The Directors of your Company are pleased to present the Thirty-fifth Annual Report together with the audited accounts for the year ended March 31, 2014.
The financial performance of the Company for the year ended March 31, 2014 is summarized 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 % as compared to Rs. 643.73 Crores for the corresponding period in the previous year. The profit before tax is Rs. 67.78 Crores as compared to Rs. 64.39 Crores for the previous year.
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 previous year and thus showing an increase of 5.13 %.
Export increased to Rs. 450.20 Crores from Rs. 428.29 Crores, showing a growth of 5.12 %.
Revenue from Domestic Market increased to Rs. 199.89 Crores from Rs. 154.57 Crores, showing a growth of 29.32 %.
Cash Profit increased to Rs. 65.41 Crores from Rs. 63.36 Crores, showing an increase of 3.24 %.
After considering the Company's profitability, cash flow and overall financial performance, your Directors are pleased to recommend a Dividend of Rs. 0.50 (25%) per Equity share of Rs. 2/- each. The total outflow on account of dividend, if approved by the Members, will be about Rs.5.43 Crores including about Rs. 0.79 Crores payable towards dividend 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 13th September, 2014 to 20th September, 2014 (both days inclusive) for the purpose of ascertaining entitlement for the said dividend. The Thirty-fifth Annual General Meeting of the 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 and high inflation. The Real GDP growth for 2013-14 is estimated to be about 4.9%. A significant and sustained slowdown in growth over the years has contributed to low business confidence. Moreover, the economy has been under serious fiscal pressure. Revised estimates suggest that the fiscal deficit for 201314 will be around 4.6% of the GDP However, by the end of 2013-14, there have been some positive signals, although it is probably too early to make a call as whether the nation is definitely getting back to a higher growth path. The Wholesale Price Index(WPI) moderated to 5.9% in March 2014, while Consumer Price Index(CPI) inflation reduced to 25 months low at 8.1% still remained high by any long term yardstick. Also, driven mainly reduction in imports, India's trade deficit reduced, consequently, the current account deficit as a ratio to GDP has narrowed significantly. 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 has bottomed 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 and leather is one of the most widely traded commodities globally. The growth in demand is driven by the fashion industry, especially footwear, furniture and interior design and the automotive industry, among others. The Indian leather industry occupies a place of prominence 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 has witnessed robust growth, transforming from a mere raw material supplier to a value added product exporter. The major markets for Indian leather products are Germany, the US, the UK, 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 $5015.41 million in the corresponding period of last year. Export of different categories of footwear holds a major share of about 43% in India's total leather and leather products exports with an export value of US$ 2531.04 million followed by leather goods and accessories with a share of 23% and finished leather with 22%.
According to the Council for Leather Exports, India's leather exports are likely to grow 20% at US $ 6 billion by end of the current fiscal and may even touch $ 14 million mark by end of 12th Five Year Plan i.e. by 2016-17. Setting up of infrastructural facilities to ramp up production and focus on domestic market are the some of the issues faced by leather industry. The availability of leather will be a major factor which will decide the future growth of this Sector. On the domestic front, India produced only 2 billion 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 to create 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 and Exporters' friendly export policies are the major strength of the leather industry. Government of India is giving top priority to the Leather Sector considering the growth potential and employment opportunities offered by the segment. Indian Leather Industry holds only 3% share in the global trade of leather and leather products and Government of India 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 the Small Sector are the major areas which needs immediate attention.
OPPORTUNITIES: Exist in Improvement in quality, Product diversification, Tapping of Local and international markets further and coping up with the changing scenario internationally.
THREATS: Are there to face competition from China, Brazil and other countries like Vietnam and Indonesia, to give quality products at lower prices and to diversify and sustaining the industry despite many challenges being faced by it especially on pollution front.
India has state of the art manufacturing plants. The footwear sector has matured from the level of manual footwear manufacturing method to the automated footwear manufacturing systems. Footwear production units are installed with world class machines. Manned by skilled 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. The future growth of the footwear industry in India will continue to be market driven, and oriented towards US and EU Markets. With technology and quality of the footwear improving year after year, Indian footwear industry is stamping its class and expertise in the global market. Keeping in view its past performance, current trend in global trade, the industry's inherent strength and growth prospects, the footwear industry aims to augment production, 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 against Rs. 557.31 Crores in the previous year and Tannery Division revenue was Rs. 182.44 Crores as 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 as against 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 protection of assets, facilitate accurate and timely compilation of financial statements and management reports, and ensure compliance with statutory laws, regulations and company policies. We have also instituted budgetary control mechanism pursuant to which the management regularly reviews actual performance with reference to budget and forecasts.
There is an adequate system of internal controls for the Company. The system is designed to adequately ensure that financial and other records are reliable for preparing financial statements and for maintaining accountability of assets. The Company also carries out regular internal audits to test the adequacy and effectiveness of its internal control processes and also to suggest improvement and upgrades to the Management.
During the year under review, your Company's Authorised Share Capital has remain unchanged at Rs. 45 Crores (Rs. Forty five Crore Only) comprising 225000000 Equity Shares of Rs. 2/- each.
During the year under review, your Company's paid up equity share capital has also remained unchanged at Rs. 185412000/- (Rupees Eighteen Crore Fifty Four Lac Twelve Thousand only) comprising 92706000 Equity Shares of Rs. 2/- each.
The Company has not accepted any deposits from the public within the meaning of Section 58A of the Companies Act, 1956 during the year under review.
HUMAN RESOURCE DEVELOPMENT
Human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions. Various human resource policies are framed and implemented for the developments of the employees. The Company has strength of about 2601 employees as on March 31, 2014.
CRISIL has upgraded its ratings on bank loan facilities of the Company to 'CRISIL A/Stable/CRISIL A1 from 'CRISIL A-/ Stable/ CRISIL A2+'. The rating upgrade reflects your Company's strength supported by its cost optimisation initiative and expansion in the higher margin domestic retail business. CRISIL believes that MIL will continue to benefit from its integrated operations and promoter's extensive industry experience.
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Narendra Prasad Upadhyay, Whole-time director of the Company, is liable to retire by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
Pursuant to the relevant sections 149,150,152 read with Schedule IV of the Companies Act, 2013, Mr Sudhindra Jain, Mr Islam-ul-Haq, Mr P N Kapoor, Mr Subhash Sapra, Dr Yashveer Singh and Mr Quazi Noor-us-Salam, the existing Non-Executive Independent Directors of the Company, will be appointed as Non-Executive Independent Directors within the meaning of Companies Act, 2013, SEBI Regulations and the relevant Regulations, for a term 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 Directors re- appointed Mr Irshad Mirza as Chairman(Executive), Mr Rashid Ahmad Mirza as Managing Director, Mr Shahid Ahmad Mirza, Mr Tauseef Ahmad Mirza, Mr Tasneef Ahmad Mirza and Mr N P Upadhyay as Executive Directors of the Company for a period of three years as per the terms specified in draft agreement to be placed before the ensuing Annual General Meeting .
Necessary resolutions for the appointment/re-appointment of the aforesaid directors has been included in the Notice convening the ensuing Annual General Meeting and details of the proposal for appointment/re-appointment are mentioned in the explanatory statements of the Notice.
Your directors commend their appointment/re-appointment.
AUDITORS AND AUDITORS' REPORT
M/s Khamesra Bhatia & Mehrotra, Chartered Accountants (Firm Registration No 001410C), Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting of the Company and are eligible for the re-appointment.
The Company has received the certificate from the said Auditors to the effect that their 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 ended March 31, 2014 does not contain any qualifications and do not call for any further comments.
The Board of Directors have appointed Mr A K Srivastava, Cost Accountant, for conducting the Cost Audit of Company's cost records in respect of PVC/TPR Soles and Rubber Sole for the year ended March 31, 2014. The Cost Audit Report for the financial year 2012-13 was filed on 30th September, 2013, within stipulated time. The Cost Audit Report for 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 Ms Savita Jyoti Associates, Practicing Company Secretary, to conduct and certify Share Capital 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 Ordinary General Meeting held on 7th May, 2005, accorded its consent, subject to Members' approval for 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, to the extent of Rs 500 Crores (Rupees Five Hundred Crores). The Members of the Company accorded their consent for the aforesaid proposals for increasing of borrowing limits and creation 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 the resolution passed under section 293 of the Companies Act, 1956 prior to September 12, 2013 with reference to borrowings and / or creation of security on assets of the Company will be regarded as sufficient compliance of the requirement of section 293 for a period of one year from the date of notification of Section 180 of the Act. The section was notified on September 12, 2013.
As per the provisions of Secrion 180(1)(c) of the Companies Act, 2013, a Company can borrow monies exceeding the aggregate of its paid up capital and free reserves (apart from temporary 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 of creation of charge, mortgage and / or hypothecation on the properties of the Company in favor of the secured lenders, security holders, trustees for the holders of such securities and other lender entities, by whatever name called.
Accordingly, the Company is now required to pass a fresh resolution for requisite authority to the Board of Directors for borrowing and / or to create charge, if any. Such approval is regarded by the Board as an enabling resolution, which can be used to raise funds 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 proposes to have enabling approval from the Members, to allow it the necessary flexibility to quickly take advantage of emerging growth opportunities, for an aggregate amount not exceeding Rs. 1000 Crore (Rupees One Thousand Crore), over and above aggregate of Company's then applicable paid up share capital and free reserves, as defined under the Companies Act, 2013.
The Members are requested to consider approving the same as set out in the Notice convening this Thirty-fifth Annual General Meeting.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially responsible organization, the Company continues to earmark its funds to engage in activities which add value to the community around it. As a part of CSR initiatives, your Company has been extending medical and educational support to economically disadvantaged and socially weaker sections of the society by way of distribution of School Uniforms, School Bags, Shoes and Books to School going children in association with the District Administration Authorities. Your Company has been organizing free Eye Camps jointly with Rotary Club, Kanpur and MIRZA FOUNDATION (a society registered for Charitable and Social Welfare purposes) and successfully performed Cornia operations of 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 the CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE to look into and ensure compliance with the said provisions under the overall supervision of the Board of Directors of the Company. 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 the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended, 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 read with Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure forming part of the Directors' Report.
The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. As per Clause 49 of the Listing Agreement with Stock Exchanges, a separate Chapter on Corporate Governance practices followed by the Company together with a Certificate from the Company's Auditors confirming 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 and Protection Fund, in compliance with the provisions of erstwhile Section 205 C of the Companies Act, 1956. The said amount represents dividend for the financial year 2005-06 which remained unclaimed by the Members of the Company for a period exceeding seven years from its date of payment.
As at March 31, 2014, dividend amounting to Rs. 30,72,040 has not been claimed by shareholders. The Company has been intimating the shareholders to lodge their claims for dividend from time to time.
Unclaimed dividend in respect of the financial year 2006-07 is due for transfer to IEPF in October, 2014. In terms of section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after said transfer.
The Company has been awarded First Place in Leather Footwear and Second Place in Overall Exports Performance in Leather Sector by Council for Leather Exports for the year 2012-13.
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:
i. That in the preparation of the annual accounts for the financial year ended 31st March, 2014 applicable accounting standards have been followed along with proper explanation relating to material departures.
ii. That the Directors had 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 at the end of the financial year and of the profit of the Company for that period.
iii. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the 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 ended 31st 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 their support and cooperation.
|For and on behalf of the Board|
|Place: Kanpur||IRSHAD MIRZA|
|Date: 24th July, 2014||Chairman|
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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