Parekh Platinum Ltd Directors Report

PAREKH PLATINUM LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT To, The Members of PAREKH PLATINUM LTD. Dear Members, Your Directors have pleasure in presenting the 2711, Annual Report together with Audited Statement of Accounts for the year ended 31st March, 2010. FINANCIAL RESULTS: Rupees in Lacs Particulars Year Ended Year Ended 31.03.2010 31.03.2009 (12 Months) (12 Months) Turnover 704.87 926.24 Profit/(Loss) Before 1358.88 (174.43) Depreciation, Interest and Tax Interest and other Financial 0.68 1.59 Expenses Depreciation 145.58 583.58 Profit/(Loss) After 1212.62 (759.60) Depreciation & Interest Fringe Benefit Tax 0.00 1.50 Deferred Tax Assets 114.09 91.65 Profit/(Loss) After Tax 1326.71 (669.45) Prior period Adjustments 2.21 12.25 Profit/(Loss) transferred 1324.50 (657.20) to Balance Sheet REVIEW OF OPERATIONS The period under review was very difficult for the company. The Company has reported a turnover of Rs.7.05 crores during the year under review. The turnover of the company & in particular, the domestic turnover have been reduced as compared to the previous year. The profit of the company mainly consists of other income. The companys performance has been affected due to take over of physical possession of Bhat unit by IFCI Ltd. coupled with lack of working capital. The company is making efforts to break the vicious cycle of mounting losses and progressively low level of operations. The Company had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) under section 15(1) of the said Act which has however been rejected. The company has filed an appeal against this order of AAIFR before the High Court, Mumbai. The said appeal has been admitted and the matter is in progress. DIVIDEND In view of the accumulated losses and negative net worth, your Directors regret their inability to recommend any dividend to the Members of the Company for the year ended on March 2010. FLOOD INSURANCE CLAIM The insurance claim filed by the Company for the damages suffered by the Company due to flood at its Mumbai plant during July 2000, is yet pending settlement. The Companys complaint with the National Commission, New Delhi, under Consumer Protection Act, 1986 has been taken up for hearing and the matter is in progress. DEPOSITS Your Company has neither accepted nor renewed any fixed deposits from the public during the year under review under section 58A of the Companies Act, 1956. STATUTORY INFORMATION A) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO. Information required 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 is given in Annexure-I to this Report. B) PARTICULARS OF EMPLOYEES. The information as required under section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended. are not given. as none of the employees qualify for such disclosure. DIRECTORS Mr. Hiten shah retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. DIRECTORS RESPONSIBILITY STATEMENT U/S 217(2AA) The Board of Directors Report: i. that in the preparation of Annual Accounts, the applicable accounting standards had been followed alongwith proper explanation relating to material departures; ii. that the Directors had selected such accounting policies and applied them consistently and made judgements 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 year; iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv. that the directors had prepared the annual accounts on a going concern basis. CORPORATE GOVERNANCE A detailed report of the Board an Corporate Governance and a certificate from practicing Company Secretary is annexed hereto , which forms part of this Annual Report. AUDITORS The Companys Auditors M/s Kastury & Talati hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received the requisite certificate pursuant to section 224 (1 B) of the Companies Act, 1956, regarding their eligibility for re-appointment as Auditors of the Company. Members are requested to consider their appointment to hold office from the conclusion of the ensuing Annual General Meeting until the next Annual General Meeting and to fix their remuneration. PERSONNEL During the year under review, the company suffered loss of production due to illegal strike by employees of the Mumbai unit under the advise from Maharashtra Navnirman Kamgar Sena [MNKS]. The company had to declare a lock out and continues to remain under lock out. The Board wishes to place on record its sincere appreciation of the contribution made by the employees at all levels despite the extremely trying times. COMMENT ON AUDITORS REPORT The auditors have commented on the take over of assets at Gandhinagar by IFCI Ltd. and sale of some of these assets. The accounting entries in this respect have not been passed. The management is unable to provide information as IFCI Ltd. is not responding to the companys request for the said information. The auditors have commented on the non-provision of interest on borrowings from Banks and Financial Institutions for the period from 1.4.2005 to 31.03.2010. The management is of the view that sufficient provision is already made in the books of account to meet the liabilities of the lenders. With regard to the auditors comments on the going concern aspect, the Management is however confident of continued operations. The auditors have commented about the realisability of dues from related parties with reference to sundry debtors, loans and advances and Deposit amounting Rs.11.97 Lacs, Rs. 6468.40 Lacs and Rs 1500.00 Lacs respectively on account of losses suffered by them and the doubtful nature of their debts and loans and advances. In the opinion of the management these debts are good debts as the same is covered by way of substantial values of tangible and intangible assets. The auditors have commented that they have not been able to obtain from the management sufficient audit evidence to provide a basis for an audit opinion and have accordingly not expressed an opinion on the financial statements. The management is unable to provide the information as IFCI Ltd. is not responding to the companys request for the said information. Hence the circumstances are beyond the control of the management. OTHER MATTERS A financial institution had initiated action under SARFAESI Act, 2002 for acquisition of assets. During the quarter ended September, 2009, IFCI Ltd. took forceful physical possession of the Companys manufacturing plant at Gandhinagar including the land, building, plant & machinery. It had issued a public notice for auction of these assets and eventually sold off some of the said assets. The Company has objected to the action under SARFESI Act by IFCI Ltd. in the DRT, Ahmedabad. The Income tax department had already attached the property at Bhat, Gandhinagar against tax demands. The IT department has filed a writ petition against IFCI Ltd. and the Company objecting to the takeover/sale of assets. This petition is pending for disposal. Dena Bank, as a leader of Consortium bankers had appointed M/s. M.M. Nissim & Co., Chartered Accountants, Mumbai, in the year 2002, as a Special Investigative Auditor to investigate the affairs of the company. They submitted their report to the members of the consortium. This report was not made available to the Company. It was only at the instance of the BIFR that the said report was provided to us in the year 2007 for the first time and after a gap of 5 years. The company was shocked to note its contents, which were absolutely false, frivolous and malafide and a number of discrepancies were observed. Various allegations made in the report were baseless. It is observed that this report forms the basis of investigation by the Central Bureau of Investigation. The Company and its Promoters have suffered a lot, both financially and otherwise. The Company has lodged a complaint against M/s. M.M. Nissim & Company, Chartered Accountants, Mumbai with the Institute of Chartered Accountants of India, New Delhi, under section 21 of the Chartered Accountant Act, 1949 for filing incorrect, misleading and fraudulent report against the Company and its promoters. ACKNOWLEDGEMENTS The Board of Directors wishes to express its gratitude and record its sincere appreciation for the commitment and dedicated efforts put in by all the Employees. Your Directors take this opportunity to express their grateful appreciation for the co-operation and support received by the company from the customers, shareholders, business partners, suppliers, various departments of governments, financial institutions and banks. By Order of the Board Parekh Platinum Limited. Rajesh J Parekh Chairman and Managing Director Place : Mumbai Date : 27th November ,2010 ANNEXURE - 1 TO THE DIRECTORS REPORT Particulars required 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 and forming part of the Directors Report for the year ended 31st March 2010. A. CONSERVATION OF ENERGY a. Energy Conservation Measures taken: Your Company is committed in saving the energy consumption by adopting various measures including improvements in process steps to effectively utilize the energy input. Some of the specific measures taken in this regard are as follows: 1. Introducing finer control in oil supply to oil fired incinerator operating system to effectively utilize the oil consumption. 2. Making provision for storage of LIDO in bulk and then establishing supply of LDO directly from refinery through tankers instead of via dealers. 3. Standardization of batch quantities for optimum utilization of melting furnaces. 4. Switching off the power source to equipments/ tube lights whenever not required. Monitoring the power factor and taking corrective measures as and when necessary to optimize it. 5. Introducing cost-effective improvements in the existing high energy- using equipment. Well controlled procedures and proper parameters set-up to focus on less energy consumption in core areas. b. Additional Investments and Proposals for reduction of consumption of energy: No major investments were made during the year under review. The Company shall always strive to achieve measures resulting in reduction of consumption of energy. c. Impact of the above measures: 1. Increased yield of products and yield of melting has now resulted in appreciable savings in energy. 2. The quality of LDO received has been better and resulted in reduction in consumption. 3. The electrical power consumption has reduced. 4. Almost no wastage of energy. d. Total energy Consumption and Energy Consumption per unit of production: (i) Powers and Fuel Consumption: Current Year Previous Year (12 Months) (12 Months) 1. Electricity a. Purchased Units [Kwh] 2,74.320 4,36,028 Total Amount (Rs) 23,19,900 37,46,857 Average Rate/Unit 8.46 8.59 (Rs/Kwh) b. Own Generation Diesel Generator Units [Kwh] - 120 Units per liter of - 0.33 Diesel oil [Kwh] Average Cost per - 117.40 Unit (Rs./Kwh) 2. L.D.O. Quantity [Liters] 19,975 25,600 Total Cost (Rs.) 8,96,470 12,37,957 Average Rate 44.88 48.36 (ii) Energy Consumption Per Unit of Production As the production quantities are amorphous it is indeterminate. B. TECHNOLOGY ABSORPTION Research And Development a. Specific areas in which R & D carried out by the Company: Continuous research is being carried out in various areas of Master Alloy amalgams. Innovations are made in techniques used for making various kinds of jewellery including studded jewellery. Indigenous development of tooling for imported machines and production techniques. b. Benefits derived: Indigenous development of tooling has led to adapting the products from imported machines as per local needs. High quality finished jewellery at competitive price is produced resulting in good name in market. c. Future Plan of Action: Development activity shall be carried on continuously in the field of Jewellery, Master Alloy amalgams using different metal composition so as to have better quality at reduced cost with minimum process time. Further development work shall be carried out in process technology for refining of precious metals from waste and scrap. d. Expenditure on R & D: Expenditure on R & D is an on going process at every stage of operation and forms part of the regular activities of the Company and hence the cost element in the form of R & D is not easily identifiable. Technology Absorption, Adaptation and Innovation: a. Efforts made: The State-of-the-Art technology from abroad was imported with a view to cater domestic as well as export market. However, it is necessary to modify the tooling and process because of the changing need of the customers. The technical team of the company could be able to do the modifications in- house. Further new designs require new masters and new toolings, which were developed indigenously. Further with a view to reduce the cost of operations your company has started using consumables, which are less costly. b. Benefits: Apart from low wastage, improved maintenance for trouble free operations and better product output, your company could generate a large number of designs of the product through design department to meet the changing market needs. c. Absorption of Technology To ensure the new and innovative product-mix, your company is continuously in touch with the new and changing state-of-the-art technology and the necessary upgradation is being done for the improvement of productivity. C. FOREIGN EXCHANGE EARNING AND OUTGO The relevant information is given in the notes on Accounts (Schedule 18 Note No.24] FOR AND ON BEHALF OF THE BOARD RAJESHJ.PAREKH CHAIRMAN AND MANAGING DIRECTOR Place : Mumbai Date : 27th November, 2010 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW: The turnover of the company & in particular, the domestic turnover have been reduced as compared to the previous year. The profit of the company mainly consists of other income. The companys performance has been affected due to take over of physical possession of Bhat unit by IFCI Ltd coupled with lack of working capital. The Company had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) under section 15(1) of the said Act has however been rejected. The company has filed an appeal against this order of AAIFR before the High Court, Mumbai. The said appeal has been admitted and the matter is in progress. BUSINESS SEGMENTS Your companys operations are broadly classified into two business segments - Jewellery Division & Industrial Products Division. (A) Jewellery Division The performance of the Jewellery division is adversely affected mainly due to the closure of Bhat operations as the physical possession of the same is taken over by IFCI Ltd. The fall in turnover is also due to high prices of Gold and sluggish domestic as well as global market. The Jewellery industry as such continues to pass through difficult times primarily on account of high prices of gold in the international as well as domestic markets. The Companys major focus is to strengihen the competitive positioning of its master alloy business with the renewed thrust on the local business. Opportunities: The master alloys have received tremendous acceptance throughout the country. Our product quality has been appreciated in the domestic markets. The Company has refocused its domestic marketing strategies to streamline the marketing activities more effectively, keeping in view the shortage of working capital requirements. Threats: The high price and volatility in the prices of gold and silver have an adverse effect on the jewellery business with the hesitant global economic recovery, jewellery demand remained heavily influenced by gold price movement. The sharp increase in gold and silver prices was the important factor in restraining the market. The company is carrying on operations from leased assets including premises and plant and machinery. The company has declared a lock out on 5th november 2010 & continued to be lock out. Review and Analysis: (Amount in Rs. Lacs) Current Year Total Sales Domestic 268.20 Export 0.50 Operating Profit/ (Loss.) 121.05 (B) Industrial Product Division: Industrial Products Division manufactures several precious metal products such as catalysts, chemicals and salts, which have industrial applications. By offering superior value to customers through innovation, the Company will continue to shift the market in its favour. The company will expand the scope and reach of its operations through intense focus on domestic business. Efforts towards higher operational efficiencies shall continue. Given the present scenario involving international competition, and consequent pressure on operating margins, the division has evolved strategies to exploit its strength and enhance business prospects. During the year under review the business of IPD division ,both domestic and export have been reduced as compared to previous year. Opportunities: The company is concentrating on silver salts, where value of material is low but the margins are considerably high. Threats: The opportunities of business in India are limited and there is lot of competition in this business. Hence profit margins are getting squeezed and quantum of business is also affected. ices was the important factor in restraining the market. The company is carrying on operations from leased assets including premises and plant and machinery. The company has declared a lock out on 5th november 2010 & continued to be lock out. Review and Analysis: (Amount in Rs. Lacs) Current Year Total Sales Domestic 403.93 Export 32.25 Operating Profit/ (Loss) (82.31) Risk and Concerns: The Companys main concerns are as under: 1 High price and Fluctuation in the price of Precious Metals. 2. The non-availability of working capital in near future. 3. General Recessionary trends prevailing globally Internal Control System and their adequacy: The Company has adequate systems of internal controls to provide reasonable assurance - that the business of the Company is conducted in a fair and proper manner. - that transactions are authorized, recorded and reported properly and - that accounting records are properly maintained and financial statements are reliable. Periodic discussions by the management with the statutory auditors and the meeting of Audit Committee of the Board of Directors regarding the issues raised from time to time on financial matters also reinforce the impact of internal controls in the Company. Human Resources: The Company firmly believes that Human Resources and knowledge capital are vital for business success and creating value for stakeholders. During the year, the Company maintained harmonious and cordial relations. No man-days were lost due to strike, lock out etc. Human resource is the strength of the company. Financial Analysis: The following are the relevant financial performance details with respect to the operational performance of the Company: Rupees in Lacs Particulars Year Ended Year Ended 31.03.2010 31.03.2009 (12 Months) (12 Months) Turnover 704.87 926.24 Profit/(Loss) Before 1358.88 (174.43) Depreciation, Interest and Tax Interest and other 0.68 1.59 Financial Expenses Depreciation 145.58 583.58 Profit/(Loss) After 1212.62 (759.60) Depreciation & Interest Fringe Benefit Tax 0.00 1.50 Deferred Tax Assets 114.09 91.65 Profit/(Loss) After Tax 1326.71 (669.45) Prior period 2.21 12.26 Adjustments Profit/(Loss) transferred 1324.50 (657.20) to Balance Sheet The turnover of the company & in particular, the domestic turnover of the company have been reduced as compared to the previous year. The companys performance continues to be affected for want of working capital and General recessionary trends prevailing globally. CAUTIONARY STATEMENT Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, availability of working capital finance, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.