DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the Twenty First Annual Report together with the Audited Financial Statements of the Company for the period from April 1, 2014 to March 31, 2015. THE COMPANIES ACT, 2013 The Ministry of Corporate Affairs (MCA) had partly notified the Companies Act, 2013 in September 2013 and March 2014 with majority of the sections as well as rules being notified in March 2014. With respect to provisions of the Companies Act, 2013, appropriate references have been made in this report to the extent these provisions have become applicable effective from April 1, 2014. Your Company has been regular in keeping pace with the fast changes introduced by the Companies Act, 2013 and initiated necessary actions accordingly. Some of the important initiatives taken by your Company are as under: • Re/constitution of the Committees of the Board; • Designation of Key Managerial Personnel's (KMP); • Establishment of Vigil Mechanism; • Recommendation for the appointment of the Independent Directors, not liable to retire by rotation, who satisfy the criteria enumerated in Companies Act, 2013; and • Providing E-Voting facility to members The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India ("SEBI"). Management evaluates all recently issued or revised accounting standards on an ongoing basis. Apart from this, the Company discloses Audited and Unaudited Financial Results on quarterly and annual basis as per Listing Agreement entered into with the stock exchanges It is evident from the above graphs that your Company has progressed during the period ended March 31, 2015. It has achieved aggregate sales of Rs. 1096.53 crores and Profit Before Tax of Rs. 71.23 crores. Barring unforeseen circumstances, the Directors of your Company expect continued growth in turnover and profitability in future also. A detailed analysis of the financial operations is given in the Management Discussion and Analysis Report which forms part of this Annual Report. SUBSIDIARY COMPANY Nandan Denim Limited does not have any subsidiary company. DIVIDEND The Company continues to evaluate and manage its dividend policy to build long term shareholder value. Your Directors are pleased to recommend for your approval a dividend of Rs. 1.00 /- (i.e. 10%) per equity share ofRs. 10/- each fully paid-up for the period ended March 31, 2015. The dividend, subject to the approval of shareholders at the Annual General Meeting to be held on September 29, 2015, will be paid to the eligible members within the stipulated time. The Board, at its meeting held on February 3, 2015, declared an Interim Dividend of Re. 0.60/- (i.e. 6%) per equity share of face value of Rs. 10/- each. The total dividend for the year works out to Rs. 1.60/- (i.e. 16%) per equity share on a face value ofRs. 10/- per share as against the total dividend of Rs. 1.20/- (i.e. 12%) per equity share on face value ofRs. 10/- per share in the previous year. The Register of Members and Share Transfer Books will remain closed from September 23, 2015 till September 29, (both days inclusive) 2015 for the purpose of payment of the final dividend for the financial year ended March 31, 2015 and the Annual General Meeting. The Annual General Meeting is scheduled to be held on September 29, 2015. DIRECTORS AND KEY MANAGERIAL PERSONNEL During the period under review, Mr. Gautam Gandhi stepped down as Independent Director from the Board with effect from August 8, 2014. The Board places on record his appreciation and gratitude for his guidance and valuable contribution during their association with the Company. On the recommendation of the Nomination and Remuneration Committee, at the Board Meeting held on November 11, 2014, Ms. Pratima Ram and Mr. Giraj Mohan Sharma were appointed as Additional Directors with immediate effect. Further, Mr. Yasho Verdhan Verma was appointed as Additional Director at the Board Meeting held on April 29, 2015. All three were appointed in the capacity of Independent Directors. As Additional Directors, they hold office up to the date of forthcoming Annual General Meeting and are eligible for appointment as Directors. Further, in terms of section 149 read with section 152 of the Companies Act, 2013, an Independent Director is now not required to retire by rotation, and may be appointed on the Board of the Company for maximum two terms of up to five years each. Accordingly, it is proposed to appoint the existing Independent and Non-Executive Directors namely Ms. Pratima Ram, Mr. Giraj Mohan Sharma and Mr. Yasho Verdhan Verma, for an initial term of five years, effective from September 29, 2015. All these Independent Directors have confirmed their independence in terms of the requirements of Companies Act, 2013. The Company has received separate notice(s) together with the requisite amount, as per the provisions of section 160 of the Companies Act, 2013, for the appointment of aforementioned Directors on the Board of the Company. Mr. Vedprakash Chiripal, Non-Executive Director, is liable to retire by rotation at the ensuing AGM pursuant to the provisions of section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible have offered themselves for re-appointment. Appropriate resolutions for their re-appointment are being placed for your approval at the ensuing AGM. In compliance with requirements of Clause 47 VIII (E) of the Listing Agreement, brief resume, expertise and details of other directorships, memberships in committees of other Companies and shareholding in the Company of persons proposed to be appointed / re-appointed as Directors are as under: Apart from the above, Mr. Brijmohan Chiripal is the Managing Director of the Company. Mr. Sanjay Agrawal has been appointed as the Chief Financial Officer w.e.f. February 3, 2015 and Ms. Purvee Roy is the Company Secretary of the Company, thereby satisfying the requirements of the provisions of sections 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to Key Managerial Personnel. Annual Evaluation of Board's Performance In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board / Director(s) for the financial year 2014-15. Declaration of Independence Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the schedules and rules issued thereunder as well as Clause 49 of the Listing Agreement so as to qualify themselves to be appointed as Independent Directors. BOARD MEETINGS The Board meets at regular intervals to discuss and decide on the Company's policies and strategies apart from other Board matters. The calendar depicting the tentative dates of Board and Committee Meetings is circulated in advance to facilitate the Directors to arrange their schedule and to ensure participation in the meetings. During the financial year 2014-15, four board meetings were held on May 30,2014; August 8,2014; November 11,2014 and February 3, 2015 respectively. The gap between two Board Meetings did not exceed 120 days. BOARD COMMITTEES Your Company has five Committees of the Board, namely: • Audit Committee • Stakeholders' Relationship Committee • Nomination and Remuneration Committee • Corporate Social Responsibility Committee • Risk Management Committee Details of all the Committees along with their composition, terms of reference and meetings held during the year are provided in detail in the'Corporate Governance Report'which forms part of the Annual Report. EVALUATION OF THE BOARD OF DIRECTORS Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting, without the participation of the Non-independent Directors and Management, considered/evaluated the Boards' performance, performance of the Chairman and other Non-independent Directors. The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship and Risk Management Committee) and Independent Directors (without participation of the relevant Director).The criteria for performance evaluation have been detailed in the'Corporate Governance Report 'which is attached as part of this Report. The Directors expressed satisfaction over the evaluation process. CORPORATE GOVERNANCE Corporate Governance is the application of best management practices, compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. Corporate governance is the system by which business organisations are directed and controlled. The corporate governance structure speciies the distribution of rights and responsibilities among diferent participants in the organisation, such as, the board, managers, shareholders and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance. The concept of corporate governance hinges on total transparency, integrity and accountability of the management and the board of directors. The Company is committed to maintaining good standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India (SEBI). Several features such as the Whistle Blower Policy, Policy on Related Party Transactions amongst others have been incorporated by the Company. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is also published in this Annual Report. DISCLOSURE REQUIREMENTS As per Clause 49 of the Listing Agreements entered into with the stock exchanges, corporate governance report with auditors'certificate thereon and management discussion and analysis are attached, which form part of this report. Details of the familiarization programme of the independent directors are available on the website of the Company [URL: <http://www.nandandenim.com/downloads/Familirization%20Policy.pdf>] Details of policy formulated by the company with regard to related party transactions is available on the website of the Company [URL: <http://www.nandandenim.com/downloads/Related%20Party%20Transaction%20Policy.pdf>]] The Code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for prevention of insider trading have also been uploaded on the Company's website [URL: <http://www.nandandenim.com/downloads/> Code%20of%20Practices%20and%20Procedures%20for%20Fair%20Disclosure%20of%20UPSI%20.pdf, <http://www.nandandenim>. com/downloads/Code%20of%20Conduct%20for%20Prevention%20of%20lnsider%20Trading%20.pdf] The Company has a Whistle Blower Policy for the employees to report genuine concerns/grievances to provide vigil mechanism for employees and directors of the Company. The provisions of this policy are in line with the provisions of section 177(9) of the Act and revised clause 49 of the listing agreement entered into with the stock exchanges. The Policy is uploaded on the Company's website [URL: <http://www.nandandenim.com/downloads/Whistle%20Blower%20Policy.pdfl.The> Policy provides a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted by them. SHARE CAPITAL The paid up Equity Share Capital of the Company as on March 31, 2015 was Rs. 45.54 crores.There has been no change in the Equity Share Capital of the Company during the year. Further, the Company has not issued equity shares with differential rights as to dividend, voting or otherwise and does not have any ESOP scheme for its employees or Directors. The Company had taken shareholders approval via postal ballot for issue of 80,00,000 convertible warrants to specified group of investors (both promoter & non-promoter) but was later on withdrawn by the Company and not acted upon. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards have been followed; (b) They 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 affairs of the Company at the end of the financial year and of the profit of the Company for that period; (c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) They have prepared the annual accounts on a going concern basis; (e) They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; (f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DEPOSITS The Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is set out as'Annexure - A'to this Report. PARTICULARS OF EMPLOYEES 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, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. AUDITORS Statutory Auditor M/s. J.T. Shah & Co., the Statutory Auditors of the Company, were appointed for a period of five years at the Annual General Meeting of the Company held on September 15,2014. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. J.T. Shah & Co., Chartered Accountants, as Statutory Auditors of the Company is placed for ratification by the shareholders. In this regard, the Company has received a written consent and certificate stating that they satisfy the criteria provided under section 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors), Rules, 2014 and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules issued thereunder. As required under Clause 49 of the Listing Agreement, M/s. J.T. Shah &Co., Chartered Accountants, have also confirmed that they hold a valid certificate issued by the Peer Review Board of ICAI. Cost Auditor The Board of Directors had appointed M/s. A.G.Tulsian & Co., Cost Accountants as the Cost Auditor of your Company for the financial year 2014-15 to conduct the audit of the cost records of your Company. As per section 148 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of your Company has appointed M/s. A.G.Tulsian &Co., Cost Accountants as the Cost Auditor for the financial year 2015-16 on the recommendations made by the Audit Committee. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM would be not exceeding Rs. 50,000/- (Rupees Fifty Thousand Only) excluding taxes and out of pocket expenses, if any. Your Company has received consent from M/s. A.G.Tulsian & Co., Cost Accountants, to act as Cost Auditor of your Company for the financial year 2015-16 along with a certificate confirming their independence. Secretarial Audit Ms. Geeta Serwani of M/s. Geeta Serwani & Associates, Practising Company Secretary was appointed to conduct the Secretarial Audit of the Company for the inancial year 2014-15, as required under section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Mangerial Personnel) Rules, 2014. The auditors' report and secretarial auditors' report does not contain any qualifications, reservations or adverse remarks. Report of the secretarial auditor has been attached as an annexure which forms part of this report. RELATED PARTY TRANSACTIONS The Company has entered into transactions with related parties as defined under section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014. The transactions were carried out in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, rules issued thereunder and Clause 49 of the Listing Agreement. The details of related party transactions as required under AS-18 are set out in Note 38 of the financial statements forming part of this Annual Report. Form AOC-2 pursuant to section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as' Annexure - E'to this Report. Post October 1,2014, prior omnibus approval of the Audit Committee and the Board has been obtained on an annual basis for transactions with related parties which are of a foreseeable and repetitive nature. A statement giving details of all the related party transactions were placed before the Audit Committee for its review on quarterly basis. The Company has developed a Related Party Transaction Policy for identification and monitoring of such transactions. The Policy, as approved by the Board, is uploaded on the Company's website. None of the Directors have any pecuniary relationships or transactions with the Company. LOANS AND INVESTMENTS BY THE COMPANY Details of loans and investments by the Company to other bodies corporate or persons are given in notes to the financial statements. DETAILS OF INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS Nandan Denim Limited has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors. The senior level management periodically review s the financial performance of your Company across various parameters and takes necessary actions, wherever necessary. RISK MANAGEMENT The Company has a well-defined risk management framework in place. Further, it has established procedures to periodically place before the Board, the risk assessment and management measures. As such, there are no risks which in the opinion of the Board threatens the existence of the Company. However, the details of the risks faced by the Company which may pose challenges and the mitigation thereof are discussed in detail in the Management Discussion and Analysis Report that forms part of the Annual Report. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE Nandan Denim Limited has always believed in providing a safe and harassment free environment for every individual working in the Company. The Company has in place a well drafted policy specifically in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which has been made applicable both at the corporate office and the plant location. Under the said Act, every Company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee as there is zero tolerance on such issues. The Company has adopted a policy, in compliance thereof and has also constituted a Committee for its effective implementation, copy of which is also available on the website of the Company. During the financial year 2014-15, no cases in the nature of sexual harassment were reported at any workplace of Nandan Denim Limited. EXTRACT OF ANNUAL RETURN As provided under section 92(3) of the Act, the extract of annual return is given in 'Annexure - C in the prescribed Form MGT-9, which forms part of this report. CEO & CFO CERTIFICATION Certification from Mr. Deepak Chiripal, CEO and Mr. Sanjay Agrawal, CFO, pursuant to provisions of Clause 49(V) of the Listing Agreement, for the year under review was placed before the Board of Directors of the Company at its meeting held on May 29,2015. A copy of the certiicate on the inancial statements for the inancial year ended March 31, 2015 is annexed along with this Report. SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE There are no significant / material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the financial year ended March 31, 2015. CREDIT RATING: During FY15, Brickworks has assigned a rating of BWR A-/A2+ to the bank facilities of Nandan Denim Limited. The rating reflect the promoters' strong industry experience, established track record of the Company, fully integrated operations, strong economies of scale with largest installed capacity for denim in India, established customers with strong domestic distribution network, moderate financial profile marked by moderate net worth with adequate debt protection metrics. RELEASE OF PLEDGED SHARES During the year under review, total 89,50,000 pledged shares of Nandan Denim Limited were released. The percentage of pledged shares to the total shareholding held by the Promoter Group was reduced from 73.80 % to 37.97%. Further, the percentage of pledged shares to the total equity shareholding of the Company came down to 23.14% from 42.79%. GREEN INITIATIVES In order to save environment by cutting down the consumption of paper, the Ministry of Corporate Affairs (MCA) has introduced "Green Initiative in Corporate Governance" by allowing paperless compliance by companies under the provisions of the Companies Act. MCA had further announced that the Directors of the Company may participate in a meeting of Board or Committee of Directors, under the provisions of the Companies Act, through electronic mode. Participation of Directors in the Board or its Committee meetings through video conferencing is an approved way of attending the meetings and such participation is considered for the purposes of quorum, authority, etc. The Companies are also mandated to conduct the postal ballot through electronic means only. The facility of electronic voting was offered to the shareholders for the postal ballot process undertaken by the Company for approval of issue of shares on preferential basis, the issue was later on withdrawn. In future, if any requirement of passing resolutions through postal ballot, Nandan Denim Limited will conduct the ballot process in the e-voting mechanism. NDL started sending documents like notices convening General Meetings, Financial Statements, etc. including Annual Reports in electronic form, to the email addresses made available to us by the depositories from time to time. We appreciate the initiative taken by MCA as it helps in prompt receipt of correspondence and also avoids delay or losses caused through post. Therefore, we are publishing only the statutory disclosures in the print edition of the Annual Report. Annual Report containing additional data is available on our website namely www.nandandenim.com Further, as a member, you will be entitled to be furnished with a copy of the above mentioned documents as required, free of cost, upon receipt of a requisition from you any time. We would appreciate your support on our desire to participate in the green initiative. ACKNOWLEDGEMENT Your Directors place on record their appreciation for co-operation and support received from various Departments of the Government of India, State Governments, banks, financial institutions, Registrar of Companies, suppliers, other regulatory authorities, shareholders, etc. the management would like to express their appreciation for the contribution and dedication of its employees at all levels and collaboration of the workers of the Company as we believe that employees form the pillars on which the success of the organization depends. For and on behalf of the Board of Directors Vedprakash Chiripal Chairman DIN:00290424 Brijmohan Chiripal Managing Director DIN:00290426 Place : Ahmedabad date : May 29,2015 |