vantech industry ltd Directors report

VANTECH INDUSTRY LIMITED ANNUAL REPORT 1999-2000 DIRECTORS REPORT To the Members of Vantech Industry Ltd. Your Directors present their fifteenth Annual Report on the business and operations of the Company alongwith the audited financial statement for the year ended 31st March, 2000. 1. DIVIDEND In the absence of profits for the year under review, your Directors regret their inability to recommend payment of dividend for the pear 1999-2000. 2. REVIEW OF OPERATIONS The cautious optimism expressed in our last report in regard to your Companys likely performance and results in the final year of the millennium gone by, remained unfulfilled due to three main reasons beyond control. i) Adverse agro climatic conditions in some of your Companys key market areas. ii) Surplus capacities in the country in its main product lines leading, in turn, to heavy price cuts by some of the industry majors. iii) Delays in sanction and disbursement of the term loan sought by your Company around the middle of the year to finance acquisition of essential equipment and machinery both on the production and pollution control fronts. The first two factors have apparently effected almost all the players in the industry, big or small, going by the results published so far. Indeed, in some cases the fill in sales volume has been far more pronounced resulting in sharp losses as against profits earlier. Against this back drop and considering the financial constraint your company was subjected to and consequent loss in production for nearly two months in the peak season - the performance during the year under review could be deemed satisfactory. And this could be attributed to the following encouraging developments: i) Strenuous efforts on the R & D side resulting in significant improvements in held / purity levels of some of the key products. ii) Innovations in changing the product mix and stepping up the output of formulations, backed by sound marketing strategies. iii) Appreciable increase in exports. 3. FUTURE OUTLOOK With the prospects of a normal monsoon, the favourable weather conditions since its onset should hopefully confirm the forecast - the Directors feel reasonably confident that your Company would be able to achieve reasonably higher volumes of output and sales during the current year, besides breaking even operationally, at the minimum. This confidence is based on. i) The momentum your Company has been actually able to attain in output levels in the last two months, thanks to resources raised against sale of surplus assets lying idle. ii) Development of a couple of new products, again largely in account of in-house R & D. These should not only serve to eventually replace Monocrotophos-hither to your Companys flag ship product and soon likely to be banned - but also add to exports and contribute significantly to the bottom line. iii) Further innovations on the part of your Companys management both in stepping up existing capacity utilisation through acting as as service provide to major agro-chemical companies in the country and also identifying profitable new opportunities arising from recent developments in bio-technology and genetic engineering. 4. BULK DRUG PROJECT The Board has decided not to proceed with the bulk drug project and, therefore, negotiations are in progress for disposal of the assets acquired for the project. 5. POLLUTION CONTROL MEASURES Your Company has implemented most of the pollution control measures recommended by the Central and State Pollution Control Authorities based on the environmental, audit and treatability studies conducted for carrying out the manufacture of existing has well as proposed new products for which facilities have been set up, final clearance is awaited. 6. Y2K COMPLIANCE Your Company could successfully enter the new millennium without encountering any Y2K problems. 7. DIRECTORS During the year Dr.V.L.Dutt, Chairman, resigned with effect from 2nd November, 1999, and the Board of Directors places on record its appreciation for the valuable services rendered by him during his tenure as Director and the Chairman of the Company. Smt.K. Jhansi, Director-in-charge, resigned with effect from 12th January, 2000, and the Board of Directors place on record its appreciation for the services rendered by her during her tenure on the Board. Sri T.V. Subramanian was coopted by the Board as a nominee of State Bank of India as A Director with effect from 29th July, 1999 and subsequently as SBI withdrew the nomination, he resigned with effect from 20th May, 2000. The Board places on record its appreciation the valuable services rendered by him during his short tenure. Consequent to the resignation of Smt.K.Jhansi as Director-in-Charge, Sri Madhav Koneru, son of Dr.K.R.Das, promoter Managing Director of the Company, was coopted by the Board as a Director and was designated Director & President to look after the day to day affairs of the Company under the guidance of the Board, Sri Madhav will be retiring as a Director at the fifteenth Annual General Meeting and it is proposed that he be elected as a non-rotational Director and designated Director & President with authority to look after the day to day affairs of the Company. At the ensuing fifteenth. Annual General Meeting of the Company, Dr.G.Tyagarajan, Director, and Sri C.L. Jain, Director, retire by rotation and they being eligible offer themselves for re-election for which necessary resolutions are proposed. 8. COST AUDIT In pursuance of an order under Sec.233B of the Companies Act, 1956, issued by the Central Government, M/s.R.R.Sarma & Co., Cost Accountants, were appointed Cost Auditors of the Company for conducting audit of cost accounts maintained by the Company for the financial year ended 31st March, 2001, subject to approval of the Central Government. 9. FIXED DEPOSITS Your Company did not raise any fixed deposits from the public during the year ending 31st March 2000. 10. PARTICULARS UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 Information in accordance with the provisions of See.217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988, is given in Annexure "A" to this report. 11. PARTICULARS OF EMPLOYEES There were no employees drawing Rs.50,000/ - or more per month or Rs.6,00,000/- or more per annum during the financial year 1999-2000 to be reported as required under Sec.217(2A) read with the relevant rules made thereunder. 12. INDUSTRIAL RELATIONS The relations between the management and the workers and staff have been cordial during the year. 13. AUDITORS M/s.M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad, retire at the conclusion of the fifteen Annual General Meeting and are eligible for reappointment. 14. ACKNOWLEDGEMENTS Your Directors wish to place on record their thanks for the support received from State Bank of India the Companys sole Bankers, and look forward to their continued support. Your Directors also thank the shareholders and investors for their support and the officers and employees for their dedicated services. For and on behalf of the Board, Place: Hyderabad C.L. Jain Date : 29th June, 2000 Chairman ANNEXURE A PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988: A. CONSERVATION OF ENERGY a) Energy conservation Measures taken - Efforts to conserve energy have been a continuous feature. - Cooling towers are interconnected to achieve higher efficiency thereby reducing the power consumption. - Extra capacity loads have been connected to improve power factor thereby reducing power consumption. b) Additional Investments and proposals for reduction of consumption of energy: - Replacing coal with husk in coal fired boiler. - Replacing softeners with reverse osmosis plant for external treatment of boiler feed water. - Use of chemicals for internal treatment of boiler feed water. - Recycling of clean condensate return into boiler. c) Impact of the above measure-Substantial savings have effected on energy cost. B. TECHNOLOGY ABSORPTION FORM B I. FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT 1. Specific areas in which R&D was carried out by the Company a) Improvements in the process for Chlorpyriphos b) Thiophanate Methyl technology has been developed and standardised at Pilot plant level. c) Work on new pesticide molecules has been initiated. 2. Benefits derived as a result of the above R&D In the production of Chlorpyriphos, the yields have increased from 50% to 60% at intermediate stage resulting in cost reduction and increased productivity. Production levels have increased resulting in significant improvement in capacity utilisation. 3. Future plan of action The Company presently bases its research work on reverse engineering and development of new agro formulations and plans to gradually switch over to development of new molecules in the light of various changes taking place in life sciences research around the globe. 4. Expenditure on Research & Development (Rs. in lakhs) 1999-2000 1998-99 A Capital 1.29 - B Revenue 6.19 7.86 C Total 7.48 7.86 D Total R&D expenditure as a percentage of total turnover. Negligible II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION 1. Efforts in brief, made towards technology absorption, adaptation and innovation: a) Chlorpyriphos technology has been significantly improved and implemented b) Process development work on certain new products is initiated. 2. Benefits derived as a result of the above efforts eg., product improvement, cost reduction, new product development, import substitution etc.: In house research and development, work on Chlorpyriphos has improved the yields further by 10% at the intermediate stage resulting in substantial cost reduction. The modified process has been implemented which resulted in substantial increase in capacity utilisation and improving the financials of the Company. 3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished. A. Technology imported : Technology for the cephalosporins, viz., Cefotaxime Sodium, Cefuroxime Sodium and Cefuroxime Axetil and their common intermediates v., 7ACA was imported from M/s. Chementecno Srl., of Italy. B. Year of import : 1994-95 C. Has the technology been full absorbed : No. D. If not fully absorbed, areas where this has not taken place, reasons therefore and the future plan of action : As the project has become unviable due to elapse of considerable time i commencement of implementation, the project has become unviable and implementation has been put-off. Hence, the technology could not be absorbed.