pharmed chemicals ltd Directors report

PHARMED CHEMICALS LIMITED DIRECTORS REPORT TO SHAREHOLDERS The Directors present their Fourth Annual Report to the members with the Audited Accounts of the Company for the year ended 30th September, 1997. REFERENCE TO BIFR As was reported last year the companys operations came under severe pressure having to face several problems since the time the project was conceived, implemented and production commenced. Initially there was six months delay in obtaining the power connection resulting in valuable loss of time for the development and stabilization of the product processes. In addition the industry itself underwent turbulent times followed by the devaluation of the rupee, changes in Government Policy, intense competition in the International and Domestic Market. All aforesaid factors led to rapid erosion of margins. The situation worsened further by the non availability of adequate working capital (both funded and non funded), leading to suspension of operation to contain further losses. This lead to non achievement of projected financial results in the prospectus and erosion of networth. Accordingly the company became a Sick Industrial undertaking in accordance with the provision of section 3 (1) (O) of the Sick Industrial Companys (Special Provisions) Act 1985 (SICA). Consequently the Board of Directors had to take cognisence of the financial situation and made a reference to BIFR as per prescribed procedure under the provisions of section 15 of SICA. FUTURE OUTLOOK Since a lot has happened the future outlook of the company will mainly depend upon the outcome of the reference to BIFR and the consequent sanction of an appropriate rehabilitation package. In the meantime, the company is also examining the possibility of strategic alliances both, within and outside India, so as to recommence the production which is temporarily suspended due to circumstances totally beyond our control. AMALGAMATION The companys petition for amalgamation with Pharmed Limited has been withdrawn consequent to the orders of the Bombay High Court as the petition made by that company. DIRECTORS Mr. Sundeep Aurora and Mr. Prem Gupta retire by rotation in terms of the Companies Act, 1956 and being eligible offer themselves for re-appointment. During the year Mr. John F Fulford and Mr. B. R. Shah resigned as Directors and Mr. K K. Aurora resigned from the function of the Managing Director. The Board wishes to place on and record its appreciation for their valuable guidance and services. The Directors regret to inform that Mr. Naaz Rovshan, alternative Director to Mr. John F Fulford passed away on 25th February, 1998. The Board wishes to place on record its appreciation for his valuable guidance and services during his tenure as a Director. AUDITORS M/s. Gnanoba & Bhat, Chartered Accountants, Bangalore retire at the conclusion of this Annual General Meeting and they are eligible for re- appointment. PERSONNEL The industrial relations among all sections of the employees remained cordial during the period of operations. Your Directors take this opportunity to thank all the employees for their co-operation and wish them the very best in their new endeavours. There are no employees in the Company who fall within the perview of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO In pursuance of Provisions of section 217(1)(e) of the Companies Act 1956, read with Rule 2 of the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, the relevant data pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/Outgo are annexed. REMARKS ON AUDITORS OBSERVATION Notes to Accounts referred to in the Auditors Report are self explanatory and therefore no specific comments are offered. As regards auditors comments in para (j) and (o) of the annexure to their report the Company had already initiated action for strengthening of the internal controls, but unfortunately the program could not be completed due to suspension of operations. ACKNOWLEDGEMENT The Directors wish to place on record their thanks to the Government agencies, business associates, Customers and Suppliers for their continued support and co-operation. for and on behalf of the Board K. K. AURORA CHAIRMAN DATE : 27.6.98 PLACE: BANGALORE ANNEXURES TO THE DIRECTORS REPORT 1. CONSERVATION OF ENERGY The Company has already installed suitable equipments for conservation and absorption of energy and continues to explore further avenues in this regard. 2. In view of the suspension of the companys operation, the details relating to Research & Development of Technology absorption are not given. 3. FOREIGN EXCHANGE & EARNINGS OUTGO During the period under review the Foreign exchange earned was Rs.48.54 lacs and outgo was Rs. 226.12 lacs.