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Montari Industries Ltd.

BSE: 500286 Sector: Agri and agri inputs
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Montari Industries Ltd. (MONTARIND) - Director Report

Company director report

MONTARI INDUSTRIES LIMITED Directors Report Your Directors have pleasure in presenting the Fifteenth Annual Report of your Company together with Audited Accounts for the year ended 30th September, 1998. Operational During the year under review certain steps were taken to improve performance of your Company including cost cutting, such as closure of unviable branches and export office at Mumbai, curtailing of manpower and re-location of Kisan formulation unit from Chandigarh to Toansa where the technical manufacturing Plant is located. The Company introduced a new insecticide-"Lethal Super" mainly used for the cotton crop and also re-introduced scabicide. Innovative sales scheme were also introduced for the first time for farmers for Milron a major product. These innovative schemes yielded good results. However, the operations of the Company were hampered because of a ban on the use of plant growth regulators and also for a certain time on combination products. Adverse market conditions both in the domestic and international markets also had an impact. Inspite of this your Company has been able to achieve a marginal positive profit before the depreciation, interest and tax. BIFR Status As informed in the previous report your Company had submitted a draft rehabilitation scheme/package to Industrial Development Bank of India (IDBI), the operating agency appointed by the Board for Industrial & Financial Reconstruction (BIFR) in terms of Section 17(3) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) . IDBI had after examining the viability of your plant, and after conducting such other checks as advised by BIFR, called meetings of all the secured creditors/lenders, financial institutions and banks. It is pertinent to report that all the secured lenders agreed to support the rehabilitation package. IDBI has since submitted the draft Rehabilitation Scheme to BIFR and the BIFR is in processing the matter further to take decision on the same. As soon as the rehabilitation scheme is approved by BIFR, the Company would forthwith proceed for implementation of the same. During the interim period Company's lead Bank has been extending its support which helped the Company to improve its performance. Your Company could meet the challenges of the year under review because of the hard work, commitment and dedication of all within the organisation and unstinted supports from its customers, bankers, financial institutions and business associates. The functional teams are continuously working as a core team towards further improvements to meet future objectives of the Company. It is mentioned for your information that during the year under review, one unsecured creditor had appealed to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), against the BIFR decision of 22.7.97 declaring the company as Sick Industrial Undertaking under Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) which appeal is still pending. Research & Development R & D continues to be a key focus area for the Company. Besides continuously working on improvements on the current products, the R & D is constantly busy with developing of new products which involve very sophisticated technology. The Company is also in dialogue with some international companies of repute to enter into a strategic alliance for certain technical inputs of new generation products. The introduction of these products would certainly have a significant positive impact on the sales and profitability of your Company. Fixed Deposits During the year under report, deposits for Rs. 54.81 lacs matured for repayment out of which Rs.2.60 lacs could only be repaid and remaining deposits of Rs.52.21 lacs are outstanding due to continued financial stringencies. Deposits aggregating to Rs.2.65 lacs belonging to 22 depositors remained unclaimed. The Company is however endeavoring to repay the pending deposits at the earliest possible. For this reason in the rehabilitation package, Company has recommended priority for these repayments. Subsidiaries As required under Section 212 of the Companies Act, 1956, the audited statement of accounts alongwith reports of the Board of Directors and the Auditor's reports in respect of the subsidiaries is annexed and forms an integral part of this report. Disclosure of Particulars As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information and data is given in the Annexure to this Report. Share Capital 9700 equity shares out of forfeited shares were issued at unpaid value of Rs. 5 per share and as a consequence, the equity share capital has been increased by Rs.0.97 lac. Extension in Redemption period of 90,000 14% Preferences Shares of Rs. 100 each, 3,80,140 15% Non-Convertible Debentures of Rs. 100 each and 28,98,057 15% Non Convertible Debentures of Rs. 50 each. IDBI, the Operating Agency in its draft rehabilitation scheme forwarded to BIFR for its approval has not provided for any redemption of Preference Shares during the period of scheme. In view of this it is proposed to redeem the Preference Shares in the years 2006-2007 when the accumulated losses would be wiped off, subject to the approval of the holders. IDBI has further recommended re-schedulement in the redemption period of 3,80,140 - 15% Secured Debentures of Rs.100 each to be repaid in the years 1999-2000 without any overdue interest. IDBI has also recommended redemption period of 28,98,057 - 15% Secured Non- Convertible Debentures of Rs. 50 each be extended and the said debentures be redeemed in three annual installments starting from 2000-01 to 2002-03 at the document rate of interest. IDBI has further recommended deferment of 50% of the simple interest outstanding as on 31.12.1997, to be paid in three years starting from 1999- 2000 @ 15.5% p.a., and waiver of balance 50% simple interest alongwith and entire compound interest and penal charges as on 31.12.97 on these debentures. Additional Information - Balance Sheet Abstract and Company's General Business Profile Information pursuant to Department of Company Affairs' Notification dated 15th May,1995, relating to Abstract of Balance Sheet and Company's General Business Profile, is given in the Report for your information. Directors Shri Malkiat Singh and Shri M.P.Setia were nominated as Directors of your Company by Punjab State Industrial Development Corporation Ltd. (PSIDC) and Unit Trust of India, (UTI) respectively. Shri Ashok Mehra, Joint Managing Director vacated his office as such but was requested to be Group Chief Executive of your Company. Your directors placed on record their appreciation for the valuable services rendered by Shri Mehra during his tenure as J.M.D. Considering Mr. Mehra's contribution in revival of the Company, your Board extended invitation to him to continue attending Company's Board Meetings. Auditors M/s. Walker, Chandiok & Co., the present Auditors have furnished a certificate regarding their eligibility for re-appointment as Company's Auditors, pursuant to Section 224 (1-B) of the Companies Act, 1956. Particulars of Employees Information as per Section 217 (2-A) of Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms part of this report. However, as per the provisions of Section 219(1)(b)(iv) of Companies Act, 1956, the Report and Accounts are being sent to all shareholders of the Company excluding the statement of particulars of employees. However any shareholder desirous of obtaining a copy thereof should write to the Company. General The notes forming part of the Accounts, being self explanatory, the comments made by the Auditors in their report, are not being dealt with separately. Acknowledgment Your Directors express their appreciation for the valuable continued co- operation and unstinted support extended by Financial Institutions, Banks, other lenders, domestic and foreign Associates, Suppliers, Distributors, Stockists, Dealers and various Govt. agencies, at the time of need. I also wish to place on record my appreciation for the wise counsel, guidance and co-operation extended by my colleagues on the Board. The Board expresses its appreciation and thanks to all officers and staff at all levels for their dedicated hard work and energetic efforts for revival of the company. On behalf of the Board of Directors New Delhi Dr. BHAI MOHAN SINGH 4th March, 1999 Chairman ANNEXURE TO THE DIRECTORS' REPORT I. CONSERVATION OF ENERGY DISCLOSURES UNDER SECTION 217(1)(e)0F THE COMPANIES ACT,1956 READ WITH COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES,1988. a) Energy conservation measures taken: i) Power consumption reduced in CPP Plant by - replacing chilled brinc of - 25 degree centrigrade with that of - 12 degree centigrade. - reduction in grinding mill operation time by more than 80%. ii) Cooling water temperatures reduced by commissioning of 180 M3/Hr. third bay and overhauling of existing 2 bay of cooling tower thereby improving operation efficiencies of energy intensive refrigeration units and also achieving better solvent recovery in the plant. iii) Augmentation of IPU(T) milling capacity thereby reducing specific energy consumption . iv) Steam losses prevented by providing automatic temperature control valve on steam line of hot water tank. v) In house insulation audit carried out and corrective measures taken for both hot and cold Insulation lines. b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: i) Installation of unitwise energy meters to closely monitor the specific energy consumption and take corrective actions wherever required. ii) Working on the feasibility of using LDO instead of HSD in steam boilers. iii) Improving boiler efficiencies by use of recommended additives both on fuel and water side. iv) Use of 2 air compressors of smaller HPs (20+10) to avoid usage of single 60 HP compressor for most of the time. v) On-going jobs on hot & cold insulation. c) Impact of Implementation of above measures (a) and (b) for reduction of energy consumption and consequent impact on cost of production of goods. --Implementation of above proposals/measures shall reduce energy consumption resulting in direct saving of fuel oil and electric power consumption . II. TECHNOLOGY ABSORPTION (A) Research and Development (R&D) 1. Specific areas in which R&D was carried out by the company. -- Process development for newer products. -- R&D support to manufacturing operations in the existing product range. -- Import substitution and optimisation of parameters. -- Testing of efficacy of new products and trouble shooting in the existing product range. 2. Benefits derived as a result of above R&D -- Improvement in efficiency, yield, purity and cost reduction. -- Import substitution of pesticides, thereby improving self reliance in newer pesticides. -- Lab scale technology developed for certain new products Chlorpyriphos - methyl and Deltamethrin. 3. Future Plan of Action -- Development of technology for pesticides (technical) and intermediates currently not manufactured by the Company. 4. Expenditure (Rs. in Lacs) Current Previous Year Year a) Capital 2.55 2.96 b) Recurring 70.17 60.46 c) Total 72.72 63.42 d) Total R&D expenditure as a percentage of total turnover 1.38 0.98 B) Technology absorption, adaptation & innovation 1. Efforts in brief made towards technology absorption, adaptation and innovation. -- Pilot plant trials completed for a new product Chlorpyriphos methyl and found conforming to international specifications. -- Process for manufacture of a new product by more cost effective and eco- friendly technology with savings on utilities, manpower, machinery & methods 2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc. -- Manufactured international quality Chloropyriphos, Isoproturon and Chlorpyriphos methyl. Chlorpyriphos and Isoproturon have been marketed within the country and all three have been exported. 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. --Not Applicable. III. FOREIGN EXCHANGE EARNINGS AND OUTGO: (Rs. in lacs) Current Previous Year Year (a) Earned 1713.86 1876.94 (b) Outgo 101.14 81.89