Your Directors take pleasure in presenting the Thirty Third Annual Report of yourCompany together with audited statement of accounts for the year ended on 31stMarch 2016.
1. FINANCIAL RESULTS
Your Company's performance during the above year is summarized below:
| || ||(Rupees in Lacs) |
|Particulars ||March 31 2016 ||March 31 2015 |
|Loss before Interest and Depreciation ||752.43 ||677.23 |
|Less : Interest ||1219.98 ||487.69 |
|Loss before Depreciation ||1972.41 ||1164.92 |
|Add : Depreciation and amortization of expenses ||383.36 ||455.40 |
|Loss before tax ||2355.77 ||1620.33 |
|Add : Provision for tax ||- ||- |
|Loss after tax ||2355.77 ||1620.33 |
Your Directors regret their inability to recommend any dividend on the equity shares inview of the losses suffered by your Company during the year under review and carriedforward losses of earlier years. They are also unable to pay any dividend on preferenceshares.
In view of the losses incurred by your Company no amount has been transferred togeneral reserve.
4. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS
The operational performance of the company showed major decline with the loss at PBTstage going up to Rs.1813.33 lacs (arrived at after adjusting reported PBT fornon-recurring expenses (net) of Rs.542.44 lacs) compared to loss of Rs.523.60 lacs in year2014-15 (adjusted for non-recurring expenses (net) of Rs.1096.73 lacs). (Figures forprevious year have been adjusted to remove impact of change in depreciation during thatyear in compliance with provisions of Schedule II of the Companies Act 2013). Increase ininterest cost by Rs.732 lacs is one of the major reasons for change in performance. Thecompany paid interest to the secured creditors as well as on unsecured loans brought in bypromoters to part-finance debt settlement under the Scheme of Arrangement as per theScheme provisions. On the operational front the performance has suffered both in Denimand Spinfab divisions mainly on account of lower volumes.
Production and sales volumes have declined both in Denim as well as in Spinfab Divisionwith Denim division suffering more on export front primarily due to sluggish Europeanmarkets and stiff competition following increased capacities on a macro level. The Spinfabdivision on the other hand also saw lower volumes but it could penetrate more intodomestic brand segment that provides better margins and thereby offsetting the negativeimpact of lower volumes to some extent.
Both the company's division continue to operate under severe limitations in terms ofproduct offering credit terms as well as product costing due to ageing machinery andworking capital constraints. These factors have a severe adverse impact on themarketability of the products over and above the pricing and margin issues for thecompany. Competitors have considerable advantage when it comes to meeting the customerrequirements in terms of changing fashion trends and product specifications as well as theoperational efficiency affecting the product costs.
The reduced raw materials prices especially on account of global slowdown have helpedthe divisions maintain the product margins and have also helped ease the adverse impact ofinflationary pressures on the prices of dyes/chemicals and other operational expenses.
The detailed discussion on performance is highlighted in management discussion andanalysis attached to this report.
5. SCHEME OF ARRANGEMENT
The Scheme of arrangement for reconstruction and compromise between the Company and itsequity shareholders preference shareholders and secured creditors (hereinafter referredto as "the Scheme") under sections 391 to 394 of the Companies Act 1956 readwith Section 100 to 103 of the Companies Act 1956 and Section 52 of the Companies Act2013 was sanctioned by the Hon'ble High Court of Gujarat vide Order dated 24.09.2015 andthe same became effective on and from 5.10.2015 upon filing a certified copy of the HighCourt Order with the Registrar of Companies Gujarat.
Accordingly the Company has made payments to Secured Creditor in terms of the Scheme.However allotment of Shares as part of secured debt settlement in terms of the Scheme toAsset Reconstruction Company (India) Ltd (ARCIL) one of the secured creditors gotdelayed as the same were to be allotted simultaneously with the Rights Issue shares. PostRights Issue formalities were delayed on account of litigation and Court order as detailedin the status on Rights Issue in this Report.
6. RIGHTS ISSUE
The Company came out with a Rights Issue of 80085089 equity shares of Rs. 10 eachaggregating to Rs.8008.51 Lacs at par in the ratio of 24:10 to part-finance settlement ofsecured debt under Scheme of Arrangement u/s. 391 of the Companies Act 1956. The issueclosed on 2nd December 2015 and the basis of allotment was approved by BSELimited the designated Stock Exchange on 11th December 2015. The process ofrefund allotment and listing of shares was to be completed by 17th December2015 but the company could not complete these processes due to a status-quo order passedby the Debt Recovery Tribunal ("DRT") Mumbai restraining Bankers to the Issuefrom release of any funds and the Company from withdrawing the funds collected in theRights Issue in a pending case which was filed by HDFC Bank against the Company.
Subsequently several legal cases and processes followed at DRT the Debt RecoveryAppellate Tribunal and Hon'ble Bombay High Court. As per various order of The Hon. BombayHigh Court including final order dated 3rd May 2016 which directed the Bankersto release the funds collected under Rights Issue towards refund and release allotmentmoney which allowed company to complete the further processes of the Rights Issueallotment was made on 5th May 2016 and refund amounts were processed on 7thMay 2016. The shares of the company under the Rights Issue have been listed uponcompletion of formalities.
7. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF YOURCOMPANY OCCURRED BETwEEN THE END OF THE FINANCIAL YEAR TO wHICH THIS FINANCIAL STATEMENTRELATE 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 Report exceptas 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 31st March 2016.
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 2016.
10. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134(3)(m) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 the information relating to Conservation of Energy TechnologyAbsorption and Foreign Exchange earnings & outgo 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 RESPONSIBILITIES INITIATIVES
The requirements of corporate social responsibility in terms of Section 135 of theCompanies Act 2013 does not apply to your company.
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 and also atthe Board of Directors for approval. Prior omnibus approval of the Audit Committee andBoard of Directors is obtained for the transactions which are of a for foreseeable andrepetitive nature. The transactions entered into pursuant to omnibus approval are placedbefore Audit Committee and Board of Directors on quarterly basis. The policy on RelatedParty Transaction (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 disclosure inForm AOC-2 is not required. Details of all material transactions if any with relatedparties have been disclosed quarterly along with the compliance report on corporategovernance. Transactions with related parties as per requirements of Accounting Standard18 are disclosed in the notes to accounts annexed to financial statements.
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
The Board of Directors has carried out an annual evaluation of its performance itsCommittees of the Board of Directors and all individual Directors pursuant to therequirements of the Companies Act 2013 and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 and also in accordance with the policy laid down by theNomination and Remuneration Committee (NRC) approved by the Board of 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. After such evaluation the Board came to the conclusionthat the Board as a whole as well as all its Members individually and the Committees ofthe Board continued to adhere to the standards of good governance and continuousimprovement in processes and procedures. The Board notes that every individual member ofthe Board and its Committees have contributed in the sustained operations and overallperformance of the Company. The manner in which the evaluation has been carried out hasbeen 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 Act2013 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 meetings of the Board of Directors were held as required under theCompanies Act 2013 and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The details of Board meetings held during the financial year 2015-2016have been furnished in the Corporate Governance Report forming part of this Annual Report.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL
There was no change in the Board of Directors of the company.
In accordance with the Article of Association of the Company and the provision of theCompanies Act 2013 Mrs. Koushlya Melwani Director (DIN: 01575110) retires by rotationand being eligible seeks reappointment.
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 loss 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) of the Companies Act 2013. The terms andconditions of the appointment of Independent Directors have been disclosed on the websiteof 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 www.ashima.in .
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
(A) 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 - 3 tothis Report.
(B) The statement containing particulars of employees as required under Section 197(12)of the Companies
Act 2013 read with Rule 5(2) and Rule 5 (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report. In terms ofSection 136 of the Companies Act 2013 the same is open for inspection at the RegisteredOffice of the Company. Copies of this statement may be obtained by the members by writingto the Company Secretary.
26. STATUTORY AUDITORS
M/s. Dhirubhai Shah & Doshi Chartered Accountants (Firm Registration No. 102511W)hold office upto the ensuing Annual General Meeting and being eligible offer themselvesfor reappointment. The Company has received letter from them to the effect that theirappointment if made would be within the prescribed limits under Section 141(3)(g) of theCompanies Act 2013 and that they are not disqualified from appointment.
27. COST AUDITOR
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. CostAccountant (Membership No: M/ 34404) as Cost Auditor of the Company for the financialyear ending on 31st March 2017 on a remuneration as mentioned in the Noticeconvening the 33rd Annual General Meeting for conducting the audit of the costrecords maintained by the Company.
A Certificate from M/s. Ankit Sheth & Co. Cost Accountant has been received to theeffect that their appointment as Cost Auditor of the Company if made would be inaccordance with the limits specified under Section 141 of the Act and Rules framedthereunder.
28. 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 had appointed Mr. TapanShah Practicing Company Secretary Ahmedabad (Certificate of Practice No. 2839) toundertake the Secretarial Audit of the Company for the financial year ended 31stMarch 2016. The Secretarial Audit Report for the financial year ended 31stMarch 2016 is annexed herewith as Annexure - 4.
29. EXPLANATIONS/COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY
The observations of Statutory Auditors in their report on the financial statements 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 2016 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.
30. 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.
31. 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 ortribunals impacting the going concern status and Company's operations.
32. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details on Internal Control Systems and their adequacy are provided in theManagement's Discussion and Analysis which forms part of this Report.
33. 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.
34. AUDIT COMMITTEE
The composition and terms of reference of the Audit Committee has been given in theCorporate Governance Report forming a part of this Annual Report. There has been noinstance where the Board has not accepted the recommendations of the Audit Committee.
35. 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 Chartered Accountants forms part of thisreport.
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.
37. 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.
Your Directors express their gratitude for the dedicated services put in by all theemployees of the Company.
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: 14th May 2016 ||Chairman and Managing Director |
Conservation of Energy Technology Absorption and Foreign Exchange Earning and outgo.
The Information under Section 134 of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 for the year ended 31st March 2016 is given herein belowand forms part of the Board's Report.
A. Conservation of Energy
i. Energy Conservation measures taken:
Replacement of conventional Reciprocating Air Compressors & LT motors byCentrifugal Air Compressor with compact and high efficient HT motor thereby saving power.
In weaving and preparatory sections conventional tube fixtures were replaced byLED tubes thereby achieving better illumination at work places as well as saving power.
Regular monitoring of power factor to reduce overall power cost.
ii. Utilization of alternate source of energy
During the year under review the sludge from Effluent Treatment Plant was dried byheating with solar energy instead of electricity/fuel.
iii. The cost of the equipment for the energy conservation is Rs.104.08 Lacs
B. Technology Absorption
i. Efforts in brief made towards Technology Absorption.
Conversion of old model PLC of Warping machine were replaced by latest versionof PLC with connected electric panel.
Old design soft starter of existing Centac air compressor motor was replaced byadvanced technology soft starter
ii. The benefit of the above effort was improvement in working of the machines andreduction in breakdowns.
iii. In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year): Not Applicable
iv. Expenditure incurred on Research and Development.
The company has not incurred any expenditure on research and development activity.
C. Foreign Exchange Earning and Outgo
During the year under review foreign exchange earnings were Rs.1013.35 lacs excludingdeemed export and foreign exchange outgo was Rs.318.18 lacs.