DEWAN RUBBER INDUSTRIES LIMITED
ANNUAL REPORT 2001-2002
Your Directors present the 17th Annual Report together with the Audited
Balance Sheet and Profit & Loss Account for the year ended 31st March,
(Rs in Lakhs)
(12 Months) (9 Months)
Sales & other income 4692.6 3675.9
Gross Profit (Loss) before interest & depreciation (813.7) (219.6)
Interest 3504.7 2524.9
Depreciation 836.4 470.3
Profit / (Loss) before tax (4954.8) (3214.7)
Prior period adjustments 7.7 460.1
Profit / (Loss) after tax (4962.5) (3674.8)
Transfer from investment allowance
reserve (utilized) - 80.1
Balance of Profit & Loss Account brought forward (12286.3) (8691.5)
(Loss) carried forward to Balance Sheet (17248.8) (12286.3)
In view of the poor performance of the Company, your Directors are unable
to recommend any dividend for the year 2001-2002.
The year under review continued to be a difficult one for the Company The
company could achieve a turnover of Rs.46.92 Crores during the year as
against the previous year's turnover of Rs.36.76 Crones of nine months. The
Company suffered net loss of Rs.49.54 Crores as compared to net loss of
Rs.32.14 Crones during the last period. The low volume of sales continued
due to non availability of adequate working capital facilities leading to
under utilisation of the manufacture facilities. The management has been
making its sincere efforts to arrange funds for revival/settlement of
outstanding dues and has submitted proposals to Banks and Financial
Institutions but the efforts of the management have not yet been
materialised in arranging the funds. Your Directors are confident for the
revival of the Company and are making sincere efforts to raise the required
REFERENCE TO BIFR
As the members are aware that due to complete erosion of its entire net
worth as on 31st March, 2001, a reference was made on 17.07.2001 to the
Board for Industrial and Financial Reconstruction (BIFR) under proviso to
sub section (1) of Section 15 of the Sick Industrial Companies (Special
Provisions) Act, 1985 for determination of measures for the rehabilitation
of the company. Proceedings before the BIFR have already been started and
the BIFR in their hearing held on 30.07.2002 has appointed IFCI Ltd as the
Operating Agency u/s 16(2) of the Act for conducting an inquiry into the
Sickness of the Company and other related aspects by getting a Special
Investigative Audit (SIA) of the Company's Accounts done by reputed firm of
Chartered Accountants The Company is proposing to file an appeal against
some of the directions contained in BIFR's Orders dated 30.07.2002.
The company has not invited/accepted any fresh deposit from public
during the year ended 31st March, 2002 under section 58A of the
Companies Act, 1956.
Since the last Annual General Meeting, the following changes have taken
place in the Board of Directors of your Company.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the company, Shri V.S. Dewan and Shin J.C. Dewan
retire by rotation and being eligible offer themselves for re-appointment,
Further, the nominations, of Shin A.K. Sharma and Shri Devender Singh have
been drawn from the Board by the IFCI Ltd. and PICUP respectively.
M/s Ashok & Co., Chartered Accountants, auditors of the company was to be
retired at the ensuing Annual General Meeting. However, due to sudden sad
demise of Sh. Ashok Kumar, Chartered Accountant. Proprietor of M/s Ashok &
Co., the Board of Directors has appointed M/s Gupta Pramod & Co., Chartered
Accountants, Meerut as auditors of the Company to fill the vacancy caused
by the sudden death of the existing Auditor of the Company. M/s Gupta
Pramod & Co. will be retiring at the ensuing Annual General Meeting and
being eligible, offer themselves for re-appointment.
The notes to the accounts referred to in the Auditors' Report are self-
explanatory and therefore do not call for any further explanation.
The Audit Committee was re-constituted an 30.10.2002 consisting of three
members viz. S/Sh. S.K. Verma, V.S. Dewan and K.R. Gupta. Sh. V.S. Dewan is
the Chairman of the Audit Committee.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement u/s 217(2AA) of the Companies Act,1956, with
respect to directors responsibility statement, the Directors of your
i. That in the preparation of the annual accounts for the year ended 31st
March, 2002, the applicable Accounting Standards have been followed and no
material departures have been made from the same,
ii. That they have selected such accounting policies and applied them
consistently and credits judgments and estimates that are reasonable aril
prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the loss of the company for
iii. That they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
iv. Since the net worth of the Company has been completely eroded as on
31.3.2001 and accordingly a reference was made before the Hon'ble BIFR
under provision to sub section (i) of Section 15 of Sick Industrial
Companies (Special Provisions) Act, 1985 for determination of measures for
the rehabilitation of the Company, the accounts of the Company for the year
ended 31st march, 2002 have been prepared on a going concern basis.
Some creditors of the company have filed winding up petitions against the
company in the High Court. Some of the auditor have also Initiated legal
proceedings in various Courts/Tribunals for recovery of their dues. Your
company is taking appropriate steps b defend the said proceedings and is
also negotiating with the parties for sorting out the matters amicably and
on terms favourable to the Company.
Annexure to this report gives the information in respect of conservation of
energy, technology absorption and Foreign Exchange earnings and outgo,
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 and forms a part of the Directors' Report.
None of the employees was in receipt of remuneration of Rs.2,00,000 or more
per month and hence the provisions of section 217(2A) of the Companies Act,
1956 are not applicable.
The equity shares of the company are presently listed with the Stock
Exchanges at Kanpur, Delhi. Mumbai, Ahmedabad and Kolkata. The shareholders
in their meeting held on 15.03.2001 had approved de-listing of equity
shares of the company from stock exchanges at Ahmedabad and Kolkata The
Annual listing fee amounting to Rs.5.62 lakhs is pending to the various
In order to raise funds by issue of shares to increase the business
activities of the Company, the Company increased its Authorised Capital
from Rs.25 Crores to Rs.50 Crores during 1996. However, due to adverse
capital market Conditions and present financial health of the Company, it
is no longer appropriate for the Company to come out with an issue In the
next few years and hence, it has been decided to reinstate me authorised
capital of the Company from Rs.50.00 Crores to Rs.25.00 Crores.
In the 11th Annual General meeting held on 27.03.1997, the Company declared
dividend @ 20% prorate to its shareholders for the year 1995-96. The
financial position of the Company deteriorated day by day and the Company
could not make the payment of the Dividend within stipulated time. Since
the liquidity position of the company has also been adversely affected due
to continuous heavy losses in the subsequent years and the company has
become Sick Industrial Company u/s 3(1)(o) of SICA, 1985, it has been
decided to revoke dividend for the year 1995-96 subject to the approval of
the shareholders in the ensuing Annual General Meeting.
The Report on Corporate Governance is annexed as part of this report
Your Directors appreciate the valuable co-operation extended by the Central
and State Government Authorities and are grateful to the financial
institutions and bankers for their continued assistance, guidance and
Your Directors place on record their appreciation of the contribution made
by the employees of the company at all levels, the shareholders, suppliers,
dealers, customers and public for their support and confidence reposed in
For and on Behalf of the Board of Directors
PLACE : MEERUT V.S. DEWAN
DATED : 30.10.2002 CHAIRMAN
ANNEXURE TO DIRECTORS' REPORT
PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
BOARD OF DIRECTORS) RULES 1988.
A. CONSERVATION OF ENERGY
Energy Conservation Measures taken
a) Energy conservation is receiving high priority, and major steps towards
energy conservation are being taken by the company on a continuous basis.
1. Closely monitors energy consuming equipments, company surrendered the
sanctioned load of 3252 KVA over a period of three years and started the
generation of power from its own generator sets.
2. Maintains close liaison between energy generating centres and consuming
b) Additional investments and proposals being implemented for reduction of
consumption of energy.
The management endeavours to reduce consumption of energy and explanations
/ research in new areas for reduction in energy consumption.
c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.
The measures taken above for reduction in energy consumption will help to
reduce the dependency on State Supplied power and stabilization of
production with the reduction in cost of production.
d) Total energy consumption and energy consumption per unit of production
as per Form A of the Annexure to the Rules
FORM FOR THE DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSUMPTION OF
A. POWER & FUEL CONSUMPTION
(12 Months) (9 Months)
a) Purchased : Units (Lakhs) 20.82 21.94
Total Amount (Rs.in Lakhs) 96.77 105.17
Rate/Unit (RS.) 4.65 4.79
b) Own Generating
Through Diesel Generator 166.06 113.62
(Units in Lakhs)
Units per litre of Diesel Oil 3.45 3.40
Cost/Unit (Rs.) 3.59 4.18
Quantity (Tonnes) - -
Total Cost (Rs. in Lakhs) - -
Average Rate/Tonnes - -
3. Furnace Oil
Quantity (Kilo Litre) 388.45 351.75
Total Amount (Rs. in Lakhs) 41.02 32.61
Average Rate (Rs./litre) 10.56 9.27
B. CONSUMPTION PER UNIT OF PRODUCTION:
There is no specific standard for the per unit consumption of electricity,
as the consumption per unit depends on the production, and product mix, as
the energy consumption per unit varies in accordance with the change in
1. RESEARCH & DEVELOPMENT:
i) Specific areas in which R&D carried out by the Company:
The company has installed proper laboratories at its various plants for the
better study of its products quality.
ii) Benefits derived as a result of the above R&D :
Reduction in cost of out-put, improvement of quality, better marketability.
iii) Future Plan of Action:
The above activities shall continue and more efforts in this direction will
iv) Expenditure on R&D:
No System of separate maintenance of R&D records has yet developed. The
expenditure is merged with various other heads of expenses.
2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
i) The efforts In brief towards technology absorption, adaptation and
innovation The plants are based on indigenous technology. Every effort is
made to know the latest development in technology in India as well as
ii) Benefits derived as a result of the above efforts e.g. Output
improvement, cost reduction, product development, Import substitution.
It has helped the company to improve the quality of products according to
the need of the market.
iii) Details of Imported Technology : NOT APPLICABLE
3. FOREIGN EXCHANGE USED AND EARNED
(12 Months) (9 Months)
(Rs. in lakhs) (Rs. in lakhs)
i) Foreign Exchange earned including
Direct and indirect Exports 3437.37 2460.06
il) Foreign Exchange used 52.75 28.93
For and on behalf of the Board of Directors
PLACE : MEERUT (V.S. DEWAN)
DATED : 30.10.2002 CHAIRMAN
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Industry trends and aspirations
There is good demand of Company's products in domestic as well as
International market which will pick up in future. We confirm to maintain
quality product maintaining consistency in quality and meeting critical and
technical requirements of customers We serve the industry with high
standard of products.
Segmentwise or productwise performance
For the financial information about the primary business segment, please
refer to relevant Note of Schedule forming part of Annual Accounts for the
year ended 31st March, 2002.
Disclosure on financial performance with respect to operational performance
The details of the financial performance of the Company are appearing in
the Balance Sheet. Profit & Loss Account and other Financial Statements
There is a continuous focus on enhancing productivity in all facet of our
operations and efforts are being made to revive the operations in the
closed Tyre /Tube Unit of the Company
Opportunity, threads and outlook
Your Company has good opportunities for future growth due to:
* Products of high standards;
* Better services to customers;
* Introduction of new products as per requirement of the customers;
* Pressure of competition from domestic market,
* Possible change in fiscal monetary and economic policies of the Govt.
which can affect cost of production
The management is managing these risks by following prudent business and
risk management practices.
Risk and Concerns
The company's products sale is largely dependent on several factors
affecting the market for which the management is taking necessary steps to
grab the market. By managing its operations on an optimal cost basis risk
mitigation strategy has been laid out for various scanrio.
Apart from nominal risk as are applicable in industrial undertakings, the
Company does no, foresee any other area of concern
Compliance of safety requirement and norms placed by different Government
Agencies are given top priority.
Internal Control System and their adequacy
The system of internal control comprises of control established in order to
provide assurance of:
a) Safeguarding assets against unauthorised use or disposition; and
b) Maintenance of proper Accounting Records and reliability of Financial
information used within business.
The internal control is supplemented by a periodic internal audit.
Material Development in HRD/IR Front
The Company continued with its emphasis on developing its Human Resources.
As on 31.03.2002, the total number of employees on the roll of the Company