EMTEX INDUSTRIES (INDIA) LIMITED
ANNUAL REPORT 2010-2011
Emtex Industries (India) Limited
Your Directors present herewith the Twenty Ninth Annual Report together
with Audited Statements of Accounts of the company for the year ended 31st
Year ended Year ended
Sales and other Income 1545.29 2267.41
Gross Profit / (Loss) (224.32) 13.68
Less: Depreciation 78.61 88.82
Net Profit / (Loss) before Tax (302.93) (75.14)
Provision for Tax 0.00 0.00
Net Profit / (Loss) After Tax (302.93) (75.14)
Less: Prior period adjustments/Extra Ordinary Items 0.07 1.06
Add: Profit B/f from previous year (22764.09) (22687.89)
Profit/(Loss) available for appropriation (23067.09) (22764.09)
APPROPRIATION - -
Balance carried forward to the Balance Sheet (23067.09) (22764.09)
In view of the losses, your Directors regret their inability to recommend
payment of any Dividend on the Equity Shares and Preference Shares for the
year ended 31st March 2011.
On the reference made to the Honble Board for Industrial and Financial
Reconstruction (BIFR) in 2002, the Board had declared your company sick
under Section 3 (1)(o) of the Sick Industrial Companies (Special
Provisions) Act, 1985, vide its order of 4th January 2006.
The Company submitted a One Time Settlement (OTS) offer cum Draft
Rehabilitation Proposal (DRP) for settlement of existing loans and
rehabilitation of the unit. The offer has been accepted by the Operating
Agency (OA), IFCI Ltd., Bank of Nova Scotia and Punjab National Bank. They
have also been paid in full and final settlement. The Redeemable Preference
Shares subscribed by UTI, long overdue for redemption, were also taken on
assignment by M/s. Invent Assets Securitization and Reconstruction Private
Dena Bank, IndusInd Bank and ARCIL, to whom our dues to State Bank of India
were assigned, communicated their willingness to accept the offer through
M/s. Pegasus Assets Reconstruction Pvt. Ltd. who manages this portfolio.
But, in the absence of approval by the remaining secured creditors, the
OTS/DRP has not been fully implemented.BIFR has again advised the Company
to submit a revised DRP for considering rehabilitation of the unit.
When the OTS-cum-DRP is implemented, the company plans to raise Working
Capital and funds for essential Capex, to enable the Company to revive
operations in full swing and to generate profit over a period of time.
There was no improvement in the business operations and turnover during the
year, which is difficult without infusion of working capital funds. The
company is managing its operations with job work for third parties. When
the revised rehabilitation cum OTS proposal is submitted to BIFR and got
approved and implemented as mentioned above, working capital facilities can
be mobilized. Thereafter, the operational capability and efficiency of the
unit would improve significantly.
The operations of textile division are now confined to job works. The
demand for fabrics is now picking up in spite the overall slackness in the
economy. There has been qualitative improvement in the products, reduction
in the cost of operations to the extent possible.
CHEMICAL DIVISION: QUIMICA:
Our chemical division is out of operations for the past couple of years.
The prices of essential raw materials like Phenol remain high, making
economic operation of our Chemical Division impossible. We can consider
revival of operations only when we are able to generate at least cash
Textiles being an essential item of the necessities of daily life and
considering the changing life styles demands can only go up. Moreover, your
company has been specialized in cotton textiles, which are in great demand.
Cotton textile is also preferred world over and the demand is insatiable.
As your company is catering to this segment, the potential for growth is
plenty. But we should be able to effectively tap the opportunities and
grow. It is also a known fact that the industry earns substantial foreign
exchange for the country and provides employment to millions of Indians
directly and manifold others indirectly, apart from contributing
substantially to the exchequer, at the Central, State or local levels.
In spite of the difficulties being faced by the company now, we are
determined to go forward and withstand the vicissitude so as to consolidate
on our strengths and win over the hurdles. We are taking every effort in
this direction and hope to come out as winners the implementation of the
OTS cum Rehabilitation Plan with the approval of the Honble BIFR.
During the year Mr. V. S. Nair, Nominee Director of IFCI has resigned from
the Board of Directors consequent to settlement of companys dues to IFCI,
the Board of Directors placed on records its gratitude and appreciation for
the valuable guidance he has provided to the Company.
Mr. Sunder Rangan and Mr. Ganesh Khemka, Directors of the Company retire by
rotation at the forthcoming Annual General Meeting and being eligible,
offers themselves for re-appointment.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements under section 217(2AA) of the Companies Act,
1956 with respect to Directors Responsibility Statement, it is hereby
(i) that in the preparation of the annual accounts for the financial year
ended 31st March, 2011, the applicable accounting standards have been
followed along with proper explanation relating to material departures, if
(ii) that your 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 your
Company at the end of the financial year and of the loss of your Company
for the year under review;
(iii) that your 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 your
Company and for preventing and detecting fraud and other irregularities;
(iv) that your Directors have prepared the accounts for the financial year
ended 31st March, 2011 on a Going Concern basis.
M/s. N. G. Jain & Co., Chartered Accountants, Auditors of the Company holds
office until the conclusion of the ensuing Annual General Meeting and being
eligible, offered themselves for reappointment.
The Company has received a letter from them to the effect that their
appointment if made would be within the prescribed limits u/s 224 (1B) of
the Companies Act, 1956 and that they are not disqualified for such
appointment within the meaning of Section 226 of the Companies Act, 1956.
PARTICULARS OF EMPLOYEES
Your Company has no employee whose remuneration details are required to be
provided under the purview of the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE ORNINGS
The particulars as required to be disclosed pursuant to Section 217(1)(e)
of the Companies Act, 1956 read with the Companies (Disclosures of
particulars in the report of Board of Directors) rules, 1988 are given in
the Annexure 1 forming part of this report
Your Directors take this opportunity to express their sincere gratitude to
the Operating Agency, IFCI and all banks and institutional lenders for
their support to the company and its rehabilitation plans and look forward
to receiving their continued encouragement. Our business associates,
creditors, suppliers and customers have shown great forbearance during our
difficult times and we sincerely thank them. The Directors are also pleased
to record their appreciation to the employees at all levels for their
devotion and commitment and acknowledge their valuable contribution.
For and on behalf of the Board
Place : Mumbai
Dated : 22nd July, 2011.
1. ANNEXURE TO THE DIRECTORS REPORT
FORM - A
Form of Disclosure of particulars with respect to Conservation of Energy
POWER AND FUEL CONSUMPTION:
(a) Purchases Unit 2153860 2719600
Total Amount (Rs.) 1,18,46,763 1,31,52,080
Rate / Unit 5.50 4.84
(b) Own Generation Unit 5911 15537
Total Amount (Rs.) 26304 76,752
Rate / Unit 4.40 4.94
2. STEAM COAL
Quantity (in Tons) 6337.79 6113.87
Total cost (Rs.) 2,97,05,259 2,83,09,631
Average Rate (Per Ton) 4687 4630
3. URNACE OIL
Quantity (in Tons) Nil Nil
Total cost (Rs.) Nil Nil
Average Rate (Per Kltrs) Nil Nil
4. OTHERS/INTERNAL GENERATION Nil Nil
B. CONSUMPTION PER THOUSAND METERS / M.T. OF PRODUCTION
5. Electricity Coal
2010-11 2009-10 2010-11 2009-10
FABRICS 1.58 1.53 0.52 0.7
CHEMICALS 0 0 Nil Nil
Since the Companys operations involve low consumption of energy, the
Company has no comments to offer under para A (a) to (c) of Rule 2 of the
Companies (Disclosure of Particulars in Report of Board of Directors) Rules
FORM - B:
Form of Disclosure of Particulars with respect to absorption
RESEARCH AND DEVELOPMENT 2010-11 2009-10
Specific Area in which R&D carried out by the Company Nil Nil
Benefits derived as a result of above R&D Nil Nil
Future Plan of Action Nil Nil
Expenditure on R&D Nil Nil
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Efforts, in brief, made towards technology absorption,
adaptation and innovation NA NA
Benefits derived as a result of above efforts e.g.
product improvement, cost reduction,
Product development, import substitution, etc. NA NA
Imported Technology NA NA
FORM - C:
FOREIGN EXCHANGE EARNING AND OUTGO
1. EARNINGS Rs.94.37 lacs (P.Y.Rs. 1.42 Lacs FOB)
2. OUTGO: Rs.0.40 lacs (P.Y.Rs. 4.48 lacs)
For and on behalf of the Board
Place : Mumbai
Date : 22nd July, 2011
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Union Government has been extending support to Textile Industry, in
view of its importance in the overall context of employment generation,
foreign exchange earnings and tax revenue for the Government. The industry
directly employs over 35 million people and contributes 14% of total
industrial production of the country. The industry has earned 17% of
India's foreign exchange earnings. The employment potential of this sector
is so vast that it is estimated to provide additional employment to 6.5
million people during the Eleventh Five Year Plan.
It is heartening that budgetary provision for Technology Up-gradation Fund
(TUF) has been increased and the DEPB Scheme has also been extended up to
March, 2011. But, there is an element of suspense in the ad hoc-ism, which
needs to be addressed by the Union Govt. Governmental support,
encouragement and concerted efforts by the Industry are called for to
register steady increase, both in domestic production and share in
international trade which presently is at a low level.
The company was not able to exploit the business opportunities, as working
capital limits with banks remained frozen for the past few years. The
revised DRP cum OTS submitted to Operating Agency on 17/12/2009 is taken as
the basis for settling the dues of the company.
The company has only two divisions, namely Textiles and Chemicals. The
performance of the divisions is discussed below:
The company has been striving to improve the productivity and optimization
of stenter-wise utilisation of plant capacity. Effective steps are also
being taken for cost reduction. Positive results would surely emerge
especially with settlement of dues of secured creditors as discussed above
and availing of working capital to improve the liquidity position. We also
will reenter exports arena once adequate working capital is tied up,
without which we will not be able to stick to exacting production schedules
of overseas buyers.
CHEMICAL DIVISION: QUIMICA:
As stated we felt it prudent to close down the operations of this division
until situations improve.
The company has been in the business of textile trade and processing for
the past three decades, thus gaining very valuable experience and
expertise. The company is well equipped with all required machineries to
process all kinds of fabrics and has expertise to meet most demanding
specifications according to changing fashions in textile fabrics. But,
absence of working capital stands in the way of exploiting them. Once the
OTS is implemented and working capital is availed of, the operations would
start generating profit with the help and involvement of our skilled and
competent people. The company's products are still in demand in the
international market and therefore the brand equity of the company remains
The Union Government has taken a series of measures to support the textile
sector in the country. Your company has good processing facilities, though
requiring up-gradation and is committed to avail of opportunities for
development of business. With Govt.'s support, we are sure to go ahead
taking advantage of every opportunity, subject to removal of the hindrances
stated above and getting required support from the Govt., BIFR, lenders and
The Company is subject to usual vagaries of international business risks,
exchange fluctuation, influence of other internal and external factors
affecting any business in general.
FOREIGN CURRENCY RISKS
The Company has plans to do direct exports after the OTS is implemented.
The exports are usually in US$, which currency, of late is showing wide
fluctuation. We shall take a median rate for fixing the prices, situation
permitting and thus cover the risk to a great extent. We do not import any
raw material / consumables. Hence, foreign currency fluctuation risk is
limited to the foreign currency transactions relating to exports.
The Company faces competition from both organized and unorganized sectors.
As domestic sales are very low, it is not considered a serious issue. The
contacts and relation with overseas clients of yester years are maintained
and it would be only a question of time and efforts to revive them and
The company has not been able to take advantages of Technological Up-
gradation schemes, as it has been a sick unit with all limits frozen by
banks and financial institutions. When these financial constraints are
removed and its revised DRP is implemented, the company hopes to make
investment to upgrade its machineries over a period of time.
Statement in this Management Discussion and Analysis describing the
Company's objectives, projections, estimates and expectations may be
considered as 'Forward Looking Statements' within the meaning of the
applicable laws and regulations. Actual results might differ substantially
or materially from those expressed or implied.