ANNUAL REPORT 1999-2000
Your Directors have pleasure in presenting their Report with the Audited
Accounts for the period ended 30th June, 1999. In order to incorporate the
financial impact of the on going restructuring program, the financial year
was extended upto 30th June, 1999. Hence the figures for the period under
report are for 15 months and are not comparable with the previous year.
In view of the loss incurred during the period under report, your Directors
unable to recommend any dividend on Equity Shares.
During the greater part of the period under review the industrial sector
continued to face unfavourable conditions, with liquidity remaining under
strain. As far as the operations of your Company are concerned, the actual
levels achieved were much lower than what could have been achieved. The
losses made in the previous year resulted in restricting the availability
of working capital and consequently, the planned operating levels could not
As part of its continuing restructuring efforts, the Company has
discontinued manufacture of Phthalic Anhydride and certain colorants due to
unremunerative price realisations. In line with the strategy of focusing
on its core activities, the Company decided to divest its popular `Ranipal'
brand and its business in the consumer and retail segments. The divestment
process has been completed.
The proposed expansion of the Vat Dyes capacity has faced time overruns as
a result of funds shortage and the Company is in discussion with a
financial institution to secure necessary loan funds. During the period,
however, the Company was able to achieve limited increase in capacity and
Employee costs are a significant component of costs and control and
reduction in employee costs will be a key element in achieving long-term
competitiveness and sustainability. As a measure of improving long-term
viability employee costs. Bankers are being approached to support a
Voluntary Retirement Scheme for Ranoil plant.
In the present competitive environment, your Company evaluates on regular
basis its present business lines to focus more on its core business,
besides remaining vigilant in cost cutting measures and improving
productivity. It is expected that these measures will have positive impact
and will bring back gradually the improvement in performance in future.
As the Members are aware, the Company has entered into a joint venture with
CIBA for Pigments. The Company is currently in discussion with CIBA and the
joint venture Company on all aspects, including supply of know-how from
CIBA through Joint Venture as envisaged and ways and means to improve
product supply to joint Venture. The Company intends to arrive at mutually
acceptable conclusions in this regard.
During the period Ranoli (Vadodara) Plant was awarded ISO-9002
certification by Bureau Veritas Quality International for Quality
Management System. With this, all three manufacturing Units now hold ISO-
9002 Certificates. This will help in achieving higher performance levels in
international markets and in improving business prospects in future.
Exports for the period were higher at Rs. 132.85 crores (including
incentives of Rs. 5.61 crores) against Rs. 89.71 cores of the pervious
year. Your Company has been awarded by the Ministry of Commerce,
Directorate General of Foreign Trade, New Delhi, the Golden Status Trading
HOuse Certificate. With a view to better and enhanced penetration in the
various export markets, the Company has assigned to an international
Company for exclusive use in certain international markets, its trade-mark
for a lump-sum consideration payable over 5 years. Your Company is making
sustained efforts to widen its export base by tapping new markets.
OVERSEAS JOINT VENTURES
There was no significant improvement in global market environment during
the period. The performance of the overseas joint ventures in USA, UK and
Japan was reasonable considering recessionary conditions and intense
competition prevailing in the respective markets.
Your Company has issued Non-Convertible Debentures of Rs. 600 lakhs on
private placement basis to IDBI to meet the normal capital expenditure and
the shortfall in cash flow to overcome liquidity constraints faced by the
Company. The Directors commend the approval of the share holders to the
resolution proposed in this behalf for creating security in favour of IDBI.
A resolution is also proposed for providing corporate guarantee to Bankers
of Mafatlal Days & Chemicals Ltd. in terms of the conditions stipulated by
them for grant of financial assistance to them.
In order to continue the thrust in expanding sales in export markets in the
core areas of Vat Dyes and to strengthen the financial resources of the
Company, a comprehensive financial programme is under development and
A sum of Rs. 481.11 lakhs was repaid to various financial institutions
towards loans availed from them. The funds raised for working capital by
way of series of Debentures aggregating to Rs. 2300 lakhs (outstanding
Debentures Rs. 1311.34 lakhs) have been utilized for working capital
requirements and have not been diverted for any other purpose. The
observations made by the Auditors in their Report have been fully clarified
in the relevant notes forming part of the accounts, which are self-
249 Fixed Deposits aggregating to Rs. 14.70 lakhs due for repayment on or
before 30th June, 1999 remain unclaimed as at the close of the period. As
on the date of this report, deposits aggregating to Rs. 4.43 lacs thereof
have been claimed and paid or renewed.
During the period under report, your Company has made investments in shares
and securities of an aggregate amount of Rs. 207.20 lakhs.
SAFETY & ENVIRONMENT, ENERGY CONSERVATION ETC.:
Your Company continuously makes efforts for reducing wastes and increasing
energy efficiencies and conducts its manufacturing activities in compliance
with applicable environmental laws and regulations. Besides providing
training for health of employees and for pollution free environment, well
planned measures in safety standards are constantly monitored. The
information as required under the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, forming part of this Report,
RESEARCH & DEVELOPMENT
R & D Department is engaged in process improvement, technology upgradation,
development of new ranges of dyestuffs and intermediates, evaluation of
alternate raw materials, and minimizing effluent load/re-cycling of waste.
STATUS ON Y2K PREPAREDNESS
The areas likely to be affected due to Y2K issues include IT Systems,
production, testing and control equipment. The Company has completed the
process of testing of hardware and software for Y2K compatibility. For
embedded systems, compliance certificates are being obtained from the
vendors of the equipments/instruments. The appropriate remedial measures
are being taken to replace the non-Y2K compatible hardware, software and
embedded systems. The whole process is expected to be completed by 30th
September, 1999. As for external risks, the process of ascertaining Y2K
compliance status of principal suppliers and vendors has been completed.
The cost of minimising the risks due to Y2K issues has been currently
estimated to be around Rs. 20 lakhs.
The statement pursuant to Section 212 of the Companies Act, 1956 relating
to your Company's subsidiary Companies is attached.
Mr. R.C. Mehta, Mr. M.L. Apte, and Mr. Keshub Mahindra, Directors retire by
rotation at the ensuing Annual General Meeting. They offer themselves for
reappointment. Your directors recommend their reappointment.
Your Directors have donated a sum of Rs. 2.27 lakhs during the period for
charitable and philanthropic purposes to various social and educational
institutions which they trust will meet with your approval. Your Company
also actively participates, alongwith other Associate Companies, in the
Sun-grace Mafatlal Sports Club to promote sports activities.
The properties and assets of your Company are adequately insured.
M/s. C.C. Chokshi & Co, are eligible for reappointment as the Auditors for
the current year to hold office from the conclusion of the ensuing Annual
General Meeting. The Members are requested to consider reappointing them as
Auditors and to fix their remuneration. In view of the extension of the
Financial Year 1998-99 by three months upto 30th June, 1999 and consequent
increase in audit work and all round increase in costs, the Directors
recommend resolution as proposed for approval of Members for increases in
their audit fees for the said period.
Relations between the Management and labour were satisfactory throughout
the period. As required under Section 217 (2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees forms part of
this Report. However, as per the provisions of Section 219 (1) (b) (iv) of
the said Act, the Report and the Accounts are being sent to all Members,
excluding the particulars of employees. Any Member interested in obtaining
such particulars may write to the Company secretary at the Registered
Office of the Company.
Your Directors place on record their appreciation for the dedicated and
sincere service of employees at all levels and for the support and co-
operation of banks, financial institutions, collaborators shareholders and
all others closely associated with your Company.
For & On behalf of the board
Yogindra N. Mafatlal
Dated: 25th August, 1999 Chairman
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
A. Consumption per unit of production
In view of the multi-stage, multi-product nature of production, covering
large number of Deyes, Dye Intermediates and Chemicals, it is not possible
for the Company to furnish data relating to consumption per unit of
Some significant energy conservation measures implemented
Implementation of Energy and Water conservation measures wee continued
which resulted in reduction and surrender of contract demand for power and
water quota. This was possible through on lint monitoring of power
consumption and awareness for water conservation measures.
Investment proposals for reduction of energy consumption
Installation of Solar Water heating system, recycling of condenser cooling
water, variable speed drive on 80 HP cooling tower motor, procurement of
new efficient compressor for air, are among few of the proposals planned
for reduction of energy consumption.
Impact of above measures
The impact of the above measures taken has resulted in saving of over Rs.
161 lacs during the period under review.
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION
Research & Development
1. Specific areas in which R&D carried out by the Company:
* Process Improvement
* Technology upgradation and quality control
* Development of new Dyestuffs and Intermediates
* Development and evaluation of alternate raw materials
* Minimizing effluent load/recycling of waste
2. Benefits derived as a result of the above R&D:
* Improvement in the quality of existing products
* Reduction in cost and wastages
* Promotion of exports and import substitution
* Improvement in safety and environment protection.
3. Future plan of action: To continue R&D activities in the relevant areas
to achieve the benefits listed above.
Technology Absorption Adaptation & Innovation
1. Efforts towards technology absorption, adaptation & innovation: The R&D
Dept. keeps itself abreast of the technical developments relating to the
Company's line of products world wide to bring about improvement in the
products for better quality, cost effectiveness, energy saving, safety and
2. Benefits derived as a result of above efforts: The benefits have been
3. A. a. Imported technology : Process for VAt Dyes & its precursors
b. Year of Import : Part in 1996-97
c. Has technology fully absorbed : No. Full know-how still to be received.
d. Plan if not fully absorbed : Plant/process review & modifications
in progress to the extent know-how
B. a. Imported technology : Process for Solvent Dyes
b. Year of Import : 1997-98
c. Has technology fully absorbed : No
d. Plan if not fully absorbed : Plant/process review & modifications