DIRECTOR'S REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS Your Directors have pleasure in presenting the Sixteenth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2015. DIVIDEND In view of the loss, your Directors regret their inability to recommend any Dividend for the year under review. REVIEW OF OPERATIONS The total production of Denim fabric during the year under review was 11.55 million meters as compared to 9.48 million meters during the previous year. The Company has achieved a sales turnover of Rs. 16726.54 lacs during the year under review as compared to a turnover of Rs. 11859.96 lacs during the previous year. The Company is a sick company as defined under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and the Draft Rehabilitation Scheme is under implementation. The segment wise details as required by Accounting Standard - 17 are given in the notes forming part of the Accounts. INDUSTRY STRUCTURE AND DEVELOPMENTS The Denim capacity was around 600 million meters about five years ago which has increased to more than 1000 million meters. In the past two years, the Indian Denim industry has seen an increase in capacity of about 200-250 million meters due to capacity addition by existing players as well as entry of new payers in the field. FUTURE PROSPECTS The Denim industry has been growing at a steady pace but over capacity is a serious threat due to entry of several medium/large players and the increasing competition from the un organized sector. Fluctuation in the prices of Cotton and other key raw materials are some of the challenges being faced by the denim Industry. The Company is making efforts at value addition to improve its performance. CORPORATE GOVERNANCE A Report on Corporate Governance along with the Auditor's Certificate regarding Compliance of the conditions of Corporate Governance pursuant to clause 49 of the Listing Agreement are annexed hereto. The Directors refer to the observations of the Auditor and wish to state that as on the date of this Report, the Composition of the Board of Directors, is in compliance of clause 49 (II)(A)(2) of the Listing Agreement and Company is taking steps to appoint a Chief Financial Officer. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134(3)( c ) of the Companies Act, 2013 the Directors confirm that: 1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; 2. Appropriate 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 at March 31, 2015 and the loss of the Company for the year ended March 31, 2015; 3. 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; 4. The annual accounts have been prepared on a going concern basis; and 5. Internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; 6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively. AUDIT COMMITTEE In accordance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr. Mahendra Lodha - Chairman, Mr. Deonath Singh, Mr. H. D. Ramsinghani and Mr. R. G. Kulkarni. The Audit Committee acts in accordance with the terms of reference specified from time to time by the Board. There were no instances when the recommendations of the Audit Committee were not accepted by the Board during the year under review. OTHER COMMITTEES The Company has constituted the Stakeholders Relationship Committee which presently consists of Mr. D. N. Singh (Chairman), Mr. H. D. Ramsinghani and Mr. S. S. Arora. The Company has also constituted the Risk Management Committee which presently consists of Mr. D. N. Singh (Chairman), Mr. H. D. Ramsinghani, Mr. Mahendra Lodha and Mr. R. G. Kulkarni. The Board has formulated a Risk Management Policy covering various risks associated with the business of the Company. The Company has also constituted the Nomination and Remuneration Committee which presently consists of Mr. Mahendra Lodha (Chairman), Mr. D. N. Singh, Mr. S. S. Arora and Mr. R. G. Kulkarni. The Company has not constituted a Corporate Social Responsibility Committee as the Company does not fulfill the prescribed criteria. DISCLOSURES Information as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo is annexed hereto as Annexure A and forms a part of this Report. No remuneration was paid to the Managing Director during the year under review and no remuneration was paid to non executive Directors other than sitting fees for attending meetings of the Board or committees thereof. There were no employees drawing remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year under review or part thereof. The Details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed hereto as Annexure B and forms a part of the Report. Details of loans, guarantees and investments, if any, are given under the Notes to Financial Statements. All transactions entered in to with Related Parties during the year under review were at an arms length at prevailing market rates and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. There were no material related party transactions with the Promoters, Directors or the Key Managerial Personnel or their relatives during the year under review. There were no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations. The Company has formulated a Whistle Blower Policy under which all personnel have access to the Audit Committee to report genuine concerns or grievances relating to the business activities of the Company in general. The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement is not applicable to the Company as on March 31, 2015. The Company has an adequate system of internal controls that ensures that all assets are protected against loss from unauthorized use or disposition and all transactions are recorded and reported in conformity with generally accepted accounting principles. There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal ) Act, 2013 during the year under review. DIRECTORS During the year under review, four Board Meetings were held on May 28, 2014, July 31, 2014, November 11, 2014 and February 11, 2015. Mr. S. S. Arora retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment. The Board of Directors of the Company have appointed Mrs. N. H. Ramsinghani as an Additional Director. In accordance with the provisions of sections 161 of the Companies Act, 2013. Mrs. Ramsinghani will hold office of the Director up to the date of the forthcoming Annual General Meeting. The Company has received a Notice from a Member pursuant to the provisions of Section 160 of the Companies Act, 2013 signifying the intention to propose the name of Mrs. N. H. Ramsinghani as a Director of the Company. The Board of Directors of the Company have appointed Mr. R. G. Kulkarni as an Additional Director. In accordance with the provisions of sections 161 of the Companies Act, 2013, Mr. R. G. Kulkarni will hold office of the Director up to the date of the forthcoming Annual General Meeting. The Company has received a Notice from a Member pursuant to the provisions of Section 160 of the Companies Act, 2013 signifying the intention to propose the name of Mr. R. G. Kulkarni as a Director of the Company. In accordance with the provisions of sections 149 and 152 of the Companies Act, 2013 and the rules made there under, it is proposed to appoint Mr. R. G. Kulkarni as non executive Independent Director for a period of five years from the date of the forthcoming Annual General Meeting. All Independent directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act,2013 and Clause 49 of the Listing Agreement. The Board of Directors have framed a policy in relation to remuneration of directors, Key Managerial Personnel and senior Management and it lays down criteria for selection and appointment of Board Members. The performance evaluation of the Chairman and the non executive Directors was carried out by the Independent Directors of the Company in their meeting held on February 11, 2015. STATUTORY AUDITORS REPORT There is no qualification in the Statutory Auditors Report for the year under review. AUDITORS M/s. Dayal & Lohia, Chartered Accountants, (Membership No 102200W) the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from them certifying that their appointment, if made, would be in compliance with all the applicable provisions of the Companies Act, 2013. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made there under, the Company has appointed Ajay A arora & Co to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed hereto as Annexure C and forms a part of this Report. The Directors refer to the observations of the Secretarial Auditor and wish to state on the date of this Report that the composition of the Board of Directors is in Compliance of Clause 49(II)(A)(2) of the Listing Agreement and the Company is taking steps to appoint a Chief Financial Officer. COST AUDIT The Company has appointed M/s. J. Verma & Associates, qualified Cost Auditors for conducting the Audit of cost records for the financial year 2015-16. The Company has received a Certificate from Cost Auditors certifying their independence and arm's length relationship with the Company. The Cost Audit Compliance Report for the financial year ended 31st March, 2014 was filed on September 20, 2014 with Ministry of Corporate Affairs, New Delhi. The Cost Audit Report for the financial year ended 31st March, 2015 will be filed within the stipulated time. EXTRACT OF ANNUAL RETURN The extract of the Annual Return in Form MGT 9 pursuant to the provisions of Section 92 of the Companies Act, 2013 is annexed hereto as Annexure D and forms a part of this Report. FIXED DEPOSITS The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet. SAFETY, ENVIRONMENTAL CONTROL & PROTECTION The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru. INDUSTRIAL RELATIONS The Industrial Relations remained cordial during the year under review. ACKNOWLEDGEMENT Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies. CAUTIONARY STATEMENT Statements in this Report describing the Company's objectives, projections, estimates, expectations or predictions are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include domestic and global prices of Methanol/Naphtha, changes in Government regulations, future availability of gas, litigation and industrial relations. The Company assumes no responsibility to amend, modify or revise any of the statements on the basis of subsequent developments, information or events. For and on behalf of the Board H. D. RAMSINGHANI CHAIRMAN & MANAGING DIRECTOR DIN: 00035416 Place : Mumbai Date : August 4, 2015 |