Silcal Metallurgic Ltd Directors Report.

THE SILCAL METALLURGIC LIMITED ANNUAL REPORT 2000-2001 DIRECTORS REPORT Your Directors have pleasure in placing before you the TWENTY SECOND ANNUAL REPORT of the Company for the year ended 31st March, 2001 together with the Audited Balance Sheet as at 31st March, 2001 and the Profit and Loss Account for the year ended that date. COURSE OF BUSINESS During the year under review, the production of Ferro Silicon has marginally increased to 7836 MT as compared to the previous year production of 7028 MT; correspondingly the turnover of the Company has increased by 11%. However, the increase in the turnover has not resulted increase in profitability in view of the continuous poor price realisation due to sluggish market conditions and increased in product costs. The unit at Pondicherry & Avanashi continued to be remained closed for the whole year in view of the heavy power tariff increase by the respective Electricity Boards. The steel industries sector continues to be in bad shape because of very low indigenous production and dumping of imports. The Ferro Alloy Industries which depend upon the fortune of steel industries also suffered a lot owing to the non-favourable conditions of Steel Industries. Notwithstanding the fact, your Company, made a net profit of Rs.52 Lakhs before prior period adjustments and provision for Taxation. PROJECTS The Company could not make any further progress towards Bhoothathankettu Hydro Electric Project since the portion of land by the Irrigation Department for the project has not been handed over to the Company. The Company has approached the Honble High Court of Kerala requesting their intervention and direction to the concerned authorities to hand over the land to the Company immediately. The matter is still pending. Further, no significant progress has been achieved in both the Power Projects due to paucity of funds. The Company is on the look outfor external commercial borrowings. FUTURE OUTLOOK The Companys request to the Government of Kerala and Kerala State Electricity Board to provide Power at Pre-92 Tariff till the commissioning of Bhoothathankettu Hydro Electric Project, was in vain. The Company has approached the Honble High Court of Kerala for the same along with a Petition for handing over of Land. The Companys performance depends upon the early implementation of the Hydro Electric Projects. The Directors of the Company are working in this direction. DIVIDENDS No Dividend has been recommended for the year since the Company has not earned sufficient Cash Profits. AUDITORS REPORT The observation made in the Auditors Report have been dealt within item No.2(c) and 16 of Schedule 27 - Notes forming parts of Acounts. These are self explanatory and do not call for further comments. INDUSTRIAL RELATION The Company has been maintaining cordial relationship with the Employees. DEPOSITS The Company has neither accepted nor renewed any deposits during the year and has no overdue or unclaimed deposits of any kind. ENERGY CONSERVATION, TECHNOLOGY-ABSORPTION, FOREIGN-EXCHANGE EARNINGS AND OUTGO Particulars of Conservation of Energy, Technology-Absorption, Foreign Exchange earnings and outgo in terms of requirement of Section 217(1)(e) of the Companies Act, 1956 are set out in the Annexure-A in the prescribed format, forming part of this report. CORPORATE GOVERNANCE Listing Agreement with Stock Exchanges have been amended to include Corporate Governance Code as per SEBI directives. The said Corporate Governance Code will become applicable to your Company by March, 2002. However, your Company has already initiated steps to put in place the system of Corporate Governance and all the mandatory provisions will be fully complied with before the deadline prescribed. The Audit Committee and Share Transfer Committee have already been set-up. The other information on Corporate Governance are given in Annexure-B. PARTICULARS OF EMPLOYEES No employee of the Company is covered under the provisions of Section 217(2A) of the Companies Act, 1956. DIRECTORS RESPONSIBILITY STATEMENT As required by Section 217(2AA) of the Companies Act, 1956 introduced by the Companies (Amendment) Act 2000, you Directors state that: i) in the preparation of the annual accounts for the year ended 31.03.2001, the applicable accounting standards have been followed along with proper explanation relating to material departures. ii) that the accounting policies adopted in the preparation of the annual accounts have been applied consistently and reasonable and prudent judgements and estimates have been made 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 the year ended that date. iii) 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 for preventing and detecting fraud and other irregularities. iv) the annual accounts for the year ended 31.03.2001 have been prepared on a going concern basis. GENERAL M/s. Indian Renewable Energy Development Agency Ltd., (IREDA) has also filed a case against the Company with Debt Recovery Tribunal (DRT) in line with M/s. Industrial Investment Bank of India (IIBI) which is already pending before DRT for the recovery of outstandings. The Company has requested time for making payment on the plea that the Company has incurred losses on account of continuous power-cuts imposed by the Kerala State Electricity Board. As reported in the previous year, one of the project creditors has filed a case in Honble High Court of Chennai for winding-up of the Company for non-payment of the dues to them. The Company is contending the case since this is not a fit case for winding-up. In the meantime, the said creditor has also initiated Arbitration Proceedings claiming damages. DIRECTORS Sri. K. Chandran and Sri. C.V. Krishnaswamy, Directors of the Company, retire at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. Smt. M. Roopa Rajalakshmi has been co-opted as Director of the Company till the ensuing Annual General Meeting. The Company has received notice from a member of his intention to propose Smt. M. Roopa Rajalakshmi as Director of the Company whose office is subject to retirement by rotation at the forthcoming Annual General Meeting. Sri. S. Ranganathan (Nominee of IREDA) & Smt. N. Amsaveni, Directors of the Company have resigned from the Board during the year. Your Directors place on record their deep appreciation for the services rendered by them during their tenure. AUDITORS M/s. T. Nagarajan & Co., Chartered Accountants, Coimbatore retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. APPRECIATION Your Directors acknowledge with gratitude the co-operation and assistance given by the Financial Institutions and Banks during the year under review. Your Directors also wish to place on record their sense of appreciation of the devoted services rendered by Executives, Staff and Workers of the Company. FINALE Your Directors are constantly striving to improve the performance and strength of the Company with the help of Lord Almighty. BY ORDER OF THE BOARD C.R.NARAYANASWAMY MANAGING DIRECTOR COIMBATORE 11.09.2001 ANNEXURE TO DIRECTORS REPORT ANNEXURE-A INFORMATION UNDER SECTION 217 (1)(e) OF THE COMPANIES ACT 1956, READ WITH COMPANIES DISCLOSURE OF PARTICULARS RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31st MARCH, 2001. I. Conservation of Energy a) Energy conservation measures taken : The specific energy consumption of various products is being continuously monitored and effective steps are being taken to reduce it, continuously. b) Additional investments and : The company has been spending huge proposals, if any. amounts every year for conservation of energy and reduction in consumption of Units of Power. In view of the impending Hydel Projects presently, no additional investments have been made. c) Impact of the measures at (a) : The measures have started yielding and (b) above for reduction of results in reduction in the power energy consumption and consequent consumption impact on the cost of production. II. Technology Absorption : The process know-how & product-mix has been modified to improve and optimise the performance of the Plant. III. Foreign Exchange Earnings and Outgo: Earnings - Nil Lakhs Outgo - 14.08 Lakhs