| The Company was incorporated on 28th November, 1975 at New Delhi as a Private Ltd. Company with the Registrar of Companies, Delhi and Haryana (ROC) at New Delhi. Subsequently, the Company became a deemed Public Ltd. Company under Section 43A(1-A) of the Companies Act, 1956 and certificate of incorporation was amended by the ROC on July 1, 1993. Simultaneously, the Shareholders of the Company passed a special resolution at the Extraordinary General Meeting of the Company held on 19th September, 1994 deleting the restrictive clauses provided under Section 3 (1) (iii) (a) (b) and (c) of the Companies Act, 1956 and as
such the Company became a Public Ltd. Company within the meaning of Section 3(1) (iv) of the Act.
The Company was incorporated in 1975 with the main objects to take-over business of Auto Pins (India) Regd., a partnership firm established in 1952 by Dr. Tirlok Singh, his son Shri Autar Singh and their relatives. The firm was in the business of manufacturing leaf springs and auto pins
with the manufacturing facilities at Faridabad (Haryana). In 1979, Company became a partner in the firm with a 15% stake. The company was not carrying out any other business apart from the above during 1975-80. By way of Dissolution Deed of partnership made on September 30, 1980, the company took over the business of Auto Pins (India) Regd., the partnership firm by taking over its assets, liabilities and operations as a going concern. The Company thus became the sole owner and successor to the business carried on by the erstwhile Partnership firm. The present promoter does not have any dispute with the previous firm. Assets and Liabilities were taken over at their book values without
any revaluation which are as follows:
Assets Rs. in Lacs
Goodwill 40.28
Other Fixed Assets 57.59
Investments 1.92
Current Assets 276.86
Loans & Advances 44.64
Liabilities Rs. in Lacs
Reserves for Investment
Allowance 9.73
Secured Loans 216.03
Unsecured loans 25.54
Current Liabilities 157.48
The consideration amount was paid to the respective partners in cash/credited to respective current accounts.
The operations and working of the Company since 1981 had been largely unsatisfactory mainly duo to high cost of production, liquidity constraints and others, leading to successive cash losses and consequential erosion of networth. The Company was referred to Board of Industrial and Financial Reconstruction (BIFR) in 1987 and BIFR
sanctioned a Rehabilitation Scheme in November, 1989, which came in operation in 1990 and inter-alia, envisaged capital expenditure towards repairs, overhauling and balancing equipment besides payment of statutory dues/pressing creditors and retrenchment of workers. The rehabilitation scheme also envisaged sanction of reliefs and concessions
from the Banks and term loan from IRBI at concessional rate of interest. The details of the same are set out below:
Under the rehabilitation scheme drawn up by BIFR the principal reliefs and concessions were
a) Funded interest at a concessional rate of 10 % p.a.
b) Waiver of penal Interest of Rs.16.65 Lacs by Canara Bank and Rs.1.63 lace by Punjab & Sind Bank.
c) Working Capital term loan of Rs 144.33 lacs to carry concessional rate of interest @ 13.50% p.a.
d) Rehabilitation Loan of Rs. 24 lacs by Banks at concessional interest rate of 15% p.a.
e) Rehabilitation Loan of Rs. 41 lacs by IRBI at concessional interest rate of 14% p.a.
f) Working capital facilities at concessional interest rate of 15% p.a.
In terms of the said scheme the Banks have right to recompense in respect of reliefs and concessions granted. The, mode of recompense and the time shall be settled by discussion between the company and the banks after the company's networth becomes positive. To date no bank has
exercised its right of recompense.
Mr. Rajbir Singh, the present promoter of the Company, took over the majority share holding and the management of the Company in 1988. The performance of the Company after change in the management and implementation of the rehabilitation Scheme has shown progressive improvement. The Company turned the corner during the year 1990-91
whereafter there has been successive improvement in turnover and profitability. The turnover of the Company rose from Rs.750.38 Lacs in 1990-91 to Rs. 1640.76 lacs during the year ended 31st March, 1994. The profit after tax during the corresponding period rose from Rs.7.05 Lacs
to Rs.141.80 lacs in 1993-94 and the accumulated losses of the Company were entirely wiped out. In recognition of the turnaround, the Company was discharged from the purview of BIFR on 31st August, 1994.
The Company issued 8,19,000 shares to the offerers in November 1994 at a premium of Rs.45/- per share to part finance she expansion, modernisation and diversification of the manufacturing facilities at Faridabad. Under the said scheme the installed capacity is in the process of being increased from 14,400 tpa of tapered leaf springs to 32,400 tpa and from 1,200 tpa to 3,600 tpa in respect of parabolic
leaf springs. The company has already achieved installed capacity of 24,000 tpa of tapered leaf springs and 3600 tpa of Parabolic Springs. The Company has also installed manufacturing facilities for Rear Axles with a capacity of 1,200 tpa. The cost & means of finance of the said scheme is as follows:
COST AND MEANS OF PROJECT (Rs. in Lacs)
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Expansion of Leaf & Parabolic Springs Axle Plant-1
Total Cost Incurred* To Be Total Cost Incurred
Incurred
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1 Land 0.00 0.00 0.00 0.00 0.00
2 Building 78.00 45.00 33.00 0.00 0.00
3 Plant & Machinery 611.00 438.00 173.00 45.00 45.00
4 MFA 12.00 9.00 3.00 4.00 4.00
5 Pre-operative Exp 26.00 10.00 16.00 1.00 1.00
6 Contingency 32.00 0.00 32.00 0.00 0.00
7 Margin Money 161.00 113.50 47.50 27.00 27.00
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Total 920.00 615.50 304.50 77.00 77.00
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1 Placement of Shares 373.00 373.00 0.00 77.00 77.00
2 HFC (Term Loan)# 222.50 185.00 37.50 0.00 0.00
3 IRBI(Term Loan)^ 267.00 0.00 267.00 0.00 0.00
4 Internal Accruals 57.60 57.50 0.00 0.00 0.00
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Total 920.00 615.50 304.50 77.00 77.00
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* as on 31.12.95
# Haryana Financial Corporation
^ Industrial Reconstruction Bank of India
Schedule of Implementation for the Scheme
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SCHEDULE OF IMPLEMENTATION
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FOR INSTALLED CAPACITY FOR INSTALLED CAPACITY
OF 24000 tpa OF 32400 tpa
Commencement Completion
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LAND & SITE NOT REQUIRED NOT REQUIRED NOT REQUIRED NOT
DEVELOPMENT REQUIRED
CIVIL CONSTRUCTION MAY-95 completed JAN-96 MAY-96
AND RENOVATION FEB-96
DELIVERY OF PLANT & OCT-94 completed JAN-96 MAY-96
MACHINERY AT SITE JUL-95
ERECTION AND NOV-94 completed JAN-96 MAY-96
INSTALLATION JUL-95
COMMENCEMENT OF JUL-95 completed JUN-96 JUN-98
TRIAL RUNS AUG-95
COMMERCIAL - completed - JUN-96
PRODUCTION - AUG-95
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The scheme commenced in October 1994 and commissioned 24,000 TPA of Leaf Springs, 3,600 TPA of Parabolic Springs and 1.200 TPA of Rear Axle Shafts by 31.08.95, as per its original schedule and cost estimates. The balance capacity of Leaf Springs is scheduled to be commissioned by June
1996.
Based on the progress detailed above, the Company achieved a higher turnover of Rs.1832.56 Lacs and a profit before tax of Rs.231.91 Lacs during the year ended 31st March, 1995. As on 31st March, 1995 the paid up capital of the Company stood at Rs.317.42 Lacs and reserves aggregating Rs.551.12 Lacs. The Company has issued Bonus Shares in the
ratio of 3:5 in October 1995 to the existing shareholders by capitalising a sum of Rs.190.45 Lacs out of its free reserves Share Premium Account. The funds to be raised from the public issue are for the proposed expansion project of Rear Axles.
Present business
The Company is presently engaged in the manufacture of tapered leaf springs and parabolic springs having an installed capacity of 24,000 tpa and 3600 tpa respectively. The Company is also engaged in:
a) manufacture of Anti Roll Bars. The installed capacity is at present 20 tpa.
b) manufacture of rear Axle Shafts with an installed capacity of 1200 tpa. This capacity is proposed to be augmented to 4.800 tpa by setting up a new plant.
c) marketing of the products being manufactured as also Universal Joint Cross (UJ Cross), an automotive component.
The existing manufacturing facilities of the Company for the manufacture of Leaf Springs/Parabolic Springs are located at 16, industrial Area, N.I.T., Faridabad 121 001(Haryana) and the manufacturing facilities for the axles are located at 15/7 Mathura Road, Faridabad 121 001 (Haryana). The location of the proposed expansion project of the rear axles will be in Faridabad/Ballabhgarh which is in the vicinity of the existing facilities.
The Company caters to the requirement of Leaf Springs of Tata Engineering and Locomotive Company Ltd. (TELCO). Ashok Leyland Ltd., the only two heavy vehicle manufacturers in the Country, and Mahindra and Mahindra Ltd., manufacturer of Jeeps as an OE, API, the predecessor firm of the Company, started supplying to TELCO in 1972-73 and to Ashok
Leyland Ltd. in 1973-74. The company carries out Job work namely manufacture of Leaf Spring for Ashok Leyland Ltd., one of the two Heavy Vehicle manufacturers. Against the Job work carried out by the Company the Raw material namely Alloy Spring Steel is supplied by Ashok Leyland Ltd. The Job work charges are fixed by negotiations and vary based
on the design, weight and the value addition required. The average Job work charges at present are Rs.6,450 per Mt. but are subject to revision based on the rise in manufacturing costs.
The Company is also catering to the requirement of tapered leaf springs in the replacement market under the brand name `SIROCCO' since 1954 (through its predecessor firm) and has an all India network of Dealers and Distributors. The Company also caters to the requirements of various State Transport Undertakings (STUs) and is a supplier to a number of STUs namely, Haryana Roadways, UP State Road Transport Corporation, Andhra Pradesh State Road Transport Corporation, Delhi Transport Corporation etc.
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