Your Directors have pleasure in presenting the 30th Annual Report of ESKAYKnIT (INDIA) LIMITED along with the Audited Statements of Accounts for theFinancial Year ended 31st March 2017.
| || ||(Rs. in Lacs) |
|Particulars ||2016-2017 ||2015-2016 |
|Revenue from operations ||3555.49 ||8339.93 |
|Finance Cost ||5515.01 ||5260.44 |
|Depreciation and amortization Expense ||3019.54 ||3072.65 |
|Profit/ (Loss) before exceptional and extraordinary items and tax ||(8185.74) ||(8214.43) |
|Exceptional items || || |
|Extraordinary items || || |
|Profit/ (Loss) before tax ||(8185.74) ||(8214.43) |
|Deferred Tax Assets/(Liabilities) ||543.76 ||487.42 |
|Provision for Taxation ||0.00 ||0.00 |
|Net Profit/(Loss) ||(7641.98) ||(7727.01) |
During the year the Revenue from operations of the Company has substantially decreasedto Rs. 3555.49 Lacs as against Rs. Rs. 8339.93 Lacs in respect of the previous FinancialYear ended 31st March 2016. The Company has suffered Loss before Tax Rs 8185.74 Lacs inthe financial year ended 31st March 2017 as against loss of Rs. 8214.43 Lacs in theprevious financial year ended 31st March 2016. The Company has Net Loss of Rs. 7641.98Lacs after considering deferred tax of Rs. 543.76 Lacs as against Net Loss of Rs 7727.01Lacs in the previous financial year ended 31st March 2016. However there is no cash lossduring the year.
The Company has incurred Substantial losses due to markets resulting in poor sales.
The company experienced that the efficiency of plant and machineries especiallySpinning Machines have gone down and set up an in house Expert Group to suggest measuresfor Technology up gradation and Modernization. As per their recommendations old machinesincluding Ring Frames requiring expenditure towards repairs and maintenance consuminghigh power with low output have been identified and shifted to workshop/godowns forappropriate action.
Further the Company after incurring huge losses and eroding its net worth completelyhad made an application to be registered as a Sick Company with Board for Industrial andFinancial Reconstruction.
During the Year under review the Company does not have any subsidiary associate orjoint venture companies.
In view of Loss of the Current year your Directors are unable to recommend anydividend on the equity shares for the year under review.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the year Mrs. Manasi Inderjit Wadkar (DIN: 05309693) Director of the Companywill be retire by rotation at the ensuring Annual General Meeting of the Company and beingeligible offer herself for re-appointment as per the Provisions of Companies Act 2013 andarticles of Association of the Company. The Board recommends her appointment.
The Board of Directors of the Company had appointed Mrs. Neha Nilesh Patil (DIN:07114205) as Additional Directors w.e.f. 14th November 2016. Pursuant to the provisionsof Section 161 of the Companies Act 2013 she shall hold office up to the date of ensuingAnnual General Meeting. The Notice pursuant to Section 160 of the Companies Act 2013 hasbeen received from the Members proposing their candidature for appointment as Directors ofthe Company.
Brief details of the Director being reappointed / appointed have been incorporated inthe Corporate Governance Report of the forthcoming Annual General Meeting.
All the Independent Directors have given declarations that they meet the criteria ofindependence as lay down under Section 149
(6) Of the Act and SEBI Listing Regulations. In the opinion of the Board they fulfillthe conditions of independence as specified in the Act and the Rules made there under andare independent of the management. Further as required under Section 203(1) of theCompanies Act 2013 Company has appointed Ms. Neeta Shetty as a Chief Financial Officerdesignated as a Key Managerial Personnel of the Company w.e.f.10th February 2017andresigned w.e.f. 31st March 2017.
Further Mr. Deepak Mathur and Mr. Pushpendra Pratap Singh Directors of the Companyhave stepped down from the Board W.e.f. 12th August 2016 due to personal reasons. TheBoard records its appreciation of the valuable contribution rendered by Mr. Deepak Mathurand Mr. Pushpendra Pratap Singh during their tenure as Directors of the Company. Mr.Narayan Ghumatkar Director of the Company has been appointed as a Chairman of the Boardw.e.f. 14th November 2016.
ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OFDIRECTORS:
Pursuant to the provisions of the Companies Act 2013 and Regulations 17 19 and otherapplicable provision of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") theBoard has carried out an annual evaluation of its own performance performance of theDirectors as well as the evaluation of the working of its Committees.
The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Board itsCommittees and Directors.
The Boards functioning was evaluated on various aspects including inter aliadegree of fulfillment of key responsibilities Board structure and compositionestablishment and delineation of responsibilities to various Committees effectiveness ofBoard processes information and functioning.
Directors were evaluated on aspects such as attendance and contribution at Board/Committee Meetings and guidance/ support to the management outside Board/ CommitteeMeetings. In addition the Chairperson was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and motivating and providing guidance to the Managing Director.
Areas on which the Committees of the Board were assessed included degree of fulfillmentof key responsibilities adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of theChairperson and the Non-Independent Directors was carried out by the Independent Directorswho also reviewed the performance of the Board as a whole.
The Nomination and Remuneration Committee also reviewed the performance of the Boardits Committees and of the Directors.
The Chairperson of the Board provided feedback to the Directors on an individual basisas appropriate. Significant highlights learning and action points with respect to theevaluation were presented to the Board.
As required by Regulation 34 read with Schedule V of the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 a report oncorporate governance is appended along-with a certificate from the Auditors.
EXTRACT OF ANNUAL RETURN:
Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in form MGT-9 is annexed asAnnexure A.
BOARD AND COMMITTEE MEETINGS:
A calendar of Board and Committee Meetings to be held during the year was circulated inadvance to the Directors. 4 (four) Board Meetings were convened and held during the year.
The Board has constituted an Audit Committee with Mr. Naresh Chandra Sharma as Chairmanand Mr. Manmohan Ahluwalia and Mr. Trivendra Singh as the Members. There have not been anyinstances during the year when recommendations of the Audit Committee were not accepted bythe Board.
The Company has also constituted various other Committees viz. Nomination &Remuneration Committee Stakeholder Relationship Committee Management and FinanceCommittee and Sexual Harassment Committee.
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport Attached to this Directors Report.
The intervening gap between the Meetings was within the period prescribed under the Actand the Listing Regulations.
DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149 (6) of the Companies Act 2013so as to qualify themselves to be appointed as Independent Directors under the provisionsof the Companies Act 2013 and the relevant rules.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that: a. in the preparation of the annualfinancial statements for the year ended March 31 2017 the applicable accountingstandards have been followed and there is no material departures; b. they have selectedsuch accounting policies and applied them consistently and made judgment and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2017 and of the profit of the Company for the year ended onthat date; c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d. they have prepared the annual financial statements have been preparedon a going concern basis;
e. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; f. they havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.
DETAILS OF SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALIMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN FUTURE
There are no significant material orders passed by the Regulators / Courts / Tribunalwhich would impact the going concern status of the Company and its future operations.Hence disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules 2014 is notrequired.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in Note 2.3 of the Notes to the financialstatements.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
The Company familiarizes its Independent Directors with the Company their rolesrights responsibilities in the company nature of the industry in which the companyoperates business model of the company etc. through various programmers. The details ofsuch familiarization programmed shall be disclosed on the Companys website at thefollowing web link: http:// eskayknitindia.com/wp/
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the Internal Audit Manual. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee of the Board &to the Chairman & Managing Director.
The Internal Audit Department monitors and evaluates the efficiency and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls.
Significant audit observations and recommendations along with corrective actionsthereon are presented to the Audit Committee of the Board.
CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviours of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as "code ofbusiness conduct" which forms an Appendix to the Code. The Code has been posted onthe Companys website www.eskayknitindia.com. The Code lays down the standardprocedure of business conduct which is expected to be followed by the Directors and thedesignated employees in their business dealings and in particular on matters relating tointegrity in the work place in business practices and in dealing with stakeholders. TheCode gives guidance through examples on the expected behaviour from an employee in a givensituation and the reporting structure. All the Board Members and the Senior Managementpersonnel have confirmed compliance with the Code. All Management Staff were givenappropriate training in this regard.
MANAGEMENT DISCUSSION & ANALYSIS REPORTS
The Management Discussion & Analysis Report which form an integral part of thisReport are set out as separate Annexure together with the Certificate from the auditorsof the Company regarding compliance with the requirements of Corporate Governance asstipulated by SEBI Listing Regulations.
RELATED PARTY TRANSACTIONS:
All transactions entered by the Company with Related Parties were in the OrdinaryCourse of Business and at Arms Length pricing basis. There were no materiallysignificant transactions with Related Parties during the financial year 2016-17 which werein conflict with the interest of the Company. Suitable disclosures as required under AS-18have been made in Notes to the financial statements.
The Company has also adopted Related Party Transaction Policy as required underRegulation 23 of SEBI Listing Regulations.
The Board has approved the policy on Related Party Transactions and MaterialSubsidiary. The policies have been uploaded on the Companys website under the weblink: http://eskayknitindia.com/wp/related-party-transactions/
Material changes and commitments affecting the financial position of the Company whichhave occurred between 31st March 2017 and 11th August 2017.
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (31st March 2017) and the date of the Report11th August 2017.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as Annexure-Bto the Boards report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The Directors are happy to state that the relations between the Company and itsEmployee remained cordial throughout the year. The Directors acknowledge and express theirappreciation for the contributions made by the employees at all levels. Focused attentionwas given for knowledge updating and application of new technologies available to reducecosts and to meet the business challenges.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 none of the employees drew remuneration of Rs10200000/- or more per annum/Rs. 850000/- or more per month during the year or drew remuneration in excess of theremuneration drawn by Managing Director or Whole-time Directors or Manager and does nothold either by himself or through his spouse or dependent children 2 per cent or moreequity shares of the company. Disclosures pertaining to remuneration and other details asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are providedin the AnnexureC forming a part of Annual Report.
In terms of the provisions of Section 136(1) read with its relevant proviso of theCompanies Act 2013 the Annual Report excluding the aforesaid information is being sentto the members of the Company. The said information is available for inspection at theRegistered Office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished without any fee and free of cost.
CONSERVATION OF ENERGY:
a) Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved. b) Nospecific investment has been made in reduction in energy consumption.
c) As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.
Companys products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required. The Company constantly strives for maintenance and improvement in quality ofits products and entire Research & Development activities are directed to achieve theaforesaid goal.
FOREIGN EXCHANGE EARNINGS AND OUT-GO:
During the period under review there was no foreign exchange earnings or out flow.
The Remuneration policy of the Company comprising the appointment and remuneration ofthe Directors Key Managerial Personnel and Senior Executives of the Company includingcriteria for determining qualifications positive attributes independence of a Directorand other related matters has been provided in the Corporate Governance Report which isattached to this Report.
The Company has adopted a Risk Management Policy in accordance with the provisions ofthe Act and SEBI Listing Regulations. It establishes various levels of accountability andoverview within the Company while vesting identified managers with responsibility foreach significant risk.
The Internal Audit Department facilitates the execution of Risk Management Practices inthe Company in the areas of risk identification assessment monitoring mitigation andreporting. Through this programme each Function and Unit addresses opportunities andrisks through a comprehensive approach aligned to the Companys objectives. TheCompany has laid down procedures to inform the Audit Committee as well as the Board ofDirectors about risk assessment and management procedures and status.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
The Company has adopted a Vigil Mechanism/ Whistle Blower Policy to provide a formalmechanism to the Directors and employees to report their concerns about unethicalbehaviour actual or suspected fraud or violation of the Companys Code of Conduct orethics policy. The Policy provides for adequate safeguards against victimization ofemployees who avail of the mechanism and also provides for direct access to theChairperson of the Audit Committee. It is affirmed that no personnel of the Company hasbeen denied access to the Audit Committee.
PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Companys shares andprohibits the purchase or sale of Company shares by the Directors and the designatedemployees while in possession of unpublished price sensitive information in relation tothe Company and during the period when the Trading Window is closed.
The Board is responsible for implementation of the Code. All Board Directors and thedesignated employees have confirmed compliance with the Code.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE:
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has notreceived any complaint of sexual harassment during the financial year 2016-17.
SAFETY HEALTH AND ENVIRONMENT:
Sustained and meticulous efforts continue to be exercised by the Company at all plantsof the Company towards greener production and environment conservation. The Companyperseveres in its efforts to indoctrinate safe and environmentally accountable behavior inevery employee as well as vendors by rigid compulsory annual training and refreshercourses as well as frequent awareness programme. Mock drills of emergency preparednessare regularly conducted at all the plants showing Companys commitment towardssafety not only of its own men and plants but also of the society at large.
Safety records at all plants showed considerable improvement and accident statisticsshowed downward trend. This was made possible by strict adherence to laid down proceduresand following of international guidelines. Involvement of workers in all safety mattershas been encouraged by their participation in shop floor safety meetings. To achieve thegoals environment protection systems and processes are well in place. To meet thechallenge of environment protection in a proactive manner unavoidable wastes are dealtwith in the most efficient and scientific way.
The health of employees and the environment in and around the Plant area have beengiven due care and attention. The Company continued to comply with the prescribedindustrial safety environment protection and pollution control regulation at itsproduction plant through periodic checks of the system involved and constant monitoringto meet the standards set by the pollution control authorities etc.
All the mills of the Company are eco-friendly and do not generate any harmfuleffluents. They have facilities for captive power generation as a stand-by arrangement tomeet any contingency. Safety devices have been installed wherever necessary although boththe spinning and knitting activities are known to be quite safe and free from usualhazards of water and air pollution.
INDUSTRIAL RELATIONS & HUMAN RESOURCES MANAGEMENT:
The Company is of firm belief that good Human Resource Management would ensure successthrough high performance. HR strategy and plans of the Company are deeply embedded withthe organizational goals. In order to enhance the manpower productivity the goal is set toincrease the production capacity of the various plants and rationalize the manpowerthrough scientific study. All the operational goals of the top management emanate from thebusiness plan. The goals of MD are shared with his subordinates who in turn share theirgoal with their respective subordinates and so on. Regular visits by HR team are beingmade to all the plants to meet the employees and also interaction meetings are conductedto get their feedback based on which HR policies are improved continuously. The processhas resulted in better employee relationship.
The Company lays due emphasis on all round development of its human resource. Hencetraining of the employees is aimed at systematic development of knowledge skillsaptitude and team work. Training is designed for the development of personal skillsnecessary for the performance of the present job and to prepare them for future growth.Individual development is given top priority to groom high caliber manpower.
The Company has not invited/received any Fixed Deposits from the Public during the yearunder report.
The properties / assets of your Company are adequately insured.
AUDITORS: Statutory Auditor:
M/s. A. F. Khasgiwala & Co. Chartered Accountants (Membership No. 006491 FirmRegistration No. 105114W) had completed a term of ten years. Their term as auditors is upto the conclusion of the forthcoming AGM. In accordance with the Section 139 of CompaniesAct 2013 M/s. Rishi Sekhri & Associates Chartered Accountants (Membership No.126656 & Firm Registration No.128216W) are proposed to be appointed as auditors for aperiod of Five year commencing from the conclusion of this AGM till Thirty Fifth AnnualGeneral Meeting of the Company to be held on 2022 subject to rectification of theirappointment at every AGM if so required under the Act.
Further the Company has received the consent and eligibility of the Statutory Auditorunder Sections 139 and 141 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 for continuing as the Auditors of the Company. Members are requested toapprove the appointment and authorize the Board of Director fix their remuneration.
As per the requirements of Central Government and pursuant to the provisions of Section148 of the Companies Act 2013 and Rules made thereunder the Board of Director onrecommendation of the Audit Committee appointed Mr. Pradip Damania Cost Accountant of theCompany for the financial year 2017-2018 and has recommended their remuneration to theShareholders for their ratification at the ensuring Annual General Meeting. The Companycarries out an audit of cost records every year.
Pursuant to the provisions of Section 138 of the Companies Act 2013 the Board ofDirectors of the Company had appointed Internal Auditor of the Company for the financialyear 2016-17 and Company carries out an Internal Audit on quarterly basis.
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed Anuja Bansal (M.No. 34817); a Company Secretaries in Practice to undertakethe Secretarial Audit of the Company for the year ended 31st March 2017. The SecretarialAudit Report is annexed as Annexure D.
The Auditors Report and the Secretarial Audit Report for the financial year ended31st March 2017 do not contain any qualification reservation adverse remark ordisclaimer.
The Directors have pleasure in recording their appreciation of the assistanceco-operation and support extended to your Company by the shareholders all GovernmentAuthorities Financial Institutions Banks Consultants Solicitors and Customers.
| ||For and Behalf of the Board of Directors |
| ||Sd/- |
|Place: Mumbai ||Trivendra Singh |
|Date: 11th August 2017 ||Managing Director |
| ||Din: 05240052 |