2008-09,
a rise by 18 % .
Sales Industrywise
Mining 3%
Chemical & Fertilizer 3%
Marine 5%
Sponge Iron 5%
Lift Gear 8%
Plastic & Rubber 8%
Steel Conversion 10%
Sugar 11%
22% Material Handling /Power
13% Other (Rest)
12% Cement
Orderbook Industrywise
Mining 4%Material
Handling / Power
23%
Sponge Iron 4%Chemical & Fertilizer 5%
Lift Gears 7%
Plastic & Rubber 9%
Steel Conversion 10%
Cement 11% Other (Rest)13%
Sugar 14%
2007-2009
1.36%
Rs. 3,944 2009
Rs. 3,891 2008
Rs. 3,110 2007
increase from 2008
Net Sales Rs.in Mn
Vertical Roller Mill (VRM) Drive Gear BoxSugar Mill Drive Planetary Gear Box
Elecon Engineering Company Limited - Annual Report 2008-0914
Prayasvin B. Patel
Chairman & Managing Director
Directors’ Report
Dear Members,
I am very much pleased to report that your Company has again
performed well in 2008-09, the year of immense economic turmoil.
We have over many years pursued a strategy which has enabled
us to build a robust business. On behalf of the Board of Directors of your
Company, I take great pleasure in presenting the 49th Annual Report
and Audited Statement of Accounts for the financial year ended on
31st March, 2009.
Your Directors strive towards giving the highest value to the
shareholders. We have maintained our tradition of coming forth with high
quality content and services. Our tradition in no way inhibits our capacity
for innovations.
Elecon Engineering Company Limited - Annual Report 2008-0914
Elecon Engineering Company Limited - Annual Report 2008-09 15
As stewards of the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavours.
The summary of operating results for the year and appropriation of divisible profits is given below:
Net Profit of Rs. 5745.12 lacs as against the Turnover of Rs. 82643.52 lacs and Net Profit of Rs. 6720.42 lacs respectively during the previous year, representing increase in Turnover of 15.56% and decrease in Net Profit by 14.51%.
Not only do we have a significant number of orders but our ability to make the most of it is a part of the Elecon strength. The Company holds unexecuted orders worth Rs.1550 crores. Rs 1311 crore is for the MHE division and Rs.239 crore is for the Gear Division as of March 31, 2009. This will augment our commitment to steer the Company in the most profitable direction.
Your Company with pursuit of excellence was able to attend substantial live enquiries, with a promising turn on the horizon.
Dividend
Your Directors are pleased to recommend dividend of Rs. 1.50/- per share (previous year Rs. 1.50/- per share on 9,28,61,510 equity shares of Rs. 2/- each) on 9,28,61,510 equity shares of Rs. 2/- each for the year ended on 31st March, 2009.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:
• in the preparation of the annual accounts of the Company for the year ended on March 31, 2009, the applicable accounting standards have been followed;
• 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 profit of the Company for the year ended on that date;
• 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; and
• the accounts have been prepared on a “going concern” basis.
Corporate Governance
As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Company’s Auditors form part of this report.
Your Company, acknowledging its corporate responsibility, has voluntarily obtained a “Secretarial Compliance Report” from Mr. Ashwin Shah, Company Secretary in whole-time practice, which is annexed to this Report.
Profit Before Tax, Interest,Depreciation & Adjustments for previous yearLess : InterestDepreciationProfit Before TaxLess: Provision for TaxDeferred TaxFBT Profit After TaxAdd:Adjustment of Previous YearsPrevious Year Balance Brought ForwardPROFIT AVAILABLE FOR APPROPRIATIONAPPROPRIATIONS:Proposed DividendIncome Tax on DividendTransfer to General ReserveBalance Carried Forward
Year Ended March 31,
15861.55
4836.80 2214.72 8810.03 1812.431197.48
55.00 5745.12
(248.09) 5641.37
11138.40
1392.92 236.73
7500.002008.75
2008-2009
14030.38
2742.661419.809867.922932.00
164.4951.00
6720.43
0.001550.608271.03
1392.92236.73
1000.005641.37
2007-2008
(Rs. in Lacs)
Review of Operations
During the year ended on 31st March, 2009, the Company has achieved Turnover of Rs. 95506.48 Lacs and
Net Worth (Rs. in Lacs) 27371
23575
18747
10037
FY09FY08FY07FY06
Net Worth
Book Value of Shares Rs.
Book Value Rs.
FY09FY08FY07FY060
5
10
15
20
25
30
3529.48
25.39
20.2
11.1
Elecon Engineering Company Limited - Annual Report 2008-0916
Auditors
The Company’s Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari retire as Statutory Auditors at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment.
Statutory Disclosures
None of the Directors of your Company is disqualified as per provisions of Section 274(1)(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.
Insurance
The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.
Industrial Relations/Personnel
We are committed to upholding the excellent reputation of Elecon in the field of Industrial relations. Through continuous efforts the Company invests and improvises development programmes for its employees.
Acknowledgement
The Board of Directors acknowledges the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the society at large.
The support of the Bankers, Auditors, Central and State Government Officials, Solicitors, Advisors, Business partners and Members of Elecon family cannot go unmentioned here. Without their unfailing support the growth of the Company would not have been possible.
Your Directors look forward to having a long and fruitful relationship with all of them.
For and on behalf of Board of Directors
Prayasvin B. PatelChairman & Managing Director
Mumbai, May 2, 2009
Elecon Engineering Company Limited - Annual Report 2008-0916
In line with global practices, your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the relationship between the Company and its Stakeholders.
Fixed Deposits
During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2009.
Particulars of Employees
Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.
Conservation Of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars required to be furnished under Section 217(1)(e) read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure B, forming part of this report.
Directors
Shri Prashant C. Amin, was appointed as an Additional Director of the Company from the 29th of July 2008. His experience in the field of planning, marketing, business development and financial management will be an asset to the Company. He holds the office upto the date of the ensuing Annual General Meeting of the Company.
The Board welcomes Shri Prashant C. Amin and considers it an advantage to the Company to avail the expertise of the new board member. Members’ approval for his appointment as a Director has been sought in the Notice convening the Annual General Meeting of the Company.
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Pradip M. Patel and Shri Chirayu Amin, Directors retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment.
Shri Upendra M. Patel and Shri Ashok J. Patel, Independent Directors of the Company resigned from the Directorship of the Company w.e.f. 17/04/2009 and 29/04/2009 respectively. The Board places on record appreciation for valuable services and guidance provided by them during the tenure of their directorship.
Elecon Engineering Company Limited - Annual Report 2008-09 17
Spiral bevel hard cutting machine
Management Discussion & Analysis
Industry Structure and Development
Even in the current economic slowdown, consumption of power is going to increase as the power is one of the essential commodities and it needs to be catered with very scarce resources. India is the 5th largest power producer in the world with the total power capacity of more than 145,000MW. Despite growth in power generation capacity over various 5-Year Plans, India is facing huge power deficit with peak power deficit of about 16%. That is the reason why Power sector is less impacted in current economic crisis. Most of the Power Plants existing in India are owned by Government. All power units use equipments manufactured and supplied by Material Handling Equipment Industry. MHE Div. of the Company supplies majority of its products to Power Sector.
However traditional power resources are scarce. Alternate Energy is the future for the power industry. The Company, in sync with the future trends, caters to this sector also by providing Wind Turbine Generators (WTG) and other related equipments.
Thus, these two business segments of the Company deals with still growing Energy Generation Sector and this is helping a lot to the Company to maintain its business.
During the year under review, the Company has installed 5 WTGs in Gujarat. Your Company has also supplied
1 WTG to North America. Besides, the existing Wind Farm in Kutch Dist., Gujarat, the Company is developing another Wind Farm at Varvala, in Jamnagar Dist., Gujarat. The new Wind Farm will have an installed capacity of 45 MW.
The demand in this industry is decided by the economic growth and the economic environment of the country. Higher GDP boosts investment in the infrastructure industry. This follows a pattern of modernization of existing facilities and repair and maintenance of the same. This is directly beneficial to the Company as both of our Material Handling Equipment division and Gear division form an essential part of most manufacturing facilities.
Opportunities and Threats
The global economic crisis and the slowdown in the industrial and engineering sector in India have its impact on the business of the Company. But at the same time Engineering services are considered as unique and knowledge- or domain-driven services and hence would be one of the growth engines of the future of your Company.
However, we have not allowed any complacency to creep in and have enforced stringent cost cutting measures to tide this economic storm. Your Company has already initiated in this direction by resorting to better management of supply chain, value engineering of products, manpower review and reducing travel expenses.
Elecon Engineering Company Limited - Annual Report 2008-0918
Hobbing Machine Cutting Internal Gear Ring
Elecon Engineering Company Limited - Annual Report 2008-0918
Elecon Engineering Company Limited - Annual Report 2008-09 19
Cutting unnecessary costs, pruning wide-ranging innovation investment and strengthening the core business has helped the Company to stand strong in this trying times.
Segment-wise Performance
During the financial year 2008 — 2009, the Company has achieved a Turnover of Rs. 95506.48 Lacs as against Rs. 82643.52 Lacs in the previous year, which shows a growth of 15.56% over the previous year.
The Turnover of Gear Division has increased to Rs. 39439.60 Lacs from Rs. 38909.68 Lacs in the previous year, which shows a nominal increase of 1.36%.
The Turnover of MHE Division has increased to Rs. 56066.88 Lacs as against Rs. 43733.84 Lacs in the previous year, which shows an increase of 28.20%.
The Profit Before Tax has decreased to Rs. 8810.03 Lacs from Rs. 9867.92 Lacs in the previous year resulting into a decrease of 10.72 %.
The Profit After Tax has decreased to Rs. 5745.12 Lacs from Rs. 6720.42 Lacs, resulting into a decrease of 14.51%, over the previous year.
Outlook
The current market turmoil has dented the growth curve of various industries such as Infrastructure and Construction, which, in turn, has hit the engineering industry also. But with the government’s plans to boost up the economy by injecting funds in various industries like infrastructure, construction, automobile and power, near future is expected to see growth, particularly for the Material Handling Equipment division.
In other segment i.e. Alternate Energy Division, your Company will be benefited due to Government of India’s (GOI) actions to promote wind energy in the Country.
Despite of GOI’s endeavour to augment generation capacity of different sources, demand and supply gap is increasing. By 2012, India’s energy requirement will touch 157,107 MW.
Under the 11th Five Year Plan (2007-2012), GOI has envisaged plans to increase the installed capacity of renewable energy to 10% of total power generation. Wind, Hydro, Biomass and Solar are the main renewable energy sources. A target of 10,500 MW has been fixed for Eleventh Five Year Plan for Wind Power capacity addition through commercial projects with private sector investment. GOI has taken various steps to have energy security for the Country. This will definitely help your Company in developing its business in this segment.
Risk and Concerns
MHE Division
The long standing reputation of the Company and its commitment to quality and service has ensured, that, despite the economic downturn, the MHE division, has a constant stream of business and enquiries from well established business partners. The upgradation plans, cost cutting practices and just-in-time/build-to-order production
methods, makes us very valuable to them.
The Government of India has lofty plans for infrastructure development. The demand for material handling equipments is correlated with the growth of other segments like Infrastructure, Construction, Ports, Pipelines, Roads, Steel, Power, Mining Projects etc. But poor quality of existing infrastructure acts as a bottleneck as significant resource is utilized for its repairs and maintenance. This acts as a hurdle for implementation of new projects, which also hampers the overall development of the economy and the sector.
Gear Division
In this segment, your Company is still doing good business and has utilized the economic slump as an opportunity to look for, find and make improvements as well as cost savings changes throughout its products.
Your Company supplies Power Transmission Gearboxes to almost all sectors of industry. Therefore, slowdown in one sector has been set off by servicing the other sector.
Your Company has taken all necessary steps to hedge to a great extent against the recent volatility in Steel & other raw material prices.
Internal Control System
Adequate internal control procedures have been put in place, keeping in mind the size and the nature of the business of the Company. These ensure efficiency and effectiveness of operations within the Company. This also goes a long way in protecting the Company resources, ensuring reliable financial reporting and compliance with laws and regulations.
Development in Human Resources/Industrial front
It has been the tradition of the Company to maintain excellent industrial relations at all levels. This has ensured a very healthy level of enthusiasm within the employees. This has enabled the Company to maintain its growth despite competition and economic slackness.
The number of employees as on 31st March, 2009 was 889 as against 801 as on 31st March, 2008.
Cautionary Note
The statements forming part of this Report may contain certain forward looking remarks within the meaning of applicable laws and regulations. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements.
Significant factors which could make a difference to the Company’s operations include domestic and international economic conditions, changes in Government regulations, tax regime and other statutes.
The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events.
20 Elecon Engineering Company Limited - Annual Report 2008-09
Internal Grinding Machine
Elecon Engineering Company Limited - Annual Report 2008-0920
21Elecon Engineering Company Limited - Annual Report 2008-09
ANNEXURE – A TO DIRECTORS’ REPORT
a. Information pursuant to Section 217 (2A)(a)(i) of the Companies Act, 1956 read with the Companies (particulars of
employees) Rules, 1975 and forming part of this Directors’ Report for the financial year ended on 31st March, 2009.
Name Age Qualification Date of Designation Gross Experience Last
Joining Remuneration in years Employment
(Rs. in Crores)
Shri P. B. Patel 51 years B. E. (Mech.) 1/7/83 Chairman and 3.38 27 Business
M.B.A. Managing
(U.S.A.) Director
b. Names of employee employed for part of the year and were in receipt of remuneration at a rate of not less than
Rs. 2 Lacs p. m. in terms of Section 217 (2A) (a) (ii) of the Companies Act, 1956.
NIL
Notes:
1. The appointment is contractual.
2. The gross remuneration received includes Salary, Housing Allowance, Medical Allowance, Commission and Company’s
Contribution to Provident Fund, Superannuation and Gratuity Fund. Monetary value of perquisites is in accordance with
provision of Income Tax Act, 1961.
3. Experience includes number of years of service elsewhere, wherever applicable.
4. Shri Prayasvin B. Patel, Chairman and Managing Director of the Company is relative of Mr. P. M. Patel, Director of the
Company.
22 Elecon Engineering Company Limited - Annual Report 2008-09
Please refer Notes to the Accounts, Schedule – 17.
Particulars 2008-2009 2007-2008
Earnings 4,080.41 3,711.05
Outgo 21,031.10 14,081.37
(Rs. in Lacs)
ANNEXURE – B TO DIRECTORS’ REPORT
Information required under Section 217(1) (e) of the
Companies Act, 1956 read with the Companies (Disclosure
of Particulars in the Report of Board of Directors) Rules, 1988.
1. CONSERVATION OF ENERGY
Energy conservation with special thrust is under
continuous process through improved maintenance
practices.
(a) Energy Conservation measures taken
(i) Company has installed number of special energy
saving devices (CESS, South Korea make) on air
compressor motors resulted in reduction of power
consumption to the extent of 12% of total energy
consumed on such compressors.
(ii) Technical office building of the Company has been
covered with aluminium composite panel to
maintain room temperature and thereby reduced
energy consumption for A. C. Plant.
(iii) Company has used Variable Frequency Drives
(VFD) to reduce motor power during no load
running of high capacity induction motors used
for gear box testing.
(iv) Company has re-organized material flow to reduce
movement and thereby reduced energy
consumption.
(v) Company has replaced number of high voltage
consuming lighting systems into low voltage
consuming FL tubes in the company’s factory
sheds and workshop to conserve energy.
(vi) Company has continued the use of Fork Lift instead
of Hydro Crane to minimize the consumption of
the power.
(vii) Also we have adopted variable frequency drive
for saving power for crane application in Heavy
Machine Shop to reduce consumption of
electricity.
(b) Additional investments and proposal if any, being
implemented for reduction of consumption of energy
(i) Continuous efforts are made to find out, how the
consumption of energy can be reduced by the
electrical department.
(c) Impact of measures at (a) and (b) above for reduction
of energy consumption and consequent impact on the
cost of production of goods
Implementation of above referred measures have
resulted in significant reduction in consumption of
energy and also in reduction of cost of goods.
2. TECHNOLOGY ABSORPTION
(I) Research and Development(a) Specified areas in which R & D carried out by the
Company: Continuous research and development
being done to update all our products. However,
separate research and development cell is not
formed in the organization.
(b) Benefits derived as a result of R & D : It results into
reduction of waste as well as improvement of
quality of the products of the Company on
continuous basis.
(c) Future plan of action : The Company is developing
design of low cost & high rating ET Gear Box Series.
(d) Expenditure on R & D : Not applicable.
(II) Technology absorption, adaptation and innovation
(a) The Company, for the first time, is developing
high speed conveyor with the consultancy support
from M/s. Conveyor Dynamics Inc. USA.
(b) The Company has already signed a Technical
Collaboration Agreement for availing the
technology to design and manufacture the Lift
Gear Boxes with Haisung Industrial System
Company Limited of Korea. Company has already
remitted last two installments towards the
Technical Know how Fees.
The Company has also signed the Technical
Collaboration Agreement with RENK AG, of
Germany for availing technology for design and
manufacture of Vertical Roller Mill Gear Boxes.
Company has remitted second installment out of
three installments towards the Technical Know
how Fees. The Company has already raised its
first commercial invoice for the said Gear Boxes.
(c) Benefits derived as a result of the above efforts:
Presently, the Vertical Roller Mill Gearboxes are
being imported by the Indian manufacturers and
hence, it will substitute the import market and
create new market for the Company for this
segment.
(d) The Company has developed PCF Gear Box for
sugar mills to meet todays requirements of high
power, high output torque, high mill capacity.
(e) Technologies imported during the last five years:
Technologies Imported Year of import
LHD811S & LHD912 Axles & its spares 2005
Wind Electric Generators 2005
NIL 2006
Lift Gear Boxes 2007
Vertical Roller Mill Gear Box 2007
3. FOREIGN EXCHANGE DETAILS
23Elecon Engineering Company Limited - Annual Report 2008-09
SECRETARIAL AUDIT REPORT
To
The Board of Directors
ELECON ENGINEERING COMPANY LIMITED
1. I have examined the registers, records and documents of
Elecon Engineering Company Limited (“the Company”) for
the financial year ended on March 31, 2009 maintained
under the provisions of :-
• The Companies Act, 1956 and the Rules made under
the Act;
• The Depositories Act, 1996 and the Regulations and
the Bye laws framed under the Act;
• The following Regulations and Guidelines prescribed
under the Securities and Exchange Board of India Act,
1992 (“SEBI Act”)
• The Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeover)
Regulation, 1997;
• The Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 1992;
• The Securities Contracts (Regulation) Act, 1956 (‘SCRA’)
and Rules made under the Act; and
• The Equity Listing Agreement with Bombay Stock
Exchange Limited and National Stock Exchange of
India Limited.
1. Based on my examination and verification of the
records for the year ended on 31st
March 2009 produced
before me and according to the information and
explanations given to me by the Company, I report
that the Company has, in my opinion, complied with
the provisions of the companies Act, 1956 (the Act) and
the rules made under the Act and Memorandum and
Articles of Association of the Company, with regard to:
(a) Maintenance of various statutory registers and
documents and making necessary entries therein.
(b) Closure of Register of Members.
(c) Forms, returns, documents and resolutions required
to be filed with the Registrar of companies.
(d) Service of documents by the Company on its Members.
(e) Notice of Board Meetings and Committee meetings of
Directors.
(f ) The meetings of Directors and Committees of Directors
including passing of resolutions by circulation.
(g) The annual general meeting held on July 29, 2008
(h) Minutes of proceedings of General meeting and of
Board and other meetings.
(i) Approvals of shareholders, the Board of Directors, the
committee of Directors and competent authorities,
wherever required.
(j) Constitution of the Board of Directors and
appointment, retirement and re-appointment of
directors.
(k) Remuneration paid to the Directors other than
Managing and Wholetime Directors.
(l) Appointment and remuneration of Auditors.
(m) Declaration and payment of dividends.
(n) Borrowing and registration, modification and
satisfaction of charges.
(o) Investment of Company’s fund including inter
corporate loans and investments and loans to Directors
and others.
(p) The transactions covered under section 297 of the Act,
in as much as that the transactions are entered into
with such parties because there was either no alternate
source of supply or that the management preferred
the supplier’s products and services on quality grounds
or peculiarity of the products sold or services rendered.
(q) Generally, all other applicable provisions of the Act
and the rules made under that Act.
2. I further report that:
(a) The Company’s Directors have complied with the
requirements as to Disclosure of interest and concern
in contracts and arrangements, shareholding/
debenture holdings and directorships in other
companies and interests in other entities.
(b) The Directors have complied with the disclosure
requirements in respect of their eligibility of
appointment, their being independent and compliance
with the Code of Conduct for Directors and
Management Personnel.
(c) There was no prosecution initiated against or show
cause notice received by the Company and no fines or
penalties were imposed on the Company under the
Act against the Company, its Directors and Officers.
(d) The Company has obtained all necessary approvals of
the Central Government and/ or other authorities
under the Act.
3. I further report that the Company has complied with the
provision of the Depositories Act, 1996 and Bye-laws
framed thereunder by the Depositories with regard to
dematerialisation / rematerialisation of securities and
reconciliation of records of dematerialized securities with
all securities issued by the Company.
4. I further report that;
(a) The Company has complied with the requirement
under the listing Agreements entered into with
Mumbai stock Exchange Limited and National Stock
Exchange of India Limited
(b) The Company has complied with the provision of the
Securities and Exchange Board of India (Substantial
Acquisition of shares and takeover) Regulation, 1997
with regard to the disclosures and maintenance of
records required under the Regulations.
(c) The Company has complied with the provision of the
Securities and Exchange Board of India (Insider Trading)
Regulation 1992 with regard to the disclosure and
maintenance of records required under the Regulations.
CS ASHWIN SHAH
Place : Ahmedabad COMPANY SECRETARY
Date : 02-05-2009 C. P. No. 1640
24 Elecon Engineering Company Limited - Annual Report 2008-09
CORPORATE GOVERNANCE REPORT
INTRODUCTION
Corporate Governance is the set of processes, customs, policies, laws and institutions affecting the way in which a Company is
directed, administered and controlled in the best interest of the stakeholders and others ensuring greater transparency and
better and timely financial reporting. The concept of corporate governance primarily hinges on complete transparency, integrity
and accountability of the management, with an increasingly greater focus on investor protection and public interest.
The ULTIMATE OBJECTIVE of the Corporate Governance is to attain highest standard of procedures and practices followed by
the Corporate World so as to have transparency in its functioning with an ultimate aim to maximise the value of various
stakeholders.
The detailed report on implementation by the Company, of the Corporate Governance Code as incorporated in the Clause 49
of the Listing Agreement with the Stock Exchanges is set out below:
A. MANDATORY REQUIREMENTS
(I) Company’s Philosophy on the code of Governance
In ELECON, Corporate Governance philosophy stems from our belief that corporate governance is a key element in
improving efficiency and growth as well as enhancing investor confidence.
ELECON recognizes the ethics and importance of corporate Governance and acknowledges its responsibilities towards
all stakeholders including Government, employees, customers, suppliers, regulatory authorities and the shareholders.
ELECON Philosophy on Corporate Governance is to bestow high standard of transparency, fairness and accountability
for performance at all levels and to ensure best performance through professionalism, social responsiveness, business
practices and maximization of operational efficiency. The Company’s Corporate Governance is based on the values of
integrity, transparency and accountability. The Company endeavors to maximize the shareholders’ value and to protect
the interest of stakeholders by strengthening the best practices, professionalism and empowerment of employees.
(II) Board of Directors
The Company is managed by the Board of Directors consisting highly qualified and experienced professionals from
different fields, which formulates strategies, policies and reviews its performance periodically. The Chairman &
Managing Director manages the business of the Company under the overall supervision, guidance and control of the
Board.
Composition
The Company has an Executive Chairman and the number of Non-Executive Independent Directors is 50% of the total
number of Directors. The Board of Directors consists of 6 Directors including one Chairman & Managing Director, Two
non-independent non-executive and Three independent non-executive Directors. The Board of Directors thus, has an
adequate combination of executive and non-executive Directors.
None of the Directors on the Board is a Member of more than 10 Committees and Chairman of more than 5
Committees (as per Clause 49 (D)(ii) of Listing Agreement) across all the companies in which he is a Director.
Necessary disclosures have been made by the Directors.
BOARD MEETINGS AND PROCEDURES
(A) Scheduling and selection of Agenda items for Board Meetings
i. The meetings are being convened by giving appropriate advance notice after obtaining the approval of the Chairman
of the Board. Detailed agenda, management reports and other explanatory statements are circulated in advance
amongst the members for facilitating meaningful, informed and focused decisions. To address specific urgent need,
meetings are also being called at shorter notice. The Board is also authorized to pass Resolution by circulation for all
such matters, which are of utmost urgent nature.
ii. Where it is not practicable to attach any document or the agenda is of confidential nature, the same is placed on the
table with the approval of the Chairman of the Board. In special and exceptional circumstances, additional or
supplemental item(s) on the agenda are permitted. Sensitive subject matters are discussed at the meeting without
written materials being circulated.
iii. The agenda papers are prepared by the officials concerned and submitted to the Chairman and Managing Director
for his approval. Duly approved agenda papers are circulated amongst the Board members by the Company Secretary.
iv. As per the convenience of the members of the Board, The Board meetings are usually held at the Company’s
Registered office in Vallabh Vidyanagar, Dist. Anand or at Mumbai.
25Elecon Engineering Company Limited - Annual Report 2008-09
v. The members of the Board have complete access to all information of the Company. The Board is also free to
recommend inclusion of any matter in agenda for discussion. Senior management officials are called to provide
additional inputs to the items discussed by the Board as and when necessary.
(B) Recording minutes of proceedings at the Board Meeting
Minutes of the proceedings of each Board meeting is recorded and the same is read in the next Board Meeting. The
minutes of the proceedings of the meetings are entered in the Minutes Books and the same are signed by the Chairman
as prescribed in the Companies Act, 1956.
(C) Compliance
The Compliance Officer while preparing the agenda notes, is responsible for and is required to ensure adherence to all the
applicable provisions of law, rules, guidelines etc. The Company Secretary has to ensure compliance to all the applicable
provisions of the Companies Act, 1956, SEBI Guidelines, Listing Agreements, and other statutory requirements pertaining
to capital market. The Board of Directors reviews a quarterly Compliance Report confirming adherence to all applicable
laws, rules, and guidelines.
BOARD MEETINGS
During the year 2008-2009, the Board Meetings were held on 26th May 2008, 29th July 2008, 17th October, 2008 and
29th January, 2009 and the gap between two Board meetings was well within the limit of four months.
The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and at
the last Annual General Meeting, as also the number of Directorship and Committee positions, as held by them in Public
Limited Companies, as on 31st March, 2009 are given below:
Name of Nature of No. of Board No. of Attendance No. of No. of Committee
Directors Directorship Meetings held Board at AGM other Chairmanship/during the Meetings Director- Membership
tenure of Attended ship Chairman- Member-Directorship ship ship
Shri Prayasvin B. Patel Non- 4 4 Yes 13 - 2(Chairman & IndependentManaging ExecutiveDirector) Director
Shri Pradip M. Patel Non- 4 3 Yes 4 - 3IndependentNon-ExecutiveDirector
Shri Prashant C. Amin Non- 3 3 - 8 - 1IndependentNon-ExecutiveDirector
Shri Upendra M. Patel* Independent 4 3 Yes 5 - 1Non-ExecutiveDirector
Shri Chirayu R. Amin Independent 4 2 Yes 10 1 -Non-ExecutiveDirector
Shri Ashok J. Patel* Independent 4 2 No 6 1 1Non-ExecutiveDirector
Shri Hasmukhlal Independent 4 4 Yes 4 3 3S. Parikh Non-Executive
Director
Dr. Amritlal C. Shah Independent 4 4 Yes 6 1 5Non-ExecutiveDirector
*Shri Upendra M. Patel and Shri Ashok J. Patel have resigned from directorship of the Company w.e.f. 17/04/2009 and
29/04/2009 respectively.
26 Elecon Engineering Company Limited - Annual Report 2008-09
The Company did not have any material pecuniary relationship or transactions with the Independent Non-Executive Directors
during the year 2008-2009.
Disclosure regarding Directors retiring by rotation and being re-appointed:
Shri Pradip M. Patel and Shri Chirayu Amin, Directors retire by rotation at the ensuing Annual General Meeting and being eligible,
offer themselves for re-appointment. Shri Chirayu Amin is not related to any other Directors of the Company. However, Shri
Pradip M. Patel is related to the Chairman & Managing Director of the Company.
Mr. Prashant C. Amin was appointed as an Additional Director of the Company on 29/07/2008, by the Board of Directors of the
Company. According to the provisions of Section 260 of the Companies Act, 1956, he holds office as Director only upto the date
of ensuing Annual General Meeting. The Board considers it desirable that the Company should continue to avail itself of his
services. The Directors recommend to the members for their approval the resolution for his appointment as a director.
(III) Audit Committee
The term of reference of the Audit Committee are in accordance with the Section 292A of the Companies Act, 1956
and Clause 49 II C, D and E of the Listing Agreement.
Audit Committee comprises of experts specialising in accounting/financial management. The Chairman of the Audit
Committee is a Non - Executive and Independent Director. The Composition of the Audit Committee as on 31st March,
2009 is as follows:
Name Designation Category
Shri Hasmukhlal S. Parikh Chairman Independent & Non-Executive Director
Shri Ashok J. Patel* Member Independent & Non-Executive Director
Shri Pradip M. Patel Member Non-independent & Non-Executive Director
Dr. Amritlal C. Shah Member Independent & Non-Executive Director
*Shri Ashok J. Patel, Independent Director of the Company has resigned from the directorship of the Company
w.e.f. 29/04/2009.
The Audit Committee met Four times on the following dates during the last financial year:
26-05-2008 29-07-2008 17-10-2008 29-01-2009
Attendance of Audit Committee Meeting:
Name of Directors No. of Meetings Held No. of Meetings Attended
Shri Hasmukhlal S. Parikh 4 4
Shri Ashok J. Patel 4 2
Shri Pradip M. Patel 4 3
Dr. Amritlal C. Shah 4 4
The Vice President (Commercial) & CFO, Statutory Auditors, Internal Auditors are permanent invitees to the meeting and
attended & participated at the meetings of the Committee. Company Secretary was present at all the above meetings.
The Chairman of the committee was present at the Annual General Meeting held on 29th July, 2008.
(IV) Shareholders’/Investors’ Grievance Committee
Terms of Reference: To look into the Investors’ complaints, if any, and to redress the same expeditiously. Besides that the
Committee also considers and approves the transactions as may be referred to it by the Share Transfer Committee/ Committee
of Directors.
The Shareholders’/Investors’ Grievance Committee comprises of the following Directors :
Name Designation Category
Shri Ashok J. Patel* Chairman Independent & Non-Executive Director
Shri Hasmukhlal S. Parikh Member Independent & Non-Executive Director
Shri Pradip M. Patel Member Non-independent & Non-Executive Director
*Shri Ashok J. Patel, Independent Director of the Company has resigned from the directorship of the Company
w.e.f. 29/04/2009 and Dr. A. C. Shah, Independent Director of the Company has been appointed as a member of the
27Elecon Engineering Company Limited - Annual Report 2008-09
Shareholders’/Investors’ Grievance Committee w.e.f. 02/05/2009.
Shri Paresh Shukla, Company Secretary is the Compliance Officer and Secretary of the Committee. One Meeting was held,
during the financial year 2008-09, on 26th May, 2008.
Attendance of Shareholders’ / Investors’ Grievance Committee Meeting:
Name of Directors No. of Meetings Held No. of Meetings Attended
Shri Ashok J. Patel 1 1
Shri Pradip M. Patel 1 -
Shri Hasmukhlal S. Parikh 1 1
(V) Remuneration Committee
The Remuneration Committee has been constituted to recommend the remuneration package of the Managing Director based
on the performance and defined criteria.
The Remuneration Committee of the Company as on 31st March 2009 consists of the following Directors:
Name Designation Category
Shri Hasmukhlal S. Parikh Chairman Independent & Non-Executive Director
Shri Ashok J. Patel* Member Independent & Non-Executive Director
Shri Pradip M. Patel Member Non-Independent & Non-Executive Director
*Shri Ashok J. Patel, Independent Director of the Company has resigned from the directorship of the Company
w.e.f. 29/04/2009 and Dr. A. C. Shah, Independent Director of the Company has been appointed as a member of the
Remuneration Committee w.e.f. 02/05/2009.
Shri Paresh Shukla, Company Secretary of the Company is the Secretary of the Committee. No Remuneration Committee
Meeting was held during the financial year 2008-09.
(VI) Remuneration of Directors
a. Non-Executive Directors
The Non-Executive Directors do not draw any remuneration from the Company other than sitting fees. The Company pays the
sitting fees to all the non-executive Directors at the rate of Rs. 15,000/- for each meeting. The sitting fees paid to Non-Executive
Directors for attending Board and Committee Meetings during the year 2008-09 is as follows:
Report on Communication received from the Investors during the year 2008-2009.
Nature of Queries (Correspondence) Total Total Pending Remark
Received Replied
Inquiry pertaining to non- receipt of shares sent for transfer 7 7 — —
Inquiry on Dematerialization of Shares 12 12 — —
Name Correction/deletion 46 46 — —
Address correction 170 170 — —
Letter Received from SEBI/ other Statutory Bodies 10 10 — —
Loss of Shares & issue of duplicate Shares 62 62 — —
Split/Consolidation of Shares 3 3 — —
Transmission of shares 23 23 — —
Demat — — — —
28 Elecon Engineering Company Limited - Annual Report 2008-09
b. Executive Directors
The Company pays remuneration by way of salary, perquisites, allowances and Commission to the Managing Director.
The salary paid during the year to the Managing Director is within the ceiling prescribed by Section 198, 309 and the
Provisions of Schedule XIII of the Companies Act, 1956.
The remuneration paid to the Managing Director for the year 2008-09 is as follow:
Rs. in Lacs
Salary Perquisites Commission Total
Shri Prayasvin B. Patel 103.50 0.18 198.00 301.68*
* Does not include the Company’s contribution to Provident Fund, Superannuation Fund to the extent not taxable and Gratuityand encashment of leave at the end of tenure, as per the rules of the Company.
(VII) Committee of Directors
In addition to the above Committees, the Board has constituted a Committee of Directors comprising of the following
Directors as on 31-03-2009 :
*Shri Upendra M. Patel and Shri Ashok J. Patel have resigned from directorship of the Company w.e.f. 17/04/2009 and
29/04/2009 respectively. Shri Prashant C. Amin and Shri Chirayu Amin, Directors of the Company have been appointed as
members of the Committee w.e.f. 02/05/2009.
Shri Prayasvin B. Patel Chairman
Shri Upendra M. Patel* Member
Shri Ashok J. Patel* Member
The Committee met on the following dates during the last financial year:
17-04-2008 05-08-2008 29-11-2008
30-04-2008 21-08-2008 12-12-2008
05-05-2008 13-09-2008 19-01-2009
21-06-2008 03-10-2008 28-02-2009
15-07-2008 14-10-2008 21-03-2009
Attendance :
Name of Member No. of Meetings Held No. of Meetings Attended
Shri Prayasvin B. Patel 15 15
Shri Upendra M. Patel 15 15
Shri Ashok J. Patel 15 —
Attendance at the Committee of Directors meetings during the year were as follow :
Directors Sitting fees
Amount in Rs.
Shri Pradip M. Patel 90,000
Shri Prashant C. Amin 45,000
Shri Upendra M. Patel 2,70,000
Shri Chirayu R. Amin 30,000
Shri Ashok J. Patel 75,000
Shri Hasmukhlal S. Parikh 1,35,000
Dr. Amritlal C. Shah 1,20,000
29Elecon Engineering Company Limited - Annual Report 2008-09
(VIII) Details of General Meetings
Location, date and time of Annual General Meetings held during last 3 years:
Year Location AGM/ Date Day Time No. of
EGM Special
Resolution
Passed
2005 - 06 Elecon Engineering Co. Ltd. AGM 12-9-2006 Tuesday 2.30 p.m. 5
Audio Visual Hall
Gear Division
Anand Sojitra Road
Vallabh Vidyanagar – 388 120
2006 - 07 As above AGM 13-9-2007 Thursday 11.00 a. m. 4
2007 - 08 “Elecon” Hall, Vitthal Udyognagar, AGM 29-7-2008 Tuesday 11.00 a. m. -
Industries Association,
Nr. GIDC Office, GIDC,
Vitthal Udyognagar,
Vallabh Vidyanagar – 388 120
During the year ended 31st March, 2009, no resolution has been passed by the members through Postal Ballot.
* During the year 2007-2008, dividend was declared at the rate of Rs. 1.50 per share having face value of Rs. 2/- each.
Stock Options
The Company has not issued any Stock options to its Directors/Employees.
Equity Shares held by Directors (as on 31-3-2009)
Dividend History
Year Rate (%) Per Share (Rs.) Amount (in Rs.)
2003-2004 10% 1.00 56,47,410
2004-2005 25% 2.50 1,41,18,525
2005-2006 50% 5.00 3,06,52,000
2006-2007 75% 1.50 4,63,85,475
2007-2008 75% 1.50* 13,92,92,265
(IX) Disclosures on Materially significant related party transactions
Full disclosure of related party transactions as per Accounting Standard - 18 issued by the Institute of Chartered
Accountants of India are given under Note No. 15 of Notes on Annual Accounts.
Name of Directors No. of shares Held
Shri Prayasvin B. Patel 4,37,320
Shri Pradip M. Patel 62,412
Shri Prashant C. Amin 19,300
Shri Upendra M. Patel —-
Shri Chirayu R. Amin —-
Shri Ashok J. Patel —-
Shri Hasmukhlal S. Parikh 11,250
Dr. Amritlal C. Shah 1,000
30 Elecon Engineering Company Limited - Annual Report 2008-09
(X) Details of Non-compliance by the Company and penalties, strictures imposed on the Company by theStock Exchange, SEBI or any Statutory Authorities on any matter related to capital market during the lastthree years
The Company has complied with the requirements of the Stock Exchanges, SEBI and Statutory Authorities on allmatters related to Capital Market during the last three years.
All Returns/Reports were filed within stipulated time with Stock Exchanges/other authorities.
No penalties or strictures were imposed by SEBI, Stock Exchanges or any Statutory Authorities for any matter relatingto Capital Market during the last three years.
(XI) Code of Conduct
i) For prevention of Insider Trading
The Company has a comprehensive code of conduct for its management, staff and directors for prevention of insidertrading. The code lays down guidelines and procedures to be followed and disclosures to be made while dealing withthe shares of the Company and cautioning them on the consequences of non-compliances. The Company Secretary hasbeen appointed as a Compliance Officer and is responsible for adherence to “Code for Prevention of Insider Trading”.
ii) For Board of Directors and Senior Management
The Board of Directors of the Company has laid down a “Code of Conduct” for all Board Members and members ofsenior management of the Company. The code of conduct is posted on the website of the Company, www.elecon.com.
The Board members and Senior Management have affirmed compliance with the “Code of Conduct” for the yearended March 31, 2009.
(XII) CEO / CFO Certificate
The Managing Director and the Chief Financial Officer of the Company have furnished the requisite certificate tothe Board of Directors under Clause 49 V of the Listing Agreement.
(XIII) Disclosures on Whistle Blower Policy
Though there is no formal Whistle Blower Policy, the Company takes cognizance of complaints made and suggestions
given by the employees and others. No employee of the Company has been denied access to the Audit Committee.
Means of communication
a) Quarterly, Half-yearly and Annual Results :
The Board of Directors of the Company approves and takes on record quarterly, half yearly and yearly financial results inthe Proforma prescribed by Clause 41 of the Listing Agreement within one month of close of the reporting period. Incompliance with Clause 41 of the Listing Agreement, the Company sends the quarterly / half-yearly / audited results tothe Stock Exchanges within 15 minutes of the end of the Board Meetings at which they are taken on record. Thesefinancial statements are normally published in prominent daily newspapers viz. The Economic Times, Financial Express,The Business Standard, Gujarat Samachar, Sandesh, Divya Bhashkar, Jansatta, Naya Padkar having wide circulation acrossthe country and also displayed on the website of the Company on www.elecon.com and simultaneously posted on theElectronic Data Information Filing and retrieval website namely www.sebiedifar.nic.in.
b) The Company also informs by way of intimation to the Stock Exchanges all price sensitive matters or such other matterswhich in its opinion are material and of relevance to the shareholders.
c) The Company’s financial results and official news releases and the presentation made to the investors, financialanalyst are displayed on the Company’s website www.elecon.com
d) Management Discussion and Analysis Report is attached with the Directors Report in this Annual Report.
Compliance Officer
Mr. Paresh Shukla
Company Secretary
Elecon Engineering Company Limited
Anand-Sojitra Road
Vallabh Vidyanagar – 388 120
Tal. & Dist. Anand, Gujarat.
Phone No. : +91 2692 227109, 230166
Email : [email protected]
31Elecon Engineering Company Limited - Annual Report 2008-09
(XIV) GENERAL SHAREHOLDERS INFORMATION
a) Annual General Meeting
Date and Time : 30th July, 2009 at 11.45 A.M.
Venue : Audio Visual Hall, Nr. Gear Division,
Anand-Sojitra Road,
Vallabh Vidyanagar – 388 120,
Gujarat.
b) Financial Calendar : April 01 to March 31
c) Date of Book Closure : Wednesday, 1st July, 2009 to Tuesday, 7th July, 2009.
(both days inclusive)
d) Dividend Payment date : on or before 4th August, 2009
e) Listing on Stock Exchange : The Company’s securities are listed at the
Bombay Stock Exchange Limited, Mumbai
The National Stock Exchange of India Limited, Mumbai
The Company has paid the annual Listing fees to the Stock Exchanges
for the financial year 2009-2010.
f) Stock code : The Bombay Stock Exchange Limited, Mumbai
(Physical Segment) : BSE 5700
The Bombay Stock Exchange Limited, Mumbai
(Demat Segment) : BSE 505700
The National Stock Exchange of India Limited
(Demat Segment) : ELECON
Demat ISIN in NSDL and CDSL for Equity Shares : INE 205 B01023
g) Stock Market Price Data :
Monthly share price movement during the year 2008-09 at BSE & NSE Performance in comparison to broad-based indices
such as BSE Sensex
Month BSE NSE
High Low Volume High Low Volume
April – 2008 200.00 166.40 1721850 200.95 166.15 2007593
May – 2008 171.95 122.00 3035414 178.40 121.90 3526880
June– 2008 127.00 90.10 3159685 125.70 91.15 2840683
July – 2008 105.00 80.15 1674183 104.80 78.50 1794349
August – 2008 128.30 88.50 6750728 128.50 88.95 7531973
September – 2008 124.30 84.25 1368197 124.30 85.00 1491694
October – 2008 93.00 36.25 2033633 94.90 36.00 2446206
November – 2008 51.45 34.15 1769655 94.90 34.10 4592628
December – 2008 40.90 29.50 3229761 39.90 29.50 2922818
January – 2009 46.10 34.00 1857541 46.40 34.15 1657974
February–2009 37.60 28.75 1109015 46.40 28.70 2660621
March-2009 32.45 23.85 2622457 32.35 23.75 3143171
ELECON vs. SENSE
X
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
20000.00
18000.00
16000.00
14000.00
12000.00
10000.00
8000.00
6000.00
4000.00
2000.00
0.00
April-‘08
May-‘08
June-‘08
July-‘08
Aug.-‘08
Sept.-‘08
Oct.-‘08
Nov.-‘08
Dec.-‘08
Jan.-‘09
Feb.-‘09
Mar.-‘09
MONTHS
Price Sensex Graph
EECL Share Price SensexS
EN
SE
X
32 Elecon Engineering Company Limited - Annual Report 2008-09
h) Share Registrar & Transfer Agent :
The Company has appointed following Registrar & Transfer Agent for Physical Transfer & Demat of the Shares:
M/s. Link Intime India Pvt. Ltd. (Formerly known as Intime Spectrum Registry Limited)
308,1st floor, Jaldhara Complex,
Opp. Manisha Society,
Off. Old Padra Road, Vasna Road,
VADODARA - 390 015.
Email : [email protected]
Phone: 0265 - 3249857, 2250241, 2252875
i) Share Transfer System :
The Company’s Shares are in compulsory Demat List and are transferable through the Depository system.
Depository transfers as well as physical transfers are handled by Link Intime India Pvt. Ltd. (Formerly known
as Intime Spectrum Registry Limited) having their registered office at C-13, Pannalal Silk Mill’s Compound, LBS
Marg, Bhandup (West), MUMBAI – 400 078.
j) Share holding pattern as on 31-03-2009
Category No. of Shares held (%) of total
Promoters 4,23,73,238 45.63
Banks, Financial Institutions and Insurance Companies 1,82,166 0.20
Foreign Institutional Investors 13,69,194 1.47
Mutual Funds and UTI 1,68,23,039 18.12
N.R. I. / O.C. B. 7,40,830 0.80
Bodies Corporate 56,36,921 6.07
Public 2,57,36,122 27.71
TOTAL 9,28,61,510 100.00
Performance in comparison to broad-based indices such as NSE Nifty
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00
0.00April-‘08
May-‘08
June-‘08
July-‘08
Aug.-‘08
Sept.-‘08
Oct.-‘08
Nov.-‘08
Dec.-‘08
Jan.-‘09
Feb.-‘09
Mar.-‘09
MONTHS
PR
ICE
Price Nifty Graph
EECL Share Price Nifty
NIF
TY
ELECON vs. NIFTY
33Elecon Engineering Company Limited - Annual Report 2008-09
l) Dematerialization of Shares and Liquidity
As on 31st March 2009, 8,73,18,550 Shares were in dematerialized form representing 94.03% of total shares.
The Company’s shares are traded on the Bombay Stock Exchange Limited, and The National Stock Exchange
of India Limited, Mumbai.
m) Outstanding GDRs/ADRs/Warrants or any other convertible Instruments, conversion date and likely
impact on equity as on 31st March, 2009 :
There is no outstanding GDRs/ADRs/Warrants or any other Convertible Instruments as on 31st March, 2009.
n) Unclaimed Dividend
As per the provisions of Section 205A read with Section 205C of the Companies Act, 1956 the Company is
required to transfer the unpaid dividend remained unclaimed and unpaid for a period of seven years from
the due dates to the Investor Education and Protection Fund (lEPF) set up by the Central Government.
Herebelow are the proposed dates for transfer of the unpaid dividend to IEPF by the Company.
* Indicative dates, actual date may vary.
o) Plant Locations : Works
1. Material Handling Equipment Division (MHE-Div.)
Anand –Sojitra Road,
Vallabh Vidyanagar – 388 120. Gujarat.
2. Gear Division
Anand –Sojitra Road,
Vallabh Vidyanagar – 388 120. Gujarat.
3. Wind Mill Division
Anand –Sojitra Road,
Vallabh Vidyanagar – 388 120. Gujarat.
Address of Regd. Office : Anand –Sojitra Road,
Vallabh Vidyanagar – 388 120. Gujarat
Internet Website : www.elecon.com
Financial Year Date of declaration Proposed date for transfer to IEPF*
2003-2004 03-09-2004 02-10-2011
2004-2005 15-09-2005 14-10-2012
2005-2006 12-09-2006 11-10-2013
2006-2007 13-09-2007 12-10-2014
k) Distribution of Shareholding as on 31-03-2009
Category No. of Percentage No. of shares Percentage
Shareholders
1 - 500 32057 69.88 3555804 3.83
501 - 1000 6632 14.46 2679854 2.89
1001 - 2000 3420 7.45 2706513 2.91
2001 - 3000 1276 2.78 1651900 1.78
3001 - 4000 520 1.13 944564 1.02
4001 - 5000 349 0.76 799881 0.86
5001 - 10000 797 1.74 2836160 3.05
Above 10000 826 1.80 77686834 83.66
TOTAL 45877 100.00 92861510 100.00
34 Elecon Engineering Company Limited - Annual Report 2008-09
Address for Correspondence :
The Shareholders may address their communications/suggestions/grievances/queries to :
Mr. Paresh Shukla
Company Secretary and Compliance Officer
Elecon Engineering Company Limited
Post Box No. 6, Anand-Sojitra Road
Vallabh Vidyanagar – 388 120
Tal. & Dist. Anand, Gujarat.
Tel No. (02692) 227109, 230166
Fax No. (02692) 236457, 236527
Email address : [email protected]
B. NON-MANDATORY REQUIREMENTS
A) CHAIRMAN OF THE BOARD
The Company has an Executive Chairman and hence, the requirement pertaining to reimbursement of expenses to
a non-executive Chairman does not arise.
B) REMUNERATION COMMITTEE
A remuneration committee comprising all non-executive directors is functioning since 2001, the details of which are
mentioned elsewhere in this Annual Report.
C) SHAREHOLDER RIGHTS TO RECEIVE FINANCIAL RESULTS
The financial performance of the Company for every quarter are extensively published in the newspapers and are
also put on the Company’s website besides being available on the SEBI website www.sebiedifar.nic.in.
D) POSTAL BALLOT
The provisions relating to Postal Ballot will be complied with in respect of matters where applicable.
E) AUDIT QUALIFICATIONS
During the year under review, there was no audit qualification in the Company’s financial statements. The Company
continues to adopt best practices to ensure the regime of unqualified financial statements.
F) TRAINING OF BOARD MEMBERS
During the Audit and Board Meetings, the management and working Directors give extensive briefings to the Board
Members on the business of the Company.
G) OFFICE SPACE FOR NON EXECUTIVE CHAIRMAN
The Company has an Executive Chairman and therefore the issue of providing office to non Executive Chairman does
not arise.
The Company has no specific tenure specified for Independent Directors.
35Elecon Engineering Company Limited - Annual Report 2008-09
AUDITORS’ CERTIFICATE ON COMPLIANCE WITH MANDATORY REQUIREMENTS OF
CORPORATE GOVERNANCE TO THE MEMBERS OF ELECON ENGINEERING COMPANY
LIMITED
To,
The Members
Elecon Engineering Company Limited
We have examined the compliance of the conditions of Corporate Governance by Elecon
Engineering Company Limited for the year ended on 31st March, 2009 as stipulated in Clause
49 of the Listing Agreement of the Company with the Stock Exchanges in India.
The compliance of the 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 the Corporate
Governance. It is neither an audit nor an expression of an opinion on the financial statements
of the Company.
In our opinion and to the best of our information and according to the explanation given to
us, the Company has complied with the conditions of the Corporate Governance as stipulated
in the above Listing Agreement.
We state that in respect of investor grievance received during the year ended on 31st March,
2009, no investor grievance is pending against the Company as per records maintained by the
Company and presented to the Investors’/Shareholders’ Grievance Committee of the Company.
We further state that such compliance is neither an assurance as to the future viability of the
Company nor the efficiency or the effectiveness with which the management has conducted
the affairs of the Company.
For and on behalf of
THACKER BUTALA DESAI
Chartered Accountants
M. T. Desai
Place : Navsari Partner
Date : 04-05-2009 M. No. : 30911
36 Elecon Engineering Company Limited - Annual Report 2008-09
DECLARATION
To,
The Members
Elecon Engineering Company Limited
I, Prayasvin B. Patel, Chairman and Managing Director and Chief Executive Officer of the Company, do
hereby declare that the Directors and Senior Officers of the Company have exercised their authorities
and powers and discharged their duties and functions in accordance with the requirement of the Code
of Conduct as prescribed by the Company and have adhered to the provisions of the same.
For Elecon Engineering Company Limited
Prayasvin Patel
Place : Mumbai Chairman and Managing Director
Date : 02-05-2009 and Chief Executive Officer
37Elecon Engineering Company Limited - Annual Report 2008-09
AUDITOR’S REPORT
To
The Shareholders of
ELECON ENGINEERING COMPANY LIMITED
Vallabh Vidyanagar
1. We have audited the attached Balance Sheet of
ELECON ENGINEERING COMPANY LIMITED as at
March 31, 2009 and also the Profit and Loss Account
and Cash Flow Statement of the Company for the
year ended on that date annexed thereto. These
financial statements are the responsibility of the
Company’s management. Our responsibility is to
express an opinion on these financial statements
based on our audit.
2. We 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 a 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.
3. As required by the amended Companies (Auditors’
Report) Order, 2003 issued by the Central
Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we annex
hereto a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. 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
purpose of our audit;
(b) In our opinion, proper books of account, as
required by the 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;
For THACKER BUTALA DESAIChartered Accountants
M. T. DESAI
Place : Navsari Partner
Date : 04-05-2009 Membership No. : 30911
(d) In our opinion, the Balance Sheet, Profit and
Loss Account and Cash Flow statement dealt
with by this report comply with the applicable
Accounting Standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956 ;
(e) Based on representations made by all the
Directors of the Company as on 31st March,
2009 and taken on record by the Board of
Directors of the Company and according to the
information and explanations made available to
us by the Company, none of the Directors of
the Company has any disqualification as
referred to in clause (g) of sub-section (1) to
section 274 of the Companies Act, 1956; and
(f ) In our opinion and to the best of our
information and according to the explanations
given to us, the said accounts read together
with the 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 the Balance Sheet, of the
state of affairs of the Company as at March
31, 2009;
(ii) In the case of the Profit and Loss Account,
of the Profit of the Company 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.
38 Elecon Engineering Company Limited - Annual Report 2008-09
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of
its fixed assets.
(b) Certain items of Plant and Machineries were physically verified by the management during the year in accordance
with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at
reasonable intervals. According to the information and explanations given to us no material discrepancies were
noticed on such verification.
(c) The Company has not disposed off a substantial part of the fixed assets during the year under review. Therefore,
going concern status of the Company has not been affected.
(ii) (a) As explained to us, inventories were physically verified by the management at the end of the year.
(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 the 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 its inventories and discrepancies noticed on physical verification have been properly dealt with in the
books of account of the Company.
(iii) (a) According to the information & explanations given to us, the Company has not granted any secured or unsecured
loan to any party listed in the register maintained under section 301 of the Companies Act, 1956.
(b) In view of clause (iii) (a) above, this clause regarding interest and other terms and conditions is not applicable.
(c) The view of clause (iii) (a) above, this clause regarding repayment of loan and interest thereon is not applicable.
(d) In view of clause (iii) (a) above, this clause regarding overdue amounts of such loan and interest thereon is not
applicable.
(e) According to the information & explanations given to us, the company has not taken any loan from any party listed
in the register maintained under section 301 of the Companies Act, 1956.
(f ) In view of clause (iii) (e) above this clause regarding interest and other terms and conditions is not applicable.
(g) In view of clause (iii) (e) above this clause regarding repayment of loan and interest thereon is not applicable.
(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system
commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets
and for the sale of goods and services.
(v) (a) According to the information and explanations given to us, contracts or arrangements with the parties listed in the
register maintained under section 301 of the Companies Act, 1956 have been entered in the register upon
ratification of the same by the Board of Directors of the Company.
(b) We are informed that in case of the transactions with the parties listed in the register maintained under section 301
of the Companies Act, 1956 no comparison of prices could be made as there was either no alternate source of
supply or that the management preferred the supplier’s products and services on quality grounds or peculiarity of
the products sold or services rendered.
(vi) According to the information and explanations given to us, applicable provisions of the directives issued by the Reserve
Bank of India and the provisions of section 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the
rules framed thereunder have been complied with in respect of deposit accepted by the company during the year under
review.
(vii) The Company has appointed a firm of Chartered Accountants to carry out internal audit work. The said internal audit
system operating in the Company commensurate with the size of the company and nature of its business.
(viii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of
cost records under section 209(1)(d) of the Companies Act, 1956 in respect of any of the products of the company.
(ix) (a) According to the records of the Company undisputed statutory dues including Provident Fund, Investor Education
& Protection Fund, Employees’ State Insurance, Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service
Tax, Cess and other statutory dues have been regularly deposited during the period with appropriate authorities.
There was no outstanding statutory dues as at the end of the year outstanding for a period of more than six months
from the date they became payable.
39Elecon Engineering Company Limited - Annual Report 2008-09
(b) According to information and explanations given to us, the Company has not paid the following statutory dues on
account of the demand being disputed by the Company.
Sr. Nature of liability Amount Pending Before
No. (Rs. in Lacs)
1. Excise Duty, penalties & interest thereon 137.36 C.E.S.T.A.T.
2. Excise Duty, penalties & interest thereon 92.34 Central Excise
Commissioner (Appeal)
3. Income Tax, Wealth Tax and interest & Penalty thereon 7.43 I.T.A.T.
4. Income Tax, Wealth Tax and interest & Penalty thereon 80.24 C.I.T [Appeal]
5. Sales Tax, Purchase Tax, Works Contract 347.55 Orissa State Sales Tax
Tax and interest & Penalty thereon Appellate Tribunal
(x) According to the records of the Company, it has no accumulated Losses. The Company has not incurred cash losses during
the financial year under review or during the immediately preceding financial year.
(xi) According to our audit procedure and on the basis of information and explanations given by the management, theCompany has not defaulted in repayment of dues to any Financial Institution or Bank. The Company has not issued anyDebenture.
(xii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not
granted any loan on the basis of security by way of pledge of shares, debentures and other securities. Therefore, thequestion of adequacy or otherwise of maintenance of documents and records in respect thereof does not arise.
(xiii) According to our audit procedure and on the basis of information & explanations given to us, the Company has not
indulged in any chit fund activity during the year under review. Therefore, the question of compliance with provisions ofany special statute applicable to chit fund does not arise.
(xiv) According to our audit procedure and on the basis of information & explanations given to us, the Company has notindulged in dealing or trading in shares, securities, debentures and other investments. In respect of long term investment
made by the Company, according to the information and explanations given to us, all the investments have been held inthe name of the Company only.
(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which thecompany has given guarantee for loans taken by others from banks or financial institutions are prima-facie not prejudicial
to the interest of the Company.
(xvi) In our opinion and according to the information & explanations given to us, the term loans obtained during the year underreview have been applied for the purpose for which they were raised.
(xvii) In our opinion and according to the information & explanations given to us, and on an overall examination of the BalanceSheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) According to our audit procedure and on the basis of information & explanations given to us, during the year underreview, the Company has not make any preferential allotment of shares to the parties or companies listed in the registermaintained under section 301 of the Companies Act,1956. Therefore, the question of impacts of the prices recovered in
respect of such shares on the interest of the Company does not arise.
(xix) According to our audit procedure and on the basis of information & explanations given to us, during the year underreview, the Company has not issued any secured or unsecured debentures. Therefore, the question of creation ofsecurities or charge in respect thereof does not arise.
(xx) According to our audit procedure and on the basis of information & explanations given to us, during the year under
review, the Company has not raise money by way of public issue of shares. Therefore, the question of disclosure andverification of end use of money so raised does not arise.
(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraudon or by the Company has been noticed or reported during the year under review.
For THACKER BUTALA DESAIChartered Accountants
M. T. DESAI
Place : Navsari Partner
Date : 04-05-2009 Membership No. : 30911
40 Elecon Engineering Company Limited - Annual Report 2008-09
BALANCE SHEET AS AT 31ST MARCH, 2009Rs. in Lacs
Schedule As at 31-03-09 As at 31-03-08
SOURCES OF FUNDS
Share Capital 1 1,857.23 1,857.23
Reserves and Surplus 2 25,682.77 21,815.39
27,540.00 23,672.62
LOANS
Secured 3 52,360.92 33,294.06
Unsecured 4 6,847.28 7,632.03
59,208.20 40,926.09
Net Deferred Tax 3,278.03 1,710.76
TOTAL 90,026.23 66,309.47
APPLICATION OF FUNDS
Fixed Assets 5 31,101.93 19,306.74
Investments 6 1,086.80 945.55
Current Assets, Loans and Advances 7 100,845.90 80,963.70
Less : Current Liabilities and Provisions 8 43,177.28 35,003.64
Net Current Assets 57,668.62 45,960.06
Deferred Expenditure 9 168.88 97.12
(To the extent not written off )
TOTAL 90,026.23 66,309.47
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors
THACKER BUTALA DESAIChartered Accountants
P. B. Patel H. S. Parikh
Chairman and Director
Managing Director
M. T. Desai Paresh Shukla
Partner Company Secretary
M. No. 30911
Place : Navsari Place : Mumbai
Date : 04-05-2009 Date : 02-05-2009
41Elecon Engineering Company Limited - Annual Report 2008-09
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. in Lacs
Schedule Year ended 31-03-09 Year ended 31-03-08INCOME
Sales 10 86,538.48 83,209.29Less: Excise Duty (7,577.16) (10,141.71)
Net Sales 78,961.32 73,067.58Erection and other Charges 16,545.16 9,575.93Other Income 11 957.72 978.66
96,464.20 83,622.17EXPENDITURE
Consumption of Materials, Sub-Contracts, Erection and other charges 12 73,747.68 59,906.12Power and Fuel 705.90 677.64Employees’ Remuneration and Benefits 13 4,383.22 3,427.75Administrative, Selling & General Expenses 14 12,315.50 10,290.29Interest 15 4,836.80 2,742.66Depreciation 2,214.71 1,419.80
98,203.81 78,464.26
(Increase)/Decrease in Stock 16 (10,549.64) (4,710.00)
87,654.17 73,754.26
PROFIT BEFORE TAXATION AND EXTRA ORDINARY ITEMS 8,810.03 9,867.91
Extra Ordinary Items - -
PROFIT BEFORE TAXATION 8,810.03 9,867.91
Provision for Taxation (including Wealth tax) 1,812.43 2,932.00Deferred Tax 1,197.48 164.49Fringe Benefit Tax 55.00 51.00
PROFIT AFTER TAXATION 5,745.12 6,720.42
Adjustment of prior period (248.09) -
Balance brought forward from last year 5,641.37 1,550.60
PROFIT AVAILABLE FOR APPROPRIATION 11,138.40 8,271.02
APPROPRIATION
Proposed Dividend 1,392.92 1,392.92
Tax on Proposed Dividend 236.73 236.73Transfer to General Reserve 7,500.00 1,000.00
Balance Carried Forward 2,008.75 5,641.37
Earning Per Share- Before Extra Ordinary Items
(i) Basic 6.19 7.24
(ii) Diluted 6.19 7.24- After Extra Ordinary Items
(i) Basic 6.19 7.24
(ii) Diluted 6.19 7.24
Face Value Per Share (Rs.) 2.00 2.00
Notes forming part of Accounts 17
As per our report of even date attached
For and on behalf of
THACKER BUTALA DESAI
Chartered Accountants
M. T. Desai
Partner
M. No. 30911
Place : Navsari
Date : 04-05-2009
For and on behalf of the Board of Directors
P. B. Patel H. S. Parikh
Chairman and Director
Managing Director
Paresh Shukla
Company Secretary
Place : Mumbai
Date : 02-05-2009
42 Elecon Engineering Company Limited - Annual Report 2008-09
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009
Rs. in Lacs
Particulars As at 31-03-2009 As at 31-03-2008
Amount Amount Amount Amount
[A] CASH FLOW FROM OPERATING ACTIVITIES
1. Net Profit before Interest, Tax ,
Extra- ordinary Items & Profit on sale
of Assets & Investments 13,675.37 12,628.50
2. Adjustments for:
(i) Depreciation 2,214.71 1,419.80
(ii) Interest Income (534.64) (79.67)
(iii) Dividend Income (71.77) (87.76)
(iv) Gratuity 201.38 -
1,809.68 1,252.37
Operating Profit Before Working
Capital Changes 15,485.05 13,880.87
3. Adjustments for Working Capital changes:
[i] Trade & Other Receivables
- Trade receivables 2,058.03 (10,433.01)
- Loans and Advances (930.12) (1,559.37)
[ii] Trade & Other payables
- Trade payables 641.58 7,130.70
- Advances 7,384.34 641.15
[iii] Inventories (14,814.29) (8,364.62)
(5,660.46) (12,585.15)
CASH GENERATED FROM OPERATIONS 9,824.59 1,295.72
4. Less: Direct Taxes Paid (2,587.92) (3,242.13)
(2,587.92) (3,242.13)
NET CASH GENERATED BEFORE EXTRA-ORDINARY ITEMS 7,236.67 (1,946.41)
5. Deferred Expenditure
Technical Know How Fees (111.62) (75.11)
NET CASHFLOW FROM OPERATING ACTIVITIES [A] 7,125.05 (2,021.52)
43Elecon Engineering Company Limited - Annual Report 2008-09
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. in Lacs
Particulars As at 31-03-2009 As at 31-03-2008
Amount Amount Amount Amount
[B] CASHFLOW FROM INVESTING ACTIVITIES
1. Purchase of Fixed Assets (14,017.74) (8,193.84)
2. Sale of Fixed Assets 18.17 144.38
3. Purchase of Investments (141.25) (141.58)
4. Sale of Investments 0.99 91.45
5. Interest Income 534.64 79.67
6. Dividend Income 71.77 87.76
NET CASHFLOW FROM INVESTING ACTIVITIES [B] (13,533.42) (7,932.16)
[C] CASHFLOW FROM FINANCING ACTIVITIES
1. Issue of Equity Capital (Including Share Premium) - 45.28
2. Proceeds from Long Term borrowings 16,300.26 8,229.08
3. Repayments against Long Term Borrowings (4,487.39) (2,635.03)
4. Proceeds from Other Borrowings 39,731.45 23,219.02
5. Repayments against Other Borrowings (33,263.97) (16,221.18)
6 . Interest Paid (4,900.73) (2,665.49)
7. Dividend Paid (1,617.62) (541.67)
NET CASHFLOW FROM FINANCING ACTIVITIES [C] 11,762.00 9,430.01
[D] NET INCR./(DECR.) IN CASH & CASH EQUIVALENTS [A+B+C] 5,353.63 (523.66)
[E] CASH & CASH EQUIVALENTS AS ON 01-04-2008/ 01-04-2007 752.24 1,275.90
[F] CASH & CASH EQUIVALENTS AS ON 31-03-2009 / 31-03-2008 [D+E] 6,105.87 752.24
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors
THACKER BUTALA DESAIChartered Accountants P. B. Patel H. S. Parikh
Chairman and Director
Managing Director
M. T. Desai Paresh Shukla
Partner Company Secretary
M. No. 30911
Place : Navsari Place : Mumbai
Date : 04-05-2009 Date : 02-05-2009
44 Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009Rs. in Lacs
As at 31-03-09 As at 31-03-08
SCHEDULE - 1
SHARE CAPITAL(A) Authorised Share Capital
(i) 22,50,00,000 (Previous Year 22,50,00,000) Equity Shares of Rs. 2/- each 4,500.00 4,500.00
(ii) 2,50,00,000 (Previous Year 2,50,00,000) Cumulative Redeemable
Preference Shares of Rs. 2/- each 500.00 500.00
5,000.00 5,000.00(B) Issued, Subscribed and Paid-up Capital :
9,28,61,510 Equity Shares of Rs. 2/- each(Previous Year 9,28,61,510 Equity shares of Rs. 2/- each) 1,857.23 1,857.23
Notes : Of the above(i) 3,42,100 equity shares of Rs. 2/- each in above (originally allotted
68,420 equity Shares of Rs. 10/- each) were issued as fully paid-up,pursuant to a contract without payment being received in cash.
(ii) 1,73,38,890 equity shares of Rs. 2/- each in above (originally allotted34,67,778 equity Shares of Rs. 10/- each) were issued as Bonus Shares by wayof capitalisation of Share Premium and Reserves.
(iii) 54,98,160 equity shares of Rs. 2/- each in above (originally allotted 10,99,632equity Shares of Rs. 10/- each) were issued as fully paid-up equity shares onconversion of debentures.
(iv) 27,16,787 Equity Shares of Rs 2/- were allotted as fully paid-up equity shareson conversion of FCCB of Series ‘A’ 9,000 nos. of $ 1,000 each.
(v) 6,19,07,673 Equity Shares of Rs 2/- each in above were issued as BonusShares by way of capitalisation of Share Premium and Reserves. 1,857.23 1,857.23
SCHEDULE - 2
RESERVES AND SURPLUS
(A) Capital ReserveAs per Last Balance Sheet - 54.79Less : Transferred to Share Premium Account “ For issue of Bonus Shares” - (54.79)
- -(B) Security Premium Account
As per Last Balance Sheet - 40.65Less : Transferred to Share Premium Account “ For issue of Bonus Shares” - (40.65)
- -(C) Share Premium Account
As per Last Balance Sheet 2,878.14 3,976.17Add : Amount transferred from Capital Reserve - 54.79
Add : Amount transferred from Security Premium Account - 40.65
Add : Amount arising on conversion of FCCB in to equity shares - 44.68
Less : Amount Utilized for issue of Bonus Shares - ( 1,238.15)
2,878.14 2,878.14(D) General Reserve
As per Last Balance Sheet 13,295.88 12,549.69Add : Transferred during the year from Profit & Loss Account 7,500.00 1000.00Add : Transferred from Capital Reserve - -Add : Transferred from deferred Tax on Transitional Liability for Gratuity - 130.69Less : Amount provided for Gratuity for Transitional Liability - (384.50)
20,795.88 13,295.88
(E) Profit and Loss Account 2,008.75 5,641.37
25,682.77 21,815.39
45Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009Rs. in Lacs
As at 31-03-09 As at 31-03-08
SCHEDULE - 3
SECURED LOANS
(See Note 2 of Schedule-17)
A. Loans and Advances from State Bank of India/
Bank of Baroda/ Exim Bank / Axis Bank / Citi Bank/HDFC Bank
(a) Cash Credit / Working Capital Demand Loan 32,295.72 24,537.78
(b) Term Loan 19,962.87 8,624.60
(Repayable within a year Rs. 6229.08 Lacs
Previous year Rs. 3201.54 Lacs)
B. Other Loans and Advances
(a) HP from Other Banks 102.33 131.68
(Repayable within a year Rs. 58.02 Lacs
Previous Year Rs. 30.58 Lacs) 52,360.92 33,294.06
SCHEDULE - 4
UNSECURED LOANS
A. Short Term Loan from Banks :
a. From : ING Vysya Bank - 1,000.00
Fully repaid during the year
b. From : Centurion bank of Punjab - 1,017.51
Fully repaid during the year
c. From : Standard Chartered Bank 1,180.00 1,180.00
(Repayable within a year Rs. 1180.00 Lacs
Previous Year Rs. 1180.00 Lacs)
B. Working Capital Demand Loan :
a. From : EXIM Bank - 3,000.00
b. From : Indusind Bank 4,234.65 507.59
C. Loans and Advances from Others : 1,430.87 926.93
(Repayable within a year Rs. 1036.22 Lacs
Previous Year Rs. 69.58 Lacs)
D. Interest accrued and due on above 1.76 -
6,847.28 7,632.03
46 Elecon Engineering Company Limited - Annual Report 2008-09
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47Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009 Rs. in Lacs
As at 31-03-09 As at 31-03-08
SCHEDULE - 6
INVESTMENTS (AT COST) - LONG TERM
Quoted :
(1) Non-Trade Investment
(A) 9,58,426 Shares (Previous year 9,58,426 Shares) 217.29 217.29
of Rs. 10/- each of M/s. Eimco Elecon (India) Ltd
(Market Value Rs. 1260.33 Lacs
Previous year Rs. 3066.96 Lacs)
(B) 1,16,880 Shares (Previous year 1,16,880 Shares) 67.19 67.19
of Rs. 10/- each of HDFC Ltd.
(Market value Rs. 1649.41 Lacs
Previous year Rs. 2786.13 Lacs)
(C) 500 Shares (Previous year 500 Shares) 0.05 0.05
of Rs. 10/- each of HDFC Bank Ltd.
(Market Value Rs. 4.84 Lacs
Previous year Rs. 6.60 Lacs)
(D) 10,789 Shares (Previous year 10,789 Shares) 21.19 21.19
of Rs. 10/- each of Bank of Baroda
(Market Value Rs. 25.77 Lacs
Previous year Rs. 31.20 Lacs)
Unquoted :
(1) Trade Investment
(A) 250 Shares (Previous year 250 Shares) of Rs. 100/- each of 0.10 0.10
M/s. Prayas Engineering Limited
(2) Non-Trade Investment
(A) 2,49,500 Shares (Previous year 2,49,500 Shares)
of Rs. 10/- each of Wizard Fincap Ltd. 24.95 24.95
(B) 1,29,965 Shares (Previous year 1,29,965 Shares )
of Rs. 10/- each of Ringspann Elecon (India) Ltd. 13.00 13.00
(C) 2,00,000 Shares (Previous year 2,00,000 Shares)
of Rs.10/- each of Eimco Elecon Electricals Ltd. 20.00 20.00
(D) 12,000 Shares (Previous year 12,000 Shares)
of Rs.10/- each of Madhuban Prayas Resorts Ltd. 1.20 1.20
(E) 12,500 Shares (Previous year Nil)
of Rs.10/- each of DRA (India) Ltd. (Aquired during the year) 1.25 -
48 Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009 Rs. in Lacs
As at 31-03-09 As at 31-03-08
(3) Investment in Foreign Companies
(A) 4,48,922 Shares (Previous year 4,48,922 Shares)
of S $ 1/- each of Elecon Singapore Pte. Ltd. 124.59 124.59
(B) 1,09,910 Shares (Previous year 1,09,910 Shares)
of Aus $ 1/- each of Elecon Australia Pty. Ltd. 31.45 31.45
(C) 2,02,750 Shares (Previous year 2,02,750 Shares)
of Rand 1/- each of Elecon Africa Pty. Ltd. 12.50 12.50
(D) 3 Shares (Previous year 3 Shares)
of AED 1,00,000/- each of Elecon Middle East FZCO 36.31 36.31
(E) 49,942 Shares (Previous year 49,942 Shares) of US$ 1/=
each of Elecon Engineering (Suzhou) Co. Ltd, Chaina 22.08 22.08
(4) Investment in Bonds / Funds
(A) Investment in Reliance Fund 135.00 90.00
5,33,814 Nos. NAV as on 31-03-09 Rs. 96.30 Lacs
(Previous Year 5,17,942 Nos. NAV Rs. 93.61 Lacs )
(B) Investment in Principal Growth Fund - 66.15 66.15
2,62,995 Nos. NAV as on 31-03-09 Rs. 33.95 Lacs
(Previous year 2,62,995 Nos.NAV Rs. 63.07 Lacs)
(C) Investment in Franklin India Flexicap 156.32 106.32
8,33,697 Nos. NAV as on 31-03-09 Rs. 99.29 Lacs
(Previous year 5,47,202 Nos. NAV Rs. 87.64 Lacs)
(D) Investment in Rural Elec. Corp. Bond 59.00 59.00
590 Nos. of Bonds @ Rs. 10,000 each
(Previous year 590 Nos. of Rs. 10,000 each)
(E) Investment in Principal Resurgent India Fund 77.11 32.11
5,94,683 Nos. NAV as on 31-03-09 Rs. 46.48 Lacs
(Previous year 124951, NAV Rs. 24.91 Lacs)
(5) Investment in Others
(A) 1 Share (Previous year 1 Share) of Rs. 100/- each 0.00 0.00
of Charotar Gramoddhar Sahakari Mandal Limited
(B) 80 Shares (Previous year 80 Shares) of Rs. 10/- each of
Karamsad Urban Co-operative Limited 0.01 0.01
(C) 100 Shares (Previous year 100 Shares) of Rs. 10/- each of
Anand Auto Vehicle Owners Co-operative Credit Society Ltd. 0.01 0.01
(D) 1 Share (Previous year 1 Share) of Rs. 10/- each of
Anand Mercantile Co-operative Bank Limited 0.00 0.00
(E) 10 Shares (Previous year 10 Shares) of Rs. 500/- each
of Charotar Gas Sahakari Mandali Limited 0.05 0.05
1,086.80 945.55
Aggregate value of Quoted Investment Rs. 2,940.35 Lacs
(Previous year Rs. 5,890.89 Lacs)
49Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009 Rs. in Lacs
As at 31-03-09 As at 31-03-08
SCHEDULE - 7
CURRENT ASSETS, LOANS AND ADVANCES
(A) Current Assets :
(I) Stock of Stores, Loose Tools, Dies
Mechanical, Electrical and Electronic
Spares (as taken, valued and certified
by the Management) at lower of cost 1,461.36 1,272.71
or net realisable value
(II) Stock-in-Trade (as taken, valued and
certified by the Management)
(i) Raw Materials (at lower of
cost or net realisable value) 14,317.94 10,226.30
(ii) Semi-Finished Goods (at lower of
cost or net realisable value) 21,378.85 12,282.45
(iii) Finished Goods (at lower of
cost or net realisable value) 2,758.11 1,304.87
(iv) Goods-in-Transit (at Cost) 158.40 174.04
(v) Land as Stock in Trade (For Wind Mill)
(III) Sundry Debtors (Unsecured,
Considered Good) : 47,173.58 49,231.61
(i) Outstanding for a period
exceeding six month 11,959.53 13,965.12
(ii) Others 35,214.05 35,266.49
(IV) Cash and Bank Balances :
(a) Cash on Hand 5.40 7.48
(b) Balance with Scheduled Banks:
(1) In Current Account 745.24 468.52
(2) Bank Deposit 5,322.64 255.68
(3) Unpaid Dividend Bank Account 32.59 20.56
(B) Loans and Advances (Unsecured Considered Good) :
(1) Loans to Staff 11.47 17.08
(2) Advances recoverable in Cash or in
Kind or for value to be received 4,503.31 3,671.86
(3) Balance with Collector of Custom,
Port Trust, Excise etc. 1,938.34 1,834.06
(4) Advance Payment of Income Tax (Net of Provision) 1,038.67 196.48
100,845.90 80,963.70
50 Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009 Rs. in Lacs
As at 31-03-09 As at 31-03-08
SCHEDULE - 8
CURRENT LIABILITIES AND PROVISIONS
(A) Current Liabilities
* Sundry Creditors (Refer Note No. 8 of Schedule 17) 28,167.81 27,526.23
Advance from Customers 12,569.49 5,185.15
Dividend Warrants issued but not encashed (Unpaid) 32.59 20.56
Interest accrued but not due 97.16 162.85
40,867.05 32,894.79
(B) Provisions
Provision for Gratuity 680.58 479.20
Proposed Dividend 1,392.92 1,392.92
Tax on Proposed Dividend 236.73 236.73
43,177.28 35,003.64
* Includes an amount of Rs. 3,983.82 Lacs (Previous Year Rs. 3,868.73 Lacs) on account of Acceptances.
SCHEDULE - 9
DEFERRED EXPENDITURE
Balance as per Last Year 97.12 43.27
Add : Addition during the year 111.62 75.11
208.74 118.38
Less : Written off during the year 39.86 21.26
168.88 97.12
51Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009
Rs. in Lacs
Year ended 31-03-09 Year ended 31-03-08
SCHEDULE - 10
SALES
Material Handling Equipments 37,490.13 30,812.56
Gear (Transmission Equipments) 36,132.05 35,873.70
WTG & Electricity Generation 605.24 1,960.53
Export Sales 4,064.98 3,703.30
Miscellaneous Sales 668.92 717.49
78,961.32 73,067.58
SCHEDULE - 11
OTHER INCOME
* Dividend Income 71.77 87.76
** Interest Income 534.64 79.67
Profit on Sales of Assets (Net) 10.33 3.34
Profit on Sales of Investments (Net) 0.99 91.44
Gain on account of Exchange Variation (Net) - 351.72
*** Miscellaneous Income 339.99 364.73
957.72 978.66
* Includes an amount of Rs. 0.03 Lacs (previous year Rs. 0.03 Lacs) dividend on Trade Investments
** Includes an amount of Rs. 2.48 Lacs (previous year Rs.0.48 Lacs) of TDS
*** Includes an amount of Rs. 38.79 Lacs (previous year Rs. 212.24 Lacs) as Insurance claims received
SCHEDULE - 12
CONSUMPTION OF MATERIALS, SUB-CONTRACTS, ERECTION AND OTHER CHARGES
Raw Materials Consumed 58,655.28 52,446.21
Stores, Tools and Spares Consumption 2,196.81 1,267.59
Sub-Contracts 11,337.66 5,277.60
Erection and other charges 416.20 274.95
Other manufacturing expenses 1,041.62 512.83
**** Technical Know how and Design Fees 100.11 126.94
73,747.68 59,906.12
**** Includes Rs. 39.86 Lacs as Written off for Deferred Expenditure (Previous year Rs. 21.26 Lacs)
52 Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009 Rs. in Lacs
Year ended 31-03-09 Year ended 31-03-08
SCHEDULE - 13
EMPLOYEES’ REMUNERATION AND BENEFITS
Salaries and Wages (Incl. Managerial Remuneration) 3,735.40 2,756.75
Contribution to Provident Fund 154.25 129.26
Employees’ Welfare Expenses 162.72 303.74
Employees’ Retirement Benefits 330.85 238.00
4,383.22 3,427.75
SCHEDULE - 14
ADMINISTRATIVE, SELLING AND GENERAL EXPENSES
Rent 8.03 28.01
Computer Software Charges 165.69 140.27
Rates & Taxes 141.28 229.33
Excise Duty (excluding duty recovered from Customers) (149.56) 122.92
Repairs and Maintenance :
Buildings 200.85 317.85
Machineries 646.98 536.78
Others 62.34 50.27
Insurance (net of recoveries) 134.91 104.57
Travelling Expenses 343.56 340.62
Bank Charges 912.59 605.55
Directors’ Fees 7.20 9.00
Packing, Forwarding & Distribution Expenses (Net of Recoveries) 600.27 866.08
Commission & Brokerage 4,219.48 3,607.93
Rectification Expenses 51.30 56.08
Bad Debts Written Off 588.26 779.31
Liquidated Damages 395.32 890.61
Advertisements & Sales Promotion Expenses 411.14 471.46
Auditors Remuneration 21.21 15.43
Donations 443.64 37.93
Lease Rentals 73.44 37.58
Royalty Paid 13.73 31.11
Technical Inspection Consultancy Fees 1.81 18.77
Other Professional Consultancy Fees 900.85 489.84
General Administrative Expenses 769.58 502.99
Loss on account of Exchange Variation (Net) 1,351.60 -
12,315.50 10,290.29
53Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009
Rs. in Lacs
Year ended 31-03-09 Year ended 31-03-08
SCHEDULE - 15
INTEREST
On Fixed Period Loan 1,064.82 631.57
On Working Capital 3,110.96 1,800.07
On Others 661.02 311.02
4,836.80 2,742.66
SCHEDULE - 16
INCREASE/DECREASE IN STOCK
Opening Stock :
Semi-finished Goods (WIP) 12,282.45 8,136.52
Finished Goods 1,304.87 740.80
13,587.32 8,877.32
Closing Stock :
Semi-finished Goods (WIP) 21,378.85 12,282.45
Finished Goods 2,758.11 1,304.87
24,136.96 13,587.32
(Increase)/Decrease in Stock (10,549.64) (4,710.00)
54 Elecon Engineering Company Limited - Annual Report 2008-09
SCHEDULE FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT AS AT
31ST MARCH 2009.
SCHEDULE – 17
NOTES ON ACCOUNTS
1. ACCOUNTING POLICIES
Significant accounting policies adopted in the preparation and presentation of the accounts are as under:
a) Basis of accounting
The accounts have been prepared on the basis of historical costs. The Company adopts the accrual system of
accounting and the accounts are prepared on a going concern concept.
b) Fixed Assets
Fixed Assets are recorded at cost of acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price and attributable cost of bringing the Assets to its working
condition for its intended use, but excludes Cenvat / service tax / VAT credit availed.
c) Borrowing Cost
Financing costs relating to deferred credits or borrowed funds attributable to construction or acquisition of fixed
assets for the period up to the completion of construction or acquisition of fixed assets are included in the cost
of the assets to which they relate.
d) Depreciation
Plant & Machinery are depreciated on Straight Line Method at the rates specified in Schedule XIV to the
Companies Act, 1956.
In respect of all other Fixed Assets, depreciation is provided on Written Down Value Method, at the rates
specified in Schedule XIV to the Companies Act, 1956.
Depreciation is provided on pro-rata basis:
i) From the date of addition, in case of additions during the year to the Fixed Assets; and
ii) Up to the date of disposal, in case of disposals during the year to the Fixed Assets.
e) Inventories
Materials and other supplies are usually held for use in the production of finished goods. These are not written
down below cost if the finished good in which they will be consumed are expected to be sold at or above
cost.
Inventories are valued at lower of cost or estimated net realizable value. The cost of inventories is arrived at
on the following basis:
Raw Materials and stores : Weighted Average Cost
Stock-in-process : Raw Materials at Weighted Average Cost &
absorption of Labour and Overheads
Finished Goods : Raw Materials at Weighted Average Cost &
absorption of Labour and Overheads
f ) Investments
Investments are generally of Long Term nature and are stated at cost unless there is a permanent fall in their
value as at the date of Balance Sheet.
Investments in foreign companies are stated at cost of acquisition.
g) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized only when there is a present obligation as a result of past events and when a reliable
estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) possible obligation
which will be confirmed only by the future event not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an outflow of resources will be required to settle
the obligation or a reliable estimate of the amount of the obligation can not be made. Contingent Assets are not
recognized in the financial statements.
55Elecon Engineering Company Limited - Annual Report 2008-09
h) Revenue recognition
i) Sale of goods is generally recognized on dispatch to customers and is shown net of recoveries.
ii) Income on turnkey contracts is accounted on the basis of billings made on customers against mutually
agreed billing schedules.
Advances received from customers in respect of contracts, which are not in relation to work performed
thereon, are shown as “Advance from Customers”.
Amounts retained by customers until satisfaction of conditions specified in the contract for release of such
amounts are reflected as Sundry debtors.
Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent
admitted by customers.
Provision is made in full for claims or penalties payable arising out of delays in completion or from any other
causes as and when admitted.
iii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable.
iv) Dividend from investments in shares is accounted for on the basis of the date of declaration of dividend
falling within the accounting year.
(v) Consistent with past practice, export incentives are accounted for as and when the claims thereof have been
admitted by the authorities.
i) Foreign Currency Transactions
i) Transactions in foreign currencies are generally recorded by applying to the foreign currency amount, the
exchange rate existing at the time of the transaction. However, where Forward Exchange Contracts are
entered into, the forward rates specified in the related Forward Exchange Contracts have been used as the
basis of measuring and recording the transactions.
ii) Gains or losses on settlement, in a subsequent period of transactions entered into in an earlier period are
credited or charged to the Profit and Loss Account.
j) Deferred Revenue Expenditure
Expenditures like Technical Know How Expenditures, which are having the benefits of enduring nature, are treated
as deferred revenue expenditure and are being written off over such a period as may be decided by the management.
k) Retirement benefits -
Retirement benefits to employees are being provided for by way of payments to Gratuity and Provident Funds.
i) The Gratuity liability & liability in respect of Leave Encashment is determined based on the Actuarial Valuation
done by Actuary as at balance sheet date in context of the Revised AS-15 issued by the ICAI, as follows :-
(Rs. in Lacs)
PARTICULARS Gratuity Funded Leave Encashment
Expense recognized in the Statement of Profit & Loss account for the year ended March 31, 2009
Current Service Cost 58.30 18.50
Interest Cost 52.04 10.61
Employer Contribution - -
Expected Return on Plan Assets (25.08) -
Net Actuarial (Gains) / Losses 163.71 4.44
Past Service Cost - -
Settlement Cost - -
Total Expenses 248.97 33.55
Net Asset / (Liability) recognized in the Balance Sheet as at March 31,2009
Present value of Defined Benefit Obligation as at March 31, 2009 973.72 164.50
Fair value of plan assets as at March 31, 2009 293.14 -
Funded status [Surplus / (Deficit)] (680.58) (164.50)
Net asset / (liability) as at March 31, 2009 (680.58) (164.50)
56 Elecon Engineering Company Limited - Annual Report 2008-09
Change in Obligation during the Year ended March 31, 2009
Present value of Defined Benefit Obligation at beginning of the year 743.45 151.52
Current Service Cost 58.30 18.50
Interest Cost 52.04 10.61
Settlement Cost - -
Past Service Cost - -
Employer Contributions - -
Acturial (Gains) / Losses 162.64 4.44
Benefits Payments (42.71) (20.57)
Present value of Defined Benefit Obligation at the end of the year 973.72 164.50
Change in Assets during the Year ended March 31, 2009
Plan assets at the beginning of the year 264.25 -
Assets acquired in amalgamation in previous year - -
Settlements - -
Expected return on plan assets 25.08 -
Contributions by Employer 47.60 -
Actual benefits paid (42.71) -
Actuarial (Gains) / Losses (1.08) -
Plan assets at the end of the year 293.14 -
Actuarial Assumptions:
Discount Rate 7.00%
Expected rate of return on plan assets 9.00%
Mortality pre retirement -
Turnover rate 3% TO 1%
Rate of escalation in salary (p.a.) 4.50%
a. The rate of escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into
account inflation, seniority, promotion and other relevant factors such as supply and demand in the
employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation
of India.
b. The liability for the gratuity Rs. 680.58 Lacs (previous year Rs. 479.20 Lacs.) as shown in the balance
sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2009 of Rs.
293.14 Lacs (previous year Rs. 264.25 Lacs.)
(ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the
company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all
the eligible employees. The Company is providing for the outstanding Liability amount allocable to the
broken period beyond the balance sheet date.
iii) Liability in respect of Provident Fund is provided on actual contribution basis.
l) As regards Insurance premium and Guarantee commission, the Company is providing for prepaid amount
allocable to period falling beyond the date of Balance Sheet under review.
m) Impairment of Assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment
loss is charged to the profit & loss account in the year in which the asset is identified as impaired. The
impairment loss recognized in prior periods is reversed if there has been a change in the estimate of
recoverable amount.
2. The loans referred to in Schedule 3 are secured as under
i) Fund Based and Non fund based Working Capital Facilities [3A(a)] granted by Consortium of Banks consisting
of State Bank of India (As Lead Bank), (including State Bank of Saurashtra merged with State Bank of India), Bank
of Baroda, Exim Bank, Axis Bank Ltd., Citi Bank N.A. and HDFC Bank Ltd. are secured by an equitable mortgage
on the immovable properties and hypothecation of movable plant and machinery and assets of the Company’s
57Elecon Engineering Company Limited - Annual Report 2008-09
Materials Handling Equipment Division excluding certain assets specifically/ exclusively charged to other banks/
financial institutions but including the whole of the Company’s Currents Assets, inventories, receivables and
book debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them
in favour of various clients of the Company. This is further secured by a second pari passu charge over
immovable assets of Gear Division.
ii) Term Loans [3A(b)] obtained from State Bank of India, Bank of Baroda, Exim Bank (for import of machinery),
Axis Bank Ltd., ICICI Bank Ltd., & Citi Bank N.A. is secured by exclusive charge by way of Hypothecation on
specific assets for which payments were made out of the term loan.
iii) Capital assets acquired on HP Loans from Banks [3B(a)] are secured by exclusive charge on respective assets
purchased through those loans.
3. During the year, the company has availed External Commercial Borrowings (ECB) of USD 10.0 Million each from ICICI
Bank Limited & Citi Bank N.A. for capital expenditure. The said ECB were disbursed by said banks before March 31,
2009 pending utilization of the same.
As per circular dated 22nd October 2008 of RBI liberalizing ECB guidelines, allowing the companies to either keep
ECB proceed off-shore or to bring funds to India for credit to Current Account with Authorized Dealer Category 1
banks in India till pending utilization for permissible end uses. The company has parked Rs. 51.72 Crores in form of
Fixed Deposits with Authorized Dealer Category 1 banks pending utilization as on March 31, 2009 shown as Bank
Deposits under head Cash and Bank Balances in Schedule 7 Current Assets, Loans and Advances.
As the company is going to utilize the said amount for its planned capital expenditure in 2009-10, net real Term
Borrowing and Net Total Borrowing as on March 31, 2009 stand reduced to that extent.
4. Contingnet Liabilities
No provision has been made in the accounts in respect of the following:
a) Disputed Excise Duty Rs. 229.70 Lacs (previous year Rs. 246.85 Lacs), against demand notices received so far.
b) Disputed Sales Tax/ Works Contract Tax Rs 347.55 Lacs (previous year Rs. 563.85 Lacs).
c) In respect of disputed Income Tax demands:
(i) Disputed by Company Rs. 87.67 Lacs (previous year Rs. 999.12 Lacs)
(ii) Disputed by Income Tax Authorities Rs. NIL (previous year Rs. NIL)
d) Guarantees issued by the Company’s Bankers Rs. 41,730.85 Lacs (previous year Rs. 30,429.67 Lacs)
e) Liability for export obligation under Export Promotion Credit Guarantee Rs. 12,985.21 Lacs (previous year
Rs.13,228.68 Lacs).
f ) Sales Bills discounted under LC with Banks Rs. 2,435.66 Lacs (previous year Rs. 1,841.38 Lacs).
g) Corporate Guarantees given on account of advance received from customers Rs. 656.14 Lacs (Previous Year
Rs. 733.57 Lacs) and on account of performance Rs. 2,342.83 Lacs (Previous Year Rs. 998.99 Lacs)
5. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 7,225.70 Lacs
(previous year Rs. 6,300.50 Lacs).
6. Technical Know how fees paid to Overseas Collaborators in pursuance of different Technology Know how Agreements
during earlier years including current year has been treated as Deferred Revenue Expenditure and to be written off
over a period of 6 years. In this account there was an opening balance of Rs 97.12 Lacs. During the year Rs. 111.61
Lacs have been paid and have been treated as Deferred. Out of total Rs. 208.74 Lacs, Rs. 39.86 Lacs (previous year
Rs. 21.26 Lacs) has been charged to Profit & Loss Account.
7. Sundry Debtors more than six months includes retention money amounting to Rs. 9,663.97 Lacs retained by various
customers against big turnkey contracts as per the terms of agreement and are receivable after satisfactory
completion of the respective contracts.
8. There are no Micro and Small Enterprise, to whom company owes dues, which are outstanding for more than 45
days as at 31st March, 2009. This information as required to be disclosed under the Micro, Small and Medium
Enterprise Development Act (MSMED Act), 2006 has been determined to the extent such parties have been identified
on the basis of information available with the company.
58 Elecon Engineering Company Limited - Annual Report 2008-09
9. Auditors’ remuneration includes the following amounts paid or adjusted as paid to them during the year.(Rs. In Lacs)
In capacity of 2008-09 2007-08
A. Auditor 11.00 7.00
B. Advisor, in respect of :
1. Taxation Matters 2.20 2.86
2. Company Law Matters - 0.60
C. In any other Capacity 6.93 4.00
D. Re-imbursement of Expenses 1.08 0.97
TOTAL 21.21 15.43
The above figures do not include Service Tax of Rs. 2.22 Lacs (Previous Year Rs. 1.78 Lacs)
Over & above the aforesaid payments, an amount of Rs. 1.83 Lacs (Previous Year Rs. 1.88 Lacs) has been paid to a firm in which
one of the partners of auditor’s firm is interested.
10. a) The sales are shown net of Sales Tax amounting to Rs. 1,847.20 Lacs.
b) The Sales figure includes Deemed Export Sales of Rs. 527.93 Lacs (previous year Rs. 693.44 Lacs). The Gross Export
Sales for the year is Rs. 4,064.98 Lacs (previous year Rs. 3,703.30 Lacs).
11. Managerial Remuneration
a) Managerial Remuneration under Section 198 of the Companies Act, 1956.
Sr. Particulars 2008 - 09 2007 - 08
No.
i) Remuneration 103.50 90.00
ii) Perquisite 0.18 -
iii) Commission on Net Profit 198.00 297.00
iv) Contribution towards PF, 36.57 26.79
Gratuity & Superannuation
TOTAL 338.25 413.79
b) Computation of Net Profits in accordance with Section 309(5) of the Companies Act, 1956 :
(Rs. in Lacs)
Particulars 2008 - 2009 2007 - 2008
Profit as per Profit and Loss Account 8,810.03 9,867.91
Add : Managerial Remuneration : 338.25 413.79
Compensation for VRS/Gratuity - -
Directors’ Fees 7.20 9.00
Total 9,155.48 10290.70
Less : Capital Profit on Sales of Fixed Assets - -
Capital Profit on Sales of Investment 0.99 91.44
9,154.49 10,199.26
(Rs. in Lacs)
59Elecon Engineering Company Limited - Annual Report 2008-09
12. Information about Business Segment (Rs. in Lacs)
2008 - 2009 2007 - 2008Segment Revenue
Material Handling Equipment 58,756.83 47,053.79
Transmission Equipment 39,439.60 38,909.68
Total 98,196.43 85,963.47
Less: Inter Segment Revenue 2,689.95 3,319.96
Net Sales / Income from Operation 95,506.48 82,643.51
Segment Profit & Loss Before Tax & Interest
Material Handling Equipment 7,157.34 6,273.72
Transmission Equipment 7,273.49 7,927.19
Total 14,430.83 14,200.91
Less : a) Interest 4,836.80 2,742.66
b) Unallocated Corporate Expenses (net of un-allocable income) 784.00 1,590.34
Total Profit Before Tax 8,810.03 9,867.91
Capital Employed
1. a) Segmentwise Assets
Material Handling Equipment 74,347.34 59,133.37
Transmission Equipment 57,600.49 41,137.07
b) Unallocated Assets - -
2. a) Segmentwise Liabilities
Material Handling Equipment 28,133.03 24,816.80
Transmission Equipment 15,044.25 10,186.84
b) Unallocated Liabilities - -
3. a) Segmentwise Capital EmployedMaterial Handling Equipment 46,214.31 34,316.57
Transmission Equipment 42,556.24 30,950.23
b) Unallocated Capital Employed - -
88,770.55 65,266.80Notes
a. Since, the figures of Alternate Energy Division (AED) are not reportable segment, as per the requirements of AS – 17,
they are not shown separately.
b. The Company has disclosed Business Segment as primary segment.
c. Segments have been identified and reported taking into account the nature of products and services, the differing risks
and returns, the organization structure and the internal financial reporting systems.
d. The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment
and amounts allocated on a reasonable basis.
e. Inter Segment Transfer Pricing Policy – the Gear supplied to Material Handling Equipment Division is based on cost.
13. Deferred Taxation
Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxes on Income,
issued by the Institute of Chartered Accountants of India.
During the year 2008-09, the Deferred tax assets and liabilities comprise of tax effect of following timing differences :
(Rs. in Lacs)
2008 - 2009 2007 - 2008
Def. Tax Liabilities Def. Tax Assets Def. Tax Liabilities Def. Tax Assets
Difference between book & Tax W. D. V. 2,927.27 - 1,865.13 -
Add: Reflected on account of earlier year:
On addition of Wind Mills 239.10 - - -
Revision in opening balance of defer 130.69 - - -
Tax asset due to gratuity provision
Disallowance under the Income Tax Act. - 19.03 - 23.68
Transitional Provision for Gratuity as per - - - 130.69
provision of AS – 153,297.06 19.03 1,865.13 154.37
Net Deferred Tax Liability - 3,278.03 - 1,710.76
60 Elecon Engineering Company Limited - Annual Report 2008-09
15. Related party disclosure
Related Party disclosure as required by AS-18, are given below:
i) Relationship:
a) Subsidiary of the Company :
� NIL
b) Associates and Joint Ventures� Madhuban Prayas Resorts Ltd.� PWH Materials Handling Limited� Ringspann Elecon (I) Limited� Eimco Elecon (I) Limited
c) Individual having control/ significant influence� Shri Prayasvin B. Patel
d) Key management Personnel
� Shri Prayasvin B. Patel
14. Basic and Diluted Earning per share (EPS) computed in accordance with Accounting Standard (AS) 20
“Earning per Share”.
(Rs. in Lacs)
2008 - 2009 2007 - 2008
A) Net Profit for Basic Earnings Per Share as per P & L A/c.
- Before Extra Ordinary Items 5,745.12 6,720.42
- After Extra Ordinary Items 5,745.12 6,720.42
Net Profit for Diluted Earnings Per Share
- Before Extra Ordinary Items 5,745.12 6,720.42
- After Extra Ordinary Items 5,745.12 6,720.42
B) Weighted average number of equity shares :
� No. of Shares at the beginning of the year 9,28,61,510 3,09,23,650
� No. of Shares issued on conversion of FCCB of US$ 0.1 mn. - 30,187
� No. of Shares issued on conversion of FCCB of US$ 7.9 mn. - -
� No. of Shares on issue of Bonus shares - 6,19,07,673
� Weighted average Shares for:
- Basic Earnings Per Share 9,28,61,510 9,28,61,510
- Diluted Earnings Per Share 9,28,61,510 9,27,93,466
C) Earning Per Share
� Before Extra Ordinary Item
- Basic (Rs.) 6.19 7.24
- Diluted (Rs.) 6.19 7.24
� After Extra Ordinary Item
- Basic (Rs.) 6.19 7.24
- Diluted (Rs.) 6.19 7.24
D) Face Value Per Share (Rs.) 2.00 2.00
61Elecon Engineering Company Limited - Annual Report 2008-09
e) Enterprises over which (c) or (d) above have significant influence
� Bipra Investments & Trusts Private Limited
� Devkishan Investment Private Limited
� K. B. Investments Private Limited
� Elecon Information Technology Limited
� Emtici Engineering Limited
� Prayas Engineering Ltd.
� Speciality Wood Pack Private Limited
� Power Build Limited
� Kirloskar Power Build Gears Limited
� Akaaish Mechatronics Limited
� Narmada Travels Limited
� Elecon Australia Pty. Limited
� Elecon Africa Pty. Limited
� Elecon Singapore Pte. Limited
� Elecon Middle East FZCO
� Elecon Engineering (Suzhou) Co. Ltd., China
� Wizard Fincap Limited
ii. The following transactions were carried out with the related parties in the ordinary course of business.
(Rs. in Lacs)
Sr. Nature of Transaction (a) (b) (e)
No. 2008- 2007 - 2008 - 2007 - 2008 - 2007 -
2009 2008 2009 2008 2009 2008
1. Purchase of Material/finished — — 637.32 697.89 11,495.79 6,999.18
Goods
2. Job work Income from — — 4.15 19.06 65.65 66.82
other Co.
3. Job work Expenses to — — 6.79 80.20 1,158.75 2,698.45
other Co.
4. Sale of Finished Goods/ — — 429.01 514.59 1,388.86 948.98
Consumable Stores
5. Purchase of Fixed Assets — — — — 174.91 —
6. Sale of Fixed Assets — — — — — —
7. Expenses Charged to — — 90.75 79.99 145.71 81.85
other Co.
8. Exp. Charged by other Co. — — — 139.80 145.54 373.00
9. Sales Commission — — — — 3,863.51 3,362.02
10. Deposit/ Loan taken — — — — — —
11. Deposit/ Loan given — — — — 28.35 10.00
12. Int. on above Loan/ Deposit — — — — — —
13. Subscribe to Share Capital. — — — — — —
14. Sale of Shares of Co. — — — — — —
15. Others — — 57.03 2.14 42.55 —
Sr. No. Nature of Transaction Transaction with (c) & (d)
2008 - 2009 2007 - 2008
1. Remuneration 338.25 413.79
62 Elecon Engineering Company Limited - Annual Report 2008-09
16. Information pursuant to the provisions of paragraph 3, 4C and 4D of Part II of Schedule VI to the
Companies Act, 1956.2008 - 2009 2007 - 2008
A) Turnover Unit / Value Unit / Value
(Certified by the Management) Quantity Rs. in Lacs Quantity Rs. in Lacs
1. Conveying Equipments 10,699.39 27,778.96 1,064 16,970.12
Tonnes Tonnes
2. Wagon Tippler & Dust Trapping 11 Nos. 2,148.85 11 Nos. 4,441.11
Equipments
3. Crushers, Screens & Feeders 530.03 2,012.36 164.40 2,425.29
Tonnes Tonnes
4. Specialised Conveying Equipment, 2,333.84 5,683.15 1,454.81 7,535.20
Stacker Reclaimers, Blender Tonnes Tonnes
Reclaimers, Rotary Disc Loaders
5. Reduction Gears & Geared Motors 33,368 39,004.26 37,055 37,924.03
Nos. Nos.
6. Wagon Marshalling Equipment 200.23 726.00 13.46 347.56
Tonnes Tonnes
7. EOT & Goliath Cranes — — — —
8. Wind Turbine Generators 2 Nos. 590.88 6 Nos. 1,798.81
9. Axles 89 Nos. 195.74 112 Nos. 253.12
10. Others — 821.12 — 1,372.34
TOTAL 78,961.32 73,067.58
2008 - 2009 2007 - 2008
B) Raw Materials Consumed Unit / Value Unit / Value
Quantity Rs. in Lacs Quantity Rs. in Lacs
� Iron & Steel 20,842 19,856.79 32,281 20,013.97Tonnes Tonnes
� Pipes & Tubes 98,359 544.90 97,177 1,625.85Mtrs. Mtrs.
� Forgings — 4,920.28 — 4,659.59
� Bearings 483,390 6,904.59 590,300 6,681.85Nos. Nos.
� Beltings 20,063 762.79 4,554 295.93Mtrs. Mtrs.
� Electricals — 2,848.84 — 922.97
� Castings 1,742 3,989.91 3,136 3,449.99Tonnes Tonnes
� Other Components — 18,827.18 — 14,796.06
TOTAL 58,655.28 52,446.21
63Elecon Engineering Company Limited - Annual Report 2008-09
C) Stocks
2008 - 2009 2007 - 2008
Opening stock Closing stock Opening stock Closing stock
Unit Value Unit Value Unit Value Unit Value
Nos. Rs. in Lacs Nos. Rs. in Lacs Nos. Rs. in Lacs Nos. Rs. in Lacs
Reduction Gears & 2,374 1,304.87 1,184 2,758.11 1,281 740.80 2,374 1,304.87
Geared motors
D) Capacity and Production 2008 - 2009 2007 - 2008
(Certified by the Management) Capacity* Capacity*
Unit Licensed Installed Actual Licensed Installed Actual
Produc Produc-
tion+ tion +
� Conveying Equipments Tonnes 28,000 15,000 10,699.39 28,000 15,000 1,004
� Wagon Tippler & Nos. 16 Sets 16 Sets 11 16 Sets 16 Sets 11
Dust Trapping Equipment each each each each
� Crushers, Screens & Feeders Tonnes 1,500 1,000 530.03 1,500 1,000 164.40
� Specialised Conveying
Equipment, Stacker Reclaimers,
Blender Reclaimers,
Rotary Disc, Loaders etc. Tonnes 10,000 3,000 2,333.84 10,000 3,000 1,454.81
� Reduction Gears and Geared Motors Nos. 55,000 55,000 32,178 55,000 55,000 38,148
� Wagon Marshalling Equipment Tonnes 300 300 200.23 300 300 13.46
� EOT Cranes & Goliath Cranes Nos. 230 100 — 230 100 —
� Wind Turbine Generators Nos. 2,500 50 2 2,500 50 6
� Axles** Nos. 1,500 1,500 89 1,500 1,500 112
* As certified by the Management. ** For Captive consumption
+ As per DGTD return.
(Rs. in Lacs)
E) Value of Imports on C.I.F. basis 2008 - 2009 2007 - 2008
Raw Material 10,201.19 9,363.45
Stores and Spares 314.05 345.70
Capital Goods 8,500.72 3,678.64
F) Expenditure in Foreign Currency
Interest 1,365.76 240.09
Technical know how 208.73 75.11
Technical Consultancy Fees — 35.36
Legal and Professional fees 355.67 24.98
Others 84.98 318.04
TOTAL 2,015.14 693.58
64 Elecon Engineering Company Limited - Annual Report 2008-09
G) Value of Raw Materials consumed
2008 - 2009 2007 - 2008
Value % of Total Value % of Total
Rs. in Lacs Consum. Rs. in Lacs Consum.
Imported 9,181.56 16 9,209.55 18
Indigenous 49,473.72 84 43,236.66 82
TOTAL 58,655.28 100 52,446.21 100
H) Value of Stores and Spares Consumed
2008 - 2009 2007 - 2008
Value % of Total Value % of Total
Rs. in Lacs Consum. Rs. in Lacs Consum.
Imported 152.79 7 76.06 6
Indigenous 2,044.02 93 1,191.53 94
TOTAL 2,196.81 100 1,267.59 100
(Rs. in Lacs)
2008 - 2009 2007- 2008
I) Amount remitted during the year in Foreign
Currency on account of Dividend NIL NIL
J) Earnings in Foreign Exchange
Export of goods on FOB Basis
� Reduction Gears 2952.11 2,340.08
� Conveying Equipments 1112.87 1,363.22
� Interest 15.43 7.75
17. Figures of previous year are regrouped and recast wherever necessary.
18. Schedules 1 to 17 form an integral part of Balance Sheet and Profit & Loss Account.
Signature to Notes on Balance Sheet and Profit & Loss Account and Schedules 1 to 17.
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors
THACKER BUTALA DESAIChartered Accountants P. B. Patel H. S. Parikh
Chairman and DirectorManaging Director
M. T. Desai Paresh M. ShuklaPartner Company SecretaryM. No. 30911
Place : Navsari Place : MumbaiDate : 04-05-2009 Date : 02-05-2009
65Elecon Engineering Company Limited - Annual Report 2008-09
BALANCE SHEET ABSTRACT
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details
Registration No. 0 1 0 8 2 State Code 0 4
Balance Sheet Date 3 1 - 0 3 - 2 0 0 9Date Date Month Year
II. Capital raised during the year (Amount in Rs. Thousands)
Public Issue N I L Rights issue N I L
Bonus issue N I L Private placement N I L
(Conversion of FCCB into Shares)III. Position of mobilisation and deployment of funds (Amount in Rs. Thousands)
Total Liabilities 9 0 0 2 6 2 3 Total Assets 9 0 0 2 6 2 3
Sources of Funds
Paid-up Capital 1 8 5 7 2 3 Reserve & Surplus 2 5 6 8 2 7 7
Secured Loans 5 2 3 6 0 9 2 Un secured Loans 6 8 4 7 2 8
Deferred Tax Liability 3 2 7 8 0 3
Application of Funds
Net Fixed Assets 3 1 1 0 1 9 3 Investments 1 0 8 6 8 0
Net Current Assets 5 7 6 6 8 6 2 Misc. Expenditure 1 6 8 8 8
IV. Performance of the Company (Amount in Rs. Thousands)
Turnover 9 6 4 6 4 2 0 Total Expenditure 8 7 6 5 4 1 7
Profit/Loss Profit/Loss
Before Tax + 8 8 1 0 0 3 After Tax + 5 7 4 5 1 2
(Please tick Appropriate box + for Profit – for Loss)
Earning per Dividend
Share in Rs. 6 . 1 9 Rate % + 7 5
(Basic after extraordinary item)
V. Generic names of Three Principal Products / Services of the Company (As per monetary terms)
Item Code No. Product Descript
843139.01 ELEVATORS, CONVEYORS & MOVING MACHINERY (Conveying Equipments)
842299.00 GEARS (Reduction Gears)
847420.02 CRUSHERS (Crushers, Screens, Feeders)
For and on behalf of the Board of Directors
P. B. Patel H. S. ParikhChairman and DirectorManaging Director
Paresh M. ShuklaCompany Secretary
Place : MumbaiDate : 02-05-2009
66 Elecon Engineering Company Limited - Annual Report 2008-09
N O T I C E
NOTICE IS HEREBY GIVEN THAT the Forty-Ninth Annual GeneralMeeting of members of Elecon Engineering Company Limitedwill be held at Audio Visual Hall, Nr. Gear Division of theCompany, Anand-Sojitra Road, Vallabh Vidyanagar - 388 120,Gujarat on Thursday, the 30th day of July, 2009 at 11.45 a. m. totransact the following business:
ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Balance Sheetas at 31st March 2009, Profit & Loss Account for the yearended on that date and the Report of Board of Directorsand Auditors thereon.
2. To declare Dividend on Equity Shares.
3. To appoint a Director in place of Shri Pradip M. Patel,who retires by rotation and being eligible, offers himselffor re-appointment.
4. To appoint a Director in place of Shri Chirayu Amin, whoretires by rotation and being eligible, offers himself forre-appointment.
5. To consider and if thought fit, to pass with or withoutmodifications, the following resolution as an OrdinaryResolution:
“RESOLVED THAT pursuant to the provisions of theCompanies Act, 1956 and other applicable provisions,M/s. Thacker Butala Desai, Chartered Accountants, beand are hereby appointed as Auditors of the Company tohold office from the conclusion of this Annual GeneralMeeting until the conclusion of next Annual GeneralMeeting of the Company at such remuneration plusService tax at the applicable rate, from time to time, plustraveling and out-of- pocket expenses incurred by themfor the purpose of audit of the Company’s accounts,exclusive of any remuneration, fees or charges payableto them for rendering any other services that may berendered by them to the Company from time to timeother than in the capacity of Auditors, as may be fixed bythe Chairman and Managing Director of the Company.”
SPECIAL BUSINESS
6. To consider and if thought fit to pass, with or withoutmodification(s) following Resolution as an OrdinaryResolution:
“RESOLVED THAT Shri Prashant Amin, who wasappointed with effect from 29.07.2008 as a Director ofthe Company and holds office upto the date of this AnnualGeneral Meeting under Section 260 of the CompaniesAct, 1956 and in respect of whom the Company hasreceived a notice in writing from a Member proposinghis candidature for the office of the Director, be and is
hereby appointed as a Director of the Company”.
By order of Board of DirectorsRegistered office:Anand Sojitra RoadVallabh Vidyanagar – 388 120Gujarat Paresh ShuklaDate : 02-05-2009 Company Secretary
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. The proxy need not be a member.
2. The instruments appointing proxy should however be
deposited at the Registered Office of the Company
not less than 48 hours before the commencement of
the meeting.
3. Information under clause 49 of the listing agreement(s)
regarding re-appointment of Directors (Item No.3 & 4)
are annexed hereto.
4. The Register of Members and Share Transfer books will
remain closed from Wednesday, 1st July, 2009 to
Tuesday, 7th July, 2009 (both days inclusive)
5. Shareholders seeking any information with regard to
accounts are requested to write to the Company at
least 10 days before the meeting so as to enable the
management to keep the information ready.
6. All documents referred to in the accompanying notice
and explanatory statement are open for inspection at
the registered office of Company on all working days
between 11.00 a.m. to 1.00 p.m. prior to date of Annual
General Meeting.
7. Members are requested to bring their copy of Annual
Report at the meeting. Spare copies will not be
available.
8. Members who have not encashed their dividend
warrants may approach the Company at its registered
office for revalidating the warrants or for obtaining
duplicate warrants.
9. The annual listing fees of all the stock exchanges where
Company’s shares are listed for the year 2009-2010
have been paid.
10. Members who hold the shares in dematerialised form
are requested to bring their Client ID and DP ID for
easier identification for attendance at the AGM.
11. Members holding the shares in physical mode are
requested to notify immediately for change of their
address and bank particulars to the Company or its
Registrar and Share Transfer Agent.
In case the shares are held in dematerialized form, then
information should be furnished directly to their
respective depository participant only.
12. Any request by share holders for change of bank
particulars after dispatch of dividend warrant should
be accompanied by copy of Client Master list showing
the changed bank details.
67Elecon Engineering Company Limited - Annual Report 2008-09
13. In terms of Section 109A of the Companies Act,
1956, nomination facility is available to individual
shareholders. The shareholders who are desirous of
availing this facility, may kindly write to Company’s
Registrar and Share Transfer Agent, M/s. Link lntime
India Pvt. Ltd., 308, 1st Floor, Jaladhara Complex,
Opp. Manisha Society, Off. Old Padra Road, Vasna
Road, Vadodara - 390015, for nomination form
quoting their folio number.
14. The payment of dividend on equity shares as
recommended by the Directors for the year ended
31st March, 2009 when declared at the meeting will
be paid:
(i) to those members whose names appear in the
Register of Members of the Company on
Wednesday, the 1st Day of July, 2009.
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956
ITEM NO. 6
Shri Prashant C. Amin was appointed as an Additional Director of the Company on 29/07/2008, by the Board of Directors
of the Company. According to the provisions of Section 260 of the Companies Act, 1956, he holds office as Director only
upto the date of ensuing Annual General Meeting. As required by Section 257 of the Companies Act 1956, a notice has
been received from a member signifying his intention to propose the appointment of Shri Prashant C. Amin as a Director
at the forthcoming Annual General Meeting. The Board also considers it desirable that the Company should continue to avail
his services. The Directors recommend the resolution to the members for their approval.
Except Shri Prashant C. Amin, no other Director is interested in the resolution.
(ii) in respect of shares held in electronics form, to
those “deemed members” whose names appear
on the statement of beneficial ownership
furnished by National Securities Depository
Limited (NSDL) and Central Depository Services
(India) Ltd, (CDSL) at the end of business hours
on Tuesday, the 30th June, 2009.
15. Members are requested to notify change in address, if
any, to the Company’s Registrar and Share Transfer
Agent at the address mentioned herein above in Note
13 quoting their folio number.
16. The Company has designated an exclusive email ID
called [email protected] for Redressal of
shareholders’/investors’ complaints/grievances. Hence,
please write to us at [email protected].
By order of Board of Directors
Registered Office :
Anand-Sojitra Road
Vallabh Vidyanagar - 388 120
Gujarat
Paresh Shukla
Date : 02-05-2009 Company Secretary
By order of Board of Directors
Registered Office :
Anand-Sojitra Road
Vallabh Vidyanagar - 388 120
Gujarat
Paresh Shukla
Date : 02-05-2009 Company Secretary
68 Elecon Engineering Company Limited - Annual Report 2008-09
Details of the Directors seeking appointment/re-appointment at the forthcoming Annual General Meeting
(Pursuant to Clause 49 of the Listing Agreement)
Name of Director
Shri Pradip M. Patel
Directorship held in
other public compa-
nies
- ABC Bearings Limited
- Eimco Elecon (India) Limited
- NSK-ABC Bearings Limited
M e m b e r s h i p /Chairmanship ofcommittees across allpublic companies
1. ABC Bearings Limitedi) Transfer - Shareholders’/Investors’ Grievance Committee - Member
2. Elecon Engineering Company Limitedi) Audit Committee- Memberii) Shareholders’ / Investors’ Grievance Committee - Memberiii) Remuneration Committee - Member
♦ Associated with the Bearing Industry for over three decades.
♦ Joined ABC Bearings Limited on 7th September, 1973
♦ Director in ABC Bearings Limited since 1st August, 1976.
♦ Managing Director of ABC Bearings Limited since 1st August, 1981.
Date of Birth Date of Appointment
Expertise in specificFunctional areas &Brief resume
05-11-1947 14-11-1977
Qualifications
M.B.A. (U.S.A.)
Shri Chirayu R. Amin
Directorship held inother public compa-nies
- Alembic Limited
- Alembic Exports Limited
- Shreno Limited
M e m b e r s h i p /Chairmanship ofcommittees across allpublic companies
1. Alembic Limited :-
i) Buy-Back Committee - Chairman
2. Paushak Limited :-
i) Shareholders’ / Investors’ Grievance Committee - Chairman
He has been appointed as Director of Alembic Limited on 20-8-1967. He was appointed asManaging Director in Alembic Limited in 1983. At present, he is Chairman-cum-Managing Directorof Alembic Limited. During his tenure as Managing Director, the Company has been able tomaintain the growth in sales despite very keen competition in pharmaceutical industry. Exportsales, which has been identified as a major thrust area, shown sizable growth. In addition to this,a Iot of restructuring has been done in respect of manpower planning and business strategy ofintroducing new products and concentrating on some selected brands for achieving sustainablecompetitive edge.
Expertise in specificFunctional areas &Brief resume
04-12-1946 29-06-1998 M.B.A. (U.S.A.)
Shri Prashant Amin has 30 years of experience in successfully founding various new ventures indifferent geographies and operating small enterprises with strong leadership and operational direction.His business acumen and ‘hands on’ approach has been the key to his success with companies he hasfounded and nurtured.A true entrepreneur and a visionary, Shri Prashant Amin has taken the responsibility of driving ELECONGroup to new heights of growth and social responsibility. He intends to bring the agility of smallenterprise and successfully merge it with the legacy and culture of ELECON Group to make the groupready for the next stage of development and growth. His valuable contribution in the areas ofStrategic planning, marketing, operations, business development and financial management has putELECON Group on the path of fast growth and energised the Group to the core. His enthusiasm andzeal to achieve makes him a role model for the ELECON Group.On completion of his MBA, Shri Prashant Amin spent 3 years as a Cost Estimator, at Sargent Industries,where he proved his financial acumen in manufacturing, planning and pricing. He returned to India in1983, to start his first venture, a container/packaging company.He founded Caltronics, a California, USA based company specializing in printed circuit board manufactureand turnkey solutions for the high tech electronics industry. Under his leadership as the COO, Caltronicsgrew from a five people company, to a forty people employer with annual revenues exceeding $10M.
- Paushak Limited
- AGI Developers Limited
- United Phosphorus Limited
- Sierra Investments Limited
- Sierra Healthcare Limited
- Quick Flight Limited
Shri Prashant C. Amin
Directorship held in
other public companies
Membership/Chairmanship ofcommittees across allpublic companies
Expertise in specific
Functional areas &
Brief resume
09-08-1956 29-07-2008 M.B.A. (Finance) (U.S.A.) & Master Degree inEngineering & Management, BITS, Pilani.
- Eimco Elecon (India) Limited
- Power Build Limited
- Prayas Engineering Limited
- Ringspann Elecon (India) Limited
- Akaaish Mechatronics Limited
- Emtici Engineering Limited
- Elecon Information
Technology Limited
1. Eimco Elecon (India) Limited
i) Audit Committee-Member
69Elecon Engineering Company Limited - Annual Report 2008-09
Proxy Form
ELECON ENGINEERING COMPANY LIMITED
Registered Office : Anand Sojitra Road, Vallabh Vidyanagar 388 120, Gujarat, India
Folio No. DP ID NO. Client ID No.
No. of Shares held
I/We
of member/members of the above
named Company hereby appoint Mr./Mrs.
of or failing
him/her, Mr./Mrs. of
as my/our proxy to vote for me/us and on my/our behalf at 49th Anuual Meeting of the Company to be held on
Thursday, 30th day of July, 2009 at 11.45 a.m. or any adjournment thereof.
Address
This form is to be used in favour of/against* the Resolution. Unless otherwise instructed, the proxy will act as he
thinks fit.
* Please Strike out whichever is not desired.
Note : The proxy form duly signed across the revenue stamp of One Rupee should reach at the Company’s
Registered Office at least 48 hours before the date of the meeting.
affix
Re. 1
Revenue
Stamp
Signature