murablack india ltd Directors report

MURABLACK INDIA LIMITED ANNUAL REPORT 2005-2006 DIRECTORS REPORT Dear Members, Your Directors hereby present their Seventeenth Annual Report together with the Audited Accounts of your Company for the period ended June 30, 2006. FINANCIAL RESULTS: (Rupees in lacs) For the Period For the Period Ended Ended 30th June2006 30th June2005 Sales - - Gross Profit/(Loss) (14.62) (16.63) Before Depreciation, Interest & (14.62) (16.63) Taxation - - Interest 1398.95 1214.82 Depreciation 349.11 300.83 Net Profit/(Loss) before Taxation (1762.69) (1532.29) Net Profit/(Loss) after Taxation (1762.69) (1532.29) Prior year Expenses 5672.83 - Loss carried forward to Balance (7435.53) (1532.29) Sheet During the period under review, the operations of the Plant continue to be under suspension for reasons beyond the control of the Management. As you are aware, your Company has already won the award in the London Court of International Arbitration, (LCIA) in Arbitration proceedings initiated by the Company against the collaborators for supplying defective Plant & Machinery and the process for manufacturing Super and Electro Conductive Grades of Carbon Black. In addition to extinction of the balance purchase price payable to the collaborators amounting to SFR 5,871,500 has also awarded SFR 3,158,700 as damages and interest thereon. The award was delivered by LCIA on October 2000 however, the collaborators have still not paid the amount as mentioned in the Award. Appropriate steps are being taken to enforce the award. For further details, members are requested to refer the management discussion and analysis forming part of Corporate Governance and appended to this Directors Report. FIXED DEPOSITS: Your Company has not accepted any deposits within the meaning of section 58A of the Companies Act, 1956 and the rules made thereunder: PARTICULARS OF EMPLOYEES: A statement under section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is not applicable as there are no employees. DIRECTORS: Mr.S.T.Shah, Director retires by rotation at the ensuing Annual General Meeting and offers himself for reappointment. DIRECTORS RESPONSIBILITY STATEMENT U/S 217(2AA) OF COMPANIES ACT, 1956: We the Directors of Murablack India Limited, confirm the following: i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along-with proper explanations relating to material departures. ii) that the Directors selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the profit or loss of the Company for that period iii) that the Directors took proper and sufficient care to maintain adequate accounting records in accordance with the provisions of this Act to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. iv) that the Directors prepared the annual accounts on a going concern basis. ENERGY CONSERVATION, TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Since the Plant remained closed, there are no particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo required under Section 217(1)(e) of the Companies Act, 1956. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: The operations of the Company are reviewed in detail in the Management Discussion & Analysis report in the Annexure-I, which forms a part of this report. CORPORATE GOVERNANCE: A separate statement on corporate governance is produced as a part of the Annual report along with the Auditors Certificate in Annexure-II. AUDITORS: The retiring auditors M/s.P.Subramaniam & Associates, Chartered Accountants, Statutory Auditors of your Company, due to their pre occupation, have expressed their unwillingness to continue to hold office further and offered their resignation. In view thereof it is necessary to appoint a Statutory Auditor in place of M/s.P.Subramaniam & Associates, Chartered Accountants in the ensuing Annual General Meeting. Your Director proposes to appoint M/s S.V.Navalkar & Associates, Chartered Accountants as auditor of your company until the conclusion of the forthcoming Annual General Meeting. They have signified their willingness to accept reappointment and have further confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956. AUDITORS REPORT: All the observations made in the Auditor Report are suitably explained in the Notes to the Accounts and do not call for any further explanation. ACKNOWLEDGEMENTS: Your Directors wish to place on record their appreciation for the co- operation and assistance rendered by Financial Institutions, Commercial Banks, Shareholders, Consultants and Employees of the Company. By Order of the Board Place : Mumbai S.T.SHAH Date : 04.12.06 Director Corporate Office: Dubash House Director 15, J.N. Heredia Marg Ballard Estate Mumbai 400 001 ANNEXURE-I MANAGEMENT DISCUSSIONS AND ANALYSIS As you are aware, your Company was declared as a sick unit under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 by the Board for Industrial Finance and Reconstruction (BIFR) on 31st March 2000. BIFR had appointed Industrial Development Bank of India (IDBI) as the operating agency to look into the revival of the Company. BIFR has recommended winding up of the Company vide its letter no 383/99/BI dated 19th June 2003. The said BIFR recommendation to Bombay High Court to wind up your company has been assigned number as Company Petition No. 758 of 2004 (in BIFR case 382 of 1999).The matter will now come up for hearing in the usual course for appointment of official liquidator. The Directors of your Company, once again take this opportunity to explain the various steps taken for revival of your company: * Your Company was successful in securing an international arbitration award in its favour at the London Court of International Arbitration (LCIA). The LCI Aaward has completely extinguished the balance payment of SFr 5.871 Million payable under the second (ranch and also directed the collaborators to pay damages of SFR 3,158,200 and interest thereon till the date they make such payment. Additionally legal fees of sterling pound 225,000 were also awarded. However, till date the damages etc., as awarded, could not be recovered from the collaborators as they have reported bankruptcy under the Swiss Laws. * During the year under review CEGATE has dismissed our appeal filed against the Commissioners order no. 04A/PS-34/2002/M-III dated 27th March, 2002 adjudicating duty amount payable of Rs.197,096,699 (amount of interest not ascertainable) the amount of differential duty, interest and penalties payable amounting to Rs.464,054,965 (amount of interest not ascertainable). We are exploring various options to make representation to the higher Government authorities in the matter. * The entire dues of ICICI were settled amicably through a One-Time Settlement (OTS). * Canara Bank had accepted the Companys OTS proposal and according to the terms and conditions of the said consent terms Rs.52,00,000 Lakhs has already been paid to Canara Bank till date. However, for non-payment of further amounts under the OTS proposal, the same has been withdrawn by the Canara Bank. * Subsequent to the closure of the plant operations at Tarapur in the month of April 2000, all the workers and the employees have been paid their final dues as per law. * Your Company has made several unsuccessful efforts to settle IDBI dues. The likelihood of reviving your company has hinged upon IDBI accepting a settlement proposal. We are quoting extracts from the proceedings of BIFR hearing held on 18th of September 2002, which endorses the efforts committed by the Directors of your Company to ensure revival: The bench noted that the Company had failed because of the technical reasons. The Plant and Machinery which was imported was defective. The Promoters did their best to obtain relief and went for arbitration. However, before they could execute the award issued in their favor, the other party (the collaborator) went into liquidation. It was required that the Banks and FIs take a hard look at the options available and take a pragmatic view. The Paint supplied is technically defective. The recovery prospects would be negligible if the Company went into liquidation. OTS at 87% of the distress sale value of the assets on which Government agencies such as Income Tax and others also have a claim cannot be considered as totally unreasonable, especially when the borrower was not a willful defaulter. * Subsequent to the declaration of the Company as a Sick unit, the promoters continue to infuse funds from their personal resources, for holding on operations, securing your Companys assets and for making financial settlements. FUTURE OUTLOOK: In view of the foregoing paragraphs, the management feels that on the grant of the expected relief and concessions from financial institutions and the government, the activities may be revived. CAUTIONARY STATEMENT: Statement in the Managements Discussion and Analysis Report detailing the companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future events, actual results can differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting global and domestic demand-supply conditions, finished goods prices, changes in Government regulations and tax regime etc. The Company assumes no responsibility in respect of forward-looking statements, which may be revised or modified in future on the basis of subsequent developments, information or events. ANNEXURE-II (a) CORPORATE GOVERNANCE: (b) Board of Directors: Name of Attendance At Category Directors last AGM of Director J.K.Malhoutra NO NED S.T.Shah NO NED P.P.Sequeira NO NED/IND R.W.Dharwadker NO NED/IND NED - Non Executive Director IND - Independent Director (c) Committee of the Board: i) Audit Committee: In view of the closure of business operations, it was not possible for the company to comply with the requirements of Audit Committee as per the clause 49 of listing agreement. Further no independent Director is willing to join the company due to the reasons explained above. ii) Investors Grievance: Though the company is closed, in the interest of members of the company, your management continue to engage services of Share Transfer Agents for processing share transfers and other requests from the share holders of the company. According to the certificate produced by M/s Sharex Dynamic (India) Pvt, Limited there are no investor complaints pending as on 30th June 2006. SUBSIDIARY COMPANIES: There is no subsidiary company. DISCLOSURES: * During the year there has been no transactions with any related party * The Accounting treatment has been followed as per the normally accepted accounting standard. * There has been no issue of shares or debentures during the year review. * There is no pecuniary relationship of a non-executive Director with the company. * As on 30th June 2006, there are no investors complaints pending with the Share Transfer Agent of the company. CEO/CFO Certification: Since the company is closed, there is no necessity for appointment of CEO/CFO hence there is no certification available: Shareholders Information: General Meeting: The last three Annual General Meetings of the company were held as under: Financial Year Date Time Location Registered Office at 2003 31.12.2003 11.30 a.m. Plot No.F-13, M.I.D.C. 2004 31.12.2004 11.30 a.m. Tarapur 401 506 2005 31.12.2005 10.30 a.m. Maharashtra Means of Communication: In view of financial constraints and suspension of operations of the Company and also non availability of adequate man power, the Company has not been complying with the rules and regulations stipulated by stock exchanges in respect of unaudited financial results. General shareholders information: 17 Annual General Meeting - 30/12/2005 at 11.00A.M. Venue: Registered Office at: Plot No: F 13, M.I.D.C. Tarapur 401 506 Maharashtra Book Closure: The Register of Members and share transfer books of the company shall remain closed from 28.12.2006 to 30.12.2006 (inclusive of both days). Market Price Data: In the absence of any source of income for the Company due to closure of the plant operations, the listing fees could not be paid and therefore shares of the Company are not quoted on any of the stock exchanges where they are listed. Distribution of Shareholding: The distribution of shareholding as on June 30th, 2006 was as follows: % of % of No. of ordinary No. of total No. of total Shares held share share shares held holders holders shares Upto 5000 101345 96.341 14056320 48.658 5001 to 10000 2836 02.690 2378550 08.234 10001 to 20000 660 00.626 1017900 03.524 20001 to 30000 127 00.120 321700 01.114 30001 to 40000 36 00.034 128300 00.414 40001 to 50000 71 00.067 342700 01.186 50001 to 100000 85 00.081 726500 02.515 Above 100000 42 00.040 9916030 34.326 Total 105202 100.00 28888000 100.000 (i) Dematerialization of shares and Liquidity and Share transfer system: The shares of the company have not, so far, been demateriaiized. (ii) Location of the Plants (Manufacturing Units): Plot No.F 13, M.I.D.C. Tarapur 401 506 Maharashtra (iii) Address for correspondence: Dubash House 15, J.N. Heredia Marg Ballard Estate Mumbai 400 038 CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE: To The Members of Murablack India Limited We have examined the compliance of conditions of Corporate Governance by the Company for the year ended 30th June, 2006 as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges in India. The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we state that in view of continuing closure of the business operation and no employees during the year under review, the company could not comply with certain conditions as stipulated by Clause 49 of the Listing Agreement. The Registrars and the Share Transfer Agents of the Company have certified that as on 30th June, 2006 there was no investor grievance pending to be resolved for more than 30 days. We further state that such compliance is neither an assurance as to the further viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For P.SUBRAMANIAM & ASSOCIATES Chartered Accountants P.Subramaniam Proprietor (M.No.43163) Place : Mumbai Date : 04.12.06