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Glory Films Ltd.

BSE: 532857 Sector: Industrials
NSE: GLORY ISIN Code: INE408H01012
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Glory Films Ltd. (GLORY) - Director Report

Company director report

GLORY POLYFILMS LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT To The Shareholders, GLORY POLYFILMS LIMITED Your Directors are pleased to present the 15th Annual Report and the Audited Statements of Accounts for the year ended 31st March, 2012, and the Auditors' Report thereon. Financial Results: Financial results of the Company for the year under review along with the figures for previous year are as follows: (Rs. in Lacs) Particulars 2011-2012 2010-2011 Total Income 13,175.72 17,554.41 Total Expenditure 11,605.67 14,830.08 Profit/(Loss) before Interest, Depreciation & Tax (PBDIT) 1,570.06 2,724.33 Depreciation 1,432.19 903.18 Interest & Financial Charges 2,134.40 1,352.93 Exchange loss on Issue of GDR - 296.50 Profit/(Loss) Before Tax (1,996.52) 171.71 Less: Provision for Taxation (21.96) 120.99 Profit/(Loss) after Tax (1,974.56) 50.72 During the year under review, your Company has recorded a total income of Rs. 13,175.72 lacs (previous year Rs. 17,554.41 lacs), representing a decrease of approximately 25.54%. Your Company incurred a Loss before tax of Rs. 1996.52 lacs (previous year Profit Before Tax Rs. 171.71 lacs). The Loss for the year was on account of increase in raw material prices, which largely depends on the movement of crude oil prices. Your Directors are optimistic of a quick turnaround in the coming years, due to the rise in demand for the plastic packaging products in India and abroad. Dividend: Your Directors have not recommended payment of any dividend, on account of the loss incurred for the year under review. Manpower Development Process: The Company's Human Resource Division has finalized an organization structure that supports the vision and strategy of the Company. The organization structure is divided into five bands: Strategic, Operational, Manager, Executive and Support, which have been further divided into various levels. All Glory employees are assigned a level under a particular band depending upon their role, impact and criticality of job and the contribution to the Company's strategy. Particulars of Employees: None of the employees fall under the purview of the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 including Companies (Particulars of Employees) Rules, 2011, as amended. Auditors: a) Internal Auditors:- The Internal Auditors, M/s. A D V & Associates, Chartered Accountants, Mumbai have conducted the internal audits periodically and submitted their reports to the Audit Committee. Their reports have been reviewed by the Audit Committee and the Statutory Auditors. b) Statutory Auditors:- M/s. Mittal & Associates, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limit under Section 224(1B) of the Companies Act, 1956. Your Directors recommend the re- appointment of M/s. Mittal & Associates, Chartered Accountants, as the Statutory Auditors of the Company, at the ensuing Annual General Meeting. c) Auditors' Report:- With respect to the following comments on the Statement of Accounts referred to in the Report of Auditors, your Directors reply as under: Auditors' Comments: 1. Sr. No. 4 (d), comply with the applicable Accounting Standards (except for AS-15 in respect of employee benefits); 2. Sr. No. 4 (f), non provision of doubtful advances of Rs.38 Lacs; 3. Sr. No. v(b), of the Annexure to Auditors' Report, transactions for purchase/sale of goods made on Credit basis, at prices which are reasonable; 4. Sr. No. (vi), of the Annexure to Auditors' Report, the Company has accepted deposit falling within the purview of Sections 58A and 58AA and the compliances for the same is pending; 5. Sr. No. (xi), of the Annexure to Auditors' Report, the Company has made delayed payment of Installments of term loans taken from State Bank of India and Indian Overseas Bank during the year and the Installments for certain months are still outstanding. Board of Directors' Reply: 1. Provision for gratuity has not been made on the basis of actuarial valuation. The same will be accounted in the year of resignation/termination of services of the employees concerned. The Company has made necessary arrangement with the Life Insurance Corporation of India for determining the Actuarial Valuation of the gratuity; 2. With respect to non-provision of doubtful advances of Rs. 38 Lacs, the Company is making its final attempt to recover the said outstanding and the recovery process is in progress; 3. With respect to the sale or purchase of goods made on credit basis to a party, entered in the Register under Section 301 of the Act, the transaction are on the same terms and conditions to the credit period and pricing like any other parties and further the same does not fall within Section 297 of the Act; 4. The Company is in the process of filing necessary returns with the Registrar of Companies for the deposits accepted during the year; and 5. The Board of Directors have laid out necessary mechanism for timely payment of the installments of the Term Loans availed from State Bank of India and Indian Overseas Bank. Appointment of Cost Accountant: M/s. B. F. Modi & Associates, Cost Accountants, Mumbai have been appointed to submit the Compliance Report along with the requisite annexures duly certified by them for the financial year commencing from 01st April, 2011 to 31st March, 2012 as required under the Rule 2 of the Companies (Cost Accounting Records) Rules, 2011 to the Central Government within the time prescribed under above referred rules. Appointment/Reappointment of Directors: Mr. Sanjeev A. Jain has resigned as a Director of the Company, which was accepted by the Board of Directors with effect from 13th August, 2011. The Board accords its appreciation for his contributions during his tenure as a Director of the Company. Mr. Deviprasad Taparia and Mr. Vilas R. Shah, resigned as Directors of the Company with effect from 26th March, 2012. The Board accords its appreciation for their contributions to the business of the Company during their tenure as Directors of the Company. Mr. Prakash N. Kela was designated as the Non-executive Chairman of the Company, with effect from 01st April, 2012, by the Board at its meeting held on 26th March, 2012 Mr. Muralidharan Iyengar was appointed as an Additional Director of the Company with effect from 30th May, 2012 and he hold office upto the date of the ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Companies Act, 1956, from a member proposing his candidature as a Director, liable to retire by rotation. In accordance with the requirement of the Companies Act, 1956 and Articles of Association of the Company, Mr. Umesh P. Kela and Mr. Navin Chokshi, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Your Directors recommend the above appointment/re-appointments. Directors' Responsibility Statement: Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state:- (i) That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with explanation relating to material departures, if any; (ii) That the Directors have 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 ended 31st March, 2012 and of the Loss of the Company for that financial year; (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting record in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) That the Directors have prepared the Annual Accounts on a going concern basis. Report on Corporate Governance: A detailed report on Corporate Governance has been provided elsewhere in the Annual Report, as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. Management Discussion and Analysis: A separate section on Management Discussion and Analysis, as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is given in the Annual Report. Fixed Deposits: The Company has taken/availed unsecured loans from Directors and others to meet with the fund requirements for the business of the Company. The Company is in the process of filing necessary Statement in Lieu of Advertisement and to comply with the requirements of Section 58A of the Companies Act, 1956 and applicable Rules made thereunder. Conservation of Energy & Technology Absorption, Foreign Exchange Earning and Outgo: 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, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo are set out in Annexure to this Report. Acknowledgments: Your Directors place on record their appreciation of the support extended by customers, investors, bankers, business associates, vendors and various government agencies. The Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company. For and on Behalf of the Board of Directors Place: Mumbai Prakash N. Kela Date : 14th August, 2012 Chairman ANNEXURE TO THE DIRECTORS' REPORT I. CONSERVATION OF ENERGY FORM - A Power and Fuel Consumption Year ended Year ended 31.03.2012 31.03.2011 Electricity Total Units 5427811 4458764 Amount (Rs. In lacs) 229.17 142.35 Rate Per Unit (Rs.) 4.22 3.19 Consumption per unit of Production (in unit/kg.) Own Generation - (Through Diesel Generator) Total Units (in liters) Nil Nil Amount (Rs. In lacs) Nil Nil Rate Per Unit (Rs.) Nil Nil Form 'B' II. Technology Absorption & Research & Development 1) Specific area in which R & D carried out by the Company: During the year under review, efforts were made in the following areas with the objective of optimizing process systems and adopting parameters that ensure product improvement and cost reduction: * Total Quality Management (TQM) rolled out in the Company resulted in process improvements and new methods of increasing production and manpower efficiencies across divisions. * Energy saving measures like single tank condensate, natural draft cooling tower and improved lighting system led to energy conservation and natural energy source optimization initiatives. * Renewed focus on safety measures and proper training resulted in reduced wastage of resources and avoidance of unfortunate incidents thus increasing overall efficiency. * Reducing cost of materials, effecting import substitution, simplifying processes and achieving time savings. * Quality improvements and up-gradation of raw material supplier. 2) Benefits derived as a result of the above R & D: * High quality, value added and cost effective multilayer films & laminates preferred by the consumers were developed. * Reduction in cost of raw materials and packaging materials and higher productivity. * Significant reduction in the emission of pollutants into environment; use of clean methods of energy generation. * Improved quality of products and thereby strong market position and premium positioning of the products. 3) Future plan of action: The Company will continue to pursue its R&D work on developing high quality products to meet the ever changing consumer needs and on adding value to our existing products. 4) Expenditure on R & D: Charged to the respective heads of accounts and not allocated separately. III. Foreign Exchange Earning and Outgo: The Company is exploring the possibilities of exporting its products to various countries and the Board has initiated the required marketing strategies in this regard. Your Directors are optimistic for a better overall performance with the penetration of new markets abroad. Foreign Exchange Earned : Rs. Nil Foreign Exchange used : Rs. 6.60 Crores (import of Raw Material) & Rs. Nil (Capital Goods) For and on Behalf of the Board of Directors Place: Mumbai Prakash N. Kela Date : 14th August, 2012 Chairman MANAGEMENT DISCUSSION AND ANALYSIS Packaging Industry: The global plastic industry is witnessing continuous shift of production bases to low-cost Asian countries. This coupled with increasing foreign investments, and rise in the number of new manufacturing establishments are presenting Asia-Pacific as a prime driver of growth in the plastics industry. In particular, China and India offer enormous potential due to expanding automobile demand, resurgence in growth fundamentals across all end-use markets, such as rebuilding of consumer/business confidence, increasing income levels, rebound in general production, and rise in capital investments in all end-use sectors. Besides growing demand from the automobile, mining, chemical, construction and agricultural industries, the Asia-Pacific plastics market is propelled by trends such as globalization, demand for durable products and urbanization Packaging sector is one of the major consumers of plastics. Apart from being used as a substitute for traditional materials, plastic packaging is being increasingly used in healthcare and personal care products, and packaged foods and beverages markets. Advancements in packaging material science and mounting demand for product protection and stability are further driving demand for plastic packaging. Bioplastic demand is on the rise and is expected to grow, owing to novel applications in the packaging industry, primarily for food and beverages. Emerging nations with underdeveloped or no recycling facilities are expected to benefit considerably from bioplastics products and packaging. Global production and consumption of plastics increased from less than 5 million tonnes in 1950 to 260 million tonnes in 2007. It is expected to reach 297.5 million tons by 2015 out of which a third is used for packaging. Packaging in India: Today, packaging is produced more quickly and efficiently. It is generally lighter in weight, uses less material, is easier to open, dispense from, reseal, store, and dispose. Packaging has evolved from a relatively small range of heavy, rigid containers made of wood, glass, and steel, to a broad array of rigid, semi rigid and flexible packaging options increasingly made from specialized lightweight materials. Encouraged by strong economic growth, stimulation in processed food production and retailing and the growing personal disposable incomes of the 350 million middle-income earners in India, will drive growth in the flexible packaging industry over the next five years averaging 15% per annum through to 2015. Flexible Packaging: Flexible packaging consists of multi-layer laminated sheets of plastics (PVC, LDPE, HDPE, BOPP, BOPET), paper, cloth, or metal foils that are used separately or in combination for various packaging applications. However, this article discusses flexible packaging as laminates of plastics that have a unique set of properties that ensure toughness, moisture resistance, aroma retention, gloss, grease resistance, heat salability, printability, low odour and taste. These find use in packaging food, tea, coffee, spices, chewing tobacco, bakery, confectionery, oils, and in certain other non-food applications such as household detergents, health and personal care, soaps, and shampoos. Flexible Packaging Demand in India and Worldwide: Worldwide demand for converted flexible packaging is forecasted to grow 3.6 percent per year to over 19 million metric tons in 2013, faster than real (inflation adjusted) gains in GDP. Factors contributing to rising converted flexible packaging demand include growth in food and beverage shipments, which represent the largest market by far. In addition, cost performance and source reduction advantages, as well as ongoing developments in high- barrier resins and value added features, will continue to favour flexible packaging products over their rigid packaging materials. Flexible packaging has reached market maturity in the developed nations of North America and Western Europe and future growth will be modest. However, in developing countries, the flexible packaging sees strong growth. Asia is the largest regional market with 29.1% of global market volume in 2011, followed by Western Europe and North America. Asia is also the fastest growing market for consumer flexible packaging, with a forecast CAGR for 2011-16 of 7.9%. The region is forecast to represent 55.0% of total world flexible packaging consumption growth during the period 2011-16. India and China are the fastest-growing national markets for consumer flexible packaging, together accounting for 44.0% of world flexible packaging consumption growth during the forecast period. The Indian flexible packaging Market 2011 shows India represents a US$ 3 billion market that is expected to continue growing at around 18-20% a year until 2015. India is poised for huge growth with opening up of retail sector. Opportunities & Threats: Opportunities:- * Rapidly growing economy resulting in rising demand for plastic packaging products in India and abroad. * Flexible Packaging also has a strong outlook for barrier packaging, including stand-up pouches, non-retort stand-up pouches. * Rapid growth in globalization in FMCG segment. * Flexible Packaging vies for conversion opportunities from rigid packaging and already controls the Foodservice area. In general, flexible packaging continues to provide solid market penetration vs. aseptic and hot-fill rigid packaging, a trend most industry pundits believe will continue. Threats:- * Raw material availability and its prices shooting up due to unforeseen circumstances (Petroleum prices). * The competition is increasing with the addition of new capacities. Increased competition leads to reduced price, decreased sales, lower profit margins thus adversely affecting the business and financial conditions of the Company. * Inadequate management controls arising from the massive increase in scale of operation might result in losing market share and profits. Internal Control Systems and their Adequacy: The Company has in place adequate internal control systems and procedure commensurate with size and nature of the business. These procedures are designed to ensure: * That all assets and resources are used efficiently and are adequately protected; * That all the internal policies and statutory guidelines are complied with; and * The accuracy and timing of financial reports and management information is maintained. Human Resources/Industrial Relations: Industrial relations remained cordial during the year. Employees' competencies and skills were enhanced by exposing them to several internal and external training programmes. Additional efforts continued to be implemented with a view to obtain commitment and loyalty towards the organisation. Cautionary Statement: Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company's actual results, performance or achievements could thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. For and on Behalf of the Board of Directors Place: Mumbai Prakash N. Kela Date : 14th August, 2012 Chairman