Steel Tubes of India Ltd. के निदेशक की रिपोर्ट

Mar 31, 2009

The Directors have pleasure in presenting their Fiftieth Annual Report of the Companys performance during the Financial Year 2008-09.

SETTLEMENT UNDER SECURITIZATION ACT

The members of the company are aware through the previous Annual Reports that the Secured Lenders of the Company have already sold off the Assets of the Company to M/s. Caparo Engineering India Private Limited (Caparo) for recovery of their dues under the provisions of Section 13 (2) Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Securitization Act).

Accordingly as on the date of reporting the Company does not own any manufacturing facility. The Company had made full and final settlement of all the employees of the Company and there is no employee working in the company since 18th August, 2006.

REFERENCE WITH BIFR

While hearing Companys reference No. 303 / 2002 , 80 / 2004 and 32 / 2005 on 20th March, 2006, the honble Board for Industrial and Financial Reconstruction (BIFR) had declared the Company as sick under Section 3 (1) (O) of SICA, 1985 and appointed IFCI as Operating Agency (OA) to prepare a scheme for rehabilitation of the Company involving change in management.

However the Secured Creditors of the Company acting under the lead of IDBI / SASF, who took possession of the assets of the Company to recover their dues under the SARFAESI Act, 2002, represented before the honble Board of BIFR in the hearing held on 7th December, 2006, that in view of the steps of possession of all assets taken over by the Secured Creditors and thereafter sale of the assets to M/s. Caparo Engineering India Private Ltd., the proceeding before the honble Board of BIFR is to be abated.

The Company represented before the honble Board of BIFR that the Promoters of the Company have an experience of more than thirty years in processing, manufacturing and / or marketing the precision / steel tubes and engineering goods / products. The Company also wishes to restart its activities for general engineering operations and will submit a revival plan for the Company. The honble Board has however accepted the contention of Secured creditors under Section 15 (1) of SICA, 1985.

Accordingly the Company has preferred an appeal on 9th January, 2007 before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) against BIFRs order dated 7th December, 2006 in case No. 303/02, 80/04 & 32/05 for maintaining the status quo before the BIFR. The appeal at AAIFR has been registered on 23rd January, 07 and assigned no. 34/07. The Company is preparing its rehabilitation plans for revival of the Company, so that the liabilities of the unsecured creditors can also be dealt with suitably.

PERFORMANCE DURING THE YEAR

The members are requested to take note that during the year 2008- 09, the company did not have any sales or processing income as there were no operational activities in the company after 18th August, 2006, thus, your Company during the financial year 2008- 09 received a gross misc. income of Rs. 111.86 Lacs, i.e. profit on sale of assets. After absorbing the operating and other expenses, the Company recorded a net loss for the year Rs.4.27 Lacs against Rs. 63.68 Lacs in the previous year. The members are requested to take note that in absence of any income on sales or processing, the financial figures for the year are not comparable. The financial details of the performance of your Company during the year are as under:

(Rs. in Lacs)

Particulars 2008-09 2007-08

Sales & Processing Income - -

Other Misc. Income 111.86 38.86

Gross Profit/(Loss) (EBIDTA) 63.36 (12.11)

Less-Interest 39.56 20.46

-Depreciation 28.07 31.11

Profit/(Loss) Before Tax (PBT) (4.27) (63.68)

Prior Period items (Net)

Profit/(Loss) after Tax for the year (PAT) (4.27) (63.68)

Earlier Year Interest Written back - 2477.51

Add: Balance brought Forward 8429.23 11119.56

Balance carried to Balance Sheet 8433.44 8429.23

Paid up Share Capital 1240.00 1240.00

Reserve & Surplus-As per Balance Sheet 52.52 52.58



DIVIDEND

Considering the accumulated losses as at the end of the financial year ending 31st March, 2009, the Board of Directors does not recommend any dividend on its Equity Shares for the year 2008- 09.

PUBLIC DEPOSITS

The Company was having public deposits scheme but after sale of assets by secured lenders. The company have not taken any fresh deposit.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE EARNING AND OUTGO

As the Company does not have any manufacturing activities after the sale of assets w.e.f 18th August, 2006, many provisions of the Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosures of particulars in the report of the Board of Directors) Rules 1988 are not applicable at the end of the year.

REPORT ON CORPORATE GOVERNANCE AND COMPLIANCES

The absence of regular revenue stream has affected the Companys ability to timely comply with few of the provisions of the listing agreement such as payment of listing fee to Stock Exchanges and

Custodian Charges to CDSL, appointment of Managing Director, Chief Finance Officer & Company Secretary. The Company during the year 2008-09 did not have any manufacturing activities. There is no employee working in the Company. However despite these situations, the Company has tried to fairly comply with the requirement of Corporate Governance in terms of listing agreement. A detailed report on Corporate Governance is annexed along with the Certificate of Auditors on the Report, as Annexure-I and forming part of this report.

PARTICULARS OF EMPLOYEES

The Company did not have any employee receiving remuneration within the parameters of Section 217 (2 A) of the Companies Act, 1956. The dues of all the Employees have been paid through the settlement arrived at with Secured Lenders under Securitization Act, 2002.

DEMATERIALISATION FACILITIES

As per SEBI guidelines the trading in your Companys equity shares is compulsory in dematerialized form and your Company has made arrangements with both the Depositories i.e. National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) to facilitate the investors to trade in the Companys equity shares in dematerialized form through the Depository of their choice. The Company has also appointed M/s Link Intime India Pvt. Ltd., Mumbai, a SEBI Registered independent Agency, as Registrar & Transfer Agent (RTA) for handling Demat as well as physical share transfer work of the Company. The detail address and contact address of RTA has been given elsewhere in the Annual Report. Currently trading into the Shares of the Company is going on the National Stock Exchange.

During the year 2008-09, 23,291, physical share were demated taking the total demated shares to 96,89,151 share comprising around 78.14% of the total holding of 1,24,00,001 shares.

DIRECTORS COMMENTS ON AUDITORS REPORT

In reply to the comments on qualifications made in the Auditors report, your Directors wish to inform the members that, (i) Your Company is facing liquidity crisis and as a result there has been delay in honouring the repayment of public deposits and maintain the liquid assets as per the applicable rule, (ii) There have been delays in payment of statutory dues due to liquidity difficulty faced by the company. The company has however, made efforts to liquidate these liabilities in phases, (iii) The liabilities of secured creditors have already been substantially repaid through one time settlement entered into with them, (iv) There are certain liabilities, which are included in the demands made by the respective departments against which the Company has preferred appeal to the appropriate authorities. Once the decision is received, the same shall be followed, (v) The Plant & Machinery of the Company have already been disposed off by secured lenders. Thereafter, the company wish to explore possibilities for restarting activities in area of its expertise of general engineering to have a regular revenue stream and to liquidate other outstanding liabilities, (vi) There is no employee working in the company as at the date of this reporting. All the liabilities towards erstwhile employees have been fully discharged.

Other comments of the Auditors are already quantified and adequately dealt with elsewhere in the notes to the accounts, report of the Corporate Governance or Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies (Amendment) Act, 2001 your Directors to the best of their knowledge & belief state that:

1. that the Company maintains proper accounting records, which disclose with reasonable accuracy, the financial position of the Company.

2. that these accounting records have formed the basis in the preparation of financial statements of the Company in compliance with the provisions of the Companies Act, 1956, including any amendments thereto.

3. that in preparing the aforesaid financial statements of the Company, appropriate accounting policies have been consistently applied and supported by reasonable and prudent judgments and estimates.

4. that your Directors believe that all accounting standards as applicable have been followed and that these financial statements have been prepared on going concern basis.

5. that appropriate accounting systems are in place, which are reasonably expected to safeguard the interest of the Company and to preventing and detecting fraud and other irregularities.

BOARD OF DIRECTORS

Mr. Vivek Loiwal retires by rotation and being available offer himself for reappointment.

AUDITORS

The Auditors M/s. Rastogi Narain & Co., Chartered Accountants, New Delhi, shall cease to hold office at the end of the ensuing Annual General Meeting and being available, have offered them for reappointment.

HUMAN RELATIONS & DEVELOPMENT

The company has settled dues of all its employees and there is no employee working in the company at present. The industrial * relations in the company were always cordial due to its excellent human relation policies.

ACKNOWLEDGEMENT

The Directors place on record their sincere appreciation to the Companys Bankers, Financial Institutions and all other agencies associated with the Company for their unstinted support.

For and on behalf of the Board

For STEEL TUBES OF INDIA LIMITED

Place : Indore (R.C.SONI)

Date : 2nd September, 2009 CHAIRMAN