DIRECTORS' REPORT Your Directors have pleasure in presenting the Twenty Sixth Annual Report of the Company and the audited financial statements for the year ended the 31st March, 2015. Number of meetings of the Board Particulars of the meetings held during the year along with the details regarding the meetings attended by the directors form part of the Corporate Governance Report. The composition of the Board and its committees has also been given in detail in the report on Corporate Governance. Dividend Your Directors recommend to the members, a preference dividend @ 8% p.a. i.e. Rs. 8/- per share on 18,85,400 Cumulative Redeemable Preference Shares (CRPS) of Rs. 100/- each issued to various Banks/ Institutions and @ 3% p.a. i.e. Rs. 3/- per share on 12,00,000 Cumulative Redeemable Preference Shares (CRPS) of Rs. 100/- each issued to persons forming part of promoter and promoter group as per the CDR package. The aforesaid dividend on CRPS will absorb Rs. 224.19 lac (inclusive of distribution tax). A proposal for confirmation of the dividend on CRPS will be placed before the shareholders at the ensuing Annual General Meeting. In view of carried forward losses, no dividend is recommended on Equity Shares. Operations Your Directors feel pleasure in informing the members that as a result of various improvement measures undertaken by the management in the past few years, your Company, during the year under review, recorded satisfactory turnover and profitability. The Company achieved a Turnover of Rs. 648.42 crores for the year ended the 31st March, 2015 against Rs. 653.35 crores in the previous year, ended the 31st March, 2014. The Company achieved a net profit of Rs. 16.69 crores against Rs. 29.47 crores in the previous year. During the period under review, your Company has been able to achieve production of 17877 MT of cotton yarn (17332 MT), 1526 MT of dyed yarn (1406 MT), 3625 MT of grey knitted fabric (3692 MT), 4804 MT of processed fabric (4737 MT) and 49.42 lac pieces of garments (53.35 lac pieces), without any expansion in capacity. Industry Scenario India's textiles and clothing industry is one of the mainstays of the national economy. It is also one of the important sectors in India's exports contributing nearly 13.25% to the country's total exports basket. The textiles industry is labour intensive and is one of the largest employers, employing nearly 35 million people. Government of India has taken various initiatives for the development of the textiles sector i.e 13 new textiles parks were approved which is estimated to bring in private sector investment of about Rs. 3240 crore and generate direct employment for about 35,000 persons over the next three years. Further, with a vision to create friendly economy the government introduced several initiatives i.e. duty free entitlement to garment exporters, 24/7 customs clearance facility resulting in faster clearance of import and export cargo etc. Over the past few years, India has achieved significant growth in cotton production. About a decade ago, India was barely self sufficient to meet its requirement of cotton from domestic production but is now poised to overtake China to become the world's biggest producer of cotton this year. During 2014-15, the area under cotton cultivation in India has furthered increased to a record level of 125 lakh hectares. India Cotton Federation (IFC) estimates a record harvest of 40 million bales during 2014-15, a growth of about 8% over 37.5 million bales in 2013-14. Modernization and Expansion Your Directors, in their previous report, informed the members about modernization plan to replace some equipment which were very old. Your Directors have pleasure in informing the members, that a modernization & expansion plan involving a capex of Rs. 40 crore has been completed during the year under review. This will result in improvement in quality and productivity leading to higher profitability. Your Directors, in order to reduce the cost of power generation have approved the project for a 33 KVA Dedicated Feeder line for the supply of power directly from the Grid which involves a total cost of Rs. 103 lac. Further, in order to utilize the full Dye House capacity, your Directors have agreed to purchase additional knitting machines involving a total outlay of Rs. 571 lac. The purchase of additional machines will reduce overall production costs. Your Directors feel pleasure in informing you that the Company has embarked upon a further modernization of the spinning unit and increase in capacity of Garment unit involving a capital outlay of Rs. 470 lac for Spinning Unit and Rs. 460 lac for Garment Unit to be funded through internal accruals and loans. No material changes and commitments have occurred between the end of the financial year till the date of the report, which in turn affect the financial position of the Company. Corporate Social Responsibility Corporate Social Responsibility (CSR) is core to our business. Your Company always strived to achieve a balance between environment, social imperatives and the expectations of our stakeholders. It is a continuous journey wherein due importance is given to education especially to the girl child, creating a healthy environment, creating new opportunities and maintaining ethical business standard. With the Corporate Social Responsibility now becoming a statutory obligation, your Directors had during the year under review, formally constituted a Corporate Social Responsibility Committee comprising of Shri P. S. Dasgupta, Shri Shekhar Agarwal and Shri Shantanu Agarwal. Your Directors, upon recommendation of the CSR Committee, adopted CSR Policy during the year and initiated its implementation. During the year the Company has identified the activity concerning the promotion of education with special focus on girl child education. Further, the Company is in the process of enlarging the scope of CSR activities and other activities to be undertaken. The detail of the CSR spend by the Company is enclosed as Annexure - I forming part of this report. Annual Return Pursuant to Section 92 of the Companies Act, 2013, read with Rule 12 of The Companies (Management and administration) Rules, 2014, the Annual Return is attached as Annexure - II. Directors and Key Managerial Personnel Your Directors in their previous report informed the members about the resignation of Shri L.N. Jhunjhunwala, Chairman-Emeritus and the founder of the Company as well as the Group from the directorship of the Company. Your Directors had also informed the members that Shri L.N. Jhunjhunwala upon the unanimous request of the Board of Directors had agreed to continue as Chairman -Emeritus. Your Directors are thankful to Shri L.N. Jhunjhunwala for his continuous guidance to them and the Company. As informed to the members in the previous report by your Directors, Dr. Kamal Gupta, Shri D.N. Davar and Shri P. S. Dasgupta, Independent Directors were appointed for a term of 5 years by the Shareholders at the last Annual General Meeting held on the 26th September, 2014. Your Directors further inform the members that, during the year under review, Shri Shantanu Agarwal was appointed as a director of the Company. Smt. Geeta Mathur was appointed as an Additional Director in the category of Independent Director. Smt. Geeta Mathur brings with her vast experience in the field of Banking and Finance. Your Directors take this opportunity to welcome Shri Shantanu Agarwal and Smt. Geeta Mathur on the Board of Directors. The proposal for confirmation of appointment of Smt. Geeta Mathur as an Additional Director as well as an Independent Director for a term of 5 years shall be put up before the ensuing Annual General Meeting. Shri Shantanu Agarwal, Director retires by rotation and being eligible offers himself for reappointment. Your Directors further inform the members that declaration has been taken from the independent directors at the beginning of the financial year stating that they meet the criteria of independence as specified under sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. During the year, Shri Shekhar Agarwal, Managing Director & CEO of the Company, Ms. Sweta Garg, Company Secretary of the Company and Shri P. S. Puri, Chief Financial Officer of the Company were designated as Key Managerial Personnel. Directors' Appointment and Remuneration Policy Pursuant to the provision of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors on the recommendation of Nomination and Remuneration Committee has framed a policy for the appointment of Directors and Senior Management and their remuneration. The policy forms part of the Board Report and is annexed as Annexure - III. Annual Evaluation by the Board Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing agreement, annual evaluation has been done by the Board of its own performance, its Committees and the individual Directors. The manner of evaluation is mentioned in the Nomination and Remuneration policy forming part of this Report. Further, every independent director of the Company is familiarized with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes. Particulars of Loans, Guarantees or Investments Details of loans, Guarantees and Investments are given in the notes to the Financial Statements at appropriate places. Particulars of Contracts or Arrangements with Related Parties All contracts / arrangements / transaction entered into by the Company during the financial year with the related parties are on arm's length basis and in the ordinary course of business. During the financial year, there was no material contract or arrangements entered into by the Company with any of the related party. Your Directors draw attention of the members to Note 2.8.8 to the financial statement which contain particulars with respect to related parties. The policy on dealing with the Related Party Transactions as approved by the Board of Directors is disclosed on the website of the Company under the following link: <http://maraloverseas.com/pdf/Policy_on_Related_Party_Transaction>. pdf Significant and Material Orders Passed by The Regulators or Courts There are no significant and material orders passed by the regulators or courts. Auditors Appointment Statutory Auditors The Company's Auditors M/s. Doogar & Associates (Firm Reg. No. 000561N) and M/s. Ashim & Associates (Firm Reg. No. 006064N), who retire at the conclusion of the ensuing Annual General Meeting, are eligible for re-appointment. Further, they have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder. The observations of the Auditors, if any, are explained wherever necessary, in the appropriate notes to the accounts. The Auditors' Report does not contain qualification, reservation or adverse remark. Internal Auditors Pursuant to Section 138 of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, the Company has appointed M/s. P.K. Deora & Co., Chartered Accountants (Firm Reg. No. 004167N) and M/s. KRA & Associates, Chartered Accountants (Firm Reg. No. 002352N) as the internal auditors of the Company. Secretarial Auditor Pursuant to Section 204 of the Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Shri D.P. Gupta, Practicing Company Secretary holding Membership No. FCS 2411 and Certificate of Practice No. 1509 proprietor of M/s SGS, Company Secretaries, Delhi, as the Secretarial Auditor of the Company. The Secretarial Audit Report does not contain qualification, reservation or adverse remark. The Report of Secretarial Audit is annexed as Annexure - IV. Cost Auditor Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014 and Notification issued by Ministry of Corporate Affairs dated 31st December, 2014, textile Companies were required to get their cost records audited from the financial year commencing on or after 1st day of April, 2015. The Company has appointed M/s K. G. Goyal & Co. (Firm Reg. No. 000017) as the cost auditor of the Company for the Financial Year 2015-16. Risk Management Policy The Company has adopted a risk management policy which aims at creating and protecting shareholders' value by minimizing threats and weaknesses and identifying and maximizing opportunities. Pursuant to the policy, your Directors periodically review the risks associated with the business or threaten the prospects of the Company. Corporate Governance The Company has been practicing good Corporate Governance over a period of time and lays emphasis on transparency, accountability and integrity. Company conforms to the code of corporate governance as stipulated under the Listing Agreement which is also published on the website of the Company. Report on Corporate Governance along with the Certificate of Auditors, M/s. Doogar & Associates (Firm Reg. No. 000561N) and M/s. Ashim & Associates, (Firm Reg. No. 006064N) Chartered Accountants, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, forms part of the Annual Report. Whistle Blower Policy With the objective of pursuing the business in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior and to encourage and protect the employees who wish to raise and report their genuine concerns about any unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct, the Company has adopted a Whistle Blower Policy. The Company has adopted a framework whereby the identity of the complainant is not disclosed. The policy has been disclosed on the website of the Company, the link of which is given hereunder: <http://www.maraloverseas.com/pdf/Whistle> Blower Policy.pdf Management Discussion and Analysis Report Management Discussion and Analysis Report, as required by clause 49 of Listing Agreement, forms part of the Annual Report. Internal Control Systems The Audit Committee, in consultation with the Board, is responsible for establishing and maintaining adequate internal control systems in the operations of the Company to ensure that the information, which is provided to the management, is timely and reliable. The controls have been designed to provide a reasonable assurance of maintaining proper accounting controls for ensuring reliability of financial reporting, protecting assets from unauthorized use or losses, compliances with statutory regulations. The Company has continued its efforts to align all its processes and controls with global best practices. These systems ensure that transactions are executed in accordance with specified policies and resources are deployed prudently as per the business plan. The annual business plan is presented to the Audit Committee at the beginning of every financial year and regular updates are presented on a quarterly basis to the Committee and the Board. The Action Taken Report of the previous meeting is presented in the ensuing meeting and members are regularly updated about the actions taken. The Company's internal control systems comprise of compliance by in-house staff supplemented by internal audit checks by the internal auditors. The internal auditors independently evaluate the adequacy of internal controls and periodically audit the majority of the transactions in value terms. Internal Auditors report directly to the Audit Committee of the Board. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The information required to be disclosed pursuant to Section 134(3) (m) of the Companies Act, 2013 read with the Rules, 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure - V forming part of this Report. Particulars of Employees The information pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the name along with the particulars drawing remuneration in excess of the limits of the employees is annexed as Annexure - VI. Further, disclosures pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the relevant statement is annexed as Annexure - VII. Directors' Responsibility Statement Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors state that: - in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same; - appropriate Accounting Policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2015 and of the Profit and Loss of the Company for the year ended on that date; - proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; - the Annual Accounts have been prepared on a going concern basis. - that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. - that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Acknowledgements Your Directors place on record the diligent efforts made by the employees at all levels in discharging their responsibilities. We would like to thank all our clients, vendors, bankers, other business associates, Central and State Government for their continued support and encouragement during the year and their confidence towards the management. The directors also thank the investors for their continued faith in the Company. For and on behalf of the Board Ravi Jhunjhunwala Chairman DIN -00060972 Noida (U.P) 5th May, 2015 |