filaments india ltd Directors report
FILAMENTS INDIA LIMITED
ANNUAL REPORT 2003-2004
DIRECTORS REPORT
To the Members,
Your Directors are pleased to present the Fourteenth Annual Report and
Audited Statement of Accounts for the year ended 31st March 2004.
FINANCIAL HIGHLIGHTS:
Financial highlights for year 2003-2004 is:
(Rs. In Lakhs)
Particulars 2003-04 2002-03
Income 1394.61 1,408.47
Operating & General Expenses 1362.00 1,360.99
Operating Profit 32.61 47.48
Financial Expenses 117.88 121.16
Sub Total (85.27) (73.68)
Depreciation 91.89 87.00
Profit/ (Loss) before tax (177.16) (160.68)
Provision for tax Nil Nil
Profit/Loss after tax (177.16) (160.68)
OPERATIONS AND OUTLOOK FOR THE CURRENT YEAR
Sales for the year- both local sales as well as exports- have marginally
increased over the previous year. The company, pursuant to its cost-cutting
exercise, has been able to reduce the employee costs as well as financial
expenses for the year, though marginally. However, due to the towering
costs of electricity, raw materials and other inputs, the company has not
been able to recoup its losses. As a result, the losses for the year have
been more-or-less the same as that of the previous year.
As a result of the debt restructuring exercise undertaken by the company in
accordance with the Debt Recovery Package announced by the Union
Government, the company has been able to restructure its term loan from the
industrial Development Bank of India, the benefit of which would be
reflected in the current years performance.
DIVIDEND
The Directors regret their inability to recommend any dividend for the
financial year ended 31st March 2004 due to losses of around Rs. 177 lakhs,
which the company has sustained during the year and liquidity crunch faced
by the company.
DEMATERILISATION OF COMPANYS SHARES
The Shares of the company are under the compulsory dematerialisation with
effect from 27 October 2000. The company has successfully dematerialised
more than 68% of the total issued share capital of the company.
DIRECTORS
In accordance with provisions of the Companies Act, 1956 and Articles of
Association: of the Company, Mr. K.G. Bajoria, Director of the company,
retires by rotation at the ensuing Annual General Meeting of the company
and being eligible, offers himself for re-appointment.
The company has received a request from one of-the shareholder of the
company proposing the name of Mr. Arun Phasu, as a director on the Board of
Directors of the company. Presently he is serving in an Indian IT company
and a brief bio-data is enclosed with notice of AGM.
AUDITORS
M/s S. Bhandari & Co., Chartered Accountants retires at the conclusion of
the Annual General Meeting as Statutory Auditors and being eligible, offer
themselves for re-appointment.
AUDITORS OBSERVATIONS
As regards the Auditors observations, the explanations given in Accounting
Policies and Notes on Accounts (contained in Schedule-15 of the Balance
Sheet) are self-explanatory and therefore do not call for any further
comments from the Board. Reply to specific observations of the Auditors are
as follows.
1) The company has sent out letters to its sundry debtors, sundry creditors
and other recoverable advances for balance confirmation. Some of them have
sent their replies and for remaining, replies are awaited. Some parties
have reported certain differences, the reconciliation of which is in
progress.
2) Flat purchased at Kolkata for Rs. 8.49 lakhs was acquired with an
intention to open a branch office at Kolkata, which however, was later
considered unnecessary, considering the costs involved in running and
maintaining the office. The property is now in the process of being sold.
Therefore, the property has not been registered in the name of the Company.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors states:
1) That in the preparation of annual accounts, the applicable accounting
standards have been followed alongwith proper explanation relating to
material departures, wherever applicable.
2) That the directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable and
prudent so as to give a true a fair view of the state of affairs of the
company at the end of the financial year and the loss of the company for
that period.
3) That the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and for
the prevention and detection of fraud and other irregularities.
4) That the directors have prepared the annual accounts on a going concern
basis.
FIXED DEPOSIT
The company has not accepted any deposits from the public during the year
under consideration.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
Information in accordance with Section 217(1)(e) of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is given in Annexure -A forming part of this report.
PARTICULARS OF EMPLOYEES
The company had no employee covered under Section 217(2A) of the Companies
Act, 1956 during the year.
INDUSTRIAL RELATIONS
The Industrial relations remained extremely cordial during the year.
MANAGEMENT DISCUSSION & ANALYSIS REPORT:
The Management Discussion & Analysis Report as stipulated under clause 49
of the listing agreement is attached to this report.
CORPORATE GOVERNANCE REPORT AND AUDITORS CERTIFICATE ON CORPORATE
GOVERNANCE:
The Company is committed to follow the standards of good Corporate
Governance - A report on Corporate Governance and a certificate from the
Auditors of the Company regarding compliance of conditions of corporate
governance as stipulated under Clause - 49 of the listing agreement is
attached to this report.
ACKNOWLEDGEMENTS
The Directors express their gratitude for the guidance and continued co-
apportion extended by Banks, Financial Institutions and Government
authorities. The Directors also convey their deep appreciation of the co-
operation shown by the shareholders, and also the dedication shown by the
employees and associates. The Directors also look forward to their
continued support and encouragement for a brighter tomorrow.
For and on behalf of the Board
K.G. BAJORIA C.K. SARAWGI
Managing Director Director
Place: Bhiwadi
Dated: 30th June 2004
ANNEXURE A
Report on conservation of energy, technology absorption and foreign
exchange earnings and outgo in the manner prescribed as per Companies
(Disclosure of Particulars in the respect of Board of Directors) Rules
1988, read with provision of section 217(1)(e) of the Companies Act, 1956.
A. CONSERVATION OF ENERGY
a) Energy Conservation measures taken:
The Company has installed latest plant and machinery, which is energy
efficient.
b) Additional investments and proposal, if any, being implemented for
reduction of consumption of energy:
No further specific investment is proposed in immediate future except as
required to optimise consumption of energy
c) Impact of the measures at (a) & (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods
The consumption of electricity in comparison to per Kg of yam produced has
gone up marginally which is directly attributable to increase in per unit
electricity charges.
d) Total energy consumption and energy consumption per unit of production
as per Form A below:
FORMA
(Form for disclosure of particulars with respect to conservation of energy)
A). POWER AND FUEL CONSUMPTION
FOR THE YEAR FOR THE YEAR
ENDED 31.3.2004 ENDED 31.3.2003
1. ELECTRICITY
i) Purchase units 1236747 1378205
Total amount 5608039 6091825
Rate/Unit 4.53 4.42
ii) Own Generation
a) through Diesel Generation unit 3176915 3091803
Total amount 14018274 11459100
Units per litre of Diesel Oil 4.41 3.71
b) through Steam. Turbine Generator units NIL NIL
Total amount NIL NIL
Units per litre of fuel/ Gas NIL NIL
2. Coal (Steam Coal for Boiler) NIL NOT APPLICABLE
3. Furnace Oil NIL NOT APPLICABLE
4. Other/ Internal Generation NIL NOT APPLICABLE
B) CONSUMPTION PER UNIT PRODUCTION (IN KGS.)
Product: Synthetic Yarn
Electricity Units 2.74 2.81
Furnace Oil NIL NIL
Coal NIL NIL
Other NIL NIL
B. TECHNOLOGY ABSORPTION
(e) Efforts made in technology absorption as per Form B below:
FORM B
Disclosure of particulars with respect to technology absorption.
RESEARCH AND DEVELOPMENT (R & D).
1) Specific Area in which company carried out the R & D: N.A.
2) Benefits derived as a result of the above R & D: N.A.
3) Future plan of action: N.A.
4) Expenditure on R & D
Capital Nil
Recurring Nil
Total Nil
Total R & D as percentage of total sales Nil
The quality control equipments are fully computerized and among the latest
available for the synthetic yarn industry.
B) TECHNOLOGY ABSORPTION,ADOPTION AND INNOVATION.
1) Efforts in brief made towards technology absorption, adoption and
innovation: No new technology has been adopted during the year.
2) Benefits derived as a result of the above efforts e.g product
improvement; cost reduction, product development, import substitution etc:
Not Applicable
3) In case of improved technology imported during the last 5 years,.
following information may be furnished.
A) Technology imported N.A.
B) Year of import N.A.
C) Has Technology been fully absorbed N.A.
D) If not absorbed N.A.
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
(f) Activities relating to exports; initiatives taken to increase exports;
development of new export markets for products and services; and export
plans: The company is on the lookout for new export markets consistently.
(g) Total foreign exchange used and earned:
Rs. in lacs
Particulars Fur the year Fur the year
ended 31.3.2004 ended 31.3.2003
Earned
Exports (FOB Value) 179.31 170.03
Used
Foreign Travel 0.72 1.24
Imports (CIF Value) - -
Raw Material 19.32 20.76
Components a & Spare Parts 5.83 3.52
Plant & Machinery Nil 3.88
Sales Promotion 0.24 0.12
Legal & Professional Expenses Nil Nil
Others (Capital Goods) Nil Nil
Foreign Currency loan (Capital Goods) Nil Nil
Interest on Foreign Currency Loan Nil Nil
Total 26.11 29.52
For and on behalf of the Board
K.G. BAJORIA C.K. SARAWGI
MANAGING DIRECTOR DIRECTOR
Place: Bhiwadi
Dated: 30th June 2004
MANAGEMENT DISCUSSION & ANALYSIS REPORT
INDUSTRY STRUCTURE& DEVELOPMENT:
In spite of various initiatives taken by the industry and the Government in
the recent past, the textile industry is still reeling under losses due to
the demand-supply imbalance and mounting costs. Though the interest rates
in the economy have fallen considerably in the recent past, the benefit has
not been fully passed on by the lenders to the borrowers. Consequently,
most of the units in the industry either have closed down, or have gone
sick- The cost cutting mantra remains the single largest factor deciding
the fate of units in the industry.
The Debt Relief Package announced by the erstwhile NDA Government to revive
the ailing textile industry has been a shot in the arm, giving it a much-
needed relief. However, the scheme failed to be implemented in spirit due
to the unwillingness of various lenders, thereby defeating the purpose of
the package to a large extent. The delay in its implementation too has
taken its toll. Many textile units that expected to benefit from it were
forced to close down before they could benefit from the package.
Though the closure of some units has been unfortunate, concurrently it has
been a blessing in disguise for other units of the industry. Due to the
sudden demand-supply gap recently created by the closure, the remaining
units have been able to breathe a sign of relief. This has enabled them to
implement the much needed price correction in the products that was long
pending, but was not possible due to the prevailing buyers market.
Consequently, the textile market has started to look up, indicating that
the realizations and sales of the company would improve considerably this
year over the previous year.
RISK AND CONCERNS:
Though the outlook of the market has improved in the recent times, the
company has constantly faced the problem of piling debts that it has been
trying hard to serve. With the partial implementation of Debt Relief
Package by the Financial Institutions, the cost of debt servicing has
fallen considerably. However, the quantum of debt remains a cause of
concern to the company, which more or less sets-off the fall in the
interest rates on the loans.
HUMAN RESOURCE DEVELOPMENT:
The company presently employs around 160 people. The cost-cutting exercise
undertaken by the company has resulted in the reduction of work force cost
by around 5-6%, which is a considerable amount in monetary terms. This has
enabled the company to sustain its commitment to provide the best possible
working conditions and remuneration to the existing work force.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The company has incorporated an Audit Committee on 30th March 2001 pursuant
to Section 292A of the Companies Act, 1956, consisting of three members.
The purpose of the Committee has been to advise the Board on the matters
relating to the accounting, auditing and internal controls, thereby
assisting the Board to carry out the day-to-day functioning of the company
effectively and efficiently As a result of this and other measures taken by
the company, it has identified the areas in which there is a scope to take
up the cost reduction exercise,. and the company has been constantly
working on it.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis Report describing
the Companys objectives, outlook, estimates, expectations or predictions
may be forward-looking statements within the meaning of applicable
securities laws and regulations. Actual results may differ materially from
those expressed or implied. Important factors that could make a difference
to the Companys operations include among others, economic conditions
affecting demand/ supply and price conditions in domestic and overseas
markets in which the company operates, changes in the Government
regulations, tax law and other statutes and incidental factors.
For and on behalf of the Board
K.G. BAJORIA C.K. SARAWGI
MANAGING DIRECTOR DIRECTOR
Place: Bhiwadi
Dated: 30th June 2004