DIRECTORS REPORT To, The Members of MIRZA INTERNATIONAL LIMITED Your Directors have pleasure in presenting their Thirty-sixth Annual Report on the business and operations of the Company and the audited accounts for the Financial Year ended March 31, 2015. 2. MAJOR HIGHLIGHTS OF FINANCIAL PERFORMANCE: Your Company’s performance during the year under report has been Commendable. The Financial Year 2014-15 has been a successful year as your Company has added capacities in Tannery as well as in Shoe Divisions. The major highlights are as given below: • The Revenue from operation increased to Rs. 918.99 Crore from Rs. 707.35 Crore and thus showing growth of about 30%. • The Profit Before Tax is Rs. 78.73 Crore as compared to Rs. 67.78 Crore for the previous year and therebyshowing the growth of about 16%. • The EBITDA increased to Rs. 142.64 Crore from Rs. 121.82 Crore in the previous year and thus showing an increase of about 17%. • Export increased to Rs. 585.32 Crore from Rs. 450.20Crore showing a growth of about 30%. • Revenue from Domestic Market increased to Rs. 258.52 Crore from Rs. 199.89 Crore showing agrowth of about 29%. • Cash Profit increased to Rs. 75.78 Crore fromRs. 65.41 Crore showing an increase of about 16%. 3. GROWTH STRATEGY The Board of Directors, in its meeting held on 11th March, 2015 has approved, in- principle, the Scheme of Merger / Amalgamation of Genesis footwear Enterprises Pvt. Ltd. (A Company under the same management and engaged in same line of business) and submitted the Scheme to the Stock Exchanges and Securities & Exchange Board of India (SEBI) for their approval. The copies of the documents in connection with the above have been posted at the Website of the Company. The proposed Merger will lead to an increased value generation for the Merged Company. 4. SUBSIDIARY / ASSOCIATE COMPANY Company does not have any Subsidiary Company. However, Azad Multispeciality Hospital & Research Centre Ltd. (A Company registered U/s 8 of the Companies Act, 2013) is an Associate Company in which Company has Subscribed & Paid up Capital of 200000 Equity Shares of Rs. 10/- each, making 41.66% of the Paid up Capital. The Financial Statement of the Associate Company has not been consolidated in view of the Notification dated 14th October, 2014 of the Ministry of Corporate Affairs. 5. DIVIDEND After considering the Company's profitability, cash flow and overall financial performance, your Directors are pleased to recommend a Dividend of Rs. 0.50 (25%) per Equity Shares of face value of Rs. 2/- each. The total outflow on account of dividend, if approved by Members, will be of about Rs. 5.43 Crore including about Rs. 0.94 Crore payable towards Dividend Distribution Tax, Surcharge and Cess on the same. The Company paid the same dividend for the year ended 31st March 2014 also. The Register of Members and Share Transfer Books will remain closed from 22nd September, 2015 to 29th September, 2015 (both days inclusive) for the purpose of ascertaining entitlement for the said dividend. The Thirty-sixth Annual General Meeting of the Company is to be held on Tuesday, 29th September, 2015. 6. RESERVES The Board proposes to transfer the amount of Rs. 5.50 Crore to Reserve, as compared to Rs. 5.00 Crore transferred in the previous year. 7. SHARE CAPITAL During the year under review, your Company's Authorised Share Capital remained unchanged at Rs.45 Crore (Forty Five Crore only) comprising 225000000 Equity Shares of Rs. 2 each. The Paid Up Equity Capital as at 31st March, 2015 remained at Rs. 18.54 Crore. 8. DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment: During the year under report in compliance of the provisions of Companies Act, 2013 and the Listing Agreement with the Stock Exchanges, Mrs. Vinita Kejriwal (DIN 06952088) was appointed as an Independent Director for a term of 5 years pursuant to Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 and clause 49 of the Listing Agreement. Retirement by Rotation: In accordance with the provisions of Companies Act, 2013, Mr. Shahid Ahmad Mirza and Mr. Tauseef Ahmad Mirza, Whole Time Directors of the Company, are liable to retire by rotation at ensuing Annual General Meeting and are eligible for re-appointment. The Board recommends their re-appointment. Independent Directors With coming into the force of the Companies Act, 2013 the Board appointed all the existing Independent Directors viz. Mr. P.N Kapoor , Dr. Yashveer Singh, Mr. Subhash Sapra, Mr. Q. N. Salam, Mr. Islamul Haq, Mr. Sudhindra Jain and Mrs. Vinita Kejriwal as Independent Directors under Section 149 of the Companies Act, 2013, for a term upto 5 years. The shareholders at their Annual General Meeting held on 20th September, 2014 have approved their appointment. 9. EVALUATION OF BOARD'S PERFORMANCE In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the performance evaluation of the Board, its Committees and individual Directors, was carried out during the year under review. Questionnaire Approach was adopted for said evaluations. The Nominations and Remuneration Committee at its meeting carried out a separate exercise for evaluating every Director's performance. The evaluation of Independent Directors was carried out without the presence of that Director. A separate meeting of the Independent Directors was convened which reviewed the performance of the Board (as a whole), the non Independent Directors and the Chairman. Some of the key criteria's for performance evaluation were as follows: Performance evaluation of Board and Committees. 1. Degree of ful filment of key responsibilities. 2. Board structure and composition. 3. Effectiveness of Board processes, information and functioning. 4. Board culture and dynamics. 5. Quality of relationship between the Board and the Management. 6. Establishment and delineation of responsibilities to Committees. Performance evaluation of Directors 1. Provide meaningful and constructive contribution and inputs in meetings. 2. Display a good degree of understanding of the Company, Industry Sector, Geography. 3. Display independence of judgement. 10. FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS The Independent Directors of the Company are persons of integrity, possessing rich experience and expertise in the field of corporate management, finance, capital market, economic and business information. The Company has issued appointment letters to the Independent Directors, setting out in detail, the terms of appointment, duties, roles, responsibilities and expectations from the appointed Director. Presentations are regularly made to the Board of Directors /Audit Committee /Nomination & Remuneration Committee/ Corporate social responsibilities Committee /Stake holder relationship Committee on various related matters, where Directors have interactive sessions with the Management. 11. REMUNERATION POLICY The Company follows a policy on remuneration of Directors, Key Managerial Personnel (KMP), Senior Management personnel (SMP) and other employees of the Company. The Policy is approved by the Nomination & Remuneration Committee of the Company. The Independent Directors of the Company shall be entitled to receive remuneration by way of sitting fees for attending meeting of Board. The Managing Director of the Company shall be paid remuneration as approved by the shareholders on the recommendation of the Board and Nomination & Remuneration Committee. The Remuneration Policy of the Company is given as Annexure I to the Board's Report. 12. RISK MANAGEMENT POLICY Risks are an integral part of business and it is imperative to manage these risks at acceptable levels in order to achieve business objectives. The risks to which the Company is exposed are both external and internal. Your Company has formulated a Risk Management Policy to provide an integrated and standardized approach in managing all aspects of risk to which your Company is exposed. Audit Committee monitors the Enterprise Risk Management Policy with participation from officers responsible for risk management and to take appropriate steps to ensure that these risks are at acceptable levels. 13. WHISTLE BLOWER POLICY & VIGIL MECHANISM Your Company has laid down a Vigil Mechanism and formulated a Whistle Blower Policy in order to provide a framework for responsible and secure Whistle Blowing Mechanism. The Policy aims to provide an avenue for Employees and Directors to raise their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct and it also empowers the Audit Committee of Board of Directors to investigate the concerns raised by them. The Policy is also posted on the Website of the Company. All Directors and Employees of the Company are eligible to make protected disclosures under the Policy addressed to Vigilance Officer of the Company in relation to matters concerning the Company. During the year under review, no employee of the Company was denied access to the Audit Committee. 14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 The Company has not given any Loans or Guarantees covered under the provisions of Section186 of the Companies Act, 2013. The details of the investment made by the Company is given in the notes to financial statements. 15. INTERNAL CONTROL SYSTEM The Company has put in place an adequate system of internal control commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information complying with applicable status, safeguarding of assets of the Company and ensuring Compliance with Corporate Policies. The Company has a dedicated Internal Audit team headed by a Qualified Chartered Accountant with skills commensurate with size, nature and complexity of operations of the Company. Internal Auditor reports functionally to the Audit Committee of Board which reviews and approves risk based annual internal audit plan. Audit Committee periodically review the performance of internal audit function. During the year, the Audit Committee met regularly to review reports submitted by the internal audit department. All significant audit observations and follow-up actions there on were reported to the Audit Committee. The Company has a rigorous business planning system to set targets and parameters for operations which are reviewed with the actual performance to ensure timely action, if required. The Audit Committee reviews adherence to internal control systems, Internal Audit Reports and legal compliances. The Committee reviews all quarterly and yearly results of the Company and recommends the same to Board for its approval. 16. TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF Pursuant to the provisions of Section 124 of the Companies Act, 2013 money transferred to the Unpaid Dividend Account of the Company and which has remained unpaid or unclaimed for a period of seven years from the date of transfer by the Company has been deposited to the Investor Education Protection Fund (IEPF) established by Central Government. 17. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is given separately and forms part of Annual Report. 18. INSIDER TRADING REGULATIONS The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of Unpublished Price Sensitive Information (UPSI) in relation to the Company and during the period when the Trading Window is closed. The Company Secretary & Head of Compliance is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code. 19. CODE OF CONDUCT FOR DIRECTORS & SENIOR OFFICERS The Board at its Meeting has adopted a Code of Conduct for Directors & Senior Management in accordance with the provisions of the Companies Act, 2013 and the Listing Agreement. The Code also incorporates the duties of Independent Directors. All the Board Members and Senior Management Personnel have confirmed compliance with the Code. A declaration to that effect signed by the Managing Director forms part of the Corporate Governance Report. A copy of the Code has been put on the Company's website. 20. HUMAN RESOURCES Your Company treats its "human resources" as one of its most important assets. During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. Your Company's thrust is on the promotion of talent internally through job rotation and job enlargement. The Company has strength of 2791 employees as on 31st March, 2015. 21. CORPORATE SOCIAL RESPONSIBILITY(CSR) The Corporate Social Responsibility Committee has formulated and recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingactivities to be undertaken by the Company, which has been approved by the Board. The Company has identified Education and Health as key focus areas of engagement for CSR activities. The Company would also undertake other initiatives in compliance with the Schedule VII of the Companies Act 2013. The Annual Report on CSR activities is annexed herewith and marked as Annexure II to this Report. 22. PARTICULARS OF EMPLOYEES Particulars of employees covered by the provisions of Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure III to this Report. 23. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013; (a) That in the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013 have been followed along with proper explanation relating to material departures; (b) That such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date ; (c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) That the annual financial statements have been prepared on a going concern basis; (e) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; (f) That systems to ensure compliance with the provisions of all applicable laws were in place were adequate and operating effectively. 24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows: MIL has always been a frontrunner in continually improving its operational performance in all areas, like productivity, yield, utilization and host of other operating metrics, while reducing the consumption of fuel, power, stores and others. While undertaking the modernization and technology up-gradation of production facilities, due consideration is also given in selection of Plant and Equipment which conforms to the benchmarking standards in terms of energy conservation methodologies. The key initiatives for conservation of energy taken by the Company were: (a) Installation of new multi-fuel (Coal/Wood Chips fired) Boiler has replaced consumption of Coal and Diesel by usage of wood chips which is more cost effective and efficient and resulted into lower cost of fuel per sqft of leather. These are more environment friendly also. (b) Installation of High Tech Leather Drying Machine has reduced considerably the Leather Drying Process and thus, resulting to reduced processing hours and saving of Power. (c) Increased use of CFL/LED lighting solutions to replace the conventional lighting systems which paves the way for substantially reduced energy consumption. (d) Company has taken up various Water Management Plans for optimum use of water resources, like treatment of process generated water and planned reuse of treated water for Green-Belt development, equipment, floor, road washing and some specified process activities before its final discharge. (e) Installation of rain water tanks having dual plumbing for its re use of rain water and/or treated water for toilets, flushing and gardening purposes. (f) The options for installing solar lights and solar panels for plant lighting are evaluated for using renewable energy. RESEARCH AND DEVELOPMENT (R&D) Research and Development (R&D) activities at MIL are focused mainly on process improvements, development of new designs, processes and products, energy optimization, waste utilization and use of low quality raw materials. Company keeps itself abreast of the technological up-gradation at all stages of production. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION The Company absorbs and adapts the technologies on a continuous basis to meet its specific products needs from time to time. Innovation in process control, product development, cost reduction and quality improvement are being made on a continuous basis looking to the market requirements. FOREIGN EXCHANGE EARNINGS AND OUTGO During the year, the Foreign Exchange earned was X 585.32 Crore mainly on account of Exports. The Foreign Exchange outgo was X 128.75 Crore. 25. CORPORATE GOVERNANCE CERTIFICATE Your Company has complied with the Corporate Governance requirements under Companies Act, 2013 and as stipulated under the provisions of the Listing Agreement entered into with the Stock Exchanges. A detailed Report on Corporate Governance is given as Annexure IV to this Report. A certificate of Statutory Auditors, confirming compliance of the Corporate Governance requirements by the Company, is attached to the Report on Corporate Governance. 26. AUDITORS a) STATUTORY AUDITORS M/s. Khamesra Bhatia & Mehrotra, Chartered Accountants, (ICAI Registration No. 001410C) were appointed as Statutory Auditors of your Company to conduct the audit of accounts for the year ended 31st March, 2015. Their term of appointment expires at the conclusion of the forthcoming Annual General Meeting. M/s. Khamesra Bhatia & Mehrotra have expressed their willingness to get re-appointed as the Statutory Auditors of the Company and have furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013, and the rules framed thereunder. In terms of the Listing Agreement, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Khamesra Bhatia & Mehrotra as the Statutory Auditors of the Company. The Auditors' Report to the Shareholders for the year under review does not contain any qualification. b) SECTRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. A S T O & Co. LLP, a firm of Company Secretaries in practice were appointed to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. There are no adverse remarks or observations made in their Secretarial Audit Report. The Report of Secretarial Auditors is given in Annexure V to this Report, which is attached herewith and forms a part of Board's Report. c) COST AUDITORS The Board of Directors have appointed Mr. A. K. Srivastava, Cost Accountant, for conducting the Cost Audit of Company's cost records in respect of PVC / TPR Soles and Rubber Sole for the year ended 31st March, 2015. The Cost Audit Report for the financial year 2013-14 was filed within stipulated time. The Cost Audit Report for the financial year 2014-15 shall also be filed within prescribed time. 27. EXTRACT OF ANNUAL RETURN: As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT 9 forms a part of this Annual Report as ANNEXURE VI . 28. NUMBER OF BOARD MEETINGS During the Year 2014-15, Board met 8 times (on 24th May, 2014, 24th July 2014, 8th November, 2014, 23rd January, 2015, 3rd February, 2015, 20th February, 2015, 03rd March, 2015 and 11th March, 2015). The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 29. COMPOSITION OF AUDIT COMMITTEE The Company has an Audit Committee comprising of 5 Members namely Mr. Sudhindra Jain, Chairman of the Committee and Mr. P. N. Kapoor, Mr. Subhash Sapra, Mr. Qazi Noorus Salam, Mr. Irshad Mirza as members. Other details about the said Committee are given in Corporate Governance Report. All the recommendations made by Audit Committee were accepted by the Board. 30. RELATED PARTIES TRANSACTIONS All Related Party Transactions entered into during the financial year under review by the Company were on arm's length basis and in ordinary course of business. All related party transactions are placed before the meeting(s) of Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the financial year for the transactions which are of a foreseen and repetitive in nature. The Company's Policy on Related Party Transaction has been posted on Company's Website. The web link to access the said policy is <http://mirza>. co.in/party_transactions.html 31. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he meets the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. 32. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance for sexual harassment at work place and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace in line with the provision of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 33. CREDIT RATING CRISIL has given rating to the Company as 'CRISIL A / Stable/CRISIL'A1 from 'CRISIL A-/Stable/CRISIL A2+'. The rating reflects your Company's strength supported by the cost optimisation initiative and expansion in the higher margin domestic retail business. CRISIL believes that MIL will continue to benefit from its integrated operation and promoters' extensive industry experience. ICRA Limited has also Reaffirmed the Long Term Rating at [ICRA] A and has assigned a "Stable" outlook on the Long Term Rating. 35. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review. a. Details relating to deposits covered under Chapter V of the Companies Act, 2013. b. Issue of equity shares with differential right as to dividend, voting or otherwise c. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operation in future. 36. ACKNOWLEDGEMENTS Your Directors are pleased to place on record their sincere thanks to the Banks and various Government Authorities for the support and co-operation extended to the Company and place on record their appreciation for the sincere and devoted services rendered by all employees of the Company at all levels. Your Directors are especially grateful to the shareholders for reposing their trust and confidence in the Company. For and on behalf of the Board IRSHAD MIRZA Chairman Place: Kanpur Date: 30th July, 2015 |