You are here » Home » Companies » Company Overview » Zodiac Clothing Company Ltd

Zodiac Clothing Company Ltd.

BSE: 521163 Sector: Industrials
NSE: ZODIACLOTH ISIN Code: INE206B01013
BSE 14:36 | 29 Nov 102.10 -4.90
(-4.58%)
OPEN

105.00

HIGH

105.90

LOW

99.95

NSE 14:29 | 29 Nov 102.90 -3.95
(-3.70%)
OPEN

106.90

HIGH

107.30

LOW

101.70

OPEN 105.00
PREVIOUS CLOSE 107.00
VOLUME 7651
52-Week high 153.80
52-Week low 85.05
P/E
Mkt Cap.(Rs cr) 253
Buy Price 102.20
Buy Qty 10.00
Sell Price 103.05
Sell Qty 10.00
OPEN 105.00
CLOSE 107.00
VOLUME 7651
52-Week high 153.80
52-Week low 85.05
P/E
Mkt Cap.(Rs cr) 253
Buy Price 102.20
Buy Qty 10.00
Sell Price 103.05
Sell Qty 10.00

Zodiac Clothing Company Ltd. (ZODIACLOTH) - Director Report

Company director report

TO THE MEMBERS

To

The Members

Zodiac Clothing Company Limited.

The Board of Directors are pleased to present the Company's 36th AnnualReport and the Company's Audited Financial Statements (Standalone and Consolidated) forthe Financial Year ended 31st March 2020.

1. BUSINESS

During the financial year ended 31st March 2020 the operational revenue ofthe Company on a Standalone basis was Rs 18938.71 Lakhs vs. Rs 21442.41 Lakhs in theprevious year. Profit/(Loss) Before Tax and before exceptional items was Rs (2335.42)Lakhs vs. Rs (1472.89) Lakhs in the previous year while the net Profit/(Loss) after Taxfor the Financial Year ended 31st March 2020 was Rs (2132.79) Lakhs vs. Rs(1844.64) Lakhs in the previous year. The Total Comprehensive Loss for the year was Rs(3279.38) Lakhs vs. Rs (2191.51) Lakhs in the previous year.

On a Consolidated basis the Operational revenue of the Company for the year decreasedto Rs 19082.42 Lakhs from Rs 21582.55 Lakhs in the previous year. The ConsolidatedProfit/(Loss) before Tax and before exceptional items fell to Rs (3004.51) Lakhs vs. Rs(2198.49) Lakhs in the previous year the Net Profit/(Loss) after tax being Rs (2896.54)Lakhs vs. Rs (2679.27) Lakhs in the previous year. The Consolidated Total ComprehensiveLoss for the year was Rs (3733.35) Lakhs vs. Rs (2696.14) Lakhs in the previous year.

OPERATIONAL REVENUE - STANDALONE

The slowdown in the Indian economy has been extended due to declining growth in privateconsumption tepid increase in investment drop in savings and continuing muted exports.The GDP for the financial year 2019-20 was 4.2% which has been the lowest in the pasteleven years. The end of FY 20 was further challenging due to the global spread of theCovid 19 pandemic resulting in economic shutdowns creating unprecedented challenges forthe economy. The pandemic led tightening of liquidity risk averseness build up and safetybeing the greatest priority for consumers resulting in dramatic fall in consumptiondemand is likely to result in India facing its first growth recession since 1979-80.

India went into a corona virus-related lockdown only at the end of March - later thanmany other Asian and European nations - so the effects of the stay-at-home order onlybecame fully visible in the quarter ending in June (GDP being down by 23.9%) as thecountry's efforts to contain the corona virus wreaked havoc on the economy.

India's economic decline was one of the worst among major economies with the U.S.economy for example contracting 9.5 percent in the June quarter.With the COVID-19restrictions being loosened but with the virus continuing to rage in the country andelsewhere the second quarter's results across industries though expected to improvewill continue to remain uninspiring with some sectors continuing to be in distress. TheGovernment's attempt to create liquidity to restore demand in India is a welcome move.

The operating results of the Company have been affected in a year that presentedseveral challenges in each of the different segments and especially in the MBO segment ofthe Company's business. The consumer sentiment was lacklustre across channels withpossibly the exception of the online stores.The last 2 weeks of the financial year arealways charged with frenetic sales activityso the loss in turnover was more than pro ratafor the lockdown during March 20.The Company apart from initiating several efforts toexpedite the growth of its online businesshas also besides closing down (16) unviablestores started to move from the fixed rental model to the revenue share model in respectof most of its retail stores and converting fixed expenses to variable expenses whereverpossible besides moving to an asset light model to the extent possible. This is expectedto aid the Company in reducing a large part of its fixed expenses and bring down itslosses substantially.

In line with declining real GDP growth India's total exports are also stagnating forthe previous five years. Further due to the ongoing pandemic clothing manufacturers arelikely to witness a 25 per cent plus decline in revenue in the ongoing financial year dueto the prolonged lockdown a sharp fall in both domestic and export demand and lowerdiscretionary spending according to a report by Crisil Ratings.

On the global front contrary to market expectations escalation in trade war betweenUS and China have dampened risk sentiment and outlook for global growth. The recentslowdown in global demand has also increased competition further in the markets impactedby the Pandemic. The projected post pandemic consumption of clothing in 2020 in EU isprojected at 59% of 2019 and in US at 63% of 2019 total USD 308B of which imports wouldbe USD 122B. The countries with favourable treaties (zero/no duties by importingcountries) will be at a greater advantage.

On the domestic front RBI's forex reserves have been increasing sharply. During thecurrent year India's trade deficit has been decreasing despite a fall in exportsbecause of a greater fall in imports. With the expected shrinking of the current accountdeficit and the balance of payments surplus expected to continue through the currentfiscal the rupee is expected to strengthen in spite of RBI aggressive intervention.

Clothing imports into India continued the upward trend with a CAGR of 8% over the lastthirteen years. This alarming increase was mainly due to India's Free Trade Agreements andzero duty access to highly competitive clothing exporters like Bangladesh. China &Bangladesh continue to remain the biggest suppliers of textiles and clothing products toIndia.

The Inverted structure of GST which has resulted in huge blockage of funds especiallyfor distressed MSME clothing retailers needs to be addressed forthwith by putting refundson fast track without any further loss of time. Also the unutilised tax credits aredeadweight and reduce India's competitiveness.

The cumulative Index of Industrial Production (IIP) for clothing ended the year on apositive note. However India's clothing exports are continuously declining since 2017mainly due to stiff competition economic slowdown reduction in reimbursement for dutiespaid (which only partially compensate for the taxes incurred) delays in disbursementcreates constraints in working capital because of large amounts receivable towards thesebesides cut-throat competition particularly from FTA zero duty / low duty and low wagecountries. WTO compliant support is needed urgently to sharpen India's exportcompetitiveness.

The cost of not progressing with the EU trade deal - and for that matter of allowingthe Regional Comprehensive Economic Partnership (RCEP) to move forward without India islikely to isolate India at this crucial juncture of it's development.

Going forward both the Indian clothing industry and Government need to work in tandemtowards achieving the agility that our competitor countries display.

The Company continues to invest in enhancing it's competitiveness as well as inInformation Technology (I.T.) to better service the needs of it's customers besidesconsistently scouting for new viable locations for it's store additions which continuesto be a focus area.

2. RESULTS OF OPERATIONS

Financial Results

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Total Revenue from Operations (Net) 20682.39 22619.92 20296.21 22245.58
Profit/(Loss) Before Exceptional Items And Tax (2335.42) (1472.89) (3004.51) (2198.49)
Exceptional Item - (305.62) - (305.62)
Profit/(Loss) Before Tax (2335.42) (1778.51) (3004.51) (2504.11)
Provision for Taxation:
Current tax 110 107.00 110.80 109.41
Deferred tax Charge/(Credit) (337.61) (275.41) (243.75) (168.79)
Tax in respect of earlier years 24.98 234.54 24.98 234.54
Profit/(loss) after taxation (2132.79) (1844.64) (2896.54) (2679.27)
Other Comprehensive Income (1146.59) (346.87) (836.81) (16.87)
Total Comprehensive Income for the year (3279.38) (2191.51) (3733.35) (2696.14)

3. SUBSIDIARY COMPANIES

As on 31st March 2020 the Company had three (3) subsidiaries. There are noAssociate Companies within the meaning of Section 2(6) of the Companies Act 2013("Act"). There has been no material change in the nature of the business of thesubsidiaries.

Pursuant to the provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries in Form AOC-1 isattached as Annexure 3 to this report.

Pursuant to the provisions of Section 136 of the Act the Standalone and Consolidatedfinancial statements of the Company along with relevant documents and the financialstatements of the subsidiaries are available on the website of the Company at the linkhttp://www.zodiaconline.com/zodiac/retail/ information/investorrelations.

4. CONSOLIDATED FINANCIAL STATEMENTS

I n accordance with the requirements of Accounting Standards AS-21 a Report on theperformance and financial position of all the 3 (three) wholly owned subsidiaries includedin the Consolidated Financial Statement and their contribution to the overall performanceof the Company is provided in Form AOC - 1 and forms part of this Annual Report.

5. RATING

The Company has been advised by ICRA (an associate of Moody's Investor Service) thatthe rating process shall be done only after the accounts for the Financial year 2019-20are finalized and approved.

6. CAPEX

The Company has incurred a Capital expenditure of Rs 392.48 Lakhs during the yearprimarily in state of the art production equipment new stores and information systems tosharpen our competitiveness.

7. LIQUIDITY

The Debt Equity ratio as on 31st March 2020 was (0.27) on a Standalonebasis and (0.23) on a Consolidated basis.

The cash and bank balances/cash equivalents along with liquid investments (freereserves - on consolidated basis) were Rs 2090.42 Lakhs in March 2020 as against Rs2262.41Lakhs last year.

8. SHARE CAPITAL

During the year under review the paid up share capital of the Company increased fromRs 212945960/- to Rs 224776770/- pursuant to allotment of Equity Shares uponconversion of 1183081 Convertible Warrants into equivalent Equity Shares of Rs 10/-each at a premium of Rs 159.05/- per Equity Share on Preferential Basis to the Promotersof the Company vide circular resolution dated 22nd July 2019.

9. DIVIDEND & RESERVE

The Board of Directors of your Company have not recommended any dividend for theFinancial Year 2019-20 (previous year Rs 1/-) per equity share of Rs 10/- each (@ 10%).

10. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements regarding CorporateGovernance as required under Regulations 17 to 27 and Schedule V of the SEBI LODR with theStock Exchange(s). The report on Business Responsibility Corporate Governance ManagementDiscussion and Analysis as well as the Auditors Certificate on the compliance ofCorporate Governance forms part of the Annual Report.

11. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES

In line with the requirements of the Companies Act 2013 and SEBI LODR the Company hasa Policy on Related Party Transactions which is also available on Company's website at thelink http:// www.zodiaconline.com/zodiac/retail/information/ investorrelations. The Policyensures that proper reporting approval and disclosure processes are in place for alltransactions between the Company and Related Parties.

The Policy specifically deals with the review and approval of Material Related PartyTransactions keeping in mind the potential or actual conflict of interest that may arisebecause of entering into these transactions. All Related Party Transactions are placedbefore the Audit Committee for review and prior approval and wherever applicable omnibusapprovals are obtained for Related Party Transactions. A statement of the related partytransactions entered to during the quarter is placed before the Audit Committeespecifying the nature and value of these transactions.

All Related Party Transactions entered during the year were in Ordinary Course of theCompany's business and on an Arm's Length basis. No Material Related Party Transactionsi.e. transactions exceeding ten percent of the annual consolidated turnover as per thelast audited financial statements were entered during the year by the Company. Since allrelated party transactions entered into by the Company were in the ordinary course of theCompany's business and were on an arm's length basis the disclosure under form AOC-2 isnot applicable. However the Directors draw attention of the members to Note no. 44 to theStandalone financial statements which sets out relevant disclosures on transactions withrelated parties.

12. QUALITY

The focus on productivity gains and consistent quality continues to be the cornerstoneof the Company's philosophy. Quality continuous innovation and pursuit of high valueaddition and cost control continue to drive the Company.

13. BRAND BUILDING

The Company continues to invest in building the strength of it's 3 brands (Zodiac Z3and ZOD!) aspiring to get traction in sales in the present as well as in the future.

Upgradation of quality to win customer loyalty is a continuously ongoing exercise theobjective being to get the customers delight at the price value relationship which istruly international quality and design at prices which are not exorbitant even withoutany discounts.

14. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNING AND OUTGO:

(A) Conservation of Energy

The Company having already achieved excellent bench marks in conservation of energyhas invested in steam optimization projects for its process requirements which hasresulted in a drop in the consumption and the efficiency is going up.

The other focus areas have been to monitor the energy consumption on the shop floorusing energy meters to be able to analyze understand and fine tune efficiencies use oftranslucent roofing panels in laundries thereby negating the requirement of artificiallighting during the day time use of motion sensor activated lights in common areasresulting in low electricity consumption when there is no movement in line with theCompany's philosophy of energy conservation.

As a result of the Company's policy to continuously upgrade sustain and improve theCompany continues to maintain an exceptionally good rating in the HIGGS index a globallycertified measurement index for sustainability.

The Company has by using aggressive cost reduction measures and energy efficientequipment reduced the electrical consumption by nearly 25% over the last 6 years inspiteof the demand on processing and value addition increasing in line with the trend infashion.

(B) Pollution Control

The Company's zero liquid discharge plant for water treatment has resulted in theCompany's dependency on outside water to almost nil. Also with improved processingtechniques the water consumption has reduced by more than 60% despite the higher volumeof work resulting in a good HIGGS score.

The Company's continued emphasis and training programs has helped the workers toconserve water not only at the work area but also at their homes resulting in savings onthe shop floor.

With the increase in the catchment area for rain water harvesting the surplus watergenerated is used to recharge the existing ground water sources and for maintaining thebeautiful garden and flowering plants around the factory premises thereby creating a verypleasant atmosphere. The Company's continuous efforts have been recognized by thePollution Control Board and the Company is being referred as a model factory by thePollution Control Board.

It is the Company's continuous thrust in this area that has resulted in results whichfar exceed the industry norm. As a result of aggressively mapping the input parameters/processes & live balancing of the effluent treatment the Company has been able toachieve a high level of efficiency whereby the quality of the RO reject is better than thestandards set for permeate water. The company is further investing in mapping waterconsumption department-wise in the shop floors & arriving at the best methods andpractices for further conservation. The drive towards becoming better at every stepcontinues unabated. The treatment plant and its efficiencies continue to be a bench markand continues to inspire with the outstanding results.

With its energy-efficient design the ZODIAC corporate office continues to use around60 percent less energy than a typical office of the same size.

(C) Technology Absorption Adaptations and Innovation:

The Company continues to use the latest technologies for improving the productivity andquality of its services and products. The Company's operations do not require significantimport of technology.

(D) Foreign Exchange Earnings and Outgo.

Foreign exchange used and earned 2019-20 2018-19
a. Foreign Exchange Earnings 10432 10579
b. Foreign Exchange Outgo 3350 3838

15. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is traditionally driven by a moral obligation andphilanthropic spirit. The Company has a heritage of being engaged in such activities. TheCompany is committed to sustainability and all business decisions take in to account itssocial and environmental impact.

As per the provisions of Section 135 of the Companies Act 2013 the Company has a CSRCommittee details of which are given in the Corporate Governance Report forming part ofthis report. The details of the Company's CSR policy has been posted on the website of theCompany at the link http://www.zodiaconline.com/zodiac/retail/information/investorrelations.

The Report on CSR activities as required under Companies (Corporate SocialResponsibility) Rules 2014 including a brief outline of the Company's CSR Policy totalamount to be spent under CSR for the Financial Year amount unspent and the reasonsthereof are set out at Annexure 1 forming part of the report.

16. DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under review Mr. M. Y. Noorani the founder of the Company ceased tobe the Chairman and Director of the Company due to his demise on 20th November2019. Consequent to that Mr. A. Y. Noorani has been appointed as the Chairman of theCompany and Mr. S. Y. Noorani has been appointed as the Vice Chairman of the Companyw.e.f. 12th February 2020. Mr. Madhav Apte ceased to be the Director on theexpiry of his term as an Independent Director w.e.f. 11th August 2019 Duringthe year Mr. Vaman M. Apte was appointed as an Additional Independent Director of theCompany w.e.f. 13th August 2019 and he holds office till the date of theensuing 36th Annual General Meeting of the Company. Pursuant to the noticereceived from a member proposing his appointment as a Director of the Company it isproposed to appoint him as an Independent Director at the ensuing Annual General Meetingof the Company for a period of five years upto 12th August 2024 in terms ofSection 149 of the Companies Act 2013.

The present term of Ms. Elizabeth Jane Hulse as Independent Director of the Companyends on 11th August 2020. The Board of Directors based on the performanceevaluation and the recommendation of Nomination & Remuneration Committee hasappointed her as an Additional Director to hold office till the date of the 36thAGM of the Company and also recommended the re-appointment of Ms. Elizabeth Jane Hulse asthe Independent Director of the Company for a second term of 5 (Five) years w.e.f. 12thAugust 2020 till 11th August 2025.

In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. A. Y. Noorani Chairman and Non ExecutiveDirector retires by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment.

List of Key Managerial Personnel

Sr. No Name of the person Designation
1. Mr. S. Y. Noorani Vice Chairman & Managing Director
2 Mr. B. Mahabala V. P. Commercial & Chief Financial Officer
3 Mr. Kumar Iyer G. M. Legal & Company Secretary

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as prescribed under the Act.

The Company has a policy for performance evaluation of Independent Directors BoardCommittees and other Individual Directors which includes criteria for performanceevaluation of the Non- Executive and Executive Directors.

The performance of the Board was evaluated after seeking inputs from all the Directorson the basis of criteria such as Board Composition and structure effectiveness of Boardprocesses information and functioning etc. The Committees were evaluated by theNomination and Remuneration Committee ("NRC") after seeking inputs from theCommittee Members on the basis of criteria such as composition of the Committeeseffectiveness of the Committee meetings etc.

The Board and the NRC reviewed the performance of the individual Directors on the basisof the criteria such as the contribution of the individual Director to the Board andcommittee meetings like preparedness on the issues to be discussed meaningful andconstructive contribution and inputs in meetings etc.

In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole was evaluated taking into account theviews of the Independent Directors. However in view of the incumbent Chairman beingappointed only on the 12th February 2020 the Independent Directorsunanimously agreed to review his performance after the completion of 1 year.

The details of programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are postedon the website of the Company at the link http://www.zodiaconline.com/zodiac/retail/information/ investorrelations.

17. NUMBER OF MEETINGS OF THE BOARD:

Four Meetings of the Board were held during the year the details of which are providedin the Corporate Governance report which forms part of this report.

18. DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors state that:

(i) In the preparation of the annual accounts for the year ended 31st March2020 the applicable accounting standards read with requirements set out under ScheduleIII to the Act have been followed and there are no material departures from the same;

(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 2020 and ofthe profit and loss of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a ‘going concern' basis;

(v) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively and

(vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and are operating effectively.

NET WORTH - CONSOLIDATED

19. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

The Company's plants retail stores and offices were shut down from March 25 2020consequent to nationwide lockdown announced by the Government of India due to COVID 19pandemic and with the easing of restrictions the Company's plants retail stores andoffices have commenced the operations. However since the lockdown continued for most partof the first quarter coupled with low market demand the financials of the Company arelikely to be impacted. Considering the current situation there are no materialadjustments required to the carrying value of assets and liabilities as at July 30 2020and the Company will continue to monitor the changes for any material impact as thesituation evolves.

20. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company's policy on Board Diversity provides for an appropriate mix of diversityskills experience and expertise required on the Board and assesses the extent to whichthe required skills are represented on the Board including the criteria for determiningqualifications positive attributes and independence of a Director.

The Company has a Remuneration Policy to evaluate the performance of the members of theBoard to ensure remuneration to Directors KMP and Senior Management involving a balancebetween fixed and incentive pay reflecting short and long-term performance objectivesappropriate to the working of the Company and its goals and to retain motivate andpromote talent and to ensure long term sustainability of talented managerial persons andcreate competitive advantage. The policy ensures that the level and composition ofremuneration is reasonable and sufficient to attract retain and motivate Directors KMPand Senior Management of the quality required to run the Company successfully and therelationship of remuneration to performance is clear and meets appropriate performancebenchmarks.

The Independent Directors have to comply with the requirements of the Companies Act2013 and Regulation 16 (b) of SEBI LODR on the independence of the Directors. The Companyhas obtained certification of independence from the Independent Directors in accordancewith Section 149(6) of the Companies Act 2013.

The remuneration details of the Executive and NonExecutive Directors is disclosed inthe Corporate Governance report which forms part of the Directors Report. The above policyhas been posted on the website of the Company at the link http://www.zodiaconline.com/zodiac/retail/information/ investorrelations.

21. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:

The particulars of loans and investments have been disclosed in the financialstatements. The Company has not given any guarantees.

22. HUMAN RESOURCE MANAGEMENT:

The Company recognizes the need for continuous growth and development of its employeesto meet the challenges posed by the industry besides fulfilling their own career pathobjectives. Consequently the role of Human Resources continues to remain vital andstrategic to the Company. Employee recruitment training and development are a key focusarea with policies processes and extensive use of technology to attract retain andbuild on skills of high calibre employees. Industrial relations have continued to beharmonious throughout the year.

23. COMPLIANCE WITH THE CODE OF CONDUCT

The Code of Conduct adopted by the Company for its Board of Directors and SeniorManagement Personnel has been uploaded on the Company's website at the linkhttp://www.zodiaconline.com/ zodiac/retail/information/investorrelations.

The Declaration of the Compliance with the Code of Conduct has been received from allBoard members and Senior Managerial Personnel. A certificate to this effect from Mr. S. YNoorani Vice Chairman & Managing Director forms part of this report.

24. FIXED DEPOSITS

The Company has not accepted any Fixed Deposits from the Public under Section 73 of theCompanies Act 2013.

25. COMPANY'S WEBSITE

The Financial Statements Annual Report including Corporate Governance ReportShareholding Pattern etc. are displayed inter se with the other information on theCompany's website viz. www.zodiaconline.com.

26. DONATIONS

During the financial year the Company has besides CSR contributed Rs 1802000/-(Rupees Eighteen Lakhs and Two Thousand only) to various deserving causes.

27. INSURANCE

All the properties/assets including buildings furniture/fixtures etc. and insurableinterests of the Company are adequately insured. The international debtors who avail ofcredit are also insured despite their flawless record as a measure of abundant caution.

28. AUDITORS

The Auditors M/s. Price Waterhouse Chartered Accountants LLP (FRN 012754N/N500016)who are the Statutory Auditors of the Company hold office up to the 38th AnnualGeneral Meeting.

As per the circular issued by the Ministry of Corporate Affairs dated 3rdJanuary 2018 effective from 7th May 2018 the provision for ratification ofthe appointment of the Statutory Auditors at every Annual General Meeting has beenomitted. As such the item ratifying the appointment of M/s. Price Waterhouse CharteredAccountants is not included in the Notice of the 36th Annual General Meeting.

The Auditors' Report to the members for the year under review does not contain anyqualification reservation adverse remark or disclaimer. The Auditors have not reportedany fraud to the Company required to be disclosed under Section 143(12) of the Act.

29. COST AUDITOR:

In terms of the Companies (Cost Records and Audit) Amendment Rules 2014 the Companyis not covered under the purview of Cost Audit from the F. Y. 2014-15 onwards.

30. SECRETARIAL AUDIT:

As per Section 204 of the Companies Act 2013 and Rules made thereunder the Companyhas appointed M/s. Robert Pavrey & Associates Company Secretaries (CP No- 2928) toundertake the Secretarial Audit of the Company. The Secretarial Audit report is includedas Annexure 2 and forms an integral part of this report.

The Secretarial Audit Report to the members for the year under review does not containany qualification reservation adverse remark or disclaimer.

31. AUDIT COMMITTEE:

The details pertaining to the composition of Audit Committee are included in theCorporate Governance Report which forms a part of this report.

32. DETAILS OF SHAREHOLDERS' FUNDS

EMPLOYED FOR THE YEAR 2019-20

CONSOLIDATED:

33. RISK MANAGEMENT

In line with the regulatory requirements the Company has a Risk Management Policy toidentify and assess the key risk areas monitor and report the compliance andeffectiveness of the same. The Risk Management Committee is responsible for reviewing therisk management plan and ensuring its effectiveness. The Audit Committee has additionaloversight in the area of financial risks and controls. Major risks identified by thebusinesses and functions are systematically addressed through mitigating actions on acontinuing basis.

34. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an effective internal control and risk-mitigation system which areconstantly assessed and strengthened with new/ revised standard operating procedures. TheCompany's internal control system is commensurate with its size scale and complexities ofits operations. The internal and operational audit is entrusted to M/s. CNK &Associates LLP. The main thrust of internal audit is to test and review controlsappraisal of risks and business processes besides benchmarking controls with bestpractices in the industry.

The Audit Committee actively reviews the adequacy and effectiveness of the internalcontrol systems and suggests improvements to strengthen the same. The Company has a robustmanagement information system which is an integral part of the control mechanism.

The Audit Committee members Statutory Auditors and the Business Heads are periodicallyapprised of the Internal Audit findings and corrective action taken. Audit plays a keyrole in providing assurance to the Board of Directors. Significant audit observations andcorrective actions taken by the management are presented to the Audit Committee. Tomaintain its objectivity and independence the Internal Audit function reports to theChairman of the Audit Committee.

35. ANTI SEXUAL HARASSMENT POLICY

The Company has in place an Anti Sexual harassment policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 & the Rules made thereunder. Internal Complaints Committee (ICC) has beenset up to redress Complaints received regarding sexual harassment. All employeespermanent contractual temporary and trainees are covered under the policy. During theyear under review there were no complaints received under the said Act.

36. EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is uploaded on the website of the Company atthe link http:// www.zodiaconline.com/zodiac/retail/information/ investorrelations.

37. SECRETARIAL STANDARDS:

The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Board and General Meeting.

38. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

The details pertaining to the establishment of Vigil Mechanism/ Whistle Blower Policyis included in the Corporate Governance Report which forms part of this report.

39. INVESTOR EDUCATION AND PROTECTION FUND

As per the provisions of Sections 124 and 125 of the Companies Act 2013 read with theIEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 (‘the Rules') allunpaid or unclaimed dividends and the respective shares thereof for the Financial Yearupto 2011-12 have been transferred to the IEPF established by the Central Governmentwithin the stipulated time.

40. STATEMENT OF DEVIATIONS OR VARIATIONS

Pursuant to Regulation 32 of the SEBI (Listing Obligations and Disclosure RequirementsRegulations) 2015 below is the Statement of Deviation or Variation for the year ended 31stMarch 2020:-

a. Deviation in the use of proceeds from the objects stated in the offer document orexplanatory statement to the notice for general meeting.

There is no deviation in the use of proceeds from the objects stated in the explanatorystatement to the notice for the 34th Annual General Meeting.

b. Category wise variation:

There is no variation as the application money raised through preferential allotment ofEquity Shares and Convertible Warrants was Rs 49.99 Crores till 31st March2020 and the Company has fully utilized the amount i.e. Rs 50.00 Crores for the objectsstated in the explanatory statement to the notice for the 34th Annual GeneralMeeting.

41. PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a. The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the Financial year 2019-20:

Non-executive directors* Ratio to median remuneration
Mr. M. Y. Noorani till 20th November 2020
M. L. Apte till 11th August 2019 -
Mr. A. Y. Noorani -
Mr. V. M. Apte -
Mr. Y. P. Trivedi -
Mr. S. R. Iyer -
Dr. Naushad Forbes -
Mr. Bernhard Steinruecke -
Ms. Elizabeth Jane Hulse -

*Note:

The Chairman is not paid any remuneration nor sitting fees for attending Board andCommittee Meetings. The Non-Executive Directors of the Company are paid only Sitting Feesfor attending the Board and Committee Meetings of the Company details of which are givenin the Corporate Governance Report and are not entitled to any other remuneration.

Executive Director Ratio to median remuneration
Mr. S. Y. Noorani --

Note: The ratio to median remuneration is nil for the F.Y. 2019-20 as Mr. S. Y.Noorani has voluntarily agreed to not receive remuneration for the F.Y. 2019-20.

b. The percentage increase in remuneration of each Director Chief Financial OfficerCompany Secretary in the Financial Year:

Directors Chief Financial Officer and Company Secretary* % Increase in remuneration in the financial year
Mr. V. M. Apte -
Mr. Y. P. Trivedi -
Mr. S. R. Iyer -
Mr. Naushad Forbes -
Mr. Bernhard Steinruecke -
Ms. Elizabeth Jane Hulse -
Mr. A.Y Noorani -
Mr. S.Y. Noorani -
Mr. B. Mahabala (CFO) -
Mr. Kumar Iyer (CS) -

Note:

*The Chairman & Vice Chairman are not paid any remuneration nor sitting fees forattending Board and Committee Meetings. The Non-Executive Directors of the Company arepaid only Sitting Fees for attending the Board and Committee Meetings of the Companydetails of which are given in the Corporate Governance Report and are not entitled to anyother remuneration.

c. The percentage increase in the median remuneration of employees in the financialyear: 3.93% (as the median employee is a piece rated worker)

d. The number of permanent employees on the rolls of Company: 1805 (as on 31stMarch 2020)

e. Percentage increase over decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with the last publicoffer:

Particulars 31st March 2020 July 1994 (IPO) July 1994 (IPO)* % Change
Market Price (BSE) 100.50 110.00 24.45 311.04
Market Price (NSE) 103.45 110.00 24.45 323.11

*Adjusted for 1:1 Bonus issue in 2005 &1:2 Bonus issue in 2010 & 2011.

f. The Average percentile increase in the salaries of Employees (i.e. employees atFactory/ies and to the office staff) other than Senior managerial personnel in the lastFinancial Year was 5% to 6%. There has been no increase in the managerial remuneration.

g. The key parameters for any variable component of remuneration availed by theDirectors: During the Financial Year 2019 - 20 no performance linked bonus or any othervariable component of remuneration has been paid to the Executive Director of the Company.

h. Affirmation that the remuneration is as per the remuneration policy of the Company:The Company affirms that the remuneration is as per the remuneration policy of the Company

i. Information of top 10 employees as required under Section 197(12) of the Act readwith Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 for the year ended 31st March 2020 is given below:

Sr. No Name Date of Birth Designation Remuneration o Nature of Employment Qualification and Experience Date of joining Last Employment Percentage of Equity Shares held Relative of any Director/ Manager of the Company
1 Salman Yusuf Noorani 15-03-1963 Vice Chairman and Managing Director -Nil- Contractual B.com/38 years 01-03-1994 6.85 Brother of Mr. A.Y. Noorani Chairman & Non Executive Director
2 Behroze Daruwala 04-09-1950 VP - Fabrics & Merchandising 4611047 Permanent B.A./ 48 years 30-05-1972 0.13
3 Imraan Surve 11-10-1968 VP-Marketing Zod LFS & Z3 4563518 Permanent B.A. (Hons.) Economics/ 28 years 18-12-2001 Contract Advertising Pvt. Ltd. 0.02
4 B Mahabala 07-11-1951 V. P. Commercial & C.F.O 4701616 Permanent M.com MBA & Diploma in Cost & Management Accountancy/47 years 15-06-1984 Vulcan Engineers Limited 0.02
5 Awais Noorani 07-10-1975 VP - International Sales & Sourcing 4535666 Permanent B.Com MBA from IMD Switzerland/25 years 01-12-2002 0.00 Son of Mr. A.Y. Noorani Chairman and nephew of Mr. S. Y. Noorani Vice Chairman and Managing Director
6 Anand Pisharody 19-10-1957 VP - Manufacturing 3355472 Permanent B.A./ 41 years 02-05-1986 Indian Molasses Company Limited 0.00
7 Vishal Chadha 17-11-1964 GM - Sales MBO 3046604 Permanent B.A./ 31 years 22-07-2004 Johnson & Johnson Private Limited 0.01
8 Kumar Iyer 11-06-1964 GM Legal & Company Secretary 3043975 Permanent M. Com ACS/ 36 years 15-05-2014 Advani Hotels & Resorts (India) Limited 0.00
9 Nafees Azam 07-04-1960 GM - Sales (Retail) 2844659 Permanent B.Com./ 35 years 21-05-2004 Geep Industrial Syndicate Limited
10 Subbraman Parameswaran 06-12-1970 DGM - Projects 2637895 Permanent B.Sc and PGD in Marketing Management / 29 years 01-04-2001 West coast Industries Limited 0.09
11 Vikram Puri 29/06/1976 Senior Product Manager 3371250 Permanent B. Sc Physics/ 24 years 07/05/2002 Cotton Club Inc. 0.00 -

Disclosure Requirements:

As per SEBI LODR the Corporate Governance Report with the Auditors' Certificatethereon Business Responsibility Report and Management Discussion and Analysis areattached and the same forms a part of this report.

42. ACKNOWLEDEMENTS

The Directors are grateful for the co-operation support and assistance received fromthe customers shareholders the Government other statutory bodies Banks SolicitorsDistributors Suppliers and other business associates during these turbulent times.

The Directors also express their sincere appreciation of the employees at all levelsfor having risen to meet the several challenges encountered and look forward

to their valuable support and commitment in the times ahead.

For and on behalf of the Board of Directors

A. Y. NOORANI
Chairman
DIN: 00041686
Place: Mumbai
Date : 30th July 2020

.