Your Directors have pleasure in presenting their 22nd Annual Report and theAudited Accounts for the Financial Year ended 31st March 2017 together withthe Auditor's Report thereon.
1) Financial Results
| || || |
(Rs. in Lacs)
| || |
|Particulars ||Current Year ||Previous Year ||Current Year ||Previous Year |
| ||31st March 2017 ||31st March 2016 ||31st March 2017 ||31st March 2016 |
|Total Income ||38182 ||33837 ||38183 ||33838 |
|EBIDTA ||7026 ||5615 ||7023 ||5612 |
|Interest and Finance Expenses ||3596 ||2259 ||3596 ||2259 |
|Depreciation ||1843 ||996 ||1843 ||996 |
|Profit before tax ||1587 ||2360 ||1584 ||2357 |
|Provision for tax (MAT) ||379 ||539 ||379 ||539 |
|Deferred Tax ||(139) ||628 ||(139) ||628 |
|MAT of earlier period ||105 ||80 ||105 ||80 |
|MAT Credit Entitlement ||(379) ||(539) ||(379) ||(539) |
|Profit After Tax ||1621 ||1652 ||1618 ||1649 |
2) Transfer to Reserve
The Company has not transferred any amount to reserves during the year.
3) Review of operations
On a Standalone basis the total Income from operations of the Company was Rs. 38182Lacs as against Rs. 33837 Lacs for the previous year (PY). The Companyearnedaprofit ofRs. 1587 Lacs from ordinary activities before tax in the current year (CY) as against aprofit of Rs. 2360 Lacs in PY. After providing for tax the Company reported a net profitofRs. 1621 Lacs for profi the year ended 31st March2017asagainstanet of Rs.1652 Lacs for the Financial Year ended 31st March 2016.
On a Consolidated basis the total Income from operations of the Company was Rs. 38183Lacs as against Rs. 33838 Lacs for the PY. The Company hasearneda Rs. 1584 Lacs fromordinary activities before tax in the CY as against a profit of Rs. 2357 Lacs previousyear. After providing for tax the Company reported a net profit ofRs. 1618 Lacs for theFinancial Year ended 31st March 2017 as against a net profit ofRs. 1649 Lacsfor the Financial Year ended 31st March 2016.
4) Backward integration cum expansion project
Your Company undertook a backward integration project to integrate the manufacturingprocesses and to reduce dependence on vendors of yarn and weaved fabric. The expansionProject is intended to replace the outsourcing of raw materials (yarn and fabric) andenable the Company to achieve higher levels of integration of Spinning Weaving andPrinting activities and thereby improve the margins. The expansion Project comprises asunder:
(i) Spinning facility enhanced by 40128 Spindles
(ii) Weaving Capacity increased by 112 Looms
(iii) Printing Capacity enhanced by 78 lac meter per annum.
(iv) Installation of "Ready for Dyeing" (RFD) Machinery
The Weaving Printing & Processing facility was commissioned in March 2016 and theSpinning Facility was commissioned in September 2016.
5) Performance of Joint Venture Companies
The Company has no subsidiary company but the two Joint Ventures which are as under:
i. Morarjee Castiglioni (India) Private Limited (50%)
ii. Just Textiles Limited (49%)
A Statement containing the salient features of the Financial Statements of said JointVentures is annexed in the prescribed Form AOC-1 to this Report as "Annexure1".
A policy on material subsidiaries has been formulated and hosted on the website of theCompany at www.morarjee.com.
6) Share capital
The paid up Share Capital of the Company is Rs 50.43 crores divided into 36332349Equity Shares of Rs. 7/- each constituting to Rs.25.43 Crore listed with
BSE Ltd. and National Stock Exchange of India Limited and unlisted preference sharecapital as follows:
|Particulars ||Amount in Rs. |
|1000000 5% Redeemable Cumulative ||100000000 |
|Non-Convertible Preference Share of Rs. 100/- each (5%NCPS) || |
|1500000 9% Redeemable Cumulative ||150000000 |
|Non-Convertible Preference Share of Rs. 100/- each (9%NCPS) || |
|Total ||250000000 |
The Company has neither issued any shares nor granted any Stock Options nor any SweatEquity Shares during the year.
Your Directors are pleased to recommend a dividend on the shares of the Company for thefinancial year ended 31st March 2017 as under:
At the rate of 5% i.e. Rs. 5 per share on 1000000 5% NCPS aggregating to Rs.50 Lacs
At the rate of 9% i.e. Rs. 9 per share on 1500000 9% NCPS aggregating to Rs.135 Lacs
At the rate of 20% i.e. Rs. 1.40 per share on equity shares aggregating to Rs.508.65 Lacs
Dividend shall be paid within 30 days from the date of declaration of dividend in theensuing AGM.
The Company has neither accepted nor renewed any deposits during the year.
9) Particulars of Loans Guarantee or Investments
During the year under review the Company has not made any investments advanced anyloans or provided any guarantee falling under Section 186 of the Companies Act 2013("the Act").
10) State of company's Affairs and business Review
The details of the Company's affairs including its operations are more specificallygiven in the Management Discussion and Analysis Report which is given in this AnnualReport.
11) Corporate Social Responsibility ("CSR")
The Company believes in social equity and the principle of equal opportunityirrespective of gender religion caste or creed. Thus Company seeks to promote access toquality education technical skills and competencies for economically weak communities forcreating economic independence and sustainable livelihoods. Moreover CSR has been anintegral part of the way in which the company conducts its business. The Company has beenmaking conscious efforts to involve communities in its development journey and hasreceived appreciation from its stakeholders which gives a sense of pride andencouragement to continue to perform better. Towards achieving this objective Company hascontributed and spent an amount of Rs. 60.03/- Lacs towards the CSR activities of theCompany during the Financial Year 2016-17. The Company has undertaken CSR activities asper the CSR policy of Company read with Schedule VII of the Act.
In accordance with the provisions of Section 135 of the Companies Act 2013 read withCompanies (CSR Policy) Rules 2014 made thereunder the Annual Report on the CSRactivities of the Company along with the CSR initiatives undertaken during the year 2016-17 is enclosed to this report as "Annexure 2". The constitution of theCSR Committee and its terms of reference are more particularly stated in the CorporateGovernance Report which forms a part of this Annual Report. The CSR Policy of the Companyis hosted on the website of the Company at www.morarjee.com.
12) Business Risk Management
The composition of the Risk Management Committee is not applicable to your Company.However the Company has constituted a Risk Management Committee for identifying andevaluating the risks associated with the Business of the Company and to minimize them andadopted a Risk Management policy in accordance with the provisions of the Act andRegulation 17(9) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations"). The details of Committee and itsterms of reference are set out in the Corporate Governance Report. The Committeeperiodically reviews the risk management practices and actions deployed by the managementwith respect to the identification impact assessment monitoring mitigation andreporting of key risks while trying to achieve its business objectives.
13) Internal Control System and their adequacy
Your Company has an Internal Control System commensurate with the size scale andcomplexity of its operations and well-documented procedures for various processes whichare periodically reviewed for changes warranted due to business needs. The InternalAuditor continuously monitors the efficiency of the internal controls/ compliance with theobjective of providing to Audit Committee and the Board of Directors an independentobjective and reasonable assurance of the adequacy and effectiveness of the organisation'srisk management control and governance processes. This system of internal controlfacilitates effective compliance of Section 138 of the Act and the Listing Regulations.
To maintain its objectivity and independence the Internal Auditor reports to theChairman of the Audit Committee. The Internal Auditor monitors and evaluates theefficiency and adequacy of the internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company.Based on the report of internal auditor process owners undertake corrective actions intheir respective areas and thereby strengthen the controls. Significant audit observationsand corrective actions thereon are presented to the Audit Committee.
During the year under review no reportable material weakness in the operation wasobserved. Regular audit and review processes ensure that such systems are reinforced on anongoing basis.
14) Vigil Mechanism/ Whistle Blower Policy
The Vigil Mechanism/Whistle Blower Policy has been put in place for the Directors andEmployees to report their genuine concerns about unethical behavior actual or suspectedfraud or violation of the Company's Code of Conduct. The mechanism provides for adequatesafeguards against the victimization of Director(s) and Employee(s) who avail of themechanism. Directors and Employees may make protected disclosure under the policy to theCompliance Committee constituted by the Company to administer the internal code ofbusiness conduct. In exceptional cases Directors and Employees have direct access to theChairman of the Audit Committee. Further no personnel have been denied access to theCompliance Committee/ Chairman of the Audit Committee as the case may be.
No complaints were received in this regard during the year under review.
15) Directors and Key Managerial Personnel
On the recommendation of the Nomination and Remuneration Committee Lt. Gen. A. K.Singh (DIN: 07698288) was appointed as an Independent Director of the Company at themeeting of the Board of Directors held on 8th February 2017 with immediateeffect for a period of 5 consecutive years pursuant to Sections 149 152 and 161 of theAct and the rules made thereunder. The appointment of Lt. Gen. A. K. Singh is subject tothe approval of the shareholders of the Company at the ensuing Annual General Meeting("AGM") as per the details given in the Notice of the AGM. The Board recommendshis appointment to the shareholders at the ensuing AGM.
Mr. Harsh A. Piramal (DIN: 00044972) has been reappointed by the Board as theWhole-Time Director (designated as the Executive Vice Chairman) of the Company for afurther period of 5 years with effect from 1st April 2017 at a remunerationapproved for 3 years as stated in the notice of the Annual General Meeting subject to theapproval of the shareholders. The Board recommends his appointment to the shareholders atthe ensuing AGM.
Ms. Urvi A. Piramal (DIN: 00044954) Director of the Company is liable to retire byrotation and being eligible has offered herself for re-appointment. The Board recommendsher re-appointment to the shareholders at the ensuing AGM.
All the Independent Directors of your company have given declarations that they meetthe criteria of Independence as laid down under Section 149(6) of the Act and the ListingRegulations.
The Company has complied with the requirements of having Key Managerial Personnel asper the provisions of Section 203 of the Act.
16) Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for the selection and appointment of Directors Key Managerial PersonnelSenior Management and their remuneration etc. The Remuneration policy of the Company ismore particularly stated in the Corporate Governance Report which forms a part of thisAnnual Report.
17) Board evaluation
Regulation 17 of the Listing Regulations read with Schedule IV and other applicableprovisions of the Act mandates formal evaluation to be done by the Board of its ownperformance and that of its Committees and individual directors and that the IndependentDirectors shall evaluate the perfomance of non-independent directors and the Chairpersonof the Company.
The evaluation process was externally facilitated and conducted by hrcraft aProfessional Business Consulting Firm specialized in feedback exercises engaged forcarrying out evaluation process in a fair and transparent manner. The performanceevaluation forms were circulated to all the Directors and they have provided their inputson the same. A Report of the evaluation was then forwarded to the Chairperson and therespective Director to maintain the confidentiality of the Report.
The Independent Directors at their meeting held on 8th February 2017evaluated performance of the Chairperson non-independent directors of the Company and theperformance of the Board as a whole based on the evaluation report provided by thehrcraft.
Pursuant to provisions of Section 178 of the Act the Nomination and RemunerationCommittee has also carried out performance evaluation of every Director and the Board hascarried out formal annual evaluation of its own performance and that of its Committees andindividual Directors. Further the evaluation of the Independent Directors was carried outby the entire Board excluding the Director being evaluated.
The Directors were satisfied with the outcome of the evaluations of the Board itsCommittees and the individual directors and on the basis of the evaluation reports thepresent term of appointment of Independant Directrs shall be continued.
18) Meetings of the Board
During the year under review the Board of Directors of the Company met four times andthe gap between two consecutive board meetings was within the limits prescribed by the Actand Listing Regulations. The details of the meetings are included in the CorporateGovernance Report.
19) Committees of the Board
The details of all the Committees of the Board including the Audit and CSR Committeealong with their terms of reference composition and meetings held during the year areprovided in the Report on Corporate Governance which forms part of this Annual Report.
20) Directors' Responsibility Statement
Pursuant to Section 134 (5) of the Act ("the Act") we hereby state that:
i) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures in any;
ii) your 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 as at 31st March 2017 and itsprofit for the year ended on that date;
iii) your Directors have taken proper and sufficient care towards the 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) your Directors have prepared the annual accounts for the year ended 31stMarch 2017 on a going concern basis;
v) your Directors have laid down internal controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
vi) your Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
21) Related Party Transactions ("RPTs")
The RPTs entered into by the Company during the Financial Year 2016-17 were on an arm'slength basis and in the ordinary course of business and no RPTs were material. The detailsof RPTs to be reported in Form AOC-2 are enclosed as "Annexure 3".
All RPTs were placed before the Audit Committee for its approval and Committee hadgranted its prior omnibus approvals for some of the transactions with related parties thatwere of repetitive nature. The details of transactions entered into pursuant to theomnibus approval of the Audit Committee are placed before the Audit Committee for itsreview on a quarterly basis. The Company has framed a policy on RPTs for the purpose ofidentification and monitoring of such transactions.
The policy governing RPTs is hosted on the Company's website at www.morarjee.com.
22) Auditors and their reports
A. Statutory Auditors & Auditors Report
In terms of Section 139 of the Act the Board of Directors of the Company has appointedM/s. Haribhakti & Co. LLP Chartered Accountants (Firm Registration No. 103523W/W100048) as the Statutory Auditors for a term of 5 years commencing from the conclusion ofensuing 22nd AGM till the conclusion of the 27th AGM subject toratification by shareholders at every AGM. The appointment of M/s. Haribhakti & Co.LLP in place of M/s. Manubhai & Shah LLP the existing Statutory Auditors who havecompleted the maximum permissible tenure as the Statutory Auditors of the Company will beconsidered by the members in the ensuing AGM.
M/s. Haribhakti & Co. LLP have given their consent to act as the Statutory Auditorsof the Company and also confirmed that their appointment if made would be within thelimits specified under Section 141(3)(g) of the Act. They have further confirmed that theyare not disqualified to be appointed as statutory auditors and they hold valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India.
The Auditor's Report on the Standalone and Consolidated Financial Statements of theCompany for the Financial Year 2016-17 as submitted by M/s. Manubhai & Shah LLP didnot contain any qualifications reservations or adverse remarks and are self explanatory.There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Act and Rules framed thereunder either to the Company or to the Central Government.
B. cost Auditors
Pursuant to Section 148 of the Act the Board of Directors on the recommendation ofthe Audit Committee appointed M/s. Phatak Paliwal & Co. as the Cost Auditors of theCompany for the Financial Year 2017-18. The remuneration of the Cost Auditor has also beenapproved by the Board of Directors on the recommendation of Audit Committee and therequisite resolution for ratification of remuneration of Cost Auditors by the shareholdershas been set out in the Notice of AGM. The Company has received a certificate from theCost Auditor M/s. Phatak Paliwal & Co. certifying their independence and arm's lengthrelationship with the Company in accordance with the provisions of the Act.
C. Secretarial Audit
Pursuant to provisions of Section 204 of the Act read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. KalaAgarwal Company Secretary in practice to undertake the Secretarial Audit of the Company.The Secretarial Audit Report for the financial year ended 31 st March 2017 isannexed herewith marked as Annexure 4 to this Report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark except for delay insubmission of the shareholding pattern of the Company for the quarter ended 30thSeptember 2016 with BSE and details mentioned in the Secretarial Audit Report are selfexplanatory.
23) Corporate Governance Report and Management Discussion and Analysis Report
The Corporate Governance Report and the Management Discussion & Analysis Reporttogether with the Certificate received from the Statutory Auditors of the Companyregarding compliance of the conditions of Corporate Governance as stipulated in theListing Regulations form an integral part of this annual report.
24) Extract of Annual Return
The extract of the Annual Return in the prescribed form MGT-9 is annexed as "Annexure5" to this report.
25) Particulars of Employees
The information required pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided on request. In terms of Section 136 of the Actthe reports and accounts are being sent to the shareholders and others entitled theretoexcluding the said information which will be made available for inspection by theshareholders at the Registered Office of the company during business hours on working daysof the Company up to the date of the ensuing Annual General Meeting. If any shareholder isinterested in inspecting the same such shareholders may write to the Company Secretary inadvance.
26) Energy Conservation and Technology absorption Foreign Exchange Earnings and Outgo
The information pertaining to conservation of energy and technology absorption asrequired under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8(3) of theCompanies (Accounts) Rules 2014 is furnished in "Annexure 6" to thisreport.
The total Foreign Exchange Inflow was Rs. 13769.60 Lacs and Outflow was Rs. 5354.79Lacs during the year under review.
27) Significant and Material Orders
There were no significant and material orders passed by any Regulators or Courts orTribunals during the year ended 31st March 2017 impacting the going concernstatus and Company's operations in future.
28) Prevention of Sexual Harassment of Women at workplace
The Company has zero tolerance towards sexual harassment at workplace and has adopted apolicy to abide by letter and spirit requirements of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder.The Company has Internal Complaints Committee (ICC) at Group level to redress thecomplaints of sexual harassment. During the year Company has not received any complaintof sexual harassment.
29) Material Changes and Commitments affecting the financial position of the companyduring the period from 31st March 2017 to the date of the report
There has been no material change/commitment affecting the financial position of theCompany during the period from the end of the financial year on 31st March2017 to the date of this Report. There has been no change in the nature of business of theCompany.
The Directors take this opportunity to express their deep sense of gratitude to thebanks Central and State Governments and their departments and the local authorities fortheir continued guidance and support.
We would also like to place on record our sincere appreciation for the commitmentdedication and hard work put in by the employees of the Company and for the continuouscooperation and support of Customers Suppliers Business Partners and other stakeholdersof the Company.
| ||On behalf of the Board |
| ||For Morarjee textiles Limited |
|Place: Mumbai ||Urvi A. Piramal |
|Date: 15th May 2017 ||chairperson |
| ||(DIN 0000044954) |