Kamadgiri Fashion Ltd.
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ISIN No INE535C01013 52Wk High (Rs.) 188 BV (Rs.) 69.11 FV (Rs.) 10.00
Bookclosure 18/09/2018 52Wk Low (Rs.) 78 EPS (Rs.) 11.10 P/E (X) 8.99
Mkt Cap. (Rs. Cr.) 58.52 P/BV (X) 1.44 Div Yield (%) 2.01 Mkt Lot 1
2016-03

To

The Members,

The Directors are pleased to present the Twenty-Ninth Annual Report on the business and operation of the Company together with the Audited Financial Statements for the year ended 31st March, 2016.

FINANCIAL HIGHLIGHTS (Rs.in Lakh)

Particulars

Financial Year 2015-16

Financial Year 2014-15

Turnover

30,058.05

25,966.75

Other Income

4.02

2.20

Profit before tax

320.20

356.26

Less: Provision for current tax

(164.78)

(107.59)

Less: Net deferred tax liability / (asset)

(34.72)

31.44

Profit for the year

190.14

217.23

Add: Balance brought forward

1,091.04

1,016.16

Profit available for appropriation

1,281.18

1,193.34

Appropriation:

Transferred to General Reserve

9.51

10.86

Proposed dividend

81.60

75.97

Tax on proposed dividend

16.61

15.47

Balance carried forward

1,173.46

1,091.04

OPERATIONS

During the year under review, the Company has achieved a turnover of Rs.30,058.05 lakh as compared to Rs.25,966.75 lakh in the previous year. Accordingly, there was a top line growth of 15.90%. The Profit after tax for the financial year 2015-16 was Rs.190.14 lakh as compared to Rs.217.23 lakh during the previous year. There was decline in the Profit after tax due to higher cost of production comprising of increased cost of labour cost, job charges, material cost and power tariffs.

The Company has been working on various measures to reduce cost and increase the efficiency.

FUTURE PLANS

The Company is identifying its core strength of weaving, manufacturing “value for money” fabrics/garments and marketing same through its distribution network as well as organized retail market. Further, the Company is also concentrating on brand manufacturing contract, which gives lesser margin but at the same time releases marketing pressure. The Company continues to innovate and improve upon its production process to increase its operational efficiency at optimum cost.

The Management is expecting these initiatives to result in better profitability in coming years.

ISSUE OF SECURITIES

During the year under review, the Company has issued and allotted 3,75,000 Equity shares of Rs.10/- each at a premium of Rs.52/- per share aggregating Rs.232.50 lakh and 4,29,505 Compulsorily Convertible Debentures (“CCDs”) of Rs.10/- each at a premium of Rs.52/- per CCD aggregating Rs.266.29 lakh convertible on 01st April, 2016.

Through these preferential issues of securities, the Company has raised Rs.498.79 lakh in aggregate from non-promoter group.

SHARE CAPITAL

During the year, paid up Equity share capital of the Company has been increased from Rs.506.49 lakh to Rs.543.89 lakh consequent to issue of 3,75,000 new shares on preferential basis.

On 01st April, 2016, paid up Equity share capital of the Company further increased to Rs.586.93 lakh on conversion of 429,505 CCDs.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.1.50/- (i.e. 15%) per equity share on the equity capital of the Company for the year under review. The said dividend shall be subject to the approval of the members at the ensuing annual general meeting.

PUBLIC DEPOSIT

The Company has not accepted any deposit from the public during the financial year under review.

RESERVES

During the year under review, the Company has transferred Rs.9.51 lakh to general reserves.

CORPORATE GOVERNANCE REPORT

As per Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from Auditors of your Company regarding compliance of conditions of Corporate Governance as stipulated in Regulation 17(7) read with Part A of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also enclosed along with the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis is presented as a separate section forming part of this Annual Report.

DISCLOSURE REQUIREMENTS

The process of Familiarization program for Independent Directors is posted on website of the Company at the link http://kflindia.com/wp-content/ uploads/2015/08/KFL-ID-Familiarization.pdf.

Accordingly, the Company provides as part of Board Meeting insight on various business process through specific discussion on business review. As part of familiriasation program the Company has spent about two hours during the year in various Board Meetings on business review and update.

Policy on dealing with related party transactions is available on the website of the Company at the link http://kflindia.com/wp-content/uploads/2015/08/KFL-RPT-Policy.pdf

The Company has formulated and disseminated a Whistle Blower Policy to provide vigil mechanism for employees and Directors of the Company to report genuine concerns that could have serious impact on the operations and performance of the business of the Company. This Policy is in compliance with the provisions of Section 177(9) of the Companies Act, 2013 and Regulation 4(d)(iv) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Establishment of Vigil Mechanism is available on the website of the Company at the link http://kflindia.com/wp-content/uploads/2015/08/KFL-Vigil-Mechanism.pdf

NUMBER OF BOARD MEETINGS

The Board of Directors met 5 (Five) times during the financial year 2015-16. The details of Board meetings and the attendance of the Directors are provided in the Corporate Governance Report which forms part of this Annual Report.

DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Act stating that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.

PERFORMANCE EVALUATION OF BOARD

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) and Regulation 25(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of performance of its own, the Committees thereof and the Directors individually. At the meeting of the Board all the relevant factors that are material for evaluating the performance of the Committees and of the Board were discussed in detail.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Independent Directors was carried out by the entire Board except the Independent Director being evaluated.

The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The Company's policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013, has been disclosed in the Corporate Governance Report, which forms part of the Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of Section 152 of the Companies Act, 2013, Mr. Lalit Genka retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Mr. Siddhant Singh was appointed as Company Secretary with effect from 01st September, 2015.

Additional information on appointment/reappointment of Directors as required under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given in the Notice convening the ensuing Annual General Meeting.

COMMITTEES OF THE BOARD OF DIRECTORS AUDIT COMMITTEE

During the year review, the Audit Committee of the Company comprised of three Independent Directors viz., Mr. Sanjeev Maheshwari, Mr. Rahul Mehta and Ms. Bindu Shah. Mr. Sanjeev Maheshwari is the Chairman of the Audit Committee. There are no instances where the Board did not accept the recommendations of the Audit Committee. The terms of reference, powers and roles of the Committee are disclosed in the Corporate Governance Report, which forms part of the Annual Report.

Details of all the Committees of the Board of the Company along with their terms of reference, composition and meetings held during the year, are provided in the Corporate Governance Report, which forms part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement it is hereby confirmed that:

i. in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for that period;

iii. 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;

iv. the Directors have prepared the annual accounts for the financial year ended 31st March, 2016, on a going concern basis;

v. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

vi. 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.

AUDITORS AND AUDITORS’ REPORT Statutory Auditors

At the Annual General Meeting of the Company held on 26th September, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai was appointed as statutory auditors of the Company to hold office till the conclusion of the 32nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting.

Accordingly, the appointment of M/s. Haribhakti & Co. LLP, Chartered Accountants, Mumbai, as statutory auditors of the Company, placed before for ratification by the shareholders.

The Auditors' Report does not contain any disqualification, reservation or adverse mark.

Secretarial Auditor

The Company has appointed M/s. H. S. Associates, Company Secretaries to conduct Secretarial Audit of the Company for the financial year 2015-16 in terms of provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditor Report for the year ended 31st March, 2016 is annexed to this report as Annexure A. There is no observation or comment which requires your attention.

Cost Auditor

As per the requirement of Central Government pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out Cost Audit of cost records relating to Textile products every year.

The Board of Directors, on the recommendation of Audit Committee, has appointed Ms. Ketki D. Visariya, Cost Accountant, as Cost Auditor to audit the accounts of the Company for the financial year 2016-17 at a remuneration of Rs.90,000/- plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking ratification of members' for the payment of remuneration to Cost Auditor forms part of the Notice convening the Annual General Meeting.

The Cost Audit report for the financial year 2014-15 was filed with the Ministry of Corporate Affairs.

EXTRACT OF ANNUAL RETURN

In terms of provisions of Section 92 (3) of the Companies Act, 2013, an extract of Annual Return in prescribed format is annexed to this Report as Annexure B.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, all transactions entered into by the Company with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, were in the ordinary course of business and on an arm's length basis.

There were no materially significant transactions with the related parties during the financial year which were in conflict with the interest of the Company.

Disclosure of transactions with related parties as required under the Accounting Standard (AS-18) has been made in the notes forming part of the financial statements. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable to your Company.

PARTICULARS OF LOANS GRANTED, GUARANTEE PROVIDED AND INVESTMENTS MADE PURSUANT TO THE PROVISIONS OF SECTION 186 OF THE COMPANIES ACT, 2013

The Company has not granted any loans, not provided any Guarantee and not made any Investments which are covered under the provision of Section 186 of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO AND EXPORT INITIATIVE

Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of Companies (Accounts) Rules, 2014 is given as Annexure C. The Company being focusing in Indian market, it has not taken any export initiative.

PARTICULARS OF EMPLOYEES

In terms of provisions of Companies Act, 2013 and disclosure as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 framed there under, the names and other particulars of employees are provided under Annexure D, which is annexed to this Report.

Addition to the above, a statement containing the particulars as required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of managerial Personnel) Rules, 2014 is given as Annexure E.

RISK MANAGEMENT POLICY AND INTERNAL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of the business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The Audit Committee of the Board of Directors actively review 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.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has always believed in providing a safe and harassment free workplace for every individual working in Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

The Board wishes to place on record their sincere appreciation to all the bankers, customers, employees at all levels and stakeholders for the continued support and patronage during the year under review.

By Order of the Board

For Kamadgiri Fashion Limited

Place: Mumbai Pradip Kumar Goenka

Date: 30th May, 2016 Chairman & Managing Director