INDORE WIRE COMPANY LIMITED
ANNUAL REPORT 2002-2003
The Directors hereby present their 42nd Annual Report on the business and
operations of the Company and the financial results for the period ended on
31st March, 2003.
1. FINANCIAL RESULTS (Rs. in lacs)
Profit / (Loss) before Depreciation & Tax (93.78) (348.34)
Less : Depreciation 390.84 317.43
Provision for Taxes (MAT) NIL NIL
Profit / (Loss )after Taxes (484.62) (665.77)
Add : Surplus brought forward NIL NIL
Less: Short / Excess provision for the
earlier year 16.56 541.01
written Off/ back
Less: Income Tax for the earlier years NIL NIL
Surplus/ (Deficit) available (501.18) (1206.78)
Proposed Dividend NIL NIL
Tax on Dividend NIL NIL
Transfer to General Reserve NIL NIL
Balance Carried to Balance Sheet (501.18) (1206.78)
Note : Deficit shown in the Financial Results of 2002-03 are before
provision of interest.
Due to continued loss during the year, your Directors regret their
inability to recommend dividend for the Financial Year 2002-03.
3. TURNOVER & PROFIT
During the year under review your Company performed better than previous
year. In spite of Job Work arrangement for production of LRPC Strands with
Tata Steels since 1st January, 2003 at Company's Special Wire Division at
Pithampur Dist. Dhar, your Company maintained its turnover to Rs. 25.77
Crores in comparison to Rs. 28.13 Crores (for 12 months period) for the
previous year. This performance is more satisfactory when your Company is
passing through financial crisis and slow down in international and
domestic market specially in Iron & Steel Industries throughout the Year.
It is also worth noting that Company is improving its performance and the
loss incurred by the Company during the year under review is Rs.5.01 Crores
(before Interest) in comparison to Rs. 12.07 Crores (before interest) for
the previous year.
The depressed market, liquidity crunch, continuation of anti-dumping duty
imposed by the European Union together with high cost of borrowings and
increased cost of production has adversely affected profit margin of the
company & working at large in spite of the best efforts made by the
Company. However, your company continues its thrust to enrich its product-
mix, increase volumes in defined market of value added segments and to
implement scheme for drastic reduction in cost of production and increased
Although the economy of the Country is passing through difficult period &
economic policies of the present Government and stress on infrastructure
developments has not improved the industrial activities and growth in
Economy of the Country but positively, results of which is likely to come
and now it is expected that demand of your Company's products will
In spite of all these adverse factors the Net Loss after Tax of the Company
has reduced from Rs 6.66 Crores in Financial Year 01-02 to Rs. 4.85 Crores
in Financial year under review, a reduction in loss by Approximately 27%.
The company tried its best to utilise its Production Facilities to the
maximum extent but due to working capital deficit it could not able to do
so. But, Production and Sales activities went on smoothly during the year
under review. We are quite hopeful that in years to come Positive Results
will come of the above mentioned efforts.
5. REPORT ON SICKNESS OF THE COMPANY
Consequent upon complete erosion of Net Worth of the Company on the basis
of Financial Results of 2000-01, your Company filed its Reference u/s 15
(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICI
in short) with Hon'ble Board for Industrial & Financial Reconstruction
('BIFR' in Short) and the Reference has been Registered as Case No.
207/2001 Dt. 31.052001. After registration of case first hearing was held
on 14.01.21302 and as required by Hon'ble BIER, your Company has made
satisfactory reply against objections raised by some Banks & Financial
Institutions and consequently the Industrial & Development Bank of India
(Operating Agency appointed by the Hon'ble BIFR) recommended the Company as
a `Sick Industrial Company' within the meaning of Sec. 3 (1) (0) of the
SICA. Thereafter, based on the rations of Operating Agency, Hon'ble BIER
vide its Order Dt.31.10.2002 declared the Company as "Sick Industrial
Company" with some directions including direction to company to submit its
comprehensive rehabilitation proposal to Operating Agency, to Operating
Agency to Company's proposal & its techno-economic viability (TEV in short)
within specified period. Your Company complied with all such directions and
also submitted its draft rehabilitation proposal to OA. A Joint Meeting (JM
in short) of all Banks & FIs in this connection was also called up by OA on
21.03.2003 and as decided in IM the TEV study carried out by the Agency
appointed by OA and the Company also submitted its Valuation Report to OA.
Thereafter, on 28.05.2003 at the hearing called up by the Hon'ble BIER,
Rehabilitation Proposal submitted by the Company and also on the issue of
its techno-economic viability were discussed in detail. But the Hon'ble
BIER has taken rigid view against the Company and Without proving further
opportunity to Company, passed an Order for Change of Management of the
Company and directed the OA to invite offers for
takeovering/amalgamation/merger for rehabilitation With or without One Time
Settlement including measures listed u/s 18(1) (i) and 18(11) of SICA.
through publication of advertisement in newspapers.
Being aggrieved by the Order passed by BIFR dated 28.05.2003 your company
filed an Appeal before the Hon'ble Appellate Authority for Industrial &
Financial Reconstruction (AAIFR in short) New Delhi, on 1st July, 2003 but
as there was no Bench in existence at AAIFR, the appeal is still pending
for hearing with Hon'ble AAIFR.
Your Company is also going to challenge the said Order of BIFR at the
Hon'ble Madhya Pradesh High Court, Bench at Indore to get interim relief
sought in the Writ Petition and to get stay against the said Order of BIFR.
6. QUALITY IMPROVEMENT
During the year your Company has maintained and complied with all the
requirements of the International Standards and having "ISO 9002"
Certification for its Pithampur Plant and the thrust continues to develop
quality products by installing checks at every stage of Production right
from selection of raw material.
7. AUDITORS' REPORT
Auditors in their report have made certain observations for which suitable
explanations have been provided in the Notes forming part of Accounts.
These Notes may be considered as explanations by the Directors as part of
In accordance with Article 125 of the Articles of Association of the
Company, Mr. N.K. Singh, Director of the Company retire by rotation and
being eligible for re-appointment.:
The Auditors of the Company M/s R. D. Joshi & Company, Chartered
Accountants, retiring at the conclusion of the Annual General Meeting are
eligible for re-appointment.
10. AUDIT COMMITTEE
Your Company has followed the provisions of Sec. 292 A of the Companies
(Amendment) Act, 2000 and convened Audit Committee Meetings 2 times. The
Audit Committee reviewed the Financial Statements and found Internal
Control System of the Company satisfactory. This Audit Committee is having
all the powers to perform its duties, make recommendations and to observe,
review and discuss the financial management & internal control system with
the Auditors of the Company.
11. DIRECTORS' RESPONSIBILITY STATEMENT
The Annual Accounts of the Company had been prepared in accordance with the
applicable accounting standards alongwith proper explanations relating to
material departures Your Directors had selected reasonable and prudent
accounting policies which shows true & fair view of the state of affairs of
the Company at the end of financial year and of the profit & loss of the
Company for that period.
Your Directors have also taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and to prevent and detect fraud and other irregularities.
Harmonious relations continued throughout the year at Indore & Pithampur
Plant of the Company The Directors wish to place on record their
appreciation of the sincere and dedicated services of all its employees.
The Statement of particulars of employees pursuant to section 217 (2A) of
the Companies Act, 1956 is not required as there is no employee who is
getting remuneration more than Rs. 12 Lacs in a year or Rs. 1,00,000/- per
13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORTS AND FOREIGN
EXCHANGE EARNINGS & OUTGO
A statement giving details of conservation of energy, technology
absorption, exports and foreign exchange earnings and outgo, in accordance
with the Companies (Disclosure of particulars in the Report of the Board of
Directors) Rules, 1988 is annexed.
Your Company wish to put on record the appreciation for IDBI and Working
Capital Banks for their continued Co-operation through out the year.
For and on behalf of the Board
Place: Indore P.K. Dang
Date : 21.08.2003 (Director)
STATEMENT CONTAINING PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF ThE BOARD OF DIRECTORS) RULES, 1988 AND
FORMING PART OF DIRECTORS' REPORT.
1. CONSERVATION OF ENERGY
ENERGY CONSERVATION MEASURES TAKEN AND PROPOSALS FOR SAVING OF ENERGY IN
Efforts are continuing towards reduction in energy consumption by
undertaking regular energy audits, preventive maintenance upgradation of
various machines and review of manufacturing process. The company has added
certain balancing equipment and carried out modifications to the existing
plant and machines as result of which the production from the same machines
will go up and also will result in reduction in energy consumption per
tonne of wire.
The old fuel burners have been replaced by modern and efficient fuel
burners to reduce energy consumption. In order to achieve power factor
correction, capacitors have been installed in all the heavy electric motors
thereby resulting in substantial saving in electric energy consumption in
the years to come.
Form for disclosure of particulars with respect to conservation of energy.
Form for disclosure of particulars of conservation of Energy:
A. POWER AND FUEL CONSUMPTION
a) PURCHASED (in Units) 5243140 4485848
Total amount ( Rs.) 24852982 20830749
Rate/Unit (Rs.) 4.74 4.64
b) OWN GENERATION
i) Through Diesel Generator (in Units) Nil 8732
Unit per litre of Diesel Oil Nil 2.91
Cost / Unit in Rs. Nil 6.10
ii) Through steam Generator Nil Nil
2. Furnace Oil/LDO
Qty. (Litres) 336600 305850
Total Amount (in Rs.) 3995208 3681015
Cost/Unit (in Rs.) 11.87 12.03
Consumption per unit of Production
Electricity (in Units) 441 438
Furnace Oil / LDO (Litre) 28 29
(electricity Purchased includes electricity consumed by the Company for job
work of Tata Steels from Jan 2003 to Mar 2003.)
B. TECHNOLOGY ABSORPTION
1. Research and Development:
i) Specific Areas and benefits of R&D efforts:
Presently R&D related tasks are being carried out by the Quality Control
Department and Engineering Department, Major emphasis has been on
improvement of process parameters in order to achieve better quality and
higher productivity with existing product lines
iii) Expenditure incurred on R&D.
No specific programme envisaging separate expenditure on R&D was adopted.
2. Technology absorption, adopting and innovation:
Efforts are continuing for improving the properties of wires so as to bring
them on par with the best product in the world. In line with the policy of
the management and growing consciousness better quality products for
automobile, engineering and domestic sector. Attempts are being made to
revamp the plant by identifying the areas where latest equipments or latest
process can be incorporated.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year foreignexchange ergo was Rs. 328732/- on purchase of stores
consumables. Foreign exchange earning was Nil during the year.