DIRECTORS' REPORT To, The Members, Your Directors' have pleasure in placing before you the 22nd ended 31st March' 2015. REVIEW OF OPERATIONS & FUTURE PROSPECTS: The Gross Sales and other Income for the year ended 31st March, 2015 stood at Rs. 10551.50 lacs, an increase of 7 % over the previous year and Net Profits at Rs. 188.60 Lacs as compared to Rs. 39.07 lacs in the previous year. The international economic conditions especially in US are reviving and Board of Directors are anticipating that situation will improve further in the years to come. Your Company’s Wholly Owned Subsidiary namely SSA International Limited has achieved a Turnover of Rs. 1745.40 crores and Net Profit of Rs.28.78 crores,. As you are already aware that Company’s other wholly owned Subsidiary namely Sam Buildcon Limited is not operational. Your Board is exploring new avenues to revive the Company and planning to set up a Pasta manufacturing Plant and also changed the name of this company to ARLIN Foods Limited to match the new business activities. A brief note on the performance of the subsidiaries is attached as Annexure to this Annual Report. Your Company would like to serve various products to provide good service to its customers by supplying products like structured, casualand formal wear garments and also the wrinkle free garments under international brands taken by the Company -Greg Norman and English Laundry, and is anticipating to grow at an impressive rate . DIVIDEND In order to conserve and strengthen the financial resources of the Company, the Directors regret their inability to recommend any dividend for the year 2014-2015. DIRECTORS Your Directors with profound grief inform the sad demise of Mr. Anil Mittal Chairman & Managing Director, who passed away on 25th June 2014. Mrs. Rita Mittal appointed as Additional Director w.e.f. 19th July, 2014 and designated as Chairperson and Managing Director in the Board of Directors meeting dated 13th August, 2014. Mr. Atul Mittal designated as Key Managerial Personnel and appointed as CFO of the Company in the Board of Directors Meeting dated 14th February, 2015. Mr.Atul Mittal, Director of the Company retire by rotation at the conclusion of the ensuing Annual General Meeting of the Company, and pursuant to article no. 89 of the Articles of Association of the Company and being eligible, offer himself for re-appointment. Mr. A.P Mathur and Mr. Vinay Mittal has resigned from the post of Directorship w.e.f 10.11.2014 and 10.02.2015 respectively. The Non- Executive Independent Directors as per the provisions of the Companies Act, 2013 was re-appointmented for a period of 5 years in the Annual General Meeting held on 30th September, 2014 and is not liable to retire by rotation. BOARD OF DIRECTORS MEETINGS During the year 6 (Six) Board Meetings and 4 (four) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. AUDIT COMMITTEE Pursuant to the provisions of section 177 of the Companies Act, 2013 and as per Clause 49 of the Listing Agreement the Audit Committee has comprise the following members:) Mr. S.K. Gupta ) Mr. Raman Ohri i) Mr. Atul Mittal Mr. A.P Mathur resigned from the committee w.e.f 10th November, 2014. The committee was reconstituted in the Board Meeting dated 9th December 2014 and Mr. Atul Mittal was appointed as new member of the Committee. AUDITORS Pusuant to Section 139 of the Companies Act, 2013, M/s Aggarwal & Rampal Chartered Accountants, Delhi was appointed as Auditors until the conclusion of the ensuing Annual General Meeting to be held in 2017( subject to ratification of their appointment at every annual general meeting ) at such remuneration as shall be fixed by the Board. Certificate from Auditors has been received to the effect that their reappointment, if made, would be in accordance with the limits specified in Section 141 of the Companies Act, 2013. Your Directors recommend the ratification of appointment of M/s Aggarwal & Rampal Chartered Accountants from the conclusion of ensuing Annual General Meeting until the conclusion of Annual General Meeting to be held in the year 2016. SECRETARIAL AUDIT Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. DMK, Associates, Company Secretaries, as Secretarial Auditor to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the Financial Year 2014-15 submitted by them in prescribed form MR-3 has been annexed hereto, marked as Annexure-4 and forms an integral part of this Report. The Secretarial Auditor has made certain observations. The observations and reply thereto are as under: Qualifications/Observations 1.It is observed that Mr. Atul Mittal, Whole Time Director of the company has signed the certificate of corporate governance, for the financial year ended 31st March, 2014, on behalf of Mr. Anil Mittal, Chairman & Managing Director, CFO and CEO of the company, been to USA for Medical treatment for his serious medical health conditions and later on expired on 25th June, 2014. 2.However, pursuant to Section 178 of the Act and Clause 49(IV) of Listing Agreement, the company is required to have minimum three non-executive directors for constitution of Nomination and Remuneration Committee.It is observed that after the resignation of Mr. A.P. Mathur, Non-Executive Independent Director on 10.11.2014, there were only two non-executive directors on the board of the company. However, we have been informed by the management that the company is in the process of appointing Non-Executive Director shortly Management Reply 1.Mr. Anil Mittal, the then Chairman and Managing Director of the Company had been suffering from serious health problems from various months and as per the Doctor's advice he has been admitted to Hospital in USA and later on expired on June 25, 2014. Therefore Board of Directors at its meeting held on 30th May, 2014 authorized Mr. Atul Mittal, Whole Time Director sign the corporate governance report of the Company on his behalf. 2.The Management is in the process of selecting the suitable independent non executive director in the Board of the company and it is expected that process will be completed shortly. INTERNAL AUDIT M/s Ashok Aggarwal & Co. a firm of Chartered Accountants are conducting periodic Internal Audit of all operations of the Company and the Audit Committee of the Board of Directors has reviewed their findings regularly. Their reports have been well received by the Audit Committee. AUDITORS' REPORT The Statutory Auditors of the Company has submitted their reports on the standalone and consolidated Financial Statements of the Company for the Financial Year ended 31st March, 2015, which are self-explanatory and no further comments are required. There has been no observation or comment of the auditors on financial transactions or matters which has any adverse effect on the functioning of the company; further, there is also no qualification, reservation or adverse remarks in the Auditors' Reports on the standalone and consolidated Financial Statements of the Company for the Financial Year ended 31st March, 2015. COMPLIANCE CERTIFICATE FROM COST AUDITOR FOR MAINTENANCE OF COST RECORDS Pursuant to the provisions of section 148 of the Companies Act, 2013 and rules made thereunder and with Cost Accounting Record Rules 2011, M/S M.K. Kulshrestha & Associates, Cost Accountants have been appointed by the Board for the financial year 2015-16 for the Compliance Report of cost accounting records. The Report for the F.Y. 2014-15 was well taken in the Board of Director's Meeting. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. MANAGEMENT DISCUSSION AND ANALYSIS As required by Clause 49 of the Listing Agreement with Stock Exchanges, a Management discussion & Analysis Report is appended . 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. A separate report on Corporate Governance report along with Certificate on its compliance is annexed to this report. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(3)(c) read with Section 134(5), the Directors state that— (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; (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. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS All independent directors have given declarations to the effect 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. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION In terms of Section 178(3) of the Companies Act, 2013, upon recommendation of the Nomination and Remuneration Committee, the Board has adopted the Nomination and Remuneration Policy of the Company. Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other prescribed matters, are governed by such policy. As per terms of Section 178(4) of the Act, such policy is attached hereto as Annexure - 1 which forms part of this report. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a vigil mechanism Policy to deal with instance of fraud and mismanagement, if any. As per the policy objective, the Company encourages its employees who have concerns about suspected misconduct, to come forward and express these concerns without fear of punishment or unfair treatment. A vigil mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of conduct or policy. The mechanism provides for adequate safeguards against victimization of employees and Directors to avail of the mechanism and also provide for direct access to the Managing Director/Chairman of the Audit Committee in exceptional cases. Such policy is made available on the website of the Company. CREDIT RATING During the year under review the Company sustained its long term credit rating of "BB+" and short term credit "A4+". DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY The Board of Directors in its meeting held on 13th August, 2014 has adopted a policy as the Risk Management Policy of the Company with main objective of to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The implementation and monitoring of this policy is currently assigned to the Audit Committee of the Board. Though the Board is striving to identify various elements of risk, however, in the opinion of the Board, there has been no element of risk which may threaten the existence of the Company. SUBSIDIARIES The Company has two subsidiaries namely, SSA International Limited and Arlin Foods Limited (Formerly known as Sam Buildcon Limited). During the year, the Board of Directors ('the Board') reviewed the affairs of the subsidiaries. As per Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 and Clause 32 and other provisions of the Listing Agreement, entered into with the Stock Exchanges, a consolidated financial statement of the Company and its subsidiary has been prepared and attached to the stand alone financial statement of the Company. The Consolidated Financial Statements have been prepared in accordance with the relevant accounting standards. Form AOC-1 annexed to the Financial Statements. The accounts of the Subsidiaries are also available for inspection for shareholders/members/investor, during the business hours at the registered office of the company. CHANGE IN THE NATURE OF BUSINESS There was no change in the nature of Business of the Company during the year. The Company has two wholly owned subsidiaries namely M/ s SSA International Limited and M/s Arlin Foods Limited (formerly known as M/s Sam Buildcon Limited).There was no change in the nature of business in SSA International Limited. However M/s Arlin Foods Limited is planning to set up a Pasta manufacturing Plant. PUBLIC DEPOSIT The Company has not invited or accepted fixed deposits from public during the year under review, under Chapter V of the Companies Act, 2013 and the Rules made thereunder. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The internal Audit functions reports to the Chairman of the Audit Committee and to Chairman and Managing Director of the Company. The Internal Audit monitors and evaluates the efficiency and adequacy of Internal control systems in the company. It's compliances with operating systems, accounting procedure and policies at all locations of the Company. RELATED PARTY TRANSACTIONS During the year under review, there was no new transaction with related parties falling under the purview of Section 188 of the Act. All the transactions with the related parties were in ordinary course of business and on arm's length basis, hence, were out of the purview of Section 188 of the Act. All transactions with related parties were duly reviewed by the Audit Committee of the Board. LOANS, GUARANTEES AND INVESTMENT During the year under review Company has invested Rs. 5.50 crores (Rupees Five Crores Fifty lakhs) in the equity capital and provided the Guarantee of Rs. 716.79 crores, enhanced from existing Rs.568.10 crores, for working capital limits to its wholly owned subsidiary SSA International Limited. INDUSTRIAL RELATIONS The Industrial relations remained cordial during the year under review. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE OUTGO In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, a statement containing details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in the manner as prescribed under the Companies (Accounts) Rules, 2014, is given in Annexure - 2 hereto and forms part of this Report. EXTRACT OF THE ANNUAL RETURN In terms of Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the extract of the annual return in form MGT-9 is annexed herewith as Annexure - 3 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS/ TRIBUNALS There has been no significant and material order passed by any regulator, courts or tribunals impacting the going concern status and operations of the Company in future. DEMATERIALIZATION OF SHARES Your Company's shares are participating both with National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). The ISIN number of the Company is INE931D01012. STOCK EXCHANGE LISTING The Equity shares of your Company are listed at: The Bombay Stock Exchange, (BSE), Mumbai. ACKNOWLEDGEMENT Your Directors wish to place on record their gratitude to members, business associates, various agencies of the Government, Financial Institutions and Banks for all the help and Co-operation extended by them to the Company. They also acknowledge with appreciation the devoted services rendered by the workers, staff and Executives at all levels of the Company. For and on behalf of the Board of Directors For SAMTEX FASHIONS LIMITED RITA MITTAL (CHAIRPERSON & MANAGING DIRECTOR) DIN 03398410 Place : New Delhi |