| The Directors are pleased to present their 14th Annual Report together
with the Audited Statement of Accounts for the Company for the period
ended 31st March, 2000.
FINANCIAL RESULTS
1998-2000 (Rs. in lac)
Sales & other income 307.79
Gross profit before Depreciation & Finance Charges (-) 1038.82
Less : Finance Charges 4613.24
Depreciation 1159.77
Net Profit/(Loss) for the year (-) 6811.83
DIVIDEND
In view of the losses incurred in the current year, the Directors are
unable to recommend any dividend.
OPERATIONS AND FINANCIAL STATUS
As informed to you in the report of the Financial Year 1997-98, the
project of the Company stands fully installed barring induction of a
few balancing equipment. The Company has commenced operations, albeit
on a relatively low scale of operations. The overrun in the time and
cost of the project has had a cascading effect on the finances of the
Company. It has adversely affected Company's financial structure and
increased the financial burden substantially due to certain extraneous
factors such as highly staggered and delayed financial closure, non
availability of timely and adequate working capital finance as also
non availability of Tool Cost Finance which incidentally constitute
critical and cost intensive component of the over all operational
finance requirement.
Therefore al through the year under review the company remained
financially stressed and could not have an optimal scale of operations
to utilize its installed capacity gainfully.
Due to the circumstances as explained above, the company has incurred
losses, during the period under review and the accumulated losses as on
31.03.2000 standing at Rs. 71.77 Crores have exceeded Company's net
worth which is Rs. 49.51 crores. by virtue of the erosion of net
worth, the company comes within the ambit of section 3(1)(o) of the
sick industrial Companies (Special Provision) Act 1985 (1 of 1986).
The Board of Directors at their Meeting held on 23.06.2000 formed an
opinion that the Company has become a sick industrial company as
defined under Section 3(1) (o) of the Sick Industrial Companies
(Special Provision) Act, 1985 (1 of 1986) and the steps provided under
section 15 of the said act may be initiated.
As a measure aimed towards a substantial restructure of the finances of
the Company so as for it to be able to become more cost-competitive,
the Management is exploring various alternative options. One of the
them is towards mobilizing an ECB loan. Your Company has approached
IDBI to support this endeavour of the Company. The Management of your
Company is hopeful of the proposal fructifying it is hoped that such a
proposal could enable the finances of the company to be favourably
recasted.
OUTLOOK FOR THE FUTURE
The Management is seized with the present circumstances and has already
initiated actions/measures to restructure the finances of the company
and mobilize some need base resources to reduce the financial burden and
increase the scale of operations. coupled with the current status,
which includes physical readiness of the project and order book
position cum market conditions, the management is hopeful that the
Company can expect to do better in the coming year. However, structure
in order on the co-operation from the FI's /Banks to enable the
Company to put its financial structure in order and be able to avail
the Working Capital/Tool Cost finances adequately. It would then be in
a position to cash in on the buoyant market conditions - domestic as
well as international for the products the Company manufactures.
The Board of Directors at their meeting held on 8th February, 2000
discussed the proposal to develop a business model/plan for It related
activities. It was thought that I.T. related activities would very soon
be integral to almost all traditional businesses. It was decided that
it si the right time to start taking steps towards this goal.
As a matter of an "APPROACH" it is proposed that steps be initiated to
generate varied information based from Company's available resources
and identify outsourcing agencies for designing and developing a
business model as also for supply of technology and hardware.
Which would ultimately result into :
a. Making AFL a third generation techno-savvy business outfit, such
that it more than satisfied its customers and vendors. The idea is to
have the capability for online commerce with its business associates.
b. Exploring and exploiting the large and niche interested viewer base
of the foundry-related entities. The foundry being a core industry, the
viewer base would encompass foundries per se, supplies of a host of
foundry input materials, of foundry equipment, of foundry technology,
of user industries of castings, of foundry business related
organizations, of universities and its large pool of engineering
students and of course R & D outfits as also Government.
Further, the Members of the Board were of the opinion that AFL is well
positioned to explore and exploit, with minimal resource requirement,
the above concept by virtue of its manpower, available infrastructure,
a plethora of information on lost foam and other competing technologies
and a substantially large data bank on user and supplier base.
For this purpose Company needs to change Memorandum of Association by
inserting a new object under the heading "Other Objects". And keeping
with the proposal to commence this business it is found prudent to even
change the name of the Company. The resolution to effect these
alterations are included in the notice of the Annual General Meeting.
FIXED DEPOSITS
During the period under review, the Company has not accepted any fixed
deposits within the meaning of Section 58-A of the Companies Act, 1956.
DIRECTORS
Mr. I.K. Shah and Mr. A.V. Bhansali retie by rotation and, being
eligible, offer themselves for re-appointment.
During the period under review, Mr. F.S. Broacha, Director has resigned
from the Board with effect from 08/02/2000 due to pre-occupation with
his work. The board places on record its appreciation of the valuable
advice and guidance received form Mr. F.S. Broacha during his tenure
as a Director of the Company.
During the period under review, Mr. Dilip J. Thakkar, Alternate
Director to Mr. P. Zettler has resigned from the Board with effect from
29/-07/1999 due to his difficulty in attending Board Meetings. The
Board places on record its appreciation of the valuable advice and
guidance received for Mr. Dilip J. Thakkar during his tenure as a
Director of the Company.
During the period under review Mr. P. Zettler ceased to be a Director of
the Company by virtue of Section 283 (1)(g) of the Companies Act, 1956
due to his absence from the three consecutive Board Meeting without
obtaining Leave of Absence form the Board.
During the period under review, The Industrial Finance Corporation o
India Ltd. (IFCI) has withdrawn the nomination of Mr. M.P. Jain as
their Nominee on the Board with effect from 29/07/1999. The Board
laces on record its appreciation of the valuable advice and guidance
received form Mr. M.P. Jain during his tenure as a Director of the
Company. The Industrial Finance Corporation of India Ltd. nominated
Mr. A.K. Das on the board as their Nominee with effect from 29/10/1999.
During the period under review, Industrial Development Bank of India
(IDBI) has withdrawn the nomination of Mr. M.G. Bakre as their Nominee
on the Board with effect from 16/08/1999. The Board places on record
its appreciation of the valuable advice and guidance received from Mr.
M.G. Bakre during his tenure as a Director of the Company.
EMPLOYEES
The relations with the employees have ben cordial. Particulars of
Employees as required to be disclosed under the provisions of section
217(2A) of the Companies Act, 1956 read with Companies (Particulars of
Employees)Rules, 1975 as amended up to date can be had from the
Registered Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO.
A. Conservation of Energy :
The new modern manufacturing plant has been set up with necessary
facilities to use energy in cost effective manner.
B. Technology Absorption :
The Company has absorbed the time tested Lost Foam Technology (LFT) for
the manufacture of Ferrous and non-Ferrous castings successfully.
C. Foreign Exchange Earnings and Outgo :
Amount
(Rs.)
a. Foreign Exchange used 20048710
b. Foreign Exchanged earned 209710
AUDITORS
M/s. R.N. Bhansali & Co., Chartered Accountants & M/s. Mittal & Mittal,
Charted Accountants, retire at this Annual General Meeting and being
eligible offer themselves for re-appointment.
You are requested to appoint M/s. R.N. Bhansali & Co., Chartered
Accountants & M/s. Mittal & Mittal, Chartered Accountants, as joint
Auditors for the current financial year and fix their remuneration
Requisite certificates under section 224 of the Companies Act, 1956
from the said two Auditors have been duly received.
AUDITORS REPORT
The Notes on the Accounts referred to in the Auditors Report are self
explanatory except note No. 2.5 and Point No. 17 and 18 of the
Annexure to the Auditors Report. Explanation to the Auditors' comments
are as follows :
REPLY TO POINT NO 2.5 :
The Company has endeavored to obtain confirmation of balances from ythe
Creditors. Adjustments to the accounts are regularly made as and when
confirmations from the various parties are received.
REPLY TO POINT NO. 17 OF ANNEXURE TO THE AUDITORS REPORT :
The Company, on account of tight cash flow condition, has been paying
salaries in a staggered manner in the form of advances and has not been
able to pay off the total liabilities of Provident Fund and ESIC to the
authorities concerned under Employees Provident Fund and Miscellaneous
Provisions Act, 1952. The Company is taking all necessary
steps to ensure that the same is paid very shortly.
REPLY TO POINT NO. 18 OF ANNEXURE TO THE AUDITORS REPORT :
The Company has inadvertently paid TDS in excess to the extent of Rs.
96,83,632/- to the Income Tax Authorities in respect of Technical
Know-how Fees. The Company has also applied for refund of the excess
amount and the same is expected to be refunded to the Company. The
proposes to pay off the arrears of TDS liabilities against the refund and
file returns accordingly.
Y2K COMPLIANCE
At AFL we have already taken necessary steps to ensure that Y2K problem
does not affect the company's working adversely within the organisation
as well as with customers, suppliers, banks, financial institutions,
etc.
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