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Ashima Ltd.

BSE: 514286 Sector: Industrials
NSE: ASHIMASYN ISIN Code: INE440A01010
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(0.78%)
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OPEN 25.85
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VOLUME 53085
52-Week high 27.45
52-Week low 12.50
P/E
Mkt Cap.(Rs cr) 333
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 25.85
CLOSE 25.75
VOLUME 53085
52-Week high 27.45
52-Week low 12.50
P/E
Mkt Cap.(Rs cr) 333
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ashima Ltd. (ASHIMASYN) - Director Report

Company director report

Your Directors take pleasure in presenting the Thirty Fourth Annual Report of yourCompany together with audited Financial Statements for the year ended on 31stMarch 2017.

1. FINANCIAL RESULTS

Your Company's performance during the above year is summarized below:

(Rupees in Lacs)
Particulars March 31 2017 March 31 2016
Profit / (Loss) before interest depreciation extraordinary item and tax (1375.66) (752.43)
Less: Interest (877.92) (1219.98)
Profit / (Loss) before depreciation extraordinary item and tax (2253.58) (1972.41)
Less: Depreciation and amortisation of expenses (353.04) (383.36)
Profit / (Loss) before extraordinary items and tax (2606.62) (2355.77)
Add: Extraordinary item (income) 5255.17 -
Profit/(Loss) before tax 2648.55 (2355.77)
Less: Tax Expenses 41.04 -
Profit/(Loss) after tax 2607.52 (2355.77)

2. DIVIDEND

Your Directors regret their inability to recommend any dividend on the equity shares inview of the carried forward losses of earlier years. They are also unable to pay anydividend on preference shares.

3. RESERVES

In view of the accumulated losses of earlier years no amount has been transferred togeneral reserve.

4. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

For the year under review the Company earned profit before tax of Rs. 2648.55 lacswhich included extraordinary income of Rs. 5255.17 lacs being profit on sale of part ofsurplus land to finance debt settlement. Excluding this income and non-recurring expensesof Rs. 733.46 lacs loss before tax of Rs.1873.16 lacs reflects marginaldeclineovercomparablefigureof loss of Rs. 1813.33 lacs of previous year after netting offnon-recurring expense of Rs. 542.44 lacs. Operational performance could not match that ofprevious year. There was considerable fall in volumes of Denim Division as sales tocertain segments fell. Spinfab Division profitability also declined as it could notsustain margins by protecting volumes in market segments like brands where margins arehigh. A combination of adverse factors like product offering limitations of the Companyadverse market conditions upswing in yarn prices and substantial fall in saving in powercost through purchase of power from open access system led to deterioration inperformance.

On the other hand several positive factors offset the fall in performance. The slidein Denim Division performance was to some extent contained by undertaking more jobwork inDenim Division. Wage bill was lower upon closure of spinning activity and implementationof VRS. Interest cost was lower due to repayment of certain loans.

A detailed discussion on performance appears as part of Management Discussion andAnalysis attached to this report.

It would be pertinent to note that the Company has been facing competitive disadvantagein the market due to its old machinery which restricts product portfolio and hampers costefficiency. The Company has initiated modernization on a moderate scale as permitted byits resources to be in a better position to face the market and improve its performance.

5. SCHEME OF ARRANGEMENT

It was reported in the Board's Report for the financial year ended on 31st March 2016that the Hon'ble High Court of Gujarat vide its Order dated 24.09.2015 sanctioned theScheme of Arrangement for reconstruction and compromise between the Company and its equityshareholders preference shareholders and secured creditors ("the Scheme") andthe same became effective from 5.10.2015.

Your Directors are pleased to report that the Company has paid entire secured debt(including the deferred payments) as settled in terms of the Scheme.

6. SHARE CAPITAL

During the year under review the paid-up Equity Share Capital increased to Rs.12845.39lacs on account of allotment of 80085089 equity shares of Rs.10/- each made underRights Issue to the Shareholders of the Company and 15000000 equity shares allotted tothe Secured Creditor pursuant to Scheme of Arrangement u/s 391 to 394 of the CompaniesAct 1956.

7. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OFOUR COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments which affect the financial position ofthe Company occurring between the end of financial year and the date of this Reportexcept as stated specifically in this Report.

8. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company does not have any subsidiary joint venture or associate Company for theyear ended on 31st March 2017.

9. DEPOSITS

The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014. Therewere no unpaid or unclaimed deposits as on 31st March 2017.

10. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

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 of The Companies (Accounts) Rules 2014 forms part of this Report and annexedat Annexure-1.

11. RISK MANAGEMENT

The Company has set up a risk management framework to identify monitor minimizemitigate and report and also to identify business opportunities. The executive managementoversees the risk management framework and the Audit Committee evaluates internalfinancial controls and risk management systems. In the opinion of Board there are no riskwhich may threaten the existence of the Company.

12. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

The requirements of corporate social responsibility in terms of Section 135 of theCompanies Act 2013 would be applicable to your Company considering the net profit for theyear under review.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF COMPANIESACT 2013

There are no loans granted or guarantees given or security provided or investments madeunder Section 186 of the Companies Act 2013.

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions with Related Parties are placed before the Audit Committee for itsapproval and at the Board of Directors for information. Prior omnibus approval of theAudit Committee is obtained for the transactions which are of a foreseeable and repetitivenature. The transactions entered into pursuant to omnibus approval are placed before AuditCommittee and Board of Directors on quarterly basis. The policy on Related PartyTransaction (RPT) as adopted by the Board of Directors is available at the Company'swebsite at the weblink http://www.ashima.in/Policy_Related_Party_Transactions.pdf.

The members may note that all transactions entered into by the Company with the RelatedParties were on arm's length basis and in the ordinary course of business and thereforeprovisions of Section 188 of the Companies Act 2013 are not attracted. Thus disclosurein Form AOC-2 is not required. Transactions with related parties as per requirements ofAccounting Standard 18 are disclosed in the notes to accounts annexed to financialstatements.

15. NOMINATION AND REMUNERATION POLICY

A Nomination and Remuneration Policy has been formulated pursuant to the provisions ofSection 178 and other applicable provisions of the Companies Act 2013 and Rules theretostating therein the Company's policy on nomination and remuneration of Directors KeyManagerial Personnel and Senior Management and approved by the Board of Directors at itsmeeting held on 07.03.2015. The said policy may be referred to at the Company's websiteat http://www.ashima.in

16. ANNUAL EVALUATION OF BOARD'S PERFORMANCE

Pursuant to the requirements of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and in accordance with the policy laid downby the Nomination and Remuneration Committee (NRC) as approved by the Board of Directorsthe Board has carried out an annual evaluation of its performance its Committees and allindividual directors.

In a separate meeting of Independent Directors performance of Non IndependentDirectors performance of the Board as a whole and performance of the Chairman &Managing Director was evaluated. The manner in which the evaluation has been carried outhas been explained in the Corporate Governance Report.

17. 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 included in this Report as Annexure-2.

18. WEBSITE OF YOUR COMPANY

Your Company maintains a website www.ashima.in where detailed information of theCompany and specified details in terms of the Companies Act 2013 and SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 have been provided.

19. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the year 4 (four) meetings of the Board of Directors were held as requiredunder the Companies Act 2013 and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The details of Board meetings held during the financial year2016-forming part of this Annual Report.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year following changes have occurred in the Board of Directors of theCompany;

Mr. Jaykant Baxi resigned as an Independent Director of the Company w.e.f. 2nd August2016. The Board of Directors places on record their appreciation for the contribution madeby him during his tenure with the Company.

Mr. Neeraj Golas ceased to be Nominee Director of Asset Reconstruction Company (India)Ltd (ARCIL) due to withdrawal of nomination by ARCIL. The Board of Directors places onrecord their appreciation for the contribution made by him during his tenure with theCompany.

Mr. Neeraj Golas was appointed as an Additional Director of the Company in the capacityof Independent Director for a term of five (5) years by the Board of Directors of theCompany w.e.f. 12.08.2016 who holds office upto the date of 34 th Annual General Meetingand is eligible for appointment as Director. The Company has received notice under Section160 of the Companies Act 2013 from a member signifying the intention to propose thecandidature of Mr. Neeraj Golas for the office of the Director. A brief profile of Mr.Neeraj Golas has been given in the Notice convening the 34th Annual GeneralMeeting.

Mr. Atul Kumar Singh was appointed as an Additional Director of the Company in thecapacity of Independent Director w.e.f. 15.10.2016 for a term of five (5) years by theBoard of Directors w.e.f. 15.10.2016. who holds office upto the date of 34th AnnualGeneral Meeting and is eligible for appointment as Director. The Company has receivednotice under Section 160 of the Companies Act 2013 from a member signifying the intentionto propose the candidature of Mr. Atul Kumar Singh for the office of theDirector.Abriefprofileof Mr. Atul Kumar Singh has been given in the Notice convening the34th Annual General Meeting.

Mr. Chintan N. Parikh Chairman and Managing Director of the Company was re-appointedas Managing Director of the Company for period of three (3) years w.e.f. 07.02.2017 i.e.upto 06.02.2020 with payment of remuneration by the Board of Directors of the Company atits meeting held on 11.02.2017 on recommendation of Nomination & RemunerationCommittee subject to the approval of Shareholders at the 34th Annual GeneralMeeting of the Company. A brief profile of Mr. Chintan Parikh has been given in the Noticeconvening the 34th Annual General Meeting.

Mr. Krishnachintan Parikh was appointed as an Additional Director by the Board ofDirectors of the Company and was further designated as Executive Director by the Board ofDirectors for the period of three (3) years w.e.f. 1st June 2017 with paymentof remuneration on recommendation of Nomination & Remuneration Committee. Mr.Krishnachintan Parikh hold office upto the date of 34th Annual General Meetingof the Company and is eligible for appointment as Director subject to the approval ofShareholders at the 34th Annual General Meeting. The Company has receivednotice under Section 160 of the Companies Act 2013 from a member signifying the intentionto propose the candidature of Mr. Krishnachintan Parikh for the office of the Director. Abrief profile of Mr. Parikh has been given in the Notice convening the 34thAnnual General Meeting.

In accordance with the Article of Association and the relevant provisions of theCompanies Act 2013 Mr. Chintan N. Parikh (DIN No. 00155225) retires by rotationand being eligible seeks re-appointment.

21. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3) (c) and 134 (5) of the Act 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; and

(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

(f) the directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively;

22. DECLARATION OF INDEPENDENT DIRECTORS

All the Independent Directors have given their declaration to the Company stating theirindependence pursuant to Section 149(6) and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The terms and conditions of the appointment ofIndependent Directors have been disclosed on the website of the Company at www.ashima.in

23. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In compliance with the requirements of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Company has put in place a Familiarization Program forthe Independent Directors to familiarize them with the Company their roles rightsresponsibilities in the Company nature of the industry in which the Company operatesbusiness model etc. The details of the Familiarization Program is available on the websiteof the Company at www.ashima.in.

24. INSURANCE

The Company's plant property equipments and stocks are adequately insured againstmajor risks. The Company has also taken Directors' and Officers' Liability InsurancePolicy to provide coverage against the liabilities arising on them.

25. PARTICULARS OF EMPLOYEES

(i) The ratio of the remuneration of each director to the median employee'sremuneration and other details in terms of sub-section 12 of Section 197 of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are forming part of this report and is annexed as Annexure - 3to this Report.

(ii) The statement containing particulars of employees as required under Section197(12) of the Companies Act 2013 read with Rule 5(2) and Rule 5 (3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisreport. However the said statement is not being sent along with this Annual Report to themembers in line with the provisions of section 136 of the Companies Act 2013. The same isopen for inspection at the Registered Office of the Company. Copies of this statement maybe obtained by the members by writing to the Company Secretary.

26. AUDITORS

(a) STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act 2013 read withapplicable Rules the term of office of M/s. Dhirubhai Shah & Doshi CharteredAccountants (Firm Registration No. 102511W) as Statutory Auditors of the Company shallcome to an end at the conclusion of the forthcoming Annual General Meeting of the Company.

The Board of Directors places on record its appreciation for the services rendered byM/s Dhirubhai Shah & Doshi Chartered Accountants Ahmedabad as Statutory Auditors ofthe Company.

Subject to the approval of the members the Board of Directors has recommended theappointment of M/s. Mukesh M. Shah & Co. Chartered Accountants Ahmedabad (FirmRegistration No. 106625W) as the Statutory Auditors of the Company pursuant to Section 139of the Companies Act 2013.

The Company has received letter from them to the effect that their appointment ifmade would be within the limits prescribed under Section 141(3) (g) of the Companies Act2013 and that they are not disqualified from appointment.

(b) COST AUDITORS

In terms of the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors on therecommendation of the Audit Committee have appointed M/s. Ankit Sheth & Co. CostAccountants (Membership No: M/ 34404) as Cost Auditor of the Company for the financialyear 31st March 2018 on a remuneration as mentioned in the Notice conveningthe 34th Annual General Meeting for conducting the audit of the cost recordsmaintained by the Company.

A Certificate from M/s. Ankit Sheth & Co. Cost Accountants has been receivedappointment as Cost Auditor of the Company if made would be in accordance with thelimits specified under Section 141 of the Act and Rules framed thereunder.

26. SECRETARIAL AUDIT REPORT

Pursuant to provisions of Section 204 read with Rule 9 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr. TapanShah Practicing Company Secretary Ahmedabad (Certificate of Practice No. 2839) toundertake the Secretarial Audit of the Company for the financial year ended 31st March2017. The Secretarial Audit Report is annexed herewith as Annexure - 4.

27. REPORTING OF FRAUD BY AUDITORS

There have been no instances of fraud reported by the Auditors u/s 143 (12) of theCompanies Act 2013 and rules framed thereunder either to the Company or to the CentralGovernment.

28. EXPLANATIONS / COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTISING COMPANY SECRETARY

The observations of Statutory Auditors in their report on the financialstatements areself explanatory and therefore do not call for any further comments.

Mr. Tapan Shah Practising Company Secretary was appointed to carry out the secretarialaudit for the year ended 31st March 2017 in terms of provisions of Section 204of the Companies Act 2013. The Secretarial Audit Report is annexed with this Report.There are no qualifications reservations or adverse remarks in the said Secretarial AuditReport.

29. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM

The details of composition of Audit Committee have been furnished in the CorporateGovernance Report forming part of this Annual Report.

Your Company has established Vigil Mechanism (whistle blower policy) for Directors andemployees to report their genuine concerns details of which have been given in theCorporate Governance Report annexed to this Report and displayed on the website of theCompany.

30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS OF THE COMPANY

There has been no significant and material order passed by the regulators or courts thegoing concern status and Company's operations. All orders received by the Company duringthe year are of routine in nature which have no significant / material impact.

31. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details on Internal Control Systems and their adequacy are provided in theManagements Discussion and Analysis which forms part of this Report.

32. LISTING WITH STOCK EXCHANGES

Your Company is listed with the BSE Limited and National Stock Exchange of India Ltd.and the Company has paid the listing fees to each of the Exchanges.

33. AUDIT COMMITTEE

The Company has an Audit Committee pursuant to the requirements of the Companies Act2013 read with the rules framed thereunder and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The details relating to the same are given in the Reportof Corporate Governance forming part of this Report. During the financial year 2016-17there has been no instance where the Board has not accepted the recommendations of theAudit Committee.

34. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 (3) read with Schedule V (C) of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 a report on CorporateGovernance along with Management Discussion and Analysis Report and Certificate ofcompliance from M/s. Dhirubhai Shah & Doshi forms part of this report.

35. GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a. Issue of equity shares with differential rights as to dividend voting or otherwise

b. Issue of shares (including sweat equity shares) to employees of the Company underany scheme including Employee Stock Option Scheme.

c. Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees.

36. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

Your Directors state that during the year under review there were no cases filedpursuant to Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

37. APPRECIATION

Your Directors express their gratitude for the dedicated services put in by all theemployees of the Company.

38. ACKNOWLEDGEMENTS

Your Directors places on record their sincere thanks to the customers vendorsinvestors banks and financial institutions for the continued support. Your Directors arealso thankful to the Government of India State Government and other authorities for theirsupport and solicit similar support and guidance in future.

For and on behalf of the Board
Place: Ahmedabad Chintan N. Parikh
Date: May 6 2017 Chairman and Managing Director
(DIN: 00155225)