Your directors have pleasure in presenting their 34th Annual Report together with theaudited financial statements for the financial year ended 31st March 2018.
|1. FINANCIAL RESULTS || || |
|The Company's financial performance for the year ended 31st March 2018 is summarized below: || ||(Rs. in Lacs) |
|Particulars ||Current Year ||Previous Year |
|Revenue from operations ||176274.88 ||173166.89 |
|Profits Before Depreciation Finance Cost and Tax ||15430.85 ||21511.73 |
|Less: Depreciation ||6576.90 ||6918.70 |
|Less: Finance Cost ||7073.14 ||5982.38 |
|Profits Before Tax ||1780.81 ||8610.65 |
|Less Tax Expense: || || |
|Current Year Tax ||413.00 ||1973.00 |
|Mat Credit Entitlement ||(413.00) ||-- |
|Deferred Tax ||58.67 ||(375.83) |
|Profit for the period ||1722.14 ||7013.48 |
|Other Comprehensive Income || || |
|Items that will not be reclassified to profit or loss || || |
|i) Re-measurement gains (losses) on defined benefit plans ||238.59 ||(55.87) |
|ii) Net gain/(loss) on FVOCI equity instruments ||(949.71) ||1988.37 |
|Deferred Tax effect on the above ||195.08 ||-- |
|Total Comprehensive Income for the period ||1206.10 ||8945.98 |
2. PERFORMANCE REVIEW
The Company operates in two Business segments i.e. Textile and Sugar as per IndianAccounting Standard (AS)-108 (Operating Segment).
i) Textile: The textile division accounts for 87% (including inter-segment) of thetotal turnover of the company for the year ended 31st March 2018. The Business wiseperformance of this segment is as under:
a. Yarn: The Company has produced 64350 MTs of yarn as against 68236 MTs in theprevious year.
b. Fabric: The Company has produced 705.29 lacs meters of fabrics (both grey andprocessed) as against 747.20 lacs meters in the previous year.
The total turnover of this segment (Yarns and Fabrics) has decreased to Rs. 1540.37crores as against Rs. 1551.26 crores in the previous year showing a marginal decrease of0.71%.
ii) Sugar: The Company has produced 563310 Qtls. of sugar as against 468115Qtls. in the previous year at a Recovery rate of 10.70% (previous year 10.80%). The totalturnover of this segment is Rs. 224.00 crores as against Rs. 176.29 crores in the previousyear showing an increase of 27 %.
The Year under review was tough for the textile industry. Inspite of the challengesthe company has achieved operational income of Rs. 1762.74 crores as against Rs. 1731.67crores showing a marginal increase of 1.79 % over the previous year. The company hasearned Profit before finance cost depreciation and tax of Rs. 154.31 crores as againstRs. 215.12 crores in the previous year. After providing for finance cost of Rs. 70.73crores (previous year Rs. 59.82 crores) Depreciation of Rs. 65.77 crores (previous yearRs. 69.19 crores) and Tax Expenses of Rs. 0.59 crores (previous year Rs. 15.97 crores)(inclusive of Deferred Tax) the Profit for the year comes to Rs. 17.22 crores as againstRs. 70.13 crores in the previous year.
The performance of the Company was affected because of increase in price of raw cottonand the challenges of the after effects of demonetization and mid year roll out of theGoods and Service Tax (GST) faced by the textile industry. Under the circumstances yourCompany has performed reasonably well.
3. TRANSFER TO RESERVES
Your company has transferred Rs. 6.53 crores (previous year Rs. 84.12 crores) to theGeneral Reserves out of profits available for appropriation.
4. CREDIT RATING
The Rating Committee of ICRA has reaffirmed the long-term rating for the Company's Lineof Credit (LOC) at [ICRA] A (pronounced ICRA A). The Outlook on the long-term rating isStable'. The Rating Committee of ICRA has also reaffirmed the short-term rating forthe Company's LOC at [ICRA] A1 (pronounced ICRA A one). The Rating Committee of ICRA hasassigned the rating of [ICRA]A1 (pronounced ICRA A one) to the proposed Rs. 50 CroreCommercial Paper (CP) Programme of the Company.
In order to conserve resources for the future your directors express their inabilityto recommend dividend for the financial year ended on 31st March 2018.
6. INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the applicable provisions of the Companies Act 2013 and rules framedthereunder the amount of dividend remaining unpaid or unclaimed for a period of sevenyears from the date of transfer to the unpaid account is required to be transferred toInvestor Education and Protection Fund (IEPF) of the Central Government. Accordingly theCompany has transferred Rs. 1752.927/- being the amount of unclaimed dividend for theyear 2009-10 to the IEPF. Members who have not yet en-cashed or claimed the dividendsthat are yet to be transferred to the IEPF are requested to contact the Company at theearliest.
In terms of the requirements of Section 124 (6) of the Companies Act 2013 read withInvestor Education and Protection Fund (IEPF) Authority (Accounting Audit Transfer andRefund) Rules 2016 as amended ('the Rules') the Company is required to transmit theShares in respect of which the dividend has remained unpaid or unclaimed for a period ofseven consecutive years to the IEFP Account. Members are requested to take note of thesame and claim their unclaimed dividend immediately to avoid transmission of theunderlying shares to IEPF Account. The shares transmitted to the IEPF Account can beclaimed back by the concerned members from the IEPF authority after complying with theprocedure prescribed under the rules. During the Financial year 2017-18 the Company hastransmitted 1160874 Shares to IEPF Account. The list of members whose shares have beentransmitted to IEPF Authority is displayed on the web site of the company at web-linkwww.owmnahar.com/nahar_ie/ transfer-of-equity-shares.php.
7. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March 2018 is Rs. 398351410/- dividedinto 39835141 Equity Shares of the face value of Rs. 10/- each. During the year underreview the Company has not issued shares with differential voting rights nor has grantedany stock options or sweat equity. As on 31st March 2018 none of the Promoters /Directors of the Company hold instruments convertible into equity shares of the Company.During the year 2017-18 there is no change in the Share Capital 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
No changes and commitments affecting the financial position of the company haveoccurred during the year under review as well as the period between the end of financialyear till the date of this report.
Appointment and Change in Director
In accordance with the provisions of Section 152 of the Companies Act 2013and the Company's Articles of Association Sh. Dinesh Gogna (DIN: 00498670) and Sh. NavdeepSharma (DIN: 00454285) Directors of the Company will be retiring by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for re-appointment.Accordingly the requisite resolution(s) are proposed at the ensuing Annual GeneralMeeting for approval.
The term of appointment of Dr. Vijay Asdhir (DIN: 06671174) comes to an end atthis Annual General Meeting. Pursuant to Section 149 (10) of the Companies Act 2013 theCompany is re-appointing Dr. Vijay Asdhir as Independent Director not liable to retire byrotation for a further period of three consecutive years i.e. up to the conclusion of37th Annual General Meeting to be held in the year 2021.
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 four Board Meetings were convened and held on 30.5.2017 14.8.201714.11.2017 and 14.2.2018. The detail thereof is also given in the Corporate GovernanceReport. The intervening gap between the meetings was within the period prescribed underthe 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 2017-18 the Independent Directors met on 12th December2017 inter-alia to discuss:-
(i) The performance of Non-Independent Directors and the Board as a whole;
(ii) The performance of the Chairman of the Company taking into account the views ofExecutive and Non Executive Directors and
(iii) To assess the quality quantity and timeliness of flow of information between thecompany management and the board that is necessary for the board to effectively andreasonably 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 March2018 the applicable accounting standards have been followed along with proper explanationrelating 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 2018and 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-A andforms 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 detailsof Related 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: www.owmnahar.com/ nahar_ie/pdf/RPT_ Policy.pdf. The details of RelatedParties transactions are given in Note No. 38 of the Notes to Financial Statements.Pursuant to the provisions of section 134(3) Form AOC-2 is annexed herewith in Annexure-B.
15. AUDIT COMMITTEE
The Company has constituted an Audit Committee pursuant to Section 177(8) read withRule 6 of the Companies (Meetings of the Board and its Powers) Rules 2014 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. Presently the AuditCommittee consists of Sh. Dinesh Gogna and Dr. (Mrs) Harbhajan Kaur Bal as Members and Dr.Vijay Asdhir is the Chairman of the Audit Committee. The detailed information regardingAudit Committee and its terms of reference is given in Corporate Governance Report formingan integral part 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. 01stApril 2016. Accordingly the Financial Statements have been prepared in accordance withthe Companies (Indian Accounting Standard) Rules 2015 as amended by the Companies (IndianAccounting Standards) Amendment Rules 2016.
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. The company has engaged an independent agency toaccess the adequacy of the existing internal financial controls and suggest means forfurther strengthening the same.
19. COMPLIANCE WITH SECRETARIAL STANDARDS
During the year the Company has complied with the applicable Secretarial Standards asprescribed under section 118 of the Companies Act 2013.
20. 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.
21. 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.
During the year under review based on the discussion with the Oswal Foundation theCompany had identified a project for setting up of Eye Care Centre in a CharitableHospital. The Company could not spend an amount of Rs. 68.52 Lacs towards its CSRobligation because of the deferment of the Eye Care project by the charitable medicalinstitution. The Company also made efforts to identify projects in other areas. Howeverit was not able to identify meaningful projects finalize implementation agencies and thetarget beneficiaries which would have created a visible impact on the society.
Due to the aforementioned reasons the Company was not able to spend its CSR amounttill 31st March 2018. The Company remains committed towards the noble cause of socialdevelopment and has accordingly decided to carry forward the unspent amount of Rs. 68.52Lacs to the next year. Oswal Foundation has already begun helping to run the charitablehospital for the purposes of diagnosis & treatment besides other charitable activitiesunder CSR already approved. In July 2018 the Company has issued a cheque amounting toRs. 123.43 Lacs which includes the amount of Rs. 54.91 Lacs of CSR liability for theFinancial Year 2016-17 in favour of Oswal Foundation for the purposes of CSR includingpromotion of charitable hospital being run by Mohan Dai Oswal Cancer Treatment &Research Foundation.
The CSR policy of the company has been placed on the Company's website at web-linkhttp://www.owmnahar. com/nahar_ie/pdf/CSR_Policy_ NIEL.pdf. The report on CSR activitiesas required under the Companies (Corporate Social Responsibility) Rules 2014 includingbrief outline of the Company's CSR policy is annexed herewith marked as Annexure-C.
22. NOMINATION & REMUNERATION POLICY
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy for appointment and remuneration of Directors Key Managerial Personnel and SeniorManagement of the Company. The policy also lays down criteria for determiningqualifications positive attributes independence of directors and other matter 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
The shareholders at their 33 Annual General Meeting (AGM) held on 26th September 2017had approved the appointment of M/s. K.R.Aggarwal & Associates Chartered Accountants(Firm Registration No. 030088N) as statutory auditors of the Company to hold office fromthe conclusion of 33 AGM up to the conclusion of 38 AGM to be held in the year 2022.
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. The Company hasmaintained accounts and cost records with respect to Textile and Sugar business asspecified by the Government under Section 148(1) of the Companies Act 2013.Your Directorshad on the recommendation of the Audit Committee appointed M/s. Ramanath Iyer & Co.Cost Accountants New Delhi to audit the cost accounts of the Company for the financialyear 2017-18. The cost audit report for the financial year 2016-17 was filed with theMinistry of Corporate Affairs on 29.12.2017. As required under the Companies Act 2013the remuneration payable to the cost auditor is required to be placed before the Membersin a general meeting for their ratification. Accordingly a resolution seeking members'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 the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company had appointed M/s. P.S.Bathla & Associates a firm of CompanySecretaries in Practice (C.P. No. 2585) to undertake the Secretarial Audit of the Company.The Secretarial Audit Report is attached as Annexure-D and forms an integral partof this Report. There is no secretarial audit qualification for the year under review.
24. 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.
25. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(1) 5(2) and 5(3) ofCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014 (as amendedup to date) in respect of employees of the Company forming part of the Directors' Reportfor the year ended 31st March 2018 is given in Annexure-E to this Report.
26. 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.
27. 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.
28. ASSOCIATE/CONSOLIDATED FINANCIAL STATEMENT
As on 31st March 2018 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 Accounting Standards (Ind AS) and pursuant to Section 129(3) of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014. The audited consolidated financialstatements are provided in the Annual Report. A statement containing salient features offinancial statements of associate companies in Form AOC-1 is annexed with the financialstatements. 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 revenue fromoperations of company was Rs. 4409.16 lacs as compared to Rs. 3680.68 lacs in theprevious year. The company has incurred a net loss of Rs. 2.82 lacs as against Rs. 429.40lacs in the previous 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 Rs. 56.45 lacs as compared to Rs. 53.92 lacs in the previousyear. The company has earned a net profit of Rs. 46.29 lacs as against Rs. 45.64 lacs inthe previous 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 Rs. 60.58 lacs as compared to Rs. 57.77 lacs in the previousyear. The company has earned a net profit of Rs. 50.40 lacs as against Rs. 49.58 lacs inthe previous year.
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 Rs. 86.13 lacs as compared to Rs. 74.87 lacs in the previousyear. The company has earned a net profit of Rs. 79.45 lacs as against Rs. 93.89 lacs inthe previous year.
29. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The company is committed to create and maintain an atmosphere in which employees canwork together without any fear of exploitation. The Company has complied with theprovisions relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Duringthe financial year 2017-18 the company has not received any complaint on sexual harassmentand hence no complaint remains pending as on 31st March 2018.
30. 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 cooperation of employees at all levels.
| ||For and on behalf of the Board of Directors |
|Place: Ludhiana ||Jawahar Lal Oswal |
|Date: 14th August 2018 ||(DIN: 00463866) |
| ||Chairman |