The Directors have pleasure in presenting the 15th Annual Report on the
business and operations of the Company together with the Audited Annual
Accounts for the year ended 31st March 2007.
The highlights of the financial results are as under:
Particulars 2006-07 2005-06
Consolidate Standalone Standalone
Net Sales (Turnover) 897.50 737.79 352.25
Other Income 45.64 40.35 10.51
EBITDA 113.57 88.06 29.00
Financial charges 49.74 46.18 8.15
Depreciation 54.03 35.70 7.55
Prior period adjustment 0.71 0.00 0.00
Profit before tax (PBT) 10.51 6.18 13.30
Provision for current tax 0.70 0.70 1.12
Provision for deferred tax (4.77) 0.89 1.97
Fringe benefit tax 0.41 0.39 0.15
Profit after tax (PAT) but
before Minority Int. 14.17 4.20 10.06
Minority Interest 1.58 0.00 0.00
Net Profit 12.58 4.20 10.06
The year under review was marked with mergers and acquisitions. During
the year the Company acquired two Companies viz. Amit Spinning
Industries Ltd. and Indo Rama Textiles Ltd. Subsequently indo Rama
Textiles Ltd. was amalgamated with the Company in December 2006 vide
order of the Honble High Court of Delhi dated 20th December 2006.
In August 2006 Spentex Industries Limited, through its subsidiary,
Spentex Tashkent Toytepa LLC has entered into an Asset Sale & Purchase
Agreement with Tashkent-Toyetpa Tekstil Limited, a state controlled
company in Uzbekistan and acquired its textiles business with a
capacity of 220,000 spindles and 236 Air jet looms at USD 81 million to
be paid in installments through Companys subsidiaries.
During the year under review, the Company has achieved 154.79% increase
in its consolidated revenues which stood at Rs. 897.50 crores compared
to Rs. 352.25 crores in the previous year. The Companys consolidated
Earning Before Interest, Depreciation and Tax (EBITDA) 3.9x times to
Rs.113.57 crores over Rs 29.00 crores in the previous year.
The Company has recorded a consolidated Profit after Tax of Rs. 12.58
Crores, an increase of 25.05 % over the previous year.
The segment wise reporting of various business segments are provided in
Note XXI of Notes to Accounts to the Audited Balance Sheet and also
in Management Discussion & Analysis.
Considering the very large opportunity available and the Companys
significant expansion and acquisition plans, the Directors do not
recommend any dividend in the best interests of the company.
FUTURE OUTLOOK AND STRATEGIES:
While there are challenges to address, overall the prospects for the
Indian textile industry are bright. India is the worlds second biggest
textile manufacturer, right after China. India ranks just after China
and the USA in the production and consumption of cotton. The Indian
textiles industry has established its supremacy in cotton based
products, especially in the readymade garments and home furnishings
segment. Export of readymade garments from India amounted to US$ 8 bn
in FY06 and are likely to amount to US$ 16 bn by the end of 2010,
assuming a conservative growth of 15% per annum. According to
estimates, investments in textiles are expected to touch USS 31 bn by
2010. This presents a large opportunity for the company given that yarn
forms the backbone of the entire textile industry.
The Companys strategy is to achieve global scale rapidly through value
accretive acquisitions. The Companys endeavor is to acquire or build
high quality manufacturing facilities in strategic regions across the
world, where it can access raw materials at competitive costs, benefit
from competitive energy costs, and avail of high quality infrastructure
to access the most remunerative markets for its products. The Company
believes that besides ensuring faster scaling up, this strategy will
enable lower capital costs, high operating margins and within a
reasonable period higher and sustainable return on the Companys
ISSUE OF SHARES/DEBENTURES AND LISTING
During the year under review the Company has issued and allotted the
following equity shares:
Date of Issue/ Shares Distinctive Numbers Nature of allotment
19.07.06 17,50,000 5,74,59,192 to Conversion of Warrants
5,92,09,191 by CVCI into equity
21.08.06 75,00,000 5,92,09,192 to
6,67,09,191 Issue and allotment of
equity shares to QIBs
08.02.07 44,87,844 6,67,09,192
7,11,97,035 Shares allotted pursuant
to Scheme of Amalgamation
of M/s. Indo Rama Textiles
Ltd. with Spentex
Industries Ltd. in the
ratio of 90 shares of
Spentex Industries Ltd.
against 100 shares of Indo
Rama Textiles Ltd.
Consequent upon the allotment of aforesaid shares, the paid-up capital
of the Company stands increased to Rs.71,19,70,350/-The shares of ther
Company have also been listed on NSE on 20th December 2006.
The Company has issued 500 9% Secured Redeemable Nonconvertible
Debentures of Rs.10,00,000/- each to UTI Bank Ltd. and the said
debentures are listed on BSE. Another 500 9.18% Secured Redeemable
Nonconvertible Debentures of Rs.10,00,000/- each were issued and
allotted by erstwhile Indo Rama Textiles Ltd. to LIC Mutual Fund.
Consequent upon the amalgamation of Indo Rama Textiles Ltd. with the
Company, the repayment of the said Debentures has been taken over by
the Company which are due for redemption on 19th July 2007.
The equity shares of the Company continue to be listed on BSE & NSE.
The Equity shares issued and allotted during the year, were also listed
on BSE and NSE. There has been no default in paying the annual listing
A separate report on Corporate Governance is attached as a part of the
Annual Report, along with the Certificate on compliance of Corporate
Governance issued by a Company Secretary in practice is attached as
annexure to this report.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on management Discussion and Analysis is attached as a part of
the Annual Report.
Mr. Pankaj Sharma, Mr. Deepak Diwan and Mr. Sitaram Parthasarathy
retire by rotation and are eligible for re-appointment
Mr. Amrit Agrawal was co-opted as an Additional Director on 28.04.2007.
He holds such office until this Annual General Meeting and is eligible
In terms of Clause 49 of the Listing Agreement, the details of the
Directors to be re-appointed are being provided in the Notice of the
ensuing Annual General Meeting.
M/s. Price Waterhouse, Chartered Accountants, the Statutory Auditors of
the Company, retire at this Annual General Meeting and being eligible,
offer themselves for re-appointment. The Company has received a
certificate from them to the effect that their re-appointment, if made,
would be in accordance with section 224(1 B) of the Companies Act,
1956. The Board recommends their re-appointment.
The Auditors Report read together with the Notes to Accounts is
self-explanatory and do not call for any further explanation under
Section 217(3) of the Companies Act, 1956.
The security on the Debentures referred to in the Auditors Report were
raised by the erstwhile Indo Rama Textiles Ltd. which merged with the
Company pursuant to order of the Honble High Court of Delhi dated 20th
December 2006, the maturity date in respect of the said Debentures is
19th July 2007.
Pursuant to the directions of the Central Government Mr. Rajesh Goyal,
Cost Accountant of M/s. K G Goyal & Associates, Cost Accountants
appointed as Cost Auditor to conduct the audit of the Cost Accounts of
the Company for the financial year ending 31st March, 2007 for the
MERGER OF INDO RAMA TEXTILES WITH THE COMPANY
During the year under review, the Honble High Court, Delhi vide its
order dated 20/12/2006 approved the Scheme of Amalgamation of Indo Rama
Textiles Ltd. (IRTL) with the Company.
As a result, IRTL a profit making listed Company has merged with the
Company. Consequent upon that, the business of IRTL together with all
its assets, liabilities were transferred to the Company with effect
from April 01, 2006. Further, its authorized share capital has also
merged with the authorized capital of the company which has now
increased to Rs.121 Crores.
This merger is bound to strengthen the financials of the Company though
economy in scale of operations, creating a long term value for the
The Company has not accepted any deposits within the meaning of Section
58A of the Companies Act, 1956 and the rules made there under.
The Company has following subsidiary/step-down subsidiary companies
during the year under review:
1. Amit Spinning Industries Ltd., India
2. Spentex (Netherlands) B.V., Netherlands
3. Spentex (Mauritius) Pvt. Ltd., Mauritius
B. Step-down subsidiaries
1. Spentex Tashkent Toytepa LLC., Uzbekistan
2. Spentex (Cyprus) Pvt. Ltd., Cyprus
3. Spentex (Singapore) Pte. Ltd., Singapore
In terms of the approval granted by the Central Government under
section 212(8) of the Companies Act, 1956, reports of the Board of
directors and Auditors, Balance Sheet and Profit & Loss Account of
these subsidiaries/step-down subsidiaries have not been attached to the
Balance Sheet of the Company. The Company believes that the
consolidated annual accounts which form part of the annual report
present a full and fair view of the state of affairs and the financial
candition of the Company and its subsidiaries/step-down subsidiaries.
The Company will make available the audited annual accounts and related
details upon request by any member of the Company. These documents will
also be available for inspection at the registered office of the
Company during business hours.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard 21 on consolidated financial
statements read with Accounting Standard 23 on accounting for
investments in associates, the directors provide the audited
consolidated financial statements in the Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT:
As stipulated under Section 217(2AA) of the Companies Act, 1956, the
Directors hereby state and confirm
a) That the preparation of the Annual Accounts, the applicable
accounting standards have been followed along withproper explanations
relating to material departures;
b) That the Directors have selectedsuch accounting policies and
applied them consistently and made judgment andestimates 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;
c). That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records inaccordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and forpreventing and detecting fraud and other
d). That the Directors have prepared the annualaccounts on a going
PARTICULARS OF EMPLOYEES
Information relating to employees of the Company, as required under
section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, as amended, the employees who
are in receipt of remuneration for the full year or part of the year as
the case may be which, in aggregate was not less than the amount
specified under section 217(2A) of the Companies Act, 1956 is attached
herewith as Annexure - I.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo as required under
Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in Annexure - A which form a part of the report.
The industrial relations during the year under review remained
harmonious and cordial. The Directors wish to place on record their
appreciation for the wholehearted co-operation received from all the
employees at various units/divisions of the Company.
The Directors gratefully acknowledge the whole hearted support given by
the customers, suppliers, shareholders, employees, central and state
governments, financial institutions, banks, and we look forward to
their continued cooperation and best wishes in our endeavour to steer
the company towards greater heights.
Annexure To the Directors Report
Information Under Section 217(1)(e)of the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 and
Forming part of the Directors Report for the year ended March 31,
2007. Thus the current year figures are not comparable with that of the
previous year as previous year figures are given pre amalgamation of
Indo Rama Textiles Ltd.
A. CONSERVATION OF ENERGY :
During the yearunder review further efforts were made to ensure optimum
utilization of fuel and electricity.
a. Energy conservation measurestaken :
The Company is continuously taking efforts in energyconservation,
energy saving tubes and electronic ballasts are continuously to be
being installed in a phased maner for this purpose.
B. TECHNOLOGY ABSORPTION : RESEARCH & DEVELOPMENT(R&D)
1. Specific areas in which R&D has been carried out by the Company:
Identifying improvements to processes through properly documented
systems to strengthen yarn quality, improve productivity and effective
2. Benefits derived as result of the above R&D Effective
utilization of resources and fulfillment of customers requirements.
3. Future plan of action: Widening of product range for improving
4. Expenditure on R & D. :
a) Capital Rs. 259.22 Lacs
b) Revenue Rs. 9.67 Lacs
c) Total Rs. 269.34 Lacs
d) Total R&DExpenditure as
percentage of total turnover 36.51 %
TECHNOLOGYABSORPTION, ADAPTATION AND INNOVATION :
a) Efforts : Continuousimprovement to process through data analysis and
b) Benefits: Improvement in productivity and quality
c)Technology imported during the last 5 years : None
C. FOREIGN EXCHANGEEARNINGS AND OUTGO :
a) Efforts : In Spite of Stiff Global Competition and reduced margins,
we are continuing to put our best efforts in earning foreign exchange
contributing to the national Ex-chequer,
b)Earnings and Outgo : Particulars with regard to foreign exchange
earnings and outgo appear in Schedule XX of the accounts
Annexure I To the Directors Report
Information Pursuant to Section 217 (2A) of the Companies Act, 1956,
read with Companies (Particulars of Employees) Rules. 1975 and forming
part of the directors report of the financial year ended 31st March,
Name Age Qualifiction Date of Designation Gross
L N Kaushik 40 M.Tech 19/05/2006 President 26,37,096
V K Jain 58 M.Tech 08/02/2007 President 4,37,500
Name Experience Last Employer Designation
L N Kaushik 7 Abhishek Ind. Ltd. Vice President
V K Jain 24 Alis Industries Ltd. President