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Modistone Ltd.

BSE: 509117 Sector: Auto
NSE: N.A. ISIN Code: N.A.
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Modistone Ltd. (MODISTONE) - Director Report

Company director report

MODISTONE LIMITED ANNUAL REPORT 2000-2001 DIRECTORS' REPORT Your Directors present the 7th Annual Report together with the Audited Statement of Accounts of the Company of the year ended 30th September, 2001. STATUS WITH BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) As per the directions of BIFR, a joint meeting with IFCI/ Banks was held on 10th April, 2001 wherein Company presented the revised rehabilitation proposal submitted by the Promoters. After detailed presentation, the Banks discussed the scheme but did not find the same acceptable. The last hearing before BIFIR was held on 25th April, 2001 before Bench-1, consisting of Shri P.P. Chauhan, Chairman and Shri T.R. Sridharan, Member. Mr. Alok Dhir, Advocate, Dhir & Dhir Associates, made a detailed presentation of the revised rehabilitation proposal. The Banks/Union representatives did not find the scheme acceptable to them. The Bench finally passed the following order: Quote: "In view of the above, the Bench confirmed its prima facie opinion that the sick industrial company, M/s Modistone Ltd. is not likely to make its networth-exceed its accumulated losses within a reasonable time while meeting all its financial obligations. The company as a result thereof is not likely to become viable on a long term basis and hence it is just, equitable and in public interest that it is wound up u/s 20(1) of the Act. This opinion may be forwarded to the concerned High Court along with copies of all earlier orders/proceedings for necessary action according to law." Unquote: The Company received a letter dated 11th May, 2001 from Registrar, BIFR, New Delhi stating that the Opinion of the Board io wind up Modistone Ltd. had been forwarded to the Hon'ble High Court of Maharashtra, Mumbai for further action under the law vide Order dated 25.04.2001. Modistone Employees Union had filed an Appeal before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) against the order of BIFR dated 25.04.2001. The Appeal was heard on 6th August, 2001 but was dismissed vide Order dated 08.08,2001. In the meanwhile Modistone Employees Union has filed a Writ Petition in the High Court of Judicature at Bombay challenging, inter alia, order dated 25.04.2001 of BIFR. The proceedings in the above Writ Petition are in progress. INDUSTRIAL RELATIONS The lock out declared by the Company at its Factory premises at Sewree, Central Office, Mumbai District Office and Godown vide the lock out notice dated 22nd September, 1997 which became effective from 8th October, 1997 and the lock out declared in various other Offices and Godowns on different dates in October, 1997 is still continuing. The various legal proceedings initiated consequent upon the aforesaid declaration of lock out are pending in different Courts and the Company is defending the same. 69th ANNUAL GENERAL MEETING The 69th Annual General Meeting of tine company for which Notices along with the requisite documents were sent to the shareholders could not be held as the Police Authorities did not grant permission to hold the said AGM due to serious law and order situation and consequently the Annual Accounts and Balance Sheet for the financial year ended 30th September, 2000 could not be laid before the shareholders in the said AGM. FIXED DEPOSITS Out of the total deposits earlier collected from the shareholders and the public, a sum of Rs. 31,000/- from 11 depositors still remain unclaimed as on 30th September, 2001 DIRECTORS Mr. R.L. Ahuja and Mr. R.S. Dubey are liable to retire by rotation at thisAnnual General Meeting and being eligible, offer themselves for reappointment. PARTICULARS OF EMPLOYEES The Company has no employee who was in receipt of remuneration as has been prescribed u/s 217 (2-A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors state that i) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii) the Directors had selected such accounting policy and applied them consistently. However, no provision has been made in the accounts in respect of (i) Loan and interest accrued thereon amounting to Rs. 21.50 lacs (Note No. 10), (ii) Excise Duty liability in relation to PME case wherein Assessing Authority has raised a demand of Rs. 1589 lacs and company has provided Rs. 660 lacs (Note No. 12), (iii) Wages to workers at Mumbai Plant and various offices estimated at Rs. 626.57 lacs [Note No. 15(v)], interest due to financial institutions, banks and others amounting to Rs. 1741.09 lacs [Note No. 15 (i), (ii) & (iv) interest due on short term loan and raw material loan from holding company and also on security deposit from customers (amount unascertainable) [Note No. 15 (iii)] and writing down of inventories due to partly deterioration/damages and obsolence (amount unascertainable) (Note No. 16). Subject to these, the Directors had 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 of the profit or loss of the company for that period; iii) the Company has still not been able to obtain some of the accounting and financial records (including asset registers and revaluation records) due to continued lockout, in the Plant and in various offices, which are necessary for preparing the annual accounts as well as for finalising the audit. Accordingly, sales, stocks, debtors, accrued expenses/liabilities and bank reconciliations etc. of the company have been compiled on the basis of available information, books of accounts and records. The consequential adjustments, if any, on above points would be made in the accounts as and when the complete records are available. Subject to the above, the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv) The Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 15th April, 1998 had declared the Company as a "Sick Industrial Company" and appointed IFCI as the Operating Agency. The rehabilitation proposals submitted by the Company/Promoters have not been found acceptable to IFCI/Banks. The BIFR in its last hearing held on 25th April, 2001 has recorded its opinion to wind up the Company and has forwarded the same to Mumbai High Court for further proceedings according to law. Meanwhile Modistone Employees Union has filed a Writ Petition in the High Court of Judicature at Mumbai challenging, inter alia, order dated 25.04.2001 of BIFR and proceedings in this regard are in progress. Notwithstanding the above the accounts have been prepared on the postulate of "going concern". LISTING OF SHARES The Company's 2,07,45,132 Equity Shares of Rs. 10/- each aggregating to Rs. 20,74,51,320/- are listed on The Stock Exchange Mumbai and The Delhi Stock Exchange Association Ltd. Due to financial stringency the company could not pay the listing fees to the aforesaid Stock Exchanges since 1st April, 1998 onwards. AUDITORS Ford, Rhodes, Parks & Company who are Auditors of your Company, retire at this Annual General Meeting and being eligible, offer themselves for reappointment. A Certificate in terms of Section 224 (1B) of the Companies Act, 1956 has been received from them. AUDITORS' REPORT The notes on the statement of the Accounts referred to in the report of the Auditor have been suitably explained by way of notes to the accounts and may be treated as information/explanations submitted by the Board as contemplated u/s 217(3) of the Companies Act, 1956. AUDIT SUB-COMMITTEE Pursuant to the provisions of Section 292A of the Companies Act, 1956, (as amended), the Board of Directors of the Company has constituted a Committee of Board of Directors known as Audit Sub Committee consisting of M/s. K.B. Gupta, R.L. Ahuja, K.D. Gupta and R.S. Dubey as its members. The Committee shall have such powers and authority as provided under the aforesaid provisions and shall act in accordance with the terms of reference to be specified in writing by the Board of Directors from time to time for which the provisions of Listing Agreements with Stock Exchange(s) will also be kept in view. TAX AUDIT Your Company has re-appointed M/s Thakur & Company as Auditors for submitting Tax Audit Report in terms of Section 44AB of the income-Tax Act, 1961 for the financial year ended March 31, 2002. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Since the Factory/Depots of the Company were under lockout no production activity could take place during the period. Therefore, Conservation of Energy, Technology Absorption, Research and Development and Adaptation and Innovation Activities could not be carried out. Foreign Exchange Earnings and outgo was nil. Hence, Form A and B prescribed in this regard are not attached. ACKNOWLEDGMENT Your Directors place on record their appreciation to various Central and State Government Authorities, Financial Institutions, Banks and the shareholders for their valuable guidance, assistance and support. By Order of the Board Place: New Delhi K.B. GUPTA Date : 7th March, 2002 Director & Chairman of the Meeting