Your Directors are pleased to present herewith the 6th Annual Report on the businessand operations of the Company and the Audited Accounts for the year ended 31st March 2017.
1. Financial Results and Operations
The summarized financial results for the year ended 31st March 2017 as compared withthe previous year are as under:
|Particulars ||For the year 2016-17 ||For the year 2015-16 |
|a. Sales ||91.55 ||374.79 |
|b. Profit / Loss before Interest || || |
|Depreciation & Tax ||(28.95) ||(17.37) |
|c. Less: Interest ||- ||0.01 |
|d. Less: Depreciation ||11.78 ||13.58 |
|e. Profit before Tax ||(40.74) ||(30.96) |
|f. Less: Tax || || |
|g. Add: Deferred Tax ||0.58 ||0.75 |
|h. Net Loss ||(41.33) ||(31.71) |
During the year under review the company has achieved a turnover of 91.55 lakhs asagainst 374.79 lakhs in the previous year. During the Year the company incurred a Net lossbefore tax of 40.74 lakhs as against a loss of 30.96 lakhs in the previous year.
Due to losses incurred the Company has not recommended any dividend for the year underreview.
3. Fixed Deposits
The Company has not accepted any fixed deposits from the public and no amount ofprincipal or interest on public deposits was outstanding as on the balance sheet datewithin the meaning of section 73 and section 74(1) of the Companies Act 2013 and Rule 2(c ) of Companies (Acceptance of Deposits) Rules 2014.
4. Transfer to Reserves
No amount was transferred to the Reserves for the year ending 31.03.2017 since thecompany has incurred losses during the period.
5. Consolidated Financial Performance
As required under the Listing Agreement entered into with the Stock Exchanges aconsolidated financial statement of the Company is attached. The consolidated financialstatements have been prepared in accordance with the relevant accounting standards asprescribed under section 133 of the Companies Act 2013 read with Rule 7 of the Companies(Accounts) Rules 2014 and the Companies (Indian Accounting Standards) Rules 2015 (asamended). The Company has consolidated the proportional Loss after tax in accordance withAccounting Standards Ind AS 110 read with Ind AS 28.
6. Board of Directors
Relevant information on composition of the Board and number of meetings is provided inBoard of Directors' section of Corporate Governance Report which forms part of thisAnnual Report.
During the year the Board of Directors have not appointed any directors.
During the year there were no changes in the Board.
Statement on Declaration given by Independent Directors under subSection (6) of Section149
The Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149(7) of the Companies Act 2013 stating that they meet the criteriaof Independence as provided in sub-section (6).
Disclosures about receipt of any commission by MD /WTD from company or anycommission/remuneration from the subsidiaries
The Managing Director or Whole time directors are not in receipt of any commissionfrom the company or any remuneration or commission from the subsidiaries.
7. Evaluation of the Board's Performance.
In compliance with the Companies Act 2013 and Clause 27 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the performance evaluation ofthe Board and of its Committees was carried out during the year under review. More detailson the same is in the Corporate Governance Report.
8. Familiarization Programme for Independent Directors
The company has formulated a familiarization programme for the Independent Directors toprovide insights into the company to enable the Independent Directors to understand itsbusiness in depth and contribute significantly to the company.
9. Nomination and Remuneration Policy
The company follows a policy on remuneration of Directors and Senior ManagementEmployees. The policy is approved by the Nomination and Remuneration Committee and theBoard. More details on the same are given in the Corporate Governance Report.
10. Director's Responsibility Statement
In accordance with clause (c) of sub-section 3 of section 134 of the Companies Act2013 the Directors of the Company state:
a. That in the preparation of the accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed along with proper explanationrelating to material departures.
b. That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were 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 of the Company for the year under review.
c. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safe guarding the assets of the Company and for preventing and detecting fraud andother irregularities.
d. That the Directors have prepared the accounts for the financial year ended 31stMarch 2017 on a going concern basis'. e. That the directors have laid down internalfinancial controls to be followed by the company and that such financial controls areadequate and operating effectively.
f. The Directors had devised proper systems to ensure Compliance with the provisions ofall applicable Laws and that such systems were adequate and operating efficiently.
11. Particulars of Employees
The remuneration paid to your Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015 (including any statutory modification(s) orre-enactment(s) for the time being in force). The salient aspects covered in theNomination and Remuneration Policy have been outlined in the Corporate Governance Reportwhich forms part of this report.
The information required under Section 197 (12) of the Act read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as AnnexureI.
12. Auditors a) Statutory Auditors
The Statutory Auditors of the company M/s Luharuka & Associates CharteredAccountants Hyderabad (Firm No. 01882S) retire at the ensuing Annual General Meeting andare eligible for re-appointment. Your company has received intimation to the effect thatProposed re-appointment if made would be within the Prescribed limit under Section 141 ofthe Companies Act 2013 and also in compliance with the requirements of the ListingAgreement regarding Peer Review. They have confirmed their willingness to accept officeif re-appointed.
The Board based on the recommendation of the Audit Committee recommended theappointment of M/s. Luharuka & Associates Chartered Accountants as Statutory Auditorsof the Company.
The Auditors' Report to the Shareholders for the year under review does not contain anyQualifications.
There are no qualifications reservations or adverse remarks made by M/s. Luharuka& Associates Chartered Accountants Statutory Auditors in their Consolidated andStandalone report for the Financial Year ended 31st March 2017.
INDIAN ACCOUNTING STANDARDS (IND-AS)
The Ministry of Corporate Affairs (MCA) on February 16 2015 notified that IndianAccounting Standards (Ind AS) are applicable to certain classes of companies from April 12016 with a transition date of April 1 2015. Ind AS has replaced the previous Indian GAAPprescribed under Section 133 of the Companies Act 2013 ("the Act") read withRule 7 of the Companies (Accounts) Rules 2014 and the Companies (Indian AccountingStandards) Rules 2015 (as amended). Ind AS is applicable to the Company from April 12016. The reconciliations and descriptions of the effect of the transition from previousGAAP to Ind AS have been set out in the notes to accounts in the standalone financialstatement and in the consolidated financial statement.
The Board of Directors based on the recommendation of the Audit Committee havereappointed Mr Suresh Chandra Agrawal Chartered Accountant as the Internal Auditor ofyour Company. The Internal Auditor is submitting their reports on quarterly basis.
b) Secretarial Auditors
The Board has appointed Mr Y Koteswara Rao Company Secretary in Practice to carry theSecretarial Audit under the provisions of section 204 of the Companies Act 2013 for thefinancial year 2016-17. The Report of the Secretarial Auditor is annexed to this report asAnnexure - II.
13. Risk Management Policy
The company has instituted a proper mechanism for identifying and establishing controlsto effectively manage different kinds of risks. At present the threats risks and concernsbeing felt are stiff competition in the market consolidation of manufacturers who havebranded products and fluctuations in prices as well as availability of raw materials.
14. Vigil Mechanism
The Company has established a vigil mechanism and oversees through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the chairman of the AuditCommittee on reporting issues concerning the interests of co-employees and the Company.The company has also set out a whistle blower policy in terms of the SEBI (ListingObligation and Disclosure Requirements) Regulations 2015 so as to ensure that thebusiness is conducted with integrity and the company's financial information is accurate.
The Policy on Vigil Mechanism and whistle blower policy may be accessed on thecompany's website.
15. Declaration about Compliance with Code of Conduct by Members of the Board andSenior Management Personnel
The company has complied with the requirements about the Code of Conduct for Boardmembers and Senior Management Personnel.
16. 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 workplace (Prevention Prohibition and Redressal)Act 2013. All employees (permanent contractual temporary and trainee) are covered underthe Policy. The following is a summary of sexual harassment complaints received anddisposed off during each year:
a) No. of Complaints Received : NIL
b) No. of Complaints Disposed off : NIL
17. Conservation of Energy Technology Absorption Foreign Exchange Earning and Outgo
Particulars pursuant to the provisions of section 134 read with rule 8 of Companies(Accounts) Rules 2014 of the Companies Act 2013 are given in the Annexure IIIforming a part of this Report.
18. Disclosures Under The Companies Act 2013
i. Extract of Annual Return
An Extract of Annual Return prepared in accordance with section 92(3) of the CompaniesAct 2013 in Form MGT-9 is annexed as Annexure IV to this Report.
ii. Number of Board Meetings
The Board of Directors met Seven (7) times during the year 2016-17. The details ofBoard Meeting and attendance of Directors is provided in the Corporate Governance Report.
iii. Change in Share Capital
The Company has not increased any Share Capital during the year 2016-17.
iv. Composition of Audit Committee
The Board has constituted the Audit Committee which comprises of Shri. Manoj Kumar asthe Chairman and Shri Manoj Kumar Dugar and Shri. Dilip Kumar Surana are the members ofthe committee. More details on the Committee are given in the Corporate Governance Reportforming a part of this Report.
v. Related Party Transaction
All Related Party Transactions are entered on Arm's Length basis and are in complianceof the Companies Act 2013 and the Listing Agreement.
There are no materially significant related party transactions made by the company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the company at large.
All Related Party Transactions are presented to the Audit Committee and the Board.Approval is obtained for transactions which are foreseeable and repetitive in nature. Astatement of all Related Party Transactions is presented before the Audit Committee onquarterly basis specifying the nature value and terms and conditions of thetransactions.
vi. Loans/Guarantees/Investments under section 186 of Companies Act 2013
No Loans/ Guarantees/ Investments under section 186 of Companies Act 2013 have beenmade during the year 2016-17.
vii. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The provision section 135 of Companies Act 2013 is not applicable to the company
19. Corporate Governance
Pursuant to Regulation 27 of the SEBI (Listing Obligation and Disclosure Requirement)Regulations 2015 a separate report on corporate governance has been included in thisAnnual Report in Annexure V together with a certificate from the Practicing CompanySecretary regarding compliance of conditions of Corporate Governance.
All Board members and senior management personnel have affirmed compliance with theCode of Conduct for the year 2016-17. A declaration to this effect signed by the ManagingDirector of the Company is contained in this Annual Report.
20. Management Discussion and Analysis Report
Pursuant to the provisions of Clause 27 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a report on Management Discussion & Analysis isherewith annexed as Annexure VI to this report.
21. Significant and Material Orders passed by the Regulators or Courts
There are NO material significant orders passed by the Regulators or Courts which wouldimpact the going concern status of the company and its future operations.
22. Human Resource
Your company considers its Human Resources as the key to achieve its objectives.Keeping this in view your company takes utmost care to attract and retain qualityemployees. The employees are sufficiently empowered and the work environment propels themto achieve higher levels of performance. The unflinching commitment of employees is thedriving force behind the company's vision. Your company appreciates the dedication of itsemployees.
23. Details of Policy developed and implemented by the company on its Corporate SocialResponsibility initiatives
The Companies Act 2013 lays down a mandatory provision wherein every company having
3 Net worth of rupees five hundred crore or more or
3 Turnover of rupees one thousand crore or more or
3 Net profit of rupees five crore or more during any financial year shall constitute aCorporate Social Responsibility Committee of the Board consisting of three or moredirectors out of which at least one director shall be an independent director.
As the said provisions are not applicable to the company it has not developed andimplemented any Corporate Social Responsibility initiatives.
24. Transfer of Unclaimed Dividend to Investor Protection Fund.
The provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno dividend declared and paid.
Buy back of Securities
The Company has not bought back any of its securities during the financial year underreview.
The Company has not issued any Sweat Equity Shares during the financial year underreview.
No Bonus Shares were issued during the financial year under review.
Employees Stock Option Plan
The Company has not provided for any Stock Options to its employees during thefinancial year under review.
Your Directors wish to express their appreciation for the cooperation and continuedsupport received from the Industrial Development Bank of India the Company's Bankers.Your Director's also take this opportunity to place on record their appreciation for thededicated services rendered by the executives managers officers employees and workersfor the dedication and sense of commitment shown by the employees at all levels and theircontribution towards the performance of the Company.
By Order of the Board For Urbaknitt Fabs Limited
(Formally known as Pankaj Polypack Limited)
Manoj Kumar Dugar
Chairman& Managing Director
Place: Secundrabad Date: 01.09.2017
Particulars of Employees information as per Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014
The Remuneration Policy of the Company is designed to attract motivate improveproductivity and retain manpower by creating a congenial work environment encouraginginitiatives personal growth and team work and inculcating a sense of belonging andinvolvement besides offering appropriate remuneration packages and superannuationbenefits. The policy reflects the Company's objectives for good corporate governance aswell as sustained long term value creation for shareholders.
The Nominations & Remuneration Committee determines individual remunerationpackages for Directors KMPs and Senior Officials of the Company taking into accountfactors it deems relevant including but not limited to market business performance andpractices in comparable companies having due regard to financial and commercial health ofthe Company as well as prevailing laws and government/other guidelines. The Committeeconsults with the Chairman of the Board as it deems appropriate. Remuneration of theChairman is recommended by the Committee to the Board of the Company.
This Remuneration Policy applies to directors senior management including its KeyManagerial Personnel (KMP) and other employees of the Company.
The guiding principle is that the remuneration and the other terms of employment shouldeffectively help in attracting and retaining committed and competent personnel. Whiledesigning remuneration packages industry practices and cost of living are also taken intoconsideration.
Section 197(5) provides for remuneration by way of a fee to a director for attendingmeetings of the Board of Directors and Committee meetings or for any other purpose as maybe decided by the Board.
Section 197(1) of the Companies Act 2013 provides for the total managerialremuneration payable by the Company to its directors including managing director andwhole time director and its manager in respect of any financial year shall not exceedeleven percent of the net profits of the Company computed in the manner laid down inSection 198 in the manner as prescribed under the Act.
The Company with the approval of the Shareholders and Central Government may authorisethe payment of remuneration exceeding eleven percent of the net profits of the Companysubject to the provisions of Schedule V.
The Company may with the approval of the shareholders authorise the payment ofremuneration upto five percent of the net profits of the Company to its anyone ManagingDirector/Whole Time Director/Manager and ten percent in case of more than one suchofficial.
The Company may pay remuneration to its directors other than Managing Director andWhole Time Director upto one percent of the net profits of the Company if there is amanaging director or whole time director or manager and three percent of the net profitsin any other case.
The net profits for the purpose of the above remuneration shall be computed in themanner referred to in Section 198 of the Companies Act 2013.
As per the Policy followed by the Company since inception the non-executive directorsare paid remuneration in the form of sitting fees for attending Board and Committeemeetings as fixed by the Board of Directors from time to time subject to statutoryprovisions.
Remuneration of Whole Time Directors including Managing Director reflects the overallremuneration philosophy and guiding principle of the Company. When considering theappointment and remuneration of Whole Time Directors the Nomination & RemunerationCommittee (NRC) considers pay and employment conditions in the industry merit andseniority of the person and the paying capacity of the Company.
The NRC while designing the remuneration package considers the level and composition ofremuneration to be reasonable and sufficient to attract retain and motivate the person toensure the quality required to run the company successfully.
The NRC while considering a remuneration package must ensure a balance between fixedand performance linked variable pay reflecting short and long term performance objectivesappropriate to the working of the company and its goals.
The NRC considers that a successful Remuneration Policy must ensure that some part ofthe remuneration package is linked to the achievement of corporate performance targets anda strong alignment of interest with stakeholders.
The term of office and remuneration of Whole Time Directors are subject to the approvalof the Board of Directors shareholders and the limits laid down under the Companies Act2013 from time to time.
The Independent Directors shall not be entitled to any stock option and may receiveremuneration by way of fee for attending meetings of the Board or Committee thereof or forany other purpose as may be decided by the Board and profit related commission as may beapproved by the members. The sitting fee to the Independent Directors shall not be lessthan the sitting fee payable to other directors.
Reward principles and objectives:
The Company's Remuneration Policy is guided by a reward framework and set of principlesand objectives as more fully and particularly envisaged under section 178 of the CompaniesAct 2013 inter alia principles pertaining to determining qualifications positiveattributes integrity and independence etc.
Remuneration packages for Whole Time Directors are designed subject to the limits laiddown under the Companies Act 2013 to remunerate them fairly and responsibly.
The Whole Time Directors' remuneration comprises of salary perquisites and performancebased commission/ reward apart from retirement benefits like P.F. SuperannuationGratuity etc. as per Rules of the Company.
Remuneration also aims to motivate personnel to deliver Company's key businessstrategies create a strong performance-oriented environment and reward achievement ofmeaningful targets over the short and longterm.
The Whole Time Directors are entitled to customary non-monetary benefits such ascompany cars furnished accommodation health care benefits leave travel communicationfacilities etc. Their terms of appointment provide for severance payments as per theCompanies Act.
Key Managerial Personnel [KMP] Senior Management:
Appointment of KMP & senior management and cessation of their service are subjectto the approval of the NRC and the Board of Directors. Remuneration of KMP and othersenior management personnel is decided by the Managing Director (MD) on the recommendationof the Whole Time Director concerned where applicable broadly based on the RemunerationPolicy in respect of Whole Time Directors. Total remuneration comprises of:
1. A fixed base salary - set at a level aimed at attracting and retaining executiveswith professional and personal competence showing good performance towards achievingCompany goals.
2. Perquisites in the form of house rent allowance/ accommodation furnishingallowance reimbursement of medical expenses conveyance telephone leave travel etc.
3. Retirement benefits - contribution to PF superannuation gratuity etc. as governedby respective acts and rules prevailing in the Company from time to time.
4. Motivation /Reward - A performance appraisal is carried out annually and promotions/increments/ rewards are decided by MD based on the appraisal and recommendation of theconcerned Whole Time Director where applicable.
5. Severance payments - in accordance with terms of employment and applicablestatutory requirements if any.
The remuneration of other employees is fixed from time to time as per the guidingprinciples outlined above and considering industry standards and cost of living. Inaddition to basic salary they are also provided perquisites and retirement benefits as perschemes of the Company and statutory requirements where applicable. Policies ofmotivation / reward / severance payments are applicable to this category of personnel asin the case of those in the management cadre.
The Committee may recommend to the Board removal of a Director KMP or SeniorManagement Personnel due to following reasons:
Breach of Contract or trust
Conflict in interest
Such recommendation to the Board shall be with reasons recorded in writing.
Disclosure of information:
Information on the total remuneration of members of the Company's Board of DirectorsWhole Time Directors and KMP/ senior management personnel may be disclosed in theCompany's annual financial statements as per statutory requirements.
Application of the Remuneration Policy:
This Remuneration Policy shall continue to guide all future employment of DirectorsSenior Management including Key Managerial Personnel and other employees. Any departurefrom the policy can be undertaken only with the approval of the Board of Directors.