TO THE SHAREHOLDERS
We present herewith our Annual Report along with the Audited Accounts of the Companyfor the year ended March 31 2017. The corresponding previous period was from June 172015 (date of Incorporation) to March 31 2016 and hence the results are not comparable.
| || ||(Rs. Lacs) |
| ||March 31 2017 ||March 31 2016 |
|Operations for the year/period resulted in (Loss)/Profit before Interest and Depreciation of ||(475.03) ||90.42 |
|less: Finance Costs ||1331.89 ||859.26 |
|less: Depreciation ||283.16 ||217.18 |
|less: Exceptional items ||106.29 || |
|(Loss)/Profit Before Tax ||(2196.37) ||(986.02) |
|less: Taxation || || |
|(Loss)/Profit After Tax ||(2196.37) ||(986.02) |
|Balance brought forward ||(986.02) || |
|Leaving a Balance of which is carried forward ||(3182.39) ||(986.02) |
The Directors do not recommend any dividend.
REVIEW OF KEY BUSINESS MATTERS
The financial year 2016-17 was marked by uncertainties around the globe. Recovery indeveloped economies remained weak on poor sentiment arising from the US Presidentialelections the Brexit vote the oil production cuts & price corrections and theextreme geopolitical tensions in various parts of the world. In India prospects looked upwith a much awaited good monsoon driving the agrarian economy. The decision to demonetizehigh denomination notes curbed cash-intensive economic activity restricting temporarilyliquidity and consumption across the economy but the impact was short lived and signalleda change in regime. The steps towards implementation of the long-awaited GST andgovernment initiatives should improve investment and business growth prospects with therevival of customer confidence.
The markets for the Company's products also suffered from stagnant demand andcompetitive pressures from synthetic and blended fabrics and cheaper supplies from Chinainfluencing customer preferences. A marked shift to ready-mades and the move away fromformal wear is also impacting overall superior fabric demand globally. Domestic sales inwinter (also a major wedding/festival season) historically the strongest period forwoollen/worsted fabric sales were severely hit as a result of consumer uncertainty andlack of cash following unprecedented circumstances from November 2016 though it isreasonable to consider that this was an extraordinary event that could not have beenforeseen. Nevertheless it is safe to say that the strongest season for the Company was awashout during this year. Exports also continued to drag following global uncertainties.
All in all the Company achieved significantly lower than expected sales volume at28.02 lac metres (previous year annualised: 35.2 lac metres) translating into operationalrevenue of Rs. 99.39 Crores (previous year: Rs. 94.73 crores; annualised: Rs. 126.3Crores). The possibilities of monetising surplus assets of the company to help ease theliquidity crunch are being evaluated. The Company continues to expend considerablemanagement energy on marketing improving operations and managing liquidity.
DIRECTORS & KEY MANAGERIAL PERSONNEL
The tenure of Independent Directors Sri A.C. Mukherji and Sri G. Momen comes to anend at the forthcoming Annual General Meeting.
Sri C.L. Rathi retires by rotation and though eligible is not seeking re-election dueto personal reasons. The Board places on record its sincere and deep appreciation of thevaluable guidance and services rendered by Sri A. C. Mukherji Sri G. Momen and Sri C. L.Rathi during their respective long tenures on the Board of erstwhile Digjam Limited and ofthe Company.
In accordance with the recommendations of the Remuneration & Nominations Committeethe Board has appointed Sri Kishor Shah as (Independent) Additional Director with effectfrom May 8 2017. Sri Kishor Shah has declared that he meets the criteria of independenceas per Section 149(6) of the Companies Act 2013 (the Act'). In terms of Article 113of the Articles of Association of the Company read with Section 161 of the Act Sri Shahwill hold office up to the date of the forthcoming Annual General Meeting; the Company hasreceived notice u/s 160(2) of the Act proposing his appointment as Director along withrequisite deposit.
During the year four Board Meetings were held as per the details in the annexedCorporate Governance Report.
The marketing team was restructured and strengthened during the year to meet with theincreasing challenges of domestic and global competition with dynamic strategies backedby team reliability geared towards our renewed commitment to the Customer. Strengtheningof key operating teams also continues as an on-going process.
As reported earlier upon amalgamation of erstwhile Digjam Limited with the Companyunder the Scheme of Amalgamation sanctioned by the Hon'ble High Court of Gujarat87641621 fully paid up Equity Shares of the face value of Rs. 10/- each at a premium ofRs. 5/- per Share and 500000 8% Non-Convertible Redeemable Preference Shares ofRs. 100/- each at par were allotted on April 29 2016 in the ratio one share for every oneshare held in erstwhile Digjam Limited. The Equity Shares of the Company were subsequentlylisted on July 13 2016. By operation of the 2nd Proviso to sub-section (2) of Section 47of the Act 500000 8% Non-Convertible Redeemable Preference Shares of Rs. 100/-each acquired 5000000 Voting Rights on March 27 2017. The said Preference Shares areheld by one of the Promoter Group companies and were allotted by erstwhile Digjam Limitedon March 27 2015.
STATUTORY INFORMATION AND OTHER MATTERS
Information as per the requirements of the Act our report on Corporate Governancealongwith the Auditors' Certificate on Compliance and the Managements' Discussion &Analysis Report form part of this report and are annexed hereto.
The extract of the Annual Return in Form MGT-9 is attached herewith.
The Board has on the recommendation of the Remuneration & Nominations Committeeframed a Policy for appointment and remuneration of Directors and Senior ManagerialPersonnel as well as criteria for determining independence and other relevant matters(policy and criteria annexed herewith). Pursuant to the provisions of the Act and SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the Board carried out annual evaluation of its performance and ofindividual Directors (including independent) as well as the evaluation of its AuditRemuneration and Nominations and Stakeholders Relationship Committees. The concernedDirector did not participate in the meeting while being evaluated. A questionnaire wascirculated to all the Directors. The Remuneration and Nominations Committee also evaluatedthe performance of every Director. The evaluation of the Chairman of the Board and thenon-independent Directors was also carried out at the separate meeting of the IndependentDirectors.
The information on Conservation of Energy Technology absorption foreign exchangeearnings and outgo is annexed hereto.
The Company has in place a system of periodical review of business risks. The AuditCommittee and the Board are informed about the risks identified assessment thereof andminimization procedures and identification of elements of risks which in the opinion ofthe Board may threaten existence of the Company.
The Company has an internal control system commensurate with its size of operations.The internal audit function is carried out by an external agency which reports to theChairman of the Audit Committee. During the course of internal audit the efficacy andadequacy of internal control systems of the Company is also evaluated. Based on thereports corrective actions are taken and the controls strengthened. The Company has nosubsidiary joint venture or associate company.
The Company has not invited/accepted any Fixed Deposits under Chapter V of the Act andthere are none outstanding on March 31 2017. The Company has not granted any loan orissued any guarantee or made any investment to which the provisions of Section 186 of theAct apply.
All transactions with related parties during the year were in the ordinary course ofbusiness on an arm's length basis. There are no such material transactions entered into bythe Company which may have a potential conflict of interest with that of the Company andto which Section 188(1) of the Act applies and thus disclosure in Form AOC-2 is notrequired to be annexed. In accordance with the provisions of the Act and SEBI ListingRegulations all Related Party Transactions are placed before the Audit Committee forapproval or for omnibus approval as necessary. The statement of all such transactionsentered into is placed before the said Committee for their review. The Policy on RelatedParty Transactions as approved by the Board is uploaded on the Company's website at thelink: http//digjam.co.in/pdf/ RPTpolicy2.pdf.
There are no significant and material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and its future operations.
The Audit Committee constituted by the Company meets the requirement of Section 177 ofthe Act and Regulation 18 of SEBI Listing Regulations; details of its composition arefurnished in the Corporate Governance Report. There was no instance during the year wherethe Board had not accepted any recommendation of the Audit Committee.
The Company has a vigil mechanism for Directors and employees to report genuineconcerns in accordance with the Whistle Blower Policy; no employee is denied access to theAudit Committee in this regard. The said Policy provides for safeguards through ProtectedDisclosures against victimization of persons who use such mechanism and is displayed onthe Company's website. The details of the Whistle Blower Policy are also annexed herewith.
The Company has constituted a committee on Corporate Social Responsibility (CSR) thedetails of which are furnished in the Corporate Governance Report. While the statutoryrequirements on spending are not applicable to the Company in view of loss/inadequateprofit small steps have always been taken by the Company for social and inclusivedevelopment in its local area; however given the relatively small size and geographicalspread it has not been practical to yet undertake any significant projects beyond these.The CSR Policy of the Company is annexed herewith.
Information required pursuant to Section 197(12) of the Act read with Rule 5 (asamended) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company is annexed. However in terms of Section 136of the Act the Annual Report is being sent to members of the Company excluding theinformation in respect of employees of the Company pursuant to Rule 5(2) of the aforesaidRules and which will be furnished on request. The aforesaid statement is also availablefor inspection by shareholders at the Registered Office of the Company during businesshours on working days upto the date of the ensuing Annual General Meeting.
The Company has set up a Committee to look into the complaints under The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and nocomplaint relating to sexual harassment at work place has been received during the year.
DIRECTORS' RESPONSIBILITY STATEMENT
The Managing Director & Chief Executive Officer and the Chief Financial Officerhave certified the Financial Statements as per the requirements of Regulation 17(8) of theSEBI Listing Regulations which has been reviewed by the Audit Committee and taken onrecord by the Board. Having taken reasonable and bonafide care pursuant to Section 134(5)of the Act the Directors indicate that (a) in the preparation of annual accounts theapplicable Accounting Standards had been followed alongwith proper explanations relatingto material departures; (b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the loss of the Company for the year; (c) the Directorshad taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (d) the Directors have preparedthe annual accounts on a going concern basis; (e) the Directors had laid down internalfinancial controls to be followed by the Company and that such internal financial controlsare adequate and were operating effectively; and (f) the Directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
The Statutory Auditors and Secretarial Auditors have made no audit qualifications forthe year under review.
M/s Deloitte Haskins & Sells LLP Chartered Accountants had been appointed as theStatutory Auditors of the Company at the First Annual General Meeting to hold office untilthe conclusion of the Sixth Annual General Meeting of the Company i.e. for a term of fiveyears. As provided in Section 139 of the Act the said appointment is being placed forratification at the forthcoming Annual General Meeting.
The Company had appointed M/s N. D. Birla & Co. Cost Accountants Ahmedabad toaudit the cost accounts of the Company for the year ended March 31 2017 and theremuneration payable to them was approved by the Members at their 1st Annual GeneralMeeting. Further the Board has on the recommendation of the Audit Committee appointedthe said Cost Accountants for audit of cost records of the Company for the year endingMarch 31 2018. In terms of Section 148 (3) of the Act the remuneration payable to themis required to be approved at the forthcoming Annual General Meeting.
Pursuant to the provisions of Section 204 of the Act the Company had appointed SriViral Sanghavi (Proprietor: Viral Sanghavi & Associates) Practising CompanySecretary to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is attached herewith.
We place on record our sincere appreciation of the valuable cooperation and supportreceived at all times by the Company from its bankers other stakeholders concernedGovernment Departments other authorities its channel partners employees andshareholders.
| ||For and on behalf of the Board |
|New Delhi ||Sidharth Birla |
|May 8 2017 ||Chairman |