The Directors' are pleased to present the Sixteenth Annual Report and
the Audited Accounts for the financial year ended 31st March 2000.
Summarised Financial Results
Sales/Income 5,964.40 12,777.66
Profit before interest,
Depreciation and tax (710.81) 1,672.53
Profit before Depreciation
and tax (2,578.10) (1,690.17)
Depreciation 1,835.06 1,295.76
Profit Before Tax (4,413.16) (2,985.93)
Provision for Tax Nil Nil
Profit After Tax (4,413.16) Nil
Surplus from last year 1,134.79 4,120.72
Provision for Dividend
written back 921.67 Nil
carried forward (2,356.70) 1,134.79
Reserves and Surplus
The reserves and surplus of the company stood at Rs.11,344.09 lakhs as
at 31st March 2000.
The performance during the year under review has been significantly
lower. Scarcity of adequate working capital low productivity,
continuing recession in the auto and electronics market have been the
reasons for the significant drop in the revenues and accumulation of
losses during the period. The delay in tie up of funds which was
envisaged at the commencement of the year has resulted in considerable
loss of potential business opportunities in the auto and electronics
(copper clad laminates) segment. However operations in the chemicals
division stabilised during the second halt of the year. There events
have to a large extent led to under utilization of plant capacities and
low productivity levels resulting in higher losses during the year.
With the entry of multinationals with larges capital outlay, lowering
of import tariffs and the unhealthy competition from the unorganized
sector, the electronics & air conditioning market is undergoing a
transition. The company has a minor presence in these segments and
given the scenario above it has been consciously decided to cease
operations in these areas in the current year and focus in areas where
the company has its inherent strength. The company would hitherto
focus all its resources in consolidating its existing presence in auto
components, chemicals and electronics (copper clad laminates) in the
In addition to decline in normal business operations, modernisation of
the existing plants, manpower rationalisation and the much desired
commencement of commercial production in the copper clad laminates
plant could not be achieved during the year due to the delay in the tie
up of short term and long term resources. Concentration of large
investments in the copper clad laminates project and the delay in
achieving commercial production has deprived the other performing and
profit making divisions of the much required working capital & capital
investments for modernisation.
Recognising the need to provide requisite impetus for achieving higher
levels of performance, the board has identified the three segments
where it has inherent strength, namely, auto components, chemicals and
electronic (copper clad laminates) as core areas for growth. A
detailed study of the steps required to achieve this objective is in
progress, suitable remedial measures including manpower rationalisation
would be identified and implemented during the current year. Positive
results from these remedial measures would gradually accrue and thus
enhance performance and profitability in a couple of years.
Consent of the members of the company was accorded to the board at the
previous annual general meeting to raise resources from time to time
not exceeding US million on by issue of appropriate securities as
determined by the Board to liquidate its existing high cost borrowing,
modernisation and meet its working capital requirements. The board is
pleased to state that the company has identified a group of high net
worth overseas bodies corporate and has in principle tied up foreign
investments viz., initial issue of securities aggregating to US $ 25
million, finer details of the investments are in the process of being
finalised. The investment by the group of foreign investors in the
securities proposed to be issued by the company, though initially
limited to infusion of funds, is in the Imminent future expected to
culminate into a long term strategic business partnership.
As a corollary to the decision by the foreign investors to
strategically associate with the company and become business partners
in the long run, they have appointed Bower Cotton, London, Unite
Kingdom, a solicitors firm of international despute with a business
standing of over 175 years, to advise and assist the present and
prospective investors who have evinced interest in investing in the
company. Consequently, the have nominated Mr. Paul Francis Simms,
Solicitor & Senior Partner, Bower Cotton to represent the investors as
Director on the board of the company. The board places on record its
appreciation for the assistance and advice being rendered by Mr. Paul
Francis Simms in the financial and business restructuring of the
Amidst the delay in tying up the requisite funds to liquidate the
existing high cost borrowings, as earlier indicated in our previous
report, the banks & financial institutions who had recalled the
facilities and advances besides initiating judicial proceedings have
further obtained orders for possession of the secured properties of the
company. However, in light of the strategic tie up and the imminent
disbursement of funds by the foreign investors, the banks and financial
institutions have at the request of the company consented to defer
legal proceedings/possession of assets of the company. Negotiations
are under way with the banks and financial institutions for one time
settlement of dues; the process would be completed before the end of
the current year. Significant concessions and savings in interest
costs are expected to accrue as a result of this exercise, appropriate
adjustments have been made in the financial statements to reflect these
changes, the liabilities have been accordingly reinstated. The Company
could not replenish adequate cash flow for timely redemption of
redeemable preference shares.
In the backdrop of the above developments and the strategic financial
and business restructuring now in progress, the board is confident of
improved performance and profitability in the years ahead.
The Directors do not recommend dividend in view of minimal operations
and negative performance for the year under review.
Dr. Jewan Prakash Raina and Mr. S.Krishnamoorthy, Directors, retire by
rotation and being eligible offer themselves for re-appointment.
Mr.V. Ramakrishnan, Managing Director, whose term expires on 22nd
October 2000 has been re-appointed as Managing Director, subject to the
consent of the members, at the meeting of the Board of Directors of the
company held on 29th September 2000.
The Board recommends approval by members of the re-appointment of Mr.
V. Ramakrishnan, as Managing Director of the company on the existing
terms and conditions and subject to the provisions contained in
Schedule XIII to the Companies Act, 1956 set out in detail in the
notice to the members.
Mr. Paul Francis Simms who was appointed as Director on the Board with
effect from 20th April 2000 retires at this Annual General Meeting and
is eligible for re-appointment. The company has received notice under
section 257 of the Companies Act, 1956 from a member proposing the
candidature of Mr. Paul Francis Simms as Director.
Messrs. R. Swaminathan & Co., Chartered Accountants, Chennai hold
office until the conclusion of this Annual General Meeting. The
company has received a letter from R. Swaminathan & Co. to the effect
that their appointment, if made would be within the limits prescribed
under section 224(1B) of the Companies Act, 1956 and thus eligible for
re-appointment. Messrs. S. Viswanathan Chartered Accountants, Chennai
have expressed their inability to act as auditor due to their other
Year 2000 Compliance
The Year 2000 transition was smooth without any disruption to the
operation of any of the Divisions of the company.
Dematerialisation of shares
The Securities and Exchanges Board of India, vide circular dated 29th
May 2000 directed the company for compulsory dematerialisation of
shares of the company by all class of investors with effect from 30th
October 2000. In order to conform to the requirements of the
Depositories Act, 1996, it is necessary to introduce a new article in
the Articles of Association of the company. However the company has
approached SEBI and sought time to go in for compulsory
dematerialisation effective 1st April 2001, Necessary resolutions for
alteration/amending the Articles of Association is placed before the
members for their consent.
As per the amended provisions of the Listing agreement it will be
mandatory for your company to implement corporate governance during the
financial year 2000-2002. Necessary steps will be taken to ensure the
implementation of the same before the prescribed date.
The aggregate amount of deposits from public as at 31st March 2000 is
Rs.3.95 crores, which includes a deposit of Rs.2 crores from an
institution. Of the above, unclaimed deposits amount to Rs.0.06
crores, deposits matured and remaining outstanding for repayment
aggregates to Rs.3.70 crores. On account of the recurring losses and
tight liquidity condition, there has been a delay in repayment of the
deposits. The Company continues to progressively repay deposits in a
scheduled manner. The Board records its grateful appreciation for the
understanding shown by the deposit holders. The Board has taken a
decision to repay the matured deposits in full as and when the funds
are in place. The company has discontinued acceptance/renewal of
The particulars of employees under section 217(2A) of the Companies
Act, 1956 read with Companies (Particulars of employees) Rules 1975
forms part of this Report. However as per the provision of Section 219
(1)(b)(iv) of the Companies Act, 1956 the report and accounts are being
sent to the shareholders of the company excluding the statement of
particulars of employees under section 217(2A) of the Act. Any
shareholder interested in obtaining a copy of the said statement may
write to the registered office of the company.
The relations with the staff and workers union continue to remain
cordial and harmonious.
Conservation of Energy Technology, Absorption and Foreign Exchange
The thrust on energy conservation continued though energy consumption
at the Company's factories is not a major cost factor. Energy
consumption devices have been installed where appropriate and steps
taken to conserve energy from time to time.
The statement in Form B 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 is given in the annexure forming
part of this report.
Disclosure of Particulars with respect to Technology Absorption
Research and Development (R & D)
1. Specific areas in which R & D is carried out by the Company
The Company has in-house R & D Departments in Auto, Chemical and
Electronics Divisions. The R & D efforts are directed towards quality
control, improvement/upgradation of existing products and development
of new products.
2. Benefit derived as a result of the above R & D
Improvement in quality, cost effectiveness and realisation of higher
levels of production.
3. Future plan of action
Consolidation of the results achieved, pursue Improvements in the above
areas to achieve international quality standards.
4. Expenditure on R & D (Rs.in thousands)
a) Capital Rs.232 (1999-Rs. 575)
b) Recurring Rs.137 (1999-Rs.1174)
c) Total Rs.369 (1999-Rs.1749)
d) Total R & D expenditure as a
percentage of total turnover 0.06% (1999-0.14%)
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation
Training and retraining of the existing personnel and the new personnel
is being practised to ensure that the technology absorption is complete
and transferred to new generation technical personnel.
In the process of absorbing technology from M/s. Nationwide Circuit
2. Benefits derived as a result of the above efforts etc. product
improvement, cost reduction, product development, import substitution,
Achieving higher purity level and cost reduction in core business
Particulars of Imported Technology
a) Technology imported
b) Year of import
c) Has technology been fully absorbed
d) If not fully absorbed, areas where this has not taken place, reasons
therefore, and future plans of action.
During the year 1999-2000 there was no import of technology.
Foreign Exchange Earnings and Out Go
1. Activities relating to exports, initiatives taken to increase
development of new export markets for products and services and export
We have exported carburettors, Fuel pumps, water pumps and housings to
New Zealand USA and Republic of South Africa during the year under
Total foreign exchange Rs.in thousands
(a) Used (a) Rs.9,672 (1999-Rs.3,974)
(b) earned (b) Rs. 832 (1999-Rs.3,901)