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Deepak Spinners Ltd.

BSE: 514030 Sector: Industrials
NSE: DEEPAKSPIN ISIN Code: INE272C01013
BSE LIVE 15:40 | 18 Aug 79.90 0.80
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OPEN 81.40
PREVIOUS CLOSE 79.10
VOLUME 616
52-Week high 119.90
52-Week low 75.00
P/E 7.36
Mkt Cap.(Rs cr) 57
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 81.40
CLOSE 79.10
VOLUME 616
52-Week high 119.90
52-Week low 75.00
P/E 7.36
Mkt Cap.(Rs cr) 57
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Deepak Spinners Ltd. (DEEPAKSPIN) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present their Report together with the Audited FinancialStatements for the year ended 31st March 2016.

1. FINANCIAL RESULTS (Rs. in Lacs)
Profit before Depreciation & Tax 3518.22
Less : Depreciation 1353.53
Provision for Tax
- Current year 465.00
- Deferred Tax 131.52
Net Profit 1568.17
Transfers and Appropriations :
Less : Interim Dividend and Dividend Tax 173.06
Balance carried forward to
Reserves and Surplus 1395.11

2. Dividend

The Company had paid Interim Dividend of Rs. 2/- per equity share during the year2015-16. The Directors have not recommended any final dividend.

3. General Review

The project of capacity expansion at Guna plant by installing 14112 spindles togetherwith related machinery and accessories has been completed.Inspiteofsluggishmarketconditionsprofitability of the Company has been maintained due tobetter utilization of resources and efficiency in working.

The Company has planned to upgrade its electricity supply at Baddi works. The dyeingcapacity is being increased by 8 MT per day at Baddi enabling the Company to increase theproduct mix of own dyed yarn which would offer better profit margins. These activities areexpected to be completed within the current financial year and its capital expenditurewill be met through internal accruals.

4. Internal Financial Control Systems

The Company has an adequate Internal Financial Control System commensurate with thesize scale and nature of its operations. Internal

Audit is conducted by independent Chartered Accountants on quarterly basis. Tomaintain its objectivity and independence the Internal Auditors report directly to theAudit Committee of the Board. Based on the report of the Internal Audits functional headsundertake corrective action and thereby strengthening the controls in their respectiveareas.

5. Statutory Auditors

M/s. Singhi & Co Chartered Accountants (ICAI Registration no. 302049E) New Delhiwho are Statutory Auditors of the Company hold office up to the forthcoming AnnualGeneral Meeting and are recommended for re-appointment to audit the accounts of theCompany for the Financial Year 2016-17. As required under the provisions of Section 139 ofthe Companies Act 2013 the Company has obtained written confirmation from M/s. Singhi& Co. that their appointment if made would be in conformity with the limitsspecified in the said Section. The appointment proposed is within the time frame fortransition under sub-section (2) of Section 139 of the Companies Act 2013.

6. Auditors’ Report :

The Auditors’ Report to the Shareholders does not contain any reservationqualification or adverse remark.During the year under review the Auditors have notreported any matter under Section 143(12) of the Companies Act 2013 therefore no detailis required to be disclosed under Section 134(3)(ca) of the Act.

7. Secretarial Audit

Secretarial Audit was carried out by M/s. A. Arora & Co. Company Secretaries (PCSRegistration no. 993) for the financial year 2015-16. The Secretarial Audit Report isannexed as ‘Annexure – I’ and forms integral part of this Report.There has been no qualification reservation or adverse remark or disclaimer in thereport. During the year under review the Auditors have not reported any matter underSection 143(12) of the Companies Act 2013 therefore no detail is required to bedisclosed under Section 134(3)(ca) of the Act.

8. Cost Audit

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 as amended on the recommendation of the AuditCommittee the Board of Directors had appointed M/s Shakti K. & Associates CostAccountants (ICWAI Registration no. 11338) as Cost Auditors of the Company to carry outcost audit of the products manufactured by the Company.

The Company has received their written consent that the appointment is in accordancewith the applicable provisions of the Act and rules framed there under. The remunerationof Cost Auditors has been approved by the Board of Directors on the recommendation ofAudit Committee and the requisite resolution for ratification of remuneration payable toCost Auditors by members is included in the Notice convening the ensuing Annual GeneralMeeting of the Company.

9. Directors and Key Managerial Personnel : a) Changes in Directors & KeyManagerial Personnel

In accordance with the provisions of Companies Act 2013 and Articles of Association ofthe Company Shri Yashwant Kumar Daga retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers himself for reappointment. The brief resume andother details as required under the Listing Regulations are provided in the Notice of the34th Annual General Meeting.

There were no changes in Key Managerial Personnel of the Company.

b) Statement on declaration given by Independent Directors

All Independent Directors have given declarations confirming that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andListing Regulations.

c) Meetings

During the year five Board Meetings and four Audit Committee meetings were convenedand held the details of which are given in the Corporate Governance Report.

d) Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard has carried out an annual evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its Committees. At the meetingof the Board all the relevant factors that are material for evaluating the performance ofthe Committees and of the Board were discussed in detail.

Evaluation of the performance of individual Directors was carried out evaluation beingmade on parameters such as level of engagement and contribution independence ofjudgement safeguarding the interest of the Company and its minority shareholders etc.The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and non-independent Directors wascarried out by the Independent Directors. The Directors expressed their satisfaction withthe evaluation process.

10. Directors’ Responsibility Statement –

In terms of the provisions of Section 134(5) of the Companies Act 2013 your Directorsconfirm as under – a) That in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; b) That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period; c) That theDirectors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d) That theDirectors had prepared the annual accounts on a going concern basis; and e) That theDirectors had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively. f) Thatthe Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

11. Corporate Social Responsibility –

In accordance with the requirements of Section 135 of the Companies Act 2013 theCompany has a Corporate Social Responsibility Committee the terms of reference and otherdetails of which are provided in the Corporate Governance Report. The CSR Policy has beenframed and posted on the website of the Company www. dsl-india.com. As a good corporatecitizen the Company is committed to discharging its social responsibility. As required bySection 134(3)(o) of the Companies Act 2013 and Rule 9 of the Companies (Corporate SocialResponsibility ) Rules 2014 Annual Report on CSR activities is annexed as‘Annexure – II’ to form part of this report.

12. Vigil Mechanism

The Company has a Vigil Mechanism to provide an avenue for Directors and employees toraise concerns of any fraud mismanagement negligence violations of legal or regulatoryrequirement. The policy of Vigil Mechanism is an internal policy to make protecteddisclosures in good faith and to raise concerns to be appropriately dealt by Vigil Officeror the Audit Committee as the case may be. Complaints received by Vigil Officer areinvestigated by the Vigil Officer and a report thereon is submitted to the AuditCommittee. Although no personnel were denied access to the Vigil Officer and the AuditCommittee no complaints were received during 2015-16. To ensure that this mechanism isadhered to and to assure that the concern will be acted upon seriously the Company will:

1. Ensure that the Complainant and/or the person processing the Protected Disclosure isnot victimized for doing so.

2. Ensure complete confidentiality.

3. Take disciplinary action if any one destroys or conceals evidence of the ProtectedDisclosure made/to be made.

4. Provide an opportunity of being heard to the persons against whom the complaint isreceived.

The Policy on Vigil Mechanism is also posted on the website of the Company.

13. Risk Management Policy –

The Company has an efficient Risk Management framework to identify and evaluatebusiness risks and opportunities. Risk Management forms an integral part of theCompany’s Mid-Term Planning cycle. It defines the risk management approach across theenterprise at various levels. The Audit Committee has been delegated the responsibilityfor monitoring and reviewing risk management assessment and minimization procedures.

14. Nomination and Remuneration Policy

The Board has on the recommendations of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors KMP and Senior Management andtheir remuneration. The details of Company’s Remuneration Policy is attached as ‘Annexure–III’and forms part of this report of the Board of Directors.

15. Related Party Transactions

All related party transactions that were entered into during the financial year were onan arm’s length basis and were in the ordinary course of business. There were nomaterially significant transactions with related parties during the financial year whichwere in conflict with the interest of the Company and hence Form AOC 2 is not required.All related party transactions are placed before the Audit Committee as also the Board forapproval. Prior omnibus approval of the Audit Committee is obtained for transactions whichare of foreseen and repetitive nature for a period of one year. The transactions enteredinto pursuant to the omnibus approval so granted are placed before the Audit Committee ona quarterly basis. Where the need for Related Party Transactions cannot be foreseen theAudit Committee has granted omnibus approval for such transactions subject to their valuenot exceeding Rs. 1 crore per transaction which is valid for a period of one year.

The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany’s website.

None of the Directors has any pecuniary relationships or transactions vis--vis theCompany.

16. Disclosures regarding Employees a) The Statement of Details of Remuneration asrequired under Section 197 and Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is attached as ‘Annexure – IV’ andforms a part of this Board’s Report. b) No employee of the Company was in receipt ofremuneration in excess of limits laid down in Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. Also no employee by himself or alongwith his spouse and dependent children holds 2% or more of the equity shares of theCompany. c) The Company has not received any complaint under ‘The Sexual Harassmentof Women at Workplace (Prohibition Prevention and Redressal) Act 2013 during the year.

17. Fixed Deposits :

During the year the Company has not accepted any deposits from the public and as suchthere are no outstanding deposits in terms of the Companies (Acceptance of Deposits)Rules 2014.

18. Loans Guarantees and Investments

The Company has not given loans directly or indirectly to any person or other bodycorporate or given guarantee or provided any security in connection with a loan to anyother body corporate or person. The Company has also not made any investments as per theprovisions of Section 186 of the Companies Act 2013.

19. Corporate Governance

A report on Corporate Governance and Management Discussion and Analysis as requiredunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements)Regulations2015 (‘Listing Regulations’) is annexed herewith. Compliance Certificate issuedby Statutory

Auditors of the Company regarding compliance of Corporate Governance is also annexed.

20. Extract of Annual Return

The extract of annual return in Form MGT-9 is annexed herewith as ‘Annexure– V’.

21. Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo.

As required by Section 134(3)(m) of the Companies Act 2013 and Rule 8(3) of theCompanies (Accounts) Rules 2014 information with regard to Conservation of energytechnology absorption and foreign exchange earnings and outgo are annexed as‘Annexure – VI’ to form part of this report.

22. Significant and material orders passed by the regulators or courts

There are no significant material orders passed by the regulators / courts which wouldimpact the going concern status and its future operations.

23. Acknowledgement

Your Directors place on record their deep appreciation of the co-operation extended byour Bankers stakeholders business associates Central and State Governments anddistrict level authorities for their co-operation and support and look forward to theircontinued support in future. They also record their appreciation of the dedicated servicesrendered by the executives staff members and workers of the Company.

24. Cautionary Statement

Statements in the Board’s Report and the Management Discussion & Analysisdescribing the Company’s objectives expectations or forecasts may be forward lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company’s operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother factors such as litigation and industrial relations.

YASHWANT KUMAR DAGA
Place : New Delhi P. K. DAGA P. K. DROLIA Directors
Date : 30.05.2016 Chairman and Managing Director VIKRAM PRAKASH

‘Annexure – I’

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED MARCH 31 2016

[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The MembersDeepak Spinners Limited

#121 Industrial Area Baddi Tehsil: Nalagarh Dist: Solan Himachal Pradesh

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by DEEPAK SPINNERS LIMITED(hereinafter called "the Company"). Secretarial Audit was conducted in a mannerthat provided me a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing my opinion thereon. Based on my verification of the DEEPAKSPINNERS LIMITED’S books papers minute books forms and returns filed and otherrecords maintained by the company and also the information provided by the Company itsofficers agents and authorized representatives during the conduct of secretarial audit Ihereby report that in my opinion the company has during the audit period covering thefinancial year ended on March 31 2016 complied with the statutory provisions listedhereunder and also that the Company has proper Board-processes and compliance-mechanism inplace to the extent in the manner and subject to the reporting made hereinafter : I haveexamined the books papers minute books forms and returns filed and other recordsmaintained by DEEPAK SPINNERS LIMITED ("the Company") for the financial yearended on March 31 2016 according to the provisions of :

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade thereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’):

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011 and The Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) (Amendment) Regulations 2013.

(b) The erstwhile Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 1992 and Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015 effective from May 15 2015;

(c) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 and the amendments thereof; (d) The Securities and Exchange Board ofIndia (Issue of Capital and Disclosure Requirements) Regulations 2009 - Not applicable asthe company has not issued any securities during the financial year under review.

(e) The Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 - Not Applicable as the company has not provided any share based benefitsto the employees during the year.

(f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 and Chapter V of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 effective from December 012015 - Not applicable as the company has not issued any debt securities during thefinancial year under review.

(g) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client -Not applicable as the company is not registered as Registrar to an Issue and ShareTransfer Agent during the financial year under review.

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998- Not applicable as the company has not bought back any of its securities during thefinancial year under review.

(vi) The major provisions and requirements have also been complied with as prescribedunder all applicable Labour laws viz. The Factories Act 1948 The Payment of Wages Act1936 The Minimum Wages Act 1948 The Payment of Bonus Act 1965 Industrial Dispute Act1947 Employee State Insurance Act 1948 The Employee’s Provident Fund andMiscellaneous Provisions Act 1952 The Payment of Gratuity Act 1972 The IndustrialEmployment (Standing Order) Act 1946 Equal Remuneration Act 1976 The EmploymentExchange (Compulsory Notification of Vacancies) Act 1956.

(vii) Environment Protection Act 1986 and other environmental laws.

(viii) Hazardous Waste (Management and Handling) Rules 1989 and the Amendments Rules2003. (ix) The Air (Prevention and Control of Pollution) Act 1981.

(x) The Water (Prevention and Control of Pollution) Act 1974.

I have also examined compliance with the applicable clauses of the following :

a) Secretarial Standards issued by The Institute of Company Secretaries of India asnotified by Government of India effective from July 01 2015.

b) The Listing Agreements entered into by the Company with National Stock Exchange ofIndia Limited and BSE Limited and SEBI (Listing Obligations & Disclosure) Regulations2015; During the period under review the Company has complied with the provisions of theact rules regulations guidelines standards etc. mentioned above.

Based on our examination and the information received and records maintained I furtherreport that :

1. The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act

2. Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent well in advance and a system exists for seeking andobtaining further information and clarifications on the agenda items before the meetingand for meaningful participation at the meeting.

3. All decision is carried through majority while the dissenting members’ viewsif any are captured and recorded as part of the minutes.

4. The company has proper board processes.

Based on the compliance mechanism established by the company and on the basis of thecompliance certificate(s) issued by the Company Secretary/ Officers and taken on record bythe board of directors in their meeting(s) I am of an opinion that :

1. There are adequate systems and processes in the company commensurate with the sizeand operations of the company to monitor and ensure compliance with applicable lawsrules regulations and guidelines.

2. On examination of the relevant documents and records on test check basis thecompany has complied with the following laws specifically applicable to the company : a.The Indian Electricity Act 2003 and Indian Electricity Rules 2005. b. The Boilers Act1923 c. The Petroleum Act 1934 and Petroleum Rule 2002 I further report that during theaudit period the shares of the company were delisted from the Calcutta Stock Exchangew.e.f. July 03 2015.

Apart from the business stated above there were no instances of : (i) Public / Rights/ Preferential issue of shares / debentures / sweat equity.

(ii) Redemption / buy-back of securities.

(iii) Major decisions taken by the Members in pursuance to Section 180 of the CompaniesAct 2013.

(iv) Merger / amalgamation / reconstruction etc. (v) Foreign technical collaborations.

For A. ARORA & COMPANY
AJAY K. ARORA
Proprietor
Place : Chandigarh FCS No. 2191
Date : 30.05.2016 C P No. : 993

This report is to be read with our letter of even date which is annexed as"Annexure A" and forms an integral part of this report.

"Annexure-A"

To

The Members

Deepak Spinners Limited #121 Industrial Area Baddi Tehsil: Nalagarh Dist: SolanHimachal Pradesh

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial records is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records basedon our audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of secretarial records. Theverification was done on test basis to ensure that the correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andbooks of accounts of the company.

4. Wherever required we have obtained the management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of the management. Our examination waslimited to the extent of verification of procedures on test basis.

6. The secretarial audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.

For A. ARORA & COMPANY
AJAY K. ARORA
Proprietor
Place : Chandigarh FCS No. 2191
Date : 30.05.2016 C P No. : 993

‘Annexure - II’

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the Company’s CSR policy including overview of projectsor programs proposed to be undertaken and a reference to the web-link to the CSR policyand projects or programs.

Pursuant to Section 135 of the Companies Act 2013 and rules framed there under theCompany has formulated a Corporate Social Responsibility (CSR) Policy. The CSR Policyrelates to the activities to be undertaken by the Company as specified in Schedule VII ofthe Act and the expenditure thereon and focuses on addressing critical socialenvironmental and economic needs of the weaker sections of the society.

CSR Policy can be perused on the following website : http://www.dsl-india.com/wp-content/uploads/2014/09/csr_policy.pdf

2. The Composition of the CSR Committee :

Sr. No. Name of the Member Category
1. Shri Yashwant Kumar Daga (Chairman) Non-Executive
2. Shri Vikram Prakash Non-Executive Independent
3. Shri Pradeep Kumar Drolia Non-Executive Independent

3. Average net profit of the Company for last three financial years asper Section198 of the Companies Act 2013

Year Profit / Loss (-)
(Rs. In Lakhs)
2012-13 2004.61
2013-14 2255.08
2014-15 966.57
Total 5226.26
Average Net Profits 1742.09

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above)

Rs. 34.84 Lakhs (being 2% of the average net profits as stated in item 3 above)

5. Details of CSR spent during the financial year :

(a) Total amount to be spent for the financial year: Rs. 34.84 Lakhs (b) Amountunspent if any : Rs. 32.69 Lakhs

(c) Manner in which the amount spent during the financial year is detailed below.

(1) (2) (3) (4) (5) (6) (7) (8)
Sl. No. CSR project or activity identified Sector in which the Project is covered Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs was undertaken Amount outlay (budget) project or programs wise (Rs.) Amount spent on the projects or programs Sub – heads: (1) Direct expenditure on projects or programs (2) Overheads (Rs.) Cumulative expenditure upto to the reporting period (Rs.) Amount spent : Direct or through implementing agency
1. Financial assistance for the education of a mentally challenged Child Education Chandigarh 90000 90000 90000 Direct
2. Contribution to construction cost of boundary wall of a school Education Guna District Madhya Pradesh 125000 125000 125000 Direct
TOTAL 215000 215000 215000

6. In case the Company has failed to spend the two per cent of the average netprofit of the last three financial years or any part thereof the Company shall providethe reasons for not spending the amount in its Board report.

The Company recognizes that it cannot prosper in isolation from the community andenvironment in which it operates. It aims to take up CSR initiatives focusing on holisticdevelopment of local communities and create social environmental and economic value tothe society. The Company is in the process of identifying the suitable projects andstepping up efforts to increase its expenditure on CSR activities.

7. A responsibility statement of the CSR Committee that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company

The implementation and monitoring of Corporate Social Responsibility Policy is incompliance with the CSR objectives and Policy of the Company.

P. K. Daga Yashwant Kumar Daga
(Chairman and Managing Director) (Chairman CSR Committee)

‘Annexure – III’

EXTRACT FROM NOMINATION AND REMUNERATION POLICY

Objective and Purpose of the Policy :

• To lay down criteria and terms and conditions with regard to identifying personswho are qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.

• To determine remuneration based on the Company’s size and financialposition and trends and practices on remuneration prevailing in peer companies in thetextile industry.

• To carry out evaluation of the performance of Directors as well as KeyManagerial and Senior Management Personnel.

• To provide them reward linked directly to their effort performance dedicationand achievement relating to the Company’s operations.

• To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.

Applicability :

The Policy is applicable to Directors (Executive and Non Executive) Key ManagerialPersonnel (KMP) and Senior Management Personnel

Matters To Be Dealt With Perused And Recommended To The Board By The Nomination andRemuneration Committee : The Committee shall :

• Formulate the criteria for determining qualifications positive attributes andindependence of a director.

• Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in this policy.

• Carry out the evaluation of performance of Directors KMP and Senior ManagementPersonnel and recommend to the Board their appointment and removal.

• Recommend to the Board a policy relating to remuneration for the directors KMPand other employees and recommend to the Board amendments to such policy as and whenrequired.

Guiding Principles For Appointment And Removal Of Director KMP And Senior Management

— Remuneration policy and arrangements for Directors KMPs and Senior ManagementPersonnel shall be determined by the Committee on the basis of Company’s financialposition pay and employment conditions prevailing in peer companies or elsewhere incompetitive market to ensure that the remuneration and the other terms of employment shallbe competitive to ensure that the Company can attract retain and motivate competentexecutives.

— Remuneration packages may be composed of fixed and incentive pay depending onshort and long term performance objectives appropriate to the working of the Company.

— The Committee considers that a successful remuneration policy must ensure that asignificant part of the remuneration package is linked to the achievement of corporateperformance targets and a strong alignment of interest with stakeholders.

Remuneration of the Whole-Time Directors Directors KMP And Senior ManagementPersonnel

1. The remuneration / compensation / commission etc. to the Whole-time Directors andDirectors will be determined by the Committee. It shall be fixed as per the slabs andconditions mentioned in the Articles of Association of the Company the Companies Act2013 the rules made there under and the Listing

Agreement with Stock Exchanges as amended from time to time. The Committee shallrecommend the remuneration / compensation / commission etc. to be paid to the Whole-timeDirector and Directors to the Board for approval. The remuneration / compensation /commission etc. shall be subject to the prior/post approval of the shareholders of theCompany and Central Government wherever required.

2. Increments to the existing remuneration / compensation structure of Whole timeDirector and Directors may be recommended by the Committee to the Board which should bewithin the slabs approved by the Shareholders.

3. The Non-Executive / Independent Directors may receive remuneration by way of sittingfees for attending meetings of Board or Committee thereof. Provided that the amount ofsuch fees shall not exceed such amount as may be prescribed by the Central Government fromtime to time.

4. Commission to Non-executive Directors may be paid within the monetary limit approvedby shareholders as per the applicable provisions of the Companies Act 2013.

5. The remuneration / compensation / commission etc. to the KMP and Senior ManagementPersonnel will be determined based on the Company’s financial position trends andpractices on remuneration prevailing in peer companies in the textile industry andperformance of such KMP and Senior Management Personnel.

6. Where any insurance is taken by the Company on behalf of its Whole-time DirectorChief Executive Officer Chief Financial Officer the Company Secretary and any otheremployees for indemnifying them against any liability the premium paid on such insuranceshall not be treated as part of the remuneration payable to any such personnel.

7. An Independent Director shall not be entitled to any stock option of the Company.

‘Annexure IV’

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014.

i) The ratio of the remuneration of each director to the median remuneration of theemployee of the company for the financial year.

Sr. No. Name of Director Remuneration of Director for financial year 2015-16 (Rs. In Lacs) Ratio of remuneration of each Director to median remuneration of employees
1. Shri Pradip Kumar Daga Nil Nil
Chairman and Managing Director
2. Shri Yashwant Kumar Daga 3.20 3.85
3. Shri Vikram Prakash 3.40 4.10
4. Shri Pradeep Kumar Drolia 3.40 4.10
5. Smt. Nilu Agrawal 2.65 3.19

ii) The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear.

Directors - N.A.

Key Managerial Personnel :

Shri S. B. Sharda Chief Financial Officer - 10.97% and Smt. Puneeta Arora CompanySecretary - 24.53%

iii) The percentage decrease in the median remuneration of employees in thefinancial year 2015-16 was 14.48%. Decrease in the median remuneration is due toincrease of labour force at non-managerial level pursuant to expansion in productioncapacity.

iv) There were 2137 number of permanent employees on the roll of the Company as on31.03.2016.

v) The explanation on the relationship between average increase in remuneration andCompany’s performance

Average increase in remuneration of all employees was about 9.56% which was in linewith the increase in remuneration in the industry. The increase in remuneration was givenon the basis of individual performance of the concerned employee taking into account theinflation. The total Profit after tax earned during the financial year 2015-16 increasedby 75.74% since previous year.

vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company

The total remuneration of Key Managerial Personnel increased by 13% in 2015-16 ascompared to the year 2014-15. The total Profit after Tax earned during the financial year2015-16 increased by 75.74% since previous year.

vii) Variations in the market capitalisation of the Company at the closing date ofthe current financial year and previous financial year.

The market capitalization as on 31st March 2016 was Rs. 5931 Lacs (Rs. 3109 Lacs as on31st March 2015).

viii) Variations in the price earnings ratio of the Company at the closing date ofthe current financial year and previous financial year

Price Earning Ratio of the Company was 3.78 as at March 31 2016 and was 3.48 as atMarch 31 2015.

ix) Percentage increase/decrease in the market quotations of the shares of theCompany in comparison to the rate at which Company came out with the last public offer inthe year.

The company has not made any public issue or rights issue of securities since last 23years so comparisons have not been made of current share price with public offer price.

x) Average percentile increase already made in the salaries of employees other thanthe Managerial Personnel in the last Financial Year and its comparison with percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.

Average salary increase of employees other than Key Managerial Personnel in the lastfinancial year i.e. 2015-16 was 9.21%. Average increase in the remuneration of KeyManagerial Personnel was 13%. There are no exceptional circumstances for increase inmanagerial remuneration.

xi) Comparison of the each remuneration of the Key Managerial Personnelagainst’ the performance of the Company.

Same as in (vi) above

xii) The key parameters for any variable component of remuneration availed by theDirectors.

The Non-executive Directors are paid commission. The amount of commission is decided bythe Board of Directors considering the performance of the Company. at a rate notexceeding 1% of the net profits of the Company calculated in accordance with the relevantprovisions of the Act and other applicable laws in a financial year

xiii) The ratio of the remuneration of the highest paid Director to that ofemployees who are not Directors but receive remuneration in excess of the highest paidDirector during the year.

The ratio of the remuneration of the highest paid Director to that of averageremuneration of employees who are not directors but receive remuneration in excess ofhighest paid Director during the year is – 1 : 1.84

xiii) It is hereby affirmed that the remuneration paid is as per the RemunerationPolicy of the Company.

‘Annexure – VI’

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOPURSUANT TO SECTION 134(3)(m)OF THE COMPANIES ACT 2013 READ WITH RULE 8(3) OF THECOMPANIES (ACCOUNTS) RULES 2014.

1. CONSERVATION OF ENERGY

a) Steps Taken or Impact on Conservation of Energy

• Energy saved by connecting of dye house effluent water with CETP as per theState Govt. Regulation.

• Installed led lamps.

• Replaced PCC Panel in power house with the advanced technology resultant savingin energy.

• Arrested compressed air leakage.

• Used Uniflood lights in dye house to save the energy.

• Reuse of Reverse Osmosis (RO) waste in the gardening and irrigation.

• 18 nos of Ring frame Machines spindle sets changed for better quality &energy saving.

• 2 Nos of old Autoconer machines replaced with new ones for energy saving.

• Replacement of tube lights with led 15 watt to increase the lux level And energysaving.

• Installed Variable Frequency Device in unit-1-Waste Collection System (WCS)Machine after optimization of suction pressure for energy saving.

• Optimisation of motor speeds by installing frequency drives.

• Recycle and reuse of Effluent Treatment Plant (ETP) water in gardening andirrigation.

• Installation of inverter for spray pump in humidification plant.

• Switching off the Humidification Plant & Blow Room during winters

• Turbo ventilators used in place of Exhaust fan in dye house and packingdepartment to save the energy.

• Maintaining 0.993 power factor to get the maximum rebate from MPEB & alsominimize power losses.

• Replacement of old RJK cheese winding by new Versha cheese winding.

• Replaced the old Switch Fuse Units (SFUs) with MCCBs in distribution boards atGuna Unit to reduce the heat loss.

• Ash handling – Flat belt system was removed and developed Pneumatic AshHandling System which is environment friendly and energy efficient.

b) Steps taken by the Company for utilizing alternate sources of energy

40% of total energy requirements in Guna Unit is met by way of Solar Energy.

• Boiler Blow Down Control System to recover heat from Boiler

•UsedAcrylictransparentsheetsinthedyehousepackingunitno.1FinishingGodownrawmaterial andDG Hall for sun light in day time as alternate source of energy.

• Re-used the heat of the dye house discharge effluent water in the boiler feedwater at 70-75 degree centigrade to save the pet coke.

c) The Capital investment on energy conservation equipments.

• Installed inverter for spray pump in humidification plant.

• Replacement of Autoconer machines ring frame machine spindle sets and cheesewinding.

• Installation of Heat Recovery System

• Installation of Variable Frequency Devices for optimization of motor speeds andsuction pressure.

• Installation of stabilizers for Autoconer machines.

2. TECHNOLOGY ABSORPTION

a) Efforts Made Towards Technology Absorption

The Company absorbs and adapts the technologies on a continuous basis to meet itsspecific needs from time to time.

b) Benefits derived like product improvement cost reduction product development orimport substitution

(i) Quality and productivity improvement.

(ii) Cost Reduction.

(iii) Improved safety measures and pollution control.

(iv) Energy Conservation.

c) In the case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)

i) The details of technology imported Nil
ii) The year of import Nil
iii) Whether the technology been fully absorbed Nil
iv) If not fully absorbed areas where absorption has not taken place and the reasons thereof Nil
d) The expenditure incurred on Research and Development (R & D) = Nil

3. FOREIGN EXCHANGE EARNINGS AND OUTGO :

The Foreign Exchange earned in terms of actual inflows during the year and ForeignExchange outgo during the year in terms of actual outflows.

(Rs. In Lacs)
Foreign Exchange earned (inflow) 2200.82
Foreign Exchange used (outflow) 741.11