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Pokarna
BSE: 532486|ISIN: INE637C01017|SECTOR: Ceramics/Granite
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Directors Report Year End : Mar '14    « Mar 13
Dear Members,
 
 The Directors are pleased to present the 23rd Annual report together
 with the audited accounts of your company for the financial year ended
 31st March, 2014. The summarized consolidated and standalone financial
 performance of your company is as under;
 
                                                    (Amount Rs. in Lacs) 
 SUMMARY OF THE FINANCIAL RESULTS
 
                                                 Standalone
 Particulars                                  2013- 14  2012-13
 
 Total income                                 17049.25  16022.87
 
 Less-expenditure                             16325.25  15508.99
 
 Profit/(Loss) Before tax and extra-            724.00    513.88
 
 ordinary items
 
 Total tax expenses                             236.13    149.37
 
 Extra-ordinary item (refer note. 2.23            -         -
 in consolidated financial statements).
 
 Profit after tax and Extra-ordinary            487.87    364.51
 item
 
 Balance of Profit & Loss account,             2877.12    888.14
 brought forward.
 
 Amount transferred from FCCB                  3035.26   1624.47
 redemption Reserve
 
 Amount transferred to General                   36.60      - 
 Reserve
 
 Proposed dividend (including tax)              145.10      -
 
 Balance carried to balance sheet              6218.55   2877.12
 
 Particulars                                    Consolidated 
                                              2013- 14  2012-13
 
 Total Income                                 23170.70  20867.02
 
 Less-Expenditure                             23643.50  22540.68
 
 Profit/Loss Before Tax and extra              (472.80) (1673.66)
 Ordinary items 
 
 Total tax Expenses                            (892.89)   149.37
 
 Extra ordinary item (refer note 2.23           747.63   1158.75
 in consolidated financial statements).
 
 Profit after tax and extra oridnary           1167.72   (664.28)
 Item
 
 Balance of Profit &Loss account,             (4613.58) (5573.77)
 brought forward.
 
 Amount transferred from FCCB                  3035.26   1624.47
 redemption Reserve
 
 Amount Transferred to General Reserve           36.60      -
 
 Proposed dividend (including tax)              145.10      -
 
 Balance carried to blance sheet               (592.30) (4613.58)
 
 BUSINESS REVIEW
 
 In the Granite Division, during the year 2013-14 your Company has
 achieved revenues ofRs. 1,549 million and PBIT of Rs. 295 million
 registering a growth of 10% and 24% respectively. Domestic Export mix
 stood at Rs. 482 million & Rs. 1067 million respectively with major export
 contribution coming from USA i.e., Rs. 494 million, contributing 46% to
 export revenues. During the year 2013-14 your Company executed various
 projects including supplies to Reliance ADAG Head Quarters - Mumbai,
 Rajiv Gandhi International Airport - Hyderabad, IREO — Gurgaon,
 Prestige — Hyderabad, Bengaluru, Chennai, One Market - USA, Barwa
 Financial District - Qatar, U.S. Consulate - Indonesia.
 
 PESL has achieved revenues ofRs. 615 million and PBIT ofRs. 98 million.
 Domestic Export mix stood at Rs. 37 million & Rs. 578 million respectively
 with major export contribution from USA i.e., Rs.440 million contributing
 76% to export revenues. During the year 2013 -14 PESL supplied quartz
 to various projects including Mumbai International Airport (T2),
 Continental Hospitals - Hyderabad, Dew Flower, Sobha Developers -
 Bengaluru, Arlington Downs — USA, Marriott Irvine - USA, Amli Ballard -
 USA, Amway Specialty Suites — USA.
 
 During the year, Apparel Division of the Company achieved revenues
 ofRs.143 million and PBIT ofRs. (118) million. Entire revenue during the
 year was achieved from the domestic market.
 
 In granite business, your Company is one of the leading manufacturers &
 providers of choicest and exclusive range of Indian & Imported
 granites. Your Company has developed long-term relationships with
 several niche customers in India & abroad. Over the years, your Company
 has evolved in response to changing customer demands and aspirations.
 Aggressive marketing and rational utilization of resources has helped
 granite division of your Company record improved results for the year
 under review. In line with outlook for the sector, your company is
 contemplating undertaking an expansion programme in its granite
 processing facilities and quarries.The feasibility study for the same
 is under progress.
 
 Your Company is well known in the trade for prospecting, discovering
 and mining granite. Your Company has over two decades of experience in
 scientific and sustainable mining, mine planning and development Your
 Company-owned and/or operated mines have since its inception, met
 substantial raw material needs of the Company''s granite processing
 facilities. Currently, Your Company owns and/or operates granite mines
 in the States of Telangana, Andhra Pradesh and Tamilnadu.Your Company''s
 long-term strategy is to have greater control over raw material
 resources (granite blocks) and to achieve this, your Company has also
 made several applications for grant of new mining lease(s) in different
 states.
 
 Apparel business of Your Company continues to be under pressure. In
 line with the performance and near term outlook, your Company has
 moderated its Stanza retail stores roll-out plan. Some of the Stanza
 stores have also been resized with intent to improve store
 productivity, efficiency and reducing store operation costs. At
 locations that weren''t performing up to the mark, your company has
 decided to rationalise spaces by reducing the area or full closure of
 stores.
 
 Going forward, we will continue to focus on long term value creation in
 the businesses we know and understand better.  In Granite and Quartz,
 though pleased with our progress, we know there remains abundant
 opportunity to expand our national and international presence, while
 continuing to enhance our offering and achieve higher levels of
 productivity in our operations. It remained a challenging year for your
 Company''s Apparel business, which suffered from sluggish demand and
 lower capacity utilization. In essence, the Company''s growth in short
 to medium term will be driven by the Granite business and subsidiary''s
 Quartz business will become a key contributor to earnings in future.
 
 SUBSIDIARY & CFS
 
 In view of the general exemption granted by the Ministry of Corporate
 Affairs in 2011, the annual accounts of the subsidiary of the Company
 for the financial year ended 31 March, 2014 are not being attached with
 this Annual Report of the Company and certain financial highlights of
 the subsidiary are disclosed in the Annual Report, as part of the
 Consolidated financial statements. The audited Annual Accounts and
 related information of the subsidiary will be made available, upon
 request by any shareholder of the Company, for inspection at the
 registered office.
 
 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB''s)
 
 Provision has been retained towards premium payable on redemption of
 FCCB''s which were matured on 29.03.2012 as per the subsisting terms and
 conditions. As on date bonds have been redeemed to the extent of 9539
 bonds as per the negotiated terms with the said bond holders.The gain /
 benefit, cost, charges including foreign exchange gain / loss at the
 close of the year are transferred to Pokarna Engineered Stone Limited
 (subsidiary) as per the Scheme of Arrangement sanctioned by Hon''ble
 Andhra Pradesh High Court and agreement thereto.The corresponding
 receivable arising thereof is disclosed under the head''Loans and
 Advances to Subsidiary''. The Company expects no further liability other
 than provided for in the books.
 
 DIVIDEND
 
 Looking into the improved financial performance, the Board of Directors
 is pleased to recommend dividend of Rs. 2.00 per equity share ofRs. 10
 (20%) for the year ended 31.3.2014. The dividend payout for the year
 under review, inclusive ofTax on Dividend distribution, is Rs. 145.10
 Lacs, resulting in a pay-out of 29.74% of the profits of the Company on
 a stand-alone basis.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors responsibility statement, your
 directors confirm that:
 
 - in the preparation of the annual accounts, the applicable accounting
 standards have been followed and no material departures have been made
 from the same;
 
 - such accounting policies have been selected and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give true and fair view of the state of affairs of the
 company at the end of the financial year and of the profit of the
 company for that period;
 
 - proper and sufficient care have been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 and 2013 for safeguarding the assets of the company
 and for preventing and detecting fraud and other irregularities;
 
 - the annual accounts are prepared on a going concern basis.
 
 AUDIT COMMITTEE
 
 In terms of the requirement of clause 49 of the listing agreement with
 the Bombay Stock Exchange and Section 292A of the Companies Act, 1956
 and Section 177 of the Companies Act, 2013, your company has
 constituted Audit committee.The composition of the committee & other
 details are given in the corporate governance report which forms part
 of this annual report.
 
 CORPORATE GOVERNANCE
 
 Your company is committed to maintain the highest standards of
 corporate governance. As required under Clause 49 of the listing
 agreement with the Stock exchange, a report on corporate governance as
 well as Auditors certificate on the compliance of conditions on
 corporate governance are annexed and form part of this annual report.
 
 All board members and senior management personnel have affirmed
 compliance with the Code of conduct for the year 2013-14. A declaration
 to this effect signed by the Chairman & Managing Director of your
 company is annexed to this annual report.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 ''Management''s Discussion and Analysis Report'' is provided in a separate
 Section and forms part of this annual report.
 
 AUDITORS
 
 Statutory Auditors
 
 The Statutory Auditors of the Company, M/s. S. Daga & Co., Chartered
 Accountants ( Reg. No. 000669S), retire at the conclusion of the
 ensuing Annual General Meeting and being eligible offer themselves for
 re-appointment as per the provisions of the Companies Act, 2013. The
 Audit Committee and the Board of Directors of the Company recommend the
 reappointment of S. Daga & Co., Chartered Accountants, as Statutory
 Auditors of the Company.
 
 The Board has duly reviewed the Statutory Auditors Report on the
 Accounts.The Auditors without qualifying the report have made some
 observations, such observations are self explanatory and therefore do
 not call for any further comments or further explanation by the Board.
 
 Cost Auditors
 
 In terms of Cost Audit Orders issued by Ministry of Corporate Affairs
 in 2012, M/s. DZR & Co., Cost Accountants were appointed as Cost
 Auditors of the Company for conducting cost audit of Apparel Division
 of the Company for the financial year 2013 -14, the Cost Auditor Report
 for the financial year 2013 — 14 has been submitted to the Board on
 09th August, 2014.
 
 The due date for filing of the Cost Audit Report with the Ministry of
 corporate affairs, for the financial year 2013-14 is 27th September
 2014 (as per Rules, report need to be filed within 180 days from the
 date of closing of respective financial year). Company will ensure that
 the said report will be filed within due date.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 In line with the provisions of the Companies Act, 2013 and rules made
 there under (the Act), a Corporate Social Responsibility (CSR)
 Committee has been formed by the Board of Directors, Mr. Gautam Chand
 Jain, Mr. Meka Yugandhar and Mr.Vinayak Rao Juwadi are the members of
 the CSR Committee.Your Company has identified Health, Sanitation,
 Education and Environment as thrust areas for CSR activities.
 
 DIRECTORS
 
 Ms.ApurvaJain has been appointed as the Additional Director (whole
 time) of the Company with effect from August 9th, 2014 and she shall
 hold office up to the date of the ensuing Annual General Meeting, The
 Company has received requisite notice in writing from a member
 proposing Ms.ApurvaJain for appointment as a Whole time Director.
 
 In accordance with the provisions of the Companies Act, 2013 Mr. Rahul
 Jain, Executive Director of the Company is liable to retire by rotation
 at the ensuing Annual General Meeting and being eligible, offered
 himself for re-appointment.  Board of Directors recommends his
 re-appointment.
 
 Further the Board of Directors recommends the re-appointment of all the
 existing Independent Directors of the Company for a futher period from
 15th September, 2014 to 31 March, 2019 pursuant to Section 149 of the
 Companies Act, 2013.
 
 PARTICULARS OF EMPLOYEES
 
 None of the employees of the company was in receipt of remuneration in
 excess of limits prescribed under Section 217(2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended till date during the year under report.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 Disclosure under Form A pursuant to Companies (Disclosure of
 Particulars in the Report of the Board of Directors) Rules, 1988 are
 applicable to the Apparel division of the company, hence the
 information pertaining to that division is provided below:
 
 A.Power & Fuel Consumption                    2013-14  2012-13
 
 1.  Electricity
 
 a) Purchased power
 
    Units                                       269106   303188
 
    Total amount (In Rupees)                   2950193  2362806
 
    Rate per unit (In Rupees)                    10.96     7.79
 
 b) Own Generation Through Diesel Generator
 
    Litres of Diesel utilized                     3000    15670
 
    Total cost of Diesel utilized (In Rupees)    171446  759513
 
    Units per litre generated                      3.69    3.69
 
    Cost Per unit                                 15.49   13.12
 
 B.  Consumption per unit of production (i.e one shirt / one trouser).
 2013-14 2012-13
 
 Electricity (in number of units) 3.51 2.82
 
 Note: During the year under review FSA charges ofRs. 5,27,532, have been
 levied, on the apparel division of the Company.
 
 FORMB
 
 (Disclosure of particulars with respect to technology absorption)
 RESEARCH AND DEVELOPMENT (R & D)
 
 1.  Specific areas in which R&D carried out by the company — Not
 applicable having regard to the nature of the industry.
 
 2.  Benefits derived as a result of the above R&D — Not applicable.
 
 3.  Future plan of action — Not applicable.
 
 4.  Expenditure on R & D: Nil
 
 Company maintains a high level of information flow with various
 companies. Through visits of executives to developed countries, your
 company keeps abreast with the advanced technological developments and
 through specific program, introduces, adopts and implements them. This
 has resulted in higher production, accuracy and perfection in
 excavation of rough granite blocks, processing of random granite slabs,
 tiles and manufacturing of apparel.
 
 Your company generally exports granite to countries like Algeria,
 Australia, Bangladesh, Belgium, Canada, China, Colombia, Croatia,
 Finland, Germany, Hong Kong, Ireland, Italy, Jamacia, Jordan, Libya,
 Netherlands, New Zealand, Norway, Poland, Qatar, Russia, Slovenia,
 Switzerland, UK, USA andVietnam.
 
 Your company is continuously exploring possibilities of exporting new
 markets.
 
 During the year under review, the total standalone foreign exchange
 earnings was Rs. 10581.42 Lacs and expenditure of your company was Rs.
 2187.82 Lacs.
 
 ACKNOWLEDGEMENTS
 
 Your Directors express their appreciation for the support, trust and co
 operation received from the banks, Government authorities, customers,
 suppliers, shareholders and other stakeholders during the year under
 review.The Board is also very thankful to the holders of Foreign
 Currency Convertible Bonds for their support.
 
 Your Directors acknowledge with gratitude the commitment and dedication
 of the employees at all levels, which has contributed to the growth and
 success of the company.
 
 Your Directors look forward to the continued support from all of you in
 the years to come.
 
                                          For and on behalf of the Board
 
 Place : Aliabad                                Gautam Chand Jain
 Date : 09th August, 2014                  Chairman & Managing Director
                                                (DIN: 00004775)
 
 Registered Office:
 105, First Floor, Surya Towers,
 S. P. Road,
 Secunderabad- 500 003.
 CIN: L14102TG1991PLC013299
 Tel: 040-27842182 Fax:040-2784 2121
 Email: companysecretary@pokarna.com
 Website: www.pokarna.com
Source : Dion Global Solutions Limited
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