DIRECTORS' REPORT Dear Members, The directors have pleasure in presenting their Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended 31st March, 2016 2. DIVIDEND Your directors consider that the interim dividend of Rs. 17/- per ordinary share of face value of Rs. 10/- each (i.e. 170%) paid for the year ended 31st March, 2016 is reasonable and therefore do not recommend a final dividend for the year. 3. TRANSFER TO RESERVE Directors propose to transfer an amount of Rs. 25 to the SEZ re-investment reserve account and Rs. 2650 to the general reserve out of the profit for the year. During the year under review, the Jute Industry gradually came out from bad phase and was able to operate at reasonable capacity largely on account of regular government orders compared to previous year when there was an Industry-wide cut in production. In the wake of above scenario, it is a matter of great satisfaction that due to better production and operational efficiency, your Company achieved higher operating profit by more than 94% i.e. Rs. 1,859.26, being Rs. 3,826.64 in the year under review as compared to Rs. 1,967.38 in the previous year. However, impact of said increase in profitability was diluted mainly due to lower other income, largely attributable to less return on debt funds on account of lower interest rates, stagnant capital market, few maturities of investments as compared to previous year. Accordingly, profit after tax was Rs. 3,647.47 as compared to Rs. 3,458.09 during the previous year. Demand of jute goods from overseas markets remained sluggish. There has been steep fall in export of jute yarn from India. Moreover, the Company's export oriented unit at Falta SEZ has been continuously operating at reduced capacity for want of adequate orders. Accordingly, CIF value of export sales was lower at Rs. 10,553.34 as against Rs. 11,973.47 during previous year. Nevertheless, we are pursuing with our initiatives to export other diversified Jute products including shopping bags, geo textile products, conventional and decorative hessian products and are hopeful to establish them in the time to come. 4. CORPORATE GOVERNANCE The corporate governance report and a certificate from the statutory auditors M/s Jain & Co., Chartered Accountants regarding compliance of the conditions of corporate governance as stipulated in Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given in Annexure - I, forming part of this report. 5. EXTRACT OF THE ANNUAL RETURN An extract of the annual return for the year ended 31st March, 2016 in the prescribed Form MGT-9 is given in Annexure - II forming part of this report in compliance with Section 92 of the Companies Act, 2013. 6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Particulars of investments made by the Company have been disclosed in Note 11 and Note 14 to the financial statements for the year ended 31st March, 2016. 7. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES During the year under review, all transactions with related parties were in the ordinary course of business and on arm's length basis. There being no 'material' contracts or arrangement or transactions at arm's length basis with related parties, no disclosure in From AOC-2 is therefore required. Disclosures as required under accounting standard-18 have been made in Note 46 to the financial statements for the year ended 31st March, 2016. Since the Company has not extended any loan or advance to its associate, holding or firms/companies in which directors are interested, no disclosure is required as per Point A(2) to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information and details on conservation of energy, technology absorption, foreign exchange earnings and outgo, as stipulated in Section 134(3)(m) of the Companies Act, 2013 and the Rules framed thereunder are given in Annexure - III forming part of this Report. 9. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY The Board has developed and implemented a risk management policy identifying therein the elements of risk and concern that may threaten the existence of the Company. Audit committee reviews the risk elements and decides the appropriate mitigation procedures. The Board keeps an overall watch on the business risks and opportunities. Detailed discussion on risks/concern/threat has been made under the head 'management discussion and analysis report'. 12. CORPORATE SOCIAL RESPONSIBILITY (CSR) During the year, the Company made direct expenditure on restoration of two school buildings near the factory area as part fulfillment of the CSR towards promoting education. Besides, CSR activities were carried out through eligible registered trusts having established track records in the field of promoting education and health care. CSR Policy of the Company is available on Company's website (www.groupcheviot.net). Annual Report on CSR is given in Annexure - IV forming part of this report. 13. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has established a vigil mechanism/whistle blower policy to report any concern or misconduct by affected persons. This Policy also allows a direct access to the Chairman of audit committee in exceptional cases. The whistle blower policy is hosted on the Company's website (www.groupcheviot.net). 14. DIRECTORS During the year under review, there was no change in the composition of the Board of Directors. Mr. Harsh Vardhan Kanoria, Chairman and Managing Director and CEO (holding DIN 00060259) was re-appointed for a period of five years with effect from 1st August, 2015 by the members at the AGM held on 13th August, 2015. Mrs. Malati Kanoria, non-executive director, (holding DIN 00253241) was re-appointed as a Director at the AGM held on 13th August, 2015 whose period of office was liable to determination by retirement of directors by rotation. Mr. Nawal Kishore Kejriwal (Mr. Kejriwal) (holding DIN 00060314) retires from the Board by rotation at the forthcoming AGM, and being eligible, offers himself for re-appointment. Mr. Kejriwal has been re-appointed as Wholetime Director of the Company by the Board whose period of office shall be liable to determination by retirement of directors by rotation for a further period of 2 years with effect from 1st June, 2016 subject to the approval of the members at the forthcoming AGM. Brief details of Mr. Kejriwal seeking re-appointment have been given in the notice convening AGM. All independent directors of the Company have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013. The Board of directors have carried out the annual performance evaluation of its own performance, performance of various committees constituted by the Board and the individual directors. The criteria for said evaluation has been stated in the corporate governance report annexed hereto. 15. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS Keeping in view the requirements of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the nomination and remuneration committee (NRC) review the composition and diversity of the Board and identify persons who are qualified to become directors in accordance with the criteria laid down by the Board of Directors of the Company. NRC recommend to the Board about the appointment/re-appointment of eligible candidates including their terms of appointment and remuneration. The remuneration policy including criteria for determining qualifications, positive attributes, independence of a director have been disclosed in Annexure - V forming part of this Report. 16. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, it is hereby stated to the best of our knowledge and belief that : (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; (c) the directors had taken proper and sufficient care 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; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 17. NUMBER OF MEETINGS OF THE BOARD The Board of directors met 5 (five) times during the year under review. More details are available in the corporate governance report. 18. COMPOSITION OF AUDIT COMMITTEE The Board has constituted the audit committee with three independent directors. More details on the audit committee are given in the corporate governance report. 19. KEY MANAGERIAL PERSONNEL There was no change in the Key Managerial Personnel during the year under review. 20. PARTICULARS OF EMPLOYEES The ratio of the remuneration of each director to the median employee's remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules framed there under have been disclosed in Annexure - VI forming part of this Report. 21. PUBLIC DEPOSITS The Company has not accepted deposits from Public under Section 73 of the Companies Act, 2013 read with Rules framed there under. 22. DISCLOSURE Following disclosures are made under the Companies (Accounts) Rules, 2014 : (i) The financial summary or highlights are discussed at the beginning of this report; (ii) There is no change in the nature of business; (iii) There is no company which has become or ceased to be the Company's subsidiary, joint venture or associate company during the year; (iv) No significant and material order was passed by the regulators or courts or tribunals which impact the going concern status and its future operations. 23. ADOPTION OF NEW ARTICLES OF ASSOCIATION The existing Articles of Association of the Company were adopted in accordance with the provisions of the Companies Act, 1956. With the enactment of Companies Act, 2013 and its substantial Sections having come into force, it is now expedient to replace the existing Articles of Association with the new set of Articles of Association. It is accordingly proposed that a new set of Articles of Association be adopted by the members and a resolution to this effect is included at Item No. 5 of the notice convening the annual general meeting. The Board recommends passing of the said resolution by the members. 24. STATUTORY AUDITORS M/s Jain & Co., Chartered Accountants (ICAI Registration No. 302023E), was appointed as the statutory auditor of the Company at the AGM held on 8th August, 2014 to hold office until the conclusion of the AGM to be held in 2017 subject to ratification by members at every AGM. The Board recommends ratifying the tenure of M/s Jain & Co., Chartered Accountants, as Statutory Auditors of the Company from the conclusion of ensuing AGM until the conclusion of the next AGM. A certificate from the auditors has been received to the effect that they meet the criteria laid down under Section 141 of the Companies Act, 2013 and are willing to continue as statutory auditors of the Company. Moreover, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 25. COST AUDITORS The cost accounting records maintained by the Company for the current financial year ending on 31st March 2017 are required to be audited pursuant to Section 148 of the Companies Act, 2013 read with Rules framed thereunder. In this regard, the Board of directors on the recommendation of audit committee, had reappointed M/s D. Radhakrishnan & Co., Cost Accountants (Registration No. 000018), to carry out the cost audit at a remuneration of Rs. 32,500/- plus applicable taxes and re-imbursement of out of pocket expenses incurred by them. The resolution included at Item No. 9 of the notice convening the annual general meeting seek members' ratification to the remuneration payable to the cost auditor. 26. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules framed there under, the Company has appointed M/s MR & Associates, a firm of practicing company secretaries (CoP 2551) as the secretarial auditor for the year ended 31st March, 2016. The secretarial audit report dated 14th May, 2016 is attached as Annexure - VII to this report. 27. ACKNOWLEDGEMENTS The directors sincerely thank financial institutions, banks, government authorities, business associates and all stakeholders for their continued co-operation and support to the Company. The directors record with appreciation, the dedicated service and valued contributions made by employees at all levels. For and on behalf of the Board Harsh Vardhan Kanoria Chairman and Managing Director, Chief Executive Officer DIN : 00060259 Place : Kolkata, date : 25th May, 2016 |