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Directors Report of Faze Three Ltd.

Mar 31, 2023

The Board of Directors are pleased to present the 38th Annual Report of your Company containing the business performance and the Audited Financial Statements for the year ended on March 31, 2023.

1. FINANCIAL PERFORMANCE (STANDALONE & CONSOLIDATED)

(INR in Crores)

Particulars

For the Year

For the Year

For the Year

For the Year

ended

ended

ended

ended

31.03.2023

31.03.2023

31.03.2022

31.03.2022

(Standalone)

(Consolidated)

(Standalone)

(Consolidated)

Revenue from Operations

547.92

558.18

505.01

504.46

Other Income

5.57

5.58

6.98

6.98

Total Income

553.49

563.76

511.99

511.44

Profit before tax

76.71

77.62

71.39

71.40

Provision for taxation (incl. deferred tax)

19.27

19.32

20.32

20.32

Profit for the year

57.44

58.30

51.07

51.08

Other comprehensive income for the year

(0.16)

(0.63)

1.23

1.00

Total comprehensive income for the year

57.28

57.67

52.30

52.08

The standalone and consolidated financial statements for the financial year ended March 31, 2023, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs.

2. KEY HIGHLIGHTS OF THE FINANCIAL PERFORMANCE/ STATE OF THE COMPANY''S AFFAIRS

During the year under review, the Company achieved consolidated revenue from operations of INR 558.18 Crores as against INR 504.46 Crores in the previous year.

The total Standalone Income for the Quarter ended (QE) March 31, 2023 stood at INR 134.34 Crores versus INR 157.06 Crores for QE March 2022.

The Company''s Standalone Net Profit after Tax (NPAT) for year ended March 31, 2023 stood at INR 57.44 Crores versus INR 51.07 Crores for year ended March 31, 2022, depicting a growth of 12% y-o-y basis and the Consolidated NPAT for year ended March 31, 2023 stood at INR 58.30 Crores as against NPAT of INR 51.08 Crores for year ended March 31, 2022.

3. DIVIDEND

During the year under review, the Board of Directors had declared an Interim Dividend for the Financial year 2022-23, on May 27, 2022 of INR 0.50 (Fifty Paise) per Equity Share (i.e. 5%) of the face value of INR 10/- each.

The Board of Directors have decided to retain the resources to fuel the growth and objectives of the

Company and therefore do not recommend dividend for the financial year ended March 31, 2023. The Directors are confident to derive optimum utilization out of the same, which shall be in the best interest of the stakeholders.

4. SHARE CAPITAL

The Authorised Share Capital of the Company is INR 26,00,00,000/- divided into 2,60,00,000 equity shares of face value of INR 10/- each. The paid-up share capital of the Company is INR 24,31,90,000/- divided into 2,43,19,000 equity shares of face value of INR 10/- each.

During the F.Y. 2022-23 there was no change in the share capital of the Company.

5. LISTING OF EQUITY SHARES ON NATIONAL STOCK EXCHANGE OF INDIA

The equity shares of the Company are listed on the Main Board of National Stock Exchange of India Limited (NSE), with effect from the trading hours of Friday, November 18, 2022. Your Company is now Listed on both Major Stock Exchanges in India i.e., NSE and BSE Limited.

6. RESERVES

There were no appropriations to reserves/ general reserves during the year under review. The closing balance of the retained earnings of the Company for the FY 2022-23 is Rs. 135.46 Crores.

7. DEPOSITS/ LOANS FROM DIRECTORS

The Company has not accepted any deposits from the public falling within the ambit of Section 73 and 76 of the Companies Act, 2013 ("the Act") and the Companies (Acceptance of Deposits) Rules, 2014, or under Chapter V of the Act. The Company has not accepted any deposit or any loan from the directors during the year under review.

8. SUBSIDIARY OR ASSOCIATE OR JOINT VENTURE COMPANY

The Company has two wholly owned subsidiaries as on March 31, 2023, namely:

i. Faze Three US LLC

The Company has a wholly owned subsidiary (WOS) in USA viz. Faze Three US LLC which is a front office of the Company in USA and is actively engaged in sourcing local business within USA for supplying the Company''s range of products to stores/ retailers.

The Total Income of WOS for FY 2022-23 stood at USD 1.84 MN vs USD 1.37 MN for FY 2021-22. The PAT for FY 2022-23 stood at USD 0.039 MN as against PBT USD 0.004 MN during previous year.

ii. Mats and More Private Limited

The Company has a wholly owned subsidiary (WOS) incorporated in India viz. Mats and More Private Limited. The WOS is engaged in the business of manufacturing, import, export and dealing in patio mats, floor covering, indoor and outdoor furnishing products including other furnishing products.

The Total Income of WOS for FY 2022-23 stood at INR 2.62 Crores. The PBT for FY 2022-23 stood at INR 0.05 Crores.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial

statements of the WOS in Form AOC-1 forms part of this Annual Report. Copies of the financial statements of the subsidiary companies are available on the Company''s website at https://www.fazethree.com/financial-result/.

During the period under review, no company has become or ceased to be Subsidiary, Associate or Joint Venture of the Company.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(3)(c) of the Act, with respect to the Director''s Responsibility Statement, the Directors hereby confirm that:

(i) in the preparation of the Annual Financial Statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) such accounting policies as mentioned in Notes to Financial Statements have been selected and applied consistently and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Annual Financial Statements have been prepared on a going concern basis;

(v) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(vi) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

10. NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES

The Board and Committees of the Board meets at regular intervals to discuss and decide on Company/ Business policy and strategy apart from other Board business. In case of a urgent business need, where the meeting of the Board of Directors is not envisaged, the Board''s approval is taken by passing resolutions by circulation, as permitted by law, which are noted and confirmed in the subsequent Board Meeting.

The details of number of Board and Committee meetings of the Company are set out in the Corporate Governance Report, which forms part of this Report.

11. CHANGES IN DIRECTORS AND/ OR KEY MANAGERIAL PERSONNEL

In accordance with Section 152 of the Act, Mr. Sanjay Anand, Whole Time Director (DIN: 01367853) is liable to retire by rotation and being eligible has offered himself for re-appointment. The Board recommends his re-appointment to the shareholders at the ensuing Annual General Meeting.

During the year under review following changes took place in the position of Directorship and Key Managerial Personnel:

i. Mr. James Barry Leonard (DIN: 09744803) and Mr. Chuji Kondo (09744760) were appointed as the Non-Executive Independent Directors of the Company, for the period of five consecutive years with effect from October 05, 2022;

ii. Mr. Kartik Jethwa (DIN: 08587759) resigned as the Non-Executive Independent Director of the Company with effect from October 05, 2022, due to personal reasons;

iii. Mr. Nikhil Daga was appointed as the Company Secretary & Compliance Officer of the Company with effect from September 15, 2022 in place of Mr. Akram Sati who resigned from the position of Company Secretary & Compliance Officer with effect from the closure of business hours of August 31, 2022;

iv. Ms. Samruddhi Varadkar was appointed as the Company Secretary & Compliance Officer of the Company with effect from February 03, 2023 in place of Mr. Nikhil Daga who resigned from the position of Company Secretary & Compliance Officer with effect from the closure of business hours of February 02, 2023.

There was no other change in the composition of the Board of Directors, Key Managerial Personnel and

the Board Committees during the year under review.

Following are the Key Managerial Personnel as on March 31, 2023:

Mr. Ajay Anand

: Managing Director

Mr. Sanjay Anand

: Whole-time Director

Mr. Ankit Madhwani

: Chief Financial Officer

Ms. Samruddhi Varadkar

: Company Secretary & Compliance Officer

The Company has complied with the requirements of having Key Managerial Personnel as per the provisions of Section 203 of the Act.

12. PERFORMANCE EVALUATION OF BOARD

Pursuant to Section 178 of the Act read with Schedule IV thereto and Regulation 17 of the Securities and Exchange Board of India ("SEBI") (Listing Obligations and Disclosure Requirements), Regulations 2015 ("Listing Regulations"), a formal evaluation of Board''s performance and that of its Committees and individual directors has been carried out by the Board.

The evaluation of all the directors including independent directors was carried out by the entire Board, except for the director being evaluated. The performance is evaluated after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, experience and competencies, attendance, effectiveness of board processes, information and functioning, independent approach, etc. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the SEBI on January 05, 2017.

The performance of the Committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, attendance of the members, recommendations to the Board and their implementation, effectiveness of committee meetings, etc.

The Independent Directors at their meeting held on September 16, 2022 evaluated the performance of the Non-Independent Directors and the Board as a whole, the Chairman of the Board after considering the views of other Directors and assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Board of Directors expressed their satisfaction to the outcome of the aforesaid evaluations.

13. DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have submitted requisite declarations confirming that they (i) meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are independent; (ii) have complied with the Code of Conduct laid down under Schedule IV of the Act and (iii) they have registered themselves with the Independent Director''s Database maintained by the Indian Institute of Corporate Affairs.

During the year under review, Mr. James Barry Leonard (DIN: 09744803) and Mr. Chuji Kondo (09744760) were appointed as the Non-Executive Independent Directors of the Company, for the period of five consecutive years with effect from October 05, 2022. In the opinion of the Board, Mr. Leonard and Mr. Kondo, hold the highest standards of integrity and possess requisite expertise and experience required to fulfill their duties as Independent Directors. Further, the Independent Directors would appear for the online proficiency test which is conducted by Indian Institute of Corporate Affairs, within the timeline prescribed under Rule 6 of The Companies (Appointment and Qualifications of Directors) Rules, 2014.

14. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

The Board members are provided with necessary documents, reports and internal policies to enable them to familiarise with the Company''s procedures and practices.

Pursuant to the SEBI regulations, the Company organises Familiarization Programme periodically for the Independent Directors, with a view to familiarize them with their role, rights and responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, etc. The Board familiarization process comprises of the induction programme for new Independent Directors, sessions on business and functional issues and strategy making. Periodic presentations are made at the Board and Committee meetings on business and performance updates of the Company including finance, sales, and overview of business operations, business strategy and risks involved.

During the year under review, the Independent Directors were familiarized on business model, key updates on business performance, and legal/ regulatory updates at Board Meetings as well as through periodic reports.

The policy for Familiarization Programme for the Independent Directors is available on website of the Company at https://www.fazethree.com/corporate-governance/.

15. DISCLOSURE RELATING TO REMUNERATION TO DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES

Disclosure pertaining to remuneration of employees as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to the Report as Annexure I.

The information required pursuant to Section 197 of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided on request. In terms of Section 136 of the Act, the reports and accounts are being sent to the shareholders and others entitled thereto, excluding the said information, which will be made available for inspection by the shareholders in electronic mode, up to the date of AGM. Members can inspect the same by sending an email to the Company Secretary in advance at [email protected] .

As on March 31, 2023, the Company has no employee who:

(i) if employed throughout the financial year, was in receipt of remuneration, in aggregate of INR 102.00 Lakhs or more, per annum or

(ii) if employed for part of the financial year, was in receipt of remuneration, in aggregate of INR 8.50 lakhs or more, per month

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

16. ANNUAL RETURN

Pursuant to the provisions of Sections 134(3)(a) and 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the draft Annual Return as of March 31, 2023, is placed on the website of the Company at https://www.fazethree.com/corporate-governance/

17. AUDIT COMMITTEE

The Audit Committee of the Board of Directors of the Company is duly constituted pursuant to Section 177 of the Act and Regulation 18 of Listing Regulations.

As on March 31, 2023, the Audit Committee comprises of 3 (three) members namely Mr. Vinit Rathod (Chairman), Mr. Ajay Anand (Member) and Mr. Manan Shah (Member). Other details pertaining to the Audit Committee are included in the Corporate Governance Report, which forms part of this report. All the Members of the Committee are adequately literate to understand the financial and other aspects. All the recommendations made by the Committee during the period were accepted by the Board.

18. NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Board of Directors of the Company is duly constituted pursuant to Section 178(1) of the Act and Regulation 19 of Listing Regulations.

The Nomination and Remuneration Committee is responsible for evaluating the balance of skills, experience, independence, diversity and knowledge on the Board and for drawing up selection criteria. The Board of Directors of the Company has defined a policy on Director''s appointment and payment of remuneration including criteria for determining qualifications, positive attributes and independence of Directors and terms of reference of the Committee which is available on the website of the Company at https://www.fazethree.com/policies/.

As on March 31, 2023, the Nomination & Remuneration Committee comprised of 3 (three) members all being Non-Executive Directors namely Mr. Vinit Rathod (Chairman), Mrs. Rashmi Anand (Member) and Mr. Manan Shah (Member). All the recommendations made by the Committee during the period were accepted by the Board.

19. STAKEHOLDERS'' RELATIONSHIP COMMITTEE

The Stakeholders'' Relationship Committee of the Board of Directors of the Company is duly constituted pursuant to Section 178(5) of the Act and Regulation 20 of the Listing Regulations.

As on March 31, 2023, the Stakeholders Relationship Committee comprises of 3 (three) members namely Mr. Vinit Rathod (Chairman), Mr. Ajay Anand (Member) and Mr. Manan Shah (Member). Other details pertaining to the Committee are included in the Corporate Governance Report, which forms part of this report.

20. CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)

The business cannot exist in isolation and for a business to be profitable, it needs to consider the Social Responsibility in order to build a positive synergy between the two. The Company has always considered Social Responsibility as an integral part of sustainable growth and has been over the years contributing towards it in various ways. The management of the Company endeavors for the upliftment of the society and the natural resources which are essential for overall economic growth.

During the FY 2022-23, the Company was required to spent INR 85,52,667/- towards the CSR contribution. The Board of Directors of the Company pursuant to the Rule 7(3) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and on the recommendation of the CSR Committee, approved to the set off the excess available CSR contribution against the CSR contribution to be spent in FY 2022-23.

The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the annual report on Corporate Social Responsibility (CSR) activities as per format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, is annexed as Annexure II to this report.

The CSR policy has been posted on the website of the Company at https://www.fazethree.com/policies/.

21. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The information as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings and outgoings is annexed to this report as Annexure III.

22. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year, the Company has entered into transactions with related parties as defined under Section 2(76) of the Act and Listing Regulations. All related party transactions were carried out at arm''s length price and in the ordinary course of business.

The Members of the Company, vide resolution passed through the postal ballot on December 14, 2022, approved the potential Material Related Party Transactions under the Regulation 23 of the Listing Regulations, with Faze Three Autofab Limited for FY 2022-23 and FY 2023-24, at an arm''s length basis and in the ordinary course of business.

All Related Party Transactions are approved by Audit Committee. Prior omnibus approval is obtained from the Audit Committee in respect of the transactions which are repetitive in nature. The transactions entered into pursuant to omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

As per the SEBI Listing Regulations, if any related party transaction exceeds Rs 1,000 crore or 10% of the annual consolidated turnover as per the last audited financial statement whichever is lower, would be considered as material and require Members approval. In this regard, during the year under review, the Company had taken necessary Members approval. However, there were no material transactions of the Company with any of its related parties as per the Act. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY23 and, hence, the same is not required to be provided.

Suitable disclosure as required by the Indian Accounting Standards (IND AS 24) has been made in the notes to the Financial Statements. The Company shall seek shareholders'' approval for material related party transactions proposed to be entered in the upcoming financial year in the ensuing AGM.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is available at https://www.fazethree.com/policies/ .

23. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes or commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2023 and the date of the Directors'' report.

24. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behavior and provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is perceived to be in violation of or in conflict with the Code of Conduct of the Company and to report concerns about unethical behavior. No person has been denied access to the Chairman of the Audit Committee. The said policy has been posted on the website of the Company at https://www.fazethree.com/policies/.

During the year under review, no complaint or adverse reporting was received by the designated officer of the Company.

25. DISCLOSURE AS PER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance towards sexual harassment at the workplace. The Company has adopted Prevention of Sexual Harassment Policy in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.

The Company has complied with the provisions relating to the constitution of the Internal Committee as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has not received any complaint or adverse reporting during the year.

26. RISK MANAGEMENT

The Company has in place a mechanism to inform Board of Directors about the Risk assessment and risk minimization procedures and periodical reviews to ensure that risk is controlled by the management through the means of a properly laid-out framework. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

27. INTERNAL FINANCIAL CONTROLS

The Company has adequate internal control systems, commensurate with the size, scale and complexity of its operations, which monitors business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels.

28. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is enclosed as Annexure IV.

29. CORPORATE GOVERNANCE

The Company believes in transparency and adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated in Listing Regulations. A report on Corporate Governance is annexed to this report as Annexure V.

30. AUDITORS AND THEIR REPORTA. STATUTORY AUDITORS AND AUDITORS'' REPORT

M/s. MSKA & Associates Chartered Accountants (Firm Registration No. 105047W), were appointed as the Statutory Auditor by the Members of the Company at the 37th Annual General Meeting of the Company, for a period of 5 years and shall hold the office till the conclusion of the 42nd Annual General Meeting of the Company, to be held in the calendar year 2027.

The Auditor''s Report on IND AS financial statements (standalone and consolidated) of the Company for the FY 2022-23, as submitted by M/s. MSKA & Associates, Chartered Accountants, did not contain any qualifications, reservations or adverse remarks and are self-explanatory.

There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act and Rules framed thereunder either to the Company or to the Central Government.

B. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has undertaken Secretarial Audit for the FY 2022-23 by appointing M/s. Sanjay Dholakia & Associates, Practicing Company Secretary, which, inter alia, includes audit of compliance with the Companies Act, 2013, and the Rules made thereunder, SEBI Listing Regulations and other Regulations and Acts applicable to the Company. The Secretarial Audit Report is annexed to this report as Annexure VI.

The Secretarial Auditors'' Report for the financial year ended March 31, 2023, does not contain any reservation, qualification or adverse remark. There is no fraud reported by the Secretarial Auditor during the year under review as per Section 143(12) of the Act and Rules framed thereunder either to the Company or to the Central Government.

The Board of Directors at their meeting held on May 23, 2023, has appointed M/s. Sanjay Dholakia & Associates, Practicing Company Secretaries (Certificate of Practice No. 1798), as the Secretarial Auditor for FY 2023-24.

31. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under Section 186 of the Act, are provided in the notes to the financial statements.

32. DISCLOSURE ON ACCOUNTING TREATMENT

The Company has not used any differential treatment which is not in compliance with Accounting Standards and the financials of the Company depict a true and fair view of the state of affairs of the Company.

33. FRAUD REPORTED BY THE AUDITORS, IF ANY

There is no fraud reported by the Auditors during the year under review as per Section 143(12) of the Companies Act, 2013.

34. COST AUDIT AND RECORDS

The Company maintains the cost records of its products as per the provisions of sub-section (1) of Section 148 of the Act. Pursuant to the provisions of Rule 4(3)(i) of the Companies (Cost Records and Audit) Rules, 2014 the requirement of Cost Audit is not applicable to the Company.

35. SECRETARIAL STANDARDS

During the year under review, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

36. SIGNIFICANT MATERIAL ORDERS PASSED BY COURTS, IF ANY

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

37. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT ("BRSR")

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the initiatives taken by the Company from an environmental, social and governance perspective, are provided in the Business Responsibility and Sustainability Report ("BRSR”) for the financial year 2022-23 which is included as a separate section in the Annual Report. The Company has prepared the BRSR report on voluntary basis.

38. POLICIES UNDER LISTING REGULATIONS

The SEBI Listing Regulations mandated the formulation of certain policies for all listed Companies which are as under.

a. Documents Retention & Archival Policy'' as per Regulation 9 and Regulation 30 which may be viewed at https://www.fazethree.com/policies/

b. Policy for determining Materiality of events / information'' as per Regulation 30 which may be viewed at https://www.fazethree.com/policies/

c. Policy for determining material subsidiary'' as per Regulation 16(1)(c) of the Listing Regulations which may be viewed at https://www.fazethree.com/policies/

39. OTHER DISCLOSURES

• There was no change in the nature of the business of the Company during the year under review.

• The Company has not issued any shares with differential voting during the year under review.

• There were no revisions in the financial statements from the end of the Financial Year to date of the Director Report.

• The Company has neither issued any shares nor granted any Stock Options nor any Sweat Equity Shares during the year.

• No application has been made under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) ("the IBC, 2016"), hence, the requirement to disclose the details of application made or any proceeding pending under the IBC, 2016 during the year along with their status as at the end of the financial year is not applicable.

• The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable during the year under review.

• There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as on March 31, 2023.

40. ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the co-operation extended by all the

employees, Bankers, Financial Institutions, various State and Central Government authorities and

Stakeholders.


Mar 31, 2018

The Directors have pleasure in presenting the 33rd Annual Report of your Company containing the business performance and the Audited Financial Statements for the year ended on 31st March 2018.

1. FINANCIAL PERFORMANCE (Standalone & Consolidated):

(Rs. in Crores)

Particulars

For the Year ended 31.03.2018 (Standalone)

For the Year ended 31.03.2018 (Consolidated)

For the Year ended 31.03.2017 (Standalone)

Revenue from Operations

239.87

239.87

243.77

Other Income

10.63

10.63

22.90

Profit before tax

15.54

15.54

27.27

Provision for taxation (incl. deferred tax)

(1.29)

(1.29)

(10.59)

Profit for the year

16.83

16.83

37.86

Other comprehensive income for the year

0.17

0.17

0.26

Total comprehensive income for the year

16.66

16.66

37.60

The standalone and consolidated financial statements for the financial year ended March 31, 2018, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs.

2. KEY HIGHLIGHTS OF THE FINANCIAL PERFORMANCE:

During the year under review, the Company earned revenue from operations of Rs. 239.87 Crores as against Rs. 243.77 Crores in the previous year. The Company achieved Net Profit of Rs. 16.83 crores as against Net Profit of Rs. 37.86 Crores during previous year.

3. DIVIDEND:

Your directors are pleased to announce that the Board of Directors of the Company has declared an Interim Dividend of Rs. 0.50/- per share of Rs. 10/- each (5%) for FY 2017-18 considering the performance during the year to the shareholders who shall be on the register of members on June 2, 2018.

4. SHARE CAPITAL:

Preferential Issue of equity shares & convertible equity warrants

During the year under review the Company on April 7, 2017 allotted by way of Preferential allotment 3,19,000 equity shares of Rs. 10/- each and 8,45,500 equity warrants convertible into equal number of equity shares of Rs. 10/- each to promoter/ non promoter investors.

Out of the said 8,45,500 convertible equity warrants, 7,00,000 warrants were converted into equal number of equity shares ranking paripassu with the existing equity shares of the Company on December 26, 2017 upon receipt of balance subscription amount from the allottee to exercise the conversion. Consequently the paid up equity capital of the Company as at March 31, 2018 stood at Rs. 24,31,90,000/- consisting of 2,43,19,000 equity shares of Rs. 10/- each.

5. RESERVES:

There were no appropriations to reserve/ general reserve during the year under review.

6. DEPOSITS:

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, or under Chapter V of the Companies Act, 2013.

7. SUBSIDIARY COMPANY:

During the year under review, the Company formed a wholly owned subsidiary (WOS) in USA namely Faze Three US LLC and invested Rs. 2.43 crore for the set up. The said WOS is held as a front end of the Company in USA and is actively engaged in sourcing local business within USA for supplying the Company''s range of products to stores/ retailers. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of the WOS in Form AOC 1 is attached to the Consolidated Financial Statements. The separate audited financial statements in respect of the WOS are also available on the website of the Company.

8. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013, with respect to the Director''s Responsibility Statement, the Directors hereby confirm that:

(i) in the preparation of the Annual Financial Statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) such accounting policies as mentioned in Notes to Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Annual Financial Statements have been prepared on a going concern basis;

(v) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(vi) systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

9. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE:

The Board and Committees of the Board meets at regular intervals to discuss and decide on Company / Business policy and strategy apart from other Board business. In case of a special and urgent business need, the Board''s approval is taken by passing resolutions by circulation, as permitted by law, which are noted and confirmed in the subsequent Board Meeting.

The details of number of Board and Committee meetings of the Company are set out in the Corporate Governance Report which forms part of this Report.

10. PERFORMANCE EVALUATION OF BOARD:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015. The same is found to be satisfactory.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, experience & competencies, attendance, effectiveness of board processes, information and functioning, independent approach, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, attendance of the members, recommendations to the Board and their implementation, effectiveness of committee meetings, etc.

11. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015.

12. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS:

Pursuant to the SEBI regulations, the Company has worked out a Familiarization Programme for the independent Directors, with a view to familiarize them with their role, rights and responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, etc. The Board familiarization process comprises of the Induction programme for new independent Directors, sessions on business and functional issues and strategy making.

The policy for Familiarization Programme for the Independent Directors is available on website of the Company.

13. DISCLOSURE RELATING TO REMUNERATION TO DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES:

As required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personal) Rules, 2014, as amended from time to time, details of Remuneration to Directors and Key Managerial Personnel is provided in Form MGT-9 annexed to this Report.

The Company has no employee who- (i) if employed throughout the financial year, was in receipt of remuneration, in aggregate, more than Rs. 102.00 Lacs, or (ii) If employed for part of the financial year, was in receipt of remuneration, in aggregate, more than Rs 8.50 lacs per month.

14. AUDIT COMMITTEE:

The Audit Committee comprises of three members namely Mr.VinitRathod (Chairman), Mr.Manan Shah and Mr. Ajay Anand. Other details pertaining to audit committee are included in the Corporate Governance Report, which forms part of this report. All the Members of the Committee are financially literate.

15. NOMINATION & REMUNERATION COMMITTEE:

The Company has constituted a Remuneration Committee pursuant to Section 178(1) of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Nomination and Remuneration Committee is responsible for evaluating the balance of skills, experience, independence, diversity and knowledge on the Board and for drawing up selection criteria. The Board of Directors of the Company has defined a policy on Director''s appointment and payment of remuneration including criteria for determining qualifications, positive attributes and independence of Directors and terms of reference of the Committee.

The Nomination & Remuneration Committee comprises of three members all being Non-Executive Directors namely Mr.VinitRathod (Chairman), Mr.Manan Shah and Ms.Shweta Jain. All the recommendations made by the Committee during the period were accepted by the Board.

16. CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR):

The Company during the year formed CSR Committee comprising Mr. Ajay Anand as the Chairman and Mr. Sanjay Anand and Mr.Manan Shah as members.

The said Committee has formulated and recommended to the Board of Directors, CSR Policy indicating the activities to be undertaken by the Company and monitoring and implementation of the framework of the activities. The CSR Policy is available on the website of the Company at www.fazethree.com.

Note on CSR spending as required under Section 135 of the Companies Act, 2013 and the rules framed thereunder:

The FY 2017-18 was the first year post the turnaround of the Company in 2017. The Company was unable to undertake spending of Rs. 18.21 lacs for CSR Activities as per the rules, since it was unable to find adequate avenues and was in the process of identifying areas of expending the said amount and also it was necessary for the Company to focus and pull back the available resources to the maximum extent so as to meet its operational requirements in the interest of the stakeholders including the communities around the factory locations. The management believes that upliftment of the society at large is one of the key factors of sustainable economic growth and will strive to contribute to the society by way of CSR in the coming years in a fair and ethical way so as to balance their interests along with the interests of the stakeholders.

17. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:

The information as required under Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings and outgoings is annexed to this report as Annexure I.

18. RELATED PARTY TRANSACTIONS:

All transactions entered into with related party as defined under Section 188(3) of the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on arm''s length price and do not attract the provisions of Section 188 of the Companies Act, 2013. All material transactions with related parties during the financial year were in the interests of the Company. Disclosure as required under IND AS 24 has been made in the notes to the financial statements. The Company has proposed to take approval of Members for all material related party transactions proposed to be entered into in the current financial year through Ordinary Resolution.

The policy on Related Party Transactions as approved by the Board is available on the website of the Company at www.fazethree.com.

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and the same forms part of this report as Annexure II.

19. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy, as part of vigil mechanism as defined under Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is perceived to be in violation of or in conflict with the Code of Conduct of the Company and to report concerns about unethical behavior. The said policy has been posted on the website of the Company at www.fazethree.com.

20. DICSLOSURE AS PER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT, 2013:

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14, the internal committee constituted under the said act has confirmed that no complaint/ case has been filed/ pending with the Company during the year.

21. RISK MANAGEMENT:

The Company has in place a mechanism to inform Board of Directors about the Risk assessment and risk minimization procedures and periodical reviews to ensure that risk is controlled by the management through the means of a properly laid-out framework.

22. INTERNAL FINANCIAL CONTROLS:

The Company has adequate internal control systems, commensurate with the size, scale and complexity of its operations which monitors business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels.

23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is enclosed as Annexure III.

24. CORPORATE GOVERNANCE:

The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance is annexed to this report as Annexure IV.

25. STATUTORY AUDITOR:

M/s. MSKA & Associates Chartered Accountants (Firm Registration No. 105047W), were appointed by the members of the Company in the 32nd Annual General Meeting for a period of 5 years i.e. till the conclusion of the 37th Annual General Meeting. In accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every AGM. The appointment of M/s. MSKA & Associates as the Statutory Auditor of the Company shall continue for the FY 2018-19. M/s. MSKA & Associates has confirmed that their appointment is within the prescribed limits specified in Section 139 of the Companies Act, 2013.

26. SECRETARIAL AUDITOR:

The Company has undertaken Secretarial Audit for the financial year 2017-18 which, inter alia, includes audit of compliance with the Companies Act, 2013, and the Rules made thereunder, Listing Regulations and other applicable Regulations and Acts. The Secretarial Audit Report is annexed to this report as Annexure V. Pursuant to the provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sanjay Dholakia& Associates, Practicing Company Secretary to undertake Secretarial Audit for the financial year 2018-19.

27. OBSERVATIONS - STATUTORY AUDITOR & SECRETARIAL AUDITOR:

Statutory Auditor:

The Auditors'' Report to the Members does not contain any reservation, qualification or adverse remark.

Secretarial Auditor:

The Secretarial Audit Report to the Members does not contain any reservation, qualification or adverse remark.

28. COST AUDIT AND RECORDS:

The provisions of sub-section (1) of section 148 of the Act are not applicable to the Company as the Central Government of India has not specified the maintenance of cost records for any of the products of the Company.

As regards to Cost Audit, vide notification issued by Government on 31st December 2014, the Company is not required to conduct a Cost Audit.

29. EXTRACT OF ANNUAL RETURN:

The details forming part of extract of the annual return in Form MGT-9 is annexed to this report as Annexure VI.

30. INDIAN ACCOUNTING STANDARDS (IND AS):

The Indian Accounting Standards (IND AS) were notified by the Ministry of Corporate Affairs on February 16, 2015. The Company has adopted IND AS with effect from 1st April, 2017 with comparatives for the previous year ending 31st March, 2017. Your Company has taken adequate steps in this regard and has ensured a smooth transition to IND AS.

31. SIGNIFICANT MATERIAL ORDERS PASSED BY COURTS:

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

32. ACKNOWLEDGMENT:

Your Directors wish to place on record their appreciation for the co-operation extended by all the employees, Bankers, Financial Institutions, various State and Central Government authorities and Stakeholders.

For and on behalf of the Board

For Faze Three Limited

Place: Mumbai Ajay Anand

Date: 22nd May, 2018 Chairman & Managing Director


Mar 31, 2015

Dear Shareholders,

The Directors are presenting the 30th Annual Report of your Company and the Audited Financial Statements for the year ended 31st March 2015.

1. FINANCIAL RESULTS:

(Rs. in Lacs) Particulars For the Year For the Year ended ended 31.03.2015 31.03.2014

Revenue from Operations 21762.07 23068.95

Other Income 231.14 253.37

Profit before Depreciation & Amortization, Finance Cost and Exceptional Items 1806.10 2549.02

Less:

Depreciation & Amortization 492.05 494.49

Finance Cost 1418.45 1475.66

Exceptional Items 325.79 716.79

Profit / (Loss) before taxation (430.19) (137.91)

Provision for taxation (incl. deferred tax) - 15.48

Profit/ (Loss) for the year carried to Balance Sheet (430.19) (153.39)

2. OPERATIONS:

During the year under review, the Company's revenue from operations stood at Rs. 21762.07 Lacs as against Rs. 23068.95 Lacs in the previous year. The Loss Before Tax stood at Rs. 430.19 Lacs. The Company has suffered a Net Loss of Rs. 430.19 Lacs for the financial year ended 31.03.2015.

The Company had operational profit of Rs. 1806.10 Lacs as compared to Rs. 2549.02 Lacs in the previous year. The reduction of operational profit is due to reduction in turnover of the Company by 6% as compared to previous year.

As reported in earlier years the company is having liabilities towards Foreign Currency Convertible Bonds of US $ 8 Mln and towards invocation of Corporate Guarantee given by the Company to its Wholly owned subsidiary company M/s. Pana Textil GmbH of Euro 4.4 Mln, which is under liquidation process. Company has provided the liabilities in the books of accounts towards applicable annual charge & forex fluctuation on the said liabilities as claimed by the Bank from time to time. Due to the said provisions the company's profitability has been adversely affected.

3. DIVIDEND:

Due to financial losses, your company has not recommended any dividend for the year.

4. RESERVES:

The Company has not transferred any amount to reserves due to losses in current financial year.

5. DEPOSITS:

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, or under Chapter V of the Companies Act, 2013.

6. RELATED PARTY TRANSACTIONS:

All transactions entered into with related party as defined under Section 188(3) of the Companies Act, 2013 and Clause 49 of the Listing agreement during the financial year were in the ordinary course of business and on arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The Company has proposed to take approval of shareholders regarding related party transactions entered into by the Company during financial year and propose to be enter into with related parties in next financial year through Special Resolution.

7. INTERNAL FINANCIAL CONTROLS:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

For the financial year under review as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchange, Management Discussion and Analysis Report is Annexed thereto.

9. CORPORATE GOVERNANCE:

The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchange. A separate report on Corporate Governance is Annexed thereto.

10. BOARD MEETINGS:

During the year under review, the Company has conducted 8 (Eight) Board Meetings on 1st April, 2014, 28th April, 2014, 9th May, 2014, 29th May, 2014, 14th August, 2014, 14th November, 2014, 29th December, 2014 and 13th February, 2015.

11. AUDIT COMMITTEE:

The Audit Committee comprises of four members namely Mr. Vasudeva Rao (Chairman), Mr. Rajiv Rai Sachdev, Mr. Ajay Anand and Mr. Sanjay Anand. All the recommendations made by the Audit Committee were accepted by the Board.

The Audit Committee met 4 (Four) times in the year on 29th May, 2014, 14th August, 2014, 14th November, 2014 and 13th February, 2015.

12. REMUNERATION COMMITTEE:

The Company has constituted a Remuneration Committee pursuant to Section 178(1) of the Companies Act, 2013 and has defined the policy on Director's appointment and payment of remuneration including criteria for determining qualifications, positive attributes and independence of a Directors.

The Remuneration Committee comprises of two members namely Mr. Vasudeva Rao (Chairman) and Mr. Rajiv Rai Sachdev. All the recommendations made by the Committee were accepted by the Board.

13. SUBSIDIARY COMPANY:

The Company's Wholly owned subsidiary company M/s. Pana Textil GmbH has filed an insolvency petition in the German Court. The German court has completed the insolvency proceedings and the company is in the process of liquidation.

14. EXTRACT OF ANNUAL RETURN:

The details forming part of extract of the annual return in Form MGT - 9 is Annexed to this report.

15. DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your directors make the following statement in terms of Section 134 (3) (c) of the Companies Act, 2013:

(i) that in the preparation of the Annual Financial Statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that such accounting policies as mentioned in Notes to Financial Statements have been selected and applied consistently and made judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the loss of the Company for the year ended on that date;

(iii) that 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;

(iv) that the Annual Financial Statements have been prepared on a going concern basis;

(v) that the proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

The information as required under Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings and outgoings is annexed to this report.

17. RISK MANAGEMENT POLICY:

The Company has in place a mechanism to inform Board of Directors about the Risk assessment and risk minimization procedures and periodical reviews to ensure that risk is controlled by the Management through the means of a properly laid-out framework.

18. CORPORATE RESPONSIBILITY STATEMENT (CSR):

The company is not required to comply with section 135 of Companies Act, 2013 along with rules made in this behalf as company is having negative Networth and is incurring losses since last 4 years.

19. PERFORMANCE EVALUATION OF BOARD:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Remuneration and other Committees. The same is found to be satisfactory.

20. DECLARATION FROM INDEPENDENT DIRECTORS:

The Company has received necessary declaration from Independent Director of the Company Mr. Vasudeva Rao. Under Section 149(7) of the Companies Act, 2013, he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.

21. STATUTORY AUDITORS:

M/s. Thakur Vaidyanath Aiyar & Co., Chartered Accountants, Mumbai (Firm Rgn. No. 000038N) being eligible offer themselves for re-appointment. M/s. Thakur Vaidyanath Aiyar & Co. has confirmed that the appointment will be within the prescribed limits specified in Section 139 of the Companies Act, 2013. Members are requested to appoint the auditors.

22. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sanjay Dholakia & Associates, Practicing Company Secretary to undertake Secretarial Audit. The Report is annexed to this Annual Report.

23. OBSERVATIONS – AUDITOR & SECRETARIAL AUDITOR:

Statutory Auditor:

As regards to qualifications contained in the Auditors Report, the Auditor's views are self-explanatory. The Board of Directors shall take necessary steps towards depreciation calculation as per Companies Act, 2013 in the following Financial year.

Secretarial Auditor:

As mentioned in the report, the Company was required to appoint a Chief Financial Officer (CFO as KMP) and a Woman Director on the Board. Your Directors would like to inform you that the Company is still in the process of appointing the same.

24. COST RECORDS:

Pursuant to the directives of the Central Government under the provisions of Section 148(1) of Companies Act, 2013, Company has maintained cost records and included the same in Books of Accounts.

25. ACKNOWLEDGMENT:

Your Directors wish to place on record their appreciation for the co-operation extended by all the employees, Bankers, Financial Institutions, various State and Central Government authorities and Stakeholders.

For and on behalf of the Board

FOR FAZE THREE LIMITED

Place: Mumbai

Date : 30th May, 2015 Ajay Anand

Chairman & Managing Director


Mar 31, 2014

Dear Members,

The Directors present the 29th Annual Report of the Company together with its Audited Statement of Profit and Loss for the year ended March 31, 2014 and the Balance Sheet as on that date:

FINANCIAL RESULTS (Rs. Lacs)

Particulars For the Year For the Year ended ended 31.03.2014 31.03.2013

Revenue from Operations (net) 23068.95 18880.50

Other Income 253.37 525.28

Profit before interest, tax, depreciation

& amortization, finance cost and exceptional 2549.03 772.17 items

Depreciation & amortization expenses 494.49 489.87

Finance Cost/Interest 1475.66 1469.99

Exceptional items 716.79 917.30

Profit/(Loss) Before Tax (137.91) (2104.99)

Less: Tax Expenses

Deferred Tax 15.48 45.96

Profit/ (Loss) After Tax (153.39) (2150.95)

COMPANY OPERATIONS

The revenue from operations stood at Rs. 23,068.95 Lacs as against Rs. 18,880.50 Lacs during the previous year. The revenue from other income stood at Rs. 253.37 Lacs as against Rs. 525.28 Lacs during the previous year.

During the year under review, the Company earned a profit of Rs. 2,549.03 Lacs before interest, tax, depreciation & amortization, finance cost and exceptional items as against of Rs. 772.17 Lacs in the previous year. However, the Company has suffered a net loss of Rs. 153.39 Lacs as against the loss of Rs. 2,150.95 Lacs during the previous year.

The Company's revenue from Exports has increased from Rs. 15,589.73 Lacs to Rs. 19,135.22 Lacs, a significant growth of 23% from previous year.

DIVIDEND

In view of the losses reported by the Company, your Directors have not recommended any dividend.

PERFORMANCE REVIEW

The FY 2012-13 has been an extremely challenging year for the Company. The slow recovery of the US economy, continued crisis in the Euro-zone and the slowdown in the Chinese economy, especially low exports of textiles, have put pressure on the overall economy. These, coupled with the steep increase in input cost, labour cost and inflationary trends in the markets have adversely affected the industry as well as the Company. A weaker Rupee against the dollar has helped the company to have better sales realization against the export orders and reduced the impact of various challenges in the Industry. However, the increased cost of borrowings and provision for foreign exchange loss on revaluation of FCCB liabilities have adversely affected the company's profits.

BUSINESS OVERVIEW

The GDP growth in India during the year is estimated to have been around 4.7%. Inflation was at very high levels during the first half of the year, but has gradually come down to 6% by the end of the year. The Indian Rupee's recent depreciation against the US$ has not been helpful in getting the economy back on growth path. However, the ushering in of a stable Government, post elections, has revived sentiments and lifted investor confidence which would pave the way for growth in the current financial year.

During the year 2013, the textile industry registered a growth of 13.91% in US$ terms and 27.04% in Rupee terms. Textiles exports have touched US$ 41.58 billion in 2013-14 as against US$ 36.50 billion FY 2012-13. The share of textiles export in the Indian Exports Basket significantly increased from 12.15% to 13.26% in USD during 2013-14 as against overall Indian export growth of 4.37%.

The Indian home furnishing industry is facing tough competition from China. However, the Industry has sustained itself through focus, primarily on value added products, which makes it popular and distinct across the global markets. With changing needs, innovations and also increasing customer demands, the home furnishing industry has expanded with many new players entering the market, but India still maintains its stronghold in the global home furnishing market.

In spite of the adverse market conditions prevailing in the global market and various businesses in which the Company operates, the overall performance of the Company during the year has significantly improved compared to that of the previous year. The overall sales of the company has increased by 24% and the exports have increased by 23% which is a noteworthy performance considering the subdued global textile markets. With the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy and industry is looking forward to better growth prospects in 2014-15 and in turn the Company is expecting to sustain its growth and perform better in the current financial year.

SUBSIDIARY COMPANY:

The Ministry of Corporate Affairs has issued direction under section 212 (8) of the Companies Act, 1956 vide general circular No. 2/ 2011 dated February 8, 2011 and in accordance with the same, the Balance Sheet, the Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company.

As reported last year, the Company's wholly owned subsidiary company of M/s Pana Textil GmbH has filed an insolvency petition in the German Court. The German court has completed the insolvency proceedings and the company is in the process of liquidation.

FIXED DEPOSITS

Your Company has not accepted any deposits from public, and no amount of principal or interest was outstanding on the date of the Balance Sheet.

DIRECTORS

Mr. Rajiv Rai Sachdev is a Non-Executive Non-Independent Director, retires at the ensuing Annual General Meeting of the Company, being eligible offer himself for re-appointment. A Brief resume of Mr. Rajiv Rai Sachdev is forming part of the Corporate Governance Report.

Mr. Ajay Anand is the one of Promoters of the Company. The Board of directors appointed him as Additional Director on the Board of the Company w.e.f. 1st October 2013 and appointed as Managing Director w.e.f. 1st April 2014.

The Board of Directors had re-appointed Mr. Sanjay Anand as Whole Time Director of the Company and the same was approved by the members of the Company at their meeting held on 29th September 2013. The Company had an application to the Central Government for payment of remuneration and the same was not been considered for approval and his re-appointment was not regularized. Hence, the Board of Directors has appointed Mr. Sanjay Anand as Whole time Director of the Company w.e.f. 1st April 2014 under the provisions of Section 196, 198, 203 and read with Schedule V of the Companies Act, 2013.

Mrs. Rashmi Anand , Whole Time Director of the Company resigned from the Board w.e.f. 17th June 2013. The Board wishes to place on record its appreciation for the contribution made by Mrs. Rashni Anand in the growth of the Company and wishes her the best for her future endeavors.

As per the provision of Section 149 and other applicable provisions, if any, of the Companies Act, 2013, Mr. Vasudeva Rao, is proposed to be appointed as Independent Directors of the Company for a period of five years effecting from 1st April 2014 to 31st March 2019.

Your approval for their appointment of aforesaid Directors have been sought in the Notice convening the Annual General Meeting of the Company.

AUDITORS

M/s Thakur Vaidyanath Aiyar & Co. Chartered Accountants, Firm Registration No. 000038N, retire at the forthcoming Annual General Meeting and are eligible for reappointment. The retiring Auditors have furnished a Certificate of their eligibility for re-appointment under section 139 (1) of the Companies Act, 2013 (corresponding to section 224 (1B) of Companies Act 1956) and have indicated their willingness to continue. Members are requested to appoint the auditors and fix their remuneration.

AUDITORS' REPORT:

The Auditors' Report to the Shareholders does not contain any reservation, qualification or adverse remark.

COST AUDITORS AND COST AUDIT REPORT:

Pursuant to the directives of the Central Government under the provisions of Section 148 of Companies Act 2013 (corresponding to section 233B of the Companies Act, 1956), qualified Cost Auditors have been appointed to conduct cost audits relating to several products manufactured by the Company.

REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR)

The Company has filed a Reference under the provisions of Section 15A of the Sick Industrial (Special Provisions) Act, 1985 with Board for Industrial and Financial Reconstruction (BIFR) based on the Audited Financial Accounts of the Company for year ended 31.03.2012. BIFR has accepted the application and issued a Reference No. 48/2012. The said reference is pending before BIFR.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company had issued Foreign Currency Convertible Bonds of US$ 8.00 million on 26.12.2006, which were due for redemption on 27.12.2011. The company could not redeem the said bonds on due date. The Company has made relevant provisions regarding principal, interest and revaluation of liability in the Statement of Profit & Loss.

LEGAL SUITS

As reported last year, four winding petitions were filed against the Company in the Bombay High Court. The proceedings of all four petitions are pending before the Hon'ble High Court and the Company is strongly contending the cases in the High Court.

PARTICULARS OF EMPLOYEE

There are no employees drawing salary as required to be mentioned under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars required under Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure to this Report.

DIRECTOR'S RESPONSIBILITY STATEMENT

The Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The directors had prepared the annual accounts on "going concern basis".

CORPORATE GOVERNANCE

A separate section on Corporate Governance is included in the Annual Report and the Certificate from the Company's auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is annexed thereto.

ACKNOWLEDGMENT

The Board places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed to the performance and the Company's continued inherent strength. It also extends its gratitude to the Central and various State Governments, the investors, the bankers, financial institutions and district level authorities for the support extended to the Company from time to time. Shareholders' appreciation of the management's efforts expressed at the general meetings of the Company and otherwise, is a great fillip in the untiring effort for better performance year after year.

For and on behalf of the Board

Place: Mumbai

Date: 29.05.2014 Ajay Anand Chairman & Managing Director

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