41 st Annual Report

Transcription

1 st Annual Report VBC Industries Limited /914, 3rd Floor, Progressive Towers, Khairatabad, HYDERABAD , Andhra Pradesh, India

2 CONTENTS Notice Directors' Report Management Discussion & Analysis Corporate Governance Independent Auditors' Report Balance Sheet Statement of Profit & Loss Cash Flow Statement Notes FORTY FIRST ANNUAL GENERAL MEETING Day : Monday Date : Time : A.M. Venue : Surana Udyog Auditorium, FAPCCI, Red Hills, HYDERABAD REGISTERED OFFICE /914, Third Floor, Progressive Towers, Khairatabad, HYDERABAD ANDHRA PRADESH, INDIA. Tel / , Fax WORKS Dinnedevarapadu Village, NH-7, Kurnool , Andhra Pradesh. Tel: , Fax:

3 VBC Industries Limited BOARD OF DIRECTORS Dr. M.V.V.S. MURTHI Chairman (Non-Executive) Sri R.K.R. GONELA, I.A.S. (Retd.) Director Sri J. KAMESWARA SARMA Director Sri V.S. RAO Director Sri M.V. ANANTHAKRISHNA Director Sri M.S. LAKSHMAN RAO Managing Director AUDIT COMMITTEE Sri R.K.R. GONELA, I.A.S. (Retd). Chairman (Non-Executive) Sri J. KAMESWARA SARMA Member Sri V.S. RAO Member INVESTORS' GRIEVANCE AND SHARE TRANSFER COMMITTEE Dr. M.V.V.S. MURTHI Chairman (Non-Executive) Sri M.S. LAKSHMAN RAO Member Sri J. KAMESWARA SARMA Member REMUNERATION COMMITTEE Sri R.K.R. GONELA, I.A.S. (Retd). Chairman (Non-Executive) Sri V.S. RAO Non-Executive Member Sri D.S. SARMA COMPANY SECRETARY GM (Corporate Affairs) & CS/Compliance Officer AUDITORS : BANKERS : M/s. BRAHMAYYA & CO., UCO BANK INDIA Chartered Accountants, Flagship Corporate Branch VISAKHAPATNAM. Somajiguda, Raj Bhavan Road Hyderabad Andhra Pradesh. SHARE TRANSFER AGENTS VENTURE CAPITAL & CORPORATE INVESTMENTS PVT. LIMITED , Bharat Nagar, HYDERABAD Tel: / 76, Fax: info@vccilindia.com Members are requested to bring this Annual Report to the Meeting. 1

4 NOTICE OF THE 41 st ANNUAL GENERAL MEETING OF THE COMPANY Notice is hereby given that the FORTY FIRST Annual General Meeting of the members of VBC INDUSTRIES LIMITED will be held on Monday, the 30 th day of September, 2013 at a.m. at Surana Udyog Auditorium of the Federation of Andhra Pradesh Chambers of Commerce and Industry, situated at , Red Hills, Hyderabad to transact the following business: ORDINARY BUSINESS: 1. To receive, consider and adopt the Balance Sheet as at 31 st March, 2013, and the Statement of Profit & Loss and the Cash Flow statement for the year ended on that date together with the reports of Directors and Auditors thereon. 2. To appoint a Director in place of Sri J.Kameswara Sarma, who retires by rotation, and being eligible offers himself for re-appointment. 3. To appoint a Director in place of Sri V.S. Rao, who retires by rotation, and being eligible offers himself for re-appointment. 4. To appoint Auditors for the Financial Year to hold office till the conclusion of the next Annual General Meeting and fix their remuneration. M/s. Brahmayya & Co., Chartered Accountants, (Firm Regd. No S), the retiring Auditors, being eligible, offer themselves for re-appointment. SPECIAL BUSINESS 5. To consider and approve to re-appoint Sri M.S. Lakshman Rao, as the Managing Director of the Company: To consider, and if thought fit, to pass with or without modifications, the following Resolution as an Ordinary Resolution: RESOLVED THAT pursuant to Section 198, 269, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956, approval be and is hereby accorded to re-appoint Sri M.S. Lakshman Rao, Managing Director, whose term of office was till 18 th July, 2013 for a further period of five years with retrospective effect from 19 th July, 2013 to 18 th July, 2018(both days inclusive) as the Managing Director of the Company and Sri M.S. Lakshman Rao be entitled to receive commission only on net profits as determined by the Board of Directors subject to the limits prescribed under the Companies Act, 1956 and the Board of Directors shall have the power to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the Board of Directors and Sri M.S. Lakshman Rao. 6. To consider and approve to make investment(s) in Orissa Power Consortium Limited (OPCL): To consider and, if thought fit, to pass the following resolution, with or without modification(s), as a Special Resolution: RESOLVED THAT pursuant to the provisions of Section 372A and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modifications or re-enchantments thereof for the time being in force, and the Rules and Regulations thereof, the Board of Directors of the Company be and is hereby authorized to make investment of upto ` 50 Crores (Rupees Fifty Crores only) in one or more tranches, in the Equity Share Capital of Orissa Power Consortium Limited(OPCL) on such terms and conditions as the Board of Directors may deem fit." 2

5 VBC Industries Limited RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorized to do all such acts, deeds, matters and things, settle any question, difficulty or doubt that may arise in this regard and give such directions, as it may, in its absolute discretion, deem expedient, desirable and necessary including delegating all or any of the powers herein conferred to any Committee of Directors or Managing Director or any Director(s) or any other Officer(s) of the Company, to give effect to this Resolution. 7. To consider and approve to make investment(s) in VBC POWER COMPANY LIMITED (VBCPCL): To consider, and if thought fit, to pass with or without modifications, the following resolution, as a Special Resolution: "RESOLVED THAT pursuant to the provisions of Section 372A and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modifications or reenchantments thereof for the time being in force, and the Rules and Regulations thereof, the Board of Directors of the Company be and is hereby authorized to make investment of upto ` 50 Crores (Rupees Fifty Crores only) in one or more tranches, in the Equity Share Capital of VBC Power Company Limited(VBCPCL) on such terms and conditions as the Board of Directors may deem fit." RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorized to do all such acts, deeds, matters and things, settle any question, difficulty or doubt that may arise in this regard and give such directions, as it may, in its absolute discretion, deem expedient, desirable and necessary including delegating all or any of the powers herein conferred to any Committee of Directors or Managing Director or any Director(s) or any other Officer(s) of the Company, to give effect to this Resolution. 8. To consider and approve to make investment(s) in Konaseema Gas Power Company Limited (KGPL): To consider, and if thought fit, to pass with or without modifications, the following resolution, as a Special Resolution: "RESOLVED THAT pursuant to the provisions of Section 372A and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modifications or reenactment thereof for the time being in force, and the Rules and Regulations thereof, the Board of Directors of the Company be and is hereby authorized to make investment of upto `115 Crores (Rupees One Hundred Fifteen Crores Only) in one or more tranches, in the Equity Share Capital of Konaseema Gas Power Limited(KGPL) on such terms and conditions as the Board of Directors may deem fit." RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorized to do all such acts, deeds, matters and things, settle any question, difficulty or doubt that may arise in this regard and give such directions, as it may, in its absolute discretion, deem expedient, desirable and necessary including delegating all or any of the powers herein conferred to any Committee of Directors or Managing Director or any Director(s) or any other Officer (s) of the Company, to give effect to this Resolution. Place : Hyderabad Date : BY ORDER OF THE BOARD For VBC INDUSTRIES LIMITED Sd/- (D.S. SARMA) COMPANY SECRETARY

6 NOTES: 1. ANY MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. IN ORDER TO BE EFFECTIVE, THE PROXIES SHOULD BE RECEIVED BY THE COMPANY AT ITS REGISTERED OFFICE AT LEAST 48 HOURS BEFORE THE MEETING. 2. Explanatory statement in respect of item Nos. 5 to 8 of the notice is annexed hereto in pursuance of Section 173(2) of the Companies Act, 1956 and the same forms part of the notice. 3. Pursuant to Section 154 of the Companies Act, 1956 and applicable provisions of the Listing Agreement, Register of Members and Share Transfer Books of the Company shall remain closed from 22 nd September, 2013 to 30 th September, 2013(both days inclusive) for the purpose of the Annual General Meeting. 4. Members holding shares in electronic form who wish to change their address are requested to intimate the same to the Registrars and Share Transfer Agents M/s. Venture Capital and Corporate Investments Limited, , Bharat Nagar, Hyderabad (Tele: No / ; Fax No ). 5. Members desirous of making Nomination in respect of their shareholding are requested to submit Form 2B to the Registrars and Share Transfer Agents. 6. Shareholders are requested to convert their physical shareholdings into electronic shareholdings for their own convenience. Members are requested to quote Folio No./DP ID and Client ID in all correspondence and intimate any change in their address to the Company s Share Transfer Agents. 7. Members/Proxies are requested to bring duly filled in attendance slips to the meeting. 8. As required under Clause 49 of the Listing Agreements with Stock Exchanges, brief particulars of Sri J.K. Sarma and Sri V.S. Rao, who are proposed to be re-appointed as Directors are provided hereunder: a. Sri JANGA KAMESWAARA SARMA: Sri Janga Kameswara Sarma is a post graduate in Mathematics and served in the Indian Audit & Accounts Service (IA & AS) and has more than 42 years services in various capacities in Government of India. His valuable advise and guidance on several matters including setting up of power projects and on various matters relating to techno-commercial and economic issues are of immense use to the Company. He is also a director on the Board of Krishna Godavari Power Utilities Limited, Bhadrachalam Power Company Limited and various other reputed corporate bodies. Considering his experience and expertise in various industrial related matters and activities, the Board of Directors thought fit to re-appoint him as a non-executive and independent Director of the Company in the overall interest of the company and hence your Directors recommend the re-appointment of Sri Janga Kameswara Sarma for its approval by the members of the Company. None of the Directors except Sri J.K.Sarma is concerned or deemed to be interested in the proposed re-appointment of Sri J.K. Sarma, to the extent of his re-appointment as an independent non executive Director of the Company. b. Sri V.S.RAO: Sri V.S. Rao is a graduate engineer in Mining from Osmania University. He worked in TISCO for nearly 36 years in various capacities and acquired varied experience, which is very useful to the Company. 4

7 VBC Industries Limited Sri V.S. Rao, also held the post of Managing Director of your company till However, he is continuing to be a Director of the Company from 2008 besides holding directorship in other Companies. His experience and expertise in the present activities of VBC Industries Limited, especially relating to manufacturing of Ferro Silicon and setting up of new projects, is of immense use to your Company. In light of the above facts, the Board of Directors of your Company decided to re-appoint Sri V.S. Rao as a Director of the VBC Industries Limited and the same is required to be approved by the shareholders of the Company as per the provisions of the Companies Act, None of the Directors other than Sri V.S. Rao is concerned or deemed to be interested in the proposed re-appointment of Sri V.S.Rao, to the extent of his re-appointment as an independent non executive Director of the Company. SPECIAL BUSINESS: ITEM No. 5 Re-appointment of Sri M.S. Lakshman Rao as the Managing Director of the Company for a period of five years: Sri M.S. Lakahman Rao, who is also the Managing Director of VBC Ferro Alloys Ltd. was appointed as the Managing Director of the Company for a period of five year from 19 th July, 2008 to 18 th July, 2013 by the members of the Company at the 37 th Annual General Meeting held on the 29 th September, 2008 with a view to utilize his valuable experience and expertise in the field of management for more than 15 years experience in the field of Ferro Alloys industry. Considering the meritorious and valuable services rendered by Sri M.S. Lakshman Rao, Managing Director of your company, it is proposed to re-appoint him for a further period of five years with retrospective effective from 19 th July, 2013 to 18 th July, 2018 (both days inclusive) and Sri M.S. Lakshman Rao be entitled to receive commission on such terms and conditions as may be determined by the Board of Directors of the Company from time and time in view of the limits prescribed under the Companies Act, Your Directors commend the Resolutions at item No. 5 as an Ordinary Resolutions for its approval by the members. None of the Directors other than Dr. M.V.V.S. Murthi and Sri M.S. Lakshman Rao is concerned or deemed to be interested in the above Resolution. ITEM NO. 6 Your company has promoted Orissa Power Consortium Ltd. (OPCL) for setting up Hydro Power Projects and invested an amount of Rs crores for establishment of 4x5 MW dam based hydro electrical project at Orissa and the said project is successfuly operating. The OPCL got another licenses for setting up 3x6 MW (18 MW) hydro electric power project at Jalaput, Visakhapatnam Dist., Andhra Pradesh on Machkund River. The estimated project cost for the said project is ` crores with a debt equity ratio of 70:30. Your directors seek your approval for investment upto ` 30 crores for implementation of Jalaput Hydro Electric Project. This investment of ` 30 crores requires the approval of the shareholders of the Company under the provisions of Section 372A of the Companies Act, Your Directors commend the resolution at item No. 6 as a Special Resolution for its approval by the Shareholders of the Company. None of the Directors of your Company is interested in the above resolution mentioned at item No. 6. 5

8 ITEM NO. 7: The Ferro Alloy industry is a highly power intensive and cost of power is critical in determining the competitiveness of the products. Your Company s operationswere drastically affected due to severe power cutsimposed by the power distribution companies and also steep increase in tariff. To tide over this problem, your company has proposed to establish a captive power plant in association with group companies and accordingly proposed to invest in equity share capital of the VBC Power Company Limited. The said Company is setting up a 1x60 MW Thermal Power Project with a capital outlay of about ` 275 Cr., out of which the equity component would be about ` 90 Cr. In order to get the sustainable and cheap power, your Directors seekyour approval for investment upto ` 50 Cr in VBC Power Company Ltd in setting up the power plant by VBC Power Company Limited. The said investment in VBC Power Company Limited is required approval of the Shareholder as per Section 372Aand other applicable provisions, if any, of the of the Companies Act, 1956 and the Rules and Regulations made thereunder. Your Directors commend the resolution at item No. 7 mentioned above as a Special Resolution for its approval by the Shareholders of the Company. None of the Directors of your Company is interested in the above resolution mentioned at item No. 7. ITEM NO.8: Members are kindly aware that your company is one of the promoters of Konaseema Gas Power Co Ltd (KGP), which has setup a Gas based 445 MW power plant and that your company has given an undertaking to the various lenders of KGPL to meet the cost overrun. As part of the undertaking given to the various lenders, your company is required to make a further investment of about ` 75 Cr in KGPL for which the sanction of the shareholders is sought by way of a special resolution, as required by section 372A and other applicable provisions of the Companies Act, Your Directors commend the resolution at item No. 8 mentioned above as a Special Resolution for its approval by the Shareholders of the Company. None of the Directors of your Company is interested in the above resolution mentioned at item No. 8. IMPORTANT COMMUNICATION TO MEMBERS The Ministry of Corporate Affairs has taken a Green Initiative in the Corporate Governance by allowing paperless compliances by the companies and has issued circulars stating that service of notice/documents including Annual Report can be sent by to its members. To support this green initiative of the Government in full measure, members who have not registered their addresses, so far, are requested to register their e- mail addresses, in respect of electronic holdings with the Depository through their concerned Depository participants. Members who hold shares in physical form are requested to fill the appropriate column in members feedback form and register the same with Venture Capital & Corporate Investments Pvt. Limited. BY ORDER OF THE BOARD For VBC INDUSTRIES LIMITED Place : Hyderabad Date : Sd/- (D.S. SARMA) COMPANY SECRETARY 6

9 DIRECTORS REPORT VBC Industries Limited Dear Shareholder, Your Directors take pleasure to present the 41 st Annual Report of VBC Industries Limited together with Audited Financial Statements for the financial year ended 31 st March 2013: FINANCIAL RESULTS (HIGHLIGHTS): Particulars Current year Previous year (` in Lakhs) (` in lakhs) Gross Revenue Profit/(Loss) before Interest Depreciation & Tax (PBIDT) (336.28) Less/Add(+): Interest & Financial Charges (479.03) Profit/(Loss) before Depreciation & Tax (PBDT) (815.31) Less/Add(+): Depreciation (148.57) Profit/(Loss) before tax(pbt) (963.88) Less: Provision for taxation including Deferred Tax Charge for the year Profit/(Loss) after Tax(PAT) (921.38) Profit brought forward from previous year ADD/(Less) Profit/(Loss) for the year (921.38) Profit available for appropriation and carried to Balance Sheet BUSINESS PERFORMANCE: Your directors wish to inform the members that during the financial year under report, the company has completed the modernization work of its Ferro alloy unit at Dinnedevarapadu Village, Kurnool Dist. However, because of severe power cuts imposed by the power distribution companies due to acute power shortage in the state, the company could not operate the plant for most of the year. Accordingly, the company s turnover for the year under report is only ` lakhs, compared to ` lakhs of the previous year. As the company incurred loss during the year under report, your directors regret that the company is not in a position to declare dividend to its shareholders. PROSPECTS: Indian steel industry plays a significant role in the country s economic growth. The World Steel Association has estimated steel consumption in India to grow at 5% in The long term future of the Iron and Steel industry is optimistic and positive as Government of India is giving utmost importance to develop infrastructure facilities and also housing needs of the population will enhance the consumption of the Iron and steel in the country. However, the steep increase in power tariff by the power distribution companies in Andhra Pradesh, has completely negated the entire growth prospectus of the Ferro Alloy industry in Andhra Pradesh. NEW PLANT: Your company s plan to set up a modern integrated Ferro Alloys plant at Akkallapalli Village, Bhimini Mandal of Adilabad district with a capacity of 45,000 MTS of Ferro Silicon Manganese was defered in the present scenario. INVESTMENTIN KGPL 445 MW GAS POWER PROJECT Konaseema Gas Power Limited (KGPL) in which your Company has invested in equity, was able to operate its power plant at 23.49% only during the financial year , as the natural gas production in KG basin has been drastically comedown. Consequently KGPL could generate only 916 million units of power during the financial year. Further the power plant has to cease its generation activities due to non supply of gas from April,

10 INVESTMENTIN OPCL 20 MW HYDEL POWER PLANT Orissa Power Consortium Limited (OPCL) which started generation of power under the 20 MW Hydro Electric Power Project and in which your Company also invested in equity and also generated MU of power during the Financial Year ended with 31 st March, The total revenue of the Company during the said period was ` crores and earned a net profit of ` 3.50 crores. ISSUE OF NON-CONVERTIBLE DEBENTURES TO IFCI LTD: The company has issued 57,00,000 Non-convertible Debentures of ` 100 each, with a annual coupon rate of 5%, redeemable in six half yearly installments over a period of five years amounting to ` 5700 Lakhs to IFCI Ltd during April 2013 under private placement to meet its obligation in respect of the undertaking given as a promoter of Konaseema Gas Power Limited (KGPL) to its various lenders to meet the cost overrun in the setting up of 445MW Gas based power plant. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION: In compliance with the requirements of 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, the statement showing the particulars in relation to conservation of energy, technology absorbed and foreign exchange earnings and outgoings is furnished and forms part of this report. CORPORATE GOVERNANCE As required under Clause 49 of the Listing Agreement, Reports on Management Discussion & Analysis and Corporate Governance together with the Certificate of Auditors on Corporate Governance are provided separately in this Annual Report and forms part of Directors Report. FIXED DEPOSITS The company has not accepted any fixed deposits from public. PERSONNEL Your Company is maintaining cordial relations with all its employees. Your Directors and Management express happiness for commitment and dedication shown by the employees. PARTICULARS OF EMPLOYEES READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED There is no employee covered under Section 217 (2A) of the Companies Act, INSURANCE Your company s movable and immovable assets have been adequately insured against various risks. MANAGING DIRECTOR The present term of five years of the Company s Managing Director Sri M.S. Lakshman Rao was up to 18 th July, Considering his invaluable and meritorious service to the Company during the last five years, it is proposed to re-appoint him as the Managing Director of the Company for a further period of five years with retrospective effect from 19 th July, 2013 onwards. The personal details of Sri M.S. Lakshman Rao are annexed to the Notice of Annual General Meeting which is forming part of this Annual Report and also the approval of shareholders sought for the proposed re-appointment as per the provisions of the Companies Act, DIRECTORS In accordance with the provisions of Section 255 of The Companies Act, 1956 and clause 105 of the Articles of Association of the Company, Sri J.K. Sarma and Sri V.S.Rao, Directors are liable to retire by rotation and being eligible, offer themselves for re-appointment. Board recommends their reappointment. In accordance with the provisions of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, the details of Sri J.K.Sarma and Sri V.S.Rao are annexed to the Notice of the Annual General Meeting which is forming part of this Annual Report. AUDITORS: M/s Brahmayya & Co., Chartered Accountants, the Auditors of the Company, who retire at the conclusion of the forthcoming Annual General Meeting have consented to continue in office, if re-appointed. They have confirmed that their re-appointment, if made, will be in accordance with the limits specified u/s 224(1B) of the Companies Act, Your Directors recommend their re-appointment for the financial year

11 VBC Industries Limited COST AUDITORS Pursuant to the approval of the Central Government under Section 223B of the Companies Act, 1956, the Company has re-appointed M/s. Nageswara Rao & Co, Cost Accountants, Secunderabad (Firm Registration No. 332) as the Cost Auditors of the Company for the Financial Year ending 31 st March, DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirements under Section 217(2AA) of the Companies Act 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that: (i) In the preparation of annual accounts for the financial year ended 31 st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures. (ii) Such accounting policies have been selected and applied and that such judgments and estimates have been made as 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 loss of the Company for the period. (iii) Proper and sufficient care for the maintenance of adequate accounting records have been taken 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; (iv) The annual accounts of the company have been prepared on a going concern basis. DECLARATION The Company has been regular in filing all Forms and Returns with the Registrar of Companies as required under the Companies Act, 1956 and has not defaulted in repayment of deposits, payment of dividend, redemption of debentures and preference shares. Accordingly, the company has not committed any of the defaults specified under Section 274(1)(g) of the Companies Act, 1956 (as amended by the Companies Amendment Act, 2000) disqualifying its Directors to act as Directors of other Public Companies. ACKNOWLEDGEMENTS: Your Directors thank all Members, Customers, Vendors, Regulatory & Government Authorities and the Bankers of the Company for the full support extended by them. Your Directors place on record their deep appreciation for the support and contribution of employees through their dedication, hard work and commitment and look forward to the future with confidence. For and on behalf of the Board for VBC INDUSTRIES LIMITED Sd/- Place : Hyderabad Dr. M.V.V.S. MURTHI Date : Chairman 9

12 ANNEXURE TO DIRECTORS' REPORT A. CONSERVATION OF ENERGY : Ferro Alloy Industry is highly power intensive and energy charges constitute a major element in the cost of production. Company, therefore, gives importance to energy conservation measures. POWER AND FUEL CONSUMPTION Current Year Previous Year Electricity a. Purchase Units (KWH) 24,66,828 5,52,83,264 Total Amount (` in lacs) Rate / Unit (in `) b. Own Generation i) Through diesel generator : Units (KWH) Nil Nil Units per ltrs. of Diesel Oil Nil Nil Cost / Unit (`) (Fuel + Oil) Nil Nil ii) Through steam Turbine / Generation : Units Nil Nil Units per ltrs. of fuel oil / gas Nil Nil Cost / Unit Nil Nil 2. Coal (specify quality & where used) Quantity (Tones) Nil Nil Total Cost Nil Nil Average Rate Nil Nil 3. Furnace Oil Quantity (K.ltrs.) Nil Nil Total Amount Nil Nil Average Rate Nil Nil 4. Other internal generation Nil Nil CONSUMPTION PER UNIT OF PRODUCTION Electricity KWH/MT - Ferro Silicon 8,999 9,216 Furnace Oil Nil Nil Coal (specify quality) Nil Nil Others (specify) Nil Nil 10

13 VBC Industries Limited B. TECHNICAL ABSORPTION : 1. RESEARCH AND DEVELOPMENT (R&D) a. Specify areas in which R&D is carried out by the Company Nil Nil b. Benefits derived as a result of the above R&D Nil Nil c. Future plan of action: a) Production of special grade Ferro Silicon for high grade Steels b) Improvements in preparation of raw material facilities. d. Expenditure on R&D i) Capital Nil Nil ii) Recurring Nil Nil iii) Total Nil Nil iv) Total R&D Expenditure as a percentage of Total Turnover Nil Nil 2. TECHNOLOGY ABSORPTION, ADOPTATION & INNOVATION : a. Efforts, in brief, made towards technology, absorption, adaptation and innovation Nil Nil b. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution etc. Nil Nil c. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished : i) Technology Imported Nil Nil ii) Year of Import Nil Nil iii) Has technology been fully absorbed Nil Nil iv) If not fully absorbed, areas where this has Nil Nil not taken place, reasons there for and future plans of action d. Foreign Exchange Earnings & Outgo i) Foreign Exchange Earnings at FOB Value-(`) Nil Nil ii) Foreign Exchange Outgo - Nil Nil A] CIF Value of Imports : Raw Materials, Components and Spares Nil Nil Capital Goods Nil Nil B] Others Nil Nil For and on behalf of the Board for VBC INDUSTRIES LIMITED Sd/- Place : Hyderabad Dr. M.V.V.S. MURTHI Date : Chairman 11

14 MANAGEMENT DISCUSSION AND ANALYSIS REPORT 1. BACKGROUND The Management Discussion and Analysis sets out the developments in the business environment and the Company s performance since our last report. This analysis supplements the Directors Report and the Audited Financial Statements forming part of this Annual Report. 2. INDUSTRY STRUCTURE Ferro Alloy Industry was established to cater the needs of global steel industry. Ferro alloys are used as additives and deoxidizing agents in steel manufacture. Steel producers use Ferro manganese, Silico manganese and Ferro silicon, while stainless steel units use ferro chrome and charge chrome. At present there is surplus capacity in the country. Strong growth in steel and stainless steel is expected in the near future with generally healthy economic conditions over the next few years. And it is expected that the excess capacity will be absorbed and further growth is anticipated in Ferro Alloys Industry. 3. OPERATIONS, OPPORTUNITIES & THREATS OPERATIONS: This has been dealt with in the Directors Report. OPPORTUNITIES: India s natural resources and geographical position is exceptionally well positioned to benefit from the growing demand for steel making raw materials. The Ferro alloys industry also thrives with the increased demand for steel. To reap the benefits of growing demand for steel, your Company is setting up a plant at Akkalapalli Village in Adilabad District for the manufacture of Ferro Alloys, Calcium Carbide and Pig Iron. THREATS: The manufacture of Ferro alloys is highly power-intensive, and therefore the cost of power is critical to the competitiveness. On an average, 50% of the total cost per tonne of Ferro alloys is on account of power. This is the major threat that the industry is facing and in order to be competitive on a global scale, it is necessary to have stable power supply at a remunerative price. 4. SEGMENT-WISE PERFORMANCE OR PRODUCT-WISE PERFORMANCE The Company has only one business segment i.e., Ferro Alloys. 5. OUTLOOK Long term outlook of your company appears to be encouraging because of the following reasons: a) Your Company is participating in a Power Plant of 65 MW being set up at Village Jagannathpur, Sirpur Kagaznagar Mandal, Adilabad District in the State of Andhra Pradesh by M/s. VBC Power Company Ltd., in association with Group companies and this would enable your Company to draw the required power at a comparatively lower price than that of the price being charged by CPDC of AP Limited. b) Your company had already invested significant funds in 445 MW Natural Gas Power Project of M/s. Konaseema Gas Power Limited and 20 MW Hydro Electric Power Project of M/s. Orissa Power Consortium Limited which have already started the commercial production and your Company is expected to benefit from its investments. 6. RISKS & CONCERNS The following are the risks and concerns that your company may face in future: a) Konaseema Gas Power Limited has to cease power generation activities due to non-supply of gas since April, b) Government regulations, like reduction in import duties, anti dumping duty and increase in power tariffs by CPDC of AP Limited and shortage of power, may also affect the profitability of the Company, since more than 40% of production costs account for power. 12

15 VBC Industries Limited 7. INTERNAL CONTROL SYSTEMS AND ADEQUACY The Company has sound internal control system, which ensures that all the assets are protected against loss from unauthorized use and all the transactions are recorded and reported correctly. The internal control system is supplemented by an extensive programme of internal audits and reviews by Management. The internal control systems are designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets. Further, reliance of all internal control functions and its entire gamut of activities are covered by independent audit, conducted by separate internal auditors, whose findings are reviewed regularly by the Audit Committee and Management of the Company. 8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE This has been dealt with in the Directors Report. 9. HUMAN RESOURCE DEVELOPMENT Human capital is one of the key elements of your Company. The Company has employed 139 employees who are highly motivated and have been contributing towards the growth of the Company. The company s human resource policies are aimed at motivating its employees to deliver high quality performance and reward talent with adequate compensation and accelerated career growth opportunities. Company believes that an on-going learning process is vital for growth in the fast changing business environment and for this purpose Company has been conducting various training programmes, motivation programmes for improving the knowledge levels of the employees at all levels. 10. INDUSTRIAL RELATIONS This has been dealt with in the Directors Report. Cautionary Statement: Certain statements made in the Management Discussion and Analysis Report relating to the Company s objectives, projections, outlook, expectations, estimates, etc. may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections, etc., whether expressed or implied. Several factors could make a significant difference to the Company s operations. These include climatic conditions, economic conditions affecting demand and supply, Government Regulations and taxation, natural calamities etc. over which the Company does not have any control. for and on behalf of the Board Place: Hyderabad Date : Sd/- Dr. M.V.V.S. MURTHI Chairman 13

16 REPORT ON CORPORATE GOVERNANCE: 1. A brief statement on the Company s philosophy on code of governance Corporate Governance is about directing and controlling the company with the overriding objective of optimizing return for the shareholders. A good governance process aims to achieve this by providing long-term visibility of its business, ensuring effective relationship with stakeholders, establishing systems that help the Board in understanding risk appetite and monitoring risk at every stage of corporate evolution process. The Company believes that any meaningful policy on corporate governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks & balances which ensure that the decision making powers vested in the executive management is used with care and responsibility to meet stakeholders aspirations and societal expectations. 2. Board of Directors: Composition and Category of Directors as on Category No. of Directors % Executive Directors Non-Executive Directors : (i) Promoter Directors (ii) Others Independent Non-Executive Directors Total The Attendance record of the Directors at the Board Meetings held during the financial year ended on 31 st March, 2013, the last Annual General Meeting (AGM) and the details of their other Directorships and Committee Chairmanships and Memberships are given below. Name of the Director Category Designation Last AGM attendance (YES/NO) Dr. M.V.V.S. Murthi Non Executive, Chairman Yes Promoter Shri R.K.R. Gonela Non Executive Director Yes Independent Sri V.S.Rao Non Executive Director Yes * NIL Independent Sri G.L.Tandon* Non Executive Director No 2 NIL 4 NIL NIL Independent Sri J.K. Sarma Non Executive Director Yes NIL Independent Sri M.S.Lakshman Rao Executive Managing Yes NIL Director w.e.f Sri M.V. Ananthakrishna Non Executive Director Yes NIL NIL Independent *Consequent on the sad demise of Sri G.L.Tandon, Director on , which was noted by the Board of Directors of the Company at its meeting held on 28th September, 2012, he ceased to be a Director of the Company. # Excluding Directorships in Private Limited Companies. 14 Attendance in Board Meetings No. of Board Meetings held Present during his tenure No. of Directorships and No.of Committee positions in other public companies Other Directorships# Committee Memberships* Committee Chairmanships*

17 VBC Industries Limited Number of Board Meetings held, dates on which held: Five Board Meetings were held during the financial year on 25th May, 2012, 28 th July 2012, 28 th September, 2012, 3 rd November, 2012 and 13 th February, Audit Committee Brief description of Terms of Reference The Audit Committee of the Board is responsible for overseeing the Company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, adequate and credible; and reviewing with management the annual financial statements before submission to the Board. The Committee periodically reviews with the management, external and internal auditors about the adequacy of internal control systems. The Committee periodically interacts with the Statutory auditors to review the manner in which they are performing their responsibilities. The Committee also holds discussions with the Statutory auditors before the commencement of statutory audit on the nature and scope of audit and ascertains any areas of concern and review of their written comments. The Committee reviews the financial and risk management policies of the Company. The Committee has full access to financial data and to the company s staff. The Committee also reviews the quarterly (un-audited) and annual financial statements before they are submitted to the Board. Composition of the Audit Committee as on 31 st March, 2013: Sri R.K.R Gonela Chairman Independent non-executive Director Sri J.K. Sarma Member Independent Non-executive Director Sri V.S. Rao Member Non-executive Director The Company Secretary of the Company acts as the Secretary of the Audit Committee. Meetings and Attendance during the year Date R.K.R. Gonela J.Kameswara Sarma V.S. Rao YES YES YES YES YES YES YES YES YES YES YES YES 4. Remuneration policy: The remuneration policy followed by the Company is as per the relevant provisions of the Companies Act, 1956 read with Schedule XIII. The payment of sitting fees to the non-executive Directors for attending the meetings of the Board and Committees of Board will be decided by the Board of Directors in accordance with the provisions of the Companies Act, 1956 and as per the stipulations in the Articles of Association of the Company. No remuneration has been paid to the Managing Director and other Directors. 15

18 The Company has paid only sitting fees and reimbursement of actual expenses to other non-executive directors for attending the meetings of Board and Committee of Directors. The details of sitting paid to the directors are as under: (in `) Name Designation Sitting Fee Salary Benefits Total Dr.M.V.V.S. Murthi Sri R.K.R. Gonela Sri J.K. Sarma Sri V.S. Rao Non-Executive Chairman 25,000 NIL NIL 25,000 Independent Non-Executive Director 45,000 NIL NIL 45,000 Independent Non-Executive Director 45,000 NIL NIL 45,000 Non-Executive Director 30,000 NIL NIL 30,000 Sri M.V. Ananthakrishna Independent Non-Executive Director 25,000 NIL NIL 25,000 Sri M.S. Lakshman Rao Managing Director NIL NIL NIL NIL 5. Investors Grievances and Share Transfer Committee: The Shareholders Grievances Committee was constituted by the Board of Directors at its meeting held on to redress the grievances of the shareholders and also to protect their interest. The Share Transfer Committee was also constituted in the year 1994 to consider the approval of share transfer, transmission, issue of duplicate shares, split, consolidation of shares etc. The Share Transfer Committee meets twice in a month on an average to consider the aforesaid matters. However, the Company has re-named the share transfer committee as Investors Grievances and Share Transfer committee w.e.f 11 th November, 2011 with the following Directors as the members of the Committee: Name of member Category Status Dr. M.V.V.S. Murthi PNEC Chairman Sri M.S. Lakshman Rao M D Member Sri J.Kameswara Sarma NEC Member Name and designation of compliance officer: Sri D.S. SARMA Company Secretary The Shareholder's Grievances Committee, as and when occasion arises, oversees the performance of Registrars and Share Transfer Agents and recommends improvements for quality services to the investors. 16

19 VBC Industries Limited a) Shareholders complaints: As soon as complaints are received from the shareholders, the same will be redressed by the Registrar and Share Transfer Agents and also by the Secretarial Department of the Company within one week from the receipt of complaints. There are no complaints remained unsolved to the satisfaction of shareholders. b) Number of shares pending for transfers: No Equity Shares remain pending for transfer as on 31 st March, General Body Meetings a) Details of the Last 3 AGMs Year Location Date Time Special Resolution Surana Udyog p.m. No special resolution was Auditorium, passed during the year FAPCCI , Red Hills HYDERABAD Surana Udyog a.m. Four Special Resolutions were Auditorium passed during the year for : FAPCCI 1. To increase the Authorized , Red Hills Share Capital from Equity Share HYDERABAD Capital of ` crores to ` crores, consisting equity and preference share capital and to amend the Capital Clause of Memorandum of Association the Company Surana Udyog a.m. No Special Resolution was Auditorium passed during the year. FAPCCI , Red Hills HYDERABAD i) Profile and other information regarding the Directors being appointed / reappointed as required under Clause 49 IV (G) (i) of the Listing Agreement have been given in the Notice of the Annual General Meeting annexed to this Annual Report. 7. REMUNERATION COMMMITTEE: The Remuneration Committee was re-constituted by the Board of Directors with Sri R.K.R. Gonela and Sri V.S.Rao, independent Directors of the Company as the members of the said Remuneration Committee. 8. Management Discussion & Analysis Report Management Discussion & Analysis Report is separately given in this Report. 17

20 Disclosures: There are no transactions, which may have potential conflict with the interests of the Company. Schedule 18 of the Annual Accounts contains the details of related party transactions as required by the Accounting Standard 18 (AS-18) on Related Party Disclosures issued by the Institute of Chartered Accountants of India. There is no non-compliance by the company and no penalties, strictures have been imposed on the company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets during the last three years. The Company has complied with all mandatory requirements of Clause 49 and is in the process of implementation of Non-mandatory requirements. A Certificate duly signed by the Managing Director & CFO and General Manager(Finance) relating to financial statements and internal controls and internal control systems for financial reporting as per the format provided in Clause 49(V) of the listing agreement was placed before the Board, who took the same on record. 9. Means of communication: The means of communication to the shareholders are through quarterly financial results which are normally published in Business Standard/Financial Chronicle and Andhra Prabha/Andhra Bhoomi daily news papers both in English and Telugu language respectively having wide circulation. 10. General Shareholders information: i) Date, Time and Venue of the 41 st Annual General Meeting The 30 th day of September, 2013 at A.M. at Surana Udyog Auditorium of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) at Hyderabad. ii) iii) Financial Calendar (tentative and subject to change) Financial Reporting for the quarter ended 30 th June, th July, 2013 Financial Reporting for the quarter ended 30 th September, th November, 2013 Financial Reporting for the quarter ended 31 st December, th February, 2014 Financial Reporting of Audited Results for the year ended 31 st March, th May, 2014 Dates of Book Closure 21 st September, 2013 to 30 th September, 2013 (both days inclusive) iv) Dividend Payment date : Not Applicable v) Listing on Stock Exchanges The Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street Mumbai vi) Stock Code: VBC IND vii) Scrip Code: Listing Fees The Company has paid annual listing fee for the year to the Bombay Stock Exchange Limited, where the securities are listed. 18

21 VBC Industries Limited viii) Monthly High and Low Quotation of Shares traded on The Stock Exchange, Mumbai Month High (`) Low (`) Close (`) No. of Shares Apr ,730 May ,701 June ,773 July ,929 Aug ,429 Sep ,730 Oct ,056 Nov ,284 Dec ,39,190 Jan ,06,807 Feb ,36,075 Mar ,844 ix) a. Registrar and Share Transfer Agents M/s. Venture Capital and Corporate Investments Limited having registered office at , Bharat Nagar, Hyderabad , Ph: /6 are the Company s Share Transfer Agents in both physical and dematerialized form. b. Share Transfer System The Managing Director and the Company Secretary have been individually authorized to attend to share transfers and issue of duplicate share certificates once a fortnight. The Investors Grievance & Share Transfer Committee shall approve the share transfers effected by the above under the delegated authority once in a quarter. The average time taken for processing of share transfers including dispatch of share certificates was approximately 15 days, if the documents are clear in all respects. As the Company s shares are currently traded in dematerialized form the transfers are processed and approved in the electronic form by NSDL/CDSL through their depository participants. There are no pending share transfer requests as on 31 st March,

22 x) (a) Distribution of Shareholding as on 31 st March, 2013 Category No. of % Shares held % From To shareholders Up to , ,54, , ,27, ,92, ,55, ,25, ,15, ,22, And above ,42,51, Total 32, ,50,43, (b) Category wise Distribution of Shareholding as on 31 st March, 2013 Categories No. of % to Shares Total Promoters, Directors / Relatives and associated Persons 3,18,62, Financial Institutions & Banks Foreign Institutional Investors Non-resident Indians 25, Private Corporate Bodies 9,83, Indian Public 1,21,71, TOTAL 4,50,43, xi) Dematerialisation of Shares and Liquidity Trading of securities of your Company has been made compulsorily in dematerialized form under rolling settlement with effect from 26 th January, 2001 and are available for trading under both the Depository Systems in India - NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited). Under the Depository System, the International Securities Identification Number (ISIN) allotted to the Company s shares is INE809C As at 31 st March 2013, 66.36% of the Equity Share Capital, representing 2,98,92,852 shares were held in depository mode. Investors who wish to exercise the option of dematerialization of their shares are required to submit Dematerialization Request Form (DRF) duly filled along with the original optional letter to the Depository Participant (DP) For guidance on Depository services, shareholders may write to the Company or to the Registrars and Share Transfer Agents. xii) There are no outstanding GDRs / ADRs / Warrants or any Convertible Instruments due for conversion. 20