1996
SABOO BROTHERS LIMITED
CHAIRMAN'S STATEMENT
It gives me great pleasure to extend a warm welcome to all of you to this
Seventeenth Annual General Meeting of your Company. With your permission, I
will take the report of the Board of Directors and the attached accounts
for the fifteen months period ended 30th June, 1996 as read, as the same
were with you for the past some time.
MACRO ECONOMIC OVERVIEW OF THE COUNTRY DURING 1995-96
It is appreciable to note that inspite of slow agricultural growth, the
Indian economy maintained its momentum of acceleration in GDP by
registering an impressive growth of around 7 during the fiscal year 1995-96
as compared to around 5.3 during the last year. There were lots of ups and
downs during this period and the political situation of our Country also
remained uncertain. There was a change of Government in May 1996 when the
Country witnessed tumultuous events as the Congress reign was taken over by
multi-party alliance, United Front Government" at the Centre. The new
Government has expressed deep concern and commitment to continue the reform
process and have reiterated the need to cut fiscal deficit, raise revenues
and to restructure the infrastructure sector. The Government's initiative
in encouraging foreign direct investment by streamlining the procedures of
Foreign Investment Promotion Board and also the relaxed guidelines for
issue of Global Deposit Receipts and external commercial borrowings should
result in increased inflow of funds from abroad.
The confidence of the general public and the Securities market fraternity
has also shaken over the past one year which has not only resulted in total
depression in the capital market but has resulted in liquidity crunch and
has affected every corner, sector and industry of our Country. This has
forced RBI to introduce new regulations from time to time or controlling
money market and bank credit which has led to banks lending at interest
rates in the range of 17 to 20 despite a drop in inflation below 5. As such
steps are regularly being taken by the UF Government to improve the
situation but the general confidence and sentiment is still required to be
lifted.
I am strongly of the view that if sincere efforts are put in to implement
the policies and plans of the new Government, there will certainly be a
path to success towards achievement of targets set for the fiscal year
1996-97.
CIMENT INDUSTRY PERFORMANCE AND PROSPECTS
The Cement Industry witnessed another good period during fiscal year 1995-
96 when the production of cement touched new height of 69 million tonnes as
against 62.4 million tonnes in the previous year representing a growth of
10. The task force for the Cement Industry set up by the Government of
India has in its report indicated that the demand pattern in Ninth plan
period is expected to grow at the rate of 8 to 9 percent annually to reach
109 million tonnes by 200-2002 and to 160 million tonnes in 2006-2007 which
confirms tremendous potential for growth in the years to come. Here I wish
to acknowledge the fact that the current market of the industry has
depressed over past few months but I am confident this situation will not
last for a long time as this is due to overall bad liquidity position of
the Country as a whole.
ASSESSMENT OF COMPANY'S
The performance of the company has been improved as compared to previous
year. As the current year was extended by three months period which ended
on 30th June, 1996 hence the current financial year consists of fifteen
months period as compared to twelve months period of previous year. The two
periods comparison shows proportionate increase and tremendous improvement
in sales and profits. The gross sales has improved from 535.91 Lakh to Rs.
1246.04 Lakh and the profit before taxation after providing for
depreciation has improved from Rs. 71.14 Lakh to Rs. 183.42 Lakh. The net
profit has also jumped up from Rs. 47.14 Lakh to Rs. 139.42 Lakh during
this period. Inspite of this no dividend has been recommended by the
directors of the company with a view to plough back the profits to meet the
present challenges and further improve the financial position by mobilising
the funds towards achieving the company's objectives. The success of your
Company is also marked by the fact that there has been substantial
improvement in cement production by 10 and increase in demand which has
encouraged private entrepreneurs for further investment in cement plants.
Your company alongwith its Group concerns is also considering to take up
projects for setting up cement plants of higher capacity upto 600 TPD. For
this it has entered into an agreement with a concern based at Gujarat for
construction of buildings and heavy foundations for installing a plant upto
the aforesaid capacity. The successful installation of plant will open new
avenues for your company and its success.
STATUS OF NEW PROJECT
I feel indeed regret to express that the implementation of new project at
Village Tanawara on Salawas road, District Jodhpur has delayed mainly due
to delay in conversion of land for industrial use by the State Government
of Rajasthan. However it is heartening to note that immediately after
getting the permission in July, 1996 the company has boosted its efforts to
construct factory buildings in full swing which is expected to be completed
by next March, 1997. 70% construction work is almost over and the remaining
sections are expected to be erected before the expiry of the expected time.
Further the machinery is ready for installation and for delivery at site,
which will not cause any further delay of the new project.
PROSPECTS OF NEW PROJECT AND FUTURE OUTLOOK
The commencement of new project will enhance its existing production of
refractory cement which will be mainly consumed about 70% in integrated
steel plants, nearly 15 in Thermal power plants and rest 15 among large
Cement plants, Sugar industries, Petro-Chemical and fertilizer industries.
As far as its export potential is concerned it is being demanded in Middle
East countries & also Pakistan, Sri Lanka Bangladesh, etc., and we being
nearer to these countries expect to receive good response on commencement
of production. The company is also regularly supplying its refractory
products to prestigious Organisations like Bhillai Steel Plant, Bokaro
Steel Plant Bharat Refractories Ltd., etc., and has also started exporting
of refractory cement to Egypt & Greece.
At the new site, the plans are also underway to manufacture Calcined lime
and Hydrated lime with purity in the range of 93-95 percent which is rarely
available in India and especially Northern India. The main users of the
output will be the industries engaged in the production of lubricants,
paper, fertilizers, chemicals etc.
I am also pleased to inform you that the company has recently procured
export orders for four Mini Cement Plants of 150 TPD capacity which ensures
the continued efforts of the company towards determined future growth.
You will also be pleased to note that the company has decided to
manufacture Brown Fused Alumina of which the current demand is hovering
around Rs. 50 Crore in India. There are only few manufacturers of this
product in India and thus company does not foresee any problem in marketing
the product.
The company is also carrying on research and development activities for the
production of White Fused Alumina and we hope to commence its commercial
production as well as marketing in near future and expect to receive good
response.
Besides the Company is also planning to produce import substitute low
silica (Silica below 2.5) Dead Burnt Magnesite and I feel pleasure in
claiming that your company will be first in Northern India to produce this
rare quality of Magnesite which is being used in bulk by all the major
steel plants, at present this is being imported by them.
ACKNOWLEDGEMENT
With a promise for a bright future, I thank you for your support and co-
operation and would also like to take this opportunity to acknowledge the
continuous co-operation and support extended to the company by its
customers, suppliers, Financial Institution, Banks and other Government
Authorities. I also place on record my appreciation for the good work done
by workers and members of staff at all levels and for maintaining cordial
industrial relations during the year.
(DURGA PRASAD SABOO)