Nahar Spinning Mills Ltd.
|BSE: 500296||Sector: Industrials|
|NSE: NAHARSPING||ISIN Code: INE290A01027|
|BSE 00:00 | 16 Aug||92.90||
|NSE 00:00 | 16 Aug||92.80||
|Mkt Cap.(Rs cr)||335|
|Mkt Cap.(Rs cr)||335.00|
Nahar Spinning Mills Ltd. (NAHARSPING) - Director Report
Company director report
Your Directors have pleasure in presenting the Thirty Seventh Annual Report on theaffairs of the company for the financial year ended 31st March 2017. FINANCIALPERFORMANCE
Your Company's Financial Performance during the year is summarised below:
INDIAN ACCOUNTING STANDARD
The Ministry of Corporate Affairs (MCA) vide its notification dated February 2015notified the Indian Accounting Standards (Ind AS) applicable to certain classes ofcompanies. The company has adopted Indian Accounting Standards (Ind aS) from 01 April2016 (transition date being 01 April 2015) and accordingly the financial statements havebeen prepared as per the Indian Accounting Standard Rules 2015 as prescribed underSection (133) of the Companies Act 2013 read with relevant Rules issued thereunder andthe other accounting principles generally accepted in India.
The Reconciliation and the effect of the transition as per GAAP vis a vis Ind AS hasbeen provided in Note no. 41 in the notes to the account in the Financial Statement.OPERATIONAL REVIEW AND STATE OF AFFAIR We would like to inform you that Company operatesin a single segment i.e. "TEXTILE" as such disclosure requirements as perAccounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India NewDelhi are not applicable.
We are pleased to inform you that inspite of a challenging year for Textile Industry;Company has been able to sustain its operational performance. The Company has achieved atotal operating income of Rs. 2154.15 crores as against Rs. 2047.22 Crores showing anincrease of 5.22% over the previous year. Likewise the export at Rs. 1343.79 crores hasalso shown an increase of 5.17% over the previous year.
The slackness in Global demand coupled with exchange rate fluctuations severelyaffected Company's financial performance. Beside the increase in the prices of raw cottonwithout the corresponding increase in the yarn prices also affected the Company'sperformance and it could earn a profit of Rs. 52.22 crores as against Rs. 52.56 crores inprevious year.
TRANSFER TO RESERVE
The Company has not transferred any amount to the General Reserve and thus Company'sGeneral Reserve stands on Rs.505.58 Crores as on 31st March 2017. Howeverafter making adjustment of Dividend Tax on Dividend CSR Expense Reserve and Adjustmentof income tax and adding comprehensive income for the year an amount of Rs. 45.97 Croreshas been retained in the Surplus Account and thus Retained Earnings/Surplus Account standincreased to Rs.107.68 Crores as on 31st March 2017.
The Board in its meeting held on 30th May 2017 has recommended a dividend@ 30% (i.e. Rs.1.50 per equity shares of Rs.5/- each) on paid up share capital for theyear ended 31st March 2017. The proposal is subject to the approval of theshareholders at the ensuing Annual General Meeting to be held on 26thSeptember2017. The total dividend declared (excluding dividend distribution tax) forthe currentyear is Rs. 5.41 crores.
The dividend if approved at the forthcoming Annual General Meeting will be paid outof the profits of the Company to all those shareholders whose names shall appear in theRegister of Members on 1st September 2017 or Register of Beneficial Ownersmaintained by the Depositories as at the close of 1st September 2017. INVESTOREDUCATION AND PROTECTION FUND
Pursuant to the provisions Section 124(5) of the Companies Act 2013 read with IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 all unpaid and unclaimeddividends which remain unpaid or unclaimed for a period seven years from the date of suchtransfer shall be transferred by the Company to the Investor Education Protection Fund(IEPF) established by the Central Government.
Accordingly the Company has transferred an amount of Rs. 429529/- (Rupees Four LakhsTwenty Nine Thousand Five Hundred Twenty Nine Only) being the amount of unclaimed dividendfor the year 2008-2009 to the Investor Education and Protection Fund. Further unpaiddividend for the year 2009-2010 shall be transferred to Investor Education and ProtectionFund pursuant to Section124(5) of the Companies Act 2013 in November 2017. The Companyhas already sent letter/notice to the shareholders informing them to claim the unclaimeddividend from the Company before such transfer to the Investor Education and ProtectionFund. Pursuant to the provisions of Section 124 (6) of the Companies Act 2013 read withthe Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 as amended the Equity shares of the Company in respect of whichdividend has remained unclaimed or unpaid for a period of seven consecutive years or moreare required to be transferred to the IEPF Authority as per applicable provisions of theAct.
The Company has already sent individual notices to the concerned shareholders at theirregistered addresses whose share are liable to be transferred to the IEPF Authorityadvising them to claim their unclaimed dividend and also uploaded the details on itswebsite i.e. www. owmnahar.com
In case the concerned shareholders do not claim their unclaimed dividends the Companyshall with a view to comply with the Rules transfer the shares to the IEPF Authoritywithout any further notice to the shareholders and no liability shall lie against theCompany in respect of the shares so transferred. The shareholders may note that upontransfer of the shares to IEPF Authority including all benefits accruing on such sharesif any the same can be claimed only from IEPF Authority by following the procedureprescribed under the Rules. DECLARATION BYINDEPENDENT DIRECTORS The Independent Directorshave submitted their declaration to the Board that they fulfill all the requirements asstipulated in Section 149(6) of the Companies Act 2013 so as to qualify themselves to beappointed/re-appointed as Independent Directors under the provisions of the Companies Act2013 and the Rules made thereunder.
APPOINTMENT OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 152(6) of the Companies Act 2013 and Article 117of Article of Association of the Company Sh. Dinesh Gogna (DIN 00498670) and Sh. KamalOswal (DIN00493213) will be retiring by rotation at the ensuing Annual General Meetingand being eligible offer themselves for reappointment. The Board recommend theirreappointment to the members of the Company at the ensuring Annual General Meeting.
The shareholders vide their Special Resolution dated 30.09.2016 has reappointed Mr.Dinesh Oswal Managing Director of the Company for a further period of Five Years w.e.f. 1stJanuary 2017 to 31st December 2021.
We would also like to inform you that the first term of office of the Dr. (Mrs.) H.K.Bal Dr. Suresh Kumar Singla Dr. Amrik Singh Sohi Prof. K.S. Maini and Dr. Yash PaulSachdeva as Independent Directors expires at the ensuing Annual General Meeting.
Dr. (Mrs.) H.K. Bal and Dr. Y.P. Sachdeva have requested the Board not to considerthem for reappointment and relieve them from the office of the director after the expiryof their present term. The Board places on record its appreciation for the valuablecontribution made by Dr. (Mrs.) H.K. Bal and Dr. Y.P. Sachdeva during their tenure asDirectors of the Company.
Further pursuant to the Notice received under section 160 of the companies act 2013along with the deposit of requisite amount the Board on the recommendation of Nominationand Remuneration Committee and on the basis of performance evaluation of Directors hasdecided to re-appoint Dr. Suresh Kumar Singla (DIN 00403423) and Dr. Amrik Singh Sohi (DIN03575022) as Independent Directors for a second term of five consecutive years upto 25thSeptember 2022 and Prof. K.S. Maini (DIN 00454686) as Independent Director for a secondterm of three consecutive years upto 25th September 2020. The necessaryresolutions for their appointment have been proposed in the accompanying Notice.
We would also like to inform you that the company has received a notice in writing froma member along with the deposit of requisite amount under section 160 of the CompaniesAct. 2013 purposing the candidature of Dr. Vijay Asdhir (DIN 006671174) and Dr. ManishaGupta (DIN 06910242) as Independent Directors of the Company. The Nomination andRemuneration Committee after verifying their profile and suitability has recommended theirappointment to the Board. Accordingly the Board having regard to their skills experienceand knowledge has proposed the appointment of Dr. Vijay Asdhir (DIN 006671174) and Dr.Manisha Gupta (DIN 06910242) as Independent Directors of the Company to hold office forfive consecutive years for a term upto 25th September 2022 in the Notice ofensuing Annual General Meeting.
Pursuant to the provision of Section 203 of the Companies Act 2013 Mr. Dinesh OswalManaging Director Mr. Anil Garg Chief Financial Officer and Mr. Brij Sharma CompanySecretary are the Key Managerial Personnel (hereinafter referred as KMP) of the Companyand there has been no change in the KMP since the last fiscal year.
The provisions of the Companies Act 2013 and Regulation 17 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 mandate that a formal annualperformance evaluation is to be made by Board of its own performance and that of itsCommittee and individual Directors Schedule IV of the Companies Act 2013 states thatperformance evaluation of the Independent Director shall be done by Directors excludingthe Director being evaluated.
The Board carried out a formal annual performance evaluation as per thecriteria/framework laid down by the Nomination and Remuneration Committee of the Companyand adopted by the Board. The evaluation was carried out through a structured evaluationprocess to evaluate the performance of individual directors including the Chairman of theBoard. They were evaluated on parameters such as their education knowledge experienceexpertise skills behavior leadership qualities level of engagement and contributionindependence of judgment decision making ability for safeguarding the interest of theCompany stakeholders and its shareholders. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the Chairmanand the Non Independent Directors was carried out by the Independent Directors. The Boardwas satisfied with the evaluation process and the approved the evaluation results thereof.CORPORATE POLICIES:
The Securities and Exchange Board of India (SEBI) on September 22015 issued SEBI(Listing Obligations and Disclosures Requirements) Regulations 2015. As per the saidRegulations the listed Companies are required to formulate certain policies. As a goodcorporate entity the company has already formulated several corporate governance policiesand the same are available on the company's website i.e.
The company has adopted certain policies the details of which are given hereunder:
APPOINTMENT AND REMUNERATION POLICY
The Board on the recommendation of the Nomination and Remuneration Committee has frameda policy for Appointment and Remuneration of Directors Senior Management and otheremployees as provided under Section 178(3) of the Companies Act 2013. The objective ofthe Policy is to have an appropriate mix of Executive Non-Executive and IndependentDirectors. The present Board consists often members Sh. Jawahar Lal Oswal is non-executiveChairman. Sh. Dinesh Oswal is a Managing Director. There are four Non Executive Directorsand five are Independent Directors out of which one Director namely; Dr. (Mrs.) H.K.Bal aswomen director on the Board. The Company's Policy of Appointment and Remuneration includescriteria for determining Qualification Positive Attributes Independence of Directors andother matters as required under sub Section 3 of Section 178 of the Companies Act 2013.The policy also laid down the criteria for determining the remuneration of directors keymanagerial personnel and other employees. The Appointment and Remuneration Policy of theCompany is available on the Company's website and can be accessed at
SEPARATE MEETING OF INDEPENDENT DIRECTORS
The Company's Independent Directors held their meeting on 19th December2016 without the attendance of Non Independent Directors and members of the management.All Independent Directors were present at the meeting. They
I. Reviewed the performance of non-Independent directors and the Board as a whole;
ii. Reviewed the performance of the Chairperson of the Company taking into account theviews of Executive Directors and Non- Executive Directors;
iii. Assessed the quality and timeliness of the flow of information between thecompany's Management and the Board which is necessary for the Board to effectively andreasonably perform their duties.
FAMILIARISATION PROGRAMME FOR BOARD MEMBERS
The Company at the time of appointing a Director issues a formal letter of appointmentwhich inter alia explains the role functions duties and responsibilities expected fromhim/her as a Director of the Company. All Independent Directors are provided with allpolicies/Guidelines as framed by the Company under various statutes and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 to familiarize with Company'sprocedure and practices. Further to update them on the regular basis the Companyprovides copies of all amendments in Corporate Laws Corporate Governance Rules and SEBI(Listing Obligations and Disclosure Requirements) Rules 2015. They have also been updatedregarding the Companies Amendment Bill 2016 which has already been passed by lower houseand is pending for approval of the upper house in the Parliament. The details of theCompany's policy on Familiarization Programs for Independent Directors are posted on thewebsite of the company and can be assessed at http://www .owmnahar.com/ spinning /pdf/familiarization/ program/NSML001.pdf.
NO. OF BOARD MEETINGS
During the year under review the Board of Directors met four times i.e. 30thMay 2016 12th August 2016 11th November 2016 and 13thFebruary 2017 with a predefined agenda circulated well in advance. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013.RELATED PARTY TRANSACTIONS
Your Company is engaged in the Manufacture & Exports of yarns and knitted garments.Likewise some Group Companies (which are public limited Companies) are also engaged in theTextile Industry. Because of nature of Industry sometimes sale/purchase/fabrication jobstransactions takes place between the Group Companies in the ordinary course of businessat Arm's length basis and are in compliance with the applicable provisions of theCompanies Act 2013 and the SEBI (LODR) Regulations 2015. There are no materiallysignificant related party transactions made by the Company with Promoters Directors orKey Managerial Personnel etc which may have potential conflict of interest with theCompany at large or which warrants the approval of the shareholders. Accordingly notransactions are being reported in Form AOC-2 in terms of Section 134 of the Act read withthe Rule 8 of the Companies (Accounts) Rules 2014. However the transactions entered intowith the Group Companies during the year under review has been given to Notes to thefinancial statements in accordance with the Accounting Standards.
The Company has not entered into any contract or arrangement with the related partiesas referred in Section 188(1) of the Companies Act 2013. Thus the requirement fordisclosure of particulars of contracts or arrangement with related parties referred to inSection 188(1) is not applicable. However as per Company's policy all the GroupCompanies transactions regarding sales/purchase etc. are placed before the Audit Committeeas well as the Board for their information and approval.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATEAND THE DATE OF THE
There are no material changes and commitments affecting the financial position of theCompany occurred between the end of the financial year to which these financial statementsrelate and the date of this report. SHARECAPITAL
The Paid up equity share capital of the Company as on 31st March 2017 isRs. 1803.27 Lakhs. During the year under review Company has neither issued any shareswith differential rights as to dividend voting or otherwise nor granted any stock optionsor sweat equity under any scheme.
SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and company's operations in future.
PARTICULARS OF LOANS INVESTMENTS GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT2013
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 form part of the Notes to the Financial Statements providedin the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
As reported in our last report Company adopted CSR Policy and decided to undertake CSRActivity in collaboration with Group Companies under one umbrella i.e. through OswalFoundation which is a Registered Society formed in 2006 having its charitable objects invarious fields. The details of the CSR policy are available on the Company's website i.e.
The disclosure in respect of the existing CSR Activities pursuant to Section 134(3) ofthe Companies Act 2013 read with Rule 9 of the Companies (Accounts) Rules 2014 andCompanies (Corporate Social Responsibility) Rules 2014 is annexed hereto as"Annexure I" and forms part of this Report.
As required under Section 177 of the Companies Act 2013 the Board of Directors havealready constituted Audit Committee consisting of three Non-Executive Directors namely;Prof. K.S. Maini as Chairman Sh. Dinesh Gogna and Dr. S.K. Singla as members. Mr. BrijSharma is the Secretary of the Committee. The Committee held four meeting during the yearunder review.
Pursuant to the provisions of Section 177(9) of the Companies Act 2013 read withCompanies (Meetings of Board and its Powers) Rules 2013 the Company established a VigilMechanism process as an extension of Company's Code of Conduct whereby any employeedirectors customers vendors etc. can report the genuine concerns or grievances to themembers of the Audit Committee about unethical bahaviour actual or suspected fraud orviolation of Company's Code of Conduct so that appropriate Action can be taken tosafeguard the interest of the company. The Mechanism also provides for adequate safeguardsagainst victimization of persons who uses such mechanism. The mechanism provides directaccess to the chairperson of the Audit Committee in appropriate or exceptional cases. TheWhistle Blower Policy/Vigil Mechanism is also posted on Company's Website. The Company hasa dedicated e-mail address i.e. whistleblowernsml@ owmnahar.com for reporting the genuineconcerns.
The Audit Committee regularly reviews the working of the Mechanism. No complaint wasreceived during the year under review.
SUBSIDIARY JOINT VENTURE OR ASSOCIATES COMPANY
The Company does not have any subsidiaries joint venture and associates Company duringthe year under review.
We are pleased to inform that the Credit Rating Information Services of India Ltd.(CRISIL) in their Credit Rating Report of November 2016 re-affirmed the credit rating"A" for long term debt instruments/ facilities and "A1" for the shortterm debt instruments/ facilities and "A1" for commercial paper of Rs. 235.00millions of the Company. The rating "A" indicates stable and rating"A1" indicates very strong degree of safety regarding timely payment of thefinancial obligations.
The Ministry of Corporate Affairs (MCA) has taken a "Green Initiative in theCorporate Governance" by allowing paperless compliances by the Companies. Further asper the provisions of Companies Act 2013 read with Companies (Management andAdministration) Rules 2014 the Company may send financial statements and other documentsby electronic mode to its members. Your Company has decided to join the MCA in itsenvironmental friendly initiative.
Accordingly henceforth Company propose to send documents such as notices of GeneralMeetings Annual Report and other communications to its shareholders via electronic modeto the registered E-mail addresses of the shareholders. To support this green initiativeof the Government in full measure shareholders are requested to register/update theirlatest E-mail addresses with their depository Participant(D.P.) with whom they are havingDemat Account or send the same to the Company via Email at:-
LISTING OF SECURITIES
The securities of the company are presently listed on the following Stock Exchanges:.
i. The BSE Ltd. 25th Floor Phiroze Jeejeebhoy Towers Dalal StreetMumbai.
ii. The National Stock Exchange of India Ltd. Exchange Plaza 5th FloorPlot No.C/1 G- Block Bandra Kurla Complex Bandra (E) Mumbai
The Company has paid listing fee to both the Stock Exchanges for the financial year2017-18.
As the members must be aware that Companies securities are tradable compulsorily inelectronic form w.e.f. 21st March 2000. Your Company has already establishedconnectivity with both the Depositories i.e. National Securities Depository Limited (NSDL)and Central Depository Services (India) Limited (CDSL) to facilitate the holding andtrading of securities in electronic form. As on date 95.47% of the total Equity ShareCapital of the Company has been dematerialized. The shareholders who have not gone in fordematerialisation of shares till date are requested to opt for dematerialisation of theshares at the earliest.
Further as per SEBI circular no. D&CC/FITTC/CIR- 15/2002 dated 27thDecember 2002 Company has appointed M/s Alankit Assignments Ltd. as Registrar for ShareTransfer and Electronic Connectivity. Accordingly all the shareholders Investors Membersof the Stock Exchanges Depository Participants and all other concerned are requested tosend all communication in respect of Share Transfer Demat/Remat Change of Address etc.to our Registrar at below mentioned address:
Alankit Assignments Limited (Unit: Nahar Spinning Mills Limited)
Alankit House 2E/21 Jhandewalan Extension New Delhi-110055
In case any query/complaint remains unresolved with our Registrar please write toCompany Secretary at the Registered Office of the Company.ENVIRONMENTFRIENDLYCORPORATEENTITY
As a responsible corporate entity your Company is sensitive to environment also and iscontributing a bit to improve the ecological balance by introducing Organic Cotton yarns& Fair Trade Cotton Yarns certified by Control Union Certificate of Netherlands &F.L.O. of Germany. The Company is registered with Clean Development Mechanism (CDM)Executives Board and United Nations Framework Conventions on Climate
Change (UNFCCC) Secretariat Bonn Germany. DIRECTORS RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial statements for theyear under review conform in their entirely to the requirements of Companies Act 2013.
The Directors confirm:
I) that in preparation of the Annual Accounts the applicable accounting standards hadbeen followed alongwith proper explanations relating to material departures;
II) that they had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and of theprofit or loss of the company forthat period;
III) that they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with provisions of this Act for safeguarding the assetsof the company and for preventing and detecting fraud and other irregularities;
IV) that they had prepared the Annual Accounts on a going concern basis.
V) that the directors in the case of a listed company had laid down internalfinancial Controls to be followed by the company and that such internal financial controlsare adequate and were operating effectively;
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.
AUDITORS & AUDITOR'S INDEPENDENT REPORT STATUTORYAUDITORS
The members at the Annual General Meeting held on 30th September 2016appointed M/s Gupta Vigg and Co. Chartered Accountants (Registration No. 001393N) asStatutory Auditors of the Company to hold office till the conclusion of the 37thAnnual General Meeting of the Company. Their period of office will expire at the ensuingAnnual General Meeting scheduled to be held on 26th September 2017.
The Board of Directors place on record its appreciation for the services rendered byM/s Gupta Vigg & Co. as Statutory Auditors of the Company.
We would like to inform you that in compliance with the provisions of Section 139 ofCompanies Act 2013 the Board on the recommendation of the Audit Committee has decided topropose the appointment of M/s YAPL& Co. Chartered Accountant (Firm Registration No.017800N) having their office at K-102 Kismat Complex Miller Ganj Ludhiana 141003 asStatutory Auditor of the Company for a term of five consecutive years (commencing fromCompany's financial year 2017-18) to hold office starting from the conclusion of the 37hAnnualGeneral Meeting till the conclusion of the 42nd Annual General Meeting to beheld in 2022. They have given a written consent/certificate regarding eligibility fortheir appointment as Auditors in accordance with the Rule 4 of the Companies (Audit andAuditors) Rule 2014 read with the provisions of Section 139(2) of the Companies Act2013. The resolution for their appointment has been proposed for your approval in theaccompanying Notice.
The Statutory Auditors have submitted Audit Report on the Accounts of the Company forthe Accounting year ended 31st March 2017. The observations and comments givenby Auditors in their Report read together with the Notes to the Accounts are selfexplanatory and require no comments.
We would like to inform you that the Ministry of Corporate Affairs vide Notificationdated 31st December 2014 amended Companies (Cost Records and Audit) Rules
2014 pursuant to which the Company's business activities have been included withinthe purview of Cost Audit requirement. Accordingly the Board of Directors on therecommendation of Audit Committee appointed M/s Ramanath Iyer & Co. (MembershipNo.000019) Cost Accountant as Cost Auditors of the Company for financial year 2017-18and has fixed a remuneration of Rs.1.62 Lakhs (Rupees One Lakh Sixty Two Thousand Only)subject to the ratification of the members as per the provision of Section 148(3) of theCompanies Act 2013 and Rules 14 of the Companies (Audit and Auditors) Rules 2014. Aresolution for the ratification of the remuneration of the Cost Auditors by the members atthe ensuing Annual General Meeting is being proposed for your approval.
The Board pursuant to the provision of Section 204 of the Companies Act 2013 readwith Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 has appointed M/s. P.S. Bathla & Associates Practicing Company Secretarieshaving Certificate of Practice No. 2585 as Secretarial Auditor to conduct SecretarialAudit for the financial year 20172018.
M/s. P.S. Bathla & Associates Practicing Company Secretaries have carried out theSecretarial Audit for the financial year ended March 312017 and their Secretarial AuditReport in Form No. MR-3 is annexed hereto as Annexure II and from part of this Report.
The Report is self explanatory and requires no comments.
BUSINESS RISK MANAGEMENT
The Company has laid down Risk Management Policy.
The Policy aims to identify evaluate manage and monitor all types of risks associatedwith the business of the Company. The Board as well as Audit Committee regularly overseasthe risk management process in the Company as required under 134(3)(n) of the CompaniesAct 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015.Your Company is operating in Textile segment and has identified certain risks which mayaffect the performance of the Company. These are operational risks such as fluctuation incotton prices fluctuation in foreign exchange rates Labour problems and regulatory riskssuch as change in Government Policy with respect to Textile Industry etc. The Company'sRisk Management Policy aims to suggest the steps to be taken to control and mitigate therisk associated with the Company's Textile Business. We are of opinion that none ofidentified risk is such that which may threaten the existence of the Company.
INTERNAL FINANCIAL CONTROLAND SYSTEMS
The Company is maintaining an efficient and effective system of Internal FinancialControl for facilitation of speedy and accurate compilations of financial statements. TheCompany's Internal Financial Control System is designed to ensure operational efficiencyprotection and conservation of resourses accuracy and promptness in financial reportingand compliances with procedures laws and regulations. The Company's Internal ControlSystem commensurate with the nature of its business and size of its operations. In orderto further strength the Internal Control System and to automate the various process of thebusiness Company is making use of Enterprise Resource Planning (ERp).
Pursuant to the provisions of Section 138 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 the Company has also appointed a Chartered Accountant asInternal Auditor for the financial year 2017-18. The Company is also having Internal AuditDepartment to test the adequacy and effectiveness of Internal Control Systems lay down bythe management and suggests improvement in the systems. Internal Audit Reports arediscussed with the management and are reviewed by the Audit Committee of the Board. Duringthe year Company's Internal Controls were tested and no reportable weakness in the systemwas observed.
Apart from the above an Audit Committee consisting of three non executive directorshas been constituted. All the significant audit observation and follow up Action thereonare taken care of by the Audit Committee. The Audit Committee also oversees and reviewsthe adequacy and effectiveness of Internal Control in the Company. The Audit Committee metfour times during the financial year under review. The Company has also established aVigil Mechanism as per Section 177(9) of Companies Act 2013 read with Rule 7 of theCompanies (Meeting of Board and its Powers) Rules 2014.
The Indian accounting standard (Ind AS) became applicable on the Company w.e.f. 1stApril 2016 (transition date being 1st April 2015). Accordingly the financialstatements have been prepared in accordance with the Companies (Indian AccountingStandards) Rules 2015 as amended by Companies (Indian Accounting Standards) Rules 2016.The Company appointed M/s Grant Thronton India LLP Gurugram (Haryana) a leadingconsultancy firm in the Accounting/Financial matters to advice the Company on convergenceof Ind AS. The report submitted by them has been implemented for preparing the financialstatement for the year ended 31st March 2017.
During the year under review the Company has not accepted any Public Deposit withinthe meaning of Section 73 of the Companies Act 2013 and the rules made thereunder. Thereis no outstanding/unclaimed deposit from the public. However the information as requiredunder Rule 8 of the Companies (Accounts) Rules 2014 is given hereunder:-
(i) Deposits accepted during the year : Nil
(ii) Deposits remained unpaid or unclaimed as at the end of the year : Nil
(iii) Default in repayment of deposits and deposits which are not in compliance withthe requirements of Chapter V of the Companies Act 2013 : N.A.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment for women at workplace and hasadopted a policy against sexual harassment in line with Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules framedthereunder.
During the financial year 2016-17 the Company has not received any complaints onsexual harassment and hence no compliant remains pending as of 31st March2017.
Extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 for the financial year 2016-17in the Form MGT-9 of the Company is annexed herewith as Annexure III and form part of thisreport.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the company is annexed as "Annexure IV" and formpart of this report.
In terms of Section 197(14) of the Companies Act 2013 the Company does not have anyHolding Company. However the details regarding remuneration received by Managing Directoris given in point VI of the ANNEXURE III annexed hereto and form part of this report.
During the year under review Sh. Dinesh Oswal Managing Director of the Company hasbeen paid a remuneration of Rs. 43200000 (Rupees Four Crores and Thirty Two Lakhs) forthe first nine months of the year i.e. w.e.f. 1st April 2016 to 31stDecember 2016 as per the approval of the Central Government vide its letter no. SRNC35933985/2014-CL.VII dated 17th February 2016. Thereafter from 1stJanuary 2017 to 31st March 2017 he has been paid a monthly salary of Rs.1000000/- because of inadequacy of profits. The Company has already submitted anapplication to the Ministry of Corporate Affairs (Central Government) vide SRN No.G41303728 dated 19th April 2017 for its approval for payment of remunerationto Mr. Dinesh Oswal the Managing Director of the Company as per shareholder's approvalvide their Special Resolution dated 30th September 2016. He has beenre-appointed as a Managing Director for a further period of five years w.e.f 1stJanuary 2017 to 31st December 2021. Sh. Dinesh Oswal is 52 years of age. Heis Commerce Graduate and has business experience of 32 years in Textile Industry. He isemployed on contractual basis for five years w.e.f. 1st January 2017 to 31stDecember 2021. Before joining the Company he was employed with M/S. Oswal Woollen MillsLimited as Commercial Manager. He is holding 23766 equity shares of Rs. 5/-each whichconstitute 0.07% of the equity capital of the Company. Sh. Dinesh Oswal is related to Sh.Jawahar Lal Oswal Chairman andSh. Kamal Oswal Director of the Company.
No other employee was in receipt of remuneration exceeding the limits as provided underRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO
The detailed information as required under Section 134(3) of the Companies Act 2013read with Sub Rule 3 of the Rule 8 Companies (Accounts) Rules 2014 is enclosed as perAnnexure-V and forms part of this report.
REPORT ON THE CORPORATE GOVERNANCE
Your Company continues to follow the principles of good Corporate Governance. TheCompany has already constituted several committees of directors to assist the Board ingood Corporate Governance. The Corporate Governance Report alongwith the AuditorsCertificate regarding compliance of the conditions of the Corporate Governance asstipulated in part C of Schedule V of the
SEBI (Listing Obligation and disclosure Requirements) Regulations 2015 is attachedherewith as Annexure-VI and from part of this report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as per SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 is enclosed as perAnnexure-VII and forms part of this Report.
The industrial relations remained cordial throughout the year and the excellent resultswere achieved with the whole hearted co-operation of employees at all levels.
The Board of Directors of the Company wish to place on record their thanks andappreciation to all workers staff members and executives for their contribution to theoperations of the Company. The Directors are thankful to the Bankers FinancialInstitutions for their continued support to the Company. The Directors also place onrecord their sincere thanks to the shareholders for their continued support co-operationand confidence in the Management of the Company.
FOR AND ON BEHALF OF THE BOARD