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Aditya Mills Ltd.

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Aditya Mills Ltd. (ADITYAMILLS) - Director Report

Company director report

DIRECTORS’ REPORT

TO THE MEMBERS

Your Directors have pleasure in presenting their 54th Annual Report on thebusiness and operations of the company together with the Audited Statement of Accounts forthe year ended on 31st March 2015.

FINANCIAL RESULTS

The financial results for the year are given below:

(Rs. in lacs)
2014-2015 2013-2014
Net Sales/lncome from Business Operation 86.01 131.27
Other Income 19.99 13.05
Total Income 106.00 144.32
Profit for the year before tax 21.87 75.80
Less: Provision for Taxation
Income Tax 4.17 14.45
Income Tax for previous year 0.00 0.16
Deferred Tax 2.54 23.26
6.71 37.87
Profit for the year 15.16 37.93

Review of Business Operations and Future Prospects:

During the year company sold part of its land at Kishangarh. Due to unfavorableconditions prevailing in real estate all over India and recessionary conditions in localbusinesses your company faced difficulty in disposing of its inventory in land. Yourcompany is exploring possibilities to diversify into other businesses as well.

During the period under review the company has made an agreement to sell its share ofagricultural and residential land at Bandersindri Tehsil Kishangarh and the same has beenregistered in April 2015. The advance against sale of this land was received and the samewas invested temporary in mutual funds. This helped augment liquid funds of the company.

Discharge from BIFR:

The BIFR Bench declared the company on 09.09.1994 as a Sick Industrial Company in termsof the provisions of Section 3(1)(0) of the Sick Industrial Companies Act 1985. On thebasis of report of IFCI (operating agency) the BIFR discharged the company from thepurview of SICA / BIFR vide its order dated 19th February 2015.

Dividend:

Directors regret their inability to recommend any dividend.

Share Capital:

There is no change in share capital of the company under review.

Reserves:

During the year Rs. 12.97 lacs was transferred from revaluation on reserve to capitalreserve on the basis of land sold during the year.

Committees of the Board:

During the year in accordance with the Companies Act 2013 the Board has constituted/ reconstituted some of its Committees. There are currently four Committees of the Boardas follows:

• Audit Committee

• Nomination and Remuneration Committee

• Independent Director’s Committee

• Stakeholder’s Committee

Extract of annual return:

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return u/s 92 (3) of the Act in the prescribed format is appended as Annexure 1 tothe Board’s report.

Number of Board meetings held with dates:

Four Board meetings were held during the year. The details of Board meetings are givenbelow:

Date Board Strength No. of Directors Present
19th April 2014 5 4
21st July 2014 5 4
17lh November 2014 5 4
14h March 2015 5 4

Particulars of Loans Guarantees and Investments under Section 186:

Details of Investments: The company during the year made new investments of Rs. 182.50lacs in Mutual Funds as under:-

SI. No Date of Investment Details of Investee Amount (In Lacs) Purpose for which the proceeds from investment is proposed to be utilized by the recipient Date of Board Resolution Date of Special Resolution (if required) Expected Rate of Return
1. 02.09.14 Birla Sunlife Short Term Fund (Growth) 61058.138 units 30.00 N.A. 01.11.2003 28.11.2003 8%
2. 18.12.14 Birla Sunlife Top 100 Fund 58034.516 units 24.00 N.A. 01.11.2003 28.11.2003 14%
3. 06.06.14 Birla Sunlife Treasury 4.50 N.A. 01.11.2003 28.11.2003 8%
02.09.14 Optimizer Plan 17.00 N.A. 01.11.2003 28.11.2003 8%
23.01.15 (Growth) 27930.528 units 25.00 N.A. 17.11.2014 Yet to be obtained 8%
4. 02.09.14 Birla Sunlife Floating 10.00 N.A. 01.11.2003 28.11.2003 8% '
18.12.14 Rate Long Term 24.00 N.A. 01.11.2003 28.11.2003 8%
22.12.14 (Growth) 50317.052 units 48.00 N.A. 17.11.2014 Yet to be obtained 8%

As per Companies Act 2013 and approval from shareholders the Board can invest up toRs. 200.00 lacs. However the Board invested money exceeding this limit subject toapproval of shareholders. Accordingly the Board has made a proposal of the same for yourratification.

Related Party Transactions:

During the year company did not enter into any contracts or make arrangements withrelated parties except remuneration paid to Chairman & Whole Time Director and ViceChairman & Managing Director for which approval was taken from the shareholders.

Subsidiary Companies: -

The Company does not have any subsidiary.

Auditors’ Report and Explanation to Auditors’ Remarks:

The company has already complied with the Accounting Standards prescribed by theInstitute of Chartered Accountants of India and is constantly endeavouring to ensureadherence to the same and their norms as may be prescribed from time to time.

Regarding observation for valuation of stock-in-trade it was already informed in thepast that the land in question was converted into stock-in-trade in the financial year2001-2002 when the company commenced Real Estate Business. The company has consistentlysold this land at a higher price than this book value thereby facilitating its revival.

Regarding default in repayment of unsecured loan from SICOM due to paucity of fundsthe company could not make the payment. However efforts are going on and company ishopeful to clear the dues in due course. Similarly dues to custom authority have not beenpaid as demand is very old and there is an ambiguity about the demand itself.

The other notes referred to by the Auditors in their Report being self-explanatory and/ or suitably explained / clarified hereinafter require no further explanation.

Secretarial audit Report Explanation to the remarks thereon:

M/s. R. Chouhan & Associates Practising Company Secretaries Jaipur were appointedto conduct the secretarial audit of the company for the financial year 2014-15 asrequired under Section 204 of the Companies Act 2013 and Rules there under.

The secretarial audit report for the Financial Year 2014-15 forms part of the AnnualReport as Annexure 2 to the Board’s report.

Regarding investments made beyond approval from shareholders as per shareholdersapproval in the Annual General Meeting held on 28th November 2003 the Boardof Directors are empowered to invest up to Rs. 200.00 lacs but during the period companyreceived funds as advance against sale of land and such amount was invested in mutualfunds for want of more viable options. Therefore such investments were made to the extentof Rs. 233.76 lacs (excess by 33.76 lacs) without taking approval of shareholders asrequired under the Act. Now your Board of Directors proposes to ratify the investmentsalready made by the company and also make further investments in mutual funds subject tothe total of such investments including existing investment not exceeding Rs. 15.00 Croresfor the time being till the amount is not utilized for the purpose of operations of theCompany.

Remuneration to Shri Devapriya Kanoria as Managing Director was approved only up to 26lhMarch 2014 by Central Government at the time of his appointment as ManagingDirector up to 26th March 2016. However later on approval was taken fromshareholders for further period i.e.27'h March 2014 to 26th March2016 in their General Meeting held on 1st July 2013 and application was madewith Central Government but Central Government gave approval up to 31st March2014 only instead of 26th March 2016 vide letter dated 24hSeptember 2014. After enquiry from them the company was informed that previously itapplied as per Companies Act 1956. A fresh application was made according the newCompanies Act 2013. Hence now a revised approval from shareholders and other concernedauthority is necessary.

Regarding not complying with listing agreements made before a long period the companywas declared sick in 1994 and in 1996 the operation of the company stopped. Due tofinancial crises almost staff left and company was not in a position to employ higher paidstaff to ensure compliances of Listing Agreements. On the other side at Jaipur andCalcutta Stock Exchanges there were no transactions since over 20 years.

Regarding non redemption of Preference Share Capital and payment of Dividend thereon asin past there was no surplus funds therefore the company was not in position pay thesame. However now Board is considering means to settle these dues.

Deposits:

The company has neither accepted nor renewed any deposits during the year under review.Directors’ Responsibility Statement

The financial statements are prepared in accordance with the Generally AcceptedAccounting Principles (GAAP) under the historical cost convention on accrual basis exceptfor certain financial instruments which are measured at fair values. GAAP comprisesmandatory accounting standards as prescribed under Section 133 of the Companies Act 2013(‘the Act’) read with Rule 7 of the Companies (Accounts) Rules 2014 theprovisions of the Act (to the extent notified) and guidelines issued by the Securities andExchange Board of India (SEBI).There are no material departures from prescribed accountingstandards in the adoption of these standards the Board of Directors of the company herebystate and confirm:

(i) that in the preparation of the Annual Accounts for the Financial Year ended 31stMarch 2015 the applicable Accounting Standards have been followed along with properexplanations (if any) relating to material departures;

(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and pf the profit of the company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies’ Act2013 for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities; and

(iv) that the Directors have prepared the Annual Accounts for the Financial Year ended31s1 March 2015 on a ‘going concern’ basis.

(v) The directors have laid down internal financial controls which are adequate andare operating effectively.

(vi) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.

Personnel

In terms of provisions of Section 197(12) of the Companies Act 2013 read with Rules5(2) and 5(3) of the Companies (appointment and Remuneration of Managerial Personnel)Rules 2014 no employee of the Company has drawn salary in excess of Rs. 6000000/- perannum or Rs. 500000/- per month.

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rules 5(1) of the Companies (appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as per Annexure 3.

Auditors:

M/s. G.P. Kejriwal & Company Chartered Accountants Jaipur retire at theconclusion of the ensuing AGM and are eligible for re-appointment. The company hasreceived letter from them to the effect that their re-appointment if made would bewithin the prescribed limits under Section 141 (3)(g) of the Companies Act 2013 and theyare not disqualified for reappointment.

Directors:

During the period under review Shri Bimal Kumar Jhunjhunwala Independent Director ofthe company has resigned from the Board of the company w.e.f. 14th March 2015.

The Board places its sincere appreciation towards the valuable contribution receivedfrom Shri Bimal Kumar Jhunjhunwala during his tenure as Independent Director of thecompany.

In terms of the provisions of Section 161 of the Companies Act 2013 (the"Act") read with Rules made thereunder Smt. Arti Kanodia was appointed as anAdditional Director w.e.f. 14th March 2015 which are liable to vacate theoffice at the ensuing Annual General Meeting has been considered to be appointed as anIndependent Directors of the Company in terms of the provisions of Section 149 and otherapplicable provisions of the Act read with the Rules made thereunder regarding whichCompany received an application along with requisite amount of deposit from memberproposing her candidature for the post of Independent Director under Section 160 of theAct.

The Company has received from Smt. Arti Kanodia (1) consent in writing to act asDirector in Form No. DIR-2 pursuant to Rule 8 of the Companies (Appointment &Qualification of Directors) Rule 2014 (2) Intimation in Form DIR-8 in terms of Companies(Appointment & Qualification of Directors) Rule 2014 to the effect that she is no*disqualified under Subsection (2) of Section 164 of the Companies Act 2013 and (3) adeclaration to the effect that she meets the criteria of independence as provided inSub-section (6) of Section 149 of the Companies Act 2013.

Also in accordance with the provisions of Section 196 of the Act read with Schedule Vof the Act Shri Devapriya Kanoria Managing Director of the Company who was appointedw.e.f. 27th March 2011 and who is liable to retire from the post on 26lhMarch 2016 has been proposed to be re-appointed as Managing Director of the Company for aterm of next 5 years w.e.f.27th March 2016.

Smt. Hansa Singh Nominee Director Government of Rajasthan has not attended any meetingduring the year under review. '

Shri Pradumna Kanodia resigned as director with effect from 10th July 2015.The Board places on record its appreciation for the services rendered by Shri PradumnaKanodia during his tenure with the Company.

In terms of the provisions of Section 161 of the Companies Act 2013 (the"Act") read with Rules made there under Shri Gautam Kanodia is appointed as anAdditional Director w.e.f. 10th July 2015 which are liable to vacate theoffice at the ensuing Annual General Meeting has been considered to be appointed as anIndependent Directors of the Company in terms of the provisions of Section 149 and otherapplicable provisions of the Act read with the Rules made there under regarding whichCompany received an application along with requisite amount of deposit from memberproposing his candidature for the post of Independent Director under Section 160 of theAct.

The Company has received from Shri Gautam Kanodia (1) consent in writing to act asDirector in Form No. DIR-2 pursuant to Rule 8 of the Companies (Appointment &Qualification of Directors) Rule 2014 (2) Intimation in Form DIR-8 in terms of Companies(Appointment & Qualification of Directors) Rule 2014 to the effect that he is notdisqualified under Sub' section (2) of Section 164 of the Companies Act 2013 and (3) adeclaration to the effect that he meets the criteria of independence as provided inSub-section (6) of Section 149 of the Companies Act 2013.

On the recommendation of the nomination an a remuneration committee the Board approvedre-appointment of Shri Devapriya Kanoria as a managing director with effectfrom 27th June 2016 for a further period of 5 years.

On the recommendations of the nomination and remuneration committee the Board alsoapproved remuneration to Shri Ashwini Kumar Kanoria Chairman and Whole Time Director forthe period April 2015 to March 2017 and remuneration to Shri Devapriya Kanoria from 1stApril 2014 to 26m March 2016.

Nomination & Remuneration Committee Policy:

The nomination and remuneration Committee was reconstituted after Shri Bimal KumarJhunjhunwala Independent Director of the Company vacated the office w.e.f. 14thMarch 2015 and by appointing Shri Pradumna Kanodia as a member of the Committee. Furtherafter resignation by Shri Pradumna Kanodia w.e.f. 10th July 2015 Now theCommittee consists of the following members:- '

a. Shri Aditya Bubna (Chairman)

b. Shri Gautam Kanodia

c. Smt. Arti Kanodia

The above composition of Nomination & Remuneration Committee consist of IndependentDirectors viz. Shri Aditya Bubna Shri Gautam Kanodia and Smt. Arti Kanodia who form themajority.

The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and separate its functions of governance andmanagement. As on March 312015 the Board consists of 6 members two of whom are Managingor whole-time directors one nominee Director and three are independent directors. TheBoard periodically evaluates the need for change in its composition and size.

The policy of the Company on directors’ appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under Sub-section (3) of Section 178 of the Companies Act 2013adopted by the Board. We affirm that the remuneration paid to the directors is as per theterms laid out in the nomination and remuneration policy of the Company.

Our policy on the appointment and remuneration of directors and key managerialpersonnel provides a framework based on which human resources management aligns theirrecruitment plans for the strategic growth of the company.

The company considers human resources as its invaluable assets. This policy onnomination and remuneration of Directors Key Managerial Personnel (KMPs) and otheremployees has been formulated in terms of the provisions of the Companies Act 2013 to payequitable remuneration to the directors KMPs and employees of the company and toharmonize the aspirations of human resources.

Objective and purpose of the policy:

- To formulate the criteria for determining qualifications competencies positiveattributes and independents for the appointment of a director (executive/non executive)and to the Board policies relating to the remuneration of the directors KMPs and otheremployees.

- To address the following items: committee members qualification committee membersappointment and removal: committee structure and operations and committee reporting tothe Board.

- To formulate the criteria of performance of all the directors on the Board.

- To devise a policy on Board diversity; and .

- To lay out remuneration principals for employees linked to their effortsperformances and achievements relating to the company’s goals.

Declaration by independent directors:

The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.

Board evaluation:

The Board shall monitor and review the Board evaluation framework. The Companies Act2013 states that a formal annual evaluation needs to be made by the Board of its ownperformance and that of its committees and individual directors. Schedule IV of theCompanies ’ Act 2013 states that the performance evaluation of independent directorsshall be done by the entire Board of Directors excluding the director being evaluated.The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board.

Risk Management:

As part of Risk Management framework the company reviewed periodically the variousrisks and finalized mitigation plans. The risk areas dentified by the Risk Managementframework were covered by the Internal Audit and major risks we re discussed periodically.

Disclosure of Composition of Audit Committee and provide Vigil Mechanism:

The Audit Committee was reconstituted after Shri Bimal Kumar Jhunjhunwala IndependentDirector of the Company vacated the office w.e.f. 14th March 2015 and byappointing Shri Pradumna Kanodia as the member of the Committee. Further afterresignation of Shri Pradumna Kanodia w.e.f. 10lh July 2015 the Committee nowconsists of the following members:-

a. Shri Aditya Bubna (Chairman)

b. Shri Gautam Kanodia

c. Shri Devapriya Kanoria

The above composition of Audit Committee consists of independent Director viz. ShriAditya Bubna and Shri Gautam Kanodia who form the majority.

Our company has established Vigil Mechanism and adopted Whistle Blower Policy as perthe provisions of Section 177 of the Companies Act 0"3 end the applicable rules.

The Whistle Blower Policy is a channel to reinforce a robust implementation of thecompany’s Code of Conduct. Through the Policy the company seeks to provide aprocedure for all the employees of Aditya Mills Limited to disclose any unethical andimproper practice taking place in the company for appropriate action and reporting.Appropriate Authority shall address the concerns of Directors and Employees.

Significant and material orders:

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company’s operations in future.

Internal financial control and its Adequacy:

The company has adequate internal controls commensurate with the size and nature of itsbusiness..

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.

Material Changes Affecting the Financial Position of the Company:

There were no material changes which could affect the Financial Position of theCompany. Conservation of EnergyTechnology Absorption:

The company has been advised that disclosure of particulars under Section 134 (3) (m)read with rule 8 of the Companies (Accounts) Rules 2014 relating to Conservation ofEnergy etc. is not applicable to it. Particulars relating to Technology / Absorptionetc. has not been furnished as the company has neither undertaken a: y Research &Development activities in the field of Real Estate nor imported any technology.

Foreign exchange earnings and outgo:

During the period under review the foreign exchange earnings or out flow were as under:

(Rs. in lacs)
Particulars Year ended Year ended
31st March 2015 31st March 2014
Foreign Exchange outgo _ (including reimbursement of expenses Rs. 1.37 Nil

Acknowledgements:

The Board places on record its appreciation for the continued support and encouragementextended to the company by shareholders Central and State Governments Consultants BankEmployees and other stakeholders whose co-operation and support has immensely enriched thecompany.

Place: Mumbai For and on behalf of the
Board of Directors
Date: 10th July 2015 (A. K. Kanoria)
Chairman of the Meeting

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