DIRECTORS REPORT TO THE MEMBERS, Your Directors have great pleasure in presenting twenty fifth annual report of the company together with the audited annual accounts for the year ended 31st March 2015. DIVIDEND Board of Directors recommended dividend of 15% equivalent to Rs. 0.30/- on each fully paid-up equity share of Rs. 21- for the year ended 31st March, 2015. The dividend will entail an outflow of Rs. 101.34 Lacs excluding taxes. The dividend, in the opinion of the board represents a prudent balance between the need for the company to reward its shareholders as well as the need to plough back the profits for the Company's own requirements. RETAIL EXPANSION The Company continues its efforts to boost sales through different promotional schemes and campaigns and continued its effort to open retail outlets across India in Malls as well as on high Streets. The Company opened total 22 retail stores. As on 31st March 2015 the numbers of Company owned/managed stores were 237. The Company during the year took steps to improve sales and profitability by revamping its E-commerce platform, "archiesonline.com by making it more user friendly and in line with the existing indian e-commerce websites to attract more customers. Company has also tied up with various E-retailers who have vast presence in the virtual space like Flipkart, Snapdeal, E-lndia Store, Groupon India, Saffron Art Pvt. Ltd., Gift A love.com Phoolwala.com My flower tree, Shopclues, Indian Gifts Portal, Fern N Petals & Bookaflower.com Your Company will continue with its efforts to open new outlets across india. With expectation of improvement in economy, your Company has plans to open 25 more stores including Archies & Hallmark Stores during the year 2015-16. CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance and Management Discussion and Analysis Report together with a certificate from the Company's Auditors confirming compliance is set out in the annexure forming part of this report. In compliance with the Corporate Governance requirements, the Company has implemented a Code of Conduct for all its Board Members and Senior Management Personnel, who have affirmed compliance thereto. The said Code of conduct has been posted on the Company's website. DIRECTORS' RESPONSIBILITY STATEMENT To the best of the knowledge and belief and according to the information and explanation obtained, your Directors make the following statements in terms of section 134(5) of the Companies Act, 2013: (i) That in the preparation of the annual accounts for the year ended 31 st March 2015, the applicable Accounting Standards have been followed, along with proper explanation relating to material departures, if any; (ii) That such accounting policies as mentioned in the Notes to Accounts, have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent, so as to give a true and fair view to the state of affairs of the Company as at 31 st March, 2015 and of the profit of the Company for the year ended on that date; (iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That the annual accounts have been prepared on a going concern basis; (v) That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (vi) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. DIRECTORS Pursuant to the provisions of section 152 of the Companies Act, 2013, atleast two-third of the Directors shall be subject to retirement by rotation out of which, one-third of such Directors must retire from office at each Annual General Meeting of the shareholders and a retiring director is eligible for reelection. Accordingly, Mr. Dilip Seth retires by rotation and being eligible, has offered to be re-appointed at the ensuing Annual General Meeting. During the year under review, the Company appointed Mr. Sunil Behl, Mr. Prem kumar Chadha and Mr. Arun Singhal as Independent Directors of the Company for a period of five consecutive years and Mr. Deepak Thakkar as Non Independent Director of the Company for a period of two years. In terms of Section 149 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Clause 49 of the Listing Agreement, the Company is required to have a woman director on its board. Dr. Bhavna Chadha was appointed as Independent Director of the Company pursuant to Section 149 of the Companies Act, 2013 for a period of two years. Mr. Pramod Arora Jt. Managing Director, did not offer himself for re-appointment as director, retired at the previous Annual General Meeting held on 23rd September 2014 BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing agreement, the Board, in consultation with its Nomination & Remuneration Committee has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committee and Individual Directors, including Independent Directors. A structured questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. Board members had submitted response on a scale of 4 (outstanding) -1 (needs improvement) for evaluating the entire Board, respective Committees of which they are members and of their peer Board members, including Chairman of the Board. The Independent Directors had met separately without the presence of Non-independent Directors and the members of management and discussed, inter-alia, the performance of Non - Independent Directors and Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of executive and Non-Executive directors. The Nomination and Remuneration Committee has also carried out evaluation of every Director's performance. The performance evaluation of all the Independent Directors have been done by the entire Board, excluding the Director being evaluated. The Board of Directors expressed their satisfaction with the evaluation process. NUMBER OF MEETINGS OF THE BOARD The details of the number of meetings of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance Report. AUDITORS M/s. Uberoi Sood and Kapoor, Chartered Accountants, the Statutory Auditors of the company hold office up to the forthcoming Annual General Meeting of the company and are eligible for re-appointment and have confirmed their eligibility and willingness to accept the office of the auditors, if re-appointed. The Company has received letter from them that their re-appointment, if made, would be within the prescribed limits under Section 139 of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Board of Directors have recommended to appoint M/s. Uberoi Sood and Kapoor, Chartered Accountants, the Statutory Auditors of the Company to audit the accounts of the Company for the financial year 2015-16. The Notes on Financial Statements referred to in the Auditor's Report are self explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. COST AUDITORS As per the new Companies (Cost Records and audit) Rules 2014 the appointment of Cost Auditor is not required for your Company. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. RISK MANAGEMENT Your Company is well aware of risks associated with its business operations. Comprehensively risk management system is being put in place involving classification of risk, adoption of risk management measures and a strong mechanism to deal with potential risks and situation leading to a rise of risks in an effective manner. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO. The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo information are given in Annexure 'A' to the Directors' Report, in terms of the requirements of Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9, as required under Section 92(3) of the Companies Act, 2013 is annexed herewith as Annexure-B and forms an integral part of this report. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Board has appointed M/s. Dayal & Maur, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure C to this Report and forms an integral part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. EMPLOYEES' REMUNERATION None of the Employees drew salary more than Rs. 5,00,000/- per month or Rs. 60,00,000/- in a year as required under the provisions of Section 197 (12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. NOMINATION AND REMUNERATION POLICY The Board of Directors have constituted Nomination and Remuneration Committee pursuant to Clause 49 of the Listing Agreement comprising Mr. Sunil Behl (Chairperson), Mr. Prem Kumar Chadha and Mr. Arun Singhal as members of the Committee. The Board of Directors has formulated a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy also lays down the criteria for selection and appointment of Board Members. The details of the Policy forms a part of this report as Annexure - D and the Details / Disclosures of Ratio of Remuneration to each Director to the median employee's remuneration as Annexure - E. CORPORATE SOCIAL RESPONSIBILTY The Board of Directors of the Company have constituted Corporate Social Responsibility (CSR) committee pursuant to Section 135 of Companies Act, 2013, schedule VII and relevant rules and provisions comprising Mr. Sunil Behl (Chairperson), Mr. Anil Moolchandani and Mr. Dilip Seth as members of the Committee on 16th May, 2014. The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a CSR Policy indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities. The Corporate Social Responsibility policy is also available on our website at the link, <http://www.archiesonline.com/htdocs/csr.pdf> During the year, the Company has spent Rs. 7,00,000/- on CSR activities and the balance unspent amount of Rs. 14,41,497 will be spent in the financial year 2015-16 due to reason that the Company was in the process of selecting suitable projects for CSR. The Annual Report on CSR activities is annexed herewith as Annexure - F. WHISTLE BLOWER POLICY The Board at its meeting held on 16th May 2014, adopted a Whistle Blower Policy in accordance with the provisions of the Companies Act 2013 and as per the revised Clause 49 of the Listing Agreement, which provides a formal mechanism for all directors, employees and other stakeholders of the Company, to report to the management their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Company's Business Code of Conduct. The Policy also provides a direct access to the Chairperson of the Audit Committee to make protective disclosures to the management about grievances or violation of the Company's Business Code of Conduct. The Whistle Blower policy is also available on our website at the link, <http://www.archiesonline.com/htdocs/Whistle-blower-policv-ARCHIES->LIMITED.pdf. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE The Board of Directors of the Company have constituted Internal Complaint Committee who will hear and redress the complaint made in writing by any aggrieved woman of sexual harassment at workplace as per the "Sexual Harassment of Woman At Workplace (Prevention, Prohibition and Redressal) Act, 2013".The Policy is also available on our website at the link, <http://www.archiesonline.com/htdocs/Sexual-Harassment-Policy.pdf>. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Woman At Workplace (Prevention, Prohibition and Redressal) Act, 2013. AUDIT COMMITTEE The Audit Committee as on 31st March, 2015 comprises Independent Directors namely Mr. Sunil Behl, Mr. Arun Singhal and Mr. Prem Kumar Chadha. All the recommendations made by the Audit Committee were accepted by the Board. RELATED PARTY TRANSACTIONS All transactions entered with the Related Parties for the year under review were on arm's length basis and in the ordinary course of business. Thus disclosure in Form AOC-2 is not required. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. All related party transactions are placed before the Audit Committee as also to the Board for approval. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is available on our website at the link, <http://www.archiesonline.com/htdocs/transactionPolicy.pdf>. Your Directors draw attention of the members to Note 34 to the financial statement which sets out related party disclosures. PUBLIC DEPOSITS During the year, your Company has not accepted and/or renewed any public deposits in terms of the provisions of the Companies Act, 2013. PARTICULARS OF LOANS GIVEN, INVESTMENT MADE AND GUARANTEES GIVEN During the year under review the Company has not granted any loans and Investment made and given guarantee under the provisions of Section 186 of the Companies Act, 2013. INDUSTRIAL RELATIONS The relations between the Company and its employees continued to be cordial and harmonious throughout the year under review. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operation, ACKNOWLEDGEMENT Your Directors would like to take this opportunity to express their sincere thanks to its valued franchisees, distributors, C & F agents, collaborators, bankers. Government authorities, customers and all other business associates for their continued co-operation and patronage. The Directors would also like to express their deep sense of appreciation to all the employees who are committed to strong work ethics, excellence in performance and commendable teamwork and have thrived in a challenging environment. The Directors wish to express their gratitude to the valued shareholders for their unwavering trust and support. For and on behalf of the Board Anil Moolchandani Chairman-cum-Managing Director Place : Delhi Date : 05 August, 2015 |