MUNAK CHEMICALS LIMITED
ANNUAL REPORT 2001-2002
Your Directors take pleasure in presenting to you the Twenty Second Annual
Report and Audited Statements of Accounts for the year ended 30th June,
FINANCIAL RESULTS AND OPERATIONS
The company has shown dismal performance during the year under report due
to unfavourable policies of the Government of India towards fertilizer
industry in general and Single Super Phosphate Industry in particular
coupled with glut situation created in DAP fertilizer in the market. This
has adversely affected the market of Single Super Phosphate Industry and
your company is one of the victims. As a result of this the Plant could
trot run during the year. Plants In the state of Punjab and other parts of
the country have either been closed down or incurring huge losses.
Your company has made gross turnover of Rs.19.85 lacs as compared to
Rs.230.12 lace in the previous year. After providing for depreciation
amounting to Rs.6.53 lacs, the working results showed net loss of Rs.235.89
lacs as against a Net loss of Rs.83.89 lacs in the previous year.
During the year, the Company has sold Plant & Machinery and incurred a loss
of Rs.128.84 lacs.
The net worth of the Company as on 30.06.2002 is Rs.1115.61 lacs. The
Company has accumulated losses of Rs. 1257.77 lacs which has eroded the net
worth of the Company. Your Director have formed an opinion that the Company
has become a sick Company under Sick Industrial Companies (Special
Provisions) Act, 1985 and would be-making an appropriate reference to the
Board for Industrial and Financial Reconstruction for determination of the
measures which shall be adopted with respect to the company.
Production during the year under report was Nil of Single Super phosphate
and Nil of sulphuric acid as against 1799 MT and 8349 MT respectively in
the previous year.
During the year under report, your Company has sold only 510 MT of
sulphuric Acid as against 7560 MT in the previous year.
The Company has not accepted any fixed deposits from the public during the
Sh. P.D. Sharma, Director of the company retire by rotation under Article
123 of the Articles of Association of the company and being eligible offers
himself for re-appointment.
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
i. that in the preparation of the annual accounts for the financial year
ended 30th June,2002, the applicable accounting standards had been followed
along with proper explanation relating to material departures;
ii. that the Directors had selected such accounting policies and applied
them consistently and made judgements 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 or loss of
the company for the year under review;
iii. 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, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
iv. that the Directors had prepared the accounts for the financial year
ended 30th June, 2002 on a 'going concern' basis.
M/s. S.C. Dewan & CO., Chartered Accountants, Auditors of the Company
retires at the conclusion of ensuing Annual General Meeting and are
eligible for reappointment.
EXPLANATION TO OBSERVATIONS OF THE AUDITORS ARE AS FOLLOWS:
PARA 2 (vi)
The management was forced to take this hard decision to clear the full &
final settlement dues of workers who were pressing very hard for release of
their payments. However, the COmpany has sufficient Immovable Assets to
secure the loan taken from Punjab State Government.
NOTE NO. 1 (III)
As the Plant remain closed during year and the Board of Directors has
decided not to Charge Depreciation or Factory Building and Plant &
Machinery in order to reflect the correct value of Building and Plant &
Machinery in the Balance Sheet.
Efforts are being made to reconcile the Debit/Credit balances. Confirmation
from some of the customers and suppliers is a awaited.
NOTE NO. 12
The land was allotted to the Company on 99 years lease hold basis by PSIEC.
The dispute was in regard to the total price of the land allotted by PSIEC
and as such write-off in respect of land will be provided after dispute is
PARTICULARS OF EMPLOYEES
Particulars of Employees pursuant to the provision of Section 217(2A) of
the Companies Act, 1956, read with Companies (Particulars of Employees)
Rule, 1975, is not annexed since none of the Employees was in receipt of
remuneration higher than the limit fixed in the said Section.
The particulars with respect to conservation of energy etc. as required
under section 227 (1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the report of the Board of Directors) Rule,
1988 are annexed and form part of this report.
As required by provisions of the Listing Agreement with the Stock
Exchanges, the Report on Management Discussion and Analysis, Corporate
Governance as well as the Auditor's Certificate regarding' compliance of
Conditions of Corporate Governance are annexed to this Report.
Your Directors wish to convey thanks to all concerned departments of
Central, State Governments, Financial Institutions led by IFCI and State
Bank of India for their continued co-operation.
Your Directors also express their appreciation of the dedication shown by
the employees of the Company during the year.
for and on behalf of the Board of Directors
(P.D. SHARMA) (VIJAY KUMAR GARG)
DIRECTOR MANAGING DIRECTOR
PLACE : CHANDIGARH
DATED : 14th October, 2002
ANNEXURE TO THE DIRECTORS' REPORT
INFORMATION AS PER SECTION 217(1)(e) OF COMPANIES ACT, 1956, READ WITH
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF DIRECTORS) RULES,
1988 AND FORMING PART OF DIRECTORS' REPORT FOR THE YEAR ENDED 30TH June,
A) CONSERVATION OF ENERGY
The Company has reviewed all the electric motors and replaced the motors
with a lower H.P. wherever possible. The Company is also strictly
following the procedure of switching off motors which are not affecting our
A) POWER AND FUEL CONSUMPTION
Year ended Year ended
30th June, 2002 31st March, 2001
a) Purchase (Units/KWH) Nil 7,54,793
Total Amount (Rs.) Nil 32,13,136
Rate/Unit(Rs.) Nil 4,257
b) Own Generation
i) Through Diesel Generator Nil 12,120 KWH
Unitper Ltr.of Diesel Oil Nil 4.04 KWH
Cost per Unit 3.77
ii) Through Steam Turbine/ Nil
Generator Units Nil Nil
Units Per Ltr. of Fuel
Oil/Gas Nil Nil
Cost/Unit Nil Nil
2) COAL N.A. N.A.
3) FURNACE OIL/DIESEL
FO. Qty. (KL) Nil 2.56
Total Amount (Rs.) Nil 21,504
Average Rate (Per K.L.) Nil 8,400.00
DSL. Qty. (KL) Nil 25.30
Total Amount (Rs.) Nil 3,85,320
Average Rate (Per K.L.) Nil 15,230
4) OTHER/INTERNAL GENERATION
Qty.(KL) NIL NIL
Total Amount (Rs.) NIL NIL
Average Rate (Per K.L.) NIL NIL
A) CONSUMPTION PER UNIT OF PRODUCTION
Unit (M.T) ASSP ASSP
Electricity (KWH) Nil 52
Furnace Oil (K.L.) Nil 13.23
Coal NIL NIL
Other Diesel (K.L.) Nil 16.59
B) TECHNOLOGY ABSORPTION
1) Research And Development:
No Research & Development work has been carried out by the Company and
therefore, there is no expenditure on this head or any other benefit
accrued from it.
2) Technology Absorption
The Company has not imported any technology for its plant.
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has not exported its products during the year under review,
therefore, there is no foreign exchange earnings. There is no, foreign
exchange out going for importing raw materials and others as the same is
being procured from private parties.
MANAGEMENT DISCUSSION AND ANALYSIS
The Fertilizer Industry has been adversely effected due to the adverse
Policies of Govt. of India, as a result thereof, margins have been under
pressure due to withdrawal of subsidy.
a) Industry structure and development.
The most of the Fertilizer Plants in India are lying closed or are on the
verge of shut down of their operations. The development of the Industry
wholly depends upon the policies of Govt. of India.
b) Opportunities and threats.
The opportunities are being explored to diversity in other areas as the SSP
Fertilizer of India is facing threat low demand on one side and withdrawal
of subsidy by Govt. on the other side. As such other business opportunities
are being looked into.
c) Risks and concerns.
The Company has already closed the operation and there had been a Nil
turnover of SSP, the mass product of the Company.
So far as SSP Industry is concerned the future is very bleak due to
availability of Imported Fertilizer and other substituted at more
economical prices and drastic reduction in demand due to drought conditions
in the northern part of India.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate system of internal control in order to
ensure that all transactions are authorised, recorded and reported
correctly. Regular internal audit checks are carried out to ensure that
adequate systems are in place. The management continuously reviews the
internal control systems and procedures to ensure orderly and efficient
conduct of business. The emphasis of internal control prevails across
functions and processes covering the entire activities of the company.
COMPANY'S FINANCIAL PERFORMANCE AND ANALYSIS
Other matters such as operational and financial performance have been
discussed under the respective heads in the Director's Reports.
HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS
Our employees continue to be the backbone of our organisation. Our efforts
are towards instilling a level of competency in the work force. The human
resource has to be more dynamic and result oriented in the present day
On behalf of Board of Directors
PLACE : CHANDIGARH
DATED : 14TH OCTOBER, 2002 (V.K. GARG)