To, The Members of GSL NOVA PETROCHEMICALS LTD.
(Formerly Known as NOVA PETROCHEMICALS LTD.)
The Directors have pleasure in presenting the 19th Annual Report and
Audited Statement of Accounts for the year ended 31st March 2012.
The Operational and Financial highlights are as under: -
Particulars 2011-2012 2010-2011
Net Sales & Other Income 15844.15 22072.08
Profit before Interest,
Depreciation & Tax(PBDIT) (298.29) 793.45
Less : Interest & Financial Charges 1021.34 775.27
Profit before Depreciation (1319.63) 18.18
Less : Depreciation 536.98 604.92
Profit/(Loss) before Exceptional Item (1856.61) (586.74)
Profit/(Loss) on Exceptional Item Nil Nil
Profit / (Loss) before Tax (1856.61) (586.74)
Less : Provision for Tax Nil Nil
Add : Provision for Deferred Tax Nil Nil
Profit After Taxation/(Loss) (1856.61) (586.74)
Add : Balance Brought
from Previous Year (3684.55) (3097.81)
Profit Available for Appropriations (5541.16) (3684.55)
Less : Appropriations (a) Dividend Nil Nil
(b) General Reserve Nil Nil
Balance Carried to Balance Sheet (5541.16) (3684.55)
During the year under review, your company has achieved Net Sales and
Other Income of Rs 158.44 crores as compared to previous year''s Net
Sales and Other Income of 220.72 crores. The Loss before Interest,
Depreciation and Tax was Rs 2.98 crores for the FY 2011-12 as compared
to Profit before Interest, Depreciation and Tax (PBDIT) of Rs 7.93
crores for the previous FY 2010-11. The Cash Loss (Loss before
Depreciation) was Rs 13.19 crores for the FY 2011-12 as compared to Cash
Profit of Rs 0.18 crores for the previous FY 2010-11. The net loss
during the year under review was Rs 18.57 crores as compared to net loss
of Rs 5.87 crores for the previous year of the company. The operations
of the company are influenced from change in prices of raw materials,
fuel prices, lower demand of yarn as well as lower rate of sales
realization due to excess supply over demand resulting in to overall
lower sales and capacity utilisation etc.
PRESENT COURSE OF BUSINESS AND OUTLOOK:
The Management''s discussion and analysis report, as required under
corporate governance, forming a part of this report, is a reflection of
the current state of business. It also deals with the opportunities and
threats faced by your company and the company outlook.
The Prospect of synthetic yarn industries is linked with the movement
of crude oil prices in international market as the raw material of
synthetic yarn are derivatives of crude oil. One of the events that
have dominated the world map right from the beginning of 2011 is the
political uproar in the Middle East and North African region. The
fallout of the event was a sudden and steep rise in the price of crude
However the prospect of chips plant based on old aged batch processing
technology are bleak in view of high conversion cost and competition
arisen from creation of huge capacity from new plants based on
continuous process technology. To overcome the said situation, the
management of your company decided to purchase chips directly from the
market. In view of the same, poly chips plant remained idle during the
year under review. Though the management had further explored the
possibility of modernization of the chips plant and also of
manufacturing other than textile grade of chips in this plant but the
same was not materalised as the banks have reservations for further
financing in view of delay in split of bank facilities between two
companies and continuous losses.
To give further effect to the Scheme of Arrangement in the nature of
Demerger, your Company executed fresh documents with banks for
splitting the existing limits between Demerged and Resultant companies
in accordance with the approved Scheme of Demerger.
Further, inter se transfer of shares of the company between two
promoter groups were also partly completed to implement the said scheme
RESTRUCTURING OF BANK DUES UNDER CDR MECHANISM:
As the members are aware, the Company has taken considerable finance
from banking institutions, secured by the assets of the Company. In
view of losses incurred by the company, the CDR and Banks while
approving restructuring and also demerger have stipulated that the
unsecured loan from Promoters group/associates be converted in to
capital so that TNW remain positive all the time. In turn your company
had applied to Stock Exchanges for in-principle approval for
preferential issue of Equity shares. However in view of SEBI order
dated 12.01.2010 restraining the company to access capital market for
two years, same could not be complied with so far. The banks will have
right to recompense in respect of waivers/sacrifice made by them for
restructured debts under CDR mechanism.
Due to loss incurred by the Company during the year 2011-12 coupled
with accumulated losses, your directors regret their inability to
recommend any dividend on the Equity Share Capital.
The Board of Directors of the Company was reconstituted due to sad
demise of an independent director Shri R.C. Jain on 3rd April, 2011.
The Board of Directors appointed Shri Piyush R. Vyas as an additional
Director during the year under review. Pursuant to the provisions of
Section 260 of the Companies Act,1956, the term of office of Shri
Piyush R. Vyas as an Additional Director of the Company expired at the
conclusion of 18th Annual General Meeting.
The Board of directors considered it in the best interest of the
Company to continue to avail the benefit of the long and varied
experience of Shri Piyush R. Vyas Accordingly, the Board had proposed
to the members of the Company to appoint him as regular director on the
Board liable to retire by rotation in 18th Annual General Meeting held
on 30th September,2011. Shri Piyush R. Vyas was appointed as a director
liable to retire by rotation by members of the company in 18th Annual
General Meeting held on 30th September,2011. However, due to his ill
health, he resigned as a director on the board w.e.f. 20th June, 2012.
The board placed on record the valuable services rendered by him to the
company during his tenure as director.
Shri Shyam Gupta and Shri Sandeep Goyal, Directors of the Company,
retire by rotation at the ensuing 19th Annual General Meeting and being
eligible for re-appointment, have offered themselves for the
re-appointment. Brief resume of the two Directors and names of
companies in which they hold the Directorship as stipulated under
Clause 49 of the Listing Agreement are given in the notes attached to
the Notice calling 19th Annual General Meeting of the Company.
REAPPOINMENT OF MANAGING DIRECTOR:
The present term of office of Managing Director Shri Sunilkumar Gupta
expired on 27th May, 2012. The appointment/reappointment of Managing
Director and approval of terms of remuneration in accordance with the
provisions of Companies Act, 1956 read with Schedule XIII thereto
requires approval of shareholders in General Meeting. Hence, the board
proposed a resolution for reappointment of Managing Director on expiry
of his present term on 27th May, 2012 in 18th Annual General Meeting of
Share holders of the company held on 30th September, 2011 so that
approval is obtained prior to expiry of his present terms of office of
Managing Director. The resolution approving the terms of re-appointment
and remuneration was passed in 18th Annual General Meeting held on 30th
September,2011. However, in view of operational Losses, the Managing
Director has voluntarily desired not to receive any remuneration from
the date of his reappointment of fresh tenure of Five Years from 28th
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956
Directors'' Responsibility Statement is given as under,
(i) That in the preparation of the annual accounts for the financial
year ended 31st March 2012; the applicable accounting standards have
been followed along with proper explanation relating to material
(ii) That such accounting policies have been selected and applied
consistently and judgements and estimates have been made 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 and of the
profit or loss of the Company for the year ended 31st March, 2012.
(iii) That proper and sufficient care has been taken 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
(iv) That the annual accounts have been prepared for the financial year
ended 31st March, 2012 on a going concern basis.
The Company has adequately covered all assets against all risks.
Auditors of the company M/s. J. T. Shah & Co. Chartered Accountants of
Ahmedabad, will retire from the office of the Auditors at the
conclusion of ensuing 19thAnnual General Meeting and being eligible,
offer themselves for re-appointment from the conclusion of the ensuing
Annual General Meeting till the conclusion of the next Annual General
Meeting. The Company had pursuant to section 224 (1B) of the Companies
Act,1956, received a certificate that their appointment, if made , will
be within the limits as laid down in the section 224 (1B).
COMPLIANCE REPORT BY COST ACCOUNTANT:
Pursuant to Section 209 (1)(d) and Rule 2 of The Companies (Cost
Accounting Records) Rules,2011 the company shall file compliance report
duly authenticated and signed by Kiran J. Mehta, Partner of Kiran J.
Mehta & Co. Cost Accountants having office at Ahmedabad for financial
year 2011-12 in prescribed Form-A along with the annexure to the
Central Government within prescribed time period from the close of the
company''s financial year to which the compliance report relates.
APPOINTMENT OF THE COST AUDITOR:
As required under Cost Audit Branch Order dated 24th January, 2012
issued under reference no. F. No. 52/26/CAB-2010 by Ministry of
Corporate Affairs, Government of India , the industries engaged in the
production, processing or manufacturing of Jute, Cotton, Silk, Woolen
or Blended Fibers/ Textiles as covered under Chapters 50 to 63 of The
Central Excise Tariff Act,1985 wherein the aggregate value of the turn
over made by the company from sale or supply of all its products/
activities during the immediately preceding financial year exceed 100
crore of rupees or wherein the company''s equity or debt securities are
listed or are in process of Listing on any stock exchange, whether in
India or outside India, shall get its Cost Accounting Records, in
respect of each of its financial year commencing on or after the 1st
day of April,2012, audited by a cost auditor who shall be either a cost
accountant or a firm of cost accountant, holding valid certificate of
practice under the provision of Cost and Works Accountants Act,1959.
Accordingly, the company in its board meeting held on 11th May, 2012
had appointed Shri Kiran J. Mehta, Partner of M/S Kiran J. Mehta & Co.
Cost Accountants having its office at 257, 2nd Floor, Ellisbridge
Shopping Centre, Opp. M. J. Library, Ahmedabad-380 006 to conduct the
cost audit for financial year commencing from 1st April,2012 and ending
on 31st March,2013.
Explanation to the qualification in Auditors'' Report.
The Directors submit their explanation to the qualifications made by
the Auditors in their report for the year 2011-12. The relevant Para
nos. of the report and reply are as under:
9 (a) The delay in the payment of Wealth tax of Rs.5 lacs was due to
demerger since it was based on combined wealth of company prior to
demerger. Now after the demerger the company shall file revised wealth
tax return and pay wealth tax accordingly. Further there is delay in
depositing unpaid/unclaimed dividend into Investor Education and
Protection fund of Rs 2.85 lacs due to freezing of unpaid dividend bank
account by government authorities. There is delay in payment of tax
deducted at source of Rs 0.14 lac and value add Tax of Rs 3.61 lacs and
the Company is arranging to make the payment of the same shortly.
11. There had been delay in repayment/non payment of loan installment
and interest to the various banks due to liquidity crunch on account of
cash losses incurred by the company .
17. Short term fund were used for long term uses due to repayment of
loan installments and interest to the banks and cash loss incurred by
Besides, the notes to the Accounts are also self explanatory and give
suitable explanation to qualifications in Auditors'' Report.
Due to change in company''s Board of Directors during the year under
review, the Audit Committee was reconstituted in accordance with the
provisions of the Companies Act, 1956 and listing agreement entered
into by the Company with the Stock Exchanges.
SHAREHOLDERS TRANSFER AND GRIEVANCES COMMITTEE:
Due to change in company''s Board of Directors during the year under
review, the Shareholders Transfer and Grievances Committee was
reconstituted in accordance with Listing Agreement with Stock
Due to change in company''s Board of Directors during the year under
review, the Remuneration Committee was reconstituted in accordance with
Listing Agreement with Stock Exchanges.
The Company has not accepted any deposit falling within the purview of
the provisions of Section 58-A of the Companies Act, 1956 read with the
Companies (Acceptance of Deposit) Rules, 1975.
Your Company has complied with the Corporate Governance guidelines as
per Clause 49 of the Listing Agreement with the Stock Exchanges.
A report on Corporate Governance and a Certificate from the Auditors of
the company regarding compliance with Corporate Governance guidelines
as stipulated and Management Discussion & Analysis reports have been
attached by way of separate section as part of this Annual Report.
DELISTING OF EQUITY SHARES:
Presently the equity shares of the company are listed on Bombay Stock
Exchange Limited (BSE) and National Stock Exchange of India Limited
(NSE). During the year under review, the equity shares of the company
were delisted voluntarily under Clause 6 (a) of SEBI (Delisting of
Equity Shares) Regulations, 2009 from Ahmedabad Stock Exchange Limited
(ASE) with effect from 30th March, 2012. Based on the Securities and
Exchange Board of India (Delisting of Equity Shares) Regulations 2009,
it is open for the company to voluntarily delist its equity shares from
one or more stock exchange (s) if it continues to remain listed on any
stock exchange having nationwide trading terminals. Accordingly, the
equity shares of the company were delisted as aforesaid from ASE
without giving any exit opportunity to the share holders as the equity
Shares of the company continued to be listed on BSE and NSE which is
having nation wide trading terminals. The proposed delisting of the
company''s equity shares from ASE will not be prejudicial to or affect
the interests of the investors.
PARTICULARS OF EMPLOYEES:
There are no employees employed by the Company through out the
financial year or for a part of the financial year who were drawing
remuneration as per the limit provided in section 217 (2A) of the
Companies Act, 1956 and therefore there are no details required to be
given in the report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNING AND OUTGO:
Information in accordance with the provisions of Section 217(1)(e) of
the Companies Act, 1956, read with the Companies (Disclosure of
Particulars in the Report of Board of Directors'' Report) Rules, 1988
regarding conservation of energy, technology absorption and foreign
exchange earning and outgo is given in the Annexure forming part of
Your Directors wish to express their sincere thanks for the support and
co-operation extended by the Bankers of the Company viz. State Bank of
India, Bank of Baroda, UCO Bank, Central Bank of India and CDR
authorities, all State and Central Government Departments,
Shareholders, valued Customers and Suppliers etc. of the Company. Your
Directors also wish to express their sincere thanks for the
contribution rendered by the employees of the Company at all levels.
For & on behalf of the Board of Directors,
Date : 31/08/2012 Chairman