| Your Directors of the company have pleasure in presenting the 21st Annual Report together with Audited Statement of Accounts of the Company for the year ended 31st March, 1997
FINANCIAL RESULTS (Rs. in Lacs)
PARTICULARS CURRENT PREVIOUS
YEAR YEAR
31.03.1997 31.03.1996
TOTAL INCOME 26584.53 31395.14
PROFIT BEFORE INTEREST, AND DEPRECIATION 3715.64 4852.27
INTEREST 1589.50 922.42
DEPRECIATION 193.83 149.36
PROFIT BEFORE TAX 1932.31 3780.49
PROVISION FOR TAXATION 0.00 300.00
LOSS ON FIRE 0.00 342.67
PROFIT AFTER TAX 1932.31 3137.82
PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR 1775.92 1193.71
PROFIT AVAILABLE FOR APPROPRIATION 3646.94 4331.53
DIVIDEND
In order to conserve resources the Board of Directors of your Company are of opinion that no dividend for the financial year 1996-97 be recommended & resources be utilized for strengthening the existing
operations of the Company.
OPERATIONS
Shoe Division
The year 1996-97 was not good for the Indian Footwear Industry, due to
unfavourable Government policies like reservation of the Shoe Industry
for Small Scale Industry and higher import duty on the raw materials
and components. Your Company has also experienced its impact, resulting de-cline in the turnover. The turnover of the Company has de-cline from Rs. 31395.14 lacs to Rs. 26584.53 lacs, a fall of 15% as compare to the previous year. The Company has posted a net profit of Rs. 1932.31 lacs.
During the year under review your Company was in a consolidation phase
being the 3rd year of domestic operation. The retail market was under
severe strain due to the slump in the economy. Your Company faced the
situation in a planned manner, and rationalized its distribution net work. The operations were regulated and inventory control system was
improved. During the year six new showrooms were opened in strategically important markets.
A sales conference was organized, which was attended by all the business associates. In the conference the future plans were unveiled and new advertisement marketing strategies were formalized considering the direct market feedback.
Your Company is negotiating with two Foreign Shoe Companies for setting
up a joint Venture shoe manufacturing unit for retail shoe marketing. As per market study conducted by the Company the prospect for the Indian Shoe Industry is very bright in the coming years.
OTHER VENTURES
Steel Project
The project implementation work of Mideast Integrated Steels Limited
was delayed due to non disbursement of over run finance by some financial institutions. Your Company has appraised the affairs of the
project to the lead term lending Financial Institution, IDBI and IDBI
is taking all necessary steps including further finance to ensure early
completion of the said project.
Aviation Project
Directors are pleased to inform that the Mesco Airlines Limited has once again baged prestigious contracts from ONGC and Government of Himachal Pradesh. The performance of the Mesco Airlines is assuring you the best long term returns.
L & T Shoe Division
The Company has installed all the machines purchased for L&T Shoe unit,
at Bhiwadi (Rajasthan) instead Kalol (Gujarat), as L&T could not get the Industrial Licence transferred in our name within the stipulated period. The Bhiwadi unit has already started commercial production.
SUBSIDIARY
The Annual Report, together with Audited Accounts, of Mesco (Mauritius)
Limited are annexed hereto. The information required under Section 212
of the Companies Act, 1956 relating to subsidiary is attached to the
accounts of the Company.
FIXED DEPOSITS
The Company has invited fixed deposits from Public during the financial
year as per section 58A of the Companies Act, 1956 & provisions of the
Companies (Acceptance of Deposits) Rules, 1975. The position of the
Fixed Deposits as on 31st March, 1997 are as follows :
1. Big deposits (only 2 nos.) : Rs. 232.50 lacs
2. Small deposits : Rs. 249.75 lacs
AUDITOR'S OBSERVATIONS
The Company has been keeping sufficient balances in its current accounts with various scheduled banks, free from charges or lien, to maintain the liquid assets as prescribed in Rule 3A of the Companies (Acceptance of Deposits) Rules, 1975. As per the Auditors, liquid assets should be maintained in a separate account.
The Company could not repay some of its fixed deposits in time, however
the Company is repaying to all its small depositors regularly with their mutual consent.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNING AND OUTGO
As required under Companies (Disclosure of Particulars in the report of
Board of Directors) Rules, 1988 a statement showing the information
relating to the conservation of energy, technology, absorption and
foreign exchange earnings and outgo is enclosed as Annexure-I and forms
part of this report.
Information as per Section 217(1)(e) read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31st March, 1997.
I. CONSERVATION OF ENERGY
Your Company is not covered in the Schedule of Industries given under
Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 requiring furnishing of information regarding conservation of energy in all phases of its operations.
II. RESEARCH & DEVELOPMENT
1. Specific Research & Development Activities : The Company has carried
out various research and development activities for upgradation of the
product and import substitution of components for shoe-making and
consumables.
2. Benefits : The import content of the shoes has shown a declining
trend and the net foreign exchange earnings have improved significantly.
3. Future Plan of Action : The future plan of action includes concentration of activities for import substitution, opening more and
more retailing out-lets, expanding Brand name of MESCO.
III. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The Company had up-grade its shoe making operations for producing
up-market shoes, by improving design and pattern for shoes.
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