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Directors Report of Duncans Industries Ltd.

Sep 30, 2014

Dear Members,

The Board of Directors of the Company submits the Twentieth Annual Audited Accounts for the year ended 30th September, 2014 :


Current Year Previous Period (18th Months)

Profit / (Loss) before, interest, depreciation, exceptional items and tax (969) 405

Finance Cost (1802) (2575)

Depreciation (298) (448)

Profit / (Loss) before tax (3069) (2618)

Tax expenses - -

Profit / (Loss) for the year (3069) (2618)


The Company is a sick industrial company within the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the Rehabilitation Scheme sanctioned by the Hon''ble BIFR, is under the process of implementation. As per the provisions of the Scheme, no dividend on Preference and Equity Share capital is permissible.


The Rehabilitation Scheme of the Company as sanctioned by the Hon''ble BIFR vide its order dated 16th January, 2012 is under implementation. As reported in the earlier accounts, pursuant to the said Scheme, the Fertilizer Undertaking had been de-merged and transferred to Kanpur Fertilizers & Cement Ltd (KFCL) with effect from 1st October, 2010, leaving the tea operations with the Company.


In view of a severe drought in North Bengal during the beginning of the season this year, the Company was lagging behind its estimated production. The first significant rainfall was received as late as in the first week of May, 2014 and that too it was not widespread. Plucking was suspended at almost all the Company''s tea gardens during the month of April, 2014 due to non-availability of leaf.

The revenue from operations for the year ended 30th September, 2014 was Rs.184.58 crones as against Rs.262.10 crones in the previous eighteen months period. Own crop during the year was 129.80 lac kgs of tea as against production of 220.81 lac Kgs. of tea in the eighteen months of the previous period. 127.81 lac kgs of tea was sold at an average price of about Rs.144.42 per kg in the current year as compared to sales of 181.29 lac kgs in the previous eighteen months period at an average price of Rs.144.71 per kg. Continuing adverse weather conditions in successive years in the Dooars and Terai areas caused the crop of the Company to be behind the targets. The increase in selling price did not improve the profitability due to lower production of tea, hike in the wage cost of labour pursuant to Memorandum of Settlement (MOS) arrived at amongst the Tea Association, Tea Plantation Workers Unions and the West Bengal Government on 4 th November, 2011 and adverse impact of the steep increase in the cost of coal, fuel oil, electricity, fertilizers, agro chemicals, etc. The MOS with the workers, which was executed for three years period, is now due for a fresh agreement effective from 1st April, 2014 onwards.

Overall prospect of the tea business appears to be encouraging with a strong demand for CTC teas in which the Company is engaged predominantly.

The management has taken steps to revamp the operations of the tea business. Working capital is being augmented and the current year capital expenditure will improve long term prospects in generating future profitability. The Company is in the process of replacing high cost coal with alternative fuels i.e. waste wood / biomass, etc. Modernization of spraying equipments are under process which will reduce pest control cost. Application of organic fertilizers is under consideration. Priority is also given for uprooting and replanting of age old tea bushes in the tea estates of the Company to improve long term prospects. Extensive replanting done over the last three years will have a large bearing on crop in the immediate future.

With the efforts already undertaken, barring unforeseen circumstances, it is expected that performance of the tea business of the Company will improve significantly.


Pursuant to the Scheme sanctioned by the Hon''ble BIFR, the Company has refunded fixed deposits in settlement of the dues of fixed deposits holders and as on 30th September, 2014, refund warrants for 5428 fixed deposit holders aggregating to Rs.608.98 lacs remain un-encashed and requisite amounts are lying with the Bank for this purpose.


In terms of the provisions of the Companies Act and the Company''s Articles of Association, Mr. Shrivardhan Goenka shall retire by rotation and being eligible, offers himself for re-appointment. The Board has appointed Mr. Rajesh Sharma as Managing Director of the Company for a period of three years with effect from 27th September, 2014. Mr. M.H. Chinoy who was appointed as Wholetime Director of the Company with effect from 1st January, 2014, will cease to be a Wholetime Director at the close of business hours on 31st December, 2014 being unable to continue as such. However, considering his long association with the Company, the Board will retain his service as Non-Executive Director of the Company effective from 1st January, 2015. The Board recommends the appointment / re-appointment of the aforesaid Directors at the ensuing Annual General Meeting.

Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013, the Board of Directors is seeking appointment of Mr. T. S. Broca, Mr. R. K. Bhargava, Mr. D. Sengupta and Dr. A. L. Ananthanarayanan as Independent Directors for a term of five consecutive years i.e. upto the conclusion of the Twenty Fifth (25th) Annual General Meeting to be held in the calendar year 2019. Details of the proposal for appointment of Mr. Broca, Mr.Bhargava, Mr. Sengupta and Dr. Ananthanarayanan have been mentioned in Statement pursuant to Section 102 of the Companies Act, 2013 in the Notice of Annual General Meeting. The aforesaid directors fulfill the conditions specified in the Companies Act, 2013 and rules made thereunder for their appointment as Independent Directors.

The Board is of the opinion that their continued association as Independent Directors shall immensely benefit the Company. The Board recommends their appointment as Independent Directors by the shareholders.


Vide General Circular No. 2/2011 dated 8th February, 2011, the Ministry of Corporate Affairs (MCA), Government of India, has granted a general exemption to companies from attaching the Balance Sheet, Statement of Profit and Loss and other documents referred to in Section 212(1) of the Companies Act, 1956. Accordingly, the said documents are not being attached with the Balance Sheet of the Company. A statement containing brief financial details of the subsidiary companies for the year ended 31st March, 2014 is included in the Annual Report.

As required under the Listing Agreement entered into with the Stock Exchange, a Consolidated Financial Statement of the Company along with all its subsidiaries is attached. The Consolidated Financial Statement has been prepared in accordance with the relevant Accounting Standards. These Financial Statements disclose the assets, liabilities, income, expenses and other details of the Company and its subsidiaries.


Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, is presented in a separate section forming part of this Report.


A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchange, is annexed forming part of this Report. A certificate from the Statutory Auditors, confirming compliance of conditions of Corporate Governance as stipulated under the said Clause 49, is annexed forming part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo 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, has been provided in the Annexure forming part of this Report.


The Company continued to have cordial and harmonious relations with its employees at all levels.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, are given in the Annexure to this Report.


Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that :

(i) in the preparation of the Annual Accounts for the year ended 30th September, 2014 the applicable Accounting Standards have been followed along with proper explanations and there are no material departures ;

(ii) such accounting policies as were reasonable and prudent were selected in preparing the accounts and these were applied consistently. Further judgments and estimates that were reasonable and prudent were also applied in the course of preparing the accounts so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the loss of the Company for the year ended 30th September, 2014;

(iii) proper and sufficient care was 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 and for preventing and detecting frauds and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.


The Website of the Company is functioning.


The Company''s equity shares are listed with The National Stock Exchange of India Ltd (NSE) as well as traded in the BSE Ltd. The Company has paid the requisite listing fee to the Stock Exchange where the shares of the Company are listed.


The Statutory Auditors, Messrs Lodha & Co., Chartered Accountants, who were appointed at the last Annual General Meeting held on 30th December, 2013 have expressed their willingness for re-appointment as Statutory Auditors at the ensuing AGM.

The Board, on the recommendation of the Audit Committee, has recommended the re-appointment of Messrs Lodha & Co., Chartered Accountants as Statutory Auditors for a consecutive period of three years in accordance with Section 139 of the Companies Act, 2013. The said Auditors have confirmed that their appointment, if made, shall be within the limit laid down under the relevant provisions of the Companies Act. Appropriate resolution seeking approval of the members to the said re-appointment is appearing in the Notice convening 20th AGM of the Company.

The observations in the Auditors Report have already been explained in the Notes forming part of the Financial Statements and further clarified as under :

Para 4(I)(a)-Outstanding long term loans and Advances have been explained in Notes 10(a)(i) and 10(b)(i) to the financial statements. These are group company advances given for strategic reasons and can only be dealt with in terms thereof. Para 4(I)(b)-Regarding non-ascertainment of impact of wage revision pending negotiation thereof has been explained in Note 19(i) to the financial statements. Para 4(I)(c)-Pursuant to the decision of the Hon''ble High Court at Calcutta in similar matter with regard to levy of salami, under certain circumstances the Company has filed an appeal against the imposition of salami before the appropriate authority, has been explained in Note 26 to the financial statements. Para 4(I)(d)-As regards managerial remuneration, necessary applications are pending for approval before MCA, as explained in Note 27 to the financial statements. Pending approval, the note and qualification is consequential in nature. Para 4(I)(e)-We are in the process of obtaining confirmations of debit and credit balances including advances, trade receivables, trade payables and other liabilities and necessary effects will be given on reconciliation thereof as explained in Note 28 to the financial statements.


The Directors of the Company wish to place on record their gratitude to the various departments of the Central Government, Government of West Bengal, banks, shareholders, vendors, customers and employees for their continued support.

For and on behalf of the Board

Place : Kolkata G. P. Goenka Dated : 18th November, 2014 Executive Chairman

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