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Gokaldas Exports Ltd.

BSE: 532630 Sector: Industrials
NSE: GOKEX ISIN Code: INE887G01027
BSE LIVE 15:57 | 15 Dec 114.20 1.95
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113.60

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NSE 15:40 | 15 Dec 114.40 2.10
(1.87%)
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OPEN 113.60
PREVIOUS CLOSE 112.25
VOLUME 17897
52-Week high 139.20
52-Week low 52.00
P/E
Mkt Cap.(Rs cr) 399
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 113.60
CLOSE 112.25
VOLUME 17897
52-Week high 139.20
52-Week low 52.00
P/E
Mkt Cap.(Rs cr) 399
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gokaldas Exports Ltd. (GOKEX) - Director Report

Company director report

We have pleasure in presenting Fourteenth Annual Report on the business and operationsof the Company together with the Audited Results for the financial year ended March 312017.

Financial Results (Standalone)

(Rs. In lakhs) Your Company s performance during the year as compared to the previousyear is summarized below:

Particulars Year ended March 31 2016 Year ended March 31 2017
Revenue 115096.52 94254.22
EBITDA 6558.57 676.49
Other Income 4541.81 0.00
PBT 5107.72 -4681.81

Review of Operations

Gokaldas Exports has reported total revenue of Rs. 94254.22 Lakhs which is 18.11%lesser than that of previous year. The decline in revenue in FY 17 was mainly due to lossof business from a key export customer and delay in onboarding operations of a large newcustomer which was stabilized in the last two quarters. Also the company has realignedthe customer portfolio discontinued non- profitable orders and rationalized the capacity.

While this rationalization has resulted in adverse impact on the financials of thecompany during the year in the medium to long term this will help the company to enhancethe profitability and quality of growth. The company continues its efforts in acquiringnew customers and expand the scope of operations with the existing customers.

Key Cost Metrics

In order to meet the challenges of competitive pricing from the internationalcustomers the company continued its initiatives of consolidating its factories andoptimized the infrastructure and rationalized cost structure across the value chain Theseinitiatives have resulted in improved key cost metrics as detailed below thereby leadingto improve the cost competitiveness of the company in the market.

Rs. in Lakhs
Particulars FY16 FY17
Employee benefit Expenses 12183 10475
Other Expenses 36814 34815
Finance costs 3946 3636
Total 52943 48926

Despite the inflation the company s efforts in optimizing the cost structure helped tobring down the fixed costs by Rs 4017 Lacs during the financial year.

We have undertaken substantive strategic measures to improve our performance viz:focus on increasing share of business with existing customers develop new customers andmarkets focus on high margin product basket strengthen design capabilities improvemanufacturing efficiencies and sustain focus on tighter financial management. Our effortshas resulted in acquiring new customers in FY 18 and these initiatives will help usachieve enhanced results in the coming years.

Dividend

No dividend has been recommended by the Directors for the year.

Transfer to Reserves

No amount is transferred to the Reserves.

List of Subsidiaries

Your Company has 12 subsidiary companies. The names of these companies are as follows:i. All Colour Garments Private Limited ii. Deejay Trading Private Limited iii.Glamourwear Apparels Private Limited iv. Madhin Trading Private Limited v. MagentaTrading Private Limited vi. Rafter Trading Private Limited vii. Rajdin Apparels PrivateLimited viii.Reflexion TradingPrivateLimited ix. Rishikesh Apparels Private Limited x.SevenHills ClothingPrivate Limited xi. SNS Clothing Private Limited and xii. VigneshApparels Private Limited. Pursuant to provisions of Section 129(3) of the Companies Act2013 a statement containing salient features of the financial statements of the SubsidiaryCompanies in Form AOC-1 is given in Annexure to this report In view of the above theAudited Financial Statements along with the reports of the Board of Directors and theAuditors pertaining to the above subsidiaries have not been attached to this Report. TheFinancial Statements of the said subsidiaries will be kept for inspection at theregistered office of your Company. Investors who want to have a copy of the above maywrite to the Company Secretary to the registered office.

Material Changes

No Material Changes or commitments have occurred between the end of the Financial Yearand the date of this Report which affect the financial statements of the Company inrespect of the reporting year.

Open offer

On March 31 2017 Blackstone FP Capital Partners (Mauritius) VB Subsidiary Ltdpromoter of the Company and Clear Wealth Consultancy Services LLP Acquirer has enteredinto a Share Purchase Agreement for acquisition of 13955742 equity shares representing39.94% of fully paid-up equity share capital of the Company at a price of Rs. 42/- (RupeesForty Two Only) per equity share aggregating to Rs. 586141164/- (Rupees Fifty EightCrore Sixty One Lakhs Forty One Thousand One Hundred Sixty Four only) payable in cash. Theaforesaid transaction has triggered open offer obligation as per the SEBI (SubstantialAcquisition of Shares and Takeovers) regulations 2011. Consequently the Acquirer alongwith Mathew Cyriac Gazania Advisory LLP Westex Infotech Private Limited and GauthamMadhavan (Collectively referred to as PACs ) has made an open offer to all the publicshareholders of the Company for acquisition of up to 9179993 equity shares (Ninety OneLakhs Seventy Nine Thousand Nine Hundred and Ninety Three) representing 26% of the fullypaid up equity share capital of the Company at a price of Rs. 63.25 (Rupees Sixty Threeand Twenty Five Paisa only) per equity share. Post the Open Offer Blackstone FP CapitalPartners (Mauritius) VB Subsidiary Ltd does not hold any equity shares in the Companyeffective 10th July 2017 and the Acquirer along with the PACs shall be categorized aspromoter and promoter group of the Company as per regulation 31A of SEBI LODR 2015. Inthis connection necessary amendments to the Articles of Association (AOA) and theCompliance requirements are being initiated.

Merger

The Company has applied for a Scheme of Amalgamation of 9 wholly owned subsidiarycompanies with the Company. The appointed date of amalgamation is April 1st 2016. TheApplication is filed with Hon ble National Company Law Tribunal on February 23rd 2017.The Company awaits necessary approvals for the merger to become effective.

Changes in Subsidiaries Joint Ventures and Associates:

Your Company is holding 99.94% stake in the subsidiaries Companies. All thesubsidiaries are wholly owned Subsidiary Companies.

Deposits

During the year under review your Company has not invited or accepted any depositsfrom the public under section 76 of the Companies Act 2013 and Rules made there under.

Employee Stock Options Plan - 2010

Your Company has introduced the Employee Stock Option Scheme 2010 in accordance withthe SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines1999. During the year 138336 employee stock options were converted into equivalentnumber of equity shares. As required under SEBI (Share Based Employee BenefitsRegulations 2014) a disclosure is annexed herewith.

Share Capital

Consequent to conversion of stock options into equity shares your Company s Paid Upequity share capital has gone up to Rs.174638310 as on March 31 2017 from Rs.173946630 as on March 31 2016

Directors and Key Managerial Personnel

During the year there is no change in the directorship.

Mr. Richard B Saldanha Chairman retires by rotation at forthcoming Annual GeneralMeeting and being eligible offers himself for re-appointment. The brief resume and otherdetails as required under the Listing Regulations are provided in the Notice of the 14thAnnual General Meeting of the Company. Mr. Mathew Cyriac was appointed as AdditionalDirector of your company from 29th March 2017 pursuant to provisions of Section 161 ofthe Companies Act 2013. The detailed particulars are provided in the Notice of the AnnualGeneral Meeting. It is expected that the company will benefit from the rich and vide andvaried experience and knowledge of Mr. Mathew Cyriac. Your directors recommend hisregularization as director of the company.

In terms of Section 203 of the said Act the following were designated as KeyManagerial Personnel of your company by the Board: Mr. P. Ramababu Vice Chairman &Managing Director Mr. Sathyamurthy A Chief Financial Officer Ms. Ramya K Company Secretary

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Directors underSection 149(7) of the Companies Act 2013 that he / she meet the criteria of independencelaid down in Section 149 (6) of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015( Listing Regulations )

Evaluation of the Board s Performance

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement/SEBI (Listing Requirements) Regulations 2015 a structured questionnaire wasprepared after taking into consideration various aspects of Board s functioningcomposition of the Board and its Committees execution and performance of specific dutiesobligations and governance.

The performance evaluation of Independent Directors has been carried out. Theperformance evaluation of the Non-Independent Directors was carried out by the IndependentDirectors. The Board of Directors expressed their satisfaction with the evaluationprocess.

Number of Meetings of the Board

During the year Six Board Meetings were held on May 30 2016 August 9 2016September 26 2016 October 27 2016 February 3 2017 and March 29 2017. The Particularsof Directors & their attendance during the financial year 2016-17 has been disclosedin the Corporate Governance Report forming part of this Annual Report.

Board Committee

The Company has the following committees of the Board:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee The Composition of each of the aboveCommittees their respective roles and responsibility are as detailed in the report onCorporate Governance.

Directors Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to the Directors Management states that: I) In the preparation of the annualaccounts for the year ended March

31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any; II) They have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company and of its profits / losses for the year ended March 31 2017; III) They havetaken proper and sufficient care towards the maintenance of adequate accounting records inaccordance with the provisions of this Act to safeguard the assets of the Company and toprevent and detect fraud and other irregularities; IV) They have laid down InternalFinancial Controls to be followed by the Company and the Audit Committee of the Board ofDirectors shall ensure that the Internal Control is adequate and robust; V) The annualaccounts are prepared on a going concern basis VI) They have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.

Safety Health Environment

We as a responsible manufacturer are committed to take adequate measures related toenvironment employee health and safety in developing manufacturing storing handlingand distribution of our products. It is our responsibility to provide a workplace freefrom accidents injuries and exposure to hazardous substances conserve natural resourcesand prevent pollution to protect the environment. Besides as a constructive partner inthe communities in which it operates the Company has been taking concrete actions torealize its social responsibility objectives thereby building value for its variousstakeholders. We respect human rights value our employees and invest in innovativetechnologies. In the past the Company has supported innumerable social and communityinitiatives and continues to do the same. Some of the key initiatives taken by the companyare:

Regular fire safety audits along with mock drills at all locations Identification andimplementation for additional fire safety measures for high rising buildings (beyond 15Mtrs) Up-gradation of existing fire control and safety systems including training on fireprevention for employees Enhanced focus on product safety and safe working practicesthrough training programs Implementation of a Zero Liquid Discharge (ZLD) project withenhanced capacity of Reverse Osmosis Plant in Denim Laundry for recycling of waste water.

Installation of CCTV Cameras for improved surveillance system in order to capture anyuntoward incidents and to prevent thefts.

Corporate Governance

Your Company is committed in maintaining the highest standards of Corporate Governance.Your Directors adhere to the standards set out by the Securities and Exchange Board ofIndia s (SEBI) Corporate Governance practices. Your Company s Corporate GovernanceCompliance Certificate is in line with SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and is given along with the Corporate Governance Report.

Management Discussion and Analysis

Management Discussion and Analysis Report is given separately forming part of thisAnnual Report and is in accordance with the requirements laid out in SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

Listing

The equity shares of the Company are listed on the BSE Limited (BSE) and National StockExchange of India Limited (NSE). The Company has paid the listing fees to the respectivestock exchanges till date. The Company s shares are tradable compulsorily in thedematerialized form and the Company has entered into an agreement with National SecuritiesDepository Limited (NSDL) and Central Depository Services India Limited (CDSL) for tradingin electronic form.

Auditors a) Statutory Auditor

M/s Girish Murthy & Kumar (Registration Number000934S) CharteredAccountants wereappointed as Joint Statutory Auditors of the Company along with M/s S. R. Batliboi &Associates LLP (Registration Number 101049W) till the conclusion of 14th Annual GeneralMeeting to be held in the year 2017. M/s Girish Murthy & Kumar (Registration Number000934S) Chartered Accountants would vacate office as Auditors ofthe Companyattheconclusionof ensuing Annual General Meeting pursuant to Section 139(2) (b) of theCompanies Act 2013 dealing with compulsory rotation of Auditors. Thus M/s Girish Murthy& Kumar (Registration Number 000934S) Chartered Accountants would be carrying outlimited review of first quarter financial results of FY 2017-18.

Pursuant to applicable provision of the Comp anies Act 2013 on the recommendationsof the Audit Committee it is proposed to appoint M/s S. R. Batliboi & Associates LLP(Registration Number 101049W) as statutory Auditors of the Company to hold office from theconclusion of 14th Annual General Meeting of the Company until the conclusion of 15thAnnual General Meeting. Necessary resolution for the appointment of M/s S. R. Batliboi

& Associates LLP (Registration Number 101049W) as statutory Auditors is included inthe Notice of the Annual General Meeting.

The Board Places on record it s appreciation for the contribution of M/s Girish Murthy& Kumar (Registration Accountants during their tenure as Auditors of the Company.

No qualification adverse remarks or disclaimer made by the Statutory Auditors withregards to the financial statements for the financial year 2016-17.

The statutory Auditors of the Company have not reported any fraud as specified underSection 143(12) of the Companies Act 2013.

b) Secretarial Auditor

Pursuant to the Provisions of Section 204 of the Companies Act 2013 and theRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr. NagendraD Rao Practicing Company Secretary (CP NO:7731 FCS: 5553) to undertake the secretarialaudit of the Company. The Secretarial Audit

Report is given in Annexure to this Report. The Report does not contain anyqualification.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

In pursuance of the Conservation of Energy Technology Absorption Foreign ExchangeEarnings in such manner as prescribed under Rule 8 (3) of the Companies (Accounts) Rules2014 the particulars of the same are given below.

A. Conservation of Energy The operations of the Company are not energy intensive.However the Company takes continuous initiatives to curtail consumption of energy on anongoingbasis.

B. Technology absorption adaptations and innovation Not Applicable

C. ForeignExchangeEarnings and Outgo Foreign Exchange earned: Rs. 68854.63 lakhs Out go: Rs. 13301.59 lakhs

Related Party Transactions

All related party transactions that were entered into during the financial year wereon an arm s length basis and were in the ordinary course of business. The Company presentsa statement of all related party transactions before the Audit Committee. Prior omnibusapproval of the Audit Committee has been obtained for the transactions which are offoreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted along with a statement giving details of all related partytransactions is placed before the Audit Committee. Further there are no materiallysignificant related party transactions during the year under review made by the Companywith promoters Directors Key Managerial Personnel or designated persons which may have apotential conflict of interest with the Company at a large.

Particulars of Loan Guarantees and Investment

In Terms of Section 134 of the Companies Act 2013 the particulars of LoansGuarantees and Investments under Section 186 of the Companies Act 2013 is detailed inNotes to Accounts of the Financial Statements.

Disclosure under the sexual harassment of women at workplace (prevention prohibition& redressal) Act 2013

Your Company has in place a policy on prevention prohibition and Redressal ofdiscrimination at work place in line with the requirements of the Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013. All employees(permanent contractual temporary trainees) are covered under this policy.

An Internal Complaints Committee (ICC) was set up to redress complaints receivedregarding sexual harassment and discrimination at work place.

During the year ended March 31 2017 the ICC has received no complaints pertaining toSexual harassment/ discrimination at work place.

Extract of the Annual Return

Relevant extract of annual return to be filed with the Registrar of Companies for thefinancial year 2016-17 in Form MGT-9 is given as Annexure to this Report.

Internal Control Systems

The Company has adequate system of internal control to safeguard and protect from lossunauthorized use or disposition of its assets. All the transactions are propertyauthorized recorded and reported to the Management. Internal Audit is carried out in aprogrammed way and follow up actions were taken for all audit observations.

Corporate Social Responsibility (CSR)

In terms of Section 135 and Schedule VII of the Companies Act 2013 the Board ofDirectors of your Company has constituted a Corporate Social Responsibility Committee.

The Corporate Social Responsibility Policy as formulated by the Corporate SocialResponsibility Committee and approved by the Board of Directors is available on thewebsite of the Company at http://www.gokaldasexports.com

Remuneration Policy for the Directors Key Managerial Personnel and other Employees

In terms of the provisions of Section 178(3) of the Act and Regulation 19 of SEBI(Listing Obligations and Disclosure

Requirements) Regulations 2015 the Nomination &Remuneration Committee isresponsible for formulating criteria for determining qualification positive attributesand independence of a & Remuneration Committee is also responsible for recommending tothe Board a policy relating to remuneration of Directors Key Managerial Personnel andother senior employees. In line with this Board has adopted Remuneration Policy forDirectors Key Managerial Personnel and other senior employees of the Company. The copy ofpolicy is available on the company s website www.gokaldasexports.com

Development and implementation of a Risk Management Policy

Your Company has adopted a Risk Management Policy for addressing the requirements ofrisk identification risk assessment risk mitigation plans etc. of the company. In termsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors have formulated a policy on Risk Management which can be accessed from thewww.gokaldasexports.com.

Particulars of Employees

The information required pursuant to Section 197(12) of the Act read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 ( Rules )in respect of remuneration and other detail is given separate statement in the AnnualReport. The remuneration paid to all key Management Personnel was in accordance withremuneration policy adopted by the Company. In terms of the provisions of Section 197(12)of the Act read with Rule 5(2) and 5(3) of Rules a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules is provided in the Annual Report.

Vigil Mechanism/whistle Blower Policy

Your Company has a Vigil mechanism established Whistle Blower Policy as per therequirement of the Companies Act 2013 and the Listing Regulations to enable allemployees and the directors to report in good faith any violation of the policy. The AuditCommittee of the Board oversees the functioning of Whistle Blower Policy. Your Company hasdisclosed the details of Whistle Blower

Code of Conduct

Your Company has laid down a Code of Conduct Policy which can be accessed onwww.gokaldasexports.com

Acknowledgements and Appreciation

Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners and associates financial institutions and the Central andState Governments for their consistent support and encouragement to the Company. I am sureyou will join our Directors in conveying our sincere appreciation to all employees of theCompany for their hard work and commitment.

On behalf of the Board of Directors

Richard B Saldanha

(Chairman)

P. Ramababu

(Vice Chairman and

Managing Director)

Bengaluru

14th August 2017