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Filaments India Ltd.

BSE: 514472 Sector: Industrials
NSE: N.A. ISIN Code: INE179C01010
BSE 05:30 | 01 Jan Filaments India Ltd
NSE 05:30 | 01 Jan Filaments India Ltd

Filaments India Ltd. (FILAMENTSINDIA) - Director Report

Company director report

FILAMENTS INDIA LIMITED ANNUAL REPORT 2003-2004 DIRECTOR'S REPORT To the Members, Your Directors are pleased to present the Fourteenth Annual Report and Audited Statement of Accounts for the year ended 31st March 2004. FINANCIAL HIGHLIGHTS: Financial highlights for year 2003-2004 is: (Rs. In Lakhs) Particulars 2003-04 2002-03 Income 1394.61 1,408.47 Operating & General Expenses 1362.00 1,360.99 Operating Profit 32.61 47.48 Financial Expenses 117.88 121.16 Sub Total (85.27) (73.68) Depreciation 91.89 87.00 Profit/ (Loss) before tax (177.16) (160.68) Provision for tax Nil Nil Profit/Loss after tax (177.16) (160.68) OPERATIONS AND OUTLOOK FOR THE CURRENT YEAR Sales for the year- both local sales as well as exports- have marginally increased over the previous year. The company, pursuant to its cost-cutting exercise, has been able to reduce the employee costs as well as financial expenses for the year, though marginally. However, due to the towering costs of electricity, raw materials and other inputs, the company has not been able to recoup its losses. As a result, the losses for the year have been more-or-less the same as that of the previous year. As a result of the debt restructuring exercise undertaken by the company in accordance with the Debt Recovery Package announced by the Union Government, the company has been able to restructure its term loan from the industrial Development Bank of India, the benefit of which would be reflected in the current year's performance. DIVIDEND The Directors regret their inability to recommend any dividend for the financial year ended 31st March 2004 due to losses of around Rs. 177 lakhs, which the company has sustained during the year and liquidity crunch faced by the company. DEMATERILISATION OF COMPANY'S SHARES The Shares of the company are under the compulsory dematerialisation with effect from 27 October 2000. The company has successfully dematerialised more than 68% of the total issued share capital of the company. DIRECTORS In accordance with provisions of the Companies Act, 1956 and Articles of Association: of the Company, Mr. K.G. Bajoria, Director of the company, retires by rotation at the ensuing Annual General Meeting of the company and being eligible, offers himself for re-appointment. The company has received a request from one of-the shareholder of the company proposing the name of Mr. Arun Phasu, as a director on the Board of Directors of the company. Presently he is serving in an Indian IT company and a brief bio-data is enclosed with notice of AGM. AUDITORS M/s S. Bhandari & Co., Chartered Accountants retires at the conclusion of the Annual General Meeting as Statutory Auditors and being eligible, offer themselves for re-appointment. AUDITORS OBSERVATIONS As regards the Auditor's observations, the explanations given in Accounting Policies and Notes on Accounts (contained in Schedule-15 of the Balance Sheet) are self-explanatory and therefore do not call for any further comments from the Board. Reply to specific observations of the Auditors are as follows. 1) The company has sent out letters to its sundry debtors, sundry creditors and other recoverable advances for balance confirmation. Some of them have sent their replies and for remaining, replies are awaited. Some parties have reported certain differences, the reconciliation of which is in progress. 2) Flat purchased at Kolkata for Rs. 8.49 lakhs was acquired with an intention to open a branch office at Kolkata, which however, was later considered unnecessary, considering the costs involved in running and maintaining the office. The property is now in the process of being sold. Therefore, the property has not been registered in the name of the Company. DIRECTORS' RESPONSIBILITY STATEMENT The Board of Directors states: 1) That in the preparation of annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, wherever applicable. 2) That the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true a fair view of the state of affairs of the company at the end of the financial year and the loss of the company for that period. 3) That the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for the prevention and detection of fraud and other irregularities. 4) That the directors have prepared the annual accounts on a going concern basis. FIXED DEPOSIT The company has not accepted any deposits from the public during the year under consideration. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure -A forming part of this report. PARTICULARS OF EMPLOYEES The company had no employee covered under Section 217(2A) of the Companies Act, 1956 during the year. INDUSTRIAL RELATIONS The Industrial relations remained extremely cordial during the year. MANAGEMENT DISCUSSION & ANALYSIS REPORT: The Management Discussion & Analysis Report as stipulated under clause 49 of the listing agreement is attached to this report. CORPORATE GOVERNANCE REPORT AND AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE: The Company is committed to follow the standards of good Corporate Governance - A report on Corporate Governance and a certificate from the Auditors of the Company regarding compliance of conditions of corporate governance as stipulated under Clause - 49 of the listing agreement is attached to this report. ACKNOWLEDGEMENTS The Directors express their gratitude for the guidance and continued co- apportion extended by Banks, Financial Institutions and Government authorities. The Directors also convey their deep appreciation of the co- operation shown by the shareholders, and also the dedication shown by the employees and associates. The Directors also look forward to their continued support and encouragement for a brighter tomorrow. For and on behalf of the Board K.G. BAJORIA C.K. SARAWGI Managing Director Director Place: Bhiwadi Dated: 30th June 2004 ANNEXURE A Report on conservation of energy, technology absorption and foreign exchange earnings and outgo in the manner prescribed as per Companies (Disclosure of Particulars in the respect of Board of Directors) Rules 1988, read with provision of section 217(1)(e) of the Companies Act, 1956. A. CONSERVATION OF ENERGY a) Energy Conservation measures taken: The Company has installed latest plant and machinery, which is energy efficient. b) Additional investments and proposal, if any, being implemented for reduction of consumption of energy: No further specific investment is proposed in immediate future except as required to optimise consumption of energy c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods The consumption of electricity in comparison to per Kg of yam produced has gone up marginally which is directly attributable to increase in per unit electricity charges. d) Total energy consumption and energy consumption per unit of production as per Form A below: FORMA (Form for disclosure of particulars with respect to conservation of energy) A). POWER AND FUEL CONSUMPTION FOR THE YEAR FOR THE YEAR ENDED 31.3.2004 ENDED 31.3.2003 1. ELECTRICITY i) Purchase units 1236747 1378205 Total amount 5608039 6091825 Rate/Unit 4.53 4.42 ii) Own Generation a) through Diesel Generation unit 3176915 3091803 Total amount 14018274 11459100 Units per litre of Diesel Oil 4.41 3.71 b) through Steam. Turbine Generator units NIL NIL Total amount NIL NIL Units per litre of fuel/ Gas NIL NIL 2. Coal (Steam Coal for Boiler) NIL NOT APPLICABLE 3. Furnace Oil NIL NOT APPLICABLE 4. Other/ Internal Generation NIL NOT APPLICABLE B) CONSUMPTION PER UNIT PRODUCTION (IN KGS.) Product: Synthetic Yarn Electricity Units 2.74 2.81 Furnace Oil NIL NIL Coal NIL NIL Other NIL NIL B. TECHNOLOGY ABSORPTION (e) Efforts made in technology absorption as per Form B below: FORM B Disclosure of particulars with respect to technology absorption. RESEARCH AND DEVELOPMENT (R & D). 1) Specific Area in which company carried out the R & D: N.A. 2) Benefits derived as a result of the above R & D: N.A. 3) Future plan of action: N.A. 4) Expenditure on R & D Capital Nil Recurring Nil Total Nil Total R & D as percentage of total sales Nil The quality control equipments are fully computerized and among the latest available for the synthetic yarn industry. B) TECHNOLOGY ABSORPTION,ADOPTION AND INNOVATION. 1) Efforts in brief made towards technology absorption, adoption and innovation: No new technology has been adopted during the year. 2) Benefits derived as a result of the above efforts e.g product improvement; cost reduction, product development, import substitution etc: Not Applicable 3) In case of improved technology imported during the last 5 years,. following information may be furnished. A) Technology imported N.A. B) Year of import N.A. C) Has Technology been fully absorbed N.A. D) If not absorbed N.A. C) FOREIGN EXCHANGE EARNINGS AND OUTGO (f) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: The company is on the lookout for new export markets consistently. (g) Total foreign exchange used and earned: Rs. in lacs Particulars Fur the year Fur the year ended 31.3.2004 ended 31.3.2003 Earned Exports (FOB Value) 179.31 170.03 Used Foreign Travel 0.72 1.24 Imports (CIF Value) - - Raw Material 19.32 20.76 Components a & Spare Parts 5.83 3.52 Plant & Machinery Nil 3.88 Sales Promotion 0.24 0.12 Legal & Professional Expenses Nil Nil Others (Capital Goods) Nil Nil Foreign Currency loan (Capital Goods) Nil Nil Interest on Foreign Currency Loan Nil Nil Total 26.11 29.52 For and on behalf of the Board K.G. BAJORIA C.K. SARAWGI MANAGING DIRECTOR DIRECTOR Place: Bhiwadi Dated: 30th June 2004 MANAGEMENT DISCUSSION & ANALYSIS REPORT INDUSTRY STRUCTURE& DEVELOPMENT: In spite of various initiatives taken by the industry and the Government in the recent past, the textile industry is still reeling under losses due to the demand-supply imbalance and mounting costs. Though the interest rates in the economy have fallen considerably in the recent past, the benefit has not been fully passed on by the lenders to the borrowers. Consequently, most of the units in the industry either have closed down, or have gone sick- The 'cost cutting' mantra remains the single largest factor deciding the fate of units in the industry. The Debt Relief Package announced by the erstwhile NDA Government to revive the ailing textile industry has been a shot in the arm, giving it a much- needed relief. However, the scheme failed to be implemented in spirit due to the unwillingness of various lenders, thereby defeating the purpose of the package to a large extent. The delay in its implementation too has taken its toll. Many textile units that expected to benefit from it were forced to close down before they could benefit from the package. Though the closure of some units has been unfortunate, concurrently it has been a blessing in disguise for other units of the industry. Due to the sudden demand-supply gap recently created by the closure, the remaining units have been able to breathe a sign of relief. This has enabled them to implement the much needed price correction in the products that was long pending, but was not possible due to the prevailing buyer's market. Consequently, the textile market has started to look up, indicating that the realizations and sales of the company would improve considerably this year over the previous year. RISK AND CONCERNS: Though the outlook of the market has improved in the recent times, the company has constantly faced the problem of piling debts that it has been trying hard to serve. With the partial implementation of Debt Relief Package by the Financial Institutions, the cost of debt servicing has fallen considerably. However, the quantum of debt remains a cause of concern to the company, which more or less sets-off the fall in the interest rates on the loans. HUMAN RESOURCE DEVELOPMENT: The company presently employs around 160 people. The cost-cutting exercise undertaken by the company has resulted in the reduction of work force cost by around 5-6%, which is a considerable amount in monetary terms. This has enabled the company to sustain its commitment to provide the best possible working conditions and remuneration to the existing work force. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The company has incorporated an Audit Committee on 30th March 2001 pursuant to Section 292A of the Companies Act, 1956, consisting of three members. The purpose of the Committee has been to advise the Board on the matters relating to the accounting, auditing and internal controls, thereby assisting the Board to carry out the day-to-day functioning of the company effectively and efficiently As a result of this and other measures taken by the company, it has identified the areas in which there is a scope to take up the cost reduction exercise,. and the company has been constantly working on it. CAUTIONARY STATEMENT: Statements in the 'Management Discussion and Analysis Report' describing the Company's objectives, outlook, estimates, expectations or predictions may be 'forward-looking statements' within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include among others, economic conditions affecting demand/ supply and price conditions in domestic and overseas markets in which the company operates, changes in the Government regulations, tax law and other statutes and incidental factors. For and on behalf of the Board K.G. BAJORIA C.K. SARAWGI MANAGING DIRECTOR DIRECTOR Place: Bhiwadi Dated: 30th June 2004