Your Directors are pleased to present the 34th Annual Report of the Company togetherwith its Audited Accounts for the year ended 31st March, 2010.
| || ||(Rs. in Lacs) |
| ||This year ||Previous year |
| ||200 09-2010 ||2008-2009 |
|Gross Income ||64,683 ||55,895 |
|Net Income ||63,097 ||54,894 |
|Profit before extra-ordinary items, depreciation & tax ||6,799 ||4,822 |
|Profit before depreciation & tax ||7,407 ||4,069 |
|Less: Depreciation ||3,073 ||2,939 |
|Profit before tax ||4,334 ||1,129 |
|Tax on Income ||1,246 ||170 |
|(a) Current Tax ||736 ||128 |
|(b) Deferred Tax ||530 ||140 |
|(c) Fringe Benefit Tax ||- ||30 |
| ||1,266 ||298 |
|Less: MAT Credit Entitlement ||20 ||128 |
|Profit after Tax ||3,088 ||959 |
|Balance brought forward ||536 ||608 |
|Profit available for appropriation ||3,623 ||1,567 |
|Appropriations: || || |
|Interim Dividend and Tax thereon (paid during the year) ||230 ||- |
|Proposed Final Dividend ||300 ||241 |
|Tax on Dividend ||50 ||41 |
|Transfer to General Reserve ||2,000 ||750 |
|Balance Carried to Balance Sheet ||1,044 ||536 |
|Earning Per Share (Rs): Basic ||23.56 ||7.29 |
|Diluted ||20.92 ||7.29 |
During the year 2009-10, your Company's performance realed new heights, both in termsof gross income and profitability. The net income from operations during the year atRs.631 crores went up by 15% over Rs.549 crores achieved in 2008-09. The production ofyarn increased by 11%, fabrics by 15% and garments by 45%. The Company also startedproduction of technical fabrics during the year. There is good scope for further increasein production all along the value chain.
Profit before depreciation and tax for the year 2009-10 at Rs.7,407 lacs recorded inimpressive growth of 82% over Rs.4,069 lacs of 2008-09. The profit before tax and netprofit for the year worked out to Rs.4,334 lacs and Rs.3,088 lacs, i.e. up by 284% and222% respectively over the previous year. The Company has paid Rs.736 lacs as income taxbesides providing Rs.530 lacs as deferred tax liability for the year under report.
The basic and diluted Earning Per Share (EPS) for the year 2009-10 works out to an alltime high of Rs.23.56 and Rs.20.92 respectively.
During the year 2009-10, the export turnover at Rs.36,674 lacs as against Rs.32,759lacs during 2008-09, recorded an increase of 12% mainly due to increase of 15% in yarnexports. The Company has increased production and export of readymade garments and as suchthe export growth in garments was more than 48% over the year 2008-09.
During the year under report, your Company added few more important customers of worldrepute. The Company's marketing as well as, design and development teams participated inthe international trade fairs to acquaint themselves with the latest market trends andacquire better understanding of the customers requirements. The Company has developed adesign studio for fabrics and garments to boost the export sales by introducing newdesigns. It is continuously making efforts to attract the new customers domestically andinternationally.
The Company has already paid interim dividend of Rs.1.50 per equity share in January,2010. Your Directors are now pleased to recommend final dividend of Rs.2.00 per equityshare. Thus, the total dividend is Rs.3.50 per equity share (previous year- Rs.1.80 perequity share) of Rs.10/- each of the Company. The dividend payout for the year wouldaggregate Rs.490.85 lacs besides dividend tax of Rs.82.29 lacs. The Company has also paid3% dividend on preference shares.
INCREASE IN SHARE CAPITAL
During the year 2009-10, the Company issued 16,50,000 warrants on preferential basis topersons other than promoters @ Rs.41 per warrant based on the prevailing rules andregulations.
The Board of Directors, in its meeting held on 27th April, 2010 has converted thesewarrants into an equal number of equity shares, as per the terms of issue of thesewarrants. Accordingly, the equity share capital of the Company has increased to1,47,56,361 equity shares of Rs.10/- each.
EXPANSION, DIVERSIFICATION AND MODERNIZATION
During the year under review, the Company has added fixed assets of Rs.4,585 lacsbesides-the-capital work-in-progress of Rs.828 lacs and advances to capital goodssuppliers of Rs.1,622 lacs as at 31.03.10. These expenses were incurred on expansion,diversification and modernization of all the areas of its operations viz. spinning,weaving, finishing and readymade garments.
The Company has made investment of Rs.2,280 lacs in spinning for modernization andreplacement of spindles, Rs.447 lacs on fabric weaving for replacing 20 looms, and Rs.951lacs on fabric processing facility adding various value adding machines suitable fortechnical fabrics and increase in the processing capacity by about one million meter amonth besides Rs.907 lacs in readymade garments division for 4 additional lines fortrousers and 1 line for production of Jackets at Daman and Surat.
The total production capacity of the Company as at 31s' March, 2010 for yarn productionis 133588 ring spindles, including 14400 spindles for worsted yarn spinning, 576 air jetspindles, 190 shuttleless looms, 12 air jet jacquard looms, 5 stenters with processingcapacity of 4 million meters a month and 2.50 lac pieces of garments per month.
The Company has arranged the requisite funds for the expansion, diversification andmodernization schemes through term loans from banks and financial institutions as well asploughing back of internal accruals of the Company. The term loans availed during the yearaggregate Rs.3,541 lacs out of which Rs.2,964 lacs were under TUFS.
The Company's ongoing expansion plan i.e. 2nd unit of captive Thermal Power Plant of15/18 MW capacity and increase in production capacities in all the areas of its operationsis under implementation. Further capital outlay expected during 2010-11 is Rs.90 crores.The means of financing the same have been fully tied up.
The Joint Venture Company Carreman Fabrics India Ltd., has a fabric weaving plant of 60Rapier Looms. Your Company has 50% stake in JV's equity share capital. The JV Companymanufactures fabric on job work basis for your Company, the total production during theyear 2009-10 being 65.65 lac meters as against 62.35 lac meters in the year 2008-09. TheJV Company earned net profit of Rs.46.87 lac during 2009-10 as against Rs.95.22 lac in theprevious year; the shortfall in profitability is attributed to increasing powermaintenance and employees cost.
The 1st unit of captive Thermal Power Plant of 15/18 MW capacity is workingsatisfactorily. The Company's power requirement has increased on account of expansion ofcapacity of various division at Banswara over the years. The Company is in the process ofinstallation of 2nd unit of coal based Thermal Power Plant of the same capacity, which isexpected to become operational in the last quarter of the current financial year, 2010-11.The Company has also signed a fuel supply agreement for purchase of coal from SouthEastern Coalfields Ltd. The availability of Indian Coal at Government supply rates willreduce the cost of power generation. The Government coal supply is expected to commencefrom June/ July, 2010.
During the year 2009-10, the Company availed term loans aggregating Rs.3,541 lacs fromBanks and Financial Institutions. It also received increase in need based working capitalfrom all the bankers of the Company.
CONTRIBUTION TO EXCHEQUER
During the year, your Company contributed Rs.2,478 lacs to the Government Exchequer byway of Excise Duty, Service Tax, Value Added Tax (VAT), Income Tax, Dividend DistributionTax and other payments.
The Company did not have any subsidiary as on 31st March, 2010. However, it has 50%stake in equity capital of Carreman Fabrics India Ltd., a Joint Venture Company betweenBanswara Syntex Ltd. and Carreman, France.
CORPORATE GOVERNANCE / MANAGEMENT DISCUSSION & ANALYSIS REPORT
As per Clause 49 of the Listing Agreements with the Stock Exchanges, the Company hasadopted a Code of Conduct applicable to the members of the Board and senior management.The Company fully complies with the Corporate Governance practices as enunciated in theListing Agreements; Corporate Governance Report and Management Discussion & AnalysisReport are annexed and marked Annexure-I, which form part of this report.
The Company has not issued any advertisement inviting fixed deposits from the public.However, it continues to accept deposits from public. As on 31st March, 2010, the Companyhad such deposits aggregating Rs.743.17 lacs. Deposits which matured during the year wereeither renewed or repaid. All the interest and principal dues are being paid regularly.The Company has duly complied with the provisions of the Companies (Acceptance ofDeposits) Rules, 1975.
Appointment of Shri Shaleen Toshniwal as a Whole-time Director is expiring on 30thSeptember, 2010. The Board of Directors, in its meeting held on 27th April, 2010 hasre-appointed Shri Shaleen Toshniwal as Whole-time Director for further period of 3 yearsfrom 1st October, 2010 to 30th September, 2013. Necessary resolution for appointment ofShri Shaleen Toshniwal shall be placed before the shareholders at the forthcoming AnnualGeneral Meeting for their approval.
In accordance with the provisions of Articles of Association of the Company, Shri KamalKishore Kacholia, Shri Vijay Mehta and Shri P. Kumar, Directors, are retiring by rotationand, being eligible, offer themselves for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, with respect toDirectors' Responsibility Statement, it is hereby confirmed that:
I. In the preparation of the annual accounts for the year ended 31st March, 2010 theapplicable Accounting Standards have been followed and the Notes to the Accounts areself-explanatory.
II. The Directors have selected such Accounting Policies and applied them consistentlyand made judgements and estimates, that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March, 2010 and of theprofit of the Company for the year ended on that date.
III. The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956,for safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities.
IV. The Directors have prepared the annual accounts of the Company for the year ended31st March, 2010 on a going concern basis.
In accordance with the requirement of Clause 49 of the Listing Agreements with StockExchanges, the Board has constituted the Audit Committee which presently comprises threeindependent Directors viz. Shri P. Kumar, (Chairman), Shri Kamal Kishore Kacholia and ShriS.B. Agarwal as members.
The composition, role, functions and powers of the Audit Committee are in accordancewith the applicable laws and the Listing Agreements with the Stock Exchanges.
M/s. Kalani & Company, Chartered Accountants, Jaipur, hold office as the Auditorsof the Company until the conclusion of the ensuing Annual General Meeting and are eligiblefor re-appointment. They have furnished a Certificate to the effect that there-appointment, if made, would be within the prescribed limits under Section 224(1-B) ofthe Companies Act, 1956.
As regards Auditors' observations, the relevant Notes on account are self-explanatoryand, therefore, do not call for any further comments, except in the matter of non paymentof Service Tax and Cess thereon of Rs. 19.10 lacs and disputed liabilities of Rs.11.75lacs towards the excise duty and Rs.403.61 lacs towards entry tax. While the matterpertaining to Excise duty refunds taken by the Company are under appeal with JointSecretary, Govt. of India, Service Tax demand with CESTAT, New Delhi and Entry Tax ispending with Hon'ble High Court, Rajasthan.
These liabilities will be met if necessary on final decision of the respectiveAppellate Authorities.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pursuant to the provisions of Section 217 (1) (e) of the Companies Act,1956, in relation to conservation of energy, technology absorption, foreign exchangeearnings and outgo, in accordance with the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988 is annexed and marked Annexure 'II', which formspart of this report.
DEMATERIALIZATION OF SHARES
In pursuance of SEBI / Stock Exchange directions, your Company offered demat option toits esteemed shareholders so as to enable them to trade the shares in the demat form. Inresponse, 95.60% shares have been converted into demat form up to 31st March, 2010. Thestock code number in NSDL and CDSL for equity shares of the Company is ISIN - INE 629D01012.
PARTICULARS OF EMPLOYEES
During the year under report, the relations between the Company's management and itsstaff/workers continued to remain cordial. The Directors place on record their deepappreciation of the devoted services of the workers, staff and the executives.
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, as amended, the particulars ofemployees of the Company who were in receipt of remuneration of Rs.2,00,000/- per month ormore are annexed and marked Annexure 'III,' which forms part of this report.
Your Directors wish to express their grateful appreciation for the co-operation andassistance extended by the financial institutions, banks, various Central & StateGovernment Departments, Customers and Suppliers during the year under review. TheDirectors thankfully acknowledge the continuous support and guidance of all theshareholders and, more importantly, for the confidence reposed in the Company'smanagement.
| ||For and on behalf of the Board |
|Place: Mumbai ||R.L. TOSHNIWAL |
|Date: 26th May, 2010 ||Chairman & Managing Director |
ANNEXURE-II TO DIRECTORS' REPORT
Additional information as required under the Companies (Disclosure of particulars inthe report of Board of Directors) Rule, 1988.
A. CONSERVATION OF ENERGY:
a) Energy Conservation measures taken.
1) Placing new type of reflectors around 500 nos. on tube lights, found gain in luxlevel by 30%, saving power and improving lux on machines.
2) Replacing around 350 GFL lamps by of CFL lamps in all residential area saving around10.05 KW per hour.
By continuous monitoring and attending, high power consuming machines, 1% power savingachieved in Carding/TFO and Ring Frame departments.
Installed Electro-pneumatic IGV control on 1 No. Centac Air Compressor saving 100KW ofpower per hour.
b) Additional investment and proposal being implemented for reduction of consumption ofenergy.
Replacement of old motors by new technology motors at a cost of around Rs.50 lacs.
c) Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods.
Marginal impact on overall cost of production.
d) Total energy consumption and energy consumption per unit of production in respect ofIndustries specified in the schedule thereto.
As per form 'A' enclosed.
B. TECHNOLOGY ABSORPTION:
Efforts made in technology absorption.
As per form 'B' enclosed.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The activities relating to exports, initiatives taken to increase exports, developmentof new export market for products and services and export plans have been discussed underthe head "Exports" in the main body of the Directors Report.
The information in respect of Foreign Exchange outgoing and earning is contained initem 12(B)(d) & (e) in Schedule 22 annexed to the Balance Sheet as at 31st March,2010.
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
A. POWER AND FUEL CONSUMPTION
|S. No ||Particulars ||Current Year ||Previous Year |
| || ||2009 -2010 ||2008 -2009 |
|1. ||Electricity || || |
| ||a) Purchased Units ||2,35,91,884 ||1,05,04,847 |
| ||Total Amount (Rs.) ||11,45,11,693 ||5,19,03,460 |
| ||Rate/Unit ||4.85 ||4.94 |
| ||b) Own generation || || |
| ||i) Through Coal based || || |
| ||Thermal Power plant Unit ||11,27,33,138* ||11,30,28,300* |
| ||Units per Kg. of Coal ||1.118 ||1.035 |
| ||Cost/Unit ||3.11 ||3.92 |
| ||ii) Through Furnace Oil || || |
| ||Generator unit ||2,91,90,418 ||1,73,10,903 |
| ||Units per Kg. of Furnace Oi ||I 4.29 ||4.29 |
| ||Cost/Unit ||4.85 ||4.12 |
| ||iii) Through Diesel Generator unit ||72,836 ||57,998 |
| ||Units per Ltr.of Diesel Oil ||2.98 ||2.90 |
| ||Cost/Unit ||11.70 ||12.87 |
|2 ||Coal Qty.(MT) ||1,05,925 ||1,15,650 |
| ||Total cost (Rs.) ||37,05,97,148 ||46,31,09,101 |
| ||Average rate/MT(Rs.) ||3,499 ||4,004 |
|3 ||Lignite Qty.(MT) ||14,495 ||9,377 |
| ||Total cost (Rs.) ||2,82,35,409 ||2,99,71,649 |
| ||Average rate/MT(Rs.) ||1,948 ||3,196 |
|4 ||Petcoke Quantity (MT) ||5,731 ||5,764 |
| ||Total cost (Rs.) ||3,19,17,299 ||2,87,62,594 |
| ||Average rate/MT(Rs.) ||5,569 ||4,990 |
|5 ||LPG Quantity (MT) ||619.64 ||465.32 |
| ||Total cost (Rs.) ||2,31,01,034 ||1,91,19,936 |
| ||Average rate/MT(Rs.) ||37,281 ||41,090 |
|6 ||Furnace Oil Qty.(Kgs.) ||70,20,562 ||41,61,699 |
| ||Total Amount (Rs.) ||14,39,55,492 ||7,31,25,255 |
| ||Average Rate/Kg.(Rs.) ||20.50 ||17.57 |
|7 ||Diesel Qty. Itrs. ||54,072 ||87,815 |
| ||Total Amount(Rs.) ||17,56,605 ||29,10,755 |
| ||Average Rate/Ltr.(Rs.) ||32.49 ||33.15 |
|8 ||Other/Internal generation ||Not applicable ||Not applicable |
* Including 2944900 KWH given to Carreman Fabrics India Ltd. for job weaving done forthe Company (Previous year 4130790 KWH)
B. CONSUMPTION PER UNIT OF PRODUCTION
Power facility is common for production of cloth and yarn; accordingly, suchinformation for each product is not available.
FORM - B
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION 2009-2010
RESEARCH AND DEVELOPMENT (R & D)
1. Specific areas in which R&D carried out by the Company.
The Company has set up a world class fabric testing laboratory as per ISO, AATCC, ASTM,LS & Co, M & S, etc. testing protocol. The laboratory has successfully achievedaccreditation of Levis & Co, Marks & Spencer and is undergoing ISO 17025 NABL andCoach accreditation. The laboratory is providing on line testing services to variousdepartments to achieve excellent quality and productivity.
The Company has well developed fabric designing department and has created a garmentstudio at Mumbai for improvement in fabric and garment designs. The Company has alsoprocured computer software to create and develop new designs for manufacturing Jacquardfabrics.
The Company has imported Chinese spinning and weaving machines, which are cheaper thanLMW/lndian machines.
2. Benefits derived as a result of the above R&D
As the result of the above efforts, the products of the Company are meetinginternational quality standards and are, therefore, globally well accepted. The fabricsample can be tested in the Company's laboratory as per customers' requirement/international standards thereby saving time and cost. Earlier, the sample used to be sentoutside Testing Labs, incurring extra time and cost.
During the year, the Company purchased worsted spinning plant and other machines forexpansion and modernization at competitive prices. The delivery period of these machineswas also much lower in comparison. The Company has well equipped design and developmentfacilities; it has also established technical textile fabric section and is regularlysupplying good quality of technical textile fabric to a well reputed brands in USA.
3. Future plans and action
Research and development is a continuous process. The Company is going to add newtesting equipment for all wool and wool mixed fabrics and upholstery fabrics.
The Company is developing various types of technical textile fabrics, with latesttechnology, to be supplied to institutional bodies like Defense, Railways, Airlines,Luxury Traveling Coaches etc. During these developments, the laboratory is also beingexpanded with latest testing equipments for the testing of technical fabrics.
For the garment division, the Company has imported Jackets stitching machinery whichhas been installed in garment factory at Surat.
4. Expenditure on R & D
a) Capital expenditure is approx. Rs.165 lacs.
b) Recurring - Normal running expenditure Rs.119 lacs.
c) Total Rs.284 lacs.
d) Total R&D expenditure as a percentage of total turnover is less than 1%
TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adoption and innovation.
The Company deputes its technicians to various other weaving and finishing units withinand outside India to understand the improvements in the respective areas. The Companystarted lamination of coated fabric and technical textile fabric in-house, which is a newproduction activity for the Company. The Company engaged the services of technicians fromabroad and upgraded the cotton yarn dyeing quality. For the wool dyeing also, Companyinstalled RF Dryer and improved this machine to produce better quality end products.During the year, the Company started production of Jacquard fabric. It purchased computersoftware for developing the fabric designs. The in house testing laboratory was upgradedto the international standard.
2. Benefits derived as a result of the above efforts, e.g. product improvement, costreduction, production development, import substitution etc.
The Company was depending on out side Yarn Dyer for Cotton as well as texturisedfilament yarn dyeing. The introduction and gradual increasing the capacity of cotton/texturised filament yarn dyeing facility at Banswara, has enabled Company to reduce thelead time. Now, it can deliver its products to the customers in about 15 days.
3. In case of imported technology (import during the last 5 years reckoned form thebeginning of the financial year) the following information may be furnished.
| ||For and on behalf of the Board |
|Place: Mumbai ||R.L. TOSHNIWAL |
|Dated: 26th May, 2010 ||Chairman & Managing Director * |
ANNEXURE-III TO DIRECTORS' REPORT
INFORMATION PURSUANT TO SECTION 217 (2A) OF COMPANIES ACT, 1956 READ WITH THECOMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF DIRECTORS REPORT FORTHE YEAR ENDED 31ST MARCH, 2010
|S.No. Name of the Employee ||Designation & nature of duties ||Remuneration (Rs. in Lacs) ||Qualifications & Experience (No. of years) ||Age (Years) ||Date of Commencement of employment ||Previous employer designation, period of service (No. of years) |
|A. Employed through-out the year and were in receipt of remuneration aggregate of not less than Rs. 24,00,000/- per annum |
|1. Shri R.L.Toshniwal ||Chairman & Managing Director ||103.67 ||M.Sc.(Tex.) Leeds University England(47) ||76 ||01.08.1977 ||Oriental Carpets Mfg. (India) Ltd. Chief Executive (6) |
|2. Shri Ravi Toshniwal ||Joint Managing Director ||96.21 ||B.Tech(Chem.Engg.) 46 (18) || ||24.08.1992 ||- |
|3. Shri Rakesh Mehra ||Whole-time Director ||95.78 ||F.C.A (22) ||53 ||01.10.1993 ||R.R.Toshniwal Enterprieses Chief Executive (5) |
|4. Shri Shaleen Toshniwal ||Whole-time Director ||83.57 ||MBA (7) ||33 ||21.10.2003 ||- |
|5. Shri S.S. Sajal ||President ||35.42 ||B.Tech.PGDIM (40) ||61 ||21.09.1978 ||Blue Nile Spinning & Wvg. Co. Ltd. Sudan Dy.wvg. Manager (8) |
|6. Shri J.K. Rathi ||President - Commercial ||27.27 ||B.E. (Mech.) ||59 ||01.06.1978 ||R.R. Toshniwal & Co. (P) Ltd. Manager (3) |
1) Total number of employees included in the above statement are six and the nature oftheir employment is contractual.
2) The above figures are for the twelve months period from 01.04.2009 to 31.03.2010.
3) Remuneration comprises salary, allowances, monetary value of perquisites andcontribution to provident fund.
4) In addition to the above remuneration, employees are also entitled to gratuity.
5) Employees at Sr. No.1 to 4 are related to each other.