TO THE SHAREHOLDERS
We present herewith our Annual Report along with the Audited Accounts of the Companyfor the year ended March 31 2018.
| ||March 31 2018 ||March 31 2017 |
|Operations for the year resulted in (Loss)/Profit before || || |
|Interest and Depreciation of ||(1600.72) ||(418.51) |
|less: Finance Costs ||1413.85 ||1351.91 |
|less: Depreciation ||275.19 ||283.16 |
|less: Exceptional Items || ||106.29 |
|(Loss)/Profit Before Tax ||(3289.76) ||(2159.87) |
|less: Taxation || || |
|(Loss)/Profit After Tax ||(3289.76) ||(2159.87) |
|Other Comprehensive Income ||78.35 ||(56.53) |
|Balance brought forward ||(3216.60) ||(1000.20) |
|leaving a Balance of which is carried forward ||(6428.01) ||(3216.60) |
Indian Accounting Standards (Ind AS) have been adopted with effect from April 1 2017as notified by the Ministry of Corporate Affairs. Accordingly previous years' figureshave been restated to comply with Ind AS.
The Directors do not recommend any dividend.
REVIEW OF KEY BUSINESS MATTERS
Economic growth in 2017-18 at 6.6% continued to keep capacity utilization across manyindustries sub-optimal and private investment remains low. However stabilizing GSTaddressing stressed loans and recapitalization of banks and the prospects of a normalmonsoon suggest a return to improved domestic GDP growth in coming years. In othereconomies and our export markets consumer and business confidence in recent monthstogether with projected global GDP rise in 2018/2019 translate into positive signs ofaccelerating global trade particularly which in the Company views is optimistic.
The Company's products faced stagnant demand and competitive pressures from syntheticand blended fabrics and cheaper supplies from China. A marked shift to ready-mades and themove away from formal wear is also impacting overall superior fabric demand globally.Besides disruptive effects of GST implementation particularly the resistance from textiletrade and markets severe working capital constraints continued in the year intensifyingthe vicious-circle nexus with operating losses.
Demand is particularly affected due general liquidity constraints in the marketimpacted by the time-consuming recovery from demonetization - unlike a faster recover seenby FMCG - and the disruptions during transition to GST. Besides the demand situation theCompany's operations suffered hugely due to the said combination of working capitalconstraints and cash losses. During the year sales volume were lower at 16.4 lac metres(previous year: 27.2 lac metres) resulting in a substantially lower revenue of Rs. 59.0crores (previous year : Rs. 99.2 crores).
To address the difficult financial position the management has been continuouslyfocusing on avenues to raise resources including through sale of surplus assets to inductfunds into operations and reduce debt. The general tight liquidity conditions were notconducive to asset sales last year but the Company expects success in its efforts duringthe current year. A reasonable assessment is that there is sufficient underlying value insurplus and disposable assets to make a meaningful impact on the Company's finances.
The Company transitioned to the GST system satisfactorily and there have been no majorhitches. Despite the initial effects and challenges a stabilized and moderated GST willhelp improve business prospects and trade.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Sri A. C. Mukherji Sri G. Momen Independent Directors and Sri C. L. RathiNon-Executive Director retired from the Board of Directors of the Company with effectfrom September 22 2017. The Board once again places on record its sincere and deepappreciation of the valuable guidance and services rendered by Sri A. C. Mukherji Sri G.Momen and Sri C. L. Rathi during their respective long tenures on the Board of erstwhileDigjam Limited and of the Company.
Ms. Meenakshi Birla retires by rotation at the forthcoming Annual General Meeting andbeing eligible offers herself for re-appointment. All Independent Directors have givendeclarations that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013.
Upon completion of his term on December 31 2017 the Board on the recommendation ofthe Remuneration & Nominations Committee re-appointed Sri C. Bhaskar as ManagingDirector & Chief Executive Officer for a period of three years wef January 1 2018.The Resolution setting out terms of his re-appointment is proposed for the forthcomingAnnual General Meeting.
During the year five Board Meetings were held as detailed in the annexed CorporateGovernance Report.
STATUTORY INFORMATION AND OTHER MATTERS
Information as per the requirements of the Act our report on Corporate Governancealongwith the Auditors' Certificate on Compliance and the Managements' Discussion &Analysis Report form part of this report and are annexed hereto.
The extract of the Annual Return in Form MGT-9 is attached herewith.
The Board has on the recommendation of the Remuneration & Nominations Committeeframed a Policy for appointment and remuneration of Directors and Senior ManagerialPersonnel as well as criteria for determining independence and other relevant matters(policy and criteria annexed herewith). Pursuant to the provisions of the Act and SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the Board carried out annual evaluation of its performance and ofindividual Directors (including independent) as well as the evaluation of its AuditRemuneration and Nominations and Stakeholders Relationship Committees. The concernedDirector did not participate in the meeting while being evaluated. A questionnaire wascirculated to all the Directors. The Remuneration and Nominations Committee also evaluatedthe performance of every Director. The evaluation of the Chairman of the Board and thenon-independent Directors was also carried out at the separate meeting of the IndependentDirectors.
The information on Conservation of Energy Technology absorption foreign exchangeearnings and outgo is annexed hereto.
The Company has in place a system of periodical review of business risks. The AuditCommittee and the Board are informed about the risks identified assessment thereof andminimization procedures and identification of elements of risks which in the opinion ofthe Board may threaten existence of the Company.
The Company has an internal control system commensurate with its size of operations.The internal audit function is carried out by an external agency which reports to theChairman of the Audit Committee. During the course of internal audit the efficacy andadequacy of internal control systems of the Company is also evaluated. Based on thereports corrective actions are taken and the controls strengthened.
The Company has no subsidiary joint venture or associate company. The Company has notinvited/accepted any Fixed Deposits under Chapter V of the Act and there are noneoutstanding on March 31 2018. The Company has not granted any loan or issued anyguarantee or made any investment to which the provisions of Section 186 of the Act apply.
All transactions with related parties during the year were in the ordinary course ofbusiness on an arm's length basis. There are no such material transactions entered into bythe Company which may have a potential conflict of interest with that of the Company andto which Section 188(1) of the Act applies and thus disclosure in Form AOC-2 is notrequired to be annexed. In accordance with the provisions of the Act and SEBI ListingRegulations all Related Party Transactions are placed before the Audit Committee forapproval or for omnibus approval as necessary. The statement of all such transactionsentered into is placed before the said Committee for their review. The Policy on RelatedParty Transactions as approved by the Board is uploaded on the Company's website at thelink: http://digjam.co.in/pdf/RPTPolicy 2.pdf.
There are no significant and material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and its future operations.
The Audit Committee constituted by the Company meets the requirement of Section 177 ofthe Act and Regulation 18 of SEBI Listing Regulations; details of its composition arefurnished in the Corporate Governance Report. There was no instance during the year wherethe Board had not accepted any recommendation of the Audit Committee.
The Company has a vigil mechanism for Directors and employees to report genuineconcerns in accordance with the Whistle Blower Policy; no employee is denied access to theAudit Committee in this regard. The said Policy provides for safeguards through ProtectedDisclosures against victimization of persons who use such mechanism and is displayed onthe Company's website. The details of the Whistle Blower Policy are also annexed herewith.
The Company has constituted a committee on Corporate Social Responsibility (CSR) thedetails of which are furnished in the Corporate Governance Report. While the statutoryrequirements on spending are not applicable to the Company in view of loss/inadequateprofit small steps have always been taken by the Company for social and inclusivedevelopment in its local area; however given the relatively small size and geographicalspread it has not been practical to yet undertake any significant projects beyond these.The CSR Policy of the Company is annexed herewith.
Information required pursuant to Section 197(12) of the Act read with Rule 5 (asamended) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company is annexed. However in terms of Section 136of the Act the Annual Report is being sent to members of the Company excluding theinformation in respect of employees of the Company pursuant to Rule 5(2) of the aforesaidRules and which will be furnished on request. The aforesaid statement is also availablefor inspection by shareholders at the Registered Office of the Company during businesshours on working days upto the date of the ensuing Annual General Meeting.
The Company has set up a Committee to look into the complaints under The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and nocomplaint relating to sexual harassment at work place has been received during the year.
DIRECTORS' RESPONSIBILITY STATEMENT
The Managing Director & Chief Executive Officer and the Chief Financial Officerhave certified the Financial Statements as per the requirements of Regulation 17(8) of theSEBI Listing Regulations which has been reviewed by the Audit Committee and taken onrecord by the Board. Having taken reasonable and bonafide care pursuant to Section 134(5)of the Act the Directors indicate that (a) in the preparation of annual accounts theapplicable Accounting Standards had been followed alongwith proper explanations relatingto material departures; (b) the Directors had selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the loss of the Company for the year; (c) the Directorshad taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (d) the Directors have preparedthe annual accounts on a going concern basis; (e) the Directors had laid down internalfinancial controls to be followed by the Company and that such internal financial controlsare adequate and were operating effectively; and (f) the Directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
The Statutory Auditors and Secretarial Auditors have made no audit qualifications forthe year under review.
M/s Deloitte Haskins & Sells LLP Chartered Accountants had been appointed as theStatutory Auditors of the Company at the First Annual General Meeting to hold office untilthe conclusion of the Sixth Annual General Meeting of the Company i.e. for a term of fiveyears.
The Company had appointed M/s N.D. Birla & Co. Cost Accountants Ahmedabad toaudit the cost accounts of the Company for the year ended March 31 2018 and theremuneration payable to them was approved by the Members at their 2nd Annual GeneralMeeting. Further the Board has on the recommendation of the Audit Committee appointedthe said Cost Accountants for audit of cost records of the Company for the year endingMarch 31 2019. In terms of Section 148 (3) of the Act the remuneration payable to themis required to be approved at the forthcoming Annual General Meeting.
Pursuant to the provisions of Section 204 of the Act the Company had appointed SriViral Sanghavi (Proprietor: Viral Sanghavi & Associates) Practising CompanySecretary to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is attached herewith.
We place on record our sincere appreciation of the valuable cooperation and supportreceived at all times by the Company from its bankers other stakeholders concernedGovernment Departments other authorities its channel partners employees andshareholders.
| ||For and on behalf of the Board |
|New Delhi ||Sidharth Birla |
|May 24 2018 ||Chairman |