SPEECH OF SHRI N.D. SARAF, CHAIRMAN, BOARD OF DIRECTORS OF THE COMPANY AT THE 6TH ANNUAL GENERAL MEETING OF THE COMPANY HELD AT THE REGISTERED OFFICE OF THE COMPANY AT 46 A&B MIDC INDUSTRIAL ESTATE, HINGNA ROAD, NAGPUR (MAHARASHTRA) ON 15TH SEPTEMBER, 2009.

Dear Shareholders,

          I am pleased to extend you all, a warm welcome to this 6th Annual General Meeting of your company.

The Annual Report containing the Audited Accounts for the year ended 31st March, 2009 together with the reports of the Board of Directors, is already with you and with your permission, I shall take them as read.

 The Economic and Industrial scenario during the financial year 2008-2009 has been very turbulent. The first half of 2008-2009 witnessed increased demand for steel products and the management was focusing more on issues relating to meeting the rising demand for its products and concentrating more on higher production. All this changed dramatically with the bankruptcy of some of the premier and renowned financial institutions in the USA. The financial crisis of US quickly gripped the world into its fold and its effect was felt everywhere. Demand in everything including metals plunged across the globe. The world economy suddenly took a complete U turn and plunged into deep recession. Confidence level of the customers and lenders came down to all time low leading to sudden slow down in the economic cycle of many countries. Indian economy too felt the heat of the meltdown. Customers stopped buying, leading to downward pressure on prices and companies were left with high level of finished inventories at their disposal. In order to sustain operations inventories were liquidated by many companies much below their cost of production, but still the market did not have the appetite to absorb the supply.

Your company also faced such a situation in the later half of the financial year 2008-2009. From the month of October 2008 onwards there was significant decline in the order book position of your company. The production level of the company had come down to as low as 30% which resulted into significant decline in the turnover of the company. For the financial year ending March 2009 your company recorded operating income of Rs. 371.54 crores and net loss of Rs.527 Lacs as compared to operating income of Rs.477.83 crores and profit after tax of Rs.276 Lacs in FY- 2008. In order to effectively deal with the prevailing economic recession your company adopted various cost management techniques to mitigate the losses, however the scale of recession was such huge that Inspite of its best effort your company was unable to restrict losses for the year.

However, despite the global meltdown and depressed markets, the turnover of the company’s exports has increased to Rs. 64.98 crores in FY 2008-2009 against the sales of Rs. 52.76 crores in FY 2007-08 mainly due to remarkable export performance in the first half of the year. Your company is hopeful, that with the improvement in world economy exports will reach new highs.

In order to reduce dependence on automobile market, your company had decided to enter the open die forged round market aimed at energy, heavy industries and defence sectors. To this effect, a Forging plant having a 2000T Forging Press, 10 Tons Manipulator, Reheating cum Annealing Furnaces and a Fully equipped Hydraulic Pump room was set up and commissioned on 10th July 2009. The plant will produce forged rounds in the diameter range of 150-600 mm, stepped shafts, eccentric shafts, gear blanks and flanges. These products apart from a good domestic market will also cater to export demand. Forged products will be supplied to diverse industries like cement ,sugar Mills, rolling mills, material handling equipments,, gear and gear box manufacturers, crane wheels manufacturers, oil refineries, petro chemicals sector, pressure vessel manufacturing units, printing machinery sector, transmission and power equipment manufacturing units and government organisations like Defence, Railways and Nuclear Power Corporations.

In order to be competitive in alloy and stainless steel market, an effective cost reduction plan is launched by your company to reduce the variable and fixed costs. Sourcing cost effective raw material, energy saving in process and quality improvements to increase overall yield along with reduction in manpower cost are some of the measures implemented, which will make your company withstand the stiff challenge effectively. Data availability for MIS and better efficiency in operations is also likely to improve with the successful implementation of Oracle based ERP system in your company.  

Your company has also installed modern equipments like MEMS in addition to AMLC installed last year to improve the surface and internal soundness of the finished steel, which will enhance the company’s capability for producing more critical grades with better yield. The company has also received approval from TUV Nor systems GmbH & Co for PED for more additional grades like F12, F22,410, 420, B16,T-91 etc., which will enable the company to increase its share in alloy and stainless steel business.

 
Before I conclude, on behalf of the Board of Directors, I take this opportunity to thank all our shareholders for their confidence and faith in the company, our customers and vendors for their continued co-operation and support. I also express my gratitude for the continued support and co-operation received from Central Government, State Government, Financial Institutions, and Consortium Banks. Last but not the least, I would like to thank all the employees of the Company, for their dedicated service and for their continued contribution in building a stronger company.

Thank you,
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