Finolex Cables Limited Board of Directors
P. P. Chhabria Chairman
Dr. H. S. Vachha
B. G. Deshmukh
Atul C. Choksey
Sanjay K. Asher
P. G. Pawar
S. B. (Ravi) Pandit
Pradeep R. Rathi
A. J. Engineer
D. K. Chhabria Managing Director
V. K. Chhabria Dy. Managing Director
M. L. Jain Asst. Managing Director and Chief Operating Officer
P. B. Parasnis Asst. Managing Director and Chief Financial Officer
Company Secretary & Vice President (Legal) R. G. D’Silva
Bankers Central Bank of India Bank of Baroda BNP Paribas Citibank N.A. Corporation Bank HDFC Bank Ltd. ICICI Bank Ltd. Standard Chartered Bank State Bank of India The Bank of Nova Scotia
Auditors B. K. Khare & Co. Chartered Accountants
Solicitors Crawford Bayley & Co.
Registered Office 26/27, Mumbai-Pune Road, Pimpri, Pune 411 018 Tel.: 020-27475963
8 40th Annual Report 2007-08
Directors’ Report
To The Members Your Directors are pleased to present their 40th Annual Report and Audited Accounts for the year ended 31st March, 2008.
FINANCIAL RESULTS: (Rs. in million)
2008 2007
Income 14,178.983 10,526.253 Profit Before Interest, Depreciation and Tax 1,656.939 1382.582 Less : Interest 189.287 147.987 Less : Depreciation 264.671 264.288 Profit Before Tax 1,202.981 970.307 Less : Provision for Taxation (a) Current Tax 341.360 280.000 (b) Deferred Tax (33.720) (4.623) (c) Fringe Benefit Tax 6.100 5.000 Profit After Tax 889.241 689.930 Surplus brought forward and other adjustments 152.527 113.101
1,041.768 803.031
APPROPRIATIONS Debentures Redemption Reserve 50.000 100.000 Proposed Dividend 229.409 214.115 Tax on Proposed Dividend 38.988 36.389 General Reserve 300.000 300.000 Surplus carried to Balance Sheet 423.371 152.527
1,041.768 803.031
GOLDEN JUBILEE YEAR Your Directors feel proud to state that the calendar year 2008 is the 50th year of glorious business presence. The manufacturing idea was conceived by the promoters and started in the year 1958 in the form of a partnership firm; albeit the business assuming corporate form sometime later. A meeting of the Board of Directors is planned to be held at appropriate time to make a special announcement with regard to Golden Jubilee Year. The Directors extend their warm greetings to the members for the Golden Jubilee Year and are grateful to them for the encouragement and support over the period of time.
DIVIDEND Your Directors are pleased to recommend enhancement in dividend on equity shares from 70% to 75%. The amount thereof per equity share will be Rs.1.50. The total dividend outgo (including dividend tax) will be Rs.268.397 million. Dividend distribution as a percentage of the net profit is 30.2%.
OPERATIONS Income for the year under review was Rs.14,178.983 million and net profit was Rs.889.241 million. The income was higher by 34.7% and the net profit was up by 28.9% over the previous year. Segmentally, electrical cables contributed 59.9%, communication cables contributed 19.8%, copper rods contributed 18.2% and other products contributed 2.1% to the total sale of products. The sales mix,
9 Finolex Cables Limited when compared to the previous year, underwent a change due to increase in jelly filled telephone cable (JFTC) orders. During the year under review, the Company received orders from different customers for supply of JFTCs. The sales of electrical cables and other communication cables were in line with the market conditions prevailing from time to time during the year. Copper prices once again experienced a great deal of volatility for most of the year. The Company had done product- price revisions to effectively deal with the volatility in copper prices. The system of Value Added Tax (VAT) has now been adopted by all the states within the Union Territory. However, there continues to be disparity in VAT rates for many of the Company’s products. Added to the divergence in rates is the variability in procedures for compliance. The state governments are working towards unifying the rates and procedures for VAT. The Union Government has made known its intentions to implement a single tax regime called ‘Goods and Services Tax’ (GST). The governmental initiatives should promote a better compliance environment and provide an impetus for business by organized sector companies like your Company. The Company witnessed good growth in profit for the year on account of increase in business activity coupled with cost management measures undertaken.
PROJECTS The Company had undertaken initiatives to manufacture new products and expand production base for the existing products in due consideration of the emerging market needs.
Compact Fluorescent Lamps (CFLs) Project CFLs have been branded ‘Finoglow’ by your Company. Finoglow is an energy saving lamp, can save energy consumption upto 80% as against an equivalent incandescent lamp. Finoglow is available in different color temperatures, wattages and sizes. Finoglow has a high color rendering index essential for true color lighting. Finoglow is available in retrofit and non-retrofit versions. The manufacturing facility went on stream during September, 2007. Keeping in mind the high future CFL demand, your Company has taken steps to expand the present CFL capacity by almost three times. The business of CFL should get a big boost with the Government of India considering to ban conventional GLS lamps and promote CFL in support of the efforts to control global warming. Keeping in mind the high future CFL demand, your Company has decided to expand the CFL capacity from 10 million units to 30 million units per year at an additional expenditure of Rs. 300 million. Your Company has intentions to further expand capacity to 100 million CFLs over medium term at a new location in the state of Gujarat or Andhra Pradesh.
High Voltage Power Cables Project This project was undertaken to manufacture insulated, underground usage power cables upto 66 KV rating. The manufacturing facility has been set up at Urse near Pune. The plant has started trial runs during March, 2008. High voltage power cables are required at power generation station and in power transmission segment in lower quantum; however, major requirements come from power distribution segment for upgrading the existing network by replacing overhead transmission wires and underground power cables to cater to the ever growing demand for power caused by continuing urbanization process.
Uttarakhand Project This project was conceived to expand the manufacturing base for light duty electrical cables for use in construction industry, electrical panel wiring and consumer electrical goods. This plant is fast nearing completion and expected to go on stream in May 2008. This Greenfield manufacturing facility would be capitalized in the books in the next financial year. The Uttarakhand manufacturing facility will enjoy fiscal incentives by way of excise duty exemption and income tax benefit in the defined manner for the defined period. The commissioning of this facility will enhance competitiveness of the Company; besides staying close to the current and potential customers in business-booming northern and eastern regions of the country.
Electrical Switches Project Branded as ‘Finoswitch’, the Company manufactures electrical switches of superior quality and aesthetics. Finoswitch is meant for controlling the flow of power. Finoswitch is safe, durable and tested to last over sixty thousand clicks. They are launched in two ranges; premium range for niche market and classic range for mass market. Premium range has a unique fluorescent stripe that glows in dark and acts as a guide. The intermediate manufacturing facility at Urse is fully operational. The Company has intentions to shift manufacturing operations to Uttarakhand state at the present location and manufacture electrical switches on full scale basis. The products manufactured / to be manufactured at the above plants have / will have the same assurance of Finolex quality and safety standards. The products will ride on the high brand equity enjoyed by your Company and are sold/will be sold through the existing country wide distribution network.
Urse Expansion Your Company manufactures a variety of electrical and communication cables at its plants located at Urse near Pune. The Company has undertaken expansion of capacity of compounding plant and of various copper cable capacity at Urse at an estimated capital expenditure of about Rs. 400 million. The expansion in capacity is targeted to be completed in the financial year 2008-09, in a phased manner.
10 40th Annual Report 2007-08
Finolex J-Power Systems Private Limited On 13th December, 2007, the Company entered into a joint venture agreement with J-Power Systems Corporation of Japan to offer complete turnkey solutions in extra high voltage (EHV) cable systems in India and abroad. The joint venture will be equipped with state-of-the-art production facility such as vertical continuous vulcanizing (VCV) tower to produce high voltage cross linked polyethylene (XLPE) insulated power cables. Since such cables are installed in the trunk lines of high voltage power transmission grids in the urban areas, extreme quality and reliability are required. The joint venture has been named “Finolex J-Power Systems Private Limited” and will manufacture and sale high voltage power cables upto 500KV capacity. The joint venture company shall also offer complete services of turnkey installation and connectorization of the complete circuit along with the manufacture and supply of power cables and accessories (jointing kits). J-Power Systems Corporation is a Japanese cable manufacturer specialized in high voltage power cables and systems, established in 2001 as an equally owned joint venture between Hitachi Cable Limited and Sumitomo Electric Industries Limited, the global leaders in the field of extra high voltage cable technology. Your Company will hold 49% of the share capital of the joint venture company and the balance 51% will be held by the joint venture partner. However, the management control will be with your Company. The joint venture is a significant development for the Company. With it, the Company completes its electric cable product range from the lowest voltage grade of 48 volts in auto cable to the highest voltage of 500,000 volts in power cable segment. Your Company is the only company in India with this unique distinction.
NEW PRODUCTS Looking at the customer requirements, your Company adds new variety of cables to its product range. Accordingly during the year under review, the Company’s Marketing team successfully launched various state-of-the-art cables designed and developed by the in-house R&D team. As part of its future plans, your Company is studying the market potential for manufacture of Aluminium Conductor Steel Reinforced (ACSR Conductor) and Enamelled Wires with a view to develop products to meet requirements of niche markets.
EXPORTS In January 2008 your Company was awarded the prestigious trophy by Engineering Export Promotion Council for Star Performer as medium enterprise in the product group of miscellaneous electrical machinery and apparatus (including electrical distribution and control apparatus) for outstanding contribution to engineering exports during the year 2005-06. The Company’s sustained efforts to improve its earnings from its business in the international markets have started yielding results. FOB value of exports for the year was Rs. 779.118 million as against Rs. 672.532 million for the previous year. The Company exports a variety of cables. With the manufacturing background for years, access to and availability of best breed technology and conformity with international standards the Company has been offering customized cable solutions to its international customers. The Company has initiated the process of establishing its maiden branch office in DUBAI.
FINANCE Your Company has been accorded P1+ rating, the highest rating for a Rs. 2.5 billion (enhanced from Rs. 2 billion) short term debt program. The Company holds AA+ / Stable rating for its Rs. 500 million long term non convertible debentures outstanding. The Company has also obtained a similar rating for another Rs. 500 million long term non convertible debentures to be issued at an appropriate time in future. All the debt ratings have been given by CRISIL. The Company follows a balanced policy to manage liquidity and borrowing. The Company has been able to meet its financial commitments in a timely manner. The Company has been able to contain its interest cost despite rising interest rates.
SUPERBRAND STATUS It is a matter of great pride that the Company has been selected as the ‘Superbrand’ in the exclusive and elite Superbrand Category. The Business Superbrand status was for the calendar years 2004, 2005 and 2006. The Company moved forward and was awarded the Consumer Superbrand status as well for the calendar years 2006 and 2007. New ‘Superbrand’ status for the year 2008-09 is under issuance to the Company. The Company is the only Indian cable company to have achieved this distinction.
SIX SIGMA Your Company has committed itself to Six Sigma initiative. The Six Sigma initiative is progressing satisfactorily. The training phase of the first group of participants is over and pilot projects undertaken by them are under financial evaluation. Six Sigma will help the Company identify, focus on and solve business challenges before it in a disciplined manner. Six Sigma demands hardwork and commitment of resources. Six Sigma is a continuous improvement process.
FIXED DEPOSITS The Company had stopped accepting fixed deposits since 28th April, 2003. As on 31st March, 2008, the unclaimed deposits were Rs. 40,000 and interest accrued thereon till due date. The reminders sent by the Company in the past to the deposit holders at their known
11 Finolex Cables Limited address were not helpful in liquidating the unclaimed deposits. Under the provisions of the Companies Act, 1956, unclaimed deposits of Rs. 71,000 and interest accrued thereon of Rs 3722 have been transferred on 25th March 2008 to the Investor Education and Protection Fund (IEPF) established by the Central Government. If the deposits of Rs. 40,000 continue to remain unclaimed, they will also be transferred to the IEPF Account of the Central Government on the due dates.
EMPLOYEES Human resource management has assumed immense importance in the present days. The economy is growing at unprecedented rates and on a continuous basis; hence demand for trained and talented human capital has gone up. Towards human resource retention and development, the Company follows pragmatic methods. The human skill development part is taken care of through training programs. The training programs are designed in a systematic manner after identifying an individual’s training needs. Cutting across the organizational hierarchy, training sessions are held for promoting team spirit and for addressing training needs. The motivation part is taken care of through empowerment and ensuring healthy working environment. The dual remuneration system: assured as well as performance related: promotes talent within the Company. The Company endeavours to ensure that its different functions are adequately manned. Industrial relations continued to be cordial during the year. The Company had 1,316 permanent employees on its roll as on 31st March, 2008.
CORPORATE GOVERNANCE The statement of Management Discussion and Analysis is annexed hereto and forms a part of this Report.
CORPORATE SOCIAL RESPONSIBILITY The Company has decided to sponsor setting up of a rural residential school under the Government of Andhra Pradesh State’s landmark initiative to provide quality education to semi urban and rural students of the State in collaboration with the corporate world. The Government has handed over about 43 acres against the 50 acres of land agreed to be provided free of cost for setting up the school. Your Company shall set-up the school infrastructure such as school building, library, games facilities, hostels, staff quarters, etc. This school will be affiliated to Central Board of Secondary Education, New Delhi. 25% of the school running cost will be borne by the Company whereas, Government will bear 50% of such cost and the balance 25% will be met through collection of fees. This school will be managed by the Board of Governors to be constituted. As the members are aware, the Company has been contributing to Finolex Academy of Management & Technology which runs a full fledged engineering college since 1994 at Ratnagiri which is affiliated to Mumbai University, Mumbai. The Academy also offers Masters Degree in Computer Applications. International Institute of Information Technology or I2IT as it is known is also patronized by the Company. I2IT offers post graduate MS and MBA courses with various specializations in Advanced Information Technology. Your Company has adopted ITI Lonavala, Pune under the Government of India scheme for public private partnership for revamping of industrial training in India by converting Industrial Training Institutes (ITIs) into centres of excellence. All Industry Partners have to enter into a Memorandum of Agreement (MoA) in a common form under the said scheme and the Company has entered into such MoA with President of India and the Government of Maharashtra for revamping ITI Lonavala, Pune as a centre of excellence. The Company’s associate company, Finolex Industries Limited has adopted ITI, Ratnagiri under the said scheme. Besides, the Company also extends financial assistance to worthy social causes. The Company discharges its duties as a responsible corporate citizen. The Company accords highest importance to legal compliances and contributes to the exchequer handsomely. All of its plants are environment compliant and hold ISO 14001 (Environment Management System) certification. The Company has adopted a Code of Conduct. Honesty and integrity are the corner stones on which the human capital is built within the Company. The Company promotes an environment of trust and confidence while functioning.
DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that; i) in the preparation of the annual accounts, the applicable accounting standards have been followed; ii) appropriate accounting policies have been selected and applied consistently and have 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, 2008 and of the Profit and Loss Account for the year ended 31st March, 2008; iii) proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.
12 40th Annual Report 2007-08
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Information on conservation of energy, technology absorption, foreign exchange earning and outgo required to be given pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.
PARTICULARS OF EMPLOYEES Information as required under the provisions of Section 217(2A) of the Companies Act, 1956 (the Act) and the rules framed there under forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders, excluding the statement of particulars of employees under Section 217(2A) of the Act. Any shareholder desirous of obtaining a copy of the said statement may write to the Company Secretary & Vice President (Legal) at the Registered Office of the Company.
LISTING OF SECURITIES The Company’s equity shares are listed on the two premier stock exchanges of the country namely Bombay Stock Exchange Limited and National Stock Exchange of India Limited, amongst other stock exchanges. The Company has issued Global Depository Receipts which are listed on the Luxembourg Stock Exchange. The Company’s non-convertible debentures are listed on wholesale debt market segment of the National Stock Exchange of India Limited.
DIRECTORS In February 2008, Dr. N.A. Kalyani resigned from the Board of Directors of the Company for health reasons. The Board of Directors places on record its deep appreciation of the valuable services and contribution rendered by Dr. Kalyani since his appointment on the Board of Directors in October 1998 as senior member of the Board. With his resignation, he relinquished his membership of the Audit Committee of the Board of Directors. Mr. P P Chhabria and Mr.V K Chhabria, Wholetime Directors of the Company will be completing their term of appointment on 30th June 2008. The Board of Directors has approved their reappointment for a period of five years. The terms and conditions of their reappointment are being put up to the members for approval. Accordingly, suitable resolutions which appear in the notice of the ensuing Annual General meeting have been proposed for consideration. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Sanjay K. Asher, Mr. Pratap G. Pawar and Mr. B.G. Deshmukh retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. Mr. Adi J Engineer was co-opted as an Additional Director on 23rd October 2007. He is B.E. (Civil), FIE and AIIA and is a technocrat with immense experience in the Energy sector. He had been responsible and successful in setting up diverse projects during his long and successful career with various multinational and other companies. He was earlier the Managing Director of Tata Power Limited and continues as a Director on its Board of Directors. He is also a Director on the Boards of several companies. Mr.Engineer’s appointment is to be confirmed by the members at the ensuing Annual General Meeting. The Board of Directors feel that the presence of Mr.Adi J Engineer as a Director of the Company will greatly benefit the Company. Accordingly, the Board of Directors recommends his appointment as a Director of the Company.
AUDITORS M/s B.K. Khare & Company, Chartered Accountants, Auditors of the Company, hold office until conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.
ACKNOWLEDGEMENT Your Directors are grateful to the channel partners, dealers and customers of the Company for their growing patronage for the Company’s products. Your Directors thankfully acknowledge the support received from other business associates of the Company. Your Directors compliment the central and state governments, statutory authorities, local bodies, banks and financial institutions for their cooperation and support to the Company’s business operations. The employees are assets of the Company and your Directors appreciate their contribution for the progress and growth of the Company. Your Directors are grateful to the members for extending their complete support in conduct of the affairs of the Company.
For and on behalf of the Board of Directors
Pune P.P. Chhabria Dated : 28th April, 2008 Chairman
13 Finolex Cables Limited
Annexure to Directors’ Report
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 :
A. Conservation of Energy : a) Energy Conservation measures : i) Commissioning of new 4MW heavy fuel oil engine to stop use of high energy consuming diesel engines. ii) Providing thermal insulation on the chilled water tanks and pipelines to minimize radiation loss. iii) Installed HT power factor compensation for Goa Electricity Department power, resulting in energy conservation. iv) Luminous push button provided at work centres and installed limit switches where necessary. v) Energy Efficient Metal Halide light fittings provided in aisle ways in place of 250 W HPML lamps. vi) Auto control ON-OFF provided to street lights. vii) Installation of energy efficient light fittings in place of conventional tube lights. viii) Improved preventive maintenance of machines to reduce energy loss.
b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy : Various proposals / measures for reducing energy consumption are under consideration. c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Impact has not been separately measured. d) Total energy consumption and energy consumption per unit of production as per Form A in respect of industries specified in the schedule thereto:
Not applicable.
B. Technology Absorption : Efforts made in technology absorption as per Form B are as follows : Form for disclosure of particulars with respect to Absorption, Research and Development (R&D)
1. Specific areas in which the Company is pursuing R & D efforts : (a) Following new cables have been designed, developed and successfully launched in the market : (i) Co-axial cable using CCS conductor. (ii) RG214 Co-axial cables. (iii) Figure 8 cables.
2. Benefits derived as a result of the above R&D : The aforesaid newly developed products have been introduced in the market and give significant benefits in terms of quality, better performance of the end-user application and import substitution.
3. Future plan of action: - To develop RF cables - To develop CAT7 LAN cables with higher bandwidth. - To develop cross-linkable HFFR cables for high temperature working. - To develop low water peak optic fibres. - To develop cost effective FTTH Cables. - To develop ZHFR building wires.
14 40th Annual Report 2007-08
4. Expenditure on R & D (a) Capital } The development work is carried on (b) Recurring } by the concerned departments on (c) Total } an ongoing basis. The expenses (d) Total R & D expenditure as } and the costs of assets are grouped a percentage of total turnover } under the respective heads.
Technology Absorption, Adaptation and Innovation :
1. Efforts in brief, made towards technology absorption, adaptation and innovation : (a) Power Modules for heating control were indigenised for substantial savings. (b) Overall temperature control of the manufacturing process was improved by using specially designed PID controllers in-house. (c) Imported equipment PLC programs were suitably modified for minimum product damage during power interruptions for reducing in process scrap. (d) Continuous efforts are going on for further developing, improving and upgrading all types of cables.
2. Benefits derived as a result of the efforts e.g. product improvement, cost reduction, product development, import substitution etc. : Several tangible and intangible benefits from new technology are derived such as cost reduction, productivity, development of new products, import substitution and better customer services. Development and manufacture of new products with enhanced features will extend the product range of the Company, enabling it to cater to different customer needs. 3. Imported technology (imported during the last 5 years reckoned from the beginning of the financial year) : a) Technology Imported : Nil b) Year of Import : Not applicable c) Has technology been fully absorbed ? : Not applicable d) If not fully absorbed, areas where this has not taken place, reasons therefor, and future plans of action : Not applicable
C. Foreign Exchange Earnings and Outgo : Exports have shown good growth in the year. The geographical spread of exports has now widened to the countries in the developed part of the world. With the manufacturing background for years, access to and availability of best breed technology and conformity with international standards, the Company has been offering customized cable solutions to its international customers. The Company continues to remain focused on export activity and is confident of achieving an impressive export turnover in due course of time. The Company has initiated the process of establishing its maiden branch office in DUBAI. i) Earnings by way of Exports : Rs. 779.118 million ii) Outgo by way of Imports : Rs. 1,565.970 million
For and on behalf of the Board of Directors
Pune P.P. Chhabria Dated : 28th April, 2008 Chairman
15 Finolex Cables Limited
Management Discussion and Analysis
1. BUSINESS OF THE COMPANY: The Company currently operates in two main business segments, Electrical Cables and Communication Cables. The Company has recently added High Voltage Power Cables to its range of Electrical Cables. The Company manufactures Continuous Cast Copper Rods (CCC rods), essentially for captive consumption; however a part of the production of CCC rods is sold. The Company has expanded its product range which includes Electrical Switches and Compact Fluorescent Lamps (CFLs) manufactured by it. The Company also manufactures PVC Sheets for various applications like roofing, signage and interiors.
1.1 Main Segments: The Company is the leading domestic manufacturer of electrical and communication cables with a wide product range. The Company thus offers a ‘Total Cable Solution’. The broad segmentation of the products manufactured by the Company is as follows: Group Products Covered Application Electrical Cables 1100 V PVC insulated cables Electrification of residential, commercial and industrial establishments, electrical panel wiring and consumer electrical goods. Motor winding PVC insulated Submersible pumps and electrical motors. cables and 3 core flat cables Automotive/battery cables Wiring harness for automobile industry and battery cables for various applications UPS cables For providing power from the UPS to the computer/ appliances in the networking environment. Heavy duty, underground, low voltage, Connection to the user point from main supply of power and control cables power. Heavy duty, underground, Intra-city power distribution network high voltage, power cables Communication Cables Jelly filled telephone cables (JFTCs) Telephone line connections to exchanges and users. Local area network (LAN) cables Indoor and outdoor networking, voice and data transmission, broadband usage. PE insulated telephone cables Telephone instrument connections to EPABX. (Switchboard cables) Coaxial cables Cable TV network solutions. Optic fibre Principal raw material for optic fibre cables. Optic fibre cables For use in networks requiring high speed transfer of large bandwidth due to voice, image and data transmission. V-SAT cables For connecting V-SAT dish to base station. Copper Rods CCC rods of 8 mm diameter Raw material for manufacture of copper based cables. Electrical Switches Premium & classic switches, Domestic lighting, hotels, shops, offices, corridors. sockets, regulators, etc. Compact Fluorescent Retrofit & non-retrofit lamps Domestic lighting, hotels, shops, offices, corridors. Lamps (CFLs) PVC Sheets PVC corrugated sheets, foam Industrial roofing, wall cladding, signage boards, partition sheets and rigid sheets boards, exhibition display boards and false roofing.
The Company’s product application range is thus for electrical usage, transmission of voice, data and images (contents) for domestic, commercial and industrial applications to electrical products, touching every person in his daily life.
16 40th Annual Report 2007-08
1.2 Revenue Break up : Segment-wise revenue breakup for the last two years is as follows:
2. REVIEW OF OPERATIONS: • Production of metal based electrical and communication cables during the year under review was at 2,640 TCKM (thousand core kilometers) (previous year : 1,565 TCKM). Production of optic fibre cables during the year was 38,265 cable kilometers (previous year : 20,547 cable kilometers). The sale value of electrical cables increased by 15% and the sale of communication cables was higher by 73% (due to better JFTC business) over the earlier year. • The sale of CCC rods (net of interdivisional transfers) was at Rs. 2,869.468 million. • Exports were higher at Rs. 779.118 million as against Rs. 672.532 million of the earlier year. • The income from operations (including excise duty) was higher at Rs. 15,928.978 million for the year under review as compared to Rs. 11,859.227 million for the earlier year. • Profit after tax was higher at Rs. 889.241 million against Rs. 689.930 million for the earlier year. • The Company commissioned its high voltage power cables plant at Urse near Pune and thus added high voltage power cables upto 66 KV rating to its range of electrical cables. The Company signed a joint venture agreement with J-Power Systems Corporation, Japan for manufacturing extra high voltage power cables between 60 KV to 500 KV range and to offer complete services of turnkey installation and connectorization with supply of jointing kits. • The Company commissioned its CFL manufacturing facility at Urse near Pune. Keeping in mind the high future CFL demand, the Company has taken steps to raise CFL manufacturing capacity from 10 million units to 30 million units per year. • A Greenfield manufacturing facility was conceived and set up at Roorkee, Uttarakhand to expand the manufacturing base for light duty electrical cables for use in construction industry, electrical panel wiring and consumer electrical goods. This plant is fast nearing completion and expected to go on stream in May 2008. • A reference may please be made to the financial statements.
3. KEY STRENGTH AREAS 3.1 Leading Manufacturer The Company is India’s leading manufacturer of electrical and communication cables with a wide product range. This status not only helps the Company in terms of economies of scale, but as a market leader it is well positioned to reach out to new customers, both domestic and international. 3.2 Technical Superiority of Products The Company lays a lot of emphasis on maintaining superiority status in terms of quality and product features through in- house research and development. The Company has defined quality assurance processes and strives for improvement in products. This product advantage is key reason why the Company has been able to carve out a niche position for itself in the market. 3.3 Extensive Distribution Network The Company has created a strong and dependable distribution network of channel partners and dealers, spreading across the country. The distribution network also includes commission agents/dealers appointed in the overseas market. The intention is to service the customer at his doorstep. Not only has the distribution network been built, the Company undertakes a periodical review of it for upgradation and expansion. The domestic distribution network is well supported by branch offices and depots opened by the Company at a number of locations throughout the Country.
17 Finolex Cables Limited
3.4 Backward Integration The Company manufactures CCC rods used as principal raw material for copper based electrical and communication cables. The Company makes its own compounds using PVC resin of different grades and formulations tailored specially for high performance cables. The Company manufactures FRP rods and draws its own fibre for fibre optic cables. These backward integration measures help in product differentiation and facilitate maintaining desired quality of products for superior consistent performance besides ensuring timely supply of the raw material. 3.5 Unique Practices The Company has pioneered many unique practices followed in the cable industry. The Company runs an enrollment scheme for electricians who qualify for performance based incentives. The Company grants personal accident insurance cover as one of the key incentives. The Company has arranged for bank finance under a channel finance scheme to facilitate trade cycle of the channel partners. The bank lends money to the channel partners on soft terms and for extended duration. The credit is strictly regulated by the Company. The channel finance scheme is in vogue for over last many years and is run without recourse to the Company. 3.6 ERP System The Company uses the best of breed technology SAP R/3 software, the most widely used ERP software in the world, to manage its internal processes. All the manufacturing plants, branch offices and stock-points of the Company are connected to the SAP-ERP system through leased data circuits 24 X 7. This provides cohesiveness and efficiency in handling of business operations. To dovetail its processes with the distributor’s internal processes, the Company has extended some of the functionalities of SAP ERP to its distributors through a CRM application by virtue of which a distributor can place an order directly, check the order execution status, verify the credit status, etc. 3.7 Superbrand Status The Company is the only Indian cable company which holds the coveted Superbrand status right from the year 2004 and onwards till 2007. The new Superbrand status for the year 2008-09 is under issuance to the Company. 3.8 Six Sigma The Company has initiated Six Sigma exercise at the manufacturing locations and support functions like purchase, sales, finance, human resource development and administration etc. The financial benefits will accrue from time to time; however, more importantly, Six Sigma will keep guiding the Company through a disciplined methodology to focus on solving business challenges before it. 3.9 Export potential The Company’s products meet the requirement of international standards and thus are capable of geographical penetration. The Company has its presence in the international market for sometime now. The Company has been exporting light duty electrical cables, LAN cables, optic fibre cables and a variety of customised cables. With the best technology products in its armoury, the Company is putting a greater thrust on exports. 3.10 Total Cable Solution The Company is probably the only one of its kind in the country to offer a “Total Cable Solution”. Different types of electrical cables are produced using copper as the core conductor. Various types of communication cables are produced using copper as well as optic fibre as the primary medium of transportation of signals. Different types of low voltage power cables are produced using aluminum or copper as the core conductor. Different types of high voltage power cables will be produced at the recently commissioned manufacturing facility, using copper as the core conductor. The Company keeps on introducing new cable varieties besides upgrading the existing cable varieties. The Company has the ability to produce customised cables. The Company manufactures electrical products namely electrical switches and CFLs which are germane to electrical cable business of the Company. Due to its product portfolio, the Company has the advantage of operating in multiple market segments simultaneously. The Company is well placed to leverage its position for a distinct competitive advantage.
4. GROWTH DRIVERS The Company enjoys the leadership position in business on account of its commitment to, and continuous efforts in, the following main areas; • Ensuring consistent product quality • Focusing on product improvement • Ensuring competitive pricing and cost structure • Planning timely supply and servicing • Expanding existing businesses • Developing new products • Undertaking of new businesses • Pursuing market development, penetration and visibility • Creating customer preference • Adopting dynamic approach to situations
18 40th Annual Report 2007-08
5. BUSINESS ENVIRONMENT : The segment-wise discussion on the markets which are served by the Company is as follows: 5.1 Electrical Cables Electrical cables can be further categorised into light duty electrical cables, power and control cables. (i) Light duty electrical cables include electrical wires used extensively for lighting. The main product of this category is 1100 volts PVC insulated wires which find application in electrification of residential, commercial and industrial establishments, electrical panel wiring and consumer electrical goods. The building industry and white goods industry have a close correlation with personal income. Higher the personal income, higher is the spending on essentials for life and thereafter on comforts of life. India is a growth story due to favourable demographics and competitive cost structure. As the economic activity is increasing, the personal incomes are growing as well as more and more of population is coming within the spectrum of spending for housing and white goods. This fuels commercial and industrial activity to go up. Upswing in economic activity is attracting foreign investment into the country, boosting the economic activity further. The business and individual confidence levels are high. Hence, there is increase in demand for buildings and rise in consumption-expenditure. Such an environment is creating deeper and a wider market place for this variety of electrical wires. Due to India growth story, many of the renowned automobile manufacturers have set-up automobile manufacturing facilities in India. Due to cost advantage, global auto manufacturers have started out sourcing auto components from India. Domestic demand for automobiles coupled with export potential thereof augurs well for the automobile wires produced by the Company. The Company manufactures automobile wires according to international standards such as German VDE Standards, Japanese JIS Standards, etc. The Company has been accepted and considered as a dependable source of quality automobile wire for auto-wire harness manufacturers. Majority of the population in India is still dependent for their living on agriculture. Farming is still monsoon dependent. Rain water is harvested by farmers trapping it underground in wells and is drawn for irrigation during non-monsoon period. The drawing of water happens by virtue of a submersible pump. The motor of the submersible pump is wound with the winding wire and the pump is powered through a 3 core flat cable. Both these products are manufactured by the Company for sale within the country as well as for exports. UPS cables are battery backup cables used for providing power from UPS to the consumption points. Many states in India are facing shortage of power. UPS substitutes for electricity supplied through grid. If grid supplied electricity is not available, UPS takes over and meets power needs to a certain extent. Thus UPS has become a household item in India. The Company is adding to its production base of light duty electrical cables by setting up manufacturing facility near Roorkee in the Uttarakhand State. Additionally, the Company has decided to spend for expansion of capacity at Urse near Pune. (ii) The other category of electrical cables namely power and control cables are also manufactured by the Company. In power cable category, with addition of new unit commissioned at Urse recently, the Company has the ability to manufacture such cables within the range 3.3 KV to 66 KV. These cables are either low voltage or high voltage cables depending upon their applications; however, always meant for underground usage. Power and control cables upto 3.3 KV rating are used for connecting user point to the main supply of power. Power cables above 3.3 KV rating are meant for use in underground application for intra-city electricity distribution network. The Company manufactures insulated power cables only. These cables meet the requirements of international standards. Performance For the year under review, the electrical cables registered sales of Rs.9,339.225 million against Rs. 8,132.680 million of the previous year showing a growth of 15%. Outlook Electrical cables is the main focus area of business for the Company. It accounted for 59.9% of total sales for the year under review. The main activities consuming electrical cables in bulk like building industry, automobile industry, agricultural irrigation and electricity distribution are generally in the growth mode. There might be a temporary lowering of growth estimates due to the concerns about global economic slow down. However, Indian economy is not expecting a major slow down in growth. The system of VAT in place in all the states which, once harmonized, will generate accelerated business for electrical cables. The macro environment for power cable sector is very strong on the back of improved investment scenario in the country. Large investment is coming in power generation, distribution, rural electrification, upgrading existing distribution network, industrial capacity expansion, construction and the like. These factors would drive demand growth for power cables in India. The manufacturing facility set up at Roorkee (first phase) is expected to go into commercial production of light duty electrical cables in May 2008. The expansion of manufacturing capacity at Urse is underway. These initiatives are expected to provide competitive advantages to the Company. The Company faces two principal risks in this business. The Indian electrical cable industry is characterised by a large unorganized sector. Besides, there are smaller, regional players creating electrical cables business to be highly competitive. The first and foremost risk the Company faces is of competition from unorganized sector and smaller and regional players. The Company has been dealing with the competitive forces through its organized business approach by providing superior quality products, safe products and maintaining high standards of service levels with its customers. The Company enjoys the advantages of economies of scale and backward integration. The Company evolves innovative business practices and adopts a dynamic approach for handling the competitive business situations. The system of VAT
19 Finolex Cables Limited
is helping to curb unorganized sector. The other risk is of raw material price movements which can occasionally be sharp. Though the Company endeavors to pass on the price effect to the customers, there has always been a time lag between the price movement and the passing thereof which could benefit or dis-benefit the Company for the lag period or otherwise. The Company negotiates price variation contracts with bulk buyers. The Company has been fair in dealing with its customers and accordingly enjoys customer confidence in pricing decisions. 5.2 Communication Cables The communication cables comprise of state of art, new generation communication cables and traditional telephone cables. (i) The state of art communication cables are either copper based or glass based. The copper based cables include LAN cables, coaxial cables, PE insulated switchboard cables and V-SAT cables. These cables are used for last mile connectivity. LAN cables are used in high speed networks, coaxial cables are used to provide content input to TV receiving sets, PE insulated switchboard cables are used to connect telephone instruments to an EPABX system and V-SAT cables find their application in V-SAT towers to connect the dish to the base station. Optic fibre cables are glass based cables and they have the maximum bandwidth and speed. Certain cable designs used as trunk cables in long distance networks while other designs are used in distribution, whether by telecom companies, multi-service organisations or other service providers. Communication cables which carry voice, data or images is the backbone of an economic activity. The speed and bandwidth determine the capabilities of a communication network. (ii) Traditional telephone cables include JFTCs which are laid underground and are used for connecting land line telephones to exchanges. These are copper based cables. With introduction of mobile telephones in India and due to substitution by optic fibre cables, JFTC business has lost its value. Nevertheless, JFTC continues to remain a preferred option for last mile connectivity in fixed line telephones. The demand for JFTCs may continue to remain modest. The Company would continue to manufacture JFTCs especially with broadband features for public sector and private sector telecom companies and to meet the export demand. The Company has the capability to make JFTCs as per customer’s needs. Performance: The communication cables segment (including optic fibre) recorded sales of Rs.3,104.802 million for the year under review against Rs. 1,794.804 million for the earlier year showing a growth of 73 %. The Company received orders from different customers for supply of JFTCs. Outlook: India is growing at a good pace on year-on-year basis. Favourable demographics and opportunities to earn income is helping the country to keep maintaining the pace of development. The economic development requires inter-area, a strong, dependable and sustainable communication network. Cable is a backbone of the communication network. The performance characteristics of cable defines the effectiveness of the communication network. Growing networking requirements, expanding entertainment industry and increasing broad band usage offer good business prospects for communication cables’ business of the Company. The Company’s communication cables meet with the requirement of local as well as international standards. And therefore, find ready acceptance with domestic customers as well as in the exports market. In fact, the Company’s LAN cables are accredited with UL (Underwriters’ Laboratories Inc., USA) verification status. Thus there exists a good scope for sale of communication cables in India and abroad. The Company has been exporting these cables. The risks of competition and copper price movements similar to the electrical cables business are also applicable to the business of communication cables. The varying global demand-supply equation of optic fibre and resultant price movement thereof; availability of preforms and price thereof and delay/slow-down in investment into networks by telecom companies/ service provider and other relevant entities due to global slow-down pose risk to the business of communication cables. 5.3 Copper Rods The copper rod is the feed stock for copper based electrical and communications cables. The Company manufactures its own copper rods. The base material for producing copper rods is copper cathodes; the bulk of which are procured from local manufacturers under supply agreements. A smaller portion of the requirement of copper cathodes is imported as and when need be. After meeting the in-house requirement of copper rods, the balance production of copper rods is allocated for third party sale. Performance: During the year under review, the CCC rods division recorded a production volume of 24,642 metric tonnes and sales of Rs. 8,578.481 million, of which Rs.5,709.013 million were inter-divisional transfers and Rs.2,869.468 million were sales to others. The volatility which had been observed in copper prices in the earlier period continued during the year under review. The monthly average LME copper price (CSP) varied between a high of US dollars (USD ) 8439 per metric tonne to a low of USD 6588 per metric tonne. Outlook: The copper rod production is mainly for in-house consumption. The Company’s steps to set up new plants for cables as well as to expand the cable capacity at the existing plants will boost up the captive consumption of copper rods. The Company has signed a joint venture agreement with J-Power Systems Corporation of Japan to manufacture extra high voltage power cables. These are essentially copper based cables. Accordingly the utilization of capacity at copper rod plant is expected to improve.
20 40th Annual Report 2007-08
5.4 Electrical Switches and CFLs The manufacture and sale of these electrical products act as a logical extension of the cables business of the Company. They have the backing of Finolex name, assuring the customer of quality, safety and performance standards. These electrical and lighting products are sold through the existing well-spread distribution network of cables. Market response has been encouraging. On its part to contain the effects of global warming, the Government is promoting use of CFLs. Keeping in mind, high future CFL demand the Board of Directors has decided to expand the CFL capacity. 5.5 PVC Sheets PVC Sheets may be classified as corrugated, flat sheets and rigid sheets. Corrugated sheets are used for roofing. Flat sheets are used for partition, exhibition, false roofing, wall cladding, display board and signage. The Company also manufactures rigid sheets which find application in chemical industry for manufacture of tanks and other handling system for corrosive chemicals and gasses. PVC sheets are light in weight, anti-corrosive and clean. The Company manufactures them in various thicknesses, profiles and colours. PVC sheets are meant for substituting asbestos sheet (which may be carcinogenic) and metal sheets (which are corrosive). Performance: During the year under review, the PVC Sheets division recorded production volume at 1,617 metric tonnes as against 1,570 metric tonnes for the earlier year. The sales were Rs.157.011 million, as against Rs.148.896 million, for the earlier year.
Outlook: The business of PVC sheets is not growing as expected due to availability of cheaper substitutes (though not recommended) like asbestos sheet, metal sheets, etc. The domestic market is extremely competitive. There exists an overseas demand for PVC sheets and the Company exports PVC sheets in modest quantity. 5.6 Summary The Company’s main business which comprises of manufacture of electrical cables and communication cables is closely linked to the economic development of the country. India is coming of age and thriving to progress and convert herself into a developed nation. This crusade for development requires substantial spending on infrastructure for development and upgradation. Addition to power generation capacity, spending on construction, industrialization, urbanization, increase in consumption expenditure, laying, upgradation and modernization of communication network and the like are the indicators for growing cable business. The governmental initiative on rationalizing commercial taxation system like VAT and consolidating different business and commercial taxes into a single point tax system like Goods and Services Tax (GST) should give a business boost to the manufacturers in the organized sector like your Company. Copper rod consumption shall increase due to increase in business of copper based electrical and communication cables. The Company is also desirous of increasing copper rod sale to other consumers. Electrical switches and CFL businesses are steadily gaining firmer roots in the market. The business of PVC sheets is closely linked to the customer preference for a better quality product. The Company’s products satisfy the Indian and international standards’ requirements. The Company has been able to grow on its exports. Looking futuristically, the Company has undertaken expansion of manufacturing capacities. The Company has added high voltage power cables to its range of electrical cables. Through a joint venture the Company is entering into the business of extra high voltage power cables hitherto not within the Company’s domain. Thus the Company is committed to expanding its business activities in an optimal manner. The Company has resources available at its disposal to implement and realize its business goals.
6. RISK MANAGEMENT DOCUMENT: The Company has a Risk Management Document in place. The Document defines the risk policies, lays out the risk strategies and methodology to decide on the risk taking ability of the organisation. The Document has been created with the intention to bring in awareness about various risks associated with the business of the Company. The risk management process involves risk identification, risk measurement, risk prioritisation, risk monitoring, risk escalation and risk mitigation. This Document sets out the infrastructure for risk management. The risk policies are reviewed at appropriate time.
7. INTERNAL CONTROL SYSTEM The Company has established a system of internal controls commensurate with its size and nature of business operations. The internal control system enables exercise of control over the transactions in the desired manner and at the desired level. The internal control system comes up for review periodically and wherever required is upgraded from time to time. In addition to internal control system, there exists a system of internal audit. The internal audit is conducted under the guidance and advice of the Audit Committee comprising of independent directors. The internal audit thus plays an important role as it conducts audit of all key business areas as per a predrawn and approved audit plan. The internal audit, amongst other things, looks at internal controls and procedures, reports to the Audit Committee non-compliances and gives suggestions for strengthening the internal controls. All audit observations, reviews and follow-up actions are reported to the Audit Committee. The Audit Committee met nine times during the year under review.
21 Finolex Cables Limited Financial summary for ten years (Rs. In million)
1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
PROFIT AND LOSS ACCOUNT DATA Gross Revenue ++ 4,656 5,761 6,279 6,750 5,189 5,689 6,701 8,899 12,055 16,270 Materials and manufacturing cost (including excise duty) 3,023 3,922 4,313 4,876 3,682 4,132 5,191 6,855 9,557 13,068 Employee cost 158 189 230 261 251 292 254 326 355 497 Administration & selling expenses 290 372 424 502 493 461 520 660 750 1,033 Extra ordinary Items — — — — — 37 ———— Depreciation 88 150 190 222 235 263 259 313 264 265 Interest and finance charges 237 181 196 164 246 178 106 128 159 204 Profit before tax 860 947 926 725 282 326 371 617 970 1,203 Taxation 240 240 201 65 35 30 63 113 280 314 Profit after tax 620 707 725 660 247 296 308 504 690 889 Dividend (including tax on dividend distribution if applicable) 140 286 284 230 104 138 157 209 251 268
BALANCE SHEET DATA Share capital 180 343 343 343 306 306 306 306 306 306 Reserves 5,509 5,103 5,545 5,526 4,923 5,080 4,702 5,055 5,495 6,109 Net worth 5,689 5,446 5,888 5,869 5,229 5,386 5,008 5,361 5,801 6,415 Loan Funds 1,126 1,190 1,047 1,223 2,036 1,880 1,321 2,343 2,653 2,876 Deferred Tax (Net) — — — 213 285 295 184 213 208 175 Total Liabilities 6,815 6,636 6,935 7,305 7,550 7,561 6,513 7,917 8,662 9,466 Gross Block 1,605 2,733 3,102 4,211 4,596 4,777 4,126 4,753 5,807 6,773 Net Block 948 1,866 2,049 2,872 3,074 3,006 2,118 2,288 3,079 3,784 Investments 1,758 1,719 2,137 2,012 2,318 3,067 2,491 2,722 2,833 3,168 Net current assets 4,109 3,051 2,749 2,421 2,144 1,488 1,904 2,907 2,750 2,514 Miscellaneous Expenditure (to the extent not written off or adjusted) — — — — 14 — — — — —
Total Assets 6,815 6,636 6,935 7,305 7,550 7,561 6,513 7,917 8,662 9,466
KEY RATIOS Growth in Revenue (%) 1.0 23.8 9.0 7.5 (23.1) 9.6 17.8 32.8 35.5 35.0 PAT to Revenue (%) 13.3 12.3 11.5 9.8 4.8 5.2 4.6 5.7 5.7 5.5 Return on Net Worth (%) 10.9 13.0 12.3 11.2 4.7 5.5 6.2 9.4 11.9 13.9 Earnings per Share Rupees 6.9 4.1 4.2 3.8 1.6 1.9 2.0 3.3 4.5 5.8 (for face value of Rs. 2/- each) Asset Turns (Revenue to Total Assets) 0.7 0.9 0.9 0.9 0.7 0.8 1.0 1.0 1.4 1.7 Return on Capital Employed (%) 14.5 16.3 16.3 12.3 6.2 6.5 6.7 10.1 13.5 15.4 Debt to Equity Ratio 0.2 0.2 0.2 0.2 0.4 0.4 0.3 0.4 0.5 0.4 Dividend (incl. Dividend Tax) Distribution to PAT(%) 22.6 40.5 39.1 34.8 41.9 46.7 51.0 41.5 36.4 30.2
Note : ++ Comprises Income From Operations(including excise duty) and Other Income
22 40th Annual Report 2007-08
Auditors’ Report
To the Members of Finolex Cables Limited. We have audited the attached Balance Sheet of Finolex Cables Limited as at 31st March 2008, and also 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. We 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 a 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report as follows: 1. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India, in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph 1 above:
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 account as required by law have been kept by the Company so far as appears from our examination of the books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us; 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 to in sub-section (3C) of Section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from the Directors as on 31st March, 2008 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2008 from being appointed as 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 accounts, read together with the Company’s Accounting Policies and the Notes thereto 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 the Balance Sheet, of the state of affairs of the Company as on 31st March, 2008
ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
For B. K. Khare & Co. Chartered Accountants
U. B. Joshi Place : Pune Partner Dated : 28th April, 2008 Membership No. 44097
23 Finolex Cables Limited Annexure to the Auditors’ Report
Referred to in paragraph 1 of our Report of even date: i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The Company has substantially completed the reconciliation of Physical Inventory of Fixed Assets with book records. c) During the year, Company has not disposed of any substantial/major part of fixed assets. ii. a) As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been properly dealt with in the books of account. iii. a) 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. The Company has granted a loan of Rs. 3.50 Mn to Finolex Infrastructure Limited, a party covered in the register maintained under Section 301 of the Companies Act, 1956. The loan is not sqaured off during the year. b) The rate of Interest and other terms and conditions of the loan are not prejudical to the interest of the Company. c) The principal amount is not due during the year.The party is regular in payment of interest. iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of inventory and fixed assets, and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls. v. In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956, a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements have been entered in the register required to be maintained under Section 301. b) According to the information and explanations given to us and excluding certain transactions of purchase of goods and material of special nature for which alternate quotations are not available, in our opinion, the contracts or arrangements have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time. vi. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore, the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and Rules there under are not applicable to the Company. vii. In our opinion, the Company has an internal audit system commensurate with the size and the nature of its business. viii. We have broadly reviewed the books of account maintained by the Company relating to the manufacture of cables, conductors and Compact Florescent Lamps pursuant to the rules made by the Central Government for the maintenance of cost records 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 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 records of the Company and information and explanations given to us, the Company has been regular in depositing 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 statutory dues with the appropriate authorities during the year.
24 40th Annual Report 2007-08
b) According to the records of the Company and information and explanations given to us, dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and cess which have not been deposited on account of disputes and the forum where dispute is pending as under:
Name of the statute Nature of dues Amount Period to which Forum where dispute is (Rs.in Million) amount relates pending Sales Tax Act Sales Tax demand 0.403 F.Y.1992-1993 Appellate Tribunal Sales Tax demand 0.560 F.Y.1993-1994 Appellate Tribunal
Sales Tax demand 0.070 F.Y.1999- 2000 Deputy Commissioner (Appeals) Sales Tax demand 0.060 F.Y.2001-2002 Deputy Commissioner (Appeals) x. The Company does not have accumulated losses as at the end of the year and the Company has not incurred cash losses during current and the immediately preceding financial year. xi. Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions, banks and 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. The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company. xiv. (a) Based on the records examined by us and according to the information and explanations given to us, we are of the opinion that the Company is maintaining proper record of the transactions and contracts of dealing in shares and securities and that timely entries have been made in these records. (b) Based on our audit procedures and to the best of our knowledge and belief and according to the information and explanation given to us, the shares and securities have been held by the Company in its own name. xv. According to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from banks and financial institutions. xvi. To the best of our knowledge and belief and according to the information and explanation given to us, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained. xvii. According to the Cash Flow Statement and records examined by us and according to the information and explanations given to us, on overall basis, funds raised on short-term basis have, prima facie, not been used during the year for long-term investment . xviii. The Company has not made any preferential allotment to parties and companies covered under register maintained under Section 301 of the Companies Act, 1956, during the year and the question of whether the price at which the shares have been issued is prejudicial to the interest of the Company does not arise. xix. According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued. xx. The Company has not raised money by any public issues during the year and hence the question of disclosure and verification of end use of such money does not arise. xxi. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported during the year.
For B. K. Khare & Co. Chartered Accountants
U. B. Joshi Place : Pune Partner Dated : 28th April, 2008 Membership No. 44097
25 Finolex Cables Limited Balance Sheet as at 31st March, 2008 (Rs. in million)
Schedule 2008 2007 Sources of Funds Shareholders’ Funds : Share Capital 1 305.879 305.879 Reserves & Surplus 2 6,109.291 5,494.818 6,415.170 5,800.697
Loan Funds : Secured Loans 3 2,112.621 1,976.875 Unsecured Loans 4 763.450 676.471 2,876.071 2,653.346 Deferred Tax Credit (Net) 174.729 208.449 Refer Note 5 - Schedule 15 9,465.970 8,662.492
Application of Funds Fixed Assets : 5 & 5A Gross Block 6,772.833 5,806.540 Less : Depreciation 2,989.109 2,727.107 Net Block 3,783.724 3,079.433
Investments 6 3,168.470 2,833.152 Current Assets, Loans & Advances : 7 Interest Accrued on Investments 0.029 0.127 Inventories 2,360.758 1,923.026 Sundry Debtors 1,075.537 788.046 Cash & Bank Balances 214.014 610.720 Loans & Advances 3,729.111 3,271.743 7,379.449 6,593.662 Less: Current Liabilities and Provisions : 8 Liabilities 1,663.520 1,014.781 Provisions 3,202.153 2,828.974 4,865.673 3,843.755 Net Current Assets 2,513.776 2,749.907 9,465.970 8,662.492 Notes 15 As per our report of even date P.P. Chhabria D.K. Chhabria Chairman Managing Director For B. K. KHARE & COMPANY Dr. H.S. Vachha V.K. Chhabria Chartered Accountants Sanjay K. Asher Dy. Managing Director P.G. Pawar M.L. Jain U.B. Joshi R.G.D’Silva P.R. Rathi Asst. Managing Director and Partner Company Secretary & A.J. Engineer Chief Operating Officer Membership No. 44097 Vice President (Legal) P.B. Parasnis Asst. Managing Director and Pune: 28th April, 2008 Pune: 28th April, 2008 Chief Financial Officer
26 40th Annual Report 2007-08
Profit and Loss Account for the year ended 31st March, 2008 (Rs. in million)
Schedule 2008 2007 Income: Income from Operations 9 15,928.978 11,859.227 Less : Excise Duty 2,091.311 1,529.016 13,837.667 10,330.211 Other Income 10 341.316 196.042 14,178.983 10,526.253 Expenditure: Materials & Manufacturing 11 10,976.637 8,027.519 Personnel Expenses 12 497.153 355.321 Other Expenses 13 1,033.346 749.571 Finance Charges 14 204.195 159.247 Depreciation 264.671 264.288 12,976.002 9,555.946 Profit Before Tax 1,202.981 970.307 Less : Provision for Taxation Current Tax 341.360 280.000 Deferred Tax (Net) (33.720) (4.623) Fringe Benefit Tax 6.100 5.000 Profit After Tax 889.241 689.930 Add : Surplus brought forward 152.527 113.101 Balance Available for Appropriation 1,041.768 803.031 Appropriations Debenture Redemption Reserve 50.000 100.000 Proposed Dividend 229.409 214.115 Tax on Proposed Dividend 38.988 36.389 General Reserve 300.000 300.000 618.397 650.504 Surplus Carried to Balance Sheet 423.371 152.527 Earnings Per Share Basic / Diluted (face value Rs. 2/- each) 5.81 4.51 Profit after Tax available for equity shareholders 889.241 689.930 No. of Shares used in computing Earnings per Share (Basic / Diluted) 152,939,345 152,939,345 Notes 15
As per our report of even date P.P. Chhabria D.K. Chhabria For B. K. KHARE & COMPANY Chairman Managing Director Chartered Accountants Dr. H.S. Vachha V.K. Chhabria Sanjay K. Asher Dy. Managing Director U.B. Joshi R.G.D’Silva P.G. Pawar M.L. Jain Partner Company Secretary & P.R. Rathi Asst. Managing Director and Membership No. 44097 Vice President (Legal) A.J. Engineer Chief Operating Officer P.B. Parasnis Asst. Managing Director and Pune: 28th April, 2008 Pune: 28th April, 2008 Chief Financial Officer
27 Finolex Cables Limited Cash Flow Statement for the year ended 31st March, 2008 (Rs. in million)
2008 2007 A. Cash Flow from Operating Activities Net profit Before Tax 1,202.981 970.307 Adjustments for : Depreciation (Net) 264.671 264.288 Provision for Short term compensated absences 2.726 3.200 Income from Investments (27.308) (9.921) Dividend Income (137.246) (126.585) Interest Income (24.369) (11.959) Loss / (Profit) on : Sale of Fixed Assets (28.256) (1.361) Loss / (Profit) on : Sale of Investments (86.665) (15.826) Loss / (Profit) on : Forex Transactions 128.305 1.120 Interest Cost 189.286 147.987 Diminution in the value of Investments 10.646 4.187 291.791 255.131 Operating Profit before Working Capital Changes 1,494.772 1,225.438 Adjustments for Working Capital Changes : Trade and Other Receivable (373.361) (34.665) Inventories (437.732) 161.319 Trade Payable 657.966 80.373 (153.127) 207.027 Cash generated from Operations 1,341.645 1,432.465 Tax refund / (Paid) (371.794) (356.714) Net Cash Flow from Operating Activities 969.851 1,075.751
B. Cash Flow from Investing Activities Income from Investments 27.308 9.921 Dividend Income 137.246 126.584 Interest Income 24.369 11.959 Inflow from / (Additions to) Investments 67.356 7.450 Diminution in the value of Investments (10.646) (4.187) Purchase of Fixed Assets/ Capital Expenditure (Net) (940.706) (1,054.522) Net Cash Flow from Investing Activities (695.073) (902.794)
C. Cash Flow from Financing Activities Proceeds from External Commercial Borrowings 349.100 850.000 Short Term Acceptances movement 711.829 (284.523) (Loss) / Profit on : Forex Transactions (128.305) (1.120) Dividend & dividend tax paid (254.926) (205.553) Interest Cost (189.286) (147.987) Net Cash Flow from Financing Activities 488.412 210.817 Total (A) + (B) + ( C ) 763.189 383.773
28 40th Annual Report 2007-08
Cash Flow Statement for the year ended 31st March, 2008 (Rs. in million)
2008 2007 D. Increase / (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents Opening Balance 733.327 349.554 Closing Balance 1,496.516 733.327 Net Increase / (Decrease) in Cash and Cash Equivalents 763.189 383.773
Notes : 1) The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard 3 on Cash Flow Statement issued by ICAI 2) Previous year figures have been regrouped wherever necessary to conform to current year’s classification.
As per our report of even date P.P. Chhabria D.K. Chhabria Chairman Managing Director For B. K. KHARE & COMPANY Dr. H.S. Vachha V.K. Chhabria Chartered Accountants Sanjay K. Asher Dy. Managing Director U.B. Joshi R.G.D’Silva P.G. Pawar M.L. Jain P.R. Rathi Asst. Managing Director and Partner Company Secretary & A.J. Engineer Chief Operating Officer Membership No. 44097 Vice President (Legal) P.B. Parasnis Asst. Managing Director and Pune: 28th April, 2008 Pune: 28th April, 2008 Chief Financial Officer
29 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 1 - Share Capital Authorised 235,000,000 Equity Shares of Rs. 2/- each 470.000 470.000 15,000,000 Unclassified Shares of Rs. 2/- each 30.000 30.000 500.000 500.000 Issued & Subscribed 152,939,345 Equity Shares of Rs. 2/- each fully paid. 305.879 305.879 (Of the above, 146,065,520 Equity Shares are issued as fully paid up bonus shares by capitalisation of Reserves)
305.879 305.879 During the previous year the Company had subdivided the Rs. 10/- share into 5 shares of Rs. 2/- each. Consequently 30,587,869 shares of Rs.10/- each have become 152,939,345 shares of Rs. 2/- each w.e.f 16th January, 2007.
Schedule 2 - Reserves & Surplus Capital Reserve as per last Balance Sheet 84.079 84.079 84.079 84.079 Share Capital Buyback Reserve as per last Balance Sheet 55.183 55.183 55.183 55.183 Share Premium as per last Balance Sheet 1,090.955 1,090.955 1,090.955 1,090.955 Debenture Redemption Reserve as per last Balance Sheet 200.000 100.000 Add : Transferred from Profit & Loss Account 50.000 100.000 250.000 200.000 Less : Transferred to Profit & Loss Account — — 250.000 200.000 General Reserve as per last Balance Sheet 3,912.074 3,612.074 Less : Provision for differential amount of compensated absence 6.371 — Add : Transferred from Profit & Loss Account 300.000 300.000 4,205.703 3,912.074 Surplus in Profit & Loss Account 423.371 152.527 4,629.074 4,064.601 6,109.291 5,494.818
30 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 3 - Secured Loans Term Loans: Long Term Loans: Non- Convertible Debentures 7.60% L-Series 500.000 500.000 External Commercial Borrowings 1,199.100 850.000 1,699.100 1,350.000 Short Term Loans from Banks: Foreign Currency Demand Loans — 212.500 Packing Credit 199.850 414.375 Other Working Capital Borrowings 213.671 — 413.521 626.875 2,112.621 1,976.875
Notes: Particulars Redemption Tenor Repayment Condition Schedule a) Debentures - L Series At par 5 years Lumpsum on 11th August, 2010 b) External Commercial Borrowings At par 5 years Lumpsum on 27th March, 2012
Security: (i) Debentures - L Series First pari-passu charge on the immovable properties of JFTC Goa Division and premises situated at Ahmedabad. (ii) External Commercial Borrowings First pari-passu charge on all the immovable / movable fixed properties of the company, both present and future, save and except properties excluded as agreed to by the lendors. (iii) Short Term Loans from Banks Hypothecation of inventories and book debts.
Schedule 4 - Unsecured Loans Acceptances (Short Term)- Banks 739.657 227.678 Deferred Sales Tax Loan 23.793 23.793 Short Term Foreign Currency Loans from Banks — 425.000 763.450 676.471
31 Finolex Cables Limited (Rs. in million) NET BLOCK Balance Balance 3,079.433 Depreciation at as at as Deductions Total DEPRECIATION Year 3.496 2.333 17.837 32.532 18.890 16.85310.471 0.825 -11.296 5.557 4.642 1,051.078 1,051.078 Gross Block Balance For the Deductions
GROSS BLOCK 1.740* - 81.804 - 890.284 208.291 25.868 - 234.159 656.125 600.189 25.455 1.595 2.36724.683 - - - -24.683 25.455 74.585 4.902 0.070 79.417 61.6703.311 0.017 64.964 14.453 12.915 128.266 - -128.266 127.766 0.045 -127.811 0.455 0.500 131.505 7.427 -138.932 81.291 7.587 - 88.878 50.054 50.214 1.4.2007 31.3.2008 1.4.2007 as at 31.3.2008 31.3.2008 31.3.2007 Balance Additions 4,697.86163.377 5.776 4,755.462 2,465.622264.288 2.803 2,727.107 2,028.355 1,051.078 1,728.655 1,728.655 1,051.078 Includes borrowing cost capitalised during the year Rs. 3.306 million (Previous nil) Description at as # at as at as Intangible AssetsTotalCapital Work -in - Progress Including Capital Advances (Refer Schedule 5A) TotalPrevious YearPrevious Year Capital Work -In - Progress 4,755.462 TotalPrevious Year 294.376 * Includes prorata cost of the assets jointly owned, current year Rs. 1.684 million (Previous 5.022 million) 5.659 # 5,806.540 5,044.179 2,727.107264.671 2.669 2,989.109 6,772.833 2,055.069 2,028.355 5,806.540 3,783.724 3,079.433 LandLandHold Lease Buildings 33.760 808.480 - - 33.760 2.375 0.341 - 2.716 31.044 31.385 Plant & MachineryFurniture,Fittings & Office Equipment 3,490.825179.216 0.336 3,669.705 2,210.134222.457 0.319 2,432.272 1,237.433 1,280.691 Computers, Peripherals & ERP SystemVehicles 35.564 17.691 2.886 50.369 16.674 Dies & MouldsExchange Fluctuation11.909 15.113 - -11.909 8.435 0.741 - 9.176 2.733 3.474 Schedules forming part of the Balance Sheet Schedules forming part Schedule 5 - Fixed Assets
32 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 5A- Capital WIP including Capital Advances & Expenditure pending Allocation
High Voltage Power Cable Project - Urse: Capital Advances 3.958 39.511 Capital WIP & Expenditure Pending Allocation Land 30.143 30.143 Building 344.730 202.089 Plant & Machinery 330.286 215.123 Other Assets 1.842 0.059 Preoperative Expenses 16.177 0.731 Interest 19.879 — Trial Run Expenses - Net of Trial Run Income 20.449 — 767.464 487.656 Light Duty Cable Project - Roorkee: Capital Advances 13.297 131.152 Capital WIP & Expenditure Pending Allocation Land 129.935 124.797 Building 206.360 75.465 Plant & Machinery 285.855 2.964 Other Assets 0.038 0.036 Preoperative Expenses 77.226 22.546 Interest 13.680 1.814 726.391 358.774 Others: Capital Advances 78.976 26.421 Capital WIP 155.824 178.227 234.800 204.648 TOTAL 1,728.655 1,051.078
Note: Includes borrowing cost capitalised during the year Rs. 35.813 million (Previous year Rs. 1.814 million)
33 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 6 - Investments Non Trade Long Term (At Cost) Quoted Investments (Listed) 91,000 Equity Shares of Rs. 2 each fully paid in Bharat Forge Limited 1.506 1.506 (Previous Year 91,000) 40,192,597 Equity Shares of Rs. 10 each paid in Finolex Industries Limited 1,518.530 1,518.530 (Previous Year 40,192,597) 399,500 Equity Shares of Rs. 10 each paid in IndusInd Bank Limited 3.995 3.995 (Previous Year 399,500) Aggregate Market Value of Quoted Investments Rs. 2,702.452 million (Previous Year 2,806.651 million) 1,524.031 1,524.031
Unquoted Investments 6,100,000 Equity Shares of Rs. 10 each fully paid in I2IT Pvt Limited 61.000 61.000 (Previous Year 6,100,000) 1,000,000 Equity Shares of Rs. 10 each fully paid in Plastro 10.011 10.011 Plasson Industries(India) Limited (Previous Year 1,000,000) 3,350 Equity Shares of Rs. 10 each fully paid in Promain 0.041 0.041 Limited (Previous Year 3,350) 967,700 Equity Shares of Rs. 10 each fully paid in SICOM 77.803 77.803 Limited (Previous Year 967,700) — 6% cumulative redeemable preference shares of — — Re. 1 each in Sun Pharmaceutical Industries Limited (Bouns Shares) (Previous year 4,268) 1,000 Equity Shares of Rs. 10 each fully paid in The Saraswat 0.010 0.010 Co-op Bank Limited (Previous Year 1,000) 24,975 Equity Shares of Rs.10 each fully paid in Finolex 0.250 — Infrastructure Limited (Previous Year Nil)
Investment in Joint Venture Company 4,900 Equity Shares of Rs. 10 each fully paid in Finolex 0.049 — J-Power Systems Private Limited (Previous Year Nil) Share Application Money - Finolex J - Power Systems Private Limited 3.500 — 152.664 148.865 Provision for diminution in value of shares of SICOM Ltd. 25.373 34.213 127.291 114.652
Current Investments (Valued at lower of cost and fair value) Quoted Invesments 5,000 Equity Shares of Rs. 10 each fully paid in Bank of Rajasthan 0.155 0.155 Limited (Previous Year 4,000) 198,750 Equity Shares of Rs.10 each fully paid in BF Utilities Limited 0.994 0.994 (Previous Year 198,750)
34 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 5,000 Equity Shares of Rs.10 each fully paid in Bhojwani Leasing & 0.000 0.000 Finance Limited (Previous Year 5,000) 100 Equity Shares of Rs.10 each fully paid in Birla Ericsson 0.001 0.001 Optical Limited (Previous Year 100) 100 Equity Shares of Rs. 10 each fully paid in Delton 0.001 0.001 Cables Limited (Previous Year 100) 57 Equity Shares of Re. 1 each fully paid in Dish TV 0.000 — India Limited (Previous Year Nil) 5,000 Equity Shares of Rs. 10 each fully paid in Global 0.000 0.000 Boards Limited (Previous Year 5,000) 3,150 Equity Shares of Rs. 10 each fully paid in ICICI Bank Limited 0.460 0.460 (Previous Year 3,150) 200,000 Equity Shares of Rs. 10 each fully paid in Kirloskar 6.210 6.210 Ferrous Limited (Previous Year 200,000) 100,000 Equity Warrants in Kirloskar Ferrous Limited 0.000 0.000 (Previous Year 100,000 ) 100 Equity Shares of Rs. 10 each fully paid in Nicco Corporation 0.000 0.000 (Previous Year 100) 2,100 Equity Shares of Rs. 10 each fully paid in RPG Cables 0.030 0.030 Limited (Previous Year 2,100) 100 Equity Shares of Rs. 10 each fully paid in Sterlite Optical 0.003 0.003 Tech Limited (Previous Year 100) 100 Equity Shares of Rs. 10 each fully paid in Uniflex Cables 0.001 0.001 Limited (Previous Year 100) 100 Equity Shares of Rs. 10 each fully paid in Usha Martin 0.000 0.000 Infotech Limited (Previous Year 100) 500 Equity Shares of Re. 1 each fully paid in Usha Martin Limited 0.003 0.003 (Previous Year 100 Equity Shares of Rs.5 each fully paid) 100 Equity Shares of Rs. 10 each fully paid in Vindhya 0.002 0.002 Telelinks Limited (Previous Year 100) 50 Equity shares of Rs. 10 each fully paid in Wire & Wireless 0.000 0.000 India Limited (Previous Year 50) 100 Equity Shares of Rs. 10 each fully paid in ZEE Entertainment 0.014 0.014 Enterprises Limited (Previous Year 100) 45 Equity Shares of Rs. 10 each fully paid in ZEE News Limited 0.000 0.000 (Previous Year 45) — Units of Rs. 10 each of ABN AMRO Fixed Term Plan — 10.000 Series 2 - 13 Month plan - Growth (Previous Year 1,000,000) — Units of Rs. 10 each of ABN AMRO Fixed Term Plan Series-1 — 5.000 Growth (Previous Year 500,000) 1,000,000 Units of Rs. 10 each of ABN AMRO Fixed Term Plan Series 10 10.000 — Plan E Institutional- Growth (Previous Year Nil)
35 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 977,995 Units of Rs. 10 each of AIG India Equity Fund - Regular- 9.639 — Dividend (Previous Year Nil) 48,900 Units of Rs. 100 each of Benchmark Split Capital Fund 5.000 5.000 Class A - Growth (Previous Year 48,900) 1,000,000 Units of Rs. 10 each of Birla Fixed Term Plan AK- Growth 10.000 — (Previous Year Nil) — Units of Rs. 10 each of Birla Fixed Term Plan - Series F - — 20.082 Growth (Previous Year 2,008,182) 1,000,000 Units of Rs. 10 each of Birla Fixed Term Plan Institutional - 10.000 10.000 Series R - Growth (Previous Year 1,000,000) 1,687,556 Units of Rs. 10 each of Birla Sunlife Income Fund- Growth 49.645 — (Previous Year Nil) — Units of Rs. 10 each of Chola Fixed Maturity Plan - 14 months - — 10.000 Cumulative (Previous Year 1,000,000) 5,000,000 Units of Rs. 10 each of DBS Chola FMP - Series 6 - 50.000 50.000 (410 Days Plan) - Cumulative (Previous Year 5,000,000) — Units of Rs. 10 each of Deutsche Fixed Term Fund - — 10.000 Series 5 - Growth (Previous Year 1,000,000) — Units of Rs. 10 each of Deutsche Fixed Term Fund Series 9- — 10.000 Growth (Previous Year 1,000,000) 1,000,000 Units of Rs.10 each of DSP Merrill Lynch FMP 13 Months 10.000 — Series 1- Growth (Previous Year Nil) 199,943 Units of Rs. 10 each of DSP Merrill Lynch Opportunity Fund - 10.350 7.600 Growth (Previous Year 178,559) 185,195 Units of Rs. 10 each of DSP Merrill Lynch Tiger Fund - Growth 7.222 1.822 (Previous Year 57,757) — Units of Rs. 10 each of DWS Fixed Term Fund - Series 10- — 20.000 Growth (Previous Year 2,000,000) 2,000,000 Units of Rs. 10 each of DWS Fixed Term Fund Series 25 - 20.000 20.000 Institutional - Growth (Previous Year 2,000,000) 1,000,000 Units of Rs.10 each of DWS Fixed Term Fund Series 47- 10.000 — Growth (Previous Year Nil) — Units of Rs. 10 each of Fidelity Equity Fund -Dividend — 12.625 (Previous Year 801,481) 977,995 Units of Rs.10 each of Fidelity International Opportunities 9.724 — Fund- Dividend (Previous Year Nil) — Units of Rs. 10 each of Fidelity Special Situations Fund - — 20.000 Dividend (Previous Year 1,955,990) 1,951,100 Units of Rs. 10 each of Fidelity Special Situations Fund - 26.065 — Growth (Previous Year Nil) 27,798 Units of Rs. 100 each of Franklin India Prima Fund - Growth 4.598 8.500 (Previous Year 51,389)
36 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 1,000,000 Units of Rs. 100 each of Franklin India Smaller Companies 10.000 10.000 Fund - Growth (Previous Year 1,000,000) — Units of Rs. 10 each of Grindlays Fixed Maturity 22nd Plan - — 10.000 Dividend (Previous Year 1,000,000) — Units of Rs. 10 each of Grindlays Fixed Maturity Plus — 10.000 Plan I - Plan B-Growth (Previous Year 1,000,000) 133,020 Units of Rs. 10 each of HDFC Equity Fund - Growth 18.686 13.000 (Previous Year 113,708) — Units of Rs. 10 each of HDFC Fixed Maturity Plan - — 10.000 13 Months - Growth (Previous Year 1,000,000) 1,000,000 Units of Rs. 10 each of HDFC Fixed Maturity Plan - 13 Months 10.000 — March 08 Series VII - Growth (Previous Year Nil) 5,000,000 Units of Rs. 10 each of HDFC Fixed Maturity Plan 15 Months 50.000 50.000 Feb 2007 (3) - Wholesale Plan - Growth (Previous Year 5,000,000) 1,000,000 Units of Rs. 10 each of HDFC Fixed Maturity Plan 14 Months 10.000 — Feb 2008 (VII) - Wholesale Plan - Growth (Previous Year Nil) 3,000,000 Units of Rs. 10 each of HDFC Fixed Maturity Plan - 370 Days 30.000 — March 08 (2) - Growth (Previous Year Nil) 1,000,000 Units of Rs.10 each of HDFC Infrastructure Fund-Dividend 9.354 — (Previous Year Nil) 155,134 Units of Rs. 10 each of HSBC Equity Fund - Growth 10.493 7.600 (Previous Year 135,067) — Units of Rs. 10 each of HSBC Fixed Term Series 13 -Growth — 10.000 (Previous Year 1,000,000) — Units of Rs. 10 each of HSBC Fixed Term Series 4 - Growth — 10.000 (Previous Year 1,000,000) 2,000,000 Units of Rs. 10 each of HSBC Fixed Term Series 23 - Growth 20.000 20.000 (Previous Year 2,000,000) 4,802,245 Units of Rs.10 each of HSBC Flexi Debt Institutional- Growth 50.000 — (Previous Year Nil) — Units of Rs. 10 each of ING Vysya Fixed Maturity Fund — 20.000 Series VII - Growth (Previous Year 2,000,000) 2,000,000 Units of Rs. 10 each of ING Vysya FMP-Series XXII - Growth 20.000 20.000 (Previous Year 2,000,000) 1,000,000 Units of Rs.10 each of ING Vysya Global Real Estate Fund- 10.000 — Dividend (Previous Year Nil) 1,000,000 Units of Rs.10 each of ING Vysya Long Term FMP 1 10.000 — Institutional- Growth (Previous Year Nil) 1,000,000 Units of Rs.10 each of JM Agri & Infra Fund - Dividend 7.024 — (Previous Year Nil) 977,995 Units of Rs.10 each of JM Contra Fund - Dividend Payout 9.362 — (Previous Year Nil)
37 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 2,000,000 Units of Rs.10 each of JM FMP Series IX Months Institutional- 20.000 — Growth (Previous Year Nil) 977,517 Units of Rs.10 each of JM Small & Midcap Fund - Dividend 10.000 — (Previous Year Nil) 977,995 Units of Rs.10 each of JP Morgan India Equity Fund - Dividend 9.914 — (Previous Year Nil) 2,312,478 Units of Rs.10 each of Kotak Bond Fund Regular- Growth 49.660 — (Previous Year Nil) 2,000,000 Units of Rs. 10 each of Kotak Fixed Maturity Plan 13 Months- 20.000 20.000 Series 1 - Growth (Previous Year 2,000,000) 1,000,000 Units of Rs.10 each of Kotak FMP 14 Months Series 4- 10.000 — Growth (Previous Year Nil) — Units of Rs. 10 each of Kotak 30 -Dividend — 8.806 (Previous year 278,327) 3,084,818 Units of Rs.10 each of Lotus India Arbitrage Fund - Dividend 31.549 — (Previous Year Nil) 1,000,000 Units of Rs.10 each of Lotus India FMP 13 Months Series IV- 10.000 — Institutional- Growth (Previous Year Nil) 5,000,000 Units of Rs. 10 each of Lotus India FMP 15 Months Series 1- 50.000 50.000 Growth (Previous Year 5,000,000) 1,000,000 Units of Rs.10 each of Lotus India FMP 375 Days 10.000 — Series VIII- Growth (Previous Year Nil) 2,000,000 Units of Rs.10 each of Lotus India FMP 375 Days Series I to III - 20.000 — Growth (Previous Year Nil) 71,028 Units of Rs.1000 each of Mirae Asset Liquid Super 71.500 — Institutional- Growth (Previous Year Nil) 487,805 Units of Rs.10 each of Optimix Multimanager Equity Fund - 5.000 — Dividend (Previous Year Nil) — Units of Rs. 10 each of Principal Cash Managment Fund - — 40.000 Liquid Institutional Premium - Growth (Previous Year 3,425,332) — Units of Rs. 10 each of Principal Deposit Fund (FMP -4-20) — 10.000 385 days plan - Growth (Previous Year 1,000,000) 3,704,003 Units of Rs.10 each of Principal Income Institutional Plan- 49.937 — Growth (Previous Year Nil) 244,499 Units of Rs. 10 each of Prudential ICICI Equity & Derivatives 2.420 2.480 Fund- Optimiser - Dividend (Previous Year 244,499) 2,000,000 Units of Rs. 10 each of Prudential ICICI Fixed Maturity Plan 20.000 20.000 Series 34-15 Months- Growth (Previous Year 2,000,000) — Units of Rs. 10 each of Prudential ICICI Fixed Maturity Plan — 20.000 Series 37- 3M-Plan A - Growth (Previous Year 2,000,000) 1,000,000 Units of Rs.10 each of Prudential ICICI FMP Series 43 14 10.000 — Months Plan A- Growth (Previous Year Nil)
38 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 1,000,000 Units of Rs. 10 each of Prudential ICICI Fusion Fund - 10.000 10.000 Growth (Previous Year 1,000,000) 977,995 Units of Rs.10 each of Reliance Equity Advantage Fund - 9.822 — Dividend (Previous Year Nil) — Units of Rs. 10 each of Reliance Equity Fund -Dividend — 22.025 (Previous Year 1,995,000) 1,990,013 Units of Rs. 10 each of Reliance Equity Fund -Growth 26.427 — (Previous Year Nil) 2,000,000 Units of Rs. 10 each of Reliance Fixed Horizon Fund II 20.000 20.000 Annual Plan Series V Intitutional - Growth (Previous Year 2,000,000) 5,000,000 Units of Rs. 10 each of Reliance Fixed Horizon Fund II 50.000 50.000 Annual Plan Series VI Institutional - Growth (Previous Year 5,000,000) 50,387 Units of Rs. 100 each of Reliance Growth Fund - Growth 12.127 11.000 (Previous Year 54,540) 1,940,081 Units of Rs. 10 each of Reliance Income Fund Retail Plan 49.494 — Growth Plan- Growth (Previous Year Nil) — Units of Rs. 10 each of Reliance Liquidity Fund -Growth — 0.577 (Previous Year 51,673) 345,457 Units of Rs.10 each of Reliance Liquid Fund -Treasury Plan 6.639 — Institutional - Growth (Previous Year Nil) — Units of Rs. 10 each of Reliance Monthly Interval Fund- — 50.000 Growth (Previous Year 5,000,000) 977,995 Units of Rs.10 each of Reliance Natural Resources Fund- 9.411 — Dividend (Previous Year Nil) 40,179 Units of Rs. 100 each of Reliance Vision Fund- Growth 8.282 2.322 (Previous Year 13,684) 498,750 Units of Rs. 10 each of SBI Magnum Bluechip Fund - 5.356 5.436 Dividend (Previous Year 498,750) 1,000,000 Units of Rs. 10 each of SBI Debt Fund Series 13 Months- 10.000 — Growth (Previous Year Nil) 178,640 Units of Rs. 10 each of SBI Magnum Sector Funds Umbrella 7.893 1.893 Contra - Growth (Previous Year 53,249) 1,000,000 Units of Rs.10 each of SBI Infrastructure Fund - Dividend 10.000 — (Previous Year Nil) 1,138,443 Units of Rs. 10 each of SBI Multicap Equity Fund - Dividend 14.356 14.583 (Previous Year 1,138,443) 383,723 Units of Rs. 10 each of Standard Chartered Classic Equity - 4.690 7.500 Growth (Previous Year 613,665) 1,000,000 Units of Rs. 10 each of Standard Chartered Enterprise Equity - 10.000 10.000 Dividend (Previous Year 1,000,000)
39 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 2,000,000 Units of Rs. 10 each of Standard Chartered Fixed Maturity Plan 20.000 20.000 Yearly Series 2- Growth (Previous Year 2,000,000) 1,000,000 Units of Rs.10 each of Standard Chartered Fixed Maturity Plan 10.000 — Yearly Series 20 Plan B - Growth (Previous Year Nil) — Units of Rs. 10 each of Standarad Chartered Fixed Maturity — 50.000 Plan- Quarterly Series 7- Growth (Previous Year 5,000,000) — Units of Rs. 10 each of Standarad Chartered Liquidity — 100.000 Manager Plus - Growth (Previous Year 93,155) 959,506 Units of Rs. 10 each of Sundaram BNP Paribas Equity 9.362 9.389 Multiplier Fund - Growth (Previous Year 959,507) 1,000,000 Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term 10.000 10.000 Plan Series XIX-14M - Growth (Previous Year 1,000,000) 1,000,000 Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term 10.000 — Plan Series C Institutional - Growth (Previous Year Nil) 1,000,000 Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term 10.000 — Plan Series E - Growth (Previous Year Nil) — Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term — 30.000 Plan Series XVI-90 Days-Growth (Previous Year 3,000,000) 973,236 Sundaram BNP Paribas Global Advantage Fund - Dividend 9.799 — 1,000,000 Units of Rs.10 each of Sundaram BNP Paribas Select 7.971 — Thematic Funds Energy Opportunities Fund - Dividend (Previous Year Nil) — Units of Rs. 10 each of Sundaram Rural India Fund - — 19.450 Dividend (Previous Year 2,000,000) 1,819,851 Units of Rs. 10 each of Sundaram Rural India Fund - 24.568 — Growth (Previous Year Nil) 181,918 Units of Rs. 100 each of Sundaram Select Midcap Fund - 16.760 7.400 Growth (Previous Year 99,848) — Units of Rs. 10 each of TATA Fixed Horizon Fund Series 3- — 10.000 scheme D (13 Months) Growth (Previous Year 1,000,000) 67,913 Units of Rs. 10 each of TATA Growth Fund - Growth 1.670 3.200 (Previous Year 13,118) 3,000,000 Units of Rs. 10 each of TATA Fixed Horizon Fund Series 6 - 30.000 30.000 Scheme C - Growth (Previous Year 3,000,000) 5,000,000 Units of Rs. 10 each of Templeton Fixed Horizon Series 1 - 50.000 50.000 13M Plan - Growth (Previous Year 5,000,000) 1,854,809 Units of Rs. 10 each of Templeton India Income Builder 49.404 — Account- Growth (previos Year Nil) 4,500,000 Units of Rs. 10 each of UTI Fixed Term Income Fund 45.000 45.000 Series II - Growth (Previous Year 4,500,000)
40 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007 Schedule 6 - Investments (Contd.) 1,000,000 Units of Rs. 10 each of UTI Fixed Term Income Fund 10.000 — Series VI Plan V - Growth (Previous Year Nil)
[Aggregate Market Value of Current Quoted Investments 1,504.047 1,180.164 Rs. 1,803.319 million (Previous Year Rs. 1,685.928 million)] Unquoted Investments 100 Equity Shares of Rs. 10 each fully paid in East West 0.000 0.000 Travel & Trade Links Limited (Previous Year 100) 1 Pass through Certificate of Rs. 10,000,000/- each of 5.638 6.842 Old Palasia RMBS Trust Series - I; Trustee - IDBI Bank Limited (Previous Year 1) 5.638 6.842
Investment in Property Immovable Property * 7.463 7.463 3,168.470 2,833.152 * The Company has entered into agreements for sale of some flats against which it has received an advance of Rs. 2.300 million (Previous Year - Rs. 2.300 million)
Aggregate Value of - Quoted Investments Book Value 3,028.078 2,704.195 Market Value 4,505.771 4,492.579
- Unquoted Investments Book Value 132.930 121.494
41 Finolex Cables Limited Schedules forming part of the Balance Sheet
Details of Purchase and Sale of No. of Shares/ Details of Purchase and Sale of No. of Shares/ Shares/ Units during the year Units Shares/ Units during the year Units
ABN AMRO Cash Fund Institutional Plan-Growth 2,410,277 HSBC Cash Fund-Institutional Plus-Growth 27,372,265 ABN AMRO FTP Series 10 Plan E Institutional -Growth 1,000,000 HSBC Equity Fund - Growth 48,441 ABN AMRO Money Plus Regular- Growth 2,510,662 HSBC Flexi Debt Institutional-Growth 4,802,245 AIG India Equity Fund Regular-Dividend 977,995 ICICI Liquid Super Institutional Premium - Growth 106,275,362 AIG India Liquid Fund Retail- Growth 10,468 ICICI Prudential FMP Series 43 - 14 Months AIG India Liquid Fund Super Institutional - Growth 302,073 Plan A - Growth 1,000,000 AIG India Treasury Plus Fund Institutional Growth 3,141,605 ICICI Prudential Institutional Liquid Plan-Super Institutional - Growth 64,632,704 Birla Cash Plus Institutional Premium - Growth 71,654,772 ING Global Real Estate Fund-Dividend 1,000,000 Birla FTP Series AK-Growth 1,000,000 ING Long Term FMP -1 Institutional-Growth 1,000,000 Birla Sun Life Cash Manager-Institutional Plan-Growth 25,703,732 ING Vysya Liquid Plus Fund-Growth 2,363,622 Birla Sun Life Income Fund - Growth 1,687,556 ING Vysya Liquid Super Institutional - Growth 59,713,552 Chola Liquid Institutional Plus-Growth 2,601,592 JM Agri & Infra Fund-Dividend 1,000,000 DBS Chola Liquid Super Institutional-Growth 18,469,839 JM Contra Fund - Dividend 1,000,000 DBS Chola Short Term Floating Rate-Growth 31,389,426 JM FMP Series IX - 15 Months- Institutional-Growth 2,000,000 DSP ML FMP 13 Months Series 1 - Growth 1,000,000 JM High Liquid Super Institutional - Growth 3,090,744 DSP ML Liquidity Fund Institutional - Growth 33,581 JM Small & Midcap Fund-Dividend 977,517 DSP ML Opportunity Fund - Growth 66,261 JP Morgan India Equity Fund-Dividend 977,995 DSP ML Tiger Fund-Growth 142,850 JP Morgan India Liquid Fund -Growth 59,067,095 DWS Fixed Term Fund Series-47 - Growth 1,000,000 JP Morgan India Liquid Plus Fund - Growth 50,017,334 DWS Short Maturity Fund- Growth 7,538,692 Kotak 30 - Dividend 278,327 Fidelity Cash Fund - Super Institutional - Growth 18,791,734 Kotak Bond (Regular) - Growth 2,312,478 Fidelity Cash Fund Institutional Plan-Growth 51,799,445 Kotak FMP 14 Months Series 4 - Growth 1,000,000 Fidelity Equity Fund -Dividend 801,481 Kotak Liquid Institutional Premium - Growth 1,740,958 Fidelity International Opportunities Fund- Dividend 977,995 Kotak Liquid Institutional Premium-Growth 22,403,619 Fidelity Liquid Plus Institutional - Growth 1,000,404 Lotus India Arbitrage Fund- Dividend 2,981,201 Fidelity Short Term Income Institutional - Growth 27,895,924 Lotus India FMP -13 Months-Series IV- Fidelity Special Situations Fund-Growth 1,951,100 Institutional-Growth 1,000,000 Fidelity Special Situations Fund-Dividend 1,955,990 Lotus India FMP 375 Days Series VIII - Growth 1,000,000 Franklin India Prima Fund - Growth 23,590 Lotus India FMP-375 Days- Series I To III-Growth 2,000,000 Grindlays Floating Rate Fund - Liquid - Institutional Lotus India Liquid Fund Institutional-Growth 53,141,236 Plan-B-Growth 1,485,531 Magnum Insta Cash Fund Liquid Floater Plan- HDFC Equity Fund - Growth 47,021 Growth 11,167,978 HDFC FMP 13 Months March 2008- Series VII - Magnum Sector Funds Umbrella Contra-Growth 125,391 Growth 1,000,000 Mirae Asset Liquid Fund - Institutional- Growth 159,529 HDFC FMP 14Months February 2008 (VII) - Mirae Asset Liquid Fund - Super Institutional-Growth 258,754 Wholesale Plan - Growth 1,000,000 Optimix Multimanager Equity Fund-Dividend 487,805 HDFC FMP 370 Days March 2008 (2) - Growth 3,000,000 Principal Cash Management Fund Liquid HDFC Infrastructure Fund- Dividend 1,000,000 Institutional Premium - Growth 12,428,397 HSBC Cash Fund-Institutional Plan-Growth 19,967,676 Principal Income Institutional Plan - Growth 3,704,003
42 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet
Details of Purchase and Sale of No. of Shares/ Details of Purchase and Sale of No. of Shares/ Shares/ Units during the year Units Shares/ Units during the year Units
Reliance Equity - Dividend 1,995,000 Sundaram BNP FTP Plan C Institutional-Growth 1,000,000 Reliance Equity Advantage Fund - Dividend 1,000,000 Sundaram BNP FTP Plan E - Growth 1,000,000 Reliance Equity Fund - Growth 1,990,013 Sundaram BNP Paribas Fixed Term Plan Reliance Floater-Growth 5,980,657 Series XXIX - Growth 3,080,460 Reliance Growth Fund - Growth 21,710 Sundaram BNP Paribas Global Advantage - Reliance Income Fund-Retail Plan-Growth Plan - Dividend 1,000,000 Growth 1,940,081 Sundaram BNP Paribas Rural India Fund-Growth 1,819,851 Reliance Liquid Fund - Treasury Plan - Institutional Sundaram Money Super Institutional Plan - Growth 11,726,377 Option-Growth 4,212,374 Sundaram Rural India - Dividend 2,000,000 Reliance Liquidity - Growth 5,539,705 Sundaram Select Midcap Fund - Growth 29,684 Reliance Liquidity Fund -Growth 6,212,606 Sundaram Select Thematic Energy Opportunities Reliance Natural Resources Fund-Dividend 977,995 Fund-Dividend 1,000,000 Reliance Vision Fund-Growth 26,495 Tata Growth Fund - Growth 62,205 SBI Debt Fund Series 13 Months - Growth 1,000,000 Tata Liquid Manager - Growth 54,675 SBI Infrastructure Fund -Dividend 1,000,000 Templeton India Income Builder Account - Growth 1,854,809 SBI Premier Liquid Fund-Institutional Growth 22,334,344 UTI Fixed Income Interval Fund-Monthly SBI-Liquid Plus Institutional Plan-Growth 5,000,690 Institutional Plan Series-I - Growth 19,753,477 Standard Chartered Classic Equity - Growth 229,942 UTI Fixed Income Interval Fund-Quarterly Standard Chartered Liquid Manager Plus-Growth 522,415 Institutional Plan Series-I - Growth 2,000,000 Standard Chartered FMP Yearly Series 20 UTI Fixed Term Income Fund Series IV - Plan B - Growth 1,000,000 Plan V - Growth 1,000,000 Standard Chartered Liquidity Manager-Growth 9,293,617 UTI Liquid Cash Plan Institutional Plan-Growth 515,767
43 Finolex Cables Limited Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 7 - Current Assets, Loans and Advances (A) Current Assets Interest Accrued on Investments 0.029 0.127
Inventories Stores and Spares 103.403 82.164 Raw Materials 420.199 341.708 Semi finished Goods 737.101 631.299 Finished Goods 1,051.324 833.160 Packing Materials 16.213 15.291 Scrap 20.075 8.719 Goods for Trading 12.443 10.685 2,360.758 1,923.026 Sundry Debtors Unsecured, considered good, unless stated otherwise Outstanding for a period exceeding six months 114.428 135.600 Considered Doubtful 8.573 8.573 Less : Provision 8.573 8.573 114.428 135.600 Other Debts 961.109 652.446 1,075.537 788.046
Cash & Bank Balances Cash on hand 2.028 1.822 Balances with Scheduled Banks in : - Current Accounts 171.658 183.873 - Fixed Deposit Accounts 0.025 0.025 171.683 183.898 Balance with Barclays Bank Plc. in : - Fixed Deposit Account 40.303 425.000 (maximum amount outstanding during the year 214.014 610.720 Rs. 430.100 million, previous year Rs. 425.000 million) 3,650.338 3,321.919 (B) Loans & Advances Unsecured, considered good, unless stated otherwise Balances with Customs, Excise etc. 77.954 49.778 Advances recoverable in cash or in kind or for value to be received 510.516 452.724 Include Rs. 3.500 million (Previous Year Rs. Nil) to associate company, Finolex Infrastructure Ltd. Maximum amount outstanding during the year Rs. 3.500 million (Previous Year Rs. Nil) Advance Income Tax 3,140.641 2,769.241 3,729.111 3,271.743 7,379.449 6,593.662
44 40th Annual Report 2007-08
Schedules forming part of the Balance Sheet (Rs. in million)
2008 2007
Schedule 8 - Current Liabilities and Provisions (A) Current Liabilities Sundry Creditors (Refer Note No. 6) 792.498 543.761 Other Liabilities 812.516 414.664 Deposits from Distributors 3.227 7.127 Deposits from Customers / Others 37.524 29.473 Interest accrued but not due 8.181 5.683 Unclaimed Fixed Deposits 0.040 0.116 Unclaimed Dividend * 9.534 13.957 1,663.520 1,014.781 (B) Provisions Proposed Dividend 229.409 214.115 Tax on Proposed Dividend 38.988 36.388 Provision for Taxation 2,906.237 2,559.171 Provision for Short term compensated absences 27.097 18.000 Provision for Gratuity 0.422 1.300 3,202.153 2,828.974 4,865.673 3,843.755
*The figure does not include any amount due and outstanding to be credited to Investor Education & Protection Fund.
45 Finolex Cables Limited Schedules forming part of the Profit and Loss Account (Rs. in million)
2008 2007
Schedule 9 - Income from operations Sale of Products 15,657.798 11,659.130 Sale Others 30.212 30.989 Sale of Scrap 240.968 169.108 15,928.978 11,859.227 Schedule 10 - Other Income Interest earned on - Investments 27.308 9.463 - Deposits — 0.459 - Others 24.369 11.959 Dividend Received From Long Term Investments 122.636 126.157 From Current Investments 14.610 0.427 Profit on Sale of Assets 28.475 1.547 Profit on Sale of Investments (Net) From Current Investments 86.665 15.826 Miscellaneous Income 37.253 30.204 [Tax deducted at source Rs. 2.959 million (Previous year Rs. 3.757 million)] 341.316 196.042
Schedule 11 - Materials and Manufacturing Expenses Materials Consumed Raw Materials * 10,729.380 7,503.200 Packing Materials 175.926 123.330 Stores & Spares 155.960 83.280 Add/(Less) : Decrease/(Increase) in stock of (335.322) 146.770 Finished, Semi-finished Goods & Scrap Incremental Excise Duty on 14.370 (26.318) Closing Stock of Finished Goods 10,740.314 7,830.262 Manufacturing Expenses (Direct) Processing Charges 1.541 2.212 Power & Fuel 267.520 203.078 269.061 205.290 Less: Captive Consumption for Capitalisation 32.738 8.033 10,976.637 8,027.519
* Includes cost of goods traded in Rs.5.264 million( Previous year Rs. 14.338 million )
46 40th Annual Report 2007-08
Schedules forming part of the Profit and Loss Account (Rs. in million)
2008 2007
Schedule 12 - Personnel Expenses Salaries, Wages, Bonus and Commission etc. 471.288 347.872 Contribution to Provident and other Funds 19.048 3.489 Workmen and Staff Welfare Expenses 3.350 2.219 Recruitment & Training Expenses 3.467 1.741 497.153 355.321 Schedule 13 - Other Expenses Rent, Rates and Taxes 20.200 13.363 Insurance 14.911 17.323 Repairs & Maintenance : Building 8.471 5.153 Machinery 10.067 16.533 Other Assets 16.311 16.075 Directors’ Sitting Fees 1.095 0.488 Auditors’ Remuneration : Audit Fees 2.500 2.050 Tax Audit Fees 0.500 0.500 Other Services 0.800 0.758 Out of Pocket Expenses 0.060 0.048 Travelling and Conveyance 36.253 32.409 Communication Expenses 14.154 11.643 Selling & Distribution Expenses : Sales Incentives 444.623 359.451 Freight Outward (Net) 115.721 95.787 Advertisement, Publicity etc. 68.726 45.553 Miscellaneous Expenses 150.428 128.413 Provision for Doubtful Advances — 2.710 Amounts Written off 0.002 0.008 Loss on Derivative / Forex Transactions (Net) 128.305 1.120 (Refer Note No. 10D, Schedule 15) Loss on Sale of Assets 0.219 0.186
1,033.346 749.571 Schedule 14 - Finance Charges Interest: Fixed Period Loans 87.902 58.738 Others 101.385 89.249 Bank Charges 14.908 11.260
204.195 159.247
47 Finolex Cables Limited Notes forming part of the Accounts
Schedule - 15 1. Significant Accounting Policies i) Accounting Convention: The financial statements are prepared under the historical cost convention, having due regard to fundamental accounting assumptions of going concern, consistency and accrual, in compliance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956. ii) Fixed Assets a) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. Attributable finance costs and expenses of bringing the respective assets to working condition for their intended use are capitalised. b) Intangible Assets :Expenses incurred by the Company on acquisition , development or enhancement of intangible resources are recognised as intangible assets if these are identifiable , Controlled by the Company and it is probable that future economic benefit attributable to the asset would flow to the enterprise. Intangible asset are amortised from the date when they are available for use over the best estimate of their useful life. c) Impairment: The carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated as the higher of net selling price and value in use. Impairment loss is recognised whenever carrying amount exceeds the recoverable amount. d) Borrowing Costs that are directly attributable to the acquisition or production of a qualifying asset are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expense in the period in which they are incurred. iii) Depreciation: Depreciation is provided on straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. iv) Valuation of Investments: Investments classified as long-term investments are stated at cost. Provision for diminution, if any, in the value of long- term investments is made to recognise a decline other than temporary in the fair value of investments. The fair value of a long-term investment is ascertained with reference to its market value, investee’s assets and results and the expected cash flows from the investment as well as the strategic importance to the company. v) Valuation of Inventories: All the inventories are valued at lower of cost or net realisable value. Cost of Raw Materials, Packing Materials, Stores and Spares is determined at weighted average cost. Finished goods and Semi Finished goods are valued at material cost, cost of conversion and production cess wherever applicable. Scrap generated out of manufacturing process is valued at net realisable value except in case of sheets, optic fibre, CFL and Switch divisions where it is accounted for on sale. vi) Foreign Currency Transactions: Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Current Assets and Current Liabilities are translated at the year-end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of Current Assets and Current Liabilities at the end of the year including exchange difference related to purchase of fixed assets from outside India is recognised as income or expense, as the case may be. The company uses foreign exchange forward contracts and options to reduce the cost or to hedge it’s risks associated with foreign currency fluctuations to underlying transactions, for certain firm commitments or forecasted transactions. The difference between the forward rate and the exchange rate at the inception of the forward contract for underlying transaction is recognised as income or expense over the life of the contract. In respect of hedge contracts, for firm commitment or forecasted transactions, the attributable gain or loss is taken to profit and loss account on accrual or on completion of hedge contract. Loss if any, in respect of outstanding derivatives at the balance sheet date is assessed by the management based on the principle of prudence and charged to profit and loss account of that period. vii) Revenue Recognition: a) Sale of goods is recognised on despatches to customers and includes excise duty. b) Dividend income is accounted for when right to receive is established. c) Credits on account of Custom Duty and other benefits, which are due to be received with reasonable certainty, are accrued upon completion of exports. viii) Employee Benefits: a) Defined Contribution Plan : Contributions are made to approved Superannuation and Provident Fund. b) Defined Benefit Plan:
48 40th Annual Report 2007-08
Notes forming part of the Accounts
Company’s liability towards gratuity is determined using the projected unit credit method which consider each period of service as giving rise to an additional unit of benefit entitlement and measures each units separately to build up the final obligation. Past Service Gratuity Liability is computed with reference to the service put in by each employee till the date of valuation as also the projected terminal salary at the time of exit. Actuarial gain or losses are recognised immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future Cash Flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation. c) Short Term Compensated Absences: Liability on account of encashment of leave to employee is considered as short term compensated expense provided on actual. ix) Taxation : Income Tax expense comprises current tax and deferred tax charge or credit. Deferred tax for timing difference between the book and tax profit for the year is accounted using tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date. Deferred Tax assets arising from the timing difference are recognised to the extent that there is virtual certainty that sufficient future taxable income will be available. x) Provisions and Contingent Liabilities: a) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation. b) Contingent liabilities are disclosed by way of note to the financial statements, after careful evaluation by the management of the facts and legal aspects of the matter involved. 2. Contingent Liabilities: a) Liability on account of Sales Bills discounted with Bank Rs. 749.000 million (Previous Year Rs. 308.277 million). b) Disputed demands in appeal towards excise Rs. 387.022 million (Previous year Rs. 384.640 million), customs Rs. 13.427 million (Previous year 13.427 million) and sales tax Rs. 51.760 million (Previous year Rs. 49.753 million) c) i) Disputed Income Tax demands and matters in appellate proceedings Rs. 426.650 million (Excluding consequential interest or penalty) (Previous year Rs. 274.800 million). ii) Appeals preferred by Income Tax Department against Appellate decisions in favour of the Company, wherein, should the ultimate decision be unfavourable to the Company, the liability is estimated to be Rs. 498.560 million (Previous year Rs. 487.225 million) d) Guarantees given by Company’s Bankers on behalf of the Company, towards performance and other matters, amounting to Rs. 679.725 million (Previous year Rs. 849.100 million), are secured by hypothecation of Stock in trade, Book Debts, Stores and Spares etc. e) The Company has imported capital goods under the Export Promotion Capital Goods (EPCG) scheme, of the Government of India , at concessional rates of duty on an understanding to fulfil quantified exports against which future obligation aggregates to Rs. 798.170 million (Previous year Rs. 1081.060 million) over a period of next eight years 3. Estimated amount of contracts remaining to be executed on capital account (net of advances paid), not provided for Rs. 572.246 million (Previous year. Rs. 534.823 million). 4. Capital Advances grouped with capital work-in-progress include an amount of Rs. 2.291 million (Previous year Rs. 2.291 million) for Leased Land, possession of which has been taken, subject to fulfilment of certain conditions, as per agreement with Maharashtra Industrial Development Corporation 5. Taxation: Deferred Tax: The break-up of deferred tax assets and liabilities into major components at the year end is as below. (Rs. in million) Particulars of timing difference Liabilities Assets Depreciation 231.541 NIL (274.867) (NIL) Impairment Loss — 56.812 (—) (66.418) Total 231.541 56.812 (274.867) (66.418) Net Deferred Tax Liability 174.729 (208.449)
49 Finolex Cables Limited Notes forming part of the Accounts
Current Tax: Provided in accordance with the provisions of the Income Tax Act 1961.
6. Sundry Creditors A) Outstanding to creditors other than Micro, Small and Medium Enterprise Rs. 792.238 million (Interest Paid/Payable is Rs. Nil) B) Outstanding to Micro, Small and Medium Enterprise : Rs. 0.260 million The Company is in the process of compiling information from its suppliers regarding their status under Micro, Small and Medium Enterprise Development Act, 2006 and hence disclosure, if any, of the amounts unpaid as at the year end together with the interest paid / payable as required has been given to the extent of information available. Rs. million a) Principal amount due 0.167 b) Interest paid under MSMED Act, 2006 Nil c) Interest due 0.065 d) Interest accrued and due Nil e) Interest due and payable till actual payment 0.065
7. Based on the review as on 1stApril, 2004 the Company has accounted for the impairment loss on the assets of “Optic Fibre” cash generating unit forming part of Communication Cable segment. Accordingly the impairment loss of Rs. 650.595 million and related deferred tax effect of Rs.121.877 million has been adjusted against the General Reserve in accordance with transitional provision of AS 28 as at 31st March, 2005. On review there is no indication of further increase or reversal in the impairment loss as at 31st March, 2008.
8. Investment in Joint Venture 1. The name of the joint venture company : Finolex J-Power Systems Private Limited 2. Ownership interest : 49% 3. Country of Incorporation : India On 13th December, 2007, the Company entered into a joint venture agreement with J- Power Systems Corporation of Japan, to offer complete turnkey solutions in extra high voltage (EHV) cable systems in India and abroad. Accordingly, Rs. 0.049 million have been invested by way of share capital and Rs. 3.5 million have been paid in advance against share application money. Share Capital commitment at present is Rs. 192.451 million (net of the above)
9. Related Party Transactions: Disclosures as required by Accounting Standard 18 “Related Party Disclosures” are given below: a) List of Related Parties : Associate Companies Finolex Industries Limited Finolex Proprietary Limited Corrugated Box Industries (India) Private Limited Plastro Plasson Industries (India) Limited Finolex Infrastructure Limited Joint Venture Finolex J-Power Systems Private Limited b) Key management Personnel and Relatives Key Management Personnel 1. Mr. P. P. Chhabria - Chairman 2. Mr. D. K. Chhabria - Managing Director 3. Mr. V. K. Chhabria - Deputy Managing Director 4. Mr. M. L. Jain - Asst. Managing Director and Chief Operating Officer 5. Mr. P. B. Parasnis - Asst. Managing Director and Chief Financial Officer. Relatives Mr. K. P. Chhabria - Brother of Mr. P.P. Chhabria, and Father of Mr. D. K. Chhabria and Mr. V. K. Chhabria
50 40th Annual Report 2007-08
Notes forming part of the Accounts
c) Transactions with Related Parties -Major Parties (Rs in million)
Nature of Transactions Associate Key Management Companies/ Personnel and Relatives Joint Venture
Sales, Services and Other Income 1 Sale of goods Finolex Industries Limited 51.413 — (8.998 ) (—) Others 1.342 — (1.406 ) (—) 2 Sale of other material Finolex Industries Limited 8.844 — (1.305) (—) 3 Recoveries Finolex Industries Limited 0.948 — (0.360) (—) 4 Sale of Land Finolex Industries Limited 30.833 (—) (—) 5 Dividend Received Finolex Industries Limited 120.578 — (120.578) (—) 6 Reimbursement of Expenses Received Finolex Industries limited 0.302 — (0.656) (—) Purchase of Material / Assets 1 Purchase of Raw Material and Components Finolex Industries Limited 25.809 — (50.152) (—) Others 0.041 — (—) (—) 2 Purchase of Fixed Assets Finolex Industries Limited 0.347 — (1.397) (—) 3 Purchase of Investments Finolex J-Power Systems Private Limited 0.049 — (—) (—) Finolex Infrastructure Limited 0.250 — (—) (—) Expenses 1 Managerial Remuneration — 90.010 (—) (60.960) 2 Services Finolex Proprietary Limited 6.183 — (5.604) (—)
51 Finolex Cables Limited Notes forming part of the Accounts
Nature of Transactions Associate Key Management Companies/ Personnel and Relatives Joint Venture
3 Rent Corrugated Box Industries (India) 2.991 — Pvt. Limited (2.100) (—) Mr. K.P. Chhabria — 0.528 (—) (0.528) 4 Reimbursement of Expenses Paid Finolex Industries limited — — (10.579) (—) Finolex Proprietary Limited 0.498 — (0.511) (—) 5 Dividend Paid Finolex Industries limited 31.062 — (26.624) (—) Amount Outstanding 1 Creditors Finolex Industries Limited 4.808 —- (5.839) (—) Others — — (0.088) (—) 2 Debtors Finolex Industries Limited 25.495 — (4.126) (—) Others 1.917 — (2.155) (—) 3 Loans and Advances and Deposits Corrugated Box Industries (India) 0.925 — Pvt. Limited (2.275) (—) Mr. K.P. Chhabria — 5.000 (—) (5.000)
Finolex Infrastructure Limited 3.500 — (—) (—)
4 Finolex J-Power Systems private 3.500 — Limited – Share Application Money (—) (—)
5 Others Refund of Deposit Corrugated Box Industries (India) 1.350 — Pvt. Limited (1.050) (—)
Interest Receivable Finolex Infrastructure Limited 0.032 — (—) (—)
52 40th Annual Report 2007-08
Notes forming part of the Accounts
10 A. Quantitative information of derivative instruments outstanding as at the Balance Sheet date:
(Rs. in million) Category Amount Amount
Year ended Year ended 31.03.2008 31.03.2007
Foreign Exchange Forwards/ Options 9,214.000 — Interest Rate Swaps 4,868.000 2,461.400 Currency Swaps 2,498.000 1,376.025
B. The Company has entered into derivative transactions with an objective to hedge the financial risks associated with its business viz. foreign exchange and interest rate.
C. The Company has not hedged the following foreign currency exposures : (i) Borrowings grouped under secured loans equivalent to Rs. 999.250 Million (Previous year Rs. 1,476.875 million) and under unsecured loans equivalent to Rs. 739.657 million. (Previous year Rs. 652.678 million) (ii) Creditors for imports equivalent to Rs. 39.393 million (Previous year Rs. 45.691 million) (iii) Receivables equivalent to Rs. 171.991 million. (Previous year Rs. 195.630 million)
D. Loss on Derivative / Forex transactions includes Rs. 92.000 million loss on certain outstanding derivatives at the Balance Sheet date assessed by the management based on the principle of prudence. In respect of other contracts, since they are in the nature of effective hedge, profit / loss, if any, has not been ascertained separtely.
53 Finolex Cables Limited Notes forming part of the Accounts
(Rs. in million)
2008 2007
11. Managerial Remuneration a) Computation of Net Profit in accordance with Sec.198 of the Companies Act 1956. Profit as per Profit & Loss Account (Before Tax) 1,202.981 970.307 Add: Directors’ Remuneration 30.580 21.180 Directors’ Commission 60.780 40.580 Directors’ Sitting Fees 1.095 0.488 Depreciation 264.671 264.288
357.126 326.536 1,560.107 1,296.843 Less: Depreciation u/s 350 of the Companies Act, 1956 264.671 264.288 Profit on Sale of Assets (Net) 28.256 1.361 Profit / (Loss) on Sale of 86.665 15.826 Investments (Net) 379.592 281.475 Profits available for Distribution 1,180.515 1,015.368 Commission as decided by the Board : Chairman, Managing Director and Deputy Managing Director 59.430 39.780 Non Whole-time Directors 1.350 0.800 60.780 40.580 b) Details of payments and provisions on account of remuneration to Chairman, Managing Director, Deputy Managing Director, Asst. Managing Directors and Non Whole-time Directors included in the Profit and Loss Account : i) Salary 11.574 8.558 ii) Commission to: Chairman, Managing Director & Deputy Managing Director. 59.430 39.780 Non Whole-time Directors 1.350 0.800
60.780 40.580 iii) Contribution to Funds 4.627 2.333 iv) Other Perquisites 14.379 10.289
Note: Contribution to Gratuity Fund is made on global valuation and hence is not precisely ascertained.
54 40th Annual Report 2007-08
Notes forming part of the Accounts
12. Capacities and Production
Class of Goods Unit Installed Production Installed Production Capacity (Net) Capacity 2006-2007 31.3.2008 2007-2008 31.3.2007
1 Electrical Cables TCKM 1,030.00 874.29 # 1,030.00 702.96 # 2 Telecommunication Cables Optic Fibre Cables KM 48,000.00 38,264.91 48,000.00 20,547.44 Other Telecommunication Cables TCKM 10,612.00 1,766.14 10,612.00 862.53 3 PVC Sheets and Accessories M T 2,100.00 1,617.24 2,100.00 1,570.05 4 Fibre KM 600,000.00 381,193.82 * 600,000.00 414,028.00 * 5 Cross Linked Polyethylene and other M T 2,500.00 — 2,500.00 — Compounds ( used for captive consumption) 6 Polycoated FRP Rod KM 1,500.00 — 1,500.00 — 7 Continuous Cast Copper Rods M T 60,000.00 24,642.11@ 60,000.00 16,653.79 @
Installed capacities are certified by the Managing Director and relied upon by the Auditors. # Equivalent tonnage 27,757 MT (Previous Year 23,211 MT) * Includes captive consumption of 456,982 Kms (Previous Year 170,762 Kms) @ captive consumption of 16,898 MT( Previous Year 13,207 MT) 5,000 TCKM of Other Communication Cables Capacity is interchangeable with 332 TCKM of Electrical Cable capacity.
13. Stock & Turnover (Rs. in million)
Class of Goods Unit Opening Stock Closing Stock Turnover Quantity Value Quantity Value Quantity # Value
1 Electrical Cables TCKM 49.63 514.482 70.12 684.298 853.81 9,339.225 (84.01) (617.837) (49.63) (514.482) (737.34) (8,132.680) 2 Communication Cables Optic Fibre Cables KM 1,684.92 29.889 2920.81 50.155 37,029.00 979.849 (6,262.00) (79.664) (1,684.92) (29.889) (25,124.52) (552.020) 3 Other communication TCKM 188.08 114.283 114.25 98.864 1,839.98 2,092.177 cables (227.46) (149.636) (188.08) (114.283) (901.91) (1,216.052) 4 PVC Sheets and MT 273.72 14.196 373.45 14.681 1,517.51 157.011 Accessories (257.53) (16.266) (273.72) (14.196) (1,553.86) (148.896) 5 Fibre KM 251,375.04 110.091 88,360.00 32.443 544,209.00 ** 32.776 (74,534.23) (37.932) (251,375.04) (110.091) (237,187.19) ** (26.732) 6 Continuous Cast MT 202.28 73.933 283.41 117.084 24,560.98 $ 2,869.468 Copper Rod (614.91) (209.107) (202.28) (73.933) (17,066.42) $ (1,526.408) 7 Others *** 86.377 86.242 458.472 (—) (86.377) (256.439) 8 Less - Excise Duty 2,091.311 (1,529.016) 943.251 1,083.767 13,837.667 (1,110.442) (943.251) (10,330.211) # Includes captive consumption ** Includes captive consumption of 456,982 Kms (Previous Year 170,762 Kms.) $ Includes captive consumption of 16,898 MT (Previous Year 13,207 MT) *** Includes goods traded in Rs. 11.203 million (Previous Year Rs. 30.514 million.)
55 Finolex Cables Limited Notes forming part of the Accounts
(Rs. in million) 2008 2007 14. Raw Materials Consumed: QTY (MT) Value (Rs. million) QTY (MT) Value Rs. million Copper 25,542 8,565.742 17,506 5,937.937 PVC 14,217 958.055 11,348 659.224 Polythene 4,594 372.028 2,296 152.885 Preform 9 64.065 10 79.061 Others 769.490 674.093 TOTAL 10,729.380 # 7,503.200 # # Includes Cost of Goods Traded Rs. 5.264 million (Previous Year Rs. 14.338 million). 15. CIF Value of Imports: Raw Material 1,281.099 886.120 Spares & Components 29.748 14.517 Capital Goods 255.123 269.133 1,565.970 1,169.770 16. Consumption of Raw Materials : Imported 9.92% 1,064.854 13.13% 984.806 Indigenous 90.08% 9,664.526 86.87% 6,518.394 10,729.380 7,503.200 17. Consumption of Stores & Spares : Imported 6.72% 10.477 8.38% 6.976 Indigenous 93.28% 145.483 91.62% 76.304 155.960 83.280 18. Expenditure in Foreign Currency : i) Travelling 2.835 2.764 ii) Interest 15.844 3.414 iii) Professional Fees 4.798 11.977 iv) Export Sales Commission 10.872 11.815 v) Bank Charges 0.984 — vi) Others 1.547 4.991 36.880 34.961 19. Earnings in Foreign Currency : FOB Value of Exports 779.118 672.532 Interest 16.258 0.127 20. Dividends Remitted in Foreign Currency : Number of Share holders 1 1 Number of Shares held # 6,143,425 1,232,385 Year to which Dividend relates Year ended 31/03/07 Year ended 31/03/06 Amount remitted (Net of Tax deducted at source) Rs. in million 8.601 7.394 # During the previous year the Company had subdivided the Rs. 10/- share into 5 shares of Rs. 2/- each. Consequently 30,587,869 shares of Rs. 10/- each have become 152,939,345 shares of Rs. 2/- each w.e.f 16th January, 2007. 21. Segment Reporting : The Business segment has been considered as a primary segment for disclosure. The categories included in each of the reported business segment are as follows: i) Electrical Cables ii) Communication Cables iii) Copper Rods iv) Others The above business segments have been identified considering i) The nature of the product/services ii) The related risks and returns iii) The internal financial reporting systems Revenue and expenses have been accounted for based on their relationship to the operating activities of the segment. Revenues and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocable Expenses”. Assets and Liabilities which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocable Assets/Liabilities”
56 40th Annual Report 2007-08
Notes forming part of the Accounts
21. A ) Primary Segment Information for the year ended 31st March, 2008 (Rs. in million) Period Electrical Communication Copper Others Other than Elimination Total Cables Cables Rod Segments
REVENUE External Current Year 9,570.828 3,103.368 2,920.449 334.333 - - 15,928.978 Previous Year 8,268.172 1,820.579 1,529.669 240.807 - - 11,859.227 Inter - segment Current Year - - 5,709.013 - - (5,709.013) - (Net of Excise) Previous Year - - 4,677.626 - - (4,677.626) - Less : Excise Duty Current Year 1,284.198 364.071 400.222 42.820 - - 2,091.311 Previous Year 1,090.337 198.698 214.295 25.686 - - 1,529.016 Total Revenue Current Year 8,286.630 2,739.297 8,229.240 291.513 - (5,709.013) 13,837.667 Previous Year 7,177.835 1,621.881 5,993.000 215.121 - (4,677.626) 10,330.211
RESULT Segment Result Current Year 1,244.419 183.500 143.034 (55.738) - - 1,515.215 Previous Year 1,081.357 29.624 79.767 23.413 - - 1,214.161 Other Unallocable Current Year ----(122.948) - (122.948) income net of Previous Year - - - - (95.867) - (95.867) expenditure Less Interest Expenses Current Year ------189.286 Previous Year ------147.987 Profit before Current Year ------1,202.981 Taxation Previous Year ------970.307 Less Provision for Current Year ------313.740 Taxation Previous Year ------280.377 Profit after Tax Current Year ------889.241 Previous Year ------689.930
OTHER INFORMATION Segment Assets Current Year 3,589.685 2,726.048 490.149 639.742 6,886.019 - 14,331.643 Previous Year 2,513.391 2,555.959 421.249 553.693 6,461.955 - 12,506.247 Segment Liabilities Current Year 688.926 170.200 361.046 98.356 3,547.145 - 4,865.673 Previous Year 350.225 131.305 300.278 101.403 2,960.544 - 3,843.755 Capital Expenditure Current Year 743.558 120.140 0.000 63.718 132.752 - 1,060.168 Previous Year 710.773 23.545 0.649 134.456 13.892 - 883.315 Depreciation Current Year 65.913 147.934 19.205 25.735 5.884 - 264.671 Previous Year 77.449 145.222 19.150 17.299 5.168 - 264.288 20. B) Secondary Segment Information (by Geographical Segment) (Rs. in million) Particulars Year ended Year ended 31.03.2008 31.03.2007 REVENUE (Net of Excise) Exports 790.415 682.149 Domestic 13,047.252 9,648.062 Total 13,837.667 10,330.211 Debtors Exports 171.991 195.630 Domestic 903.546 592.416 Total 1,075.537 788.046
Note : Assets of the Company except sundry debtors are not identified with the geographical segment as these are used interchangeably and are located in India.
57 Finolex Cables Limited Notes forming part of the Accounts
22. Disclosure as per Accounting Standard 15 (Revised 2005) In view of the revised Accounting Standard on Employee Benefits AS15 (Revised 2005), additional charge of Rs. 6.371 million upto 31st March 2007, has been adjusted against opening balance of revenue reserves in consonance with transitional provisions of AS 15 (Revised 2005). The following table sets out the status of the Gratuity Plan as required under AS 15 (Revised 2005).
Statement Showing changes in Present Value of obligations as on 31st March, 2008
(Rs. in million) Present Value of obligations at the beginning of the Year 41.799 Interest Cost 3.147 Current Service Cost 3.454 Benefits Paid 3.670 Actuarial(gain)/Loss on obligations 4.382 P.V. of obligations as at end of the year 49.115
Table showing changes in the fair value of plan assets as on 31st March, 2008
Fair Value of plan Assets at the beginning of the year 43.235 Expected return on Plan assets 4.145 Contributions 5.507 Benefits Paid 3.670 Actuarial Gain/ (Loss) on Plan assets (0.525) Fair value of plan Assets at the end of Year 48.692 Funded Status (0.422)
Actuarial Gain/Loss recognised as on 31st March, 2008
Actuarial gain/(Loss) for the year-obligation (4.382) Actuarial gain/(Loss) for the year-plan assets (0.525) Total(gain)/Loss For the year 4.013 Actuarial (gain)/Loss recognised in the year 4.013
Amounts to be recognised in the Balance Sheet as on 31st March, 2008
Present Value of obligations as at the end of the year 49.115 Fair value of plan assets as at the end of the year 48.692 Funded Status (0.422) Net Asset/(Liability) recognised in balance sheet (0.422)
Expenses Recognised in statement of Profit & Loss Account
Current Service Cost 3.454 Interest Cost 3.147 Expected return on plan assets 4.045 Net Actuarial(gain)/Loss recognised in the year 4.907 Expenses recognised in statement of Profit & Loss 7.363
58 40th Annual Report 2007-08
Notes forming part of the Accounts
Table showing fair value of plan assets as on 31st March, 2008
Fair Value of plan assets at beginning of the year 43.234 Actual return on plan assets 3.620 Contributions 5.507 Benefits Paid 3.669 Fair Value of plan assets at the end of the year 48.692 Funded Status (0.422) Excess of actual over estimated return on Plan Assets (0.526)
Actuarial Assumptions: Other than Copper Rod Division Rod Division Discounted Rate 8% 8.25% Salary Escalation 7 % 5.50%
23. Figures in respect of the previous year have been regrouped or rearranged wherever necessary to confirm to current year’s classification.
59 Finolex Cables Limited Notes forming part of the Accounts
24. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE (Information pursuant to Part IV of Schedule VI to the Companies Act, 1956)
I. Registration Details Registration No. 1 6 5 3 1
Date Month Year State Code Balance Sheet Date 3 1 0 3 2 0 0 8 1 1
II. Capital raised during the year (Amount in Rs.thousands) Public Issue Rights Issue NIL NIL
Bonus Issue Private Placement NIL NIL
III. Position of Mobilisation and Deployment of Funds (Amount in Rs.thousands) Total Liabilities Total Assets 9465970 9465970 Sources of Funds Paid-up Capital Reserves and Surplus 305879 6109291 Deferred Tax Credit (Net) 174729 Secured Loans Unsecured Loans 2112621 763450
Application of Funds Net Fixed Assets Investments 3783724 3168470 Net Current Assets Miscellaneous Expenditure 2513776 NIL Accumulated Losses NIL
IV. Performance of the Company (Amount in Rs.thousands) Turnover Total Expenditure 14178983 12976002 +/ - Profit /Loss Before Tax +/ - Profit /Loss After Tax + 1202981 + 889241 Earnings Per Share in Rs. Dividend Rate % (For Face Value of Rs 2/- each) Rs.5 . 81 75
60 40th Annual Report 2007-08
Notes forming part of the Accounts
V. Generic Names of Three Principal Products / Services of the Company (As per Monetary Terms) Item Code No. (ITC Code) Product Description 85444919 JELLY FILLED TELEPHONE CABLES
Item Code No. (ITC Code) Product Description
8544 ELECTRICAL CABLES - LIGHT DUTY
Item Code No. (ITC Code) Product Description 8544 ELECTRICAL CABLES - HEAVY DUTY
Item Code No. (ITC Code) Product Description 900110 FIBRE OPTIC CABLE
Item Code No. (ITC Code) Product Description 854420 CO- AXIAL CABLES
Item Code No. (ITC Code) Product Description
854459 LAN CABLES
Item Code No. (ITC Code) Product Description 3920 PVC SHEETS
Item Code No. (ITC Code) Product Description 7407 . 10 CONTINUOUS CAST COPPER RODS
As per our report of even date P.P. Chhabria D.K. Chhabria Chairman Managing Director For B. K. KHARE & COMPANY Dr. H.S. Vachha V.K. Chhabria Chartered Accountants Sanjay K. Asher Dy. Managing Director P.G. Pawar M.L. Jain U.B. Joshi R.G.D’Silva P.R. Rathi Asst. Managing Director and Partner Company Secretary & A.J. Engineer Chief Operating Officer Membership No. 44097 Vice President (Legal) P.B. Parasnis Asst. Managing Director and Pune: 28th April, 2008 Pune: 28th April, 2008 Chief Financial Officer
61 Finolex Cables Limited
CORPORATE GOVERNANCE
1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE : The Company’s philosophy on Corporate Governance envisages attainment of transparency, accountability and propriety in the total functioning of the Company and in the conduct of its business internally and externally, including its interactions with employees, shareholders, deposit holders, creditors, consumers and institutional and other lenders. The Company believes that its systems and actions must be dovetailed for enhancing the performance and shareholder value in the long term. The Company has adopted certain practices to achieve good corporate governance; the salient ones being fairness and transparency in dealings, accountability for performance, effective management control by the Board, constitution of Board Committees as a part of internal control system, fair representation of professional, qualified, non-executive and independent Directors on Board, adequate and timely disclosure of financial and other information and prompt discharge of statutory obligations and duties. The Board has laid down a Code of Conduct for all Board members and senior management of the Company. The Code of Conduct has been hosted on the website (http://www.finolex.com) of the Company.
2. BOARD OF DIRECTORS: 2.1 Constitution of the Board : • The composition of the Board of Directors with reference to number of Executive and Non-Executive Directors, meets the requirement of Code of Corporate Governance. • Out of Thirteen Directors, there are three promoter executive Directors namely Mr. P.P. Chhabria, Chairman, Mr. D.K. Chhabria, Managing Director and Mr. V.K. Chhabria, Deputy Managing Director and two non-promoter executive Directors Mr. M.L. Jain, Assistant Managing Director and Chief Operating Officer and Mr. P.B. Parasnis, Assistant Managing Director and Chief Financial Officer. • There are eight independent non-executive Directors, namely Dr. H.S. Vachha, Mr. B.G. Deshmukh, Mr. Atul C. Choksey, Mr. Sanjay K. Asher, Mr. P.G. Pawar, Mr. S.B. (Ravi) Pandit, Mr. P.R. Rathi and Mr. A. J. Engineer (appointed on 23rd October 2007). Dr. N.A. Kalyani an independent non-executive Director resigned from the Board wef 9th February 2008 for health reasons.
2.2 Meetings : Board meetings are held at least four times during the year coinciding with the presentation of each quarterly result. During the last Financial Year four Board meetings were held i.e. on 10th May 2007, 20th July 2007, 23rd October 2007 and 31st January 2008. The meetings were attended as follows: • Mr. P. P. Chhabria, Mr. D.K. Chhabria, Mr. V. K. Chhabria, Mr. M. L. Jain, Mr. P.B. Parasnis and Dr. H. S. Vachha attended all the four meetings. • Mr. B.G. Deshmukh, Mr. P.G. Pawar and Mr. P.R. Rathi attended three meetings. • Mr. Sanjay K. Asher, Mr. S.B. (Ravi) Pandit and Mr. A.J. Engineer (appointed w.e.f. 23rd October 2007) attended two meetings. • Mr. A.C. Choksey attended one meeting and Dr. N.A. Kalyani, who resigned from the Board wef 9th February 2008 for health reasons, did not attend any of the meetings. All Directors attended the last Annual General Meeting held on 29th June 2007 except for Mr. A.C. Choksey, Mr. S.B. (Ravi) Pandit and Dr. N. A. Kalyani.
2.3 Remuneration to Executive Directors: (Amount in Rupees) Particulars Chairman Managing Deputy Managing Asst. Managing Asst. Managing Director Director Director and Chief Director and Chief Operating Officer Financial Officer P.P.Chhabria D.K.Chhabria V.K.Chhabria M.L. Jain P.B. Parasnis Salary and Allowances 3,300,000 3,300,000 1,890,000 1,661,000 1,423,000 Contribution to Provident 1,386,000 1,386,000 823,800 547,020 484,606 & Superannuation Funds Other perquisites 3,297,418 3,297,888 1,887,710 1,529,670 1,365,813 Commission / Incentive 23,100,000 23,100,000 13,230,000 1,500,000 1,500,000 Total 31,083,418 31,083,888 17,831,510 5,237,690 4,773,419
62 40th Annual Report 2007-08
Notes: 1) There is no scheme of ‘Employee Stock Options’ during the year. 2) The above does not include contributions to group superannuation and gratuity funds as the contributions/benefits are on a group basis. 3) In all the cases, the service contract is for a period of five years from the date of appointment. Notice period / severance fees applicable are 180 days for Mr. P.P. Chhabria, Mr. D.K. Chhabria and Mr. V.K. Chhabria and 90 days and 60 days in case of Mr. M.L. Jain and Mr. P.B. Parasnis respectively. 4) Performance criteria is a value judgement made by the Remuneration Committee which considers and recommends payment of commission / incentive based on the performance of the Company and contemporary practices in Industry. The recommendations of the Committee are further considered by the Board and a collective decision taken without participation of interested Directors.
2.4 Remuneration to Non-Executive Directors:
Name of Non- Sitting Fees Commission Total Shareholdings (in Nos. of Shares) of Non- Executive Director (Rs.) (Rs.) (Rs.) Executive Directors in the Company Dr. H.S. Vachha 195,000 150,000 345,000 — Mr. B.G. Deshmukh 60,000 150,000 210,000 — Mr. Atul C. Choksey 15,000 150,000 165,000 17,750 Mr. Sanjay K. Asher 300,000 150,000 450,000 12,395 Mr. P.G. Pawar 210,000 150,000 360,000 — Dr. N. A. Kalyani — 150,000 150,000 — Mr. S. B. (Ravi) Pandit 30,000 150,000 180,000 — Mr. P.R. Rathi 255,000 150,000 405,000 — Mr. A.J. Engineer 30,000 150,000 180,000 — Total 1,095,000 1,350,000 2,445,000 30,145
(a) Sitting fees are uniform for meetings of the Board / Committee thereof and are paid to each Non-Executive Director for attending Board / Committee meetings. (b) Commission not exceeding one percent of the net profits of the Company or Rupees Fifteen Lacs, which ever is less and as may be determined by the Board each financial year is paid to non-executive Directors. Such commission has been shared equally amongst such Directors. The sitting fees was approved by the shareholders at the Annual General Meeting held on 27th June 2006 and payment of commission to non-executive Directors upto maximum of Rs.15 lacs was approved by the shareholders at the Annual General Meeting held on 29th June 2007. 2.5 The details of other Directorships and Committee memberships:
No. of Company Directorships Committee Positions held Public Companies Other Companies Mr. P.P. Chhabria 03 18 02 (Chairman of two) Dr. H.S. Vachha 04 01 05 (Chairman of three) Mr. B.G. Deshmukh 02 02 01 (Chairman of one) Mr. Atul C. Choksey 10 03 — Mr. Sanjay K. Asher 16* 19 08 (Chairman of three) Mr. P.G. Pawar 06 11 01 Mr. D.K. Chhabria 01 08 — Mr. V.K. Chhabria — — — Mr. M.L. Jain — 01 — Mr. P.B. Parasnis 03 01 02 Mr. S.B. (Ravi) Pandit 03 07 01 Mr. P.R. Rathi 11 06 04 Mr. A.J. Engineer 06 — 01 (Chairman of one)
* Alternate Directorship in one company
63 Finolex Cables Limited
2.6 Information placed before the Board of Directors:
The information placed before the Board of Directors is as follows: a) Annual operating plans and budgets, revisions and updates, if any. b) Capital budgets with revisions and updates, if any. c) Quarterly (including periodic) results of the Company and its operating divisions / business segments. d) Minutes of meetings of Audit and other Committees of the Board. e) The information on recruitment and remuneration of senior officers below the Board level, including appointment or cessation of office by Chief Financial Officer and Company Secretary. f ) Show cause, demand and prosecution notices, which are materially important. g) Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems. h) Details of any joint venture or collaboration agreement. i) Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property. j) Industrial relationship issues of material nature and proposed remedial actions. All significant developments in Human Resources / Industrial Relations. k) Transactions of material nature of buying and selling of investments, or undertaking / assets, which are not in normal course of business. l) Quarterly reports on foreign exchange exposure and the steps taken by the Management to manage the risks of adverse exchange rate movement, if material. m) Status on compliance with all regulatory, statutory and material contractual requirements. n) Details of delegation of authorities to executives and Powers of Attorney issued.
3. AUDIT COMMITTEE: The Audit Committee which was formed in February 1997, presently comprises of three independent non-executive Directors, namely Dr. H.S. Vachha (Chairman of the Committee), Mr. Sanjay K. Asher and Mr. P.R. Rathi (Alternate Chairman). Dr. N. A. Kalyani, resigned from the Board and consequently the Audit Committee with effect from 9th February 2008 for health reasons. The brief terms of reference of the Audit Committee include - 1) Review of the Company’s financial reporting process and financial Statements, 2) Review of accounting and financial policies and practices, 3) Review of internal control and internal audit systems, 4) Discussion with Internal Auditors and Statutory Auditors on any significant findings and follow-up thereon, 5) Reviewing the Company’s financial and risk management policies, 6) To investigate any activity within its terms of reference, 7) To seek information from any employee, 8) To obtain outside legal or other professional advice, 9) To secure attendance of outsiders with relevant expertise, if it considers necessary, 10) Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible, 11) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees, 12) Approval of payment to statutory auditors for any other services rendered by the statutory auditors, 13) Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a) Matters required to be included in the Directors’ Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956, b) Changes, if any, in accounting polices and practices and reasons for the same, c) Major accounting entries involving estimates based on the exercise of judgment by management, d) Significant adjustments made in the financial statements arising out of audit findings, e) Compliance with listing and other legal requirements relating to financial statements,
64 40th Annual Report 2007-08
f) Disclosure of any related party transactions, g) Qualifications, if any, in the draft audit report, 14) Reviewing, with the management, the quarterly financial statements before submission to the Board for approval, 15) Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems, 16) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit, 17) Discussion with internal auditors any significant findings and follow up there on, 18) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board, 19) Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern, 20) To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors, 21) The Audit Committee shall mandatorily review the following information: a) Management discussion and analysis of financial condition and results of operations, b) Statement of significant related party transactions (as defined by the audit committee), c) Management letters / letters of internal control weaknesses issued by the statutory auditors, d) Internal audit reports relating to internal control weaknesses, and e) The appointment, removal and terms of remuneration of the Chief internal auditor. The Committee has met nine times during the financial year ended 31st March 2008, as against the minimum requirement of four meetings i.e. on 21st April 2007, 10th May 2007, 20th July 2007, 30th August 2007, 18th September 2007, 23rd October 2007, 18th December 2007, 31st January 2008 and 26th February 2008. Dr. H.S. Vachha attended all the meetings, Mr. Sanjay K. Asher attended seven meetings, Mr. P.R. Rathi (appointed on 10th May 2007) attended six meetings and Dr. N.A. Kalyani who resigned from the Board and consequently from the Audit Committee with effect from 9th February 2008 for reasons of health did not attend any of the meetings. The date of the meeting of the Committee held for considering finalisation of accounts for the year ended 31st March 2008 was 28th April 2008.
4. REMUNERATION COMMITTEE: In view of the importance given by the Company to good corporate governance and though it is a non-mandatory requirement, a Remuneration Committee was constituted by the Board of Directors at its meeting held on 21st October 2000. The Remuneration Committee has been set up to determine on behalf of the Board and on behalf of the shareholders with agreed terms of reference, the Company’s policy on specific remuneration packages for Executive Directors including pension rights and any compensation payment. The Committee comprises four independent and non-executive Directors namely Mr. B.G. Deshmukh (Chairman of the Committee), Mr. Sanjay K. Asher, Mr. P.G. Pawar. and Mr. P.R. Rathi. The Committee has met on 10th May 2007 and 31st January 2008 during the financial year ended 31st March 2008. Mr. Sanjay K. Asher and Mr. P.G. Pawar attended all the meetings and Mr. B.G. Deshmukh attended the meeting held on 10th May 2007.
5. SHAREHOLDERS’ COMMITTEE: The Share Transfer Cum Investors’ Grievances Committee presently comprises of three Executive Directors (namely Mr. P.P. Chhabria, Mr. D.K. Chhabria and Mr. M.L. Jain) and three independent, non-executive Directors (namely Mr. P.G. Pawar, Mr. Sanjay K. Asher and Mr. P.R. Rathi). Mr. P.G. Pawar an independent and non-executive Director is the Chairman of the Committee. The Board has designated Mr. R.G.D’Silva, Company Secretary as the Compliance Officer. The Committee in addition to considering share transfer matters, oversees redressal of shareholder and investors’ complaints / grievances and recommends measures to improve the level of investor services. The Committee normally meets about once in a month as required, and there were nine meetings during the year. The total number of complaints received and replied to the satisfaction of shareholders during the year were four and no complaint was outstanding as on 31st March 2008. There was no share transfer request pending as on 31st March 2008.
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6. GENERAL BODY MEETINGS: Location and time for last three Annual General Meetings:
Year Location Date Time Whether any special resolution passed therein 2004-05 Acharya Atre Rangmandir 5st July, 2005 11.30 a.m. No Sant Tukaramnagar Pimpri, Pune – 411 018 2005-06 Acharya Atre Rangmandir 27th June, 2006 11.30 a.m. Yes Sant Tukaramnagar Pimpri, Pune – 411 018 2006-07 Acharya Atre Rangmandir 29th June, 2007 11.30 a.m. Yes Sant Tukaramnagar Pimpri, Pune – 411 018
(a) No special resolution was passed through postal ballot last year and no such resolution is proposed to be passed by postal ballot this year. 7. DISCLOSURES: (a) Disclosure regarding materially significant related party transactions: For details please refer Schedule 15 (Note No. 9) of Notes forming part of the Accounts. (b) There were no instances of non-compliance or penalty, strictures imposed on the Company by Stock Exchanges or SEBI or any Statutory Authority on any matter related to capital markets, during the last three years. (c) The Company has complied with the mandatory requirements of corporate governance Clause 49 of the Listing Agreements with the Stock Exchanges. (d) The non-mandatory requirements have not been adopted as a formal policy except for Remuneration Committee as set out in item 4 above.
8. MEANS OF COMMUNICATIONS: The quarterly results of the Company are published in leading national newspapers viz., normally Financial Express (all editions) / Economic Times (Mumbai edition) and Sakal (Pune edition) and also displayed on the corporate website (http:// www.finolex.com) along with official news releases. The corporate presentation prepared by the Company was uploaded on its website and was also informed to the Stock Exchanges for taking the same on record. Management provides detailed analysis of Company’s operations, which forms a part of the Annual Report.
9. SHAREHOLDER INFORMATION: The Annual report includes Financial Statements, key financial data and detailed information in the Shareholders’ information section.
10. CODE OF CONDUCT: THE Board has laid down a code of conduct for all Board members and senior management of the Company. The Code of Conduct has been hosted on the website (http://www.finolex.com) of the Company.
Declaration: All Board members and senior management personnel have affirmed compliance with the Code of Conduct of the Company in the year under report.
Sd/- Place : Pune D. K. Chhabria Date : 28th April 2008 Managing Director
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Auditors’ Certificate on Corporate Governance
To the Members of FINOLEX CABLES LIMITED
We have examined the compliance of conditions of corporate governance by Finolex Cables Limited (the Company) for the year ended on 31st March 2008 as stipulated in clause 49 of the Listing Agreement of the Company with the stock exchanges. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the 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 Agreements. We 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 and on behalf of B. K. KHARE & CO. Chartered Accountants Sd/- U. B. Joshi Partner Place : Pune Membership No. 44097 Date : 28th April, 2008
Shareholder Information
Registered Office Finolex Cables Limited, 26/27 Mumbai - Pune Road, Pimpri, Pune 411018. Annual General Meeting The Fortieth Annual General Meeting (“AGM”) of the Company will be held on Wednesday, 30th July, 2008 at 11.30 a.m. at Acharya Atre Rangmandir, Sant Tukaramnagar, Pimpri, Pune – 411 018. Financial Calendar (Tentative) : (a) Annual General Meeting : 30th July 2008 (b) Results for quarter ending 30th June, 2008 : Last week of July 2008 (c) Results for quarter ending 30th September, 2008 : Last week of October 2008 (d) Results for quarter ending 31st December, 2008 : Last week of January 2009 (e) Results for quarter ending 31st March, 2009 : Last week of April 2009 Dates of Book Closure The Company’s Transfer Books will be closed from Saturday, 19th July 2008 to Wednesday, 30th July 2008 (both days inclusive) for purpose of AGM and for payment of Dividend for the year ended 31st March 2008. Dividend Payment The Board of Directors of the Company at its meeting held on 28th April 2008 recommended payment of Dividend @ 75 % (i.e. Rs.1.50 per share) for the year ended 31st March, 2008. The payment of dividend is to be approved by the shareholders at the AGM and as on date is exempt from income - tax in the hands of the shareholders. The aforesaid Dividend, if declared at the AGM, will be paid on or before 28th August 2008 to those members whose names appear in the Register of Members as on the date of the AGM. In respect of shares held in electronic form, the dividend will be paid on the basis of beneficial ownership as per details to be received from the Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for this purpose, the same being as of close of their respective hours of business on the date immediately preceding the aforesaid Book Closure period (ie as of 18th July, 2008). Stock Exchange Listing The Company’s shares are presently listed on the Stock Exchanges at Ahmedabad, Bangalore, Chennai, Cochin, Delhi, Kolkata,
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Mumbai and Pune and also on the National Stock Exchange and OTC Stock Exchange. The Company’s Global Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange. Stock Code Physical Demat Segment
Trading Symbol Bombay Stock Exchange FINOLEX CABL 144 Trading Symbol National Stock Exchange FINCABLES EQ FINCABLES AE
Stock Market Data The monthly high and low quotations and volume of shares traded at Mumbai (BSE) and National Stock Exchanges (NSE) are as follows :
BSE NSE
Period High (Rs) Low (Rs) Volume Shares High (Rs) Low (Rs) Volume Shares Traded (Nos.) Traded (Nos.)
April 07 100.00 81.60 379,802 98.95 76.00 752,340
May 07 97.50 81.15 814,305 98.00 81.00 1,488,577
June 07 96.05 85.25 633,750 95.80 85.05 755,044
July 07 104.00 83.10 1,097,616 105.00 82.20 1,430,196
August 07 91.45 74.40 1,407,644 90.35 71.30 1,964,444
September 07 83.85 73.90 2,264,445 79.90 73.50 3,950,303
October 07 88.50 62.55 6,732,376 89.95 58.60 8,814,264
November 07 95.95 72.45 4,817,242 96.00 73.10 7,319,320
December 07 122.00 92.05 5,583,359 136.65 91.90 10,563,721
January 08 133.50 71.70 4,829,536 132.95 72.00 8,776,642
February 08 101.45 79.00 1,587,203 116.30 79.50 2,694,527
March 08 86.75 58.50 1,849,390 87.40 58.20 2,176,493
Registrar and Transfer Agents The Company has taken requisite steps and centralised at a single point its share registry works for shares held in physical as well as electronic form with Finolex Industries Limited, D-1/10, MIDC Chinchwad, Pune 411019 holding Share Transfer Agent Category II Registration No. INR0000001765 issued by Securities and Exchange Board of India (“SEBI”). Share Transfer System Share Transfer requests received in physical form are registered within 30 days from date of receipt and Demat requests are normally confirmed within an average of 15 days from the date of receipt. Shareholder Statistics and Distribution of Shareholdings as on 31st March 2008 Statistics of shareholders- 2006- 2008 31st March No. of shareholders 2006 17,433 2007 21,210 2008 35,862
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Distribution of Shareholding as on 31st March 2008
Category No. of Shares Held Percentage of Shareholding
A Promoter’s holding 1 Promoters - Indian Promoters 50,604,919 33.09 - Foreign Promoters NIL NIL 2 Persons acting in Concert NIL NIL
Sub total 50,604,919 33.09
B Non-Promoters holding 3 Institutional Investors a Mutual Funds and UTI 12,178,776 7.96 b Banks, Financial Institutions, Insurance 15,204,395 9.94 Companies (Central / State Govt. Institutions / Non-Government Institutions) c FIIs 5,145,467 3.37
Sub total 32,528,638 21.27
4 OTHERS a Private Corporate bodies* 26,205,333 17.14 b Indian Public 36,923,863 24.14 c NRIs / OCBs 533,167 0.34 d Any others (Custodian for GDRs) 6,143,425 4.02
Sub total 69,805,788 45.64 Grand Total 152,939,345 100.00
* Includes 22,187,075 shares (14.51%) held by Associate Company – Finolex Industries Limited.
Dematerialisation of shares The Company’s equity shares are included in the list of Companies whose scrips have been mandated by SEBI for settlement only in dematerialised form by all institutions and all investors. The Company had signed agreements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to offer depository services to its shareholders. As on 31st March 2008 94.06 % of the equity share capital of the Company has been dematerialised. Outstanding GDRs / DRs / Warrants, etc There are no outstanding GDRs / ADRs / Warrants or any convertible instruments as on 31st March 2008.
Plant Locations Pimpri (Electrical Cables) Urse 26/27, Mumbai-Pune Road (Electrical & Communication Cables) Pimpri, Pune 411 018 Taluka Maval, Dist. Pune 410 506 Telephone : 27475963 (15 lines) Telephone (02114) 237026/27 Facsimile : (020) 27472239 / 27472224 Facsimile (02114) 237025 Email : [email protected] Email : [email protected]
Goa (Electrical & Communication Cables) Goa (Communication Cables) Plot No 117/L118 Plot No. L123/9A, Verna Industrial Estate Verna Industrial Estate Verna Salcette, South Goa Verna Salcette Telephone : (0832) 2782002/3/4 South Goa, GOA Facsimile : (0832) 2783909 Telephone : (0832) 2782002/3/4 Email : [email protected] Facsimile : (0832) 2783909 Email : [email protected]
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Goa (CCC Rod) Sheets Division Plot No S263/2 Gat No 399 Panjim-Belgaum Road Village Urse Usgaon-Tisk, Ponda Taluka Maval Goa – 403406 Dist. Pune 410 506 Telephone : (0832) 2344378/9 Telephone : (02114) 237035/36 Facsimile : (0832) 2344140 Facsimile : (02114) 237042 Email : [email protected] Email : [email protected]
Optic Fibre Division Lighting Division (CFL) Urse Plot No.399, Village – Urse, Taluka Maval Tal – Maval, Dist Pune – 410 506 Dist – Pune – 410 506 Telephone : (02114) 237003/4/5/6/7 Telephone : (02114) 237035, 237036 Facsimile : (02114) 237009 Facsimile : (02114) 237041 Email : [email protected] Email : [email protected]
Switches Division Roorkee Gat No.344, Village Urse, Plot Nos. K-1 & K-2 AIS Industrial Estate Taluka Maval Latherdeva Hoond, Mangalaur, Roorkee District Pune – 410 506 Taluka Haridwar, Uttarakhand - 247667 Telephone : (02114) 237021/2/3 Telephone : (01332) 224069 Facsimile : (02114) 237006 Telefax : (01332) 224068 Email : [email protected] Email : [email protected]
Investor Correspondence The Company’s Share Department provides assistance to shareholders under the supervision of Mr. R.G D’Silva, Company Secretary & Vice President (Legal). Any query relating to shares and requests for transactions such as transfers, transmissions and nomination facilities, duplicate share certificates, change of address, non-receipt of dividends / Annual Report, as also regarding dematerialisation of shares may please be taken up with : Mr. R. G. D’Silva Company Secretary & Vice President (Legal) Finolex Cables Limited 26/27 Mumbai - Pune Road, Pimpri, Pune 411 018 Telephone : (020) 27475963 Extn.279 / 230 Facsimile : (020) 27472239 / 27470260 Email : [email protected]
Shareholder information On-line The Balance Sheet information is a part of the Company’s World Wide Web home page http://www.finolex.com. Users can obtain information on Company products and services, Company background, Management and financial information and other major developments.
Nomination Facility Individual shareholders can now avail of the facility of nomination. The nominee shall be the person in whom all rights of transfer and/ or amount payable in respect of the shares shall vest in the event of the death of shareholder(s). A minor also can be a nominee provided the name of the guardian is given in the Nomination Form. The facility of nomination is not available to non-individual shareholders such as bodies corporate, financial institutions, Kartas of Hindu Undivided Families and holders of Power of Attorney. In case of any assistance, please contact Mr. R.G. D’Silva, Company Secretary & Vice President (Legal) at the Registered Office of the Company.
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