We submit the Fifty-ninth Annual Report and Statement of Accounts for
the period ended 31st May, 2000.
In order to ensure that benefits of the first phase of the
restructuring proposals are available to the Company within a financial
year, the financial year of the Company has been extended upto 31st
(Rs. in million)
Gross Profit/(Loss) (269.722)
Less : Depreciation 29.502
Add : Transfer from Investment Allowance Reserve 1.654
Transfer from Revaluation Reserve 8.056
Profit/(Loss) for the year (289.514)
Add : Profit/(Loss) of the previous year (64.755)
Loss carried to Balance Sheet (354.269)
During the period under report, sales of the Company were Rs.855.56
million as compared to the sales of Rs.1146.50 million for the previous
Apart from continuing severe recession in the market, due to poor off
take by 600 Lathes Limited, U.K., sales at Harihar was affected very
badly. Further due to shifting of operations from Hubli Unit to
Harihar, there has been complete loss of production for a period of 8
months at Hubli. Hence, sales of the Company for the period under
report has been reduced.
Market conditions has still not improved. Performance of key sectors
like automobiles, engineering has been severely affected and the
overall indicators are that it will take some more time before the
economy turns around. However the Company is putting all its efforts
to improve the order book position and also the sales.
In view of the current economic circumstances, in order to ensure the
viability and improvement in the operational efficiency and also
improve profits in the years to come, the Company has already taken
steps to completely restructure its operations. The Company will be
implementing further restructuring proposals.
As a part of restructuring plan, the operations of the Company at its
Hubli Unit has been transferred to Harihar with effect from 26th
January, 2000. In the process, out of 591 employees at Hubli Unit, 457
employees have opted for Voluntary Retirement Scheme and 134 employees
have opted for transfer to Harihar. Shifting of machines from Hubli to
Harihar has been completed successfully and production of the products
manufactured at the erstwhile Hubli Unit has been stabilised at Harihar
with the existing man power. This has also helped the Company to
centralise all its operations in one place.
In order to concentrate in core areas of business of the Company, it
has been decided to discontinue the operations of Medical Equipment
Division of the Company with effect from 16th June, 2000.
The Auditors of the Company have made some remarks in their Report
regarding non-payment of statutory dues by the Company on time. Due to
the prevailing difficult market conditions and the losses incurred by
the Company, financial position of the Company has come under severe
strain. Hence, the Company was not in a position to pay statutory dues
on time. However, the Company has been requesting concerned statutory
authorities to grant some more time such that the Company can clear the
statutory dues as early as possible.
On the basis of the audited financial results for the period ended 31st
May, 2000, your Company became a sick industrial company within the
meaning of Section 3(1)(o) of the Sick Industrial Companies (Special
Provisions) Act, 1985. In terms of the proviso to Section 15(1) of the
said Act, the Board of Directors, at their meeting held on 6th October,
2000, had formed an opinion, that your Company had become a Sick
Company. Accordingly, a reference to the Board for Industrial and
Financial Reconstruction (BIFR) has been made by the Company.
Exports during the period under report is Rs. 120.21 million as
compared to Rs.159.97 million during the previous year. The lower
exports is mainly attributable to the poor off take by 600 Lathes
In view of the loss incurred during the period, the Directors regret
their inability to recommend dividend.
DISPOSAL OF FIXED ASSETS
Lands, admeasuring 57 Acres and 5 Guntas, together with buildings
thereon, situated at Unit II and Unit III of your Company at Sattur
Village, Dharwad District, which were lying un-utilised, have been
disposed of on 7th January. 2000.
INCREASE IN AUTHORISED SHARE CAPITAL
At the Extraordinary General Meeting of the Company held on 6th June,
2000, the Authorised Capital of the Company was increased from Rs.190
million to Rs.250 million. Now the Authorised Capital is comprised of
14,000,000 Equity Shares of Rs.10/- each and 11,000,000 Preference
Shares of Rs.10/- each.
Dr. C. A. Phalnikar resigned as the Chairman and also as a Director of
the Company with effect from 28th July, 1999. The Directors place on
record their appreciation of the valuable services rendered to the
Company by Dr. C. A. Phalnikar.
Consequent upon the resignation of Dr. C. A. Phalnikar, Sri Vikram S.
Kirloskar, Vice Chairman & Managing Director, was appointed as the
Chairman of the Company and also of the Board of Directors with effect
from 28th July, 1999.
Subsequently, Sri Vikram S. Kirloskar resigned as the Managing Director
of the Company with effect from 6th October, 2000, but continues to be
the Chairman of the Board of Directors and also of the Company.
Consequent upon his resignation as the Managing Director, Sri Vikram S.
Kirloskar is liable to retire by rotation. Hence, he retires by
rotation at the ensuing Annual General Meeting and being eligible
offers himself for reappointment.
To ensure full time attention to the affairs of the Company, at the
Board Meeting held on 6th October, 2000, Sri Sham S. Kirloskar has been
appointed as an Additional Director and also the Managing Director of
the Company with effect from 6th October, 2000.
Sri Sham S. Kirloskar vacates his office as an Additional Director at
this meeting. A notice has been received from a member of the Company
notifying his intention to propose the candidature of Sri Sham S.
Kirloskar as a Director. Necessary Resolution has been proposed seeking
Members' approval for the appointment of Sri Sham S. Kirloskar as a
Director of the Company.
The nomination of Sri V. S. V. Ramana, representing Life Insurance
Corporation of India, has been withdrawn and in his place Sri V.
Ramanan has been nominated with effect from 28th October, 1999. The
nomination of Sri G. V. Nageswara Rao, representing Industrial
Development Bank of India, has been withdrawn and in his place nobody
has been nominated. The Directors place on record their appreciation of
the valuable services rendered to the Company by Sri V. S. V. Ramana
and Sri G. V. Nageswara Rao.
Three of the Directors of the Company, namely, Sri Pratap Bhogilal, Sri
Atul C. Kirloskar and Sri K.J.George retire by rotation at the ensuing
Annual General Meeting and being eligible offer themselves for
Financial Year of the subsidiary. Precision Tooling Systems Limited,
has been extended upto 31st May, 2000. During the said period, your
subsidiary has incurred a loss of Rs.21.14 million as against a loss of
Rs.10.43 million for the previous year. In view of the loss incurred
during the period, it could not declare any dividend.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975 as amended, the particulars of employees covered under these rules
are annexed forming part of the Report.
CONSERVATION OF ENERGY
In order to conserve and minimise power utilisation at foundry, steps
have been taken to avoid warm holding of molten metal in the furnace
and also running of compressors at prescribed timings. There are
further proposals which include reduction of wastage of liquid metal in
the form of spillages. With these energy conservation measures, there
will be improvement in the yield.
RESEARCH & DEVELOPMENT
In order to cater to the change in customer preference and also to suit
current market conditions, new products have been developed for
machining heavy engineering components, mass production lines and also
high speed auto components. Development of these new products will
result in reduced floor areas of machines, reduction in capital
investment at customer's end, improvement in productivity and reduced
operator dependability and fatigue.
In Foundry, improvements have been made for reduction in machining
allowances such that product accuracy could be maintained at the
customer's end while reducing metal consumption at Company's end. This
has also resulted in lower rejection at customer end.
The Company has incurred recurring expenditure of Rs.30.605 million
towards R & D and there has been no capital expenditure. The total
expenditure towards R & D is 3.58% of the turnover of the Company.
No technology has been imported during the period under report and the
technology which were imported in the previous years were fully
absorbed and assimilated.
FOREIGN EXCHANGE EARNINGS & OUTGO
Foreign exchange earnings & outgo is Rs.149.72 million and Rs.75.58
CONTRIBUTION TO EXCHEQUER
During the period under report, the Company has contributed a sum of
Rs.221.94 million to the exchequer by way of Excise Duty, Customs Duty,
Sales Tax and various other taxes.
The Company's accounts have been audited by Messrs. S. R. Mandre & Co.,
Chartered Accountants, Bangalore, and Messrs. R G. Bhagwat, Chartered
Accountants, Mumbai, who will hold office till the conclusion of the
ensuing Annual General Meeting and are eligible for reappointment.