VISHWAS STEELS LIMITED
ANNUAL REPORT 1999-2000
To the Members of Vishwas Steels Limited.
Your Directors present the Tenth Annual Report of your Company together
with the Audited Statement of Accounts for the financial year ended 30
The company has incurred losses during the period under review. The
following are the main reasons.
A. Increase in the key input cost without corresponding increase in the
selling price of finished goods.
B. Due to the liberalised steel import policy and dumping of steel from CIS
Countries at very low rates, these products were available in the market at
prices lower than the Company's cost of production. Also the Company had no
leverage to increase selling prices due to wHich there was a negative
C. The operations of the Rolling Mill Division at Goa commenced in January,
2000. However, on account of a number of unforeseen and uncontrollable
problems such as realignment of the mill, sinking of foundation etc. the
plant could not operate continuously on a commercial basis thereafter. This
problem was further accentuated by a general slowdown in the steel sector,
fall in price realisation of finished goods, erratic supply of power
leading to higher wastage and production losses. On account of these
factors integrated operations at Goa could not be stabilised to date. The
result of these happenings had an adverse cascading impact on the
operations leading to the Company making substantial losses in the
subsequent nine months beginning from January, 2000 to September,2000.
D. The Company could not fully tie-up the working capital limits for more
than a year and the delay in commissioning of the Rolling Mill had a
cascading impact on the operations of the Company.
E. Due to non-viable operations at Tarapur on account of higher power
tariff, the operation of the plant has been temporarily suspended since
F. Due to the stay granted by the Goa bench of Bombay High Court, the
Company was not able to get the required sanctioned load of power hence,
the Company had to operate on the low-capacity utilisation at Goa plant.
Consequently, the Company was not able to recover its fixed overheads
resulting in the losses.
In order to revive operations and restore the viability of the units, the
Company plans to initiate the following steps.
a) A complete restructuring of both long term and short term debt, which
would involve extension of moratorium and reschedulement of principal
repayments, relief in accrued interest and reduction in rates in future for
long term borrowings, alongwith reassessment of working capital
requirements and restructuring of outstanding limits.
b) To consider Export of steel products from Goa Unit. The export would be
made of value-added Rolled Products mainly to the Middle East region where
a large demand has been noticed.
c) The Company is also exploring possibilities to reduce input costs,
increase price realisations and volumes and derive benefits of economies of
The Company has launched its portal viz. emetalinfo.com on 21st July,
2000. The same is hosted on Internt.
REFERENCE TO BIER
In view of the losses at the end of the financial year 1999-2005 which has
exceeded the entire net worth of the Company, the Board of Directors has
decided to make a reference to the Board for Industrial and Financial
Reconstruction (BIFR) under Section 15(1) of the Sick Industrial Companies
(Special Provisions) Act, 1985 for determination of the measures which
shall be adopted with respect to the Company.
EXTENSION OF FINANCIAL YEAR
The financial year of the Company has been extended upto 30th September,
2000 to comprise a period of 15 months i.e. from 1st July, 1999 to 30th
The Company has allotted on 5th January, 2000 52,71,800 Equity Shares of
Rs. 10/- each for cash at the premium of Rs. 18/- per share on preferential
basis to the Promoters, Associates / Bodies Corporate as per the
shareholders approval obtained at the Annual General Meeting of the Company
held on 7th December, 1999
During the year under review, the following Directors viz. Shri Chndra
Mohan, Shri Subhash Patil, Shri D. N. Davar, Shri P. G. Kakodkar and Shri
Noel Jacob resigned from the Board. The Board places on record its sincere
appreciation of the valuable guidance and assistance rendered by them
during their association with the Company.
Shri Punit Chadha will retire by rotation at the forthcoming Annual General
Meeting and being eligible, offers himself for re-appointment.
With reference to the observation made by the Auditors in their report, the
Directors wish to state as under:
1. The Company has maintained records showing full particulars of fixed
assets, which are pending for updating, specially for assets at Goa
factory. We have been informed that these records are being updated. As
informed to us. the physical verification of these assets was carried out
by Management during the period and reconciliation between book records and
physical inventory s in progress, discrepancies if any will be dealt with
suitably as and when ascertained.
The records for fixed assets are in the process of being updated and the
same shall be completed soon. As soon as the same are updated, the
Statutory Auditors will be intimated accordingly.
2. On the basis of our examination of stock records, except for stores and
spares we are of the opinion that the valuation of stocks is fair and
proper and in accordance with the normally accepted accounting principles
and is on the same basis as in the preceding year.
Upto last year, the Company has maintained the records for accounting of
stores and spares on manual basis. However, for the period under review,
the Company has changed the system of maintaining records from manual to
computerised which is under implementation stage. The entire process is
expected to be implemented within a month's time and after completion of
the same, the statutory auditors will be intimated accordingly.
3. In our opinion the Internal Audit System is generally commensurate with
the size of the Company and the nature of its business. However, it needs
to be further strengthened.
Internal Audit function in the Company is being strengthened by outsourcing
to professional audit firms. Periodicity and coverage is ensured as
prescribed in the Internal Audit Manual of the Company. In addition,
specific suggestion by Auditors with reference to periodicity and coverage
are kept in view while formulating annual audit programmes.
4. The Company has not maintained records as prescribed under Section 209
(1) (d), of the Companies Act, 1956 for the period.
The Company has already short-listed a few Cost Accountants for maintenance
of cost accounting record3 and the same will be finalised very soon. As
soon as the records will be completed, the same shall be presented to the
Auditors for their observations. The Company is hopeful of completing the
said records within the next two months.
M/s. P. V. Page 8 Company, Chartered Accountants, Auditors of the Company
retire at the ensuing Annual General Meeting of the Company and being
eligible, offer themselves for re-appointment.
PARTICULARS OF EMPLOYEES
Information as per Section 217 (2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules,1975 is given in Annexure I
and forms part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
Information pursuant to Section 217 (1)(e) of the Companies Act, 1956, read
with the Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1g88 relating to the Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II
forming part of this Report.
Your Directors wish to place on record their appreciation of the continued
support and co-operation received from Financial Institutions, Bankers,
Customers, Suppliers and Shareholders. Your Directors place on record their
appreciation for the services rendered by Employees at all levels.
For and on behalf of the Board of Directors
Place: Mumbai N. S. PARULEKAR
Date : November 8,2000 Chairman
ANNEXURE I TO THE DIRECTORS' REPORT
Particulars under Companies (Disclosures of particulars in the Report of
Board of Directors) Rules, 1988.
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken
i) Energy conservation is aimed at by adopting innovative measures to
reduce wastage and optimise consumption.
ii) Continuation of measures taken in earlier years.
b) Additional Investments and proposals, if any, being implemented for
reduction of consumption of energy.
There is no proposal at the moment for any additional investment but the
Company is scanning opportunities for taking advantage of any new
technology that may be available.
c) Impact of the measures at (a) and (b) above for reduction in energy
consumption and consequent impact on the cost of production of goods.
The Company could not effectively implement the above measures mainly on
account of erratic supply of power coupled with production bottlenecks in
Goa. However, in Tarapur the same was implemented effectively only upto
June, 2000 subsequent to which operations were temporarily discontinued on
aCcount of non-viable operations. Also, it would be difficult to actually
quantify the positive impact of these measures at Tarapur since there has
been a progressive hike' in power tariff.
d) Total energy consumption and energy consumption per unit of production.
The information required is given in the prescribed Form 'A'.
B. TECHNOLOGY ABSORPTION
Efforts made in Technology Absorption
The required information is given in the prescribed Form 'B'.
For and on behalf of the Board of Directors
Place: Mumbai N. S. PARULEKAR
Date : November 8,2000 Chairman
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION
1. Areas of R & D
The Company has continuously strived to upgrade the production methods and
to employ the latest techniques available.
2. Benefits Derived
In the past, the Company has experienced a positive impact on its
production. However, over the past 9 months it may be reasonable to infer
that not much benefit could accrue to the Company due to the operations
being run at below normal capacity and specifically continued operational
problems at Goa.
3. Technology Absorption and Innovation
1. Efforts made
With the aid of sophisticated instruments and modern technology, efforts
have been continuously made to improve the quality of the finished goods.
II. Benefits derived as a result of the above efforts
Mainly due to operational and other related problems experienced by the
Company not much benefit could derived by the above measures.
III. Particulars of technologies Imported during the last 5 years
No technology has been imported by the Company during the last 5 years.