Shaan Interwell (India) Ltd Directors Report.

1997 SHAAN INTERWEL (INDIA) LTD. DIRECTORS REPORT TO THE MEMBERS Your Directors submit their Twelfth Annual Report of the Company with audited accounts for the eighteen months period ended 30th September, 1997. 1) FINANCIAL HIGHLIGHTS: The financial results of the Company for the eighteen months period ended 30th September, 1997 are as under: (Rs. in Lakhs) For the Eighteen For the year months period ended ended 30/09/1997 31/03/1996 Turnover 3155.97 3540.02 Profit/Loss Before Tax (2028.71) 463.70 Profit/Loss After Tax (2028.71) 463.70 Balance Carried Forward from } 565.29 275.96 Previous Year } Less: Appropriations/Add: Writtenback General Reserve -- 46.37 Proposed Dividend 128.00 128.00 Balance carried to Balance Sheet (1335.42) 565.29 2) OPERATIONS: The turnover of the company was low in view of the delayed offtake of the new project and insufficiency of working capital further made it difficult to build up the turnover. The operating level of the new project was low and this led to low capacity utilisation and operational loss. The high debt burden lead to a very high financial loss during the period. With the total erosion of net worth, the Company is required to make reference to the Board for Industrial & Financial Reconstruction under proviso to Section 15 (1) of The Sick Industrial Companies (Special Provisions) Act, 1985. The Company is simultaneously working towards evolving a plan for rehabilitation . 3) PROSPECTS: The future outlook for the Company is encouraging in view of the increase in demand for the Companys product witnessed in the last few months. However the off-take will be slow since there is a severe working capital constraint. The rehabilitation package would focus in increasing the operating levels by exploiting the emerging business opportunity and also providing more aggressive product mix to achieve better plant utilisation. The increase in operating levels would lead to improvement in contribution which would be available for reducing the debt burden. 4) DIVIDEND: In view of the adverse results your directors regret their inability to declare a dividend for this period. 5) CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE Information required under section 217(1)(e) of the Companies Act,1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is included in Annexure to this report. 6) DIRECTORS The Directors place on record their sincere appreciation for the valuable contribution made by Mr. S. Ramanujam, Mrs. Shanti Shivkumar and Mr. S. P. Agarwal, Directors of the Company who have resigned from the Board. The Directors also wish to thank Ms. Savita Sinha who was nominated by IDBI on the Board. The nomination has been withdrawn as on date by IDBI. Mr. P. S. Srinivasan, Director retires by rotation and being eligible offers himself for reappointment. 7) PERSONNEL Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and under Section 217(1)(e) of the said Act read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988 form part of this report. However as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts is being sent to all Shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company at its Corporate Office. 8) ACKNOWLEDGEMENT Your Directors acknowledge the continued trust and confidence you have placed in the Company. The Directors record appreciation for the services rendered by the employees of the Company. They also acknowledge the co- operation rendered by the IDBI, Corporation Bank and other NBFCs. 9) AUDITORS M/s. R. Devarajan & Co. Chartered Accountants, Auditors of the Company retire and being eligible offer themselves for reappointment. 10) NOTES ON ACCOUNTS AND AUDITORS REPORT The observation of the Auditors and notes forming part of accounts are self explanatory. For and on Behalf of the Board P. S. SRINIVASAN Chairman Place : Mumbai Dated : May 14, 1998 ANNEXURE TO THE DIRECTORS REPORT Particulars required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 A. CONSERVATION OF ENERGY: Your Company continued its policy of setting high priority for the conservation of energy taking into consideration the fast depleting resources available at our disposal. Your Company has been taking appropriate measures including Energy Audit to review energy generation and consumption, proper maintenance of energy generating/consumption systems, implementing better methods of control on use of steam and electricity, etc. It has specifically endeavored to implement Steam Recycling System, Interlinked Piping System, Integration of Operations Consuming Energy, etc. to ensure optimal utilisation of energy. The above measures have resulted in reduction of energy consumption resulting in conservation of energy. Your Companys product Wonderboard enables conservation of environment as it is a substitute for Wood and is also fully recyclable in nature. B. TECHNOLOGY ABSORPTION: RESEARCH & DEVELOPMENT Your Company has established the Shaan Quality Management and Research Centre (SQMRC) at its Plant at Khadoli to continuously upgrade the quality and strength of its products. The Company has been successful in providing effective packaging solutions to various corporates and has obtained four Indiastar 9 awards from the Indian Institute of Packaging in this regard, which is the highest recognition for excellence in Packaging in India. Your Company has framed a Quality Policy it wishes to pursue and is doing its best to be the foremost in the field of Secondary Packaging. It has acquired immense benefits by the Research & Development activities undertaken by it in this regard and in its quest for technology orientation in terms of products & processes. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION Your Company has been successful in fully stabilising the Wonderboard Technology availed from its collaborator M/s. Interwell A. B., Sweden. The technical know-how for the manufacture of Wonderboard has enabled the Company to provide cost effective alternative to companies which were otherwise totally dependent on Wood. Your Company has efficiently provided innovative designs for safely reaching the customers products to their destinations. The Technology has now been well absorbed and is creating a welcome chance in the attitude of Wood users for changeover to Wonderboard. This Technology has resulted in a reduction of cost for the users, proved to be a substitute for otherwise imported packaging material, better aesthetic presentation, etc. Above all, it serves as a valuable measure for the conservation of ecology enhancing the standards of better living. Your Company has also taken up the import of Angle Board Technology from M/s. Interpack U.K. for guarding the box edges along the vertical & horizontal sides so as to improve the strength of the box. C. FOREIGN EXCHANGE EARNINGS & OUTGO: This information is given under note no. (13) V, VI, IX, XI, XII of Schedule 19 to the Accounts. For and on Behalf of the Board P. S. SRINIVASAN Chairman Place : Mumbai Dated : May 14, 1998