wilwayfort india ltd Directors report

WILWAYFORT INDIA LIMITED ANNUAL REPORT 2006-2007 DIRECTORS REPORT To The Members, The Directors place before you the 21st Annual Report together with the Audited Statement of Accounts of the Company for the financial year ended 31st March, 2007. FINANCIAL RESULTS: The financial results of the Company for the year under review as compared to the previous year are summerised below for your consideration. (Rupees in lacs) Current year Previous year PARTICULARS ended 31.3.2007 ended 31.3.2006 Sales & other Income 1493.56 1670.90 Profit/(Loss) before Interest and Finance charges and (24.27) 1.36 Depreciation: Interest and Finance Charges 193.75 73.61 Profit / (Loss) before Depreciation (218.02) (72.25) Depreciation 81.63 81.75 Profit / (Loss) before tax (299.65) (154.00) Expenses relating to previous year 46.66 (6.90) Net Profit / (Loss) (346.31) (160.90) Profit / (Loss) brought forward from previous year (2382.25) (2221.35) Profit / (Loss) carried to Balance Sheet (2728.56) (2382.25) DIVIDEND: In view of the carry forward of accumulated losses in the Company, the Board of Directors regret their inability to recommend payment of any dividend for the financial year under review. CURRENT OPERATIONS: The sales revenue including other income for the financial year ended 31st March, 2007 was Rupees 1493.56 lacs as compared to the last year sales revenue of Rupees 1670.90 lacs. The Company made losses of Rupees 299.65 lacs in the financial year 2006-2007 compared to Rupees 154.00 lacs in the previous financial year 2005-2006. Margins were under pressure due to volatility & higher raw material prices due to lack of working capital availability, Company could not utilize installed capacity at optimum level. During the year under review, higher capacity installation by the captive users as well as unorganized sector in the market also affected the business opportunities in domestic as well as export market. INDUSTRY STRUCTURE AND DEVELOPMENT: Metallising and Coating of Polyester Film segment of the packaging industry made a significant expansion & capacity enhancement during the year. The polyester film producers themselves to avail the opportunity of the higher demand from domestic as well export market installed the fresh capacities in metallising and coating. The metallising and coating segment of packaging industry grew at the rate of 12% as compared to the growth of 20% of overall Packaging Industry. Metallising and Coating of Polyester Film segment is contributing 40% market share with the organised sector in which your Company is operating and rest 60% market share is controlled by unorganised sector. OPPORTUNITIES AND THREATS: The demand of the product in the domestic as well as international market is growing gradually which provide an opportunity to the Company to make an aggressive marketing with the available resources. Last year the installed capacity of Polyester Film in the domestic market was approximately 1,50,000 Metric Ton. With the hike in overall capacity in the industry by way of modernisation and expansion during the current financial year, the demand and supply of raw material i.e. Polyester Film has been disturbed which has resulted into instability in the raw material prices. The Company is exposed to the risk of fluctuating interest rates and Polyester Film prices, The Company being a Sick Industrial Company also facing cash flow problem in day to day affairs. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE: The Companys operating business is organised and managed according to the nature of product with Single Primary Reportable Segment comprising of manufacturing and supply of Metallising, Coating and Embossing of Plastic Film and Papers. The detail of segment reporting is given at Schedule XVI (25) of the Annual Accounts. FUTURE OUTLOOK: With the good economic and industrial scenario in the Country, which is reflected with the higher GDP indication, we expect a reasonable growth in product demand in the domestic as well as international market. In view of growing organized retail market in India, the demand of FMCG will increase significantly which may have positive impact on overall packaging industry. The Company will make a efforts to take advantage of every opportunities within its constrain and resource available. INTERNAL CONTROL SYSTEMS: The Company has evolved a system of internal control to ensure that the assets are safeguarded and transactions are authorized, recorded and correctly reported. Planned periodical reviews are carried out resulting in identification of control, deficiencies and opportunities for bridging gaps with best practices. The Audit Committee reviews the adequacy of the internal control systems. REHASILITION PACKAGE: Based on the compromise proposal submitted by the Company to Vijaya Bank (lending bank) for One Time Settlement (OTS), the lending bank has agreed to accept the sum of Rs. 500 lakhs (Rs. Five Crores only) in full and final settlement of the dues payable in quarterly installment excluding interest @ 5% per annum of the offer amount on reducing balance basis and other terms and conditions mentioned in their letter of acceptance. However, due to acute financial problem in the Company, the Company could not make payment of OTS amount to Vijaya Bank on schedule time. Consequently, the lending bank took action for the possession of properties of the Company under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (54 of 2002). The management is taking all possible steps to replace dues of Vijaya Bank with other scheduled Bank / financial investor / body corporate. Part payment of OTS amount has been made to Vijaya Bank. The management is committed to liquidate the liabilities of secured and unsecured creditors with all possible resources. HUMAN RESOURCE DEVELOPMENT: The industrial relations remained cordial during the year under review. Mapping of jobs has been initiated to ensure that the right person is allocated the right job. The Company reviews manpower need and allocation of job from time, to time to ensure the best utilization and growth of the workforce. CAUTIONARY STATEMENT: Statements in this report, describing the Companys objectives, expectations and/or predictions, 1, may be forward looking within the meaning of applicable securities law and regulations. Actual results may differ materially from those stated in the statement. Important factors that could influence the Companys sales revenue, includes global and domestic supply and demand conductions, affecting selling prices of finished goods, availability of inputs and their prices, changes in the government regulations, tax laws, economic development within the country and outside and other factors such as litigation and industrial relation. PUBLIC DEPOSITS: The Company has not invited any deposits from the Public within the meaning of section 58A of the Companies Act, 1956 and rules framed thereunder, during the financial year under review. AUDITORS REPORT: The management wishes to make following comments on the observation made by the auditors in their report: i. Payment of Sales Tax Rs. 3414655/- and Entry Tax Rs. 255008/- amounting to Rs. 3669663/- as on 31st March, 2007 under para 9 (a) of the auditor report shall be made. ii. Disputed statutory dues as mentioned in para 9 (b) of the auditors report are under appeal before the appropriate authority and no final order of the appellant authority is received till date. Therefore, management will take the appropriate steps as and when the decision of appropriate appellant authority will come. AUDITORS: Messrs Vijender Gupta & Co., Chartered Accountants, the Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for reappointment as statutory auditors of the Company for the financial year 2007-2008. They have given a certificate to the effect that the appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956. Board of Directors recommends for their re-appointment as statutory auditors. DIRECTORS: Mr. Raj Kumar Gupta a Director of the Company retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. Mr. Ashok Ahluwalia, Whole Time Director of the Company and Lt. Col. Inder Pal Singh (Retd) resigned from the Directorship of the Company with effect from 10th August, 2007. Your Directors wish to place on record their appreciation for the co-operation and guidance given by them during their association with the Company. Mr. Ashok Paul Ahluwalia and Mr. Gaurav Kumar Mishra were appointed as Additional Directors of the Company with effect from 10th August, 2007 to hold office till the conclusion of the forthcoming Annual General Meeting of the Company. The Board of Director re-appointed Mr. Inder Pal Singh Walia as Managing Director of the Company with effect from 1st May, 2007, subject to the approval of the members and Central Government. The Board of Directors recommends for their re-appointment as per the resolution set out in the notice of Annual General Meeting. CORPORATE GOVERNANCE: Pursuant to clause 49 of the listing agreement entered into with the stock exchanges, the Report on Corporate Governance together with Auditors Certificate on Corporate Governance is annexed with this Report. PARTICULARS OF EMPLOYEES: There was no employee during the year under review in respect of whom information is required to be given under section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. DIRECTORS RESPONSIBILITY STATEMENT: As required under section 217(2AA) of the Companies Act, 1956, the Directors confirm that: I. In the preparation of the annual accounts, the applicable accounting standards had been followed and that no material departure had been made from the same; II. the Directors had selected such accounting policies and applied them consistently and made judgments 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 and Loss of the Company for that period; III. the Directors had taken proper and sufficient care 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; and IV. the Directors had prepared the annual accounts on a going concern basis. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO: The information required to be disclosed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with tie 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 given in the annexure - A forming part of this report. APPRECIATION: The Board of Directors of the Company takes the opportunity to express sincere appreciation for the efforts put in by the officers and employees of the Company, at all levels, for attainment of improved working results during the year under review. Relations with the workers remain cordial. We express our sincere thanks to the bankers, business associates and shareholders of the Company for their cooperation in such difficult time. Place: New Delhi By Order of the Board of Directors Date : 16.08.2007 Sd/- (Inder Pal Singh Walia) Managing Director ANNEXURE - A: INFORMATION REQUIRED TO BE DISCLOSED UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988. CONSERVATION OF ENERGY: Energy conservation measure taken: - High-energy efficient metalliser and slitter being run at high capacity resulting in lower power consumption for per unit of production. - High-energy efficient generators being regularly maintained to achieve better power generation for captive use. Additional investment and proposals, if any, being implemented for reduction of consumption of energy: - The Company is making continuous efforts to improve energy conservation through close monitoring of manufacturing method and process and regular maintenance of D.G. set. Impact of measures(a) and (b) above : Power consumption per unit produced is controlled to some extent. Total energy consumption and energy consumption per unit of production: - As per Form - A. - Not applicable as the Company is not covered under the list of specified industries. TECHNOLOGY ABSORPTION (As per Form - B): (i) RESEARCH AND DEVELOPMENT (R&D): Specific areas in which R&D carried out by the Company: - Product improvement for better reliability and improved durability to meet Specific customers need both domestic and export. 2. Benefits derived as a result of the above R&D: - The Company has been successfully manufacturing high optical density metallised plastic film. 3. Future plan of action. - Continuous efforts to improve quality of metallised plastic film and develop new metallised, coated and laminated products. 4. Expenditure on R&D: - No specific expenses can be earmarked for R&D, as this is an ongoing process at the operational level. TECHNOLOGY ABSORPTION , ADAPTATION AND INNOVATION: 1. Efforts in brief, made towards technology absorption, adaptation and innovation: Continuous efforts made at technology absorption. Efforts also undertaken for development of metallised film for twist wrap or packaging of confectionery. Benefits derived as result of the above efforts: Improved product acceptance. Competitiveness. Customer net widened FOREIGN EXCHANGE EARNINGS AND OUTGO: 1. Activities relating to exports: The Company has exported metallised plastic film and lacquer coated film during the year under review. Exports are being made during the current year and efforts are continue to further increase the exports. (Rupees in. lacs) Particulars Current Year Previous Year 31.3.2007 31.3.2006 Earnings: - Export Sales 23.75 33.16 Total 23.75 33.16 Outgo: - Repayment of Foreign Currency loan 0.00 0.00 (including advances) - Raw materials & consumables 11.24 40.88 - Travelling 0.00 1.07 - Foreign magazines 0.00 0.00 Total 11.24 41.95