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History of RK Suitings Ltd.

R.K. SUITINGS LIMITED [RKSLs] was incorporated as a public limited Comp. on November 27, 1987 in the State of Rajasthan. The Comp. is promoted with the main object of manufacturing & processing any & all types of fabrics and textiles. The Comp. obtained the Certificate for Commencement of Business from the Registrar of Companies, Rajasthan on March 22, 1988. The Comp. has set up in 1994 a unit [Process Houses] to process 24 lakh metres of suiting and 4/8 lakh metres of shirting per annum with the financial assistance of Rs. 111 lakhs from Gujarat Industrial and Investment Corporation [GIICs] on a free-hold plot of land admeasuring 12400 square metres at Akash Ganga Industrial Estate, Village Vasna - lawa, Tehsil Sanand, Distt. Ahmedabad. The existing unit, which is the phase i of project, is being run smoothly. The phase II of the project was conceived by Comp. in April 1995.

Presently the Comp. is a closely held Public Limited Company with authorised & paid up capital of Rs.600 lakhs and Rs. 99.65 lakhs respectively.

ACTIVITIES UNDERTAKEN BY THE COMPANY DURING 1988-94

The Comp. was Incorporated on November 27, 1987 with the object of setting up project for installation of shuttleless looms to make high quality fabric. A project report was prepared but owing to the high cost, the project was dropped. However, it was decided to set up a process house for processing of synthetic fabrics. Work on this revised project has started.

It was decided to set up the process house at Ahmedabad. Accordingly, land was acquired at Akashganga Industrial Estate at Taluka Sanand, Ahmedabad, site development work, construction of building was started & orders for plant and machineries were placed.

The project report was submitted to Financial Institution in 1991- 92 for availing loan of Rs. 111 lacs which was sanctioned by GIIC. The Comp. has availed loan to the extent of Rs. 108.45 lacs. It has also received sanction for working capital of Rs. 65 lacs. These sanctions were received for phase I. The work on site development, building, plant & machineries, misc. fixed assets, effluent treatment plant etc. is near completion. The company has commenced its commercial production in January 1995.

PRESENT BUSINESS OF THE COMPANY

The Comp. is engaged in processing of polyester, viscose and cotton fabric both on its own Acc. & job work basis. The Comp. markets its fabric under the brand name RK, which has become a popular brand as a Comp. namely R.K. PROCESSORS LTD. & a firm M/s. R.K. SYNTHETICS from the RK GROUP are already marketing their production under the said brand name for several years. The brand name has not been registered in the name of Comp. but in the name of group concern R K Synthetics. The Comp. has entered into an agreement with R K Synthetics on October 4, 1995 as per which the Comp. is allowed to use the brand name for period of 20 years on a token fees of Rs. 1000/-.

During the last year 1994-95 which happens to be the first year of Company operation having only 3 months operation, the Comp. has registered a turnover of Rs.125.98 lakhs, with job work charges of Rs. 1.92 lakhs, commission of Rs. 18.67 lakhs & net profit of Rs. 8.23 lakhs respectively as per the audited statement of accounts.

The implementation of Company Phase i was delayed by three months as per the appraisal of GIIC & there was a cost over-run of Rs. 19.94 lakhs in implementation of the said phase i of project. The cost escalation was met by the Promoters.

There was a fire in the grey godown at the factory premises of the Comp. on May 22, 1995 in which stocks worth about Rs. 40.35 lacs were destroyed & properties were also damaged resulting in the capital loss of about Rs.2.07 lacs. The Comp. has filed claim for above loss with New India Assurance Company. The insurance Comp. has already twice carried out inspection & finalisation of claim is still pending.

1. There is no contingent liability in the opinion of the Management of Company.

2. The Comp. has not written off preliminary expenses and deferred revenue expenditure during the year.

3. The central government vide notification no. 477[Es] dated 25.7.91 under Industrial Development Regulation Act, 1951 has exempted the industry from registration/licence. Hence, the installed capacity to be treated as the capacity registered for statistical purpose of concerned Ministry.

4. The Comp. has purchased raw materials worth Rs. 3,17,501/- from Sharad Syntex Pvt. Ltd., a group company, at prevailing market price, Shri Rakesh Kabra S/o. Shri R. S. Kabra, Director of this company, is a Director of Sharad Syntex Pvt. Ltd.