Modern Denim Ltd. के निदेशक की रिपोर्ट

Mar 31, 2012

The Directors have pleasure in presenting Annual Report and audited accounts for the financial year ended on March 31, 2012.

1. FINANCIAL RESULTS

(Rs. In crores)

2011-12 2010-11

Net Profit for the year before exceptional items 1.29 3.08

Exceptional items - 69.94

Net profit after exceptional items 1.29 73.02

2. OPERATIONS

During the financial year, the Company has achieved a turnover of about Rs. 167 crores as against Rs. 143 crores during the previous financial year. With the entry of new manufacturers and additions to the capacities by all the major producers of denim in the country, there has been surplus in the market with the average realizations declined during the year under review. Company is facing acute shortage of working capital which has impacted profitability of the Company for the year. Production cost pushed up due to exorbitant increase in power and other input cost. Inspite of difficult business conditions prevailing in the domestic textile market and continued recessionary trend prevailing in global textile markets, your Company has been able to generate net profit of about Rs. 1.29 crores as against net profit of Rs. 3.08 crores in previous year. The exports of Denim are not remunerative due to world wide competition in the global market of Denim Industry, flooding of cheaper denim fabric by China, East Asian Countries & Pakistan. However, the Company is continuing its efforts to explore opportunities for its products in overseas markets and could export the Denim Fabrics of about Rs. 2 crores during the year under review. Your Company has also taken several remedial steps to meet the challenges viz. measures of saving in cost at all fronts of operation, optimize use of available resource etc. Your Directors regret their inability to recommend any dividend for year under review in absence of net profits.

3. FUTURE PROSPECTS

Since last few years the Denim Industry is passing through difficult business conditions. Due to change in fashion the demand of denim fabric has declined world over resulting into over supply situation. Over supply situation coupled with lower demand have squeezed the margins not only of your Company but almost of every leading houses in denim segment of textiles. The substantial increase in the number of players in denim sector is a cause of worry and may lead to further glut in the market. Domestic demand is expected to grow at 20-25% whereas supply growth is expected to be in excess of 50%. The long term success is possible only when the product mix is diversified. However such diversification will need large investment which is not possible for your Company as we have shortage of funds. Thus prospects of Denim industry remains uncertain.

4. RESTRUCTURING OF DEBTS & REFERENCE TO BIFR

The company is making continuous efforts for settlement of dues of the secured lenders. Once settlement with the remaining secured lenders are completed, company will file fully tied up Draft Rehabilitation Scheme with Operating Agency & Hon'ble BIFR.

5. PUBLIC FIXED DEPOSIT

In view of petition filed by the Company, the Hon'ble Company Law Board has passed an order on 21/12/2001 that "The repayment of fixed deposits shall be made by the Company in accordance with "revival scheme" as and when approved by BIFR under the provision of SICA". However payments on compassionate ground are continued to be made as per the decision of the committee formed by Hon'ble Company Law Board for this purpose.

6. DIRECTORS

Shri RR. Maheshwari is liable to retire by rotation and being eligible, offers himself for re-appointment. Appropriate resolution for the re-appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting, which the Board recommends for your approval.

7. AUDITORS

M/s. J. T. Shah & Co., Chartered Accountants, Ahmedabad retires at the forthcoming Annual General Meeting. Your Directors recommend their re-appointment as Auditor of the Company for the year 2012-13. The observations made by the Auditors are self explanatory and have been dealt with in the notes forming part of the financial statements and hence need no further clarifications.

8. INDUSTRIAL RELATIONS & PARTICULARS OF EMPLOYEES

Your Directors sincerely appreciate the workers, staff and officers for putting in their best efforts. The Company has enjoyed healthy and cordial industrial relations throughout the year under review. There is no employee getting remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended.

9. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:-

i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to 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 the year under review;

iii) 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;

iv) the Directors have prepared the annual accounts on a going concern basis.

10. PARTICULARS OF ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

The statement of particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo as required in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 (A), 2(B) and 2 (C) of the Companies (Disclosures of particulars in the report of Board of Directors) Rules, 1988 is annexed hereto and forms part of this report.

11. CONSTITUTION OF AUDIT COMMITTEE

The Board of Directors has constituted the Audit Committee of Directors to exercise powers and discharge functions as stipulated in section 292A of the Companies Act, 1956. The present Audit Committee consists of member directors as follows:-

Shri H. L. Sharma, Chairman

Shri B. L. Verma

Shri R.R. Maheshwari (From 22nd March, 2012)

12. ACKNOWLEDGEMENTS

The Board places on record its sincere thanks and gratitude for the assistance and continued co-operation that the Company has been receiving from the financial institutions, banks, employees, shareholders and Central as well as State Government.

ON BEHALF OF THE BOARD

(SACHIN RANKA) Chairman & Managing Director

Place: Mumbai Date : 29th June, 2012

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Mar 31, 2011

The Directors have pleasure in presenting Annual Report and audited Accounts for the financial year ended on March 31, 2014.

1. FINANCIAL RESULTS _(Rs. in crores)

2010-11 2009-10

Net Profit/(Loss) for the year before exceptional items 3.08 (8.59)

Exceptional items 69.94

Balance brought forward from last year (297.89) (289.30)

Balance carried to Balance Sheet (224.87) (297.89)

2. OPERATIONS

The market situation has gradually changed from last year and demand is growing. This is because, denim is no longer remains restricted to only men's wear. There is greater acceptance among kids and women. In "domestic market, Denim is finding wide acceptance in small cities and villages. Your company had made all out efforts to take benefit of aforesaid opportunities with innovative qualities. The exports of denim are not remunerative because of lower price realization and stiff competition, therefore entire sales during the year under review is in the domestic market.

The Performance of your company during the year under review has improved. The turnover for the year under review was Rs. 143 crores as against Rs. 93 crores in previous year thus registering of growth of 54%.' Sales increased mainly due to increase of sales realization per meter on account of increase of raw material cost. Your company has been able to generate net profit of Rs. 3.08 crores as against net loss of Rs. 8.59 crores in previous year. In view of accumulated losses, your directors are unable to declare any dividend for the year under review.

3. FUTURE PROSPECTS

Your Directors foresee upsurge in demand during the ensuing years. Denim volumes are expected to grow further towards fashion and value added fabrics instead of basic Denim. Although the Company is having limited financial resources, it is making untiring efforts to reap the benefits of present growth of Denim Industry. Our strategy to focus development of new designs in the conventional denim fabric is helping us greatly and being welcome in the medium segment of the market. As such your Company is hopeful to maintain its presence with a competitive edge inspire of new entrants. The substantial increase in the number of players in denim is a cause of worry and may lead to a further glut in the market. This obviously means pressure on demand and margins. However the long term outlook for "denim industry appears encouraging in view of growing consumption.

4. RESTRUCTURING OF DEBTS & REFERENCE TO BIFR

The company is making continuous efforts for settlement of dues of the secured lenders which includes re scheduleement, one time settlement, waiver of entire interest. Settlement made during the year under review has resulted into write back of principal and interest which has been included in the exceptional items shown under the financial results. The Company is making efforts for settlement with remaining secured lenders. Pursuant to directions of the Hon'ble BIFR, the Company will now submit fully tied up Draft Rehabilitation Scheme to the Operating Agency.

5. PUBLIC FIXED DEPOSIT

In view of petition filed by the Company, the Hon'ble Company Law Board has passed an order on 21/12/2001 that "The repayment of fixed deposits shall be made by the Company in accordance with "revival scheme" as and when approved by BIFR under the provision of SICA." However payments on compassionate ground are continued to be made as per the decision of the committee formed by Hon'ble Company Law Board for this purpose.

6. DIRECTORS

Shri B.L. Verma is liable to retire by rotation and being eligible, offers himself for re-appointment. Appropriate resolution, for the re-appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting, which the Board recommends for your approval. Specified undertaking of the Unit Trust of India (SUUTI) has withdrawn the nomination of Shri Punit Saxena w.e.f. 6/7/2010. The Board places on record its appreciation for the valuable contribution made by Shri Punit Saxena during his tenure as a director of the company. The Board of Directors has re-appointed Shri Sachin Ranka as Chairman and Managing Director of the Company for a further period of 5 years.

7. AUDITORS

M/s. J. T. Shah & Co., Chartered Accountants, Ahmedabad retires at the forthcoming Annual General Meeting. Your Directors recommend their re- appointmentasAuditoroftheCompanyfortheyear2011-12. The observations made by the Auditors are self explanatory and have been dealt with in the notes vide Schedule 13 forming part of the accounts and hence need no further clarifications.

8. INDSUTRIALRELATIONS & PARTICULARS OF EMPLOYEES Your Directors sincerely appreciate the workers, staff and officers for putting their best efforts. The Company has enjoyed healthy and cordial industrial relations throughout the year under review. There is no employee getting remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees ) Rules, 1975 as amended.

9. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to sub-section (2AA) of Section 217 Of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that :-

i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to 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 the year under review;

iii) 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 ;

iv) the Directors have prepared the annual accounts on a going concern basis.

10. PARTICULARS OF ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHNAGE OUTGO

The statement of particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo as required in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 (A), 2(B) and 2 (C) of the Companies Disclosures of particulars in the report of Board of Directors) Rules, 1988 is annexed hereto and forms part of this report.

11. CONSTITUTION OF AUDIT COMMIITTEE

The Board of Directors have constituted the Audit Committee of Directors to exercise powers and discharge functions as stipulated in section 292 A of the Companies Act, 1956. The present Audit Committee .consists of member directors as unden-

Shri H. L. Sharma, Chairman

Shri B. L.Verma

12. ACKNOWLEDGEMENTS

Your Directors appreciate the co-operation extended by the Government authorities, Bankers, Financial Institutions and are grateful for their assistance, guidance and support. Your Directors are also grateful to the employees and shareholders for their support and confidence reposed in the management.

ON BEHACF OF THE BOARD

Place :Mumbai (SACHIN RANKA)

Date : 25th June, 2011 Chairman & Managing Director