vanasthali textile industries ltd Directors report

Dear Members,

Your Directors are pleased to present the Twenty Fourth Annual Report along with the Audited statement of Accounts for the financial year ended 31^st March, 2015.

1. FINANCIAL RESULTS

Your Company’s financial performance during the financial year 2014-2015 is summarized below: -

Particulars	As at 31.03.2015	As at 31.03.2014
	(Amt In Rs)	(Amt In Rs)
INCOME
Revenue from operations	117,381,413	154,887,906
Other income	2,323797	2,425,528
Total Revenue	119,705,210	157,313,434
EXPENDITURE
Cost of materials consumed	37,112,602	75,586,486
Changes in inventories of finished goods work-inprogress and Stock-in-Trade	13,545,682	6,462,478
Employee benefits expense	31,683,483	37,010,111
Finance costs	67,241	126,996,105
Other expenses	44,411,775	57,642,274
Depreciation and amortization expense	64,763,784	47,033,059
Total expenses	191,584,566	350,730,512
Profit before exceptional and extraordinary Items and tax	(71,879,356)	(193,417,078)
Exceptional item Gain of sale of scrap from discarded assets	.	3,513,362
Loss due to fire in Plant		(4,391,593)
Profit Before Tax	(71,879,356)	(194,295,309)
Tax expense:	-	-
Profit {Loss} after tax	(71,879,356)	(194,295,309)
Earnings per equity share: (1) Basic	(3.63)	(9.81)
(2) Diluted	(3.63)	(9.81)

As of result of above, the Company could not get better realization of its products resulting in a net loss of Rs.718.79 Lacs as compared to Rs. 2887.66 in the previous year though the company has made some advancements as compared to last year but due to, falling demand and prices in the international Market, global meltdown, and increase in the price of yarn 9companys major raw material). The turnover of the company during the year stands at Rsll97.05 lacs, as compared to Rs. 1573.13 Lacs in the previous year which has decreased by Rs.3 76.08 approximately.

3. DIVIDEND

Your directors are unable to recommend any dividend for the year ended 31st March, 2015.

4. FUTURE PROSPECTS

The long-term outlook for terry towel has always been encouraging but the financial pressure and other constraints never allowed company to capitalize it The company continued its emphasis retaining its customers realizing from debtors, including Product and market development There is no doubt that your company’s product quality is well established and accepted in the international market despite all these hurdles.

The Management is making all the efforts to eliminate liquidity crunch and sustain the production focusing and in talks with the financial institution so that this situation can be successfully sailed through. *

5. SUBSIDIARY OF THE COMPANY

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Companys Subsidiary’, (in Form AOC-1) is forming part of the Consolidated Financial Statements.

Pursuant to Section 136 of the Companies Act, 2013 ("the Act"), the Company is exempted from attaching to its Annual Report, the Annual Report of the Subsidiary Company viz. V D R Leasing and credit company private Limited

The financial statement of the subsidiary company is kept open for inspection by the shareholders at the Registered Office of the Company. The Company shall provide the copy of the financial statement of its subsidiary company to the shareholders upon their request free of cost It is also available on the website of the Company.

6. CONSOLIDATED AUDITED ACCOUNTS

We believe that the Consolidated Audited Statements of Accounts present a more comprehensive picture rather than the standalone Audited Accounts. The Consolidated loss after tax of the Company and is Subsidiary is Rs. 718.79 Lacs during the year.

7. INDUSTRIAL RELATIONS

Cordial and harmonious industrial relations prevailed throughout the year.

8. INSURANCE

The properties and insurable interest of the company, like building, plant & machinery, stocks, etc. are properly insured.

9. CORPORATE GOVERNANCE

The Company is strongly committed towards its philosophy of good Corporate Governance. The endeavor of your Company is not only to comply with regulatory requirements but also to practice Corporate Governance principles that lay a strong emphasis on integrity transparency and overall accountability. A separate Section on Management Discussion & Analysis and Corporate Governance along with certificate on its Compliance from Company Secretary in Practice is enclosed with this Annual Report

10. GREEN INITIATIVE

As pursuant to the circular no. 2/2011 dated 8th February, 2011 of the Ministry of Corporate Affairs, Government of India, we are adopting the green initiative option as being the responsible organization we are committed to reduce harmful impact of using more paper on the environment Towards this end our management has taken the decision that our printed copy of the Annual Report to shareholders would not contain Balance Sheet, Profit & Loss Account and Auditors Report of V D R Leasing and Credit Private Limited.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There are no contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013. Accordingly, Form No. AOC-2 is not being attached.

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

Information pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with the rule 8 (3) of the Companies (Account) rules , 2014, relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed to this report

13. PARTICULARS OF EMPLOYEES

There is no employee whose particulars are required to be furnished in the Sec. 197 of the Companies Act, 2013 and rules made there under.

14. DIRECTORS’ RESPONSIBLITY STATEMENT AS PER SECTION 134 (S) OF COMPANIES ACT, 2013

Pursuant to the requirements of Section 134 (5] of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the annual accounts for the financial year ended 31^st March 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) That the directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the loss for the year under review;

(iii) That the directors have 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;

(iv) That the directors have prepared the accounts for the financial year ended 31^st March 2013 on a going concern basis.

15. DIRECTORS

Mr. Panna Lai Goswami, who retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment.

All the Independent Directors have given a declaration under sub-section (7) of section 149 of the Companies Act, 2013 (’Act") that they meet the criteria of independence as laid down under Section 149 (6] of the Act and Clause 49 of the listing agreement

16. AUDITORS

M/s Jain Raj & Associates, Chartered Accountant, appointed in EGM held on 14-09-2014, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment

17. AUDITORS REPORT

The Auditors’ Report is enclosed with the Accounts for the year ended March 31, 2015. This time Auditor has preferred to give Adverse Report. The Basis for his Adverse Report are as follows:

EXPLANATION TO ADVERSE EFFECTS OF AUDITOR

a) Refer Note no. 22.3 of Notes to Accounts, regarding non confirmation of balances with suppliers, customers, other creditors, recoverable advances, Margin money and loan facility from 1DBI & balance with HDFC & SBBJ banks which have been taken as per books, and are subject to confirmation/reconciliation.

In spite of our letters written to the bankers for confirmation of balances in bank/loan accounts, no response has been received from them. We are unable to comment on the consequential losses which may arise on such confirmations & reconciliations in future.

Reply of the BOD: According to Section 13(4) of Sarfaesi Act, Banks have taken over the symbolic possession of the company assets & due to this banks are not giving confirmation of balances. Since the company is not in operation from January, 2015 /operations are suspended.

b) Refer Note No. 22.5 of Notes to Accounts, in view of abatement of B1FR reference , the company is no more a registered company under SICA and the provisions of rehabilitation comes to an end through BIFR. The management feels that the companys manufacturing process shall be restored once the settlement with lender banks takes place for which a proposal has been made to them. Whereas in view of multiple financial, operating & other indicator and in view of the event of closure of manufacturing facility and SARFES1 action by bankers which effects the Going Concern Assumption and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business.

Reply of the BOD: As all the banks have given their consent to lead bank i.e. OBC for filing MA (Miscellaneous Applications) before the BIFR for the abatement of reference filed by the company as their total holding comes to more than 70% of total outstanding amount which fulfills the condition of 70%holding of SICA, hence BIFR have allowed the abatement.

c) Refer Note No. 22.5 of Notes to Accounts, in the opinion of the management, no adjustment is required to the carrying amount of fixed assets and Capital Work in Progress, on account of impairment as required by AS-28. In view of the action taken by the lenders and the management’s inability to make an assessment about the future cash flows, asset liability mismatch and non availability of present value of the assets including those pending for capitalization, and therefore it may be unable to ascertain such impairment which may exist and required to be charged to profit and loss account

Reply of the BOD: As the company is not in operation from January, 2015 and BIFR passed the abatement order in October, 2015 It is difficult to ascertain at this time what would be the sources of funds Inflow and utflow would be managed due to sudden abatement of BIFR reference.

d) Refer Note No.22.6{a) of Notes to Accounts, regarding adjusting and set off of export debtors recoverable (related party) and non settlement of foreign bills, we are unable to express our opinion as to what legal complication which may arise due to non-settlement of such foreign bills with the appropriate authority under foreign exchange regulations.

Reply of the BOD: All the amount mentioned is already included in the loan recall amount and that will be settled by the bank or the management in the OTS whomsoever will be done in the future.

e) Refer Note No.22.6 of Notes to Accounts, regarding non provision foreign exchange fluctuation related to the adjusted debtors as well as debtors against which provision for bad & doubtful debts has been made, is contrary to the requirement of AS 11 of ICAI.

Reply of the BOD: As the old outstanding of foreign debtors is still outstanding and that is not being recovered hence there is no point to include it

f) Refer Note no. 22.5(e) of Notes to Accounts, regarding non provision of interest on loan liabilities has resulted into understatement of losses of Rs 14.07 Crores and understatement of corresponding liabilities to the same tune.

Reply of the BOD: Already the bank has recalled the loan and initiated the proceeding under SARFAESI Act so there is no point providing for interest amount by the company therefore that is not included in the books of account

g) Refer Note no. 22.1 of Notes to Accounts, regarding statutory liabilities, there is huge statutory liabilities and non settlement of dues. We cannot comment on the consequential effects from such defaults which may arise in future.

Reply of the BOD: the company is under the financial distress and the burden is due to sudden abatement of BIFR therefore the company is ascertaining how the statutory liability will be met and the company is in the process of appeal to many of the authorities and trying to get the waiver off.

(h) Adverse references contained in annexure to our audit report of even date as required by Companies Auditor Report Order 2015.

18. COST AUDITOR REPORT

As per section 148 of the companies Act, 2013, read with rule 14 of the companies act (cost record and audit) amendment Rules, 2014, the cost audit records maintained by the company in respect of business are required to be audited and the cost audit was conducted by Niraj Kumar Vishwakarma & associates, cost accountants, he has also given some Adverse Qualifications in the Cost Audit Report

19. FIXED DEPOSITS

During the year under review, your company has not accepted any fixed deposit within the meaning of Section 73 of the Companies Act, 2013 and the rules made thereto.

20. CORPORATE SOCIAL RESPONSIBILITY

Due to average net profit of last three years being negative, your Company is not required to spend any amount of CSR Activities during the year under review.

21. RELATED PARTY TRANSACTIONS

All transactions entered into with related parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreements during the financial year were in the ordinary course of business and on an arm’s length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with the related parties during the financial year which were in conflict with the interest of the Company and hence, enclosing of Form AOC-2 is not required. Suitable disclosure as required by the Accounting Standard (AS 18) has been made in the notes to the Financial Statements.

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

The company has suffered a major setback when the BIFR has abated the reference filled by the company in the month of October, 2015 as all the banks have given their consent to lead bank that is OBC for filing & (Miscellaneous Applications) before the BIFR for the abatement of reference filed by the company as their total share fulfilled the condition of 70% of total outstanding amount which fulfills the 70% condition of SICA, hence BIFR have allowed the bankers.

23. DISCLOSURE OF HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL)

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

24. RISK MANAGEMENT POLICY

The Company has formulated a Risk Assessment & Management Policy. The details of the Risk Management are covered in the Corporate Governance Report

25. AUDIT COMMITTEE

The composition of directors and other details are provided in the Corporate Governance Report of the Company. The Company has established a vigil mechanism through the Committee, wherein the genuine concerns can be expressed by the employees and Directors. The Company has also provided adequate safeguards against victimization of employees who express their concerns.

26. EROSION OF NET WORTH - REFERENCE TO BOARD FOR INDUSTRIAL AND FINANACIAL RECONSTRUCTUION

On account of losses incurred during the year under review and also the carried forward losses of past years, the entire net worth of the company has got eroded at the end of the financial year ended on march 31^st 2011 mentioned in the previous annual report In the Board of directors meeting held on 24^th August 2011, the directors formed opinion to refer the company to BIFR and on 26-09-2011 the company made reference u/s 15(1) of the Sick Industrial Companies Act (special provisions act, 1985). The matter is undergoing with BIFR from then, and also with AAIFR and no matter is sub-judice.

As the company is not in operation from January, 2015 and BIFR abatement is October, 2015 management is to ascertain what would be the source for Cash Flows and how the cash outflow would be managed due to sudden abatement of BIFR reference.

ACKNOWLEDGEMENT

Your Directors wish to place on record sincere gratitude for the co-operation and assistance extended by the Government authorities, Financial Institutions, Banks, Suppliers, Agents and Buyers. Your Directors also wish to acknowledge with thanks all stakeholders for their valuable sustained support and encouragement. The Directors wish to place on record their deep sense of appreciation for the commitment and dedication of employees at all levels.

		For and on behalf of the Board
	(Nikhil Poddar)	(David Soans)
	Chairman and MD	Director
Date: 09/11/2015 Place: New Jersey-(USA)	DIN No.01886021	DIN NO. 01897431