SURYA ROSHNI LIMITED 1 BOARD OF DIRECTORS B. D. Agarwal Chairman and Managing Director B. B. Chadha G. S. Gupta K. K. Narula M. G. Bakre IDBI Nominee Rajendra Arya Urmil Agarwal J. P. Agarwal Vice-Chairman and Joint Managing Director MANAGEMENT EXECUTIVES Corporate S. N. Bansal Executive Director & CFO Lighting Division Sharad Agarwal Executive Director Chatur Singh Chief General Manager Kashipur Unit B. B. Pradhan Chief General Manager Malanpur Unit Steel Division Shiv Kumar Gaur Vice President (Commercial) COMPANY SECRETARY B. B. Singal STATUTORY AUDITORS Sastry K. Anandam & Company Chartered Accountants COST AUDITORS R. J. Goel & Co. Lighting Division H. R. Singal Steel Division BANKERS State Bank of India Punjab National Bank State Bank of Patiala REGISTERED OFFICE AND WORKS-STEEL DIVISION Prakash Nagar, Sankhol, Bahadurgarh-124507 (Haryana) E-mail : [email protected]WORKS-LIGHTING DIVISION 7 k.m. Stone, Kashipur-Moradabad Road, Kashipur-244713 Distt. Udham Singh Nagar (Uttaranchal) E-mail:[email protected]J - 7, 8 & 9, Malanpur Industrial Area Malanpur, District Bhind (Madhya Pradesh) E-mail : [email protected]CONTENTS PAGE NO. Notice 2 Management Discussion & Analysis 6 Directors' Report 8 Report on Corporate Governance 13 Auditors' Report 18 Balance Sheet 20 Profit & Loss Account 21 Schedules 22 Balance Sheet Abstract 37 Interest in Subsidiary Companies 38 Cash Flow Statement 39 Annual Report of Subsidiary Company: l Surya Roshni Inc., New York 40 Consolidated Accounts 43
Transcript
SURYA ROSHNI LIMITED
1
BOARD OF DIRECTORS
B. D. Agarwal Chairman andManaging Director
B. B. Chadha
G. S. Gupta
K. K. Narula
M. G. Bakre IDBI Nominee
Rajendra Arya
Urmil Agarwal
J. P. Agarwal Vice-Chairman andJoint Managing Director
MANAGEMENT EXECUTIVES
Corporate
S. N. Bansal Executive Director & CFO
Lighting Division
Sharad Agarwal Executive Director
Chatur Singh Chief General ManagerKashipur Unit
B. B. Pradhan Chief General ManagerMalanpur Unit
Steel Division
Shiv Kumar Gaur Vice President (Commercial)
COMPANY SECRETARY
B. B. Singal
STATUTORY AUDITORS
Sastry K. Anandam & CompanyChartered Accountants
COST AUDITORS
R. J. Goel & Co. Lighting Division
H. R. Singal Steel Division
BANKERS
State Bank of IndiaPunjab National BankState Bank of Patiala
Notice is hereby given that the Thirty Third Annual General Meetingof the members of SURYA ROSHNI LIMITED will be held on Thursday,the 28th September, 2006 at 10.30 A.M., at the Registered Office ofthe Company at Prakash Nagar, Sankhol, Bahadurgarh 124 507(Haryana) to transact the following business:
ORDINARY BUSINESS
1. To consider and adopt the Audited Accounts of the Companyand the Reports of Directors and Auditors thereon for the yearended 31st March, 2006.
2. To declare dividend.
3. To appoint a Director in place of Shri K. K. Narula, who retiresby rotation and, being eligible, offers himself forre-appointment.
4. To appoint a Director in place of Shri B. B. Chadha, who retiresby rotation and, being eligible, offers himself forre-appointment.
5. To appoint Auditors and to fix their remuneration.
SPECIAL BUSINESS
6. To consider and, if thought fit, to pass with or withoutmodification(s), the following resolution as an OrdinaryResolution:
"RESOLVED THAT the consent of the Company be and is herebyaccorded in terms of Section 293(1)(a) and other applicableprovisions, if any, of the Companies Act, 1956 to mortgagingand/or charging by the Board of Directors of the Company of allthe immovable and movable properties of the Companywheresoever situated, present and future and the whole of theundertaking of the Company in favour of Industrial DevelopmentBank of India Ltd. (IDBI Ltd.) acting for itself and as agent ofBanks/Financial Institutions to secure:
a) Rupee Term Loan of Rs.2000 lac (Rupees Two thousand laconly) lent and advanced by IDBI Ltd. to the Company.
b) Corporate Loan of Rs.1000 lac (Rupees One thousand laconly) lent and advanced by State Bank of India to theCompany.
c) Corporate Loan of Rs.1000 lac (Rupees One thousand laconly) lent and advanced by State Bank of Patiala to theCompany.
d) Corporate Loan of Rs.1000 lac (Rupees One thousand laconly) lent and advanced by State Bank of India to theCompany.
e) Additional Bill discounting limit of Rs. 200 lacs (RupeesTwo Hundred lacs only) lent and advanced / agreed to beadvanced by Small Industries Development Bank of India(SIDBI) to the Company.
f) The Working Capital Limits of Rs.18150 lac, secured onSecond Charge basis, lent and advanced/agreed to be lentand advanced by State Bank of India, Punjab National Bankand State Bank of Patiala to the Company. The details are asunder;
S. No. Consortium Banks (Rs. In Lac)
1 State Bank of India 9,250
2 Punjab National Bank 7,800
3 State Bank of Patiala 1,100
Total 18,150
together with interest thereon at the respective agreed rates,
damages, commitment charges, premia on prepayment or on
redemption, costs, charges, expenses and other monies payable
by the Company to IDBI Ltd., SIDBI, State Bank of India, State
Bank of Patiala and Punjab National Bank under Loan Agreements
entered into/to be entered into by the Company in respect of the
aforesaid loans.
RESOLVED FURTHER THAT the Board of Directors of the
Company or a Committee of Directors authorised by the Board
in this behalf be and is hereby authorised to finalise all
agreement(s) for creating mortgage and/or charge as aforesaid
and to do all such acts, deeds and matter as may be necessary or
expedient for giving effect to the above resolution."
7. To consider and, if thought fit, to pass with or without
modification(s), the following resolution as an Ordinary
Resolution:
"RESOLVED THAT pursuant to the provisions of Section 198,
269,309, 310 and Schedule XIII and such other applicable
provisions, if any, of the Companies Act, 1956, (the Act) including
any statutory modification or any amendment or any substitution
or reenactment thereof for the time being in force, approval of
the members of the Company be and is hereby accorded to
increase the remuneration paid to Shri Basu Dev Agarwal as the
Managing Director of the Company w.e.f. 01-11-2006 for the
rest of his tenure, as set out in the draft Supplementary Agreement
to be executed between the Company and Shri Basu Dev Agarwal,
which is hereby specifically approved with authority to the Board
of Directors of the Company to alter and /or vary the remuneration
within the limits, if any, prescribed in the Act and/or any schedules
thereto.
RESOLVED FURTHER THAT in the event of loss or inadequacy
of profits in any financial year during the rest of his tenure, the
Company will pay Shri Basu Dev Agarwal remuneration,
perquisites, benefits and amenities not exceeding the ceiling laid
down in Section II of Part II of Schedule XIII of the Companies
Act, 1956, as may be decided by the Board of Directors.
RESOLVED FURHTER THAT the Board of Directors be and are
hereby authorised to do all such acts, deeds and things as may
be considered necessary to give effect to the aforesaid resolution."
8. To consider and, if thought fit, to pass with or without
modification(s), the following resolution as an Ordinary
Resolution:
"RESOLVED THAT pursuant to provisions of Section 198, 269,
309, 317 and Schedule XIII and other applicable provisions, if
any, of the Companies Act, 1956, (the Act) including any statutory
modification or any amendment or any substitution or
reenactment thereof for the time being in force, approval of the
members of the Company be and is hereby accorded to the
reappointment of, including remuneration, perquisites, benefits
and amenities payable to Shri Jai Prakash Agarwal as the Joint
Managing Director of the Company for a period of five years
commencing from 1st January, 2007 to 31st December, 2011, as
set out in the draft Agreement to be executed between the
Company and Shri Jai Prakash Agarwal, the main terms of which
are set out in this notice, which is hereby specifically approved
with authority to the Board of Directors of the Company to alter
and / or vary the terms and conditions of the said re-appointment
within the limits, if any, prescribed in the Act and / or any
schedules thereto.
Notice
SURYA ROSHNI LIMITED
3
RESOLVED FURTHER THAT in the event of loss or inadequacyof profits in any financial year during the aforesaid period, theCompany will pay Shri Jai Prakash Agarwal remuneration,perquisites, benefits and amenities not exceeding the ceiling laiddown in section II of Part II of Schedule XIII of the CompaniesAct, 1956, as may be decided by the Board of Directors.
RESOLVED FURTHER THAT the Board of Directors of theCompany be and are hereby authorised to enhance, enlarge, alteror vary the scope and quantum of remuneration, perquisites,benefits and amenities payable to Shri Jai Prakash Agarwal in thelight of the further progress of the Company which revision shouldbe in conformity with any amendments to the relevant provisionsof the Act and / or the rules and regulations made thereunderand / or such guidelines as may announced by the CentralGovernment from time to time."
By Order of the BoardRegistered Office :Prakash Nagar, Sankhol,Bahadurgarh - 124 507 (Haryana) B. B. SINGALDated : 24th May, 2006 COMPANY SECRETARY
NOTES
1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THISANNUAL GENERAL MEETING MAY APPOINT A PROXY TOATTEND AND VOTE ON A POLL ON HIS BEHALF. A PROXYNEED NOT BE A MEMBER OF THE COMPANY.
Proxies, in order to be effective, must be received at 408, PadmaTower-I, Rajendra Place, New Delhi - 110 008 or RegisteredOffice, not less than forty-eight hours before the commencementof this Annual General Meeting i.e. before 10.30 a.m. on 26thSeptember, 2006.
2. Explanatory statement pursuant to Section 173(2) of the CompaniesAct, 1956, in respect of item no.s 6, 7 and 8 is annexed hereto.
3. The Register of Members and Share Transfer books of the Companywill remain closed from 13.09.2006 to 18.09.2006 (both daysinclusive).
4. Members are requested to forward their change of addressnotifications, Bank Account details including 9 digit MICR numberappearing on the cheque pertaining to the respective bank accountto facilitate distribution of dividend through Electronic ClearingService (ECS) to the Company / Registrar and Transfer Agent - MasServices Pvt. Ltd., AB-4, Safdarjung Enclave, New Delhi - 110029, in respect of Shares held in physical form and to theirrespective Depository Participants if the shares are held inelectronic form.
5. Pursuant to Section 205A of the Companies Act, 1956, dividend,which remains unpaid or unclaimed for a period of seven yearswill be transferred to the Investor Education & Protection Fund ofthe Central Government.
Members who have not encashed their dividend warrant so farfor the financial year ended 31st March, 1999, or any subsequentfinancial year(s) are requested to address their claim to TheCompany Secretary, Surya Roshni Limited, 408, Padma Tower-I,5, Rajendra Place, New Delhi - 110 008.
6. Information provided as per Clause 49 IV (G) (i) of the ListingAgreement.
The following are the details of the directors seeking reappointmentor recommended to be appointed as a Director :
Notice
Shri K. K. Narula, aged about 67 years, has been the director ofthe Company since March, 2000. He is the Chairman of theCompany's Audit Committee and member of the RemunerationCommittee. He does not hold directorship in any other company.Shri Narula is a M. Com. from the University of Delhi and also aCertified Associate of Indian Institute of Bankers (CAIIB). He hasa vast experience of over 43 years in the field of Banking andFinance. He retired as Chief General Manager from SBI Chandigarh(LHO) and is currently working as Banking and ManagementConsultant. Further he is not holding any shares of the Company.
Shri B. B. Chadha, aged about 68 years, has been a director of theCompany since October, 2003. He is director in Jay Yushin Ltd.and Delton Cables Ltd. He is a Chairman in Audit Committeeand member in Remuneration Committees of Jay Yushin Ltd. ShriChadha is a Fellow member of Institute of Cost and WorksAccountants (ICWA) of India and member of Institute of InternalAuditors, Florida, USA. He has a vast experience of over 47 yearsin the field of Finance and other functional areas. He was heldthe position of Chairman and Managing Director in IndianTelephone Industries Limited for three years and at senior positionin SAIL for over thirty years. Further he is not holding any sharesof the Company.
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OFTHE COMPANIES ACT, 1956
ITEM NO. 6
The Company has been sanctioned the term / corporate loans fromIDBI Ltd., State Bank of India and State Bank of Patiala, Bill discountinglimit from SIDBI and working capital limits from consortium Banksi.e. State Bank of India, Punjab National Bank and State Bank of Patialafor its Steel and Lighting Divisions. The details are as under:
a) Rupee Term Loan of Rs.2000 lac (Rupees Two thousand lac only)lent and advanced by IDBI Ltd. to the Company.
b) Corporate Loan of Rs.1000 lac (Rupees One thousand lac only)lent and advanced by State Bank of India to the Company.
c) Corporate Loan of Rs.1000 lac (Rupees One thousand lac only)lent and advanced by State Bank of Patiala to the Company.
d) Corporate Loan of Rs.1000 lac (Rupees One thousand lac only)lent and advanced by State Bank of India to the Company.
e) Additional Bill discounting limit of Rs. 200 lacs (Rupees TwoHundred lacs only) lent and advanced / agreed to be advancedby Small Industries Development Bank of India (SIDBI) to theCompany.
f) The Working Capital Limits of Rs.18150 lac, secured on SecondCharge basis, lent and advanced/agreed to be lent and advancedby State Bank of India, Punjab National Bank and State Bank ofPatiala to the Company.
S. No. Consortium Banks (Rs. In Lac)
1 State Bank of India 9,250
2 Punjab National Bank 7,800
3 State Bank of Patiala 1,100
Total 18,150
the financial assistance together with interest thereon at the
interest, liquidated damages, commitment charges, premia on
prepayment or on redemption, costs, charges, expenses and other
monies payable by the Company to IDBI Ltd., SIDBI, State Bank
of India, State Bank of Patiala and Punjab National Bank under
SURYA ROSHNI LIMITED
4Notice
Loan Agreements entered into/to be entered into by the Company
in respect of the aforesaid loans have to be secured by a joint
mortgage of all the immovable and movable properties of the
Company, present and future.
Section 293(1)(a) of the Companies Act, 1956, provides inter alia
that the Board of Directors of a Public Company shall not, without
the consent of such Public Company in General Meeting, sell,
lease or otherwise dispose of the whole or substantially the whole
of the undertaking of the Company, or where the Company owns
more than one undertaking, of the whole or substantially the whole
of any such undertaking. Since the mortgage by the Company of
its immovable and movable properties as aforesaid in favour of
the Lenders may be regarded as disposal of the Company's
properties/undertakings, it is necessary for the members to pass a
resolution under Section 293(1)(a) of the Companies Act, 1956,
before creation of the said mortgage/charge.
Copy of the Loan Agreement(s) executed between the Company
and Lenders and copies of the relevant documents/ correspondence
between the said Lenders and the Company are open for inspection
at the Registered Office of the Company between 11.00 A.M. to
1.00 P.M. on any working day prior to the date of the meeting.
None of the Directors of the Company is in any way, concerned
or interested in the resolution.
ITEM NO. 7
The Shareholders of the Company at the Extra-Ordinary General
Meeting held on 12-12-2003 had appointed Shri Basu Dev Agarwal
as a Managing Director for a period of five years from 01-11-2003 to
31-10-2008. Considering the inflationary trend and increased in
business activities of the Company which resulted in increase in work
and responsibility of the Managing Director and also the amount of
remuneration payable in the similar Industries, the Board of Directors
deemed fit to revise the remuneration payable to Shri Basu Dev
Agarwal, Managing Director w.e.f. 01-11-2006 for the rest of his tenure
by executing a Supplementary Agreement for modification of
remuneration and the rest clauses of the Principal Agreement dated
21-10-2003 will remain same and effective.
The Board of Directors in their meeting held on 24-05-2006 approved
the revised remuneration of Shri Basu Dev Agarwal, as Managing
Director w.e.f. 01-11-2006 for the rest of his tenure as follows :
SALARY : Salary of Rs.275000/- per month in the Grade of 275000-
30000-305000.
COMMISSION : 1% Commission of the net profit of the company
computed in the manner laid down in section 309(5) of the
Companies Act, 1956 subject to a maximum of 50% of the annual
salary.
PERQUISITES : Perquisites will be allowed in addition to salary
and commission restricted to an amount equal to the Annual Salary.
For this purpose unless the context otherwise requires, perquisites
are classified into three categories: Parts A, B and C and the ceiling
shall apply only to Part-A.
PART-A
HOUSING :
I. The expenditure by the Company on hiring unfurnished
accommodation for the Managing director shall be subject to
the following ceilings:
60% of the Salary, over and above 10% payable by the Managing
Director himself.
II. In case the accommodation provided to the Managing Directoris owned by the Company, the Company shall deduct 10% ofthe salary of the Managing Director.
III. In case no accommodation is provided by the Company to theManaging Director, House Rent Allowance shall be paid by theCompany to him subject to the ceiling laid down in Housing I,herein above.
IV. The Expenditure incurred by the Company on gas, electricity,water and furnishings shall be valued as per the Income TaxRule, 1962. This shall, however, be subject to a ceiling of 10%of the salary of the Managing Director.
2. Medical Reimbursement : Expenses incurred for self and familysubject to a ceiling of one month's salary per year or threemonth's salary in a period of three years.
3. Leave Travel Concession : For self and family once in a yearincurred with the rules specified by the Company.
4. Club Fees : Fees of clubs subject to a maximum of two clubs.Admission and life membership fees shall not be allowed.
5. Personal Accident Insurance : Premium not to exceed Rs. 4000/-per annum.
PART-B
Contribution to provident fund, Superannuation fund or annuityfund will not be included in the computation of the ceiling onperquisites to the extent these either singly or put together are nottaxable under the Income Tax Act. Gratuity payable shall notexceed a half month's salary for each completed year of service.
PART-C
The Company shall provide a car with driver and telephone facility atthe residence of the Managing Director. Provision of car with driverfor use of Company's business and telephone facility at the residencewill not be considered as perquisites. Personal long distance calls ontelephone and use of car for private purpose shall be billed by theCompany on the Managing Director.
The aforesaid remuneration shall be subject to the limit of 5% of thenet profits as laid down under sub-section (3) of section 309 of theCompanies Act, 1956.
If the Company has no profits or the profits are inadequate in anyfinancial year during the terms of his office as the Managing Director,Sh. Basu Dev Agarwal will be entitled to receive the aboveremuneration and perquisites as minimum remuneration, providedthat the total remuneration, of salary, perquisites and any otherallowances shall not exceed the ceiling as provided in section II ofthe Part II of Schedule XIII of the Companies Act, 1956 or such otheramount and perquisites as/is may be provided in the said scheduleXIII as may be amended from time to time or any equivalent statutoryre-enactment(s) thereof.
Apart from the aforesaid remuneration, Shri Basu Dev Agarwal willbe entitled to reimbursement of expenses incurred in connection withthe business of the Company.
No sitting fees will be paid to him for attending the meetings of theBoard of Directors of the Company or Committees thereof.
Copy of the Supplementary Agreement / Draft supplementaryAgreement executed / to be executed between the Company andShri Basu Dev Agarwal are open for inspection at the Registered Officeof the Company between 11.00 a.m. to 1.00 p.m. on any workingday prior to the date of the meeting.
Shri Jai Prakash Agwarwal, Joint Managing Director and Smt. UrmilAgarwal, Director of the Company, are the relatives of Shri Basu DevAgarwal and to the extent they are interested in the resolution.
SURYA ROSHNI LIMITED
5 Notice
ITEM NO. 8
The Shareholders of the Company at the Annual General Meetingheld on 28-09-2001 had re-appointed Shri Jai Prakash Agarwal as aJoint Managing Director for a period of five years from 01-01-2002 to31-12-2006. The Shareholders are aware that since Shri Jai PrakashAgarwal assumed the office of Joint Managing Director of theCompany, the Company has made all-round progress. The Companyrather owes its present stature and position to his guidance andforesight. His unshakable determination along with a vast experiencehas helped the Company scale new heights year after the other. Underthe management control and guidance of Shri Jai Prakash Agarwal,Joint Managing Director, the Company has consistently maintainedits sales and profitability.
The Board of Directors of the Company, in their meeting held on24th May, 2006 approved the re-appointment of Shri Jai PrakashAgarwal, as Joint Managing Director for a period of five years w.e.f.1st January, 2007 on the following remuneration and terms andconditions, subject to the approval of the Members, and otherconcerned authority, if necessary.
SALARY : Salary of Rs.250000/- per month in the Grade of 250000-30000-370000.
COMMISSION : 1% Commission of the net profit of the companycomputed in the manner laid down in section 309(5) of theCompanies Act, 1956 subject to a maximum of 50% of the annualsalary.
PERQUISITES : Perquisites will be allowed in addition to salary andcommission restricted to an amount equal to the Annual Salary .For this purpose unless the context otherwise requires, perquisitesare classified into three categories: Parts A, B and C and the ceilingshall apply only to Part-A.
PART-A
HOUSING :
I. The expenditure by the Company on hiring unfurnishedAccommodation for the Joint Managing director shall be subjectto the following ceilings:
60% of the Salary, over and above 10% payable by the JointManaging Director himself.
II. In case the accommodation provided to the Joint ManagingDirector is owned by the Company, the Company shall deduct10% of the salary of the Joint Managing Director.
III. In case no accommodation is provided by the Company to theJoint Managing Director, House Rent Allowance shall be paidby the Company to him subject to the ceiling laid down inHousing I, herein above.
IV. The Expenditure incurred by the Company on gas, electricity,water and furnishings shall be valued as per the Income TaxRule, 1962. This shall, however, be subject to a ceiling of 10%of the salary of the Joint Managing Director.
2. Medical Reimbursement : Expenses incurred for self and familysubject to a ceiling of one month's salary per year or threemonth's salary in a period of three years.
3. Leave Travel Concession : For self and family once in a yearincurred with the rules specified by the Company.
4. Club Fees : Fees of clubs subject to a maximum of two clubs.Admission and life membership fees shall not be allowed.
5. Personal Accident Insurance : Premium not to exceed Rs.4000/-per annum.
PART-B
Contribution to provident fund, Superannuation fund or annuity fundwill not be included in the computation of the ceiling on perquisitesto the extent these either singly or put together are not taxable underthe Income Tax Act. Gratuity payable shall not exceed a half-month'ssalary for each completed year of service.
PART-C
The Company shall provide a car with driver and telephone facility atthe residence of the Joint Managing Director. Provision of car withdriver for use of Company's business and telephone facility at theresidence will not be considered as perquisites. Personal long distancecalls on telephone and use of car for private purpose shall be billedby the Company on the Joint Managing Director.
The aforesaid remuneration shall be subject to the limit of 5% of thenet profits as laid down under sub-section (3) of section 309 of theCompanies Act, 1956.
If the Company has no profits or the profits are inadequate in anyfinancial year during the terms of his office as the Joint ManagingDirector, Shri Jai Prakash Agarwal will be entitled to receive the aboveremuneration and perquisites as minimum remuneration, providedthat the total remuneration, of salary, perquisites and any otherallowances shall not exceed the ceiling as provided in section II ofthe Part II of Schedule XIII of the Companies Act, 1956 or suchother amount and perquisites as/is may be provided in the saidschedule XIII as may be amended from time to time or any equivalentstatutory re-enactment(s) thereof.
Copy of the Agreement / Draft Agreement executed / to be executedbetween the Company and Shri Jai Prakash Agarwal are open forinspection at the Registered office of the Company between 11.00 a.m.to 1.00 p.m. on any working day prior to the date of the meeting.
Shri B. D. Agarwal, Managing Director and Smt. Urmil Agarwal,Director are the relatives of Shri Jai Prakash Agarwal and to the extentthey are interested in the above said appointment.
By Order of the Board
Registered Office :Prakash Nagar, Sankhol,Bahadurgarh - 124 507 (Haryana) B. B. SINGALDated : 24th May, 2006 COMPANY SECRETARY
SURYA ROSHNI LIMITED
6
MANAGEMENT DISCUSSION AND ANALYSIS
PROFILE
Surya Roshni Limited began its journey in the Steel Tubes Industry. Itthen diversified into manufacture of Lighting products in 1984. The1990s saw the company implement major expansion and backwardintegration programs. This resulted not only in the timely availabilityof good quality raw material but also proved to be immensely costeffective. Today, the Company is the leader in Steel Tubes / Pipesmarket and the second largest Lighting Company in India.
Quality has always been the driving force at Surya. Your companysucceeded in bench-marking quality and innovation standards byachieving the ISO 9002 in the year 1999. The company was awardedISO-14001 and OHSAS-18001 certifications related to Environmentand Safety respectively. The company continues to be committedtowards making quality products, ensuring human as well asenvironment safety and bringing value addition to the investments ofthe shareholders. Surya, standing poised towards achieving newheights, is on it's way to becoming one of the leading brands globally.
INDUSTRY STRUCTURE AND DEVELOPMENT
Despite competition from other established market players andunorganized sectors, Lighting Division is witnessing steady growth inturnover and profit. The following may impact the market in the comingyears :
• Small Scale Industry in GLS and FTL• The increasing cost of electricity resulting into opting for use of
energy saving lamps.• Shift from traditional to innovative lamps and systems
The management is keeping constant watch on these points toovercome from them.
The Steel Tubes industry too witnessed growth during the year underreview and the market growing steadily due to the boom ininfrastructure sector. The future is likely to see only those companiessuccessful, which have their products priced competitively and tosell their products in the international market. All possible efforts arebeing made by your company to reduce costs without compromisingon the quality of the product and increase the export.
SWOT ANALYSIS
Strengths :
• Well focused vision of the Management• Complete backward integration• High quality of products• Nation-wide marketing network
Weaknesses :
• Diminishing margin of profit on the products• Uncertainties of external market forces
Opportunities :
• Potential increase in demand of energy efficient products• Untapped potential in outsourcing and marketing of Luminaries• Increase in demand of regular lighting products with a general
improvement in the power condition in urban as well as ruralsectors and increase in spending on infrastructure development
Threats :
• Tough competition from multi-national companies• Unbranded products from the unorganised sector
SEGMENT-WISE PERFORMANCE :
The company is broadly divided into two main segments viz. Steeland Lighting.
A detailed note on the segment-wise performance is given under the
Notes on Accounts, forming a part of annual accounts of the company.
OUTLOOK :
The Government is giving continuous thrust on housing and
infrastructure sector where Steel Tubes and Lighting products are used.
The existing refineries are expanding their capacities and new refineries
are coming into the scene. In future also there seems to be a
tremendous scope for export in Cold Rolling as well as ERW Pipes
particularly to USA and other European Countries. The government
spending on infrastructure development is also expected to increase
the demand of pipes every year. With the easy availability of finance
and tax incentives, it is expected that housing sector will get a major
boost. In view of the same, the long term outlook of the Company
remains positive.
RISKS AND CONCERNS :
Technology obsolescence is an inherent business risk in a fast changing
world and speed of change and adaptability is crucial for survival of
business. Government energy policy and development of new
superior products may render some of its existing production facilities
obsolescent. At SURYA, the continuing modernization, aggressive cost
cutting and adaptability of new technology are always main strengths
and enabled the company to do away with obsolescent plants/
processes and to emerge as one of the most modern plants in the
lighting industry throughout the world. Its strength enable the Company
to face future risk and convert them into opportunities.
Further aggressive cost cutting, addition to the product mix to
incorporate more value-added products and with the present strengths
of the company, the management feels that it can now compete
effectively both in terms of quality and price with similar products
imported from various countries. With the assistance of world-
renowned consultants, the company has made good progress towards
its objective of becoming the world leader in lighting products. Intense
competition in the Lighting industry, the company is adding a new
product range. Moreover, stress is being laid on boosting exports as
well as institutional demands. At the same time, labour, time and
money is also being geared towards making the various plant premises
more and more eco friendly.
The Steel Tubes industry has also been witnessing a fast changing
environment. The quality parameters of pipes used in the oil sector
are becoming more stringent each day. Moreover, any failure of pipes
after the supply to customers in the oil and gas sector attracts heavy
penalties. The company is taking utmost care to ensure very high
quality of products. During the year under review, the company took
major steps towards upgaradation of technology in order to ensure
compliance of the quality norms.
Further a shift in the policy of the Government of India regarding:
a) Import duty on Steel, Zinc etc.,
b) DEPB on HR Coil, Steel Pipe, CR Strips, FTL and GLS,
c) Incremental benefit scheme for Status Holders,
could adversely affect business of the Company.
INTERNAL CONTROL SYSTEM :
Your Company remains committed to maintaining internal controls
designed to provide adequate assurance on the efficiency of operations
and security of its assets. The accounting records are adequate for
preparation of financial statements and other financial information.
The adequacy and effectiveness of internal controls across the various
business, as well as compliance with laid down systems and policies
are regularly monitored by your Company's internal audit process
Management Disscussion
SURYA ROSHNI LIMITED
7 Management Disscussion
both at divisional and corporate level. The major IT enabled business
applications are periodically validated for their integrity, control and
quality of functionality by the trained internal audit team. The Audit
Committee of Board, which met five times during the year, reviews
internal control systems as well as financial disclosures.
FINANCIAL AND OPERATIONAL PERFORMANCE :
The Company was able to maintain itself as a leader in the Steel Tubesindustry and as a strong contender in the Lighting industry. Givenbelow are the financials of the company for the current as well as theprevious year :
(Rs. in crores)
Particulars 2005-2006 2004-2005
Profit for the year 56.18 41.83
Less : Depreciation 27.47 24.49
Profit before tax 28.71 17.34
Provision for tax 10.02 4.85
Net Profit after tax 18.69 12.49
Balance brought forward from theprevious year 67.90 58.00
Profit available for appropriations 86.59 70.49
Proposed Equity Dividend 3.90 3.05
Tax on Distributed Profits 0.55 0.44
Transferred to General Reserve 1.00 1.00
Deferred Tax revision (0.23) (1.90)
Balance carried to Balance Sheet 81.37 67.90
During the year the turnover of the Company increased to Rs.1218.57crores from Rs.1179.18 crores last year, registering an increase of3.34%. However the gross profit increased to Rs.56.18 crores fromRs.41.83 crores last year, a rise of 34.30%.
During the year the Company has intimated to the Central ExciseDepartment for claiming the exemption in Excise Duty for a period often years from 2nd January, 2006 under Notification No. 50/2003-CEdated 10th June, 2003 regarding incentives to Units located inUttaranchal on undertaking substantial expansion by way of increasein installed capacity by more than 25% in respect of all the final andintermediate products manufactured and cleared from Kashipur Unitas well as captive consumption, which improves the profitability ofthe Company.
The Company has taken steps to install the Compact Fluorescent Lamp(CFL) plant, which is a value added product and will enhance theprofitability of the Company.
The Steel Division of the Company is in the process of replacing Diesel-Generating sets to Gas-Generating sets for reduction of energy cost.
During the year under review, the revenue distribution of variousproducts of the two divisions was as under:
INDUSTRIAL RELATIONS AND HUMAN RESOURCEMANAGEMENT :
Industrial relations during the year under review were cordial andpeaceful. The management wishes to place on record, the excellentcooperation and contribution made by the employees, collectivelycalled "SURYA PARIVAR", at all levels of the organisation to thecontinued growth of the company. There was constant focus on allround organizational development. Various training programsincluding visionary exercises were conducted for personal as well asprofessional development of the employees. Further various otheractivities like annual sports, festival celebrations take place every yearto get in touch with them and their families.
Relationship has been very cordial with the worker's union for thepast several years. During the month of December 2004 themanagement executed wage agreement with the union, which shallbe applicable till 31st December, 2007.
The Company's industrial relations continued to be harmonious duringthe year under review. The number of persons directly employed bythe Company was 3511 as on 31st March, 2006.
CAUTIONARY STATEMENT :
Statements in this report on Management's Discussion and Analysisdescribing the company's objectives, projections, estimates,expectations or predictions may be "forward looking statements" withinthe meaning of applicable laws and regulations. These statements arebased on certain assumptions and expectations of future events. Actualresults could differ materially from those expressed or implied.Important factors that could make a difference to the Company'soperations include economic conditions affecting global and domesticdemand-supply, finished goods prices in the domestic and overseasmarkets in which the Company operates, raw-materials cost andavailability, changes in Government regulations, tax regimes,economic developments and other factors such as litigation andindustrial relations. The Company assumes no responsibility to publiclyamend, modify or revise any forward looking statements, on the basisof any subsequent developments, information or events.
SURYA ROSHNI LIMITED
8
DIRECTORS' REPORTDear Shareholders,
Your Directors have pleasure in presenting the Thirty Third AnnualReport on the operations of your Company, together with auditedaccounts for the year ended 31st March, 2006.
1. FINANCIAL RESULTS(Rs. in crores)
Particulars 2005-2006 2004-2005
Profit for the year 56.18 41.83
Less : Depreciation 27.47 24.49
Profit before tax 28.71 17.34
Provision for tax 10.02 4.85
Net Profit after tax 18.69 12.49
Balance brought forward from theprevious year 67.90 58.00
Profit available for appropriations 86.59 70.49
Proposed Equity Dividend 3.90 3.05
Tax on Distributed Profits 0.55 0.44
Transferred to General Reserve 1.00 1.00
Deferred Tax revision (0.23) (1.90)
Balance carried to Balance Sheet 81.37 67.90
2. DIVIDEND
Your Directors are pleased to recommend the payment of dividend@ Rs.1.50 per share on the paid up equity share capital of Rs.26.00crores. The dividend on Equity Shares, if approved at the AnnualGeneral Meeting, will be payable to those shareholders whosenames appear on the company's register of members on 18thSeptember, 2006. In respect of shares held in dematerialised form,the dividend shall be payable on the basis of beneficial ownershipas at the end of 12th September, 2006, as per the details furnishedby National Securities Depository Ltd./ Central Depository Services(India) Ltd. for the purpose, as on that date.
3. PREFERENTIAL ISSUE
The Company has issued 44,00,000 optionally convertible warrantsconvertible into 44,00,000 equity shares on or before July 15, 2007on preferential basis to promoters and their associates of Rs.10/-each at premium of Rs.54/- per warrant on 16th January, 2006after the shareholders' approval in the Extra Ordinary GeneralMeeting held on 2nd January, 2006. During the year the warrantholders have exercised the option for conversion of 6,00,000warrants into equity shares and accordingly the paid-up capital ofthe Company increased from Rs.25,40,12,500/- toRs.26,00,12,500/-. Remaining 38,00,000 optionally convertiblewarrants are outstanding for conversion into equity shares and afterconversion the paid-up capital will be enhanced accordingly.
4. PERFORMANCE DURING THE YEAR UNDER REVIEW
During the year under review, the turnover of your Company increasedto Rs.1218.57 crores from Rs.1179.18 crores last year, registering anincrease of 3.34%. However the gross profit increased to Rs.56.18crores from Rs.41.83 crores last year, a rise of 34.30%. The exportturnover during the year under review is Rs.99.27 crores as againstRs. 143.05 crores in previous year. The performance of the variousdivisions and the subsidiaries of your Company is given below:
STEEL DIVISION
During the year under review, the turnover of the division isRs.829.21 crores as compared to Rs.844.99 crores in the last financialyear. The export turnover of the division is Rs.70.44 crores incomparison to Rs.115.18 crores in the last financial year. The divisionhas, however been able to maintain it's leadership in the Steel Tubes'market. The product is now well established in some countries withorders flowing on a regular basis.
LIGHTING DIVISION
Despite competition from other established market players andunorganised sectors, the Division has witnessed a steady growthin turnover and profit. During year under review, the turnover ofthe division increased to Rs.389.36 crores as compared toRs.334.18 crores last year, an increase of 16.51%. The exportturnover during the year under review increased to Rs.28.83 croresas against Rs.27.87 crores in previous year registering an increaseof 3.44%. Strategies are being continuously developed to givegreater thrust to the exports.
During the year the Company has intimated to the Central ExciseDepartment for claiming the exemption in Excise Duty for a periodof ten years from 2nd January, 2006 under Notification No. 50/2003-CE dated 10th June, 2003 regarding incentives to Unitslocated in Uttaranchal on undertaking substantial expansion byway of increase in installed capacity by more than 25% in respectof all the final and intermediate products manufactured and clearedfrom Kashipur Unit as well as captive consumption.
SUBSIDIARIES
Surya Roshni Inc., the only wholly owned subsidiary of the companyin USA. The sales during the year are US$ 18,774 as compared toUS$ 701,390 in the previous year. There was a net loss of US$167,822 as compared to previous year's loss of US$ 431,222. Effortsare being made to improve the performance.
5. FUTURE PROSPECTS
STEEL DIVISION
In view of thrust of the Government of India on water andinfrastructure sectors, there is tremendous scope for growth in theSteel Pipe and Cold Rolled Industry. More demand is expectedfrom various Oil and Gas companies for LDP pipes of APIstandards. In the Cold Rolling segment also demand is expectedto increase due to higher growth in the automobile sectors.
LIGHTING DIVISION
There is an increase in demand of regular lighting products with ageneral improvement in the power condition in urban as well asrural sectors and increase in spending on infrastructuredevelopment in the coming years. Well defined strategies are beingimplemented in order to cater the gradual increase in demand oflighting products and enhance the product share in market and toboost the demand for your Company's products. The Companyhas taken steps to install the Compact Fluorescent Lamp (CFL)plant, which is a value added product and will enhance theprofitability of the Company. As a result of the sincere initiativesbeing taken at all levels, the turnover and profitability of yourcompany during the current year are likely to reflect a considerablegrowth as compared to those of the year under review.
6. FIXED DEPOSITS :
The Public response towards the Company's fixed deposit schemecontinued to be encouraging during the year under review. At theclose of the year, 133 deposit holders, whose deposits, aggregatingto Rs.49.89 lacs, had become due for payment, did not claim orrenew their deposits. Since then, deposits aggregating to Rs.24.66lacs have either been claimed or renewed. The principal amountand interest were duly paid for all other deposits, which maturedduring the year.
7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO :
Details of energy conservation and research and developmentactivities undertaken by the Company alongwith information inaccordance with provision of Section 217(1)(e) of the CompaniesAct, 1956, read with the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988, are given asAnnexure 'A' to the Directors' Report.
Directors' Report
SURYA ROSHNI LIMITED
9 Directors' Report
8. PARTICULARS OF EMPLOYEES AND DISCLOSURE OFINFORMATION
Particulars of employees, as required under Section 217(2A) ofthe Companies Act, 1956, read with Companies (Particulars ofEmployees) Rules, 1975, as amended and information as perCompanies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988, are given as Annexure 'B' to the Directors'Report.
9. DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms :
i. that in the preparation of the annual accounts, the applicableaccounting standards have been followed along with properexplanation relating to material departures;
ii. that the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company forthat period;
iii. that the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and otherirregularities;
iv. that the Directors had prepared the annual accounts on a goingconcern basis.
10. DIRECTORS
As per Article 101 of the Articles of Association of the Company,
Shri K. K. Narula and Shri B. B. Chadha, retire by rotation and,being eligible, offer themselves for reappointment.
11. AUDITORS
The Auditors, Messers. Sastry K. Anandam & Company, CharteredAccountants, retire at the forthcoming Annual General Meetingand, being eligible, offer themselves for reappointment. Theobservations of the Auditors have been suitably dealt with in thenotes on accounts.
12. COMPLIANCE CERTIFICATE
As per Revised Clause 49 of the Listing Agreement with the StockExchanges, the compliance certificate from Chairman andManaging Director and CFO is given as Annexure 'C' to theDirectors' Report.
13. ACKNOWLEDGEMENT
Your Directors wish to place on record, their appreciation for thecontinued support from All India Financial Institutions, Bankers,Government Authorities, Business Constituents and Investing Public.
Your Directors also wish to place on record once again, theirappreciation for the contribution made by the workers, staff andexecutives at all levels, to the continued growth and prosperity ofthe Company. The overall industrial relations remained cordial atall the establishments.
for and on behalf ofthe Board of Directors
B. D. AGARWALPlace : New Delhi CHAIRMAN AND
Dated : 24th May, 2006 MANAGING DIRECTOR
ANNEXURE 'A' TO DIRECTORS' REPORTInformation as per Section 217(1)(e) read with Companies(Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and formingpart of the Directors' Report for the year ended 31st March, 2006.
I. CONSERVATION OF ENERGY
a) Energy conservation measures taken :
At Steel Division, Bahadurgarh :
– One diesel Generator Set has been successfully converted into Duel Fuel (Gas and Diesel).
– Additional capacitor banks installed to improve power factor to reduce time losses.
– Transparent sheets have been installed in the sheds to improve natural light.
– Automatic Star Delta controller has been installed in the Annealing Furnace by which the electric motor will function as per requirementof annealing cycle / temperature required.
– Power adjustment as per load requirement and replacement of various electrical equipments to prevent energy losses.
– Replacement of various cables and reduction in the distance between supply point and consumption point to control energy loss duringtransmission.
At Malanpur Unit of Lighting Division :
– Replacing existing air compressor by screw compressor in Component Division.
– Replacing 7.5 KW blower by 4.6 KW blower in 14" danner and by putting blower in 14" process line.
– By doing modification in exhaust oven in FTL-III.
– By putting off two glazing burner on 20" danner.
– Controlling oil pump of press machines by timer in Cap Division.
– Replacing transistor based UPS with IGBT based system.
– Energy saving in services after making improvement in doing insulation or patching work in furnance (compressed air was controlled).
At Kashipur Unit of Lighting Division :
– Cellulose fills type system installed in HID/TLD & NTL side air cooling plant in place of conventional air washer to increase the efficiencyand replacement of existing 7.5 H.P. (2 no.s) water pumps by 1.0 H.P. water pumps for energy conservation.
– A.C. drive installed on Twin lobe air compressor for TL 5th chain and reduced the frequency from 50Hz to 35 Hz and maintain linepressure in limit 11 to 12 psi as per the plant requirement.
– A.C. drive installed in HID side air cooling plant blower and reduced the frequency from 50Hz to 45 Hz.
– Water line installed on ETP plant for gardening.
– Provide energy management system software in LT room for on-line energy monitoring.
– Transformer loss reduced analyzing by software.
– Introduced power capacitor to improve the P.F. and for reduced unit consumption.
– Installed 42 no.s small Thyrister in place of 7 no.s big Thyrister at F.P.P. furnance for longer life of electrode and better working.
SURYA ROSHNI LIMITED
10Directors' Report
b) Additional investment and proposals being implemented for reduction of consumption of energy :
At Steel Division, Bahadurgarh :
Order has been placed for purchase of Gas based Power Generation Set of 3 MW.
c) Impact of the measures at a) above for reduction of energy consumption and consequent impact on the cost of production of goods :
The above measures resulted in substantial saving in the consumption of energy and consequent saving in the cost of production of goods.
d) Total energy consumption and energy consumption per unit of production as per Form-A of the Annexure to the Rules in respect ofIndustries in the Schedule thereto :
Steel Division Lighting Division
2005-2006 2004-2005 2005-2006 2004-2005A) Power & Fuel Consumption
1. Electricitya) Purchased
Units (in thousands) 12349.64 14570.55 22424.27 21631.62Total Amount (Rs. in lacs) 492.75 576.64 751.72 778.85Rate / Unit (Rs.) 3.99 3.96 3.35 3.60
b) Own GenerationThrough Diesel GeneratorUnits (in thousands) 2804.35 4093.52 5083.93 6128.33Unit per Ltr. Of HSD 3.08 3.28 3.45 3.81Cost / Unit (Rs.) 9.41 6.97 7.38 5.73
c) Own Generation byNatural Gas Generator SetUnits (in thousands) 8479.53 4038.09 Not used Not usedUnit per SCM 2.67 2.52 Not used Not usedCost / Unit (Rs.) 2.69 3.23 Not used Not used
3. Natural Gas used in GI Pipe & CR MillQty. SCM3 (in thousands) 4017.14 4261.12 Not used Not usedTotal amount (Rs. in lacs) 288.95 310.14 Not used Not usedRate / SCM (Rs.) 7.19 7.28 Not used Not used
4. L.P.G.Qty. (Tonnes) Not used Not used 2165.31 2047.69Total amount (Rs. in lacs) Not used Not used 653.57 478.01Rate / KG (Rs.) Not used Not used 30.18 23.34
5. Diesel (LDO Used in C.R. Mill)Qty. (K.Ltrs.) 11.89 20.00 707.01 641.81Total amount (Rs. in lacs) 2.21 3.42 178.07 143.44Rate / Ltr. (Rs.) 18.60 17.11 25.19 22.35
6. PropaneQty. (Tonnes) Not used Not used 2416.86 2151.30Total amount (Rs. in lacs) Not used Not used 785.03 490.68Rate / KG (Rs.) Not used Not used 32.48 22.81
Electricity Units 111.88 107.53 134.51 166.39 Furnace Oil/HSD/LDO/RFO Ltrs. 2.64 5.04 181.75 190.82 HSD/LDO (In CR Mill) Ltrs. 0.22 0.36 Not used Not used Propane / LPG Kg. Not used Not used 57.49 56.84 Natural Gas Consumption (In GI Mill) SCM 26.69 27.05 Not used Not used Natural Gas Consumption (In CR Mill) SCM 31.84 34.14 Not used Not used
SURYA ROSHNI LIMITED
11 Directors' Report
II. TECHNOLOGY ABSORPTION
Efforts made in technology absorption as per Form-B of the Annexure to the Rules :
1. Research and Development (R&D)
a) Specific areas in which R&D carried out by the company :
During the year under review, no R&D carried out.
b) Benefits derived as a result of above R&D : Not Applicable
c) Future Plan of action :
If required, Research and Development activities shall be carried out in future to achieve greater efficiency in production techniques.
d) Expenditure on R&D : No capital as well as recurring expenditure made on R&D.
a) Efforts, in brief, made towards technology absorption, adaptation & innovation :
Major initiatives are being taken to upgrade the various processes by making use of latest and better techniques. Efforts are constantlybeing made to make the maximum use of the available infrastructure, at the same time innovating new techniques to bring aboutefficiency as well as economy in different areas. Employees are given appropriate training of and on the job, to enable them to achievethe planned performance.
b) Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc.:
There were various benefits derived as a result of the efforts listed above, some of them included better utilization of the availableresources, product improvement and development, cost reduction, better overall efficiency.
c) In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) : Nil
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
a) Activities relating to exports, initiatives taken to increase export, development of new markets for products and services and export plans:
Major initiatives were taken to boost the exports of the company. Some of them included :
– Emphasis has been given on Foreign Traveling of Export Executives and Directors for development of new markets.
– The Company has participated in the conferences and exhibitions organized in various foreign countries.
– Steps has been taken for creating export market for Large Dia Pipe of API standards.
b) Total foreign exchange used and earned (Rs. in lacs)
Used : 4099.87 Earned : 8560.46for and on behalf of
the Board of Directors
Place : New Delhi B. D. AgarwalDate : 24th May, 2006 Chairman & Managing Director
ANNEXURE 'B' TO THE DIRECTORS' REPORT
Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, and part of the Directors' Report
Sl. Name Age Designation / Remuneration Qualification Experience Date of LastNo. yrs. Nature of duties (Rs.) yrs. Commencement employement
of employment and position held
Employed throughout the financial year
1. Sh. B. D. Agarwal 77 Chairman & 35,10,000 B. A. 51 01.04.1982 Jindal Industries Ltd.Managing Director (Whole Time Director)
2. Sh. J. P. Agarwal 55 Vice Chairman and 30,60,000 B. Com. 34 01.04.1986 Jindal Industries Ltd.Joint Managing Director (Executive Director)
Notes:
1) Shri B. D. Agarwal, Chairman and Managing Director and Shri J. P. Agarwal, Vice Chairman and Joint Managing Director of the Company areboth related to each other.
2) The employment of Shri B. D. Agarwal and Shri J. P. Agarwal are contractual and governed by the terms and conditions approved by theCentral Government/ Shareholders.
3) Remuneration includes salary, commission, medical exp., house rent paid / house rent allowance, other allowances and taxable value ofperquisites.
4) No employees of the Company came within the purview of the provisions of Section 217 (2A)(a)(iii) of the Companies Act, 1956 during the year.
for and on behalf ofthe Board of Directors
Place : New Delhi B. D. AgarwalDate : 24th May, 2006 Chairman & Managing Director
SURYA ROSHNI LIMITED
12Directors' Report
ANNEXURE ‘C’ TO THE DIRECTORS’ REPORT
Certification by Managing Director and Chief Financial Officer (CFO) of the Company
We hereby certify that for the financial year ending 31st March, 2006 on the basis of the review of the financial statements and the cash flow statementand to the best of our knowledge and belief that:
1. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.
2. These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards,applicable laws and regulations.
3. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the 2005-2006 which are fraudulent,illegal or violative of the Company’s Code of Conduct.
4. We accept the responsibility for establishing and maintaining internal controls. We have evaluated the effectiveness of the internal controlsystems of the Company and we have disclosed to the auditors and the Audit Committee those deficiencies, of which we are aware, in the designor operation of the internal control systems and that we have taken the required steps to rectify these deficiencies.
5. We further certify that:
a) There have been no significant changes in internal control during this year.
b) There have been no significant changes in accounting policies during this year.
c) There have been no instances of significant fraud of which we have become aware and the involvement therein, of management or anemployee having a significant role in the Company’s internal control system.
B. D. Agarwal S. N. BansalPlace : New Delhi Chairman and Executive Director &
Dated : 24th May, 2006 Managing Director CFO
SURYA ROSHNI LIMITED
13
CORPORATE GOVERNANCE REPORT FOR THE YEAR 2005-06
1. Corporate Governance Philosophy
The Securities and Exchange Board of India (SEBI) has prescribed mandatory standards of Corporate Governance for all companies listed onIndian stock exchanges and notified them under Revised Clause 49 of the Listing Agreement. This chapter constitutes your Company's compliancewith Clause 49 of the Listing Agreement.
Your Company has already adopted a Code of Conduct, which lays down the standards of values, ethics and business principles of theManagement. Our business and day to day affairs of the Company are conducted with highest level of compliance.
2. Board of Directors
The names, alongwith categories of the Directors on the Board, their attendance at Board meetings during the year and at the last AGM as alsothe number of directorships and committee memberships held by them in other companies are given below :
The Chairman is an Executive Director and the number of Independent Non-Executive Directors on the Board is more than 50% of the Boardstrength at any point of time. All Independent Non-Executive Directors comply with the legal requirements for being "independent". TheIndependent Directors do not have any pecuniary relationships or transactions either with the Company or with the promoters/management thatmay affect their judgment in any manner.
Under the Law, the Board of Directors must meet at least four times a year, with a maximum time gap of four months between any two meetings.
During the last financial year, our Board met seven times, on 17th May, 2005; 29th June, 2005; 29th July, 2005; 12th September, 2005;28th October, 2005; 5th December, 2005; 24th January, 2006.
None of the Directors of our Company were members in more than 10 committees or acted as Chairman of more than five committees across allcompanies in which they were Directors.
Surya Code of Conduct:
During the year, the Board of Directors adopted Code of Conduct for Directors and Senior Management. The Board Members and SeniorManagement personnel have affirmed their compliance with the code of conduct. The Code of Conduct was duly posted on the website of theCompany. The Chairman and Managing Director has certified that the Board Members and senior management personnel have complied withthe code of conduct and the same is placed before the Board.
3. Audit Committee
The Audit Committee comprises three Directors. The members of Audit Committee are Shri. K. K. Narula (Chairperson and IndependentDirector), Shri B. B. Chadha (Independent Director) and Shri G. S. Gupta (Independent Director). All the three members have extensive financialand accounting knowledge and background. The terms of reference of the Audit Committee are in line with revised Clause 49 II (C) and (D) ofthe Listing Agreement with the stock exchanges and Section 292A of the Companies Act, 1956. During the year under review, five committeemeetings were held i.e. 27.06.2005, 29.07.2005, 12.09.2005, 28.10.2005 and 23.01.2006 and were attended by all members of the Committee.The quorum for the Committee is two members. The Audit Committee meetings were attended by the heads of Finance and Internal Auditand the Auditors (including Cost Auditors) as invitees. The members held discussions with the Auditors during the meetings and theCommittee reviewed the periodic unaudited and audited results of the company before being considered and approved by the Board ofDirectors. Sh. B.B. Singal, Company Secretary, acts as the secretary to the Committee.
Name Category No. of Board Whether No. of Directorships No. of Committee positionsof the Director Meetings attended held in other companies held in other companies
attended AGM onduring 27th
Chairman Director Chairman Member2005-06 Sept. 2005
Sh. B. D. Agarwal Promoter(Chairman & ExecutiveManaging Director) Non-Independent 7 YES – 2 – –
Sh. J. P. Agarwal Promoter(Vice Chairman & ExecutiveJt. Managing Director) Non-Independent 7 NO – – – –
Sh. M. G. Bakre Non-Executive(IDBI Nominee) Independent 6 NO – – – –
Sh. K. K. Narula Non-ExecutiveIndependent 7 YES – – – –
Sh. Rajendra Arya Non-ExecutiveIndependent 6 NO – 1 – –
Smt. Urmil Agarwal Non-ExecutiveNon-Independent 1 NO – – – –
Sh. B. B. Chadha Non-ExecutiveIndependent 6 NO – 2 1 1
Sh. G. S. Gupta Non-ExecutiveIndependent 7 NO – 2 – –
Corporate Governance
SURYA ROSHNI LIMITED
14Corporate Governance
The role of the Audit Committee, which amongst other things includes the following:
1. Overseeing of the company's financial reporting process and disclosure of its financial information to ensure that the financial statementsare correct, sufficient and credible.
2. Recommending the appointment, re-appointment and, if required, the replacement or removal of the statutory auditors and fixation of auditfees and approval of payment of statutory auditors for any other services rendered by the statutory auditors.
3. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:a. Matters required to be included in the Directors' Responsibility Statement to be included in the Board's Report in terms of clause (2AA)
of Section 217 of the Companies Act, 1956.b. Changes, if any, in accounting policies and practices and reasons for the same.c. Major accounting entries involving estimates based on the exercise of judgment by management.d. Significant adjustments made in the financial statements arising out of audit findings.e. Compliance with listing and other legal requirements relating to financial statements.f. Disclosure of any related party transactions.g. Qualifications in the draft audit report.
4. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
5. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.
6. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority ofthe official heading the department, reporting structure coverage and frequency of internal audit.
7. Discussion with internal auditors any significant findings and follow up thereon.
8. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or afailure of internal control systems of a material nature and reporting the matter to the board.
9. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion toascertain any area of concern.
10. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non paymentof declared dividends) and creditors.
11. Reviewing the management discussion and analysis of financial condition and results of operations:
12. Reviewing the significant related party transactions, submitted by management.
13. Reviewing the management letters / letters of internal control weaknesses issued by the statutory auditors.
14. Reviewing the internal audit reports relating to internal control weaknesses.
15. Reviewing the appointment, removal and terms of remuneration of the Chief Internal Auditor
16. Reviewing the financial statements, in particular, the investments made by the unlisted subsidiary company.
The minutes of the Committee are placed before the Board.
4. Directors Remuneration
a. Pecuniary Relationships:
None of the Non Executive Directors of your Company have any pecuniary relationship or transactions with the Company except for sittingfees paid to them for attending Board meetings or Committee meetings thereof.
b. Remuneration Policy:
The following aspects are considered while determining the remuneration package of the senior management of the Company:• Industry Standards• Remuneration package of executives in the industry with similar skill sets
c. The details of remuneration / sitting fees paid to the Executive Directors / Non Executive Directors during the financial year 2005-2006 isas under:
Name Salary Perquisites Commission Stock Sitting Fees& Allowances Options
(Rs.) (Rs.) (Rs.) (Rs.)
Sh. B. D. Agarwal(Chairman & Managing Director) 17,55,000/- 8,77,500/- 8,77,500/- Nil N.A.Sh. J. P.Agarwal(Vice Chairman & Jt. Managing Director) 15,30,000/- 7,65,000/- 7,65,000/- Nil N.A.Sh. M. G. Bakre (IDBI Nominee) Nil Nil Nil Nil 45,000/-Sh. K. K.Narula Nil Nil Nil Nil 1,05,000/-Sh.Rajendra Arya Nil Nil Nil Nil 1,20,000/Smt. Urmil Agarwal Nil Nil Nil Nil 7,500/-Sh. B. B. Chadha Nil Nil Nil Nil 82,500/-Sh. G. S. Gupta Nil Nil Nil Nil 1,27,500/-
Period of Contract (Sh. B. D. Agarwal) : 5 years from 1st November, 2003 (i.e. upto 31st October, 2008)Period of Contract (Sh. J. P. Agarwal) : 5 years from 1st January, 2002 (i.e. upto 31st December 2006)
The Company has not issued Stock options to any of its Directors.
The Remuneration Committee has been reconstituted on 29th January, 2004 and it comprises Shri K. K. Narula (Chairperson), Shri RajendraArya and Shri G. S. Gupta. The scope of the Remuneration Committee includes finalizing the remuneration packages for Executive Director(s)of the Company. Sh. B. B. Singal, Company Secretary, acts as the secretary to the committee.
There is no meeting held during the year under review.
6. Shareholders/ Investors' Grievance Committee
The Board of Directors of the Company had reconstituted the Investors' Grievance Committee on 29th June, 2005. The Committee has themandate to review and redress shareholder grievances. The Committee met 4 times during the year on 25.04.2005, 19.07.2005, 17.10.2005and 16.01.2006, and the attendance of Members at the Meeting was as follows:
Name of the members Status No. of Meetings Attended Remarks
Sh. B. D. Agarwal Member 4 –
Sh. Rajendra Arya Chairman 4 –
Sh. G. S. Gupta Member Nil Membership withdrawn on 29-06-05
Sh. K. K. Narula Member 2 Appointed as member on 29-06-05
The quorum for the Committee is two members. The minutes of the Committee are placed before the Board.
Number of shareholders' complaints received upto 31st March, 2006 : 319
Number of complaints not solved to the satisfaction of the shareholders : Nil
Number of pending complaints : Nil
7. General Body Meetings
The last three Annual General Meetings were held on the following dates :26.09.2003; 24.09.2004; 29.09.2005at the Registered Office of the company at Prakash Nagar, Sankhol, Bahadurgarh -124 507 at 10:30 a.m.
Two Special Resolutions were passed at the 30th AGM held on 26th September, 2003.
During the year 2005-2006, Extra-ordinary General Meeting was held on 2.01.2006, at the Registered Office of the company at Prakash Nagar,Sankhol, Bahadurgarh -124 507, in which the 44,00,000 Optionally Convertible Warrants were approved for issue on preferential basis topromoters and their associates.
During the last year one special resolution was put through postal ballot for alteration of Object Clause of the Memorandum of Association ofthe Company. Shri B. B. Singal, Company Secretary, has conducted the postal ballot exercise. The details of voting pattern was as follows:
Number of valid postal ballot forms received 1243
Votes in favour of the Resolution 10959549
Votes against the Resolution 6372
Number of invalid postal ballot forms received 31
8. Disclosures
i) The senior management has made disclosures to the board relating to all material financial and commercial transactions. There are nomaterially significant related party transactions that may have potential conflict with the interest of the company at large.
ii) The Company has complied with all applicable requirements prescribed by the regulatory and statutory authorities including Stock Exchangesand SEBI during the preceding three financial years on all matters related to capital market and no penalties / strictures in this respect havebeen imposed on the Company.
iii) The Company has complied with all mandatory requirements and has constituted Remuneration Committee of the Board.
iv) The Company has issued 44,00,000 optionally convertible warrants on preferential basis of Rs.10/- each at premium of Rs.54/- per warranton 16th January, 2006 followed by the shareholders' approval in the Extra Ordinary General Meeting held on 2nd January, 2006. TheCompany has received the 10% upfront money on 13-01-2006 amounted to Rs.2,81,60,000/- against the allotment of 44,00,000 warrantsand further the company has also received 90% allotment money amounted to Rs.3,45,60,000/- against allotment of the 6,00,000 equityshares on conversion of 6,00,000 warrants on 23-03-2006 and 24-03-2006 from the applicants of the aforesaid shares.
The above fund is utilised by the Company to financing the additional working capital requirements.
9. Means of Communication
i) Half yearly report sent to each shareholders residence : Noii) Newspapers in which quarterly results normally published : Financial Express, Dainik Tribune, Business Standardiii) Website where results or official news are displayed : www.suryaroshnilighting.comiv) Whether it also displays presentations made to institutional
investors or to the analysts : Yes (if any)v) Whether Management Discussion & Analysis Report is
part of the Annual Report or not : Yes
Corporate Governance
SURYA ROSHNI LIMITED
16
10. General Shareholder Informationi. AGM : Date and Time - 28.09.2006 at 10:30 a.m.
Venue - Prakash Nagar, Sankhol, Bahadurgarh, Haryana - 124 507.ii. Financial Year - 1st April to 31st Marchiii. Book closure Date - 13.09.2006 - 18.09.2006 (both days inclusive)iv. Dividend payment date - On or after 29.09.2006v. Listing on Stock Exchanges - The securities of the company were listed on the following Stock
Exchanges during the financial year 2005-06:
The Stock Exchange, Mumbai The National Stock Exchange of India Ltd.Rotunda Building, Dalal Street, Exchange Plaza, Bandra- KurlaFort, Mumbai - 400 001. Complex, Bandra, Mumbai - 400 051.
The company has paid the Annual Listing Fees to the Stock Exchanges for the Financial Year 2005-06 and 2006-07.
vi. Stock Code
Equity Shares - BSE - (Physical) - 336
(Dematerialised) - 500336
NSE - (Symbol) - SURYAROSNI
MONTH NSE BSE
HIGH (Rs.) LOW (Rs.) HIGH (Rs.) LOW (Rs.)
April, 2005 43.50 35.00 43.25 34.75
May, 2005 48.20 33.00 48.40 33.00
June, 2005 45.80 37.50 45.80 36.25
July, 2005 45.00 37.15 45.50 37.10
August, 2005 63.35 40.50 63.10 39.10
September, 2005 77.40 52.00 76.80 53.65
October, 2005 63.10 45.70 63.00 45.10
November, 2005 68.50 48.65 68.90 49.00
December, 2005 69.50 59.25 69.65 59.00
January, 2006 82.55 64.10 82.85 64.25
February, 2006 76.50 65.50 76.70 65.50
March, 2006 71.00 63.10 73.50 63.40
viii. Performance in comparison to BSE SENSEX
Corporate Governance
vii. Market Price Data :
ix. Registrar : MAS Services Private Limited(Common for both Physical and Electronic share registry) AB-4, Safdarjung Enclave, New Delhi - 110 029.
The Company's share transfers are handled by MAS Services Pvt. Ltd., Registrar and Transfer Agents(RTA). The shares received in physicalmode by the Company/RTA are transferred expeditiously provided the documents are complete and shares under transfer are not underdispute. Confirmation in respect of the request for dematerialisation of shares is sent to the respective depositories - National SecuritiesDepository Limited / Central Depository Services India Limited within 15 days. None of the transfer was pending for more than a fortnightas on 31st March, 2006.
xi. Distribution of Shareholding
Shareholders Shares
Holdings Number % of Total Number % of Total
1-5000 19308 99.01 6288859 24.19
5001-10000 92 0.47 685312 2.64
10001- 20000 33 0.17 502477 1.93
20001-100000 36 0.18 1685949 6.48
Over 100000 34 0.17 16838653 64.76
TOTAL 19503 100.00 26001250 100.00
SURYA ROSHNI LIMITED
17 Corporate Governance
Shareholding Pattern
CATEGORY No. of Shares held % age of Paid-upCapital
Promoters (including Persons Acting in Concert) 6458494 24.839
Institutional Investors 2784318 10.708
Private Corporate Bodies 9990840 38.424
Indian Public 6608938 25.418
NRIs and OCBs 96938 0.373
Others (Clearing Members) 61722 0.237
TOTAL 26001250 100.00
xii. Dematerialisation of Shares & Liquidity : The company has obtained electronic connectivity with the National Securities DepositoryLtd. (NSDL) and the Central Depository Services Ltd. (CDSL) for demat facility(ISIN: INE335A01012). As on 31st March, 2006, 2,29,54,967 equity shares, being 88.28% ofthe company's total paid-up equity shares had been dematerialized.
The shares of the company are regularly traded at the NSE and BSE.
xiii. Outstanding GDRs /ADRs /Warrants or : 38,00,000 optionally convertible warrants are outstanding into equity shares in the ratio ofany Convertible instruments, conversion 1:1 on or before 15.07.2007 and after conversion equity capital will be enhanced accordingly.date & likely impact on equity
xv. Address for correspondence : The Company SecretarySurya Roshni Limited408, Padma Tower - I, 5, Rajendra Place, New Delhi - 110 008.Tel. - (011) 51539765, 25810093-96 Fax - (011) 25753955E-Mail - [email protected]
AUDITOR'S CERTIFICATE
Auditor's certificate on compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement
To the members of
Surya Roshni Limited
We have examined the compliance of conditions of corporate governance by Surya Roshni Limited ("the company") for the year ended 31st
March, 2006, as stipulated in Revised Clause 49 of the Listing Agreement of the company with the stock exchanges.
The compliance of the conditions of corporate governance is the responsibility of the management. Our examination was limited to the
procedures and implementation thereof, adopted by the company, for ensuring the compliance of the conditions of corporate governance. It
is neither an audit nor an expression of opinion on the financial statements of the company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has complied
with the conditions of corporate governance as stipulated in the abovementioned Listing Agreement.
We state that no investor grievances are pending for a period exceeding one month against the company as per the records maintained by the
company.
We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with
which the management has conducted the affairs of the company.
For SASTRY K. ANANDAM & CO.
CHARTERED ACCOUNTANTS
Place : New Delhi (K. Ananda Sastry)
Dated : 24th May, 2006 Partner, FCA
Membership No. 9980
SURYA ROSHNI LIMITED
18
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our report of even date
1. In respect of its fixed assets :
a) The Company has maintained records showing full particulars
including quantitative details and situation of its fixed assets
on the basis of available information.
b) As explained to us, the fixed assets have been physically
verified by the management during the year in a phased
periodical manner, which in our opinion is reasonable, having
regard to the size of the Company and nature of its assets.
No material discrepancies were noticed on such physical
verification. It was explained that the title deeds of some of
the assets including lands are with Industrial Development
Bank of India and therefore could not be verified.
c) In our opinion, the Company has not disposed of substantial
part of fixed assets during the year and the going concern
status of the Company is not affected.
2. In respect of its inventories :
a) As explained to us, inventories have been physically verified
by the management at regular intervals during the year.
b) In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of inventories followed by the management are
reasonable and adequate in relation to the size of the Company
and the nature of its business.
c) The Company has maintained proper records of inventories.
As explained to us, there were no material discrepancies
noticed on physical verification of inventory as compared to
the book records.
3. In respect of loans, secured or unsecured, granted or taken by the
Company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a) The Company has not granted any loans, secured or
unsecured to Companies, firms or other parties covered in
the register maintained under Section 301 of the Companies
Act, 1956.
b) Since the Company has not granted any loans, the Clause
(b), (c), (d) relating to the rate of interest, receipt of Principal
amount, overdue amount does not apply.
c) The Company has not taken any loans, secured or unsecured
from Companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
d) Since the Company has not taken any loans, the Clause
relating to the rate of interest, payment of Principal amount,
overdue amount does not apply.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and also for
the sale of goods. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in
internal controls.
5. In respect of transactions covered under Section 301 of the
Companies Act, 1956:
a) In our opinion and according to the information and
explanations given to us, there are no transactions made in
pursuance of contracts or arrangements, that needed to be
AUDITORS' REPORT
ToThe Members
1. We have audited the attached Balance Sheet of M/s SURYA ROSHNILIMITED as at 31st March, 2006 and the Profit and Loss Account& also the Cash Flow Statement for the year ended on that dateannexed thereto. These financial statements are the responsibilityof the Company's Management. Our responsibility is to express anopinion on these financial statements based on our Audit.
2. We conducted our audit in accordance with Auditing Standardsgenerally accepted in India. Those standards require that we plan &perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. An auditincludes examining, on a test basis, evidence supporting the amounts& disclosures in financial statements. An audit also includesassessing the accounting principles used & significant estimatesmade by Management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 asamended by the Companies (Auditors' Report) (Amendment) Order,2004 issued by the Central Government of India in terms of SubSection (4A) of Section 227 of the Companies Act, 1956 and onthe basis of such checks as we considered appropriate and accordingto the information and explanations given to us, we enclose in theAnnexure hereto a statement on the matters specified in paragraphs4 and 5 of the said order.
4. Further to our comments in the Annexure referred to in paragraph 3above, we report that:
(i) We have obtained all the information and explanations,which to the best of our knowledge and belief were necessaryfor the purposes of our audit.
(ii) In our opinion, proper books of account, as required by lawhave been kept by the Company so far as appears from ourexamination of those books.
(iii) The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement withthe books of account.
(iv) In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report Complywith the mandatory Accounting Standards referred in SubSection (3C) of Section 211 of the Companies Act, 1956.
(v) On the basis of written representations received from thedirectors as on 31st March, 2006, and taken on record bythe Board of Directors, we report that none of the directorsis disqualified as on 31st March, 2006 from being appointedas a director in terms of clause (g) of sub-section (1) of Section274 of the Companies Act, 1956.
(vi) In our opinion and to the best of our information andaccording to the explanations given to us, the said accountsread together with the Significant Accounting Policies andother notes thereon give the information required by theCompanies Act, 1956 in the manner so required, and presenta true and fair view, in conformity with the accountingprinciples generally accepted in India :a) in so far as it relates to Balance Sheet, of the State of
affairs of the Company as at 31st March, 2006;b) in so far as it relates to Profit and Loss Account, of
PROFIT of the Company for the year ended on that date;and
c) in so far as it relates to the Cash Flow Statement, of theCash Flows for the year ended on that date.
For SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS
(K. ANANDA SASTRY)Place : New Delhi Partner, F.C.A.Dated : 24th May, 2006 Membership No. 9980
Auditors' Report
SURYA ROSHNI LIMITED
19
entered into in the register maintained under Section 301 of
the Companies Act, 1956.
b) Since there are no transaction, the Clause relating to making
entry in the register maintained under Section 301 of the
Companies Act, 1956 does not apply.
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of
Section 58A and 58AA or any other relevant provisions of the
Companies Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975 with regard to the deposits accepted from the public.
Since the Company has not defaulted in repayments of deposits,
compliance of Section 58AA or obtaining any order from the
Company Law Board, National Company Law Tribunal or Reserve
Bank of India or any other Court or Tribunal, does not arise.
7. In our opinion, the internal audit system of the Company is
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of accounts relating to
materials, labour & other items of cost maintained by the Company
Pursuant to the Rules made by the Central Government for the
maintenance of Cost Records under Section 209(1) (d) of the
Companies Act, 1956 and we are of the opinion, that prima facie,
the prescribed accounts and records have been made and
maintained. We have , however, not made a detailed examination
of the same.
9. In respect of statutory dues :
i) the company is generally regular in depositing with
appropriate authorities undisputed statutory dues including
provident fund, investor education and protection fund,
employees state insurance, Income Tax, Sales Tax, Wealth
Tax, Service Tax , Custom Duty, Excise Duty, Cess and other
material statutory dues applicable to it.
ii) According to the information and explanations given to us,
no undisputed amounts payable in respect of Income Tax,
Wealth Tax, Sales Tax, Custom Duty, Excise Duty and Cess
were in arrears as at 31st March, 2006 for a period of more
than six months from the date they became payable.
iii) The disputed statutory dues aggregating to Rs. 5,15,11,293/-
that have not been deposited on account of matters pending
before appropriate authorities are as under:
Sl. Name of Nature of Dues Forum where Amount in (Rs.)
No. the Statue dispute is
pending
1. Central Excise Excise Duty – Commissioner of 14,37,127
Act, 1944 Central Excise
– CEGAT 20,23,799
– High Court 1,53,62,997
2. Trade Tax Act, Trade Tax Departmental
1948 Appeal before
Supreme Court 2,92,31,542
3. Employees State Employees High Court
Insurance Act, State Insurance
1966 Calculation 34,55,828
Total 5,15,11,293
10. The Company has no accumulated losses and has not incurred anycash losses during the financial year covered by our audit or in theimmediately preceding financial year.
11. Based on our audit procedures and according to the informationand explanation given to us, we are of the opinion that theCompany has not defaulted in repayment of dues to financialinstitutions, banks or debenture holders.
12. In our opinion and according to the information and explanationsgiven to us, no loans and advances have been granted by theCompany on the basis of security by way of pledge of shares,debentures and other investments.
13. In our opinion, the Company is not a chit fund or a nidhi/mutualbenefit fund/ society. Therefore, clause 4(xiii) of the Companies(Auditor's Report) Order 2003 is not applicable to the Company.
14. In our opinion, the Company is not dealing in or trading in Shares,securities, debentures and other investments. Accordingly, theProvisions of Clause 4 (xiv) of the Companies (Auditors' Report)Order, 2003 are not applicable to the Company
15. The Company has given guarantees for loans taken by subsidiaryfrom banks. According to the information and explanations givento us, we are of the opinion that the terms and conditions thereofare not prima-facie prejudicial to the interests of the Company.However, the guarantee has since been released.
16. In our opinion, the term loans have been applied for the purposesfor which they were raised.
17. According to the information and explanations given to us and onan overall examination of the Balance Sheet of the Company, wereport that no funds raised on short term basis have been used forlong term investments. No long term funds have been used tofinance short term assets except permanent working capital.
18. During the year, the Company has made Preferential Issue of44,00,000 Convertible Warrants into Equity Shares of nominalvalue of Rs.10/- each at a premium of Rs.54/- per share calculatedin accordance with SEBI (Disclosure & Investor Protection)Guidelines 2000 to Promoters & persons acting in concert. Out ofthe above Preferential Issue, 2,50,000 warrants were allotted toShri Jai Prakash Agarwal, Joint Managing Director of the Company.
19. The Company has no debentures as at 31st March, 2006.
20. The Company has not raised any money by way of public issueduring the year.
21. In our opinion and according to the information and explanationsgiven to us, no fraud on or by the Company has been noticed orreported during the year, that causes the financial statements to bematerially misstated.
for SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS
(K. ANANDA SASTRY)
Place : New Delhi Partner, F.C.ADated : 24th May, 2006 Membership No. 9980
Auditors' Report
SURYA ROSHNI LIMITED
20
BALANCE SHEET AS AT 31ST MARCH, 2006
Particulars Schedule As at As atNo. 31st March, 2006 31st March, 2005
Less: Transferred from Capital Reserve on Revaluationof Fixed Assets 5‚01‚226 5‚01‚226
27‚46‚70‚290 24‚49‚04‚864
TOTAL 9‚75‚17‚73‚327 9‚93‚64‚04‚393
PROFIT/(LOSS) BEFORE TAX FOR THE YEAR 28‚71‚18‚098 17‚33‚98‚100
Provision for Tax
– Current 10‚81‚17‚023 4‚76‚68‚135
– Deferred (1,35,52,001) 8,21,763
– Fringe Benefit 56‚50‚000 –
PROFIT/(LOSS) AFTER TAX 18‚69‚03‚076 12‚49‚08‚204
Surplus brought forward from previous year 67‚90‚19‚541 57‚99‚44‚737
AVAILABLE FOR APPROPRIATIONS
Proposed Equity Dividend 3‚90‚01‚875 3‚04‚81‚500
Tax on Dividend 54‚70‚013 43‚53‚650
Deferred Tax Revision (23,08,578) (1,90,01,750)
Transfer to General Reserve 1‚00‚00‚000 1‚00‚00‚000
Balance carried to Balance Sheet 81‚37‚59‚307 67‚90‚19‚541
Earning per Equity Share - Basic & Diluted 7.36 4.92
Significant Accounting Policies and Notes on Accounts 21
Profit & Loss Account
The Schedules referred to above and notes on accounts thereon form an integral part of Profit & Loss Account.
As per our attached report of even date
For SASTRY K. ANANDAM & CO.Chartered Accountants B. D. Agarwal
Chairman and
K. ANANDA SASTRY S. N. Bansal Managing Director
Partner Executive Director & CFOMembership No. 9980
J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &
Dated : 24th May, 2006 Company Secretary Joint Managing Director
Directors
B.B. Chadha
G.S. Gupta
K.K. Narula
M.G. Bakre
Rajendra Arya
SURYA ROSHNI LIMITED
22Schedules
Schedules to the Balance Sheet
SCHEDULE 1 As at As at31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SHARE CAPITAL
Authorised :
4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000 49‚80‚00‚000
6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000 6‚20‚00‚000
56‚00‚00‚000 56‚00‚00‚000
Issued, Subscribed and Paid up :
2,60,01,250 (Previous Year - 2,54,01,250) 26‚00‚12‚500 25‚40‚12‚500Equity Shares of Rs. 10/- each fully paid up(6,00,000 Equity shares of Rs.10/- each fully paid-upallotted during the year upon conversion of Warrants)
(Of the above shares 3,00,000 Equity shares ofRs.10/- each allotted as fully paid up Bonus sharesby capitalisation of General Reserve during 1980-81,86,47,500 Equity shares of Rs.10/- each during1994-95 and 22,38,750 Equity shares of Rs. 10/-each during 1995-96 by capitalisation of securitiespremium account.)
38,00,000 (Previous Year - NIL) Optionally Convertible Equity 2‚43‚20‚000 –Warrants of Rs 64/- each Rs. 6.40 paid up convertible on orbefore 15th july, 2007 (6,00,000 Optionally Convertible EquityWarrants have been converted into equity shares during the year)* Refer Note No. 6
Total 28‚43‚32‚500 25‚40‚12‚500
SCHEDULE 2 As at As at As at31.03.2005 Addition Deduction 31.03.2006 31.03.2005
RESERVES AND SURPLUS
Capital Reserve
– Capital subsidy 50‚00‚000 – – 50‚00‚000 50‚00‚000
– on revaluation of Fixed Assets 1‚22‚23‚364 – 501,226 1‚17‚22‚138 1‚22‚23‚364
Capital Redemption Reserve 3‚00‚00‚000 – – 3,00,00,000 3,00,00,000
SCHEDULE 3 As at As at31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SECURED LOANS
Term Loans
From Financial Institutions 73‚44‚99‚607 60‚96‚97‚221
From Banks 77‚28‚77‚953 79‚97‚29‚669
Working Capital Loans from Banks 1‚38‚85‚24‚802 1‚26‚50‚62‚374
2‚89‚59‚02‚362 2‚67‚44‚89‚264
NOTES :
1) Term Loans from Banks and financial Institutions secured by deposit of title deeds relating to immovable assets of the company and further secured byhypothecation of all company's movable assets.
2) Working Capital Loans from Banks are secured against hypothecation of present and future stock of raw material, stock in process, finished goods, spareand stores, book debts etc., guaranteed by two directors of the company and further secured by way of second charge on the company's Fixed Assets.
SCHEDULE 4 As at As at31st March, 2006 31st March, 2005
(Rs.) (Rs.)
UNSECURED LOANS
Fixed deposits from Public 12‚39‚52‚000 17‚34‚00‚000
From Financial Institutions and Banks 25‚09‚27‚164 20‚00‚00‚000
Provision for Leave Encashment * 1‚04‚88‚148 91‚14‚543
Total 8‚15‚73‚382 5‚96‚87‚313
* Refer Note No. 6
Schedules to the Balance Sheet
As at As at31st March, 2006 31st March, 2005
(Rs.) (Rs.)
Schedules
SURYA ROSHNI LIMITED
27
Schedules to the Profit & Loss Account
For the Year ended For the year ended31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SCHEDULE 13
SALES
Inland (net of return) 11‚19‚29‚99‚543 10‚36‚13‚01‚650
Export* 99‚26‚74‚325 1‚43‚04‚83‚618
12‚18‚56‚73‚868 11‚79‚17‚85‚268
Less : Internal consumptions of components 76‚61‚93‚794 65‚06‚15‚971
Total 11‚41‚94‚80‚074 11‚14‚11‚69‚297
* Export Includes Export Benefits of Rs. 6,58,84,761(Previous Year Rs. 9,81,73,775) and Rs. Nil (Previous Year 12,65,900)to Surya Roshni Inc., a wholly owned subsidiary
SCHEDULE 14
OTHER INCOME
Rent 96,000 104,000
Interest (TDS Rs. 1,27,213) 10‚41‚054 6‚02‚419
Others 48‚82‚180 35‚01‚459
Insurance claims 64‚00‚699 1‚95‚180
Income from Investment (Non-Trade) 1‚06‚137 1‚04‚760
Foreign Exchange fluctuation – 8‚21‚618
Profit on Sale of Fixed Assets 68‚52‚320 15‚67‚729
Profit on Sale of Investments – 50,000
Total 1‚93‚78‚390 69‚47‚165
SCHEDULE 15
ACCRETION/(DECRETION) TO STOCK
Stock as at 1st AprilFinished Goods 77,01,78,297 71‚89‚41‚075Semi Finished Goods 20,64,38,466 14‚80‚27‚134Scrap 1,80,38,777 88‚82‚561
99,46,55,540 87‚58‚50‚770
Stock as at 31st MarchFinished Goods 70‚07‚12‚213 77‚01‚78‚297Semi Finished Goods 16‚46‚26‚442 20‚64‚38‚466Scrap 3‚16‚37‚299 1‚80‚38‚777
89‚69‚75‚954 99‚46‚55‚540
Accretion/(Decretion) to Stock (9,76,79,586) 11,88,04,770
SCHEDULE 16
MANUFACTURING EXPENSES
Stores and spares consumed 14‚29‚87‚564 14‚52‚95‚807
Power and fuel 25‚15‚82‚329 26‚99‚40‚228
Water charges 23‚89‚403 21‚85‚925
Repairs to :Machinery 3‚04‚09‚119 2‚67‚98‚402Building 71‚16‚314 1‚04‚97‚728Others 17‚08‚487 25‚17‚978
For the Year ended For the year ended31st March, 2006 31st March, 2005
(Rs.) (Rs.)
Schedules
SURYA ROSHNI LIMITED
29
Statutory Auditors’ Remuneration
Statutory Audit Fees 3‚90‚000 3‚75‚000
Income Tax Audit Fees 1,00,000 1,00,000
Auditors' Expenses 32,233 31,127
Management Fees for certificates/reports 1,70,300 1,55,412
6‚92‚533 6‚61‚539
Total 15‚55‚16‚101 14‚87‚92‚241
SCHEDULE 21
A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of preparation of Financial Statements
(a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accountingprinciples (GAAP) and the provisions of the Companies Act, 1956, as adopted consistently by the Company except for certain fixedassets which have been revalued.
(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrualbasis.
2. Fixed Assets
Fixed Assets are stated at cost net of CENVAT and includes amounts added on revaluation, less accumulated depreciation. All costs,including interest on borrowings attributable to acquisition of Fixed Assets upto the date of commissioning of the assets and net charges onforeign exchange contracts and adjustments arising from exchange rate variations relating to borrowings attributable to the fixed assets arecapitalised.
3. Depreciation
(i) Depreciation on fixed assets is provided on straight line method as per the provisions of Sec. 205(2) of the Companies Act, 1956.
(ii) Depreciation on additions is being provided on pro rata basis from the date of such additions.
(iii) Depreciation on assets sold, discarded or demolished during the year is being provided at their rates up to the date on which such assetsare sold, discarded or demolished.
(iv) Depreciation on additions on account of change in rupee value due to revaluation of foreign currency loan is being provided atrespective rates of depreciation of related assets.
4. Foreign Currency Transactions
(i) The Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting yearexcept where the Company has entered into forward exchange contracts, the difference between the forward rate and the exchange rateat the date of the transaction is recognised in the statement of profit & loss over the life of the contract.
(ii) Exchange differences arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are recognisedas Income or Expense as per Accounting Standard 11 issued by the Institute of Chartered Accountants of India.
(iii) Non-Monetary items denominated in foreign currency are stated at cost.
5. Investments
The investments are valued at cost of acquisition.
6. Gratuity and Leave Encashment
The Provision for Gratuity and Leave Encashment are made as per actuarial valuation basis as at the end of the financial year. However theCompany has covered its Gratuity liabilities with Life Insurance Corporation of India (LIC) by forming a Gratuity Trust and the liabilities paidto LIC is debited to Gratuity provisions.
7. Insurance Claims
Insurance claims are accounted for on settlement of claims.
8. Inventories
(i) Raw material, Stores & Spares are valued at cost on FIFO basis.
(ii) Finished Goods are valued at cost or net realisable value whichever is lower. Cost includes direct cost and appropriate portion ofoverheads.
(iii) Semi-finished goods are valued at cost or net realisable value whichever is lower.
(iv) Scrap and Salvage is valued at market price.
(v) The closing stock constituting duty-free imports consequent to utilisation of DEPB credit is valued at the actual cost of purchaseincluding such foregone import duty.
9. Revenue Recognition
The VAT collected from the customers is not included in Sales.
Schedules to the Profit & Loss Account
For the Year ended For the year ended31st March, 2006 31st March, 2005
(Rs.) (Rs.)
Schedules
SURYA ROSHNI LIMITED
30Schedules
B. NOTES ON ACCOUNTS
1. Contingent liabilities not provided for in respect of :
(a) Letter of Credit / Bank Guarantees outstanding Rs. 32,05,31,659 (Previous year Rs. 32,18,05,761).(b) Disputed Excise duties liability Rs. 1,88,23,923 (Previous year Rs. 2,09,00,344).(c) Disputed Trade tax liability Rs. 2,92,31,542 (Previous year Rs. 2,92,31,542).(d) Bonds executed by the company to custom department against fulfilment of export obligation under 5% EPCG Scheme Rs. 12,49,67,445
(Previous year Rs. 5,14,52,783).(e) Disputed ESI liability Rs. 34,55,828 (Previous year Rs. 34,55,828).(f) Disputed demand of Uttaranchal Power Corporation Rs. 34,87,907 (Previous year Rs. 34,87,907).
2. Estimated amount of contracts remaining to be executed on capital account (less advances) Rs.3,39,68,000/- (Previous year - Rs.5,75,75,000/)
3. Consequent upon opting for Central Excise exemption w.e.f. 02-01-2006 based on Notification No. 50/2003 dated 10-06-2003, a sum ofRs.1,34,61,135/- was paid under protest by Kashipur Factory and the same shall be recognised as expense in the year in which the matter isfinally settled by the appropriate authorities.
4. The name of small scale industrial undertaking to whom the company owe any sum together with interest outstanding for more than thirty days are:Bhavita Chemicals Pvt. Ltd. Mumbai, D. J. Fluorine Mumbai, Hindustan Adhesives Ltd. Delhi, K. D. Dowels & Keys Faridabad, Met-Pro ChemicalsMumbai, New Pack Plastics Pvt. Ltd. Noida, Niwar Metals Pvt. Ltd. Bhiwadi, Punjab Lighting Aids Mohali, Polydim Dies Pvt. Ltd. Musore, PatialaPackers Patiala, Patiala Packaging Ind. Patiala, Rishabh Gas & Chemicals Ghaziabad, Gwalior Carton works Malanpur, Jain Packaging IndustriesShikohabad, Kusum Packers Gwalior, Chhaya Packers & Printers Pvt. Ltd. Hapur, Cosmic Aluminium Wires (P) Ltd. Noida, Indian Machine ToolsGhaziabad, Jurgyan Industries Jabalpur, Mantlssa Engineers Ghaziabad, Natthu Singh Kushwha Spring Works Gwalior, Precision Engineers Ghaziabad,Pragati International Indore, S & U Mek Engineers (P) Ltd. Hyderabad, Hydmarks Applicon, Roll Form Equipment Pvt. Ltd.
5. The Trade Tax cases for the assessment year 1994-95 to 1995-96 has been decided in favour of Company by Hon'ble High Court, Allahabad.The assessment upto the year 1999-2000 has been completed and the refunds have been received, which were due on the basis of the aboveHon'ble High Court decision. However, the Trade Tax liability Rs. 2,92,31,542/- is shown as contingent liability as the matter is subjudice atthe Supreme Court of India.
6. The Company has issued 44,00,000 optionally convertible warrants convertible into 44,00,000 equity shares on or before July 15, 2007 onpreferential basis to promoters and their associates of Rs.10/- each at premium of Rs.54/- per warrant on 16th January, 2006 followed by theshareholders' approval in the Extra Ordinary General Meeting held on 2nd January, 2006. During the year the warrant holders have exercisedthe option for conversion of 6,00,000 warrants into equity shares and accordingly the paid-up capital of the Company has increased fromRs.25,40,12,500/- to Rs.26,00,12,500/-. Remaining 38,00,000 optionally convertible warrants are outstanding for conversion into equity sharesand after conversion the paid-up capital will be enhanced accordingly.
7. Earning per Share (Basic & Diluted)
Particulars This Year (Rs.) Previous Year (Rs.)
Profit after Tax 18,69,03,076 12,49,08,204Profit for Equity Shareholders 18,69,03,076 12,49,08,204Number of Equity Shares 2,60,01,250 2,54,01,250(Face Value Rs. 10/- each)2,54,01,250 Equity Shares for Full Year 254012506,00,000 Equity Shares for 3 days (600000*3/365) 4932Weighted Average number of Equity Shares used asdenominator for calculating EPS 2,54,06,182 2,54,01,250Basic & Diluted Earning Per Share (EPS) (Rs.) 7.36 4.9238,00,000 Equity Shares to be issued against the conversion of 38,00,000 Optionally Convertible Warrants are fairly priced and are assumedto be neither dilutive nor antidilutive. Hence the same is not considered for computation of diluted earning per share.
8. Deferred Tax
As per Accounting Standard (AS - 22) on accounting for Taxes on income issued by the Institute of Chartered Accountants of India, the deferredtax liability as on 31st March, 2006 comprises of the following :
Deferred Tax As on As on31st March, 2006 31st March, 2005
(a) Deferred Tax Liability1. Related to Fixed Assets (49,08,56,412) (50,26,20,330)
Net Deferred Tax Assets / (Liabilities) (47,83,68,049) (49,42,28,629)
The deferred tax liability upto 31st March, 2005 was measured as per the Income Tax rates enacted on the Balance Sheet date. The same hasbeen revised to Rs. 49,19,20,050/- and the difference of Rs. 23,08,578/- has been credited to the Profit and Loss Appropriation Account.
SURYA ROSHNI LIMITED
31 Schedules
9. Segment Information for the year ended 31st March, 2006 and 31st March, 2005The company has identified the following two Primary Business Segments :1. Steel - Engaged in the production of Steel Tubes & Pipes and Cold Rolled Strips.2. Lighting - Engaged mainly in the manufacture of different varieties of Lamps.Secondary Segment reporting has been performed on the basis of Geographical Locations.
Primary Business Segments
Particulars Lighting (Rs.) Steel (Rs.) Total (Rs.)
Non-cash expenses other than Depreciation – – –– – –
Geographic SegmentIndia 10‚49‚26‚90‚510
9‚80‚88‚59‚454Outside India 92‚67‚89‚564
1‚33‚23‚09‚843
SURYA ROSHNI LIMITED
32
10. Related party disclosures
Related party disclosures as required under Accounting Standard on "Related Party Disclosures" issued by the Institute of Chartered Accountantsof India are given hereunder :
A. Relationship :
i) Subsidiary Companies– Surya Roshni Inc., New York
iv) Entities over which the key management personnel are able to exercise significant influence– Galaxy Pipes Limited– Prakash Industries Limited
B. Transactions carried out with the related parties in the ordinary course of business :
i) Subsidiary Companies :
Surya Roshni Inc.This Year Previous Year
Amount in Rs. US $ Amount in Rs. US $
Investment:Total Investment at the beginning of the year 7,09,11,514 1,500,000 7,09,11,514 1,500,000Investment made during the year Nil Nil Nil NilTotal investment at the year end 7,09,11,514 1,500,000 7,09,11,514 1,500,000
Loan Taken:Loan at the beginning of the year 1,42,18,750 325,000 Nil NilLoan taken during the year Nil Nil 1,48,18,750 325,000Loan repaid during the year Nil Nil Nil NilLoan outstanding at the year end 1,44,98,250 325,000 1,42,18,750 325,000
Interest Paid:Interest paid during the year 5,39,174 12,413 2,50,553 5,719
Sale :Receivables against sales at the beginning of the year Nil Nil 2,75,93,362 631,174.3Sale of goods during the year Nil Nil 12,65,900 27,475Outstanding receivable at the year end Nil Nil Nil Nil
ii) Key Management Personnel & their Relatives :
Remuneration for the year 2005-2006 :– Sh. B.D.Agarwal (Chairman & Managing Director) Rs. 35,10,000– Sh. J.P.Agarwal (Vice-Chairman & Jt. Managing Director) Rs. 30,60,000– Sh. Vinay Surya (Chief Operating Officer - Export) Rs. 4,92,000
Sitting Fees for the year 2005-2006Smt. Urmil Agarwal (Director) Rs. 7,500/-
Schedules
SURYA ROSHNI LIMITED
33
11. Disclosure of loans / advances and investment as per Clause 32 of the Listing Agreement with the Stock Exchanges :Investment :
Subsidiary As on 31st March, 2006 Maximum outstanding during theyear ended 31st March, 2006
Surya Roshni Inc. (USA) Rs. 7,09,11,514 ($1,500,000) Rs.7,09,11,514 ($1,500,000)
12. Disclosure of Foreign Exchange Transactions in terms of AS - 11
Particulars This year Previous Year
i) Exchange rate fluctuation differences included in the net profit/ (4,60,10,963) 71,63,005(loss) for the period.
ii) Exchange rate fluctuation differences in respect of forward exchange (1,48,393) (97,954)contracts to be recognised in next year profit & loss Account.
13. The exchange difference of Rs.41,99,926/- (previous year Rs. 18,85,895/-) on account of borrowing for the purpose of acquiring fixed assetsis credited to Profit and Loss Account in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India.
14. Remuneration of Managerial Personnel Paid/payable during the year:
Particulars This Year Previous Year(Rs.) (Rs.)
Salary, HRA & Medical Exp. 49,27,500 40,27,500
Commission 16,42,500 13,42,500
Total 65,70,000 53,70,000
COMPUTATION OF REMUNERATION OF MANAGERIAL PERSONNEL UNDER SECTION 198 OF THE COMPANIES ACT, 1956
Particulars This Year Previous Year(Rs.) (Rs.)
Profit for the year: 28,71,18,098 17,33,98,100
Add:(Depreciation 27,46,70,290 24,49,04,864
(Loss on sale of Fixed Assets 47,89,440 22,60,053
(Remuneration to Managerial Personnel 65,70,000 53,70,000
(Profit on sale of fixed assets as per section 350 of the Companies Act, 1956 83,54,426 19,10,043
58,15,02,254 42,78,43,060
Less: (Profit on sale of fixed assets 68,52,320 15,67,729
(Loss on sale of fixed assets as per Section 350 of the Companies Act, 1956 31,28,709 14,77,728
(Depreciation computed as per Section 350 of the Companies Act, 1956 27,46,70,290 24,49,04,864
28,46,51,319 24,79,50,321
Net Profit U/ 349 of the Companies Act, 1956 29,68,50,935 17,98,92,739
Remuneration @ 10% per annum 2,96,85,093 1,79,89,274
15. Additional information pursuant to the provisions of paragraph 3 and 4C of Part II of Schedule VI of the Companies Act, 1956.
A. Capacity and Production Unit Licenced Capacity *Installed Capacity Production
As at 31st March As at 31st March As at 31st March
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY (AS PER MONETARY TERMS)
Item Code No. (ITC Code) Product Description
Item Code No. (ITC Code) Product Description
Item Code No. (ITC Code) Product Description
Balance Sheet Abstract
�
7 3 0 4 01 . 0 1
L A M P S8 5 3 9 00
C O L D O L L E D TS RR I P S7 2 0 9 22
2 8 5 6 3 7 1 7 1 9 1 1 2 5 4 8 2 2 3 N I L N I L
N I L N I L N I L
1 2 2 0 5 0 5 2 1 1 9 1 7 9 3 4
2 8 7 1 1 8 1 8 6 9 0 3
7 . 3 6 1 5
0 5
0 33 1
7 5 4 3
2 0 0 6
S T E E L T U B E S A N D P I P E S
6 0 0 0
5 8 0 8 2 1 7 5 8 0 8 2 1 7
2 6 0 0 1 3
�
As per our attached report of even date
For SASTRY K. ANANDAM & CO.Chartered Accountants B. D. Agarwal
Chairman and
K. ANANDA SASTRY S. N. Bansal Managing DirectorPartner Executive Director & CFOMembership No. 9980
J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &
Dated : 24th May, 2006 Company Secretary Joint Managing Director
Directors
B.B. Chadha
G.S. Gupta
K.K. Narula
M.G. Bakre
Rajendra Arya
4 7 8 3 6 8 2 8 9 5 9 0 2 5 2 0 1 0 3
1 2 9 7 7 9 92 4 3 2 0
SURYA ROSHNI LIMITED
38
INTEREST IN SUBSIDIARY COMPANIESStatement pursuant to section 212 of the Companies Act, 1956
1. Name of Subsidiary Companies Surya Roshni Inc.(New York)
2. Financial Year ending of the Subsidiary 31st March, 2006
3. Shares of the Subsidiary held bySurya Roshni Ltd. on the above date:
(a) Number of Shares & face value 100 Common Stock ofUS$ 1000 each and 56 CommonStock of US$ 25000 each
(b) Extent of Holding 100%
4. Net aggregate amount of Profit/(Loss)of the subsidiary so far as theyconcern members of Surya Roshni Ltd.:
(a) Dealt with in the accounts of Surya NILRoshni Ltd. for the year ended31st March, 2006
(b) Not Dealt with in the accounts of (US$ 167,822)Surya Roshni Ltd. for the yearended 31st March, 2006
5. Net aggregate amount of Profit/(Loss)for the previous financial years of theSubsidiary since it became Subsidiaryso far as they concern members ofSurya Roshni Ltd.:
(a) Dealt with in the accounts of Surya NILRoshni Ltd. for the year ended31st March, 2006
(b) Not Dealt with in the accounts of (US$ 604,503)Surya Roshni Ltd. for the yearended 31st March, 2006
6. Change of interest of Surya Roshni Not ApplicableLtd. in the Subsidiary between the endof the financial year of the Subsidiaryand that of Surya Roshni Ltd.:
7. Material changes between the end of Not Applicablethe financial year of the Subsidiary andthe end of the financial year of SuryaRoshni Ltd. in respect of Subsidiary'sfixed assets, investments, lending andborrowing for the purpose other thanmeeting than current liabilities
8. Remarks NIL
Interest in Subsidiary Companies
B. D. AgarwalChairman and
S. N. Bansal Managing Director
Executive Director & CFO
J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &Dated : 24th May, 2006 Company Secretary Joint Managing Director
Directors
B.B. Chadha
G.S. Gupta
K.K. Narula
M.G. Bakre
Rajendra Arya
SURYA ROSHNI LIMITED
39
CASH FLOW STATEMENT
This Year Previous Year
(Rs.) (Rs.) (Rs.) (Rs.)
A. CASH FLOW FROM OPERATING ACTIVITIES
NET PROFIT BEFORE TAX 28,71,18,098 17,33,98,100
ADJUSTMENT FOR :
Depreciation 27‚46‚70‚290 24‚49‚04‚864
Interest (Net) 27‚57‚06‚537 24‚49‚88‚767
Loss/(Profit) on Sale of Fixed Assets (20,62,880) 6,92,324
Rent Income (96,000) 54‚82‚17‚947 (1,04,000) 49‚04‚81‚955
Operating Profit before working capital changes 83‚53‚36‚045 66‚38‚80‚055
Adjustment for :
Trade & Other Receivables (22,20,60,834) 5‚07‚50‚909
We have examined the above Cash Flow Statement of Surya Roshni Limited for the year ended 31st March, 2006 The Statement has beenprepared by the Company in accordance with the requirements of listing agreement Clause 32 with Stock Exchanges and is based on and inagreement with the books and records of the Company and also the Profit and Loss Account and Balance Sheet of the Company covered by ourreport of even date to the members of the Company.
For SASTRY K. ANANDAM & CO.CHARTERED ACCOUNTANTS
Place : New Delhi K. ANANDA SASTRYDated : 24th May, 2006 Partner, F.C.A
Membership No. 9980
B. D. AgarwalChairman and
S. N. Bansal Managing Director
Executive Director & CFO
J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &Dated : 24th May, 2006 Company Secretary Joint Managing Director
TOTAL LIABILITY & STOCKHOLDERS' EQUITY 733,106 997,801
(See accompanying notes to financial statements)
DIRECTORS' REPORT 2005-2006
The Directors present this Report and the Financial Statement of the Company
for the financial year ended 31st March, 2006
Operations
The company was incorporated on December 7, 1999, in the state of New York,
under the name of Surya Roshni Ltd. and subsequently the name was changed to
Surya Roshni Inc. The Company focuses on marketing and distribution of Energy
Saving Lamps for a wide variety of customers.
The sales during the year are USD 18,774 as compared to USD 701,390 in
the previous year. There was a net loss of USD 167,822 as compared to
previous year's loss of USD 431,222. Efforts are being made to improve the
performance.
Share Capital
The entire issued share capital of $ 1,500,000 is owned by the Surya Roshni
Limited (A Corporation of India) and the company is a Wholly Owned Subsidiary
of Holding Corporation.
Auditors
M/s Mahesh J Agashiwala, C.P.A.P.C. Certified Public Accountant the Auditors
of the company are eligible for re-appointment for the current financial year.
On Behalf of the Board of Directors
Basudev Agarwal
Dated : 1st May, 2006 Director - President & Secretary
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Stockholdersof Surya Roshni Inc.
We have audited the accompanying Balance Sheet of Surya Roshni Inc. (the“Company”) as of 31st March, 2006 and 31st March, 2005 and the relatedstatements of Income and Expenditure, Retained Earnings and Cash Flows forthe years then ended. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
We conducted our audit in accordance with Generally Accepted AuditingStandards in the United States of America. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatements. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatement. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe our audit provides a reasonablebasis for our opinion.
In our opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Surya Roshni Inc as of 31st March,2006 and 31st March, 2005 and the results of its operations and cash flows forthe years then ended in conformity with Generally Accepted AccountingPrinciples in the United States of America subject to Note no. 3 on the valuationof inventories and Note no. 4 on Accounts Receivables, as given in the attachednotes to the financial statements.
New York, NY Mahesh J. AgashiwalaMay 01, 2006 CPA P.C.
SURYA ROSHNI INC. (NEW YORK)
41
INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006 & 200531.03.2006 31.03.2005
$ $
Sales 18,774 710,403
Less : Returns & Allowances – (9,013)
Net Sales 18,774 701,390
Cost of sales (Schedule A) 138,095 951,554
Total Cost of Sales 138,095 951,554
Gross profit / (Loss) (119,321) (250,164)
Operating expenses : (Schedule B)
Selling, general and administrative expenses 61,560 201,445
Other Income:
Interest Income 13,059 7,534
Interest Tax Refund – 12,853
Income (Loss) before Corporate Taxes (167,822) (431,222)
Corporate Taxes (Note 2) – –
Net Income (167,822) (431,222)(See accompanying notes to financial statements)
COMPARATIVE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2006 & 2005
31.03.2006 31.03.2005Cash flows from operating activities : $ $
Net Income / (Loss) (167,822) (431,222)
Adjustments to reconcile net profit to net cash
provided (used in) by Operating activities :
Depreciation for the Period 1,934 127
(Increase)/Decrease in Accounts Receivable 50,647 533,583
(Increase)/Decrease in Inventory 120,598 874,699
Decrease in Other Current Assets (974) 7,289
Increase/(Decrease) in Current Liabilities (96,873) (679,586)
Net cash provided by operating activities 75,332 736,113
Cash Flow from Investing activities :
Loan to Surya Roshni Limited, India – (325,000)
Cash Flow from Financing activities :
Increase in Equity – –
Net Increase/(decrease) in cash flow (92,490) (20,109)
Cash at beginning of year 131,563 151,673
Cash at end of Period 39,073 131,563(See accompanying notes to financial statements)
SCHEDULE OF COST OF SALES FOR THE YEAR ENDED 31ST MARCH, 2006 & 2005
(SCHEDULE A)31.03.2006 31.03.2005
$ $
Cost of Sales
Inventory - beginning 3,92,744 1,267,443
Purchases – –
Freight Charges 988 8,399
Packing Materials – 39,404
Warehousing 16,510 20,690
Custom & Clearing Charges – 8,363
Total 410,242 1,344,298
Inventory - ending (272,147) (392,744)
Cost of Sales 138,095 951,554
(See accompanying notes to financial statements)
SURYA ROSHNI INC. (NEW YORK)
42
SCHEDULES OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED 31ST MARCH, 2006 & 2005
61,560 201,445(See accompanying notes to financial statements)
STATEMENT OF RETAINED EARNINGS AS OF 31ST MARCH, 2006 & 2005 31.03.2006 31.03.2005RETAINED EARNINGS : $ $
Beginning Balance (604,503) (173,281)Net Profit / (Loss) for the Period (167,822) (431,222)
Ending Balance (772,325) (604,503)(See accompanying notes to financial statements)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2006
NOTE 1 - ORGANIZATIONSurya Roshni Inc. ("the Company") was incorporated under the laws of the state of New York on December 7, 1999, and also obtained certificate to do businessin the States of California.The principal business of the Company is the marketing and distribution of light bulbs for a wide variety of customers.The Company is a wholly owned subsidiary of Surya Roshni Ltd. (India) which is incorporated in India.The company is no longer having any major operations. The company did not make any purchases during the year and there are negligible amount of sales.The company has no payroll during the year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Accounting is done on accrual basis.b. Inventory is valued at cost or market price whichever is lower.c. No provision for taxes as the company has incurred losses in the year and has huge carryover losses.d. The Company follows Diminishing Balance Method of depreciation over the estimated useful life of the assets.
NOTE 3 - INVENTORYThe inventory of the Company is valued at $ 272,147 (based on its net realizable value). Almost 50% of the inventory comprises of PMI-15W bulbs wholevaluation had been reduced by $ 238,235 last year and has been reduced again by $ 22,639 in the current year. These bulbs have been purchased in September2001 and the marketability of these bulbs has reduced considerably since it lost its 'Energy Star Rating'. Apart from the above mentioned, most of the inventorylying in stock are purchases of the year 2002 and their value has been reduced this year by $ 78,285. The total reduction in the value of inventory has been of$ 100,924. The management is hopeful of realizing this value and is negotiating with liquidators.
NOTE 4 : ACCOUNTS RECEIVABLEAlmost 72% of the Accounts Receivable are over 2.5 years past due. Management has booked bad debts of $ 40,947 in the current year which comprises of aprovision for bad debts of $ 25,000. The total provision for bad debts presently is $ 50,000 which has been netted out against the total Accounts Receivable of$ 139,318. The amount realized from the last year's Debtors during the year is $ 6,421 only and the management expects to realize the overdue accounts byinstituting continuous follow up with the customers.
NOTE 5 - LOANS AND ADVANCESThe Company has advanced a loan of $ 325,000 to its parent company, Surya Roshni Limited, India @ 3.50% p.a. till January 2006 and the rate has been revisedto 5.5% from February 2006. Interest accrued till 31st March, 2006 is $ 1,757 (net of withholding tax) has been provided in the books.
NOTE 6 : LINE OF CREDITThe cash and bank balance includes the Certificate of Deposit of $ 30,000. This Certificate of Deposit is held as collateral against $ 27,000 Line of Credit fromState Bank of India. The CD earns 2.9% interest whereas the Company pays 3.4% interest on the Line of Credit.
NOTE 7 - INCOME TAXESThe Company has net operating loss carry forwards, which will expire as follows:Year ending 31st March, Federal New York California2013 $ 251,6582014 $ 429,9312023 $ 175,445 $ 251,4632024 $ 444,077 $ 443,922
NOTE 8 - EQUITYThe Company is authorized to issue 200 shares @ No Par Value.Shares issued and outstanding as on 31st March, 2006 was $ 1,500,000 (100 shares @ $ 1,000 per share and 56 shares @ $ 25,000 per share.)
SURYA ROSHNI LIMITED
43
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS
The Board of DirectorsSurya Roshni LimitedNew Delhi
We have examined the attached Consolidated Balance Sheet of Surya RoshniLimited and its subsidiary as at 31st March, 2006, the Consolidated Profit and LossAccount and the Cash Flow Statement for the year then ended.These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on the financial statements based on ouraudit. We have conducted our audit inaccordance with generally accepted auditingstandards in India. These Standards require that we plan and perform the audit toobtain reasonable assurance whether the financial statements are prepared, in allmaterial respects, in accordance with an identified financial reporting frameworkand are free of material misstatements. An audit includes, examining on a test basis,evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statements. Webelieve that our audit provides a reasonable basis for our opinion.We did not audit the financial statements of subsidiary, whose financial statementreflect total assets of Rs. 327.04 lakhs as at 31st March,2006 and Rs. 436.54 lakhsas at 31st March, 2005 and total revenues of Rs. 14.20 lakhs and Rs. 315.78 lakhsrespectively for the years then ended. These financial statement have been audited
by other auditors, whose reports have been furnished to us and our opinion, insofaras it relates to the amounts included in respect of the subsidiary, is based solely onthe report of the other auditors.We report that the consolidated financial statements have been prepared by theCompany in accordance with the requirements of Accounting Standard (AS) 21,Consolidated Financial Statements, issued by the Institute of Chartered Accountantsof India and on the basis of the separate audited financial statements of Surya RoshniLimited and its subsidiary included in the consolidated financial statements.On the basis of the information and explanations given to us and on the considerationof the separate audit reports on individual audited financial statements of SuryaRoshni Limited and its subsidiary, we are of the opinion that :a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state
of affairs of Surya Roshni Limited and its subsidiary as at 31st March, 2006;b) the Consolidated Profit and Loss Account gives a true and fair view of the
consolidated results of operations of Surya Roshni Limited and its subsidiary for theyear then ended ; and
c) the consolidated Cash Flow Statement gives a true and fair view of”the consolidatedCash Flow of the Company and its subsidiary for the year then ended.
For SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS
(K. ANANDA SASTRY)Place : New Delhi PARTNER F.C.A.Dated : 24th May, 2006 Membership No. 9980
CONSOLIDATED BALANCE SHEET
Particulars Schedule As at As atNo. 31st March, 2006 31st March, 2005
Less: Transferred from Capital Reserve on Revaluation of Fixed Assets 5‚01‚226 5‚01‚226
27‚47‚56‚521 24‚49‚10‚420
TOTAL 9‚75‚53‚00‚060 9‚94‚85‚80‚018
PROFIT/(LOSS) BEFORE TAX FOR THE YEAR 27‚99‚69‚363 15‚45‚32‚138
Provision for Tax
– Current 10‚81‚17‚023 4‚76‚68‚134
– Deferred (1,35,52,001) 8‚21‚763
– Fringe Benefit 56‚50‚000 –
PROFIT/(LOSS) AFTER TAX 17‚97‚54‚341 10‚60‚42‚241
Surplus brought forward from previous year 65‚20‚52‚663 57‚23‚63‚695
AVAILLABLE FOR APPROPRIATIONS
Proposed Equity Dividend 3‚90‚01‚875 3‚04‚81‚500
Tax on Dividend 54‚70‚013 43‚53‚650
Deferred Tax Revision (23,08,578) (1,90,01,750)
Transfer to General Reserve 1‚00‚00‚000 1‚00‚00‚000
Balance carried to Balance Sheet 77‚96‚43‚694 65‚25‚72‚535
Earning per Equity Share - Basic & Diluted 7.08 4.17
Significant Accounting Policies and
Notes on Accounts 21
Profit and Loss Account
The Schedules referred to above and notes on accounts thereon form an integral part of Profit & Loss Account.
As per our attached report of even date
For SASTRY K. ANANDAM & CO.
Chartered Accountants B. D. AgarwalChairman and
K. ANANDA SASTRY S. N. Bansal Managing Director
Partner Executive Director & CFOMembership No. 9980
J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &
Dated : 24th May, 2006 Company Secretary Joint Managing Director
Directors
B.B. Chadha
G.S. Gupta
K.K. Narula
M.G. Bakre
Rajendra Arya
SURYA ROSHNI LIMITED
45
Schedules to the Consolidated Balance Sheet
SCHEDULE 1 As at As at31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SHARE CAPITAL
Authorised :
4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000 49‚80‚00‚000
6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000 6‚20‚00‚000
56‚00‚00‚000 56‚00‚00‚000
Issued, Subscribed and Paid up
2,60,01,250 (Previous Year - 2,54,01,250) Equity Shares of 26,00,12,500 25‚40‚12‚500Rs. 10/- each fully paid up (6,00,000 Equity Shares ofRs. 10/- each fully paid-up allotted during the year uponconversion of Warrants)
(Of the above shares 3,00,000 Equity shares ofRs.10/- each allotted as fully paid up Bonus shares bycapitalisation of General Reserve during 1980-81,86,47,500 Equity shares of Rs.10/- each during 1994-95 and22,38,750 Equity shares of Rs. 10/- each during 1995-96 bycapitalisation of securities premium account.)
38,00,000 (Previous Year - NIL) Optionally Convertible Equity 2‚43‚20‚000 –Warrants of Rs 64/- each Rs. 6.40 paid up convertible on or before15th july,2007 (6,00,000 Optionally Convertible Equity Warrantshave been converted into equity shares during the year)
Total 28‚43‚32‚500 25‚40‚12‚500
SCHEDULE 2 As at As at As at31.03.2005 Addition Deduction 31.03.2006 31.03.2005
RESERVES AND SURPLUS
– Capital subsidy 50‚00‚000 – – 50‚00‚000 50‚00‚000
– on revaluation of Fixed Assets 1‚22‚23‚364 – 5,01,226 1‚17‚22‚138 1‚22‚23‚364
Capital Redemption Reserve 3‚00‚00‚000 – – 3‚00‚00‚000 3‚00‚00‚000
SCHEDULE 3 As at As at 31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SECURED LOANS
Term Loans
From Financial Institutions 73‚44‚99‚607 60‚96‚97‚221
From Banks 77‚28‚77‚953 79‚97‚29‚669
Working Capital Loans from Banks 1‚38‚85‚24‚802 1‚26‚50‚62‚374
2‚89‚59‚02‚362 2‚67‚44‚89‚264
NOTES :
1) Term Loans from Banks and Financial Institutions secured by deposit of title deeds relating to immovable assets of the company and further secured byhypothecation of all company's movable assets.
2) Working Capital Loans from Banks are secured against hypothecation of present and future stock of raw material, stock in process, finished goods, spare andstores, book debts etc., guaranteed by two directors of the company and further secured by way of second charge on the company's Fixed Assets.
Schedules
SURYA ROSHNI LIMITED
46
SCHEDULE 5
FIXED ASSETS (Amt. in Rs.)
PARTICULARS
GROSS BLOCK DEPRECIATION NET BLOCK
Up To Additions Sales/ As at Up To For the Year Sales/ Up To As at As at01.04.2005 Adjustments 31.3.2006 31.3.2005 ended 31.3.2006 Adjustments 31.3.2006 31.3.2006 31.3.2005
Land & Site Development 9‚70‚78‚041 – – 9‚70‚78‚041 – – – – 9‚70‚78‚041 9‚70‚78‚041
Stores and spare parts, etc. (at cost on FIFO Basis) 17‚40‚61‚324 14‚86‚16‚258Raw Materials (at cost on FIFO basis) 46‚75‚65‚695 43‚72‚84‚788Scrap and salvage (at market value) 3‚16‚37‚299 1‚80‚38‚777Semi -finished goods (at cost or net realisable value, whichever is less) 16‚46‚26‚442 20‚64‚38‚466Finished goods (at cost or net realisable value, whichever is less) 71‚28‚52‚691 78‚73‚60‚847
Total 1‚55‚07‚43‚451 1‚59‚77‚39‚136
SCHEDULE 8
SUNDRY DEBTORS
(unsecured, considered good)
Debts outstanding for a period exceeding six months 2‚00‚50‚691 2‚04‚02‚002Other debts 1‚04‚45‚09‚507 89‚05‚61‚935
Total 1‚06‚45‚60‚198 91‚09‚63‚937
SCHEDULE 9
CASH AND BANK BALANCE
Cash on hand 26‚93‚329 28‚47‚336Cheques/Drafts/TTs in hand/ in transit 2‚72‚65‚727 1‚70‚54‚010Balance With Scheduled Banks in :
Advances recoverable in cash or in kind orfor value to be received 19‚81‚34‚761 14‚48‚13‚704Security Deposits 1‚67‚96‚565 1‚69‚59‚673Earnest Money Deposits 28‚59‚838 29‚51‚100Claims Recoverable/Receivable 1‚45‚20‚760 12,14,495
Total 23‚23‚11‚924 16‚59‚38‚972
SCHEDULE 11
CURRENT LIABILITIES
Sundry Creditors– Due to SSI 1‚70‚94‚108 92‚64‚896– Others 11‚25‚28‚019 16‚17‚33‚876
Other Liabilities 11‚52‚12‚226 12‚66‚68‚554Interest accrued but not due 55‚46‚946 92‚32‚128
Total 25‚03‚81‚299 30‚68‚99‚454
SCHEDULE 12
PROVISIONS
Proposed Equity Dividend 3‚90‚01‚875 3‚04‚81‚500Tax on Dividend 54‚70‚013 42‚75‚030Provision for gratuity 2‚66‚13‚346 1‚58‚16‚240Provision for Leave Encashment 1‚04‚88‚148 91‚14‚543
Total 8‚15‚73‚382 5‚96‚87‚313
SURYA ROSHNI LIMITED
48
Schedules to the Consolidated Profit and Loss Account
For the Year Ended For the Year Ended 31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SCHEDULE 13SALESInland (net of return) 11‚19‚38‚37‚051 10‚39‚19‚87‚463Export* 99‚26‚74‚325 1‚43‚04‚83‚618
12‚18‚65‚11‚376 11‚82‚24‚71‚081Less : Internal consumptions of components 76‚61‚93‚794 65‚06‚15‚971
Total 11‚42‚03‚17‚582 11‚17‚18‚55‚110
* Export Includes Export Benefits of Rs. 6,58,84,761 (Previous Year Rs. 9,81,73,775)and Rs. Nil (Previous Year 12,65,900) to Surya Roshni Inc., a wholly owned subsidiary
SCHEDULE 14OTHER INCOMERent 96‚000 1‚04‚000Interest (TDS Rs. 1‚27‚213) 16‚23‚616 14‚94‚350Others 48‚82‚180 35‚01‚459Insurance claims 64‚00‚699 1‚95‚180Income from Investment (Non-Trade) 1‚06‚137 1‚04‚760Foreign Exchang fluctuation – 8‚21‚618Profit on Sale of Fixed Assets 68‚52‚320 15‚67‚729Profit on Sale of Investments – 50,000
1‚99‚60‚952 78‚39‚096
SCHEDULE 15ACCRETION/(DECRETION) TO STOCKStock as at 1st April
SCHEDULE 17EMPLOYEES REMUNERATION AND BENEFITSSalaries,wages and allowances including bonus and gratuity 43‚27‚85‚173 38‚66‚32‚034Employers contribution to PF, ESI and administrative charges 3‚56‚02‚884 3‚24‚62‚583Staff Welfare Expenses 1‚87‚70‚124 2‚34‚38‚542Remuneration to Managerial Personnel 65‚70‚000 53‚70‚000Staff Recruitment and Training Expenses 17‚95‚486 15‚71‚503
Total 49‚55‚23‚667 44‚94‚74‚662
SCHEDULE 18SELLING EXPENSESCarriage Outward 28‚64‚38‚812 32‚31‚73‚447Commission\Service Charges on sale 4‚64‚36‚596 4‚97‚14‚596Discounts 21‚78‚81‚748 19‚51‚72‚971Advertisement 2‚99‚31‚190 3‚25‚54‚472Claims for defective 3‚91‚93‚774 2‚40‚11‚820Others 3‚14‚62‚637 5‚65‚28‚968
Total 65‚13‚44‚757 68‚11‚56‚274
Schedules
SURYA ROSHNI LIMITED
49
Schedules to the Consolidated Profit and Loss Account
For the Year Ended For the Year Ended 31st March, 2006 31st March, 2005
(Rs.) (Rs.)
SCHEDULE 21
A. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General
Surya Roshni Limited was incorporated in India and operates as a Holding Company for other group companies.2. Principles and Basis of preparation of Financial Statements
The consolidated financial statements have been prepared in accordance with Accounting Standards (AS 21) Consolidated Financial Statements.
The consolidated financial statements comprise the financial statements of the parent company and its subsidiary.
The following group company considered for consolidation.
Sl. Name of the Subsidiary Company Country of Extent of Holding (%) Conversion Rate
No. Incorporation as on March 31, 2006 This Year Previous Year1. Surya Roshni Inc. USA 100.00 US$ Rs. 44.61 US$ Rs. 43.75
The consolidated financial statements are prepared on historical cost convention using accounting policies of the parent company unless otherwise stated. InterCompany balances and transactions have been eliminated in the consolidation.
3. Fixed Assets
Fixed Assets are stated at cost net of CENVAT and includes amounts added on revaluation, less accumulated depreciation. All costs, including interest on borrowingsattributable to acquisition of Fixed Assets upto the date of commissioning of the assets are capitalised.
4. Depreciation(i) Depreciation on fixed assets for the parent company is provided on straight line method as per the provisions of Sec. 205(2) of the Companies Act, 1956 and
for the subsidiary, the basis of depreciation rates prescribed under respective domestic laws.(ii) Depreciation on addition is being provided on pro rata basis from the date of such additions.(iii) Depreciation on assets sold, discarded or demolished during the year is being provided at their rates up to the date in which such assets are sold, discarded or
demolished.(iv) Depreciation on additions on account of increase in rupee value due to revaluation of foreign currency loan is being provided at respective rates of depreciation
of related assets.5. Foreign Currency Translations
The Monetary items denominated in foreign currency have been translated at the exchange rate prevailing on the last day of the accounting year and the resultantdifference is carried as translation reserve under "Reserves and Surplus".
6. Investments
The investments are valued at cost of acquisition.
Miscellaneous Expenses 3‚92‚04‚777 5‚04‚67‚770Foreign Exchange FluctuationLoss on sale of fixed assets 47‚89‚440 22‚60‚053Loss on sale of Investments 61,768 –Sales Tax / Trade Tax Paid 1‚98‚32‚634 1‚41‚01‚783
The Provision for Gratuity and Leave Encashment are made as per actuarial valuation basis as at the end of the financial year. However the Parent Company hascovered its Gratuity liabilities with Life Insurance Corporation of India (LIC) by forming a Gratuity Trust and the liabilities paid to LIC is debited to Gratuity provisions.
8. Insurance Claims
Insurance claims are accounted for on settlement of claims.
9. Inventories
(i) Raw material, Stores & Spares are valued at cost. Cost calculated on FIFO basis.(ii) Finished Goods are valued at cost. Cost includes direct cost and appropriate portion of overheads.(iii) Semi-finished goods are valued at cost or net realisable value whichever is lower.(iv) Scrap and Salvage is valued at market price.(v) The closing stock constituting duty-free imports consequent to utilisation of DEPB credit is valued at the actual cost of purchase including such foregone import
duty.
10. Revenue Recognition
The VAT collected from the customers is not included in Sales.
11. Share Capital
Authorised
4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000
6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000
56‚00‚00‚000
Issued, Subscribed and Paid up2,60,01,250 Equity Shares of Rs. 10/- each fully paid up 26‚00‚12‚500(6,00,000 Equity Shares of Rs.10/- each fully paid-up allotted during the year upon conversion of warrants)
(Of the above shares 3,00,000 Equity shares of Rs.10/- each allotted as fully paid up Bonus shares bycapitalisation of General Reserve during 1980-81, 86,47,500 Equity shares of Rs.10/- each during 1994-95and 22,38,750 Equity shares of Rs. 10/- each during 1995-96 by capitalisation of securities premium account.)
38,00,000(Previous year - Nil) Optionally Convertible Warrants of Rs.64/- each Rs. 6.40/- paid up convertible 2,43,20,000on or before 15th July, 2007. (6,00,000 Optionally Convertible Equity Warrants have been converted intoequity shares during the year)
Total 28‚43‚32‚500
12. Deferred Tax
As per Accounting Standard (AS - 22) on accounting for Taxes on income issued by the Institute of Chartered Accountants of India, the deferred tax liability as on 31stMarch, 2005 comprises of the following :
Particulars As on 31st March, 2006 As on 31st March, 2005
(a) Deferred Tax Liability
1. Related to Fixed Assets (49,08,56,412) (50,26,20,330)
(b) Deferred Tax Assets
1. Gratuity 89,58,052 53,23,746
2. Leave Encashment 35,30,311 30,67,955
Net Deferred Tax Assets/(Liabilities) (47,83,68,049) (49,42,28,629)
The deferred tax liability upto 31st March, 2005 was measured as per the Income Tax rates enacted on the Balance Sheet date. The same has been revised toRs.49,19,20,050/- and the difference of Rs.23,08,578/- has been credited to the Profit and Loss Appropriation Account
Schedules
9. Segment Information for the year ended 31st March, 2006 and 31st March, 2005The company has identified the following two Primary Business Segments :1. Steel - Engaged in the production of Steel Tubes & Pipes and Cold Rolled Strips.2. Lighting - Engaged mainly in the manufacture of different varieties of Lamps.Secondary Segment reporting has been performed on the basis of Geographical Locations.
Non-cash expenses other than Depreciation – – –– – –
Geographic Segment
India 10‚49‚26‚90‚5109‚80‚88‚59‚454
Outside India 92‚76‚27‚0721‚36‚29‚95‚656
14. Earning per share (Basic and Diluted)
Particular This Year (Rs.) Previous Year (Rs.)
Profit after Tax 17,97,54,341 10,60,42,241Profit for Equity Shareholders 17,97,54,341 10,60,42,241Number of Equity Shares (Face Value Rs. 10/- each) 2,60,01,250 2,54,01,2502,54,01,250 Equity Shares for Full Year 2,54,01,2506,00,000 Equity Shares for 3 days (600000*3/365) 4,932Weighted Average number of Equity Shares used as denominator for calculating EPS 2,54,06,182 2,54,01,250Basic & Diluted Earning Per Share (EPS) (Rs.) 7.08 4.17
38,00,000 Equity Shares to be issued against the conversion of 38,00,000 Optionally Convertible Warrants are fairly priced and are assumed to be neither dilutive norantidilutive. Hence the same is not considered for computation of diluted earning per share.
15. Related party disclosureRelated party disclosures as required under Accounting Standard on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are givenhereunder :
iii) Entities over which the key management personnel are able to exercise significant influence– Galaxy Pipes Limited– Prakash Industries Limited
CONSOLIDATED CASH FLOW STATEMENT
This year Previous Year
(Rs.) (Rs.) (Rs.) (Rs.)
A. CASH FLOW FROM OPERATING ACTIVITIES
NET PROFIT BEFORE TAX 27‚99‚69‚363 15‚45‚32‚138
ADJUSTMENT FOR :
Depreciation 27‚47‚56‚521 24‚49‚10‚420Interest (Net) 27‚51‚52‚481 24‚41‚76‚767Loss/(Profit) on Sale of Fixed Assets (20,62,880) 6,92,324Rent Income (96,000) 54‚77‚50‚122 (1,04,000) 48‚96‚75‚511
Operating Profit before working capital changes 82‚77‚19‚485 64‚42‚07‚649Adjustment for :Trade & Other Receivables (21,99,69,213) 4,67,98,419Inventories 4‚69‚95‚685 (14,27,31,439)Trade Payables (4,43,47,444) (21,73,20,972) (1,53,19,069) (11,12,52,089)
Cash Generated from Operations 61‚03‚98‚513 53‚29‚55‚560Income Tax Paid (11,37,67,023) (4,76,68,134)Exchange Difference on translation of foreign currency 4,32,368 43‚122Interest Paid (13,55,70,466) (24,89,05,121) (10,53,28,160) (15,29,53,172)
NET CASH FROM OPERATING ACTIVITIES 36‚14‚93‚392 38‚00‚02‚387
B. CASH FLOW FROM INVESTING ACTIVITIES
Sale/(Purchase) of Investments 3‚67‚770 2,32,230Interest Received 16‚23‚616 14‚94‚350Purchases of Fixed Assets (48,96,89,866) (22,21,35,841)Capital Work in Progress 63‚81‚171 (9,91,64,160)Sale/Adjustments of Fixed Assets 2‚18‚49‚279 60‚08‚958Rent Received 96,000 1,04,000
NET CASH USED IN INVESTING ACTIVITIES (45,93,72,030) (31,34,60,463)
C. CASH FLOW FROM FINANCING ACTIVITIES
Increase/(Decrease) Long Term Borrowings 9‚85‚87‚625 6‚65‚89‚580Increase/(Decrease) Short Term Borrowings 12‚34‚62‚428 3‚22‚63‚248Issue/(Redemption) of Share Capital 6‚27‚20‚000 –Interest on borrowings (14,12,05,631) (14,03,42,957)Dividend Paid (3,47,56,530) (3,46,90,569)NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES 10,88,07,892 (7,61,80,698)Net Increase/(decrease) in cash & cash equivalents 1,09,29,253 (96,38,773)Opening Cash & Cash equivalents 3‚95‚05‚314 4‚91‚44‚088Closing Cash & Cash equivalents 5‚04‚34‚568 3‚95‚05‚315
Cash Flow Statement
B. Transactions carried out with the related parties in the ordinary course of business :
i) Key Management Personnel & their Relatives :
Remuneration for the year 2005-2006 :– Sh. B.D.Agarwal (Chairman & Managing Director) Rs. 35,10,000– Sh. J.P.Agarwal (Vice-Chairman & Jt. Managing Director) Rs. 30,60,000– Sh. Vinay Surya (Chief Operating Officer – Export) Rs. 4,92,000Sitting Fees for the year 2005-2006
Smt. Urmil Agarwal (Director) Rs. 7,500/-
AUDITORS’ REPORTWe have examined the above Consolidated Cash Flow Statement compiled from the consolidated audited financial statements of Surya Roshni Limited for theyear ended March 31,2006, reported by us on 24th May,2006 and found the same to be drawn in accordance therewith.
For SASTRY K. ANANDAM & CO.CHARTERED ACCOUNTANTS
K. ANANDA SASTRYPlace : New Delhi Partner, F.C.ADated : 24th May, 2006 Membership No. 9980
SURYA ROSHNI LIMITED
52
B. D. AgarwalChairman and
S. N. Bansal Managing Director
Executive Director & CFOJ. P. Agarwal
Place : New Delhi B. B. Singal Vice Chairman &
Dated : 24th May, 2006 Company Secretary Joint Managing Director
