Birla Machining & Toolings Ltd merged Directors Report

BIRLA MACHINING AND TOOLINGS LIMITED (FORMERLY DAGGER FORST TOOLS LIMITED) ANNUAL REPORT 2010-2011 DIRECTORS REPORT To The Members The Directors present hereunder the 45th Annual Report on the Business and operations of the Company along-with the Audited Statement of Accounts of the Company for the year ended 31st March, 2011. The financial results for the year are summarized as under: FINANCIAL RESULTS Amount (Rs) 2010-11 2009-10 (12 Months) (12 Months) Income 2,11,10,333 5,45,92,510 Profit/(Loss) before Interest, Depreciation and Taxation (23,49,812) (7,48,39,883) Less: Interest 1,11,545 1,51,19,148 Less: Depreciation 10,19,992 67,70,242 Profit/(Loss) before Exceptional Items (34,81,349) (9,67,29,273) Exceptional Items - (6,42,11,667) Profit/(Loss) after Exceptional items before Tax (34,81,349) (16,09,40,940) Profit/(Loss) from Continuing Operations (34,81,349) (1,81,54,247) Profit/(Loss) from Discontinuing Operations - (14,27,86,693) (34,81,349) (16,09,40,940) Less: Provision for Taxation: For Current Tax 22,000 1,18,23,000 For Earlier Year 1,34,111 - Deferred Tax (Assets)/Liabilities - - Profit after Tax (36,37,460) (17,27,63,940) Add: Balance bought forward from previous period (20,48,98,613) (3,21,34,673) (20,85,36,073) (20,48,98,613) APPROPRIATIONS Dividend Dividend Tax - - Balance carried to Balance Sheet (20,85,36,073) (20,48,98,613) DIVIDEND Considering the financial performance of the Company for the financial year ended March 31, 2011, your Directors regret their inability to recommend dividend on the equity shares. PERFORMANCE REVIEW The income of the Company for the financial year 2010-11 stood at Rs.211.10 Lacs as against last years Rs. 545.93 Lacs. The Loss before tax is Rs. 34.81 Lacs as against Loss before tax of Rs. 1,609.41 Lacs of corresponding previous year ended 2009-10. The Loss after tax stood at Rs. 36.37 Lacs as against Loss after tax of Rs. 1,727.64 Lacs of corresponding previous year ended 2009-10. FUTURE PROSPECTS/OUTLOOK OF THE COMPANY The Board of Directors of the Company in their meeting held on April 29,2011 approved the Scheme of Amalgamation of the Company and Birla AccuCast Limited with Biria Precision Technologies Limited (the Transferee Company) subject to the approval of shareholders .of the Company and other regulatory authorities. Birla AccuCast Limited is engaged in the business of foundry, produces shell moulded ferrous castings, straddling the entire spectrum of nodular, vermicular and Grey Cast Iron, for automotive, hydraulic and engineering industries. Biria Precision Technologies Limited is engaged in the business of Machining of Precision Components, manufacturing of high speed steel cutting tools, precision AT3 Class tool holders, HSK tooling, Expanding Mandrels and Sleeves besides advanced products like hydro grip and shrink fit CNC toolings. It is proposed to realign businesses of the Company along with the business of above two Companies from a perspective of fund-raising, future growth and increase in intrinsic value of shareholders of the merged/consolidated Company. Therefore, with a view to facilitate the aforesaid decision, it is proposed to amalgamate Birla AccuCast Limited, Birla Machining & Toolings Limited with Birla Precision Technologies Limited. The Company has received No Objection to the proposed Scheme from Bombay Stock Exchange Limited. The appointed date of the Scheme of Amalgamation is I st April, 2010 subject to approval of the High Court of judicature at Bombay. DIRECTORS Smt Avanti Birla and Shri Shailesh Sheth, Non-Executive Directors of the Company retires by rotation and being eligible, offers themselves for re- appointment. Brief resume of directors proposed to be re-appointed/appointed including their other directorships are given in the Report on Corporate Governance forming part of the Annual Report. INSURANCE All properties and insurable interests of the Company have been adequately insured. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO During the year under review, the Company had taken effective steps at every stage to reduce energy consumption and conserve energy in all phases of operation. Information as per Section 217(I)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed as Annexure A. PUBLIC DEPOSITS: Your Company has not accepted any fixed deposit from the public. As such, no amount of principal or interest is outstanding as on the Balance Sheet date. EMPLOYEES During the year under review, there was no employee covered under the provision of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended by Notification GSR 289(E) dated 31.03.2011, General Circular No. 23 dated 03.05.2011. DIRECTORS RESPONSIBILITY STATEMENT The Company is in compliance with various accounting and financial reporting requirements in respect of the financial statement for the period under review. Pursuant to Section 217(2AA) of the Companies Act, 1956, and in respect of the annual accounts for the period under review, the Directors hereby confirm that: I) In the preparation of the annual accounts, the applicable accounting standards had been followed; II) Appropriate accounting policies have been selected and applied 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 year and of the profit or loss of the Company for that period; III) Proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities have been taken to the best of their knowledge and ability; IV) The annual accounts have been prepared on a going concern basis. AUDITORS M/s. CHATURVEDI & SHAH, Chartered Accountants, the Statutory Auditors of the Company, retire at the ensuing Annual General Meeting. They have confirmed their eligibility and willingness for reappointment. The Directors recommend their reappointment by the Members at the forthcoming Annual General Meeting. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis Report, Corporate Governance Report and Practicing Company Secretarys certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. HUMAN RESOURCE & INDUSTRIAL RELATIONS Industrial relations were harmonious throughout the year. The Board wishes to place on record their sincere appreciation to the cooperation extended by all employees in maintaining cordial relations. ACKNOWLEDGEMENT Your Directors take this opportunity to thank all investors, clients, vendors, banks. Regulatory and Government authorities and stock exchange for their continued support. The Directors also wish to place on record their appreciation of the contribution made by business partners/associates at all levels. For and on behalf of Board of Directors Place: Mumbai Rajesh shah Tushar Dey Date : August 8, 2011 Director Director ANNEXURE A TO DIRECTORS REPORT I. Information under Section 217(I)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in Report of Board of Directors) Rules, 1988 ami forming part of die Directors Report for the year ended 31st March, 2011 A. Conservation of Energy: During the year under review, efforts continued to conserve and avoid wastage of energy in every possible way. B. Technology Absorption: Research & Development: 1. Specific areas in which R&D carried out by the Company: Further Developments in existing Testing Systems, Procedures and facilities for improving product quality and performance. 2. Benefit derived as a result of the above R&D: Improvement in the quality of products and reduction in rejections. 3. Expenditure on R & D: The expenditure on in-house R&D is shown under the respective heads and no separate account is maintained. 4. Technology Absorption, Adaption and Innovation: In order to keep abreast of the developments in technology, latest machines and testing equipment were regularly added to our facilities. C. Foreign Exchange Earnings and Outgo: 1. Activities relating to the exports, initiatives taken to increase exports: Not Applicable. 2. Total foreign exchange used and earned: (Rupees in Lacs) 2010-11 2009-10 (12 Months) (12 Months) Total foreign exchange used 16.33 40.71 Total foreign exchange earned - 31.95 MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT a) Economy and Market Trends: Global and Indian Economy After witnessing a sharp downturn in 2008 and 2009, the global economy had started recovering with positive quarterly growth in US, Germany, France, etc. But the recent downgrading of US rating and the fears of extremely high national debt in Italy, Greece, Portugal and Spain makes the Western outlook cautious. But Indian economy being mostly domestic-growth driven is not likely to be affected much. In fact if the material prices drop because of negative Western growth it could be beneficial for India in terms of lowering cost of import and could bring down the inflation rate. As per the data released by International Monetary Fund (IMF), World GDP grew by 5.0 per cent in 2010. In financial year 2011, Indias economic performance was powered by a rebound in agricultural and service sector. The economy grew by 8.6 in financial year 2011. About the Company As already mentioned in the Directors Report, the Board of Directors of the Company in their meeting held on April 29,2011 approved the Scheme of Amalgamation of the Company and Birla AccuCast Limited with Birla Precision Technologies Limited (the Transferee Company) subject to the approval of shareholders of the Company and other regulatory authorities. It is proposed to realign businesses of above three Companies from a perspective of fund-raising, future growth and increase in intrinsic value of shareholders of the merged/consolidated Company. Therefore, with a view to facilitate the aforesaid decision, it is proposed to amalgamate Birla AccuCast Limited, Birla Machining & Toolings Limited with Birla Precision Technologies Limited. The Company has received No Objection to the proposed Scheme from Bombay Stock Exchange Limited. The appointed date of the Scheme of Amalgamation is I st April, 2010 subject to approval of the High Court of Judicature at Bombay. b) Opportunities/Future Outlook: It is predicted that emerging economies like India would continue to register reasonable growth in the coming decade as the Indian economy is characterized on strong fundamentals. The Company is very closely monitoring the changes in the market conditions, and making all efforts to position itself, at the right time and at the right place. From the proposed Amalgamation, the Company expects to achieve the synergy of Machining Business that exists between three entities to the best advantage of all stakeholders and also to achieve cost savings from more focused operational efforts, simplification of business processes, improved procurement and the elimination of duplication. c) Segment-wise Performance: The segment wise performance in detail is given in Note 13 of Schedule 19 to the audited accounts of the Company as available in this Annual Report. d) Threats/Risks & Concerns: Normal business risk is associated with machining industry, such as need for continuous technological up-gradation to meet customers high expectations and stringent quality requirements. Increase in input costs, changes in tax structure, change in interest rates, change in government policies/ laws of land, development and stability of Indian economy against the negative external and internal forces may also impact the overall performance of the Company. Profitability may be affected on account of competition from existing and prospective manufacturers of the Companys products. Further, as the Company proposes to amalgamate (discussed above), the delay in Government approvals may also affect the performance of the Company. All these risks are continuously reviewed by the management and acted upon. e) Internal Control Systems and their adequacy: Your Company continues to remain committed to maintain high standards of internal control designed to provide adequate assurance on the efficiency of operations and security of its assets. The adequacy and effectiveness of the internal control across various activities, as well as compliance with laid down systems and policies are comprehensively and frequently monitored by your Companys management at all levels of the organization. f) Human Resources and Industrial Relations: Your Company continues to lay emphasis on qualitative growth of its human resources by providing congenial and constructive work environment, in consonance with its belief that the real strength of its organization lies in its employees. Industrial relations were cordial and satisfactory throughout the financial year. g) Financial highlights: a. Sales and Other Income The income during the financial year 2010-11 was Rs.211.10 Lacs against Rs. 545.93 Lacs during the last financial year 2009-10. b. Profit/Loss During the financial year 2010-11 the Company has incurred a loss of Rs. 34.81 Lacs as against loss of Rs. 1609.41 Lacs before Tax in the financial year 2009-10. However, after taking into consideration tax adjustment the net loss of the Company during the year 2010-11 was Rs 36.37 Lacs against net loss of Rs 1727.64 Lacs for the year 2009-10. Forward Looking Statements Statements in this report on Managements Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. Forward-looking statements are based on certain assumptions and expectations of future events and the Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The important factors that could make difference to the Companys operations includes the economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, change in Government regulations, tax Saws and other statutory and numerous incidental factors. The Company assumes no responsibility to publicly amend or revise the forward-looking statements or any loss to the investors in the shares of the Company making investments relying on such forward-looking statements.