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Company director report

VISHAL EXPORTS OVERSEAS LIMITED ANNUAL REPORT 2008-2009 DIRECTORS' REPORT TO THE MEMBERS OF VISHAL EXPORTS OVERSEAS LIMITED Ahmedabad Your Directors are pleased to present the 15th Annual Report together with the audited accounts for the year ended 30th September, 2009. FINANCIAL RESULTS: (Rs. in Lacs) Particulars 2008-2009 2001-2008 (12 Months) (12 Months) Sales and Operating Income 491.22 2636.31 Other Income 36.95 104.51 Profit/(Loss) before Interest, (684.92) (1246.19) Depreciation and Tax Add:Previous Year FDR Interest 311.51 728.39 Less:Interest and Financial charges 159.79 304.72 Pepreciation and amortization 213.66 784.91 Previous year expenses 272.46 0.00 Profit/(Loss) before Tax (311.47) (1607.43) Less:Provision for taxation: (a) Current Tax 0.00 0.00 (b) Excess Provision of earlier year 0.00 0.00 (c) Fringe Benefit Tax 0.00 0.00 (d) Deferred Tax 0.00 0.00 Profit/(Loss) after Tax (311.47) (1607.43) Add:Surplus brought forward (6576.52) (4969.09) Balance carried to Balance Sheet (6887.99) (6576.52) THE PERIOD IN RETROSPECT: The members would appreciate that the company has not yet come out of the woods on account of many factors which collectively we have confronted. Notwithstanding this difficulty, the Board of Directors had been putting in its valiant efforts in order to rehabilitate company's business and bring it out of the present distress. The secured creditors' onslaught continued unabated during the year under report. Couple of secured creditor banks who had not filed recovery proceedings earlier also adopted the similar strangulating and hostile measures instead of rehabilitation. The efforts to find solution were defeated in the backdrop of fresh restriction placed by Courts/Tribunals. No meaningful business could have been undertaken under such restrictive regime which is reflected in quarterly results for the year under report. The secured creditors resorted, in addition to filing recovery proceedings, measures under Securitization Act, 2002 and liquidated some of the valuable hypothecated machinery and other assets resulting into substantial erosion of wealth which otherwise could have been protected if these assets were allowed to be sold in a businesslike negotiated manner instead of distressed auction sale. Company has taken assistance of legal counsel and the Board tried to protect interest of the company by filing appropriate Appeals before the Appellate Tribunal wherever advised by legal experts. We regret to report to the members that company could not avail of benefits of release of Rs.67 crores worth Duty Free Entitlement Certificates (DFECs) for more than 14 months on account of indifferent, unrealistic and hostile postures of consortium banks who did not issue NOC for utilization of these licenses on such suitable conditions needed for utilization and value realisation. On one hand the bankers liquidated valuable assets at throwaway prices under forced auction of assets and on the other hand did not permit other assets such as DEFCs to be utilized to create value. Under this backdrop, company was pushed from both sides by the secured creditor banks. After taking legal experts' advice, your company has instituted a damage suit against 23 consortium banks seeking compensation for negligence, wrongful actions, omission & commission, lack of duty of care and causing unlawful losses. The company's case would come up in due course and we are confident that justice would be done to the cause of the company. The Board of Directors has been steadfast in its approach in attempting for rebuilding the fortunes, with the possible assistance from its creditors, customers and the members alike, although at the moment, this task looks difficult. SALE OF IMMOVABLE PROPERTIES OF THE COMPANY: The company being categorized as non-performing asset by the various banks and accordingly the said various banks, have sold the assets which were charged to them, under Securitization Act 2002. The said banks have not provided the details of the assets sold, sale consideration etc. to the Company during the year and accordingly the company has not recorded the sale of such assets in the books of account. DIVIDEND: As the Company has incurred losses during the year, the Board regrets its inability to recommend and declare any dividend to be paid to the members of the Company for the year under review. SUBSIDIARY COMPANY & CONSOLIDATED FINANCIAL STATEMENT.: At present the Company does not have any subsidiary. FIXED DEPOSITS: The Company has neither accepted nor invited any deposit from public, within the meaning of Section 58A of the Companies Act, 1956 and the Rules made there under. INSURANCE: The Company's buildings, plant and machineries, stocks and other properties wherever necessary and to the extent required have been adequately insured. DIRECTORS: There is no change in the management of the Company during the year under review. In accordance with the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. Ashwinkumar B. Parikh, Director of the Company shall retire by rotation at the ensuing Annual General Meeting and being eligible offer himselves for re-appointment. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed: 1. That in the preparation of the annual accounts for the financial year ended 30th September, 2009, as far as possible and except the accounting standards mentioned by the auditors in their report as either NOT COMPLIED WITH or As PARTLY COMPLIED WITH, all other applicable accounting standards have been followed and no material departure have been made from the same during the year. 2. That the Directors have selected appropriate accounting polices and applied them consistently and made judgments 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 and of the profit or loss of the company for the year under review. 3. That the Directors have taken proper and sufficient care to the best of their knowledge and ability, 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; 4. That the Directors have prepared the annual accounts for the financial year ended 30th September, 2009 on a 'going concern' basis. AUDITORS AND AUDITORS' REPORT: M/s. H.J. Parikh & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, shall retire at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for appointment as Statutory Auditors of the Company for the financial year 2009-10. They have issued a certificate stating that their appointment, if made, would be within the prescribed limits under section 224(iB) of the Companies Act, 1956. The Audit Committee of the Board of Directors has recommended the appointment of M/s. H.J. Parikh & Co., Chartered Accountants, Ahmedabad, as Statutory Auditors of the Company for the financial year 2009-10. CLARIFICATIONS ON AUDITOR'S NOTES: (A) Regarding the written off debit/credit balances: The Board is of the opinion that it will not be able to recover dues from the parties whose account have been written off amounting to Rupees 312.96 Lacs. Necessary steps were taken before coming to this conclusion. (B) Other notes mentioned in auditors report are self-explanatory in nature. NON-COMPLIANCE OF SOME OF THE CLAUSES OF LISTING AGREEMENT: Due to crucial position of financial illness of the Company due to non- functioning of business activities and huge bloekage of fund with overseas buyers, your Company was not able to pay full payment of Annual Custodian Fees to NSDL and CDSL and hence both the custodians are not providing the benpos data to the Company and as a result, Company could not Comply some of the clauses of Listing Agreement. On fact of the above, National Stock Exchange (NSE) has suspended trading in equity shares of the Company. Board has taken all reasonable steps to revoke the said suspensions and start trading activities on NSE. The procedure is still in progress. RELATED PARTY TRANSACTIONS: The details of related party transactions are given in notes forming part of accounts. INDUSTRIAL RELATIONS: Harmony relationship with the Staff members, Bankers, Consultants, Shareholders/Investors and the various departments of the government have been maintained by the Company even if considerable lower volume of business activities of the Company. The Directors acknowledge and appreciate the determination and sincere efforts of all their employees. HUMAN RESOURCES: Your Directors wish to place on record their deep appreciation to employees at all levels for their all-round efforts, dedication, commitment and loyal services. PARTICULARS OF EMPLOYEES: There are no employees whose particulars are required to be disclosed in terms of provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1915 as amended from time to time. CORPORATE GOVERNANCE: Your Directors affirm their commitments to the Corporate Governance Standards prescribed by the Securities and Exchange Board of India (SEBI). A Report on Corporate Governance with Management and Discussion Analysis as required under the Clause 49 to Listing Agreement is appended herewith as a forming part of Annual Report of the Company. CEO/CFO CERTIFICATION: The Chairman & Managing Director has submitted a certificate to the Board regarding the financial statements and other matters as required under clause 49(V) of the Listing Agreement. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION FOREIGN EXCHANGE EARNMGS AND OUTGO: As your company is primarily engaged in the business of integrated Export, Import and related trading activities, it does not require any consumption of energy or absorption of technology, the additional information as required under the provisions contained in Section 217(1)(e) of the Companies Act, 1956 read with the companies (Disclosures of Particulars in the Report of Board of Directors) Rules 1988 with respect to conservation of energy and technology absorption is not required to be furnished. As a part of Companys expansion plan, the Company had set up various wind farms in India. The Company has generated electricity of 11657452 units during the year under review (P.Y. 31171280 units) through the wind farms. The total Foreign Exchange earnings on Export of goods stood at Rs. NIL crores (P.Y. NIL crores) and the Value of import on traded goods and other expenditure in foreign currency amounts to Rs. NIL crores (P.Y. NIL crores). MATERIAL CHANGES: Except the information given in this report. No material changes have taken place after completion of the financial year up to the date of this report which may have substantial effect on business and finances of the company and which are required to be disclosed in this Report. ACKNOWLEDGEMENT: The Board expresses its gratitude and appreciates the assistance and co- operation received from the Creditors, Banks, Government Authorities, Customers and Shareholders / Investors during the year under review. Your Directors also wish to place on record its deep sense of appreciation for the committed services of all the employees of the Company. For and on behalf of the Board of. Directors Place: Ahmedabad Pradeep S. Mehta Date : 29th January, 2010 Chairman & Managing Director MANAGEMENT DISCUSSION AND ANALYSIS REPORT (I) Industry Structure, Development and Performance.: Except the energy generation income from wind milts, there is no other activities of export/import business in the Company during the year under review. As explain in directors reports the company could not function due to crucial financial position of the company. Being the generation income and few trading transaction company could not do any business at all even if there is a positive movement in global industry after long recession period due to adverse financial position of the company. As far as the business of Power Generation, the Opportunities and Treats are stated below: (a) Generation of Electricity through Wind Turbine Generators (1) Opportunities & Threats: Looking to the demand of power/Electricity In India, the scope of power sector industries is very positive. As all the wind mitts of the Company are mortgaged with various banks/Financial Institutes and the legal proceeding is pending with various judicial authorities. And also the Company being in financial crunch has sold some of its winds milts to banks/financial institute which were mortgaged while some of the wind milts are functioning. (II) Internal Control systems and its adequacy: The Company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. The Audit Committee reviews periodically financial statement of the Company and comments of Internal Audit Department. Suggestions for improvement are considered and the Audit Committee follows up on the implementation of corrective actions. The Committee also meets the Statutory Auditors of the Company to ascertain, their views on the adequacy of internal control systems in the Company. (III) Financial Analysis: The company is facing a tremendous financial crisis due to huge funds being blocked with overseas buyers, piling up to export incentives receivable from the government and non-continuation of the business activities of the Company with the reasons of financial crisis in the Company. Profitability: The Company has incurred a loss to the tune of Rs. 311.47 Lacs as compared to previous year loss of Rs. 1607.43 tacs before interest, depreciation and tax. Cautionary Statement: As mentioned in the Directors' Report, the Company is still in financial crunch due to one or more reasons but your directors and Company are hopeful to bring the Company on right track and maintain confidence level of shareholders/investors.