BOARD'S REPORT Dear Shareholders, 1.Your Directors are pleased to present their Report together with the Audited Accounts for the year ended 31st March 2015. 2. DIVIDEND Keeping in view the need of textile industry to continuously upgrade, and modernise, it is considered prudent to conserve funds to achieve cost effectiveness, to provide margin money for expansion and to service the increased debt. Your Directors, therefore, regret their inability to recommend any dividend this year. 3. GENERAL REVIEW Major renovation / replacement of machinery at both plants were successfully completed at a cost of ' 10.00 crores financed by term loan from State Bank of India (SBI) and partly by internal accruals. In the current year, capacity expansion at Guna plant as planned by installing 14,112 spindles together with related machinery and accessories, at a capital cost of ' 62.00 crores, is presently under implementation and is expected to be completed by March 2016. This is being financed by term loan of ' 43.00 crores from SBI, the balance being funded by internal accruals. The sluggish off take coupled with wide fluctuations in prices of raw materials has been witnessed throughout the year. This situation continues and should hopefully improve later in the year. 4. INTERNAL FINANCIAL CONTROL SYSTEMS The Company has an adequate Internal ControlSystem commensurate with the size, scale and nature of its operations. Internal Audit is conducted by independent Chartered Accountants, on quarterly basis. To maintain its objectivity and independence, the Internal Auditors report directly to the Audit Committee of the Board. Based on the report of the Internal Audits, functional heads undertake corrective action and thereby strengthening the controls in their respective areas. 5. STATUTORY AUDITORS M/s. Singhi & Co, Chartered Accountants (Registration no. 302049E), New Delhi, who are Statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the Financial Year 2015-16. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. Singhi & Co. that their appointment, if made, would be in conformity with the limits specified in the said Section. 6. AUDITORS' REPORT The Auditors' Report to the Shareholders does not contain any reservation, qualification or adverse remark. 7. SECRETARIAL AUDIT 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 had appointed M/s. A. Arora & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed with this report as Annexure - 'I'. 8. COST AUDIT Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, qualified Cost Auditors, M/s Shakti K. & Associartes, Cost Accountants have been appointed to conduct cost audit relating to the products manufactured by the Company. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members' ratification for remuneration payable to Cost Auditors is included in the Notice convening the ensuing Annual General Meeting of the Company. 9. DIRECTORS a) Changes in Directors Shri Pradip Kumar Daga was reappointed as Managing Director of the Company with effect from 16th April 2015 for a period of three years, at the Annual General Meeting held on 6th September 2014. In accordance with the provisions of Companies Act, 2013 and Articles of Association of the Company, Shri Pradip Kumar Daga, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors had appointed Ms. Nilu Agrawal as Additional Director of the Company in the category of Independent Directors with effect from 1st April 2015 for a period of five years till 31st March 2020 subject to consent of shareholders in the ensuing Annual General Meeting. Ms. Nilu Agrawal has a rich business experience, which will be beneficial for the Company. This will also fulfill the requirement of having a woman Director on the Board of Directors under the Companies Act, 2013 and Clause 49 of the Listing Agreement. b) Statement on declaration given by Independent Directors All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 of the Listing Agreement. c) Meetings During the year, five Board Meetings and four Audit Committee meetings were convened and held, the details of which are given in the Corporate Governance Report. d) Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, the Directors individually, as well as the evaluation of the working of its Committees. 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. Evaluation of the performance of individual Directors including the Chairman of the Board was carried out, evaluation being made on parameters such as level of engagement and contribution, independence of judgement, 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. The performance evaluation of the Chairman and non-independent Directors was carried out by the Independent Directors. The Directors have expressed their satisfaction with the evaluation process. 10. KEY MANAGERIAL PERSONNEL During the year, Shri S. B. Sharda, who is already the President of the Company was appointed as the Chief Financial Officer (CFO) of the Company. Mrs. Puneeta Arora, Company Secretary was appointed as such before the Companies Act, 2013 came into force. They are Key Managerial Personnel of the Company. 11. DIRECTORS' RESPONSIBILITY STATEMENT In terms of the provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm 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 departures; 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 and loss 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 this Act 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; and 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. 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. 12. CORPORATE SOCIAL RESPONSIBILITY The Company is committed to discharging its social responsibility as a good corporate citizen. The CSR Policy has been framed and posted on the website of the Company, www. dsl-india.com . As required by Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014, Annual Report on CSR activities is annexed as Annexure - 'II' to form part of this report. 13. VIGIL MECHANISM The Company has a Vigil Mechanism to provide an avenue for Directors and employees to raise concerns of any fraud, mismanagement, negligence, violations of legal or regulatory requirement. The policy of Vigil Mechanism is an internal policy, to make protected disclosures in good faith and to raise concerns to be appropriately dealt by Vigil Officer or the Audit Committee as the case may be. Complaints received by Vigil Officer are investigated by the Vigil Officer and a report thereon is submitted to the Audit Committee. Although no personnel was denied access to the Vigil Officer and the Audit Committee, no complaints were received during 2014-15. To ensure that this mechanism is adhered to, and to assure that the concern will be acted upon seriously, the Company will: 1. Ensure that the Complainant and/or the person processing the Protected Disclosure is not victimized for doing so. 2. Ensure complete confidentiality. 3. Take disciplinary action, if any one destroys or conceals evidence of the Protected Disclosure made/to be made. 4. Provide an opportunity of being heard to the persons against whom the complaint is received. The Policy on Vigil Mechanism is also posted on the website of the Company. 14. RISK MANAGEMENT POLICY The Company has an efficient Risk Management framework to identify and evaluate business risks and opportunities. Risk Management forms an integral part of the Company's MidTerm Planning cycle. It defines the risk management approach across the enterprise at various levels. The Audit Committee has been delegated the responsibility for monitoring and reviewing risk management, assessment and minimization procedures. 15. NOMINATION AND REMUNERATION POLICY The Board has on the recommendations of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, KMP and Senior Management and their remuneration. The Company's Remuneration Policy is attached as Annexure - 'III' and forms part of this report of the Directors. 16. 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. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company and hence, form AOC 2 is not required. All related party transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of foreseen and repetitive nature for a period of one year. The transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis. Where the need for Related Party Transactions cannot be foreseen , the Audit Committee has granted omnibus approval for such transactions subject to their value not exceeding ' 1 crore per transaction, which is valid for a period of one year. The Policy on Related Party Transactions, as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. 17. PARTICULARS OF EMPLOYEES a) The prescribed particulars of employees required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - 'IV' and forms a part of this Board's Report. b) No employee of the Company was in receipt of remuneration in excess of limits laid down in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Also, no employee, by himself or along with his spouse and dependent children holds 2% or more of the equity shares of the Company. 18. FIXED DEPOSITS During the year, the Company has not accepted any deposits from the public and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014. 19. LOANS, GUARANTEES AND INVESTMENTS The Company has not given loans, directly or indirectly to any person or other body corporate or given guarantee or provided any security in connection with a loan to any other body corporate or person. The Company has also not made any investments as per the provisions of Section 186 of the Companies Act, 2013. 20. CORPORATE GOVERNANCE A report on Corporate Governance and Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is annexed herewith. Compliance certificate regarding compliance of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is also annexed. 21. EXTRACT OF ANNUAL RETURN The extract of annual return in Form MGT-9 is annexed herewith as Annexure - 'V'. 22. CASH FLOW ANALYSIS In conformity with Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended 31.3.2015 is annexed hereto. 23. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO. As required by Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules, 2014, information with regard to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure -'VI' to form part of this report. 24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the regulators / courts which would impact the going concern status and its future operations. 25. ACKNOWLEDGEMENT Your Directors place on record their deep appreciation of the co-operation extended by our Bankers, financial institutions, stakeholders, business associates, Central and State Governments and district level authorities for their co-operation and support and look forward to their continued support in future. They also record their appreciation of the dedicated services rendered by the executives, staff members and workers of the Company. 26. CAUTIONARY STATEMENT Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. P. K. DAGA Chairman and Managing Director VIKRAM PRAKASH Directors YASHWANT KUMAR DAGA Directors P. K. DROLIA Directors NILU AGRAWAL Directors Place : New Delhi Date : 29.05.2015 |