The Directors hereby submit their Report with the Audited Accounts of
the Company for the year ended 31st March, 2001.
(Rs. in Lakhs)
year ended year ended
31st March 31st March
other Income 2726 5702
Income from sales of TDR - 1242
Total 2726 6944
a) Less before
Depreciation 1836 2376
b) Add: Interest 394 493
c) Loss before depreciation 2230 2869
d) Add: Depreciation 226 240
e) Loss for the year 2456 3109
f) Add: Prior year
adjustments - 34
g) Add: Cumulative
Loss brought forward
from previous year. 7456 4313
h) Cumulative Loss carried
to Balance Sheet 9912 7456
OPERATIONS AND FINANCE:
2. Gross income during the year decreased to Rs. 27.26 crores as
compared to that of Rs. 57.02 crores during the previous year. The
operations of the Company came to complete halt in November, 2000. The
BIFR issued show cause notice for charge in Management as the
operations were not viable in the Company has no resources to continue
the loss generating activities. The promoters after investing a huge
amount of funds could include that it will not be possible on their
part to revive the Company. The Company was operating at a loss of
approximately R. 2 Crores per month which required a cash infusion of
the like amount. There had not been any source of funds from any comer
and the Company's operation came to a complete halt.
The total cumulative losses at the end of 31.03 2001 reached to a level
of Rs. 99.12 Crores as against the Share Capital of Rs. 7.80 crores
only. The operating agency IDBI, the Company's Bankers Bank of Baroda
and the BIFR came to the conclusion that the operations of the Company
can not be made viable in the present circumstances. The BIFR therefore
recommended to the Honourable High Court, Mumbai for the winding up of
In view of the closure of operations and non availability of the funds
for meeting the liabilities, the working environment became
non-conductive and the management could not access the records and
information. As such the Accounts for the year ended 31.03.2001 have
been prepared based on the records available with the management. The
same has been reported by the Auditors in their report.
3. The BIFR at the hearing on 5.2.2001 came to the conclusion that the
company was not likely to make it's net worth exceed its accumalated
losses within a reasonable time while meeting its financial obligations
and that the Company as a result thereof was not likely to became
viable in future. Hence it was just, equitable and in the public
interest that it should be wound up. This opinion was forwarded to the
Honourable High Court, Mumbai, RMMS, the recognised Union has filed an
appeal against the order of BIFR. The appellate authority AAIFR
rejected the appeal of RMMS. However, at the instance of representative
Union and with the initiative of the Government authorities a Committee
has been set up to explore ways and means to generate liquidity out of
assets of the Company and to meet liabilities of the workers and
creditors with the approval of the Honourable High Court.
4. Consequent to the recommendations of the BIFR, Bank of Baroda filed
an application before the Honourable High Court, Mumbai for orders for
winding up of the Company. The hearing is continuing.
The Honourable High Court, Mumbai has appointed Court Receiver, who has
taken possession of some of the assets of the Company.
IDBI also filed an application before the Debt Recovery Tribunal (DRT).
The matter has been heard by the Tribunal and it has been adjourned for
One of the creditors who was holding a Decree against the Company since
1997 also moved the High Court, Mumbai for recovery of their dues.
5. The Company's fixed assets are insured by the first charge holders
i.e. IDBI and request has been made to bank of Baroda for the insurance
of the current assets including inventories.
6. In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. K. C. Mehra retires by
rotation at the ensuing Annual General Meeting and is eligible for
re-appointment. The Board commends his appointment.
The BIFR has withdrawn the nomination of Mr. R. S. Rathore as their
Nominee and he ceased to be a Director of the Company with effect from
30st August, 2001. The Board placed on record its sincere appreciation
of the valuable services rendered by them.
7. COROMANDEL GARMENTS LTD. (CGL):
The operations of the subsidiary Company remain suspended since
13.5.1999. In the mean time, as part of the Revival Scheme submitted to
BIFR, 532 employees were sent way on Early Retirement Scheme (ERS).
BIFR has convened the meeting on 16.4.2001 for discussing the Draft
Revival Scheme (DRS) circulated to all concerned. At this meeting the
management of subsidiary Company informed BIFR that the parent company
M/s. The Svadeshi Mills Company Limited, which was also declared as a
sick company (Case No. 50/98) was referred to Mumbai High Court by BIFR
for initiating the winding up proceedings and this has stalled the
promoter support to see through the smooth implementation of Revival
Scheme. Consequently BIFR had directed the Operating Agency (OR) to
advertise in the news papers calling for change of management of
subsidiary Company. Accordingly the Operating Agency (M/s. Bank of
Baroda) advertised in the news papers on 30.5.2001 and invited offers
for change of management. Unfortunately, there was no response to the
advertisement released by the operating agency. In the mean while, the
employees of Coromandel Garments Limited came together and framed an
Employees Industrial Co-Operative Society and submitted a Revival
Proposal to BIFR through the Operating Agency.
A Notice dated 24.10.2001 from BIFR directing the management of
subsidiary Company to show cause as to why winding up notice should not
be issued in view of the considerable delay on the part of the
subsidiary Company in finishing Rehabiliation Proposal.
The subsidiary Company has since submitted a reply to BIFR in response
to their notice.
AUDITORS AND AUDIT REPORT:
8. Your are required to appoint Auditors for the current year and
authorities the Board to fix their remuneration. The retiring Auditors,
Messrs A. F. Ferguson & Co., Chartered Accountants offer themselves for
re-appointment as the Auditors of the Company. Having regard to the
provisions of Section 224A of the Companies Act, 1956, the appointment
is required to be passed by a Special Resolution.
The Auditors in their report to the Members have made observations and
qualifications to be read with the Notes to the Accounts. The Auditors
have also stated that all the records and documents are not accessible
and that the financial statements have been prepared by the Company
based on the records available with the Company. Accordingly, the
Auditors have not been able to carry out their normal Audit Procedures
and checks and accordingly their reports are based on the Examination
of the records produced to them and available with the management. In
the present circumstances as explained above, the Board had no other
option but to complete the accounts with the available information. The
observations of the Auditors in their report read with the Notes to the
Accounts are self explanatory and it is not possible to take any
further corrective steps and comment in view of the non-availability of
the human resources.
DIRECTOR'S RESPONSIBILITY STATEMENT
9. Pursuant to the provisions contained in Sub-section (2AA) of Section
217 of the Companies Act, 1956, the Board reports to the members of the
Company that, to the best of their knowledge and belief and subject to
paragraph 8 above:
a. in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
b. the Directors had selected such accounting policies and applied them
consistently and made judgements and estimates 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 that period.
c. the Directors has taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d. the Directors had prepared the annual accounts on a going concern
PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
10. The Company has no employee drawing a remuneration of Rs.
12,00,000/- p.a. and/or Rs. 1,00,000/- p.m., if employed for a part of
the year. Hence Section 217 (2A) of the Companies Act, 1956 with the
Companies (Particulars of Employees) Rules, 1975 does not apply.
Particulars of Energy, Technology and Foreign Exchange pursuant to
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the Report of Board of Directors) Rules,
1988 is set out in the Annexure A hereto and forms part of this report.
COST ACCOUNTING RECORDS (COTTON TEXTILES) RULES, 1977:
11. Being in Textile business the above Rules are applicable to the
Company. The necessary books of accounts and cost records prescribed
under Section 209(1)(d) of the Companies Act, 1956 have generally been
maintained but could not be made available to the Cost Auditors.
12. The Directors thank the Company's Bankers, Bank of Baroda and the
Industrial Development bank of India (IDBI) for the help and
co-operation. The Directors also acknowledge and appreciate the
continued trust and confidence reposed by the Shareholders on the
Company. The Directors wish to thank all the employees for their
support under extremely difficult circumstances.
Statement containing particulars pursuant to the Companies (Disclosure
of particulars in the Report of Board of Directors) Rules, 1988.
A. Conservation of Energy:
(i) Measures undertaken during the year were continuation of proposals
initiated during the earlier year.
(ii) Additional investments and proposals include implementation and
installation of equipments already purchased subject to availability of
funds for completion of these project.
(iii) The impact of the measure will be to reduce consumption of power
and reduction in the cost of manufacture.
B, Technology Absorption and Research and Development
(a) Research and Development
1. Specific areas in which R & D carried out by the Company.
2. Benefits derived as a result of the above R & D.
3. Future plans of actions.
4. Expenditure on R & D - Rs. in Lakhs - Nil.
(b) Technology Absorption, Adoption and Innovation.
(c) Foreign Exchange Earnings and Outgo: (Rs. in Lakhs) Current
Previous Year Year
Foreign Exchange Earnings Nil 9.58
Foreign Exchange Outgo Nil 159.95
Due to the difficult situation prevailed during the whole year and the
total closure of operations from November, 2000, no steps would be
taken on the above matters as the same was not feasible.