DIRECTORS' REPORT To The Members, The Directors hereby present their 56th Annual Report on the business and operations of the Company for the financial year ended on 31st March, 2010. DIVIDENDS In view of the financial results given above, the Directors do not recommend any dividend. REVIEW OF OPERATIONS The directors have been reviewing the performance of various business operations of the company from time to time. A gist of management discussion and analysis report has been separately given as part of the Annual Report In this behalf. ENERGY CONSERVATIONH-ECHNOLOGY ABSORPTION ETC. Particulars with respect to conservation of energy etc. pursuant to section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out in the enclosed Annexure 'A' forming part of this report. Your directors are pleased to inform you that out of total 1.22 crore units power consumed at MDF Division at Tohana,1.14 crore units were generated in-house, using non-conventional fuel i.e. agro-waste as fuel in our thermal generation facilities at Tohana during the year under review. This has resulted in reduced power withdrawal from Dakshin Haryana Bijii Vitran Nigam Limited (DHBVNL) to that extent apart from reduction In the cost per KWH of electricity generated from HSD. The management is constantly looking at various energy saving measures so as to bring In substantial savings at MDF as well as at Chemical Division of the Company. Your Company's R&D Centre continues to work closely in co-ordination with both the MDF & Chemical Divisions to improve the product and processes to make them more up to date, economical and environment friendly. AUDITORS' REPORT As regards point No.6 of the CARD part of the Auditors' Report, as the matter has been before the Court and being sub-judice, the Board is not in a position to offer any comment in this respect. However, the Board is of the view that deposits were accepted in the years prior to 1997, which the company has been trying to liquidate despite severe liquidity crunch being faced by the company. As regards point No,9(a) of the CARD part of the Auditors' Report pertaining to payment of statutory dues including P.F. etc., the delays and arrears occurred due to severe liquidity crunch being faced by the company on account of continued operational losses incurred during year under review. As regards point No. 10 of the CARD part of the Auditors' Report in regard to accumulated losses having exceeded fifty percent of net worth of the company, the Board is siezed of the matter and necessary actions are under way to ensure compliance(s) a.s may be required in this behalf. As regards point No.11 of the CARD part of the Auditors' Report in regard to the default stated therein, these are expected to get regularised in the current year on account of improved business prospects of company's products, which is expected to improve profitability of operations In near future. As regards point No. 17 of the CARO part of the Auditors' Report in regard to application of the funds raised on short term basis for payment of long term dues under GTS, the company has reached one time settlement (OTS) with the term lending financial institutions and has been in the process of arranging long term funds for the same. In the meantime, certain short term funds have been raised through the sidksidiary company, as well as by way of ICD loans to make payments as per OTS arrangements reached with the said Institutions to meet company's commitments in terms of OTS. These short term funds will be discharged after arrangement of long term funds. NUCHEM INFRASTRUCTURE LIMITED (FORMERLY NUCHEM MACHINE TOOLS LIMITED) The Balance Sheet of Nuchem Infrastructure Limited (formerly Nuchem Machine Tools Limited), a subsidiary of your company, together with the reports of the Directors and Auditors thereon alongwith the statement of interest in the subsidiary company u/s 212 of the Companies Act, 1956, are attached witt^Jhe Balance Sheet of your company. As you are aware that the subsidiary company had entered into a Joint Collaboration agreement with a reputed developer for utilisation of its Land. After obtainig the LOI for developing an IT park and making initial progress in the project, the wotk has not made any progress due to downtrun in the reality business. The subsidiary company is in dialouge with the developer to prepare a road map for early completion of the project as was envisaged. TERM DEPOSITS The members have been duly apprised in earlier reports regarding the ROC having Initiated legal actions against the company for alleged noncompliance of the CLB Order No.15/119/96-CLB dated May 20, 1997 whereby the scheme for repayment of public deposits accepted by the company during earlier years was approved by the Hon'ble CLB. At the instance of the company, the Hon'ble CLB approved a revised scheme for repayment of said deposits vide its Order No.25/1/ 2005-CLB dated 10.6.2005 envisaging payment to depositors over a period of four years effective from 1.10.2005 and the Hon'ble Court had adjourned the ROC case sine die. In view of continuing losses in the company and consequent overall liquidity crunch, the company has once again approached the Hon'ble CLB to seek further extension of time to fultlH Its obligations to its valued depositors. The matter is under consideration of the Hon'ble CLB. CORPORATE GOVERNANCE Auditors' Certificate on compliance of conditions of Corporate Governance and separate section on Corporate Governance are enclosed as Annexures B' & ' C . DIRECTORS Sh.P.P. Khanna, Sh. R.K. Jain and Sh. Ajay Baijal directors of the company resigned from the Board w.e.f.2.11.2009, 9.11.2009 & 15.01.2010 respectively. The Punjab National Bank withdrew its Nominee Director Sh. U.K. Sharma from the Board and appointed Sh.V.P. Khandelwal in his place, which became effective from 13.10.2010. While weteoming Sh.V.P. Khandelwal on the Board of the Company, your directors wish to place on record their deep appreciation of the valuable guidance given by Sh.P.P.Khanna, Sh.R.K.Jain, Sh.Ajay Baijal and Sh. U.K.Shanna from time to time during their tenure as Director of the company. Sh. Autar Singh will retire from the Board by rotation, and being eligible, offers himself for re-election. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respact to Directors' Responsibility Statement, it is hereby confirmed: i. that in the preparation, of the annual accounts for the financial year ended on 31.3.2010, the applicable accounting standards iiad been followed alongwitii proper explanation relating to material departures; ii. that the Directors had selected such accounting policies and applied them consistently and made judgements 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 as on 31.3.2010 and of the profit or loss of the Company for the year under review; iii. that the Directors had taltsn proper and sufficient care for 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 31.3.2010 on a 'going concern' basis. AUDITORS The Auditors of the Company; IVI/s.D.S.Talwar & Co. and M/s.S.S. Kothari Mehta & Co. jointly will hold office till the conclusion of the ensuing Annual General Meeting; who being eligible, offer themselves for re-appointment. The Board proposes for re-appointment of the retiring auditors at such remuneration as may be decided by the members at the Annual General Meeting. APPRECIATION The Board acl^nowledges with gratitude the cooperation and assistance, which has been extended by the Financial Institutions and Banl^s during the year under review. The Board places on record its deep appreciation of the services rendered by the employees at all levels. It wishes to thank all its business associates, suppliers, buyers, dealers, stockists, agents etc. for their continued support. To them all, we send our assurances of good business, growing together and happy times. For and on behalf of the Board (Anil Kumra) Director (Arun Barar) Managing Director Place : Faridabad Dated; 12-11-2010 |