1995 PRESIDENCY SHOE INTERNATIONAL LIMITED DIRECTORS' REPORT Your Directors are pleased to present their Thirteenth Annual Report together with the Audited Accounts of the Company for the period ended 31st March, 1995. PUBLIC ISSUE Your Company increased the equity capital base from Rs.143.96 Lakhs to Rs.493.96 Lakhs by way of a Public Issue of 35,00,000 Equity shares of Rs.10/- each for cash at a premium of Rs.10/- per share aggregating Rs.700 lacs. The issue was oversubscribed 9.14 times, and the shares have been listed at Madras, Bombay and Calcutta Stock Exchanges. The Board of Directors are thankful to the investors for the confidence reposed on the Management of the Company. The Directors wish to record their appreciation for the support received from Merchant Bankers, Bankers to the Issue, Underwriters, and Brokers. The Allotment procedure was completed in December 1994. OPERATIONS Your company's operations continued to be successful. The profit after tax for the eight months period is Rs. 63.39 lacs, registering a growth of 45%. The company has improved its performance in terms of sales turnover by 71 % during the period. DIVIDEND Your Directors recommend a dividend of 14% (subject to tax), payable pro- rata out of the profit for the period, subject to the approval of the shareholders. This will absorb a sum of Rs.44,55,358/-. This represents a payout ratio of 70%. FUTURE PROSPECTS Your Board of Directors view the future with robust optimism. The infrastructure carefully conceived and built up, both in terms of the best in equipment and human resources, has not only enabled the Company to achieve impressive results in the last two years, but will generate the projected growth and expansion in the coming years. The delay in installing and commissioning the full shoe unit on account of procedural problems concerning the re-classification of the land, did not affect the Company's performance as it was possible to enhance the production and sale of finished leather. After the Full Shoe Plant is fully operational before the end of 1995, your Board will decide on diversification in a new line of business, for which purpose the Memorandum and Articles of Association were amended in 1994 . DIRECTORS Mr. C. A. Menon and Mr. M. G. Mujadid, Directors would retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. Mr. M. Ramanathan who has been co-opted as an Additional Director from 2.5.95 under Section 260 of the Companies Act, 1956 holds office upto this Annual General Meeting and notice has been received from a member of the Company proposing the name of Mr. M. Ramanathan as a Director and approval of the Members is being sought for the appointment. Mr. Johnny Varghese who has been serving as Member of the Board has resigned from the Directorship for personal reasons. The Board places on record its warm appreciation of the valuable advice and services rendered by him during the tenure of his office. AUDITORS M/s. Selvam & Suku, Chartered Accountants, Madras, the Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. INFORMATION AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956. Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is annexed as part of this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO As required under the provisions of Section 217 (1) (e) of the Companies Act 1956, information relating to conservation of energy, Technology absorption and foreign exchange earnings and outgo is annexed hereto. ACKNOWLEDGEMENT Your Directors take this opportunity to express their thanks to the Government of Tamil Nadu, Banks and Financial Institutions, Customers and Suppliers for their valuable assistance and encouragement. Your Directors wish to place on record their appreciation of the sincere efforts put in by the employees of your Company at all levels. ANNEXURE TO DIRECTORS' REPORT Conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 for A. CONSERVATION OF ENERGY A) Energy conservation measures taken. The performance of the equipments has been further improved to reduce the consumption of the power during the year. b) Additional investments and proposals, if any, being implemented for reduction of consumption ot energy. No additional investment in the Current Year. c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. No separate costing has been done. FORM B (See Rule 2) I. RESEARCH AND DEVELOPMENT (R & D) At present, the Company is not carrying out any significant Research and development activity. II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts, in brief, made towards technology absorption, adaptation and innovation: The company has developed the required technology internally and marketed value added products meeting the requirements of overseas customers. 2. Benefit derived as a result of the above effort: The usage of in-house developed technology has resulted in the product improvement. 3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year) following information may be furnished: There is no imported technology and hence this is not applicable. a. Technology Imported: b. Year of Import. c. Has technology been fully absorbed? d. If not fully absorbed, areas where this has not taken place, reasons therefor and further plan of action. e. Foreign Exchange earnings and outgo: The operations of the company are export oriented. Foreign Exchange earnings - (Rs. in lacs) 1. Export Sales (FOB) : 237.70 2. Foreign exchange outgo (on cash basis) (including raw materials, spare parts, capital goods and other expenditure in foreign currency : 12.35 For and on behalf of the Board of Directors S. OSMAN ALI KHAN Chairman & Managing Director Place: MADRAS, Dated: 28th June, 1995.