KANAKDHARA STEEL LIMITED
Your Directors present their Twelfth Annual Report of the Company together
with the Audited Accounts for year ended 31st March, 1995.
In the year 1994-95 your Company encountered the worst crisis in its
existence so far. The problems which started from December, 1993 continued
in 1994-95 also. The strike in the industry called by the federation due to
imposition of additional excise duty in the Union Budget for 1994 continued
till the middle of June, 1994. The operations of the Company which was
severely affected from December, 1993 onwards finally came to a grinding
halt in July, 1994. The plant is under closure till date. The Company could
achieve till July production of 3446 M.T. and a turnover of Rs. 11.95
crores only resulting in a loss of Rs. 21.14 crores mainly due to the heavy
overhead and interest costs. There being only three months productions
during the whole year, the balance nine months interest and overhead
expenses remained fully unabsorbed. The Company had to sell its finished
products in a totally dull market resulting in a heavy loss. In view of the
unsettled market conditions, lack of financial support and non-recovery of
debtors, the Plant could not be restarted.
The accumulated losses of 1993-94 and 1994-95 wiped out the entire networth
of the Company requiring a reference to the BIFR under the Sick Industrial
Companies (Special Provisions) Act, 1985. Accordingly your Board of
Directors decided to refer the Company to the BIFR. The Company has also
been registered by the BIFR and a complete revival package has been
submitted to the BIFR for its approval.
Future Plan of Action
Your company made a thorough market study while preparing the revival plan
and came to the conclusion that without a suitable product mix the unit
cannot be viably restarted. In these market conditions starting the unit
with only utensil grade stainless steel will not be a farsighted policy
because the number of competitors have substantially increased over the
last two years. The unpredictability of the market added to the stiff
competition does not guarantee a steady growth of turnover and
profitability. Your management had to look beyond for restarting the unit
viably. Keeping these factors in view the company has decided to change its
product mix suitably to ensure a much wider market with scope for exports.
The thrust is on products with a much higher contribution which will enable
the company to sustain the market fluctuations comfortably. In achieving
this, the company should start manufacturing more of value added items like
Industrial Fasteners, Bright Bars, Forging Grade Steel, S.S. Rivets, Wire
etc., in addition to the Utensil Grade Stainless Steel. These products also
have a very good export potential. In this connection the company contacted
various importers in Europe and have received very positive response.
The Company has prepared and submitted a comprehensive revival plan to the
BIFR authorities taking into account all the above factors. The Company is
awaiting the appointment of an Operating Agency by the BIFR for necessary
appraisal, vetting and approval of the revival plan. The management is
hopeful of an early revival.
In view of the heavy losses suffered by the Company and its present
financial status, the Directors regret its inability to recommend any
Dividend for the year.
Safety & Environment Protection
The Company has strictly followed all safety measures at every stage of
production and effective emphasis have been given to the adherence of
The Company is proud to say that even in this extremely difficult situation
it enjoys the wholehearted support of its employees.
Mr. M.N. Kampani resigned from the Board of Directors in March, 1995 and
Mr. S. Mukherjee in May, 1995. Mr. R.P. Gore was co-opted as an additional
Director to the Board. He retires in this Annual General Meeting and seeks
appointment to the Board of Directors.
Shri Sudip Das shall retire by rotation in this Annual General Meeting and
being eligible offers himself for re- appointment.
We thank all the erstwhile Directors for their valuable support and
contribution to the Company during their tenure of Directorship.
Messers Thakur Vaidyanath Aiyar & Co., Statutory Auditors of the Company
retire at the conclusion of the Twelfth Annual General Meeting and are
recommended for re-appointment. The Company has received the necessary
certificate under Section 224(1) of the Companies Act, 1956 from them.
Particulars of Employees
Particulars regarding employees as required to be disclosed in the
Director's Report in accordance with the provisions of Section 217(2A) of
Companies Act, 1956 are indicated in the statement enclosed as Annexure 1.
The Management is grateful to the Financial Institutions i.e. ICICI, IDBI
and IFCI, the consortium of Banks, i.e. Union Bank of India, State Bank of
India, State Bank of Hyderabad as well as SICOM for their valuable support.
The Directors also wish to record their appreciation for the co-operation
and efforts of the employees.
ANNEXURE THE DIRECTOR'S REPORT
(Pursuant to Section 217(1)(e) of the Companies Act, 1956)
(a) Energy Conservation measures taken:
- A series of capacitor bank 11KV are installed for reducing power
consumption in the Arc Furnace.
- System of segregation and processing of scrap is existing to reduce
furnace burden and saving of energy for melting of scrap.
- Automatic temperature controllers are also provided for switch on and
switch off of cooling tower fans, shed lights etc.
(b) Additional Investment:
There is delay in the process of setting up a Rolling Mill. Capital
advances against the above project have been given.
(c) Once the Rolling Mill project is complete along with certain additional
Plant & Machinery the Company by changing the product mix can have value
added finished products which will enhance contribution and profit
(d) Total energy consumption and consumption per unit of production as per
Form A are given hereunder :-
Year ended Year ended
31st March, 31st March,
Purchased Units (KWH) 2990610 13217270
Total Amount (Rs. in Lakhs) 151.61 357.32
Rate/(Unit (Rs. KWH) 5.07 2.70
Research and Development:
As the Plant was in operation only for three months no specific R&D
programme could be carried on except for establishing contact with abroad
parties for proposed manufacture of High Grade Industrial Steel like Bright
Expenditure on R&D: (Rs. in Lakhs)
Foreign Exchange Earnings & Outgo:
(i) Foreign Exchange earned Nil
(ii) Foreign Exchange outgo Nil
For and on behalf of the Board of Directors
President and Whole Time Director
Place : Bombay
Dated : 14th August, 1995.