Indian Card Clothing Company Ltd.
|BSE: 509692||Sector: Industrials|
|NSE: INDIANCARD||ISIN Code: INE061A01014|
|BSE LIVE 15:40 | 23 Nov||189.65||
|NSE 14:50 | 23 Nov||187.35||
|Mkt Cap.(Rs cr)||86|
|Mkt Cap.(Rs cr)||86.29|
Indian Card Clothing Company Ltd. (INDIANCARD) - Director Report
Company director report
The Indian Card Clothing Company Limited
Your Directors take pleasure in presenting their 63rd Annual Report on thebusiness and operations of the Company together with audited financial statements for theyear ended March 31 2017.
02. PERFORMANCE REVIEW:
During the year under review the Company earned a total revenue of Rs. 7726.51 Lakhsas against Rs. 8610.92 Lakhs in the Previous Year. The profit after tax earned by theCompany for the financial year 2016-17 has been Rs. 1267.59 Lakhs against the profitaftertax of Rs. 1360.21 Lakhs for the financial year 2015-16.
The revenue of the Card Clothing Division for the financial year 2016-17 wasdown by approx. 22% due to overall slowdown in the textile industry.
At the beginning of the year under review your Company successfully completedthe sale transaction of the 2ndfloorofthe ICC Devi GauravTechnology ParkPimpri Pune.
The commercial building at Powai Mumbai has been substantially occupied duringthe financial year 2016- 17 barring some exceptions during the year.
03. SHARE CAPITAL:
The paid up share capital of the Company as on March 31 2017 was Rs. 455.11 Lakhs.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock option or sweat equity shares. As on March 312017 noneof the Directors of the Company hold instruments convertible into equity shares of theCompany.
04. STATE OF COMPANY'S AFFAIRS:
Though the Card Clothing segment has incurred losses for the financial year ended March312017 efforts have been made by the Management Team to improve operational efficiencyand reduce costs.
Your Directors are therefore optimistic about showing a better performance in improvingsales of the Company in the coming years through improvements in processes and thedeployment of appropriate resources in the functional areas of the company.
Mr. Vinod Vazhapulli has been appointed as the Chief Executive Officer (CEO) of theCompany with effect from January 16 2017 with the specific task of focussing on the CardClothing Division. We are confident that the Company would benefit underthe professionalmanagement and leadership of Mr. Vinod Vazhapulli.
The detailed information about the Company's Affairs is provided underthe ManagementDiscussion and Analysis Report in accordance with the requirements under Regulation 34 (2)(e) of the SEBI (Listing Obligations And Disclosure Requirements) Regulations 2015 (the"Listing Regulations").
05. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
a) Meetings of the Board of Directors held during the vear2016-17:
During the year under review five (5) meetings of the Board of Directors took placedetails of which have been provided in the Corporate Governance Report that forms part ofthis Annual Report. The intervening gap between the two meetings did not exceed 120 daysin accordance with the provisions of the Companies Act 2013.
b) Declaration bv Independent Directors:
The Company has received necessary declaration from all the Independent Directors underSection 149(7) of the Companies Act 2013 that they meet the criteria of Independence asprovided in sub-section (6) of Section 149 of the Companies Act 2013 and Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
All Independent Directors are not liable to retire by rotation as per Section 152 ofthe Companies Act 2013.
c) Changes in the Board of Directors during the year 2016-17:
The following changes have taken place in the Board of Directors of the Company duringthe year 2016-17:
Mr. Mehul K. Trivedi resigned as the Managing Director of the Company witheffect from January 162017. however he continues to be the Non-Independent Non-ExecutiveDirector of the Company.
Other than change in designation of Mr. Mehul K. Trivedi from the position ofManaging Director of the Company to Non- Executive Director of the Company there was nochange in the Board of Directors of the Company.
Mr. Mehul K. Trivedi (DIN: 00030481) is liable to retire by rotation at the ensuingAnnual General Meeting.
The brief profile of Mr. Mehul K. Trivedi seeking re-appointment at the ensuing AnnualGeneral Meeting as a Director liable to retire by rotation has been included in thenotice convening the ensuing Annual General Meeting.
d) Details of Key Managerial Personnel other than Managing Director:
The Board in its meeting held on December 7 2016 appointed Mr. VinodVazhapulli as Chief Executive Officer (whole time Key Managerial Personnel) and Managerwith effect from January 162017 underthe provisions of the Companies Act 2013.
Other than appointment of Mr. Vinod Vazhapulli as Manager (Whole time KeyManagerial Personnel) and designated as 'Chief Executive Officer1 under theprovisions of the Companies Act 2013 there was no change in the Key Managerial Personnelof the Company.
The Company has earned net profit of Rs.1267.59 Lakhs during the financial year2016-17. This was mainly on account of profit on sale of 2nd floor of IT Parkat Pimpri Pune. The Company has already distributed a Special
Interim Dividend for the financial year 2016-17 @ Rs. 10/- per Equity Share of facevalue of Rs.10/- each i.e. 100%. Given the Company's policy to maintain a stabledividend the Board of Directors in its meeting held on May 26 2017 has recommendedsubject to approval of the Members of the Company a dividend of Rs. 21- per Equity Shareof Face Value of Rs. 10/- each i.e. 20% for the year ended March 312017 to be paid outof the profits of the Company.
No amount was transferred to Reserves for the year under review.
07. SUBSIDIARY COMPANIES AND THEIR PERFORMANCE / FINANCIAL POSITION:
In accordance with Section 129 (3) of the Companies Act 2013 and Accounting Standard(AS) 21 the Company has prepared the Consolidated Financial Statements of the Company andall its subsidiaries which forms part of this Annual Report.
The Company does not have any material subsidiary whose net worth exceeds 20 percent ofthe consolidated net worth of the holding company in the immediately preceding accountingyear or has generated 20 percent of the consolidated income of the Company and itssubsidiaries during the previous financial year. However the Company has prepared apolicy for determining material subsidiaries which is uploaded on the Company's websiteand can be accessed vide weblink:
The Statement in form AOC-1 containing salient features of the financial statements ofCompany's Subsidiaries is attached to the financial statements of the Company. The briefdetails about the performance and financial position of the subsidiaries of the Companyare given below:
a) ICC International Agencies Ltd.:
ICC International Agencies Ltd (ICCIAL) recorded a decrease of 0.5 percent in itsrevenue from Rs. 354.36 Lakhs in the previous year to Rs. 352.43 Lakhs in the financialyear 2016-17. The Subsidiary Company recorded loss after tax of Rs. 43.58 Lakhs in thecurrent year against previous year's loss after tax of Rs. 26.16 Lakhs. The reducedrevenue and the after tax loss incurred was due to the difficult trading conditions in thetextile industry within India leading to many customers postponing or cancelling capitalequipment purchases. The global slowdown in the textile industry also contributed toreduced revenue.
b) Garnett Wire Ltd.. UK:
Garnett Wire Ltd a U.K. Company in which your Company holds 60 percent of the issuedshare capital recorded reduction of 9.4 percent in its revenue from 1255011(equivalent to Rs. 1180 Lakhs) to 1137224 (equivalent to Rs. 1000.64 Lakhs).Thelossaftertaxwas18988(equivalenttoRs. 16.70 Lakhs) as against a profit of 884739(equivalent to Rs. 831.57 Lakhs) in the previous year. The subsidiary incurred a lossduring the year under review mainly due to the expenses incurred to move its operation toa rented facility post sale of its owned premises in the previous financial year.
c) Shivrai Sugar and Allied Products Pvt. Ltd.:
Shivraj Sugar and Allied Products Pvt. Ltd. is yet to commence the operations.
08. AUDIT COMMITTEE:
Pursuant to the provisions of Sections 177 (8) of the Companies Act 2013 read withRule 6 and 7 of the Companies (Meetings of Board and its Powers) Rules 2014 the AuditCommittee consists of the following Members:
The above composition of the Audit Committee consists of Independent Directors only.
All the recommendations of the Audit Committee during the year were accepted by theBoard of Directors of the Company.
09. VIGIL MECHANISM:
The Company has adopted Vigil Mechanism details of which have been provided in theCorporate Governance
Report and also posted on the website of the Company at:
10. STATUTORY AUDITORS:
M/s. B.K. Khare & Co. Chartered Accountants (Firm Reg. No. 105102W) have beenacting as auditors of the Company since conclusion of 48th Annual General Meeting of theCompany held on September 25 2002. They were reappointed as the statutory auditors of theCompany at the Annual General Meeting of the Company held on August 62015 for twofinancial years i.e. for the financial year 2015-16 and 2016-17. Subsequently in theAnnual General Meeting of the Company held on August 122016 their appointment asStatutory Auditors of the Company was ratified by the Members uptothe conclusion of thisAnnual General Meeting. Accordingly M/s. B.K. Khare & Co. Chartered AccountantsPune would hold the office of the Statutory Auditors of the Company upto the conclusion ofthe ensuing Annual General Meeting of the Company.
The Board of Directors of the Company therefore in its meeting held on May 26 2017has proposed the appointment of M/s. P.G. Bhagwat Chartered Accountants Pune (FirmRegistration No.: 101118W) on the basis of the recommendation of the Audit Committee asthe Statutory Auditors of the Company for a period of five years commencing from theconclusion of this Annual General Meeting (AGM) till the conclusion of the sixty-eighthAGM of the Company subject to ratification by the members if any required as perapplicable laws from time to time at every Annual General Meeting.
It should be noted that M/s. P.G. Bhagwat Chartered Accounts Pune were holding theoffice of the Internal Auditors of the Company for the financial year 2016-17 and yearsprior to financial year 2016-17.
The Company has received written consent from M/s. P.G. Bhagwat Chartered AccountantsPune stating that they satisfy the criteria provided under Section 141 of the CompaniesAct 2013 read with the Companies (Audit and Auditors) Rules 2014 and that theappointment if made shall be in accordance with the applicable provisions of theCompanies Act 2013 and rules made thereunder. As required under Regulation 33(1 )(d) ofthe SEBI (LODR) Regulations 2015. M/s. P.G. Bhagwat Chartered Accountants Pune havealso confirmed that they hold a valid certificate issued by the Peer Review Board of ICAI.
11. AUDITORS' REPORT:
There are no adverse remarks nor any disclaimer qualifications or reservations in theAuditors' Report.
The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment for the time being in force).
12. SECRETARIAL AUDIT REPORT:
S. Anantha & Ved LLP (LLPIN: AAH8229) Company Secretaries Mumbai were appointedas the Secretarial Auditor to conduct the Secretarial Audit of the Company for thefinancial year 2016-17 as required under Section 204 of the Companies Act 2013 and therules made thereunder.
The Secretarial Audit Report for the financial year2016-17 is enclosed as Annexure -Ato the Board's Report. There are no adverse remarks nor any disclaimer qualifications orreservations in the Secretarial Audit Report.
13. DIRECTORS' RESPONSIBILITY STATEMENT:
In terms of section 134 (3) (c) and section 134 (5) of the Companies Act 2013 theDirectors confirm that:
a) In the preparation of the annual accounts for the financial year ended March312017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b) The directors have 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 atthe end of the financial year and ofthe profit of the company forthe year;
c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in
accordance with the provisions of this Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls which are to be followedby the Company and that such internal financial controls are adequate and were operatingeffectively; and
f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.
14. CORPORATE GOVERNANCE;
As per Regulation 34 (3) read with Schedule V of the Listing Regulations a separatesection on Corporate Governance practices followed by the Company together with acertificate from the Company's Auditors confirming compliance is set out separately underCorporate Governance Report.
15. POLICY FOR SELECTION APPOINTMENT AND REMUNERATION OF DIRECTORS INCLUDING CRITERIAFOR THEIR PERFORMANCE EVALUATION:
The Company has adopted a policy titled as "Nomination & RemunerationPolicy" which interalia includes Company's policy on Board Diversity selectionappointment and remuneration ofdirectors criteria for determining qualificationspositive attributes independence of a Director and criteria for performance evaluation ofthe Directors.
Pursuant to the Guidance Note issued by the Securities and Exchange Board of India(SEBI) through its circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated January 52017 onBoard Evaluation required to be carried out by the Companies pursuant to the provisions ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("LODR") the Board of Directors of your Company in itsmeeting held on February 11 2017 based on the recommendations of the Nomination &Remuneration Committee approved revision in the criteria for performance evaluation ofevery director (including the Chairperson CEO Independent Directors and Non-IndependentDirectors) as contained in the said Nomination & Remuneration Policy of the Company("Revised Criteria for Performance Evaluation').
The Revised Nomination & Remuneration Policy as approved by the Board is uploadedon company's website at:
16. PERFORMANCE EVALUATION:
Regulation 4 (2) (f) (ii) (9) read with Regulation 17 (10) of the Listing Regulationsmandates that the Board shall monitor and review the Board evaluation framework and shallcarry out performance evaluation of the I ndependent Directors. The Companies Act 2013states that a formal annual evaluation needs to be made by the Board of its ownperformance and that of its committees and individual directors. Schedule IV of theCompanies Act 2013 states that the performance evaluation of Independent Directors shallbe done by the entire Board of Directors excluding the director being evaluated.
The Performance Evaluation of the Directors the Board and its Committees wasaccordingly carried out based on the revised criteria for Performance Evaluation approvedby the Nomination & Remuneration Committee and approved by the Board of Directors.Further details in respect of the criteria of evaluation has been provided in theCorporate Governance Report.
The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and the Non-Independent Directors wascarried out by the Independent Directors who also reviewed the performance of theSecretarial Department. Your directors express their satisfaction with the evaluationprocess.
17. PARTICULARS OF EMPLOYEES AS REQUIRED UNDER RULE 5 (2) OF THE COMPANIES (APPOINTMENTAND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:
Details ofTop 10 employees together with the remuneration drawn by them is enclosed asAnnexure- B.
None of the employees has drawn remuneration more than the limit prescribed under Rule5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and none of the employees hold (by himself
or alongwith his spouse and dependent children) more than two percent of the EquityShares of the Company. Hence the requirement of disclosure under Section 197 (12) of theCompanies Act 2013 is not applicable.
18. PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
a) The ratio of the remuneration of each directorto the median employee's remunerationforthe financial year and such other details as prescribed is as given below:
Mr. Mehul K. Trivedi resigned from the position of Managing Director of the Companywith effect from January 16 2017. As a result the Company did not have any ExecutiveDirector on its roll who received the remuneration for the entire financial year 2016-17.Therefore the remuneration received by Mr. Mehul Trivedi as Managing Director of theCompany for part of the year is not comparable with the remuneration of other employeesand hence the ratio required above cannot be arrived at.
b) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:
c) The percentage increase in the median remuneration of employees in the financialyear: NIL
d) The number of permanent employees on the rolls of company as on March 312017:336
e) average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;
During the year under review there was no increase in the average remuneration ofemployees other than the managerial personnel. Further there was no increase in theaverage managerial remuneration during the year.
f) The remuneration has been paid to all the employees of the Company as per theNomination & Remuneration Policy of the Company.
19. PARTICULARS OF CONTRACTS OF ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUBSECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013:
All the transactions with related parties are in the ordinary course of business and onarm's length basis; and therefore disclosure in fromAOC-2 is not required.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website at http://www.cardindia.com/content/fr_abus.htm
During the year 2016-17 the Company did not accept any deposit from public within themeaning of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.
21. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:
During the year under review no loans or guarantees were given or investments weremade pursuant to provisions of Section 186 of the Companies Act 2013.
22. SIGNIFICANT AND MATERIAL ORDERS:
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
23. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Company is giving due consideration to the conservation of energy and all effortsare being made to properly utilize the energy resources.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure - C to theBoard's Report.
24. ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company operates in ERP environment and has implemented the Oracle System for thepurpose of "Internal Financial Controls" within the meaning of the explanationto Section 134 (5) (e) of the Companies Act 2013 read with Rule 8(5)(viii) of theCompanies (Accounts) Rules 2014. The Company has laid down internal financial controlswhich are adequate and were operating effectively and the Board of Directors has adoptednecessary internal control policies and procedure for ensuring the orderly and efficientconduct of its business including adherence to Company's policies safeguarding itsassets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and timely preparation of reliable financial information.
The Board of Directors is of the opinion that for the year ended March 312017 theCompany has sound internal financial controls commensurate with the nature and size of thebusiness operations of the Company.
25. RISK MANAGEMENT:
The Company has in place Risk Management System which takes care of riskidentification assessment and mitigation. The Company has a 2 tier structure consistingof Risk Steering Committee and Risk Council to monitor and mitigate the risks of theCompany. There are no risks which in the opinion of the Board threaten the existence ofthe Company. Risk factors and its mitigation are covered extensively in the ManagementDiscussion and Analysis Report forming part of the Board's Report
26. EXTRACT OF ANNUAL RETURN:
The extract of the Annual Return pursuant to the sub-section (3) of Section 92 of theCompanies Act 2013 prepared in form MGT 9 is annexed herewith as Annexure - D to theBoard's Report.
27. CORPORATE SOCIAL RESPONSIBILITY (CSR):
Your Company has constituted CSR Committee considering the requirements of theCompanies Act 2013. Details regarding constitution of the Committee and its meeting(s)have been provided in the Corporate Governance Report.
Considering the threshold requirements specified under section 135 (1) of the CompaniesAct 2013 the Company was not liable for CSR spend as specified under section 135 (5) ofthe Companies Act 2013 for the financial year 2016-17 and has not spent any amount on CSRactivities during the financial year 2016-17.
28. POLICY ON PREVENTION OF SEXUAL HARASSMENT:
The Company has in place Anti Sexual Harassment Policy in line with the requirements ofThe Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered underthis policy.
During the year 2016-17 no complaints were received regarding sexual harassment.
29. DISCLOSURE UNDER SECTION 134 (3) (I) OF THE COMPANIES ACT 2013:
Except as stated above and disclosed elsewhere in this report no material changes andcommitments have occurred between the end of the financial year of the Company and date ofthis report which can affect the financial position of the Company.
Your Directors place on record their sincere thanks and appreciation for the continuedsupport and confidence extended by Central and State Governments Bankers CustomersSuppliers and Shareholders. Your Board would like to record its sincere appreciation tothe employees for the dedicated efforts and contribution in playing a significant part inthe Company's operations.
ANNEXURE-A Form No. MR-3
FOR THE FINANCIAL YEAR ENDED MARCH 31 2017
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
The Indian Card Clothing Company Limited
Bombay- Poona Road Penicilin Factory Pimpri Pune-411 018
I have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by The Indian Card ClothingCompany Limited (hereinafter called 'the Company'). Secretarial Audit was conducted in amanner that provided me a reasonable basis for evaluating the Corporate Conducts/StatutoryCompliances and expressing my opinion thereon.
Based on my verification of the Company's books papers minute books forms andreturns filed and other records maintained by the Company and also the Informationprovided by the Company its officers agents and authorized representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on March 31 2017 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter:
I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 312017 accordingto the provisions of:
(i) The Companies Act 2013 (theAct) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 ('SCRA') and the rules madethereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings (Not Applicable as there were no instances of ForeignDirect Investment Overseas Direct Investment and External Commercial Borrowings duringthe year under review however with respect to the earlier investments necessary Annualcompliances viz.: Filing of Annual Return on Foreign Liabilities and Assets and AnnualPerformance Report has been done);
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ('SEBIAct'):-
a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015 (including the erstwhile SEBI (Prohibition of Insider Trading)Regulations 1992);
c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 and The Securities and Exchange Board ofIndia (Share based Employee Benefits) Regulations 2014 (Not Applicable forthe year underreview);
e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not Applicable for the year under review);
f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client(Not Applicable forthe year under review);
g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009 (Not Applicable for the year under review); and
h) The Securities and Exchange Board of India (Buyback of Securities) Regulations 1998(Not Applicable for the year under review).
(vi) Other laws applicable specifically to the Company:
a) The Air (Prevention and Control Pollution) Act 1981 and rules made thereunder;
b) The Water (Prevention and Control Pollution) Act 1974 and rules made thereunder;and
c) Hazardous Wastes (Management Handling and Transboundary Movement) Rules 2008.
I have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India; and
(ii) SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above subject to the followingobservation:
The Company has filed E-Forms with the Ministry of Corporate Affairs within prescribedtime except for a couple of instances wherein the Company has paid the additional fees andcomplied with the requirements.
I further report that
Based on the information provided by the Company its officers and authorizedrepresentatives during the conduct of the audit and also on the review of compliancereports by the respective Department Heads / Company Secretary / CFO / KMP taken on recordby the Board of Directors of the Company in my opinion adequate systems and processesand control mechanism exist in the Company to monitor and ensure compliance withapplicable general laws like labour laws competition law environmental laws and allother applicable laws rules regulations and guidelines. The Company has responded tocompliance requirements notices for demands claims penalties etc. levied bystatutory/regulatory authorities and initiated actions for corrective measures andcompliance thereof.
I further report that the compliance by the Company of applicable financial laws likedirect and indirect tax laws and Labour Law Compliances have not been reviewed in thisAudit since the same have been subject to review by statutory financial audit and otherdesignated professionals.
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
I further report that
Adequate notice is given to all directors to schedule the Board Meetings along with theagenda generally at least seven days in advance and detailed notes on agenda were sentwell in advance before the meeting and a system exists for seeking and obtaining furtherinformation and clarifications on the agenda items before the meeting and for meaningfulparticipation at the meeting.
All decisions at Board Meetings and Committee Meetings are carried out unanimously asrecorded in the minutes of the meetings of the Board of Directors or Committee of theBoard as the case may be.
I further report that during the year under review there were no events viz.
i) Public/Right/sweat equity;
ii) Redemption/Buy-back of securities;
iii) Major decisions taken by the members pursuant to Section 180 of the Companies Act2013
iv) Merger/amalgamation/reconstruction etc; and
v) Foreign technical collaborations; or
such other specific events / actions in pursuance of the above referred laws rulesregulations guidelines etc. having any bearing on the Company's affairs.
For S. Anantha & Ved LLP
Ved Prakash Designated
Partner Membership No.36837
CP No.: 16986
Place : Mumbai
Date : May 262017
DETAILS OF TOP TEN EMPLOYEES AS ON MARCH 31 2017 AS REQUIRED UNDER RULE 5 (2) OF THECOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES. 2014
For and on behalf of the Board of Directors
INFORMATION IN RESPECT OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
Information as per Section 134 (3) (m) of the Companies Act 2013 read with Companies(Accounts) Rules 2014 ("Rules") for the year ended March 312017 is as follows:
A) CONSERVATION OF ENERGY:
i) Steps taken or impact on conservation of energy:
Various innovative measures to reduce waste and to achieve optimum utilization ofenergy were adopted by the Company during the year under review resulting in reduction ofpower cost. The major steps taken during the year 2016-17 towards conservation of energytogether with its impact is as given below:
During the year under review the Company through its key initiatives such asreduction in number of working days per week modification of shift timings and workingetc. achieved substantial savings in its power cost.
Power factor maintained to unity resulting in 7 percent rebate in monthly billof MSEDCL. The total annual rebate received from MSEDCL during the year was approx.Rs.8.72 Lakhs.
Savings of approx. Rs. 1.1 Lakhs were achieved during the year by using energysaving equipments.
Savings of approx. Rs. 10.95 Lakhs in power cost was achieved by optimumutilization of air conditioning dust extraction plant and compressed air.
Timely payment to MSEDCL has earned a yearly discount of approx. Rs. 1.27 Lakhs.
The steps taken towards the conservation of energy during the financial year 2016-17has resulted into overall savings of Rs. 39.37 Lakhs in the power cost.
ii) Steps taken bv the Company for utilising alternate sources of energy:
The Company continuously uses its best endeavor for identifying and utilizing alternatesources of energy. Following measures were taken to utilize alternate sources of energy:
The installed Solar water heaters are functional at appropriate places in in thefactory premise at Pune.
The installed Solar street light poll is functional in the factory premise atPune.
iii) The Capital Investment on energy conservation equipments:
No capital investment was made during the year on energy conservation equipments.
B) TECHNOLOGY ABSORPTION:
i) The efforts made towards Technology Absorption:
Your Company continues to take consistent efforts towards Technology Absorption. Themajor steps taken during the year 2016-17 on Technology Absorption are as follows:
New product development suitable for high speed cards.
Upgradation of the recently launched TOPS Height measurement device.
ii) The benefits derived like product improvement cost reduction product developmentor import substitution:
Shall cater to the world-wide market of card clothing required by Non-woven andother technical textile manufacturers. Apart from growing market of Indian technicaltextiles major markets in Turkey Taiwan Vietnam & Bangladesh will generateadditional revenue. Close collaboration with GWL will enable us toexplore new market.
Development of Tops and metallic wire for recycled and OE processing highproduction card would enable to reduce maintenance cost per kilogram of yam production andwould enhance our presence in this segment of the spinning industry.
Continual improvement in Tops height measurement device will enable mills to usethe device with minimum skillset and derive best benefits in achieving better life of Topswhile improving carding machine efficiency.
Your Company plans to continue to carry out improvements in its manufacturingprocesses.
iii) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial veart:
No technology was imported during the year or any time during the last three financialyears.
iv) The expenditure incurred on Research and Development (R&D1 during the financialyear 2016-17 : Rs. 55.34 Lakhs
C) FOREIGN EXCHANGE USED AND EARNED:
The details of Foreign Exchange used and earned during the year are as follows:
For and on behalf of the Board of Directors
Prashant K. Trivedi
Chairman (DIN : 00167782)
Place : Mumbai-lndia
Date : May 26 2017
A) Industry Structure and Developments:
Card Clothing is a critical input required by the spinning mills for producing qualityyarn which is then used by the textile industry for woven or knit fabrics. It is amechanical process that disentangles cleans and makes parallel fibres to produce acontinuous web or sliver suitable for subsequent processing. The demand for card clothingin the re-clothing market is entirely dependent on the current installed capacity ofcarding machines the production rate of the carding machines which are installed byspinning mills and the consumption of fibre. Card Clothing is initially supplied togetherwith the new carding machines and subsequently in the secondary/replacement market oncethe carding machine is due for re-clothing.
The installed base of carding machines in India is 27034 cards of which very slowspeed cards and slow speed cards are aggregating to 7342. High production cards are13536 and super production cards are 6156. This generates an annual demand of 6522 setsof card clothing (Source: compiled by the Company). The bulk of the carding machines inIndia fall within the high production category as it has become no longer economical tobe able to operate slow production cards due to increasing cost of manpower and power. Theannual increase in the demand for card clothing is approximately 2% which is mainly in thecategory of super production cards.
Despite difficult global trading condition in the spinning industry and it's knock oneffect in the accessories business no major changes have taken place in the industrystructure. Textile machinery shipments in the year 2016 globally showed declining trendfor short staple i.e. ring spinning spindles continuously for the third year. On the otherhand the trend improved for long staple i.e worsted spindle and open end rotors.(Information from ITMF on ITMSS)
In the European market Rieter and Trutzschler are the major manufacturers of cardingmachines. Rieter carding machines are 60" wide. Rieter which owns Graf supplies allits carding machines with Graf card clothing. Trutzschler GmbH manufactures new cards with50.4" width. Trutzschler cards are equipped with Trutzschler card clothing and arefavoured by spinning mills processing coarse and medium counts of cotton. Even afterdecline in the installation of new cards Trutzschler Card Clothing and Graf areendeavouring to improve their volumes by offering competitive prices to the existingcustomers and by focusing on the market segments such as Card Clothing for cards below 40Kgs. of Production which was not pursued by them before.
There are other myriad manufacturers of carding machines in China although theinternational demand for those carding machines is limited by virtue of their inability tomatch the technology of European and Indian manufacturers. Chinese suppliers are targetingthe card clothing market of slow speed cards by offering competitive prices.
As far as the re-clothing market is concerned Graf and Trutzschler are generallypreferred for the first re-clothing cycle by the spinning mills on Rieter and Trutzschlercards respectively. Cards in the super production segment are imported by the spinningmills directly from Rieter orTrutzschler Germany.
The major Indian manufacturers of carding machines are Lakshmi Machine Works (LMW) andTrutzschler India. Between the two major Indian carding machine manufacturers LMW is wellestablished and has the advantage of being able to provide a "bale to yarn"solution for new spinning mills. Both LMW and Trutzschler manufacture 40' width card. LMWcarding machines are clothed with Lakshmi Card Clothing (LCC) and Groz Bekeart.Trutzschler India equips its carding machines with card clothing manufactured byTrutzschler in India or Germany.
LCC GBKT and ICC share the market for re-clothing of high production card segmentmanufactured by LMW and Trutzschler India and for some imported super production cards.These three Card Clothing manufacturers have been able to hold their share in this area byvirtue of providing prompt service quicker delivery and acceptable quality at reasonableprices.
The year 2016-17 evidenced a decline in the demand for card clothing mainly due tooverall slowdown in textile industry high cotton prices demonetisation impact and lowerexport sales.
During the year the cotton prices were higher by approx. 29%. The Cotton pricesremained firm at higher level resulting into higher working capital requirements andhigher borrowings for domestic mills.
The weak trend in cotton-yarn production primarily mirrored the decline in cotton-yarnexport volumes till November 2016 due to lower demand from China amid improved local millusage. Although the cotton yarn export volumes improved in December 2016 productionremained constrained due to the government's demonetisation drive.
All this In turn Impacted demand of card clothing products and accessories.
B) SWOT Analysis:
Strong brand recall due to Its presence In the market for nearly 60 years.
ICC through Its Institutional knowledge and vast experience has acquired areputation of being able to provide solutions for many problems related to carding facedby spinning mills.
ICC is perceived as a "value for money" brand in the market.
ICC's premium re-clothing combination of Maxus Plus cylinder wire Nextra 55Tops and Aero doffer has demonstrated good results in the market and customers arepreferring this combination for its consistent results and cost competitiveness.
Strong sales and service support in all major spinning centers in India as wellas a wide distribution network. ICC has also established own sales and service set-up inTurkey.
ICC does not have a close association with a leading carding machinemanufacturers in and outside India.
Ample business opportunities in new market segments and in the export market.
Diversification into allied activities and product verticals.
Declining global inventory expected improvement in demand and the governmentfocus on the textile sector will provide good opportunities for card clothing industry.
As spinning mills discard slow production cards to replace it with highproduction cards or super production cards the demand for re-clothing of high productionand super production cards will increase. This would create additional demand for thecompany's products.
Tops Height Measuring Device (THM) an innovation by the Company is very wellreceived by the spinning mills in and outside India. The Company expects THM would bringgood business opportunities in the future.
Stiff Competition from the Competitors who have emerged as value for moneyprovider. This would put lot of pressure on pricing of Company's products.
Competition from Chinese card clothing manufacturers in the slow production andhigh production card segment poses a threat to ICC's share in these segments although thesize of the former segment is dwindling every year and many customers in the highproduction card segment are wary of the inconsistent quality of Chinese card clothing.
i) Product-wise Operational performance:
The Product-wise performance of the Company is as given below:
Sales to the Cotton sector in the financial year 2016-17 were Rs. 3285.75 Lakhs asagainst Rs. 4144.47 Lakhs in the previous financial year.
Sales to the Woollen sector In the financial year 2016-17 were Rs.501.41 Lakhs asagainst Rs. 613.25 Lakhs in the previous financial year.
Sales to the Accura sector in the financial year 2016-17 were Rs. 521.10 Lakhs asagainst Rs. 739.40 Lakhs in the previous financial year.
ii) Measures taken for improving the operational efficiency:
The Company was consistent in its efforts to reduce its overheads mainly due tonew policies and procedures implemented during the year.
Manufacturing of Metallic Card Clothing and Tops at the Nalagarh plant of theCompany was stabilized during the year.
The Company has assiduously pursued enquiries in the key target overseasmarkets.
Concerted efforts were made for targeting those customers from market segmentsin the domestic market who are amenable to use the Company's products.
Demand forthe Card Clothing products is highly dependent on the consumption of cottonby the spinning mills. It is expected that demand for your Company's products will improvein the short term. The production of cotton in India is expected to increase as a resultof increase in acreage by 10-15% i.e. upto 120 million hectares in the financial year2017-18. The expected increase in acreage will help in increase in the production ofcotton. This will further help to maintain stability in the prices of cotton.
Higher focus of the government on the textile sector in the coming fiscal year wouldresult in rise in demand for Indian textiles. This will in turn substantially increasecotton consumption in domestic mills.
It is expected that global demand and supply position in the textile industry will berelatively balanced in view of continued auction of reserves of China and other countries.
During the financial year 2017-18 the Company will further continue to focus on itsefforts related to improvements in plant efficiency and productivity develop new productsfor latest generation of carding machines and leverage the opportunities arising out ofthe expected increase in the consumption of fibre by the domestic mills. (Source:
E) Risks and Concerns:
Card Clothing industry in India which is a major supplier to the spinning millsvirtually depend upon a single source supplier for commodities like steel cotton andrubber due to the criticality of raw material required for manufacturing card clothing.The card clothing manufacturers have very little control over such suppliers. . Furtherthe Card Clothing is used solely in the textile spinning industry which is cyclic innature. As a result of cyclic nature of the spinning industry the demand for CardClothing is also erratic as was evidenced in the financial year 2016-17.
While tapping the growth opportunities the major risks and areas of concern for thecard clothing industry are increasing input costs high price of power and inadequatesupply of power and lack of infrastructure among companies in Small & Very Small scalesector.
Apart from the risk associated with the volatility in raw material prices the Companyis also exposed to other general risks related to volatility in Foreign Exchange rateschange in taxation structures changes in interest rates natural/manmade disasters andpolitical risks.
F) Internal Control Systems and their adequacy:
The Company has a costing system to help control costs and to take decisions onpricing.
A firm of auditors manned by technically and commercially qualified personnel carriesout internal audit of both Pimpri and Nalagarh plants which is followed up by discussionwith each department the Chief Executive Officer and in the Audit Committee. Whereverrisks have been identified in processes or systems these have been addressed byimplementing a more robust process.
The Company has a proper and well-established accounting and auditing system coveringall areas of operations. ERP has been strengthened and more rigorous processes have beeninstituted and the same is being monitored on continuous basis. The Company functions withOracle R12 ERP system thereby enabling seamless operations. The Company has taken all thenecessary steps in preparing its ERP System as well as other internal systems for itssmooth functioning in the Goods and Service Tax (GST) era.
The Company has a 2 tier structure consisting of Risk Steering Committee and RiskCouncil to monitor and mitigate the risks of the Company.
Both manufacturing plants of the Company have ISO 9001 certification which is renewedfrom time to time.
The Company has laid down internal financial controls which are adequate and wereoperating effectively and the Board of Directors has adopted necessary internal controlpolicies and procedure for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies safeguarding its assets prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand timely preparation of reliable financial information.
G) Financial performance and Operational Performance:
Standalone Financial Performance
During the year under review the Company earned a total revenue of Rs. 7726.51 Lakhsas against Rs. 8610.92 Lakhs in the Previous Year. The net profit earned by the Companyfor the financial year 2016-17 has been Rs. 1267.59 Lakhs against the aftertax profit ofRs. 1360.21 Lakhs for the financial year 2015-16.
Consolidated Financial Performance
During the year under review the Company along with its subsidiaries achieved a totalconsolidated turnover of Rs. 8501.78 Lakhs for the year ended March 312017 as againstRs. 10953.78 Lakhs forthe previous year ended March 312016. The consolidated profitafter tax for the year under review has been Rs.682.86 Lakhs as against consolidatedprofit aftertax of Rs. 1806.27 Lakhs forthe previous year.
H) Manpower Development in HR and Industrial relations:
Industrial relations of the Company were cordial throughout the year. The WageSettlement Agreement which was valid for a period of 3 (three) years expired on March 312016. The negotiations with the Trade Union are currently under way forfinalising new WageSettlementAgreement commencing from April 12016.
Your Company recognises the need for a strong dynamic and motivated Human Resources.Over the years Company has maintained consistency in its efforts in training anddeveloping its human resource to sustain in the increasing competition.
The number of permanent employees on the rolls of the Company as on March 312017 is336 of which only 90 employees are covered underthe provisions of Section 2 (s) ofIndustrial Disputes Act 1947.
I) Cautionary Statement:
Statements in the Management Discussions and Analysis section describing company'sprojections estimations expectation and predictions may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from the expressed or implied. Important factors thatwould make a difference to the company's operations include demand supply conditions rawmaterial prices changes in government regulations tax regimes competition and economicdevelopments within and outside the country.