indore wire company ltd Directors report

INDORE WIRE COMPANY LIMITED ANNUAL REPORT 2002-2003 DIRECTORS REPORT Dear Shareholders, The Directors hereby present their 42nd Annual Report on the business and operations of the Company and the financial results for the period ended on 31st March, 2003. 1. FINANCIAL RESULTS (Rs. in lacs) 2002-03 2001-02 Profit / (Loss) before Depreciation & Tax (93.78) (348.34) Less : Depreciation 390.84 317.43 Provision for Taxes (MAT) NIL NIL Profit / (Loss )after Taxes (484.62) (665.77) Add : Surplus brought forward NIL NIL Less: Short / Excess provision for the earlier year 16.56 541.01 written Off/ back Less: Income Tax for the earlier years NIL NIL Surplus/ (Deficit) available (501.18) (1206.78) Appropriations Proposed Dividend NIL NIL Tax on Dividend NIL NIL Transfer to General Reserve NIL NIL Balance Carried to Balance Sheet (501.18) (1206.78) Note : Deficit shown in the Financial Results of 2002-03 are before provision of interest. 2. DIVIDEND Due to continued loss during the year, your Directors regret their inability to recommend dividend for the Financial Year 2002-03. 3. TURNOVER & PROFIT During the year under review your Company performed better than previous year. In spite of Job Work arrangement for production of LRPC Strands with Tata Steels since 1st January, 2003 at Companys Special Wire Division at Pithampur Dist. Dhar, your Company maintained its turnover to Rs. 25.77 Crores in comparison to Rs. 28.13 Crores (for 12 months period) for the previous year. This performance is more satisfactory when your Company is passing through financial crisis and slow down in international and domestic market specially in Iron & Steel Industries throughout the Year. It is also worth noting that Company is improving its performance and the loss incurred by the Company during the year under review is Rs.5.01 Crores (before Interest) in comparison to Rs. 12.07 Crores (before interest) for the previous year. 4. OPERATIONS The depressed market, liquidity crunch, continuation of anti-dumping duty imposed by the European Union together with high cost of borrowings and increased cost of production has adversely affected profit margin of the company & working at large in spite of the best efforts made by the Company. However, your company continues its thrust to enrich its product- mix, increase volumes in defined market of value added segments and to implement scheme for drastic reduction in cost of production and increased productivity. Although the economy of the Country is passing through difficult period & economic policies of the present Government and stress on infrastructure developments has not improved the industrial activities and growth in Economy of the Country but positively, results of which is likely to come and now it is expected that demand of your Companys products will increase. In spite of all these adverse factors the Net Loss after Tax of the Company has reduced from Rs 6.66 Crores in Financial Year 01-02 to Rs. 4.85 Crores in Financial year under review, a reduction in loss by Approximately 27%. The company tried its best to utilise its Production Facilities to the maximum extent but due to working capital deficit it could not able to do so. But, Production and Sales activities went on smoothly during the year under review. We are quite hopeful that in years to come Positive Results will come of the above mentioned efforts. 5. REPORT ON SICKNESS OF THE COMPANY Consequent upon complete erosion of Net Worth of the Company on the basis of Financial Results of 2000-01, your Company filed its Reference u/s 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICI in short) with Honble Board for Industrial & Financial Reconstruction (BIFR in Short) and the Reference has been Registered as Case No. 207/2001 Dt. 31.052001. After registration of case first hearing was held on 14.01.21302 and as required by Honble BIER, your Company has made satisfactory reply against objections raised by some Banks & Financial Institutions and consequently the Industrial & Development Bank of India (Operating Agency appointed by the Honble BIFR) recommended the Company as a `Sick Industrial Company within the meaning of Sec. 3 (1) (0) of the SICA. Thereafter, based on the rations of Operating Agency, Honble BIER vide its Order Dt.31.10.2002 declared the Company as "Sick Industrial Company" with some directions including direction to company to submit its comprehensive rehabilitation proposal to Operating Agency, to Operating Agency to Companys proposal & its techno-economic viability (TEV in short) within specified period. Your Company complied with all such directions and also submitted its draft rehabilitation proposal to OA. A Joint Meeting (JM in short) of all Banks & FIs in this connection was also called up by OA on 21.03.2003 and as decided in IM the TEV study carried out by the Agency appointed by OA and the Company also submitted its Valuation Report to OA. Thereafter, on 28.05.2003 at the hearing called up by the Honble BIER, Rehabilitation Proposal submitted by the Company and also on the issue of its techno-economic viability were discussed in detail. But the Honble BIER has taken rigid view against the Company and Without proving further opportunity to Company, passed an Order for Change of Management of the Company and directed the OA to invite offers for takeovering/amalgamation/merger for rehabilitation With or without One Time Settlement including measures listed u/s 18(1) (i) and 18(11) of SICA. through publication of advertisement in newspapers. Being aggrieved by the Order passed by BIFR dated 28.05.2003 your company filed an Appeal before the Honble Appellate Authority for Industrial & Financial Reconstruction (AAIFR in short) New Delhi, on 1st July, 2003 but as there was no Bench in existence at AAIFR, the appeal is still pending for hearing with Honble AAIFR. Your Company is also going to challenge the said Order of BIFR at the Honble Madhya Pradesh High Court, Bench at Indore to get interim relief sought in the Writ Petition and to get stay against the said Order of BIFR. 6. QUALITY IMPROVEMENT During the year your Company has maintained and complied with all the requirements of the International Standards and having "ISO 9002" Certification for its Pithampur Plant and the thrust continues to develop quality products by installing checks at every stage of Production right from selection of raw material. 7. AUDITORS REPORT Auditors in their report have made certain observations for which suitable explanations have been provided in the Notes forming part of Accounts. These Notes may be considered as explanations by the Directors as part of their report. 8. DIRECTORS In accordance with Article 125 of the Articles of Association of the Company, Mr. N.K. Singh, Director of the Company retire by rotation and being eligible for re-appointment.: 9. AUDITORS The Auditors of the Company M/s R. D. Joshi & Company, Chartered Accountants, retiring at the conclusion of the Annual General Meeting are eligible for re-appointment. 10. AUDIT COMMITTEE Your Company has followed the provisions of Sec. 292 A of the Companies (Amendment) Act, 2000 and convened Audit Committee Meetings 2 times. The Audit Committee reviewed the Financial Statements and found Internal Control System of the Company satisfactory. This Audit Committee is having all the powers to perform its duties, make recommendations and to observe, review and discuss the financial management & internal control system with the Auditors of the Company. 11. DIRECTORS RESPONSIBILITY STATEMENT The Annual Accounts of the Company had been prepared in accordance with the applicable accounting standards alongwith proper explanations relating to material departures Your Directors had selected reasonable and prudent accounting policies which shows true & fair view of the state of affairs of the Company at the end of financial year and of the profit & loss of the Company for that period. Your Directors have also taken proper and sufficient care 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 to prevent and detect fraud and other irregularities. 12. PERSONNEL Harmonious relations continued throughout the year at Indore & Pithampur Plant of the Company The Directors wish to place on record their appreciation of the sincere and dedicated services of all its employees. The Statement of particulars of employees pursuant to section 217 (2A) of the Companies Act, 1956 is not required as there is no employee who is getting remuneration more than Rs. 12 Lacs in a year or Rs. 1,00,000/- per month. 13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORTS AND FOREIGN EXCHANGE EARNINGS & OUTGO A statement giving details of conservation of energy, technology absorption, exports and foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is annexed. 14. ACKNOWLEDGEMENT Your Company wish to put on record the appreciation for IDBI and Working Capital Banks for their continued Co-operation through out the year. For and on behalf of the Board Place: Indore P.K. Dang Date : 21.08.2003 (Director) STATEMENT CONTAINING PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF ThE BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTORS REPORT. 1. CONSERVATION OF ENERGY ENERGY CONSERVATION MEASURES TAKEN AND PROPOSALS FOR SAVING OF ENERGY IN FUTURE. Efforts are continuing towards reduction in energy consumption by undertaking regular energy audits, preventive maintenance upgradation of various machines and review of manufacturing process. The company has added certain balancing equipment and carried out modifications to the existing plant and machines as result of which the production from the same machines will go up and also will result in reduction in energy consumption per tonne of wire. The old fuel burners have been replaced by modern and efficient fuel burners to reduce energy consumption. In order to achieve power factor correction, capacitors have been installed in all the heavy electric motors thereby resulting in substantial saving in electric energy consumption in the years to come. Form for disclosure of particulars with respect to conservation of energy. FORM-A Form for disclosure of particulars of conservation of Energy: A. POWER AND FUEL CONSUMPTION 2002-03 2001-02 1. Electricity a) PURCHASED (in Units) 5243140 4485848 Total amount ( Rs.) 24852982 20830749 Rate/Unit (Rs.) 4.74 4.64 b) OWN GENERATION i) Through Diesel Generator (in Units) Nil 8732 Unit per litre of Diesel Oil Nil 2.91 Cost / Unit in Rs. Nil 6.10 ii) Through steam Generator Nil Nil 2. Furnace Oil/LDO Qty. (Litres) 336600 305850 Total Amount (in Rs.) 3995208 3681015 Cost/Unit (in Rs.) 11.87 12.03 Consumption per unit of Production Electricity (in Units) 441 438 Furnace Oil / LDO (Litre) 28 29 (electricity Purchased includes electricity consumed by the Company for job work of Tata Steels from Jan 2003 to Mar 2003.) B. TECHNOLOGY ABSORPTION 1. Research and Development: i) Specific Areas and benefits of R&D efforts: Presently R&D related tasks are being carried out by the Quality Control Department and Engineering Department, Major emphasis has been on improvement of process parameters in order to achieve better quality and higher productivity with existing product lines iii) Expenditure incurred on R&D. No specific programme envisaging separate expenditure on R&D was adopted. 2. Technology absorption, adopting and innovation: Efforts are continuing for improving the properties of wires so as to bring them on par with the best product in the world. In line with the policy of the management and growing consciousness better quality products for automobile, engineering and domestic sector. Attempts are being made to revamp the plant by identifying the areas where latest equipments or latest process can be incorporated. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: During the year foreignexchange ergo was Rs. 328732/- on purchase of stores consumables. Foreign exchange earning was Nil during the year.