 |
| DIRECTORS'
REPORT |
|
|
Your Directors have pleasure in presenting their Report together with the audited accounts for the financial year ended 31st March, 2004.
|
| FINANCIAL
RESULTS |
| |
2003-2004
Rs. Lakh
|
2002-2003
Rs. Lakh
|
| Sales |
60698 |
134452 |
| Profit Before
Interest and Depreciation |
9119 |
11487 |
Less:
Interest
Depreciation |
753
3037 |
3282
4502 |
| Profit Before
Tax |
5329 |
3703 |
| Provision
for Tax: |
| -Current |
| -Deferred |
|
|
|
| Profit After Tax |
4323 |
2683 |
| Add; Surplus
brought forward |
4761 |
3863 |
| Amount available
for Appropriation |
9084 |
6546 |
| APPROPRIATIONS |
|
|
| Transfer
to General Reserve |
3000 |
2000 |
| Transfer from
Debenture Redemption Reserve |
- |
(125) |
| Transfer from
Investment Allowance Reserve |
- |
(260) |
| Dividend on
Equity Capital: Proposed |
1339 |
1071 |
| Dividend Tax |
171 |
137 |
| Surplus Carried
to Balance Sheet |
4574 |
3723 |
| TOTAL |
9084 |
6546 |
|
|
| Corporate Developments |
The Scheme of Arrangement (Demerger) between the Company
and Coromandel Fertilisers Ltd (CFL) for demerger of Farm Inputs Division of the
Company to CFL and amalgamation of Parry & Company Ltd (P&Co) and The
Mofussil Warehouse and Trading Company Ltd (MWT) with your Company
effective 1st April 2003 was sanctioned by the High Courts of Judicature at
Madras and Hyderabad. The financial accounts of your Company for the year
ended 31st March 2004 take into account the effect of the said restructuring.
The figures for the year 2003/04 are therefore not comparable with the figures
of 2002/03. Consequent upon the de-merger, the Company's total debt has
come down significantly. Your
Company (together with its subsidiary) now holds 68.69% of CFL and will therefore continue to
benefit from the growth of this business. |
| Performance |
| During the year, your Company achieved a turnover of Rs. 60698
lakhs. The operating profit for the year was Rs. 9119
lakhs and the profit before tax Rs. 53291akhs.
During the period under review, the Company's operating and
financial performance improved considerably. Effective cost
reduction measures in all the sugar factories and some improvement in domestic price
realisation enabled the Sugar division to post better results despite lower
output.
Growth in the construction industry coupled with softening of
interest rates on home loans and the "Parryware" brand pull
resulted in a good performance by the Parryware division. Further,
Company's focus on tapping low cost funds and
retiral/ prepayment of high cost debts resulted in lower interest outgo.
A detailed discussion and analysis on the performance and outlook
of your Company's various businesses is set out in the Management
Discussion and Analysis Report forming a part of this report.
The Company continues to enjoy AA - rating for its long term
borrowings and PI + rating for its commercial paper programme
from CRISIL, post restructuring. Further, the Company also enjoys
prime rating from its banker State Bank of India and was able to
access rupee and foreign currency funds at competitive rates.
|
| Dividend |
| In view of the improved financial performance, your Directors are
pleased to recommend a dividend of Rs. 7.50 per equity share of
Rs.10/- each (75%) for the financial year ended 31st March 2004. |
| Award |
The Company's Parryware brand has been awarded
"Superbrand"
status by the Super Brand Council of India, which is a recognition of continuous
customer focus and best brand recall for the Company's products.
|
| Re-statement of values of certain fixed assets |
| During the period under review, the Company carried
out a comprehensive review of all the assets capitalised
under its various capital investment programmes. Based on the review, it was
considered appropriate to write down the book value of
certain fixed assets to reflect their current economic value to the Company.
Pursuant to the approval of the shareholders and the confirmation
of the Hon'ble High Court of Madras an amount of Rs.3000 lakhs
has been utilised from the Securities Premium Account to adjust
the diminution in value of the fixed assets of the Company
identified as aforesaid. |
| Divestment of
Parry's Confectionery Limited |
| Your Company along with its subsidiary viz., Santhanalakshmi
Investments Pvt Ltd (SIL) was holding a 43.61% in Parrys
Confectionery Ltd's equity. With a view to focus on the core
businesses, it was decided to exit from the confectionery business.
Accordingly, your Company entered into a share purchase agreement with M/s. Lotte Confectionery Company Limited, Korea
(Lotte), to divest the entire shareholding for a consideration of
Rs.283.12 per share. Lotte will as per the terms of the agreement
continue using "Parry brand" for a period of 5 years. The Company
has since received the entire consideration, during May 2004.
|
| Divestment of small businesses |
| With a view to focus on core businesses the board of directors
decided to divest the small and non-core businesses of
Netlon, General Marketing and Travels carried on by the erstwhile Parry
and Company Ltd (since amalgamated with the Company w.e.f.
01.04.03) to and in favour of M/s.Parry Engineering & Exports Ltd.
(PEEL) for a total consideration of Rs.1225 lakhs based on the
valuation done by Pricewaterhouse Coopers Private Limited.
These businesses are being sold to PEEL w.e.f., 1st June 2004 or such
other date as may be approved by the Board. The total sales/revenue of these
businesses in 2003-04 was Rs.16 crore. The divestment of these businesses
is not expected to have any adverse impact on the Company's future
profitability. The Company has since received the approval of the
shareholders, through the process of postal ballot for the divestment.
|
| Delisting |
| The Company's equity shares were listed at London Stock
Exchange (LSE) besides being listed at MSE, BSE and NSE in
India. As there were no transactions in our shares during the last
several years, it was decided to delist our equity shares from LSE.
The formalities of delisting having been completed, the shares have
been delisted w.e.f. 27th Februaty 2004. |
| Subsidiary Companies: |
| Coromandel Fertilisers Limited |
| Coromandel Fertilisers Limited
(CFL) achieved a turnover of Rs.122259 lakhs for the year ended 31st March 2004 and the profit
after tax was Rs.4310 lakhs. The Company's Board has declared a
dividend of 65% for the current year. Your Company along with its
subsidiary currently holds 68.69% of CFL. |
| Parry Chemicals Limited |
| As a part of the Scheme of Arrangement, Parry Chemicals Limited
(PChL) became a 100% subsidiary of CFL. PChL achieved a turnover of Rs 3725 lakhs
for the year ended March 31, 2004 and the Profit after Tax was Rs 9.35 lakhs. |
| East India Sugars Private Limited |
| During the year, the Company acquired 95% stake in East India
Sugars Pvt Ltd (EIS) , Chennai a Company engaged primarily in
sugar trading. Your Company believes a trading arm will be an
important asset in the emerging scenario of greater competition,
trade and need for speed. East India Sugars Pvt. Ltd registered an income of Rs. 59 lakhs for
the year ended 31st March 2004 and incurred a loss of Rs.1
1akh. |
| Parrys Confectionery Investment and Finance Company Limited |
| Parrys Confectionery Investment and Finance Company Limited by
virtue of being a subsidiary of EIS has become a subsidiary of your
Company. It achieved a business income of Rs. 1.55 lakhs and
made a profit of Rs. 0.77 lakhs for the year ended 31st March 2004. |
| Santhanalakshmi Investments Private Limited |
| Santhanalakshmi Investments Private Limited, the investment
subsidiary made a profit of Rs. 40 lakhs on an income of Rs. 156 lakhs during the year. |
| Parry America Inc. |
| Parry America Inc, the 100% subsidiary based in US reported an
income of Rs. 62 lakhs for the year ended 31st March 2004. After
providing for expenses, the Company incurred a loss of Rs.15 lakhs.
The main business of this company is to market and sell
NeemAzal'" Technical in US markets and trading of technical and
formulations in South America, Mexico and Canada. |
| Directors |
Mr. M.V.Subbiah, Executive Chairman 'stepped down from the
Board with effect from 19th January 2004, on attaining the age of
65.Mr. M.V.Subbiah took over as Managing Director of this Company in 1984 when this Company was in
great difficulties having sustained losses for ten years. By reorganising
products, technology and adopting appropriate HR practices he was primarily"
responsible for turning this Company as profitable and growth
oriented. Later by expansions and acquisitions he consolidated
Company operations and increased the turnover, profit and market
capitalisation. The Directors place on record the significant
contribution of Mr M.V. Subbiah, and wish him well in future.
The Board appointed Mr. S. M. Datta as the non-executive
chairman of the Company with effect from 19th January 2004.
Mr. S. M. Datta, Chairman retires by rotation in terms of Articles
102 and 103 of the Articles of Association of the Company and is
eligible for reappointment.
Mr.S.Viswanathan , Director retires by rotation in terms of Articles
102 and 103 of the Articles of Association of the Company and is eligible for reappointment.
Mr. R. Seshasayee and Mr. R. S. Nanda, Directors resigned from the
Board w.e.f.,17.10.2003 and 01.12.2003 respectively, due to their
pre-occupations.
The Directors wish to place on record their appreciation for the
valuable services rendered by Mr.R.Seshasayee and Mr.R.
S.Nanda, Directors, during their tenure. |
| Corporate Governance |
| Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, a Management Discussion and Analysis, Corporate
Governance Report and Auditors' Certificate regarding compliance
of conditions of Corporate Governance are made a part of the
Annual Report. |
| Transfer to the Investor Education and Protection Fund |
| In terms of Section 205C of the Companies Act, 1956, an amount of Rs. 7.33
lakhs being unclaimed dividend, interest on fixed deposit, interest on
debentures, unclaimed deposits etc. was transferred during the year to the
Investor Education and Protection Fund established by the Central Government. |
| Deposits |
The Company has discontinued acceptance of public deposits since
July 2003.
107 deposits totalling to Rs. 10.07 lakhs due for repayment on or before 31st
March, 2004 were not claimed by the Depositors on that date. Efforts are being
made to contact all such deposit holders to facilitate the refund to them. |
| Director's Responsibility Statement |
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the
Directors confirm that, to the best of their knowledge and belief:
- in the preparation of the Profit & Loss Account for the financial
year ended 31st March 2004 and the Balance Sheet as at that
date ("financial statements"), applicable accounting standards
have been followed;
- appropriate accounting policies have been selected and applied
consistently and such judgements and estimates that are reason
able and prudent have been made so as to give a true and fair
view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company
for that period;
- proper and sufficient care has been taken 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. To ensure this, the Company has
established internal control systems, consistent with its size and nature of
operations. In weighing the assurance provided by any such system of internal
controls its inherent limitations should be recognised. These systems are
reviewed and updated on an ongoing basis. Periodic internal audits are
conducted to provide reasonable assurance of compliance with these
systems. The Audit Committee meets at regular intervals to review the
internal audit function;
- the financial statements have been prepared on a going concern
basis.
|
| Auditors |
| Mis. Lovelock & Lewes, Chartered Accountants, Chennai, the
Company's Auditors, retire at the conclusion of the forthcoming
Annual General Meeting and being eligible offer themselves for
reappointment. |
| Branch Auditors |
| Mis. Borkar & Muzumdar, Chartered Accountants, Mumbai, the
Company's Branch Auditors, retire at the conclusion of the
forthcoming Annual General Meeting and being eligible offer
themselves for re-appointment. |
| Cost Auditor |
| The Company received the approval of the Central Government for appointment of Mr. D. Narayanan as Cost Auditor to conduct
the cost audits for the financial year 2003 - 04. |
| Particulars of Employees |
| Under the provisions of Section 21 7 (2A) of the Companies Act, 1956 read
with Companies (Particulars of Employees) Rules, 1975 as amended, the
names and other particulars of employees are set out in the Annexure to the
Directors' Report. |
| Acknowledgement |
| The Directors thank the customers, suppliers, farmers, financial institutions,
banks, depositors, debenture holders and shareholders for their continued
support and also recognise the contribution made by the employees to the
Company's progress during the year under review.
Chennai
31st May, 2004 |
on
behalf of the board |
|
S. M. DATTA
Chairman |
Information under Section 217 (1) (e) of the Companies Act,
1956 read with the Companies (Disclosure of particulars in the
Report of Board of Directors), Rules, 1988 and forming part of
the Directors' Report.
|
| I. CONSERVTION OF ENERGY
|
- Replacement of inefficient motors with energy efficient motors at
Parryware Alwar unit.
- Energy conservation measures in compressed air system in Parryware
Ranipet unit resulted in considerable reduction in energy cost.
- Efficiency of co-generation plant at Nellikuppam was enhanced resulting
in additional power generation.
|
| II. TECHNOLOGY ABSORPTION, ADAPTATION AND lNNOVATION
|
| None
|
| III. During the year towards Research and Development activities
in the various divisions, an amount of Rs. 2.08 crore has been
incurred on account of revenue expenditure.
|
| IV. FOREIGN EXCHANGE EARNINGS AND OUTGO:
|
| Particulars |
2003-04
Rs. Crore |
| (a) Earnings |
25.92 |
| (b) Outgo |
22.96 |
|
