Directors Report of Celebrity Fashions Ltd.
Mar 31, 2018
Dear Shareholders,
The Directors have pleasure in presenting the 29th Annual Report of the Company, along with the Audited Financial Statements of the Company for the financial year ended 31st March 2018.
FINANCIAL HIGHLIGHTS
The Companyâs performance during the year as compared with previous year is summarized below:
(Rs. In Crores)
|
Particulars |
FY 2017-18 |
FY 2016-17 |
|
Revenue From operations |
203.54 |
192.05 |
|
Gross Profit / (Loss) before interest and depreciation |
12.80 |
8.97 |
|
Interest |
6.79 |
6.59 |
|
Profit / (Loss) before depreciation and tax |
6.01 |
2.38 |
|
Depreciation |
6.89 |
7.03 |
|
Profit / (Loss) before Exceptional items |
(0.88) |
(4.65) |
|
Exceptional Item - Expense/ (Income) |
0.00 |
8.22 |
|
Profit/(Loss) after Exceptional items |
(0.88) |
(12.87) |
|
Profit/ (Loss) before tax |
(0.88) |
(12.87) |
|
Provision for Taxation |
0.00 |
0.00 |
|
Profit / (Loss) after tax |
(0.88) |
(12.87) |
|
Other Comprehensive Income |
(0.42) |
(0.56) |
|
Balance carried to Balance Sheet |
(1.30) |
(13.43) |
PERFORMANCE REVIEW
The clothing Export scenario continued to be fiercely competitive. Textile and clothing exports slid 0.4% in the last financial year (2017-18) to $ 35 billion as apparel exports fell. While exports of cotton yarn, fabrics and made ups grew 4%, outbound apparel shipments registered a 4% decline, reducing from $ 17.3 billion to $ 16.7 billion. Garment exports from Vietnam and Bangladesh were increasing whereas Garment production in India has declined in the last 10 months. As pricing are too competitive, great effort is necessary to bag orders. Furthermore Duty Drawback element also reduced by about 70% during the period.
IMF said Indiaâs growth is expected to rise from 6.7% in 2017-18 to 7.3% in 201819 and 7.5% in 2019-20, as the effects of demonetization and the introduction of the goods and services tax fade.
The performance of the Company has to be viewed from the context of the back drop of the business conditions that it was compelled to operate during the year.
Pursuant to the notification, issued by the Ministry of Corporate Affairs dated February 16, 2015 relating to the Companies (Indian Accounting Standards) Rules, 2015, the Company has adopted âIND ASâ with effect from 1st April 2017 with transition date of 1st April 2016. Accordingly, the financial statements for the year 2017-18 have been prepared in compliance with the Companies (Indian Accounting Standards) Rules, 2015.
The Company has turned in a satisfactory performance in the year 2017-18 with a net Revenue from operations at Rs.203.54 crs reflecting ~ 6 percent rise vis-a-vis Rs.192.05 crs recorded in the previous year. The Operating EBITDA stood at Rs.12.80 crs against Rs.8.97 crs the previous year.
A detailed analysis of the financial results is given in the Management Discussion and Analysis Report which forms part of this report.
CHANGES TO SHARE CAPITAL
Preferential Allotment
Allotment of Equity Shares on Preferential basis upon conversion of Warrants: âDuring the financial year 2016-17, the Company has issued and allotted 56,96,756 Warrants at a price of Rs.11.41 (including premium of Rs.1.41 per Warrant) per Warrant to promoters and Managing Director convertible into equivalent number of Equity Shares on preferential basis in accordance with and in terms of the provisions of Sections 39, 42 and 62(1)(c) of the Companies Act, 2013 read with rules framed thereunder, Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time and other applicable laws. Out of the 56,96,756 warrants allotted, 35,05,696 Warrants were converted into equivalent number of Equity Shares during the year under review.
Consequent upon allotment of 35,05,696 equity shares on preferential basis, the paid up equity share capital of the Company has been increased from Rs.42,07,12,490/-to Rs. 45,57,69,450.
The entire issue proceeds were utilized for Augmenting Long Term Capital and for general corporate purpose. This equity infusion reiterates the promoterâs commitment towards the business of the company and confidence in its growth prospects and will strengthen the balance sheet of the company.
DIVIDEND
In view of the loss for the year under review, no amount is proposed to be transferred to the reserve(s) and your Directors have not recommended payment of any dividend for the year under review.
TRANSFER TO RESERVES
During the year under review, the Company has not transferred any amount to the reserves.
FINANCE AND ACCOUNTS
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act. The financial statements up to and for the year ended March 31, 2017, were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act (âPrevious GAAPâ). The financial statements for the year ended March 31, 2018 is the first financial statements of the Company under Ind AS.
Due to the losses incurred by the Company in the earlier years, there is no provision for Income Tax. The Company has recognized Deferred Tax Asset in unabsorbed depreciation and accumulated losses to the extent of corresponding deferred tax liability on the difference between the book balances and written down value of fixed assets under Income Tax.
DEPOSITS
During the year under review, the Company has not accepted or renewed any fixed deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2018, there were no deposits which were unpaid or unclaimed and due for repayment.
CASH FLOW STATEMENT
In conformity with the provisions of Section 134 of Companies Act, 2013 and Regulation 34 2(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash flow statement for the year ended 31st March, 2018 forms part of this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with the related parties entered during the year were in the ordinary course of business and on Armâs length basis. Details of such transactions are given in the accompanying financial statements. The Company has framed a policy on Related Party Transactions and the same has been displayed in the Companyâs website www. celebritygroup.com
Further, the prescribed details of related party transactions of the Company in Form No. AOC-2, in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure II to this Report.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
The Company does not have any subsidiary or associate or joint venture company.
CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS
The Corporate Governance Report and Management Discussion & Analysis which forms part of this Report are set out as separate Annexures, together with the Certificate from the Secretarial Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated in Schedule V of Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPLIANCE WITH CODE OF CONDUCT
The Company has framed a Code of Conduct for all the members of the Board and Senior Management personnel of the Company. The Code of Conduct is available on the Companyâs website: www.celebritygroup.com. All members of the Board and senior management personnel have affirmed compliance to the Code as on March 31, 2018.
As stipulated under Regulation 34 (3) and Schedule V (D) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a declaration Signed by Mr. Charath Ram Narsimhan, Managing Director to this effect is annexed to the report on Corporate governance, which forms part of this annual report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with the requirements of Section 135 and Schedule VII of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of Directors have constituted a CSR Committee. The details of the Committee are provided in the Corporate Governance Report, which forms part of this Annual Report.
As there have been carry forward losses, provisions of Section 135 of Companies Act, 2013 pertaining to Corporate Social Responsibility are not applicable to the Company.
The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the website www.celebritygroup.com.
ESTABLISHMENT OF VIGIL MECHANISM
Pursuant to Section 177 (9) of Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has a vigil mechanism established, to enable all employees and the directors to report in good faith about any violation of the Policy. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. The Whistle Blower Policy covering all employees and directors is hosted in the Companyâs Website www.celebritygroup.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors:
During the year, the board, at its meeting held on 05th April, 2017, based on the recommendation of the Nomination & Remuneration Committee, appointed Mr. Vidyuth Rajagopal, who was actively involved in all spheres of the management of the Company as Joint Managing Director from the position of the whole-time director.
The board, on the recommendation of Nomination and Remuneration Committee, at its meeting held on 11th December, 2017 reviewed the remuneration payable to Joint Managing Director effective 01st October, 2017 within the overall limits prescribed in Schedule V of the Companies Act, 2013.
During the year, the board, at its meeting held on 11th December, 2017 re-appointed Mr. Charath Ram Narsimhan as Managing Director of the Company, effective 13th February, 2018 to hold the office for a period of five years on such terms and conditions, subject to the approval of the shareholders at the AGM.
Key Managerial Personnel:
Pursuant to Section 203 of the Companies Act, 2013, Mr. S. Venkataraghavan was appointed as Chief Financial Officer (Key Managerial Personnel) of the Company with effect from 27th May, 2017 in place of Mrs. L. Visalakshi who resigned from the services of the Company with effect from 26th May, 2017.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received necessary declarations from all the Independent Directors of the Company confirming that they continue to meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16 & 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, as amended, extract of the Annual Return of the Company in the prescribed Form MGT-9 is annexed as Annexure- III to this Annual Report.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met Six (6) times during the financial year 2017-18 i.e., 05th April 2017, 26th May 2017, 18th August 2017, 08th September 2017, 11th December 2017, and 13th February 2018. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
AUDIT COMMITTEE
Pursuant to Section 177 (8) of Companies Act 2013, the particulars relating to the Composition, terms of reference and other details about the Audit Committee has been detailed in the Corporate Governance Report which forms part of this Annual Report.
During the year, all the recommendations of the Audit Committee were accepted by the Board.
The Audit Committee reviews the adequacy and effectiveness of the Companyâs internal financial controls, so that the ultimate objective of Zero Surprise, Risk controlled Organization is achieved.
REMUNERATION POLICY
The Remuneration policy of the company has been structured to match the market trends of the industry, qualifications and experience of the employee and responsibilities handled by them.
The Policy inter alia provides for the following:
a) attract, recruit, and retain good and exceptional talent;
b) list down the criteria for determining the qualifications, positive attributes, and independence of the directors of the Company;
c) ensure that the remuneration of the directors, key managerial personnel and other employees is performance driven, motivates them, recognises their merits and achievements and promotes excellence in their performance;
d) motivate such personnel to align their individual interests with the interests of the Company, and further the interests of its stakeholders;
e) ensure a transparent nomination process for directors with the diversity of thought, experience, knowledge, perspective and gender in the Board; and
f) fulfill the Companyâs objectives and goals, including in relation to good corporate governance, transparency, and sustained long term value creation for its stakeholders.
Particulars pertaining to constitution of the Nomination and remuneration Committee and its terms of reference has been detailed in the Corporate Governance Report which forms part of this Annual Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provision of Section 186 of the Companies Act, 2013.
MATERIAL CHANGES & COMMITMENTS
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report
BOARD EVALUATION
An annual performance evaluation of all Directors, the Committees of Directors and the Board as a whole for the year under review was carried out. For the purpose of carrying out performance evaluation, assessment questionnaires were circulated to all Directors and their feedback was obtained and recorded.
REPORT AS PER SECTION 134 READ WITH RULE 8 AND SUB RULE 5 OF COMPANIES (ACCOUNTS) RULES 2014
Change in nature of business, if any: NIL
The name of Companies which have become or ceased to be its subsidiaries, Joint Ventures or associate companies during the year: NIL
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
The Company was not in receipt of any orders from the regulator / courts / tribunals impacting the going concern status of future operations of the Company.
The Company was in receipt of the notice / order from statutory authorities during the year for claim not acknowledged as debts by the company. The details of the same have been provided in Note 38 of the financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.
DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY
Pursuant to section 134 (3) (n) of the Companies Act, 2013 the company has framed Risk Management Policy which lays down the framework to define, assess, monitor and mitigate the business, operational, financial and other risks associated with the business of the Company. The Company has been addressing various risks impacting the Company in Management Discussion and Analysis Report which forms part of this Annual Report.
During the year under review, the company has not identified any element of risk which may threaten the existence of the company.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTOR
In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility of the Directors, the working of the Company, nature of the Industry in which the Company operates, business model, etc.
The details of such familiarization programmes for the Independent Directors are disclosed on the website of the Company www.celebritygroup.com.
AUDITORS
Statutory Auditors
M/s SRSV & Associates, Chartered Accountants, Chennai have been appointed as the Statutory Auditors of the Company from the conclusion of the 28th Annual General Meeting till the conclusion of 33rd Annual General Meeting of the Company in place of M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, the Joint Auditors of the Company.
The Annual Accounts of the Company including its Balance Sheet, Statement of Profit and Loss and Cash Flow Statement including the Notes and Schedules to the Accounts have been audited by M/s. SRSV & Associates, Chartered Accountants, Chennai.
The Statutory Auditorsâ Report does not contain any qualification, reservation or adverse remark on financial Statements of the Company. The Auditorsâ Report is enclosed with the financial statements in this Annual Report.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BP & Associates, Practicing Company Secretaries, as the Secretarial Auditors of the Company to undertake the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year 2017-18 does not contain any qualification, reservation or adverse remark or declaimer which requires any explanation/comments by the Board. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure IV.
Internal Auditors
Pursuant to Section 138 of the Companies Act 2013 read with rule 13 of The Companies (Accounts) Rules, 2014 and all other applicable provisions (including any amendment thereto) if any of the Companies Act, 2013 and as recommended by the audit committee M/s. RVKS & Associates, Chartered Accountants, Chennai were appointed as the Internal Auditors of the company for the Financial Year 2017-18.
The audit conducted by the Internal Auditors is based on an internal audit plan, which is reviewed each quarter in consultation with the Audit Committee. These audits are based on risk based methodology and inter alia involve the review of internal controls and governance processes, adherence to management policies and review of statutory compliances. The Internal Auditors share their findings on an ongoing basis during the financial year for corrective action. The Audit Committee oversees the work of Internal Auditors.
LISTING FEE
The equity shares of the Company are listed on the Stock Exchanges viz., BSE Limited and The National Stock Exchange of India Limited. The Company has paid the applicable listing fee to the Stock Exchanges within the stipulated time.
DISCLOSURE UNDER SECTION 67 (3) (C) OF THE COMPANIES ACT, 2013
No disclosure is required under Section 67 (3) (c) of the Companies Act, 2013 read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.
PARTICULARS OF EMPLOYEES
Disclosure with respect to the remuneration of directors and employees pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as ANNEXURE-I.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the financial year 2017-18, no unpaid or unclaimed dividend was required to be transferred to IEPF.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
An Internal Complaints Committee (ICC) was set up to redress the complaints received from women regarding sexual harassment and discrimination at workplace.
During the year ended 31st March, 2018, the ICC did not receive any complaint pertaining to sexual harassment/discrimination at the work locations.
DIRECTORSâ RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and ability, confirm that:-
a) in the preparation of the annual accounts for the financial year ended 31 st March 2018, 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 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 at the end of the financial year and of the profit and loss 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; and
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.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companyâs internal financial controls were adequate and effective during financial year 2017-18.
CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION / FOREIGN EXCHANGE
A. Conservation of Energy:
The operations of the Company are not energy-intensive. However, wherever possible, the Company strives to curtail the consumption of energy on a continuing basis.
B. Technology absorption: Not applicable.
C. Foreign Exchange Earning and Outgo :
a. Total Foreign exchange earned (FOB Value) : Rs.173.53 Crs
b. Total Foreign exchange outgo : Rs.43.42 Crs
SECRETARIAL STANDARDS
The Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS - 1) and General Meetings (SS - 2) issued by The Institute of Company Secretaries of India.
ACKNOWLEDGEMENT
The Directors wish to convey their gratitude and appreciation to all the employees for their valuable contribution during the year. They would also like to place on record their appreciation for the continued co-operation and support received by the Company during the year from bankers, financial institutions, business partners and other stakeholders.
For and on behalf of the Board
Sd/-
Venkatesh Rajagopal
Place: Chennai Chairman
Date: 28th May, 2018 (DIN: 00003625)
Mar 31, 2016
Dear Members,
The Directors hereby submit the 27th Annual Report on the business and operations of the Company along with the audited statements of the Company for the year ended 31st March 2016. The Management Discussion and Analysis is also included in this report.
Financial Highlights Rs. in Crs
|
FY 2015-16 |
FY 2014-15 |
|
|
Revenue From operations |
197.21 |
205.87 |
|
Gross Profit / (Loss) before interest and depreciation |
11.01 |
13.84 |
|
Interest |
8.65 |
9.33 |
|
Profit / (Loss) before depreciation and tax |
2.37 |
4.51 |
|
Depreciation |
8.05 |
6.80 |
|
Profit / (Loss) before Exceptional and Extra-Ordinary Items |
(5.69) |
(2.29) |
|
Exceptional Item |
27.09 |
- |
|
Extra-Ordinary Item |
- |
- |
|
Profit / (Loss) after Exceptional and Extra-Ordinary Items |
21.40 |
(2.29) |
|
Profit / (Loss) before tax |
21.40 |
(2.29) |
|
Provision for Taxation |
- |
- |
|
FY 2015-16 |
FY 2014-15 |
|
|
Profit / (Loss) after tax |
21.40 |
(2.29) |
|
Balance brought forward from previous year |
(65.17) |
(61.76) |
|
Less: Value of Assets with Expired Life written off |
- |
(1.12) |
|
Balance carried to Balance Sheet |
(43.77) |
(65.17) |
Companyâs Performance
Revenue from Operations for FY 2015-16 was at Rs.197.21 crs as compared to Rs.205.87 crs in FY 2014-15. Earnings before Interest, Tax and Depreciation (EBITDA) was at Rs.11.01 crs against Rs.13.84 crs in FY 2014-15. Profit after Tax (PAT) for the year was Rs.21.40 crs including exceptional item of Rs.27.09 crs against Net losses of Rs.2.29 crs in FY 2014-15.
The year 2016 was a year of aberration with the companyâs operations impacted due to Chennai floods in November and December. The Company lost significant man-days of effective production leading to deferred shipments at incremental costs and capacity losses. However the resilience and extra-ordinary determination / dedication put forth by the management team helped the Company to minimize its losses.
During the year under review, the Company disposed two of its non-core properties in line with the re-structuring package sanctioned by the Lender. The gain of Rs.27.09 crs on sale of properties were recorded under exceptional Item in the Financial Statements of the Company.
The sale proceeds of the properties were utilized towards repayment of term loans. As at 31st March 2016 the Company had met the obligations on debt repayment and interest as per the re-structuring package sanctioned to the Company by its lender.
Share Capital
There were no changes to Share Capital during the year under Review.
The Share Capital of the Company as on 31st March 2016 is as below:
Authorised Share Capital
4.40.00.000 Equity Shares of Rs.10 each - Rs.44.00 crs
2.60.00.000 - 1% Cumulative Redeemable Preference Shares of Rs.10 each - Rs.26.00 crs Issued, Subscribed and Paid-up Equity Share Capital 3,90,03,765 Equity Shares of Rs.10 each - Rs.39.00 crs 2,51,04,500 - 1% Cumulative Redeemable Preference Shares of Rs.10 each - Rs.25.10 crs Transfer to Reserves
The Company transferred Rs.21.40 Crs to Reserves and Surplus account during the financial year ending 31st March 2016.
Dividend
In view of the accumulated losses, no dividend is being recommended.
Finance and Accounts
The financial statements have been prepared in compliance with the requirements of the Companies Act, and Generally Accepted Accounting Principles (GAAP) in India.
The management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgment relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present our state of affairs and profits /(losses) for the year.
Due to the losses incurred by the Company in the earlier years, there is no provision for Income Tax. The Company has recognized Deferred Tax Asset in unabsorbed depreciation and accumulated losses to the extent of corresponding deferred tax liability on the difference between the book balances and written down value of fixed assets under Income Tax.
The company has not accepted any deposits from the public within the meaning of Section 73 of the Companies Act 2013 and as such no amount on account of principal or interest on deposits from public was outstanding as on date of the balance sheet.
The Accounts of the Company have been prepared on the basis of âgoing concern conceptâ. The Company continue to focus on cash generation. The focus is on improving operating efficiencies and cost savings and to improve the financial health of the Company.
Cash Flow Statement
In conformity with the provisions of Regulation 34 (2)(c) of SEBI (LODR) Regulations, 2015, the Cash Flow Statement for the year ended 31st March 2016 forms part of the Annual Report.
Particulars of Contracts or Arrangements with Related Parties
All the transactions with the Related Parties are in the Ordinary Course of Business and on Armâs length basis. The details on Related Party Transactions have been disclosed in the notes to accounts. The Company has framed a policy on Related Party Transactions and the same has been displayed in the Companyâs website www.celebritygroup.com
The details of related party transactions pursuant to clause (h) of sub-section (3) of section 134 of the Act is enclosed in form no. AOC-2 as Annexure-II
Corporate Governance Report
The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under Regulation 34 (3) of SEBI (LODR) Regulations, 2015 forms a part of the Annual Report.
The requisite certificate from the Auditor, M/s CNGSN & Associates LLP confirming the compliance of conditions of Corporate Governance as stipulated under Schedule V(E) of SEBI (LODR) Regulations, 2015 which forms part of this report.
Compliance with Code of Conduct
The Company has put in place a Code of Conduct for its Board Members and Senior Management Personnel. Declarations of Compliance with Code of Conduct have been received from all the Board Members and Senior Management Personnel. A Certificate to this effect from Mr. Charath Ram Narsimhan, Managing Director forms part of this Report.
Corporate Social Responsibility (CSR)
The Company has constituted a Corporate Social Responsibility (CSR) Committee. As there have been carry forward losses, provisions of section 135 of Companies Act, 2013 pertaining to corporate social responsibility are not applicable to the Company.
The particulars relating to CSR committee and policy have been detailed in Corporate Governance Report.
Establishment of Vigil Mechanism
The Company has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted by the Board Members. The Whistle Blower Policy covering all employees and directors is hosted on the Companyâs Website www.celebritygroup.com
Directors
In accordance with the provisions of Section 152 of the Companies Act 2013, Mrs. Rama Rajagopal retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.
Declaration by Independent Director
The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act, that they meet the criteria of Independence as laid down in Section 149(6) of the Act.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure-III
Number of Meetings of Board
During the financial year, the Board met 8 times. The Board meetings were held in accordance with the provisions of the Companies Act 2013. The particulars relating to the meeting of Board of Directors has been detailed in Corporate Governance Report which forms part of this report.
Audit Committee
During the year all the recommendations of the Audit Committee were accepted by the Board. The particulars relating to the Audit Committee has been detailed in Governance Report which forms part of the report.
Key Managerial Personnel
Pursuant to the provision of Section 203 of the Companies Act, 2013 Mr. Charath Ram Narsimhan Managing Director, Mrs. L. Visalakshi, Chief Financial Officer have been designated as the Key Managerial Personnel (KMP) of the Company.
Remuneration Policy
The Board of Directors of the Company formulated and adopted policies for remuneration of Directors. The details of the same have been included in Report on Corporate Governance, which forms part of this report.
Particulars of Loan, Guarantees or Investments
The Company has not given any loans or guarantees covered under the provision of section 186 of the Companies Act, 2013. The details of the investments made by the company are given in the notes to the financial statements.
Material Changes & Commitment, if any affecting the financial position of the Company
There were no material changes, affecting the financial position of the Company which has occurred between the end of the financial year i.e. March 31, 2016 and date of the Directorsâ report i.e. May 30, 2016.
Board Evaluation
Pursuant to the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Report as per Section 134 read with Rule 8 sub rule 5 of Companies Accounts Rules 2014:
Change in nature of business, if any: Nil Details of Director or KMP appointed or resigned:
Mr. K Senthil Kumar, Company Secretary, KMP and Compliance Officer resigned from the services of the Company w.e.f August 21, 2015.
Pursuant to Mr. K Senthil Kumarâs resignation, Ms. Uma Maheswari was appointed as the Company Secretary, KMP and Compliance Officer of the Company effective September 18, 2015. Ms. Uma Maheshwari resigned from the services of the Company w.e.f 30th March, 2016
Name of Companies which become or cease to be its subsidiaries, JV or associate during the year: NIL
Details relating to deposits covered under Chapter V of Companies Act 2013: Nil
Details of deposits which are not in compliance with the requirements of Chapter V of Companies Act 2013: Not Applicable
Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future:
The Company was not in receipt of any orders from the regulator / courts / tribunals impacting the going concern status of future operations of the Company. The Company was in receipt of the notices / orders from statutory authorities during the year for claim not acknowledged by the company as debts. The details of the same have been provided in Note 28 of the financial statements.
Internal control systems and their adequacy:
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations to ensure that all assets are safeguarded and protected against any loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly.
To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and there by strengthen the controls. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls (IFC) is annexed with the Auditors report.
Adequate systems and processes, commensurate with the size of the Company and of its business are put in place to ensure compliance with the provisions of all applicable laws and such systems and processes are operating effectively.
Audit Committee and Board of Directors of the Company were appraised on the performance of the IFC.
Business Risk Management:
In an interdependent, fast-moving world, organizations are increasingly confronted by risks that are complex in nature and global in consequence. Such risks can be difficult to anticipate and respond to, even for the most seasoned business leaders.
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (LODR) Regulations, 2015, the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report which forms part of the Boards report.
At present the company has not identified any element of risk which may threaten the existence of the company.
The Company is exposed to the following risks:
Foreign Exchange Risk
The Companyâs policy is to systematically hedge its long term foreign exchange risks as well as short term exposures in line with its hedging policy. In addition to this, the company also has a natural hedge on the imports of the company which is almost 40%-50% of its Exports.
Interest Rate Risk
The Company is exposed to interest rate risk. The interest rates have softened during the course of the year.
The Companyâs Banks have sanctioned a re-structuring package wherein the interest rates on term loans are at concessional levels. However the Banks reserves the right of recompense and the compensation will cover the entire amount of sacrifice and concessions in rates of interest of all facilities.
Apart from the above, the Company is also exposed to certain operating business risks in the form of government regulations and the same is taken care through regular monitoring and corrective mechanisms.
Familiarization Programme for Independent Director:
The Board members are provided with necessary documents / brochures, reports and internal policies to enable them to familiarize with the Companyâs procedures and practices. The details of such familiarization programmes for the Independent Directors are posted on the website of the Company (for details, please visit www.celebritygroup.com)
Statutory Auditors
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s CNGSN & Associates LLP, Chartered Accountants, Chennai, the Joint Auditors of the Company, retire at the ensuing Annual General Meeting and are eligible for re-appointment.
The Annual Accounts of the Company including its Balance Sheet, Statement of Profit and Loss and Cash Flow Statement including the Notes and Schedules to the Accounts have been audited by M/s Anil Nair & Associates, Chennai and M/s CNGSN & Associates LLP, Chennai.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BP & Associates, Practicing Company Secretaries as Secretarial Auditors, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is presented separately and forms part of this report.
Auditorsâ Report and Secretarial Auditorâs Report
The auditorsâ report and secretarial auditorâs report do not contain any qualifications, reservations or adverse remarks.
Listing Fee
The equity shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company has paid the applicable listing fee to the Stock Exchanges up to date.
Human Resources/Industrial Relations
Industrial relations have continued to be harmonious at all units throughout the year.
Measures for employeesâ safety, their welfare and development received top priorities. Your Company has a vision of being an âInjury Freeâ and âZero Environment Incidentâ organization. Over the past many years, your Company has been progressing well on the safety record in factories and facilities. The Company had around 3690 employees as on 31st March 2016.
The Board wishes to place on record its appreciation to all the employees in the company for their sustained efforts and contribution to the Company.
Transfer to Investor Education and Protection Fund:
During the financial year 2015-16, no unpaid or unclaimed dividend was required to be transferred to IEPF.
Policy on Prevention of Sexual Harassment of Woman at Workplace:
The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
An Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at workplace.
During the year ended March 31, 2016, the ICC has received no complaints pertaining to sexual harassment / discrimination at work place.
Directors Responsibility Statement
In terms of Section 134(5) of the Companies Act, 2013, the directors would like to state that:
i) In the preparation of the annual accounts, the applicable accounting standards have been followed.
ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.
iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv) The Board of Directors have prepared the annual accounts on a âgoing concern basisâ.
v) The Board of Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
vi) The Board of Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2015-16.
Adoption of New Set of Articles of Association
On December 07, 2015, the Companyâs Shareholders approved by way of Postal Ballot, adoption of new set of Articles of Association in the place of existing Articles of Association in line with the provisions of the Companies Act, 2013.
Conservation of Energy / Technology Absorption / Foreign Exchange
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However, wherever possible, the Company strives to curtail the consumption of energy on a continuing basis.
ii. Technology absorption: Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.162.56 crs
Total Foreign exchange outgo Rs. 41.67 crs
Appreciation
The Directors are sincerely thankful to you - the esteemed shareholders, customers, business partners and State Bank of India for the faith reposed and valuable support provided by them in the Company and its Management.
Date : 30th May 2016 For and on Behalf of the Board
Place : Chennai V. Rajagopal
Chairman
Mar 31, 2015
Dear Members,
The Directors hereby present the 26th Annual Report along with the
audited statements of the Company for the year ended 31st March 2015.
Outlook and Financial Highlights
The revival in demand in major markets such as US and Europe enabled
India to witness a double digit growth in export of ready-made garments
from FY 2014 to FY 2015. Export of readymade garments from India has
grown faster than those shipped from China for a bulk of 2014.
IndiaÂs garment exports were growing at the rate of over 15% and this
is a clear cut indication that India is emerging as one of the top
sourcing and compliant destinations for the buyers in the World.
The other fundamentals which would boost export of readymade garments
is the governmentÂs focus on "Make in India" theme facilitating
exports, export incentives from the government and increase in
manufacturing costs in China. The shift in demand for garment from
China to India due to rise in labour and power costs have made
production in China expensive compared to India. With an encouraging
scenario on the global front, the industry would still face challenges
in terms of availability of skilled labour and stringent labour laws of
the Country.
Your Company recorded total revenues of Rs.205.87 crs as against
Rs.235.31 crs last year. During the year under review, your Company
relocated one of its manufacturing facilities and consolidated its
operations in its existing facilities thereby causing reduction to
capacities. However with improved operational efficiencies and greater
control on costs, the Operational EBITDA margins stood at Rs.13.84 crs
as compared to Rs.10.36 crs previous year; Other Income were at Rs.3.58
crs against Rs.1.36 crs.
The Company re-aligned its Depreciation Policy in accordance with
Schedule II, Companies Act, 2013. Consequently, with effect from 1st
April 2014, the carrying value of assets is now depreciated over its
revised remaining useful life. Where the remaining useful life of the
assets are NIL as on 1st April 2014, carrying value of assets amounting
to Rs.1.12 crs have been adjusted against opening reserves.
Consequent to the above, the Net losses for the year were at Rs.2.29
crs against Rs.1.63 crs previous year, (before extraordinary income of
rupees 9.97 crs)
Rs. In Crs FY 2014-15 FY 2013-14
Revenue From operations 205.87 235.31
Gross Profit / (Loss) before interest 13.84 10.36
and depreciation
Interest 9.33 6.92
Profit / (Loss) before depreciation 4.51 3.44
and tax
Depreciation 6.80 5.07
Profit / (Loss) before Extra- (2.29) (1 63)
Ordinary Income
Extra-Ordinary Income - 9.97
Profit / (Loss) before tax (2.29) 8.34
Provision for Taxation - -
Profit / (Loss) after tax (2.29) 8.34
Balance brought forward from (61.76) (70.10)
previous year
Less: Value of Assets with Expired (1.12) -
Life written off
Balance carried to Balance Sheet (65.17) (61.76)
Finance and Accounts
There is no provision for Income Tax, due to the losses incurred by the
Company in the earlier years. The Company has recognized Deferred Tax
Asset in unabsorbed depreciation and accumulated losses to the extent
of corresponding deferred tax liability on the difference between the
book balance and written down value of fixed assets under Income Tax.
The net worth of the Company as on 31st March 2014 has turned positive
under the provisions of Sick Industries Companies Act. Accordingly, the
Company filed for discharge under the purview of SICA before BIFR. BIFR
vide its order dated 04th August 2014 has discharged the Company from
the purview of BIFR.
The Company has not accepted any deposits within the meaning of Section
73 of the Companies Act 2013.
During the year under review, the Board of Directors of your Company at
their Meeting held on 13th November 2014, have decided to delete the
name of the wholly owned subsidiary Company Celebrity Clothing Limited
from MCA records. Accordingly Celebrity Clothing Limited has filed with
Ministry of Corporate Affairs (MCA) for striking off its name from the
MCA records under FTE mode on 23rd December 2014 and the name has been
removed from the records of MCA. Hence the requirement of presenting
annual report of CCL does not arise. Also the shares of Celebrity
Clothing Limited held by your Company stands cancelled pursuant to the
same.
The Accounts of the Company have been prepared on the basis of 'going
concern conceptÂ. Your Company continued to focus on cash generation.
The focus on managing optimal levels of inventory, sound business
performance, operating efficiencies and cost savings across the
organization to mitigate the problem and to improve the financial
health of the Company.
Share Capital
The Company made preferential allotment of 26,50,000 Equity Shares at
the face value of Rs.10/- per share to the promoter, Mr. V. Rajagopal
during year under review towards his contribution to Equity. The object
of this issue is for working capital purposes and to improve the net
worth position of the Company.
The above preferential allotments were approved by the Shareholders in
the ExtraOrdinary General Meeting held on 16th July 2014.
Consequent to the above, the Equity Share Capital of the Company
increased by Rs.2.65 crs.
Dividend
In view of the accumulated losses, no dividend is being recommended.
Cash flow Statement
In conformity with the provisions of Clause 32 of the Listing Agreement
with Stock Exchanges, the Cash Flow Statement for the year ended 31st
March 2015 is annexed hereto.
Related Party Transactions
All the transactions with the Related Parties are in the Ordinary
Course of Business and on ArmÂs length basis. The details on Related
Party Transactions have been disclosed in the notes to accounts. Your
Company has framed a policy on Related Party Transaction and the same
has been displayed on the CompanyÂs website: www.celebritygroup.com
The details of related party transactions pursuant to clause (h) of
sub-section (3) of section 134 of the Act is enclosed in form no. AOC-2
as Annexure - II
Corporate Governance Report
The Company is committed to maintain the highest standards of corporate
governance and adhere to the corporate governance requirements set out
by SEBI.
The report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms a part of the Annual Report.
The requisite certificate from the Auditor, M/s CNGSN & Associates LLP
confirming the compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreements with the Stock
Exchanges forms a part of this report.
ManagementÂs Discussion and Analysis Report
A detailed review on the operations and performance of the Company
along with the outlook is presented separately under the Management
Discussion and Analysis Report which forms part of this Annual Report.
Compliance with Code of Conduct
Your Company has put in place a Code of Conduct for its Board Members
and Senior Management Personnel. Declaration of Compliance with Code of
Conduct has been received from all the Board Members and Senior
Management Personnel. A Certificate to this effect from Mr. Charath Ram
Narsimhan, Managing Director forms part of this Report.
Corporate Social Responsibility (CSR)
As there have been carry forward losses, provisions of section 135
pertaining to corporate social responsibility are not applicable to the
Company.
The particulars relating to CSR committee and policy have been detailed
in Corporate Governance Report.
Establishment of Vigil Mechanism
Your Company has in place a vigil mechanism pursuant to which a Whistle
Blower Policy has been adopted by the Board Members. The Whistle Blower
Policy covering all employees and directors is hosted on the
CompanyÂs Website @ www.celebritygroup.com
Directors
During the year under review your company has come out of the purview
of BIFR. Hence continuance of Mr Ramji Sinha as Special Director
inducted by BIFR is withdrawn.
Pursuant to Section 152 of the Companies Act 2013, Mrs. Rama Rajagopal
retires by rotation at the ensuing Annual General Meeting and being
eligible, offers herself for reappointment.
All Independent Directors have give declaration that they meet the
criteria of independence as laid down under section 149(6) of the
Companies Act, 2013 and clause 49 of the Listing Agreement.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as "Annexure - III"
Meeting of Board
The particulars relating to the meeting of Board of Directors has been
detailed in the Corporate Governance Report which forms part of the
report
Key Managerial Personnel
To comply with requirement of Section 203 of the Companies Act, Mr.
Charath Narsimhan Managing Director, Mrs. L. Visalakshi, CFO and Mr.
K.Senthil Kumar, Company Secretary have been designated as the Key
Managerial Personnel of the Company.
Remuneration Policy
The particulars relating to remuneration policy has been detailed in
Corporate Governance Report which forms part of the report.
Particulars of Loan, Guarantees or Investments
The Company has not given any loans or guarantees covered under the
provision of section 186 of the Companies Act, 2013. The details of the
investments made by the company are given in the notes to the financial
statements.
Material changes & Commitment, if any affecting the financial position
of the company which have occurred between the end of the financial
year of the company to which the financial statement relate and the
date of the Report- Nil
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an evaluation of its
own performance, the directors individually as well as the evaluation
of the working of its Audit, Appointment & Remuneration Committees. The
manner in which the evaluation has been carried out has been explained
in the Corporate Governance Report.
Report as per Section 134 read with Rule 8 sub rule 5 of Companies
Accounts Rules 2014:
Change in nature of business, if any: Nil
Details of Director or KMP appointed or resigned: Nil (only designated)
Name of Companies which become or cease to be its subsidiaries, JV or
associate during the year - Celebrity Clothing Ltd
Details relating to deposits covered under Chapter V of Companies Act
2013: Nil
Details of deposits which are not in compliance with the requirements
of Chapter V of Companies Act 2013: Not Applicable
Details of significant and material orders passed by the regulators or
courts or tribunals impacting the going concern status and companyÂs
operations in future:
The Company was not in receipt of any orders from the regulator /
courts / tribunals impacting the going concern status of future
operation of the Company. The Company was in receipt of the notice /
order from statutory authorities during the year for claim not
acknowledged by the company as debts. The details of the same have been
provided in Note 29 of the financial statements.
Internal control systems and their adequacy:
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations.. To maintain its objectivity
and independence, the Internal Audit function reports to the Chairman
of the Audit Committee of the Board & to the Chairman & Managing
Director. The Internal Auditor monitors and evaluates the efficacy and
adequacy of internal control system in the Company, its compliance with
operating systems, accounting procedures and policies at all locations
of the Company. Based on the report of internal audit function, process
owners undertake corrective action in their respective areas and there
by strengthen the controls. Significant audit observations and
recommendations along with corrective actions thereon are presented to
the Audit Committee of the Board
Business Risk Management:
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49
of the listing agreement, the company has constituted a business risk
management committee. The details of the committee and its terms of
reference are set out in the corporate governance report which form
part of the Boards report.
At present the company has not identified any element of risk which may
threaten the existence of the company.
Familiarisation Programme for Independent Director:
The Board members are provided with necessary documents / brochures,
reports and internal policies to enable them to familiarize with the
CompanyÂs procedures and practices. The details of such
familiarization programmes for the Independent Directors are posted on
the website of the Company (for details, please visit
www.celebritygroup.com)
Auditors
M/s. Anil Nair & Associates and M/s. CNGSN Associates LLP, Chartered
Accountants, Chennai are the Auditors of the Company. They were
appointed in the 25th Annual General Meeting of the Company till the
conclusion of third consecutive Annual General Meeting of the Company
and subject to ratification by the shareholders at every Annual General
Meeting. A motion for ratification will be placed before the Members of
the Company in the 26th Annual General Meeting for their approval.
M/s Anil Nair & Associates have applied for re-evaluation of
certificate from ICAI and the process is on-going. As on the date of
signing this Balance Sheet, the Chartered Accountant Firm, M/s Anil
Nair & Associates is yet to the receive the certificate from the Peer
Review Board. Consequently as a matter of abundant prudence, M/s Anil
Nair & Associates have abstained from signing the Balance Sheet of the
Company. The Annual Accounts of the Company including its Balance
Sheet, Statement of Profit and Loss along with Cash Flow Statement have
been audited and signed by M/s CNGSN & Associates, LLP.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Mr. Bhaskar, Company
Secretary in Practice, to undertake the Secretarial Audit of the
Company. The Secretarial Audit Report is annexed as "Annexure - IV".
Cost Auditor
Since the Company is not in the purview of Cost Audit, the appointment
of Cost Auditor under the requirement of the provisions under Section
148 of the Companies Act, 2013 is not required for the financial year
2015-16.
Management response with respect to Statutory AuditorÂs / Secretarial
Auditor Qualification:
The Report of Statutory Auditors on the Financial Statements of the
Company for the financial year ending 31st March 2015 and Secretarial
Audit Report for the financial year 2014-15 contains qualifications.
The response from the Management with respect to the qualifications is
appended below:
a) The delays in remitting the unclaimed dividend amounts to Investor
Education and Protection Fund were due to delays in receipt and
reconciliation of data from the Bank. Immediately upon receipt of data,
the Company has remitted the amount of Rs.33,799/- to Investors
Education and Protection Fund.
b) During the year under review, the Company has arrived at an
out-of-court settlement with its tenant and has entered into a fresh
lease deed and memorandum of understanding. The Company has recognized a
rental income of Rs.1.26 crs pertaining to previous year and the same
has been included under Other Income. Along with the same, the Company
has recognized the rental income for the Current Year during the last
quarter of the financial year The service tax amounts of Rs.30 lakhs on
the rental income were pending to be remitted as on 31st March 2015. The
Company is taking steps to remit the same at the earliest.
c) In accordance with the re-structuring package sanctioned to the
Company by State Bank of India, an amount of Rs.18.22 crs was to be
repaid by 31st March 2015 from the sale of proceeds of one of
properties of the Company. Pending disposal of the property, the amount
of Rs.18.22 crs remained unpaid to State Bank of India. The Company is
taking necessary steps for disposal of the property and for repayment
of term loans. As at 31st March 2015, interest on working capital and
term loans amounting to Rs.1.10 crs were pending to be serviced since
February 2015. The Company has serviced the same in April 2015.
d) The accumulated losses of the Company have exceeded 50% of its
networth as on 31st March 2015. The accounts of the Company have been
prepared on Going Concern basis. Your CompanyÂs Management Team
constantly strives to mitigate the problems, improve the financial
health of the Company by controlling the losses and the Company
foresees signs of revival.
Listing Fee
The equity shares of your company are listed on the Bombay Stock
Exchange Limited and National Stock Exchange of India Limited. Your
Company has paid the applicable listing fee to the Stock Exchanges up
to date.
Personnel
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
during these tough times.
Policy on Prevention of Sexual Harassment of Woman at Workplace:
Your Company has in place a Policy on Prevention, Prohibition and
Redressal of Sexual Harassment and Non-discrimination at Work Place in
line with the requirements of Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013. All
employees (permanent, contractual, temporary, trainees) are covered
under this policy.
An Internal Compliants Committee (ICC) was set up to redress complaints
received regarding sexual harassment and discrimination at workplace.
During the year ended March 31, 2015, the ICC has received no
complaints pertaining to sexual harassment / discrimination at work
place.
Directors Responsibility Statement
In terms of Section 134 (5) of the Companies Act, 2013, the directors
would like to state that:
i) In the preparation of the annual accounts, the applicable accounting
standards have been followed with explanation related to material
departures if any.
ii) The directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 or
loss of the Company for the year under review.
iii) The directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the 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 had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
vi) The directors had devised proper system to ensure compliance with
the provisions of all applicable laws and that such system were
adequate and operating effectively.
Conservation of Energy / Technology Absorption / Foreign Exchange
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherever possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption: Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.160.44 crs
Total Foreign exchange outgo Rs. 48.80 crs
Appreciation
The Directors are sincerely thankful to you - the esteemed
shareholders, customers, business partners and State Bank of India for
the faith reposed and valuable support provided by them in the Company
and its Management. The Directors wish to place on record the
co-operation extended and the solidarity shown by the employees in
assisting the organization to control its losses and contributing for a
good turnaround.
Date : 21st May 2015 For and on Behalf of the Board
Place : Chennai V. Rajagopal
Chairman
Mar 31, 2014
Dear Members,
The Directors hereby present the 25th Annual Report along with the
audited statements of the Company for the year ended 31st March 2014.
FY 2013-14 FY 2013-14
Revenue From operations 235.31 186.37
Gross Profit / (Loss) before 10.36 6.26
interest and depreciation
Interest 6.92 4.35
Profit / (Loss) before 3.44 1.91
depreciation and tax
Depreciation 5.07 6.59
Profit / (Loss) before (1 63) (4.68)
Extra-Ordinary Income
Extra-Ordinary Income 9.97 -
Profit / (Loss) before tax 8.34 (4.68)
Provision for Taxation
Profit / (Loss) after tax 8.34 (4.68)
Balance brought forward (70.10) (65.42)
from previous year
Balance carried to Balance Sheet (61.76) (70.10)
Indian Export Performance saw tremendous rebound in textile exports.
The exports of garments from India have grown by 15.5% year on year to
USD 14.94 bn in FY 2013- 14 according to sources.
Improving textile and apparel demand from large markets and benefit
acrruing from a falling rupee have improved the performance of garment
exporters. Rupee depreciation improved the competitiveness of Indian
exporters in global textile trade mainly over China, Bangladesh and
Vietnam. Sri Lanka is emerging as a competitor with an edge in currency
competitiveness. Rupee depreciated the most during June to September
2013 against US Dollar and remained the most volatile. But the currency
gains were partly offset by continued high inflation and bargain
hunting by overseas buyers.
Your Company recorded total revenues of Rs.235 crs for the financial
year ending 31st March 2014 as compared to Rs.186 crs previous year.
The operating margins were at Rs.10.36 crs as compared to Rs.6.26 crs
last year. The increase in revenues and incremental realisation on
account of depreciation of INR against US Dollar contributed to
incremental margins during the year under review.
The loss before extra-ordinary gain was at Rs.1.63 crs as compared to
Rs.4.68 crs previous year. During the year, your company had an
extra-ordinary gain of Rs.9.97 crs being the gain on settlement of dues
with one of the banks under One-Time Settlement Scheme. The net profits
after extra-ordinary income stood at Rs.8.34 crs during the year under
review.
Finance and Accounts
There is no provision for Income Tax, due to the losses incurred by the
Company in the earlier years. The Company has recognized Deferred Tax
Asset in unabsorbed depreciation and accumulated losses to the extent
of corresponding deferred tax liability on the difference between the
book balance and written down value of fixed assets under Income Tax.
The Company has not accepted any deposits within the meaning of Section
58A and 58AA of the Companies Act 1956.
The Company''s networth was eroded as on 31st March 2010 under the
provisions of Sick Industrial Companies Act (SICA). Accordingly the
company filed for reference with the Board for Industrial and Financial
Reconstruction (BIFR) under section 15(1) of SICA. The reference was
considered by BIFR and upon submissions made and material on record,
BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of
SICA vide its order dated 19th April 2011. BIFR appointed State Bank of
India (SBI) as the Operating Agency (OA) and issued directions to
submit a Rehabilitation Scheme as per section 18 of SICA.
State Bank of India sanctioned a Re-structuring Package to the Company
vide its Sanction Letter dated 16th November 2012. The package included
Conversion of portion of Term loans into Equity and 1% Cumulative
Redeemable Preference Shares, re-schedulement of Term loan repayments
and interest concessions.
SBI converted Rs.7.47 crs of Term loans into Equity Shares and Rs.25.10
crs of Term loans into 1% Cumulative Redeemable Preference Shares
during September / October 2013.
HDFC Bank opted for a One-Time Settlement (OTS) of dues; accordingly
the Company settled the dues of HDFC Bank under OTS and the net gain of
Rs.9.97 crs upon settlement has been recognized under extra-ordinary
income in the Statement of Profit and Loss.
The Draft Rehabilitation Scheme is pending for approval before
Honorable BIFR.
The net worth of the Company as on 31st March 2014 has turned positive
under the provisions of Sick Industries Companies Act.
The Accounts of the Company have been prepared on the basis of ''going
concern concept''. Your Company''s Management Team constantly strives to
mitigate the problems, improve the financial health of the Company by
controlling the losses and the Company foresees strong signs of
revival.
Share Capital
The Company issued 74,69,100 Equity Shares of Rs.10/- each to State
Bank of India (SBI) pursuant to conversion of Term loans during
September 2013. During the same period the Company issued 2,51,04,500
1% Cumulative Redeemable Preference Shares of Rs.10/- each to SBI
against conversion of Term loans into Preference Shares.
The above conversion was in accordance with the Rehabilitation Scheme
sanctioned by SBI to your Company.
State Bank of India, in its Sanction letter dated 16th November 2012
has stipulated that Promoters should cause equity infusion of Rs.7 crs
in phases toward their contribution.
The first tranche of Rs.3.50 crs was received during the FY 2012-13 and
your Company was in receipt of the balance Rs.3.50 crs during
February/March 2014.
The Company made preferential allotment of 1,50,000 Equity Shares at
the face value of Rs.10/- per share to the promoter, Mr. V. Rajagopal
and 33,50,000 Equity Shares at the face value of Rs.10/- per share to
M/s Leman Diversified Fund, a Foreign Institutional Investor during
March 2014 towards their contribution to Equity.
Further the Promoters / Directors had infused funds towards the
One-Time Settlement of dues with HDFC Bank. The Company made
preferential allotment of 13,50,000 Equity Shares at the face value of
Rs.10/- per share to the promoter, Mr. V. Rajagopal and 10,00,000
Equity Shares at the face value of Rs.10/- per share to the Managing
Director, Mr. Charath Ram Narsimhan towards their contribution to
Equity.
The above preferential allotments were approved by the Shareholders in
the Extra- Ordinary General Meeting held in March 2014.
Consequent to the above, the Equity Share Capital of the Company
increased by Rs.13.32 crs and the Preference Share Capital increased by
Rs.25.10 crs
Dividend
In view of the accumulated losses, no dividend is being recommended.
Personnel
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
during these tough times.
Directors
During the year under review, BIFR inducted Mr. Ramji Sinha as a
Special Director of the Company.
Pursuant to Section 152 of the Companies Act 2013, Mrs. Rama Rajagopal
retires by rotation at the ensuing Annual General Meeting and being
eligible, offers herself for reappointment.
Auditors
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for reappointment.
Cost Auditor
Pursuant to the provisions under Section 233B of the Companies Act,
1956 your Company has appointed M/s. Rafiq & Associates, as Cost
Auditor of your Company for the financial year 2014-15.
Corporate Governance Report and Management Discussion and Analysis
Statement
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
Particulars as per Section 217 of the Companies Act, 1956
A) Pursuant to the requirement of Section 217 (2AA) of the Companies
Act, 1956 and based on the representations received, your Directors
hereby confirm that:
i. In the preparation of the Annual Accounts for the year ended 31st
March 2014, the applicable Accounting Standards have been followed and
there are no material departures;
ii. The Directors have selected such accounting policies and applied
them consist- ently and 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 at the end of the financial year and of the
profit or loss of the Company for that period;
iii. The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detect- ing fraud and other
irregularities;
iv. The Directors have prepared the Annual Accounts on a going concern
basis.
B) During the year under review, there were no employees covered under
the provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Amendment Rules, 2011.
C) The information pursuant to Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given below:
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherev- er possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption:
Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.186.12 crs
Total Foreign exchange outgo Rs. 76.18 crs
Appreciation
The Directors are sincerely thankful to you - the esteemed
shareholders, customers, business partners and State Bank of India for
the faith reposed and valuable support provided by them in the Company
and its Management. The Directors wish to place on record the
co-operation extended and the solidarity shown by the employees in
assisting the organization to control its losses and contributing for a
good turnaround.
For and on Behalf of the Board
Dated : 5th May 2014 V. Rajagopal
Place : Chennai Chairman
Mar 31, 2013
Dear Shareholders,
The Directors hereby present the 24th Annual Report along with the
audited state- ments of the Company for the year ended 31st March 2013.
Financial Highlights
Rs. In Crs
FY 2012-13 FY 2011-12
Revenue From operations 186.37 190.38
Gross Proft / (Loss) before
interest 6.26 9.85
and depreciation
Interest 4.35 16.36
Proft / (Loss) before depreciation and 1.91 (6.51)
tax
Depreciation 6.59 7.16
Proft / (Loss) before Extra-Ordinry (4.68) (13.67)
Income
Extra-Ordinary Income
Proft / (Loss) before tax (4.68) (13.67)
Provision for Taxation
Proft / (Loss) after tax (4.68) (13.67)
Balance brought forward from previous (65.41) (51.74)
year
Balance carried to Balance Sheet (70.10) (65.41)
India continue to be a major sourcing destination for buyers across the
globe. India''s share of the world''s textile and apparel exports stands
at 4.5 per cent. It is estimated that due to the increasing shift of
textile and apparel production to Asian nations and the deteriorating
export-competitiveness of China, this fgure will grow to 8 per cent by
2020, with a total exports value of $82 billion. This growth, from 4.5
per cent to 8 per cent of world trade, will open up huge potential for
Indian players. Although the Apparel Exports Market is looking up in
the front end, the business and pricing conditions continue to remain
tough. The competition from Indonesia, Bangladesh, Vietnam and Turkey
is intense due to their low cost of manufacturing.
Your Company has recorded total revenues of Rs.186 crs for the fnancial
year ending 31st March 2013 as compared to Rs.190 crs previous year.
The operating margins are at Rs.6.25 crs as compared to Rs.9.85 crs
last year. The increase in operating costs clubbed with reduction in
turnover has contributed to lower margins for the current year.
Your Company was not able to gain on the fall in the Rupee against the
USD until November 2012 on account of the USD-INR Option Contracts
entered by the Company during 2007-08. With these contracts having come
to an end in October 2012, your Company is expected to beneft by
realising the full value of INR against USD.
The Young Management Team in place constantly strives to mitigate the
problems, improve the fnancial health of the Company by controlling the
losses and the Company foresees strong signs of revival.
Finance and Accounts
There is no provision for Income Tax, due to the loss incurred by the
Company during the year. The Company has recognized Deferred Tax Asset
in unabsorbed depreciation and accumulated losses to the extent of
corresponding deferred tax liability on the difference between the book
balance and written down value of fxed assets under Income Tax.
The Company has not accepted any deposits within the meaning of Section
58A and 58AA of the Companies Act 1956.
The Company''s networth was eroded as on 31st March 2010 under the
provisions of Sick Industrial Companies Act (SICA). Accordingly the
company fled for reference with the Board for Industrial and Financial
Reconstruction (BIFR) under section 15(1) of SICA. The reference was
considered by BIFR and upon submissions made and material on record,
BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of
SICA vide its order dated 19th April 2011. BIFR appointed State Bank of
India (SBI) as the Operating Agency (OA) and issued directions to
submit a Rehabilitation Scheme as per section 18 of SICA.
State Bank of India has sanctioned a Re-structuring Package to the
Company vide its Sanction Letter dated 16th November 2012. The package
includes Conversion of portion of Term loans into Equity and 1%
Cumulative Redeemable Preference Shares, re-schedulement of Term loan
repayments and interest concessions. SBI as submitted the Package for
approval before Hon''ble BIFR. The approval from HDFC Bank on the
Re-structuring Package is awaited.
The Term loan obligations of State Bank of India in accordance with the
Sanction letter dated 16th November 2012 have been met in full. However
the interest commitments of Rs.4.01 crs against Working Capital Loans
and Term loans is pending to be serviced from August 2012.
With HDFC Bank yet to approve the re-structuring package, the Company
has defaulted in repayment of Term loans amounting to Rs.2.51 crs and
Interest commitments of Rs.2.57 crs. The term loan repayment is pending
from February 2012, while the interest commitment remains unpaid since
February 2011. The Accounts of the Company have been prepared on the
basis of ''going concern concept'' despite negative networth as on 31st
March 2013 in view of the various strategic initiatives that the
Company is exploring and also considering the Rehabilitation Scheme
submitted to Banks / BIFR. The Management is confdent of being able to
continue and operate the business and bring positive results in future.
Share Capital
State Bank of India, in its Sanction letter dated 16th November 2012
has stipulated that Promoters should cause equity infusion of Rs.7 crs
in phases toward their contribution. Accordingly your Company was in
receipt of Rs.3.50 crs as frst tranche of the equity infusion during
October / November 2012.
The Company made preferential allotment of 14,00,000 Equity Shares at
the face value of Rs.10/- per share to M/s Celebrity Connections, a
partnership frm wherein the promoters Mr. V. Rajagopal and Mrs. Rama
Rajagopal are the only partners and 21,00,000 Equity Shares at the face
value of Rs.10/- per share to M/s Davos International Fund, a Foreign
Institutional Investor during January 2013 towards their contribution
to Equity. The allotment was approved by the Shareholders in the Extra-
Ordinary General Meeting held in October 2012.
Consequent to the above, the Share Capital of the Company has increased
by Rs.3.50 crs.
Dividend
In view of the business loss for the year, no dividend is being
recommended.
Personnel
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
during these tough times.
Directors
During the year under review, Mr. S. Surya Narayanan has resigned from
the post of
Managing Director. The Board places on record its appreciation for his
tremendous contribution during his tenure.
Consequent to his resignation, Mr. Charath Ram Narsimhan, the group
Chief Executive Offcer has been elevated to the post of Managing
Director. Pursuant to Section 255 of the Companies Act 1956, Mr. N.K.
Ranganath and Mrs.
Nidhi Reddy retire by rotation at the ensuing Annual General Meeting
and being eligible, offer themselves for reappointment. Auditors
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for reappointment.
Cost Auditor
Pursuant to the provisions under Section 233B of the Companies Act,
1956 your Company has appointed M/s. Rafq & Associates, as Cost Auditor
of your Company for the fnancial year 2013-14.
Corporate Governance Report and Management Discussion and Analysis
Statement
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
Particulars as per Section 217 of the Companies Act, 1956
A) Pursuant to the requirement of Section 217 (2AA) of the Companies
Act, 1956 and based on the representations received, your Directors
hereby confrm that:
i. In the preparation of the Annual Accounts for the year ended 31st
March 2013, the applicable Accounting Standards have been followed and
there are no material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the fnancial year and of the proft or loss
of the Company for that period;
iii. The Directors have taken proper and suffcient care for maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the 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.
B) During the year under review, there were no employees covered under
the provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Amendment Rules, 2011.
C) The information pursuant to Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given below:
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherever possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption: Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.165.44 crs
Total Foreign exchange outgo Rs. 48.40 crs
Appreciation
The Directors are sincerely thankful to you  the esteemed
shareholders, customers, business partners and commercial banks for the
faith reposed and valuable support provided by them in the Company and
its Management. The Directors wish to place on record the co-operation
extended and the solidarity shown by the employees in assisting the
organization to control its losses and contributing for a good
turnaround. The Directors thank the Banks, particularly State Bank of
India for all their sustained support throughout the journey of the
Company.
For and on Behalf of theBoard
Dated : 3rd May 2013 V.Rajagopal
Place : Chennai, Chairman
Mar 31, 2012
The Directors hereby present the 23rd Annual Report along with the
audited statements of the Company for the year ended 31st March 2012.
Overview
Countries are increasingly eliminating their trade barriers and
international trade now truly spans the globe. Products and services
come from everywhere and go everywhere. This, as well as the
liberalization of large financial flows, makes countries very dependent
on what happens in the international economy. India has some leeway to
get reforms back on track with its long-term growth prospects firm,
according to the resources.
India's textile and apparel exports may have missed the $33-billion
target in 2011-12 fiscal despite a weak rupee, as demand from biggest
market Europe dwindled due to the sovereign debt crisis.
The country's apparel shipment inched up by just 1.5 per cent to 1.28
billion in February, the third worst monthly performance this fiscal,
as the crisis in Europe intensified. Apparel exports between April and
February, however, rose 19 per cent in dollar terms to $12.14 billion
due to an initial pick-up and a 16 per cent depreciation of the rupee
against the dollar that made overseas dispatches more remunerative.
Apparel exports account for nearly half of the total shipments by the
textile and garments industry.
The government expected the exports to rise in 2011-12 as demand seemed
to have returned after the global financial turmoil in 2008, but the
debt crisis in Europe erupted, jeopardizing shipment prospects. EU and
the US, the worst affected nations in the current debt crisis, together
account for around 65% of India's textile exports.
The textile industry accounts for around 14 percent of industrial and
more than 10 percent of the country's total exports. It is the largest
jobs generator after agriculture, employing around 35 million people
across various segments.
To prop up the cash-strapped textiles sector, the Industry has
requested for the restructuring of loans as well as interest subsidy to
the garments and knit-wear sectors grappling with the economic slowdown
of their biggest export markets that forced a sudden plunge of product
prices after two successive years of relentless rise in raw material
costs.
With the Reserve Bank of India rejecting the proposal, the fortune of
the Exporters is again reserved.
Financial Highlights - Rs. In Crs
FY 2011-12 FY 2010-11
Revenue From operations 190.38 188.45
Gross Profit / (Loss) before interest 9.85 3.31
and depreciation
Interest 16.36 14.06
Profit / (Loss) before depreciation (6.51) (10.75)
and tax
Depreciation 7.16 8.76
Profit / (Loss) before Extra-Ordinary (13.67) (19.51)
Income
Extra-Ordinary Income - -
Profit / (Loss) before tax (13.67) (19.51)
Provision for Taxation
Profit / (Loss) after tax (13.67) (19.51)
Balance brought forward from (51.75) (134.63)
previous year
Less: Accumulated losses - 102.39
written off pursuant to Scheme of
Arrangement
Balance carried to Balance Sheet (65.42) (51.75)
The Company's revenues stood at Rs.190 crs as against Rs.188 crs
previous year. The operational margins have improved drastically
despite of marginal increase in revenues mainly on account of various
strategic initiatives undertaken by your company including adding of
new premium clients, reign of business mix both on geographical as well
as on product lines, rationalization of capacities, tight cost control
mechanisms and better deployment of resources.
Finance and Accounts
There is no provision for Income Tax, due to the loss incurred by the
Company during the year. The Company has recognized Deferred Tax Asset
in unabsorbed depreciation and accumulated losses to the extent of
corresponding deferred tax liability on the difference between the book
balance and written down value of fixed assets under Income Tax.
The Company has not accepted any deposits within the meaning of Section
58A and 58AA of the Companies Act 1956.
The Company was in receipt of interest subsidy of Rs.2.52 crs under
Technology Up gradation Fund (TUF) Scheme during the year and the same
has been deducted from Interest on Term loan in the Financial
Statements.
The Company's net worth was eroded as on 31st March 2010 under the
provisions of Sick Industrial Companies Act (SICA). Accordingly the
company filed for reference with the Board for Industrial and Financial
Reconstruction (BIFR) under section 15(1) of SICA. The reference was
considered by BIFR and upon submissions made and material on record,
BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of
SICA vide its order dated 19th April 2011. BIFR issued directions to
the lenders and to the Company to submit a Rehabilitation Scheme as per
section 18 of SICA.
The Term loan obligations and Interest Commitments have been met in
full with respect to the State Bank of India in accordance with the
Terms and Conditions of the Sanction letter. However the Company has
defaulted in repayments of Term loans amounting to Rs.0.22 crs and
Interest Commitments amounting to Rs.1.55 crs with respect to HDFC
Bank's Borrowings. The Term loan repayment is pending since February
2012 while the interest commitment remains unpaid since January 2011.
The Company submitted its Draft Rehabilitation Proposal (DRS) to the
Operating Agency, State Bank of India and is awaiting the sanction of
the Second Re-structuring Package.
The Cut-off Date for the DRS is 31st March 2011 as per the Orders of
BIFR and the Company has sought certain reliefs / concessions in Term
loans / interest rates with the lenders.
The Accounts of the Company have been prepared on the basis of 'going
concern concept' despite negative net worth as on 31st March 2012 in
view of the various strategic initiatives that the Company is exploring
and also considering the Rehabilitation Scheme submitted to Banks /
BIFR. The Management is confident of being able to continue and operate
the business and bring positive results in future.
Share Capital
There is no addition to the share capital during the year.
Dividend
In view of the business loss for the year, no dividend is being
recommended.
Personnel
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
during these tough times.
Directors
Pursuant to Section 255 of the Companies Act 1956, Mr. N.K. Ranganath
and Mrs. Nidhi Reddy retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for reappointment.
Auditors
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for reappointment.
Corporate Governance Report and Management Discussion and Analysis
Statement
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
Particulars as per Section 217 of the Companies Act, 1956
A) Pursuant to the requirement of Section 217 (2AA) of the Companies
Act, 1956 and based on the representations received, your Directors
hereby confirm that:
i. In the preparation of the Annual Accounts for the year ended 31st
March 2012, the applicable Accounting Standards have been followed and
there are no material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the profit or
loss of the Company for that period;
iii. The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the 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.
B) During the year under review, there were no employees covered under
the provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Amendment Rules, 2011.
C) The information pursuant to Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given below:
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherever possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption:
Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.181.35 crs Total Foreign
exchange outgo Rs. 66.44 crs
Appreciation
The Directors are sincerely thankful to you - the esteemed
shareholders, customers, business partners, financial / investment
institutions and commercial banks for the faith reposed and valuable
support provided by them in the Company and its Management. The
Directors wish to place on record the co-operation extended and the
solidarity shown by the employees in assisting the organization to
control its losses and contributing for a good turnaround. The
Directors thank the Banks, particularly State Bank of India for all
their sustained support throughout the journey of the Company.
For and on Behalf of the Board
V. Rajagopal
Chennai, 15th May 2012 Chairman
Mar 31, 2010
The Directors hereby present the 21st Annual Report along with the
Audited Statement of the Company for the year ended 31st March 2010.
Industry Outlook
The global policy stimulus has gone a long way in finding an exit to the
Great Recession. The economic recovery is underway.
The Countrys GDP growth in the third quarter of 2009-10 stood at 6.0%
as against the growth of 6.2% registered in the same quarter of the
previous year. The GDP growth for the whole fscal 2009-10 was estimated
to be 7.2%. Indias trade is observed to recover from depression, which
existed up to the later half of 2009. In the end of 2009 the exporters
again reported to get orders in good numbers. As per FICCI, the data from
November 2009 was also seen to substantiate the same. In February 2010,
exports rose by 34.0% as against the rise of 23.0% in February, previous
year.
Buoyed by a robust 8.6 % expansion in the fourth quarter, the Indian
economy witnessed a healthier growth of 7.4% in 2009-10 as compared to
the 7.2% estimated by the Central Statistical Organization (CSO)
earlier, primarily owing to a stimulus à aided rebound in manufacturing
coupled with better than anticipated performance by the farm sector.
With this India has maintained its position as the second fastest
growing economy after China which posted an 11.9% growth in the same
quarter.
Exports jumped by 36.2% to $16.88 billion in April, showing clear signs
that the export sector was making a strong comeback. After continuous
decline for 13 months from October 2008, exports turned positive in
November 2009 and since then shipments have followed the growth path.
Indian Rupee in February à March 2010 traded Rs.45 levels vis-a-vis the
level in May 2009 at Rs.49-50. The sharp appreciation in Indian Rupee
is an obvious cause of concern for the Indian exporters.
Indian textile industry is on revival path with production of fbre,
yarn and cloth showing positive growth during April to November 2009.
The production of cloth increased by 10.8 percent, man- made fbre and
yarn production grew by 21.3% & 11.8%, respectively, and the total spun
yarn production increased by 5.1% during the period.
The second quarter of the current fscal saw a strong revival in sales
growth and weaving companies posted a sales growth of 19.7%, spinning
industry 8.9%, man-made Fibre industry 15.7% and readymade garments
industry 14.2%. The Sector witnessed a favorable investment climate
since last quarter of last fscal. For the government, however the
litmus test now would be whether the economic recovery continues to
hold even after partial roll back of stimulus measures.
Garment exports formed 45 percent of total textile exports from the
country. While in other industries, the third generation entrepreneurs
expanded the horizon further, the same was not the case with garment
industry in India. Fragmentation and absence of vertical integration
affected the industry most. Establishment of clusters, common facility
centres and development of brands held the key to success. If sustained
efforts are made by the industry, the country can capture additional
US$ 1.5 billion textile and clothing export in US market, which will
also help to generate additional employment opportunities.
The domestic apparel market in India has shown a significant growth in
the past by registering a Compounded Annual Growth Rate (CAGR) of 13%.
Despite the recent demand slump, the domestic market is expected to
grow at around 9-10% in the next 5 years. Market is moving away from
the traditional segmentation to a much deeper and wider segmentation
based on consumer needs.
Indian domestic apparel market is currently pegged at between Rs
120-150 billion, with several high potential demographics still
untapped such as teens, extra large sizes and children, among others.
As per the CSO data, the countrys per capita income stood at Rs.44,345
in 2009-10. It was higher by 10.5 % over Rs.40,141 a year ago. This
means the potential buying capacity will go up in the domestic market.
Financial Highlights - Rs. In Crs
FY 2009-10 FY 2008-09
Income From operations 294.09 230.04
Gross Profit / (Loss)
before interest and 8.37 (89.27)
depreciation
Interest 18.98 21.04
Profit / (Loss) before (10.61) (110.31)
depreciation and tax
Depreciation 9.94 8.74
Profit / (Loss) before (20.56) (119.05)
Extra-Ordinary Income
Extra-Ordinary Income 8.33 -
Profit / (Loss) before tax (12.23) (119.05)
Provision for Taxation 0.29
Profit / (Loss) after tax (12.23) (119.34)
Balance brought forward (122.40) (3.06)
from previous year
Balance carried to (134.63) (122.40)
Balance Sheet
Operational Highlights
The Income from operations has gone up by Rs.64.05 crs as compared to
the previous year, an increase of 27.8% than the previous year. EBIDTA
for the year is at Rs.8.37 crs (+ve) as against Rs. 89.27 crs (-ve) in
the previous year. The loss for the year stood at Rs.12.23 crs after
accounting for extra- ordinary item of Rs.8.33 crs of income as against
the loss of the Rs.119.34 crs recorded in the previous year. The
Company has ended the fourth quarter of the year on a high note with a
Profit after Tax of Rs.1.64 crs.
The Companys both the divisions, Exports and Domestic, have performed
reasonably well this year with Exports recording over 37% growth over
the previous year and domestic division, Indian Terrain with 8%
increase in turnover. Revenues from Exports stood at over Rs.214 crs
and Indian Terrain at Rs.80 crs.
Exports Division has recorded significant improvements in terms of
productivity in operations. The fall in Rupee against the USD until the
third quarter of the financial year has helped the Exports Market to
swing back. But with the European Crisis, the Indian currency started
its recovery in the last quarter and has signaled cautious attitude for
the Exporters. The Company with an Expert Management Team in place is
exploring the various risk mitigation strategies and has also initiated
a Productivity Improvement Program which will serve as a catalyst in
achieving the set goals.
Indian Terrain has been performing extra-ordinarily and has currently
53 Exclusive Branded Outlets. Indian Terrain has recorded its fabulous
presence in over 700 outlets across the nation. The brand is just
bullish in its expansion and has chosen the franchisee route as its
expansion strategy for administrative and economic reasons. With the
rise in per capita income, Indian Terrain is staged well for its
wide-spread expansion both geographically and product wise.
The Company has let out its property at Chrompet to one of the
Hospitals from 1st April 2010 at a rental income of Rs.1.50 crs per
annum. The rental income is being utilized to repay the bank
borrowings. Further the Company is also proposing to sell / lease-out
another property at Pallikaranai.
The Company has implemented various initiatives to improve on the
effciencies and control the losses. The Company has recorded positive
EBITDA and there are strong signs of revival.
As at the year end, the accumulated losses have resulted in substantial
erosion of the networth of the Company. However, in view of the various
strategic initiatives that the Company is exploring, the Company is
confident of being able to continue and operate the business on a
"going concern" basis and accordingly the financial statements have been
prepared on the same lines.
The Company has not provided for the service tax liability of Rs.103.36
lakhs, which has been qualifed by the auditors in their report. The
Company is confdent of getting stay order against the levy as advised
by the legal counsel.
Financial Re-structuring
The Company in view of the losses incurred has approached its Bankers
during September 2008 for re-structuring its corporate debts. State
Bank of India (SBI), the Companys primary banker has sanctioned the
financial re-structuring scheme on 23rd December 2008 with retrospective
effect from 1st October 2008. HDFC Bank has sanctioned the
re-structuring scheme during June 2009 with retrospective effect from
1st April 2009.
The Re-structuring Scheme includes interalia carving out Clean Term
Loan from Working Capital Facilities, reduction of Interest Rates on
loans, re-scheduling of all Term Loan Repayments with repayments
starting from October 2011, deferment of interest repayments through
Funded Interest Termloan of 2 years from October 2008 / April 2009 (for
SBI and HDFC).
The Company has to comply with conditions laid by the Scheme which
includes fresh infusion of additional equity by the Promoters to the
extent of Rs.5 crores, deployment of funds in investments into
Business, pledge of Equity Shares of Promoters and Personal Guarantee
of the Promoters viz. Mr. V. Rajagopal, Chairman and Managing Director
and Mrs. Rama Rajagopal, Executive Director.
The Company has complied with the various conditions stipulated by the
Banks.
The other bankers have opted to enter into a One-Time Settlement with
the Company. Accordingly, the Company has settled its other Bankers by
paying 35% of the Outstanding dues. The balance 65%, viz. 8.33 crs, of
the total dues has been written back as gain on One-Time Settlement and
the same has been classifed as Extra-Ordinary Income in the Profit and
Loss Statement.
Business Re-structuring Proposal
The Company is broadly segmented into Exports and Domestic Divisions.
Exports Division is further sub-divided into Tops and Bottoms Division.
The Domestic Division (brand Indian Terrain) and Bottoms Division cater
to different markets / products. The company sensing the need to manage
them as independent entities for enhancement of their capabilities and
to have greater focus on their operations, has decided to hive-off the
divisions. Further, the hive-off would provide greater fexibility to the
entities, to meet the needs for carrying out its operations.The hived-
off divisions will realize true values when separated and also will
maximize their returns and effciency.
The Company has filed a scheme of arrangement with the Honble High
Court of Madras for the demerger of Indian Terrain Division into Indian
Terrain Fashions Limited (ITFL) and transfer of Bottoms Division on a
going concern basis to Celebrity Clothing Limited (CCL), a 100%
subsidiary, through slump sale.
Further, the Company intends to fair value the assets of the company
and write off the accumulated losses against the existing reserves. The
Scheme of Arrangement is under Section 391 to 394 read with Section 78
and Section 100 to 103 of the Companies Act.
Upon demerger, ITFL would be a listed entity, with its shares listed in
National Stock Exchange of India Limited (NSE) and Bombay Stock
Exchange Limited (BSE). Every shareholder of the Company would be
issued 2 shares of ITFL for every 7 shares held in the company. CCL
will remain unlisted.
The Company has got the in-principal approval for the Scheme from NSE
and BSE. The Scheme was fled with the High Court of Madras on 15th
April 2010.
The Honble High Court of Madars vide its order dated 26th April 2010
has ordered for a meeting of the Equity Share holders of the Company on
9th June 2010. The entire Scheme is subject to the approval of the
Shareholders and Creditors of the Company.
This scheme facilitates the entities involved, to explore new avenues
and would enhance the future growth prospects for the people and
organizations connected with them. The restructuring activities under
the scheme would unlock shareholders value and create long term value
for all the stakeholders.
Finance and Accounts
The company has incurred Loss for the year and hence there is no
provision for Income Tax.
The company has not availed any credit facility from any institutions
during the year. The company has not accepted any deposits within the
meaning of Section 58A and 58AA of the Companies Act 1956.
Share Capital
State Bank of India, in its Sanction letter dated 23rd December 2008
has stipulated that the Promoters will have to bring in Rs.5 crs in
phases as contribution towards equity. Accordingly, the promoters have
brought in Rs.50 lakhs during March 2009.
The Company has gone for a preferential allotment of 2,94,118 equity
shares at Rs.17.03 per share to one of the promoters, Mr. V. Rajagopal
during August 2009. The allotment was approved by the Shareholders in
the Annual General Meeting held in July 2009.
Further, pursuant to ESOP Scheme, the Company has allotted 7,500 equity
shares on conversion of options exercised by employees.
Consequent to the above, the Share Capital of the Company has increased
by Rs.30.16 lakhs.
The promoters have brought in next tranche of their contribution
towards equity to an extent of Rs.25 lakhs and the same is classifed
under Share Application Money as on 31st March 2010. The promoters /
directors have further brought in Rs.2.83 crs during April 2010 towards
equity of the Company.
Dividend
In view of the business loss for the year, no dividend is being
recommended
Personnel
The Board wishes to place on record its appreciation to all the
employees in the Company for their sustained efforts and contributions
in the current Challenging Scenario.
Directors
The whole time Directors have been accorded approval for payment of
minimum remuneration under Section 198(4) read with Section II of Part
II of Schedule XIII of the Companies Act, 1956, consequent to which the
terms of appointment has been fxed for 3 years effective from 1st April
2006. Due to inadequacy of Profits, the Board of Directors at its
Meeting held on 13th December 2007 approved on recommendation of the
Remuneration and Compensation Committee and as approved by the Members
in the Annual General Meeting held on 28th August 2008, modifed the
remuneration of the whole time Directors of the Company with effect
from 01st January 2008 as Rs.24.00 lakhs per annum for each of the
whole time Director as against Rs.42.00 lakhs per annum earlier.
Pursuant to Section 255 of the Companies Act, 1956, Mr. N.K. Ranganath
and Mrs. Nidhi Reddy, retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment.
Subsidiary companies
As required under Section 212 of the Companies Act, 1956, the Annual
Reports for the year 2009-2010 and Accounts for the year ended on March
31, 2010, of the subsidiary companies Indian Terrain Fashions Limited
and Celebrity Clothing Limited are attached.
Auditors
M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
of the Company, retire at the ensuing Annual General Meeting and are
eligible for re-appointment.
Corporate Governance Report and Management Discussion and Analysis
Statement
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
Particulars as per Section 217 of the Companies Act, 1956
A) Pursuant to the requirement of Section 217 (2AA) of the Companies
Act, 1956 and based on the representations received, your Directors
hereby confrm that:
i. In the preparation of the Annual Accounts for the year ended 31st
March 2010, the applicable Accounting Standards have been followed and
there are no material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the Profit or loss
of the Company for that period;
iii. The Directors have taken proper and suffcient care for maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the 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.
B) The Particulars of employees, as required under Section 217 (2A) of
the Companies Act, 1956 are given in a separate statement attached to
this Report and forms part of it.
C) The information pursuant to Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given below:
i. Conservation of Energy:
The operations of the Company are not energy-intensive. However,
wherever possible, the Company strives to curtail the consumption of
energy on a continuing basis.
ii. Technology absorption:
Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange
earned (FOB Value) Rs.20,827.75 lakhs
Total Foreign exchange
outgo Rs. 6,966.85 lakhs
Employee Stock Option Plan
The particulars of ESOP Scheme 2005, ESOP 2007 and ESOP 2007 (2) which
are provided as per the SEBI ESOP Guidelines, forms part of this
report.
Appreciation
The Directors are sincerely thankful to you à the esteemed
shareholders, customers, business partners, financial / investment
institutions and commercial banks for the faith reposed and valuable
support provided by them in the Company and its Management. The
Directors wish to place on record the co-operation extended and the
solidarity shown by the employees in assisting the organization to
control its losses and contributing for a good turnaround.
For and on Behalf of the Board
V Rajagopal
Chairman & Managing Director
Place:Chennai
Date : 04-06-2010
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