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Magnus Rubber Industries Ltd.

BSE: 523882 Sector: Others
NSE: N.A. ISIN Code: N.A.
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Magnus Rubber Industries Ltd. (MAGNUSRUBBER) - Director Report

Company director report

MAGNUS RUBBER INDUSTRIES LIMITED ANNUAL REPORT 2004-2005 DIRECTORS' REPORT To The Members, Your Directors are presenting herewith 12th Annual Report alongwith Audited Accounts for the year ended 31st March, 2005. Financial Results: The Financial Results are as under : Rupees in lacs 2004-05 2003-04 Gross Operating Profit 0.12 22.73 Less : Interest & Fin. Charges 22.43 9.03 Depreciation on Fixed Assets 18.11 18.94 Preli.& Share Issue Exps.w/off - 2.95 Profit/(Loss) for the year (40.42) (8.19) Prior period adjustments 0.62 - Balance of Loss B/f. (613.92) (605.73) Provision for Tax - - Total Loss (653.72) (613.92) In view of carried forward losses, your directors do not recommend any dividend for the year under review. Operations In view of the Company being declared Sick Industrial Undertaking by BIFR as per the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 proposed Draft Rehabilitation Scheme is under consideration by Operating Agency i.e. IDBI & BIFR. The future prospects of the company are subject to approval of the concessions sought by the company in the Scheme particularly by the State Government. Moreover, since the basic raw material for company's product, i.e. synthetic rubber is petrobase product, the international prices have gone up substantially and due to cut throat competition among rubber stoppers manufacturer, the company is unable to suitably increase the prices of its product and as a result, the current year profitability is also under pressure. Finance : Due to continuous losses incurred, it has become difficult for the management to honour its commitments for repayment of loan installments as well as interest payable to IDBI, Bank of India and repayment due under Sales Tax Deferment Scheme as well as interest on above. Moreover, as mentioned in Note No. 12, Schedule 16 of the Notes on Accounts, the company could not adhere to the requirements of provisions of Section 58A of the Companies Act, 1956 regarding deposits accepted by the company. Directors : Mr. Nitin H. Mehta retires by rotation and being eligible, offers himself reappointment. There is no other change in present Board of Directors. Conservation of Energy etc. The particulars are given in Annexure given herewith. Particulars of Employees There are no employees who are in receipt of remuneration more than the amount prescribed under Section 217(2)(a) of the Companies Act, 1956, read with the Companies (Particulars of Employment) Rules, 1975. Industrial Relations: The industrial relations have remained cordial and harmonious during the year. Directors' Responsibility Statement Pursuant to the provisions of Section - 217(2AA) of the Companies Act, 1956, your Directors declares that i) in preparation of the annual accounts, the applicable accounting standards had been followed alongwith proper explanation relating to material departures; ii) the Directors had 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 and after the profit or loss of the company for that period; iii) the Directors have taken-proper and sufficient care for the maintainance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and defecting fraud and other irregularities; iv) the Directors had prepared the annual accounts on a going concern basis. Auditors M/s. Mukesh R. Chokshi & Co., Chartered Accountants, Ahmedabad retires at the ensuing Annual General Meeting and the Company has received their consent under provisions of Section 224 (1B) of the Companies Act, 1956. You are requested to appoint them as auditors for the year 2005-06. Auditors Report The various observations made by auditors in their report dated 31/08/2005 are self explanatory. Audit Committee The provisions of Section - 292A relating to constitution of Audit Committee are not applicable to the Company. Corporate Governance Report on Corporate Governance and management discussion and analysis as required vide Clause-49 of the Listing Agreement alongwith Auditors Certificate ate annexed to this report. Acknowledgment :- Your Directors wish to place on record their appreciation for whole hearted Co-operation received from the Bankers, Financial Institutions and Employees of the Company at all the levels. On behalf of the Board of Directors Date : 31/08/2005 (Nitin H. Mehta) Place : Ahmedabad Chairman ANNEXURE STATEMENT PURSUANT TO SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956 AND THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTOR'S REPORT FOR THE YEAR ENDED 31ST MARCH, 2005. A) CONSERVATION OF ENERGY a) NIL b) NIL c) NIL d) Total energy consumption in form A is as under: FORM - A Current Previous Year Year Electricity Purchased units (nos) 2,70,210 2,15,115 Total amount (Rs.) 14,71,963.29 2,01,254.96 Rate per units (Rs.) 5.45 5.58 B) TECHNOLOGY ABSORPTION: NIL C) FOREIGN EXCHANGE EARNINGS & OUTGO i) Total foreign exchange used Raw Materials NIL NIL Traveling NIL NIL Total foreign exchange earned NIL NIL On behalf of the Board of Directors Date : 31/08/2005 (Nitin H. Mehta) Place : Ahmedabad Chairman MANAGEMENT DISCUSSION AND ANALYSIS Industrial Structure and Development Due to severe competition in the manufacture of pharmaceutical rubber stoppers as well as increasing prices of raw material and price-cut in products has not left any room for the company to earn profit. Opportunities & Threats As mentioned above. the competitive market position has left marginal opportunities for the growth of market of company's product. Segment Review & Analysis The company is a single product company. Outlook Due to traditional production method and incapacity to adopt new technology, it is difficult for the company to expect any with in market share enjoyed at present. Risk & Concerns The low price level of rubber stoppers during the year has taken heavy toll on financial health of the company. Being a highly competitive industry, a fair return is essential for this industry to remain healthy. Poor margins of the product has restricted any further new developments. Internal control systems and their adequacy The company maintains adequate internal control systems. The company has adequate internal control measures to monitor the purchase of raw materials, stores, sales etc. which are under direct supervision and control of joint managing director. Financial performance Due to deteriorating financial conditions of the company, it has become difficult for the management to honour its commitments for repayment of loan installments as well as interest payable to IDBI, Bank of India and repayment due under Sales Tax Deferment Scheme as well as interest on above. Moreover, as mentioned in Note No. 12, Schedule 16 of the Notes of Accounts, the company could not adhere to the requirements of provisions of Section 58A of the Companies Act, 1956 regarding deposits accepted by the company. Human Resource Development/Industrial Relations The company's policy is to increase the spirit of teamwork and well qualified personnel are at the helm of the affairs. As on 31/03/2005, the company has 40 personnel on its roll. The Industrial relations were cordial at plant and offices. Cautionary Statement The statements made in the report are based upon assumptions and expectations of future events. Actual results could however differ in future. The company assumes no responsibility in respect of forward looking statements that may be amended or modified later on the basis of subsequent developments, information or events.