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Directors Report of Mafatlal Industries Ltd.

Mar 31, 2014

The Members,

Mafatlal Industries Limited

The Directors are pleased to present the 100th Annual Report together with Audited Statement of Accounts for the year ended 31st March, 2014.

1. Financial Results:

The Financial Results of the Company are as under:

(Amount Rs in Lacs) Current Previous Year 2013-14 Year 2012-13

Revenue from Operations 91,772.63 79,749.07

Other Income 1,776.49 4,289.06

EBIDTA 4,610.45 8,999.05

Less: Depreciation 1,834.60 1,444.05

Finance Costs 1,489.45 3,199.92

Profit before Exceptional Items 1,286.40 4,355.08

Exceptional Items (Net) 736.77 697.74

Profit before Taxes 2,023.17 5,052.82

Tax (Expense) / Benefits 370.21 (1,336.89)

Profit after Taxes 2,393.38 3,715.93

Add: Surplus brought forward from previous year 4,386.64 3,768.28

Add: Pursuant to Scheme of Amalgamation - (1,908.71)

Amount available for appropriation 6,780.02 5,575.50

Appropriation

Transfer to Capital Redemption Reserve 3,000.00 -

Transfer to General Reserve 245.00 375.00

Proposed Final Dividend 417.39 695.64

Corporate Dividend Tax 70.94 118.22

3,733.33 1,188.86

Surplus carried to Balance Sheet 3,046.69 4,386.64

2. Dividend:

The Board of Directors is pleased to recommend a dividend for the year of Rs. 3 per Share (30%) on 1,39,12,886 Equity Share of Rs.10/- each, aggregating to Rs. 4.17 crores as compared to total dividend of Rs. 5/- per share (@ 50%) for the previous year comprising of normal dividend of Rs. 3/- per share (@ 30%), and a Special Centenary Dividend of Rs. 2/- per share (@ 20%).

3. Year in Retrospect:

The overall deceleration of India'' GDP growth had a significant negative impact on the general business environment and consumer sentiment. While the textile industry in general had to face the impact of high raw material prices, the same could not be recovered in pricing due to the over-supply of products emanating from capacity built up by most fabric manufacturers in the last couple of years.

The Profit before Tax decreased from Rs. 50.53 crores in the previous year to Rs. 20.23 crores for the year under review and the Profit after Tax has decreased from Rs. 37.16 crores in the previous year to Rs. 23.93 crores for the year under review.

During the year, the Company obtained credit rating from both Crisil Ltd. (CRISIL) and Credit Analysis and Research Ltd. (CARE) to its proposal of obtaining financial facilities to the tune of Rs. 100 crores. CRISIL has assigned its ''CRISIL BBB-/Stable'' rating to the cash credit and proposed term loan facilities and has assigned its ''CRISIL A3'' rating to the letter of credit and bank guarantee facilities and indicated ''Stable outlook to the Company''. CARE has assigned its ''CARE BBB-'' rating to the long term facilities having tenure of more than one year and has assigned its ''CARE A3'' rating to the short term facilities having tenure of up to one year. All the above ratings indicate moderate degree of safety regarding timely payment of financial obligations.

During the year, the Company redeemed the entire outstanding balance of Fully Redeemable Non-Cumulative Preference Shares of Rs. 30 crores.

4. Listing of Shares pursuant to the Amalgamation of Mishapar Investments Limited and Mafatlal Denim Limited with the Company:

The Scheme of Arrangement and Amalgamation of Mishapar Investments Limited (Wholly Owned Subsidiary Company) and Mafatlal Denim Limited (Promoter Group Company) with the Company has become effective w.e.f. 28th May, 2013.

The Company had issued and allotted 40,99,415 equity shares of face value of Rs. 10/- each fully paid-up to the shareholders of Mafatlal Denim Limited on 30th May, 2013 in ratio of 1:10. The said shares have been admitted to listing and trading at the BSE Ltd. w.e.f. 15th July, 2013 and at the Ahmedabad Stock Exchange Ltd. w.e.f. 18th July, 2013.

5. Project Promotion Division:

NOCIL Limited (NOCIL):

Nocil Limited achieved a growth of 6.5% in its sales volumes as compared to the previous year through sustained marketing efforts and also due to some exits/closures of a few local and international Rubber Chemical players. The gross turnover for the year under review was Rs. 643 crores as compared to Rs. 527 crores in the previous year, representing an increase of about 22%. This increase was possible due to a combination of Rupee depreciation, a change in the product mix alongwith some price corrections which were done to offset some rising input costs. Nocil Limited continued its efforts to improve its price realisations, but the same were severely constrained in this regard on account of the aggressive dumping resorted to by competitors.

The new plant commissioned at Dahej in Gujarat, during the end of previous year, initially witnessed certain teething problems as is expected in any chemical plant of this nature. The capacity utilisation of this plant was impacted by the very high imports of this product into the country due to the aggressive dumping resorted by the competitors. However, with the recent enhancement of anti-dumping and safeguard duties, Nocil Limited is hopeful that capacity utilisation will mprove which will have a significant positive impact on the performance of Nocil Limited

6. Corporate Social Responsibility (CSR):

At Mafatlal Industries Ltd., a part of Arvind Mafatlal Group, fulfilling CSR has been a way of life. The Group has been mplementing a range of CSR activities over the last 50 years in areas like poverty allevation, health care, education for young children and women''s upliftment in rural India etc. CSR is considered as a humble tribute to what society has given us. We are striving continuously with the sole objective of creating an environment of well- being in all spheres of life.

Pursuant to the provision of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. Shri H.A. Mafatlal is the Chairman of the Committee and Shri V. P. Mafatlal and Shri V. R. Gupte are other Members of the Committee. The Board of Directors have based on the recommendations of the Committee, formulated a CSR Policy.

7. Energy, Absorption and Foreign Exchange Earnings and out go:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of 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 is annexed hereto and forms part of this Report.

8. Particulars of Employees:

nformation as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this report and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary.

9. Industrial Relations:

The relations between the employees and the Management have remained cordial

10. Directorate:

Pursuant to the provisions of the Companies Act, 2013, Shri H A. Mafatlal, retires by rotation at the ensuing Annual Genera Meeting and being eligible, offer himself for reappointment.

Shri P. J. Desai has resigned from the Directorship of the Company w.e.f. 30th May, 2014. Your Directors place on record its appreciation for the services rendered by Shri P. J Desai during his association with the Company.

Shri P. R. Amin, Shri N. K. Parikh, Shri V. R. Gupte and Shri P.N. Kapadia, Independent Directors, whose period of Office was liable to determination by retirement of Directors by rotation under the erstwhile applicable provisions of the Companies Act, 1956 are being appointed as Independent Director for a term of five consecutive years. Notices under Section 160 of the Companies Act, 2013 have been received from Members signifying their intention to propose their candidature as directors of the Company.

In order to comply with the provisions of Section 152(6) of the Companies Act, 2013 requiring not less than two thirds of the total number of Directors (excluding Independent Directors) of the Company to be rotational directors, the Company has re- classified Shri Rajiv Dayal, Managing Director of the Company as a Director liable to retire by rotation

11. Subsidiary Companies:

Repal Apparel Pvt. Ltd., Myrtle Textiles Pvt. Ltd., and Mayflower Textiles Pvt. Ltd. ceased to be subsidiaries of the Company with effect from 25th March, 2014. In view of the above, only Mafatlal Services Ltd. continue to be a subsidiary of the Company.

As per the general exemption granted under Section 212(8) of the Companies Act, 1956, by the Government of India, Ministry of Corporate Affairs, New Delhi vide its General Circular No.2/2011, dated 8th February, 2011, Balance Sheet and Statement of Profit & Loss, Directors'' Report and the Auditor''s Report of the said Subsidiary company has not been attached with the Balance Sheet of the Company.

However, other details required to be disclosed as per the said General Circular No.2/2011, dated 8th February, 2011, have been given in the Annual Report.

The Annual Accounts and related information of the subsidiary company are open for inspection by any member at the Registered Office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available these documents upon request by any member of the Company who may be interested in obtaining the same.

12. Insurance:

The properties and insurable interests of your Company like buildings, plant and machinery, stocks etc. are adequately nsured.

13. Directors'' Responsibility Statement:

As required under the provisions of Section 217 (2AA), of the Companies Act, 1956, your Directors report as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) that the 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 the Company at the end of the financial year and of the profit of the Company for the year under review;

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the directors have prepared the annual accounts on a ''going concern'' basis.

14. Auditors:

At the Annual General Meeting, Members are requested to appoint M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara, as Auditors from the conclusion of this meeting till the conclusion of the 103rd Annual General Meeting

and to fix their remuneration. The specific notes forming part of the Accounts referred to in the Auditor''s Report are self- explanatory and give complete information

15. Cost Audit:

As per the requirement of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the cost accounts relating to the product "Textiles" is required to be carried out every year. The Company has appointed Cost Auditors viz. Shri I. V. Jagtiani, Mumbai and Shri B. C. Desai, Ahmedabad, to audit the cost accounts for the Financial Year 2013-14 ended 31st March, 2014. Approva from the Central Government has been received for the above referred appointments. The Cost Audit Report in respect of the financial period 2013-14 will be filed on or before due date i.e. 27th September, 2014.

16. Corporate Governance & Management Discussion & Analysis Report:

As required under the Listing Agreement with Stock Exchanges, Reports on "Corporate Governance" as well as "Management Discussion and Analysis Report" are attached and form part of the Directors'' Report. Further, during the year under review, the Company has complied with all the mandatory requirements of the Corporate Governance. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Agreement is annexed to the Report on Corporate Governance.

17. Appreciation:

The Directors wish to place on record their appreciation of the devoted services of the workers, staff and the officers who have largely contributed to the efficient management of your Company. The Directors place on record their appreciation for the continued support of the shareholders of the Company.

For and on behalf of the Board,

Mumbai, H. A. MAFATLAL Dated: 30th May, 2014 Chairman


Mar 31, 2013

To The Members of Mafatlal Industries Limited

The Directors are pleased to present the 99th Annual Report together with Audited Statement of Accounts for the year ended 31st March, 2013.

1. Financial Results:

The Financial Results of the Company are as under: (Amount Rs. in lacs)

Current Year1 2012-13 (12 months) Previous Period2 2011-12 (9 Months) 1st April, 2012 to 31st March, 2013 1st July, 2011 to 31st March, 2012

Revenue from Operations 79749.07 14374.88

Other Income 4289.06 3694.91

EBIDTA 8999.05 (1096.70)

Less: Depreciation 1444.05 203.42

Finance Costs 3199.92 245.11

Profit before Exceptional Items 4355.08 (1545.23)

Exceptional Items (Net) 697.74 (5040.76)

Profit before Taxes 5052.82 (6585.99)

Tax (Expense) / Benefits (1336.89) 1400.00

Profit after Taxes 3715.93 (5185.99)

Add: Surplus brought forward from previous year 3768.28 11954.27

Add: Pursuant to Scheme of Amalgamation (1908.71)

Amount available for appropriation 5575.50 6768.28

Appropriation

Transfer to Capital Redemption Reserve 3000.00

Transfer to General Reserve 375.00

Proposed Final Dividend 695.64

Corporate Dividend Tax 118.22

1188.86 3000.00

Surplus carried to Balance Sheet 4386.64 3768.28

1 The figures for the financial year 2012-13 include the figures of erstwhile Mafatlal Denim Limited and erstwhile Mishapar Investments Limited which have been amalgamated with the Company with effect from 1st April, 2012.

2 The Board of Directors had changed the financial year 2011-12 to end on 31st March, 2012 instead of 30th June, 2012. Hence, the previous financial year was for a period of nine months.

In view of the above, the financial results for the financial year 2012-13 are not comparable with those for the financial year 2011-12.

2. Dividend:

Though the Arvind Mafatlal Group has been in the textile business since 1905, Mafatlal Industries Limited was incorporated on 20th January, 1913. To mark this ''Centenary Year'', in addition to the normal dividend of Rs.3/- per share (@ 30%), a Special Centenary Dividend of Rs.2/- per share (@ 20%) aggregating to Rs.5/- per Equity Share (@ 50%) on 1,39,12,886 Equity Shares of face value of Rs.10 each has been recommended by the Board.

3. Year in Retrospect:

The year under review was a historic year for the Company in many ways. The Company completed 100 years of its existence and also took a major decision in amalgamating Mafatlal Denim Limited and Mishapar Investments Limited with itself as per the Scheme of Amalgamation sanctioned by Hon''ble High Courts of Gujarat and Mumbai with effect from the appointed date of 01.04.2012.

The benefits of the amalgamation are reflected in the increase in Revenue to Rs.840.38 crores, PBIDT to Rs.89.99 crores and PAT to Rs.37.16 crores for FY 12-13.

The general business environment continued to be challenging due to the uncertain global economic scenario and the deceleration of India''s GDP growth. Your Company has fine- tuned its business strategy by focusing on capital investments, cost reduction initiatives through VRS, improvement in product mix and creating a visibility for further strengthening Mafatlals brand.

4. Amalgamation of Mishapar Investments Limited and Mafatlal Denim Limited with the Company:

The Scheme of Arrangement and Amalgamation of Mishapar Investments Limited (Wholly-Owned Subsidiary Company) and

Mafatlal Denim Limited (Promoter Group Company) with the Company has been sanctioned by the Hon''ble High Court of Gujarat and Hon''ble High Court of Judicature at Bombay vide Orders dated 8th April, 2013 and 26th April, 2013 respectively, with effect from 1st April, 2012 (Appointed Date). The Company has filed a copy of the above referred Orders with the Registrar of Companies, Gujarat and the Registrar of Companies, Maharashtra and the said Scheme has become effective w.e.f. 28th May, 2013.

The Company has issued and allotted 40,99,415 Equity Shares of face value of Rs.10/- each fully paid-up to the shareholders of Mafatlal Denim Limited on 30th May, 2013 in ratio of 1:10 as per the Scheme. The Company has submitted applications for listing of 40,99,415 Equity Shares of face value of Rs.10/- each to BSE Limited (BSE) and Ahmedabad Stock Exchange Limited (ASE).

5. Project Promotion Division:

NOCIL Limited (NOCIL):

The year experienced one of the most challenging business environments which the rubber chemicals industry has ever faced. Most major customers of NOCIL undertook significant production cuts to align their production with the decline in the demand from the automobile sector. This in turn, resulted in lower demand for Rubber Chemicals.

Despite this, NOCIL''s turnover for the year under review, touched Rs.527 crore as compared to Rs.511 crore in the previous year, representing an increase of about 3%. The net profit was Rs.42.49 crores as compared to Rs.33.99 crores in the previous year.

As reported last year, one of the major initiatives undertaken by NOCIL''s management, was to set-up a new manufacturing facility at Dahej in Gujarat, with a much improved process technology, to produce a key intermediate for an important product in the range of rubber chemicals. The said facility commenced commercial production from early March 2013.

6. Energy, Absorption and Foreign Exchange Earnings and out go:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of 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 is annexed hereto and forms part of this Report.

7. Particulars of Employees:

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this report and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary.

8. Industrial Relations:

The relations between the employees and the management have remained cordial.

9. Directorate:

Shri P. J. Desai, Director of the Company will retire by rotation at the ensuing 99th Annual General Meeting of the Company and being eligible, offers himself for re-appointment. Shri V. K. Balasubramanian retires by rotation but has shown his unwillingness for re-appointment on retirement. The Board places on record its sincere appreciation of the valuable services and co-operation extended by Shri V. K. Balasubramanian during his tenure as Director of the Company.

The Board of Directors of the Company has appointed Shri P. N. Kapadia and Shri V. R. Gupte as Additional Directors on the Board of Directors of the Company with effect from 30th May, 2013. Pursuant to the provisions of Section 260 of the Companies Act, 1956, Shri P. N. Kapadia and Shri V. R. Gupte shall hold office up to the date of the ensuing 99th Annual General Meeting of the Company. The Company has received notices under Section 257 of the Companies Act, 1956, alongwith the deposit of Rs.500/- each from the Members of the Company signifying their intention to propose at the ensuing 99th Annual General Meeting, Shri P. N. Kapadia and Shri V. R. Gupte as candidates for the office of the Directors of the Company, liable to retire by rotation. Considering the varied experience and expertise of the said Directors, your Board of Directors recommends their appointment as Directors of the Company at the ensuing Annual General Meeting.

The Board of Directors of the Company at their Meeting held on 28th May, 2013, has appointed Shri V. P. Mafatlal and Shri Rajiv Dayal as the Executive Vice-Chairman and Managing Director & Chief Executive Officer of the Company respectively with effect from 28th May, 2013 on terms and conditions and remuneration as stated under Item Nos. 9 & 10 of the Explanatory Statement of the Notice convening the 99th Annual General Meeting of the Company subject to the approval of the Shareholders of the Company. Your Board of Directors recommend their appointment as Executive Vice-Chairman and Managing Director & Chief Executive Officer of the Company respectively at the ensuing 99th Annual General Meeting of the Company. Shri Hrishikesh A. Mafatlal has stepped down from the position of Managing Director of the Company w.e.f. 28th May, 2013 and continues as the Chairman of the Company.

10. Subsidiary Companies:

During the year, Mafatlal Global Apparel Limited and Silvia Apparel Limited have ceased to be subsidiaries of the Company. Further, the Hon''ble High Court of Gujarat pursuant to an Order dated 27th February, 2013 directed Sunanda Industries Limited to be wound up under Sections 433 and 434 of the Companies Act, 1956. During the year, Mishapar Investments Limited, wholly-owned subsidiary has been amalgamated with the Company with effect from 1st April, 2012. In view of the above, the following companies continue to be subsidiaries of the Company:

1. Mafatlal Services Limited

2. Myrtle Textiles Pvt. Limited

3. Mayflower Textiles Pvt. Limited

4. Repal Apparel Pvt. Limited

As per the general exemption granted under Section 212(8) of the Companies Act, 1956 by the Government of India, Ministry of Corporate Affairs, New Delhi vide its General Circular No.2/2011, dated 8th February, 2011, Balance Sheet and Statement of Profit & Loss, Directors'' Report and the Auditors'' Report of the said Subsidiary companies have not been attached with the Balance Sheet of the Company.

However, other details required to be disclosed as per the said General Circular No.2/2011, dated 8th February, 2011, have been given in the Annual Report.

The Annual Accounts and related information of the subsidiary companies are open for inspection by any member at the Registered Office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available these documents upon request by any member of the Company who may be interested in obtaining the same.

11. Insurance:

The properties and insurable interests of your Company like buildings, plant and machinery, stocks among others are adequately insured.

12. Directors'' Responsibility Statement:

As required under the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors report as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures,

(ii) that the 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 the Company at the end of the financial period and of the profit of the Company for the period under review,

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities,

(iv) that the directors have prepared the annual accounts on a ''going concern'' basis.

13. Auditors:

At the Annual General Meeting, Members are requested to appoint M/s. Deloitte Haskins & Sells, Chartered Accountants,

Vadodara, as Auditors for the current year and to fix their remuneration. The specific notes forming part of the Accounts referred to in the Auditors'' Report are self-explanatory and give complete information.

14. Cost Audit:

As per the requirement of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the cost accounts relating to the product ''Textiles'' is required to be carried out every year. The Company has appointed Cost Auditors viz. Shri I. V. Jagtiani, Mumbai and Shri B. C. Desai, Ahmedabad, to audit the cost accounts for the Financial Year 2012-13 ended 31st March, 2013. The erstwhile Mafatlal Denim Limited had also appointed Shri I. V. Jagtiani, Mumbai to audit the cost accounts for the Financial Year 2012-13 ended 31st March, 2013. Approval from the Central Government has been received for all the above referred appointments. The Cost Audit Report in respect of the financial year 2012-13 will be filed on or before due date i.e. 27th September, 2013.

15. Corporate Governance & Management Discussion & Analysis Report:

As required under the Listing Agreement with Stock Exchanges, Reports on ''Corporate Governance'' as well as ''Management Discussion and Analysis Report'' are attached and forms part of the Directors'' Report. Further, during the period under review, the Company has complied with all the mandatory requirements of the Corporate Governance. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Agreement is annexed to the Report on Corporate Governance.

16. Appreciation:

The Directors wish to place on record their appreciation of the devoted services of the workers, staff and the officers who have largely contributed to the improved results of your Company. The Directors place on record their appreciation for the continued support of the shareholders of the Company.

For and on behalf of the Board,

Mumbai, H. A. MAFATLAL

Dated: 30th May, 2013 Chairman


Jun 30, 2011

The Members,

MAFATLAL INDUSTRIES LIMITED

The Directors present the 97th Annual Report together with Audited Statement of Accounts for the period ended 30th June, 2011.

1. FINANCIAL RESULTS:

The Financial Results of the Company are as under:

(Amount Rs.in Lacs)

Current period Previous Period 2010-11 2009-10 @ (13months) (14 months) 1st June.2010 to 1st April, 2009 to 30th June, 2011 31st May, 2010

Turnover (Including export benefits/ 65,034.61 13,238.20 incentives)

Other Income (includes sale of 21,135.56 17,575.49 properties)

Increase/(Decrease) in Stock of 1,030.48 (117.26) finished Goods & Process Stock

Gross Profit 51,673.59 7,065.18

[Before Interest, Depreciation & Tax]

Less: Depreciation 252.48 332.51

Interest (Net) 647.59 458.23

Provision for Current tax

(Including Wealth tax) 12,450.40 1,100.25

Profit after Taxes 38,323.12 5,174.19

(Short)/Excess Provision of Tax of Earlier Years) (267.12) 2.11

38,056.00 5,176.30

Add: Deficit brought forward from

Previous Period/Year (26,101.73) (31,278.03)

11,954.27 (26,101.73)

@ The Board of Directors has changed the Financial Year 2010-11 to end on 30th June, 2011 instead of 31st May, 2011.

2. DIVIDEND:

The Profit, during the period under report, is due to income arising out of the sale of Development Rights on the 50% land of Mazgaon Unit in terms of Modified Rehabilitation Scheme-2009(MS-09) approved by the Hon'ble Board for Industrial & Financial Reconstruction (BIFR). The operations of the Company during the year have resulted in a loss, though substantially reduced.

Pursuant to MS-09 the Company cannot declare any dividends to its equity shareholders without the prior approval of the BIFR during the rehabilitation period which extends up to 31st March, 2016. Also, as per the terms of issue of Fully Redeemable Non Cumulative Preference Shares the company cannot declare any dividend on equity shares till dividend is declared and paid to the preference shareholders who are entitled to a dividend @ 1% for every financial year commencing on or after 1st January, 2014, unless redeemed earlier.

The Company however, is confident of repaying its residual liabilities under the schemes including redemption of Preference Shares much sooner than the period envisaged under MS-09.

In view of this, Directors regret their inability to recommend dividend.

3. MODIFIED REHABILITATION SCHEME (MS-09):

As you are aware, the Hon'ble BIFR has sanctioned the Rehabilitation Scheme of the Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985("SICA") vide its Order dated 30th October, 2002. Thereafter, as already reported last year, the Modified Rehabilitation Scheme (MS-09) of the Company was sanctioned by BIFR, vide Order dated 24th/25th June, 2009.

Consequent upon the net worth of the Company turning positive based on Balance Sheet of 31st May, 2010 and upon application of the Company, BIFR de-registered the Company from the purview of SICA/BIFR vide its Order dated 12th August, 2010. Under the said Order dated 12th August, 2010, BIFR interalia directed that the unimplemented provisions of MS-09, if any, should be implemented by the concerned agencies and their implementation shall be monitored by the Company. Subsequently, in an Appellate Proceedings, the Appellate Authority for Industrial and Financial Reconstruction vide its Order dated 16th May, 2011, interalia modified the above directions to the effect that the implementation of MS-09 shall be monitored by the BIFR instead of the Company.

During the period under review the winding-up petition filed by LKP Merchant Financing Ltd.("LKP")(which was reported to the members of the Company in earlier Directors' Report) was withdrawn by LKP as their dues were settled.

4. SALE OF MAZGAON UNIT LAND OF THE COMPANY IN MUMBAI:

The Members are aware that the BIFR-sanctioned Rehabilitation Scheme and the Modified Scheme of the Company provided for sale of surplus assets including Mazgaon land in Mumbai.

As intimated to the members in the Explanatory Statement annexed to the notice of postal ballot dated 9th May, 2011, the Company had received Offer dated 3rd May 2011 from Piramal Developers Pvt. Ltd. and Gliders Buildcon LLP, entities of Ajay Piramal Group for development or sale / assignment of leasehold land of the Company admeasuring about 30,910 Sq. Mtrs. (including road set back area of 3622 Sq. Mtrs.) situated at Rambhau Bhogale Marg, Mazgaon, Mumbai-400 010, for a consideration of Rs.605.80 Crores. The said proposal was approved by the members by passing a resolution by postal ballot by overwhelming majority of 99.82% of the valid votes cast in the said postal ballot.

Accordingly, on 17th June, 2011, the Company executed Agreement with Gliders Buildcon LLP, for the development and other relevant agreements in respect of a part of the Company's leasehold land at Mazgaon in Mumbai admeasuring about 30,910 Sq. Mtrs.

As mentioned in the explanatory statement to the notice of the said postal ballot, the remaining 50% land of the Company at Mazgaon (Mumbai), is required to be surrendered to the Municipal Corporation of Greater Mumbai ("MCGM") for which the Company will be eligible to get Transferable Development Rights("TDRs"). The Company will be able to sell such TDRs in the market.

The Developer shall construct at its cost a Spinning Unit and give it to the Company for recommencing the spinning activity with a capacity of 10000 spindles which is required to be run by the Company in terms of the notification dated 10th February, 2004 issued by the Government of Maharashtra for dereserving 50% of the land and also in terms of the BIFR sanctioned schemes.

Ahmedabad Unit :

As reported to the members in the Directors' Report for financial year ended 30th September, 2003 the Company had agreed to sell its closed Ahmedabad Unit to Annapurna Polymers Pvt. Ltd. (APPL) for a consideration of Rs.6,77,70,000/- out of which the Company had already received a sum of Rs.5,10,00,000/- as advance. The said sale was pursuant to the Scheme of Rehabilitation approved by BIFR, and it was also approved by the Asset Sale Committee appointed pursuant to the said BIFR Scheme. The formal transfer of the assets of the said unit to APPL was completed during the period against which the Company has received the balance consideration of Rs.1,67,70,000/-.

5. YEAR IN RETROSPECT :

During the period under review, due to continuous product development activities and better plant maintenance efforts, the production during the 13 months period was substantially improved to 192.88 lacs mtrs. compared to 180.74 lacs mtrs. during the previous period of 14 months. This could have been improved further but for the shortage of working capital and delay in implementation of capital expenditure due to lack of funds which adversely affected the utilization of plant capacities.

Cost reduction and product improvement projects were undertaken on continuous basis in order to reduce losses and improve Profitability. With this, the Company has been successful in improving the process house capacity utilization as well as deliver better quality products.

Further, there was a substantial rise in raw material rates as also increase in employees cost due to high infl ation and consequential increase in dearness allowance. The increase in cost of production due to these factors was off-set to a large extent by an increase in selling prices of the products, increase in volume of production and better product-mix.

Total sales during the 13 months period was 218.16 lacs mtrs. compared to 197.89 lacs mtrs during the previous period (14 months). The textile turnover during the current period of 13 months was Rs.165.32 crores as compared to Rs.132.38 crores during the previous period.

The period under review was a landmark for the Company since it was de- registered from the purview of SICA/BIFR after almost a decade of hibernation under BIFR. Further the Company also achieved a major milestone of completing the sale of its Mazgaon Unit land. The proceeds realized therefrom will be sufficient to address the residual outstanding liabilities in terms of MS-09. It will also provide the requisite seed capital to the Company to raise its Fixed Capital and Working Capital requirements from the Banks for its growth and expansion.

6. PROJECT PROMOTION DIVISION:

NOCIL Limited (NOCIL):

During the year 2010-11, NOCIL had relatively stable business conditions in the first half of the year. However, right from the beginning of second half, prices of most of its inputs started hardening on the back of the surge in the crude oil price as well as the prices of various derivatives thereof. Also the Company continues to face very aggressive competition from the dumped imports of Rubber Chemicals into India and margins remained under pressure due to the continued dumping of the products. The Company has initiated a Mid Term Anti-Dumping Petition on imports sourced from Korea. Despite increase in input cost by a combination of timely booking of orders at the best possible prices, better management of various operational parameters and organization of utilities management, the margins during the year remained more or less similar to the previous year.

The turnover of NOCIL for the year 2010-11 was Rs.480 crores as compared to Rs.460 crores, representing an increase of 4.50% over the previous year. The production of Rubber Chemicals and their intermediates was 38,264 MT for the year under review as against 36,697 MT representing an increase of 4 % as compared to the previous year. NOCIL has made Profit before Tax of Rs.48.01 Crore for the year as compared to Rs.50.13 Crores for previous year. During the year 2010-11, NOCIL achieved exports of Rs.181 crores, which were marginally lower than Rs.186 crores in the previous year.

The Rubber Chemicals market continues to remain competitive and dumping by international suppliers into India continues to be a matter of concern.

7. ENERGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of 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 is annexed hereto and forms part of this Report.

8. PARTICULARS OF EMPLOYEES:

No employee of the Company was in receipt of remuneration of Rs.65 lacs for 13 months period ended 30th June, 2011 or Rs.5 lacs per month for the part of the period. Hence, Statement required to be given as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is not given.

9. INDUSTRIAL RELATIONS:

The relations between the employees and the Management have remained cordial.

10. DIRECTORATE:

Shri P. R. Amin and Shri V. K. Balasubramanian, Directors of the Company will retire by rotation at the ensuing 97th Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

11. SUBSIDIARY COMPANIES:

During the period under review Mishapar Investments Ltd., Sudas Manufacturing & Trading Limited, Sunanda Industrial Machinery Ltd., Mafatlal Services Ltd., continued to be the subsidiaries of your Company.

As per the general exemption granted under Section 212(8) of the Companies Act, 1956, by the Government of India, Ministry of Corporate Affairs, New Delhi. vide its General Circular No.2/2011, dated 8th February, 2011, Balance Sheet and Profit & Loss Account, Directors' Report and the Auditor's Report of the Subsidiary companies have not been attached with the Balance Sheet of the Company.

However, other details required to be given as per the said General Circular No.2/2011, dated 8th February, 2011, have been disclosed in the Annual Report.

The Annual Accounts and related information of the subsidiary companies are open for inspection by any member at the Registered office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available these documents upon request by any member of the Company who may be interested in obtaining the same.

12. INSURANCE:

The properties and insurable interests of your Company like buildings, plant and machinery, stocks etc. are properly insured.

13. DIRECTORS' RESPONSIBILITY STATEMENT:

As required under the provisions of Section 217 (2AA), of the Companies Act, 1956, your Directors report as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures,

(ii) that the 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 the Company at the end of the financial period and of the Profit of the Company for the period under review,

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities,

(iv) that the directors have prepared the annual accounts on a going concern basis.

14. AUDITORS:

At the Annual General Meeting, Members are requested to appoint M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara, as Auditors for the current year and to fix their remuneration. The specific notes forming part of the Accounts referred to in the Auditor's Report are self-explanatory and give complete information.

Cost Audit:

As per the requirement of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the cost accounts relating to the product "Textiles" is required to be carried out every year. The Company has appointed Cost Auditors viz. Shri I. V. Jagtiani, Mumbai and Shri B. C. Desai, Ahmedabad, to audit the cost accounts for the Financial Year 2010-11 i.e. from 1.06.2010 to 31.05.2011, pursuant to approvals of the Central Government vide their letters dated 15th July, 2010 and 13th July, 2010, respectively. The Company has applied to the Central Government for approval to the appointment of the said Cost Auditors for the extended Financial Year 2010-11 ended on 30th June, 2011.The Cost Audit Report in respect of the financial period 2010-11 will be filed on or before the due date i.e.27th December, 2011.

15. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS REPORT:

As required under the Listing Agreement with Stock Exchanges, Reports on "Corporate Governance" as well as "Management Discussion and Analysis Report" are attached and form part of the Directors' Report. Further, during the period under review, the Company has complied with all the mandatory requirements of the Corporate Governance. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Agreement is annexed to the Report on Corporate Governance.

16. APPRECIATION:

The Directors wish to place on record their appreciation of the devoted services of the workers, staff and the officers who have largely contributed to the efficient management of your Company in the difficult times. The Directors place on record their appreciation for the continued support of the shareholders of the Company.

For and on behalf of the Board,

H. A. MAFATLAL

Chairman Mumbai,

Dated: 8th August, 2011


May 31, 2010

The Directors present the 96th Annual Report together with Audited Statement of Accounts for the 14 months period ended 31st May, 2010.

1. FINANCIAL RESULTS:

The Financial Results of the Company are as under: (Rs.in Lacs)

Current period Previous Year

2009-10 2008-09

(14 months) (12 months)

Turnover (Including export benefits/ 13238.21 12707.10

incentives)

Other Income 17575.49 42059.00

(Decrease)/increase in Stock of (117.26) 17.20

finished Goods & Process Stock

Gross Profit 7065.18 34951.28

[Before Interest, Depreciation & Tax]

Less: Depreciation 332.51 , 402.02

Interest (Net) 458.23 782.54

Provision for Current tax

(Including Wealth tax) 1100.25 0.40

Provision for Fringe Benefit

Tax - 15.60

Profit after Taxes 5174.19 33750.72

Excess Provision of Tax of

Earlier Years 2.11 -

5176.30 33750.72

Add: Deficit brought forward from

Previous Year/Period (31278.03) (65028.75)

(26101.73) (31278.03)

*The Board of Directors has extended the Financial Year 2009-10 to end on 31s1 May, 2010.

2. DIVIDEND:

Your Directors regret their inability to recommend dividend.

3. MODIFIED REHABILITATION SCHEME (MS-09):

As you are aware, the Honble Board for Industrial & Financial Reconstruction (BIFR) has sanctioned the Rehabilitation Scheme of the Company, under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 vide its Order dated 30th October, 2002. The said Scheme was implemented substantially by the Company.

As already reported last year the Modified Rehabilitation Scheme (MS-09) of the Company was sanctioned by the Honble Board for Industrial & Financial Reconstruction (BIFR), New Delhi, vide Order dated 24th/25th June, 2009. During the period under review the Company has taken steps to implement the said Scheme.

As mandated by the BIFR in MS-09, the promoters of the Company have, in order to strengthen the equity base of the Company, converted the 300,00,000 - Optionally Convertible Fully Redeemable Non-cumulative Preference Shares of Rs.10/- each aggregating Rs.3000 Lacs and the Company has allotted on 12th November, 2009, 48,13,860 Equity Shares of Rs.10/- each at the conversion price of Rs.62.32 per equity share (i.e. Premium of Rs.52.32 per share) computed as per formula provided in the said modified rehabilitation scheme. The formula for the conversion price is higher of either (i) the average of weekly high and low of closing price of shares of the Company as quoted on the Bombay Stock Exchange during the six months preceding the date of conversion of OCCP or (ii) the average of weekly high and low of the closing price of shares of the Company as quoted on Bombay Stock Exchange during the 2 weeks preceding the date of conversion i.e.12-11-2009.

In terms of Clause 78(1) Chapter VII of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the said shares have been listed on BSE and ASE with a lock-in period of 3 years for 19,62,722 shares and balance 28,51,088 shares for one year.

The Honble High Court of Bombay has dismissed the Public Interest Litigation (PIL) filed by an NGO in the Honble High Court of Bombay, challenging the decision of the Government of Maharashtra for de-reserving 50% of the Mazgaon Unit Land of the Company in Mumbai. Thus, the 50% of the said land is available to the Company either for sale or to develop the same.

Further as per the direction and the guidelines of the MS-09, the Company constituted Asset Sale Committee-I comprising of a representative of the Company, Monitoring Agency, Government of Maharashtra and a Nominee Director appointed by the BIFR, for the disposal of identified assets at Mumbai, Maharashtra and similarly Asset Sale Committee-ll comprising of a representative of the Company, Monitoring Agency, Government of Gujarat and a Nominee Director appointed by the BIFR, for the disposal of the identified assets in Gujarat was constituted. Substantial work on disposal of the Assets has been completed in accordance with the directions and guidelines issued in the said MS-09. Accordingly the said Asset Sale Committees have disposed of some of the identified assets of the Company and realized more than Rs.80 crores.

During the year the Net Worth of the Company turned positive as at 31s1 May, 2010 and the Company ceased to be Sick Industrial Undertaking within the meanning of Section 3(i) (o) of the SICA, 1985. On an application by the Company seeking its de-registration from BIFR under SICA, the BIFR, vide its Order dated 12th August, 2010, discharged the Company from the perview of SICA/BIFR with certain directions as under:

i) IDBI Bank is relieved from the responsibility of Monitoring Agency.

ii) The un-implemented provisions of Modified Scheme (MS-09) if any, should be implemented by the concerned agencies and their implementation would be monitored by the Company M/s. Mafatlal Industries Limited.

iii) The Special Director1, appointed by the BIFR on the Companys Board of Directors (BoD), if any, would stand discharged with immediate effect.

iv) The Company would complete the necessary formalities with the Registrar of Companies (ROC) as may be required.

The Company has filed the said order with the Registrar of Companies on 04.09.2010.

4. YEAR IN RETROSPECT:

, Operations of the Company during the period under review were affected by shortage of working capital resulting in underutilization of the plant capacities. While working with existing old machines best possible efforts have been made to produce the high quality products with reasonable success. Delay in implementation of Capex has affected Companys plans to achieve higher value addition in product-mix. Cost-reduction and product- improvement projects have been undertaken on continuous basis in order to reduce losses and improve product-mix. With these efforts the Comapny has been successful in improving the Companys process-house capacity utilisation as well as deliver better quality products.

This policy of continuous product-mix improvement / process improvement has helped Company to achieve higher volumes of sale of processed fabrics in export as well as domestic markets. The Company has substantially reduced production of Grey fabrics for sale due to its very low contribution margins at 8.49 lac mtrs during the period under review as compared to 53.86 lacs Yntrs during the previous year

Profitability during the period under review was adversely affected by substantial increase in prices of raw materials and higher wage bill due to increased D.A. There was marginal relief in profitability due to favourable foreign exchange rate realization against exports.

The total sales during the period (14 months) was 184.53 lacs mtrs. as compared to 190.33 lacs mtrs during previous period of 12 months. The textile turnover during the current period Apr 09 to May 10 was Rs. 132.38 crores as against Rs. 127.08 crores during the previous period of 12 months.

5. PROJECT PROMOTION DIVISION:

NOCIL Limited (NOCIL):

The year 2009 -10 started with an unprecedented negative outlook due to the global financial meltdown. Fortunately, the situation in India had started turning positive as compared to the Western world. As a result, the domestic Tyre industry got back to normal production levels and consequently demand for rubber chemicals showed a healthy trend in the domestic market. NOCIL experienced positive volume growth during the year under review and this growth as mentioned above, was driven mainly by Domestic Sales.

The turnover of NOCIL for the year under review was Rs.460 crores as compared to Rs.499 crores representing a decrease of 7.87% over the previous year. The production of rubber chemicals and their intermediates was 36697 MT for the year under review as against 33573 MT representing an increase of 9.30% as compared to the previous year.

During the year under review, NOCIL achieved exports of Rs.181 crores as against Rs.231 crores in the previous year.

During the year NOCIL has managed to pay off all its secured loans in the first quarter of the year and also pay unsecured loan during May, 2010. As such NOCIL has become a debt free company.

6. ENERGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO:

Additional information on conservation of energy, technology absorption. foreign exchange earnings and a:. required to be disclosed in terms of 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 is annexed hereto and forms part of this Report.

7. PARTICULARS OF EMPLOYEES:

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms a part of this Report, and will be sent on demand to the shareholders. Any shareholders interested in obtaining a copy of the said statement may write to the Company Secretary.

8. INDUSTRIAL RELATIONS:

The relations between the employees and the Management have remained cordial. ,

9. DIRECTORATE:

Shri Arvlnd N. Mafatlal retires by rotation but has shown his unwillingness for re-appointment on retirement. In recognition of the contribution made by him in the growth of the Company as well as the Group, it is decided by the Board to confer the honour of "Chairman Emeritus" on Shri Arvind N. Mafatlal w.e.f. the date of conclusion of 96 th Annual General Meeting. Shri Hrishikesh A Mafatlal is appointed as the Chairman of the Company from the date of the conclusion of the ensuing 96 th Annual General Meeting. The Board places on record its sincere appreciation for the valuable services rendered by Shri Arvind N. Mafatlal during his tenure with the Company.

Shri P. J. Desai, Director of the Company will retire by rotation at the ensuing 96th Annual General Meeting of the Company and being eligible, offer himself for re-appointment.

BIFR has withdrawn the nomination of Shri Mohan Lall as Special Director from the Board of Directors of the Company with effect from 30th March,2010. The Board places on record its sincere appreciation of the guidance and co operation extended by Shri Mohan Lall during his tenure as Director of the Company.

10. SUBSIDIARY COMPANIES.

During the year under review Mishapar Investments Ltd., Sudas Manufacturing & Trading Limited, Sunanda Industrial Machinery Ltd., Mafatlal Services Ltd., continued to be the subsidiaries of your Company.

As per the exemption granted to the Company by the Central Government vide its Order No. 47/3/2010-CL-lll dated 28th June,2010, the Company has not attached copy of the Balance Sheet and Profit and Loss Account, Directors Report and Auditors Report of the Subsidiary Companies for the financial year ended 31" March, 2010 and other documents required to be attached under Section 212(1) of the Companies Act/1956 to the Balance Sheet of the Company for the period ended 31st May, 2010.

However, the other details as required by the Central Government, while granting the said exemption, are disclosed in the Report.

The Annual Accounts and related information of the subsidiary companies are open for inspection by any member/investor at the Registered Office of the Company on any working days between 2.00 p.m. to 4.00 p.m. and the Company will make available these documents/details upon request by any

member of the Company who may be Interested in obtaining the same. The annual accounts and related information of the subsidiary companies are also available on the Companys website.

11. INSURANCE:

The properties and insurable interests of your Company like buildings, plant and machinery, stocks etc. are properly insured.

12. DIRECTORS RESPONSIBILITY STATEMENT:

As required under the provisions of Section 217 (2AA), your Directors report as under:

(i) that in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures,

(ii) that the 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 the Company at the end of the period and of the Profit of the Company for the period under review, 1

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records In accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities,

(iv) that the directors have prepared the accounts on a going concern basis

13. AUDITORS:

At the Annual General Meeting, Members are requested q appoint M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara, as Auditors for the current year and fix their remuneration. The specific notes forming part of the Accounts referred to in the Auditors Report are self- explanatory and gives complete information.

Cost Audit

As per the requirement of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the cost accounts relating to the product Textiles" is being carried out every year. The Company has appointed Cost Auditors viz. Shri I. V. Jagtianl, Mumbai and Shri B. C. Desai, Ahmedabad, to audit the cost accounts for the year 2009-10 i.e. from 1.04.2009 to 31.05.2010. Necessary applications have been made for amendment in Financial Year 2009-10 to end on SI" May, 2010 instead of 31st March, 2010 in approvals of the Central Government vide their letters bearing dated 8.06.2009 and 09.11.2009. Approvals for modifications are awaited.

14. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS:

As required under the Listing Agreement with Stock Exchanges, Reports on "Corporate Governance as well as "Management Discussion and Analysis are attached and forms part of the Directors Report. Further, during the year under review, the Company has complied with all the mandatory requirements of the Corporate Governance. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Agreement is annexed to the Report on Corporate Governance.

15. APPRECIATION:

The Directors wish to place on record their appreciation of the devoted services of the workers, staff and the officers who have largely contributed to the efficient management of your Company in the difficult times. The Directors place on record their appreciation for the continued support of the shareholders of the Company.

For and on behalf of the Board,

H A MAFATLAL

Vice- Chairman

Mumbai,

Dated: 24th September, 2010

 
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