DIRECTORS REPORT TO, THE SHAREHOLDERS, KAVITA FABRICS LIMITED Your Directors have pleasure in presenting the 10th Annual Report of your Company along with the Audited Statement of Accounts for the Period ended 31st March, 2015. RESULTS OF OPERATION REVIEW: During the current period, your Company has shown an increase in revenue to the extent of 16.34 % from Rs.95.60 Lakhs during FY 2013-14 to Rs. 111.22 Lakhs during FY 2014-15. PAT has shown an increase of 58.29 % from Rs. 6.13 Lakhs during FY 2013-14 to Rs. 9.71 Lakhs during FY2014-15. FINANCIAL YEAR This report of Directors along with its Annexure, Management Discussion and Analysis, Corporate Governance Report, Financial Statements along with their Notes are prepared for the period April 01, 2014 to March 31, 2015 (a period of 12 months). Pursuant to the provisions of Section 2(41) of the Companies Act, 2013, a 'financial year' in relation to the Company means the period ending on the 31st day of March every year, in respect whereof financial statement of the Company is made. Your Company in compliance with the provisions of the Companies Act, 2013. SHARE CAPITAL During the period April 01, 2014 to March 31, 2015, there is a change in the Issued, Subscribed and Paid Up Capital of your Company pursuant to bonus issue in the ratio of 2:1 (i.e. two bonus equity share of Rs.10/- for every one fully paid up equity shares of Rs.10/- each held) to the shareholders. The Share Capital Audit as per the directives of the Securities and Exchange Board of India (SEBI) is being conducted by RanjanaMimani& Associates, Practicing Company Secretaries. The Equity Shares of your Company are listed on Bombay Stock Exchange in India viz. BSE Limited (BSE) and the Company has entered into Listing Agreement with the Stock Exchange. As per the requirements of Listing Agreement, the said Share Capital Audit reports are duly forwarded to the Stock Exchanges where the Company's' Equity Shares are Listed. The paid up Share Capital of the Company stands at Rs. 104,187,060/- (Rupees Ten Crores Forty One Lakh Eighty Seven Thousand and Sixty Only). DIVIDENDS: The Company has decided to sustain the growth in line with the long term growth objectives of the Company by retaining the profits and utilizing the same for opportunities in hand. RESERVES No Amount has been transferred by the Company to Reserve during the Year DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Section 152 Companies Act, 2013 read with applicable Rules, if any, Mr. Shailesh Chandak, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for a re-appointment. The Company has appointed Mr. Shailesh Chandak as the Chief Financial Officer of the Company. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the Board of Directors of the Company state that — a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation and there are no material departures from the same; b) The Directors had 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 viz. March 31, 2015 and of the profit and loss of the company for that period; c) The Directors had taken proper and sufficient care 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) The Directors had prepared the annual accounts on a going concern basis; and e) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. PUBLIC DEPOSITS The Company has neither invited nor accepted any public deposits during the period under review. CORPORATE SOCIAL RESPOSIBILITY : The provisions of Section 135 of the Companies Act, 2013 are not applicable to the Company NUMBER OF MEETINGS OF BOARD OF DIRECTORS During the Financial Year 2014-15, the Board of Directors of the Company met 6 times on 27 May, 2014, July 08, 2014, July 22, 2014, November 12, 2014, January 09, 2015 and March 31, 2015. Frequency and quorum at these meetings were in conformity with the provisions of the Companies Act, 2013 and the Listing Agreement entered into by the company with the Stock Exchanges. All the Board members and the senior management personnel have affirmed compliance with the Code of Conduct during the year ended on 31stMarch, 2015. 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 as a part of this Annual Report as Annexure I. PARTICULAR OF EMPLOYEES AND RELATED DISCLOSURES The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished as Annexure II. AUDIT COMMITTEE During the Financial Year 2014-15, Audit Committee met 4 times on 27 May, 2014, August 13, 2014, November 12, 2014andFebruary 13, 2015. All the recommendations made by the audit committee were accepted by the board. Frequency and quorum at these meetings were in conformity with the provisions of the Companies Act, 2013 and the Listing Agreement entered into by the company with the Stock Exchanges. DECLARATION OF INDEPENDENCE BY INDEPENDENT DIRECTORS All the Independent Non-Executive Directors of the Company viz. Mr.GovindlalSaboo, Mr.Nitin Maheshwari and Mr.Kishan Kumar Sarda have submitted the declaration of independence as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of Listing Agreement. NOMINATION AND REMUNERATION COMMITTEE The Company follows a policy on "Nomination and Remuneration of Directors, Key managerial Personnel and Senior Management". The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same are given in Annexure III. CONTRACTS AND ARRANGEMENT WITH RELATED PARTY The Company had entered into related party transactions. Form AOC 2 as required under the Companies Act, 2013 for related party transaction is annexed as Annexure IV to the Directors Report. STATUTORY AUDITORS The Statutory Auditors of the Company are M/s. Sanjay Maheswari & Associates, Chartered Accountants (ICAI Registration No.113289W, have audited the Financial Statements of the Company for the period April 01, 2014 to March 31, 2015. The Statutory Auditors were appointed by the members of the Company at the 9th Annual General Meeting of the Company held on June 26, 2014 to audit the Financial Accounts of the Company. Their term in the office of Statutory Auditors concludes at the ensuing Annual General Meeting and pursuant to provisions of Section 139 of the Companies Act, 2013 read along with the applicable rules framed thereunder, M/s. Sanjay Maheswari & Associates are eligible for re-appointment. M/s. Sanjay Maheswari & Associates 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 to hold the office of Statutory Auditors of the Company. As per the requirements of the Listing Agreement, M/s. Sanjay Maheswari & Associates have vide letter confirmed that they hold a valid certificate. The Board on recommendation of Audit Committee have recommended the members of the Company, for appointment of M/s. Sanjay Maheswari& Associates, as the Statutory Auditors of the Company for a term of 4 years, subject to ratification of members at every consequent Annual General Meeting. SECRETARIAL AUDITORS The Board of Directors vide their meeting held on March 31, 2015 have appointed M/s R. M Mimani& Associates as Secretarial Auditors to conduct Secretarial Audit for the Financial Year 201415. The Secretarial Audit Report issued by M/s R. M Mimani& Associates, Company Secretaries in Practice is self explanatory and does not call for further comments. The Secretarial Audit Report and Management reply on the qualifications stated in the said Report forms a part of Directors Report in Annexure V. BUSINESS RISK MANAGEMENT The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business. The Company has adopted risk management policy. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO ( A ) Conservation of Energy Your Company is continuously taking initiatives to ensure the optimum utilization of energy available in day to day operations. Your Company uses energy efficient lighting devices, light fittings to save energy, capacitor bank / devices to maintain power factor which are environment and power efficient. ( B ) Technology Absorption Your Company is doing its business by ensuring optimum utilization of its available resources. Your Company has not taken any research & development activity so far. ( C ) Foreign Exchange Earnings and Outgo: The Company has not incurred in foreign currency during the financial year 2014-15. CODE OF CONDUCT The Board has laid down a Code of Conduct for all Board members and senior management personnel of the Company, which is available on website of the company i.e. www.kavitafabrics.com. The Company has obtained confirmations for the compliance with the said code from all its Board members and senior management personnel for the year ended March, 31, 2015. CAUTIONARY STATEMENT Statements in this Report, Management Discussion and Analysis, Corporate Governance, Notice to the Shareholders or elsewhere in this Annual Report, describing the Company's objectives, projections, estimates and expectations may constitute 'forward looking statement' within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the Market conditions and circumstances. INTERNAL FINANCIALS 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 were observed. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr.Shailesh Chandak retires by rotation at the ensuing Annual General Meeting under the applicable provisions of Companies Act, 2013, Mr.Shailesh Chandak being eligible and offering himself for appointment, is proposed to be appointed as an Executive Director. Mr Shailesh Chandak is appointed as Chief Financial Officer of the Company. Based on the confirmations received from Directors, none of the Directors are disqualified from appointment under Section 164 of the Companies Act 2013. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit Compliance Committee , Nomination and Remuneration Committee and Stakeholders Relation Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has always believed in providing a safe and harassment free workplace for every individual through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition &Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15 • Number of complaints received: NIL • Number of complaints disposed off: NIL PARTICULARS OF EMPLOYEES Particulars of employees as required u/s 134 of the Companies Act, 2013 are not annexed since there are no employees drawing remuneration of more than Rs. 60,00,000/- per annum during the year under review, if employed for full year or more than Rs. 5,00,000/- per month, if employed for part of the year. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report under requirements of Clause 52 of the SME Listing agreement (as Company was listed on SME Platform of BSE Limited for the Financial Year 2014-15) forms part of this Annual Report for the year ended 31st March 2015. CORPORATE GOVERNANCE The Company is committed to maintain high standards of corporate governance and adhere to corporate governance requirement set out by SEBI. The report of corporate governance as stipulated under the Listing Agreement forms an integral part of the report. The Compliance certificate from the auditors or practicing company secretaries regarding compliance of conditions of corporate governance as stipulated in Clause 52 of the SME Listing agreement (As Company was listed on SME Platform of BSE Limited for the Financial Year 2014-15) shall be annexed with the report. AUDITORS' REPORT The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments. VIGIL MECHANISM The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The Vigil Mechanism / Whistle Blower Policy has been uploaded on the Company's Website i.e www.kavitafabrics.com PARTICULARS OF LOANS GIVEN, OR INVESTMENTS MADE Particulars of loans given, investments made, along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statement . (Please refer the standalone financial statement). HUMAN RESOURCES Your Company treats its "human resources" as one of its most important assets. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). LISTING WITH STOCK EXCHANGES The Company was listed on BSE SME segment for the Financial Year 2014-15 and now has migrated to BSE main frame. The Company confirms that it has paid the Annual Listing Fees for the year 20152016 to BSE where the Company's Shares are listed. ACKNOWLEDGEMENTS The Directors wish to thank and deeply acknowledge the co-operation, assistance and support extended by the Regulatory Authorities, Company's Bankers, Customers, Shareholders and other business constituents during the year under review. The Directors also wish to place on record their appreciation for all round co-operation and contribution made by employees at all levels. For and on behalf of the Board Kavita Fabrics Limited Harish Chandak (Chairman & Managing Director) Shailesh Chandak (Executive Director) Place: Surat Date:August 31, 2015 |