VISION ORGANICS LIMITED
ANNUAL REPORT 2002-2003
The Members of
VISION ORGANICS LIMITED
Your Directors present herewith Ninth Annual Report together with Audited
Annual Statements of Accounts for the year ended 31 03.2003.
1. FINANCIAL RESULTS
During the year under review, the Company earned Turnover of Rs 24.60 lacs as
against Rs.1094.56 lacs of previous year, whereas netloss after
Interest. Depreciation and Tax reached to Rs. 3483.72 lacs as against Rs
607.27 lacs of previous year.
In view of huge loss,the Company has not charged depreciation whereas no
provision for Interest on Secured Loans obtained from Banks has been made
as the quantum of Interest devolving on the Company. could not be
entertained,due to suit filed against Banks.
In view of loss,the Board regrets its inability to recommend payment of
3. OPERATION IN RETROSPECT
The Company which was otherwise a growing Company witnessed the year under
review,as a year of full of despair and difficulties mainly due to illegal
acts of Bankers. The Company has been penalised by its clientele groups by
non payment of sales proceeds which were earlier realizable debtors,on the
ground that the Company could not fulfill the supply/delivery schedules of
confirmed orders committed by it,with these customers,at the time of
undertaking expansion project.
Due to serious and repeated,violations by the Banks of specific laws such
as Banking secrecy laws,Negotiable Instrument Act u/s.31,Indian Contract
Act u/s.73,Indian Contract Act u/s 38 by banks,for which company had
already filed suits for damages in 2001 in the Court,Company was compelled
to stop its productions. This obviously resulted into huge failure in
Company's long-term supply commitments made in year 2000 to its prospective
regular buyers. As a result these customers had to incur huge losses by
buying these huge quantities at very high rates from spot markets,to
fullfill their commitments & had to suffer partly,for heavy
production,losses where they could not procure our replacements.
Thus clearly due to violation of laws by bank,company could not fullfill
huge supply commitments to its regular customers,hence Company had to
suffer huge compensations and make necessary provisions to such suffered
customers which is the main reason of losses. Company had already made
corresponding damages claim in court against concerned banks as mentioned
4. FUTURE PROSPECTS
The Company is required to make necessary application to the Board for
Industrial and Financial Reconstruction(BIFR) for its revival and
rehabilitation under Section 15 of Sick Industrial Companies(Special
Provisions) Act,1985 on complete erosion of its entire networth as at
31.03.2003 and necessary steps are being taken in this regard. The Company
expects that the settlement of its dues from the Banks,it would recommence
its manufacturing activities. The Company is also actively trying other
possibilities on priority basis.
5. ISSUE OF SHARES ON PREFERENTIAL BASIS
In order to reduce the financial obligations of unsecured loans lenders,the
Company has envisaged a plan to offer,issue and allot 7,00,000 Equity
Shares of Rs 10/-each at per on preferential basis subject to the approval
of the shareholders and Stock Exchanges.
6. REPORT ON CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS
Report on Corporate Governance and Management Discussion and Analysis
Report are attached herewith as Annexures 'A' and 'B' to this report.
7. DIRECTOR'S RESPONSIBILITY STATEMENT
As required under Section 217(2AA) your directors confirm that:
i. In the preparation of annual accounts,the applicable accounting
standards have been followed.
ii. The directors had selected such accounting policies and applied them
consistently except non provision of Depreciation and Interest for the
reasons stated hereinunder and made 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 on 31st March,2003 and of the loss of the Company
for the year ended on that date.
iii. 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 preventing and detecting fraud and other irregularities.
iv. The directors have prepared the annual accounts on a going concern
8. FIXED DEPOSITS
Fixed deposits received and outstanding as at 31st March,2003 stood at Rs
39.16 lacs. None of the deposits has remained unclaimed or overdue as on
Mrs.Nayna J.Shah who retires by rotation and being eligible offers herself
M/s. Dilip K.Thakkar & Co,the Chartered Accountants,Vadodara,the Statutory
Auditors of the Company,hold office upto conclusion of ensuring Annual
General Meeting, do not offer themselves for reappointment,due to their
personal reasons. However,the Company has received a certificate from M/s
Y.K. Shah & Co,the Chartered Accountants,stating that if their appointment
as Statutory Auditors is made,it would be well within the ceiling
prescribed under Section 224(1-B) of the Companies Act,1956.
The members are requested to consider appointment of Auditors and fix their
11. AUDITORS' REMARKS IN THEIR REPORT.
The remarks made in Auditor's Report by the Statutory Auditors read with
notes on accounts are self explanatory and do not require any further
clarification and explanation.
12. STATUTORY DISCLOSURES.
The information required under Section 217(2A) of the Companies Act,1956
read with the Companies(Particulars of Employees) Rules.1975 is not
furnished as no employee is covered thereunder.
The information required under Section 217(1)(e) of the Companies Act,1956
read with Companies(Disclosure of particulars in the Report of the Board of
Directors) Rules,1988 is not annexed hereto as no manufacturing activity
could be undertaken during the year under review.
The Board expresses its sincere appreciation to all the concerned for their
For and on behalf of the Board
Place : Vadodara J.H.SHAH
Date : 30/06/2003. Chairman & Managing Director
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Clause 49 of the Listing Agreement,a Management Analysis Report
covering division-wise performance and outlook is given below:
a) Industry Structure and Developments:
The market of PVC Plasticizers is directly connected with the market growth
of PVC Rexines and PVC Plastics Customers generally belong to, PVC Cable
manufacturers,PVC pipes manufacturers,PVC films manufacturers, PVC Shoes
At present the demand of PVC plasticizers in India is approx 1,05,000 MTPA
while manufacturing capacities available in India are 1,00,000 MTPA. The
Company has been selling its products to number of customers directly as
well as through dealer net work.
The flexible PVC sector is the largest consumer of plasticizers. Therefore
the growth of plasticizer industry is directly dependent on the growth of
the flexible PVC market. PVC itself enjoys the largest market share (28%)
amongst all the commodity thermoplastics. The present demand of PVC is
estimated to increase reasonably.
b) Opportunities and Threats:
1. Existence of adequate infrastructure and necessary scale of plant
2. Professionally managed Company promoted by experienced promoters.
3. The Company has capacity to manufacture whole range of PVC
plasticizers,which are used by seven different segments of Industries.
Hence not dependent on any one market segment.
4. Strong network of dealers will ensure ready market for the Company's
5. Locational advantages like sales tax exemption for 15 years,100% income
tax deduction U/s 801A for 5 years and lower power tariffs.
By ensuring reasonable scale of economy and international quality
standards, a market can be effectively tapped.
The reduction in sales & incurring of operational losses as compared to
previous year is due to Banks is violated specific laws compelling the
Company to stop production which resulted into loss of sell and profits for
which the Company has filed suits against concerned Banks,as mentioned
1. Any change in the government policies,rules and regulations will have an
adverse effect on the performance of the Company.
c) Segment wise/product wise performance:
During the year the Company has not undertaken major manufacturing activity
of its product.
The flexible PVC sector accounts for about 41% of the total PVC market.
This includes products segments such as wires and cables,calendered
sheets,footwear etc. In view of such growth,it was expected that the
plasticizer industry would experience on increase in demand especially
phthalates,considering their wide spread usage both in general purpose as
well as special applications. However in reality,illegal acts of the Banks
has frustrated efforts of the Company.
e) Risks and concerns:
Any change in government policy,rules and regulations will have an adverse
effect on the Company.
f) Internal control systems and their adequacy:
The System of internal control of the company is adequate keeping in mind
the size and complexity of the Company's business. Systems are
periodically reviewed to ensure effectiveness.
g) Discussions on financial performance with respect to Operational
The financial performance of the Company is worse than last year due to
reasons already stated however,the Company is keen to bring turn around in
h) Material Development in Human Resources/Industrial Relations:
Human resource development is a primary area of focus for the company.
Employee communication was given special priority during the year. Effort
was made to provide transparent feed back to employees on organisational