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Eastern Silk Industries Ltd.

BSE: 590022 Sector: Industrials
NSE: EASTSILK ISIN Code: INE962C01027
BSE 00:00 | 26 Nov 5.87 0.26
(4.63%)
OPEN

5.76

HIGH

5.89

LOW

5.55

NSE 00:00 | 26 Nov 5.75 0.25
(4.55%)
OPEN

5.75

HIGH

5.75

LOW

5.60

OPEN 5.76
PREVIOUS CLOSE 5.61
VOLUME 239745
52-Week high 5.92
52-Week low 0.98
P/E 29.35
Mkt Cap.(Rs cr) 46
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.76
CLOSE 5.61
VOLUME 239745
52-Week high 5.92
52-Week low 0.98
P/E 29.35
Mkt Cap.(Rs cr) 46
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

TO THE MEMBERS

Your Directors have pleasure in presenting their Seventy Fifth Annual Report togetherwith the Audited Statements of Accounts of your Company for the year ended March 31 2021.

FINANCIAL RESULTS

(Rs.. in Lacs)

Particulars 2021 2020
Profit/(Loss) before depreciation/Exceptional Items and taxation 580.38 679.82
Less/Add: Depreciation 475.85 574.49
Profit/(Loss) for the year before taxation 104.53 105.33
Add/ (Less): Provision for Current/Earlier Year Taxation (0.06) (0.05)
Profit/(Loss) for the year 104.47 105.28
Add: Balance b/f of Retained Earnings of Previous Years (19969.78) (20075.06)
Balance to be Carried Forward to the Next Year (19865.31) (19969.78)

PERFORMANCE REVIEW

Highlights of performance during the financial year 2020-21 are:

• Total Revenue from Operation of the Company is Rs.9066.51 Lacs as against10317.51 Lacs in the previous year.

• Operating Profit / ((Loss) is Rs.580.38 Lacs as against Rs.679.82 Lacs in theprevious year.

• Profit before taxation is Rs.104.53. Lacs for the year as against the loss ofRs.105.33 Lacs in the previous year.

• Profit after T ax is Rs.104.47 Lacs as against the Loss of Rs.105.28 Lacs in theprevious year.

The performance of the Company during the year under review showed decrease in thesales due to the non-supportive markets and varied changes in the customer preferences. Asthe global textile market is interconnected this outbreak has a global impact due totravel restrictions and raw materials shortages.

A detailed review of the operations of the Company for the Financial Year ended 31stMarch 2021 is given in the Management Discussion and Analysis Report which forms a partof this report.

PROCEEDINGS OF CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER INSOLVENCY AND BANKRUPTCYCODE 2016 (IBC)

During the year under review pursuant to Section 7 of the Insolvency & BankruptcyCode 2016 ("Code") the Financial Credito rs i.e. Edelweiss AssetReconstruction 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 view of the lockdown across due to the COVID-19 pandemic manufacturing operationsof the Company across all its locations were suspended temporarily during March and April2020 temporarily 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 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. However Company thrust would be onmodernization and energy conservation in the coming future taking into consideration theimpact of the pandemic of COVID-19.

DIVIDEND

The Board of Directors does not recommend any dividend on Equity Shares during the yearunder review. The Board of Directors does not also declare dividend on RedeemableCumulative Preference Shares.

PUBLIC DEPOSIT SCHEME

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

DISCLOSURE OF PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNING AND OUTGO

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. The manufacturing unitsof the Company are environment regulations complaint.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

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 results ofthe evaluation are satisfactory and adequate and meet the requirement of the Company. TheCompany ensures constitution of the Board of Directors with an appropriate compositionsize 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 re-assess 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.

In accordance with Section 196 197 and 203 of the Companies Act 2013 and theArticles of Association of the Company Mr. Sundeep Shah Managing Director of the Companyand Ms. Megha Shah Executive Director of the Company shall be reappointed with effectfrom 1st September 2021.

During the year under review Mr. Abhishek Haralalka (DIN: 08836412) has been appointedas a Non-Executive Independent Director of the Company with effect from 29thAugust 2020.

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. Mahesh Jhawar - Company Secretary

During the year under review Mr. Deepak Agarwal Company Secretary and Mr. Uma ShankarGutgutia Chief Financial Officer of the Company resigned from their respectivedesignations and Mr. Mahesh Jhawar Company Secretary and Mr. Prateek Chhawchharia ChiefFinancial Officer of the Company were appointed with effect from 16th January2021.

DIRECTORS' RESPONSIBILITY STATEMENT

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 2021 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 2021 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.

NUMBER OF MEETINGS OF THE BOARD

The details of the meetings of the Board and the details of the attendance of thedirectors in the meetings are provided in the Corporate Governance Report.

DETAILS OF COMMITTEES OF THE BOARD

Composition of Audit Committee of Directors Nomination & Remuneration Committee ofDirectors Stakeholders Relationship/Grievance Committee of Directors and Share TransferCommittee of Directors number of meetings held in each committee and meetings attendedby each member as required under the Companies Act 2013 are provided in CorporateGovernance Report and forming part of this report.

CORPORATE GOVERNANCE

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 Requirement)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"Annexure II"

PARTICULARS OF LOANS GURANTEES INVESTMENTS AND SECURITIES MADE

There are no loans given investments made guarantees given or security provided bythe Company to any entity under Section 186 of the Companies Act 2013.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

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 with thepolicy of the Company on materiality of related party transactions.

Your Directors draw attention of the members to Note 47 to the financial statementwhich sets out related party disclosures.

MATERIAL CHANGES

No material changes or commitments affecting the financial position of the Company haveoccurred after the closure of the financial year till the date of this report.

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 Section 135under 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 in theimmediately preceding financial year the Board does not recommend any amount to be spenton the CSR activities. However the Board ensures that once the Company will start earningcash profits they shall after taking into account the recommendations of the CSRCapprove 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 already settled with 4(four)banks/financial Institutions on One Time Settlement (OTS) basis and entered into asettlement arrangement through ARC's for 6(Six) banks/financial Institutions. The Companyis hopeful to arrive at the settlement arrangement soon with the remaining financialinstitution i.e. Exim Bank.

During the year under review pursuant to Section 7 of the Insolvency & BankruptcyCode 2016 ("Code") the Financial Credito rs i.e. Edelweiss AssetReconstruction 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 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. Variousprograms involve risk identification assessment and risk mitigation planning forstrategic operational and financial compliance related risks across various levels ofthe organization.

The Current pandemic of COVID-19 has exposed the Company towards various identifiedand unidentified risks. The Board is successfully identifying the elements of risksinvolved along with its severity and their impact on the existence of the Company.

INTERNAL FINANCIAL CONTROLS

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.

AUDITORS

Messrs. Suresh Kumar Mittal & Co. Chartered Accountants New Delhi (Firm Regn.No.500063N) has been appointed as Auditors of the Company for a period of five yearscommencing from the conclusion of Seventy First Annual General Meeting till the conclusionof Seventy Sixth Annual General Meeting.

Messrs. Suresh Kumar Mittal & Co. Chartered Accountants consented to the saidappointment and confirmed that their appointment are within the limits specified underSection 141(3)(g) of the Act. They have further confirmed that they are not disqualifiedto be appointed as statutory auditors in terms of the proviso to Section 139(1) Section141(2) and Section 141(3) of the act read with the Companies (Audit and Auditors) Rules2014.

COST AUDITORS

The Board of Directors of the Company pursuant to Section 148(3) of the Companies Act2013 read with Rule 14 of Companies (Audit and Auditor Rules) 2014 has appointed M/s.N. Radhakrishnan & Co. Cost Accountant for conducting the audit of cost records ofthe 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 Central Government underSub-section (1) of Section 148 of the Companies Act 2013.

SECRETARIAL AUDITOR

The Board has appointed Ms. Garima Gupta Practicing Company Secretary to conductSecretarial Audit for the Financial Year 2020-21. The Secretarial Audit Report for thefinancial year ended March 31 2021 is annexed herewith marked as "Annexure IN"to this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.

COMPLIANCE OF SECRETARIAL STANDARDS

Yours Company has complied with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.

EXTRACT OF ANNUAL RETURN

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.

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 THECOMPANIES ACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014

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.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

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.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transacti ons 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.

6. None of the directors of the Company have resigned.

7. There was no revision of Financial Statements and Board's Report of the Company.

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.

ACKNOWLEDGEMENT

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 SUNDEEPSHAH
Kolkata 700 001 Chairman & Managing Director
Dated: 30th June 2021

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