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DIAMOND AGRO INDUSTRIES LIMITED
ANNUAL REPORT 2003-2004
DIRECTORS' REPORT
TO THE MEMBERS
Yours directors have great pleasure in presenting their Eleventh Annual
Report along with Audited statement of the Account for the year ended 31st
March 2004.
FINANCIAL RESULTS
The Company has finished its Ninth full year of operation & during the year
produced 17319.604 MT of Vanaspati & Refined oil compared to Last year's
production which was 24065.719 MT. The net Loss amounts to Rs.130.02 Lacs
as compared to last year's loss of Rs. 102.70 Lacs.
Financial position for the year under operation are summarised below.
(Rs. In Lacs)
2003-2004 2002-2003
Sales & other Income 7862.34 10341.73
Total Expenditure 7810.74 10198.85
Financial Charges 99.91 156.53
Depreciation 81.71 89.04
Net Loss for the year 130.02 102.70
DIVIDEND
In view of the operational results of the company your directors are unable
to recommend any dividend for the year 2003-2004.
The Equity Shares of the Company are listed on Delhi, Bombay, Ludhiana and
Madras Stock Exchanges and Company has not paid listing fee to the Stock
Exchanges due to continuing losses. In view of this it has been decided to
delist the company's equity shares from Delhi , Ludhiana and Madras stock
Exchanges .
FIXED DEPOSITS
The Company has not accepted any fixed deposits from the public.
OPERATIONS
The Company has completed eighth full year of production. The Brand name
"Akash" for vanaspati & Refined oil is well recognized in the market.
DIRECTORS
Sh. A.P. Mathur, Sh. Yogesh Goel & Sh S.K. Sharma Directors retire by
rotation in accordance with provision of the Companies Act, 1956 & Article
of Association of the company & being eligible offer themselves for
reappointment. The Nomination of Mr.V.K. Joy as nominee was withdrawn by
IFCI & in his place IFCI has nominated Sh. Balbir Singh DGM (Law) as
Director. Further during the year Sh. Vinay Aggarwal was appointed as
additional director.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 217(2AA) of the companies Act
1956 with respect to Directors Responsibility Statement, it is hereby
confirmed:
- That in the preparation of the annual accounts for the financial year
ended 31st March, 2004, the applicable accounting standards had been
followed along with proper explanation relating to material
departures.
- That the directors had selected such accounting policies and applied them
consistently and made judgement and estimates that were 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 of the company
for the year under review ;
- That the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1.956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
- That the directors had prepared the account for the financial year ended
31st March 2004 on a going concern basis.
AUDIT COMMITTEE
The Audit Committee Provides direction to the Audit and it monitors the
quality of the Audit. the Audit Committee was constituted by the board of
Director at its Meeting held on 22/7/2000 and it comprised of Dr.B.B. Goel
as Chairman and Shri Ashok Sharma (PSIDC) and Sh.V.K. Joy as members and
Audit Committee acted as per the provisions of the Companies act, 1956, As
IFCI has withdrawn the nomination of Sh.V.K. Joy, the Audit Committee was
reconstituted with induction of Sh. Vinay Aggarwal, director along with
Dr.B.B. Goel and Sh. Ashok Sharma as members. Dr.B.B. Goel is Chairman of
the Audit Committee.
AUDITORS & THEIR REPORT
M/s Kapil Kumar & Co., Chartered Accountants, Auditors of the Company hold
office until the conclusion of the ensuing Annul General Meeting & they
have conveyed their acceptance to continue for the financial year 2004-
2005. In view of this your directors recommend the appointment of M/s Kapil
Kumar & Co. Chartered Accountants as Statutory Auditor of the Company for
the year 2065-2005 to hold office until the conclusion of next Annual
General Meeting.
The report of Auditors is self explanatory.
DISCLOSURE OF PARTICULARS
As required by the companies(Disclosure of Particulars in the Report of
Board of Directors) Rules 1988, the relevant information and data is given
in Annexure-I to this report.
As required under the provisions of section 217(2A) of the Companies
Act,1956 read with Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out in
Annexure-II hereto forming part of this report.
INDUSTRIAL RELATIONS
The Industrial relations have been cordial during the period under review.
ACKNOWLEDGEMENTS
Yours Directors take this opportunity to express their deep sense of
gratitude to The Industrial Finance Corporation of India Limited, Bureau of
Indian Standards, Punjab State Industrial Development Corporation Limited,
Punjab National Bank, & Jammu & Kashmir Bank Ltd., Govt. of Punjab and
local authorities for their continued guidance and support.
For and on behalf of the Board.
Sd/-
Date : 29/7/2004 S.K. Sharma
Place : Chandigarh (Chairman)
ANNEXURE TO DIRECTOR'S REPORT
ANNEXURE - 1
INFORMATION AS PER SECTION 217(1) (e) READ WITH THE COMPANIES (DISCLOSURE
OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988 AND
FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2004.
I. CONSERVATION OF ENERGY;
a) The Company had carried out insulation of all pipe lines to save energy.
b) Over Capacity motors were replaced with required motors.
c) Electrical Audit was being done to enable management to supervise the
energy consumption. The aforesaid steps have resulted into reduction in
power & fuel consumption.
MARCH, 2004 MARCH, 2003
POWER AND FUEL CONSUMPTION
1. Electricity
a) Purchased
Units (KWH) 19.56 19.70
Total Amount (Rs. Lacs) 84.98 77.57
b) Own Generation
Through Diesel Generation
Units (KWH) 0.88 4.05
Units Per Liter of Diesel Oil 2.87 2.78
2. Coal (Specify quantity and
where used) N.A N.A
3. Furnace Oil N.A N.A
4. Other Internal Generation
i) De-oiled Rice Husk
(for Boiler)
(Quantity) M.T
6431.050 7882.50
Total Cost (Rs. Lacs) 100.98 146.74
Rate/Unit (Rs.) 1570.30 1862.00
ii) Diesel & others (Rs. Lacs) 10.78 46.19
Quantity Liters 54880 259535
Average Rate (Rs.) 19.65 17.80
5. Consumption per Unit (M.T.)
Of production (Vanaspati &
Refined Oil) & Solvent Extraction oil
i. Production (Tonnes) 17319.604 24065.719
ii. Electricity (Unit) P.T 118.03 98.67
iii. Diesel & Others (liters) 3.17 10.78
iv. Coal N.A N.A
v. *De-oiled Rice Husk (kg) 371.32 327.54
II. Technology Absorption
Research & Development
The Company has improved its processing mix by in house research
Technology Absorption, Adaption and Innovation:
The Company has been able to improve the quality of Vanaspati and Refined
Oil by in house development work done in the Laboratory. The Company has no
technical collaboration with any foreign party.
III. Foreign Exchange Earnings & Outgo:
There were no Foreign Exchange payment during the year.
For and on behalf of the Board.
Sd/-
Date : 29/7/2004 S.K. Sharma
Place : Chandigarh (Chairman)
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management of Diamond Agro Industries Ltd. is pleased to present its
analysis report for the year 2003-2004.
INTRODUCTION:
The company is engaged in the production and manufacturing of edible oil
products including Vanaspati and Refined oils under its brand name "AKASH".
INDUSTRY OUTLOOK:
Unluckily due to radical changes in the duty structure and with so many
changes both at national and international levels, the vanaspati Industry
has faced lot of problems in the recent years the factors directly or
indirectly responsible are as follows
1. After The Finance Act (of 2001) duty structure for vanaspati & Edible
oils Industry has seen many changes and subsequently during the years the
duty structures has seen many changes quite often.
2. Then in the international market, the rates of oil has changed so
frequently that along with the fluctuating rate of Duty it is difficult to
plan the production and the cash flow. The import of oil is necessary to
maintain the quality as there is no other local oil available compatible
with the CPO (Crude Palm Oil) which is imported.
3. There is no long term credit available for import of oil which
necessitate more of working capital fund.
4. Then an excise duty of Rs. 1250/- per tonne has also been imposed during
this budget 2003 on vanaspati & refined oil whereas the price realization
is much lesser than the amount of excise duty imposed & thus making margins
very low.
5. The company has to incur extra expenditure on freight etc as the port is
at quite a distance from factory site. This along with the increased custom
duty has a multiplied effect in lowering the margins. Hence these are the
factors which are directly responsible for the losses which are mainly due
to inconsistent policies of the Govt. towards vanaspati industries.
OPERATIONAL AND FINANCIAL PERFORMANCE
Financial performance : 2003-2004 2002-2003
(Rs. in lacs)
Sales 78.62 103.41
EBIDTA (-) 130.01 (-) 102.69
Trading activities
During the year sales were 16838.759 MT including 10928.758 of Vanaspati &
5909.801 of Refind oil. There is 25% decline in sale volume of vanaspati &
50% decline sales volume of Refind oil due to lower demand factor. The
Company continued its efforts in encouraging its sales volume despite lower
demand and sales volume.
Distribution network:
The sales is through dealers network who market both bulk & retail packs of
the company.
INTERNAL CONTROL SYSTEMS
The Company ensures existence of adequate internal control through
documented policy and procedures to be followed by the executives at
various levels in the organization. While operating managers ensure
compliance within their areas, internal audit carries out audit test on the
selected samples and report noncompliance weaknesses, if any, through
internal audit reports of the respective Department.
With the objective of improving the systems and removing bottlenecks, if
any, periodic systems review is carried out and Policies and Procedure
Manuals are continually reviewed and amended
Opportunities and threats
Economic liberation, rapid urbanisation , rising consumer awareness,
attitudes habits and their prosperity has made the market more competitive.
Besides maintaining the quality standards, company has to ensure the
quantitative terms of the sale and the fluctuating market of imported oils
along with the quite often changing Government policies in terms of custom
duty continue to worry the management including other factors.
Risks & Concerns
Basically the vanaspati industry and Government has to work hand in for the
growth of the industry as till today due to unsynchronized Development (in
Government policies) and radical changes in duty structure, the industry
despite its ample sqope of developments is not able to grow.
Cautionary Statement
The report may contain certain statements that the Company believes are, or
may be considered to be "forward looking statements" that describe our
objectives, plants or goals. All these forward looking statements are
subject to certain risks and uncertainties, including but not limited to,
Government action, economic development, risks inherent in the Company's
growth strategy and other factors that could cause the actual results to
differ materially from those contemplated by the relevant forward looking
statements.
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