STEEL TUBES OF INDIA LIMITED
ANNUAL REPORT 2007-2008
Your Directors have pleasure in presenting their Forty-Nineth Annual Report
of the Company's performance during the Financial Year 2007-2008.
SETTLEMENT UNDER SECURITIZATION ACT:
The members of the company are aware through the previous. Annual Reports
that the Secured Lenders of the Company have already sold off the Assets of
the Company to M/s. Caparo Engineering India Private Limited (Caparo) for
recovery of their dues under the provisions of Section 13 (2)
Securitization & Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (the Securitization Act).
Accordingly as on the date of reporting the Company does not own any
manufacturing facility. The Company had made full' and final settlement of
all the employees of the Company and there is no employee working in the
company since 18th August, 2006.
INFERENCE WITH BIFR:
While hearing Company's reference No. 303 / 2002, 80 /2004 and 32/2005 on
20th March, 2006, the Hon'ble Board for Industrial and Financial
Reconstruction (BIFR) had declared the Company as sick under Section 3.(1)
(0) of SICA, 1985 and appointed IFCI as Operating Agency (OA), to prepare a
scheme for rehabilitation of the Company involving change in management.
However the Secured, Creditors of the Company acting under the lead of IDBI
/ SASF, who took possession of the assets of the Company to recover their
dues under the SARFAESI Act, 2002, represented before the Hon'ble Board of
BIFR in the hearing Field on 7th December, 2006, that in view of the steps
of possession of all assets taken over by the Secured Creditors and
thereafter sale of the assets, to M/s. Caparo Engineering India Private
Ltd., the proceeding before the Hon'ble Board of BIFR is to be abated.
The Company represented before the Hon'ble Board of BIFR that the Promoters
of the Company have and experience of more than thirty years in processing,
manufacturing and/or marketing the precision /steel tubes and engineering
goods / products. The Company also wishes to restart its activities for
general engineering operations and will submit a revival plan for the
Company. The Hon'ble Board has however accepted the contention of Secured
Creditors under Section 15 (1) of SICA/1985.
Accordingly the Company has preferred an appeal on 9th January, 2007 before
the Appellate Authority for Industrial and, Financial Reconstruction
(AAIFR) against BIFR's order dated December, 2006 incase No.303/02,80 32/05
for maintaining the status quo before the BIFR the appeal at AAIFR has been
registered on 23rd January, 07 and assigned no 34/07. The Company is
preparing its rehabilitation plans for revival of the Company, so that the
liabilities of the unsecured creditors can also be dealt with suitably.
PERFORMANCE DURING THE YEAR:
The members are requested to take note that during the year 2007-08, the
company did not have any sales or processing income as there were no
operational activities in the company after 18th August, 2006, thus, your
Company during the financial year 2007-08 received a gross misc. income of
Rs.38.86 Lacs, which includes profit on sale of assets of Rs. 26.34 Lacs.
After absorbing the operating and other expenses, the Company recorded a
net loss for the year Rs,63.68 Lacs against the profit of full year
operation of Rs.110;09 Lacs in the previous year. The members are requested
to take note that in absence of any income on sales or processing, me
financial figures for the year are not companies. The financial details of
me performance of your Company during the year are as under:
(Rs. in Lacs)
Particular 2007-08 2006-07
Sales & Processing Income - 340.88
Other Misc. Income 38.86 1400.86
Gross Profit/(Loss) (EBIDTA) (12.11) 764.59
Less-Interest 20.46 551.02
Depreciation 31.11 105.06
Profit/(Loss) Before Tax (PBT) (63.68) 110.09
Prior Period Hems (Net) - (11.24)
Profit/(Less) after Tax for the year (PAT) (63.68) 108.85
Earlier Year Interest Written back 2477.51 7084.51
Reduction in Liabilities & Assets - 3926.19
Add: Balance brought Forward 11119.56 (21962.62)
Balance carried to Balance Sheet 8429.23 11119.56
Paid up Share Capital 1240.01 1240.01
Reserves Surplus - As per Balance Sheet 52.58 52.58
Considering the accumulated' losses as at the end of the financial year
ending 31st March, 2008, the Board of Directors does not recommend any
divided on its Equity Shares for the year 2007-08.
The company was having public deposit scheme but after sale of assets by
secured lenders. The company have no taken any fresh deposit
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE EARNING
As the Company does not have any manufacturing activities after the sale of
assets w.e.f 18th August, 2006, many provisions of the Section 217(1)(e) of
the Companies Act, 1956, read with the Companies (Disclosures of
particulars in the report of the Board of Directors) Rules 1988 are not
applicable at the end of the year. However a report as applicable for the
year is given in the Annexure - I and forming part of this report.
REPORT ON CORPORATE GOVERNANCE AND COMPLIANCES:
The absence of regular revenue stream has affected the Company's ability to
timely comply with few of the provisions of the listing agreement' such as
payment of listing fee, to Stock Exchanges and Custodian Charges to NSDL &
CDSL, appointment of Managing Director, Chief Finance Officer & Company
Secretary. The Company during the year 2007-08 did not have any
manufacturing activities. There is no employee working in the Company
However despite these situations, the Company has tried to fairly comply
with the requirement of Corporate Governance in terms of listing
agreement. A detailed report on Corporate Governance is annexed along with
the Certificate of Auditors on the Report, as Annexure-II and forming part
of this report.
PARTICULARS OF EMPLOYEES:
The Company did not have any .employee receiving 'remuneration within the
parameters of Section 217 (2 A) of ; the Companies Act, 1956. The dues of
all the Employees have been paid through the settlement arrived at with
Secured Lenders under Securitization Act, 2002.
DEMATERIALISATION FACILITIES :
As per SEBI guidelines the trading in /bur Company's equity shares is
Compulsory in demateralized. form and your Company has made arrangement,
with both the Depositories i.e. National Securities Depository Ltd..
(NSDL) and Central Depository Services (India) Ltd. CDSL) to facilitate the
investors to trade in the Company's equity shares in dematerialized
form through the Depository of their choice. The Company has also
appointed M/s Intime Spectrum Registry Limited, Mumbai, a SEBI Registered
independent Agency, as Registrar & Transfer Agent (RTA) for handling Demat
as well as physical share transfer work of the Company. The detail address
and contact address of RTA has been given elsewhere in the Annual Report.
Currently trading into the Shares of the Company is going on the National
During the year 2007-08, 20,78,796, physical share were demated taking the
total demated shares to 96,65,860 share, comprising amound 77.95% of the
total holding of 1,24,00,001 shares.
DIRECTORS' COMMENTS ON AUDITORS REPORT:
In reply to the comments on qualifications made in the Auditor's report,
your Directors wish to inform the members that:
(i) Your Company is facing liquidity crisis and as a result there has been
delay in honouring the repayment of public deposits and maintain the liquid
assets as per the applicable rule.
(ii) There havebeen delays in payment of statutory dues due to liquidity
difficulty faced by the company. The company has however, made efforts to
liquidate these liabilities in phases.
(iii) The liabilities of secured creditors have already been
substantially repaid through one time settlement entered into with them.
(iv) There are, certain liabilities, which are, included in the demands
made by the respective departments against which the Company has preferred
appeal to the appropriate authorities. Once the decision is received, the
same shall be followed.
(v) The Plant & Machinery of the Company have already; been disposed off
by secured lenders. There after, the company wish to explore possibilities.
for restarting activities in area of its expertise of general engineering
to five a regular revenue stream and to liquidate other outstanding
(vi) There is no employee working in the Company as at the date of this
reporting. All the Liabilities towards erstwhile employees have been fully
discharged. Other comments Of the Auditors are already quantified and
adequately dealt with elsewhere in the notes to the accounts, report of the
Corporate Governance or Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT:
In terms of Section 217 (2AA) of the Companies (Amendment) Act, 2001 your
Directors to the best of their knowledge & belief state that:
1. That the Company maintains proper accounting records, which is close
with reasonable accuracy, the financial position of the Company.
2. That these accounting records have formed basis in the preparation of
financial statements of the Company in compliance with the provisions of
the Companies Act, 1956, including any amendments thereto.
3. That in preparing, the aforesaid financial statements of the Company,
appropriate, accounting policies have been consistently applied and
supported by reasonable are prudent judgments arid estimates.
4. That your Directors believe that all accounting standards as applicable
have been followed and that these financial statements have been prepared
on going concern basis.
5. That appropriate accounting'systems are in place, which are reasonably
expected to safeguard the interest of the Company and to preventing and
detecting fraud and other irregularities.
BOARD OF DIRECTORS:
Mr. R.C. Soni retires by rotation and being available offer himself for
The Auditors M/s. Rastogi Narain & Co. Chartered Accountants, New Delhi,
shall cases to hold office at the end of the ensuing Annual General Meeting
and being available, have offered them for reappointment.
HUMAN RELATIONS & DEVELOPMENT:
The Company has settled dues of of all its employees and there is no
employee working in the at present. The industrial relations the company
were always cordial due to its excellent human relation policies.
The Directors place on record their sincere appreciation to the Company`s
Bankers, Financial Institutions and all other agencies associated with the
Company for their unstined support.
For and on behalf of the Board or
STEEL TUBES OF INDIA LIMITED
Date : 2nd September, 2008 (R.C. SONI)
ANNEXURE -1 TO THE DIRECTOR'S REPORT
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
Additional information given in accordance with the Companies (Disclosure
of particulars in the Report of the Board of Directors) Rules, 1988.
During the year 2007-08 there is no Operational activities, and the company
has operational activities only up to I8th August, 2006, the figures for
which are given here under
FORM-A CONSERVATION OF ENERGY:
(Amount in Rs.)
Particulars 2007-08 2006-07
a) Power and Fuel Consumption
a) Purchased-KWH - 1381000
Total amount (Rs.) - 7605521
Rate/Unit(Rs.) - 5.51
Own Generation - -
b) Through DG Set (Units) - -
Unit/per Ltr of desel oil - -
c) Wind Mill Power (Units) - -
d) Solar Power (Units)
2. HSD (Liters). - 67724
3. Furnace Oil (Liters) - 114365
4. Kerosene (Liters) - 97685
b) Consumption per unit of Production:
1. Electricity (KWH/MT)
a) Tubes - 447
b) CR Strips - -
2. HSD/Kcrosenc Oil (excluding DO - 73.15
Setconsumption) (Liter/MT)-Steel Tubes
3.furnace Oil (Liter/MT) -Steel Tubes. - 41.05
FORM - B - TECHNOLOGY ABSORPTION:
1. RESEARCH DEVELOPMENT (R&D):-
Particulars of Expenditure of Research & Development (R&D) are nil.
2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
Efforts were carried out for modifications of process, equipment and
products from time to time to suit market requirements and to improve
3. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Particulars of foreign exchange earned and used are nil.
For and on behalf of the Board
STEEL TUBES OF INDIA LIMITED
Place: Indore (R.C. SONI)
Date : 2nd September, 2008 CHAIRMAN
Management Discussion and Analysis for 2007-08:
Company Structure and Developments Steel Tubes of India Limited was the
flagship Company of STI Group at Indore (MP) since 1959. The company was
engaged in manufacturing of Precision Steel Tubes and Steel Strips. The
Company has seen many ups and downs in last four decades.
After taking over the possession of the fixed assets and manufacturing
plant of the Company by Secured Lenders there is no operational activities
in the company due to sale off of all the Assets of the Company for
recovery of outstanding dues by Secured Creditors under the provisions of
Section 13 (2) the Securitization Act. Accordingly as on date the Company
does not own any manufacturing facility since 18th August, 2006.
Financial Status and Performance:
The Company was having an excellent manufacturing facility and its product
quality with its range of products was, very well, established and accepted
by, the user segment. However recession in the user industry in the past,
and uneconomic scale of operation adversely affected the financial
performance of the Company.
The Financial difficulty arranging working capital and entry of new
producers in the market, rise in the world and domestic steel fuel prices,
affected the working of the Company resulting in subsequently the sell off
of all assets by the Secured Lenders.
Though there were no operational activities in the company after 18th
August, 2006, your Company during the financial year 2007-08 received
miscellaneous income of Rs.38.86 Lacs, which includes profit on sale of
assets of Rs. 26.34 lacs. After absorbing the expenditures, the Company
recorded a, net profit for the year Rs.63.86 Lacs. The members are
requested to take note that due to non operation and also income on sale of
assets, the financial figures for the year are not comparable.
Opportunities & Threats:
While hearing Company's reference No. 303/2002, 80/2004 and 32/2005 on 20th
March, 2006, the honorable Board for Industrial and Financial
Reconstruction (BIFR) had declared the Company as sick under Section 3 (1)
(0) of SICA, 1985 and appointed IFCI as Operating Agency (OA) to prepare a
scheme for rehabilitation of the Company involving change in management.
However-the Secured Creators of the Company acting under the lead of IDBI /
SASF, who took possession of the assets of the Company to recover their
dues under the SARFAESI Act, 2002, represented before the honorable Board
of BIFR in the hearing held on 7th December, 2006, that in view of the
steps of possession of all assets taken over by the Secured Creditors and
thereafter sale of the assets to M/s. Caparo Engineering India Private
Ltd., the proceeding before the honorable Board of BIFR is to be abated.
The Company also wishes to restart its activities for general engineering
operations and will submit a revival plan for the Company. The honorable
Board has however accepted the contention of Secured creditors under
Section 15 (1) of SICA71985..
The Company wishes to submit its rehabilitation plans for revival of the
Company, so that the liabilities of the unsecured creditors an so be dealt
Industrial Relation and Human Resources Management:
As on date no employee working in the Company since 8th August, 2006. All
the dues of erstwhile employees of the Company have Been amicably settled.
The Company has always followed the policy of continuous upgradation of its
employees. Development of available Human Resources by imparting regular
on the job training has been given an important thrust in the HRD policy of