Your Directors present the Eleventh Annual Report of the Company together with theAudited Financial Statements of the Company for the Financial Year ended 31st March 2017.
1. FINANCIAL PERFORMANCE
| || || ||(Rs. in Lakhs) |
|Particulars ||Merged ||Standalone ||Consolidated |
| ||As at 31st March 2017 ||As at 31st March 2016 ||As at 31st March 2016 |
|Total Revenue from Operation ||31121.83 ||18596.79 ||25088.19 |
|Profit before depreciation and Taxation ||3385.90 ||2093.10 ||2654.13 |
|Depreciation ||350.10 ||224.72 ||334.79 |
|Profit Before Tax ||3035.80 ||1868.38 ||2319.34 |
|Tax Expenses ||1005.66 ||630.13 ||768.92 |
|Net Profit ||2030.14 ||1238.25 ||1550.42 |
Note: Previous year figures are not comparable since current year figures include theeffect of merger of erstwhile Momai Apparels Limited into the Company with appointed dateas 1st April 2016 and current year figures also include effect of merger of MomaiApparels Limited into the Company.
2. SCHEME OF ARRANGEMENT
Subsequent to the approval of the shareholders at the Court Convened Meeting held on30th November 2016 and through Postal Ballot on 28th February 2017 to the Scheme ofArrangement between Momai Apparels Limited with Ashapura Intimates Fashion Limited andtheir Respective Shareholders and Creditors your Company had filed the petition forsanction of the Scheme of Arrangement with the Hon'ble High Court of Mumbai.
Consequent to the notification of certain pending sections of Companies Act 2013including sections related to the Compromise and Arrangements and National Company LawTribunal (NCLT) the jurisdiction for sanctioning the Scheme of Arrangement has beentransferred from High Court of Mumbai to the NCLT Mumbai Bench. The Scheme was pendingwith NCLT for sanction as on 31st March 2017.
Currently Scheme of Arrangement has been approved by the Hon'ble National Company LawTribunal on 28th September 2017 with appointed date 1st April 2016.
Pursuant to the Scheme of Arrangement your Company shall issue and allot 10 fully paidup Equity Shares of the Company of Rs 10/- each to the equity shareholders of MomaiApparels Limited for every 27 fully paid up Equity Shares of Rs 10/- held by them in MomaiApparels Limited. The Scheme of Arrangement will enable the Company to consolidate andeffectively manage the Transferor Company and the Company in a single entity which willprovide several benefits including synergy economies of scale attain efficiencies andcost competitiveness.
3. TRANSFER TO RESERVES
The Company has transferred an amount of Rs.1967.72 Lakhs to Reserve Account during theyear under review.
4. SHARE CAPITAL
The paid up Equity share capital as at 31st March 2017 stood at Rs.1946.72 Lakhs.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock option or sweat equity shares.
The details of warrants issued during the year are disclosed in the report of CorporateGovernance which is attached to this report.
No dividend was declared by the Company during the financial year 2016-17 in view ofaccumulation of profits.
6. FINANCES AND ACCOUNTS
During the financial year 2016-17 the country experienced two landmark economicreforms even as the global economic scenario was indifferent. Firstly the Goods andServices Tax ("GST") would be applicable on the supply of goods or services asagainst the present concept of tax on the manufacture or sale of goods or provision ofservices. GST being a destination based consumption tax would accrue to the states orthe union territories where the consumption takes place. It would be a dual GST with theCentre and states simultaneously levying tax on a common tax base. GST has been in effectfrom 1st July 2017. Secondly the Reserve Bank of India by a notification dated 8thNovember 2016 withdrew 500 and 1000 denominations of bank notes thereby affectinggrowth in the last two quarters of the financial year ended 31st March 2017.
Also the Company has through Postal Ballot dated 27th August 2017 approved issue ofNon-Convertible Debentures for an aggregate amount upto Rs.25 Crore (Rupees Twenty FiveCrores only) on private placement basis.
Your Company has not accepted any deposits under Chapter V of the Companies Act 2013.
8. CREDIT RATING
Reflecting the improved financial strength during the year under reporting the CreditAnalysis & Research Limited "CARE" has upgraded the credit rating assignedto the Company reviewed and revised rating from CARE BBB+ (Triple B plus) to CARE A(Single A); Stable with effect from 10th November 2017 for its cash credit bankfacilities.
9. QUALITY AND HONORARY
The focus on productivity gains and consistent quality continues to be the cornerstoneof the Company's philosophy and as an honorary for the same the Company has received anaward on 7th October 2016 namely Alina Entrepreneur Excellence Award and The EconomicTimes best Brand Award 2017 on 11th February 2017.
10. HUMAN RESOURCE
Relation with employees in the corporate office factory and all stores continue to becordial. HR policies of the Company are focused on developing the potential of eachemployee. With this premise a comprehensive set of HR policy is in place aimed atattracting retaining and motivating employees at all level.
The ratio of remuneration of each director to the median employee's remuneration andother details in terms of Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed as "Annexure A" to this report.
The information in respect of employees of the Company required pursuant to Rule 5 (2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 willbe provided upon request. In terms of Section 136 of the Companies Act 2013 the Reportand Accounts are being sent to the Members and others entitled thereto excluding theaforesaid Annexure which is available for inspection by the Members at the RegisteredOffice of the Company during business hours on working days of the Company up to the dateof the ensuing Annual General Meeting. If any Member is interested in obtaining a copythereof such Member may write to the Company Secretary in this regard.
11. SUBSIDIARY COMPANY
Pursuant to Scheme of Arrangement as stated above Momai Apparels Limited cease to beSubsidary of the Company appointed date being April 12016.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Re-appointment of Director
In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. Dinesh Chanubha Sodha (DIN: 02836240) and Mr.Hitesh Subhash Punjani (DIN 03268480) Directors of the Company shall retire by rotationand being eligible offer themselves for re-appointment. The Board recomments theirre-appointment for consideration of Members at the ensuing AGM.
Appointment and resignation of Directors/Key Managerial Personnel
During the year Ms. Manisha Pareek Company Secretary and Compliance Officer of theCompany has resigned with effect from 30th June 2016 and the Board has appointed Ms.Bhoomi Mewada as the Company Secretary and Compliance Officer of the Company with effectfrom 23rd July 2016.
Also the Board has approved the change in designation of Mr. Mohit Shah from ChiefFinancial Officer to Chief Executive Officer of the Company with effect from 11th August2016 and appointed Mr. Anurag Gangwal as the Chief Financial Officer of the Company witheffect from 11th August 2016.
The details of training and familiarisation programme and Annual Board Evaluationprocess for Directors have been provided under the Corporate Governance Report.
Statement on declaration given by Independent Directors:
The Independent Directors have submitted the declaration of Independence as requiredpursuant to Section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence provided under Section 149(6) of the Act and Regulation 16(1)(b) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015) [the "Listing Regulations"].
Further details on the directors including Company's policy on directors Rs.appointmentand remuneration including criteria for determining qualifications positive attributesindependence of a director and other matters are given in the corporate governance reportwhich form part of this Annual Report.
13. NUMBER OF MEETING OF BOARD OF DIRECTOR
The details of the number of meetings of the Board held during the financial year2016-17 forms part of the Corporate Governance Report.
14. PARTICULAR OF LOANS GUARANTEE OR INVESTMENTS
Details of Loans Guarantee and Investment covered under section 186 of the CompaniesAct 2013 are given in the notes to the Financial Statement provided in this AnnualReport.
15. CORPORATE GOVERNANCE
The report on Corporate Governance as stipulated under Regulation 34 (3) read with ParaC of Schedule V to the Listing Regulations inter alia containing the composition of theAudit Committee details of establishment of vigil mechanism forms part of this report.The requisite Certificate from the Practicing Company Secretary confirming compliance withthe conditions of Corporate Governance as stipulated under the Listing Regulations isattached to this report.
16. MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under Regulation 34(2) of the Listing Regulations the ManagementDiscussion and Analysis Report on the operations of the Company is attached to thisReport.
17. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed as Annexure - B"to this Report.
18. PARTICULARS OF CONTRACTS OR ARRANGEMENT MADE WITH RELATED PARTIES
During the year under review all transactions entered into by the Company with relatedparties as defined under the Act and the Listing Regulations were in the ordinary courseof business and on an arm's length basis.
Particulars of contracts or arrangements with related parties as required under Section134(3)(h) of the Act in the prescribed Form AOC-2 is annexed as "Annexure - C"to this Report.
The details of the transactions with Related Parties are provided in the notes toFinancial Statements.
19. AUDITORS Statutory Auditor
At the Annual General Meeting held on 26th September 2014 JDNG & AssociatesChartered Accountants were appointed as Statutory Auditors of the Company to hold officetill the conclusion of the Annual General Meeting to be held in the year 2017.
Your Company has recommended M/s. Bagaria & Co LLP to be appointed in the upcomingAnnual General Meeting of the Company to hold office for a term of five years from theconclusion of this Annual General Meeting till the conclusion of the sixteenth AnnualGeneral Meeting of the Company to be held in the year 2022 subject to ratification oftheir appointment by the Members at every Annual General Meeting. M/s. Bagaria & CoLLP Chartered Accountants have confirmed their eligibility under section 141 of theCompanies Act 2013 and the related Rules to continue as the statutory auditor of theCompany for the financial year 2017-18.
Pursuant to the provision of Section 204 of the Companies Act 2013 M/s JaiprakashSingh & Associates Practicing Company Secretary have been appointed to conduct theSecretarial Audit of the Company for the finacial year 2016-17. The Secretarial AuditReport is annexed as "Annexure-D" to this Report. The report is based onthe standalone financial statements of the Company.
There were no audit qualifications in the Statutory Auditors Report as well as in theSecretarial Audit Report for the financial year 2016-17 as annexed to this Annual Report.
20. DIRECTORS Rs.RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act 2013 that:
In the preparation of the annual accounts for the financial year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
they have selected such accounting policies and applied them consistently andmade judgements 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 2016-17and of the profit of the Company for that period;
they have taken proper and sufficient care towards maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting the fraud andother irregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls which are adequate and areoperating effectively;
they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
21. CORPORATE SOCIAL RESPONSIBILITY
In terms of Section 135 of the Companies Act 2013 the Board of Directors of yourCompany has constituted a Corporate Social Responsibility Committee ("CSRCommittee") under the Chairmanship of Executive Director of the Company.
The CSR Committee of the Board has formulated a CSR Policy which has been uploaded onthe website of the Company at http://www.ashapurafashion.com/investor/CSR%20Policy. pdf
The Annual Report on CSR activities as prescribed under Section 135 of the CompaniesAct 2013 is annexed as "Annexure - E" to this report.
22. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has an internal control system commensurate with the size scale andcomplexity of its operations. The Internal Audit Department monitors and evaluates theefficacy and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies of the Company. Based on the reportof internal audit function the Company undertakes corrective action in their respectiveareas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
Except to the order passed by the Hon'ble National Company Law Tribunal related toScheme of Arrangement between Momai Apparels Limited and Ashapura Intimates FashionLimited and their respective Shareholders and Creditors (explained in detail under point 3of this report) no other significant and material orders passed by the Regulators orCourts that would impact the Company and its future operations.
24. SEXUAL HARASSMENT:
The Company has constituted an Internal Complaint Committee as required under Section 4of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 and the Rules made thereunder. During the year under review no complaints werereported.
25. SAFETY ENVIRONMENT CONTROL AND PROTECTION:
The Company is aware of the importance of environmentally clean and safe operations.The Company's policy requires conduct of operations in such a manner so as to ensuresafety of all concerned compliances environmental regulations and preservation ofnatural resources at the Plant.
26. REPORTING OF FRAUDS
There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Companies Act 2013 & Rules framed thereunder either to the Company orto the Central Government.
27. MATERIAL CHANGES AND COMMITMENTS
Except as disclosed elsewhere in this Report and its Annexures no material changes andcommitments which could affect the Company's financial position have occurred betweenthe end of the financial year of the Company and the date of this Report.
28. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under section 134(3)(m) of the Companies Act 2013 readwith Rule 8 (3) of the Companies (Accounts) Rules 2014 is as follows:
A. Conservation of Energy
(i) The steps taken or impact on conservation of energy :
The Company has made concrete efforts for enhancement in the capacity utilization costcompetitiveness and quality through systematic process monitoring and adherence totechnological norms by:
Installation of energy efficient LED Lights in all stores.
I nstallation of Energy Management System in all stores.
Reducing power consumption in cooling towers.
Replacement of inefficient motor.
Technical up-gradation and modernization of various machines.
Replacement of old plant and machinery with modernization of existing machinery.
(ii) The Steps taken by the Company for utilising alternate sources of energy :
1. All the Store Unit maintenance head and store managers were made aware about energyconsumption of their store as per the connected load. Based on the connected load andoperating hours budgeted energy consumption is given to each stores and practice oftaking daily logs and cross-checking the daily consumption with the budgeted units isadopted. This helps in curbing the unwanted consumption motivate users to take all thepossible measures to save the energy and helps in pointing out the discrepancies in theenergy consumption pattern and corrective action to eliminate the discrepancies.
2. Controlled the energy consumption of HVAC system by optimizing the temperatureinside the stores (24C). This drive is the major contributor for the energy conservationfor the stores.
3. Optimized lighting consumption by strictly controlling the operating hours as perthe usage pattern. Color coding is followed for distinguishing the different lighting andusing LED Lights in the all stores (emergency show window signages floor lightingindirect lighting) switches; so that energy usage can be optimized.
4. Eliminated the unwanted light consumption and restricted usage of the lightingduring day work.
(iii) The capital investment on energy conservation equipments : NIL
B. Technology absorption adaption and innovation
(i) The efforts made towards technology absorption during the year under review are:-The Company continues to use the latest technologies for improving the quality of itsservices and products.
(ii) In case of imported technology-The Company's operations do not require significantimport of technology.
C. Foreign Exchange Earnings and Outgo
| || ||(Rs. in Lakhs) |
|Particulars ||2016-17 ||2015-16 |
|Foreign exchange earnings ||526.19 ||752.38 |
|Outgo ||Nil ||Nil |
29. Cautionary Statement
Statement in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Company's objectives projections estimates andexpectation may constitute forward looking statement Rs.within the meaning ofapplicable laws and regulations Although the expectation are based on reasonableassumptions the actual results may differ.
30. Acknowledgement and Appreciation
Your Directors wish to convey their appreciation for the assistance and co-operationreceived from the shareholders customers dealers suppliers bankers Government and allother business associates for the continuous support given by them to the Company andtheir confidence in its management.
Your Directors also wish to place on record their appreciation for impressive growthachieved through the competence hard work solidarity co-operation and support ofemployees at all levels.
| ||For and on behalf of Board of Directors |
|30th November 2017 ||Harshad H Thakkar |
|Mumbai ||Chairman and Managing Director |
| ||DIN: 01869173 |