HEATSHRINK TECHNOLOGIES LIMITED ANNUAL REPORT 2007-2008 DIRECTOR'S REPORT 1. OPERATIONS AND FINANCIAL RESULTS: YEAR ENDED YEAR ENDED 31.03.08 31.03.07 RUPEES RUPEES Net Sales 8,72,31,877 7,04,23,379 Other Income 19,03,450 17,48,445 Operating Loss 166,60,79,980 139,83,98,542 Borrowings Adjusted/Written Back - - Provision For Fringe Benefit Tax 3,60,000 3,00,000 Loss for the period 166,64,39,980 139,86,98,542 Balance brought down from Previous year 1002,02,90,395 862,15,91,853 Total Deficit 1168,67,30,375 1002,02,90,395 APPROPRIATIONS: Loss carried to Balance Sheet 1168,67,30,375 1002,02,90,395 Total 1168,67,30,375 1002,02,90,395 2. DIVIDEND: In view of the loss suffered during the period the Directors express their inability to recommend payment of any dividend on the Equity and Preference shares. 3. OPERATING PERFORMANCE: On account of capacity utilization and continued working capital crises, your Company ended up making an Operating Loss of Rs.166,60,79,980/- as against loss of Rs. 139,83,98,542 in the year ended 31.03.2007. The adverse liquidity conditions continued through out the year. The Banker did not provide credit facilities however they continued to adjust part of their dues from the realization deposited into the Bank account. This has resulted in strain on Company's export sales. In spite of all the problems your Company is desperately trying to maintain its Sales. 4. COURT RECEIVER: Pursuant to the order dated 21st June, 2002 passed by the Mumbai High Court, Court Receiver, High Court Mumbai continues to be in the possession of all the movable and immovable properties of your Company situated at Plot No. 112, Road No. 13. M.I.D.C Marol. Andheri (E), Mumbai. Your Company continues as their Agent to run the business on a monthly royalty of Rs.3,00,000/-. 5. SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ORDINANCE, 2002: Your Company has received demand notices under section 13(2) of the said Ordinance 2002 from the major Banks & Financial Institution. In the event of non-payment of their dues the Banks & F.I. have threatened to enforce their security interest. The Company has filed suitable replies to the above demand notices. Till date the Lenders have taken no action. 6. STATUS OF THE REFERENCE TO BOARD FOR INDUSTRIAL& FINANCIAL RECONSTRUCTION (BIFR): Your Company's references filed for the year ended 31st December, 1999, 31st March, 2002, 31st March, 2005 and 31st March, 2006 were heard before the BIFR Bench on 8th April, 2008. The bench has reserved its order. 7. FIXED DEPOSITS: During the year Company has not accepted/renewed any Fixed Deposit. As on 31st March 2008 Fixed Deposits amounted to Rs.2,82,82,000/- and due to the severe financial crunch the same were due and unpaid. 8. SUBSIDIARY COMPANIES: A Statement of the Holding Company's interest in the subsidiary in accordance with section 212(2)(a) of the Companies Act, 1956 is enclosed. 9. DIRECTORS: Mr. Brhram S. Doctor Mr. Pramod R. Shah and Mr. P.S Gangurde Directors of your Company are disqualified to act as Directors of your Company by virtue of section 274(1) (g) of the Companies Act, 1956. They have informed the Company about their disqualification, However they have agreed to continue as Directors on Board of your Company since there are only three Directors of the Company and despite its best efforts your company was unable to appoint any new Directors. Mr. P.S. Gangurde retires from the Board on rotation and has agreed for reappointment. 10. AUDITORS: M/s Kanak Rathod & Co. Chartered Accountants, the Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. 11. AUDITORS' REPORT: Auditor's Report to the Accounts have been considered by the Board and clarified, wherever necessary, in the schedule 'Notes timing part of the account.' 12. DIRECTORS' RESPONSIBILITY STATEMENT (DRS): Pursuant to the requirement under Section 217(2AA) of the Companies Act. 1956 with respect to Director's Responsibility Statement. it is hereby confirmed: a. That in the preparation of the Annual Accounts for the year ended 31st March 2008. the applicable accounting standards had been followed along with proper explanation relating to material departures. b. That the Directors have 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 ended 31st March 2008 and the Loss of the Company for that year. c. That the Directors had 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 preventing and detecting fraud and other irregularities. d) That the Directors had prepared the Annual Accounts for the year ended 31st March 2008 on a going concern basis. 13. LISTING FEES: The listing fees payable to Stock Exchange Mumbai from the year 1999-2000 onwards remain unpaid. 14. CORPORATE GOVERNANCE: In terms of Clause 49 of the Listing Agreement with the Stock Exchanges a report on the Corporate Governance is appended as annexure to this report. 15. AUDIT COMMITTEE: The company has constituted an Audit Committee of directors as required under Section 292A of the Companies Act, 1956. Some of the terms of reference of audit committee are to review the financial reporting process and to examine accountancy, taxation, and disclosure aspects of significant transactions. 16. CONSERVATION OF ENERGY: a. Energy Conservation Measures taken: Energy conservation remains one of the most important areas of Plants' performance and is being continuously monitored. Some of the measures taken are: i. The power factor has improved with due emphasis on modernization of equipments and better operational methods. ii. Additional capacitor banks have been installed in different sections. iii. We have made optimum use of electrical motors and day light resources at plant. b. Additional investment and proposals, If any being implemented for reduction in consumption of Energy: i. Right sizing of the, motors s being done to run the motors at full lead conditions. ii. Improvement in power quality through voltage stabilization. 17. TECHNOLOGY ABSORPTION AND ADOPTION: Your Company has its own design and R&D department. It has taken keen interest to develop and indigenous its products that have also been type tested by the renowned authorities such as CPRI. Bangalore and KEMA, Holland. 18. FOREIGN EXCHANGE EARNINGS AND OUTGO: Your Company did not fared well on the export front during the year under review. Exports during the year just amounted to Rs.1,74,67,701/- as against Rs. 1,80,18,804/- in the previous year. The relevant figures relating to the foreign exchange used and earned are given in the statement of additional information appended to the accounts. 19. PARTICULARS OF THE EMPLOYEES: The Company enjoyed cordial and peaceful relations with the employees. The Directors wish to place on record their appreciation of the contribution made by the employees at all levels and facing the challenges posed by the changing global business environment. In your Company no employees are drawing the salary and perks as per the limits laid down by under sub- section (I) (e) of Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988. 20. ACKNOWLEDGEMENT: Your Directors acknowledge with gratitude, the co-operation and assistance given by the financial institutions, bankers, customers and employees of the company during the year under review. For and on Behalf of the Board Behram S. Doctor Director Place: Mumbai Date : 10.07.2008. Regd. off: Plot No. 112, Road No. 13, M.I.D.C, Marol, Andheri (E), Mumbai 400 093.