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Eastern Silk Industries Ltd.

BSE: 590022 Sector: Industrials
BSE 00:00 | 22 Jun 2.95 -0.35






NSE 00:00 | 22 Jun 2.95 -0.20






OPEN 3.65
VOLUME 31751
52-Week high 9.19
52-Week low 2.66
Mkt Cap.(Rs cr) 23
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3.65
CLOSE 3.30
VOLUME 31751
52-Week high 9.19
52-Week low 2.66
Mkt Cap.(Rs cr) 23
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Eastern Silk Industries Ltd. (EASTSILK) - Director Report

Company director report


Your Directors have pleasure in presenting their Seventy First Annual Report togetherwith the Audited Statements of Accounts of your Company for the year ended March 312017.


(Rs. in Lacs)

2017 2016
Profit/(Loss) before depreciation/Exceptional Items and taxation (6416.62) (6628.49)
Less/Add: Depreciation 1066.20 1378.64
Profit/(Loss) before taxation (7482.82) (8007.13)
(Add)/Less: Exceptional Items 11996.44 5824.52
4513.62 (2182.61)
Less/Add: Provision for Current/Earlier Year Taxation 7.45 -
4506.17 (2182.61)
Less/Add: Deferred Tax Liability - -
Profit/(Loss) after Tax 4506.17 (2182.61)
Add: Balance brought forward from previous year (24950.07) (22767.46)
Add: Transitional Depreciation Adjustments - -
Less: Depreciation on Revalued Assets - -
Which Directors have decided to carry forward to the next year (20443.90) (24950.07)


Highlights of performance during the financial year 2016-17 are:

• Total Revenue from Operation of the Company is Rs. 6342.29 Lacs as against^.7047.41 Lacs in the previous year.

• Operating Profit / (Loss) is Rs. (6416.62) Lacs as against Rs. (6628.49) Lacsin the previous year.

• Profit / (Loss) before taxation is Rs. (7482.82) Lacs as against Rs. (8007.13)Lacs in the previous year.

• Profit / (Loss) after Tax is Rs. 4506.17 Lacs as against of Rs. (2182.61) Lacsin the previous year.

The performance of the Company during the year under review showed sluggish sales dueto the non-supportive markets and resorting to polyester cotton viscose and otherblended fabric from its main stay i.e. Silk Textiles. The Company has been settling itsoutstanding dues with the banks and financial Institutions on One Time Settlement (OTS)basis and also entering into settlement arrangement with the ARC'S. The remission ofliability on account of settlement resulted in the after tax profits during the year underreview.

The Company was a BIFR referred company under the Sick Industrial Companies (SpecialProvision) Act 1985 (SICA) pending registration of the same as a Sick Unit. FurtherMinistry of Finance vide a notification dated 25th November 2016 has repealed the SickIndustrial Companies (Special Provisions) Act 1985 (SICA) with effect from 1st December2016 which resulted in the dissolution of BIFR. Again it was at the option of the Companyto pursue the matter pending before the National Company Law Tribunal (NCLT) within 120days from the dissolution of the BIFR. Management after deliberate discussions had come tothe conclusion that it will not pursue the matter before the NCLT taking into account thefact that the Company has been settling its outstanding dues with the banks and financialInstitutions on One Time Settlement (OTS) basis and also entering into settlementarrangement with the ARC'S.

Your Company has been successfully introducing new designs and new blends taking intoaccount the customers taste and preferences globally but the same has not resulted infetching the desired results. As conveyed earlier difficulties faced by the Company canonly be resorted by increasing the scale of operation via infusion of machines andtechnology. Inspite of the best efforts the Company has not been able to increase itsshare in the Overseas market.


Within the limited scope and under restricted market condition your management is verypositively responding to matching situation in the global market. To bring down the costof production your Company will have to increase the scale of operation which furtherrequires infusion of machineries and technology. Implementation of GST on the textileindustry has been a progressive decision by the Government and would give impetus for thegrowth and development of the entire textile value chain.


In view of the accumulated losses the Board of Directors does not recommend anydividend on Equity Shares. The Board of Directors does not also declare dividend onRedeemable Cumulative Preference Shares.


During the year your Company has not accepted any deposits. There are no outstandingdeposits as on date.


Requisite declarations from all the Independent Directors of the Company confirmingthat they are not disqualified to act as an Independent Director in compliance with theprovisions of Section 149 of the Companies Act 2013 and the Board is also in the opinionthat the Independent Directors fulfill all the conditions specified in the Companies Act2013 making them eligible to act as Independent Director.

Necessary policies and the criteria for the performance evaluation of Directors asIndividual Board and Committees are devised by the Company. Evaluation of Board andCommittees are being done under best practices prevalent in the Industry. The Companyensures constitution of the Board of Directors with an appropriate composition sizediversified expertise and experience and commitment to discharge their responsibilitiesand duties effectively. Nomination & Remuneration Committee formulated by theCompany's Board in accordance with the provisions of Section 178 of the Companies Act2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements)Regulations2015 evaluates the each individual whether they met the specified criteria andprovides valuable contribution to the Company. At the time of appointment/re-appointmentof Independent Director Nomination & Remuneration Committee assess the independenceof the directors as referred in Section 149(6) of the Companies Act 2013 and Regulationsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and re-assessthe same when any new interest or relationships are disclosed by them. The IndependentDirectors shall abide by the "Code of Independent Directors" as specified inSchedule IV to the Companies Act 2013. Nomination & Remuneration Committee ensuresthat all the requisite and applicable provisions of the Companies Act 2013 rules andregulations made thereunder and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended from time to time are complied with.


In terms of provisions of Section 134(3)(c) of the Companies Act 2013 your Directorsstate that:

i) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are 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 loss of the Company for the year under review.

iii) that the Directors have taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) that the Directors have prepared the accounts for the financial year ended 31stMarch 2017 on a going concern basis.

v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.


The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms an integral part of this Report. The requisite certificate fromthe Auditors of the Company confirming compliance with the requirements of CorporateGovernance is attached to the report on Corporate Governance.

A separate section on Corporate Governance and Management Discussion and Analysistogether with the Auditor's certificate confirming the compliance of conditions onCorporate Governance as Schedule V (Part E) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with the Stock Exchange form part of the Annual Report as "AnnexureII"


All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement/transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions.

Your Directors draw attention of the members to Note 43 to the financial statementwhich sets out related party disclosures. CORPORATE SOCIAL RESPONSIBILITY

The Company formulated the Corporate Social Responsibility Committee (CSRC) inconsultation with the Board during the F.Y 2014- 15 pursuant to introduction of Section135 under the Companies Act 2013. Mr. Sundeep Shah Mr. H. S. Gopalka and Mr. G.DHamathka are the members of the CSRC. Since the Company has been incurring cash losses inthe last three preceding financial years 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 .


The Company has settled its dues with the SIDBI under One Time Settlement (OTS) basisand your management has paid the entire amount arrived under OTS to them. Your Companyalso entered into a settlement arrangement with Asset Reconstruction Company (ARC) whoacquired the Company's loan from three banks/financial Institution namely Federal BankUnion Bank & State Bank Of India. Negotiation with the other banks/financialInstitution on a bilateral basis is going on.


The Company has been addressing various risks impacting the Company and the policy ofthe Company. During the year your Directors made sure that all the risks that theorganization faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks.

The Company monitors manages and reports on the principal risks and uncertainties thatcan impact its strategic long term objectives. The risk management process is reviewedperiodically in order to keep it aligned with the emerging risks across the globe. Variousprogrammes involve risk identification assessment and risk mitigation planning forstrategic operational and financial compliance related risks across various levels ofthe organization.


The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed.


The particulars required to be furnished under Section 134(3) (m) of the Companies Act2013 read with Companies (Disclosure of particulars of Board of Directors) Rules 1988 areset out in "Annexure I" which forms part of the report.


As per the provisions of the Act the Company is required to appoint a new auditors andMessrs. Suresh Kumar Mittal & Co. Chartered Accountants New Delhi (Firm Regn.No.500063N) are proposed to be appointed as Auditors of the Company for a period of fiveyears commencing from the conclusion of Seventy First Annual General Meeting till theconclusion of Seventy Sixth Annual General Meeting subject to ratification of suchappointment by the shareholders every year from the Seventy Second to the Seventy FifthAnnual General meeting of the Company.

Messrs. Suresh Kumar Mittal & Co. Chartered Accountants have consented to thesaid appointment and confirmed that their appointment if made would be within the limitsspecified under Section 141 (3)(g) of the Act. They have further confirmed that they arenot disqualified to be appointed as statutory auditors in terms of the proviso to Section139(1) Section 141(2) and Section 141(3) of the Act read with the Companies (Audit andAuditors) Rules 2014.

The Board of Directors recommend the appointment of Messrs. Suresh Kumar Mittal &Co. Chartered Accountants as statutory auditors of the Company for the aforesaid period.

The proposed appointment of Messrs. Suresh Kumar Mittal & Co. as the new Auditor isin place of Messrs. B.K. Shroff & Co Chartered Accountants who have been theauditors of the Company since the ensuing Annual General Meeting. The Board places onrecord its appreciation to Messrs. B.K. Shroff & Co for discharging their duties asthe Company's auditors for a long period.


Pursuant to the Companies (Cost Records And Audit) Rules 2014 notified w.e.f 30thJune 2014 Textile Industry has been exempt from maintaining the cost records and forconducting the audit of such records. However Your Company is continuing its associationwith M/s. N. Radhakrishnan & Co. a firm of Cost Auditors for assisting and directingthe Company with regard to allocation of direct and indirect costs to the various productsand suggesting various measures lowering the cost without compromising with the quality.


The Board has appointed Ms. Garima Gupta Practicing Company Secretary to conductSecretarial Audit for the financial year 2016- 17. The Secretarial Audit Report for thefinancial year ended March 312017 is annexed herewith marked as "Annexure III"to this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.


The particulars required to be furnished under Section 134(3)(a) of the Companies Act2013 read with Companies (Management and Administration) Rules 2014 as prescribed in FormNo. MGT-9 is given in "Annexure IV" annexed to this report.


Your Directors appreciate the significant contribution made by the employees to theoperations of your Company during the period. In terms of provisions of Section 197(12) ofthe Act read with Rules 5(1) 5(2) and 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 a statement showing the names and other particularsand disclosures of the employees drawing remuneration in excess of the limits set out inthe said rules are provided in the Annual Report

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.


The Company in pursuance to the provisions of section 177(9) & (10) of theCompanies Act 2013 has formulated a vigil mechanism (whistle blower policy) for itsDirectors and Employees of the Company to report their genuine concerns about unethicalbehavior actual or suspected fraud or violation of the company's Code of Conduct. Themechanism provides for adequate safeguards against victimization of Directors andemployees who avail of the mechanism. In exceptional cases Directors and employees havedirect access to the Chairman of the Audit Committee. The Vigil Mechanism (Whistle BlowerPolicy) is available on the company's website.


Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the period underreview:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Work place (Prevention Prohibitionand Redressal) Act 2013.


Your Directors wish to convey their appreciation for the co-operation and assistancereceived from the government financial institutions bankers and stakeholders of yourCompany. The Board wishes to place on record its deep appreciation for the integrity andhard work of its employees at all levels to meet challenging markets.

Registered Office: By Order of the Board
19 R N Mukherjee Road S. S. SHAH
Kolkata 700 001 Chairman & Managing Director
Dated: 30th May 2017