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Origin Agrostar Ltd.

BSE: 524170 Sector: Others
NSE: SQUAREDBIO ISIN Code: INE964A01019
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Origin Agrostar Ltd. (SQUAREDBIO) - Director Report

Company director report

ORGIN AGROSTAR LIMITED ANNUAL REPORT 2003-2004 DIRECTORS' REPORT Your Directors have pleasure in presenting the Fifteenth Annual Report of your Company together with the Audited Accounts for fifteen Months' Period ended 31st March '2004. FINANCIAL RESULTS (Rs. In lacs) 15 months' period 15 months period ended 31.03.2004 ended 31.12.2002 Turnover 60.97 1071.71 Other Income 8.87 30.75 Total 69.84 1102.46 Gross Profit/(Loss) (211.21) (670.28) Depreciation 214.99 216.32 Interest 136.81 166.82 Taxation - - Net Profit/loss) (570.11) (1053.41) REVIEW OF OPERATIONS The Income of the Company has decreased drastically to Rs. 69.84 Lacs. The company could not operate the plant for most of the time due to various reasons including high raw material prices. Most of the time Company was engaged in the implementation of project for producing Maize Starch. This would provide alternative raw material to the Tapioca Tuber. The project is in the advanced stage of implementation and is expected to be completed by the Second Quarter of this year. The Company is expected to turn around during Second half of the year. In addition to this project, the Company is also implementing an expansion project to produce additional 10 MTPD of Dextrose Monohydrate and 10 MTPD of Maltodextrine which would add substantially to the turnover and also improve the profitability. DIRECTORS' RESPONSIBILITY STATEMENT As required by Section 217 (2AA) of the Companies Act, 1956, in respect of Annual Accounts of the Company for 15 months period ended 31st March, 2004, the Directors confirm that: a. In the preparation of the Annual Accounts, the applicable accounting standards have been followed. b. The Directors have selected such accounting policies and applied them consistently and make judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2004 and of the loss of the Company for the period ended on that date; c. The Directors have 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 presenting and detecting fraud and other irregularities; d. The Directors have prepared the annual accounts on a going concern basis. DIVIDEND Your Directors regret their inability to pay dividend to the sharesholders for 15 months period ended 31st March 2004, in view of loss Incurred by the Company. CORPORATE GOVERNANCE The report on Corporate Governance is given elsewhere in the Annual Report. DIRECTORS Shri. K. Gopalakrishnan resigned as Director with effect from 04th June, 2003. Shri. M.C. Agarwal has been appointed Additional Director of the Company in the Board Meeting held on 30th April, 2003. AUDITORS' REPORT: The Auditors in their report have made certain observations which have been suitably explained in the notes to the accounts. These notes are self- explanatory and do not call for further explanations. AUDITORS M/s. N.K. Tharad & Co., Chartered Accountants, retire at the completion of ensuing Annual General Meeting and are eligible for reappointment. LISTING FEES: The Company has not paid Listing Fees to the following Stock Exchanges for the year 2003-2004. 1. Ahmedabad Stock Exchange 2. The Calcutta Stock Exchange Association Limited 3. The Delhi Stock Exchange Association Limited 4. Notional Stock Exchange of India Limited 5. Madras Stock Exchange Limited 6. The Stock Exchange, Mumbai GENERAL 1. Development in Human Resources Your Directors wish to acknowledge the contribution made by each and every employee. The direct employment strength stood at 139 compared to 159 in the previous Accounting Period. Your company has embarked upon reorganization of its capacities, marketing and distribution systems as part of the Total Cost Management efforts. This includes right sizing of the company's total Human Resources. Information under Section 217 (2A) of the Companies Act, 1956 read with "Particulars of Employees" Rules 1975, is not applicable for this Accounting Period and does not form part of this report. 2. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo. As required under Section 21 7 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, particulars relating to conservation of energy, technology absorption and foreign , exchange earnings and outgo ore annexed ACKNOWLEDGMENT Your Company is grateful for the cooperation and assistance extended by Government of India, Government of Tamilnadu, Financial Institutions, Consortium of Banks, Shareholders, our valued Customers and Suppliers. For and on behalf of the Board Chennai M.C. AGARWAL 24th May, 2004 Director ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217 (1) (E) OF THE COMPANIES ACT, 1956 A. CONSERVATION OF ENERGY a. Energy conservation measures taken: 1. The Company had taken action during design stage of Maltodextrine and DMH expansion to incorporate energy conservation techniques in the process. 2. Thermal and cold insulation have been provided to vessels and pipes to conserve energy. 3. Thennic Fluid Heater Burner Nozzles have been changed to conserve fuel. 4. Energy conservation audit team has been formed to evaluate the areas in which further action can be taken to conserve energy. b. Total Energy consumption and energy consumption per unit of production: FORM -A A. Power and fuel consumption UNIT From 01.01.2003 From 01.10.2001 To 31.03.2004 To 31.12.2002 1. Electricity (a) Purchased Units KWH NIL 12,74,472 Total Amount Rs.(Lacs) NIL 116.84 Rate/Unit Rs. NIL 9.17 (b) Own Generation (i) Through Diesel Generator Units KWH 33,878 41,201 Unit per ltr. of Diesel Oil KWH 2.1 1.81 Cost/Unit Rs. 10.95 11.66 (ii) Through Steam Turbine Generator Units NIL NIL Units per ltr of fuel oil/gas NIL NIL Cost/Unit NIL NIL 2. Coal (Specify Quality and where used) Quality-Leco & Husk used in boiler Quantity MT NIL 925 Total Cost Rs.(Lacs) NIL 9.25 Average Rate/MT Rs. NIL 1000 3. Diesel Oil (for thermic fluid heater) Quantity KL NIL 49.88 Amount Rs.(lacs) NIL 10.46 Average rate/litre Rs. NIL 21.00 4. Others/Internal Generation Quantity NIL NIL Tatal Cost NIL NIL Average rate/Tonne Tonne NIL NIL 5. Consumption per tonne of production with standards (if any) UNIT From From 01.01.2003 01.10.2001 To 31.03.2004 To 31.12.2002 Production MT NIL 1039 Electricity KWH NIL 1226 Light Diesel Oil Ltrs. 16 48 Leco Kgs. NIL NIL Husk Kgs. NIL 890 B. Technology Absorption Form - B I. Research and Development The Company has a well equipped testing and application laboratory for carrying out Research and Development work on Starch products. The Company had developed a pilot farm in the factory premises for multiplying their hybrid varieties. a. Future Plan of Action The present efforts in regard to Tapioca Development will continue, and discussions are under way with Research Institutions for propagating improved hybrid varieties of Tapioca. b. Expenditure on Research and Development i. Capital NIL ii. Recurring NIL iii. Total NIL iv. Total R & D expenditure as a percentage of total turnover. NIL 11. Technology Absorption, Adaptation and Innovation 1. a. Technology imported Basic engineering drawings have been obtained from overseas technical collaborator for the project. Starch Process know-how from Starcoso GmbH. b. Year of Import 1990-91 c. Has technology been fully absorbed. Yes d. If not fully absorbed, areas where this has not taken place, reasons therefor and further plan of action. N.A. 2. Technology Indigenous: a. In house process has been developed for high Maltose Syrup, Malta Dextrine and energy powder with a variety of flavours such as Orange, Strawberry and Cola C. Foreign Exchange earnings and outgo a. Efforts : Company has exported Starch, Liquid Glucose and Honey to many countries. Further possibilities of export to other countries are being explored. (In Rs.) b. i. Export of Goods NIL ii. Services of Exports 60,89,540 iii. Foreign Exchange earnings - Export sales (FOB) NIL iv. Foreign exchange outgo NIL v. Net foreign exchange earnings NIL MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT Industry Scenario: a. The main, business of the company is in Starch and Starch based derivatives sector. This Sector has seen Positive growth during the post year after overcoming the slackness of earlier years. b. However unlike other major players, who use maize as the main raw material, the company is dependent on Tapioca for it feedstock. The prices and availability of Tapioca is highly fluctuating and hence the company is constantly under pressure on its production costs. c. However with the implementation of the Maize crushing project which will produce Maize Starch, the Company would overcome this major bottleneck and would be able to sell finished products at competitive prices. Opportunities: The Company has tremendous opportunities for marketing its products in South India being strategically located close to the main consuming industries in the food, pharma and confectionary industries. There has been substantial growth in these sectors due to entry of new players in the confectionary business and rapid expansions in pharma business. With increased production plans in downstream production like Dextrose, Monohydrate and Maltodextrine and with the Company's ability to manufacture products of high quality, there is tremendous potential to grow in these products. The company also has exported its products to various countries and sees a good export potential in Russia, Middle East and Far East countries. Outlook: With the completion of the Maize processing plant and enhancement of capacities of products with better margins and there would be an improvement of Company's performance in the next few years. Risks and concerns: The enormous delay in implementation of the critical projects have led to the substantial fall in the manufacturing operations of the company. The management is now implementing its plans in right earnest and would come out with better performance in the next two years. The statements above represent the view and intentions of the management and efforts to realize the some are being done in right earnest. The success depends on various internal and external conditions. Internal Control System: Your Company has established an advanced internal control system and manual in the Purchase, Production and Marketing areas and in line with ERP system requirements. Development in Human Resources: The Company has an employee strength of 139 as compared to 159 in the previous Accounting Period. The difference is due to the right sizing of the various departments to achieve better deployment and improving performance. The Company has cordial relations with the workers' union.