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Sarika Paints Ltd.

BSE: 526039 Sector: Consumer
NSE: N.A. ISIN Code: N.A.
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Sarika Paints Ltd. (SARIKAPAINTS) - Director Report

Company director report

SARIKA PAINTS LIMITED ANNUAL REPORT 2004-2005 DIRECTOR'S REPORT To The Members, Sarika Paints Limited Your Directors have pleasure in presenting the 16th Annual Report and audited Accounts for the year ended 31st March, 2005. FINANCIAL RESULTS (Rs. in Lacs) Particulars 2004-05 2003-04 Sales & Other Income 376.29 716.70 Gross Profit before Depreciation, Taxes & Interest (31.73) (40.21) Less: Depreciation 11.39 11.63 Interest 35.90 41.74 ADD: Prior period Income/(Expenditure) (8.08) (1.44) Net Profit/(Loss) for the year (87.10) (95.04) ADD: Balance brought forward from the Previous Year (528.69) (433.64) Profit/(Loss) before appropriation (615.79) (528.69) Appropriations General Reserve 0.00 0.00 Balance carried forward (615.79) (528.69) DIVIDEND In view of the losses suffered during the year, your Directors do not recommend any dividend. OPERATIONS & RESULT During the year under review, the performance of the Company has not been as expected. The sales of the Company came down to Rs. 376.29 lacs compared to Rs. 712.70 Lacs during the previous year. The Company suffered with liquidity crunch and had to limit it's operation. There was low capacity utilization. The Company had to sell the slow moving inventory lying at it's godown, with it's branches and CSA's at a low price thereby effecting it's profitability. Stiff Competition from the Multi Nationals and large manufacturers continued during the year for the regular products as a result the Company is shifting it's focus to some specialized and more profitable products. DEPOSITS The Company has not invited or accepted any deposits falling within the limits of the provisions of Section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 during the year. DIRECTORS In accordance with the Articles of Association of the Company Shri Nareshbhai L. Patel and Shri. Kantibhai M. Patel, retire by rotation as directors at the ensuing Annual General meeting and being eligible offers themselves for reappointments. DUES TO SMALL SCALE UNDERTAKING As required by Circular No. GSR/129(E) in respect of SSI suppliers under 'Interest on delayed payment to Small Scale & Ancillary Industry Undertaking Act, 1993' the related data from the creditors is not available. Hence necessary figures due to SSI are not given, however the same are under compilation. AUDITORS The Company's Auditor M/s. S K. Jha & Co., Chartered Accountants, Ahmedabad will retire at the conclusion of the ensuing Annual General Meeting and being eligible offers themselves far reappointment as auditors for the year 2005-06. AUDIT COMMITTEE Pursuant to the provisions of Section 292A of the Companies Act, 1956, Company constituted the Audit Committee of the Board of Directors comprising of Shri Kishor Dudhatra, as Chairman and Shri Mahendrabhai B.Patel and Shri Naresh L. Patel as members of the Committee. Shri Kishor Dudhatra Chairman of the Audit Committee resigned on 29.04.04 and in his place Shri Gaurang M. Shah was appointed as member of the Audit Committee. All the members of the Committee are Non-executive and Independent Directors, The Committee has reviewed the accounts for the year ended March 31, 2005. AUDITOR'S REMARK Remarks of Auditor's in their report are self-explanatory and hence do not require any further clarification. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing requirements, relating to Corporate Governance a report is being enclosed separately. LISTING The Company's shares are listed on Ahmedabad and Mumbai Stock Exchanges. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions of section 217 (2AA) of the Companies Act, 1956, your Directors declare that : a) In preparation of annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure; b) the Directors have 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 of the profit and loss account of the Company for that period; c) The Directors have taken proper and sufficient care for the maintenance 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 detecting fraud and other irregularities; d) The Directors have prepared the annual accounts on a going concern basis. AUDITOR'S CERTIFICATE The auditor has certified the Company's compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is annexed to the report on Corporate Governance. PARTICULARS OF EMPLOYEES There was no employee drawing a remuneration exceeding the ceiling prescribed under Section 217(2A) of the Companies Act, 1956. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO IS GIVEN VIDE ANNEXURE - I TO THE DIRECTORS REPORT ANNEXED HERETO. ACKNOWLEDGEMENT The Board of Directors wish to express their sincere thanks for the support and co-operation extended by the bankers, valued customers and employees of the Company at all levels. For and on Behalf of the Director Place : AHMEDABAD Dharmesh A. Shah Date : 17.06.05 Chairman & Managing Director ANNEXURE - I (A) CONSERVATION OF ENERGY (a) Energy Conservation measures taken During the year under review, extra care was taken by the Company to ensure optimum conservation of electricity & fuel at the plant of the Company. (b) Additional investment and proposal for reduction of consumption of energy. Additional investment and proposal for reduction of consumption of energy is not significant and there is no proposal for the time being for any other investment for reduction of consumption of energy. (c) Impact of the above measures The impact of the measures taken has been positive. FORM - A Form and Disclosures of particulars with respect to conservation of energy. 2004-05 2003-04 (A) POWER & FUEL CONSUMPTION Electricity (a) Purchased Unit (Kwh) 79834 82996 Total Amount (minimum) Rs. 536466 474214 Rate/Unit (in Rate) 6.72 5.71 (b) Own Generation through Diesel Generator Units (Kwh) 287 302 Cost/ Units (in Rs.) 35.47 39.48 B. CONSUMPTION PER UNIT OF PRODUCTION Electricity Production in Kgs./Ltrs. 393021 698916 Power consumed (in Units) 79834 82996 Consumption per unit of Production. 0.20 0.12 FORM - B Form for disclosure of particulars with respect to absorption RESEARCH & DEVELOPMENT (R&D) 1. Specific area in which R & D is carried out by the Company : (i) The products are developed to suit the changing market conditions. (ii) Technology up-gradation of the products for improvement in quality & cost factors. (iii) Improvement in manufacturing process. 2. Benefits derived as a result of above R & D (i) Improvement in quality consistency of products. (ii) Improvement in process efficiency. (iii) Company is able to meet demand of continuous change and improvement in product quality as required by the market conditions. (iv) New product development for manufacturing shade card. 3. Future Plan of action (i) Modernisation of Operating system for better work effectiveness. (ii) Improved quality of synthetic enamel for decorative purpose to meet market demands and II line refinishing plants for automobile industries. 4. Expenditure on R & D during the financial year The expenditure on R & D is nil, as no separate department has been set up. At the process stage itself, the R & D is taken care of. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION 1. Efforts in brief made towards technology absorption, adaptation & innovation : The Company has undertaken regular in-house efforts to improve the quality of the product. 2. Benefits derived as a result of the above efforts: Better quality products are achieved. 3. Imported Technology: No imported technology was tried during the year. (C) FOREIGN EXCHANGE EARNINGS AND OUTGO Year ended Year ended 31.03.2005 31.03.2004 i) Foreign Exchange Earnings NIL NIL ii) Foreign Exchange Out Go NIL 293215 For and on Behalf of the Board of Directors Dharmesh A. Shah Chairman & Managing Director Place : AHMEDABAD Dated : 17.06.05 MANAGEMENT DISCUSSION AND ANALYSIS Opportunities and Threats The Market is being thrown open. The competition has necessitated aggressive marketing strategy for the Survival of industry. The Company selling strategy through a well-established network of branches and consignment selling Agents (CSAs) located in different parts of the country, which are supported by the Company's strong marketing force. The Company relies on a strong trade push strategy through a well-defined Trade Relationship Management Policy. The Company's broad product range and visits by its marketing people to the branches and CSAs ensure that the Company's products receive maximum response and are adequately promoted. Initiatives by the Company The initiatives being taken by the Company are that focusing on modern system of manufacturing process for improving quality standard and reduction of costs of the products. The employees at all levels are being made aware of the changing conditions and the challenges of the open market. They are also being trained to tackle the situations under different circumstances. The Company is expecting to improve the overall productivity, profitability as a result of this strategy. Outlook The margins in the industry are under severe pressure on account of stiff competition. However, the Company expects that it can meet the challenges with its strength in marketing network, its strategic planning, productivity improvement and cost reduction exercise, which have already been implemented in right perspectives. These measures would lead to better position to meet the future challenges. The Company has adopted the latest technology. Risks and Concerns The aggressive marketing and price wars by competitors are the major risks and concerns of the Company. Tough competition and price wars have put a lid on the growth and profitability of the industry whereby the margins are under pressure. The players need increased working capital. However, Company expects to overcome the areas of concern with strategic initiatives. Internal Control Systems and their adequacy The Company has an adequate internal audit system commensurate with its size and the nature of its business towards achieving efficiency in the operation, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws. Material Development in Human Resources Employee relations continue to be cordial. Training and development activities are identified, organized and progress monitored as part of human resource development activities. Financial Highlights Revenues The sales during the year under review was Rs. 376.29 lacs (previous year Rs. 661.37 lacs). Operating Expenses The operating and other expenses for the year ended 31-03-2005 were Rs.413.29 lacs (previous year Rs. 597.03). Profit/Loss after Tax The net loss after tax during the year under review was Rs. 87.10 lacs (previous year loss was (Rs. 95.04 lacs). Interest and Financial charges The Company has incurred interest cost of Rs. 35.90 lacs during the year. (Previous year Rs.41.74 lacs). Fixed Assets There was no, addition to any Fixed Assets of the Company during the year under review except for computer system of Rs.13650/- (Previous year Rs.329709/-). Cautionary Statement The statements on the Company's objectives, projections, estimates and expectations made herein above are based on certain assumptions and likelihood of future events and are 'forward-looking Statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially, from those expressed or implied. The Management Discussion and Analysis presents the industry Overview, Opportunities and Threats, Initiatives by the Company and overall strategy of the Company in the midst of the competition faced due to the globalization, liberalization and other factors. Increasing liberalization and competition in the domestic as well as international market has intensified and forced the players to adopt aggressive marketing strategy and promotional campaigns to protect their market shares. The Company, in order to protect and expand its market share, has given thrust on the marketing. Opportunities and Threats The Market is being thrown open. The competition has intensified and aggressive marketing is necessary for survival of industry. The Company sells its products through a well-established network of Branches and Consignment Selling Agents (CSAs) located in various parts of the country, which are supported by the Company's strong marketing force. The Company relies on a strong trade push strategy through a well-defined Trade Relationship Management Policy. The Company's broad product range and visits by its marketing people to the branches and CSAs ensure that the Company's products receive maximum response and are adequately promoted. Initiatives by the Company The following initiatives are being taken by the Company : Focusing on modernization of manufacturing process to improvise quality and reduction of costs. The employees at all levels are being made aware of the changing conditions and the challenges of the open market. They are also being trained to tackle the situations under different circumstances. The Company is quite confident that the overall productivity, profitability would improve in a sustainable manner, as a result of this strategy. Outlook The margins in the industry are under pressure on account of stiff competition. However, the Company expects that it can meet the challenges with its strength in marketing network, its strategic planning, productivity improvement and cost reduction exercise, which have already been launched in right earnestness. These measures would place the Company in a position of comfort to meet the real challenges of the future. The Company has adopted the sophisticated technology. Risks and Concerns The aggressive marketing and price wars by competitors are the major risks and concerns of the Company. Tough competition and price wars have put a lid on the growth and profitability of the industry whereby the margins are under pressure. The players need increased working capital. However, Company expects to overcome the areas of concern with strategic initiatives. Internal Control Systems and their adequacy Your Company continues to place considerable emphasis and effort on the internal control systems. There is a well established internal control system with clearly laid down powers and responsibilities that are required to ensure the adequacy of the internal Control System. Material Development in Human Resources The Company takes measures to make more efficient HRD functioning with the parameters to achieve Excellent Rank. Steps have been taken to create a sense of belongingness in the minds of the employees.