EXIDE INDUSTRIES LIMITED
ANNUAL REPORT 2008-2009
DIRECTOR'S REPORT
TO
THE SHAREHOLDERS
Your Board of Directors have pleasure in presenting the 62nd Annual Report
of the Company together with the Audited Accounts for the year ended 31st
March, 2009.
Economic Environment:
2008-09 has been a watershed year in the socioeconomic history of our
Nation. Starting with a GDP growth prediction of over 9% like previous
years; a bullish stock market with sensex gaining new heights month on
month; followed by unprecedented rise in crude oil and commodity prices
leading to unbridled inflation surpassing the 12% mark; the ghastly
terrorist attacks in Mumbai; signing of the historical Nuclear Treaty, deep
rooted recession of the economic superpowers resulting in a complete wipe
out of the capital markets and slump in industrial production - the year
was indeed of rising hopes and shattered aspirations.
Added to this was the global financial crisis in the US and several
European countries leading to bankruptcy of some of the major financial
institutions which threatened the world financial system. Much of the
industrialized world entered into a deep recession resulting from vicious
circles of high oil and food prices and bursting of the housing bubble in
the US. This led to collapse of the entire banking and financial system
across countries and increased unemployment, which in the US alone now is
estimated to be 8.5%.
Though the initial feeling in India was that our Country was insulated from
the financial crisis affecting the Western hemisphere the ripple effects
were witnessed during the later part of the year. Any significant slow-down
in the US, which accounts for 1/4th of the World GDP, is bound to have
repercussions across the globe. However, since the interdependency between
the US economy and India has reduced considerably over the past two decades
the effect on our economy is expected to be less drastic. During the third
quarter of the financial year under review there was a sharp fall in the
value of the rupee and the worldwide credit crunch led to foreign investors
divesting shares of Indian companies worth more than US$ 12.5 billion
approximately Rs 62,000 crores. There was a drastic fall in the growth of
certain sectors like IT enabled services, steel, automobiles, textiles,
cement and housing etc. The automobile sector was badly hit and in October
2008 the overall car sales declined by about 9% and car production fell by
more than 12%. November 2008 recorded the steepest fall in -car sales in
the past five years with Maruti recording a degrowth of 27%, Mahindra &
Mahindra 40% and Tata Motors 12% respectively.
The Government was quick to react and a spate of financial packages like
cut in repo and reverserepo rates, reduction in excise duty and service tax
etc. were announced in several tranches. These interventions, coupled with
the sharp fall in crude oil prices and reducing rate of inflation, helped
in styming the crisis to a considerable extent. Recent production / sales
data on cement, steel and automobiles indicate a strong recovery since
January 2009. Two wheeler sales grew by 12% and car sales by a healthy 23%
in February 2009. However, commercial vehicles continued to report a slower
growth. The index of six core industries released by the Department of
Industrial Policy and Promotion shows a growth of 2.2% in February 2009
which was the highest growth rate clocked in the last four months. The
recovery in these sectors are expected to gather further momentum in the
coming months. Thanks to the monetary and fiscal initiatives of the
Government, high inventory levels and low liquidity, two major problems
affecting the industrial sector have been eased to a great extent. The
quick recovery indicates that there continues to be a strong domestic
demand. The reduction in interest rates are expected to further strengthen
this impetus. Capacity expansion plans which were shelved during October to
December 2008 are now being announced. The financial packages announced by
the G20 countries should give some impetus to growth in the industrialized
countries and the reversal of recessionary trend. Due to some infusion of
funds by Foreign Institutional Investors in the beginning of the current
financial year, the stock markets appear to be on the recovery path.
However, widening revenue fiscal deficit, mainly arising out of the fiscal
and monetary packages announced by the Government, would continue to be a
major source of concern.
Industry Structure and Development:
The domestic Battery Industry is poised to grow by more than double within
the next five years. Though the un-organised sector is about three times
the size of the organised business but with stricter pollution control and
regulatory norms, especially with regard to recycling of toxic waste such
as Lead, it may be difficult for small scale un-organised business to
sustain their operations in the long term. Notwithstanding the recent
setback arising out of the global meltdown, the automobile industry in
India is poised for quantum growth especially in the small car and two
wheeler segments. With Tata Motors launching the Nano and Bajaj and Renault
announcing their plans, India would emerge as a small car hub in the
Region. Nearly all the major global automobile manufacturers have set up
base in India and are also looking at India for export of their products.
Interestingly, several commercial vehicle manufacturers have identified
India as a manufacturing base for their export market which would also lead
to a higher demand for Indian batteries. This would definitely expand the
market base for automotive batteries manifold. In addition, with the thrust
on infrastructure, communication and power sectors, the consumption of
industrial batteries are also expected to rise substantially. That India is
emerging as a global player is evident from the fact that for the first
time an International Battery Fair was hosted in India in 2008 instead of
its traditional venues like the US, Europe or Asia-Pacific region.
Performance:
Your Company continues to maintain its leadership position in India and
South Asia. The year started promisingly with over 34% growth in sales and
an increase of 20% in profit before tax for the first six months.
Unfortunately, thereafter, as a fall out of the global economic downturn
the auto industry in particular and other core industries including
infrastructure, telecom, power etc. in general showed either a sharp
degrowth or a tapering down of growth. This definitely affected the
operations of your Company but, inspite of such difficult circumstances,
your Board is pleased to announce that your Company succeeded in increasing
its net turnover by 19% and its profits before tax by 16% over the previous
year.
Automotive Batteries:
Inspite of depressed sales in certain segments in the auto industry
reasonable growth was achieved mainly due to increased marketing efforts,
aggressive forays in the replacement segment, capturing of a larger market
share in the two wheeler segment, introducing cost effective technologies
and also through strict financial discipline and austerity measures.
Presently, your Company enjoys a significant market share in the vehicle
OEM segment.
Your Company has been identified as a supplier for batteries for Tata
Motor's small car 'Nano'. In view of some innovative features, a design
registration for this type of battery has been filed in India. Further,
supplies of upgraded batteries based on Advanced Hybrid technology for Tata
Motor's new model 'Vista' under the Indica / Indigo platform has also
commenced. Your Company has also been nominated as the single source for
supply of batteries for Toyota's small car as well as for the new models of
Fiat D/200 and D/300. A high performance battery for General Motors
'Tavera' and for Hyundai Motors new vehicle i20 has also been introduced. A
complete range of DIN batteries for Hyundai's Accent and Getz cars have
been upgraded to the advanced calcium technology under the 'Matrix' brand
with an extended warranty of sixty months. In the motorcycle segment, three
popular types of maintenance-free batteries based on calcium technology was
introduced under the 'XPack' brand with thirty six months warranty. Your
Company has received an order for 5000 batteries for the Singapore Taxi
market amidst tough competition. Honda Japan has selected your Company as
an exclusive supplier initially for 2 years for VRLA MC battery. This is a
Hi Tech product and is being introduced in Hero Honda, Honda Motorcycle &
Scooters (India) Ltd. for the first time. This battery is being jointly
developed alongwith Furukawa Battery, Japan, your Company's collaborator
and Honda, Japan. This will help in increasing your Company's market share
further in motor cycle OEM as well as in replacement market.
Your Company has entered into a technical collaboration with Changxing
Noble Power Sourcing Co. Ltd., China for manufacture of Deep Cycling E-bike
batteries for electric bicycles and scooters. These E-bike batteries would
be launched in the second quarter of the current financial year. Your
Company is also in the process of developing batteries for a variety of
Stop-Start micro-hybrid vehicles. Further, your Company intends to foray
into development and marketing of Lithium-ion batteries for the emerging
electric vehicle segment.
Your Board is pleased to inform that an International Patent of Low Water
Loss' battery was filed with WIPO, Geneva jointly in the name of Daramic
LLC and your Company.
With a view to increase its market penetration and for ensuring better
service to the end-users your Company has reorganized its Marketing and
Distribution set-up by expanding to 203 locations made up of hubs and
spokes monitored by the Regional Controlling centres. This initiative has
paid immense dividends as not only your Company is now able to be
aggressively present in the replacement market but also to provide better
after-sales and warranty services to its customers. Your Company's CRM
initiative through its portal www.exidereachout.com has been very
successful and apart from servicing the needs of customers and dealers has
helped in building up a data base of loyal customers. Project Kissan,
another initiative for customers in the rural markets has also achieved
popularity in converting potential customers to subscribe to your Company's
products.
Your Company has entered into arrangements with Indian Oil Corporation,
Hindustan Petroleum Corporation Ltd., and Toyota Kirloskar for distribution
of its products through their retail outlets. Similar additional linkages
are also being explored. This would enable your Company to have a much
larger presence across the country including all B and C class towns.
Industrial Batteries:
The net sales of Industrial batteries was Rs 1269 crores as against Rs 1019
crores in the previous year representing a growth of 25%. This was achieved
inspite of cheaper imported batteries flooding the market mainly due to the
ongoing recession in the Western countries. The growth in trade sales was
achieved primarily due to better reach and improved product perception.
Following satisfactory field trials, a flat plate Golf Cart battery was
introduced during the year. Development of Gel Tubular Prototype Cells for
Telecom applications is also in progress. Your Company has also developed
low maintenance batteries for invertors.
Submarine Batteries:
The Submarine division performed satisfactorily during the year under
review with a number of prestigious orders in hand. Noteworthy among these
was an order from the Indian Navy for an Advanced Technology Vehicle (ATV)
as well as orders from the Admiralty Ship Yard of Russia for third country
exports. This was the first time that a Russian Ship Yard has given orders
for submarine batteries to India.
Exports:
Export of both Automotive and Industrial batteries registered a degrowth
mainly due to the severe economic downturn. Details of activities relating
to exports are mentioned in Part III of the Information as per Section
217(1)(e) of the Companies Act, 1956 which is annexed to this Report.
Financial Results:
(In Rs. Crores)
2008-2009 2007-2008
Profit before depreciation & taxation 503.33 438.57
Depreciation / Amortisation 67.94 64.24
Profit before tax 435.39 374.33
Taxation 151.00 124.00
Profit after tax 284.39 250.33
Balance brought forward 281.30 118.41
Making a total of 565.69 368.74
Out of this appropriations are:
General Reserves 185.00 50.00
Leaving a balance of 380.69 318.74
Interim Dividend (40%) 32.00 -
Tax on Interim Dividend 5.44 -
Proposed Final Dividend (20%) 16.00 32.00
Tax on Final Dividend 2.66 5.44
[Aggregate Dividend amounts to 60%
(Previous year 40%)]
And leaving a balance of (which is
carried forward to next year) 324.59 281.30
Consolidated Financial Statements:
In accordance with Accounting Standard 21 Consolidated Financial Statements
form part of the Report & Accounts. These Accounts have been prepared on
the basis of audited financial statements received from the subsidiaries
and associate companies as approved by its respective Board of Directors.
Dividend:
Your Company has paid an interim dividend at the rate of 40% on the equity
shares to the shareholders whose names appeared on the Register of Members
on 27th January, 2009. Your Directors are now pleased to recommend a final
dividend at the rate of 20% on the equity shares of the Company for the
year ended 31st March, 2009, subject to your approval at the ensuing Annual
General Meeting. Consequently, the total dividend for the year ended 31st
March, 2009, including the interim dividend paid during the year, amounts
to 60% (Re, 0.60 per equity share of Re.1/- each).
Corporate Governance:
Transparency is the cornerstone of your Company's philosophy and all
requirements of Corporate Governance are adhered to both in letter and
spirit. The Audit Committee of the Board meets at regular intervals as
required in terms of Clause 49 of the Listing Agreement. Your Board of
Directors have taken necessary steps to ensure compliance with all
statutory and listing requirements. The Directors and key management
personnel of your Company have complied with the Code of Conduct which was
approved by the Board of Directors. Apart from being in compliance with all
requirements of Clause 49 of the Listing Agreement your Company has
voluntarily adopted certain governance principles. Setting up of the
Remuneration Committee of Directors and introduction of a Model Code for
Insider Trading in 2004 are some of the initiatives taken by your Company
towards this end.
The Report on Corporate Governance as required under the Listing Agreement
forms part of and is annexed to this Report. The Auditors' Certificate on
compliance with Corporate Governance requirements is also attached to this
Report. Further, as required under Clause 49 (V) of the Listing Agreement a
certificate from the CEO and CFO is being annexed with this Report.
Business / Operational Excellence:
In keeping with its vision to provide credible value addition to our
stakeholders and being recognized as a responsible corporate citizen, your
Company has implemented an exhaustive Total Quality Management System (TQM)
throughout the organization. The TQM system includes the latest techniques
of Total Productive Maintenance (TPM), 6 Sigma and Lean Manufacturing -
leading towards business excellence.
Products manufactured at your Company's state-of-the-art manufacturing
facilities symbolise quality and customer satisfaction. Quality is designed
into products through use of techniques like Advanced Product Quality
Planning (APQP), Failure Mode & Effect Analysis (FMEA), Statistical Process
Control (SPC) and Measurement System Analysis (MSA) . Process capability
monitoring ensures that products are well within specification with
negligible rework and scrap.
TQM is a strategic initiative and your Company has progressed considerably
in its unending journey towards Business Excellence. For its Quality
Management System (QMS), the Industrial SBU part of Haldia, Hosur and
Shamnagar factories have been certified to ISO9001. For the Automotive SBU
- Bawal, Chinchwad, Haldia, Hosur, Shamnagar and Taloja factories have been
certified to ISO/ TS16949. These certifications although issued in the
names of the different factories, however include all our business
processes of R&D, Manufacturing, Marketing, Sales, After Sales Support and
Corporate functions. The Submarine SBU is certified to ISO-9001. The
certification body is the renowned TUV-NORD, headquartered in Germany.
In line with its core value of striving for Excellence, your Company is
implementing the European Foundation for Quality Management (EFQM) Business
Excellence Model. Your Company has won the CII-EXIM Bank Award for 'Strong
Committment to Excel' in 2006 and 2007 . In 2008 your Company bettered its
performance and has been one amongst eight companies in India to get the
coveted 'Significant Achievement' Award.
To improve efficiency and utilization of machines your Company has
implemented Total Productive Maintenance (TPM) in the factories, following
the methodology given by Japanese Institute of Plant Maintenance (JIPM).
For its efforts in TPM, the JIPM has conferred the 'Award for TPM
Excellence - 2008' to our Haldia plant. The other factories are gearing up
to the challenge to win this award in the near future.
Apart from these, your Company has won several awards in Quality, Safety-
Health-Environment, 5-S, Energy Conservation and Productivity. As a proof
of customer satisfaction, your Company has also won awards and recognition
from Toyota, Tata Motors and Bajaj Auto.
Environment & Safety:
For the Environmental Management System (EMS) the Chinchwad, Haldia, Hosur,
Shamnagar and Taloja factories are certified to ISO 14001. The Bawal
factory is expected to be certified by the third quarter of the current
financial year. Your Company is committed to preserve the environment and
prevent pollution, going much beyond statutory compliance and ISO 14001
certification. Your Company aims at continuous improvement of its
environmental performance. Minimisation of waste and preservation of
natural resources are not only part of policy but are put into effect by
practice and implementation of several environmental projects. This has
resulted in your Company receiving the prestigious TERI Corporate
Environment Award in 2007.
The concern for Occupational Health and Safety issues has prompted your
Company to implement OHSAS 18001 standard in its factories. The Hosur plant
has already been certified and the other factories are expected to receive
the certification in due course.
Energy conservation continues to be an area of focus for your Company as
this is a major cost in the manufacturing process. Your Company has taken
several initiatives at each plant level in order to conserve energy. Proof
of this is available with all major plants at Shamnagar, Haldia, Hosur,
Taloja and Chinchwad, being ISO 14001 certified.
Corporate Social Responsibility:
Your Company continues to believe that it has societal obligations which it
must fulfill in order to remain a responsible corporate citizen of the
Country. It also believes that the ethical conduct of business is part of
its corporate ethos which helps to fulfill the Company's long term vision
and its engagement with stakeholders at large.
One of the key challenges for all individuals and enterprises is sustenance
of the environment and, therefore, the need to generate awareness and drive
initiatives to create a greener earth. Towards this end, your Board is
pleased to announce that your Company has agreed to partner UNICEF in their
Child Environment Programme in India that aims to create a greener and
healthier world and to ensure equitable and sustainable access to basic
health and hygiene facilities, particularly for the unreached and
marginalized rural communities. This initiative has been linked to raising
consumer consciousness and creating awareness for return of used batteries
which contain lead and thereby inducing the vehicle owners to participate
in the cause.
Your Hosur plant continued with its community initiatives by focusing on
the five core areas of Health care, Education, Women Empowerment,
Environment and Relief activities. During the year, a village in Tamilnadu
was adopted for community development, a road map for development of a
model village has been undertaken, high school classrooms, mid-day meal
kitchens and toilets have been constructed. Apart from that, support has
been given for education needs of children of single / handicapped parents
and assistance in sports activities for local students have been given.
In Haldia, vocational training for rural women was organised and sewing
machines and zari machines were distributed through the cooperative system.
Further, your Company actively contributed and participated in distribution
of relief materials for the flood victims in Purba Midnapore, West Bengal.
In Taloja drinking water facilities were provided at Vridhashram and a
Community Garden was developed. Your Company also actively participated in
the Pulse-Polio programme. Your Company also has taken up a project for
Drug De-addiction and Rehabilitation for street children and a project for
development of societal skills for slum children in Kolkata. In Bawal,
Medical and Health camps were organized in an adopted village where free
medicines were distributed and pathological tests arranged for the
villagers.
Internal Controls:
Your Company has proper and adequate system of internal controls. The
Internal Audit team conducts both Systems and Financial Audit which are
carried out in two phases at each factory, branch, Regional and Corporate
offices. The audit findings are reviewed by the Audit Committee of
Directors and corrective action, as deemed necessary, is taken. The Company
also has laid down procedures and authority levels with suitable checks and
balances encompassing the entire operations of the Company.
Your Company has identified various business risks and has laid down the
procedure for mitigation of the same. The Risk Management & Mitigation
Systems are reviewed by the Audit Committee of Directors from time to time.
Outlook:
With the recession likely to continue in most of the developed countries
atleast for the medium term, it would inevitably have cascading effects on
the World economic order. The IMF in its latest report has cautioned that
the economic downturn is likely to continue through 2009-10 and perhaps
even further. Though it is expected that India would not be as badly hit
compared to countries like the USA, Western Europe, Japan or South Korea,
but the growth in our economy would definitely be affected to a
considerable extent in this environment. Nevertheless, it is heartening to
note that foreign institutional investors have once again reposed faith in
the Indian capital markets which apart from strengthening the sensex, will
act as a catalyst in increasing the confidence levels of all concerned. The
short turnaround time taken by the core industries in recovering from the
slump, the limited dependence on exports to the USA and the fiscal and
monetary initiatives taken by the Government will be an accelerator for a
better industrial climate in the near future. However, it may be premature
to make any accurate prediction since one cannot vouch that the worst is
yet to be over.
Opportunities and Threats:
Infrastructure has been identified as a core thrust area by the Government
and large investments are planned both by the public as well as the private
sector in these segments. India is witnessing a telecommunication
revolution and its potential is vast. Not only are new and path-breaking
technology easily available but due to the vast population, especially in
the two tier and three tier cities, the prospects for this sector are
extremely promising. As stated earlier, several global players in the
automotive industry are setting up manufacturing bases in India not only
for catering to the domestic market but also for sourcing their overseas
requirements. Huge investments are also planned in the power sector for
generation, transmission and distribution and this would get a big fillip
after India has been admitted honourably in the Nuclear Club. All this will
augur well for your Company since your Company's products cater to all the
above segments where stupendous growth is expected in the short to medium
term.
Your Company is continuously investing in acquiring new technology and
know-how, capacity expansion and upgradation of the manufacturing
facilities. The in-house R&D Department has not only been consistently
developing. quality products for existing as well as new applications but
also been successful in reducing costs. The Company's foreign technical
collaborators continue to strongly support your Company both with sharing
their technology as well as for improvement of manufacturing and other
related processes. Due to its quality products, competitive pricing and
transparent dealings, your Company continues to be the largest power
solutions company in South Asia and shall strive to maintain its position
in the future.
Risks & Concerns:
Cheap imports, mainly from China, for industrial batteries continue
unabated and has seen a recent spurt after the industrial slow down in the
developed countries. Unfortunately, the present laws and the procedures for
anti-dumping are not adequate in this area.
Prices of Lead, which is a major constituent of your Company's products,
are extremely volatile. From a peak of US$ 2800 per MT in the beginning of
2008-09 the prices of lead crashed to US$ 963 per MT in the third quarter
of the said financial year, and currently is above US$1400 per MT. This
volatility not only creates uncertainty on procurement of the material but
also has a major impact on the manufacturing cost of the products. Your
Board is conscious of all the above risks and endeavours to minimize the
same through prudent business practices.
Lead Acid batteries may not be the optimal source of power solutions for
major applications in the long term not only due to its inherent polluting
nature but also due to limitations in its physical properties. Further, due
to the volatility of price and availability of crude oil more and more
automotive manufacturers are actively considering developing electrically
powered hybrid vehicles. In such a scenario, there would be a paradigm
shift in the technology and the ingredients for manufacturing of storage
power batteries. Your Company is conscious of such risks and is gearing
itself up for acquiring knowledge, technology and expertise for catering to
the emerging and completely different requirements of the future.
Subsidiary Companies:
Your Company has four Indian subsidiaries viz. Chloride Metals Limited
(formerly Tandon Metals Limited), Caldyne Automatics Limited, Leadage
Alloys India Limited, Chloride International Limited and three foreign
subsidiaries, viz. Chloride Batteries S.E. Asia Pte. Ltd., Singapore, Espex
Batteries Limited, UK, and Associated Battery Manufacturers (Ceylon)
Limited, Sri Lanka.
Chloride Metals Limited, which is a 100% subsidiary of your Company, is
engaged in lead smelting and refining operations and has its plant at
Markal, Pune. The said Company achieved a turnover of Rs. 153 crores
representing a growth of 143% over the previous year and a profit before
tax of Rs 7.33 crores which is 226% higher than the previous year. The name
of the Company was changed from Tandon Metals Limited to Chloride Metals
Limited with effect from 1st December, 2008 after receipt of necessary
approvals from the Registrar of Companies, Pune, Maharashtra.
Caldyne Automatics Limited is a 100% subsidiary of your Company having its
factory at Sector V, Salt Lake City, Kolkata and is engaged in manufacture
and sale of Chargers, DC Power Systems and associated equipment. During the
year 2008-09, the said company achieved a turnover of Rs. 31.65 crores and
a profit before tax of Rs. 0.38 crores.
Leadage Alloys India Limited, a 51% subsidiary of your Company, has its
plant at Kolar District, Karnataka and is engaged in lead smelting and
refining activities. During the year 2008-09 the said company has achieved
a turnover of Rs 444 crores representing an increase of more than 62% over
the previous year. However, the profit before tax decreased from Rs 11.33
crores in the previous year to Rs 7.45 crores in 2008-09, due to the sharp
fall in Lead prices in the third quarter of the year under review, which
resulted in high cost inventories.
Chloride International Limited, a 100% subsidiary of your Company, is
engaged in the marketing and sale of Non-conventional Energy Systems like
Solar Panels, Lanterns, Home Lights etc. Due to the depressed market
conditions and reduced institutional spending, mainly arising out of the
economic slow down, sales of the said company during 2008-09 amounted to
Rs.3.66 crores only as compared to Rs 6.17 crores in the previous year. Due
to low operating margins, Profit before tax was only Rs. 0.01 crores during
the said year.
Your Company holds 100% of the share capital in Chloride Batteries S E Asia
Pte. Ltd., Singapore. The said company is engaged in manufacture and sale
of lead acid batteries and caters to the South East Asian and Australian
markets. During the year 2008-09 the Company achieved a turnover of SGD 40
million (Rs. 134.31 crores) and Profit before tax of SGD 1 million (Rs.3.23
crores).
Espex Batteries Limited, UK, in which your Company holds 51% of the share
capital, is engaged in marketing and selling of lead acid batteries for
industrial applications. During the year 2008-09 the company achieved a
turnover of GBP 3.5 million (Rs. 25.19 crores) and made a loss of GBP 0.1
million (Rs. 1.03 crores).
Your Company holds 61.5% in Associated Battery Manufacturers (Ceylon)
Limited, Sri Lanka. The said company is engaged in the business of
manufacturing and marketing of Lead Acid batteries. During the year 2008-09
the said company achieved a turnover of SLR 1429.50 million (Rs. 62.90
crores) and Profit before tax of SLR 83.36 million (Rs. 3.67 crores).
Your Company has received approval from the Central Government exempting
your Company from attaching the Accounts of the Subsidiary Companies with
the Annual Accounts of your Company. Any shareholder interested in
obtaining a copy of the Accounts of the Subsidiary Companies may send a
written request to the Company Secretary. at the Registered Office of the
Company.
Human Resources:
Your Company believes that nurturing and development of human capital is of
key importance for its operations. The HR policies and procedures of your
Company are geared up towards this objective. Your Company has laid down
processes for attracting, retaining and rewarding talent. The Appraisal
systems are transparent and with an objective to identify performers. Your
Company has developed systems for Skill Gap Analysis and based on the
results, necessary training interventions are made on a regular basis. Exit
interviews and succession planning continues to receive priority.
As on the date of this Report your Company has 4186 employees.
Directors:
Mr. Bhaskar Mitter, Mr. S N Mookherjee and Mr. Vijay Aggarwal, Directors
retire by rotation and being eligible offer themselves for reappointment.
None of the Directors of your Company are disqualified for being appointed
as Directors, as specified in Section 274(1)(g) of the Companies Act, 1956.
Auditors:
The Auditors, M/s S R Batliboi & Co., Chartered Accountants retire at the
conclusion of the ensuing Annual General Meeting and being eligible under
Section 224(1 B) of the Companies Act, 1956, offer themselves for re-
appointment.
Information pursuant to Section 217 of the Companies Act, 1956:
a. Conservation of Energy and Technology Absorption:
Information pursuant to Clause (e) of SubSection (1) of Section 217 of the
Companies Act, 1956 read with Companies [Disclosure of Particulars in the
Report of Board of Directors] Rules, 1988 and forming part of the
Directors' Report for the financial year ended 31st March, 2009, are
attached hereto.
b. Particulars of Employees:
In accordance with the provisions of Section 217 of the Companies Act, 1956
and the Rules framed thereunder, the names and other particulars of
employees are set out in the annexure to the Directors' Report. In terms of
the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
Directors' Report is being sent to all the shareholders of the Company,
excluding such annexure. Any shareholder interested in obtaining a copy of
the said annexure may write to the Company Secretary at the registered
office of the Company.
c. Directors' Responsibility Statement:
In accordance with the provisions of Section 217(2AA) of the Companies Act,
1956, the Board of Directors state:
(i) That in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any;
(ii) That the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit or loss of the
company for that period;
(iii) That the Directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
(iv) That the Directors have prepared the annual accounts on a going
concern basis.
Forward-Looking Statements:
This Report contains forward-looking statements that involve risks and
uncertainities. When used in this Report, the words 'anticipate',
believe', 'estimate', 'expect', 'intend', 'will' and other similar
expressions as they relate to the Company and/or its businesses are
intended to identify such forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise. Actual results, performance or achievements could differ
materially from those expressed or implied in such forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their dates. This Report
should be read in conjunction with the financial statements included herein
and the notes thereto.
Acknowledgement:
Your Directors would like to record its appreciation for the co-operation
and support received from its employees, shareholders, Government agencies
and all stakeholders.
On behalf of the Board of Directors
Place: Mumbai R G Kapadia
Date : 27th April, 2009 Chairman
ANNEXURE TO DIRECTORS' REPORT
Information as per Section 217(1)(e) of the Companies Act, 1956, read with
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 and forming part of the Directors' Report for the
year ended 31st March, 2009.
I. Conservation of Energy:
The Company accords great importance to conservation of energy. The main
focus of the Company during the year was:
a. Close monitoring of consumption of electricity, LPG, diesel and water.
b. Closely monitoring electricity consumption based on 'KWH/MT of Lead
Consumed'.
c. Optimisation of electricity, LPG, diesel and water by reducing process
cycle time, process modification and also by equipment modification /
replacement / retrofitting.
d. Usage of renewable energy, viz. Solar.
e. Achieving power factor standards nearing unity. All of the Company's
plants targeted unity.
Chinchwad Plant:
1. Use of non conventional energy (wind power) of 679215 KWH.
2. Power factor maintained at 0.98.
3. Optimised use of energy by switching off machines, lights, fans, air
conditioners and exhaust systems whenever not required.
4. 100% use of recycled water for gardening and shop floor washing.
5. Reduction in compressed air consumption by arresting air leakages.
6. Awareness given to workmen for conservation of energy.
7. Installed solar power plant for street lights near administration
building.
8. Water cooling system for Oxide Mills made closed loop for water
conservation.
9. Optimizing running of equipments to have a continuous run rather than
start stop.
10. Use of electronic chokes for light fittings.
Bawal Plant:
1. VFD installation in Grid Casting machines - Saving 8693 KWH per annum.
2. VFD installation in Pasting and Flash Drying Oven - Saving 3911 KWH per
annum.
3. Replaced all incandescent Lamps by CF - Saving 47808 KWH per annum.
4. Energy Saving T-5 tube lights (28 Watts) installed in assembly area, New
JF and Acid Dilution plant - Saving 10800 KWH per annum.
5. Ten numbers of Solar lights provided for street lighting - Saving 17,560
KWH per annum.
6. Solar Water heater provided for canteen - Saving 26280 KWH per annum.
7. Energy saving Street lights installed (7 nos.) - Saving 8432 KWH per
annum.
8. Lead Ingot Feeding designed with sliding arrangement and replaced
motorized movement - Saving 3766 KWH per annum.
9. Closed Loop Air system and Leakage arresting in the air distribution
system to improve efficiency - 84,000 KWH per annum.
10. Optimum Air system is installed to optimise the air pressure
requirement thereby reduce the power requirement - Saving 1,29,900 KWH per
annum.
11. DM Water Re-circulation in pasting, leads to saving of 11.5 kl per day
- Saving DM Water 3450 kl per day.
12. Imported CMW acid Filling and leveling machines installed to reduce
acid waste and thereby reduce power consumption - Saving 900 KWH per annum.
Hosur Plant:
1. Power common feed line system in VRLA Casting thereby saving energy to
the tune of Rs 1.75 lacs per month.
2. Conversion of 40HP Bag Filter to 7.5 HP Bag filter in Bay 1 Pasting
machine resulting in saving of Rs 0.37 lacs per month.
3. Service Equipment automation like Fume Killers for all Assembly lines.
4. Trim Die Hydraulic power pack machine inter connected with Grid Casting
- Auto Machine installed.
5. Assembly Conveyor and Service Equipment Automation done.
6. Conversion of Twin tube light fitting to Single tube light fitting.
7. Power factor improvement made resulting in saving of Rs 3.78 lacs per
month.
Taloja Plant:
1. Conversion of Electrically Heated Pot to LPG fired Pot selenium alloy,
therefore, KWH per plate resulting in a saving of Rs 3.60 lacs per annum.
2. Installation of Star-delta converter in compressors.
3. To achieve power factor unity.
4. LPG, energy less water bath vaporisor for vapourising gas resulting in a
saving of Rs 5.70 lacs per annum.
5. Optimum utilisation of HSD, by use of additives and increasing the load
factor of DG sets.
6. Auto switching of Blowers as per the production requirements.
7. Optimum utilisation of Motors.
Shamnagar Plant:
1. Improvement of power factor from 0.95 to 0.98 by installing 4 nos APFC
banks of additional 1000 KVAR capacity with harmonic filter. Savings
achieved: Approx Rs.1.00 lacs per month from November 2008 onwards.
2. Replaced Mercury vapour lamps in Energy park by solar lighting. Saving
achieved: Rs 24000 per year.
3. In Iron Clad, Plante & Industrial Casting area Power driven exhaust
system replaced by Natural draft roof extractor. Hot air goes up by natural
draught and total 6 nos. of 3HP Force draft replaced. Savings achieved per
year: 81,000 KWH and Cost savings: Rs. 3,48,000 per year.
4. Replaced Holman Compressors at 5 kg/cm2 pressure for supplying
compressed air for washing of plates in Industrial & Plante Forming to 3.5
kg/cm2 compressed air for washing operation, one Inefficient Holman
compressor stopped by installing pressure reducing valve in both Plante and
Industrial Forming area. - Savings achieved per year: 1,44,000 KWH and Cost
savings: Rs. 6,12,000 per year.
5. Installation of transparent sheets in roof in place of asbestos sheet in
New Industrial building, energy load reduced by not using of 24 nos. of
mercury vapour lamps in day time. Savings achieved per year: 21,600 KWH and
Cost savings: Rs. 92,880 per year.
6. Double tube light set converted to single set & Mercury Lamps removed
from less required areas. 40 watt 180 nos. tube lights, 52 nos. of 250 watt
Mercury lamps, 6 nos. of 150 watt Mercury lamps and 6 nos. 20 watt tube
lights removed. Savings achieved per year: 90,000 KWH and Cost savings:
Rs.3,87,000 per year.
7. In Automotive section, recirculation of cooling water one no. Tiegel &
one no. Fuji was started. 150 KL of water saving achieved per day. Savings
achieved per year: 1,20,000 KWH and Cost Savings: Rs. 5,16,000 per year.
8. LPG pressure reduced to 13-14 psi by increasing the temperature of
Vapouriser and introduced LPG pressure regulators in various machines
without affecting the production activities. (LPG consumption reduced to 4
MT per Month approx.). Savings achieved: Rs. 14,40,000 per year .
Haldia Plant:
1. Improvement of power factor from 0.96 to 0.98
2. Use of solar lighting for street illumination.
3. Use of air turbine ventilator for improving ventilation.
4. Use of VFD in screw compressor.
5. Installation of lighting saver in domestic lighting illumination.
6. Replacing V Belts by Flat belts to eliminate transmission losses.
7. Transfer of effluent by gravity eliminating use of pump.
8. Replacement of conventional 40W tube light by 25W energy saving tube
light.
9. Installation of LPG Pressure regulator in grid casting LPG header to
control LPG pressure and eliminate heat losses.
10. LPG flow control in reaction pot to eliminate heat losses.
11. Installation of solar water heater for preparing hot water in canteen.
12.Reuse of treated sewerage water in gardening and floor washing.
13. Recycle and reuse of RO reject water in Jar Formation cooling and alloy
blending pig cooling.
II. Particulars as per Form B:
A1. Research & Development (R&D) Specific areas in which R&D is carried out
by the Company:
Research & Development activities are aimed at the continuous advancement
of Technology, the development of new products with a competitive edge for
various applications, viz. Automotive, Motor Cycle, Railway, Motive Power,
UPS, Telecom, Submarine etc.
Advanced Technology Projects would include new range of batteries for
Idling Stop-Start Applications (micro-hybrid vehicles), Deep Cycling VRLA
Batteries for Electric-Bike & Scooter applications, Long Life Solar &
Inverter batteries, Technology improvement to enhance Re-chargeability and
Deep Cycling capabilities, Long Life batteries for Automotive, UPS &
Telecom Applications, etc.
The on-going R&D Projects are focused on the development of new Grid
Alloys, improved Active Material Formulations, new Designs & Tools,
Improved Processes & Separator Materials, etc. Special focus is also being
laid on improving the product consistency.
A2. Benefits derived as a result of the above R&D:
Significant benefits have been derived from the R&D activities. Some of the
notable achievements would include: Development and introduction of Nano
Car battery, new products for Hyundai's i20 car models (both Petrol and
Diesel), long life batteries for Inverter and Solar applications, Long Life
Motor Cycle batteries based on Advanced Calcium Technology, etc.
In addition, there are several OE projects in progress which include
development of batteries for new vehicle models like Toyota, Volkswagen,
Renault-Nissan and General Motors India, Tata Motors, M&M and Nissan, etc.
Furthermore, development projects are in progress for the introduction of
Deep Cycling VRLA batteries for E-bikes and Scooters, Sealed VRLA type
batteries for Motor Cycle range, Gel Tubular range for rural Telecom and
UPS applications, Long Life VRLA batteries for UPS applications, etc.
New manufacturing processes have been introduced, e.g. new Expanded Grid
lines at Shamnagar and Hosur, Double Sided Pasting Machine and modified
Curing Processes for the new Paste Formation, etc. The new Grid Alloy
developed in-house has been utilized for the manufacture of Long Life as
well as Idling Stop-Start type Automotive batteries.
A3. Future Action Plan:
The major R&D focus will be on the development of state-of-the-art
batteries for Idling Stop-Start applications (micro-hybrid vehicles), mild
hybrid and electric vehicles, long life batteries for E-bikes and Scooters,
Gel Tubular batteries for rural Telecom and UPS applications, etc.
The research projects will also aim at building enhanced re-chargeability
and deep cycling capability in new range of batteries for a variety of
applications, long life batteries based on improved materials and
processes, enhancement of battery's shelf life, etc. In addition to the
Advanced Lead-Acid Technology, new Research Projects will be initiated on
the development of high power, long life batteries suitable for a variety
of hybrid and electric vehicles in the medium to long term.
A4. Expenditure on R & D:
The capital and revenue expenditure on R & D were Rs. 1.80 Crores and
Rs.7.58 Crores respectively, aggregating to Rs. 9.38 Crores.
Total R&D Expenditure as percentage of Net Turnover: 0.28%.
B1. Technology Absorption, Adaptation and Innovation:
a) Continuous improvement in the Product Design & Technology. New
innovations in the area of New Alloys & Paste Technology towards the
development of Advanced Lead-Acid batteries for a variety of applications
including Automotive, Motor Cycle, Solar, Inverter and Industrial
Applications.
b) Introduction of E-bike batteries, improvement in Production & Process
Technology with the assistance from Technical Collaborators.
c) Evaluation of new and emerging Technologies for future use.
B2. Benefits:
R&D innovations and new products have helped the Company to maintain its
technological leadership in the country. Similar benefits have been derived
by way of enhanced market penetration by meeting the specific requirements
of International and Domestic OEMs, Replacement Markets, Exports, etc.
B3. Particulars, of Imported Technology in the last 5 years
Technology Year of Has Technology If not fully absorbed,
Imported Import been absorbed reasons and future
action plan
Lead acid storage 1999, Absorbed Not applicable
batteries for valid upto
Automotive 2010
applications with
Shin-Kobe Electric
Machinery Co. Ltd.,
Japan
URLA batteries for 1995, Absorbed* Not applicable
Stationary valid upto
applications with 2010
Shin-Kobe Electric
Machinery Co. Ltd.,
Japan
Lead Acid Storage 1996, Absorbed* Not applicable
Batteries for valid upto
Automotive 2010
applications with
Furukawa Battery
Co. Ltd., Japan
VRLA Lead Acid 2007, Absorbed* Not applicable
Storage batteries valid upto
for motorcycles with 2012
Furukawa Battery
Co. Ltd., Japan
Deep Cycling E-bike 2008, In progress In trial production
batteries for valid upto stage. Will be
Electric Bicycles & 2010 absorbed during the
Scooters with period of the
Changxing Noble agreement.
Power Sourcing Co.
Ltd., China
* Agreement continuing mainly for technical assistance.
III. Foreign Exchange - Earnings and Outgo:
1. Activities relating to exports, initiatives taken to increase exports,
development of new export markets for products and services and export
plans:
Your Company continued with its initiatives for developing the export
market for both Automotive and Industrial batteries. During the year, Dynex
MF brand of automotive batteries with Ca-Ca Alloy was launched in the UAE
and Bahrain. A special battery for Singapore Taxis was developed and orders
for 5000 batteries was received. A distributor was appointed for Automotive
batteries in Uzbekistan and Turkmenistan and the distribution network in
Lebanon and Ghana were reactivated after a considerable period.
In the Industrial battery segment, a whole range of bolt-on traction
batteries were developed as also a new product 6V32Ah (Tubular in
transparent container) for HDB, Singapore. Successful inroads were made in
Germany, Canada and Poland for the first time. Your Company also secured
and executed its biggest single order for solar application in Mali,
Africa.
2. Total Foreign Exchange used and earned:
Used Rs. 727.95 crores
Earned Rs. 121.69 crores
On behalf of the
Board of Directors
Place: Mumbai R G Kapadia
Date: 27th April, 2009 Chairman
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