Management Discussion And Analysis
The global economic passed through challenges one more year. The output growth in the
year 2013-14 was around 3.00% which was less than 3.20% the year in 2012-13. The slowdown
can be experienced everywhere whether it was developed, developing or under develop
countries. The Indian Economy also experienced slow down in the GDP this financial year.
The GDP of the country was around 4.5% during the Financial Year 2013-14 which was less
than the predicted. The decrease in the value of Indian Rupee and lack of clarity in the
Govt. Policy also affected all the industries. The final budget presented by the new Govt.
gives some hopes for the growth in the GDP and recovery in the performance of the
industries in the upcoming period.
The slowdown affected across the board and none of the industry could escape from it.
Agro Products : The country witnessed an all time high production in the food grain
during the financial year 2013-14. It achieved 263 million tones of production which means
it was higher by 2.4% as compared to the previous financial year 2012-13. Rice and Wheat
was the major part of the production and the growth was 1% in rice and 2% in wheat as
compared to the last FY 2012-13. The Oilseed also witnessed 7% growth over the production
of previous year.
Global Soya bean production could maintain the increasing trend in this year too.
During the current FY 2013-14 the production was approx 284 million tones as compared to
268 million tones in the previous year 2012-13. The growth was around 6%. The global
growth was mainly due to better production in the USA, Brazil and Argentina.
The soya bean production in India was very low during the current FY 2013-14 as
compared to FY 2012-13. The availability of the soya bean in the market was very poor and
the trading was very less. The company like yours suffered a lot due to higher production
globally. The price of the finished product was less and due to non-availability of soya
bean in the local market, the production cost became higher.
The Solvent Extraction segments of the company could not operate throughout the season.
The Solvent extraction plant could not operate in the previous financial year due to
shortage of fund. The management decided to start the operation in the financial year in
question during the season. The lower production of the soya bean resulted less
availability of soya bean in the domestic market and the price goes up. On the other hand
the higher production in the global market the cost of the finished product was soft and
hence company suffered on both side. The management decided to discontinue the operation
shortly after the start of operation of the plant.
The Paper & Paper Board Segment : The global demand for paper and paper board
marginally increased by 1% in the financial year 2013-14 as compare to the preceding
financial year 2012-13. This is continuing third year when the demand for the product
increased in globally even though the weak economical condition.
The performance of the paper & paper board was appreciable in the domestic market.
When country was facing slow down in the GDP and other industries were struggling the
paper and paper board grew by 6%. The demand for the writing & printing paper also
increased by 10% during the same period in the domestic market.
The trend is showing that the market will witness a consistent growth of around 6% in
the coming five years on year to year basis. The demand for the superior quality of the
paper packages product will be higher as comparison to the other types of paper product
because of the growth in demand of branded apparel industry, FMCG and organized retail
industry.
The Cement : The cement industry of the country faced tough time during the current
year. The Govt. took some harsh step to reduce the current account deficit of the country
which impacted negatively to the domestic industry particularly related to infrastructure
project. Due to the parliamentary vote, the government also could not take the major
policy decision. Further due to surface of the coal scam the production of the coal dipped
and availability of coal in the market was less, hence the price increases in the open
market which resulted in the rise of cost of production. The Indonesian coal was available
in the market but the depreciation in the value of the Indian Rupee affected negatively in
that too. The starting of operation by new plants and addition of capacity by existing
plants added the production capacity higher as compare to the increase in demand of the
cement. Hence maximum plants are operating at capacity which is far less than its actual
capacity that also affects the cost of production as well as profitability of the company.
During the last year the monsoon also prolonged which was resulted the decrease in demand
in cement. The manufacturers are also facing the higher cost of transportation due to rise
in cost of road transportation and railway freight due to rapid increase in fuel price.
The sign of positivity can be seen in the policy of new government and in the budget.
The declaration of govt. related to investment in the infrastructure projects look better
prospect for the industry but it will take time to impact in the industry.
The financial year 2013-14 was consisted of nine months while the FY 2012-13 was of
fifteen months hence the comparison cannot be reasonable. During the financial year under
review the revenue of the company was Rs 24,680.34 lacs. The Profit After Tax was negative
during the current year and the amount of loss was Rs 22,831.33 Lacs. The company achieved
the revenue which is less than projected by the management. The negative result of the
company was mainly due to lower capacity utilization of paper unit and Cement Unit, and
non – operation of Solvent plants. The company has been facing cash liquidity problem
and it was one of the main reason for affecting the result of the Company. Even though the
scarcity of the fund, the company could manage to operate the Paper units and Cement Unit
for partial period which helped to achieve the revenue mentioned above. The Cement Unit of
the Company is performing at around 40% capacity and the management has been taking all
necessary steps to improve the capacity utilization of the said unit but due to shortage
of funds not able to take the effective solutions. We are sure that the problem will sort
out shortly and it will achieve its true capacity. It is also a great pleasure for us to
inform you that the cement product of your company established a niche market in the
central and western India.
The Profit of the Company was negative during the period hence there is no transfer of
any fund in the General Reserve during the year. During the current year the company
referred to the BIFR under the provision of Chapter III of Sick Industrial Companies
(Special Provisions) Act, 1985 for determination whether the Company is a Sick Industrial
Company or not. The same is under process before the BIFR.
Business Segments:
Solvent Extraction Plant
The Solvent Extraction business of the company was the main back bone of the business
of the company since its inception till few years back. The company has been suffering
through shortage of fund. The solvent extraction segment has suffered most due to the said
problem. The company started its operation at the beginning of the season but could not
continue for long and had to discontinue the operation during the season itself. The
availability of soya bean in the domestic was lower as compared to other years and hence
the price was higher. The production of the soya bean in the global market was better than
as compare to preceding years so the price of the finished products was soft. Hence the
company was facing hit from both sides and it affected the operation of the units. The
lower revenue of the company during the period in concern is mainly due to non –
performance of this segment.
Agro Unit I :
The Agro Unit I of the company achieved revenue during the financial year 2013-14
(consist of nine months) was Rs 575.26 Lacs and the net loss was Rs 2,869.61 lacs. The
comparison with the preceding year not possible because the preceding year consisted of
fifteen months and the current financial year was of nine months and the figure given in
the table below is for better information only. The depreciation, interest and wages are
the major factor of the loss amount.
The Summarized Financial Result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
575.62 |
3,765.32 |
| 2 Profit Before Depreciation and Amortisation |
(2,420.02) |
(508.86) |
| Expenses, Finance Cost and Tax Expenses |
|
|
| Less: Finance Cost |
437.23 |
685.90 |
| Depreciation And Amortisation Expenses |
11.52 |
23.53 |
| Profit Before Tax |
(2,868.76) |
(1,218.29) |
| Less : Current Tax (Earlier Years) |
0.85 |
0.41 |
| Add: Deferred Tax (Assets) |
0.00 |
360.06 |
| Profit for the Year |
(2,869.61) |
(858.64) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
3,269.69 |
4,128.33 |
| Closing Balance |
400.08 |
3,269.69 |
Agro Unit II
The story of this Unit is also not different from Agro Unit I. During the period under
review the revenue of the Agro Unit II was Rs 840.52 Lacs and the profit of the company
was negative to Rs 2,576.92 Lacs. Depreciation, interest and the wages was the main factor
of the loss.
The Summarized Financial Result is as under:
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
265.25 |
3,920.55 |
| 2 Profit Before Depreciation and Amortisation |
(2,085.34) |
(317.15) |
| Expenses, Finance Cost and Tax Expenses |
|
|
| Less: Finance Cost |
450.68 |
666.90 |
| Depreciation And Amortisation Expenses |
40.54 |
79.94 |
| Profit Before Tax |
(2,576.56) |
(1,063.99) |
| Less : Current Tax (Earlier Years) |
0.36 |
0.23 |
| Add : Deferred Tax (Assets) |
0.00 |
315.40 |
| Profit for the Year |
(2,576.92) |
(748.82) |
| Less : Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
6,516.38 |
7,265.19 |
| Closing Balance |
3,939.46 |
6,516.38 |
Paper Segment
During the financial year ended on 31.03. 2014 (consist of nine months) the company
could manage to earn Revenue of Rs 11,362.68 Lacs. The company earned negative profit
during the period in consideration. The negative profit was Rs 3,052.14 lacs.
Duplex Unit
During the period in the consideration the Duplex unit of the company achieved revenue
of Rs 1,438.54 Lacs for the financial year (consist of nine months) ended 31.03.2014.
During the period in consideration the said unit suffered through loss. The loss before
depreciation, interest and tax was Rs 639.61 lacs and loss after tax was Rs 745.46 Lacs.
The Summarized Financial Result is as under.
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
1,438.54 |
4,382.18 |
| 2 Profit Before Depreciation and Amortisation |
(639.61) |
(695.49) |
| Expenses, Finance Cost and Tax Expenses |
|
|
| Less: Finance Cost |
55.39 |
98.80 |
| Depreciation And Amortisation Expenses |
48.73 |
87.99 |
| Profit Before Tax |
(743.73) |
(882.28) |
| Less : Current Tax (Earlier Years) |
1.74 |
3.21 |
| Add: Deferred Tax (Assets) |
0.00 |
217.83 |
| Profit for the Year |
(745.46) |
(667.66) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
4.98 |
672.64 |
| Closing Balance |
(740.48) |
4.98 |
News Print Unit
The Govt. of India always encourages to the Indian manufacturers to produce more and
more News Print paper and to reduce the dependence on imported news print paper with a
view to save the valuable forex. During the current financial year (consist of nine
months) the company earned a revenue of Rs 3,078.17 Lacs. During the same period the loss
before the depreciation, interest and tax was Rs 69.32 lacs and loss after tax Rs 574.84
lacs. The depreciation and interest is the major part of the loss.
The Summarized Financial Result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
3,078.17 |
6,732.08 |
| 2 Profit Before Depreciation and Amortisation |
69.32 |
925.00 |
| Expenses, Finance Cost and Tax Expenses |
|
|
| Less: Finance Cost |
351.88 |
698.78 |
| Depreciation And Amortisation Expenses |
291.70 |
594.39 |
| Profit Before Tax |
(574.27) |
(368.16) |
| Less : Current Tax (Earlier Years) |
0.57 |
0.89 |
| Add: Deferred Tax (Assets) |
0.00 |
145.14 |
| Profit for the Year |
(574.84) |
(223.91) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
(522.70) |
(298.79) |
| Closing Balance |
(1,097.54) |
(522.70) |
Writing and Printing Paper Unit
The Government has launched several initiatives like Sarva Shiksha Abhiyan, right of
Children to Free and Compulsory education, right to education for all etc. improved the
literacy rate of the country and also boosts the demand of writing & printing paper in
the domestic market. The consumption of the writing & printing paper is growing at a
constant rate in the domestic market.
During the period is concern i.e. FY ended 31.03.2014 the revenue of the Unit was at Rs
5,179.45 Lacs. The revenue of the current period is concerned is lower as compared to the
nine months in any of the preceding years. This is mainly due to less utilization of the
capacities because of shortage of funds. This unit suffered through losses during the
current financial year. The loss before depreciation, interest, and tax was Rs 770.71 lacs
and loss after tax was Rs 1,404.71 lacs. Half of the loss is consist of depreciation and
interest.
The Summarized Financial Result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
5,179.45 |
11,259.56 |
| 2 Profit Before Depreciation and Amortisation |
(770.71) |
(670.83) |
| Expenses, Finance Cost and Tax Expenses |
|
|
| Less: Finance Cost |
274.92 |
498.10 |
| Depreciation And Amortisation Expenses |
352.02 |
711.08 |
| Profit Before Tax |
(1,397.65) |
(1,880.01) |
| Less : Current Tax (Earlier Years) |
7.06 |
2.55 |
| Add : Deferred Tax (Assets) |
0.00 |
616.62 |
| Profit for the Year |
(1,404.71) |
(1,265.94) |
| Less : Prior Period Item |
0.00 |
0.00 |
| Add : Balance in Profit & Loss Account |
(4,349.61) |
(3083.67) |
| Closing Balance |
(5,754.32) |
(4,349.61) |
SBS Unit
The growth in the organized sector of retail market in India and increase in the use of
pre-packaged goods playing important role in growing demand of the premium quality of
duplex board i.e. SBS Board. The company failed to utilize the opportunity during the
previous year due to non availability of sufficient fund. The revenue for the current
financial year ended 31.03.2014 was Rs 1,666.52 Lacs. The profit before depreciation,
interest & tax of the Unit for current period ended 31.03.2014 was negative at Rs
567.28 Lacs and profit after tax was negative Rs 2,204.61 lacs. The major part of the loss
is consist of depreciation and interest.
The summarized financial result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
1,666.52 |
9,376.61 |
| 2 Profit Before Depreciation and Amortisation Expenses, Finance Cost and Tax Expenses |
(567.28) |
603.01 |
| Less: Finance Cost |
1,182.46 |
1,956.54 |
| Depreciation And Amortisation Expenses |
450.66 |
746.04 |
| Profit Before Tax |
(2,200.39) |
(2,099.57) |
| Less : Current Tax (Earlier Years) |
4.22 |
5.51 |
| Add: Deferred Tax (Assets) |
0.00 |
578.35 |
| Profit for the Year |
(2,204.61) |
(1,526.73) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
(7,243.07) |
(5,716.34) |
| Closing Balance |
(9,447.68) |
(7,243.07) |
Pulp Mill Unit
Due to technical and other unavoidable reason the Pulp Unit remained closed throughout
the year.
Paper Power Unit
The paper plants of the company are having two power co-generation plants one is 3 MW
and another is 15 MW. The power generations at these Units totally used for the captive
purpose of all the paper plants of the Company. During the period in question, i.e.
financial year ended 31.03.2014, the revenue of the Unit was at Rs 2,277.98 Lacs. The loss
before depreciation, interest and tax was Rs 1,718.28 lacs during the same period ended
31.03.2014 and loss after tax was Rs 1,918.68 lacs. The higher cost of the coal in the
open market is main reason for the loss.
The Summarized Financial Result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
2,277.98 |
5,897.99 |
| 2 Profit Before Depreciation and Amortisation Expenses, Finance Cost and Tax Expenses |
(1,718.28) |
(1,399.21) |
| Less: Finance Cost |
69.55 |
136.46 |
| Depreciation And Amortisation Expenses |
130.33 |
259.54 |
| Profit Before tax |
(1,918.16) |
(1,795.20) |
| Less : Current Tax (Earlier Years) |
0.52 |
0.00 |
| Add: Deferred Tax (Assets) |
0.00 |
0.00 |
| Profit for the Year |
(1,918.68) |
(1,795.20) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
1,832.75 |
3,627.95 |
| Closing Balance |
(85.93) |
1,832.75 |
Cement Captive Power Unit
The company is having captive power plant of 50 MW comprising of three Units of 16.5
MHZ each at the Cement Plant, Chandrapur. Two out of three units have started production.
All the power requirement of Cement plants are fulfilled by these two units only. Both the
units are performing at its full capacity. The power generation in these two units is
sufficient for the time being. During the current financial year ended 31.03.2014 the
revenue was Rs 2,930.70 Lacs. The profit was positive before depreciation, interest and
tax was at Rs 1,067.74 lacs. The profit of this unit became negative after tax. Loss after
tax was Rs 462.14 lacs. This unit has the positive PBIT. The performance could have been
better if the coal would have available of better quality with ease in the domestic
market.
The summarized financial result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
2,930.70 |
5,163.64 |
| 2 Profit Before Depreciation and Amortisation Expenses, Finance Cost and Tax Expenses |
1,067.74 |
1,993.38 |
| Less: Finance Cost |
1015.55 |
2,291.28 |
| Depreciation And Amortisation Expenses |
514.33 |
1,068.84 |
| Profit Before Tax |
(462.14) |
(1,366.74) |
| Less : Current Tax (Earlier Years) |
0.00 |
0.00 |
| Add : Deferred Tax (Assets) |
0.00 |
0.00 |
| Profit for the Year |
(462.14) |
(1,366.74) |
| Less : Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
(2,476.67) |
(1,109.93) |
| Closing Balance |
(2,938.81) |
(2,476.67) |
Cement Unit
This unit is the flagship business of the company. The Cement unit has not been
stabilized yet and yet to achieve its full capacity. During the financial year (consist of
nine months) ended 31.03.2014 Cement Unit achieved revenue of Rs 12,477.14 Lacs. The
operational loss of the unit was at Rs 1,276.55 lacs during the period in concern. The
depreciation and interest burden of this unit is quite high and hence the loss after tax
was Rs 9,803.31 lacs. The lower utilization of capacity and higher cost of raw material
and transport is the main reason for suffering through loss.
The summarized financial result is as under :
| Sr.No. Particulars |
Financial Year |
Financial Year |
|
2013 - 2014 |
2012 - 2013 |
|
(For Nine Months) |
(For Fifteen Months) |
| 1 Sales |
12,477.14 |
29,443.00 |
| 2 Profit Before Depreciation and Amortisation Expenses, Finance Cost and Tax Expenses |
(1,276.55) |
(4,173.91) |
| Less: Finance Cost |
5,812.89 |
13,030.51 |
| Depreciation And Amortisation Expenses |
2,676.68 |
4,427.37 |
| Profit Before Tax |
(9,766.13) |
(21,631.79) |
| Less : Current Tax (Earlier Years) |
37.18 |
0.00 |
| Add: Deferred Tax (Assets) |
0.00 |
6,642.29 |
| Profit for the Year |
(9,803.31) |
(14,989.51) |
| Less: Prior Period Item |
0.00 |
0.00 |
| Add: Balance in Profit & Loss Account |
(35,552.00) |
(20,562.49) |
| Closing Balance |
(45,355.31) |
(35,552.00) |
POINT WISE REPLY TO QUALIFICATION INAUDITORS REPORT
1. The financial statements of the company have been prepared on the basis of going
concern concept. During the past two years, the financial position of the company suffered
due to variety of factors and huge losses. This has resulted in reduction of
companies’ net worth. Consequently the company could not pay sales tax dues in time.
Due to losses the company became "SICK UNIT" and it became difficult to conduct
day to day business. Therefore, the company approached BIFR, Delhi under SICACT 1985 for
declaration it a SICK UNIT.
Further, that Government of Maharashtra under Bombay Relief Undertakings (Special
Provisions) Act vide Notification No.:[BRU-2013/CR169/13/Ins.10] dated 25.02.2014 has
declared our company as a Relief Undertaking as a result of which for a period of one year
commencing 25.02.2014 all rights, privileges, obligations or liabilities accrued or
incurred before the said date (except those mentioned in the notification) and any remedy
for the enforcement or enforced thereof stand suspended and all proceedings relating
thereto pending before any court, tribunal, officer or authority, stand stayed.
2. The accounting for the same is being done on cash basis since inception of the
company. To ensure consistency in the policy the accounting for employee benefits and
foreign exchange is being done on cash basis. The company will carry out actuarial
valuation in future so as to comply withAS-15 on Employee Benefits.
3. The Company has taken steps to get the confirmation of the balances from trade
receivables and payables, lenders and loans and advances. The confirmation received by the
company has already been submitted to the auditors.
4. During the year under review, the company, on re-examination of future profitability
and as a consideration of prudence has decided not to account for the deferred tax assets.
However till date Rs 226.95 Crores has been recognised under Deffered TaxAssets.
5. The Company has written off a sum of Rs 43.39 Crores under the head ‘Quality
Rebate & Shortage’ in the profit & loss account pertaining to stock of
Soyabean due to shortage accumulated for current period and earlier years and the document
has already been produced to the auditors.
6. The company has given advances to m/s machinery supplier amounting to Rs 11.06
Crores. The machinery supplier has contravened the terms and condition as mentioned in
agreement and we are trying to get refund back of our advances hence it has been not
written off during the financial year.
7. The Company has capitalized expenses to the tune of Rs 25.40 Crores for PULP Mill
unit till the date of last balance sheet as the said unit was not in operation since the
last 4-5 years. All the expenses incurred were capitalized however no depreciation has
been claimed during the year.
8. Comments of the Auditors have been noted with regard to impairment loss on account
of inoperative pulp unit for future compliance.
9. Cash Credit and Term Loan classified as Non-performing Accounts by the bank. The
accounting policy of the company have been maintained on accrual basis hence interest has
been provided @10.50% as the rate applicable at the time of CDR however bankers have not
charged the interest due to NPA.
10. The Company is in discussion with FCCB holders to buy back at discounted rate. Same
yet to be finalized. Once it finalized the same will be repaid. Hence in this regard the
provision of the same is being done on cash basis.
11. With regard to comment of the auditor on AS-5, some of the expenses have been
booked on cash basis which may be related with previous year but the amount is not
significant hence the impact is not material. However the company will comply the
provisionAs-5 in future.
12. The company is recognised income on accrual basis on account of VAT receivable
under PSI 2007 scheme issued by Govt of Maharashtra. It was shown under the head of "
Short Term Loan & Advances because it is receivable in one year. In earlier years also
same practice has been followed by the company.
13. Due to NPA account the same is not bifurcated.
14. The amount spent on Rajasthan, Karnataka shown under the Non-current assets of the
company because based on the fact that the amount spent is of the nature of advanced
related to upcoming projects.
+91-9892691696
