2.

INDUSTRY & COMPANY PROFILE

2.1 INDUSTRY PROFILE Economy builds the nation and industry builds the economy LANCO industries limited are one of the best mini blast furnace pig iron manufacturing units in our country and it was 5th plant under TATA-KORE technology .The Companys act -1956, in the name of LANCO FERRO LTD. The company started construction work in august 1993.The entries construction work was completed in a record of 12 months. This was achieved by teamwork of LANCO collective and the best efforts of the contractors .With this achievement the company started commercial productions in September 1994. The name LANCO Ferro Limited was changed to LANCO INDUSTRIES LIMITED ON JULY 6TH, 1994. LANCO INDUSTRURIES LIMITED is between Tirupati and Srikalahasti with an access of about 30kms form Tirupati and about Rachagunneri village, Srikalahasti Mandal of Chittor district Andhra Pradesh is as follows.
1. 2. 3. 4. 5. 6. 7. 8. 9.

Cheap availability of required land. There is more water resource. The distance between the harbor and present work spot is less. Proximity to raw materials. Proximity to marketing. To have financial subsidy. Nearer to the railway sidings. Well connected to the road, rail and port. Availability of labor.

LANCO industries are importing coke from china, Japan and Australia because; there is scarcity of cooking coal, which is the raw material for producing coke. The coke, which is imported, comes to Chennai port. Which is approximately 100 km away from the site? And from there is brought to site, and also fluxes. Which are required to produce pig iron like Limestone, Dolomite, Quartzite and Manganese, are available in near by districts?

2.1.1 PLANT UNDER THE GROUP:

The pig iron plant and LANCO cement plant are two plants, which are presently under of m/s. LANCO industries limited and LANCO construction limited is the sister of concern of it.

a. ADMINISTRATION:
The general administration of the company is carried out by managing director, and general managers of fianc .Commercial, operations, materials, purchase, human resource and administration. The chairman and managing director are holding overall control on administration in all aspects, with the help of Vice President and other General Managers .The board consists of five members directors, Vice Chairman, a Managing Director and a Company Secretary.

2.2 COMPANY PROFILE

The name Lanco has been derived from the promoter of the group shri. Lagadapati Amarappa Naidu.The Lanco group is a diversified multi faced conglomerate with the business interests in pig iron, cement, power, graded castings, spun pipes, information technologies and infrastructure development. Young technologies with exceptional entrepreneur skills promote the Lanco group with a mission and a great vision and top agenda to put the group on global corporate may be during the next 10 years. 2.2.1. LANCO INDUSTRIES LIMITED: Established in the year of 1993.an ISO 9002 Company, it had setup a state of the art integrated manufacturing facility for pig iron through mini-blast furnace route conforming to the latest international technology with initial capacity of 1,00,000 TPA. Its quality products of S G- Grade pig iron are being supplied to foundries in the south. As a forward integration, it has utilized the slag produced in the pig iron are being supplied to the foundries in the south. As a forward integration, it has utilized the slag produced in the pig iron manufacturing process to install the cement plant is being met through a 2.5mw co-generation power plant . Due to severe completion and survival, company has increased the production capacity from 90000 TPA from 2003.

2.2.2 LOCATION
A Lanco industry limited is a rural based factory sprawling over many areas of land with deep resources and congenial soil. It is located in Rachagunneri village near Tirupati nearly 50% of the consumption of electric power is supplied by APSES, government of Andhra Pradesh and other 50% of power is maintained by the company owned Dg sets and power plants. Since it is a rural area labor potential is available and also company is enjoying the subsidies from state government. The Lanco group is a diversified multifaceted Onglo miracle, with business interests in Pig iron, Cement, Power graded castings, spun pipes, Real estate

development, information technology a past from infrastructure use development promoted by entrepreneurial skills and the agenda to put the group on the global corporate map during the next 10 years. LANCO KALAHASTRI CASTING LIMITED MERGED WITH LANCO INDUSTRIES LIMITED Established in 1997 and strategically locked in close proximity to the mini-blast furnace of the pig iron plant, it has a clear economic mileage over other casting sites. The molten metal from the blast furnace is directly used as a basic raw material to produce graded castings, cast iron pipes and ductile iron spun pipes with a capacity of 60,000 TPA ,which will be gradually expended for the to meet the surging demand of the products.

The ups to the pipes plant will be met through 10 MW captive power plants. To emerge to enhance the necessities and the self-stuffiness, it was decided to enhance the production capacity from 60,000 to 90,000 TAP FROM 2003. 2.2.3 BRIEF HISTROY OF SINCE INCORPORATION TILL DATA Lanco industry limited (LIL) was incorporated on 1st November 1991 by Lanco group of companies. Since it is a rural area labor potential is available and company is enjoying the subsides from state government. The Lanco group is a diversified multifaceted Onglo miracle, with business interests. In pig iron, cement, power graded castings, spun pipes, real estate development information technology a past from infrastructure use development promoted by entrepreneurial skills and the agenda to put the group on the global corporate map during the next 10 years. LANCO KALAHASTI CASTINGS LIMITED MERGED WITH LANCO INDUSTRIES LIMITED Established in 1997 and strategically located in close proximity to the mini-blast furnace of the pig iron plant, it has a clear economic mileage over other casting sites.

The molten metal from the blast furnace is directly used as a basic raw material to produce graded castings, cast iron pipes and ductile iron spun pipes with a capacity of 60000 TPA, which will be gradually expanded for the meet the surging demand of the products. The ups to the pipe plant will be met through 10MW captive power plants. To emerge to enhance the necessities and the self suffiency, it was decided to enhance the production capacity from 60,000 TPA TO 90.000 TPA from 2003. 2.2.4 BRIEF HISTORY OF LIL SINCE INCORPATION TILL DATE Lanco industries limited (LIL) was incorporated on 1st November 1991 by Lanco group of companies to manufacture pig iron using korf (German)Srikalahasti road, which is located at Rachagunneri village on Tirupati Srikalahasti road . Which is about 30 kms from Tirupati and 10 kms from Srikalahasti? The installed of pig iron was 90,000 TPA and with similar capacity 90,000 TPA for cement. Due to the poor demand and other reasons, the operation of the cement unit of the company were suspended and the unit was reengineered for producing a different product mix having potential in south India. As measure of forward integration project for adding value to the pig iron manufactured by the company ,LIL floated an another company named Lanco Kalahastri casting limited (LKCL) on 4th march 1997 to manufacture iron casting and spun pipes in the same campus of the company with an annual capital of 40,000 TPA and 35,700 TPA respectively. However, due to falling pig iron prices, increase additional capacity in the industry, competition and the technical financial assistance, the operations of both LIL and LKCL were affected and the company was exploring financial and technical strategic alliance with indian1st foreign partner. During the same time Mrs. Electro steel costing limited, was also looking for additional capacities for producing spun pipes. Considering the synergies involved, Lanco industries limited enter in to the tragic alliance partnership during December 2002, with M/s. Electro steel casting limited (ECL), Kolkatta a leading manufacturing of CI, pipes and DI pipes. This was win situation for both LIL&ECL.

After takeover a financial re-engineering and re-structure of LIL was under taken by ECL by implementing the following.
1.

Immediately after taken over an amount of RS .2200 lakes were infused as share capital of the company by Miss ECL to strengthen the equity base of the company.

2. 3.

During 2002 the capacity of pig iron was increased from 90,000 TPA to150, 000 TPP. With effect from 1st April 2002 LKCL was merged with the company to take advantage of the close synergy in the business of the two companies, since a large part of molten iron/pig ironies consumed by LKCL for manufacturing of 101 pipes.

4.

After the merger ,the share capital of LIL, the paid up share value of RS,101 was reduced to RS.2.50 per share and accordingly one share of RS.101 each fully paid up in LIL was issued to all the existing shareholders for every 4 shares held by them.

5. 6.

During 2003, the capacity of the 01 pipe was increased to 90,000 TPA. During 2004, the company took the step of backward integration by setting up 150,000 TPA coke over plant in the same complex, which was commissioned in

7.

During 2005, the company started setting up of a captive power plant of 12MW by using the waste heat recovered from the coke oven plant which is expected to be commissioned by March 2006.

8.

An additional amount of RS, 25 cores is being spent on other capital works like revamping of bitumen coatings machine, balancing equipment and facilities for production of higher diameter DI pipes etc, to increase the capacity of 101 pipe from the present 90,000 TPA to 120,000 TPA by 2006-07. The above has resulted in the company witnessing a profitable years after a gap of 8

years during the years ended 31st march, 2003, 2004&2005and a dividend of 10% was declared for the years ended 31st march 2004and2005 to the shareholders.

2.2.5 STEP-BY-STEP COMPANYS GROWTH 1991 1994 1995 1997 2002 2002 2003 2003 2004 2005 2006 2007 Incorporation of Lanco Setting up of Mini Blast Furnace with 90,000 TPA capacity Setting up a 250 TPD Mini Cement Plant Setting up of LKCL for manufacture of 40,000 TPA castings and 35,700 TPA D I Pipes Strategic Alliance with Electro steel Casting Limited Infusion of Rs.2200 lakhs to the equity and financial restructuring Merger of LKCL with LIL for synergy Capacity of Pig Iron was increased to 90,000 TPA to 150000 TPA Capacity of DI Pipes was increased to 90,000 TPA Commissioning of 150,000 TPA coke oven plant Setting up of Captive Power Plant of 12 MW by using the waste heat recovered from the coke oven plant. Merger of LKCL with LIL for synergy

2.2.6 DIRECTORS REPORT Our directors take pleasure in presenting the 11th annual report and audited accounts of your company of the year ended 31st march 2006 BOARD OF DIRECTORS Shri .Pradip Kumar Khaitan Shri. Mayank Kejriwal Shri. G. Maruthi rao Shri. Gouri Shankar rathi Shri. L Madhusudhan rao Shri. G.Bhaskara rao Shri. L.Sridhar Shri. Suresh chukkapalli Shri. Vatasala Krishna Kumar Shri. P.Rajeswar Rao Chairman managing director Director Director Director Director Director Director Director Director

2.2.7 SCHEME OF ARRANGEMENT As you are aware, the shareholders approved the scheme of arrangement of;

Reduction in capital of the company and Amalgamation of Lanco Kalahasti castings Ltd. ;(LKCL) with Lanco industries Ltd., (L1L) with effect from 1st April 2003. The scheme of arrangement received all the requisite approval and the reduction of

capital and amalgamation of LKCL became operative on 8th April ,2004 being the date of filing the certified copy of the order , issued by the Honorable high court of Andhra Pradesh on 20th February ,2004,with the Registrar of Companies ,Hyderabad.

In line with the scheme of arrangement the paid up share capital of the company of Rs .61, 91, 23,790 divided into the same 5, 19, 12,379 equity shares of Rs.2.50/- each fully paid up by cancellation of paid up shares capital to the extent of Rs.7.50/- per equity share and automatic consolidation in to 1 equity share (new) ofRs.10% each fully paid up for every 4 equity shares of Rs.2.50% each. .

Further 2,67,85,50 equity shares (new) of Rs .10/- each fully paid up of the company were allotted to the shareholders of erstwhile LKCL in the ratio of 3(three ) equity shares in the company against every 4(four ) equity shares held by them in LKCL as on 30th April, 2004,the record date for the purpose. As a result of the above, the figures for the financial year 2003 -2004 include the working results of erstwhile LKCL amalgamated with the company with effect from 1st April 2003 and therefore the figures are not comparable with those of the previous year.

2.2.8 COMPETITORS OF LANCO CEMENTS In the cement industry the Lanco industries are facing the competition from the following cement industries.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Sagar cements limited, Ambuja cements limited, Bheema cements limited, Sri Chakra cements limited, Priya cements limited, Ultratek cements limited, Ambuja cements limited, Maha cements limited, Raasi cements limited, Vishnu cements limited, Nagarjuna cements limited.