Punjab Woolcombers Ltd Directors Report

PUNJAB WOOLCOMBERS LIMITED ANNUAL REPORT 2003-2004 DIRECTORS REPORT The Members, Punjab Woolcombers Limited Your Directors have great pleasure in presenting the 28th Annual Report of your Company alongwith the Audited Statements of Accounts for the year ended on 31st March, 2004 and Auditors Report thereon. FINANCIAL RESULTS 31.03.2004 31.03.2003 (Rs. in Lacs) (Rs. in Lacs) Sales & Other Income 1414.30 1095.24 Profit/(Loss) before Financial Charges (337.07) (856.65) & Depreciation Finance Charges 1143.89 1010.39 Depreciation 253.47 243.72 Pre-Tax Profit (Loss) (1734.43) (2110.76) Balance Brought Forward (6590.52) (4479.71) Previous Year Expenses (51.54) (0.06) Balance Carried to Balance Sheet (8376.49) (6590.52) DIVIDEND: Your Directors regret their inability to recommend any dividend due to non- availability of profits. OPERATING RESULTS: During the year the total income of the company has increased due to better market conditions but due to shortage of working capital, units are still operating on job work basis. During the year companys total turnover and other income has increased from Rs. 1095.24 lacs in previous year to Rs.1414.30 lacs in current year which showed 29% growth as compared to previous year. The job charges for the year 2003-2004 were Rs.148.17 lacs as against the previous year job charges of Rs.228.25 lacs. Loss before financial charges and depreciation has reduced from Rs. 856.65 lacs in 2002-2003 to Rs.337.07 lacs in 2003-2004. The Company is making its best efforts to reduce its cash losses by increasing its own production & discouraging the job work, which will reflect the better financial results during the current year. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to Section 217 (2AA) as inserted by Companies Amendment Act, 2000 your Directors hereby confirm. (i) That in the preparation of the annual accounts, the applicable- accounting standards had been followed along with proper explanation relating to material departures except as mentioned in Auditors Report; (ii) That the Company 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 Company had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with he provisions of this Act of safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. (iv) That the Company had prepared the annual accounts on a going concern basis. FIXED DEPOSITS: During the year the Company has neither accepted nor renewed Fixed Deposits U/s 58A of the Companies Act, 1956. The Company has no overdue deposits outstanding other than those unclaimed as on 31st March, 2004. AUDITORS REPORT: The Auditors Report and Notes on Accounts are self explanatory and therefore, do not call for any comments. AUDITORS: M/s S. Tandon & Associates, Chartered Accountants, Chandigarh are retiring at the forth coming Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a consent letter Under Section 224(1)(B) from M/s S. Tandon & Associates, Chartered Accountants, Chandigarh to act as Statutory Auditors of the Company for the year 2004-2005. Your Directors recommend the appointment of M/s S. Tandon & Associates, Chartered Accountants, Chandigarh to act as Statutory Auditors of your Company for your approval for the current financial year. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information relating to conservation of energy, absorption and foreign exchange earnings and outgo as 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 which forms part of this Report. DIRECTORS: Sh. Anil Jain, director who is retiring at this meeting offers himself for re-appointment. Sh. M.K. Katara have resigned from the directorship of the company. Sh. Mahinder Jain appointed as an additional director of the company, who will hold office till this. Annual General Meeting unless appointed as director of the company in this Annual General Meeting by the members of the Company. Directors place on record their gratitude for the services rendered by Sh. M.K. Katara during his tenure as director of the company and welcome Sh. Mahinder Jain on the Board of the company. COST AUDITORS: M/s. Khushwinder Kumar & Associates, Chartered Accountants, Jalandhar has been appointed as the Cost Auditors of the Company for the year 2003-2004 and their Report will be submitted to the Deptt. Of Companies Affairs, Govt. of India in accordance with the requirement of Law. REFERENCE TO THE BOARD FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION UNDER SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985: Since the net-worth of the company was completely. eroded as per the Balance Sheet for the year ended 31.03.2001, the reference was made to the Board for Industrial & Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, which was rejected by the BIFR. The Company made an appeal (Appeal No.259 of 2001 against the said order before AAIFR. The AAIFR had disposed of the appeal vide their order dated 27.11.2001. Fresh reference on the basis of Balance Sheet as on 31.03.2001 was filed which was registered with BIFR as Case No. 341/2001. The case was heard by BIFRs Bench-I on 2.9.2003 and the Bench has reserved its orders. Honble BIFR vide its order dated 16.12.2003 appointed PNB as operating agency to conduct a special investigative audit (SIA) in the accounts of the Company and to restructure the Balance Sheet of the Company as on 31.03.2001 as per the direction of AAIFR. M/s M. Verma & Associates a firm of Chartered Accountants conducted SIA into the accounts of the company and submitted its report to PNB which was sent to BIFR and other secured creditors for their comments. SIAs conclusion is that from the restructured Balance Sheet as at 31.03.2001, it may be observed that accumulate4 losses of the company were Rs.2302.79 lac which still exceeds the networth of the Company (Rs.1338.06 lacs), meaning thereby that the company is sick as per provisions of SICA. The operating agency has concurred with SIA conclusions. A reference on the basis of the Balance Sheet for the year ended at 31.03.2002 has also been made before the BIFR which has been registered as Case No.64/2003 and is pending for hearing. PARTICULARS OF EMPLOYEES U/S 217(2A): The Particulars of employees as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are NIL. No employee is being paid salary more than the limits given u/s 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules 1975, as amended. ADDITIONAL INFORMATION-BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE: Information pursuant to Department of Company Affairs Notification dated 15th May, 1995 relating to the Balance Sheet Abstract and Companys General Business Profile are given in the Annual Report for your information. INDUSTRIAL RELATIONS: Industrial relations though remained harmonious in all the Units of the Company during the year, yet the number of workers reduced substantially due to less capacity utilization. COMPLIANCE OF CLAUSE 47 & 49 OF LISTING AGREEMENT: The equity shares of the Company are listed at Ludhiana, Delhi and Mumbai Stock Exchanges. Annual Listing Fees for the last four years has not paid to all these Stock Exchanges due to financial constraints being faced by the Company. Separate Report on Corporate Governance is annexed herewith as a part of this Report as Annexure -II. ACKNOWLEDGEMENT: Your Directors place on record their appreciation for the continuous cooperation of the workers the members of the staff and the executives ,of the Company. Your Directors also place on record appreciation of the assistance and co-operation extended by,all India Financial Institutions/ Investment Institutions and Banks. For and on behalf of the Board Sd/- Place: LUDHIANA (N.K. OSWAL) Date : 31.08.2004 CHAIRMAN-CUM MANAGING DIRECTOR ANNEXURE - I INFORMATION AS PER SECTION 217(1) (e) 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, 2004. A. CONSERVATION ENERGY: a) The Company is aware of the importance of conservation of energy and continuous efforts are being made to reduce energy cost at all levels. Special attention is being given for the use of energy efficiency equipments. During the year company reviewed and continued to pursue the energy conservation measures taken in the previous year with a view to further reduce the cost of energy and consequently the cost of production. b) The Management is committed to further identify new areas where the convention equipments can be replaced by latest equipments so as to reduce the consumption of various sources of energy. c) Total energy consumption and energy consumption per unit of production are as under: a) Power and Fuel Consumption: Current Year Previous Year 1) Electricity a) Purchased Units(lacs) 34.89 47.68 Total Amount (Rs. lac) 139.98 179.82 Rate/Unit (Rs.) 4.01 3.77 b) Own Generation Through D.G.Set Units (lacs) 0.30 0.78 Total Amount (Rs. lacs) 1.85 4.66 Cost/ Unit (Rs.) 6.17 5.98 2) Steam Coal Quantity (Tonnes) - - Total Cost (Rs. lacs) - - Avg. Rate/Tonne (Rs.) - - 3) Rice Husk Quantity (Tonnes) 7.08 26.65 Total Cost (Rs. lacs) 11.30 56.64 Avg. Rate/Tonne (Rs.) 1596 2125 Consumption per Kg. Of Production: Wool/ Woolen/ Worsted Synthetic Tops Yarn Yarn Curr. Prev. Curr. Prev. Curr. Prev. Year Year Year Year Year Year a) Electricity (Unit) 6.40 12.54 4.35 12.55 9.46 12.56 b) Coal (Kgs.) - - - - - - c) Husk (Kgs.) 18.35 22.02 - - - - B. TECHNOLOGY ABSORPTION: 1. RESEARCH & DEVELOPMENT: R&d department of the Company continued to support the Companys business by providing improved as well as new products and process to establish market leadership. a) Proper product development through extensive analysis of the existing qualities of yams have resulted in encouraging results and are expected to yield nore benefits in future. b) The Company will continue to given emphasis on product development in process, product quality, cost reduction, improvement in process productivity, safety and pollution control. c) FUTURE PLAN OF ACTION: The Company is planning to introduce various qualities of yarns, like blended yarns to increase its overall market share, Various new and unique coloured yams will also be launched shortly for the benefit of the customers at an affordable cost. d) EXPENDITURE ON RESEARCH & DEVELOPMENT: Specific areas in which R&D activities carried out by the Company has resulted in encouraging results and the benefits are expected in future: - New Product/Process Development - Technology Enhancement to active standards. - Technology upgradation Expenditure on Research & Development are very difficult,to ascertain as the same staff and equipments are used for production and quality control. 2. Technology absorption, adaptation and innovation: The Company is continuing its efforts to improve the quality of its products thereby strengthening its market share. 3. Imported Technology (Imported during last 5 years) - Nil C. FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Company has successfully entered into export market by making exports during the year. The response to its products in the international market is encouraging and repeated export orders are being received by the company b) Total Foreign Exchange used and earned: (Rs. lacs) 2003-04 2002-03 Used 45.08 35:32 Earned 325.87 288.87 for and on behalf of the Board Sd/- PLACE: LUDHIANA (N.K. OSWAL) DATE : 31.08.2004 CHAIRMAN-CUM MANAGING DIRECTOR