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Directors Report of Shree Ganesh Forgings Ltd.

Mar 31, 2014

Dear Members,

The Directors present herewith the 41st Annual Report and the Audited Statement of Accounts of the company for period from 1st April, 2013 to 31st March, 2014.

Financial Highlights

PARTICULARS FOR THE (IN LACS) PERIOD ENDED 2012-2013 2013-2014

Operational Income 3.26 214.56

Other Income 361.92 23.33

Total Expenditure 521.51 2357.15 (excluding interest)

Interest - 9.99 Loss before Tax (127.02) (2119.26)

Deferred Tax 77.81 79.25

Loss after tax (49.21) (2040.01)

Dividend

The Board does not recommend any dividend for the period under review.

Operations

During the period under review, the turnover of the Company was Rs. 3.26 Lac in comparison to Rs. 214.56 Lac of previous year mainly on account of partial closure of the production facilities due to lack of availability of working capital funds and persistent labour problems. The company has been mainly servicing customers whose requirements matched the company''s stock of semi- finished and finished goods entirely or partially. In several cases, semi-finished and finished goods have been re-worked to meet the current customers'' requirements.

Members are aware that the company had filed a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 due to erosion of its net worth. As of 31st March, 2014, the net worth remains negative in view of the accumulated loss .

Meanwhile, our accounts with the banks were designated as Non- Performing Asset (NPA) by the bankers and in May, 2011 the bankers initiated recovery action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Company is taking all requisite measures to ensure that the outstanding dues to the bankers is settled and has already given its proposal for one-time settlement with the bankers. State Bank of India, which became our lead bank after the merger of State Bank of Indore with it in August 2010, also sent us a possession notice in October, 2011 against which the company has already filed an application with the Debt Recovery Tribunal. The management is making constant endeavors to move on with discussions with the bankers so as to arrive at a mutually acceptable proposal.

The management is also evaluating various options with respect to raising the funds required for settling the banks'' dues, including selling or leasing the land on which the factory is situated and shifting the operations to an alternate site. As of date, the management is seriously considering a couple of proposals, although a structured outcome is yet to emerge.

Directors

In accordance with the provisions of the Articles of Association of the Company, Mrs. Anita Sekhri, retires by rotation at the forthcoming Annual General Meeting and being eligible, offer herself for reappointment. The Board recommends her re-appointment.

Statutory Auditors

The Auditor M/s. Batliboi & Purohit, Chartered Accountants (Firm Registration No. 101048W), who are the statutory auditors of the Company, hold office till the conclusion of the forthcoming AGM and are eligible for re-appointment. Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. Batliboi & Purohit, Chartered Accountants (Firm Registration No. 101048W) as statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the Forty Third AGM to be held in the year 2016, subject to ratification of their appointment at every AGM. The Board of Directors has recommended their re-appointment as auditors.

The written consent from the Auditor has been received along with a certificate that their appointment if made, shall be in accordance with the prescribed conditions and the said auditors satisfy the criteria provided in Section 141 of the Act.

Public Deposits

The Company has not invited and/ or accepted any deposits within the meaning of Section 58 A of the Companies Act, 1956, read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder.

Directors'' Responsibility Statement

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

a) In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the accounting policies have been selected and applied consistently and all judgments and estimates made are reasonable and prudent, so as to give a fair view of the state of affairs of the Company as at 31st March, 2014 and of the loss for that period ;

c) 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 safeguarding the assets of the Company and for preventing fraud and other irregularities ;

d) the annual accounts have been prepared on a going -concern basis.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information required in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as Annexure A to this Report.

Subsidiary Company

The statement pursuant to Section 212 of the Companies Act, 1956 in respect of the Company''s subsidiary viz. SGFL International BV is attached as Annexure B to this Report. The subsidiary was constrained to sell off its investments in view of the fall in global demand and due to serious operational problems. The consolidated financial statements of the Company and its subsidiary forms part of the Annual Report.

Pursuant to the General Circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs , the Board has given consent for not attaching the Balance Sheet, the Profit and Loss Account and other documents as set out in section 212 (1) of the Companies Act, 1956, in respect of the subsidiary. However, these documents are available for inspection by any member at the Registered Office of the Company, during working hours upto the date of the Annual General Meeting. Copies of these documents shall also be made available to any member of the company upon request.

Particulars of Employees

There are no employees drawing remuneration in excess of the limits specified in section 217(2A) of the Companies Act, 1956.

Industrial Relations

The company was constrained to lay off few employees in view of partial closure of operations consequent to which they had moved the Industrial Court, Thane for payment of closure compensation.

The company has been taking efforts to ensure peaceful severance of service and amicable settlement of the dues of the employees concerned. In reciprocation, some of the employees have accepted the company''s proposal and their dues have been settled. However ,the Industrial Court, Thane ,has restrained the company from shifting, selling, parting with or creating third party interest in respect of its plant, machinery , land, building or any immovable property.

Management Discussion & Analysis Report and Report on Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion & Analysis Report, the Report on Corporate Governance and the certificate in respect of compliance of requirements of Corporate Governance are annexed to this Report and form part of this Annual Report.

Acknowledgement

Your Directors express their grateful appreciation to the company''s valued customers, suppliers, investors and bankers for their continued support, assistance, co-operation and guidance. Your directors also thank all the employees and executives for their contribution and look forward to their continued support in the future too.

Date: 25.11.2014 By order of the Board Place: Mumbai For Shree Ganesh Forgings Limited

Registered Office: Sd/- 412, Emca House, Deepak B. Sekhri S.B.S. Road, Fort, Chairman & Managing Director Mumbai-400 001 DIN : 00054671


Mar 31, 2013

The Directors present herewith the 40th Annual Report and the Audited Statement of Accounts of the company for period from 1st April, 2012 to 31st March, 2013.

Financial Highlights

For the period ended (in lacs) 2012-13 2011-12

Operational Income 214.56 236.32

Other Income 2.33 5.98

Total Expenditure 2357.15 1332.27

(excluding interest)

Interest 9.99 1.32

Loss before Tax (2119.26) (1089.97)

Tax 79.25 21.10

Loss after tax ( 2040.01) (999.94)

Dividend

The Board does not recommend any dividend for the period under review.

Operations

During the period under review, the turnover of the Company was Rs. 214.56 Lac in comparison to Rs. 236.32 Lac of previous year mainly on account of partial closure of the production facilities due to lack of availability of working capital funds and persistent labour problems. The company has been mainly servicing customers whose requirements matched the company''s stock of semi- fnished and fnished goods entirely or partially. In several cases, semi-fnished and fnished goods have been re-worked to meet the current customers'' requirements.

The reworked Corporate Debt Restructuring (CDR) package although sanctioned by the CDR Cell in March 2010 and sanctioned individually by all the lender bankers was not implemented at all though it was expected to be implemented by July 2010. Further, the banks unilaterally decided to exit from the CDR scheme. We have also fled an appeal with the CDR Core Group as per their extant rules in this regard.

Members are aware that the company had fled a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 due to erosion of its net worth. As of 31st March, 2013, the net worth remains negative in view of the accumulated loss .

Meanwhile, our account with the banks were designated as Non- Performing Asset (NPA) by the bankers and in May, 2011 the bankers initiated recovery action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Company is taking all requisite measures to ensure that the outstanding dues to the bankers is settled and has already given its proposal for one-time settlement with the bankers. State Bank of India, which became our lead bank after the merger of State Bank of Indore with it in August 2010, also sent us a possession notice in October, 2011 against which the company has already fled an application with the Debt Recovery Tribunal. The management is making constant endeavors to move on with discussions with the bankers so as to arrive at a mutually acceptable proposal.

The management is also evaluating various options with respect to raising the funds required for settling the banks'' dues, including selling or leasing the land on which the factory is situated and shifting the operations to an alternate site. As of date, the management is seriously considering a couple of proposals, although a structured outcome is yet to emerge.

Directors

Mr Deepak B Sekhri and Mrs. Anita D Sekhri are proposed for the reappointed by the Board as Managing Director and Whole time Director respectively, subject to confrmation of the shareholders at the general meeting. The approval of the members for their appointment as Managing Director and Whole Time Director respectively is being sought at the ensuing Annual General Meeting.

In accordance with the provisions of the Articles of Association of the Company, Mr. Deepak Sekhri, retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment. The Board recommends his re- appointment.

Statutory Auditors

The Auditors M/s Batliboi & Purohit, Chartered Accountants, Mumbai, hold offce until the conclusion of the ensuing Annual General Meeting. The Board recommends their reappointment. The Company has received a certifcate to the effect that their appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Remarks of Auditors

The point mentioned in Auditors Report as the Basis of Qualifed Report that Accumulated losses is more than 50% of its Net worth is because the Company has been facing lot of operational problems in recent past due to shortage of staff, senior fnance head and there is no production and sales in the Company. Also due to shortage of funds, the Company has become a sick unit. Therefore, Company has applied in the B.I.F.R / A.A.I.F.R for its restructuring.

Point no.iii of Annexure to Auditors Report regarding Loan granted to related parties.

As the Company is a sick company it was unable to comply with provisions of section 295 and obtain approval from Central Government. It is in the process of Complying with the various provisions of the Acts.

Point no. ix of Annexure to Auditors report in respect of Statutory Dues

It has been observed that there have been few delays in payment of Statutory Dues. As the Company is a sick company and have accumulated losses it was unable to pay its Statutory dues. The company is in the process of settling all its Statutory dues.

Others remarks of the Auditors are self-explanatory in nature read with respective notes to accounts and need no further clarifcations.

Public Deposits

The Company has not invited and/ or accepted any deposits within the meaning of Section 58 A of the Companies Act, 1956, read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confrmed that:

a) In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the accounting policies have been selected and applied consistently and all judgments and estimates made are reasonable and prudent , so as to give a fair view of the state of affairs of the Company as at 31st March, 2013 and of the loss for that period ;

c) proper and suffcient care has been 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 fraud and other irregularities ;

d) the annual accounts have been prepared on a going -concern basis.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information required in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as Annexure A to this Report.

Subsidiary Company

The statement pursuant to Section 212 of the Companies Act, 1956 in respect of the Company''s subsidiary viz. SGFL International BV is attached as Annexure B to this Report. The subsidiary was constrained to sell off its investments in view of the fall in global demand and due to serious operational problems. The consolidated fnancial statements of the Company and its subsidiary forms part of the Annual Report.

Pursuant to the General Circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs , the Board has

given consent for not attaching the Balance Sheet, the Proft and Loss Account and other documents as set out in section 212 (1) of the Companies Act,1956, in respect of the subsidiary. However, these documents are available for inspection by any member at the Registered Offce of the Company, during working hours upto the date of the Annual General Meeting. Copies of these documents shall also be made available to any member of the company upon request.

Particulars of Employees

There are no employees drawing remuneration in excess of the limits specifed in section 217(2A) of the Companies Act, 1956.

Industrial Relations

The company was constrained to lay off few employees in view of partial closure of operations consequent to which they had moved the Industrial Court, Thane for payment of closure compensation.

The company has been taking efforts to ensure peaceful severance of service and amicable settlement of the dues of the employees concerned. In reciprocation, some of the employees have accepted the company''s proposal and their dues have been settled. However ,the Industrial Court, Thane ,has restrained the company from shifting, selling, parting with or creating third party interest in respect of its plant, machinery , land, building or any immovable property .

Management Discussion & Analysis Report and Report on Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion & Analysis Report, the Report on Corporate Governance and the certifcate in respect of compliance of requirements of Corporate Governance are annexed to this Report and form part of this Annual Report.

Acknowledgement

Your Directors express their grateful appreciation to the company''s valued customers, suppliers, investors and bankers for their continued support, assistance, co-operation and guidance. Your directors also thank all the employees and executives for their contribution and look forward to their continued support in the future too.

Date: 06.01.2014

Place: Mumbai For and on behalf of the Board of Directors

Sd/-

Deepak B. Sekhri

Chairman & Managing Director

 
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