HINDUSTAN NITROPRODUCTS GUJARAT LIMITED
To The Members,
Your Directors have pleasure in presenting their Fifth Annual Report
together with the Audited Accounts of the Company for the year ended 31st
March, 1995 and are pleased to announce that the project of the Company to
manufacture 12000 T.P.A. of Aniline and 18000 T.P.A. of Nitrobenzene has
Operation of the Nitrobenzene Plant has continued on and off and your
company has earned revenue by selling the same in the domestic market.
There have, however, been interruptions in the operation of Hydrogen plant
due to technical problems (and hence Aniline was affected also), which have
since been overcome and all the three plants together are now expected to
function with full momentum.
COST OVERRUN :
Total project cost has increased from Rs. 4194 lacs to Rs. 5431 lacs,
primary due to interest on various term loans of Financial Institutions
amounting to Rs. 550 lacs, unforeseen cost of Rs. 165 lacs towards
installation of new NGL/Naphta based technology as feed stock/fuel for
production of Hydrogen and proposed installation of PSA system in the
Hydrogen plant costing to 240 Lacs.
Cost over run has been a direct fall out of unexpected and unforeseen
delays in the project implementation such as non-availability of Natural
Gas and consequent switching over to NGL/Naphta technology, delay in coming
out with the Public Issue in the then prevailing recessionary environment,
delay in the erection of high tension power supply line and availability of
power from G.E.B. and unexpectedly heavy rains in the last couple of
1. Conversion of Interest into Equity
In order to part Finance the Cost Overrun, your Company had submitted its
proposal to the Industrial Credit and Investment Corporation of India Ltd.
(ICICI), the Lead Financial Institution to the Company, acting for itself
and on behalf of Industrial Development Bank of India (IDBI) and Unit Trust
of India (UTI), the other participating Financial Institutions (Fls), for
converting their unpaid/overdue interest amounting to Rs. 550 Lacs on
various Term Loans granted to the Company in to Equity Share Capital. The
proposal is under final stage of appraisal and on receiving the approval,
the Company proposes to issue 55,00,000 Equity Shares of Rs. 10/- each at
par to the FIs in lieu of the interest due amounting to Rs. 550 Lacs.
In anticipation of approval from FIs as aforesaid, the Company has sought
the consent from Members for conversion of unpaid/overdue interest of FIs
into Equity Share Capital under Item No. 9 of the notice of Annual General
Meeting, forming part of this Annual Report.
2. Issue of Equity Shares
Further to meet the increased Long Term Working Capital requirements of the
Company and the cost of balancing equipments, your Company is planning to
issue further equity shares of Rs. 10/- each for an aggregate value not
exceeding Rs. 1000 Lacs to the Directors /Members /NRIs /OCBs /FIIs /Mutual
Funds /Public etc. by way of Public Issue/Rights Issue/Private Placement
/Preferential Allotment, which would be in the best interest of the
The necessary approval from the Members is being sought under Item No. 10
of the notice of Annual General Meeting, forming Part of this Annual
Now that the initial teething problems are behind us, the Company expects
to stabilise normal working soon and move on to sustained profitable
performance. With a view to strengthening and streamlining the Company's
operations, the Board has decided to install a Pressure Swing Absorber
Systems (PSA) in the Hydrogen Plant, costing Rs 240 lacs.
This would enhance the capacity of the hydrogen plant from 800 cubic meter
per hour to 4000 cubic meter per hour. With high production, it would be
possible to generate additional revenue for the Company by selling surplus
Hydrogen available after satisfying internal demand.
Your Directors are glad to inform you that your Company had received the
long awaited sanction from Ministry of Petroleum, Government of India,
granting the Company allocation of 45,000/- cubic meter of Gas per day and
also executed the Gas supply contract with M/s. Gas Authority of India
Limited (GAIL) for supply of Gas. On availability of Natural Gas, your
Company is hopeful of achieving better quality of its products at lower
The Company has been sanctioned working capital, both fund based and non-
fund based limits, aggregating Rs. 894 Lacs from the Consortium of Bankers
consisting of Central Bank of India as lead Bank, Vijaya Bank and Union
Bank of India. The execution of documents have been completed and the
Company has been made available both the limits, in full, for utilisation.
On Marketing front, looking to the present supply and demand position of
Aniline in the country, your Company is expecting to take up the front-
ranking position in the domestic market in near future. The quality of the
products of your Company is of high purity and on receiving the initial
feed back from the domestic market, your Company does not forsee any
difficulty in gaining acceptability for its products in the market. The
company is at present concentrating on setting up of its marketing network
through out the country, started with Gujarat and Maharashtra.
Your Company proposes to actively develop exports and would in the long run
aim at exports constituting a minimum of one third of its total sales.
The Company has not accepted any fixed deposits from the public for the
period under review within the meaning of Section 58A of the Companies Act,
1956 and the rules made thereunder.
Mr R Kannan has been nominated by Industrial Credit and Investment
Corporation of India Ltd. (ICICI) as Nominee Director with effect from
08.02.1995 in place of Mr. Sunil Bahl. The Directors place on record their
appreciations for the services rendered by Mr. Sunil Bahl during his
tenurship as a Director of the Company.
Mr. M.R. Menon, Dr. N.P. Jain, Mr.B. Aravamudham and Mr. L.N.S. Mukundan,
IAS, Directors of the Company, retire by rotation, and being eligible,
offer themselves for re-appointment.
All the properties and insurable interest of your Company are adequately
Information pursuant to Sec. 217(1 (e) of the Companies Act, 1956 read with
the Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 is given in Annexure-I to this Report. Statement
giving particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 are given in Annexure-II to this Report.
The auditors, M/s. U.S. Bohara & Co., Chartered Accountants. Baroda hold
office until the conclusion this Annual General Meeting and do not offer
for re-appointment, owing to their pre-occupations. The Directors place on
record their sincere appreciations for the services rendered by M/s. U. S.
Bohara & Co. during their tenure as a Auditors of the Company.
The Company has received a certificate from M/s. C. C. Chokshi & Co.,
Chartered Accountants, Baroda to the effect that their appointment if made,
would be within the prescribed limit under Section 224 (1-B) of the
Companies Act, 1956.
Your Directors gratefully acknowledge the continued support and valuable
advice received from the leading financial institutions namely,
(1) Industrial Credit Corporation of India Ltd., (ICICI),
(2) Industrial Development Bank of India (IDBI) and
(3) Unit Trust of India (UTI);
From the prestigious promoter in associate sector namely, Gujarat
Industrial Investment Corporation Ltd., (GIIC), and from the prominent
bankers namely, Central Bank of India, Vijaya Bank, and Union Bank of
India. Your Directors greatly appreciated the co-operation extended by GAIL
and other Govt. Authorities and Institutions. Your Directors also placed on
record their appreciation for the sincere efforts put in by all the
ANNEXURE - I
Information regarding conservation of energy, technology absorption and
foreign earning and outgo required to be furnished and pursuant to the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules 1988 and forming part of the Director's Report for the
year ended on 31 st March, 1995.
A. CONSERVATION OF ENERGY :
a. Energy conservation measures taken :
The plants of the Company are designed with the latest technology and in
built controls are provided there in for optimal utilization of energy.
Whatever heating is involved, the same is done by using thermic fluid
heating system. In the said System Hot oil in closed pipe lines moves
around from utility section to plant area, wherein there is no
puging/outgoing of hot oil and as such, no wastage of energy.
b. Additional investments and proposals, if any being implemented for
reduction of consumption of energy.
No additional investment is envisaged.
c. Impact of the measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.
The above measures has reduced the energy consumption but, since the period
under review is very small, its exact impact will be known in the coming
d. Details of total energy consumption for production.
Details of total energy consumption are given in Form-A hereunder.
FORM - A
Disclosure of particulars with respect to conservation of energy. (To the
Power and Fuel Current Year Previous Year
Units (KWH) 5506.00 N.A.
Total Amount (Rs. in lacs) 0.26 N.A.
Rate per Unit (Rs./KWH) 4.80 N.A.
b. Own Generation
i) Through Diesel Generator
Unit (KWH) 33858 N.A.
Unit per Ltr. of diesel oil 7.87 N.A.
Cost/Unit (Rs./KWH) 2.75 N.A.
ii) Through steam turbine /
generator NIL NIL
2. Coal (specify quality and where used) NIL NIL
3. Furnace Oil NIL NIL
Quantity (M.T.) 7.08 NIL
Total Amount (Rs. in lacs) 0.54 NIL
Average Rate (Rs./M.T.) 7424.00 NIL
B. TECHNOLOGY ABSORPTION :
As per the details provided in Form B, hereunder.
FORM - B
Disclosure are in which (R & D) carried out by the Company.
The Company has not carried our Research and Development activities during
the period under review.
2. Benefits derived as a result of the above R & D.
3. Future Plan of Action.
The Company has plans for setting up a full fledge Research and Development
Unit in-house in future.
4. Expenditure on R & D. NIL
b. Technology Absorption, Adaptation and Innovation
1. Efforts, in brief, made towards technology absorption, adaptation and
The Company has been supplied the indigenously developed technology by Ms.,
Shirag Organics Industires Pvt. Ltd. utilizes low cost raw materials and
for the first time in India, the long lasting catalyst in the manufacturing
of Aniline. Recycling of Acids and pioneer introduction of innovative
nitration process would result in lower cost of production.
The technology would be fully absorbed in the current F.Y. 1995-96.
2. Benefits derived as a result of the above efforts.
As the time span was short since the Company started commercial production,
no information is available regarding above.
3. Technology imported during the last five years.
Not applicable as the Company has not imported any technology during the
last five years.
C. FOREIGN EXCHANGE EARNING AND OUTGO :
-- Foreign Exchange earned : Nil
-- Foreign Exchange outgo : Rs. 95.10 lacs.
Note :- This being the first year of operation, corresponding figures for
the previous year are not provided.
By order of the Board
DR. N.P. JAIN
Place : Bombay
Date : 26th July, 1995.