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Mrinal Dyeing & Mfg Co Ltd.

BSE: 500291 Sector: Industrials
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Mrinal Dyeing & Mfg Co Ltd. (MARINALDYE) - Director Report

Company director report

1995 MRINAL DYEING AND MFG. CO. LIMITED DIRECTORS' REPORT Your Directors have pleasure in presenting the 7th Annual Report together with Audited Accounts of the Company for the Financial year ended 31st July, 1995. DIVIDENDS Your Directors are pleased to recommend a dividend of 5% for the year ended 31st July, 1995. The dividend, if approved by the members at the Annual General Meeting, will be paid, subject to deduction of tax at source as per the provisions of the Income Tax Act, 1961. OPERATIONS The Corporate Philosophy to achieve over and above projections backed by total quality management has made the Company to reach the phenomenal heights during this year. The Company, during the year under review has shown significant increase in both profitability and turnover. The turnover shot up from Rs. 17.73 crores (in 1993- 94) to Rs. 51.78 crores, thereby recording a growth of 199% while the profit after tax increased from Rs. 1.57 crores (in 1993-94) to Rs. 7.44 crores, the rate of increase being 374%. A Comparative analysis of the Company's Projected and Actual Performance is as given below :- (Rs. in Lakhs) Actual Performance Projections for for the year 1994-95 1994-95 (as per Prospectus Dated 17/9/93) 1. Sales & Other Income 5184.71 2829.02 2. Net Profit (after interest, depreciation & tax) 744.16 324.84 3. Earnings per Share (Rs.) 7.00 3.05* 4. Dividend (%) 5 20 * Annualised The operations in 1994-95 indicate a substantial improvement over 1993-94. However since beginning of the financial year 1995-96 Company has faced problems due to very harsh liquidity crunch. The contributing factors for such a situation being, inability of the Company to raise adequate working capital funds from banking system due to difficult liquidity position of the banks. This compelled the Company to resort to short term debt at prohibitively high cost. This was compounded due to efforts made by the Company since August, 1995 to increase market share despite adverse selling conditions by extending longer credit to customers. This led to high level of sundry debtors thereby worsening the situation. Most unfortunately the Company could not prevent the default in meeting its liabilities of ICDs & accepted bills and consequently certain litigations in this respect, are instituted against the Company. The Board anticipates to overcome these problems successfully. Under such circumstances the Company requires large funds to augment the working capital & thereby reach the planned targets. Therefore, the Board proposes to come out with an issue of Optionally Fully Convertible Debentures (OFCDs), very shortly. Keeping all these in view the Board of Directors has reconsidered (as its meeting held on 12/03/96) its earlier decision of dividend (at its meeting held on 30/10/95) and decided dividend to 5% (instead 20%) on its equity in the best interests of the Company. Accordingly the excess provision for dividend is transferred back to Profit & Loss A/c. During the half year ended 31st January, 1996 the performance of the Company despite strenuous conditions, was satisfactory. In the said period the turnover of the Company was Rs. 48.82 Crores and the profit after tax was Rs. 1.52 Crores. If everything materialise as projected, your Directors are confident that the desired targets at the horizon may be achieved. be achieved. EXPANSION & DIVERSIFICATION PROGRAMMES The Company, has successfully carried out the expansion programme and expanded its dyeing & cone winding capacities to 3000 t.p.a. Considering the increase in demand for its products, the Company will need to depend upon contract manufacturing from other small units in and around Vapi. But as a long term exercise, the Company is planning to acquire a plot of land near Vapi and is considering to relocate all its manufacturing facilities there, as there is little scope for implementing the desired substantial expansion plans at the existing locations. This would require an estimated investment to the tune of Rs. 30 Crores. At the end of this exercise, the Company will have a dyeing & cone winding capacity of 6000 t.p.a. As a measure of horizontal diversification, the Company is seeking to implement its project of integrated knitting & garmenting. The negotiations are in progress with the importers in Europe / North America for a firm buyback arrangements of the quality knitwear to be manufactured by the Company. The critical machineries for this project will be imported. This will ensure that the products will have the quality which is so very essential the international markets. EXPORTS With the installation of sophisticated quality control devices, at dyeing unit at Vapi, the Company anticipates to match the international quality demands in the export market of dyed synthetic yarns. Your Company to inform you that it has exported a few consignments on trial to various buyers in Europe and the same have passed the rigorous quality standards laid down by these buyers. Your Company can look forward to an increased volume of business in the export market. As a result of this expansion cum horizontal diversification, the Company is confident of achieving a turnover in excess of Rs. 200 Crores by the turn of the Century and attain a prominent place on the world textile map. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Information in accordance with the provisions of Section 217 (i) (e) of the Companies Act, 1956, read with the 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 Annexure. DIRECTORS Shri Madhav G. Pradhan, resigned from the Board on 26th February, 1996 due to old age & health problems. The directors place on record their sincere appreciation for valuable services rendered by him during the tenure of his association with the Company. Shri Nishantraj Nahata & Shri Sudhakar S. Kasture retire by rotation, and being eligible offer themselves for reappointment. INSURANCE All the properties and insurable interest of the Company including Building, Plant & Machineries and Stocks wherever necessary have been adequately insured to the extent required. PUBLIC DEPOSITS There were no overdues or unclaimed deposits outstanding as on 31st July, 1995 and the Company has complied with all the requirements prescribed by the Companies (Acceptance of Deposits) Rules, 1975 as amended. In the subsequent period one fixed deposit has matured, the Company has repaid major amount and requested the depositor to allow some time to repay the balance in due course. PARTICULARS OF EMPLOYEES The Company has not appropriate any person who: i) If employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than Rupees Three Lacs, or ii) If employed for a part of the financial year, was in receipt of remuneration for any part of that year, at the rate which, in the aggregate, was not less than Rupees Twenty Five Thousand per month, or iii) If employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, in or as the case may be, at a rate which, in the aggregate, in excess of that drawn by the Managing Director or Whole Time Director or Manager and holds by himself or alongwith this suppose and dependent children, not less than two percent, of the equity shares of the Company. Hence particulars of remuneration under Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975 are not applicable to the Company. AUDITORS & OTHER REPORT The Company's Auditors M/s. N.K. Jalan & Co., Chartered Accountants who retire at the conclusion of the Annual General Meeting are eligible for reappointment. The Company has received certificate from them to the effect that their appointment if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956. The observations in the Auditor's Report are dealt with in the notes at the appropriate places and the notes are self explanatory. ACKNOWLEDGEMENT Your Directors acknowledge with gratitude and wish to place on record their appreciation for the support and co-operation received by the Company from Bank of Baroda, I.D.B.I., G.I.I.C., Customers, Suppliers and Employees at all levels for their contribution to the Company's successful operations and look forward to their continued support. ANNEXURE TO THE DIRECTORS' REPORT DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE REPORT OF THE BOARD OF DIRECTORS FOR THE YEAR ENDED 31ST JULY, 1995. A. CONSERVATION OF ENERGY The Company has adopted various measures to conserve energy and thereby achieved reduction in the cost of Production. The Company's own Technical staff have identified further areas of energy reduction and based on their recommendations the Company has engaged the services of professionals, who are experts in energy/fuel oil conservation in Yarn Dyeing plants. Details regarding the present energy consumption including captive generation are furnished in Annexure Form 'A' as per the requirements of the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988. FORM A (A) Power and Fuel Consumption Current Year Previous Year 1. Electricity a) Purchased Units 9,41,068 5,32,678 Total Amounts (Rs.) 19,14,411 10,07,808 Rate/Units Rs. 2.03 1.89 b) Own Generation i) Through Diesel Generator Units 8,32,236 NIL Unit per Ltr. of Diesel Oil 1.92 NIL Cost/Unit (Rs.) 4.29 NIL ii) Through steam turbine/Generator NIL NIL 2. Coal NIL NIL 3. Furnace Oil i) Quantity (K. Ltrs.) 3,37,203 1,73,180 ii) Total Amount (Rs.) 18,34,384 9,42,413 iii) Average Rate (Rs.) 5.44 5.44 4. Other/Internal generation NIL NIL (B) Consumption per Kilogram production Current Year Previous Year Production: Dyed Yarn Electricity (Units) 0.65 0.64 Furnace Oil (K. Ltrs.) 0.13 0.21 Coal NIL NIL Others NIL NIL B. TECHNOLOGY ABSORPTION FORM - B 1. Research and Development (R & D) i) Specific Areas in which R & D carried out by the Company. a) Study of process Parameters. b) Studies and experiments and reduction of wastage of yarn through better handling of raw material and doffing system. c) Hoseknitting and dyeing of polyester yarn for controlling shade variations. d) Development of Centrifugal System for Yarn Drying which reduces cost of drying by about 75% e) Development of many new shades suitable for domestic as well as export market. f) Use of Cotton Hose on dye springs which reduces bottom waste. g) Development of Collapsible Plastic Tubes for export of Soft Package Polyester Yarn suitable for high quality dyed yarn. ii) Benefits derived as a result of above R & D a) Quality Upgradation b) Cost reduction c) Energy Savings iii) Future Plan of action Continuous efforts to improve quality and reduce cost. iv) Expenditure on R & D R & D has been done on continuous basis in various departments and the cost of Research & Development remain merged with the various heads. 2. Technology Absorption, Adaptation and Innovation. i) Efforts made towards technology absorption, adaptation and Innovation and benefits derived as a result thereof: a) The Company's own Technical Staff has experimented and studied Centrifugal Technology which results in saving of power to the extent of 75%. b) The Company experimented new winding Technology which reduce cost of winding to the extent of 10%. ii) Details of Imported Technology : Not applicable. C. FOREIGN EXCHANGE EARNINGS AND OUTGO Foreign Exchange Earnings Rs. 15.64 Lakhs Foreign Exchange Outgo Rs. 9.42 Lakhs For and on behalf of the Board of Directors RAJKUMAR NAHATA Chairman & Managing Director Place : Bombay Date : 12th March, 1996.