DIRECTORS' REPORT To The Members, Your Directors hereunder present the Twenty First Annual Report of the Company together with the Audited Annual Accounts showing the financial position of the Company for the year ended 31st March, 2011. A. REVIEW OF OPERATIONS During the year under review, the Company has achieved Sales Turnover (net of excise) of Rs. 31127.28 Lacs as against Rs. 18061.85 Lacs for the financial year ended 31st March, 2010 which is quite substantial, but this was not sufficient to break-even and Company has incurred a Net Loss of Rs. 2825.27 Lacs before tax as against a loss of Rs. 2745.82 Lacs for the previous year ended 31.03.2010. The various steps taken for improving the operations were reflected in higher sales turnover and reduced operating loss in year under review. B. SUBMISSION OF DRAFT REHABILITATION SCHEME (DRS) FOR APPROVAL TO THE BOARD FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION (BIFR) ENVISAGING AMALGAMATION OF THE COMPANY WITH APAR INDUSTRIES LTD., THE HOLDING CO. (AIL). Pursuant to the reference made by the Company in accordance with the provisions of Sick Industrial Companies (Special Provisions) Act 1985 (SICA) to the Board for Industrial & Financial Re-construction (BIFR), the Company has been declared as Sick Industrial Company by BIFR vide its' order dated October 26, 2010 and directed the Company to file a fully tied up Draft Rehabilitation Scheme (DRS) for it's revival to Syndicate Bank who has been appointed as Operating Agency (OA) to examine the DRS. After having preliminary discussion with the management of AIL, the Holding Company, the Company has submitted DRS to OA which include proposal for amalgamation of the Company with AIL with cut-off-date as 31st March 2010 for expeditious revival. In the opinion of the Management of the Company and also its Holding Company, the above option is most suitable for expeditious revival of the Company as there is blink possibility of its revival independently. The Company is pursuing the matter with BIFR for early approval of the said Rehabilitation Proposal submitted by the Company. The Company is also proposing appropriate Resolution in the notice to the members to take the approval of its shareholders in the ensuing Annual General Meeting (AGM) for the same. C. PROPOSAL FOR AMALGAMATION OF MARINE CABLES & WIRES PVT. LIMITED (MCWPL) - A WHOLLY OWNED SUBSIDIARY OF THE COMPANY -WITH APAR INDUSTRIES LTD. (AIL), THE PARENT COMPANY. As reported last year, M/s Marine Cables & Wires Pvt. Limited (MCWPL), a Wholly Owned Subsidiary of the Company, which was doing job works for the Company, has also been declared as Sick Industrial Company by BIFR and directed MCWPL to submit a Draft Rehabilitation Scheme (DRS) for its revival. The Management of your Company had discussion on the matter with the management of AIL and also with MCWPL with regard to revival of MCWPL. As directed by BIFR, MCWPL has already submitted a Draft Rehabilitation Scheme (DRS) proposing Amalgamation of MCWPL with AIL for consideration and sanction by BIFR. Syndicate Bank, Mumbai has been appointed as Operating Agency (OA) by BIFR to monitor/ review and submit the final Rehabilitation Proposal. The OA is taking necessary steps in the matter as directed by BIFR. D. SHARE CAPITAL During the year, under review there was no change in the issued and paid up share capital of the Company which stood at Rs. 2498.04 lacs divided into 249,80,366 number of equity shares of Rs. 10/- each fully paid. E. LISTING The Company's equity shares are listed on the Bombay Stock Exchange Ltd. (BSE), Mumbai. F. FUTURE OUTLOOK The business environment for Cable industry is still challenging but showing signs of industrial and infrastructure growth. However, the Industry is having excess capacity compared to demand currently. The future outlook in terms of investment in the infrastructure sector, particularly power, is also good. This indicates that demand for the cable business should improve further. We are optimistic that Financial year 2011-12 will be a better year than earlier Financial years. The industry has significantly expanded its' capacity resulting in a price war like situation with reduction in prices and margins, though demand is at a higher level. It is expected that margins will also slowly improve and in the next 1-2 years should come back to the pre-2008 level. The recovery in margins has been slow due to significant over capacity in the industry. Our Company has further de-bottlenecked its capacity in the Elastomeric and Power cable divisions making certain idle facilities suitable for Power Cables besides addition of few new types of equipment. The capacity of fiber optic cables is also being enhanced by upgrading existing equipments and addition of new machinery. Several measures have been taken to improve process, productivity and quality with new equipments and manpower training. The last year has seen a major improvement in Company's sales performance as a consequence of these actions. We expect to continue with this momentum resulting in a better performance in Financial year 2011-12, both in terms of sales and profitability with an objective to break even. If the pricing environment improves due to stronger than expected demand, the performance of the Company may further benefit. G. CORPORATE GOVERNANCE Your Directors fully endorse the principles of Corporate Governance and to implement the same as per requirements of Clause 49 of the Listing Agreement. The Management Discussion & Analysis and Corporate Governance Report are attached to this report. H. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with regard to the Directors' responsibility statement, it is hereby confirmed that: i. In the preparation of the annual accounts for the financial year ended March 31, 2011, the applicable accounting standards were followed along with proper explanations relating to material departures, if any. ii. Appropriate accounting policies were selected and applied them consistently and made judgement 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 loss of the Company for the financial year for that period. 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 fraud and other irregularities. iv. The annual accounts were prepared on a going concern basis. I. DEPOSITS Your Company has not accepted any fixed deposit from public within the meaning of Section 58-A of the Companies Act and rules made there under. J. BOARD OF DIRECTORS i) Shri S.K. Kinra has been appointed as a Special Director by the Board for Industrial & Financial Reconstruction (BIFR) New Delhi on the Board and other committees of the Board of Directors of the Company w.e.f. 3rd January, 2011. ii) Dr. Narendra D. Desai and Shri H. N. Shah, the Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) of the Company and being eligible, offer themselves for re-appointment. Appropriate resolutions for approval of the members for the re- appointment of Dr. Narendra D. Desai and Shri H. N. Shah as Directors of the Company have been proposed in the notice to the Members for the ensuing Annual General Meeting. The Board recommends their appointment / re-appointment. K. PARTICULARS OF EMPLOYEES There are no employees whose remuneration was in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended. L. AUDITORS The Auditors, M/s. Rashmi Zaveri & Co. Chartered Accountants, are retiring at the ensuing Annual General Meeting and they are not seeking re-appoinment. The Audit Committee at their meeting held on 26th May, 2011 have recommended the name of M/s Sharp & Tannan, Chartered Accountants, to be appointed as Statutory Auditors of the Company in place of retiring Auditors. The Company has received necessary certificate u/s 224(1B) of the Companies Act from M/s Sharp & Tannan, Chartered Accountants. The Board recommends the appointment of M/s Sharp & Tannan as Statutory Auditors of the Company by the shareholders at the ensuing Annual General Meeting. M. AUDITORS' REPORT The observations contained in the Auditor's Report are self-explanatory and therefore, no further comments are required separately. N. OTHER INFORMATION a) The Company has been granted exemption for the year ended March 31, 2011 by the Ministry of Corporate Affairs vide its letter dated 28th January, 2011 from attaching to its balance sheet, the annual report of the Company's wholly owned subsidiary viz. M/s Marine Cables & Wires Pvt. Limited. As required in terms of the exemption, a statement containing brief financial details of the said subsidiary for the year ended 31st March, 2011 are included in the annual report of the Company. b) Attached to and forming part of this report are the following : i) Particulars relating to conservation of energy, technology absorption and foreign exchange earning and outgo. ii) Report on Corporate Governance and Auditors' Certificate regarding compliance of the conditions of Corporate Governance. O. ACKNOWLEDGEMENT Your Directors would like to express their gratitude for the support, assistance and co-operation received from the Bankers, Apar Industries Ltd. (AIL), the Holding Company, Government Authorities, Customers, Vendors and Shareholders of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company in the difficult time. FOR AND ON BEHALF OF THE BOARD (DR. N. D. DESAI) CHAIRMAN Place: Mumbai. Date : 26th May, 2011 |