The Members of E-Land Apparel Limited (formerly known as Mudra Lifestyle Limited) YourDirectors present the19th Annual Report of the Company together with theAudited Financial Statements for the financial year ended 31st March 2016.
The financial performance of the Company for the year ended 31st March2016is summarized below:
(Rs. In Lakhs)
|Particulars ||Year ended ||Year ended |
| ||31st March 2016 ||31st March 2015 |
|Operational & Other Income ||23866.92 ||17934.44 |
|Loss before Interest Depreciation Prior period items Exceptional Items & Tax ||(759.10) ||(1187.10) |
|Interest ||359.00 ||393.32 |
|Depreciation & Amortization ||258.65 ||265.47 |
|Loss before exceptional items and tax ||(1376.75) ||(1845.89) |
|Prior period items ||490.37 ||909.87 |
|Exceptional Items ||- ||(1430.19) |
|Loss before tax ||(1867.12) ||(1325.57) |
|Less/(Add): Provision for Taxation including prior period adjustments ||- ||2576.77 |
|Deferred Tax ||- ||- |
|Loss after tax ||(1867.12) ||(3902.34) |
OPERATIONS OF THE COMPANY / COMPANY PERFORMANCE:
The Companys total income from operations for F.Y. 2015-16 at Rs. 23454.56 Lakhswas higher by 34.00% over last year (Rs. 17503.16 Lakhs in F.Y. 2014-15). The totalexpenses for F.Y. 2015-16 at Rs. 24884.67 Lakhs was higher by 28.36% over last year (Rs.19387.01 Lakhs in F.Y. 2014-15). Loss after tax for F.Y. 2015-16 stood at Rs.1867.12Lakhs as against Rs. 3902.34 Lakhs for F.Y. 2014-15.
TRANSFER TO RESERVES:
As there are losses for the financial year 2015-16 the Company did not transfer anyamount to reserves during the year.
As there are no profits the Board of Directors of the Company does not recommend anypayment of dividend on the shares for the financial year 2015-16.
CORPORATE DEBT RESTRUCTURING (CDR):
In order to overcome debt repayment obligations the Company had applied for therestructuring of its debts through CDR Mechanism envisaged under the Reserve Bank of India(RBI) guidelines dated 23rd August 2001 and subsequent amendments theretowhich was approved by the CDR Cell vide their letter of approval dated 27thJune 2012 subject to the compliance of the conditions mentioned therein and theimplementation of the CDR Scheme within a period of 120 days from the issuance of theLetter of Approval. The Company has already executed Master Restructuring Agreement (MRA)and has opened the Trust and Retention Account (TRA) with SBI on the terms and conditionsset out in Trust and Retention Account Agreement. Other follow-on procedures such asSecurity creation in favour of SBICAP Trustee Ltd. as a security Trustee for beneficialinterest of all existing CDR lenders for majority of its properties is completed. TheCompany has proposed an offer to the CDR lender banks on 25th January 2016 forOne Time Settlement (OTS) of all its existing debts with the banks and repayment of entireoutstanding principal and interest due and the waiver of the entire recompense portion.All the Lenders have approved the OTS proposal and same was placed before the CDR EG. CDREG has approved the same and Company is in the process of complying with the OTS proposal.
Your Company had received an order dated 4th June 2013 issued underSections 11(1) 11(2)(j) 11(4) and 11(B) of the SEBI Act 1992 read with section 12A ofSCRA Act 1956 in relation to the compliance with requirement of Minimum PublicShareholding.
Mr.Murarilal Agarwal Mr.Ravindra Agarwal Mr.Vishwambharlal Bhoot (Old Promoters) andE-Land Asia Holdings Pte Ltd. formed the promoter group of your Company. As per theprovisions of the Securities Contracts (Regulations) Rules 1957 as amended (SCRR) andClause 40A of the Listing Agreements entered into with Stock Exchanges where the shares ofthe Company are listed your Company was required to maintain a public shareholding of 25%of the aggregate paid-up equity share capital (Minimum Public Shareholding Threshold)(MPS). Accordingly the public shareholding of the Company falls short of the required MPSby 10.79%.
The Original Promoters thereby on 26th September 2014 made an offer forsale of approximately 5180000 equity shares of face value of Rs.10 each representing10.79% of the total paid-up share capital of the Company through the stock exchangemechanism in accordance with circular no. CIR/MRD/DP/18/2012 dated July 18 2012 issued bythe SEBI and as amended by SEBI vide its circular no. CIR/MRD/DP/24/2014 dated August 82014.
Minimum public shareholding was achieved on 26th September 2014 throughoffer for sale mechanism. The Company had received an adjudication order from SEBI dated29th September 2015 and Company has complied with the same.
RBI COMPOUNDING ORDER
During the year ended March 31 2014 Company had entered into a tripartite agreementwith E-Land Asia Holdings Pte Ltd its holding Company and Mr. Murarilal Agarwal Mr.Ravindra Agarwal and Mr. Vishwambharlal Bhoot (Old Promoters) whereby the loan outstandingtowards the Old promoters had been directly paid by the holding Company on behalf of theCompany. As the loan was used to meet general corporate purpose the Company had made anapplication under the applicable provisions of the Foreign Exchange Management Act("FEMA") and the rules and regulations there under for regularizing the same.Company had received approval from the Reserve Bank of India (RBI) treating the Loan asan External Commercial Borrowing subject to the applicable provisions for compoundingunder FEMA and the Regulations thereunder. Subsequently Company made Compoundingapplication with RBI. Company received the Compounding order and is in the process ofcomplying it with the same.
MATERIAL CHANGES AND COMMITMENTS:
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report.
During the year under review your Companys Authorized Share Capital is Rs. 6001Lakhs comprising of 60010000 Equity Shares of Rs. 10/- each. The Companys paid upcapital is Rs. 4799.05 Lakhs comprising of 47990469 Equity Shares of Rs. 10/- eachfully paid up. During the year under review the Company has not issued any shares. TheCompany has not issued shares with differential voting rights. It has neither issuedemployee stock options nor sweat equity shares. As on March 31 2016 none of theDirectors of the Company holds shares of the Company.
SHIFTING OF REGISTERED OFFICE OF THE COMPANY:
The Board pf Directors at its meeting held on Friday 06th November 2015had decided to shift the registered office of the Company to 404 4th FloorWestern Edge-1 Western Express Highay Magathane Borivali (east) Mumbai-400066 withinthe same city i.e Mumbai with effect from 10th October 2015 accordinglyForm INC-22 was filled with Registrar of Companies Mumbai which was duly approved.
The Equity Shares of the Company are listed on BSE Limited (BSE) with scrip code no.532820 and on National Stock Exchange of India Limited (NSE) with symbol as ELAND.
The listing fee for the year 2015-16 has been paid to both the Stock Exchanges.
DIRECTORS & KEY MANAGERIAL PERSONNEL:
The Company has gone in for a major re-organization of its top leadership with the twinobjective of accelerating growth and furthering its strategic goals. This strategicre-alignment will enable the company to focus on growth opportunities while furthering itsleadership.
Mr. Kwang Hyuck Choi Whole Time Director has been appointed as the Managing Directorof the Company with effect from 27th June 2016 and his appointment andremuneration will be subject to the approval of the shareholders of the company and theCentral Government if required under Section 196 197 203 read with Schedule V of theCompanies Act 2013.
The remuneration to be paid to Mr. Kwang Hyuck Choi Managing Director had alreadybeen approved by the Nomination and Remuneration Committee at its meeting held on 27thJune 2016.
Your Directors take this opportunity to express their deep sense of appreciation forthe valuable services rendered by Mr.Yangweon Yoo during his tenure as Director.
In accordance with the provisions of Section 152 of the Companies Act 2013 read withCompanies (Management & Administration) Rules 2014 and Articles of Association of theCompany Mr. Jung Ho Hong is liable to retire by rotation at the ensuing Annual GeneralMeeting of the Company. Mr. Jung Ho Hong being eligible offers himself forre-appointment.
Brief resume of the Directors proposed to be appointed/re-appointed as stipulated underListing Agreement with the Stock Exchanges where the shares of the Company are listed aregiven in the Notice convening 19th Annual General Meeting.
The Company had filed requisite Form MR-2 for approval of reappointment and payment ofremuneration for Mr. Yangweon Yoo on 7th April 2015 Mr. Kwang Hyuck Choi and Mr. Jung HoHong on 6th April 2015. The Company has received Central Government approval forreappointment and payment of remuneration to Mr. Yangweon Yoo vide order No. SRNC49141070/ 4/2015 CL. VII dated 2nd February 2016 and for Mr. Kwang Hyuck Choivide order No. SRN C49067424/2015 CL-VII dated 28th January 2016. The CentralGovernment approval is pending for reappointment and payment of remuneration to Mr. JungHo Hong and the follow up for the same is in process.
DECLARATION BY INDEPENDENT DIRECTORS:
The independent directors have submitted the Declaration of Independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section (6).
FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF BOARD ITS COMMITTEES AND DIRECTORS:
Information on the manner in which formal annual evaluation has been made by the Boardof its own performance and that of its Committees and individual directors is given in theCorporate Governance Report.
EXTRACT OF ANNUAL RETURN:
The extract of annual return as provided under sub-section (3) of Section 92 of theCompanies Act 2013 in the prescribed Form MGT 9 is attached as "AnnexureA" to this Report.
NUMBER OF MEETINGS OF THE BOARD:
There were 5 meetings of the Board held during the year. Detailed information is givenin the Corporate Governance Report.
CORPORATE GOVERNANCE REPORT:
Pursuant to Clause 49 of the Listing Agreement and SEBI Listing Regulations 2015 thefollowing have been made a part of the Annual Report and are attached to this report: lManagement Discussion and Analysis Report l Corporate Governance Report l Auditorscertificate regarding compliance of conditions of Corporate Governance
The Company has not accepted / renewed any deposits within the meaning of Section 73and Section 74 of the Companies Act 2013 and the Rules made thereunder.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013 yourDirectors state that:-
(1) In the preparation of the annual accounts for the year ended 31st March 2016 theapplicable Accounting Standards have been followed and that there are no materialdepartures;
(2) Appropriate accounting policies have been selected 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 as at 31st March 2016 and of the loss ofthe Company for the year ended 31st March 2016;
(3) Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(4) They have prepared the annual accounts on a "Going Concern" basis.
(5) Proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively.
(6) Proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems were adequate and operating effectively.
NOMINATION AND REMUNERATION POLICY:
The Board on the recommendation of the Nomination and Remuneration Committee has frameda Remuneration Policy providing
(a) criteria for determining qualifications positive attributes and independence ofdirectors and
(b) a policy on remuneration for directors key managerial personnel and otheremployees.
The detailed Nomination and Remuneration Policy is placed on Companys website athttp://www.elandapparel.com/ Nomination%20&%20Remuneration%20Policy.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Information regarding loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 are detailed in the Financial Statements.
RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were onan arms length basis and were in the ordinary course of business.
All Related Party Transactions upto 31st March 2016 were placed before theAudit Committee and the Board for approval. Prior omnibus approval of the Audit Committeewas obtained for Related Party Transactions for a period up to 31st March 2016and for the financial year 2015-16. The transactions entered into pursuant to the omnibusapproval so granted were audited and a statement giving details of all related partytransactions was placed before the Audit Committee for its review on a quarterly basis.The Company has obtained the approval of the shareholders by way of special resolution forthe material related party transactions. The Board of Directors and the Audit Committeehave also approved the said related party transactions.
There are material related party transactions as defined under clause 49 ofthe Listing Agreement and SEBI Listing Regulations 2015 the details of the same aredisclosed in Form AOC-2 in that regard which is attached as "Annexure B "to thisreport.
The Policy on RPTs as approved by Board is uploaded on the Companys website athttp://www.elandapparel.com
The Company undertakes the transactions of purchase and sale of goods andavailing/rendering services with E-Land Group of Companies as mentioned in point 32 inNotes to Accounts.
None of the Directors/Key Managerial Personnel has any pecuniary relationships ortransactions vis-a-vis the Company which may have potential conflict with the interest ofthe Company at large.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 regarding Conservation ofEnergy Technology Absorption and Foreign Exchange Earnings and Outgo is attached as"Annexure C" to this report.
RISK MANAGEMENT POLICY:
Information on the development and implementation of a Risk Management Policy for theCompany including identification therein of elements of risk which in the opinion of theBoard may threaten the existence of the Company is given in the Corporate GovernanceReport.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
In accordance with Section 177(9) and (10) of the Companies Act 2013 and Clause 49(II)(F) of the Listing Agreement the Company has established a Whistle Blower Policy andVigil Mechanism. The policy is available on the Companys website athttp://www.elandapparel.com/whistle-blower-policy.pdf
CORPORATE SOCIAL RESPONSIBILITY:
As the Company does not fall under any of the threshold limits given under theprovisions of Section 135 of the Companies Act 2013 the compliances under CSR are notapplicable to the Company.
REFERENCE TO THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION ("BIFR")UNDER THE PROVISIONS OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT 1985:
The total losses of the Company as on 31st March 2016 have exceeded itsentire Net Worth. Accordingly your Company is proposing to make a reference to the BIFRunder the provisions of Section 15(1) of the Sick Industrial Companies (SpecialProvisions) Act 1985 for determination of the measures that should be adopted by yourCompany to revive the Company. Your Company is in the process of collating all therequisite data needed for making the reference to the BIFR.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The Company has an employee drawing remuneration above the limits mentioned in Section197(12) of the Companies Act 2013 read with Rules 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended from time totime the details of the same is attached in "Annexure E" to this report.
INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder.
During the financial year 2015-16 the company has not received any complaints onsexual harassment and hence no complaints remain pending as of 31st March2016.
The Company has no Subsidiary.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS & COURTS.
There were no penalties orders passed during the year.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
The Company has an internal control system commensurate with the size scale andcomplexity of its operations. This ensures that all transactions are authorized recordedand reported correctly and assets are safeguarded and protected against loss fromunauthorized use or disposition. Your Company has adequate internal controls for itsbusiness processes across departments to ensure efficient operations compliance withinternal policies applicable laws and regulations protection of resources and assets andappropriate reporting of financial transactions.
The Company has Internal Audit function which is empowered to examine the adequacy andcompliance with policies plans and statutory requirements. It comprises of experiencedprofessionals who conduct regular audits across the Companys operations. The Companyhas also appointed a firm of Chartered Accountants as Internal Auditors who reviews thevarious functions of the Company thoroughly and report to the Audit Committee. During theyear under review the Risk Management Committee of the Company had reviewed the newrequirement of Internal Control over Financial Reporting ("ICOFR") and finalizedthe detailed analysis of key processes and these were presented for review by theStatutory Auditors. The control mechanism and the process of testing of controls werediscussed with the Statutory Auditors. The Statutory Auditors have submitted their reporton the Internal Financial Controls which forms an integral part of this Report.
The adequacy of the same has been reported by the Statutory Auditors of your Company intheir report as required under the Companies (Auditors Report) Order 2003.
Your Company considers its Human Resources as the key to achieve its objectives.Keeping this in view your Company takes utmost care to attract and retain qualityemployees. The employees are sufficiently empowered and such work environment propels themto achieve higher levels of performance. The constant commitment of the employees is thedriving force behind the Companys vision. Your Company appreciates the spirit of itsdedicated employees.
The Company has received a consent letter from M/s. Deloitte Haskins & Sells LLPChartered Accountants Mumbai having Firm Registration No.117366W/W-100018 regarding theirwillingness to act as Statutory Auditors of the Company. The Company has also received acertificate from them to the effect that their appointment if made would be incompliance with the conditions as prescribed under Section 139 of the Companies Act 2013and they satisfy the criteria as provided under Section 141 of the Act. They have alsoconfirmed their compliance pursuant to Regulation 33(1) (d) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 in respect of "Peer ReviewCertificate" issued by the Peer Review Board of ICAI. The Audit Committee and Boardof Directors in their meeting held on 12th August 2016 has recommended theappointment of M/s. Deloitte Haskins & Sells LLP Chartered Accountants Mumbai asStatutory Auditors of the Company subject to approval of shareholders in ensuing AnnualGeneral Meeting.
The Statutory Auditors M/s. S R B C & CO LLP Chartered Accountants Mumbai haveexpressed their unwillingness to continue as Statutory Auditors of the Company fromconclusion of the ensuing Annual General Meeting. Accordingly they have tendered theirresignation to the Board of directors in their meeting held on 12/08/2016. Board hasaccepted the same.
Your Directors recommend the appointment of M/s. Deloitte Haskins & SellsLLP Chartered Accountants Mumbai as Statutory Auditors of the Company to hold office from theconclusion of the ensuing 19th Annual General Meeting upto the conclusion of 24thAnnual General Meeting of the Company subject to ratification of the appointment bymembers at every Annual General Meetings.
There are no qualifications reservations or adverse remarks made by M/s. S R B C &CO LLP Statutory Auditors of the Company in their report for the financial year ended 31stMarch 2016. The Statutory Auditors have not reported any incident of fraud to the AuditCommittee or to the Board of the Company in the year under review.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. B. K. Pradhan &Associates a firm of Company Secretaries in Practicehaving C.P.No.:10179 to undertake the Secretarial Audit of the Company. The SecretarialAudit Report is attached herewith as "Annexure D".
No adverse comments have been made in the said report by the Practising CompanySecretary.
RECONCILIATION OF SHARE CAPITAL AUDIT:
In compliance of circular no.D&CC/FITTC/CIR-16/2002 dated 31st December2002 further amended by Circular No.CIR/ MRD/DP/30/2010 dated 6th September2010 issued by the Securities and Exchange Board of India ("SEBI")Reconciliation of Share Capital Audit has being carried out at the specified intervals bya Practicing Company Secretary and have been submitted to the Stock Exchanges where theCompany is listed within due dates.
APPRECIATION / ACKNOWLEDGEMENT:
Board of Directors wish to express their gratitude and record sincere appreciation forthe dedicated efforts of all the employees of the Company. Directors are thankful to theesteemed shareholder for their continued support and confidence reposed in the Company.The Board takes this opportunity to express its gratitude for the valuable assistance andco-operation extended by Government Authorities Banks Corporate Debt Restructuring (CDR)Cell Financial Institutions Vendors Customers Advisors and other business partners.
| ||For and on behalf of the Board || |
|Date: 12th August 2016 ||Kwang Hyuck Choi ||Jung Ho Hong |
|Place: Mumbai ||Managing Director ||Whole-time Director |
| ||DIN:02229626 ||DIN:02229634 |