Your Directors have pleasure in presenting the 27th Annual Report of the Company alongwith Audited Accounts for the Financial Year ended 31st March 2017.
The summarized results of your Company are given in the table below:
| ||( Rs. in Lacs) |
| ||Year Ended 31st March 2017 ||Year Ended 31st March 2016 |
|Gross Revenue ||15903 ||16077 |
|Other Income ||286 ||20 |
|Total Revenue ||16189 ||16097 |
|Less: Total Expenditure ||15018 ||15021 |
|Gross Profit ||1171 ||1076 |
|(before Depreciation & Finance Cost) || || |
|Less: Depreciation ||232 ||185 |
|: Finance Cost ||449 ||401 |
|Profit Before Extraordinary Item ||490 ||490 |
|Less: Extraordinary item || || |
|Profit Before Tax (PBT) ||490 ||490 |
|Less: Provision for Income Tax ||184 ||140 |
|: Deferred Tax ||(13) ||47 |
|Profit After Tax(PAT) ||319 ||303 |
|Balance B/F ||198 ||181 |
|Balance available for appropriation ||517 ||484 |
|Less : Dividend & Dividend Tax || ||46 |
|Less : Transfer to General Reserve ||300 ||240 |
|Less : Adjustment relating to fixed Assets ||16 ||0 |
|Balance transfer to Balance Sheet ||201 ||198 |
SUMMARY OF OPERATIONS
Total Revenue remained at the same level of the previous year with a marginal increaseof Rs. 92 Lacs. Profit Before Tax remained just the same as previous year at Rs. 490 Lacs.For the Financial year 2016-17 PAT stood at Rs. 3.19 crores vis-a-vis
Rs. 3.03 crores in the previous year.
Industrial Safety Handgloves:
From the very inception the Company's main activity is concentrated in the productionand export of Industrial Safety gloves which are considered essential elements inminimizing health related risk at work places for over the two decades. With the passingof years the Company has diversified its range of products encompassing various types ofprotective wears like industrial gloves of several varieties like leather cottonsynthetic gloves dotted gloves and industrial garments and also an exclusive cottongarments for kids wear for the domestic market. Though the demand for industrial gloves inthe age old European market have been seriously restricted over the last couple of yearsdue to the persistent depressionary climate engulfing the global economy your companysuccessfully withstand the pressure by timely addition to its customer base in the newgeographies like USA and Middle East Countries and thereby its dependence on Europeanmarket was reduced and at the same time it helped the Company to maintain its export levelamidst the overall decline in value of exports from India in 2017.
During the year under review the Gross revenue from export of hand gloves andsafetywears segment accounted for 74% of the total revenue as against 78% in the previousyear while the garment sector for Kids' wear in the domestic market more than compensatedthe aforesaid marginal loss by an increase from
19% in FY 2015-16 to 24% in FY 2016-17. Whereas the net margin i.e. contribution toPAT from the export segment accounted for 72% in the FY 2016-17 as against 71.7% in the FY2015-16 and conversely the contribution of garment sector was increased marginally from19.5% to 20.7% in 2016-17.
The Company is in the process of implementation of close monitoring of various controlmeasures like inventory control debtors control cost control and the like which isexpected to give further booster to increases not only in contribution to Gross Revenuebut also to their respective shares in the PAT during the FY 2017-18. At the same timesuch upward realisation both in terms of Revenue and PAT for the garment sector will beadded up by addition of fashion wears variety for the domestic market.
As compared to the aforesaid principal of operating segments the Company has a thirdsegment of operation i.e. generation of power through windmill. The revenue from windmillis though very insignificant of Rs. 86 Lacs onlyi.e. about 0.5% of the total revenue itmay be highlighted that the Company having already liquidated its entire loan liabilityfor installation of windmills at Dhule in Maharashtra the entire revenue generated fromthis sector goes to add up to the profit of the Company without having effect on the costof financing to the Company.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES JOINT VENTURES ORASSOCIATE COMPANIES DURING THE YEAR
During the financial year ended 31st March 2017 no entity became or ceased to be thesubsidiary joint venture or associate of the Company.
Your Directors are pleased to recommend an ordinary Dividend of Rs. 1.50 per equityshare of Rs. 10 each for the Financial Year 2016-17. The proposed dividend is subject toapproval of Shareholders in the ensuing Annual General Meeting of the Company and it wouldresult in appropriation of
Rs. 46 Lacs (Including Corporate Dividend Tax of Rs. 8 Lacs) out of the net profits ofthe Company. The dividend would be payable to all Shareholders whose names appear in theRegister of Members as on the Record Date i.e. at from the close of business hours of 15thSeptember 2017.
Your Company proposes to transfer a sum of Rs. 300 lacs to the General Reserve andcarry forward a balance Rs. 201 lacs in the Profit and Loss Account.
TRANSFER TO INVESTOR EDUCATION AND
Pursuant to the provisions of Section 125 of the Companies Act 2013 your Company hastransferred Rs. 96717/- during the year 2016-17 to the Investor Education and ProtectionFund. This amount was lying unclaimed/ unpaid with the Company for a period of seven yearsafter declaration of Dividend for the financial year 2008-09.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statements relateand the date of this Report.
CHANGE IN NATURE OF BUSINESS IF ANY
During the F.Y 2016-17 there has been no change in the nature of business of theCompany.
CAPITAL / FINANCE
During the year the Company did not issue/allot any Shares/Securities.
As on 31st March 2017 the issued subscribed and paid up share capital of yourCompany stood at Rs. 25200000/-comprising 2520000 Equity shares of Rs. 10/- eachfully paid.
The company proposes to raise further capital to the tune of not exceeding Rs. 12.50crores by issue and allotment of further equity shares on Preferential Basis during thecurrent year with a view to augment its working capital needs for repayment of outstandingunsecured loans etc.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTED ORHAVE RESIGNED DURING THE YEAR
Mr. Shri Kishan Saraf (DIN: 00128999) was re-appointed as the Managing Director of theCompany for a period of three years with effect from1st April 2015.
Mr. Deo Kishan Saraf (DIN: 00128804) was re-appointed as the Whole Time Director andCFO for a period of three years with effect from1st April 2016.
Mr. Samir Kumar Ghosh (DIN: 00129301) was appointed as a Non-Executive IndependentDirector for a period of five years with effect from 9th September 2014.
Mrs. Trishna Patodia Pereira (DIN - 03501546) was appointed as a Non-ExecutiveIndependent Director for a period of five years with effect from 1st June 2015.
During the year Mr. Mukul Banerjee (DIN- 07527632) was appointed as a Non-ExecutiveIndependent Director while Mrs. Rashi Saraf (DIN- 07152647) was appointed as aNon-Executive Non-Independent Rotational Director.
Miss. Shruti Poddar a qualified company secretary and a member of the Institute ofCompany Secretaries of India has been appointed as the Company Secretary and ComplianceOfficer of the Company with effect from 01.02.2016.
None of the Directors of the Company is disqualified from being appointed as Directorsunder the provisions of Section 164(2) of the Companies Act 2013.
The Independent Directors have furnished required declarations as provided u/s Section149(7) of the Companies Act 2013 confirming independence.
KEY MANAGERIAL PERSONNEL
In compliance with the provisions of Section 203 of the Companies Act 2013 theCompany has appointed the following persons as Key Managerial Personnel of the Company:
1. Mr. Shri Krishan Saraf - Managing Director
2. Mr. Deo Kishan Saraf - Whole-time Director & CFO
3. Miss. Shruti Poddar -Company Secretary & Compliance officer
FORMAL ANNUAL EVALUATION
The ultimate responsibility for good governance and prudent management of a companylies with the board of Directors of the company. The board is expected to exercisecontinuous proactive and effective decision making and implementation thereof with a viewto achieve the desire goal. In this connection the Nomination and Remuneration Committeeof the Board of Directors had set out a framework of guidelines for the board of Directorsto undertake continuous evaluation of the performance of the Company while affirming thedesired destination. The Board of Directors as a whole is required to display itscommitment to Good Governance ensuring a constant improvement of processes and procedureswherein each individual member of the board is committed to contribute his best in theoverall growth of the organisation.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the financial year 2016-2017 the Board of Directors of the Company met 6 (Six)times on 16th April 2016 30th May 2016 12th August 2016 12th November 2016 21stDecember 2016 and 14th February 2017. Further a separate Meeting of the IndependentDirectors of the Company was also held on 14th February 2017 whereas the prescribed itemsenumerated under Schedule IV to the Companies Act 2013 and clause 25 of the ListingRegulations were discussed.
EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return in Form No. MGT 9 forms part of the Board's Report andis annexed herewith as Annexure - I
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors to the best oftheir knowledge hereby state and confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 internal financial controls to be followed by the company were laid down andsuch internal financial controls were adequate and were operating effectively; and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
1. STATUTORY AUDITORS
At the Annual General Meeting (AGM) held on 9th September 2014 M/s. R. K. Bajaj &Co. Chartered Accountants (Firm Regn. No. 314140E) had been appointed as the StatutoryAuditors of the Company for a consecutive period of Three (3) years from the year 2014-15in terms of the provisions u/s 139 of the Companies Act 2013 and such appointment of theAuditor had been duly ratified by the members at every Annual General Meeting held inbetween.
In terms of the provisions u/s 139 of the Companies Act 2013 and rules madethereunder the terms of office of M/s R. K. Bajaj & Co. having completed 10 yearswith this Company is not eligible for re-appointment. In the vacancy. The Company proposesto appoint M/s SRB Associates Chartered Accountants who have given their consent to Actas the Statutory Auditors of the Company at the forthcoming AGM. Pursuant to see 139 ofthe Companies Act 2013.
Further the report of the Statutory Auditors when read with Notes and Schedules asannexed are self-explanatory and therefore do not call for any further comments.
2. COST AUDITORS
In view of the provisions u/s Section 148 and all other applicable provisions of theCompanies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 theprovisions of Cost Audit is not applicable on the products of the Company for the FY2016-17.
3. SECRETARIAL AUDITORS
Pursuant to the provisions u/s Section 204 of the Companies Act 2013 read withcorresponding Rules framed thereunder M/s Rekha Goenka & Associates CompanySecretaries were appointed as the Secretarial Auditors of the Company to carry out thesecretarial audit for the year ending 31st March 2017.
SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors is annexed to this Reportas ANNEXURE- II. There are no qualifications reservations or adverse remarks madeby Secretarial Auditors in their Report.
The Company has not accepted any deposits from the public during the year as definedunder Section 73 of the Companies Act 2013. Deposit outstanding as on 31st March 2017including unclaimed deposit was Nil.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the financial year ended 31st March 2017 no Loan or Guarantees u/s 186 of theCompanies Act 2013 was made or provided by the Company. The particulars of investmentsmade by the Company under Section 186 form part of the Notes to the financial statementsannexed to this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Reference is made to the disclosures included in the notes to Financial Statementpursuant to the provisions of Section 129 read with Schedule III to the Companies Act2013 showing the Related party Transactions entered into during the year. However it maybe noted that all transactions with the related party had been made in the normal courseof business at arm's length basis and thereby no specific resolution/ permission u/s 188of the Companies Act 2013 was required during the year.
The total number of Employees of the Company as on 31st March 2017 was 171.YourCompany believes that employees are the most valuable assets of an organization and theoptimum utilization of the skill knowledge and attitude they possess are instrumental tothe growth of the organization.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsunder the Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal)Act 2013. No complaint has been received during the year under review.
The Audit Committee of the Board of Directors of the Company comprises of 4 (Four)Members namely Mr. S. K. Ghosh Mrs.Trishna Patodia Pereira Mr. Mukul Banerjee and Mr.D.K Saraf. Majority of them are Independent Directors with exception of Mr. D.K Saraf whois a Non-Independent -Executive Director. Mr. S. K. Ghosh an Independent Director is theChairperson of the Audit Committee. The committee met four times during the year on 30thMay 2016 12th August 2016 12th November 2016 and 14th February 2017. The Boardaccepted the recommendations of the Audit Committee as were made by it during the year.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
The Company's Whistle Blower Policy encourages Directors and employees to bring to theCompany's attention instances of unethical behaviour actual or suspected incidents offraud or violation of the Acknit Code of Conduct that could adversely impact the Company'soperations business performance and / or reputation. The Policy provides that the Companyinvestigates such incidents when reported in an impartial manner and takes appropriateaction to ensure that the requisite standards of professional and ethical conduct arealways upheld. It is the Company's Policy to ensure that no employee is victimised orharassed for bringing such incidents to the attention of the Company. The practice of theWhistle Blower Policy is overseen by the Audit Committee of the Board and no employee hasbeen denied access to the Committee. The Whistle-blower Policy is available on theCompany's corporate websitehttp://www.acknitindia.com/corporate-policies/whistle-blower-policy-acknit.pdf
NOMINATION AND REMUNERATION COMMITTEE
The Nomination & Remuneration Committee comprises of 3 (three) Non-ExecutiveIndependent Directors namely Mr. S. K. Ghosh (Chairperson) Mrs. Trishna Patodia Pereira(Member) and Mr. Mukul Banerjee (Member).
Mr. Mukul Banerjee has been appointed as member of the Committee with effect from 30thMay 2016.
The Company's Remuneration Policy is available on the Company's websitehttp://www.acknitindia.com/corporate-policies/nomination-and-remunertion-policy.pdf.
The details of terms of reference of the Nomination and Remuneration Committee numberand dates of the meetings held attendance of the Directors and remuneration paid to allthe Directors during the year ended 31st March 2017 are given separately in the attachedCorporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company is not covered under the purview of Section 135 of Companies Act 2013hence CSR provisions are not applicable.
The Company having not reached the parameters prescribed under Section 135 of theCompanies Act 2013 of applicability the provisions for CSR are not attracted to thisCompany.
Your Company uphold the standard of good corporate governance and is compliant with theprovisions as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 both in letters and spirits. The Company's core values of honesty andtransparency have been followed in every line of business decision making since itsinception.
The Corporate Governance report giving details as required under paragraph c' ofSchedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isattached to this report as Annexure III and forms part of the report. The CorporateGovernance Certificate for the year ended 31st March 2017 as issued by M/s Rekha Goenka& Associates Practising Company Secretaries Kolkata is also attached hereto as AnnexureIV which forms part of this report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of Regulation 34(2) read with Paragraph B of Schedule V of Securities andExchange Board of India (Listing Obligations & Disclosure Requirements) Regulations2015 Management Discussion and Analysis Report is attached as Annexure - V andforms part of this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached hereto as AnnexureVI which forms part of this Report.
PARTICULARS OF EMPLOYEES
The information on particulars of employees as required under Section 197(12) of theAct read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure VII.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There was no significant and material order passed by the Regulators or Courts orTribunals impacting the going concern status and/ or Company's operations in future.
ICRA Ltd. vide their rating report of March 2017 has upgraded
the following ratings of your Company's financial instruments:
|Instrument ||Rating action (March 2017) |
|Cash credit ||[ICRA]BBB- Reaffirmed with outlook revised from stable to negative |
|Term loan ||[ICRA]BBB- Reaffirmed with outlook revised from stable to negative |
|Bank guarantee ||[ICRA]BBB- Reaffirmed with outlook revised from stable to negative |
|Non-Fund Based Limits ||[ICRA]A3 |
LISTING OF SHARES
The shares of the Company are listed on the Calcutta Stock Exchange Ltd (CSE) and BSELimited (BSE). The listing fee for the year 2016-17 has already been paid to the credit ofBSE while rectification in bill from CSE is awaited for processing the payment thereof.
MANAGING DIRECTOR'S CERTIFICATE
Managing Director's Certificate under Regulation 34(3) read with Paragraph D ofSchedule V of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 on compliance of Code of Conducts is attached as AnnexureVIII.
The Board places on record its appreciation for the continued co-operation and supportextended to the Company by customers vendors regulators banks financial institutionsand others concerned. The Company also extend its thankful appreciation of the services ofthe employees and staff of the Company without whose hardwork and involvement the desiredresults of the Company could not be achieved. The Board deeply acknowledges the trust andconfidence placed by the consumers of the Company and all its shareholders at large.
For and on behalf of the Board of Directors
For Acknit Industries Limited
|Shri Krishan Saraf ||Deo Kishan Saraf |
|Managing Director ||Whole-time Director & CFO |
|DIN-00128999 ||DIN-00128804 |
|Place: Kolkata || |
|Date: 7th Jul 2017 || |