steel tubes of india ltd Management discussions

STEEL TUBES OF INDIA LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis for 2007-08: Company Structure and Developments Steel Tubes of India Limited was the flagship Company of STI Group at Indore (MP) since 1959. The company was engaged in manufacturing of Precision Steel Tubes and Steel Strips. The Company has seen many ups and downs in last four decades. After taking over the possession of the fixed assets and manufacturing plant of the Company by Secured Lenders there is no operational activities in the company due to sale off of all the Assets of the Company for recovery of outstanding dues by Secured Creditors under the provisions of Section 13 (2) the Securitization Act. Accordingly as on date the Company does not own any manufacturing facility since 18th August, 2006. Financial Status and Performance: The Company was having an excellent manufacturing facility and its product quality with its range of products was, very well, established and accepted by, the user segment. However recession in the user industry in the past, and uneconomic scale of operation adversely affected the financial performance of the Company. The Financial difficulty arranging working capital and entry of new producers in the market, rise in the world and domestic steel fuel prices, affected the working of the Company resulting in subsequently the sell off of all assets by the Secured Lenders. Though there were no operational activities in the company after 18th August, 2006, your Company during the financial year 2007-08 received miscellaneous income of Rs.38.86 Lacs, which includes profit on sale of assets of Rs. 26.34 lacs. After absorbing the expenditures, the Company recorded a, net profit for the year Rs.63.86 Lacs. The members are requested to take note that due to non operation and also income on sale of assets, the financial figures for the year are not comparable. Opportunities & Threats: While hearing Companys reference No. 303/2002, 80/2004 and 32/2005 on 20th March, 2006, the honorable Board for Industrial and Financial Reconstruction (BIFR) had declared the Company as sick under Section 3 (1) (0) of SICA, 1985 and appointed IFCI as Operating Agency (OA) to prepare a scheme for rehabilitation of the Company involving change in management. However-the Secured Creators of the Company acting under the lead of IDBI / SASF, who took possession of the assets of the Company to recover their dues under the SARFAESI Act, 2002, represented before the honorable Board of BIFR in the hearing held on 7th December, 2006, that in view of the steps of possession of all assets taken over by the Secured Creditors and thereafter sale of the assets to M/s. Caparo Engineering India Private Ltd., the proceeding before the honorable Board of BIFR is to be abated. Future Outlook: The Company also wishes to restart its activities for general engineering operations and will submit a revival plan for the Company. The honorable Board has however accepted the contention of Secured creditors under Section 15 (1) of SICA71985.. The Company wishes to submit its rehabilitation plans for revival of the Company, so that the liabilities of the unsecured creditors an so be dealt with suitably. Industrial Relation and Human Resources Management: As on date no employee working in the Company since 8th August, 2006. All the dues of erstwhile employees of the Company have Been amicably settled. The Company has always followed the policy of continuous upgradation of its employees. Development of available Human Resources by imparting regular on the job training has been given an important thrust in the HRD policy of the Company.