| The Directors present the Seventeenth Annual Report alongwith the
audited accounts of the Company for the year ended 30th June 2000.
FINANCIAL RESULTS
The accompanying Profit and Loss Account shows that for the period
ended 30th June 2000, your Company after providing for taxation of nil
reported a
[Rs. In Lakhs)
Loss of 5544.50
Add : 1. Prior year adjustments 1501.40
2. Carried forward of the previous year 5285.91
12331.81
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
The 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.
The 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 31st 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.
The 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. The 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 KS Raju, Shri P K Madhav and Shri L V V lyer
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 27th May 2000 subject to
the approval by the Members at the forthcoming Annual General Meeting.
Your directors commend his reappointment.
The 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.
The directors commend their appointment.
The 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 31st 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(1 B) 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.
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 the
above R & D Nil Nil
3. Future plan of action Nil Nil
4. Expenditure on R & D Nil Nil
5. Technology absorption, adaptation and
innovation NA NA
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) Travelling Nil 5.68
(iii) Others Nil 4.89 | 