TO THE MEMBERS OF
KHATOR FIBRE & FABRICS LIMITED
The Directors take pleasure in presenting the Thirty First Annual Report together withthe Audited Financial Statements for the year ended 31st March 2017. TheManagement Discussion and Analysis has also been incorporated into this report.
1. FINANCIAL RESULTS
Key highlights of the Financial Results for Khator Fibre & Fabrics Limited for thefinancial year 2016-17 are tabulated below: (Amt in Lacs)
|Particulars ||2016-2017 ||2015-2016 |
|Income from Operation ||5871.97 ||5550.43 |
|Revenue from ISDS ||666.94 ||30230 |
|Less : Manufacturing Administrative & Selling ||5423.22 ||5074.84 |
|Expenses || || |
|Less: ISDS Expenses ||666.94 ||302.30 |
|Profit before Depreciation & Interest ||448.75 ||475.59 |
|Less: Interest ||149.47 ||179.54 |
|Depreciation ||210.30 ||209.50 |
|Provision for Taxation (Net Deferred Tax) ||28.47 ||27.03 |
|Profit after Taxation ||60.51 ||5932 |
|Add : Surplus Brought Forward From Previous Year ||18.35 ||18.83 |
|Less : Transfer to General Reserves ||60.00 ||60.00 |
|Balance carried forward to Balance Sheet ||18.86 ||1835 |
2. HIGHLIGHTS OF PERFORMANCE
The total net sale for the year was Rs. 5857.73 Lacs as compared to Rs. 5507.23Lacs in 2015-16 a growth of 6.36 %.
Total profit before tax for the year was Rs. 88.98 Lacs as compared to Rs. 86.55Lacs in 2015-16.
Total profit after tax for the year was Rs 60-51 Lacs as compared to Rs. 5952Lacs in 2015-16.
3. BUSINESS OPERATIONS
The total turnover of Company in processing and fabric sales increased by 6.36%. Duringthe financial year the Company engaged in ISDS schemes promoted by Govt of India underSkill India / Make In India & committed to economical & social responsibilities.
Further the Company is happy to inform its shareholders for being appointed asExclusive Channel Partner from F.Y. 2017-18 in the category of School Uniforms andCorporate Uniforms for East West & North Zone of India by M/s. The Bombay Dyeing& Mfg. Co. Ltd.
There was no change in nature of business of the Company during the year under review.
Your Directors do not recommend any Dividend for the year under review so as toconserve the resources of the Company.
5. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March 2017 was Rs.42109500/-. During the year under review the Company has not issued shares withdifferential voting rights nor granted stock options nor sweat equity. There was no changein the Company's share capital during the year under review.
6. TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs. 60.00 Lacs to the General Reserves.An amount of Rs. 18.86 Lacs is proposed to be retained in the Statement of Profit andLoss.
Hie Company has not accepted deposit from the public and shareholders falling withinthe ambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules
2014. Hence the requirement for furnishing details of deposits which are not incompliance with the Chapter V of the Act is not applicable.
8. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
9. SUBSIDIARY COMPANIES
The Company has no Subsidiary Company.
10.1 Retirement by Rotation
Pursuant to Section 132 (6) of the Companies Act 2013 and in terms of the Articles ofAssociation of the Company Mr. Ashok S. Khator Director retires by rotation at theforthcoming Annual General Meeting and being eligible offers himself for re-appointment.
10.2 Declaration by Independent Directors
The Company has received declarations from the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both underSection 149 (6) of the Companies Act 2013 and under Regulation 17 of the SEBI (LODR)Regulations 2013.
10.3 Familiarization Programme for Independent Directors
The Program intends to provide insights into the Company so that the IndependentDirectors can understand the Company's business in depth and the roles rightsresponsibility that they are expected to perform/enjoy in the Company to keep them updatedon the operations and business of the Company thereby facilitating their activeparticipation in managing the affairs of the Company. In addition to the above Directorsare periodically advised about the changes effected in the Corporate Law the SEBI (LODR)Regulations 2013 with regards to their roles rights and responsibilities as Directors ofthe Company.
10.4 Annual Board Evaluation
According to Regulation of 25(3) of the SEBI (LODR) Regulations 2015 and Circular No.SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2017 issued by SEBI onGuidance Note on Board Evaluation a meeting of the Independent Directors was held on 14thFebruary
2017 to inter alia evaluate the performance of the Non-Independent Directorsincluding the Chairman. The Board thereafter in its meeting held on the same day evaluatedthe performance of the Independent Directors.
10.5 Key Managerial Personnel
The following persons have been designated as Key Managerial Personnel of the Companypursuant to Section 2(51) and Section 203 of the Act read with Rule 8(5)(iii) of theCompanies (Accounts) Rules 2014 framed thereunder.
1. Mr. Kailash S. Khator Managing Director
2. Mr. Ashok S. Khator Whole-Time Director - CFO
None of the Key Managerial Personnel have resigned during the year under review.
10.6 Remuneration Policy
The Board has in accordance with the provisions of Section 178 (3) of the CompaniesAct
2013 formulated the policy setting out the criteria for determining qualificationspositive attributes independence of a Director and policy relating to remuneration forDirectors Key Managerial Personnel and Senior Management Employees. The detail of thesame has been disclosed in the Corporate Governance Report.
10.7 Board Meetings
A calendar of Board Meetings is prepared and circulated in advance to the Directors.
During the year the Company has held 5 (five) Board Meetings which were held on 30thMay
2016; 13th August 2016; 14th November 2016; 09thDecember 2016 & 14th February 2017. The maximum interval between any twomeetings did not exceed 120 days.
11. 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:
a) that in the preparation of the annual financial statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b) that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2017 and of the profit of theCompany for the year ended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
12. PLEDGE OF SHARES
None of the equity shares of the Directors of the Company are pledged with any banks orfinancial institutions.
13. RELATED PARTY TRANSACTIONS
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI (LODR) Regulations 2015. There are no materially significantrelated party transactions made by the Company with Promoters Directors or Key ManagerialPersonnel etc. which may have potential conflict with the interest of the Company at largeor which warrants the approval of the shareholders. Accordingly no transactions are beingreported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014. However the details of the transactions with RelatedParty are provided in the Company's financial statements in accordance with the AccountingStandards.
14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
15. DISCLOSURES UNDER SECTION 134 (31 fit OF THE COMPANIES ACT. 2013
No material changes and commitments which could affect the Company's financial positionhave occurred between the end of the financial year of the Company and date of thisreport.
16. DISCLOSURE UNDER THF. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION.PROHIBITION AND REDRESSAL1 ACT. 2013
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and Rules made thereunder your Company has inplace a Policy for Prevention of Sexual Harassment of Women at Work Place and constitutedan Internal Complaints Committees (ICC). No complaint has been raised during the yearended 31st March 2017.
17. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES. JOINT VENTURES ORASSOCIATE COMPANIES
There are no companies which have become or ceased to be its Subsidiaries JointVenture or Associate Companies during the financial year 2016-17.
18. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The criteria prescribed for the applicability of Corporate Social Responsibility underSection 135 of the Companies Act 2013 is not applicable to the Company.
19. BUSINESS RISK MANAGEMENT
The nature of business is manufacturing of Textiles. The inheritant risk to thebusiness of the company is as follows:
a) Foreign Exchange Risk
b) Yam Price Risk
c) Stiff Global Competition
d) Government Policy on incentives for exports
e) Risk elements in business transactions
f) Success of Cotton Crop
All the above risk has been discussed in the Management Discussion and Analysis Report.The nature of risk is dynamic of business and entrepreneurship. The Company has not formedRisk Management Committee since it is not applicable under Regulation 21 of the SEBI(LODR) Regulations 2015.
20. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit (IA) functionis defined in the Internal Audit Charter. To maintain its objectivity and independencethe Internal Audit function reports to the Chairman of the Audit Committee of the Board.
The Company monitors and evaluates the efficacy and adequacy of internal control systemin the Company its compliance with operating systems accounting procedures and policiesat all locations of the Company. Based on the report of internal audit function processowners undertake corrective action in their respective areas and thereby strengthen thecontrols. Significant audit observations and corrective actions thereon are presented tothe Audit Committee of the Board.
21. INFORMATION SYSTEM
In a business where information is critical Information Technology plays a vital rolefacilitating informed decision making to grow the business. Over the years the Companyhas invested extensively in infrastructure people and processes with the objective tocapture protect and transmit information with speed and accuracy.
22. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism to deal with instance of fraud and mismanagement ifany. The detail of the Whistle Blower Policy is explained in the Corporate GovernanceReport.
23.1 Statutory Auditors
M/s. S. R. Goyal & Co. Chartered Accountants the outgoing auditors has completedhis term as auditor pursuant to Section 139(2) of the Act at the end of conclusion of the31 " Annual General Meeting.
It is proposed to appoint M/s. Giriraj & Lohiya Chartered Accountant as StatutoryAuditor of the company for the Company's financial year 2017 - 18 to hold office from theconclusion of the this Annual General Meeting of the Company till the conclusion of thenext Annual General Meeting in place of M/s. S. R. Goyal & Co. Chartered Accountants.The Company has received a letter from M/s. Giriraj & Lohiya Chartered Accountant tothe effect that their appointment if made would be maintain be within the prescribed limitunder Section 141(l)(g) of the Companies Act 2013 and that they are willing to act asstatutory auditors of the company. As required under Regulation 33 of the SEBI (LODR)Regulations 2015 the auditors have also confirmed that they hold a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India.
23.2 Statutory Auditors' Observations
The notes on financial statements referred to in the Auditor's Report areself-explanatory and do not call for any further comments. The Auditor's Report is anUn-modified report and does not contain any qualification reservation adverse remark ordisclaimer.
23.3 Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s P. P. Shah & Co. Practicing Company Secretary to undertake theSecretarial Audit of the Company. The Report of the Secretarial Audit Report is annexedherewith as "Annexure A".
23.4 Qualifications in Secretarial Audit Report
A) Appointment of Company Secretary:
As per Section 203 (1) (ii) the Company is required to appoint Company Secretary. TheCompany has not appointed Company Secretary consequently the Annual Audited FinancialStatements are not signed by Company Secretary. In this regard the management of theCompany has provided the following reply:
(i) The Company has appointed Mr. Omprakash Bajaj as Compliance Officer of the Companywho looks after the compliance of the Companies Act 2013 and SEBI Act and rules madethereunder;
(ii) The Company has availed the services of Practicing Company Secretary for advisingon compliance of the Companies Act 2013 and SEBI Act and rules made thereunder;
(iii) The Volume and Scope of work for the Company Secretary is less and it is not afull time work and the job of Company Secretary is not attractive commensurate with thescope of work and salary.
B) Appointment of Internal Auditor:
As per Section 138 of the Companies Act 2013 the Company is required to appointInternal Auditor. The Company has not appointed Internal Auditor. In this regard themanagement of the Company has provided the following reply:
(i) The size of operation of the Company is very small accordingly it is not viable toappoint Internal Auditor but the Company has established the internal control system.
C) Website Posting:
As per the various sections of the Companies Act 2013 regulations of the SEBI (LODR)Regulations 2015 and Secretarial Standard - 2 the Company is required to post variousinformation / policies on the website of the Company. The Company has not posted anyinformation / policies on the website of the Company. In this regard the management of theCompany has provided the following reply:
(i) The Company is filing regularly all the information with BSE and all theinformation is available on the website of BSE.
D) Dematerialization of Promoters Shareholding:
As per Regulation 31 (2) of the SEBI (LODR) Regulations 2015 the listed entity shallensure that 100% of shareholding of promoters and promoter group is maintained indematerialize form and the same is maintained on a continuous basis. In this regard themanagement of the Company has provided the following reply:
(i) One of the promoter holding 49500 equity shares constituting 1.16% of total equityshare capital listed on BSE Limited is not held in dematerialized form.
(ii) One of the deceased promoter holding 15010 equity shares constituting 0.35% oftotal equity share capital listed on BSE Limited is not held in dematerialized form.
E) Filing of Limited Review Report / Audit Report on Quarterly Basis:
As per Regulation 33(3)(c) of the SEBI (LODR) Regulations 2015 in case the listedentity submits Unaudited Financial Results to the Stock Exchange on quarterly basis thenthe same shall be subject to limited review by the Statutory Auditors of the Company andin respect of the last quarter the Audited Financial Results shall be accompanied by theAudit Report. The Company has not filed Audit Report in respect of Audited FinancialResults for the financial year ended 31st March 2016 and Limited Review Reportin respect of the Unaudited Financial Results for the quarter ended 3(fh June2016 3(fh September 2016 and 31st December 2016 with BSE Limitedwhere its equity shares are listed.
24. CORPORATE GOVERNANCE
Your Company attaches considerable significance to good Corporate Governance as animportant step towards building investor confidence improving investors' protection andmaximizing longterm shareholders value. The certificate from M/s. S. R. Goyal & Co.Chartered Accountants confirming compliance of conditions of Corporate Governance asstipulated under Schedule V (E) of the Securities and Exchange Board of India (LODR)Regulations 2015 of the Stock Exchanges is annexed.
25. MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Schedule V (B) of SEBI (LODR) Regulations 2015 report on"Management Discussion and Analysis'' is attached and forms part of this AnnualReport.
26. ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
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 "AnnexureB".
27. LISTING WITH STOCK EXCHANGES
Your Company is listed with BSE Limited and the Company has duly paid the listing feesto the Exchange.
28. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as "Annexure C".
29. PARTICULARS OF EMPLOYEES
During the year there was no employee in receipt of remuneration as prescribed in theRule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014. The prescribed particulars of Employees as required under Section 197 (12) of theAct read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is attached as "Annexure D" and form part of this Report.
However in accordance with the provisions contained in the proviso to Section 136(1)of the Companies Act 2013 the Annual Report and accounts excluding the aforesaidinformation are being sent to the shareholders of the Company. Any member interested inobtaining such particulars may write to the Compliance Officer at the Registered Office ofthe Company for the same.
30. HUMAN RESOURCES
The relations of the employees of the Company have been cordial during the year.Employees are considered to be team members being one of the most critical resources inthe business which maximize the effectiveness of the Organization. Human resources buildthe Enterprise and the sense of belonging would inculcate the spirit of dedication andloyalty amongst them towards strengthening the Company's Polices and Systems. The Companymaintains healthy cordial and harmonious relations with all personnel and therebyenhancing the contributory value of the Human Resources.
31. ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.
32. ENHANCING SHAREHOLDERS VALUE
Your Company believes that its Members are among its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your Company is also committed to creating value for its other stakeholders byensuring that its corporate actions positively impact the socio-economic and environmentaldimensions and contribute to sustainable growth and development.
33. GREEN INITIATIVES
Electronic copies of the Annual Report 2016-17 and Notice of the 31st AnnualGeneral Meeting are sent to all members whose email addresses are registered with theCompany / Depository Participants). For members who have not registered their emailaddresses physical copies of the Annual Report 2016-17 and the Notice of the 31stAnnual General Meeting under Section 101 of the Companies Act 2013 are sent in thepermitted mode. Members requiring physical copies can send a request to the Company.
Your Company provides e-voting facility to all its members to enable them to cast theirvotes electronically on all resolutions set forth in the Notice. This is pursuant to theSection 108 of the Companies Act 2013 and Rule 20 of the Companies (Management andAdministration) Amendment Rules 2015.
Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year. The Directors place on record their sincereappreciation to all employees of the Company for their unstinted commitment and continuedcontribution to the Company.
35. CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother factors such as litigation and industrial relations.
By Order of the Board of Directors
Kailash S. Khator Ashok S. Khator
Managing Director Whole-Time Director
Place: Mumbai Date: 30th May 2017