DIRECTORS' REPOR Dear Members, Your Directors have pleasure in presenting the Twenty Fifth Annual Report alongwith the Audited Accounts for the year ended March 31, 2015. DIVIDEND In view of the challenging times being faced by the Man Made Fibres Industry and to conserve the resources, the Board has not recommended any dividend on the equity shares for the year 2014-15. OPERATIONS During the year under review, the Company achieved turnover of Rs. 157276 lacs as compared to Rs. 176940 lacs in the previous year resulting in decrease of 11%. Decrease in turnover is due to decline in finished goods prices consequent upon decrease in price of raw material and deep fall in crude prices. During the year under review, the Company has earned net profit of Rs. 960 lacs as compared to net loss of Rs. 809 lacs in the previous year. No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. In respect of fire at Company's POY manufacturing unit at Dadra in November, 2012, the claim under fire policy has been received during FY 2013-14 and claim under loss of profit policy amounting to Rs. 536.59 lacs is still under consideration of Insurer. SHARE CAPITAL During the financial year 2013-14, the Company had allotted 80,00,000 convertible warrants on preferential basis to the promoters and others to be converted at the option of warrant holders in one or more tranches, within 18 months from the date of allotment viz September 20, 2013 of warrants into equivalent number of fully paid equity shares of the company of the face value of Rs. 10/- per share at an exercise price of Rs. 25/- per share (including premium of Rs. 15/- per share). The Company, during the financial year 2013-14, had converted 42,40,000 warrants into equivalent number of equity share and balance 37,60,000 warrants were converted during the year under review. Consequently the paid up share capital of the Company increased to Rs. 32.00 crore from Rs. 28.24 crore. FIXED DEPOSITS During the year under review, the Company has not accepted any fixed deposits. DIRECTORS Mr. Madhav Bhageria (DIN:00021953), Director, retires by rotation and being eligible, offer himself for reappointment at the ensuing Annual General Meeting. During the year under review, Shri B.B.Tandon (DIN: 00740511) who, resigned from the Board of Directors w.e.f. 24th September, 2014, has again joined the Board of Directors with effect from 13th February, 2015 as an Additional Independent Director subject to approval of Members at the ensuing Annual General Meeting. As per provisions of the Companies Act, 2013, Independent Directors may be appointed for a term upto five years and shall not be liable to retire by rotation. Accordingly the Board recommends the appointment of Shri B.B.Tandon as Independent Director for a period of five years at the ensuing Annual General Meeting. The Board has also reappointed Mr. Ashok Chauhan (DIN: 00253409) as Whole-time Director in their meeting held on 13th February, 2015 for a further period of two year w.e.f. 12.02.2015 at a consolidated Salary of Rs. 3.00 lacs per month subject to the approval of Members in the ensuing annual general meeting. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually and the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been given in the Corporate Governance Report. REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Nomination & Remuneration Policy is annexed herewith as Annexure "A". CORPORATE SOCIAL RESPONSIBILITY As required under the Companies Act, 2013 ("Act"), the Corporate Social Responsibility ("CSR") Committee was constituted and it consists of Shri Madhu Sudhan Bhageria as the Chairman, Shri Purrshottam Bhaggeria, Shri Madhav Bhageria, Shri B.B.Tandon and Mrs. Pallavi Joshi Bakhru, as members. During the year under review, the Company introduced a CSR Policy emphasising its focus on community development projects, prioritizing local needs in the area of education, health, livelihood and environment, for ensuring long term sustainable benefits. The said policy is available on the Company's website www.flatex.com . The Board, on the recommendation of CSR Committee, approved Rs. 7.84 lacs being two percent of average net profits of the Company calculated in accordance with the provision of Section 198 of the Companies Act, 2013 during proceeding three financial years to be spent on CSR activities. During the year under review, the Company has incurred an expenditure of Rs. 4.68 lacs on Education, toilets and medical facilities, which is less than two percent of average net profits of the Company during proceeding three financial years. The Company committed to install more public toilets in association of local administration at Dadra, which could not be made ready by 31st March, 2015. Therefore, the Company was unable to spend the balance of Rs. 3.16 lacs during the year. Details of the expenditure incurred towards CSR for the financial year 2014-15 is annexed herewith as Annexure "B". MEETINGS OF THE BOARD Four (4) meetings of the Board of Directors were held during the year. The details of which are given in the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, your Directors state that: i. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures therefrom; ii. they 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 profits of the Company for that period; iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they have prepared the annual accounts on a going concern basis. v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and vi. That they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS The Report on Corporate Governance as stipulated under clause 49 of the Listing Agreement along with the Auditors' Certificate regarding compliance of conditions of Corporate Governance and Management Discussion & Analysis are annexed herewith as Annexure "C". AUDITORS M/s Amod Agrawal & Associates, Chartered Accountants (Firm Registration No.005780N), were appointed as Statutory Auditors of the Company at the 24th Annual General Meeting of the Company held on 30th September, 2014 to hold office until the conclusion of this Annual General Meeting (AGM) till the conclusion of the Twenty Seventh AGM of the Company in accordance with the provisions of the Companies Act, 2013. However, this appointment was subject to ratification by the members at every Annual General Meeting held after appointment during their tenure of office. Certificate from the auditors has been received to the effect that their appointment, if made, would be within the limits prescribed under the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and therefore, their ratification for appointment as Statutory Auditors for the year 2015-16 is being sought from the Members of the Company at the ensuing Annual General Meeting. AUDITORS' REPORT The company has received letter dated 26th December, 2014 from National Stock Exchange (NSE) advising the company to restate its Financial Statements for the financial year 2012-13 subsequent to the auditors qualification relating to treatment of foreign exchange difference during FY 2012-13. The detail of which is given in the Note 32 of the Balance Sheet. The Company has taken up the matter with NSE/SEBI to explain and substantiate that the accounting treatment made by the Company is justified. Considering the Company's request, the Securities and Exchange Board of India (SEBI) has informed the Company for providing an opportunity of being heard and to make submissions/ representations before Qualified Audit Review Committee (QARC). Accordingly, the Company has submitted the written Statement and Representation before Qualified Audit Review Committee (QARC). As the matter is under consideration of SEBI/QARC, any effect, any with respect to restatement of financial statement for FY 2012-13 will be accounted for on receipt of final decision in the matter. COST AUDITORS Your Company has appointed M/s Bahadur Murao & Co., (Firm Registration No. 000008) a firm of Cost Auditors, for conducting the audit of cost records for the financial year 2014-15. Subject to the approval of the Central Government and Members at the ensuing Annual General Meeting, M/s Bahadur Murao & Co. has been appointed as the Cost Auditor for the financial year 2015-16 at a remuneration of Rs. 50,000 plus service tax and out of pocket expense. SECRETARIAL AUDITOR The Board has appointed M/s Siddiqui & Associate, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure "D". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with 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 as material in accordance with the policy of the Company on materiality of related party transactions. Pursuant to 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014), Form No. AOC-2 is annexed herewith as Annexure "E". The Policy on related party transactions approved by the Board may be accessed on the Company's website www.flatex.com . Your Directors draw attention of the members to Note no. 38 to the financial statement which sets out related party disclosure. STOCK EXCHANGE LISTING Presently, the Equity Shares of the Company are listed on National Stock Exchange and Bombay Stock Exchange. The Annual Listing Fee for the year 2015-2016 has been paid to the Stock Exchanges. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A statement relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed underthe Companies Act, 2013, is annexed herewith as Annexure "F". PARTICULARS OF EMPLOYEES During the year, no employees of the Company received remuneration more than Rs. 60.00 lacs per annum or Rs. 5.00 lacs per month if employed for part of the year. Accordingly, no information pursuant to the provisions of Section 197(12) of the Companies Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is required to be given. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed herewith as Annexure "G". VIGIL MECHANISM In terms of the Section 177 of the Companies Act, 2013 and Listing Agreement, the Company has formulated the Whistle Blower Policy/Vigil Mechanism. The Protected Disclosures should be reported in writing by the complainant as soon as possible, not later than 30 days after the Whistle Blower becomes aware of the same and should either be typed or written in a legible handwriting in English/Hindi/ Gujarati and the same should be addressed to the Vigilance Officer of the Company or in exceptional cases, to the Chairman of the Audit Committee. The Policy on Vigil Mechanism and Whistle Blower Policy may be accessed on the Company's website www.flatex.com . During the year under review, no complaint was received from any Whistle Blower. RISK MANAGEMENT POLICY Pursuant to section 134(3)(n) of the Companies Act, 2013 & Clause 49 of the Listing Agreement, the Company has laid down Risk Management Policy to inform Board members about the risk assessment and minimization procedures which is also given in the Corporate Governance Report. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statement (Please refer to Note 14, 15&20to the financial statement). DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has put in place and practiced an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints regarding sexual harassment. All employees are covered under this policy. During the year under review, the Company has not received any complaint underthe said Policy. EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure "H". ACKNOWLEDGEMENTS The Board of Directors is pleased to place on record its sincere appreciation for the assistance, support and cooperation received from its Bankers, Government Authorities, Dealers, Customers and Vendors. Your Directors would like to record their sincere appreciation for the dedicated efforts put in by all employees, their commitment and contribution ensuring smooth operations that your Company has achieved during the year. Your Directors also place on record their sincere appreciation for the confidence reposed by the Members in the Company. For and on behalf of the Board of Directors MADHU SUDHAN BHAGERIA Vice Chairman and Managing Director (DIN:00021934) PURRSHOTTAM BHAGGERIA Joint Managing Director (DIN: 00017938) Place : New Delhi Date : 13th August, 2015 |