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Aditya Mills Ltd.

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Aditya Mills Ltd. (ADITYAMILLS) - Director Report

Company director report

TO

THE MEMBERS

Your Directors have pleasure in presenting their 55th Annual Report on thebusiness and operations of the company together with the Audited Statement of Accounts forthe year ended on 31s1 March 2016.

FINANCIAL RESULTS

The financial results for the year are given below:

(Rs. in lacs)
2015-2016 2014-2015
Net Sales/lncome from Business Operation 85.72 86.01
Other Income 317.99 19.99
Total Income 403.71 106.00
Profit for the year before tax 263.85 21.87
Less: Provision for Taxation
Income Tax for the year 51.66 4.17
Income Tax for previous year 0.22 0.00
Deferred Tax (3.60) 2.54
48.28 6.71
Profit for the year 215.57 15.16

Review of Business Operations and Future Prospects:

During the year under review company sold its share of residential and agriculturalland at Bandersindri. This investment made by the company several years ago yielded goodreturns as is reflected in the financial statement of the year under review. Due tounfavorable conditions prevailing in real estate all over our country and recession inlocal businesses your company faced difficulty in disposing of its inventory in land.Your company is exploring possibilities to diversify into other businesses as well. Yourcompany has invested temporary surpluses in mutual funds and disinvested some of its lossmaking investments. The new investments should generate returns in the following year.

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. 11.06 lacs was transferred from revaluation 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 Directors’ Committee

• Stakeholder relationship 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 AnnexureA’ to the 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
10th July 2015 6 4
2nd No''ember 2015 5 4
10th February 2016 5 4
28th March 2016 5 4

Particulars of Loans Guarantees and Investments under Section 186:

Details of Investments: The company during the year made new investments of Rs.494.00 lacs in Mutual Funds as under:-

S.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. 15.04.15 Birla Sunlife MIDCAP Fund Dividend 142247.51 units 50.00 N.A. 10.07.15 30.09.15 8%
2. 15.04.15 Birla Sunlife Top 100 Fund Dividend 263469.900 units 50.00 N.A. 10.07.15 30.09.15 8%
3. 15.04.15 Birla Sunlife Dynamic Bond Fund Retail (Growth) 101955.922 units 25.00 N.A. 10.07.15 30.09.15 8%
4. 16.06.15 Birla Sunlife 45.00 N.A. 10.07.15 30.09.15 6.5%
26.10.15 Enhanced Arbitrage 48.00 N.A. 10.07.15 30.09.15 6.5%
29.10.15 Fund Retail (Growth) 37.00 N.A. 10.07.15 30.09.15 6.5%
03.11.15 1245583.52 units (Tax Free) 6.00 N.A. 10.07.15 30.09.15 6.5%
5. 15.04.15 Birla Sunlife Equity 50.00 N.A. 10.07.15 30.09.15 10%
Fund Dividend 91826.329 units 32.00 N.A. 10.07.15 30.09.15 10%
6. 08.12.15 Birla Sunlife Govt. Securities Long Term (Growth) 91448.620 units 39.00 N.A. 10.07.15 30.09.15 8%
7. 10.02.16 Birla Sunlife Short Term Fund (Growth) 17830.46 units 10.00 N.A. 10.07.15 30.09.15 8%
8. 16.03.16 Birla Sunlife MNC Fund (Growth) 37588.330 units 50.00 N.A. 10.07.15 30/09.15 10%
9. 16.03.16 Birla Sunlife Treasury Optimizer Plan (Growth) 6700.725 units 12.00 N.A. 10.07.15 30.09.15 8%
10. 16.03.16 Birla Sunlife 95 Fund 3070T 815 units 40.00 N.A. 10.07.15 30.09.15 10%

As per Companies Act 2013 and old approval taken from shareholders the Board caninvest up to Rs. 200.00 lacs. However further approval has been taken from shareholderson 30th September 2015 to the extent of Rs. 15.00 Crores.

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.Further transaction made with related party during the year as given in Form AOC 2 whichhas been enclosed with the report. (See Annexure-B)

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 toensure adherence 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 Practicing Company Secretaries Jaipur were appointedto conduct the secretarial audit of the company for the financial year 2015-16 asrequired under Section 204 of the Companies Act 2013 and Rules there under.

The secretarial audit report for the Financial Year 2015-16 forms part of the AnnualReport as Annexure C 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 theBoard of Directors are empowered to invest up to Rs. 200.00 lacs but during the periodcompany received further funds against sale of land and such amount was invested in mutualfunds for want of more viable options. However approval from shareholders had been takenfor the investments already made by the company and also for further investments in mutualfunds subject to the total of such investments including existing investment not exceedingRs. 15.00 Crores in their meeting held on 30th September 2015.

Remuneration to Shri Devapriya Kanoria as Managing Director was approved only up to 26thMarch 2C14 by Central Government at the time of his appointment as ManagingDirector up to 26th March 2016. However later on approval was taken fromshareholders .or further period i.e. 27m 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 31s1 March2014 only instead of 26h March 2016 vide letter dated 24thSeptember 2014. After enquiry from them the company was informed that previously itapplied as per Companies Act 1956. Afresh application was made according to the newCompanies Act 2013. The approval from shareholders has been taken and application beforeCentral Government is pending.

Remuneration to ShriAshwini Kumar Kanoria as Whole Time Director was approved only upto 31st March 2015 by Central Government at the time of his appointment asWhole Time Director up to 31st March 2017. However later on approval wastaken from shareholders on 10th July

2014 for remuneration from April 2015 to March 2017 but formalities according toCompanies Act 2013 were not fulfilled hence again approval was taken from shareholderson 30th September

2015 and application before Central Government is pending.

Appointment of Shri Devapriya Kanoria as Managing Director is effective from27.03.2016 approval from shareholder has been taken and application before CentralGovernment is pending.

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 all staff left and the company was not in a position to employhigher paid staff to ensure compliances of Listing Agreements. On the other side atCalcutta Stock Exchange - there were no transactions since over 20 years.

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

Deposits:

The company has neither accepted nor renewed any deposits during th^year under review.Further in respect of Rule 2(1 )(c )(viii) of the Companies (Acceptance of Deposits) Rules2014 Company does not accept any amount as unsecured loan from directors of the Companyand their relatives.

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 prescribedaccounting standards in the adoption of these standards the Board of Directors of thecompany hereby state and confirm that the directors have:

(i) in the preparation of the Annual Accounts for the Financial Year ended 31s1March 2016 the applicable Accounting Standards followed along with proper explanations(if any) relating to material departures;

(ii) selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the company at the end of the financial year and of the profit of thecompany for the year under review;

(iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies’Act 2013 for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;and

(iv) Prepared the Annual Accounts for the Financial Year ended 31st March2016 on a ‘going concern’ basis.

(v) laid down internal financial controls which are adequate and are operatingeffectively.

(vi) devised proper systems to ensure compliance with the provisions of all applicablelaws 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 as amended wide notification dated 30.06.2016 no employee of the Company hasdrawn salary in excess of Rs. 10200000/- per annum or Rs. 850000/- per month. Furtherlist of top 10 employees are as under:-

S. No. Name of the Employee Remuneration In Rupees Perquisites In Rupees Total In Rupees
1. Shri A.K.Kanoria 1200000 120000 1320000
2. Shri D.Kanoria 900000 103235 1003235
3. Shri Bipin Shah 385375 34200 419575
4. Smt. Mansi M. Rane 276070 24600 300670
5. Shri N.C.Patni 224000 19200 243200
6. Shri Lai Singh 146220 13200 159420
7. Shri Prince Sharma 108000 0 108000

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 D.

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 re-appointment.

Directors:

During the period under review Shri Pradumna Kanodia Independent Director of thecompany resigned from the Board w.e.f. 10!h July 2015. The Board places itssincere appreciation towards the valuable contribution received from Shri Pradumna Kanodiaduring his tenure as Independent Director of the company.

Smt. Arti Kanodia and Shri Gautam Kanodia was appointed as an additional independentdirector w.e.f. 14.03.2015and 10.07.2015 respectively and regularized as independentdirectors in the Annual General Meeting held on 30.09.2015. *

In accordance with the provisions of Section 196 of the Act read with Schedule V ofthe Act Shri Ashwini Kumar Kanoria Whole Time Director of the Company who was appointedw.e.f. 1st April 2012 to 26th March 2017 and who is liable toretire from the post on 31st March 2017 has been proposed to be re-appointedas Whole Time Director of the Company for a term of next 5 years w.e.f. 1stApril 2017.

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

Pursuant to Section 152 of the Companies Act 2013 none of the directors of thecompany liable to retire by rotation at forthcoming annual general meeting.

Nomination & Remuneration Committee Policy:

The Nomination and Remuneration Committee was reconstituted after Shri PradumnaKanodia vacated the office w.e.f. 10th July 2015. Now the Committee consistsof the following members who are all Independent.

a. Shri Aditya Bubna (Chairman)

b. Shri Gautam Kanodia

c. Smt. Arti Kanodia

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 31 2016 the Board consists of 6 members two of whom aremanaging or Whole-Time Directors one nominee Director and three are independentdirectors. The Board periodically evaluates the need for change in its composition andsize.

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 end 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 independence 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 member’s qualification committeemember’s appointment and removal: committee structure and operations and committeereporting to the 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 directors shallbe done by the entire Board of Directors excluding the director being evaluated. Theevaluation 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 identified by the Risk Managementframework were covered by the Internal Audit and major risks were discussed periodically.

Disclosure of Composition of Audit Committee and provide Vigil Mechanism:

The Audit Committee was reconstituted after Shri Pradumna Kanodia vacated his officew.e.f. 10th July 2015. The Committee now consists 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 2013 and 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 a procedurefor all the employees of Aditya Mills Limited to disclose any unethical and improperpractice taking place in the company for appropriate action and reporting. AppropriateAuthority 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:

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which the financial statements relateand the date of this report.

Disclosures under Sexual Harassment of Women at workplace (Prevention Prohibition& Redressal) Act 2013.

The company is committed to provide a safe and conducive work environment to itsemployees. During the year under review no case of sexual harassment was reported.

Conservation of Energy Technology Absorption and Foreign exchange earnings and outgo:

Information on conservation of Energy Technology absorption Foreign Exchange earningsand outgo required to be disclosed under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are provided hereunder

Particulars Remarks
A) CONSERVATION OF ENERGY:
• the steps taken or impact on conservation of energy; N.A.
• the steps taken by the company for utilizing alternate sources of energy; N.A.
• the capital investment on energy conservation equipments; N.A.
B) TECHNOLOGY ABSORPTION:
• the efforts made towards technology absorption; N.A.
• the benefits derived like product improvement cost reduction product
development or import substitution; N.A.
• in case of imported technology (imported during the last three years reckoned froi n the beginning of the financial year)- N.A.
(a) the details of technology imported;-
(b) the year of import; *
(c) whether the technology been fully absorbed;
(d) if not fully absorbed areas where absorption has not taken place
and the reasons thereof; Not applicable since 5 years period is over
• the expenditure incurred on Research and Development N.A. '

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

(Rs. in lacs)
Particulars Year ended 31st March 2016 Year ended 31st March 2015
Foreign Exchange earnings Nil Nil
Foreign Exchange outgo (including reimbursement of expenses Rs. 3.29 Rs. 1.37

Corporate Social Responsibilities (CSR)

The company does not meet the criteria of Section 135 of Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) Rules 2014 so there is norequirement to constitution of Corporate Social Responsibility Committee.

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.

For and on behalf of the
Board of Directors
Place: Mumbai A. K. Kanoria
Date: 8th July 2016 Chairman of the Meeting
DIN 00182770