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United Soyaa Products Ltd.

BSE: 519001 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
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United Soyaa Products Ltd. (UNITEDSOYAAPR) - Director Report

Company director report

1994 UNITED SOYAA PRODUCTS LIMITED DIRECTORS' REPORT TO THE MEMBERS OF UNITED SOYAA PRODUCTS LTD. Your Directors have pleasure in presenting the Eleventh Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March,1994. PRODUCTION/MARKETING Your Company has processed a total of 24926 MTS (including those of Grasim Industries Ltd.) of oil seeds/cake/crude oil during the financial year 1993- 94 against 54021 MTS in the corresponding previous year. The refined oil production during the year 1993-94 has been 3596 MTS (including that of ITC) as against 4975 MTS in the immediately preceding year. During the first half of the year, the Company was engaged in the execution of the export order for M/s. G. Premjee Ltd. During the second half of the year 1993-94, the Company was engaged in processing of Soyabean seeds for M/s. Grasim Industries Ltd., and mainly in refining of crude oil for I.T.C. Ltd. The Company sells its soyabean Refined Oil under the brand names of 'Teacher' and 'Master'. This is sold in 15 Kg tins and also in 1 Ltr.,2Ltr and 5 Ltr., attractive poly packs/poly jars. Your Company has been granted status of Export House. AUDITORS M/s. Ramkrishna & Co., Chartered Accountants, the Auditors of the Company hold office until the conclusion of Annual General Meeting. The Board of Directors recommends their reappointment. The Company has received a certificate from M/s. Ramkrishna & Co., Chartered Accountants that their reappointment, if made, would be within the prescribed limits under Section 224 (IB) of the Companies Act,1956. AUDITORS' REPORT Remarks in the Auditors' Report are self-explanatory and do not require any comments from our side. PERSONNEL Relations between employees and the management were cordial during the year under review. The Directors wish to place on record their appreciation for the sustained dedication and hard work put in by them. Four employees of the Company are covered under Section 217 (2A) of the Companies Act, 1956. The statement as required under Companies (Particulars of Employees) Rules, 1975 is enclosed in Annexture '1 ' to the Direcotors' Report. MANAGEMENT/ DIRECTORS Mr.K.D.Nayar, thc Ex-Chairman cum Managing Director of United Bank of India has been appointed as Managing Director of the Company. Mr. P.S.V. Mallya, the Ex-Chairman cum Managing Director of Syndicate Bank has been appointed as Additional Director on the Board. Mr.B.Mishra, resigned as Director and Wholetime Director of the Cornpany. Your Directors place on record their appreciation of valuable contributions made by Mr. B.Mishra. In accordance with the orovisions of the Companies Act,1956, and Articles of Association of the Company, Mr. Harish khanna anri Dr. (Miss) Kala S.Pant retire by rotation and being eligible offer themselves tor reappointment. DISCLOSURE OF SPECIAL PARTlCULARS Informattion as per 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 is given in Annexure '2; ' to Directors' Report. DEPOSITS The Company has not accepted any deposits from the public during the year. EROSION OF THE COMPANY'S PEAK NET WORTH AND THE CAUSES FOR SUCH EROSION UNDER THE SICK INDUSTRICAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985. The accummulated losses of the Company as on 31.3.1994 have eroded the entire peak net worth of the Company. The main causes for the losses were/are as under:- a) The Company had entered into a job work contract with ITC for the processing of 70000 MT of soyabean seeds during the period from November'91 to September'92. I.T.C. foreclosed its contract at 53000 MT of soyabean seeds in the month of July'92 due to non- parity. The Company could not run the plant adequately thereafter due to meagre Working Capital Limits available to the Company and the Company had to remain idle almost for three months and it could not operate in absence of proper Working Capital Limits. b) In October'92, the Company got a break through and entered into an export contract for 1,00,000 MTS of DOC with M/s.G.Premjee Ltd., for which necesaary margins were also provided under Red Clause L.C. However the Bank failed to sanction the need based Working Capital Limits as per the CAS application submitted by the Company. As against the need based Working Capital Limit of Rs.26.07 crores, the Bank of Baroda allowed limit (s) of only Rs.10.88 crores. Despite our protestation, even the limit of Rs.10.88 crores was made available at a margin of 25% instead of 10% although the Company was fully engaged in the execution of the export order. The Company went on requesting persistantly for the reduction of margin requirements from 25% to 10% and our pleas were accepted very late and by the time the damage was already done. The Bank also adjusted huge amounts against the overdues in the accounts in a very short period whereas the Company had not generated sufficient surplus to absorb these adjustments. In addition, the Bank of Baroda went on charging commercial rate of interest ranging between 18% to 26% as against the 13.5% rate of interest applicable to export making units. All this culminated in reduction in Drawing Power/negative Drawing Power forcing the Company to stop execution of export order in the month of June and thereafter the plant remained idle for four months during the year 1993-94. c) Although the year 1992-93 had been a year of Company's direct entry in the international markets with the export of Soya Meal but due to unforseen circumstances, the Company could not take full benefits of the international trade. d) Soyabean Industry is a seasonal industry and requires huge amounts of Working Capital for stocking raw materials. With the availability of meagre funds, the Company could not buy and stock seeds at competitive prices and therefore the plant could not be operated at its full capacity. e) The oil prices did not move alongwith the prices of seeds because of the Policies of the Government to regulate the prices so as to keep the inflatio lary trend under check. f) The Company entered into an agreement in September'93 with M/s. Grasim Industries Ltd., for the processing of 54000 MT of Soyabean seeds for them. M/s. Grasim Industries Ltd., stopped processing operations at 15190 MT of seeis in the month of December'93 due to non-parity. Therefore the plant of the Company also remained idle for three months during the 2nd half of the year 1993-94. The Company has now become a Sick indusrial Company under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 and is planning to file its case with Board for Industrial and Financial Reconstruction. ACKNOWLEDGEMENT The Director wish to place on record their aratitude for the co- operation and continued support rendered by the Financial Institutions, Banks various Government Agencies and Shareholders to the Company. The Board also places on record ts appreciation of the valuable services rendered by all managerial personnel and employees of the Company. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS (RAJ KUKAR GUPTA) CHAIRMAN Place: Bhopal Date: 26th May, 1994.