BOARDS' REPORT TO, THE MEMBERS, SHRI DINESH MILLS LIMITED. Your Directors have pleasure in presenting their Report together with the Annual Financial Statement for the year ended 31st March, 2015. . DIVIDEND Your Directors have recommended for your consideration Dividend of Rs. 1.80 per Equity share (Previous year Rs.1.80 per Equity share) on 50,84,382 equity shares of Rs.10/- each amounting to Rs. 91,51,887.60 for the financial year ended 31st March, 2015. 3. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND (IEPF) The Company has already transferred unclaimed dividend upto financial year 2006- 2007 to IEPF during the year under review. The Dividend for the financial year 2007-2008 will be transferred to IEPF in the current financial year i.e. 2015 - 2016 on due date as mentioned in the Note No. 5 of the ensuing 80th AGM Notice. 4. MANAGEMENT DISCUSSION AND ANALYSIS A. OVERALL REVIEW OF OPERATIONS We are a composite textile sector company manufacturing woolen / worsted suiting and machine clothing (felt). The Company manufactures and markets high quality products under the brand name 'dinesh'. There are few organized sector companies and many companies are in un-organized sector and the Company has to face cut throat competition in the domestic and international markets. The Textile Industry is labour & capital intensive and one of the largest employers in India and the industry has to face various internal & external challenges and our Company is not an exception to these challenges. Despite sluggish domestic & international markets and intense competition on prices, our Company could achieve sales turnover of Rs.8049/- Lacs and the net profit of Rs.454/- Lacs during the year under review as compared to Rs.8610/- Lacs and Rs.433/- Lacs respectively of the previous year. The profitability has been improved slightly due to proper monitoring of expenses. During the year under review, we could achieve the higher export turnover amounting to Rs.687/- Lacs as compared to Rs. 537/- Lacs of the previous year. C. OVERALL OUTLOOK Despite the efforts being made by the Government to revive the economy, sluggish global demand and declining export competitiveness, the situation at ground level are not showing the improvement as expected after the formation of the new Government. However, our Company is taking appropriate actions to increase the sales turnover and profitability by innovative techniques of marketing with proper product mix. The Company assumes no responsibility in respect of forward looking statements made herein above which may substantially change based on subsequent developments, events, change in the Government policies, exchange rate etc. over the globe. D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Internal Audit department conducts audit of all departments of the Company and places Audit reports/ plans before the Audit Committee which reviews adequacy of internal audit functions, audit procedures and its coverage periodically. The minutes of the Audit Committee meetings are placed at the meetings of the Board of Directors from time to time. The Company has adopted the concept of pre-audit and therefore, the mistakes, if any are rectified before the transactions are finally booked in the Accounts of the Company. The Board of Directors appointed Mr. Manoj Kumar Upadhyay as an Internal Auditor of the Company. E. INDUSTRIAL RELATIONS The industrial relations both at Baroda and Ankleshwar unit have remained cordial. As on 31st March, 2015, there were 986 employees in the Company. 5. MATERIAL CHANGES AND COMMITMENT, IF ANY There are no other material changes and commitments affecting the financial position of the Company occurred from 1st April, 2015 to the date of this Report. 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure - "A" attached to this Report. 7. RISK MANAGEMENT The Company has been taking appropriate actions pursuant to Risk Management Policy from time to time to mitigate adverse impact of various Risks which may adversely affect the performance of the Company and may threaten the very existence of the Company. The provisions relating to Risk Management Committee is not applicable to the Company. 8. THE CORPORATE SOCIAL RESPONSIBILITY As the provisions of relating to the Corporate Social Responsibility (CSR) as prescribed u/s. 135 of the Companies Act, 2013 along with Rules made thereunder are not applicable to our Company and therefore, neither the CSR Committee nor the CSR Policy are required to be framed by the Company. 9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS During the year under review, the Company has not given any loans, guarantees or made investments pursuant to Section 186 of the Companies Act, 2013 and therefore, the disclosure under the said provision is not applicable. 10. THE RELATED PARTY TRANSACTIONS During the year under review, the transactions with Related Parties were not material, entered into in the ordinary course of business and on Arms' length basis. However, as Good Corporate Governance practice, the particulars of Related Parties transaction are given in Note No. 30 attached to the Annual Financial Statement. 11. AUDITORS REPORTS The Auditors' Report issued by M/s. Dhirubhai Shah & Doshi on the Accounts is self-explanatory and therefore, does not call for any explanation. There were no qualifications, reservations or adverse remarks made by the above referred Statutory Auditors. The Secretarial Audit Report issued by the Secretarial Auditor, M/s. Kashyap Shah & Co., Practicing Company Secretaries, Vadodara is self explanatory and therefore, does not call for any explanation. There were no qualifications, reservations or adverse remarks made by the above referred Secretarial Auditor. The copy of the Secretarial Audit Report is attached as Annexure - "B" to this Report. 12. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES The Board of Directors of the Company at their meeting held on 30th September, 2014 approved the Remuneration Policy as recommended by the Nomination & Remuneration Committee of Directors of the Company relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters pursuant to Section 178(3) of the Companies Act, 2013. The Remuneration Policy can be viewed at Company's website www.dineshmills.com in "Investors" Section 13. ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure - "C" is attached to this Report. 14. THE MEETINGS OF THE BOARD OF DIRECTORS During the year under review, six meetings of Board of Directors of the Company were held on 30/05/2014, 14/08/2014, 30/09/2014, 13/11/2014, 06/02/2015 and 27/03/2015. 15. KEY MANAGERIAL PERSONNEL (KMP) AND REMUNERATION Shri Bharatbhai Patel, Chairman & Managing Director, Shri J B Sojitra, Company Secretary and Shri B. B. Patel, Chief Financial Officer are the KMP of the Company pursuant to Section 203 of the Companies Act, 2013 and the Rules made there under. During the year under review, Shri B. B. Patel was appointed as Chief Financial Officer (CFO) of the Company. REMUNERATION ETC. PURSUANT TO SECTION 197(12) AND THE RULES MADE THEREUNDER ARE AS UNDER: a) The ratio of the Remuneration of each Director to the median employee's remuneration for the financial year are given hereunder: (1) Name : Shri Bharatbhai Patel (Chairman & Managing Director - CMD) Ratio: 85 : 1 (2) Name: Shri Nimishbhai Patel (Managing Director) Ratio: 79 : 1 b) The percentage increase in Remuneration of each Director, Chief Financial Officer, Company Secretary during the financial year: (1) Shri Bharatbhai Patel - Chairman & Managing Director : NIL % (2) Shri Nimishbhai Patel - Managing Director : NIL % (3) Shri B. B. Patel - Chief Financial Officer : 6 % (4) Shri J. B. Sojitra - Company Secretary : 7 % c) The percentage increase in the median remuneration of employee in the financial year: 5 % d) The number of permanent employees on the Roll of the Company: 986 e) The explanation on the relationship between average increases in Remuneration and Company performance: The Net Profit of the Company has been increased from Rs.433/- Lacs to Rs.454/- Lacs, an increase of 5% against which the average increase in remuneration of employees is 8 % and this increase is normal considering the inflation so as to motivate the employees of the Company. However, during the year under review, there is no increase in the managerial remuneration of Shri Bharatbhai Patel and Shri Nimishbhai Patel, Managing Directors of the Company. f) Comparison of the Remuneration of the Key Managerial Personnel (KMP) against the performance of the company: The increase in the Net Profit of the Company by 5% whereas increase in the remuneration of KMP is 7 % (excluding the remuneration of CMD) which is normal yearly increment. 16. CORPORATE GOVERNANCE The Report on Corporate Governance pursuant to Clause 49 of the Listing Agreement with BSE Ltd. alongwith the certificate of M/s. Dhirubhai Shah & Doshi, Chartered Accountants, Auditors of the Company are attached herewith as Annexure - D and Annexure - E respectively. 17. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company has only one Subsidiary Company viz. Dinesh Remedies Ltd., engaged in manufacturing of Empty hard Gelatin Capsules Shells at Village Mahuvad, Haranmal Road, Padra-Jambusar Highway, Taluka Padra, District Vadodara - 391 440. There are no other Joint Ventures and Associate companies. 18. DEPOSITS During the year under review, the Company has paid all the deposits which were accepted / renewed under the Companies Act, 1956 & Rules made there under by 31st March, 2015 pursuant to Section 74 of the Companies Act, 2013 & Rules made there under. The Company has neither accepted nor renewed any deposits pursuant to Section 73 and 76 of the Companies Act, 2013 and Rules made there under during the financial year 2014 - 2015. 19. DIRECTORS During the year under review, the Board of Directors appointed Mrs. Gorsi Parekh as an Additional (Independent) Director w.e.f. 6th February, 2015 and her appointment as an Independent Director of the Company for a term of five years from 6th February, 2015 to 5th February, 2020 is proposed for approval of shareholders at their ensuing 80th Annual General Meeting. The particulars of Mrs. Gorsi Parekh are given in the Notice of the ensuing 80th Annual General Meeting of the members of the Company. Pursuant to Section 149 and 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors are not liable to retire by rotation whereas other Directors are liable to retire by rotation and accordingly, Shri Nimish Patel, Managing Director of the Company would retire by rotation and being eligible, offer himself for re-appointment. The particulars of the Director retiring by rotation and seeking re-appointment have been given in the Notice of the ensuing 80th Annual General Meeting of the members of the Company. 20. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors have given the declaration that, they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 read with Rules made there under. 21. PERFORMANCE EVALUATION OF DIRECTORS The performance evaluation of all the Directors including Independent Directors and the Board as a whole which includes the Committees thereof was done on 27th March, 2015 as per the Performance Evaluation Policy approved by the Board in its meeting held on 6th February, 2015 based on the recommendation of the Nomination & Remuneration Committee. As per provisions of the Companies Act, 2013 read with Rules made thereunder, a separate meeting of the Independent Directors was held on 27th March, 2015 to consider the following agenda: a) Review the performance of Non-Independent Directors and the Board as a whole. b) Review the performance of the Chairperson of the Company. c) Asses the efficacy and adequacy of flow of information. The Independent Directors viz. Shri T. M. Patel, Shri Rakesh Agrawal, Shri A. T. Patel and Shri H. N. Elavia were present in the meeting held on 27th March, 2015 and they considered the above referred agenda. 22. STATUTORY AUDITORS The tenure of M/s. Dhirubhai Shah & Doshi, Chartered Accountants, Ahmedabad would expire on the conclusion of the ensuing 80th Annual General Meeting. The Company has received a letter dated 5th May, 2015 from the above referred Auditors to the effect that, if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The continuance of appointment and payment of remuneration to M/s. Dhirubhai Shah & Doshi, Chartered Accountants are proposed to be approved in the ensuing 80th Annual General Meeting. 23. COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM The Audit Committee consists of three Independent Directors viz. Shri H. N. Elavia, Chairman of the Audit Committee, Shri A. T. Patel and Shri T. M. Patel are the members of the Audit Committee The Board of Directors of the Company has also established the Vigil Mechanism pursuant to Section 177(9) of the Companies Act, 2013 and Rules made thereunder read with Clause 49 of the Listing Agreement with BSE Ltd. for Directors and Employees to report their genuine concerns and the Whistle Blower Policy can be viewed at Company's website www.dineshmills.com "Investors" Section. As per the Policy, any Director or Employee can directly access to the Chairman of the Audit Committee. 24. SHARES: (a) BUY BACK OF SECURITIES: The Company has not bought back any of its securities during the year under review. (b) SWEAT EQUITY: The Company has not issued any Sweat Equity Shares during the year under review. (c) BONUS SHARES: No Bonus Shares were issued during the year under review. (d) EMPLOYEES STOCK OPTION PLAN: The Company has not provided any Stock Option Scheme to the employees. 25. INSURANCE: All the properties of the Company including buildings, plant & machinery and stocks have been insured. 26. DIRECTORS RESPONSIBILITY STATEMENT Your Directors confirm that,: (a) in the preparation of the Annual Accounts for the financial year 2014-2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures; (b) 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 and loss of the Company for that period; (c) the Directors had 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 Directors had prepared the Annual Accounts on a going concern basis; (e) 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) 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. 27. ACKNOWLEDGEMENTS Your Board of Directors thanks all the stakeholders viz. shareholders, customers, suppliers, bankers, employees for their support during the year under review. For and on behalf of the Board of Directors BHARAT PATEL CHAIRMAN Date : 30th May, 2015 Place : Vadodara |