TO THE MEMBERS
Your Directors have pleasure in presenting their Seventy Six AnnualReport together with the Audited Statements of Accounts of your Company for the year endedMarch 312022.
FINANCIAL RESULTS
| | (Rs. in Lacs) |
| Particulars | 2022 | 2021 |
| Profit/(Loss) before depreciation/Exceptional Items and taxation | (284.50) | 580.38 |
| Less/Add: Depreciation | 402.00 | 475.85 |
| Profit/(Loss) for the year before taxation | (686.50) | 104.53 |
| Add/ (Less): Provision for Current/Earlier Year Taxation | 0.00 | (0.06) |
| Profit/(Loss) for the year | (686.50) | 104.47 |
| Add: Balance b/f of Retained Earnings of Previous Years | (19865.31) | (19969.78) |
| Balance to be Carried Forward to the Next Year | (20551.81) | (19865.31) |
PERFORMANCE REVIEW
Highlights of performance during the financial year 2021-22 are:
• Total Revenue from Operation of the Company is Rs. 7314.03 Lacsas against Rs. 9066.51 Lacs in the previous year.
• Operating Profit / ((Loss) is Rs. (284.50) Lacs as against Rs.580.38 Lacs in the previous year.
• Profit/Loss before taxation is Rs. (686.50) Lacs for the year asagainst the profit of Rs. 104.53 Lacs in the previous year year.
• Profit/Loss after Tax is Rs. (686.50) Lacs as against the Lossof Rs. 104.47 Lacs in the previous year.
The performance of the Company during the year under review showeddecrease in the sales due to the non-supportive markets and varied changes in the customerpreferences. As the global textile market is interconnected this outbreak has a globalimpact due to travel restrictions and raw materials shortages.
A detailed review of the operations of the Company for the FinancialYear ended 31st March 2022 is given in the Management Discussion and AnalysisReport which forms a part of this report.
PROCEEDINGS OF CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER INSOLVENCYAND BANKRUPTCY CODE 2016 (IBC)
During the year under review pursuant to Section 7 of the Insolvency& Bankruptcy Code 2016 ("Code") the Financial Creditors i.e. EdelweissAsset Reconstruction Company Limited ASREC (India) Ltd. and Export-Import Bank of Indiarespectively who have filed the applications to the Hon'ble National Company Law TribunalKolkata Bench against the Company for recovery of their outstanding dues have been takenup but none of the applications have been admitted till date by the Hon'ble NCLT KolkataBench and Corporate Insolvency Resolution ("CIR") Process in respect of theCorporate Debtor i.e. Eastern Silk Industries Limited ("the Company") under theprovisions of the said Insolvency and Bankruptcy Code 2016 have not yet commenced.However the Company is continuously following up the issues involved with its FinancialCreditors to resolve the differences.
IMPACT OF COVID-19
In continuation of the COVID-19 pandemic the challenges of uncertainlockdowns unlock phases health hazards and supply chain disruptions across the globecontinued to impact the business in the first three month of FY 2022. In view of thelockdown across due to the COVID-19 pandemic manufacturing operations of the Companyacross all its locations were suspended temporarily during March and April 2021temporarily which continues to impact key geographies that we operate in with manycountries reporting second and third wave of infections. The actions taken by variousgovernments to contain the pandemic such as lockdown restrictions have resulted insignificant disruption to people and business. Consequently market demands in textilesegments and supply chains have been affected. The Company is talking all the necessarysteps and precautionary measures to ensure the safety and well-being of all its employees.
FUTURE OUTLOOK
Within the limited scope and under restricted market condition yourmanagement is very positively responding to matching situation in the global market. Tobring down the cost of production your Company will have to increase the scale ofoperation which further requires infusion of machineries and technology. However Companythrust would be on modernization and energy conservation in the coming future taking intoconsideration the impact of the pandemic of COVID-19.
DIVIDEND
The Board of Directors does not recommend any dividend on Equity Sharesduring the year under review. The Board of Directors does not also declare dividend onRedeemable Cumulative Preference Shares.
PUBLIC DEPOSIT SCHEME
During the year your Company has not accepted any deposits. There areno outstanding deposits as on date.
DISCLOSURE OF PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGYABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO
The particulars required to be furnished under Section 134(3) (m) ofthe Companies Act 2013 read with Companies (Disclosure of particulars of Board ofDirectors) Rules 1988 are set out in "Annexure I" which forms part ofthe report. The manufacturing units of the Company are environment regulations complaint.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Requisite declarations from all the Independent Directors of theCompany confirming that they are not disqualified to act as an Independent Director incompliance with the provisions of Section 149 of the Companies Act 2013 and the Board isalso in the opinion that the Independent Directors fulfill all the conditions specified inthe Companies Act 2013 making them eligible to act as Independent Director.
Necessary policies and the criteria for the performance evaluation ofDirectors as Individual Board and Committees are devised by the Company. Evaluation ofBoard and Committees are being done under best practices prevalent in the Industry. Theresults of the evaluation are satisfactory and adequate and meet the requirement of theCompany. The Company ensures constitution of the Board of Directors with an appropriatecomposition size diversified expertise and experience and commitment to discharge theirresponsibilities and duties effectively. Nomination & Remuneration Committeeformulated by the Company's Board in accordance with the provisions of Section 178 of theCompanies Act 2013 and Regulation 17(10) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 evaluates the each individual whether they met thespecified criteria and provides valuable contribution to the Company. At the time ofappointment/re-appointment of Independent Director Nomination & RemunerationCommittee assess the independence of the directors as referred in Section 149(6) of theCompanies Act 2013 and Regulations of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and reassess the same when any new interest orrelationships are disclosed by them. The Independent Directors shall abide by the"Code of Independent Directors" as specified in Schedule IV to the CompaniesAct 2013. Nomination & Remuneration Committee ensures that all the requisite andapplicable provisions of the Companies Act 2013 rules and regulations made thereunder andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended fromtime to time are complied with.
DIRECTORS
Mr. Sundeep Shah (DIN.00484311) Chairman Cum Managing Director
Ms. Megha Shah (DIN: 07172597) Executive Director
Mr. Madhu Kant Sharma (DIN: 01836989) Non-Executive Independent Director
Mr. Pankaj Kumar Deorah (DIN: 03426417) Non-Executive Independent Director and
Mr. G.D. Harnathka (DIN: 01360829) Non-Executive Independent Director.
Mr. Abhishek Haralalka (DIN: 08836412) Non-Executive Independent Director.
KEY MANAGERIAL PERSONNEL
Following are the Key Managerial Personnel of the Company:
Mr. Sundeep Shah - Managing Director
Mr. Prateek Chhawchharia - Chief Financial Officer (CFO)
Mr. Rahul Jaiswal - Company Secretary
During the year under review Mr. Mahesh Jhawar Company Secretary ofthe Company resigned from their respective designations on 13th November 2021and Mr. Rahul Jaiswal Company Secretary is appointed with effect from 16thNovember 2021.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(3)(c) of the Companies Act 2013your Directors state that:
i) in the preparation of the annual accounts for the year ended March31 2022 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
ii) that the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year and of the loss of the Company for the year under review.
iii) that the Directors have taken proper and sufficient care formaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
iv) that the Directors have prepared the accounts for the financialyear ended 31st March 2022 on a going concern basis.
v) the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
vi) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
NUMBER OF MEETINGS OF THE BOARD
The details of the meetings of the Board and the details of theattendance of the directors in the meetings are provided in the Corporate GovernanceReport.
DETAILS OF COMMITTEES OF THE BOARD
Composition of Audit Committee of Directors Nomination &Remuneration Committee of Directors Stakeholders Relationship/Grievance Committee ofDirectors and Share Transfer Committee of Directors number of meetings held in eachcommittee and meetings attended by each member as required under the Companies Act 2013are provided in Corporate Governance Report and forming part of this report.
CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of corporategovernance and adhere to the corporate governance requirements set out by SEBI. The reporton Corporate Governance as stipulated under the SEBI (Listing Obligations and DisclosureRequirement) Regulations 2015 forms an integral part of this Report. The requisitecertificate from the Auditors of the Company confirming compliance with the requirementsof Corporate Governance is attached to the report on Corporate Governance.
A separate section on Corporate Governance and Management Discussionand Analysis together with the Auditor's Certificate confirming the compliance ofconditions on Corporate Governance as Schedule V (Part E) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 with the Stock Exchange form part of the AnnualReport as "Annexure II"
PARTICULARS OF LOANS GURANTEES INVESTMENTS AND SECURITIES MADE
There are no loans given investments made guarantees given orsecurity provided by the Company to any entity under Section 186 of the Companies Act2013.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in the ordinary course of business andon an arm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.
Your Directors draw attention of the members to Note 47 to thefinancial statement which sets out related party disclosures.
MATERIAL CHANGES
No material changes or commitments affecting the financial position ofthe Company have occurred after the closure of the financial year till the date of thisreport.
CORPORATE SOCIAL RESPONSIBILITY
The Company formulated the Corporate Social Responsibility Committee(CSRC) in consultation with the Board during the F.Y 2014-15 pursuant to introduction ofSection 135 under the Companies Act 2013. Mr. Sundeep Shah Mr. Madhu Kant Sharma and Mr.G.D. Harnathka are the members of the CSRC. Since the Company had incurred cash losses inthe immediately preceding financial year the Board does not recommend any amount to bespent on the CSR activities. However the Board ensures that once the Company will startearning cash profits they shall after taking into account the recommendations of theCSRC approve the Corporate Social Responsibility Policy of the Company and shall disclosecontents of such policy in its report and will also place the same on the Company'swebsite www.easternsilk.com.
BANK LOANS
Out of the 11(Eleven) Consortium members the Company have alreadysettled with 4(four) banks/financial Institutions on One Time Settlement (OTS) basis andentered into a settlement arrangement through ARC's for 6(Six) banks/financialInstitutions. The Company is hopeful to arrive at the settlement arrangement soon with theremaining financial institution i.e. Exim Bank.
During the year under review pursuant to Section 7 of the Insolvency& Bankruptcy Code 2016 ("Code") the Financial Creditors i.e. EdelweissAsset Reconstruction Company Limited ASREC (India) Ltd. and Export-Import Bank of Indiarespectively filed applications to the Hon'ble National Company Law Tribunal KolkataBench against the Company for recovery of their outstanding dues but none of theapplications have been admitted till date by the Hon'ble NCLT Kolkata Bench and CorporateInsolvency Resolution ("CIR") Process in respect of the Corporate Debtor i.e.Eastern Silk Industries Limited ("the Company") under the provisions of the saidInsolvency and Bankruptcy Code 2016 have not yet commenced. However the Company iscontinuously following up the issues involved with its Financial Creditors to resolve thedifferences.
RISK MANAGEMENT
The Company has been addressing various risks impacting the Company andthe policy of the Company. During the year your Directors made sure that all the risksthat the organization faces such as strategic financial credit market liquiditysecurity property IT legal regulatory reputational and other risks have beenidentified and assessed and there is an adequate risk management infrastructure in placecapable of addressing those risks.
The Company monitors manages and reports on the principal risks anduncertainties that can impact its strategic long term objectives. The risk managementprocess is reviewed periodically in order to keep it aligned with the emerging risksacross the globe. Various programs involve risk identification assessment and riskmitigation planning for strategic operational and financial compliance related risksacross various levels of the organization.
The Current pandemic of COVID-19 has exposed the Company towardsvarious identified and unidentified risks. The Board is successfully identifying theelements of risks involved along with its severity and their impact on the existence ofthe Company.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls withreference to financial statements. During the year such controls were tested and noreportable material weaknesses in the design or operation were observed.
AUDITORS
M/s Suresh Kumar Mittal & CO. Chartered Accountants New Delhi(Firm's Registration No. 500063N) were appointed as the Statutory Auditors of the Companyfor the terms of Five years till the conclusion of the Seventy One Annual General Meeting(AGM) of the Company scheduled to be held before September 2021 and hence would retire atthe conclusion of the ensuing Seventy Six AGM. As per the provision of the Companies Act2013 provides for the appointment of a new Auditor when the existing Auditor's Firm hascompleted his tenure. Accordingly as per the said requirements of the Act M/s B.K.Shroff & CO Chartered Accountants Kolkata (Firm Regn. No. 302166E) is proposed to beappointed as the Statutory Auditors of the Company for a period of 5 years commencingfrom the conclusion of 76th AGM till the conclusion of the 81st AGMto be held in the year 2027.
M/s B.K. Shroff & CO Chartered Accountants Kolkata (Firm Regn.No. 302166E) have consented to the said appointment and confirmed that their appointmentif made would be within the limits specified under Section 141 (3)(g) of the Act. Theyhave further confirmed that they are not disqualified to be appointed as StatutoryAuditors in terms of the provisions of the proviso to Section 139(1) Section 141(2) andSection 141(3) of the Act and the provisions of the Companies (Audit and Auditors) Rules2014.
COST AUDITORS
The Board of Directors of the Company pursuant to Section 148(3) ofthe Companies Act 2013 read with Rule 14 of Companies (Audit and Auditor Rules) 2014has appointed M/s. N. Radhakrishnan & Co. Cost Accountant for conducting the audit ofcost records of the Products 'Silk fabrics' 'Cotton Fabrics' 'Linen Fabrics' and'Polyester Fabrics' maintained by the Company for the Financial Year 2021 -22.
The Company maintained the cost records as specified by the CentralGovernment under Sub-section (1) of Section 148 of the Companies Act 2013.
SECRETARIAL AUDITOR
The Board has appointed Ms. Garima Gupta Practicing Company Secretaryto conduct Secretarial Audit for the Financial Year 2021-22. The Secretarial Audit Reportfor the financial year ended March 31 2022 is annexed herewith marked as "AnnexureIN" to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
COMPLIANCE OF SECRETARIAL STANDARDS
Yours Company has complied with the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
The particulars required to be furnished under Section 134(3)(a) of theCompanies Act 2013 read with Companies (Management and Administration) Rules 2014 asprescribed in Form No. MGT-9 is given in "Annexure IV" annexed to thisreport.
The web link for the Annual Return placed on the Company's website ishttp://www.easternsilk.com/Home/AnnualReport
PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134(3)(q) AND SECTION 197(12) OF THE COMPANIES ACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
Your Directors appreciate the significant contribution made by theemployees to the operations of your Company during the period. In terms of provisions ofSection 197(12) of the Act read with Rules 5(1) 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 a statement showingthe names and other particulars and disclosures of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report
Having regard to the provisions of the first proviso to Section 136(1)of the Act and as advised the Annual Report excluding the aforesaid information is beingsent to the members of the Company. The said information is available for inspection atthe registered office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished on request.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The company in pursuance to the provisions of section 177(9) & (10)of the Companies Act 2013 has formulated a vigil mechanism (whistle blower policy) forits Directors and Employees of the Company to report their genuine concerns aboutunethical behavior actual or suspected fraud or violation of the company's Code ofConduct. The mechanism provides for adequate safeguards against victimization of Directorsand employees who avail of the mechanism. In exceptional cases Directors and employeeshave direct access to the Chairman of the Audit Committee. The Vigil Mechanism (WhistleBlower Policy) is available on the company's website.
GENERAL
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theperiod under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividendvoting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme save and except ESOS referred to in this report.
4. Neither the Managing Director nor the Whole-time Directors of theCompany receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and Company's operations infuture.
6. None of the directors of the Company have resigned.
7. There was no revision of Financial Statements and Board's Report ofthe Company.
Your Directors further state that during the year under review therewere no cases filed pursuant to the Sexual Harassment of Women at Work place (PreventionProhibition and Redressal) Act 2013.
ACKNOWLEDGEMENT
Your Directors wish to convey their appreciation for the co-operationand assistance received from the government financial institutions bankers andstakeholders of your Company. The Board wishes to place on record its deep appreciationfor the integrity and hard work of its employees at all levels to meet challengingmarkets.
