JALPAC INDIA LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR'S REPORT
To
The Members,
Your Directors present the Audited Accounts of the company for the year
ended 31st March, 2012.
FINANCIAL RESULTS (Rupees in thousands)
Year Ended Year Ended
31st March, 2012 31st March, 2011
Net Sales & Other Income 241984 231199
Profit before
Interest & Depreciation 4242 (1171)
Profit before Depreciation 4011 (1332)
Profit before Tax (18043) (23857)
Add: Exceptional Items - -
Less: Provision for FBT - -
Profit after Tax (18043) (23857)
Profit brought forward (471074) (447217)
Balance carried forward (489117) (471074)
`
DIVIDEND:
In view of the company being sick, the Directors do not recommend any
dividend.
Operations:
As reported earlier, no bank support has been available after Sept 2008 and
despite the company having made an offer along with the co-promoter to the
lenders, a settlement has not been arrived at. Hence no financial infusion
has taken place in the company.
Despite no working capital and no bank support in terms of L/C discounting
facilities etc., operations have continued on the strength of a very
limited portfolio of customers who are willing to pay either 100% advance
or fund the purchase of rawmaterials.
While sales in quantity terms decreased by 8%, value increased by 2%.
Exports including deemed exports increased by 53% in quantity and 30% in
value terms. Domestic sales including jobwork declined by 37% in quantity
terms and 28% in value terms.
Despite a low capacity utilization of 16%, on account of no working capital
and no bank support, there was a positive EBIDTA OF Rs. 42.42 lacs despite
a negative foreign exchange fluctuation of Rs. 68.37 lacs as a result of a
weakening rupee.
EBIDTA and capacity utilization comparison for the last 3 years is:
Year Capacity EBIDTA
Utilisation (Rs. in lacs)
2009-10 14% 38.82
2010-11 18% (11.71)
2011-12 16% 42.42
The above shows that after a Debt Rehabilitation Scheme based on an OTS
with the bankers is in place, the company would be able to achieve a
financial turnaround.
As reported earlier, the focus has been only on the production of value
added products. More value added products can be developed once there are
no financial constraints which can take the company into a positive
direction.
Metallized paper with improved barriers can be a product for the future.
Metallized paper - a promising product for the future:
As reported last year, the Ministry of Environment and Forests banned the
use of plastics for packaging of Pan Masala, Gutka and tobacco products
effective 1st March 2011. This positively impacted the company in the first
quarter of this financial year as metallized paper sales increased
significantly during this period.
Subsequently, however, aluminium foil was imported from China and that
became the major product of usage in that segment since it has a better
barrier than metallized paper.
Despite this, as the world and India get more environmentally conscious,
metalllized paper with improved barriers can be an environmentally friendly
packaging material for the future.
Some more developments will have to be carried out in terms of the
improvement of the moisture and oxygen barriers which are critical for
packaging. If success is achieved on the barrier front, metallized paper
could be a promising product for the company in future.
Rawmaterial prices:
Polyester film along with paper is one of the major rawmaterials. Polyester
film prices which were at skyrocketing levels of Rs. 229/kg. in October
2010, dropped to levels of Rs. 117/kg. in April 2011 and remained at a
price of around Rs. 100 till March 2012.
Exports:
With no bank support and no L/C discounting facility available, only
limited selective export orders were taken from customers who are able to
pay in advance. Clubbed together, - exports (direct and deemed) increased
by 53% in quantity terms and 30% in value terms. There was a compression in
value because of a sharp decline in the rawmaterial - polyester film price
during the year as against the previous year.
Product development:
The company has been working on improving the barriers of metallized paper
as also working on some value added coated products as the future of the
company depends on high value niche products.
Turn around strategy and outlook:
The company has been able to convince one of its major customers to invest
and participate in the rehabilitation of the company. However, the offer
made by the company along with this co-promoter has not been acceptable to
the bankers as they are looking at a higher offer.
The EBIDTA positive financial performance not withstanding a low capacity
utilization because of severe working capital constraints is an indicator
that with a financial infusion and a Debt Rehabilitation Scheme based on an
OTS being in place, the company would be in a position to turn around
financially.
Status of reference to BIFR
As reported earlier, the company is a Sick Industrial Company within the
section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act,
1985. A reference was filed with BIFR under Section 15(1) of the said Act
by the company on 7th June, 2004 and registered by BIFR on 21st June, 2004.
The Hon'ble BIFR in its order dated 5.9.2006 had declared the Company sick
and appointed the State Bank of India as the operating agency.
A rehabilitation scheme was filed by the company in June 2009 based on a
One Time Settlement with the secured lenders backed by a strategic
investor. The OTS offer made by the company with backing from a strategic
investor had not been acceptable to the lenders, as a result of which a
fully tied up Debt Resolution Scheme could not be put in place.
The Hon'ble BIFR in its order dtd 22.4.2010 had directed the Operating
Agency to issue an advertisement for Change of Management as per their
guidelines and had directed the Operating Agency to submit its report and a
Draft Rehabilitation Scheme, if it emerges, within 4 months. As per the
Hon'ble BIFR's guidelines, the existing promoters could also submit their
fully tied up Draft Revival proposal with or without a co-promoter with
proof of their financial resources for rehabilitation. As per their
guidelines, other things being equal, the proposal from the existing
promoters would still get a preference over others.
The company had made a bid within the stipulated period in July 2010 along
with a co-promoter with proof of the financial resources of the co-
promoter. The offer was not accepted by the lenders on 3.9.2010.
The Hon'ble BIFR in its order dtd 3.3.2011 had directed the Operating
Agency to reissue another advertisement for Change of Management as per
their new guidelines and had directed the Operating Agency to submit its
report and a Draft Rehabilitation Scheme, if it emerges, in 2 months from
the date of closing of bid/offer. The Hon'ble BIFR also directed SBI (OA)
to examine the proposal of the Japanese firm that had offered to raise
funds for the company.
Though an offer was received from the Japanese firm, their proposal was
turned down by the lenders. The company had again submitted a Debt Revival
Scheme (DRS) within the stipulated period along with a co-promoter. This
offer was also not accepted by the lenders.
The Hon'ble BIFR in its order dtd 17.8.2011 had indicated that the company
is working and the products that they are manufacturing are now having a
good market potential and that the company employs about 151 workers, whose
livelihood is dependant on the company's survival. Hence the bench gave one
more opportunity to the company to settle its secured debts.
The company was also asked to show cause as to why the company should not
be wound up keeping in view that the dues of the secured lenders had not
been settled and the proposals submitted by the company had not been
accepted by the secured lenders. The company had submitted its reply to the
show cause notice for winding up on 27.10.2011.
The Hon'ble BIFR in its order dtd 29.12.2011 after considering the material
on records and the submissions made, observed that the bench was convinced
that the company was making sincere efforts for its revival. The board
observed that the company was employing about 151 workers whose livelihood
depended on the company's survival.
Hence, the Bench gave one more opportunity to the company to settle its
secured creditors and kept the SCN for winding up of the company in
abeyance till the next date of hearing.
The company had already informed the Hon'ble Board that the strategic
financial investors identified by the company earlier, who were willing to
support the efforts of the company had withdrawn as the OTS settlement
offers made with their support were not acceptable to the secured lenders.
The company therefore, made renewed efforts to identify a new strategic/
financial investor and made an offer along with a co-promoter, who is also
a major customer of the company on 1.3.12 which the lenders again turned
down in the hearing held on 6.3.12.
Despite having identified a co-promoter who is willing to participate in
the Rehabilitation of the company, as a result of no settlement with the
lenders, the Hon'ble BIFR has formed an opinion about the winding up of the
company under Section 20(1) of SICA vide their order dtd 20.7.2012.
Since the Hon'ble BIFR does not have the power to wind up, they would be
communicating their opinion to the Hon'ble High Court of Uttarakhand in
which State our plant facility is located.
Being an operating company with a reasonable turnover despite no bank
support and no working capital, the company is in the process of filing an
appeal before the Hon'ble AAIFR against the order of the Hon'ble BIFR.
Personnel:
As reported earlier, during the period of sickness of the company, there
has been a heavy exodus of management and supervisory personnel. We have
been doing our best to retain the core team. After 1st April 2005, till
date - a period of over 7 years, only two increments were granted to the
management and supervisory staff. Despite this, some of the employees have
demonstrated great determination and loyalty during this very very
turbulent period in the history of the company. Retention of the core
management and supervisory team is critical for the company's operations.
FIXED DEPOSITS
The company has not accepted/renewed any deposits during the year.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF
THE COMPANIES ACT, 1956:
As required under Section 217(2AA), which was introduced by the Companies
(Amendment) Act, 2000 your Directors confirm that:
I. In the preparation of the annual accounts, the applicable accounting
standards have been followed alongwith proper explanation relating to
material departures;
II. 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 and of the profit or loss of the
Company for that period;
III. 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
preventing and detecting fraud and other irregularities;
IV. The Directors have prepared the annual accounts `on going concern
basis'.
V. These financial results of the company have been audited by M/s Lodha &
Co. Chartered Accountants. A reference may be made to their report dated
30.08.2012 to the members together with Annexure `A' thereto containing
information as per requirement under the Companies (Auditor's Report)
Order, 2003 attached with these annual accounts.
CORPORATE GOVERNANCE
The Company has complied with the mandatory provisions of Corporate
Governance as prescribed in the Listing Agreement with the Stock Exchanges.
A separate report on Corporate Governance is included as a part of the
annual report alongwith the Auditors' Report on this compliance.
AUDITORS' REPORT:
Your directors wish to comment on the following remarks made by the
auditors in their report under Companies Auditors' Report Order, 2003 as
under:
1. Regarding non maintenance of inventory and valuation thereof: Company is
maintaining full itemwise details of finished goods, raw material, stores
and spares and in the opinion of management, valuations are fair.
Other comments of the auditors in their report have suitably been explained
in the relevant notes on accounts, which are self explanatory and do not
call for any further comments from the Directors.
LISTING OF SECURITIES:
Trading in shares of the company has been suspended at Bombay Stock
Exchange w.e.f. 24.02.2011 due to certain non-compliances. Pursuant to
special resolution passed at previous Annual General Meeting held on
28.09.2010 the company has filed application for voluntary delisting on
15.3.2011 with stock exchanges at Uttar Pradesh, Kolkata, Ahmedabad and
Delhi. The same is pending at respective stock exchanges. The securities of
the company shall continue to be listed on the stock exchange having nation
wide trading terminal vis Bombay Stock Exchange, Mumbai, and therefore as
per the SEBI (Delisting of Equity Shares) Regulations 2009, issued by the
Securities and Exchange Board of India, no exit opportunity need to be
given to the shareholders of the Company.
DIRECTORS
Shri Anil Sharma, Director retires by rotation as required under the
Companies Act, 1956 and being eligible, offers himself for re-appointment.
PICUP appointed Mr. D K Sharma as Nominee Director on the Board of
Directors vide their letter no. Sec/Board/3795 dtd 15.12.2011. Formalities
of his appointment are in process.
AUDITORS
M/s Lodha & Co. Chartered Accountants, auditors of the Company, retire at
the forthcoming Annual General Meeting and being eligible, offer themselves
for reappointment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND
OUT GO:
Information in accordance with clause (e) of subsection (1) of section 217
of the Companies Act, 1956 read with the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 and
forming part of the Directors' Report for the year ended 31st March, 2012
is given in Annexure A to this Report.
COST AUDIT COMPLIANCE
The company is in the process of appointing Cost Auditors.
PERSONNEL:
There was no employee in the Company drawing remuneration more than the
limits prescribed under Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975.
ACKNOWLEDGEMENTS:
The Directors wish to place on record their appreciation of the dedication,
commitment and loyalty of the employees who have stood by the company in
its most difficult hour in embattled, warlike conditions despite having to
face personal financial pressures.
The Directors also wish to record their appreciation of the support and
understanding displayed by the Company's Bankers and Financial
Institutions.
On Behalf of the Board of Directors
Sd/- Sd/-
New Delhi Madhukar Jalan R.R. Malhotra
Dated 30.8.12 Managing Director Executive Director
ANNEXURE A
REPORT ON CONSERVATION OF ENERGY ETC.
FORMING PART OF THE DIRECTORS' REPORT
A. CONSERVATION OF ENERGY:
Both the chiller units of two Metalizing plants are not being operated when
chamber is open to save on energy costs.
B. TECHNOLOGY ABSORPTION:
Success in improvement of the moisture barrier in metallized paper.
C. FOREIGN EXCHANGE EARNING & OUTGO:
i. Total Foreign Exchange used & earned
(Rs. in Thousands)
(a) Foreign Exchange Earned 9657
(FOB Value of Exports)
Claim received -
(b) Foreign Exchange Used
(CIF Value of Imports)
(i) Capital Goods -
(ii) Raw Materials -
(iii) Stores & Spares 159
(iv) Others -
On Behalf of the Board of Directors
Sd/- Sd/-
Madhukar Jalan R.R. Malhotra
Managing Director Executive Director
Place: New Delhi
Date : 30th August, 2012
Registered Office:
Jalpac India Limited
Mota Haldu,
Haldwani, Nainital
Uttarakhand
MANAGEMENT DISCUSSION AND ANALYSIS
1. INTRODUCTION
Your Company is engaged in the manufacture of Metallized Paper/Board,
Metallized and Coated Films, Metallic yarn and Metallized films with an
installed capacity of 8900 tons per annum at its plant located at Haldwani,
Distt.
Nainital, Uttaranchal.
The metallized paper is used mainly in the labels and the gift-wrap
segment. Effective 1st March 2011, there was a ban on use of plastics for
packaging of Pan Masala, Gutkha and Tobacco products. This led to usage of
metallized paper in the packaging segment also. This demand subsequently
waned because of import of aluminium foil from China which has a better
barrier than metallized paper. Metallized and coated films are used in
flexible packaging, insulation, glitter powder and metallic yarn/zari
applications. Metallized films are used in the packaging segment.
2. INDUSTRY STRUCTURE, DEVELOPMENTS AND BACKGROUND
Traditionally, the industry had a distinct three tier structure with no
backward or forward linkages:
a. Film manufacturers
b. Metallizers
c. Printing Convertors
Initially, large printing convertors had backward integrated into the
metallizing arena which had an impact on a reduced market size for
standalone metallizers like us. This threat, at that time, was successfully
countered by increasing exports of metallized film.
As reported earlier, polyester film manufacturers who forward integrated
into the metallizing business around the year 2002/2003 have continued to
expand capacity continuously and now completely dominate the plain
metallized film packaging segment - both domestic and exports.
This has virtually rendered the plain metallizing packaging segment
unremunerative for standalone metallizers since film manufacturers price
the metallized film at variable cost plus levels as they view the value
chain, right from DMT/PTA/chips to the metallized film realization pushing
standalone metallizing companies out of the packaging segment. As a result
of this phenomenon, standalone metallizers and players in the unorganized
yarn segment made a foray into the coated product segment (film for
metallic yarn) as a result of which margins eroded significantly in the
coated film segment also.
Both these - backward integration by our customers and forward integration
by our suppliers hit our plain metallized film business hard which segment
was given up because it became unremunerative at prices from the integrated
metallizers. The only way to ward off this challenge is to either backward
integrate into film making which entails a very huge investment, forward
integrate into printing and flexible packaging or focus on specialty niche
products.
Your company has chosen the latter option as production of such products
does not require any major capital investment and such products can be
produced on the current equipment.
2.1 Recent Developments:
After the ban on plastics for the packaging of pan masala, gutkha and
tobacco products, there was a heavy demand for metallized paper in this
packaging segment during the first quarter of the financial year - April to
June 2011. Subsequently with the import of aluminium foil from China,
packaging in this segment shifted to an aluminium foil paper laminate,
since the barrier properties of aluminium foil are better than metallized
paper. Despite this negative development, as the world and India become
more environmentally conscious, metallized paper with improved moisture and
oxygen barrier which will need development can be an environmentally
friendly, plastic free packaging material for the future. The focus should
be on developing this product for packaging segments other than gutkha and
pan masala because many states have started banning these products.
2.2 Advantages to integrated polyester film producers with metallizers
against standalone metallizers like us:
A. As a consequence of their integration, have the ability to price plain
metallized films at variable cost levels and use metallization as a means
of selling their film.
B. In the export segment, Indian polyester film producers with metallizing
plants have a distinct advantage in terms of quicker delivery and freight
costs, since they are now located in different parts of the world
(Thailand, Dubai, Turkey, Mexico, Poland and USA) and are closer to the
major markets.
C. Since endusers buy both plain and metallized polyester film, they prefer
a single source who can supply both.
This has had a serious impact on both the domestic and export plain
metallized film business as plain metallized film constituted almost 90% of
our metallized/coated film export business.
2.3 Raw material prices:
Polyester film along with paper is one of the major rawmaterials. Polyester
film prices which were at skyrocketing levels of Rs. 229/kg. in October
2010, dropped to levels of Rs. 117/kg. in April 2011 and remained at a
price of around Rs. 100 till March 2012.
2.4 Worldwide market - geographical breakup and product wise growth/
decline:
The world market for metallized materials is estimated at 10,57,000 tons.
The Indian market size for metallized products is estimated at around
105700 tons. The approximate breakup of the world demand for metallized
products is:
Europe 25%
China 25%
North America 18%
India 10%
South America 05%
Middle East 06%
South Africa 03%
Rest of the World 08%
Total 100%
The world metallized/vacuum coated product wise demand is estimated at:
Polyester 26%
PP 45%
Paper 21%
Board 01%
Other films 07%
The overall, worldwide growth in the metallized product market is estimated
at around 7%. The growth in the metallized film market is estimated at
round 8%, in the metallized paper market at around 3% while there is a
decline of 5% in the metallized board market.
2.5 Indian market growth:
The domestic metallized polyester and metallized BOPP markets are growing
at around 11% and 15% respectively but have been captured largely by
polyester and BOPP film producers with metallizers.
The flexible packaging market growth in India is at around 17% per annum.
3. STRATEGIC VULNERABILITY:
Way back in 1994, the company had explored possibilities of backward
integration into polyester film production. This option was dropped at that
time because of investment constraints as also the much acclaimed
management `mantra' of sticking to core competency. Your company followed
this percept and focussed on metallizing and coating and on the strength of
its quality made inroads into major global markets becoming a top exporter
in this product segment.
Despite these positives, with hindsight, the vulnerability of this strategy
has been exposed because of forward integration by our suppliers and
backward integration by our customers into the metallizing business. By not
integrating - forward or backward, the company's metallized film expansion
initiatives gave the desired results only till the time that film producers
had not decided to enter the metallization business. So the success of this
strategy depended on others not making a foray into the metallization
business.
With radical changes in the industry and developments, it is obvious that
the product mix will need a radical shift to specialty coated products and
metallized paper where there is no imminent threat from polyester film
producers with metallizers. This change has already been made with a shift
in focus to specialized coated film products and metallized paper which
film producers with metallizers do not produce.
With the world and India becoming more environmentally conscious,
metallized paper, a product that the company specializes in, can be the
product for the future if the barrier properties can be improved, since it
is a more environmentally friendly product compared to plastic or aluminium
foil.
4. BUSINESS AND FINANCIAL PERFORMANCE:
The business performance of the Company is appended below:
Quantity
Production (Tons) Growth
2011-12 2010-11 Decline
Metallized Film 987 1260 (22%)
Metallized Paper 469 325 44%
Total 1456 1585 (8%)
Sales (Tons) Growth
2011-12 2010-11 Decline
Film: Domestic 221 679 (67%)
Export (Deemed & Direct) 790 510 55%
Job work 3 85 (96%)
Paper: Domestic 328 70 369%
Export (Deemed & Direct) 0 5 (100%)
Job work 136 255 (47%)
Total 1478 1604 (8%)
Combined Quantity
Sales (Tons) Growth
2011-12 2010-11 Decline
Domestic 549 749 (27%)
Export (Deemed & Direct) 790 515 53%
Job work 139 340 (59%)
Total 1478 1604 (8%)
Value
Sales value (Rs. In lacs) Growth
2011-12 2010-11 Decline
Film: Domestic 292 912 (68%)
Export (Deemed & Direct) 1581 1206 31%
Job work 1 16 (94%)
Paper: Domestic 441 56 688%
Export
(Deemed & Direct) 0 8 (100%)
Job work 109 185 (41%)
Total 2374 2383 40%
Combined Value
Sales value (Rs. In lacs) Growth
2011-12 2010-11
Domestic 734 968 (24%)
Export (Deemed & Direct) 1581 1214 30%
Job work 110 201 (45%)
Total 2425 2383 2%
Sales value of current year does not include sale of traded goods of
Rs.43.75 lacs
5. FINANCIAL PERFORMANCE:
Despite a low capacity utilization of 16%, on account of no working capital
and no bank support, there was a positive EBIDTA OF Rs. 42.42 lacs despite
a negative foreign exchange fluctuation of Rs. 68.37 lacs.
EBIDTA and capacity utilization comparison for the last 3 years is:
Year Capacity EBIDTA
Utilisation (Rs. in lacs)
2009-10 14% 38.82
2010-11 18% (11.71)
2011-12 16% 42.42
6. OPPORTUNITIES AND THREATS:
Opportunities
a) The ban on plastics for packaging of Pan Masala, Gutkha and Tobacco
products last year is a pointer that metallized paper with technical
developments relating to improvement in the moisture and oxygen barriers
could be a promising packaging medium in the future, since the world and
India are becoming more environmentally conscious.
b) Additional investment for forward integration in select niche segments
like metallic yarn and holography.
c) Additional investment for forward integration into flexible packaging.
d) Additional investment for backward integration into film production.
e) Product and market development initiatives in paper based products.
f) Recent development of a new coated product for the insulation market.
g) Beer sales are reportedly now growing at a galloping rate of around 25%
which could present an opportunity for metallized paper also.
h) New product developments of specialized products.
Threats
a. While the `Law of the Land' as on date, bans the use of plastics for
packaging of pan Masala, Gutkha and Tobacco products, several litigations
are pending with the Hon'ble Supreme Court including some for ban of the
end product. The ban on the end product which has already commenced and
implemented in several states, will impact the opportunity.
b. The metallized paper market will be focussed upon by more standalone
metallizing companies, since they like us cannot compete in the plain
metallized film business.
c. A standalone metallizer with coating facilities has backward integrated
into polyester film production and this may put pressure on coated
polyester based products in both the domestic and export markets.
d. Though the threat from the unorganized sector is receding because of a
reduction in excise duties which are currently at 12% and 6% respectively
on film and paper, this threat still exists. There has been a need to
implement the `Rule of Law' to instill fear into those not following the
laws of the land and bring such people and entities to the book, so that
those following the law of the land have an advantage rather than a
disadvantage in terms of business opportunities.
7. OUTLOOK:
The company has been able to convince one of its major customers to invest
and participate in the rehabilitation of the company. However, the offer
made by the company along with this co-promoter has not been acceptable to
the bankers as they are looking at a higher offer.
The EBIDTA positive financial performance not withstanding a low capacity
utilization because of severe working capital constraints is an indicator
that with a financial infusion and a Debt Rehabilitation Scheme based on an
OTS being in place, the company would be in a position to turn around
financially.
8. RISKS AND CONCERNS:
Despite having identified a co-promoter who is willing to participate in
the Rehabilitation of the company, as a result of no settlement with the
lenders, the Hon'ble BIFR has formed an opinion about the winding up of the
company under Section 20(1) of SICA.
Since the Hon'ble BIFR does not have the power to wind up, they would be
communicating their opinion to the Hon'ble High Court of Uttarakhand in
which State our plant facility is located.
Being an operating company with a reasonable turnover, despite no bank
support and no working capital, the company is in the process of filing an
appeal before the Hon'ble AAIFR against the order of the Hon'ble BIFR.
9. INTERNAL CONTROL AND THEIR ADEQUACY:
The Company has a proper and adequate system of controls in order to ensure
that all assets are safeguarded against loss from unauthorised use or
disposition and that all transactions are checked, verified, recorded and
reported correctly.
Internal Audit checks are carried out to ensure that the responsibilities
are executed effectively and that proper adequate systems are in place.
The Board of Directors has constituted an Audit Committee with its Chairman
as an Independent Director. The Committee meets periodically. The
observations and recommendations of the internal and statutory auditors are
addressed.
10. HUMAN RESOURCE AND INDUSTRIAL RELATIONS:
As reported earlier, during the period of sickness of the company, there
has been a heavy exodus of management and supervisory personnel. We have
been doing our best to retain the core team. After 1st April 2005, till
date - a period of over 7 years, only two increments were granted to the
management and supervisory staff. Despite this, some of the employees have
demonstrated great determination and loyalty during this very very
turbulent period in the history of the company.
Retention of the core management and supervisory team is critical for the
company's operations.
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