Directors
To the Members,
The Directors of your Company are pleased to present the 52nd Annual Report,
with the statement of the audited accounts for the financial year ended on December 31,
2012.
| FINANCIAL RESULTS |
Year ended Dec 31, 2012 |
Year ended Dec 31, 2011 |
|
Rs.in million |
Rs.in million |
| Net Sales & Services |
22041.3 |
24167.2 |
| Other Income |
917.8 |
727.2 |
| Total Income |
22959.1 |
24894.4 |
| Operating Expenditure |
19691.9 |
21370.0 |
| Depreciation |
435.9 |
385.2 |
| Profit Before Tax |
2831.3 |
3139.2 |
| Provision for taxation |
930.5 |
1054.3 |
| Profit After Tax |
1900.8 |
2084.9 |
| Balance brought forward from last year |
5205.3 |
4180.0 |
| Profit available for appropriation |
7106.1 |
6264.9 |
| The appropriations are as follows: |
|
|
| Proposed dividend on Equity Shares |
395.5 |
395.5 |
| Tax on Proposed dividend |
64.1 |
64.1 |
| Transfer to General Reserves (including compulsory transfer to Reserves required under
Section 205(2A) of the Companies Act, 1956) |
1000.0 |
600.0 |
| Leaving a balance of |
5646.5 |
5205.3 |
DIVIDEND
Your Directors are pleased to recommend a dividend of Rs. 7.5 per share (75%)
for the year ended December 31, 2012 out of the current year`s profit, as compared to
Rs. 7.5 per share, for the preceding year ended December 31, 2011. The dividend, if
approved, at the forthcoming Annual General Meeting will be paid out of the profits of the
Company for the year and will absorb a sum of Rs. 395.5 million. This would involve
a cash outflow of Rs. 462.7 million including tax on dividend.
OPERATIONS
The year posed prolonged challenging scenarios in the economic environment. High
inflation, fiscal imbalances and resultant high interest rates continued to deter the
sentiments. A decline in the buoyancy in the Asian economies along with fragile recovery
in advanced economies also affected export growth adversely.
A sharp drop in volumes led to a decline in sales by 9%. This coupled with inflationary
pressures on cost and a weakening Rupee put additional pressure on margins. Despite the
difficult business and macro environment, our profit before tax as percent to sales is
only marginally lower a Rs. 12.8 per cent as compared to 13 per cent last year and Profit
after Tax for the year as per cent to sales remains at 8.6% though lower by 8.8 per cent
over the previous year. Exports constitute 6.2 per cent of the total sales as
compared to 8.7 per cent of sales in the previous year reflective of the weakness
in the global markets. The earning per share and cash earning per share for the year under
review was Rs. 36.0 and Rs. 44.3 respectively.
Brownfield expansions at Pune and Haridwar facilities are planned in the coming years
to create capacities to meet the expected growth in demand.
Business excellence is one of our core competitive strategies of doing business.
Business excellence addresses the entire value chain and weeds out what is not relevant or
sub-optimal. We continue to actively nurture and foster a culture of innovation by
leveraging on our global knowledge base and delivering value to our customers.
Backed by the intrinsic strengths of SKF, driven by the experience of working with
customers over 100 years and across geographies, your company continues to be the leader
in its segment. SKF India Ltd will continue to leverage the parent company`s
well-developed global research and development facilities, competent talent to further
strengthen its market leadership.
LIQUIDITY
Your Company continues to remain debt-free and maintains sufficient cash to meet
strategic objectives. There are no long-term borrowings. During 2012, internal cash flows
have covered working capital requirements, investments and dividend payments. The Balance
Sheet remained strong with cash and liquid investments of Rs. 3070 million.
SUSTAINABILITY AND SAFETY
The philosophy of `SKF Care` is embedded in everything that we do. SKF Care is integral
to the processes and operations and our way of doing business. At SKF business decisions
are guided by the principles of SKF Care which includes Business Care, Environmental Care,
Employee Care and Community Care.
SKF`s BeyondZero™ strategy describes SKF`s overall commitments towards environment
and sustainability. Being a responsible citizen, we at SKF strive to act in a way that not
only secures strong financial performance but also supports environmental sustainability.
SKF BeyondZero™ consists of two simultaneous goals:
• Reduce the negative environmental impact from our own operations and those of
our suppliers
• Innovate and offer our customers new technologies, products and services with
enhanced environmental performance characteristics.
In this continuously changing world, ever-evolving sustainable and profitable
technologies will define progress in future. SKF`s knowledge engineering capabilities and
its applications to manufacture innovative and energy-efficient solutions enable customers
to achieve business profitability and their environmental goals.
Along with the above goals, safety at work place continues to remain a prime focus for
the company. Your company continues to improve the EHS performance by implementing various
programs and stringent practices towards the prevention of work place accidents and
pollution, promotion of employee health and well being and reduction of environmental
impacts.
AWARDS / RECOGNITION
Your Directors are glad to report that during the year, the company was recognised and
felicitated for exemplary performance in various fields and some of the significant
achievements are:
• SKF India ranked among the top 50 Most Admired Companies in India by Fortune
Magazine - Ranked 1st in the Engineering and Capital Goods category and 3rd in the Auto
Components category
• SKF India Ltd. was honored with the prestigious Dun & Bradstreet award 2011,
for the 6th consecutive year, for its significant contribution to the bearing sector
• SKF Pune manufacturing facility was conferred the Gold Certificate of merit at
the Ninth edition of Economic Times and Frost & Sullivan India Manufacturing
Excellence award-2012
• SKF India was awarded in 2012 `Star performer` by the Engineering Export
Promotion Council of India (EEPC), for excellence in exports of engineering goods and
services during 2009-10
• SKF has been conferred as the best supplier in the `Best Quality & Services`
category and `Improvement Orientation` category by Tata Steel
• SKF India awarded as the "Preferred supplier for local R&D capability
development" by Maruti
• SKF India, Awarded Quality - Gold award from Bajaj Auto for Valuable Support and
Contribution for the year 2011
• SKF India bags two awards at Productivity Improvement Case Competition 2012
organized by Pune Divisional Productivity Council, winner (best case study) in the
management category and first runner up in the operator category.
These awards and recognitions came as a result of the focused effort towards evolution
of your company from a bearing manufacturer and supplier to an integrated solutions
provider.
We thank all our customers, suppliers, employees and all other stakeholders for their
continued support and contribution to these awards. These recognitions further inspire us
to aim higher in order to become competitive and deliver value in everything we do.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As responsible corporate citizens, we have always endeavored to make positive
contribution to the communities in which we operate. Your company`s CSR initiatives are
aimed at local community needs and contributes to the community development.
All the CSR activities are determined by the philosophy of `making a meaningful
difference in the lives we touch`. Your Company`s CSR activities are conceived to help in
the holistic development of the underprivileged children by engaging them in various
activities such as sports, culture and education. Keeping this in mind, your company runs
a sports academy for underprivileged children as it believes sport is an essential part of
a child`s mental and physical development
Your company also supports several NGOs guided by the above philosophy.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to requirements of Section 217 (2AA) of the Companies Act, 1956 and on the
basis of information and advice received by them, your Directors confirm:-
1. that in the preparation of the annual accounts, the applicable accounting standards
have been followed and there are no material departures
2. that the Directors have 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 as on December 31, 2012
and of the profit of the company for the year ended on that date;
3. that the Directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the company and for preventing and detecting fraud and
other irregularities;
4. that the Directors have prepared the annual accounts on a going concern basis.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Irrespective of the location, your company has undertaken the commitment that all new
facilities must be designed and constructed to world-class standards in terms of
environmental performance; and we do so by adopting the `Leadership in Energy and
Environmental Design` (LEED) standard for all our major constructions.
With clear focus on energy conservation, your company has launched `SustEn` project to
reduce carbon footprint and energy consumption costs, results for which will be visible in
2013 and beyond.
The information relating to Energy Conservation, Technology Absorption and Foreign
Exchange Earnings and Outgo as required to be disclosed under section 217 (1) (e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules, 1988 are set out as an annexure forming part of this Report.
CORPORATE GOVERNANCE
A detailed report on the Corporate Governance system and practices of the Company and
certificate from the Auditors of the Company regarding compliance of conditions of
Corporate Governance and a separate section on Management Discussion & Analysis forms
part of the Annual Report.
Your Company is committed to transparency in all its dealings and places high emphasis
on business ethics. Certificate from CEO/CFO, inter alia, confirming the correctness of
the financial statements, compliance with Company`s code of conduct, adequacy of the
Internal Control measures and reporting of matters to the Audit Committee in terms of
Clause 49 of the Listing Agreement with the Stock Exchanges, is also enclosed as a part of
the Annual Report.
DEPOSITS
The Company discontinued accepting fixed deposits from Public and Shareholders in the
year 2001. No amount of Principal or interest was outstanding as at December 31, 2012.
PERSONNEL
The Board of Directors commends the continued dedication of employees at all levels and
the industrial relations continue to be peaceful and cordial. Your Company`s dedicated and
talented workforce has enabled it to remain at the forefront of the industry. Your Company
remains committed to provide a challenging and rewarding work environment to all its
employees.
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975 as amended, the names and other
particulars of employees are set out as an annexure to the Directors` report. However, as
per provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and the
accounts are being sent to all the shareholders excluding the aforesaid information. Any
shareholder desirous of obtaining such particulars may write to the Company Secretary at
the registered office of the Company.
DIRECTORS
Mr. Prakash M. Telang was appointed as an additional Director with effect from October
23, 2012. Mr. Telang is an Independent Director. As per the provision of Section 260 of
the Act, Mr. Telang holds office only up to the date of the forthcoming Annual General
Meeting and is eligible for appointment.
In accordance with the requirements of the Companies Act, 1956 and the Company`s
Articles of Association, Mr. T. Sthen and Mr. R. Makhija retire by rotation and being
eligible have offered themselves for re-appointment. Resolutions seeking approval of the
Members for their appointment have been incorporated in the
Notice of the Annual General Meeting and a brief detail about them has been provided in
the corporate governance report.
Mr. D. C. Shroff, a Director of the Company who retires by rotation at the forthcoming
AGM, has conveyed his decision not to offer himself for re-appointment. He is also the
Chairman of the Audit Committee. The Directors place on record their appreciation of the
valuable contribution made by him.
AUDITORS
M/s. B S R & Associates, Chartered Accountants, the retiring auditors have
expressed their unwillingness for their re-appointment. The Company has received a notice
to propose M/s Price Waterhouse & Co., Bangalore, Chartered Accountants, as statutory
auditors in place of the retiring auditors who will hold office from the conclusion of the
forthcoming Annual General Meeting until the conclusion of the next Annual General
Meeting. In terms of Clause 41(1)(h) of the Listing Agreement, the statutory auditors of
your Company are subjected to the Peer Review Process of the ICAI. M/s Price Waterhouse
& Co,, Bangalore, hold a valid certificate issued by Peer Review Board of ICAI.
A certificate from the proposed Auditors has been received to the effect that their
re-appointment, if made, would be within the limits prescribed under Section 224(1B) of
the Companies Act, 1956.
COST AUDITORS
Pursuant to Section 233B of the Companies Act, 1956, the Central Government has
prescribed Cost Audit of the Company. The Board has appointed M/s. RA & Co. as Cost
Auditors of the Company for the year 2012. The Cost Audit is under process and the Company
will submit the Cost Auditors` report to the Central Government in time. The Cost Audit
report for the financial year 2011 has been submitted on 30th March 2012 as
against the due date of 28th June 2012.
ACKNOWLEDGEMENT
The Board wishes to acknowledge and thank all stakeholders for their valuable sustained
support and encouragement towards the conduct of the efficient operations of the Company.
Your Board is particularly indebted to its Principals, AB SKF who have supported the
Company at all times.
|
For and on behalf of the Board |
|
SKF India Limited |
|
K C Mehra |
| Mumbai, March 26, 2013 |
Chairman |
Annexure to the Directors` Report
Information as per section 217(1) (e) 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 December 31, 2012 Disclosures
A. CONSERVATION OF ENERGY :
Pune Plant
During the year 2012, SustEn project was launched to focus on various energy
saving projects which were focused on compressed air systems, Heat treatment, production
channels and general utilities. In all 13 projects were completed. This has resulted in
savings of over 10.0 MINR.
The projects covered were:
• Implementation of Energy Audit & various green belt projects.
• Optimizing the compressed air pressure, identifying and eliminating air
leakages.
• Solid State Control of heaters in HT furnaces.
• Harmonic level measurement & use of harmonic filtration units for reduction
in power losses.
• Channel wise electrical power consumption and actions to reduce active power
component.
Improvement & maintaining power factor
• Maintained overall power factor of the factory to 0.997.
• Optimization of automatic power factor controllers at SKF`s main incoming
feeders.
• In 2012 total discount availed from MSEB was 70 percent higher than in 2011.
Energy measurement & audits
• Specific energy consumption of all compressors mapped.
Energy Saving Projects completed during 2012.
• 2 Reciprocating old CPT compressors replaced with energy efficient screw
compressors.
• Main compressor header pressure reduced from 75 PSI to 72 PSI to reduce
electrical energy usage.
• Solid State control of heaters is provided on 4 heat treatment furnaces to
optimize electrical consumption.
Bengaluru Plant
• Energy conservation measures continued in the following areas yielded an annual
cost savings of around 2 MINR.
• Compressed air
• Water chilling for process cooling and comfort cooling.
• Power factor improvement
• Lighting.
Haridwar Plant
• The plant is constructed as green building - LEED/IGBC guidelines and other best
practices resulting in lot of energy saving.
• Installation of Flux control system for flexlink conveyors
Induction motor flux control device installed on one channel resulting in saving of
16,312 KWH of energy per annum. The device will be installed in other channels which will
accrue additional saving of 48,936 KWH per annum.
• Compressed Air
Reduction in compressed air consumption is achieved by arresting leakages and
optimization of header pressure. Total energy saving achieved is 5400 KWH per annum.
Additional Proposal of Activities
• Further Implementation of energy saving projects in the areas of compressed air
systems, pumps and cooling towers.
• Replacement of 2 old 2000 KVA transformers with energy efficient transformers.
• Installation of 500KW solar energy plant as a renewable energy source.
• Monitoring of channel wise electric power consumption with KW and power factor.
B. TECHNOLOGY ABSORPTION :
• The Company has been consistently supported by its Parent Company, Aktiebolaget
SKF (AB SKF) in keeping updated on technology developments. The Company receives technical
know-how from AB SKF on continuous basis. This has been used extensively in wide range of
products giving competitive edge in the market.
• Pune Plant
Installation of new MDGBB Channel:
New MDGBB channel installation has been completed with new Grinding machines.
Production from this channel has started from second quarter of 2012.
Installation of new HBU1 Channel:
New HBU1 channel installation is in progress. New Grinding machines and Assembly
machines have been added. The channel installation will be completed in first half of next
year.
• Bengaluru Plant
• Upgradation of Technical modifications on Grinding and Assembly machines was
further enhanced, resulting into increase in efficiency and capacity improvements of the
channels
• Haridwar Plant
• The speed of production continued to increase during the year as the technology
absorption improved
• Installation and commissioning of additional channel is on, which will further
enhance the installed plant capacity
C. FOREIGN EXCHANGE EARNINGS AND OUTGO :
- Exports during the year were mainly for automotive customers. The company continued
to explore new businesses for overseas market. Exports during the year were about 6% of
the total sales
- The information on foreign exchange earnings and outgo is contained in the Notes to
Financial Statements.
|
For and on behalf of the Board |
|
SKF India Limited |
|
K.C. Mehra |
| Mumbai, March 26, 2013 |
Chairman |
??? |