khator fibre & fabrics ltd share price Directors report


TO THE MEMBERS OF

KHATOR FIBRE & FABRICS LIMITED

The Directors take pleasure in presenting the Thirty First Annual Report together with the Audited Financial Statements for the year ended 31st March, 2017. The Management Discussion and Analysis has also been incorporated into this report.

1. FINANCIAL RESULTS

Key highlights of the Financial Results for Khator Fibre & Fabrics Limited for the financial year 2016-17 are tabulated below: (Amt, in Lacs)

Particulars 2016-2017 2015-2016
Income from Operation 5871.97 5550.43
Revenue from ISDS 666.94 30230
Less : Manufacturing, Administrative & Selling 5423.22 5074.84
Expenses
Less: ISDS Expenses 666.94 302.30
Profit before Depreciation & Interest 448.75 475.59
Less: Interest 149.47 179.54
Depreciation 210.30 209.50
Provision for Taxation (Net Deferred Tax) 28.47 27.03
Profit after Taxation 60.51 5932
Add : Surplus Brought Forward From Previous Year 18.35 18.83
Less : Transfer to General Reserves 60.00 60.00
Balance carried forward to Balance Sheet 18.86 1835

2. HIGHLIGHTS OF PERFORMANCE

• The total net sale for the year was Rs. 5857.73 Lacs as compared to Rs. 5507.23 Lacs in 2015-16, a growth of 6.36 %.

• Total profit before tax for the year was Rs. 88.98 Lacs as compared to Rs. 86.55 Lacs in 2015-16.

• Total profit after tax for the year was Rs, 60-51 Lacs as compared to Rs. 59,52 Lacs in 2015-16.

3. BUSINESS OPERATIONS

The total turnover of Company in processing and fabric sales increased by 6.36%. During the financial year the Company engaged in ISDS schemes promoted by Govt, of India under Skill India / Make In India & committed to economical & social responsibilities.

Further the Company is happy to inform its shareholders for being appointed as Exclusive Channel Partner from F.Y. 2017-18, in the category of School Uniforms and Corporate Uniforms for East, West & North Zone of India by M/s. The Bombay Dyeing & Mfg. Co. Ltd.

There was no change in nature of business of the Company, during the year under review.

4. DIVIDEND

Your Directors do not recommend any Dividend for the year under review, so as to conserve the resources of the Company.

5. SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2017 was Rs. 4,21,09,500/-. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. There was no change in the Companys share capital during the year under review.

6. TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs. 60.00 Lacs to the General Reserves. An amount of Rs. 18.86 Lacs is proposed to be retained in the Statement of Profit and Loss.

7. DEPOSITS

Hie Company has not accepted deposit from the public and shareholders falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules,

2014. Hence, the requirement for furnishing details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

8. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

9. SUBSIDIARY COMPANIES

The Company has no Subsidiary Company.

10. DIRECTORS

10.1 Retirement by Rotation

Pursuant to Section 132 (6) of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Ashok S. Khator, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

10.2 Declaration by Independent Directors

The Company has received declarations from the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both, under Section 149 (6) of the Companies Act, 2013 and under Regulation 17 of the SEBI (LODR) Regulations, 2013.

10.3 Familiarization Programme for Independent Directors

The Program intends to provide insights into the Company so that the Independent Directors can understand the Companys business in depth and the roles, rights, responsibility that they are expected to perform/enjoy in the Company to keep them updated on the operations and business of the Company thereby facilitating their active participation in managing the affairs of the Company. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, the SEBI (LODR) Regulations, 2013 with regards to their roles, rights and responsibilities as Directors of the Company.

10.4 Annual Board Evaluation

According to Regulation of 25(3) of the SEBI (LODR) Regulations, 2015 and Circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January, 2017 issued by SEBI on Guidance Note on Board Evaluation, a meeting of the Independent Directors was held on 14th February,

2017 to inter alia, evaluate the performance of the Non-Independent Directors, including the Chairman. The Board thereafter in its meeting held on the same day evaluated the performance of the Independent Directors.

10.5 Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014 framed thereunder.

1. Mr. Kailash S. Khator, Managing Director

2. Mr. Ashok S. Khator, Whole-Time Director - CFO

None of the Key Managerial Personnel have resigned during the year under review.

10.6 Remuneration Policy

The Board has in accordance with the provisions of Section 178 (3) of the Companies Act,

2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management Employees. The detail of the same has been disclosed in the Corporate Governance Report.

10.7 Board Meetings

A calendar of Board Meetings is prepared and circulated in advance to the Directors.

During the year the Company has held 5 (five) Board Meetings which were held on 30th May,

2016; 13th August, 2016; 14th November, 2016; 09th December, 2016 & 14th February, 2017. The maximum interval between any two meetings did not exceed 120 days.

11. DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended 31st March, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

12. PLEDGE OF SHARES

None of the equity shares of the Directors of the Company are pledged with any banks or financial institutions.

13. RELATED PARTY TRANSACTIONS

All the related party transactions are entered on arms length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Companys financial statements in accordance with the Accounting Standards.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

15. DISCLOSURES UNDER SECTION 134 (31 fit OF THE COMPANIES ACT. 2013

No material changes and commitments which could affect the Companys financial position have occurred between the end of the financial year of the Company and date of this report.

16. DISCLOSURE UNDER THF. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION. PROHIBITION AND REDRESSAL1 ACT. 2013

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has in place a Policy for Prevention of Sexual Harassment of Women at Work Place and constituted an Internal Complaints Committees (ICC). No complaint has been raised during the year ended 31st March, 2017.

17. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES. JOINT VENTURES OR ASSOCIATE COMPANIES

There are no companies which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies during the financial year 2016-17.

18. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The criteria prescribed for the applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 is not applicable to the Company.

19. BUSINESS RISK MANAGEMENT

The nature of business is manufacturing of Textiles. The inheritant risk to the business of the company is as follows:

a) Foreign Exchange Risk

b) Yam Price Risk

c) Stiff Global Competition

d) Government Policy on incentives for exports

e) Risk elements in business transactions

f) Success of Cotton Crop

All the above risk has been discussed in the Management Discussion and Analysis Report. The nature of risk is dynamic of business and entrepreneurship. The Company has not formed Risk Management Committee since it is not applicable under Regulation 21 of the SEBI (LODR) Regulations, 2015.

20. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

21. INFORMATION SYSTEM

In a business where information is critical, Information Technology plays a vital role, facilitating informed decision making to grow the business. Over the years, the Company has invested extensively in infrastructure, people and processes with the objective to capture, protect and transmit information with speed and accuracy.

22. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The detail of the Whistle Blower Policy is explained in the Corporate Governance Report.

23. AUDITORS

23.1 Statutory Auditors

M/s. S. R. Goyal & Co., Chartered Accountants, the outgoing auditors has completed his term as auditor pursuant to Section 139(2) of the Act at the end of conclusion of the 31 " Annual General Meeting.

It is proposed to appoint M/s. Giriraj & Lohiya, Chartered Accountant as Statutory Auditor of the company for the Companys financial year 2017 - 18 to hold office from the conclusion of the this Annual General Meeting of the Company till the conclusion of the next Annual General Meeting in place of M/s. S. R. Goyal & Co., Chartered Accountants. The Company has received a letter from M/s. Giriraj & Lohiya, Chartered Accountant to the effect that their appointment if made would be maintain be within the prescribed limit under Section 141(l)(g) of the Companies Act, 2013 and that they are willing to act as statutory auditors of the company. As required under Regulation 33 of the SEBI (LODR) Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

23.2 Statutory Auditors Observations

The notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report is an Un-modified report and does not contain any qualification, reservation, adverse remark or disclaimer.

23.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s P. P. Shah & Co., Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure A".

23.4 Qualifications in Secretarial Audit Report

A) Appointment of Company Secretary:

As per Section 203 (1) (ii), the Company is required to appoint Company Secretary. The Company has not appointed Company Secretary, consequently the Annual Audited Financial Statements are not signed by Company Secretary. In this regard the management of the Company has provided the following reply:

(i) The Company has appointed Mr. Omprakash Bajaj as Compliance Officer of the Company who looks after the compliance of the Companies Act, 2013 and SEBI Act and rules made thereunder;

(ii) The Company has availed the services of Practicing Company Secretary for advising on compliance of the Companies Act, 2013 and SEBI Act and rules made thereunder;

(iii) The Volume and Scope of work for the Company Secretary is less and it is not a full time work and the job of Company Secretary is not attractive commensurate with the scope of work and salary.

B) Appointment of Internal Auditor:

As per Section 138 of the Companies Act, 2013, the Company is required to appoint Internal Auditor. The Company has not appointed Internal Auditor. In this regard the management of the Company has provided the following reply:

(i) The size of operation of the Company is very small accordingly, it is not viable to appoint Internal Auditor but the Company has established the internal control system.

C) Website Posting:

As per the various sections of the Companies Act, 2013, regulations of the SEBI (LODR) Regulations, 2015 and Secretarial Standard - 2, the Company is required to post various information / policies on the website of the Company. The Company has not posted any information / policies on the website of the Company. In this regard the management of the Company has provided the following reply:

(i) The Company is filing regularly all the information with BSE and all the information is available on the website of BSE.

D) Dematerialization of Promoters Shareholding:

As per Regulation 31 (2) of the SEBI (LODR) Regulations, 2015, the listed entity shall ensure that 100% of shareholding of promoters and promoter group is maintained in dematerialize form and the same is maintained on a continuous basis. In this regard the management of the Company has provided the following reply:

(i) One of the promoter holding 49,500 equity shares constituting 1.16% of total equity share capital listed on BSE Limited is not held in dematerialized form.

(ii) One of the deceased promoter holding 15,010 equity shares constituting 0.35% of total equity share capital listed on BSE Limited is not held in dematerialized form.

E) Filing of Limited Review Report / Audit Report on Quarterly Basis:

As per Regulation 33(3)(c) of the SEBI (LODR) Regulations, 2015, in case the listed entity submits Unaudited Financial Results to the Stock Exchange on quarterly basis then the same shall be subject to limited review by the Statutory Auditors of the Company and in respect of the last quarter, the Audited Financial Results shall be accompanied by the Audit Report. The Company has not filed Audit Report in respect of Audited Financial Results for the financial year ended 31st March, 2016 and Limited Review Report in respect of the Unaudited Financial Results for the quarter ended 3(fh June 2016, 3(fh September, 2016 and 31st December, 2016 with BSE Limited where its equity shares are listed.

24. CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors protection and maximizing longterm shareholders value. The certificate from M/s. S. R. Goyal & Co., Chartered Accountants, confirming compliance of conditions of Corporate Governance as stipulated under Schedule V (E) of the Securities and Exchange Board of India (LODR) Regulations, 2015 of the Stock Exchanges is annexed.

25. MANAGEMENT DISCUSSION AND ANALYSIS

As required under the Schedule V (B) of SEBI (LODR) Regulations, 2015, report on "Management Discussion and Analysis is attached and forms part of this Annual Report.

26. ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The 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 herewith as "Annexure B".

27. LISTING WITH STOCK EXCHANGES

Your Company is listed with BSE Limited and the Company has duly paid the listing fees to the Exchange.

28. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure C".

29. PARTICULARS OF EMPLOYEES

During the year, there was no employee in receipt of remuneration as prescribed in the Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees as required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "Annexure D" and form part of this Report.

However, in accordance with the provisions contained in the proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and accounts excluding the aforesaid information are being sent to the shareholders of the Company. Any member interested in obtaining such particulars may write to the Compliance Officer at the Registered Office of the Company for the same.

30. HUMAN RESOURCES

The relations of the employees of the Company have been cordial during the year. Employees are considered to be team members being one of the most critical resources in the business which maximize the effectiveness of the Organization. Human resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Companys Polices and Systems. The Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources.

31. ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

32. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

33. GREEN INITIATIVES

Electronic copies of the Annual Report 2016-17 and Notice of the 31st Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participants). For members who have not registered their email addresses, physical copies of the Annual Report 2016-17 and the Notice of the 31st Annual General Meeting under Section 101 of the Companies Act, 2013 are sent in the permitted mode. Members requiring physical copies can send a request to the Company.

Your Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015.

34. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

35. CAUTIONARY STATEMENT

Statements in the Boards Report and the Management Discussion & Analysis describing the Companys objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

By Order of the Board of Directors

Kailash S. Khator Ashok S. Khator

Managing Director Whole-Time Director

Place: Mumbai Date: 30th May, 2017