AADI INDUSTRIES LIMITED
ANNUAL REPORT 2010-2011
Your Directors have pleasure in presenting the Seventeenth Annual Report on
the operations of the Company together with the audited accounts for the
year ended 31st March, 2011.
Financial Results for the year ended 31st March, 2011 are as under:
(Rs. in lacs)
Current Previous Financial Year
Financial Year 2010-11 2009-10
Net Sales and other Income 12102.84 7664.30
Profit before Depreciation, 894.99 535.61
Interest and Tax (PBDIT)
Less: Interest 396.82 230.54
Depreciation 55.16 41.03
Profit before Taxation 443.01 264.04
Less: Provision for Taxes
-Income Tax 130 67.94
-Deferred Tax Asset 19.54 16.62
-Prior Period Item 8.22 0.00
Profit after Taxation 285.25 179.48
Balance brought from 126.56 5.58
Balance available for 411.81 185.06
Proposed Dividend 50.00 50.00
Dividend Tax 8.50 8.50
Profit carried to Balance Sheet 353.31 126.56
During the year under review, your Company achieved sales of Rs. 12102.84
lacs and earned net profit after tax of Rs. 285.25 lacs compared to Rs.
7664.30 lacs and Rs. 179.48 lacs respectively for the previous financial
Your Directors are pleased to recommend final dividend @ Re. 0.50/- per
share for the Financial Year 2010-11 subject to approval of the
shareholders at the ensuing Annual General Meeting, which if approved,
would absorb Rs. 58.50 lacs on account of dividend and distribution tax
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mrs. Mansi Shah Director of the
Company, retires by rotation and being eligible, offers herself for re-
appointment at the ensuing Annual General Meeting.
Mr. R.C. Singhvi was appointed as an Additional Director with effect from
1st December, 2010 to hold office upto the date of ensuing Annual General
Meeting. However due to his pre occupation resigned from the office of
director of the Company with effect from 26th March 2011.
Mr. C. R. Mehta and Mr. Surjit Banga Independent Directors also resigned
from the directorship of the Company with effect from 26th March 2011 and
6th July 2011 respectively. The Board places on record its deep
appreciation of the invaluable services rendered by Mr. C. R. Mehta, Mr.
Surjit Banga and Mr. R. C. Singhvi during their respective tenure as
Director of the Company. Mr. Sunil Mistry, Independent Director was
appointed as the Additional Director of the Company w.e.f. 30th May, 2011
to hold office upto the date of ensuing Annual General Meeting and being
eligible offer himself for reappointment. The Company has received a notice
under Section 257 of the Companies Act, 1956 proposing his candidature as
Director of the Company.
Alternation of Object Clause:
The Object Clause of the Company was altered through Postal Ballots. The
Members of the Company vide resolution passed at the Annual General Meeting
of the members of the Company held on 26th August, 2010 altered the Object
Clause of the Company and adopted the business as mentioned in the then
inserted Clauses 67 to 70 under Part C of Object Clause of the Company.
There after the said Objects were adopted as the Main Object of the Company
substituting the then Main Objects.
Directors' Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
- in the preparation of the annual accounts, the applicable Accounting
Standards have been followed and no material departures were found;
- 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 as at 31st March, 2011 and of the profit of the Company for the
- the Directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
- the annual accounts for the year ended 31st March, 2011 have been
prepared on going concern basis. Public Deposits:
The Company has not accepted any deposit pursuant to provisions of Section
58A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
Delisting of Shares:
The Company had made an application to Vadodara Stock Exchange for
delisting of its shares since there was no trading of shares at the said
Stock Exchange. The Company's said application for delisting of shares was
approved by the Managing Body of the said Stock Exchange. The Company has
been informed by the said Stock Exchange vide their letter dated 27th
January, 2011 that the trading of shares of the Company have been delisted
from the said Stock Exchange accordingly the shares of the Company is now
listed only on Bombay Stock Exchange.
M/s Sunderji Gosar & Co., Chartered Accountants, the Statutory Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for re-appointment. The retiring Auditors have furnished a
certificate of their eligibility for re-appointment under Section 224(1 B)
of the Companies Act, 1956 and have indicated their willingness to continue
in the said office. Members are requested to appoint auditors for the
current year and to authorize the Board to fix their remuneration.
As regards observations of the Auditors for non payment of certain
Statutory Dues, the Board of Directors would like to state that due to
temporary shortage offunds, the said dues have been remained unpaid.
Necessary steps have been taken to make the payment of the said outstanding
A Report on Corporate Governance and Management Discussion & Analysis
Report pursuant to Clause 49 of the Listing Agreement are annexed hereto
and form part of this report.
Particulars of Conservation of Energy, Technology Absorption, Adaptation
and Innovation and Foreign Exchange Earnings and outgo:
Information relating to the Conservation of Energy, Technology Absorption,
Adaptation and Innovation and Foreign Exchange Earnings and Outgo pursuant
to Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988
is annexed hereto and forms part of this report.
Particulars of Employees:
During the year under review, none of the employees of the Company, whether
employed for the whole year or part thereof, was in receipt of remuneration
aggregating to or in excess of the limits specified under Section 217(2A)of
the Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, and hence, no particulars of employees are required
to be furnished in connection with the said Rules.
The Board wishes to place on record its sincere appreciation for the
continuous support received from Shareholders, Customers, Suppliers,
Bankers, Statutory Authorities and all other business associates. The Board
also takes this opportunity to thank the employees at all levels for their
hard work, commitment and invaluable contribution to the Company's
For and on behalf of the Board
Chairman & Managing Director
ANNEXURE TO THE DIRECTORS' REPORT:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956 read
with the Companies (Disclosure of the Particulars in the Report of the
Board of Directors) Rules, 1988 and forming part of the Directors' Report
for the year ended 31st March 2011.
I. CONSERVATION OF ENERGY:
During the year under review, the Company applied strict control systems to
monitor day to day power consumption, to endeavor to ensure the optimal use
of energy with minimum wastage for its plant.
A. Power and Fuel Consumption Year Ended Year Ended
Purchased Unit (in kw) 313124 52192
Total Amount (Rs.) 13,99,668 233324
Unit Rate (Rs.) 4.47 4.47
Quantity (in Ltrs) 3,05,000 5473
Total Cost (Rs.) 7,093 1800454
Average rate/liter (Rs.) 43 35.88
B. Consumption per unit
Electricity (per MT) 176.86 units 2000 units
L.D.O. (per MT) 153.6 units 500 units
II. A) RESEARCH AND DEVELOPMENT (R&D):
1. Specific areas in which R&D carried out by the Company.:
The Company has set up the facilities to manufacture plastic bags and
tarpaulin covers with latest technology machines available in the industry
and most suitable in the Indian conditions. During the year under review no
R & D activities were undertaken up by the Company but online R&D process
is proposed to be implemented to ensure optimum utilization of capacity,
best quality output with control over the manufacturing cost.
2. Benefits derived as a result of the above R&D.:
3. Future Plan of action:
To reduce cost of production and improve quality, it is proposed to carry
out Research and Development in several areas with in-house facilities.
B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. The Company has not acquired any technology for its manufacturing
operations. However, the process applied is standard and generally accepted
in the Industry.
2. Proper facilities will be set up for quality assurance and checking of
various parameters at regular interval.
3. Benefits derived as a result of the above efforts:
The Company is expected to achieve consistency in the product quality, cost
control, product development, import substitution etc. This will also help
to achieve better yields and quality of the end product and the cost
4. Purchase of technology imported during the last 5 years:
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year under review the Company did not have any earnings in
foreign exchange (Previous Year Rs. Nil). However, the Company recorded
foreign exchange outgo of Rs. Nil/- towards foreign traveling. (Previous
Year Rs. Nil)
For and on behalf of the Board
Date : 11th August 2011 Rushabh Shah
Place: Mumbai Chairman and Managing Director
MANAGEMENT DISCUSSION AND ANALYSIS:
Statements in this Report, particularly those which relate to the Company's
objectives, projections, estimates and expectations may constitute forward
looking statements within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
(A) Industry structure and developments:
Considering the plastic industry, in India, low-density polyethylene (LDPE)
and linear low density polyethylene (LLDPE) are widely used polymers. This
segment of polymers is growing at the rate of 12% per year. More than 50%
of LDPE/ LLDPE is used by the packaging industry. The second most used
polymer in India is HDPE, with a share of 22%. The value of its domestic
consumption is Rs 2,123 crore and it is growing at the rate of 15% per
year. HDPE is used in the manufacturing of raffia, blow molding, injection
molding, and in the paper industry as well. The majority of manufacturing
capacities are owned by the big industrial houses.
Investment in the plastics sector in India is also rising with domestic and
overseas companies setting up or expanding manufacturing activities.
Further, the Indian government has taken steps to enhance competitiveness
of the country's plastic industry by reducing import duties and central
excise rates, and introducing value-added tax to replace sales tax.
As regards growth in the Plastic Industry, the global consumption of
plastic is much more than the consumption of plastics in India. It is
expected that consumption of plastics in India is expected to rise within
five years and the industry will offer 'unprecedented opportunities' in the
next two decades due to rapid urbanization and growth in retail business in
(B) Opportunities and Threats, Risks and Concerns:
The change in business policies, including the relaxation in restrictions
on foreign ownership; some privatization of government assets; and tariff
reductions, have made the country as competitive as the other Asian
regions. Foreign investors view India as a country with enormous potential,
hence new foreign and domestic investments in the plastics industry will
accelerate competition through higher growth, and measures by the Indian
government to encourage investments. It is expected that India's polymers
sector will have one of the highest growth rates of any polymer industry
over the next 10 years.
As per the study carried out for availability of growth of various
industries in India, India's petrochemical industry is expected to attract
investments of more than $18 billion in the next 4-5 years. About $10
billion of that will be invested in the downstream processing industry and
the rest by several existing and new producers. India can become a global
production base and an export hub in the coming years. Hence availability
of raw materials would be easy and that will further enhance the
opportunities for the Plastic Industry which is a by product of
With more concentration on the specialty grades quality products which are
more eco friendly plastic products and moving away from the type of
commodity made cheaply will have more scope to survive in the long run
considering the environmental issues attached with the Plastic Industry.
With the quality consciousness, India can be a competitive supplier to
China and to the rest of Asia.
The main threat is from the unorganized sector comprising low grade plastic
goods manufacturers and from non eco-friendly manufacturing units. This may
lead to quality problems in the international market and downgrading of
Indian manufacturers' image. Secondly, due to its basic nature and use of
low grade of plastic which is not eco-friendly, there has always been a
threat of substitution of plastic as basic material with other metal or
alternate material. These are the key risk factors which the Plastic
Industry has to tackle in future.
(C) Internal control systems and their adequacy:
The financial year under review being the Second year of operations with
the commissioned of own manufacturing department, the Company is in process
of designing and putting in place various internal control systems for all
the key departments including production, purchase, finance and accounts
with specific thrust on the materials wastage, environmental issue, and
regular compliances at all level. Going forward, the Company has plans to
expand its systems to other departments with recruitment of managerial
cadre personnel more exhaustive reporting and rigorous follow up actions
wherever any signs of shortcomings. Further Internal Audit systems will
also be placed and proposed to be carried out to check the implementation
and working of the Internal Systems.
(D) Material developments in Human Resources/Industrial Relations front,
including number of people employed
The Company's industrial relations continued to be harmonious during the
Second year of manufacturing activities wherein the Company generated any
employment during the year under review.
(E) Social Responsibility:
The Company is conscious of its obligations towards Health, Safety &
Environment to meet the norms of local Pollution Control Board at Silvassa
(F) Cautionary Statement:
Statement in the Management discussion & analysis describing the Company's
objectives, projections, estimates & exceptions may be 'forward looking
statements' within the meaning of applicable securities laws & regulations.
Actual results could differ materially from those expressed or implied.
Important factors that could make difference to the company's operations
include economic conditions affecting demand/ supply and price conditions
in the domestic & overseas markets in which the company operates changes in
the Government regulations, tax laws & other statutes & other incidental
(G) Future Outlook:
Company is planning to expand its business by issuing the shares of the
Company which forms the Un-issued Capital of the Company, this will enable
the Company to have more money to expand its business and avail the
emerging opportunities in Plastic Industries.
For and on behalf of the Board,
Chairman & Managing Director
Date : 11th August 2011