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Bharat Pipes & Fittings Ltd.

BSE: 513028 Sector: Industrials
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Bharat Pipes & Fittings Ltd. (BHARATPIPE) - Director Report

Company director report

1995 BHARAT PIPES & FITTINGS LIMITED DIRECTOR'S REPORT Your Directors present their report together with the Audited Accounts of the Company for the year ended 31st December, 1995. OPERATION With great regret, we have to report that for the first time in its history, your Company has suffered heavy loss including cash loss in the operations of the Company. During the year the raw material (PVC RESIN) prices were higher and were increased by the local manufacturers in view of their monopolistic situation. There was no corresponding increase in the selling price of our major product PVC PIPES. The margins were thus severly eroded and to top it all as per the custom prevailing in the industry, we had to give 90 to 120 days credit to the dealers and distributors. Upto June 1995 although payments were received late, the delayed was only for a few days. However, thereafter there was was a severe liquidity crunch in the market and the receipt from debtors were delayed beyond 6 months. In fact from October, 1995 the debtors went on increasing and the cash flow was very negligible. The interest cost and other expenses contributed heavily to the huge loss during the year. Due to the frequent breakdown of old machinery, due to its wear and tear created quality problems of pipes and it was suggested by the employees that total overhauling of many machine and dies and moulds were very essential. The expert in the field were put to work alongwith chartered engineers and valuers to give their recommendations. As per recommendations, large amount of old machineries, dies and moulds were scrapped during the year. All these factors coupled with the adverse cash flow, uncertain capital market and industrial climate as also the political uncertainties made their adverse impact on most of the industries. Our industry is the most vulnerable of all as such no amount of efforts could stall the mounting of losses. The production was curtailed to minimum level as it was unwise to make sales on credit and purchase the raw material for cash. All these unprecedented and unexpected reasons have led your Company to face huge losses which has eroded more than 50% of its peak network. DIVIDEND In view of huge losses, the Directors regret their inability to recommend any dividend for the year. Due to adverse cash flow and non-recovery of huge arrears from debtors, the Company has been unable to pay the dividend which was declared last year. FINANCE a) During the year the second conversion of Zero Interest Secured Full Convertible Debentures has taken place in June, 1995. b) As mentioned earlier, the Company has faced liquidity crunch from July, 1995 which went on worsening every month. The cash flow was very erratic and negative. This has resulted in the non payment of dues of various financial institutions as also interest and dues to the consortium of Bankers. Bankers were very helpful and co-operative in these adverse circumstances and even the financial institutions were very considerate in their approach. The Company has taken certain inter-corporate deposits and finance for purchase of raw-material. In view of negative cash flow it was unable to pay all the creditors on due dates. Most of the creditors were understanding enough to roll over the advances and grant time for payment. However, some of the creditors have filed suits in the High Court for recovery of the money and for appointment of Provisional Liquidator. They have also filed petitions under section 434 of the Companies Act for winding up of the Company and have also filed criminal suits under Section 138 of the Negotiable Instruments Act against your Directors and for no fault of theirs they have been put to great hardship and mental trauma. In fact renowned & professional Directors submitted their resignation in August 1995 to avoid undue harassment. PUBLIC DEPOSIT The fixed deposit from Public and shareholders at end of the year were Rs. 1,08,75,000. There were 11 deposits valued Rs. 37000/- lacs lying unclaimed as on 31st December, 1995. DIRECTORS During the year, Mr. V.G. Rajadhyaksha, Mr. Manuel Menezes, Dr. Ranjan Banerjee and Mr. Manu Shroff resigned as Directors of the Company due to their pre-occupation, health, harassment by creditors by filling criminal proceedings under Section 138 of Negotiable Instrument Act., super- annuation-age etc. The Directors place on record their appreciation of their valuable guidance and long standing services rendered by them during the tenure of their office as the Directors. Mr. V.G. Rajadhyaksha has been the Chairman of the Company for over a decade and the Directors would like to specially place on record his meritorious services to the Company till the date of his resignation. Mr. Manuel Menezes who retired due to ill-health has recently left this world for Heavenly Abode. We pray Almightly that His Soul Rest in Peace. In place of these Directors, the Company-had appointed Dr. Jayesh Shah, an N.R.I. from U.S.A. and Mr. Vinai Chandoke a Technocrat and a renowned plastic technologist, as Directors of the Company. ADDITIONAL INFORMATION The particulars of additional requirement proposed by the Companies (Amendment) Act, 1988 in respect of conservation energy and absorption of technology, do not apply to the products of your Company. However, your company is constantly adopting the latest technical innovations to improve conservation of energy and absorption of technology. EMPLOYEES The Director take this opportunity to record their appreciation of the co- operation and sense of commitment displayed by the employees and workers of the Company. The information as per Sub-Section 2A of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in the Annexure forming part of this report. AUDITORS M/s. P.M. Turakhia & Associates, Chartered Accountants Mumbai retire at the conclusion of this ensuing Annual General Meeting. They have conveyed their consent to act as Auditors of the Company, if re-appointed. They have also confirmed that their appointment will be within the limits under Section 224 (IB) of the Companies Act, 1956. Your Directors recommend M/s. P.M. Turakhia & Associates Chartered Accountants as Auditors of the Company and request to fix their remuneration. ACKNOWLEDGEMENT Your Directors place on record their deep appreciation of the continued support from shareholders, bankers and financial institutions. FOR AND ON BEHALF OF THE BOARD PRAVIN V. SHETH CHAIRMAN Place : Mumbai Dated : 26th June, 1996