CHAIRMAN'S STATEMENT
KREBS BIOCHEMICALS LIMITED
Annual Report 1998-99
This seventh Annual Report of the company carries the accounts for the year
1998-99 along with the reports of Directors and Auditors. It may be noted
that the turnover during this year was Rs.36.84 crores which is just 1.84%
more than in the year 1997-98. The net profit however, registered a fall by
10.73% over the preceding year.
You may please recall my statement in the previous Annual General Meeting
wherein I have alerted the company that the steady growth recorded so far
cannot be taken for granted and that continuous efforts are required to
maintain the pace. This year unfortunately, there has been a set back in
the exports of the company's products compared to last year. This is
explained as due to abnormal fall in prices in the international market,
aggravated by the financial crisis in South East Asian economies. An
earnest effort has however, been made to sustain our price levels by
looking for alternative sources. This, I believe, has taken some time
resulting in accumulation of stocks.
The unit at Kothapalli village in Visakhapatnam dist. has been completed
successfully and the commercial production of Erythromycin is declared form
22nd Jan, 1999, soon after obtaining clearance from Environmental
Authorities. Here again, I must say, that we were lucky to envisage the
need to establish a multipurpose equipment for fermentation and production
of different lines of value added products. Thus even though the company
had teething problems regarding the stabilization of the process, the time
was not wasted. Having achieved successful production of Erythromycin
thiocyanate, considering that some more time is required to complete
stablization of the process, necessary decision was taken to try
simultaneously alternative lines of production of high value items taking
advantage of the flexibility and versatility of the fermentation equipment
installed. Fortunately this intitiative is proved successful. But all that
effort falls into the current year leaving the year 1998-99 with the burden
of expenditure incurred and depreciation charged.
Having said all that, I am glad to report that the overall effect on
profitability is not significant. In view of the comfortable position of
profits for the year and reserves, directors desired to maintain the same
level of dividend as declared last year i.e at Rs.5/- per share of Rs.10/-
in the best interests of the shareholders.
Your company is quite conscious of its social responsibilities and
interacts continuously with the local inhabitants by extending help and
assistance in matters of hygiene and education. Plans are under way to
dovetail these efforts into some of the relevant programs of the
Government. In consultation with the Pollution Control Board a long term
plan is devised to reduce the pollution effect and this plan is now under
implementation.
The management and employees continue to be dedicated and committed to
quality and professional competence. The product also has a good standing
in the market. I believe strongly, that the company has a bright future
contributing its share to the national goal of "Health for All".