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Directors Report of Hanung Toys & Textiles Ltd.

Mar 31, 2015

Dear Members,

The Directors present the 25th Annual Report of the Company together with the standalone and consolidated audited statements of Financial Accounts of the year ended March 31, 2015.

FINANCIAL HIGHLIGHTS:

The following table gives the financial highlights of your company on a standalone basis according to the Indian Generally Accepted accounting Principles (GAAP)

FINANCIAL RESULT (STANDALONE) (in Lacs)

Particulars 2014-15 2013-14

Net Sale & other Income 13642 50054

Profit / (Loss) Before Interest, Depreciation & Tax (93314) (36237)

Financial Overheads 27173 23062

Depreciation 6236 4480

Net Profit/(Loss) Before Tax (126723) (63779)

Provision for Tax -- --

- Current -- --

- Deferred -- (11963)

- Tax for earlier years -- (2237)

Net Profit/(Loss) after Tax (126723) (49578)

Appropriations

Proposed Dividends Nil Nil

Provision for Tax for Dividends Nil Nil

Surplus carried forwards to Balance Sheet (126723) (49578)

Transfer to General Reserve --

Net Surplus carried forwards to Balance Sheet --

FINANCIAL RESULTS (Consolidated)

The following table gives the financial highlights of your company on a consolidated basis according to the Indian Generally Accepted Accounting Principles (GAAP).

(in Lacs) Particulars 2014-15 2013-14

Net Sale & other Income 13642 50080

Profit / (Loss) Before Interest, Depreciation & Tax (91363) (35326)

Financial Overheads 27174 23063

Depreciation 6237 4482

Net Profit/(Loss) Before Tax (124774) (62871)

Provision for Tax -- --

- Current -- --

- Deferred -- (11963)

- Tax for earlier years -- (2237)

Net Profit/(Loss) after tax before Minority interest (124774) (48670)

Minority interest in income/(loss) -- 4

Net Profit /(Loss) after Tax & Minority Interest (124774) (48666)

Appropriations

Proposed Dividends -

Provision for Tax for dividends -

Surplus carried forwards to Balance Sheet (124774) (48666)

Transfer to General Reserve -

Net Surplus carried forwards to Balance Sheet -

Erosion of Net Worth and reference to the Board for Industrial and Financial Reconstruction (BIFR)

The operating results have been adversely affected due to adverse market conditions, non receipt of Tuff's subsidy and blockage of substantial funds in slow/ non moving stocks and debtors. The Company faced severe liquidity crunch and huge scarcity in the working capital funds. In order to partially mitigate the working capital fund scarcity and arrest the further deterioration in the quality of stocks, the Company affected disposal of stocks of slow moving / non moving fabrics and finished goods at market prices, which in most of the cases was well below the cost, resulting in losses. The Company settled its old debtors by allowing their pending debit notes, quality discount and /or taking the material back, which further contributed losses to the Company.

On accumulated losses of the Company exceeding the entire net worth, the Company made a reference with the Board for Industrial and Financial Reconstruction in terms of the provisions of section 15(1) of Sick Industrial Companies (Special Provision) Act 1985, which has since been registered by the Hon'ble BIFR as case No. 54/2015.

OVERVIEW AND REVIEW OF OPERATIONS

The Indian Toys and Textiles Industry witnessed challenging times as a results of low growth led by issues such as high fiscal deficit, high inflation and worsening current account balance. The slowdown in the global growth aggravated the sluggishness in the economy. Apart from the un-favorable demand supply scenario the industry has been also reeling under the pressure of rising manufacturing cost.

The gross sales and other income for the financial year under review were Rs. 13642 lacs as against Rs. 50054 lacs for the previous financial year. During the Year under review the Company has incurred Losses after Tax of Rs 126723 lacs as against the Losses of Rs. 49578 lacs for the previous year.

The Loss of the company has increased due to increase in finance cost and increase in depreciation due to change in method as prescribed by the Companies Act 2013 during the year. The Company expects to improve its working in the next financial year.

DIVIDEND

The Board of Directors has decided not to recommend any dividend due to non availability of profit during the year.

CORPORATE DEBT RESTRUCTURING

The Company had approached it's lead banker and lender, i.e., Punjab National Bank for restructuring of its debt under CDR mechanism, and accordingly, the lead banker referred the matter to CDR Empowered Group on 31st July, 2013. The case of the Company was admitted under CDR on 26th September, 2013, and the CDR scheme was discussed in CDR EG meeting held on 21.04.2014, and was approved in the meeting held on 23rd May, 2014 and the same was informed to the Company on 16th June, 2014.

The main features of CDR scheme are as below:

1. Cutoff date is 1st April 2013.

2. Moratorium period will be 2 years and repayment in 8 years.

3. Rate of interest on term loan is reduced to 11% p.a.

4. Rate of interest on working capital and FITL (Funded interest Term Loan) is reduced to 10.50%p.a.

5. Waiver of all liquidity damages and penal interest and penal charges etc.

6. Promoter's contribution Rs.83.68 crores to be brought in within one year.

7. Conversion of interest for initial 24 month into FITL (Funded interest Term Loan) with repayment period of 6 years.

BUSINESS

The Company's main operations consist of Manufacturing of Soft Toys and Home Furnishings.

EMPLOYEE STRENGTH

The total numbers of permanents employees on the rolls of the company was 448 as on March 31, 2015,

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure-B forming part of the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure-A forming part of the Annual Report.

Having regard to the provisions of Section 136(1) read with its relevant provisions of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

CORPORATE GOVERNANCE

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause-49 of the Listing Agreement with the Stock Exchanges. The report on Corporate Governance forms part of the Annual Report.

The statutory auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under clause 49 of the Listing Agreement. The certificate in this regard forms part to the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard (AS) 21 on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report.

SUBSIDIARIES

Pursuant to section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's subsidiaries (in Form AOC-1) is attached to the financial statement.

The Annual Accounts of the subsidiary companies and the related detailed information are available at any time to shareholder of the parent company and subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the Company's Corporate office.

DIRECTORS

Mr. Abhishek Monu Kaushik was appointed as an additional director (Independent) on 9th April 2015 and Mrs. Deepika Gera appointed as an Additional Director (Independent) on 30th June 2015. These Directors will hold the office till the date of forthcoming Annual General Meeting. A Notice in writing has been received from Members signifying their intention to propose the appointment of Mr. Abhishek Monu Kaushik and Mrs. Deepika Gera as a Director under independent Director category at the Annual General Meeting to hold office for 5 consecutive years with effect from their appointment without being subject to retirement by rotation.

During the Year Mr. C.S. Batra ceased to be Director with effect from 25th Nov. 2014 and Mr. R.K. Pandey, ceased to be Director with effect from 22nd June 2015, The Directors wish to place on record the valuable guidance and services rendered by the independent Directors during their tenure as Independent director of the Company.

Mr. Umesh Dhal ceased to be C.F.O with effect from 21st May 2015 Pursuant to Rule 895 (iii) of the Companies (Accounts) Rules 2014 It is reported that other than the above there have been no changes in the Directors or Key Managerial Personnel during the Year.

STATUTORY AUDITOR

M/s Ravindra Sharma & Associates, New Delhi has been appointed as Statutory Auditor in place of M/s AMRG & Associates New Delhi under section 139 (8) of the Companies Act 2013. M/s AMRG & Associates has resigned during the year and M/s Ravindra Sharma & Associates, New Delhi appointed to fill the casual vacancy caused by M/s AMRG & Associates New Delhi.

M/s Ravindra Sharma & Associates, New Delhi, the Statutory Auditor have confirmed their eligibility to the effect that their reappointment would be within the prescribed limits under the Companies Act 2013 and that they are not disqualified for reappointment.

The Report of the Statutory Auditors for the year ended 31st March 2015 does not contain any qualification, reservation or adverse remark.

AUDITORS QUALIFICATION SYSTEM ON ACCOUNTS

Notice to the accounts, as referred in the auditor's report, are self- explanatory and consistently followed and therefore do not call to any further comments and explanations.

COST AUDITOR

In terms of the provisions of The Companies Act, The Board of Directors of your company have on the recommendation of the Audit Committee, Appointed M/s Chandra Sharma & Co. Vaishali, Ghaziabad as Cost Auditor to conduct the cost audit of your company for the financial year ending 31st March 2016 subject to the approval of the Central Government.

The Audit Committee has received a certificate from the Cost Auditor certifying their independence and arm's length relationship with the company.

COMPLIANCE UNDER COMPANIES ACT, 2013

Pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, your Company complied with the compliance requirements and the detail of compliances under Companies Act, 2013 are enumerated below:

EXTRACT OF ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act 2013 read with Rules 12(1) of Companies (Management and Administration) Rules 2014 an extract of the Annual Return in Form MGT-9 is attached herewith as Annexure-E.

BOARD MEETING HELD DURING THE YEAR

During the year, 17 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-C to this Report.

DIRECTORS' RESPONSIBILTY STATEMENT

To The best of our knowledge and belief and according to the information and explanation obtained by us, your Directors make the following statements in the terms of section 134(3)(c) of the Companies Act, 2013:

1. in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

2. for the financial year ended March 31, 2015, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended March 31, 2015.

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. the annual financial statements have been prepared on a going concern basis.

5. that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively.

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

SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company engaged the services of M/s NG & Associates, New Delhi Company Secretary in practice to conduct the Secretarial Audit of the Company for the financial year ended on 31st March 2015. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-D to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis Report, highlighting the Performance and Prospects of the Company's energy and environment segments including details if subsidiaries catering to the respective business, is attached.

LISTING OF STOCK EXCHANGES

The company's equity shares are listed on two stock exchanges- National Stock Exchange of India Ltd (NSE), and Bombay Stock Exchange Ltd (BSE).

PUBLIC DEPOSITS

The Company had no unpaid / unclaimed deposit(s) as on March 31, 2015. During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V – Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.It has not accepted any fixed deposits during the year.

CODE OF CONDUCT COMPLIANCE

Pursuant to clause 49 of the Listing agreement entered with the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, the declaration signed by the Managing Director affirming compliance with the code of Conduct by the Director's and senior management personnel, for the financial year 2014-2015 is annexed and forms part of the Directors and Corporate Governance Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The particulars prescribed under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are furnished in Annexure A to this Report.

CAUTIONARY STATEMENT

Statements made in the Report, including those stated under the caption "Management Discussion and Analysis" describing the Company's plans, projections and explanations may constitute "forwards looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

REGISTRAR AND SHARE TRANSFER AGENT

M/s Karvy Computershare Private Limited, Hyderabad, is the Registrar and Share Transfer Agent of the Company. Details of the depository system and listing shares are given in a part of the "Additional Shareholders Information", which forms a part of the Corporate Governance Report and is attached with the Annual Accounts.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere thanks to the Company's clients, vendors, investors, and bankers for their continued support to the Company during the year. The Directors wish to place on record their appreciation of the contributions made by employees at all levels.

We thank the Government of India, State Government and other Government agencies for their support and look forward to their continued support in future.

By order of the Board

For Hanung Toys and Textiles Limited

Place : Noida Ashok Kumar Bansal

Date : August 14, 2015 Chairman-cum-Managing Director


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 24th Annual Report of the Company together with the standalone and consolidated audited statements of Financial Accounts of the year ended March 31, 2014.

FINANCIAL HIGHLIGHTS:

The following table gives the financial highlights of your company on a standalone basis according to the Indian Generally Accepted accounting Principles (GAAP)

FINANCIAL RESULT (STANDALONE) (Rs. in Lacs)

Particulars 2013-14 2012-13

Net Sale & other Income 50054 180557

Profit Before Interest, Depreciation & Tax (36237) 31163

Financial Overheads 23062 16618

Depreciation 4480 6556

Net Profit/(Loss) Before Tax (63779) 7989

Provision for Tax

* Current - 1685

* Deferred (11963) (84)

Tax for earlier years (2237) (216)

Net Profit/(Loss) after Tax (49578) 6604

Appropriations

Proposed Dividends Nil 532

Provision for Tax for Dividends Nil 86

Surplus carried forwards to Balance Sheet (49578) 5986

Transfer to General Reserve 3500

Net Surplus carried forwards to Balance Sheet - 2486

FINANCIAL RESULTS (Consolidated)

The following table gives the financial highlights of your company on a consolidated basis according to the Indian Generally Accepted Accounting Principles (GAAP)

(Rs. in Lacs)

Particulars 2013-14 2012-13

Net Sale & other Income 50080 181480

Profit Before Interest, Depreciation & Tax (35326) 28826

Financial Overheads 23063 16619

Depreciation 4481 6558

Net Profit Before Tax (62870) 5649

Provision for Tax

* Current - 1685

* Deferred (11963) (84)

Tax for earlier years (2237) (217)

Net Profit after tax before Minority interest (48670) 4265

Minority interest in income/(loss) 4 4

Net Profit after Tax & Minority Interest (48666) 4269

Appropriations

Proposed Dividends - 532

Provision for Tax for dividends - 86

Surplus carried forwards to Balance Sheet 3651

Transfer to General Reserve 3500

Net Surplus carried forwards to Balance Sheet 151

RESULTS OF THE OPERATION

The Indian Toys and Textiles Industry witnessed challenging times as a results of low growth led by issues such as high fiscal deficit, high inflation and worsening current account balance. The slowdown in the global growth aggravated the sluggishness in the economy. Apart from the un-favorable demand supply scenario the industry has been also reeling under the pressure of rising input costs. The prices of key raw materials have soared.

The gross sales and other income for the financial year under review were Rs. 50054 lacs as against Rs. 180557 lacs for the previous financial year. During the Year under review the Company has incurred Losses after Tax of Rs. 49578 as against the Profit of Rs. 6604 lacs for the previous year.

The Profit after Tax decreased due to increase in Finance Cost of the Company during the year. The Company expects further to improve its working in next year after implementation of Corporate Debt Restructure mechanism.

DIVIDENDS

The Board of Directors has decided not to recommend any dividend due to non availability by of profit during the year.

CORPORATE DEBT RESTRUCTURING

The Company had approached it''s lead banker and lender, i.e., Punjab National Bank for restructuring of its debt under CDR mechanism, and accordingly, the lead banker referred the matter to CDR Empowered Group on 31st July, 2013. The case of the Company was admitted under CDR on 26th September, 2013, and the CDR scheme was discussed in CDR EG meeting held on 21.04.2014, and was approved in the meeting held on 23rd May, 2014 and the same was informed to the Company. The Company awaits confirmatory communication of the aforesaid approval. The Company continues to reflect the charges executed in favour of its lenders as were prior to restructuring and has accounted the financial effect of debt restructuring in its books of account; the variances in balances of lenders, if any, as are known on execution of restructuring documentation will be accounted at the time of execution of modification of charges.

The main feature of CDR mechanism is as below:

1. Cut off date is 31st march 2013.

2. Moratorium period will be 2 years and repayment is 8 years.

3. Rate of interest on term loan is reduced to 11%.

4. Rate of interest on working capital and FITL (Funded interest Term Loan) is reduced to 10.50%.

5. Waiver of all liquidity damages and penal interest and penal charges etc.

6. Promoter''s contribution Rs.8368 Lacs to be brought in within one year.

7. Conversion of interest for initial 24 month into FITL (Funded interest Term Loan) with repayment period of 6 years.

BUSINESS

The Company''s main operations consist of Manufacturing Toys and Home Furnishings.

SUBSIDIARIES

By a general circular (No. 2/2011 dated February 8, 2011), the Ministry of Corporate Affairs, Government of India, under Section 212(8) of the Companies Act,1956, has permitted companies not to attach copies of the balance sheets and profit & loss Accounts, Directors'' Reports, Auditors'' Reports, and other documents of all their subsidiaries, to the Accounts of the Company. The company has acted accordingly.

However, Annual accounts of the subsidiary companies and the related detailed information are available at any time to shareholder of the parent company and subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the company''s corporate office.

The Hanung (Shanghai) Limited and Cody Direct Corp, are subsidiary of the companies within meaning of Section 4 of Companies Act 1956.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis Report, highlighting the Performance and Prospects of the Company''s energy and environment segments including details if subsidiaries catering to the respective business, is attached.

CORPORATE GOVERNANCE

Report on Corporate Governance as required under Clause-49 of the Listing Agreement with the Stock Exchanges, forms part of the Annual Report. A Certificate from the Auditors of the Company M/s Rohtas & Hans, Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause-49, forms part to the Annual Report.

LISTING OF STOCK EXCHANGES

The company''s equity shares are listed on two stock exchanges- National Stock Exchange of India Ltd (NSE), and Bombay Stock Exchange Ltd (BSE).

PUBLIC DEPOSITS

The Company had no unpaid / unclaimed deposit(s) as on March 31, 2013. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total numbers of permanents employees on the rolls of the company was 1350 as on March 31, 2014.

PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars under Section 217(1) of the Companies Act, 1956 (the Act), read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexes and forms part of this Report.

DIRECTORS

There are Four Directors on the Board of Directors of the Company.

During the Year Mr. Sita Ram Goel and Col. S.K. Jain has resigned from the Board. The Board appreciated the services provided by Mr. Sita Ram Goel and Col. S.K. Jain.

Prior to coming into force of section 149 of the Companies Act 2013, two of the Company''s Directors, Mr. R.K. Pandey and Mr. C.S. Batra were categorized as independent directors in terms of the definition contained in the equity listing agreement.

The Provisions of Section 149(4) of the Companies Act, 2013 pertaining to the appointment of independent directors have been notified by the Ministry of Corporate affairs with effect from April 1,2014. Pursuant to the coming into force of Section 149 of the Companies Act 2013 from 1st April 2014, The Company has reassessed the status of its Directors with a view to determining their qualifying for classification as independent Directors in terms of Section 149(6) of the Companies Act 2013. Accordingly, R.K. Pandey and Mr. C.S. Batra fulfil the criteria laid out in section 149(6) of the Companies Act 2013 in this regard.

Section 149(10) of the Companies Act 2013 restricts the tenure of independent Director to two terms of up to ten years with a single term not exceeding five years, which shall be effective from April 1st 2014. The revised clause 49 of the Listing Agreement also contain the same provisions.

Mr. R.K. Pandey, and Mr. C.S. Batra, are liable to retire by rotation at the ensuring Annual General Meeting and being eligible, offer themselves for appointment as independent Directors pursuant to the Provisions of the Companies Act 2013 to hold the office for a period upto March 2019.

Additional Information and brief profile, as stipulated under the equity listing agreement for each of the above directors seeking re-appointment/appointment is annexed to the notice of the AGM.

Further, the business items relating to re-appointment/appointment of above directors have been included in the Notice of the AGM.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms that:

1) The Director 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 for the state of affairs of the Company as at March 31st 2014 and of the profit of the Company for the year ended on that date;

2) That the Directors have taken proper and sufficient care for the 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;

3) The annual accounts for the year ended March 31, 2014 have been prepared on a ''going concern'' basis. and

4) Proper systems are in place to ensure compliance of all laws applicable to the Company

STATUTORY AUDITOR

In term of office of M/s Rohtas & Hans, as statutory auditors of the Company will expire with the conclusion of forthcoming annual general meeting of the Company. M/s Rohtas & Hans, has been statutory auditors since long of Company.

The Board of Directors of the Company have subject to approval of the members decided to make change in the statutory auditors. This change is in order to comply with the condition of as mentioned in CDR Package as approved by CDR Cell. A special notice from Hanung Furnishing pvt Ltd. has been received proposing a resolution in the forthcoming annual general meeting for appointment of M/s AMRG & Associates, Auditor of the Company in place of M/s Rohtas & Hans being the retiring auditor.

A resolution proposing appointment of M/s AMRG & Associates and Saxena, as the statutory auditor of the company pursuant to section 139 of the companies act 2013 forms part of the notice.

M/s Rohtas & Hans, over many year have successfully met the challenge that the size and scale of the company''s operations pose for auditor and have maintained highest level of governance, rigour and quality in their audit. The Board of Directors on record its appreciation for the services rendered by M/s Rohtas & Hans as statutory auditor of the Company

AUDITORS QUALIFICATION SYSTEM ON ACCOUNTS

A. Observations in the Auditors'' Report are dealt within Notes to Accounts at appropriate places and being self- explanatory, need no further explanation.

B. The Auditors in their report to the members, have given qualified opinion and response of your directors with respect to it is as follow:

i. Company has a subsidiary Hanung (Shanghai) Ltd. in China. Since the purpose of opening a company in China is not fulfilled and has incurred continuous loss since its inception, the board of director has decided to windup the company so that further loss to be minimize. The process of winding up of the company has been initiated and it will take some time to complete the formalities. The effect of investment made in Hanung (Shanghai) Ltd. has been accounted after the completing the winding up process.

ii. Deferred tax assets of Rs. 10522 lacs are recognized on the principle of going concern and based on the future projection of taxable income as per TEV study done by Dun & Bradstreet Information Services India Pvt. Ltd. Since it is only one quarter passed from the date of closing of financial year, it''s too early to establish any negative performance of the company. The Directors are confident of the future business performance and growth of the company. The company has filed its income tax return for the assessment year 2012-13 on 31st January 2014. The company had also filed a petition with Hon''able Income tax Settlement Commission on 19.02.2014 in respect of income for the years ended March 31, 2011 to March 31, 2013, which was admitted vide its order dated 29.04.2014. The Company had discharged due and admitted liability of income tax based on favourable response from the Hon''ble Settlement Commission and further liability expected is dependent on outcome of disposal of the case by the Hon''ble Settlement Commission.

C. The Auditors in their annexure to audit report, have point out some opinion and response of your directors with respect to it is as follow:

i. Point no. 2 (c) of annexure to the audit report regarding slow moving inventory of Rs. 27269.26 lacs due to cancellation of export orders. The directors of the company are trying hard to realize the said inventory and are in the opinion to fully realizable over a period of 2-3 years.

ii. Point no. 9 of annexure to the audit report regarding Statutory dues; the company in general has been regular in remitting the statutory dues in time. The management has taken steps to avoid delays and as a matter of internal control also, statutory dues are being monitored for timely remittances. Since the company is facing financial crisis, all the pending statutory dues will be paid during the current financial year.

CODE OF CONDUCT COMPLIANCE

Pursuant to clause 49 of the Listing agreement entered with the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, the declaration signed by the Managing Director affirming compliance with the code of Conduct by the Director''s and senior management personnel, for the financial year 2013-2014 is annexed and forms part of the Directors and Corporate Governance Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

By the terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the Particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo are set out as an Annexure to this Report.

CAUTIONARY STATEMENT

Statements made in the Report, including those stated under the caption "Management Discussion and Analysis" describing the Company''s plans, projections and explanations may constitute "forwards looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

REGISTRAR AND SHARE TRANSFER AGENT

M/s Karvy Computershare Private Limited, Hyderabad, is the Registrar and Share Transfer Agent of the company. Details of the depository system and listing shares are given in a part of the "Additional Shareholders Information", which forms a part of the Corporate Governance Report and is attached with the Annual Accounts.

COST AUDITOR

In terms of the provisions of The Companies Act, The Board of Directors of your company have on the recommendation of the Audit Committee, Appointed M/s Chandra Sharma & Co. Vaishali, Ghaziabad as Cost Auditor to conduct the cost audit of your company for the financial year ending 31st March 2015 subject to the approval of the Central Government.

The Audit Committee has received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the company.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere thanks to the Company''s clients, vendors, investors, and bankers for their continued support to the Company during the year. The Directors wish to place on record their appreciation of the contributions made by employees at all levels.

We thank the Government of India, State Government and other Government agencies for their support and look forward to their continued support in future.

By order of the Board For Hanung Toys and Textiles Limited

Place : Noida Ashok Kumar Bansal Date :30th September, 2014 Chairman-cum-Managing Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 23rd Annual Report of the Company together with the standalone and consolidated audited statements of Financial Accounts of the year ended March 31, 2013

FINANCIAL HIGHLIGHTS:

The following table gives the financial highlights of your company on a standalone basis according to the Indian Generally Accepted accounting Principles (GAAP).

FINANCIAL RESULT (STANDALONE)

(Rs.in Lacs)

Particulars 2012-13 2011-12

Net Sale & other Income 180557 1,41,436

Profit Before Interest, Depreciation & Tax 31163 27,734

Financial Cost 16618 12,754

Depreciation 6556 2807

Net Profit Before Tax 7989 12,173

Provision for Tax

— Current 1685 631

— Deferred (84) 45

Tax for earlier years (216)

Net Profit after Tax 6604 11497

Appropriations

Proposed Dividends 532 504

Provision for Tax for Dividends 86 82

Surplus carried forwards to Balance Sheet 5986 10911

Transfer to General Reserve 3500 3,500

Net Surplus carried forwards to Balance Sheet 2486 7411

FINANCIAL RESULTS (Consolidated)

The following table gives the financial highlights of your company on a consolidated basis according to the Indian Generally Accepted Accounting Principles (GAAP)

(Rs.in Lacs) Particulars 2012-13 2011-12

Net Sale & other Income 181480 1,41,532

Profit Before Interest, Depreciation & Tax 28826 27,073

Financial Overheads 16619 12,755

Depreciation 6558 2,820

Net Profit Before Tax 5649 11,498

Provision for Tax

— Current 1685 631

— Deferred (84) 45

Tax for earlier years (217)

Net Profit after tax before Minority interest 4265 10,822

Minority interest in income/(loss) 4 2

Net Profit after Tax & Minority Interest 4269 10,824

Appropriations

Proposed Dividends 532 504

Provision for Tax for dividends 86 82

Surplus carried forwards to Balance Sheet 3651 10,238

Transfer to General Resen/e 3500 3,500

Net Surplus carried forwards to Balance Sheet 151 6,738

RESULTS OF THE OPERATION

The Indian Toys and Textiles Industry witnessed challenging times as a results of low growth led by issues such as high fiscal deficit, high inflation and worsening current account balance. The slowdown in the global growth aggravated the sluggishness in the economy. Apart from the un-favorable demand supply scenario the industry has been also reeling under the pressure of rising input costs. The prices of key raw materials have soared.

The gross sales and other income for the financial year under review were Rs. 180557 iacs as against Rs. 141436 lacs for the previous financial year registering an increase of 27.65%. The Profit before Tax (after interest and depreciation charges) of Rs.7989 as against Rs. 12173 lacs for the previous year registering a decrease by 34.37% and Profit after Tax of Rs.6604 lacs against Rs. 11497 lacs for the previous year registering a decrease by 42.56%.

The Profit after Tax decreased marginally due to increase in Finance Cost of the Company during the year. The Company expects further to improve its working in next year.

As regards the losses during the last two year, we did capex more than Rs. 300 Crore before financial year 2012 all the interest cost were charged to the capex. During last year all the interest as well as our incremental depreciation has been charged to the profit and loss account that was the main reason of huge losses of the company incurred.

DIVIDENDS

The Board of Directors at their meeting held on 26th June 2013 recommended the dividend for the Financial Year 2012-13. But as the Company is facing liquidity crunch and approached CDR for restructuring existing debt. Meanwhile our Bankers have protested against payment of the proposed dividend in view the application for restructuring of existing debt with CDR. Therefore the Board of Director has decided to withdraw its recommendation for payment of dividend for the financial year 2012-2013 keeping in view the strong protest by the Banks against payment of dividend.

CORPORATE DEBT RESTRUCTURING

The company has initiated discussions with its lenders to restructure its debts through corporate debt restructuring (CDR) mechanism and accordingly have filled a flash report with the CDR Cell Mumbai on 30th July 2013. We hope that the restructuring of debts will improve in the liquidity of the company, reduction in finance cost and strengthen the core operations of the Company. It will also lead to value addition of the stake holders in the long term.

BUSINESS

The Company''s main operations consist of Manufacturing Toys and Home Furnishings.

SUBSIDIARIES

By a general circular (No. 2/2011 dated February 8, 2011), the Ministry of Corporate Affairs, Government of India, under Section 212(8) of the Companies Act,1956, has permitted companies not to attach copies of the balance sheets and profit & loss Accounts, Directors'' Reports, Auditors'' Reports, and other documents of all their subsidiaries, to the Accounts of the Company. The company has acted accordingly.

However, Annual accounts of the subsidiary companies and the related detailed information are available at any time to shareholder of the parent company and subsidiary companies and to statutory authorities. On request, these documents will be made available for inspection at the company''s corporate office.

The Hanung (Shanghai) Limited and Cody Direct Corp, are subsidiary of the companies within meaning of Section 4 of Companies Act 1956.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis Report, highlighting the Performance and Prospects of the Company''s energy and environment segments including details if subsidiaries catering to the respective business, is attached.

CORPORATE GOVERNANCE

Report on Corporate Governance as required under Clause-49 of the Listing Agreement with the Stock Exchanges, forms part of the Annual Report. A Certificate from the Auditors of the Company M/s Rohtas & Hans, Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause- 49, forms part to the Annual Report.

LISTING OF STOCK EXCHANGES

The company''s equity shares are listed on two stock exchanges- ¦ National Stock Exchange of India Ltd (NSE), and Bombay Stock Exchange Ltd (BSE).

PUBLIC DEPOSITS

The Company had no unpaid / unclaimed deposit(s) as on March 31, 2013. It has not accepted any fixed deposits during the year.

EMPLOYEE STRENGTH

The total numbers of permanents employees on the rolls of the company was 2583 as on March 31, 2013 PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956

A statement of the particulars under Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexes and forms part of this Report.

DIRECTORS

There are six Directors on the Board of Directors of the Company.

During the year Mr. Ashwani Kumar Singla has resigned from the Board on 12th June 2013. The Board appreciated the services provided by Mr. Ashwani Kumar Singla during his tenure as a Director. Mr. Sita Ram Goel has been appointed as a additional director on 12th June, 2013.

By the terms of Article of Association, Mr. R.K. Pandey, and Col. S.K. Jain, is liable to retire by rotation at the ensuring Annual General Meeting and being eligible, offer themselves for reappointment. Brief resumes of the Directors proposed to be re-appointed, their expertise in specific functional areas and names of the companies in which they hold directorship / Membership / Chairmanship of the Board Committees, as stipulated under clause 49 of the listing agreement with the Stock Exchange have been provided in the report on Corporate Governance.

DIRECTORS'' RESPONSIBILTY STATEMENT

Pursuant to the requirements of section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

- That the preparations of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

- That 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 period under review.

- That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with company and for preventing and detecting fraud and other irregularities;

- That the Directors have prepared the annual accounts for the year ended March 31, 2013 on a ''going concern1 basis.

AUDITORS QUALIFICATION SYSTEM ON ACCOUNTS

Notice to the accounts, as referred in the auditors report, are self- explanatory and consistently followed and therefore do not call to any further comments and explanations.

CODE OF CONDUCT COMPLIANCE

Pursuant to clause 49 of the Listing agreement entered with the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, the declaration signed by the Managing Director affirming compliance with the code of Conduct by the Director''s and senior management personnel, for the financial year 2012-2013 is annexed and forms part of the Directors and Corporate Governance Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

By the terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the Particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo are set out as an Annexure to this Report.

CAUTIONARY STATEMENT

Statements made in the Report, including those stated under the caption "Management Discussion and Analysis" describing the Company''s plans, projections and explanations may constitute "forwards looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

REGISTRAR AND SHARE TRANSFER AGENT

M/s Karvy Computershare Private Limited, Hyderabad, is the Registrar and share Transfer Agent of the company. Details of the depository system and listing shares are given in a part of the "Additional Shareholders Information", which forms a part of the Corporate Governance Report and is attached with the Annual Accounts.

COST AUDITOR

In terms of the provisions of section 233 B of the Act, The Board of Directors of your company have on the recommendation of the Audit Committee appointed M/s Chandra Sharma & Co. Vaishali, Ghaziabad as Cost Auditor to conduct the cost audit of your company for the financial year ending 31st March 2014 subject to the approval of the Central Government.

The Audit Committee has received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the company.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere tharks tc the Company''s clients, vendors, investors, and bankers for their continued support to the Company during the year. The Directors wish to place on record their appreciation of the contributions made by employees at all levels.

We thank the Government of India, State Government and other Government agencies for their support and look to their continued support in future.

By order of the Board

For Hanung Toys and Textiles Limited

Place : Noida Ashok Kumar Bansal

Date : August 14, 2013 Chairman-cum-Managing Director

 
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