| |
Your Directors are pleased to present the 49th Annual Report and Audited Financial Statements of your Company for the year ended March 31, 2009. |
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| |
Financial Results: |
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| |
| Parameters |
2008-09 |
2007-08 |
| Gross revenue |
6,706.02 |
5,840.38 |
| Less excise duty |
508.14 |
554.36 |
| Net revenue |
6,197.88 |
5,286.02 |
| EBITDA |
1,127.89 |
887.33 |
Profit before taxation and extraordinary items
|
683.10 |
461.15 |
| Less extraordinary item |
115.33 |
11.85 |
| Profit before taxation |
567.77 |
449.30 |
| Less provision for taxation |
166.25 |
162.80 |
| Profit after taxation |
401.52 |
286.50 |
| Add balance brought forward |
916.24 |
756.31 |
| Amount available for appropriation |
1,317.76 |
1,042.81 |
| Appropriations |
|
|
| Transferred to General Reserve |
50.00 |
30.00 |
| Proposed dividend on equity shares |
88.04 |
82.54 |
| Corporate dividend tax |
14.96 |
14.03 |
| Balance carried forward |
1,164.76 |
916.24 |
|
|
|
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Analysis of performance: |
| |
Building products industry which is closely connected with
construction industry, observed strong growth in the first half of the fiscal year and suddenly dropped in September. The financial crisis, as signaled by the Lehmans collapse, coupled with Satyam ordeal had a deep and widespread impact on the Indian economy and our business segments.
Despite these depressing scenarios your Company reported
a 14.82% increase in gross revenue to Rs. 6,706.02 mn
and a significant increase of 27.11% in EBITDA to
Rs. 1,127.89 mn during 2008-09, on account of the
following: |
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|
| |
 |
10.97% growth in revenue from the Building Products
Division was achieved despite economic slowdown and
recession in real estate industry. Your Company was able to
sustain growth through operational efficiencies and
strengthening our product portfolio with the launch of new
products in the premium sanitaryware range, faucets and
wellness product segments |
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|
|
| |
|
20.38% growth in revenue from the Container Glass
Division was achieved through improved process efficiency,
increase in contribution of value-added products catering
to the soft drinks, liquor and pharmaceutical customers
Your Company achieved EBIDTA margin of 18.47% and
increase in cash profit by Rs. 219.97 mn during the year.
This was made possible due to the following initiatives: |
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Improved sales realization through premium pricing as a
response to market and economic activities |
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Reduction in operational costs as a percentage of sales |
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Improved cash flow through enforced policy on
receivables outstanding |
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Cost reduction through productivity enhancements &
across the board cost rationalisation |
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Process innovation and technology upgradation
indirectly supported cash improvements |
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The inflationary trend in input costs (power, fuel and raw
materials) was offset by better production planning,
reduced number of batch changes and production of
lighter container glass products.
During 2008-09, there was no fresh issue of equity shares.
However, the total debt increased by 132.36% to
Rs. 4,690.54 mn, to fund the setting up of new glass
unit at Bhongir. Despite this, the Company was able to
maintain the long term debt to total equity ratio at 1.24:1
and an interest cover of 6.78 ensuring adequate credit
worthiness. |
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|
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Division-wise review |
| |
Building Product Division: The sustainable growth of
10.97% in revenue to Rs. 3,378.15 mn, even though in
later part of the year our industry was affected by
economic slowdown erupted by the global financial crisis.
Container Glass Division: The division attained a
remarkable growth of 20.38% in total revenue to
Rs. 3,313.35 mn during the year, driven by better
production efficiencies, reduction in bottle-weights and
cost management. |
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|
| |
Major Initiatives during the year |
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Building Product Division: |
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Increased plant efficiency with customer rejection rate of
less than 0.1% through a quality-checking discipline of 18
tests before final delivery |
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Increased automation of the casting process to improve
material and manual productivity |
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Reduced raw material and finished goods inventory,
optimising the working capital cycle |
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Established a supply chain management department to
integrate raw material procurement, warehousing, logistics,
demand planning, order processing and depot
management |
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Developed value-added products with reduced water
usage and strengthened product design, aesthetics and
surface finish |
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Introduced various customer service schemes to
strengthen our brand image |
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Container Glass Division: |
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|
Commercial operations of a greenfield plant in Bhongir,
Andhra Pradesh, commenced on March 30, 2009. We
commenced a Rs. 2,765 mn state-of-the-art new plant in a
short period of 13 months against industry benchmark of
24 months |
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Increased soft drink bottle production |
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Improved inventory management by maintaining it for
24 days |
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Entering into long-term contracts with raw material
suppliers to reduce the production cost |
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Improved process efficiency through modernisation and
reduction of wastages through process control |
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Enlarging product basket by developing 33 varieties of
bottles including 10 light weight bottles |
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|
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Management focus |
| |
HSIL is a leading player in both Building Products and
Container Glass industry catering to the customers growing
demand. It endeavors to maintain a long-term association
with the customers by satisfying their evolving needs.
The management’s focus is on enhancing the business
model to serve customers 24x7, to grow and sustain in the
expanding domestic / international market. The aim is not
only to serve the customers but to maintain a life-time
contact.
Its focal point is to increase production efficiencies, people
productivity, process controls and innovative practices, in
order to achieve highest standards of good governance
prevalent in the industry.
Your Company is achieving sustainable growth by providing
value-added services to its customers, dealer network,
employees and the environment at large. |
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Dividend |
| |
Your Directors recommend for the consideration of the
members, at the Annual General Meeting, payment of
dividend of Rs. 1.60 per share on equity shares of face
value of Rs. 2 each for the year ended March 31, 2009,
the total outgo including tax thereon will be Rs.103 mn. |
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Appropriations |
| |
It is proposed to transfer Rs. 50 mn to the General Reserve
while Rs. 1,164.76 mn is proposed to be retained in the
profit and loss account. |
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Directors |
| |
Mr. Ashok Jaipuria, Mr. G. L. Sultania and Mr. V. K.
Bhandari are liable to retire by rotation and being eligible,
have offered themselves for re-appointment. |
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Share capital |
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During 2008-09, there was no change in the Company’s
share capital. |
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|
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ERP program |
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The Company implemented SAP on the ERP platform in
Container Glass Division also, which benefited the Company
in managing inventory and debtors with the overall effect
of enhancing cost efficiencies. |
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Corporate Governance |
| |
Your Company complies with all mandatory requirements
as stipulated under Clause 49 of the Listing Agreement
with the Stock Exchanges. The Corporate Governance
Report and a certificate from the Company’s statutory
auditors, regarding compliance of the conditions of
Corporate Governance, are attached with the report and
form an integral part thereof.
Further, the Management Discussion and Analysis report is
appended to and forms a part of the Annual Report. |
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Wholly owned subsidiaries |
| |
The Company formed one wholly-owned subsidiary, HSIL
Associates Ltd., on September 4, 2008, in India and
another wholly-owned subsidiary, Halis International Ltd.,
On January 14, 2009 in Mauritius. As per the requirement
under Section 212 of the Companies Act, 1956, the Annual
Report of the Company’s subsidiaries, AGI Glasspack Ltd.,
Hindware Home Retail Private Ltd. and HSIL Associates Ltd.
for the year ended March 31, 2009, is attached to the
Company’s balance sheet. Also, the statement as required
under Section 212 (3) is annexed to this Report. |
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Fixed deposit |
| |
Your Company did not invite or accept any fixed deposit
pursuant to provisions of Section 58A of the Companies
Act, 1956, during the year. |
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Statutory disclosures |
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Particulars of employees as required under Section 217(2A)
of the Companies Act, 1956, read with Companies
(Particulars of Employees) Rules, 1975, are annexed to this
Report. |
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Awards and recognition |
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The Company was recognised through following awards |
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Selected as ‘Business Superbrand India 2008’ |
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Reader Digest ‘Trusted Brands Platinum Award’ |
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4Ps India's ‘100 most Valuable Brands’ |
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IIPM ‘Most Admired 100 companies’ |
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Mera Brand India’s ‘Most Preferred Brand’ |
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Elle Deco ‘International Design Award 2008’ |
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Name change |
| |
Your Company is known and recognised by its abbreviated
name ‘HSIL’ among the Company’s numerous dealers, subdealers,
distributors, bankers, financial institutions and the
ultimate users/consumers. Therefore, we thought it was
advisable to change the name of the Company to ‘HSIL
Limited’. After obtaining your consent and compliance of
all statutory formalities, the name change became effective
from March 24, 2009. This intimation was sent to all
concerned. |
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Directors’ responsibility statement
pursuant to Section 217 (2AA) of the
Companies Act, 1956 |
| |
Your Directors hereby confirm that in the preparation of
annual accounts, the applicable accounting standards were
followed along with proper explanation relating to material
departures.
Your Directors selected such accounting policies and
applied them consistently and made judgments and
estimates that were reasonable and prudent so as to give a
true and fair view of the state of affairs of your Company
at the end of the financial year and of the profit of your
Company for that period.
Your Directors took proper and sufficient care for
maintaining adequate accounting records in accordance with the provisions of this Act for safeguarding the assets
of your Company and for preventing and detecting fraud
and other irregularities.
Your Directors prepared the annual accounts on a going
concern basis. |
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|
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Conservation of energy, technology
absorption and foreign exchange earnings
/ outgo |
| |
Information required under Section 217(1) (e) of the
Companies Act, 1956, read with the Companies (Disclosure
of Particulars in Report of the Board of Directors) Rules,
1988, is annexed to this Report. |
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Auditors |
| |
The auditors M/s Walker, Chandiok & Company, Chartered
Accountants, will hold office until conclusion of the
ensuing Annual General Meeting, and are recommended
for reappointment. Auditors have confirmed that their reappointment,
if made, shall be within the limits laid down
under Section 224 (1B) of the Companies Act, 1956.
The notes to the accounts referred to in the Auditors'
Report, are self-explanatory and therefore, do not require
any further comments under Section 217 (3) of the
Companies Act, 1956. |
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Internal audit |
| |
The Company has an adequate system of internal control to
ensure compliance with policies and procedures. Internal
audit of all the units/divisions of the Company is regularly
carried out to review the internal control systems. The
internal auditors evaluate the adequacy of internal controls
and independence of the audit is ensured by their direct
reporting to the Audit Committee of the Board. |
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Appreciation |
| |
Your Directors wish to place on record their sincere
appreciation for the support and cooperation extended
by all dealers, financial institutions, banks, customers,
employees and all the stakeholders of your Company
and look forward to their continued support
in the years ahead. |
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For and on behalf of the Board of Directors |
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| Place: Gurgaon |
Rajendra K Somany |
| Date: May 23, 2009 |
Chairman and |
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Managing Director |
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Annexure to Director’s Report |
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| 1. |
Energy conservation measures taken |
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Rationalising use of LPG vaporiser |
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|
Modification to Lehrs to optimally suit bottle-production
requirements from I. S. machines |
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Rationalisation of compressed air pressure requirements
for various equipment |
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|
Predictive maintenance of compressed air coolers, dryers
and air lines |
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| |
|
Rationalisation of pumping in the water pumping
systems |
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|
| |
|
Modification of the heat tracing practice for large oil
storage tanks |
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|
Installation of additional capacitor banks resulting in
improved power factor |
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| |
|
Increased kiln utilisation for firing pieces by stopping one
kiln and dense loading in other kilns |
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|
Increased dryer loading by effective utilisation of trolleys
inside the dryer |
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Waste heat utilisation for ware dryers |
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|
Reduced the material losses by corrective and preventive
methods in various stages of the process and implementing
SOPs |
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|
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| |
|
Installation of energy efficient compact fluorescent
lamps and mercury lamps, saving 8% power; installed
energy saving devices in the compressors to save 6%
power; installed variable frequency drives to reduce power
consumption |
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|
| |
| 2. |
Additional investments and proposals |
|
| |
Replacement of old motors with energy saving motors
resulted in energy saving |
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| 3. |
Impact of the above measures on energy
conservation and cost of production |
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Reduction in electrical energy consumption |
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Reduction in fuel consumption per unit |
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Action taken on the cast floors and shop floor helped
conserve power consumption per MT |
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| 4. |
Total energy consumption and energy
consumption per unit |
|
| |
Total consumption and energy consumption per unit of
production, in respect of Container Glass Division, as per
Form 'A' was as under: |
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|
| |
Form ‘A’ |
| |
| Particulars |
2008-09 |
2007-08 |
| A) POWER AND FUEL CONSUMPTION |
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|
| |
1. |
a) Electricity (purchased) |
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|
| |
|
|
units (KWH) |
73,228,223 |
74,013,294 |
| |
|
|
Total amount (Rs.) |
196,571,944 |
227,795,519 |
| |
|
|
Rate / unit |
2.68 |
3.08 |
| |
|
b) Own generation |
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|
| |
|
|
Units (KWH) |
1,728,289 |
255,826 |
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|
|
Unit per LT of fuel oils |
4.08 |
3.03 |
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|
|
Rate / unit |
6.44 |
9.37 |
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|
c) Total (A + B) |
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|
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|
|
Units (KWH) |
74,956,512 |
74,269,120 |
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|
|
Total amount (Rs.) |
207,702,125 |
230,193,595 |
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|
|
Rate / unit |
2.77 |
3.10 |
| |
2. |
Fuels (coal, HSD, LDO, LPG and LSHS) |
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|
| |
|
|
Quantity in MT |
25,185 |
24,056 |
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|
|
Value (Rs.) |
731,190,522 |
557,143,691 |
| |
|
|
Rate / MT |
29,033 |
23,160 |
| B) CONSUMPTION PER MN PIECES OF PRODUCTION |
|
|
| |
Glass bottles (production in mn pieces) |
868.53 |
854.50 |
| |
Electricity (KWH) |
86,303 |
86,915 |
| |
Fuels (coal, HSD, LDO, LPG and LSHS) |
29.00 |
28.15 |
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|
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| 1. |
Research and Development |
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|
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| a) |
Specific areas in which R&D was carried out by the
Company and benefits derived from it are |
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Building Products Division : |
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Development work on enhancing cosmetic gloss and
luster of the glaze and finish |
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Development of world class enhanced star white colour
glaze benchmarking the best worldwide products |
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Development of metallic glaze (copper texture) |
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Development of special anti-bacterial glazes
incorporating Nano technology to produce ‘Germi Clean’
range of products |
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|
Development of EWC Green with special water
conservation features of 2/4 litre flush |
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Development of new urinals: |
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| i) |
Enigma µ sense and Alexa-e-sense – Both have water
conservation feature through remote sensing and auto
flushing |
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| ii) |
New aqua free-water less urinal was re-manufactured incorporating a different and better waste treatment
cartridge |
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Successful volume production of Crystal extended WM
closet |
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Design and development of new one piece closets like
Cedar & Fusion for the high-end market |
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New carousal spraying system: An additional carousel
was introduced for spraying |
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|
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Container Glass Division: |
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Search for cheaper alternate raw materials and sourcing
of the same in the face of depletion of raw materials is in
progress |
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Development of low-cost and user-friendly concealed
water closets |
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Continuous process innovation for cost reduction and
cosmetic finish enhancement |
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|
Development of innovative high-end products, keeping
water conservation in focus |
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Introducing “Germi Clean” feature in all high-end
products |
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|
| |
| 2. |
Technology absorption, adaptation and
innovation |
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| |
|
| |
| a) |
Efforts made towards technology absorption, adaptation
and innovation |
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|
| |
|
Process innovations with the objective of reducing raw
material and fuel costs |
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|
New products were introduced with better aesthetics
and utility |
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Innovative designs competing with international
standards |
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| b) |
Benefits derived as a result of the efforts above |
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|
Cost reduction and new product development to satisfy
consumer needs |
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Product improvements through convenient and
environment-friendly production |
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|
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|
No technology was imported during last five years |
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| |
|
| |
| Expenditure on R&D |
|
(Rs. mn) |
| |
2008-09 |
2007-08 |
| Capital expenditure |
0 |
0 |
| Recurring expenditure |
1.41 |
1.04 |
| Total |
1.41 |
1.04 |
| Total R&D expenditure as a % of total building products revenue |
0.04% |
0.03% |
| |
|
|
|
| |
|
| |
| 3. |
Foreign exchange earnings and outgo |
|
| |
|
| |
Activities and initiatives |
| |
A number of new products were developed and exported.
The export team was strengthened for better direct market
penetration overseas, especially for Southeast Asia and
developed countries. Better strategies were lined up for
more aggressive development of overseas opportunities. |
| |
|
| |
| |
|
(Rs. mn) |
| |
2008-09 |
2007-08 |
| Earnings in foreign exchange |
268.66 |
203.19 |
| Expenditure on foreign exchange: |
|
|
| Raw material, spare parts
and others |
768.87 |
488.36 |
| Capital equipments |
8.44 |
141.69 |
|
| |
|
| |
For and on behalf of the Board of Directors |
| |
| Place: Gurgaon |
Rajendra K Somany |
Date: May 23, 2009 |
Chairman and Managing Director |
|
| |
|
| |
Statement regarding subsidiary companies pursuant to
Section 212 (3) of the Companies Act, 1956 |
| |
|
| |
(Rs. mn) |
| |
| 1. |
Name of Subsidiary |
AGI Glasspack Ltd. |
HSIL Associates Ltd. |
Hindware Home Retail Pvt. Ltd. |
Halis International
Ltd.* |
| 2. |
Financial year |
March 31, 2009 |
March 31, 2009 |
March 31, 2009 |
March 31, 2009 |
| 3. |
Holding company's interest |
100% |
100% |
100% |
100% |
| 4. |
Shares held by holding company in subsidiary
(number) |
4,301,200 |
50,000 |
6,225,000 |
50,000 |
| 5. |
The net aggregate of
profits / (losses) for the
current financial year of
the subsidiary so far as
it concerns the members
of the holding company
(a) Dealt with or provided for in the accounts of the
holding company
(b) Not dealt with or provided for in the
accounts of the holding
company |
(0.02)
– |
(0.02)
– |
(74.71)
– |
(0.12)
– |
| 6. |
The net aggregate of
profits / (losses) for the
previous financial year of
the subsidiary so far as it
concerns the members of
the holding company
(a) Dealt with or provided for in the accounts of the
holding company
(b) Not dealt with or provided for in the
accounts of the
holding company |
0.02
–
|
–
– |
(18.49)
– |
–
– |
|
| |
|
| |
* The subsidiary was incorporated on January 14, 2009 in Mauritius. The first financial year of this subsidiary will end on March 31, 2010, so its financial
statements could not be attached with the Balance sheet of HSIL Ltd. The figures shown are management certified but unaudited. |
| |
|
| |
Information as per Section 217(2A) of the Companies Act, 1956
read with Companies (Particulars of Employees) Rules, 1975
and forming part of the Directors’ Report for the financial year
ended March 31, 2009 |
| |
|
| |
| Name of the Employee |
Designation & Nature of Employment |
Qualification |
Experience (years) |
Date of Employment |
Age (years) |
Remuneration Received (Rs.) |
Last Employment held and designation |
| A. Employed throughout the period and in receipt of remuneration not less than Rs. 2,400,000 for the period |
| Mr. R.K. Somany |
Chairman and Managing Director Contractual |
B.Com., FI (Cem.), FBIM (U.K.), LFIMA |
54 |
October 1, 1965 |
72 |
23,872,340 |
– |
– |
| Mr. Sandip Somany |
Joint Managing Director Contractual |
B.Com., Diploma in Ceramics (USA) |
24 |
October 1, 1985 |
46 |
22,634,215 |
– |
– |
| Mr. R.B. Kabra |
President, Building Products Division |
B.Com., FCA, ACS |
28 |
September 7, 1981 |
51 |
8,417,552 |
Hyderabad Asbestoes Ltd. |
Chief Accountant |
| Mr. Arun Kumar D. |
President, Container Glass Division |
B.E. (Mechanics) |
37 |
December 2, 1996 |
62 |
5,113,950 |
Nagarjuna Acqua Ltd. |
President |
| Mr. Sanjay Kalra |
V.P., Sales, BPD |
B.Sc., MBA |
25 |
April 29, 2002 |
47 |
3,912,935 |
Pidilite Industries |
D.G.M. |
| Mr. Sanjay Gaur |
V.P., H.R., BPD |
B.Com., MBA |
19 |
December 04, 2006 |
42 |
3,851,876 |
Bharti Airtel Ltd. |
G.M., HR |
| Mr. J.K. Somani |
Sr. V.P. Accounts, BPD |
B.Com., ACS |
31 |
June 16, 1977 |
52 |
3,843,531 |
– |
– |
| Mr. S.S. Kamath |
V.P., Works, BPD |
B.Tech. |
26 |
December 20, 2005 |
48 |
3,432,593 |
ACC Ltd., Refactory Division |
V.P., Works |
| Mr. Direndra Kumar Suri |
Head, Faucets Division |
MBA |
17 |
June 10, 2003 |
41 |
3,208,007 |
Ess Ess Ltd. |
Country Manager |
| Mr. Ajay Seth |
V.P., Services, BPD |
B.E. (Elect), MBA |
19 |
September 10, 2007 |
41 |
3,161,040 |
Reliance Industries Ltd. |
G.M., Service |
| B. Employed for part of the period and in receipt of remuneration not less than Rs. 200,000 per month |
| Mr. Vijay Sati |
V.P., Supply Chain, BPD |
B.E. (Civil), MBA |
20 |
July 14, |
44 |
2,645,842 |
HCL Technologies |
Head Commercial |
| Mr. Anil Chandani |
Sr. G.M., Corporate Finance |
B.Com. (H), FCA, FCS, AICWA, DBF |
18 |
April 21, 2008 |
41 |
2,455,559 |
GHCL Ltd. |
G.M., Corporate Finance |
|
| |
Notes: |
| |
| 1. |
Employees named above are/were wholetime employees of the Company as per the Company’s terms and conditions. |
| |
|
| 2. |
Mr. R.K. Somany, Chairman and Managing Director and Mr. Sandip Somany, Joint Managing Director are related to each other. None of the other employees
are related to any of the Directors of the Company. |
| |
|
| 3. |
Mr. R.K. Somany, Chairman and Managing Director and Mr. Sandip Somany, Joint Managing Director are promoters of the Company and except them no
other employee holds 2% or more of the equity share capital of the Company. |
| |
|
| 4. |
Remuneration Received includes Gross Salary, Bonus, Commission, performance incentive, ex-gratia, actual expenditure for provision of rent free
accommodation or benefits or amenities, house rent allowance, medical expenses, leave travel assistance, other allowances, reimbursement of gas, water and
electricity expenses. Company’s contribution to provident fund, employee pension scheme, gratuity fund and provision of car valued as perquisites in
accordance with rules under the Income Tax Act, 1961. |
| |
For and on behalf of the Board of Directors |
| |
|
| |
| Place: Gurgaon |
Rajendra K Somany |
| Date: May 23, 2009 |
Chairman and Managing Director |
|
|
