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Vision Organics Ltd.

BSE: 532383 Sector: Industrials
NSE: VISIONLTD ISIN Code: INE514B01010
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Vision Organics Ltd. (VISIONLTD) - Director Report

Company director report

VISION ORGANICS LIMITED ANNUAL REPORT 2002-2003 DIRECTORS' REPORT To, 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. 2. DIVIDEND In view of loss,the Board regrets its inability to recommend payment of Dividend. 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 above. 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 basis. 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 that date. 9. DIRECTORS Mrs.Nayna J.Shah who retires by rotation and being eligible offers herself for reappointment. 10.AUDITORS 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 remuneration. 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. 13. ACKNOWLEDGEMENT The Board expresses its sincere appreciation to all the concerned for their valuable support. For and on behalf of the Board Place : Vadodara J.H.SHAH Date : 30/06/2003. Chairman & Managing Director Annexure 'B' 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 manufacturers etc. 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: Swot Analysis: Strengths: 1. Existence of adequate infrastructure and necessary scale of plant economy. 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 products. 5. Locational advantages like sales tax exemption for 15 years,100% income tax deduction U/s 801A for 5 years and lower power tariffs. Opportunities: By ensuring reasonable scale of economy and international quality standards, a market can be effectively tapped. Threats: 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 above. 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. d) Outlook: 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 performance: 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 its operations. 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 issues.