GLOBAL STONE INDIA LIMITED
ANNUAL REPORT 2007-2008
DIRECTOR'S REPORT
Dear Shareholders,
The Directors of your Company have pleasure in presenting the Twenty-Third
Annual Report of, the Company with the Audited Annual Accounts for the Year
ended at 31st March 2008.
FINANCIAL HIGHLIGHTS:
The Financial Results of the Company for the year ended 31st March, 2008
are asunder:
Rs.in lakhs
Particulars 2007-2008 2006-2007
Sales and other Income 954.84 1801.88
Total Manufacturing & Administrative Expenditures 1021.78 1860.17
Profit(Loss) before Interest, Depreciation & Tax (66.94) (58.29)
Interest and Finance Charges 213.79 197.16
Profit/(loss) Before Depreciation and Taxation (280.73) (255.45)
Depreciation 121.28 125.28
Fringe Benefit Tax 0.93 1.35
Provision for taxation - -
Profit(Loss) after Taxation (402.94) (382.08)
Prior Period Adjustments (0.72) 9.95
Balance b/f from previous year (3057.44) (2685.31)
Balance carried to Balance Sheet (3461.10) (3057.44)
OPERATIONS:
The operations of your company during 2007-08 were far from satisfactory.
During the year the sales and operating income of your Company at Rs.955
Lacs, reduced by 48% from Rs. 1802 Lacs in the previous year resulting in a
large portion of your operating expenses remaining unabsorbed. The net loss
of the Company during the year at Rs. 403 lacs was marginally higher in
comparison to previous year losses of Rs. 382 Lacs on accounts of saving in
raw material and stores cost and strict control over the expenses.
Actually the continued scarcity of good quality raw material, steep rise in
the overall cost of inputs, absence of working capital finances and lower
scale of activities have. made the operations of the Company economically
unviable. Therefore the accumulated losses till. end of the current
financial year have mounted to Rs.3461 Lacs. In view of this continued
heavy losses in the operations, the Management of the* company explored
various possibilities to continue manufacturing operations but were forced
to close the manufacturing unit with effect from the close of the business
hour on 16th February, 2008. The company management having tried all the
alternate options does not see any possibility of revival of the company in
future in the current operating circumstances.
CLOSURE OF THE COMPANY:
In the circumstances explained above and with a view to conserve available
resources from further depletion as well as to save further administrative
and maintenance cost on the loss making operations, the Company has given a
closure notice to the Labour Secretary, Department of Labour, Government of
Karnataka, Bangalore intimating closure of the Manufacturing operations in
the Company with effect from close of the business hour on 16th February,
2008. The dues of all the employees and workers of the Company (except
gratuity) have been settled and now from 17th February, 2008 and onwards
there is no employee working in the Company.
POSTAL BALLOT FOR DISPOSAL OF THE UNDERTAKING:
Your Board of Directors considered that in the current financial and
economic conditions the Company cannot sustain its operation further and
therefore, there is an urgent need to find out ways for settling dues of
all the secured as well as unsecured lenders besides, taking-practical
steps for saving the existing resources of the Company from any further
losses for the benefit of all stake holders of the Company. Your Board
therefore considered that entering into one time settlement with all the
lenders by disposal of the fixed and non-fixed assets of the Company could
be the only way to save further losses and erosion into the value of assets
and resources of the Company.
Members of the Company are aware that the disposal of undertaking either
whole or in part or disposal of the fixed and non-fixed assets of the
Company including land, building, plant and machineries etc. will require
necessary approval from shareholders by ordinary resolution u/s 293(1)(a)
of the Companies Act, 1956 and as per section 192A of the Act read with
Companies (passing of the resolution by postal ballot) Rules, 2001, this
approval of the shareholders are to be obtained by means of a postal
ballot. Therefore the Company had sent Postal Ballot Form to all the
shareholders of the Company for their consent or dissent on the proposal of
disposing off all the fixed-and non-fixed assets of the Company including
land, building, plant and machineries etc.
The Board of Directors wish to inform that members have given a good
response (52.04% or 62,45,180 shares) for the postal ballot formalities.
The majority of members of the Company have endorsed the views of your
Board of Directors by giving their assent to the disposal of unit as only
0.02% shareholders (representing 2600 shares) of the Company have conveyed
their dissent whereas 51.91 % shareholders (representing a 62,29,280
shares) of the Company have conveyed their assent to the resolution
proposed in this regard through postal ballot and approved the same.
Having received the approval of the Members, the Company is moving forward
with the prospective buyers to negotiate, finalize and execute necessary
documents for disposal of the assets in whole or in part and to take all
other necessary actions in this regard.
SETTLEMENT WITH THE SECURED LENDERS:
The Company is in the process of negotiation, finalization and execution of
necessary documents with its secured lenders, whose outstanding liabilities
are proposed to be paid by disposal of the assets of the Company. The
Company has already reached to a settlement with State Bank of India; State
Bank of Mysore and Unit Trust of India. The liabilities of other secured
lenders are also proposed to be settled similarly.
FUTURE OUTLOOK:
As the company is in the process of disposal of its land, building, plant &
machinery and other fixed assets, the prospects of the company in future
appear to be critical, The management of the Company also does not expect
to commence operations at any other alternate place and therefore any
turnaround in the Company in the near future is very difficult. However the
Company shall continue to look for market opportunities in the same
business line and utilize its experience to generate some regular revenue
from its activities so that liabilities of other, unsecured creditors can
be settled and any excess available thereafter be used to refund to the
shareholders of the Company.
DIVIDEND:
In view of the loss, your Directors regret their inability to recommend
dividend for the year.
DEMATERIALISATION FACILITIES:
The Company is continuing the agreement with Central Depository Services
(India) Ltd.(CDSL). Accordingly, the equity shares of the Company can now
be held. in the electronic form with CDSL and the members can have their
holding in depository account. The ISIN number allotted by CDSL to the
equity shares of the Company is INE 057601019. Members who have not
converted their shares into demat form may get the same done as the equity
shares of the company shall be tradable in dematerialized mode only on the
stock exchanges.
DELISTING OF SECURITIES FROM STOCK EXCHANGES:
Equity shares of the Company are continued to be listed at Five Stock
Exchanges. As there is no trading in the Equity Share of the Company at any
of the Stock Exchanges the Board of Directors have decided to de-list its
equity from three Stock Exchange i.e Madhya Pradesh Stock Exchange, Indore,
Madras Stock Exchange, Chennai and The Stock Exchange, Ahemdabad but
keeping the listings at Bangalore (BGSE) and Bombay Stock Exchanges.
Necessary resolution in these regard has already been passed by the
shareholder in the 19th Annual General Meeting. The listing of Equity
Shares shall continue for trading at BSE and BGSE.
DIRECTORS:
Mr. Ajay Jajoo, Director of your Company retires by rotation at the ensuing
Annual General Meeting and being eligible offers himself for re-appointment
as a Director liable to retire by rotation.
AUDITORS:
The Auditors, M/s. Brahmayya & Co., Chartered Accountants, Bangalore,
retire at the conclusion of the ensuing Annual General Meeting and being
eligible offers themselves for re-appointment.
REPORT ON CORPORATE GOVERNANCE:
The Company has fairly complied. with the requirement of Corporate
Governance in terms of Clause 49 of the listing agreement. A detailed
report on Corporate Governance is annexed as Annexure forming part of this
report.
DIRECTORS' RESPONSIBILITY STATEMENT:
Your Directors confirm that:
(i) In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
(ii) The accounting policies are consistently applied and reasonable,
prudent judgement and estimates are made so as to give a true and fair view
of the state of affairs of the Company at the end of the financial year;
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) The Directors have prepared the annual accounts on a going concern
basis.
RESPONSE TO AUDITOR'S QUALIFICATION:
Auditor's Report Point No.3(v) - One of the independent directors of the
Company has become disqualified because of his directorship in other
company. Despite the adverse financial status of affairs of the company,
the Board of Directors is looking for a suitable alternative for the
independent directors for appointment in the Board.
Annexure to Auditor's Report Point No. 15 - The demand of sales tax dues is
due to late submission of C & H forms against which the company has filed
appeal before the appropriate authorities which has been heard and the
order is awaited in our favour. It is expected that the liability on this
account will not be more than Rs.25 lacs, which the company is prepared to
pay when the final demand, if any, is raised on us. The custom duty dues as
referred in Audit report are disputable against which the Company has filed
appeal before the appropriate authorities and the case is-yet to be heard.
Annexure to Auditor's Report Point No.17 - In view of the continuous losses
incurred in business operations and that the Company's processing
activities having been closed w.e.f.1Th February 2008 , the Company has not
been able to pay its dues to State Bank of India and State Bank of Mysore
for its working capital liabilities and the dues of Unit Trust of India in
respect of debentures subscribed by UTI. The Company has however proposed
to settle the outstanding liability of these Banks & Financial Institutions
through one time settlement out of the proceeds of sale of assets. The
residual amount available is also being used to pay the liabilities of
other debenture holders.
Other comments of the Auditors are already quantified and adequately dealt
with elsewhere in the notes to the accounts or Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO:
(a) CONSERVATION OF ENERGY:
The Company has placed continuous thrust on saving of electrical energy in
the factory and office area. The total energy consumption and energy
consumption per unit of production as per form 'A' is not given, as the
Company is not covered under the list of specified industries.
(b) TECHNOLOGY ABSORPTION:
There is no significant change in the technology adopted by the company
apart from cost effective modifications done around the Machines. The
Company has absorbed fully the technology installed in all areas of
operation.
(c) RESERCH AND DEVELOPMENT:
As a policy, continuous thrust on Research and Development is being
maintained.
(d) FOREIGN EXCHANGE EARNINGS AND OUTGO:
Foreign exchange earnings and outgo during the year under review are as
under:
Earning: Amount Rs. In lakhs
(a) FOB value of Export -
Outgo:
(a) CIF value of Capital goods -
(b) CIF value of import of consumables 101.71
(c) Remittance of interest -
(d) Foreign Travel Expenses 3.23
(e) Commission on Export Sales -
PARTICULARS OF EMPLOYEES:
The Company had no employees in the category mentioned in Section 217 (2A)
of the Companies Act, 1956. From 17th February, 2008 and onward there is no
employee working in the Company.
FIXED DEPOSITS:
The Company has not accepted any deposits from the public during the year
ended on 31st March, 2008.
ACKNOWLEDGEMENT:
The Directors are pleased to record their appreciation for the support and
contributions made by all the concerned agencies,
By order of the Board
For GLOBAL STONE INDIA LIMITED
Date : 30th June, 2008 (Rajendra Prasad)
Place: Indore Director
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL HIGHLIGHTS:
The Financial Results of the Company for the year ended 31st March, 2008
are asunder:
Rs.in lakhs
Particulars 2007-2008 2006-2007
Sales and other Income 954.84 1801.88
Total Manufacturing & Administrative Expenditures 1021.78 1860.17
Profit(Loss) before Interest, Depreciation & Tax (66.94) (58.29)
Interest and Finance Charges 213.79 197.16
Profit/(loss) Before Depreciation and Taxation (280.73) (255.45)
Depreciation 121.28 125.28
Fringe Benefit Tax 0.93 1.35
Provision for taxation - -
Profit(Loss) after Taxation (402.94) (382.08)
Prior Period Adjustments (0.72) 9.95
Balance b/f from previous year (3057.44) (2685.31)
Balance carried to Balance Sheet (3461.10) (3057.44)
OPERATIONS:
The operations of your company during 2007-08 were far from satisfactory.
During the year the sales and operating income of your Company at Rs.955
Lacs, reduced by 48% from Rs. 1802 Lacs in the previous year resulting in a
large portion of your operating expenses remaining unabsorbed. The net loss
of the Company during the year at Rs. 403 lacs was marginally higher in
comparison to previous year losses of Rs. 382 Lacs on accounts of saving in
raw material and stores cost and strict control over the expenses.
Actually the continued scarcity of good quality raw material, steep rise in
the overall cost of inputs, absence of working capital finances and lower
scale of activities have. made the operations of the Company economically
unviable. Therefore the accumulated losses till. end of the current
financial year have mounted to Rs.3461 Lacs. In view of this continued
heavy losses in the operations, the Management of the* company explored
various possibilities to continue manufacturing operations but were forced
to close the manufacturing unit with effect from the close of the business
hour on 16th February, 2008. The company management having tried all the
alternate options does not see any possibility of revival of the company in
future in the current operating circumstances.
FUTURE OUTLOOK:
As the company is in the process of disposal of its land, building, plant &
machinery and other fixed assets, the prospects of the company in future
appear to be critical, The management of the Company also does not expect
to commence operations at any other alternate place and therefore any
turnaround in the Company in the near future is very difficult. However the
Company shall continue to look for market opportunities in the same
business line and utilize its experience to generate some regular revenue
from its activities so that liabilities of other, unsecured creditors can
be settled and any excess available thereafter be used to refund to the
shareholders of the Company.
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