Your Directors submit their Report for the financial year ended 31st March 2014
The domestic footwear market is driven by growing fashion consciousness together withincreased disposable income among India's urban middle class which contributes about 45%of overall footwear market making India the second-largest global producer of footwearacross varied segments after China. In the last 5 years Chinas imports haveincreased by 132.67 percent and are eating the major market size of all categories i.e.men women and children. The imports from China have surged the most by rising about 295percent. Imports from USA have declined but imports from all other countries haveincreased tremendously.
Among the top ten countries to which the Indian Footwears are being exported exportsto Belgium have registered the highest compound annual growth rate (CAGR) of 22.7 percentin the last five years whereas Italy has registered the lowest CAGR of -9.1 percent in thelast five years. Due to the increasing imports from China to Italy Indian presence hasreduced in the total imports of Italy and thus has recorded a negative growth rate. Themaximum exports of
India are made to UK and US as they acquire the largest share in Indias totalFootwear exports with 18.9 percent and 11.3 percent respectively.
There should be implementation of best practices at a firm level and at the sectorallevel it should be through cluster based approach by setting up cross-industry clustersand support them through governmental interventions on infrastructure like port clearancesand power promotion of footwear industry by giving benefits at domestic as well as inexports and subsidy schemes. The future growth of the footwear industry in India willcontinue to be market-driven and oriented towards EU and US markets. With technology andquality of the footwear improving year after year Indian Footwear industry is stampingits class and expertise in the global footwear trade.
"Low cost of production abundant availability of raw material ever-evolvingretail ecosystem buying patterns and a huge consumption market are certain basic featuresthat set apart the Indian footwear market. As per the report of ASSOCHAM the globalfootwear market which is growing at a CAGR of about five per cent is currently estimatedat about Rs.10.15 lakh crore is likely to reach Rs. 12.34 lakh crore by 2015.
PRESENT FINANCIALS & COMPANY AFFAIRS
During the Year under review your company has registered an appreciable growth inrespect of turnover during the financial year 2013-14 which amounting to Rs. 5857.08 Lacs.Your Company has registered a profit before tax of Rs. 173.11 lacs.
Net profit increased by 66.27% to Rs. 1.38 crore in the year ended March 2014 asagainst Rs. 0.83 crore during the previous year ended March 2013. Sales increased by41.44% to Rs. 58.57 crore in the year ended March 2014 as against Rs. 41.41 crore duringthe previous year ended March 2013.
PROPOSED TRANSFER TO RESERVES
In terms of section 217 (1) (b) of the Companies Act 1956 for the Financial Yearending March 31 2014 the Company had transferred Rs. 25 lacs to the General Reserve.
Review of Operations
Your Companys performance during the year as compared with that during theprevious year is Summarized below: -
(Fig In Rs. Lacs)
| ||Year ended March 31st 2014 ||Year ended March 31st 2013 |
|Sales of products and services ||5857.07 ||4140.89 |
|Other Income ||102.13 ||261.34 |
|Total Income ||5959.20 ||4402.23 |
|Total Expenditure other than Interest and Depreciation ||5495.49 ||3983.24 |
|Profit before Interest Depreciation and Tax ||463.71 ||418.99 |
|Depreciation and Amortization Expenses ||120.77 ||139.48 |
|Profit before Interest and Tax ||342.94 ||279.51 |
|Finance Cost (net) ||169.83 ||175.83 |
|Profit before Tax ||173.11 ||103.68 |
|Provision for Current Tax ||34.64 ||20.74 |
|Provision for Deferred Tax ||0 ||0 |
|Net Profit ||138.47 ||82.94 |
|Adjustments in respect of prior years ||13.85 ||0.16 |
|Surplus brought forward ||673.22 ||661.82 |
|Profit after Tax available for appropriation ||797.84 ||744.92 |
|Your Directors recommend appropriation as under: || || |
|Proposed Dividend on Equity Shares ||58.54 ||48.79 |
|Dividend Tax on Proposed Dividend ||9.50 ||7.91 |
|Transfer to General Reserve ||25.00 ||15.00 |
|Income Tax /TDS/ wealth Tax Provision ||17.99 ||0 |
|Surplus Carried Forward ||686.81 ||673.22 |
|Total Appropriation ||797.84 ||744.92 |
The Directors recommended dividend of Rs. 1.80/- (18%) per share on Equity shares forthe year ended 31st March 2014 which will attract dividend tax of Rs. 9.49 Lacs. Thetotal payout will be Rs. 58.54 Lacs and tax thereon Rs. 9.49 Lacs.
Information pursuant to Section 217(2A) of the Companies Act 1956 read with theCompanies (Disclosures of particulars in the Report of Board of Directors) Rules 1988 isgiven as under which forms part of this Report. There is no employee whose particulars arerequired to be given under section 217(2A) of the Companies Act 1956 and the Companies(particulars of employees) Rules 1975.
M/s Y.K. Sud & Co. Jalandhar Chartered Accountants who are the Statutory Auditorsof the Company retires at the forthcoming Annual General Meeting and is eligible forreappointment. The retiring Auditors have furnished a certificate of their eligibility forreappointment pursuant to provisions of Section 139 & 142 of the Companies Act 2013and have indicated their willingness to be reappointed.
Your Company has not accepted any deposits during the financial year and as such noamount of principal or interest was outstanding on the date of the Balance Sheet.
APPOINTMENT OF COST AUDITOR
Your Company does not come under the purview of Cost Records and Cost Audit underCompanies Act 2013 and rules made thereunder so far. Any amendments in the rules or lawif carried out by Ministry of Corporate Affairs will be adopted in letter and spirit.
In accordance with the requirement of the section 383A of the Companies Act 1956 aCompliance Certificate for the financial year 2013-14 from M/s Dinesh Gupta & Co.Practicing Company Secretaries Jalandhar has been attached.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE AND OUTGO
Information relating to energy conservation foreign exchange earned and spent andresearch and development activities undertaken by the Company in accordance with theprovisions of 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" to the Directors Report.
MANAGEMENT DISCUSSION AND ANAYLSIS REPORT
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges ManagementDiscussion and Analysis Report is annexed as ANNEXURE gBh along withAuditors Certificate regarding Compliance of the Conditions of Corporate Governanceis given as part of this Annual Report.
The report on Corporate Governance as stipulated under Clause 49 of the ListingAgreement forms part of the Annual Report. The requisite certificate from M/s Y.K. Sud& Co. Chartered Accountants Confirming Compliance with the conditions of CorporateGovernance as Stipulated under the aforesaid clause 49 is annexed hereto as ANNEXUREgCh and forms part of this Annual Report.
The observations of the Auditors in their report are self-Explanatory and/or explainedsuitably in the Notes to the Accounts.
RESEARCH AND DEVELOPMENT
Footwear intended for use in multiple sporting activities represent non-trivial designchallenges. Research and development facilities are available in house. Company iscontinuously engaged in using best efforts for developing and testing of the productsmanufactured at every level of production. Various factors like Gender skill level andenvironmental conditions add further requirements upon footwear designs and developing.Research activities mainly include the testing of the developed product by using varioustests like bond test color fastness sole abrasion test and blooming test.
VOLUNTARY DELISTING OF THE COMPANY S ORDINARY SHARES FROM CERTAIN STOCK EXCHANGES
The Companys application for delisting of ordinary shares is pending with TheDelhi Stock Exchange Ltd.
PAYMENT OF LISTING FEE
The stocks of the Company are available for trading in dematerialized shape on thestock exchanges. The equity shares of the Company are listed on Bombay Stock Exchange andthat the annual fees for the year 2014-15 has been duly paid.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act 1956the Directors of your Company confirm:
a) That in the preparation of the annual accounts the applicable accounting standardshave been followed and no material departures have been made from the same;
b) That such accounting policies have been selected and applied consistently and suchjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the profit or loss of the Company for that period;
c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company for preventing and detecting fraud and other irregularities;
d) That the annual accounts have been prepared on a going concern basis.
Your Directors wish to express their deep sense of appreciation for the committedservices of all the employees of the Company. They place on record their appreciation forthe support and cooperation your Company has been receiving from its Bankers CustomersDistributors Dealers suppliers and other business partners.
| ||By Order of the Board |
| ||For Sarup Industries Limited |
|Place: Jalandhar || |
|Date: 28.08.2014 || |
|Sd- ||Sd- |
|Manjit Bawa ||Atamjit Singh Bawa |
|Chairperson ||Managing Director |
ANNEXURE A to DIRECTORS REPORT
Forming Part of the Directors Report
Information pursuant to Section 217(1) (e) of the Companies Act 1956 read with thecompanies (Disclosure of particulars in the Report of the Board of Directors) rules 1988in respect of conservation of energy technology absorption and foreign exchange earningsand outgo.
A. Conservation of Energy
1) Energy Conservation measures undertaken: -
The year has been a widening gap between electricity production and demand right acrossthe country. However Your Company is ever mindful of the need for energy conservationnot only as a method of cost reduction but but also because it is a global and socialobligation.
I. Utilisation of lights and stand-alone air conditioners only when required.
II. Switching off computers when not in use.
III. Any other measures as recommended by the concerned department for maximumconservation.
2) Additional investments and proposals:
I. Replacement of existing lighting systems with higher efficiency systems and maximizenatural day lighting
II. Company is trying to reduce its expenses of energy consumption.
III. Expenditure on power and fuel during the year ending 31st March 2014under review is Rs. 98.30 lacs as compared to Rs. 79.53 lacs during year ending March 312013.
B. Technology Absorption Adaptation & Innovation
Efforts in brief made towards absorption:
Induction of contemporary technology and continuous improvement projects acrossbusinesses towards reducing process variability cycle time and wastage while enhancingmanufacturing productivity. The Company is using the modern technology in themanufacturing process. As a result there has been a marked Improvement in the quality ofthe products manufactured by the Company besides lowering the cost of production. Thetechnology has been fully absorbed.
C. Details of Import of Technology
During the year new technology machines have been imported for better quality controland increase in productivity.
D. Foreign Exchange Earnings and Outgo
The information relating to foreign exchange earnings and outgo is provided under Notesto the Balance Sheet and Financial Statements.