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Aluminium Industries Ltd.

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Aluminium Industries Ltd. (ALUMINIUMINDS) - Director Report

Company director report

DIRECTORS

to the Shareholders

To

The Members

Your directors present their Sixty Eighth Annual Report together with the auditedstatement of accounts of the Company forthe financial year ended 31 st March 2014.

1. Financial Results

The performance of the Company for the financial year 2013-14 is as under:

(Rs in Lakhs)
2013-14 2012-13
Gross Turnover & other Income 1898 2105
Add: Profit/ (Loss) before Int Depreciation & Tax (629) (336)
Less: Interest & Finance Charges - 1581
Less: Depreciation / Impairment of FixedAssets 16 19
Less: Provision forTaxation - -
Profit/Loss afterTax (645) (1264)
Loss Brought forward (47618) (46354)
Loss Carried forward (48263) (47618)

2. Scheme of Rehabilitation

The Hon'ble Board for Industrial and Financial Reconstruction ("the BIFR")vide its order dated 12.02.2014 received on 22.02.2014 has sanctioned the RehabilitationScheme of the Company [herein called asthe Sanctioned Scheme (SS -14)].

(a) The Scheme envisages the following broad strategy for revival of the Company:

i. Settlement with secured creditors at 100% of the principal amount.

ii. Technical Restructuring of conductor division Switchgear division Relay DivisionMachinery Division through in house research and development & by making substantialinvestment in up gradation of technology and strengthening the after sale servicesnetwork.

iii. Conversion of preference capital into equity share capital at par.

iv. Sacrifices by promoters and equity shareholders involving write down of theircapital by 90% and infusion of fresh loans / Equity for working capital and /or shortfallsif any.

v. Mobilisation of Funds: The promoters propose to bring Rs 153 crores towards revivalof the company. Present promoters have arranged Volta Impex Pvt Ltd as strategic investor("SI") and the SI proposes to bring 30 % of the amount proposed to be brought inby the promoters. The SI has agreed that in case the cost escalates it will induce furtherfunds as unsecured loans.

vi. Restructuring of existing outstanding liabilities (except secured loans) keeping inview the expected future cash flows in order to achieve complete repayment of dues of theCompany

vii. Payment of all outstanding labour dues as per the agreement entered /to be enteredinto between the Company and labour unions.The dues will be paid within three months ofthe sanction of scheme by BIFR.

viii.Grant of reliefs and concessions from Central Government and Authorities /Departments and Bodies thereof various State Governments and Authorities / Departmentsand Bodies thereof Secured Creditors and other Stakeholders / Parties concerned.

(b) The Company is of view that reliefs and concessions sought from Income TaxDepartment Central Board of Excise and Customs Director General of Foreign

Trade and various authorities of states from state of Andhra Pradesh Odisha KeralaRajasthan and Uttar Pradesh Indian Railways Provident Fund

Department ESIC Department labour unions particularly permission of renewal offactory lease lands from the respective states are very essential for successfulimplementation of the sanctioned scheme.

(c) Since the various concessions and reliefs as mentioned hereinabove are still in theprocess of approval and confirmation and post the sanction of the scheme four appealsbeing preferred before the Hon'ble AAIFR against the subject scheme which have beenadmitted the Company has been advised that as a prudent approach the effect of the schemeshould not be crystallized and accordingly the Company has decided not to provide anyinterest on secured loans for the year under consideration.Thus the required accountingadjustments in respect of Preference Share Redemption Reserves Securities PremiumAccount Investment Allowance Reserves Secured Loans and other liabilities etc. are notgiven effect and consequently accumulated deficit balance of the Statement of Profit &Loss has not been reduced. Had this been accounted for the accumulated deficit balance ofthe Statement of Profit & Loss would have been reduced to that extent.

Against the appeals filed at Hon'ble AAIFR the Company has been advised that this willnot jeopardise the Scheme.

3. Share Capital

In terms of the shareholders' approval obtained at the Extra-ordinary General Meetingheld onJune 212014

(a) The Nominal Value of each equity share has been reduced from Rs. 10/-to Re. 1/-.

(b) The Authorised Capital of the Company has been increased to Rs.620000000 (RupeesSixty Two Crore only) consisting of 600000000 (Sixty Crores) Equity Shares of Re.1/-(Rupee One only) each and 200000 (Two Lakhs) Preference share of Rs. 100/-(Rupees OneHundred only) each.

4. Debentures &Secured Lenders

The Company is in process of settling the Secured Creditors as per the Scheme.

5. Surveillance Audit Details

Your Company has completed Surveillance Audit during 2013-14 for ISO 9001-2008Surveillance Audit Certification and same is valid upto Jan 2016.

6. Directors' responsibility statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act 1956 theDirectors hereby state that:

i) in the preparation of the Annual Accounts all the applicable accounting standardshave been followed along with proper explanation relating to material departures.

ii) the Directors have adopted such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe loss of the Company for that year save and except provided inthe Notes toAccounts.

iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records n accordance with the provision of the companies i Act 2013for safeguardingthe assets of the Company ni the working units namely Relays Division atTrivandrum Switchgear Division at Mannar and Machinery Division at Hyderabad and effortsare being made to maintain proper records and information in respect of other units andfor preventing and detecting fraud and other irregularities.

iv) the Annual Accounts have been prepared on a going concern basis on the basis ofrelief and concessions granted by the BIFR upon approval of SS-14.

7. Directors

During the year under review the Board of Directors ofthe Company had appointed Mr.K.V. Rao and Mr.V. S. C. Bose at its meeting held on 28th February 2014 as an AdditionalDirector liable under Section 161 of the Companies Act 2013 read with Articles ofAssociation of the Company.

Mr. K.V. Rao and Mr.V.S.C. Bose holds office only till the date of the forthcomingAnnual General Meeting. Notices has been received from members as required under section160 of the Companies Act 2013 proposing Mr. K.V. Rao and Mr.V.S. C. Bose as candidaturefor the office of the Directors of the Company.

Brief details of these directors are provided in the Explanatory Statement attached tothe notices of the AGM.

During the year under review Mr. Shivaji Sen Gupta and Mr. Praveen Kumar cease to bethe Nominee Directors of BIFR w.e.f. 05.12.2013 and 09.09.2013 respectively.The

Board places on record their appreciation to the services rendered by Mr. Shivaji SenGupta and Mr. Praveen Kumar duringtheir tenure as Directors.

In accordance with the provisions of section 152 of the Companies Act 2013 Mr K.Vijaya Chandran and Mr. Jugal K. Choudhury retire by rotation being eligible have offeredthemselves for re-appointment as Directors.Your Directors recommend their appointment asDirectors of the Company.

8. Corporate Governance:

A separate report on the practices followed by the Company on Corporate Governance isannexed and forms a part of this report.

9. Auditors:

M/s. Joseph and Nampiathiri Chartered Accountants statutory auditors of the Companyretire at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. The Audit Committee at its meeting held on 28th August 2014 recommendedappointment of M/s. Joseph and Nampiathiri Chartered Accountants as Statutory Auditors ofthe Company forthe financial year 2014-15.

10. Audit Qualifications

The qualifications in paragraph 4 and paragraph 5 of the attached Auditor's Report readwith the notes on accounts are self explanatory except those points which are beingexplainedas below: The Company has prepared accounts for the year 2013-14 based on theconcept of Going Concern for all the divisions. Certain provisions were made on theestimated basis and for known expenses were accounted in full. Your Directors have alsonoted the observation of the auditors along with the notes on accounts and wish to comment/ clarify on the important observations as follows:

1. The Company is steadily maintaining its books of accounts on the concept of"going concern basis" as the Hon'ble BIFR has approved the scheme (SS -14) on12.02.2014. The Company is on the revival path on account of approved scheme by BIFR. TheCompany is planning to modernize and enhance its operations on a substantial scale. Asenvisaged by the recent management these measures shall show significant improvement inthe performance of the Company in future years. Accordingly the Company continues tofollow its decision taken in the previous years to maintain the accounts on the concept ofgoing concern basis.

2. The company has made provision of arrear of Fixed Cumulative Dividendon CumulativeRedeemable Preference shares due to non availability of profits. However in terms ofscheme sanctioned by Hon'ble BIFR the accumulated dividend on Preference Shares would notbe payable.

3. 9.5% Redeemable Cumulative Preference Shares were due for redemption in 2000.However due to financial crisis the Company could not redeem the same. However in termsof scheme sanctioned by Hon'ble BIFR the preference share would be converted in to EquityShares.

4. Company has written off the investment of shares of two Subsidiary companies asthere was no business transaction in the subsidiary companies and name has been struck offfrom the records of Ministry of Corporate Affairs.

5. Since the various concessions and reliefs as mentioned in Sanctioned Scheme arestill in the process of approval and confirmation and as prudent approach company has notcrystallized the effect of the scheme. Thus the required accounting adjustments in respectof Preference Share Redemption / Conversion Securities Premium Account InvestmentAllowance Reserves Secured Loans and other liabilities etc. are not given effect to inthese accounts

6. Records showing full particulars including quantitative details and situation offixed assets are being updated and verified for all the units during the year. Physicalverification of the assets is in progress so as to cover most of the fixed assets of theCompany.

7. Company has initiated an internal audit system at its Switchgear Division Mannarunit and is in the process of implementing the same in other Operating units.

8. Company has requested for waiver of interest and penalties on the delays of paymentof statutory dues and has further taken steps to deposit the balance amount with thestatutory authorities.

9. Remedial steps are being taken on other qualifications raised in the Auditor'sReport.

11. Particulars of Employees

The particulars required under Section 217(2A) of the Companies Act 1956 read withthe Companies (Particulars of Employees) Rules 1975 are not applicable to the Company.

12. Disclosures regarding Conservation of Energyetc.:

Your Company is in the manufacturing of electrical equipment and is not included in thelist of industries under Schedule to the Companies (Disclosure of Particulars in theReport of the Board of Directors) Rules 1988. Therefore Form A and the disclosurescontained therein are not applicable tothe Company.

13. Research & Development

The Company has initiated necessary steps for improving quality of products andincreasing the product range. Diversification and modernization hold the key to theexistence and survival of organizations in today's highly competitive business scenario.

14. Acknowledgement:

Your Directors acknowledge the continued support received from the Board for Industrialand Financial Restructuring Lenders Central and State Government Departmentsparticularly Government of Kerala Andhra Pradesh Telangana and Odisha CustomersSuppliers and Shareholders during the year under review. Their continued support is vitaland critical for the successful implementation of the revival scheme duly approved byHon'ble BIFR vide its order dated 12.02.2014.

Your Directors also wish to place on record their deep appreciation to the employeesfor their commitment and continued contribution tothe Company.

For and on behalf of the Board of Directors

Jayakumar K. Chettiyar

Director & Company Secretary

Place: Mumbai

Dated:30th September2014

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