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Alsa Marine & Harvests Ltd.

BSE: 523447 Sector: Others
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Alsa Marine & Harvests Ltd. (ALSAMARINE) - Director Report

Company director report

ALSA MARINE & HARVESTS LIMITED ANNUAL REPORT 2000-2001 DIRECTORS' REPORT To the Members Your Directors have pleasure in presenting the Eleventh Annual Report together with the Audited Accounts for the year ended 31st December, 2000. DIVIDEND In view of the loss suffered during the year under review, your Directors have decided not to recommend any dividend for the period ended 31st December 2000. THE YEAR IN RETROSPECT During the period under review, your Company had to continue resorting to job work due to problems on the working capital front. The Sea Food Industry started showing signs of its much awaited revival. It was mainly due to the support of the Merchant exporters that the Company could utilise its plant capacities and also meet its costs. This again was possible only because your Company had infrastructure and experienced production staff. The Calcutta plant was fully operational but the Visakhapatnam plant could not reap the benefits of its implementation which was carried out by the Company amidst great financial difficulties. The reasons for this has been explained elsewhere in this report. The plant at Chennai which is a leased one operated for about nine months and the Bhubaneswar plant for about three months. All efforts to install imported plant and machinery lying idle at Chennai (which was intended to be transferred to Cochin) were in vain as ICICI Limited have not yet cleared the proposal and we are eagerly awaiting their approval to proceed further. This would have given a boost to the Company's operations at a very critical juncture. Due to job work revenues, the Company was in a position to reduce its operational losses to Rs.6.44 crores (Rs.11.12 crores during the previous period of 15 months). However there were certain extraordinary items. In the first place, the entire stocks of the Company valued at Rs.2.69 crores, which were old, were considered unsuitable for Human consumption. Secondly, the Company had to acknowledge a claim of a Merchant Exporter to the tune of Rs.4.39 crores towards Finished goods stock of the Merchant Exporter which the Company was holding in trust and which value has since depleted. Further, the Company had to write-off old advances considered irrecoverable amounting to Rs.12.53 crores. Most of these advances relate to the period when the industry suddenly took a dip as a result of multi-various factors. Members may recall that last year the Company had written off a sum of Rs.8.27 crores and retained the balance in order to make maximum efforts and see if recoveries could be made. The Company has reviewed the same again and based on its assessment on impossibility of recovering these amounts, a decision to write-off has been taken. However, the Company would continue its efforts to recover the dues. Lastly, the Company has made provision for diminution in value of investments amounting to Rs.4.69 crores. REFERENCE TO BIFR Based on previous year's (1998-99) losses and approval by the shareholders in the previous Annual General Meeting of the Company held on 14th September, 2000, the Company made necessary reference to the Board for Industrial & Financial Reconstruction (BIFR) as per the provisions of Sec. 3 (1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985. The BIFR Bench in its meeting on 19th April, 2001 declared the Company sick. They appointed ICICI Limited as the Operating Agency and directed that a Techno Economic Viability study be conducted by an external Consultant to study the Company's viability. Consequently, ICICI Limited has appointed Indian Institute of Management, Calcutta to conduct this study and submit necessary report based on which further progress could be made in the discussions with Institutions and BIFR. The Board would like to add that all possible steps to revive the Company are being undertaken . SUBSIDIARIES The turnover of the subsidiary M/s Seal Fisheries Limited was Rs.2.89 crores during the 15 month period ended 30.09.2000. This period witnessed one of the most difficult periods for this Company. Their Bankers suddenly reduced the sanctioned facilities citing the problems faced by your Company. Representations to the Bank did not yield the desired result. Finally, decision to dispose off the trawlers became inevitable. Both the trawlers have been sold for a good price. They are in the process of taking a decision on future business. The other subsidiary M/s. Alsa Europe was declared bankrupt in 1998 by the Belgium courts as mentioned in the earlier Directors' Report. Despite all efforts it has not been possible to obtain any details of the Company's assets and liabilities which have been handled by the Curator appointed by the court. As a result this Company's Balance sheet as of 30th June 2000 has not been published. Your Company would approach Reserve Bank of India for permission to write off of the Investment. However, suitable provision for the diminution in value of this investment has been made by the Company in its accounts for the year. Your Company's claim against the subsidiary has not found success in the trial court at Belgium. The Company has preferred an appeal before the higher court and the outcome is awaited. PROSPECTS FOR THE CURRENT YEAR Your Company would have fared much better during the year under review but for the unfortunate delays in debonding the Visakhapatnam Unit, which is a 100% Export Oriented Unit. The Company has been waiting patiently for this approval which is yet to crystallise. Since Government benefits are not available for Merchant Exporters who get their raw material processed in a 100% EOU Merchant Exporters have not given job work to our Visakhapatnam Unit and the unit has been suffering for the last one year because of this. Due to the delay, the Company is yet to reap the benefits of the state-of- the art plant installed at this unit. It is earnestly hoped that the approval would come soon enabling this plant undertake job work operations. The Company's image and Brand Equity in the foreign markets are still good. Most of the products exported by the Merchant Exporters, out of job work in our factories, are sent in Alsa brand. The well established brand image of the Company, combined with its infrastructure and the confidence of the exporters in the company's ability to process and turn out quality material, will help the Company maximise the utilisation of its Plant capacities. This will in turn help the Company in generating surplus, once the plants at Visakhapatnam and the proposed one at Cochin become fully operational. The Industry has done well during the year and the turnovers have increased from Rs.5117 crores during 1999-00 to Rs.6300 crores during 2000-01. Quality standards have improved by leaps and bounds resulting in attracting more business for this Industry. This has put our country amongst the top exporting nations in respect of marine products. Last year mention was made of your company's Managing Director's effective role as President of Seafood Exporters Association of India in making relentless pursuit with the Government along with other representatives of the Industry. He has continued to play a major role in the Central Government considering sanctioning a restructure package by way of a Reconstruction Fund for this Industry. The prospects of the Industry achieving this seems to be good due to the positive attitude of the Government. We are sure that this Reconstruction Fund will give the required boost for the major Companies in this Industry to plan their revival. DEPOSITS As on 31st December, 2000 your Company had deposits of Rs.6.67 lakhs and there was one deposit matured but unclaimed as on that date. DIRECTORS Mr. Salim Pasha, Director, retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment. AUDITORS Mr. V. Dasaraty, Venkatesh & Co. Chartered Accountants, Chennai, retire at the conclusion of this Annual General Meeting and are eligible for reappointment. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed: (i) that in the preparation of the annual accounts for the financial year ended 31st December, 2000, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review; (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities: (iv) that the Directors had prepared the accounts for the financial year ended 31st December, 2000 on a 'going concern' basis. HUMAN RESOURCES As there is no employee to whom the provisions of section 217(2A) is applicable, no information is furnished. CORPORATE GOVERNANCE As the provisions of Sec 292 A have become applicable towards the end of the year under review, steps are initiated to comply with the requirements during the current year. As regards compliance of conditions of Corporate Governance as stipulated under clause 49 of the listing agreement, your Company has time up to 31st March, 2003. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO The information required under Section 217(l) (3) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is furnished in Annexure 2 to this Report. ACKNOWLEDGMENT Your Directors acknowledge the support from Merchant Exporters at a very critical juncture. The Company acknowledges the continued support extended by ICICI Limited at a vital juncture. The contribution and the support of the employees of the Company in carrying out their duties amidst a tumultuous period is commendable and requires special mention. We wish to personally thank each one of them who have stood by us in such hard times. For and on behalf of the BOARD OF DIRECTORS Chennai ALTAF PASHA 30th June, 2001 Chairman ANNEXURE 1 TO THE DIRECTORS' REPORT Information pursuant to Section 217 (1) (e) 1. CONSERVATION OF ENERGY (a) Energy Conservation Measures taken : The performance of the equipments was optimised in earlier years and as a result, consumption of power during the year is reasonable. Since the goods produced by the Company are highly perishable in nature, power supply assumes high priority, notwithstanding the fact that the industry is not power intensive. (b) Additional investment and proposals if any being implemented for reduction of consumption of energy : The Company had conducted a technical audit to identify areas of energy conservation and taken action thereon, including minor investment as required. (c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production goods : Since power constitutes an insignificant part of the cost of production, the conservation measures have only nominal positive impact. (d) Conservation of energy; 2. TECHNOLOGY ABSORPTION FORM B A. Research and development : The R&D wing is being strengthened - to evolve more scientific methods of processing/packaging, addition of new products to existing range and improved production efficiencies. B. Technology absorption 1. Efforts in brief made towards technology adaptation and innovation. The Company has internally developed and marketed, value added products meeting the requirements of the overseas customers. 2. Benefits derived as a result of the above efforts: The Company's range of value added products have been diversified. 3. In case of imported Technology There is no imported (Imported during last 5 years reckoned technology and hence from the beginning of the financial year) this is not applicable following information may be furnished. a. Technology imports b. Year of import c. Has technology only been imported? d. If fully not absorbed, areas where this has not taken place, reasons thereof and future plan of action. 3. FOREIGN EXCHANGE EARNINGS AND OUTGO The operations of the Company are export oriented. The Company has expanded and modernised its processing facilities with the objective of increasing the exports. Rs. i) Foreign exchange earnings of FOB basis Nil ii) Foreign exchange outgo 34,10,383 For and on behalf of the BOARD OF DIRECTORS Chennai, ALTAF PASHA 30th June 2001 Chairman ADDENDUM TO THE DIRECTORS' REPORT A. Auditors' Report under clause 2 (e): 1) Note 15 of Schedule 16: The bad and irrecoverable advances/debtors written off relate to the period when the industry suddenly took a dip as a result of multi-various factors. Maximum efforts were made to recover the dues during the year under review. However, since in the judgement of the Board these advances are impossible to recover, it has been decided to write off the outstanding. 2) Note 21 of Schedule 16: The Company has been maintaining close co-ordination with the parties and referring the balances periodically. Hence no discrepancy is foreseen. 3) Note 8 of Schedule 16 referred in Auditors' Report 2(e)(l)-. Last year, the Company had carried forward certain stocks with a view to attempt disposal of the same in the local markets. However, due to the stocks becoming unsuitable for human consumption, the Company could not salvage any recovery against these stocks. Hence the write off. 4) Notes 12 & 13 of Schedule 16 referred in Auditors' Report 2(e) & 2(e)(2): i) Note 12 of Schedule 16 explains in detail the status of the Company vis a vis the advance taken from M/S Alsa Europe. The Company has gone on appeal against the order of the Trial Court at Belgium and as such the claim against the Company awarded by the Local Court is considered as a contingent liability. ii) The Company has not made any provision for exchange fluctuation on the amount outstanding, against export advance received from M/S Alsa Europe. This is because the Company has made a claim of US$14 million against M/S Alsa Europe but recognised only 50% as income in its accounts. No provision is considered necessary since the balance claim remains to be recognised. 5) Notes 18 & 19 of Schedule 16 referred in Auditors' Report 2(e)(3) i) The Company has been negotiating with the Banks seeking reduction of interest and waivers. The Company's account is categorised as a Non Performing asset by the Banks. The Company has been declared a Sick Company by the Board for Industrial and Financial reconstruction. As part of the revival proposal to be submitted for consideration by the Banks, Financial Institutions and other creditors, the Company would seek considerable concessions. Due to this interest has not been accounted on outstanding to Banks and Non Banking Finance Companies from whom Hire Purchase and Bill Discounting facilities have been availed. ii) The Company has made a representation to ICICI Ltd. about the liability as mentioned in Note 19 and the reply for the same has not been received. The Company expects a favourable response and hence the liability has not been accounted in the books. 6) Note 20 of Schedule 16 referred in Auditors' Report 2(e)(4): The Company has been accounting the Gratuity and Leave encashment on cash basis right since inception and confirm that in the year of occurrence the same will be debited to the Profit and Loss account. B. Clause (xvii) and (xviii) of the annexure to the Auditors' Report.- Due to the Company's financial condition, the Company could not make the payments/ remittances towards items mentioned. Efforts are being made to update the payments during the current year. For and on behalf of the BOARD OF DIRECTORS Chennai ALTAF PASHA 30th June, 2001 CHAIRMAN