| Disclosure in board of directors report explanatory DIRECTORS' REPORT ToTHE MEMBERS Your Directors have pleasure in presenting their Seventieth Annual Report together with the Audited Statements of Accounts of your Company for the year ended March 31, 2016. FINANCIAL RESULTS (`. in Lakh) | 2016 | | 2015 | Profit/(Loss) before depreciation/Exceptional Items and taxation | (5,844.04) | | (3 411.77) | Less/Add: Depreciation | 1,378.64 | | 2 023.08 | Profit/(Loss) before taxation | (7,222.68) | | (5 434.85) | (Add)/Less: Exceptional Items | 5,040.07 | | 1 746.61 | | (2,182.61) | | (3 688.24) | Less/Add: Provision for Earlier Year Taxation | - | | - | | (2,182.61) | | (3 688.24) | Less/Add: Deferred Tax Liability | - | | - | Profit/(Loss) after tax | (2,182.61) | | (3 688.24) | Add: Balance brought forward from previous yearAdd: Transitional Depreciation AdjustmentsLess: Depreciation on Revalued Assets | (22,767.46)-- | | (18 337.52)75.94(817.64) | Which the Directors have decided tocarry forward to the next year | (24,950.07) | | (22,767.46) | | | | | | | | | | | | |
PERFORMANCE REVIEW Highlights of performance during the financial year 2015-16 are: � Total Revenue from Operation of the Company is `.7,047.41lakh as against `.6,101.77 lakh in the previous year. � Operating Profit / ((Loss) is `.(5,844.04) lakh as against `.(3,411.77) lakh in the previous year. � Profit / (Loss) before taxation is `.(7,222.68) lakh as against `.(5,434.85) lakh in the previous year. � Profit / (Loss) after Tax is `.(2,182.61) lakh as against of `.(3,688.24) lakh in the previous year. The performance of the Company during the year under review showed a better picture as compared to the previous year. However improvement in the operational revenue has been offset by the operating loss incurred during the year. The Company is a BIFR referred company under the Sick Industrial Companies (Special Provision) Act, 1985 (SICA), pending registration of the same as a Sick Unit. The Company has been trying to make up the volume losses in its main stay i.e. Silk Textiles by resorting to polyester, cotton, viscose and other blended fabric. Inspite of the best efforts of the Company these low end products are fetching very meager realization. Your Company has been successfully introducing new designs and new blends taking into account the customers taste and preferences globally. Difficulties faced by the Company can only be resorted by increasing the scale of operation via infusion of machines and technology. FUTURE OUTLOOK 'Make in India' campaign launched by the government intends to provide a further boost to the Indian textile industry and enable it achieve 20% growth in exports and sustain 12% growth rate in domestic market till 2024-25 as suggested by report of expert committee on Vision, Strategy and Action Plan for Indian Textiles and Apparel Sector. Infusion of machineries and technology is essential to bring down the cost of production. However Company's expansion considering its financial condition is limited to the . As conveyed earlier within the limited scope and under restricted market condition, your management is very positively responding to matching situation in the global market. DIVIDEND In view of the accumulated losses the Board of Directors does not recommend any dividend on Equity Shares. The Board of Directors does not also declare dividend on Redeemable Cumulative Preference Shares. PUBLIC DEPOSIT SCHEME During the year, your Company has not accepted any deposits. There are no outstanding deposits as on date. DIRECTORS AND KEY MANAGERIAL PERSONNEL During the year on account of untimely demise of Shri R.S Rungta, he ceases to be a Director of the Company and on the recommendation of Nomination and Remuneration Committee, the Board appointed Sri Dilip Kumar Rungta (DIN: 00534100), as an Additional Non-executive Independent Director of the Company with effect from November 14, 2015. The Company has received a notice under Section 160 of the Companies Act, 2013 from a member signifying his intention to propose the candidature of Sri Dilip Kumar Rungta (DIN: 00534100), for the office of Director, and is eligible for appointment as an Independent Director, as provided under the Articles of Association of the Company and shall hold office for a period of 5 years and not liable to retire by rotation. Requisite declarations from all the Independent Directors of the Company confirming that they are not disqualified to act as an Independent Director in compliance with the provisions of Section 149 of the Companies Act, 2013 and the Board is also in the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Director. Necessary policies and the criteria for the performance evaluation of Directors as Individual, Board and Committees are devised by the Company. Evaluation of Board and Committees are being done under best practices prevalent in the Industry. The Company ensures constitution of the Board of Directors with an appropriate composition, size, diversified expertise and experience and commitment to discharge their responsibilities and duties effectively. Nomination and Remuneration Committee formulated by the Company's Board in accordance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements), Regulations,2015 evaluates the each individual whether they met the specified criteria and provides valuable contribution to the Company. At the time of appointment/re-appointment of Independent Director, Nomination and Remuneration Committee assess the independence of the directors as referred in Section 149(6) of the Companies Act, 2013 and Regulations of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and re-assess the same when any new interest or relationships are disclosed by them. The Independent Directors shall abide by the "Code of Independent Directors" as specified in Schedule IV to the Companies Act, 2013. Nomination and Remuneration Committee ensures that all the requisite and applicable provisions of the Companies Act, 2013 rules and regulations made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 as amended from time to time are complied with. DIRECTORS' RESPONSIBILITY STATEMENT In terms of provisions of Section 134(3)(c) of the Companies Act, 2013, your Directors state that: i) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;ii) that the Directors have selected such accounting policies 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 at the end of the financial year and of the loss of the Company for the year under review.iii) that the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2016 on a going concern basis. v) 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) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the requirements of Corporate Governance is attached to the report on Corporate Governance. A separate section on Corporate Governance and Management Discussion and Analysis together with the Auditor's certificate confirming the compliance of conditions on Corporate Governance as Schedule V (Part E) of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 with the Stock Exchange form part of the Annual Report as "Annexure II" CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. 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. Your Directors draw attention of the members to Note 41 to the financial statement which sets out related party disclosures. CORPORATE SOCIAL RESPONSIBILITY The Company formulated the Corporate Social Responsibility Committee (CSRC) in consultation with the Board during the F.Y 2014-15 pursuant to introduction of Section 135 under the Companies Act, 2013. Sri Sundeep Shah, Sri H. S. Gopalka and Sri G.D Harnathka are the members of the CSRC. Since the Company has been incurring cash losses in the last three preceding financial years, the Board does not recommend any amount to be spent on the CSR activities. However the Board ensures that once the Company will start earning profits, they shall after taking into account the recommendations of the CSRC, approve the Corporate Social Responsibility Policy of the Company and shall disclose contents of such policy in its report and will also place the same on the Company's website www.easternsilk.com. |