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Titan Industries
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Explore Titan Ind connections « Mar 10
Directors Report Year End : Mar '11
To the Members of Titan Industries Limited
 
 The Directors are pleased to present the Twenty seventh Annual Report
 and the Audited Statement of Accounts for the year ended 31st March
 2011:
 
 Financial Results
 
                                                     Rs. in crores
 
                                              2010-2011      2009-2010
 
 Total Income                                   6626.94        4714.98
 
 Less: Excise Duty                                49.97          28.70
 
 Net Income                                     6576.97        4686.28
 
 Expenditure                                    5935.28        4279.46
 
 Gross profit                                   641.69         406.82
 
 Interest                                          8.21          25.42
 
 Cash operating profit                          633.48         381.40
 
 Depreciation / Amortisation                      34.48          60.08
 
 Profit before taxes                            599.00         321.32
 
 Income taxes - Current                          168.60          81.50
 
 - Deferred                                       (3.24)        (13.42)
 
 Profit after taxes for the year                433.64         253.24
 
 Less: Income tax of earlier years                 3.22           2.92
 
 Net Profit                                     430.42         250.32
 
 Profit brought forward                         272.91         211.03
 
 Amount available for appropriation              703.33         461.35
 
 Appropriations :
 
 Debenture redemption reserve                      5.28           5.28
 
 Proposed dividend on equity shares              110.97          66.58
 
 Tax on dividends                                 18.00          11.06
 
 Transfer to general reserve                     136.46         105.51
 
                                                 270.71         188.43
 
 Balance carried forward                         432.62         272.92
 
 Titan Industries Limited has delivered one of its best ever
 performances. Sales income for the year 2010-11 was Rs.6570.86 crores,
 registering a growth of 39.7% over previous year''s sales of Rs.4703.12
 crores. This growth was attributable to the continued dynamism of the
 Indian economy resulting in high consumer confi dence, favorable
 demographics of our primary market - India, the unique position Titan
 and its brands occupy in the consumers'' mind space and the talent and
 commitment exhibited by the Company''s employees and business
 associates.
 
 Profit before tax for the Company grew by 86.4% to Rs.599.00 crores,
 while net profit grew by 71.9% over previous year to Rs.430.42 crores.
 
 Both Watches and Jewellery segments recorded excellent growth on the
 back of very good retail sales. Watch Business achieved breakthrough in
 several new consumer segments in the watch market – the sub Rs.500
 economy segment,
 
 where Sonata Super-Fibre recorded handsome sales and the children''s
 segment, with Titan Zoop. The successful expansion of exclusive
 Fastrack stores net work has reinforced Fastrack''s position as India''s
 most exciting youth brand.  The Company also took confident steps into
 accessories market with the national launch of Fastrack accessories
 (bags, belts, wallets, wrist-bands). The Jewellery Division
 aggressively pursued growth of diamond studded jewellery and was also
 able to improve the grammage growth of gold jewellery, despite the
 increase in gold prices. The Eyewear business witnessed rapid expansion
 of its retail network, with healthy sales growth in like-to-like
 stores. The B2B business of Precision Engineering which was hit last
 year due to global slowdown made good recovery and performed reasonably
 well compared to the previous year.
 
 The Jewellery segment sales grew by 43.5% to Rs.5027.23 crores and the
 Watch segment sales grew by 23.3% to Rs.1266.46 crores. Sales of others
 including Eyewear, accessories and Precision Engineering rose by 60.7%
 to Rs.243.87 crores.
 
 The year witnessed expansion of the Company''s retail network with a net
 addition of 122 stores (124503 sq.ft.) across Watches, Jewellery and
 Eyewear businesses. As on 31st March 2011, the Company has a total of
 665 stores, with over 810000 sq.ft of retail space, delivering a retail
 turnover in excess of Rs.6150 crores.
 
 International operations
 
 The Company achieved an export turnover of Rs.127 crores during the
 year. Exports include sale of watches and precision engineered
 components.
 
 The International Business Division of Watches made a splendid foray
 into Vietnam in 2009 and followed it up with an equally successful
 launch in South Africa in 2010-11, the initial results of which have
 been encouraging. While Far East Asian markets continued to do well,
 some Middle East markets reported sluggish economies and results during
 the year. The export of precision engineered components during the year
 showed improvement over the previous year.
 
 Dividend
 
 The Directors are pleased to recommend payment of dividend on equity
 shares at the rate of 250% (Rs.25 per equity share), subject to
 approval by the shareholders at the Annual General Meeting. The
 dividend payout on equity shares recommended by the Directors of the
 Company is Rs.110,97,32,700 calculated at the rate of Rs. 25 per equity
 share on 4,43,89,308 equity shares of the face value of Rs.10 each.
 
 However, it is to be noted that at the said meeting of the Board of
 Directors of the Company, the Directors have also recommended issue of
 bonus shares in the ratio of one equity share for every existing equity
 share of Rs. 10 each and sub-division of equity share of Rs. 10 into 10
 equity shares of Rs.1 each, subject to approval by the members of the
 Company. Consequent to the issue of the bonus shares and sub-division
 of equity shares, while the aggregate amount of dividend on equity
 shares if declared at the 27th Annual General Meeting shall remain
 unchanged at Rs.110,97,32,700, the rate per equity share shall be
 adjusted to the number of equity shares outstanding arising out of the
 issue of bonus shares and sub-division of equity shares. In other
 words, the rate of dividend on equity shares will be Rs. 1.25 on
 88,77,86,160 equity shares of Re. 1 each, aggregating Rs.110,97,32,700.
 
 Finance
 
 During the year under review, borrowings of Rs.5.42 crores were repaid
 during the year. The Company incurred Rs.66.24 crores as capital
 expenditure in respect of refurbishment and expansion programmes at
 manufacturing facilities and retail outlets and in IT Hardware systems.
 
 The Company''s continued effort at conserving cash and containing
 capital employed has enabled the company to generate net cash infl ow
 of Rs.907 crores.
 
 During the year, the Company''s long term debt rating was upgraded by
 CRISIL to AA  /Stable (pronounced double A plus with stable outlook)
 from AA/Stable, indicating high degree of safety. ICRA has reaffi rmed
 the long term debt rating of LAA (pronounced as L Double A) with a
 positive outlook which indicates high credit quality.
 
 The year 2010-11 witnessed smart growth by various sectors including
 agriculture, industry and service. However, high infl ation has been a
 major concern which prompted the Reserve Bank of India to tighten the
 monetary policy by increasing the key interest rates.
 
 Titan Industries Limited
 
 As on 31st March 2011, there were no fixed deposits held by the
 Company from the public, shareholders and employees other than
 unclaimed deposits amounting to Rs.0.06 crores.
 
 An amount of Rs.5.28 crores has been transferred to the debenture
 redemption reserve in accordance with statutory requirements and the
 terms of Rights Issue.
 
 As amount of Rs.136.46 crores has been transferred to the general
 reserve .
 
 During the year under review, the Company made payments aggregating to
 Rs.675.23 crores by way of central, state and local taxes and duties as
 against Rs.456.65 crores in the previous year.
 
 The Company has redeemed 21,13,038 6.75% Non- convertible Debentures of
 a face value of Rs. 250/- each aggregating to Rs.52.83 crores on 11th
 May 2011 in terms of the issue of these Debentures.
 
 Bonus Issue and sub-division of equity shares
 
 The Board of Directors have approved the Issue of Bonus Shares in the
 ratio of 1 equity share for every 1 equity share held, to the existing
 shareholders of the Company and sub-division of the Company''s equity
 share of Rs.10 each into 10 equity share of Re.1 each.
 
 Pursuant to Sec 192A of the Companies Act, 1956, read with the
 Companies (Passing of the Postal Ballot) Rules, 2001 approval of the
 shareholders was sought by Postal Ballot in respect of amendment to the
 Memorandum of Association and Articles of Association of the Company
 for increase in Authorized Share Capital, Issue of Bonus Shares in the
 ratio of 1 fully paid share for every 1 share held and sub-division of
 the equity share of the Company of the face value of Rs.10 each in to
 10 equity shares of Re.1 each. The Resolutions put to vote through
 Postal Ballot has been passed by the Shareholders of the Company with
 the requisite majority. The Board of Directors have fixed the Record
 Date (24th June 2011) for the issue of bonus shares and sub-division
 of the equity shares of the Company, subject to such statutory and
 other approvals as may be required.
 
 Subsidiaries
 
 As at 31st March 2011, the Company has the following subsidiaries:
 
 1) Titan TimeProducts Ltd, Goa
 
 2) Tanishq (India) Ltd, Bangalore
 
 3) Titan Properties Ltd, Hosur
 
 The performance highlights of these subsidiary companies for FY 2010-11
 are as under:
 
 Titan TimeProducts Ltd. sold 8.52 million (2009-10: 6.27 million)
 Electronic Circuit Boards in 2010-11 and made a net profit of Rs.72.62
 lakhs (2009-10: Rs 34.43 lakhs).
 
 Tanishq (India) Ltd. made a net profit of Rs.32.56 lakhs
 (2009-10:Rs.41.92 lakhs) and Titan Properties Ltd made a net profit of
 Rs.170.32 lakhs (2009-10: Rs.9.53 lakhs).
 
 None of these companies has declared a dividend.
 
 The annual accounts of the above three subsidiary Companies have been
 consolidated with the Accounts of Titan Industries Ltd for the fi
 -nancial year 2010-11.
 
 A Petition has been filed pursuant to sections 391 to 394 of the
 Companies Act, 1956 by the Company''s subsidiary company Tanishq (India)
 Limited as the Transferor Company seeking sanction to the Scheme of
 Amalgamation proposed to be made between itself and its holding company
 Titan Industries Ltd as the Transferee Company effective 1st April 2010
 as the Appointed Date. No shares of the Transferee Company are to be
 issued pursuant to the Scheme. Based on an application made under
 section 391 of the Companies Act, 1956, by the Transferor Company, the
 Hon''ble High Court of Karnataka which has jurisdiction over the
 Transferor Company has granted dispensation of the meetings of
 shareholders and creditors of the Transferor Company.
 
 A Company Petition No. 9 of 2011 was filed in the Karnataka High Court
 by Tanishq (India) Ltd, Transferor Company on 7th January 2011 seeking
 sanction to the amalgamation as aforesaid and the fi nal order in
 respect thereof is awaited.
 
 The Ministry of Corporate Affairs, Government of India has issued a
 Circular No. 2 /2011 dated 8th February 2011 granting general exemption
 to Companies under Sec 212(8) from attaching the documents referred to
 in Sec 212 (1) pertaining to its subsidiaries, subject to approval by
 the Board of Directors of the Company and furnishing of certain fi
 -nancial information in the Annual Report.
 
 The Board of Directors of the Company have accordingly accorded
 approval to the Company dispensing with the requirement of attaching to
 its Annual Report the annual audited accounts of the Company''s
 subsidiaries.
 
 Accordingly, the Annual Report of the Company does not contain the
 individual financial statements of these subsidiaries, but contains
 the audited consolidated financial statements of the Company, its
 subsidiaries and an associate.  The Annual Accounts of these subsidiary
 companies, along with the related information, is available for
 inspection at the Company''s registered offi ce and copies shall be
 provided on request. The statement pursuant to the approval under
 section 212(8) of the Companies Act, 1956, is annexed together with the
 Annual Accounts of the Company.
 
 Consolidated financial statements
 
 The Consolidated Financial Statements of the Company prepared as per
 Accounting Standard AS 21 and Accounting AS 23, consolidating the
 Company''s accounts with its subsidiaries and an associate have also
 been included as part of this Annual Report.
 
 Corporate Social Responsibility
 
 Our business-linked initiatives like MEADOWS women empowerment program
 and the Karigar Parks, employment of the differently abled, education
 initiatives in the Titan Scholarship Program and the Titan School are
 programmes that the Company continued to support during FY 2010-11. The
 Mr. Perfect programme of the Jewellery Division, which seeks to ensure
 a clean and modern work space for the skilled craftsmen in our
 Jewellery business and also aims to retain and enhance human skills,
 has gained momentum and is targeting to cover all our vendor partner
 units in the next 18 months.
 
 Apart from these on-going initiatives, the following important
 initiatives were conceived /supported by the Company:
 
 1.  100,000 dark glasses were given free to Sankara Nethralaya for poor
 patients to wear after their cataract surgery.
 
 2.  A special watch was created and marketed in commemoration of the
 26/11 Mumbai blasts, with all the sale proceeds being given to the Taj
 Public Service Welfare Trust towards the welfare of the victims.
 
 3.  A systematic process for evaluating worthy causes was created with
 a cross-functional team comprising managers.  The team selected three
 NGOs out of sixty applications received and they are:
 
 - The Samarthanam Trust for the disabled;
 
 - The Spastics Society of Karnataka and
 
 - The SGBS Trust in their Unnati programme of enabling employability of
 underprivileged youth. The Company will support these NGOs for a three
 year period.
 
 Awards and Recognition
 
 The Jewellery Division of the Company won the inaugural Most Innovative
 Retailer Award of the Economic Times, apart from two individual awards
 for Gold Plus and one for Tanishq in the same competition. The Tanishq
 wedding television commercial won two prestigious Effies
 (Effectiveness Awards of the advertising industry) and was also rated
 among the top 10 films of the year by television channels. The Gold
 Plus Loyalty programme Ananta won many awards across the country
 including the Qimpro Award. Zoya won the store launch and couture
 Jewellery of the year from the Jewellery industry.
 
 The Integrated Supply Chain of Jewellery Division won many awards,
 including the CII Quality Award, the Frost & Sullivan Award for
 Benchmarking and the Golden Peacock Innovation Award.
 
 The watch brand ‘Titan'' has been ranked 10th amongst 16,000 brands
 studied across nine Indian cities in a Brand Trust Study by Trust
 Research Advisory. Brand Titan was also ranked as the Most Admired
 Timewear Brand in the Images
 
 Titan Industries Limited
 
 Fashions Award 2011.The Company also won the World watch award from the
 Chitralekha group for the Flagship store at Linking Road, Mumbai as
 being the best watch store. This same store was also rated for the best
 Retail signage by 3M, across all product categories. The Company won
 several Big Bang awards for excellence in advertising and media for
 the marketing campaigns of Raga Flora and Titan - Be More
 instituted by the Advertising Club, Bangalore.  The Fastrack Brand won
 the Master Brand Award 2010, given by CMO Council.
 
 The Company has been ranked 1st in the Retail Category and 19th overall
 by the Great Place To Work Institute in their survey India''s Best
 Companies To Work For.
 
 The Company received the Best Commercial Establishment Award for
 Corporate Sustainability from Tamil Nadu Government and the Economic
 Times Retail Award for the Most Innovative Retailer.
 
 Annexures
 
 In terms of provisions of section 217(2A) of the Companies Act, 1956,
 read with the Companies (Particulars of Employees) Rules, 1975, the
 names and other particulars are set out in the Annexure to the
 Directors'' Report. However, having regard to the provisions of section
 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report
 excluding the aforesaid information is being sent to all the members of
 the Company, and others entitled thereto. Any member interested in
 obtaining such particulars may write to the Company Secretary at the
 Registered Offi ce of the Company or through mail by sending their
 requests to the Company Secretary at arrajaram@titan.co.in. Required
 information as per section 217(1)(e) is annexed.
 
 Auditors
 
 Members will be requested at the Annual General Meeting to appoint
 auditors for the current year and pass resolutions per Item No. 6 of
 the Notice.
 
 Corporate Governance
 
 A separate report on Corporate Governance forms a part of the Annual
 Report along with the Auditors'' Certifi cate on Compliance.
 
 Directors
 
 Mr. Ishaat Hussain, Ms. Vinita Bali and Mr. V Parthasarathy retire by
 rotation and are eligible for re-appointment.
 
 Mr. Sunil Paliwal, IAS resigned as Director of the Company on 6th
 December 2010. The Directors wish to record their gratitude and
 appreciation for the wise counsel and contribution made by Mr. Sunil
 Paliwal during his tenure as a Director of the Company.
 
 Mr. Nihal Kaviratne, Independent Director resigned from the Board of
 the Company with effect from 3rd March 2011.  Mr. Kaviratne joined the
 Board in September 2006 and has made valuable and signifi cant
 contribution to the growth and progress of the Company. As Chairman of
 the Board Audit Committee, Mr. Kaviratne has displayed high level of
 professionalism and outstanding leadership in rendering direction and
 guidance to the Company. The Directors wish to record their gratitude
 and appreciation for the wise counsel and contribution made by Mr.
 Nihal Kaviratne during his tenure as Chairman of the Board Audit
 Committee and as a Director of the Company.
 
 Prof. Das Narayandas was appointed as an Additional Director of the
 Company on 29th April 2011.Prof. Das Narayandas is the James J. Hill
 Professor of Business Administration at the Harvard Business School and
 currently is the Chair of Harvard Business School Executive Education''s
 Advanced Management Program and co-chair of the Building Client
 Management Capabilities in Professional Service Firms. His academic
 credentials included a Bachelor of Technology degree in Engineering
 from the Indian Institute of Technology, a Post-Graduate Diploma in
 Management from the Indian Institute of Management, and a Ph.D. in
 Management from Purdue University, USA.
 
 Members attention is drawn to Item No. 7 of the Notice for the
 appointment of Prof. Das Narayandas as a Director of the Company.
 
 Mrs. Susan Mathew, IAS, Additional Chief Secretary to the Government of
 Tamilnadu, and Chairperson, Tamilnadu Industrial Development
 Corporation Ltd (TIDCO) was appointed as Chairperson and Director on
 the Board of the Company on 14th June 2011 as a nominee of TIDCO.
 
 Members attention is drawn to Item No. 8 of the Notice for the
 appointment of Mrs. Susan Mathew as a Director of the Company.
 
 Dr. N. Sundaradevan, IAS, Principal Secretary to the Government of
 Tamilnadu, Industries Department was appointed as a Director on the
 Board of the Company on 14th June 2011 as a nominee of TIDCO.
 
 Members attention is drawn to item no. 9 of the Notice for the
 appointment of Dr. N. Sundaradevan as a Director of the Company.
 
 Mr. Debendranath Sarangi, IAS and Mr. Rajeev Ranjan, IAS resigned as
 Directors of the Company on 14th June 2011.  The Directors wish to
 record their gratitude and appreciation for the wise counsel and
 contributions made by them during their tenures as Directors of the
 Company.
 
 Directors'' Responsibility Statement
 
 Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors''
 based on the representations received from the operating management
 confi rm that:
 
 1.  In the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 departures;
 
 2.  They have in the selection of the accounting policies, consulted
 the statutory auditors and have 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 of the company for that period;
 
 3.  They have taken proper and suffi cient care, to the best of their
 knowledge and ability, 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.  They have prepared the annual accounts on a going concern basis.
 
 Acknowledgements
 
 Your Directors wish to place on record their appreciation of the
 support which the Company has received from its promoters, lenders,
 business associates including distributors, vendors and customers, the
 press and the employees of the Company.
 
                                  On behalf of the Board of Directors,
 
                             Bhaskar Bhat          C G Krishnadas Nair
 
 Bangalore, 14th June 2011   Managing Director                Director
Source : Dion Global Solutions Limited
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