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Punjab Fibres Ltd.

BSE: 514179 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
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Punjab Fibres Ltd. (PUNJABFIBRES) - Director Report

Company director report

PUNJAB FIBRES LIMITED ANNUAL REPORT 2006-2007 DIRECTOR'S REPORT To The Shareholders Your Directors are pleased to present their 27th Annual Report with the audited Statement of Accounts for the year ended 31st March, 2007 and the Auditors' Report thereon. OPERATIONS: During the past couple of years, the Indian Textile Industry had been facing tough competition in domestic as well as the international markets. Resultantly, the huge losses suffered by the industry had thus forced a large number of spinning units to virtually wind up their operations. However, the dismantling of quote regime has triggered opening up of the market, offering newer opportunities for the Indian yarn manufacturing industry. The Indian Textile Industry virtually is now in the grip of globalization and is continuously on the look out to acquire sick units even in the U.S., Europe, Middle East, and Africa and in other neighbouring countries. According to the current trends, a strong performance of the developing Asian suppliers of clothing' to the key markets is now, therefore, expected to continue. Thus, the company foresees a bright business opportunity in the years ahead. Meanwhile, pending settlement, and with a view to maintain a minimum level of operations in order to avoid any deeper crisis, the Company continues to engage a part of its installed capacity on a Job-Work arrangement. FINANCIAL RESULTS: Current Year Previous Year Rs. Rs. Profit/(Loss) before Financial Expenses and Depreciation 32,44,361 65,18,670 Less : Financial Expenses 43,675 70,034 Profit/(Loss) after Financial Expenses 32,00,686 64,48,636 Less : Depreciation 1,51,95,475 2,04,43,929 Profit/(Loss) after Depreciation (1,19,94,789) (1,39,95,293) DIVIDEND: As there are no surplus for appropriation, your Directors are unable to recommend dividend for the year under review. WORKING CAPITAL: Your Company continues to avail Working Capital Limits of Rs.775.00 lakhs for its Unit-I at Viii. Rail Majra (Pb.) and Rs.925.00 lakhs for its Unit- II at Surajpur (U.P.) from State Bank of Patiala in consortium with Punjab National Bank. Meanwhile, the State Bank of Patiala had unilaterally and arbitrarily proceeded to declare the name of the company and its directors as the 'willful defaulters'. Upon company's various representations to de- categorize the name of the company from the list of willful defaulters, a firm of Chartered Accountants appointed by the bankers carried out a detailed examination of the books of account and other records and reportedly concluded that in the light of the facts and circumstances, the company can not be categorized as willful defaulter. Despite various subsequent representations, the bankers have yet to take effective steps to de-categorize the name of the company from the list of willful defaulters. DIRECTORS: Shri Sita Ram Agarwal, Director of the Company retires by rotation and being eligible, offers himself for re-appointment. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors confirm that: i) In the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures; ii) Appropriate accounting policies have been selected and have 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 2006-2007 and the profit or loss of the Company for that period; iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv) The annual accounts have been prepared on a going concern basis. DEMATERIALISATION OF SHARES: The equity shares of your Company have been included in the list in which trading is compulsory in dematerialized form for all the shareholders of the Company. The Company's request for dematerialization of shares has been deferred by the National Securities Depository Limited. COMMENTS ON AUDITORS' REPORT: Appropriate disclosures have been made in Schedule 17 under the heading 'Notes to the Accounts' vide Note Nos. 2 (v), (vi), (xi), (xii), (xviii) (a) to (d) , 3(iv) (a) to (c), (v), 4, 5, 6, 7(ii), 8(ii), (iv) and 10 as regards the qualifications made by the statutory auditors in their report dated August 28, 2007 on the Balance Sheet and Profit & Loss of the company for the year under review. The company has been declared a sick industrial company during the year under review under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. Keeping in view the same, certain reliefs and concessions are anticipated from the concerned lenders/Govt. departments. Thus, certain provisions relating to interest on term loans, working capital loans, promoters' loans, interest free loans from Punjab Govt, and disputed demands of Central Excise, Customs, Employees' State Insurance Corporation, Provident Fund Organization etc. have not been made in the Profit & Loss Account. However, the same have been duly clarified/quantified in the Balance Sheet under Schedule 17 of 'Notes to the Accounts'. Further, the continued cash crunch has restricted the company to pay the undisputed demands quantified under para 9 of the Annexure to the Auditors' Report. However, the rehabilitation/revival scheme envisaging payment of such arrear of dues, subject, however, to certain reliefs and concessions, is under consideration of the secured lenders under the aegis of BIFR and the company expects their requisite approval shortly. STATUTORY AUDITORS: M/s. S.C. Dewan & Company, Chartered Accountants, S.C.O. 90, 1st Floor, Swastik Vihar, Panchkula -134109 retire and are eligible for re-appointment as Statutory Auditors of the Company. ACKNOWLEDGMENT: Your Directors wish to place on record their deep gratitude to the consumers of the Company's products for their patronage, the all India Financial Institutions for their consistent guidance and co-operation and to the Bankers, the Suppliers and the Trading Community for their support and assistance as rendered to the Company from time to time. PERSONNEL: The relations between employees and the management have been exemplary. The Directors record their warm appreciation for the dedication, hard work and efficiency of all the employees. There are no employees who are in receipt of salary exceeding the limits prescribed under Section 217(2A) of the Companies Act, 1956. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information as required to be disclosed under Section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure to this report. On behalf of the Board (PADAM KUMAR JAIN) Chairman & Managing Director New Delhi August 28, 2007 Annexure to Directors' Report INFORMATION AS PER SECTION 217(l)(e) READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988, AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2007. 1. CONSERVATION OF ENERGY: Energy conservation measures taken: The Company has formed a strong technical team consisting of senior personnel to avoid wasteful consumption and execute energy conservation schemes. 2006-2007 2005-2006 A) Power & Fuel Consumption: 1. Electricity: a) Purchased: Unit (in Thousands) 10,193.88 10,377.48 Total Amount (Rs. in Lakhs) 374.45 381.38 Rate/Unit (Rs.) 3.67 3.68 b) Own Generation: i) Through Diesel Generator Unit (in Thousands) 679.19 275.23 Unit per litter of Diesel Oil 3.40 3.40 Cost/Unit (Rs.) 9.03 7.92 ii) Through Steam Turbine/Generator Nil Nil 2. Used for Generation of steam in Boiler i) Coal Quantity (Tonnes) Nil Nil Total Cost (Rs. in Lakhs) Nil Nil Average Rate (Rs. Per Unit) Nil Nil ii) Diesel Nil Nil 3. Others Nil Nil B) Consumption per unit of production Product: Cotton-Viscose-Synthetic Blended Spun Yarn Electricity (Unit/Kg.) 2.66 2.67 Furnace Oil (Ltrs.) Nil Nil Coal-Steam (Kgs.) Nil Nil 2.TECHNOLOGY ABSORPTION: The Company has no activities relating to technology absorption. 3. FOREIGN EXCHANGE EARNINGS AND OUTGO: The details of Foreign Exchange earnings and outgo during the year are as under. (Rs. in Lakhs) 2006-2007 2005-2006 Earnings Nil Nil Outgo Nil Nil On behalf of the Board (PADAM KUMAR JAIN) Chairman & Managing Director New Delhi August 28, 2007