EVINIX INDUSTRIES LIMITED
ANNUAL REPORT 2010-2011
Dear Members & colleagues,
Your Directors have pleasure in presenting the Fifteenth Annual Report
together with the Audited Statement of Accounts on the performance of the
company for the financial year ended 31st March 2011.
Rs in lacs
Particulars Year Ended Year Ended
March 31, 2011 March 31, 2010
Total Income 22469.36 16574.41
Profit before Depreciation
and Interest 1563.88 1726.94
Finance Cost 966.85 771.09
Depreciation 231.07 235.67
Provision for Tax *Including FBT 37.00 51.41
Profit from Operations 365.95 720.19
Deferred Tax 65.49 (62.32)
Profit after Tax 263.46 731.10
Prior Year Adjustment 4.45 4.45
Add: Surplus of last Year 3783.40 3056.76
Surplus available for
appropriation 3884.58 3783.40
General Reserve 0.00 0.00
Proposed Dividend on
Equity Shares 0.00 0.00
Surplus Carried to
Balance Sheet 3884.58 3783.40
Surplus available for
appropriation 3884.58 3783.40
PERFORMANCE OF YOUR COMPANY
Your Company is engaged in fashion accessories, apparels and fabric
products. These product basket is such that all or one segment are always
winning businesses across India & our traditional markets. The Company is
growing on a consistent basis and year 2010-11 was not an exception to the
same. The Gross income from operation was Rs. 20679.51 lacs in comparison
to Rs. 16033.40 lacs during the previous year. Profit after Tax during the
year decreased from Rs. 731.10 Lacs to Rs. 263.46 Lacs during the previous
The Operating profit was lower due to increase in input costs as available
across various raw material categories, higher lease rentals on expanded
retail space and prolonged pressure on realized prices as well discounting
to help recessionary markets in Europe & USA. This year has been year of
high cost of money, i.e extended credits to buyer has also added to reduced
Your Directors are of the view that in the current phase of expansion and
the large opportunities of further growth available to the company, there
will be a need to conserve the funds. Hence, your directors do not
recommend dividend for the year financial year ended March 31, 2011.
The authorised capital of the Company is Rs. 20,00,00,000/- comprising of
20,00,00,000 Equity shares having face value of Rs. 1 out of which the
issued, subscribed and paid up capital is Rs. 10,70,00,000/- comprising of
10,70,00,000 Equity shares having face value of Rs. 1/- per share.
In accordance with the Provisions of the Companies Act, 1956, and the
Articles of Association of the Company Dr. Ajeet Kumar Doshi and Mr.
Mahabir Prasad Additional Directors of the company are being offered for
A brief note in terms of the requirement of the Corporate Governance on the
aforesaid Director has been included at Part - I of Annexure - II.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to
Directors' Responsibility Statement, the Members of the Board confirm that:
1. In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation;
2. Prudent accounting policies have been selected and judgments and
estimates have been made 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 financial year ended 31st March
3. Proper and sufficient care has been taken 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. Annual accounts have been prepared on a going concern basis.
REGISTRAR AND SHARE TRANSFER AGENT
Beetal Financial & Computer Services Private Limited is continued to act as
Registrars and Share Transfer Agents as common agency both for physical and
dematerialized shares as required under Securities Contract (Regulation)
The detail of RTA forms part of the Corporate Governance Report.
As required under Clause 49 of the Listing Agreement, a Report on Corporate
Governance along with Certificate on Corporate Governance confirming
compliances with the conditions of Corporate Governance obtained from the
Statutory Auditors of the Company is annexed to this Report. (Part - 2 of
Annexure - II)
MANAGEMENT DISCUSSION AND ANALYSIS
The detailed review of operations, performance and future outlook of the
Company is given separately under the head 'Management Discussion and
Analysis'. (Part - 1 of Annexure - II)
LISTING AT STOCK EXCHANGE
The Equity Shares of the Company continue to be listed on Bombay Stock
Exchange and National Stock Exchange. The Annual Listing Fees for the year
2011-12 have been paid to the Stock Exchanges.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
Information in accordance with the provisions of Section 217(1)(e) of
Companies Act, 1956, read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given in
the statement annexed (Annexure - I) hereto and forms part of this report.
The Company has neither invited/ nor accepted any deposits during the year
within the meaning of Section 58A of the Companies Act, 1956, read with
Companies (Acceptance of Deposits) Rules, 1975.
Employee relations continued to be cordial during the year March 31, 2011.
Your Company continued its thrust on Human Resource Department. Your
Company has initiated various customized training programs viz. personality
development, development of inter personal skills, communication skills,
public speaking etc. for its employees that enhance both personal, as well
as career growth of the employees. These programs are conducted round the
year by professional trainers as well as by the human resource department
of the Company. Your Company has also encouraged its employees to attend
seminars and discussions conducted by professional institutions and trade
bodies. The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and immense
contribution to the high level of performance and growth of the business
during the year.
PARTICULARS OF EMPLOYEES
As required by the provisions of section 217(2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975 as
amended, the name and other particular of the employee is set out in the
Annexure I (Annexure to the Director's Report)
AUDITORS & AUDITORS' OBSERVATIONS
M/s. A.S. Patwa & Co., Chartered Accountants, the Statutory Auditors of the
Company, retire at the forthcoming Annual General Meeting of the Company
and have expressed their reluctance to continue, if appointed. M/s. Doggar
& Company, Chartered Accountants, New Delhi have been shortlisted by the
Board of Directors of the Company to take over as the Statutory Auditors of
the Company for the financial Year 2011-12 .Your Directors recommend their
re-appointment. Observations in the Auditors' Report are dealt with in
Notes to Accounts at appropriate places and being self-explanatory need no
Your Director place on record their sincere gratitude to the continuing
patronage of our valued customers, bankers and financial institutions,
business associates, shareholders, suppliers and other statutory
authorities who have extended their valuable sustained support and
encouragement to your Company. Your Directors look forward to all of your
continued support and undertaking in the years to come.
Your Managing Director, K. M. Gupta place special thanks to all of you
associated with your company specially his colleagues, associates, bankers,
statutory & regulatory authorities who have helped him in founding,
promoting, steering your company to it's present position in this special
categories of specially Fashion accessories.
Your directors wish to place on record, their sincere appreciation to the
dedication and commitment of its employees for the growth of the Company.
Which has understandably, been significant for the Company's success in
meeting Targets during testing times as this year.
For and on behalf of the Board
(K.M. Gupta) (Kamlesh Kumari)
Managing Director Director (Commercial & Administration)
Date : August 19, 2011
ANNEXURE - I
ANNEXURE TO THE DIRECTORS' REPORT
I. Statement of particulars pursuant to Companies (Disclosure of
Particulars in the Report of Directors) Rules 1988.
1. Conservation of Energy
a. Energy conservation measures taken : During the period under review,
the company has saved energy in
production process by optimizing
b. Additional investments and
proposals, if any, being
implemented for reduction of
consumption of energy. : NIL
c. Impact of measures at (a) & (b) : All efforts will result in
above for reduction of Energy economy of resources
consumption and consequent and cost cutting.
impact on the cost of
production of goods.
d. Total Energy Consumption and : Given in the below mentioned chart
Energy Consumption per unit of
A. POWER AND FUEL CONSUMPTION (Rs. in Lacs)
PARTICULARS CURRENT YEAR PREVIOUS YEAR
Units (Nos.) 284114 737617
Total Amount (Rs.) 1599369 3855857
Rate/Unit (Rs.) 5.66 5.23
b. Own Generation
i) Through Diesel
Quantity (Ltr.) 96000 147703
Total Amount (Rs.) 3615360 4927680
Average Rate (Rs.) 37.66 33.36
Generate (Units) (Nos.) N.A. 1119160
Unit per-ltr of Diesel oil (Nos.) N.A. 7.58
Cost/Unit (Rs.) N.A. 5.52
ii) Through Steam Turbine N.A. N.A.
2. Coal N.A. N.A.
3. Diesel (Excluding use on
Generation of Electricity)
Quantity (Ltrs) 31275 41575
Total amount (Rs.) 1108699 1345788
Average Rate (Rs.) 35.45 32.37
4. Others/Internal generation N.A. N.A.
B. CONSUMPTION PER UNIT OF PRODUCTION
PARTICULARS ACCESSORIES (PER PIECE)
CURRENT YEAR PREVIOUS YEAR
1. ELECTRICITY 0.63 0.63
2. COAL N.A N.A
3. OTHERS N.A N.A
II. TECHNOLOGY ABSORPTION: Efforts made in technology absorption as per
Form-B of the Annexure to the Rules.
A. RESEARCH & DEVELOPMENT (R & D)
1. Specific areas in which R&D : R & D work has already started
carried out by the Company. and will continue for sometime
2. Benefits derived as a result
of the above R&D : N.A
3. Future Plan of Action : The company is exploring new
areas and new range of products.
4. Expenditure on R&D : N.A.
a. Capital : NIL
b. Recurring : NIL
c. Total : NIL
d. Total R&D Expenditure as a
Percentage of total turnover : NIL
B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief made
towards technology absorption, : N.A
adaptation and innovation.
2. Benefits derived as result
of the above efforts e.g. product
improvement, cost reduction,
product development, import
substitution etc. : N.A
3. In case of imported technology
(imported during the last 5 years
reckoned from the beginning of
the financial year), following
information may be furnished : NIL
a. Technology imported : N.A.
b. Year of import : N.A.
c. Has technology been fully
absorbed? : N.A.
d. If not fully absorbed, areas
where this has not taken place,
reasons therefore and future
plans of action. : N.A.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to export : Company's export income has view
initiatives taken to increase of the world. Company's Exports
exports; development of new have grown considerably during
export markets for products the last financial year.
and services and exports plan. Company is coming out with new &
innovative Export plans to
further improve it during the
next financial year.
2. Total Foreign exchange used : The information regarding Foreign
and earned Exchange earnings and outgo are
contained in Notes No. 18 & 19 in
the Notes to the Accounts.
MANAGEMENT DISCUSSION & ANALYSIS
Industry structure and developments
Its heartening to note that the Indian textile industry contributes around
14 percent to industrial production, 4 per cent of the country's Gross
Domestic Product (GDP) and 17 per cent to the country's export earnings.
This apart, it also provides direct employment to over 35 million people
thereby emerging as the second largest provider of employment after
agriculture, according to a Ministry of Textiles report.
The cumulative production of cloth during April'09-March'10 has increased
by 8.3 per cent as against the corresponding period of the previous year.
It is during this year though many companies have shifted their focus from
Clothing to other sectors, but new entrants backed by funding from FII's &
Private equity shows the strength which Indian Textile sector has. It is
our domestic population needs which are growing @16% annually, which
enables us to grow.
Opportunities and Threats
India's textile industry has been on a growth trajectory since the quotas
were phased out. Though not very friendly policy initiatives , capacity
expansion and India's rising market share, change in products & designs or
more so need to have value added hand work products, we are likely to see a
rapid export growth in this sector.
Changing lifestyles and accelerating preferences of the urban population
for branded apparels are also some of the growth drivers. In opening of
Retail sector specially Malls coming up across the country welcome new
domestic & International brands. Identification of the textile sector as a
priority one for 'job creation' by the government certainly augurs well for
the long-term needs of trained man power. This is particularly a positive
indication for players in the garmenting side, being very labor intensive.
India ranks fifth in the global textile and clothing trade (exports being
nearly 3% of global textile trade).
The European & US brands are now setting up contract manufacturing units in
India with special reference to supplies for their Indian Chain Stores.
which single handedly opens up a wide array of possibilities for all the
stakeholders within the textile industry. Experts believe that the golden
era of Chinese textile and apparel exports is over and the production base
of global textiles is gradually shifting from China to India, Pakistan and
other low cost destinations.
Threats are for loosing quantities supply orders to low cost neighboring
countries like Bangladesh & Sri Lanka , which needs to be mitigated by
shift in product lines as well up gradation of technology.
Financial performance of Evinix Industries Limited
(in Million) 2010-11 2009-10
Revenue 2,067.95 1,603.23
Income 10.59 4.39
Income 2,078.54 1,607.62
Expenditure -2,088.36 -1,435.37
Interest -96.68 -77.11
PBDT 59.70 95.14
Depreciation -23.11 -23.57
PBT 36.60 71.57
Tax 3.70 1.09
Net Profit 25.91 72.67
The Company has achieved a Sales Turnover of Rs. 2067.95 million in
Financial Year 2010-11 as against sales revenue of Rs 1603.23 million
during the previous year. The Company has recorded Profit before
Depreciation, and Tax of Rs 59.70 million as against Rs 95.14 million
during the year before. A higher net profit of Rs 72.67 million was
registered in FY10 as against a profit of Rs 25.91 million during the
Evinix has started export of Polyester Cotton wraps & scarfs, bedsheet sets
to African countries through India based agents and plan to undertake
direct export marketing during 3rd quarter of financial year 2010 and the
same has been carried on.
Your company's expansion plan met with global recession and there was a
downturn in retail segment. Consequently, this Strategic Business Unit
(SBU) failed to match its projected sales figure and sales were managed on
high discounts only. Company has already identified a loss of Rs 14.73
Crores on these retail stores.
Despite generating consistent growth in its top line, company's EBIDTA
level deteriorated where one of the reasons was fixed expenses incurred for
running these stores; same can be depicted from following table
Rs. in Crore
Particulars 2007-08 2008-09 2009-10 2010-11
Net Sales 119.04 121.78 160.32 206.71
EBIDTA 22.87 15.47 17.26 15.63
EBIDTA (%) 19.21% 12.70% 10.77% 7.56%
To shield its main manufacturing activity from the negative impact of its
retail segmentand in absence of any hope of its revival in near future,
company's management has decided to close all its present stores. As a
step, leases of all company operated stores are now cleared of its lock in
period of 3 years.
Efforts have been undertaken to open more manufacturing locations to meet
growing order book position & avoid outsourcing which shall help in
improving our bottom line.
Internal control systems and their adequacy.
The Company maintains and proper internal controls system of internal
controls. All the Company's assets are secured and protected against loss
from illicit use or dispossession. All the transactions are authorized. It
is ensured that Company's internal audit is being strengthened from time to
time and all the financial statements and accounting records of the company
are reviewed and reliable.
Material developments in Human Resources/Industrial Relations front
Sustained and meticulous efforts continue to be exercised by the Company at
all its plants, towards greener production and environment conservation.
The Company perseveres in its efforts to indoctrinate safe and
environmentally accountable behavior in every employee, as well as vendors,
by rigid compulsory annual training and refresher courses, as well as
frequent awareness programs. Mock drills of emergency preparedness are
regularly conducted at all the plants showing Company's commitment towards
safety, not only of its own men and plants, but also of the society at
The health of employees and the environment in and around the Plant area
have been given due care and attention. The Company continued to comply
with the prescribed industrial safety environment protection and pollution
control regulation at its production plant, through periodic checks of the
system involved and constant monitoring to meet the standards set by the
pollution control authorities, etc.
All the plants of the Company are eco-friendly and do not generate any
harmful effluents. They have facilities for captive power generation as a
stand-by arrangement, to meet any contingency. Safety devices have been
installed wherever necessary, your companies all manufacturing locations
are fully compliant to buyer norms & certified. These are inspected audited
by independent third party as well buyer's auditors.
The growth in the global textile industry is closely linked to the GDP
growth of the US and the European nations. While these economies have been
in turmoil in recent times, what is enthusing is the fact that with growing
disposable incomes, the domestic market offers significant potential to the
branded apparel players. While the shrinking capacities in the US are a
positive for Indian companies, competition from low cost producers like
China and India cannot be ignored.
Even though experts claim that China is past its glorious days, still one
needs to take China seriously because of the capability of Chinese
exporters to supply quality products at cheap prices. Indian textile
exporters cannot afford complacency and need to be on their toes for any
changes within the international trade community.
According to Ministry of Textiles, the current domestic market of textile
in India is expected to increase up to US$ 60 billion by 2012 from the
current US$ 34.6 billion. The share of exports is also expected to increase
from 4% to 7% within 2012.' Textile Accessories are also an important part
of this segment. Coming year shall see addition of Home fashion &
Furnishing as another segment contributing min. 25% of revenues & margins.
Your company's plans to diversify in non textile areas are on cards,
sectors such as Food, Agri Commodities & Infrastructure. In these new areas
while opportunities are large so are downsides, we are cautiously
evaluating small proposals matching to our capabilities & risk return
expectations of all stakeholders.