Acknit Industries Ltd Directors Report.

Dear Shareholders,

Your Directors have pleasure in presenting the 29th Annual Report of the Company for the Financial Year ended 31st March, 2019.

FINANCIAL RESULTS

The summarized results of your Company are given in the table below:

( Rs in Lakhs)

Particulars Financial Year Ended Financial Year Ended
31.03.2019 31.03.2018
Gross Revenue 17378.61 16209.12
Other Income 508.08 386.63
Total Revenue 17886.69 16595.75
Less: Total Expenditure 16571.20 15443.27
Gross Profit 1315.49 1152.48
(before Depreciation & Finance Cost)
Less: Depreciation 226.91 226.19
: Finance Cost 498.32 507.24
Profit Before Tax (PBT) 590.26 419.05
Less: Provision for Income Tax 128.64 136.44
: Deferred Tax (6.64) (14.59)
Profit After Tax(PAT) 468.26 297.19
Other Comprehensive Income net of tax (42.79) 0.21
Total Comprehensive Income 425.47 297.40
Balance B/F 188.90 370.36
Balance available for appropriation 614.37 667.76
Less : Dividend & Dividend Tax 54.97 45.50
Less : Transfer to General Reserve 350.00 250.00
Less : Adjustment relating to Fixed Assets - -
Add : Effective portion of gains/(losses) on designated portion of hedging instruments in a cash flow hedge - (183.36)
Balance transfer to Balance Sheet 209.40 188.90

SUMMARY OF OPERATIONS

During the year under review, the total revenue has increased from Rs 16,595.75 Lakhs to Rs 17,886.69 Lakhs. PAT for the Financial Year 2018-19 was Rs 468.26 Lakhs as against Rs 297.19 Lakhs in the previous Financial Year 2017-18. For the Financial Year 2018-19 total comprehensive income stood at Rs 425.47 Lakhs vis-a-vis Rs 297.40 Lakhs in the previous Financial Year 2017-18.

SEGMENT-WISE PERFORMANCE

From the very inception, the Companys main activity is concentrated in the production and export of Industrial Safety gloves which are considered essential elements in minimizing health related risk at work places for over the two decades. With the passing of years, the Company has diversified its range of products encompassing various types of protective wears like industrial gloves of several varieties like leather, cotton, synthetic gloves, dotted gloves, industrial garments. The Company is planning to further diversify its range of products by manufacturing other safety products like shoes, both for export and domestic market.

Industrial Safety Hand Gloves:

During the year under review, the gross revenue from hand gloves accounted for 68% of the total revenue as against 69% in the previous year. Whereas, the segment result i.e. contribution to PAT from hand gloves accounted for 83% in the Financial Year 2018-19 as against 82% in the Financial Year 2017-18.

Garments:

The gross revenue of garment sector was increased marginally from 30.59% to 31.31% in the Financial Year 2018-19. The Company is monitoring various control measures like inventory control, debtors control, cost control and the like which gives booster to increase not only contribution to gross revenue but also to their respective shares in the PAT. The Company is coming up with new segments of garments which will results in adding new customers and extending export market.

Windmill:

As compared to the aforesaid principal operating segments the Company has a third segment of operation i.e. generation of power through windmill. The revenue from windmill is Rs 119.21 Lakhs i.e. about 0.69% of the total revenue. It may be highlighted that the Company having already liquidated its entire loan liability for installation of windmills at Dhule in Maharashtra, the entire revenue generated from this sector goes to add up to the profit realisation of the Company without having effect on the cost of financing to the Company.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANY

The Company does not have any Subsidiary, Joint Venture or

Associate Company.

DIVIDEND

Your Directors are pleased to recommend dividend of Rs 1.50 per equity share of Rs 10 each for the Financial Year 2018-19 i.e. 15% on the paid up equity share capital of the company. The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting of the Company and it would result in appropriation of Rs 54.97 Lakhs (including Corporate Dividend Tax of Rs 9.37 Lakhs). Your Company retains the extra profit for future plans.

RESERVES

Your Company proposes to transfer a sum of Rs 350 Lakhs to the General Reserve and carry forward a balance of Rs 209.40 Lakhs in the Profit and Loss Account.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provision of Section 124(5) of the Companies Act, 2013 your Company has transferred Rs 84,806/- during the Financial Year 2018-19 to the Investor Education and Protection Fund. This amount was lying unclaimed/ unpaid with the Company for a period of seven years after declaration of dividend for the Financial Year 2010-11.

Further the Company has also transferred 9,455 Equity Shares to the Investor Education and Protection Fund pursuant to the provision of Section 124(6) of the Companies Act, 2013 during the Financial Year 2018-19, in respect of which dividend had not been paid or claimed by the members for 7(seven) consecutive years or more.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this Financial Statement relates and the date of this report.

CHANGE IN NATURE OF BUSINESS, IF ANY

During the Financial Year 2018-19, there has been no change in the nature of business of the Company.

SHARE CAPITAL

During the year, the Company did not issue/allot any Shares/Securities.

As on 31st March, 2019, the issued and subscribed capital of your Company stood at Rs 3,52,00,000/-. The paid-up Capital of your Company stood at Rs 3,04,00,000/-comprising of 30,40,000 Equity Shares of Rs 10/- each fully paid.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board consists of the following persons:

Key Managerial Personnel

1) Mr. Shri Krishan Saraf Managing Director
2) Mr. Deo Kishan Saraf Whole-time Director & Chief Financial Officer
3) Ms. Bandana Saha Company Secretary & Compliance Officer

Non-Executive, Non-Independent Directors

1) Mrs. Rashi Saraf

Non-Executive, Independent Directors

1) Mr. Samir Kumar Ghosh

2) Mr. Mukul Banerjee

3) Mr. Jadav Lal Mukherjee

None of the Directors of the Company is disqualified from being appointed as Directors under the provisions of section 164(2) of the Companies Act, 2013.

The Independent Directors has furnished required declarations pursuant to Section 149(7) of the Companies Act, 2013 confirming their respective independence status.

In accordance with the provisions of Companies Act, 2013 and the Companys Articles of Association, Mrs. Rashi Saraf (DIN: 07152647), Non-Executive Non-Independent Director of the Company, will be subject to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offers herself for re-appointment.

The above re appointment forms part of the ensuing Annual General Meeting.

The term of appointment of Whole-time Director expired with the closure of Financial Year 2018-19. The Board has thus passed a resolution for re-appointment of Mr. Deo Kishan Saraf as Whole-time Director cum CFO for a further period of 3(three) years subject to confirmation and approval of members in the ensuing Annual General Meeting.

The resolution for approval of such re-appointment forms part of the notice of the ensuing Annual General Meeting.

APPOINTMENT

Mr. Jadav Lal Mukherjee (DIN: 06421227) has been appointed as the Non-Executive Independent Director of the Company w.e.f. 30th May, 2018.

FORMAL ANNUAL EVALUATION

The ultimate responsibility for good governance and prudent management of a Company lies with the Board of Directors of the Company. The Board is expected to exercise continuous proactive and effective decision making and implementation thereof with a view to achieve the desired goal. In this connection, the Nomination and Remuneration Committee had set out a framework of guidelines for the Board of Directors to undertake continuous evaluation of the performance of the Company while affirming the desired destination. The Board of Directors as a whole is required to display its commitment to Good Governance ensuring a constant improvement of processes and procedures wherein, each individual member of the Board is committed to contribute his best in the overall growth of the organisation.

MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2018-19, the Board of Directors of the Company, met seven(7) times on16th April 2018, 30th May 2018, 20th July 2018, 13th August 2018, 13th November 2018, 11th February 2019 and 29th March 2019. Further, a separate meeting of the Independent Directors of the Company was also held on 11th February, 2019, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 were discussed.

EXTRACT OF THE ANNUAL RETURN

The details forming part of the extract of Annual Return of the Company in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 is annexed herewith as Annexure-I to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors to the best of their knowledge hereby state and confirm that :

a) in the preparation of Annual Accounts, 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 Financial Year March 31, 2019 and the Profit or 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 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the Annual Accounts for the Financial Year ended March 31, 2019 on a going concern basis.

e) the Directors had laid down Internal Financial Controls to be followed by the Company and such Internal Financial Controls were adequate and operating effectively.

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

AUDITORS

1. STATUTORY AUDITOR

At the Annual General Meeting (AGM) held on 21st September, 2017, M/s. SRB & Associates, Chartered Accountants (Firm Reg. No. 310009E) has been appointed as the Statutory Auditors of the Company in terms of the provisions of section 139 of the Companies Act, 2013 for a consecutive period of 5(five) years, subject to ratification by members in every Annual General Meeting. However, the requirement of ratification by members at every Annual General Meeting is dispensed with vide MCA commencement notification of Companies (Amendment) Act, 2017 dated 07th May, 2018.

Further, the report of the Statutory Auditors when read with Notes and Schedules as annexed are self-explanatory and therefore do not call for any further comments.

2. INTERNAL AUDITOR

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, your Company had appointed M/s Dhand & Co., Chartered Accountants as the Internal Auditor of the Company for the Financial Year 2018-19.

3. COST AUDITOR

In view of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the provisions of Cost Audit is not applicable on the products of the Company for the Financial Year 2018-19.

4. SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding rules framed thereunder, M/s Rekha Goenka & Associates, Practising Company Secretary, was appointed as the Secretarial Auditor of the Company to carry out the secretarial audit for the Financial Year ended 31st March, 2019.

SECRETARIAL AUDIT REPORT

Secretarial Audit Report given by the Secretarial Auditor is annexed to this Report as Annexure-II. There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in the Secretarial Audit Report.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the public during the year as defined under Section 73 of the Companies Act, 2013. Deposit outstanding as on 31st March, 2019 including unclaimed deposit was Nil.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENT

The Company has in place adequate internal financial controls with reference to Financial Statement. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the Financial Year ended 31st March, 2019 no Loan or Guarantees u/s 186 of the Companies Act, 2013 was provided by the Company. The particulars of investments made by the Company under Section 186 forms part of the notes to the Financial Statement annexed to this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Reference is made to the disclosures included in the notes to the Financial Statement pursuant to the provisions of Section 129 read with Schedule III to the Companies Act, 2013 which shows the Related Party Transactions entered into during the year. Particulars of material transactions at arms length basis is annexed to this Report in Form AOC-2 as Annexure- III.

HUMAN RESOURCE

The total number of employees of the Company as on 31st March, 2019 was 155.Your Company believes that employees are the most valuable assets of an organization and the optimum utilization of the skill, knowledge and attitude they possess are instrumental to the growth of the organization.

INTERNAL COMPLIANT COMMITTEE

The Company has in place Policy on Prevention of Sexual Harassment of Women in line with the requirements under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has duly constituted Internal Compliant Committee to prevent instances of sexual harassment and to receive and to effectively deal with complaints pertaining the same. No complaint has been received during the year under review.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors of the Company comprises of 4 (four) members, namely Mr. Samir Kumar Ghosh, Mr. Deo Kishan Saraf, Mr. Mukul Banerjee and Mr. Jadav Lal Mukherjee. Majority of them are Independent Directors with exception of Mr. Deo Kishan Saraf, who is a Whole-time Director cum CFO of the Company. Mr. Samir Kumar Ghosh, an Independent Director, is the Chairman of the Audit Committee. The committee met 5(five) times during the year on 16th April 2018, 30th May 2018, 13th August 2018, 13th November 2018 and 11th February 2019. The Board accepted the recommendations of the Audit Committee as were made by it during the year.

The composition of the Committee, number and dates of the Audit Committee meeting along with the attendance details of the members are given separately in the Corporate Governance Report annexed herewith as Annexure- IV.

NOMINATION AND REMUNERATION COMMITTEE

Your Company has Nomination and Remuneration Committee pursuant to the provisions of Section 178 of the Companies Act, 2013. The Nomination and Remuneration Committee comprises of 4(four) members namely Mr. Samir Kumar Ghosh, Mr. Mukul Banerjee, Mr. Jadav Lal Mukherjee and Mrs. Rashi Saraf. The functions of this Committee include identification of persons who are qualified to become Directors and who may be appointed as Senior Management, formulation of criteria for determining qualifications, positive attributes, independence, recommendations of their appointments to the Board, evaluation of every Directors performance, formulation of Remuneration Policy to include recommendation of remuneration for Directors, Key Managerial Personnel and Senior Management.

The Companys Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Other Employees is available on the Companys website- http://www.acknitindia.com/corporate-policies/nomination-and-remunertion-policy.pdf The details of terms of reference of the Nomination and Remuneration Committee, number and dates of the meetings held, attendance of the Directors and remuneration paid to all the Directors during the Financial Year ended 31st March, 2019, are given separately in the Corporate Governance Report annexed herewith as Annexure-IV.

STAKEHOLDERS RELATIONSHIP COMMITTEE

Your Company has Stakeholders Relationship Committee pursuant to section 178 of the Companies Act, 2013 which comprises of 5(five) members, namely Mr. Samir Kumar Ghosh, Mr. Deo Kishan Saraf, Mr. Mukul Banerjee, Mr. Jadav Lal Mukherjee and Mrs. Rashi Saraf. The committee is headed by Mr. Samir Kumar Ghosh.

During the year under review, the Stakeholders Relationship Committee met four(4) times during the year on 30th May 2018, 13th August 2018, 13th November 2018 and 11th February 2019 in order to take on note the share transfer / transmission / remat of shares/sudivision as intimated by the RTA of the Company.

The composition of the Committee, number and dates of the Stakeholders Relationship Committee meeting along with the attendance details of the members are given separately in the Corporate Governance Report annexed herewith as Annexure-IV.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Companys Whistle Blower Policy encourages Directors and employees to bring to the Companys attention, instances of unethical behaviour and actual or suspected incidents of fraud or violation of the Acknit Code of Conduct that could adversely impact the Companys operations, business performance and / or reputation. The Policy provides that the Company investigates such incidents, when reported, in an impartial manner and takes appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld. It is the Companys Policy to ensure that no employee is victimised or harassed for bringing such incidents to the attention of the Company. The practice of the Whistle Blower Policy is overseen by the Audit Committee of the Board and no employee has been denied access to the Committee. The Whistle-blower Policy is available on the Companys corporate website- http://www.acknitindia.com/corporate-policies/whistle-blower-policy-acknit.pdf

RISK MANAGEMENT POLICY

The Company has in place a comprehensive risk management policy, which is reviewed periodically by the Board of Directors. As of now the Directors do not envisage any element of risk which may threaten the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is not covered under the purview of Section 135 of Companies Act, 2013, hence CSR provisions are not applicable.

CORPORATE GOVERNANCE

Your Company uphold the standard of good corporate governance and is compliant with the provisions as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 both in letters and spirits. The Companys core values of honesty and transparency have been followed in every line of business decision making since its inception.

The Corporate Governance Report giving details as required under Paragraph C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this report as Annexure-IV. The Certificate on Corporate Governance for the year ended 31st March, 2019 as issued by M/s Rekha Goenka & Associates, Practising Company Secretary is also attached hereto as Annexure-V which forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) read with Paragraph B of Schedule V of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report is attached hereto as Annexure-VI which forms part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND 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 attached hereto as Annexure VII which forms part of this Report.

PARTICULARS OF EMPLOYEES

The information on particulars of employees as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached hereto as Annexure-VIII which forms part of this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

There was no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and/ or Companys operations in future.

CREDIT RATINGS

ICRA Ltd. vide their rating report of February, 2019 has assigned the following ratings of your Companys financial instruments:

Instrument Rating action (February 2019)
Long-Term Cash Credit [ICRA]BBB- Rating Reaffirmed with stable outlook
Long-Term Term Loan [ICRA]BBB- Rating Reaffirmed with stable outlook
Long-Term Bank Guarantee [ICRA]BBB- Rating Reaffirmed with stable outlook
Short-Term Non-Fund Based Limits [ICRA]A3

LISTING OF SHARES

The shares of the Company are currently listed on The Calcutta Stock Exchange Ltd (CSE) and The Bombay Stock Exchange Ltd (BSE). It was reported in the earlier year that the Company has taken initiative for delisting its shares from CSE. The application of de-listing has been considered by CSE and as per its recommendations, necessary de-listing process has been initiated.

MANAGING DIRECTORS CERTIFICATE

Managing Directors Certificate under Regulation 34(3) read with Paragraph D of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on compliance of Code of Conducts is attached hereto as Annexure-IX which forms part of this Report.

ACKNOWLEDGEMENT

The Board places on record its appreciation for the continued co-operation and support extended to the Company by customers, vendors, regulators, banks, financial institutions and others concerned. The Company also extend its thankful appreciation of the services of the employees and staff of the Company without whose hard work and involvement the desired results of the Company could not be achieved. The Board deeply acknowledges the trust and confidence placed by the consumers of the Company and all its shareholders at large.

For and on behalf of the Board of Directors

For Acknit Industries Limited

Shri Krishan Saraf Deo Kishan Saraf
Managing Director Whole-time Director & CFO
DIN-00128999 DIN-00128804
Place: Kolkata
Date: 29th May, 2019