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Directors Report of Digjam Ltd.

Mar 31, 2016

REPORT OF THE DIRECTORS TO THE SHAREHOLDERS

We present herewith our Annual Report along with the Audited Accounts of the Company for the period ended March 31, 2016.

During the year, the Company proposed a scheme of amalgamation with its erstwhile parent company with a view to achieve financial strength and flexibility, and provide opportunities to leverage raising of resources to finance business needs with an improved financial structure. The Hon''ble High Court of Gujarat sanctioned the Scheme of Amalgamation ("the Scheme") between the erstwhile Digjam Limited and its wholly owned subsidiary Digjam Textiles Limited ("the Company") and their respective Creditors and Shareholders vide its Order dated February 17, 2016. On filing a certified copy of the Court Order with the Registrar of Companies, Gujarat on March 17, 2016 the Scheme came into effect.

Accordingly, the entire business and undertaking of erstwhile Digjam Limited was transferred as a going concern to the Company with effect from close of business on June 30, 2015 (Appointed Date) pursuant to Sections 391 to 394 of the Companies Act, 1956 and other applicable provisions of the said Act and the Companies Act, 2013 ("the Act"). Thereafter, the name of the Company stood changed from ''Digjam Textiles Limited'' to ''Digjam Limited'' w.e.f. March 23, 2016. In essence, all shareholders of the erstwhile Digjam Limited automatically converted to shareholders of the Company in exactly the same proportion by number of shares.

As the Company was incorporated on June 17, 2015 and this is its first Report, previous year''s figures are not applicable.

FINANCIAL RESULTS (Rs. Lacs)

Operations for the period resulted in Profit

March 31, 2016

before Interest and Depreciation of

90.42

less : Finance Costs

859.26

less : Depreciation

217.18

(Loss)/Profit Before Tax

(986.02)

less: Taxation

-

(Loss)/Profit After Tax

being the Balance which is carried forward

(986.02)

The Directors do not recommend any dividend.

REVIEW OF KEY BUSINESS MATTERS

Following positive government policies for growth and governance, India''s overall economic prospects are on a recovery path. But domestic demand conditions have not fully recovered. Capacity utilization across many industries is sub-optimal and private business is still constrained and hesitant about fresh investments. Challenges to economic prospects include possible rise in oil prices, uncertain monsoons, debt overhang in businesses, and slow revival of customer confidence.

The markets for the Company''s products also suffered indifferent demand. Competition from synthetic and cotton fabrics and cheaper supplies from China worked to influence customer preferences. A marked shift to ready mades is also impacting overall superior fabric demand at home. In addition, domestic sales were hit on account of deficient monsoon and exports dragged due to weak conditions in global markets. The Company achieved lower than expected sales volume at 26.4 lac metres (annualized: 35.2 lac metres) translating into operational revenue of Rs. 94.7 crores in 9 months (annualized: Rs.126.3 Crores). The Company continues to expend considerable management energy on marketing, improving operations and managing liquidity.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Sri S. Ragothaman, Sri C. Bhaskar and Sri Satish Shah were the first Directors of the Company upon incorporation. At the Board Meeting held on March 10, 2016, Sri Sidharth Birla, Ms. Meenakshi Birla and Sri C. L. Rathi were appointed as Additional Directors and Sri Bharat Anand, Sri A.C. Mukherji and Sri G. Momen were appointed as (Independent) Additional Directors. The Board also designated Sri S. Ragothaman as an Independent Director. All the Independent Directors have declared that they meet the criteria of independence as per Section 149(6) of the Companies Act, 2013. All the Additional Directors hold office upto the date of the forthcoming Annual General Meeting; the Company has received notices u/s 160(2) of the Act proposing their appointment as Directors along with requisite deposits.

The Board has unanimously elected Sri Sidharth Birla as Chairman of the Company and has appointed Sri C. Bhaskar as Managing Director & Chief Executive Officer of the Company for the period from March 18, 2016 till December 31, 2017 subject to relevant approvals; the Resolution setting out the terms of his appointment is proposed for the forthcoming Annual General Meeting. Sri Bhaskar will, as permitted in law, continue to also hold office of Managing Director in Xpro India Limited.

Sri Satish Shah resigned from the Board on March 10, 2016 and there upon, he was appointed as Vice President & Chief Financial Officer of the Company. Sri Jatin Jain had been appointed as the Company Secretary of the Company on January 28, 2016.

During the period, seven Board Meetings were held as per the details in the annexed Corporate Governance Report.

SHARE CAPITAL

The Company was incorporated with paid-up Equity Share Capital of Rs. 5,00,000. Pursuant to the Scheme the aforesaid Share Capital held by erstwhile Digjam Limited stands cancelled. As per the Scheme, the Company has since the close of the period allotted 8,76,41,621 fully paid up Equity Shares of face value of Rs. 10/- each, at a premium of Rs. 5/per Share and 5,00,000 - 8% Non-Convertible Redeemable Preference Shares of Rs. 100/- each at par, on April 29, 2016 to the entitled shareholders of erstwhile Digjam Limited in the ratio 1 (one) share for every 1 (one) share held in erstwhile Digjam Limited on the Record Date i.e. March 31, 2016.

The Equity Shares of the Company are in the process of being listed and relevant approvals are anticipated soon.

STATUTORY INFORMATION AND OTHER MATTERS

Information as per the requirements of the Act, our report on Corporate Governance along with the Auditors'' Certificate on Compliance and the Managements'' Discussion & Analysis Report form part of this report and are annexed hereto.

The extract of the Annual Return in Form MGT-9 is attached herewith.

The Board has, on the recommendation of the Remuneration & Nominations Committee, framed a Policy for appointment and remuneration of Directors and Senior Managerial Personnel as well as criteria for determining independence and other relevant matters (policy and criteria annexed herewith). Pursuant to the provisions of the Act and Regulation 17(10) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Board of erstwhile Digjam Limited carried out annual evaluation of its performance, and of individual Directors (including independent) as well as the evaluation of its Audit, Remuneration and Nominations, and Stakeholders Relationship Committees. The concerned Director did not participate in the meeting while being evaluated. A questionnaire was circulated to all the Directors. The Remuneration and Nominations Committee of erstwhile Digjam Limited also evaluated the performance of every Director. The evaluation of the Chairman of the Board and the non-independent Directors was also carried out at the separate meeting of the Independent Directors.

The information on Conservation of Energy, Technology absorption, foreign exchange earnings and outgo is annexed hereto.

The Company has in place a system of periodical review of business risks. The Audit Committee and the Board are informed about the risks identified, assessment thereof and minimization procedures and identification of elements of risks which in the opinion of the Board may threaten existence of the Company.

The Company has an internal control system commensurate with its size of operations. The internal audit function is carried out by an external agency which reports to the Chairman of the Audit Committee. During the course of internal audit, the efficacy and adequacy of internal control systems of the Company is also evaluated. Based on the reports, corrective actions are taken and the controls strengthened.

The Company has no subsidiary, joint venture or associate company. The Company has not invited/accepted any Fixed Deposits under Chapter V of the Act and there are none outstanding on March 31, 2016. The Company has not granted any loan or issued any guarantee or made any investment to which the provisions of Section 186 of the Act apply.

All transactions with related parties during the period were in the ordinary course of business on an arm''s length basis. There are no such material transactions entered into by the Company which may have a potential conflict of interest with that of the Company and to which Section 188(1) of the Act applies and thus, disclosure in Form AOC-2 is not required to be annexed. In accordance with the provisions of the Act and Regulation 23 of the SEBI Listing Regulations, all Related Party Transactions are placed before the Audit Committee for approval or for omnibus approval as necessary. The statement of all such transactions entered into is placed before the said Committee for their review. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website at the link: http://digjam.co.in / Pdf / RPT policy2.pdf

There are no significant and material orders passed by the Regulators/ Courts/Tribunals which would impact the going concern status of the Company and its future operations.

The Audit Committee constituted by the Company meets the requirement of Section 177 of the Act and Regulation 18 of SEBI Listing Regulations; details of its composition are furnished in the Corporate Governance Report. There was no instance during the period where the Board had not accepted any recommendation of the Audit Committee.

The Company has a vigil mechanism for Directors and employees to report genuine concerns in accordance with the Whistle Blower Policy; no employee is denied access to the Audit Committee in this regard. The said Policy provides for safeguards through Protected Disclosures against victimization of persons who use such mechanism, and is displayed on the Company''s website. The details of the Whistle Blower Policy are also annexed herewith.

The Company has constituted a committee on Corporate Social Responsibility (CSR), the details of which are furnished in the Corporate Governance Report. While the statutory requirements on spending are not applicable to the Company in view of loss/inadequate profit, small steps have always been taken by the Company for social and inclusive development in its local area; however given the relatively small size and geographical spread, it has not been practical to yet undertake any significant projects beyond these. The CSR Policy of the Company is annexed herewith.

Information required pursuant to Section 197 of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is annexed.

The Company has set up a Committee to look into the complaints under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and no complaint relating to sexual harassment at work place has been received during the period.

The Managing Director & Chief Executive Officer and the Chief Financial Officer have certified as per the requirements of Regulation 17(8) of the SEBI Listing Regulations which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care pursuant to Section 134(5) of the Act, the Directors indicate that (a) in the preparation of annual accounts, the applicable Accounting Standards had been followed along with proper explanations 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 period and of the loss of the Company for the period; (c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors have 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.

AUDITORS'' OBSERVATIONS

The observations of the Statutory Auditors and Secretarial Auditors, are routine and in the nature of general disclosures.

AUDITORS

M/s Deloitte Haskins & Sells LLP, Chartered Accountants, had been appointed as the first Statutory Auditors of the Company by the Board of Directors to hold office until the conclusion of the first Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. They are proposed to be appointed to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the sixth consecutive Annual General Meeting of the Company thereafter.

The erstwhile Digjam Limited had appointed M/s N. D. Birla & Co., Cost Accountants, Ahmedabad, to audit the cost accounts of the Company for the year ended March 31, 2016 and the remuneration payable to them was approved by the Members at their 65th Annual General Meeting. Further, the Board has, on the recommendation of the Audit Committee, appointed the said Cost Accountants for audit of cost records of the Company for the year ending March 31, 2017. In terms of Section 148 (3) of the Act, the remuneration payable to them is required to be approved at the forthcoming Annual General Meeting.

Pursuant to the provisions of Section 204 of the Act, the Company had appointed Sri Viral Sanghavi (Proprietor: Viral Sanghavi & Associates), Practicing Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is attached herewith.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.

For and on behalf of the Board

New Delhi Sidharth Birla

May 18, 2016 Chairman

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