| Dear Shareholders,
The Directors are pleased to present their Fifty-first Annual Report
together with Audited Financial Statements of your Company for the year
ended March 31,2012
FINANCIAL RESULTS:
(Rs. In Lakhs)
Parameters YEAR YEAR
ENDED ENDED
31.03.2012 31.03.2011
Gross revenue 2442.98 2250.77
Less: excise duty 203.66 184.71
Net revenue 2239.32 2066.06
Other Income 95.22 48.07
Income 2334.54 2114.13
Expenditure 2106.16 1806.41
EBITDA 228.38 307.72
Less:Interest & Depreciation 214.46 215.89
Profit before taxation and
extraordinary items 13.92 91.83
Less: Extraordinary items - -
Profit before taxation 13.92 91.83
Less: Tax expense
Current Tax - -
Deferred Tax (419.80) -
Profit/Loss after taxation 433.72 91.83
PERFORMANCE ANALYSIS:
During the year the total turnover of the company has increased due to
better market conditions. The company's total income has increased from
Rs. 2250.77 lacs in previous year to Rs. 2442.98 lacs in current year
which showed 9% growth as compared to previous year. The 9% growth
achieved for the year is lower on account of loss of production due to
cyclone Thane'. Earnings before Interest, depreciation and taxation
have been reduced to Rs. 228.38 lacs in 2011-12 from Rs. 307.72 lacs in
the previous year 2010-2011.
The production was remained under pressure throughout the year due to
increase in various cost components and competitive pressure rising
from continuing creation/ expansion of more capacities.
Since the outlook for the industry appears to be positive, your
Directors are hopeful in achieving better results based on the credible
estimates on likelihood of robust demand over the terms.
OPERATIONAL REVIEW:
Your Company has already initiated steps for implementation of Scheme
approved by BIFR and major part of the modernisation cum expansion
program was completed during the last financial year. By this the
Installed capacity of the company increased to 12500 Metric Tonnes per
annum. However, due to delays in obtaining additional working capital
from banks and the enhanced natural gas supply from the suppliers, much
of the expanded capacity could not be operational almost till the end
of the financial year. Thus the benefits of expansion are not realised
in the financial year and excess fuel & operational costs were incurred
in the year due to these delays. The company is strengthening its
distribution network by various means for effective marketing of
additional Quantitative shift in production. Due to cyclone Thane' the
Kiln got fully damaged and installed capacity reduced by 3750 Metric
Tonnes.
Your Company's operations have been impacted by:-
- The slow down in profits on account of loss of production due to
cyclone "Thane", leading to a lower margin.
- Severe damage of Plant and Machinery due to the cyclone Thane',
resulting in the shutdown of the plant during January 2012 and it took
another two months to bring back the operations to a reasonable level.
IMPACT OF CYCLONE "THANE":
Cyclone "Thane" struck Cuddalore in the early hours of 30th December,
2011. Unfortunately, the factory happened to be the epicentre of the
cyclone created havoc in the whole area including the factory with a
wind speed of above 150-160 kmph which has resulted in a serious damage
to the fixed assets of the company. The estimated damage caused by
Thane' is to the tune of Rs. 7.80 crore for which the Company has
preferred a claim with the Insurance Company.
Due to this the entire factory was closed for almost a month during
January 2012 and it took another couple of months to bring back the
operations into a reasonable level thereby losing more than two months
of production.
The task of stabilization of the plant and bringing it back to its
original state took around another 3 months. The damage to property and
material are covered by insurance. The insurance surveyors who are
assessing the loss are of the opinion that the claim settlement as per
the insured value would be in the region of Rs.2.50 Crores and the
balance to the extent of Rs.5.30 Crores have to be borne by the
Company. This has further adversely hit the working of the Company and
the loss inclusive of operational loss is estimated to the tune of
Rs.7.50 Crore.
Your Company has taken a number of initiatives to reduce the cost of
production which should enable it to compete effectively and increase
the sales volumes and margins.
DIVIDEND:
In view of the accumulated losses, the Directors express their
inability to declare dividend.
FIXED DEPOSIT:
Your Company did not invite or accept any fixed deposit pursuant to
provisions of Section 58A of the Companies Act, 1956, during the year.
As on date there is no deposit which has matured and pending for
payment.
SHARE CAPITAL:
During the year under review, there were no capital issues and hence no
funds raised through share capital.
IMPLEMENTATION OF REHABILITATION SCHEME SANCTIONED BY BIFR
The Board for Industrial and Financial Reconstruction [BIFR] has
approved the rehabilitation scheme of your company on 06th October 2008
and the company has completed implementation of major activities
approved by BIFR.
In order to give effect to the various restructuring programmes as
approved by BIFR, the company has also initiated the process of
implementation of Capital Reduction and listing of securities in
accordance with finalised position of allotment by strictly adhering to
the directions given under scheme of BIFR resulting in profitable
revival of the Company.
BOARD OF DIRECTORS
In accordance with the applicable provisions of the Companies Act, 1956
read with the Articles of Association of the Company, Mr.
B.S.Shailendar, Director of the company, retire from the Board by
rotation at the ensuing Annual General Meeting and being eligible,
offer himself for re-appointment.
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors'
to the best of their knowledge and belief confirm that:
1. In the preparation of the Profit and Loss Account for the Financial
Year ended March 31, 2012, and the Balance Sheet as at that date
("Annual Accounts"), the applicable accounting standards have been
followed along with proper explanation relating to material departures;
2. That the Directors' had 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 and loss of the Company for that period;
3. That the Directors had 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 fraud and other
irregularities;
4. That the Directors had prepared the Annual Accounts for the
Financial Year ended March 31, 2012 on a going concern basis.
AUDITORS AND THEIR OBSERVATIONS
The Statutory Auditors, M/s. Suri & Co., Chartered Accountants, retire
at the conclusion of the ensuing Annual General Meeting and are
eligible for re-appointment for the current financial year.
The Company has received confirmation that their appointment will be
within the limits prescribed under Section 224(1B) of the Companies
Act, 1956. The Audit Committee of the Board has recommended their
appointment. The necessary resolution is being placed before the
shareholders for approval.
Items under which auditors have commented in their report are suitably
explained by the Director's forms a part of this report.
Particulars as required under 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
A) Conservation of Energy
Your Company continues to be committed to energy conservation in its
manufacturing operations. The new kiln which is just commissioned is
expected to save fuel consumption by at least 40%. The power was
economically and optimally utilised during the year. As the power costs
are mounting from the Electricity Board, your company is exploring the
possibility of installing captive generation.
B) Technology Absorption
Your company is planning to adopt improved technology for better
quality improvement, energy saving, material consumption and reduction
of wastages.
C) Research and Development
The Company has a continuous ongoing R 8s D Program which during the
period under review introduced various designs of sanitary wares. In
addition to development of new products, the R 8s D Department also
institutated a comprehensive policy on cost reduction and improved
production efficiency in line with modern trends so as to differentiate
the brand positioning of "Neycer" from other competitors brands.
D) Foreign Exchange Earnings and Outgo
Foreign Exchange earned during the year : Rs. Nil ( PY Rs.Nil)
Foreign Exchange used during the year: Rs. 26.29 lakhs (PY Rs.4.43
lakhs)
PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 217(2A) OF THE COMPANIES
ACT, 1956
None of the employees of the Company are in receipt of total
remuneration exceeding the limits prescribed under Provisions of
Section 217(2A) of the Companies Act, 1956. Hence no reporting is
furnished under the heading.
CORPORATE GOVERNANCE REPORT
Your Company has been practicing the principles of good Corporate
Governance. A detailed report on the Corporate Governance Code and
practices of the Company along with a certificate from the Statutory
Auditors of the Company regarding compliance of the conditions of
Corporate Governance as stipulated under clause 49 of the Listing
Agreement are annexed in a separate section in this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed analysis of the Company's progress and future outlook is
separately discussed in the Management Discussion and Analysis Report,
is appended to and forms a part of the Annual Report.
DIRECTORS REPLY TO AUDITORS QUALIFICATIONS:
With regard to the observation of the auditors relating to
non-provision of interest on the Term Loan and Loan from Body
Corporate, the Board wish to state that the subject matter forms part
of the Scheme approved by the BIFR and hence not provided.
With regard to observation of Auditors in their report Annexure Clause
"IX", the statutory dues mentioned are payable over a period of 2 years
as per the BIFR directives.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to express grateful appreciation
for the valuable support and co-operation received from Financial
Institutions, Bankers, Shareholders, Creditors, various departments of
Governments and all other stakeholders.
The Directors also wish to thank the Timeshare Customers who have
supported the Company in this hour of need. Your Directors also place
on record the wholehearted commitments from the employees of the
Company and their combined efforts to turnaround the Company.
For and on behalf of the Board
Place : Chennai
Date : 27-08-2012 Sd/- Sd/-
Krishna Prasad Tripuraneni Y. Mohan Prasad
Director Director. |