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Directors Report of Spice Islands Apparels Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Twenty Seventh Annual Report on the business and operations of the Company and the accounts for the financial year ended March 31st, 2015.

1. FINANCIAL RESULTS

The Company's financial performance, for the financial year ended March 31,2015 is summarised as below:

STANDALONE

Rs (in lacs)

Revenue from operations(net) and other income 2489.13

Profit Before Tax (PBT) 81.72

Provision for tax (including previous year (20.70) deferred tax)

Profit After Tax (PAT) 61.02

Balance brought forward from previous year 402.73

Depreciation adjustment 19.18

Profit available for appropriations 444.58

Appropriation

Proposed Equity Dividend 64.50

Taxon Proposed Equity Dividend 12.90

General Reserve 1.00

Surplus Carried to next year's account 366.18

During the year under review, the turnover of the Company registered an increase of about 49% over the financial year 2013-2014 and 95% over the financial year 2012-2013. In short the turnover has almost doubled in last two years. On the other hand other income has declined due to reasons beyond management's control.

The market in the Europe and Middle East looks brighter and the Management's efforts to push the sales in Middle East is yielding better results. The increased activity and tighter control over the expenses has resulted into a net profit of Rs.81.72 lacs as against Rs.48.41 lacs in the preceding year.

The current year has begun on a good note and the Company expects further improvement in its performance.

2. DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 1.50 per share. Dividend if approved by the shareholders, at the Annual General Meeting, will absorb Rs. 64.50 Lacs.

3. RESERVES

The Board proposes to transfer Rs. 1 Lac to General Reserve.

5. CHANGE IN NATURE OF BUSINESS

The Company continues to undertake the garment activity and during the year under review there is no change in the nature of its business.

6. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of the report.

7. SUBSIDIARY COMPANIES

The Company does not have any subsidiary/Associate Company.

8. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from a Company Secretary in Whole Time Practice confirming compliance forms an integral part of this report. Refer Annexure 'D1.

9. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the annual return in form MGT-9, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure-A and forms an integral part of this report.

10. DIRECTORS

During the year under review there is no change in directors of the Company.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

As per provisions of Section 152 of the Companies Act, 2013, one third of the total strength of directors is required to retire by rotation at every Annual General Meeting and they can offer themselves for reappointment, if eligible. At present the total strength of Board of directors of the Company is Six Directors out of which four are Independent Director and two are executive director. All independent directors were appointed for a period of 5 years with effect from 1st April 2014. The executive directors namely Mr. Umesh M. Katre was appointed as Managing Director for a period of 3 years with effect from 1st November, 2012. Mrs. Seema U. Katre, the Whole Time Director was appointed fora period of 3 years with effect from 11th November, 2013.

Since the Independent directors are not required to be calculated for the purpose of determining the directors liable to retire by rotation and the executive director are appointed for a particular period as per the terms of employment, no directors are retiring by rotation at the forth coming Annual General Meeting.

11. KEY MANAGERIAL PERSONNEL

During the year under review, the Company has designated / appointed following persons as Key Managerial Personnel:

Sr. No. Name of the Person Designation

1. Mr. Umesh M. Katre Chairman & Managing Director

2. Mr. Rohan U. Katre Chief Financial Officer

3. Mr. Pravin R Kokam Company Secretary*

*Appointed with effect from 29th May, 2015

12. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration the various aspects of the Board's functioning, composition of the Board and its Committees, execution and performance of the specific duties obligations and governance.

The performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

13. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The details of the number of meeting of the Board held during the financial year 2014-15 forms part of the Corporate Governance Report.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY

The Company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013.

The details of the investments made by Company are given in the notes to the financial statements.

15. WHISTLE BLOWER POLICY

The company has a whistle blower policy to report genuine concerns and grievances. The Whistle Blower Policy has been posted on the website of the company (www.spiceislandsapparelslimited.in).

16. REMUNERATION AND NOMINATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. The detail of this policy is available on the website of the Company.

17. RELATED PARTY TRANSACTION

All contracts / arrangement / transactions entered by the Company during the financial year with the related parties were in the ordinary course of business and on an Arm's length basis. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of Related Party Transactions.

The Policy of materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on Company's website (www.spiceislandsapparelslimited.in).

Your Directors draw attention of the members to Note 36 to the financial statement which sets out related party disclosure.

18.SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

19. PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the TradingWindow is closed. The Board is responsible for implementation of the Code.

All Board of Directors and the designated employees have confirmed compliance with the Code.

20. DIRECTOR'S 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 statements in terms of Section 134(3) (c) of the Companies Act, 2013:

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

(b) 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date;

(c) 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, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) that the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

(f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

21.STATUTORY AUDIT

Messrs T D Jain and D I Sakaria, Chartered Accountants, (Firm Registration No: 002491S) who are Statutory Auditors of the Company and holds office upto forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the financial year 2015-16. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from Messrs TD Jain and DI Sakaria that their appointment, if made, would be in conformity with the limits specified in the said Section.

22.COST AUDIT

Pursuant to the provisions of Section 148 of the Companies Act, 2013, the Company had carried out audit of cost records for the year ended 31st March, 2014 and the Cost Audit Report for the financial year 2013-14 was filed with the Ministry of Corporate Affairs on 2nd January, 2015.

The Companies (Cost Records and Audit) Rules 2014, as notified with effect from 30th June, 2014 lays down in detail the rules for applicability of maintenance of cost records and the audit thereof. None of the criteria are applicable to the Company and accordingly no audit of the cost records is carried out for the year ended 31st March, 2015.

23.SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed Messrs Nitesh Jain & Co., a firm of Company Secretaries in practice (C.RNo.8582) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure B and forms an integral part of the Report. It may be noted that with effect from 29th May, 2015 the Company has appointed Whole Time Company Secretary in terms of provisions of section 203 of the Companies Act, 2013. This replies to the observation of Secretarial Auditor. Except this there are no qualifications in Secretarial Audit Report.

24.INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has in place proper and adequate internal control systems commensurate with the nature of its business and size and complexity of its operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations, and that all assets and resources are acquired economically, used efficiently and adequately protected.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

25.RISK MANAGEMENT

During the year under review, steps were taken to identify and evaluate elements of business risk. Consequently a revised robust Business risk management framework is in place. The risk management framework defines the risk management approach of the Company and includes periodic review of such risks and also documentation, mitigating controls and reporting mechanism of such risk.

Some of the risks that the Company is exposed to are;

Financial Risks

The Company's policy is to actively manage its foreign exchange risk within framework laid down by the Company's forex policy approved by the Board.

Given the interest rate fluctuations, the Company has adopted a prudent and conservative risk mitigation strategy to minimize interest cost.

Commodity Price Risk

The Company is exposed to risks of price fluctuation of raw materials. The Company proactively manages these risks through inventory management and vendor loyalty practices. The Company's reputation for quality, product differentiation and service mitigates the impact of price risk on finished goods.

Regulatory Risk

The company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks through regular review of legal compliances carried out through internal as well as external audits. The Company continuously reviews the policies to avoid any statutory and regulatory risk.

Human Resources Risks

Retaining the existing talent pool and attracting new talent are major risks. The Company has initiated various measures including training and development activities to preserve the valuable employees and is liberal in pay package so as to give them the safety and dedication to the Company.

26.INFORMATION PURSUANT TO RULE 5 (2) OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The Company does not have any employee (s) who are in receipt of remuneration exceeding the limits specified under Rule 5 (2) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

27.CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company does not have any obligation to fulfill under corporate social responsibility as none of the criteria are applicable to the Company.

28.STATUTORY INFORMATION

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure - C to this report.

The Company has not accepted any deposits, within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.

29. GENERAL

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act, 2013.

30. CAUTIONARY STATEMENT

Statements in the Director's Report & Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company's operations include raw material availability and its prices, cyclical demand and pricing in the Company's principle markets, changes in Government regulations, Tax regime, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

31. ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on behalf of the Board of Directors, SPICE ISLANDS APPARELS LIMITED

PLACE : MUMBAI UMESH M. KATRE DATE : 29th May, 2015. (Chairman & Managing Director)






Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Twenty Sixth Annual Report of the Company for the year ended 31st March, 2014.

(Rs. in lacs) (Rs. in lacs) 2013-2014 2012-2013

FINANCIAL RESULTS

Sales & Operating Income 1617.41 1231.91

Other Income 123.01 55.29

Profit (Loss) before Taxation 48.41 (70.98)

Provision for Taxation - Current 0.11 -- Year (Nett)

Short / (excess) Provision 16.71 0.60 for Tax

Deferred Tax (11.33) 4.13

Profit after Taxation 42.92 (75.71)

Add : Balance brought forward 411.11 512.97 from previous year 454.03 437.26

APPROPRIATION

General Reserve 1.00 1.00

Proposed Dividend 43.00 21.50

Tax on distribution of dividend 7.30 3.65

Balance Profit carried forward 402.73 411.11

454.03 437.26

OPERATIONS

During the year under review, the turnover of the company registered an increase of about 31% over the previous year. Other income has also increased by about 122% over the previous year. This has helped the company to achieve profit of 48.41 lacs as against loss of 70.98 lacs in the preceding period.

The turnaround was mainly on account of breakthrough in the Middle East market as against the Company''s core market in Europe. This was first experience in a new market and the margin has been satisfactory. Going forward, this may turn out to be a potential growth area.

The current year has begun on a good note and the Company expects improvement in performance.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 1.00 per Share. Dividend, if approved by the shareholders, at the Annual General Meeting, will absorb Rs. 43.00 lacs.

TAXATION

Provision of Rs. 16.81 lacs is made to meet the liability for Tax (Nett).

DIRECTORS

In accordance with the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, Your Company is seeking appointment of Mr. Carl V. Dantas, Mr. C.G. Patankar, Mr. Ashok G. Daryanani & Mr. Rahul L. Mehta as Independent Directors for Five consecutive years. Details relating to their appointment are mentioned in the Statement annexed to the Notice under Section 102 of the Companies Act, 2013.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed, both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchange.

Mrs. Seema Katre''s continued association as a Whole time Director is in the interest of the Company, particularly for strengthening the back office functions and improved coordination amongst various functional heads. Her contribution for cost control and for improving efficiency at all levels is immense and hence the Board recommends her re-appointment as a WHOLE TIME DIRECTOR for a further period of three years. Suitable resolution is proposed in the forthcoming Annual General Meeting.

DIRECTORS RESPONSIBILITY

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed.

2. Appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give true and Fair view of the state of affairs of the company as at 31st March, 2014 and of the profit of the company for the year ended on 31st March, 2014.

3. Proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.

REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

The reports on Corporate Governance and Management Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement form part of the Annual Report. The certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance is annexed to the Corporate Governance Report.

UNCLAIMED DIVIDEND FOR PREVIOUS YEAR''S

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on September, 2, 2013 (date of last Annual General Meeting) on the Company''s website (www.spiceislandsapparelslimited.in), as also on the Ministry of Corporate Affairs, website.

DEPOSITORY SYSTEM

Trading in Equity Shares of your Company is permitted in dematerialized form in terms of notification issued by Securities and Exchange Board of India [SEBI]. Your Company has entered into agreements with National Securities Depository Ltd. [NSDL] & Central Depository Services India) Ltd. [CDSL], to enable shareholders to hold shares in dematerialized form. Since dematerialization facilitates quick share transfers and prevents forging of documents, those shareholders who have not opted for this facility are advised to dematerialize their shares with either of the Depositories.

PARTICULARS OF EMPLOYEES

The particulars required under section 217 (2A) of the Companies Act, 1956, read with the Companies (particulars of employees) Rule, 1975 are not furnished since none of the employees of the Company are drawing remuneration in excess of the limit laid down under the said provisions.

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

The details as required under the Companies (disclosure of particulars in the Report of Board of Directors) Rules 1988, are set out in the annexure forming part of this Report.

COMPLIANCE CERTIFICATE

The Company has obtained Compliance Certificate pursuant to provisions of Sec 383 A of the Companies Act, 1956 from a Secretary in Whole Time practice, M/s. Nitesh Jain & Co., in the prescribed form regarding the compliance of all the provisions of the said Act.

COST COMPLIANCE REPORT

As required by Notification 429E dated 3rd June 2011 issued by the Ministry of Corporate Affairs, the Company has obtained Cost Compliance Report from the Cost Accountants and field the same with the Central Government.

AUDITORS COMMENTS

Independent Auditors report to the Members does not contain any adverse remarks and as such no comments are required.

AUDITORS

Members are requested to appoint Auditors for the current year and to authorize the Board of Directors to fix their remuneration. M/s. T D Jain & D I Sakaria, Chartered Accountants, have furnished a certificate of their eligibility for re- appointment under section 224 (1B) of the Companies Act, 1956

NOMINATION

Articles of Association of the Company were suitably amended to permit nomination facility. Members of the Company are requested to avail themselves of the nomination facility.

COMPLIANCE WITH COMPANIES ACT, 2013

With effect from 1st April, 2014 most of the provisions of the Companies Act, 2013 as notified by Ministry of Corporate Affairs (''MCA'') are in force. The Statutory compliance done by the Company under the provisions of the Companies Act, 1956 requires review / modifications and should be made compliant with the New Companies Act. Keeping in mind the good practices followed by the Company in earlier years, several resolutions are proposed for approval by the members of the Company in the Annual General Meetings the details are available in the notice of Annual General Meeting and explanatory statement attached thereto.

Ordinary / Special resolution''s proposed for approval of members are detailed herein below.

SN. Particulars Remark

1. Appointment of Mr. Carl Mr. Carl V. Dantas was appointed V. Dantas as an independent director on 4th as an Independent November, 1995. Under provision of Director Section 149(10) of the Companies Act, 2013 he can hold office of director for a further period of 5 years if approved by shareholders of the Company. Having regard to be valuable experience Mr. Dantas has, it is in the interest of the Company that he holds the directorship of the Company for a further period of five years.

2. Appointment of Mr. Mr. Ashok G. Daryanani was appointed Ashok G. Daryanani as an independent director on 29th as an Independent October, 2003. Under provision of Director Section 149(10) of the Companies Act, 2013 he can hold office of director for a further period of 5 years if approved by shareholders of the Company. Having regard to be valuable experience Mr. Ashok G. Daryanani has, it is in the interest of the Company that he holds the directorship of the Company for a further period of five years.

3. Appointment of Mr. C. G. Mr. C.G. Patankar was appointed Patankar as an on 30th as an Independent Director January, independent director 2003. Under provision of Section 149(10) of the Companies Act, 2013 he can hold office of director for a further period of 5 years if approved by shareholders of the Company. Having regard to be valuable experience Mr. C.G. Patankar has, it is in the interest of the Company that he holds the directorship of the Company for a further period of five years.

4. Appointment of Mr. Mr. Rahul L. Mehta was appointed as Rahul L. Mehta as an an independent director on 29th Independent Director January, 2010. Under provision of Section 149(10) of the Companies Act, 2013 he can hold office of director for a further period of 5 years if approved by shareholders of the Company. Having regard to be valuable experience Mr. Rahul L. Mehta has, it is in the interest of the Company that he holds the directorship of the Company for a further period of five years

5. Reappointment of Mrs. Mrs. Seema U. Katre is associated Seema U. with the Company as whole time Katre as Whole Time director for past 3 years and having Director regard to the valuable contribution made by her in improving efficiency at all level she is reappointed as whole time director for further period of three years.

6. Authority to the Board Although the requisite authority was of Directors to sell granted to the board by the members /dispose off / create under provisions of section293(1)(a) charge on the assets of the Companies Act, 1956, the of the Company enabling resolution is proposed under provisions of section 180(1)(a) of the Companies Act, 2013.

7. Authority to the Board of Although the borrowing powers were Directors to borrow in granted to the board by the excess of paid up share members under provisions of section capital and free 293(1)(d) of the Companies Act, reserves 1956, the enabling resolution is proposed under provisions of section 180(1)(c) of the Companies Act, 2013.

8. Increasing the limits to Suitable authority to the board is makes loans / investments ought to be granted under provisions / provide of section 186 of the Companies Act, guarantees 2013. This will help the board to park the surplus fund of the Company in a profitable manner and / or to make strategic investment.

9. Approval of Remuneration The boards of directors have payable to Cost Auditors appointed M/s. Moorthy & Company LLP as Cost Auditors to conduct audit of the cost record of the Company for financial year ended 31.03.2014. Specific approval from members is required for payment of remuneration to the cost auditors under provisions of section 148 of Companies Act, 2013

10. Approval of Remuneration The boards of directors have payable to Cost Auditors appointed M/s. Moorthy & Company LLP as Cost Auditors to conduct audit of the cost record of the Company for financial year ending on 31.03.2015. Specific approval from members is required for payment of remuneration to the cost auditors under provisions of section 148 of Companies Act, 2013

11. Adoption of New Articles The present Articles of Association of Association is not in consonance with the provisions of Companies Act, 2013. The Article contains the references of Companies Act 1956 it is therefore considered expedient to wholly replace the existing article of Association with new set of Articles

12. Delisting of equity The equity shares of the Company shares of the company are not at all traded in Ahmadabad & from Ahmadabad & Pune It would therefore be advisable Stock Exchanges. to do away with Pune Stock Exchange the listing of equity shares from the said stock exchange.

13. ENABLING POWERS - buy Only enabling power from shareholders back of the Shares are sought, to permit the board of the Company of directors to decide on buy back of shares at an appropriate time. At present there is no concrete plan but in near future if opportunity permits the board may consider buying back some shares which will improve the share valuation, as the same is highly undervalued. As of now, there is no firmed up immediate plan to go for buy back.

Directors commend the above resolutions for approval of the shareholders.

APPRECIATION

Your Directors acknowledge with gratitude the co-operation extended by Bankers of the Company, Stock Exchange, SEBI, and other Government/ Semi Government Authorities.

Your Directors also wish hereby to place on record their appreciation of the efficient and loyal services rendered by all the staff and workmen of the company, without whose whole hearted efforts, the overall satisfactory performance would not have been possible.

The Board also thanks the Shareholders of the Company for their whole hearted support.

For and on behalf of the Board of Directors, SPICE ISLANDS APPARELS LIMITED

PLACE : MUMBAI UMESH M. KATRE DATE : 28th May, 2014. (Chairman & Managing Director)


Mar 31, 2013

To, The Members,

The Directors have pleasure in presenting the Twenty Fifth Annual Report of the Company for the year ended 31st March, 2013.

(Rs. in lacs) (Rs. in lacs) 2012-2013 2011-2012

FINANCIAL RESULTS

Sales & Operating Income 1231.91 1381.02

Other Income 55.29 84.90

Profit (Loss) before Taxation (70.98) 38.45

Provision forTaxation

- Current Year (Nett) 4.13 18.37

Short/(excess) Provision for Tax 0.60 (0.70)

Profit after Taxation (75.71) 20.79

Add: Balance brought forward from previous year 512.97 530.66

437.26 551.45

APPROPRIATION

General Reserve 1.00 1.00

Proposed Dividend 21.50 32.25

Tax on distribution of dividend 3.65 5.23

Balance Profit carried forward 411.11 512.97

437.26 551.44

OPERATIONS

The trend of decline in sales has continued even during the year 2012 - 13, although the percentage fall was much lower compared to the previous year (10.79% as against 26 %). To be precise, the turnover has declined to Rs. 1231.91 lacs as against Rs. 1381.02 lacs in the preceding year. It was difficult to maintain the turnover as certain factors such as prevailing economic situation in Europe, financial health of buyers, difficult entry in the US market etc. are beyond control of the Management. The recovery of claim amount from ECGCon account of failure of one of the company''s main customer was not sufficient and the company had to book bad debts of about 66.60 lacs. Unlike last year, the benefit on account of exchange gain is marginal as the currency has stabilized.

Thus the above factors have resulted in a net loss of 70.92 lacs as against a profit of 38.45 lacs in 2011-12. The loss would have been higher but for the tight control over expenses. Having regard to the fact that the Company has incurred loss but with a view not to disappoint shareholders in the 25th year of the Company, a modest dividend of Rs. 0.50 per share is recommended.

The current year would certainly see an increase in turnover & profitability, as order booking has improved.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 0.50 per Share. Dividend, if approved by the shareholders, at the Annual General Meeting, will absorb Rs. 21.50 lacs.

TAXATION

Provision of Rs. 4.72 lacs is made to meet the liability for Tax. DIRECTORS

Mr. Rahul Mehta retires by rotation and being eligible offers himself for re-appointment.

Mr. Umesh Katre''s continued association as s Managing Director is in the interest of the growth of the Company and suitable resolution is proposed in the forthcoming Annual General Meeting for his re-appointment for a further period of three years. The Board recommendsthe resolution.

DIRECTORS RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Director''s confirm that :

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed.

2. Appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company as at 31st March, 2013 and of the loss of the company for the year ended on 31st March, 2013.

3. Proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A report on the Corporate Governance Code along with a certificate from the Practicing Company Secretary of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and AnalysisReportasstipulatedunderClause49oftheListing Agreementsare annexed to this Report.

DEPOSITORY SYSTEM

Trading in Equity Shares of your Company is permitted in dematerialised form in terms of notification issued by Securities and Exchange Board of India [SEBI], Your Company has entered into agreements with National Securities Depository Ltd. [NSDL] & Central Depository Services (India) Ltd. [CDSL], to enable shareholders to hold shares in dematerialized form. Since dematerialization facilitates quick share transfers and prevents forging of documents, those shareholders who have not opted for this facility are advised to dematerialize their shares with either of the Depositories.

PARTICULARS OF EMPLOYEES

The particulars required under section 217 (2A) of the Companies Act, 1956, read with the Companies (particulars of employees) Rule, 1975 are not furnished since none of the employees of the Company are drawing remuneration in excess of the limit laid down under the said provisions.

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

The details as required under the Companies (disclosure of particulars in the Report of Board of Directors) Rules 1988, are set out in the annexure forming part of this Report.

COMPLIANCE CERTIFICATE

Compliance Certificate obtained pursuant to provisions of Sec 383 A of the Companies Act, 1956 from a Secretary in Whole Time practice, M/s. Nitesh Jain & Co., in the prescribed form regarding the compliance of all the provisions of the said Act, is enclosed herewith.

COST COMPLIANCE REPORT

As required by Notification 429E dated 3rd June 2011 issued by the Ministry of Corporate Affairs, the Company has obtained Cost Compliance Report from the Cost Accountants and field the same with the Central Government.

AUDITORS COMMENTS

Independent Auditors report to the Members does not contain any adverse remarks and as such no comments are required. However, out of abundant caution, the Board explains the information provided in Annexure referred to para 1 of the said report.

a) Disputed dues (Clause 9~(c) of the Report on other legal and regulatory requirements): The Company has challenged the various demands at different levels with concerned authorities and is hopeful that this will be reduced considerably once the appeal orders are received. Besides, the Company has obtained legal opinion and at present no provision is required for the disputed demands.

b) Cash loss (Clause 10 of the Report on other legal and regulatory requirements):

On account of reduction in turnover and the fact that a substantially large amount was to be provided towards bad debts, the Company did suffer cash loss during the year under review. The issue is addressed at a different level and attempts are being made to recover all fixed and variable costs. The resources of the Company are judicially utilised and the Board is of the opinion that the Company will certainly be able to do away with cash losses during the current financial year.

AUDITORS

Members are requested to appoint Auditors for the current year and to authorize the Board of Directors to fix their remuneration. M/s. T D Jain & D I Sakaria, Chartered Accountants, have furnished a certificate of their eligibility for re- appointment under section 224 (IB) of the Companies Act, 1956

NOMINATION

Articles of Association of the Company were suitably amended to permit nomination facility. Members of the Company are requested to avail themselves of the nomination facility.

APPRECIATION

Your Directors acknowledge with gratitude the co-operation extended by Bankers of the Company, Stock Exchange, SEBI, and other Government/Semi Government Authorities.

Your Directors also wish hereby to place on record their appreciation of the efficient and loyal services rendered by all the staff and workmen of the company, without whose whole hearted efforts, the overall satisfactory performance would not have been possible.

The Board also thanks the Shareholders of the Company for their whole hearted support.

For and on behalf of the Board of Directors,

SPICE ISLANDS APPARELS LIMITED

PLACE :MUMBAI UMESH M. KATRE

DATE : 28th May, 2013. (Chairman & Managing Director)


Mar 31, 2012

The Directors have pleasure in presenting the Twenty Fourth Annual Report of the Company for the year ended 31st March, 2012.

(Rs. in lacs) (Rs. in lacs)

2011-2012 2010-2011

FINANCIAL RESULTS

Sales & Operating Income 1430.73 1943.40

Other Income 37.52 53.34

Profit before Taxation 38.78 176.60

Provision for Taxation - Current Year (Nett) 18.70 66.61

Short / (excess) Provision for Tax (0.70) 1.46

Profit after Taxation 20.79 108.53

Add : Balance brought forward from previous year 530.66 482.27

551.45 590.80

APPROPRIATION

General Reserve 1.00 10.00

Proposed Dividend 32.25 43.00

Tax on distribution of dividend 5.23 7.14

Balance Profit carried forward 512.96 530.66

551.44 590.80

OPERATIONS

Sales & operating income has declined by about 26% over the previous year i.e. from Rs. 1943.40 lacs to Rs. 1430.73 lacs. Restricting the fall to his level itself was a challenge as the major customer area of the company, the European markets as all of us are aware, are in a state of turmoil and severe recession. Given the negative outlook, the company found it difficult to accept business from probable customers for want of credit worthiness or risk insurance. Under these circumstances the Management had little choice but to restrict business to financially healthy customers, whose own order books were slack due to low demand and also a reluctance on their part to hold higher inventories. We expect this type of dismal scenario to continue, if not worsen, in the year ahead.

Resultant depression of the Western market has had its toll on retail businesses and in one such instance, a major retail chain store client of one of the company's UK based customer filed for liquidation which resulted in our customer facing severe financial issues & thereby necessitating the company of having to file its first ever insurance claim with the Export Credit Guarantee Corporation. On account of this filing and based on procedure, a certain percentage of the claim as stipulated requires to be written off as bad debts. Same has been provided for, bringing further pressure on pre and post tax profitability.

As has been stated, the year gone by has seen severe recessionary trend in the Western market with no positive signs of recovery in the forthcoming year and on the other hand on the home front cost of production is steadily rising on account of double digit inflationary trend resulting in escalation of salaries and wages, transport cost, energy costs all of which are key elements in our price structure. The result of all these pressures are reflected in the lower margins and thereby the operating results.

Given the dismal scenario, the forthcoming financial year which itself has begun on an extremely weak note is unlikely to strengthen and therefore the Management of your company will strive to explore new markets and better manufacturing avenues and hope to achieve reasonable results.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 0.75 per Share. Dividend, if approved by the shareholders, at the Annual General Meeting, will absorb Rs. 32.25 lacs.

TAXATION

Provision of Rs. 13.89 lacs is made to meet the liability for Tax.

DIRECTORS

Mr. AshokG. Daryanani retires by rotation and being eligible offers himself for re-appointment.

DIRECTORS RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Director's confirm that :

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed.

2. Appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company as at 31 st March, 2012 and of the Profit of the company for the year ended on 31st March, 2012.

3. Proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A report on the Corporate Governance Code along with a certificate from the Practicing Company Secretary of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreements are annexed to this Report.

DEPOSITORY SYSTEM

Trading in Equity Shares of your Company is permitted in dematerialized form in terms of notification issued by Securities and Exchange Board of India [SEBI]. Your Company has entered into agreements with National Securities Depository Ltd. [NSDL] & Central Depository Services India Ltd. [CDSL], to enable shareholders to hold shares in dematerialized form. Since dematerialization facilitates quick share transfers and prevents forging of documents, those shareholders who have not opted for this facility are advised to dematerialize their shares with either of the Depositories.

PARTICULARS OF EMPLOYEES

The particulars required under section 217 (2A) of the Companies Act, 1956, read with the Companies (particulars of employees) Rule, 1975 are not furnished since none of the employees of the Company redrawing remuneration in excess of the limit laid down under the said provisions.

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

The details as required under the Companies (disclosure of particulars in the Report of Board of Directors) Rules 1988, are set out in the annexure forming part of this Report.

COMPLIANCE CERTIFICATE

Compliance Certificate obtained pursuant to provisions of Sec 383 A of the Companies Act, 1956 from a Secretary in Whole Time practice, Mr. P. V. Ramaswamy, in the prescribed form regarding the compliance of all the provisions of the said Act, is enclosed herewith.

AUDITORS

Members are requested to appoint Auditors for the current year and to authorize the Board of Directors to fix their remuneration. M/s. T D Jain & D I Sakaria, Chartered Accountants, have furnished a certificate of their eligibility for re-appointment under section 224 (1B) of the Companies Act, 1956

NOMINATION

Articles of Association of the Company were suitably amended to permit nomination facility. Members of the Company are requested to avail themselves of the nomination facility.

APPRECIATION

Your Directors acknowledge with gratitude the co-operation extended by Bankers of the Company, Stock Exchange, SEBI, and other Government/Semi Government Authorities.

Your Directors also wish hereby to place on record their appreciation of the efficient and loyal services rendered by all the staff and workmen of the company, without whose whole hearted efforts, the overall satisfactory performance would not have been possible.

The Board also thanks the Shareholders of the Company for their whole hearted support.

For and on behalf of the Board of Directors,

SPICE ISLANDS APPARELS LIMITED

PLACE : MUMBAI UMESH M. KATRE

DATE : 30th May, 2012 (Chairman & Managing Director)


Mar 31, 2010

The Directors have pleasure in presenting the Twenty Second Annual Report of the Company for the year ended 31st March, 2010.

(Rs. IN LACS) (Rs. IN LACS)

2009-2010 2008-2009

FINANCIAL RESULTS

Sales & Operating Income 2039.36 1441.40

Other Income 165.23 125.12

Profit before Taxation / Extra Ordinary item 390.47 191.95

Provision for Taxation - Current Year 60.92 1.46

Excess Provision for Tax (0.43) (0.50)

Profit after Taxation 329.98 193.91

329.98 193.91

APPROPRIATION

General Reserve 20.00 10.00

Proposed Dividend 64.50 43.00

Tax on distribution of dividend 10.96 7.31

Balance Profit carried forward 234.52 133.60

329.98 193.91

OPERATIONS



Continuing the trend of increase in turnover, the sales and operating income increased by approx 42% (previous year 8%) to Rs. 2039.37 lacs as against Rs. 1441.40 lacs in the previous year. This was achieved despite the global downturn affecting all the markets. The main reason towards the better results achieved by the Company purely rests on the abilities of the overseas agents appointed and their having channelized business of stable & profit worthy clients to the Company and at the same time ensuring that the debtor book remains under control.

The knitwear division continues to hold the key and contributes about 72% of the turnover. With the increase in turnover, profitability has increased more than 100% over the previous year. Prudent utilization of resources, re-grouping of product mix coupled with apportionment of fixed cost over greater turnover has paid rich dividends. Apart ftom the operating profits achieved from the core business, the Company also gainfully utilized its surplus funds in a mix of deposits and market operations which also added a fair amount to the bottom-line. Conservative approach of write-off of Irrecoverable advance of Rs. 68.04 lacs in the previous year has also been instrumental in uplifting the profit as the advance are recovered in the form of shares of a certain company. Overall, the profit before tax works out to Rs. 390.47 lacs as against Rs. 191.95 lacs in the preceding year. The profit achieved is lower by approx Rs. 73.80 lacs as the last quarter resulted in a forex loss of approx Rs. 31.68 lacs on account of fall in value of foreign currency as well as the Company having paid its employees a performance bouns of Rs. 17.12 lacs and also having given a donation of Rs. 25 lacs for a worthy cause as per the wishes expressed by the members in the last Annual General Meeting.

The current calendar year began with upheavals in European currencies on account of uncertainties on the financials of three or four members of the European Union. This has resulted in a significant downward pressure on the two principal currencies in which your Company trades i.e. GBP and Euro. Added to this , the last six months have seen increased speculation in the cotton and cotton yarn markets resulting in the yarn and fabric prices firming up by approx 20%. Thus the downward pressure on the foreign exchange aspect with added price increase in the principle raw material would probably lead to a difficult year ahead in terms of margins and perhaps even in achieving planned targets. Nevertheless the management will make all afforts in keeping the Companys operations under control so as to reduce the negative impact as far as possible.

In keeping with the streamlining of the Companys operations & structure, the Board has decided to do away with the subsidiary company as it is not contributing in any significant manner.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 1.50 per Share. Dividend, if approved by the shareholders, at the Annual General Meeting, will absorb Rs. 64.50 lacs.

TAXATION

Provision of Rs. 68,50,000/- is made to meet the liability for Tax.

DIRECTORS

During the year under review, Mr. Rahul Lalbhai Mehta was co-opted as an Additional Director of the Company. The Board recommends his appointment as a Director in the forthcoming Annual General Meeting.

Mr. Karl Dantas retires by rotation and being eligible, offers himself for re-appointment.

Mr. Umesh Katres continued association as a Managing Director is in the interest of the growth of the Company and suitable resolution is proposed in the forthcoming Annual Meeting for his reappointment for a further period of three years. The Board recommends the resolution.

DIRECTORS RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Directors confirm that :

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed.

2. Appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give true and faire view of the state of affairs of the company as at 31st March, 2010 and of the Profit of the company for the year ended on 31st March, 2010.

3. Proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A report on the Corporate Governance Code along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreements are annexed to this Report.

DEPOSITORY SYSTEM

Trading in Equity Shares of your Company is permitted in dematerialised form in terms of notification issued by Securities and Exchange Board of India [SEBi]. Your Company has entered into agreements with National Securities Depository Ltd. [NSDL] & Central Depository Services (India) Ltd. [CDSL] to enable shareholders to hold shares in dematerialized form. Since dematerialization facilitates quick share transfers and prevents forging of documents, those shareholders who have not opted for this facility are advised to dematerialize their shares with either of the Depositories.

SUBSIDIARY COMPANY

A statement under section 212 of the Companies Act, 1956 is enclosed.

PARTICULARS OF EMPLOYEES

The particulars required under section 217 (2A) of the Companies Act, 1956, read with the Companies (particulars of employees) Rule, 1975 are not furnished since none of the employees of the Company are drawing remuneration in excess of the limit laid down under the said provisions.

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

The details as required under the Companies (disclosure of particulars in the Report of Board of Directors) Rules 1988, are set out in the annexure forming part of this Report.

COMPLIANCE CERTIFICATE

Compliance Certificate obtained pursuant to provisions of Sec 383 A of the Companies Act, 1956 from a Secretary in Whole Time practice, Mr. P. V. Ramaswamy, in the prescribed form regarding the compliance of all the provisions of the said Act, is enclosed herewith.

AUDITORS

Members are requested to appoint Auditors for the current year and to authorize the Board of Directors to fix their remuneration. M/s. Ostawal & Jain, Chartered Accountants, have furnished a certificate of their eligibility for re-appointment under section 224 (1B) of the Companies Act, 1956.

NOMINATION

Articles of Association of the Company were suitably amended to permit nomination facility. Members of the Company are requested to avail themselves of the nomination facility.

APPRECIATION

Your Directors acknowledge with gratitude the co-operation extended by Bankers of the Company, Stock Exchange, SEBI, and other Government/ Semi Government Authorities.

Your Directors also wish hereby to place on record their appreciation of the efficient and loyal services rendered by all the staff and workmen of the company, without whose whole hearted efforts, the overall satisfactory performance would not have been possible.

For and on behalf of the Board of Directors,

SPICE ISLANDS APPARELS LIMITED

PLACE : MUMBAI UMESH M. KATRE

DATE :21st MAY, 2010. (Chairman & Managing Director)

 
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