konar organics ltd Directors report

KONAR ORGANICS LIMITED ANNUAL REPORT 2002-2003 DIRECTORS REPORT Dear Members, The Board of Directors of your company have pleasure in presenting the 15th Annual Report together with the Audited Accounts of the company for the year ended 31-03-2003. FINANCIAL HIGHLIGHTS Income 245.05 Lakhs Net Loss 114.92 Lakhs During the year under review, the company has record losses due to venous factors like decision in the bulk drug Industry, high interest burden, fluctuation of raw material prices etc., Price have fallen drastically. Sometimes even the raw material mats are not realised. Despite all this the management is confident that in the coming years the company will fetch good Profits. DEPOSITS The company has not accepted public deposits and the provisions of Sec. 58A of the Companies Act, 1956 are not applicable to the company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE Details regarding energy conservation, technology absorption foreign exchange earnings and outgo as required by Sec. 217(1)(e) of companies Act, 1956 read with the companies (Disclosures of the particulars in the report of the Board of Directors) Rules, 1988 are given in Annexure - I forming part of this report. PARTICULARS OF THE EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1966: The relation between employees and management is very cordial and information to be provided pursuant to Sac 217 (2A) of the companies Act, 1958 read with the companies (Particular of Employees) Rules, 1975 is NIL. b DIRECTORS RESPONSIBILITY STATEMENT 1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with prepare explanation relating to material departure. 2. The Directors have selected such amounting policies and applied them consistently and made adjustments and estimates that are reasonable and prudent. So as to give a We and fair view of the state of affairs of the company as at 31st March 2003 and of the Profit, Loss of the company for the year ended on that data. 3. The Directors have taken proper and sufficient cars for the maintenance of adequate records in accordance with the provisions of the Companies Act, for safe guarding the assets of the company and for preventing and detecting fraud end other irregularities. 4. The Directors have prepared the Annual Accounts on a going concern basis. DIRECTORS Sri D. Vishnu Vardhan Reddy, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. AUDIT COMMITTEE Your Company has constituted Audit Committee comprising of Sri B. Kalyan Varma. Sri B. Rams Krishnama Raju and A.L.S. Mani Kumar. REMUNERATION COMMITTEE Your Company has constituted Remuneration Committee comprising of Sri B. Kalyan Varma. Sit B. Rama Krishnama Raju and A.L.S. Mani Kumar. INVESTORS GRIEVANCES COMMITTEE: Your Company has constituted Investors Grievances Committee composing of Sri B. Kalyan Varma, Sri B. Rama Krishnama Raju and Sri A.L.S. Mani Kumar. AUDITORS M/s. Venkatamalli & Associates. Chartered Accountants, Auditors of the Company retires at the conclusion of ensuing Annual General Meeting and they are eligible for reappointment. The observations made by Auditors, in their Report read with Notes an Accounts are self explanatory and do not require any comments. b FUTURE OUTLOOK Your company identified mare profitable and high value products to be manufactured. Your management is also thinking about the job work opportunities in order to utilize the spare capacity Your Director are trying to overcome all the problems in a systematic manner In order to get goad profits. The company is also trying for direct exports as our products are having good export potential. CORPORATE GOVERNANCE CODE: During the current year, your Directors continued adopting the code of Corporate Governance. A separate report an the Corporate Governance and Management Discussion and Analysis is attached as part of the Annual Report. An Auditors Certify to regarding compliance of conditions of Corporate Governance is also annexed. ACKNOWLEDGMENTS: Your Directors wish to place on record their great appreciation and gratitude for the whole hearted support, assistance, co-operation from the companys Bankers The Karnataka Bank Limited from time to time and all those who are associated with the company and also appreciated the dedicated and sincere services rendered by employees of your company. Your directors would like to thank all the share holders for their continued support to this company. Place: Hyderabad Date : 25-11-2003 ANNEXURE-I Information as per Sec. 217 (1) (e) read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 and forming part of the Directors Report for the year ended 31st March, 2003. A. Conservation of Energy As on 31-03-2003 1. Electricity: Units 4,43,508 Total Amount Rs. 19,98,789/- Rate per Unit Rs.4.51 2. Coal: Quantity 716,65 Tons Total Cost Rs. 10.36,940/ Average Rate (per Ton) Rs.1,448,93/ 3. Diesel: Quantity 200 Lts. Total Cost Rs. 4,254/ Average Rate (per Lur,) Rs. 21.27 B. Technology Absorption Nil C. Foreign Exchange Earnings - Nil Outgo - Nil BY THE ORDER OF THE BOARD for KONAR ORGANICS LIMITED Place : Hyderabad Sd/- Date : 25-11-2003 (Chairman) MANAGEMENT DISCUSSION AND ANALYSIS: Overview The financial statements have been prepared in accordance with the requirements of the Companies Act, 1956 There are no material departures from me prescribed accounting standards in the adoption of the accounting standards. The management of the company accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements refects in a true and fair manner, the form and substance of transactions, and reasonably present the Companys state of affairs and profits for me year. Results of operations: We have manufactured bulk drugs in units at Shed No. 41, Phase - II, IDA, Mallapur R.R. Disc, A.P. and Survey No. 18012, Kampally Village, Zinnaram Mandel, Madak District, A.P. We have also under taken job works of Bulk Drugs to M/s. Transchem Ltd., Bombay and M/s. Pharmed Medicare Pvt. Ltd. Bangalore and our turnover including other income is Rs. 245.05 Lakhs. We have Let out our factory premises F-10, IDA, Gandhinagar, Kukatpally, Hyderabad, A.P. on lease basis to M/s. Balaji Phartna Chem Exports There ware no exports during the financial year under review. Opportunities and Threats The company tried to capitalize upon its customer base with launching of new products of Bulk Drugs. However due to cutthroat competition from Bulk Drugs manufacturers, the company is incurring heavy losses due to decrease of prices of Bulk Drugs. Outlook The management hopes to recover through undertaking of jobworks of Bulk Drugs and increase of own production of Bulk Drugs. Risks and concerns The risk of competing products is one of the major risks mat the company faces. The management is trying to minimize the cost of production through various alternative methods and with stand the competition Discussion on financial performance with respect to operational performance Total revenues of the company increased from Rs. 169.84 Lakhs to 245.05 Lakhs, an increase of about 44.28%. Net loss before depreciation decreases from 160.72 lakhs to 58.92 lakhs a decrease of about 63.34%. Others Human Resources The Company firmly believes that Human Resources and knowledge capital vital for business success and creating values for shareholders. The Companys philosophy is based on a pluralistic leadership and empowerment model, a performance driven and transparent culture. The Companys endeavor is to create competency based skill enhancement and development. The Company is rationalizing the internal rules, perquisites entitlements and grades to flatten the organization further. Internal Control System: The Company has well defined internal control systems and procedures to ensure optimal use of Companys resources and protection thereof, facilitate accurate and speedy compilation of accounts and management information reports and compliance with laws and regulations. The Company has a well defined organization structure, authority levels and internal guidelines and rules for conducting business transactions. Internal Termal auditors observations and recommendations and adequacy of internal controls are also periodically reviewed by the Audit Committee of the Board of Directors.