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Vishwas Infocom Industries Ltd.

BSE: 513573 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE014C01019
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Vishwas Infocom Industries Ltd. (VISHWASINFOCOM) - Director Report

Company director report

VISHWAS STEELS LIMITED ANNUAL REPORT 1999-2000 DIRECTORS' REPORT To the Members of Vishwas Steels Limited. Your Directors present the Tenth Annual Report of your Company together with the Audited Statement of Accounts for the financial year ended 30 September 2000. OPERATIONS The company has incurred losses during the period under review. The following are the main reasons. A. Increase in the key input cost without corresponding increase in the selling price of finished goods. B. Due to the liberalised steel import policy and dumping of steel from CIS Countries at very low rates, these products were available in the market at prices lower than the Company's cost of production. Also the Company had no leverage to increase selling prices due to wHich there was a negative contribution. C. The operations of the Rolling Mill Division at Goa commenced in January, 2000. However, on account of a number of unforeseen and uncontrollable problems such as realignment of the mill, sinking of foundation etc. the plant could not operate continuously on a commercial basis thereafter. This problem was further accentuated by a general slowdown in the steel sector, fall in price realisation of finished goods, erratic supply of power leading to higher wastage and production losses. On account of these factors integrated operations at Goa could not be stabilised to date. The result of these happenings had an adverse cascading impact on the operations leading to the Company making substantial losses in the subsequent nine months beginning from January, 2000 to September,2000. D. The Company could not fully tie-up the working capital limits for more than a year and the delay in commissioning of the Rolling Mill had a cascading impact on the operations of the Company. E. Due to non-viable operations at Tarapur on account of higher power tariff, the operation of the plant has been temporarily suspended since June, 2000. F. Due to the stay granted by the Goa bench of Bombay High Court, the Company was not able to get the required sanctioned load of power hence, the Company had to operate on the low-capacity utilisation at Goa plant. Consequently, the Company was not able to recover its fixed overheads resulting in the losses. In order to revive operations and restore the viability of the units, the Company plans to initiate the following steps. a) A complete restructuring of both long term and short term debt, which would involve extension of moratorium and reschedulement of principal repayments, relief in accrued interest and reduction in rates in future for long term borrowings, alongwith reassessment of working capital requirements and restructuring of outstanding limits. b) To consider Export of steel products from Goa Unit. The export would be made of value-added Rolled Products mainly to the Middle East region where a large demand has been noticed. c) The Company is also exploring possibilities to reduce input costs, increase price realisations and volumes and derive benefits of economies of scale. The Company has launched its portal viz. emetalinfo.com on 21st July, 2000. The same is hosted on Internt. REFERENCE TO BIER In view of the losses at the end of the financial year 1999-2005 which has exceeded the entire net worth of the Company, the Board of Directors has decided to make a reference to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 for determination of the measures which shall be adopted with respect to the Company. EXTENSION OF FINANCIAL YEAR The financial year of the Company has been extended upto 30th September, 2000 to comprise a period of 15 months i.e. from 1st July, 1999 to 30th September, 2000. SHARE CAPITAL The Company has allotted on 5th January, 2000 52,71,800 Equity Shares of Rs. 10/- each for cash at the premium of Rs. 18/- per share on preferential basis to the Promoters, Associates / Bodies Corporate as per the shareholders approval obtained at the Annual General Meeting of the Company held on 7th December, 1999 DIRECTORS During the year under review, the following Directors viz. Shri Chndra Mohan, Shri Subhash Patil, Shri D. N. Davar, Shri P. G. Kakodkar and Shri Noel Jacob resigned from the Board. The Board places on record its sincere appreciation of the valuable guidance and assistance rendered by them during their association with the Company. Shri Punit Chadha will retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. AUDITORS' REPORT With reference to the observation made by the Auditors in their report, the Directors wish to state as under: 1. The Company has maintained records showing full particulars of fixed assets, which are pending for updating, specially for assets at Goa factory. We have been informed that these records are being updated. As informed to us. the physical verification of these assets was carried out by Management during the period and reconciliation between book records and physical inventory s in progress, discrepancies if any will be dealt with suitably as and when ascertained. MANAGEMENT'S REPLY The records for fixed assets are in the process of being updated and the same shall be completed soon. As soon as the same are updated, the Statutory Auditors will be intimated accordingly. 2. On the basis of our examination of stock records, except for stores and spares we are of the opinion that the valuation of stocks is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. MANAGEMENT'S REPLY Upto last year, the Company has maintained the records for accounting of stores and spares on manual basis. However, for the period under review, the Company has changed the system of maintaining records from manual to computerised which is under implementation stage. The entire process is expected to be implemented within a month's time and after completion of the same, the statutory auditors will be intimated accordingly. 3. In our opinion the Internal Audit System is generally commensurate with the size of the Company and the nature of its business. However, it needs to be further strengthened. MANAGEMENT'S REPLY Internal Audit function in the Company is being strengthened by outsourcing to professional audit firms. Periodicity and coverage is ensured as prescribed in the Internal Audit Manual of the Company. In addition, specific suggestion by Auditors with reference to periodicity and coverage are kept in view while formulating annual audit programmes. 4. The Company has not maintained records as prescribed under Section 209 (1) (d), of the Companies Act, 1956 for the period. MANAGEMENT'S REPLY The Company has already short-listed a few Cost Accountants for maintenance of cost accounting record3 and the same will be finalised very soon. As soon as the records will be completed, the same shall be presented to the Auditors for their observations. The Company is hopeful of completing the said records within the next two months. AUDITORS M/s. P. V. Page 8 Company, Chartered Accountants, Auditors of the Company retire at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. PARTICULARS OF EMPLOYEES Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules,1975 is given in Annexure I and forms part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO. Information pursuant to Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1g88 relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II forming part of this Report. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation of the continued support and co-operation received from Financial Institutions, Bankers, Customers, Suppliers and Shareholders. Your Directors place on record their appreciation for the services rendered by Employees at all levels. For and on behalf of the Board of Directors Place: Mumbai N. S. PARULEKAR Date : November 8,2000 Chairman ANNEXURE I TO THE DIRECTORS' REPORT Particulars under Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988. A. CONSERVATION OF ENERGY a) Energy conservation measures taken i) Energy conservation is aimed at by adopting innovative measures to reduce wastage and optimise consumption. ii) Continuation of measures taken in earlier years. b) Additional Investments and proposals, if any, being implemented for reduction of consumption of energy. There is no proposal at the moment for any additional investment but the Company is scanning opportunities for taking advantage of any new technology that may be available. c) Impact of the measures at (a) and (b) above for reduction in energy consumption and consequent impact on the cost of production of goods. The Company could not effectively implement the above measures mainly on account of erratic supply of power coupled with production bottlenecks in Goa. However, in Tarapur the same was implemented effectively only upto June, 2000 subsequent to which operations were temporarily discontinued on aCcount of non-viable operations. Also, it would be difficult to actually quantify the positive impact of these measures at Tarapur since there has been a progressive hike' in power tariff. d) Total energy consumption and energy consumption per unit of production. The information required is given in the prescribed Form 'A'. B. TECHNOLOGY ABSORPTION Efforts made in Technology Absorption The required information is given in the prescribed Form 'B'. For and on behalf of the Board of Directors Place: Mumbai N. S. PARULEKAR Date : November 8,2000 Chairman FORM A DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION 1. Areas of R & D The Company has continuously strived to upgrade the production methods and to employ the latest techniques available. 2. Benefits Derived In the past, the Company has experienced a positive impact on its production. However, over the past 9 months it may be reasonable to infer that not much benefit could accrue to the Company due to the operations being run at below normal capacity and specifically continued operational problems at Goa. 3. Technology Absorption and Innovation 1. Efforts made With the aid of sophisticated instruments and modern technology, efforts have been continuously made to improve the quality of the finished goods. II. Benefits derived as a result of the above efforts Mainly due to operational and other related problems experienced by the Company not much benefit could derived by the above measures. III. Particulars of technologies Imported during the last 5 years No technology has been imported by the Company during the last 5 years.