The Directors hereby present the 23rd Annual Report along with the
audited statements of the Company for the year ended 31st March 2012.
Countries are increasingly eliminating their trade barriers and
international trade now truly spans the globe. Products and services
come from everywhere and go everywhere. This, as well as the
liberalization of large financial flows, makes countries very dependent
on what happens in the international economy. India has some leeway to
get reforms back on track with its long-term growth prospects firm,
according to the resources.
India''s textile and apparel exports may have missed the -billion
target in 2011-12 fiscal despite a weak rupee, as demand from biggest
market Europe dwindled due to the sovereign debt crisis.
The country''s apparel shipment inched up by just 1.5 per cent to 1.28
billion in February, the third worst monthly performance this fiscal,
as the crisis in Europe intensified. Apparel exports between April and
February, however, rose 19 per cent in dollar terms to .14 billion
due to an initial pick-up and a 16 per cent depreciation of the rupee
against the dollar that made overseas dispatches more remunerative.
Apparel exports account for nearly half of the total shipments by the
textile and garments industry.
The government expected the exports to rise in 2011-12 as demand seemed
to have returned after the global financial turmoil in 2008, but the
debt crisis in Europe erupted, jeopardizing shipment prospects. EU and
the US, the worst affected nations in the current debt crisis, together
account for around 65% of India''s textile exports.
The textile industry accounts for around 14 percent of industrial and
more than 10 percent of the country''s total exports. It is the largest
jobs generator after agriculture, employing around 35 million people
across various segments.
To prop up the cash-strapped textiles sector, the Industry has
requested for the restructuring of loans as well as interest subsidy to
the garments and knit-wear sectors grappling with the economic slowdown
of their biggest export markets that forced a sudden plunge of product
prices after two successive years of relentless rise in raw material
With the Reserve Bank of India rejecting the proposal, the fortune of
the Exporters is again reserved.
Financial Highlights - Rs. In Crs
FY 2011-12 FY 2010-11
Revenue From operations 190.38 188.45
Gross Profit / (Loss) before interest 9.85 3.31
Interest 16.36 14.06
Profit / (Loss) before depreciation (6.51) (10.75)
Depreciation 7.16 8.76
Profit / (Loss) before Extra-Ordinary (13.67) (19.51)
Extra-Ordinary Income - -
Profit / (Loss) before tax (13.67) (19.51)
Provision for Taxation
Profit / (Loss) after tax (13.67) (19.51)
Balance brought forward from (51.75) (134.63)
Less: Accumulated losses - 102.39
written off pursuant to Scheme of
Balance carried to Balance Sheet (65.42) (51.75)
The Company''s revenues stood at Rs.190 crs as against Rs.188 crs
previous year. The operational margins have improved drastically
despite of marginal increase in revenues mainly on account of various
strategic initiatives undertaken by your company including adding of
new premium clients, reign of business mix both on geographical as well
as on product lines, rationalization of capacities, tight cost control
mechanisms and better deployment of resources.
Finance and Accounts
There is no provision for Income Tax, due to the loss incurred by the
Company during the year. The Company has recognized Deferred Tax Asset
in unabsorbed depreciation and accumulated losses to the extent of
corresponding deferred tax liability on the difference between the book
balance and written down value of fixed assets under Income Tax.
The Company has not accepted any deposits within the meaning of Section
58A and 58AA of the Companies Act 1956.
The Company was in receipt of interest subsidy of Rs.2.52 crs under
Technology Up gradation Fund (TUF) Scheme during the year and the same
has been deducted from Interest on Term loan in the Financial
The Company''s net worth was eroded as on 31st March 2010 under the
provisions of Sick Industrial Companies Act (SICA). Accordingly the
company filed for reference with the Board for Industrial and Financial
Reconstruction (BIFR) under section 15(1) of SICA. The reference was
considered by BIFR and upon submissions made and material on record,
BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of
SICA vide its order dated 19th April 2011. BIFR issued directions to
the lenders and to the Company to submit a Rehabilitation Scheme as per
section 18 of SICA.
The Term loan obligations and Interest Commitments have been met in
full with respect to the State Bank of India in accordance with the
Terms and Conditions of the Sanction letter. However the Company has
defaulted in repayments of Term loans amounting to Rs.0.22 crs and
Interest Commitments amounting to Rs.1.55 crs with respect to HDFC
Bank''s Borrowings. The Term loan repayment is pending since February
2012 while the interest commitment remains unpaid since January 2011.
The Company submitted its Draft Rehabilitation Proposal (DRS) to the
Operating Agency, State Bank of India and is awaiting the sanction of
the Second Re-structuring Package.
The Cut-off Date for the DRS is 31st March 2011 as per the Orders of
BIFR and the Company has sought certain reliefs / concessions in Term
loans / interest rates with the lenders.
The Accounts of the Company have been prepared on the basis of ''going
concern concept'' despite negative net worth as on 31st March 2012 in
view of the various strategic initiatives that the Company is exploring
and also considering the Rehabilitation Scheme submitted to Banks /
BIFR. The Management is confident of being able to continue and operate
the business and bring positive results in future.
There is no addition to the share capital during the year.
In view of the business loss for the year, no dividend is being
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
during these tough times.
Pursuant to Section 255 of the Companies Act 1956, Mr. N.K. Ranganath
and Mrs. Nidhi Reddy retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for reappointment.
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for reappointment.
Corporate Governance Report and Management Discussion and Analysis
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
Particulars as per Section 217 of the Companies Act, 1956
A) Pursuant to the requirement of Section 217 (2AA) of the Companies
Act, 1956 and based on the representations received, your Directors
hereby confirm that:
i. In the preparation of the Annual Accounts for the year ended 31st
March 2012, the applicable Accounting Standards have been followed and
there are no material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for that period;
iii. The Directors have taken proper and sufficient care 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
iv. The Directors have prepared the Annual Accounts on a going concern
B) During the year under review, there were no employees covered under
the provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Amendment Rules, 2011.
C) The information pursuant to Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given below:
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherever possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption:
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.181.35 crs Total Foreign
exchange outgo Rs. 66.44 crs
The Directors are sincerely thankful to you - the esteemed
shareholders, customers, business partners, financial / investment
institutions and commercial banks for the faith reposed and valuable
support provided by them in the Company and its Management. The
Directors wish to place on record the co-operation extended and the
solidarity shown by the employees in assisting the organization to
control its losses and contributing for a good turnaround. The
Directors thank the Banks, particularly State Bank of India for all
their sustained support throughout the journey of the Company.
For and on Behalf of the Board
Chennai, 15th May 2012 Chairman