DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2016

Dear Shareholders,

Your Directors present the 50th Annual Report and Audited Financial Statements of the Company for the year ended 31st March, 2016.

Profit after Finance Cost but Before Tax has increased by 42% during the year. This was due to overall improvement in all spheres, be it plant operations including reduction in energy cost, higher sales in quantitative term and lower finance cost

DIVIDEND

We recommend a dividend at the rate of 75% (i.e. Rs. 7.50 per Equity Share of Rs. 10/- each) for the year ended 31st March, 2016 which includes Special Dividend at the rate of 15% (i.e. Rs. 1.50 per Equity Share) to commemorate Golden Jubilee Year (Previous year at the rate of 60% i.e. Rs. 6/- per Equity Share of Rs. 10/- each).

COURSE OF BUSINESS AND OUTLOOK

The Management’s Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is forming a part of this report and gives the state of affairs of the business of the Company. The performance of your Company improved in line with the business engineering work undertaken in the previous year. Few more polyester spinning lines at Bharuch site were converted for producing Nylon Filament Yarn. The demand of Nylon Filament Yarn has   witnessed a good growth due to lower raw material prices. In case of Nylon Tyre Cord Fabric, after conversion of two step process machines into one step process machines and enhanced dipping capacity, the Company has been able to increase its customer base and could sell higher quantity. One of the important factor which improved the performance of the Company was savings in energy cost due to access to open power purchase at Pune site and generation of power from own DG sets at Bharuch site.

EXCISE DUTY DEMAND

The Company has filed an appeal against the order of Commissioner of Central Excise for the alleged excise duty demand of Rs. 22927 lacs, equal amount of penalty and interest on duty amount before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai, denying benefit of Notification No. 6/2000 CE dated 01.03.2000 for specific excise duty. The appeal has been admitted and, on pre-deposit of Rs. 700 lacs, stay granted. An application has been made for early hearing of the appeal and Appellate Authority conceded the request. Your Company has been advised by the legal experts that it has a fair chance of ultimately succeeding in the matter and, accordingly, no provision is required to be made in books of account.

EXPANSION AND MODERNISATION

The Company is cautiously watching development in Synthetic Yarn Industry, imports from China, high dependency on raw material imports and single source of domestic supply and with this background, the Company is evaluating various options which could be available to it for its growth strategy. Until such time, it will continue to put its thrust on re-engineering of its existing operations and carry on balancing investment in modification of existing equipments and some fresh investments in energy conservation schemes.

HEALTH, SAFETY AND ENVIRONMENT

The report on Management’s Discussion and Analysis includes observations on health, safety and environment compliances by the Company.

All Plant sites of the Company are environment regulations compliant.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are set out in a separate statement attached hereto and forming part of the report. (Annexure-I).

CORPORATE GOVERNANCE

Your Company reaffirms its commitment to Corporate Governance and is fully compliant with the conditions of

Corporate Governance stipulated in Clause ‘C’ of Schedule V on Annual Report pursuant to Regulations 34(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section of disclosure on Corporate Governance and a Certificate from the firm of Practising Company Secretaries dated 4th May, 2016 in this regard is annexed herewith and forms a part of the Report.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION :

(including criteria for determining qualification, positive attributes, independence of a Director, policy relating to remuneration for Directors, Key Managerial Personnel and other employees)

Policy on Directors’ Appointment

Policy on Directors’ appointment is to follow the criteria as laid down under the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Emphasis is given to persons from diverse fields or professions.

Policy on Remuneration

Guiding Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that -

Remuneration to unionised workmen is based on the periodical settlement with the workmen union.

Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and Workmen (non Unionised) is industry driven in which it is operating taking into account the performance leverage and such factors so as to attract and retain quality talent.

For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors of the Company has initiated and put in place evaluation of its own performance, its committees and individual directors. The results of the evaluation are satisfactory and adequate and meets the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(7) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in Section 149(6) of the Act.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(1)(c) of the Companies Act, 2013 and on the basis of explanation and compliance certificate given by the executives of the Company, and subject to disclosures in the Annual Accounts and also on the basis of discussions with the Statutory Auditors of the Company from time to time, we state as under :

a) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure;

b) that 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 of the Company for that period;

c) that 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) that the directors had prepared the annual accounts on a going concern basis;

e) that 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; and

f) that 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.

DIRECTORS

In accordance with Articles of Association of the Company Mr. B.K. Birla, Director of the Company will retire by rotation and being eligible, offers himself for re-appointment.

Mr. G.M. Singhvi, Whole-time Director of your Company whose tenure of 3 (three) years comes to an end on 15th May, 2016 has been re-appointed by the Board of Directors in its meeting held on 2nd February, 2016 for a period of 1 (one) year commencing from 16th May, 2016, subject to approval of the shareholders of the Company at the forthcoming Annual General Meeting.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

The Board of Directors have met five times and Independent Directors once during the year ended 31st March, 2016.

DETAILS OF COMMITTEE OF DIRECTORS

Composition of Audit Committee of Directors, Nomination and Remuneration Committee of Directors and Stakeholders Relationship/Grievance Committee of Directors, number of meetings held of each Committee during the financial year 2015-16 and meetings attended by each member of the Committee as required under the Companies Act, 2013 are provided in Corporate Governance Report and forming part of the report.

The recommendations of the Audit Committee, as and when made to the Board, has been accepted by it. 

KEY MANAGERIAL PERSONNEL

Mr. G.M. Singhvi the Whole-time Director of the Company has been re-appointed w.e.f. 16th May, 2016, subject to approval of the shareholders.

The other Key Managerial Personnel of the Company are Mr. S. Thapliyal, President of the Company, Mr. D.B. Roonghta, Chief Financial Officer and Mr. C.B. Gagrani, Company Secretary.

PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTY

There is no transaction with Related Party which requires disclosure under Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.

LOANS, INVESTMENTS AND GUARANTEES BY THE COMPANY

There is no loan given, investment made, guarantee given or security provided by the Company to any entity under Section 186 of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROLS

The Company is having in place Internal Financial Controls System. The Internal Financial Controls with reference to the financial statements were adequate and operating effectively.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the financial year ended 31st March, 2016.

RISK MANAGEMENT

Your Company has developed and implemented a Risk Management Policy, including identification of element of risk and the risk that may threaten the existence of the Company. The Company has constituted a Risk Management Committee of Senior Executives to evaluate the risk and mitigation plan and monitor them. The Risk Management Committee evaluated various risks and mitigation plans and monitored them. There is no element of risk identified by the Management that may, in the opinion of the Board, threaten the existence of the Company.

A detailed report on significant risks and mitigation is given under the head Risk Management in Management Discussions and Analysis.

WHISTLE BLOWER MECHANISM

Your Company has put in place Whistle Blower Mechanism. The detailed mechanism is given in Corporate Governance Report forming part of this report.

COROPRATE SOCIAL RESPONSIBILITY

Information on Corporate Social Responsibility (CSR) Policy and initiative taken by the Company during the financial year 2015-16, pursuant to Section 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith and forming part of the report. (Annexure-II).

ANALYSIS OF REMUNERATION

Pursuant to Rule 5 of the Companies (Appointment and Remuneration) Rules, 2014 a disclosure on remuneration related information of employees, Key Managerial Personnel and Directors is annexed herewith and forming part of the report. (Annexure-III).

AUDITORS

The tenure of M/s.Price Waterhouse, the Statutory Auditors of the Company, appointed in 49th Annual General Meeting of the Company, will come to an end on the conclusion of 50th Annual General Meeting of the Company.

Indian Accounting Standard (Ind AS) has become effective from 1st April, 2016 and keeping in view the changing profile of your Company's business with decline in Polyester Textile Yarn business and considering all aspect of the matter, your Board has decided to recommend the appointment of M/s. Khimji Kunverji & Co. as Statutory Auditors of the Company under Section 139 of the Companies Act, 2013. The Board placed on record its appreciation of the services of the retiring Auditors M/s. Price Waterhouse who have been Auditors of the Company right from the inception.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report for the year ended 31st March, 2016 in prescribed form duly audited by the Practising Company Secretary M/s. Sanjay Sangani & Co. is annexed herewith and forming part of the report.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in a separate statement attached herewith and forming part of the report. (Annexure-IV).

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014, the extract of annual return is annexed herewith and forming part of the report. (Annexure-V).

For and on behalf of the Board of Directors

RAJASHREE BIRLA

G.M. SINGHVI

Directors  

Date : May 04, 2016  

Place : Mumbai