ANNUAL REPORT 2005-2006
Your Directors have pleasure in presenting the 65th Annual Report on the
business and operations of the Company together with Audited Accounts of
your Company for the financial year ended 31st March, 2006.
The summarized financial results of the Company for the year under report
are as under:
(Rs. in lacs)
Sales & other income 48,361.60 48,603.14
Operating Profit (EBIDTA) 2,524.22 1,620.53
Interest 575.42 599.82
- Profit on sale of land 393.94 238.94
- Income from sale of Paper Brands/Trade Marks 603.52 -
Gross Profit (PBD) 2,946.26 1,259.65
Depreciation 623.66 546.59
Profit before tax (PBT) 2,322.60 713.06
- Current Tax 182.10 73.00
- Deferred Tax 679.32 152.07
Net. Profit for the year after tax (PAT) 1,461.18 487.99
Prior period adjustments 0.41 -
Balance brought forward from previous year 1,258.13 1,204.52
Profit available for appropriation 2,719.72 1,692.51
- Proposed Dividend on
(a) Equity Shares 192.80 128.53
(b) 15% Preference Shares (Interim Dividend) 3.01 -
(c) Preference Shares @15% including - 77.02
accumulated dividend for past years
(d) Corporate Dividend Tax 27.46 28.83
- General Reserve 200.00 200.00
- Preference Share Capital Redemption Reserve 40.50 -
Balance carried forward 2,255.95 1,258.13
Your Directors are pleased to recommend dividend @15% on the Equity Shares
of Rs. 10/- each for the year ended 31st March, 2006. An interim dividend
@15% for the period from 1st April, 2005 to 28th September, 2005 (i.e. up
to the date of redemption) was paid at the time of redemption of the
Preference Shares of Rs.10/- each on 28th September, 2005.
Your Company has made tremendous progress in its operations during the year
ended 31st March, 2006 and has recorded impressive growth in the
profitability. The sales & other income during the year under review was
Rs.48,361.60 lacs as against Rs.48,603.14 lacs during the previous year.
Record operating profit (EBIDTA) of Rs.2,524.22 lacs excluding the profit
from land sale and sale of paper brands/trade marks, has been achieved as
against Rs. 1,620.53 lacs in the previous year reflecting an increase of
The growth during the year was primarily driven by better margins in the
paper business and better realization from land sale in the Gagan Enclave
township developed by the Company:
* The improvement in performance of the paper business was despite various
odds faced due to higher fuel & input costs, increased distribution costs
due to highly volatile petro prices, etc. Your Company plans to manufacture
speciality and other papers having higher growth potential which coupled
with the modernization of pulping and paper making facilities will enable
the Company to further improve the operating performance & input use
efficiencies and post robust growth in the coming years;
* As regards edible oil operations, though this segment recorded lower
margins during the year mainly due to dumping of cheap Sri Lankan imported
vanaspati in the Indian market, the company expects good growth in other
outsourced FMCG products, namely, rice, salt etc. on the backdrop of strong
revival of FMCG markets and increased consumption in India. The fresh
policy measures at the Government level will mitigate to a large extent the
impact of Sri Lankan Vanaspati in the current year in view of quota
restrictions & import through canalizing agency;
* The dairy segment is expected to post good growth on the back of strong
growth planned by McDonalds' for its restaurants and the demand growth in
other third party processing arrangements with Mother Dairy, PCDF, etc:
* The Company's initiatives in the fast growing real estate sector have
been rewarding as the 'Gagan Enclave' township developed by it at Ghaziabad
is perceived as one of the best colonies in the area. The outlook for real
estate business remains strong because of healthy demand growth of housing.
The Company is taking further initiatives to involve fully into this
business, which will be a separate business segment from the financial year
The detailed performance of various businesses of the Company for the year
ended 31st March, 2006 has been stated in the Management Discussion &
Analysis Report which appears as a separate statement in the Annual Report.
Members are aware that the several businesses carried on by your Company
have different business dynamics and growth drivers. The nature of risk and
competition involved in each of these businesses is distinct from others.
Each of the businesses has tremendous growth and profitability potential
and they require focussed leadership and management attention. As a part of
the long term business planning and growth strategy, it is proposed to
restructure/reorganize the businesses by way of segregation/consolidation
into separate legal entities having distinct management focus. A composite
Scheme of Arrangement between Amrit Banaspati Company Ltd. (ABCL), ABC
Paper Ltd. (ABC Paper) and Amrit Enterprises Ltd. (AEL) and their
respective shareholders has been proposed pursuant to the provisions of
Section 391/394 of the Companies Act, 1956 which provides for:
- Demerger of paper business of ABCL into ABC Paper
- Demerger of edible oils business of ABCL into AEL and reorganization of
the share capital of AEL; and
- Reorganisation of the share capital of ABCL in the light of the aforesaid
de-merger. The remaining businesses namely dairy and real estate shall
continue to remain with the Company.
The detailed terms of the proposed restructuring/ reorganization including
the swap ratios and vesting of the assets/liabilities of the respective
businesses, are set out in the Scheme of Arrangement which would be issued
to the shareholders and others in accordance with the relevant provisions
of the Companies Act, 1956.
The Lignin Precipitation System (LPS) Project of pollution control put-up
in a joint-venture company, namely, M/s. Greencone Environs Pvt.Ltd., made
significant progress during the year. The LPS project has been implemented
and the commercial production commenced. Both the partners, i.e. your
Company and Granit of Switzerland have brought in their equity
contribution. Greencone has been sanctioned financial assistance in the
form of term loan and working capital facilities by State Bank of India.
The project is getting stabilized and is expected to achieve the optimum
scale of operations shortly.
(a) Preference Shares:
4,05,000 - 15% Redeemable Cumulative Preference Shares of Rs.10/- each have
beer redeemed on the due date of redemption on 28th September, 2005 and
redemption proceeds together with the dividend upto the date of redemption
have been paid to all the preference shareholders.
(b) Term Loan:
Punjab National Bank has sanctioned term loan of Rs.1,175 lacs for various
capital expenditure schemes being implemented at Company's Paper Unit and
(c) Fixed Deposits:
As on 31st March, 2006, your Company had Fixed Deposits of Rs. 511.51 lacs.
There were no outstanding deposits as on 31st March, 2006. There was no
failure in making repayment of the fixed deposits on maturity and interest
due thereon in terms of the conditions of your Company's Scheme.
ANNUAL GENERAL MEETING
The Registrar of Companies U.P. & Uttranchal, granted extension of time
upto 27th. December, 2006 for holding the 65th Annual General Meeting of
Messrs ABC Paper Limited has became a wholly-owned subsidiary of the
Company during the financial year under review. The statement pursuant to
Section 212 of the Companies Act, 1956 and the Audited Accounts of M/s. ABC
Paper Ltd. are annexed to this Report. As a part of the Restructuring
Scheme, the Company has transferred/assigned the paper brands/trade marks
to the Subsidiary for a consideration of Rs.603.52 lacs.
CONSOLIDATED FINANCIAL STATEMENTS
As required pursuant to the Accounting Standard-91, the Consolidated
Financial statements are annexed and form part of the Annual Report and
The Central Government has directed cost audit to be carried out every year
in respect of Vanaspati and Paper. The cost audit is in progress and the
reports will be submitted to the Central Government.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
The information relating to conservation of energy, technology absorption
and foreign exchange earnings & outgo as required under Section 217(1)(e)
of the Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 is given in Annexure
which from part of this Report.
Cordial relations were maintained throughout the year in all the Units of
the Company. The Directors express their appreciation for the contribution
made by the employees to the operations of the Company during the year.
The particulars of employees as per Section 217(2A) of the Companies Act,
1956 are set out in the Annexure which forms part of this Report. However,
as per the provisions of Section 219(1)(b)(iv) of the said Act, the report
and accounts are being sent all the members of the Company excluding the
aforesaid information. This statement shall be made available for
inspection by any member during working hours for a period of 21 days
before the date of the Annual General Meeting. Any member interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
The Board of Directors was strengthened with the induction of Shri Vikram
Bajaj and Shri Pavan Khaitan, as Additional Directors on 3rd March, 2006.
Both Shri Vikram Bajaj and Shri Pavan Khaitan retire at the ensuing general
meeting of the Company and being eligible offer themselves for re-
appointment. Shri Pavan Khaitan has also been appointed as Managing
Director of the Company on 3rd March, 2006.
In accordance with the provisions of the Companies Act, 1956 and Articles
of Association of the Company, Shri K.R. Ramamoorthy, Shri L.M. Suri and
Shri Praveen Kumar retire by rotation and are eligible for re-appointment.
M/s V. Sahai & Co., Chartered Accountants, Statutory Auditors, retire at
the forthcoming Annual General Meeting and being eligible, offer themselves
DIRECTORS' RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, your
(i) That in the preparation of the annual accounts, the applicable
accounting standards has been followed;
(ii) That the accounting policies selected and applied are consistent and
the judgements and estimates made 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
(iii) That 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.
(iv) That the annual accounts have been prepared on a going concern basis.
A Report on Corporate Governance along with a Certificate from the Auditors
of the Company regarding compliance of the conditions of Corporate
Governance pursuant to Clause 49 of the listing agreement with stock
exchanges is annexed and forms part of the Annual Report.
Your Directors convey their sincere thanks to the various agencies of the
Central Government, State Governments, Banks and other concerned agencies
for all the help and cooperation extended to the Company. The Directors
also deeply acknowledge the trust and confidence the shareholders and
investors have placed in the Company. Your Directors also record their
appreciation for the dedicated services rendered by the workers, staff and
officers of the Company.
For and on behalf of the Board
New Delhi N.K. BAJAJ
Sept. 27, 2006 Chairman & Managing Director
STATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING
PART OF DIRECTORS' REPORT
I. CONSERVATION OF ENERGY
(a) Energy conservation has been an important thrust area in all the Units
of the Company and is continuously monitored. Various on-going measures for
conservation of energy include (i) use of energy efficient lighting and
better use of natural lighting (ii) reduction of energy loss, (iii)
replacement of outdated energy intensive equipment and (iv) revamping of
steam lines to reduce leakages.
(b) The Company it continuing the system of regular energy audit. Energy
conservation is an ongoing process and new areas are continuously
identified and suitable investments are made, wherever necessary.
(c) The adoption of energy conservation measures has helped the Company in
its drive to improve efficiency, reduction in cost and reduced machine
POWER & FUEL CONSUMPTION
Edible Oils Paper Dairy Products
2005-06 2004-05 2005-06 2004-05 2005-06 2004-05
Unit (lacs KWH) 68.17 69.99 84.86 182.03 - -
Total amount (Rs.lacs) 282.33 291.47 378.89 719.81 - -
Rate/Unit (Rs./KWH) 4.14 4.16 4.46 3.95 - -
(b) Own generation
i) Through Diesel
Unit (lacs KWH) 0.20 0.85 - 0.10 16.17 15.36
Unit/Ltr. of Diesel Oil 2.91 3.19 - 3.60 3.21 3.29
Cost/Unit (Rs./KWH) 8.56 6.18 - 5.96 8.40 6.52
ii) Through Steam Turbine/
Generator - - - - - -
Unit (lacs KWH) - - 340.91 244.52 - -
Cost/Unit (Rs./KWH) - - 3.24 3.19 - -
2. COAL (Specify quality
and where used)
Quantity (Tonnes) - - - - - -
Total cost (Rs.lacs) - - - - - -
Average rate (Rs.) - - - - - -
3. FURNACE OIL
Total quantity - - - - 343.55 314.33
Total cost - - - - 56.90 43.92
Average rate/Ltr. - - - - 16.56 13.97
(a) Rice Husk (for Boiler)
Quantity (Tonnes) 17,493 14,917 44,539 32.657 - -
Total cost (Rs.lacs) 299.42 264.32 845.20 541.07 - -
Rate/Unit (Rs.MT) 1,712 1,772 1,898 1.657 - -
(b) HSD (for Boiler)
Quantity (K.Ltr.) - 84 - - - -
Total amount (Rs.lacs) - 16.61 - - - -
Rate/Unit (Rs./K.Ltr.) - 19,730 - - - -
Production (Tonnes) 57,122 57,491 42,583 40.625 5,784 5,613
Electricity/Tonnes (KWH) 119 123 1,000 1.050 279 273
Others - - - - - -
II. TECHNOLOGY ABSORPTION
Research and Development:
(a) The Company has developed its own technology base in all its
operations. The R & D centres have been set up in all the manufacturing
units which carry out research work in several areas including material and
process developments towards efficiency improvements, quality improvements,
capacity optimization, waste reduction etc. Apart from process
improvements, the research and development also aims at finding equivalent
substitutes of various inputs and packaging materials to have cost savings
without compromising quality.
The Paper Unit has entered into a joint-venture arrangement with Messrs
Granit Rocherche Development S.A. of Switzerland for implementation of
Lignin Precipitation System project to reduce the pollution load, through a
joint-venture company, Messrs Greencone Environs Pvt. Ltd. Test marketing
of the lignin recovered in the process is going on. The lignin can be used
in many applications in the chemical industry.
(b) The Company has derived benefits of product diversification, cost
reduction and better quality as a result of the above efforts.
(c) The research and development is an on-going exercise and suitable
efforts will continue to be made in future.
(d) The expenditure on R & D has been as follows:
(Rs. in lacs)
(i) Capital - -
(ii) Recurring 3.79 5.12
(iii) Total 3.79 5.12
(iv) Total R&D expenditure as a
percentage of turnover 0.01% 0.01%
Technology absorption, adaptation and innovation:
The Company has not directly imported any technology for its products.
However, for the Lignin Precipitation System project put-up in a joint-
venture company, namely, Greencone Environs Pvt.Ltd., Sailakhurd, the
technology has been developed by the JV partner, Messrs. Granit Rocherche
Development S.A. of Switzerland.
III. FOREIGN EXCHANGE EARNINGS & OUTGO
Particulars with regard to foreign exchange earnings & outgo appear on page
56 of the Annual Report and Accounts.
For and on behalf of the Board
New Delhi N.K. BAJAJ
September 27, 2006 Chairman & Managing Director