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Namaste Exports Ltd.

BSE: 526059 Sector: Others
NSE: NAMASTEXP ISIN Code: INE583A01017
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Namaste Exports Ltd. (NAMASTEXP) - Director Report

Company director report

To The Members

Directors present the Twenty Ninth Annual Report of the Company along with the AuditedBalance Sheet and Profit and Loss Account for the year ended 31st March 2017.

1. FINANCIAL RESULTS

(Rs. in Thousands)
2016-2017 2015-2016
Sales & Other Income 332062 310760
Profit (Loss) Before Interest
Depreciation
Non Operative (Loss) / Profit (23146) (46716)
Less / (Add)
Interest (11002) (8393)
Depreciation (6521) (7312)
Non-Operative (Loss) / Profit (40669) (62421)
Profit (Loss) before Tax (40669) (62421)
Exceptional Items 72417 -
Profit (Loss) before extraordinary
items and tax 31748 (62421)
Extraordinary items 23333 (21369)
Add/(Less) tax related to earlier year
Deferred Tax written off - 744
Profit/(loss) for the year 55081 (84534)
Profit/(loss) brought forward (44345) 40189
Net Surplus / (Deficit) in statement
of Profit & Loss A/c carried to
balance sheet (7724) (44345)

PUBLIC DEPOSITS

During the year under review your Company has not accepted any deposits under theprovisions of Section-58A of the Companies Act 2013 and the rules made thereunder.

PERFORMANCE

The company achieved a turnover of Rs. 33.20 Crs. in a challenging situation. Thecompany's tannery was not operative for a substantial portion of the year. However theexport of finished leather and sale of Kavaci jackets have began on a positive note. Thecompany received an insurance settlement of Rs. 2.81 Crs.

FUTURE PROSPECTS

The company pursuing new buyers to increase export turnover. There are positiveindications. The export sale of finished leather has began well and many internationalbuyers have started placing orders. We expect the export of finished leather to be gamechanger for the company. The company has launched all out efforts to sell the‘Kavaci' brand biker jackets. The company has participated in several biker roadshows College fests etc. We are pleased to say the product is well received by thepublic. With the above efforts the company is looking forward doing an increase turnoverand profitability.

2.EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There were no material changes and commitments which occurred affecting the financialposition of the Company between March 31 2017 and the date on which this report has beensigned.

3.MATERIAL CHANGES & COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT: There are no materialchanges and commitments between the end of the Financial Year and the Date of the Reportwhich affect the financial position of the Company.

4.CHANGE IN NATURE OF BUSINESS:

There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014

5. DIVIDEND

In view of the losses incurred your Directors expressed inability to recommend anydividend.

6.RESERVES

In view of the losses the question of transferring any amount to Reserves does notarise.

7. SHARE CAPITAL

As per directives of BIFR company has issued shares to Banks/ FIs in lieu of interestdue to them with the condition to buy back. Accordingly company has purchased 2051200shares issued to IDBI (SASF) resulted in reduction in share capital.

Disclosure regarding Issue of Equity Shares with Differential Rights

During the year under review the Company has not issued Shares with DifferentialRights.

Disclosure regarding issue of Employee Stock Options:

During the year under review the Company has not issued Shares Employee Stock Options.

Disclosure regarding issue of Sweat Equity Shares:

During the year under review the Company has not issued Sweat Equity Shares.

8. CAPITAL EXPENDITURE

As on 31st March 2017 the gross tangible and intangible assets stood at Rs.154850410 and the net tangible and intangible assets at Rs. 82789715 Additionsduring the year amounted to Rs. 1167817 The Company has not purchased any assets underlease.

9. BOARD MEETINGS:

Board Meetings and Attendance of Each Director at the Board Meetings and the lastAnnual General Meeting : The Meetings of the Board are held at regular intervals with atime gap of not more than 120 days between two consecutive Meetings. Additional Meetingsof the Board of Directors are held when necessary. The Agenda of the Meeting is circulatedto the Directors in advance. Minutes of the Meetings of the Board of Directors arecirculated amongst the Members of the Board for their perusal.

During the financial year 2016-17 6 meetings of the Board of Directors were as under:

One Board meetings during April 2016 viz. 30/04/2016 and remaining five meetings on30/05/201616/08/201628/09/201612/11/2016 and 11/02/2017 respectively. The gap betweentwo board meetings did not exceed four months.

The details of attendance of directors of the board meeting are as under :

Name of the Directors No. of Board meetings held No. of Board meetings attended Attendance at last AGM
Mr. K. Vinod Bhat Managing Director 6 6 Yes
Mr. K. Vishal Bhat Director 6 4 Yes
Mr. M. Sripad Rao Whole Time Director 6 6 Yes
Mr. E.N. Veeranna Whole Time Director 6 6 Yes
Mrs. Geetha Santhanagopalan Independent Director 6 6 No
Mr. G.P. Roy Independent Director 6 2

10. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).

11.COMPOSITION OF AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE &STAKEHOLDERS' RELATIONSHIP COMMITTEE:

Following are the composition of various Committees: As on 31st March 2017 the AuditCommittee of the Company consists of three (3) Non-Executive Independent Directors and allof them have financial and accounting knowledge. The Board has accepted therecommendations of the Audit Committee during the year under review.

The Audit Committee comprises of :

(i). G.P. Roy (Chairman of the Committee) (DIN : 06487847)

(ii). Mrs. Geetha Santhanagopalan (DIN : 06602023)

(iii). K. Vishal Bhat (DIN : 02446614)

12. NOMINATION AND REMUNERATION COMMITTEE:

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and forother employees and their remuneration

The Nomination and Remuneration Committee comprises of :

(i). Mrs.Geetha Santhanagopalan (Chairman of the Committee ) (DIN : 06602023) (ii).G.P. Roy (DIN : 06487847)

(iIi). K. Vishal Bhat (DIN : 02446614)

The Grievance Committee comprises of :

(i). G.P. Roy (Chairman of the Committee) (DIN : 06487847)

(ii). Mrs. Geetha Santhanagopalan (DIN : 06602023)

(iii). K. Vishal Bhat (DIN : 02446614)

13.VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has established an effective vigil mechanism (for directors and employeesto report genuine concerns) pursuant to the provisions of Section 177(9) & (10) of theCompanies Act 2013 and as per Regulations 22 of SEBI (LODR) Regulations 2015 which isavailable on website of the Company and there were no cases reported during the lastperiod.

14. CORPORATE GOVERNANCE

The company has complied with certain requirements as per the Security Exchange Boardof India (SEBI) guidelines for Corporate Governance.

15. DIRECTORS' RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that: a. in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures; b. the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year under review; c. thedirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d. the directorshave prepared the annual accounts on a ‘going concern' basis; e. the directors havelaid down internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and were operating effectively f. the directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

16. EXTRACT OF ANNUAL RETURN:

As required pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report is attached as Annexure I.

17. INFORMATION ABOUT THE FINANCIAL PERFORMANCE/ FINANCIAL POSITION OF THESUBSIDIARIES/ASSOCIATES/JV

Your Company is not subsidiary of any company. Your Company has no subsidiaries orjoint ventures in India or abroad. Consequently financial performance of theSubsidiary/Associates referred to in Section 129 of the Companies Act 2013 in Form AOC-1is not annexed to this Report

18. AUDITORS

The Statutory Auditors M/s. Murugesh & Co. Chartered Accountants (ICAI FirmRegistration No 2232 S) has been appointed for period of 5 years from the date of 29th AGMtill conclusion of 34th AGM in accordance with the regulations specified in the CompaniesAct 2013.

Your Company has not appointed any internal auditors.

EXPLANATION BY BOARD ON COMMENTS BY AUDITORS:

The Statutory Auditor's of the Company M/s. Iswhar & Gopal Chartered AccountantsBangalore have given their Audit Report for the year ended 31st March 2017 with certainemphasis of matter on which the Directors of the Company clarify as follows.

Observations made in the Report :

Qualifiaction by the auditor Explanation by the Board
The Company has paid Rs. 20512000/- to Industrial Develop- ment Bank of India on 19/09/2016 to buy back 2051200 equity shares of Re. 1 each of the Company. The buyback of shares was done even though Company did not have reserves or secu- rity premium or not raised further equity to fund the buy back as required under the provisions of section 68 of the Companies Act 2013 read with Rule 17 of Companies (Share Certificate & Debentures) Rules 2014. The Company has not obtained nec- essary approvals / made filings under 68 of the Companies Act 2013 read with Companies (Share Certificate & Debentures) Rules 2014 Securities Exchange Board of India Stock Ex- change (refer note no 2.01B). Share issued to IDBI as per scheme approved by BIFR in lieu of interest payable to them. The company decided to sell an asset to meet working capital requirement and IDBI refused to release the charges unless shares were bought back. Buy-back was an obligation and the company had no other alternative than to de- part from provision of Sec 68 of the Companies Act 2013. SEBI has been informed about this deviation.
As detailed in Note No 2.01 A the Company has not filed required documents with Registrar of Companies Karnataka Bangalore regarding increase in authorized capital paid up capital reduction in the face value of paid up capital and other documents relating to amalgamation / restructuring for a substantial period. Additional shares issued for increase in share capital as per BIFR directives through BIFR in their order waived payment of fee to MCA in this regard. The company's appeal for waive the fee is still pending. The company hopes to sort out the issue.
As referred in note 2.05 advance of Rs. 18376956 is due for substantial period from a firm in which relatives of a director are interested. As per the documents produced before us the Company has neither taken steps to register the property nor taken steps to recover the said dues. The company would complete the registration formalities at the earliest.

19. SECRETARIAL AUDIT REPORT

The trading in the shares of the company in the BSE/NSE remain suspended from 2002. Thecompany's application/request for listing of shares and revocation of suspension is yet tobe approved by the stock exchanges. Since the suspension continues and the company isdeemed unlisted appointment of a Company Secretary/ Secretarial Auditor is kept inabeyance. The company shall comply these requirements upon revocation of suspension andlisting of shares.

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 has notappointed a Company Secretary in Practice to undertake the Secretarial Audit of theCompany for the year under review for obtaining Secretarial Audit in the form of MR-3.

20. PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS & OUTGO

Your Company gives high priority for conservation of energy through better supervisionand training of employees to economize the usage of electricity.

(A). CONSERVATION OF ENERGY

Steps taken / impact on conservation of energy. The Company's operations are not power intensive. Nevertheless your Company has introduced various measures to conserve and minimize the use of energy wherever it is possible.
(i) Steps taken by the company for utilizing alternate sources of energy including waste generated. Nil
(ii) Capital investment on energy conservation equipment. Not Applicable
Total energy consumption and energy consumption per unit of production as per Form A. The Company is not covered in the list of industries which should furnish information in Form ‘A' relating to energy consumption and energy consumption per unit of production

(B) Technology Absorption

Efforts in brief made towards technology absorption Not applicable
adaptation and innovation Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import sustitution etc.
In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished:
Technology imported Not applicable
Year of Import Not applicable
Has technology been fully absorbed Not applicable
If not fully absorbed areas where this has not taken place reasons therefore and future plan of action Not applicable

(C) Research and Development (R & D)

Specific areas in which R & D carried out by the company The Company has not carried out any research and development work during the course of the year.
Benefits derived as a result of the above R & D Not Applicable
Future plan of action Not Applicable
Expenditure on R & D
(a) Capital Nil
(b) Recurring Nil
(c) Total Nil
(d) Total R & D expenditure as a percentage of total turnover Nil
(D) Foreign Exchange Earnings and Outgo
Activities relating to exports Not Applicable
Initiatives taken to increase exports Not Applicable
Development of new export markets for products and services Not Applicable
Export plans Not Applicable
Total Exchange used (Cash basis) As on 31st March 2016: Rs. 49853174
Total Foreign Exchange Earned (Accrual Basis) As on 31st March 2017: Rs.234680153

21. RATIO OF REMUNERATION TO EACH DIRECTOR

Pursuant to Section 197(12) of the Companies Act 2013 and Rule 5 (1) (2) (3) of theCompanies (Appointment and Remuneration) Rules 2014 details/disclosures of Ratio ofRemuneration to each Director to the median employee's remuneration is annexed to thisreport as Annexure 2 There are no employees posted and working in a country outside Indianot being Directors or relatives drawing more than sixty lakhs rupees per financial yearor five lakh rupees per month as the case may be. Therefore statement/disclosure pursuantto Sub Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is not required to be circulated to the members and is not attached to theAnnual Report.

22. DEPOSITS

Your Company has not invited/accepted/renewed any deposits from public as defined underthe provisions of Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014and accordingly there were no deposits which were due for repayment on or before 31stMarch 2017.

23. MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBNUALS IMPACTING GOINGCONCERN STATUS OF COMPANY:

No order was passed by any court or regulator or tribunal during the period underreview which impacts going concern status of the Company.

24. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY:

The Company continued to maintain high standards of internal control designed toprovide adequate assurance on the efficiency of operations and security of its assets. Theadequacy and effectiveness of the internal control across various activities as well ascompliance with laid-down systems and policies are comprehensively and frequentlymonitored by your Company's management at all levels of the organization. The AuditCommittee which meets at-least four times a year actively reviews internal controlsystems as well as financial disclosures with adequate participation inputs from theauditors.

25. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDEDBY THE COMPANY:

The Company has not given any loan or guarantees covered under the provisions ofsection 186 of the Companies Act 2013.

26. RISK MANAGEMENT POLICY

The Company has not yet formulated a Risk Management Policy. Your Company has in placea mechanism to inform the Board Members about risk assessment and minimization proceduresand undertakes periodical review to ensure that executive management controls risk bymeans of a properly designed framework.

27. CORPORATE SOCIAL RESPONSIBILITY

Since the Company does not meet the criteria for the applicability of Section 135 ofthe Companies Act read with the Companies (Accounts) Rules 2015 this clause is notapplicable.

28. RELATED PARTY TRANSACTIONS (RPTs):

Related Party Transactions were entered into during the year by your Company.Accordingly the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act 2013 in Form AOC 2 is attached.

29. ANNUAL BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations 2015the Board has carried out an annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration and Compliance Committees.

30. MANAGEMENT DISCUSSION AND ANALYSIS

As requisite and appropriate Management Discussion & Analysis is covered under thisReport itself a separate note on the same is not being furnished.

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration

31. LISTING WITH STOCK EXCHANGE

The trading in the shares of the company in the BSE/NSE remain suspended from 2002. Thecompany's application/request for listing of shares and revocation of suspension is yet tobe approved by the stock exchanges. Your Company has to pay listing fee to Bombay StockExchange and delisting process is on with National Stock Exchange.

32. CORPORATE GOVERNANCE AND SHAREHOLDERS' INFORMATION

In compliance with the Listing Agreement with the Stock Exchange the Company hascomplied with all the requirements as per the Security Exchange Board of India (SEBI)guidelines for Corporate Governance. All the requisite Committees are functioning in linewith the guidelines.

Certificate from K. Narendra Practising Company Secretary confirming the compliancewith the conditions of Corporate Governance as stipulated under Regulation 27 of SEBI(LODR) the Listing Agreement is given to the company.

33. EVENT BASED DISCLSOURE

There are no event based disclosures.

34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the sexual harassment of women at the workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2016-17

No of complaints received: NIL No of complaints disposed off: NIL

35. FRAUD REPORTING (REQUIRED BY COMPANIES AMENDMENT BILL 2014)

There are no frauds

36. HUMAN RESOURCES & INDUSTRIAL RELATIONS

Employee relations at all levels continued to remain cordial.

37. ACKNOWLEDGEMENT

Directors place on record their sincere appreciation for the assistance andco-operation received from the bankers financial institutions. The Directors also placeon record their appreciation for the support given and contribution made by the officersstaff and workers at all levels during the year. Government of India particularly Ministryof Commerce and Finance and Govt. of Karnataka and Bank for their support during the yearunder review and the Company look forward to their continued co-operation and support.

For and on behalf of the Board of Directors

Sd /-
Bangalore-560 018 (K. VINOD BHAT)
30th May 2017 MANAGING DIRECTOR
(DIN : 02359812)