Divinus Fabrics Ltd Directors Report.

To

The Members,

Your Directors are pleased to present to the valued stakeholders, the 34th Annual Report of Divinus Fabrics Ltd along with the Audited Financial Statements of the Company for the Year ended March 31st, 2019.

FINANCIAL HIGHLIGHTS- AT A GLANCE

• Overall Performance of your Company

• Your Company has earned Net Profit of Rs. 3,50,200 /- (Rupees Three Lakh Fifty Thousand, Two Hundred) only in 2018-19 as against Net Profit of Rs. 2,12,153 (Rupees Two Lakh, Twelve Thousand and One Hundred Fifty Three only) in FY-2017-18.

• The financial summary, performance highlights operations/state of affair of your Company for the year are summarized below:

(Amount in Rupees)

PARTICULARS

Standalone

2018-19 2017-18
Sales - 1,03,58,220
Other Income 19,26,173 15,57,152
Total Income 19,26,173 15,57,152
Total Expenditure 14,52,930 1,16,29,639
Profit/(Loss) before tax 4,73,243 2,85,733
Tax 1,23,043 73,580
Net Profit/(Loss) 3,50,200 2,12,153
Paid Up Share Capital 4,45,70,040 4,45,70,040

DIVIDEND

No Dividend was declared for the current financial year due to loss incurred by the Company.

RESERVES

The net movement in major reserves of the Company for Financial Year 2018-19 and the previous year as follows:

Particulars 31/03/2019 31/03/2018
Surplus in Statement of Profit and Loss
Opening balance 34,60,017 32,47,864
Net Profit / (Loss) for the year 3,50,199 2,12,153
Excess / (Short) of Previous Years - -
Sub Total 38,10,215 34,60,017
(-) Utilized for issue of Bonus Shares - -
(-) Tax on Dividend - -
Total 38,10,215 34,60,017

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared or paid by the Company, the provisions of Section 125 of the Companies Act, 2013 do not apply.

DEPOSITS

During the year under review, the Company has not accepted any deposits in terms of section 73 of the Companies Act, 2013 to be read with the Companies (Acceptance of Deposits) Rule, 2014 as amended from time to time, and also no amount was outstanding on account of principal or interest thereon, as on the date of the Balance Sheet.

SUBSIDIARY / ASSOCIATE/ JOINT VENTURES COMPANIES OF THE COMPANY

The Company is not having any Subsidiary Company/ Joint Venture/ Associate Company during the financial year 2018-2019. (Refer Annexure B)

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section of this Annual Report.

CHANGE IN NATURE OF BUSINESS

During the year under review, there was no change in nature of business of the Company.

CHANGE IN DIRECTORS /KEY MANAGERIAL PERSONNEL DURING THE YEAR

The details about the changes in Directors or Key Managerial Personnel by way of Appointment, Re - designation, Resignation, Death, Dis-qualification, variation made or withdrawn etc. are as follows:

• During the financial year 2018-19, there was no change in the Directorship of the Company.

• Mr. Arvind Agarwal has been resigned from the Directorship of the Company w.e.f. 13.08.2019

• Ms. Aayesha Imran Imran Shaikh has been appointed as Non-Executive Independent Director of the Company w.e.f. 29.05.2019

• Ms. Sima Devi has been appointed as Non-Executive Independent Director of the Company w.e.f. 16.08.2019.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6) OF COMPANIES ACT, 2013

All Independent Directors have given declarations under section 149(7) that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and rules made there under to be read with SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.

DISCLOSURE OF CHANGE IN ACCOUNTING TREATMENT IN FINANCIAL STATEMENTS

During the period under review, there were no changes in the Accounting treatment in the Financial Statements for the financial year 2018-19, different from that as prescribed in Accounting Standards, prescribed by the Institute of Chartered Accountants of India (ICAI).

EXTRACT OF ANNUAL RETURN

The details forming part of extract of Annual Return under sub section 3 of Section 92 of the Companies Act, 2013 in Form MGT-9 is annexed herewith as "Annexure A,"

NUMBER OF MEETINGS OF THE BOARD

During the year under review, Six Board Meetings, 5 Audit Committee Meetings, Six Nomination & Remuneration Committee Meetings, one Stakeholders’ Relationship Committee Meetings, were convened and held. All the Meetings including Committee Meetings were duly held and convened and the intervening gap between two consecutive meetings was within the period prescribed under the Companies Act, 2013 to be read with the SEBI (Listing Obligations & Disclosure Requirements), Regulations 2015.

No. of Board Meeting held during the year:

S. No. Date S. No. Date
1. 30.05.2018 4. 13.11.2018
2. 10.08.2018 5. 01.01.2019
3. 31.08.2018 6. 13.02.2019

AUDIT COMMITTEE

The Audit Committee of the Company is constituted in line with the provisions of section 177 of the Companies Act, 2013 to be read with Regulation 18 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015. The Composition of Audit Committee as off 31.03.2019 is given below:

S. No. Name Category Category (Whether Executive/Non- Executive/Independent Director)
1. Mr. Arvind Agrawal, Chairman Non- Executive Independent Director
2. Ms. Seema Member Non- Executive Independent Director
3. Mr. Kuldip Singh Member Non-Executive Director

No. of Audit Committee Meeting held during the year

1. 30/05/2018 2. 10/08/2018
3. 31/08/2018 4. 13/11/2018
5. 13/02/2019

NOMINATION & REMUNERATION COMMITTEE

The Nomination & Remuneration Committee of the Company is constituted in line with the provisions of section 178 of the Companies Act, 2013 to be read with Regulation 19 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015. The Composition of the Committee is given below:

S. No. Name Category Category (Whether Executive/Non- Executive/Independent Director)
1. Mr. Arvind Agrawal, Chairman Non- Executive Independent Director
2. Ms. Seema Member Non- Executive Independent Director
3. Mr. Kuldip Singh Member Non-Executive Director

No. of Nomination & Remuneration Committee Meeting held during the year

S. No. Date S. No. Date
1 30.05.2018 4 13.11.2018
2 10.08.2018 5 01.01.2019
3 31.08.2018 6 13.02.2019

STAKEHOLDERS’ RELATIONSHIP COMMITTEE

The Stakeholders’ Relationship Committee of the Company is constituted in line with the provisions of section 178 of the Companies Act, 2013 to be read with Regulation 20 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.The Composition of the Committee is given below:

S. No. Name Category Category (Whether Executive/Non- Executive/Independent Director)
1. Mr. Arvind Agrawal, Chairman Non- Executive Independent Director
2. Ms. Seema Member Non- Executive Independent Director
3. Mr. Kuldip Singh Member Non-Executive Director

No. of Stakeholders Relationship committee meeting: 1. 31/08/2018

VIGIL MECHANISM COMMITTEE

The Company has established a Vigil Mechanism for its Directors and employees to report their genuine concerns or grievances. The policy provides a framework for directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy. Protected disclosures can be made by a whistle blower through an email or to the Chairman of the Audit Committee. The vigil mechanism/whistle blower policy can be accessed on the Companys website at the link: www.divinusfabrics.com.

BOARD ANNUAL EVALUATION

The provisions of section 134(3)(p) of the Companies Act, 2013 read with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandate that a Formal Annual Evaluation is to be made by Board of its own performance and that of its Committee and individual Directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of the Independent Director shall be done by Directors excluding the Director being evaluated. The Board carried out a formal annual performance evaluation as per the criteria/framework laid down by the Nomination & Remuneration Committee of the company and adopted by the Board. The evaluation was carried out through a structured evaluation process to judge the performance of individual Directors including the Chairman of the Board. They were evaluated on parameters such as their education, knowledge, experience, expertise, skills, behavior, leadership qualities, level of engagement & contribution, independence of judgment, decision making ability for safeguarding the interest of the Company, stakeholders and its shareholders.

The performance evaluation of the Independent Directors was carried out by the entire Board except the participation of concerned Independent Director whose evaluation was to be done. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent

Directors. The Board was satisfied with the evaluation process and approved the evaluation results thereof.

REMUNERATION POLICY FOR THE BOARD OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and as per the Listing Agreement, the Nomination and Remuneration Committee is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The Nomination and Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company. The Remuneration Policy is annexed as Annexure to this report.

POLICY REGARDING THE APPOINTMENT OF BOARD OF DIRECTORS

The Board of Directors adopted uniform policy for the appointment of Director in pursuance of various provisions of Companies Act and Listing Agreement.

CRITERIA FOR DETERMINING QUALIFICATIONS. POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act is annexed as Annexure to this Report.

CORPORATE GOVERNANCE REPORT

In pursuance of SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014, Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 shall be applicable on those companies having paid up equity share capital exceeding Rs.10 crore and Net Worth exceeding Rs.25 crore, as on the last day of the previous financial year. The paid up share capital of your company not qualify the applicability of Regulations of SEBI disclosure requirement. Therefore separate Report of Corporate Governance is not attached herewith.

In spite of above said SEBI circular, Your Company adopts best practices for corporate governance, disclosure standard and enhanced shareholder value while protecting the interest of all other stakeholders including clients, its employee. This has enabled your Company to earn the trust and goodwill of its investors, business partners, employees and the communities in which it operates. Your directors believe that Company profitability must go hand in hand with a sense of responsibility towards all stakeholders, employee and communities.

STATUTORY AUDITOR, SECRETARIAL AUDITOR & COST AUDITOR WITH THEIR QUALIFICATION, RESERVATION OR ADVERSE REMARKS ALONG WITH THE EXPLANATION OR COMMENTS BY THE DIRECTORS

A. STATUTORY AUDITOR

A written consent/certificate regarding eligibility for the appointment of M/s S. Agarwal & Co., Chartered Accountants as the Statutory Auditors in accordance with the Rule 4 of the Companies (Audit and Auditors) Rule, 2014 read with the provisions of section 139(2) of the Companies Act, 2013 has been received by the company.

The Board on recommendation of the Audit Committee has proposed appointment of M/s S. Agarwal & Co., Chartered Accountants, as the Statutory Auditors of the Company to hold the office from the conclusion of ensuing Annual General Meeting till the conclusion of Annual General Meeting to be held in the financial Year 2024.

Qualification(s) and Directors comments on the report of Statutory Auditor:

The Notes on Accounts and observations of the Auditors in their Report on the Accounts of the Company are self-explanatory and in the opinion of the Directors, do not call for any further clarification(s). Also, the report submitted by the Auditor is unqualified.

B. SECRETARIAL AUDITOR

Pursuant to provision of section 204 of the Companies act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Company has appointed M/s. Ojha & Associates, Practicing Company Secretaries to undertake Secretarial Audit of the Company.

The Secretarial Audit was conducted by M/s. Ojha & Associates, Practicing Company Secretary, and the report thereon is annexed herewith as "Annexure G".

Qualification(s) and Directors comments on the report of Secretarial Auditor:

No adverse observation(s) have been recorded by the Secretarial Auditor for the year under review in its report

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITOR

There were no instances of fraud that have been observed by the Statutory Auditor during audit of the financial statements for the financial year 2018-19, which are required to be disclosed by the company in its Board Report under Section 143 (12) of the Companies Act, 2013.

PARTICULAR OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The details of loans, guarantees or investments made by the company, if any, pursuant to the provisions of section 186 of the Companies Act, 2013 can be found in the balance sheet.

PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OF THE COMPAIES ACT, 2013

All contracts/arrangements/transactions entered into during the financial year with the related parties were on arm’s length basis and were in the ordinary course of business.

FINANCIAL POSITION

A) Issue of equity shares with differential voting rights

No equity shares with differential voting rights has been issued by the company during the financial year 2018-19

B) Issue of sweat equity shares

The Company has not issued sweat equity shares pursuant to provisions of Section 54 read with Rule 8 of the Companies (Share Capital and Debenture) Rules, 2014 during the Financial Year.

C) Issue of employee stock options

The Company has not issued shares under employee’s stock options scheme pursuant to provisions of Section Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014, so question does not arise about voting rights not exercised by employee during the year under review.

D) Buy Back of Securities

The Company has not bought back any of its securities pursuant to the provisions of Section 67 and Section 68 of the Companies Act 2013 during the year under review.

E) Voting Rights of Employees

During the year under review the company has not given loan to any employee for purchase of its own shares as per section 67 (3) (c) of the Companies Act, 2013. Therefore the company is not required to make disclosure as per rule 6 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

MATERIAL CHANGES AND COMMITMENTS, IF ANY

There are no material changes or commitments noticed by the Board between the end of financial year of the company as on 31st March, 2019 and the date of this Report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

To the best of the Management’s knowledge, no significant and material order(s) were passed by any regulator(s) or courts or tribunals which could impact the going concern status and company’s operation in future.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT-GO

Information required to be given pursuant to section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given below:

• STEPS TAKEN FOR CONSERVATION OF ENERGY

The Company has been taking energy saving measures viz., Use of energy saver electrical equipments, CFL fittings are provided inside the building for common area lighting in the projects of the Company, Efficient ventilation system in offices and the projects of the Company.

Moreover, your company emphasis towards a safe and clean environment and continue to adhere to all regulatory requirements and guidelines.

• TECHNOLOGY ABSORPTION

Your Company is engaged in to the business of trading of Fabrics. The business of the Company does not require intense use of technology. Therefore no technology has been absorbed during the period under review. Further during the year Company has not imported any technology.

Our Company has not undertaken any research and development work during the year 2018-19. However, in order to minimize its cost and increase the quality of its products, your Company is trying to maintain highest standard of quality.

• FOREIGN EXCHANGE EARNINGS AND OUTGO.

There was no foreign exchange inflow or Outflow during the year under review.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has formulated a Risk Management Policy which aims at enhancing shareholders’ value and providing an optimum risk reward tradeoff. The risk management approach is based on a clear understanding of the variety of risks that the organization faces, disciplined risk monitoring and measurement and continuous risk assessment and mitigation measures.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The company does not fall under the criteria of net worth, turnover or profit for applicability of Corporate Social Responsibility (CSR) provisions as per Section 135 of the Companies Act, 2013, hence the same are not applicable to the company for the period under review.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As per Regulation 22 of the SEBI Regulations, 2015, in order to ensure that the activities of the Company & its employees are conducted in a fair & transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behavior, the company has adopted a vigil mechanism policy. This policy is explained in "Corporate Governance Report" and is also posted on website of the company.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of "The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013" and Rules made there under, your Company has constituted Internal Complaints Committee (ICC) at its workplaces. During the year, no complaints were filed with the Company.

CORPORATE GOVERNANCE REPORT

As per Reg. 34 of SEBI Regulation, 2015 to be read with Part A of Schedule V of the said regulations, a separate section on corporate governance practices followed by the company, together with the certificate from the company’s Statutory Auditors/ Practicing Company Secretary confirming compliance forms an integral part of this Report.

HUMAN RESOURCE

The relationship with employees continues to be harmonious. The company always considers its human resource as its most valuable asset. Imparting adequate and specialized training to its employees is ongoing exercise in the company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has in place, a sound Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Management monitors and evaluates the efficacy & adequacy of internal control system in the Company, in compliance with operating systems, accounting procedure and policies. Bases on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

LISTING AGREEMENT

The shares of the Company are presently listed at BSE Ltd. (Bombay Stock Exchange).

All statutory dues including Annual Listing Fees for the Financial Year 2018-19 has been paid (with interest, if any payable) by the Company.

PERSONNEL RELATIONS

Your Directors hereby place on record their appreciation for the services rendered by executives, staff and other workers of the Company for their hard work, dedication and commitment. During the year under review, relations between the Employees and the Management continued to remain cordial.

CODE OF CONDUCT

The Board of Directors has laid down the code of conduct for all Board Members and members of the Senior Management of the Company. Additionally, all Independent Directors of the company shall be bound by duties of Independent Directors as set out in Companies Act, 2013 to be read with SEBI Listing Regulations, 2015.

All Board Members, Key Managerial Personnel and Senior Management Personnel have affirmed compliance with the Code of Conduct.

PARTICULARS OF EMPLOYEES/DIRECTORS

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as follows:

The company has for Executive Directors and remuneration paid to them is disclosed in MGT-9. Further, no sitting fee has been paid to any director during the year.

The remuneration paid to all Key Managerial Personnel was in accordance with the remuneration policy as adopted by the company.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134(3) of the Companies Act 2013, the Directors, would like to state as follows:

(a) In the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures and the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013;

(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 and 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, 2013 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;

(e) the directors, in the case of a listed company, 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for assistance and co-operation received from the various stake holders including Financial Institutions, Banks, Governmental authorities and other business associates who have extended their valuable support and encouragement during the year under review.

Your Directors take the opportunity to place on record their deep appreciation of the committed services rendered by the employees at all levels of the Company, who have contributed significantly towards Company’s performance and for enhancing its inherent strength. Your Directors also acknowledge with gratitude the encouragement and support extended by our valued stakeholders.

By Order of the Board of Directors
For Divinus Fabrics Limited (Formerly known as Avishkar Finance Company Limited).
Sd/- Sd/-
Gagan Anand Aayesha Imran Shaikh
(DIN: 06957651) (DIN: 06668559)
Date: 13/08/2019 Managing Director Director
Place: Delhi