GIRNAR FIBRES LIMITED
ANNUAL REPORT 2006-2007
Your Directors have pleasure in presenting the 17th Annual Report together
with AuditedAccounts of the Company for the financial year ended 31st
1. FINANCIAL RESULT:
The financial results of your Company for the year endel 31st March, 2007
is summarized below:
(Rs. in Lacs)
Profit before Financial Expenses And Depreciation 313.19 292.26
Less: Financial Expenses 298.64 299.24
Profit/Loss after Financial Expenses 14.55 6.98
Less: Depreciation 289.99 280.57
Profit/Loss after Depreciation (-) 275.44 (-) 287.55
Prior period adjustments 17.60 2.90
Provision of Fringe Benefit Tax 2.80 3.40
P/Loss after Tax (-)310.06 308.08
Provision 00 fy,
2. FINANCIAL REVIEW AND OPERATION:
Production and Sales review.
During the year Your Company has made production of 3809346 Kgs. Cotton
hosiery, yarn of various counts and recorded a gross turnover of Rs.4119.81
lacs as compared to Rs. 4037.25 lacs in the previous year.
The Company has made export turnover of Rs 499.41 lacs during the current
year as compared to Rs. 1137.36 lacs in the previous year.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A. INDUSTRY STRUCTURE:
The textile industry in India has an important place, account for 14% of
total industrial production and contribute 30% of the total exports and is
a largest employment generator. Providing one of the most basic needs of
people and holds importance maintaining sustained growth for improving
quality of life. It is a major contribution to the country's economy. Post
lifting up of the import restriction of the multi-fiber arrangement,the
market has become competitive and the data released by the OTEXA, USA shows
that the first year of the non-quota regime for textiles has been Indian
export to the US grow by 27 percent year on year to US$ 4.6 billion.
Besides that the Govt. has also taken steps for the development of the
textile Industry by framing textile policy for achieving target export.
Inspite the performance of the Indian textile lndusty suffered from the
second quarter onward of the current year because of strengthening of rupee
as compared to dollars resulted in decline of export and increase in
pressure on the domestic market and decline in nest sales realization, But,
the global textile industry is growing faster due to ever increasing demand
for cotton fibre consumption in worldwide and as a result, the Indian
textile industry is also bound to grow in the international and domestic
market. Secondly, the increase in per capital income is reason of
increasing consumption of cotton fibres in India. Your Company is striving
and making all its efforts for its revival and the CDR cell a voluntary
organization under the aegis of the RBI has taken some effective steps and
ordered for the re-working of its debts restructuring as per present'cash
flow, so that the Company may able to derive the maximum benefit of the
present scenario of open economy. Your Company has also to cope with the
problem of shortage of working capital limits and increasing price of
cotton the major raw material has converted the unit no.2 into
Polyester/Cotton Yarn (PC).
B. FINANCIAL PERFORMANCE:
The turnover of the Company for the current year is Rs. 4119.81 Lacs as
compared to Rs.4037.25 Lacs in the previous year and ended the year with
cash profit of Rs. 14.55 Lacs as compared to cash loss of Rs. 6.98 Lacs in
the previous year.
C. FUTURE PROSPECTS:
Your Company during the current year has taken effective steps in revival
of its financial and operational strength and as above said, the CDR cell
has allowed and ordered for the re-working of the debts restructuring as
per the present cash flow. Although, the modernization of plant was
envisaged in the earlier approved CDR package and that could not be
implemented due non-availability of financial support from the
Institutions. Now, therefore, the Company is stressing more on the
maintenance of its old plant and machinery to achieve optimum level of
production, maintaining high quality standard and working on to reduce
power and other, costs. As already said the demand for the cotton fibres is
growing faster in international and domestic market and your Company is
manufacturer of cotton yam and with the re-working of the debt
restructuring as per present cash flow the Company will start delivering
improved and better results in the year to come.
D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Commensurate with the size and operations, your Company has adequate
internal control systems, which are in place. The Company regularly gets
its internal control report and its suggestions are implemented as and when
E. HUMAN RESOURCES/INDUSTRIAL RELATIONS:
The Company has good industrial relations with its employees. The company
has taken adequate steps to harmonize the relations with its employees and
workers and also taken steps for the welfare of employees.
The disclosures are as mentioned in Clause 8 under Section of Corporate
The Company ended the year with a net Loss and have no surplus funds
available from the earlier years and therefore, the Directors do no,
recommend payment of dividend for the year under review.
4. DECLARATION BY BIFRAS SICK UNIT:
The Company has been declared a Sick Unit in terms of Section 3(1)(O) of
Sick Industrial Companies (Special Provision)Act, 1985 (SICA) by BIFR vide
its order dated 25.04.2006 and the State Bank of India has been appointed
as operating agency under Section 17(3) of the Act to examine the viability
of the Company and formulate a rehabilitation Scheme.
5. REWORKING OF FINANCIAL RESTRUCTURING:
The Corporate Debt restructuring cell (CDR) has earlier sanctioned a
package of restructuring the debts of the Company under the CDR mechanism
and according to the approved package, the Company could not able to meet
targets, due to reasons beyond its control. The modernization of the plant
as well as need based working capital facilities were envisaged in the
approved package, but actually, in sufficient working capital facilities as
well as non-sanction of funds for modernization of the plant were the major
reasons for the non-achievements of specked targets. Accordingly, the
Monitoring Committee constituted by the CDR cell has again allowed the
revival/reworking of the package as per present cash flows.
In accordance with the provisions of the Companies Act, 1956 and Articles
of association of the Company Sh. Praful Kumar Jain, Director retire and
being eligible and offer himself for reappointment.
7. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
i. That in the preparation of the Annual Accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures.
ii. That your Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable; and
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 profit or loss of the
Company for that period.
iii. That your Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act for safeguarding the assets of the Company
and for preventing and detecting fraud and other irregularities.
iv. That your Directors had prepared the: Annual Accounts on a going
8. CORPORATE GOVERNANCE:
The Company is following the prescribed guidelines of the Corporate
Governance and a separate report on Corporate Governance forming part of
the Annual Report of the Company is annexed hereto. A certificate from
theAuditors of the Company regarding compliance of they guidelines of
Corporate Governance as stipulated under Corporate Governance clause of the
Listing Agreement is annexed to the report on Corporate Governance.
M/s Gupta Sanjiv & Company, Chartered Accountants, Ludhiana, retire at the
conclusion of the forthcoming Annual General Meeting and being eligible,
offer themselves for reappointment.
10. AUDITORS' REPORT:
The Auditors' Report on the Accounts of the Company for the year under
review is self-explanatory and need no further comments.
11. COST AUDITORS:
In accordance with the provisions of Section 2938 of the Companies Act,
1956 the Board of Directors of the Company have re-appointed M/s Pawan
Verma & Associates, Cost Accountants, Jalandharas Cost Auditors of the
Company for the Cost Audit and the approval of the Central Government has
also been received for the year 2007-2008.
12. PUBLIC DEPOSITS:
During the year under review, the company has not accepted any Fixed
Deposits from the public within the meaning of Section 58A of the Companies
Act, 1956 ,end the rules made thereunder.
13. DEMATERIALISATION OF THE COMPANY'S SCRIPS:
The Company has completed formalities relating to dematerialization of
share, but the shares could not be converted in Demate form because of
negative net worth of the Company.
14. CONSERVATION OF ENERGY, TECHNOLOGY,ABSORPTION, FOREIGN EXCHANGE EARNING
The Company is mainly concentrating on the conservation of Energy and
striving for the minimization of the energy cost while carrying out
manufacturing operations. A statement giving details of conservation of
energy, technology absorption, Foreign Exchange Earning and Outgo, in
accordance with Section 217(1)(e) of the Companies,1956 read with Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988
is given in Annexure (11) hereto and forms part of this Report.
15. PARTICULARS OF EMPLOYEES:
The statement showing the particulars of the employees as required by the
provisions of Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars. of Employees) Rules, 1975 as amended is not given
as no employee was in receipt c f remuneration equal to or exceeding Rs
24.00 lacs per annum, if employed for the full year or Rs 2.00 lacs per
month, if employed for the part of the year.
16. LISTING OF SECURITIES:
The Securities of the Company are listed at the following Stock Exchange:
1. Ludhiana Stock Exchange Association Ltd.
2. Delhi Stock Exchange Association Ltd.
3. The Bombay Stock Exchange Ltd.
4. The Madhya Pradesh Stock Exchange Ltd.
5. Madras Stock Exchange Ltd.
6. The Calcutta Stock Exchange Association Ltd.
The Company has paid all the pending listing fees to the above Stock
Exchanges upto the year 2005-2006.
Your Directors are pleased to place on record their sincere gratitude to
the Financial Institution(s), Banker(s),Central/State Govt. Authority
(ies), and Business Constituents and to the Shareholders of the Company for
their continued and valuable cooperation and support extended to the
Company during the year.
Your Directors also wish to place on record and express their deep
appreciation for the devoted and sincere services rendered by Workers,
Staff & Executives at all levels of the operations of the Company during
FOR AND ON BEHALF OF THE BOARD
PLACE: LUDHIANA (GULSHAN JAIN) (JATINDERJAIN)
DATED: 03.09.2007. EXECUTIVE DIRECTOR MANAGING DIRECTOR