MTZ Polyfilms Ltd. के निदेशक की रिपोर्ट

Mar 31, 2010

The Directors present the Twenty Fourth Annual Report with the Audited Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

Rs. in lacs

Year ended Year ended 31/03/2010 31/03/2009

Sales 10126.64 9325.87

Profit/(Loss) before interest, depreciation, deferred revenue expenditure, extraordinary/prior period items and tax (230.35) 68.70

Interest and Finance Charges (719.83) (938.76)

Profit/(Loss) before depreciation, deferred revenue expenditure, extraordinary/prior period items and tax (950.18) (870.06)

Depreciation (1002.71) (1001.57)

Profit/(Loss) before deferred revenue expenditure, extraordinary/prior period items and tax (1952.89) (1871.63)

Deferred Revenue Expenditure amortised (4.31) (4.31)

Extraordinary/Prior Period Items (Net) (0.81) 0.38

Profit/(Loss) after tax (1958.01) (1875.56)

Add: Deficit brought forward (19002.39) (17126.84)

(Loss) carried to Balance Sheet (20960.40) (19002.40)

DIVIDEND

Due to the loss incurred during the year and the Companys substantial debt repayment obligations, the Directors are unable to recommend payment of dividend.

CORPORATE GOVERNANCE

The Company has endeavored to comply with the provisions of Corporate Governance as prescribed under the Listing Agreement with the Bombay Stock Exchange. A separate Report on Corporate Governance alongwith the Auditors Certificate on its compliance by the Company is included as a part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board confirms that:

(i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

(ii) The Directors have 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 as at 31st March, 2010 and the Profit and Loss Account for the year ended on that date.

(iii) 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.

(iv) The Accounts have been prepared on a going concern basis.

INSURANCE

The Fixed Assets and Current Assets of the Company have been adequately insured.

FIXED DEPOSITS

The Company has not accepted any Fixed Deposits from the Public and/or Shareholders during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo as required by Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies. (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure "A" to this Report.

AUDITORS

M/s. R. K. Chapawat and Company, Chartered Accountants, Statutory Auditors of the Company, retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

PERSONNEL

The Company had 140 employees as at 31st March, 2010. Industrial relations were satisfactory during the year.

Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to Shareholders of the Company excluding the aforesaid information. Any Shareholder seeking such particulars may write to the Company at its Registered Office.

On behalf of the Board of Directors

Place : Mumbai SANJAY B. SHAH

Dated : 22nd January, 2011. Chairman

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Mar 31, 2009

The Directors present the Twenty Third Annual Report with the Audited Accounts for the year ended 31st March, 2009.

FINANCIAL RESULTS

Rs. in lacs

Year ended Year ended 31/03/2009 31/03/2008

Sales 9325.88 11355.05

Profit/(Loss) before interest, depreciation, deferred revenue expenditure, extraordinary/prior period items and tax 68.70 671.50

Interest and Finance Charges (938.76) (880.53)

Profit/(Loss) before depreciation, deferred revenue expenditure, extraordinary/prior period items and tax (870.06) (209.03)

Depreciation (1001.57) (1001.63)

Profit/(Loss) before deferred revenue expenditure, extraordinary/prior period items and tax (1871.63) (1210.66)

Deferred Revenue Expenditure amortised (4.31) (4.31)

Extraordinary/Prior Period Items (Net) 0.38 1.33

Profit/(Loss) after tax (1875.56) (1213.64)

Add: Deficit brought forward (17126.84) (15913.19)

(Loss) carried to Balance Sheet (19002.40) (17126.83)

DIVIDEND

Due to the loss incurred during the year and the Companys substantial debt repayment obligations, the Directors are unable to recommend payment of dividend.

FINANCIAL PERFORMANCE AND OPERATIONS - PET FILM

Sales turnover for the year ended 31st March, 2009 decreased 18% to Rs. 9325.88 lacs from Rs. 11355.05 lacs in the previous year. The decline in revenue was caused by a 17% drop in plant output, which reduced to 9,630 MT during the year, and the resumption of job-working which resulted in the elimination of raw material cost from sales turnover for approximately 4% of the Companys sales volumes. The foregoing contractions were partially offset by an improvement in sales realizations. As in previous years, the overriding factor that contributed to lower operating levels was the shortage of working capital.

Consequent to the decline in sales turnover outlined above, fixed costs had to be absorbed over lower volumes. This led to the Companys annual EBITDA decreasing to a marginal Rs. 68.70 lacs. Comparable EBITDA in the prior year was Rs. 671.50 lacs. The lower EBITDA during the year also expanded the Companys loss at the net level to Rs. 1871.63 lacs. This is against a net loss of Rs. 1210.66 lacs in 2007-08. Management considers these operating results to be unsatisfactory in the backdrop of favorable market conditions and attractive selling prices that existed in the domestic PET Film market during the year under review. The improvement in market conditions for PET Film was fueled by recurring double digit growth in the domestic flexible packaging sector, increased demand for other applications such as metallic yarn and limited additions to production capacity. The flexible packaging sector in India continued to benefit from a structural shift in consumption from conventional packaging mediums to laminate packs. This trend is expected to carry on gaining momentum in years to come on the strength of growing per capita income and a favorable demographic profile in India.

Global demand growth for PET Film, although lower than in the immediately preceding year due to the adverse effects of the financial crisis which began in the second half of 2008, also remained at an acceptable level during the year. This is because China and India have been the major contributors to the rise in global consumption of PET Film in the last 10 years and these countries have been less impacted by the slowdown than developed economies. Despite having access to customers in markets other than the US and EU, which still levy anti-subsidy and anti-dumping duties on PET Film originating from India, the working capital shortage confronting the Company constrained it from undertaking exports in a meaningful manner. This was borne out by the significant reduction in export turnover registered during the year under report.

From the above, it is evident that the Company, due to its strained financial position and high leverage, has been unable to participate in the recent upswings that have occurred in its end markets. Production and sales have been erratic and insufficient as the Company has had to primarily depend on its suppliers and customers for short term trade credit in the absence of working capital facilities from its Bankers, who are yet to take a final view on the Companys revised financial restructuring plan. Moreover, with working capital itself being in short supply, there has been no possibility of financing the Companys identified improvement projects related to operating costs and capacity.

FUTURE OUTLOOK - PET FILM

Demand growth for PET Film in India is likely to remain strong on account of the factors already discussed earlier in this Report. Global demand growth for PET Film is also expected to return to pre-downturn trajectories as the recession bottoms out in developed economies and customers begin re-stocking product. This should have a positive effect on exports of PET Film from India. Notwithstanding these positives, a large amount of PET Film capacity is in the process of being brought into operation in India towards the end of 2009-10 and in 2010-11. This is bound to have adverse repercussions on the domestic selling price of PET Film in the short to medium term although the severity of price movements cannot be predicated. The domestic PET Film industry has undergone several phases of oversupply in earlier periods and it remains to be seen whether the experiences of the past will lead to greater price discipline being exercised by manufacturers this time around.

The Company, on its part, needs to consummate its already submitted revised financial restructuring plan with lenders, promoters and other concerned agencies through BIFR. Only upon this happening can the Company find a long term solution to its leverage and working capital, which in turn will give it the flexibility to implement its improvement projects.

RISKS AND CONCERNS - PET FILM

In the perception of the management, the principal risk factors affecting the Company are as follows:

- The cyclical nature of the PET Film sector and the volatility in earnings that can arise therefrom.

- Entry of new manufacturers both domestically and internationally and the destabilizing effect on the market/selling prices that can be caused as a result.

- The loss of key customers in the Indian and export market and the resultant adverse effect on sales volumes.

- Substitution of PET Film in certain applications by competing substrates such as BOPP Film and aluminium foil.

- The imposition of further anti-dumping and anti-subsidy duties by important export destinations such as USA and the EU on imports of PET Film from India. This could compound the present inability to export to these countries and exert additional pressure on the domestic market.

- Reduction in customs duty on import of PET Film into India and the decline in selling prices that can occur on account of this.

- Foreign exchange and interest rate fluctuations and their negative impact on financial results.

- The Companys financial strength to withstand downturns in the PET Film sector.

- The Companys ability to implement a revised financial and operational restructuring plan to reduce its leverage, improve its cost structure and de-bottleneck capacity.

- The Company being able to continue funding its working capital/liquidity needs and, as being experienced currently, the negative impact on capacity utilization in the event of shortfalls in working capital availability.

- The ability to source the required volume of raw materials and other inputs and disruptions that can occur in the supply chain if the Company is unable to meet its obligations to suppliers.

- Significant and sudden increases in the price of raw materials and the Companys ability to pass these through to the market.

PROJECT STATUS

POLYESTER CHIPS

Due to the paucity of finance, the Company is unable to plan the implementation of the said project at the current time. Expenditure incurred thus far on the project continues to be reflected under Capital Work-in-Progress as a final decision is yet to be taken with regard to its implementation.

FORWARD-LOOKING STATEMENTS

Any forward-looking statements contained in the Directors Report represent your Companys expectations based on present information and assumptions. These statements are subject to various uncertainties and actual results could differ materially from those which are expected or projected.

INTERNAL CONTROL SYSTEMS

The Company has a system of internal controls to ensure that all assets are protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly. A program of internal audits and management reviews supplements the process of internal controls. The Company also has an Audit Committee that interacts with its Auditors in dealing with matters within its terms of reference.

DIRECTORS

Mr. Anand S. Shah retires at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

CORPORATE GOVERNANCE

The Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as prescribed under the Listing Agreement with the Bombay Stock Exchange. A separate Report on Corporate Governance alongwith the Auditors Certificate on its compliance by the Company is included as a part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Board confirms that:

(i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed.

(ii) The Directors have 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 as at 31st March, 2009 and the Profit and Loss Account for the year ended on that date.

(iii) 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.

(iv) The Accounts have been prepared on a going concern basis.

INSURANCE

The Fixed Assets and Current Assets of the Company have been adequately insured.

FIXED DEPOSITS

The Company has not accepted any Fixed Deposits from the Public and/or Shareholders during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo as required by Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies.

(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure "A" to this Report.

AUDITORS

M/s. R. K. Chapawat and Company, Chartered Accountants, Statutory Auditors of the Company, retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

PERSONNEL

The Company had 145 employees as at 31st March, 2009. Industrial relations were satisfactory during the year.

Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to Shareholders of the Company excluding the aforesaid information. Any Shareholders seeking such particulars may write to the Company at its Registered Office.

On behalf of the Board of Directors

Place : Mumbai SANJAY B. SHAH

Dated : 6th April, 2010. Chairman