ALEXCON FOAMCAST LIMITED
ANNUAL REPORT 1999-2000
Alexcon Foamcast Limited
Your Directors are pleased to present their 14th Annual Report together
with the Audited Statement of Accounts of your Company for the period ended
31st March, 2000.
In view of the losses incurred in the current year, your Director are
unable to recommend any dividend.
2. OPERATIONS AND FINANCIAL STATUS
As informed to you in the report of the Financial Year 1997-98, the project
of the Company stands fully installed barring induction of a few balancing
equipments. The Company has commenced operations. The overrun on a
relatively low scale of operations. The overrun in the time and cost of the
project has had a cascading effect on the finances of the Company. It has
adversely affected Company's financial structure and increased the
financial burden substantially due to certain extraneous factors such as
highly staggered and delayed financial closure, non availability of timely
and adequate working capital finance as also non availability of Tool Cost
Finance which incidentally constitute critical and cost intensive component
of the over all operational finance requirement.
Therefore all through the year under review, the company remained
financially stressed and could not have an optimal scale of operations to
utilize its installed capacity gainfully.
Due to the circumstances as explained above, the Company has incurred
losses during the period under review and the accumulated losses as on
31.03.2000 standing at Rs. 71.77 Crore have exceeded Company's net worth
which is Rs. 49.51 Crore. By virtue of the erosion of net worth, the
Company comes within the ambit of Section 3 (1) (o) of the Sick Industrial
Companies (Special Provision) Act 1985 (1 of 1986). The Board of Directors
at their Meeting held on 23.06.2000 formed an opinion that the Company has
become a sick industrial company as defined under Section 3 (1) (o) of the
Sick Industrial Companies (Special Provision) Act 1985 (1 of 1986) and the
steps provided under section 15 of the said act may be initiated.
As a measure aimed towards a substantial restructure of the finances of the
Company so as for it to be able to become more cost-competitive, the
Management is exploring various alternative options. One of them is
towards mobilizing an ECB loan. Your Company has approached IDBI to support
this endeavor of the Company. The Management of Your Company is hopeful of
the proposal fructifying. It is hoped that such a proposal could enable the
finances of the Company to be favourably recasted.
3. OUTLOOK FOR THE FUTURE
The Management is seized with the present circumstances and has already
initiated action/measures to restructure the finances of the company and
mobilize some need base resources to reduce the financial burden and
increase the scale of operations. Coupled with the current status, which
includes physical readiness of the project and order book position cum
market conditions, the management is hopeful that the Company can expect to
do better in the coming year. However, much would depend on the co-
operation from the FI's / Banks to enable the Company to put its financial
structure in order and be able to avail the Working Capital / Tool Cost
finances adequately. It would then be in a position to cash in on the
buoyant market conditions - domestic as well as international for the
products the Company manufactures.
The Board of Directors at their meeting held on 8th February, 2000
discussed the proposal to develop a business model / plan for IT related
activities. It was thought that I.T. related activities would very soon be
integral to almost as traditional businesses. It was decided that it is the
right time to start taking steps towards this goal.
As a matter of an "APPROACH" it is proposed that steps be initiated to
generate varied information based from Company's available resources and
identify outsourcing agencies for designing and developing a business model
as also for supply of technology and hardware.
Which would ultimately result into;
a. making AFL a third generation techno-savvy business outfit, such that it
more than satisfies its customers and vendors. The idea is to have the
capability for on line commerce with its business associates.
b. exploring and exploiting the large and niche interested viewer base of
tire foundry-related entities. The foundry being a core industry the viewer
base would encompass foundries per se, suppliers of a host of foundry input
materials, of foundry equipments, of foundry technology, of user industries
of castings. of foundry business related organizations, of universities and
its large pool of engineering students and of course R & D outfits as also
Further, the Members of the Board were of the opinion that AFL is well
positioned to explore and exploit, with minimal resource requirement, the
above concept by virtue of its manpower available infrastructure, a
plethora of information on lost foam and other competing technologies and a
substantially large data bank on user and supplier base.
For this purpose Company needs to change Memorandum of Association by
inserting a new object under the heading "Other Objects". And keeping with
the proposal to commence this business it is found prudent to even change
the name of the Company. The resolutions to effect these alterations are
included in the notice of the Annual General Meeting.
4. FIXED DEPOSITS
During the period under review, the Company has not accepted any fixed
deposits within the meaning of Section 58-A of the Companies Act, 1956.
Mr. I. K. Shah and Mr. A. V. Bhansali retire by rotation and, being
eligible, offer themselves for re-appointment.
During the period under review, Mr. F. S. Broacha, Director has resigned
from the Board with effect from 08/02/2000 due to pre-occupation with his
work. The Board places on record its appreciation of the valuable advice
and guidance received from Mr. F S. Broacha during his tenure as a Director
of the Company.
During the period under review, Mr. Dilip J. Thakkar, Alternate Director to
Mr. P. Zettler has resigned from the Board with effect from 29/07/1999 due
to his difficulty in attending Board Meetings. The Board places on record
its appreciation of the valuable advice and guidance received from Mr.
Dilip J. Thakkar during his tenure as a Director of the Company.
During the period under review Mr. P. Zettler ceased to be a Director of
the Company by virtue of Section 283 (1)(g) of the Companies Act, 1956 due
to his absence from the three consecutive Board Meetings without obtaining
Leave of Absence from the Board.
During the period under review, The Industrial Finance Corporation of India
Ltd (IFCI) has withdrawn the nomination of Mr. M. P. Jain as their Nominee
on the Board with effect from 29/07/1999. The Board places on record its
appreciation of the valuable advice and guidance received from Mr. M. P.
Jain during his tenure as a Director of the Company. The Industrial Finance
Corporation of India Ltd. nominated Mr. A. K. Das on the Board as their
Nominee with effect from 29/10/1999.
During the period under review, Industrial Development Bank of India (IDBI)
has withdrawn the nomination of Mr. M. G. Bakre as their Nominee on the
Board with effect from 16/08/1999. "The Board places on record its
appreciation of the valuable advice and guidance received from Mr. M. G.
Bakre during his tenure as a Director of the Company.
The relations with the employees have been cordial. Particulars of
Employees as required to be disclosed under the provisions of section 217
(2A) of the Companies Act, 1956 read with Companies (Particulars of
Employees) Rules, 1975 as amended up to date can be had from the Registered
Office of the Company.
7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO.
A. Conservation of Energy :
The new modern manufacturing plant has been set up with necessary
facilities to use energy in cost effective manner.
B. Technology Absorption :
The Company has absorbed the time tested Lost Foam Technology (LFT) for the
manufacture of Ferrous and Non-Ferrous castings successfully.
M/s. R. N. Bhansali & Co., Chartered Accountants & M/s. Mittal & Mittal,
Chartered Accountants, retire at this Annual General Meeting and being
eligibly offer themselves for re-appointment.
You are requested to appoint M/s. R. N. Bhansali & Co., Chartered
Accountants and M/s. Mittal & Mittal, Chartered Accountants, as joint
Auditors for the current financial year and fix their remuneration.
Requisite certificates under section 224 of the Companies Act, 1956 from
the said two Auditors have been duly received.
9. AUDITORS' REPORT
The Notes on the Accounts referred to in the Auditors' Report are self
explanatory except Note No. 2.5 and Point No. 17 and 18 of the Annexure to
the Auditors' Report. Explanation to the Auditors' comments are as follows:
REPLY TO POINT NO. 2.5 :
The Company has endeavored to obtain confirmation of balances from the
Creditors. Adjustments to the accounts are regularly made as and when
confirmations from the various parties are received.
REPLY TO POINT NO. 17 OF ANNEXURE TO THE AUDITOR'S REPORT
The Company, on account of tight cash flow condition, has been paying
salaries in a staggered manner in the form of advances and has not been
able to pay off the total liabilities of Provident Fund and ESIC to the
authorities concerned under Employees Provident Fund and Miscellaneous
Provisions Act, 1952. The Company is taking all necessary steps to ensure
that the same is paid very shortly.
REPLY TO POINT NO. 18 OF ANNEXURE TO THE AUDITOR'S REPORT
The Company has inadvertently paid TDS in excess to the extent of Rs.
96,83,632/- to the Income Tax Authorities in respect of Technical Know-how
Fees. The company has also applied for refund of the excess amount and the
same is expected to be refunded to the Company. The Company proposes to pay
off the arrears of TDS liabilities against the refund and file returns
10. Y2K COMPLIANCE
At AFL we have already taken necessary steps to ensure that Y2K problem
does not affect the company's working adversely within the organisation as
well as with customers, suppliers, banks, financial institutions, etc.
Your Company continued to receive full co-operation from Industrial
Development Bank of India, the Industrial Finance Corporation of India
Ltd., Industrial Credit and Investment Corporation of India Ltd., Unit
Trust of India, Industrial Investment Bank of India, State Bank of India.
Central Government, State Government and Local Authorities. Your Directors
place on record their appreciation to them. Your Directors also appreciate
the employees' efforts in putting their best at this critical juncture of
project implementation and subsequent timely start up.
for and on behalf of the Board,
KIRAN P DALAL
CHAIRMAN AND MANAGING DIRECTOR
Place : Mumbai.
Date : 23rd June, 2000