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Directors Report of Kingfa Science & Technology (India) Ltd.

Mar 31, 2015

The Directors hereby present their 31st Annual Report along with Audited Financial Statements for the year ended March 31, 2015.

FINANCIAL RESULTS (Rs. in Lacs)

Year Ended Year Ended Particulars March 31, 2015 March 31, 2014

Revenue from Operations

Gross 24,680.58 19,933.00

Net of Excise Duty 21,879.24 17,782.55

Other Income 12.65 23.26

(Loss) / Profit before Finance Costs & Depreciation and amortisation expense 658.16 (306.51)

Finance Costs 812.33 656.36

Loss before Depreciation and amortisation expense (154.17) (962.87)

Depreciation and amortisation expense 314.18 265.73

Loss before Tax (468.35) (1,228.60)

Tax expenses - Current Tax - -

- Deferred Tax (164.14) (380.88)

(164.14) (380.88)

Loss after Tax (304.21) (847.72)

Balance brought forward (1,247.75) (400.03)

Depreciation adjustment as per Companies Act, 2013 (18.57) -

Deficit carried forward (1,570.53) (1,247.75)

BUSINESS OPERATIONS

Sales Revenue grew by 23% over the previous year, with volume growth of 15% achieved. Engineering Plastic Compounds sourced from HQ Kingfa, achieved its full year of sales, whilst the sale of EP compounds produced by the Company clocked revenue for last quarter of the year.

The benefit of drop of Polypropylene prices during the last quarter did not last long, as the prices started rising sharply towards the end of the last quarter.

Detailed analysis of the Company's performance during the year is provided in Annexure to this report under Management's Discussion and Analysis Report.

DIVIDEND

The operations of the Company have resulted in a loss as explained in detail in the Management's Discussion and Analysis Report. Hence, your Directors regret that they are unable to recommend any dividend on the Equity Share Capital of the Company for the year under review.

SHARE CAPITAL

The paid up equity capital as on March 31, 2015 was Rs. 640.72 lacs. The Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

OFFER FOR SALE BY PROMOTER

The Promoter, Kingfa Sci. & Tech. Co., Ltd., China in order to comply with the minimum public shareholding requirements of the listing agreement with Stock Exchanges had gone for Offer for Sale (OFS) of 5,00,000 Equity Shares on 16.12.2014 and had offloaded 2,58,930 Equity Shares (4.04%). A second Offer for Sale of 2,41,070 (3.76%) Equity Shares on 15.01.2015 was done and achieved successfully.

With the above two OFS's done, the promoter shareholding is now in compliance with the minimum public shareholding requirements of the listing agreement.

RIGHTS ISSUE OF EQUITY SHARES

The Company in order to augment resources for its long term funds requirement of the Company has proposed to go for Rights Issue of Equity Shares and intends to deploy the Issue Proceeds for Repayment of short term loans availed by the Company and Setting up of additional facilities at the existing locations. In this regard, the Company has filed draft letter of offer with SEBI and BSE Limited and awaiting its comments.

FINANCE

The Company's claim with the Government of Maharashtra for the Industrial Promotion Subsidy for its investment in Jejuri was approved during the year. The Company has received the refund of Electricity duty and is awaiting receipt of the VAT subsidy.

BIFR

Upon obtaining approval from the Shareholders at the Annual General Meeting held on 25th July, 2014, the Company had intimated Board for Industrial and Financial Reconstruction (BIFR) of the fact of erosion of more than 50% of the peak Net Worth. Subsequent status report of the steps undertaken have also been intimated.

FIXED DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees nor has made any Investments covered under the provisions of Section 186 of the Companies Act, 2013.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY

The Company does not meet the criteria prescribed under Section 135 of the Companies Act 2013, hence the same is not applicable for the year under review.

ENVIRONMENT, HEALTH AND SAFETY

The facilities of the Company renewed their ISO 14001 and OHSAS 18001 certification.

Your Company's policy require the conduct of all operations in such a manner so as to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

INDUSTRIAL RELATIONS

Industrial relations remained cordial during the year.

Various HR initiatives are continuously taken to align the HR policies to the growing requirements of the business. Reviews, training and tools are being provided for the personnel to improve overall efficiency.

DIRECTORS

Your Director, Mr.Wu Xiaohui retire by rotation and being eligible, offers himself for re-appointment.

The Board appointed Ms. Kamana Srikanth as an Additional Director - Non Executive Independent Director of the Company with effect from 13th February, 2015 for a period of 5 years subject to approval by the Shareholders at the ensuing Annual General Meeting.

Your Directors have re-appointed Mr.Bo Jingen as Managing Director and Mr.Wu Xiaohui as Whole-time Director of the Company at their Meeting held on 31st October, 2014.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

NUMBER OF MEETINGS OF THE BAORD

The details of the number of Meetings of the Board held during the Financial Year 2014 - 15 forms part of the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013:

(i) that in the preparation of the Annual Accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit or loss of the Company for the year ended on that date;

(iii) that the Directors has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

(v) that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) that the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on arm's length basis.

SUBSIDIARY COMPANIES

The Company does not have subsidiary.

AUDITORS

M/s. P. Srinivasan and Co., Chartered Accountants, Chennai, Statutory Auditors, retire at the close of this Annual General Meeting and are eligible for reappointment. The Company has received confirmation regarding their consent and eligibility under sections 139 and 141 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 for appointment as the auditors of the company.

As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Audit Committee and the Board of Directors have recommended the appointment of the Auditors for the financial year 2015 - 16. The necessary resolution is being placed before the shareholders for their approval.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company had appointed M/s.Lakshmmi Subramanian & Associates, Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as ANNEXURE - I and forms an integral part of this Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as ANNEXURE - II.

BUSINESS RISK MANAGEMENT

Business risk evaluation and management is an ongoing process within the Company. The Assessment is periodically examined by the Board.

STATUTORY INFORMATION

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in

ANNEXURE - III to this Report.

The particulars of employees are not applicable since there is no employee drawing remuneration more than Rs. 60,00,000/- per annum (full year) or Rs. 5,00,000/- p.m (part of the year).

All the dividends of the earlier years, which have remained unclaimed, have since been transferred to the Investor Education and Protection Fund at the expiry of the specified period(s) as required under Companies Act. Details of dividends remaining unclaimed as on 31.03.2015 are as under :

Year Date of No. of Total Unclaimed Due date for transfer declaration Share holders Dividend (Rs.) to IEPF Account

2007 - 2008 (Final) 16.09.2008 563 54,161.50 22.10.2015

2008 - 2009 No Dividend declared N.A.

2009 - 2010 No Dividend declared N.A.

2010 - 2011 29.09.2011 730 60,928.80 05.11.2018

2011 - 2012 No Dividend declared N.A.

2012 - 2013 No Dividend declared N.A.

2013 - 2014 No Dividend declared N.A.

CORPORATE GOVERNANCE AND MANAGEMENT'S DISCUSSION & ANALYSIS REPORTS

The Corporate Governance and Management's Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexures, together with the Certificate from the Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENT

Your Directors wish to record their appreciation of the continued support and co-operation from your Company's customers, vendors, bankers and all other stakeholders. Your Company will continue to build and maintain strong links with its business partners.

The Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also place on record their gratitude to the Members for their continued support and confidence.

For and on behalf of the Board of Directors

Place : Chennai N. SUBRAMANIAN BO JINGEN

Date : 28th May, 2015 Chairman of the Meeting Managing Director


Mar 31, 2013

The Directors hereby present their 29th Annual Report alongwith Audited Statement of Accounts of the Company for the year ended March 31'' 2013.

FINANCIAL RESULTS

(Rs.in Lacs)

Year Ended Year Ended Particulars March 31'' 2013 March 31'' 2012

Revenue from Operations

Gross 17''634.38 16''539.48

Net of Excise Duty 15''657.95 15''010.03

Other Income 83.63 14.36

Profit before Finance Costs &

Depreciation and amortisation expense 268.64 910.04

Finance Costs 697.12 655.61

(Loss) / Profit before Depreciation and amortisation expense (428.48) 254.43

Depreciation and amortisation expense 281.85 267.94

(Loss) / Profit before Tax (710.33) (13.51)

Tax expenses - Current Tax

- Deferred Tax (205.50) (16.00)

(205.50) (16.00)

(Loss) / Profit after Tax (504.83) 2.49

Balance brought forward 104.80 102.32

(Loss) / Profit available for Appropriation (400.03) 104.80

Appropriations:

Transfers to General Reserve

Special General Reserve

Proposed Dividend

On Equity Shares

Tax on distributable profits

(Deficit) / Surplus carried forward (400.03) 104.80

(400.03) 104.80





BUSINESS OPERATIONS

Revenue from Operations grew moderately by 4% over the previous year'' though volumes remain flat. The year witnessed continued turbulence on the business front with inflation continuing to rule high'' leading to high interest rates and dampened consumer enthusiasm to buy automobiles.

Your Company had to continue facing the challenges of a sustained high inflation on input prices. The high input costs'' in the context of resistance from customers to adequate compensation'' led to erosion in margins.

As indicated in the last year''s report'' your company has completed the compounding facility at Manesar to cater to the requirements of the Northern market'' with an initial capacity of 6000 MTPA. This facility was commissioned in March 2013 and is expected to contribute to growth of the company during the current year.

The Pultrusion division has been only achieving marginal performance during the recent years and hence it was decided to close down operations of this division.

As part of realignment of capacity'' it was decided to curtail production at Pudukkottai. Consequently it was decided to sell the two Wind Mills which the Company had established. The proceeds from the sale were utilised for funding the Manesar facility and into operations.

Detailed analysis of the Company''s performance during the year is provided in Annexure - F to this Report.

DIVIDEND

Due to the adverse business environment'' the operations of the Company have resulted in a net loss as explained in detail in the Management''s Discussion and Analysis Report. In order to conserve resources'' your Directors regret that they are unable to recommend any dividend on the Equity Share Capital of the Company for the year under review.

ENVIRONMENT'' HEALTH AND SAFETY

The facilities of the Company renewed their ISO 14001 and OHSAS 18001 certification.

Your Company''s policy require the conduct of all operations in such a manner so as to ensure safety of all concerned'' compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

EMPLOYEE RELATIONS

Industrial relations remained cordial during the year. A new three year wage pact'' upon expiry of the earlier agreement was signed with the workmen of the Puducherry plant.

Various HR initiatives are continuously taken to align the HR policies to the growing requirements of the business. Technical and Safety training programmes are given periodically to workers.

PART II - CORPORATE MATTERS

CORPORATE GOVERNANCE

Your Company continues to be committed to governance aligned with good management practices.

As per the requirement of Clause 49 of the Listing Agreement entered into with the Stock Exchanges'' a detailed report on Corporate Governance is set out in Annexure - B to this Report.

The Statutory Auditors of the Company have examined the Company''s compliance and have certified the same'' as required under SEBI Guidelines. Such certificate is reproduced in Annexure - C to this Report.

The Whole Time Director and CFO certification is given in Annexure - D to this Report.

A Statement of General Business Principles is given in Annexure - E to this Report.

A separate Management''s Discussion and Analysis Report on the Company''s performance is given in Annexure - F to this Report.

A Declaration by Mr.S.K.Subramanyan (Whole-time Director) with regard to compliance of Company''s Code of Conduct by the Board Members and Senior Management Personnel is furnished as Annexure - G to this Report.

The Directors'' Responsibility Statement as required under Section 217(2AA) of the Companies Act'' 1956 is furnished in Annexure - H to this Report.

CHANGE IN MANAGEMENT CONTROL

The Promoters of the Company have informed the Board that they have entered into a Share Purchase Agreement with M/s. Kingfa Sci. & Tech. Co.'' Ltd.'' Guangzhou'' China'' for transfer of their shareholding in the Company.

This process will be completed after necessary approvals are obtained.

The Board of Directors have considered this communication and taken note of the development.

The Board feels that it will be in the best interests of the Company'' its Shareholders and the Employees if a strategic global player from the Industry is inducted into the Company.

DIRECTORS

Mr.Narayan Sethuramon'' Director resigned from the Board with effect from 23rd July'' 2012. The Board wishes to place on record its appreciation of the valuable services rendered by him during his tenure in office both in the Executive and Non Executive roles.

Your Directors'' Mr…… and Mr…… retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible'' offer themselves for re-appointment. - To be finalised (Refer Addendum to Directors'' Report in Page No.7).

The necessary resolutions in this regard are being placed before the Shareholders for their approval.

AUDITORS

The Auditors of the Company'' M/s. P. Srinivasan and Co.'' Chartered Accountants'' Chennai hold office until the conclusion of the Annual General Meeting and have given their consent for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224 (1B) of the Companies Act'' 1956. The necessary resolution is being placed before the shareholders for their approval.

COST AUDITOR

Your Company has come under the purview of The Companies (Cost Audit Report) Rules'' 2011 and is required to conduct an audit of the cost records'' by a Cost Accountant. In requirement of this'' the Company has appointed P. Raju Iyer'' M.Pandurangan & Associates'' Cost Accountants'' Chennai as the Cost Auditors for the audit of Cost records for the year ended 31st March 2013.

The Company has duly filed the Cost Compliance Report for the year ended 31st March 2012.

STATUTORY INFORMATION

The provisions of Section 217(2A) of the Companies Act'' 1956'' read with the Companies (Particulars of Employees) Rules'' 1975'' as amended'' are not applicable since there is no employee drawing remuneration more than Rs. 60''00''000/- per annum (full year) or Rs. 5''00''000/- p.m (part of the year).

Particulars required under Section 217(1)(e) of the said Act relating to Energy Conservation'' Technology Absorption and Foreign Exchange Earnings and Outgo are furnished in a separate statement annexed to and forming part of this Report as

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act'' 1956.

ACKNOWLEDGEMENT

Your Directors wish to record their appreciation of the continued support and co-operation from your Company''s customers'' vendors'' bankers and all other stakeholders. Your Company will continue to build and maintain strong links with its business partners.

The Directors sincerely appreciate the high degree of professionalism'' commitment and dedication displayed by employees at all levels. The Directors also place on record their gratitude to the Members for their continued support and confidence.

For and on behalf of the Board of Directors

Place : Chennai V. SRINIVASAN MURALI VENKATRAMAN

Date : 21st May'' 2013 Chairman of the Meeting Vice - Chairman


Mar 31, 2012

The Directors hereby present their 28th Annual Report along with Audited Statement of Accounts of the Company for the year ended March 31, 2012.

FINANCIAL RESULTS

(Rs. in Lacs)

Year Ended Year Ended Particulars March 31, 2012 March 31, 2011

Revenue from Operations

Gross 16,539.48 15,468.06

Net of Excise Duty 15,010.03 14,011.62

Other Income 14.36 12.14

Profit before Finance Costs &

Depreciation and amortization expense 910.04 864.98

Finance Costs 655.61 465.09 Profit before Depreciation and

amortization expense 254.43 399.89

Depreciation and amortization expense 267.94 269.09

Profit / (Loss) before Tax (13.51) 130.80

Taxation- Current Tax - 32.00

- Deferred Tax (16.00) (6.00)

(16.00) --26.00

Profit after Tax 2.49 104.80

Balance brought forward 102.32 144.84

Profit available for Appropriation 104.80 249.64

Appropriations:

Transfers to

General Reserve - 100.00

Special General Reserve - 2.50

Proposed Dividend

On Equity Shares - 38.44

Tax on distributable profits - 6.38

- 147.32

Surplus carried forward 104.80 102.32

104.80 249.64

BUSINESS OPERATIONS

Revenue from operations recorded an increase of 7% over the previous year, though volumes remained flat. The year witnessed a turbulent business environment that moderated growth. The year started with optimism but as it progressed there were challenges with inflation, decelerating growth and worsening investment climate which adversely impacted consumer sentiments. The global economic environment was confronted with geo-political instability, Euro zone crisis, fluctuating global commodity prices etc.

Your Company had to deal with the challenges of a sharp depreciation of the Indian Rupee during the year coupled with a sharp increase in the prices of polypropylene during the last quarter. This has to be viewed in the context of extreme resistance from Customers to price revisions.

The financial statements have been prepared in compliance with the revised Schedule VI guidelines, notified by the Ministry of Corporate Affairs. Therefore, the previous year's figure have been regrouped / recast wherever necessary.

The Pultrusion Division continues to face the challenges of declining prices during the year due to surplus capacity pressures which resulted in a lower performance as compared to the previous year.

Detailed analysis of the Company's performance during the year is provided in Annexure - E to this Report.

DIVIDEND

During the year under review, the operations of the Company were impacted for various reasons as explained under the head 'Business Operations'. In view of the adverse financial results and to conserve resources for future growth, your Directors have not recommended any dividend on the Equity Shares for the year under review.

EXPANSION PLANS

Your Company had embarked on a aggressive market development strategy to increase the share of its business in the automotive segment and we hope to see the benefit of these initiatives in the current year.

With this market dynamics, a capacity balancing needs to be implemented in order to serve the existing customers and new entrants in a much more efficient manner. Hence, your Company had decided to put up a new facility at Manesar in the State of Haryana. This facility will have an initial capacity of 3000 TPA.

ENVIRONMENT, HEALTH AND SAFETY

Your Company is conscious of the importance of environmentally clean and safe operations. Your Company's policy require the conduct of all operations in such a manner so as to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

EMPLOYEE RELATIONS

Various HR initiatives are continuously taken to align the HR policies to the growing requirements of the business. Your Company has a structured induction process at all locations and Management Development Programmes to upgrade skills of Managers. Technical and Safety training programmes are given periodically to workers. Industrial relations remained generally cordial.

PART II - CORPORATE MATTERS CORPORATE GOVERNANCE

Your Company continues to be committed to Governance aligned with good management practices.

As per the requirement of Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a detailed report on Corporate Governance is set out in Annexure - B to this Report.

The Statutory Auditors of the Company have examined the Company's compliance and have certified the same, as required under SEBI Guidelines. Such certificate is reproduced in Annexure - C to this Report.

The Whole Time Director and CFO certification is given in Annexure - D to this Report.

A separate Management Discussion and Analysis Report on the Company's performance is given in Annexure - E to this Report.

A Declaration by Mr.S.K.Subramanyan (Whole-time Director) with regard to compliance of Company's Code of Conduct by the Board Members and Senior Management Personnel is furnished as Annexure - F to this Report.

The Directors' Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - G to this Report.

DIRECTORS

Your Directors, Mr.Dinshaw K Parakh and Mr.Narayan Sethuramon retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

The term of Office of Mr.S.K.Subramanyan as Whole Time Director [Director (Finance & Administration) & Company Secretary] expires on 30th September 2012. The Board has recommended his re-appointment for a further period of three years.

The necessary resolutions in this regard are being placed before the Shareholders for their approval.

AUDITORS

The Auditors of the Company, M/s. P. Srinivasan and Co., Chartered Accountants, Chennai hold office until the conclusion of the Annual General Meeting and have given their consent for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956. The necessary resolution is being placed before the shareholders for their approval.

STATUTORY INFORMATION

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, are not applicable since there is no employee drawing remuneration more than Rs. 60,00,000/- per annum (full year) or Rs. 5,00,000/-p.m (part of the year).

Particulars required under Section 217(1)(e) of the said Act relating to Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo are furnished in a separate statement annexed to and forming part of this Report as Annexure - A.

All the dividends of the earlier years, which have remained unclaimed, have since been transferred to the Investor Education and Protection Fund at the expiry of the specified period(s) as required under Section 205C of the Companies Act, 1956. Details of dividends remaining unclaimed as on 31.03.2012 are as under :

Year Date of No. of Total Unclaimed Due date for transfer decla ration Share holders Dividend ( Rs.) to IEPF Account

2004 - 2005 28.09.2005 82 74,304.00 08.10.2012

2005 - 2006 18.09.2006 46 32,040.00 28.09.2013

2006 - 2007 13.09.2007 515 1,60,553.00 20.10.2014

2007 - 2008 (Interim) 31.01.2008 568 41,224.00 08.03.2015

2007 - 2008 (Final) 16.09.2008 569 54,305.70 22.10.2015

2008 - 2009 No Dividend declared N.A.

2009 - 2010 No Dividend declared N.A.

2010 - 2011 29.09.2011 738 62,827.20 05.11.2018

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

ACKNOWLEDGEMENT

Your Directors wish to record their appreciation of the continued support and co-operation from your Company's customers, vendors, bankers and all other stakeholders. Your Company will continue to build and maintain strong links with its business partners.

The Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also place on record their gratitude to the Members for their continued support and confidence.

For and on behalf of the Board of Directors

Place : Chennai V.THIRUPATHI MURALI VENKATRAMAN

Date :4th June, 2012 Chairman of the Meeting Vice - Chairman


Mar 31, 2010

The Directors hereby present their 26th Annual Report alongwith Audited Accounts of the Company for the year ended March 31, 2010.

FINANCIAL RESULTS





(Rs. in 000s)

Year Ended Year Ended

Particulars

March 31, 2010 March 31, 2009

Income from Operations

Gross 1,185,159 1,337,835

Net of Excise Duty 1,092,150 1,183,322

Other Income 3,577 3,572

Profit before Interest &

Depreciation 71,142 42,958

Interest 47,526 48,298

Profit/(Loss) before

Depreciation 23,616 (5,340)

Depreciation 25,768 20,565

Profit/(Loss) before tax (2,152) (25,904)

Taxation - Current Tax - 660

- Deferred Tax (Asset) (2,000) (8,235)

(2,000) (7,575)

Profit/(Loss) after Tax (152) (18,329)

Balance brought forward 15,668 34,149

Profit available for

Appropriation 15,516 15,820

Appropriations:

Transfers to

General Reserve - -

Special General Reserve - -

Capital Redemption Reserve 1,032 152

Dividends

On Equity Shares - -

Tax on distributable profits - -

1,032 152

Surplus carried forward 14,484 15,668

15,516 15,820



BUSINESS OPERATIONS

Your company had to deal with some significant challenges during the year including sluggish demand in the first half, volatility in the Polymer prices and receivables pile up leading to liquidity issues. The total Sales Revenue dipped 10% during the year inspite of a marginal overall increase in volumes.

Your company took multiple steps to tackle these issues which has resulted in a considerable improvement in margins even with a stagnant topline. The new unit at Jejuri (Near Pune) commissioned last year was operating at almost full capacity on a consistent basis.

The Pultrusion Division expanded its product portfolio with solutions for new applications and this helped to improve the performance of the division.

DIVIDEND

In view of the difficult business environment during the first half of 2009 - 2010, the Operations of the Company have resulted in a net loss as explained in detail in the Management Discussion and Analysis Report. Further the outlook for the current year is viewed with cautious optimism and hence your Directors after careful consideration have decided as a matter of prudence, defer the dividend for the year under consideration.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, ENERGY CONSERVATION ETC.

Your company has established a dedicated State of the art Application Development Centre at Puducherry . This centre boasts of some of the latest Equipments to test sophisticated parameters of plastic parts used by the compounders and the Automotive OEMs. Your company is seeking accredition by NABL to this centre.

The centre successfully developed compounds to meet the stringent specifications of the OEMs, besides developing cost effective formulations with alternate materials to deal with instability in the supply chain.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure - A to this Report.

PART II - CORPORATE MATTERS

CORPORATE GOVERNANCE

As per the requirement of Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a detailed report on Corporate Governance is set out in Annexure - B to this Report.

The Statutory Auditors of the Company have examined the Companys compliance, and have certified the same, as required under SEBI Guidelines. Such certificate is reproduced in Annexure - C to this Report. The Whole Time Director and CFO certification is given in Annexure - D to this Report. A separate Management Discussion and Analysis Report on the Companys performance is given in Annexure - E to this Report.

A Declaration by Mr.S.K.Subramanyan (Whole-time Director) with regard to compliance of Companys Code of Conduct by the Board Members and Senior Management Personnel is furnished as Annexure - F to this Report.

The Directors Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - G to this Report.

COMPLETION OF BUYBACK OF EQUITY SHARES

The buy-back of equity shares which commenced on 26th February, 2009 has been closed on 15th September, 2009. A total of 1,18,425 equity shares of Rs.10/- each were bought back from the public Shareholders under the offer and the said shares were also extinguished. The amount invested in the buy back is about Rs.4 million.

EMPLOYEE RELATIONS

Relations between the Employees and the Management continued to be cordial during the year under review.

A fresh Long Term settlement was entered into between the Management and the Workmen of the Puducherry plant.

Since there are no employees who would come under the purview of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, such particulars are not provided.

DIRECTORS

Yours Directors, Mr.V.Thirupathi, Mr.V.Srinivasan and Mr.Babulal M.Varma retire by rotation at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. However, Mr.Babulal M.Varma has expressed his intention not to seek re-election.

The necessary resolutions in this regard are being placed before the Shareholders for their approval.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

AUDITORS

The Auditors of the Company, M/s. P. Srinivasan and Co., Chartered Accountants, Chennai hold office until the conclusion of the Annual General Meeting and have given their consent for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956. The necessary resolution is being placed before the shareholders for their approval.

ACKNOWLEDGEMENT

Your Directors wish to record their appreciation of the continued support and co-operation from your Companys customers, vendors, bankers and all other stakeholders. Your Company will continue to build and maintain strong links with its business partners.

The Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also place on record their gratitude to the Members for their continued support and confidence.



For and on behalf of the Board of Directors

BABULAL M. VARMA MURALI VENKATRAMAN

Chairman of the Meeting

Vice-Chairman

Place : Chennai

Date : 28th July, 2010

 
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