cottage inds exposition ltd 2006

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ANNUAL REPOIT

W E A V I N G T H E F U T U R E

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Corporate Information

Directorate :A. Rashid Mir- Chairman ;

M. Ashraf Mir - Managing DirectorDr. Tabasum MirRauf A. QaziBrijendra KumarPran Ganju

Company SecretaryGeetu Lall

Statutory AuditorsRoy Malhotra & Co. (Sgr), New Delhi

Branch Auditors i(except Goa & Cochin Branches) IVirendra K Gupta & Co., New Delhi

BankersThe Jammu & Kashmir Bank Ltd.H.S.B.C. Ltd.Standard Chartered BankAmerican Express BankICICI Ltd.Citi Bank

Registered OfficeShalimar, Srinagar - Kashmir :

Corporate Office I15, Anand Lok, New Delhi -110049 ,

ShowroomsAgra, Bangalore, Chennai, Cochin, Goa, Hyderabad, Jaipur, Leh,Madurai, Mumbai, New Delhi, Srinagar, Trichy, Triyandrurn,Udaipur, Varanasi. ;

:

Subsidiaries !Renaissance Corporation Ltd., UK ' jCottage Industries Exposition (Mauritius) Ltd., MauritiusRenaissance Corporation of America, USA ,Cottage Industries Exposition (Kenya) Ltd., KenyaCIE Overseas Services & Trading Co. Ltd., Mauritius

Contents

. Directors',; Report

Statement Relating to: Subsidiary Companies

Auditors' Report

Balance Sheet

Profit & Loss Account

'. Schedules &. Notes on Accounts

Part IV & Quantitative Details

Accounts' of Subsidiaries

Page No

2-4

5

6-8

9

10

11-22

23-24

In separatebooklet(s)




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Report of DirectorsToThe Members of,Cottage Industries Exposition Ltd.

The Board of Directors of your Company have greatpleasure in placing their 28th Annual Report on theperformance of the company together with the auditedannual accounts for the year ended 31st March, 2006.

FINANCIAL HIGHLIGHTS(IN RS. LACS)

PARTICULARS

Sales & Other IncomeProfit before Depreciation& TaxationLess: DepreciationProfit Before TaxationLess: Provision For TaxationLess: Provision for Fringe Benefit TaxLess: Benefit for Deferred TaxProfit After TaxationAdd: Balance Brought Forward

from Previous YearPrevious Year AdjustmentProfit Available For Appropriation

Recommended AppropriationsTransferred To General ReserveBalance Carried To Balance Sheet

YEAR ENDED31-3-2006

16,729.19

560.31232.73327.58144.0048.00

(29.79)165.37

495.112.73

663.21

200.00463.21

YEAR ENDED31-3-2005

14,623.58

597.73152.09445.64146.00

(11.10)310.74

687.37(3.00)

995.11

500.00495.11

PERFORMANCE & OPERATIONS

The overall performance of the Company during thefinancial year under review was satisfactory with the salesand other income increasing by 14.39% to Rs.16729.19lacs as against Rs. 14623.58 lacs for the previousfinancial year. The profit after tax is reduced to Rs. 165.37lacs as against Rs.310.74 lacs for the previous financialyear. The increase in administrative & selling expenditure,depreciation at accelerated rate for impairment orobsolescence anticipated and provision for new fringebenefit tax adversely affected the profitability.

During the year under review, the Company has openedfour new showrooms at Mysore, Design Centre New Delhi,Habitat Cochin, Habitat Trivandrum. Three newshowrooms in New Delhi and two more showrooms, oneat Jaipur and another at Hyderabad are expected to startin the current fiscal.

Out of the sanctioned amount of Rs. 1000 lakhs by SIDBIfor Goa Projects, the Company has drawn term loan ofRs.370 lakhs for Calangute Project. Remaining termloan of Rs.630 lakhs will be drawn for the Panaji Projectby the end of the current fiscal.

DIVIDEND

No dividend has been recommended by the Board of

Directors for the year under report to conserve the fundsfor expansion and growth of the Company.

SUBSIDIARIES

In terms of prvisions of Section 212 of the CompaniesAct, 1956 the Audited Statements of Accounts, Directorsand Auditors Report thereon and the Statement pursuantto section 212 of the Companies Act 1956 of thesubsidiaries Cottage Industries Exposition (Kenya) Ltd.,Kenya for the financial year ended 31-12-2005,Renaissance Corporation Ltd., U.K. for the financial yearended 31 -01 -2006, Renaissance Corporation of America,USA for the financial year ended 31 -03-2006, CottageIndustries Exposition (Mauritius) Ltd., Mauritius for thefinancial year ended 30-09-2005 and CIE OverseasServices & Trading Co. Ltd., Mauritius for the financialyear ended 30-09-2005 and SPA Legends Resorts Pvt.Ltd. for the financial year ended 31 -03-2006 are annexedto this report.

DIRECTORATE

Mr. Rauf Ahmed Qazi and Mr. Pran Ganju, Directors ofthe Company, will retire by rotation at the ensuing AnnualGeneral Meeting and being eligible, offer themselves forreappointment.

AUDITORS

M/s Roy Malhotra & Co. (Srinagar), CharteredAccountants will retire at the ensuing Annual GeneralMeeting and being eligible, offer themselves for re-appointment. The Company has obtained the certificatefrom the Auditors as required under section 224 (1B) ofthe Companies Act, 1956 to the effect that theappointment, if made, would be within the limit specifiedin that section.

M/s V.K. Gupta&Co., Chartered Accountants, New Delhi,Branch Auditors of the Company (Except Goa & CochinBranches), will retire at the ensuing Annual GeneralMeeting and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

AUDITORS' REPORT

The observations made by the auditors in their reporthave been adequately dealt with in the notes on accounts,which are self explanatory and do not call for any furthercomments.

PUBLIC DEPOSITS

Your Company has neither accepted nor renewed anydeposits, during the year under review, under section 58Aof the Companies Act, 1956 and rules framed thereunder.




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PERSONNEL

None of the employees is covered under Section217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 asamended up to date.

HUMAN RESOURCES

Being aware of increased significance and importanceof human resources for the growth and development ofthe organisation your company is committed to enrichits manpower and accordingly imparts training to itsemployees from time to time within its limited financialresources. The company continues to have very cordialand harmonious relations with its employees.

AUDIT COMMITTEE

The report of Audit Committee containing its constitutionand functions is attached hereto.

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance of Section 217(2AA) of the CompaniesAct 1956, your Directors hereby confirm:

a) that in preparation of the annual accounts, theapplicable accounting standards have been followedalongwith the proper explanation relating to materialdepartures;

b) that such accounting policies have been selectedand applied consistently and the judgment andestimates made are reasonable and prudent soas to give a true and fair view of the state of affairsof the company as at 31st March, 2006 and of theprofit of the Company for the year ended on thatdate;

c) that proper and sufficient care has been taken forthe maintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, 1956 for safeguarding of assets of the Companyand for preventing and detecting the fraud and otherirregularities;

d) that the annual accounts have been prepared on agoing concern basis.

PARTICULARS UNDER SECTION 217(1)(e) OF THECOMPANIES ACT, 1956

The information required under the Companies (Disclosureof particulars in the Report of Board of Directors) Rules,1988, as regards Conservation of Energy and TechnologyAbsorption is not given since your Company does notbelong to the Scheduled Industries as specified underthe schedules to the above rules. Operations of yourCompany are not energy intensive and expenses on powerin relation to income are very nominal. However, steps &measures were taken to use energy conservatively.

The Company's activities do not involve any technologyabsorption or expenditure on Research and Development.

The Foreign exchange earnings and outgo during theyear under review are as follows:

Foreign exchange earnings :-i. Value of goods exported on GIF basisil. Sale in Foreign Exchangeiii. Management: Fees & Dividend

Foreign exchange outgo ::-i. On Travelling & sales promotioniii. Purchase of Goods & Furniture

ACKNOWLEDGMENTS

(In Rs. Millions): 823.18: 596.73: 11.95

(In Rs. Millions): 5.45: 0.49

The Board takes this opportunity to express their deepgratitude for the continued co-operation and valuableassistance received from its esteemed customers,suppliers and various Govt. of India's agencies especiallyISEPC, CEPC, IHEPC, Reserve Bank of India, TheJarnmu & Kashmir Bank Ltd. and SIDBI.

Your Directors also place on record their sincereappreciation towards the contributions made byemployees at all levels in the Company.

For and on behalf of the BoardFor COTTAGE INDUSTRIES EXPOSITION LTD.

M. Ashraf MirManaging Director

Date: 31st August, 2006Place: New Delhi

Rauf Ahmad QaziDirector

COphMGE.INDUSTRIES EXPOSITION LTDIi i 11 IlllhJT .1 lit I IK. l l lk l .n l l ' , , ; » l l i . B . Ul U . I ; J i - J M k j : i l i l l : : i» l i l t iM, U. Ml .!•




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Report of Audit Committee

The Company has a Audit Committee which consistsof following members being Directors other thanManaging Director & Whole Time Director namely:

1. Ms. Tabasum Mir - Chairman of the Committee2. Mr. Rauf Ahmad Qazi3. Mr. Pran Ganju

Ms. Tabasum Mir, was elected as Chairman of AuditCommittee. Ms. Tabasum Mir, Mr. Rauf Ahmed Qaziand Mr. Pran Ganju are the non executive Directors ofthe Company.

The responsibility of the Audit Committee is to superviseeffectively the financial reporting process, which ensuresfinancial & accounting controls and compliance with thefinancial policies of the Company. The Committeeinteracts with the Statutory and Internal Auditors toascertain the quality and veracity of the Company'stransactions to review the manner in which they areperforming their responsibilities and to discuss theirreports.

During the year, the members of Audit Committee havemet thrice and in addition, one meeting was also heldto consider the Annual Accounts of the Company forthe year ended 31st March, 2006.

During the year, the Committee reviewed:

1. The functions of internal audit.2. The internal controls ensuring the correctness,

adequacy and reliability of financial statements.3. Accounting implication of major transactions.4. Management Information Systems.5. Company's financial and risk management policies6. The Annual financial statements before submission

to the Board focusing primarily on accounting policiesand accounting standards and compliance of legalrequirements concerning the financial statements.

7. The appointment of internal and statutory auditors,their term of reference, scope of work and powers,remuneration etc.

The Board was informed by the Chairman of the AuditCommittee regarding various matters discussed in theAudit Committee and the actions taken thereat.

For and on behalf of the Board

M. Ashraf MirManaging Director

Date : 31s' August, 2006Place: New Delhi





STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES.

Name of the subsidiary

Particulars:

1 . Financial year of the company.

2. Extent of holding company's interest in subsidiarycompany:

Percentage of holding

3. ft Net aggregate amount of Profit/Losses of the subsidiarycompany for the financial year(s) so far as it concernmembers of the Company.:a) Dealt within the accounts of the Companyi) for the financial year of the subsidiary companyii) for the previous financial years of subsidiary company

since it became subsidiary.

b) Not dealt within the accounts of the Companyi) for the financial year of the subsidiary company

ii) for the previous financial years of the subsidiarycompany since it became subsidiary

# Note: As per the information available to us

4. # Material changes between the end of the financial year ofsubsidiary company and that of the Company in respect of:i) Change in the interest of holding co. in subsidiary(%)ii) Fixed Assetsiii) Investmentsiv) Money lent by the subsidiary companyv) Money borrowed by the subsidiary other than for

meeting current liabilities

# Note: As per the information available to us

RenaissanceCorporation ofAmerica, USA

31-03-2006

750,000 equityshares of US S 1each fully paid up.

100%

NilNil

US $(1691 44)(7524)US $ (328989)(14633)

NilNilNilNil

Nil

Cottage IndustriesExposition(Mauritius) Ltd.,Mauritius

30-09-2005

120,000 equityshares of MRU 100each fully paid up.

100%

NilNil

MRU 2,99,48.37444,623MRU (35,37,388)(5271)

NilNilNilNil

Nil

CIE OverseasServices & TradingCo. Ltd., Mauritius

30-09-2005

25,000 equityshares of MRU 100each fully paid up.

100%

NilNil

MRU 2,68,32,86139981MRU 13,52,47,031201518

NilNilNilNilNilNil

Cottage IndustriesExposition (Kenya)Ltd., Kenya

31-12-2005

13,940 equityshares of KSh. 1000each fully paid up.

100%

NilNil

KSh (57,74,31 3)(3580)KSh (15,842,967)(9823)

NilNilNilNil

Nil

RenaissanceCorporation Ltd.,U.K.

31-01-2006

321 ,000 equityshares of GBP 1each fully paid up.

100%

NilNil

GBP 28,0592198GBP (4,63, 128)(36281)

NilNilNilNil

Nil

SPA LegendsResorts Pvt.Ltd.

31-03-2006

11,77,000 equityshares of Rs. 10each fully paid up.

100%

NilNil

Rs. (7,604.16)

Rs. (3,849)-

Note : Figures in italics have been mentioned in Rupees Thousands (Conversion rates 1 US $ = Rs.44.48 as on 31.03.2006, 1 Mauritian Rupee = Rs.1.49 as on 30.09.2005, 1 Kenyan Shilling = Rs.0.62as on 31.12.2005, 1 Pound Sterling (E) = Rs. 78.34 as on 31.01.2006)

A.S. PrasadGeneral Manager (Accounts)

Geetu LallCompany Secretary

M. A. MirManaging Director





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Report of AuditorsTo,The Members of,COTTAGE INDUSTRIES EXPOSITION LTD.

We have audited the attached Balance Sheet of CottageIndustries Exposition Limited as at 31st March, 2006 andalso the annexed Profit & Loss Account and Cash FlowStatement for the year ended on that date annexedhereto, which also incorporate the accounts of thebranches at DELHI, CHENNAI, MUMBAI, MADURAI,BANGALORE, TRIVANDRUM, VARANASI, AGRA,JAIPUR, UDAIPUR & HYDERABAD audited by thebranch auditors. These financial statements are theresponsibility of the Company's Management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. These standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit providesa reasonable basis for our opinion.

We report that:1. As required by the Company (Auditor's Report)

Order, 2003 issued by the Central Govt. of India interms of Section 227(4A) of the Companies Act 1956,we enclose in the Annexure a statement on thematters specified in Paragraph 4&5 of the said Order.

2. Further to our comments in the annexure referred toin paragraph (1) above, we report that:

(a) We have obtained all the information andexplanations which to the best of our knowledgeand belief were necessary for the purpose ofthe audit.

(b) In our opinion proper books of accounts asrequired by law have been kept by the Companyso far as appears from our examination of thebooks of account at Head Office, Cochin & GoaBranches and as reported to us by the BranchAuditors.

(c) The Balance Sheet and the Profit & Loss

Account dealt with by this report are inagreement with the books of the account.

(d) Based on the confirmations received fromDirectors of the Company and the informationand explanations given to us, none of theDirector is disqualified from being appointed asDirector in terms of section 274(1 )(g) of theCompanies Act, 1956.

(e) In our opinion, the Balance Sheet, Profit andLoss Account and the Cash Flow Statement ofthe company comply with the AccountingStandards referred to in sub-section 3(c) ofsection 211 of the Companies Act, 1956.

(f) In our opinion and to the best of our informationand according to the explanation given to us,the said accounts, together with the schedulesand subject to accounting of Income frompremium on sale of DEBP Licences, Govt.Department refunds & insurance claims on cashbasis (Note No. 5) confirmation of balances (NoteNo. 13) seizure of stock having FOB valueRs.5919067/-lying in possession of Hotel ParkSheraton (Adyar), Chennai (Note No.16(b)),Land at Madanpur Khadar & Basement atD.C.M. Building, New Delhi not being registeredin the name of the company (Note No. 17), non-inclusion of 1/12th share of Agra land & buildingas per the Hon'ble High Court Order (Note No. 19)and read with other notes in schedule 14 givethe information required by the Companies Act,1956, in the manner so required and give a trueand fair view in conformity with the accountingprinciples generally accepted in India:-

i) In the case of the Balance Sheet, of thestate of affairs of the Company as at 31st

March, 2006;ii) In the case of the Profit & Loss Account, of

the Profit of the company for the year endedon 31st March, 2006 and

iii) In the case of the Cash Flow Statement, ofthe Cash Flow for the year ended on 31st

March, 2006.

For Roy Malhotra & Co. (Sgr.)Chartered Accountants

Place: New DelhiDate: 31s' August, 2006

K.K. ftfehraPartner

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