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Company director report

ALCOBEX METALS LIMITED ANNUAL REPORT 2009-2010 DIRECTOR'S REPORT To The Members Your Director have pleasure in presenting the 40th Annual Report and Audited Statement of Accounts of the Company for the year ended on 31st March, 2010. FINANCIAL RESULTS Particulars 2009-2010 2008-2009 (Rs. in Lacs) Loss before depreciation, interest, taxation 592.86 616.40 and extraordinary items Add: Depreciation 138.88 141.73 Add: Interest 1347.47 1374.29 Loss 2079.21 2132.42 Add/Less: Prior Period adjustment/ 7.39 1.71 exceptional/extraordinary items Net Loss 2086.60 2134.13 Deficit as per last year 16083.01 13777.18 Less: Provisions for Deferred Tax Assets/ (5265.65) 278.30 Liabilities (Net) Less : Debenture Redemption Reserve - - & Capital Reserve W/back Adjusted against General Reserve - - LOSS CARRIED TO BALANCE SHEET 23435.26 15633.01 OPERATIONS Due to severe liquidity problems production had been falling month after month and it had to be totally stopped from mid December, 2009 following withdrawal of power & water supply to the company by the authorities concerned. The company achieved a production of 410.62 M.T and a turn over of Rs. 1396.95 Lacs during the year as against the production of 1555 M.T. and a turn over of Rs. 6010.34 Lacs during the previous year. EXPORT The company's export during the year under report amounted to Rs. 401.84 Lacs (FOB Value) as against Rs. 3610.56 Lacs during the previous year. DIVIDEND Owing to the losses incurred by the company, your directors express their inability to recommend payment of dividend on the equity shares for the year under report. FUTURE OUTLOOK The acute shortage of Working Capital continues to haunt the operation of the company. The company is making serious efforts to locate a strategic investor to finance the working capital and also make one time settlement with its secured lenders. Future outlook of the company will depend upon the success of company's efforts to locate a strategic investor. INDUSTRIAL RELATIONS Industrial relations had been generally satisfactory. DIRECTORS Shri S.R. Kanunga retire by rotation at the 40th Annual General Meeting and being eligible offer themselves for reappointment. Shri Vineet Bhandari ceased to be additional director with effect from 30th September, 2010 Shri S.K. Singh, Nominee Director of PNB ceased to be director consequent upon his resignation with effect from 28th April, 2010. Shri D.K. Kankaria ceased to be director with effect from 17th June, 2010 due to his sad demise. The profile of the Director seeking reappointment at this Annual General Meeting is given in the Report on Corporate Governance. AUDITORS REPORT The Company has provided full disclosure in the audited accounts of the company through Notes to the accounts and accounting policies forming part of the Balance sheet as at 31st March, 2010 in respect of qualifications mentioned by Auditors in their Report. Further the notes to the Accounts and Accounting Policies referred to in Auditors Report are self-explanatory and the qualifications have been suitably explained therein. In addition to the same, the Director would like to state that: (a) The company has prepared accounts on the going concern basis as the Company has partially continued with its operation and arrangements are being made to tide over liquidity problem. Accordingly, the company is of view that there is no impairment of assets and also accounted for deferred tax assets. (b) The company is in process of obtaining balance confirmation certificates from various parties and also reconciling various accounts. (c) Steps are been taken to avoid delays in payment of statutory dues. AUDITORS The auditors of the company M/s Ray & Ray, Chartered Accountants, retire at the 40th Annual General Meeting of the company and have given their consent for reappointment. The Company has also received a certificate from them under section 224 (IB) of the Companies Act, 1956. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to section 217 (2AA) of the Companies Act, 1956 the Directors, confirm that: 1. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed except to the extent disclosed in Significant Accounting Policies and Notes to the Accounts (Schedule 25 & 26). 2. Appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made, 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 /loss of the Company for that period. 3. Proper and sufficient care for the maintenance of adequate accounting record in accordance with the provisions of the Companies Act, 1956, has been taken for safeguarding the assets of the company and prevailing and detecting fraud and other irregularities, to the best of our knowledge and ability. 4. The annual accounts have been prepared on a 'going concern basis. SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 The package earlier given by the Corporate Debt Reconstruction cell of IDBI to the Company has since been withdrawn by it. The Honorable BIFR is considering various issue relating to the future of the Company. A notice has also been served to the Company under Section 13 of the SARFAESI Act by some secured lenders seeking payment of their dues from the Company. PERSONNEL There was no employee of the company drawing salary in excess of the limits prescribed under section 217 (2A) of the Companies Act, 1956. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO In accordance with the requirement 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 a statement showing particulars in respect of above is annexed and forms part of this report. CORPORATE GOVERNANCE The Report on Corporate Governance is annexed and forms part of this report. OTHER INFORMATION The Audit Committee of the Company reviewed the financial statements for the year under review at its meeting held on 8th September, 2010 and recommended the same for the approval of the Board of Directors. As per the listing agreement with the stock exchange, the Management discussion & Analysis report, Report on Corporate Governance and Auditor's Certificate regarding compliance of all conditions of Corporate Governance form a part of this report. ACKNOWLEDGMENT Your Directors acknowledge with gratitude, the assistance and cooperation provided by the Govt., of Rajasthan, the Company's bankers and financial institutions, suppliers, customers and various other Government Departments. For and on behalf of the Board of Directors Place: Jaipur (G.C. Kanunga) (S.R. Kanunga) Date : 8th September, 2010 Managing Director Director ANNEXURE TO THE DIRECTORS' REPORT Conservation of energy, technology absorption, foreign exchange earnings and out go in accordance with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988]. CONSERVATION OF ENERGY a. Energy conservation measures taken. Efforts are continuously being made to conserve energy. b. Proposals are under consideration for power factor improvement and Energy conservation. Installation of additional capacitor and panel for improvement of power factor for energy conservation as well tariff benefits /reduction in power bill. c. Sufficient electricity was generated on DG set by using H.S.D. which resulted in considerable savings and helped in controlling voltage fluctuation. d. Impact of the measures at (a) (b) and (c) above for reduction of energy consumption and consequent impact on the cost of production of goods. Continuous efforts are being made for energy conservation and for reduction of power consumption per unit of production. e. Total energy consumption and energy consumption per unit of production as per Prescribed Form 'A' Not applicable. TECHNOLOGY ABSORPTION Form 'B' f. Research & Development (R & D) (i) Specific areas in which R&D carried out by Company Conceptualized the minimum number of oil fire burners in all the three pre heating billet furnaces of extrusion press. The modification had resulted in considerable savings in furnace oil consumption. (ii) Benefits derived as a result of above R&D Expansion of marketing areas particularly in the export field. Research will be carried out for new alloys and existing fluxes, filters, SCCM, less New technical route will be being developed for modifying the existing techniques for various copper and copper alloys/sections. (iii) Future plan of action To improve productivity, quality vis-a-vis energy saving additional auxiliary equipments will be added and modified after restart of production (iv) R & D Expenditure a) Capital : Nil b) Recurring : 0.32 Lacs c) Percentage of turnover : 0.022% TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION (i) Plantation and garden have been developed in the factory to reduce the air pollution of foundry etc. The wastewater generated is neutralised and treated for being reused in gardening. (ii) New alloys viz Chromium Copper, Chromium Zirconium copper, Zirconium copper and silicon bronze and Aluminum Bronze were been developed and also supplied to the foreign customer. (iii) Developed pipe U-Bend for various sizes to be used in marine application purposes. (iv) Bright annealing to match International Standards & Quality of product was achieved by shifting from the Exo-gas to Nitrogen gas being generated in house. (v) Customer care and satisfaction were further improved by adopting detailed presentation of the product and its end use in number of countries during the year. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year), following information may be furnished. Not applicable FOREIGN EXCHANGE EARNINGS AND OUT GO (a) Activities relating to exports, initiative taken to increase exports, development of new export market for products and services and export plans The Company is continuing to export its products. (b) Total Foreign Exchange earned and used: 2009-2010 2008-2009 (Rs. In lacs) Foreign Exchange Earned 410.843 610.56 Foreign Exchange Used Nil 1246.84 For and on behalf of the Board of Directors Place: Jaipur (S.R. KANUNGA) (G.C. KANUNGA) Date : 8th September, 2010 Director Managing Director MANAGEMENT DISCUSSION AND ANALYSIS A. Industry Structure & Developments: Alcobex is a leading manufacturing company in India in manufacturing of extruded copper-based alloys such as pipes, tubes, solids, profiles and sections. The qualities of the company's products are well accepted in the international market. The quality is at par with international standard and due to this the export of the company's products is increasing and it had touched to Rs. 401.84 lacs during the year 2009-2010. B. Outlook: The qualities of the company's products are well accepted internationally and there is a good scope for higher export. The Company has been declared as sick unit by the Board of Industrial & Financial Reconstruction of the Sick Industrial Companies (Special Provision) Act 1985. BIFR at is meeting held on 2nd August, 2010 directed the company to deposit the Rs. 5 Crores with IDBI within One month and if the Company does not deposit said amount within the stipulated time, the IDBI could file the MA for change of management. The Company is making efforts to arrange for funds from the Strategic Investor and also will seek extension of time from BIFR for making such deposit, if necessary. C. Financial Performance: Because of inadequacy of working capital production as envisaged could not be achieved and the company incurred loss during the year 2009-10. D. Internal Control System: The company has a proper and adequate system of internal controls to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly. An external firm of Chartered Accountants appointed by IDBI is conducting concurrent/internal audit according to terms and conditions mandated upon Said Financial institution. The reports of concurrent auditors are periodically reviewed by the Audit Committee, which includes independent and Nominee directors appointed by banks and financial institutions. E. Human Resources: Employees' relations continued to be satisfactory during the year. F. Cautionary Statement: While the company formulates plans, prepares monthly and annual budgets based on certain assumptions and expectations and makes efforts to achieve the laid down targets, but actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company's operations include economic conditions affecting global and domestic demand-supply, finished goods, prices in the domestic and overseas market in which the company operates, raw material cost and availability, changes in Government regulations, tax regimes economic developments within India and other factors such as litigation and industrial relations. The company assumes no responsibility to publicly amend modify or revise any forward looking statement on the basis of any subsequent developments, information or events. For and on behalf of the Board of Directors Place: Jaipur (G.C. KANUNGA) Dated: 08th September 2010 Managing Director