DIRECTORS' REPORT We have pleasure in presenting Twelfth Annual Report on the business and operations of the Company together with Audited Results for the financial year ended March 31, 2015. Review of Operations Gokaldas Exports, on a consolidated basis, has reported total revenue of Rs.113,749 Lakhs which is constant over previous year 2013-14. There are positive indicators from the US markets as their economy is showing signs of improvement, while European markets are looking weak with Greece imbroglio and similar stress in few other countries like France and UK. The company has successfully adopted its strategy of expanding geo-footprint to countries like Latin America and doing development work in few other countries. There is focus on reviewing product mix for higher thrust on products with higher margins. On the profitability front, the company has shown positive performance with growth in operational profits as well as at the PBT level. Profits from operations has grown in excess of 30% in 2014-15 over 2013-14, through proactive measures towards cost & waste reduction, cost containment & margin improvement. This has helped the company post an EBIDTA of Rs.7,206 Lakhs in 201415 as against Rs. 5,473 Lakhs in 2013-14. PBT for 2014-15 has also seen improvement to Rs.3,552 Crin 2014-15 as against a small loss in 2013-14 aided by one time income. Key Cost Metrics In the year 2014-15, there has been reduction in the key costs ratios as compared to previous year. The company had taken various measures towards creating an environment of effective cost management in the organization to keep the costs from spiraling as well as keep ourselves competitive in the market place. Among the key cost items, raw material costs to sales have reduced from 50% in 2013-2014 to48% in 2014-15, and overhead costs from 15.7% to 13.5%. There has been increase in depreciation charge due to change in accounting standard. Interest subvention was not renewed by Ministry of Commerce for the year 2014-15 leading to hike in interest costs & resultant hit to the P&L Our strategy of cost management measures continues, which coupled with productivity enhancement initiatives would drive the overall performance improvement strategy in the coming years. Wage costs form a significant part of our costs, which has seen increase in rates over the years as follows. As can be seen from the chart below, minimum wage in Karnataka has gone up 3 times over the past 8 years. Rising trend in wholesale price index (WPI) also reflects continuing inflationary pressure on operating costs. We have undertaken substantive strategic measures to improve our performance, viz: focus on increasing share of business with existing customers, bring churn in customer set, develop new customers and markets, focus on high margin product basket, strengthen design capabilities, improve manufacturing efficiencies, and sustain focus on tighter financial management. These initiatives will help us achieve enhanced results in the coming years. Dividend No dividend has been recommended by the Directors for the year Transfer to Reserves No amount is transferred to the Reserves. List of Subsidiaries Your Company has 13 subsidiary companies. The names of these companies are as follows: All Colour Garments Private Limited, Deejay Trading Private Limited, Glamourwear Apparels Private Limited, Madhin Trading Private Limited, Magenta Trading Private Limited, Rafter Trading Private Limited, Rajdin Apparels Private Limited, Reflexion Trading Private Limited, Rishikesh Apparels Private Limited, Seven Hills Clothing Private Limited, SNS Clothing Private Limited, Vignesh Apparels Private Limited and Robot Systems Private Limited. Pursuant to provisions of Section 129(3) of the Companies Act, 2013 a statement containing salient features of the financial statements of the Subsidiary Companies in Form AOC-1 is given in Annexure to this report, the Audited Financial Statements along with the reports of the Board of Directors and the Auditors pertaining to the above subsidiaries have not been attached to this Report. The Financial Statements of the said subsidiaries will be kept for inspection by any investor at the registered office of your Company and that of the subsidiary companies. Investors who want to have a copy of the above may write to the Company Secretary at the registered office. Deposits During the year under review, your Company has not invited or accepted any deposits from the public under section 76 of the Companies Act, 2013 and Rules made there under. ESOP-2010 Your Company has introduced the Employee Stock Option Scheme - 2010 in accordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999. During the year 2,18,332 employee stock options were converted into equivalent number of equity shares. As required under SEBI (Share Based Employee Benefits Regulations, 2014), a disclosure is annexed herewith. SHARE CAPITAL Consequent to conversion of stock options into equity shares, your Company's Paid Up equity share capital has gone up to Rs. 172,971,660 as on March 31, 2015 from 171,880,000 as on March 31,2014. Directors During the year 2015-16, Mr. Gautam Chakravarti, Director, resigned from Directorship with effect from 25th May, 2015 and Mr.R Ramababu has been appointed as Vice Chairman and Managing Director of the Company with effect from 25th May, 2015. The Board of Directors places on record sincere appreciation to Mr. Gautam Chakravarti for his invaluable contribution to the Company during his tenure as Whole-time Director. Mr. Richard B Saldanha, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The brief resume/details relating to Director being re-appointed as stipulated under Clause 49 of the Listing Agreement is furnished in the Report on Corporate Governance. At the Board Meeting of the Company held on September 29th, 2014 the Company had appointed Mrs. Smita Aggarwal (DIN: 01478327), a woman Director as Independent Director under the Companies Act, 2013, for 5 years. 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 various aspects of Board's functioning, composition of the Board and its Committees, execution and performance of specific duties, obligations and governance. The performance evaluation of Independent Directors has been carried out. The performance evaluation of the Non-independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. NUMBER OF MEETINGS OF THE BOARD During the year, five Board Meetings were held on May 10, 2014, August 13, 2014, September 29, 2014, November 14, 2014 and February 14, 2015. The Particulars of Directors &their attendance during the financial year 2014-2015 has been disclosed in the Corporate Governance Report forming part of this Annual Report. BOARD COMMITTEE The Company has the following committees of the Board: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Stakeholders' Relationship Committee 4. CSR Committee The Composition of each of the above Committees, their respective roles and responsibility are as detailed in the report on Corporate Governance. The Company's last Annual General Meeting was held on 29th September, 2014. Directors' Responsibility Statement Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, the Management states that: I) 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; II) They 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 and of its profits / losses for the year ended March 31,2015; III) They have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of this Act, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities; IV) They have laid down Internal Financial Controls to be followed by the Company and the Audit Committee of the Board of Directors shall ensure that the Internal Control is adequate and robust; V) They have prepared the financial statements for the year ended March 31,2015 on a going concern basis; VI) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Safety, Health, Environment We, as a responsible manufacturer, are committed to take adequate measures related to environment, employee health and safety in developing, manufacturing, storing, handling and distribution of our products. It is our responsibility to provide a workplace free from accidents, injuries and exposure to hazardous substances, conserve natural resources and prevent pollution to protect the environment. Besides, as a constructive partner in the communities in which it operates, the Company has been taking concrete actions to realize its social responsibility objectives, thereby building value for its various stakeholders. We respect human rights, value our employees, and invest in innovative technologies. In the past the Company has supported innumerable social and community initiatives and continues to do the same. Some of the key initiatives taken by the company are: • Regular fire safety audits along with mock drills at all locations • Identification and implementation for additional fire safety measures for high rising buildings • Up-gradation of existing fire control and safety systems including training on fire prevention for employees • Enhanced focus on product safety and safe working practices through training programs • Implementation of a Reverse Osmosis plant in Denim Laundry for recycling of wastewater Corporate Governance Your Company is committed to maintaining the highest standards of Corporate Governance. Your Directors adhere to the standards set out by the Securities and Exchange Board of India's (SEBI) Corporate Governance practices. Your Company's Corporate Governance Compliance Certificate is in line with Clause 49 of the Stock Exchange Listing Agreement and is given along with the Corporate Governance Report. Management Discussion and Analysis Management Discussion and Analysis Report is given separately, forming part of this Annual Report and is in accordance with the requirements laid out in Clause 49 of the Listing Agreement with Stock Exchanges. Listing The equity shares of the Company are listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the listing fees to the respective stock exchanges till date. The Company's shares are tradable compulsorily in the dematerialized form and the Company has entered into an agreement with National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL) fortradingin electronic form. Auditors a) Statutory Auditor At the AGM held on 29th September, 2014 the members approved the appointment of M/s S R Batliboi & Associates LLP, Chartered Accountants and M/s Girish Murthy & Kumar Chartered Accountants as Joint Statutory Auditors for a period of three (3) years from the eleventh AGM till the conclusion of the thirteen AGM subject to the approval of the Audit Committee and ratification by the Members every year. As recommended by the Audit Committee, the Board has proposed the re-appointment of M/s S R Batliboi & Associates LLP, Chartered Accountants and M/s Girish Murthy & Kumar Chartered Accountants as Joint Statutory Auditors for fiscal 2015-16. b) Secretarial Auditor Pursuant to the Provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Nagendra D Rao, Practicing Company Secretary (CP No :7731, ACS No & 5553) to undertake the secretarial audit of the Company. The Secretarial Audit Report is given in Annexure to this Report. Particulars of Employees The Statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an annexure forming part of this Annual Report Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo In pursuance of the Conservation of Energy, Technology Absorption, Foreign Exchange Earnings in such manner as prescribed under Rule 8 (3) of the Companies (Accounts) Rules, 2014, the particulars of the same are given below. A. Conservation of Energy The operations of the Company are not energy intensive. However, the Company takes continuous initiatives to curtail consumption of energy on an ongoing basis. B. Technology absorption, adaptations and innovation Not Applicable C. Foreign Exchange Earnings and Outgo Foreign Exchange earned: Rs. 82,664 lakhs Outgo :Rs. 21,755 lakhs RELATED PARTY TRANSACTIONS All related party transactions, that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. The Company presents a statement of all related party transactions before the Audit Committee. Prior omnibus approval of the Audit Committee has been obtained for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted along with a statement giving details of all related party transactions is placed before the Audit Committee. Further there are no materially significant related party transactions during the year under review made by the Company with promoters, Directors, Key Managerial Personnel or designated persons which may have a potential conflict of interest with the Company at a large. PARTICULARS OF LOAN, GUARANTEES AND INVESTMENT In terms of Section 134 of the Companies Act, 2013 the particulars of Loan, Guarantees and Investment given by the Company under Section 186 of the Companies Act, 2013 is detailed in notes to accounts of the financial statements. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Your Company has in place a policy on prevention, prohibition and Redressal of Sexual Harassment and Nondiscrimination at work place in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual temporary, trainees) are covered under this policy. An Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at work place. During the year ended March 31,2015, the ICC has received no complaints pertaining to Sexual harassment/discrimination at work place. EXTRACT OF THE ANNUAL RETURN Relevant extract of annual return to be filed with the Registrar of Companies for the financial year 2014-15 is given as Annexure to this Report. INTERNAL CONTROL SYSTEMS The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. Internal Audit is carried out in a programmed way and follow up actions were taken for all audit observations. CORPORATE SOCIAL RESPONSIBILITY (CSR) In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company has constituted a CSR Committee. REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES In terms of the provisions of Section 178(3) of the Act and Clause 49(IV)(B)(1) of the Listing Agreement, the NRC is responsible for formulating criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to remuneration of Directors, Key Managerial Personnel and other senior employees. In line with this, Board has adopted Remuneration Policy for Directors, Key Managerial Personnel and other senior employees of the Company. The copy of policy is available on the company's website www.gokaldasexports.com DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY Your Company has adopted a Risk Management Policy for addressing the requirements of risk identification, risk assessment, risk mitigation plans etc of the company. RISK MANAGEMENT POLICY In terms of Clause 49 of the listing agreement, the Board of Directors have formulated policy on risk management which can be accessed from the website of theCompanyatwww.gokaldasexports.com Acknowledgements and Appreciation Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners and associates, financial institutions and the Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company for their hard work and commitment. On behalf of the Board of Directors Richard B Saldanha (Chairman) R Ramababu (VC and MD) Place ; Bangalore Date ; 12th August, 2015 |