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Gini Silk Mills Ltd.

BSE: 531744 Sector: Industrials
NSE: N.A. ISIN Code: INE548B01018
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VOLUME 30210
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P/E 82.61
Mkt Cap.(Rs cr) 201
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OPEN 366.40
CLOSE 344.10
VOLUME 30210
52-Week high 505.00
52-Week low 228.85
P/E 82.61
Mkt Cap.(Rs cr) 201
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gini Silk Mills Ltd. (GINISILKMILLS) - Director Report

Company director report

To

The Members of

GINI SILK MILLS LIMITED.

Your Directors have pleasure in presenting their 37th Annual Report on thebusiness and operations of the Company and Audited Statement of Accounts for the yearended 31st March 2017.

1. FINANCIAL HIGHLIGHTS:

The Board's Report is prepared based on the stand alone financial statements of thecompany.

(Rs. in Lakhs)

Particulars 2016-2017 2015-2016
1. REVENUE
Net Sales/ Income from operation 3911.61 4075.39
Other Income 213.23 149.83
Total 4124.84 4225.22
2. LEss: expenditure
Cost of Materials Consumed 1595.55 1084.90
Purchases of Traded Goods 186.17 603.11
(Increase)/ Decrease in Inventories of Finished Goods and Stock in Process 12.32 (81.73)
Employee Benefit Expenses 367.68 391.45
Financial Cost 143.85 147.45
Depreciation and Amortization Expense 96.80 92.00
Other Expenses 1412.97 1658.77
Total 3815.34 3895.95
3. Profit Before Tax 309.50 329.27
4. Provision for Taxation
i) Current Tax 82.00 65.00
ii) Deferred Tax 11.63 81.05
iii) (Excess)/ Short provisions written back of earlier years (25.79) 2.77
5. Profit After Tax 241.66 180.45
6. Balance Carried from Previous Year 2403.09 2256.33
7. Amount Available for Appropriation 2644.75 2436.77
8. Appropriations:
Interim Dividend - (27.96)
Proposed Dividend - -
Dividend Distribution Tax - (5.72)
Prior Period Items - -
Depreciation as per schedule II of Companies Act 2013 4.23 -
9. Balance carried to Balance Sheet 2648.98 2403.10
Basic/ Diluted Earnings per Equity Shares 4.32 3.23

2. DIVIDEND:

We are pleased to announce that the Board of Directors has recommended Rs.0.50/- perEquity Share of Rs.10/- each (i. e. 5% of Face Value) aggregating to Rs.2796300 (excluding Dividend Distribution Tax as applicable) for the Year Ended on March 31 2017.

3. RESERVES:

No amount out of current year's Profits is transferred to the Reserves and Surplus.

4. OPERATIONS:

Our Revenue from operations during the period under review has decreased to '. 3911.61Lakhs from '. 4075.39 Lakhs in the Previous Year. i. e. a decrease of 4.02% in theFinancial Year 2016-17.

During the period under review the Profit After Tax (PAT) stood at 241.66 Lakhs(Previous Year '. 180.45 Lakhs). There is a increase of 33.92 % in Net Profit after tax ascompared to Previous Year. The performance for the coming years is expected to improveupon from the last year if right macroeconomic indicators are achieved in future.

5. DIRECTORS' RESPONSIBILITY STATEMENT:

The Directors' confirm that-

(a) in the preparation of the Annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures;

(b) the Directors had selected such Accounting Policies 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 at the end of the financial year and ofthe Profit and Loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theAssets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the Annual accounts on a going concern basis; and

(e) the Directors had laid down Internal Financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and

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

6. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Report in form MGT-9 as requiredunder Section 92(3) of the Companies Act 2013 read with rule 12(1) of the Companies(Management and Administration ) Rules 2014 are included in this Report as Annexure-Iand forms an integral part of this report.

7. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The Particulars of every contract or arrangements entered into by the Company withRelated Parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto is disclosed inForm No. AOC-2 as Annexure II.

8. DIRECTORS OR KEY MANAGERIAL PERSONNEL APPOINTMENTS / RESIGNATIONS DURING THE YEAR:

The following change took place during the financial year 2016-17 under review:

Name of the person Designation Date of Change Nature of Change Appointment/ Resignation
Mr. Ruchir Jalan Director 30/05/2016 Appointment
Mr. Ramprasad Poddar Director 01/06/2016 Resignation

9. (1) PARTICULARS OF EMPLOYEES:

Sr. No Particulars Remarks
1. The Ratio of the Remuneration of each a) Mr. Vishwanath Harlalka Executive Chairman - 12.99:1
Director to the median Remuneration of the Employees of the Company for the Financial Year. b) Mr. Deepak Harlalka Managing Director - 12.99:1
2. The percentage increase in the a) Mr. Vishwanath Harlalka - Nil
Remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year. b) Mr. Deepak Harlalka - Nil
3. The percentage Decrease in the median Remuneration of Employees in the financial year. 8.38%
4. The number of permanent Employees on the rolls of Company. 107
5. Average percentile increase already made in the salaries of Employees other than Managerial personnel in the last financial year and its comparison with the percentile increase in the Managerial Remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the Managerial Remuneration. There has been no increase in the salaries of the Employees other than Managerial personnel in the last financial year.
6. Affirmation that the Remuneration is as per the Remuneration Policy of the Company. It is hereby affirmed that the Remuneration is as per the Remuneration Policy of the Company.

(2) Particulars of Employees drawing Remuneration in excess of limits prescribedunder Section 134(3)(q) read with Rule 5 of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 :

There are no Employees drawing Remuneration exceeding Rupees One Crore and Two Lakhsper annum if employed throughout the financial year or Rupees Eight Lakh and FiftyThousand per month if employed for part of the financial year or draws Remuneration inexcess of Managing Director or Whole time Director or Manager and holds by himself oralong with his spouse and dependent children not less than two percent of the EquityShares of the Company.

10. NUMBER OF MEETINGS OF BOARD DURING THE YEAR:

sr. no Particulars No. of meetings held
1. Board Meetings Four
2. Audit Committee Meetings Four
3. Nomination and Remuneration Committee Meeting One
4. Independent Directors Meeting One

11. FORMAL ANNUAL EVALUATION:

Pursuant to the applicable provisions of the Act and the Listing Regulations the Boardhas carried out anAnnual Evaluation of its own performance and working of its Committees.The Board's functioning was evaluated on various aspects including inter alia degree offulfillment of key responsibilities its structure and composition establishment anddelegation of responsibilities to various Committees. Directors were evaluated on aspectssuch as attendance and contribution at Board/ Committee Meetings and guidance/ support tothe management of the Company. Areas on which the Committees of the Board were assessedincluded degree of fulfillment of key responsibilities adequacy of Committee compositionand 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 the Chairmanand the Non Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Board as a whole.

12. DECLARATION BY AN INDEPENDENT DIRECTOR:

Declarations by the Independent Directors that they meet the criteria of independenceas provided in sub-section (6) of Section 149 of the Companies Act 2013 has been receivedby the Company.

13. REMUNERATION POLICY:

The Board ofDirectors has framed a policy which lays down a framework in relation toremuneration ofDirectors Key Managerial Personnel and Senior Management of the Company.The remuneration policy is also uploaded on the website www.ginitex. com

14. STATUTORY AUDITORS:

The Auditors M/s. Vatsaraj & Co. Chartered Accountants (FRN No.111327W) Mumbaiwill retire at the ensuing Annual General Meeting. They have completed consecutive tenureof ten years (including transition period) as provided under sub-section (2) of Section139 of the Companies Act 2013 (the "Act"). In view of the above and on therecommendation of the Audit Committee the Board of Directors have proposed theappointment of M/s Bilimoria Mehta & Co. Chartered Accountants Mumbai (FRN: 101490W)as Statutory Auditors of the Company for the terms of five consecutive years subject toratification of reappointment by the members at every AGM held after this AGM with effectfrom conclusion of ensuing Annual General Meeting.

M/s. Bilimoria Mehta & Co. CharteredAccountants have confirmed that theirappointment if made would be in accordance with Section 139 of the Act read with theCompanies (Audit and Auditors) Rules 2014. They have further confirmed that they satisfythe criteria prescribed under Section 141 of the Act.

15. SECRETARIAL AUDIT REPORT:

In terms of Section 204 of the Companies Act 2013 and Rules made there under M/s.Sandeep Dar and Co. Practicing Company Secretaries have been appointed as SecretarialAuditor of the Company. The report of the Secretarial Auditor is enclosed as AnnexureIII to this report. The report is self-explanatory however the Company has initiatednecessary steps to comply with various non-compliances as mentioned under the SecretarialAudit Report.

16. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company at www.ginitex.com

17. COMPOSITION OF AUDIT COMMITTEE:

Composition of Audit Committee as on March 312017 as required under section 177(8) ofthe Companies Act 2013 read with Regulation 18 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

1. Mr. Suresh Gaggar - Chairman

2. Mr. Pankajkumar Agarwal - Member

3. Mr. Ruchir Jalan - Member

18. SIGNIFICANT MATERIAL CHANGES:

There were no material changes and commitments which adversely affects the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.

19. RISK MANAGEMENT:

The Company is reviewing its Risk perception from time to time taking into accountsoverall business environment affecting/ threatening the existence of the Company.Presently management is of the opinion that such existence of risk is minimal.

20. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS:

The Company has in place adequate Internal Financial Controls. During the year suchcontrols were tested and no reportable material weakness in the design or operation wasobserved.

21. DEPOSITS:

During the year under review the Company has not accepted any Deposits within themeaning of Section 73 of Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.

22. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:

During the period under review Company has given loans to the following parties:

Sr. No. Name Amount (Rs.)
1. Mukand Limited 100 Lakhs
2. Babcock Borsig Limited 100 Lakhs
3. Mukand Limited 100 Lakhs

23. CORPORATE GOVERNANCE:

Your Company believes that Corporate Governance is a code of self discipline. In theline with this policy the Board of Directors strongly believes that it is very importantthat the Company follows healthy Corporate Governance practices and reports to theshareholders the progress made on the various measures undertaken.

A report on Corporate Governance along with a certificate from the Statutory Auditorson compliance with Corporate Governance norms forms an integral part of this report.

24. MANAGEMENT DISCUSSION AND ANALYSIS:

I. Industry Structure And Developments

The Indian Textiles industry is extremely varied with the hand-spun and hand-wovenTextiles sectors at one end of the spectrum while the capital intensive sophisticatedmills sector at the other end of the spectrum. The close linkage of the Textile industryto agriculture (for raw materials such as cotton) and the ancient culture and traditionsof the country in terms of Textiles make the Indian Textiles sector unique in comparisonto the industries of other countries it has the capacity to produce a wide variety ofproducts suitable to different market segments.

India has a very powerful and impressive cotton yarn and fabric business sector thatwill now be looking at what it can achieve in the non-cotton and cotton/man-made blendsand 100-percent man-made textiles. The sector appears to have the confidence andcapability to shift its focus towards India's growing man-made textile industry.

II. Opportunities and Challenges

The Textiles industry is labour intensive and is one of the largest employers. Thefuture for the Indian Textile industry looks encouraging in the long term backed by bothstrong domestic consumption as well as export demand.

Competing with other progressing countries striking a balance between demand andsupply considering Environmental and international labour laws are the major challenges.

Being the largest employer in India coupled with strong industry linkages with therural economy augurs Indian textile industry as one of the most significant sectors withan incremental growth potential. Rural economy has seen a spurt in income levels the lastfew years and this is the right time to juxtapose their synergies to promote the industrygrowth. Being one of the key focus sectors under the Government's "Make in India'campaign is a testimony to the huge growth potential the industry holds both in terms ofinfrastructure development and skill improvement. Globally favourable trade policyreforms would also allow the industry to expand its trade partners improve its exportcompetitiveness and contribute substantially to the nation's income.

However the growth prospects are constrained by many challenges including rising inputcosts (wages power and interest cost) restrictive labour laws. Such issues need to beaddressed to result in unlocking maximum industry growth potential.

iii. Segment-Wise or product-Wise performance

In textiles our product is very well accepted by our customers & we are in theprocess of increasing our customer portfolio.

iv Outlook

Your Company's future growth will be driven by volume growth across the entire businessunit. In the immediate future your Company will focus on its core strengths productsegments. Its focus on building marketing & distribution foot-prints shall continuewith renewed vigor during the coming year. On the whole your Company is optimistic forthe outlook of growth in the short to medium term in terms of total revenues/ turnover andoperating margins considering overall expected positive trend in textiles industry.

v Risk and Concerns

A key factor in determining a company's capacity to create sustainable value is therisk that the company is willing to take and its ability to manage them effectively. TheCompany's Risk Management processes focuses on ensuring that risks are identified on atimely basis and addressed.

Foreseeing the concerns the Company manages to identify evaluate and monitornon-business risks.

Vi internal Control Systems and their Adequacy

The existing internal controls are adequate and commensurate with the nature sizecomplexity of the Business and its Processes. During the year the Company has laid downthe framework for ensuring adequate internal controls and to ensure its effectivenessnecessary steps were taken by the Company.

VII. Discussion on financial performance with respect to Operational Performance

During the year under review your company has registered a turnover of Rs.3911.61Lakhs as compared to '4075.39 Lakhs in the previous year.

The sales revenue from Processing of Fabric is '1889.72 Lakhs as compared to previousyear ?2371.40 Lakhs.

Viii. Material developments in human resources/ industrial relations front includingnumber of people employed

Your Company has cordial relations with its employees. The company commends thecommitment dedication and competence shown by its employees in all aspects of business.With the growing requirements of the company Company has taken necessary initiatives toensure not only the retention of the employees but also their growth and development.

The people of any industry serve as propeller for upliftment of the industry and thusindirectly contribute the National Product and through this to the exchequer of India. Themanagement has always remained conscious of these inter-related factors and maintained afavorable climate during the year to suit the growth and excellence in the Company. Themanagement has always strived to maintain cordial relationship between the staff workersand management. This attitude created an atmosphere where each and every staff and workerstarted feeling a sense of 'ONENESS'.

25. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceand has set up Internal Complaints Committee under the Act for implementation of saidpolicy.

The following is a summary of sexual harassment complaint received or dispose of duringthe year 2016-17:

• No. of Complaint received: NIL

• No. of Complaint disposed off: NIL.

26. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO PURSUANT TO PROVISIONS OF SECTION 134 OF THE COMPANIES ACT 2013 READ WITH RULE 8(3) OF COMPANIES (ACCOUNTS) RULES 2014

A) conservation of ENERGY:

(i) The steps taken or impact on conservation of energy - Energy conservation continuesto receive priority attention at all levels by regular monitoring of all equipments anddevices which consume electricity.

(ii) The steps taken by the company for utilizing alternate sources of energy - Companyensures that the manufacturing operations are conducted in the manner whereby optimumutilization and maximum possible savings of energy is achieved.

(iii) The capital investment on energy conservation equipments - Since Company ishaving adequate equipment no capital investment on energy conservation equipments is madeduring the year.

B) TECHNOLOGY ABSORPTION:

(i) The efforts made towards technology absorption - Not Applicable

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution - Not Applicable

(iii) In the case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year) - Not Applicable.

(a) The details of technology imported - Not Applicable

(b) The year of import - Not Applicable

(c) Whether the technology been fully absorbed - Not Applicable

(d) If not fully absorbed areas where absorption has not taken place and the reasonsthereof - Not Applicable

(iv) The expenditure incurred on Research and Development - At present the Company doesnot have separate division for carrying out research and development work. No expenditurehas therefore been earmarked for this activity.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO

There were no foreign exchange earnings and outgo during the year under review.

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

Maharashtra Pollution Control Board directed the Company to stop operations of thefactory at Tarapur till certain pollution control measures are implemented by the Company.We are happy to inform that Company has duly complied with the directions of the MPCB andre-commenced the operations.

28. ACKNOWLEDGEMENT:

We record our gratitude to the Banks and others for their assistance and co-operationduring the year. We also wish to place on record our appreciation for the dedicatedservices of the employees of the company. We are equally thankful to our esteemedinvestors for their co-operation extended to and confidence reposed in the management.

By ORDER OF THE BOARD
FOR GINI SILK MILLS LIMITED
Vishwanath Harlalka
Chairman
Registered Office:
413 Tantia Jogani Industrial Estate Premises
Opp. Kasturba Hospital J. R. Boricha Marg
Lower Parel (East) Mumbai-400011
Date: July 12 2017
Place: Mumbai