DIRECTORS' REPORT FOR THE YEAR ENDED 31st MARCH, 2010 To The Members, The Directors have pleasure in presenting the 37th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2010. FINANCIAL REVIEW The financial year 2009-10 started with uptrend in demand for iron and steel products and buoyancy in the steel prices during the year after the unprecedented global economic slow down in the second half of the previous year. Since ferro alloys are exclusively utilized as raw materials in steel industry, the ferro alloys industry witnessed uptrend in the demand and better prices for ferro alloys during the year. Your Company has achieved a turnover of Rs.382.06 crores (including conversion income of Rs.310.61 crores) as compared to Rs.425.06 crores (including conversion income of Rs.353.02 crores) in the previous year. The Company has achieved an improved performance in terms of financial results and earned a net profit (before tax) of Rs.79.23 crores despite considerable increase in power tariff. This is due to strategic measures taken by the Management viz. increase in production and sales, better product mix, improved techno-economic parameters, optimization in procurement and continuous emphasis on cost reduction, prudent funds management. PRODUCTION REVIEW Company had to operate Furnace-ll for ten months and Furnace-I for one month for Silico Manganese production. In order to meet enhanced demand for SAIL Plants. Furnace-I was operated for producing Ferro Manganese for eleven months and Furnace-ll for two months for production Ferro Manganese. SALES & MARKETING REVIEW SAIL STEEL PLANTS During the financial year 2009-10 the Company continued conversion arrangements with SAIL Steel Plants in order to have secured market. Vigorous efforts were made by the Company to find market outside SAIL. OTHER CUSTOMERS The Company continued to achieve a growth in terms of sales realization through sale of ferro alloys to customers other than SAIL Plants. RESEARCH & DEVELOPMENT Major in-house development projects undertaken in the technical area were : i) Installation and commissioning of new booster blower (Booster D) in Booster House resulting in energy saving. ii) Upgradation of SAF Automation System by replacing S5135U by S7-300 system. iii) Modification and installation of new scale discharge vibrators and energy efficient vibrators in Bunker House. iv) Digitalization of all the drawings with soft copy and computerization of Drawing Office with facility of A-4 size drawing, scanning and printing of drawing upto A-0 size on plotter. v) Development of indigenous source of supply for membrane housing seal. vi) Mechanization of product handling/breaking to improve the labour productivity and yield. vii) Construction of additional storage bunkers to feed low cost raw materials to furnaces. HUMAN RESOURCES MANAGEMENT REVIEW Human Resources has been MEL's greatest strength. Considering the increased activities the focus and thrust has been on optimum manpower utilization and improvement in production and productivity. Redeployment of employees has been carried out during the year considering the cross sectional requirement in the Company. The Human Resource Development (HRD) activities have been focused on enhancement of Technical and Managerial skills with thrust on multi-skill training and exposure to modern management techniques. During the year 353 employees were trained in various areas. The Company continues to recognize excellence in performance and innovation and has awarded 3 Executives and 14 Non-Executives for their individual contribution with 9 groups awards on Republic Day, 2010. The Company's Scholarship for Meritorious wards has been awarded to 5 children during the year. The Company has also motivated 76 Bright Pupils by honoring them with awards for their best performance in academics. The Company in association with the National AIDS Control Organization (NACO) has actively participated and promoted the Information, Education and Communication (IEC) under the campaign for HIV/Aids awareness programme. The manpower strength of MEL as on 31st March, 2010 was 714 comprising 589 Non-executives and 125 Executives. The Presidential directives for Scheduled Caste and Scheduled Tribe continued to be implemented and monitored on regular basis. Out of total manpower, 13.45% were Scheduled Caste, 7.84% Scheduled Tribes and 56.61% Other Backward Castes. The Company has been continuing thrust on the implementation of Official Language Policy of Government of India. The Company has been continuously focusing on improving safety standards in the Company by conducting safety workshop/programme to inculcate safety awareness amongst the employees and workers in the factory premises. Several safety measures have been introduced with intensive safety awareness drives to make the work place safe and hazard free. Harmonious Industrial Relations has been the support behind the high production and high productivity. During the year the Industrial Relations remained harmonious and peaceful with full support and co-operation of the Trade Union and Officers' Association. ENVIRONMENT Environment Management and Pollution Control is always accorded top priority in company's activities to comply with applicable legal and other requirements related to its environmental aspects and try to go beyond. To keep environment clean for ecological protection, focused attention was given in the areas of green belt development in and around the plant premises, solid waste management, monitoring of liquid effluent and air ambient for various environmental parameters. Following special efforts were taken during the financial year for enhancing the effective environment management at MEL: a) Consent to operate under the Air (P&CP) Act, The Water (P&CP) Act and The Hazardous Waste (Management, Handling and Trans boundary Movement) Rules is valid upto 31/12/2011. b) Major breakthrough achieved in disposal of solid waste SiMn Granulated slag to WCL for stowing in underground coal mines. About 3.80 lakhs MT of slag has been disposed of. c) Installation work has been started for Dry Fog Dust Suppression system at raw materials charging system to control dust emission at various transfer points during charging of raw materials to furnace. d) Monthly monitoring of environment parameters for exercising better control over working of Pollution control equipment. e) Spraying water on plant roads with mist spray system for controlling fugitive emission due to vehicular movement on plant roads. f) Cleaning of effluent pond in record time for controlling Suspended Solids in discharge effluent. CARPORATE SOCIAL RESPONSIBILITY MEL has been serving the community located in the periphery of its premises which includes 14 villages in Mul Tahsil, Chandrapur District. In the year 2009-10 the focus of its activities remain on the benefit to the community at large for development of Villages in terms of education, health, self employment and infrastructural facilities, etc. In the year 2009-10, your Company has conducted six medical camps covering Gynaeco and General Health for ladies, eye check-up camps for men and women, plastic surgery for children and facilitating heart patients referred to Nagpur for heart surgery. This benefited 1500 residents of nearby villagers and mofussil around MEL. The Company has continued to distribute school bags and stationery items to 16 Schools and 7 'Anganwadies' benefiting 1717 children. It has also reached out "Aikal Vidyalayas" located inside the forest and distance villages. For upliftment of the sports, the Company has sponsored Badminton, Chess, Cricket, Throw-ball, Football, Kabaddi, Aquatics, Tennis & Volleyball tournaments during the year. The Company has contributed for cleaning and beautification of Ramala Talav a major water reservoir at Chanrdapur, construction of compound wall before the Community Center of Neharu Nagar, bifurcator on Chandrapur - Nagpur Road and providing drinking water facilities in the District Stadium towards community development. The Company has provided material support, basic necessities and medical check-up to blind, orphanages, physically challenged persons. The Company has also extended support for self employment scheme like providing training for stitching and cutting classes to 28 ladies each of Borda and Valani village and training and Driving Licenses for Light Motor Vehicle to 20 residents of Borda and Valani village. The development activities carried out during the year have benefited the villagers and also enhanced the image of the Company. TOTAL QUALITY & INDUSTRIAL SAFETY Quality Management System (QMS) in accordance with ISO-9001-2000 International Standard was successfully maintained in MEL during 2009-10. Transaction Audit of ISO-9001-2008 QMS of MEL was carried out successfully by certifying agency M/s.LRQA, Mumbai, on 22nd to 23rd September, 2009 and they recommended for ISO-9001-2009 for the next two years with additional three departments -Sinter Plant-I & II and 4.2 MW Power Plant. HIGHLIGHTS OF SAFETY PERFORMANCE i. No fatal accident during the year. Reduction in reportable accidents by 75% over the previous year. ii. Out of 23 departments, 22 departments maintained "Zero Reportable Accident" level. iii. Eleven months were celebrated as Zero Accident Months except June, 2009. iv. 100% use of Crash Helmets by two wheeler riders. v. Fire, Safety and Yoga training programmes were organized by HRD which has resulted in improving health, moral and positive attitude and safety awareness of employees. MERGER OF MEL WITH SAIL The Expert Group constituted by the Ministry of Steel, Govt, of India, to evaluate the Feasibility of proposals for merger of PSUs, has recommended for merger of MEL with SAIL. MEL Board in its Meeting held on 26th May, 2006, approved in principle for merger of MEL with SAIL subject to the provisions of Companies Act, 1956. The Board in its Meeting held on 27th August, 2009 has approved the draft Scheme of Amalgamation of MEL with SAIL. The Ministry of Steel, Govt of India, has accorded approval to the draft Scheme of Amalgamation of MEL with SAIL. MEL has submitted Application U/s 391 to 394 of the Companies Act, 1956, for Amalgamation of MEL with SAIL to the Ministry of Corporate Affairs, Govt, of India. The Hon'ble Joint Secretary, Ministry of Corporate Affairs, Govt, of India, has held hearing on this Application on 5th May, 2010, and passed Order on 1st June, 2010 for convening meeting of the equity shareholders of MEL and SAIL for consideration and approval of the Scheme of Amalgamation of MEL with SAIL. FUTURE PLAN i. Installation of one number 45 MVA Submerged Arc Furnace for production of Ferro Alloys. ii. Installation of Dust Suppression System at Raw Materials charging system. iii. Parallel operation of Sinter Pots in Sinter Plant No.ll for increasing sinter production. iv. Acquisition of Mining Lease for Manganese Ore. v. Electrification of MEL Railway Sidings. vi. Use of CO gas in place of fire wood for baking of Carbon Paste. vii. To reduce the cost of production of Ferro Alloys by: a) Partial replacement of charcoal by coal. b) Exploring Mn Ore mines from Gua mines and use thereof. c) Production of LGHS Mn Ore Sinter and use in Silico Manganese production. Special Projects at MEL: Installation of 67.5 x 2 MW Power Plant Techno-economic/pre-feasibility report for 67.5 x 2 MW Captive Power Plant at MEL, Chandrapur, prepared by MECON, Ranchi, has been received from NSPCL, New Delhi. The report is under examination. REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC. Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is given at Annexure - I, II & III respectively to this report. Your Company is a designated consumer and Energy Audit is mandatory for designated consumers through Accredited Energy Auditors. Energy Audit was conducted on Submerged Arc Furnaces and its Auxiliaries in March, 2009, according to Energy Conservation Act, 2001, by Accredited Energy Auditors M/s. Petroleum Conservation Research Association, Mumbai. MEL has complied with the provisions of Energy Conservation Act, 2001. PARTICULARS OF EMPLOYEES There was no employee of the Company who received remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. DIRECTORS Shri B.B. Singh has been appointed as Director w.e.f. 12th November, 2009. Shri P.K. Bajaj ceased to be Director w.e.f. 20th November, 2009. Shri R. Ramaraju ceased to be Director w.e.f. 1st April, 2010. Shri S.N. Singh has been appointed as Director w.e.f. 22nd April, 2010. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed : i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) that the directors had prepared annual accounts on a going concern basis. CORPORATE GOVERNANCE In terms of listing agreement with the Stock Exchange a compliance report on Corporate Governance is given at Annexure-IV to this report. The Management Discussion & Analysis Report is given at Annexure-V. A certificate from Auditors of the company regarding compliance of conditions of Corporate Governance is placed at Annexure-VI to this report. In terms of Listing Agreement, the Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. All the Board Members and Senior Management personnel have affirmed compliance with the Code. AUDITORS' REPORT The Statutory Auditors' Report on Accounts of the Company for the financial year ended 31st March, 2010 along with Management's replies are enclosed. The comments of Comptroller and Auditor General of India under the Section 619(4) of the Companies Act, 1956 on the accounts of the Company for the year ended 31st March, 2010 are enclosed at Annexure-VI I. ACKNOWLEDGEMENT The Board of Directors take this opportunity to express their appreciation for the support, Co-operation and loyalty extended by every employee of the Company. They wish to acknowledge the continued support extended by Steel Authority of India Limited. The Directors also greatly appreciate the excellent support the Company received from Shareholders, Auditors, Bankers, Financial Institutions, Central & State Governments, Local Authorities, Maharashtra Electricity Regulatory Commission (MERC), Maharashtra State Electricity Distribution Company Limited (Maha Vitaran) and the Suppliers and Customers. For & on behalf of the Board Sd/- S. N. Singh Chairman Place : Rourkela. Date : 24th June, 2010 |