saurashtra paper board mills ltd Directors report

SAURASHTRA PAPER & BOARD MILLS LIMITED ANNUAL REPORT 2000-2001 DIRECTORS REPORT Your Directors have pleasure to present 27th Annual report together with the statement of accounts, for the financial period ended 30th September, 2001. Dividend The Board of Directors do not recommend payment of dividend for the year under consideration for both, Equity and Preference Shares. Operations & Performance Whilst, companys unit at Navagam is operational, the unit at Shapar is temporarily closed since April 2000. Aside from the financial crunch, which engulfed and diabled the company to carry out the operations at Shapar, the draught in Saurashtra region made it very difficult in the fast two years the availability of water that is very essential in the process of paper manufacturing. The companys accumulated losses (Rs.1283.06) at the end of financial years 30.09.2000 exceeded its net worth (Rs.864.27) and therefore the company came within the perview of Section 3(1)(o) of Sick Industrial Companies Act, 1985 and was declared a sick undertaking in August 2001. IDBI has been appointed as an Operating Agency to examine the viability of the company and submit the, Rehabilitation Scheme of the company to Hon BIFR. During the year, the stock of raw materials amounting; to Rs. 314.25 lac, lying at Shapar plant of the company was found to have been substantially damaged and deteriorated. On the basis of an in house technical evaluation made lay the company, the loss on account of this damage & deterioration amounting to Rs. 293.08 lac has been charged to Profit & Loss account. Business Restructuring Incurrence of losses and subsequent declaration of Sick Undertaking has left a deep mark on the functioning of the company. However, the management is confident to reengineer the operations of the company and strategically leverage to propel the company in to the good working platform. The management is in the process of working out an effectual business plant to translate its vision of achieving strategic positioning and emerge as a key player into reality. Future Outlook And Market Scenario The general Indian Industry was submerged under prolonged economic slump and has started unfolding in the changing scenario in the later months of 2000. The demand for paper will continue to be good in the foreseeable future with the expected increase in the level of literacy, standard of living and the disposable income of the people in the coming years. Within the paper industry, according to CRISIL INFAC, tile prospects of demand for writing printing palter and the industrial Kraft paper, would also continue to grow in demand in the coming years, albeit at relatively modest rates (CAGR) of 5.9 and 6.9 respectively in the period 2001-05. Net realisations are expected to improve in tile paper industry due to overall favourable demand supply situation and the expected increase in the input costs. In view of this, the companys revenue models are also expected to witness tit upward trend. Public Deposits The total amount of fixed deposits received by the company front the shareholder and the public stood at Rs. 243.60 lass. The company has Rs. 211.25 deposit, which arc matured and claimed, but remained unpaid. As per the directives from The Company Law Board, Western Region Bench (Mumbai) vide order dated 10th January 2002 the repayment of deposits along with interest to all its depositors is to be made in accordance with the Revival Scheme which may be approved by BIFR. The company has provided for the Restructuring of Fixed Deposits in its Revival Scheme submitted to IDBI (Operating Agency). Directors Pursuant to the newly incorporated provision of Section 274 (1)(g) of the Companies Act, 1956 all the Directors of the company become disqualified w.e.f. 13th December, 2001, due to Companys default in repayment of Public Deposit. However, existing Directors of the Company can continue in their office until the expiry of their existing term. At the forth coming Annual General Meeting of the company term of Directors namely Shri Shectal S. Mehta and Shri Hemant I. Shah expired and they call not be reappointed as explained above. The company has prayed to Honble BIFR in its Revival Scheme submitted to IDBI (Operating Agency) for exempting from the applicability of provisions of Section 274(1)(g) of the Companies Act with regard to the dis- qualification of Directors of the company to hold the office of Director during the operative period of the scheme. Statutory Disclosures Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed hereto. Statement pursuant to Section 217(2A) of the Companies Act, 1956 is not applicable. Auditors Report With regard to the various qualifications made by Auditors in their Report, Notes forming part of the Schedule : R of the Accounts are self explanatory. Auditors You are requested to appoint Auditors at the forthcoming Annual General Meeting and to fix their remuneration. Directors Responsibility Statement Pursuant to Section 217(2A) of the companies (Amendment) Act, 2000, the directors confirm that: 1. In preparation of the annual accounts, applicable accounting standards have been followed except with regards to the notes no. 3 & 9 of schedule R forming part of the Accounts; 2. Appropriate accounting policies have been selected and applied consistently and have made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of the affairs of the company as at September 30, 2001; 3. Proper and sufficient care has been taken 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; 4. The annual accounts have been prepared on a `Going Concern basis. Acknowledgments Your Directors place on record their appreciation of the unstinted support given by the employees and the management in the conduct of business. They also record their appreciation for co-operation received during the year from Industrial Development Bank of India, Gujarat Industrial Investment Corporation Ltd., State Bank of India and Bank of India. The directors also wish to thank their Shareholders and Customers for their continued support. For & on Behalf of Board of Directors Place: Rajkot Shashikant K. Mehta Date : 22.03.2002 Chairman ANNEXURE TO THE DIRECTORS REPORT Information under section 217(1)(e) of the Companies Act, 1956 read with the Companies (disclosure of particulars in the Report of Board of Directors) Rules 1988 and forming part of the Directors Report for the year ended 30th September, 2000. A. Conservation of Energy: a) Energy conservation measures taken : Company undertook appropriate steps to avoid undue loss of energy during; the year by constantly monitoring energy consumption levels. b) Additional investment proposals, if any being, implemented for reduction of energy consumption. : Not Quantifiable c) Impact of measures at (a) and (b) for reduction of energy consumption and consequent impact on the cost of production of goods : Not Quantifiable FORM- B (See Rule-2) B. Technology Absorption 2001 2000 (12 Months) (9 Months) I. RESEARCH & DEVELOPMENT (R & D) 1. Specific areas in which R & D : NIL NIL carried out by the company 2. Benefits derived as a result of NIL NIL the above R & D 3. Future plan of action. NIL NIL 4. Expenditure on R & D : NIL NIL (a) Capital NIL NIL (b) Recurring NIL NIL (c) Total NIL NIL (d) Total R & D expenditure as a percentage of total turnover. NIL NIL H. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION 1. Efforts, in brief, made towards NIL NIL technology absorption, adoption and innovation 2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development; import substitution etc. 3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished (a) Technology imported : Deinking and Dispersion Technology (b) Year of import : 1995 and 1996 (c) Has technology been fully absorbed? : Yes (d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action. : N.A. 2001 2000 (12 Months) (9 Months) C. Foreign Exchange Earnings and Outgo: 1. CIF value of Imports i) Stores NIL NIL ii) Waste paper NIL 1,68,83,737 iii) Chemicals NIL NIL 2. Expenditure incurred in foreign currency i) Foreign Travels 3,85,145 39,002 3. Amount remitted (luring the NIL NIL year in foreign currency on account of dividend to non-resident shareholders. 4. FOB Values of Export NIL 33,62,420 For & on Behalf of Board of Directors Place: Rajkot Shashikant K. Mehta Date : 22.03.2002 Chairman