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Nagarjuna Finance Ltd.

BSE: 506129 Sector: Financials
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Nagarjuna Finance Ltd. (NAGARJUFIN) - Director Report

Company director report

ANNUAL REPORT 1999-2000 NAGARJUNA FINANCE LIMITED DIRECTORS' REPORT To the Members Your Directors present the Seventeenth Annual Report alongwith the audited accounts of the Company for the year ended 30th June 2000. DIVIDEND Considering the loss and non-availability of funds for appropriation, the Board has reluctantly skipped dividend on both Equity as well as Preference shares. OPERATIONS Your Company during the year under review earned a total income of Rs 30.37 crores represented by turnover of Rs 16.17 crores from sale of insecticides and Rs 14.20 crores of income from financial services businesses concluded in the earlier years. The already pruned income level owing to discontinuance of financial services activities and restoration of the undertaking comprising the business of manufacture and sale of insecticides to Vijayalakshmi Insecticides and Pesticides Limited during the previous year, was further affected on account of several existing borrowers who had availed Lease and/or Hire Purchase facilities defaulting on their contractual commitments. As a result, the liquidity position deteriorated sharply concomitantly with the worsening of the asset quality and the recovery of financial services related receivables during the year fell far short of the projected levels. In many cases the legal action against defaulters did yield results; however due to the protracted process and inherent delays involved in such action, a marked improvement in collection should be visible only in due course of time. The stepped up collection drive resulted in some contracts having to be rescheduled wherever it was evident that the concerned borrower needed relief and was committed to the revised dates for payment. While things being so, your Company in order to strengthen the cash flow, securitised a portion of its asset portfolio during the year by assigning the receivables arising therefrom on 'non recourse basis', to supplement its efforts towards meeting fixed deposit repayment obligations. Your Company during the last three years had an unblemished track record of having repaid over Rs 275 crores of fixed deposits which constitutes over 73% of the highest level of deposits held. Despite the best efforts put forward, owing to the Increased level of mismatch between deposit repayment obligations and projected collections, your Company had to seek relief in the form of deferment beyond contractual maturity dates for fixed deposits. After hearing your Company, and the written submissions in this connection made by the Reserve Bank of India and the Registrar of Companies, Andhra Pradesh, the Company Law Board (CLB) in its order dated February 29, 2000 permitted your Company to repay a major portion of the outstanding deposits as at 315' December 1999, over a period of 5 to 36 months from the date of maturity or date of the order whichever is later. Your Company has been repaying the matured deposits as per the order of the Company Law Board including under the Hardship category. Repayments during the year amounted to Rs 40 crores bringing the outstanding deposits of Rs 119 crores at the beginning of the year down to Rs. 79 crores as at 30th June 2000. Unclaimed deposits were at Rs.4.85 crores at the end of the year which were subsequently lowered on account of continuous efforts made to activate the depositors concerned . Your Company made a loss before interest and depreciation of Rs 11.45 crores after writing off bad debts considered irrecoverable. After accounting for interest of Rs 37.26 crores and depreciation of Rs 6.74 crores, the loss for the year was Rs 55.45 crores. There was no amount available for appropriation (previous year - Nil). Prior year adjustments accounted for Rs 15.01 crores. The loss carried to the balance sheet amounted to Rs 123.32 crores. During the current year, your Company faced with the continuing situation of poor recoveries, had Initiated a dialogue with like minded financial services companies with a view to jointly work towards accelerating the pace of recoveries. Towards this end, a consortium of financial services companies i.e. Jenson & Nicholson Financial Services Limited, IFB Finance Limited, SM Finance Limited and Mahalaxmi Factoring Services Limited had entered into a strategic alliance during the second week of September 2000 with your Company. The strategic alliance will supplement and complement the competencies of each participant in operational areas for the optimum benefit of the respective companies and their depositor holders. Your Company expects the strategic alliance to bear fruits in the coming months which would enable deposit obligations to be met out of the improved cash flow position. To suitably reflect the change in the profile of your Company consequent to the changes made in the main objects clause of the Memorandum of Association, it is proposed to rename your Company as "N F Agro Chemical Industries Limited". A resolution to this effect is proposed for the consideration of the shareholders at the forthcoming Annual General Meeting. Your directors commend the resolution for approval. In order to provide space for the infusion of new talents so as to achieve the objectives of the strategic alliance, the Board of your Company has been restructured by inducting new directors. Accordingly, Shri Minoo R Shroff, Shri K S Raju Shri P K Madhav and Shri L V V Iyer have laid down their office. Shri S Chari has been reappointed as the Managing Director of the Company for a further period of 3 years from 27' May 2000 subject to the approval by the Members at the forthcoming Annual General Meeting. Your directors commend his reappointment. Your directors are confident that the benefits of the above strategic alliance would be in the best interest of the deposit holders and shareholders. Shri C Satyanarayana, Shri G.S. Raju, Shri A P Kurian and Shri C D Menon ceased to be directors during the current year having resigned on grounds of health and for personal reasons. Shri A James and Shri S Ramamurthy who have been appointed as directors on 16th September 2000 in the casual vacancy caused by the resignation of Shri G S Raju and Shri C Satyanarayana hold office upto the date of the forthcoming Annual General Meeting Notices under Section 257 of the Companies Act, 1956 have been received from some of the Members signifying their intention to propose the candidature of the above inductees for the office of director. Approval of the shareholders is sought for their appointment. Your directors commend their appointment. Your Directors place on record their appreciation of the valuable contribution made by the outgoing directors during their tenure of office. Subsidiary Nagarjuna Securities Limited, the Stock Broking, subsidiary reported a profit of Rs 6.27 lakhs after tax on a gross income of Rs 690.50 lacs for the year ended 31b' March 2000 as against a loss of Rs 6.33 lacs on a gross income of Rs 157.81 lacs in the previous year. Personnel Particulars of employees in terms of requirement laid down under Section 217 (2A) of the Companies Act 1956, are set out in the Annexure which forms an integral part of the report. Auditors M/s M Bhaskara Rao & Co., Chartered Accountants Auditors of the Company, retire at the close of the Annual General Meeting. A Certificate under Section 224(1B) of the Companies Act, 1956 has been obtained to the effect that their reappointment, if considered. will be in order Disclosures Particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are furnished in the annexure. Auditors' Report The comments of the Auditors may be read along with the observations made in this Report on the non-applicability of the RBI Act and the directions made thereunder, to the Company. Acknowledgements Your Directors wish to place on record their appreciation for the continued support from the Banks, Financial Institutions and Depositors. The Board commends the dedication of the employees, who have performed well in a difficult year and thank the shareholders for the confidence they have reposed in the Company and the Management. On behalf of Board of Directors S. Chari S. Ramamurthy Managing Director Director Place : Hyderabad Date : 27th October,2000 ANNEXURE FORM A Form for disclosure of particulars with respect to conservation of energy FORM B Form for disclosure of particulars with respect to absorption Research and Development (R & D) Current Year Previous Year 1. Specific areas in which R & D Nil Nil carried out by the Company. 2. Benefits derived as a result of Nil Nil the above R & D 3. Future plan of action Nil Nil 4. Expenditure on R & D Nil Nil 5. Technology absorption, adaptation NA NA and innovation FORM C (Rupees in Lakhs) Foreign Exchange earned Current Year Previous Year Foreign Exchange outgo: Nil 1370.36 (i) Raw Material Nil 564.27 (ii) Traveling Nil 5.68 (iii) Others Nil 4.89