himatsingka seide ltd share price Directors report

We are pleased to present the Thirty Eighth (38th) Annual Report on the business and operations of your Company, along with Audited Financial Statements and the Auditors Report for the financial year ended March 31, 2023.

. FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are given below: (Rs.in Lacs)

		Standalone			Consolidated
Particulars
	2022-23	2021-22	Change %	2022-23	2021-22	Change %
Revenue from Operations	2,05,274	2,85,898	(28.20)	2,67,774	3,18,395	(15.90)
Other Income	7,740	1,994	288.16	7,502	1,962	282.36
Total Revenue	2,13,014	2,87,892	(26.01)	2,75,276	3,20,357	(14.07)
EBITDA	29,028	48,455	(40.09)	34,604	54,992	(37.07)
EBITDA Margin (%)	14.14%	16.95%	(16.58)	12.92%	17.27%	(25.19)
EBIT	17,224	37,070	(53.54)	18,201	39,150	(53.51)
Profit before tax	(4,234)	22,384	(118.92)	(7,522)	21,033	(135.76)
Tax Expense	(1,215)	6,951	(117.48)	(1,115)	6,951	(116.04)
Profit after tax	(3,019)	15,433	(119.56)	(6,407)	14,082	(145.50)

? BUSINESS HIGHLIGHTS

Some key highlights of FY23 are as follows:

• The Standalone Total Revenue for Financial Year 2022-23 decreased by 26.01% and stood at fi 2,13,014 Lacs. Consequently, the Standalone EBITDA decreased by 40.09% and stood at fi 29,028 lacs.

• The operating performance during the fiscal was impacted due to a subdued demand environment, extremely high levels of raw material infiation and high energy costs. However, raw material costs, energy costs and global demand environment witnessed improvement starting second half of the fiscal 23 leading to an improvement in operating performance during the second half of the fiscal.

? CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of Business carried out by the Company during the period under review. There were no material changes & commitments during the period under review till the date of the report, affecting the financial position of the Company.

3. SHARE CAPITAL

During the year under review, Company has not issued and/or allotted any shares with/ without diferential voting rights as per Section 43 of Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014. The Authorized Share Capital of the Company is fi 67,00,00,000 divided into 13,40,00,000 Equity Shares of fi 5 /- each and the Paid-up Capital of the Company is fi 49,22,85,800/- divided into 9,84,57,160 Equity Shares of fi 5 each.

? ISSUE OF SECURITIES

The Board at its meeting held on December 15, 2022 approved the following items of special business and shareholders of the Company consented to the same vide postal ballot resolution passed on January 15, 2023:

• Borrowing limits under section 180(1)(c) of the Companies Act, 2013 for an amount upto fi 3500 crores.

• Issuance of Securities including FCCBs to identified investors upto $ 13 Million.

Pursuant to delegation of powers to Securities Allotment Committee ("SAC"), the following allotments were approved by Securities Allotment Committee:

• 3420 Unrated, Unlisted, Secured, Redeemable, NCDs of face value fi 10,00,000 aggregating fi 342,00,00,000/- (Rupees three hundred and forty-two crores only) to International Finance Corporation ("IFC") on March 31, 2023 through Private Placement.

• 8300 Unrated, Unlisted, Unsecured FCCBs of face value of US $ 1000 each aggregating to US Dollar 8,300,000 (United States Dollar Eight Million Three Hundred Thousand only) to IFC on April 27, 2023 through Private Placement.

• 210 Unrated, Unlisted, Secured, Redeemable, NCDs of face value fi 10,00,000 aggregating fi 21,00,00,000/- (Rupees twenty-one crores only) to IFC on July 06, 2023 through Private Placement.

• 4200 Unrated, Unlisted, Unsecured FCCBs of face value of US $ 1000 each aggregating to US Dollar 4,200,000 (United States Dollar Four Million Two Hundred Thousand only) to IFC on July 07, 2023 through Private Placement.

? DIVIDEND

In view of the Companys operating performance during the current fiscal, the Board has not recommended any dividend to the shareholders for the year ended March 31, 2023.

? TRANSFER TO RESERVES

No amount has been transferred to reserves for the financial year ended March 31, 2023.

? SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES AND CHANGES THEREON

As on March 31, 2023, the Company had the following subsidiaries and Joint Ventures:

Subsidiaries

• Himatsingka Wovens Private Limited – (wholly owned subsidiary)

• Himatsingka Holdings NA Inc. – (wholly owned subsidiary)

• Himatsingka America Inc. – (Step down wholly owned subsidiary)

Joint Venture

• Twill & Oxford LLC, is a Joint Venture Company based out of UAE and has filed for voluntary liquidation under the applicable regulations and is same is under process.

Consolidated Financial Statements

As required under section 129(3) of the Companies Act, 2013 the Company has prepared Consolidated Financial Statements which form a part of the Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies. A statement containing the salient features of the Financial Statements of its subsidiaries in form AOC-1 is annexed to this report as Annexure 1.

Pursuant to section 136 of the Companies Act, 2013, the Annual Report of your Company containing inter alia Financial Statements including Consolidated Financial Statements and Financial Statements of the subsidiaries are available on the Companys website – https://www.himatsingka.com/investors/financial-reports

. ANNUAL RETURN

As required under the Companies Act, 2013, the draft of the Annual Return for the year 2023 is available on the website of the company – https://www.himatsingka.com/investors/financial-reports

? . PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year as per the provisions of the Companies Act, 2013.

? . BOARD OF DIRECTORS AND COMMITTEES

Composition of Board and changes thereto

As on March 31, 2023, the Board of the Company comprised of 7 (Seven) Directors of which 3 (Three) were Independent Directors including one Independent Woman Director, 1 (One) Nominee Director, and 3 (Three) were Executive Directors two of whom were Promoter Executive Directors. The details of changes in the composition of the Board and Committees thereof are provided in the Corporate Governance Report forming part of the Annual Report.

As on date of the report i.e. Aug 10, 2023, the Board of the Company comprises of 6 (Six) Directors of which 3 (Three) are Independent Directors including one Independent Woman Director and 3 (Three) are Executive Directors two of whom are Promoter Executive Directors. In the opinion of Nomination & Remuneration Committee and Board, Independent Directors appointed during the year hold requisite integrity, expertise and experience to serve on the Board of the Company.

Board Meetings

The Board met 8 (Eight) times during the year under review and the intervening gap between the meetings was within the period prescribed under the Companies Act 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The details of the meetings and attendance thereof are provided in the Corporate Governance Report forming part of the Annual Report.

Board Committees

The requisite details pertaining to the Committees of the Board are included in the Corporate Governance Report which is part of the Annual Report.

Re-appointment of Director retiring by rotation

In accordance with the provisions of section 152(6) of the Companies Act, 2013, and Articles of Association of the Company, Mr. S. Shanmuga Sundaram, Director, (DIN: 09816120), retires by rotation and being eligible, ofiers himself for re-appointment. His re-appointment will be taken up at the ensuing Annual General Meeting for approval of shareholders.

Declaration by Independent Directors

The Company has received from each of its Independent Directors, declaration as stipulated under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of Listing Regulations, confirming that the Director meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 16(b) of Listing Regulations. The Independent Directors have also declared compliance with Rule 6(1) and 6(2) of Companies (Appointment and Qualification of Directors) Rules, 2014.

Directors Responsibility Statement

As required by the provisions of Section 134(3)(c) of the Companies Act, 2013, we the Directors of Himatsingka Seide Limited, confirm the following: a) in the preparation of the Annual Financial Statements for the year ended March 31, 2023, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; b) the Directors have 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 afiairs of the Company at the end of the Financial Year 2022-23 and of the Profit and loss of the Company for that period; c) the Directors have taken proper and suficient 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 Annual Financial Statements have been prepared on a Going Concern basis; e) the Directors have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating efiectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efiectively.

Key Managerial Personnel (KMP)

The Key Managerial Personnel(s) of the Company as on March 31, 2023 were Mr. D.K. Himatsingka, Executive Chairman, Mr. Shrikant Himatsingka, Managing Director & CEO and Mr. M. Sridhar, General Manager – Corporate Compliance & Company Secretary.

Mr. D.K. Himatsingka has been re-appointed as Executive Chairman, for a period of 5 (Five) years w.e.f. June 1, 2023 and Mr. Shrikant Himatsingka has been re-appointed as Executive Vice Chairman & Managing Director for a period of 5 (Five) years w.e.f. June 1, 2023. The details of the same is provided in the Corporate Governance Report. During the year, Mr. K.P Rangaraj, President – Finance & Group Chief Financial Officer , attained superannuation and retired from the services of the Company with efiect from close of business hours on March 15, 2023.

Board Performance Evaluation

The Company has, during the year, conducted an evaluation of the Board as a whole, its Committees and the individual Directors including the Independent Directors. The evaluation was carried out through difierent evaluation forms which covered among others the evaluation of the composition of the Board/committee, its efiectiveness, activities, governance, and with respect to the Chairman and the individual Directors, their participation, integrity, independence, knowledge, impact and infiuence on the Board. The Independent Directors of the Company also convened a separate meeting and evaluated the performance of the Board, the Non-Independent Directors and the Chairman.

? COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the provisions of Secretarial Standard (SS-1 on Meetings of the Board of Directors) and Secretarial Standard (SS-2 on General Meetings).

? AUDITORS AND AUDITORS REPORT a) Statutory Auditors

The Members of the Company at the 37th AGM held on September 28, 2022 had appointed M/s MSKA & Associates, Chartered Accountants, as the Statutory Auditors of the Company to hold Office for a period of 5 (Five) years from the conclusion of the 37th AGM till the conclusion of 42^nd AGM to be held in the year 2027. The report of Statutory Auditors M/s MSKA & Associates, Chartered Accountants, for F.Y-2022-23 (forming part of the Annual Report) does not have any qualification, reservation or adverse remarks.

b) Secretarial Audit

The Company had appointed CS Vivek Bhat, Company Secretary in Practice, to conduct the secretarial audit as required under Section 204 of the Companies Act, 2013. The Secretarial Audit Report for the financial year 2022-23 does not contain any adverse remark, qualification or reservation. The report is appended as Annexure 2 to this report.

c) Secretarial Compliance Report

The Company had appointed CS Vivek Bhat, Company Secretary in Practice for issuing the Annual Secretarial Compliance Report under Regulation 24A of Listing Regulations which is appended as Annexure 3 to this report.

d) Cost Auditors

Since the Companys export revenue in foreign exchange, for the financial year 2022-23 was greater than 75% (seventy-five percent) of the total revenue of the Company, the Company falls within the exemption specified in Clause 4(3) of The Companies (Cost Records and Audit) Rules, 2014. In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan and Doddaballapur.

e) Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Board of Directors of the Company has reappointed Grant Thornton Bharat LLP for carrying out the Internal Audit of the Company for the financial year 2023-24. The audit committee of the Board of Directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit of the Company.

f) Internal Financial Controls

The Board reviews the efiectiveness of controls as part of Internal Financial Controls framework. There are regular scheduled reviews that covers controls, process level controls, fraud risk controls and the Information Technology environment. Based on this evaluation, no significant events have been noticed during the year that have materially afiected, or are reasonably likely to materially afiect, our Internal Financial Controls. The management has also come to a conclusion that Internal Financial Controls and other financial reporting was efiective during the year and is adequate considering the business operations of the Company. The Statutory Auditors of the Company has audited Internal Financial Controls over Financial Reporting and their Audit Report is annexed as Annexure A to the Independent Auditors Report under Standalone Financial Statements and Consolidated Financial Statements.

g) Fraud Reporting

There have been no instances of fraud reported by the Auditors under section 143(12) of the Companies Act 2013 and Rules framed thereunder either to the Company or to the Central Government.

? 3. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES MADE

The particulars of loans made, guarantees given, investments made and securities provided as per the provisions of Section 186 of the Companies Act, 2013 and the relevant rules made thereunder are given in the notes to the Standalone Financial Statements.

? PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered into by the Company with its related parties are at arms length and in the ordinary course of business. Therefore, there is no requirement to annex AOC-2 to this Report.

? SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS/ COURTS

There are no significant or material orders passed by Regulators/ Courts during the year under review.

? CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-4.

? . RISK MANAGEMENT

The Company has developed and implemented a comprehensive Risk Management Policy and framework to counter and mitigate the various risks encountered by the Company. In terms of the provisions of Section 134 of the Companies Act, 2013 a Risk Management Report is set out elsewhere in this Annual Report.

? REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) The remuneration of Directors is given herein below:

(Rs.in Lacs)

Director	DIN	Sitting fees	Salaries and perquisites	Profit linked Commission	Total	Ratio to Median remuneration of employees	Percentage (%) increase/ (Decrease) over previous year
Mr. D.K. Himatsingka	00139516	Nil	141.52	Nil	141.52	69.60:1	(70.47)
Mr. Shrikant Himatsingka	00122103	Nil	137.01	Nil	137.01	67.38:1	(41.48)
Mr. Rajiv Khaitan	00071487	9.50	Nil	10.00	19.50	9.59:1	14.71
Mr. Harminder Sahni^	00576755	2.50	Nil	10.00	12.50	6.15:1	NA
Ms. Sandhya Vasudevan^	00372405	2.00	Nil	10.00	12.00	5.90:1	NA
Mr. Pradeep Bhargava^	00525234	8.00	Nil	10.00	18.00	8.85:1	0.00
Mr. Raja Venkataraman^	00669376	7.50	Nil	10.00	17.50	8.61:1	6.06
Mrs. Sangeeta Kulkarni^	01690333	3.50	Nil	5.00	8.50	4.18:1	(41.38)
Mr. V. Vasudevan^	07521742	4.00	Nil	Nil	4.00	1.97:1	(87.22)
Mr. S. Shanmuga Sundaram^	09816120	Nil	11.73	Nil	11.73	5.77:1	NA

^Not on the Board of the Company for the full Financial Year 2022-23 and Remuneration details for the period of association.

In the remuneration mentioned above, the sitting fees, salaries and perquisites form the fixed component of the total remuneration. The commission is a variable component and is linked to the operating performance of the Company. b) Percentage Increase/ (Decrease) in the Remuneration of the Key Managerial Personnel (other than Directors mentioned above)

Key Managerial Personnel	Designation	Percentage Increase/(Decrease) in the remuneration, if any
Mr. K.P. Rangaraj	President – Finance and Group CFO	(5.97)
	General Manager – Corporate Compliance &
Mr. M. Sridhar		19.00
	Company Secretary

c) The percentage increase in median remuneration of the employees is 2.78 % d) The number of permanent employees in the rolls of the Company is 7114 e) The average increase in the salaries of managerial personnel during the year was 12.48% and the average increase in the salaries of employees other than managerial personnel was 1.27%. f) The Executive Directors were not eligible for payment of Commission in view of the operating performance of the Company during the year.

g) During the year, there were four employees (including KMP) whose remuneration was higher than that of the highest paid director.

h) It is hereby afirmed that the remuneration paid during the year is as per the Nomination and Remuneration Policy of the Company.

i) Information as per rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: The Statement containing names of top ten employees in terms of remuneration drawn and particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 shall be provided to the shareholders upon a request made to the Company Secretary at investors@himatsingka.com. Further, the Annual Report is being sent by email to the members excluding the aforesaid information in terms of Section 136 of the Act.

? . INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the applicable provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of fi10,99,818.00. Further, 11,627 corresponding shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules. Year-wise amounts of unpaid / unclaimed dividends lying in the unpaid account up to the year, and the corresponding shares, which are liable to be transferred are provided in the Shareholder Information section of Corporate Governance Report and are also available on our website – https://www.himatsingka.com/investors/shareholder-information

? INSURANCE

The Companys assets are subject to risks/ peril and are adequately insured. In addition, the Company has also taken a Directors & Officers Liability Policy to provide coverage against the liabilities arising on them. The Policy extends to all Directors and Officers of the Company and its Subsidiaries.

? POLICIES

a) Whistle Blower Policy

As a conscious and vigilant organization, Himatsingka Seide Limited believes in the conduct of the afiairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, transparency and ethics.

In its endeavour to provide its employees a secure working environment, the Company has established a "Whistle Blower Policy" as required under the Companies Act, 2013 and Listing Regulations and the same is also available in the Companys website – https://www.himatsingka.com/investors/corporate-governance The Company Secretary of the Company, has been designated as the Chief Compliance Officer under the policy and the employees can report any instance of unethical behaviour, fraud and/or violation of the Companys code of conduct or policy to the Chief Compliance Officer .

The Company has put in place adequate measures for the visibility of the whistle blower policy to employees and stakeholders at the workplace and at the plants. In exceptional and appropriate cases, an employee can make direct appeal to the Audit Committee Chairman. The contact details of the Audit Committee Chairman are also available in the Whistle Blower Policy. The details of complaints received, if any are provided in the Corporate Governance Report forming part of the Annual Report.

b) Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to provide a safe and secure work environment to all its employees. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Therefore, any discrimination and/or harassment in any form is unacceptable and the Company has in place a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as per the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The details of complaints thereof, if any are provided in the Corporate Governance Report forming part of the Annual Report.

c) Nomination and Remuneration Policy

The Nomination and Remuneration Committee has formulated a policy as required under Section 178(3) of Companies Act, 2013 and Regulation 19 read with Schedule II to the Listing Regulations, stipulating the criteria for determining qualifications, required experience and independence of a director and also the criteria relating to the remuneration of the directors, key managerial personnel, senior management personnel and other employees and their performance evaluation. The policy is available on the Companys website https://www.himatsingka.com/investors/corporate-governance

. d) Dividend Distribution Policy

The Board of Directors of the Company have adopted a Dividend Distribution Policy as required under Regulation 43A of Listing Regulations. The Policy is available at the website of the company https://www.himatsingka.com/investors/corporate-governance.

e) Policy for determining material subsidiaries

As required under Regulation 24 of Listing Regulations, the Company has adopted a policy for determining material subsidiaries. The policy has been disclosed on the Companys website – https://www.himatsingka.com/investors/corporate-governance

f) Policy on Related Party Transactions:

The Company has also formulated a policy on dealing with Related Party Transactions as required under Regulation 23 of Listing Regulations. The same is available on the Companys https://www.himatsingka.com/investors/corporate-governance.

g) Corporate Social Responsibility

Corporate Social Responsibility (CSR) is central to the operating philosophy of the Company and it is the Companys constant endeavour to ensure that its businesses uphold the highest standards of governance and compliance. It aims to deliver sustainable value to society at large as well as shareholders. In keeping with its philosophy, the Company has set up a CSR Committee that identifies CSR projects and overlooks, supervises and provides guidance for the implementation of the projects. The CSR Committee explores various activities based on the thrust areas, filters and shortlists projects for CSR activities with the approval of Board of Directors. The companys CSR activities envisage initiatives primarily in the areas of health, education, environmental protection, community development and sanitation among others.

The details of the Composition of CSR Committee, the CSR Policy and the CSR spending have been elaborated in the Annexure-5 to this report.

? CORPORATE GOVERNANCE REPORT fiCGRfi

We comply with the corporate governance code as prescribed by the Stock Exchanges and the Securities and Exchange Board of India (SEBI). The detailed report on corporate governance forms a part of the Annual Report and the Corporate Governance Report along with the Practicing Company Secretary Certificate on compliance with the mandatory recommendations on corporate governance is available in a separate section.

3. MANAGEMENT DISCUSSION AND ANALYSIS REPORT MDA

In terms of Regulation 34 of SEBI Listing Regulations, the Management Discussion and Analysis Report (MDA) forms part of the Annual Report outlining the International and Domestic economic outlook, key developments in the International and Domestic Textile Industry.

? BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT BRSR

The Company has prepared Business Responsibility and Sustainability Report which forms part of the Annual Report inter alia containing environmental, social and governance disclosures.

? PENDING PROCEEDINGS UNDER THE IBC CODE,

During the year, Company filed an application before National Company Law Tribunal, ("NCLT"), Mumbai under Insolvency and Bankruptcy Code 2016 claiming an amount of fi 1,29,07,257.6 from Textile Professional LLP and an amount of fi 6,21,47,627 from Umiya Textiles Pvt. Ltd. As a counter, Textile Professional LLP had filed a petition at NCLT, Bangalore.

The proceedings with respect to above are at difierent stages and are ongoing.

? VALUATION FOR LOANS OBTAINED FROM FINANCIAL INSTITUTIONS/ BANKS

There was no instance of one-time settlement with any Bank or Financial Institution during the period under review.

Acknowledgement

Your Directors wish to place on record their appreciation of the continuous efiorts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Financial Institution for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

	For and on behalf of the Board
Shrikant Himatsingka		D.K. Himatsingka
(Executive Vice Chairman & Managing Director)		(Executive Chairman)
Place: Bengaluru
Date : August 10, 2023