nicco corporation ltd Directors report


DIRECTORS

TO THE MEMBERS

For the year ended on 31st March, 2013

Your Directors present herewith their Report together with the Audited Accounts of your Company for the year ended 31st March 2013.

A. FINANCIAL RESULTS & APPROPRIATIONS (Rs. Lakhs)
2012-13
Gross Turnover : 26952
Gross Profit/(Loss) for the year : 2566
Less: Depreciation : 640
Profit/Loss after depreciation : 1926
Less : Finance cost : 4429
Profit/(Loss) before Tax : (2503)

The performance of Cables Division of your Company in particular Shyamnagar unit, had improved and the operating profit before Interest, Depreciation and Tax of Cables Division had registered an increase over 4% during the financial year. The performance of Project Division suffered serious setback due to lack of order as it is difficult to meet the qualification criteria in most tenders due to your Company’s negative net worth. The division thus suffered due to its inability to participate in most public tenders of PSUs and Government bodies. Your Company had moved a Miscellaneous Application (MA) with BIFR for formation of a Joint Venture Company with Project business between NCL and Oriental Manufacturers Private Limited (OMPL) with a stake-holding of 10% and 90% respectively. BIFR on hearing of the MA directed your Company to come up with the total Draft Rehabilitation Scheme (DRS) package instead of piecemeal proposals. Your Company thereafter moved an appeal with AAIFR, since time was considered as the essence for such strategic alliance. AAIFR hearing is still pending. As a result of all these factors your Company suffered losses of Rs. 2503 lacs during the year under review. The working capital position continued to remain short and critical throughout the year. The situation had further worsened due to continuous repayment of loans as per the CDR scheme. Owing to the high debt burden, finance cost had further increased. The interest cost was the major element of cost and had off-set the savings achieved in operations and other fixed cost. The major challenge in the current year would be to restrict further increase in finance cost though this would be difficult until BIFR approves the DRS.

In response to the application filed before BIFR, your Company had been declared sick by the order dated 7th September 2011 and Allahabad Bank has been appointed as the Operating Agency (OA) for your Company to work out the DRS package for submission to BIFR. In the joint lenders meeting held on 5th September 2012 Ernst & Young (E&Y) was appointed to study the viability and assist OA and the Company to prepare a DRS Package. E&Y submitted their report along with the DRS. The lenders are now discussing the DRS package proposed by E&Y.

B. DIVIDEND

In view of the loss suffered by the Company and the accumulated losses of the previous years, your Directors cannot recommend any dividend on Preference or Equity Shares.

C. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the listing Agreement with the Stock Exchange is enclosed in Annexure A.

D. FINANCE

The working capital position remained critical throughout the year as a result the overall financial result was not satisfactory. The operations suffered for want of funds. In view of the prevailing critical fund position the management of your Company initiated a few actions viz (i) to focus on high contribution products and (ii) to emphasise on reduction of operation cycle. Unfortunately the working capital gap was too large. The management actions yielded some results to contain the operational loss to the present level. Further delay in the decision of hiving off of Project Division by BIFR compelled your Company to succumb to a higher loss compared to the last year. The working capital position in the current year would be far more critical due to the past losses. It is therefore necessary to get the DRS approved by BIFR and implemented at the earliest and your Company’s management is striving in this direction.

The installment payments for Preference Shares of WBIDC and TDB had fallen due. Due to inability to pay the installment, your Company submitted restructuring proposal to WBIDC and TDB, which is yet to be approved. However these issues are being addressed in the DRS. As per approval of BIFR, 5,50,000 of Preference Shares of Rs.100 each and 72,00,080 Equity Shares of Rs.10 each of Nicco Biotech Limited, a subsidiary of NCL had been sold in the current year. The proceeds amounting to Rs.11.94 crore have been kept in a ‘no lien deposit account’ with Allahabad Bank. The disbursement of the said money would be done as per the direction of BIFR. Out of the fresh funds mobilized by issue of Equity Shares to Nicco Restructuring Employees Trust Fund (NRETF), the Company as per CDR scheme expended some funds for much needed Capital Expenditure. Additional capex requirements and source of funding have been considered in DRS prepared by E&Y.

During the year your Company has issued and allotted 1,10,00,000 Equity Shares of Rs 2/- each for cash at par aggregating to Rs 2,20,00,000/- to NRETF in accordance with the CDR Approval.

E. FIXED DEPOSITS

Your Company has not accepted any fixed deposits during the period under review, as such there are no outstanding of overdue deposits as on 31 st March, 2013.

F. SUBSIDIARY

Your Company sold off its holding in the subsidiary Company, Nicco Biotech Ltd. Subsequent to sale of shares of Nicco Biotech Limited, your Company has no subsidiary as on 31st March, 2013 as such attachment of accounts of subsidiary Company as required under Section 212 of the Companies Act, 1956 does not arise.

G. ENERGY CONSERVATION

The details relating to energy conservation requirements of section 217(1)(e) of the Companies Act, 1956 are not applicable.

H. RESEARCH AND DEVELOPMENT

Details in regard to Research and Development are shown in Annexure B.

I. FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of foreign exchange earnings and outgo are shown in Annexure B.

J. CORPORATE GOVERNANCE

Your Company has strictly observed the principles of good Corporate Governance through accountability and transparency.

A separate report on Corporate Governance as prescribed in the Listing Agreement of the relevant Stock Exchange forms part of the Annual Report 2012-13 along with the Auditors’ statement on its compliance (Annexure C).

K. TOTAL QUALITY AND ENVIRONMENT MANAGEMENT

Your Company’s factories at Shamnagar and Baripada are accredited to Quality Management System (QMS) under ISO 9001: 2008 and Environment Management System (EMS) under ISO 14001:2004. Both the systems continue to be maintained through periodic Internal Audit by a team of trained Internal Auditors and by Re-Certification/Surveillance Audits conducted by Indian Register of Quality Systems (IRQS).

L. FUTURE PROSPECTS

Your Directors are confident that through DRS a suitable revival restructuring scheme would be worked out for the revival of the Company under the auspices of BIFR.

M. DIRECTORS

Mr Udayan Ray, Dr Dilip Kamar Datta, Mr Sujit Poddar and Mr Shiv Siddhant Narayan Kaul retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

A brief resume of the Directors proposed to be appointed/re-appointed, nature of their expertise in specific functional areas and names of Companies in which they hold Directorships and Memberships/Chairmanships of Board/Committees, as stipulated under clause 49(IV)(G) of the Listing Agreement with the Stock Exchange, are provided in the Notice convening the 30th Annual General Meeting of the Company.

N. EXPORTS

During the year under review there had been no export.

O DIRECTORS’ RESPONSIBILITY PURSUANT TO SECTION 217(2AA) OF THE COMPANIES ACT, 1956

Your Directors confirm :

1. that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

2. that your Directors have selected such accounting policies and applied them 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 year ended 31st March, 2013 and of the profit of the Company for that period;

3. that your Directors have taken proper and sufficient care for the 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; and

4. that your Directors have prepared the Annual Accounts on a going concern basis.

P. PARTICULARS OF EMPLOYEES

Your Company did not employ any person whose particulars are required to be attached to this Report under Section 217(2A) of the Companies Act, 1956.

Q. TEAM OF SENIOR MANAGEMENT PERSONNEL

Apart from Managing Director, the Team of Management Personnel of the Company include Mr S K Pal, Executive Director, Mr V R Moza, President (Marketing), Mr A K Ghosh, President (Operations), Mr Kartick Chatterjee, Sr. Vice President (Corporate Affairs & Legal), Mr Prasanta Pandit, Associate Vice President (Finance & Accounts) and Mr Indranil Mitra, General Manager & Company Secretary who are to be reckoned as Managerial Personnel/Officer within the meaning of Clause 49 of the Listing Agreement, SEBI (Prohibition of Insider Trading) Regulations, i992 and Section 2(30) of the Companies Act, 1956.

R. AUDITORS

The Statutory Auditors of your Company M/s G Basu & Co., Chartered Accountants, retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-appointment. Your Directors recommend the re-appointment of M/s G Basu & Co., as Statutory Auditors of the Company and their remuneration needs to be fixed.

S. AUDITORS’ REPORT

The Comments made by the Auditors in their report have been duly explained in the attached Notes to Accounts and hence do not need to be dealt with here.

T. COST AUDITORS

Pursant to the directives of the Central Government under the provisions of section 233B of the Companies Act, 1956, M/s S Roy Choudhury & Co., Cost Accountants, have been appointed to conduct Cost Audits relating to cables manufactured by the Company.

U. ACKNOWLEDGEMENTS

Your Directors wish to record their sincere appreciation of the efforts put in by all the employees and their commitment during the year. Your Directors also take this opportunity to acknowledge the cooperation and assistance of Banks, Financial Institutions, Technology Development Board, the Government of India, the Government of West Bengal and the CDR Cell, BIFR. Finally, your Directors owe their gratitude to all the Shareholders and Debenture Holders for their continued support to the Company.

On behalf of the Board of Directors
Place : Kolkata RAJIVE KAUL UDAYAN RAY
Dated, the 12th day of August, 2013 Chairman Managing Director

ANNEXURE — B

ANNEXURE TO THE REPORT OF THE DIRECTORS

Information under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

1. RESEARCH AND DEVELOPMENT

The R&D Centre of your Company has been focussing on development of products and cost effective compounds for Specialised Cables and Electron Beam Irradiated Cables. The Company has successfully developed certain sophisticated Special Cables for Indian Navy.

2. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION

The Company has absorbed the updated polymer technology for development of newer compounds.

3. FOREIGN EXCHANGE EARNINGS AND OUTGO

Year 2012-13
(Rs. Lacs)
Export (including deemed exports) —
Other Foreign Exchange Earnings —
Foreign Exchange Outgo —
Import of Materials 708.93
Travelling & Others 5.05
Technical Design Nil

 

On behalf of the Board of Directors
Place : Kolkata RAJIVE KAUL UDAYAN RAY
Dated, the 12th day of August, 2013 Chairman Managing Director