Ashima Ltd Directors Report.

Your Directors take pleasure in presenting the Thirty Sixth Annual Report of your Company together with Audited Financial Statements for the year ended on March 31,2019.

1. FINANCIAL RESULTS

Your Company’s performance during the above year is summarized below:

( in Lacs)

Particulars March 31, 2019 March 31, 2018
Total Income 28569 23261
Profit / (Loss) before Finance Costs, Depreciation and Amortization Expenses, Exceptional Items & Tax Expenses (695) (871)
Less: Finance Costs 394 654
Profit/(Loss) before Depreciation and Amortization Expenses, Exceptional Items & Tax Expenses (1089) (1525)
Less: Depreciation and Amortization 365 367
Profit / (Loss) before Exceptional Items & Tax Expenses (1453) (1892)
Add: Exceptional Item (Income) 3236 14540
Profit Before Tax 1782 12648
Less: Tax Expenses - -
Profit After Tax 1782 12648
Other Comprehensive Income (6) (61)
Total Comprehensive Income 1776 12587

2. DIVIDEND

Your Directors do not recommend any dividend on the equity shares as well as preference shares.

3. RESERVES

No amount has been transferred to any reserve.

4. review of business operations and future prospects

During the year under review, the Company has reported a profit of 1776 lacs for the year at PBT level compared to 12587 lacs in the preceding year. It may be noted that the performance for the year includes 3236 lacs (last year 14540 lacs) being an exceptional and extraordinary item which mainly includes gain on account of sale of surplus land by the company. The operational performance, excluding impact of such exceptional item, has improved during the year and the loss at PBT level has reduced to 1100 lacs (arrived at after adjusting reported PBT for non-recurring expenses (net) of 359 lacs) compared to loss of 1910 lacs in the preceding year (adjusted for non-recurring expenses (net) of 43 lacs). Upon prudent utilization of proceeds from sale of surplus assets, the interest cost for the year reduced further by 261 lacs and contributed positively to the profitability.

The Denim division has been able to increase the volumes further during the year on account of higher penetration into the domestic brand segment. However, the export market remained lackluster on account of stiff pricing pressure and impact of fiscal policy on volumes being exported to neighbouring countries. Upgradation of manufacturing facilities carried out over last couple of years has enabled the division to enhance its product profile and better spread in terms of market reach. Margins remained under pressure due to various reasons such as firmed up yarn prices, increase in power tariff and fuel costs, tough competition prevailing in the sector. However, the division exercised better controls on other operational costs including product and process optimization and kept overall costs under control. Division has been able to improve its bottom-line, though not significantly, on account of combined effect of all such measures.

Spinfab division has achieved impressive growth in volumes for last 2 years due to business with brand segment and large format stores contributing to the volume push. The division witnessed increased pressure on margins as cost increases could not be passed on in the market due to demand-supply variables. Yarn prices as well as prices of dyes and chemicals remained higher during the year. Utility costs including power and fuel also went up. The negative impact of the same has been aptly offset by measures undertaken on attaining cost efficiencies and effective control on the overheads.

A detailed discussion on performance appears as part of Management Discussion and Analysis attached to this report.

5. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF OUR COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments which affect the financial position of the Company occurring between the end of financial year and the date of this Report, except as stated specifically in this Report.

6. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company does not have any Subsidiary, Joint Venture or Associate Company for the year ended on March 31,2019.

7. DEPOSITS

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. There were no unpaid or unclaimed deposits as on March 31,2019.

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

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report and annexed at Annexure-1.

9. RISK MANAGEMENT

The Company has framed and adopted a "Risk Management Policy" to identify, monitor, minimize and mitigate risks and determine the responses to various risks to minimize their adverse impact on the organization. The Company is exposed to various financial risks viz. credit risk, liquidity risk, foreign currency risk, interest rate risk etc. The executive management oversees the risk management framework and the Audit Committee evaluates internal financial controls and risk management systems. However, the details of risk management objectives and policies made by the Company under the said provision is given in the notes to the Financial Statements. In the opinion of Board, there are no risk which may threaten the existence of the Company. The Risk Management Policy is placed on the website of the Company at www.ashima.in

10. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

In terms of requirements of Section 135(1), the Board of Directors at its meeting held on August 11,2017 has constituted a Corporate Social Responsibility (CSR) Committee. The CSR Committee consists of 3 (Three) Directors viz., Mr. Chintan N. Parikh-Chairman, Dr. Bakul Dholakia- Independent Director and Mr. Atulkumar Singh- Independent Director, as on March 31,2019.

During the financial year, the said Committee met on February 09, 2019 for consideration, review and recommendation to the Board of Directors of the Company for CSR expenditure. The Committee has noted that no amount was required to be spent towards CSR expenditure for the FY 2018-19 in terms of Section 135(5) of the Companies Act, 2013. The CSR Policy is placed on the website of the Company at www.ashima.in

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF COMPANIES ACT, 2013

During the year, the Company has granted loan and made investments. However, there are no guarantees given or security provided under Section 186 of the Companies Act, 2013. The details of loan granted and investments made as on March 31,2019 are given in the Notes to the Financial Statements forming part of the Annual Report.

12. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE wITH RELATED PARTIES

All the transactions with Related Parties are placed before the Audit Committee for its approval and at the Board of Directors for information. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The transactions entered into pursuant to omnibus approval are placed before Audit Committee and Board of Directors on quarterly basis. The policy on Related Party Transaction (RPT) as revised by the Board of Directors at its meeting held on February 09, 2019 in the light of amendments in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which is applicable w.e.f. April 01,2019 is available at the Company’s website at www.ashima.in

All the related party transactions were on arm’s length basis and hence disclosure in Form AOC-2 is not required. There were no materially significant transactions with any of the related parties that may have potential conflict with the interest of the Company at large.

Transactions with related parties as per requirements of IND-AS are disclosed in the notes to the Financial Statements.

13. NOMINATION AND REMUNERATION POLICY

A Nomination and Remuneration Policy has been formulated pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Rules thereto stating therein the Company’s policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management and the same was revised by the Board of Directors at its meeting held on February 09, 2019 in the light of amendments in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said revised policy is placed on the Company’s website at www.ashima.in.

14. ANNUAL EVALUATION OF BOARD’S PERFORMANCE

Pursuant to the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with the policy laid down by the Nomination and Remuneration Committee (NRC), as approved by the Board of Directors, the Board has carried out an annual evaluation of its performance, its Committees and all individual Directors.

In a separate meeting of Independent Directors, performance of Non Independent Directors, performance of the Board as a whole and performance of the Chairman & Managing Director was evaluated. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

15. ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure-2. The Annual Return of the Company has been placed on the website of the Company at www.ashima.in.

16. WEBSITE OF YOUR COMPANY

Your Company maintains a website www.ashima.in where detailed information of the Company and specified details in terms of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 have been provided.

17. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the year, 4 (four) meetings of the Board of Directors were held, as required under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details of

Board meetings held during the financial year 2018-19 have been furnished in the Corporate Governance Report forming part of this Annual Report.

During the year, your Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

18. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment:

1. Mr. Sanjay Majmudar: The Board of Directors on recommendation of the Nomination and Remuneration Committee (NRC) appointed Mr. Sanjay Majmudar as an Additional Director w.e.f. November 03, 2018 and designated him as an Independent Director. In terms of Section 161 of the Act, he holds office up to the date of ensuing Annual General Meeting (AGM). Accordingly, the Board recommends the resolution in relation to the appointment of Mr. Sanjay Majmudar as an Independent Director, for a first term of five (5) consecutive years commencing from November 03, 2018 to November 02, 2023 for the approval by the members of the Company.

2. Dr. Bakul H. Dholakia: He is completing his first term of five (5) years of his appointment as an Independent Director on September 28, 2019 and is eligible for re-appointment for another term of five (5) consecutive years subject to approval of the Members by Special Resolution. Based on the performance evaluation of the Independent Directors, the NRC has recommended and the Board of Directors has approved his re-appointment as an Independent Director for a second term of five (5) consecutive years commencing from September 29, 2019, subject to approval of Members. Since he shall be attaining age of 75 years on July 15, 2022 during his second term, the requisite justification and disclosure has been made in the Notice of AGM as per applicable regulations.

3. Mrs. Koushlya Melwani: The Board of Directors, on recommendation of the NRC, has re-designated Mrs. Koushlya Melwani from Non-Independent Director to Independent Director and appointed her as an Independent Director of the Company, for a first term of five (5) consecutive years commencing from May 25, 2019 to May 24, 2024, subject to approval of the Members. Your Board recommends the resolution in relation to her re-designation and appointment as an Independent Director.

All the above Independent Directors named at Sr. 1 to 3 above, meet the criteria of independence as prescribed under Section 149(6) of the Act and as per Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they are not debarred or disqualified from being appointed or continuing as directors of companies by the SEBI /MCA or any such statutory authority. During their tenure of appointment, they shall not be liable to retire by rotation as provided under Section 152(6) of the Companies Act, 2013.

4. Mr. Vipul Naik: The Board of Directors on recommendation of the NRC appointed Mr. Vipul Naik as an Additional Director w.e.f. May 25, 2019. In terms of Section 161 of the Act, he holds office up to the date of ensuing AGM. Accordingly, the Board recommends the resolution in relation to appointment of Mr. Vipul Naik as a Director (Non-Executive Non- Independent) for the approval by the members of the Company.

The Company has received requisite Notices from Member(s) under Section 160 of the Companies Act, 2013 in respect of all the aforesaid Directors stated at Sr. 1 to 4, proposing their candidature for the office of Director. The resolutions for appointment /re-appointment of aforementioned Directors along with their brief profile forms part of the Notice of the 36th AGM and the respective resolutions are recommended for approval of members.

Retirement by Rotation:

In accordance with the Articles of Association and the relevant provisions of the Companies Act, 2013, Mr. Chintan N. Parikh retires by rotation at the ensuing Annual General Meeting of the Company and being eligible seeks re-appointment. Your Board recommends his reappointment.

Cessation:

1. Mr. Bihari B. Shah, Independent Director of the Company, resigned from the office of Director with effect from February 09, 2019. Your Directors wish to place on record their sincere appreciation of services rendered and valuable guidance provided by him during his long association with the Company as a Director since January, 2006.

2. Mr. Atulkumar Singh, Independent Director of the Company, resigned from the office of Director with effect from May 25, 2019. Your Directors wish to place on record their sincere appreciation of services rendered by him during his association with the Company.

There was no change in the composition of the Board of Directors and Key Managerial Personnel during the year under review, except as stated above.

19. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provision of Section 134(3) and 134(5) of Act the Board of Directors confirms that to the best of its knowledge and belief:

(a) in the preparation of the 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 the financial year and of the profit 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 this 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 on a going concern basis; and

(e) 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) the directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

20. DECLARATION OF INDEPENDENT DIRECTORS

All the Independent Directors have given their declaration to the Company stating their independence pursuant to Section 149(6) and Regulation 16(1)(b) SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015. The terms and conditions of the appointment of Independent Directors have been disclosed on the website of the Company at www.ashima.in.

21. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In compliance with the requirements of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 the Company has put in place a Familiarization Programme for the Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarization Program are available on the website of the Company at www.ashima.in.

22. INSURANCE

The Company’s plant, property, equipments and stocks are adequately insured against major risks. The Company has also taken Directors’ and Officers’ Liability Insurance Policy to provide coverage against the liabilities arising on them.

23. PARTICULARS OF EMPLOYEES

i) The ratio of the remuneration of each director to the median employee’s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of

the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and is annexed as Annexure-3 to this Report.

ii) The statement containing particulars of employees as required under Section 197(12) of the Companies

Act, 2013 read with Rule 5(2) and Rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, the said statement is not being sent along with this Annual Report to the members in line with the provisions of Section 136 of the Companies Act, 2013. The same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary.

24. AUDITORS

(a) STATUTORY AUDITORS

M/s. Mukesh M. Shah & Co., Chartered Accountants, Ahmedabad (Firm Registration No. 106625W) were appointed as Statutory Auditors of the Company at the 34th Annual General Meeting held on August 11,2017, for a term of five (5) consecutive financial years i.e. commencing from FY 201718, subject to their appointment being ratified by the shareholders in every AGM. The Companies Amendment Act, 2017 has with effect from May 07, 2018 omitted the requirement of ratification of appointment of Statutory Auditors at every intervening Annual General Meeting. Accordingly, the same is not required to be placed before the Members at the ensuing AGM.

The Statutory Auditors has given a confirmation to the effect that they are eligible to continue with their appointment and have not been disqualified in any manner from continuing as Statutory Auditors. The remuneration payable to the Statutory Auditor shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

The Auditors’ Report for FY 2018-19 forms part of this Annual Report and does not contain any qualification, reservation or adverse remark.

(b) COST AUDITOR

The Board of Directors, on the recommendation of the Audit Committee, have appointed M/s. Ankit Sheth & Co., Cost Accountants (Membership No: M/ 34404) as Cost Auditor of the Company for the financial year 2019-20, on a remuneration as mentioned in the Notice convening the 36th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from M/s. Ankit Sheth & Co., Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

The Company has filed the Cost Audit Report for the financial year 2017-18 on August 31, 2018, which is within the stipulated timeline prescribed under the Companies (Cost Records and Audit) Rules, 2014.

As per requirements of the Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and accordingly, such accounts are made and records have been maintained for the year ended March 31,2019.

(c) SECRETARIAL AUDITOR

Pursuant to provisions of Section 204 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015 as amended, the Company has appointed Mr. Tapan Shah, Practicing Company Secretary, Ahmedabad, to undertake the Secretarial Audit of the Company for the financial year ended March 31,2019. The Secretarial Audit Report is annexed herewith as Annexure-4.

The Secretarial Audit Report for the year ended on March 31,2019 does not contain any qualifications, reservations or adverse remarks.

25. REPORTING OF FRAUD BY AUDITORS

There have been no instances of fraud reported by the Auditors u/s 143 (12) of the Companies Act, 2013 and rules framed thereunder either to the Company or to the Central Government.

26. VIGIL MECHANISM

Your Company has established Vigil Mechanism (whistle blower policy) for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report and displayed on the website of the Company at www.ashima.in.

27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

There has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations. All orders received by the Company during the year are of routine in nature which have no significant / material impact.

28. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details on Internal Control Systems and their adequacy are provided in the Management Discussion and Analysis which forms part of this Report.

29. LISTING wITH STOCK EXCHANGES

Your Company is listed with the BSE Limited and National Stock Exchange of India Ltd. and the Company has paid the listing fees to each of the Exchanges.

30. AUDIT COMMITTEE

The Company has an Audit Committee pursuant to the requirements of the Companies, Act, 2013 read with the rules framed there under and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details of composition of Audit Committee and other details relating to the same are given in the Report of Corporate Governance forming part of this Report. During the Financial Year 2018-19, there has been no instance where the Board has not accepted the recommendations of the Audit Committee.

31. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 (3) read with Schedule V (C) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, a report on Corporate Governance along with certificate of compliance from M/s. Mukesh M. Shah & Co, Chartered Accountants and Management Discussion and Analysis Report forms part of this report as Annexure 5 & 6 respectively.

32. GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Issue of equity shares with differential rights as to dividend, voting or otherwise.

b. Issue of shares (including sweat equity shares) to employees of the Company under any scheme including Employee Stock Option Scheme.

c. Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees.

33. DISCLOSURE AS PER SEXUAL HARASSMENT OF wOMEN AT wORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted an Internal Complaints Committee (ICC) in due compliance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress complaints received regarding sexual harassment.

Your Directors state that during the year under review, there were no complaints relating to sexual harassment nor any cases filed pursuant to the said Act.

34. APPRECIATION

Your Directors express their gratitude for the dedicated services put in by all the employees of the Company.

35. ACKNOWLEDGEMENTS

Your Directors places on record their sincere thanks to the customers, vendors, investors and banks for their continued support. Your Directors are also thankful to the Government of India, State Government and other authorities for their support and solicit similar support and guidance in future.

For and on behalf of the Board
Chintan N. Parikh
Place : Ahmedabad Chairman and Managing Director
Date : May 25, 2019 (DIN:00155225)

ANNEXURE-1

Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo.

The Information under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules

2014 for the year ended March 31,2019 is given here below and forms part of the Board’s Report.

A. Conservation of Energy

i. Energy Conservation measures taken:

• Replaced conventional tube fixtures with LED tubes, thereby achieving better illumination at work places as well as saving power.

• Improved condensate recovery by attending to flash steam recovery, plugging steam leakages and applying proper insulation on condensate & steam lines. This has resulted into increase in average feed water temperature at boiler house and improved steam to fuel ratio.

• Replaced manual fuel feeding system in boiler bunker with fuel feeding by JCB, resulting into efficient material handling and reduced power consumption.

• Equipped yarn-dyeing machine motors with new variable frequency drives and operated with lower frequency, resulting into reduced power consumption without compromising on yarn quality.

• Modified carriers within the beam-dyeing and package-dyeing machines so as to impart greater flexibility and higher production volumes. This has resulted into efficient machine utilization and reduced energy consumption in terms of power, steam, water as well as chemical consumption.

• Regular monitoring of power factor to reduce overall power cost.

ii. Utilization of alternate source of energy:

During the year under review, the sludge from Effluent Treatment Plant was dried by heating with

solar energy instead of electricity/fuel.

iii. The capital investments on energy conservation equipments:

The cost of the equipment for the energy conservation is 15.31 Lacs

B. Technology Absorption

i. Efforts, in brief, made towards Technology Absorption:

• Old HMI, servo motors, PLC, servo drives, modules and connected electronic components of a machine replaced by advanced and up-graded version of PLC & software by a reputed brand.

• New steam flow meters installed in steam lines to monitor specific steam consumption pattern with variety of yarn and fabric sizes.

• Installed auto titration system in dyeing and sizing department resulting into improved quality parameters.

ii. The benefits derived:

The above efforts enabled reduction in breakdowns and efficient machine operations.

iii. I n case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

? Technology imported : High speed sample warping machine

• Year of import : 2016-17

• Whether technology has been fully absorbed? : Yes

? Technology imported : Continuous tumbler machine

• Year of import : 2017-18

• Whether technology has been fully absorbed? : Yes

iv. Expenditure incurred on Research and Development:

The company has not incurred any expenditure on research and development activity.

C. Foreign Exchange Earning and Outgo

During the year under review foreign exchange earnings were 2090.02 lacs excluding deemed export and foreign exchange outgo was 69.51 lacs.

For and on behalf of the Board
Chintan N. Parikh
Place : Ahmedabad Chairman and Managing Director
Date : May 25, 2019 (DIN:00155225)