Annual Report 2008-09

Lanco Industries Limited

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corporate information

Directors Shri G. Maruthi Rao

Shri Gouri Shankar Rathi

Shri L. Madhusudhan Rao

Shri G. Bhaskara Rao

Shri L. Sridhar

Shri D.R. Jawahar (Nominee of IDBI)

Shri P. Rajeswara Rao (Nominee of APIDC)

managing Director Shri Mayank Kejriwal

chief operating officer Shri Shirish Kurane

sr. general manager-finance Shri G.D. Saini

& company secretary

auDitors M/s. K.R. Bapuji & Co.

Hyderabad

solicitors Khaitan & Co.

Bankers ICICI Bank Ltd.

HDFC Bank Ltd.

IDBI Bank Ltd.

Standard Chartered Bank

BNP Paribas

Punjab National Bank

Bank of India

registereD office & Works Rachagunneri – 517 641

Srikalahasthi Mandal

Chittoor District

Andhra Pradesh

share transfer agents M/s. Karvy Computershare Private Limited

Plot No. 17-24, Beside Image Hospital

Vittalrao Nagar, Madhapur

Hyderabad-500 081


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Directors’ reportDear shareholders,

Your Directors take pleasure in presenting the 17th Annual Report and Audited Accounts of your Company for the year ended 31st March, 2009.

financial results

(rs. in lakhs) (Rs. in Lakhs)2008-09 2007-08

Net Sales & Other Income 64,681.79 46,458.84Gross Profit 4,464.66 5,514.43Depreciation 1,641.84 1,512.99Profit Before Taxation 2,822.82 4,001.44Less: Provision for Taxation (Including Deferred Tax) 987.53 1,409.70Profit After Tax 1,835.29 2,591.74Profit Brought Forward from Previous Year 1,242.48 858.92Prior Period Adjustment – (55.46)Balance Available for Appropriation 3,077.77 3,395.20Appropriations are made as under: – Debenture Redemption Reserve 468.75 187.50 – General Reserve 1,000.00 1,500.00 – Proposed Dividend 397.64 397.64 – Dividend Tax 67.58 67.58Balance Carried Forward to Next Year 1,143.80 1,242.48

DiViDenDYour Directors recommend payment of dividend @ 10% on the equity shares of the Company for the year ended 31st March, 2009. If approved, the dividend will absorb Rs. 465.22 lakhs (including Rs. 67.58 lakhs towards dividend tax).

reVieW of operationsDuring the year, the Company achieved Sales (Gross) of Rs. 680.47 Crs., an increase of 37.55% over the previous year’s figure of Rs. 494.72 Crs. However due to spiraling cost of inputs especially the imported coal and freight, higher interest cost & foreign exchange loss, the Profit (PBT) for the year was lower at Rs. 28.23 Crs. as against Rs. 40.01 Crs. in the previous year.

The quantity of Low Ash Metallurgical Coke produced in the Coke Oven Plant was marginally low at 1,13,052 MT in FY 2008-09 as against 1,17,438 MT in FY 2007-08. The units of power generated in the 12 MW Waste Heat Recovery Based Captive Power Plant of the Company were higher at 629 Lakh units in the year under review compared with 473 Lakh units in the preceding year.

The production of Mini Blast Furnace (MBF) producing liquid metal mainly for Ductile Iron Pipe Plant, for the year was at 1,48,433 MT compared with 1,48,677 MT in the previous year, reflecting no major change.

However, the production of D.I. Pipes was higher by about 9% at 1,23,422 MT compared with 1,13,471 MT in the preceding year.

The production of Cement during the year was also higher by 24% at 86,812 MT compared to 70,002 MT in the previous year.

During the year, the Company installed two new Induction Furnaces and an Annealing Furnace at an aggregate capital outlay of about Rs. 30 Crs. to overcome the capacity constraints in the Ductile Iron Pipe plant, thereby increasing its capacity from 1,20,000 TPA to 1,80,000 TPA, in last quarter of the year 2008-09.

Apart from the above increase in the capacity of DIP Plant, the Company is also planning to install by June’10, a higher capacity Mini Blast Furnace with hot blast stoves, which along with water, power and other infrastructure facilities will require an additional investment of about Rs. 100 Crs. To meet the requirement of funds for these investments and to augment long-term funds for working capital, the Company has obtained sanction of a Term Loan of Rs. 128 Crs. out of which Rs. 14.41 Crs. have been availed during the year 2008-09.

current year’s prospectsThe market conditions are likely to remain challenging in the near future due to emerging domestic competition and the prevailing global economic recession.

However the demand for D.I. Pipes is likely to be positive, in view of the thrust given by the Government of India to create infrastructure for drinking water across the country. This along with softening prices of imported coking coal a key input for the Company, indicates towards a positive outlook for the performance of your Company, during the current year.


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Directors

Shri Pradip Kumar Khaitan resigned from the Board on 29th January, 2009. Your Directors place on record their appreciation for the active participation and valuable services rendered to the Company by Shri Pradip Kumar Khaitan.

Industrial Development Bank of India Limited (IDBI), Mumbai nominated Shri D.R. Jawahar on the Board of Directors of the Company with effect from 8th September, 2008 in place of Smt. Vatsala Krishnakumar. Your Directors place on record their appreciation for the active participation and valuable services rendered to the Company by Smt. Vatsala Krishnakumar.

Shri Gouri Shankar Rathi and Shri G. Maruthi Rao retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

corporate goVernance

The Corporate Governance report is set out as Annexure to this Report.

management Discussion anD analysis

Please refer to the management discussion and analysis section appearing elsewhere.

particulars of employees

Board of Directors express its appreciation for sincere efforts made by the employees of your Company at all levels during the year and their co-operation in maintaining cordial relations.

The information required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, the report and accounts are being sent to all the shareholders of the Company excluding the above information. Those shareholders, who desire to obtain these particulars, would be provided the same upon receiving such request.

statutory information

Information as per Companies (disclosure of particulars in the Report of Board of Directors) Rules, 1988 related to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-‘A’ attached hereto and forming part of this report.

Directors responsiBility statement

The Board of Directors of the Company confirms:

i) That in the preparation of annual accounts the applicable accounting standards have been followed and there has been no material departure.

ii) That the selected accounting policies were applied consistently and the Directors 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 as at 31st March 2009 and of the profits of the Company for the year ended on that date.

iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities: and

iv) That the annual accounts have been prepared on a going concern basis.

auDitors

The Auditors, M/s. K.R. Bapuji & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

acknoWleDgements

The Board of Directors thank the Customers, Shareholders, Investors, Government Authorities, Financial Institutions and Banks for their continued co-operation and support to your Company.

For and on behalf of the Board of Directors

Place: Chennai g. Bhaskara rao mayank kejriwal

Date: 27th April, 2009 Director Managing Director


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annexure – ‘a’ to Directors‘ reportInformation as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March 2009.

a. conserVation of energy

a. energy conservation measures taken

•CommissionedduringtheyearaNewAnnealingFurnacewithBlastFurnaceGasasfuel,whichresultsintheCompany not using LDO for Annealing Furnace.

•ReductionofCokeConsumptioninMBF,byoptimumutilizationofthehandlingsystem.

b. additional investments & proposals, if any, being implemented for reduction of consumption of energy

•InstallationofhighcapacityMiniBlastFurnacewithHotBlastStoves,whichwouldresultinhighproductivitywith lower coke consumption.

•Variablefrequencydevice(VFD)forslagdrier&rootblowersforenergyconservationinCementPlant.

Energy conservation is an ongoing process and there is a continuous programme to create awareness and motivate the employees to conserve energy through small group activities.

c. Benefits derived from the above initiatives (a) and (b)

With implementation of above measures, cost of energy is likely to be reduced resulting in reduction of cost of production.

B. technology aBsorption

The Chinese Technology for Annealing Furnace and Stamp Charging in Coke Oven Plant has been fully absorbed.

c. foreign exchange earning anD outgo

Foreign Exchange Earning and outgo (Rs. in Lakhs): 2008-09 2007-08

i) Foreign Exchange Earning – – ii) Foreign Exchange Used 27,968.87 14,067.65

form-a a. poWer & fuel consumption 2008-09 2007-08

Electricity a. Purchased:

Units (KWH) 14826230 20167134 Total amount (Rs.) 8,02,32,190 6,90,37,809 Rate / Unit (Rs. / KWH) 5.41 3.42

b. Own Generation:1. Through Diesel Generator

Units (KWH) 528497 422320 Units / Ltr. of Diesel Oil 2.79 3.66 Cost / Unit (Rs. / KWH) 9.99 8.96

2. a) 2.5 MW CPP (MBF)Units (KWH) 17348800 18675200Cost / Unit (Rs. / KWH) 0.25 0.26

b) 12 MW CPP (COP)Units (KWH) 62907066 47254326Cost / Unit (Rs. / KWH) 0.45 0.55

B. consumption per mt of proDuction Electricity (KWH) Pig Iron 180 175 D.I. Pipe 360 327 Cement 101 94 Coke 23 20


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corporate goVernance reportcompany’s philosophy on corporate goVernanceIt is a process that requires to be comprehensive for maximum effectiveness. The Company, therefore, follows a systematic and rigorous process encompassing all regulatory disclosures, transparency, proficient operational practices, well-built internal controls and risk management systems for enhancement of Stakeholders’ value.

The Board of Directors seeks to discharge its operational, strategic and fiduciary responsibilities in all fairness to ensure good managementpractices;further,theBoardrepresentstheshareholders’interestintermsofmaximizingshareholderswealthand remain committed to its responsibilities for all the constituents of its business i.e., investors, customers, employees, suppliers and the general public.

BoarD of Directors

composition of Board

Company’s eight-member Board of Directors comprises:

• OneExecutiveDirector.

• ThreeIndependentNon-ExecutiveDirectors.

• FourNon-IndependentNon-ExecutiveDirectors.

The composition of the Board of Directors and the position they hold in other public companies including private companies which are subsidiaries of public companies are given in the following table:

name of Director executive / non-

executive / independent

no. of other* Directorships

held

other* committee# positions held

as chairman as member

Shri Pradip Kumar Khaitan (i) Chairman-Non-Executive

14 3 11

Shri Mayank KejriwalManaging Director-Executive

12 – –

Shri G. Maruthi RaoNon-Executive- Independent

– – –

Shri Gouri Shankar Rathi Non-Executive – – –

Shri G. Bhaskara Rao Non-Executive 15 5 5

Shri L. Madhusudhan Rao Non-Executive 14 – 2

Shri L. Sridhar Non-Executive 15 1 –

Smt. Vatsala Krishnakumar (ii)Nominee of IDBI (Lender)

Non-Executive- Independent

1 – –

Shri D.R. Jawahar (ii) Nominee of IDBI (Lender)


– – –

Shri P. Rajeswara Rao Nominee of APIDC (Equity Investor)


3 – 1


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(i) Resigned from the Board on 29th January, 2009.

(ii) IDBI nominated Shri D.R. Jawahar as its nominee in place of Smt. Vatsala Krishnakumar with effect from 8th September, 2008.

* Excluding Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956.

# OnlytwoCommitteesviz,Audit,andShareholders/Investors’GrievanceCommitteeshavebeenconsideredforthispurpose.

None of the Non-Executive Directors have any pecuniary relationship or transaction with the Company in their personal capacity.

attenDance of each Director at the BoarD meetings anD the last annual general meeting

Five Board Meetings were held during the year 2008-09. The dates of the meetings are as follows:

28th April’08, 19th July’08, 27th August’08, 23rd October’08 and 23rd January’09.

Agenda Papers along with explanatory statements were circulated to the Directors in advance for each of these meetings.All relevant information as recommended by the SEBI on Corporate Governance as well as items required under Clause 49 of the listing agreement was placed before the Board from time to time.

the following table highlights the attendance of each Director at the respective meetings during the year 2008-09:

name of DirectorBoard meetings

agmheld attended

Shri Pradip Kumar Khaitan 5 3 NO

Shri Mayank Kejriwal 5 4 NO

Shri G. Maruthi Rao 5 4 YES

Shri Gouri Shankar Rathi 5 5 YES

Shri G. Bhaskara Rao 5 4 YES

Shri L. Madhusudhan Rao 5 – NO

Shri L. Sridhar 5 4 YES

Smt. Vatsala Krishnakumar 5 2 NO

Shri D.R. Jawahar 5 2 NO

Shri P. Rajeswara Rao 5 3 YES

auDit committee

The Audit Committee, which was constituted on 30th January, 2001 presently comprises two Independent Non-Executive Directors and one Non-Executive Director.

The Audit Committee is expected to review the Company’s financial reporting process and its financial statements, review the accounting and financial policies and practices, review the efficacy of the internal control mechanisms and monitor the management of risk, review policies adopted by the Company and ensure compliance with the regulating guidelines, review reports furnished by the internal and statutory auditors and ensure that suitable follow ups are taken.

The terms of the reference of the Audit Committee include the powers as laid out in Clause 49 II (C) of the Listing Agreement and role as stipulated in Clause 49 II (D) of the Listing Agreement.

The Audit Committee during the year ended 31st March, 2009 had four meetings on 28th April’08, 19th July’08, 23rd October’08 and 23rd January’09.


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the composition of the audit committee as on 31st march, 2009 and attendance during the year are as under:

sl.no.

name of Directors positionexecutive / non-executive /

independentno. of meetings

attended

1 Shri G. Maruthi Rao Chairman Independent, Non-Executive 3

2 Shri G. Bhaskara Rao Member Non-Executive 3

3 Smt. Vatsala Krishnakumar (Nomination withdrawn w.e.f. 8.9.08)

Member Independent, Non-Executive 2

4 Shri D.R. Jawahar(Nominated w.e.f. 8.9.08)

Member Independent, Non-Executive 1

TheAuditCommitteemeton27thApril,2009 forconsideringfinalizationofaccounts for theyearended31stMarch,2009.

The Managing Director, Chief Operating Officer, Sr. General Manager-Finance & Company Secretary, Statutory Auditors and Internal Auditors are generally present in the Audit Committee meeting as invitees.

Company Secretary acts as the Secretary to the Audit Committee.

Shri G. Maruthi Rao, Chairman of the Audit Committee attended the last Annual General Meeting of the Company held on 27th August, 2008.

code of conduct

In pursuance of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (as amended), theBoardhasapprovedthe‘CodeofConductforPreventionofInsiderTrading’andauthorizedtheAuditCommitteetoimplement and monitor the various requirements as set out in the Code.

Pursuant to Clause 49 of the listing agreement, it is hereby affirmed that the ‘Code of Conduct for Prevention of Insider Trading’ approved by the Board has been complied with during the year by the senior management of the Company.

Whistle Blower policy

Pursuant to Clause 49 of the listing agreement, the Company has put in place the ‘Whistle Blower Policy’ duly approved by the Board. Further, it is hereby affirmed that the Company has not denied any personnel access to the Audit Committee of the Company (in respect of matters involving alleged mis-conduct) and that the Company has provided protection to “Whistle Blowers” from unfair termination and other unfair or prejudicial employment practices.

remuneration committee

The Remuneration Committee comprises of three Directors namely Shri. Gouri Shankar Rathi (Chairman – Non-Executive), Shri G. Bhaskara Rao (Non-Executive) and Shri D.R. Jawahar (Independent – Non-Executive) as its members.

The Remuneration Committee reviews and recommends the terms of appointment and remuneration of the Executive Directors for approval by the Board as well as the shareholders.

Presently the Non-Executive Directors do not receive any remuneration from the Company except by way of sitting fees for attending the meetings of the Board and its Committees. Moreover, Shri Mayank Kejriwal, Managing Director of the Company has also offered his services without any remuneration from the Company.


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Details of remuneration to Directors, 2008-09

name of the Directors sitting fee (rs.) service contract / notice period / severance fees

Shri Pradip Kumar Khaitan 60,000 Resigned on 29th January, 2009

Shri Mayank Kejriwal – –

Shri G Maruthi Rao 1,40,000 Retirement by rotation

Shri Gouri Shankar Rathi 1,00,000 -do-

Shri G Bhaskara Rao 1,40,000 -do-

Shri L Madhusudhan Rao – -do-

Shri L Sridhar 80,000 -do-

Smt. Vatsala Krishnakumar 80,000 Nomination withdrawn by IDBI w.e.f. 8.9.08

Shri D.R. Jawahar 60,000 Nominated by IDBI w.e.f. 8.9.08

Shri P. Rajeswara Rao 60,000 Nominee of APIDC

total 7,20,000

shareholdings of non-executive Directors

name no. of shares held % of company’s equity shares

Shri L. Madhusudhan Rao 2284724 5.75

Shri G. Bhaskara Rao 2284674 5.75

Shri L. Sridhar 2282935 5.74

Shri G. S. Rathi 10571 0.03

shareholDers committee

The composition of Shareholders’ / Investors’ Grievances Committee is as follows:

Shri Gouri Shankar Rathi – Chairman

Shri G Bhaskara Rao – Member

Shri G. Maruthi Rao – Member

the shareholDers’ / inVestors’ grieVances committee aDministereD the folloWinga. Redress Shareholders’ and Investors’ complaints relating to non-receipt of balance sheet, transfer of shares, non-

receipt of dividends etc.

b. Consolidate and sub-divide share certificate(s).

c. Approve transmission and issue of duplicate / fresh share certificate(s).

In accordance with Clause 49 para VI(D) of the Listing Agreement of the Stock Exchanges, the Board has delegated powers of share transfers to M/s. Karvy Computershare Private Limited (KCPL), Plot No. 17-24, Beside Image Hospital, Vittalrao Nagar, Madhapur, Hyderabad-500 081. KCPL reviews share transfers every fortnight.

compliance officer

G.D. Saini, Company Secretary, Rachagunneri-517641, Srikalahasthi Mandal, Chittoor District, AP., Ph: 08578-287650-55, Fax: 08578-287657, E-mail: [email protected]

general BoDy meetings

Location and time for last three Annual General Meetings:

Date Venue time

31.08.2006 Rachagunneri Village, Srikalahasthi Mandal, AP. 11.30 A.M.



No special resolution was put through postal ballot in the last year.


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Disclosures• TheCompanyhasgenerallycompliedwithallthemandatoryrequirementsasspecifiedintherevisedClause49tothe

extent these apply and extend to the Company.

• TransactionswiththerelatedpartiesaredisclosedinNote10ofSchedule19oftheAccountsinAnnualReport.

• NotransactionsweremadethatmayhavepotentialconflictwiththeinterestsoftheCompanyatlarge.

• TheManagingDirectorhasgivendeclarationtotheBoardthathehasnopersonalinterestinanymaterial,commercialand financial transactions that may have any potential conflict with the interest of the Company at large.

• TherewerenostricturesorpenaltiesimposedbyeitherSEBIortheStockExchangesoranystatutoryauthorityfornon-compliance of any matter relating to Capital Market during the last three years.

• TheCEO(ManagingDirector)andtheCFO(Sr.GeneralManager-Finance&CompanySecretary)havefurnishedaCertificate to the Board for the year ended 31st March, 2009 in compliance with the revised Clause 49.V of the Listing Agreement(s) as amended.

means of communication

The Company regularly intimates quarterly financial results to the Stock Exchanges immediately after they are taken on record by the Board. Further, coverage is given by publication of the financial results in the leading economic and vernacular daily newspapers.

The quarterly financial results and other shareholder related information are also posted on Corporate Filing site and Company’s website www.lancoindustries.com.

Management Discussion and Analysis is covered in the Directors’ Report to the Shareholders, which forms a part of the Annual Report.

general shareholDers information

The following information would be useful to our shareholders:

sl. no information

1 Annual General Meeting

– Date and Time 28th August, 2009 at 11.30 AM

– Venue At Registered Office: Rachagunneri Village-517641,Srikalahasthi Mandal, A.P.

2 Financial Calendar Tentative Schedule

Financial Reporting for the Quarter ended June 30, 2009 End July, 2009.

Financial Reporting for the Quarter ended September 30, 2009 End October, 2009.

Financial Reporting for the Quarter ended December 31, 2009 End January, 2010.

Financial Reporting for the Quarter ended March 31, 2010 End April, 2010.

Annual General Meeting for the year ending March 31, 2010. End August, 2010.

3 Book Closure Date (Both days inclusive) 22nd August, 2009 to 28th August, 2009.

4 Dividend Payment Date 3rd September, 2009.

5 Listing Details:

– Equity SharesListed at Mumbai Stock Exchange Ltd & National Stock Exchange of India Ltd.

– Non-Convertible Debentures Listed at Mumbai Stock Exchange Ltd.

6 Stock Code (Mumbai & National Stock Exchange) 513605 & Lancoin

7 Demat ISIN Number for NSDL & CDSL

– Equity Shares INE943C01027

– Non-Convertible Debentures INE943C07016

(The Company has voluntarily de-listed its shares from the Calcutta Stock Exchange Association Limited and the Hyderabad Stock Exchange Limited)


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8. stock market Data:

monthmumbai stock exchange national stock exchange

high (rs.) low (rs.) Volume high (rs.) low (rs.) Volume

Apr-08 48.75 35.00 431822 48.60 35.10 441046

May-08 49.00 41.00 250139 48.70 40.70 278997

Jun-08 42.40 30.50 131821 43.00 30.75 149124

Jul-08 35.60 28.35 324734 35.75 28.00 543982

Aug-08 38.25 32.60 200421 38.40 32.30 182222

Sep-08 37.50 25.15 111685 36.50 25.40 106631

Oct-08 30.10 16.75 104798 29.00 16.60 122817

Nov-08 22.95 16.70 44014 23.40 16.85 50981

Dec-08 21.00 17.10 292326 21.00 17.10 300345

Jan-09 21.85 16.10 224352 22.50 16.00 204082

Feb-09 19.40 15.75 53158 19.50 15.05 59158

Mar-09 18.00 12.60 91704 18.00 12.00 130516

Share Price Performance in comparison to BSE / NSE Sensex / Nifty

% change in lil share price % change in sensex / nifty

BSE NSE BSE NSE

Financial Year 2008-09. -63.80 -62.41 -48.98 -36.21

9. Registrar & Share Transfer Agents Karvy Computershare Private LtdPlot No. 17-24, Beside Image Hospital,Vittalrao Nagar, Madhapur, Hyderabad-500 081

10. Share Transfer System The turnaround time for completion of transfer of shares in physical form is generally 15 days from the date of receipt, if the documents are clear in all respects.

11. Details of queries / complaints received and resolved during the year 2008-09:

The total number of complaints received and resolved during the year was:

Total Complaints Received – 41

Total Complaints Resolved – 41

As confirmed by M/s Karvy Computershare Private Ltd (RTA of the Company) the complaints are generally attended within 15 days from the date of receipt.

12. Distribution of Shareholding as on March 31, 2009:

sl no.

category number of shareholders

% of shareholders

no. of shares % of amountfrom to

1 1 5000 13654 90.87 1587037 3.99

2 5001 10000 681 4.53 572238 1.44

3 10001 20000 317 2.11 486805 1.22

4 20001 30000 108 0.72 264098 0.66

5 30001 40000 55 0.37 196141 0.49

6 40001 50000 43 0.29 205772 0.51

7 50001 100000 62 0.41 471326 1.19

8 100001 And above 106 0.70 35980178 90.50

total 15026 100.00 39763595 100.00


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13. Categories of Shareholding as on 31st March, 2009

sl. no.

categoryno. of shares

heldpercentage of shareholding

a. promoter’s holDing

1 promoters

a) Indian Promoters

Electrosteel Castings Limited i) 19301218 48.54

Othersii) 498669 1.25

b) Foreign Promoters – –

2 persons acting in concert

sub-total 19799887 49.79

B. non-promoters holDing

3 institutional investors

a) Mutual Funds and UTI 17325 0.04

b) Banks, Financial Institutions, Insurance Companies (Central / State Govt. Institutions / Non-Government Institutions)

394725 0.99

c) FIIs 10050 0.03

sub-total 422100 1.06

4 others

a) Private Corporate Bodies 1910889 4.81

b) Indian Public 13060292 32.84

c) NRIs / OCBs 4564473 11.49

d) Any other (Clearing Members) 5954 0.01

sub-total 19541608 49.15

granD total 39763595 100.00

14. Dematerialisation of Shares and Liquidity

Since the Company has entered into an agreement with both the depositories namely NSDL and CDSL for dematerialisation of its Shares, the Shareholders oftheCompanyhavethechoicetodematerializetheirsharesandkeepthemindematerializedformwithanydepositoryparticipant.

15. Outstanding convertible Instruments

As on 31.3.2009, there are no outstanding convertible instruments.

16. Registered Office & Works Village: Rachagunneri-517641Mandal: SrikalahasthiDistrict: Chittoor, A.P., India.Ph.No: 08578-287650 (5Lines)

17. Members can Contact us at our Registered Office:

As stated above.

18. Adoption of Non-Mandatory requirements

Besides constituting the Remuneration Committee, the Company has so far not implemented other Non-Mandatory requirements of the Code of Corporate Governance.


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certificate of compliance With the coDe of conDuct

Declaration under clause 49(i)(D)

This is to certify that:

1) In pursuance of the provisions of Clause 49(I)(D) of the Listing Agreement, a Code of Conduct has been laid down by the Company for all the Board members and the Senior Management Personnel of the Company.

2) The said Code of Conduct is also uploaded on the website of the Company at www.lancoindustries.com.

3) All Board Members and Senior Management Personnel have affirmed having complied with the said Code of Conduct, during the year ended 31st March, 2009.

For lanco industries limited

Place: Chennai mayank kejriwalDate: 27th April, 2009 Managing Director

auDitors’ certificate on corporate goVernance

To

The Members of

LANCO INDUSTRIES LIMITED

We have examined the compliance of conditions of Corporate Governance by Lanco Industries Limited for the year ended on 31st March, 2009, as stipulated in clause 49 of the Listing Agreement of the said company with the stock exchanges.

The compliance of 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 above mentioned Listing Agreement.

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 k.r. Bapuji & co. Chartered Accountants

k.r. Bapuji Place: Chennai PartnerDate: 27th April, 2009 Membership No. 21169


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management Discussion & analysisBack grounD

Lanco Industries Limited (LIL) was promoted by Lanco Group in 1992 in Chittoor District, A.P. LIL setup a Mini Blast Furnace (MBF) in 1994 with a capacity of 90,000 TPA to manufacture and sell Pig Iron to the customers and foundry units across India.

In 1998, LIL entered into an arrangement to supply Molten Iron and Pig Iron to Lanco Kalahasthi Castings Limited (LKCL) a company within the same campus engaged in the business of Iron Castings & Forging. LKCL later on added high technology Ductile Iron Pipes (DIP) manufacturing facilities to its portfolio.

In March 2002, India’s leading D.I. Pipe manufacturer, Electrosteel Castings Limited (ECL) entered into a strategic alliance with LIL and LKCL by acquiring 46.43 and 48.89 percent stake in the companies respectively. In addition to technological support, ECL also infused fresh funds into LIL by way of equity participation and re-modeled the financial structure, thus reducing interest costs.

In 2003, the capacity of MBF was increased from 90,000 TPA to 1,50,000 TPA and the capacity of D.I. Pipes was increased from 60,000 TPA to 90,000 TPA at a capital outlay of approx. Rs. 35 crores.

In 2003, LKCL got merged with LIL (with effect from 1st April, 2003) to take advantage of the close synergy in the business model of the two companies, since a large part of Pig Iron in liquid form is consumed by LKCL for manufacture of Pipes.

In 2004, a major backward integration project comprising of 1,50,000 TPA Coke Oven Plant and 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant at a capital outlay of Rs. 88 crores was started.

In2005,1,50,000TPACokeOvenPlantwascommissionedandcommercialproductionwasstabilized.Thecokebeingproduced is at par with international quality of LAM coke.

In 2006, the capacity of D.I. Pipes was further increased from 90,000 TPA to 1,20,000 TPA and the 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant was setup, which started generating power from March, 2007.

In 2007, Stamp Charging System was successfully implemented at Coke Oven Plant for producing quality Metallurgical coke at a lower cost.

In 2008, the Company implemented ERP system (SAP) to support business process and effective resource planning & management.

In 2009, capacity of D.I. Pipes was increased from 1,20,000 TPA to 1,80,000 TPA.

Value aDDition

LIL has a large value addition chain starting from iron ore to D.I. Pipes. Company’s own Coke Oven Plant along with 12 MW Waste Heat Recovery Based Co-generating Captive Power Plant have strengthened the value chain.

the year in retrospect (2008-09 Vs. 2007-08)The volumes of production and sales of Company’s products reflected a healthy growth during the year 2008-09.

productproduction (mt) Dispatches (mt)

2008-09 2007-08 2008-09 2007-08Molten Metal / Pig Iron* 1,48,433 1,48,677 1,49,970 1,47,795D.I. Pipes 1,23,422 1,13,471 1,23,345 1,14,749Cement ** 86,812 70,002 87,008 69,633

* Dispatches include 1,36,137 MT (previous year 1,26,018 MT) used for captive consumption.

** Dispatches include 10,087 MT (previous year 9,066 MT) used for captive consumption.


14

1,13,052 MT coke was produced in the Coke Oven Plant for captive consumption during 2008-09 vis-à-vis 1,17,438 MT in 2007-08.

The 12 MW Waste Heat Recovery Based Co-Generating Captive Power Plant of the Company produced 629 Lakh units during 2008-09 compared to 473 Lakh units in 2007-08.

With the increase in volumes, the Company achieved a higher turnover of Rs. 646.82 Crores during the year under review compared to Rs. 464.59 Crores in the year 2007-08. Despite healthy growth in the top line, due to spiraling cost of inputs and higher interest cost, the profit (PBT) was lower at Rs. 28.23 Crores as against Rs. 40.01 Crores in the previous year.Consequently, the profit after tax also came down to Rs. 18.35 Crores as against Rs. 25.92 Crores for 2007-08.

inDustry structure

D.I. Pipes are generally preferred for water supply, sewerage and transmission applications. Superiority of D.I. Pipes lies in its ability to provide trouble free service against increasing traffic load and much longer life compared to other types of Pipes.

Water supply in our country is mainly met through monsoons and needs significant investment in water infrastructure for conservation and re-use of water resources. Therefore, the Government is focusing on creation of urban and rural infrastructure, including water resource and sewage management. In these efforts, monetary support is being provided to the Government by International Development Finance Institutions such as the World Bank and the Asian Development Bank. This has generated good demand for D.I. Pipes that are increasingly being used for water and sewage transportation. Moreover, special thrust is being given by the Government for providing potable water through out the country.

Business

raw-materials

As already discussed due to steep increase in the prices of the key raw-materials i.e., Coal and Iron Ore required for manufacture of molten Pig Iron, the ratio of raw-material cost to turnover increased to 63% in the year 2008-09 as against 55% in the previous year, reflecting a substantial hike in input cost.

Quality

The Company continues to focus on quality to ensure brand image and higher market share. Company’s quality systems are ISO 9001:2000 accredited. BSI, UK has approved Ductile Iron Pipes manufactured by Company for using kite mark license.

safety, health & environment

The Company is committed to the safety and health of its employees and all stakeholders. The safety management systems in the company are regularly being improved and upgraded. Systems for monitoring activities relating to health, hygiene and safety have been setup at every plant. Training and awareness programmes are conducted regularly on safety, health and environment. The Company’s environment management systems are ISO 14001:2004 certified. The Company has sponsored various social activities for spreading awareness of environment and safety issues in the neighboring villages.

corporate social responsibility (csr)

CSR activities are considered to be an integral part of Company’s business. With this guiding principle, the Company has initiated various CSR activities to address the needs and issues of the people living in the area. Such activities include education, health care and vocational trainings.

information technology

The Company believes that Information Technology is an important tool to support its business functions to align them with best industry practices. The Company has successfully implemented SAP as ERP System during 2008-09.


15

opportunities anD threats

The rising prices of raw-materials and logistics coupled with competitive market have created pressure on the margins. Howeverhighercapacityutilization,costcontrolmeasuresandlong-termplanningforraw-materialavailability(includingbackward integration) will enable the Company to protect margins on its end product and achieve sustained growth.

outlook

The Company is continuously moving forward to achieve operational excellence and value addition for the stakeholders throughoperationalsynergy,highercapacityutilization,backwardintegration,costreductionandcontinualimprovementin shop floor operations. Backward integration by setting up Coke Oven Plant and Captive Power Plant has further strengthened the value addition chain of the Company. The growth in demand for D.I. Pipes offers positive outlook for the Company in the coming years.

risks anD concern

Please refer to Risk Management section appearing elsewhere in the Annual Report.

internal control system anD its aDeQuacy

The Company has an established Internal Control System, the compliance of which is periodically assessed by internal audit and regularly reviewed by the statutory auditors and the audit committee of the Board. Any change that is recommended is assessed and implemented.

human resources

The Company firmly believes in the development of human resources, which is its key asset to achieve sustainable competitive advantage and enhance shareholders value. The Company undertook several steps towards development of human resources including training at various levels, safety and performance appraisal. Industrial relations were cordial throughout the year.

cautionary statement

Statements in this report on management discussion and analysis, describing the Company’s objectives or projections, may be forward-looking statements within the meaning of applicable laws or regulations. Actual results could, however, differ materially from those expressed or implied.


16

risk managementThe Company is committed to strengthen its Risk Management capability on continuous basis with the aim to protect and enhance shareholder value. The Company’s risk management ensures compliance with the requirements of amended Clause 49 of the Listing Agreement.

economic risk

Due to increase in the cost of inputs and raw-materials used by it, the Company is faced with the threat of pressure on margins.

To counter this risk, Company has taken various steps including setting up Coke Oven Plant, Power Plant from Waste Heat Recovery & upgrading and expanding manufacturing capacities. Apart from this, cost control measures have been initiated at all plants.

competitor risk

As the Company’s market is highly competitive in view of increasing domestic capacity and lowering of duty barriers, it is exposed to the risk of competitors.

To counter this risk, the Company is focusing on increasing its market share and taking various marketing initiatives. The Company is also taking steps to establish the brand image of its product. Considering the thrust given by the Government of India on water projects, the demand of D.I. Pipes is expected to grow.

enVironment risk

As the Company is engaged in Steel Industry, it is exposed to the risk of environment and pollution controls.

The Company is an ISO 14001:2004 certified and strictly follows the applicable norms. The company is committed for conservation of environment and development of greenery.

inDustrial risk

Labour unrest may affect the production and the Company is exposed to such risk.

Since inception the Company is maintaining excellent labour relations and there have been no loss of man-days on this account. The Company believes that labour relations will continue to remain excellent.

foreign exchange risk

Considering the large imports and borrowings in foreign exchange, the Company is exposed to the risk of fluctuation in the foreign exchange rates.

The Company reviews its exposure in foreign exchange on a regular basis and takes appropriate actions with the aim to minimizetheriskoffluctuationinexchangerates.

payment riskThe Company is exposed to risk of default in payment by its customers.

As the water projects are Government funded or foreign aided, the risk of default is minimum. In case of other customers, creditworthinessisevaluatedbeforesupplytominimizesuchrisk.


17

auDitors’ report To

The members of

LANCO INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of Lanco Industries Limited as at 31st March, 2009, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4 A) of the Companies Act, 1956 (hereinafter referred to as ‘the said Order’) and on the basis of such examination of the books and records of the Company as we considered appropriate and the information and explanations given to us during the course of the audit, we enclose in the annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors of the company, as on 31st March, 2009 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the Significant Accounting Policies and other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

ii) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For k.r. Bapuji & co. Chartered Accountants

k.r. Bapuji Place: Chennai PartnerDate: 27th April, 2009 Membership No. 21169


18

annexure to auDitors’ reportre: lanco industries limited

(Referred to in paragraph 3 of our report of even date)

(i) (a) In our opinion, the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management during the year as per a detailedprogramdrawnforthesaidpurpose,whichinouropinionisreasonable,havingregardtothesizeofthe Company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) No substantial part of the fixed assets of the Company has been disposed off during the year.

(ii) (a) As explained to us, inventories were physically verified during the year by the management. In our opinion, the frequency of the said verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followedby themanagementwere reasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material.

(iii) (a) According to the information and explanations given to us, 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) In view of the above, reporting on items (b), (c) and (d) of clause (iii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company.

(c) According to the information and explanations given to us, 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) In view of the above, reporting on items (f) and (g) of clause (iii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedurescommensuratewiththesizeoftheCompanyandnatureofitsbusiness,forthepurchaseofinventory,fixedassets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in v(a) above and exceeding the value of Rs. 5 lakh with any party during the year have been made at the prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provision of the Companies Act, 1956 and Rules framed there under.

(vii) Inouropinion,theCompany’sinternalauditsystemiscommensuratewithitssizeandnatureofitsbusiness.

(viii) We have broadly reviewed the books of account maintained by the Company relating to the products, where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.


19

(b) According to the information and explanations given to us, the disputed statutory dues that have not been deposited on account of disputed matters pending before appropriate authorities as at 31st March, 2009 are as follows:

sl. no.

name of the statute

nature of dues

amount (rs. in lakhs)

period to which it relates

forum where the dispute is pending

1.Central Sales Tax

Act, 1956

Sales tax-do--do-

97.6175.5360.61

1999-002003-042004-05

Sales Tax Appellate Tribunal.

2. -do- -do- 47.70 2005-06 Appellate Dy. Commissioner (CT).3. APGST Act, 1957 -do- 67.52 2002-03 Sales Tax Appellate Tribunal.

4.Central Excise Act,

1944

Central Ex-cise Duty/

Interest26.00 2005-06 CESTAT, Bangalore.

5. -do- -do- 61.002004-05 &2005-06

-do-

6. -do- -do- 17.00 2005-06 Commissioner (Appeals).

7. -do- -do- 79.002006-07 &2007-08

-do-

(x) The Company does not have accumulated losses as at 31st March, 2009 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks or debenture holders.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from Banks and Financial Institutions.

(xvi) In our opinion and according to the information and explanations given to us, on overall basis, the term loans have been applied for the purposes for which they were obtained.

(xvii) Based on the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion, the funds raised by the Company on short term basis have prima facie not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares during the year.

(xix) According to the information and explanations given to us, the Company has created necessary securities in respect of secured debentures.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported.

For k.r. Bapuji & co.

Chartered Accountants

k.r. Bapuji

Place: Chennai Partner

Date: 27th April, 2009 Membership No. 21169


20

Balance sheet as at 31st march, 2009

schedule31st mar’09

(rs. in lakhs)31st Mar’08

(Rs. in Lakhs)i. source of funDs1. shareholders funds

a) Share capital 1 3,976.36 3,976.36 b) Reserves & Surplus 2 8,549.77 7,179.70

2. loan fundsa) Secured Loans 3 22,645.54 17,832.33b) Unsecured Loans 4 15,460.46 12,271.32

3. Deferred tax liability (net) 3,123.73 2,576.95total 53,755.86 43,836.66

ii. application of funDs1. fixed assets 5

a) Gross Block 38,974.86 35,516.23b) Less: Depreciation 10,734.88 9,127.88c) Net Block 28,239.98 26,388.35d) Capital Work in Progress 425.37 862.01

2. investments 6 – – 3. current assets, loans & advances

a) Inventories 7 14,436.48 12,092.91b) Sundry Debtors 8 11,966.16 8,814.31c) Cash & Bank Balances 9 3,463.66 420.10d) Loans and Advances 10 6,107.54 5,289.66

35,973.84 26,616.98less current liabilities & provisions 11a) Current Liabilities 10,108.38 9,319.38b) Provisions 774.95 711.30

10,883.33 10,030.68net current assets 25,090.51 16,586.30

total 53,755.86 43,836.66

notes on accounts 19

As per our report attached For and on behalf of the BoardFor K.R. Bapuji & Co.Chartered Accountants

K.R. Bapuji G. Bhaskara Rao DirectorPartnerMembership No. 21169 Mayank Kejriwal Managing DirectorPlace: ChennaiDate: 27th April, 2009 G.D. Saini Company Secretary


21

profit anD loss account for the year enDeD 31st march, 200931st mar’09

(rs. in lakhs)31st Mar’08

(Rs. in Lakhs)scheduleincome Sales (Gross) 68,046.95 49,472.02 Less: Excise Duty 3,575.34 3,106.39 Sales (Net) 64,471.61 46,365.63 Other Income 12 210.18 93.21 Increase / (Decrease) in Stocks 13 (246.82) 14.16

total 64,434.97 46,473.00

expenDiture Raw Materials Consumed 14 39,775.51 24,779.93 Manufacturing Expenses 15 10,091.71 8,874.80 Cost of Material Sold 607.33 659.16 Salaries, Wages and Other Allowances 16 2,142.75 1,862.53 Other Expenses 17 2,745.53 2,479.56 Financial Charges 18 4,607.48 2,302.59 Depreciation 1,641.84 1,512.99

total 61,612.15 42,471.56

profit Before tax 2,822.82 4,001.44Provision for Tax – Current 318.20 453.41MAT Credit Utilised / (Entitlement) 108.14 (453.41)Provision for Deferred Tax 546.78 1,392.16Provision for Fringe Benefit Tax 14.41 17.54profit after taxation 1,835.29 2,591.74Balance brought forward from previous year 1,242.48 858.92Prior period adjustment – (55.46) profit available for appropriation 3,077.77 3,395.20

appropriations Transfer to Debenture Redemption Reserve 468.75 187.50 Transfer to General Reserve 1,000.00 1,500.00 Proposed Dividend 397.64 397.64 Tax on Dividend 67.58 67.58 Balance Carried to Balance Sheet 1,143.80 1,242.48

3,077.77 3,395.20Basic & Diluted Earning per Share (Rupees) 4.62 6.52No. of Shares used in computing Basic & Diluted EPS

3,97,63,595 3,97,63,595

notes on accounts 19




22

cash floW statement for the year enDeD 31st march, 20092008-09 2007-08

(rs. in lakhs) (Rs. in Lakhs)a. cash flow from operating activities

Net Profit Before Tax 2,822.82 4,001.44 Adjustments for:Interest & Financial Charges 4,607.48 2,302.59 Depreciation 1,641.84 1,512.99 Miscellaneous Expenditure Written off – 3.59 Loss on Sale of Fixed Assets 4.22 47.81 Provision For Doubtful debts – 7.06 (Profit) / Loss on sale of Investments (21.27) (14.50)Leave Encashment benefit obligation for prior years – 6,232.27 (55.46) 3,804.08 Operating Profit before working Capital changes 9,055.09 7,805.52

Adjustments for:(Increase) / decrease in Loans & Advances (817.88) 405.43 (Increase) / decrease inTrade& Other Receivables (3,151.85) (1,153.45)(Increase) / decrease in Inventories (2,343.57) (1,456.05)Increase / (decrease) in Trade Payables 787.51 (5,525.79) (510.21) (2,714.28)Cash Generated from Operations 3,529.30 5,091.24 Direct Taxes Paid (440.77) (470.95)Cash from Operating Activities 3,088.53 4,620.29

B. cash flow from investing activitiesPurchase of Fixed Assets (3,077.19) (3,908.89)Sale of Fixed assets 16.14 10.26 Income on Investments 21.27 14.50 Net Cash From Investing Activities (3,039.78) (3,884.13)

c. cash flow from financingactivitiesLong Term Borrowings-Receipts / (Repayments)[Net] (288.77) (861.63)Short Term Borrowings-Receipts / (Repayments)[Net] 8,291.13 848.71 Interest Paid (4,542.33) (2,488.29)Dividend Paid (397.64) (397.64)Tax on Dividend (67.58) (67.58)Net Cash From Financing Activities 2,994.81 (2,966.43)Net Increase / (Decrease) in Cash & Cash Equivalents (A+B+C)

3,043.56 (2,230.27)

Cash & Cash Equivalent as at Beginning of Year 420.10 2,650.37 Cash & Cash Equivalent as at End of Year 3,463.66 420.10




23

scheDules annexeD to anD forming part of accounts 31st mar’09 31st Mar’08 (rs. in lakhs) (Rs. in Lakhs)

1. share capitalAuthorised Capital5,30,00,000 Equity Shares of Rs. 10/- each 5,300.00 5,300.00

Issued, Subscribed and Paid up Capital 3,97,63,595 Equity shareof Rs. 10each fully Paid up. (Including 2,67,85,500 Equity shares allotted as fully paid up pursuant to the Scheme of Amalgamation without payment being received in cash.)

3,976.36 3,976.36

total 3,976.36 3,976.36

2. reserVes & surplus Opening Additions Transfer/ as at 31st Balance During the Adjustments mar’ 2009

Year During the

Year a. reservesCapital Reserves:– Share forfeiture account 0.97 0.97 – State Subsidy 55.00 55.00 Debenture Redemption Reserve 281.25 468.75 750.00 General Reserve 5,600.00 1,000.00 6,600.00

5,937.22 1,468.75 – 7,405.97 B. surplusProfit & Loss Account 1,242.48 1,143.80 1,242.48 1,143.80

total 7,179.70 2,612.55 1,242.48 8,549.77

Security as 31st mar’09 31st Mar’08 per note (rs. in lakhs) (Rs. in Lakhs)

3. secureD loansDebentures:500 – G-Sec Linked Secured Redeemable Non- Convertible debentures of Rs. 10 lakhs each (redeemable in 20 equal quarterly instalments starting from 30th September 2008 – redeemed during the Year – Rs. 750 Lakhs)

1 4,250.00 5,000.00

Term Loans from:BanksRupee Loan 2 6,841.00 6,000.00 Foreign currency Loans 3 845.33 1,332.33 Working CapitalLoan from Banks 4 10,709.21 5,500.00

total 22,645.54 17,832.33


24

security notes:

1. G-Sec Linked Privately Placed Secured Redeemable Non-Convertible Debentures are secured by a Joint Mortgage by deposit of title deeds in respect of certain immovable properties and by English Mortgage on certain immovable properties and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Company’s Bankers on specified movable assets for working capital requirements and by corporate guarantee of a group company upto fifty percent of the outstanding amount.

2. Rupee loans from Banks are secured by way of joint mortgage by deposit of title deeds on certain immovable properties ranking pari-passu with existing lenders and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Company’s Bankers on specified movable assets for working capital requirements and by corporate guarantee of a group company upto fifty percent of the outstanding amount.

3. Foreign Currency Loans from Banks are secured by way of joint mortgage by deposit of title deeds on certain immovable properties ranking pari-passu with existing lenders and hypothecation over movable assets of the Company (other than book debts) subject to prior charge of the Company’s Bankers on specified movable assets for working capital requirements.

4. Working Capital facilities are secured by hypothecation of raw material, semi-finished goods and finished goods, consumable, stores and spares, book debts, both present and future of the Company.

31st mar’09 (rs. in lakhs)

31st Mar’08 (Rs. in Lakhs)

4. unsecureD loansSales Tax Deferment 4,878.54 4,771.32 (Payable within one year Rs. Nil, Previous Year Rs. Nil)Short Term Loans from Banks Rupee Loans – 4,000.00 Foreign Currency Loans 10,581.92 – Non-Convertible Debenturesa) 15 Privately placed Mibor linked debentures of

Rs. 100 Lakhseach aggregating to Rs. 1500 Lakhs – redeemed during the year)

– 1,500.00

b) 20 Privately placed Mibor linked debentures of Rs. 100 Lakhseach aggregating to Rs. 2000 Lakhs – redeemed during the year)

– 2,000.00

total 15,460.46 12,271.32


25

5. fixeD assets (Rs. in Lakhs)

sl.

no.

particulars gross Block Depreciation net Block

name of the assetcost

1-apr-08

additions

During

the year

Deletions/

sales

During the

year

cost

31-mar-09

as on

1-apr-08

for

the yearadjustments

total

31-mar-09

as on

31-mar-09

as on

31-mar-08

1 Land 1,482.65 1.13 – 1,483.78 – – – – 1,483.78 1,482.65

2 Factory Buildings 5,388.46 4.25 – 5,392.71 1,103.01 180.10 – 1,283.11 4,109.60 4,285.45

3 Non-Factory Buildings 580.79 30.36 – 611.15 75.79 9.79 – 85.58 525.57 505.00

4 Plant & Machinery 24,537.05 3,144.98 – 27,682.03 6,538.95 1,232.14 – 7,771.09 19,910.94 17,998.10

5 Electrical Installation 2,506.52 39.82 – 2,546.34 892.08 121.84 – 1,013.92 1,532.42 1,614.44

6 Office Equipment 317.17 37.69 0.41 354.45 128.86 23.76 0.14 152.48 201.97 188.31

7 Furniture 145.14 8.35 – 153.49 85.70 8.42 – 94.12 59.37 59.44

8 Vehicles 558.45 16.08 54.78 519.75 303.49 40.74 34.70 309.53 210.22 254.96

9 Intangible Assets – 231.16 – 231.16 – 25.05 – 25.05 206.11 –

total 35,516.23 3,513.82 55.19 38,974.86 9,127.88 1,641.84 34.84 10,734.88 28,239.98 26,388.35

Capital work in progress 425.37 862.01

Previous year figures 31,824.32 3,801.33 109.42 35,516.23 7,666.24 1,512.99 51.35 9,127.88 26,388.35 24,158.08



6. inVestments – –

total – –

Units of Mutual Funds purchased and sold during the year (Face value Rs. 10/- each except otherwise stated):

particularspurchase sales

nos.Value

rs. in lakhsnos.

DSP Black Rock Money Major Fund(Units of Rs. 1000/- each) 846723.52 8,455.00 846723.52 HDFC Cash Management Fund – Saving Plan Growth 6735631.12 700.00 6735631.12 ICICI Prudential Liquid Plan – Daily Dividend Option 1286727.80 150.00 1286727.80

total 8869082.44 9,305.00 8869082.44



7. inVentories(Note 1 (F)on Schedule 19)Stores & Spares 2,882.46 2,501.86 Raw Materials 9,662.19 7,452.40 Work in process 998.48 927.17 Finished Goods and By-Products 893.35 1,211.48

total 14,436.48 12,092.91


26

9. cash anD Bank BalancesCash on hand 4.28 3.15 Balance with Scheduled Banks:– Current Accounts 3,446.48 407.14 – Deposit Accounts – – – Unpaid Dividend Account 12.90 9.81

total 3,463.66 420.10



8. sunDry DeBtors-unsecureDExceeding six months:– Considered Good 226.97 102.50 – Considered Doubtful 162.81 232.02

389.78 334.52 Other Debts 11,739.19 8,711.81 12,128.97 9,046.33 Less: Provision for doubtful debts 162.81 232.02

total 11,966.16 8,814.31

10. loans anD aDVancesAdvances recoverable in cash or in kind or for value to be received – Unsecured – Considered good

1,993.15 1,588.73

Deposit for Iron Ore Purchase 7,575.80 5,975.80 Less: Received from Associate company 4,545.48 3,030.32 3,585.48 2,390.32 Advance Income Tax [Net of Provision for taxation aggregating to Rs. 318.20 Lakhs (Previous Year Rs. 453.41 Lakhs)]

29.97 66.99

MAT Credit Entitlement 749.12 295.71 Add/(Less): Entitlement/(Utilised) during the year (108.14) 640.98 453.41 749.12 Balance with Excise authorities 413.12 494.50

total 6,107.54 5,289.66

11. current liaBilities anD proVisionsa. current liabilities Sundry Creditors (Note 5 on Schedule 19) 9,343.88 8,617.74 Advances from Customers 665.07 670.45 Interest Accrued but not due 86.53 21.38 Unclaimed Dividend * 12.90 9.81

10,108.38 9,319.38 B. provisions Staff Benefit 309.73 246.08 Proposed Dividend 397.64 397.64 Tax thereon 67.58 67.58

774.95 711.30 total 10,883.33 10,030.68

*The same is not due for payment to Investors Education and Protection Fund.


27



12. other incomeProfit on Sale of Current Investments 21.27 14.50 Miscellaneous Income 188.91 78.71

total 210.18 93.21

13. increase / (Decrease) in stocksClosing Stock Work in process 998.48 927.17 Finished Goods 893.35 1,891.83 1,211.48 2,138.65

Less: Opening Stock Work in process 927.17 870.88 Finished Goods 1,211.48 2,138.65 1,253.61 2,124.49

(246.82) 14.16

14. raW material consumeDOpening Stock 7,452.40 6,050.08 Add: Purchases 42,592.63 26,841.41

50,045.03 32,891.49 Less: Cost of materials sold 607.33 659.16

49,437.70 32,232.33 Less: Closing Stock 9,662.19 7,452.40

total 39,775.51 24,779.93

15. manufacturingexpensesPower & Fuel 1,034.68 1,044.47 Stores & Spares Consumed 8,026.71 7,107.49 Handling & Transport charges 1,030.32 722.84

total 10,091.71 8,874.80

16. salaries, Wages & other alloWances Salaries, Wages, Bonus & Other Benefits 1,823.54 1,654.86 Staff Welfare Expenses 168.87 96.13 Contribution to and provision for Provident Fund & Other Funds

150.34 111.54

total 2,142.75 1,862.53


28

31st mar’09 31st Mar’08 (rs. in lakhs) (Rs. in Lakhs)

17. other expenses Directors’ Remuneration-Sitting Fees 7.20 5.35 Rent 31.93 31.67 Rates & Taxes (including Wealth Tax Rs. 0.30 Lakhs Previous year 0.39 lakhs)

87.59 88.77

Insurance 109.47 134.69 Travelling & Conveyance 116.20 149.23 Directors Travelling 4.38 3.56 Communication Expenses 41.24 44.25 Freight, Packing, Forwarding & LD Charges 62.31 53.18 Commission to Selling Agents 929.39 536.30 Loss on sale of fixed Assets 4.22 47.81 Repairs & Maintenance – Plant & Machinery 556.10 626.57 – Buildings 57.78 69.23 – Others 8.09 82.61 Provision for doubtful debts – 7.06 Printing & Stationery 11.75 29.50 Vehicle running & maintenance 309.21 254.35 Auditors’ Remuneration: – Audit fee 2.75 2.00 – Tax Audit 1.25 1.00 – Certification fee 0.30 0.18 – Out of Pocket Expenses 0.28 0.31 – Service Tax 0.41 0.39 Advertisement & Business Promotion 90.15 44.12 Bad debts written off 69.21 474.49 Less: Transferred from Bad Debts Provision (69.21) – (474.49) – Legal & Consultancy Charges 217.78 185.70 Miscellaneous Expenses 95.75 78.14 Preliminary Expenses written off – 3.59

total 2,745.53 2,479.56

18. interest & financial charges Interest on Debentures 533.98 504.72 Interest on Term loans 721.47 756.80 Interest on Working Capital 2,510.19 1,405.38 Financial Charges 288.17 59.60 (Gain) / Loss on Foreign Exchange 714.10 (366.66)

Sub – Total 4,767.91 2,359.84 Less: Interest Earned 160.43 57.25 (TDS Rs. 4.24 Lakhs, Previous Year Rs. 3.95 Lakhs)

total 4,607.48 2,302.59


29

19. notes on accounts1. significant accounting policies

a) general The financial statements are prepared under the historical cost convention in accordance with the provisions of

the Companies Act, 1956 and materially comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India except to the extent disclosed in the following notes.

B) use of estimates The preparation of financial statements require management to make estimates and assumptions that affect the

reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and the reported amounts of income and expenses during the year.

Contingencies are recorded when it is probable that a liability will be incurred and the amounts can reasonably beestimated.Differencesbetweentheactualresultsandestimatesarerecognizedintheyearinwhichtheresultsareknown/materialized.

c) fixed assets and Depreciation1) tangible assets

i) gross Block

a) Fixed Assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition with due adjustments for Cenvat / Vat credits.

b) Capital Work-in-progress includes Machinery to be installed, Construction & Erection Materials and Advances and unallocated pre-operative expenses etc.

ii) Depreciation

a) Depreciation is provided on fixed assets used during the year under Straight Line Method at the rates specified in the Schedule XIV of the Companies Act, 1956.

b) Assets acquired and costing Rs. 5000 or less are being depreciated fully in the year of addition / acquisition.

2) intangible assets Intangibleassetsarestatedatcostofacquisitionlessaccumulatedamortization.Computersoftwarepackages

(ERPandothers)areamortizedoveraperiodof5years.Amortizationisdoneonstraightlinebasis.

D) sales Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment

sales etc., are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of account sales from the respective consignee.

e) investments Long Term Investments are stated at cost less permanent diminution, if any in value. Current Investments are

carried at lower of cost or fair value.

f) inventories i) Inventoriesarevaluedatlowerofthecostornetrealizablevalue.Costinrespectofrawmaterials,Stores

and Spares have been calculated on weighted average basis, which includes expenses incidental to procurement of the same.

ii) By-Productsarevaluedatnetrealizablevalue.

iii) Cost in respect of finished goods includes manufacturing expenses, factory and administrative overheads and excise duty.

iv) Cost in respect of work in progress represents, cost incurred upto the stage of completion.


30

g) revenue recognition All expenses and income to the extent considered payable and receivable respectively unless specifically stated to

be otherwise are accounted for on mercantile basis.

h) foreign currency transactions Foreign currency assets and liabilities are translated at exchange rates prevailing at the year end. The loss or gain

thereon and also on exchange differences on settlement of the foreign currency transactions during the year are adjusted to the Profit and Loss Account under respective heads of accounts. The difference between the forwardrateandexchangerateatthedateoftransactionisrecognizedasincomeorexpenseoverthelifeofthecontracts.

i) retirement Benefits i) Provident & Family Pension Fund: In accordance with the provisions of the Employee Provident Funds and

Miscellaneous Provisions Act, 1952, eligible employees of the company are entitled to receive benefits with respect to provident fund, a defined contribution plan in which both the company and employee contribute monthly to Provident Fund Scheme by the Central Government at a determined rate and the company’s contribution is charged off to the Profit & Loss Account.

ii) Leave Encashment Benefits: Leave encashment benefits payable to employees while in service, retirement, death while in service or on termination of employment with respect to accumulated leaves outstanding at the year end are accounted for on basis of actuarial valuation at the balance sheet date. The present value of such obligation is determined by the projected unit credit method as at the balance sheet date through which the obligations are settled. The resultant actuarial gain or loss on change in present value of defined benefit obligationorchangeinreturnoftheplanassetsisrecognizedasanincomeorexpenseintheProfitandLossAccount.

iii) Gratuity: Contributions under the scheme for defined benefit under the Payment of Gratuity Act, 1972, is determined on the basis of actuarial valuation and are funded to Life Insurance Corporation of India and recognizedasyear’sexpenditure.

J) miscellaneous expenses Preliminary Expenses and expenditure in connection with issue of shares are being written off over a period of ten

years or earlier.

k) Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are

capitalizedasapartofcostofsuchassettillsuchtimeastheassetisreadyforitsintendeduseorsale.Aqualifyingasset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All otherborrowingcostsarerecognizedasanexpenseintheperiodinwhichtheyareincurred.

l) contingent liabilities Contingent liabilities are generally not provided for and are disclosed by way of notes to the accounts.

m) segment reporting The accounting policies adopted for segment reporting are in line with the accounting policies adopted in financial

statements.

n) export Benefits Export benefits arising on account of entitlement for duty free imports are accounted for through import of

materials. Such benefits under Duty Entitlement Pass Books are accounted for on accrual basis.

o) government grants & other claims Revenue grants including subsidy / rebates, refunds, claims etc., are credited to Profit and Loss Account under

‘Other Income’ or deducted from the related expenses. Grants relating to fixed assets are credited to Capital ReserveAccountoradjustedinthecostofsuchassetsasthecasemaybe,asandwhentheultimaterealizabilityof such grants etc., areestablished/realized.


31

p) income tax Provision for Tax is made for both current and deferred taxes. Current tax is provided on the taxable income using

the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing differences, whicharecapableofreversalinsubsequentperiodsarerecognizedusingtaxratesandtaxlaws,whichhavebeenenacted or substantively enacted.

Q) Derivative instruments Derivative transactions of Interest and Foreign Currency Swap and Option contracts are accounted for on their

settlementandaccordinglythegains/lossesarisingtherefromarerecognizedunderrespectiveheadsofaccountsas and when the settlement takes place in accordance with the terms of respective contracts.

2. contingent liabilities not provided for

2008-09(rs. in lakhs)

2007-08(Rs. in Lakhs)

Guarantees given by banks on behalf of the Company.a) 1,214.16 922.24

Bills discounted with banksb) 591.58 –

Various demands raised, which in the opinion of the management are c) not tenable and are pending with various forums / authorities:

Sales Taxi) 713.41 561.93

Excise Custom Duty & Service Taxii) 4,313.00 288.00

Income Taxiii) 3.07 3.07

3. estimated amount of capital contracts not provided for (net of advances) 385.88 992.10

4. In the opinion of the Management, Current Assets and Loans & Advances have the value at which these are stated in theBalanceSheet,if,realizedintheordinarycourseofbusiness,unlessotherwisestatedandadequateprovisionsforall known liabilities have been made and are not in excess of the amount reasonably required

5. Disclosure of Sundry Creditors under current liabilities is based on the information available with the company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding at the Balance Sheet. Based on the above the relevant disclosure u/s 22 of Act are as follows:-

rs. in lakhs

Principal amount outstanding at the end of the year Nil

Interest amount due at the end of the year Nil

Interest Paid to suppliers Nil

6. interest during construction and pre-operative expenses allocated to fixed assets added during the year is as follows

2008-09(rs. in lakhs)

2007-08(Rs. in Lakhs)

Interest 131.75 13.13

Salaries, Wages, Gratuity & other Benefits 27.13 –

Bank Charges 64.00 –


32

7. the disclosures required under accounting standard 15 “employee Benefits” notified in the companies (accounting standards) rules 2006, are given below

(Rs. in Lakhs)

Defined contribution plan: 31.3.2009 31.3.2008

Employers Contribution to Provident Fund 105.45 83.80

Benefits

gratuity (funded)

leave (unfunded)

Gratuity (Funded)

Leave (Unfunded)

present Value of obligations:

Balance as at the beginning of the year 124.33 137.93 101.79 99.67

Service Cost 22.01 27.29 17.55 19.49

Interest Cost 9.95 10.57 8.14 7.66

Benefits Paid -9.81 -11.53 -8.46 -7.81

Actuarial (Gain) / Loss 23.09 5.50 5.31 18.92

Balance as at the closing of the year 169.57 169.76 124.33 137.93

fair Value of plan of assets:

Balance as at the beginning of the year 121.06 0.00 76.52 0.00

Expected Return of Plan Assets 13.08 0.00 10.19 0.00


Contributions 25.28 11.53 42.82 7.81

Benefits Paid -9.81 -11.53 -8.47 -7.81

Balance as at the closing of the year 149.61 0.00 121.06 0.00

reconciliation of fair value of assets and obligations:

Fair Value of Plan of Assets 149.61 0.00 121.06 0.00

Present Value of Obligations 169.56 169.76 124.33 137.93

AmountrecognizedinBalanceSheet 19.95 169.76 3.27 137.93

expenses recognized during the year:

Current Service Cost 22.01 27.29 17.55 19.49

Interest Cost 9.95 10.57 8.14 7.66

Expected Return of Plan Assets -13.08 0.00 -10.19 0.00


Net Cost 41.97 43.36 20.81 46.07

investment Details:

Funds Managed by the Insurer 100% 0% 100% 0%

Others 0% 0% 0% 0%

Total 100% 0% 100% 0%

actuarial assumptions:

Mortality Table (LIC) 1994-96 (ultimate) 1994-96 (ultimate)

Discount Rate (per annum) 8% 8% 8% 8%

Expected Return of Plan Assets (per annum) 8% 0% 8% 0%

Rate of escalation in salary (per annum) 7% 15% 7% 15%


33

8. Balances of Sundry Debtors / Creditors are subject to confirmation and reconciliation, if any.

9. Segment Reporting

The Company’s main business is manufacturing and selling pipes. In addition, the Company is also manufacturing& selling cement, Producing power for captive use which does not qualify as a reportable segment as per Accounting Standard – 17 on segment reporting issued by the Institute of Chartered Accountants of India. Accordingly, in the opinion of the management Pipes is the only reportable segment.

10. Disclosure of Related Parties / Related Party Transactions

Name of the Related Parties with whom transactions were carried out during the year and description of relationship:

a. Associate Company:

M/s Electrosteel Castings Limited

b. Key Management Personnel & their relatives (KMP):

Shri. Mayank Kejriwal, Managing Director*

c. Enterprise where KMP / relatives of KMP have significant influence or control

Lanco Hills Technology Park Private Limited+

Disclosure of Related Party Transactions (Rs. in Lakhs):

Sl.No.

Nature of TransactionsAssociate Company

Key Management Personnel

KMP havecontrol

1. Sale of Goods 8,619.11 Nil 46.80

2. Trade Receivables 146.30 Nil 19.31

3. Purchase of Goods 15,216.74 Nil Nil

4. Trade Payable 4,637.26 Nil Nil

5. Interest Paid 1,300.84 Nil Nil

6. Interest Payable 17.66 Nil Nil

7. Deposit received & outstanding 4,545.48 Nil Nil

* Shri Mayank Kejriwal, Managing Director has offered his services without any remuneration from the company.

+ Shri L. Madhusudhan Rao, Shri L. Sridhar and Shri G. Bhaskara Rao the Directors of the Company are interested in Lanco Hills Technology Park Private Limited.

11. Provision for Tax is made for both current and deferred taxes. Deferred Tax Assets and Liabilities arising on account of timing differences, which are capable of reversal in subsequent periods, are recognized using tax rates and tax laws, which have been enacted or substantially enacted at the balance sheet date. Break up of deferred tax assets and deferred tax liabilities:

(Rs. in Lakhs)

ParticularsOpening as on

01.04.2008(Charge) or Credit

During the yearClosing as on

31.03.2009

Deferred Tax Assets 490.30 (132.45) 357.85

Deferred Tax Liabilities (3,067.25) (414.33) (3,481.58)

Net Deferred Tax Assets / (Liabilities) (2,576.95) (546.78) (3,123.73)


34

12. As stipulated in AS-28, the Company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing business are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly, the management is of the view that no impairment provision is called for in these accounts.

13. (a) category wise outstanding derivatives contracts entered for hedging as on 31st march 2009

sl. no.

category currency current year previous year

underlying purpose no. of Deals

amountin us$

no. of Dealsamountin us$

1 Forward USD/INR 7 1,65,89,689 – – Buyers Credit

2 Option USD/INR 2 40,00,000 – – Buyers Credit

(b) un-hedged foreign currency exposures as on 31st march 2009

sl. no. nature currency current year previous year

1 ECB USD 16,66,667 33,33,334

2 Imports USD 1,94,114 –

3 Buyers Credit & interest USD 5,67,924 –

14. information in respect of goods produced / manufactured (in mt)

items2008-09 2007-08

installedcapacity $

productionInstalledCapacity

Production

D.I. Spun Pipes 1,80,000 1,23,422 1,20,000 1,13,471

Pig Iron * 1,50,000 1,48,433 1,50,000 1,48,677

Cement + 90,000 86,812 90,000 70,002

Coke ** 1,50,000 1,13,052 1,50,000 1,17,438

$ As certified by the Management.

* includes 1,36,137 M.T. (Previous year 1,26,018 M.T.) used for captive consumption.

+ Includes 10,087 M.T. (Previous Year 9,066 M.T.) used for Captive Consumption.

** For captive consumption.

Licensed Capacity is not applicable in terms of Government of India’s Notification No. S.O. 477 (E)dated 25th July 1991.


35

15. Turnover, Closing and Opening Stocks

Product YearTurnover Closing Stock Opening Stock

MT Rs. Lakhs MT Rs. Lakhs MT Rs. Lakhs

D.I. Spun Pipes2008-09 1,23,345 53,143.92 2,036 720.59 1,959 573.382007-08 1,14,749 35,307.82 1,959 573.38 3,237 955.85

Pig Iron & Molten Metal2008-09 1,49,970* 3,994.73 133 15.75 1,670 289.902007-08 1,47,795* 4,341.52 1,670 289.90 788 124.04

Cement2008-09 87,008+ 2,816.52 552 12.63 748 13.092007-08 69,633+ 1,919.47 748 13.09 379 6.17

Scrap & By Products2008-09 – 5,909.86 144.38 – 335.112007-08 – 5,644.12 – 335.11 – 163.82

Castings2008-09 – – – – – – 2007-08 – – – – 19 3.73

Others 2008-09 – 2,181.92$ – – – – 2007-08 – 2,259.09$ – – – –

Total2008-09 68,046.95 893.35 – 1,211.482007-08 49,472.02 1,211.48 – 1,253.61

* Includes 1,36,137 M.T. (Previous Year 1,26,018 MT) used for Captive Consumption

+ Includes 10,087 M.T. (Previous Year 9,066 MT) used for Captive Consumption

$ Includes sale of purchased coke Rs. 595.80 lakhs (2369 M.T.), others Rs. 39.12 lakhs {Previous Year Coal: Rs. 371.40 lakhs (6936 MT), Iron Ore: Rs. 503.27 lakhs (35,034 M.T.)}.

16. Raw Materials Consumed

2008-09 2007-08

MT Rs. in Lakhs MT Rs. in Lakhs

Coke 7,524 1,539.67 28,207 2,816.10

Iron Ore 3,02,064 10,076.04 2,73,203 7,804.95

Coking Coal 1,72,456 20,720.35 1,39,342 9,008.24

Others – 7,439.45 – 5,150.64

Total 39,775.51 24,779.93

17. Value of Imported & Indigenous Raw Materials, Spare Parts, Components Consumed

2008-09 2007-08

Rs. in Lakhs % Rs. in Lakhs %

Imported 24,494.78 51.24 13,344.22 41.85

Indigenous 23,307.44 48.76 18,543.20 58.15

Total 47,802.22 100.00 31,887.42 100.00

18. CIF Value of Imports

2008-09Rs. in Lakhs

2007-08Rs. in Lakhs

Raw Materials 24,714.56 11,450.95

Stores & Spares 2,218.92 1,837.63

Capital Goods 763.46 621.74


36

19. expenditure in foreign currency

2008-09rs. in lakhs

2007-08Rs. in Lakhs

Interest & Financial Charges a) 188.13 102.63

Traveling Expensesb) 0.42 3.84

Legal & Professional Chargesc) 37.79 3.21

Payment of Dividend on Equity Shares in Foreign Currencyd)

– No. of Non-Resident shareholders 47 47

– No. of shares held 4558691 4765442

– Dividend (Rs. in Lakhs) 45.59 47.65

20. earnings in foreign exchange

2008-09rs. in lakhs

2007-08Rs. in Lakhs

FOB value of Exports nil Nil

21. Disclosure of loans and advances as per the requirement of Clause 32 of the listing agreement with the Stock Exchanges in India.

(i) The Company does not have any subsidiary and it has not given any loans and advances in the nature of loans to its associates.

(ii) Interest free loans as per general rules of the Company have been given to its employees. Aggregate amount of such advances and loans outstanding at the year end is Rs. 36.66 lakhs (Previous year Rs. 27.74 lakhs)

22. Previous Years Figures have been re-grouped / re-arranged wherever necessary.

The Schedules referred to above form an integral part of the Balance Sheet.




37

scheDule-Vi

part-iV

Balance sheet aBstract anD company Business profile

I. Registration DetailsRegistration No. 1 3 3 9 1 State Code 0 1 Balance Sheet Date 3 1 0 3 2 0 0 9

Date Month YearII. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Right IssueN I L N I L

Bonus Issue Private PlacementN I L N I L

III. Position of Mobilisation and Development of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets

5 3 7 5 5 8 6 5 3 7 5 5 8 6SOURCES OF FUNDSPaid-up Capital Reserves & Surplus

3 9 7 6 3 6 8 5 4 9 7 7Secured Loans Unsecured Loans

2 2 6 4 5 5 4 1 5 4 6 0 4 6Deferred Tax Liability (Net)

3 1 2 3 7 3APPLICATION OF FUNDSNet Fixed Assets Investments

2 8 6 6 5 3 5 N I LNet Current Assets Misc. Expenditure

2 5 0 9 0 5 1 N I LProfit & Loss Account

N I LIV. Performance of the Company (Amount in Rs. Thousands)

Turnover (Gross Revenue) Total Expenditure4 6 8 2 5 7 1 3 4 6 5 4 3 4 3 1Profit / Loss before Tax Profit / Loss after Tax

+ / - + / -4 2 8 2 2 8 2 4 1 8 3 5 2 9(Please tick appropriate box (+) for Profit, (-) for Loss)Earning per share in Rs. Dividends Rate %

4 . 6 2 1 0V. Generic Name of principal product / Service of Company (as per monetary terms);

Item Code No.: (ITC Code) Production Description7 3 0 3 . 0 0 D . I . P I P E S2 5 0 2 . 2 9 C E M E N T




38

lanco inDustries limiteDRegd. Office: Rachagunneri – 517641, Srikalahasthi Mandal, Chittoor District, A.P. India

noticeNotice is hereby given that Seventeenth Annual General Meeting of Lanco Industries Limited will be held at the Registered Office of the Company at Rachagunneri, Srikalahasthi Mandal, Chittoor District, Andhra Pradesh on Friday, the 28th day of August, 2009 at 11.30 A.M. to transact the following business:

orDinary Business

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2009 and Profit & Loss Account for the year ended as on that date, together with the Auditors’ Report and Directors’ Report thereon.

2. To declare dividend.

3. To appoint a Director in place of Shri Gouri Shankar Rathi who retires by rotation and being eligible offers himself for reappointment.

4. To appoint a Director in place of Shri G. Maruthi Rao who retires by rotation and being eligible offers himself for reappointment.

5. To appoint Statutory Auditors and fix their remuneration and for this purpose to consider and if thought fit to pass with or without modification(s), the following resolution as an Ordinary Resolution:-

“Resolved that M/s K.R. Bapuji & Co, Chartered Accountants, Hyderabad be and are hereby re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting of the Company at a remuneration to be decided mutually between the Board of Directors and the Auditors including reimbursement of out of pocket expenses”.

By Order of the Board For lanco industries limited

Place: Chennai g. D. saini Dated: 27th April, 2009 Sr. General Manager-Finance & Company Secretary


39

notes:

1. A Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote, instead of himself / herself. The proxy, so appointed, need not be a member of the Company. In order to be effective, the proxy form(s) duly completed and signed should reach the registered office of the Company at least 48 hours before the commencement of the meeting.

2. The dividend, if declared, will be payable within 30 days from the date of declaration to those members whose names appear on the Register of Members of the Company as on 28th August, 2009.

3. The register of members will remain closed from 22.08.09 to 28.08.09 (both days inclusive). The transfer books of the Company will also remain closed during the aforesaid period.

4. Members are requested to notify any change in their addresses to the Company.

5. Members desiring to seek any information / clarification on the annual accounts are requested to write to the Company at least 7 days before the Annual General Meeting.

intimation required to be furnished as per the listing agreement:

As required under the listing agreement, the particulars of Directors who are proposed to be appointed / re-appointed are given below:

Name of Director(s) Shri Gouri Shankar Rathi Shri G. Maruthi RaoDate of Birth 9th January, 1950 14th April, 1939.Date of Appointment 8th June, 2005 30th March, 2002.Qualifications B. Com. (Hons), F.C.S., L.L.B. B.Sc (Hons).

Special ExpertiseExpert in General Management and Marketing.

Expert in Administrative & General Management.

Directorship in other Public Limited Companies.

– –

Audit Committee – – Remuneration Committee – – Shareholders / Grievances Committee –


40

notes

Annual Report 2008-09

Documents

year rs

preceding year

sridhar shri

madhusudhan rao shri

bhaskara rao shri

idbi bank

sales gross of rs

jawahar nominee of idbi