Lakhani India Ltd Directors Report

LAKHANI INDIA LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT To The Members, Your Directors have pleasure in presenting the Twenty Ninth Annual Report of your Company together with Audited Accounts for the year ended 31st March, 2011. FINANCIAL RESULTS: (Rs. in Lacs) PARTICULARS 2010-11 2009-10 Sales & Other Income 34695.99 28073.03 Profit before Depreciation (1664.98) 1241.44 Less: Depreciation 762.96 702.02 Profit before Tax (2427.94) 539.42 Provision for Tax: Current 0.00 100.00 Prior period - - Deferred 64.46 111.76 Net Profit after Tax (2492.40) 327.66 Add: Balance Brought Forward 1617.66 1289.99 Balance Carried to Balance Sheet (874.74) 1617.65 DIVIDEND: No dividend is recommended for the period ended 31st March, 2011. DEPOSITS: During the year the Company has not accepted any Deposits under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975. AUDITORS: M/s Sameer Charu & Associates, Statutory Auditor of the Company had resigned on 23.05.2011 and thus causing casual vacancy in the office of Statutory Auditor of the Company. M/s Rakesh Gupta & Associates, Chartered Accountants, Delhi has been appointed as Statutory Auditors of the Company through postal ballot conducted as per section 192 A of the Companies Act, 1956 to hold office until the conclusion of the ensuing 29th Annual General Meeting. M/s Rakesh Gupta & Associates, Chartered Accountants, offer themselves for appointment as Statutory Auditors from conclusion of this Annual General Meeting to the conclusion of the next Annual General Meeting. The Company has also received a Certificate from the Auditors to the effect that their appointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956. The Report of the Auditors is self explanatory and does not call for any further comment. COST AUDITORS: Pursuant to the directives of the Central Government and provisions of Section 233B of the Companies Act, 1956 M/s K. V. Sharma & Co., Cost Accountants, have been appointed to conduct the Cost Audit of the foot-wear manufactured by the Company for the year 2011-2012, the Cost Audit Report will be directly submitted to the Central Government. DIRECTORS: Mr. S. K. Kundra was appointed as additional director pursuant to section 260 of companies act, 1956 in the board meeting held on 15.11.2011. He holds office up to forthcoming Annual General Meeting of the company. Your company has received notice from a member seeking his appointment as Director of your Company pursuant to Section 257 of the Companies Act, 1956. Mr. Narendra Kumar Pandey has resigned from the directorship w.e.f. 09.09.2011. Your Directors place on record their appreciation for the valuable services rendered by Dr. N.K. Pandey during his tenure on the board. Mrs. Suman Lakhani, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956, the Directors confirm that in preparation of Annual Accounts for the Financial Year ended 31st March, 2011: (i) The applicable Accounting Standards have been followed along with proper explanation relating to material departures; (ii) The appropriate Accounting policies have been selected and applied consistently, judgments and estimates made are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2011 and of the Profit and Loss Account of the company for that period; (iii) The proper and sufficient care has been taken for 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 for the financial year ended on 31st March, 2011 have been prepared on a going concern basis. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT: The Ministry of Corporate Affairs vide its General Circular No.2/2011, dated February 08, 2011 has granted a general exemption under Section 212(8) of the Companies Act, 1956 to all the Companies from annexing the annual accounts and other statements of subsidiary companies with the annual report of the holding company. A statement setting out important financials of the subsidiary company is attached and forms a part of this Annual Report. The Annual Accounts of the subsidiary are also available for inspection for any member/ investor, during business hours, at the Registered Office of the Company. The Consolidated Accounts of the Company are annexed to this report. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT: A separate statement on Corporate Governance and Management Discussion & Analysis Reports along with Auditors Certificate is enclosed as an annexure. PARTICULARS OF EMPLOYEES: There were no Employees who were in receipt of remuneration in excess of the Limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended. CONSERVATION OF ENERGY: The particulars required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out in the Annexure, forming part of this report. ACKNOWLEDGMENT: The Board acknowledges with gratitude the co-operation and assistance provided to your Company by the bankers and authorities of State Government from time to time. The Board wishes to place on record its appreciation to the contribution made by employees of the Company. Your Directors thank the customers, clients, vendors and other business associates for their continued support. Your Directors are thankful to the shareholders for their continued patronage. For and on behalf of Board of Directors Place: Faridabad P. D. Lakhani Dated: 15th November, 2011 Chairman & Managing Director ANNEXURE TO DIRECTORS REPORT: Statement pursuant to 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 the Directors Report for the Year ended 31st March, 2011: A. CONSERVATION OF ENERGY: (a) Energy Conservation measures taken: 1. Use of energy efficient motors. 2. Proper care has been taken in the factory building for natural lighting and ventilation. 3. Automatic power factor correction panels have been installed. 4. Strict controls on wastage of energy have been made. 5. The Company uses efficient lighting equipment to save the power. 6. The Company invests in the latest energy efficient technologies to conserve energy. 7. The Company maintains machineries on regular basis to ensure optimum utilization of energy resources, especially power and fuel costs. 8. All the section workers have been provided with Distribution Boxes so that they can shut down the power during idle time. (b) Additional investments and proposals being implemented for reduction of consumption of energy: The Company has developed systems to identify areas for making investment and implementing proposals to reduce consumption of energy resources and for optimum utilization of limited energy resources. (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: As a result of energy conservation measures adopted, there has been considerable saving in the energy consumption. The Company continues to make all efforts to keep energy consumption at optimum level. (d) Total energy consumption and energy consumption per unit of production: Form-A is not applicable. (e) Efforts made in technology absorption are given as per Form-B annexed: (f) Total Foreign Exchange used and earned: Year ended Year ended 31.03.2011 31.03.2010 Used 14.96 Lacs 18.95 Lacs Earned 41.41 Lacs 1629.40 Lacs ANNEXURE TO DIRECTORS REPORT: FORM-B For disclosure of particulars with respect of absorption: RESEARCH AND DEVELOPMENT (R & D): 1. Specific areas in which R & D carried out by the Company: The material development, product development, process development, waste recycling and energy saving were the specific areas for Research & Development during the year under review. 2. Benefits derived as a result of the above R & D: Improvement in quality, energy efficiency as well as the development of eco friendly processes enabled the companys products to be competitive in the market. 3. Future plan of action: The Company will continue to focus on developing high quality products to drive growth and a relentless focus on reducing cost to fund growth. 4. Expenditure on R & D: Expenditure on R & D is not separately allocated and identified due to the nature of industry. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts in brief, made towards technology absorption, adaptation and innovation: The technological know-how for manufacture of products has been fully absorbed and adapted by the Companys personnel in the production process. The R & D team ensures successful absorption and adaptation of latest technologies with all the manufacturing divisions. 2. Benefits derived as a result of the above efforts: i) Improvement in product quality ii) Reduction in wastage & process losses. iii) Reduction in process cycle time. iv) Abatement in pollution v) Improved productivity 3. Technology imported during last five years - NIL For and on behalf of Board of Directors Place: Faridabad P.D. Lakhani Dated: 15th November, 2011 Chairman & Managing Director MANAGEMENT DISCUSSION AND ANALYSIS ECONOMIC - OVERVIEW: The Indian economy plays a major role in the world. Last year the GDP growth rate was registered at 8%. With over 8% growth rate in last three quarters, it is estimated that the GDP growth rate will continue between 8% to 10%. The Indian markets have been strong and supported by its domestic demand and growing population. Besides this, there have been other factors for the growth of Indian markets such as consumer habits, investment in infrastructure and friendly government policies. The manufacturing sector has recorded growth. Despite the steady growth in the economy, inflation and increasing interest rates have been obstructions in the industrial growth and consumer spending. On the one hand, economic growth provides the opportunities for investment and expansion in manufacturing sector and development in infrastructure. On the other hand, inflation and rising interest rates turn into obstructions in growth of manufacturing sector. INDUSTRY STRUCTURE, OPPORTUNITIES AND THREATS: India is the one of the biggest producer of footwear. In India, footwear is manufactured both in organized and unorganized sector. The unorganized sector accounts almost half of total production. The Indian consumer has become more quality conscious and trendy. The organized sector which is equipped with advanced technological infrastructure and Research & Development can meet out the demand of consumer preferences, quality and modern trends. This has provided more opportunities to the organized sector for growth in its size and product range. The footwear industry has been contributory to the economic growth. On the one hand, it provides employment to a large number of people and on the other hand it develops the market and product and contributes in industrial output. However, the competitive environment, economic slowdown and financial crisis have been concern for footwear industry. SEGMENTWISE OR PRODUCTWISE PERFORMANCE: The Company is mainly engaged in the business of manufacturing of Footwear, so the Management considers Footwear as the only business segment of the Company. FINANCIAL PERFORMANCE: The Management Discussion and Analysis Segment constitute the part of Directors Report and Financial Performance and Review of Operations have been fully disclosed in Directors Report. OUTLOOK & KEY CHALLENGES: Lakhani India Ltd. is an established name in footwear market for its high quality products. The company manufactures footwear and a diversified range of shoe products with the help of technological advancement and built up infrastructure. The company has developed and established its brands and retail network. It has been the prime responsibility to meet the consumer demand and to provide high quality products at lowest possible price in competitive environment and to ensure the sustainable growth. INTERNAL CONTROL SYSTEM: The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, and to ensure that all transactions are authorized, recorded and reported correctly and adequately. The Companys internal controls are supplemented by an extensive program of internal audits, review by management and documented policies, guidelines and procedures. The internal control is designed to ensure that financial and other records are reliable for preparing financial information. All financial and audit control systems are also reviewed by the Audit Committee of the Board of Directors of the Company. ENVIRONMENT AND SAFETY: The Company continued to strive toward its commitment to protect and promote the environment. On environmental matters, all plants of the Company continue to perform well beyond the stringent operational norms prescribed by the Haryana Pollution Control Board. The Company had planted number of trees around the factory premises on road. Adequate measures for safe guarding the safety and health of employees and labourers are installed at the plants of Company. The Workers and staff are regularly trained to handle the fire fighting equipments at all manufacturing plants in case of need. HUMAN RESOURCES & INDUSTRIAL RELATIONS: We firmly believe that it is our people who are most important valuable assets and resources. The Company strives to ensure best working conditions for its people and that there are no compromises on the health and safety of its employees. The Company has a healthy work culture built around strong corporate value. The Company also encourages and supports its employees to upgrade their skills on a continual basis through organizing skill development programs. The employees are provided training and also encouraged to participate in skill development courses. The devotion and commitment of our employees has enabled the Company to fulfill its targets and deadlines in time. Employer - Employee relations continued to remain cordial during the year. CAUTIONARY STATEMENT: Statements in the Management discussion and analysis report describing the Companys estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that would make a difference to the Companys operations include demand-supply conditions, raw material prices, changes in Government regulations, tax regimes, economic developments within the country and other factors For and on behalf of Board of Directors Place: Faridabad P. D. Lakhani Dated: 15th November, 2011 Chairman & Managing Director