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8/8/2019 Annual Report HIL
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Annual Report - Hyderabad Industries - 2009-
2010
HYDERABAD INDUSTRIES LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
TO
THE SHAREHOLDERS
The Directors have pleasure in presenting their Report and the AuditedAccounts of the Company for the year ended 31st March 2010.
FINANCIAL RESULTS Rs. in lacs
2009-2010 2008-2009
Profit before Interest,Depreciation, Exceptional
Items and Taxation 15772.12 9393.46
Less: Interest 625.14 941.90
Depreciation 1554.71 1398.30
Profit before ExceptionalItems & Taxation 13592.27 7053.26
Exceptional Items 18.37 110.62
Profit after Exceptional Items 13573.90 6942.64
Taxes (4602.08) (2533.81)
Profit after Tax 8971.82 4408.83
Balance as per last year 5181.10 2145.36
AVAILABLE FOR APPROPRIAT10N 14152.92 6554.19
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APPROPRIATION
General Reserve 8493.30 500.00
Interim Dividend on Equity Shares 447.75 -
Proposed Final Dividend onEquity Shares 746.26 746.26
Corporate Dividend Tax 202.93 126.83
Balance carried to Balance Sheet 4262.68 5181.10
DIVIDEND
During the year the Board has declared an Interim Dividend of Rs. 6/- per
equity share (60% of the paid-up capital). Your directors are now pleased
to recommend a final dividend of Rs. 10/- per equity share (100% of thepaid-up capital) for your consideration and approval at the ensuingAnnual
General Meeting of the Company.
With the proposed final dividend, the total dividend for the year 2009-10would be Rs 16/- per share (160% of the paid-up equity capital).
The total dividend outgo would be Rs 1396.94 lacs (including dividenddistribution tax) as against Rs. 873.09 lacs - (100% of the paid-up equitycapital) for the year 2008-09.
HOMAGE TO LATE SHRI G.P. BIRLA
We, on behalf of all our stakeholders, wish to place on record our
profoundsorrow and grief on the sad demise of Shri G.P. Birla on 5th March 2010.
He was a doyen in the industrial world and established a large number of
industries in various sectors in India and abroad like automobile, paper,cement, electrical, building products and precision engineering products.
He was a noble hearted soul and a great philanthropist and establishedseveral large foundations, hospitals and institutions for charitable andeducational purposes.
He was awarded 'Padma Bhushan' in the year 2006 by the Government of India
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for his outstanding services to the nation. In his death, the country haslost a great industrialist and a philanthropist.
OVERALL ECONOMY
The year 2009-10 started in a subdued note after the global economywitnessed financial crisis and hefty bailout schemes. However with all-round efforts by the Government of India to face challenge posed by theGlobal Economy, the Indian Economy sailed through difficult times andresponded swiftly. The effectiveness of the policy measures becameevident
as the year ended on a positive note with a GDP growth of around 7.2%in2009-10. While most of the sectors have performed reasonably well in the
last year, the rural and semi-urban areas contributed significantly to our
growth on account of improvement in their net household income, whichenabled the Company to perform better.
PERFORMANCE
The year 2009-10 proved to be an another successful year in the history
of the Company in all metrics, resulting in higher sales revenues and profits.
The Company achieved a growth rate of 14% with overall Gross Turnoverof
Rs. 756 crores during the year under review. The growth in turnover ismainly attributed to better marketing efforts and the favourable marketconditions, both for sheeting and green building products. The OperatingProfit margin (PBIDT) improved from 15% to 22% during the year, as aresultof all round efforts by the team HIL.
Production and Sales, in quantity terms, of Fibre Cement Sheets haveincreased by 15% and 5% respectively over the previous year. During the
year under review the industry growth of the Fibre Cement Sheets was
estimated to be around 6% over the previous year. Due to volatility in the
markets and rising price trends the input costs had gone up during theyear. However on account of various cost saving measures, improvedqualityand better realisation, the Fibre Cement Sheet Business reported asignificant improvement in profitability during the year.
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Our brand 'Charminar' established over six decades as a superior brandbased on quality, strength and durability, continues to enjoy premiumbrandequity in the market. The Fibre Cement Sheet Industry is estimated togrow
at about 8% in financial year 2010-11 on account of increased income inrural areas coupled with various initiative by Government by way of low-cost/affordable housing scheme for the betterment of the ruralpopulation.With the additional capacities established and planned further during theyear, your Company is confident of maintaining its market leadership.
With the special focus given to the Company's GREEN BUILDINGPRODUCTSDIVISION during the earlier year, the Company could garner the attentionof
the new generation builders/consumers of the products across India. Themarket growth for Aerocon Panels has improved considerably during theyear.Thermal Insulation segment also reported a reasonable growth during the
year. However the AAC Blocks division, on account of increased
competitionand aggressive pricing by the competitors as well as slackness in theconstruction industry for the major part of the year, witnessed a declinein revenues. With more focus towards environment protection andsustainability across all Industries and your company being a pioneer in
promoting Green Building Products, coupled with various other inherentadvantages of the products, the Company is confident to attract a largercustomer base going forward. To face the competition in marketing andstaying ahead with the curve, the Green Products Division substantiallyincreased its sales team and embarked on new marketing strategies foritsvarious products and is also working with different verticals in the market
to increase the awareness of the products and grow the revenue.
The production in quantity terms of Aerocon Panels has increased by 40%and
the sales have increased 22% respectively over the previous year.
Production and Sales, in quantity terms, of AAC Blocks have decreased by
10% and 17% respectively over the previous year.
Production and Sales, in quantity terms, of Thermal Insulation productshave increased by 16% and 13% respectively over the previous year.
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NEW PROJECTS
As part of our market share retention strategy, the Company is constantly
exploring the option of enhancing the capacity at its existing location andalso to set up new plants in new strategic locations to keep pace with thegrowing demand for our products.
During the year under review the Company has started commercialproduction
of its second Line at Kondapally village near Vijayawada, AP. Setting up of
a new unit at Golan, near Surat, Gujarat for manufacture of AAC Blockswascompleted in a record time of 14 months and trial production was started
inMarch 2010. After satisfactory completion of trial runs, we expect theplant to start its commercial production during mid of May 2010. This willhelp the company to cater to the growing market for AAC Blocks in thewestern part of the country, as the demand for this product is expandingdue to its inherent advantages of light weight, good compressive strength
heat and sound insulation and faster rate of construction.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
A Report on Management Discussion & Analysis is appended as Annexure(IV)to this report as per the requirements of Listing Agreement with the Stock
Exchange(s).
DIRECTORS
In accordance with the provisions of Companies Act, 1956 and the Articles
of Association of the Company, Mr. P. Vaman Rao and Mr. Krishnagopal
Maheshwari, Directors of the Company will retire by rotation at theensuing
Annual General Meeting and, being eligible, will be offering themselves for
re-appointment.
For Directors seeking re-appointment in the forthcoming Annual GeneralMeeting of the Company; the particulars as required to be disclosed in
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accordance with Clause 49 (Corporate Governance) of Listing Agreement,forms part of Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Directors' Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956 is given in the Annexure(I)attached hereto and forms part of this Report.
CORPORATE GOVERNANCE
The Company has been making every effort to improve governance andtransparency in the conduct of business. Your Company is committed togoodCorporate Governance with ethical corporate practices. As per the
requirements of Listing Agreement with the Stock Exchanges, aComplianceReport on Corporate Governance for the year 2009-10 and a Certificatefromthe Auditors of the Company are furnished as part of this Annual Report.
HUMAN RESOURCE DEVELOPMENT
The various efforts and initiatives being taken by the Company to growthetop line and improve operational efficiencies will be possible with a
highly motivated and a competent team. The Company is continuallystrivingtowards these objectives. The Industrial Relations at all plants of theCompany continued to be cordial. As an important part of HR initiatives,continued focus is being given on training and development of people intheCompany and in creating an environment of learning.
AUDITORS
The present Auditors of the Company, M/s. S.R. Batliboi & Co., Chartered
Accountants, have expressed their unwillingness to be re-appointed asAuditors of the Company on their retirement at the forthcoming Annual
General Meeting. The Board records its appreciation for the assistanceandguidance provided by them during their long tenure with the Company.TheBoard recommends the appointment of M/s. S.R. Batliboi & Associates,Chartered Accountants as Auditors of the Company.
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PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
Particulars with respect to Conservation of Energy, Technology Absorption
and Foreign Exchange Earnings and Outgo as required under Section217(1)(e)of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in
the Annexure (II) attached hereto and forms part of this Report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956,read with the Companies (Particulars of Employees) Rules, 1975 asamended,the names and other required particulars of the employees are set out inAnnexure (III) attached hereto and forms part of this Report.
TOTAL PRODUCTIVE MAINTENANCE (TPM)
The Company has adopted Total Productive Maintenance (TPM) practicesinfour of its plants during the year under the guidance of Confederation of
Indian Industry. The said practices are continuously followed in therespective areas during the year under review also which has helped theCompany to improve operational efficiencies and better utilization of theavailable resources. Company has plans to implement TPM across all theunits in the forthcoming year. Your Directors are confident that thecontinued practice of the said methodology will help the Company toimprove
productivity, ensure quality, reduce costs and improve profitability in thecoming years.
ACKNOWLEDGEMENTS
Your Directors wish to thank all the Shareholders, the Company's
Customers,Business Associates, Trade Partners, Bankers and Suppliers for thecontinuous support and cooperation extended by them.
The Directors also wish to place on record their appreciation of all theemployees for their commitment and contribution towards achieving the
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goalsof the Company.
On behalf of the Board of Directors
C.K. BIRLAChairman
Place: New DelhiDate : 5th May, 2010
Annexure (I): Directors' Responsibility Statement
Pursuant to the requirement of Section 217(2AA) of the Companies Act,1956,and on the basis of compliance certificate received from the executives of
the Company and subject to disclosures in the Annual Accounts, as alsoonthe basis of the discussion with the Statutory Auditors of the Companyfromtime to time, and to the best of their knowledge and informationfurnished,
the Board of Directors states:
i) That in preparation of the Annual Accounts for the year ended 31stMarch, 2010; all the applicable Accounting Standards prescribed by theInstitute of Chartered Accountants of India have been followed along with
proper explanation relating to material departures, if any.
ii) That the Directors have adopted such accounting policies, as selectedin consultation with Statutory Auditors, and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to
givea 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 financial yearended March 31st 2010.
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956, for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
iv) That the Annual Accounts for the year ended 31st March, 2010, hasbeen
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prepared on a going concern basis.
On behalf of the Board of Directors
C.K. BIRLA
Chairman
Place: New DelhiDate : 5th May, 2010
Annexure II
Annexure (II): Statement of particulars under the Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988.
Conservation of Energy
Your Directors recognize the importance of conserving energy at alllocations. To conserve and optimize the use of energy, the Company hasbeeninstalling the energy efficient blowers, vacuum pumps, backwater pumps
andother equipments in existing plants. Energy efficient lighting system andmodernized mechanical devices/systems were also installed for optimumusageof power. Strict control exercised during operation of the plants is aimed
at reduction in usage of fuel. In pursuit of reducing carbon footprint,your Company has taken a small step towards using renewable fuel inplaceof Furnace oil in one of the plant. Further areas of improvement are being
constantly pursued as part of ongoing program to optimize usage of energy.
Total energy consumption and energy consumption per unit of Productionasper 'Form A' of the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988:
FORM A
Form for disclosure of particulars with respect to conservation of energy:
(A) Power and Fuel Consumption
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2009-10 2008-09
1. Electricity
a. Purchased
Units (lacs KwH) 20.75 19.64
Total amount (Rs. in lacs) 92.20 88.46
Rate/Unit (Rs./KwH) 4.44 4.50
b. Own Generation
i) Through Diesel Generator
Units (lacs KwH) 17.00 9.71
Units per Litre of Diesel Oil 3.20 3.20
Cost/Unit (Rs.) 9.72 10.12
ii) Through Steam Turbine/Generator - -
2. Coal - -
3. Furnace Oil/LDHSQuantity (K.Ltrs.) 1432 1480
Total amount (Rs. in lacs) 334.76 341.29
Average Rate (Rs./K-Ltrs.) 23371 23063
4. Others/Internal generation - -
(B) Consumption per unit of production
Thermal Insulation Products (Refractories)
Electricity (KwH/MT.) 645 575
Furnace Oil/LDHS (Litres./MT.) 714 739
Coal - -
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1. The Company is continuously endeavoring to upgrade its technologyfromtime to time in all aspects through in-house R&D primarily aiming atreduction of cost of production and improving the quality of the product.The Company has successfully achieved results in reducing the cost of
production, power consumption and improving technical efficiencies.
2. Particulars of imported technology (imported during the last 5 yearsreckoned from the beginning of the financial year): None
Foreign Exchange Earnings and Outgo:
Efforts to identify export opportunities for the products of the Companycontinued during the year under review. The Company is exploring otheroffshore markets to increase the quantum of exports, particularly in theMiddle East, Asian, Far East and African countries.
Total Foreign Exchange used and earned:
2009-10
A. Foreign Exchange Earned (Rs. in lacs)
Export of Goods (FOB) 400.00
Others 50.12
Total 450.12
B. Foreign Exchange Used
Raw Materials, Components, Sparesand Capital Goods (CIF) 17559.99
Other matters 240.19
Total 17800.18
On behalf of the Board of Directors
C.K. BIRLAChairman
New Delhi, 5th May, 2010
MANAGEMENT DISCUSSION AND ANALYSIS
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OVERVIEW
The year 2009-10 was a notable year world wide as most of thedeveloped
economies were yet to come out of the recession on account of unprecedentedfinancial crisis which unfolded during earlier year. Though the year begunamidst un-certainity, coordinated efforts by the Governments across theglobe over a wide range of fiscal measures mitigated the effects of recession to a large extent. The Indian Economy which also felt the heat
of global recession during 2008-09 started recovering during the earlier part
of the year, and turnaround was noticeable from third quarter onwards.
The Government of India with renewed mandate from public during lastParliamentary elections, continued to dedicate its full support to revivethe economy from the slowdown. The various stimuli and fiscal controlsintroduced by the Government during 2008-09 continued during themajor partof year under review and this helped to maintain the impetus towards
revival. Adequate liquidity in the system limited the actual impact of slowdown to a great extent. The resilience of the Indian Economy wasdemonstrated during the year as India was one of the earliest fewemergingmarkets to bounce back swiftly from the slowdown and report a modest
GDPgrowth.
All the sectors of the Indian Economy witnessed a decent growth duringtheyear under review, especially the manufacturing and service relatedsectors
witnessed a strong rebound. Though some of the input costs are on arisingtrend, various cost cutting measures initiated by Companies helped themto
report better performance.
As per the revised key economic indicators the GDP growth for the year2009-10 is projected at around 7.2% (Source: RBI). With the all roundefforts of the Central Government and the Reserve Bank of India throughitsfiscal and monetary measures to revive growth, the Indian economy isexpected to deliver a GDP growth rate of around 8% in financial year
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201011, which gives confidence that Indian Economy is set to achievedoubledigit growth in the next few years to come.
INDUSTRY AND COMPANY TREND
The building products industry has witnessed a reasonable growth duringtheyear mainly on account of sustained rural demand on the back of adequatedisposable incomes and Government sponsored schemes. In the urban
area,which are the main markets for our green building products, customerpreference for our energy saving and light weight products stimulated the
demand despite a significant slowdown in the real estate sector.
The Fibre Cement Sheet business is poised for growth over next few yearsonaccount of anticipated migration from thatched and tiled roofing to morerefined roofing. Thatched roof is not waterproof, and poses a fire hazardbesides needing regular replacement. Tiled roof needs continued
maintenanceand is not safe. Therefore, whenever the economic conditions improve,thefirst choice of the rural poor is to replace the roof over their head withthe affordable, waterproof, heat insulating and long lasting fibre cement
roof sheets.
The implementation of the UIN Programme is expected to further boostincomefor the rural poor thereby increasing the potential market for usage of fibre cement sheets in rural areas. The Government of India, with an aimto
provide adequate shelter to the rural poor has introduced programmeslikeIndira Awas Yojna (63% higher allocation in FY11 compared to last year),Golden Jubilee Rural Housing Finance Scheme, Pradhan Mantri Adarsh
GramYojana, Productive Housing in Rural Area and Rural Housing Fund which is
apositive note for the industries in the roofing sector.
With a healthy growth in GDP and expectations of a robust demand in the
future from Rural India on account of projects like NREGA & UIN leading
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tohigher disposable income in the hands of the rural population the industry
expects to achieve double digit growth (in the range of 10%), in thefollowing years.
Factoring the estimated growth in demand, all the leading players in theindustry are contemplating expansion plans by augmenting capacity atstrategic locations. Besides this new players are also entering this field.
Your Company also gets better realisation of the product from the market
onaccount of its improved quality characteristics, easy availability andpremium brand image. Our Green Products are also garnering theattractionof the building community in the last few years and having decent
profitability margins. With focused approach on better marketing efforts,cost reduction measures and productivity improvement through TPMpractices,the Company could report 14% growth in its gross revenue during theyearunder review over the previous year. The significantly improved PBIDT
margin for the year, as a percentage of net sales was at 22% ascompared to15% in the previous year.
Your Company is also continuing its thrust on the Green Building Products
Division. The new plant which is being set up in Golan, near Gujarat formanufacture of AAC Blocks is expected to increase the market share inwestern India. AAC Blocks with its inherent advantages such as afavourableweight to compressive strength ratio, usage of flyash and energy savingproperty are fast becoming the choice of the new generation builders.
Withthe right pricing we anticipate this product to witness significant growthin volumes as builders convert from their conventional bricks to our green
AAC Blocks, especially with the realty sector recovering from theslowdown.
The Company continues to concentrate on critical areas of operationduringthe current year also. The capacity added in Balasore for Fibre CementSheets during last year garnered decent market size in Orissa which hasalso helped the company to reduce its logistics costs. The Thermal
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Insulation product also received a good response from the markettherebymaintaining its leadership position.
The sheeting industry saw several new capacities being put up during the
year, which put pressure on pricing and sales volumes. This has posedsignificant challenges for the Company in marketing its products. Despitethis your Company was able to achieve a growth rate of 5% in quantityterms, which is in line with the industry growth rate of around 6%.
The second half of the year witnessed an increase in the trend of demand
for the Green Products on the back of revival of the economy. While theoverall market showed a flat or marginally positive growth, your Company
registered reasonable growth in its Aerocon Panels and ThermalInsulation
products. The demand for Green Building Products is increasing the worldover on account of serious concerns about the environment and theimpact onenergy consumption, and hence our Green Products Division is alsoexpectedto do well in future.
OUTLOOK FOR THE COMPANY
The Company's business consists of the following Product Groups:
(A) BUILDING PRODUCT GROUP
1. Fibre Cement Sheeting Business Division
a. Fibre Cement Corrugated Sheets (PVA and Chrysotile Fibre)
b. Flat Products
2. Green Building Products Business Division
a. Autoclaved Aerated Concrete Blocks (Light Weight Bricks)
b. Aerocon Panels
(B) THERMAL INSULATION PRODUCT GROUP
a. Calcium Silicate Insulating Materials
During the year under review the Fibre Cement Sheets continued to be
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majorcontributor to the Company's turnover. The Company is one of theleadingmanufacturers of Fibre Cement Sheets in India with an estimated marketshare of about 20%. Although Industry recorded a growth of about 6%,
duringthe year under review, your company has registered a growth of 5% inlinewith the industry standards. The Company faced severe competition inthemarket from competing substitute products, such as, GI Corrugated
Sheets onaccount of fall in steel prices.
However, Fibre Cement Sheets are gaining popularity as they are betterinsulator of heat, less-expensive, safer, need no maintenance and last
longer when compared to competing roofing material.
Based on projections on GDP growth and internal assessments, the FibreCement Sheet Industry is likely to grow at 8% per annum in the currentyear. To retain our leadership position, the Company has established anadditional line at Vijayawada and the commercial production has
commencedin the month of July 2009.
In order to participate in the future growth opportunities and to retainits share, the Company is evaluating setting up of new plants at a
strategic locations and to increase the production capacities of existingplants. This would enhance the availability of its products to the customer
and reduce logistic costs. The Company is also further strengthening itsmarketing and distribution network.
The market for AAC Blocks is directly dependent on the construction of
multistory apartments and commercial buildings in particular. Our product
and the brand Aerocon is well known and accepted among the users of AAC
blocks. The size of the market did not grow in the previous year due tothe
slump in the real estate business that was evident all over the country.The construction business also saw existing projects slowing down. Thishadan overall effect on our volumes. However with recovery of the real estate
sector we expect the demand to start growing henceforth.
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Aerocon Panels continued to grow and has improved its share of businessboth in the partition and prefabricated office and housing segment. Duetothe recessionary trends seen in the real estate and industrial business
very few new commercial space was created and modification of existingspace was rare. Sectors involved in creating infrastructure startedattracting reasonable investment. Due to this and the increasedmarketingactivities undertaken by the company this division was able to growinspite
of the slump in the potential sectors. We expect this product to gainbetter acceptance and show improved revenues in the future.
Demand for insulation products continue to be good due to freshinvestments
for green field projects as well as replacement and modernization of plantsin the Cement, fertilizer, Petrochemical and other industries. Our productHysil continued to have a large share of this market. Our capacityexpansion plans will ensure we continue to maintain this position.
Our Company is perceived as a multi product and multilocationalcompany inthe market. We work closely with the end customer/user and this hasyieldeddesirable results. Our complete solution approach provides the customers
with various products and services integrated with application support tomeet needs of the customer. We have undertaken considerable effortsincreasing awareness of the benefits of our Green products and this willcontinue to help us offer better value to customers and get them todifferentiate our products.
RESEARCH AND DEVELOPMENT
The Company continues to place great importance to Research andDevelopment(R&D) and Innovation for new product development, process
improvements,business continuity, new applications development, cost reduction and
enhancement of product quality to global standards. The Company's R & DCentres have one of the finest testing facilities in India. The Researchand Development (R&D) Centres of the Company is recognized by theDepartment of Scientific and Industrial Research, Ministry of Science andTechnology, Government of India. The enhanced and fully dedicated team
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isactively working with our Business Development team to identify the newareas of interest and improve the process and performance of the productataffordable prices.
RISKS
The Company has established a formal Risk Management Plan. ACorporate RiskManagement Committee has been constituted which goes into the process
of risk assessment, its mitigation, monitoring and reporting. Implementation
and review of the risk management initiatives are periodically reported tothe Board, which helps in identification of new risk areas, their impact on
the business of the Company and to initiate risk mitigation strategies, asmay be necessary well in advance to reduce the impact of the risk in ourbusiness process.
The main raw materials required for building products of the Company are
OPC Cement, Raw Chrysotile, Fly-ash and Lime.
The prices of OPC cement have been volatile in the recent past and evenitsavailability has become a constraint in some regions. The Company
continuesto work on strengthening our supplier base.
The safe use of Chrysotile Asbestos has been scientifically established asposing no health risk to the workers in fibre cement plants, and with norisk to its users. However some of these unethical lobbyists have beencontracted to spread false rumours for vested business interests. The
lobbying for banning asbestos by some groups with vested businessinterestscontinued throughout the year. In fact the protest intensified during theyear as lobbying groups started approaching semi-judiciary authorities
andother associations with false allegations and reports for imposing the ban
on the usage of asbestos. Misguiding information about health effects of chrysotile asbestos continues to be quoted by Ban asbestos groupunabatedly. Asbestos industry in India, and your company rely upon theevidence based health facts and have proven in the last 25 years thatchrysotile asbestos can be used safely under controlled conditions underwhich it poses no risk to its workers and users.
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The Company has one of the best systems for dust suppression, dustextraction and dust collection. The fibre dust levels measured in all unitsof your Company are much lower than internationally specifiedpermissible
levels. At these levels of exposure, and with available evidence fromstudies conducted on employees of fibre cement industry using Chrysotile
fibre under similar conditions, the Company is confident that there should
not be any risk of asbestos related disease in the employees.
The Asbestos Information Centre (AIC) and Asbestos Cement ProductsManufacturing Association (ACPMA), promoted by Indian Manufacturershavebeen advocating safe/controlled use/health hazard potentials programs
andcampaigns to highlight the differences between the safe White Asbestos(Chrysotile) and other (Blue and Brown) types of Asbestos. Theeducationalcampaigns and appropriate representations made by these bodies haveresulted in better appreciation of scientific facts amongst the policy and
decision makers. The possibility of restriction or ban on use of Chrysotilefibre (Chrysotile Asbestos) therefore seems remote.
Fly-ash which is procured from the thermal power stations either free orat
low cost earlier is now available through the tender mechanism at highercost, resulting in increased cost for the Company.
BUSINESS SEGMENT ANALYSIS
The Company's business can broadly be classified into two groups i.e.Building Product Group and Thermal Insulation Product Group.
(A) BUILDING PRODUCT GROUP
This segment consists of Fibre Cement Corrugated Sheets, Flat Products,
Autoclaved Aerated Concrete Blocks (Light Weight Bricks) and AeroconPanels. Fibre Cement Sheet is the main product accounting for about 85%
of Company's sales Revenue.
Production and Sale of Fibre Cement Sheets during the year under reviewwas771639 MT and 729767 MT respectively.
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During the year the Company has set up an additional line at Vijayawadaformanufacture of Fibre Cement Sheets. The product available from thisfacility will help the Company in servicing the southern markets more
effectively and cost lower freight costs.
The pressure on sales volumes and prices of Fibre Cement Sheets willcontinue due to additional capacities being created country-wide. TheCompany is confident of attaining a respectable share in the futuregrowth
with it's recognized and established brand of CHARMINAR, efficientmarketing infrastructure and product distribution network.
The AAC Blocks and Aerocon Panels are gaining increased recognition asgreen building products. The new plant for AAC Blocks at Golan will cater
the urban centers in Maharashtra and Gujarat. The marketing team hasalsobeen strengthened to take up new challenges poised by the competitiongoingforward. Due to a few recent entrants, the pricing for AAC Blocks will pose
a challenge but the Company is preparing itself to take up this challengeand protect its market share. The Aerocon panels are gaining increasedacceptability and are expected to achieve double digit growth in theforthcoming year.
(B) THERMAL INSULATION PRODUCT BUSINESS GROUP
This group of Calcium Silicate based insulating materials servicesindustries such as cement, power, petrochemical, fertilizer plants etc. Due
to their superior properties and high quality, the company's products have
good acceptance over its substitutes. Efforts are being made fordevelopingnew applications to expand the market size. The Company is in theprocess
of increasing the capacity from 6000 MT to 8400 MT at its Dharuheraplant,
which will help the Company to maintain its clientale and leadershipposition in the market.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company believes that internal control is necessary concomitant of
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theprinciple of governance that freedom of management should be exercised
within a frame work of appropriate checks and balances. The Companyhas
adequate internal control systems and procedures commensurate with thesizeand nature of its business. Further the effectiveness of internal controlsystem is regularly tested by the Internal Audit department of theCompanyand also by the external agencies engaged for this purpose. The Company
hasa separate Internal Audit Department, which ensures operational controlatvarious locations of the Company on regular basis. Systems andprocedures
of the Company are designed in such a way to check the transactions atthenext level and provide the necessary information to the management. The
internal control systems provide reasonable assurance with regard to safe
guarding the assets, promoting operational efficiencies and ensuringcompliance with various legal and regulatory provisions. The internalauditdepartment also reviews the existing deviations in reporting and iscontinually addressing various points to plug any loop holes found in the
existing system. This process ensures that all transactions arecontinuously monitored, reviewed and appropriate corrective actions areinitiated, to ensure accurate financial reporting.
The internal audit function covers the routine audit, management auditandspecial audits which ensures that the systems are in place to closely
monitor and evaluate the efficiency and adequacy of internal controlsystems.
The internal audit department conducts regular audits based on the
annualinternal audit program approved by the audit committee of the Board
covering all functional areas and locations. Any irregularity orsignificant issues are brought to the notice of the Audit Committee of theBoard along with the Action Taken/Proposed to be taken by theManagement.The composition and working of Audit Committee forms part of CorporateGovernance Report.
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SYSTEMS
The Company has successfully implemented SAP as its ERP (EnterpriseResource Planning) for its accounting operations through networking of all
locations under ERP and are now focusing on providing further valueaddition to the internal and external customers with the availabletechnology. During the year 2009-10, your Company has successfullyimplemented the Disaster Recovery System to safeguard the valuableinformation stored in the data server, thereby ensuring un-interpreted
useof the technology and also gearing up to meet the future challenges going
forward.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
The management of the company believes that the human resource is itsmostvaluable asset, which needs to be nurtured and equipped with necessarytools to face the challenges posed by the dynamic business environment,
onan ongoing basis. The management of the Company is committed to thewelfareand career growth of its people. Senior management of the Companymaintains
personal touch and a friendly approach in dealing with their colleagues.
The Company is utilizing diversified recruitment methodologies andsources.It has stepped up its in-house training and development programs todeveloprequired competencies to meet the challenges of the future. The
employeerelations with the bargainable staff have been reasonably cordial at mostof the plants.
The wage agreement with the respective unions at Jasidih has beencompleted
during the year under review. The wage agreement for the workersattachedto the Chennai & Timmapur units are under negotiation and managementexpects an amicable settlement during the current year.
As at 31st March, 2010 the Company had 1838 employees.
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ENVIRONMENT, HEALTH & SAFETY
It has been the Company's policy to give highest priority to safety,employees health and environment protection. The Company believes
that aclean environment in and around the work place fosters health andprosperity for the individual, the group and the community they belongto.Regular medical examinations of employees and health care schemes arepart
and parcel of all the Plant operations. Health surveillance of employeesadhering to national regulations and ILO recommendations is an ongoingprocess. We ensure best environment engineering controls are adopted inthefactories and that we are successful in preventing occupational health
hazards. On environment front, the Company follows the best practices.ThePollution control equipment installed in our Plants ensures achievement of
internationally best emission norms and is recommended to be followedelsewhere in the world.
CAUTIONARY STATEMENT
Statements in the Directors Report including Management Discussion & Analysis Report describing the Company's objectives, expectations or
predictions may be forward looking within the meaning of applicablesecurities laws and regulations and reflects only the management'sperception and assessment. Actual results may differ materially fromthoseexpressed in the statement and the Company assumes no responsibilityinrespect of forward looking statements made herein which may undergo
changesin the future. Important factors that could influence the Company'soperations include global and domestic demand and supply conditionsaffecting selling prices of finished goods, input availability and prices,
exchange rates, changes in government regulations, tax laws, economicdevelopments within the country and other factors such as litigation and
industrial relations.