idi ltd share price Directors report

IDI LIMITED ANNUAL REPORT 1999-2000 DIRECTORS REPORT Your Directors have pleasure in presenting their Report with the Audited Accounts for the period ended 30th June, 1999. In order to incorporate the financial impact of the on going restructuring program, the financial year was extended upto 30th June, 1999. Hence the figures for the period under report are for 15 months and are not comparable with the previous year. DIVIDEND In view of the loss incurred during the period under report, your Directors unable to recommend any dividend on Equity Shares. OPERATIONS During the greater part of the period under review the industrial sector continued to face unfavourable conditions, with liquidity remaining under strain. As far as the operations of your Company are concerned, the actual levels achieved were much lower than what could have been achieved. The losses made in the previous year resulted in restricting the availability of working capital and consequently, the planned operating levels could not be realised. As part of its continuing restructuring efforts, the Company has discontinued manufacture of Phthalic Anhydride and certain colorants due to unremunerative price realisations. In line with the strategy of focusing on its core activities, the Company decided to divest its popular `Ranipal brand and its business in the consumer and retail segments. The divestment process has been completed. The proposed expansion of the Vat Dyes capacity has faced time overruns as a result of funds shortage and the Company is in discussion with a financial institution to secure necessary loan funds. During the period, however, the Company was able to achieve limited increase in capacity and utilisation. Employee costs are a significant component of costs and control and reduction in employee costs will be a key element in achieving long-term competitiveness and sustainability. As a measure of improving long-term viability employee costs. Bankers are being approached to support a Voluntary Retirement Scheme for Ranoil plant. In the present competitive environment, your Company evaluates on regular basis its present business lines to focus more on its core business, besides remaining vigilant in cost cutting measures and improving productivity. It is expected that these measures will have positive impact and will bring back gradually the improvement in performance in future. As the Members are aware, the Company has entered into a joint venture with CIBA for Pigments. The Company is currently in discussion with CIBA and the joint venture Company on all aspects, including supply of know-how from CIBA through Joint Venture as envisaged and ways and means to improve product supply to joint Venture. The Company intends to arrive at mutually acceptable conclusions in this regard. ISO-9002 During the period Ranoli (Vadodara) Plant was awarded ISO-9002 certification by Bureau Veritas Quality International for Quality Management System. With this, all three manufacturing Units now hold ISO- 9002 Certificates. This will help in achieving higher performance levels in international markets and in improving business prospects in future. EXPORTS Exports for the period were higher at Rs. 132.85 crores (including incentives of Rs. 5.61 crores) against Rs. 89.71 cores of the pervious year. Your Company has been awarded by the Ministry of Commerce, Directorate General of Foreign Trade, New Delhi, the Golden Status Trading HOuse Certificate. With a view to better and enhanced penetration in the various export markets, the Company has assigned to an international Company for exclusive use in certain international markets, its trade-mark for a lump-sum consideration payable over 5 years. Your Company is making sustained efforts to widen its export base by tapping new markets. OVERSEAS JOINT VENTURES There was no significant improvement in global market environment during the period. The performance of the overseas joint ventures in USA, UK and Japan was reasonable considering recessionary conditions and intense competition prevailing in the respective markets. FINANCE Your Company has issued Non-Convertible Debentures of Rs. 600 lakhs on private placement basis to IDBI to meet the normal capital expenditure and the shortfall in cash flow to overcome liquidity constraints faced by the Company. The Directors commend the approval of the share holders to the resolution proposed in this behalf for creating security in favour of IDBI. A resolution is also proposed for providing corporate guarantee to Bankers of Mafatlal Days & Chemicals Ltd. in terms of the conditions stipulated by them for grant of financial assistance to them. In order to continue the thrust in expanding sales in export markets in the core areas of Vat Dyes and to strengthen the financial resources of the Company, a comprehensive financial programme is under development and implementation. A sum of Rs. 481.11 lakhs was repaid to various financial institutions towards loans availed from them. The funds raised for working capital by way of series of Debentures aggregating to Rs. 2300 lakhs (outstanding Debentures Rs. 1311.34 lakhs) have been utilized for working capital requirements and have not been diverted for any other purpose. The observations made by the Auditors in their Report have been fully clarified in the relevant notes forming part of the accounts, which are self- explanatory. FIXED DEPOSITS 249 Fixed Deposits aggregating to Rs. 14.70 lakhs due for repayment on or before 30th June, 1999 remain unclaimed as at the close of the period. As on the date of this report, deposits aggregating to Rs. 4.43 lacs thereof have been claimed and paid or renewed. INVESTMENTS During the period under report, your Company has made investments in shares and securities of an aggregate amount of Rs. 207.20 lakhs. SAFETY & ENVIRONMENT, ENERGY CONSERVATION ETC.: Your Company continuously makes efforts for reducing wastes and increasing energy efficiencies and conducts its manufacturing activities in compliance with applicable environmental laws and regulations. Besides providing training for health of employees and for pollution free environment, well planned measures in safety standards are constantly monitored. The information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, forming part of this Report, is annexed. RESEARCH & DEVELOPMENT R & D Department is engaged in process improvement, technology upgradation, development of new ranges of dyestuffs and intermediates, evaluation of alternate raw materials, and minimizing effluent load/re-cycling of waste. STATUS ON Y2K PREPAREDNESS The areas likely to be affected due to Y2K issues include IT Systems, production, testing and control equipment. The Company has completed the process of testing of hardware and software for Y2K compatibility. For embedded systems, compliance certificates are being obtained from the vendors of the equipments/instruments. The appropriate remedial measures are being taken to replace the non-Y2K compatible hardware, software and embedded systems. The whole process is expected to be completed by 30th September, 1999. As for external risks, the process of ascertaining Y2K compliance status of principal suppliers and vendors has been completed. The cost of minimising the risks due to Y2K issues has been currently estimated to be around Rs. 20 lakhs. SUBSIDIARY COMPANIES The statement pursuant to Section 212 of the Companies Act, 1956 relating to your Companys subsidiary Companies is attached. DIRECTORS Mr. R.C. Mehta, Mr. M.L. Apte, and Mr. Keshub Mahindra, Directors retire by rotation at the ensuing Annual General Meeting. They offer themselves for reappointment. Your directors recommend their reappointment. SOCIAL WELFARE Your Directors have donated a sum of Rs. 2.27 lakhs during the period for charitable and philanthropic purposes to various social and educational institutions which they trust will meet with your approval. Your Company also actively participates, alongwith other Associate Companies, in the Sun-grace Mafatlal Sports Club to promote sports activities. INSURANCE The properties and assets of your Company are adequately insured. AUDITORS M/s. C.C. Chokshi & Co, are eligible for reappointment as the Auditors for the current year to hold office from the conclusion of the ensuing Annual General Meeting. The Members are requested to consider reappointing them as Auditors and to fix their remuneration. In view of the extension of the Financial Year 1998-99 by three months upto 30th June, 1999 and consequent increase in audit work and all round increase in costs, the Directors recommend resolution as proposed for approval of Members for increases in their audit fees for the said period. EMPLOYEES Relations between the Management and labour were satisfactory throughout the period. As required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the said Act, the Report and the Accounts are being sent to all Members, excluding the particulars of employees. Any Member interested in obtaining such particulars may write to the Company secretary at the Registered Office of the Company. ACKNOWLEDGMENT Your Directors place on record their appreciation for the dedicated and sincere service of employees at all levels and for the support and co- operation of banks, financial institutions, collaborators shareholders and all others closely associated with your Company. For & On behalf of the board Yogindra N. Mafatlal Dated: 25th August, 1999 Chairman FORM-A DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY A. Consumption per unit of production In view of the multi-stage, multi-product nature of production, covering large number of Deyes, Dye Intermediates and Chemicals, it is not possible for the Company to furnish data relating to consumption per unit of production. Some significant energy conservation measures implemented Implementation of Energy and Water conservation measures wee continued which resulted in reduction and surrender of contract demand for power and water quota. This was possible through on lint monitoring of power consumption and awareness for water conservation measures. Investment proposals for reduction of energy consumption Installation of Solar Water heating system, recycling of condenser cooling water, variable speed drive on 80 HP cooling tower motor, procurement of new efficient compressor for air, are among few of the proposals planned for reduction of energy consumption. Impact of above measures The impact of the above measures taken has resulted in saving of over Rs. 161 lacs during the period under review. FORM-B DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION Research & Development 1. Specific areas in which R&D carried out by the Company: * Process Improvement * Technology upgradation and quality control * Development of new Dyestuffs and Intermediates * Development and evaluation of alternate raw materials * Minimizing effluent load/recycling of waste 2. Benefits derived as a result of the above R&D: * Improvement in the quality of existing products * Reduction in cost and wastages * Promotion of exports and import substitution * Improvement in safety and environment protection. 3. Future plan of action: To continue R&D activities in the relevant areas to achieve the benefits listed above. Technology Absorption Adaptation & Innovation 1. Efforts towards technology absorption, adaptation & innovation: The R&D Dept. keeps itself abreast of the technical developments relating to the Companys line of products world wide to bring about improvement in the products for better quality, cost effectiveness, energy saving, safety and pollution control. 2. Benefits derived as a result of above efforts: The benefits have been covered above. 3. A. a. Imported technology : Process for VAt Dyes & its precursors b. Year of Import : Part in 1996-97 c. Has technology fully absorbed : No. Full know-how still to be received. d. Plan if not fully absorbed : Plant/process review & modifications in progress to the extent know-how received. B. a. Imported technology : Process for Solvent Dyes b. Year of Import : 1997-98 c. Has technology fully absorbed : No d. Plan if not fully absorbed : Plant/process review & modifications in progress.