DIRECTOR'S REPORT DEAR SHAREHOLDERS, Your Directors have pleasure in presenting the 23™ Annual Report together with the Audited Statement of Accounts of the Company for the financial year ended 31st March, 2015. OPERATIONAL & PERFORMANCE REVIEW During (he year under review, your Company has achieved a sales turnover of Rs. 2404.79 lacs as against sales turnover of Rs. 2116.37 tacs during the previous year showing an increase of 13.62 % and profit (after tax) is Rs. 7B.87 lacs for the year as against net profit (after tax) of Rs. 119.73 lacs during previous year showing decline of 50.81% due to slowdown in economy. SUBSIDIARY COMPANY During the year ended 31" March, 2015. the Company did not have any subsidiary company. FIXED DEPOSITS The Company ties not accepted or renewed any deposit from the public during the year under review pursuant to the provisions of Companies Act 2013 and rules made there under. DIVIDEND Keeping In view to conserve resources, your Directors do not recommend any dividend Tor the year under review. APPOINTMENT OF KEY MANAGERIAL PERSONS (KMPa) AND INDEPENDENT DIRECTORS ¦n accordance with the provisions of the Companies Act. 2013 and Articles of Association of the Company Mr. ijiurag Gupta, DIN 00192886 shall retire by rotation at the forthcoming Annual General Meeting and is eligible 'or re-appointment. In accordance with the provisions of the Companies Act, 2013. Mr. T N Goel. DIN 00193103 and Mr. Rajesh Gupta. DIN 00133052, shall be appointed as Independent directors, at the forthcoming annual general meeting for 5 consecutive years. STATUTORY AUDITORS M/s Jain S Anil Sood, Chartered Accountants. Statutory Auditors, hold office until the conclusion of the ensuing annual general meeting and being eligible, offer themselves for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act. 2013 and Rules framed there under and willingness to accept the office of the Statutory Auditors, if reappointed. !n terms of provisions of section 139 and 141 of the Companies Act. 2013, your directors recommend their reappointment for a five year term starting from the conclusion of (he ensuing Annual General Meeting of the ijompany subject to ratification by the members at every Annual General Meeting. The auditors have forwarded their certificate stating (hat their re-appointment, if made will be in accordance with the criteria specified under section 141 of the Companies Act. 2013. SECRETARIAL AUDIT Mr. Sanjlv Kumar Goel, Practicing Company Secretary has been appointed by the Board to conduct Secretarial Audit under provisions of section 204 of the Companies Act 2013. The Secretarial Audit report is annexed with ihe Director's Report as Annexure - 1. There is no qualification in secretarial audit report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNING AND OUTGO Energy conservation continues to be an area of major emphasis In your Company. Efforts are made to optimize the energy cost while carrying out manufacturing operations. As required by the provisions of section 134 of the Companies Act. 2013, the relevant information regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in the Annexure- 2 forming part of this report. STATUTORY DISCLOSURES None of the Directors of the Company are disqualified under the provisions of section 164 of the Companies Act 2013. The Directors have made the requisite disclosures, as required under the Companies Act 2013 and Clause 49 of the Listing Agreement. CORPORATE GOVERNANCE The Company is committed to maintain the good standards of Corporate Governance. The Company has complied with the CorDtfaiejGoyemance.requlrements.es stipulated, under Clause 49 of the Listing Agreement. Pursuant lo clause 49 of the Listing Agreement with the Stock Exchanges, the Report on Corporate Governance together with M/s Jain & Anil Sood, Chartered Accountants Certificate regarding compliance of Corporate Governance is annexed to this report. DIRECTOR'S RESPONSIBILITY STATEMENT Pursuant to the provisions of section 134(3)(c) of the Companies Act. 2013, it is hereby confirmed that: (a) in the preparation of annual accounts for the financial year ended 31st March. 2015. the applicable accounting standards have been followed and that there are no material departures; (b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the slate of affairs of (he Company as a( 31sl March, 2015 and of the profit of the Company For the year ended on that date; (c) 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; (a) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively (f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequately and operating effectively. EXTRACT OF ANNUAL RETURN The details forming part of extract of the Annual Return is given in Form MGT-9 in Annexure - 3. NUMBER OF BOARD MEETINGS During the financial year 2014-15; Eight Board meetings were held. The meetings were held on 27"th May, 2014, 12th August, 2014. 3" September, 2014. 5th September, 2014, 12th November, 2014. . 2nd December. 2014. 27th January. 2015 and 12" February, 2015. As stipulated by Code of Independent Directors under Companies Act 2013 and under Listing Agreement, a separate meeting of Independent directors was held on 12th February, 2015. The other relevant details of Board meetings and the attendance of the Directors etc. Is given under Corporate Governance Report annexed with Director's Report DECLARATION BY INDEPENDENT DIRECTORS AH Independent Directors of the Company have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act 2013 stating that they meet. the criteria of independence as provided in sub-section (6). PARTICULARS OF LOAN, GU RANT EES OR INVESTMENTS UNDER SECTION 166 No loans, guarantees or investments under Section 186 of the Companies Act, 2013 have been given by the Company. RELATED PARTY TRANSCATIONS All related party transactions that were entered into during the financial year were In the ordinary course o' business and were at arms length basis. No Materially significant related party transactions have been entered by the Company with Promoters, Directors or Key Managerial Personnel etc. that had potential conflict with the interest of the Company at large. AD Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which am of a foreseen and repetitive nature. The detail of transactions entered into pursuant to the omnibus approval so granted is placed before (he Audit Committee and the Board of Directors on a quarterly basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the company. POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE The Company has In place en Antl Sexual Harassment Policy in line with the requirements of The Sexua-' Harassment of Women at the Workplace (Prevention, Prohibition. » Redreasal) Act. 2013. Internal Complaints. Committee (ICC) has been set up to redress complaints received regarding sexual harassment. Ail employee; i (permanent contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received.and disposed off during the year 2014-15 a) No. of complaints received: Nil b) No. of complaints disposed off: Nil MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relatB and the date of the report other than those disclosed in the financial statements. RISK MANAGEMENT POLICY Risk management is a continuous process across the organization designed to identify, assess and frame e response to threats that affect the achievement of its objectives. It enables management to prepare for risks before thoy devolve to improve the operational effectiveness. Determination of the risk appetite allows management to deploy resources according to the need. The Company firmly believes that to ensure effective risk management, there ought to be risk management plans to handle the risks based on the priorities and challenges of the business. The factors involved in identified risks must be considered and the o accuracy of assessment is very important. This implies, if proper risk management implemented as a best practice then massive capital losses can be prevented. The success of the Risk Management Framework depends on the efforts taken to mitigate/ reduce either the probability or consequence of the risk/ threat. Therefore considering the same, Company's Risk Management Policy includes three key elements: I Risk Assessment I. Risk Management and Risk Mitigation * - II. Risk Monitoring Risks are analyzed, considering likelihood and impact, as a basis for determining how they should be managed effectively. Adhering the some, Company has constituted Risk Management Committee end adopted an effective Risk Management Policy in its place to assess, mitigate .end to monitor the different risks exposed to the industry in which it operates. Risk management policy of the company is available at company's website www.hisarspinningmills.com POLICY ON DIRECTOR'S APPOINTMENT & REMUNERATION AND OTHER PRESCRIBED MATTERS The Nomination and Remuneration Committee constituted by the Company functions in accordance with the terms of reference as set out under provisions of Clause 49 of Listing Agreement read with provisions of Section 178 cf the Companies Act, 2013 & rules made there under. Apart from other Corporate Polices which are mandatory under Companies Act as wen as under Listing Agreement, the said Committee has also formulated and recommended to the Board a Nomination & Remuneration Policy relating to director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and all other matters as stipulated under the provisions of section 178 of Companies Ad 2013. The policy also relates to remuneration of Director's. KMP's and other employees of the Company. The said policy is given in Annexure-4. INTERNAL FINANCIAL CONTROL SYSTEM AND ITS ADEQUACY Your Company maintains an adequate and effective Internal Control system commensurate wtth its size and complexity. Internal control systems provide, among other things, a reasonable assurance that transactions are executed with Management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safeguarded against significant misuse or loss. During the year under review, the Company continued to Implement their suggestions and recommendations to improve the internal financial control environment. Their scope of work inter-altar includes review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. In addition to statutory audit, the financial controls of the Company at various locations are reviewed by the Internal Auditors, who report their findings to the Audit Committee of the Board. The Audit Committee actively reviews the adequacy and effectiveness of Internal control system and suggests further strengthening the same, wherever •equired. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS During the year under review, there Is no material or derfs) passed by the regulators or courts or tribunal impacting the going concern status and company's operation In future. DISCLOSURE REGARDING COMPANIES (SHARE CAPITAL AND DEBENTURE) RULES 2014 The paid up listed equity share capital of the Company as al 3111 March 2015 was Rs. 3,73.50.000/- comprising of 37,35.000 equity shares of Rs. 10/- each. As required under Companies (Share Capital and Debenture) Rule!< 2014. during the year under review, the Company; has not issued equity shares with differential voting rights, sweat equity shares, preference shares and employee stock options and also not made any provision for purchase of Its own shares by employees or by trustees. DISCLOSURE REGAROING VOTING RIGHT NOT EXERCISED DIRECTLY BY THE EMPLOYEES During the year under review, there Is NIL disclosure as required under provisions of section 67(3) of Companies Act 2013. AUDIT COMMITTEE Audit Committee constituted by the Company functions in accordance with the terms of reference as set out under the provisions of Clause 49 of Listing Agreement read with provisions of Section 177 of Companies Act, 2013 & rules made thereunder and additional responsibilities assigned to it by Board of Directors of the Company. The Committee reviews the internal audit reports and findings of internal auditors along with the comments of management. The functions of the Audit Committee among others include approving and implementing the audit procedures, effective supervision of financial reporting system. Whistle Blower Mechanism, internal control and procedures, recommending appointment of Statutory Auditors. Cost Auditors to Board and also ensuring compliances with regulatory guidelines. The Board has constituted the Audit Committee comprises of following: , VIGIL MECHANISM/WHISTLE BLOWER POLICY The Company has e vigil mechanism named "Whistle Blower PoWcy/VJgil Mechanism" (o deal with Instance of ¦ fraud and mismanagement. If any. The detail of the Policy Is explained In the Corporate Governance Report and also available at company's website www.hlsarspinnlngmllls:com PERFORMANCE EVALUATION OF BOARD OF DIRECTORS During the year under review, the Board adopted a formal mechanism for evaluating Its performance and as well as that of its committees, individual Directors, including the Chairman of the Board in compliance with the Companies Act 2013 and Clause 49 of Listing Agreement. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board, its committee & members, their experience & competencies, performance of specific duties & obligations, governance and also In accordance with Performance Evaluation Policy of Company. Broadly the performance of Norn lndepertdent/ Exeajtrve/Whole Time Directors) was- ovaluated on the basis of their own performance, expertise. Intelligence, their qualitative & quantitative contribution towards operational achievements, organizational performance etc. The performance of Non-Executive Independent Directors were evaluated on the basis of their constructive participations in Board/Committee/General meetings, their informed & balanced decision-making, ability to monitor financial controls & systems. & certain allied parameters. The performance evaluation of various Board Committees constituted under Companies Act & Listing Agreement was made on the basis of their respective terms of reference, discharge of functions, governance etc. I As stipulated by Code of Independent Directors under Companies Act 2013 and Listing Agreement, a separate meeting of independent directors 12* February, 2015 to review the performance of Non-independent directors including the Chairman end the Boards as a whole. The Independent Directors also reviewed the quality, content and timeliness of flow of information between Management and the Board. Disclosure of information's as required under rule 5111 of Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014 The Provisions of Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 requiring particulars of the employees in receipt of remuneration in excess of Rs. 60 lacs per year to be disclosed in the Report of Board of Directors are not applicable to the Company as none of the employees was in receipt of remuneration in excess of Rs. 60 lacs during the financial year 2014-15 Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report. Having regard to the provisions of Section 136(1) read with its relevant proviso of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished free of cost. The Nomination and Remuneration Committee of the Company has affirmed that the remuneration is as per the remuneration policy of the Company. ACKNOWLEDGEMENT Your Directors wish to convey their appreciation lo ail of [he Company's employees for their enormous efforts as well as their collective contribution lo the Company's performance. "The Directors-would also like to thank shareholders, customers, dealers, suppliers, Financial Institutions, bankers. Government and all the other business associates for the continuous support given by them to the Company and their confidence in its management. By order of the Board (Gopal Krishan Gupta) Chairman Cum Managing Director DIN-00192935 Place: Chandigarh Dated: September 04, 2015 |