Your Directors have pleasure in presenting the 32nd Annual Report on the business andoperations of your Company together with the audited accounts for the financial year ended31st March 2021.
1. FINANCIAL RESULTS
Your Company's performance during the year is as below:
(Rs. in Lakhs)
|Particulars ||Year ended 31.03.2021 ||Year ended 31.03.2020 |
|Total Revenue ||28732.19 ||56640.67 |
|Profit before Interest Tax & Depreciation ||1.32 ||3580.59 |
|Less: Net Interest & Finance Cost ||5094.50 ||5297.78 |
|Less: Depreciation ||3214.79 ||3835.35 |
|Profit before tax ||(8307.97) ||(5552.54) |
|Provision for Tax & Deferred tax ||(1888.86) ||(1359.85) |
|Profit for the year ||(6419.11) ||(4192.69) |
|Other comprehensive income ||83.80 ||(21.26) |
|Total comprehensive income ||(6335.31) ||(4213.95) |
2. PERFORMANCE DURING THE YEAR
During the year under review the company has achieved revenue of Rs 28732.19 Lakh ascompared to Rs. 56640.67 Lakh for the previous financial year. The Net loss for the yearstood at Rs. 6419.11 Lakh against Rs. 4192.69 Lakh in the previous year.
Your Company looks forward to strengthen its operations by curtailing expenditureaggressive export marketing etc. This would help the Company to improve its results andprofitability.
3. IMPACT OF COVID-19 PANDEMIC ON BUSINESS:
I. ABILITY TO MAINTAIN OPERATIONS INCLUDING THE FACTORIES/UNITS/ OFFICES SPACESFUNCTIONING AND CLOSED DOWN:
The Company's Manufacturing Facilities remained shut from 24th March 2020 due tolockdown and we would like to inform you that the operations of the plant was started from1st September 2020 though the Corporate Office has resumed earlier. The company compliedwith all requirements relating to Social Distancing and wear face mask face cover andhave proper sanitizations thermal checking at the gate maintaining proper hygiene withproper interval with reduced work force.
II. SCHEDULE IF ANY FOR RESTARTING THE OPEARTIONS:
The operations started from 1st September 2020 and full fledged operations were startedwhen the major markets in the country were opened then it started based on revisedproduction plan after considering current market scenario and according to the guidelinesissued by the Government.
III. STEPS TAKEN TO ENSURE SMOOTH FUNCTIONING OF OPEARTIONS:
In this regard various actions have been taken considering Employees Health as well asour Vendors capability to work on priority for our operations. The Company has takenproper steps to ensure smooth functioning of operations.
IV. ESTIMATION OF THE FUTURE IMPACT OF COVID-19 ON ITS OPEARTIONS:
COVID-19 pandemic has caused massive disruptions across every sphere of human andbusiness activity. During first quarter of FY 2021-22 there has been severe second waveof Covid-19 across all States in India and hence many States announced lock-down whichwere lifted in phased manner from June 2021. As a result domestic demand for denimfabrics remained subdued during fi'rst quarter of FY 2020-21. In some States still curbsare imposed for timing in Malls retail area etc. Now with successful implementation ofvaccination drive by Government across India the Covid-19 vaccination doses administeredin India have crossed 50 crore. Due to receding impact of second wave coupled withincrease in vaccination the domestic demand in denim textile market should showimprovement in coming quarters. Exports market demand have increased significantly and thecompany is well positioned to reap benefits from substantial increase in exports demandfor denim fabrics with higher exports during current year.
V. DETAILS OF IMPACT OF COVID-19 ON LISTED ENTITY'S CAPITAL AND FINANCIAL RESOURCES:
a) Profitability: - It was adversely affected.
b) Liquidity Position:- There is short term liquidity mist match due to prolongedoperating cycle of the domestic denim textile market. However the company is confident tomanage the working capital of the company in coming periods due to reduction in debt andimproving market conditions.
c) Ability to service debt and other financial arrangements:- The Company has withdrawnfrom the restructuring of debts as per Reserve Bank of India framework. The company hasavailed ECLGS 2.0 loans as per guidelines of Government of India and the company has soldsome of windmills. Consequently the company has reduced the working capital facultieswith consortium bankers. Hence the company does not have much liquidity concerns thoughcash position is challenging with our reduced limits and tight control over expenditurethe company will be able to service its debt and other financial arrangement as it comesup.
d) Assets: - Company has secured all its assets and are in working condition.
e) Internal financial reporting and control: - Internal Financial Reporting and Controlare not adversely affected.
f) Supply Chain: - At present the supply chain of the Company in exports istemporarily affected to some extent due to Global shipping lines shortages in the World.However the company is positive and hopes that it will get normalize.
g) Demand for its products/services: - It will continue to show improvement withincreasing vaccination in India and other countries in World.
VI. EXISTING CONTRACTS/ AGREEMENTS WHERE NON FULFILLMENT OF THE OBLIGATIONS:
The Existing contracts/agreements where non-fulfillment of the obligations by anyparty had significant impact on the business of the company.
VII. OTHER RELEVANT MATERIAL UPDATES ABOUT THE LISTED ENTITY'S BUSINESS:-
No such material information at this time.
Your Directors do not recommend payment of any Dividend for the financial year ended31st March 2021.
5. INDIAN ACCOUNTING STANDARD (IND AS)
The company has adopted Indian Accounting Standards (IND AS) with effect from 1stApril 2017 pursuant to the notification of Companies (Indian Accounting Standard) Rules2015 issued by the Ministry of Corporate Affairs. Hence previous year's figures have beenregrouped and reclassified wherever considered necessary to confirm the figuresrepresented in the current period.
6. COMPLIANCE OF SECRETARIAL STANDARDS
During the year the Company has complied with the requirements of the ApplicableSecretarial Standards i.e. SS-1 and SS-2 relating to "Meeting of Board ofDirectors" and "General Meetings" respectively issued by Institute ofCompany Secretaries of India.
7. RESERVES AND SURPLUS
The Company has not transferred any amount to General Reserves for the Financial Year2020-21.
8. SHARE CAPITAL
The paid up Equity Share Capital as at 31st March 2021 stood at Rs. 2345.98 Lakhs.During the year under review the Company has neither made any issue of equity shares withdifferential voting rights nor has granted any stock options or sweat equity. The Companyhas no scheme of provision of money for purchase of its own shares by employees or bytrustees for the benefit of employees.
9. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS
During the financial year under review pursuant to SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 your Company has complied with all theapplicable provision of Corporate Governance.
Separate report on Corporate Governance and Management Discussion & Analysis asrequired under the SEBI Listing Regulations are forming parts of the Annual Report.
The requisite certificate from Practicing Company Secretary confirming the compliancewith the condition of Corporate Governance along with the observation is attached to theReport on Corporate Governance.
10. MATERIAL CHANGES IF ANY
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial relate and the dateof this report except the sale of 9(Nine) windmills with an aggregate capacity of 13.5 MWout of the total 14 (fourteen) windmills installed by the company at various locations inGujarat and decision to sell a substantial part of undertaking (spinning unit) situated atVillage Sari Sarkhej Bavla Highway Ta. Sanand Dist. Ahmedabad Gujarat.
11. 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.
12. FIXED DEPOSITS
Your company has accepted/renewed the deposits aggregating to Rs. 6808.20 Lakhs frompublic & Members during the year under review after complying with the provisions ofthe Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014. There has beenno default in repayment of deposits or payment of interest thereon during the year underreview. There are no deposits which are not in compliance with the requirements of ChapterV of the Companies Act 2013.
Your directors appreciate the support which the company has received from the publicand shareholders to its fixed deposit scheme.
13. INSURANCE AND CLAIMS
All properties and insurable interests of the company including building plant andmachinery and stocks wherever necessary and to the extent required have been adequatelyinsured.
14. SUBSIDIARY COMPANIES /JOINT VENTURES/ASSOCIATE COMPANIES
On November 17 2017 the company had incorporated a subsidiary company namely M/s. AyeEss Spinning Mills Private Limited Ahmedabad. There after it had acquired 100% equityshares of such company and accordingly it becomes wholly owned subsidiary company of thecompany.
The Resolution passed by the board of directors of Aye Ess Spinning Mills PrivateLimited the company has filed an application under section 248(2) of the Companies Act2013 for voluntary striking off^ the name of the company from the Registrar of Companieswith ROC Gujarat after complying with all the prescribed legal formalities. Pendingpublication of notice in the Official Gazette by the ROC Gujarat and the name of the AyeEss Company is yet to be striken off^ from Registrar of Companies and to be dissolved asat the year end. As the net worth of the Aye Ess as at March 31 2021 is NIL theinvestment in Aye Ess amounting to Rs. 1.00 Lac has been provided as loss in diminution invalue of investment in subsidiary in Standalone Financial Results of the Company.
Therefore there would be no Consolidated Financial Results of the parent company as atMarch 31 2021.
Company is not having any associate company and Joint venture as defined under theprovisions of Companies Act 2013 whose accounts are to be consolidated with the accountsof the company.
15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
For all related party transactions prior omnibus approval of the Audit Committee isobtained on a yearly basis for the transactions which are of foreseen and repetitivenature and such approval is in interest of the Company. Transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval.
A detailed report on material contracts and arrangements made during the financial year2020-21 being arm's length transactions have been reported and annexed hereto in formAOC-2 as Annexure -A forming part of this report.
There are no materially significant related party transactions made by the company withpromoters key managerial personnel or other designated persons which may have potentialconflict with interest of the company at large.
The Company has adopted a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Company's website at the web linkhttp://www.aarveedenims.com/investors/ corporate-governance/
16. AUDIT COMMITTEE
Details pertaining to Composition of Audit Committee are included in CorporateGovernance Report. All recommendations made by were accepted by Board.
17. RISK MANAGEMENT
The Company has adopted a Risk Management Policy for a systematic approach to controlrisks. The Risk Management Policy of the Company lays down procedures for riskidentification evaluation monitoring review and reporting. The Risk Management Policyhas been developed and approved by the Senior Management in accordance with the businessstrategy.
18. INTERNAL CONTROLS SYSTEMS AND ADEQUACY
The Company has in place an adequate system of internal controls. It has documentedpolicies and procedures covering all financial and operating functions and processes.These have been designed to provide a reasonable assurance with regard to maintaining ofproper accounting controls for ensuring reliability of financial reporting monitoring ofoperations protecting assets from unauthorized use or losses and compliance withregulations.
19. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
1) Changes in Directors and Key Managerial Personnel
In accordance with the provision of Section 152 (6) of the Companies Act 2013 andArticles of Association of the Company Mr. Vinod P Arora (DIN: 00007065) ManagingDirector shall retire by rotation at the forthcoming Annual General Meeting of the Companyand being eligible offer himself for re-appointment. The Board recommends hisre-appointment.
Mr. Amol Dalal (DIN: 00458885) Mr. Ashok Gandhi (DIN: 00022507) Mr. Sanjay Majmudar(DIN: 00091305) & Mrs. Aarti Thakkar (DIN: 08603909) being independent directors arenot eligible for retire by rotation and hold office for five consecutive years for a termfrom the date of their appointment by the Board of Directors as per the provisions ofSection 149 152 read with Schedule IV of the Companies Act 2013 and Regulation 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Mr. Rajesh P. Arora Non Executive director of the Company has resigned w.e.f. 24thAugust 2020.
Information regarding the meeting of directors and remuneration etc. is given in theCorporate Governance report attached with the report.
The company is having following Key Managerial Personnel: -
|Key Managerial Personnel ||Designation |
|1 Mr. Vinod P. Arora (DIN: 00007065) ||Chairman & Managing Director |
|2 Mr. Ashish V. Shah (DIN: 00007201) ||Managing Director |
|3 Mr. Kalpesh V. Shah (DIN: 00007262) ||Whole Time Director |
|4 Mr. Nipun Arora (DIN: 00989835) ||Whole Time Director |
|5 Mr. Ketan Desai ||Chief Financial Officer |
|7 Ms. Yashaswini Pandey* ||Company Secretary |
|8 Mr. Darshak Thaker** ||Company Secretary |
*Ms. Yashaswini Pandey Company Secretary of the company has appointed w.e.f.07.10.2020.
**Mr. Darshak Thaker Company Secretary of the Company resigned w.e.f. 07.10.2020.
2) Declaration by an Independent Director(s)
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Act and Regulation 16 (1) (b) ofthe Listing Regulations. In the opinion of the Board they fulfill the conditions ofindependence as specified in the Act and the Rules made there under and are independent ofthe management. The detail terms of Independent Directors are disclosed on the Company'swebsite with the following link http://www.aarvee-denims.com/script-code-stock-exchanges.html
3) Annual Evaluation of Board Performance and Performance of its Committees and ofDirectors
Pursuant to the applicable provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance and the Directors individually andas well as the evaluation of the working of its Committees. The criteria applied inevaluation process are explained in the Corporate Governance Report.
20. NUMBER OF MEETINGS OF THE BOARD
During the year under review five board meetings were convened and held the detailsof which are given in the corporate governance report. The intervening gap between themeetings was within the period prescribed under the Act and the Listing Regulations.
21. COMMITTEES OF BOARD OF DIRECTORS
Your Company has several Committees which have been established as part of bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.
The Company has following Committees of the Board:
a. Audit Committee
b. Nomination and Remuneration Committee
c. Stakeholders' Grievances and Relationship Committee
d. Corporate Social Responsibility Committee
e. Share Transfer Committee
f. Risk Management Committee
A detailed note on the committees with respect to composition meetings powers andterms of reference is provided under the corporate governance report section in thisAnnual Report.
22. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that 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 fairview of the state of afi^airs of the Company as at 31st March 2021 and of the Profit ofthe Company for the year ended on that date;
(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 andthat such internal financial controls are adequate and are operating eff^ectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating eff^ectively.
23. CORPORATE SOCIAL RESPONSIBILITY
In Accordance with section 135 of the Act and Rules framed thereunder the Company hasconstituted a Corporate Social Responsibility ("CSR") Committee of Directors.The details of composition of CSR Committee are given in the Corporate Governance Report.
The details of CSR policy and CSR spending by the Company have been provided asAnnexure-B to this report as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014.
24. POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure.
The Company has not received any complaint of sexual harassment during the financialyear 2020-21.
25. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013 andRegulation 22 of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 aVigil Mechanism or 'Whistle Blower Policy' for Directors employees and other stakeholdersto report genuine concern has been established. The same is uploaded on the website of theCompany http://www.aarvee-denims.com/ pdfs/vigil-machanism.pdf. It is affirmed that nopersonnel of the Company have been denied access to the Audit Committee.
26. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
(1) Statutory Auditors
M/s Shah & Shah Associates Chartered Accountant Ahmedabad (Firm Registration No.113742W) Statutory Auditors of the Company were appointed in the 28th Annual GeneralMeeting to holds office until the conclusion of the 33rd Annual General Meeting going tobe held in the calendar year 2022.
M/s Shah & Shah Associates Chartered Accountant Ahmedabad (Firm Registration No.113742W) Statutory Auditors of the Company have submitted the Audit Reports for AuditedStandalone Financial Results of the Company for the financial year ended 31st March 2021with unmodified opinion.
(2) Cost Auditors
The company has received a consent letter from the cost auditors M/s. N. D. Birla andCo. Cost Accountant to the efi^ect that their appointment if made would be within theprescribed limits under section 141(3) (g) of the Companies Act 2013 and that they arenot disqualified for appointment. The board of Directors of the company at its meetingheld on 28th June 2021 appointed M/s. N. D. Birla & Co. Cost Accountants as the costauditors of the Company to conduct the audit of cost records maintained by the Company asrequired by the Companies (Cost Records and Audit) Rules 2014 as amended from time totime.
The members are requested to ratify the remuneration to be paid to the cost auditors ofthe company
(3) Secretarial Auditors
Pursuant to Section 204 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr. TapanShah. Practicing Company Secretary (COP No. 2839) for conducting Secretarial Audit of theCompany for the financial year ended on 31st March 2021. The Secretarial Audit report ofMr. Tapan Shah. Practicing Company Secretary along with the observations for the financialyear ended 31st March 2021 is annexed as Annexure - C.
28. FRAUD REPORTED BY AUDITORS UNDER SUB SECTION (12) OF SECTION 143 OTHER THAN THOSETO REPORTABLE TO CENTRAL GOVERNMENT:
During the year under review the Statutory Auditors and Secretarial Auditor have notreported any instances of fraud committed in the Company by its officers or Employees tothe Audit Committee under Section 143(12) of the Companies Act 2013
29. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 (3) ofThe Companies (Accounts) Rules 2014 is annexed as Annexure - D.
30. PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is attached as Annexure - E to this report.
31. ANNUAL RETURN
The extract of Annual Return is no longer required to be attached with the Director'sReport u/s 134(3)
(a) of the Companies Act 2013 read with Rule 12(1) of the Companies (Management &Administration) Rules 2014 vide notifications issued by Ministry of Corporate Aff^airs(MCA) dated 28/08/2020 and 05/03/2021.
Pursuant to Sub-section 3(a) of Section 134 and Sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules2014 the copy of the Annual Return of the Company for the Financial Year ended on31.03.2021 in Form MGT-7 is available on website of theCompanyhttp://www.aarvee-denims.com.
32. INDUSTRIAL RELATIONS
The industrial relations continued to be generally peaceful and cordial.
33. TRANSFER OF AMOUNT/SHARES TO INVESTOR EDUCATION AND PROTECTION FUND
The amounts which remained unpaid or unclaimed for a period of seven years have beentransferred by the company from time to time on due dates to the Investor Education andProtection Fund.
Pursuant to the provisions of Section 124(6) of the Companies Act 2013 read with theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 as amended till date transfer of shares held by the shareholders of theCompany whose dividends are unpaid for a consecutive period of 7 years or more to theDemat A/c of the Investor Education and protection fund authority opened by the lEPFAuthority in terms of the aforesaid Rules is under process.
Pursuant to the provision of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012there are no unpaid and unclaimed amounts lying with the Company as on 26th December 2020(date of last Annual General Meeting).
The Company has Company Secretary as Nodal Officer under the provisions of the InvestorEducation and Protection Fund.
34. REGULATORY STATEMENT
The Equity shares of your company are listed on the BSE Limited (BSE) and the NationalStock Exchange of India Limited (NSE).
The Company has paid the listing fees for the year 2020-21 as well as for 2021-22 toabove stock exchanges.
35. INFORMATION TECHNOLOGY
Your company keeps in line with the ongoing technological developments taking place inthe country and worldwide. The information technology adopted by the company serves as animportant tool of internal control as well as providing the benefits of modern technologyto its esteemed customers. Company is taking utmost precautions for the security of dataand having a dedicated team for this. During the financial year 2020-2021 there was noinstance of cyber security breach happened in the company.
36. CREDIT RATING
During the year under review Brickwork Ratings India Private Limited for Bank Loanfacilities and India Ratings and Research Private Limited for Deposits provided thefollowing Credit Ratings to the company:-
|Facility ||Tenure ||Rating |
|Term Loans ||Long Term ||BWR B + ( Credit Watch with Negative Implications) |
|Fund Based Working Capital || || |
|NF Based Working Capital ||Short Term ||BWR A4 |
|Term deposit programme (longterm) (Fixed Deposit) ||INDtD || |
| ||FOR AND ON BEHALF OF BOARD OF DIRECTORS |
| ||Vinod P Arora |
|Place: Ahmedabad ||Chairman and Managing Director |
|Date: 13.08.2021 ||DIN:00007065 |
|Registered office: || |
|191 Shahwadi || |
|Nr. Old Octroi Naka Narol - Sarkhej Highway || |
|Narol Ahmedabad - 382 405 || |
|CIN: L17110GJ1988PLC010504 || |