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Directors Report of Clutch Auto Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors have great pleasure in presenting the 43rd Annual Report together with the Audited Accounts Tor tie financial year ended 31st March. 2014.

FINANCIAL RESULTS

{Rs. in Lakhs)

2013-14 2012-13

1. Income from Operations 3059.35 9541.02

2. Other income (Incl. Increase/Decrease (819.791) (819.79) in value in goods in process)

3. Total Revenue (1 2) 1175.98 8721.23

4. Raw Materials and Components 2783.46 6439.58

5. Employees Costs 318.45 1652.34

6. Other Expenses 698.67 1298.67

7. Total Expenses (excl. Dep. & Interest) 3300.53 9420.59

8. Profit before Interest, depreciation & tax (2174.60) (699.36)

9. Depreciation and Amortization Expenses 356.22 502.90

10. Profit Before Interest and Tax (8-9) (2529.82) (1293.26)

11. Interest and financial charges 2103.63 2137.42

12. Exceptional item 8871.28 -

13. Profit Before Tax (10-11) (13504.69) (3430.63)

14. Current Tax - -

15. Deferred Tax (207.69) (9.13)

t6.Profit after Tax (12-13-14) (13296.99) (3421.55)

Business Performance and Operations

During the year under report, that Company has reported a net income of Rs.3,059 85 Lacs which is significantly lower than the Sales achieved during the financial year 2012-13. This is due to lack of working capital, partial shifting of Plant 5 Machinery from Faridabad arid non-availability of skilled labor at Bhiwadi, Rajashtan. Due to this, you company lacs suffered net loss of Rs. 13,296 99 Lacs resulting in complete erosion of its net worth.

Restructuring of the Working Capital Facilities Term Loans

During the period under report, accounts of the Company were restructured by the Banks to augment the working capital needs of the Company and to facilitate transfer of the Plant & Machinery from Faridabad to Bhiwadi.

The restructuring of hank accounts were done by the Bank, The State Bank of Travancore and 2nd Lead Bank. State Bank of India. Apart from these two banks, only Canarg Bank supported the restructuring process and other banks namely DBS. Central Bank of India and Export Import Earning of India did not participate in this process. This led to non-sharing of stipulated sanctioned amount of working capital. The sharing banks didn't take the exposure let by these non-participating banks. Unfortunately, sharing banks didn't disburse the full sanctioned amount of working capital leading to defaults in the accounts and on other fronts. This unfortunate development took place despite the fact of compliance of all the terms & conditions stipulated by the banks for the Promoters as well as the Company.

Company has made all efforts to bring the Company on rail and keep Company's operations smooth hut due to paucity of funds. Company has not been able to achieve the objective. In view of the circumstances stated above, your directors have decided to inform tie 3oand for Industrial & Financial Reconstruction (BIFR) of its present financial situation and seek revival as the net worth of the company the period.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis of operation for the year under review, as stipulated under clause 49 of the listing agreement with the Stock Exchanges, is provided in annexure attached to this report.

FIXED DEPOSITS

The Company has not accepted any Public Deposits within the meaning of Section b3Aof the Companies Act, 1956, as such no amount of Principal and interest on fixed deposits was outstanding on the date of Balance Sheet.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act 1956, the Directors to the best of theis knowledge & belief confirm that:

i. In .he preparation of the Annual accounts, the applicable accounting standands have been followed:

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable end prudent so as to give a true and fais view of the state of affairs of the Company at the end of the financial year and of the profit & loss at the Company forth year under review;

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 safeguanding the assets at the Company and for preventing and detecting fraud and other irregularities;

iv. The Annual accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

The Company has taken the requisite steps to comply with the recommendations concerning Corporate Governance A separate statement on Corporate Governance together with a Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the listing agreement forms part of this Annual Report.

PERSONNEL

The information required under the provisions of Section 217(2A) of the Companies Act. 1956. read with the Companies (Particulars of Employees) Rules, 1975 is not applicable for the Financial yea r 2013-14.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING /OUTGO

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo required to the given pursuant to Section 217(1)(e) o; the Companies Act. 1956 read with the Companies {Disclosure of Particulars in the Report of the Board of D rectors) Rules, 1988 is annexed hereto and terms part of this report.

AUDITORS

This. S C Garg & Associates, Chartered Accountants. New Delhi, the Statutory Auditors of the Company will retire at the close of this Annual General Meeting and has given consent for theis re- appointment as Statutory Auditors of the Company.

Your Directors recommend theis reappointment, subject to approved of the Shareholders of the Company for a there term at such remuneration as may mutually be agreed between the Board and the Statutory Auditors.

Observation of the Auditors

During the year under report, due to liquidity crunch, the plant at Bhiwadi could not run at its full capacity. Plants & Machineries are also lying idle at Faridabad. so the Company has provided pro-rata depreciation of Rs.3.64.93.543 instead of Rs. 18,08,83.328 as calculated under Schedule XIV of the Companies Act 1956.

The Company has boon showing doubts outstanding against originate Equity parent Markets segment. These outstanding debts are or account of non-settlement of Warranty Claims forwanded by the Customers of earlier years since corporation of The Company. During the year the Company has provided for Rs 55,000,000 on account of Doubtful Debits in the Balance Sheet so far and Balance warranty claims yet to be determined & be provided for.

These outstanding are doubtful to be recovered pertaining to the current situation of the Company cess the Company is almost out of Original Equipment Market segment. This has led to unprecedented losses for The Company.

The settlement with the workers took place on 8to July 2013 pursuant to which terms & conditions for compensation for The Workers wore decided, however, duo to non-compliance of the terms & conditions stimulated in the agreement and interpretation of various clauses of .he agreement are yet to be finalized. This has led to non-provision : payment of liabilities to the excellent of Rs.6.0b,20.299. As the matter is sub-judice, suitable provisions will be Marie after the matter is settled by the Court.

Due to Workers non-cooperation at the Faridabad Plant and acquisition of some portion of land at Faridabad by Delhi Metro Rail Corporation, it was diff cult for the management to keep complete vigil of records lying at Fariadabad and to save it from pilferage. However, consistent efforts have been made by The management to take care of all the assets including records at Faridabad and to make it available to the Auditors.

Interest on _TO Mutual Fund had not been provided is earlier years because Company has taken stand that interest will be provided as & when it will be paid.

Due to losses & liquidity crunch. Company has not been regular in meeting its obligation towands financial institution s/banks and their statutory authorities but the Company is committed to clear the dues once it starts making profit.

Secretariat Audit

Pursuant to the provisions of Section 20-1 of the Companies Act,2013. your Board has appointed M/s D K Dubey & Associates, PCS to conduct Secretariat Audit.

Acknowledgment

Your Board of Directors wishes to express its gratitude and record its sincere appreciation for the commencement and dedicated efforts put in by the employees.

They also take this opportunity to thanks the Banks. Customers, Suppliers and business associates. The directors are thank you to the esteemed share officers for theis continued support and The confidence reposed in the Company and its management

For and on behalf of the Board of Directors

Place: New Delhi Vijay Krishan Mehta

Date : August 14, 2014 Chairman & Managing Director


Mar 31, 2013

The Directors have pleasure in presenting the 42nd Annual Report of the Company, together with the Audited Accounts for Item year ended 31 st March 2013.

FINANCIAL RESULTS

(Rs in Lakhs)

2012-13 2011-12

1. Income from Operations 9541.02 24467.73

2. Other Income (including increase/ 418.76

Director in value n goods in process)

3. Total Revenue (1 2) 6721.23 24386.49

4. Raw Materials and Complement 14439.42

5. Employees Costs 1652.34 1966.56

6. Other Expenses 1258.67 3915.90

7. Total Expenses (excel. Dep. & Interest) 9420.59 20371.88

8. PBDIT(3-7) (399.36) 4514.60

9. Depreciation and Amortizations 555.80 1574.92

10. PBIT (8-9) (1253.26) 293.63

11. Interest 2137.42 101.62

12. PBT (10-11) (3430.66) 838.06

13. Current Tax 160.00

14. Deferred Tax (9.13) (163.37)

15. PAT (12-13-14) (3421.55) 781.43

Business Performance and Operation

During the year under report. that Company has reported a net income of Rs. 9541 Lacs. During the period under report. your Company had faced multiple challenges strike by Workers during April and shifting process from January 2013 (shifting of manufacturing facility from Faridabad to Bhiwadi) Longing few. Due to these reasons: operations of the company suffered drastically and Company has to incur losses.

As informed last year, the Company has established a manufacturing facility at Bhiwadi. Rajasthan by selling a stale of the arms and factoring pant which is almost double in the size and manufacturing facility in comparison to its existing manufacturing facility at Faridabad. Company has all ready shifted much of the machines from Faridabad to Bhiwadi. Production at Bhiwadi has already been started and is getting momentum.

Dividend

During the year due to strike by workers during April-May 2012 and shifting of manufacturing facility from Faridabad to Bhiwadi have likens toll on the operations resulting in severe losses. Hence, the Round of Diameters are not in a position to recommend any dividend for the financial year ended 31.03.2013.

Fixed Deposits

The Company has not accepted any public Deposits within the meaning of Set; lion 58A of If is Companies Act, 1956, as such no amount of Prim not pal as interest on fixed deposits was outstanding on the date of Balance Sheet.

Directors

i) Resignation by Directors:

a) Sh.CS Aggarwal resigned w.e.f 15th September, 2012

b) Sh.Anuj Mehta resigned w.e.f. 1st October, 2012

c) Sh,Avinash P Gandhi resigned w.e.f. 15.March,2013,

You'' Board of Directors sincerely appreciates their contributions for the Company.

ii) Disclosures regarding re-appointment of Directors liable to retire by rotation

In terms of Section 256 of the Companies Act. 1956, Mr. K K Taneja is liable tax retire at the'' ensuing Annual General Meeting and being eligible. offer himself for re-appointment. His brief profile is given in the Section of the Corporate Governance Report. Your Directors recommend his re-appointments for a further term from the conclusion of the ensuing Annual General Meeting their larger business interests of your Company,

iii) Confirmation of the appointment of Additional Directors

a) Your Board has appointed Shi G C Nararig (B.E., RLE,, F.I.I E.J. as Additional Director of the Company. He is Chairman of Renner Aqua met Indie Pvt. Ltd. and member of various prestige c us Association is.

b) Your Board has appointed Sh. Dhirendra N Chaturvedi (B.A., LL.B., M.B.A., P.G.D.(IPR}}: as Additional Director of Ira Company He is an remain in the field of Taxation

Your Directors recommend their appointment from the conclusion of the ensuing Annual General Meeting in the larger business interests of your Company.

Management Discussion & Analysts is Report

The 3oard presents Management Discussion and Analysis Report as Annexure- A to this Report.

Corporate Governance Report

You'' Company has adopted the best possible corporate governance norms and it has been our endeavor to comply and u paraded the same to the changing norm sapper Cause 4 9 of the Listing Agreement and maintaining highest level of transparency. ethics, accountability and fairness in all of its operations. The Company believes in atoning the best business interests to enhance overall shareholders1 value by adopting sound business practices.

A separate section on Corporate Governance and a Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements) with the Stock Exchanges) form part of the Annual Report as Annexure- B,

In terms of Clause 49(l)(D)(ii) of the Listing Agreement, a certificate affirming compliance with the Code of Conduct of the Company has been skijored by the Managing Director of the Company is enclosed as part of this Report as Annexure-C. In terms of the Clause 49 of the Reporting Agreement, a certificate from the Managing Director. interlaid. confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of natters to the Audit Committee in germs of these said Clause, is falser enclosed as a part of the Report as Annexure-D.

Auditors

M/s. S C Garg & Associates, Chartered Accountants. New Delhi. the Statute r/ Auditors of the Company will retire at the close of this Annual General Meeting and has given consent for their re- appointment as Statutory Auditors of the Company.

Your Directors recommend Their re-appointment. subject to approval of the shareholders of the company for a farther term at such "remuneration as may mutually be agreed between the Board and the Statutory Auditors.

Re -Structuring of the Working Capital Facilities''/Term Loans To meet additional murkily capital required for production to face liquidity crunch as well as for completion of the shifting process of machines from Faridabad to Bhiwadi. Company had approached the Consortium Banks as well as term Lenders for nest during of the Working Capital Facility Mies/Term Loans. The State Bank of Travancore, State Bank of nixie and Canara Bank have already sanction and the restructuring of the Working Capital Facilities. Sanction a from other-tanks/Term I enders are wailer as yet.

Due to continuous labor problem throughout the year and coupled with shitting of existing manufacturing facility from Faridabad to Bhiwadi, access to records were limited for the purpose of audit. However, IV a management out the Company tried its level best to provide records & data for suitable audit purposes,

The Company was not able to operate at full capacity due to labor problem during the under review. Hence only l/3rd depredation of Ra. 5.93,90.306/- was provided instead of Rs.17,99,67348/-.

Due to losses &. liquidity church. Company has not been regular in meeting its obligation towards financial institutions/banks and other statutory authorities but the Conrail is committed clear the dues after the restructuring package is implemented fully.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA}of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(I) That if he preparation of the annual accounts for the financial year ended 31st March. 2013. the applicable accounting standards have been followed along with appropriate explanation relating to mater al departures;

(ii) That the Directors have selected such accountings policies and applied them consistently find made judgments and estimates that are reason able and prudent sc as to give a true and fair view of" the a tale of affairs of the Company at the end of the financial year and of The profit or loss of the Company for the year under review;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records The accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and ether irregularities:

(iv}That the Directors have prepared the couch'' Tor the financial year ended 31st march, 2013 on a. "going conger" basis.

Employees & Workers

We sincerely appreciate the good work and the valuable co- operation extended by the employees and workers. But unfortunately workers resulted to illegal 3:rike in the Month of April and May. 2012 and further non co-operations by the Workers ultimately lead to settlement agreement with the Workers who were not ready to join at Bhiwari on 08th July. 2013 under which compensation amount is to- be paid in installments over a period of time.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings & Outgo

The information required under the provisions of Section 217(2 A) of the Companies Act, 1956. read with the Companies (Particulars of Employees) Rules, 1975 is not applicable for the Financial Year 2012-13.

A Statement containing the necessary information as required under the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1t)BB as part of the Directors1 Report for the year ended 31st March. 2013 is furnished in Annexure - E to this report.

Acknowledgement

You Directors wish to place on record their thanks for the assistance, guidance and cooperation extended to the Company from time to time by church stoma re, -manically Institutions. Banks, Central & State Governments add cur dear Members (Shareholders) during the year tender report. They also wish to place on record their deep appreciation to the loyal, diligent and devoted services provided by the emblems at all levels of the Company.

For and on behalf of the Board of Directors

Place: New Delhi Vijay Krishan Mehta

Bate: 31.07.2013 Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the 39th Annual Report of the Company, together with the Audited Accounts for the year ended 31st March 2010.

FINANCIAL RESULTS (Rs. in Lakhs)

2009-10 2008-09

1. Income from Operations 24781.65 21992.17

2. Excise Duty 1783.59 2247.29

3. Net Sales (1-2) 22998.06 19744.88

4. Other Income (including increase/

Decrease in value in goods in process) 575.54 87.88

5. Total Revenue (3+4) 23573.60 19832.77

6. Raw Materials and Components 13546.65 11200.99

7. Employees Costs 2210.99 2128.37

8. Other Expenses 4147.45 3811.83

9. Total Expenses

(excl. Dep. & Interest) 19905.09 17141.19

10. PBDIT{5-9) 3668.51 2691.58

11. Depreciation and Amortization 1404.22 782.92

12. PBIT (10-11) 2264.29 1908.66

13. Interest 1351.92 1346.04

14. PBT (12-13) 912.37 562.62

15. Current Tax 161.65 162.67

16. Deferred Tax (89.00) (46.00)

17. PAT (14-15-16) 839.72 445.95

18. Balance Brought Forward from

last year 5939.30 5493.35

19. Surplus carried forward to the

Balance Sheet 6779.02 5939.30

20. Earning per Share

(EPS in Rupees) - Basic 5.03 2.73

- Diluted

Business Performance and Operations

It gives a sense of accomplishment to report that your Company has achieved an overall growth of 17% whereas the Gross Profit before Interest & Depreciation has increased by 36% and PAT by almost 88%.

In order to avoid duplication and overlap between the Directors Report and the Management Discussion & Analysis, your directors request you to refer to the Management Discussion & Analysis Section of this Annual Report, which cover the Companys performance, Industry trends and other material change with respect to the Company as well as suitable note on Research & development activities.

Expansion

The Company has been undergoing an expansion cum modernization project for quite sometime. The present facility at Faridabad on a 6.55 acre (26,500 Sqm) land area would leave no scope for expansion after implementation of the ongoing expansion & modernization project. Companys project under NMITLI (New Millennium Indian Technology Leadership Initiative) scheme under the aegis of CSIR in association with prestigious partnering Institutions is also under advance stages of crystallization. The outcome of NMITLI project will altogether create a new product segment for the Company and its successful commercialization would require additional space to set up separate manufacturing/ assembly line for this new generation range of Clutches.

The Company has already purchased plot admeasuring ~ 50,340 Sq. Mtr., at Kahrani (Bhiwadi Extn.) Distt. Alwar, Rajasthan, for setting up an additional facility which will enable the Company to accommodate its present line of business with double capacity and also to manufacture new range products under NMITLI project.

Dividend

Considering the expansion projects and future growth plans, the Directors have decided to plough back the profits of the Company for financial year 2009-10. Accordingly the Board does not recommend any dividend payment for the year ended 31st March 2010. The Directors believes that this decision will contribute to the future growth of the Company and enhancement of shareholders wealth in the long run.

Share Capital

During the year, the Company has allotted 24,45,000 Equity Share Warrants of Rs.10/- each at premium of Rs.40/- each to promoter under preferential allotment to finance its Bhiwadi Project stated as above, out of which 3,68,000 share warrants have been converted into equity shares of Rs. 10/- each. Paid up Capital of the Company has increased to 1,66,81,880 shares of Rs.10/- each.

Fixed Deposits

The Company has not accepted any public Deposits within the meaning of Section 58A of the Companies Act, 1956, as such no amount of Principal as interest on fixed deposits was outstanding on the date of Balance Sheet.

Directors

i) Additional Director : Sh. Satish Sekhri was co-opted on the Board by your Directors w.e.f. 1.4.2010). Sh. Satish Sekhri is a B.E.(Mech) from Delhi College of Engineering and MBA (Gold Medalist) from Chandigarh University. He has retired as Managing Director of Bausch Chassis Systems Ltd.

Yours Directors commends the said appointment of Sh. Satish Sekhri as a Non Executive Independent Director, for consideration and approval of Shareholders at the ensuing Annual General Meeting of the Company. His brief Resume is given in Corporate Governance Report.

Sh. Satish Sekhri does not hold any shares in the Company.

ii) Disclosures regarding re-appointment of Directors liable to retire by rotation

In terms of Section 256 of the Companies Act, 1956, Ms. Pooja Kapur and Sh. Avinash P Gandhi Directors are liable to retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Their brief profile is given in the Section of the Corporate Governance Report.

Your Directors recommend their re-appointments for a further term from the conclusion of the ensuing Annual General Meeting in the larger business interests of your Company.

Management Discussion & Analysis Report

The Board presents Management Discussion and Analysis Report as Annexure - A to this Report.

Corporate Governance Report

Your Company has adopted the best possible corporate governance norms and it has been our endeavour to comply and upgrade the same to the changing norms as per Clause 49 of the Listing Agreement and maintaining highest level of transparency, ethics, accountability and fairness in all of its operations. The Company believes in attaining the best business interests to enhance overall shareholders value by adopting sound business practices.

A separate section on Corporate Governance and a Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of the Annual Report.

In terms of sub clause (v) of the Clause 49 of the Listing Agreement, a certificate of the CEO/CFO inter alia, confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of matters to the Audit Committee in terms of the said Clause, is also enclosed as a part of the Report.

Auditors

M/s. B. Aggarwal & Co., Chartered Accountants, New Delhi, the Statutory Auditors of the Company, retire at the close of this Annual General Meeting and being eligible, offer themselves for re-appointment.

Your Directors recommend their re-appointment, subject to approval of the shareholders of the company, for a further term at such remuneration as may mutually be agreed between the Board and the Auditors.

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have 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 or loss of the Company for the year under review;

(iii) that the Directors have 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 frauds and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2010 on a "going concern" basis.

Employees

The Company has maintained cordial relationship with its Employees throughout the year. The workforce of the Company is most committed with their duties. I would like to express appreciation of the good work done and co-operation extended by employees at all levels in accomplishing Companys tasks and goals.

The information required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Report is placed as Annexure - B to this report.

Conservation of Energy, Technology Absorption and Foreign

Exchange Earnings & Outgo

A Statement containing the necessary information as required under the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 as part of the Directors Report for the year ended 31st March, 2010 is furnished in Annexure - C to this report.

Acknowledgement

Your Directors wish to place on record their thanks for the assistance, guidance and cooperation extended to the Company from time to time by our Customers, Financial Institutions, Banks, Central & State Governments and our dear Members (Shareholders) during the year under report. They also wish to place on record their deep appreciation of the loyal, diligent and devoted services provided by the employees at all levels of the Company.

For and on behalf of the Board of Directors

New Delhi, Vijay Krishan Mehta

11th August, 2010 Chairman & Managing Director

 
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