DIRECTOR'S REPORT TO THE MEMBERS
Your Directors pleased to present the 35th Annual Report covering the operational andfinancial performance of your Company along with the Audited Financial Statements for theFinancial Year ended March 31 2017.
| ||Current Year ended 31.03.2017 ||Previous Year ended 31.03.2016 |
| ||(Audited) ||(Audited) |
|Turnover and other Income ||13305.25 ||24720.26 |
|Profit before Depreciation and Tax ||-175.33 ||352.12 |
|Depreciation ||141.94 ||349.13 |
|Profit before tax ||-317.27 ||2.99 |
|Income Tax for earlier years ||7.65 ||0.64 |
| ||-324.92 ||2.35 |
|Tax Expenses (Current & Deferred) ||-75.42 ||-13.38 |
|Net Profit after Tax [A+B] ||-207.63 ||15.73 |
|Add: Surplus Brought Forward ||3517.89 ||3502.15 |
|Surplus Carried to Balance Sheet ||3310.25 ||3517.88 |
OPERATION REVIEW AND FUTURE OUTLOOK
The Company has prepared the Financial Statements for the financial year ended March31'2017 under Section 133 of the Companies Act'2013 read with the Companies (IndianAccounting Standards) Rules'2015 and has recast the Financial Statements relating to theprevious financial year ended March 31'2016 in order to make them comparable.
The operation of the Company has been adversely affected by the adverse Global Marketand demonetization in India during the year under review. The sales of the year underreview were " 11657 Lakhs compared to " 22630 Lakhs in the previous year. TheCompany has incurred Loss before tax of " 317.28 Lakhs compared to profit of " 3Lakhs in the previous year. The net Loss after Tax (including deferred tax) of the yearunder review is " 207.63 Lakhs compared to profit of " 15.74 Lakhs in theprevious year.
Demands of the Silk & Velvet Fabrics were under pressure due to financial crisis inthe European and American Continent. Inspite of pressure in the Global Market theFinancials of the Divisions for the year under review has been improved compares toprevious year mainly due to correction in raw material.
The Management would like to inform that the plant of Spinning Division located atAhmedabad Gujarat had already been closed and there is being no work over there.
No expansion projects were initiated by the Company at its Weaving Division Mysoreduring the year under review due to low demand and sufficient installed capacity.
To conserve the resources of the Company the Board of Directors do not recommend anydividend for this year also.
The Company has transferred of " 4612.77 Lakhs to the General Reserve during thefinancial year ended March 31'2017. PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS
In terms of Section 186 of the Companies Act'2013 and Rules framed thereunder detailsof the Loans given and Investments made by your Company have been disclosed in Notes ofthe Financial Statements for the year ended March31'2017 which forms part of this AnnualReport. Your Company has not taken any term Loan during the year under review.
During the year under review ICRA Limited (ICRA) has reaffirmed the Credit Rating of'[ICRA] A4' (pronounced as ICRA A Four) for the Fund and Non-Fund Based Facilities of yourCompany.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THEFINANCIAL YEAR AND DATE OF REPORT
Subsequent to the end of the financial year on March 31'2017 till date there has beenno material change and/ or commitment which may affect the financial position of theCompany.
The Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE) andon the National Stock Exchange of India Limited (NSE).
The Company continues to enjoy ISO 9001:2008 accreditation MADE BY TUV NORD.
The Company has not accepted any fixed deposits during the year under review.
RELATED PARTY TRANSACTIONS
During the Financial year ended March 31'2017 all transactions with the RelatedParties as defined under the Companies Act'2013 read with Rules framed thereunder were inthe 'ordinary course of business' and 'at arm's length' basis. All Related PartyTransactions are placed before the Audit Committee as also to the Board for Approval. Asrequired under Listing Regulations the Company has formulated a policy on dealing withRelated Party Transactions.
Details of Contracts entered into with Related Parties under the provisions ofsub-section 1 of section 188 of the Companies Act 2013:
1. To avail advisory services from Mr. Bilas Rai Loyalka for the financial year 2016-17on annual fees of " 9 lakhs.
2. Purchase of fabrics job work & sale of goods to SKL Exports Limited atprevailing market price for the financial year 2016-1-17 for maximum transaction value of"10 crores per annum.
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 in included in this Report and forms anintegral part of this Report.
AUDIT AND AUDITORS
(i) Change in Auditors
In terms of the Provisions of Section 139 of the Companies Act'2013 read with theCompanies (Audit and Auditors) Rules'2014 M/s. Tiwari & Co. Chartered Accountants(ICA Firm Registration No.309112E) the Auditors of your Company shall hold office tillthe conclusion of the ensuing AGM and they shall not be eligible for re-appointment due toexpiry of the maximum permissible tenure as the Auditors of your Company. Your Boardplaces on record its deep appreciation for the valuable contributions of the Auditorsduring their long association since the inception of your Company and whishes
them success in the future. Based on the recommendation of the Audit Committee yourBoard at its meeting held on July 25'2017 appointed M/s. V. Goyel & AssociatesChartered Accountants (ICAI Firm Registration No. 312136E) as the Auditors of theCompany in place of the retiring auditors M/s. Tiwari & Company CharteredAccountants to hold office from the conclusion of the ensuing 35th AGM until conclusionof the 40th AGM of your Company.
Your Company has received a certificate form M/s. V. Goyal & Associates CharteredAccountants confirming their eligibility to be appointed as Auditors of the Company interms of the provisions of section 141 of the Companies Act'2013 and Rules framedthereunder. They have also confirmed that they hold a valid certificate issued by the PeerReview Board of the Institute of Chartered Accountants of India (ICAI) as required underthe Provisions of Regulations 33 of the Listing Regulations. The proposal for theirappointment has been included in the Notice convening the 35th AGM for obtaining approvalof the Members of the Company.
(ii) Auditors Report
The notes on Account referred to in the Auditor's Report are Self-explanatory andtherefore do not call for any explanations or comments.
(iii) Secretarial Audit Report
In terms of Provisions of Section 204 of the Companies Act'2013 read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules'2014 your Board atits meeting held on May 26'2017 appointed CS Asit Kumar Labh Company Secretary(Membership No. 32891) as the Secretarial Auditor of the Company to conduct theSecretarial Audit for the financial year ended March 31207 and to submit SecretarialAudit Report in Form No. MR-3.
A copy of the Secretarial Audit Report received from CS. Asit Kumar Labh in theprescribed Form No. MR-3 is annexed to this Board's Report.
(iv) Qualification reservation or adverse remark in the Auditors' Reports andSecretarial Audit Report
There is no qualification reservation and adverse remark made by the Auditors in theirAuditors' Reports to the Financial Statements (Standalone) or by the Secretarial Auditorin their Secretarial Audit Report for the Financial Year ended March 31'2017.
INTERNAL CONTROL SYSTEM
The Board has laid down Internal Control ("IC") within the meaning of theexplanation to section 134 (5)(e) of the Companies Act'2013. The Board believes theCompany has sound IC commensurate with the nature and size of its business.
SIGNIFICANT AND MATERIAL LITIGATIONS/ ORDERS
During the year under review there were no significant material orders passed by theRegulators/ courts and no litigation was outstanding as on March 31'2017 which wouldimpact the going concern status and future operations of your Company. The details oflitigation on tax matters are disclosed in the Auditors' Report and Financial Statementswhich forms part of this Annual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo required to be disclosed by section 134 (3)(m) of theCompanies Act 2013 read with Rule 8 (3) of the Companies (Account) Rules 2014 areprovided in the Annexure-I to this Report.
BOARD OF DIRECTORS
Your Company's Board is duly constituted which is in compliance with requirements ofthe Companies Act'2013 the Listing Regulations and provisions of the Articles ofAssociation of the Company. Your Board has been constituted with require diversity wisdomand experience commensurate to the scale of operations of your Company.
(i) Change in Directors and Key Managerial Personnel
During the year under review Mr. Raj Kumar Loyalka has resigned from the Directorshipof the company with effect from 10/11/2016.
Your Board inducted Mr. Raj Kumar Loyalka as a Chief Executive Officer with effect from14/11/2016 on order to comply with the provision of section 203 (1) (ii) of the CompaniesAct'2013.
Pursuant to section 152 of the Companies Act'2013 Ms. Urmila Loyalka (DIN: 00009266)Director retires by rotation at the ensuring Annual General Meeting and being eligibleoffers herself for re-appointment. Your Board recommends her re-appointment.
Brief resume of Directors being appointed/ re-appointed together with other relevantdetails form part of the Notice of the ensuring Annual General Meeting.
During the year under review pursuant to provisions of Section 2(51) and Section 203of the Companies Act'2013 read with ruled made thereunder the following existingofficials of the Company were designated/ classified as whole time Key ManagerialPersonnel (KMPs) of the Company-
1. The whole time Managing Director Mr. Surendra Kumar Loyalka as theChairman-Cum-Managing-Director & whole time KMP
2. The Executive Mr. Raj Kumar Loyalka as Chief Executive Officer & KMP.
3. The Company Secretary Mr. Govind Pandey as the Company Secretary & KMP
4. The Executive Mr. Sushil Kasera as the Chief Financial Officer & KMP.
(ii) Number of Meeting of the Board of Directors.
The Board of Directors of the Company met 4 times during the year under review i.e. on25/05/2016 13/08/2016 14/11/2016 & 09/02/2017. Details of Board Composition andBoard Meetings held during the Financial Year 2016-17 have been provided in the CorporateGovernance Report which forms part of this Annual Report
The Board of Directors of your Company has a duly constituted Audit Committee in termsof the provisions of Section 177 of the Companies Act'2013 read with the Rules framedthereunder and Regulation 18 of the Listing Regulations. The terms of reference of theAudit Committee has been approved by the Board of Detectors. Composition of the AuditCommittee number of meetings held during the year under review brief terms of referenceand other details have been provided in the Corporate Governance Report which forms partof this Annual Report. Recommendations made by the Audit Committee are generally acceptedby your Board.
NOMINATION AND REMUNERATION COMMITTEE
The Composition key objects etc. of the Nomination and Remuneration Committee isprovided in Corporate Governance Report which forms part of this Annual Report. TheCommittee has formulated a Nomination and Remuneration Policy.
NOMINATION AND REMUNERATION POLICY
Your Board has adopted a Remuneration Policy for identification selection andappointment of Directors Key Managerial Personnel (KMPs) and Senior Management Personnel(SMPs) of your Company. The policy provides for criteria for fixing remuneration of theDirectors KMPs SMPs as well as other employees of the Company. The policy enumerates thepowers roles and responsibilities of the Nomination and Remuneration Committee.
Your Board on the recommendations of the Nomination and Remuneration Committeeappoints Directors(s) of the Company based on his/ her eligibility experience andqualifications and such appointment is approved by the Members of the Company at GeneralMeetings. Generally the Managing Directors of the Company are appointed to hold theiroffice for a term up to five consecutive years on the Board of your Company. Based ontheir eligibility for re-appointment the outcome of their performance evaluation andbased in the recommendation by the Nomination and Remuneration Committee the IndependentDirectors may be re-appointed by the Board for another term of five consecutive years.Subject to approval of the members of your Company. The Directors KMPs SMPs shallretire as per the applicable provisions of the Companies Act'2013 and the policy of theCompany. While determining remuneration of Directors KMPs SMPs and other employees theNomination and Remuneration Committee ensures that the level and composition ofremuneration are reasonable and sufficient to attract retain and motivate them and insurethe quality required to run the Company successfully the relationship to remuneration toperformance is clear and meets appropriate performance benchmarks and such remunerationcomprises a balance between fixed and incentive pay reflecting short and long termperformance objectives appropriate to the working of the company and its goals. TheCompany follows a compensation mix of fixed pay benefits allowances perquisites andretirement benefits for its Executive Directors KMPs SMPs and other employees. TheCompany pays remuneration to Independent Detectors by way of sitting fess. Non-ExecutiveDirector of your Company do not accept any sitting fees from the Company. Remuneration toDirectors is paid within the limits as prescribed under the Companies Act'2013 and thelimits as approved by the Members of the Company from time to time.
The aforesaid Nomination and Remuneration Policy has been uploaded on the website ofyour Company www.zenithexportslimited.com and is available at the link:http://zenithexportslimited.com/nominationremunerationpolicy.pdf. Your Company conducts aBoard Evaluation process for the Board of Directors as a whole Board Committees and alsofor the Directors individually through self-assessment. The details of Board evaluationfor the F.Y 2016-17 have been provided in the Corporate Governance Report which forms partof this Annual Report.
DISCLOSURES ON REMUNERATION OF DIRECTORS AND EMPLOYEES OF THE COMPNAY
Information as required under Section 197(12) of the Companies Act'2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules'2014and subsequent amendments thereto is annexed to this Board's Report and marked asAnnexure A.
A Statement containing the Information of top ten employees in terms of Remunerationdrawn and particulars of every employee of the Company who was in receipt of remunerationnot less than the limits specified under Section 197(12) of the Companies Act'2013 readwith Rules 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules'2014 and subsequent amendments thereto is annexed to this Board's Reportand marked as Annexure A.
DIRECTORS' RESPOSIBILITY STATEMENT
Pursuant to provisions of Section 134 of the Companies Act'2013 the Directors to thebest of their knowledge and belief hereby confirm that:
I] In the preparation of the Annual Accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures;
II] The 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 profit and lossfor the year ended on that day;
III] The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act'2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
IV] The Directors had prepared the Annual Accounts on a going concern basis;
V] The Directors had laid down internal financial controls to be followed by theCompany and the such internal financial control are adequate and were operatingeffectively and;
VI] The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
In terms of Provisions of Section 177 of the Companies Act'2013 and Rules framedthereunder read with Regulations 22 of the
Listing Regulations your Company has a vigil mechanism in place for the Directors andEmployees of the Company through which genuine concerns regarding various issues relatingto inappropriate functioning of the organization can be communicated. For this purposeyour Board has a Whistle Blower Policy and has been uploaded on the website of the Companyat www.zenithexportslimited.com and the same is available at the linkhttp://zenithexportslimited.com/whistleblowerpolicy.htm. A Vigil Mechanism Committee underthe Chairman ship of the Audit Committee Chairman has been constituted. The Policyprovides access to the Head of Legal Department of the Company and to the Chairman of theAudit Committee in certain circumstances.
No person has been denied an opportunity to have access to the Vigil MechanismCommittee including the Audit Committee Chairman. During the year under review there hasbeen no incidence reported which requires action by the Vigil Mechanism Committee.
INDEPENDENT DIRECTORS STATEMENT
The Independent Directors of the Company viz. Mr. Madhukar Manilal Bhagat Mr. KesharDeo Rungta Mr. Mangilal Jain & Mr. Devendra Kumar Sarawgee have filed theirdeclaration with the Company at the beginning of the Financial Year 2017-18 affirming thatthey continue to meet the criteria of Independence as provided in sub-section (6) of theSection 149 of the Companies Act'2013 in respect to their position as an IndependentDirectors of the Company.
INFORMATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT'2013 READ WITH RULES5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES'2014
(i) The ratio of the remuneration of Director to the median remuneration of theemployees of the Company for the financial year 2016-17
|Name of Director ||Designation ||Ratio |
|Mr. Surendra Kumar Loyalka ||Chairman & Managing Director ||10:1 |
(ii) The percentage increase in remuneration of each Director Chief Executive OfficerCompany Secretary & Chief Financial Officer in the Financial Year 2016-17
There is no increment during the year under review
(iii) The percentage increase in the median remuneration of employees in the financialyear 2016-17 was 6.5%
(iv) There were 382 permanent employees on the rolls of the Company as on March31'2017.
(v) Average percentile increase already made in the salaries of employees other thanthe managerial personal in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.
The average increase in remuneration is 6.5 % for employees other than the Whole-timeDirector in the last financial year was 6% whereas the increase in the managerialremuneration was NILL.
(vi) Affirmation that the remuneration is as per the remuneration policy of theCompany: Yes
POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
Your Company has adopted a Policy under the Sexual Harassment of Women at workplace(Prevention Prohibition and Redressal) Act'2013 and Rules framed thereunder. Your Companyis committed to provide a safe and secure environment to its women employees across itsfunctions and other women stakeholders as they are considered as integral and importantpart of the Organization.
An internal Complaints Committee (ICC) with requisite number of representatives hasbeen set up to redress complaints relating to sexual harassment if any received fromwomen employees and other women associates. All employees (permanent contractualtemporary trainees) are covered under this policy which also extends to cover all womenstakeholders of the Company.
The following is a summary of sexual harassment complaints received and disposed ofduring the financial year ended March 31'2017:
| No. of Complaints received ||: NIL |
| No. of Complaints disposed of ||: NIL |
Your Company has been conducting awareness campaign across all its manufacturing unitswarehouses and office premises to encourage its employees to be more responsible and alertwhile discharging their duties.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Zenith Exports Limited follows well-established and detailed risk assessment andminimization procedures which are periodically reviewed by the Board. The Company has inplace a business risk management framework for identifying risks and opportunity that mayhave a bearing on the organizations objectives assessing them in terms of likelihood andmagnitude of impact and determining a response strategy.
The senior management assists the Board in its oversight of the Company's management ofKey risks including strategic and operational risks as well as the guidelines policiesand processes for monitoring and mitigating such risks under the aegis of the overallbusiness risk management framework.
It has been the endeavor of your Company to follow and implement best practices incorporate governance in letter and spirit. A detailed Corporate Governance Report isattached and forms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis as required under Regulation 34(2)(E) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations'2015 is disclosed separatelyin this report.
Certain Statement in the Management Discussion and Analysis describing the Company'sview about the industry expectations/ predictions objectives etc. may be forward lookingwithin the meaning of applicable laws and regulations. Actual results may differ fromthose implied therein. Important factors that could make a difference include raw materialavailability and prices demand and pricing in the Company's principal markets changes inGovernment regulations tax regimes industrial relations and economic developments withinIndia and countries with which the Company conducts business and other incidental factors.
Your Directors place on record their deep appreciation of the continued support andguidance provided by Central and State Government and all Regulatory bodies.
Your Directors offer their heartiest thanks to the esteemed shareholders customersbusiness associates Financial Institutions and Commercial Banks for the faith reposed bythem in the Company and its management.
Your Directors place on record their deep appreciation of the dedication and commitmentof Company's officers and employees at all levels and look forward to their continuedsupport in future as well.
| ||For and on behalf of the Board of Directors |
| ||Surendra Kumar Loyalka |
|Place: Kolkata ||Chairman cum Managing Director |
|Dated: July 25th 2017 ||Din No:00006232 |