Dear Members Your Directors are pleased to present the 17th Annual Report on the performance of your company during period ended as on 31st March 2008 along with the Audited statement of Accounts add Auditors Report for the reporting period. FINANCIAL RESULTS The financial results pertain to the period commencing from 1st January 2007 to 31st March 2008 thus covering a period of fifteen months. The board of directors in their meeting held on 3lst October 2007 has decided to adopt the financial year as working period of the company from the period beginning frorn 01st April 2008 onwards. OPERATIONAL REVIEW & FUTURE PROSPECTS During the fifteen months period under review, the production of cotton yarn was 1977.60 MT and production of Polyester Staple Fiber (PSF) was 41.65 MT.The company achieved a total turnover of Rs. 1950.89 lakh.The company has also earned other income to the tune of Rs. 6.00 Lakh which includes interest on security deposit with M.P. State Electricity Board of Rs. 4.99 Lakh. Due to deteriorated financial position of the company which led to the shortage of raw material and other factors the production of the company remained stopped for a period of three months. The management of the company once again managed to get the plant operational by infusing some liquidity and also getting some support from the raw material suppliers. However the ever increasing pressure of the secured lender for the repayment of their dues coupled with the company's poor financial position ultimately forced IFCI Ltd,one of the main secured lender while acting under SARFAESI Act to take over the physical possession of the factory of the company situated at 25-B, Malanpur Industrial Area, Malanpur, Distt. Bhind, Gwalior, M.P vide Panchnama dated 13th March 2008. DIRECTORS During the year Mr. Ashwani Dewan resigned from the post of managing director as well as director on 26th February 2008. Mr.Neeraj Jain, Non-Executive Independent Director has resigned from the post of directorship of the company on 26th February 2008. Mr. Mahendra Sharma who was appointed as an additional director in the meeting of the Board of Directors held on 26th April 2007; ceased to be the director as per the provisions of Section 260 of the Act since he was not reappointed in the previous AGM held on 30th June 2007. We hereby acknowledge the valuable contribution made by Mr. Ashwani Dewan, Mr. Neeraj Jain and Mr. Mahendra Sharma during their tenure on the Board. Mr. Laxman Prasad Kashyap was appointed as an additional director w.e.f 17th December 2007. As per the provisions of Section 260 of the Companies Act, his term of office expires at the ensuing AGM. The company has received a notice under Section 257 of the Companies Act, 1956 proposing the candidature of Mr. Laxman Prasad Kashyap for the post of director of the company. The relevant item for the appointment of Mr. Laxman Prasad Kashyap as a director of the company is made part of the notice of the ensuing Annual General Meeting of the company. Mr. Sanjay Nalthani was appointed as an additional director w.e.f 17th December 2007. As per the provisions of Section 260 of the Companies Act, his term of office expires at the ensuing AGM. The company has received a notice under Section 257 of the Companies Act, 1956 proposing the candidature of Mr. Sanjay Naithani for the post of director of the company. The relevant item for the appointment of Mr. Sanjay Naithani as a director of the company is made part of the notice of the ensuing Annual Genera) Meeting of the company. Mr. Harshmnai was appointed as director of the company at the previous annual general meeting held on 30th June 2007. Mr. Harshmani Pant, director of the company retires by rotation and being eligible offers himself for the reappointment. The relevant item for the appointment of Mr. Harshmani Pant as a director of the company is made part of the notice of the ensuing Annual General Meeting of the company. The company has posted its requirement for the induction of an Independent director on the Board of the company on the website "Primedirectors.com " developed by SEBI DIVIDEND Your Directors are not in a position to recommend the payment of dividend for the year under report due to the accumufated losses in the company. CORPORATE GOVERNANCE The company has made a conscious effort to institutionalize Corporate Governance practices and we believe that It shall go beyond adherence to the regulatory framework. Our corporate structure, business and disclosure practices have been aligned to our Corporate Governance Philosophy. Your company always look forward to follow the best corporate governance policies that ensure enhancement of shareholders value, association of the customers, support from the sujjpjiere and adherence to all the regulatory requirements A comprehensive report on Corporate Governance is attached to this report. The certificate of the Statutory Auditors in line with clause 49 of the stock exchange Listing Agreement supports our claim. This certificate is annexed to and forms part of the Director's Report. MANAGEMENT DISCUSSION AND ANALYSIS As required under clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis forms part of this report and is annexed herewith. AUDITORS M/s Deepak Gulati SAssociates, Chartered Accountants, New Delhi, the Statutory Auditors of the Company holds office until the conclusion of the ensuing Annual General Meeting and they have expressed their inability to continue as trie statutory auditor of the company. The company proposes the name of M/s Amit Krishna Agrawal & Co., Chartered Accountants, Hathras to act as the statutory auditor of the company. The relevant item for the appointment of M/s Amit Krishna Agrawal & Co, Chartered Accountants, Hathras as a statutory auditor of the company is made part of the notice of the ensuing Annual General Meeting of the company. The Company has received a certificate u/s 224 (1B) of the Companies Act, 1956 from M/s Amit Krishna Agrawal & Co, Chartered Accountants to the effect that their appointment as Statutory Auditors of the company, if made, will be well within the limits as prescribed. AUDIT COMMITTEE The Audit Committee comprises of Mr. Sanjay Naithani, Independent Non-Executive director to be the Chairman and the two members being Mr. Harshmani Pant (Professional Non-Executive director) and Mr. L. P. Kashyap (Professional Executive director). The company has posted its requirement for the induction of an independent director on the Board of the company. All the members of the Audit Committee are qualified and having insight to interpret and understand financial statements. During the year, the Audit Committee of the company has been reconstituted after the appointment of Mr. Harshmani Pant as director in the Board meeting held on 05th July 2007 and again reconstituted consequent to the resignation of Mr. Neeraj Jain & Mr.Ashwani Dewan and appointment of Mr. Sanjay Naithani ahd Mr. L.P.Kashyap in the Board meeting held on 26th February 2008 and Mr. Sanjay Naithani & Mr. L.P.Kashyap were inducted as members of the committee. AUDITORS'REPORT Your directors are pleased to provide the explanation in respect of the points raised and qualified by the auditor in their audit report as presented to the shareholders The explanations to the points enumerated in the audit report are as follows: a) Note no. 3(a) (I) - The unprecedented events which took place in the period of reporting led to the entire factory being taken over by the IFCI Limited in order to realize its debts. Also losses accumulating year by year led to the erosion of the net worth of the company. Yet the management of the company is optimistic and is contemplating to enter the trading business in textile sector with the promise of full support of its old and loyal customers. The management envisages that this activity of trading in textile sector will enable the company to run as going concern. b) Note no. 3(a)(II)- The company had with the approval of the Board of Directors of the company had suspended the provision of interest, penal interest, penal charges and liquidated damages payable to the bankers and Financial Institution. The management had a view that since the financial position of the company is not allowing it to service the debt of the banks and Financial Institution, it was better that these element may be suspended which inflate the losses as reported to its shareholders. c) Note no. 3(a) (III) - The outstanding balances of the banks and financial institution could not be confirmed in spite of several reminders since the cases/ counter claims are pending before DRT for final disposal. In respect of unconfirmed bank balances with scheduled bank in current accounts and margin money accounts, your directors wish to state that since these accounts were in operations before the change of the management, these accounts had become non-operational and request for closure of the said accounts were made. Since the same request is still pending and the respective banks have not even confirmed the balances in the respective accounts ajter the several reminders. d) Note no. 3(a) (IV) - The Company declared its last dividend in the year 1995-96. The dividend account for the distribution of the declared dividend was opened with UCO bank. In the year 2001, there was a phange in the management and the employees handling these accounts left the organization after the change in the management and no proper records in respect of these accounts could be traced. The company had several times written to UCO Bank for providing it with the statement so as to ascertain the amount outstanding in respect of unpaid/ unclaimed dividend in these accounts so that the same could be transferred to the Investor Education and Protection Fund. But no response has been received till date from the respective bank and this balance of Rs. 8.92 lacs is the amount being carried forward since 2001 in the absence of any further confirmation from UCO bank. The company has decided to file an application under RTl Act 2005 to collect the information in respect of these accounts. e) Note no. 3(a) (V) - These claims are of contingent nature since cases in the respective courts are pending and subject to settlement with the respective suppliers. f) Note no. 3(a) (VI) - The sales tax (CST and local tax) demand imposed by Assistant Commissioner Commercial Tax, Gwalior vide his order dated 29th January, 2007 for the assessment year 2003-04 carries a provision of appeal against the demand and the management has forwarded its papers pertaining to the matter for legal opinion and is of the view that it shall proceed to file appeal against the demand. Thus, it is of contingent nature. g) Note no. 3(a) (VII) - The inability of the company to repay the debts of the secured lenders ultimately resulted in the physical possession being taken over by the IFCI ltd on 13th March 2008. FIXED DEPOSITS Your Company has not accepted any deposits from the public during the year under review. PARTICULARS OF EMPLOYEES None of the employees was in receipt of remuneration as mentioned under Section 217(2A) of Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars as required under Section 217(i) (e) of the Companies Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 ere set out in the Annexure to this Report. DIRECTOR'S RESPONSIBILITY STATEMENT In terms of sub-section 2AA of section 217 of the Companies Act, 1956, the Board of Directors hereby States that: 1. That in the preparation of the annual accounts for the fifteen months period ended as on 31st March, 2008, the applicable accounting standards have been followed along with proper explanation relating to material departure; 2. That the Directors have selected such accounting policies 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 end of the financial year and of the losses of Company for the period under review; 3. The Directors have 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. 4. That the Directors have prepared the annual accounts for the fifteen months period ended 31st March, 2008 on a going concern basis. ACKNOWLEDGEMENTS The Board places on record its gratitude to the shareholders, various Banks / Financial institutions and the various Government departments for their continued support and assistance provided by them to the company. The Board also conveys its appreciation to all its customers, suppliers and other associated concerns for remaining associated with the company and also for the continued confidence in the company. The Board wishes to place on record its special thanks to the employees of the company working at all levels who had with their sheer hard work contributed their best to the organization. For and on behalf of the Board (HARSHMANI PANT) Director (SANJAY NAITHANI) Director Place: New Delhi Dated: 02nd September 2008 |