SUBSIDIARY COMPANIES - ITC Ltd

DIRECTORS’ REPORT
TO THE MEMBERS OF WIMCO LIMITED
Your Directors present their report for the financial year ended
31st March, 2012.
Company Performance
Your Company’s turnover, which stood at ` 169.70 crores has seen a decline
of 12% as compared to last year primarily on account of lower volumes in
the Safety Matches Business. During the year under review, your Company
incurred a net loss of ` 45.99 crores after taking into account a one-time
cost of ` 36.87 crores, inter alia, for rationalising its operations.
The income from Safety Matches Business for the year declined by 17% to
` 152.89 crores from `184.78 crores earned in the previous year. Your
Company continues to face challenges in its main business of Safety Matches
due to steep increase in the prices of key raw materials on the one hand
and growing competition from the small scale and cottage sector on the
other. The recent budget announcement increasing the excise duty on the
mechanised industry while reducing the duty on semi-mechanised industry
has put your Company’s Safety Matches Business at a further disadvantage.
Besides, the levy of discriminatory state level taxes on mechanised Safety
Matches industry has compounded the challenge faced by the Company
in the market place.
In its pursuit to restructure the Safety Matches Business to make it viable,
your Company, during the year, has implemented a Voluntary Retirement
Scheme at the Kolkata unit, post suspension of operations at the said unit.
With the above, your Company has discontinued operations at its Chennai,
Ambarnath and Kolkata units. Insofar as the Bareilly unit is concerned,
your Company has initiated steps to modernise the said unit. Meanwhile,
the Company has made alternate arrangements for sourcing its volume
requirements from external vendors. The outsourced volume has increased
by 72% to 608 million boxes from 354 million boxes sold in the
previous year.
Pursuant to your approval at the last Annual General Meeting held on
23rd September, 2011, for deployment of the assets of the Safety Matches
Business that may be rendered surplus for alternate usage, your Company
leased out its land located at Chennai to ITC Limited (ITC), the Holding
Company, for a period of ten years at an initial lease rental of ` 2.40 crores
per year and a non-interest bearing refundable security deposit of
` 50 crores. The Company has also agreed in-principle to lease out its land
and buildings located at Ambarnath to ITC for a period of ten years at an
initial lease rental of ` 1.50 crores per year and a non-interest bearing
refundable security deposit of ` 30 crores.
The surplus movable assets of the Chennai, Ambarnath and Kolkata units,
including plant & machinery, factory equipments, furniture & fixtures, are
being suitably deployed, inter alia, at the Company’s Bareilly unit. Such
deployment would assist the Company in optimising its supply-chain
management.
The Engineering Business recorded a turnover of ` 16.77 crores as compared
to ` 14.04 crores in the previous year, registering a growth of 19%. It is
your Company’s endeavour to increase value capture through continuous
product development in the packaging machinery category. This Business
is poised for further growth through new customer acquisitions.
The income from the Agri (Forestry) Business during the year was ` 11.92
crores as against ` 9.76 crores in the previous year, registering a growth
of 22%. This Business is supplying high quality poplar and eucalyptus ETPs
(Entire Transplants) to farmers in Northern India thereby providing
employment and livelihood opportunities. Apart from creating a long-term
sustainable supply of a critical raw material, our strategy of creating
sustainable and meaningful linkages across the farmer community is helping
us to contribute towards improving the green cover in the region.
Dividend
In view of the losses incurred during the year, your Directors are unable to
recommend any dividend.
Holding Company
Consequent to transfer of 9,12,38,170 equity shares of the Company by
Russell Credit Limited (Russell) to ITC, your Company became a direct
subsidiary of ITC with effect from 29th September, 2011.
Directors
In accordance with the provisions of Articles 131, 132 and 133 of the
Articles of Association of the Company, Mr. C. R. Dua and Mr. R. Tandon
will retire by rotation at the ensuing Annual General Meeting of the Company
and, being eligible, offer themselves for re-election. The Board has
recommended their re-election.
Share Capital
(i) Rights Issue
During the year, the Company made a rights issue of 9,42,30,000
equity shares of ` 1/- each at a price of ` 6.50 per equity share, including
a premium of ` 5.50 per share, to the existing shareholders of the
company in the ratio of one rights equity share for every one fully paid
up equity share held. Out of these, the Company received 1,739 valid
AUDITORS’ REPORT
TO THE MEMBERS OF WIMCO LIMITED
We have audited the attached balance sheet of Wimco Limited
(”the Company”) as at 31 March, 2012 and the related statement of profit
and loss and cash flow statement for the year ended on that date, annexed
thereto. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
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WIMCO LIMITED
applications for 9,16,25,147 rights equity shares representing 97.3%
of the issue size. These shares were allotted on 27th March, 2012,
consequent to which the paid-up equity capital of the Company
increased from ` 9.42 crores to ` 18.59 crores.
The remaining (unsubscribed) 26,04,853 shares were offered to and
subscribed by Russell, a fellow subsidiary; the said shares were allotted
on 25th April, 2012. With this, the paid-up capital of the Company
stands increased to ` 18.84 crores as on that date.
The proceeds of the aforesaid rights issue has been utilised for redemption
of Preference Shares held by Russell, upgradation of existing infrastructure,
meeting the working capital requirements and restructuring the
operations of the Company.
(ii) Preference Shares
During the year, your Company redeemed 55,00,000, 5% Redeemable
Cumulative Preference Shares of `100/- each, aggregating ` 55 crores,
held by Russell. Further, the cumulative dividend payable on the
aforesaid Preference Shares aggregating ` 8.33 crores, was waived by
Russell.
Directors’ Responsibility Statement
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
(i) in the preparation of the Annual Accounts, the applicable Accounting
Standards have been followed and no significant departures have been
made from the same;
ii) appropriate accounting policies have been selected and applied
consistently and judgments and estimates that have been made 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, 2012 and of the loss of the
Company for that period;
iii) proper and sufficient care has been taken 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
iv) the Annual Accounts have been prepared on a going concern basis.
Auditors
The Company’s Auditors M/s. BSR & Co., retire at the ensuing Annual
General Meeting, and being eligible, offer themselves for re-appointment.
The Board has recommended their re-appointment.
Subsidiaries
Particulars as required under Section 212 of the Companies Act, 1956 in
respect of the Subsidiaries of the Company viz. Pavan Poplar Limited and
Prag Agro Farm Limited, have been attached to the Accounts of the
Company.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
A) Conservation of Energy
The particulars in Form A regarding conservation of energy has not
been provided as the activity of the Company does not fall under the
list of industries specified in the Schedule annexed to the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988.
B) Technology Absorption
During the year, the Company’s expenditure on Research and
Development on poplar, eucalyptus and other wood species was
` 34.94 Lacs.
C) Foreign Exchange Earnings and Outgo
During the year, the Company earned foreign exchange of
` 278.01 Lacs. The total outflow of foreign exchange was ` 629.98 lacs.
Employees
The relations between your Company and its employees have generally
been cordial and harmonious during the year under review. None of the
employees of the Company is covered under the provisions of Section
217(2A) of the Companies Act, 1956, read with the Companies (Particulars
of Employees) Rules, 1975.
Acknowledgement
The Board acknowledges the understanding and support of the government,
investors, banks, distributors, customers, suppliers and business associates
and the dedication and hard work of its employees.
For and on behalf of the Board
Kolkata K.N. Grant
15th June, 2012 Chairman
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.