aec enterprises ltd Directors report

AEC ENTERPRISES LIMITED DIRECTORS REPORT The Shareholders of AEC Enterprises Limited, The Directors have pleasure in placing before you the 19th Annual Report and the Audited Accounts of the Company for the 15 months period ended June 30, 1998. 1. DIVIDEND Due to losses incurred by the Company, your Directors are unable to recommend payment of any dividend during the current year. 2. TAKE OVER BID LAUNCHED ON THE COMPANY The Company had availed an Inter Corporate Deposit facility of Rs.100.00 lacs from M/s Peacock Chemicals Pvt Ltd (PCPL) and as a matter of providing security towards the repayment of the said ICD, the holding Companies had pledged some shares held by them in the Company with PCPL. PCPL attempted to take over the company by way of making a public offer in terms of SEBI Takeover Regulations. The Company filed an application with Honble High Court of Delhi for granting permanent injunction on the take over bid. The Honble High Court of Delhi has granted permanent injunction vide its order dated August 31, 1998. However, PCPL have preferred an appeal with the Honble High Court of Delhi which is yet to be admitted. The next date of hearing has been fixed for January 08. 1999. 3. OPERATION 8 FUTURE OUTLOOK M/s. Trenewan Investments Pvt Ltd, Mauritius who are the majority shareholders in AEC Holdings Pvt Ltd, AEC Capital Market Ltd and AEC Investments Ltd, nave appointed Mr.V.Swaminathan and Mr.Navneet Kampani as their representatives on the Board of the Company at the meeting of Board of Directors held on August 18,1998. Further, it has also been decided that the day to day operations of the Pithampur unit will be looked after directly by these two Directors. Therefore, currently the operations of the Pithampur unit are being monitored by these two Directors. Industrial Products Division The performance of the Industrial Products Division of the Company has been severely affected by the on going recession in the economy in general, resulting in lower sales and profits consequently. The future outlook of the Division will depend on lifting of recessionary conditions and improvement in business environment. Acrylic Blankets Unit Domestic Market The domestic market offers tremendous potential which the company proposes to capitalise upon. However, being an Export Oriented Unit the Company has limitation of selling only 25% of its exports in the domestic market. With a view to increase the profitability of the company, the Board of Directors have decided to explore the possibility of converting this unit from an EOU to Zero Duty EPCG Unit. The requisite application for this purpose has been filed and final clearance is awaited. Export Market The export markets continue to be marked by very low price realisations ruling in the Middle East, which is the major market for the companys products due to severe competition in this market segment from Korea and China. The Company is in the process of exploring new markets like Europe, Canada, Australia and New Zealand. 4. DIRECTORS 4.1 ILFS Venture Capital Fund Ltd (Formerly Credit capital Venture Fund (India) Ltd) who have been holding 7,50,000 Equity Shares in the Company and in terms of shareholders agreement, have withdrawn the nomination of Shri Rahul D.Shah as their Nominee Director on the Board of the Company. The Board place on record its deep sense of appreciation for the services rendered by Shri Rahul Shah. 4.2 Shri C.K.Park and Smt. Deepa S.Apte, Directors of the Company have resigned and have requested to be relieved. The Board of Directors would like to place on record its deep sense of appreciation for the services rendered by the two Directors. 4.3 Shri R.K.Garg, Director of the Company expired on October 07,1997. The Board place on records its sense of appreciation for the valuable services rendered by Shri R.K.Garg. 4.4 Shri V.Swaminathan and Shri Navneet Kampani have been appointed as Directors on the Board of the Company as representatives of holding Companies of your Company. Their office is liable to retire by rotation and they are also eligible for re-election. 4.5 Shri G.P.Sharma,Dy General Manager, MPSIDC has been nominated as its Nominee Director on the Board of the Company in place of Shri J.R.Verma. The Board places on record its deep Sense of appreciation for the services rendered by Shri J.R. Verma. 4.6 In accordance with the provisions of Section 255 of the Companies Act, 1956 and the Companys Articles of Association Shri Sanjeev R.Apte and Shri Vasantlal D.Mehta Directors of the Company retire by rotation and are not seeking re-appointment. 5. AUDITORS The Auditors, M/s V.V.Kale 8 Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Me-eting and being eligible offer themselves for re-appointment. They have furnished a certificate to the effect that the re-appointment, if made, will be in accordance with sub-section (1B) of Section 224 of the Companies Act, 1956. 6. FIXED DEPOSITS During the period under report, your company has not accepted any Fixed Deposit within the meaning of Section 58(A) of the Companies Act, 1956 and the rules made thereunder. 7. PARTICULARS OF EMPLOYEES Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are annexed and forms part of this report. 8. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO: Information as per Section 217 (i)(e) read with Companies Disclosure of particulars in the report of Board of Directors Rules 1988 is given below :- Foreign Exchange Earning Rs.652.60 lacs Foreign Exchange Used Rs.629.56 lacs 9. PARTICULARS OF ENERGY CONSERVATION A) Conservation of Energy Since during the period under report, the Acrylic Blankets unit of the company has not functioned to the optimum capacity, the company could not implement full fledged measures for conservation of energy at the manufacturing unit. However, every effort is being made to conserve the energy during the manufacturing process. B) Technology Absorption The Company has successfully completed the technology absorption process. However, continuous efforts ar being made to improve the productivity and remove all the bottlenecks in the process. 10. As regards the Auditors observations, they are self explanatory and do not require our further comments. 11. ACKNOWLEDGEMENTS The Directors express their appreciation for the dedicated and committed hard work of the companys personnel, at all levels. Your Directors also wish to thank the companys bankers, financial institutions, shareholders and business associates for their continued support and co-operation. FOR AND ON BEHALF OF THE BOARD R. D. APTE CHAIRMAN & MANAGING DIRECTOR PLACE: NEW DELHI DATE : 24-11-98