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Bluechip Tex Industries Ltd.

BSE: 506981 Sector: Industrials
NSE: N.A. ISIN Code: INE472D01017
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VOLUME 1100
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P/E 7.73
Mkt Cap.(Rs cr) 17
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OPEN 84.75
CLOSE 84.80
VOLUME 1100
52-Week high 130.50
52-Week low 70.20
P/E 7.73
Mkt Cap.(Rs cr) 17
Buy Price 84.50
Buy Qty 97.00
Sell Price 88.90
Sell Qty 10.00

Bluechip Tex Industries Ltd. (BLUECHIPTEXIND) - Director Report

Company director report

DIRECTORS' REPORT

To

The Members

Blue Chip Tex Industries Limited

Your Directors are pleased to present herewith the 32nd Annual Report on thebusiness and operations of your Company and Audited Accounts for the Financial Year endedMarch 31 2017 together with the Audited Statement of Accounts and Auditor's Reportthereon.

The State of the Company's Affairs:

1. KEY FINANCIAL HIGHLIGHTS:

In terms of INR
Particulars As on 31st March 2017 As on 31st March 2016
Profit before depreciation 44332294 49752095
Less: depreciation 12894214 12551734
Profit before Tax 31438080 37200361
Less: Provision for taxation
Current tax 10350000 10601111
Deferred tax 296716 2501091
Profit After Tax 20791364 24098159
Earnings per share (Basic and Diluted) 10.55 12.23
Amount transferred to Profit and Loss account 20791364 24098159
Balance in Profit and Loss Account after appropriations 75087592 54296228
Transfer to General Reserve
Proposed Dividend 2955750 2955750
Tax on Proposed Dividend 601720 601720

During the year under review your Company has reported a total income of INR1401601860/- out of which non operating income amounts to INR 1269589/-. Revenue fromoperations income registered increase by INR 20428282/- as compared to previous yearhowever profitability of the company was affected due to demonetization and increase incost of raw materials.

2. DIVIDEND:

Your Directors are pleased to recommend a final dividend of INR 1.50 per equity sharefor the Financial Year ended 31st March 2017.

3. TRANSFER TO RESERVES:

The Company has not transferred any amount to Reserves out of amount available forappropriations.

4. THE STATE OF COMPANY'S AFFAIRS :

The highlights of State of Company's affairs are as under :

The Company is now planning an expansion in its present products items and hasfinalized capital expenditure of approximate of INR 21 crore comprising of construction offactory building and installation of Two (nos.) Draw Texturising Machines and Six (nos.)Air Texturising Machines. The project will be financed by Internal Accruals Promoterdirectors and Bank . With the successful implementation of this expansion programme yourCompany is anticipating increase in turnover by INR 12 crore in this year & INR 58crore in 2018-19.

5. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO [SECTION 134 (3) (m) OF THE COMPANIES ACT 2013:

Particulars required to be furnished by the Companies as per Rule 8 of Companies(Accounts) Rules 2014 are as follows:

A. Rule 8 Sub-Rule 3 (A) pertaining to Conservation of Energy:

(i) Energy conservation measures taken:

Your Company have initiated appropriate measures to conserve energy. The Company hasalways been conscious about the need for conservation of energy.

(ii) Additional investments and proposals if any being implemented for reduction ofenergy consumption:

The efforts for conservation of energy are on an ongoing basis throughout the year.

(iii) The impact of the above measures for reduction of energy consumption andconsequent impact on the cost of production of goods:

The measures taken have resulted in savings in the cost of production.

Total energy consumption and energy consumption per unit of production:

Power and Fuel Consumption:

1. Electricity: Financial Year ended 31.03.2017 Financial Year ended 31.03.2016
Purchased Units (KWH) 15637651 16042868
Total Amount (INR) 70023408 67750977
Cost/Unit (INR) 4.48 4.22
Consumption per ton polyester Texturised
Yarn Production (units in KWH) 965.30 1013.39

B. Rule 8 Sub-Rule 3 (B) pertaining to Technology absorption

Efforts in brief made towards technology absorption adoption and innovation: TheCompany keeps itself abreast of the technical development and innovation in its line ofproducts worldwide and tries to bring about improvements in the product for better yieldquality and cost effectiveness etc.

Continuous efforts are being made in the areas of quality improvements wastereduction process capability and cost minimization to specially improve the marketacceptance of the product.

C. Rule 8 Sub-Rule 3 (C) pertaining to Foreign exchange earnings and Outgo:

There are NIL Foreign Exchange earned in terms of actual inflows during the year andthe Foreign Exchange outgo was NIL during the year in terms of actual outflows.

6. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF FINANCIAL YEAR TILL THEDATE OF THIS REPORT:

No material changes and commitments other than in the normal course of business haveoccurred after the close of the year till the date of this Report which affect thefinancial position of the Company.

7. DETAILS OF SUBSIDIARY/ JOINT VENTURES/ASSOCIATE COMPANIES.

Name of Company Subsidiary / Joint ventures/ Associate Company Date of becoming of Subsidiary / Joint ventures/ Associate Company
NIL NIL NIL

8. STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF ASSOCIATECOMPANY:

Your Company is not having any associate Company and hence the statement containing thesalient feature of the financial statement of a company's associate company under thefirst proviso to subsection (3) of section 129 in the prescribed Form AOC-1 does not formpart of Directors' Report.

9. DETAILS OF NEW SUBSIDIARY/ JOINT VENTURES/ASSOCIATE COMPANIES:

There are no new Subsidiary/Joint Ventures/Associate Companies of the Company duringthe year under review.

10. DETAILS OF THE COMPANY WHO CEASED TO BE ITS SUBSIDIARY/ JOINT VENTURES/ ASSOCIATECOMPANIES:

Name of Company Subsidiary / Joint ventures/ Associate Company Date of becoming of Subsidiary / Joint ventures/ Associate Company
N.A. N.A. N.A.

11. CHANGE IN THE NATURE OF BUSINESS:

There has been no change in the nature of business of the Company during the year underreview.

12. THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH

REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has adequate and effective control systems commensurate with its size andnature of business to ensure that assets are efficiently used and the interest of theCompany is safe guarded and the transactions are authorized recorded and reportedcorrectly. Checks and balances are in place to determine the accuracy and reliability ofaccounting data.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Particulars of loans guarantees given and investments in accordance with Section 186of the Companies Act 2013 as on 31st March 2017 are as follows:

Amount outstanding as at 31 March 2017:

Particulars Amount in INR
Loans given
Guarantee given
Investments made 4194950

14. ANNUAL RETURN:

The extract of Annual Return pursuant to Section 92 of the Companies Act 2013 readwith The Companies (Management and Administration) Rules 2014 in the prescribed FormMGT-9 is hereby annexed with this report as "Annexure I'' and is a part ofthis report. The same is as on 31st March 2017.

15. DEPOSITS:

The Company has not accepted any deposits within the meaning of Section 73(1) of theCompanies Act 2013 and the Rules made thereunder.

16. BOARD MEETINGS:

The Board of Directors (herein after called as "the Board") met for Fourtimes during the Year under review:

Date of Meetings Venue and time of the meeting Directors present Directors who were absent with/ without leave of absence
1 16.04.2016 Venue: ‘Jasville' 1) Mr. Nand Kishanchand Khemani None
2nd Floor 2) Mr. Ashok Kishanchand Khemani
Opp. Liberty Cinema 3) Mr. Kumar Saturgun Nathani
New Marine Lines 4) Mr. Manmohan Kishanlal Anand
Mumbai - 400 020. 5) Mr. Rahul A. Khemani }
6) Mr. Shahin Khemani
Time: 3.30 P.M. 7) Ms. Shraddha Teli
2 08.08.2016 Venue: ‘Office No. 17 1) Mr. Ashok Kishinchand Khemani Ms. Shraddha
Maker Chamber III 2) Mr. Kumar Nathani Mangesh Teli
Jamnalal Bajaj Road 3) Mr. Manmohan Kishanlal Anand
Nariman Point 4) Mr. Nand Kishanchand Khemani
Mumbai - 400 021. 5) Mr. Rahul A. Khemani }
6) Mr. Shahin Khemani
Time: 3:30 P.M. 7) Mr. Maulin Samir Gandhi
3 11.11.2016 Venue: Office No. 17 1) Mr. Ashok Kishinchand Khemani Ms. Shraddha
Maker Chamber III 2) Mr. Nand Kishinchand Khemani MangeshTeli
Jamnalal Bajaj Road 3) Mr. Rahul Khemani
Nariman Point 4) Mr. Shahin Khemani
Mumbai - 400 021. 5) Mr. Kumar Nathani }
6) Mr. Manmohan Kishanlal Anand
Time: 3:30 p.m. 7) Mr. Maulin Samir Gandhi
4 03.02.2017 Venue: Office No. 17 1) Mr. Ashok Kishinchand Khemani None
Maker Chamber III 2) Mr. Nand Kishinchand Khemani
Jamnalal Bajaj Road 3) Mr. Rahul Khemani
Nariman Point 4) Mr. Shahin Khemani
Mumbai - 400 021. 5) Ms. Shraddha Teli }
6) Mr. Kumar Saturgun Nathani
Time: 3:30 p.m. 7) Mr. Manmohan Kishanlal Anand
8) Mr. Maulin Samir Gandhi

17. CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the period under review the following Changes in Directors and Key managerialpersonnel has taken place:

Name of the Director/ Particulars Date of Appointment/
Key managerial personal Resignation / Change in
Designation
1 Mr. Vijay Kumar Mishra Resignation from the post of Independent Director Effective date of Resignation is 05.04.2016
2 Mr. Maulin Samir Gandhi Appointment as an Additional Independent Director Effective date of appointment is 22.04.2016
3 Mr. Maulin Samir Gandhi Change in Designation from Additional Independent Director to Independent Director Effective date of change in designation is 16.07.2016
4 Ms. Sonal Shukla Appointed as Company Secretary Effective date of appointment is 01.12.2016
5 Mr. Manmohan Anand Appointed as Additional Independent Director Effective date of appointment is 16.07.2016

18. QUALIFICATION GIVEN BY THE STATUTORY AUDITORS:

There are no qualifications reservation or adverse remarks or disclaimers made by theStatutory Auditors of the Company in their report.

19. AUDITORS:

M/s. Rajendra & Co. Chartered Accountants (Firm Registration No. 108355W)Statutory Auditor of the Company will complete their tenure of two terms of fiveconsecutive years as specified under Section 139 (2) of the Companies Act 2013 at theensuring annual general meeting and hence they shall not be eligible for re-appointment.

Considering the provisions of Section 139 141 142 of Companies Act 2013 and readwith Companies (Audit and Auditors) Rules 2014 the Board of Directors based onrecommendations of the Audit Committee considered and approved the appointment of M/s. D KP & Associates Chartered Accountants (Firm Registration No. 126305W) as the StatutoryAuditors of the Company who have expressed their willingness and confirmed theireligibility for being appointed as Statutory Auditors of the Company.

Accordingly M/s. D K P & Associates Chartered Accountants (Firm Registration No.126305W) as Statutory Auditors of the Company will hold office from the conclusion of the32nd Annual General Meeting till the conclusion of 37th AnnualGeneral Meeting to be held in the year 2022 subject to the approval of shareholders in theensuing Annual General Meeting.

20. SECRETARIAL AUDITOR:

The Company has appointed M/s. Pramod S. Shah and Associates Practicing CompanySecretaries as a Secretarial Auditor of the Company according to the provision ofSection 204 of the Companies Act 2013 read with rules for conducting Secretarial Audit ofCompany for the for the financial year 2016-17. The Report of the Secretarial Audit isannexed herewith as Annexure IV. The Secretarial Audit Report does not contain anyqualifications reservations or adverse remarks.

21. CONTRACT OR ARRANGEMENT WITH RELATED PARTIES:

The Company has entered into transactions with related parties in accordance with theprovisions of the Companies Act 2013 and the particulars of contracts or arrangementswith related parties referred to in Section 188(1) as prescribed in Form AOC - 2 of therules prescribed under Chapter IX relating to Accounts of Companies under the CompaniesAct 2013 is appended as "Annexure II''

22. DETAILS OF REMUNERATION/COMPENSATION RECEIVED BY MANAGING DIRECTOR FROM

HOLDING/ SUBSIDIARY COMPANIES:

Sr. No. Name of Managing/ Whole Time Director Name of Holding/ Subsidiary Company paying remuneration/ compensation Nature of remuneration/ compensation Amount of remuneration/ compensation
N.A N.A N.A N.A

23. DISCLOSURE OF REMUNERATION PAID TO DIRECTOR AND KEY MANAGERIAL PERSONNEL ANDEMPLOYEES:

The details with regard to payment of remuneration to Director and Key ManagerialPersonnel is provided in Form No. MGT 9- extract of annual return appended as "AnnexureI".

24. CHANGE IN CAPITAL STRUCTURE:

There has been no change in the capital structure of the Company during the year ended31st March 2017.

25. CORPORATE SOCIAL RESPONSIBILITY POLICY:

During the year under review the Company has not developed the policy on CorporateSocial Responsibility as the Company does not fall under the prescribed classes ofCompanies mentioned under section 135(1) of the Companies Act 2013.

26. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATION IN FUTURE:

There are no material or significant orders passed by the regulators or courts ortribunals impacting the going concern status and the company's operation in future.

27. STATEMENT FOR DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

U/S 134:

At present the company has not identified any element of risk which may threaten theexistence of the company.

28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company is committed to provide safe and conducive environment to its employeesduring the year under review. Your Directors further state that during the year underreview there were no cases filed pursuant to the Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

29. DETAILS IN RESPECT OF FRAUDS REPORTED BY THE AUDITORS UNDER SECTION 143(12) OFCOMPANIES ACT 2013:

There are no frauds reported by the Auditor which are required to be disclosed underSection 143(12) of Companies Act 2013.

30. STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS UNDER SECTION

149 (6) OF THE COMPANIES ACT 2013:

As per the provisions of Section 149(4) of the Companies Act 2013 read with TheCompanies (Appointment and Qualifications of Directors) Rules 2014 every listed publiccompany shall have at least one-third of the total number of directors as independentdirectors.

In view of the above your Company has duly complied with the provision by appointingfollowing Independent Directors:

Sr. No. Name of the Independent Director Date of appointment/ Reappointment Date of passing of ordinary/special resolution/ Board Resolution (if any)
1. Mr. Maulin Gandhi 22/04/2016 16/07/2016
2. Mr. Kumar Nathani 09/09/2014 09/09/2014
3. Mr. Manmohan Anand 16/07/2016 16/07/2016
4. Ms. Shraddha Teli 07/11/2014 23/07/2015

All the above Independent Directors meets the criteria of ‘independence'prescribed under section 149(6) and have submitted declaration to the effect that theymeet with the criteria of ‘independence' as required under section 149(7) of theCompanies Act 2013.

31. COMMITTEES OF BOARD:

I. Nomination and Remuneration Committee:

The ‘Nomination and Remuneration Committee' consists of three Directors with twoindependent directors and one executive director with the Chairman being the IndependentDirector and the said constitution is in accordance with the provisions of Section 178 ofthe Companies Act 2013. The Committee acts in accordance with the Terms of Reference asapproved and adopted by the Board.

The Composition of the Committee is as under:

Sr. No. Name of the Member Designation
1 Mr. Kumar Nathani Chairman
2 Mr. Nand Khemani Member
3 Mr. Manmohan Anand Member

Nomination and Remuneration Policy

The Company's Nomination and Remuneration Policy for Directors Key ManagerialPersonnel and other employees is annexed as Annexure III to the Directors' Report.Further the Company has devised a Policy for performance evaluation of IndependentDirectors Board Committees and other individual Directors. The Company's Nomination andRemuneration Policy is directed towards rewarding performance based on review ofachievements periodically. The Nomination and Remuneration Policy is in consonance withthe existing industry practice.

II. Audit Committee:

In accordance with the provisions of Section 177 of the Companies Act 2013 yourCompany has constituted an "Audit Committee" comprising of Three directorsconsisting of Two Independent directors and one executive director with the Chairman beingIndependent director. The Audit Committee acts in accordance with the Terms of Referencespecified by the Board in writing.

The Composition of the Committee is as under:

Sr. No. Name of the Member Designation
1 Mr. Kumar Nathani Chairman
2 Mr. Ashok Khemani Member
3 Mr. Manmohan Anand Member

The Terms of reference of the Audit Committee are broadly stated as under:

1. Recommendation for appointment remuneration and terms of appointment of auditors ofthe company;

2. Review and monitor the auditor's independence and performance and effectiveness ofaudit process;

3. Examination of the financial statement and the auditors' report thereon;

4. Approval or any subsequent modification of transactions of the company with relatedparties;

5. Scrutiny of inter-corporate loans and investments;

6. Valuation of undertakings or assets of the company wherever it is necessary;

7. Evaluation of internal financial controls and risk management systems;

8. Monitoring the end use of funds raised through public offers and related matters.

III. Stakeholders Relationship Committee/ Shareholders Grievance Committee:

The Committee has the mandate to review redress shareholders' grievances and toapprove all share transfers.

The composition of the Stakeholders Relationship Committee / Shareholders GrievanceCommittee as on March 31 2017 is as under:-

Sr. No. Name of the Member Designation
1 Mr. Kumar Saturgun Nathani Chairman
2 Mr. Nand Khemani Member
3 Mr. Ashok Khemani Member

The functions of the Stakeholder's Relationship Committee / Shareholders' GrievanceCommittee include the following:-

1. Transfer /Transmission of shares;

2. Issue of duplicate share certificates;

3. Review of shares dematerialized and all other related matters;

4. Monitors expeditious redressal of investors' grievances;

5. Non receipt of Annual Report and declared dividend;

6. All other matters related to shares.

IV. THE VIGIL MECHANISM:

Your Company believes in promoting a fair transparent ethical and professional workenvironment.

The Board of Directors of the Company has established a Whistle Blower Policy &Vigil Mechanism in accordance with the provisions of the Companies Act 2013 and theListing Regulations for reporting the genuine concerns or grievances or concerns of actualor suspected fraud or violation of the Company's code of conduct. The said Mechanism isestablished for directors and employees to report their concerns. The policy provides theprocedure and other details required to be known for the purpose of reporting suchgrievances or concerns. The same is uploaded on the website of the Company.

32. QUALIFICATION GIVEN BY THE SECRETARIAL AUDITOR:

There are no qualifications reservation or adverse remarks or disclaimers made by theSecretarial Auditors of the Company in their report.

The Board has appointed M/s. Pramod S. Shah and Associates Practising CompanySecretaries to conduct Secretarial Audit for the financial year 2016-17. The SecretarialAudit Report for the financial year ended March 31 2017 is annexed as "AnnexureIV''.

33. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS

COMMITTEES AND INDIVIDUAL DIRECTORS:

As required under section 178(2) of the Companies Act 2013 and under Schedule IV tothe Companies Act 2013 on code of conduct for Independent directors a Comprehensiveexercise for evaluation of the performances of every individual director of the Board asa whole and its Committees and of the Chairperson of the Company has been carried by yourcompany during the year under review as per the evaluation criteria approved by the Boardand based on the guidelines given in schedule IV to the Companies Act 2013.

For the purpose of carrying out performance evaluation exercise three types ofEvaluation forms were devised in which the evaluating director has allotted to theindividual Director the Board as a whole its Committees and the Chairperson appropriaterating on the scale of six.

Such evaluation exercise has been carried out:

(i) of Independent Directors by the Board;

(ii) of Non-Independent Directors by all the Independent Directors in separate meetingheld for the purpose on 3rd February 2017;

(iii) of the Board as a whole by all the Directors;

(iv) of the Committees by all the Directors;

(v) of the Chairperson of your Company by the Independent Directors in separate meetingheld on 3rd February 2017 after taking into account the views of theExecutive/ Non-Executive Directors;

(v) of the Board by itself.

Having regard to the industry size and nature of business your company is engaged andthe evaluation methodology adopted is in the opinion of the Board sufficient appropriateand is found to be serving the purpose.

The Independent Director of the Company are evaluated by the Non-Executive Directorsand the other Directors of the Board. The criteria's for the evaluation of the IndependentDirectors are:

a. Attendance record;

b. Possesses sufficient skills experience and level of preparedness which allows theperson to clearly add value to discussions and decisions ;

c. Able to challenge views of others in a constructive manner;

d. Knowledge acquired with regard to the company's business/activities;

e. Understanding of industry and global trends;

f. Any qualitative comments and suggestions for improving effectiveness.

34. DIRECTORS' RESPONSIBILITY STATEMENT:

In accordance with provisions of section 134(3)(c) and 134(5) of the Companies Act2013 your Directors state the following:(a) In the preparation of the annualaccounts for the year ended March 31 2017 the applicable accounting standards had beenfollowed and there are no material departures from the same; (b) The Directors haveselected such accounting policies and applied them consistently and made judgements andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2017 and of the profit of the Company for theyear ended on that date;

(c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the 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;

(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 and

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

35. MANAGEMENT DISCUSSION AND ANALYSIS:

Industry Structure

The Indian textile and apparel Industry has been a significant contributor to theIndian economy and continues to play a pivotal role in India's growth story through itscontribution to industrial output employment generation and export earnings. The textileIndustry contributes 14% to the industrial production while it's share in Indian exportsstands at a significant 12%. The Indian textile Industry contributes 5% to India's GDP.India is one of the few countries with a complete and integrated textile value chainhaving production at each level of textile manufacturing with an overall annual growth of8.9%. The textile Industry is labour intensive and is one of the largest employers. TheIndian textiles Industry currently estimated at around 110 billion dollars approx isexpected to reach us$ 114 billion by 2021. The Industry is the second largest employerafter agriculture providing direct employment to over 45 million and 60 million peopleindirectly. Moreover the use and application of polyester is increasing day by dayreplacing far more expensive fibers.

Strength and Opportunities

Ambition of the Government of India to make India a hub for textiles will create anopportunity for your company to perform better in the coming years also variousinitiatives provided by the Government will help to boost the textile Industry; Make inIndia campaign; Large overseas and domestic market: Increase in consumption pattern ofpolyester across the country and even globally will give a boost to the polyester yarnmarket also the use of polyester yarn as a affordable substitute of much other manmade andnatural fibres has led to the increase in consumption of polyester yarn world over;Abundant raw material availability; Low cost skilled labour; Promising export potential;Location Advantage: Silvasa is well connected & close to Big textiles markets likeSurat North India & Bhiwandi; With GST Implementation the organised sector willdefinitely benefit.

Weakness and Threats

Fragmented Industry;

Cost competitiveness and low margins: Due to severe recessionary trends which arecontinuing in the developed countries unit realisation of products may continue to beunder pressure; –Technological obsolescence in weaving and spinning sector;Competition in the domestic as well as world markets specially from China;

Problems of power yet prevail: Severe power shortage in some of the states will remaina big threat for the utilisation of the plant and equipments due to shortage of power theutilisation may drop severely and hence volatility in yarn prices may continue; Increasein Labour wage rate on an average by 10-15%.

Increasing input costs i.e. power finance and logistics; Volatile government policies;Fluctuation in Crude Oil Prices.

Management Perception of Risks and Concerns

– In today's challenging and competitive environment strategies for mitigatinginherent risks in accomplishing the growth plans of the company are imperative. The mainrisks include strategic risk operational risk financial risk and compliances and legalrisk. The fast technology obsolescence high cost of manufacturing and taxation are themajor risk/ concerns of the business;

– Fluctuations in foreign exchange adversely impacted exports and long term exportorders cannot be booked in view of the uncertainty in exchange rates also the fluctuationin exchange rates makes it difficult to purchase machinery from abroad due to uncertaintyof the future;

– Adequate availability of raw material at the right prices is crucial for thecompany. Disruption in the supply or violent changes in the cost structure would affectthe profitability of the company;

– Government's periodical announcements for liberalised tariff concessions offeredto least developed countries like Bangladesh Nepal Bhutan and other countries underSouth Asian Free Trade Area (SAFTA) is also an area concern.

However the future for the textile Industry looks promising buoyed by strong domesticconsumption as well as export demand. Free trade with Asian countries and proposedagreements with EU Countries will also help to boost exports. Also the West has startedtaken India seriously as a potential supplier of polyester yarn apart from china. Risinggovernment focus and favorable policies to support the Industry has led to growth in theIndustry.

Internal Control and Management Systems:

Your company has an adequate internal control system. There is a system of continuousinternal audit which aims at ensuring effectiveness and efficiency of systems andoperations. Your company has the benefit of internal control systems which have beendeveloped over the years and which has ensured that all transactions are satisfactorilyrecorded and reported and all assets are protected against loss from unauthorised use orotherwise. The process of Internal control and systems statutory compliance riskanalysis and its management and information technology are taken together to provide ameaningful support to the management process also continuous efforts are being made tostrengthen the system.

Acknowledgement

Your Directors place on record their sincere gratitude for the assistance guidance andco-operation the Company has received from all stake holders. The Board further places onrecord its appreciation for the dedicated services rendered by the employees of theCompany.

For and on behalf of the Board
Ashok K. Khemani Nand K. Khemani
Place : Mumbai Managing Director Director
Date : 26th July 2017 DIN: 00053623 DIN: 00053671