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Kanakdhara Steel Ltd.

BSE: 513267 Sector: Metals & Mining
NSE: KANAKSTEEL ISIN Code: N.A.
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Kanakdhara Steel Ltd. (KANAKSTEEL) - Director Report

Company director report

1995 KANAKDHARA STEEL LIMITED DIRECTOR'S REPORT Your Directors present their Twelfth Annual Report of the Company together with the Audited Accounts for year ended 31st March, 1995. Operations In the year 1994-95 your Company encountered the worst crisis in its existence so far. The problems which started from December, 1993 continued in 1994-95 also. The strike in the industry called by the federation due to imposition of additional excise duty in the Union Budget for 1994 continued till the middle of June, 1994. The operations of the Company which was severely affected from December, 1993 onwards finally came to a grinding halt in July, 1994. The plant is under closure till date. The Company could achieve till July production of 3446 M.T. and a turnover of Rs. 11.95 crores only resulting in a loss of Rs. 21.14 crores mainly due to the heavy overhead and interest costs. There being only three months productions during the whole year, the balance nine months interest and overhead expenses remained fully unabsorbed. The Company had to sell its finished products in a totally dull market resulting in a heavy loss. In view of the unsettled market conditions, lack of financial support and non-recovery of debtors, the Plant could not be restarted. The accumulated losses of 1993-94 and 1994-95 wiped out the entire networth of the Company requiring a reference to the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. Accordingly your Board of Directors decided to refer the Company to the BIFR. The Company has also been registered by the BIFR and a complete revival package has been submitted to the BIFR for its approval. Future Plan of Action Your company made a thorough market study while preparing the revival plan and came to the conclusion that without a suitable product mix the unit cannot be viably restarted. In these market conditions starting the unit with only utensil grade stainless steel will not be a farsighted policy because the number of competitors have substantially increased over the last two years. The unpredictability of the market added to the stiff competition does not guarantee a steady growth of turnover and profitability. Your management had to look beyond for restarting the unit viably. Keeping these factors in view the company has decided to change its product mix suitably to ensure a much wider market with scope for exports. The thrust is on products with a much higher contribution which will enable the company to sustain the market fluctuations comfortably. In achieving this, the company should start manufacturing more of value added items like Industrial Fasteners, Bright Bars, Forging Grade Steel, S.S. Rivets, Wire etc., in addition to the Utensil Grade Stainless Steel. These products also have a very good export potential. In this connection the company contacted various importers in Europe and have received very positive response. The Company has prepared and submitted a comprehensive revival plan to the BIFR authorities taking into account all the above factors. The Company is awaiting the appointment of an Operating Agency by the BIFR for necessary appraisal, vetting and approval of the revival plan. The management is hopeful of an early revival. Dividend In view of the heavy losses suffered by the Company and its present financial status, the Directors regret its inability to recommend any Dividend for the year. Safety & Environment Protection The Company has strictly followed all safety measures at every stage of production and effective emphasis have been given to the adherence of environment protection. Employee Relation The Company is proud to say that even in this extremely difficult situation it enjoys the wholehearted support of its employees. Directors Mr. M.N. Kampani resigned from the Board of Directors in March, 1995 and Mr. S. Mukherjee in May, 1995. Mr. R.P. Gore was co-opted as an additional Director to the Board. He retires in this Annual General Meeting and seeks appointment to the Board of Directors. Shri Sudip Das shall retire by rotation in this Annual General Meeting and being eligible offers himself for re- appointment. We thank all the erstwhile Directors for their valuable support and contribution to the Company during their tenure of Directorship. Auditors Messers Thakur Vaidyanath Aiyar & Co., Statutory Auditors of the Company retire at the conclusion of the Twelfth Annual General Meeting and are recommended for re-appointment. The Company has received the necessary certificate under Section 224(1) of the Companies Act, 1956 from them. Particulars of Employees Particulars regarding employees as required to be disclosed in the Director's Report in accordance with the provisions of Section 217(2A) of Companies Act, 1956 are indicated in the statement enclosed as Annexure 1. Acknowledgement The Management is grateful to the Financial Institutions i.e. ICICI, IDBI and IFCI, the consortium of Banks, i.e. Union Bank of India, State Bank of India, State Bank of Hyderabad as well as SICOM for their valuable support. The Directors also wish to record their appreciation for the co-operation and efforts of the employees. ANNEXURE THE DIRECTOR'S REPORT (Pursuant to Section 217(1)(e) of the Companies Act, 1956) (a) Energy Conservation measures taken: - A series of capacitor bank 11KV are installed for reducing power consumption in the Arc Furnace. - System of segregation and processing of scrap is existing to reduce furnace burden and saving of energy for melting of scrap. - Automatic temperature controllers are also provided for switch on and switch off of cooling tower fans, shed lights etc. (b) Additional Investment: There is delay in the process of setting up a Rolling Mill. Capital advances against the above project have been given. (c) Once the Rolling Mill project is complete along with certain additional Plant & Machinery the Company by changing the product mix can have value added finished products which will enhance contribution and profit substantially. (d) Total energy consumption and consumption per unit of production as per Form A are given hereunder :- Year ended Year ended 31st March, 31st March, 1995 1994 Purchased Units (KWH) 2990610 13217270 Total Amount (Rs. in Lakhs) 151.61 357.32 Rate/(Unit (Rs. KWH) 5.07 2.70 Research and Development: As the Plant was in operation only for three months no specific R&D programme could be carried on except for establishing contact with abroad parties for proposed manufacture of High Grade Industrial Steel like Bright Bars etc. Expenditure on R&D: (Rs. in Lakhs) Capital Nil Revenue Nil Total Nil Foreign Exchange Earnings & Outgo: (i) Foreign Exchange earned Nil (ii) Foreign Exchange outgo Nil For and on behalf of the Board of Directors Sudarshan Khaitan President and Whole Time Director Place : Bombay Dated : 14th August, 1995.