Your directors have pleasure in presenting their 33 Annual Report together with theaudited financial statements for the financial year ended 31 March 2017.
1. FINANCIAL RESULTS
The Company's financial performance for the year ended 31 March 2017 is summarisedbelow: (` in Lacs)
|Particulars ||Current Year |
|Revenue From Operations ||173166.89 ||177694.62 |
|Profits Before Depreciation Finance Cost and Tax ||21511.73 ||22378.52 |
|Less: Depreciation ||6918.70 ||8998.34 |
|Less: Finance Cost ||5982.38 ||7881.21 |
|Profit / (Loss) before Tax ||8610.65 ||5498.97 |
|Less: Tax Expense: || || |
|Current Tax ||1973.00 ||2025.00 |
|Deferred Tax ||(375.83) ||(760.07) |
|Profit/(Loss) for the period ||7013.48 ||4234.04 |
|Other Comprehensive Income || || |
|A) Items that will not be reclassified to profit or loss ||(55.87) ||7.30 |
|B) Items that will be reclassified to profit or loss ||1988.37 ||177.62 |
|Total Comprehensive Income for the period ||8945.98 ||4418.96 |
2. PERFORMANCE REVIEW
We would like to inform you that in view of the Indian Accounting Standard (AS) -108(Operating Segment ) the Company operates in two main segments i.e. Textile and Sugar.
i) Textile: The textile division accounts for 89.62% (including inter-segment)of the total turnover of the company for the year ended 31 March 2017. The Business wiseperformance of this segment is as under:
a. Yarn: The Company has produced 68236 MTs of yarn as against 73245 MTs inthe previous year.
b. Fabric: The Company has produced 747.20 lacs meters of fabrics (both grey andprocessed) as against 755.59 lacs meters in the previous year.
The total turnover of this segment (Yarns and Fabrics) has decreased to ` 1551.26crores as against ` 1605.33 crores in the previous year showing a decrease of 3.37%.
ii) Sugar: The Company has produced 468115 Qtls. of sugar as against 435350Qtls. in the previous year. The total turnover of this segment is ` 176.29 crores asagainst ` 163.10 crores in the previous year showing an increase of 8.09%.
During the year under review your company has performed reasonably well and theperformance of the company was quite satisfactory as compared to previous year. During theyear the company has achieved operational income of ` 1731.67 crores as against `1776.95 crores showing a decrease of 2.59% over the previous year. The company has earnedProfit before finance cost Depreciation and tax of ` 215.12 crores as against ` 223.79crores in the previous year. After providing for Finance Cost of ` 59.82 crores (previousyear ` 78.81 crores) Depreciation of ` 69.19 crores (previous year ` 89.98 crores) andTax Expenses of ` 15.99 crores (previous year ` 12.65 crores) (inclusive of Deferred Tax)the Profit for the year comes to ` 70.13 crores as against ` 42.34 crores in the previousyear.
3. TRANSFER TO RESERVES
Your Company has transferred ` 84.12 Crores (Previous year ` 44.01 Crores) to theGeneral Reserve out of profits available for appropriation after making a provision fordividend amounting to ` 4.79 Crores (inclusive of Dividend Distribution Tax).
4. CREDIT RATING
The Rating Committee of ICRA has upgraded the long term rating to [ICRA] A (pronouncedICRA A) from [ICRA] A- (pronounced ICRA A minus). The Outlook on the long-term rating isStable. The Rating Committee of ICRA has also upgraded the short-term rating to [ICRA] A1(pronounced ICRA A one) from [ICRA] A2+ (pronounced ICRA A two plus).
The Board of Directors of your company has proposed dividend @ 10% (i.e. ` 1/- perequity share) on the Paid-up Equity Share Capital of the Company for the Financial Year2016-17. The dividend will be paid subject to the approval by the shareholders in theforthcoming Annual General Meeting.
6. INVESTORS EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 124 and 125 of the Companies Act 2013 (theAct') the company has transferred an amount of Rs. 1658375/- being the amount ofunclaimed dividend for the year 2008-09 to the Investor Education & Protection Fund(IEPF). Further unclaimed dividend for the year 2009-10 shall be transferred to the IEPFpursuant to the provisions of the Act in November 2017. The Company has also sent letter/ notice to the shareholders informing them to claim the Unclaimed Dividend from theCompany before transferring the same to IEPF.
As per section 124(6) read with Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 all shares in respect of whichdividend has not been claimed for seven consecutive years or more shall be transferred bythe Company in the name of IEPF established by the Government of India. A list of suchshareholders whose dividend is lying unclaimed and shares due for transfer is displayed onthe website of the Company.
The MCA has clarified that shares due for transfer either held in physical form ordemat form shall be transferred to IEPF Aauthority by operation of law. The MCA videGeneral Circular No. 06/2017 has extended the due date of transfer of shares to the IEPFAuthority. The Company shall transfer shares to the account of IEPF Authority as and whenMCA notifies the date.
7. SHARE CAPITAL
The paid up Equity Share Capital as at 31 March 2017 was ` 398351410/- divided into39835141 Equity Shares of the face value of ` 10/- each. During the year under reviewthe Company has not issued shares with differential voting rights nor has granted anystock options or sweat equity. As on 31 March 2017 none of the Promoters / Directors ofthe Company hold instruments convertible into equity shares of the Company.
During the year the Company has not accepted any deposit from the public. As suchthere are no outstanding deposits within the meaning of Section 73 of the Companies Act2013 read with the Companies (Acceptance of Deposits) Rules 2014.
9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY THE COMPANY
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Financial Statements.
10. MATERIAL CHANGES AFFECTING FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments affecting the financial position of theCompany which have occured between the end of financial year to which the financialstatement relates and the date of this report.
Appointment and Change in Directors
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Sh. Jawahar Lal Oswal (DIN: 00463866) and Sh. DineshOswal (DIN: 00607290) Directors of the Company will be retiring by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for re-appointment.
The term of appointment of Dr. (Mrs.) Harbhajan Kaur Bal (DIN:00008576) Dr. Yash PaulSachdeva (DIN: 02012337) Dr. Amrik Singh Sohi (DIN: 03575022) and Sh. Ajit Singh Chatha(DIN: 02289613) comes to an end on this Annual General Meeting. Pursuant to section149(10) of the Companies Act 2013 the Company is re-appointing Dr. (Mrs) Harbhajan KaurBal Dr. Amrik Singh Sohi and Sh. Ajit Singh Chatha as Independent Directors not liableto retire by rotation for a further period of three consecutive years i.e. up to theconclusion of 36th Annual General Meeting to be held in the year 2020. Dr. Yash PaulSachdeva has expressed his inability to continue as a Director for the next term. He willceased to be Director of the Company at the conclusion of this Annual General Meeting.
The Company has received a notice pursuant to section 160 of the Companies Act 2013(the Act) along with the amount of requisite deposit from a member proposing thecandidature of Dr. Suresh Kumar Singla (DIN: 00403423) for the office of Director. Membersattention is drawn to a Resolution proposing the candidature of Dr. Suresh Kumar Singla(DIN: 00403423) as an Independent Director on the Board of the Company which is includedat Item No. 9 of the Notice convening the Annual General Meeting.
The term of office of Sh. Kamal Oswal (DIN: 00493213) Managing Director of the companyexpires on 31st January 2018. The Nomination and Remuneration Committee of the Companyhas recommended and the Board has approved the reappointment of Sh. Kamal Oswal asManaging Director of the Company for a period of five years i.e. up to 31st January 2023subject to members' approval.
Declaration by Independent Directors
Necessary declaration has been obtained from all Independent Directors undersub-section (6) of Section 149 of the Companies Act 2013.
Number of Meetings of the Board
During the year five Board Meetings were convened and held on 22.4.2016 30.5.201629.8.2016 12.12.2016 and 14.2.2017. The detail thereof is also given in the CorporateGovernance Report. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013.
Pursuant to the provisions of Companies Act 2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the Company has devised a policy forperformance evaluation of the board its committees and all the Directors individually asper the criteria laid down by the Nomination & Remuneration Committee of the Company.The manner of evaluation is stated in the Corporate Governance Report forming an integralpart of this report.
Independent Directors Meeting
During the financial year 2016-17 the Independent Directors met on 12.12.2016inter-alia to discuss:- (I) The performance of Non-Independent Directors and the Board asa whole; (ii) The performance of the Chairman of the Company taking into account the viewsof Executive and Non Executive Directors and (iii) To assess the quality quantity andtimeliness of flow of information between the company management and the board that isnecessary for the board to effectively and reasonably perform their duties.
12. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your directors make the following statement in terms ofSection 134(3)(c) and (5) of the Companies Act 2013:-
I) that in the preparation of the Annual Accounts for the year ended on 31st March2017 the applicable Indian Accounting Standards have been followed along with properexplanation relating to material departures;
ii) that the directors had 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 as at 31st March 2017and of the profit of the Company for the year ended on that date;
iii) that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
iv) that annual accounts have been prepared on a going concern basis.
v) that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
13. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as Annexure-Aand forms an integral part of this Report.
14. RELATED PARTY TRANSACTIONS
During the financial year under review all transactions entered into with Relatedparties as defined under the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 were in the ordinary course of business and areat arm's length basis. The company has not entered into any contract or arrangement withRelated parties /Group companies other than in ordinary course of business. The details ofRelated Party Transactions are placed before the Audit Committee for its review andapproval on quarterly basis. These transactions were entered into as per the Company'spolicy on Related Party Transactions and are approved by the Audit Committee Board andalso by Shareholders. The company's policy on Related Party Transactions is available atthe web. link. he details of Related Parties transactions are given in Note No. 36 of theNotes to Financial Statements. Pursuant to the provisions of section 134(3) Form AOC2 isannexed herewith in Annexure-B.
15. AUDIT COMMITTEE
The Company has constituted an Audit Committee pursuant to Section 177 read with Rule 6of the Companies (Meetings of the Board and its Powers) Rules 2014 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. Presently the Audit Committeeconsists of Sh. Dinesh Gogna Dr. (Mrs) Harbhajan Kaur Bal as Members and Dr. Vijay Asdhiris the Chairman of the Audit Committee. The detailed information regarding Audit Committeeand its terms of reference is given in Corporate Governance Report forming an integralpart of the Directors Report.
16. RISK MANAGEMENT
The Company has laid down a Risk Management Policy and identified threat of such eventswhich if occurs will adversely affect the ability of the company to achieve itsobjectives. Evaluation of business risk and managing the risk has always been an ongoingprocess in your company. The Audit Committee has also been delegated the responsibilityfor assessment mitigation monitoring and review of all elements of risks which theCompany may be exposed to. The Board also reviews the risk management and minimizationprocedures.
17. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Board adopted a Vigil Mechanism/ Whistle Blower Policy as per SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and section 177 of theCompanies Act 2013 to report genuine concerns or grievances about unethical behavior ofemployees actual or suspected fraud or violation of the Company's Code of Conduct. TheCompany's Vigil Mechanism/ Whistle Blower Policy are available at the Company's websitei.e. www.owmnahar.com.
18. INDIAN ACCOUNTING STANDARD (IND AS) AND INTERNAL FINANCIAL CONTROL
The Indian accounting standard (Ind AS) became applicable on the Company w.e.f. 1stApril 2016. Accordingly the financial statements have been prepared in accordance withthe Companies (Indian Accounting Standards) Rules 2015 as amended by Companies (IndianAccounting Standards) (Amendment) Rules 2016. The Company appointed M/s Grant ThorntonIndia LLP Gurugram (Haryana) a leading consultancy firm in the Accounting/Financialmatters to advice the Company on convergence of Ind AS. The report submitted by them hasbeen implemented for preparing the financial statement for the year ended 31st March2017.
The Company is having adequate internal financial control systems and procedures whichcommensurate with the size of the Company. The Company is having Internal Audit Departmentwhich ensures optimal utilization and protection of Company's resources. The InternalAuditor monitors and evaluates the efficiency and adequacy of internal control systems inthe company its compliance with operating systems accounting procedures and also ensuresthat the internal control systems are properly followed by all concerned departments ofthe company. Significant audit observations and corrective actions thereon are presentedto the Audit Committee of the Board.
19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The company has constituted a Corporate Social Responsibility (CSR) Committee of theboard in accordance with section 135 of the Companies Act 2013. The Company has adopted aCSR Policy and undertaking CSR programmes/ projects along with group companies under oneumbrella through Oswal Foundation (OSF) which is a registered society formed in 2006having its charitable objects in various fields a SPV recognized charitable organization.They are in the process of finalizing Eye Care and Health Care centre and for which thesaid organization is finalizing the project. The Company would contribute immediately themoney of their CSR obligation for that purpose to the said foundation as and when they areready to go with the project. During the year out of its profit the Company has set apartcommitted CSR liability amounting to ` 54.89 lacs equivalent to its CSR obligation. TheCSR policy of the company has been placed on the Company's website at web-linkhttp://www.owmnahar.com/nahar_ie/pdf/CSR_Policy_NI EL.pdf. The report on CSR activities asrequired under the Companies (Corporate Social Responsibility) Rules 2014 including briefoutline of the Company's CSR policy is annexed herewith marked as Annexure-C.
21. NOMINATION & REMUNERATION POLICY
The Board has on the recommendation of Nomination & Remuneration Committee frameda policy for appointment and remuneration of Directors Key Managerial Personnel andSenior Management of the Company. The policy also lays down criteria for determiningqualifications positive attributes independence of directors and other matters providedunder section 178 of the Companies Act 2013. The Nomination and Remuneration policy ofthe company is elaborated in the Corporate Governance Report forming an integral part ofthis report.
I) Statutory Audit & Auditor's Report
Section 139 of the Companies Act 2013 and the Rules made there under provides themandatory rotation of statutory auditors. The transition period (three years) as providedunder the Act for the existing auditors i.e. M/s Raj Gupta & Co. CharteredAccountants (Firm Registration No. 000203N) shall be completing at this ensuing 33rdAnnual General Meeting of the Company. The Audit Committee of the Company has proposed andthe Board of Directors in their meeting held on 14.08.2017 has recommended the appointmentof M/s. K.R. Aggarwal & Associates Chartered Accountants (Firm Registration No.030088N) as the Statutory Auditors of the Company for a period of five consecutive yearsfrom the conclusion of this AGM till the conclusion of 38th AGM to be held in the year2022. M/s K.R. Aggarwal & Associates has confirmed their eligibility under section 141of the Companies Act 2013 and Rules framed there under for appointment as an auditor ofthe Company.
The Auditor's report on the accounts of the Company for the financial year 2016-17issued by M/s. Raj Gupta & Co. Chartered Accountants Auditors of the Company isself-explanatory and requires no comments.
II) Cost Auditor & Cost Audit Report
Pursuant to Section 148 of the Companies Act 2013 read with Companies (Cost Records& Audit) Amendment Rules 2014 the cost audit records maintained by the Company inrespect of its textiles and sugar segments are required to be audited. Your Directors hadon the recommendation of the Audit Committee appointed M/s. Ramanath Iyer & Co. CostAccountants New Delhi to audit the cost accounts of the Company for the financial year2016-17. The cost audit report for the financial year 2015-16 was filed with the Ministryof Corporate Affairs on 22.10.2016. As required under the Companies Act 2013 theremuneration payable to the cost auditor is required to be placed before the Members inthe Annual General Meeting for their ratification. Accordingly a resolution seekingmembers' ratification for the remuneration payable to M/s. Ramanath Iyer & Co. CostAccountants is included in the Notice convening the Annual General Meeting.
III) Secretarial Audit & Secretarial Audit Report Pursuant to theprovisions of Section 204 of the Companies Act 2013 and rules made there under theCompany had appointed M/s. P.S.Bathla & Associates a firm of Company Secretaries inPractice (C.P. No. 2585) to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report is attached as Annexure-D and forms an integral part ofthis Report. There is no secretarial audit qualification for the year under review.
23. KEY MANAGERIAL PERSONNEL
As per the provisions of Section 203 of the Companies Act 2013 Sh. Kamal Oswal ViceChairman-cum-Managing Director; Sh. Bharat Bhushan Gupta Chief Financial Officer and Sh.Mukesh Sood Company Secretary are the Key Managerial Personnel of the Company.
24. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5(1) 5(2) and 5(3) of Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 (as amended up to date) in respect of employees of the Companyforming part of the Directors' Report for the year ended 31st March 2017 is given in Annexure-Eto this Report.
25.CONSERVATION OF ENERGY TECHNOLOGY
ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of Companies (Accounts) Rules 2014 is annexed herewith as Annexure-F.
26. CORPORATE GOVERNANCE REPORT
Your Company continues to follow the principles of good corporate governance. Thecorporate governance report along with Auditor's certificate regarding compliance of theconditions of corporate governance as stipulated in SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 confirming compliance is attached herewith as Annexure-Gand forms part of this Report.
27.ASSOCIATE / CONSOLIDATED FINANCIAL
As on 31st March 2017 the company had four Associate Companies i.e. Cotton CountyRetail Limited J L Growth Fund Limited Vardhman Investment Limited and Atam VallabhFinanciers Limited the accounts of which have been consolidated in accordance with theapplicable Indian Accounting Standards (Ind AS) and pursuant to Section 129(3) of theCompanies Act 2013 read with Companies (Accounts) Rules 2014. The audited consolidatedfinancial statements are provided in the Annual Report. A statement containing salientfeatures of financial statements of associate companies in Form AOC-1 is annexed with thefinancial statements. The financials of the associate companies is given below:-
i) Cotton County Retail Limited (CCRL)
The company holds 49.99% equity shares of CCRL. During the year the revenue fromoperations of the company was ` 3680.68 lacs as compared to ` 2205.30 lacs in the previousyear. The company has incurred a net loss of ` 429.40 lacs as against ` 782.78 lacs in theprevious year.
ii) Atam Vallabh Financiers Limited (AVFL)
The company holds 36.85% equity shares of AVFL. During the year the revenue fromoperations of the company was ` 53.92 lacs as compared to ` 35.36 lacs in the previousyear. The company has earned a net profit of ` 45.64 lacs as against ` 26.79 lacs in theprevious year.
iii) Vardhman Investment Limited (VIL)
The company holds 47.17% equity shares of VIL. During the year the revenue fromoperations of the company was ` 57.77 lacs as compared to ` 33.23 lacs in the previousyear. The company has earned a net profit of ` 49.58 lacs as against ` 24.83 lacs in theprevious year.
16 iv) J L Growth Fund Limited (JLGF)
The company holds 41.10% equity shares of JLGF. During the year the revenue fromoperations of the company was ` 74.87 lacs as compared to ` 29.49 lacs in the previousyear. The company has earned a net profit of ` 93.89 lacs as against ` 25.31 lacs in theprevious year.
28.DISCLOSURE AS PER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The company is committed to create and maintain an atmosphere in which employees canwork together without any fear of exploitation. During the financial year 2016-17 thecompany has not received any complaints on sexual harassment and hence no complaintremains pending as on 31st March 2017.
29. INDUSTRIAL RELATIONS
Industrial relations throughout the year continued to be very cordial and satisfactory.
Your directors would like to express their appreciation for the assistance andco-operation received from financial institutions banks and shareholders. They also placeon record their appreciation for the co-operation of employees at all levels.
For and on behalf of the Board of Directors
Jawahar Lal Oswal Place: Ludhiana (DIN : 00463866)
Dated: 14 August 2017