Hanil Era Textiles Ltd Directors Report

HANIL ERA TEXTILES LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT To The Members, Your Directors have pleasure in presenting the Eighteenth Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2010. 1. FINANCIAL RESULTS: (Rs. Lacs) Particulars Current Year Previous Year 2009-10 2008-09 Total Income 959.71 3,376.42 Gross Loss (Before Depreciation & Interest) 709.18 3,901.15 Less : Interest 64.99 1,006.15 Less : Depreciation 498.38 616.20 Net loss (after Depreciation and Interest) 1,276.55 5,523.86 Add: Provision for taxation - 1.95 (Including FBT) Net Loss 1,276.55 5,525.81 2. DIVIDEND: During the year the Company has incurred a Net Loss of Rs. 12.76 Crores (Previous year Net Loss of Rs. 55.26 Crores) due to lower capacity utilisation. Hence the directors do not recommend any dividend for the year under reviews. 3. SALES, PROFITABILITY & PRODUCTION: The Company achieved the turnover of Rs. 9.60 Crores during the year under review against the turnover of Rs. 33.76 Crores in the (previous year) The fall is because of low capacity utilisation. 4. PROSPECTS: The Company has improved labour welfare and working conditions and is looking forward to improve capacity. The local market for yams and fabrics is better. The Company is in discussion with th lenders for restructuring its debts and also OTS. 5. FIXED DEPOSITS: The Company has not accepted or invited any Fixed Deposit from the public during the year under review. 6. TERM LOAN: The Company has not availed any fresh Term Loan during the year. 7. ENVIRONMENT MANAGEMENT & SOCIAL MANAGEMENT: All manufacturing process require environmental clearance from respective Pollution Control Board and the same are in compliance with present environmental legislation. As an integral part of Companys environmental protections drive, the Company ensures minimum quantity of waste generation, low emission levels and low noise pollution levels during plant operations. The relationship with the workmen remains cordial during the year. 8. DIRECTORS: Shri S C Kalra and Shri Sanjay Pachlangia, directors of the Company retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer themselves for re-appointment. 9. Directors Remuneration: During the year under review, the Managing Director has not claimed the remuneration as the Company has suffered the loss. 10. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to section 217 (2AA) of the companies act 1956, the Board of Directors of the Company confirms: a) That for the preparation of the annual accounts, the applicable accounting standards has been followed. b) That the Standard accounting policies have been consistently applied in consultation with the auditors. c) That 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. d) That the Annual accounts have been prepared on an ongoing concern basis. 11. COST AUDIT: As per the requirement of Central Government and pursuant to Section 233(b) of the Companies Act, 1956, Mr. C.S. Joshi, Cost Accountant of M/s. Shekhar Joshi & Co., Cost Accountants, Mumbai, was appointed as the Cost Auditors. 12. AUDITORS: M/s. P.V. Page & Co,. Chartered Accountants retire as Statutory Auditors of the Company and are eligible for re-appointment as Statutory Auditors of the Company to hold office from the close of the ensuing annual general meeting till the conclusion of the next annual general meeting on such terms, condition and remuneration as may be mutually agreed between the board of directors and the said auditors. The certificates from the Auditors have been received to the effect that their appointment, if made, would be within the limits prescribed under section 224(1)(B) of the Companies Act, 1956. 13. INSURANCE: The Properties and Assets of the Company have been adequately insured. The Company has taken Insurance Policy covering all major risks. 14. PARTICULARS OF EMPLOYEES: There are no employees during the period drawing remuneration more than Rs.24 lacs per annum under Section 217(2A) of the Companies Act, 1956. As such no particulars are required to be furnished. 15. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo as required under Section 217 (1) (e) of the Companies Act, 1956 are given in the Annexure - I and form part of this report. 16. MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT: The operations of the Company are reviewed in detail in the Management Discussions and Analysis Report in the Annexure - II and form a part of this report. 17. CORPORATE GOVERNANCE: A separate statement on corporate governance is included in the Annual Report along with the Auditors Certificate on its compliance in the Annexure - III and form part of this report. 18. ACKNOWLEDGEMENTS: Industrial relations with employees continue to remain cordial. Your Directors record their appreciation to all the employees of the Company, Financial institutions, Suppliers, Customers, shareholders, Business associates for the continuous support given by them to the Company and their confidence in the management By order of the Board of Directors Place : Mumbai. (R.K. Agarwal) Date : October 30, 2010 Chairman ANNEXURE - I TO THE DIRECTORS REPORT, MANAGEMENT DISCUSSION AND ANALYSIS: Information as per Section 217 (1)(e) read with companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988. A. CONSERVATION OF ENERGY: 1. Captive Power Plant using coal and natural gas as a low cost fuel for captive use and also sale to the third party. FORM A: Current Year Previous Year 31-03-2010 31-03-2009 A) Power and Fuel Consumption: 1. Coal: Quantity (tones) 23.89 Total cost (Rs. in Lacs) 0.91 Average rate 0.038 2. Electricity: Quantity (units) 5,406,716 Total cost (Rs. in Lacs) 305.51 Average rate 5.65 B) Consumption per unit of production: Product - Yarn (Tns) 719.97 1,689.37 Form B: Form for disclosure of particulars with respect to absorption (See rule 2). RESEARCH AND DEVELOPMENT (R&D): 1. Specific areas in which R & D carried out by the Company: - Improvement of product quality and process efficiency. - Optimizing production efficiency. - Cost reduction 2. Benefits derived as a result of the above R & D: - Improvement in the Quality of Manufactured products - Production free environments around factory areas. - Cost economy and plant efficiency. - Conversation of water, mineral, electricity and fuel. - Development of new market segments 3. Future plan of action: - Further improvement in Quality of products and process. - Exploration of avenues for continuous cost reduction measures. 4. Expenditure on R & D: (a) Capital (b) Recurring (c) Total (d) Total R & D expenditure as a percentage of total turnover TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATIONS: 1. Efforts, in brief, made towards technology absorption, adaptation & innovation: - Selection and application of dyes for certain Yarn qualities to improve overall fastness properties, including bleach. 2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution, etc.: - Meeting specific requirements of international customers. - Energy efficient process. - Improvement in product characteristics for premium sector. 3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information furnished: (a) Technology imported NIL (b) Year of import N.A. (c) Has technology been fully absorbed? N.A. (d) if not fully absorbed, areas where this has not taken place. N.A. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: Due to the low capacity utilisation the exports are low. (in Rs.) Current Year Previous Year 31-03-2010 31-03-2009 1. Total Foreign: Exchange earned 5,774,586 112,965,974 2. Total Foreign: Exchange utilized 11,385,249 102,372,920 By order of the Board of Directors Place : Mumbai. (R.K. Agarwal) Date : October 30, 2010. Chairman ANNEXURE - II TO THE DIRECTORS REPORT, MANAGEMENT DISCUSSION AND ANALYSIS: Management discussion and Analysis Report: OPPORTUNITIES & THREATS: The opportunities in Textiles industry in the present scenario look very limited. The value added niche manufacturing will do better. The ongoing economic turmoil in the world can affect the Textiles export from India severally. Due to adverse government policy for Export Oriented Units in Textiles sector have no benefits left and have to be debonded. HUMAN RESOURCES DEVELOPMENT: Your Company continues to pay focused attention on its human resources. Cordial relations continued at all the manufacturing locations, including Corporate Office. However there is a shortage of workmen which is effecting production. INTERNAL CONTROL SYSTEM: The Company has adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of raw materials including fixed assets & sale of goods and further transactions are duly authorized recorded and reported. By order of the Board of Directors Place : Mumbai. (R.K. Agarwal) Date : October 30, 2010. Chairman