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Page Industries Ltd.

BSE: 532827 Sector: Industrials
NSE: PAGEIND ISIN Code: INE761H01022
BSE LIVE 15:40 | 23 Oct 19614.60 697.50
(3.69%)
OPEN

19099.00

HIGH

19687.90

LOW

19008.00

NSE 15:40 | 23 Oct 19650.05 649.15
(3.42%)
OPEN

19200.00

HIGH

19699.00

LOW

19025.05

OPEN 19099.00
PREVIOUS CLOSE 18917.10
VOLUME 604
52-Week high 19687.90
52-Week low 12360.00
P/E 77.11
Mkt Cap.(Rs cr) 21,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 19099.00
CLOSE 18917.10
VOLUME 604
52-Week high 19687.90
52-Week low 12360.00
P/E 77.11
Mkt Cap.(Rs cr) 21,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Page Industries Ltd. (PAGEIND) - Director Report

Company director report

PAGE INDUSTRIES LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT Your Directors take pleasure in presenting the 17th Annual Report of the Company together with audited accounts of the Company for the year ended 31st March 2012. FINANCIAL RESULTS: Financial results for the year under review are summarised below: (Rupees in Million) Particulars For the For the year ended year ended 31st March 31st March 2012 2011 Sales 6834.09 4915.62 Other Income 183.56 120.95 Profit before Interest, Depreciation & Prior period Adj. 1513.91 1016.63 (Less): Financial Charges 66.73 47.75 (Less): Depreciation 106.22 98.30 (Less): Prior period Adjustments 0.01 (3.51) Net Profit Before Tax 1340.95 877.61 (Less): Provision for - Current taxes 403.00 286.31 - Prior Year taxes 27.80 18.17 - Deferred taxes 10.28 5.81 - Wealth Tax 0.25 0.23 Profit After Tax 899.85 585.49 Appropriation: Less: Interim Dividend 301.15 245.39 Proposed Dividend 111.54 44.62 Corporate Dividend Tax (Including tax on proposed dividend) 66.95 47.99 Transferred to General Reserve 97.00 60.00 Surplus carried to Balance Sheet 858.93 535.72 FINANCIAL HIGHLIGHTS & PERFORMANCE Your Directors wish to inform you that during the financial year ended 31st March 2012, the sales of the Company increased from Rs. 4,915.62 million to Rs. 6,834.09 million registering a growth of 39 %. The net profit before tax for the year under review has increased to Rs.1,340.95 million from Rs. 877.61 million of last year, which is an increase of 53%. The net profit stood at Rs.899.85 million as against Rs. 585.49 million of the previous year representing a growth of 54%. DIVIDEND: During the year 2011-12, your directors have declared three interim dividends on 27th May 2011 (Rs. 5 per share), 10th November 2011 (Rs.12 per share) and 9th February 2012 (Rs. 10 per share) on an equity share value of Rs. 10 each and are also pleased to recommend a final dividend of Rs. 10/- per share aggregating to a total dividend of Rs. 37 per share of an equity share value of Rs. 10 each amounting to Rs. 41,26,93,338/- for the year ended 31st March 2012. The final dividend if approved at the forthcoming Annual General meeting will be paid out of the profits of the Company. The dividend will be paid to those shareholders whose names appears on the Register of Members of the Company after giving effect to all valid share transfers lodged with the share transfer agent on or before 16th July 2012 and to those whose names appears as beneficial owners in the records of National Securities Depositories Limited and Central Depository Services (India) Limited as on the said date. EXPANSION OF CAPACITY: Begur Road Complex: Production capacity at Begur Road Complex has stabilised at 35 million pieces including partial shift working. Bommasandra Complex: The capacity at Bommasandra complex has stabilised at 27 million pieces of garments per annum. Kodichikkanahalli Complex: The capacity has been stepped up to 24 million pieces of garments per annum. We have also installed centralised automated cutting of garments in this complex. Hosa Road Complex: The capacity of this unit has stabilised at 4 million pieces of garments. Other Garmenting units: The unit set up at Kudlu Gate has stabilised with a capacity of 15 million garments per annum. We have also set up a unit at Mangammanapalya with a capacity of 7 million pieces per annum. Elastic Unit: Your Company has expanded capacity for the manufacture of woven elastic to 29 million metres per annum. The capacity for manufacture of knitted elastic has been enhanced to 14 million metres per annum. Socks Unit: The capacity of socks unit has been expanded to 4.4 million pairs per annum. The four acres of land allotted to us by Karnataka Industrial Areas Development Board (KIADB) at Gowribidanur Area, Chikkaballapura District has been physically handed over to us. We have obtained approval from KIADB for construction of the factory which is expected to commence by September' 12. NEW TERRITORY: Your Directors are happy to announce that the company has appointed a UAE Distributor for Jockey and has made the first shipment to UAE during the year under review. Our objective is to carry out brand building activities in the region and portray a high brand image as was done in India. BRAND BUILDING AND EXCLUSIVE BRAND OUTLETS (EBOs) During the year 2011-12, we have, through our authorised franchisees, opened eleven Jockey Exclusive Brand Outlets. Including these outlets, the total EBOs now number 71, well spread out in all major cities. DIRECTORS As per the provisions of the Companies Act 1956 and the Articles of Association of the Company, Mr. G P Albal and Mr. Sunder Genomal, Directors of the Company would be retiring by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment. The Board of Directors at their meeting held on 28th May 2010 re-appointed Mr. Sunder Genomal as Managing Director of the Company for a period of 5 years with effect from 1st August 2011.The same got subsequently approved by the shareholders at their meeting held on 30th July 2010. Considering the increase in the business volume and the contribution made by the Managing Director, the Board revised the remuneration payable to the Managing Director as set out in resolution No.6 in the notice. The Board places the resolution for your approval. EXPORTS The Company's exports during the year under review amounted to Rs.14.53 million. PROSPECTS In the year under review, your company commissioned 'Nielsen' research agency to conduct an independent 'brand health' study for the Jockey brand in India. The research involved fourteen cities in all four zones across the nation. Your Directors are happy to inform you that the results of the study were very heartening and showed that Jockey scored a Brand Equity Index of 4.6 on a scale of ten in the Men's Innerwear category and 2.9 in the Women's innerwear category. To put things in perspective, worldwide only 23% of brands across all product categories score a Brand Equity Index 3.0 or over on a scale of ten and only 8% of brands score 5.0 and above. Jockey India Brand Equity Index scores were way above all other brands in both the Men's and Women's Innerwear categories. The research agency has rated the Jockey brand health in India among the most powerful brands in their research experience across all categories. Jockey is indeed a very well entrenched and well respected brand in its category, not just among consumers but the trade as well. Your company is highly encouraged by the brand image, strength and leadership in the market and will continue its unrelenting endeavour to satisfy consumers with the best products in terms of style, design, comfort, fit and quality. The Indian consumer growth story remains healthy particularly in the premium segment (our target market). Apart from general growth in disposable incomes, the factors that determine consumption (education, occupation, exposure to the world, urbanization, rise in nuclear families, retail becoming more organized and consumers becoming more aspirational, discerning and brand savvy) are all evolving in favour of the Jockey brand as a leading brand in its category. With the backing of Jockey International, USA, and access to ideas, trends and innovations from forty other Jockey international licensees throughout the world, your company's long term commitment to newness & innovation will never waver be it product, back end processes or marketing. With the company's strong in-house back end capabilities, manufacturing expertise and state of the art technology, combined with a very strong distribution network, your Directors are optimistic about the future prospects of the Company and expect continued healthy sales growth and profitability in the coming years, further consolidating its position in the premium market for innerwear, leisurewear and sportswear. AGREEMENT WITH SPEEDO INTERNATIONAL LIMITED: We have on 1st July 2012 entered into a License and Distribution agreement with M/S. Speedo International Limited, London, UK for the exclusive right to manufacture and distribute Speedo products in India consisting of swimwear, apparel, water shorts, equipments and footwear. We launched Speedo brand of products in January of 2012 and have achieved Sales of Rs. 27.75 million during the current financial year. Speedo is the number one brand and product choice for swimmers around the world. While swimwear in India is still at a nascent stage, the prospects for this category blossoming are exciting. It is a matter of great pride for all of us at Page Industries to partner with a brand of this stature. We are sure that Speedo's product technology & marketing leadership, clubbed with our expertise in manufacturing and distribution will go a long way in forging a very successful and mutually beneficial partnership. HEALTH, SAFETY AND ENVIRONMENT Health, safety and the environment are always areas of concern for the Company. Your directors are committed to providing optimum safety to the employees, public, plant and equipment, as embedded in the organisational values, by reviewing our safety aspects on regular intervals and by adhering to strict compliance of laws related to safety. Your company not only ensures strictest statutory compliance but goes a step further by commissioning external international agencies to conduct periodic audits of the plant and outsourcing agencies, in the areas of health, security and safety. Your Company is an environment friendly organisation as it is a non-polluting and non-effluent generating manufacturing setup. During the year under review, we have carried out safety inspection audit by independent agency and the agency expressed their satisfaction over our safety aspects. We have also set up RO (Reverse Osmosis) water treatment plants at our factories at Bommasandra, Begur Road, Hosa Road and Kodichikkanahalli Road to make available clean drinking water to our employees. The same will be extended to all units. INDUSTRIAL RELATIONS Industrial relations are cordial at all levels and your Directors sincerely acknowledge the exemplary dedication of all its employees. FIXED DEPOSITS The Company has not accepted any fixed deposits during the year under review. MANAGEMENT DISCUSSION AND ANALYSIS REPORT & CORPORATE GOVERNANCE As required in the Listing Agreement, a Management Discussion and Analysis Report, and a separate report on Corporate Governance are enclosed as part of this Annual Report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance is also annexed to the report on Corporate Governance. CORPORATE GOVERNANCE The Company is committed to maintaining the highest standards of corporate governance. The report on corporate governance as stipulated under clause 49 of the listing agreement forms part of the annual report. LISTING Your Company's shares are listed in the Bombay Stock Exchange Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE) and the listing fees have been duly paid. AUDITORS M/s Haribhakti & Co., Chartered Accountants, Mumbai, the retiring auditors have given the certificate pursuant to Section 224(1-B) of the Companies Act, 1956 and are eligible for re-appointment. FOREIGN EXCHANGE EARNINGS AND OUT GO The Foreign Exchange earnings and outgo during the year under review were as follows: Foreign Exchange Earned Rs.10.47 Million Foreign Exchange Outgo Rs. 503.42 Million INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956 Pursuant to the provisions of sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011, the statement relating to the particulars of employees forming part of this Report is given below: Name Sunder Genomal Vedji Ticku Designation Managing Director Chief Operating Officer Remuneration received during 2011-12 Rs. 1,02,85,306 Rs. 75,00,000 Other terms and conditions NA NA Nature of employment Liable to retire by Permanent rotation Nature of duties Overall control on the Overall management affairs of the company of entire operations including all production function, sales and marketing Qualification M. Tech (Industrial B.E (Mech) Engineering) Experience Three decades of Having 19 years to experience in various experience in facets of the textile sales field industry Age 57 years 45 years Last Employment P.T.Velveteens Eureka Forbes (Indonesia) Date of commencement 01-04-1996 as 07-05-1997 of employment Managing Director No of shares 22,12,500 shares NA % of paid up share capital 19.8360% NA No other persons during the year 2011-12 were drawing remuneration in excess of the limit prescribed in the Companies (Particulars of Employees) Amendment Rules, 2011. CONSERVATION OF ENERGY : All machinery and equipment are continuously serviced, updated and overhauled in order to maintain them in good condition. This resulted in consumption of lesser energy consumption particulars as required by Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are given in the Annexure A attached. The Company continually takes steps to absorb and adopt the latest technologies and innovations in the Garment Industry. These initiatives should enable the facilities to become more efficient and productive as the company expands, thus helping conserve energy. DIRECTORS' RESPONSIBILITY STATEMENT In compliance of Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm that: - all applicable Accounting Standards have been followed in the preparation of annual accounts and that there is no material departure; - such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the year ended on that date; - proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; - the annual accounts have been prepared on a 'going concern' basis. GENERAL The Directors acknowledge the support given by the Licensor M/s Jockey International Inc., USA, M/s Speedo International Limited, UK and the Distributors. The Board also wishes to place on record their sincere thanks and appreciations to the Government of Karnataka, Bankers of the Company and the Co-operation extended by the employees at all levels. By Order of the Board For and on behalf of the Board of Directors Bangalore 30th May, 2012 CHAIRMAN ANNEXURE- A Statement appended to the Directors' Report pursuant to Rule 2(A) 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, 2012. FORM - A (Form for Disclosure of Particulars with respect to Conservation of Energy) 31.03.2012 31.03.2011 A. POWER AND FUEL CONSUMPTION 1. Electricity a. Purchased : Units 7,628,088 6,261,304 Total Amount Rs. 45,746,390 33,848,478 Rate / Unit Rs. 6.00 5.41 b. Own Generation : i) Through Diesel Generator (Units) 448,609 760,492 Units per ltr. of Diesel Oil 2.91 3.01 Cost / Unit Rs. 13.65 12.53 ii) Through steam turbine / Generator Ltr / Hour Nil Nil 2. Coal (Specify quality and where used) Nil Nil 3. Furnace Oil Nil Nil 4. Other / Internal generation Quantity (in Litres) 2070 4440 Total Cost Rs. 81,323 161,879 Hired Generation - Ltr/ Hr 11.67 18.96 B. CONSUMPTION PER UNIT OF PRODUCTION Product name Garments Garments (in Nos) Knitted Garments 72,574,011 67,846,000 Consumption per No. Electricity (Rs.) 0.71 0.64 Furnace Oil Nil Nil Coal Nil Nil C. Others (Specify) Nil Nil REPORT ON CORPORATE SOCIAL RESPONSIBILITY 1. Have a Heart Foundation Your company made donations to 'Have a Heart' Foundation that saves lives by providing free heart surgeries to poor children, young mothers, youth and breadwinners. The company's donations helped provide surgeries to seventeen individuals who desperately needed surgical treatment but simply could not afford this one time life saving expenditure. 'Have a Heart' surgeries have made a lasting difference to the lives of thousands of needy people in India. The foundation has tie ups with Bangalore's leading hospitals such as Narayana Hrudayalaya, Jayadeva Institute of Cardiac Sciences, St. John's Hospital and Bhagwan Mahaveer Jain Hospital to sponsor subsidized surgeries for the poor. 2. SOS Children's Villages of India Your company helped brightened the lives of twenty-five children at SOS Children's Villages of India by sponsoring their education and helping them live a life of dignity and security. Over the years, children at SOS have grown up to become engineers, doctors, nurses, social workers, technicians, journalists, and management and IT professionals. The organization is committed to the care of children in need and to strengthening families around the world. The core focus is to overcome the obstacles faced by children to stay in school, improve academic performance, ensure overall personality development, integrate children in mainstream society, and help them become self-reliant and contributing members of society. There are 40 SOS Children's Villages in India including facilities for Tibetan children, 122 allied projects like kindergartens, schools, social, medical and vocational training centres spread out across the country reaching out to over 22,000 children annually. 3. Christel House India Your company made donations to Christel House's educational program that concentrates, among other areas, on providing children with quality education, nutritious meals, health care, transportation, life skills training and character development. The company's donations helped provide fifty-three children with textbooks, uniforms, better transportation, and healthcare. The children belong to slums and deprived neighborhoods, and come from families with low monthly income. The Learning Centre provides them with free, rigorous academic education, which stresses competencies in English, Math, Science, Computer and basic skills. While instilling universal values of respect, responsibility, independence and integrity, it helps children achieve success by providing vocational training and mentoring them until they are integrated into work and society. 4. The National Association for the Blind Your company sponsored cataract eye surgeries at a camp organized by The National Association for the Blind (NAB) in Hediyala village of Nanjangud taluk in Karnataka. There were 458 patients in the outpatient department of the camp, out of which glasses were provided to 85 people and surgery performed on 68 patients. For holistic development of the visually challenged and with a vision to lead the visually challenged from darkness to light, this one-of-a-kind organization has established a wide range of projects and services in the field of education, training, prevention of blindness, employment generation, and general welfare of people at no charge. 5. Launching of Sankalp Project (A project of ESIC) General health camp and special day programme The Sankalp project was inaugurated by Mr. Sunder Genomal in the presence of the medical team headed by Dr. Shashirekha Sateesh, MD (OBG), Medical Advisor of the Company. Under her supervision along with the Sankalp Project coordinator the following programmes were conducted: 1. Free medical check-up and counseling of the employees. 2. Investigation of RBS for diabetes mellitus, BP check up for HTN, Hb % for Anemia and Optional HIV and STI for the employees. 3. Display of charts and handbills detailing on Diabetes Mellitus, HTN, Obesity, Heart Diseases, Dengue fever, Malaria, Chikangunya and Malnutrition. 4. Peer group training conducted by Sankalp Project co-ordinator. The training was informative and interactive, thus facilitating the group to train their fellow mates. A 'well baby' show was also organized for the creche children wherein their height, weight and mid-arm circumference (nutritional status) were examined. The children were categorized under three zones viz., green zone marked as excellent, yellow zone as borderline malnutrition and red zone as malnourished. Prizes were distributed by Mr. Pius Thomas, VP-Finance to children who were in their best as per height, weight and nutritional status. The mothers of the children belonging to yellow and red zone were given proper instructions regarding food preparation and prevention of malnutrition. MANAGEMENT DISCUSSION AND ANALYSIS The year under review ended with softening of inflation and interest rates which augured well for better growth prospects of the economy. This trend would benefit infrastructure, construction and real estate sectors which would in turn spur demand growth in the textile sector. The economy is expected to grow at a healthy pace in the medium to long term due to its strong fundamentals and steady domestic consumptions. Industry Structure and Development: One of India's leading sectors, the textile industry contributes 4% to the country GDP, provides direct employment to 35 Million people, accounts for 14% of the industrial production, 12 % of the total exports and 17% of exports earnings. Break-up of the Indian textiles industry: The Indian textile and apparel industry was valued at INR 3,900 Billion in 2010-11 and is expected to reach INR 6,700 Billion in 2015 and INR 11,000 Biliion by 2020 at a CAGR of 11%.The domestic market is expected to register a CAGR of 11 % for the same period. The Indian domestic apparel sector is expected to grow from INR 1,850 billion in 2010 to INR 5,300 billion by 2020, representing CAGR of 11 %. Of this , the innerwear market currently valued at INR 143 Billion (in 2011) is expected to grow to INR 437 Billion by 2020 growing at CAGR of 13.2%, outpacing the growth of the overall apparel market. The innerwear market in India is underpenetrated with per capita spend - 90% below Thailand and China. The market has been growing faster than the overall clothing market, driven by premiumisation. With discretionary consumer spend in India continuing to grow, these trends should persist, aided by rising urbanization and growth in consumer incomes. Indian consumer spend on innerwear products is significantly lower than other Asian peers. This trend is visible across both men's and women's segments with gaps of over 90% against countries like Thailand and China. This suggests that there is significant room for growth driven by rising per capita spending on such products. Looking ahead, we expect growth in the innerwear market to be driven by broad based consumer trends in the form of rising discretionary spend, growing number of mid-high income house hold and rising urbanization. Government of India has extended the Technology Upgradation Fund (TUF) for the eleventh five year plan and has increased fund allocation. Government of India is also setting up various apparel Parks, integrated textile parks and Special Economic Zones in partnership with private sector. Opportunities and Threats Opportunities: The premium innerwear industry is expected to grow at high rate due to the following factors. a) Increased urbanization b) Higher Disposable Income c) Change in Consumer behavior particularly in our target 15-34 age group d) Larger marketing spend by Companies creating general awareness for the category e) Increased brand awareness by consumers f) Shift from unorganized to organized sector g) Rapid expansion of modern retail format Threats: All the major international innerwear Brands have commenced operations in India realizing that Indian Market is likely to emerge as one of the largest market in the World in the next few decades. Outlook: In anticipation of growing demand, the Company has substantially expanded its installed production capacity. And with the ongoing addition of new buildings, infrastructure and facilities, the installed capacity is scalable and can be ramped up with incremental machinery to meet the expected healthy growth in demand. Segment wise Performance The Company is engaged in the business of manufacturing garments. Therefore there is no separate reportable segment. Risk and Concern: The areas of risk and concern are: 1. Increase in labour costs 2. Increase in input cost. However we are confident that increase in input cost can be passed on to consumers. We are also taking steps to monitor and improve labour productivity which will mitigate the impact of increase in labour cost to some extent. Moreover there has been softening trend in the price of input material especially cotton. Internal Control System and Adequacy The Company has an adequate internal control system commensurate with its size and nature of its business. Management has overall responsibility for the Company's internal control system to safeguard the assets and to ensure reliability of financial records. The Company has a detailed budgetary control system and the actual performance is reviewed periodically and decisions taken accordingly. Internal audit program covers all areas of activities and periodical reports are submitted to the Management. Audit Committee reviews all financial statements and ensures adequacy of internal control systems. The Company has a well-defined organization structure, authority levels and internal rules and guidelines for conducting business transactions. The successful implementation of SAP software from 1-4-2009 has been stabilized. SAP has provided the Company with the best structures, disciplined systems, best practices, enabling the Company to improve efficiency, planning and control. This implementation is proving to be an extremely useful and essential tool for the Company as it embarks on its aggressive growth plans. An exciting extension of the SAP is the Business Intelligence/Business Objects software, the implementation of which has been completed. The BI/BO software will create smart management reports that will aid decision making profoundly. Financial Performance and Analysis: (Rs. in Millions) Particulars 2011-12 2010-11 Change Percentage Turnover 6834.09 4915.62 1918.47 39% Other Income 183.56 120.95 62.61 52% Profit before Interest, Depreciation and Prior Period Adjustments 1513.91 1016.63 497.28 49% Less: Interest 66.73 47.75 18.98 40% Profit before Depreciation & Prior Period Adjustment 1447.17 972.39 474.78 49% Less: Depreciation 106.22 98.30 7.92 8% Less: Prior Period Adjustment 0.01 (3.51) (3.52) - Profit before tax 1340.94 877.61 463.33 53% Less: Tax 441.08 292.12 148.96 51% Profit after tax 899.85 585.49 314.36 54% Human Resources: The Company's HR objectives seek to attain a high performing organization, where each individual is motivated to perform to fullest capacity; where every employee feels a sense of belonging to the company and the team, aspiring for individual excellence while contributing to achieve departmental objectives. As of 31st March, 2012, the Company had 12,027 employees on its roll. Caution: Statements in the management discussion and analysis describing the Company's objectives, projections, estimates and expectations may be considered as 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The factors that might influence the operations of the Company are economic conditions, government regulations, WTO and natural calamities over which the Company has no control. The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.