Surya ar 12 13

SURYA ROSHNI LIMITED ANNUAL REPORT 2012-13

STRONGER

FOUNDATI O

BRIGHTER

FU T U

RE

NS

Forward looking statements

In this Annual Report, we have disclosed forward looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements – written and oral – that we periodically make, contain forward looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance.

We cannot guarantee that these forward looking statements will be realised, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.

THE WHOLE IS gReAteR THAN THE SUM OF ITS PARTS. - Aristotle

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suRya ROshni liMited 40th Annual 2012-2013 Report

Bad times are good times. One can either learn to accept them and wait for them to end; or can challenge one’s abilities to perform despite them. As a company that initiated its business, close to four decades ago, we at Surya Roshni Limited clearly believe in a simple fact: that each downturn is followed by an upturn and vice-versa. Therefore, successful businesses are those, which concentrate their energies and resources to build a stronger foundation for creating long term value; and not merely worry about the uncontrollable factors or the short-term challenges.

suRya ROshni liMited 40th Annual 2012-2013 Report

At Surya Roshni, we commenced our journey in 1973

Today, being present in two diverse yet synergic

as a steel tube-making unit. Since then, we embarked

businesses – steel tubes and lighting; we are truly

on a journey to strengthen the very foundations of the

excited to decipher and capitalize upon the impending

company. Be it in terms of expanding our presence in

opportunities. While Indian economy, though presently

synergic businesses, building a team or in redefining the

somber, is expected to revive in the coming years owing

processes across verticals to ensure greater efficiency.

to its demographic advantage, growing consumption and

We not only climbed the value chain to offer world-class

re-emergence of investments into infrastructure sector;

products to our customers in steel tubes and pipes

the global markets – especially Europe and US, will also

division; but also expanded our horizon to foray into the

somewhat improve with focused government efforts to

new age business – lighting. In doing so, our core traits of

revive consumption. These factors augur well for both

innovation, efficiency and quality played a commendable

of our core businesses – steel pipes and lighting, in the

role. However, the idea was not to chase volume-led

coming years.

growth in all our businesses; but more importantly a

At Surya Roshni, having continuously challenged our

growth based on relationships, higher degree of customer

limits during the downturn; we have established a stronger

satisfaction and moreover, scalable over the years. This

foundation, upon which we are envisioning a brighter

led us to steadily build an organisation that ensures

future to unfold. The path is steep. The challenges

sustained value creation for its stakeholders.

are frequent. The resolve is steady. The foundation is stronger. The future is brighter.

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suRya ROshni liMited 40th Annual 2012-2013 Report

About us Established in 1973 by Mr. J.P. Agarwal, a first generation entrepreneur and presently the Chairman of the Company

oRIgIn

oUR RePUtAtIon

• The first lighting company in India to introduce energy-efficient lighting solutions indegenously • Among the largest ERW steel pipes manufacturers in India • Largest ERW Pipes manufacturing unit in Asia • Second largest seller of GLS and FTL in India • Asia’s largest ribbon glass plant from Dema Glass UK at Gwalior, MP • Only lighting company with 100 per cent backward integration

geogRAPHICAL PReSenCe

Corporate office NEW DELHI MANUFACTURING FACILITIES

suRya ROshni liMited 40th Annual 2012-2013 Report

ing tur : c fa s nu itie Ma facil

Surya Roshni

Lighting division Kashipur (Uttarakhand) Gwalior (Madhya Pradesh)

Steel division Bahadurgarh (Haryana) Gwalior (Madhya Pradesh)

Subsidiary Company SgStL (Steel Business – Bhuj, Gujarat)

53%

teAM SURYA

CeRtIFICAtIon

5000+ people across all locations as on 31.03.2013

ISO 9001:2008

MARKetIng netWoRK

•

ISO 14001:2004

Ohsas 18001:2007

steel:

150 dealers and 20,000 Retailers pan-india

lighting: 1,500 Dealers and 2,00,000 Retailers pan-India

Our shares are listed on the Bombay Stock

LIStIngS

Exchange (Stock code – 500336) and the National Stock Exchange (Stock code – SURYAROSNI). Our market capitalization

stood at Rs. 298 crore as on 31.03.2013.

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Surya Roshni Limited 40th Annual 2012-2013 Report

Product portfolio Product range

Lighting

Pipes

Steel

PVC

Round Pipes

UPVC Pipes

CFL

Section Pipes

Agricultural Pipes

LED

API Pipes

CPVC Pipes

Luminaries

Spiral Pipes

SRW Pipes

Fittings

CR Stripes

Fittings

GLS/FTL/HID

Capacities Steel ERW pipes

Lighting 410,000 TPA

CFL

66 mn pcs p.a.

CR pipes

115,000 TPA

GLS

187 mn pcs p.a.

Spiral steel pipes

2,000,000 TPA

FTL

56mn pcs p.a.

ERW pipes

172,000 TPA

HID

0.65 mn pcs p.a.

Surya Roshni Limited 40th Annual 2012-2013 Report

Journey of Lighting Division till now 1985

1993

1997

1987

1994

2001

GLS and FTL chains started production at Kashipur plant

Second GLS lamp chain started production at Kashipur

1992

Production of Fluorescent powder, Filament for GLS and FTL at Kashipur; Commenced production at Malanpur Plant with 5 mn FTLs and 20 mn GLS

Expanded capacity at Malanpur plant to 10 mn FTLs

New modern lead glass plant started production at Kashipur; H4 Halogen lamps’ production started at Malanpur

1995

GLS lamp production capacity doubled in Kashipur; commenced H3 and Deco Lamps’ production at Malanpur

FTL capacity increased by addition of a new FTL chain at Kashipur; new GLS Chain started at Malanpur

Triband tubes developed at Kashipur

2004

Production capacity of HID lamps increased from 1.5 lac pcs. p.a. to 4.5 lacs pcs. p.a.; Second high speed falma chain installed with speed 4000 pcs. Per Hr. at Malanpur

2005 2002

Blended lamps and Blue Tubes developed; ISO 14001 and OHSAS 18001 certifications received for safety & environment

Additional tube Drawing Line installed in lead glass Furnace doubling the production capacity at Kashipur; Third line of FTL installed at Malanpur; Capacity of tubular shells increased by 50% in Kashipur; New FTL chain installed from GE (Hungary)

2006

Capacity of wire drawing & filament plant enhanced by 90 million filaments p.a.

2008

World’s best CFL plant from GE Europe commissioned in Malanpur

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Surya Roshni Limited 40th Annual 2012-2013 Report

What did we achieve in 2012-13?

Owing to strong performance across verticals Steel Division: Revenues up by 15.0% to Rs. 2052.67 crore Lighting Division: Revenues up by 17.7% to Rs. 906.36 crore

Registered robust financial performance Net revenues up 15.8 per cent from Rs. 2,554.44 crore in 2011-12 to Rs. 2,959.03 crore in 2012-13

Continuous expansion of product profile and capacity

EBIDTA up 21.1 per cent from Rs. 196.74 crorein 2011-12 to Rs. 238.26 crore in 2012-13 Net profit up 33.2 per cent from Rs. 51.98 crorein 2011-12 to

Introduced LED range of lighting products under Luminaire series Embarked on a greenfield

Rs. 69.25 crore in 2012-13 Earning per share up 33.2 per cent from Rs. 11.86 in 2011-12 to Rs. 15.80 in 2012-13 EBIDTA margin up 35 basis points to 8.05 per cent in 2012-13 Net profit margin up 31

[] Additional employees added

basis points to 2.34 per cent in 2012-13 Expanded retail network in Lighting Division to cover [] additional retailers/distributors

suRya ROshni liMited 40th Annual 2012-2013 Report

Financial trends Segmental revenues (2012-13 vs. 2011-12)

turnover (Rs. in Crores)

net worth (Rs. in Crores) 257.04

631.55

683.48

732.26

1938.93

2442.77

2753.70

3267.02

2009-10

2010-11

2011-12

2012-13

2009-10

2010-11

2011-12

2012-13

eBIdtA (Rs. in Crores)

Profit after tax (Rs. in Crores)

129.56

181.93

196.74

238.26

45.17

66.74

51.98

69.25

2009-10

2010-11

2011-12

2012-13

2009-10

2010-11

2011-12

2012-13

eBIdtA & PAt margin (%)

7.22%

8.21%

3.01%

7.70%

2.03%

8.05%

2.34%

2.52%

2009-10

2010-11

2011-12

2012-13

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Surya Roshni Limited 40th Annual 2012-2013 Report

Chairman Message

Mr. J.P. Agarwal Chairman

Surya Roshni Limited 40th Annual 2012-2013 Report

On behalf of Surya Family, I extend my best wishes to all of you.

The core principle of every business is value

Total dividend payout for the current financial year

creation. Everything else emanates from this core

is 40% (including 1st Interim Dividend of 20% and

principle. In 1973, when we set out to create a

2nd Interim Dividend of 10%).

reputed company, we wanted to concentrate on understanding the steel tubes and pipes in-depth so as to efficiently utilize our knowledge to shape up a sustainable future.

With everyone in the Company has contributed towards the commendable performance of the Company. I would like to record specifically my appreciation of the significant contribution made by

It took us well over three decades to emerge as a

our Mr. Raju in all vital areas that impacted on the

leader of steel industry and second largest Lighting

growth and performance of the Company. Working

Company of the country. Having established our

in the capacity of Dy. Managing Director; he is

credentials as leading players in both steel pipes and

instrumental in bringing down the manufacturing

lighting businesses in India and now with ‘Surya’ as

costs by eliminating inefficiencies and by increasing

a reputed brand, we continue to define, refine and

the sales volume leading to better profitability. In

redefine our product mix, processes and solutions

recognition of his admirable hard work, he has been

capability by proactive innovation and research. We

elevated as Managing Director of Surya Roshni. I

continue to expand our product profile to cater to

wish him all the success in all his endeavors that

new applications, sectors and consumer groups.

would now cover the entire gamut of operations of

For the past two years, the Indian economy has

the Company.

softened up on account of various factors. Still, I am

2013-14 thus far has outlined a challenging scenario

happy to share with you our company’s creditable

in terms of slow-down in industrial production, global

performance during the current financial year. The

debt crisis and increasing inflation. However, with

turnover of the company increased to Rs. 3267.02

eyes on the vision to empower through progress,

crores from 2753.70 crores last year, registering an

we have set sail for the destination next. It’s time to

increase of 18.6%. The Profit After Tax is increased

unleash the potential. I leave you with this note of

to Rs. 69.25 crores as compared to Rs. 51.98

optimism.

crores last year registering a growth of 33.22%.

J.P. Agarwal Chairman

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Surya Roshni Limited 40th Annual 2012-2013 Report

Mr. B Raju Managing Director

Managing Director’s Message

Surya Roshni Limited 40th Annual 2012-2013 Report

May I take this opportunity to sincerely, thank our Respected Chairman Mr. Jai Prakash Agarwal and the Board of Directors of Surya Roshni for the confidence and trust reposed in me and for honouring me to serve the Company in the capacity of Managing Director.

It gives us great pleasure to report yet another successful

year

of

achieving

growth

and

strengthening our foundations. The year 2012-13 was a year of achievements. We not only countered numerous challenges emanating from a softer economic scenario; but also improved our value proposition in terms of quality, product portfolio, presence and customer relationships.

Indeed, it takes me pleasure to further inform you that our Lighting Division has been growing at a

of customer’s needs leading to enhanced customer

rate much higher than that of national average of

satisfaction.

the industry. As on date we are the second largest Lighting Company of the Country commanding a market share in excess of 25% and we provide total lighting solutions to our customers. Our products include CFL, Tube Light, GLS, LED, Luminaires and Accessories, High Mast Lighting Systems, Lighting Poles etc.

Steel Division of Surya Group has grown in leaps & bounds within India as well as overseas. In a span of 3 years the division almost doubled its volume in the domestic front signifying care & ambition of the company with regard to serving its domestic customers. Due to the world class facilities setup in our Anjar Plant near Bhuj, Gujarat, exports got additional boost due to cost efficiencies and logistical advantages. Our mills are now, not only, better equipped to maintain the market share in our existing markets but also serving critical

As a team we remain committed to maintain our diligence & passion at work, which shall take us closer to our vision of all round growth permeating all segments of our operations, which shall reflect in increased bottom line & higher levels of satisfaction of all the stakeholders.

We have strengthened the workforce by recruiting the best talents from a pool of experienced professionals, duly experienced across both our verticals. This cultural as well as professional diversity enriches our engagement with our global customer base.

I hope with the visionary guidance from our Respected Chairman Mr. J. P. Agarwal, we would be able to meet our targets and will ensure robust shareholder value, and go a long way in creating a model company, which will enable a brighter

requirements of High End markets like USA,

tomorrow, each day.

Europe, Australia. New forays are being made to

B Raju

develop new segments to ensure better coverage

Managing Director

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Surya Roshni Limited 40th Annual 2012-2013 Report

Diversity

Synergy

Surya Roshni Limited 40th Annual 2012-2013 Report

Excellence is the ability to deliver consistently despite evolving factors. To change with the times and sometimes before it, have greater rewards. At Surya Roshni, we have always taken pride in our ability to evolve or change, yet remaining aligned to the greater cause, time after time.

Having commenced our business as a steel pipe manufacturer, we focused on delivering quality products and expanding our capacities to feed a growing network of dealers and clients. It was our deeper understanding of the overall demand and the transition of the Indian economy to ensure sustained investments in infrastructure then, that led us on thinking the possibilities our future held. In 1984, then being among the market leader in steel pipes and tubes in India, we concentrated on a new sector – lighting. Our single-minded focus and belief in our actions and our strong business model comprising of diverse yet synergic businesses – steel and lighting, enabled us to emerge as a key player in both the sectors. Today, being a globally respected player and a leader in India, we stand proven and more motivated of our actions.

Operating in a cyclical industry such as steel, it was important for us to invest into capacities and best in class facilities. At the same time, we expanded our presence in lighting business, ensuring investments in capacities and product diversification in time, helping us emerge the cost-leader in the industry, thereby resulting in fair share from global clientele. The result – it helped us to garner higher market share and gain substantial size within both our businesses.

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Surya Roshni Limited 40th Annual 2012-2013 Report

Cost

Capacity

Surya Roshni Limited 40th Annual 2012-2013 Report

To sustain a long journey, one needs to stay energized, motivated and absolutely focused.

For the road that leads to no-where is sometimes a road that offers a unique destination. The price one needs to pay is weighing the short-term cost with the longer-term benefits.

It was 1984, when we at Surya Roshni embarked on a new journey to establish our lighting division. The investments required were high.

We opted for best in class technology and expanded our product profile in time – starting right from GLS lamps to Fluorescent Tube Lamps to HID lamps. The rewards are still visible even after three decades of operations and continue to be our defining moment. However, we continued to raise the bar by consistently expanding our capacities a decade later by commissioning a new plant in Malanpur (Gwalior) in 1992. Today, with our investments in state of the art technology enables us to offer world class range of products from traditional (GLS, FTL, HID lamps) to modern (CFL lamps); at the same time, our consistent thrust on building capacities have enabled us to ensure robust cost structure and improved margins.

Our strategy to expand our capacities and in turn tame the rising cost on a sustainable basis has also been rewarding for our steel business.

We are embarking on yet another expansion plan for our steel pipes and tubes.

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Surya Roshni Limited 40th Annual 2012-2013 Report

Surya Roshni Limited 40th Annual 2012-2013 Report

Value

Quality

When the journey is long, the challenges will grow increasingly bigger and the opportunities will become evidently fewer. It is therefore important to overcome every challenge with greater zeal and at the same time, capitalize upon every opportunity that meets the eye.

Therefore, one must use every obstacle as a stepping stone.

The past three years have been challenging for the Indian economy. While the investments in infrastructure slacked across the government and private spheres, the impact has been visible on our ‘less than expected’ growth numbers. Common sense demanded that we continued to sell our inventories at a loss to sustain our working capital and service our debts. We chose otherwise and chose rationally.

We took the challenge to redefine our organization. We adapted to the change.

We aimed for to critically examine each process and each input and at the end of the day opted for an organization-wide cost rationalization programme. The aim was clear – quality is paramount. What followed enabled us not only to limit our losses in a difficult year, but also has set up a robust platform for us to grow faster in the impending upturn.

Instincts grow on positive results. Our knowledge and thorough understanding of diverse yet synergic industries have enabled us to capitalize upon the downturns in the economy as well as the industry. In 2008, amidst global slowdown, we not only chose to set-up a state-of-the-art CFL plant at higher cost; but also retired high cost debts, resulting in stronger foundations and better economies for our operations. This ability to decipher value amidst turmoil continues to define our growth even in the challenging times.

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Surya Roshni Limited 40th Annual 2012-2013 Report

Reach

Recall

Change is inevitable and is constant. To partner change is nonetheless demanding, but far more rewarding in the long-run. In four decades, the manufacturing centers have dispersed from erstwhile limited pockets to diverse geographies across India. The cost of raw materials and logistics has continued to surge. The delivery schedule for the end products at clients’ sites has shortened considerably. Moreover, the capacity build-up in the sector has resulted in higher competition.

The need to change with the times was evident for us and we prepared well. In the past five years, we have consciously focused on expanding our presence – both in terms of domestic as well as international geographies.

At Surya Roshni, our manufacturing facilities have been largely concentrated in the northern India. It was largely on account of the fact that since the time we commenced our operations, the concentration of our customers were largely limited to these geographies. While with steel tubes being heavier, logistics cost play an important role; the lighting products being fragile, logistics options are limited for better inventory management. With the improved economic conditions in the past two decades, newer and older players have broadened their manufacturing base, to cater to pan-India demand.

We continue to establish our presence in the exports markets. Currently, we export our products to more than 48 countries. Going forward, we are confident in expanding our customer base to adjoining countries and will look at newer expansion opportunities in similar regions. A dedicated brand spend is also being planned to help us capitalize upon the demand for our products in these markets.

Surya Roshni Limited 40th Annual 2012-2013 Report

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Surya Roshni Limited 40th Annual 2012-2013 Report

Surya Roshni Limited 40th Annual 2012-2013 Report

People Society A journey of a thousand miles, begins from a single motivation. Ours was to lead the change – in terms of empowerment, aspirations and inclusion. Long before the words like inclusive growth and triple bottomline because fashionable, we at Surya Roshni have been silently leading a positive change in the lives of communities in and around our locations of presence.

At Surya Roshni, we believe that each employee is also a subset of a society and therefore our primary sense of duty is towards the improvement of our employees – both in terms of their standards of living as well as their intellectual development. Today, with team of dedicated employees, we have laid special emphasis on identifying, rewarding and retaining crucial talent. As an equal opportunity employer, we at Surya Roshni have laid special emphasis on creating a transparent, open door and credible organization that values and rewards performance and character. Owing to our work culture, our people command respect across the industry for their knowledge, experience and work ethics. On the other hand, our ability to provide a rewarding career path to the talented colleagues has earned us the lowest attrition rate in the industry.

At Surya Roshni, we believe that an organization is a grand stage that enables people to come together and work towards a common good. The real worth of an organization is not in the number of zeroes it adds to the right, but the number of right causes and achievements it strives for. While the business demands sustained profitability and cash flows, we have endeavored over the years, to align our business goals towards achieving social and environmental objectives, thereby making our efforts each day, count more than just a number.

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