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Patheja Forgings & Auto Parts Manufacturers Ltd.

BSE: 500326 Sector: Engineering
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Patheja Forgings & Auto Parts Manufacturers Ltd. (PATHEJAFOR) - Director Report

Company director report

PATHEJA FORGINGS & AUTO PARTS MANUFACTURING LIMITED DIRECTORS' REPORT THE MEMBERS OF PATHEJA FORGINGS AUTO PARTS MANUFACTURERS LIMITED Your Directors present the 29th Annual Report and the accounts for the period ended 30th September, 1997. Your Company has decided to change its Accounting Year from March 31st to September 30th. Consequently, the current accounts are prepared for a period of 18 months ( i.e. 1st April, 1996 to 30th September, 1997) as against 12 months for the previous year. Necessary approval for extension of the Accounting Year has been obtained from Registrar of Companies, Maharashtra. The Company had also obtained extension of time for holding the 29th Annual General Meeting from the Registrar of Companies, Maharashtra, upto 31st March, 1998. However, due to several constraints, the 29th Annual General Meeting could not be held before 31st March, 1998. 3. DIVIDEND: In view of the adverse financial results, the Directors regret their inability to recommend any dividend on Equity Shares or Preference Shares for the period ended 30th September, 1997. The Directors also regret that the dividend for 1995-96 could not be paid despite all the efforts, in view of the acute liquidity crunch faced by the Company owing to several factors explained below. 4. OPERATIONS: The Company undertook major expansion programmes in last three years in order to expand the existing business manifold and to bring the Company to the World Class standard by modernisation and technology upgrading. Major expansion programmes implemented/ started in last three years are as under: 1995-96 : Expansion of forging capacities at all sites. 1996-97 : Setting up of a Gear Box line - Total investment - Rs.301 Crores The expansion programmes were planned to be funded through internal accruals and term loans from Financial institutions and External Commercial Borrowings. Though the loans were sanctioned by various financial institutions, there was delay in release of the loans for more than a year, which affected the implementation and project viability adversely. However the Company pursued repaid implementation of the projects and the requirements of funds for the projects was temporarily met out of internal generations, affecting working capital and necessitating tapping of short term high cost sources such as lease, hire purchase, bill discounting and intercorporate deposits. Further, to add to the woes of the Company, there was delay in assessment and release of working capital requirements compounding the Company's already overstretched finances. Since last one year, as you may be aware, there has been general slow down in the automobile industry, which has resulted in pile - up of inventories sod blocking of the debtors. On export front, the Company adopted a very aggressive attitude, which resulted in spectacular growth in exports. However, the realisation of export dues was delayed inordinately due to change in the design by the export customers. The overdue export receivables of Rs.33 crores added fuel to the fire. Under the cu-circumstances, as the loss suffered by the Company has completely eroded the net worth of the Company, the Company has become a Sick Company within the meaning of Sick lndustrial Companies (Special Provisions) Act, 1985. Accordingly, as required under the said Act, the Company will be making a reference to the Board for Industrial Financial Reconstruction, in order to determine the measures to be adopted with respect to the Company. 5. PUBLIC DEPOSITS: As on 30th September, 1997 there were no overdue and unclaimed deposits except one deposit of Rs. 2,00,00,000/- which matured on 24th June, 1997 but remained unpaid. The said deposit due to the reasons explained above is said not paid. 6. PARTICULARS OF EMPLOYEES: The particulars of employees as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies ( Particulars of Employees ) Rules, 1975, as amended, are annexed hereto. 7. DIRECTORS: Mr. M. Sudhendranath, has been nominated on the Board with effect from 3rd December, 1997 as Nominee of The Industrial Credit Investment Corporation of India Limited (ICICI), in addition to Mr, C. L. Ghalsasi. During the period under review, SICOM withdrew the nomination of their Nominee Director, Mr. N.H. Bhatter, from the Board of our Company and Consequent thereto, Mt Bhatter, relinquished ms office as Director of the Company. Mr.N.G. Shahane, Director retires by rotation and, being eligible offers himself for re-appointment. 8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO The details as required under the Companies ( Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 arc annexed. AUDITORS: M/s. Nanda 8 Co., the retiring Auditors of the Company, being eligible are proposed to be reappointed. The observations made by the Auditors in their report have been adequately dealtwith under Notes forming part of Accounts which are self-explanatory. ACKNOWLEDGEMENT: The Directors place on record their appreciation and acknowledge with gradtitude the support and co-operation extended the Company's Bankers, Financial Institutions, Shareholders, Customers and Employees at all levels and look forward to their continued support and co-operation. On behalf of the Board of Directors Man Singh Patheja Chairman Place : Pune Date : 25th October, 1998 ANNEXURE I TECHNOLOGY ABSORPTION Areas in which R & D was carried out: 1. Development of new products/processes. 2. Improvement in man/machine productivity 3. Deputation of technical personnel for training The Company pursues its R & D efforts as a continuing programme in keeping with latest developments from time to time. Expenditure on R & D (a) Capital : Nil (b) Recurring : 2.15 lacs (c) Total : 2.15 lacs (d) Total R & D expenditure as a percentage of total turnover : 0.0052% The aforesaid expenditure represents what is directly attributable to R D. Other incidental expenses have been reflected under appropriate heads 11 FOREIGN EXCHANGE EARNINGS AND OUTGO In keeping with the Company's constant thrust on exports, the Company is slowly and steadily expanding the export horizon. Total foreign exchange used and earned: USED : Rs. 762.96 Lacs EARNED : Rs. 4649.19 Lacs On behalf of the Board of Directors Man Singh Patheja Chairman Pune 25th October, 1998.