spbl ltdmerged Directors report

SPBL LIMITED ANNUAL REPORT 2005-2006 DIRECTORS REPORT The Members, Your Directors have pleasure in presenting their 21st Annual Report and the Audited Statement of Accounts for the year ended 31st March 2006. FINANCIAL RESULTS (Rs. In lacs) This Year Previous Year Gross Turnover 5771.62 4318.42 Gross Profit Before Interest, Dep. & Taxes 546.85 541.95 Less: Depreciation 283.72 273.84 Interest 202.18 224.85 Provision for Taxes :- Current Taxes 5.13 3.39 Deferred Taxes 27.90 -37.31 Fringe Benefit Tax 2.02 0.00 Net Profit after Taxes 25.90 77.18 Add : Balance brought forward 453.67 376.49 Balance carried forward 479.57 453.67 OPERATIONAL RESULTS Due to change in marketing strategy and effective cost control, the operating performance of the Company has improved substantially. The Company has posted Gross Turnover of Rs.5771.62 lacs as compared to Rs.4318.42 lacs of previous year, registering an increase of 33.65%. The Profit before tax has increased by 40.89% to Rs.60.95 lacs as compared to Rs.43.26 lacs of previous year. The Profit after Tax is Rs.25.90 lacs as compared to Rs.77.18 lacs of previous year. DIVIDEND Keeping in view the insufficiency of profits and need of internal accruals to finance the growth plans of your Company, the board of directors has not recommended dividend on equity shares and preference shares. PROJECTS The Company has successfully commissioned 8 MT Steam Boiler with Co- Generation Power Plant during October 2005. The power generated through Boiler is substantially cheaper as compared to grid supply of AVVNL. The full years benefit will accrue to the company during the current year. AMALGAMATION Subject to the approval of Honble High Court of Rajasthan, Jodhpur, other statutory authorities, and other approvals legally required, the Board of Directors of the company has approved scheme of amalgamation of the company with Sangam (India) Ltd. Subject as aforesaid the appointed date of the amalgamation has been fixed as 1st day of April 2006. DIRECTORS In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri S.N. Modani and Shri R.C. Jhanwar, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. SUBSIDIARY COMPANY: The Company has no subsidiary company. CORPORATE GOVERNANCE: The company has been proactive in following the principles and practices of good corporate governance. The company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements of the Stock Exchanges are complied with. Corporate governance report and management discussion and analysis report are attached as per clause 49 of the listing agreement. PUBLIC DEPOSITS The company has not accepted any deposits during the year. PERSONNEL The company has not paid any remuneration attracting the provisions of the Companies (Particulars or Employees) Rules, 1975 read with Section 217 (2A) of the Companies Act, 1956. Hence, no information is required to be appended to this report in this regard. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed that: (1) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (2) the directors have selected such accounting policies and applied them consistently and made judgments, and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2006 and of the profit of the Company for the year ended on that date; (3) the directors have taken proper and sufficient care for the maintenance of adequate accounting records to 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; and (4) the directors have prepared the annual accounts of the company on a going concern basis. AUDITORS The Companys Statutory Auditors, M/s S.S. Surana & Co. and M/s O.P.Dad & Co. will hold office upto the conclusion of the forthcoming Annual General Meeting and being eligible, are recommended for re-appointment. The company has received letters from them to the effect that their appointments, if made, would be within the prescribed limits under Section 224 (1-B) of the Companies Act, 1956. AUDITORS REPORT As regards Auditors observations, the relevant notes on accounts are self- explanatory and, therefore, do not call for any further comments. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to energy, technology absorption, foreign exchange earnings and outgo required to be disclosed, under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure forming part of this report. ACKNOWLEDGEMENT Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities, Customers, Vendors and Shareholders during the year under review. For and on behalf of the Board For SPBL Limited (R.P. Soni) Chairman Place : Bhilwara Date : May 3, 2006 ANNEXURE-I INFORMATION REQUIRED UNDER SECTION 217 (1) (e) READ WITH COMPANIES DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988, AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2006. (A) CONSERVATION OF ENERGY: (i) Individual steam trapping on drying range machine for saving of fuel. (ii) Thermopac VTA-20 converted from steam coal into pet coke. (iii) Used hot water on jiggers machine to save the fuel. (iv) Installation of automatic power factor panel for maintaining power factor FORM A FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY CURRENT PREVIOUS YEAR YEAR 1. POWER AND FUEL CONSUMPTION 1. ELECTRICITY (a) Purchased unit 5714300 5740045 Total amount (Rs.) 25540202 25283559 Rate/Unit (Rs.) 4.47 4.40 (b) Own Generation (i) Through Diesel Generator Set 483151 238347 Unit/Ltr of Diesel/Oil 3.28 3.21 Cost/Unit 8.37 7.04 (ii) Through steam turbine - Units 1474172 - Unit/Kg. of coal N.A. - (For Co-Generation of steam & power) 2. COAL Quantity converted (in tones) 13463 9006 Total Cost 36159666 25392253 Average Rate/M.T. 2686 2819 3. FURNACE OIL Quantity (in tones) 244575 402171 Total Cost 4405533 5391759 Average Rate/MT 18.01 13.41 II. CONSUMPTION PER UNIT OF PRODUCTION (a) Electricity Synthetic Fabric (Mtr.) 0.24 0.22 Flock Fabric (Mtr.) 0.45 0.63 Textile Flock (kg) 0.97 1.08 (b) Coal Synthetic Fabric (Mtr.) 0.46 0.40 Flock Fabric (Mtr.) 0.30 Nil Textile Flock (kg) 1.71 3.39 (c) Furnace Oil Synthetic Fabric (Mtr.) Nil Nil Flock Fabric (Mtr.) 0.09 0.18 FORM B 1. Research and Development (R&D) Nil Nil 2. Technology Absorption Nil Nil 3. Foreign Exchange Earnings 17439426 12681210 4. Foreign Exchange Outgo 28116864 1242309 By Order of the Board For SPBL Limited (R.P. Soni) Chairman Place : Bhilwara Date : 03.05.2006 MANAGEMENT DISCUSSION AND ANALYSIS The core business of the company is processing of fabric and manufacturing and marketing of flock fabric. The management discussions and analysis is given hereunder: - a) Industry structure and development: There is general awareness and concern about the need to revive the industry and exploit its export potential. On its part, the Government is conscious and taking steps which should have positive impact on this industry. TUFS is an example of Govt. initiative, b) Opportunity and threats: With effect from 1st January 2005, Industry is exposed to International market on dismantling of quota of textiles and garments. While globalization offers unlimited opportunities, the same is fraught with threats from competitors specially from countries like China, which can adversely affect our exports and local markets. However, with conscious efforts by the Industry to become competitive, it is expected that opportunities provided by the free market economy in the long run would be fully exploited to the benefit of the country. To seize the opportunity your company has already embarked upon modernisation programme. c) Segment-wise performance: The company is mainly in activities as cited above. The company has no activity outside India except some exports. Segment wise performance is given at Note No. 12 of Schedule i.e. Notes on Accounts. d) Outlook: The Directors are hopeful that with the thrust on improvement in International scenario, change in the product mix, cost effectiveness and development of new qualities, it would be possible to meet the challenges being faced by the processing and flock fabric industry. It is also expected that the export scenario would improve in the coming years, e) Risk and concerns: The year under review has been a difficult one for the textile industry in general due to increase in power cost and raw material cost. However due to competitive edge enjoyed, your company is expanding its market and aims to achieve world class market development, order procurement and supply management have been re-engineered and new practices adopted at all levels. Technology obsolescence is an inherent business risk in a fast changing world and fast adaptability to change is crucial for survival of business. Continuous modernization programme adopted by the company coupled with international bench making has enabled the company to emerge as a modern and efficient processing and flock fabric plant. f) Internal control system: The company maintains adequate internal control systems, which provide adequate safeguards and proper monitoring of the transactions. The company has an inhouse Internal Audit Department. The internal auditor reports to the Executive Director and Audit Committee of the Board. The internal auditor conducts regular departmental audits to ensure that the companys control systems are adequately followed and all statutory requirements are complied with. g) Discussion on financial performance with respect to operating performance: The operating performance of the company has been discussed in Directors Report for the year ended on 31st March 2006. h) Development in human resources and industrial relations: The company HRD activities involve total approach to develop the employees with emotional maturity, creativity, customer focus, quality consciousness, etc. The industrial relations throughout the year remained cordial in general. i) Cautionary Statement: Statements in the Management Discussions and Analysis describing the companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws and regulation. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting demand and supply and price conditions in domestic and overseas market in which the company operates, changes in Government regulations, tax regimes, economic developments within India and the countries in which the company conducts business and other incidental factors.