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Hindustan Nitro Products Gujarat Ltd.

BSE: 524544 Sector: Industrials
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Hindustan Nitro Products Gujarat Ltd. (HINDNITRO) - Director Report

Company director report

1995 HINDUSTAN NITROPRODUCTS GUJARAT LIMITED DIRECTORS' REPORT To The Members, Your Directors have pleasure in presenting their Fifth Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 1995 and are pleased to announce that the project of the Company to manufacture 12000 T.P.A. of Aniline and 18000 T.P.A. of Nitrobenzene has been completed. OPERATIONS: Operation of the Nitrobenzene Plant has continued on and off and your company has earned revenue by selling the same in the domestic market. There have, however, been interruptions in the operation of Hydrogen plant due to technical problems (and hence Aniline was affected also), which have since been overcome and all the three plants together are now expected to function with full momentum. COST OVERRUN : Total project cost has increased from Rs. 4194 lacs to Rs. 5431 lacs, primary due to interest on various term loans of Financial Institutions amounting to Rs. 550 lacs, unforeseen cost of Rs. 165 lacs towards installation of new NGL/Naphta based technology as feed stock/fuel for production of Hydrogen and proposed installation of PSA system in the Hydrogen plant costing to 240 Lacs. Cost over run has been a direct fall out of unexpected and unforeseen delays in the project implementation such as non-availability of Natural Gas and consequent switching over to NGL/Naphta technology, delay in coming out with the Public Issue in the then prevailing recessionary environment, delay in the erection of high tension power supply line and availability of power from G.E.B. and unexpectedly heavy rains in the last couple of monsoon. 1. Conversion of Interest into Equity In order to part Finance the Cost Overrun, your Company had submitted its proposal to the Industrial Credit and Investment Corporation of India Ltd. (ICICI), the Lead Financial Institution to the Company, acting for itself and on behalf of Industrial Development Bank of India (IDBI) and Unit Trust of India (UTI), the other participating Financial Institutions (Fls), for converting their unpaid/overdue interest amounting to Rs. 550 Lacs on various Term Loans granted to the Company in to Equity Share Capital. The proposal is under final stage of appraisal and on receiving the approval, the Company proposes to issue 55,00,000 Equity Shares of Rs. 10/- each at par to the FIs in lieu of the interest due amounting to Rs. 550 Lacs. In anticipation of approval from FIs as aforesaid, the Company has sought the consent from Members for conversion of unpaid/overdue interest of FIs into Equity Share Capital under Item No. 9 of the notice of Annual General Meeting, forming part of this Annual Report. 2. Issue of Equity Shares Further to meet the increased Long Term Working Capital requirements of the Company and the cost of balancing equipments, your Company is planning to issue further equity shares of Rs. 10/- each for an aggregate value not exceeding Rs. 1000 Lacs to the Directors /Members /NRIs /OCBs /FIIs /Mutual Funds /Public etc. by way of Public Issue/Rights Issue/Private Placement /Preferential Allotment, which would be in the best interest of the Company. The necessary approval from the Members is being sought under Item No. 10 of the notice of Annual General Meeting, forming Part of this Annual Report. FUTURE PROSPECTS: Now that the initial teething problems are behind us, the Company expects to stabilise normal working soon and move on to sustained profitable performance. With a view to strengthening and streamlining the Company's operations, the Board has decided to install a Pressure Swing Absorber Systems (PSA) in the Hydrogen Plant, costing Rs 240 lacs. This would enhance the capacity of the hydrogen plant from 800 cubic meter per hour to 4000 cubic meter per hour. With high production, it would be possible to generate additional revenue for the Company by selling surplus Hydrogen available after satisfying internal demand. Your Directors are glad to inform you that your Company had received the long awaited sanction from Ministry of Petroleum, Government of India, granting the Company allocation of 45,000/- cubic meter of Gas per day and also executed the Gas supply contract with M/s. Gas Authority of India Limited (GAIL) for supply of Gas. On availability of Natural Gas, your Company is hopeful of achieving better quality of its products at lower cost. WORKING CAPITAL The Company has been sanctioned working capital, both fund based and non- fund based limits, aggregating Rs. 894 Lacs from the Consortium of Bankers consisting of Central Bank of India as lead Bank, Vijaya Bank and Union Bank of India. The execution of documents have been completed and the Company has been made available both the limits, in full, for utilisation. MARKETING: On Marketing front, looking to the present supply and demand position of Aniline in the country, your Company is expecting to take up the front- ranking position in the domestic market in near future. The quality of the products of your Company is of high purity and on receiving the initial feed back from the domestic market, your Company does not forsee any difficulty in gaining acceptability for its products in the market. The company is at present concentrating on setting up of its marketing network through out the country, started with Gujarat and Maharashtra. Your Company proposes to actively develop exports and would in the long run aim at exports constituting a minimum of one third of its total sales. DEPOSITS: The Company has not accepted any fixed deposits from the public for the period under review within the meaning of Section 58A of the Companies Act, 1956 and the rules made thereunder. DIRECTORATE: Mr R Kannan has been nominated by Industrial Credit and Investment Corporation of India Ltd. (ICICI) as Nominee Director with effect from 08.02.1995 in place of Mr. Sunil Bahl. The Directors place on record their appreciations for the services rendered by Mr. Sunil Bahl during his tenurship as a Director of the Company. Mr. M.R. Menon, Dr. N.P. Jain, Mr.B. Aravamudham and Mr. L.N.S. Mukundan, IAS, Directors of the Company, retire by rotation, and being eligible, offer themselves for re-appointment. INSURANCE: All the properties and insurable interest of your Company are adequately insured. STATUTORY DISCLOSURES: Information pursuant to Sec. 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-I to this Report. Statement giving particulars of employees as required under Section 217(2A) of the Companies Act, 1956 are given in Annexure-II to this Report. AUDITORS: The auditors, M/s. U.S. Bohara & Co., Chartered Accountants. Baroda hold office until the conclusion this Annual General Meeting and do not offer for re-appointment, owing to their pre-occupations. The Directors place on record their sincere appreciations for the services rendered by M/s. U. S. Bohara & Co. during their tenure as a Auditors of the Company. The Company has received a certificate from M/s. C. C. Chokshi & Co., Chartered Accountants, Baroda to the effect that their appointment if made, would be within the prescribed limit under Section 224 (1-B) of the Companies Act, 1956. ACKNOWLEDGEMENT: Your Directors gratefully acknowledge the continued support and valuable advice received from the leading financial institutions namely, (1) Industrial Credit Corporation of India Ltd., (ICICI), (2) Industrial Development Bank of India (IDBI) and (3) Unit Trust of India (UTI); From the prestigious promoter in associate sector namely, Gujarat Industrial Investment Corporation Ltd., (GIIC), and from the prominent bankers namely, Central Bank of India, Vijaya Bank, and Union Bank of India. Your Directors greatly appreciated the co-operation extended by GAIL and other Govt. Authorities and Institutions. Your Directors also placed on record their appreciation for the sincere efforts put in by all the employees. ANNEXURE - I Information regarding conservation of energy, technology absorption and foreign earning and outgo required to be furnished and pursuant to the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988 and forming part of the Director's Report for the year ended on 31 st March, 1995. A. CONSERVATION OF ENERGY : a. Energy conservation measures taken : The plants of the Company are designed with the latest technology and in built controls are provided there in for optimal utilization of energy. Whatever heating is involved, the same is done by using thermic fluid heating system. In the said System Hot oil in closed pipe lines moves around from utility section to plant area, wherein there is no puging/outgoing of hot oil and as such, no wastage of energy. b. Additional investments and proposals, if any being implemented for reduction of consumption of energy. No additional investment is envisaged. c. Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. The above measures has reduced the energy consumption but, since the period under review is very small, its exact impact will be known in the coming year. d. Details of total energy consumption for production. Details of total energy consumption are given in Form-A hereunder. FORM - A Disclosure of particulars with respect to conservation of energy. (To the extent applicable) Power and Fuel Current Year Previous Year Consumption 1. Electricity a. Purchased Units (KWH) 5506.00 N.A. Total Amount (Rs. in lacs) 0.26 N.A. Rate per Unit (Rs./KWH) 4.80 N.A. b. Own Generation i) Through Diesel Generator Unit (KWH) 33858 N.A. Unit per Ltr. of diesel oil 7.87 N.A. Cost/Unit (Rs./KWH) 2.75 N.A. ii) Through steam turbine / generator NIL NIL 2. Coal (specify quality and where used) NIL NIL 3. Furnace Oil NIL NIL 4. Other Naptha Quantity (M.T.) 7.08 NIL Total Amount (Rs. in lacs) 0.54 NIL Average Rate (Rs./M.T.) 7424.00 NIL B. TECHNOLOGY ABSORPTION : As per the details provided in Form B, hereunder. FORM - B Disclosure are in which (R & D) carried out by the Company. The Company has not carried our Research and Development activities during the period under review. 2. Benefits derived as a result of the above R & D. Not Applicable. 3. Future Plan of Action. The Company has plans for setting up a full fledge Research and Development Unit in-house in future. 4. Expenditure on R & D. NIL b. Technology Absorption, Adaptation and Innovation 1. Efforts, in brief, made towards technology absorption, adaptation and innovation. The Company has been supplied the indigenously developed technology by Ms., Shirag Organics Industires Pvt. Ltd. utilizes low cost raw materials and for the first time in India, the long lasting catalyst in the manufacturing of Aniline. Recycling of Acids and pioneer introduction of innovative nitration process would result in lower cost of production. The technology would be fully absorbed in the current F.Y. 1995-96. 2. Benefits derived as a result of the above efforts. As the time span was short since the Company started commercial production, no information is available regarding above. 3. Technology imported during the last five years. Not applicable as the Company has not imported any technology during the last five years. C. FOREIGN EXCHANGE EARNING AND OUTGO : -- Foreign Exchange earned : Nil -- Foreign Exchange outgo : Rs. 95.10 lacs. Note :- This being the first year of operation, corresponding figures for the previous year are not provided. By order of the Board of Directors DR. N.P. JAIN CHAIRMAN Place : Bombay Date : 26th July, 1995.