Silktex Ltd Directors Report

Your Directors are pleased to present the Eighteenth Annual Report on the business and operations of the Company and the audited statement of accounts for the year ended 31st March, 2011.

Business Scenario and Performance

The World Economy during the year ended with shades of recession in USA, but the slowdown of economy as a result of European debt concerns further aggravated the business sluggishness particularly in the home furnishing area due to cut back in the big tickets pending.

The Overseas silk yarn supplies have seen unprecedented cost escalation by almost 100-150%. Your Directors have initiated various aggressive marketing steps like additional products in different blends, domestic sales which is getting positive response and are also hopeful of improving the performance during the coming year.

During the year under review due to steep increase in raw material cost, higher interest rates & volatile foreign currency fluctuations the Company has reported a loss of Rs. 479.06 Lacs compared to loss ofRs. 53.61 in the previous year.

Financial Results and Appropriations

		(Rs. in Lacs)
Particulars	2010-11	2009-10
Operating Profit	(105.09)	303.58
Profit before tax	(479.06)	(53.61)
Provision for taxation	-	3.36
Provision for deferred tax	(180.46)	(7.65)
Profit after tax	(298.60)	(49.32)
Profit brought forward from previous year	916.70	966.02
Profit available for appropriation	618.09	916.70

Dividend

During the year ended 31st March, 2011, the Board has not recommended any dividend for the year under review.

Directors

In terms of provisions of the Companies Act, 1956 and Articles of Association of the Company, Sri Sandeep Kumar Churiwala and Sri Saket Kumar Churiwala retire by rotation and being eligible, offer themselves for re-appointment.

Directors responsibility statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors confirms that:

(a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) Appropriate accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the Profit of the Company for that period.

(c) 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.

(d) The annual accounts have been prepared on a going concern basis.

Corporate Governance

Your Company has consistently been complying with the Corporate Governance Code prescribed by SEBI and a detailed report on Corporate Governance together with a Certificate of Compliance from the statutory auditors, as required by Clause 49 of the Listing Agreement, forms a part of this Annual Report.

Conservation of energy, Technology absorption and Foreign exchange earnings and outgo

Information under Section 217(1)(e) read with Companies (Disclosure of particulars in the report of Directors) Rules, 1988 is set out in Annexure - A, forming part of this report.

Management Discussion & Analysis Report

Management Discussion & Analysis Report is enclosed at Annexure - B to this report.

Particulars of employees

There are no employees employed during the year or part of the year who were in receipt of remuneration in excess of the limits prescribed under Section 2I7(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

Auditors

M/s. G. Bagrodia & Co, Chartered Accountants, Bangalore bearing Firm Registration No.: 000312S, retires at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. Directors recommend the appointment of the retiring Auditors.

Auditors Report

Regarding Point No.4 (a)

The Company has initiated necessary efforts with the concerned to realize/recover the advances. Management considers all advances as good and realizable though slowly in view of present recession.

Point No.4 (b)

The Company maintains cost records as prescribed by the central government under Section 209(1)(d) of Companies Act, 1956 and the valuation for the finished and semi finished goods are taken at the cost as certified by a Cost Accountant and others at cost of procurement or realizable value whichever is less as per the normal industrial standards.

Acknowledgements

Your Directors wish to place on record their appreciation for the excellent co-operation and assistance received from Bankers, Financial Institutions, Central and State Government. We express our wholehearted thanks to the customers and suppliers for their valued patronage and the shareholders for the continued confidence reposed in the Company and its Management.

Your Directors also wish to place on record their appreciation for the total dedication and wholehearted efforts made by employees of the Company.

	For and on behalf of the Board
Place: Bangalore	Sushil Kumar Churiwala
08-08-2011	Chairman and Managing Director

ANNEXURE TO THE DIRECTORS REPORT

ANNEXURE - A

Information as required under Section 217(I)(e) read with Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988.

Conservation of Energy

A. Energy conservation measures taken.

The Company has been using the latest techniques and equipment available in the field of energy conservation. The Company has been using its own D.G. sets, which ensures continuous and quality supply of power.

B. Additional Investments and proposals, if any, being implemented for reduction of consumption of energy. The Company has started the process to undertake power audit to eliminate any wastages and conserve of power.

The Company has invested in the latest and best technology available so far and hence there is no proposal to invest any further amounts.

C. Impact of the measures taken for reduction of energy consumption and consequent impact on the cost of production.

Energy conservation measures taken so far have resulted in improved energy efficiency. This has resulted in ensuring adequate and uninterrupted supply of good quality power at the least possible cost leading to better utilisation and low cost of production. Efforts continue to further optimize energy productivity through ongoing and planned measures.

D. Total energy consumption and energy consumption per unit of production.

FORM "A"

Form for disclosure of particulars with respect to Conservation.

		Current Year	Previous Year
A. Power & Fuel Consumption
1. a) Electricity purchased	Units	12,61,887	10,68,538
Rate/unit	Rs.	5.16	4.65
Total Amount (Includes fixed demand charges)	Rs.	65,09,177	49, 63, 737
b) Own Generation
(i) Through Diesel Generator	Units	6,76,194	11,82,404
Units/Ltr. of Diesel oil	Units	3.12	3.27
Cost/unit	Rs.	13.97	10.90
(ii) Through steam turbine/generator		Nil	Nil
2. Coal		Nil	Nil
3. Furnace Oil		Nil	Nil
4. Others/Internal Generation		Nil	Nil
B. Consumption per unit of Production
Products units: Raw Silk Yarn	Mtrs	39,759	58,552
Electricity: (units consumed/Mtrs)		10.03	8.03
Furnace Oil		Nil	Nil
Coal		Nil	Nil
Others		Nil	Nil

FORM "B"

Form for disclosure of particulars with respect to Absorption.

A. RESEARCH AND DEVELOPMENT (R & D)

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

(i) Quality enhancement of existing products with new and improved designs with different weaves and twists,

(ii) Development and evaluation of alternate and cheaper raw materials,

(iii) New product/process developments in-house.

2. Benefits derived as a result of the above R & D efforts:

(i) Consistent quality product along with development of designs of International Standards,

(ii) Lower cost of production.

3. Future plan of action:

Continuation of R& D efforts towards quality improvement, development of new designs and cost reduction.

4. Expenditure on R & D:

(i) Capital :	Nil
(ii) Recurring :	Rs. 5B.76.576/-
(iii) Total :	Rs. 5B.76.576/-
(iv) Total R& D expenditure as percentage of total turnover :	3.58 %

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief, made toward technology absorption, adaptation and innovation:

(i) Continuous information upgradation with R& D Divisions of overseas designers/buyers,

(ii) Adaptation of sophisticated technologies in development of new designs/products,

(iii) Use of high tech loom technology for better and faster weaving.

2. Benefits derived as a result of the above efforts:

(i) All round quality improvement in product arid design,

(ii) Reduced cost and increased productivity.

3. Information regarding imported technology (Imported during the last 5 years reckoned from the beginning of the financial year)

No technology has been imported : for the last five years

C. FOREIGN EXCHANGE EARNING AND OUTGO

Particulars	Year ended 31st March, 2011	Year ended 31st March, 2010
Earning in Foreign Currency :
FOB value of exports	14,28,72,191	19,19,00,157
Expenditure in Foreign Currency:
GIF value of import of Raw silk yarn	5,68,52,316	5,13,01,975
Dyes, Chemicals and Spares & Stores	9,00,770	13,80,697
Other expenses	1,09,62,671	1,43,31,797
Import of Capital Goods	—	—

 

	For and on behalf of the Board
Place: Bangalore	Sushil Kumar Churiwala
Date: 08-08-2011	Chairman and Managing Director