REPORT OF BOARD OF DIRECTORS TO THE SHAREHOLDERS ON EROSION OF PEAK NET WORTH CAUSESTHEREOF AND ACTION TAKEN BY THE COMPANY IN TERMS OF SECTION 23 OF SICK INDUSTRIALCOMPANIES (SPECIAL PROVISIONS) ACT 1985
In terms of requirement of Section 23 (1)(b) of the Sick Industrial Companies (SpecialProvisions) Act 1985 ("the Act") a report of the Board of Directors onerosion more than 50% of its peak net worth during the immediately preceding fourfinancial years along with its causes thereof and its revival plan is being submittedherewith to the Members of the Company.
As per the audited accounts of the Company for the financial year ended 31stMarch 2015 finalized and approved by the Board of Directors which are subject to theapproval of shareholders in this Annual General Meeting the current year Net Worth of theCompany is ( Rs. 992.35) Lacs while the Peak Net Worth during the immediately precedingfour financial years is Rs. 15279.80 Lacs. Therefore there has been a complete erosion ofPeak Net Worth of the Company.
Causes of Erosion of Net Worth of the Company
Following are the reasons for losses and Net Worth erosion:
Shortage of raw materials in the domestic market.
Volatility in raw materials prices resulting into weak demands further squeezingthe profit margins.
High interest burden from debt.
Highly volatile Indian Rupee against USD with sharp depreciation especially inlast couple of years had an adverse effect on the profitability of the Company.
Steps Taken/Proposed to be taken by the Company Management
Following are the steps taken and proposed to be taken by the Company:
Improve the production efficiency.
Changes in the product mix.
More thrust on export sales.
The Company has taken several steps for operational restructuring (byimplementing Direct Polymer Melt (DPM POY)) which are expected to lead to higherefficiency/ cost savings in the times to come.
|On behalf of the Board of Directors || |
|For Raj Rayon Industries Limited || |
| ||Sd/- |
| ||Rajkumari Kanodia |
|Place: Mumbai ||Non Executive |
|Dated: 31s1 July 2015 ||Chairperson & Director |