madras petrochem ltd Directors report

MADRAS PETROCHEM LIMITED ANNUAL REPORT 1997-98 DIRECTORS REPORT TO The Members Your Directors have pleasure in presenting the 30th Annual Report of your together with the audited statements of account for the ended 31st March, 1998. The turnover of the company during the year under review had come down to Rs. 5.83 crores as compared to Rs. 10.44 crores during the previous year. It may be mentioned that the steep fall in the turnover is due to lower capacity utilisation caused by non-availability of proper feedstock at reasonable prices and various constraints on the financial resources of the company. The year 1997-98 was not a good year for the corporates in the Country due to political uncertainties and instabilities which had their own adverse effects on the economy during this period. This overall recessionist tendency had its heavy toll on the company during the year under report, consequent to which the position of resources was not up to the expected levels for the operations of the company. The claim in respect of loss of 525 MT of imported feedstock due to sinking of a barge at Mumbai Port in June 96 consequent to a cyclone, has not been settled yet by the Insurance company. This loss had caused a setback in the production cycle which is yet to be restored. Customs authorities have since declared the loss of this feedstock as a total loss. The company is pursuing its claims with the Insurance company for early settlement. The projections given to the Board for Industrial and Financial Reconstruction could not be adhered to by the company for want of financial resources including working capital finance. Due to lower level of operations, the cycle for generating working capital finance was badly affected and got further aggravated by unfavourable market conditions and difficulties in recovery of receivables. The income by way of tankage handling charges was partly utilised for payment to Institutions and from October97 being fully utilised for repayment of sales tax loan and to financial institutions. OUTLOOK The directors are taking various steps to improve the financial performance of the company in the current year. The tankage income is expected to increase considerably due to proposed tie-ups with Indian Oil Corporation Ltd. and Madras Refineries Ltd. The promoters, viz. Mahavir Plantations Ltd. are fully seized of the companys position and have assured their full assistance and support in ensuring a better over all performance in the current year. FINANCE During the year under review, the promoters have brought in a sum of Rs. 229.10 lakhs as interest free advance. This is in addition to the amount of Rs. 148.54 lakhs brought in during the earlier years. Out of the tankage income received during the year, a sum of Rs. 64.09 lakhs has been remitted to ICICI Bank for appropriation on account of Term Loan balances/interest liabilities to Institutions. An amount of Rs. 42.23 lakhs has also been paid to sales tax department towards repayment of sales tax loan. LEGAL CASES The civil suit filed in the Bombay High Court against M/s. Sikri and Grover for recovery of Rs. 303.31 lakhs is still pending. DIRECTORS Shri I. Thiruvettai, Director retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment. Shri Kaushik T Bhansali was appointed as additional director with effect from July 1, 1998 in the Board Meeting held on 29th June, 1998 and he will hold office up to the date of the ensuing Annual General Meeting. A Notice under Sec.257 of the Companies Act, 1956 has been received by the company from a member proposing the appointment of Shri Kaushik T Bhansali as director of the company. Shri Kaushik T Bhansali was appointed as Executive Director with effect from 1st July 1998 subject to the requisite approval of the Shareholders, Financial Institutions and Central Government wherever necessary. Necessary resolutions for the appointment of Shri Kaushik T Bhansali as director and as Executive Director are included in the notice of the Annual General Meeting. Shri Kaushik T Bhansali joined the company in 1992 as Advisor (Management Information System and Office Automation) and is fully conversant with the operations of the company. While he was assisting to the Managing Directors and Executive Director since 1992, after the than Executive Director Viz. Shri K.R.S. Narayan left the company in the year 1995, Shri Kaushik T Bhansali has been shouldering increased responsibilities and has acquired enough experience in managing the affairs of the company. Further in the present situation, your directors felt it appropriate to strengthen the management of the company by appointing a promoter director as the Executive Director on a wholetime basis to assist the Managing Director. Shri Kaushik T. Bhansali will be stationed at Chennai on whole time basis and his appointment as Executive Director is recommended to the shareholders for approval. AUDITORS M/s Krishnaswami & Rajan, Statutory Auditors retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. CONSERVATION OF ENERGY ETC. The prescribed details as required under Section 217(1) (e) of the Companies Act,1956 are set out in the Annexure. ACKNOWLEDGEMENT Your Directors are pleased to acknowledge the support and assistance given to the company by State and Central Government, Financial Institutions, Companys Bankers, Customers and the Employees. On behalf of the Board T.V. PADMANABHAN Chairman Chennai, 28th July 1998. ANNEXURE TO DIRECTORS REPORT Information required under Section 217 (i) (e) read with 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, 1998. FORM - B I. RESEARCH & DEVELOPMENT (R & D) A. Transformer Oil & Specialities: Samples from different sources available indigenously were tried (Process Oil/Spindle HVI oil) and efforts were found to be fruitful both by way of quality and cost. B. Future Plan of action: The existing tankage income will be increased by storing and handling more products products utilising the idle capacity of tankages. Further, unutilised storage spaces will also be made available to store and handle some solid products to generate additional revenue. C. Expenditure on R&D for 1997-98 (Rs. in lakhs) 97-98 97-97 Capital -- -- Recurring Treated as Deferred revenue -- -- Others 0.04 -- Total 0.04 -- Percentage on Turnover -- -- II. FOREIGN EXCHANGE EARNINGS AND OUTGO 1. Foreign exchange outgo 109.46 243.29 2. Foreign exchange earned -- -- On behalf of the Board Sailesh T Bhansali Managing Director T.V. Padmanabhan Chairman Place : Chennai, Date : 28th July, 1998