ANNUAL REPORT 2011-2012
To The Members
Your directors are pleased to present the 66th Annual Report and the
audited accounts for the financial year ended 31st March, 2012.
1. Financial Results
The financial performance of the Company for the financial year ended 31st
March 2012, is summarized below:
Profit (from operations) before Depreciation, 6890.78 6420.91
Interest & Tax
Less: Interest 4190.56 2947.49
Depreciation 1281.56 1167.63
Profit (from operations) before Tax 1418.66 2305.79
Less: Provision for Current Taxation (865.18) 461.09
Profit after tax 2283.84 1844.70
Add: Balance in Profit and Loss Account 2111.63 1423.19
Amount Available for Appropriation 4395.47 3267.89
Dividend on Equity Shares 911.18 820.06
Tax on dividend 147.81 136.20
General Reserve 250.00 200.00
Balance carried to Balance Sheet 3086.48 2111.63
During the year under review, the Company has shown a rise of 24% in gross
sales to Rs. 304 crores. The profit before depreciation, interest and tax
has gone upto Rs. 68.90 from Rs. 64.20 crores in the previous year.
The Directors recommend the dividend at 30% (i.e. Rs.3/- per share) on
equity shares for the year ended on 31st March, 2012. The payment of
dividend will be subject to the approval of the shareholders at the ensuing
annual general meeting.
3. Operations and Management Discussion & Analysis
The current year`s operations are covered in the Management Discussion and
Analysis Report. This Management Discussion and Analysis Report, as
stipulated under Clause-49 of the Listing Agreement with the Stock
Exchanges, is presented in a separate section forming part of this annual
4. Corporate Governance
The Report on Corporate Governance, as stipulated under Clause 49 of the
Listing Agreement, forms part of this Annual Report.
The Board was pleased to appoint Mr. Ramesh Adige as an Additional Director
of the Company. Mr. Adige is a Masters in Business Administration with
specialization in Marketing from the renowned Faculty of Management
Studies, University of Delhi and holds a B. E. (Honours) degree from the
prestigious Birla Institute of Technology and Science (BITS), Pilani. He
has 37 years of extensive and wide-ranging experience in the areas of
Corporate Policy, Strategic and Perspective Planning, and External
Mr. S. Padmanabhan, Mr. Asit Javeri and Mrs. Kavita Khanna retire by
rotation in accordance with the provisions of the Companies Act, 1956 and
the Articles of Association of the Company and being eligible, offer
themselves for reappointment.
6. Directors` Responsibility Statement as required under Section 217(2AA)
of the Companies Act, 1956
The Directors state that:
(i) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
(ii) he directors had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year covered under this Report and of
the profit of the Company for the year;
(iii) the directors had 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;
(iv) the directors had prepared the annual accounts on a going concern
In terms of the requirement of Accounting Standards, segment-wise results
are shown in the notes to accounts.
7. Conservation of energy, technology absorption & foreign exchange
earnings & outgo
The details as required under the Companies (Disclosure of Particulars in
Report of Board of Directors) Rules, 1988 are provided in the annexure to
the Directors` Report.
8. Fixed Deposits
The Company has accepted the fixed deposits from public and shareholders
during the year and has complied with all the regulatory requirements. At
the end of the year, there were no unclaimed or overdue deposits.
9. Particulars of Employees
In term of notification dated 31-03-2011 issued by the Ministry of
Corporate Affairs, Government of India, there are no employees covered
under section 217(2A) of the Companies Act, 1956, in respect of whom, the
particulars are required to be given.
M/s K.S. Aiyar & Co., Statutory Auditors, retire at the ensuing annual
general meeting and are eligible for reappointment. The Audit Committee of
the Board has recommended their reappointment. M/s K.S. Aiyar & Co. have,
under Section 224(1) of the Companies Act, 1956, furnished the certificate
of their eligibility for reappointment. Requisite resolution is being
placed for the shareholders` approval.
The Directors wish to express their appreciation of the continued co-
operation of the customers, suppliers and bankers. The Directors also wish
to thank employees at all levels for their contribution, support and
continued co-operation throughout the year.
On behalf of the Board of Directors
Maitreya V. Doshi
Chairman & Managing Director
April 24, 2012
ANNEXURE TO DIRECTORS` REPORT CONSERVATION OF ENERGY
In view of acute energy shortages, the Company has taken special efforts
for energy conservation. The power factor is continuously monitored and
maintained to 1.00 (Unity) power on daily basis. With study of compressed
air consumption, one compressor has been switched off resulting in a saving
of 1200 KWH per day.
Employee awareness was created on how to use electrical energy efficiently
by adopting good shop floor practices. An automatic switching system was
installed to avoid over consumption of street light power. A manual change
over switch was installed for CNC lathe machines, which helped reduced
diesel generator power consumption.
Expenditure on R&D:
Particulars 2011-12 2010-11
Recurring expenses on R&D project - 15.67
Total R&D expenditure as a % of total turnover - 0.06
Foreign exchange earnings and outgo:
Particulars 2011-12 2010-11
Foreign Exchange Earnings:
FOB Value of Exports 156.53 70.85
Foreign Exchange Outgo:
Imports (CIF value) 4394.18 3475.17
Foreign Travel 18.33 20.45
Others 3.99 15.46
Total 4416.50 3511.08
To cater the need of automobile and engineering industries,, the
indigenously developed Gear Shaping Machine, Model PSC- 250 was introduced,
which helped increased productivity by reducing set up time from Spur to
Helical. Likewise, CNC Gear Hobbing Machine with Diameters of 630 mm and
900 mm was developed with Electronic Gear Box to increase the productivity.
MANAGEMENT DISCUSSION AND ANALYSIS
In 2011-12, the Company reported gross sales of Rs.304 crores, an increase
of 24% over the previous year.
Profit & Margin Growth
The profit from operations before depreciation, amortization expense,
interest and tax, was Rs.68.91 crores against Rs.64.21 crores over the
previous year; a growth of 7%. The cash profit was Rs.35.65 crores against
Rs.30.12 crores and the net profit was Rs.22.84 crores compared to Rs.18.45
The finance cost has increased from Rs.29 crores to Rs.42 crores, mainly
due to higher interest rates on term borrowings and working capital
requirements. Other expenses were generally in line with increased
Leverage & Liquidity
The Company`s unrevalued net worth on 31st March, 2012, is Rs.209 crores
and the total debt is Rs.356 crores. The debt-equity ratio is 1.70:1. If
the revaluation of the Company`s land is considered, the net worth is
Rs.710 crs. and the debt-equity ratio on this basis is 0.50:1.
During the year, the Company incurred a capital investment of Rs.76 crores
towards factory buildings, plant & machinery and product development. Most
of the Company`s current capital investment plans have already been
The Company operates in two reportable segments: Engineering and
Automotive. The Engineering segment has two activities: CNC Machines and
Heavy Engineering. The Automotive segment consists of Light Commercial and
Sports Utility Vehicles.
CNC Machines Division
Industry Structure & Outlook
The Auto sector has shown much lower growth during this year causing auto
ancillaries to taper down their capital investment in the year. The
Government PSU and Infrastructure sector continued their buying pattern
throughout the year. The scenario for 2012-13 is likely to be very
uncertain due to lack of clarity in Government policies. However, long term
projects, especially modernization plans of Government Ordnance Factories
appear to be on track that should give good support to the CNC Machine
During the year, the division sold 80 CNC machines at an average value of
Rs.120 crs. as against 110 machines at an average of Rs.90 lacs in the
previous year. During the year, the Company continued to receive orders
from BHEL, L&T, Tata Motors, Graziano etc.
In Sept. `11, the Company participated in the European Machine Tools
exhibition (EMO) at Hannover, Germany and received a very encouraging
response from the international market. The Company is finalizing selling
arrangements with dealers in countries like USA, Brazil, Germany, Italy,
Turkey etc. it is also working on some international projects for supply of
With its new Design Centre at Bangalore, new products development and value
engineering activity is on fast track, it will be showcased at the IMTEX
`13 exhibition in Bangalore. Production is being structured to shorten
delivery times while the new design machines enhances `value for money` to
the customer with reduced manufacturing and assembly time.
Quality improvement initiatives are on with standardization of suppliers,
parts and processes. Stricter norms are followed looking at market demand.
The Company has a world class, ISO 9001-2008 certified Company and it has
world class manufacturing facilities.
The following products were developed during the year:
* CNC Vertical Machining Centre suitable for heavy duty applications
* CNC Heavy duty Horizontal Machining Centre with quill and W axis
* CNC Gear Hobbing Machines of 630 mm and 900 mm dia. developed with
Electronic Gear Box to increase productivity
* CNC Heavy duty Gear Shaper suitable for internal gear shaping
* Targeting new customers in new geographic segments
* Rationalization of existing product portfolio
* Increasing presence in CNC vertical machining centres through additional
models for wider customer choice
* Technological improvement in gear cutting machines to offer better
solutions to customers and face growing international competition
* Long term growth in the auto and auto ancillary sector
* Modernization plans and new projects in Defense and Railways
* Export potential especially in BRIC countries
Threats, Risks and Concerns
* Uncertain Government policies
* Sluggish market conditions
* Rupee-Dollar devaluation
* Threat from used Chinese machines
Industry Structure & Outlook
This business serves the general engineering and wind mill sectors. There
is a good scope for rapid growth due to the Government`s thrust on
The Engineering division mainly manufactures and supplies wind mill
components for various customers like Enercon India and ReGen Powertech.
This division has also developed Metro Rail Bogie frames (the only approved
source in India by Delhi Metro Rail Corporation) for BEML and Gear Box
Housings for Winergy Drive System India Pvt. Ltd, a Siemens affiliate. In
2011-12, this division achieved a 42% rise in turnover.
Nearly Rs.38 crs. were invested to further expand and de-bottleneck
manufacturing lines. These lines are flexible and can be used for alternate
products and product-mix. The Company has a world class ISO 9001 certified
manufacturing facility with the highest priority given to quality
* Gear Box Housings for coal pulverizer mill for winergy
* Six new components requiring precision fabrication, machining &
painting, have been developed for wind mill generators
* Wind turbine tower for Enercon India Ltd.
The Company plans for a diversified customer base by adding at least 3 to 4
new customers every year. Discussion with leading global clients to
manufacture wind turbine towers is in process. Apart from the wind energy
sector there is also a focus on infrastructure, earth moving and power
The Engineering division has been ISO 9001 - 2008 certified for its Quality
Management System in May 2011. It maintains high quality standards with a
100% inspection standard at multiple stages. There is an "in-house"
inspection facility with "state-of-the-art" imported equipment.
* The wind energy sector offers strong opportunities for business growth
due to the global thrust on renewable energy development. Due to the
Company`s high quality standards, new wind mill generator manufacturers are
approaching to develop their components. This is because major suppliers
prefer to outsource components and assemblies instead of manufacturing them
* The infrastructure, power and earth moving equipment sectors are all
expected to grow rapidly in the next five years.
Threats, Risks and Concerns
* Risk of revenue loss and profitability due to non-utilization of
equipment for the short term, if a customer cancels an order.
* High dependence on the wind energy sector business. However, the
Management is in the process of diversifying the business to other
* Slow down in economy affecting infrastructural growth.
Industry Structure & Outlook
During the year under review, the passenger car vehicle has grown by 2.2%
due to general economy slowdown. But Utility Vehicle market has grown by
16% in India during this period. It is expected that Utility Vehicle market
and SUV market will continue to grow as these markets at present are only
14 % of passenger vehicle market in India.
The RiO project is progressing smoothly. During the year, the Company
introduced the refurbished new look RiO in the market and feedback received
is encouraging. The Company has also introduced BS IV petrol version in the
market during the year.
After developing the dealer network in North and North-East, the Company is
focusing on dealer development all over India and expects to have such
national presence by the 3rd quarter of the current year. The Company has
also initiated the concept of Premier Authorised Service Station (PASS),
which will help to have better network for service and spares to the
The Company participated in Auto Expo in January, 2012 in Delhi, wherein
RiO with new look, fitted with 1.3 Ltr. BS-IV Engine, was displayed.
The Company is developing diesel BS IV compliant RiO with 1.3 Ltr state of
art world class engine which is currently being used by leading car
manufacturers to be supplied by FIAT. The integration and homologation
process is in progress and expected to be completed shortly.
In spite of slowdown in passenger vehicle, the SUV market continue to grow
at the rate 16%. At present no compact SUV is available in the market.
Indian Government continue to support small passenger vehicles by lower
excise duty in this product segment.
Threats, Risks and Concerns
The automobile industry is affected by general economy slow down and global
Human Resources and Industrial Relations
The Company`s Industrial relations remained cordial and harmonious
throughout the year. The bargainable workmen have formed their own internal
union. The overall manpower strength is 2062, including 583 managerial
personnel. The Company has 417 engineers, technicians, constituting 72% of
the total officer strength. Recruitment of qualified personnel to improve
human resources is an on-going process.
Employee training at all levels is a key priority. Specific training and
skill building programs, both in-house and external were conducted during
the year including officers and workmen.
A cumulative number of 1391 employees have undergone learning and
development this year. These programs included Train the Trainer workshops
which was an initiative to form a stronger in-house faculty for training
and empower them with various training techniques.
Some of the other trainings undertaken during this year were team building,
SAP, communication dynamics, business etiquette, design from manufacturing
and assembly, 7 QC, gear testing, hydraulic balancing and ISO testing to
name a few. Our officers were also nominated for numerous external training
and certification programs organized by IMTMA, ICSI, SAP-India, Deloitte,
The Company re-launched a revamped version of its Performance Management
system and extensive training was imparted to all the employees to
familiarize them to the new system.
The employee suggestion scheme called "I-suggest" did very well this year
with 201 suggestions received. Out of the total su g g e sti o n s r ecei
ve d 7 2 we re implemented and resulted in a gross saving of approx Rs.57
lacs. A Lakhapati incentive scheme was announced this year wherein the top
three suggestions won heavy monetary prizes upto 1 lac, which had a
positive impact on employee morale and motivation.
The management follows an Affirmative Action Employment policy. Currently
8% of our employee base comprises of women, which is targeted to increase
to 25% within the next 2 years. HR practices, as well as special
personalized workshops were conducted for our women employees to empower
them in the workplace. In keeping with the Confederation of Indian Industry
(CII) Code of Conduct for Affirmative Action, the Company has taken
initiatives to increase the employability of the SC/ SC category. In the
last 6 years the number of SC/ST employees increased by 5%
During the National Safety week from 3rd March, 2012 to 11th March, 2012
training sessions were organized to educate our employees about general
health and safety norms. In addition to the above, to create awareness on
early disease detection, a health check-up camp was organized in-house in
collaboration with Sahayadri hospital for all workmen during March 2012.
Corporate Social Responsibility
The Company actively pursues a CSR (Corporate Social Responsibility) policy
and several initiatives were undertaken during the year.
* The annual Vinod Doshi Shikshan Yojna -a financial aid of up to
Rs.75,000/- was given to 9 needy and meritorious candidates this year. The
scheme was revised and was declared open not only to children of employees
and also to employees who wanted to pursue higher education by the
promoters of the trust.
* The annual Vinod Doshi- COEP Merit Scholarship awarding Rs. 60,000/-
each year, for 4 years to financially needy students at the College of
Engineering, Pune from the promoters charity trust was given to 10 students
this year as opposed to 5 students for the past 2 years. The scholarship
has seen its first 5 women scholars since the time of its inception. Many
activities were organized with the scholars to form a sustainable bond
between them and the Company. These activities ranged from a visit to the
Premier factory, to a mentorship system and also included formulating a
face book account and where the scholars and Premierites are a part of the
same community and can converse freely, to name a few.
* Premier Ltd. has donated a Swedish manufactured IRB 6400 Robot to the
College of Engineering, Pune. This robot will help the budding engineers at
COEP to study as students to learn and understand.
* The Company and the trust run by the promoters partnered with CHIP, a
Mumbai based NGO which works towards the upliftment of BMC school children
to organize a Career Fair for the children of class IX and X to give them
an overview of different career options and direction in the way ahead.
* The Company sponsors the annual IMTMA (Indian Machine Tool
Manufacturers` Association) Vinod Doshi Award for Outstanding
Entrepreneurship in Machine Tools. This award is given to an outstanding
first generation entrepreneur for building a Machine Tool Company in India.
* This year the Company organized multiple factory visits for students and
faculty of various colleges such as College of Engineering, Pune, Garje
Institute, Latur and ITE Malegaon to name a few. The main objective of this
was to give the students a practical view of an engineering organization
and also impart some on the job trainings to them thus increasing their
knowledge and building their motivation.
* Th i s year too for th e secon d consecutive year, the Company was the
official engineering partner for MINDSPARK `11, an inter collegiate
technical festival held in December 2011. It played a key role by
sponsoring 3 major events at the festival.
* The Company sponsored the 4th Annual Vinod Doshi Memorial Theatre
festival at th e Yeswan trao C h avan N atya Sabhagruha, Kothrud, Pune in
February 2012 to promote and preserve Hindi and Marathi theatre.
* Fellowship awards were given to 5 upcoming theatre artists to motivate
them to pursue their career in the arts. These awards were sponsored by the
* Like every year this year too, a blood donation camp was organized by
the Company on 17th March 2012. A total of around 150 bottles of blood that
were collected and were donated to Sahyadri hospital.
* As one of the Go Green initiatives, the Company dedicated a day to tree
plantation. Employees and their families came together and planted close to
500 different varieties of trees in the factory premises on this occasion.
* Another Go green intiatives taken up this year was the launch of the car
bin at the Auto Expo held in Delhi this year in January. In an initiative
to create a cleaner environment we partnered with Lighthouse managment to
promote the use of car bins.
* This Sewage Treatment Plant (STP) that was installed is used for waste
water recycling and this water is used for the garden area of the factory.
The newly created Effluent Treatment Plant is also being used to separate
oil and coolant waste and dispose this waste in an environmentally friendly
Information and Technology
The Company uses a SAP-ERP system for all its activities. It invests
regularly in upgrading the SAP infrastructure for better utility of the
system. All maintenance and system activities are outsourced to local IP
service providers. Resource planning, commercial and financial transactions
are controlled through the SAP System.
The Company has set up adequate internal controls to ensure operational
efficiency, safety of assets and efficient financial management. It has
appointed an independent firm of Chartered Accountants to conduct regular
internal audits. The Audit Committee of the Board reviews the internal
controls and audit reports regularly. There is a Managing Committee
consisting of senior functional heads and the Managing Director that meets
once a month to review overall operations of the Company.
Invention is an on-going process in the Company. The Company has, so far,
filed 15 patents for processes & products. It is the endeavour of
Management to encourage inventions of new products and processes in order
to increase our patent portfolio. This shows strong technical and
innovation skills developed in-house.
The Management Discussion and Analysis Report contain forward looking
statements describing the Company`s projections and estimates. These are
based on certain assumptions and expectations of future events. The Company
cannot guarantee the realization of projections as the actual results may
differ due to factors like the price of raw materials, demand-supply
conditions, changes in government regulations, tax structures, etc. which
are beyond the control of Management. The Company assumes no responsibility
in respect of forward looking statements which may undergo change on the
basis of any subsequent developments, information or events.