ANNUAL REPORT 2009-2010
To The Members,
The Directors hereby present their 56th Annual Report on the business and
operations of the Company for the financial year ended on 31st March, 2010.
The financial results are This Year Previous Year
briefly given below: (12 months) (18 months)
Profit/Loss for the year before - -
Interest/depreciation and taxes (-) 7,99,71,018 16,93,49,058*
Less: Interest 6,61,77,442 9,78,28,486
: Depreciation 4,27,07,966 6,66,94,025
Profit/Loss for the year before taxes (-) 18,88,56,426 48,26,547
Less: Current Tax/Fringe benefit Tax - 36,74,108
: Deferred Tax (-) 2,99,41,130 (-) 4,74,604
(-) 15,89,15,296 16,27,043
Add: Balance brought forward (-) 25,22,95,518 (-) 25,64,97,444
from last year
: Debenture Redemption Reserve - 25,74,883
: Deferred Tax of earlier years (-) 1,23,83,116 -
: Wealth Tax of earlier years (-) 628 -
Amount transferred to Balance Sheet (-) 42,35,94,558 (-) 25,22,95,518
Less: Remission of Term Loan dues 11,05,65,764 11,05,65,764
Amount as per Balance Sheet (-) 31,30,28,794 (-) 14,17,29,754
*Including profit of Rs. 23,52,00,000/- on part disinvestment of stake in
the subsidiary company.
The reserves excluding revaluation reserve now stand at Rs.3,49,50,893/-.
(P.Y. Rs.3,4.9,50,893/-). The revaluation reserve stands at
Rs.4,90,93,591/-. (P.Y. Rs.5,92,14,152/- after adjusting depreciation of
Rs..1,01,16,339/-. (P.Y. Rs 1,62,49,685/-).
In view of the financial results given above, the Directors do not
recommend any dividend.
REVIEW OF OPERATIONS:
The directors have been reviewing the performance of various business
operations of the company from time to time. A gist of management
discussion and analysis report has been separately given as part of the
Annual Report in this behalf.
ENERGY CONSERVATION/TECHNOLOGY ABSORPTION ETC.:
Particulars with respect to conservation of energy etc. pursuant to section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 are set
out in the enclosed Annexure 'A' forming part of this report.
Your directors are pleased to inform you that out of total 1.22 crore units
power consumed at MDF Division at Tohana,1.14 crore units were generated
in-house, using non-conventional fuel i.e. agro-waste as fuel in our
thermal generation facilities at Tohana during the year under review. This
has resulted in reduced power withdrawal from Dakshin Haryana Bijli Vitran
Nigam Limited (DHBVNL) to that extent apart from reduction in the cost per
KWH of electricity generated from HSD. The management is constantly looking
at various energy saving measures so as to bring in substantial savings at
MDF as well as at Chemical Division of the Company.
Your Company's R&D Centre continues to work closely in co-ordination with
both the MDF & Chemical Divisions to improve the product and processes to
make them more up to date, economical and environment friendly.
As regards point No.6 Of the CARO part of the Auditors' Report, as the
matter has been before the Court and being sub-judice, the Board is not in
a position to offer any comment in this respect. However, the Board is of
the view that deposits were accepted in the years prior to 1997, which the
company has been trying to liquidate despite severe liquidity crunch being
faced by the company.
As regards point No.9(a) of the CARO part of the Auditors' Report
pertaining to payment of statutory dues including P.F. etc., the delays and
arrears occurred due to severe liquidity crunch being faced by the company
on account of continued operational losses incurred during year under
As regards point No. 10 of the CARO part of the Auditors' Report in regard
to accumulated losses having exceeded fifty percent of net worth of the
company, the Board is siezed of the matter and necessary actions are under
way to ensure compliance(s) as may be required in this behalf.
As regards point No.11 of the CARO part of the Auditors' Report in regard
to the default stated therein, these are expected to get regularised in the
current year on account of improved business prospects of company's
products, which is expected to improve profitability of operations in near
As regards point No. 17 of the CARO part of the Auditors' Report in regard
to application of the funds raised on short term basis for payment of long
term dues under OTS, the company has reached one time settlement (OTS) with
the term lending financial institutions and has been in the process of
arranging long term funds for the same. In the meantime, certain short term
funds have been raised through the subsidiary company, as well as by way of
ICD loans to make payments as per OTS arrangements reached with the said
Institutions to meet company's commitments in terms of OTS. These short
term funds will be discharged after arrangement of long term funds.
NUCHEM INFRASTRUCTURE LIMITED (FORMERLY NUCHEM MACHINE TOOLS LIMITED):
The Balance Sheet of Nuchem Infrastructure Limited (formerly Nuchem Machine
Tools Limited), a subsidiary of your company, together with the reports of
the Directors and Auditors thereon alongwith the statement of interest in
the subsidiary company u/s 212 of the Companies Act, 1956, are attached
with the Balance Sheet of your company. As you are aware that the
subsidiary company had entered into a Joint Collaboration agreement with a
reputed developer for utilisation of its Land. After obtainig the LOI for
developing an IT park and making initial progress in the project, the work
has not made any progress due to downtrun in the reality business. The
subsidiary company is in dlalouge with the developer to prepare a road map
for early completion of the project as was envisaged.
The members have been duly apprised in earlier reports regarding the ROC
having initiated legal actions against the company for alleged
noncompliance of the CLB Order N0.15/119/96-CLB dated May 20, 1997 whereby
the scheme for repayment of public deposits accepted by the company during
earlier years was approved by the Hon'ble CLB. At the instance of the
company, the Hon'ble CLB approved a revised scheme for repayment of said
deposits vide its Order No.25/1/ 2005-CLB dated 10.6.2005 envisaging
payment to depositors over a period of four years effective from 1.10.2005
and the Hon'ble Court had adjourned the ROC case sine die. In view of
continuing losses in the company and consequent overall liquidity crunch,
the company has once again approached the Hon'ble CLB to seek further
extension of time to fulfill its obligations to its valued depositors. The
matter is under consideration of the Hon'ble CLB.
Auditors' Certificate on compliance of conditions of Corporate Governance
and separate section on Corporate Governance are enclosed as Annexures 'B'
& ' C '.
PARTICULARS OF EMPLOYEES:
The particulars of employees under Section 217(2A) of the Companies Act,
1956 and the Companies (Particulars of employees) Rules,1975 and subsequent
amendment thereto for the financial year.
Sh.P.P. Khanna, Sh. R.K. Jain and Sh. Ajay Baijal directors of the company
resigned from the Board w.e.f.2.11.2009, 9.11.2009 & 15.01.2010
respectively. The Punjab National Bank withdrew its Nominee Director Sh.
U.K. Sharma from the Board and appointed Sh.V.P. Khandelwal in his place,
which became effective from 13.10.2010. While welcoming Sh.V.P. Khandelwal
on the Board of the Company, your directors wish to place on record their
deep appreciation of the valuable guidance given by Sh.P.P.Khanna,
Sh.R.K.Jain, Sh.Ajay Baijal and Sh. U.K.Sharma from time to time during
their tenure as Director of the company.
Sh. Autar Singh will retire from the Board by rotation, and being eligible,
offers himself for re-election.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956 with respect to Directors' Responsibility Statement, it is hereby
i. that in the preparation, of the annual accounts for the financial year
ended on 31.3.2010, the applicable accounting standards had been followed
alongwith proper explanation relating to material departures;
ii. that the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that were 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 as on 31.3.2010 and of the
profit or loss of the Company for the year under review;
iii. that the Directors had taken proper and sufficient care for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
iv. that the directors had prepared the accounts for the financial year
ended 31.3.2010 on a 'going concern' basis.
The Auditors of the Company; M/s.D.S.Talwar & Co. and M/s.S.S. Kothari
Mehta & Co. jointly will hold office till the conclusion of the ensuing
Annual General Meeting; who being eligible, offer themselves for re-
appointment. The Board proposes for re-appointment of the retiring auditors
at such remuneration as may be decided by the members at the Annual General
The Board acknowledges with gratitude the cooperation and assistance, which
has been extended by the Financial Institutions and Banks during the year
under review. The Board places on record its deep appreciation of the
services rendered by the employees at all levels. It wishes to thank all
its business associates, suppliers, buyers, dealers, stockists, agents etc.
for their continued support. To them all, we send our assurances of good
business, growing together and happy times.
For and on behalf of the Board
Place: Faridabad (Anil Kumra) (Arun Barar)
Dated: 12-11-2010 Director Managing Director
ANNEXURE A' TO THE DIRECTORS' REPORT
Particulars required pursuant to section 217(1)(e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 and forming part of the Directors' Report
for the financial year ended on 31.3.2010.
A. CONSERVATION OF ENERGY:
a) ENERGY CONSERVATION MEASURES TAKEN:
- Periodical inspection, cleaning and maintenance of thermopac, Heat
Exchangers, Boiler and Chilling Units, HT/LT Capacitors, Cooling towers,
Air Compressor filters, Dryer filters, Condensor, steam coils, Water Pump
filters on regular basis to optimise energy efficiency.
- Proper management and loading of gensets to get optimum performance.
- Energy meters are installed in every section of plant for better energy
- Shifted to LPG fuel from HSD for Heating purpose.
- Synchronization of utility services with plant operations for better
- Maintained Power factor around 0.99 of DHBVNL line power supply in order
to reduce the line losses.
- Replaced Lighting with energy efficient CFL.
- Replaced energy efficient FRP Fan Blades on cooling tower fan No. 02 to
reduce power consumption.
- Replaced complete wood work of Cooling Tower Sump No. 01 to improve
efficiency of Turbine.
- One more Cooling Water Line erected from Bore well to Hydraulic Room to
control/down temperature of Hydraulic Oil during the summer seasons.
- I No. Hydraulic valve replaced to get better speed of Loader & unloader.
b) ADDITIONAL INVESTMENT AND PROPOSALS IF ANY, BEING IMPLEMENTED FOR
REDUCTION OF CONSUMPTION OF ENERGY:
- To convert indirect heating system of dryer to Direct firing System.
- Replacement of old boiler by new energy efficient wood based boiler.
- Automation of Prescol GlueyFormaldehyde plant.
- Replacement of old Heavy duty Motors by new energy efficient variable
- To install Thermopac of 2 lac kilocalorie to save the energy losses in
- Plan to replace steam coils in dryer to improve heating effciency of
- Plan to replace boiler economiser to improve boiler efficiency.
- Plan to replace Boiler Super Heater.
c) IMPACT OF THE MEASURES AT (a) AND (b) ABOVE FOR REDUCTION OF ENERGY
CONSUMPTION AND CONSEQUENT IMPACT ON THE COST OF PRODUCTION OF GOODS.
The impact of measures proposed to be taken is expected to result in
savings to the company of nearly Rs.20 lacs per month in fuel costs, apart
from reduction in break-downs and continuity of production.
d) TOTAL ENERGY AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION IN RESPECT
OF CHEMICAL DIVISION AS PER FORM-A GIVEN HEREUNDER:-
FORM - A Current Year Previous Period
1st April 2009 to 1st October, 2007 to
31st March, 2010 31st March, 2009
(12 months) (18 months)
A. Power & Fuel Consumption
(a) Purchased Unit 18,10,993 29,32,258
Total Amount Rs.84,37,393/- Rs.1,35,36,504/-
Rate/Unit Rs.4.66 Rs.4.64
(b) Own Generation Through
Unit 7,13,660 12,67,945
Units per Ltr. of Diesel Oil 2.96 3.00
Cost/Unit Rs.10.70/Unit for Rs.10.63/Unit for
Diesel Cost only Diesel Cost only
2. Fuel Briquettes
Quantity (Tons) 71.380 68.860
Total Cost Rs.2,75,279/- Rs.2,66,021/-
Average Rate Rs.3,857/- PMT Rs.3,863/- PMT
3. Fire Wood
Quantity (Tons) 760.850 1317.570
Total Cost Rs.26,62,374 Rs.42,23,633/-
Average Rate Rs.3,499/- PMT Rs.3,206/- PMT
B. Consumption per
Unit of Production
PRODUCT STANDARD 1st April 2009 to 1st Oct.2007 to
(if any) 31st March 2010 31st March 2009
- DIRECT 24 Unit/T 22.40 Unit/T 21.57 Unit/T
- INDIRECT 38.22 Unit/T 33.28 Unit/T
PRESCOL GLUE LIQUID
- DIRECT 42 Unit/T 40.56 Unit/T 40.51 Unit/T
- INDIRECT 54.68 Unit/T 41.28 Unit/T
- DIRECT 808 Unit/T 755.46 Unit/T 747.37 Unit/T
- INDIRECT 215.82 Unit/T 146.55 Unit/T
LPG FOR THERMOPAC 77.65 Kg PMT 76.63 Kg PMT
Fuel for Steam - Difficult to assess productwise
Indirect electricity unit has been allocated on Turnover basis.
Variations in the electricity and other energy consumption figures are
within the acceptable norms of practical working.
B. TECHNOLOGY ABSORPTION:
FORM - B RESEARCH & DEVELOPMENT (R&D)
1. SPECIFIC AREAS IN WHICH R&D CARRIED OUT IN THE COMPANY:
i. Modification of process of manufacture of U.F. Moulding Powder to suit
specific requirement of customer. This has resulted in value development of
an import substitution product which the customer otherwise would have
imported, including supplies to a few reputed multinational customers.
ii. Developed process to use waste material and convert to meet specific
market demand for lower cost moulding powder.
iii. Process developed and commercialised for production of E-1/2 grade of
Prescol Resin to give lower free formaldehyde emission from M.D.F. Boards.
iv. New Generation energy efficient Drum Chipper installed for chipping.
v. New Air Pre Heater installed in boiler exit gas.
vi. Upgraded Oxygen analyzer installed in Boiler exit gas to monitor &
control boiler efficiency.
vii. Press hyd. Pumps replaced with higher capacity resulting in reduction
in pre-curing of boards.
viii. Forming line area humidified with in-house developed concept.
ix. Metallurgy of refiner stator segments modified, resulting in improved
fibre quality and longevity.
2. BENEFITS DERIVED AS A RESULT OF R&D WORK:
i. The use of cheaper raw materials has been facilitated because of the
installation of new generation drum chipper.
ii. Opened a new market segment which was being catered by imported
iii. Lower consumption of fuel due to better control of fuel gas
3. FUTURE PLAN OF ACTION:
i. Testing is on to introduce a new substrate filler for the moulding
powder to modify and improve in-mould behavior during transfer moulding and
ii. To develop plant for insitu purification of water in borewells.
4. EXPENDITURE ON R&D:
a) Capital : Rs. 1,43,657/-
b) Recurring : Rs. 49,99,331/-
c) Total : Rs. 51,42,968/-
d) The R&D Expenditure as a percentage of total turnover 0.71%.
TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:
1. During the current year no technology was negotiated.
2. Details of technology imported during the past 5 years Nil
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Total Foreign Exchange used and earned
Foreign Exchange used Rs.45,48,667/-
Foreign Exchange earned Rs.1,41,02,066/-
For and on behalf of the Board
Place: Faridabad Anil Kumra Arun Barar
Dated: 12.11.2010 Director Managing Director
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The company for last few years has had 4 business segments in its
portfolio:MDF panel boards, Thermoset resins & Moulding powders, Effluent
Treatment Plants / Projects and Environment Management Services.The
management has been constantly reviewing its business portfolio and looking
at growth issues in every business.
MEDIUM DENSITY FIBRE (NUWUD) BOARD DIVISION:
This business has been the main business of the company for nearly 2
decades but has suffered from 1st having to export 25% of its production
under industrial licensing conditions and there after since 1996 from
massive dumping from 5-6 countries where prices of inputs are far lower
than in India.
While NUWUD bacame a brand synonymous with quality of MDF in the country
but due to low realisations because of dumping prices, it suffered. As the
size of industry was small i.e. just 2 plants till very recently no relief
was forthcoming from GOI for this industry inspite of it being environment
friendly business. In recent years after advent of some more plants the
industry could move and get Anti Dumping Duty on import of MDF IN Oct
2009.This will help the industry to stabilise its operations in years
We have over last few years of massive losses due to our inability to
increase prices to take care of rising input costs of all raw materials
e.g. Wood, Agro fuels and petro based materials like wax, resins etc, not
been able to put sufficient money in to R&R of plant whereby our agro fired
power plant suffered and went in to major break down in July 2009. While we
could repair and restart the plant intermittently by early August 2009 our
fuel consumptions remained higher than normal. Further steps taken for
replacement of boiler parts have brought them in control in September 2010.
We are constrained due to shortage of working capital where efforts are
under way to inject fresh Working Capital to realise full potential of MDF.
We expect that with buoyant market conditions we will be able to put this
business to profitable path in near future.
Chemical division apart from Formaldehyde and Prescol Glue which are
internally consumed has Thermoset Moulding Powders used primarily in
Electrical Wiring Devices and Melamine tableware etc. In the last few
years, the company's volumes had been under threat from small scale
moulding powder manufacturers who are exempt from paying central excise
duty and consequently enjoy price advantage on company's product.This with
ongoing rationalisation of taxes and stricter enforcement should start
easing the pressure on us. The Electrical Wiring Devices has progressively
started seeing MNCs like Panasonic.Siemens etc coming in to this field
where quality of raw materials becomes the main criteria rather than price
alone and that should in years to come start giving our moulding powder an
edge as it is the only product in the country which is approved by BIS as
well as is produced in an ISO certified facility.This should start giving
us an advantage which combined with technical support to the customer by
the company in use of its product should result in increasing the
volumes.These factors should along with booming housing market in mid and
low value segments should further give a boost to company's off take in
near future.The company has also started marketing its products abroad
although in small volumes. During the past two years, the petroleum
products including those used by the company i.e. Methanol have seen wildly
fluctuating prices and in the year under review while the company could
pass on part of cost increases to market but still had to bear part of it
internally. The working capital needs of the division have to be further
strengthened to push for aggressive growth in its business volumes.
ENVIRONMENT MANAGEMENT SERVICES DIVISION:
Today, Global Warming and Green and pollution free environment have become
the buzz words in industry as well as commercial world and environmental
issues such as quality of air, water and ground pollution, waste recycling,
solid waste management, industrial and hazardous wastes have become the
front rank concerns of policy makers as well as industry and people in
general. This has thrown up several new business opportunities for us in
the area of testing, providing solutions to the problems. The company has
been alive to all such opportunities and has developed a business plan to
extend itself beyond testing and certification work of the traditional type
to Environment Impact Assessment and Consultancy.
These services will not only further strengthen the company's services
businesses, but also take it on to a path of growth in the areas of large
business opportunities in future. In line with its growth plans, it has
accreditation from National Accreditation Board for Testing and Calibration
Laboratories (NABL) and various pollution control boards at the state
These combined with plans to further upgrade the technology in this
business and market its services aggressively should help this business
grow as one of the fast growing businesses in the years to come.
ENVIRONMENT PROJECTS DIVISION: The company over the last 4-5 years has felt
that this business has the potential to become a major business of the
company and certainly as large as MDF if not larger. However, with slow
down of economy in 2008 & 2009, in view of this business needing increasing
amounts of money to stay afloat and grow, we had to take a decision to go
slow in this business and to use the available resources to ensure that the
other 2 businesses of the company with buoyant markets, where we already
have brand leadership, are better supported at this juncture to stablise
the company's margins. Meanwhile, we are in the process to complete the
ongoing projects and further course of action will be decided at
The operations have resulted in higher losses during the year under review.
The continuing sharp fluctuation in input cost of materials like Wood, Agro
fuels and Petroleum products i.e. Methanol/Wax had increased the pressure
on margins during the year under review . This combined with break down in
our power plant at MDF division resulted in reduction in production and
sales of that division.This resulted in large losses to not only MDF but
also to chemical operations, from where resin is sold to MDF, which could
not be done to the desired levels. The company in last few years had
settled the debt of most of the term lenders and had also made efforts to
do an OTS with Punjab & Sind Bank but could not do so as decision from the
bank was not forhcoming. We could finally get approval for OTS of their
debt in December'09 and have paid 75% of OTS amounts to them through
monetisation of a low yeilding asset of the company. The company is looking
at various avenues to raise further resources to not only pay off the
balance OTS dues of PSB but also to strengthen its working capital
INTERNAL CONTROL SYSTEM:
The Company ensures adequate internal control through manualised Policy &
Procedures to be followed by the executives at various levels in the
organisation. While operating managers ensure compliance within their
areas, internal audit carries out audit tests on the selected samples and
report non-compliance/weaknesses, if any, through internal audit reports of
the respective units/areas. These reports are reviewed by the management
and subsequently by the Audit Sub-Committee of the Board. With the
objective of improving the systems and removing bottlenecks, if any,
periodic systems review is carried out and Policies and Procedure Manuals
are continually being revised. The job of internal auditing remains
entrusted to M/s. Lodha & Co., a professional firm of Chartered
HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS:
In today's business environment, the human resource is the most important
resource in any company. The Management has always considered that our
employees are valuable assets of the organisation. The maximum attention is
being given for up-gradation of skills of people working in the company
including the technical, managerial/ personnel skills of people. Training
is the main focus area and continuous efforts are made to train the
empolyees on continuous basis.The employees at all levels, inspite of tough
times the company is passing through, have stood with the company and
efforts are constantly made to ensure their well being. Industrial
relations in our units have remained cordial during the year under review.
The company has total 551 employees on its roll as on 31.03.2010 as against
617 employees as on 31.03.2009.
SAFETY AND ENVIRONMENT PROTECTION:
Safety and health has always been on a priority agenda with the Company as
is evident from the past records.The safety trainings and refreshment
courses are conducted at regular intervals and the persons concerned with
Security and safety are sent outside to learn new techniques. Company has
been associated with the Haryana Safety Council since its inception. The
health of the employees is also a major concern for the Management,
qualified doctors and well equipped dispensaries find the place in all
divisions of the company to ensure regular health check-ups of employees at
all levels. The Company has been compliant of the environment protection
norms and all efforts are made to create an environment friendly atmosphere
in the company. Tree plantations are taken up in all units as a regular
feature. Systems for pollution control in all aspects i.e. Noise, water,
air are constantly monitored and upgraded as and when required.
Certain statements in the 'Management Discussion and Analysis Report' may
be 'Forward Looking Statements' within the meaning of applicable securities
laws or regulations. Many factors may affect the actual results, which
could be different from what the management envisages in term of future
performance and outlook.
Place: Faridabad (Arun Barar)
Dated: 12-11-2010 Managing Director