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BIL Industries Ltd.

BSE: 522193 Sector: Others
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BIL Industries Ltd. (BHUPENIND) - Director Report

Company director report

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