BSE: 526642 | NSE: MIRZAINT | ISIN: INE771A01026
Market Cap: [Rs.Cr.] 382.39 | Face Value: [Rs.] 2
Industry: Leather / Leather Products
The Directors of your Company are pleased to present the Thirty-fifth Annual Reporttogether with the audited accounts for the year ended March 31, 2014.
The financial performance of the Company for the year ended March 31, 2014 issummarized below:
(Rs. in Crores)
|Earning before Finance Costs, Depreciation and amortization Expenses and Taxes||121.82||115.88|
|Less: Finance Costs||32.00||31.57|
|Depreciation & Amortization Expenses||22.04||19.92|
|Profit before Tax||67.78||64.39|
|Less: Provision for Taxes||24.41||20.95|
|Profit after Tax||43.37||43.44|
|Add: Balance in Profit & Loss Account||150.55||117.04|
|Transfer to General Reserves||5.00||4.50|
|Dividend on Equity Shares||4.64||4.64|
|Tax on Dividend||0.79||0.79|
|Income Tax (Previous Years)||0.85||-|
PERFORMANCE OF THE COMPANY:
The turnover of the Company at Rs. 707.35 Crores has shown an increase of 9.89 % ascompared to Rs. 643.73 Crores for the corresponding period in the previous year. Theprofit before tax is Rs. 67.78 Crores as compared to Rs. 64.39 Crores for the previousyear.
The major highlights of the performance are as under:
The revenue from operations increase by 10 %.
The EBITDA increased to Rs. 121.82 Crores from Rs. 115.88 Crores in the previousyear and thus showing an increase of 5.13 %.
Export increased to Rs. 450.20 Crores from Rs. 428.29 Crores, showing a growthof 5.12 %.
Revenue from Domestic Market increased to Rs. 199.89 Crores from Rs. 154.57Crores, showing a growth of 29.32 %.
Cash Profit increased to Rs. 65.41 Crores from Rs. 63.36 Crores, showing anincrease of 3.24 %.
After considering the Company's profitability, cash flow and overall financialperformance, your Directors are pleased to recommend a Dividend of Rs. 0.50 (25%) perEquity share of Rs. 2/- each. The total outflow on account of dividend, if approved by theMembers, will be about Rs.5.43 Crores including about Rs. 0.79 Crores payable towardsdividend tax, surcharge and cess on the same.
The Company had paid the same dividend for the year ended March 31, 2013 also.
The Register of Members and share transfer books will remain closed from 13thSeptember, 2014 to 20th September, 2014 (both days inclusive) for the purpose ofascertaining entitlement for the said dividend. The Thirty-fifth Annual General Meeting ofthe Company is scheduled to be held on Saturday, 20th September, 2014.
MANAGEMENT DISCUSSIONS AND ANALYSIS
During 2013-14, the Indian economy experienced an adverse mix of slowing growth andhigh inflation. The Real GDP growth for 2013-14 is estimated to be about 4.9%. Asignificant and sustained slowdown in growth over the years has contributed to lowbusiness confidence. Moreover, the economy has been under serious fiscal pressure. Revisedestimates suggest that the fiscal deficit for 201314 will be around 4.6% of the GDPHowever, by the end of 2013-14, there have been some positive signals, although it isprobably too early to make a call as whether the nation is definitely getting back to ahigher growth path. The Wholesale Price Index(WPI) moderated to 5.9% in March 2014, whileConsumer Price Index(CPI) inflation reduced to 25 months low at 8.1% still remained highby any long term yardstick. Also, driven mainly reduction in imports, India's tradedeficit reduced, consequently, the current account deficit as a ratio to GDP has narrowedsignificantly. In addition, there has been a surge in foreign capital inflows into India.However, one needs to be careful. Even if it is the case that the business cycle hasbottomed out, it is equally true that the upswing will be gradual.
The leather industry is one of the oldest and fast growing industries in India andleather is one of the most widely traded commodities globally. The growth in demand isdriven by the fashion industry, especially footwear, furniture and interior design and theautomotive industry, among others. The Indian leather industry occupies a place ofprominence in the Indian economy in view of its substantial export earnings and growth,besides the fact that it employed 2.5 million people. India's leather industry haswitnessed robust growth, transforming from a mere raw material supplier to a value addedproduct exporter. The major markets for Indian leather products are Germany, the US, theUK, Italy, France, Hong Kong, Spain, the Netherlands and UAE.
In 2013-14, India's leather exports recorded a growth rate of 17.81% reaching US $5908.82 million as against US $5015.41 million in the corresponding period of last year.Export of different categories of footwear holds a major share of about 43% in India'stotal leather and leather products exports with an export value of US$ 2531.04 millionfollowed by leather goods and accessories with a share of 23% and finished leather with22%.
According to the Council for Leather Exports, India's leather exports are likely togrow 20% at US $ 6 billion by end of the current fiscal and may even touch $ 14 millionmark by end of 12th Five Year Plan i.e. by 2016-17. Setting up of infrastructuralfacilities to ramp up production and focus on domestic market are the some of the issuesfaced by leather industry. The availability of leather will be a major factor which willdecide the future growth of this Sector. On the domestic front, India produced only 2billion sq ft of leather and to achieve the export target of US $ 14 billion by 2016-17,the industry requires an additional 4 billion sq ft of leather. On production capacity,China has been a dominant player in the leather industry with a huge chunk of about 30%share and as against this, India with only 3.05% share in the global market needs tocreate new capacities and production centres of value added leather products.
STRENGTH: Abundant raw materials, modern manufacturing with ultra modern factories,skilled manpower, good brand value in international markets, excellent CETP's andExporters' friendly export policies are the major strength of the leather industry.Government of India is giving top priority to the Leather Sector considering the growthpotential and employment opportunities offered by the segment. Indian Leather Industryholds only 3% share in the global trade of leather and leather products and Government ofIndia wants to increase it to at least 5%, which comes around to US $ 14 billion by 2017.The strength of finished leather segment is attracting global brands to India.
WEAKNESS: In Design capabilities, Low Value Additions, Skill improvement,Environmental pollution, Poor capacity utilization and quality issues especially in theSmall Sector are the major areas which needs immediate attention.
OPPORTUNITIES: Exist in Improvement in quality, Product diversification, Tapping ofLocal and international markets further and coping up with the changing scenariointernationally.
THREATS: Are there to face competition from China, Brazil and other countries likeVietnam and Indonesia, to give quality products at lower prices and to diversify andsustaining the industry despite many challenges being faced by it especially on pollutionfront.
India has state of the art manufacturing plants. The footwear sector has matured fromthe level of manual footwear manufacturing method to the automated footwear manufacturingsystems. Footwear production units are installed with world class machines. Manned byskilled technicians, these machines help to turn any new innovative idea into reality.Support systems created for the sector have indeed served the footwear industry well. Thefuture growth of the footwear industry in India will continue to be market driven, andoriented towards US and EU Markets. With technology and quality of the footwear improvingyear after year, Indian footwear industry is stamping its class and expertise in theglobal market. Keeping in view its past performance, current trend in global trade, theindustry's inherent strength and growth prospects, the footwear industry aims to augmentproduction, thereby enhancing its exports from the current level.
SEGMENT WISE PERFORMANCE
The Company's business segments are primarily Shoe Division and Tannery Division.During the year under review, the Shoe Division revenue was Rs. 623.78 Crores as againstRs. 557.31 Crores in the previous year and Tannery Division revenue was Rs. 182.44 Croresas against Rs. 169.53 Crores in the previous year.
During the year under review, the exports amounted to Rs. 450.20 Crores as against Rs.428.29 Crores in the previous year showing a growth of 5.12 %.
During the year under review, the domestic sales achieved at Rs. 199.89 Crores asagainst Rs. 154.57 Crores in the previous year showing a growth of 29.32 %.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Company has an established internal control system to optimize the use and protectionof assets, facilitate accurate and timely compilation of financial statements andmanagement reports, and ensure compliance with statutory laws, regulations and companypolicies. We have also instituted budgetary control mechanism pursuant to which themanagement regularly reviews actual performance with reference to budget and forecasts.
There is an adequate system of internal controls for the Company. The system isdesigned to adequately ensure that financial and other records are reliable for preparingfinancial statements and for maintaining accountability of assets. The Company alsocarries out regular internal audits to test the adequacy and effectiveness of its internalcontrol processes and also to suggest improvement and upgrades to the Management.
During the year under review, your Company's Authorised Share Capital has remainunchanged at Rs. 45 Crores (Rs. Forty five Crore Only) comprising 225000000 Equity Sharesof Rs. 2/- each.
During the year under review, your Company's paid up equity share capital has alsoremained unchanged at Rs. 185412000/- (Rupees Eighteen Crore Fifty Four Lac TwelveThousand only) comprising 92706000 Equity Shares of Rs. 2/- each.
The Company has not accepted any deposits from the public within the meaning of Section58A of the Companies Act, 1956 during the year under review.
HUMAN RESOURCE DEVELOPMENT
Human resource development is considered vital for effective implementation of businessplans. Constant endeavours are being made to offer professional growth opportunities andrecognitions. Various human resource policies are framed and implemented for thedevelopments of the employees. The Company has strength of about 2601 employees as onMarch 31, 2014.
CRISIL has upgraded its ratings on bank loan facilities of the Company to 'CRISILA/Stable/CRISIL A1 from 'CRISIL A-/ Stable/ CRISIL A2+'. The rating upgrade reflects yourCompany's strength supported by its cost optimisation initiative and expansion in thehigher margin domestic retail business. CRISIL believes that MIL will continue to benefitfrom its integrated operations and promoter's extensive industry experience.
In accordance with the provisions of the Companies Act, 2013 and the Articles ofAssociation of the Company, Mr. Narendra Prasad Upadhyay, Whole-time director of theCompany, is liable to retire by rotation at the ensuing Annual General Meeting and iseligible for re-appointment.
Pursuant to the relevant sections 149,150,152 read with Schedule IV of the CompaniesAct, 2013, Mr Sudhindra Jain, Mr Islam-ul-Haq, Mr P N Kapoor, Mr Subhash Sapra, DrYashveer Singh and Mr Quazi Noor-us-Salam, the existing Non-Executive IndependentDirectors of the Company, will be appointed as Non-Executive Independent Directors withinthe meaning of Companies Act, 2013, SEBI Regulations and the relevant Regulations, for aterm of five consecutive years upto 31st March, 2019, not liable to retire by rotation.
Subject to the approval of the members in the General Meeting, the Board of Directorsre- appointed Mr Irshad Mirza as Chairman(Executive), Mr Rashid Ahmad Mirza as ManagingDirector, Mr Shahid Ahmad Mirza, Mr Tauseef Ahmad Mirza, Mr Tasneef Ahmad Mirza and Mr N PUpadhyay as Executive Directors of the Company for a period of three years as per theterms specified in draft agreement to be placed before the ensuing Annual General Meeting.
Necessary resolutions for the appointment/re-appointment of the aforesaid directors hasbeen included in the Notice convening the ensuing Annual General Meeting and details ofthe proposal for appointment/re-appointment are mentioned in the explanatory statements ofthe Notice.
Your directors commend their appointment/re-appointment.
AUDITORS AND AUDITORS' REPORT
M/s Khamesra Bhatia & Mehrotra, Chartered Accountants (Firm Registration No001410C), Auditors of the Company will retire at the conclusion of the ensuing AnnualGeneral Meeting of the Company and are eligible for the re-appointment.
The Company has received the certificate from the said Auditors to the effect thattheir re-appointment, if made, would be within the limits specified in Section 141(3)(g)of the Companies Act, 2013 and that they are not disqualified for re-appointment.
The Auditors' Report to the Members on the accounts of the Company for the year endedMarch 31, 2014 does not contain any qualifications and do not call for any furthercomments.
The Board of Directors have appointed Mr A K Srivastava, Cost Accountant, forconducting the Cost Audit of Company's cost records in respect of PVC/TPR Soles and RubberSole for the year ended March 31, 2014. The Cost Audit Report for the financial year2012-13 was filed on 30th September, 2013, within stipulated time. The Cost Audit Reportfor the financial year 2013-14 shall also be filed within prescribed time.
SECRETARIAL AUDIT & RECONCILIATION OF SHARE CAPITAL
As a measure of good coporate governance practice, the Board of Directors appointed MsSavita Jyoti Associates, Practicing Company Secretary, to conduct and certify ShareCapital Reconciliation Audit for the year ended 31st March, 2014 and also appointed M/s.Swakarm Corporate Mentor LLP to conduct the Secretarial Audit for the year 2014-15.
BORROWING POWERS AND CREATION OF CHARGE
The Board of Directors of the Company vide resolution passed in the Extra OrdinaryGeneral Meeting held on 7th May, 2005, accorded its consent, subject to Members' approvalfor increasing limits on borrowings and creation of charge upon company's properties,inter-alia, under section 293(1)(d) and section 293(1)(a) of the companies Act, 1956, tothe extent of Rs 500 Crores (Rupees Five Hundred Crores). The Members of the Companyaccorded their consent for the aforesaid proposals for increasing of borrowing limits andcreation of charge, by way of Ordinary Resolution passed in the aforesaid meeting.
The said borrowing provisions are now laid down under section 180 of the Companies Act,2013. MCA vide its General Circular No 04/2014, dated March 25, 2014 provided that theresolution passed under section 293 of the Companies Act, 1956 prior to September 12, 2013with reference to borrowings and / or creation of security on assets of the Company willbe regarded as sufficient compliance of the requirement of section 293 for a period of oneyear from the date of notification of Section 180 of the Act. The section was notified onSeptember 12, 2013.
As per the provisions of Secrion 180(1)(c) of the Companies Act, 2013, a Company canborrow monies exceeding the aggregate of its paid up capital and free reserves (apart fromtemporary loans obtained from the Company's bankers in the ordinary course of business)with the approval of Members of the Company by way of a Special Resolution.
The Company may be required to procure and/or secure long term borrowings by way ofcreation of charge, mortgage and / or hypothecation on the properties of the Company infavor of the secured lenders, security holders, trustees for the holders of suchsecurities and other lender entities, by whatever name called.
Accordingly, the Company is now required to pass a fresh resolution for requisiteauthority to the Board of Directors for borrowing and / or to create charge, if any. Suchapproval is regarded by the Board as an enabling resolution, which can be used to raisefunds in an appropriate amount and using the appropriate mix of borrowing instruments,once the usage of funds has been more specifically identified. As such, the Board proposesto have enabling approval from the Members, to allow it the necessary flexibility toquickly take advantage of emerging growth opportunities, for an aggregate amount notexceeding Rs. 1000 Crore (Rupees One Thousand Crore), over and above aggregate ofCompany's then applicable paid up share capital and free reserves, as defined under theCompanies Act, 2013.
The Members are requested to consider approving the same as set out in the Noticeconvening this Thirty-fifth Annual General Meeting.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially responsible organization, the Company continues to earmark its funds toengage in activities which add value to the community around it. As a part of CSRinitiatives, your Company has been extending medical and educational support toeconomically disadvantaged and socially weaker sections of the society by way ofdistribution of School Uniforms, School Bags, Shoes and Books to School going children inassociation with the District Administration Authorities. Your Company has been organizingfree Eye Camps jointly with Rotary Club, Kanpur and MIRZA FOUNDATION (a society registeredfor Charitable and Social Welfare purposes) and successfully performed Cornia operationsof poor and weaker sections of the society.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR COMMITTEE)
Furthermore, pursuant to Section 135 of the Companies Act, 2013 and Companies(Corporate Social Responsibility) Rules, 2014, your Directors have constituted theCORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE to look into and ensure compliance withthe said provisions under the overall supervision of the Board of Directors of theCompany. The further details are available on the website of the Company.
PARTICULARS OF EMPLOYEES
A statement of Particulars of Employees as specified under Section 217(2A) of theCompanies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 asamended, is set out in the Annexure forming part of the Directors' Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under section 217(2AA) of the Companies Act, 1956 readwith Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988are set out in Annexure forming part of the Directors' Report.
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. As per Clause 49 of theListing Agreement with Stock Exchanges, a separate Chapter on Corporate Governancepractices followed by the Company together with a Certificate from the Company's Auditorsconfirming compliance forms the part of this Report.
TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
The Company has, during the year under review, transferred a sum of Rs.2,95,004/-(Rupees Two Lacs Ninety Five Thousand and four only) to Investor Education andProtection Fund, in compliance with the provisions of erstwhile Section 205 C of theCompanies Act, 1956. The said amount represents dividend for the financial year 2005-06which remained unclaimed by the Members of the Company for a period exceeding seven yearsfrom its date of payment.
As at March 31, 2014, dividend amounting to Rs. 30,72,040 has not been claimed byshareholders. The Company has been intimating the shareholders to lodge their claims fordividend from time to time.
Unclaimed dividend in respect of the financial year 2006-07 is due for transfer to IEPFin October, 2014. In terms of section 205C of the Companies Act, 1956, no claim would lieagainst the Company or the said fund after said transfer.
The Company has been awarded First Place in Leather Footwear and Second Place inOverall Exports Performance in Leather Sector by Council for Leather Exports for the year2012-13.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 withrespect to Directors' Responsibility Statement, it is hereby confirmed:
i. That in the preparation of the annual accounts for the financial year ended 31stMarch, 2014 applicable accounting standards have been followed along with properexplanation relating to material departures.
ii. That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the Company for that period.
iii. That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
iv. That the Directors had prepared the annual accounts for the financial year ended31st March, 2014 on a going concern basis'.
Your Directors take this opportunity to express their gratitudes to the bankers,employees, suppliers and the shareholders and various government departments for theirsupport and cooperation.
|For and on behalf of the Board|
|Place: Kanpur||IRSHAD MIRZA|
|Date: 24th July, 2014||Chairman|
|26-May-14||Mirza International net profit declines 28.20% in the March 2014 quarter|
|26-May-14||Board of Mirza International recommends dividend|
|25-Feb-14||Mirza International net profit declines 23.43% in the December 2013 quarter|
|25-Feb-14||Mirza International net profit rises 24.18% in the September 2013 quarter|
|25-Feb-14||Mirza International net profit rises 67.88% in the June 2013 quarter|
|25-Feb-14||Mirza International net profit rises 173.11% in the March 2013 quarter|
|14-Oct-14||Liberty Shoes closes down; Q2 net profit at Rs. 2.53 cr|
|14-Oct-14||Liberty Shoes down; posts Q2 results|
|14-Oct-14||Liberty Shoes Q2 net profit at Rs. 2.53 cr|
|04-Jun-14||Liberty Shoes registers 33% Sales growth|
|30-May-14||NB Footwear reports net loss of Rs 0.04 crore in the March 2014 quarter|
|30-May-14||Welterman International net profit rises 925.00% in the March 2014 quarter|
Irshad Mirza , Chairman
Rashid Ahmed Mirza , Managing Director
Tauseef Ahmad Mirza , Whole-time Director
Yashveer Singh , Director
Company Head Office / Quarters:
Phone : Uttar Pradesh-91-0512-2530775 / Uttar Pradesh-
Fax : Uttar Pradesh-91-0512-2530166 / Uttar Pradesh-
E-mail : firstname.lastname@example.org
Web : http://www.mirza.co.in
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