Hindoostan Spinning and Weaving Mills Ltd merged Directors Report

TO

THE MEMBERS,

Your Directors have pleasure in presenting the 109^th Annual Report on the affairs of your Company together with the Audited Statements of Accounts for the year ended March 31, 2013.

		(Rs. in lakhs)
SUMMARISED FINANCIAL RESULTS	Current Year Ended 31.03.2013	Previous Year Ended 31.03.2012
Gross Profit before Interest, Depreciation and Tax	1019.17	244.42
Less: Finance Cost	6.52	7.13
Gross Profit after interest but before Depreciation	1012.65	237.29
Less: Depreciation	471.57	423.22
Profit/(Loss) before Taxation	541.08	(185.93)
Less: Provision for Taxation	116.00	1.58
Less: Short Provision of Tax of earlier year	7.65
Balance brought forward from last year	438.45	712.87
Profit after Tax / Amount available for appropriation	855.88	528.52
Add: Transferred from Reserve under Section 45IC	48.47
Less: Transferred to General Reserve	43.00	72.70
Less: Proposed Dividend	124.84	83.23
Less: Tax on proposed Dividend	20.25	13.50
Balance carried to Balance Sheet	716.26	359.09

REVIEW OF OPERATIONS

The revenue from operations of the Company for the financial year 2012-13 is Rs.10643.50 lakhs. The Profit before tax is Rs.541.08 lakhs. The performance and overall view of the Textile as well as the Roll manufacturing business has been covered in the Management Discussion and Analysis which forms part of this Directors Report.

In order to consolidate all activities at one centralized place, the Company set up a new factory for manufacturing Calendar Rolls with the latest technology and higher capacity at Karad, Satara. The commercial production in this new factory commenced from December 2012.

The Companys Roll manufacturing factory at Ambernath is considered to be obsolete and economically unsustainable by the management. Therefore it was decided to shift its activities to the aforesaid factory at Karad.

DIVIDEND

The Directors recommend a dividend of Rs.7.50 per share (Face value of Rs. 10/- each) for the financial year ended on March 31, 2013. The total dividend payout for the year 2012-13 (inclusive of dividend tax) would aggregate to Rs.145.09 lakhs.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year under review. There are no outstanding deposits remaining unpaid / unclaimed as on March 31, 2013.

DIRECTORS

During the year under review, in the Board Meeting held on August 9, 2012, Mr. Sudhir Thackersey, Chairman, relinquished his position as Chairman and Director after his long and fruitful association with the Company. The Board Members expressed their deep sense of gratitude to Mr. Sudhir Thackersey and placed on record their appreciation for his immense contribution and leadership, patience and courage which helped the Company steer through difficult times.

The Directors of the Company have conferred the title of Chairman Emeritus upon the former Chairman of the Board, Mr. Sudhir Thackersey who, in their judgement, brought credit and distinction to the Company through his long and faithful service. Mr. Sudhir Thackersey thanked the Board and accepted the honour.

In light of Mr. Sudhir Thackersey resigning from the position of Chairman and Director of the Company, the Board, after due deliberations in the same meeting held on August 9, 2012, unanimously decided that Mr. Raoul Thackersey be appointed as the Chairman in recognition of his vast experience and association with the Company. Mr. Raoul Thackersey has accepted the appointment with effect from August 9, 2012.

Mr. R.N. Bansal, Mr. P.B. Desai and Mr. Sujal A. Shah, retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment as Directors of the Compnay in accordance with Article 99 of the Articles of Association of the Company.

SUBSIDIARY

The Company has a wholly owned subsidiary viz. Hindoostan Technical Fabrics Limited (HTFL). The revenue from operations of the subsidiary for the third financial year 2012-13 is Rs.99.64 lakhs. The Loss before tax is Rs.128.87 lakhs. The audited annual accounts of HTFL is included in the audited Consolidated Financial Statements of the Company forming part of this Annual Report prepared in accordance with the relevant Accounting Standards issued by the Institute of Chartered Accountants of India and where applicable, Listing Agreement as prescribed by the Securities and Exchange Board of India.

The Ministry of Corporate Affairs, Government of India vide Circular No. 02/2011 dated February 8, 2011 granted a general exemption under Section 212(8) of the Companies Act,1956 directing that provisions of Section 212 shall not apply in relation to subsidiaries of the Company subject to fulfillment of certain conditions. Accordingly, the Balance Sheet, Profit & Loss Account and other documents of the Subsidiary Company are not attached herewith.

The Company shall make available the Annual Accounts of the Subsidiary Company and related detailed information to any Member of the Company and the Subsidiary Company seeking the same and the same will also be available for inspection by any Member at the Registered Office of the Company and of the Subsidiary Company during their working hours upto the date of the Annual General Meeting.

The financial information of the Subsidiary Company as stipulated in the above Circular is disclosed in this Annual Report.

COST AUDITORS

As per the Order of the Central Government and in pursuance of Section 233B of the Companies Act, 1956, your Company carries out an audit of its cost records. The last date for filing of the Cost Audit Report for the Financial Year ended March 31, 2012 was January 15, 2013. The Company has filed the Cost Audit Report for the textiles division with a delay of 107 days on May 2, 2013.

Pursuant to Section 233B(2) of the Companies Act, 1956, the Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. Anant Ashok Katyare, Cost Accountants, as the Cost Auditor for conducting audit of the Companys cost records for the financial year 2012-13 and 2013-14. M/s. Anant Ashok Katyare has confirmed that this appointment is within the limits of Section 224(1B) of the Companies Act, 1956 and has further certified that they are free from any disqualifications specified under Section 233B(5) read with Section 224 and Section 226 of the Companies Act, 1956.

The Audit Committee has received a Certificate from the above Cost Auditor certifying their independence and arms length relationship with the Company.

CASH FLOW STATEMENT

In conformity with the Accounting Standard 3 issued by the Institute of Chartered Accountants of India and the provisions of Clause 32 of the Listing Agreement with the Bombay Stock Exchange Limited, the Cash Flow Statement for the year ended March 31, 2013 is annexed to the accounts.

PARTICULARS OF EMPLOYEES

There were no employees during the year covered under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company has been making continuous efforts to conserve energy and upgrade/absorb technology to optimise the energy cost. A statement containing information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of this Report is enclosed herewith as Annexure - I.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, a separate report on Corporate Governance is enclosed herewith as Annexure - II, together with a certificate from the Companys Auditors confirming compliance of conditions on Corporate Governance.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation received from the senior management, confirm that:

(i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(ii) such accounting policies have been selected and applied consistently and judgments and estimates made 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, 2013 and of the profit for the year ended March 31, 2013;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in 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;

(iv) the Annual Accounts have been prepared on a "going concern" basis.

AUDITORS

The retiring Auditors, M/s. M.A. Parikh & Co., Chartered Accountants, being eligible, offer themselves for reappointment. You are requested to appoint the Auditors to hold office from the conclusion of the meeting till the conclusion of the next Annual General Meeting and to fix their remuneration. The Company has obtained written confirmation from the Auditors as per the provisions of Section 224(1B) of the Companies Act, 1956, to the effect that the re-appointment if made, would be in conformity of the limit specified in the said section.

APPRECIATION

Your Directors place on record their appreciation for the continued support and valuable co-operation extended to the Company by shareholders and other stakeholders during the year under review. The Board also thanks the employees for their dedicated and sincere services at all levels of operations of the Company.

	For and on behalf of the Board of Directors,
Place: Mumbai	RAOUL THACKERSEY
Date : May 4, 2013	Chairman

ANNEXURE-I

INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 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 MARCH 31, 2013.

CONSERVATION OF ENERGY

TEXTILE DIVISION

Your Company has been making continuous efforts to conserve energy. A few major steps taken during the year are as follows;

(a) Energy Conservation Measures Taken

i) Energy Conservation Cell is working continuously to conserve energy in functional areas.

ii) Installation of dry run sensor for raw water pump used to supply water to boiler helped to reduce idle time consumption of power.

iii) Continual inspection of running electric motors for improved life and to conserve energy.

iv) Separation of common switches to reduce idle working of tube lights in Time Office, Folding and Weaving Preparatory.

v) Use of LED tube lights on AIRJET looms by replacing conventional 36W tube light resulted in power savings.

vi) Optimization of CFM required to run AIRJET looms resulted in lowering compressed air requirement.

vii) Auditing done for air leakages and the outcome gets attended to conserve energy.

viii) Steam leakages in the line get identified and get attended to conserve steam.

(b) Additional Investments and proposal, if any, being implemented for reduction of consumption of energy

i) Installation of VFD for humidification plant motors.

ii) Installation of water pump over blow down water tank to re-use blow down water for spraying over coal in stock.

iii) Installation of co-generation plant to fulfill power requirement.

iv) Installation of LDR system for street lights.

(c) Impact

i) Installation of a VFD for humidification plant will save considerable amount of electricity.

ii) Installation of water pump will help to bring down water requirement and ultimately result into re-use of natural resources.

iii) Installation of co-generation power plant will help to reduce power consumption cost.

iv) Installation of LDR system for street light will help optimize power consumption.

ROLL MANUFACTURING DIVISION

(a) Energy Conservation Measures Taken

The Company has been making continuous efforts to conserve energy by replacement of old electrical drives, reorganising the production process and introduction of improved systems are carried out from time to time.

(b) Additional Investments and proposal, if any, being implemented for reduction of consumption of energy

A study to identify other areas of investments in energy conservation are being considered.

(c) Impact

There has been power saving due to abovementioned measures and efforts are taken continuously.

FORM - A

Form for disclosure of particulars with respect to conservation of energy

A. Power & Fuel Consumption	Textiles	Roll Manufacturing
1. Electricity:
(a) Purchased Units (000 KWH)	11438	167
Total Amount (Rs.000)	64582	1300
Rate/Unit (Rs.per KWH)	5.65	7.81
(b) Own Generation
Through Diesel Generator Units (000 KWH)	12	-
Units per Ltr. of diesel oil	2.30	-
Cost/Unit (Rs.per KWH)	19.33	-
2. Furnace Oil:
Quantity (K.Ltrs.)	8	-
Total Amount (Rs.000 )	294	-
Average Rate (Rs.per K.Ltr.)	38519	-
3. Coal:
Quantity (Tons)	2369	-
Total Amount (J000)	11211	-
Average Rate (Rs.per M.T.)	4732	-
4. Bagasse:
Quantity (Tons)	-	-
Total Amount (T000 )	-	-
Average Rate (Rs.per M.T.)	-	-
5. Firewood:
Quantity (Tons)	-	-
Total Amount (T000 )	-	-
Average Rate (Rs.per M.T.)	-	-
B. Consumption per Unit of Production
1. Electricity:
(Purchased & Own Generation)
KWH/Metre of Grey Production / Elastic Calender Bowls	0.947	1253.09
KWH/Sq. Mtr. of Grey Production	0.606	-
2. Furnace Oil:
Kgs./Mtr. of Grey Production	0.001	-
Kgs./Sq. Mtr. of Grey Production	-	-
3. Coal:
Kgs./Mtr. of Grey production	0.196	-
Kgs./Sq. Mtr. of Grey Production	0.125	-
4. Bagasse:
Kgs./Mtr. of Grey Production	-	-
Kgs./Sq. Mtr. of Grey Production	-	-
5. Firewood:
Kgs./Mtr. of Grey Production	-	-
Kgs./Sq. Mtr. of Grey Production	-	-

FORM B

DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

Research and Development (R & D)

1. Specific areas in which R & D carried out by the Company Textiles Division

> Continual feedback via quality round supervisors of SQC resulted in better realization of cloth.

> Use of sample loom, sizing and warping helped to develop new samples from time to time in accordance to market requirements.

> Timely feedback over the areas where waste is generated being reported by SQC department to bring down waste and increase realization.

> Different trials being taken to bring down cost of Sizing chemical and uplift efficiencies in case of fine counts.

> Installation of new trash analyzer, Twist tester and moisture meter helped to detect the quality parameters according to norms in the product supplied by outside parties.

Roll Manufacturing Division

> Focus on reduction of raw material costs by trials using cost effective inputs.

> Substitution of existing imported non woven materials with more cost effective and preferably locally available and sustainable supplies.

> Continuous development of new products with applications in industry to diversify the Companys product portfolio.

> Efforts to improve manufacturing processes for higher productivity and quality levels.

2. Benefits derived as a result of the above R & D Textiles Division

• Improved fabric quality, minimum damages in the end product along with better efficiency and productivity.

• Helped sales department to keep trend in the market.

• Resulted in lowering down raw material to sales ratio and improved yield%.

• Sizing department get rid of Conventional Sizing recopies with better performance of beams at weaving stage.

• Proper and focused results arrived from new electronic instrument helped in decision taking.

Roll Manufacturing Division

• Process and product development has resulted in more efficient manufacturing of existing products and introduction of new products.

• Application development resulted in new application with better durability and improved quality.

• Access to new markets with new products in order to increase sales as well as profitability.

3. Future Plan of action

To continue R & D in the relevant areas to achieve improvement & development of existing and new products, cost reduction, export promotion, import substitution, energy saving and improvement in safety and environmental production.

4. Expenditure on R & D

	( Rs. In lakhs)
a) Capital	-
b) Recurring	6.45
c) Total	6.45
d) Total R. & D Expenditure as a percentage of total turnover	0.061%

Technology absorption, adaptation and innovation Textile Division

i) Use of Single shot sizing chemicals for sizing warp yarn removed conventional sizing recopies and working efficiency of loom shed get improved.

ii) Application of velcro over sizing beam resulted into reduction of waste generation which was happening due to beam burst.

iii) Development of industrial cloth using Sampling machine.

Roll Manufacturing Division

With the technical know-how agreement with M/s. Voith GmbH, Germany, who are one of the leading manufacturers of Calender Machine worldwide for the paper manufacturing and converting industry, the Company is producing High Efficiency Liquid Extraction rollers (Laxmi Helextra) which can replace the conventional rubber rolls in textile industry and can save 30% to 50% better liquid extraction as against the conventional squeezing mangles.

Information regarding technology imported during the last five years

(a) Technology Imported	Nil
(b) Year of Import	Not Applicable
(c) Has Technology been fully absorbed	Not Applicable
(d) If not fully absorbed, areas where this has not taken place thereof and future plans of action	Not Applicable

FOREIGN EXCHANGE EARNINGS AND OUTGO

Despite rupee depreciation and adverse market conditions, the Company has been able to achieve the exports at Rs.1656.16 lakhs (FOB). The Companys efforts continue in the areas of development and identification of new export markets.

Roll Manufacturing Division

The Company has taken initiative to boost up exports of Elastic Calender Bowls and Cotton Spun Laps (Cakes). Besides continuous efforts are being made to improve the quality of the products in the international market and also to develop new market with the help of M/s. Voith GmbH, Germany, with whom the Company has entered into Technical Know-how Agreement.

Total Foreign Exchange used and earned.

	(Rs.in lakhs)
Used	199.67
Earned	1656.16

For and on behalf of the Board of Directors,

RAOUL THACKERSEY

Chairman

Place: Mumbai

Date : May 4, 2013