ANNUAL REPORT 1998-99
BIL INDUSTRIES LIMITED
DIRECTORS' REPORT
Your Directors presents the Eleventh Annual Report of your Company together
with the Audited Statement of Accounts for the year ended March 31, 1999.
PERFORMANCE
During the year under review your Company's performance has been dismal due
to the sluggish trend in the steel Industry. The industry per se is
passing through a very lean phase. There has been a negative growth in the
domestic demand for steel during the year. The market demand for all the
sectors of the economy had slowed down, thereby widening the supply and
demand gap tremendously. This is mainly due to dumping of raw materials
and finished products from foreign countries specially from Far East Asia
and CIS. The scenario at the moment is such that there has been drastic
fall in the price of finished product whereas the money has become dearer
this has resulted in unhealthy competition from CIS. Korea, Japan and
other countries forced the price was in the Country.
As the members would recall they were informed at the last Annual General
Meeting that the Company had approached its bankers for necessary financial
assistance to stabilise the overall operations of the Company as there was
wide working capital gap, and the working capital proposal submitted to the
Company's Bankers to meet the gap. However, the Directors regret that the
banks did not appraise the proposal submitted by the Company for its
requirement of higher amount of working capital finance. They kept
avoiding the proposal submitted assigning one or another reason. Even
after holding endless meetings with the banks with loss of much precious
time, no concrete decision has been taken and the Company continues to
suffer and has been working with severe constraints on account of non-
availability of Working Capital funds. Even institutions also refused to
reschedule its liabilities for re-phasement.
Moreover, the Directors of your Company with its technical
staff/consultants made technical evaluation of the plant recently, and
based on their advice, the Board has felt necessary to change the method of
depreciation from straight line to written down value method so as to show
a realistic value of the plant.
All these resulted, from non-availability of Working Capital including non-
issuance of L/Cs and bank Guarantees even to bid for tenders and in the
process the Company has been pushed into the red, which had a record of
continuous profit making right from inception. Your Company has tried to
surmount this phase to a certain extent but it has been unsuccessful. This
is evident from the results of your Company during the year under review.
On account of non-appraisal of credit facilities by the main banker of the
Company for the last four years, deprived the Company from availing need
based facilities commensurate with its level of operations. This has
resulted into huge untied working capital portion resulting into severe
liquidity crunch.
During the year under review, thee Company had received export orders worth
US $ 18 Ml. (Indian Rs. 77 Crores). For this, regular bankers of the
Company had not sanctioned any credit facilities. Hence, the Company
approached other bank for performance guarantees to be given to overseas
buyers, out of which only one guarantee of above US $ 3 Ml. was issued.
However, the same was cancelled by the bank though it was revalidated, the
same had attached the Company's reputation resulting into invoking the
guarantee by overseas buyer. The Company was expecting about 20% margin
over export business which could not be realised, consequently thereupon
heavy loss was incurred.
Your Directors were confident that if the sufficient Working Capital was
provided to run the plant, the Company could have sustained itself. But on
account of continued non-availability of Working Capital limits, without
any definite time frame by which the Working Capital funds, will be made
available and in the circumstances explained earlier, your directors feel
that the position of the Company as it appears as shown above and upon
review of the performance of the Company and the state of affairs as
revealed in the Audited Accounts for the year ended March 31, 1999, your
Directors have formed the opinion that the Company is a sick industrial
Company in view of the fact that the net worth of the Company has turned
negative as on the date of the said accounts, for which it was decided that
it would be proper for making reference to the Board for industrial &
Financial Reconstruction (BIFR) in pursuance of the provisions of Sub-
Section (1) of Section 15 of the Sick Industrial Companies (Special
Provisions) Act, 1985.
Despite above, your Directors are still confident that once sufficient
Working Capital is made available, your Company can regain its lost
position. The core competence and capability of the Company stand un-
tained/un-blemished. The quality of your Company's product is well
accepted by discerning customers at home and abroad. Your Directors,
therefore, feel that once the required funds are made available the Company
can poise itself again in the vanguard.
PUBLIC DEPOSIT
During the year under review, Public Fixed Deposits under provisions of
section 58A of the Companies Act, 1956. Deposit worth Rs. 9.29 lacs is due
for payment.
PERSONNEL
Relations with the employees continued to be cordial. We would like to
take this opportunity to express our sincere appreciation for the
understanding and co-operation demonstrated by the employees. No employee
of the Company is in receipt of remuneration in excess of the sum
prescribed under 217 (2A) of the Companies Act, 1956, read with Companies
(particulars of Employees) Rules, 1975.
The Company has entered into an agreement with the Labour Union for thee
Settlement made between the Company and the Employee's Union for a period
of three years ending on March 31, 2001 as per the Memorandum of Settlement
between the Company and the Employees's Union.
CONSERVATION OF ENERGY
The particulars required under section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of particulars in the Report of
the Board of Directors) Rules, 1988, are attached to this report as
Annexure "A".
DIRECTORS
During the forthcoming Annual General Meeting Mr. Santosh Bagla, Mr. K.S.
Park and Mr. M. L. Chaturvedi will retire by rotation and being eligible
offer themselves for re-appointment.
During the year Mr. K. N. Ajmera has resigned from the Board. The
management of your Company sincerely place on record his valuable service
and guidance given during his tenure.
AUDITORS
Members are requested to appoint M/s. Atul Nigotya & Associates, the
retiring Auditors of the Company, and to authorise the Board of Directors
to fix their remuneration. The retiring Auditors, have furnished a
Certificate of their eligibility for re-appointment under section 224(1B)
of the Companies Act, 1956.
ACKNOWLEDGMENT
Your Board would like to place on record its sincere appreciation for the
contribution of all employees and others.
For and on behalf of the Board of Directors
Place : Mumbai Santosh Bagla
Date : May 3, 1999 Chairman
Annexure "A" to the Director's Report
Additional Information as required under the Companies (Disclosure of
particulars in the Report of the Board of Directors) Rule, 1988.
(A) CONSERVATION OF ENERGY
The thrust during the year was on systems rather than devices for energy
conservation. Areas of work were : heating systems, air-conditioning,
compressed air systems, etc. to name a few vigorous training programme were
conducted continuously for all levels of employees which has enhanced
awareness for implementation of energy conservation.
(B) TECHNOLOGY ABSORPTION
Specific areas in which Research and Development carried out by the Company
which includes development of products and process improvement.
(C) BENEFIT DERIVED FROM (A) & (B)
Improvement in product quality, reduction in the manufacturing cost,
process and maximising customer services.
(D) FOREIGN EXCHANGE EARNINGS AND OUTGO
(i) Efforts :
During the year, the Company was able to generate export earnings.
(ii) Earnings and outgo :
(Rs. in lacs)
1988-99 1997-98
For all Wire Drawing Operations
Export Sales (FOB) 58.23 64.79
Foreign exchange outgo 3.08 2.90
For and on behalf of the Board of Directors
Place : Mumbai Santosh Bagla
Date : May 3, 1999 Chairman
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