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Shree Vindhya Paper Mills Ltd.

BSE: 502452 Sector: Industrials
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Shree Vindhya Paper Mills Ltd. (SHRVINDPPR) - Director Report

Company director report

SHREE VINDHYA PAPER MILLS LIMITED ANNUAL REPORT 2004-2005 DIRECTOR'S REPORT Dear Shareholders, Your directors present the 40th Annual Report and the audited statement of accounts for the year ended 31st March 2005. Your directors regret that the Annual General Meeting of the company for the year ended 31st March 2005 could not be held in time due to reasons beyond their control and the company has obtained extension from the Registrar of Companies, Maharashtra for holding this Annual General Meeting by 31st December, 2005. 1. PAPER INDUSTRY SCENARIO: The outcome of the utilization of (Education Cess by the Govt. was manifested in the buoyancy in the domestic demand for paper. During the calendar year 2005, there have been a series of price increases and the market continued to remain balanced even during the off- season period. This suggests that with the approaching season, prices will continue to rise in their near term. The longer-term outlook also appears favourable considering that capacity creation will lag demand growth by a wide margin. This is because the paper industry continues to be unattractive for green field projects given its capital-intensive nature with a long gestation period apart from other infra-structural constraints. As such, the augmented supply will come only from the brown field expansions and the existing integrated pulp and paper mills, like your company, will reap the maximum benefit in this Situation. 2. PERFORMANCE AND FINANCIAL RESTRUCTURING: As mentioned last year, trial production commenced in October/November 2004 and your company's operations continued to go from strength-to-strength with every succeeding month. Near rated capacity has already been achieved on PM-III and the quality has been well received in the market with the result that your company has already re-established its pre-eminence in the market for OTC Carbonizing Base Tissue. Most significantly, this has been achieved without any cost of water for which your company bears a very heavy tariff, as your company generated water from its own sources. The saving is substantial and of an enduring nature. As you are aware, energy constitutes the highest component in the cost of production and your company is now seized of another major initiative in the use of bio-fuel for the steam boilers. The re-worked restructuring package was duly approved under the CDR scheme envisaging inter alia a further reduction in the rate of interest, rephasement of repayment period and change in zero date. Needless to mention, this was predicated upon substantial additional commitments on the part of the promoters, which was readily agreed to, although the delay was not due to any non-fulfillment of any obligation on their part The balance working capital is expected to be released shortly and, in anticipation, active steps are being taken towards the re-opening of the other sections of the plant. 3. Working Results: Current Year Previous Year (Rs. in lacs) (2004-2005) (2003-2004) Sales and other income 249.26 (0.95) Gross Profit/(Loss) 1532.55 (1357.82) Add: excess liability written back, pertaining to previous year 0.58 Depreciation 372.13 375.57 Net Profit/(Loss) (1904.68) (1732.81) Add: Surplus brought forward from previous yrs. (8537.01) (6804.20) Surplus available for appropriation (10441.70) (8537.01) Balance carried forward in profit & Loss Account (10441.70) (8537.01) 4. Dividend: In view of the losses, the balance Dividend of 3.5% on the preference shares is once again carried forward, would be paid to the share holders when permitted under the law. In view of the losses, your directors do not recommend any dividend on the equity shares of the company for the year under review. 5. Subsidiary company: As required under Section 212 of the Companies Act, 1956, the audited accounts and other particulars of the company's subsidiary for the year ended 31st March 2005, are attached: 6. Industrial Relations: The relations with the staff and workers continue to be cordial. An agreement was signed between the company and the workers' Union incorporating all the terms and submitted to the Labor Commissioner's Office at Jalgaon. Due to the reasons mentioned above, certain changes have become concomitant, but the broad parameters of the agreement have followed in re-employment. 7. Directors: Shri R.K. Mishra and Shri Shekhar Somani directors of the company, retire by rotation and being eligible offer themselves for reappointment. Necessary resolutions for their reappointment are placed before the shareholders. 8. Auditors: It is proposed to appoint M/s Khandelwal Jain & Co., Chartered Accountants, Mumbai, auditors of the Company from the conclusion of the forthcoming annual general meeting of the company until the conclusion of the next annual general meeting. The members are requested to appoint the auditors and and to authorize the board to fix their remuneration. The observations made in the Auditors report read together with relevant notes are self explanatory and therefore do not call for further comments under Section 217 of the Companies Act, 1956. 9. Public Deposits: There were unclaimed deposits amounting to Rs.6,000/- at the close of the year. Since then no deposits have been repaid/renewed. Necessary reminders have been sent to the depositors for the same. 10. Energy conservation: Statement giving details as required under Section 217(i)(e) of the companies Act, 1956, are given in the Annexure `A' attached hereto. 11 Particulars of Employees: Since the remuneration paid to none of the employees exceed the limit prescribed under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, no particulars are required to be furnished in this report. 12. 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 confirmed: (i) That in the preparation of the annual accounts for the financial year ended 31st March 2005, the applicable accounting standards had been followed along with proper explanation relating to material departures: (ii) That the directors had selected such accounting policies and applied them consistently and made judgements and estimated that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year under review, (iii) That the directors had 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 the company and for preventing and detecting fraud and other irregularities. (iv) That the directors had prepared the accounts for the financial year ended 31st March 2005 on a 'going concern' basis. 13. Corporate Governance: Pursuant to Clause 49 of the Listing Agreement with the stock exchanges, a Corporate Governance Report is made as part of this Annual Report. A Certificate from the Auditors of the company regarding compliance of the conditions of Corporate Governance as stipulated by clause 49 of the Listing Agreement is attached to this report. Report on Management Discussion and Analysis is also made as a part of Directors Report. 14. Appreciation: Your company is deeply grateful to the SASF, Industrial Development Bank of India, Corporate Debt Restructuring (CDR) Cell & other financial institutions & Bank of India and other banks for the consideration shown by them of the overall adverse circumstances and to the executives, staff, workmen, creditors dealers and distributors of the company for their continued cooperation and support. By Order of the Board, N.K. Somani Chairman & Managing Director Place: Mumbai Date : 26th October, 2005. ANNEXURE TO DIRECTOR'S REPORT A. Information as required under Section 217(1)(e) of the Companies Act, 1956. CONVERSION OF ENERGY 1. Measures Taken: a. Complete package is prepared to implement waste conservation & consequently energy conservation to achieve 75% reduction in water consumption from four cusec to one cusec per day. 2. Power & Fuel Consumption: Current Year Previous Year 1. Electricity : a) Purchased Units (in 000 KWH) - - Total Amount (Rs. in lass) - - Rate/Unit (Rs.) - - b) Own Generation: i) Through Diesel Generator Units (in 000 KWH) 1611 - Units/Ltr. of LDO 3.54 - Cost/Unit (Rs.) 6.67 - (ii) Through Steam Turbine / Generators (Back Pressure) - - Units (in 000 KWH) - - Cost/Unit (Rs.) - - 2. Coal: Quantity (in MT) 1007 - Total cost (Rs. In Lacs) 30.20 - Average rate/Tonne (Rs.) 2,999 - 3. Furnace Oil: Quantity (in Ltrs.) - - Total cost (Rs. in Lacs) - - Average rate/ KL (Rs.) - - 3. Consumption per unit of production Writing & Printing Paper - - Electricity KWH/MT 2594 - Furnace Oil Ltr/MT - - Coal - MT/MT 1.62 - (Total production 621 MT) Note: The company manufactures a wide range of products and the consumption of energy will vary significantly depending upon product - mix. RESEARCH & DEVELOPMENT: 1. Area of R & D: Oxidation Reduction Bleaching trials taken to improve brightness & strength of pulp and prevent reversion. 2. Benefits: Increasing brightness by 5/6 degree ISO in the final product which will result in improved sales realization and easier marketability coupled with reduced furnish cost. 3. Future Plan: (i) Development of secondary fibre processing capability. (ii) Increasing black liquor concentration into the evaporators 4. Expenditure on R & D: (i) Capital : NIL (ii) Recurring : 91,69,663/- TECHNOLOGY ABSORPTION, ADOPTION & INNOVATION: Improvement in the relevant quality parameters can be achieved as a result of R & D. FOREIGN EXCHANGE EARNINGS & OUTGO: 1. Total foreign exchange earning : NIL 2. Total foreign exchange used : Rs.6,573,694 B. INFORMATION AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956: NONE. C. INDUSTRY STRUCTURE & DEVELOPMENTS: 1. OVERVIEW: The paper market is reported to exhibit buoyancy, and the company expects sound off-take. 2. OUTLOOK: The company is engaged in writing and printing paper. To overcome the competition, the company will regularly develop new products and maintain improvement in quality after commencement. 3. OPPORTUNITIES: It is expected that the paper industry will grow and your company will reap the opportunities coming, along with the growth. 4. THREATS: Unhealthy competition in the writing and printing paper industry will yield lower realization affecting the company's profitability. 5. SEGMENT WISE PERFORMANCE: Since your company is engaged only in manufacture of paper, therefore, AS-17 issued by ICAI is not applicable. 6. INTERNAL CONTROL SYSTEM & THEIR ADEQUACY: The company has adequate internal control procedure commensurate with its size and nature of business. The company's management reviews the internal control system to ensure efficient conduct of business. 7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: Implementation of Financial Restructuring Package as approved under CDR is in progress. 8. MATERIAL DEVELOPMENT IN HR/IR FRONT: The company is always maintaining cordial relation with the staff & workmen. 9. CAUTIONARY STATEMENT: Statements in the Management Discussion & Analysis may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied in the statement. By Order of the Board, Place: Mumbai N.K. SOMANI Date : 26th October, 2005 Chairman & Managing Director