CAVALET INDIA LIMITED
DIRECTORS REPORT TO SHAREHOLDERS
Your Directors are pleased to present the Sixth Annual Report and the
Auditors Accounts of the Company for the year ended 31st March 1997.
1. OPERATING PERFORMANCE
During the year under review, your Company has made a loss, before
depreciation, of Rs. 124.46 lakhs (previous year Rs. 153.45 lakhs). Company
facing liquidity crunch due to carried over losses, worldwide recession in
leather industry and absence of credit facilities from the Bank could not
adhere to the repayment schedule of instalments and interest due to the
State Financial Institutions, namely Karnataka State Industrial Investment
& Development Corporation Ltd. and Karnataka State Financial Corporation.
Hence on 19th November,1996, KSIIDC have taken over the possession of our
manufacturing unit at Kumbalgodu, enforcing Sec.29 of State Finance Act.
Management is trying its best to get release of assets so acquired by the
During the year company has become a potentially sick under the provisions
of Sec. 23 of Sick Industrial Company (Special Provisions) Act 1985 and
accordingly Extra-Ordinary General Meeting of the Company was held on
29.11.96. The matter has been intimated to BIFR, New Delhi.
As the company has not made any profits, your directors do not recommend
Mr. G.L. Puruswani and Mr. Tommy Mansson retires by rotation and are
eligible for re-appointment. During the year Mr. H.V. Gowthama resigned due
to his pre-occupation. Directors hereby place on record their appreciation
for the services rendered by him to the company during the tenure of his
M/s. B.N. Govinda Prasad, Chartered Accountants, Bangalore, the retiring
auditors, are eligible for re-appointment.
As regards the qualifications in para 2 of the Auditors Report dated
15/11/97 on the accounts under review, your directors wish to state that:
a) Reconciliation of individual Shareholder's folios, for allotment monies
receivable, could not be completed since some original record is misplaced
while shifting office from Kumbalagodu to Koramangala. However we have
requested the Registrar of issues to give duplicate record so as to
b) Pending completion of the construction of Administrative Block at the
factory premisis, advances on capital account have not been settled. It
will be done on completion of the construction.
c) Reconciliation and confirmation of individual Sundry Creditors will be
done during the year.
d) Company has already been registered under Employees State Insurance
Scheme. Since Company's manufacturing activities have been stopped from
Sept.'96 and most of the labour force have left, Company has not taken
necessary steps for registration under Provident Fund Scheme.
e) Since Company's manufacturing activities have been stopped from Sept,
1996 depreciation has been provided from April'96 to September'96 only.
f) The Vysya Bank Ltd. have taken legal action against the Company for non-
repayment of Bridge Loan including interest and the mater has been referred
to the Debt Recovery Tribunal, Bangalore.
g) Weizmann Industries Ltd., have proposed to convert the Hire-purchase
loan to Deep-Discount debentures. Pending finalisation of their proposal,
hire-charges/interest on the Hire-purchase loan account have been accounted
upto 31/13/1996 only.
h) Due to liquidity crunch company could not pay instalments and interest
to M/s Karnataka State Industrial Investment & Development Corporation Ltd.
Hence they took the possession of Company's immovable & movable assets at
the manufacturing unit at Kumbalagodu in November 96 and therefore interest
on Term Loan from KSIIDC & KSFC have been provided upto November 96.
i) The Company has made efforts to appoint full-time company Secretary.
However, the efforts made by the Company to appoint a suitable Company
Secretary has not been materialised.
5. TECHNOLOGY ABSORPTION
Information in accordance with the provisions of section 2171) (e) of the
Companies Act read with the Companies (disclosures of particulars in the
report of the Board of Directors). Rules 1988 regarding Technology
absorption is given in annexure 'A' which forms the part of this Report.
6. PARTICULARS OF EMPLOYEES
None of the employees drew remuneration more than the limits specified
under the provisions of Section 217 (2A) of the Companies Act 1956 read
with the Companies (Particulars of the Employees) Rules 1975.
Your directors take this opportunity to place on record their appreciation
of the co-operation extended by KSIIDC, KSFC, THE VYSYA BANK LTD., & M/s.
WEIZMANN INDUSTRIES LIMITED during the year under review.
Your Directors wish to place on record their deep sense of appreciation for
the devoted services of the employees at all levels.
For and on behalf of the Board
Chairman & Managing Director
CAVALET INDIA LIMITED
FORM B (See Rule 2) disclosure of particulars with respect to Technology
Absorption forming part of the Directors Report for the year ended 31st
A. CONSERVATION OF ENERGY
The amount spend on power as compared to the turnover is insignificant.
Expenditure on water and electricity was Rs.1.03 lakhs (Previous year Rs.
B. TECHNOLOGY ABSORPTION, ADOPTION & INNOVATION RESEARCH & DEVELOPMENT
1. Specific areas in which R&D carried } The company has developed
out by the company } business bags like overnighter
2. Benefits derived as a result } organisers, laptop cases and
3. Future plan of action } travel accessories
4. Expenditure on R&D }
d) Total R & D Expenditure as a percentage Turnover.
TECHNOLOGY ABSORPTION & ADOPTION
1. Efforts in brief, made towards : Information exchange & advic
technology absorption, adoption and through technical consultant
2. Benefits derived as a result of the : Efforts being made to use
above, eg. product improvement, cost indigeneous materials where
reduction, product development import possible will result in import
substitution etc. substitute
3. In case of imported technology
(Imported during the last 5 years
reckoned from the beginning of the
financial year), following informations
may be furnished : NIL
a) Technology Imported
b) Year of Import
c) If not fully absorbed area where this has not taken place, reasons
therefore & future plans of action.
C. FOREIGN EXCHANGE EARNINGS & OUTGO
During the year earnings in Foreign Exchange was Nil (Previous year
Rs.41.21 lakhs). The outgo of Foreign Exchange during the year was Nil
(Previous Year Rs.1.42 lakhs).
STATEMENT UNDER CLAUSE 43 OF LISTING AGREEMENT
Profitability Projected vis - a - vis achieved for the year 1996 - 97
(Rs. in lakhs)
Total Sales 2475.00 6.78
Net Profit/Loss(-) 179.41 (-)174.83
For and on behalf of the Board,
Chairman & Managing Director