To The Members
The Directors have pleasure in presenting the Ninety Fifth Annual
Report of your Company together with the Audited Statement of Accounts
for the year ended 31st March 2011.
Financial results
(Rs. in Lacs)
2010-11 2009-10
Turnover and other income 1,70,306 1,20,350
Profit before interest and depreciation 25,115 16,928
Interest 2,589 2,330
Profit before depreciation 22,526 14,598
Profit for the year 19,412 11,811
Provision for tax
- Current tax 3,789 1,760
- Deferred tax 2,884 1,143
- Adjustments of earlier years 8 -
- Fringe benefit tax - 3
Profit after tax 12,731 8,905
Amount brought forward from previous year 20,317 849
Balance added pursuant to the scheme of
arrangement - 13,087
Amount available for appropriation 33,048 22,841
Appropriation proposed:
Transfer to General Reserve 26,306 890
Dividend proposed on equity shares (Current
year @ Rs. 4.50/- and previous year
@ Rs. 4/- per share of Rs. 10/- each) 1,577 1,401
Tax on dividend 262 233
Balance carried to Balance Sheet 4,903 20,317
Dividend
Your Directors recommended a dividend @ Rs. 4.50/- per equity share of
Rs. 10/- each for the year ended 31st March 2011 as against a dividend
@ Rs. 4/- per equity share of Rs. 10/- each for the year ended 31st
March 2010, subject to the approval of the shareholders at the ensuing
Annual General Meeting.
Performance
Petrochem division
The PET plant at Haldia is operating at 100% capacity utilisation. The
production of PET resin increased from 168179 MT in 2009- 10 to 200981
MT in 2010-11. Production could have been higher if the plant did not
shut down due to a fire at its raw material store.
Tea division
As reported last year, the crop in Assam was affected due to incessant
rain and increased pest activity. Tea production decreased from 104.77
lac kgs to 103.03 lac kgs. However, the sale price increased by Rs.
11.17 per kg as compared to previous year. Revenue increased by 5.97%
i.e from Rs. 129.75 crores in 2009-10 to Rs.137.50 crores in 2010-11 in
spite of a decrease in volume by 2.86%.
Prospects
Petrochem division
Existing Operations: We expect to operate at full capacity utilisation
for the year 2011-12. Thermax HTM Heater (coal based) has been
successfully commissioned and operational from January 2011. This
together with the commissioning of the captive power plant has resulted
in power and fuel cost savings which is expected to continue in the
coming years.
New Project: With respect to the expansion of the PET plant capacity in
Haldia to 4,10,000 TPA from 2,00,000 TPA, your Company received
environmental clearance from State Level Environment Impact Assessment
Authority, Ministry of Environment and Forests, Government of West
Bengal and consent to establish from the West Bengal Pollution Control
Board. The civil construction at site started in November 2010. The
plant will be on stream by April 2012.
The project cost is appraised by SBI Capital Markets Limited to be Rs.
371 crs. State Bank of India and Allahabad Bank are funding the project
cost upto ECB of USD 51 million and the balance is being funded through
internal accruals.
Development of Barrier Resins: Your Company has entered into an
Exclusive Technology License Agreement with M&G Finanziaria S.R.L.,
Italy (M&G), one of the global leaders in PET bottle resin production,
to produce and market barrier resins in India and Bangladesh using
M&G’s state of the art BicoPET technology. This will enable your
Company to capture newer customers/products where this technology would
be used for packaging. For the current year 2011-12, the Company will
start seed marketing of this product. Necessary modifications in the
existing plant are being carried out to produce these new chips. The
plant is expected to start production of the aforesaid new chips by 1st
quarter of 2012-13 after stabilisation of new plant.
Tea division
The crop prospect appears to be good at present, after a long spell of
drought broken by well-distributed rainfall in April & May 2011. The
Company mitigated the ill effects of drought to a large extent in the
North Bank gardens through continuous irrigation.
Continued focus on manufacturing quality teas, yielded favourable
results in some gardens; all other gardens will be brought under
similar manufacturing process.
Your Company''s branded teas have received good response from consumers
which has helped in achieving substantial increase in sale quantity as
compared to previous year and a similar trend is expected to continue
in 2011-12. The tea market is expected to remain good in the coming
years especially for quality teas.
In the current financial year, the Company purchased four tea factories
in Assam and expects to produce 40 lac kgs tea in these factories in
2011-12. These factories are being renovated by installing new
machineries with increased output. The production can reach up to 60
lac kgs following the expansion in due course and depending on
availability of green leaf at competitive prices in the area. Further,
your Company has acquired 100% shares of Dowamara Tea Company Private
Limited(DTCPL) in May 2011. DTCPL owns a tea manufacturing factory
having capacity of 8 lac kgs per annum. The capacity is planned to be
expanded to 15 lac kgs per annum by adding further machineries.
Further, a new factory at Hatijan tea estate is being constructed,
having an annual capacity of 15 lac kgs and is expected to be
operational in August 2011.
The Company''s current tea production is 103 lac kgs & is expected to
reach 150 lac kgs in 2011-12 and 200 lac kgs in the next 2/3 years with
few more acquisitions.
IT-SEZ Division
The construction work of ‘Dhunseri IT Park’ at Bantala is progressing
satisfactorily. The first phase having a built up area of 3,70,000 sq.
ft, will be delayed as compared to our earlier target of January 2012,
due to unavoidable circumstances.
Barring unforeseen circumstances, the Company’s performance for the
coming year is expected to be satisfactory.
Conservation of energy, technology absorption, foreign exchange
earnings/outgo
The particulars as prescribed under Section 217(1)(e) of the Companies
Act, 1956 read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988 are attached as an
annexure to this report.
Disclosure under Section 217(2A) of the Companies Act, 1956
The particulars of employees whose salary exceed the limits as
prescribed under Section 217(2A) of the Companies Act, 1956 are given
as an annexure to this report.
Auditors
M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion
of this Annual General Meeting, and being eligible, offer themselves
for reappointment.
Audit Report
With regard to the observations of the auditors in paragraph 4 of
Auditors’ Report, the relevant notes to accounts are self explanatory.
Directors
Your Directors inform that the Central Government has accorded its
approval u/s 259 of the Companies Act, 1956 to increase the total
number of Directors of the Company from 12(Twelve) to 18 (Eighteen),
subject to the condition that the increase in the number of Directors
has to be effected within 19th September 2011, failing which the
approval shall lapse.
Dr. B. Sen, Mr. B. K. Biyani and Mr. B. Bajoria, Directors of your
Company will retire at this Annual General Meeting by rotation, and
being eligible, offer themselves for reappointment. The Board
recommends their reappointment as Directors of your Company.
Fixed deposits
The Company has not accepted any deposits from the public. However the
Companies (Acceptance of Deposits) Rules, 1975 were complied with in
view of the deposits being accepted from the employees of the Company.
All deposits which matured during the year were either repaid or
renewed, excepting the deposits from two depositors totaling to Rs.
14,000/- which were not claimed by the depositors, as at 31st March
2011, and has since been paid.
Subsidiary company
1) Egyptian Indian Polyester Company S.A.E (EIPET):
As informed in the last report, the EIPET’s project in Egypt is being
set up at Ain Sokhna. The 25th January Revolution of 2011 in Egypt,
delayed the signing of the loan agreements. This has resulted in delay
in the project start up date. The IFC loan agreement was signed in
May’11 and the loan agreements with the Egyptian lenders is expected to
be signed shortly. Once the agreements are signed with the Egyptian
lenders, the construction will begin at the project site and the
same is expected to be completed by June 2013.
All major clearances have been received. As at 31st March 2011, an
amount of Rs. 7,951 Lacs has been paid as equity contribution to M/s
Egyptian Indian Polyester Company, S.A.E.
2) Dowamara Tea Company Private Ltd. (DTCPL):
As informed earlier, your Company has acquired 100% shares of Dowamara
Tea Company Private Limited (DTCPL) in May 2011. Consequently, DTCPL
has become a wholly-owned subsidiary of the Company.
Subsidiary Accounts
Ministry of Corporate Affairs has vide its General Circular No: 2 /2011
dated: 8th February 2011, granted general exemption to the companies
under Section 212 of the Companies Act, 1956, from attaching the
reports and accounts of the subsidiary company, subject to fulfillment
of certain conditions, which amongst others include the consent of the
Board of Directors for not attaching the annual accounts of the
subsidiary. Accordingly, the Board of Directors of the Company, at its
meeting held on 24th May 2011, has consented for not attaching the
annual accounts of the subsidiary, M/s Egyptian Indian Polyester
Company S.A.E., with the accounts of the Company.
Accordingly, the Audited Statements of Accounts, the reports of Board
of Directors and Auditors of the subsidiary company have not been
annexed. The annual accounts of the subsidiary company and the related
detailed information shall be made available to the shareholders of the
Company and subsidiary company seeking such information at any point of
time. Shareholders who wish to have a hard copy of the full reports
and accounts of the subsidiary will be provided the same on receipt of
written request from them. These documents will also be available for
inspection by any shareholder at the registered office of the Company
and that of the subsidiary on any working day during business hours,
except on Saturdays.
As required under the listing agreement with the stock exchanges, the
audited consolidated financial statements of your Company are also
attached and form a part of the Company’s annual report.
Cost Audit
Your Company is under the purview of Cost Audit as per Section 233B of
the Companies Act, 1956 in respect of manufacture of Tea. M/s Mani &
Co., Cost Accountants, have been appointed as Cost Auditors of the
Company.
Under the provisions of Section 233B of the Companies Act, 1956 the
Central Government did not prescribe any cost audit in respect of
manufacture of Poly Ethylene Terephthalate (PET) resin.
Directors’ responsibility statement pursuant to Section 217 (2AA) of
the Companies Act, 1956
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors’ Responsibility Statement, it is
hereby confirmed:
(i) That in the preparation of the annual accounts, the applicable
accounting standards were followed, except as specified in Para 4 of
Auditors’ Report. Proper explanation relating to material departures,
have been clarified in note no. 8 in the notes to accounts (Schedule
18) which is self explanatory;
(ii) That the Directors selected such accounting policies and applied
them consistently except as specified in notes to accounts (Schedule
18) and made judgments 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 and loss of
the Company for that period;
(iii)That the Directors took proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the Company’s assets and for
preventing and detecting fraud and other irregularities;
(iv)That the Directors prepared the annual accounts on an ‘on- going’
concern basis.
Corporate Governance and Management Discussion and Analysis reports
Corporate Governance and Management Discussion and Analysis Reports are
set out as separate annexure to this report.
Corporate Social Responsibility
Your Company is conscious of its social responsibilities and the
environment in which it operates. It has continued with its welfare
activities for development in the fields of education, culture and
other welfare measures and to improve the general standard of living.
The emphasis is on improvement of health, development of education,
culture and sports.
Your Directors wish to inform that Dhanuka Dhunseri Foundation Trust
acts as the vehicle through which the CSR activities of the Company are
carried out across the various parts of the country.
The Trust was formed in 1972 for various charitable objectives. It is
involved in various philanthropic activities like building schools,
colleges and girls hostel, providing free medicines through
dispensaries and grants to charitable institutes.
Certifications
Petrochem Division
The Petrochem division of the Company holds quality certifications from
renowned national and international agencies like the USFDA, EC,
Japanese and Canadian Food and Health Bodies and ITRC. The Petrochem
Division is ISO 9001:2008, ISO 14001: 2004 and BS OHSAS 18001: 2007
certified.
Further, the implementation of SA 8000 certification in the Petrochem
division of the Company is in process and the same is expected to be
received by end of July 2011.
Tea Division
The Santi and Dilli tea estates of the Tea division of the Company are
ISO 22000:2005 certified. The same will also be implemented in the
remaining gardens having existing factories latest by September 2011.
Awards
Your Directors have the pleasure to inform you that the following
awards have been received:
Petrochem Division
Award for Best EOU: The Company’s Petrochem division has received the
award for the best EOU (Other than MSME: Plastic Products) for
outstanding export performance for the year 2008- 09 from Export
Promotion Council for EOUs & SEZs, Ministry of Commerce & Industry,
Government of India.
Tea Division
Hatijan Tea Estate has surpassed the earlier record and achieved a
yield of 3,806 kgs per hect, the highest yield in Assam and is eligible
for the Tea Board award for the same.
Human Resources Management & Environment, Health and Safety
Health and safety of all employees has always been a matter of major
concern and importance. Your Company continuously strives to ensure
that our operations are safe. The Company recognises the importance of
managing its environmental impact. These are matters of priority and
therefore caring for the environment and responsible disposal of wastes
are some of the ongoing initiatives undertaken by the Company.
There has been an unfortunate incidence of fire due to electrical short
circuit in the raw material godown, at Haldia plant on 14th March 2011.
However, there has been no loss of life in this incident. Raw material
and other assets aggregating to Rs. 64.63 crs was lost in the fire. The
stocks and other assets are adequately insured and the comprehensive
insurance policies are in full force. An appropriate claim has been
lodged with M/s United India nsurance Company Ltd, for reimbursement
which is under its consideration. The Directors are reasonably certain
about the settlement of the claim. Meanwhile, the Company has also
taken appropriate steps to avoid such incidents in future.
Share Capital
During the year under review, your Company allotted 2,33,13,859 equity
shares of Rs. 10/- each fully paid up to the members of erstwhile South
Asian Petrochem Ltd (SAPL), pursuant to the sanction of the scheme of
arrangement, comprising interalia amalgamation of South Asian Petrochem
Ltd with the Company. Consequently, the share capital of the Company
has increased, to comprise of 3,50,24,754 equity shares of Rs. 10/-
each.
Utilisation of Proceeds from Preferential Issue
Erstwhile SAPL had made an allotment of equity shares, warrants and
FCCBs in 2007-08. Consequently, during the year 2007- 08, erstwhile
SAPL raised Rs. 7,416.23 Lacs by preferential allotment of equity
shares and equity share warrants and Rs. 7,864 Lacs from the issue of
the FCCBs.
The money raised out of such issue was to be utilised for:
i) Equity participation in overseas subsidiaries
ii) Retirement of high cost borrowings
iii) Other business purposes, including working capital requirements
The amount raised by issue of equity shares and equity share warrants
have been fully utilised towards equity participation/other expenses in
the overseas project in Egypt.
The net outstanding of FCCB proceeds (after meeting issue expenses) as
reduced by redemption in 2009-10, is Rs. 2,517.96 Lacs which remains
invested as fixed deposit with banks. The said amount will be utilised
towards equity participation in the overseas project in Egypt.
Crisil Equities Grading
Your Directors inform that CRISIL Equities vide its press release dated
8th November 2010 has assigned a CRISIL IER fundamental grade of 3/5
(pronounced three on five) to the Company. The grade indicated that the
Company''s fundamentals were ‘good’, relative to other listed equity
securities in India. CRISIL Equities has assigned a valuation grade of
5/5, indicating that the stock has a strong upside as compared to the
market price of Rs. 155/- (as on 21st February, 2011). CRISIL’s
one-year fair value of the Company’s stock was Rs. 266/-.
Employees
Your Company believes that ‘people’ are the biggest strength for the
success of any organisation. Your Directors wish to express their
appreciation to all the employees for their valuable contributions,
dedication and commitment, as well as their support in attaining the
objectives of the Company.
Acknowledgement
The Directors wish to place on record their sincere appreciation for
the whole-hearted support received from Allahabad Bank, Bank of Baroda,
Bank of India, Canara Bank, Deutsche Bank, Development Credit Bank,
Export-Import Bank of India, ICICI Bank Limited, IDBI Bank Limited,
International Finance Corporation, Washington, Punjab National Bank,
State Bank of ndia, State Bank of Travancore, Syndicate Bank, United
Bank of ndia, West Bengal Industrial Development Corporation Ltd, Tea
Board, Haldia Development Authority, Office of the District Magistrate
of East Midnapore, West Bengal Pollution Control Board, West Bengal
State Electricity Board, Ministry of Environment & Forest, Government
of West Bengal, Government of Assam, Government of Egypt, Governorate
of Suez, General Authority for Investment and Free Zones (GAFI),
Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the
Petroleum and Process Industries(ENPPI), Ahli United Bank (Egypt)
S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, the
customers, suppliers, shareholders and all others associated with the
Company.
For and on behalf of the Board of Directors
C. K. Dhanuka
Executive Chairman
Place: Kolkata
Date: 24th May 2011
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