Sarita Synthetics and Industries Ltd. के निदेशक की रिपोर्ट

Mar 31, 2009

The Directors are pleased to present Sixteenth Annual Report for the year ended Mardh 31, 2009.

FINANCIAL RESULTS

2008-2009 2007-2008 (Rs.lnOOOs) (Rs.lnOOOs)

Sales 234942.93 308717.70

Other Income 12019.28 8139.73

Misc. Exp. Written Off

Loss for the year 212790.15 219685.60

Deferred Tax Credit 6708.30 11361.70

Deferred Tax Liability 23035.07 1731.51

Less: Provision for tax - -

Loss after Tax -199659.38 -212113.96

Balance carried to

Balance Sheet (1890694.85) (1691035.46)



DIVIDEND

In view of incurring losses, your Directors do not recommend dividend for the year, uraiSer review.

OPERATIONS

The company has posted a totaJ turnover of Rs.2349.43 lacs during the year against Rs.3087.18 lacs in the year 2007-08 representing a decline of 24% and incurred a loss of Rs.2127J90 toes against Rs.2196.86 lacs in the previous year. Owing the year under review, the company could not utilize its capacities fully due to various factors suets as non availability of working capital, obsolescence of machineries over the years due to wear and tear etc., The recent global melt down also contributed its part with slashed prices, reduced margins etc. The overall impact of the above factors led to deterioration in sales and profitability.

POWER

During the year 2008-2009 Wind Powrer Project has generated 909,487 No of units.

OUTLOOK FOR THE FUTURE

The future seems to be bleak and not so promising due to the carrying of heavy debt burden by the company . The company requires huge capital infusion to maintain the capacities as well as working capital. Unless the lenders take a sympathetic view and sanction substantial waivers , the revival seems a remote possibility only. More over the company has also closed the operations of Texturising divisions as it lost its viability due to continued losses . The company is searching for an investor for infusing funds in the company for increasing the viability of the company.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchange, a Report on Corporate Governance together with Auditors Certification on Corporate Governance is appended to the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement is annexed.

DEMATERIALISATION OF SHARES

Your Companys shares are traded in Dematerial-ized mode. As at 31.03.2009, 85.26% are in dematted form.

DIRECTORS

Sri Grandhi Butchi Raju retires at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment.

AUDITORS

Messers Balaji Associates, Chartered Accountants retire at the ensuing Annual General Meeting and, being eligible, offers themselves for re-appointment.

COST AUDIT

Your Company has appointed Mr. S G Ramakrishna Cost Auditor pursuant to Section 209(1 )(d) of the Companies Act, 1956 for the year 2008-09.

DEPOSITS

The Company has not accepted any fixed deposits during the period under review.

PARTICULARS OF EMPLOYEE

Particulars of employees required to be disclosed pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956 may be treated as NIL.

INDUSTRIAL RELATIONS

The Industrial Relations continued to be cordial and your Directors wish to place on record their appreciation for the contribution of the workers and officers of the Company at all levels.

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

Pursuant to Section 217(1)(e) read with the Companies [Disclosure of Particulars in the Report of Directors] Rules, 1988 is given in the Annexure being a part of this report.

FOREIGN SUBSIDIARY

Statement under Section 212(5)(d) of the Companies Act, 1956 is enclosed in respect to the Companys Foreign Subsidiary M/s.Savitry Textiles [Nepal] Private Limited.

Consolidated Financial statements as required as per Accounting Standard 21 have not been prepared for the following reasons: The Company has a Foreign subsidiary viz., M/s.Savitry Textiles [Nepal] Private Limited, Kathmandu and as the Company could not fructify the project, the management is exploring the possibilities for disinvestments. As the control is intended to be temporary and the subsidiary is being held exclusively for disposal in the near future and also not in operation , the consolidation has not been done in view of Clause 11 (a) of AS 21.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm in respect of the audited annual accounts for the year ended March 31,2009 that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

2. 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;

3. 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; and

4. The directors have prepared the annual accounts on a going concern basis.

AUDITORS OBSERVATIONS:

Reference is invited to the following notes on account under schedule "N"

i. As stated in Note No.l (4) the non confirmation in respect of Sundry Debtors, Loans and Advances and other receivables and the prospects of subsequent realization.

ii. As stated in the Note No. I (5.2) Excise duty rentable to closing stock of Finished goods is not included and is accounted on removal. However, there is no impact on profit or loss.

iii As stated in Note No.ll (i) the company has not made provision towards disputed amounts payable to Income Tax, Sales Tax and Central Excise & Customs etc amounting to Rs.1040.14 Lakhs (excluding Bank Guarantees and Corporate Guarantees).

iv. As stated in Note No. II, 23 (a) the company has not made provision for over-due and penal interest payable to Banks and Financial institutions. Amount not ascertained due to non availability of information.

v. As stated in Note No. 1,(3) and No.ll, (19) the company has not followed the Accounting Standards namely AS 21 .and AS 13.

vi. As stated in Note Noll, 23, the company is facing number of cases from banks and financial institutions. We are unable to quantify the finance and other consequences i.e. going concern concept etc. on the company.

REPLIES TO AUDITORS OBSERVATIONS

i. The debtors have been individually evaluated and those which are considered good are taken into account.

ii. The Central Excise on finished goods was not considered because we are not able to confirm whether the stock will be sold in local market or not as there exits possibility for clearing such goods either in EOU or Domestic. However, in respect of domestic clearances the Central Excise Duty on Finished Goods will be paid as and when the goods are cleared.

iii. Since the matter is in sub-judice , the company has not made any provision. However, the company has disclosed the same as a contingent in the notes farming part of accounts.

iv. The company has been in discussion with the lenders for amicable settlements of its dues. Due to this, the company has not made provision for over due and / or penal interest

v. The Company as a Foreign Subsidiary viz., M/s Savitry Textiles (Nepal) Private Limited, Kathmandu. As the Company could not fructify the project, the management is exploring the possibilities for disinvestments., As the control is intended to be temporaryand the subsidiary is being held exclusively for disposal in the near future and also not in operation, the consolidation has not been done in view of Clause 11 (a) of AS 21

vi. No conclusion, as to the going concern concept can be drawn till the disposal of cases by the respective authorities.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their gratitude to the Government of Andhra Pradesh and Government of India, Financial Institutions, Bankers for their continued co-operation and support. Also Board sincerely acknowledges assistance given by the business associates and shareholders for their faith and confidence in the Company.

By Order of the Board of Directors For Sarita Synthetics and Ind.Ltd

Sd/-

[G Eswara Rao] Vice Chairman and Managing Director

Place: Rajam Date : July 31, 2009