VYSALI PHARMACEUTICALS LIMITED
ANNUAL REPORT 2006-2007
Your Directors present to you the 27th Annual Report of the Company
together with Audited Accounts for the period ended June 30, 2007.
(Rs. in Lacs)
Particulars Period 01.04.2006 to Year ended
Turnover 1087.26 542.18
Other Income 53.63 76.07
Increase (Decrease) in stock (9.48) (111.49)
Operating Profit/Loss: 27.18 (144.50)
Before Write Off and before
Amount/Stock written Off 14.66 308.01
interest 16.82 14.77
Depreciation 43.63 34.89
Provision for gratuity 8.60 0.00
Profit (Loss) for the year (56.54) (502.17)
As seen from the financial results, it may be observed that the total
turnover of the company stood at Rs.1087.26 Lacs comprising a domestic sale
of Rs.761.83 Lacs , export sale of Rs.95.47 Lacs and export sales through
third party arrangements of Rs.229.97 Lacs Direct exports was not possible
in the absence of export working capital,limits which affected the overall
turnover and profitability. The financial results are presented in the
table as above.
During this period, One Time Settlement (OTS) for the dues to the Banks
which was pending before the DRT since the past many years was carried out
with the active participation and help from Government of Kerala and Kerala
State Industrial Development Corporation Limited. KSIDC also sanctioned a
Term Loan of Rs.558.50 Lacs towards settlement of the OTS claim. The
settlement was completed by end of June 2007. As per the OTS Scheme, the
liabilities to the Federal Bank Limited, The South Indian Bank Limited and
Indian Bank have been settled and the assets of the Company have been taken
over from the banks and hypothecated to KSIDC as security for the loans
sanctioned to the Company. As against the outstanding of
Rs.10,29,01,332.26, Rs.7,45,15,277.13 and Rs.61,93,380.48 to The Federal
Bank Limited, The South Indian Bank Limited and Indian Bank respectively
totaling Rs.18,36,09,989.87; the dues were settled for Rs.3,00,00,000.00,
Rs.2,00,00,000.00 and Rs.58,50,000.00. The remission in the total
outstanding dues of Rs.12,77,59,989 87 has been taken as income by
crediting in Profit and Loss Account.
The Company has approached various nationalized banks for its regular
Working Capital requirements and the same is expected to be concluded soon.
Even after reduction of the accumulated losses , the Tangible Net Worth
(TNW) of the Company still remains negative which is a stumbling block for
getting the required Working Capital assistance from the banks. This can be
overcome by either increasing the share capital of the Company or by
converting a part of the Term Loan from KSIDC as share capital which will
make the TNW positive and also changes in other financial indices which are
essential parameters for the banks to offer the required financial
assistance to the Company. The sales turnover could be increased
substantially only after the working capital facilities are available to
the Company for its Domestic and Export requirements. The Company is also
exploring the possibilities of collaborating with strategic investors so
that company could venture into a long term strategic growth planning.
DETAILS OF EMPLOYEES:
There are no employees drawing remuneration as per Provisions of Section
217 (2A) of the Companies Act, 1956.
DISCLOSURE OF PARTICULARS:
Information as per Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules 1988 relating to the conservation of energy,
technology absorption, Foreign Exchange Earnings and out go are given in
Annexure-A forming part of the Report.
The observation made in the Auditors' Report and Annexure thereto are self
explanatory in nature. Since these items are dealt with in detail in the
Notes on Account, further comments are not given in the Directors' Report.
However,. Annexure B provide information and explanation on the
observations contained in the Auditors' Report wherever necessary, in
accordance with Section 217 of the Companies Act, 1956.
Shri. A.M. Jadhavedhan, Director, retires by rotation at the Annual General
Meeting and he is eligible for reappointment.
M/s. Warrier & Warder, Chartered Accountants, retire at the Annual General
Meeting and they are eligible for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT:
The Directors state as under:
(i) That in the preparation of Annual Accounts, the applicable Accounting
Standards have been followed along with proper explanation relating to
(ii) That the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the Profit or Loss of the
Company for that period.
(iii) That 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 preventing and detecting fraud and other irregularities.
(iv) That the Directors have prepared the Annual Accounts on a going
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report as required under the Listing
Agreements with Stock Exchanges is enclosed as Annexure C.
Your Directors place on record their sincere acknowledgements to the Kerala
State Industrial Development Corporation Limited for their timely support.
Your Directors place on record the sincere efforts of the Employees of the
Company, various customers, suppliers and Shareholders who have extended
their valuable support towards welfare of the Company.
By Order of the Board
DR. A.D. KRISHNAN
Chairman & Managing Director
Place: COCHIN - 682 025
Date : 14.11.2007
ANNEXURE - A:
Information 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 and forming part of the Directors Report.
CONSERVATION OF ENERGY:
Every possible efforts have been made to conserve electrical energy and
Diesel by minimizing wastages, reducing steam leaks, avoiding idle running
of machinery etc. There is no additional investment being made for the
reduction of consumption of power.
a) Power and Fuel consumption Electricity:
Units Rate/Unit Rs.
Units Purchased 308076 6.47 19,93,038.00
Units Generated 6780 13.18 89364.90
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
A. a) Activities relating to exports:
Exports to various countries are being done within the permissible
b) Initiatives taken to increase exports:
Company has involved Import / Export Houses for enhancing Export business.
c. Development of new markets for products and services:
Regular Company and Product Registration are being done.
d) Export Plans:
Company is taking all steps to see that the targeted export value is
Foreign Exchange Earnings and Outgo.
Earning: (Rs. in Lacs)
Gross value of Exports 95.47
C.I.F Value of Imports 140.05
a) MAIN REPORT:
(a) Permission is awaited any time against our request.
(b) Company has requested KSIDC to consider to waive the accumulated
interest amount on Term Loan 1. Hence no provision was given for the old
(c) Debtors and Creditors having regular transaction are always updated
from time to time regarding the balance. Steps are being taken to obtain
confirmation of balances.
(d) Appropriate action is being taken in the matter.
b. ANNEXURE TO AUDIT REPORT:
The Fixed Assets register is being updated.
Present Financial position of the Company does not permit to have internal
Maintenance of Cost Records under Section 209 (1) (d) of the Companies Act
1956 is in progress.
In the absence of working capital Banks, the turnover and consequent
profitability of the company was seriously affected resulting in delay in
payment of wages and consequent remittances of PF, ESI etc., in time. We
have made remittances up to date in respect of Employee contribution for
ESI and PF and instalment facilities were granted for payment of Employer
Contribution by the Provident Fund Appellate Tribunal.
The company has not defaulted any repayment to the Financial Institutions /
Banks, as the amount represents only excess interest charged on the earlier
Term Loan availed by the company from Institution. The current interest
payable as on 30.06.2007 is paid subsequently in July 2007.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Vysali Pharmaceuticals Limited is a Company promoted and developed by
Technocrats and Scientists in the year 1980. Company manufactures wide
range of Antibiotic Formulations and other Life Saving Drugs and exports to
various Countries. Due to continued performance in the export, Star Export
Houses has been earned by the Company. The Company also manufactures
complete range of Injectable Penicillins Bulk Drugs and its formulations.
THE COMPANY AND ITS FACILITIES:
The Company has its own manufacturing facilities for the manufacture of
various types of Pharmaceutical Formulations such as Capsules, Dry Syrups,
Tablets, Suspensions and Injections. The present facilities are capable of
catering to the growing requirements of the Company in both Domestic and
Export Markets. The Company is having Good Manufacturing Practices(GMP)
Certificate as prescribed by World Health Organisation.
BULK DRUG PLANT:
Vysali is licensed to manufacture large number of Parenteral Penicillin
Formulations for which the basic drugs are manufactured by the company in
the Bulk Drug Plant. The Bulk Drug Unit manufactures Injectable Penicillins
such as Procaine Penicillin BP, Fortified Procaine Penicillin BP,
Benzathine Penicillin, Benzylpenicillin G Sodium BP and Triple Penicillin
which trade the Company in a prominent position to meet the National and
International requirements of formulated Injectable Penicillins and other
The Company is having its own well equipped Quality Control Section to take
care of the complete Quality Control requirements of our Bulk Drug and
Formulation Plants. The section is headed by qualified experienced
MARKETING AND ADMINISTRATION:
The Company has Central Marketing and Administrative set up at Cochin. The
marketing is carried out by our Field Managers and Representatives for
marketing our products. The sales is carried out through a network of
Stockists who in turn supply the various Drugs to the Chemists and
Hospitals in accordance with the demand created by our Field Staff.
FINANCE AND MATERIAL MANAGEMENT:
Vysali has a full-fledged Finance and Materials Management Division. The
entire activities of the section is computerised and data created by them
are used for proper monitoring to enable the company to take corrective
measures from time to time. Details of the financial performance has been
reported elsewhere in the Director's Report.
Direct export has been restricted to overseas customers who are giving
advance payments against specific orders. Exports to regular clients in
Cambodia, Phillippines and Sri Lanka against Letter of Credit are being
executed through 3rd party arrangements. Export segments will be
strengthened in other markets when the export working capital arrangements
are in place.
Company's products are marketed in various states in South India through a
large network of stockists for the purpose of distribution. Company is
participating in various State and Central Government Tenders and have been
successful in getting Awards due to previous track record.
OPPORTUNITIES AND THREATS/RISK AND CONCERNS:
The competition in the International Market is always an all time threat.
However, considering the fact that the product sold are registered in the
respective countries and also accepted by the buyers, the gravity of the
situation is reduced. The reduction in margin due to exchange rate
fluctuations can become a threat but can be compensated by covering varied
product range with varied margins.
The main outlook of the Company is to establish itself in the Indian and
Overseas markets with the specialised range of products with high technical
esteem. Although Company had to face various constraints, we are hopeful
and confident that the current status of affairs will be improved with the
sincere dedicated approach and hard work from all.
The accounts that you find in the document have been presented on the
accrual system of accounting. For instance, revenue is recognised as
income/expenditure as soon as the transaction is recorded in the company's
books even though the actual receipt/expenditure expires later.
HUMAN RESOURCES/INDUSTRIAL RELATIONS:
The company has during the previous period continued its unstinted record
of good industrial relations with its employees.
INTERNAL CONTROL SYSTEM:
The Company's Internal Control Systems are well established. The Internal
Controls of the Company are commensurate with the size of the Company. An
Audit Committee comprised of the Company's Directors is at the apex of the
system. Any change in the internal control that is recommended is studied
The Technical Committee consists of Managing Director, Joint Managing
Director and Directors along with Production / Quality Control Managers and
Pharmacists to ascertain quality of all products manufactured by our
Company and also to ensure to follow all Standard Operating Procedures
(SOP) approved by the Management for implementation of the same at every
level. The Committee meets frequently but at least once in a month to
ensure strict compliance of all methods and procedures.
Statements in this Management Discussion and Analysis Report describing the
Company's objectives, projections, estimates and expectations may
constitute 'forward looking statements' within the meaning of applicable
laws and regulations. Actual results might differ materially from those
either expressed or implied.
By Order of the Board
Place: Cochin - 682 025 DR. A.D. KRISHNAN
Date : 14.11.2007 Chairman & Managing Director