Himatsingka Seide Ltd.
|BSE: 514043||Sector: Industrials|
|NSE: HIMATSEIDE||ISIN Code: INE049A01027|
|BSE 15:40 | 16 Mar||345.15||
|NSE 15:31 | 16 Mar||344.70||
|Mkt Cap.(Rs cr)||3,398|
|Mkt Cap.(Rs cr)||3398.35|
Himatsingka Seide Ltd. (HIMATSEIDE) - Director Report
Company director report
Your Directors are pleased to present the Thirty Second Annual Report on the operationsand performance of your Company together with audited financial statements and auditors'report for the year ended March 312017.
1. Business Operations Overview
The financial highlights for the year under review are given below:
(Rs. in Lakhs)
In the Fiscal year 2016-17 the Consolidated Revenue increased by 13.07% to ' 213841Lakhs and EBITDA grew by 24.48% to ' 39089 Lakhs. The increase in EBITDA was drivenmainly by optimization of costs and increase in operational efficiency across the groupthrough various initiatives. Prices of critical raw-material inputs remained stablethrough the year.
Growth and efficiency initiatives during the year
During the year 2016-17 the company made significant progress on various initiativesrelating to its Manufacturing and Distribution business. Some of the initiatives thathelped bring additional clarity and operating efficiencies in the business model include
Significantly enhanced operational efficiencies in manufacturing
Focused on the optimization of Product Portfolio
Consolidated and enhanced revenue streams from Brand Portfolio in key markets
As on March 312017 the Company had the following subsidiaries:
Himatsingka Wovens Private Limited
Himatsingka Holdings NA Inc
Himatsingka America Inc.
Giuseppe Bellora Srl.
Himatsingka Singapore Pte. Limited
Twill & Oxford LLC.
Himatsingka Europe Limited
With effect from February 17 2017 the Company has incorporated a wholly ownedsubsidiary in Europe namely "Himatsingka Europe Ltd" which is registered withthe Registrar of Companies for England and Wales .This will help to strengthen thedistribution network in Europe.
As part of the strategy to have London as Head Quarters for the whole of EuropeanOperations the Board of Directors of the Company at their meeting held on March 22 2017approved dis-investment of 100% holding in its Subsidiary Company Giuseppe Bellora Srl andsell the same to Himatsingka Europe Limited ("Wholly owned subsidiary") at thefair value. Post dis-investment of company's Holding Giuseppe Bellora Srl has become awholly owned step down Subsidiary under existing wholly owned subsidiary of HimatsingkaEurope Limited.
As required under section 129(3) the Company has prepared consolidated financialstatements which form a part of the Annual Report.
The consolidated financial statements presented by the Company include the financialresults of its subsidiary companies. Further a statement containing the salient featuresof the financial statements of its subsidiaries in form AOC-1 is annexed to this report asAnnexure 1
Pursuant to section 136 of the Companies Act 2013 the audited financial statements ofthe subsidiaries are available on the Company's website at http://www.himatsingka.com/financial-information.html. The Balance Sheet Statement of Profit and Loss and other documents of the subsidiarycompanies are kept for inspection at the Registered Office of the Company and that of therespective subsidiary companies. The Company will make available the annual accounts ofthe subsidiary companies and the related information to any member of the Company who maybe interested in obtaining it.
As required under Regulation 24 of SEBI (Listing Obligations and disclosurerequirements) Regulations 2015 the Company has drafted a policy for determining materialsubsidiaries. The policy has been disclosed in the Company's website and can be found athttp://www.himatsingka.com/corporate-governance.html
Research and Development
Research and development continues to provide valuable support to our business and hashelped us to keep pace with dynamic market conditions. We continue to give in-houseresearch and innovation the highest priority.
Environment Safety Energy conservation and Technology absorption
Safety and environmental protection remain a key area of focus for the Company.Investments are continuously made in projects that reduce / treat waste and increaseenergy efficiencies. We regularly upgrade our effluent treatment and water recyclingplants to keep abreast with technological advancements. By avoiding carcinogenic azo classdyes we ensure eco-friendly production and worker safety. Our endeavor has been tomaximize the efficient use of energy and ensure the safe and responsible discharge ofresidual wastes while minimizing any adverse environmental impact and waste generation.
Your Directors in their meeting held on May 23 2017 have recommended a dividend of50% (Rs. 2.50 per equity share) for the financial year ended March 312017 subject toapproval by the shareholders at the Annual General Meeting.
3. Transfer to Reserves
During the year an amount of ' 400 Lakhs has been transferred from Debenture RedemptionReserve to General Reserve following the redemption.
4. Extract of Annual Return
In accordance with the Section 92(3) and as required under the section 134(3)(a) theextract of the Annual Return of the Company for the year ended March 312017 is annexedhere to as Annexure 2 in the prescribed form MGT-9.
5. Number of meetings of the Board
The details of the meetings of the Board and the details of the attendance of thedirectors in the meetings are provided in the Corporate Governance Report.
6. Directors' Responsibility Statement
As required by the provisions of Section 134(3)(c) of the Companies Act 2013 theDirectors' Responsibility Statement is attached as Annexure 3 forming part of thisreport.
7. Declaration by Independent Directors
The Company has received from each of its Independent Directors the declaration asstipulated under Section 149(7) of the Companies Act 2013 confirming that the directormeets the criteria of independence as laid down under section 149(6) of the Companies Act2013.
8. Nomination and Remuneration Policy
The Company has formed a Nomination and Remuneration Committee as required under theSection 178 of the Companies Act 2013. The Committee has formulated a policy as requiredunder Section 178(3) of Companies Act 2013 stipulating the criteria for determiningqualifications positive attributes and independence of a director and also the criteriarelating to the remuneration for the directors key managerial personnel and otheremployees. The aforesaid policy is annexed to the Board's report as Annexure 4.
9. Auditors and Auditors' Reports Statutory Audit
The report of Statutory Auditors M/s. Deloitte Haskins and Sells CharteredAccountants for FY 2016-17 (appearing elsewhere in the Annual Report) does not have anyqualifications/ adverse remarks.
As per second proviso to Section 139(2) of the Companies Act 2013 (the Act) atransition period of three years from the commencement of the Act is provided to appoint anew auditor if the existing auditor's firm has completed two terms of five consecutiveyears.
Accordingly the current Statutory Auditors M/s. Deloitte Haskins and Sells CharteredAccountants hold office upto the conclusion of the 32nd Annual General Meeting. The Boardat their meeting held on February 12017 on the recommendation of the audit committeehas recommended to the members at the 32nd Annual general meeting to appoint M/s. BSR& Co. LLP Chartered Accountants as Statutory auditor for an initial term of fiveyears and their appointment is subject to ratification by the members at every AGM.
M/s. BSR & Co. LLP Chartered Accountants have consented to the said appointmentand confirmed that their appointment if made would be within the limits specified underSection 141(3)(g) of the Act. They have further confirmed that they are not disqualifiedto be appointed as statutory auditor in terms of the provisions of the proviso to Section139(1) Section 141(2) and Section 141(3) of the Act and the provisions of the Companies(Audit and Auditors) Rules 2014
The Company had appointed Mr. Vivek Bhat Company Secretary in Practice Bengaluru toconduct the secretarial audit as required under Section 204 of the Companies Act 2013.The Secretarial audit report given by Mr. Vivek Bhat is appended as Annexure 5 to theBoard's Report.
In the abovementioned report Mr. Vivek Bhat has made the following comment:
"The company could not spend the eligible profit on Corporate SocialResponsibility measures. However the Company has constituted the CSR Committee and itsconstitution was as per the regulation."
During the year the Company has registered a trust by name "HimatsingkaFoundation" a Charitable trust through which the Company wishes to increase its focuson CSR initiatives.
The Company took up various programs for the year under CSR for rural developmentrural education and development of sports and allocated funds for the same. The Companycould not utilize the allocated funds due to lack of long term sustainable CSR program.The Company has now identified a sustainable long term program under "whole schoolenrichment" and would undertake to spend the allocated funds towards the same.
As per the provisions the total amount to be spent by the Company on CSR activitiesfor the FY 2016-17 was ' 2.5 Crores. During the year an amount of ' 0.68 Crores was spentby the Company.
10. Particulars of Loans Guarantees Investments and Securities made
The particulars of loans made guarantees given investments made and securitiesprovided as per the provisions of Section 186 of the Companies Act 2013 and the relevantrules made thereunder are given in the notes to the standalone financial statements.
11. Particulars of Contracts or arrangements with related parties
All transactions entered into by the Company with its related parties are at arm'slength and in the ordinary course of business. However the list of material related partytransactions as per the Company's policy on related party transactions as required underrule 8(2) of Companies (Account) Rules 2014 is annexed to the Board's Report as Annexure6.
The Company has also formulated a policy on dealing with Related Parties Transactionsas required under Regulation 23 of SEBI (Listing Obligations and disclosure requirements)Regulations 2015. The same is available in the Company's website at http://www.himatsingka.com/corporate-governance.html .
12. Material changes
No material changes or commitments affecting the financial position of the Company haveoccurred after the closure of the financial year till the date of this report.
13. Creation of separate divisions
The Board on January 4 2017 approved via circular resolution the creation of separatedivisions for Spinning and Terry under the unit names of "Himatsingka Fibres"& "Himatsingka Terry" respectively for convenient operations of theSpinning & Terry Facilities
14. Conservation of energy Technology absorption & Foreign exchange
The details of conservation of energy technology absorption and foreign exchange areannexed to the Board's Report as Annexure 7.
15. Risk Management
The Company has developed and implemented a comprehensive risk management policy andframework to counter and mitigate the various risks encountered by the Company. Thedetails of the same are given in the Risk Management section elsewhere in this AnnualReport.
16. Corporate Social Responsibility
As on March 312017 the Corporate Social Responsibility (CSR) committee consists ofthe following directors:
The Committee has devised the CSR policy as required under Section 135 of the CompaniesAct 2013 and the relevant rules made thereunder. As per the provisions the total amountto be spent by the Company on CSR activities for the F.Y. 2016-17 was ' 2.5 Crores.
During the year an amount of ' 0.68 Crores was spent by the Company. The details ofthe CSR policy and the CSR spending have been elaborated in the Annexure 8 to this report.
17. Board Performance Evaluation
The Company has during the year conducted an evaluation of the Board as a whole itscommittees and the individual directors including the independent directors as stipulatedin the Nomination and Remuneration policy adopted by the Company. The evaluation wascarried out through different evaluation forms which covered among others the evaluationof the composition of the Board/ committee its effectiveness activities governance andwith respect to the chairman and the individual directors their participation integrityindependence knowledge impact and influence on the Board.
The independent directors of the Company also convened a separate meeting and evaluatedthe performance of the Board the non-independent directors and the chairman.
18. Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Mr. D.K. Himatsingka retires by rotation and being eligibleoffers himself for re-appointment. His re-appointment will be placed as one of the agendain the ensuing Annual General Meeting.
In accordance with the provisions of the Companies Act 2013 the Board appointed Mr.Ashutosh Halbe as the Interim Chief Financial Officer of the Company w.e.f. July 6 2017.Subsequently the Board at its meeting held on July 26 2017 approved the appointment ofMr. Rangaraj K.P. as the President Finance and Group Chief Financial Officer w.e.f.August 2 2017.
Retirements and Resignations
Mr. K.P. Pradeep resigned as the President Finance & Group CFO of theCompany with effect from January 7 2017.
Mr. Berjis Desai resigned as Director with effect from May 23 2017
Mr. Aditya Himatsingka resigned as Executive Director with effect from May 232017
Mr. Ashutosh Halbe resigned as Interim Chief Financial Officer with effect fromAugust 2 2017
Your Directors wish to place on record their deep appreciation for the outstandingcontributions and services rendered by Mr. K.P. Pradeep Mr. Berjis Desai Mr. AdityaHimatsingka and Mr. Ashutosh Halbe during their tenure.
19. Composition of Audit Committee
The Company has constituted an Audit Committee as required under the Companies Act2013. The committee consists of the following directors.
During the year there have been no incidents where the Board has deviated from therecommendations made by the committee.
20. Vigil Mechanism
As a conscious and vigilant organization Himatsingka Seide Limited believes in theconduct of the affairs of its constituents in a fair and transparent manner by adoptingthe highest standards of professionalism honesty integrity and ethical behaviour.
In its endeavour to provide its employee a secure and a fearless working environmentthe Company has established a "Whistle Blower Policy" as required under theCompanies Act 2013 and the same is also available in the Company's website.
Mr. Ashok Sharma Company Secretary has been designated as the Chief ComplianceOfficer under the policy and the employees can report any instance of unethical behaviouractual or suspected fraud or violation of the Company's code of conduct or ethics policyto him.
In exceptional cases where the Whistle Blower is not satisfied with the outcome of theinvestigation and the decision she/he can make a direct appeal to the Chairman of theAudit Committee and the contact details of the Chairman is also given in the Policy.
During the year no complaints were received under this mechanism.
21. Remuneration of Directors and Key Managerial Personnel
a) Details of Directors' remuneration
(Rs. in Lakhs)
*upto 21.5.2016 #upto 22.5.2016 $upto 22.5.2016 @w.e.f. 21.5.2016 sw.e.f. 21.5.2016
In the remuneration mentioned above the sitting fees salaries and perquisites formthe fixed component of the total remuneration and the commission is a variable componentlinked to the performance of the Company.
b) Details of the Remuneration of the Key Managerial Personnel (other than Directorsmentioned above)
c) The percentage increase in median remuneration of the employees is 10.41%
d) The number of permanent employees in the rolls of the Company is 3503
e) The key parameters for the variable zcomponent of remuneration availed by thedirectors are the amount of responsibilities taken performance of the business specificcontribution made by the director to the overall performance of the Company.
f) During the year there were no employees whose remuneration was higher than that ofthe highest paid director.
g) Statement of particulars of employees for the Financial Year 2016-17 as requiredunder rule 5(2) of the Companies (Appointment and Remuneration) Rules 2014:
(Rs. in Lakhs)
#Not related to any Directors of the Company
22. Corporate Governance
We comply with the corporate governance code as prescribed by the stock exchanges andSEBI. You will find a detailed report on corporate governance as part of this annualreport. The auditor's certificate on compliance with the mandatory recommendations oncorporate governance is annexed to this report as Annexure 9.
The Company's assets are prone to risks / peril. The major risks / peril are adequatelyinsured.
24. Public Deposits
The Company has not accepted any deposits from the public during the year within themeaning of the Companies Act 2013.
25. Cost Auditors
The Companies (Cost Records and Audit) Rules 2014 has exempted the mandatory costaudit requirements in respect of units located in Special Economic Zones (SEZ) and for100% Export Oriented Units (EOU). In view of this there was no requirement to furnishcost audit of cost records of the Company for its units at Hassan (SEZ) and Doddaballapur(EOU). The Company has exited from the export oriented unit and also exited from thespecial economic zone. Since the Company's export revenue in foreign exchange for thefinancial year 2016-2017 was greater than 75% (seventy five percent) of the total revenueof the Company the Company falls within the exemption specified in Clause 4(3) of TheCompanies (Cost Records and Audit) Rules 2014. In view of this there is no requirementto furnish cost audit of cost records of the Company for its units at Hassan andDoddaballapur.
26. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
The Company is committed to provide a healthy environment to all its employees. Henceit does not tolerate any discrimination and/or harassment in any form. The Company has inplace a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as perthe requirements of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Company has not received any complaint during the year.
27. Dividend Distribution Policy
The Board of Directors of the Company have adopted a dividend distribution policy asrequired under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)(Second Amendment) Regulations 2016. The policy is attached as Annexure 10.
28. Business Responsibility Reporting
As per SEBI Listing Regulations a Business Responsibility Report is attached and formspart of this Annual Report. Acknowledgement
Your Directors wish to place on record their appreciation of the continuous effortsmade by all employees in ensuring excellent allround operational performance. We also wishto thank our Customers Vendors Shareholders and Bankers for their continued support.Your Directors would like to express their grateful appreciation to the Central Governmentand Government of Karnataka for their continued co-operation and assistance.