skumars nationwide ltd share price Directors report

Directors Report

Your Directors are pleased to present the Twenty Third Annual Report and Audited Statements of Accounts for the financial year ended 31^st March, 2013.

FINANCIAL HIGHLIGHTS

				(Rs. in lacs)
	2012-13	2011-12	2012-13	2011-12
Particulars	Consolidated	Consolidated	Standalone	Standalone
1 Revenue from Operations (Net)	499,009	635,526	339,588	351,146
2 Other Income	964	904	161	138
3 Profit/(Loss) from Operations (PBIDT)	91,010	134,855	57,178	77,655
(-) Finance Costs	73,609	53,486	53,031	40,510
(-) Depreciation and Amortisation Expenses	16,922	14,777	12,877	9,222
4 Profit/(Loss) before Tax and Exceptional Items	479	66,592	(8,730)	27,923
(-) Exceptional (Expenses)/ Incomes	(32,415)	-	(32,415)	-
5 Profit/ (Loss) before	(31,936)	66,592	Tax (41,145)	27,923
6 (-) Provision for Taxation	3,459	19,508	271	9,966
7 Profit/ (Loss) After Tax	(35,395)	47,084	(41,416)	17,957
(-) Minority Interest *	1,557	7,590	-	-
8 Amount Available for Appropriation	(36,952)	39,494	(41,416)	17,957
9 Balance b/f from Previous Year	80,689	57,401	17,360	17,421
Appropriations:
10 Transfer to Debenture Redemption Reserve	-	203	-	203
11 Transfer to Capital Redemption Reserve	475	-	475	-
12 Balance in Restructured Financial Cost written Off	-	16,288	-	14,310
13 Reversal of Proposed Preference & Equity Dividend and Tax	(3,505)	-	(3,505)	-
14 Provision for Preference Dividend	-	32		32
15 Tax on Preference Dividend	-	5		5
16 Proposed Equity Dividend		2,974		2,974
17 Tax on Proposed Equity Dividend	-	494		494
18 Surplus/ (Deficit) carried to Balance Sheet	46,767	76,899	(21,026)	17,360

*The minority interest pertains to investment in Company’s subsidiary, Reid & Taylor (India) Ltd.

DIVIDEND

In view of the Losses incurred during the year, your Directors are unable to recommend dividend on Equity Shares and Preference Shares for the year ended 31^st March, 2013.

YEAR IN RETROSPECT

The year witnessed several challenges in the operating and business environment. Even as the global economic environment continued to be subdued, there was a significant slowdown in economic growth in India. While India’s long-term economic fundamentals and growth potential are strong, the current challenges have had implications on business sentiment and corporate profitability. Economic slowdown and the accompanying slackness in demand have taken a heavy toll on several Indian companies.

These global uncertainties also adversely affected your Company’s growth momentum. Your Company’s turnover came down by about 3% on a standalone basis. For the first time in years, the Company incurred a substantial loss as reflected Highlights. Besides the economic environment and demand contraction, other contributory factors for the adverse results were inadequacies of working capital and cessation of activities at your Company’s UK and US subsidiaries owing mainly to unfavorable market conditions in a volatile economy. As a result, your Company experienced severe cash crunch, on account of which it could not keep up with meeting interest payment to lenders and some statutory liabilities.

Earnings of garment and textile manufacturers have been under pressure over the past few years owing to higher raw material costs and sluggish domestic and foreign demand. Costs are rising and margins are getting squeezed. It is hoped that a good festive season, encouraged by a strong monsoon and an increase in rural demand will make things turn around.

EXPORTS

The Indian textile and clothing industry is sized at around $80 billion of which around $35 billion is exports. Volatility in raw material prices and expensive as well as limited credit have strained mills’ finances, while the economic crisis in the US and the EU, which together account for 65% of India’s supplies, has adversely affected demand, reinforcing fears that the overall textile export growth could be the lowest in five years and the shipment target of $40.59 billion for this fiscal is all set to be missed. There is a slowdown in the US and much of Europe, which has resulted in a dip in supplies across most segments.

Your company is predominantly a domestic player. It was able to manage exports of Rs. 436 Lacs as against Rs. 6,692 Lacs in the previous year. Additionally, exports from the Company’s subsidiary Reid & Taylor (India) Ltd. reached Rs. 2,416 Lacs (previous year Rs. 3,747 Lacs).

Demand seems to be returning now after a tepid start in this fiscal and may finally show a marginal uptick in full year exports.

CURRENT BUSINESS OUTLOOK AND PLANS

Demand for textile and apparel industry in India continues to be sluggish on account of a recessionary trend in the economy. ‘Belmonte’ in Consumer Textiles and ‘Reid & Taylor’ in Luxury Textiles segment continue to remain key contributors to the overall performance of the Company. It is hoped that conditions may start improving in the rest of the year so that with adequate working capital sourcing, your Company would be able to operate its plants at higher capacities and with higher margins. Until maximum utilization of Company’s plants is reached, there are no plans for capacity expansion in the coming year.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to support CSR initiatives and contribute towards the welfare and social upliftment of the community.

EMPLOYEES STOCK OPTION SCHEME (ESOP)

As the employees of the Company did not exercise the option under ESOP scheme, the Company cancelled / withdrew 546,060 nos of ESOPs granted under Employees Stock Option Scheme. There were 365,760 nos. of options in force as at 31st March, 2013.

HUMAN RESOURCE

Your Company recognizes that employees play a key role in making our business successful and we achieve that through empowering our employees. Your Company maintained an environment dedicated to maintaining high employees’ sense of pride, morale and teamwork. The Human Resource Development activities focused on multi-skills training and performance management workshops. The functioning and activities were further aligned to Company’s business objectives. The ongoing thrust on rationalization of manpower with focus on proper utilization continued with implementation of Zero-base manpower budget.

CORPORATE GOVERNANCE

To comply with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on Management Discussion and Analysis and Corporate Governance together with a certificate from a Practising Company Secretary confirming compliance is included in the Annual

INFORMATION TECHNOLOGY

Your Company was in the process of implementing Enterprise Resource Planning (ERP), but was obliged to go slow on account of funding problems and had to defer completion of the programme to a later date.

DIRECTORATE

Vide letter dated 5^th November, 2012, IDBI Bank Limited appointed Smt. Ranjitha Godbole as Nominee Director in place of Smt. Amita Narain. The Board placed on record the guidance, advice and support extended by Smt. Amita Narain during her tenure as a Director. We look forward to the guidance and experience of Smt. Ranjitha Godbole to help the Company in achieving its objectives.

India Debt Management Pvt. Ltd. (IDM) appointed Shri Navin Sambtani in place of Shri Alexander Shaik as an Alternate Director to Shri Denys Firth with effect from 10^th November, 2012. Vide letter dated 10^th January, 2013, IDM withdrew the nomination of Shri Susheel Kak, Shri Denys Firth and Shri Navin Sambtani (Alternate to Shri Denys Firth) as Director.

Shri Jagadeesh S. Shetty, Director - Finance & Group CFO was appointed as an Additional Director on the Board with effect from 10^th November, 2012 pursuant to Section 260, 264 of the Companies Act, 1956. The Company has received the requisite notice from a member pursuant to Section 257 of the Companies Act, 1956 proposing the candidature of Shri Jagadeesh S. Shetty for the office of Director.

Various reasons such as preoccupation, family commitment, time constraints, increased work load and advancing age led to the resignation of some Directors from the Board. viz.

Smt Jyoti N. Kasliwal with effect from 24^th August, 2012

Shri M. Damodaran with effect from 8^th October, 2012

Shri Suresh N. Talwar with effect from 26^th November, 2012

Shri Dara D. Avari with effect from 1^st March, 2013

Shri Jitender Balakrishnan with effect from 28^th March, 2013

The Board placed on record the invaluable contribution to the deliberations, advice and guidance given by all the Directors during their tenure as Directors.

In accordance with the Companies Act, 1956 and the Company’s Articles of Association, Shri Vijay Kalantri retires by rotation and being eligible, offers himself for re-appointment.

DIRECTOR’S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1) that in preparation of the Annual accounts the applicable Accounting Standards have been followed along with proper explanations relating to material departures, if any;

2) that such Accounting Policies have been selected and applied consistently, and judgements and estimates have been 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 31^st March, 2013 and of the Statement of Profit and Loss of the Company for the year ended on that date;

3) that 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;

4) that the Annual accounts have been prepared on a going concern basis.

DEPOSITS

Fixed Deposits received from the shareholders and the public stood at Rs. Nil as on 31^st March, 2013 (Previous year Rs. Nil).

There is no deposit or interest claimed but remained unpaid. All the claimed deposits with interest have been repaid in time.

Members are aware that the fixed deposit schemes have been discontinued with effect from 1st April, 2001, as benefits were not commensurate with administrative costs.

STATUTORY INFORMATION

FINANCE AND ACCOUNTS

The observations made by the Auditors in their Report and included in the relevant notes to Financial Statements are self explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by your Company in accordance with the applicable Accounting Standards (AS 21, AS 23 and AS 27) issued by the Institute of Chartered Accountants of India and the same together with Auditors Report thereon form part of the Annual Report.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company’s subsidiaries is attached. Pursuant to direction under section 212(8) of the Companies Act, 1956 by Government of India, Ministry of Corporate Affairs, New Delhi vide General Circular No. - 2/2011 No. 51/12/2007-CL-III dated 8^th February, 2011, the Board of Directors, by passing resolution on 16^th July, 2013, gave consent for not publishing / attaching copies of the Balance Sheets, Statement of Profit & Loss,

Reports of the Board and the Auditors of all the Subsidiary Companies with the audited financial statements of the Company as at 31^st March, 2013.

The annual accounts of the subsidiary companies are kept for inspection by any shareholder at the registered office of the Company and shall be made available to shareholders seeking such information at any point of time.

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

Additional information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy and Technology Absorption is given in the prescribed forms which are given in Annexure ‘1’ to the Directors’ Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per the provisions of Section 219 (1) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders of the Company excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

AUDITORS

M/s. Haribhakti & Co., Chartered Accountants, Mumbai, (bearing firm registration no. 103523W), existing Statutory Auditors of the Company were re-appointed by the Shareholders of the Company at the Annual General Meeting held on Thursday, 27^th September, 2012, who hold the office upto the conclusion of the ensuing Annual General Meeting. Since M/s. Haribhakti & Co. Statutory Auditors will be completing 10 years of statutory audit of the Company, as per the requirements of the proposed provisions of the Companies Act, 2013 have offered to make way for the Company to appoint another firm of Chartered Accountants as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Board, on the recommendation of the Audit Committee has proposed that M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai to be appointed as Statutory Auditors to hold office till the conclusion of the next Annual General Meeting of the Company. M/s. Shyam Malpani & Associates have expressed their willingness to act as Statutory Auditors of the Company, ifappointed,andhaveconfirmed would be in conformity with the provisions of Section 224(1B) of the Companies Act, 1956.

In respect of observations made by the auditors, please refer to notes to financial statements, note no. 31,33(a), (b), 35 in respect of Standalone Financial Statements and notes no. 31, 33(a) &(b),35, 37 (b) in respect of Consolidated Financial Statements which are self explanatory and hence in the opinion of Directors, do not require any further explanation.

Cost Audit

The Cost Audit for the financial year ended 31^st March 2013 was conducted by M/s. D.H. Zaveri & Associates., Cost Accountants, Mumbai. In terms of the provisions of Section 233B of the Companies Act, 1956, the Board of Directors of your Company have on the recommendation of the Audit Committee, appointed M/s. D.H. Zaveri & Associates.,Cost Accountants, Mumbai as Cost Auditors to conduct the cost audit of your Company for the financial year ending 31st March, 2014.

ACKNOWLEDGEMENT

Your Directors wish to place on record the support, assistance and guidance provided by the financial institutions, banks, customers, suppliers and other business associates. Thanks are also due to your Company’s employees for their tireless efforts and high degree of commitment and dedication. Your Directors especially appreciate the continued understanding and confidence of the Members.

By Order of the Board

For S. KUMARS NATIONWIDE LIMITED

Nitin S. Kasliwal

Chairman & Managing Director

Place : Mumbai

Date : 16^th July, 2013

ANNEXURE (1) TO THE DIRECTORS REPORT

A. CONSERVATION OF ENERGY

a) Energy Conservation measures taken

Energy resources are essential part of our life and its availability is also inadequate. We are committed for most advantageous utilization of various forms of energy in cost effective method for conservation of the precious energy resources.

We are continuously committed to adopt Energy Conservation measures and practices in all our processes, activities, products and services.

We believe in investing energy efficient technology with newer & efficient methods.

Practicing continuous implementation of energy conservation measures has resulted in a steady decline of specific Energy consumption.

Some major energy conservation measures carried out during the year are as under:

1. Baruche Superfine Cotton (BSFC) Division, at Jhagadia, Gujarat:

1.1) Modification of Gas burner width

We had modifiedOsthoff Singeing machine Gas Burner width from 3,600 mm to 2,000 mm, to reduce gas consumption in narrow width fabric processing. Capital investment was around Rs. 5.3 Lacs and saving expected per annum is around Rs. 7.2 Lacs .

1.2) Installation of Variable frequency drive (VFD) in ETP Centrifuge

Variable frequency drive has been installed in ETP Centrifuge (11 KW) to control the speed of Centrifuge drive motor. We will be able to run centrifuge with required lower flow .

Total Power consumption are

Earlier (Without VFD)	200 Kwh per day
Now (With VFD)	100 Kwh per day

Saving in power consumption is 100 units per day i.e 36,000 units per Year.

1.3) Rain Water Harvesting

We have set up water harvesting system in the plant, whereby we collect whole rain water & use the same in manufacturing process.

Total quantity collected during season was over 15,000 KL.

1.4) Fuel conversion in Thermax Steam Boiler

We had switched over to Natural Gas (NG) instead of Furnace Oil (FO) for Thermax Steam Boiler. NG is a Environmental friendly cleaner fuel as compared to FO and hence has drastically reduced Stack Emission level (Air pollution). Boiler efficiency also improved by 2 % with NG as compared to FO.

1.5) Optimization of Yarn dyeing Process

Optimized Yarn dyeing process cycles and reduce water consumption. Water consumption was reduced by 25 Lts/Kg of yarn dyed. This has also resulted in reduction of Steam by and power consumption per Kg of yarn dyed.

Considering average Yarn dyeing production of 120 Ton/Month, Water saving is around 3,000 Kl/Month.

1.6) Heater modification in Packing m/c

Heater system has been modified in Packing m/c. Earlier power consumption was 30 KW /Hr. After modification power consumption was reduced to 20 KW/Hr. Total saving per annum is around 72,000 units.

1.7) Steam control system for Vertical Drying Range

Control system has been installed for Steam flow in VerticalDrying Range for processing machine Control valve adjusts the steam flow based on temperature feedback. Average saving in steam consumption is 0.2 Kg / KG of fabric. Over all saving in steam consumption is estimated at around 432 Tons / Year.

B. TECHNOLOGY ABSORPTION

Efforts made in Technology Absorption - As per Form "B" given below:

Research & Development (R & D)

FORM "B"

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

Focus is given on Continual Product development and research. Further, we are working on

a) Yarn Dyeing vessel re-engineering.

b) Product Development of Stretch & Linen Yarn Dyed shirting fabrics.

c) Green Earth by using various Enzyme in processing in place of chemicals.

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

As a result we are able to cater high end market, improved the product quality and customer are satisfactied.

3. Future plan of action

Same as above along with Product Development having finishes like Bio Polish, Anti Microbial, Fire retardant & Soil repellent.

4. Research and Development

Technology Absorption, Adoption and Innovation

The Company has absorbed the technology of manufacturing exclusive high value super fine cotton shirting fabric

1. Efforts, in brief, made towards technology absorption, adoption and innovation:

Latest state of the art technology machines and testing equipments have been imported from Western Europe, which give consistent high value end product and are being tested and maintained regularly for consistent quality.

Additional Equipments for testing and new product developments have been installed for faster and accurate product manufacturing.

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

With continuous product and design developments, two new complete product range of High value added Shirting is being offered to high end brands.

3. Information regarding Imported Technology:

All testing and manufacturing equipments have been imported from Europe. Latest technology machinery with automation has been adopted.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to export, initiatives to increase exports, Developments of new export markets for Products and Services and Export Plan:

The Company has continued to maintain focus on and avail of export opportunities based on economic consideration During the year the Company has exports (FOB value) worth Rs. 436.48 lacs.

b) Total Foreign exchange earned and used:

(Rs. in lacs)

	Current Year 2012-13	Previous Year 2011-12
a. Total Foreign Exchange earned	436.48	6,692.53
b. Total savings in foreign exchange through products manufactured by the Company and deemed exports	-	-
Sub Total (a + b)	436.48	6,692.53
c. Total Foreign Exchange used	2,130.73	7,149.14

FORM A

FORMING PART OF ANNEXURE (1)

Form for Disclosure of particulars with respect to Conservation of Energy

Part A - POWER AND FUEL CONSUMPTION

ELECTRICITY	Current Year	Previous Year
A) Purchase:
Units (in lacs)	276.24	275.30
Total Amount (Rs. in lacs)	1,657.66	1,566.46
Rate / Units ( Rs. )	6.00	5.69
B) Own Generation
Through Diesel Generator
Units (D.G. Units) (in lacs)	3.85	4.52
Unit/Ltr of Diesel Oil	5.85	4.79
Cost/Unit ( Rs. )	6.06	5.97

Part B - CONSUMPTION PER UNIT OF PRODUCTION

ELECTRICITY	Current Year	Previous Year
Electricity per meter of fabrics (units) (in lacs)	0.30	0.32