TECHNOCRAFT INDUSTRIES (INDIA) LIMITED
ANNUAL REPORT 2007-2008
CHAIRMAN'S REPORT
Dear Shareholders
The Indian economy continued to register impressive GDP growth, although
the rate of growth declined marginally over the previous year, reflecting
inflationary trends driven by the increase in the cost of energy and raw
material. The level of industrial activity has also begun to decline as a
result of fiscal constraints imposed on money supply and the raising of
interest rate along with sub prime crises.
Despite of these adverse factors, your company's performance has been
satisfactory. I am pleased to report that your company continues to perform
on sustained basis and it has enabled to demonstrate its robust business
model with strong, satisfactory results for the year 2007-2008. The company
aims to tap the Chinese market of drum closure and scaffolding. Company is
setting up a new plant in Anhui, China for manufacturing of steel
scaffolding systems in the first phase and then drums closures in the
second phase. A new wholly owned subsidiary company has been set up for
this called Anhui Reliable Steel Technology Co in Anhui province near
Nanjing. We have already acquired 35000 sq meters land and construction of
factory building is under progress. Production is schedule to start in the
first quarter of 2009-10. Amalgamation of Danube Fashions Limited, with the
company rests pending with Hon'ble High Court, Mumbai. On application of
the company, Registrar of Companies, Mumbai has granted two months
extension to hold Annul General Meeting for year ended 2008.
Yarn Division
I am pleased to inform you that almost all our projects as envisaged in our
IPO prospectus are well within the time schedule as well as within the
budgeted costs. The second Yarn Mill consisting of 25,000 spindles has
already been commissioned in August 2007. The Mill is equipped with most
modern equipment from world's leading suppliers like Trutzschler, Toyota,
Murata, etc. The production of yarn increased from 6307.75 M.T. to 8579.70
M.T. during the year 2007-2008.
The new Yarn Mill is likely to add about Rs. 70 crores annually to the top
line of the company. Since the mill is located in the existing premises, we
expect a substantial saving of overheads through greater efficiency and
cost reduction. Scaffolding
Due to severe volatility in steel prices, tube and scaffolding division
passed through some testing times. I am pleased to inform you that we are
able to procure reasonable stocks of steel in order to tide over sudden
spurts in steel prices. The project for increasing the capacity of
scaffolding has also been implemented. This has resulted in substantial
increase in conversion of steel tubes into value added high precision
scaffoldings. The forging plant for manufacture of in house forged
components has been commissioned. These projects will improve the bottom
line of scaffolding division substantially. Your company has made a
breakthrough in the US and Latin American markets and has started supplying
to the biggest scaffolding contractor in the world. This will give us a
strong foothold in these markets.
Drum Closure:
Your company continues to be the pre-eminent global player in drum closure
and continue to stand as the 2nd largest manufacturer in the world.
Upgradation and expansion of drum closure division has almost been
completed.
Power Division
15 MW power plant is ready but due to some civil disturbance, the
commissioning is delayed. We are in the process to resolve the problem with
the local authorities and other concern people, to start the operations of
plant. Once it is done, it will not only save substantial cost but also the
income from the power division will be tax-free. We expect to add about Rs.
10 crores to the bottom line of your company after commissioning of power
plant.
Friends, we consider you as our partners. We would very much appreciate
your views and guidance on our projects and possible growth opportunities.
I am sure, as a team, we can create grow and prosper together. Before I
conclude I would like to convey my heartiest greetings and very best wishes
for Diwali and prosperous New Year Best Regards,
M.D. Saraf
(Chairman)