MIDLAND PLASTICS LIMITED
ANNUAL REPORT 2006-2007
Your Directors are pleased to present the 23rd Annual Report together with
the Audited Statement of Accounts for the year ended on 31st March, 2007.
1. Financial Results (Rs. In Lacs)
Year ended on Year ended on
Sales & Other Income 2499.25 2153.27
Gross Profit/(Loss) before
Interest and Depreciation (33.84) (47.38)
Less: Interest 73.68 83.39
Depreciation 31.73 105.41 33.02 116.41
Net Profit/(Loss) (139.25) (163.79)
Extraordinary incomes 6.78 30.08
Extraordinary expenses - -
diminution in investments - -
Prior period adjustments - (0.39)
adjusted with Depreciation 6.35 6.35
Fringe Benefit Tax (0.77) (0.70)
Profit/(Loss) after tax (126.90) (128.46)
Add: Balance transferred from:
Debenture Redemption Reserve - -
P&L A/c. brought forward (522.25) (393.79)
Balance of Profit/(Loss)
Carried over to next year (649.15) (522.25)
2. Review of Performance and Finances:
The sales and other income for the financial year under review increased by
16% to Rs.2499.25 lacs as against Rs.2153.27 Lacs for the previous year. In
spite of the improved performance, the company has incurred a loss of
Rs.126.90 Lacs during the year as against loss of Rs.128.46 Lacs in the
previous year. However, the loss before extra-ordinary income and current
year debit of Rs.25.00 lacs as bad debts written off is Rs.115.25 lacs as
compared to Rs.163.79 lacs in the previous year.
The losses incurred in the past few years have eroded the working capital
funds of the Company to a great extent and this has also affected the
current working of the Company. The liquidity problem has been further
compounded by abnormal increase in prices of polymers. The losses of the
manufacturing division have been offset to some extent by income of
Rs.13.49 Lacs earned by the consultancy division (Previous Year Rs. 29.23
Since the net worth of the Company had been completely eroded, the
mandatory reference under section 15 (1) of the Sick Industrial Companies
(Special Provisions) Act 1985 was met with the Board for Industrial &
Financial Reconstruction (BIFR). The BIFR vide its order dated 24-5-07,
declared the Company as a sick industrial company in terms of Section 3 (I)
(o) of the Act. State Bank of India has been appointed as Operating Agency
and asked to prepare a revival scheme for the company within two months.
A comprehensive scheme for modernization and financial restructuring is
being prepared and will be submitted to the Operating Agency. Your
Directors are confident that with the implementation of the scheme, the
fortunes of the company will reverse for the better.
3. Industry Structure, Opportunity & threats, risks & concerns:
The Company is primarily engaged in the manufacture of HDPE/PP woven
fabric, sacks and paper laminated sacks. The cement, fertilizer, sugar,
rice and skimmed milk powder industry are the major consumers of the
company's products. The demand for HDPE/PP woven sacks is restricted by the
Government by the unjustified continuance of the 'Jute Packaging Materials
(Compulsory use in packaging commodities) Act, 1987'. The woven sack
industry continues to be plagued by higher capacity and consequent low sale
prices. The unbridled competition and various tax concessions available to
units being set-up in states/areas like Uttaranchal, Himachal Pradesh,
Kutch, etc. have also adversely affected the. sale prices.
However, with the implementation of VAT tax by the Madhya Pradesh
Government from April 2006, your company's competitiveness in Madhya
Pradesh has improved vis-a-vis manufacturers of other states. The reduction
in Central Sales tax to 3% will also have a positive impact on the
The boom in the cement and fertilizer industry and implementation of VAT
are expected to have a positive impact on the working of the Company.
In view of the losses, your Directors regret their inability to recommend
5. Internal Control Systems
The Company has adequate internal control system commensurate with its size
of operations with qualified and experienced personnel in various
6. Conservation of Energy, Technology Absorption and Foreign Exchange
Earning & Outgo:
a) Conservation of Energy
The Company places great emphasis on savings in the cost of energy
consumption. Therefore, achieving reduction in the per unit consumption of
energy is a continuous, ongoing exercise within the Company.
b) Technology Absorption, Research & Development
The Company is making continuous efforts to improve the quality and cost
effectiveness of its products and reduce waste percentage etc. The
technology used by the Company is updated as a continuous exercise. The
Company does not have a separate Research & Development Centre but latest
technical developments are being continuously monitored and implemented.
The Company has not imported any technology.
c) Foreign Exchange Earnings and Outgo:
The details of foreign exchange earnings and expenditure on account of
imports, expenses etc., are provided in Note Nos. 24,25 & 26 respectively
of Schedule 'L'.
In accordance with the provisions of the Companies Act, 1956 and the
Company's Articles of Association, Shri P.S. Kallani & Shri Bala Kumar
Dibiru, Directors of the Company retire by rotation at the ensuing Annual
General Meeting and being eligible offer themselves for reappointment.
The Auditors, M/s. Rathi & Company, Chartered Accountants, Gwalior retire
at the ensuing Annual General Meeting and are eligible for reappointment.
9. Particulars of Employees under provision of Section 217(2A) of the
Companies Act, 1956:
During the period under review there was no employee drawing remuneration
exceeding the limits specified under Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 as
Shares of your Company continue to be listed with the Madhya Pradesh Stock
Exchange, Indore and The Stock Exchange, Mumbai. Listing fee for the year
2006-2007 of the Mumbai Stock Exchange has been paid while the M.P. Stock
Exchange is being requested to adjust the fee against the refundable
security deposit of an associate company.
The Shares of your Company were suspended for trading by BSE for certain
inadvertent non-compliance with listing agreement. The Company is hopeful
of the revocation of the suspension shortly.
Your Company has provided the facility of holding shares in dematerialized
form. As on the date of this report approximately 32.95% of the total
shares of the company have been dematerialized.
12. Corporate Governance:
A report on corporate governance pursuant to clause 49 of the listing
agreement is annexed to this report.
13. Auditors' Report:
The Company has taken a policy for management of the company's Gratuity
liability with Life Insurance Corporation of India. However, because of
mass resignations in the last two years, the accumulated gratuity fund has
been depleted to a great extent. Your Directors propose to build up the
balance in the fund with enhanced contributions in the coming years.
The other observations made in the Auditors' Report read with the relevant
notes thereon are self-explanatory and hence do not call any further
comments under Section 217 of the Companies Act, 1956.
14. Directors' Responsibility Statement:
The Board of Directors confirm that :
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed and there has been no material departure:
ii) the selected accounting policies were applied consistently arid the
Directors 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 as
at 31st March, 2007 and of the loss of the Company for the year ended on
iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with provisions of the Companies
Act, 1956 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
iv) the annual accounts have been prepared on a going concern basis.
Your Directors place on record their sincere appreciation for the
assistance and co-operation received from the Company's bankers, State Bank
of India. The Directors are grateful to Company's valued customers for the
confidence reposed by them in your Company's products and various
Government Authorities for their continued assistance and co operation.
Your Directors also express their appreciation of the excellent
contribution made by the employees in realizing corporate objectives.
Malanpur, On Behalf of the Board,
Dated : 17th July, 2007