UNITED SOYAA PRODUCTS LIMITED
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
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.
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.
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.
Remarks in the Auditors' Report are self-explanatory and do not require any
comments from our side.
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'
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.
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
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
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
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.
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)
Date: 26th May, 1994.