options chain Directors report

Scan Organics Limited DIRECTORS REPORT The Members, Your Directors have pleasure in presenting their Tenth Annual Report with the Audited Statements of Accounts for the period ended 30th June, 1998. DIVIDEND: Your Directors have not recommended any dividend. OPERATIONS: During the period of fifteen months under review the Company had a big setback and suffered a huge loss of Rs.878.89 lacs against the profit of Rs.21.83 lacs. The main reasons for the loss are given below: The Company during the period had increased the production capacity from 240 tones to 2120 tones. However, it could utilize only 28% of the installed capacity due to shortage of Working Capital. If the working capital was made available to the Company at the proper time it would have increased the sales and reduced the losses considerably. Besides, the costs of raw materials, manufacturing expenses, financial charges, depreciation etc. have increased substantially which could not be covered by the lower volume of production and sales. Apart from the above, the Company had to suspend production following the order passed by the Maharashtra Pollution Control Board for about a period of two months. This resulted not only in production loss but loss of raw materials which were under process and unwarranted expenses for complying with the requirements of Pollution Control Board. The Company has been pleading with the banks and financial institutions to sanction additional working capital loan and reduce the rate of interest. POTENTIAL SICKNESS: Due to loss, the net worth of the Company is eroded by more than 50% of its Peak Net Worth. Hence under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, our Company has become a Potentially Sick Industrially Company. As required under the said Act, the Company will have to make reference to the Board for Industrial and Financial Reconstruction FUTURE PROSPECTS: The economic slow down in the country as well as the overall global recession has effected the demand for all the dye-intermediates. Your Directors feel that by the end of the last quarter of the financial year the demand may revive. However, unless and until enough Working Capital is made available the Company would not be able to achieve the estimated target. This may lead to under utilisation of production capacity and loss. CONSERVATION OF ENERGY ETC.: The information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy, technology absorption, foreign exchange earning and outgo, forming part of this Report, is annexed. EMPLOYEES: Relations with employees at all levels continued to be cordial throughout the year. None of the employees of the Company was in receipt of a remuneration exceeding the limit prescribed under Section 217(2A) of the Companies Act, 1956 read with the relevant rules made thereunder. Hence, the particulars of such employees are not furnished. DIRECTORS: Mr. Sharad D. Datar and Mr.Rajkanwar Singh Sokhi resigned from the Board as Directors on 30/07/1998 and 10/10/1998 respectively. The Board places on record their appreciation for the valued service provided by Mr. Sharad D. Datar and Mr. Raikanwar Singh Sokhi during their tenure as Directors. Mr. A.D. Joshi was nominated as Director by SICOM Ltd., w.e.f. 29/04/1998. Mr. Mohinder Singh Sokhi, Mr. Ramnath Narang and Mr. Narender Singh Kohli were appointed on the Board as Additional Directors w.e.f. 10/10/1998. In pursuance to Section 260 of the Companies Act, 1956 and the Articles of Association and the Companies Act.,1956, Mr. Mohinder Singh Sokhi, Mr. Narender Singh Kohli and Mr. Ramnath Narang shall relinquish their office in the forthcoming Annual General Meeting. However, notices have been received from some members under Section 257 of the Companies Act, 1956 proposing their appointment as Directors of the Company in the ensuing Annual General Meeting of the Company. AUDITORS: M/s. Paras Jain & Company, Chartered Accountants, Auditors of the Company, shall retire at the forthcoming Annual General Meeting. However, they are eligible for re-appointment. Members are requested to appoint Auditors and fix their remuneration. For and on behalf of the Board Place: Thane S. S. Sokhi Date: 24th October, 1998 Chairman & Managing Director REGISTERED OFFICE: B-57, M.I. D.C. Industrial Area, Lote Parshuram, Chiplun, Dist. Ratnagiri, Maharashtra. ANNEXURE TO THE DIRECTORS REPORT 1997-98 A) CONSUMPTION PER UNIT OF PRODUCTION: In view of the multi-stage, multi-product nature of production, covering large number of Dye-intermediates, it is not possible for the Company to furnish data relating to consumption per unit of production. Some significant energy conservation measures implemented: 1) Heat and energy emitted out of the plant during exothermic reaction, is harnessed through the special coils and jackets and transferred to other process equipments for providing more energy and heat. Thus, facilitating those reactions requiring more energy and heat and conserving energy by this way. 2) All electrical connections and lines to various motors, pumps and equipments are fitted with capacitors of different capacities, which results in saving of about 10% to 20% electrical energy. Investments and proposals for reduction of energy consumption: Certain equipments have been procured so as to facilitate the above energy conservation process for reduction of energy consumption. Impact of Above Measures: In some areas of production it has resulted in cost saving. FORM B DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT: The Company has not established any separate Research and Development Facilities, but proposes to set-up in the near future. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts made towards technology absorption, adaptation and innovation: Since the Company is using Indian Technology, developed in-house, question of technology absorption does not arise. 2. Benefit derived as a result of above efforts: N.A. 3. Information regarding technology imported: (a) Imported technology : N.A (b) Year of Import : N.A (c) Has technology been fully absorbed : N.A (d) Action plan if not fully absorbed : N.A. 4. Foreign Exchange Earnings & Outgo: (a) Total Foreign Exchange Earned : 1,84,450 USD (b) Total Foreign Exchange Used : 4,595 USD