AEC (INDIA) LIMITED
The Shareholders of AEC (INDIA) LIMITED.
The Directors have pleasure in placing before you the 14th Annual Report
and the Audited Accounts of the Company for the 18 months period ended 30th
2.Take over bid
On 5th of June 1998, there was a Take-over bid lodged on your company, by
a Delhi based company, M/s Peacock Chemicals Pvt. Ltd. The Prevailing
recession in the India market, shattering of the Korean economy as well as
the complete recession in South East Asian markets, no doubt had an impact
on the working of our company also. It was probably because of the
tightness of the funds on one hand and a full knowledge of the potential of
your company on the other hand, which tempted M/s Peacock Chemicals Pvt.
Ltd. to lodge a take over bid. I am pleased to inform you that the matter
was immediately referred to the Hon'ble High Court of Delhi and after over
2 months of legal deliberations, the Hon'ble High Court of Delhi has given
a verdict absolutely in your company's favour and has highlighted in its 25
page judgement that M/s Peacock Chemicals Pvt. Ltd. have attempted by
fraudulent means to grab the company, and the same has been rejected. Now
that as the judgement has been clearly given in favour of your company, the
company is now trying to come out of the hardships and is now on the
Performance of the Company
As is known to you, the overall business scenario in the country has been
totally depressing, for over one year now. There has been no expansion in
the industrial sector nor has there been any major growth, as such it has
had an impact on your company, which is primarily related in the
construction activities. With the recession in the country as well as a
worldwide recession, the growth / expansion of the existing units as well
as the new projects have been practically shelved by the private and public
sectors. Accordingly one of the Group company's project for setting up of
P.E. Tarpaulin project for which AEC (India) Ltd. was awarded a turnkey
contract for Rs.22.60 crores, could not take off last year. This was
primarily on account of Equity not coming in from the Korean collaborator
because of the economic recession in Korea. Your company which had a
contracted plan of executing over Rs.30 crores worth of projects in the
year concluded, therefore has been able to do a turn over of only Rs. 11.42
crores in Engineering and Construction Division, with a Net profit of
Rs.49.90 lacs and Rs. 2.75 crores in Healthcare Division, with a Net Loss
of Rs.209.39 lacs, totalling a turn over of Rs.14.17 crores for the Company
as a whole, with a loss of Rs.159.49 lacs. Healthcare Division of the
Company also has undergone a lean period clubbed with no exports to the
South Korean market, which was considered to be a major buyer. The tight
financial conditions followed by a lay off at the plant from June onwards
on account of the Take over bid, has resulted in a complete set back for
Although l regret to inform that the year which has concluded has not been
a healthy year for your company, primarily on account of recession followed
by take over bid lodged on your company, but keeping in view of our
inherent strength in Engineering and construction and a positive thought
being given to develop a package for revival of the Noida Unit, we are
confident to come out of the lean period and bounce back into profits in
near future .
Engineering & Construction Division
I am pleased to inform you that your Engineering and Construction Division
has been short listed as one of the few companies in the country for
executing jobs under World Bank, Asian Development Bank, OECF Japanese
funding, German aid etc. for carrying out jobs all over the country. Your
company's this Division has expanded and has picked up jobs worth Rs.15
crores for Chennai Metropolitan Water Supply and Sewerage Board which is a
World Bank aided project. Also jobs at Karamsana in Rajasthan of Rs.9
crores has been picked up, which is funded by the German Govt., as well as
another job at Mathura of U P Jal Nigam of approx. Rs.5 crores has been
received. I am pleased to inform you that the total unexecuted order being
as on date with the Engineering and Construction Division is over Rs.50
crores. A complete thrust is being given in this front and we are in the
process of enhancing our operations on account of the technical know-how
and pre-qualification which your company possess.
Another arena which is being exploited in our construction activity is that
of taking up good value jobs of offering complete Turn key package for
setting up industrial units for different clients, be it in the field of
Textiles, Petrochemicals, Healthcare, Foods, Tele communication or any
other industry. Your company is fully geared up with offering concept to
commissioning services in the shape of identifying projects, collaborator,
tying up finance and funds, undertaking setting up of industry on a turn
key basis, organising all the clearance and approvals from the various
government departments and handing over of the units to the clients. This
type of service, all under one roof, is being pursued both in the domestic
as well as in the international markets. Few of the discussions are at an
advance stage and there are major chances that your company may bag some
assignments in foreign countries for setting up projects for the clients on
the basis mentioned above.
5. Noida Plant
In order to revamp the entire system as well as to bring your company back
into the profitability, it has been decided to change the business activity
at Noida plant.
After having detailed discussions with the Bankers of this Division. as
well as with certain consultants. 3 alternatives to revive the Noida Plant,
have been proposed. The same are:
1. To sell the entire unit including land and building to some national or
international group. Reduce the liabilities by paying off the Banks,
Institutions, other agencies and concentrating on Engineering &
2. To sell the plant and equipment of the Healthcare Products to a buyer
and utilise the land, building and utilities for setting up any other
manufacturing activity. One of the potential buyers has been identified.
Negotiations with the party are under way.
3. To offer the land, building and utilities to any multinational for them
to set up their plant at Noida in joint venture with your company.
All the above 3 possibilities are being pursued and very soon a solution to
this would be found out. We are very confident that we shall be able to
revive business at our Noida plant in the months to follow thereby
improving the health of the company.
Due to losses incurred by the Company, your Directors are unable to
recommend payment of any dividend during the current year.
7.1 ILFS Venture Capital Fund Ltd. (Formerly Credit capital Venture Fund
(India) Ltd.) who have been holding 2,50,000 Equity Shares in the Company
and in terms of shareholders agreement, have withdrawn the nomination of
Shri Rahul D.Shah as their Nominee Director on the Board of the Company.
7.2 In accordance with the provisions of Section 255 of the Companies act,
1956 and the Company's Articles of Association, Shri Vasantal D.Mehta and
Shri Satish Sabnis Directors of the company retire by rotation and being
eligible have sought re-appointment.
The Auditors, M/s V.V. Kale & Co. Chartered Accountants, retire at the
conclusion of the forthcoming Annual General Meeting and being eligible
offer themselves for re-appointment. They have furnished a certificate to
the effect that the re-appointment, if made, will be in accordance with
sub-section (lB) of Section 224 of the Companies Act, 1956.
9. Fixed Deposits
During the period under report, your company has not accepted any deposit
within the meaning of Section 58(A) of the Companies Act, 1956 and the
rules made thereunder. 9
10. Particulars of Employees
Information in accordance with the provisions of Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, are annexed and forms part of this report.
11. Particulars of Conservation of Energy, Technology absorption and
Foreign Exchange Earnings and outgo.
a) Since during the period under report, the Health Care Products Unit of
the Company has not functioned to the optimum capacity, still every effort
has been made to conserve the energy during the manufacturing process.
b) Technology Absorption
The Company has successfully completed the technology absorption process.
However, continuous efforts were made to improve the productivity and
remove all the bottlenecks in the process.
c) Information as per Section 217(1)(e) read with Companies Disclosure of
particulars in the Report of Board of Directors Rules 1988 are given below:
Foreign Exchange Earning: Rs.262.72 lacs
Foreign Exchange used: Rs. 8.76 lacs
The Directors express their appreciation for the dedicated and committed
hard work of the company's personnel at all levels
Your Directors also wish to thank the company's bankers, financial
institutions, shareholders and business associates for their continued
support and cc,- operation.
For and on behalf of the Board
PLACE: NEW DELHI (R.D. APTE)
DATE : 28.11.98 Chairman Managing Director