To the Members
Your Directors are pleased to present the Directors' Report of the Company togetherwith the audited accounts for the financial year ended 31st March 2018. The summarizedfinancial results for the year ended 31st March 2018 are as under:
1. FINANCIAL HIGHLIGHTS
The Company's financial performances for the year under review along with previousyear's figures are given hereunder:
Amount in Rs.
|Particulars || |
| ||2017-2018 ||2016-2017 ||2017-2018 ||2016-2017 |
|Revenue from operations (Net) ||8475155790 ||2922868939 3 ||7935785768 ||12942759881 |
|Profit/(Loss) Before Interest Depreciation Tax & Exceptional Items ||952802975 ||31280504 ||2418453302 ||774884322 |
|Less: Finance Cost ||97774437 ||47620067 ||913351624 ||325901831 |
|Profit/(Loss) Before Depreciation Tax & Exceptional Items ||855028538 ||-16339563 ||1505101678 ||448982491 |
|Less: Depreciation /Amortization ||114918535 ||39749061 ||1389446488 ||429584741 |
|Profit/(Loss) before exceptional items & tax ||740110003 ||-56088624 ||115655190 ||19397750 |
|Less: Exceptional items ||- ||- ||- ||- |
|Profit/(Loss) before tax ||740110003 ||-56088624 ||115655190 ||19397750 |
|Less: Deferred tax ||-17626949 ||-20693915 ||-270832896 ||-165177103 |
|Less: Current tax ||223749741 ||- ||257299741 ||2820720 |
|Add: Share of Profit/ (Loss) of Joint Ventures ||0 ||0 ||0 ||-31781738 |
|Profit/(Loss) after Tax ||533987211 ||-35394709 ||129188345 ||149972395 |
|Total other comprehensive income / (Exp.) for the period net of tax ||-634546 ||-891898 ||855929964 ||-4390081 |
|Profit /(Loss) after tax carried over to Balance Sheet ||533352665 ||-36286607 ||985118309 ||145582314 |
|Proposed Dividend ||- ||- ||- ||- |
Note : Financials for the year ended March 2018 are not comparable with that of yearended March 2017 due to Arvind Fashions Ltd. had commenced its operations from November2016 and Consolidation of subsidiaries (i.e. Tommy and Calvin Klein) is from April 2017.
2. Review of Business Operations
Your Company has posted Revenue from operations (Net) for the current year Consolidatedat Rs. 37935785768 which was at Rs. 12942759881 (consolidated from November 2016to March 2017) during the previous year. The Profit before interest depreciation tax andexceptional items for the current year Consolidated stands at Rs. 2418453302 which wasat Rs. 774884322 (consolidated from November 2016 to March 2017) during the previousyear.
The year under review was challenging on many fronts. Your company has completed yetanother significant year in which it has achieved a sustained growth in terms of turnoverand increase in profitability.
3. Statutory Auditors
At the Annual General Meeting ("AGM") held on August 04 2017 M/s. Sorab S.Engineer & Co Chartered Accountants were appointed as statutory auditors for aperiod of five years. The Report given by the Auditors on the financial statements of theCompany is part of the Annual Report.
4. Secretarial Audit
Pursuant to provisions of Section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of M/s. N. V. Kathiria & Associates Company Secretary inPractice Ahmadabad to conduct the Secretarial Audit of the Company for the financial yearended March 31 2018. The Secretarial Audit Report (in Form MR-3) is enclosed as anAnnexure-3 to this Report.
Pursuant to Section 134 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 your Company complied with the compliance requirements and the detail ofcompliances under Companies Act 2013 are enumerated below:
5. Extract of Annual Return
An extract of Annual Return in Form MGT-9 as on March 31 2018 is enclosed as anAnnexure-1 to this Report.
6. Board Meetings held during the year
The Company had ten Board meetings during the financial year under review which wereheld on 11/05/2017 21/06/2017 02/08/2017 04/09/2017 26/09/2017 28/09/201731/10/2017 08/11/2017 25/01/2018 and 30/03/2018. The maximum interval between any twomeetings did not exceed 120 days.
7. Nomination & Remuneration Policy of the Company
The Companie's policy on Nomination and remuneration of the Directors and KeyManagerial Personnel including criteria for determining qualifications positiveattributes independence of a Director and other related matters is enclosed as anAnnexure-2 to this Report.
8. Directors' Responsibility Statement
The Directors hereby make the following Responsibility Statement as required by Section134(3)(c) of the Companies Act 2013:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss account of the company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the annual accounts on a going concern basis;
e) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
9. Explanation or Comments on Qualifications Reservations or Adverse Remarks orDisclaimers made by the Auditors and the Practicing Company Secretary In their Reports
There were no qualifications reservations or adverse remarks made either by theAuditors or by the Practicing Company Secretary other that the below qualification byPracticing Company Secretary.
During the period under review the Company has not appointed Managing Directoror Chief Executive Officer or Manager and in their absence a whole-time Director asrequired under Section 203 of the Companies Act 2013 and rules made thereunder.
The company had appointed Mr. Suresh Jayaraman as Managing Director & ChiefExecutive Officer of the company and his appointment will be effective from August 012018.
10. Particulars of Loans guarantees or investments under Section 186 of the CompaniesAct 2013
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in Note No. 7 of the Notes to the financialstatements.
11. Related Party Transactions under Section 188 of the Companies Act 2013
All transactions with related parties were in the ordinary course of business and atarm's length. The Company has not entered into any transaction of a material nature withany of the related parties which are in conflict with the interest of the company. Thedetails of related party transactions are disclosed in Note No. 34 of the Notes to thefinancial statements.
The profits for the year had been retained to invest in expanding Business of theCompany hence your directors are unable to declare any dividend for the year ended 31stMarch 2018
13. Material changes and commitments affecting the financial position of the Companywhich have occurred between March 31 2018 and 03rd May 2018 (date of the Report)
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (March 31 2018) and the date of the Report (May3 2018).
14. Information on Conservation of Energy Absorption of technology and ForeignExchange Earnings and Outgo
i) Conservation of Energy
The energy consumption is insignificant so there is no need to take steps for theconservation of energy.
ii) Absorption of technology
The Company has not absorbed any technology.
iii) Foreign Exchange Earnings and Outgo
| || ||Amount in Rs. |
|Particulars ||2017-2018 ||2016-2017 |
|Earning in Foreign Currency ||203751561 ||92451210 |
|Expenditure in Foreign Currency ||316681181 ||3839828 |
15. Statement concerning development and implementation of Risk Management policy ofthe Company
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis.
16. Corporate Social Responsibility (CSR)
The Companies had constituted CSR Committee and adopted CSR policy. The average netprofits during the three immediately preceding financial years are nil hence there was norequired to spend any amount during the financial year.
17. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 the Board of Directors("Board") has carried out an annual evaluation of its own performance and thatof its Committees and individual Directors.
The performance of the Board and individual Directors was evaluated by the Boardseeking inputs from all the Directors. The performance of the Committees was evaluated bythe Board seeking inputs from the Committee Members.
The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure effectiveness of Board processes information and functioningetc. The criteria for performance evaluation of Committees of the Board included aspectslike composition of Committees effectiveness of Committee meetings etc. The criteria forperformance evaluation of the individual Directors included aspects on contribution to theBoard and Committee meetings like preparedness on the issues to be discussed meaningfuland constructive contribution and inputs in meetings etc.
18. Change in the nature of the Business
During the year under review the company had changed its nature of business fromRetailer to Wholesale of branded Apparel and Accessories Business.
19. Directors & Key Managerial Personnel
During the year under review Mr. Nilesh Shah (DIN: 01711720) and Mr. Kamal Singal(DIN: 02524196) appointments were regularised by the members in the Annual GeneralMeeting held on August 04 2017 to hold office for 5 year from the date of theirappointment as an Independent Directors of the Company.
The Independent Directors have submitted a declaration that each of them meet thecriteria for independence as provided in Section 149(6) of the Companies Act 2013 andthere has been no change in the circumstances which may affect their status as anIndependent Director during the year.
Mr. Soundararajan Kannan Chief Financial Officer and Mr. Vijay Kumar B S CompanySecretary are the Key Managerial Personnel ("KMP") of the Company and they werealso KMPs of Arvind Lifestyle Brands Limited a wholly-owned subsidiary of the Company.
20. Subsidiaries /Joint Ventures / Associates
As on March 31 2018 the Company has 2 subsidiary companies and 2 Joint VentureCompanies.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 a statement containing salient features of financialstatements of subsidiaries associates and joint venture companies in Form AOC- 1 isattached to the Financial Statements. The separate audited financial statements in respectof each of the subsidiary shall be kept open for inspection at the Registered Office ofthe Company. The Company will also make available these documents upon request by anyMember of the Company interested in obtaining the same.
During the year under review your Company has neither accepted nor renewed anydeposits within the meaning of provisions of Chapter V-Acceptance of Deposits by Companiesof the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
22. Significant and Material Orders Passed by the Regulators or Courts or Tribunalsimpacting the Going Concern status of the Company
There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company
23. Internal financial Controls
Your Company has in place adequate internal financial controls with reference tofinancial statements and dedicated Internal Audit team to ensure its adequacy. The scopeand authority of the Internal Audit function is well defined in the organisation. Tomaintain its objectivity and independence the Internal Audit function reports to theChairman of the Audit Committee of the Board. The Internal Audit Department monitors andevaluates the efficacy and adequacy of internal control systems in your Company itscompliance with operating systems accounting procedures and policies of your Company.Based on the report of the Internal Audit function process owners undertake correctiveaction in their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions suggested are presented to the Audit Committee of theBoard.
The Statutory Auditor of your Company has also given an opinion that the InternalFinancial Controls over Financial Reporting are adequate and are operating effectively atthe end of the financial year.
24. Disclosure of composition of Audit Committee
The Board had re-constituted the Audit Committee during the year under review andconsists of the following members :
i) Mr. Jayesh K. Shah
ii) Ms. Nithya Eswaran
iii) Mr. Nilesh Shah
iv) Mr. Kamal Singal
25. Transfer of Unclaimed Dividend to Investor Education and Protection Fund
The Provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno dividend declared and paid last year.
26. Share Capital
During the year under review the Company has increased its paid up capital from Rs.217416400 to Rs 231702908 by allotting 4538578 shares on rights basis and byallotting 2604676 as bonus shares in the ratio of 1:0.023.
A. Issue of Equity Shares with differential rights-No such issue and accordingly nocompliance.
B. Issue of Sweat Equity Shares-No such issue and accordingly no compliance.
C. Employees Stock Option Scheme as per the below disclosure.
Disclosures required pursuant to Rule 12 (9) of the Companies (Share Capital andDebentures) Rules 2014:
|(a) ||Options granted ||3394114 |
|(b) ||Exercise price ||54 91 and 97 |
|(c) ||Options vested ||1624706 |
|(d) ||Options exercised ||0 |
|(e) ||The total number of Equity Shares arising as a result of exercise of option ||0 |
|(f) ||Options lapsed ||0 |
|(g) ||Variation of terms of options ||78065 new options were given as adjustment in lieu of bonus issue of shares to the equity share holders in the ratio of 1:0.023. |
|(h) ||Money realized by exercise of options during the year ||0 |
|(i) ||Total number of options in force ||3472179 |
|0) ||Employee wise details of options granted to;- || |
| ||(i) Key Managerial personnel during the year ||Nil |
| ||(ii) any other employee who received a grant in any one year of option amounting to 5% or more of options granted during that year; ||Nil |
| ||(iii) identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of Grant ||Nil |
D. Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees-Not applicable.
27. Vigil Mechanism
The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or ethics policy. The Policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is affirmed that no personnel of the Companyhas been denied access to the Audit Committee.
28. Particulars of Employees
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company will be provided uponrequest. In terms of Section 136(1) of the Companies Act 2013 the Annual Report andAccounts are being sent to the Members and others entitled thereto excluding theinformation on employees' particulars which are available for inspection by the Members atthe Registered Office of the Company during business hours on working days of the Companyup to the date of the ensuing Annual General Meeting. If any Member is interested inobtaining a copy thereof such Member may write to the Company Secretary in this regard.
29. Disclosure as per sexual harassment of women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. During the financial year 2017-18 the Company has not received any complaintson sexual harassment.
The Directors wish to express their appreciation for the continued support of bankersfinancial institutions customers and various Government agencies. The Directors also wishto thank all the employees for their contribution support and continued cooperationthroughout the year.
|For and on behalf of the Board of Arvind Fashions Limited |
|Sd/- ||Sd/- |
|Jayesh Kantilal Shah ||Kulin Sanjay Lalbhai |
|Director (DIN: 00008349) ||Director (DIN: 05206878) |
|Place: Ahmedabad || |
|Date: 03/05/2018 || |