AFFLUENCE

During the year under review, the Company's performance has declined drastically.  This has resulted due to two major events, namely Labour Unrest prevailing in the Company during most of the year.  Initially the labour had started go-slow and then during October and February, it had gone on illegal strike for more than 4 months.  Secondly, one of the major customers of the Company had cancelled the ongoing orders, which was the result of the delay in execution of the orders on account of non-cooperation by the workforce.  These vents have had major impact on the performance of the Company, thereby showing almost 50% fall in sales as compared to the previous year.  As the capacity has remained idle during most part of the year, the expenses could not be recovered, hence your company has incurred cash loss of ` 2363.20 Lacs (` 1321.83 lacs during previous year).  Consequent upon the fall in sales, the company has incurred Net Loss of `2715.58 lacs (` 1992.35 lacs).  The cash loss during the current year is mainly due to the underutilization of the production capacity of the company well below the break-even level and rising cost of raw material and fixed costs due to rising inflation.

Your Directors wish to place on record that the Company is treading in tight waters in these hard times.  On one hand the capital goods sector is reeling under tough competition with international market, esp. with China and on the other hand the prices of Raw Materials and other fixed costs are rising steeply and consistently coupled with lack of working capital.  Since, the Company deals with the customers in majority the PSUs where the sales contracts are awarded on fixed price basis, without any escalation clauses, whereas all the input costs are subject to market fluctuation risks.  This puts the margins of the company under severe pressure. 

The business opportunities in the domestic sector are very scarce due to instability of political scenario and lack of public spending on utility / core sector projects.  The scenario in the International market is still worse.  The financial strength of American and European countries is weakening by the day whereas the Chinese appetite for exports has no limits due to which, the Indian industry is under continuous stress. The falling value of Rupee has further worsened the scenario.

DIVIDEND:

In view of huge carried forward losses by the Company, the Directors do not recommend any Dividend.

DEMATERIALISATION:

Your Company's shares have been dematerialized in compliance to the mandatory guidelines issued by SEBI.  Equity Shares of the Company are available for trading in Demat form under National Security Depository Ltd. (NSDL). As on date, 34.80% of the stock of the total equity has been dematerialized.

FIXED DEPOSITS:

The Company has not accepted any Deposits from public during the Year under review and there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

EMPLOYEES:

The information required under Section 217(2A) of the Companies Act, 1956, is not being given, as there was no employee during the Year or in the part of the year whose total remuneration falls under this provision.

OTHER INFORMATION:

Information pursuant to Section 217 (1) (e) of the Companies Act, 1956 and the Rules framed there under is annexed hereto and forms part of the report.

SHAREHOLDERS:

During 2010-11, 3A Capital Services Ltd. had illegitimately acquired 26% shareholding of the Company from ICICI Ltd., who was the shareholder of the company by virtue of ICICI being the major lender to the Company.  The Company had filed a Company petition with Company Law Board (CLB), Mumbai Bench challenging this illegitimate acquisition.  CLB has allowed the petition of the Company favourable by passing directions for removal of their name from the Register of Members of the Company by its Order dated 25th June 2013, and appropriate actions are being taken by your Company as per the directions of CLB.

AUDITORS AND AUDITOR'S REPORT:

M/s N.S. Bhatt and Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, has offered themselves for re-appointment.  The Auditors have not made any qualification, reservations or adverse remarks affecting the true and fair view of the accounts.  The same is self-explanatory and does not require any further comments from directors.

DIRECTORS:

Mr. TR Anantharaman, a veteran Director of the Company expired after prolonged illness and old age on February 10, 2013.  He had, during his lifetime, supported the company and provided his able guidance right from the setting-up stage.  His valuable services were very useful to the Company in shaping it and establishing in the marketplace.  The vacuum created by his death will be hard to fill and it shall be felt for a long time.  The Board of Directors places its sincere condolence on record and prays to the almighty to give strength to his bereaved family. 

 In accordance with the provisions of The Companies Act, 1956, and Article 89 of the Articles of Association of the Company, Mr. Mukesh Chaturvedi retires by rotation at the ensuing Annual General Meeting.  He being eligible, offers himself for re-appointment.DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm:

(i)            That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

(ii)          That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are 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 ended 31st March 2013 and that of the profit / loss of the Company for that year;

(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 have prepared the Annual Accounts on a going concern basis. 

  INDUSTRIAL RELATIONS

Generally the relations with the employees continued to remain cordial during the year in question except that the workers had been on agitation for most part of the year, especially during the 3rd and 4th quarter when they were on strike for more than 4 months which had impacted the working of your Company as reflected on the results for the year under consideration.  The efforts are being made to normalize the situation.

CORPORATE GOVERNANCE:

In compliance to the provisions of Clause 49 of the Listing Agreement with the Stock Exchange, your Company had implemented the Corporate Governance; it has obtained a certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance for the Year 2012-13. The detailed report on Corporate Governance, along with the certificate of the auditors of the Company is annexed herewith and form part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Company has taken an initiative under its CSR Policy by adopting Industrial Training Institute (ITI), Waghodia, under Public Private Partnership (PPP) with the Govt. of Gujarat.  The Company is maintaining and fostering the ITI as its CSR initiative. 

STATUS OF REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) AND REHABILITATION PROCESS:

The Company has been declared sick by BIFR.  The Company has submitted a Draft Rehabilitation Scheme (DRS) to the Operating Agency appointed by BIFR.  The said DRS is under examination by the Lenders.  Meanwhile, the BIFR has passed an order for Change of Management, which has been challenged by the Company by way of an appeal filed by it in Appellate Authority for Industrial and Financial Restructuring (AAIFR).  While the Appeal is pending with AAIFR, meanwhile, the AAIFR has passed an interim order staying the said order of BIFR.

ACKNOWLEDGEMENT:

Your Directors express their thanks for the co-operation and support received from Central and State Government authorities, Lenders, Investors and Business Associates during the Year under review.

                                                                             For and on behalf of Board

                                                                                      Sd/-

Place: Vadodara.                                                         Rakesh Chaturvedi

ANNEXURE TO DIRECTORS' REPORT

(ADDITIONAL INFORMATION GIVEN IN TERMS OF NOTIFICATION NO. 1029 DATED 31ST DECEMBER 1988 ISSUED BY THE DEPARTMENT OF COMPANY AFFAIRS)

 1)    CONSERVATION OF ENERGYa) Energy Conservation measures taken:

The energy conservation is of prime importance for the nation and the Company attaches a greater significance to this aspect. During the Year under review the measures implemented in past have yielded good results, both in consumption and financial terms. Some of the measures adopted by the company in its working on a consistent basis are:

(i)    Periodical preventive maintenance has ensured consumption of only rated power.

(ii)  Pneumaticallyoperated devices used by company to reduce consumption considerably.

(iii)Company uses a range of energy saving devices wherever possible and factory sheds are designed to have optimum use of natural light for normal lighting purposes.  Auto-shutoff switches have been installed, wherever possible to prevent the continuous use of machines when these are idle.  Solar lighting has also been installed by the Company, on an experimental basis.  This will save electricity considerably by switching to non-conventional energy source for general lighting.

 b) Additional investment and proposals:

During the period under review, the emphasis was placed more on strict adherence to the existing measures.  

 Impact of measures at (a) and (b) for reduction of energy consumption and consequent impact on the cost of production of goods:

As a result of implementation of above measures, your company has achieved a reduction in the overall average power consumption bringing economy in the operations of the Company.

Total Energy consumption and Energy consumption per unit:           Not Applicable 

 RESEARCH AND DEVELOPMENT AND TECHNOLOGY ABSORPTION

1. (a)   We have absorbed technology fully from all our collaborators for manufacturing of High Frequency Resistant Welded Fintubes, Air-cooled Heat Exchangers (ACHE), Heat Recovery Steam Generators (HRSG), Vacuum Filters, Clarifiers, Pulp Washers,.

(b)    Under the technical collaboration entered by the Company, relevant technologies for design and manufacture of Mechanical Sugarcane Harvesters, Air-cooled Heat Exchangers, Disc Filters, Vacuum Filters, Clarifiers, Pulp Washers, High Frequency Resistant Welded Fin tubes and commercial production commenced.

(c)    The Company is an ISO 9000:2000 certified company.

(d)    The Company had been accredited by the American Society of Mechanical Engineers (ASME) for use of their codes and procedures, so as to achieve a high degree of precision and quality assurance in the existing line of products of the Company which is due for renewal.

2.       Benefits derived as a result of above efforts.

Quality of existing range of products improved with simultaneous cost reduction to meet the requirements of the user industry.  It has proved import substitute also in many cases.FOREIGN EXCHANGE EARNINGS AND OUTGO             ` in Lacs

                                                                             For and on behalf of Board

                                                                                      Sd/-

Place: Vadodara                                                             Rakesh Chaturvedi

The energy conservation is of prime importance for the nation and the Company attaches a greater significance to this aspect. During the Year under review the measures implemented in past have yielded good results, both in consumption and financial terms. Some of the measures adopted by the company in its working on a consistent basis are: (i) Periodical preventive maintenance has ensured consumption of only rated power. (ii) Pneumatically operated devices used by company to reduce consumption considerably. (iii) Company uses a range of energy saving devices wherever possible and factory sheds are designed to have optimum use of natural light for normal lighting purposes. Auto-shutoff switches have been installed, wherever possible to prevent the continuous use of machines when these are idle. Solar lighting has also been installed by the Company, on an experimental basis. This will save electricity considerably by switching to non-conventional energy source for general lighting.

` in Lacs Particulars 2012-13 2011-12 Foreign Exchange Used For capital goods import Nil Nil Cost of Raw Material imported 39.70 71.40 Software import Nil Nil Traveling Expenses 2.66 18.26 Subscription/ Commission Nil Nil Foreign Currency Earned 19.04 107.36

DIRECTORS' RESPONSIBILITY STATEMENT - Your Directors confirm: (i) That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are 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 ended 31st March 2012 and that of the profit / loss of the Company for that year; (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 have prepared the Annual Accounts on a going concern basis.