Your Directors are pleased to present the Thirtieth Annual Report on the business andoperation of the Company together with the Audited Financial Statements for the year ended31st March 2017.
FINANCIAL HIGHLIGHTS (' in Lakh)
|Particulars ||2016-17 ||2015-16 |
|Turnover ||30994.15 ||30023.81 |
|Other Income ||20.78 ||38.26 |
|Profit before tax ||372.59 ||320.20 |
|Less: Provision for current tax ||220.00 ||(164.78) |
|Less: Net deferred tax liabil ity/(asset) ||(96.68) ||(34.72) |
|Profit for the year ||249.27 ||190.14 |
|Add: Balance brought forward ||1173.46 ||1091.04 |
|Profit available for appropriation ||1422.73 ||1281.18 |
|Appropriation: || || |
|Transferred to General Reserve ||- ||9.51 |
|Proposed dividend ||- ||81.60 |
|Tax on proposed dividend ||- ||16.61 |
|Balance carried forward ||1422.73 ||1173.46 |
During the year under review the Company has achieved a turnover of ' 30994.15 lakhas compared to ' 30023.81 lakh in the previous year. Accordingly there was a growth of3.23%. The Profit after tax for the financial year 2016-17 was ' 249.27 lakh as comparedto ' 190.14 lakh during the previous year which resulted in a growth of 31.10%.
The Company has been working on various measures to reduce cost and increase theefficiency.
The Company continues to concentrate on its core strength of weaving manufacturing andtrading of value for money' category of fabrics and ready-made apparels through itsdistribution networks also sale of fabrics to garment manufacturers and also contractmanufacturing of readymade garments to brands. The Company has embarked upon modernisationand expansion plan to improve overall efficiency. During the current financial year theCompany proposes to replace 24 Sulzer Looms with high speed 20 Rapier Looms and AutomaticDrawing Machines from Staubli. This will help in improving efficiency with less manpowerrequirements. Further the Company proposes to increase its garmenting division capacityto 4000 pieces per day by adding new space for cutting and finishing work and outsourcingstitching job to third parties. These initiatives will ensure more output with reducedcost and increased efficiency.
EQUITY SHARE CAPITAL
During the year 429505 Compulsorily Convertible Debentures
issued on preferential basis were converted into equal number of Equity shares and thatresulted in increase in paid up Equity share capital of the Company from ' 543.89 lakh to' 586.94 lakh.
Your Directors are pleased to recommend a Dividend of ' 1.50 (i.e. 15%) per share onthe Equity share capital of the Company for the year under review. The said Dividend shallbe subject to the approval of the members at the ensuing Annual General Meeting.
The Company has not accepted any deposit from the public during the financial yearunder review.
During the financial year under review the Company has not transferred any profit togeneral reserves.
CORPORATE GOVERNANCE REPORT
As per Regulation 34(3) read with Schedule V of Securities Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredas "Listing Regulations") a separate report on Corporate Governance is enclosedas a part of this Annual Report. A certificate from Auditors of your Company regardingcompliance of conditions of Corporate Governance as stipulated in Regulation 17(7) readwith Part A of Schedule II of the Listing Regulations is also enclosed along with theCorporate Governance Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis is presented as a separate section forming part ofthis Annual Report.
The process of Familiarisation program for Independent Directors is posted on websiteof the Company at the link http://kflindia. com/wp-content/uploads/2015/08/KFL-ID-Familiarization.pdf
The Board of Directors periodically review various business policies strategiesincluding internal processes and controls and the Directors are updated about newinitiatives and developments at business and operational level during the course of BoardMeeting and the Board spent about 3 (three) hours on the above matters during the year.
Policy on dealing with related party transactions is available on the website of theCompany at the link http://kflindia.com/wp- content/uploads/2015/08/KFL- RPT-Policy.pdf
The Company has formulated and disseminated a Whistle Blower Policy to provide vigilmechanism for employees and Directors of the Company to report genuine concerns that couldhave serious impact on the operations and performance of the business of the Company. ThisPolicy is in compliance with the provisions of Section 177(9) of the Companies Act 2013and Regulation 4(d)(iv) of the Listing Regulations. Establishment of Vigil Mechanism isavailable on the website of the Company at the link http://kflindia.com/wp-content/uploads/2015/08/KFL-Vigil-Mechanism.pdf
NUMBER OF BOARD MEETINGS
The Board of Directors met 4 (Four) times during the financial year 2016-17. Thedetails of Board meetings and the attendance of the Directors are provided in theCorporate Governance Report which forms part of this Annual Report.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from all the Independent Directorsunder Section 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence laid down in Section 149(6) of the Companies Act 2013.
PERFORMANCE EVALUATION OF BOARD
Subject to the provisions of the Section 134(3) of the Companies Act 2013 andRegulation 17(10) and Regulation 25(4) of the Listing Regulations the Board has carriedout an annual evaluation of performance of its own the Committees thereof and theDirectors individually. At the meeting of the Board all the relevant factors that arematerial for evaluating the performance of the Committees and of the Board were discussedin detail.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgment safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the IndependentDirectors was carried out by the entire Board except the Independent Director beingevaluated.
The performance evaluation of the Chairman and Non-Independent Directors was carriedout by the Independent Directors.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 has been disclosed in the CorporateGovernance Report which forms part of the Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of Section 152 of the Companies Act 2013 Mr. Anil Biyani retires by rotationat the ensuing Annual General Meeting and being eligible offers himself forre-appointment.
Additional information on re-appointment of Director as required under Regulation 36 ofListing Regulations and Secretarial Standards on General Meeting (SS-2) issued by theInstitute of Company Secretaries of India is given in the Notice convening the ensuingAnnual General Meeting.
COMMITTEES OF THE BOARD OF DIRECTORS
During the year review the Audit Committee of the Company comprised of 3 (three)Independent Directors viz. Mr. Sanjeev Maheshwari Mr. Rahul Mehta and Ms. Bindu Shah.Mr. Sanjeev Maheshwari is the Chairman of the Audit Committee. There are no instanceswhere the Board did not accept the recommendations of the Audit Committee. The terms ofreference powers and roles of the Committee are disclosed in the Corporate GovernanceReport which forms part of the Annual Report.
Details of all the Committees of the Board of the Company along with their terms ofreference composition and meetings held during the year are provided in the CorporateGovernance Report which forms part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed that:
i. in the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
ii. 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 as at 31st March 2017 and of the profitof the Company for that period;
iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv. the Directors have prepared the annual accounts for the financial year ended 31stMarch 2017 on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
vi. the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
AUDITORS AND AUDITORS' REPORT
At the Annual General Meeting of the Company held on 26th September 2014 M/s.Haribhakti & Co. LlP Chartered Accountants Mumbai was appointed as statutoryauditors of the Company to hold office till the conclusion of the 32nd Annual GeneralMeeting. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting.
Accordingly the appointment of M/s. Haribhakti & Co. LLP Chartered AccountantsMumbai as statutory auditors of the Company placed before for ratification by theshareholders.
The Auditors' Report does not contain any disqualification reservation or adversemark.
The Company has appointed M/s. H. S. Associates Company Secretaries to conductSecretarial Audit of the Company for the financial year 2016-17 in terms of provisions ofSection 204 of the Companies Act 2013. The Secretarial Auditor Report for the year ended31st March 2017 is annexed to this report as Annexure A. There is no observationor comment which requires your attention.
As per the requirement of Central Government pursuant to Section 148 of the CompaniesAct 2013 read with the Companies (Cost Records and Audit) Rules 2014 as amended fromtime to time your Company has been carrying out Cost Audit of cost records relating toTextile products every year.
The Board of Directors on the recommendation of Audit Committee has appointed Ms.Ketki D. Visariya Cost Accountant as Cost Auditor to audit cost records of the Companyfor the financial year 2017-18 at a remuneration of ' 0.90 lakh plus service tax asapplicable and reimbursement of out of pocket expenses. As required under the Act aresolution seeking ratification of members for the payment of remuneration to Cost Auditorforms part of the Notice convening the Annual General Meeting.
The Cost Audit Report for the financial year 2015-16 was filed with the Ministry ofCorporate Affairs.
EXTRACT OF ANNUAL RETURN
In terms of provisions of Section 92(3) of the Companies Act 2013 an extract ofAnnual Return in prescribed format is annexed to this Report as Annexure B.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all transactions entered into by the Company with relatedparties as defined under the Companies Act 2013 and Regulation 23 of Listing Regulationswere in the ordinary course of business and on an arm's length basis. There
were no materially significant transactions with the related parties during thefinancial year which were in conflict with the interest of the Company. Accordingly nodisclosure is made in respect of related party transactions as required under Section134(3)(h) of the Companies Act 2013 in Form AOC-2.
Disclosure of transactions with related parties as required under the AccountingStandard (AS-18) has been made in the notes forming part of the financial statements.
PARTICULARS OF LOANS GRANTED GUARANTEE PROVIDED AND INVESTMENTS MADE PURSUANT TO THEPROVISIONS OF SECTION 186 OF THE COMPANIES ACT 2013
The Company has not granted any loans not provided any guarantee and not made anyinvestments which are covered under the provision of Section 186 of the Companies Act2013.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGOAND EXPORT INITIATIVE
Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of Companies (Accounts) Rules 2014 is given as Annexure C. The Company beingfocusing in Indian market it has not taken any export initiative.
PARTICULARS OF EMPLOYEES
In terms of provisions Section 197(12) of Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 framedthereunder the names and other particulars of employees are provided under Annexure Dwhich is annexed to this Report.
Addition to the above a statement containing the particulars as required under Rule5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is given as Annexure E.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis. TheCompany's internal control systems are commensurate with the nature of its business andthe size and complexity of its operations. These are routinely tested by statutory as wellas internal auditors. Significant audit observations and follow up actions thereon arereported to the Audit Committee.
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of the business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures.
The Audit Committee of the Board of Directors actively review the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Company has a robust Management Information System which is an integral part ofthe control mechanism.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Your Company has always believed in providing a safe and harassment free workplace forevery individual working in Company's premises through various interventions andpractices. The Company always endeavours to create and provide an environment that is freefrom discrimination and harassment including sexual harassment.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
The Board wishes to place on record their sincere appreciation to all the bankerscustomers employees at all levels and stakeholders for the continued support andpatronage during the year under review.
| ||By Order of the Board |
| ||For Kamadgiri Fashion Limited |
|Place: Mumbai ||Pradip Kumar Goenka |
|Date: 29th May 2017 ||Chairman & Managing Director |