DirectorsThe Directors present the Annual Report together with the audited Balance Sheet and theProfit and Loss Account of RSWM Limited for the year ended 31st March, 2011.
Company's Performance
Your Company's performance during the year 2010-11 is summarised below:
| Financial Results | | (Rs.in Crore) |
| This year | Previous year |
| Turnover | | |
| Export | 783.62 | 566.70 |
| Domestic | 1,178.54 | 971.79 |
| Total | 1,962.16 | 1,538.49 |
| Profit before Interest & Depreciation | 333.94 | 192.88 |
| Less: Interest | 72.57 | 56.73 |
| Profit before Depreciation | 261.37 | 136.15 |
| Less: Depreciation | 80.15 | 87.64 |
| Profit before Tax | 181.22 | 48.51 |
| Less: Current Tax | 34.40 | 10.02 |
| Deferred Tax Liability | 23.86 | 2.46 |
| Profit after Tax | 122.96 | 36.03 |
| Add: Opening Balance | 33.06 | 29.82 |
| Profit available for appropriation | 156.02 | 65.85 |
Dividend and other appropriations
From the amount available for appropriation, Rs.12.50 crore is proposed to betransferred to General Reserve. A sum of Rs.5 crore has been transferred to PreferenceShare Capital Redemption Reserve.
During the year, the Board of Directors of your Company approved the payment of aninterim dividend @ 10% p.a., i.e. Rs.2.47 per share on 3,33,400 Redeemable PreferenceShares of Rs.150/- each, which were redeemed on 30th May, 2010, for the period tillredemption in order to meet the contractual obligation. This amounted to Rs.0.10 croreinclusive of distribution tax.
Your Directors feel immense pleasure in informing the Members that during the year anInterim Dividend of 100% i.e. Rs.10/- per equity share was approved and paid on equityshares of Rs.10/- each in view of the 50th Anniversary (Golden Jubilee) year of theCompany and LNJ Bhilwara Group. This amounted to Rs.26.99 crore inclusive of distributiontax. Your Directors are pleased to recommend to Annual General Meeting, a final dividendon Equity Shares @ 50% i.e. Rs.5 per share amounting to Rs.13.45 Crore inclusive ofdistribution tax.
The payment of interim dividend and recommendation of final dividend on the EquityShares for the year ended 31st March, 2011 will tantamount to total dividend of 150% i.e.Rs.15 per share aggregating Rs.40.44 Crore inclusive of distribution tax. A proposal fornoting the payment of interim dividend on Preference shares and Equity shares anddeclaration of final dividend on Equity shares for the year ended 31st March, 2011 will beplaced before the shareholders at the ensuing Annual General Meeting.
The balance amount of Rs.97.98 crore has been carried over to next year.
Operational performance
Your Directors gladly inform the Members that the financial year under review, whichhappens to be the 50th Anniversary year (Golden Jubilee) of the Company and the LNJBhilwara Group, recorded the best performance of the Company since inception in terms ofboth the turnover and profitability.
The Company registered an increase of 27.54% in its gross turnover from Rs.1538.49Crore in 2009-10 to Rs.1962.16 Crore in 2010-11. This increase in turnover has beenprimarily on account of increase in yarn production to 93913 MT against 85784 MT inprevious year and fabric production to 23.16 million metres from 21.44 million metres. TheExport turnover increased to Rs.783.62 Crore in 2010-11 from Rs.566.70 Crore in 2009-10and Domestic turnover to Rs.1178.54 Crore in 2010-11 from Rs.971.79 Crore in the previousyear. The details of analysis of performance of the Company and it's businesses, includinginitiatives in the areas of Human Resources and Information Technology, have beenpresented in the section on Management Discussion and Analysis of this Annual Report.
Working results of last three financial years 2008-09 to 201011 are given in Annexure Iand form part of this report.
Expansion and modernisation
Your Directors in their previous report had talked about expansion plan for addition inspindleage, replacement of old machinery, up-gradation of some equipments at various unitsof the Company, involving capital expenditure of Rs.70 Crore. Your Directors feel pleasurein informing members that the above expansion plan was successfully completed during theyear under review and has started yielding incremental contributions to the turnover andprofitability of the Company.
Your Directors gladly inform the members that encouraged with the performance of theCompany, your Directors have chalked out "LAKSHYA 2016" programme with atargeted turnover of Rs.4500 Crore and involving a capex of Rs.1500 Crore to beimplemented in phased manner to be achieved by the year 2016. The necessary details arebeing worked out and members will be updated on this plan in due course. Your Directorsare hopeful that with the support of all stakeholders, the Company will be able to achievethe target.
Subsidiary companies & joint venture
During the year under review, your Company set off the liability against the CorporateGuarantee given to Exim Bank in connection with the loan availed by RSWM InternationalB.V., the wholly owned subsidiary Company, by paying off an amount of Rs.14.42 Crore toExim Bank.
Your Directors further inform the members that RSWM International B.V., the whollyowned subsidiary Company has since been voluntarily liquidated within the legal frame-workof Netherlands.
A Statement of particulars of Cheslind Textiles Limited, subsidiary of the Company ispart of the Annual Report.
Contribution to the exchequer
Your Company has contributed an amount of Rs.79.91 crore in terms of taxes and dutiesto the Exchequer.
Directors' responsibility statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state that:
• in the preparation of the Annual Accounts, the applicable Accounting Standardshave been followed;
• appropriate Accounting Policies have been selected and applied consistently andthey have made judgements and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company on 31st March, 2011 and of theProfit and Loss of the Company for the year ended on that date;
• proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
• the Annual Accounts have been prepared on a going concern basis.
Energy conservation, technology absorption and foreign exchange earnings and outgo
The information required to be disclosed pursuant to Section 217(1)(e) of the CompaniesAct, 1956 read with Companies (Disclosure of Particulars in the report of Board ofDirectors) Rules, 1988, is given in Annexure - II forming part of this Report.
Directors
The following Directors retire by rotation and being eligible offer themselves forre-appointment:
1. Shri Arun Churiwal
2. Shri A.N. Choudhary
3. Shri Sushil Jhunjhunwala
During the period under review, EXIM Bank has withdrawn its nomination of Shri JohnMathew from the Board and nominated Shri Prabhakar Dalal as its Nominee-Director on theBoard of Directors of the Company.
The Board places on record its deep appreciation for the services rendered by Shri JohnMathew during his tenure. The Board welcomes Shri Prabhakar Dalal on the Board ofDirectors of the Company.
Internal control systems
The Company has in place proper and effective Internal Control Systems commensuratewith its size of operations to ensure that all systems and procedures are functioningsatisfactorily and all policies are being duly complied with as required. The operationsof the Company are regularly reviewed by the Audit Committee to examine and evaluate theadequacy, relevance and effectiveness of the internal control systems. The Audit Committeemakes recommendations wherever found appropriate for improvement in efficiencies andeffectiveness of the internal control systems.
Particulars of employees
Statement of particulars of Employees as required to be furnished pursuant to Section217(2A) of Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975is attached hereto and form part of this Report as Annexure - III.
Auditors
The Company's Auditors M/s. S. Bhargava Associates and M/s A.L. Chechani & Co.,retire at the conclusion of the ensuing Annual General Meeting and being eligible, offerthemselves for re-appointment. The observations of the Auditors are explained wherevernecessary, in the appropriate Note to the Accounts.
Acknowledgements
Your Directors place on record their appreciation for the continued support andco-operations received by your Company from the Customers, Dealers and Suppliers,Investors, Members, Banks, Financial Institutions, Central and State Governments. YourDirectors also thank the employees of the Company across all levels for the sincere andhard work put in by them during the year under review.
| For and on behalf of the Board |
| Place: Noida | Ravi Jhunjhunwala |
| Date: 28th April, 2011 | Chairman |
| DIN No. 00060972 |
Annexure I to the Directors' Report
Working Results
| Particulars | | 2010-11 | 2009-10 | 2008-09 |
| I PRODUCTION | | | | |
| YARN | | | | |
| A) Own | (In Ton) | 93,913 | 85,784 | 78,769 |
| B) Job Spinning from outside (Domestic) | (In Ton) | - | - | - |
| Total | | 93,913 | 85,784 | 78,769 |
| FABRIC & DENIM | | | | |
| A) Own | (In, 000 metres) | 21,557 | 19,522 | 20,225 |
| B) Job Weaving from outside | (In, 000 metres) | 1,599 | 1,918 | 68 |
| Total | | 23,156 | 21,440 | 20,293 |
| II TURNOVER | (Rs. in lac) | | | |
| YARN | | | | |
| A) Domestic | | | | |
| Grey Yarn | | 47,347 | 46,687 | 52,101 |
| Dyed Yarn | | 46,381 | 32,313 | 20,985 |
| Job Spinning | | 329 | 225 | 63 |
| | 94,057 | 79,225 | 73,149 |
| B) Export | | | | |
| Grey Yarn | | 49,034 | 38,206 | 27,955 |
| Dyed Yarn | | 24,410 | 14,642 | 8,544 |
| | 73,444 | 52,848 | 36,499 |
| Less: Inter unit/Division transfer | | 3,980 | 3,325 | 2,507 |
| Total | | 1,63,521 | 1,28,748 | 1,07,141 |
| FABRIC & DENIM | | | | |
| A) Domestic | | 24,563 | 18,337 | 17,959 |
| B) Export | | 4,918 | 3,822 | 2,491 |
| | 29,481 | 22,159 | 20,450 |
| Less: Inter unit/Division transfer | | - | 3 | 9 |
| Total | | 29,481 | 22,156 | 20,441 |
| PROCESSING CHARGES | | | | |
| Weaving Charges | | 101 | 234 | 135 |
| Processing Charges | | 1,839 | 1,600 | 1,818 |
| | 1,940 | 1,834 | 1,953 |
| Less: Inter unit/division transfer | | 6 | 3 | 847 |
| Total | | 1,934 | 1,831 | 1,106 |
| WASTE | | | | |
| A) Domestic | | 1,591 | 1,349 | 1,363 |
| B) Export | | - | - | 173 |
| Less: Inter unit/division transfer | | 311 | 236 | - |
| Total | | 1,280 | 1,113 | 1,536 |
| Total Turnover | | 1,96,216 | 1,53,848 | 1,30,224 |
Annexure II to the Directors' Report
Statement of Particulars Pursuant to the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988
1. Conservation of Energy
a) Energy Conservation Measures taken :
Spinning & Weaving
1. Installation of high energy efficient motors on Carding, Ring Frames & AutoconerMachines at Kharigram, Banswara, Mandpam, Rishabhdev & Ringas to serve dual purpose ofpower saving with improved quality.
2. Installation of retrofit impeller in Schlafhorst Autoconers & Savio Autoconersat Lodha & Kharigram.
3. Conversion of Flat Belt Drive Motors to Direct Drive into Poly V Drive Motors onJingwell Ring Frames & removal of auto doffing system at Chinese Ring Frame, atKharigram
4. Conversion of Belt Drive to Direct Drive & installation of FRP fans atHumidification plant at Lodha.
5. RSWM Lodha has been accredited with Ist prize for "2nd Rajasthan State EnergyConservation Award" in the year 2010.
Compressors
1. Replacement of Pneumatic accessories to mechanical parts in Blow Room, Carding, RingFrame & Autoconer machines for saving of compressed air power. Arresting of airleakages & putting of conversion kits at Kharigram.
2. Regular & systematic control of air leakages from compressor air in the machines-. Reduction in air consumption & replaced the higher capacity compressor by lowercapacity compressor thereby saving 2000 units of power per day, at fabric division,putting of conversion kits at Kharigram.
3. Air balancing at Humidification plant & modification in compressor PHE line atDenim.
Replacement & Installations
1. Eco ventilators in place of exhaust fans in transformer rooms at Lodha
2. Intallation of pedding mangles by replacing vaccum pump at VDR machines &replacement of DC motors by AC motors at Stenter at Fabric division.
3. Replacement of 4 MVA transformer by energy efficient transformer at Lodha to reducelosses @ 600 KWH/Day.
4. Installation of two stage screw air compressor in place of centrifugal compressors.Conservation of Water
1. Collection & reuse of condense water in process at Ringas & Denim unit.
2. Re-use of rubber belt (Sanforised unit) cooling water (earlier going into ETP) forgardening/ horticulture.
3. Use of ETP water for plantation, through drip irrigation.
4. Jet Spray Humidifiers installed at Kharigram
5. Fabric unit has completely recovered cooling water of process machines and savedalmost 4 lac ltr water per day by recycling it. It changed the flow circuit of processfeed water by Installing a new water header and saved energy of almost one department pumpof 15 H.P.
b) Additional Investment & proposals, if any, being implemented for reduction ofconsumption of energy.
1. Installation of compressed air receiver for reduction in pressure drop
2. To replace and install detuned capacitors at the load end to maintain power factor.
3. Installation of retrofit suction impeller Schlafhorst
Autoconer Model 338 & in 238147
4. Installation of energy efficient fans in WCS for carding, TFO, autoconers.
5. Energy efficient tapes & spindles for ring frame be installed.
6. Renovation of Humidity Tower & compressor line at Ringas
7. Installation of low density 2 blade fan with FRP fans in Humidification Towers
8. Replacement of rewinding pump motors (old type) with new energy efficient KSB pumpsof Kirloskar make.
9. Installation of FU drive with new motors in Schlafhorst Autoconers -238.
c) Impact of the measures at (a) & (b) for reduction of energy consumption andconsequent impact on the cost of production of goods.
• The estimated saving due to above measures is expected to be in excess of 25 lacunits per annum.
INFORMATION AS PRESCRIBED IN FORM A
A POWER AND FUEL CONSUMPTION
| S. No. | Description | 2010-11 | 2009-10 |
| A. | POWER AND FUEL CONSUMPTION | | |
| 1. | Electricity | | |
| a) Purchased: | | |
| Units (In Lacs) | 1,036.42 | 809.10 |
| Total Amount (Rs. in Lacs) | 4,305.37 | 3,720.98 |
| Rate/Units (Rs.) | 4.15 | 4.60 |
| b) Own Generation: | | |
| I) Through Thermal Power - Units (In Lacs) | 2,833.21 | 3,481.05 |
| Cost of Generation | 11,227.61 | 13,700.45 |
| Cost Per Unit (Rs.) | 3.96 | 3.94 |
| II) Through Diesel - Units ( In Lacs) | 0.13 | 0.19 |
| Units per Litre of Diesel | 2.60 | 1.73 |
| Cost per Unit (Rs.) | 20.00 | 18.89 |
| III) Through HFO Generators - Units (In Lacs) | 128.98 | 925.05 |
| Units Per Litre | 3.90 | 4.00 |
| Cost Per Unit (Rs.) | 5.98 | 4.55 |
| 2. | Coal | | |
| Quantity in M.T. | 52,267.43 | 27,072.24 |
| Total Amount (Rs. in Lacs) | 1,917.10 | 1,192.82 |
| Average rate per M.T. (Rs.) | 3,667.87 | 4,406.06 |
| 3. | HFO | | |
| HFO in Litres (lac) | 33.06 | 231.03 |
| Cost of HFO Consumed | 771.56 | 4,206.76 |
| Avg Rate (Rs./ Litre) | 23.34 | 18.21 |
| 4. | Other/Internal Generation | N.A. | N.A. |
| B | CONSUMPTION PER UNIT OF PRODUCTION | | |
| Electricity Units : Per Kg. of Yarn | 3.36 | 3.38 |
| Per Mtr. of Fabric | 1.50 | 1.44 |
| Per Mtr. of Fabric Processing | 0.30 | 0.32 |
| Coal-B Grade (In Kg.) : Per Kg.of Yarn | 0.34 | 0.23 |
TECHNOLOGY ABSORPTION.
A) RESEARCH & DEVELOPMENT.
a) Specified areas in which Research & Development carried out by the Company andfuture plan of action:
• Research and development has been done by the Company on functional textileslike Bamboo, nylon, catonic, soyabean, silk, linen blended with synthetic & cottonfibres fancy twisted yarns, typical blends like Acrylic/Nylon,Modal/AcrylicBamboo/Linen,Dyed Spun yarns with acceptability in the market for high value addedproducts for Apparels and Furnishing sectors.
• Technical Textiles : Introduction of new products in Technical Textiles productslike fire retardant, Hygienic products, anti bacterial, Anti-odour and Eco-friendly.
• Development of fancy grey yarns using special material like filasia,sparkle& injection slub for knitting and dress materials
• Development of Denim fabric using functional fibers like soya, linen & it'sblends, bamboo, hemp, natural stretch, tencel, cashmere & T400 and developed thespecial denim products like Oil and water repellent, anti microbial, hydrophilic,anti-odour and fire retardant.
B) TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION
a) Efforts in brief, made towards technology absorption, adaptation & innovation:
1. Installation of core-spun yarn attachment at Denim has been installed in one ringframe and water splicer in corresponding winding machine in order to enable to producelycra/spandex yarn in-house.
2. Up-gradation of Quality Assurance lab at Denim for International Brandaccreditations.
3. Introduction of PLASMA denim in its range which avoids Rope dying step. This conceptinvolves minimum usage of water and chemicals and thus helps in reducing GHG and carbonfoot print
4. Installation of individual spindle monitoring system - Pinter FA.NI Italy atKharigram & Lodha unit.
5. Replacement of 2 normal Cheese Winding Machines by High speed Cheese WindingMachines at Lodha unit.
6. Implementation of BAR CODING in dispatches and finished goods at all spinning units.
7. Adding of 1 latest Schlaforst PreciFx Autoconer in Cotton Section to make dye ablepackage at Lodha unit
8. Installations of Luwa make Humidification plant.
9. Replacement of Yarn Cleaners in Auto coners, Installation of APD in Auto coner toimprove the quality and production at Ringas.
10. Installation of Automatic Packing Machine to reduce the cost of operation atRingas.
b) Benefits derived as a result of the above efforts:
1. Technical upgradation led to significant improvement in quality, reliability,capacity, utilisation factor, productivity as well as profitability. It has resulted intoadding of some new products in the existing product range.
2. Accreditation of Company's Denim by International Brands.
C) in case of recently imported technology, the requisite information in brief:
1. Import of 2 amsler slub attachment for increasing capacity of producing fancy yarn
2. Pinter Individual Spindle Monitoring system which improved the quality of yarn &150 kgs of production per worker.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company refocused its efforts to increase exports and developing new markets, whichresulted in 39% increase in export turnover in current year over last year. During theyear, the Company has earned foreign exchange of Rs.748.46 crore at FOB price against anoutgo of Rs.119.62 crore compared to previous year earning of foreign exchange ofRs.539.12 crore at FOB price and outgo of Rs.53.34 crore.
Annexure III to the Directors' Report
Statement of particulars of employees pursuant to Section 217 (2A) of the CompaniesAct, 1956
A. Persons employed throughout the financial year
| Name of Employee | Designation | Remuneration Lac) | Qualification | Experience (Years) | Commencement of Employment | No. of Shares held | Whether Permanent/ Contractual | Age (Years) | LAST EMPLOYED |
| | | | | | | | | Organisation | Post Held | Duration (Years) |
| ShriArun Churiwal | Managing Director | 231.10 | B.A.(HONS) | 32 | 17/3/09 | 1,610 | Contractual | 61 | - | - | - |
| Shri J.C. Laddha | Executive Director | 197.09 | B.Com,FCA | 38 | 1/1/88 | - | Permanent | 61 | Bhilwara Spinners Ltd. | Whole Time Director | 3 |
| Shri Y.C. Gupta | Chief Executive-Denim Business | 61.02 | C.A. | 35 | 6/9/07 | | Permanent | 59 | CMT Ltd., Mauritius | Chief Executive Director | 4 |
NOTES:
1. None of the employee is holding more than 2% of the paid-up capital of the Company.
2. None of the above employee is relative of any Director of the Company.
3. None of the person was employed for the part of the year in receipt of remunerationaggregating to Rs.5,00,000/- or more per month.