DIRECTORS' REPORT: To the Members, You all are aware that the Hon'ble High Court of Bombay has appointed a Special Committee to take charge of the management and affairs of the Company vide its Order dated 12th March, 2004. With the permission of the Special Committee, your Directors are presenting the 26th Annual Report of the Company with the Audited Statement of Accounts for the financial year ended 31st March, 2013. 1. Dividend In view of the losses the Directors have not recommended any Dividend for the year ended 31st March, 2013. 2. Management Discussion and Analysis You are aware that the Company is functioning under the management of the Special Committee appointed by the Hon'ble High Court of Bombay instead of Official Liquidator in Company Petition No. 1017/2002 vide Order dated 12th March 2004. In pursuance to Order dated 12th April, 2004 passed by the Hon'ble High Court of Bombay, the Board of Directors are working under the superintendence of the Special Committee. The major thrust of the Special Committee is to recover the dues from defaulters of the Company, reduction of expenses and formulate scheme of the repayment to the fixed deposit holders, other secured and unsecured creditors. The Special Committee pursuant to the direction of the Hon'ble High Court is concentrating on recoveries and in addition to pursuing the legal recourse, is calling the defaulters for settlement of their dues with a view to expedite the recovery. The Company is currently not engaged in business of Non-Banking Finance Company (NBFC) w.e.f. 14th May, 1998 as per restrictions imposed by Reserve Bank of India and the thrust is on recovery of its dues and repayment of its liability in a phased manner. The Company, under the direction of the Special Committee appointed by the Hon'ble High Court of Bombay, is complying with all the legal requirements of the various Acts applicable including Listing Agreement, The Companies Act, 1956 and Reserve Bank of India like submission of various forms and returns to Stock Exchanges, Registrar of Companies and Reserve Bank of India. The Hon'ble High Court of Bombay reviewed the working of the Company under the management of the Special Committee and vide order dated 14th March, 2007 appraised that the Special Committee has acted in earnest and has made best possible efforts to effectuate the purpose of the constitution of the Special Committee and that a substantial amount of work has been done by the Special Committee towards realization of the outstandings, settlement of dues of the Secured Creditors, Debenture holders and Fixed deposit holders. The Special Committee comprises of Mr. Justice V. R. Datar (Retd. Judge of High Court of Bombay) as Chairman, Mr. S. C. Malhotra I.P.S., D.G.P. (Retd.) Maharashtra, Mr. P. K. Bansal, I.P.S., D.G.P. (Retd.), Gujarat as Members. The Special Committee has addressed to all class of creditors i.e. Banks and Financial Institutions, Debenture Holders and Fixed deposit holders by formulating scheme for repayment based on the availability of funds from the debtors of the Company. Adequacy of Internal Control: Considering the size and nature of activities, the Company has adequate Internal Control System covering both accounting and administrative control. In addition, the internal audit is carried out periodically. The management is ensuring an effective internal control system so that the financial statements and reports give a true and fair view. Human Resources / Industrial Relation: Inspite of Company facing financial difficulties, the morale of the employees remained high. The organization culture and the commitment of the Company to its people reflect in the motivation levels and the acknowledgement of its employees. Future Outlook: Pursuant to the responsibility vested with Special Committee with regard to formulation of Scheme for all class of creditors i.e. Banks and Financial Institutions, Debenture Holders and Fixed Deposit Holders, the management is pleased to inform that under superintendence of the Special Committee, all above referred class of creditors have been addressed with regard to its liability as referred herein separately. The efforts are being made to take further initiative to recover dues from debtors of company and redress the grievances of its creditors. 3. Fixed Deposit The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from public as on 31-3-2013 stood at Rs.11.00 Crore (Previous Year Rs.111.25 Crore). Pursuance to the responsibility vested by the Hon'ble High Court of Bombay, the Special Committee alongwith the Learned Amicus Curiae (appointed by the Hon'ble High Court of Bombay vide its order dated 14/03/2007), formulated comprehensive Scheme of Repayment to all class and categories of fixed deposit holders on the basis of availability of fund and future recoveries from the debtors of the company. The Hon'ble High Court of Bombay vide its order dated 09th February, 2012 has sanctioned the Scheme of Repayment to Fixed Deposit Holders. The repayment in pursuance of the scheme to the deposit holders shall be made category-wise as under: Principal deposit amount upto Rs.10,000/- @55%, from Rs.10,001/- to Rs.25,000/- - @45%, Rs.25,001/- to Rs.50,000/- - @35%, Rs.50,001/- to Rs.1,00,000/- -@30% and Rs.1,00,001/- and above - @25%. The scheme does not provide for payment of any interest on any category of fixed deposits. The repayment against fixed deposit shall be made only to the extent of percentage approved by the Hon'ble High Court of Bombay after deducting any amount, if already partly repaid. However, if any fixed deposit has been paid in excess of its eligibility amount under the scheme, depositor shall not be paid any further amount. The Company invited claims from Fixed Deposit Holders through an advertisement in leading newspapers in 39 cities in 19 states. The Fixed Deposit Holders had been advised to lodge their claims on or before 16th May, 2012. The Special Committee has commenced payment after adjudication of claims on the basis of availability of funds and in terms of the Scheme. Inspite of concerted efforts under directions of Special Committee to make aware the depositors in large about the Scheme approved by Hon'ble High Court of Bombay, the number of claims received from depositors are much less in numbers, but are within range of funds available. The Special Committee has also regularly informed all authorities such as RBI, SEBI, Registrar of Companies, Ministry of Company Affairs, various courts, etc. about the Scheme of payment to depositors approved by Hon'ble High Court of Bombay. The communication with above authorities has enabled large number of depositors to lodge claims with Special Committee for adjudication. The details of Scheme is also available on website of the company under Annual Report. Eventhough the Special Committee had fixed last date for submission of claims as 16th May, 2012, the company was directed to accept claims for extended period. It is more than 1 (one) year of announcement of Scheme for Fixed Deposit Holders to lodge claim, there are comparatively less number of claims received. All claims received during the period have been paid in terms of the Scheme. It is pertinent to inform that pursuant to the Scheme of repayment to Fixed Deposit Holders sanctioned by Hon'ble High Court of Bombay vide order dated 9th February, 2012 to repay part of principal amount as enumerated above. Consequent to the order, the principal liability of outstanding toward Fixed Deposits is reduced by Rs.63.91 crores. This amount has been transferred to Capital Reserve. The resultant liability then was reduced to Rs.47.34 crores. After due deligence, it was observed that the claims of large number of Fixed Deposit Holders, due from the year 1999 have not been lodged with the company. Therefore, it is thought fit and proper to reflect the liability of Fixed Deposit Holders within the strength and estimates of claims likely to be received and on the basis of estimated inflow of funds. In view of this, the Fixed Deposit liability to the tune of Rs.36.34 crores has been reduced and remitted to reserves. 4. Banks & Financial Institutions borrowings The Directors wish to inform that only one institutional creditor i.e. Gujarat State Financial Corporation (GSFC) has outstanding term loan amounting to Rs.670.98 lacs, for which efforts are being made by the Special Committee to arrive at One Time Settlement in tandem with settlement with other Banks and Financial Institutions. In view of this, the liability of GSFC works out to Rs.60 lacs and the balance has been accordingly transferred to remission of liabilities. The Special Committee has submitted its report on repayment to GSFC to Hon'ble High Court of Bombay and directions of Hon'ble High Court of Bombay are awaited. 5. Debentures As regards the liability of Non-convertible debentures, the Hon'ble High Court of Bombay vide its order dated 27/09/2010 in Company Petition No. 926 of 2009 u/s 391 of the Companies Act, 1956 has approved Scheme of Compromise with Public Issue Debenture Holders. The claims of debenture holders received so far have been satisfied as per terms and conditions of the Scheme approved by Hon'ble High Court of Bombay. 6. Statutory Information There were no employees during the year ended 31st March, 2013 in respect of whom the particulars are required to be disclosed with reference to Section 217(2A) of the Companies Act, 1956. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, require disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B prescribed by the rules. The Company, not being a manufacturing company is advised that Form A and B are not applicable to it. The Company had no Foreign Exchange earnings and outgoings during the year under review. 7. Directors The Government of India, Ministry of Corporate Affairs vide letter dated 26/12/2011 approved the re-appointment of Shri Pankaj R. Desai as Managing Director for a period of 5 (five) years w.e.f. 1/11/2011 u/s 269, 198/309, 310, 387 and 637AA of the Companies Act, 1956. Shri Puran Chandra Soni, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. 8. Directors' Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) That the Directors have 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 and of the profit or loss of the Company for the year under review; (iii) That 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; (iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2013 on a going concern basis. 9. Auditors' Observations The observations of the Auditors are in the nature of general disclosures, which read together with the accounting policies and the relevant notes to the accounts, are self-explanatory. 10. Auditors The members are requested to appoint Auditors and fix their remuneration. 11. Corporate Governance Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with. A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report. 12. Acknowledgement The Board wishes to express its deep appreciation to the Banks and Financial Institutions and various other agencies for their co-operation and to all staff members for the efficient and loyal services rendered by them. For and on behalf of the Board (Basant Bhoruka) Chairman Place: Mumbai Date: 14th May, 2013. |