alexcon roamcast ltd Directors report

ALEXCON FOAMCAST LIMITED ANNUAL REPORT 1999-2000 DIRECTORS REPORT The Members Alexcon Foamcast Limited Your Directors are pleased to present their 14th Annual Report together with the Audited Statement of Accounts of your Company for the period ended 31st March, 2000. 1. DIVIDEND In view of the losses incurred in the current year, your Director are unable to recommend any dividend. 2. OPERATIONS AND FINANCIAL STATUS As informed to you in the report of the Financial Year 1997-98, the project of the Company stands fully installed barring induction of a few balancing equipments. The Company has commenced operations. The overrun on a relatively low scale of operations. The overrun in the time and cost of the project has had a cascading effect on the finances of the Company. It has adversely affected Companys financial structure and increased the financial burden substantially due to certain extraneous factors such as highly staggered and delayed financial closure, non availability of timely and adequate working capital finance as also non availability of Tool Cost Finance which incidentally constitute critical and cost intensive component of the over all operational finance requirement. Therefore all through the year under review, the company remained financially stressed and could not have an optimal scale of operations to utilize its installed capacity gainfully. Due to the circumstances as explained above, the Company has incurred losses during the period under review and the accumulated losses as on 31.03.2000 standing at Rs. 71.77 Crore have exceeded Companys net worth which is Rs. 49.51 Crore. By virtue of the erosion of net worth, the Company comes within the ambit of Section 3 (1) (o) of the Sick Industrial Companies (Special Provision) Act 1985 (1 of 1986). The Board of Directors at their Meeting held on 23.06.2000 formed an opinion that the Company has become a sick industrial company as defined under Section 3 (1) (o) of the Sick Industrial Companies (Special Provision) Act 1985 (1 of 1986) and the steps provided under section 15 of the said act may be initiated. As a measure aimed towards a substantial restructure of the finances of the Company so as for it to be able to become more cost-competitive, the Management is exploring various alternative options. One of them is towards mobilizing an ECB loan. Your Company has approached IDBI to support this endeavor of the Company. The Management of Your Company is hopeful of the proposal fructifying. It is hoped that such a proposal could enable the finances of the Company to be favourably recasted. 3. OUTLOOK FOR THE FUTURE The Management is seized with the present circumstances and has already initiated action/measures to restructure the finances of the company and mobilize some need base resources to reduce the financial burden and increase the scale of operations. Coupled with the current status, which includes physical readiness of the project and order book position cum market conditions, the management is hopeful that the Company can expect to do better in the coming year. However, much would depend on the co- operation from the FIs / Banks to enable the Company to put its financial structure in order and be able to avail the Working Capital / Tool Cost finances adequately. It would then be in a position to cash in on the buoyant market conditions - domestic as well as international for the products the Company manufactures. The Board of Directors at their meeting held on 8th February, 2000 discussed the proposal to develop a business model / plan for IT related activities. It was thought that I.T. related activities would very soon be integral to almost as traditional businesses. It was decided that it is the right time to start taking steps towards this goal. As a matter of an "APPROACH" it is proposed that steps be initiated to generate varied information based from Companys available resources and identify outsourcing agencies for designing and developing a business model as also for supply of technology and hardware. Which would ultimately result into; a. making AFL a third generation techno-savvy business outfit, such that it more than satisfies its customers and vendors. The idea is to have the capability for on line commerce with its business associates. b. exploring and exploiting the large and niche interested viewer base of tire foundry-related entities. The foundry being a core industry the viewer base would encompass foundries per se, suppliers of a host of foundry input materials, of foundry equipments, of foundry technology, of user industries of castings. of foundry business related organizations, of universities and its large pool of engineering students and of course R & D outfits as also Government. Further, the Members of the Board were of the opinion that AFL is well positioned to explore and exploit, with minimal resource requirement, the above concept by virtue of its manpower available infrastructure, a plethora of information on lost foam and other competing technologies and a substantially large data bank on user and supplier base. For this purpose Company needs to change Memorandum of Association by inserting a new object under the heading "Other Objects". And keeping with the proposal to commence this business it is found prudent to even change the name of the Company. The resolutions to effect these alterations are included in the notice of the Annual General Meeting. 4. FIXED DEPOSITS During the period under review, the Company has not accepted any fixed deposits within the meaning of Section 58-A of the Companies Act, 1956. 5. DIRECTORS Mr. I. K. Shah and Mr. A. V. Bhansali retire by rotation and, being eligible, offer themselves for re-appointment. During the period under review, Mr. F. S. Broacha, Director has resigned from the Board with effect from 08/02/2000 due to pre-occupation with his work. The Board places on record its appreciation of the valuable advice and guidance received from Mr. F S. Broacha during his tenure as a Director of the Company. During the period under review, Mr. Dilip J. Thakkar, Alternate Director to Mr. P. Zettler has resigned from the Board with effect from 29/07/1999 due to his difficulty in attending Board Meetings. The Board places on record its appreciation of the valuable advice and guidance received from Mr. Dilip J. Thakkar during his tenure as a Director of the Company. During the period under review Mr. P. Zettler ceased to be a Director of the Company by virtue of Section 283 (1)(g) of the Companies Act, 1956 due to his absence from the three consecutive Board Meetings without obtaining Leave of Absence from the Board. During the period under review, The Industrial Finance Corporation of India Ltd (IFCI) has withdrawn the nomination of Mr. M. P. Jain as their Nominee on the Board with effect from 29/07/1999. The Board places on record its appreciation of the valuable advice and guidance received from Mr. M. P. Jain during his tenure as a Director of the Company. The Industrial Finance Corporation of India Ltd. nominated Mr. A. K. Das on the Board as their Nominee with effect from 29/10/1999. During the period under review, Industrial Development Bank of India (IDBI) has withdrawn the nomination of Mr. M. G. Bakre as their Nominee on the Board with effect from 16/08/1999. "The Board places on record its appreciation of the valuable advice and guidance received from Mr. M. G. Bakre during his tenure as a Director of the Company. 6. EMPLOYEES The relations with the employees have been cordial. Particulars of Employees as required to be disclosed under the provisions of section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended up to date can be had from the Registered Office of the Company. 7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO. A. Conservation of Energy : The new modern manufacturing plant has been set up with necessary facilities to use energy in cost effective manner. B. Technology Absorption : The Company has absorbed the time tested Lost Foam Technology (LFT) for the manufacture of Ferrous and Non-Ferrous castings successfully. 8. AUDITORS M/s. R. N. Bhansali & Co., Chartered Accountants & M/s. Mittal & Mittal, Chartered Accountants, retire at this Annual General Meeting and being eligibly offer themselves for re-appointment. You are requested to appoint M/s. R. N. Bhansali & Co., Chartered Accountants and M/s. Mittal & Mittal, Chartered Accountants, as joint Auditors for the current financial year and fix their remuneration. Requisite certificates under section 224 of the Companies Act, 1956 from the said two Auditors have been duly received. 9. AUDITORS REPORT The Notes on the Accounts referred to in the Auditors Report are self explanatory except Note No. 2.5 and Point No. 17 and 18 of the Annexure to the Auditors Report. Explanation to the Auditors comments are as follows: REPLY TO POINT NO. 2.5 : The Company has endeavored to obtain confirmation of balances from the Creditors. Adjustments to the accounts are regularly made as and when confirmations from the various parties are received. REPLY TO POINT NO. 17 OF ANNEXURE TO THE AUDITORS REPORT The Company, on account of tight cash flow condition, has been paying salaries in a staggered manner in the form of advances and has not been able to pay off the total liabilities of Provident Fund and ESIC to the authorities concerned under Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Company is taking all necessary steps to ensure that the same is paid very shortly. REPLY TO POINT NO. 18 OF ANNEXURE TO THE AUDITORS REPORT The Company has inadvertently paid TDS in excess to the extent of Rs. 96,83,632/- to the Income Tax Authorities in respect of Technical Know-how Fees. The company has also applied for refund of the excess amount and the same is expected to be refunded to the Company. The Company proposes to pay off the arrears of TDS liabilities against the refund and file returns accordingly. 10. Y2K COMPLIANCE At AFL we have already taken necessary steps to ensure that Y2K problem does not affect the companys working adversely within the organisation as well as with customers, suppliers, banks, financial institutions, etc. 11. ACKNOWLEDGEMENT Your Company continued to receive full co-operation from Industrial Development Bank of India, the Industrial Finance Corporation of India Ltd., Industrial Credit and Investment Corporation of India Ltd., Unit Trust of India, Industrial Investment Bank of India, State Bank of India. Central Government, State Government and Local Authorities. Your Directors place on record their appreciation to them. Your Directors also appreciate the employees efforts in putting their best at this critical juncture of project implementation and subsequent timely start up. for and on behalf of the Board, KIRAN P DALAL CHAIRMAN AND MANAGING DIRECTOR Place : Mumbai. Date : 23rd June, 2000