| The Directors have pleasure in placing before you their Report on the
affairs of the Company which are for the period comprising of Eighteen
Months period from 1st October 2006 to 31st March, 2008 (18 months).
The figures are not comparable for the previous period which were for
12 months.
FINANCIAL RESULTS:
For the period For the period
1st October 2006 1st April 2005 to
to 31st March, 2008 30th September
(18 months) 2006 (12 months)
(Rs. In lacs) (Rs. In lacs)
Sales Revenue 6985.80 6459.65
Gross Profit / (Loss) (Before
interest, depreciation,
Extra-ordinary items & Tax) (575.64) (589.16)
Less : Interest (Net) 32.19 4.25
Depreciation & Amortization Expenses 494.00 693.53
Extra-ordinary items
Net Profit / (Loss) After
Extra Ordinary Items (1101.83) 6594.95
Add : Balance of Profit & Loss
A/c. of Previous Year (7229.55) (14860.15)
Add : Loss of Packaging Division - (416.15)
Less : Loss of Packaging
Division transferred - (1451.79)
Amount available for appropriations - (7229.55)
APPROPRIATIONS:
Transfer to Debenture Redemption Reserve NIL NIL
Transfer to General Reserve NIL NIL
Proposed Dividend NIL NIL
Tax on Distributed Profits NIL NIL
Balance carried to Balance Sheet (8331.38) (7229.55)
IMPLEMENTATION SCHEME OF ARRANGEMENT SANCTIONED BY HONBLE HIGH COURT
OF GUJARAT.
During the year, the Company undertook following major initiatives to
implements the scheme of arrangement approved by the Hon. High Court of
Gujarat.
Demerger of Packaging Division: The Packaging division or the Company
has been demerged and vested into a separate company formed for the
purpose viz M.H. Packaging (India) Ltd and the assets and liabilities
pertaining to the said division have been transferred to this separate
company.
Reduction and Reorganisation of share capital: The paid up share
capital of the Company has been reduced by 50%, as on record date fixed
by the Board of Directors in consultation with Bombay Stock Exchange
Limited i.e. 19th September, 2006, be reducing number of shares from
121,33,669 to 60,66,835. (face value of Rs. 10/- each).The Reduced
Capital is listed on Bombay Stock Exchange Limited w.e.f. 24th August,
2007
Equity Infusion by Promoters: The promoters have infused Rs. 2.01 Crs
by 15th July, 2006 and Rs.1.49 Crs by 31st March,2007 as an additional
equity as per the approved Scheme of Arrangement. The Company has
allotted 20,10,000 Equity shares on 29/09/2006 and 14,90,000 equity
shares on 19/06/2007 to the promoters as per Scheme of Arrangement.
Conversion of secured debt into 0.01% Coupon Optionally Convertible
Preference Shares (OCRPS): On 29th September, 2006, the Company has
allotted 0.01% OCRPS of Rs.100 each totaling to Rs. 5.27 Crs to Secured
Lenders.
Disribution of Fixed Deposit Amount: The company has distributed
Rs.4.77 crores, which was lying in fixed deposit amongst the lenders as
per the Scheme.
Sale of Polymer Division: As per the scheme of arrangement with the
lenders approved by the Hon. High Court of Gujarat, Polymer Division is
to be sold out by 31st December,2006 in consultation with
ARCIL/lenders. Monitoring Committee in their meeting dated January 17,
2007 has approved sale of Polymer Division. The sale deed was executed
on 22nd February, 2007.The Company has received consideration of
Rs.3.25 Crores. As per the Scheme Company has distributed Rs.1.05
crores amongst the lenders.
Efforts of Promoters/Promoters Group: The promoters/promoters
group/such other investors has agreed to infuse further Rs.5 crores by
way of equity shares. The company has called extra ordinary general
meeting of shareholders on 12th July, 2008 for preferential allotment
of equity shares to promoters/promoters group/such other investors
subject to approval of Arcil/lenders and The Bombay Stock Exchange
Limited.The Bank of Baroda has not given their consent in the matter.
The approval from The Bombay Stock Exchange is also awaited. The
promoters/Promoters Group has already infused Rs.3.62 Crores.
DIVIDEND:
In view of losses suffered by the company during the period under
review and due to carried forward losses of earlier years, the Board is
unable to recommend any dividend on Equity Shares of the company.
YEAR IN RETROSPECT
The Financial performance performance of the Company was adversely
affected due to upward trend in cotton prices, rise in crude oil prices
and stiff competition in the market. The price of dyes and chemicals
also increased during the year under review. Due to working capital
constraints own production activity was curtailed and more job work
activity was done to recover maximum fixed costs Product-mix of own
production was also improved with more value addition during the year.
The company has invested Rs.25.89 lacs on account of capital investment
during the year under review.
The company has switch over to zero duty option for excise duty; the
turnover during the current year is without excise duty.
"SICK UNIT" UNDER BIFR:
Your Company has been declared "SICK UNIT" under Section 3 (1) (o) the
Sick Industrial Companies (Special Provisions) Act 1985. The Company is
in process of Rehabilitation Scheme in consultation with operating
Agency.
SALES AND EXPORTS:
Sales and operating income of the Company for the Period under the
review i.e. 1st October 2006 to 31st March 2008 was 67.61 Crores. As
against for the 12 months period 1st October 2005 to 30th September
2006 64.59 Crores.The Company is putting all its honest efforts
vigorously to increase the sales by selling higher value addition
fabrics. The figures in the report are not strictly comparable due to
the previous period of 12 months.
OUTLOOK FOR THE CURRENT YEAR:
The current Budget had given concessions and relief in the Excise duty.
Government of India had planned more than double allocation of fund for
Technology Up-gradation Fund (TUF) scheme. However due to continuous
increase in cost of cotton, dyes and chemicals and crude oil prices,
the Composite Textile sector is facing tough time to compete with
unorganized sector.
To compete with unorganized sector had become most difficult task for
the composite units in the textile industry. There has been
differential treatment given to the unorganized sector to protect them
from composite Mills. The Government has announced Packaged Incentives
Scheme for the textiles and rationalizes the duty structure so that
composite mills can compete with the unorganized sectors effectively.
Though the scheme like TUF is announced by Ministry of Textile the
overall situation for the Composite Textile sector has remained very
tough and this privileged sector is in soup due to thin margin of
profit.
FIXED DEPOSITS:
The Company has not accepted or renewed any Fixed Deposit during the
period under review and there are no outstanding deposits.
DIRECTORS:
Shri Manoj K.shah, the Director of the Company retire by rotation at
the ensuring Annual General Meeting and being eligible offer themselves
for re-appointment.
Shri Indrakant Trikamlal, the Director of the Company and Shri Kirit
C.Shah, the Director of the Company has resigned from the Board.The
Board of Directors has taken note of valuable services rendered by Shri
Indrakant Trikamlal and Shri Kirit C.Shah during the tenure of their
directorship.
Shri Kunal Y.Shah has joined the Board as an additional director of the
company until the conclusion of the next Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility statement, it is
hereby confirmed that:
1) In the preparation of the accounts for the financial year ended 31st
March 2007 the applicable accounting standards have been followed along
with proper explanation relating to material departures.
2) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit or
loss of the company for the year under review.
3) The 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
the company and for preventing and detecting fraud and other
irregularities.
4) The Directors have prepared the accounts for the financial year
ended 31st March 2008 on a going concern basis.
120th YEAR FOR THE COMPANY
The Company has received the prestigious National Record Certificate
from Limca Book of Records for "the oldest continuously managed family
business is that of MH Mills & Industries Limited at Ahmedabad which
started operations in 1888 under founder Achratlal Harilal with a
labour force of 400 and has completed 119 years on September 5, 2007.
CORPORATE GOVERNANCE:
The importance of corporate governance lies in its contribution both to
business prosperity and to accountability. Directors support basic
tenets of corporate governance as the prudent exercise of managements
rights in the best interest of all stakeholders in a company in
particular its shareholders, creditors, the state and its employees.
The Company has implemented the requirements of clause 49 of the
Listing Agreement. The separate report for the same is given here with.
INSURANCE:
The Company has taken Standard Fire and Special Perils Policy (Material
Damage) for the entire Textile unit. The All the Assets of the Company
are well covered under to roof of Insurance.
ENVIRONMENT:
Your Company has taken various steps to reduce water and Air pollution
in and around Mills premises. The Companys officials conduct the
Environmental Audit on Regular basis to keep the surrounding eco
friendly.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNING AND OUTGO:
Information as required under Section 217(1) (e) of the Companies Act,
1956 read with the Companies (Disclosure of Particulars in the report
of Board of directors) Rules, 1988 in set out in the Annexure forming
part of this report.
PARTICULARS OF EMPLOYEES:
The Company had none of the employees falling under Section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975.
AUDITORS:
The auditors of the company M/s. Talati & Talati, Chartered
Accountants, Ahmedabad retire at the ensuing Annual General Meeting and
are eligible for re-appointment.
M/s. Talati & Talati has shown his willingness to work as the Statutory
Auditor of the company for the next financial year.
In order to have better system of accounting and record Keeping your
Company avails the services of Professional Chartered Accountant Firm
M/s. Jitendra Shah & Associates.
COST AUDIT:
Pursuant to Sec. 233(1B) of Companies Act 1956 your company has been
covered for Mandatory Cost Audit. For which with the Approval of
Central Government (Ministry of Corporate Affairs) M/s. Kiran J. Mehta
&Co. (Cost Accountants) has been appointed as a cost auditors of the
Company.
QUALIFICATIONS IN THE AUDIT REPORT:
The Auditors of the Company have qualified their Report on following
grounds, and explanation of the Board, is provided in respect of each
of such qualification.
The Auditors have made certain observations in annexure to their Report
at para No. (ix) & (xi). In respect of dues of Gujarat Government Sales
Tax, Water Cess and Municipal Tax and textile committee cess. The
Company has approached concern Government agencies for relief and
concessions as per applicable norms of textiles "Sick Unit" and the
Company is confident that above dues will be settled in its favour. The
Statutory Liabilities will be covered under Rehabilitation Scheme.
APPRECIATION:
Our relations with employees continued to remain cordial during the
period under review. Your Directors express their appreciation for
devoted services of the employees at all levels and immense
contribution made by them towards efficient operations of the Company.
Your Directors also wishes to place on record sincere thanks to the
Management of Asset Reconstruction company Limited (ARCIL), SASF of
IDBI and Bank of Baroda for approving the scheme of compromise and debt
Restructuring and other lenders and Textile Labour Association,
Government Departments for their continued cooperation and assistance.
REGISTERED OFFICE: ON BEHALF OF THE BOARD
Saraspur, Ahmedabad. BIREN PARIKH
DATED : 07/07/2008 CHAIRMAN |