ANNUAL REPORT 1999-2000
TANFAC INDUSTRIES LIMITED
The Board of Directors have great pleasure in presenting the 26th Annual
Report along with the Audited Accounts of the Company for the financial
year ended 31st March 2000.
OPERATIONS AND OVERALL PERFORMANCE:
The sales turnover for the year was Rs.6441.37 lakhs as compared to
Rs.6421.44 Lakhs in the previous year registering a marginal increase of
0.31%. The Gross profit has decreased from Rs.1194.64 Lakhs in the previous
year, to Rs.719.45 Lakhs in the current year.
Net profit has decreased to Rs.407.21 lakhs as compared to Rs.741.48 lakhs
of the previous year
The drop in profitability was mainly due to :-
(a) steep decrease in sales price realisation of DCFA due to dumping of
DCFA and Ciprofloxacin by Chinese Suppliers. As a result, the Company had
to sell the product at unremunerative prices resulting in significant
(b) Increase in fuel cost, effective from October, 1999.
(c) drop in sales realisation per MT of HF Acid from domestic and overseas
customers due to market competition.
(d) increase in interest & depreciation charges due to commissioning of new
Your Directors recommend payment of dividend on equity shares at the rate
of 11%. The dividends in the hands of shareholders are tax free, as the tax
on dividend would be borne by the Company.
[Rs. in Lakhs]
year ended year ended
March 31,2000 March 31, 1999
Dividend outgo 109.73 169.57
Tax on Dividend at 10% 10.97 16.96
Total Outgo 120.70 186.53
The Company has made necessary provision for tax on dividend in the books
of accounts. The dividend, if approved by the Shareholders at the ensuing
Annual General Meeting will be paid to those Shareholders whose names
appear in the Register of Members of the Company as on date of the Annual
The order position for 2000 - 2001 is satisfactory. Your Company has been
consistently maintaining the leadership position in the Domestic Market of
Aluminium Fluoride with 52% Market Share.
As the International Prices have come down substantially, your Company is
not able to make a breakthrough in the overseas market. However, your
Company is exploring possibilities to export Aluminium Fluoride to
Australia, New Zealand and middle East markets during the current year.
Leadership position is being maintained by the Company in the Hydrofluoric
Acid (HF Segment). The Company's order position is good.
During the year, the Company has developed new overseas market in Thailand.
Quality of the product has been accepted by the Customer and we are hopeful
of achieving significant business .
Organo Fluorine Project
The new project for manufacture of Dichloro Fluoro Acetophenone (DCFA) was
commissioned in February 1999.
DCFA is used as an intermediate chemical in the manufacture of new
generation bulk drugs namely Ciprofloxacin and Enrofloxacin.
During the year, your Company produced and sold 35 MT of Di-chloro Fluoro
Acetophenone (DCFA) to various drug manufacturers. However during the year
there has been a steep decrease in the sales price realisation of DCFA due
to dumping of DCFA and also Ciprofloxacin (Bulk Drug) by Chinese Companies,
forcing the Company to sell the product at unremunerative prices.
At the present Market Price, it is not economically viable to operate the
plant. Hence the production of DCFA has been suspended and will resume
production after DCFA price stabilises at a reasonable level. Your company
is also exploring the possibilities of manufacturing alternate products to
make use of the existing facility and is in touch with major international
Fluorine manufacturing Companies for developing new products.
INVESTMENT IN COMMON EFFLUENT COLLECTION & MARINE DISPOSAL SYSTEM:
The Common Effluent Collection and Disposal system conceived by your
Company in association with other member companies of the Sipcot Industrial
Complex has been successfully commissioned.
RESEARCH AND DEVELOPMENT:
Currently our R&D efforts are focussed on developing alternate Organo
Fluorine Products. Samples of various new organic fluorine products have
been sent for approval to prospective customers. Your Company is hopeful of
commercialising the new products developed, on getting positive feed back
from the customers.
Also the Company's R & D efforts are focused on improving the existing
production systems, taking effective steps for efficient pollution control
and ensuring safety in the process.
ENVIRONMENT, SAFETY AND POLLUTION CONTROL:
As the Share holders are aware, Environment Protection, pollution Control
Measures and Social Welfare activities form an integral part of the
Your Company has been taking proper care in complying with all the
statutory requirements relating to Safety, Environment and Pollution
Control. Mock Safety drills are being carried out periodically and the
employees take all precautions for the safe operation of the plant.
Your Company has been awarded ISO 14001 by The Det Norske Veritas,
Netherlands for establishing the Environment Management System Standards
[EMS]. The objective of the EMS is to protect human health and environment
from the potential risk impact of our activities, products and services.
TOTAL PRODUCTIVE MAINTENANCE
Your Company has received the prestigious TPM Excellence Award 1999 - First
Category' in March 1999 from Japan Institute of Plant Maintenance (JIPM)
for successfully implementing TPM which has helped the company to achieve
Zero Break Down, Zero Stoppages, Zero Accidents and Zero Losses.
Your Company is the First Fluorine manufacturer in the world and the third
Company in India to get this coveted award. Your company is in the process
of implementing the second stages of TPM for achieving Consistency Award.
OTHER QUALITY AWARDS
Your Company has also received Rajiv Gandhi National Quality Award 1998
Commendation Certificate from prestigious BUREAU OF INDIAN STANDARD and
GOLDEN PEACOCK NATIONAL QUALITY AWARD - 1999 - Runners up from Institute of
Directors in recognition of manufacturing excellence and Total Quality
Management being practiced by the Company.
Tvl. B. Chandran, K.S. Ramanujam and S. S. Mahansaria are retiring by
rotation and being eligible, offer themselves for re-appointment.
AUDITORS & AUDITORS' REPORT:
M/s. Bhaskaran & Krishnan and M/s. Singhi & Co., Chartered Accountants,
Chennai, the Auditors of the Company retire at the conclusion of this
Meeting and are eligible for re-appointment.
The observations made in the Auditors' Report are self-explanatory and
therefore do not call for any further comments under Section 217 (3) of the
Companies Act, 1956.
PARTICULARS OF EMPLOYEES:
Particulars of Employees as required to be furnished Under section 217 (2A)
of the Companies Act 1956, and the rules framed thereunder are furnished in
the annexure to this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS
As required under Section 217 (1) (e) of the Companies Act, 1956, read with
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988, a statement containing the particulars relating to
conservation of energy, research and development and technology absorption
Employee relations continued to be cordial throughout the year. Their
whole-hearted support in implementation of TPM, ISO-9002 systems and ISO
14001 amply demonstrate team work and co-operation between them and the
HUMAN RESOURCES DEVELOPMENT:
Human Resources Development forms an integral part of your Company's
corporate philosophy. During the year, several training programmes were
conducted to enhance the competence levels of the employees.
The Company's system are fully Y2K Compliant. Your Company has incurred an
amount of Rs.18.24 lacs for replacement of hardware and upgradation of
software to meet Y2K requirements.
Your Directors wish to thank the Government of India, Government of
Tamilnadu, Financial Institutions and the Banks for their continued
guidance, help and support. Your Directors would also like to express
their sincere appreciation to M/s. BUSS, Switzerland, M/s. CHENCO, Germany
and M/s. Dalian Ftz Luyuan F-Chem Ltd., China, for their continued
Technical Support and JIPM, Japan for their continued assistance in TPM
On behalf of the Directors and the Shareholders, I place on record my
appreciation of the commitment of the members of TANFAC family consisting
of officers, staff and workers and their hardwork in ensuring the success
of our Company.
For and on behalf of the Board
Place : Chennai, P. SABANAYAGAM
Date : 8th April, 2000. Chairman
ANNEXURE TO DIRECTORS' REPORT
Information under Section 217(1)(e) of the Companies Act, 1956, read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 and forming part of the Directors' Report for the
year ended 31st March, 2000.
CONSERVATION OF ENERGY
The Company has adopted various measures to conserve energy and has taken
several measures including regular monitoring of consumption and improved
maintenance of systems.
RESEARCH AND DEVELOPMENT AND TECHNOLOGY ABSORPTION
A. Research and Development
The Company is adopting various cost reduction measures to make the
production cost effective. The Company is seriously making efforts in R&D
to develop new high value products which can be produced with facilities
available in Organo Fluoro Chemicals Plant. The progress achieved in the
above areas are summarised below:
The R&D team has developed an agrochemical intermediate, the sample of
which has been approved by a Multinational Company in Germany. The team is
now exploring the possibility of producing the product on Commercial Scale.
Besides the above achievement, the Company is continuously working on
development of new Pharma/Agro Intermediate Products. Also the Company is
vigorously interacting with other multinational companies for strategic
tie-up to manufacture speciality chemicals in the existing facilities. The
R&D efforts are also on in identifying the potential end use for the
effluent sludge generated in the process.
Your Company has been awarded the most prestigious TPM EXCELLENCE AWARD -
First Category for implementation of Total Productive Maintenance (TPM)
from Japan Institute of plant Maintenance (JIPM) for achieving zero
customer complaints, zero defects and zero losses. This has helped the
Company to implement quality measures, cost reduction measures, improvement
in the overall equipment effectiveness thereby increasing productivity.
The Company has also been awarded the Rajiv Gandhi National Quality Award
and Golden Peacock Award for the good Quality Management Practices followed
by the Company.
B. Technology Absorption, Adaptation and Innovation
1. By close interaction with our foreign collaborators, we have benefited
by becoming aware of the Developments taking place in most modem plants and
to effectively assimilate the technology in the areas of process control
and the equipment design.
2. Details of technology imported during the past five years -
Year Technology Imported Status
1996-97 HF Plant capacity Expansion Implemented Fully
31 TPD to 40 TPD
1998-99 HF Plant Capacity Expansion Implemented Fully
41 TPD to 45 TPD
1998-99 Manufacture of Fluorobenzene Implemented Fully
C. FOREIGN EXCHANGE EARNING AND OUTGO :
(Rs. In lacs)
Details 1999-2000 1998 - 1999
Exports 330.99 205.59
Forex Earned 374.98 245.31
Forex used 2272.90 1999.25
For and on behalf of the Board
Place : Chennai, P. SABANAYAGAM
Date : 8th April, 2000. Chairman