REPORT OF BOARD OF DIRECTORS TO THE SHAREHOLDERS ON EROSION OF PEAK NET WORTH, CAUSES
THEREOF AND ACTION TAKEN BY THE COMPANY IN TERMS OF SECTION 23 OF SICK INDUSTRIAL
COMPANIES (SPECIAL PROVISIONS) ACT, 1985
In terms of requirement of Section 23 (1)(b) of the Sick Industrial Companies (Special
Provisions), Act, 1985 ("the Act"), a report of the Board of Directors on
erosion more than 50% of its peak net worth during the immediately preceding four
financial years along with its causes thereof and its revival plan is being submitted
herewith to the Members of the Company.
As per the audited accounts of the Company for the financial year ended 31st
March, 2015 finalized and approved by the Board of Directors which are subject to the
approval of shareholders in this Annual General Meeting, the current year Net Worth of the
Company is ( Rs. 992.35) Lacs while the Peak Net Worth during the immediately preceding
four financial years is Rs. 15279.80 Lacs. Therefore, there has been a complete erosion of
Peak Net Worth of the Company.
Causes of Erosion of Net Worth of the Company
Following are the reasons for losses and Net Worth erosion:
• Shortage of raw materials in the domestic market.
• Volatility in raw materials prices resulting into weak demands further squeezing
the profit margins.
• High interest burden from debt.
• Highly volatile Indian Rupee against USD, with sharp depreciation especially in
last couple of years, had an adverse effect on the profitability of the Company.
Steps Taken/Proposed to be taken by the Company Management
Following are the steps taken and proposed to be taken by the Company:
• Improve the production efficiency.
• Changes in the product mix.
• More thrust on export sales.
• The Company has taken several steps for operational restructuring (by
implementing Direct Polymer Melt (DPM POY)) which are expected to lead to higher
efficiency/ cost savings in the times to come.
| On behalf of the Board of Directors |
|
| For Raj Rayon Industries Limited |
|
|
Sd/- |
|
Rajkumari Kanodia |
| Place: Mumbai |
Non Executive |
| Dated: 31s1 July, 2015 |
Chairperson & Director |