DIRECTORS' REPORT Dear Members, The Directors of your Company have pleasure in presenting the 58th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2014. PERFORMANCE REVIEW During the year under report Cotton Spinning Unit of the Company produced 54.58 lacs kgs of Cotton Yarn at an Avg. count of Ne 22.32 as compared to previous year production of 66.59 lacs kgs. at an Avg. count of Ne 23.44. The previous year was of 15 months and year under report is of 12 months. So the production level has slightly improved as compared to previous year. The Company achieved total income of Rs. 14593.77 lacs as compared to 15544.43 lacs during the previous year. Gross profit was Rs. 963.54 lacs against gross profit of Rs. 1948.45 lacs during the previous year. Company's profit before exceptional items is Rs. 353.03 lacs and net profit after exceptional item is Rs. 37.22 lacs against net profit of Rs. 699.72 lacs during the previous year. The year under report was an adverse year for Cotton Spinning Industry. The main reason was the steep hike in cotton prices during the year under report as compared to previous year. The main cause of high prices of raw cotton was the export of substantial quantities of cotton under OGL. Speculators also played their part in keeping the cotton prices high. There was much volatility in cotton prices. This had serious adverse effect on Cotton Spinning Industry. On the other hand, yarn prices remained subdued due to sluggish demand in the International market. During the year when China who is a major yarn importer stopped import of Cotton Yarn, the yarn prices further fell. So there was quite mis-match between raw material cost and price realisation of finished goods. All this resulted in adverse financial performance by the company. During the year under report prices of power and fuel and personnel expenses also increased. All these factors resulted in higher cost of production and these led to adverse financial performance by the Company. EXPORTS Your Company is producing high quality products conforming to international standards and the Cotton Spinning Unit has been awarded ISO 9001-2008 certification. The Company is supplying yarns in various countries and to some of the most reputed global yarn importers. Because of its exports performance, your Company has been awarded the status of a Star Export House by Government of India. During the year under report, the Company made an export turnover of Rs.7672.86 lacs as compared to previous year's export turnover of Rs. 9499.61 lacs. Export Turnover was slightly better as compared to previous year of 15 months. CURRENT YEAR'S OUTLOOK Your Company is manufacturing 100% grey cotton yarns for which the raw material is Cotton. Due to introduction of high yielding BT Cotton, raw cotton of different varieties is abundantly available in the country. Though there was delay in onset of monsoon in the country but subsequently monsoon has been quite active in the cotton crop growing regions in the country. Areas under crop cultivation have increased as compared to previous season. The country is expecting bumper cotton crop during the ensuing season starting from September, 2014. Due to expectation of bumper cotton crop not only in India but also major cotton growing countries like USA, Pakistan, China etc. the cotton prices have started declining. The Company expects to buy cotton at reasonable cost during the coming season. Demand of cotton yarn is also picking up in the International market. Demand for cotton yarn is also picking up in the the International market. China is also expected to restart import of cotton yarn. All these factors will help in increase in the price of yarn in the International market. Rupee-Dollar exchange rate is stable which is to the advantage of the Company. Due to these factors the Company expects to show better financial performance during the current year as compared to that of the year under report DIVIDEND Your Directors regret their inability to recommend any dividend for the year under report with a view to conserve its resources. DIRECTORS Sh. Raj Paul Oswal is retiring by rotation at the ensuing Annual General Meeting and is eligible for reappointment. Sh. Pawan Kumar Bahl, Sh. Raghubir Chand Singal and Dr. Yash Paul Sachdeva are the independent Directors of the Company. It is proposed to appoint them as independent Directors of the Company for a term of 5 years. They will not retire by rotation. DIRECTORS RESPONSIBILITY STATEMENT In accordance with the provisions of the Companies Act your directors confirm that:- i) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date; iii) the Directors have taken proper and sufficient care 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; v) the Directors have prepared the Annual Accounts on a going concern basis. CORPORATE GOVERNANCE Your Company is committed to adopt good Corporate practices that will enable it to achieve its goal of creating an organization with increasing employee and customer satisfaction and shareholders value. A separate Report on Corporate Governance is attached as part of the Annual Report pursuant to Clause 49 of the Listing Agreement. The Auditors Certificate is included in the said Corporate Governance Report. AUDITORS AND THEIR OBSERVATIONS M/s Dass Khanna & Co., Chartered Accountants, Ludhiana, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Report of the Auditors is self explanatory and also explained in the respective Notes on Accounts and hence does not call for any explanation or clarification by the Board. COST AUDITOR The Company has appointed, Sh. Rishi Mohan Bansal as Cost Auditor for the Cotton Spinning Unit of the Company for the year 2014-15, and Central Government has also approved his appointment. PUBLIC DEPOSITS During the year under report the Company did not invite or accept any Public Deposits within the meaning of Section 58-A of the Companies Act, 1956 and rules made there under. As on 31st March, 2014, the outstanding deposits amounted to Nil and the overdue unclaimed deposits amounted to Nil. LISTING The securities of the Company are listed at Ludhiana, Delhi, Ahmadabad, Mumbai and Calcutta Stock Exchanges. The Company has also applied for delisting of its shares from the stock exchanges at Ludhiana, Delhi, Calcutta and Ahmadabad and our applications are pending. PARTICULARS OF EMPLOYEES The information as required under the Companies Act read with the Companies (Particulars of Employees) Rules, 1975 as amended is Nil. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO The information pursuant to the Companies Act read with Rules made thereunder is given in the Annexure I to this Report. INDUSTRIAL RELATIONS The industrial relations remained peaceful and cordial throughout the year in the Company. ACKNOWLEDGEMENTS Your Directors take this opportunity to offer their sincere thanks to various departments of the Central and State Governments, Banks, Financial Institutions, Mutual Funds and Investors for their unstinted support and assistance. Your Directors also express their deep appreciation for the devoted and sincere services rendered by workers, staff and executives at all levels during the year and we are confident that your Company will continue to receive such co-operation from them in future also FOR AND ON BEHALF OF THE BOARD RAJ PAUL OSWAL CHAIRMAN PLACE : LUDHIANA DATED : 28.08.2014 |