SOL PHARMACEUTICALS LIMITED
ANNUAL REPORT 1999-2000
Your Directors present the Report for the Financial Year ended 31st
The financial difficulties of the Company continued during the year under
review also, pending approval of the Rehabilitation Scheme.
With the market credit support and with the support of some of the bulk
drug traders the company traders the company could utilise a portion of the
capacity of Patancheru Plant. The production is mainly used for the Orders
of M/s Teva Pharmaceutical Limited Israel with whom, the company is in
negotiation for a Joint venture for the Patancheru Plant. The Jeedimetla
Dexo plant and the pilot plant have done some job work for some local Bulk
These activities have resulted in a sales volume of Rs.29.68 Crores as
compared to a sales volume of Rs.43.88 Crores in the previous year. The
main reason for the reduced sales volume is the reduced production level
caused by the companys serious financial limitations and constraints.
The sales volume though was not sufficient to meet the overheads of all the
Units, administrative Cost and the interest cost, but has facilitated in
meeting the Factory Overheads of all the units that are in production. But
for this sales volume, the losses could have been higher.
The company is able to achieve substantial progress in the approval of the
Rehabilitation Scheme. IDBI, the Operating Agency in discussions with
Institutions, Bands and other involved agencies have prepared a Draft
Rehabilitation Scheme taking into account the directors of the Honble BIFR
in this regard.
The Honble BIFR has now circulated a Draft Rehabilitation Scheme for the
consents of all the involved agencies and convened a hearing on 4th
September, 2000. The company is making all best possible efforts for the
early approval of the Draft Rehabilitation Scheme.
The Board of Directors are confident that, on the approval of the
Rehabilitation scheme, the company can be revived in a reasonable period of
The company has overdue deposits of Rs.33.91 Crores as at 31st March,2000.
In view of the adverse liquidity position of the company the overdue
deposits could not be repaid. However, in the proposed Rehabilitation
scheme these repayments are considered.
The Honble BIFR has appointed Shri R.K.Bharagava as a special Director.
M/s SICOM Limited has withdraw the nomination of Mr. A.D.Joshi and
appointed Smt. U.J.Salpekar as the nominee.
The Board places on record its appreciation for the services of Mr.
A.D.Joshi during his tenure of office Dr. D.Rajagopala Reddy retires by
rotation at the ensuing annual general meeting and is eligible for re-
M/s J.B.Reddy & Co., the companys Auditors retire at the conclusion of
this Annual General Meeting and are eligible for reappointment.
The Auditors have made certain observation in their Report relating to the
preparation of accounts on the principles of going concern, the extent of
non-recoverability of certain debts, reconciliation of certain debits and
credit balance, non-provision of compensation payable under VRS Scheme, non
provision of financial liabilities for non fulfilment of certain export
obligations, non provision of estimated liability of future payment of
gratuity non repayment of overdue Fixed Deposits delay in deposit of
Provident Fund and ESI dues and outstanding Statutory dues.
Your Directors would like to clarify that /Note No.1 (relating to
preparation of accounts on principles applicable to a going concern), Note
No.6 and 7 (relating to non-recoverability of certain debts), Note
No.8(relating to reconciliation of certain debit and credit balances), Note
No.9(relating to non provision of compensation payable under VRS Scheme)and
Note No.10 (relating to non provision of financial liabilities for non-
fulfilment of certain export obligations) and Note No.21(relating to non
provision of estimated liability of gratuity) are self-explanatory to the
observations made by the Auditors.
The company is making all efforts to clear the pending payments relating to
Provident Fund, ESI and Statutory dues. The position with regard to Fixed
Deposits have been explained elsewhere in this Report.
The problem of Y2K to the company was restricted to the administrative
functions only and hence the companys transition to the 21st Century was
During the period under review, the relationship between the Management and
employees were cordial.
During the year under review, there were no employees who were in receipt
of remuneration of Rs,6,00,000/-per annum or Rs.50,000/-per month, if
employed for part of the year.
Information on the conservation of energy, technology absorption foreign
exchange earnings and outgo required to be disclosed under the Section
217(1)(e) of the companies Act, 1956, is enclosed.
The Central Government has prescribed cost Audit for the company under
section 233(B) of the companies Act, 1956. The Audit is under progress and
the report of the Cost Auditor will be submitted to the Government before
the due date.
Your Directors wish to place on record their appreciation for the co-
operation received by the company from various departments of the central
and state Governments companys Bankers and Financial Institutions during
the year under review. Your Directors also express their gratitude to the
shareholders of the company for the confidence reposed in the management.
On behalf of the Board
Place : Hyderabad Chairman &
Date : 25th August, 2000 Managing Director
ANNEXURE TO DIRECTORS REPORT
(Additional information given in terms of Notification No,1029 of 31-12-
1998, issued by the Department of company Affairs)
A. CONSERVATION OF ENERGY
(a) In house energy management team has implemented various energy saving
measures such as replacement of high power consuming centrifuges with Auto
Nutch Filters. This eliminates several centrifuges in the filtration area
which resulted in cost of power saving
(b) By secondary cooling methods, the cooling loads are reduced to save the
power at compressors.
(c) Condensate water in recycled to save the heat energy and to reduce the
coal consumption at boilers.
(d) The total energy consumption and energy consumption per unit of
production are as per form A.
Form of disclosure of particulars with respect to conservations of Energy.
B.Consumption per unit of production:
Products Since the company manufactures
Electricity different types of Bulk Drugs and
Furnace Oil Formulations, it is not practicable
Coal to give consumption per Unit of
B. TECHNOLOGY ABSORPTION
Effort made in Technology absorption as per From B
1. Specific areas in which R & D is carried out by the company:
a) Technology is developed for the manufacture of CIS(+) Lactam from basis
raw material paraanisaldeehyde. CIS(+) Lactum is a advanced intermediate in
the manufacture of Dilitazam.
(b) CIS (+) Lactum technology is cmmercialised and acceptable material is
produced. Material is exported to various countries.
(c) Technology is developed for the manufacture of Diethy 1 Oxalate using
alcohol. 50% of captive requirement of DEO is manufacture in-house.
2. Benefits derived as a result of R & D
(a) Commercials of CIS(+) Lactum has given good contributions cost
effective technology has given the required competitive edge to capture the
market share for this product.
(b) Backward integration for SMX has further improved the margins in this
(c) Process are developed to recover D(-) Lactum from mother liquor.
3. Future plan of Action
(a) Introduction of new product Rofecoxib.
(b) Development of technology for 2-Methy 1 Pyrazine, which is a
intermediate for the manufacture of pyrazinamide.
(c) Upgradation of the technology to improve the yields on a continuous
C.FOREIGN EXCHANGE EARNINGS AND OUTGO
(a) Activities relating to exports, initiatives taken to increase export
development of new export markets for product and service and export plans.
The company has entered into long term supply agreements with multinational
companies for supply of certain Bulk Drugs. As a result the company will be
exporting almost its entire production of bulk drugs.
(b) Total foreign exchange used and earned:
During the year under review, the company used Foreign Exchange equivalent
to Rs.0.95 Crores (Previous year Rs.1.31.Crores) for the import of
materials and earned NIL (Previous year Rs.0.21 Crores) worth of foreign
exchange by way of Exports.
On behalf of the Board
Place : Hyderabad Chairman &
Date : 25th August, 2000. Managing Director
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