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Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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Page 1: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551
Page 2: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551
Page 3: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

1

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

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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

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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

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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

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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

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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

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Elecon Engineering Company Limited - Annual Report 2008-09 7

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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

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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%

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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

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Elecon Engineering Company Limited - Annual Report 2008-09 11

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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

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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

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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

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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

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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.

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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.

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Elecon Engineering Company Limited - Annual Report 2008-0918

Hobbing Machine Cutting Internal Gear Ring

Elecon Engineering Company Limited - Annual Report 2008-0918

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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.

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20 Elecon Engineering Company Limited - Annual Report 2008-09

Internal Grinding Machine

Elecon Engineering Company Limited - Annual Report 2008-0920

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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.

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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

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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

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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.

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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.

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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

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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 — — — —

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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

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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

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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]

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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

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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

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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

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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.

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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

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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

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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.

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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.

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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

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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

Page 43: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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

Page 44: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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)

Page 45: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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

Page 46: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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

Page 47: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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

Page 48: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

46 Elecon Engineering Company Limited - Annual Report 2008-09

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Page 49: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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 -

Page 50: Elecon Annual Report 2008-09 New...Elecon Engineering Company Limited - Annual Report 2008-09 3Particulars 2008-09 2007-08 2006-07 2005-06 2004-05 US$ Mn. Rs. Mn. TURNOVER 188.3 9,551

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)

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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

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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

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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)

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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

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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)

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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.

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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)

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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

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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.

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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)

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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