BOARD'S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS TO THE MEMBERS OF, HIMACHAL FIBRES LTD. Your Directors have pleasure in presenting the 34th Annual Report together with the Audited Statement of Accounts of Himachal Fibres Limited for the year ended 31st March, 2015. 2. OPERATIONAL REVIEW: The net salefor the year is Rs.8471.59 as compared to Rs. 13071.53 lacs of previous year. The Net Loss for the year ended 31.03.2015 is Rs. 124.01 Lacs as compare to Net Loss of Rs. 12.81 Lacs for the previous year. 3. MANAGEMENT DISCUSSION & ANALYSIS REPORT 3.1 Industry And Economic Scenario & Outlook Indian economic growth in 2014 rose to 5.2% from 4.7% last year as a result of the improving macro-economic situation. The wholesale and consumer price inflation has fallen to 4.2% and 7.4% from last year's 6.3% and 10.1% on the back of a strong base effect. However, the slow pace of reforms, lack of impetus for infrastructure projects, high interest rates and tightening of fiscal policies adversely impacted the capital goods sector. Industrial production / output was also sluggish. The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in 2015. With the coming of new Govt. in the Centre it is expected that the economy should grow in the coming years and the demand for and prices of textile products should improve which will enable the Company to regain steady or better performance. 3.2 Opportunities And Threats Opportunities: a) Large, potential Domestic and International Market b) Product Development and Diversification to cater Global Needs c) Greater Investment and FDI opportunities are available. d) Industry has large and diversified segments that provide widevariety of products Threats: a) Unfavorable Labour Laws b) High Indirect Taxes, Power and Intrest Rates c) Unfavorable Government policies d) Lower Productivity in various segments. 3 Risk And Concerns Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are setoutinthe Corporate Governance Report forming part of the Board's Report. The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The key business risks identified by the Company and its mitigation plans are as under. a) Risk related to Personnel Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a substantial risk related to the retention of key personnel both in manufacturing and managerial levels. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level. With excellent performance track as well as best HR practices we are able to attract and retain people for growth of our business. b) Risk related to Safety The company has taken adequate insurance covers to indemnify the risks associated with the safety of personnel, building, stock and other infrastructure of the Company. These include: 1. Fire Insurance Policies. 2. Marine/Transit Insurance Policies. 3. Theft Insurance Policies. 4. Other Miscellaneous Policies. The company has also taken steps to strengthen IT security system as well as physical security system at all our locations c) Compliance Related Risks The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the country. All the compliances under various laws applicable to the Company, including under Companies Act 1956/2013, Factories Act, Income Tax Act 1961 etc., are followed in Letter & Spirit. 3.42 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 function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman and Managing Director. The Internal Audit Department 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 recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. 3.5 Human Resources/ Human Resource Management. The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. Your Company has kept a sharp focus on Employee Engagement. 4. TRANSFER TO RESERVE Due to losses in the current year, the company has not transferred any amount in any reserve. 5. DIVIDEND Due to losses in the current year the Board of Directors of your Company has not recommended any dividend for the financial year 2014 -2015. 6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTCCTION FUND Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply. 7. SHARE CAPITAL The paid up Equity Share Capital as on March 31, 2015 was Rs. 2212.50 Lacs. During the year under review the company has not issued any shares or any convertible instruments. Face value of the Shares of the company was reduced by way of Sub-division of nominal value of each Equity Share of Rs. 10/- (Rupees Ten Only) each into 10 Equity Shares of Rs. 1/-(Rupees One only) each. 7.1 BUY BACK OF SECURITIES The Company has not bought backany of its securities during the year under review. 1.2 SWEAT EQUITY The Company has not issued any Sweat Equity Shares during the year under review. 7.3 BONUS SHARES No Bonus Shares were issued during the year under review. 1.4 EMPLOYEES STOCK OPTION PLAN The Company has not provided any Stock Option Scheme to the employees. FINANCE 8.1 CASH AND CASH EQUIVALENT Cash and Cash equivalent as at 31s March, 2015 is Rs. 56.14 lacs. The Company continues to focus on judicious management of working capital. Working Capital parameters are kept under strict check through continuous monitoring. 8.2 DEPOSITS/FIXED DEPOSITS During the year, Company has not accepted deposit from the public falling within the ambit of Section 73 of Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Further, the Company has not repaid any deposit to public and there is no depositsare pendingason 31stMarch, 2015. 8.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Detail of Loans, Guarantees and Investments covered under the provisions of Section 186of the Companies Act, 2013 are given in the notes of Financial Statements. 9. BOARD The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our com petitive advantage. 9.1 No. Of Meetings Of The Board During the year Eight (8) Board Meetings and Five (5) Audit Committee Meetingswere convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 9.2 Policy on Director's Appointment and Remuneration. The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2015, the Board consists of 6 members, three of whom are executive or whole-time directors, and three are independent directors. The Board periodically evaluates the need for change in its com position and size. The Company has adopted Nomination and Remuneration policy for directors' appointment and remuneration, including criteria for determining qua lifications, positive attributes, independence of a director and other matters provided under the Companies Act, 2013 and clause 49 of the Listing Agreement. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company. The Nomination and Remuneration policy is explained in Corporate Governance Report. 9.3 Declaration By Independent Directors The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement 9.4 Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 9.5 Training of Independent Directors. Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our Company, the executive directors / senior managerial personnel make presentations to the inductees about the Company's strategy, operations, product, markets, organization structure, finance, human resources, technology, quality, facilities and risk management. 9^ Re- Appointments As required under clause 49 of theListing Agreement, the details of Director appointed/reappointment are given in this annual Report and forms part of this report. 9^ Retirements and Resignations During the year under review Sh. D. S. Rana, Sh. Pawan Nagpal and Sh. Raj Mittal have resigned from the directorship of the company w.e.f. 14.02.2015,12.11.2014 and 21.04.2014 respectively. 10. COMMITTEES OF THE BOARD a) Audit Committee The Audit Committee was reconstituted in accordance with the provisions of Companies Act, 2013 and clause 49 of listing agreement on 28.05.2014. Audit Committee includes Mr. Sushil Singla (Chairman), Mr. Rajan Dhawan, Mr. Akhil Malhotra. The term of reference and other details are given in Corporate Governance Report and forms part of this report. b) Nomination and Remuneration Committee The remuneration committee was renamed and reconstituted as Nomination and Remuneration Committee at a board meeting held on 28.05.2014. The terms of reference of the committee are disclosed in Corporate Governance Report and forms part of this report. Nomination & Remuneration Policy is annexed as Annexure -F to Board Report. c) Corporate Social Responsibility Committee The provisions of Companies Act, 2013 regarding Corporate Social Responsibility are not attracted to the company So, the Company has not contributed towards it as Corporate Social Responsibility Committee is not applicable. d) Stakeholder Remuneration Committee The Stakeholders' Relationship Committee was constituted by the Board on 28 May, 2014 consequent to the dissolution of the Shareholders'/ Investors' Grievance Committee). This Committee includes Mr. Sushil Singla (Chairman), Mr. Rajan Dhawan, Mr. Akhil Malhotra. Term of reference and other details are given in Corporate Governance Report and forms part of this report. e) Risk Management Committee The Company has formed the Risk Management Committee with its members as Mr. Akhil Malhotra (Chairman), Mr. Mayank Malhotra , Mr. Sushil Kumar Singla and Mr. Rajan Dhawan and the committee will perform its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management. f) Securities Transfer Committee The Securities Transfer Committee was constituted at a board meeting held on 28.05.2014. The committee detail is disclosed in Corporate Governance Report and forms part of this report. g) Banking And Finance Committee The Banking and Finance Committee was constituted at a board meeting held on 28.05.2014. The committee detail is disclosed in Corporate Governance Report and forms part of this report. 11. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement: — a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the directors had prepared the annual accounts on a going concern basis; and e) the directors, 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.- Not applicable to Private Limited Company. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 12. AUDITORS 12.1 Statutory/Auditors M/s Sumat Gupta & Co. ( FRN : 010288N) , Chartered Accountants, were appointed as Statutory Auditors for a period of three years in the Annual General Meeting held on 30.09.2014. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. 12.2 Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of M anagerial Personnel) Rules, 2014, the Company has appointed Rajeev Bhambri & Associates (CP No.: 9491, FCS: 4327),Company Secretaries to undertake the secretarial audit of the company. The Secretarial Audit Report is annexed herewith as 'Annexure - A'. 12.3 Internal Auditors Mr. Shekhar Bansal performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time. 12.4 Cost Auditor The Cost Audit was not applicable on the Company during the Financial year 2014-15 as per Companies (Cost record & audit) Rules, 2014 dated 30.06.2014. Further as per amendment in the above said rules vide notification dated 31.12.2014, M/s J. Verma & Associates, cost Accountants, Jalandhar was appointed to conduct the Cost Audit of the Company for the Financial Year 2015-16. 13. LISTING OF SECURITIES The Securities of the Company are listed on Bombay Stock Exchange Limited. The Company has paid annual listing fee to exchanges for the year 2015-16. 14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. 15. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as 'Annexure- B' 16. VIGIL MECHANISM / WHISTLE BLOWER POLICY. The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company. 17. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint venture or Associate Company. 18. RELATED PARTY TRANSACTIONS/ PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES. All transactions entered into with Related Parties as defined under Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The report of the Board in respect of the particular of contracts or arrangements with related parties referred to sub section (1) of Section 188 in form AOC-2 is annexed to this report in annexure- C 19. CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from Practicing Company Secretary confirming compliance forms an integral part of this Report. 20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013 The Company has in place a prevention of sexual Harassment policy in line with the requirements of the sexual Harassment of Women at the Workplace (prevention, prohibition and Redressal) Act, 2013. During the year 2014-15, no complaint were received by the Company related to sexual Harassment. 21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, 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- D" 22. PARTICULARS OF EMPLOYEES The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to the Board's report as per Annexure- E Since there is no employee receiving remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, there is no information requires to be given under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, 23. APPRECIATION AND ACKNOWLEDGEMENTS The company has been very well supported from all quarters and therefore your directors wish to place on record their sincere appreciation for the support and co-operation received from Employees, Dealers, Suppliers, Central and State Governments, Bankers and others associated with the Company. Your Directors wish to thank the banks, financial institutions, shareholders and business associates for their continued support and cooperation. We look forward to receiving the continued patronage from all quarters to become a better and stronger company. 24. CAUTIONARY STATEMENT The statements contained in the Board s Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results. For and on behalf of board Sd / akhl makhotra Managing directors |