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Directors Report of Koutons Retail India Ltd.

Mar 31, 2012

Dear Shareholders,

The Directors have immense pleasure in presenting the 18th Annual Report on the business and operations of the Company together with the audited statements of accounts of the Company for the year ended 31st March, 2012.

FINANCIAL HIGHLIGHTS

The financial results of the Company for the year under review are compared below with the previous year''s results for your consideration:

(Rs. in Lacs)

For the year For the year ended ended 31.03.2012 31.03.2011

Sale & Other Income 16703.13 54135.63

Profit/loss before Depreciation (19466.57) (41393.61)

Profit/loss before Tax (19650.78) (42720.99)

Income Tax Provision 0.00 0.00

Deferred Tax liability (6306.29) (16780.07)

Profit/loss after Tax (13344.99) (31393.81)

Profit & Loss Appropriation 46.13 61.86

Amt. brought forward from previous year (8281.33) 23174.34

Balance carried to Balance Sheet (21672.45) (8281.33)

TRANSFER TO RESERVES:

No portion of profits has been transferred to General Reserve Account during the financial year.

DIVIDEND

In order to keep the continue phase of diversification, additional funds will be required by your company. In pursuance of the same and also to meet the future funds requirements of the Company, the Board of Directors of your company decided to use their internal sources/funds, along with the other sources, for meeting the said additional funds requirements of the Company.

In view of the same, the directors of your company regret their inability to recommend any dividend for the current financial year ending on 31st March 2012.

SUBSIDIARY COMPANY:

During the Financial Year 2011-12, the Company has only one subsidiary Company viz., M/s. DBG Retail Holdings Limited. The statement pursuant to Section 212 of the Companies Act, 1956 is attached and forms part of the Annual Report.

In accordance with Accounting Standard 21 relating to consolidated financial statements your Directors have pleasure in attaching the said consolidated financial statements, which form part of this report and accounts. These statements have been prepared on the basis of audited financial statements received from the Subsidiary Company as approved by its Board.

PRIVATE PLACEMENT:

The Company with a view to expand its business and to integrate its IT operations and for general corporate purposes as may be decided by the Board in the best interest of the Company, it is proposed to raise funds up to the tune of Rs. USD 200 Million in one or more tranches through a public issues and/or on a private placement basis and/or QIP within the meaning of Chapter VIII of SEBI (issue of Capital and Disclosure Requirements) Regulations 2009 and/or preferential issue and/or any other kind of public issue and/or Foreign Currency Convertible Bonds ("FCCBs"), Optionally Convertible Debentures ("OCD"), bonds with share warrant attached, Global Depository Receipts ("GDR"), American Depository Receipts ("ADR") or any other equity related instrument of the Company or a combination of the foregoing.

CORPORATE GOVERNANCE:

Committed to good corporate governance practices, your Company fully confirm to standards set out by SEBI and other regulatory authorities and has implemented and complied with most of its major stipulations. Koutons Retail India Limited is committed to conduct the business of the company with the highest level of integrity and transparency. The commitment of your company is clearly reflected in the business activities of the company. As per clause 49 of the Listing Agreement, a report on Corporate Governance along with Compliance Certificate from the Practising Company Secretary form part of the Annual Report.

Code of Conduct

As per Clause 49(I)(D), the Board of the Company has laid down Code of Conduct for all the Board members of the Company and senior management as well and the same has been posted on website of the Company. Annual Compliance Report for the year ended 31st March 2012 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct. Declaration regarding compliance by Board Members and senior management personnel with the Company''s Code of Conduct is hereby attached as annexure to this report.

MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis, forming part of this report as required under clause 49(IV)(F) of the Listing Agreement with the stock exchanges is annexed to this report.

DEPOSITS:

The Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975 made there under.

LISTING FEES:

The equity shares of your company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The annual listing fee for the financial year 2012-13 has been paid.

DEMATERIALISATION OF SHARES:

Your company has entered into agreements with the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for dematerialization of the shares of the company. Accordingly the shares of the company are available for dematerialization and can be traded in Demat form.

DEMAT SUSPENSE ACCOUNT

As on 31.03.2012, 214 Equity Shares of 12 Shareholders were lying in the Escrow Account due to non-availability of the correct particulars. Despite of the several reminders being sent at the address given in the Application form as well as captured in depository''s database, by the Registrars to the Issue, viz., M/s Karvy Computer share Private Limited no response has been received. As a result the said unclaimed shares are/or being credited to the ''Koutons Retail India Limited - Demat Suspense Account'' opened with Karvy Stock Broking Limited in view of the compliance of the provisions of Clause 5A of the Listing Agreement. Every successful allottee who has not received the shares in its demat Account may approach the Company or its RTA with their correct particulars and proof of their identity for crediting of the Shares from the Demat Suspense Account to their individual demat Account. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

DIRECTORS: Changes since last Annual General Meeting

The following changes took place in the Board of Directors of the Company since the date of last Annual General Meeting:

- Mr. Rajeev Khandelwal & Mr. Parvesh Ahuja have expressed their inability to continue with their journey with the Company, due to their personal preoccupations. They have resigned from the Board w.e.f 21s'' February 2012 & 18th July 2012. The Board expresses its gratitude towards the contribution they made during their tenure, has resigned from the post of Director of the Company and Board accepted the same.

- Mr. Ashwini Kumar and Mr J M Bharadwaj have been appointed on 17th May 2012 & 15th June 2012 respectively as Additional Directors of the Company in terms of the provisions of Section 260 of the Companies Act, 1956, they hold office upto the date of ensuing Annual General Meeting of the Company.

It is proposed to regularize their appointment in the ensuing Annual General Meeting.

Retirement of Directors by Rotation

Pursuant to the provisions of the Companies Act, 1956, Mr.D PS Kohli and Mr. G SSawhney Directors of your Company, retire by rotation at the ensuing Annual General Meeting of your Company, and being eligible, have offered themselves for re- appointment.

Brief resume of the Directors proposed to be appointed / re-appointed, nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership/ chairmanship of the Board / Committees, as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

STATUTORY DISCLOSURE:

The Directors of the Company have made necessary disclosures, as required under various provisions of the Act and Clause 19 of the Listing Agreement. , ,

AUDITORS AND AUDITORS'' REPORT

M/s. R Chadha & Associates, Chartered Accountants, statutory auditors of the company, hold office until the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. Further M/s B Bhushan & Co., Chartered Accountants will be appointed to act as Joint Auditor of the Company, hold office until the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Company has received a letter from M/s R Chadha & Associates and M/s B Bhushan & Co. for their appointment/reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/reappointment within the meaning of Section 226 of the said act.

The Notes on Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further comments.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, none of the employee is in receipt of aggregate remuneration of Rs. 60,00,000/- or more if employed throughout the year.

DIRECTOR''S RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, the Directors hereby confirm that:

1. in the preparation of the annual accounts for the year ended 31st March, 2012, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period;

3. the Directors had 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;

4. the Directors had prepared the annual accounts on a going concern basis.

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

Information in accordance with the provisions of Section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given below:

Information pursuant to section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, as amended and forming part of the Directors'' Report for the financial year ended 31st March, 2012.

A. ENERGY CONSERVATION

a) Energy conservation measure taken Nil

b) Additional investment and proposal, if any, being implemented for reduction of consumption Nil

c) Impact of measure at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. Nil

d) Total energy consumption and energy consumption per unit of production: N.A

B. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION

The particulars regarding absorption of technology is given below as per Form B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988: FORM B

Form of Disclosure of particulars with respect to Absorption, Research and Development (R&D)

(1) Specific areas in which R & D is carried out by the Company:

Manufacture of fashion garments as per Indian and international trends and standards are the areas in which general research and development work pertaining to the manufacturing process is carried out by the Company.

(2) Benefits derived as a result of the above R&D:

Product Improvement.

(3) Future Plan of Action:

Appropriate actions are being planned.

(4) Expenditure on R&D:

(a) Capital:)

(b) Recurring:) Included in the

(c) Total:) manufacturing

(d) Total R&D expenditure as a percentage of total turnover) cost.

Technology Absorption, Adaptation and Innovation:

(1) Efforts in brief made towards technology absorption, adaptation and innovation:

The Company is monitoring the technological upgradation taking place in other countries in the field of garment manufacturing and the same are being reviewed for implementation

(2) Benefit derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc.

Product Improvement.

(3) In case of Imported Technology (Imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished:

(a) Technology Imported: N.A

(b) Year of Import: N.A

(c) Has technology been fully absorbed NIL

(d) lfnotfullyabsorbed,areaswherethishasnottaken ) place, reasons therefore and future plans of action: )

FOREIGN EXCHANGE EARNINGS AND OUT GO:

Activities relating to export : N.A.

initiatives to increase exports : N.A.

Developments of New export markets for products : N.A.

and services and Export plan :N.A.

During the year under review, the Company has not made any export of its goods and services, whereas, the company has continued to maintain focus on and avail of export opportunities based on economic consideration.

Foreign Exchange Earning and Outgo: (Rs. In Lacs)

a) Imports on C/F basis Nil

b) Expenditure in Foreign Currency (Foreign traveling Directors) Nil

c) Earning in Foreign Currency 370.25

The Company mainly deals in domestic market.

ACKNOWLDEGEMENT

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from Banks, Government Authorities and shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation forthe devoted services of the executives, staff and workers of the Company for its success.

Date: 27 December 2012 For and on behalf of Board of Directors

Place: Gurgaon D P S Kohli

Chairman


Mar 31, 2011

Dear Shareholders,

The Directors have immense pleasure in presenting the 17th Annual Report on the business and operations of the Company together with the audited statements of accounts of the Company for the year ended 31st March, 2011.

FINANCIAL HIGHLIGHTS

The financial results of the Company for the year under review are compared below with the previous year's results for your consideration:

(Rs.in lacs) for the year ended For the year ended 31.03.2011 31.03.2010

Sale & Other Income 54135.63 120667.26

Profit /loss before Depreciation (41393.61) 14095.21

Profit /loss be fore Tax (42720.99) 12451.83

Income Tax Provision 0.00 4313.81

Deferred Tax liability (16780.07) (42.94)

Profit/loss aft er Tax (31393.81) 8179.97

Profit & Loss Appropriation 61.86 2266.53

Amt. brought forward from previous year 23174.34 17260.90

Balance carried to Balance Sheet (8281.33) 23174.34

TRANSFER TO RESERVES:

No portion of profits has been transferred to General Reserve Account during the financial year.

DIVIDEND

In order to keep the continues phase of diversification, additional funds will be required by your company. In pursuance of the same and also to meet the future funds requirements of the Company, the Board of Directors of your company decided to use their internal sources/funds, along with the other sources, for meeting the said additional funds requirements of the Company.

In view of the same, the directors of your company regret their inability to recommend any dividend for the current financial year ending on 31st March 2011.

SUBSIDIARY COMPANY:

During the Financial Year 2010-11, the Company has only one subsidiary Company viz., M/s. DBG Retail Holdings Limited. The statement pursuant to Section 212 of the Companies Act, 1956 is attached and forms part of the Annual Report.

In accordance with Accounting Standard 21 relating to consolidated financial statements your Directors have pleasure in attaching the said consolidated financial statements, which form part of this report and accounts. These statements have been prepared on the basis of audited financial statements received from the Subsidiary Company as approved by its Board.

PRIVATE PLACEMENT:

The Company with a view to expand its business and to integrate its IT operations and for general corporate purposes as may be decided by the Board in the best interest of the Company, it is proposed to raise funds to the tune of Rs.4,00,00,00,000/- 13 (Rupees Four Hundred Crores Only) in one or more trenches through a public issues and/or on a private placement basis and/or QIP within the meaning of Chapter VIII of SEBI (issue of Capital and Disclosure Requirements) Regulations 2009 and/or preferential issue and/or any other kind of public issue and/or Foreign Currency Convertible Bonds ("FCCBs"), Optionally Convertible Debentures ("OCD"), bonds with share warrant attached, Global Depository Receipts ("GDR"), American Depository Receipts ("ADR") or any other equity related instrument of the Company or a combination of the foregoing.

The resolution contained in the business of the Notice is regarding proposal to create, offer, issue and allot equity shares and/or such other Securities as stated in the Special Resolution (the "Securities") which seeks to empower the Board of Directors (hereinafter referred to as "Board" which include any Committee thereof, whether constituted or to be constituted to undertake such issue or offer of securities.

The detail of the issue and other particulars are as under:-

(i)Securities to be issued: The Resolution set out in the accompany Notice is an enabling resolution, entitling the Board to issue equity shares or other securities convertible into or exchangeable with the equity shares as may be deemed appropriate in the best interest of the Company.

(ii) In case of issue of ADRs/GDRs the issue price shall be at a price, being not less than the price calculated in accordance with applicable law including the issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, as may be amended from time to time.

(i) Terms of Shares: The equity shares to be issued as above shall rank pari-passu in all respects with the existing equity shares of the Company. The equity shares shall be subject to the Memorandum and Articles of Association of the Company.

(ii) Purpose of issue: Expansion of business, Integration of IT operations and up gradation of network, and for General Corporate purpose as may be decided by the Board in the best interest of the Company.

CORPORATE GOVERNANCE:

Committed to good corporate governance practices, your Company fully confirm to standards set out by SEBI and other regulatory authorities and has implemented and complied with all of its major stipulations. Koutons Retail India Limited is committed to conduct the business of the company with the highest level of integrity and transparency. The commitment of your company is clearly reflected in the business activities of the company. As per clause 49 of the Listing Agreement, a report on Corporate Governance along with Compliance Certificate from the Practicing Company Secretary form part of the Annual Report.

Code of Conduct

As per Clause 49(I)(D), the Board of the Company has laid down Code of Conduct for all the Board members of the Company and senior management as well and the same has been posted on website of the Company. Annual Compliance Report for the year ended 31st March 2011 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct . Declaration regarding compliance by Board Members and senior management personnel with the Company's Code of Conduct is hereby attached as annexure to this report.



MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis, forming part of this report as required under clause 49(IV)(F) of the Listing Agreement with the stock exchanges is annexed to this report.

DEPOSITS:

The Company has not accept any deposit within the meaning of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975 made there under.

LISTING FEES:

The equity shares of your company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The annual listing fee for the financial year 2011-12 has been paid.

DEMATERIALISATION OF SHARES:

Your company has entered into agreements with the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for dematerialization of the shares of the company. Accordingly the shares of the company are available for dematerialization and can be traded in Demat form.

DEMAT SUSPENSE ACCOUNT:

As on 31.03.2011,197 Equity Shares of 11 Shareholders were lying in the Escrow Account due to non-availability of the correct particulars. Despite of the several reminders being sent at the address given in the Application form as well as captured in depository's database, by the Registrars to the Issue, viz., M/s Karvy Computer share Private Limited no response has been received. As a result the said unclaimed shares are/or being credited to the 'Koutons Retail India Limited - Demat Suspense Account' opened with Karvy Stock Broking Limited in view of the compliance of the provisions of Cause 5A of the Listing Agreement. Every successful allotted who has not received the shares in its demat Account may approach the Company or its RTA with their correct particulars and proof of their identity for crediting of the Shares from the Demat Suspense Account to their individual demat Account. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

DIRECTORS:

Changes since last Annual General Meeting

The following changes took place in the Board of Directors of the Company since the date of last Annual General Meeting :

- Mr. Anil Kevin Khatod, Mr. Rajeev Grover, Mr. Ajay Mittal, Mr. K. Santahanam, Mr. V.C. Sinha, Mr. G.C. Raghubir, Mr. V.K. Gupta and Mr. G.S. Bhalla have resigned from the post of Director of the Company and Board accepted the same.

- Mr. Parvesh Ahuja, Mr. Rajeev Khandelwal, Mr. Munish Kumar Katara have been appointed on 03/02/2011 and Mr Dilvinder Singh has been appointed on 20/08/2011 as Additional Directors of the Company on in terms of the provisions of Section 260 of the Companies Act, 1956, they hold office upto the date of ensuing Annual General Meeting of the Company.

It is proposed to regularize their appointment in the ensuing Annual General Meeting.

Retirement of Directors by Rotation

Pursuant to the provisions of the Companies Act, 1956, Mr. B S Sawhney and Mr. Kailash Chandra Sharma, Directors of your Company, retire by rotation at the ensuing Annual General Meeting of your Company and being eligible, have offered themselves for re-appointment.

Brief resume of the Directors proposed to be appointed / re-appointed, nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership / chairmanship of the Board / Committees, as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

STATUTORY DISCLOSURE:

None of the Directors of your Company is disqualified as per provision of section 274(1)(g) of the Companies Act, 1956. The Directors of the Company have made necessary disclosures, as required under various provisions of the Act and Clause 19 of the Listing Agreement.

AUDITORS AND AUDITORS' REPORT

M/s. R. Chadha & Associates, Chartered Accountants, statutory auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting. The Company has received a letter from M/s R. Chadha & Associates for their appointment/re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/reappointment within the meaning of Section 226 of the said act.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, none of the employee is in receipt of aggregate remuneration of Rs.60,00,000/- or more if employed throughout the year .

DIRECTOR'S RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, the Directors hereby confirm that :

1. in the preparation of the annual accounts for the year ended 31st March, 2011, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period;

3. the Directors had 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;

4. the Directors had prepared the annual accounts on a going concern basis.

ACKNOWLDEGEMENT

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from Banks, Government Authorities and shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation for the devoted services of the executives, staff and workers of the Company for its success.

For and on behalf of the Board of Directors

sd/-

Date: August 26, 2011 DPS Kohli

Place: Gurgaon Chairman

 
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