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| Financials |
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| Latest |
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| The Directors are pleased to submit their report and the audited accounts of the company for the year ended 31st March, 2007. |
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| Particulars |
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| Sales and Other Income |
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| Profit before Depreciation |
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| Less: Depreciation |
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| Profit before Tax |
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| Less: Provision for Current, Fringe Benefit and Deferred Tax |
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| Profit after Tax |
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| Add: Balance brought forward from previous year |
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| Amount available for appropriation |
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| APPROPRIATIONS: |
| Interim Dividend |
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| Proposed Final Dividend |
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| Tax on Dividend |
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| Transferred to General Reserve |
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| Balance carried to Balance Sheet |
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Current Year
(2006-07)Rs. |
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| 7,39,98,67,154 |
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| 47,95,68,457 |
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| 9,00,27,767 |
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| 38,95,40,690 |
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| 14,04,03,806 |
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| 24,91,36,884 |
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| 12,89,86,712 |
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| 37,81,23,596 |
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| 6,39,00,000 |
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| 2,13,00,000 |
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| 1,25,81,910 |
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| 10,00,00,000 |
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| 18,03,41,686 |
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| Previous Year (2005-06)Rs. |
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| 6,33,57,03,128 |
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| 42,37,45,077 |
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| 8,41,60,633 |
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| 33,95,84,444 |
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| 11,98,48,588 |
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| 21,97,35,856 |
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| 10,47,50,156 |
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| 32,44,86,012 |
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| 8,52,00,000 |
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| - |
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| 1,19,49,300 |
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| 9,83,50,000 |
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| 12,89,86,712 |
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| DIVIDEND: In March 2007, your Company paid an interim dividend of Rs. 15/- per share (150% on face value of Rs. 10/- each) amounting to Rs. 6.39 crores. In view of the Company's creditable performance, the directors are pleased to recommend for the approval of the members a final dividend of Rs 5/- per share on 42.60 lakhs shares of Rs. 10/- each for the financial year 2006-07 amounting to Rs. 2.13 crores towards dividend and Rs. 0.36 crores towards dividend tax resulting in total outflow of Rs. 2.49 crores bringing the total dividend to Rs. 8.52 crores (previous year Rs. 20/- per share i.e. 200% on face value of Rs. 10/- per share amounting to Rs. 8.52 crores). |
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| TRANSFER TO RESERVES: The Company proposed to transfer Rs. 10 crores to the General Reserve out of the amount available for appropriations and an amount of Rs. 18.03 crores is proposed to be retained in the Profit and Loss Account. |
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| OPERATIONS: The year 2006-07 has been a robust year for the Indian Economy. A lot of foreign investors have shown great interest in investing in India and Indian business houses have been on an acquisition spree of companies abroad. The job markets continue to improve with the retail segment booming in addition to the call centres. |
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| With this backdrop, your Company has also excelled in its Silver Jubilee year, reaching a turnover of Rs. 740 crores, a growth of 17% over previous year. The Profit before Tax has increased from Rs. 33.96 crores to Rs. 38.95 crores, a growth of 14.7% as compared to 5.7% in the previous year. |
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| Your Company continues to win international and national recognition. During the year, your Company once again was honored with the MAKE (Most Admired Knowledge Enterprise) India 2006 Award. Your Company was also one of the finalists of Global MAKE Award 2006. 'Aquaguard' and 'Euroclean', the two well-known products of the Company have been recognized as Consumer Superbrands. The SMART Living Award, instituted by the Times of India Group has bestowed the Company's product 'Aquaguard' as the most preferred brand among Water Purifiers. The Company's efforts in Customer service and satisfaction got its due recognition when it took the Best Franchisor Award 2006 for Consumer Durable by Franchisee India. Your Company was also honored with the Golden Peacock Innovation Award (Institute of Directors) and most importantly, being cited in the world's most renowned marketing text - the legendary Philip Kotler's Marketing Management book. |
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| Your Company maintained its leadership position by continuing to develop the 3 Ps - Purpose, People and Processes. It consistently strives to strengthen its leadership position in the water purification category by developing top-of-the-line water purifiers with the most modern technology, some of these products will be launched during the year 2007-08. The Company had launched an affordable resin technology based brand called 'Aquasure' for the masses of India whose households have either no running water or electricity or both. Your Company is proud to inform you that 'Aquasure' has received mass acceptance amongst Indian households and is now poised to grow at a rate of over 50% in the ensuing year. In the vacuum cleaner category also, the Company has successfully launched new models for the discerning Indian customers. The Company, therefore, takes into its stride the threat of the competition by constantly endeavoring to innovate and seek new opportunities and new market segments with a focus on future trends and behaviour. |
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| Your Company follows a prudent policy of maintaining adequate liquidity to cover any unforeseen eventualities on account of disruptive market forces. During the year, your Company has covered from its internal cash accruals - enhanced working capital requirements, capital expenditure in Information Technology, investment in international operations, investment in subsidiaries and also dividend payout. The Company is all set in the ensuing year to reap the benefits of MySAP, the ambitious project which it undertook in April 2005 to bring about revolutionary change in the operations of the Company leading to high level of Customer focus and customer satisfaction as well as customer retention and acquiring lost customers. Your Company has also embarked on a Cost Optimisation drive believing that the fixed costs need to be converted to variable costs to counter the dynamic market forces in a competitive business environment. |
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| Your Company has always been in the forefront in carrying out its Corporate Social Responsibility. The Company's Institute of Environment (EFIE) is always working towards various social causes. This is done through air pollution monitoring, rainwater harvesting consultancy, running awareness programmes among school children, and conducting the Euro Enviro Quiz, India's first and only national environment quiz for school children that now covers 160 schools in 14 cities and 1.2 lakh participants. |
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| Euro Parivaar Enviro Park and Aaji Aajoba Park for senior citizens and handicapped children, as well as other social activities continue to be sponsored by your Company to benefit the less privileged and society at large. |
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| Your Directors are confident that, barring unforeseen circumstances, the Company's performance will reflect in its theme for the year to "Reinvent the Past, Create the Future". |
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| DIRECTORATE: Mr. N.D. Khurody and Mr. C.G. Shah retire by rotation and being eligible offer themselves for reappointment. |
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| SUBSIDIARY COMPANIES: During the year under review, the Company's wholly owned subsidiary, Aquamall Water Solutions Ltd., had a sales growth of 12% as compared to previous year but due to rising input costs, it has a marginal increase of 1% in profit before depreciation for the year 2006-07. The management team of Aquamall is, however, seized of this issue and is working closely on reducing costs through value engineering, price negotiation and cost optimization drive during the ensuing year. |
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| Aquamall has now stabilized its operations under the new ERP system and should be able to drive the benefits of the ERP package during the coming years by improving the response speed to serve its customers better, increase productivity, optimize working capital on materials consumption and the planning process. |
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| Aquamall continues to focus on upgrading technology, supply high quality products by constant upgradations. It is also setting up an additional manufacturing facility near Dehradun in Uttranchal to meet the ever increasing demand for water purifiers. |
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| During the year Aquamall's wholly owned subsidiary, Forbes Aquamall Ltd. (FAQL) registered a growth of 15.5% in sales. The prices of all major inputs rose sharply during the year. However, inspite of the unprecedented increase in input costs, due to the various cost control initiatives implemented by FAQL, FAQL has been able to maintain its profitability. The Directors are confident that, barring unforeseen circumstances, the increase in turnover in the ensuing year shall enable FAQL to improve its profitability. |
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| During the year under review, the Company's subsidiary, Forbes Abans Cleaning Solutions Pvt.Ltd. changed its name to Forbes Facility Services Pvt.Ltd. (FFSPL) with effect from 22nd February 2007 pursuant to a Dissolution Agreement dated 21st June, 2006 with the joint venture partners, Abans Ltd. and Stock Traders India Pvt.Ltd. (STPL). Accordingly, STPL sold its shareholding to Eureka Forbes Ltd. in the month of July 2006, which enhances the shareholding of Eureka Forbes Ltd. to 70%. The 30% shareholding held by Abans Ltd. has, however, not been transferred to Eureka Forbes Ltd. as yet, which the Company is pursuing with Abans Ltd. |
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| The year gone by has seen FFSPL being recognized in the segments of hotels and manufacturing setups. It is setting benchmarks in the field of mechanized housekeeping and providing integrated facility services. During the year under review, FFSPL has made a modest profit before tax of Rs. 12.16 lakhs on gross income of Rs. 620.52 lakhs. |
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| Your Company's wholly owned subsidiary, Euro Forbes International Pte.Ltd., (EFIPL), Singapore, has shown improved performance for the financial year under review with a turnover of Rs. 15.65 crores and a profit before tax of Rs. 1.88 crores. During the year, EFIPL has set up its operations in other ASEAN countries of Thailand, Malaysia and Vietnam. Your Company has advanced working capital loans of $14.13 mn (Rs. 40.45 crores) to fund the operations in these countries with liberal credit period in order to establish business in these countries. In the opinion of the management, the interest bearing loans and advances are good and fully recoverable after the initial gestation period of three years. |
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| From 1st January 2007, Subject to completion of formalities and necessary approvals, EFIPL will become a part of the joint venture company, Forbes Lux Group AG, which is a 50:50 joint venture partnership with Lux International AG, Switzerland. Forbes Lux Group AG was incorporated in January 2006 as per Swiss Law in Zug, Switzerland. This Company caters to the markets of East Europe, South Africa and Russia. Your Directors are confident that in the years to come this Company combining with EFIPL will leverage on each other's strengths to capture the overseas markets in its own field of operations. |
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| During the year under review, your Company formed a subsidiary company with 70% shareholding in the name of Pro Handyman India Ltd., registered and incorporated in Bangalore on 8th November 2006 with certificate for Commencement of Business from 15th December 2006. As the company's name itself suggests, Pro Handyman India Ltd. has been formed with the object of providing any and all types of service, including servicing of electrical and electronic and/or consumer appliances and/or all kinds of allied services such as housekeeping, facility management and the like. It will also cater to any kind of concierge services for any kind of customer, whether households, societies, commercial establishments in India or overseas. |
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| Initial response from the customers has been highly encouraging in the geographical territory of Indiranagar, Bangalore. This Company's immediate plan is to expand its business model to seven major cities and to establish localised satellite offices for sales and service within the operating town. Barring unforeseen circumstances, this company's next year's performance should strengthen the confidence, the Directors have reposed in it. |
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| INSURANCE: Assets of the Company have been adequately insured against usual risks. |
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| AUDITORS AND AUDIT REPORT: You are requested to appoint Auditors for the current year, and to fix remuneration. The retiring auditors, M/s. Batliboi & Purohit offer themselves for re-appointment. |
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| Reference is made to Clause No.(ii)(c) of Annexure to the Auditor's Report which is self-explanatory. However, it should be noted that the non-availability of book stock to compare with physical stock will not have any impact on the financial results of the Company for the year under review, since the physical stocks are considered for valuation of stocks as at 31st March 2007. |
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| ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE: The information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption, and foreign exchange earnings and outgo is given in the Annexure hereto. |
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| PARTICULARS REGARDING EMPLOYEES: A statement setting out the details of remuneration paid to the employees as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is attached hereto and forms part of this Report. |
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| SUBSIDIARY COMPANIES: During the year under review, the Company's wholly owned subsidiary, Aquamall Water Solutions Ltd., had a sales growth of 12% as compared to previous year but due to rising input costs, it has a marginal increase of 1% in profit before depreciation for the year 2006-07. The management team of Aquamall is, however, seized of this issue and is working closely on reducing costs through value engineering, price negotiation and cost optimization drive during the ensuing year. |
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| DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217(AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm - |
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- That in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
- That they 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 that period;
- That they have taken proper and sufficient care to the best of their knowledge and ability 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;
- That they have prepared the annual accounts on a going concern basis.
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| APPRECIATION: Employee relations continues to be harmonious and cordial. The Board of Directors wishes to place on record its sincere appreciation of the devoted services made by employees at all levels in ensuring the high levels of performance and growth that your Company has achieved during the year. |
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| Your Board would like to place on record its sincere appreciation for the assistance given by the Company's Bankers and acknowledge that their continued support has been a source of considerable strength. |
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| On behalf of the Board of Directors |
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| SHAPOOR P. MISTRY |
| Chairman |
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| Mumbai, Dated: 2nd July 2007 |
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| ANNEXURE TO DIRECTORS' REPORT: Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors' Report for the year ended 31st March, 2007. |
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| A. CONSERVATION OF ENERGY: |
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- Energy Conservation Measures taken: Nil
- Additional investments and proposals, if any, being implemented for reduction of consumption of energy: None at present.
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| B. TECHNOLOGY ABSORPTION: |
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| Efforts made in technology absorption in Form 'B'. |
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| FORM 'B' |
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| RESEARCH AND DEVELOPMENT (R&D) |
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| 1. Specific areas in which R&D carried out by the company: The company's R&D Centre continues to be recognized by the Department of Science and Industrial Research, Ministry of Science and Technology, Government of India. The Water Laboratory at Bangalore is recognized by Karnataka State Pollution Control Board and World Water Quality Association - USA and accredited by National Accreditation Board for Testing and Calibrating Laboratories, India. The R&D Centre has been in close touch with the customers, manufacturers and field sales force to evaluate the customer's needs and product performance. The main focus has been on improving and upgrading the product offering by accelerating product development. |
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| The R&D has helped maintain the market leadership position through absorption of latest technology in the areas of floor care products, water purifiers and domestic appliances. |
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| The R&D Centre has contributed significantly towards value engineering and cost control measures, at the same time maintaining value - benefit equation for the customers. The R&D team also provides training to the field sales and service staff besides providing constant updates on technology and new products to the field and Marketing division. |
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| 2. Benefits derived as a result of the above efforts: R&D through its efforts has enabled the manufacturer to introduce on its own water purifiers at the lower end of the market segment. R&D has also recommended improved electronics, which is more stable and also automatically communicates to the service call centre if there is a service requirement. |
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| R&D has, moreover, contributed to improve upon products and accessories like modern UV water purifiers, new media to address pesticide issues, membrane technology based purifiers, etc. to meet the different requirements due to varying water condition in the market place. |
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| R&D has also tested and suggested improvements in imported products like Reverse Osmosis, 3-in-1 Vacuum Cleaners, Five Stage Water Purifiers to suit Indian conditions. |
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| Company introduced Ecofriendly household cleaning Liquids for sale through service personnel. |
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| 3. Future Plan of Action: There are a number of products, process improvements and accessories, which are under development in the field of water purifiers, vacuum cleaners, air purifiers, kitchen appliances and eco-friendly chemical cleaning solutions. These products would be at various price points to cater to different market segments. R&D will involve in joint development of products with Foreign Business associates for International requirements. |
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| R&D would continue to work on value engineering, cost optimization and re-engineering to improve the overall operating efficiency. |
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| R&D works closely with Business Development to introduce new products from the foreign business associates and also for import substitution. |
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| 4. Expenditure on R & D: |
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 | Capital | - | Rs. 0.39 lakhs |
| Recurring | - | Rs. 216.72 lakhs |
| Total | - | Rs. 217.11 lakhs |
| Total R&D Expenditure as percentage of total turnover | - | 0.30% |
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| TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: |
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| 1. Efforts, in brief, made towards technology absorption, adaptation and innovation. |
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| In line with the rapidly changing technological environment, the R&D staff are provided with the requisite means to keep abreast of the changes. They are also encouraged to attend national and international technical symposiums and trade fairs to understand the latest technology and adapt them to Indian conditions. Worked with MS Ramaiah School of Advanced Studies to develop advanced CAD / CAE designs. The technology is implemented in the product seamlessly. |
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| 2. Benefits derived, as a result of the above: product improvement, cost reduction, product development, import substitution, etc. |
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| The results derived from the above efforts have contributed to significant improvement in product quality and performance. |
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| C. FOREIGN EXCHANGE EARNINGS AND OUTGO: |
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| Earnings in foreign exchange during the year under review were Rs. 8,53,62,856/- and the outgo Rs. 49,26,27,498/-. |
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