DIRECTORSDear Shareholders,
Your Directors have great pleasure to present their Report together with the AuditedAccounts for the year ended March 31, 2010.
Financial Results:
| | (M ’000) |
| 31-03-2010 | 31-03-2009 |
| Sales | 161476.59 | 134240.03 |
| Profit before Interest, Depreciation and Tax | 40317.86 | 32607.41 |
| Less: Interest | 9354.37 | 6596.29 |
| Profit before Depreciation and Tax | 30963.49 | 26011.12 |
| Less: Depreciation | 6806.53 | 4477.47 |
| Profit before Tax | 24156.96 | 21533.65 |
| Less: Provision for Taxes (including Deferred) | 6565.05 | 6683.81 |
| Profit after Tax | 17591.91 | 14849.84 |
| Add: – Balance brought forward | 29765.52 | 16747.16 |
| – Profit available for appropriations | 47357.43 | 31597.00 |
| APPROPRIATIONS: | | |
| Add: – Transfer on Amalgamation | – | 604.11 |
| Less: – Transfer to General Reserve | 900.00 | 800.00 |
| – Additional provision for dividend | – | 91.50 |
| – Corporate Dividend Tax on Additional Dividend | – | 15.55 |
| – Proposed Dividend | 1678.50 | 1306.50 |
| – Corporate Dividend Tax | 285.26 | 222.04 |
| – Balance Carried forward | 44493.67 | 29765.52 |
| EPS (M) | | |
| – Basic | 18.90 | 21.89 |
| – Diluted | 18.59 | 17.30 |
Result of Operations
During the year under review, your Company has recorded the turnover of M 161476.59lacs against M 134240.03 lacs in the previous year, an increase of 1.20 times. The exportturnover had a quantum jump to M 100410.21 lacs from M 87369.43 lacs. The Profit After Tax(PAT) for the year increased from M 14849.84 lacs to M 17591.91 lacs, a growth of 1.18times over the previous financial year.
Dividend
Your Directors recommend a dividend of M 1.50 per Equity Share (15%) aggregating to M19,63,76,108/- (including Corporate Dividend Tax) for the financial year 2009-10, subjectto the approval of the members at the ensuing Annual General Meeting.
The dividend pay out as proposed is in accordance with the Company's policy to paysustainable dividend linked to long term performance, keeping in view the capital needsfor the Company's growth plans and the intent to optimal financing of such plans throughinternal accruals.
Share Capital
During the financial year under review, the Company raised equity funds by variousmodes as mentioned hereinbelow:
i) Issue of Equity Shares on preferential basis :
Your Company has made an allotment of 1,80,00,000 Equity Shares of M 10/- each at apremium of M 175/- each aggregating to M 333 crores, on preferential allotment basis toAAA United B.V., a Company incorporated under the laws of The Netherlands. The saidinvestor is a wholly owned subsidiary of Aktieselskabet af 1/8 2004, a company constitutedunder the laws of Denmark which is primarily engaged in the business of trade &investment and has a direct and/ or indirect stake in several companies including inBestseller A/S, which are primarily engaged in the business of designing, developing,selling and marketing of clothing products.
ii) Issue of Warrants and conversion thereof
Your Company has made an allotment of 1,00,00,000 Optionally Convertible Warrants atthe rate of M 193/- per share to Reynold Shirting Limited, an entity belonging topromoter/ promoter group of the Company. Pursuant to the option for conversion of equityshares exercised by the aforesaid promoter group entity, the Company has allotted58,00,000 Equity Shares in first tranche.
iii) Issue of Global Depository Receipts (GDR)
Your Company has raised an aggregate of US $ 97.09 million (equivalent to M451,67,72,210/-) by issue of 1,90,00,000 Global Depository Receipts (GDRs) representingequivalent number of underlying equity shares at the rate of US $ 5.11 per GDR to thepersons resident outside India. Pursuant to aforesaid, the Company's GDR have been listedon the Singapore Stock Exchange with effect from November 25, 2009.
As on March 31, 2010, the paid - up capital of the Company stands increased to M 111.90crores divided into 11,19,00,000 equity shares of the face value M 10/- each.
Business Expansions
Expansion of Yarn Dyeing, Weaving, Processing & Garmenting capacities:
During the year under review, your Company has successfully commenced the commercialproduction of its Phase III & IV expansion projects of manufacturing facilities ofyarn dyeing, weaving, processing & garmenting at various locations in the State ofMaharashtra
Further expansion of Processing & Weaving:
After completion of all Phases till IV, the Company has undertaken the new expansionprojects in Phase V for expanding its manufacturing facilities of -
| Facilities | Contemplated increase | Location |
| Fabric Processing | 1,40,000 mtrs per day | Tarapur |
| Knit Processing | 12 MT per day | Tarapur |
| Weaving | 380 Looms | Islampur |
| Weaving | 356 Looms | Tarapur |
| Yarn Dyeing | 25 Tons per day | Tarapur |
In addition, the Company has undertaken steps for import of balancing equipments ofgarment manufacturing for increasing the efficiency of existing facilities atDoddaballapur.
The aforesaid facilities are expected to be commissioned by fourth quarter of thecurrent financial year.
The cost of the project shall be financed partly by equity already raised by issue ofshares on preferential basis and balance by way of term loans under Technology UpgradationFund Scheme (TUFs) entitling the company an interest subsidy of 5% and in addition capitalsubsidy of 10% on total investment in Processing & Garment Machineries.
Directors
Mr. K. Muthukumaran, Chief General Manager of Export - Import Bank of India (EXIM Bank)has been appointed as a Nominee Director of EXIM Bank on the Board of the Company in placeof Mr. John Mathew, Chief General Manager of EXIM Bank w.e.f. October 30, 2009.
In accordance with the provisions of the Companies Act, 1956 and the Company's Articlesof Association, Mr. Suresh Vishwasrao, Mr. A. Arumugham and Dr. Pravin P. Shah, Directorsof the Company shall retire by rotation at the forthcoming Annual General Meeting andbeing eligible, offer themselves for re-appointment.
Corporate Governance
A report on the Corporate Governance as stipulated under clause 49 of the ListingAgreement with the Stock Exchanges along with a certificate from the Statutory Auditorsconfirming compliance is set out in the annexure forming part of this Report along with aseparate annexure giving the details of the Management Discussion and Analysis.
Auditors
M/s V. K. Beswal & Associates, Chartered Accountants, having Firm RegistrationNumber 101083W the Statutory Auditors of the Company shall retire at the ensuing AnnualGeneral Meeting and being eligible, offer themselves for re-appointment.
Necessary resolution in this regard is proposed at the forthcoming Annual GeneralMeeting.
Auditors’ Report
There are no specific observation in the Auditors' Report requiring further commentsunder Section 217 (3) of the Companies Act, 1956.
Fixed Deposits
The Company has not accepted or renewed any deposit from public during the year underreview.
Directors' Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm thefollowing:
1. In the preparation of the annual accounts, the applicable accounting standards havebeen followed and that there are no material departures.
2. They have selected such accounting policies in consultation with Statutory Auditorsand other Experts and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year viz March 31, 2010 and of the Profit of theCompany for that year.
3. They have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.
4. They have prepared the attached Statement of Accounts for the year ended March 31,2010 on a going concern basis.
Particulars Of Employees
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 names and otherparticulars of employees are set out in the annexure to this report. However, as per theprovisions of Section 219(1)(b)(iv) of the said Act, the annual report and accounts arebeing sent to all members of the Company excluding the aforesaid information. Any memberinterested in obtaining such particulars may write to the Company at its RegisteredOffice.
Conservation of Energy, Research and Development, Technology Absorption, ForeignExchange Earnings and 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 ofDirectors) Rules, 1988, are set out in annexure to this report.
Subsidiary Companies:
(i) Bombay Rayon Holdings Limited (BRHL)
BRHL holds 100% equity of BRFL Europe B.V., Netherlands & BRFL Italia S.r.l.,Italy.
BRHL has registered a net loss of M 62.55 lacs for the year ended March 31, 2010.
(ii) DPJ Clothing Ltd., U.K.
DPJ Clothing Limited is engaged in business of wholesale marketing and distribution ofclothing Products. The said subsidiary is assisting in getting many mid size retailers ofEurope by providing the services either by direct import or by import and delivery basis.Your Company continued to reap benefits in expanding its business in Europe.
DPJ Clothing Ltd. has registered a net profit of 4,23,955 for the year ended March31, 2010.
(iii) BRFL Europe B.V., Netherlands
BRFL Europe B.V. at Netherlands continued to play an important role for canvassing thebusiness, services to customers on products and designs.
BRFL Europe B.V. has registered a net profit of 5,75,034 for the year ended March 31,2010.
(iv) BRFL Italia S.r.l, Italy
The Company owns the popular 'GURU' brand and is into the business of retailing ofreadymade garments as well as other accessories in Europe.
BRFL Italia S.r.l, Italy has registered a net loss of 19,54,388 for the year endedMarch 31, 2010.
The Government of India, Ministry of Corporate Affairs, vide its letter dated March 19,2010 granted its approval under Section 212(8) of the Companies Act, 1956, exempting theCompany from attaching the full text of the financial statements of the subsidiaries ofthe Company.
In accordance with the requirements of the said approval, necessary disclosures aremade in respect of the subsidiaries in this Annual Report alongwith the statement pursuantto Section 212 of the Companies Act, 1956.
Any shareholder who wishes to have a copy of the annual accounts and detailedinformation about the subsidiary company may write to the subsidiary company and/or theCompany for the same. The annual accounts of the subsidiary companies will also be keptfor inspection by any member at the Registered Offices of the Company and itssubsidiaries.
As required by Section 212 of the Companies Act, 1956, the Statement of holding insubsidiaries and Consolidated Accounts pursuant to Accounting Standard (AS 21) issued bythe Institute of Chartered Accountant of India, including the financial accounts of thesubsidiary companies are forming part of the Annual Report.
Acknowledgements
Your Directors are grateful for the co-operation and support from our Bankers,Securities and Exchange Board of India ("SEBI"), Stock Exchanges and otherRegulatory Authorities, State Government and Central Government and above all ourCustomers. We look forward to receiving their continued support and encouragement. TheBoard of Directors wishes to express its gratitude and record its sincere appreciation ofthe dedicated efforts and commitment of all the employees. The directors are thankful tothe esteemed shareholders for their support and the confidence reposed in the company.
| For and on behalf of the Board |
| Place: Mumbai | Janardan Agrawal |
| Date: May 18, 2010 | Chairman |
Annexures to the Directors’ Report
Particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956, readwith the Companies (Disclosure of Particulars in the Report of the Board of Directors)Rules, 1988.
1) Conservation of Energy:
a) Energy conservation measures taken by the Company
(i) Electrical Energy :
(a) Reducing the maximum demand by evenly distributing the loads throughout the day andincreasing efficiency of plant and equipments.
(b) Improving power factor by optimum choice of power factor improvement capacitors.
(c) Monitoring the overall energy consumption.
b) Additional Investments and proposals, if any, being implemented for reduction ofconsumption of energy
The Company is reviewing various proposals for reduction in consumption of energy,mainly by way of replacement of existing equipments by modern & energy efficientequipments.
c) Impact of measures (a) and (b) above for reduction of energy consumption andconsequent impact on cost of production of goods as per Form A
d) Total energy consumption per unit of production as per Form A
Form A
| Year Ended 31/03/2010 | Year Ended 31/03/2009 |
| Fabrics | Garments | Fabrics | Garments |
| A. Power and Fuel Consumption | | | | |
| a) Electricity | | | | |
| 1. Purchase | | | | |
| Unit (Lacs) | 77.03 | 147.53 | 203.72 | 64.33 |
| Total Amount (M ’000) | 413.71 | 921.92 | 1085.93 | 349.14 |
| Rate/ Unit (M) | 5.37 | 6.25 | 5.33 | 5.43 |
| b) Own generation (Through D.G. Set) | | | | |
| Diesel Oil Consumed (Lac Ltrs.) | 2.78 | 14.62 | 6.13 | 6.92 |
| Total Amount (M ’000) | 94.12 | 534.44 | 228.59 | 255.18 |
| Avg. Per Ltr. (M) | 33.81 | 36.56 | 37.29 | 36.88 |
| c) Bio Fuel | | | | |
| Quantity (M.T) | | 6635.69 | | 2173.76 |
| Amount (M ’000) | | 237.63 | | 75.40 |
| d) Coal | | | | |
| Quantity (M.T) | 50984 | | 25225.68 | |
| Amount (M ’000) | 2044.75 | | 1182.38 | |
| B. Consumption Per unit of Production | | | | |
| Production | 78.15 | 37.55 | 58.18 | 32.07 |
| mn mtrs | mn pcs | mn mtr | mn pcs |
| Electricity (M) | 0.65/mtr | 3.88/pcs | 2.26/mtr | 4.10/pcs |
2) Technology Absorption:
The Disclosure of particulars with respect to Technology absorption as per Form"B"
FORM B
Disclosure of particulars with respect to absorption
I. Research and development (R & D)
1. Specific areas in which R & D carried out by the company:
Product and quality improvement, development of new designs, products, cost control andenergy conservation.
2. Benefits derived as a result of the above R & D:
Product Quality has improved and new products have been introduced.
3. Future plan of action:
The Company continues to focus its efforts on innovations in textile developmentprocesses.
4. Expenditure on R & D:
Nil.
II. Technology absorption, adaptation and innovation
a) Efforts, in brief, made towards technology absorption, adaptation and innovation:
The Company has been developing in-house modifications/improvements in processtechnology in its various manufacturing sections which, when found suitable, areintegrated into the regular manufacturing operation.
b) Benefits derived as a result of the above efforts, e.g. product improvement, costreduction, product development, import substitution, etc. :
High Product quality and increased business potential
c) In case of imported technology (imported during the last 5 years reckoned from thebeginning of the financial year), following information may be furnished:
| i) | Technology imported: | |
| ii) | Year of import: | Not Applicable as no imported technology is put to use. |
| iii) | Has technology been fully absorbed? | |
| iv) | If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action. | |
III. Foreign Exchange Earnings and Outgo:
1. Activities relating to exports; initiatives taken to increase exports, developmentof new export markets for products and services; and export plans.
The Company exports its textile products. All efforts of the Company are geared toincrease the business of textile exports in different products and markets.
2. Total information on Foreign Exchange earnings and outgo is contained in note nos.18and 19 of Schedule "S" of accounts.
| For and on behalf of the Board |
| Place: Mumbai | Janardan Agrawal |
| Date: May 18, 2010 | Chairman |