Neycer India Director Report

Dear Shareholders,



The Directors are pleased to present their Fifty-first Annual Report

together with Audited Financial Statements of your Company for the year

ended March 31,2012



FINANCIAL RESULTS:



(Rs. In Lakhs)



Parameters YEAR YEAR

ENDED ENDED

31.03.2012 31.03.2011



Gross revenue 2442.98 2250.77



Less: excise duty 203.66 184.71



Net revenue 2239.32 2066.06



Other Income 95.22 48.07



Income 2334.54 2114.13



Expenditure 2106.16 1806.41



EBITDA 228.38 307.72



Less:Interest & Depreciation 214.46 215.89



Profit before taxation and

extraordinary items 13.92 91.83



Less: Extraordinary items - -



Profit before taxation 13.92 91.83



Less: Tax expense



Current Tax - -



Deferred Tax (419.80) -



Profit/Loss after taxation 433.72 91.83



PERFORMANCE ANALYSIS:



During the year the total turnover of the company has increased due to

better market conditions. The company''s total income has increased from

Rs. 2250.77 lacs in previous year to Rs. 2442.98 lacs in current year

which showed 9% growth as compared to previous year. The 9% growth

achieved for the year is lower on account of loss of production due to

cyclone Thane''. Earnings before Interest, depreciation and taxation

have been reduced to Rs. 228.38 lacs in 2011-12 from Rs. 307.72 lacs in

the previous year 2010-2011.



The production was remained under pressure throughout the year due to

increase in various cost components and competitive pressure rising

from continuing creation/ expansion of more capacities.



Since the outlook for the industry appears to be positive, your

Directors are hopeful in achieving better results based on the credible

estimates on likelihood of robust demand over the terms.



OPERATIONAL REVIEW:



Your Company has already initiated steps for implementation of Scheme

approved by BIFR and major part of the modernisation cum expansion

program was completed during the last financial year. By this the

Installed capacity of the company increased to 12500 Metric Tonnes per

annum. However, due to delays in obtaining additional working capital

from banks and the enhanced natural gas supply from the suppliers, much

of the expanded capacity could not be operational almost till the end

of the financial year. Thus the benefits of expansion are not realised

in the financial year and excess fuel & operational costs were incurred

in the year due to these delays. The company is strengthening its

distribution network by various means for effective marketing of

additional Quantitative shift in production. Due to cyclone Thane'' the

Kiln got fully damaged and installed capacity reduced by 3750 Metric

Tonnes.



Your Company''s operations have been impacted by:-



- The slow down in profits on account of loss of production due to

cyclone "Thane", leading to a lower margin.



- Severe damage of Plant and Machinery due to the cyclone Thane'',

resulting in the shutdown of the plant during January 2012 and it took

another two months to bring back the operations to a reasonable level.



IMPACT OF CYCLONE "THANE":



Cyclone "Thane" struck Cuddalore in the early hours of 30th December,

2011. Unfortunately, the factory happened to be the epicentre of the

cyclone created havoc in the whole area including the factory with a

wind speed of above 150-160 kmph which has resulted in a serious damage

to the fixed assets of the company. The estimated damage caused by

Thane'' is to the tune of Rs. 7.80 crore for which the Company has

preferred a claim with the Insurance Company.



Due to this the entire factory was closed for almost a month during

January 2012 and it took another couple of months to bring back the

operations into a reasonable level thereby losing more than two months

of production.



The task of stabilization of the plant and bringing it back to its

original state took around another 3 months. The damage to property and

material are covered by insurance. The insurance surveyors who are

assessing the loss are of the opinion that the claim settlement as per

the insured value would be in the region of Rs.2.50 Crores and the

balance to the extent of Rs.5.30 Crores have to be borne by the

Company. This has further adversely hit the working of the Company and

the loss inclusive of operational loss is estimated to the tune of

Rs.7.50 Crore.



Your Company has taken a number of initiatives to reduce the cost of

production which should enable it to compete effectively and increase

the sales volumes and margins.





DIVIDEND:



In view of the accumulated losses, the Directors express their

inability to declare dividend.



FIXED DEPOSIT:



Your Company did not invite or accept any fixed deposit pursuant to

provisions of Section 58A of the Companies Act, 1956, during the year.

As on date there is no deposit which has matured and pending for

payment.



SHARE CAPITAL:



During the year under review, there were no capital issues and hence no

funds raised through share capital.



IMPLEMENTATION OF REHABILITATION SCHEME SANCTIONED BY BIFR



The Board for Industrial and Financial Reconstruction [BIFR] has

approved the rehabilitation scheme of your company on 06th October 2008

and the company has completed implementation of major activities

approved by BIFR.



In order to give effect to the various restructuring programmes as

approved by BIFR, the company has also initiated the process of

implementation of Capital Reduction and listing of securities in

accordance with finalised position of allotment by strictly adhering to

the directions given under scheme of BIFR resulting in profitable

revival of the Company.



BOARD OF DIRECTORS



In accordance with the applicable provisions of the Companies Act, 1956

read with the Articles of Association of the Company, Mr.

B.S.Shailendar, Director of the company, retire from the Board by

rotation at the ensuing Annual General Meeting and being eligible,

offer himself for re-appointment.



DIRECTOR''S RESPONSIBILITY STATEMENT



Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors''

to the best of their knowledge and belief confirm that:



1. In the preparation of the Profit and Loss Account for the Financial

Year ended March 31, 2012, and the Balance Sheet as at that date

("Annual Accounts"), the applicable accounting standards have been

followed along with proper explanation relating to material departures;



2. That the Directors'' had 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 and of the

profit and loss of the Company for that period;



3. That the Directors had 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;



4. That the Directors had prepared the Annual Accounts for the

Financial Year ended March 31, 2012 on a going concern basis.



AUDITORS AND THEIR OBSERVATIONS



The Statutory Auditors, M/s. Suri & Co., Chartered Accountants, retire

at the conclusion of the ensuing Annual General Meeting and are

eligible for re-appointment for the current financial year.



The Company has received confirmation that their appointment will be

within the limits prescribed under Section 224(1B) of the Companies

Act, 1956. The Audit Committee of the Board has recommended their

appointment. The necessary resolution is being placed before the

shareholders for approval.



Items under which auditors have commented in their report are suitably

explained by the Director''s forms a part of this report.



Particulars as required under Section 217(1)(E) of the Companies Act,

1956 read with the Companies (Disclosure of Particulars in the Report

of Board of Directors) Rules, 1988



A) Conservation of Energy



Your Company continues to be committed to energy conservation in its

manufacturing operations. The new kiln which is just commissioned is

expected to save fuel consumption by at least 40%. The power was

economically and optimally utilised during the year. As the power costs

are mounting from the Electricity Board, your company is exploring the

possibility of installing captive generation.



B) Technology Absorption



Your company is planning to adopt improved technology for better

quality improvement, energy saving, material consumption and reduction

of wastages.



C) Research and Development



The Company has a continuous ongoing R 8s D Program which during the

period under review introduced various designs of sanitary wares. In

addition to development of new products, the R 8s D Department also

institutated a comprehensive policy on cost reduction and improved

production efficiency in line with modern trends so as to differentiate

the brand positioning of "Neycer" from other competitors brands.



D) Foreign Exchange Earnings and Outgo



Foreign Exchange earned during the year : Rs. Nil ( PY Rs.Nil)



Foreign Exchange used during the year: Rs. 26.29 lakhs (PY Rs.4.43

lakhs)



PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 217(2A) OF THE COMPANIES

ACT, 1956



None of the employees of the Company are in receipt of total

remuneration exceeding the limits prescribed under Provisions of

Section 217(2A) of the Companies Act, 1956. Hence no reporting is

furnished under the heading.



CORPORATE GOVERNANCE REPORT



Your Company has been practicing the principles of good Corporate

Governance. A detailed report on the Corporate Governance Code and

practices of the Company along with a certificate from the Statutory

Auditors of the Company regarding compliance of the conditions of

Corporate Governance as stipulated under clause 49 of the Listing

Agreement are annexed in a separate section in this Annual Report.



MANAGEMENT DISCUSSION AND ANALYSIS REPORT



A detailed analysis of the Company''s progress and future outlook is

separately discussed in the Management Discussion and Analysis Report,

is appended to and forms a part of the Annual Report.



DIRECTORS REPLY TO AUDITORS QUALIFICATIONS:



With regard to the observation of the auditors relating to

non-provision of interest on the Term Loan and Loan from Body

Corporate, the Board wish to state that the subject matter forms part

of the Scheme approved by the BIFR and hence not provided.



With regard to observation of Auditors in their report Annexure Clause

"IX", the statutory dues mentioned are payable over a period of 2 years

as per the BIFR directives.



ACKNOWLEDGEMENTS



Your Directors take this opportunity to express grateful appreciation

for the valuable support and co-operation received from Financial

Institutions, Bankers, Shareholders, Creditors, various departments of

Governments and all other stakeholders.



The Directors also wish to thank the Timeshare Customers who have

supported the Company in this hour of need. Your Directors also place

on record the wholehearted commitments from the employees of the

Company and their combined efforts to turnaround the Company.



For and on behalf of the Board



Place : Chennai



Date : 27-08-2012 Sd/- Sd/-



Krishna Prasad Tripuraneni Y. Mohan Prasad



Director Director.