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Junction Fabrics and Apparels Ltd.

BSE: 539216 Sector: Industrials
NSE: N.A. ISIN Code: INE653S01010
BSE LIVE 14:27 | 02 Aug 24.00 -3.00
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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 24.00
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VOLUME 4000
52-Week high 40.00
52-Week low 16.50
P/E 11.59
Mkt Cap.(Rs cr) 6
Buy Price 23.00
Buy Qty 4000.00
Sell Price 29.50
Sell Qty 4000.00
OPEN 24.00
CLOSE 27.00
VOLUME 4000
52-Week high 40.00
52-Week low 16.50
P/E 11.59
Mkt Cap.(Rs cr) 6
Buy Price 23.00
Buy Qty 4000.00
Sell Price 29.50
Sell Qty 4000.00

Junction Fabrics and Apparels Ltd. (JUNCTIONFABRICS) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting their 5th Annual Report of yourCompany together with the Audited Balance Sheet for the Financial Year ended 31stMarch 2016.

1. FINANCIAL RESULTS:

Particulars Current Year Previous Year
2015-2016 2014-2015
Income from Operations 515669183 152555497
Gross Receipts (including other Income) 515843358 152756409
Total Expenditure before Interest and Depreciation 495613111 145467649
Less: Interest and Financial Charges 10824766 4200433
Less: Depreciation and Amortization 1074528 717240
Profit before taxation for the year 8330953 2371087
Less: Current tax Expenses 2351916 451811
Less: Deferred Tax Liability/Asset 219656 330896
Profit after taxation for the year 5759381 1588380

2. PERFORMANCE OF THE COMPANY

During the year under review the Company has earned sales income of Rs. 515669183/-as compared to Rs. 152555497/- in the previous year. Your Company has made a Net profitafter providing depreciation finance charges and deferred tax the Company of Rs.5759381/- as compared to Rs. 1588380/- in the Previous year.

3. DIVIDEND / TRANSFER TO RESERVES:

Your directors do not recommend any dividend for the year ended March 31 2016 in orderto conserve resources for the future and does not propose to transfer any amount toreserves.

4. BUSINESS REVIEW:

The Company is making efforts to improve the turnover and your Directors are optimisticof better performance during the year.

The company had achieved a revenue of Rs. 52 crores during the Financial year endingMarch 2016. The company has set a conservative growth of 20% for the current financialyear and positive outlook on exports your company expects to achieve an revenue of Rs.70to Rs.75 crores for the current year.

5. SHARE CAPITAL:

During the year under review the Company has allotted 1000000 Equity shares of Rs. 16each (including a premium of Rs. 6 per Equity Shares) to the public who subscribed theshares in the Initial Public offering which was opened for subscription on 25thJune 2015 and Closed on 29th June 2015. The entire share has listed on BSELimited under the SME Platform.

6. DIRECTORS:

Mrs. Aggarwal Prem Tanvi (DIN: 06573950) resigned from the directorship of the Companywith effect from 21st November 2015. The Board expresses its appreciation forher valuable services rendered during her association with the Company.

Ms. Ashmita Agarwal (DIN: 07332067) was appointed as an Additional Director with effectfrom 21st November 2015 hold office upto the ensuing Annual General Meeting interms of Section 161 of the Companies Act 2013. The Board recommends the appointment ofMs. Ashmita Agarwal as Director of the Company.

As per the provision of the Companies Act 2013 Mrs. Shikha Aggarwal Prem (DIN:03373965) retires by rotation at the ensuing Annual General Meeting and being eligibleseeks re-appointments. The Board recommends the appointment of Mrs. Shikha Aggarwal Premas Director of the Company.

The Board recommends the appointment of Ms. Ashmita Agarwal as Director of the Company.

7. KEY MANAGERIAL PERSONNEL:

Ms. Kiran Agarwal Company Secretary (Membership No. 36690) resigned from the Companywith effect from 01st March 2016. The Board expresses its appreciation forvaluable services rendered by her during her association with the Company.

Mrs K. Lakshmi Priya holding Membership No. 36135 in the Institute of CompanySecretaries of India was appointed as a Company Secretary of the Company with effect from27th March 2016.

No other changes took place in the Key Managerial Personnel except the CompanySecretary.

8. POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION:

The Company’s policy on Director’s appointment and remuneration and othermatters provided in section 178 of the Companies Act 2013 has been disclosed in theCorporate Governance Report.

9. DECLARATION BY AN INDEPENDENT DIRECTORS:

All independent Directors have given declarations that they meet the criteria ofIndependence as laid own under the provisions of the Companies Act and the SEBI (ListingObligations and Disclosure Requirements) Regulation 2015.

10. PERFORMANCE EVALUATION:

SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 mandated thatthe Board shall monitor and review the Board evaluation framework.

The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard on its own performance and that of its committees and individual Directors. ScheduleIV of the Companies Act 2013 states that the performance evaluation shall be done by theentire Board of Directors excluding the Director being evaluated.

The evaluation of all the Directors and the Board as whole was conducted based in thecriteria and framework adopted by the Board. The evaluation process has explained in theCorporate Governance Report.

11. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

11 meetings of the board were held during the year.

12. MANAGEMENT DISCUSSION AND ANALYSIS

In terms of provisions of Regulation 34 of the SEBI (Listing obligations andDisclosures Requirements) Regulation 2015 the Management’s discussion and analysisis set out below:

a. Industrial Structure and developments:

The Size of readymade garment industry is almost INR 300 Thousand Crores. This industryis one of the fastest growing industries in India and contributes almost 4-5% of our GDP.This is expected to grow to about INR500 Thousand Crores by 2021. Among the Ready madegarments the Hosiery segment accounts to almost 35% to 40% of the total industry. HosieryIndustry in India is concentrated in two locations one is in Ludhiana Punjab and one isTirupur in Tamil Nadu. The outlook for the industry is extremely good. The reason beingthat 1. Majority of the population is below the age of 35. 2. The fashion sense of theyoung population have undergone drastic change providing an opportunity for the Industry.Another opportunity is with the disposable income with Middleclass families in India. Theaverage spend on garments in India emanating from the middle class families are about 9%to 10%. In addition to the above the Government has forecasted good monsoon during thecurrent year and this is going to give disposable income with the farmers and in turn thisis also likely to give a boost to the business and the industry. b. Opportunities andthreats

The major opportunity for the Company is the changing trend in the dressing sense ofgeneral population in India from village to the City. Usage of Knitwear is increasing anddemand for the readymade garments have also put the pressure on the manufacturers to cutshort the working cycle and this provides a major opportunity for the company to supplyready fabric of wide variety to smaller manufacturers

The company’s strong foothold in Domestic wholesale market gives an excellentopportunity to achieve economies of scale also for increasing the exports.

Threats

The major threat is always change in Government policy. Any adverse change will affectthe industry.

Another major threat to the Industry is the shortage of labour. Shortage of skilledlabour and the increase in demand result in increased wages increasing the overhead costs.c. Segment-wise or product-wise performance.

60% of the Companies revenue targeted in Ladies wears like Pyjama sets Ladies andGirls Tops Leggings etc. 20% of the revenue would be contributed by Kids portfolio and20% of revenue will be towards Men’s/ Boys wears like T Shirts Bermudas PyjamasJogging pants etc. d. Outlook.

The outlook for the industry is extremely positive. The reason being that Majority ofthe population is below the age of 35 and choice of fashionable attires among men andwomen alike wear T shirts in one form or the other has been increasing. The increase indisposable income among middle class families in India for garments are increasing andcurrently its averaged around 9% to 10% . The overall size of readymade garment industryis almost INR 300 Thousand Crores. This is one of the fastest growing industries in Indiaand contributes almost 4-5% of our GDP. This is expected to grow to about INR500 ThousandCrores by 2021. e. Risks and Concerns.

The major threat is always change in Government policy. Any adverse change will affectthe industry. Another major threat to the Industry is the shortage of labour. Shortage ofskilled labour and the increase in demand result in increased wages increasing theoverhead costs.

f. Internal control system and their adequacy

A separate report on internal control systems and their adequacy is attached with thisreport from the statutory auditors of the Company.

g. Discussion on financial performance with respect to operational performance.

The Company has earned sales income of Rs. 515669183/- as compared to Rs.152555497/- in the Previous year an impressive growth of more than 200%. Your Companyhas made a Net profit after providing depreciation finance charges and deferred tax theCompany of Rs. 5759381/- as compared to Rs. 1588380/- in the Previous year.

h. Material developments in Human Resources/industrial Relations front includingnumber of people employed.

No major challenges existed in Human resources during the current year under review.

13. CORPORATE GOVERNANCE:

In terms of Schedule V of the SEBI (Listing obligations and Disclosures Requirements)Regulation 2015 a separate report on Corporate Governance is furnished as Annexure 1 tothis report.

14. STATUTORY AUDITORS:

In terms of Proviso to Section 139 (1) of the Companies Act 2013 M/s. Balaji &Thulasiraman Chartered Accountants (Firm Reg. No: 007262S) Tirupur has been appointed asa Statutory Auditors of the Company for a term of five years from 2014-15 subject toratification by the shareholders at the every general meeting in terms of ordinaryresolution passed by the Members at their 3rd Annual General Meeting held on 29thSeptember 2014.

In pursuance of above term necessary resolution ratifying appointment of M/s. Balaji

& Thulasiraman Chartered Accountants Tirupur as the Statutory Auditor for thefinancial year 2016 - 2017 is being placed before members for their consideration in thisAnnual General Meeting.

15. DEPOSIT:

During the year under review the Company has not accepted any Deposits within themeaning of the provisions of Section 2 (31) of the Companies Act 2013.

16. INTERNAL CONTROL SYSTEM:

The Company has adequate Internal Control Systems to monitor business processesfinancial reporting and compliance with applicable regulations. The systems areperiodically reviews by the audit Committee.

17. CODE OF CONDUCT:

In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 andthe Companies Act 2013 the Company has framed and adopted a Code of Conduct. The code isapplicable to the members of the Board the executive officers and all the employees ofthe Company.

All the members of the Board the executive officers and senior financial officers haveaffirmed compliance of the Code of Conduct as on 31st March 2016.

A declaration signed by the CEO and MD is furnished as Annexure 2 to this report.

18. EXTRACT OF THE ANNUAL RETURN:

An extract of the Annual Return as on 31st March 2016 pursuant to theSub-Section (3) of Section 92 of the Companies Act 2013 in Form MGT 9 is furnished asAnnexure 3 to this report.

19. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY:

During the year under review the Company has not made any Loans Guarantees orInvestments within the meaning of the provisions of Section 186 of the Companies Act2013.

20. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN

EXCHANGE EARNINGS AND OUTGO: A) Conservation of energy:

(i) The steps taken or impact on conservation of energy: NIL

(ii) The steps taken by the company for utilising alternate sources of energy: NIL

(iii) The capital investment on energy conservation equipments: NIL

B) Technology absorption:

1. Specific areas in which R&D carried out by the Company.

There is no Research and development activity carried on by the Company.

C) Foreign exchange earnings and Outgo:

Foreign exchange earnings : Rs.72577687 Foreign exchange outgo : Rs. NIL

21. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND

EMPLOYEES:

The company has formulated vigil mechanism for employees including directors of thecompany to report genuine concerns.

22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arms length transactions under third proviso thereto in Form AOC - 2 isfurnished as Annexure 4 to this report.

23. SECRETRIAL AUDIT REPORT:

As per the provisions of the Companies Act 2013 the Secretarial Audit for the year2015-16 have also been carried out by Mrs. S. Makhimasri Practicing Company Secretary andaccordingly her report is appended to Directors’ Report.

24. RISK MANAGEMENT POLICY:

The Management has devised Risk Management Policy considering the nature of industryand associated risks pertaining to the industry. The Management is overseeing theimplementation of the Policy on regular basis.

25. CORPORATE SOCIAL RESPONSIBILITY:

Not applicable to the Company as per the provisions of the Companies Act 2013.

26. PREVENTION OF SEXUAL HARASSMENT AT THE WORK PLACE:

As per the requirements specified in the "The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013" the Company hasconstituted an Internal Complaints Committee and is committed to provide a workenvironment that is free from sexual harassment.

27. MATERIAL CHANGES:

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year as on 31.03.2016 and the date of thisReport.

28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR

COURTS OR TRIBUNAL:

There are no significant and material orders passed by the regulators or courts ortribunal which would impact the going concern status and the Company’s operations infuture.

29. DIRECTORS’ RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

1. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

2. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofprofit of the company for that period;

3. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

4. the directors had prepared the annual accounts on a going concern basis;

5. the directors had laid down internal financial controls are adequate and operatingeffectively.

6. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

30. ACKNOWLEDGEMENT:

Your Directors wish to place on record their deep gratitude and appreciation towardsthe Company’s suppliers customers investors bankers Government of India StateGovernment and other regulatory authorities for their continued support during the year.Your Directors also acknowledge the commitment and the dedication of the employees at alllevels who have contributed to the growth of the Company.

(For and on behalf of the Board)

Place: Tirupur Date: 30.05.2016

Prem Dinanath Aggarwal Shikha Aggarwal Prem
Managing Director Whole time Director
(DIN: 02050297) (DIN: 03373965)