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Uniworth Textiles Ltd.

BSE: 500138 Sector: Industrials
NSE: FABWORTH ISIN Code: INE486C01019
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Uniworth Textiles Ltd. (FABWORTH) - Director Report

Company director report

FOR THE FINANCIAL YEAR 2016-2017

To

The Members

Your Directors have pleasure in presenting their 25th Annual Report on the business andoperations of the Company together with the Audited Statement of Accounts for the yearended 31st March 2017.

FINANCIAL HIGHLIGHTS

During the year under review financial performance of your Company was as under:

31st March 2017 31st March 2016
(Rs. In lakh) (Rs. In lakh)
Sales 4075.06 2692.66
Profit/(Loss) before Interest and Depreciation & before prior period adjustment (1416.19) 1297.24
Previous year Adjustment & Extra Ordinary Income 20.72 125.37
Profit/(Loss) before Interest and Depreciation (1436.91) (1422.61)
Less: Finance Cost 928.74 993.54
Profit / (Loss) before Depreciation (2365.65) (2416.15)
Less: Depreciation 45.75 45.29
Profit / (Loss) before Tax (2411.40) (2461.44)
Provision for Taxation
Net Profit /(Loss) after Tax for the Year (2411.40) (2461.44)
Add: Balance b/f from the Previous year (26609.70) (24148.26)
Balance carried to Balance Sheet (29021.10) (26609.70)

STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK :

India Textile Industry is one of the leading textile industries in the world. Though itwas predominantly unorganized industry even a few years back but the scenario startedchanging after the economic liberalization of Indian economy in 1991. The opening up ofeconomy gave the much-needed thrust to the Indian textile industry.

The Company was incorporated in 1992 and has significant market share in worstedsuiting in India. The Company is also making fresh and enthusiastic efforts to improve itsperformance in the world market particularly Europe Japan and the Middle East Countries.

The Company's effort over the past years to enhance its presence in the Domestic sectorbore fruit and by penetrating the Institutional segment there was significant rise inDomestic Sales and coupled with increase in Export Sales resulted in Export Turnover ofRs. 13.82 Crore which led to a Total Turnover of Rs. 40.75 Crore.

There has been an overall increase in Turnover and some decrease in input costs butthe Company continues to suffer cash loss. During the most part of the year under Reviewthe Company continued to be as a Sick

Industrial Undertaking as the Hon'ble High Court of Calcutta vide order dated08.11.2013 passed in W.P. No. 31462 (W.P.) of 2013 has held that order of abatement passedby AAIFR cannot attain finality No. 03 of 2012 is decided by Debt Recovery Tribunal (DRT)Nagpur which is sub-judice before DRT. Since BIFR and AAIFR have been abolished due torepeal of Sick Industrial Companies (special provisions) Act 1985 however the companyis exploring the possibility of registering with the NCLT with a suitable resolutionscheme.

BUSINESS OUTLOOK :

The inherent strengths of the textile industry have seen the textile industry throughrough days and hard times.

The World trading system have endangered the stability of the textile industry andcreated an atmosphere of uncertainty and turbulence in the industry. But it is also a factthat turbulence is necessary for any change in the system. In a World that is fast losingits traditional boundaries and borders are becoming invisible there is need to bringabout technological improvement structural changes liberalisation from controls andregulations increased productivities of labour and machine and reliable quality assurancesystems. If there is insecurity inherent in the globalised economy there is alsoopportunity – opening up of vast markets to Indian textiles and Indian clothing thatwere earlier closed or regulated and Indian textile industry is ready to take up thisopportunity of free trade and secure its well deserved position in the internationaltextile arena

The Economic crisis is continuing to affect the order situation adversely. The on-goingcompetition with China is also making it difficult to generate fresh business. AlthoughChina is the number one apparel export country and the Chinese-made fabrics are still notsatisfactory in respect of color texture quality etc. To be more competitive in thedomestic market the management is pursuing with the Government Authorities for De-bondingof our processing unit.

MATERIAL CHANGES AFFECTING THE FINANCIALPOS ITION OF THE COMPANY :

No material changes affecting the financial position of the company occurred betweenthe end of the financial year to which this financial statements relate on the date ofthis report.

CHANGES IN SHARE CAPITAL:

During the Financial Year 2016-17 there have been no changes in the share capital ofthe Company.

DISCLOSURE REGARDING ISSUE OF EQUITYSH ARES WITH DIFFERENTIAL RIGHTS:

The Company has not issued any Equity Shares with differential Rights during thefinancial year. DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS:

The Company has not issued any Employee Stock Options during the financial year.

DISCLOSURE REGARDING ISSUE OF SWEAT EQUITYSH ARES:

The Company has not issued any Sweat Equity Shares during the financial year.

DIVIDEND:

In view of huge accumulated losses the Directors regret their inability to recommendany dividend for the Financial Year 2016-17.

DEPOSITS:

Your Company has not accepted any deposit within the meaning of deposits covered underChapter V of the Companies Act 2013

DIRECTORS RESPONSIBILITYST ATEMENT

Pursuant to section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that:

i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively exceptdeficiencies in operating effectiveness in respect of old outstanding of tradereceivables advances to parties and some old creditors for expenses;

vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

DIRECTORS AND KEYM ANAGERIALPE RSONNEL

Mr. Kamal Sharma (DIN : 02946513) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

Mr. N. B. Kharpkar (DIN : 06373389) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

Mr. Nirmal Kumar Garg (DIN: 01648057) has been re-appointed as Executive/Whole-timeDirector of the Company with effect from 10.08.2017 by the Board of Directors of theCompany for a fresh term of 5 (Five) years.

DECLARATION BY INDEPENDENT DIRECTOR:

Pursuant to Section 149(7) of the Companies Act 2013 Independent Directors of theCompany have made a declaration confirming the compliance of the conditions of theindependence stipulated in Section 149(6) of the Act.

PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS UNDER SECTION 186:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 forms part of the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Related party transactions that were entered during the financial year were on arm'slength basis and in the ordinary course of business. There were no materially significantrelated party transactions which were in conflict of the Company.

SUBSIDIARY COMPANIES

The Company does not have any subsidiary company.

AMOUNTS TRANSFERRED TO RESERVES:

In view of huge accumulated losses and current year's losses your Directors wereunable to transfer any amount to the General Reserve Account.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

The details pertaining to conservation of energy technology absorption foreignexchange earnings and outgo are provided as Annexure I which forms part of this report.

RISK MANAGEMENT POLICY:

In terms of Section 134 (3) (n) of the Act the Board of Directors has adopted acomprehensive risk management policy which includes identification of element of risk itsmitigation and other related factor. The Board periodically reviews the same. In view ofParagraph 4.1 of SEBI Circular CIR/CFD/POLICY CELL/2/2014 dated 17th April 2014 no RiskManagement Committee has been constituted since it is not covered by the requirements ofthe above-mentioned Paragraph.

CORPORATE SOCIAL RESPONSIBILITIES

The provisions of Section 135 of the Act in connection with Corporate SocialResponsibility are not applicable to the Company since the Company falls below thethreshold limits.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors has carried out anannual evaluation of its own performance Board committees and individual directorspursuant to the provisions of the Act. The performance of the Board was evaluated by theBoard after seeking inputs from all the directors on the basis of the criteria such as theBoard composition and structure effectiveness of board processes information andfunctioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.

In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and elected Chairman of the each meetingwas evaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

• The Nomination and Remuneration Committee as specified u/s 178 of the CompaniesAct 2013 was formed with a view to reviewing and making recommendations on annualsalaries performance commissions perquisite and other employment conditions ofExecutives and Officials.The Committee's also takes into consideration remunerationpractices followed by leading Companies as well as information provided by reputedconsultants while determining the overall remuneration package.

• During the year under review the Nomination and Remuneration Committee met onetime details of the meeting have been given in Corporate Governance Report which formspart of this report.

• The following are the members of the Committee at present:

Name Designation * Executive/Non-Executive/Independent
Mr. Mukesh Mandwal Member Non- Executive & Independent
Mrs. M. S. Pingale Member Non- Executive & Independent
Mr. N. B. Kharpkar Member Non- Executive & Non-Independent

* Members present at the meeting elect one of themselves as Chairman of the Meeting.

RATIO OF REMUNERATION OF EACH DIRECTOR TO THE MEDIAN REMUNERATION OF THE EMPLOYEES:

The information as required under Section 197 of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isavailable. In terms of Section 136 (1) read with its relevant provisions of the CompaniesAct 2013 the Annual Report excluding the aforesaid information is being sent to theMembers of the Company and others entitled thereto. The said information shall be keptopen for inspection at the Registered Office of the Company on every working day of theCompany between 10 a.m. to 12 noon up to the date of the forthcoming 25th Annual GeneralMeeting.

CORPORATE GOVERNANCE REPORT:

A Report on Corporate Government together with a Certificate from the Auditors oncompliance thereof required under Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed hereto and forms a part of this report.

MANAGEMENT DISCUSSION ANALYSIS REPORT:

The Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing

Obligations and Disclosure Requirements) Regulations' 2015 with the Stock Exchanges inIndia is presented in a separate section which forms part of the Annual Report.

NUMBER OF BOARD MEETINGS:

During the Financial Year 2016-17 the Board of Directors of the company met 5 (Five)times details of the meetings has been given in the Corporate Governance Report whichforms part of this report.

AUDIT COMMITTEE:

The Details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.

STAKEHOLDERS RELATIONSHIP COMMITTEE:

The Details pertaining to composition of Stakeholders Relationship Committee areincluded in the Corporate Governance Report which forms part of this report.

AUDITORS REPORT:

The observations made by Auditors in their Auditor's Report with reference to notes tofinancialstatements are self explanatory and need no comments forms part of this report.

INT RODUCTION OF INDIAN ACCOUNTING STANDARDS (IND AS):

As per the Directions issued by Ministry of Corporate Affairs the companies and theirauditors shall comply with Indian Accounting standards for the accounting periodsbeginning on or after 1st April 2017 with comparatives for the periods ending on 31stMarch 2017 for companies whose equity or debt securities are listed or in the process ofbeing listed on any stock exchange in India or outside India and having networth of lessthan Rs. 500 Crores. The Company has already implemented the same.

STATUTORY AUDITORS:

The Company's auditors M/s. R B S C & Co. (Formerly S. S. Kothari & Co.) (FirmRegistration Number 302034E) have already completed more than ten years as StatutoryAuditors of the Company.

In accordance with provisions of Section 139 of the Companies Act 2013 and theCompanies (Audit and Auditors) Rules 2014 regarding mandatory rotation of auditorrequirement it is proposed to appoint M/s. Khandelwal Ray & Co. as Statutory Auditorsfor a period of 5 continuous years i.e. from the conclusion of 25th Annual GeneralMeeting till the conclusion of 30th Annual General Meeting of the Company to be held inthe financial year 2022 - 2023.

M/s. Khandelwal Ray & Co. have informed the Company that their appointment if madewould be within the limits prescribed under section 141 of the Companies Act 2013.

M/s. Khandelwal Ray & Co. have also furnished a declaration confirming theirindependence as well as their arm's length relationship with the Company and declared thatthey have not taken up any prohibited non-audit assignments for the Company.

APPOINTMENT OF INTERNAL AUDITOR:

The Company has appointed M/s. Ganeriwala & Associates Chartered Accountants asan Internal Auditor of the Company for the financial year 2017-18.

SECRETARIAL AUDITOR:

In terms of Section 204 of the Companies Act 2013 the Board of Directors at theirmeeting held on 30th May 2017 have appointed M/s K K Sanganeria & AssociatesPracticing Company Secretaries as Secretarial Auditor for conducting Secretarial Auditof the Company for the Financial Year 2017-18. Report of the

Secretarial Auditor for the financial year ended 31.03.2017 is given as "AnnexureII" which forms part of this report.

EXTRACT OF ANNUAL RETURN:

The extract of Annual Return in format MGT -9 for the Financial Year 2016-17 has beenenclosed with this report as "Annexure III".

DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL:

No significant & material orders passed by the regulators or courts or tribunal.

STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THEFINANCIALST ATEMENTS:

The company has adequate internal control procedures commensurate with the size scaleand complexity of its operations which are well supplemented by surveillance of InternalAuditors.

BOARDS VIEW :

Due to abolition of BIFR & AAIFR company is exploring the possibility ofregistering with NCLT with a suitable resolution scheme & is also exploring otheroptions available under the law. The Company has disputed the repayment of due. Allcompliances with the stock exchanges are updated and in respect of the status of thecompany being shown as "Suspended" by BSE Limited and the Calcutta StockExchange Limited the company has taken up the matter with both the exchanges as thecompany is in compliance with the Listing Agreement. The Company has disputed therepayment of due. The loss and damages caused to the borrower by the lender is much morethan the amount lent. Hence figures of the borrowed amount shown in the balance sheetafter due adjustments with the said loss and damages may result in No Debt Due rather theborrower is entitled to recover substantial amount from the lender. Under these facts andcircumstances the figures of borrowed amount in this balance sheet cannot be consideredas admission if any of the claim of lender(s).

DISCLOSURE ON ESTABLISHMENT OF A VIGILME CHANISM

In pursuant to the provision of section 177(9) & (10) of the Companies Act 2013The Company has formulated a Whistle Blower Policy to establish a vigil mechanism forDirectors and employees of the Company to report concerns about unethical behavior actualor suspected fraud or violation of the company's code of conduct or ethics policy. TheWhistle Blower Policy is available on the website of the Company i.e.www.uniworthtextiles. com

HEALTH SAFETY AND ENVIRONMENT PROTECTION

The Company has complied with all the applicable environmental law and labour laws. TheCompany has been complying with the relevant laws and has been taking all necessarymeasures to protect the environment and maximize worker protection and safety.

INDUST RIAL RELATIONS:

Industrial Relations continued to remain cordial throughout the year. Your Directorswish to place on record their appreciation for dedicated and sincere services rendered bythe executives staff and workmen at all levels.

POLICY ON PREVENTION OF SEXUALH ARASSMENT

The company is committed to provide a safe and conducive work environment to itsemployee and has formulated "Policy for Prevention of Sexual Harassment".

During the financial year ended 31st March 2017 the Company has not received anycomplaints pertaining to Sexual Harassment.

FRAUD REPORTING

There was no fraud reported by the Auditors of the Company under Section 143(12) of theCompanies Act 2013 to the Audit Committee or The Board of Directors during the yearunder review.

PARTICULARS OF EMPLOYEES:

During the period under review no employee of the Company drew remuneration in excessof the limits specified under the provisions of Section 197(12) of the Companies Act readwith Rules 5(2) and 5(3) of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and henceno disclosure is required to be made in the Annual Report.

ACKNOWLEDGEMENT:

Your Directors acknowledge with gratitude the co-operation and assistance received fromthe Central and State Government Financial Institutions Banks Shareholders and othersduring the year under review.

On Behalf of the Board
N. K. Garg N. B. Kharpkar
Place : Nagpur Executive Director Director
Date : 22nd August 2017 DIN: 01648057 DIN: 06373389