DIRECTORS' REPORT Your Directors are pleased to present 25th Annual Report along with the audited financial statements for the Financial Yearended March 31, 2015. OPERATIONAL PERFORMANCE Your Company has achieved turnover of Rs. 18709.05 lacs during the year under review as compared to Rs. 16681.44 lacs for the previous year thereby registering a growth of 12.15% compared to previous year. Earnings before Interest, Depreciation and Tax(EBIDTA), during the year under review are Rs. 929.02 lacs as compared to Rs. 832.47 lacs for the previous year. Profit before tax for the financial year under review has accelerated by 76.77% to Rs. 311.70 lacs during the year under review from Rs. 176.33 lacs for the previous year. Your Company has achieved Net Profit after tax of Rs. 211.83 lacs, an increase by 93.65% from Rs. 109.39 lacs during the previous year. The Company is C&F Marketing Agent of Reliance Industries Limited for yarn products. Commission income from the agency business with Reliance Industries Ltd. increased considerably during the year under review which mainly contributed to increase in profits. EQUITY INFUSION The paid up Equity Share Capital as on 31st March 2015 was Rs.550 lacs increased from Rs. 366.00 Lacs to Rs. 550 Lacs during the year under review consequent to allotment of 18,39,960 equity shares of Rs.10/- each at premium of Rs.14/-each on preferential allotment basis to promoters and non-promoters. DIVIDEND Your Directors have recommended dividend at the rate of 5.00% i.e. Rs. 0.50 per share on the Paid-up Equity Share Capital of company (amounting to Rs. 27.50 Lacs) for the year ended on 31st March, 2015, subject to the approval of members at the for the coming Annual General Meeting of Company. TRANSFER TO RESERVES Your Directors propose to transfer Rs. 5.30 Lacs to General Reserves which would enhance the balance of Reserves & surplus to Rs. 1218.89 lacs as at 31.03.2015 DEPOSITS Your Company has neither accepted nor renewed any deposit within the meaning of the Companies (Acceptance of Deposits) Rules, 2014. DIRECTORS AND KEY MANAGERIAL PERSONNEL Pursuant to the provisions of section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Shri Arvind R. Shah, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his reappointment. Ms. Sonia P. Khanna appointed as an Additional (Independent) Director of the Company with effect from March 31,2015 to hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice together with deposit of Rupees One Lakh, as provided under section 160 of the Companies Act, 2013, from the shareholder proposing the appointment of Ms. Sonia P. Khanna as Independent director not liable to retire by rotation. During the year Mr. Satish H. Shah was appointed by the Board of Directors as a Chief Financial Officer of the Company w.e.f. May 29,2014, pursuant to Section 203 of the CompaniesAct, 2013. Ms. Prachi Shukla, Company Secretary has resigned from its post w.e.f. May 28,2014. Mr. Jitesh R. Varkal appointed by the Board of Directors in her place as a Company Secretary of the company w.e.f. May 29,2014, as per requirements of Section 203 of the CompaniesAct, 2013. NUMBER OF MEETINGS OF THE BOARD During the financial year 2014-15, the Board met ten (10) times. The intervening gap between the Meetings was within the period prescribed underthe CompaniesAct, 2013. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES Your Company does not have either Subsidiary or Joint Venture Company. The company has one Associate company namely Fairdeal Textile Park Pvt. Ltd. The statement containing the salient feature of the financial statement of a company's subsidiary or subsidiaries, associate company or companies and joint venture or ventures underthe first proviso to sub-section (3) of section 129 in Form AOC-1 as required to be attached with the Board's Report is As per' Annexure -A'.. However, no consolidated financial statement is attached inline with the exemption granted in third proviso to rule 6 of the Companies (Accounts) Rules, 2014. NOMINATION AND REMUNERATION POLICY: Policy for selection and appointment of Directors and their remuneration: The Nomination and Remuneration (N&R) Committee has adopted a Policy which, inter alia, deals with the manner of selection of Board of Directors and CEO & Managing Director and their remuneration are as under: i. Appointment criteria and qualification : The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director in terms of Diversity Policy of the Board and recommend to the Board his/her appointment. Aperson should possess adequate qualification, expertise and experience for the position he/she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position. The Company shall not appoint or continue the employment of any person as Managing or Whole-time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years. ii. Remuneration Policy : The Company has a standard remuneration policy for the Executive and Non Executive Directors, which is periodically reviewed by the Nomination and Remuneration Committee. The broad idea for the policy is as under. •The remuneration / commission / sitting fees, as the case may be, to the Non-Executive / Independent Director, shall be in accordance with the provisions of the Act and the Rules made there under for the time being in force or as may be decided by the Committee / Board / Shareholders. •An Independent Director shall not be entitled to any stock option of the Company unless otherwise permitted in terms of the Act and the Clause 49, as amended from time to time •Non-Executive Directors shall be paid a sitting fee for Board Meeting and Committee Meetings fixed by the Board of Directors from time to time. •The remuneration / compensation / commission, etc., as the case may be, to the Managing / Whole Time Director will be determined by the Committee and recommended to the Board for approval. Subject to the prior/ post approval of the shareholders of the Company and Central Government, wherever required and shall be as per agreement as may be executed in accordance with the provisions of the Act and Rules made there under. •The Board has approved Nomination and Remuneration Policy which has been uploaded on the Company's website. The committee presently consists of three Directors. The Company Secretary acts as the Secretary of the Nomination and Remuneration Committee. Composition of the Nomination and Remuneration Committee is as under: DETAILS OF REMUNERATION TO ALLTHE DIRECTORS : The company has no pecuniary relationship or transaction with its non-executive Directors other than payment of sitting fees to them for attending the Board meeting and Committee meeting. No sitting fees are paid to Executive Directors. The remuneration policy of the company is directed towards rewarding performance. The Company has no stock option scheme. Further no commission is paid to any of the Directors. Total remuneration paid to Managing Director and Whole-time Director of the company during the year ended on 31st March, 2015 is Rs. 60.39 Lacs including sitting fees paid to non-executive Directors. Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014-As per 'Annexure - B'. PARTICULARS OF EMPLOYEES There were no employees whose remuneration was in excess of the limits in pursuance of section 134(3)(q) of the Companies Act, 2013 read with Rule 5(2) & (3) of The Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014. DECLARATION BY AN INDEPENDENT DIRECTOR(S): All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. ENERGYCONSERVATION.TECHNOLOGYABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO As required under section 134(3)(m) of the CompaniesAct, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 the particulars relating to conservation of energy, TechnologyAbsorption and foreign exchange earnings and outgo is appended as an Annexure-C to the Board's Report. DIRECTORS'RESPONSIBILITY STATEMENT To the best of their knowledge, 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)In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 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 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. 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. SECRETARIAL AUDITORS: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Shri Bhairav H. Shukla, Practising Company Secretary, (CP: 5820) Surat, has been appointed as the Secretarial Auditors to conduct the Secretarial Audit of the Company for the financial year 2014-15, the Secretarial Audit Report is annexed herewith as Annexure- D and forms part of this report". The report is self-explanatory and does not call for any further explanation / comments as required under Section 134(3)(f) of the CompaniesAct, 2013. STATUTORYAUDITORS AND AUDITOR'S REPORT M/s. Natvarlal Vepari & Co., Chartered Accountants, Surat, Statutory Auditors of the Company, having Firm Registration Number 123626W, was appointed as Auditors at the last AGM for three consecutive years. They have furnished requisite consent & certificate. It is proposed to ratify their appointment and fix remuneration. The observations made in the Auditor's Report are self-explanatory and, therefore, do not call for any further explanation /comments as required under Section 134(3)(f) of the CompaniesAct, 2013. COST AUDITORS The Central Government has notified Companies (cost records and audit) Rules, 2014 as on June 30,2014. As per these rules the company is not required to get its cost records audited. Hence the company has not appointed Cost Auditors for financial year 2014-15. As per the requirements of Companies (cost records and audit)Amendment Rules, 2014 dated 31 December, 2014, M/s. Kannaujiya & Co. Cost Accountants, Surat, have been appointed as the Cost Auditors to conduct the audit of the cost accounts maintained by the Company for the Financial Year 2015-16. HUMAN RESOURCES AND INDUSTRIAL RELATIONS Employee relations throughout the year were harmonious. Your company treats its human resources as its important asset contributing to the all round growth of your company. Industrial relations have continued to be cordial at all levels of the organization during the year under review. INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY: Your company is conscious about the need to line up modern management practices. The company has been successfully running RAMCO ERP software since long back. The company has recently implemented Bl tools to add further values and to make the information flow more dynamic to top and mid management levels. The company has an internal control system commensurate with its size and nature of its business which covers areas such as optimum utilization of resources, accurate and prompt recording of transactions, safeguarding of assets, adherence to applicable accounting standards and policies, review of IT and other systems, compliance with prevalent statutes, management policies and procedures. These are aimed at giving the Audit Committee a reasonable assurance on the reliability of financial reporting and statutory & regulatory compliances, effectiveness and efficiency of your Company's operations. The Internal Financial Control Systems are reviewed periodically and revised to keep in tune with the changing business environment. VIGIL MECHANISM /WHISTLE BLOWER POLICY: In pursuance of the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company. BUSINESS RISK MANAGEMENT The Company has laid down a Risk Management Policy and identified threat of such events which if occur may adversely affect either or value to shareholders, ability of Company to achieve objectives, ability to implement business strategies. Such inherent risks are categorized into Strategic risk, Operating riskand Regulatory risk. Managing Director and Whole-time Director of the Company in consultation with Audit Committee will review from time to time the riskand suggest steps to be taken to control and mitigate the same through a properly defined framework. It may be noted that none of the identified risks is of a nature which would threaten the existence of the Company. We consistently and periodically review our systems and policies in order to establish sound risk management and internal control systems. EXTRACT OF ANNUAL RETURN : The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure E" pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS : During the year under review, the company has not made any loans, guarantees and investments which are governed by the provisions of section 186 of the Companies Act, 2013. Details of Investments made under the provisions of the Companies Act, 1956, are provided in the notes to the Financial Statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: All related party transactions that were entered into during the financial year were in the ordinary course of business and were on arm's length basis. All related party transactions for the year are placed before the Audit Committee as well as before the Board for approval. The transactions entered into with related parties are reviewed on a quarterly basis by the Audit Committee. Members can refer to Note no. 28 to the Financial Statements which set out related party transactions. The details of the transactions with related parties to be provided in Form No.AOC-2 is annexed herewith as Annexure F. EVALUATION OF THE BOARD'S PERFORMANCE During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest etc. The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-independent Directors were carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS : There are no significant and material orders passed by the Regulators or Courts or tribunals which would impact the going concern status of the Company and its future operations. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance for sexual harassment at workplace and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. During the financial year 2014-15, the company has not received any complaints on sexual harassment and hence no complaints remain pending as of 31 March, 2015. CORPORATE GOVERNANCE: As per Circular No. CIR/CFD/POLICY CELL/7/2014 dated September 15,2014 issued by The Securities and Exchange Board of India (SEBI), compliance with the provisions of Clause 49 of Listing Agreement shall not be mandatory for the time being, in respect of the companies having paid up equity share capital not exceeding Rs. 10.00 crores and Net worth not exceeding Rs. 25.00 crores as on the last day of previous financial year. Since the paid up equity share capital of the company is Rs. 5.50 crores and networth is Rs. 17.69 crores, compliance with the provisions of Clause 49 of Listing Agreement relating to corporate governance is presently not compulsory for the company. Hence, Report on Corporate Governance, a certificate from the Auditors of the company regarding compliance of conditions of corporate governance and Management's Discussion and Analysis does not form the part of Annual Report. Acknowledgment Your Directors express their grateful appreciation for the assistance and co-operation received from the Banks, Financial Institutions, Government Authorities, Customers, Suppliers and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for committed services of employees of the Company at all the levels. For and on behalf of the Board of Directors Jayantilal R. Shah Chairman Place : Surat Date :13th August,2015 |