annual report 0607
TRANSCRIPT
THE ANSWER IS IN THEQUESTION.IT’S AMAZING HOW MUCH CAN BE ACHIEVEDBY A WILLINGNESS TO QUESTION.
AND IT IS EVEN MORE AMAZING HOW MUCHCAN BE ACHIEVED BY SIMPLY ASKING ‘WHY’.
32 > NITCO Tiles Limited Annual Report 2006-07 >
TODAY’S INDIAIS PROBABLYTHE FASTEST
GROWINGURBAN MARKETIN THE WORLD.
REFLECTED IN THEUNPRECEDENTED
SKYLINE-CHANGINGROLLOUT OF NEW HOMES,
OFFICES AND STORES.
IN TURN, THEGROWTH IN THISSECTOR WILLBENEFIT THOSEEXTENDINGFROM MEREMANUFACTURETO PROVIDINGINTEGRATEDFLOORINGSOLUTIONS. NITCO TILES FIGURES ONBOTH COUNTS. THE RESULT:IT HAS EMERGED AMONGTHE THREE LEADING INDIANCOMPANIES IN ITS SECTORIN THE COUNTRY TODAY.
THIS IS EXPECTED TOBENEFIT SELECT INDUSTRIES.
THOSE MANUFACTURINGAND MARKETING CERAMIC
AND VITRIFIED TILES FORONE.
5Annual Report 2006-07 >4 > NITCO Tiles Limited
WHO WE ARE • NITCO Tiles Limited is a
leading innovations-
driven flooring solutions
provider. Possesses over
five decades of rich
experience in India’s
infrastructure support
industry.
• The Company derives
its competitive edge from
the manufacture of
premium products that
represent boutique
appeal, attractive
profitability and low
competition.
• The Company enjoys a
favourable recall through
Rs. 27.08 cr of brand
investments in the last
three years.
WHAT WEACHIEVED IN2006-07 • Undertook a capacity
expansion in premium tiles
of 22.80 lac square metres
per annum (May 2006) at
our Alibaug factory.
• Appointed an additional
outsourcing partner for
vitrified tiles in China,
facilitating scale and de-
risking.
• Introduced innovative
products (Timberland,
Metallica, Steps and Risers,
Dholpur Series, Slate Stone
Series, Estonia, Matrix,
Pietre Del Sol, Art Stone,
Innova and African Slate).
• Extended into the real
estate business through the
setting up of Nitco Realties
Private Limited (100%
subsidiary). Land bank
value: Rs. 406 cr (as on
August 31, 2007).
• Derived revenues of
Rs. 4.43 cr from the wind
farm business within one
year of commissioning the
7.5-MW wind farm assets in
Dhule (Maharashtra).
WHAT WEDEAL IN • We provide an exotic
repertoire of flooring
preferences, comprising
ceramic tiles, vitrified
tiles, cement terrazzo
tiles, Italian marbles,
pavers, steps and
risers, etc.
• We are in the business
of manufacturing,
marketing and branding
mosaic and ceramic tiles.
We import and process
marbles. We also
outsource the
manufacture of
vitrified tiles.
• We provide an
exhaustive collection
across diverse designs
and colours for indoor,
outdoor and industrial
applications.
HOW WEPERFORMEDFINANCIALLY • 54% increase in
turnover (gross) from
Rs. 306.36 cr in 2005-06
to Rs. 470.43 cr in
2006-07.
• 65% growth in EBIDTA
from Rs. 43.01 cr in
2005-06 to Rs. 70.97 cr
in 2006-07.
• 128-basis point
expansion in EBIDTA
margin from 15.90% in
2005-06 to 17.18% in
2006-07.
• 90% surge in post-tax
profit from Rs. 20.02 cr
in 2005-06 to Rs. 38.03
cr in 2006-07.
WHERE WEARE LOCATED • Headquartered in the
financial capital of
Mumbai (India).
• Spread across 17 states
through a marketing and
distribution network of
550 direct dealers and
5,000-odd retail outlets.
• Runs 130 shop-in-shops
for promotion and
impulse buying.
• Eight exclusive
showrooms in Worli
Mumbai, Andheri
Mumbai, Nashik,
Ahmedabad, Cochin,
Coimbatore, Kolkata
and Goa.
WHO WECATER TO • Brand-enhancing
institutional clients
(property and mall
developers) like
Hiranandanis, Rahejas,
Pantaloons, Godrej
Properties, DLF, Unitech,
Oberoi Construction,
Keystone, Piramals,
Nirmal Lifestyle, Shrusti,
Runwal, RNA, etc.
• Retail individual buyers.
WHERE WE ARELISTED • Listed on the National
and Bombay stock
exchanges.
• Enjoyed a market
capitalisation of Rs. 739 cr
(as on October 24, 2007),
the highest among
industry peers.
CAPACITYALLOCATION Plant location
Alibaug, Maharashtra
Product manufactured
Ceramic tiles
Installed capacity
63.12 lac square metres
per annum
Plant location
Thane, Mumbai,
Maharashtra
Product manufactured
Mosaic tiles
Installed capacity
8.44 lac square metres
per annum
CORPORATEIDENTITY
7Annual Report 2006-07 >6 > NITCO Tiles Limited
FROM STEPPINGSTONES TO MILESTONES
1966 1984 2001 2004
2006
2007
2002 19971995
• NITCO Tiles Private Limited incorporated to
manufacture cement tiles.
• Work begins for manufacturing cement tiles
in Thane.
• Work begins for setting up a
greenfield plant to manufacture ceramic
floor tiles. Estimated cost: Rs. 900 mn.
• Strategic decision to outsource
vitrified/wall tiles from China under the
NITCO brand.
• Winning the Quality Excellence
Award for ceramic floor tiles from the
Institute of Trade and Industrial
Development.
• Infrastructure at the Alibaug facility
upgraded for manufacturing porcelain tiles.
• Production commences of ceramic
floor tiles in Alibaug (Maharashtra).
Capacity: 10,000 square metres per day.
• Marble operations begin in
Kanjurmarg (Mumbai).
• Initial public offer floated to mobilise
Rs. 168 cr at Rs. 168 per share.
• Creation of Nitco Realties Private
Limited (100% subsidiary) to engage in
the real estate business.
• Started distribution of Cement sourced
from Pakistan.
• Merged Shark Properties Private Ltd. with
Nitco Tiles Ltd. and Nitco Realties Private Ltd.
with Motivation Properties Private Ltd.
9Annual Report 2006-07 >8 > NITCO Tiles Limited
For years investors asked questions.In 2006-07 – as in other years – wedelivered enlightening answers
31.03.2003
31.03.2004
31.03.2005
31.03.2006
31.03.2007
40.32
40.32
40.32
40.32
63.12
Enhancing production capacity – Ceramic tiles
(sq. metres in lacs)
2002-03
2003-04
2004-05
2005-06
2006-07
151.10
172.38
208.81
306.36
470.43
Growing income from operations (Rs. cr)
2002-03
2003-04
2004-05
2005-06
2006-07
22.90
22.13
24.02
43.00
70.97
Strengthening EBIDTA (Rs. cr)
2002-03
2003-04
2004-05
2005-06
2006-07
17.10
14.55
12.80
15.90
17.18
Increasing EBIDTA margin (%)
2002-03
2003-04
2004-05
2005-06
2006-07
6.00
5.51
7.54
20.01
38.03
Surging post-tax profit (Rs. cr)
31.3.2003
31.3.2004
31.3.2005
31.3.2006
31.3.2007
114.95
123.21
136.05
198.98
229.25
Increasing gross block (Rs. cr)
2002-03
2003-04
2004-05
2005-06
2006-07
1.11
1.17
1.36
0.32
0.42
Strengthening debt-equity ratio
2002-03
2003-04
2004-05
2005-06
2006-07
NIL
NIL
NIL
10
20
Growing dividend (%)
2002-03
2003-04
2004-05
2005-06
2006-07
49.74
54.19
69.10
115.81
132.33
Rising book value per share (Rs.)
2002-03
2003-04
2004-05
2005-06
2006-07
4.89
4.49
6.15
15.59
16.39
Expanding earnings per share (Rs.)
11Annual Report 2006-07 >10 > NITCO Tiles Limited
Question one:Why should lifenot imitate art?
Core philosophy At NITCO, we define the balance between science
and art in one word. Innovation.
The result is products needed by people. The result
is products inspired by tradition, nature and life. The
result is products that enhance a user’s pride. The
result is products that translate into our competitive
edge.
Achievements • We are the only company in our industry space to
provide a comprehensive range of products and
flooring solutions, comprising ceramic tiles, vitrified
tiles, marble and mosaic.
• Our impressive array of products is conveniently
available under one roof.
• Our product variety fuses art, colour and design
for residential, hospitality, retail and industrial
applications.
• Our one-stop-complementary-solutions-shop
concept reinforces the prospect of cross-sale with a
scale up-scale down flexibility.
• Our product portfolio defines our presence at
each price point, reinforcing our brand.
Result Our topline generated a compounded annual
growth rate (CAGR) of 40% over the three years
ending 2006-07, higher than the industry average
of 17%.
13Annual Report 2006-07 >12 > NITCO Tiles Limited
Question two:Why can’t
global be local? Core philosophy At NITCO, we believe that all business, international
or national, are essentially just one thing. Local.
The result is extensive travel by our regional
specialists. The result is a willingness to absorb local
culture, people, habits and traditions. The result is a
liberated mindset reflected in shifting processes and
transactions to the most attractive geographies. The
result is superior customer service.
Achievements • We are the only company in our industry to
possess a dedicated contract manufacturing base for
vitrified tiles in a geography that offers lower costs
and attractive scale; we entered into a parallel
alliance in the same geography to enhance scale and
de-risk our dependence on a single partner.
• We possess an outsourcing advantage that not
only helps us channelise and strengthen our
bandwidth in front-end marketing and branding but
also helps us focus more on our core laboratory
strengths of research and innovation.
• We possess a competitive edge in a business
where asset and technology barriers are relatively
low with high competition from unorganised players.
• We enjoy a mutually rewarding association as a
result: while we provide the designs and monitor
quality, our partner turns the plan into a
commercialised product in the shortest time at
relatively low costs, leading to a quicker time-to-
market and enhanced market share.
Result Our income from the outsourced vitrified tiles
business stood at a robust 54% of our revenue
in 2006-07.
15Annual Report 2006-07 >14 > NITCO Tiles Limited
Question three:Why can’t wecapture shareof a space thatreally doesn’t
exist? Core philosophy At NITCO, we believe that the most important
battles of the marketplace are first fought and won
in a terrain more sophisticated. The mind.
The result is the making of a sale before it has
transpired. The result is a positive recall in an
environment of clutter. The result is a premium at a
time of declining margins.
Achievements• We are among the first few in our industry to
introduce branding in the flooring market.
• We enjoy a brand association with ‘innovation’
resulting in a perpetual product excitement and new
customer segments.
• We have introduced innovative products,
comprising the rustic series, wood strips, INVIZA
(dirt-free tile), leather finish tiles, Timberland (wood
finish tiles), slate stone (beauty of natural slate
stone), the Spa Collection, Pietre De Sol, African
slate, Matrix and Innova.
ResultWe invested Rs. 27.08 cr in our brand in the three
years leading to 2006-07, the highest in our
industry, and also reported one of the highest
brand-profit ratios in the business.
17Annual Report 2006-07 >16 > NITCO Tiles Limited
Question four:Why can’t wequestion the
conventional? Core philosophy At NITCO, we believe that radical, sustainable
growth can only be derived through a consistent
pursuit of a challenging ideal. The impossible.
The result is a benchmarking with the best global
standards – and then beyond them. The result is an
extension from ‘sales to the customer’ to ‘education
for the customer’.
Achievements • We are among the few in our industry to have
invested in an automatic sorting line – classifies
products based on their quality – right up to the
time they are packaged, eliminating manual
interventions and ensuring customised delivery.
• We possess the most advanced technology
imported from SACMI (Italy) to generate consistent
quality products at an affordable cost.
• We possess one of the largest bandwidths of first
quality products in our industry – at 70% –
generating higher than average realisations.
• We are the only company in our industry with a
24x7 customer helpline to serve our customers with
speed and surety.
ResultOur average realisations are nearly 30% higher than
our peer companies, a strong endorsement of our
quality.
19Annual Report 2006-07 >18 > NITCO Tiles Limited
Core philosophy At NITCO, we do more than predict or decipher the
future. We invent it.
The result is an extension from understanding the
competition to comprehending the consumer. The
result is an extension in our obsession from the
product to applications. The result is an extension
beyond products to products, solutions and services.
The result is a graduation from what is to what
can be.
Achievements • We leveraged our four decade-plus experience in
the construction sector to integrate forwards into
real estate through a 100% subsidiary (NITCO
Realties Private Limited).
• We created a land bank estimated at Rs. 406 cr
by reputed real estate consultants Knight Frank (as
on August 31, 2007).
• We embarked on eight residential/commercial
projects across Maharashtra (project gestation of 3-
4 years).
• We will concurrently scale-up our pan-Indian
presence through exclusive display showrooms: 20
Le Studio (average floor space of 2,000-4,000 sq.
ft.) Company operated outlets and 100 Le Express
franchisee outlets (average floor space of 1,500 sq.
ft.) in 2007-08.
Result The extension of NITCO Tiles to NITCO Realty will
drive growth, tap prospects arising out of both
businesses and enhance valuations over the
coming years.
Question five:Why can’t wesee far away
from up close?
21Annual Report 2006-07 >
How did the Company’senhanced focus on profitabilitythrough innovation bear fruit in2006-07? The year under review was one of the
best ever for us in many ways.
From a financial perspective, our gross
turnover surged 53.55% from
Rs. 306.36 cr in 2005-06 to Rs. 470.43
cr in 2006-07, while our post-tax profit
registered a sharper growth of 90%
from Rs. 20.02 cr to Rs. 38.03 cr. This
shows that our bottomline growth is
responding quicker than a growth in
our topline, justifying our focus on
profitability through innovation and
value-addition.
We embarked on timely initiatives to
sustain this trend: we undertook a
capacity expansion at our ceramic tiles
division to enhance our overall installed
capacity by 56%. We appointed one
more associate in China to ramp up our
vitrified tiles business in addition to
achieving higher sales across our
mosaic and marble product segments.
On the overall, a profitability growth
across each of our four businesses –
ceramic tiles, vitrified tiles, mosaic and
marble – gives me considerable
optimism that our strategy is
compatible with the needs of the
present and future.
What were some of the majorachievements of the Company in2006-07? There are quite a few achievements
such as:
• We consolidated our presence in the
attractively growing real estate sector
through the establishment of NITCO
Realties Private Limited, a 100%
subsidiary of NITCO Tiles Limited. We
will leverage our rich experience and
vast land bank (valued at Rs. 406 cr) to
execute eight residential/ commercial
projects in Maharashtra.
• We reported an income of Rs. 4.42 cr
from our wind power generation in
2006-07 through 100% sales to the
Maharashtra State Electricity Board. We
foresee considerable revenue
generation from this venture through
an attractive power purchase
agreement with the utility.
• We won the best SAP project
implementation award – SAP ACE 2007
(Award for Customer Excellence) – in
August 2007 (post-balance sheet
development) for the best consumer
products sector implementation among
mid-size enterprises in India.
What initiatives helped theCompany reinforce profitability? It is important to emphasise that our
rising profitability is not only the result
of what is happening in the
marketplace but importantly, the
philosophy that has been guiding our
business for the last four decades. So
what is this philosophy, one may ask. If
I have to condense this into a simple
line, it would be: conviction, innovation
and value-addition.
Conviction because India will need to
increase infrastructure investments to
support its ongoing economic growth.
Innovation because we invested in
assets, knowledge and practices.
Value-addition because that’s the key
to sustainable success in this
competitive environment.
How did the Company managecosts when oil prices peaked?NITCO’S cost management practices
were derived through the use of
superior technology, better negotiation
and cost control. This was reflected in a
decline in operating expenditure as a
percentage of turnover (net) by 100
basis points to 84.59% in 2006-07.
Besides, the Company’s power and fuel
expenses (the second biggest cost
component) as a proportion of total
operating expenditure declined 256 bps
to 7.08% in 2006-07, largely attributed
to income accrued by way of sale of
wind power to the Maharashtra State
Electricity Board.
Can you go into all the initiativesthat helped the Companyenhance profitability? I would like to mention two specifically:
• We invested in state-of-the-art assets
with a clear objective: tighten
efficiencies, enhance volumes, reduce
costs and improve quality. Result: our
turnover (gross) to capital employed
ratio strengthened from Rs. 0.89 in
2005-06 to Rs. 1.08 in 2006-07.
• We focused on the manufacture of
premium innovative products with
another objective: maximising market
share. Result: the Company leads the
premium market segment.
The success of these initiatives was
reflected in the 128-bps growth in our
EBIDTA margin to 17.18% in 2006-07,
one of the highest EBIDTA margin
growth rates achieved in our industry in
a difficult industry environment.
In what way did the Company drive its
quality and innovation agenda?
We have over the years come to the
conclusion that when we lead in
design, we lead the market. Let me
explain. In a business where fuel costs
are not uniform for all players, many
opt for a cheaper fuel mix, achieve
lower production costs and use the
price arbitrage to capture market share
without a corresponding focus on
quality. At NITCO Tiles, we had
predicted that customers would soon
wake up to this. We responded with a
consistent approach that has now
become our brand: we focused on
offering a pipeline of attractive
innovative designs, which helped
service niche requirements, graduate to
a wider mix and emerge as a one-stop
shop. The result was that in 2006-07,
our offering comprised the rustic series,
wood strips, INVIZA, leather finish tiles,
Timberland, slate stone, the Spa
Collection, Pietre De Sol and African
slate, among others.
What is your outlook for 2007-08?The industry environment continues to
be optimistic. The volume growth for
tiles (ceramic and vitrified) in 2006-07
was the highest in the country’s
history, while prices turned modest on
account of increasing supply and
competition. NITCO responded to this
reality through value-addition, cost
management and a focus on
institutional customers. Going ahead,
we will focus on profitability growth
through enhanced ceramic tile and
marble processing capacities on the
one hand and growth of our real estate
business, translating into accelerated
profit and margins momentum over the
foreseeable future.
20 > NITCO Tiles Limited
“Our gross turnover surged53.55% to Rs. 470.43 cr in2006-07, while our post-taxprofit registered a sharpergrowth of 90% to Rs. 38.03 cr.”
10 minutes with the Managing Director
Mr. Vivek Talwar appraises the performance of the Company in 2006-07 and shares his optimism for the future
The volume growth for tiles (ceramic and vitrified) in 2006-07 wasthe highest in the country’s history, while prices turned modest
on account of increasing supply and competition.
Indian ceramic tiles industryOverviewIndia is the second largest producer of ceramic tiles in Asia
and the seventh largest in the world. Sustained economic
growth and attractive infrastructure investments are expected
to catapult the Indian tiles industry to among the top five in
the world by 2010. The Government of India revised its
investments in infrastructure during the Eleventh Plan period
(2008-12) from US$288 billion to upwards of US$470 billion,
making a 185% leap over the proposed investments in the
Tenth Plan (2003-07), indicating attractive prospects for
domestic tile manufacturers.
Classification The Indian tiles industry is generally classified into three broad
segments:
Wall tiles: This segment is growing at a relatively slow pace.
Floor tiles: This segment is growing at a relatively fast rate.
Vitrified and porcelain tiles: These segments have
accelerated market growth, weaning it gradually market from
the conventional ceramic segment (wall and floor) on
account of lower maintenance cost and attractive aesthetics.
The great Indian realty boom Economy: Surging at a staggering 9.4% (2006-07), India
retained its position as the second fastest growing economy.
Riding on an expanding services and industrial sectors, the
economy is projected to be a bigger growth driver than any
of the six largest European Union countries by 2035. From
being the fourth largest economy in terms of purchasing
power parity, India is expected to emerge as the third major
economic power - ahead of Japan - within the next decade.
This wil translate into attractive prospects across the housing,
hospitality and commercial real estate sectors.
Income: Salaries in India – one of the principal drivers for
residential realty – sustained their uptrend during the year
under review. A projected 14.5% annual increase by end-
2007 will enable the average Indian to record the highest
salary growth across the Asia Pacific (Hewitt Associates). The
number of households with earnings above Rs. 1 million a
year is expected to grow from 0.8 million in 2002 to 3.8
million in 2010. The Indian middle-class is expected to grow
from 57 million in 2001-02 to 92 million in 2005-06 to 153
million by 2009-10 and 583 million by 2025, positioning
India as the fifth largest consuming economy in the world
(source: McKinsey).
Housing: The potent combination of liquid cash and
increasing affordability has fuelled the demand for residential
realty in India. The average real household disposable income
will grow from Rs. 113,744 in 2005 to Rs. 318,896 by 2025,
a projected CAGR of 5.3% that is significantly more rapid
than the 3.6% annual growth reported in the past 20 years.
With the exception of China, this growth is quicker than the
income growth in major markets like the US (source:
McKinsey). In 2006 alone, the estimated shortfall of dwelling
23Annual Report 2006-07 >
Global ceramic tiles industryThe global ceramic tiles industry clocked a robust 6% growth per annum; ceramic tiles production was estimated at 6,400
million square metres in 2006, indicating an uptrend in production and consumption. Asia continued to be the most significant
geography in both. Asia enjoyed the lion’s share of 52% of global tile production, largely driven by low-cost manufacturing
destinations, comprising China, India and Vietnam, among others. Even in terms of consumption, Asia dominated the global
scenario with consumption matching production.
Asia represents nearly 52% and 53.5% of world production and consumption respectively.
22 > NITCO Tiles Limited
INDUSTRY REVIEW
America European continent Asia
The world tile production The world tile consumption
Tiles to go… • The global tiles industry registered a CAGR of 6% per annum over the last few years.
• China is the largest tiles producer with an aggregate output of 2,500 million square
metres per annum (nearly 36% of world production).
• Spain is the second largest producer of ceramic tiles with an output of 656 million
square metres per annum followed by Italy (production 570 million square metres).
• India ranks seventh in the world in terms of output with 4.3% of the global production.
India is the second largest producer of ceramic tiles in Asia andthe seventh largest in the world. Sustained economic growth andattractive infrastructure investments are expected to catapult theIndian tiles industry to among the top five in the world by 2010.
Vitrified tiles (60 million sq. mtrs)
Ceramic tiles (Upper-end market)(140 million sq. mtrs)
Ceramic tilesLower-end market)(138 million sq. mtrs)
driven by tax incentives for users and developers alike,
strengthening the market for flooring solutions.
OutlookThe following points summarise the potential for rapid
growth of India’s flooring solutions industry:
• The aggregate demand for office space between 2005 and
2008 is estimated to be above 85 million square feet,
recording an annual growth of 14.50%.
• US$11.5-billion earmarked by the Jawaharlal Nehru Urban
Renewal Mission Plan (JNURM) over the next five years for 60
cities.
• Around 20 million new dwelling units are expected to be
commissioned every year for the next five years.
• There is a projected increase in the built-up mall area from
32.60 million square feet in 2005 to 87.80 million square
feet in 2007; the number of malls is expected to increase
from 100 to 350.
• Over 50,000 hotel rooms are expected to be added across
five years.
• A per capita use of ceramic tiles at 0.15 square metres per
annum in India compares poorly with China’s 1.89 square
metres, an anomaly that is expected to correct.
25Annual Report 2006-07 >24 > NITCO Tiles Limited
In a nutshell • Industry size pegged at Rs. 7,400 cr in March 2007.
• Production estimated at 345 million square metres (as on March 2007).
• Industry growth rate estimated at 17% in March 2007.
• Rs. 2,000 cr investments made in the last five years.
• Organised sector contributes nearly Rs. 150 cr per year.
• Industry expected to grow at 16-18% over the medium term.
US$11.5-billion earmarked by the Jawaharlal NehruUrban Renewal Mission Plan (JNURM) over the next
five years for 60 cities.
India’s IT/BPO industry is expected to account for 60-70% of itscommercial real estate demand over the next 10 years. Currently,
about 130 million square feet are acquired by IT-ITeS companies andthe demand is expected to rise to 500 million square feet by 2010.
units was 22.50 million and Confederation of Real Estate
Developers’ Association of India (CREDAI) envisages the
creation of 100 million houses by 2020.
Hospitality: A rapidly growing economy and favourable
investment and trade opportunities have strengthened India’s
hospitality sector growth at around 15% per annum. A surge
in both the business and leisure travellers arriving flocking to
India, 2006-07 witnessed a record 4.5 million foreign visitors.
The sunshine sector
2006 2010 (estimated)
Domestic tourists 60 – 70 million 80 – 90 million
International tourists 4 – 5 million 10 – 13 million
Hotel rooms 109,000 275,000
The country’s hospitality sector has not been able to catch up
with the surging demand. The current gap between supply
(61,000 rooms) and demand (90,000 rooms) is expected to
widen further with the sustained economic growth. The
current aggregate of hotel rooms across the country in the
branded category stands at 110,000. The bulk of the new
rooms is likely to be added between 2007 and 2011 (see the
following table), triggering a fresh demand for flooring
solutions.
Estimated potential in hospitality sector
Year New rooms to be added
2007 (Estimated) 6,440
2008 (Estimated) 11,043
2009 (Estimated) 20,102
2010 (Estimated) 10,502
Source: HVS International
Retail: Retail is the right industry at the right time in today’s
India. The country is set to emerge among the five largest
retail markets across the coming decade. An increasing
demand for quality retail space is being influenced by a
growth in India’s organised retail, growing preference for
shopping in malls and increase in the number of players in
the organised retail sector. Ernst & Young (E&Y) indicates that
India is witnessing a shift towards value retailing;
hypermarkets requiring large space outlays are emerging as a
preferred format. However, there are less than 50
hypermarkets in India are operated by only four-five big
retailers; E&Y says the country’s 67 cities with populations of
half a million or more have the potential to absorb a
considerably higher number of hypermarkets over the next
few years. The domestic retail industry is expecting an
investment of over Rs. 100 billion up to 2009-10 from
existing and new players. Available mall space of about 30
million square feet in the country is expected to touch 100
million square feet by 2009-10.
Corporate: The increasing demand for commercial space in
India is being triggered by a widening geographic footprint
of companies, reflected in the commissioning of
regional/sales/branch offices. Besides, government and public
sector outfits are also going in for a makeover with plug-and-
play infrastructure. UBS indicates that the domestic office
market has doubled over three years to 100 million square
feet. Much of the optimism surrounding the commercial
space segment is based on the outlook of India’s IT and IT-
enabled sectors (ITeS). India’s IT/BPO industry is expected to
account for 60-70% of its commercial real estate demand
over the next 10 years. Currently, about 130 million square
feet are acquired by IT-ITeS companies and the demand is
expected to rise to 500 million square feet by 2010. Besides,
the growth of the special economic zones (SEZs) is being
27Annual Report 2006-07 >
Industry risk Risk explanation
The Indian real estate industry might witness a
deceleration, slowing the demand for tiles and other
flooring products.
Risk response
The demand for flooring solutions is expected to
attractively increase over the foreseeable future on
account of the following reasons:
• The Working Group on Housing of Planning
Commission estimated an urban housing shortage at
22.44 million units during the Tenth Plan period (2002-
07). India’s real estate industry is expected to grow from
US$12 billion to US$45-50 billion over the next five years,
making it one of the country’s fastest growing sectors.
• According to a RONCS report (Opportunities in Indian
Housing Sector 2006-07), demand for housing units will
swell to a massive 400 million units by 2010. In view of
this, analysts are projecting that the country’s housing
and real estate sector will grow at 14% annually over the
foreseeable future.
• The organised retail industry in India is expected to
grow 25-30% annually and treble from US$7.7 billion in
2004-05 to US$24 billion by 2010 (CRISIL Research and
Information Services).
• The Indian hospitality industry is growing at a rate of
15% annually. The current gap between supply (61,000
rooms) and demand (90,000 rooms) is expected to widen
further as the economy opens and grows (The Economic
Times, May 29, 2007).
Risk measurement
In line with industry trends and prospects, NITCO’s gross
sales expanded at a CAGR of 39.88% over the three years,
leading to 2006-07.
RISK IS AN EXPRESSION OF THE UNCERTAINTY ABOUT EVENTS AND THEIR POSSIBLE IMPACT ON THEPERFORMANCE AND PROSPECTS OF A COMPANY. AS A RISK-CONSCIOUS ORGANISATION, NITCO TILESIS COMMITTED TO PROACTIVE AWARENESS, APPRAISAL AND COUNTER-ACTION.
Risk management is a structured, consistent and continuous process, applied across the organisation for the
identification and assessment of risks, control assessment and exposure monitoring.
26 > NITCO Tiles Limited
MANAGING RISKSAT NITCO TILES
1
Vendor risk Risk explanation
The Company imports its entire requirement of vitrified
tiles from China. In the advent of attrition, it might yield
its industry presence.
Risk response
• The Company enjoys exclusive five-year purchasing
rights for vitrified tiles from its associate in China.
• The Company undertook a significant corporate
initiative through the addition of another associate in
China for the supply of vitrified tiles, de-risking the
Company from an overdependence on a single supplier
and enabling it to ramp its vitrified presence.
• The Company is also planning to set up a
manufacturing base for vitrified tiles in Gujarat under a
joint venture arrangement.
Risk measurement
Over the past three years, revenues from the vitrified tiles
business expanded 77.52% compared with the
Company’s turnover growth of 39.88%.
2
Brand riskRisk explanation
The flooring solutions industry is highly dependent on
recall; inefficient brand management could lead to a
decline in sales.
Risk response
• The Company routinely carries out surveys and meetings
with architects, masons, consumers, specifiers, etc. to
keep a tab on changing preferences.
• The Company appointed the vibrant Perizaad Zorabian
as its brand ambassador, enhancing visibility.
Risk measurement
The Company’s brand spends of Rs. 27.08 cr over the
three years leading to 2006-07 has been the highest
among competitors.
3
Power and fuel riskRisk explanation
Power and fuel costs comprise 5.16% of the Company’s
turnover. A sharp increase in input costs might impact
profitability.
Risk response
• The Company expects to reduce its excessive
dependence on LPG through a substitution with liquified
natural gas following the commissioning of the Dahej-
Uran gas pipeline.
• The choice of liquefied petroleum gas (LPG) as primary
fuel has translated into consistently superior quality.
• To compensate for high fuel costs, the Company
established wind farms in Dhule (Maharashtra), with
100% of the output sold to the MSEB. It earned revenues
of Rs. 4.42 cr through this venture in 2006-07. An
attractive power purchase agreement will generate
attractive revenues over the years.
• The Company expanded its presence in the premium
flooring solutions space, enabling it to effectively offset
any increase in the costs of power and fuel.
Risk measurement
The Company’s power and fuel expenses declined from
7.15% of turnover (gross) in 2005-06 to 5.16% in
2006-07.
4
In line with industry trends and prospects, NITCO’sgross sales expanded at a CAGR of 39.88% over the
three years, leading to 2006-07.
29Annual Report 2006-07 >28 > NITCO Tiles Limited
Competition riskRisk explanation
The Company might be compelled to undercut
competition to expand market share.
Risk response
The Company has uniquely positioned itself in the
premium flooring solutions space, divergent from a price-
driven volume approach. A small portion of the product
mix is price-sensitive, an adequate safeguard from the
prospect of a price slash. The Company plans to stay
ahead of competition through the following initiatives:
• Focus on brand-enhancing institutional clients: The
Company derives over 60% of its sales from institutional
clients, who provide an effective counterbalance against
an erosion of retail sales.
• Wide range of products: The Company provides a
basket of products comprising vitrified tiles, ceramic tiles,
mosaic and marble. These products are available at
various price points across the value-chain, which provide
the Company with adequate protection in the event of a
slowdown in any one product segment.
Risk measurement
The Company’s average realisation is 30% higher then
their Competitors.
5 Innovation riskRisk explanation
The Company is focused on the premium end of the
market, which requires to be fed with a constant and
wide variety of designs. An inability to do so might
impact profitability.
Risk response
• At NITCO, we sustained marketplace excitement
through an aggressive rollout of fresh and innovative
products, comprising the rustic series, wood strips, INVIZA
(dirt-free tile), leather finish tiles, timberland (wood finish
tiles), slate stone (beauty of natural slate stone), the Spa
Collection, Pietre De Sol, African slate, matrix and the
latest innova.
• The Company catered to institutional customers
through service and customisation.
Risk measurement
The Company derived an increasing proportion of its
income from products less than three years old.
8
Dealer attrition riskRisk explanation
Attrition among its dealers might impact the Company’s
sales and profitability.
Risk response
• The Company possesses a strong pan-India dealer
network, which was further strengthened during the year
under review.
• The Company has progressively spread this risk through
the rollout of a chain of exclusive display showrooms (Le
Studio), expected to touch 20 in 2007-08.
• The Company’s franchisee Le Express Outlets are
expected to increase to 100 by the end of 2007-08.
Risk measurement
Nearly 37% of the dealers have remained with the
Company over the last five years, endorsing strong
relationships with channel partners.
9
Debtors’ riskRisk explanation
An efficient recovery mechanism is essential to de-risk a
company from the possible impact of a delayed return on
its working cycle and profitability.
Risk response
• The popularity of the NITCO brand serves as an effective
insurance against defaults.
• The Company selects and appoints dealers based on
their integrity, credit history and brand equity.
• The Company imposes a specific rate of interest payable
on credit exceeding the stipulated tenure with a view to
prevent defaults.
Risk measurement
The Company’s receivables declined from 53 days of
turnover in 2004-05 to 31 days in 2006-07.
10
Customer attrition riskRisk explanation
The Company’s profitability might be impacted in the
event of customer attrition.
Risk response
• The Company enjoys strong relations with a number of
reputed institutional customers, comprising ICICI Bank,
HDFC Bank, Hiranandani Developers, Wipro, Reliance,
Tata, MSEB Holdings, BSNL, Shoppers’ Stop and Nokia,
among others.
• The Company evolved its product into a service through
a high degree of customisation, quality and just-in-time
delivery.
• The Company is the first in its industry to run a 24x7
helpline service to address customer queries and
grievances with speed and surety.
Risk measurement
The Company recorded an increase in sales from the
existing customers in 2006-07.
6
Interest rate riskRisk explanation
There was an upward trend in international and domestic
interest rates, leading to an increase in the average cost
of borrowing.
Risk response
• To counter this threat, the Company is effectively
investing in enhancing capacities which will enable it to
spread fixed costs across a larger production volume.
• As a prudent corporate initiative, a large proportion of
the Company’s borrowings are in foreign currency. This
strategy was vindicated when it reported a net gain of
Rs. 2.80 cr in 2006-07 on account of the strengthening
rupee vis-à-vis the US dollar and other currencies.
Risk measurement
Gross interest charges as a proportion of turnover has
declined from 4.32% in 2005-06 to 1.72% in 2006-07.
7
The Company’s receivables declined from 53 days ofturnover in 2004-05 to 31 days in 2006-07.
II. Raw material overview Ceramic tiles
(i) The principal raw materials used in
the manufacture of ceramic tiles
comprise clay, silica and feldspar
(body raw material). The principal
component of the cost of body raw
material is transportation. The
overall cost of body material
increased by 20% on account of
increase in freight rates and also
increased consumption due to
change in product mix.
(ii) Glazed material: Glazes or surface
finish materials provided colour and
design to the tiles. These were
partly imported from Italy and
Spain. The cost of glaze per MT
increased 6.29% from Rs. 27617
per ton to Rs. 29349 per ton.
III. FuelThe manufacture of ceramic tiles is
power and fuel intensive. The Company
uses LPG for running its kiln, a mixture
of furnace oil and C9 for running the
spray dryer and electrical energy for
operating other equipment and lighting
installations. During the year under
review, there was increase in fuel
prices. The average cost of LPG
increased 2.23% from Rs. 30.34 per kg
to Rs. 31.02 per kg; the average cost of
C9 increased 6.44% from Rs. 23.65 per
kg to Rs. 25.17 per kg while the
average cost of furnace oil increased
34.72% from Rs. 14.10 per kg to Rs.
19.00 per kg. Due to All-round
increase in fuel cost, overall power and
fuel charges for the ceramic tiles unit
increased by 30.96% from Rs. 21.94 cr
to Rs. 28.73 cr (including electricity
amounting to Rs. 4.42 cr generated
through wind mills).
IV. Vitrified tilesThe entire requirement of vitrified tiles
was outsourced from two reputed
manufacturers in China with whom
Company enjoys exclusive
arrangements. The average cost of
vitrified tiles reduced from Rs. 311 per
sq. mtrs to Rs. 293 per sq. mtrs due to
reduction in sea freight and
product mix.
V. PersonnelThe Company’s personnel cost increased
24% to Rs. 18.29 cr from Rs. 14.70 cr
due to annual increments and the
recruitment of additional man power to
sustain a substantial increase in business
volumes.
VI. Selling and distributionexpenses Selling and distribution expenses
increased by 59.53% from Rs. 57.90 cr
to Rs. 92.37 cr on account of an
increase in sales tax (due to higher
volumes), increase in freight forwarding
expenses and higher spends on
advertisement and sales promotion.
VII. InterestDuring 2006-07, interest and other
financial charges decreased from
Rs. 13.25 cr to Rs. 8.05 cr on account of
foreign exchange gain of Rs. 2.80 cr in
2006-07 as compared to foreign
exchange loss of Rs. 0.41 cr in 2005-06.
VIII. DepreciationThe Company follows the straight-line
method in the computation of
depreciation at rates provided under
Schedule XIV of The Companies Act,
1956.
IX. MarginsEBITDA for 2006-07 was Rs. 70.90 cr
as against Rs. 43.01 cr, an increase of
65%. EBITDA margins improved from
15.90% in 2005-06 to 17.18% in
2006-07, an increase of 128 basis
points on account of an increased sale
of vitrified tiles.
X. TaxDue to depreciation benefits available on
windmills, the Company was required to
pay only minimum alternate tax.
XI. Earnings per shareAs a result of higher profits, Earnings
Per Share increased from Rs. 15.59 per
share in 2005-06 to Rs. 16.39 per
share in 2006-07.
31Annual Report 2006-07 >
a) The Company’s ceramic tiles division
reported sales of Rs. 117.17 cr
corresponding to a sale of 0.40 cr
sq. mtrs. in 2006-07 compared with
Rs. 93.72 cr in 2005-06
corresponding to sales of 0.32 cr sq.
mtrs. The sales increased by 25%
during 2006-07 due to increase in
capacity during F.Y. 2006-07. As
capacity addition happened during
the year, increased capacity could be
utilised for part of the year. Full
effect of increased capacity would
be reflected in the performance of
2007-08 onwards.
b) Vitrified tiles: Vitrified Tiles
maintained its share of around 54%
of revenue.
The sales of vitrified tiles jumped
50% from Rs. 168.83 cr in 2005-06
to Rs. 252.88 cr in 2006-07.
Average realizations were slightly
slipped from Rs. 513 per sq. mtr. to
Rs. 487 per sq. mtr. due to product
mix. Due to substantial increase in
sales over a higher base, the
Company had to cover products at
all price points.
c) Marble: Revenues derived from the
sale of marble was increased by
135% to Rs. 76.31 cr in 2006-07
from Rs. 32.50 cr in 2005-06. Sales
of marble increased mainly due to
availability of higher license of
12816 tons as compared to 2392
tons in the previous year. Average
realizations increased from Rs. 228
per sq. ft. to Rs. 229 per sq. ft. on
account of a change in the
product mix. Being a natural
product, prices varied based on
material, colour, appearance
and other features.
d) Mosaic tiles: Following a decline in
the offtake of traditional mosaic
tiles, the Company focused on the
manufacture of cement-based paver
tiles used in roads and walkways.
This switch resulted in a 43%
increase in turnover from Rs. 11.31
cr in 2005-06 to Rs. 16.22 cr in
2006-07. Average realization
increased from Rs. 24 per sq. ft. to
Rs. 32 per sq. ft.
30 > NITCO Tiles Limited
MANAGEMENT DISCUSSIONAND ANALYSIS
Profit & Loss Account
I. RevenuesNITCO capitalised on the favourable industry upturn in a significant way: gross revenues increased 54% from Rs.306.36 cr in
2005-06 to Rs. 470.43 cr in 2006-07 (break-up given below):
Product 2006-07 2005-06
(Rs. cr) (Rs. cr)
Ceramic tiles 117.17 93.72
Vitrified tiles 252.88 168.83
Marble 76.31 32.50
Mosaic tiles 16.22 11.31
Others 7.85 -
Total 470.43 306.36
NITCO capitalised on the favourable industry upturn in asignificant way: gross revenues increased 54% from Rs.3063.62
million in 2005-06 to Rs. 4704.33 million in 2006-07.
33Annual Report 2006-07 >32 > NITCO Tiles Limited
Balance Sheet
I. Reserves & surplusThe reserves of the Company increased
from Rs. 235.63 cr on March 31, 2006
to Rs. 268.69 cr on March 31, 2007.
II. LoansOverall loans on the balance sheet
increased by Rs. 44.85 cr during the
year under review due to increased
working capital requirement.
III. Gross blockThe Company’s gross block (including
capital work-in-process) increased from
Rs. 212.41 cr in 2005-06 to Rs. 257.86
cr in 2006-07 on account of an
infrastructure upgradation at Alibaug
and ceramic floor tile capacity
expansion. The results from this
investment has started reflecting in the
Company’s performance.
IV. InventoriesTiles must be made and presented in
various colours, designs and sizes,
requiring large inventory carrying.
Besides, the imported vitrified tiles must
also be adequately stocked to ensure
an anytime availability, especially prior
to the customary annual shut down in
China during January and February. As
an added service, the Company holds
inventories at its end rather than force
it upon dealers with a view to shorten
receivables, resulting in a relatively
higher stock level. The average
inventory holding increased from 128
days to 140 days.
V. DebtorsEven as the Company’s sales increased
54%, debtors increased by 48%
indicative of the Company’s brand
strength as well as a tighter receivables
management. Debtors’ increased from
Rs. 32.13 cr as on March 31, 2006 to
Rs. 47.83 cr, declined from 38 days of
turnover to 31 days.
XII. Cash & bank balancesCash and bank balances comprised
fixed deposits placed with the bank by
way of margin money etc.
XIII. Sundry CreditorsSundry creditors increased from
Rs. 64.01 cr to Rs. 99.29 cr mainly on
account of an increased import of
vitrified tiles.
5-YEAR FINANCIAL SUMMARY
Balance sheet as at March 2007 March 2006 March 2005 March 2004 March 2003
Sources of funds
Equity share capital and share 25.97 22.27 12.27 12.27 12.27
capital suspence
Reserves & surplus 268.73 235.63 72.51 54.22 48.76
Net worth 294.70 257.90 84.78 66.49 61.03
Minority Interest 0.15
Deferred tax liability 12.46 4.06 3.35 12.63 9.58
Secured loans 81.07 58.09 104.52 72.75 73.43
Unsecured loans 47.16 24.77 15.43 20.18 16.03
Total loans 128.23 82.86 119.95 92.93 89.46
Total liabilities 435.54 344.82 208.08 172.05 169.72
Application of funds
Net fixed assets 211.14 170.99 109.84 100.82 97.00
Investments 37.39 74.83 0.00 0.00 0.00
Current assets 327.33 181.56 138.92 92.74 93.61
Current liabilities 140.32 82.56 40.68 21.51 20.89
Net current assets 187.01 99.00 98.24 71.23 72.72
Total assets 435.54 344.82 208.08 172.05 169.72
Profit & loss account as on March 2007 March 2006 March 2005 March 2004 March 2003
Gross sales 470.43 306.36 208.81 172.38 151.10
Less: Excise 11.06 7.97 6.46 7.75 10.56
Less: Sales tax 46.26 27.91 14.70 12.56 6.63
Net sales 413.11 270.48 187.65 152.07 133.91
Other income 1.26 0.02 0.01 0.01 0.01
Total income 414.37 270.50 187.66 152.08 133.92
EBDITA 70.97 43.00 24.02 22.13 22.90
Interest 8.11 13.25 8.56 7.62 9.79
PBDT 62.86 29.75 15.46 14.51 13.11
Depreciation 10.04 6.46 5.64 5.25 4.89
PBT 52.82 23.29 9.82 9.26 8.22
Tax 14.79 3.28 2.28 3.75 2.22
PAT 38.03 20.01 7.54 5.51 6.00
(Rs. in crores)
35Annual Report 2006-07 >34 > NITCO Tiles Limited
RATIOS
Financial performance ratios
Year ended on 31 March 2007 2006 2005 2004 2003
Domestic turnover /total sales (%) 98.22 99.76 98.39 96.15 91.22
Export turnover/total sales (%) 1.78 0.24 1.61 3.85 8.78
Other Income/total income (%) 0.30 0.01 0.01 0.01 0.01
Raw material cost/gross sales (%) 49.20 47.14 43.15 37.82 38.45
Manpower costs/total income (%) 4.42 5.43 6.19 7.11 6.71
Excise/gross sales (%) 2.35 2.60 3.09 4.50 6.99
Interest/total income (%) 1.96 4.90 4.56 5.01 7.31
Depreciation/ total income (%) 2.42 2.39 3.01 3.45 3.65
Tax/PBT (%) 28.00 14.08 23.22 40.50 27.01
Cash profit/ total income (%) 11.60 9.79 7.02 7.08 8.13
RONW (PAT/average net worth) 13.76 11.68 9.97 8.64 9.70
ROCE (PBIT/average capital employed) 15.62 13.22 9.67 9.88 10.90
Capital output ratio (total income/ avg. capital employed) 1.06 0.98 0.99 0.89 0.81
PBDIT/interest 8.75 3.25 2.81 2.90 2.34
Raw material cost/total cost (%) 67.40 63.49 55.07 50.17 52.33
Manpower cost/total cost (%) 5.34 6.46 7.10 8.33 8.09
Power cost/total cost (%) 7.08 9.64 13.19 17.02 14.90
Other costs/total cost (%) 20.19 20.41 24.64 24.48 24.68
Balance sheet ratios
(As at 31 March) 2007 2006 2005 2004 2003
Debt-equity ratio (secured loans+Unsecured loans/
net worth + deferred tax liability) 0.42 0.32 1.36 1.17 1.11
Debtors’ turnover (days) 31 38 53 70 87
Inventory turnover (days) 157 128 120 90 85
Current ratio (current assets/current liabilities + cash credit) 1.94 2.01 1.79 1.80 1.68
Quick ratio 0.66 0.95 0.80 1.02 1.14
Cash equivalents/total assets 0.04 0.05 0.02 0.02 0.01
Depreciation/gross block 0.04 0.03 0.04 0.04 0.04
Asset turnover (net sales/average total assets) 1.06 0.98 0.99 0.89 0.81
Growth ratio
Particulars 2007 2006 2005 2004 2003
Growth in total income (%) 53.19 44.14 23.40 13.56 3.79
Growth in PBDIT (%) 65.03 79.04 8.54 -3.36 -11.24
Growth in PAT (%) 90.01 165.45 36.84 -8.17 -18.26
Growth in cash profit (%) 81.57 100.87 22.49 -1.19 -9.93
Growth in gross block (%) 15.21 46.25 10.42 7.19 2.78
Per share data ratio
Particulars 2007 2006 2005 2004 2003
Earnings (Rs) 16.39 15.59 6.15 4.49 4.89
Cash earnings (Rs) 18.51 11.89 10.74 8.77 8.88
Book value (Rs) 132.33 115.81 69.10 54.19 49.74
Net indebtedness (Rs) 49.38 37.21 97.76 75.74 72.91
EPS growth (%) 5.13 153.70 36.84 -8.17 -18.26
Margins
Particulars 2007 2006 2005 2004 2003
PBDIT (%) 17.18 15.90 12.80 14.55 17.10
PBDT (%) 15.22 11.00 8.24 9.54 9.79
PAT/total income (%) 9.18 7.40 4.02 3.62 4.48
Company commissioned an increase in
its ceramic floor tile capacity. This
resulted in sales of Ceramic Tiles
increasing from Rs. 93.72 crore in
2005-06 to Rs. 117.17 crore in
2006-07.
• Higher allotment of marble import
license of 12,816 tons.
• Several innovative products such as
Timberland, Metallica, Matrix, Dholpur
Series, Slate Stone Series, Estonia, Pietre
Del Sol, Art Stone, Innova, African Slate
etc were successfully introduced during
the year.
• Consolidation of Real Estate activities
through Nitco Realties Pvt. Ltd., a
100% subsidiary.
• The Company has successfully
implemented one of the Best ERP
package SAP. Nitco Tiles was awarded
SAP ACE 2007 Award for Best SAP
Implementation Project – Consumer
Products Sector Midsize Enterprises.
ExportsThe Company's exports during the year
ended March 31, 2007 were Rs. 8.37
crore as compared to Rs. 0.72 crore in
the previous year.
DividendIn view of the Company's satisfactory
performance during the financial year
under consideration, your Board has
recommended a dividend of Rs. 2 per
share on the entire enhanced equity
shares (previous year Rs. 1 per share)
and seeks approval for the same. If
approved, the total outgo on account
of the dividend will be Rs. 6.08 cr.
(inclusive of corporate tax on dividend).
In addition, the Company has also
made a provision for dividend of
Rs. 2.11 crores (including Dividend Tax)
being dividend payable on the new
shares that may be allotted under
Qualified Institutional Placement (QIP).
Share capital The Board of Directors and
shareholders of the Company had
approved a composite scheme of
arrangement between Nitco Tiles
Limited (NTL), Nitco Realties Private
Limited (NRPL), Shark Properties Private
Limited (SPPL) and Motivation
Properties Private Limited (MPPL) and
their respective shareholders and
creditors pursuant to the provisions of
Sections 391 to 394 and other relevant
provisions of the Companies Act, 1956.
The said composite scheme was
approved by the Hon’ble High Court,
Bombay vide its order dated September
7, 2007. Pursuant to scheme of
arrangement, 37,03,703 equity shares
of Rs. 10 each of the Company were
allotted to shareholders of Shark
Properties Private Limited on October
24, 2007. Pending allotment as on
March 31, 2007, 37,03,703 equity
shares have been shown as Share
Capital Suspense.
Utilization of funds of IPOproceedsThe details of the amount spent out of
the proceeds of the public issue in
comparison with the amount as
projected in the prospectus is given
below:
37Annual Report 2006-07 >
Review of operationsDuring the year under review, the
Company registered a robust growth in
sales and profits driven by an increased
demand, thanks to the country's
booming infrastructure and realty
sectors.
Sales increased 54% from Rs. 306.36
crore to Rs. 470.43 crore. EBIDTA
increased 65% from Rs. 43.01 crore to
Rs. 70.90 crore while EBIDTA margin
strengthened from 15.90% to 17.16%.
Profit after tax increased 90% from
Rs. 20.02 crore to Rs. 38.02 crore.
Highlights 2006-07• The Company substantially scaled up
its vitrified business from Rs. 168.83
crore in 2005-06 to Rs. 252.88 crore in
2006-07, entirely outsourced from
manufacturers in China with whom the
Company entered into exclusive long-
term arrangement in return for price,
process, quality and supply stability.
• In first quarter of FY 2006-07, the
36 > NITCO Tiles Limited
DIRECTORS' REPORT
Rs. in crore
Particulars Projected utilisation as per prospectus Actuals as at 31.03.2007
Expansion of ceramic capacity 20.91 21.41
Installation of wind mills 37.86 38.08
Setting up of wall tile unit 36.91 0.08
Public issue expenses 11.74 12.37
General corporate purposes 60.58 60.58
Total 168.00 132.52
Your Directors take pleasure in presenting the Annual Report with the audited statement of accounts of the Company for the
year ended March 31, 2007.
Financial resultsThe highlights of the financial results for the year ended March 31, 2007 are as follows:
Rs. in crores
For the year ended March 31, 2007 2006
Gross sales 470.43 306.36
Profit before interest depreciation and tax 70.90 43.01
Interest 8.05 13.25
Depreciation 10.04 6.46
Profit before tax 52.81 23.30
Provision for tax (including fringe benefit tax) 14.79 3.28
Profit after tax 38.02 20.02
Balance brought forward from the previous year 51.47 38.99
Profit available for appropriation 89.49 59.01
Proposed dividend 5.20 2.23
Dividend tax on proposed dividend 0.88 0.31
Provision for dividend payable on new shares to be allotted under
Qualified Institutional Placement(QIP) including dividend tax 2.11 –
Transferred to General Reserve 5.00 5.00
Balance carried forward 76.30 51.47
Consolidated financialstatementsAs required by the Listing Agreement
with the Stock Exchanges and in
accordance with the Accounting
Standards AS-21 on consolidated
financial statements, your Directors
provide the audited annual
consolidated financial statements in
this Annual Report.
DirectorsMr. Pran Nath Talwar, Director and
Chairman of the Company is due for
retirement by rotation and is eligible for
re-appointment. Required details are
given in the report on Corporate
Governance and Notice.
The tenure of Ms. Poonam Talwar,
Whole time Director, expired on March
31, 2007 and the Board of Directors
has re-appointed her as the Whole time
Director, subject to members’ approval
at the Annual General Meeting. She
will have a five-year tenure starting
April 1, 2007. Required details are
given in the report on Corporate
Governance and Notice.
Mr. Gaurav Burman was appointed as
an Additional Director at the meeting
of the Board of Directors held on
October 24, 2007 and will hold office
until the conclusion of the next Annual
General Meeting. Notices have been
received from members of the
Company for reappointing Mr. Gaurav
Burman at the ensuing Annual General
Meeting.
Employees stock optionschemeGrant of stock option to employees is a
time tested and well established
mechanism to align the interest of the
employees with those of the Company.
Towards achieving this goal, the
approval of members is being sought
at the ensuing Annual General Meeting
to grant stock options to the
employees not exceeding 5,00,000
option. The Employee Stock
Compensation Committee, constituted
in accordance with SEBI guidelines will
administer and monitor the scheme.
Directors' responsibilitystatementPursuant to Section 217 (2AA) of the
Companies Act, 1956, as amended by
the Companies (Amendment) Act,
2000, the Directors confirm that:
a) in preparation of the annual
accounts, applicable accounting
standards have been followed along
with proper explanations relating to
material departures;
b) appropriate accounting policies have
been selected and applied consistently
and have 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 as on March 31, 2007 and of
the profit of the Company for the year
ended March 31, 2007.
c) proper and sufficient care has been
taken for 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;
and
d) the annual accounts have been
prepared on a going concern basis.
Corporate GovernancePursuant to Clause 49 of the Listing
Agreement with the Stock Exchanges, a
detailed report on Corporate
Governance forms a part of this Annual
Report. A certificate from the auditors
of the Company confirming compliance
with the conditions of Corporate
Governance as stipulated under Clause
49 of the Listing Agreement is attached
to this Report.
Management Discussionand AnalysisManagement Discussion and Analysis
on matters related to business
performance, as stipulated in Clause 49
of the Listing Agreement with the Stock
Exchanges, is given in a separate
statement which form part of the
Annual Report.
PersonnelRelationships with employees continued
to be cordial. The HR policies of our
Company were focused on the
development potential of each
employee. With this premise, a
comprehensive set of HR policies were
laid down, aimed at attracting,
39Annual Report 2006-07 >
Pending utilization of funds for the
projects as envisaged in the prospectus,
the balance amount has been invested
in term/fixed deposits with banks.
Current year's outlookThe tile industry caters primarily to
housing, infrastructure and real estate
sectors which are experiencing an
unprecedented boom. All real estate
and infrastructure-related companies
have embarked on ambitious plans,
raised funds from the capital market
and begun fresh construction. The
Company, by virtue of being one of the
leading players in India's tile industry,
expects to benefit from this boom: the
Company has outlined a number of
initiatives that will translate into
enhanced turnover and profits during
the current year.
Expansion plansThe Company has planned following
expansion programmes during the
financial year 2007-08:-
1. The Company had originally planned
to set up a Wall Tile unit with the
capacity of 5000 sq. mtrs per day at
our existing location at Alibaug. The
Company has now upgraded the scope
of the project to manufacture high end
ceramic tiles with capacity of 10,000
sq. mtrs per day. The plant will be
capable of producing high end tiles
which will have application both on
wall and floor. The Company has
already placed orders on machinery
suppliers and production is expected to
commence by April 2008.
2. The Company has planned to set up
state of art processing facilities for
marble at Silvassa. The production is
expected to commence by second
quarter of the financial year 2008-09.
3. The Company is also in discussion
for a joint venture for manufacturing of
Vitrified Tiles at Gujarat.
Company’s initiative in thereal estate business During the year, the Company took
steps to consolidate all its real estate
initiatives through its wholly-owned
subsidiary, Nitco Realties Pvt. Ltd. The
Company appointed an eminent valuer,
Knight Frank, to carry out the valuation
for some of the properties owned by
Nitco Tiles/Nitco Realties or its SPVs. For
these initial set of properties, Knight
Frank has put the net present value of
Nitco’s land bank at Rs. 406 crore.
These projects are expected to be
completed over a period of next three
years.
Nitco is vigorously pursuing its
objectives of creating value in the real
estate sector. The Company is in talks
to undertake many more projects.
As and when these projects bear fruit,
this would add significant value to
the Company.
Subsidiary companiesDuring the year, Nitco Realties Private
Limited became the wholly-owned
subsidiary of the Company to carry out
real estate activities.
Glamorous Properties Private Ltd. is a
wholly owned subsidiary of Nitco
Realties Pvt. Ltd. By virtue of the
composite scheme of arrangement,
Nitco Realties Private Limited merged
with Motivation Properties Private
Limited and Motivation Properties
Private Limited was renamed as Nitco
Realties Pvt. Ltd. The merger was
effective January 1, 2007. By virtue of
the scheme, Particle Board India Ltd.
and Opera Properties Private Ltd. which
were subsidiaries of Motivation
Properties Private Limited became
subsidiaries of the Nitco Realties Private
Limited.
The Central Government in exercise of
the power conferred by Section 212 (8)
of the Companies Act, 1956, has
accorded its approval for exemption
from attaching the account of
subsidiaries to the balance sheet of the
Company. The Company shall provide a
copy of the Annual Report of its
subsidiary companies as required under
Section 212 of the Act to members on
their request, free of cost. These
documents will also be available for
inspection by any shareholder at the
registered office of the Company on
any working day during business
hours. A statement pursuant to
section 212 of the Companies Act
1956 containing details of subsidiaries
of the Company, forms part of the
Annual Report.
38 > NITCO Tiles Limited
Particulars as per the Companies
(Disclosure of particulars in the report
of the Board of Directors) Rules, 1988.
A. Conservation of energy:Your Company continues to be
committed to energy conservation in its
manufacturing operations. The
following are energy conservation
measures taken during the year under
review.
1. Specific consumption of LPG reduced
from 67.1 kg per MT of tile during
2005-06 to 65.7 kg per MT of tile
during 2006-07.
2. Average electrical energy
consumption reduced from 3.64 kwh
per sq. mtr during the year 2005-06 to
3.42 Kwh per sq. mtrs during 2006-07.
3. Power factor continued to be 0.999
during the entire year of operations;
the Company received a power factor
rebate of Rs. 0.25 cr during
2006-07, against a rebate of Rs. 0.16
cr during the year 2005-06
4. As a part of cost reduction, the
Company has installed two numbers of
hot air generators using coal as fuel in
the second quarter of FY 2007-08, the
benefits of which will accrue in the
subsequent years.
B. Technology absorptionThe single firing fuel efficient
technology for manufacture of ceramic
floor tiles imported from SACMI Italy
has been fully absorbed.
The Company has a full-fledged
Research and Development
department, which is constantly
engaged in product innovation,
productivity improvement, quality
improvement and cost reduction. The
production capacity of tiles of higher
sizes, namely 450x450 mm and
600x300 mm, were increased.
During the year, several innovative
products such as Timberland, Metallica,
Matrix, Dholpur Series, Slate Stone
Series, Estonia, Pietre Del Sol, Art
Stone, Innova, African Slate etc were
successfully introduced. As a part of
technology upgradation roto colour
printing machines were installed in
three numbers of glaze lines and all the
new designs were being developed
using Roto Colour. Due to several
initiatives taken by the department, the
Company successfully launched new
products which will help it to stay
ahead of competition.
C. Foreign exchangeearnings and outgoThe information on foreign exchange
earnings and outgo is furnished in the
Notes to the Accounts.
41Annual Report 2006-07 >
For and on behalf of the Board
Vivek Talwar Poonam Talwar
Managing Director Whole Time Director
Dated: October 24, 2007, Mumbai
For and on behalf of the Board
Vivek Talwar Poonam Talwar
Managing Director Whole Time Director
Dated: October 24, 2007, Mumbai
retaining and motivating employees at
all levels. Information required under
Section 217(2A) of the Companies Act,
1956, read with Companies (Particulars
of Employees) Rules, 1975, is provided
in the Annexure forming part of this
Report. In terms of section 219(1)(b)(iv)
of the Act, the Report and Accounts
are being sent to the shareholders
excluding the aforesaid Annexure. Any
shareholder interested in obtaining
copy of the same may write to the
Company Secretary at the Registered
Office.
Conservation of energy,technology absorption andforeign exchangeearnings/outgoThe information 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, with
respect to conservation of energy,
technology absorption and foreign
exchange earnings/outgo is given in
Annexure A which forms part of this
Report.
Auditors’ ReportThe Board has duly examined the
statutory auditor’s report to accounts
and clarifications, wherever necessary,
have been included in the Notes to
Accounts section of the Annual Report.
AuditorsThe present auditors of the Company,
M/s. A. Husein Noumanali & Co.,
Chartered Accountants, retire at the
conclusion of the Annual General
Meeting and being eligible, offer
themselves for re-appointment. Your
Directors recommend their
appointment.
AppreciationYour Directors wish to place on record
their sincere thanks to the following
stakeholders:
• Customers, who continue to be
delighted in the Company's range of
products and their quality, and who
therefore continue to patronise the
Company's products in spite of
competition
• Banks and financial institutions for
their continued support
• Employees for their sincere effort
without which the Company could not
have reported phenomenal growth
during the year under review.
40 > NITCO Tiles Limited
TO DIRECTORS' REPORTANNEXURE A
present, she is Director of Nitco Paints
Pvt. Ltd., Nitco Tiles and Marble Ind.
(Andhra) Pvt. Ltd., Nitco Construction
Material Pvt. Ltd. and Nitco Terrazzo
Tiles Pvt. Ltd.
Mr. Dinesh H. Kanabar, aged 48 years,
is an Independent Director of the
Company. He is an eminent chartered
accountant and is an Executive Director
(Tax & Regulatory Services) at
PricewaterhouseCoopers Pvt. Ltd. After
qualifying as a chartered accountant,
Mr. Kanabar specialised in tax and
business advisory services and
international taxation. Mr. Kanabar is
an advisor to several global
organizations for providing expert
counsel on cross-border tax issues
encompassing transfer pricing
regulations applicable to multinational
corporations and the taxation of
e-commerce.
Mr. S.K. Bhardwaj, aged 62 years, is
an Independent Director of the
Company. He is a postgraduate from
Punjab University. He has held various
senior positions with the Government
of India such as Chief Commissioner
Customs – Mumbai, Chief
Commissioner - Central Excise and
Service Tax, Mumbai, Commissioner-
Customs and Central Excise, Baroda,
Commissioner of Customs, Mumbai
and Joint Secretary, Ministry of
Defence, Government of India. He has
vast experience of nearly 37 years in the
field of indirect taxation, public
administration, etc. He has dealt with
issues relating to the fiscal policy and
VAT at Harvard University, Boston, USA.
He retired as a member of the Central
Board of Excise and Customs, Ministry
of Finance, Government of India. He is
currently engaged in providing
consultancy services in the field of
Indirect Taxes to several Corporates.
Mr. Atul Sud, aged 50 years, is an
Independent Director of the Company.
Mr. Sud has completed a postgraduate
diploma in business management from
IIM Ahmedabad, and holds a master
degree in economics from the Delhi
School of Economics. After over a
decade of service in a senior position at
American Express Bank as India head
for commercial banking, treasury and
investment banking, he founded the
Strategic Group.
Mr. Gaurav Burman, aged 35 year, has
been appointed as an additional
director of the Company in the Board
meeting held on October 24, 2007.
Mr. Burman is BA with a dual degree in
Economics and history from Tufts
University, USA. He has over 10 years
experience in private equity which has
seen him invest in Europe, Asia, and
America. Mr. Burman has been a
partner at Promethean a UK listed
private equity fund, since its inception.
He participated in all of the investment
decisions of Promethean. Mr. Burman
was instrumental in the structuring and
marketing of Promethean and is
responsible for a number of investor
relationship Promethean enjoys. He
holds a Board seat for Intermediactive
Group Limited.
Mr. Burman holds 45,000 equity shares
in the Company.
2. Board procedure
To follow transparency, the Board
follows the procedure of advance
planning in matters requiring
discussion/decisions by the Board. The
Board is given presentations on finance,
sales, marketing, major business
segments and operations of the
Company and other matters as
members want. The Chairman of the
Board finalises the agenda papers for
the Board meeting in consultation with
other persons concerned. The minutes
of the proceeding of each Board
meeting are maintained in terms of
statutory provisions. Meetings of
various committee meetings are held
properly. The minutes of committee
and Board meetings of subsidiary
companies are placed regularly before
the Board for its review.
3. The names and categories of the
Directors on the Board, their
attendance at Board meetings held
during the year and the number of
directorships and committee
chairmanships/memberships held by
them in other public companies is
given below. Other directorships do not
include alternate directorships,
directorships of private limited
companies and of companies
incorporated outside India.
Chairmanship/Membership of Board
Committees include only Audit and
Shareholders’/Investors’ Grievance
Committees.
43Annual Report 2006-07 >
Corporate Governance pertains to the
system by which companies are
directed and controlled, keeping in
mind the long-term interests of
stakeholders. It refers to the blend of
law, regulations and voluntary
practices, which enable the Company
to attract financial and human capital,
perform efficiently and thereby
perpetually generate long-term
economic value for its shareholders,
while respecting and balancing the
interests of other stakeholders and the
society as a whole.
It aims to align the interest of the
Company with that of its shareholders
and other key stakeholders. The
incentive for companies and for those
who own and manage them to adopt
global governance standards is that
these standards will help them achieve
a long-term partnership with their
stakeholders and achieve their
corporate objectives efficiently. The
principal characteristics of Corporate
Governance are transparency,
independence, accountability,
responsibility, fairness, and social
responsibility.
In sum, Corporate Governance focuses
on treatment of all shareholders and
reinforces the belief among the
shareholders that it is "Your Company"
as it belongs to them. The Chairman
and Board of Directors are the
shareholders’ fiduciaries and trustees
pushing the business forward and
maximizing long-term value for them.
A good governance process provides
transparency of corporate policies,
strategies and the decision-making
process and also strengthens internal
control systems and helps in building
relationship with all stakeholders. We
at NITCO believe in being transparent
and we commit ourselves to adherence
to good corporate governance practices
at all times as we believe that good
governance generates goodwill among
business partners, customers and
investors and helps the Company grow.
A. Board of Directors 1. Composition of the Board and a
brief profile of Directors
During the financial year 2006-07, the
Board of Nitco consisted of three
Independent Directors, who together
constituted for 50% of the Board. The
day-to-day management of the
Company is conducted by the
Managing Director who is ably assisted
by the Whole time Director.
Mr. Pran Nath Talwar, aged 80 years,
is the Chairman of our Company. He
started his industrial venture in 1956 by
setting up a partnership firm Northern
India Tiles Corporation (Delhi) for
manufacturing mosaic tiles. He is the
founder of Nitco Group and our
Company. He has more than 50 years
of experience in the tile industry. He
has been instrumental in the growth of
the Nitco Group. In recognition of his
contribution to the industry, he
received an award from the Institute of
Trade and Industrial Development in
1999 and 2000 for excellence in
industrial performance. Mr. Talwar
holds 3,17,952 equity shares in the
Company. He retires by rotation and is
eligible for re-appointment at this
Annual General Meeting. He is Director
of Nitco Paints Pvt. Ltd., Nitco Tiles &
Marble Ind. (Andhra) Pvt. Ltd., Nitco
Construction Material Pvt. Ltd., and
Nitco Terrazzo Tiles Pvt. Ltd.
Mr. Vivek Talwar, son of Mr. Pran
Nath Talwar and aged 50 years, is the
Managing Director of our Company. He
has over 26 years of experience in the
tile industry. He joined the Company as
a Director in 1980. The operational
responsibility and day-to-day
functioning of our Company were
gradually handed over to him. He was
instrumental in setting up a plant at
Alibaug to manufacture ceramic floor
tiles and also in diversifying the business
of the Company by entering into new
activities such as marketing of imported
marble and vitrified tiles in India.
Ms. Poonam Talwar, aged 42 years,
daughter of Mr. Pran Nath Talwar
holds a bachelor’s degree in commerce
and law and is the Whole time Director
of the Company. She joined the
Company as a Director in 2002. She is
in charge of the mosaic tile unit of our
Company. Under her leadership, the
mosaic tile division has witnessed
growth. The Board of Directors has re-
appointed Ms. Poonam Talwar as
Whole time Director for five years with
effect from April 1, 2007 subject to
approval of members in the Annual
General Meeting. She holds 62,562
equity shares in the Company. At
42 > NITCO Tiles Limited
REPORT ON CORPORATE GOVERNANCE
The Company’s shares are listed for
trading on the Bombay Stock Exchange
and National Stock Exchange. During
the year, 229 investor complaints were
received and all were resolved. There
were no pending investor complaints as
at March 31, 2007.
Mr. B.G. Borkar, CFO and Company
Secretary has been appointed as
compliance officer.
3. Remuneration Committee
The Board, on the recommendation of
the Remuneration Committee,
determines the remuneration payable
to Managing Director and Whole time
Director. The remuneration of the non-
executive Directors is restricted only to
sitting fees for attending the
Board/Committee meetings. The
members of the Remuneration
Committee are all independent
Directors. They are:
Mr. Atul Sud Member
Mr. Dinesh H. Kanabar Member
Mr. S.K. Bhardwaj Member
The members elect chairman of the
Committee from amongst themselves.
The Committee met once during the
year to recommend the re-appointment
and remuneration of the Whole time
Director Ms. Poonam Talwar which was
attended by all the members
mentioned above.
(b) Investigation of any activity within
its terms of reference
(c) Overseeing of the Company’s
financial reporting process and
disclosure of its financial information to
ensure that the financial statement is
correct, sufficient and credible
(d) Reviewing of the annual financial
statement with the management
(e) Reviewing of the adequacy of
internal control systems with the
management and the external and
internal auditors
(f) Reviewing of the adequacy of
internal audit function, including the
structure of the internal audit
department, staffing and seniority of
the official heading the department,
reporting structure coverage and
frequency of internal audit
(g) Reviewing of the Company’s
financial and risk management policies
(h) Periodic discussion with the auditor
about the internal control system,
scope of audit including observations
of auditors and review the quarterly,
half-yearly, and annual financial
statement before submissions to the
Board.
2. Shareholders’/Investors’
Grievance Committee
The Company has constituted a
Shareholders’/Investors’ Grievance and
Share Transfer Committee to look into
various issues relating to shareholders
including transfer and transmission of
shares as well as non-receipt of
dividend, annual report, and shares
after transfers and delay in transfer of
shares. In addition, the Committee
looks into other issues including status
of dematerialisation/rematerialisation of
shares as well as systems and
procedures followed to track investor
complaints and suggest measures for
improvement from time to time.
The composition of the
Shareholders’/Investors’ Grievance
Committee and the details of meetings
attended by its members are given
below:
45Annual Report 2006-07 >
Five Board meetings were held during
the year and the gap between two
meetings did not exceed four months.
The dates on which the Board meetings
were held are:
May 16, 2006; July 27, 2006; October
19, 2006; January 23, 2007; and
March 2, 2007.
4. Code of conduct
The Board has laid down a code of
conduct for all Board members and
senior management of the Company.
The same is posted on the website of
the Company.
None of the Non-Executive Directors
have any material pecuniary
relationship or transactions with the
Company.
Necessary information pursuant to
Clause 49 of the Listing Agreement has
been placed before the Board.
B. Committees of the Board1. Audit Committee
The Company has an Audit Committee
in accordance with the requirement of
Section 292A of the Companies Act,
1956, and the terms of reference are in
conformity with Clause 49 of the
Listing Agreement entered into with
the stock exchanges. The composition
of the Audit Committee and the
attendance of each member at the
meetings are as follows:
44 > NITCO Tiles Limited
Name Category No. of Board No. of No. of committee Whether
meetings held directorships positions held in attended the
during the held in other other public last AGM
year 2006-07 public companies companies
Held Attended Chairman Member Chairman Member
Mr. Pran Nath Talwar Non-Executive Chairman 5 – – – – – No
Mr. Vivek Talwar Executive/Managing Director 5 5 – – – – Yes
Ms. Poonam Talwar Executive/Whole time Director 5 4 – – – - Yes
Mr. Dinesh H. Kanabar Independent 5 5 – – – – Yes
Mr. S.K. Bhardwaj Independent 5 5 – 1 – – Yes
Mr. Atul Sud Independent 5 5 – 1 – – Yes
Name of Director Category No. of Committee meetings
Held Attended
Mr. Dinesh H. Kanabar, Chairman Independent 4 4
Mr. S.K. Bhardwaj Independent 4 4
Mr. Vivek Talwar Managing Director 4 4
The Chairman of the Audit Committee has attended the Annual General Meeting held on August 24, 2006.
Mr. B.G. Borkar, CFO and Company Secretary of the Company is secretary to the Committee.
Terms of reference of the Audit Committee, inter alia, are:
(a) Authority to investigate any matter pertaining to the items specified in Section 292A of the Companies Act or referred to it
by the Board
Name of Director Category No. of Committee meetings
Held Attended
Mr. S.K. Bhardwaj, Chairman Independent 8 8
Mr. Atul Sud Independent 8 8
Mr. Vivek Talwar Non-independent 8 6
entered into with the stock exchanges
as well as SEBI Regulations and
Guidelines, wherever applicable. No
penalties have been imposed or
strictures issued by SEBI, the stock
exchanges or any statutory authority on
matters relating to capital markets in
the last three years.
c) The Company has complied with
non-mandatory requirements relating
to the Remuneration Committee and
financial statements of the Company
are unqualified.
d) Secretarial audit: A qualified
practising Company Secretary carried
out a secretarial audit to reconcile the
total admitted capital with National
Securities Depository Limited (NSDL)
and Central Depository Services (India)
Limited (CDSL), total issued and listed
capital. The secretarial audit report
confirms that the total issued/paid up
capital is in agreement with the total
number of shares in physical form and
number of dematerialised shares held
with NSDL and CDSL.
e) Proceeds from public issues: Out of
the issue proceeds of Rs. 16800 lac, the
Company has utilised Rs. 13,252 lac
towards objects of the issue and
pending utilization, balance funds as at
March 31, 2007 have been invested in
term/fixed deposits with banks.
F. Means of communication
• The quarterly, half-yearly and annual
results of the Company are published in
leading newspapers in India like The
Economic Times, Business Standard,
Free Press Journal, Navshakti, and
Maharashtra Times. The results are also
displayed on the Company’s website
www.nitcotiles.com. Press releases
made by the Company from time to
time are also displayed on the website.
Presentations made to institutional
investors and analysts after the
declaration of quarterly, half-yearly and
annual results are displayed on the
Company’s website.
• The Company also informs by way of
intimation to the stock exchanges all
price-sensitive matters or such other
matters which in its opinion are
material and relevant to shareholders
and subsequently issues a press release
on those matters.
• All data/reports required to be filed
electronically on EDIFAR site pursuant
to Clause 51 of the Listing Agreement
with the Stock Exchanges have been
regularly filed in addition to their
physical filing with the stock
exchanges.
• Management Discussion and
Analysis: a report on Management
Discussion and Analysis is appended
and forms part of this Annual Report.
G. Shareholders’ information
a) The Annual General Meeting is
scheduled to be held on December 11,
2007, at 11:30 am at MC Ghia Hall,
Bhogilal Hargovindas Building, 2nd
Floor, 18/20, Kaikhusru Dubhash Marg,
Mumbai - 400 001
b) Financial year: The Company
follows April-March as its financial year.
The results for every quarter beginning
from April are declared in the month
following the quarter.
c) Date of book closure: December 5,
2007 to December 11, 2007 (both days
inclusive)
d) Dividend payment date: December
15, 2007
e) Listing on stock exchanges: The
Company's equity shares are listed on
the National Stock Exchange of India
Ltd. and Bombay Stock Exchange Ltd.
The Company has paid listing fees to
the stock exchanges for the financial
year 2007-08.
f) Stock code/symbol: BSE 532722.
NSE- NITCO. ISIN-INE858F01012
47Annual Report 2006-07 >
None of the resolutions passed by the
Company required resolution to be
passed through postal ballots. The
Company shall comply with the
requirements relating to postal ballot as
and when it will require compliance.
E. Disclosures
a) Disclosure on materially significant
related-party transactions:
Related-party transactions have been
disclosed in the Notes to Accounts in
the financial statements as on March
31, 2007. However the Company did
not have any related-party transactions,
which may have potential conflict with
the interests of the Company at large.
b) The Company has complied with all
the provisions of the Listing Agreement
Tenure of MD is for five years from
March 31, 2006
Tenure of Whole time Director is for
five years from April 1, 2007
None of the Directors hold any
instrument convertible to shares.
Criteria for payment to independent
Director: At present, the Company pays
sitting fees to independent Directors for
the Board/Committee meetings they
attend.
C. Details of shares of the
Company held by Directors as on
March 31, 2007 are as follows:
Directors No. of equity shares held
Mr. Pran Nath Talwar 3,17,952Mr. Vivek Talwar 31,24,487Ms. Poonam Talwar 62,562Mr. Dinesh H. Kanabar 7,584Mr. Atul Sud –Mr. S.K. Bhardwaj –
46 > NITCO Tiles Limited
Details of remuneration paid to Directors during the financial year ended March 31, 2007 are as under:
Rs. in lacs
Name of Directors Category Salary Perquisites and Commission Sitting fees Total
other benefits
Mr. Pran Nath Talwar Chairman – – – – –
Mr. Vivek Talwar MD 38.40 10.25 53.71 – 102.36
Ms. Poonam Talwar Whole time Director 8.40 2.45 – – 10.85
Mr. Dinesh H. Kanabar Independent Director – – – 2.00 2.00
Mr. S.K. Bhardwaj Independent Director – – – 2.16 2.16
Mr. Atul Sud Independent Director – – – 1.36 1.36
D. General Body Meetings
The last three Annual General Meetings were held as per details given below:
Year Date Time Venue Special Resolution passed
2005-06 24th August 2006 3.30 pm Patkar Hall, Nathibai Thakersey Road, Appointing Mr. Vivek Talwar as
Mumbai 400 020 Managing Director
2004-05 23rd September 2005 4.30 pm Registered office of the Company –
2003-04 29th September 2004 4.30 pm Registered office of the Company –
49Annual Report 2006-07 >48 > NITCO Tiles Limited
i) Shareholding pattern as on March 31, 2007
Category No. of shares held % of total
Promoters’ holding
Indian promoters 70,20,182 31.52
Promoters’ group 36,47,180 16.38
Sub-total 1,06,67,362 47.90
Public shareholding
Mutual funds and UTI 27,14,622 12.19
Financial institutions/banks 18,000 0.08
FIIs 30,54,367 13.71
Independent Director 7,584 0.03
Private corporate bodies 31,30,382 14.06
NRIs/OCBs 13,03,998 5.86
Other 13,75,015 6.17
Sub-total 1,16,03,968 52.10
Grand total 2,22,71,330 100.00
j) Distribution of shareholding as on March 31, 2007
No. of equity shares No. of share holders % of share holders No. of shares held % of share holding
1 – 500 8593 96.21 778140 3.50
501 – 1000 107 1.19 87857 0.40
1001 – 2000 82 0.91 127077 0.57
2001 – 3000 23 0.26 58466 0.27
3001 – 4000 9 0.11 34094 0.15
4001 – 5000 11 0.12 50930 0.23
5001 - 10000 23 0.26 159712 0.71
10001 and above 84 0.94 20975054 94.17
8932 100.00 22271330 100.00
Note : 2,22,71,330 equity shares does not include 37,03,703 equity shares allotted pursuant to scheme of arrangement which
was approved by Bombay High Court order dated September 7, 2007.
g) Market price data: The monthly high and low price of shares traded on the National Stock Exchange of India Ltd. and the
Bombay Stock Exchange Ltd. are as follows:
Month NSE BSE
High Low High Low
April 06 214.00 176.55 214.40 175.55
May 06 237.40 141.25 236.70 158.00
June 06 188.70 112.00 189.00 112.00
July 06 169.70 138.00 167.95 123.20
August 06 200.95 125.00 200.75 131.65
September 06 221.00 195.00 223.10 195.10
October 06 223.00 176.50 224.00 176.50
November 06 237.40 175.10 236.95 175.35
December 06 265.00 217.00 267.00 215.00
January 07 260.00 225.25 258.35 225.15
February 07 272.40 195.00 273.00 198.75
March 07 272.40 172.65 217.95 172.22
h) Performance of the Company’s stock price vis-à-vis NSE Nifty
11003.04.06 19.05.06 30.06.06 14.08.06
Nitco Tiles
Historic graph 01.04.2006 to 31.03.07
Nifty
27.09.06 13.11.06 27.12.06 13.02.07 30.03.07
143
176
208
241
274
To
The members
Nitco Tiles Limited
We have examined the compliance with conditions of Corporate Governance procedures implemented by Nitco Tiles Limited for
the year ended March 31, 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock
exchanges of India.
The compliance with conditions of Corporate Governance is the responsibility of the management. Our examination was limited
to a review of procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions
of Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements of the Company.
In our opinion and to the best of our information and explanations given to us, we hereby certify that the Company has
complied in all respects with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.
On the basis of representations received from the Registrar and Share Transfer Agents and as per the records maintained by the
Company which are presented to the Shareholders/Investor Grievance Committee, we state that as on March 31, 2007, no
investor grievances are pending against the Company for a period exceeding one month.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or the
effectiveness with which the management has conducted the affairs of the Company.
For A. Husein Noumanali & Co.
Chartered accountants
Mr. A. Husein Noumanali
Proprietor
Place: Mumbai M. No. 14757
Date: October 24, 2007
51Annual Report 2006-07 >
DECLARATIONIn accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, I hereby confirm and declare that all the
Directors and the senior management personnel of the Company have affirmed compliance with the code of conduct of the
Company laid down for them for the financial year ended March 31, 2007.
For Nitco Tiles Limited
Mr. Vivek Talwar
Dated: October 24, 2007 Mumbai Managing Director
k) Address for communication:
Nitco Tiles Ltd., Recondo compound,
Inside Municipal Asphalt compound,
S. K. Ahire Marg, Worli,
Mumbai 400 030
Tel: 022 66164555
Fax: 022 6660 8248
Email: [email protected]
Website: www.nitcotiles.com
l) Plant locations:
Our existing production facilities are
located at Thane for Mosaic Tiles and
Poynad (Alibaug) for ceramic/porcelain
tiles. Our marble processing facilities
are located at Kanjurmarg (Mumbai)
and Silvassa.
m) Registrars and Transfer Agents:
Intime Spectrum Registry Limited,
C 13 Panalal Silk Mills Compound,
LBS Marg, Bhandup (W)
Mumbai 400 078.
Tel: 022 2596 3838/2596 3838
Fax: 022 2596 0329
E-mail: [email protected]
Website: www.intimespectrum.com
n) Share transfer system
All the shares of the Company issued
during the IPO are in dematerialised
form. Transfers of these shares are
done through a depository where there
is no involvement of the Company. The
transfer of shares in physical form as
and when received are normally
processed within 15 days from the date
of receipt of documents complete in all
respects.
As on March 31, 2007, 71.27% of the
equity shares have been dematerialised.
We have no GDR/ADR or any
convertible instrument.
o) Nomination facility:
Shareholders holding shares in the
physical form and desirous of making a
nomination in respect of their holding
in the Company, as permitted under
Section 109A of the Companies Act,
1956, are requested to submit to the
Company the prescribed Form 2B for
this purpose.
For and on behalf of the Board
Mr. Vivek Talwar
Managing Director
Dated: October 24, 2007 Mumbai
50 > NITCO Tiles Limited
AUDITORS’ CERTIFICATE ONCORPORATE GOVERNANCE
52 > NITCO Tiles Limited
FINANCIAL SECTION
53Annual Report 2006-07 >
We have audited the attached Balance Sheet of M/s NITCOTILES LIMITED as on March 31, 2007 and also the Profit & LossAccount of the Company for the year ended on that date,annexed thereto. These Financial Statements are theresponsibility of the management. Our responsibility is toexpress an opinion on these financial statements based on ouraudit.
We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure, a statement on the matters specifiedin paragraph 4 of the said Order.
Further to our comments in the Annexure referred to above,we report that:
1) We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purpose of our audit;
2) In our opinion proper books of accounts as required by lawhave been kept by the Company, so far as appears from ourexamination of the books;
3) The Balance Sheet and Profit & Loss Account dealt with bythis report are in agreement with the books of accounts;
4) In our opinion, the Balance Sheet and Profit & Loss Accountdealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 ofthe Companies Act, 1956 to the extent applicable.
5) On the basis of written representations received from thedirectors of the Company, as on 31st March 2007, andtaken on record by the Board of Directors, we report thatnone of the directors is disqualified as on 31st Mar 2007from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act, 1956.
6) In our opinion and to the best of our information andaccording to the explanation given to us, the said accountsgive the information as required by the Companies Act,1956 in the manner so required and give a true and fairview in conformity with the accounting principles generallyaccepted in India subject to (i) giving effect to the schemeof arrangement between Nitco Tiles Limited ‘NTL’, NitcoRealties Private Limited ‘NRPL’, Shark Properties PrivateLimited ‘SPPL’ and Motivation Properties Private Limited‘MPPL’:
a) In the case of the Balance Sheet of the state of affair ofthe Company as at 31 March 2007 and
b) In the case of Profit & Loss account of the Profit for theyear ended on that date.
c) In the case of the Cash Flow Statement of the cash flowfor the year ended on that date.
For A. Husein Noumanali & Co.Chartered Accountants
(A. Husein Noumanali)Place: Mumbai ProprietorDate : October 24, 2007 Membership No. 14757
To the members ofNITCO TILES LIMITED
Auditors Report
Annexure to the Auditors’ Report
55Annual Report 2006-07 >54 > NITCO Tiles Limited
1 (a) The Company has maintained proper records showing
full particulars including quantitative details and
situation of fixed assets;
(b) As per the information and explanations given to us,
physical verification of fixed assets has been carried
out in terms of the phased programme of verification
of its fixed assets adopted by the Company and no
material discrepancies were noticed on such
verification. In our opinion, the frequency of
verification is reasonable, having regard to the size of
the Company and nature of its business.
(c) During the year, the Company has not disposed of any
substantial / major part of fixed assets.
2 (a) Physical verification of inventory has been conducted
during the year by the management at reasonable
intervals.
(b) In our opinion and according to the information and
explanations given to us, procedures of physical
verification of inventory followed by the management
are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company has maintained proper records of
inventories and discrepancies noticed on physical
verification of inventories as compared to book
records were not material.
3 The Company has not granted any loans to companies,
firms or other parties covered in the Register, maintained
under Section 301 of the Companies Act, 1956.
Accordingly sub clauses b, c & d in relation to rate of
interest & terms & conditions, regularity in repayment &
overdue amounts are not applicable.
4 The Company has taken loan from one party covered in
the Register maintained under Section 301 of the
Companies Act, 1956. The rate of interest and terms and
conditions on these loans are not prejudicial to the interest
of the Company. The Company is regular in repayment, as
per terms, and there are no overdue amount.
5 In our opinion and according to the information and
explanations given to us, there are adequate internal
control procedures commensurate with the size of the
Company and the nature of its business with regard to
purchase of inventory and fixed assets and for the sale of
goods. During the course of our audit, no major weakness
has been noticed in the internal controls.
6 (a) In our opinion and according to the information and
explanations given to us, transactions that need to be
entered into the Register in pursuance of Section 301
of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and
explanations given to us, the transactions exceeding
Rupees Five Lacs in respect of each party made in
pursuance of contracts or arrangements entered in
the register maintained under Section 301 of the
Companies Act, 1956 have been made at prices,
which are reasonable having regard to prevailing
market prices at the relevant time.
7 The Company has not accepted any deposits during the
year from the public within the meaning of the provisions
of Section 58A and 58AA of the Companies Act, 1956 and
rules made thereunder. Hence, the Clause (vi) of the order
is not applicable.
8 In our opinion, the Company has an internal audit system
commensurate with the size of the Company and the
nature of its business.
9. Paragraph 4(viii) is not applicable as the Company is not
required to maintain cost records u/s 209(1)(d) of the
Companies Act, 1956.
10 (a) According to the records of the Company, the
Company is regular in depositing undisputed
statutory dues including Employees’ State Insurance,
Income tax, Sales tax, Wealth-tax, Customs Duty,
Excise Duty, Cess and other statutory dues with
appropriate authorities. According to the information
and explanations given to us, there are no undisputed
amounts payable in respect of such statutory dues
which have remained outstanding as at 31st March,
2007 for a period more than six months from the date
they became payable.
(b) According to the records of the Company, the dues of
sales tax, income-tax, customs, wealth-tax, excise
duty, cess which have not been deposited on account
of disputes and the forum where the dispute is
pending are as under:-
Name of Nature of Amount Forum
Statute the dues (Rs./lacs)
Central Excise duty 8.30 Customs Excise &
Excise demand/ Service Tax
Act penalty Appellate
Tribunal, Mumbai
Central Excise duty 6.50 Commissioner
Excise demand/ Central Excise
Act penalty (Appeals)
Customs Duty 10.80 Customs Excise &
Act demand/ Service Tax
penalty Appellate
Tribunal, Mumbai
11 The Company has no accumulated losses as per books of
accounts at the end of the financial year and it has not
incurred cash losses in the financial year under report and
the immediately preceding financial year.
12 The Company has not defaulted in repayment of its dues
to financial institutions and banks.
13 The Company has not granted any loans or advances on
the basis of security by way of pledge of shares,
debentures or other securities.
14 The provisions of any Special Statute applicable to Chit
Fund, Nidhi or Mutual benefit Fund / Societies are not
applicable to the Company.
15 In our opinion and according to the information and
explanations given to us, the Company is not dealing in or
trading in shares, securities, debentures and other
investments. Accordingly, the provisions of clause 4 (xiv) of
the Companies (Auditor’s Report) Order, 2003 are not
applicable to the Company.
16 According to the information and explanations given to
us, the company has not given any guarantee for loans
taken by others from banks and financial institutions.
17 According to the information and explanations given to
us, the term loans raised during the year have been
applied for the purpose for which they were raised.
18 According to the cash flow statement and other records
examined by us and the information and explanations
given to us, on an overall basis, funds raised on short term
basis have, prima facie, not been used during the year for
long term investment.
19 The Company has not made any preferential allotment of
shares to parties and companies covered in the Register
maintained under Section 301 of the Companies Act, 1956.
20 The Company has not issued any security debentures
during the year. Hence, provisions of Clause 4 (xix) of the
Companies (Auditor’s Report) Order, 2003 are not
applicable to the Company.
21 We have verified that the end use of money raised by
public issues is as disclosed in the notes to the financial
statements.
22 During the course of our examination of the books and
records of the Company, carried out in accordance with
the generally accepted auditing principles in India, and
according to the information and explanation given to us,
we have neither come across any instances of material
fraud on or by the company, noticed or reported during
the year, nor have been informed of such case by the
management.
For A. Husein Noumanali & Co.
Chartered Accountants
(A. Husein Noumanali)
Place: Mumbai Proprietor
Date : October 24, 2007 Membership No. 14757
Profit and Loss Account For the year ended 31st March, 2007Balance Sheet As at 31st March, 2007
57Annual Report 2006-07 >56 > NITCO Tiles Limited
(Rupees in Lacs)
Schedules 31.03.2007 31.03.2006
I SOURCES OF FUNDS
Shareholders Funds
Share Capital I 2227.13 2227.13
Share Capital Suspense (Refer Note 2, Schedule XX) 370.37
Reserves & Surplus II 26868.60 23563.18
29466.10 25790.31
Deferred Tax Liabilities 1246.05 406.30
Loan Funds
Secured Loans III 8106.63 5808.68
Unsecured Loans IV 4664.98 2477.52
12771.61 8286.20
Total 43483.76 34482.81
II APPLICATION OF FUNDS
Fixed Assets V
Gross Block 22482.38 19897.71
Less: Depreciation 5113.95 4141.80
Net Block 17368.43 15755.91
Capital Work-in-progress 3303.29 1343.13
20671.72 17099.04
Investments VI 4301.59 7483.00
Current Assets, Loans and Advances
Inventories VII 18256.41 9566.55
Sundry Debtors VIII 4782.85 3213.24
Cash and Bank Balances IX 1388.45 1582.52
Loans and Advances X 7509.89 3794.43
31937.60 18156.74
Less: Current Liabilities and Provisions
Current Liabilities XI 11513.79 7527.74
Provisions XII 1913.36 728.23
13427.15 8255.97
Net Current Assets 18510.45 9900.77
Total 43483.76 34482.81
Statement of significant accounting policies and Notes to the Accounts XX
Schedules referred to above form an integral part of the Financial Statements
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek Talwar Proprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
(Rupees in Lacs)
Schedules 31.03.2007 31.03.2006
SALES AND OTHER INCOME
Gross Sales XIII 47043.30 30636.21
Less : Excise Duty 1105.95 796.98
Net Sales 45937.35 29839.23
Other Income XIV 117.51 2.34
46054.86 29841.57
EXPENDITURE
Materials Consumed XV 23143.26 14442.82
Stores Consumed 416.74 295.21
Power and Fuel 2430.64 2193.51
Personnel XVI 1828.70 1470.12
Administrative Expenses XVII 1908.56 1349.01
Selling & Distribution Expenses XVIII 9236.99 5790.25
38964.89 25540.92
Profit Before Interest, Depreciation & Tax 7089.97 4300.65
Interest and Other Financial Charges XIX 804.93 1324.90
Depreciation V 1004.03 645.79
Profit Before Taxation 5281.01 2329.96
Provision for Current Tax 588.47 196.07
Provision for Fringe Benefit Tax 50.78 60.00
Provision for Deferred Tax 839.75 71.45
Profit After Taxation 3802.01 2002.44
Add : Balance brought forward from previous year 5146.54 3898.05
Amount Available For Appropriation 8948.55 5900.49
Less : Proposed Dividend 519.50 222.71
Less : Dividend Tax on Proposed Dividend 88.29 31.24
Less : Provision for Dividend payable on new shares, to be
allotted under Qualified Institutional Placement (QIP) 180.00 0.00
Less: Dividend Tax on above 30.59 0.00
Less: Transferred to General Reserve 500.00 500.00
Balance Carried To Balance Sheet 7630.17 5146.54
Earning Per Share - basic & diluted (face value per share Rs.10/- each) XX(18) 16.39 15.59
Statement of significant accounting policies and Notes to the Accounts XX
Schedules referred to above form an integral part of the Financial Statements
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek Talwar Proprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
Schedule to the Accounts As at 31st March, 2007Schedule to the Accounts As at 31st March, 2007
59Annual Report 2006-07 >58 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007 31.03.2006
Authorised50,000,000 Equity Shares of Rs. 10 each 5000.00 2750.00(Previous year - 27,500,000 Equity Shares of Rs. 10 each)
5000.00 2750.00Issued and Subscribed22,271,330 Equity Shares of Rs. 10 each fully paid-up 2227.13 2227.13
2227.13 2227.13
Notes:1 In respect of the above Equity Shares, 16 Equity Shares of the face value of Rs. 10/- each have been allotted as fully paid up
and issued to the shareholders of the erstwhile Mahalakshmi Tiles & Marble Co. Pvt. Ltd. and Cospar Impex Pvt. Ltd. onamalgamation with the Company without payment being received in cash.
2 On 11th March 2006, Company allotted 10,000,000 Equity shares of Rs. 10/- each at a premium of Rs. 158 per Share throughInitial Public Offer.
Capital Reserve 0.57 0.57Capital Redemption Reserve 965.00 965.00Share Premium Account Opening Balance 16916.23 2352.92Add: Additions 0.00 15800.00Less: Public Issue Expenses 0.00 1236.69
16916.23 16916.23General ReserveOpening Balance 534.84 34.84Add: Additions 500.00 500.00Add: On account of Merger 321.79
1356.63 534.84Profit & Loss Account Balance 7630.17 5146.54
26868.60 23563.18
Note : Premium on issue of Equity Shares represents premium of Rs. 158 per share on issue of 10,000,000 equity shares underan initial public offer.
(Rupees in Lacs)
Term LoansFrom Banks 5156.31 4804.78From Financial Institutions 0.00 121.29
Cash Credit from Banks 2824.00 762.73Hire Purchase Arrangements 126.32 119.88
8106.63 5808.68
Raw Materials 2205.15 1060.15Process Stock 363.60 236.95Finished Products 15079.61 7778.78Stores, Spares and Consumables 603.55 442.67Goods in Transit 4.50 48.00
18256.41 9566.55
VII INVENTORIES
Outstanding over six months Considered good 280.25 213.10Considered doubtful 128.63 103.27
408.88 316.37Less: Provision for Doubtful Debts 128.63 103.27
280.25 213.10Other debts considered good 4502.60 3000.14
4782.85 3213.24
VIII SUNDRY DEBTORS (Unsecured)
V FIXED ASSETS
I SHARE CAPITAL
II RESERVES AND SURPLUS
III SECURED LOANS
Short Term Loans From Banks 4599.99 2377.11Inter corporate Deposits 64.99 100.41
4664.98 2477.52
IV UNSECURED LOANS
VI INVESTMENTS (At Cost, Non-Trade, Current)
Fixed Deposit with Scheduled Bank (Refer Note No. 21) 3606.00 5503.00Liquidity Fund of Reliance Mutual Fund18,974,011.383 Units of Rs. 10 each of Reliance Mutual Fund sold during the year 0.00 1980.00(Previous year - 33,521,693.324 units purchased & 14,547,681.942 units sold during the year)(Market Value as on 31st March, 2007 - Rs. NIL, previous year - Rs. 1,984.32 Lacs)Equity Investments in 100% Subsidiary (Nitco Realties Pvt Ltd)200000 Equity Shares of Re. 1/- each fully paid up in NRPL 694.59 0.0010000 Preference Shares of Rs. 10/- each fully paid up in NRPL (Refer note below) 1.00 0.00
4301.59 7483.00
Note : Pursuant to the merger , the name of Motivation Properties Pvt. Ltd. has been changed to Nitco Realties Pvt. Ltd. Thecompany is in the process of filing necessary forms with the ROC.
GROSS BLOCK DEPRECIATION NET BLOCK
Description of Assets As at As at As at For the As at As at As at
1.04.2006 Additions Deductions 31.03.2007 1.04.2006 Period Deductions 31.03.2007 31.03.2007 31.03.2006
Freehold Land 1435.44 0.00 0.00 1435.44 0.00 0.00 0.00 0.00 1435.44 1435.44
Leasehold Land 145.88 0.00 0.00 145.88 0.00 0.00 0.00 0.00 145.88 145.88
Buildings 4590.67 70.72 0.00 4661.38 772.92 154.33 0.00 927.25 3734.13 3817.75
Office Equipment 592.16 141.51 0.00 733.67 156.91 69.33 0.00 226.23 507.43 435.25
Plant & Machinery 8309.54 2134.05 0.00 10443.60 2827.77 503.40 0.00 3331.17 7112.43 5481.77
Electrical Installations 452.34 7.08 0.00 459.42 149.25 21.52 0.00 170.77 288.65 303.09
Furniture & Fixtures 270.87 175.88 0.00 446.75 79.14 21.26 0.00 100.40 346.36 191.73
Motor Vehicles 420.28 135.94 80.52 475.70 123.46 39.86 31.88 131.45 344.25 296.81
Windmill 3680.54 0.00 0.00 3680.54 32.34 194.33 0.00 226.67 3453.86 3648.20
Total 19897.71 2665.19 80.52 22482.38 4141.80 1004.03 31.88 5113.95 17368.43 15755.91
Previous Year 13605.48 6299.57 7.34 19897.71 3498.81 645.78 2.79 4141.80 15755.91
Schedule to the Accounts For the year ended 31st March, 2007Schedule to the Accounts As at 31st March, 2007
61Annual Report 2006-07 >60 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007 31.03.2006
Cash on Hand 93.54 74.89Balance with Scheduled Bank
Current Account 1006.25 1026.42Margin Money Account 288.66 481.21
1388.45 1582.52
(Rupees in Lacs)
31.03.2007 31.03.2006
Salaries, Wages, Bonus etc 1609.11 1241.14Contribution to Provident & Other Funds 105.05 110.95Welfare Expenses 114.54 118.03
1828.70 1470.12
Advances recoverable in cash or in kind or for value to be received 2373.06 2979.47Advance to Subsidiary Company 3078.75 0.00Balances with Customs & Excise 1066.30 397.22Income-tax payments 991.78 417.74
7509.89 3794.43
Sundry Creditors 9929.27 6401.13Dealer Deposit 239.84 213.39Other Liabilities 1164.97 761.98Interest accrued but not due on Loans 0.55 1.91Excise Duty 179.16 149.33
11513.79 7527.74
For Taxation 1094.98 474.28For Proposed Dividend 818.38 253.95
1913.36 728.23
Rent received 3.93 0.00Dividend received etc. 113.58 2.34
117.51 2.34
Increase/Decrease in StockOpening Stock
Finished Stock 7778.78 5782.66Process Stock 236.95 158.43
8015.73 5941.09Less: Closing Stock
Finished Stock 15079.61 7778.78Process Stock 363.60 236.95
15443.21 8015.73(Increase)/Decrease in Stock (A) (7427.48) (2074.64)Consumption of Raw MaterialsOpening Stock 1060.15 1052.90Add: Purchases 10005.74 4577.67
11065.89 5630.57Less: Closing Stock 2205.15 1060.15Total Raw Material Consumed (B) 8860.74 4570.42Purchase of Finished Goods for Sale (C) 21710.00 11947.04Total Materials Consumed (A+B+C) 23143.26 14442.82
IX CASH AND BANK BALANCES
X LOANS AND ADVANCES (Unsecured, Considered Good)
XI CURRENT LIABILITIES
XII PROVISIONS
XIV OTHER INCOME
XV MATERIAL CONSUMED
XVI PERSONNEL COST
Sales 47038.05 30635.17Labour Charges 5.25 1.04
47043.30 30636.21
XIII SALES
Schedule to the Accounts For the year ended 31st March, 2007
Rent Rates and Taxes 297.75 201.34Processing Charges 122.67 102.33Water Charges 46.14 34.10Postage and Telephone 144.29 113.67Printing and Stationery 44.98 31.81Insurance 104.05 45.63Legal and Professional Fees 123.67 96.84Travelling & Conveyance Expenses 340.22 328.44Audit Fees 15.76 12.00Hire Charges 327.64 170.47Security Charges 24.23 19.20Donations 3.48 0.70Repairs and Maintenance
Buildings 38.83 40.66Machinery 38.60 37.55Others 58.26 57.57
Miscellaneous Expenses 177.99 56.701908.56 1349.01
XVII ADMINISTRATIVE EXPENSES
Schedule to the AccountsSchedule to the Accounts For the year ended 31st March, 2007
63Annual Report 2006-07 >62 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007 31.03.2006
Advertisement & Sales Promotion 1506.52 1289.82Sales Tax 4626.37 2791.24Freight Forwarding & Distribution & Other Exp 3072.42 1684.25Bad Debts 6.32 5.79Provision for Doubtful Debts 25.36 19.15
9236.99 5790.25
XVIII SELLING & DISTRIBUTION EXPENSES
XIX INTEREST AND OTHER FINANCIAL CHARGES
Term Loans 323.92 494.26Cash Credit 449.88 265.97Others 31.13 564.67
804.93 1324.90
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS
1. Significant Accounting PoliciesA. Basis of Preparation of Financial Statements
i) The financial statements are prepared under the Historical Cost convention in accordance with generally applicableaccounting principles and relevant provisions of the Companies Act, 1956, as adopted consistently by the Company.The same are prepared on a going concern basis.
ii) The Company follows mercantile system of accounting and recognises significant items of income and expenditure onaccrual basis.
B. Fixed Assets and Depreciationi) Fixed assets are stated at cost / professional valuation less accumulated depreciation and impairment loss, if any.
ii) Depreciation on fixed assets is provided in the books of accounts on straight line method in accordance with and at therates and manner prescribed under Schedule XIV to the Companies Act, 1956.
iii) Modvat Credit availed on capital goods is accounted for by credit to respective assets, and no depreciation is availedthereon.
C. Inventoriesi. Stores and spare parts are stated at or below cost.
ii. Inventories other than stores and spare parts are valued “At cost or Net Realizable Value, whichever is lower”. Cost isgenerally determined on weighted average cost basis and whenever required, appropriate overheads are taken intoaccount. Net Realizable Value is the estimated selling price in the ordinary course of business less the estimated cost ofcompletion and the estimated costs necessary to make the sale.
iii. Cost of raw materials, stores, spare parts and consumables is net of applicable Modvat credit wherever applicable.
D. Impairment of AssetsThe carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based oninternal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds itsestimated recoverable amount. The recoverable amount is greater of the asset’s net selling price and value in use. Inassessing the value in use, the estimated future cash flows are discounted to the present value using the weighted averagecost of capital. Previously recognized impairment loss is further provided or reversed depending on change incircumstances.
E. Expenditure during construction periodIn case of new projects and substantial expansion of existing factories, expenditure incurred, including trial productionexpenses net of revenue earned and attributable interest and financing costs, prior to commencement of commercialproduction are capitalized.
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
F. InvestmentsLong-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline, otherthan temporary. Current investments are stated at cost or fair value whichever is lower. Cost is determined on a weightedaverage basis.
G. Customs & Excise DutyCustoms Duty and Excise Duty have been accounted on the basis of both payments made in respect of goods cleared asalso provision made for goods lying in bonded warehouses.
H. SalesSales are inclusive of excise duty and sales tax as applicable.
I. Foreign Currency Transactionsi) All loans repayable in foreign currency and outstanding at the close of the year are expressed in Indian Currency at the
appropriate rates of exchange prevailing on the date of the Balance Sheet. Any increase or decrease in these liabilities,to the extent they relate to borrowings for financing fixed assets, is shown as an addition to or deduction from the costof the assets acquired out of such borrowings.
ii) Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year,are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet.Resultant gain or loss is accounted as income or expense as the case may be.
iii) All other incomes or expenditure in foreign currency, are recorded at the rates of exchange prevailing on the date ofthe transaction. The difference between the rate prevailing on the date of the transaction and on the date of thesettlement is recognised as income or expense as the case may be.
iv) In respect of forward exchange contracts the difference between the forward rate and the exchange rate at theinception of the contract is recognised as income or expense over the period of the contract, except in respect of fixedassets where it is adjusted to the cost of the acquisition thereof.
v) Gains or losses on cancellation of forward exchange contracts are recognised as income or expense, except in respectof fixed assets where respective adjustment is made to the cost of acquisition thereof.
J. Employment / Retirement Benefitsi) Company’s contribution to Provident Fund, Superannuation Fund and other Funds for the year is accounted for on
accrual basis and charged to the Profit & Loss Account of the year.
ii) Liability for Leave encashment benefits has been provided on last salary drawn by employees.
iii) The Company has taken a Group Gratuity cum Life Insurance Policy with the Life Insurance Corporation of India for alleligible employees. The liability is actuarially assessed by LIC and accounted for on accrual basis.
K. TaxationCurrent TaxCurrent tax is provided on the basis of tax payable on estimated taxable income computed in accordance with theapplicable provisions of Income tax Act, 1961 after considering the benefits available under the said Act.
Deferred TaxesIn accordance with Accounting Standard 22 – Accounting for Taxes on Income, issued by the Institute of CharteredAccountants of India, the deferred tax for timing difference between the book and tax profits for the year is accounted forusing the tax rates and laws that have been enacted or substantially enacted as of the balance sheet date.
Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is reasonable certaintythat the assets can be realized in future.
2. Merger (The Composite Scheme of Arrangement)I) A Composite Scheme of Arrangement under Section 391 to 394 read with Sections 78 and 100 to 103 of the Companies
Act, 1956 (the Scheme) between Nitco Tiles Limited (”NTL”), Nitco Realties Private Limited (“NRPL”), Shark Properties PrivateLimited (“SPPL”) and Motivation Properties Private Limited (“MPPL”) and their respective shareholders and creditors hasbeen sanctioned by Hon’ble High Courts of at Mumbai. Upon necessary filings with the Registrar of Companies, the schemehas become effective on October 2,2007. Consequently, in terms of the Scheme:a) The entire business and undertaking of SPPL including all assets and liabilities, as a going concern, will stand transferred
to and vested in NTL with effect from January 1, 2007 being the Appointed Date.
Schedule to the AccountsSchedule to the Accounts
65Annual Report 2006-07 >64 > NITCO Tiles Limited
b) SPPL stand dissolved without being wound up. Consequently,
II) In consideration of the merger, NTL will issue 10 (Ten) Equity Shares of Rs. 10 each/- fully paid up for every 27 (TwentySeven) Equity Shares of Re 1 each held in the SPPL on October 2,2007. Hence, NTL has issued 37,03,703 equity shares.
Pursuant to merger of SPPL into NTL, both NRPL and MPPL will be wholly owned subsidiaries of NTL. MPPL shall, without anyfurther application or deed, issue and allot to NTL or its heirs, executors, administrators or the successors-in-title, as the casemay be 10,000 fully paid up Preference Shares of Rs. 10 each for 10,000 equity shares of Rs. 10 each held by NTL in NRPL.
III) Accounting for Amalgamationa) With effect from the Appointed Date, all the assets including investments and liabilities appearing in the books of
accounts of SPPL and NRPL stands transferred to and vested in NTL or MPPL, as the case may be pursuant to the Schemeand have been recorded by NTL and MPPL at their book values.
b) 37,03,703 Equity Shares of Rs. 10/- each to be issued as fully paid up to the Equity Shareholders of Shark PropertiesPvt. Ltd. persuant to the scheme of Amalgamation for consideration other than cash. Pending allotment, the face valueof such shares has been shown as “Equity Share Suspense”.
c) Rs. 321.79 Lacs being difference between the value of the net assets of SPPL transferred to NTL pursuant to High CourtOrder at their book values and the value of shares allotted by NTL, under this Scheme, is credited to General ReserveAccount of NTL.
IV) All costs, charges, taxes including duties, levies and all other expenses, if any (save as expressly otherwise agreed), incurredin carrying out and implementing this Scheme and matters incidentals thereto, is being borne by NTL
3. Secured LoansA. Term Loans from Banks / Financial Institutions have been secured by a first charge on pari passu basis on all movable and
immovable fixed assets of the Ceramics Tiles factory at Alibaug. It has been additionally secured by an irrevocable andunconditional personal guarantee from Mr. Vivek Talwar, Managing Director of the Company.
B. Cash Credit from banks has been secured by hypothecation of the whole of the current assets of the Company includinginventories, book debts, consumable stores & spares (not relating to Plant & Machinery), bills receivable and all othermovables, both present and future wheresoever situated. It is further secured by a first charge on the Fixed Assets of thecompany’s mosaic tiles division at Thane and Second charge on the Fixed Assets of the ceramic tiles division at Alibaug andis also guaranteed by Mr. Vivek Talwar the Managing Director of the Company.
C. Hire Purchases have been secured by hypothecation of specific assets.
4. Unsecured LoansUnsecured Loans from Banks are secured by personal guarantee of Mr. Vivek Talwar, Managing Director.
5. The Company had imported certain equipments at concessional duty under various licenses pursuant to the Export PromotionCapital Goods Scheme. The export obligation under individual licenses have to be fulfilled within a period of 8 years from thedate of the licence or such extended period as may be allowed from time to time.
6. Excise Duty of Rs. 179.16 Lacs (Previous year Rs. 149.33 Lacs) has been provided on goods held in bond and consequentlyincluded in the valuation of inventories.
7. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances, and Deposits are subject to confirmation. In the opinionof the Board, the Current Assets, Loans and Advances are of the value stated as realisable in the ordinary course of the business.Accounts receivable is net of advances. The provisions for depreciation and all the known liabilities are not in excess of theamount reasonably necessary.
8. Interest and other financial charges include loss / gain on exchange fluctuations on revenue account.
9. Provision for Taxationa) Current year charge
The Income Tax Provision of Rs. 588.47 Lacs (Previous year Rs. 196.07 Lacs) has been made pursuant to section 115JB ofthe Income Tax Act (MAT). No tax is payable on regular income for the year. Rs. 50.78 Lacs (Previous year Rs. 60.00 Lacs)has been provided towards fringe benefit tax.
b) Deferred TaxThe Company has been recognising in the financial statements the deferred tax assets / liabilities, in accordance with
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
Accounting Standard 22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India.During the year, the Company has debited the Profit and Loss Account with Deferred Tax Liability of Rs. 839.75 Lacs(Previous year Rs. 71.45 Lacs). The position of Deferred Tax Assets and Liabilities during the year is as follows:
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
Tax effect of timing difference on account of depreciation of windmills has been ignored as the same is reversed duringthe tax holiday period available under Section 80IA of the Income Tax Act.
10.Sundry Creditors in Schedule VI to the accounts includes: -a) Rs. 17.08 Lacs (previous year Rs. 10.44 Lacs) due to Small Scale Industrial Undertakings.
b) Rs. 9912.19 Lacs (previous year Rs. 6390.69 Lacs) due to other creditors.The disclosure is based on the information available with the Company regarding the status of suppliers under theIndustries Development & Regulation Act, 1951. Names of small scale industrial undertakings to whom an amount ofRs. 1 lac or more was payable and outstanding for more than 30 days is as follows:-
i) Praveen Pulverizers. Rs. 17.08 Lacs
11.Previous year’s figures have been regrouped wherever necessary to make them comparable with those of the current year
Upto During the Carried 31.03.2006 Year as at
2006-07 31.03.2007
Deferred Tax Liabilities1) Difference between accounting and Tax Depreciation (Cumulative) 1574.00 32.44 1606.44Deferred Tax Assets1) Unabsorbed Losses and Depreciation 1050.58 (807.31) 243.272) Others 117.12 NIL 117.12Net Deferred Tax Liabilities 406.30 839.75 1246.05
(Rupees in Lacs)
12.Capacity, Production, Purchases, Turnover and Stock (Figures in Lacs)
Particulars 31.03.2007 31.03.2006
A. Licenced, Installed Capacity and Actual Production Mosaic TilesLicenced Capacity N.A. N.A.Installed Capacity (Sq.ft.) 90.88 90.88Actual Production (Sq.ft.) 48.29 49.82Ceramic Tiles / Pavers Licenced Capacity N.A. N.A.Installed Capacity (Sq.mts.) 63.12 40.32Actual Production (Sq.mts.) 42.17 32.86
Installed capacity of the plant has been estimated on the basis of standard size of Ceramic Tiles of 300 mm x 300 mm. Thecapacity of the plant gets reduced with production of tiles of higher sizes.
(Figures in Lacs)
Particulars 31.03.2007 31.03.2006Quantity Rs. Quantity Rs.
B. PurchasesVitrified (Sq.mts.) 71.36 20,932.84 38.41 11,945.12Mosaic Tiles / Pavers (Sq. ft. ) 0.36 6.95 0.08 1.92Others 0.00 770.21 0.00 0.00Total 21,710.00 11,947.04
Schedule to the AccountsSchedule to the Accounts
67Annual Report 2006-07 >66 > NITCO Tiles Limited
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.) XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
Particulars 31.03.2007 31.03.2006Rs. Lacs % Rs. Lacs %
G. Value of Raw Materials, Spares Componentsconsumed during the yearRaw MaterialsImported 4361.07 49.22% 1933.27 42.30%Indigenous 4499.67 50.78% 2637.15 57.70%Total 8860.74 100.00% 4570.42 100.00%Spares & ComponentsImported 68.36 16.40% 45.85 15.53%Indigenous 348.38 83.60% 249.36 84.47%Total 416.74 100.00% 295.21 100.00%
(Figures in Lacs)
Particulars 31.03.2007 31.03.2006Quantity Rs. Quantity Rs.
C. TurnoverCeramic Floor Tiles (Sq.mts.) 40.18 11,717.42 32.11 9,372.44Vitrified (Sq.mts.) 51.90 25,288.15 32.92 16,883.22Marble (Sq.ft.) 33.35 7,630.75 14.26 3,249.90Mosaic Tiles / Pavers (Sq.ft.) 50.91 1,621.71 47.11 1,130.65Others 785.27Total 47043.30 30,636.21
D. Opening StockCeramic Floor Tiles (Sq.mts.) 11.23 1,972.55 10.48 1,873.54Vitrified (Sq.mts.) 14.85 4,999.17 9.36 2,887.25Marble (Sq.ft.) 5.11 700.39 6.78 968.22Mosaic Tiles / Pavers (Sq.ft.) 7.94 106.67 5.15 53.65Total 7,778.78 5,782.66
E. Closing StockCeramic Floor Tiles (Sq.mts.) 13.23 2,546.19 11.23 1,972.55Vitrified (Sq.mts.) 34.32 11,186.57 14.85 4,999.17Marble (Sq.ft.) 8.67 1,204.64 5.11 700.39Mosaic Tiles / Pavers (Sq.ft.) 5.68 142.21 7.94 106.67Total 15079.61 7,778.78
F. Raw Materials Consumed:Body Material MT 0.80 1,740.17 0.63 1,145.24Glaze Material MT 0.05 1,467.44 0.04 1,104.66Rough marble Blocks / Slabs Sq.ft 36.91 4,375.39 12.59 1,571.68Packing Material 483.57 326.79Others 794.17 422.05Total 8860.74 4570.42
13.Earnings in Foreign Exchange (Exports) (Rupees in Lacs)
Particulars 31.03.2007 31.03.2006
FOB Value of Exports 837.09 72.44
31.03.2007 31.03.2006
Profit before tax as per profit & loss Account 5,281.01 2,329.96 Add :- Provision for depreciation as per profit & loss Account 1,004.03 645.79 Assets written off as per profit & loss account 0.00 3.83 Remuneration to Directors 65.02 53.95 Provision for Doubtful Debts 25.36 19.15
6,375.42 3,052.69 Less :- Depreciation under Section 350 of the Companies Act, 1956 (1,004.03) (645.79)Profit as per section 349 of the companies Act , 1956 5,371.39 2,406.90 1% commission payable to Managing Director 53.71 24.00
14.Value of imports calculated on CIF basis
Goods for Resale 14366.23 8603.01 Raw Material 3141.96 1038.85 Capital Goods 554.22 803.33 Spare Parts & Components 115.98 28.30 Total 18178.39 10473.49
17.Directors Remuneration
Salary 46.80 42.70 Contribution to PF and other Funds 9.54 7.63 Perquisites 3.16 2.33 Commission 53.71 24.00 Directors sitting fees 5.52 1.29
118.73 77.95
15. Expenditure in Foreign Currency
Interest 1.62 273.56 Foreign Travel etc. 126.65 178.08
128.27 451.64
16. Auditors Remuneration
Audit Fees 15.61 12.00Out of Pocket expenses 0.15 0.00
15.76 12.00
Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 for calculation of commission payableto Managing Director
18.Earnings per share - (EPS)
31.03.2007 31.03.2006
i. Profit computation for Earnings Per Share of Rs. 10 each 3802.01 2,002.44ii. Weighted average number of equity shares for Earnings Per Share 23197256 12846672iii. Earnings Per Share (Weighted Average) Basic & Diluted EPS. (Rs.) 16.39 15.59iv. Face Value per Share (Rs.) 10.00 10.00
Schedule to the AccountsSchedule to the Accounts
69Annual Report 2006-07 >68 > NITCO Tiles Limited
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
20. Information on related party transactions as required by Accounting Standard – 18 for the year ended 31.03.2007The related parties with whom there were transactions during the year are listed below:
1. DirectorsMr.P.N.Talwar ChairmanMr.Vivek Talwar Managing DirectorMs.Poonam Talwar W/T DirectorMr.Dinesh Kanabar Independent DirectorMr. S.K. Bhardwaj Independent DirectorMr. Atul Sud Independent Director
2. Relatives of Directors : Ms.Anjali Talwar Ms.Savitri TalwarMr.Lovraj Talwar Ms.Sanjana TalwarMs.Dolly Talwar Mrs.Rajeshwari TalwarMr. Rohan Talwar
3. List of Related Parties over which the Directors have significant influence or control : Anandshree (Bombay) Holding Pvt.Ltd. Nitco Tiles & Marble Industries (A) Pvt.Ltd.Cosmos Realtors Pvt.Ltd. Norita Investments Pvt.Ltd.Delicious properties Pvt.Ltd. Opera Properties Pvt.Ltd.Eden Garden Builders Pvt.Ltd. Orchid Realtors Pvt.Ltd.Enjoy Builders Pvt.Ltd. Particle Boards India LimitedFerocity Properties Pvt.Ltd. Prakalp properties Pvt.Ltd.Lavender Properties Pvt.Ltd. Rangmandir Builders Pvt.Ltd.Merino Realtors Pvt.Ltd. Rhythm Real Estates Pvt.LtdNitco Construction Materials Pvt.Ltd. Strength Properties Pvt.Ltd.Nitco Consultants & Exports Pvt.Ltd. Ushakiran Builders Pvt.Ltd.Nitco Paints Pvt.Ltd Watco Engineering Co.Pvt.Ltd.Nitco Terrazzo Tiles Pvt.Ltd Watco Real Estate Pvt. Ltd.Glamorous Properties Pvt.Ltd. Watco Trading Pvt. Ltd.Motivation Properties Pvt. Ltd. Nitco Realties Pvt. Ltd.Watco Properties Pvt. Ltd.Mahalakshmi Tiles Corporation Nitco TilesMaharashtra Marble Co. Nitco Tiles Sales Corporation (Bombay)Nitco Exports Northern India Tiles (Sales) CorporationNitco Sales Corporation (Delhi) The Northern India Tiles Corporation (Delhi)
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)
19.Contingent Liabilities
31.03.2007 31.03.2006
Guarantees / Counter Guartantees given by the company / by banks on behalf of company 215.91 383.07 Letter of credits opened for which the company is contingently liable 5,515.16 1,488.19 Export Bills discounted / purchased with the banks 99.46 161.01 Estimated amount of contracts remaining to be executed on capital account andnot provided for ( net of advances ) 391.95 231.95 Demands against the company not acknowledged as debts and not provided foragainst which the company is in appealExcise Duty 98.80 249.00 Custom Duty 398.30 908.00
Related Party Transactions FY 2007
Directors Company controlledby Directors/Relatives
Purchase Goods & services 0.00 43.46
Rent Paid 3.00 62.00Remuneration / Sitting Fees 5.52 0.00Interest on loans paid 3.69 5.49Rent Deposit 200.00 1300.00Advances made as on 31.03.2007 0.00 3078.75Loans taken outstanding as on 31.03.2007 0.00 44.65
21.Details of utilization of IPO proceeds are stated below
Utilisation as projected Actuals as onin the prospectus 31.03.2007
Expansion of Ceramic Tiles capacity 2091 2141Setting up of Wall Tile Unit 3691 8Installation of wind Mills 3786 3808Public Issue Expenses 1174 1237General Corporate Purposes 6058 6058
16800 13252
Note: Pending utilization, as on 31.03.2007 balance funds have been invested in Fixed Deposits with Banks.
22.Remittance in foreign currency on account of dividendThe Company has paid dividend in respect of shares held by Non Residents on repatriation basis. This inter-alia includesportfolio investment and direct investment, where the amount is also credited to Non Resident External Account (NRE A/c). Theexact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in this respect isgiven herein below:
Final Dividend 2006-07 2005-06
a) Number of Non Resident Shareholders 1 –b) Number of Equity Share held by them 825281 –c) (i) Amount of Dividend Paid (Gross) (Rs. in lacs) 8.25 –
(ii) Year to which dividend relates 2005-06
23.Segment Reporting for the year ended 31st March 2007The Management has identified that the company’s products, ceramic tiles, mosaic tiles, vitrified tiles and marble are products,which serve the flooring requirements of its customers. These products are interchangeable since the ultimate use of the saidproducts is the same. As such the company has only one segment, i.e., flooring products segment and as such no separatedetails on segment reporting required under AS17 (Segment Reporting) issued by the Institute of Chartered Accountants ofIndia, is being furnished.
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek Talwar Proprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
(Rupees in Lacs)(Rupees in Lacs)
Cash Flow Statement For the year ended 31st March, 2007
71Annual Report 2006-07 >70 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007 31.03.2006
A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit as restated before Tax and Extraordinary items 5281.01 2329.96 Adjusted forDepreciation 1004.03 645.79 Provision for Bad and Doubtful Debts 25.36 19.15 (Profit)/Loss on sale of assets 24.41 3.83 (Profit)/Loss on sale of Investments ( Net ) (68.09) 0.00 Interest and Financial Charges (Net) 804.93 1324.90 Operating Profit before Working Capital Changes 7071.65 4323.64 Adjusted for changes in Working Capital :(Increase)/Decrease in Sundry Debtors (1594.97) 16.69 (Increase)/Decrease in Inventories (8689.86) (1854.29)(Increase)/Decrease in Other Receivables (62.67) (1127.83)Change in Current Liabilities 3986.05 3677.45 Cash Generated from Operations 710.20 5035.65 Income Taxes Paid (592.59) (181.79)Net Cash from Operating activities 117.61 4853.86
B. CASH FLOW FROM INVESTING ACTIVITYPurchase of Fixed Assets ( Net ) (4625.35) (6765.09)Sale of Fixed Assets 24.22 0.71 Sale/(purchase) of Investments 3942.66 (7483.00)Purchase of Investments in Subsidiary Company (1.00) 0.00 Net Cash from in Investing Activity (659.47) (14247.38)
C. CASH FLOW FROM FINANCING ACTIVITIESAdvance to Subsidiary Companies (3078.75) 0.00 Proceeds from / (Repayment) of Long Term / Short Term Borrowings, net 4485.42 (3708.83)Issue of shares at par 0.00 1000.00 Share premium on fresh issue received (net of Issue Expenses) 0.00 14563.31 Interest Paid (804.93) (1324.90)Pyt. Of Proposed Dividend & CDT (253.95) 0.00 Net Cash from / (used in) Financing Activities 347.79 10529.58 Net Increase / (Decrease) in Cash & Cash Equivalents (194.07) 1136.06 Opening Balance of Cash and Cash Equivalents 1582.52 446.46 Closing Balance of Cash and Cash Equivalents 1388.45 1582.52
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek TalwarProprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
Notes:1 The Cash Flow Statement has been prepared under the Indirect method as set out in Accounting Standard - 3(AS-3) on
Cash Flow Statement issued by The Institute of Chartered Accountants of India.
2 Cash and Cash Equivalent consists of Cash on hand Rs. 93.54 Lacs (Previous Year Rs. 74.89 Lacs), Balance in CurrentAccount - Rs. 1006.25 Lacs (Previous Year - Rs. 1026.42 Lacs) and Balance in Margin Money - Rs. 288.66 Lacs (PreviousYear - Rs. 481.21 Lacs).
Balance Sheet Abstract and Company’s Business Profile
For and on Behalf of the Board
B G Borkar Poonam Talwar Vivek TalwarMumbai, October 24, 2007 CFO & Company Secretary Wholetime Director Managing Director
Public Issue
Bonus Issue
3 1 0 3
Registration No.
Balance Sheet Date
I. Registration Details
II. Capital Raised during the year (Rs. in Lacs)
Total Liabilities (IncludingShareholders Funds)
III. Position of Mobilisation and Deployment of Funds (Rs. in Lacs)
2 0 0 7
Date Month Year
Private Placement
Paid-up Capital (including share application money)
Sources of Funds
Total Assets
Reserves & Surplus
IV. Performance of the Company (Rs. in Lacs)
Product Description Item Code No. (ITC Code)
V. Generic Names of Three Principal Products/Services of Company (As per monetary terms)
Net Fixed Assets (includingCapital Work-in-Progress)
Investments
Turnover (Sales and other income)
Profit/Loss before Tax
Total Expenditure
Application of Funds (Rs. in Lacs)
4 3 4 8 3 . 7 6
Glazed Ceramic, Vitrified Tiles
Cement Tiles of Mosaic
Marble Blocks, Slabs, Tiles
1 6 5 4 7
2 5 9 7 . 5 0
4 6 0 5 4 . 8 6 4 0 7 7 3 . 8 5
Earnings Per Share in Rs. Dividend Rate%1 6 . 3 9 2 0
2 0 6 7 1 . 7 2 4 3 0 1 . 5 9
Net Current Assets Misc. Expenditure1 8 5 1 0 . 4 5 N I L
Accumulated Losses N I L
N I L
Rights Issue N I L
State Code 1 1
N I L
N I L
4 3 4 8 3 . 7 6
2 6 8 6 8 . 6 0
Deferred Tax Liability Unsecured Loans1 2 4 6 . 0 5 4 6 6 4 . 9 8
Secured Loans 8 1 0 6 . 6 3
+ – Profit/ Loss after Tax 3 8 0 2 . 0 1+ –
Additional Information pursuant to the Provisions of Part IV of Schedule VI to the Companies Act, 1956
6 9 0 7
6 8 1 0
6 8 0 2
5 2 8 1 . 0 1
72 > NITCO Tiles Limited
Statement pursuant to Section 212 of the Companies Act, 1956,Relating to subsidiary Companies Name of Nitco Realties Glamorous Particle Boards Opera PropertiesSubsidiary Company Pvt. Ltd. Properties Pvt. Ltd. India Ltd. Pvt. Ltd.
(MotivationProperties Pvt. Ltd)
1. Financial year of the subsidiary ended on 31/03/2007 31/03/2007 31/03/2007 31/03/2007 2. Shares of the subsidiary held by the
Company directly or through it subsidiarycompanies on March 31, 2007a. Number and face value of 200000 Equity 10000 Equity 214860 Equity 5000 Equity Shares
Equity Shares Shares of Re. 1 each Shares of Rs. 10 Shares of Rs. 100 of Rs. 100 eachfully paid up each fully paid up each fully paid up fully paid up
b. Extent of holding (%) 100 100 95.49 1003. Net aggregate amount of profit / (loss)
of the subsidiary for the financial year ofthe subsidiary so far as they concernmembers of the Companya. Dealt with in the accounts of the
Company for the year endedMarch 31, 2007 NIL NIL NIL NIL
b. Not dealt with in the accountsof the Company for the yearended March 31, 2007 1.51 NIL (0.57) NIL
4. Net aggregate amount of profits/ (Losses) for previous financialyears of the subsidiary, since itbecame a subsidiary so far as theyconcern members of the Company. a. Dealt with in the accounts of
the Company for the yearended March 31, 2007 NIL NIL NIL NIL
b. Not dealt with in the accounts of theCompany for the year ended March 31, 2007 NIL NIL NIL NIL
Name of Motivation Glamorous Opera ParticleSubsidiary Company Properties Properties Properties Board
Pvt. Ltd. Pvt. Ltd. Pvt. Ltd. India Ltd.
Paid up Capital 3.00 1.00 5.00 230.00 Reserves 697.30 0.00 0.00 1.25 Total Assets 4,052.49 93.86 251.28 874.48 Total Liabilities 3,352.19 92.86 246.28 643.24 Investments (except investment in subsidiary companies) 132.75 NIL NIL 0.10 Turnover 8.66 NIL NIL 68.00 Profit before taxation 2.28 NIL NIL 18.06 Provision for taxation 0.77 NIL NIL 3.66 Profit after taxation 1.51 NIL NIL 14.40 Proposed dividend NIL NIL NIL NIL
Information of Subsidiary Companies for the year ended March 31, 2007
We have audited the attached Consolidated Balance Sheet ofNitco Tiles Limited (the company) and its Subsidiaries as at 31st March 2007, and also the Consolidated Profit & lossAccount and consolidated cash flow statement for the yearended on that date annexed thereto. These financial statementare the responsibility of the Companies management and havebeen prepared by the management on the basis of separatefinancial statements and other financial information regardingcomponents. Our responsibility is to express an opinion onthese financial statement based on our audit.
We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in thefinancial statement. An audit also includes assessing theaccounting principles used and significant estimates made bythe Management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.
1. We did not audit the financial statement of the subsidiarycompanies whose, financial statements reflect total asset ofRs. 5272.11 Lacs. as at 31st March, 2007, the total revenueof Rs. 76.66 Lacs for the year then ended. These financialstatement and other financial information have beenaudited by other auditors whose report has been furnishedto us, and our opinion is based solely on report of otherauditors.
2. We report that the consolidated financial statement havebeen prepared by the company’s management in
accordance with the requirement of Accounting standard(AS) 21, consolidated financial statement and accountingstandard (AS) 23, Accounting for investment in Associatesin consolidated financial statement and issued by Instituteof Chartered Accountants of India.
3. Based on audit as aforesaid, and on consideration ofreports of other auditors on the separate financialstatement and on the other financial information of thecomponent and accounts approved by the Board ofDirectors and to the best of
our information and according to the information given tous, we are of the opinion that the attached consolidatedfinancial statement give true and fair view in conformitywith the accounting principles generally accepted in India:
i) in the case of the Consolidated Balance Sheet, of thestate of affair of the Group as at 31st march 2007;
ii) in the case of the Consolidated Profit and loss Account,of the Profit of the Group for the year ended on thatdate; and
iii) in the case of the Consolidated Cash Flow statement, ofthe state of the Cash Flows of the Group for the yearended on that date.
For A. Husein Noumanali & Co.Chartered Accountants
A. Husein NoumanaliPlace: Mumbai ProprietorDate : October 24, 2007 Membership No. 14757
To the Board ofNITCO TILES LIMITED
Consolidated Auditors Report
73Annual Report 2006-07 >
Consolidated Profit and Loss Account For the year ended March 31, 2007Consolidated Balance Sheet As at March 31, 2007
75Annual Report 2006-07 >74 > NITCO Tiles Limited
(Rupees in Lacs)
Schedules 31.03.2007
I SOURCES OF FUNDS
Shareholders Funds
Share Capital I 2227.13
Share Capital Suspense (Refer Note 3, Schedule XX) 370.37
Reserves & Surplus II 26872.74
29470.24
Minority Interest 14.81
Deferred Tax Liabilities 1246.05
Loan Funds
Secured Loans III 8106.63
Unsecured Loans IV 4716.31
12822.94
Total 43554.04
II APPLICATION OF FUNDS
Fixed Assets V
Gross Block 22924.97
Less: Depreciation 5113.95
Net Block 17811.02
Capital Work-in-progress 3303.29
21114.31
Investments VI 3738.85
Current Assets, Loans and Advances
Inventories VII 21578.60
Sundry Debtors VIII 4782.85
Cash and Bank Balances IX 1693.39
Loans and Advances X 4677.68
32732.52
Less: Current Liabilities and Provisions
Current Liabilities XI 12108.66
Provisions XII 1922.98
14031.64
Net Current Assets 18700.88
Total 43554.04
Statement of significant accounting policies and Notes to the Accounts XX
Schedules referred to above form an integral part of the Financial Statements
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek TalwarProprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
(Rupees in Lacs)
Schedules 31.03.2007
SALES AND OTHER INCOME
Gross Sales XIV 47043.30
Less: Excise Duty 1105.95
Net Sales 45937.35
Other Income XV 126.17
46063.52
EXPENDITURE
Materials XVI 23143.26
Stores 416.74
Power and Fuel 2430.64
Personnel XVII 1831.85
Administrative Expenses XVIII 1906.52
Selling & Distribution Expenses XIX 9237.07
38966.08
Profit Before Interest, Depreciation & Tax 7097.44
Interest and Other Financial Charges XX 811.33
Depreciation V 1004.03
Profit Before Taxation 5282.08
Provision for Current Tax 588.63
Provision for Fringe Benefit Tax 50.78
Provision for Deferred Tax 839.75
Profit after Taxation (Before Adjustment for Minority Interest) 3802.92
Add: Share of Loss transferred to Minority 0.03
Profit after Taxation (After Adjustment for Minority Interest) 3802.95
Add: Balance brought forward from previous year 5146.54
Amount available for appropriation 8949.49
Less: Proposed Dividend 519.50
Less: Dividend Tax on Proposed Dividend 88.29
Less: Provision for Dividend payable on new shares, to be allotted under Qualified Institutional Placement (QIP) 180.00
Less: Dividend Tax on above 30.59
Less: Transferred to General Reserve 500.00
Balance Carried to Balance Sheet 7631.11
Earning per share-Basic & Diluted (Face value per share Rs. 10/- each) XX(18) 16.39
Statement of significant accounting policies and Notes to the Accounts XX
Schedules referred to above form an integral part of the Financial Statements
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek TalwarProprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
Schedule to the Consolidated Accounts As at March 31, 2007Schedule to the Consolidated Accounts As at March 31, 2007
77Annual Report 2006-07 >76 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007
Authorised50,000,000 Equity Shares of Rs. 10 each 5000.00
5000.00Issued and Subscribed22,271,330 Equity Shares of Rs.10 each fully paid-up 2227.13
2,227.13
Notes:1. In respect of the above Equity Shares, 16 Equity Shares of the face value of Rs.10/- each have been allotted as fully paid up
and issued to the shareholders of the erstwhile Mahalakshmi Tiles & Marble Co. Pvt. Ltd. and Cospar Impex Pvt. Ltd. onamalgamation with the Company without payment being received in cash.
2. On March 11, 2006, Company allotted 10,000,000 Equity shares of Rs.10/- each at a premium of Rs.158 per Share throughInitial Public Offer
Premium on issue of Shares represents premium of Rs. 150 per Share on issue of 10,000,000 Equity Shares under Initial Publicoffer.
Capital Reserve 0.57Capital Reserve on consolidation 3.20Capital Redemption Reserve 965.00Share Premium Account 16916.23 General ReserveOpening Balance 534.84Add: Additions 500.00Add: On account of Merger 321.79
1356.63Profit & Loss Account Balance 7631.11
26872.74
(Rupees in Lacs)
31.03.2007
Short Term Loans From Banks 4599.99Inter Corporate Deposits 116.32
4716.31
Term Loans From Banks 5156.31Cash Credit from Banks 2824.00Hire Purchase Arrangements 126.32
8106.63
Raw Materials 2205.15Process Stock 3685.79Finished Products 15079.61Stores, Spares and Consumables 603.55Goods in Transit 4.50
21578.60
VII INVENTORIES
V CONSOLIDATED FIXED ASSETS
IV UNSECURED LOANSI SHARE CAPITAL
II RESERVES AND SURPLUS
III SECURED LOANS
VI INVESTMENTS (At Cost, Non-Trade, Current)
Fixed Deposit with Scheduled Bank (Refer Note No. 21) 3606.00Investments in National Defence Certificates 0.10 Investment Property 132.33 4200 Equity Shares of Rs. 10/- each fully paid up in Saumya Buildcon Pvt. Ltd. 0.42
3738.85
GROSS BLOCK DEPRECIATION NET BLOCK
Description of Assets As at As at As at For the As at As at
1.04.2006 Additions Deductions 31.03.2007 1.04.2006 Period Deductions 31.03.2007 31.03.2007
Goodwill 0.00 422.89 0.00 422.89 0.00 0.00 0.00 0.00 422.89
Freehold Land 1435.44 0.00 0.00 1435.44 0.00 0.00 0.00 0.00 1435.44
Leasehold Land 165.58 0.00 0.00 165.58 0.00 0.00 0.00 0.00 165.58
Buildings 4590.67 70.72 0.00 4661.38 772.92 154.33 0.00 927.25 3734.13
Office Equipment 592.16 141.51 0.00 733.67 156.91 69.33 0.00 226.23 507.43
Plant & Machinery 8309.54 2134.05 0.00 10443.60 2827.77 503.40 0.00 3331.17 7112.43
Electrical Installations 452.34 7.08 0.00 459.42 149.25 21.52 0.00 170.77 288.65
Furniture & Fixtures 270.87 175.88 0.00 446.75 79.14 21.26 0.00 100.40 346.36
Motor Vehicles 420.28 135.94 80.52 475.70 123.46 39.86 31.88 131.45 344.25
Windmill 3680.54 0.00 0.00 3680.54 32.34 194.33 0.00 226.67 3453.86
Total 19917.41 3088.08 80.52 22924.97 4141.80 1004.03 31.88 5113.95 17811.02
Note: Balance as on 1.4.2006 includes opening balance of Nitco Tiles Ltd., Nitco Realties Pvt. Ltd., became subsidiary during the year.
Schedule to the Consolidated Accounts For the year ended March 31, 2007Schedule to the Consolidated Accounts As at March 31, 2007
79Annual Report 2006-07 >78 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007
Outstanding over six months Considered good 280.25Considered doubtful 128.63
408.88Less: Provision for Doubtful Debts 128.63
280.25Other debts considered good 4502.60
4782.85
(Rupees in Lacs)
31.03.2007
Sales 47038.05Labour Charges 5.25
47043.30
Cash on Hand 93.54Balance with Scheduled Bank
Current Account 1311.19Margin Money Account 288.66
1693.39
Salaries, Wages, Bonus etc 1612.26Contribution to Provident & Other Funds 105.05Welfare Expenses 114.54
1831.85
Advances recoverable in cash or in kind or for value to be received 2619.60Balances with Customs & Excise 1066.30Income-tax payments 991.78
4677.68
Sundry Creditors 9962.62Dealer Deposit 239.84Other Liabilities 1726.49Interest accrued but not due on Loans 0.55Excise Duty 179.16
12108.66
For Taxation 1104.60For Proposed Dividend 818.38
1922.98
Rent received 12.59Dividend received etc. 113.58
126.17
Increase/Decrease in StockOpening Stock
Finished Stock 7778.78Process Stock 236.95
8015.73Less: Closing Stock
Finished Stock 15079.61Process Stock 363.60
15443.21(Increase)/Decrease in Stock (A) (7427.48)Consumption of Raw MaterialsOpening Stock 1060.15Add: Purchases 10005.74
11065.89Less: Closing Stock 2205.15Total Raw Material Consumed (B) 8860.74Purchase of Finished Goods for Sale (C) 21710.00Total Materials Consumed (A+B+C) 23143.26
VIII SUNDRY DEBTORS (Unsecured)
IX CASH AND BANK BALANCES
X LOANS AND ADVANCES (Unsecured, Considered Good)
XI CURRENT LIABILITIES
XII PROVISIONS
XIV SALES
XV OTHER INCOME
XVI MATERIAL CONSUMED
XVII PERSONNEL COST
1. Principles of ConsolidationThese accounts represent consolidated accounts of the Group and its majority owned subsidiaries as follows:
* Note - Pursuant to the merger of Nitco Realties Pvt. Ltd. with Motivation Properties Pvt. Ltd., the name of MotivationProperties Pvt. Ltd . has been changed to Nitco Realties Pvt. Ltd. The company is in the process of filing necessary forms withthe ROC.
For the purpose of this consolidation, jointly owned entities, where Nitco Tiles Ltd. or its subsidiaries own directly or indirectlymore than 50 percent of voting right of a company’s share capital, have been accounted for as subsidiaries.
The equity and net income attributable to minority shareholders’ interest are shown separately in the Balance Sheets and Profitand Loss Account, respectively.
2. Other significant accounting policiesThese are set out under “ Significant Accounting Polices” as given in the standalone Financial Statement of Nitco Tiles Limited
3. Merger (The Composite Scheme of Arrangement)I) A Composite Scheme of Arrangement under Section 391 to 394 read with Sections 78 and 100 to 103 of the Companies
Act, 1956 (the Scheme) between Nitco Tiles Limited (”NTL”), Nitco Realties Private Limited (“NRPL”), Shark Properties PrivateLimited (“SPPL”) and Motivation Properties Private Limited (“MPPL”) and their respective shareholders and creditors hasbeen sanctioned by Hon’ble High Court of Mumbai. Upon necessary filings with the Registrar of Companies, the schemehas become effective on October 2,2007. Consequently, in terms of the Scheme:
a) The entire business and undertaking of SPPL including all assets and liabilities, as a going concern, will stand transferredto and vested in NTL with effect from January 1, 2007 being the Appointed Date.
b) SPPL stand dissolved without being wound up. Consequently,
II) In consideration of the merger, NTL will issue 10 (Ten) Equity Shares of Rs. 10 each/- fully paid up for every 27 (TwentySeven) Equity Shares of Re 1 each held in the SPPL on October 2,2007. Hence, NTL has issued 37,03,703 equity shares.
Pursuant to merger of SPPL into NTL, both NRPL and MPPL will be wholly owned subsidiaries of NTL. MPPL shall, withoutany further application or deed, issue and allot to NTL or its heirs, executors, administrators or the successors-in-title, asthe case may be 10,000 fully paid up Preference Shares of Rs. 10 each for 10,000 equity shares of Rs. 10 each held by NTLin NRPL.
III) Accounting for Amalgamation
a) With effect from the Appointed Date, all the assets including investments and liabilities appearing in the books ofaccounts of SPPL and NRPL stands transferred to and vested in NTL or MPPL, as the case may be pursuant to the Schemeand have been recorded by NTL and MPPL at their book values.
b) 37,03,703 Equity Shares of Rs.10/- each to be issued as fully paid up to the Equity Shareholders of Shark Properties Pvt.Ltd. persuant to the scheme of Amalgamation for consideration other than cash. Pending allotment, the face value ofsuch shares has been shown as “Equity Share Suspense”.
Schedule to the Consolidated Accounts For the year ended March 31, 2007Schedule to the Consolidated Accounts For the year ended March 31, 2007
81Annual Report 2006-07 >80 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007
Rent Rates and Taxes 296.54 Processing Charges 119.00 Water Charges 46.14 Postage and Telephone 144.29 Printing and Stationery 45.00 Insurance 104.33 Legal and Professional Fees 126.09 Travelling & Conveyance Expenses 340.24 Audit Fees 15.86 Hire Charges 327.64 Security Charges 24.23 Donations 3.48 Repairs and Maintenance
Buildings 38.83 Machinery 38.60 Others 58.26
Miscellaneous Expenses 177.99 1906.52
XVIII ADMINISTRATIVE EXPENSES
XIX SELLING & DISTRIBUTION EXPENSES
Advertisement & Sales Promotion 1506.60Sales Tax 4626.37Freight Forwarding & Distribution & Other Exp 3072.42Bad Debts 6.32Provision for Doubtful Debts 25.36
9237.07
XX INTEREST AND OTHER FINANCIAL CHARGES
Term Loans 323.92Cash Credit 449.88Others 37.53
811.33
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS.
Entity Country of Nature of Business Relationship ShareholdingIncorporation as at March
31, 2007Nitco Realities Pvt Ltd.(*) India Real Estate Development Subsidiary 100%Particle Boards India Ltd India Real Estate Development & Subsidiary 95.49%
Service providerGlamorous Properties Pvt Ltd India Real Estate Development Subsidiary 100%Opera Properties Pvt Ltd India Real Estate Development Subsidiary 100%
Schedule to the Consolidated Accounts For the year ended March 31, 2007Schedule to the Consolidated Accounts For the year ended March 31, 2007
83Annual Report 2006-07 >82 > NITCO Tiles Limited
c) Rs. 321.79 Lacs being difference between the value of the net assets of SPPL transferred to NTL pursuant to High CourtOrder at their book values and the value of shares allotted by NTL, under this Scheme, is credited to General ReserveAccount of NTL.
IV) All costs, charges, taxes including duties, levies and all other expenses, if any (save as expressly otherwise agreed), incurredin carrying out and implementing this Scheme and matters incidentals thereto, is being borne by NTL.
4. Secured LoansA. Term Loans from Banks / Financial Institutions have been secured by a first charge on pari passu basis on all movable and
immovable fixed assets of the Ceramics Tiles factory at Alibaug. It has been additionally secured by an irrevocable andunconditional personal guarantee from Mr. Vivek Talwar, Managing Director of the Company.
B. Cash Credit from banks have been secured by hypothecation of the whole of the current assets of the Company includinginventories, book debts, consumable stores & spares (not relating to Plant & Machinery), bills receivable and all othermovables, both present and future wheresoever situated. It is further secured by a first charge on the Fixed Assets of thecompany’s mosaic tiles division at Thane and Second charge on the Fixed Assets of the ceramic tiles division at Alibaug andis also guaranteed by Mr. Vivek Talwar, Managing Director of the Company.
C. Hire Purchases have been secured by hypothecation of specific assets.
5. Unsecured LoansUnsecured Loans from Banks are secured by personal guarantee of Mr. Vivek Talwar, Managing Director.
6. The Company had imported certain equipments at concessional duty under various licenses pursuant to the Export PromotionCapital Goods Scheme. The export obligation under individual licenses have to be fulfilled within a period of 8 years from thedate of the licence or such extended period as may be allowed from time to time.
7. Excise Duty of Rs.179.16 Lacs (Previous year Rs.149.33 Lacs) has been provided on goods held in bond and consequentlyincluded in the valuation of inventories.
8. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances, and Deposits are subject to confirmation. In the opinionof the Board, the Current Assets, Loans and Advances are of the value stated as realisable in the ordinary course of the business.Accounts receivable is net of advances. The provisions for depreciation and all the known liabilities are not in excess of theamount reasonably necessary.
9. Interest and other financial charges include loss / gain on exchange fluctuations on revenue account.
10.Deferred Tax
The Company has been recognising in the financial statements the deferred tax assets / liabilities, in accordance withAccounting Standard 22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India. Duringthe year, the Company has debited the Profit and Loss Account with Deferred Tax Liability of Rs. 839.75 Lacs (Previous yearRs.71.45 Lacs). The position of Deferred Tax Assets and Liabilities during the year is as follows:
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
Tax effect of timing difference on account of depreciation of windmills has been ignored as the same is reversed during thetax holiday period available under Section 80IA of the Income Tax Act.
11.Sundry Creditors in Schedule VI to the accounts includes: a) Rs.17.08 Lacs (previous year Rs.10.44 Lacs) due to Small Scale Industrial Undertakings.
b) Rs. 9945.54 Lacs (previous year Rs. 6390.69 Lacs ) due to other creditors.The disclosure is based on the information available with the Company regarding the status of suppliers under theIndustries Development & Regulation Act, 1951. Names of small scale industrial undertakings to whom an amount of Rs. 1 lac or more was payable and outstanding for more than 30 days is as follows:-
i) Praveen Pulverizers. Rs.17.08 Lacs
12.Capacity, Production, Purchases, Turnover & Stock
Installed capacity of the plant has been estimated on the basis of standard size of Ceramic Tiles of 300 mm x 300 mm. Thecapacity of the plant gets reduced with production of tiles of higher sizes.
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
Upto During the Year Carried as at31.03.2006 2006-07 31.03.2007
Deferred Tax Liabilities1) Difference between accounting and
Tax Depreciation (Cumulative) 1574.00 32.44 1606.44Deferred Tax Assets1. Unabsorbed Losses and Depreciation 1050.58 (807.31) 243.272. Others 117.12 NIL 117.12Net Deferred Tax Liabilities 406.30 839.75 1246.05
(Rupees in Lacs)
Particulars 31.03.2007A. Licenced, Installed Capacity and Actual Production
Mosaic TilesLicenced Capacity N.A.Installed Capacity (Sq.ft.) 90.88Actual Production (Sq.ft.) 48.29Ceramic Tiles / PaversLicenced Capacity N.A.Installed Capacity (Sq.mts.) 63.12Actual Production (Sq.mts.) 42.17
(Figures in Lacs)
Particulars 31.03.2007Quantity Rs.
B. PurchasesVitrified (Sq.mts.) 71.36 20,932.84Mosaic Tiles / Pavers ( Sq. ft. ) 0.36 6.95Others 0.00 770.21Total 21,710.00
(Figures in Lacs)
C. TurnoverCeramic Floor Tiles (Sq.mts.) 40.18 11,717.42Vitrified (Sq.mts.) 51.90 25,288.15Marble (Sq.ft.) 33.35 7,630.75Mosaic Tiles / Pavers (Sq.ft.) 50.91 1,621.71Others 785.27Total 47043.30
Schedule to the Consolidated Accounts For the year ended March 31, 2007Schedule to the Consolidated Accounts For the year ended March 31, 2007
85Annual Report 2006-07 >84 > NITCO Tiles Limited
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
Particulars 31.03.2007Quantity Rs.
D. Opening StockCeramic Floor Tiles (Sq.mts.) 11.23 1,972.55Vitrified (Sq.mts.) 14.85 4,999.17Marble (Sq.ft.) 5.11 700.39Mosaic Tiles / Pavers (Sq.ft.) 7.94 106.67Total 7,778.78
(Figures in Lacs)
(Rupees in Lacs)
E. Closing StockCeramic Floor Tiles (Sq.mts.) 13.23 2,546.19Vitrified (Sq.mts.) 34.32 11,186.57Marble (Sq.ft.) 8.67 1,204.64Mosaic Tiles / Pavers (Sq.ft.) 5.68 142.21Total 15079.61
F. Raw Materials ConsumedBody Material MT 0.80 1,740.17Glaze Material MT 0.05 1,467.44Rough marble Blocks / Slabs Sq.ft 36.91 4,375.39Packing Material 483.57Others 794.17Total 8860.74
Particulars 31.03.2007Rs. Lacs %
G. Value of Raw Materials, Spares Components consumed during the year Raw MaterialsImported 4361.07 49.22%Indigenous 4499.67 50.78%Total 8860.74 100.00%Spares & ComponentsImported 68.36 16.40%Indigenous 348.38 83.60%Total 416.74 100.00%
Particulars 31.03.2007FOB Value of Exports 837.09
13.Earnings in Foreign Exchange (Exports)
(Rupees in Lacs)
Particulars 31.03.2007Goods for Resale 14366.23 Raw Material 3141.96 Capital Goods 554.22 Spare Parts & Components 115.98 Total 18178.40
14.Value of imports calculated on CIF basis:
Interest 1.62 Foreign Travel etc. 126.65
128.27
15.Expenditure in Foreign Currency
Audit Fees 15.71Out of Pocket expenses 0.15
15.86
16.Auditors Remuneration
Salary 46.80 Contribution to PF and other Funds 9.54 Perquisites 3.16 Commission 53.71 Directors sitting fees 5.52
118.73
17.Directors Remuneration
Profit before tax as per profit & loss Account 5,281.01 Add :- Provision for depreciation as per profit & loss Account 1,004.03 Remuneration to Directors 65.02 Provision for Doubtful Debts 25.36
6,375.42Less :- Depreciation under Section 350 of the Companies Act, 1956 (1,004.03)Profit as per section 349 of the companies Act, 1956 5,371.39 1% commission payable to Managing Director 53.71
Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 for calculation of commission payableto Managing Director
Note: As no commission is payable to subsidiaries, the aforesaid computation of commission to MD is related to Nitco TilesLimited.
Particulars 31.03.2007i. Profit computation for Earnings Per Share of Rs. 10 each 3802.95ii. Weighted average number of equity shares for Earnings Per Share 23197256iii. Earnings Per Share (Weighted Average)
Basic & Diluted EPS (Rs.) 16.39iv. Face Value per Share (Rs.) 10.00
18.Earnings per share - (EPS)
Schedule to the Consolidated Accounts For the year ended March 31, 2007Schedule to the Consolidated Accounts For the year ended March 31, 2007
87Annual Report 2006-07 >86 > NITCO Tiles Limited
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
(Rupees in Lacs)
Particulars 31.03.2007Guarantees / Counter Guartantees given by the company / by banks on behalf of company 215.91 Letter of credits opened for which the company is contingently liable 5,515.16Export Bills discounted / purchased with the banks 99.46 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 391.95 Demands against the company not acknowledged as debts and not provided for against which the company is in appeal– Excise Duty 98.80– Custom Duty 398.30
19.Contingent Liabilities
XX STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS TO THE CONSOLIDATED ACCOUNTS. (Contd.)
(Rupees in Lacs)
Company controlledDirectors by Directors / Relatives
Purchase Goods & services 0.00 0.46Rent Paid 3.00 38.00Remuneration / Sitting Fees 5.52 0.00Interest on loans paid 3.69 5.49Rent Deposit 200.00 700.00Loans taken outstanding as on 31.03.2007 0.00 44.65
Related party Transaction of FY 2006-07
20. Information on related party transactions as required by Accounting Standard – 18 for the year ended 31.03.2007
The related parties with whom there were transactions during the year are listed below:
1. Directors
Mr. P. N. Talwar Chairman
Mr. Vivek Talwar Managing Director
Ms. Poonam Talwar W/T Director
Mr. Dinesh Kanabar Independent Director
Mr. S. K. Bhardwaj Independent Director
Mr. Atul Sud Independent Director
2. Relatives of Directors
Ms. Anjali Talwar Ms. Savitri Talwar
Mr. Lovraj Talwar Ms. Sanjana Talwar
Ms. Dolly Talwar Mrs. Rajeshwari Talwar
Mr. Rohan Talwar
3. List of Related Parties over which the Directors have significant influence or control
Anandshree (Bombay) Holding Pvt. Ltd. Nitco Tiles & Marble Industries (A) Pvt. Ltd.
Cosmos Realtors Pvt. Ltd. Norita Investments Pvt. Ltd.
Delicious properties Pvt. Ltd. Orchid Realtors Pvt. Ltd.
Eden Garden Builders Pvt. Ltd. Prakalp Properties Pvt. Ltd.
Enjoy Builders Pvt. Ltd. Rangmandir Builders Pvt. Ltd.
Ferocity Properties Pvt. Ltd. Rhythm Real Estates Pvt. Ltd.
Lavender Properties Pvt. Ltd. Strength Properties Pvt. Ltd.
Merino Realtors Pvt. Ltd. Ushakiran Builders Pvt. Ltd.
Nitco Construction Materials Pvt. Ltd. Watco Engineering Co. Pvt. Ltd.
Nitco Consultants & Exports Pvt. Ltd. Watco Properties Pvt. Ltd.
Nitco Paints Pvt. Ltd. Watco Real Estate Pvt. Ltd.
Nitco Terrazzo Tiles Pvt. Ltd. Watco Trading Pvt. Ltd.
Mahalakshmi Tiles Corporation Nitco Tiles
Maharashtra Marble Co. Nitco Tiles Sales Corporation (Bombay)
Nitco Exports Northern India Tiles (Sales) Corporation
Nitco Sales Corporation (Delhi) The Northern India Tiles Corporation (Delhi)
Utilisation as projected Actuals as onin the prospectus 31.03.2007
Expansion of Ceramic Tiles capacity 2091 2141Setting up of Wall Tile Unit 3691 8Installation of wind Mills 3786 3808Public Issue Expenses 1174 1237General Corporate Purposes 6058 6058
16800 13252
21.Details of utilization of IPO proceeds are stated below
Note: Pending utilization, as on 31.03.2007 balance funds have been invested in Fixed Deposits with Banks.
22.Since the consolidated financial statements are required to be presented for the first time, comparative figures for the previousyear are not given.
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek TalwarProprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
24.Segment Reporting for the year ended March 31, 2007The Management has identified that the company’s products, ceramic tiles, mosaic tiles, vitrified tiles and marble are products,which serve the flooring requirements of its customers. These products are interchangeable since the ultimate use of the saidproducts is the same. As such the company has only one segment, i.e., flooring products segment and as such no separatedetails on segment reporting required under AS17 (Segment Reporting) issued by the Institute of Chartered Accountants ofIndia, is being furnished.
23.Remittance in foreign currency on account of dividendThe Company has paid dividend in respect of shares held by Non Residents on repatriation basis. This inter-alia includesportfolio investment and direct investment, where the amount is also credited to Non Resident External Account (NRE A/c). Theexact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in this respect isgiven herein below:
Final Dividend 2006-07 2005-06
a) Number of Non Resident Shareholders 1 –b) Number of Equity Share held by them 825281 –c) (i) Amount of Dividend Paid (Gross) (Rs. in Lacs) 8.25 –
(ii) Year to which dividend relates 2005-06
Consolidated Cash Flow Statements For the year ended March 31, 2007
88 > NITCO Tiles Limited
(Rupees in Lacs)
31.03.2007A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit as restated before Tax and Extraordinary items 5,282.08 Adjusted forDepreciation 1004.03 Provision for Bad and Doubtful Debts 25.36 (Profit)/Loss on sale of assets 24.41 (Profit)/Loss on sale of Investments (Net) (68.09)Interest and Financial Charges (Net) 811.33 Operating Profit before Working Capital Changes 7079.12 Adjusted for changes in Working Capital:(Increase)/Decrease in Sundry Debtors (1594.97)(Increase)/Decrease in Inventories (12012.05)(Increase)/Decrease in Other Receivables (309.21)Change in Current Liabilities 4580.92 Cash Generated from / (used in) Operations (2256.19)Income Taxes Paid (583.13)Net Cash from / (used in) Operating activities (2839.32)
B. CASH FLOW FROM INVESTING ACTIVITYPurchase of Fixed Assets (Net) (5067.93)Sale of Fixed Assets 24.22Sale/(purchase) of Investments 4507.59 Net Cash from / (used in) Investing Activity (536.12)
C. CASH FLOW FROM FINANCING ACTIVITIESMinority Interest 14.84 Proceeds from / (Repayment) of Long Term / Short Term Borrowings, net 4536.75 Interest Paid (811.33)Pyt. Of Proposed Dividend & CDT (253.95)Net Cash from / (used in) Financing Activities 3486.31 Net Increase / (Decrease) in Cash & Cash Equivalents 110.87 Opening Balance of Cash and Cash Equivalents 1582.52 Closing Balance of Cash and Cash Equivalents 1693.39
Schedules referred to above form an integral part of the Financial Statements
Per our report attached For and on Behalf of the Board For A. Husein Noumanali & Co. Chartered Accountants
A. Husein Noumanali B G Borkar Poonam Talwar Vivek TalwarProprietor CFO & Company Secretary Wholetime Director Managing DirectorMembership No. 14757Mumbai, October 24, 2007
Notes:1. The Cash Flow Statement has been prepared under the Indirect method as set out in Accounting Standard - 3 (AS-3) on
Cash Flow Statement issued by The Institute of Chartered Accountants of India.
2. Cash and Cash Equivalent consists of Cash on hand Rs. 93.54 Lacs, Balance in Current Account Rs. 1311.19 Lacs andBalance in Margin Money - Rs. 288.66 Lacs