SATGURU AGRO INDUSTRIES LTD
Your Directors have pleasure in presenting the 23rd Annual Report along
with the audited accounts of the Company for the year ended 30th September,
1. FINANCIAL PERFORMANCE:
The financial performance of the Company for the year under report is as
Total Income 2020.31 7181.89
Profit/(Loss) before interest
and depreciation (560.20) 659.59
Interest 1032.31 913.01
Depreciation 274.04 315.77
Profit/(Loss) for the year (1866.55) (569.19)
Provision for Deferred Tax 495.56 --
Profit/(Loss) after Taxation (1370.99) (569.19)
Due to loss during the year, your Directors do not recommend any dividend
for the period under review.
Since the accounts for the previous financial year (FY 2001-02) was
prepared for a period of 18 months and the current year (FY 2002-03)
accounts are for 12 months, the figures of the current year are not
comparable with that of previous period.
The plant of the company was shut for a period of 4 months till
January,2003 during the current financial year. The promoters have infused
Rs.400 lacs as equity and restarted the plant. Due to the working capital
constraints, the plant was running at a capacity of 45% annualized.
The turnover of the company for the year was lower at Rs.2020.31 lacs as
compared to annualized turnover of Rs.4787.92 lacs (Rs.7181.89 lacs) for
the period ended 30.9.2002. The company has incurred loss of Rs.1866.55
lacs during the year as compared to loss of Rs.569.19 lass for the year
The main reasons for losses were:
a) Lower turnover due to shut down of plant for a period of 4 months and
lower capacity utilization thereafter.
b) Lower average sales realization and lower margin on Newsprint.
c) Higher raw materials consumption due to usage of non-conventional grades
of waste paper due to working capital constraints coupled with continued
higher international prices of raw materials, payment of detention &
demurrage charges and auction of materials by port authorities.
d) Payment of minimum demand charges to MSEB even during shut down of
e) Use of high cost coal as fuel in place of bagasse due to funds
f) Higher interest cost.
4. DEBT RESTRUCTURING & FUNDING FOR FORWARD INTEGRATION PROJECT:
As reported earlier, the company has submitted debt restructuring and fresh
funding proposal, for forward integration project to manufacture multi-wall
paper bags, to the consortium bankers in August,2002. The consortium
bankers appointed M/s. Bhide Associates, consultant for conducting Techno
Economic Viability (TEV) study of the company. The report was submitted to
the bankers in the month of January,2003.
The findings of this study found the unit to be viable after implementation
of Multi-wall Paper Sack Project and it could be rehabilitated with
infusion of funds and restructuring. Based on this report the banks decided
to go ahead to restructure the debts and sanction fresh loans during the
consortium meeting held on 5h March' 2003. The lead Bank of the consortium
had already sanctioned their share of the loan and restructuring of debts
in the month of March, 2003. The two co-operative banks in the consortium
had also restructured their debts and issued sanction letters to that
effect. The sanctions from Central Bank of India and Bank of India were
Meanwhile, as per the stipulation laid by the bankers, the promoters were
required to bring contribution of Rs.400 lacs. The promoters brought in
this fund in the form of equity and restarted operations from 24th
During the consortium meeting held in the month of October,2003, the
consortium bankers decided to refer the case to the Corporate Debt
Restructuring (CDR) cell formed by RBI. The company submitted proposal in
December,2003 and case was taken up for hearing in January,2004. During the
CDR meeting, due to lack of consensus amongst the bankers, the case had to
The company is in the process of working out alternative options to
complete the forward integration project and strengthening working capital
position by infusion of equity from private sources/ funding from
5. REFERENCE TO BIFR:
Based on the opinion obtained from the statutory auditors of the company,
the net worth of the company as on 30.9.2003 is fully eroded. The company
has to make mandatory reference to BIFR as per Section 15 of the Sick
Industrial Companies (Special Provisions) Act. 1985.
In accordance with the provisions of Article 65 of the Article of
Association of the company, Mr.Ramkumar Sunkara, will retire by rotation at
the forthcoming Annual General Meeting, and being eligible, offer himself
M/s I.V.Shah & Co., Chartered Accountants, Auditors of the Company retire
at the conclusion of the ensuing Annual General Meeting and are eligible
for re-appointment. The Members are requested to appoint the Auditors and
fix their remuneration. As regards remarks in the Auditors' Report, the
notes, wherever referred to, are self-explanatory.
As required by the provisions of Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, as
amended, the name and other particulars of the employees are set out in the
Annexure to the Directors' Report. However as per the provisions of Section
219 (1) (b) (iv) of the Companies Act, 1956, the report and the accounts
are being sent to all the shareholders of the Company excluding the
aforesaid information. Any shareholder interested in obtaining such
particulars may write to the General Manager (Finance) at the Registered
Office of the Company.
7. INFORMATION UNDER SECTION 217 (1)(e)
7.1 Conservation of Energy:
With a view to conserve the energy and resources, your company continues
take all the possible measures and has accordingly formed a team of experts
to study requirements of power, fuel, energy and natural resources and
consumption thereof and suggest methods by which the same can be saved.
Based on the feedback and suggestions received from the team, the
management has taken following steps, illustratively, as a part of
continuous efforts to reduce and save energy:
a) Time and Motion study of production activity.
b) Improved House-keeping
c) Awareness in the employees for conservation of energy
d) Optimum use of Natural Resources
7.2 Technology Absorption:
No new technology has been absorbed during the year.
7.3 Foreign Exchange Earnings and Out-go:
Particulars of Foreign Exchange Earnings and Out-go have been given in Note
No. 14 & 15 in Schedule S to the Accounts.
8. Directors' Responsibility Statement in terms of Section 217(2AA) of the
Companies Act, 1956
Your Directors have:
a. followed in the preparation of the annual accounts, the applicable
accounting standards with proper explanation relating to material
b. selected such accounting policies and applied them consistently and made
judgements and estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of your Company at the end of
the financial year and of the loss of your Company for that period.
c. taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956 for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
d. prepared the annual accounts on a going concern basis.
The Directors wish to thank various Government Departments and the
Company's Bankers for all the help they extended to the Company. Your
Directors also deeply acknowledge the continued trust and confidence that
our customers and suppliers have placed in this Company. The Directors also
wish to place on record their deep appreciation for the services rendered
by the Officers, Staff and workers of the Company at all levels and for
their dedication and loyalty.