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The Members,
Sarika Paints Limited
The Directors have pleasure in presenting the 15th Annual Report and
audited Accounts for the year ended 31st March, 2004.
FINANCIAL RESULTS:
(Rs. in Lacs)
Particulars 2003-04 2002-03
Sales & Other Income 716.70 662.62
Gross Profit before
Depreciation, Taxes & Interest (40.22) (252.6)
Less: Depreciation 11.64 12.01
Interest 41.74 48.28
ADD: Prior period Income/(Expenditure) (1.44) (5.32)
Net Profit/(Loss) for the year (95.04) (318.21)
ADD: Balance brought
forward from the Previous Year (433.65) (115.43)
Profit/(Loss) before appropriation (528.69) (433.64)
Appropriations:
General Reserve 0.00 0.00
Balance carried forward (528.69) (433.64)
DIVIDEND:
In view of the tosses suffered your Directors do not recommend any
dividend.
OPERATION & RESULT:
During the year under review, there was no significant improvement in
the performance of the company. Though the sales of the company went up
to Rs. 712.69 lakhs compared to Rs. 661.37 lacs in the previous year.
The company recorded a net loss of Rs 95.04 lacs. The above sales
includes trading sales of Rs.82.83 lakhs for metal scraps.
During the year, the management of the company has changed hands and
the new management is striving hard to improve the financial
performance. As the company has already eroded more than 50% of it's
networth due to cash losses. The company has approached GBIFR. The
company's performance is expected to increase in the current year based
on the concessions requested by the company for it's restructuring and
rehabilitation. The liquidity position of the company could not improve
during the year and there was low capacity utilisation. The Company has
added some multinational companies for which it has undertaken contract
manufacturing for new products and the losses of the company is likely
to decrease in future.
DEPOSITS:
The Company has not invited or accepted any deposits falling within the
limits of the provisions of Section 58A of the Companies Act, 1956 and
the Companies (Acceptance of Deposits) Rules, 1975 during the year.
REFERENCE TO GBIFR:
Despite Company's best efforts to improve the operational working, the
networh of the Company was eroded more than 50% in the last year and
further more in the current year on account of losses, As a result, the
Company falls within the meaning of Section 3(1) (O) of the Sick
Industrial Companies (Special Provisions) Act, 1985. The Company had
made a reference to the GBIFR as required under this Ad by making an
application on 14.10.2003 and accordingly, the Company was Registered
with GBIFR under Registration no. 208 dated 30.10.2003.
CHANGE IN MANAGEMENT:
Shri Dharmesh A. Shah & Others made Share Purchase Agreement on 13th
January, 2004 with Kantibhai M. Patel & Others for the purchase of
1305010 fully paid-up equity shares of the company having a nominal
value of Rs. 10/-per share representing 28.68 shares in the total
apid-up capital at the price of Rs. 0.50 per share aggregating to Rs.
6,62505/-. Thus management of the Company was changed from Shri
Kantibhai M. Patel & Others to Shri Dharmesh A. Shah & Others and As
per the SEBI Takeover code, 1997, an open offer was made by Shri
Dharmesh A. Shah for the acquisition of 9 10,000 Equity Shares of Rs.
10/-each being 20% of total Equity Share Capital from the shareholders
of the Company at a price of Re. 1.00 per share on the record date
fixed on 19.1.2004. against which shareholders constituting 16200
equity shares of Rs. 10 each have been offered in the open offer
DIRECTORS:
In accordance with the Articles of Association of the Company Shri
Kishor S. Dudhatra and Shri. Mahendrabhai B. Patel, retire by rotation
as directors at the ensuing Annual General meeting and being eligible
offers themselves for reappointments.
Shri Dharmesh A. Shah and Shri Gaurang M. Shah were appointed as
additional directors by the Board on 13th January, 2004 and they hold
office upto the date of the ensuing Annual General Meeting. The Board
recommend their appointments as regular directors.
Shri Dharmesh A. Shah was appointed as Managing Director w.e.f. 13th
January, 2004 for a period of five years on the terms and conditions of
the appointment including the remuneration as recommended by the
Remuneration Committee. A proposal for appointment of Shri D.A.Shah is
being placed before the members for their approval at the ensuing
Annual General Meeting
Shri K. M. Patel was appointed as Executive Director w.e.f. 01.09.2004
for a period of three years on the terms and conditions of the
appointment including the remuneration as recommended by the
Remuneration Committee. A proposal for appointment of Shri K M Patel is
being placed before the members for their approval at the ensuing
Annual General Meeting.
DUES TO SMALL SCALE UNDERTAKING:
As required by Circular No. GSR/129(E) in respect of SSI suppliers
under Interest on delayed payment to Small Scale & Ancillary Industry
Undertaking Act, 1993 the related date from the creditors is not
available. Hence necessary figures due to S51 are not given, however
the same are under compilation.
AUDITORS:
The Company's Auditor M/s Satyendra K. Jha, Chartered Accountant,
Ahmedabad will retire at the conclusion of the ensuing Annual General
Meeting and being eligible offers himself for re-appointment as
auditors for the year 2004-05.
AUDIT COMMITTEE:
Pursuant to the provisions of Section 292A of the Companies Act, 1956,
Company constituted the Audit Committee of the Board of Directors
comprising of Shri Kishor Dudhatra, as Chairman and Shri Mahendrabhai
B. Patel and Shri Naresh L. Patel as members of the Committee. All the
members of the Committee are Non-executive and Independent Directors.
The Committee has reviewed the accounts for the year ended March 31,
2004.
AUDITOR'S REMARK:
Remarks of Auditor's in their report are self-explanatory and hence do
not require any further clarification.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing requirements, relating to
Corporate Governance a report is being enclosed separately.
LISTING:
The Company's shares are listed on Ahmedabad and Mumbai Stock
Exchanges.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of section 217 (2AA) of the Companies Act,
1956, your Directors declare that;
a) In preparation of annual accounts, the applicable accounting
standards have been followed along with proper explanations relating to
material departure.
b) The Directors have selected such accounting policies and applied
them consistently and made judgments 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 and
loss account of the Company for that period;
c) The Directors have taken proper and sufficient care 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
irregularities;
d) The Directors have prepared the annual accounts on a going concern
basis.
AUDITOR'S CERTIFICATE:
The auditor has certified the Company's compliance of the requirements
of Corporate Governance in terms of Clause 49 of the Listing Agreement
and the same is annexed to the report on Corporate Governance.
PARTICULARS OF EMPLOYEES:
There was no employee drawing a remuneration exceeding the ceiling
prescribed under Section 217(2A) of the Companies Act, 1956.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNING AND OUTGO:
The particulars are given vide annexure-1 to the directors' report
attached herewith.
ACKNOWLEDGEMENT:
The Board of Directors wish to express their sincere thanks for the
support and cooperation extended by the bankers, valued customers and
employees of the Company at all levels.
For and on Behalf of the Board of Directors
Place : Ahmedabad Kantibhai M. Patel
Date : 31/08/2004 Chairman
ANNEXURE- 1 TO THE DIRECTORS' REPORT:
(A) CONSERVATION OF ENERGY:
(a) Energy Conservation measures taken:
During the year under review, extra care was taken by the Company to
ensure optimum conservation of electricity & fuel at the plant of the
Company.
(b) Additional investment and proposal for reduction of consumption of
energy Additional investment and proposal for reduction of consumption
of energy is not significant and there is no proposal for the time
being for any other investment for reduction of consumption of energy.
(c) Impact of the above measures:
The impact of the measures taken has been positive.
RESEARCH & DEVELOPMENT (R&D):
1. Specific area in which R & D is carried out by the Company.
i) The products are developed to suit the changing market conditions.
(ii) Technology upgradation of the products for improvement in quality
& cost factors.
(iii) Improvement in manufacturing process.
2. Benefits derived as a result of above R & D:
(i) Improvement in quality consistency of products.
(ii) Improvement in process efficiency.
(iii) Company is able to meet demand of continuous change and
improvement in product quality as required by the market conditions.
(iv) New product development for manufacturing shade card.
3. Future Plan of action:
(i) Modernisation of Operating system for better work effectiveness.
(ii) Improved quality of synthetic enamel for decorative purpose to
meet market demands and II line refinishing plants for automobile
industries.
4. Expenditure on R & D during the financial year:
The expenditure on R & D is nil, as no separate department has been set
up. At the process stage itself, the R & D is taken care of.
TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:
1. Efforts in brief made towards technology absorption, adaptation &
innovation:
The Company has undertaken regular in-house efforts to improve the
quality of the product.
2. Benefits derived as a result of the above efforts:
Better quality products are achieved.
3. Imported Technology:
No imported technology was tried during the year.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:
Year ended Year ended
31.03.2004 31.03.2003
i) Foreign Exchange Earnings NIL NIL
ii) Foreign Exchange Out Go 293215 35458
For and on Behalf of the Board of Directors
Place : AHMEDABAD Kantibhai M. Patel
Date : 31/08/2004 Chairman
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