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Vysali Pharmaceuticals Ltd.

BSE: 524290 Sector: Health care
NSE: N.A. ISIN Code: INE153G01016
BSE 05:30 | 01 Jan Vysali Pharmaceuticals Ltd
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Vysali Pharmaceuticals Ltd. (VYSALIPHARMA) - Director Report

Company director report

VYSALI PHARMACEUTICALS LIMITED ANNUAL REPORT 2006-2007 DIRECTOR'S REPORT To The Member Your Directors present to you the 27th Annual Report of the Company together with Audited Accounts for the period ended June 30, 2007. FINANCIAL RESULTS: (Rs. in Lacs) Particulars Period 01.04.2006 to Year ended 30-06-2007 31.03.2006 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 depreciation 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. AUDITORS' 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. DIRECTORS: Shri. A.M. Jadhavedhan, Director, retires by rotation at the Annual General Meeting and he is eligible for reappointment. AUDITORS: 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 material departures. (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 concern basis. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion and Analysis Report as required under the Listing Agreements with Stock Exchanges is enclosed as Annexure C. ACKNOWLEDGEMENTS: 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 Sd/- 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 available finance. 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 achieved. Foreign Exchange Earnings and Outgo. Earning: (Rs. in Lacs) Gross value of Exports 95.47 Out go: C.I.F Value of Imports 140.05 ANNEXURE-B: a) MAIN REPORT: Item No.4: (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 interest. (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: Item No(I): The Fixed Assets register is being updated. Item No.(vii): Present Financial position of the Company does not permit to have internal audit system. Item No.(viii): Maintenance of Cost Records under Section 209 (1) (d) of the Companies Act 1956 is in progress. Item No.(ix): 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. Item No.(xi): 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. ANNEXURE C: MANAGEMENT DISCUSSION AND ANALYSIS REPORT: THE BUSINESS: 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: FORMULATION PLANT: 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 Antibiotics. QUALITY CONTROL: 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 personnel. 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. EXPORT SCENARIO: 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. DOMESTIC SCENARIO: 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. OUTLOOK: 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. ACCOUNTING METHOD: 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 and implemented. TECHNICAL COMMITTEE: 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. CAUTIONARY STATEMENT: 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 sd/- Place: Cochin - 682 025 DR. A.D. KRISHNAN Date : 14.11.2007 Chairman & Managing Director