DIRECTORS’ REPORT TO THE MEMBERS

Dear Members,

The Directors have pleasure to present the 35th Annual Report on the business and operations of Khadim India Limited (“the Company”) together with Audited Financial Statements for the Financial Year ended 31st March, 2016.

Financial Results

The Company’s financial performance for the year ended March 31st, 2016 is summarized below:-

Amount in Rs.

Dividend

No dividend is recommended for the financial year ended 31st March 2016. 

Reserves

No amount has been transferred to the General Reserve for the financial year ended 31st March 2016.

Operations and State of Company’s  Affairs

Operations

During the financial year ended 31 st March 2016 your company recorded a gross turnover of Rs. 534.52 Crores in comparison to gross turnover of Rs. 460.15 crores during the financial year ended 31st March 2015. The net profit of your Company for the financial year ended 31st March 2016 stood at Rs. 25.24 crores in comparison to loss of Rs. 18.66 crores during last financial year ended 31st March 2015.

Your Company’s turnover during the year recorded a growth of 16.16 % compared to the financial year ended 31st March 2015. Your Board is happy to inform that during the year under report performance of your Company exceeded the budgeted figures.

As informed in the last Annual Report several corrective measures have taken like cost reduction initiative, liquidating inventory level through various incentives, optimizing  the capacity of  Panpur and Kasba Factories etc.

Your Company has opened 79 retail outlets including 53 BOs/EBOs, 17 FRMs and 9 COOs during this period. In the Non Retail segment your Company has added 71 new distributors during the year making the total numbers of distributors across the country crossing 500. During the year under report your Company has taken initiative to renovate its existing COOs / BOs / EBOs to match them with the ultra-look and décor of the new outlets. Keeping in mind the potential of western zone in which your Company has not penetrated substantially; your Company has opened a new store at Vile Parle, Mumbai, on a test basis during the year under report. Your Company has collaborated with Brands like Pantaloons; Reliance Footprints; Globus etc.to increase its presence in the retail segment. Your Company has opened various mega EBOs during this period including EBO at Raja Bazar Patna.

Manufacturing

 During the year under report, 85.77 lakh pairs of footwear have been produced in Panpur Factory  as against 53.04 lakh pairs in the last financial year, resulting an overall productive growth of 55% considering both the Factories. During the year, various new footwear items were introduced in PVC/DIP, Stuck-on and Hawaii (both Premium and Fabricated) categories. PVC injection molding process has been introduced in Panpur Factory resulting increase in supply corresponding to demand for trendy and designer footwear. In the category of Premium and Fabricated Hawaii of higher product value, the Company has produced 12.81 lakh pairs during the year under report.  In order to strengthen its position in the organized footwear market in India, your Company has been continuously improving its collection of various range of footwear across all categories – men, women and children. It has also been introducing new varieties of footwear which are trendy, stylish and also affordable.

Supply Chain Management

Your Company has standardized new and old footwear accessories line bearing in mind the present market trend and demand. During the year under report, stock corrections have been made by way of numerous strategies like salesman’s incentives, discount and extra margin to dealers and Distributors for slow/non-moving stocks. Your Company has attained optimal inventory control through steady supply of products by proper Vendor Management and regulation of ordering system. Improved Quality Control has also been achieved through more control on major components and raw materials which are essential (e.g.- Sole, Insole, Adhesive, Uppers etc.) to make footwear / accessories and increased involvement  into the production process of each and every vendor. The gross margin has been improved considerably through better vendor negotiations, effective process controls, proper merchandising and innovative Product Development. Customers’ and Stakeholders’ satisfaction has been ensured through improved quality control, faster delivery and speedy order fulfilment. 

Brand and Marketing

During the year 2015-16, there has been considerable focus on all aspects of Brand Marketing, such as Television, In-store, E-commerce and Social Media marketing, including Sponsorship in Sporting events. Retail consumer schemes such as ‘Milega Much More’ and ‘Great Loot offer’ - scratch card schemes have helped the Company reach out to both its existing customers as well as attract new customers. Successful TV brand campaign, Walk Your Talk, not only gave brand Khadim’s the desired exposure but also helped to boost sales during the festive season. It helped to showcase the brand in the National Television channels. There has been noticeable growth in the e-commerce sector with the help of renowned online marketplace management services. In addition to Flipkart and Snapdeal, brand Khadim’s now enjoys a presence in Amazon and Jabong, and many other online players like eBay, Paytm, Shopclues, Indiarush, Limeroad, Voonik and RediffShopping, contributing to wider customer reach and sales, especially in areas without our retail presence. Social media branding activities by empanelled digital agency has also resulted in wider exposure and awareness of the brand. The Company’s association and sponsorship of team KKR in IPL 2016 and subsequent in-store activity has given an incredible boost to the brand’s image as well. In the Distribution sector, the Company continues to provide our channel partners with marketing collaterals for improved sales. The website of the Company has been revamped in order to provide better edge and service to the stakeholders and customers.

Finance

During the year, with an improved and efficient working capital management aided by a significant growth in cash profits, the Company managed to keep its debt levels lower than the previous year and hence achieved major savings in terms of interest expenditure. Interest rate cuts by the RBI ensured that the average working capital cost also came down by almost 40 basis points. Further, the Company did not have to raise any new funds from the bankers to meet its short / long term requirements.

Internal Audit & Internal Control Systems

In discharging the various audit functions the Internal Audit Department of your Company, like earlier years, has correspondingly focused on review of existing Internal Controls both on financial and operational functions and ensured controls are in practice. Moreover, enhancement of controls with implementation of the same, wherever needed, has also been carried out.

The Internal Audit and Internal Control System of your Company have been set and designed adequately in different functions of operations as an ongoing practice considering the type of business and the level of operations to prevent any loss or misappropriation. Under the existing system, cases of deviations from the pre-set Rules or otherwise become identified and rectified on time. All significant observations with the corrective actions of Internal Audit have been reported quarterly before the Audit Committee of the Board of Directors for their knowledge, valued guidance and direction.

Human Resource Management

Your Company recognizes Human Resource as the most important element of the business which will deliver the expected business goals, thus it considers each employee as a talent and focuses on development and retention of the talent through various HR interventions. Most of the employees have grown with the Company and has been consistently delivering. There has been a focus on the people processes to deliver the best of services to our esteemed customers. Your Company is professionally managed by group of experienced and competent senior leadership team, which continuously drives to achieve the business goals.

Your Company wishes to express its appreciation to all the employees for their outstanding contribution to the business. Company introduced the incentive plan for the frontline employees to boost the productivity.

Your Company is focused on introducing the most contemporary Human Resource practices and to recruit, retain and develop the highest quality people with diverse background.

Information Technology

Your Company has successfully implemented Microsoft Dynamics AX as its core application.  Online physical stock taking process in Factories has been implemented without hampering normal operations. Towards supply Chain optimization, a specialized and renowned group was engaged and accordingly the applications of the Company have been streamlined to generate automatic rationing, automatic norm suggestion, Phase-out suggestion, Dynamic Buffer Management, Trend Management etc. Your Company has replaced its existing system of Attendance through Machine in all the COOs by application software namely Retail Management System (RMS).  

Share Capital

The paid up equity Share Capital as on March 31, 2016 was Rs.17,29,85,310/- divided into 1,72,98,531 equity Share of face value of Rs. 10/- each. No change in the Share Capital has been recorded during the financial year 2015-16.

Change(s) in the nature of the business

There has been no change(s) of business of the Company or in the nature of business carried on by the Company during the financial year under review.

Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report

No material changes and commitments affecting the Financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate and the date on which this Report has been signed.

Significant and material orders passed by the regulators/courts/tribunals impacting the going concern status and the Company’s operations in future

During the year under review, no significant and material orders have been passed by the regulators / courts / tribunals that may impact the going concern status and the operations of the Company in future.

Subsidiaries, joint ventures and associate companies

The Company does not have any subsidiary / associate / joint venture company for the year ended 31st March 2016.

Deposits

During the year under review the Company has not accepted any deposit from public within the meaning of chapter V of the Companies Act, 2013.

Corporate Social Responsibility

The provisions of the Companies Act, 2013 regarding Corporate Social Responsibility are applicable to the Company and towards this end the Company has adopted a comprehensive and Revised CSR Policy duly recommended by the CSR Committee vide its Meeting held on 25th March 2016, which defines the framework for your Company’s CSR Program. The Board of Directors of the Company had reconstituted the CSR Committee vide its meeting held on 23rd May 2015, 10th March 2016 and 25th March 2016 during the year. The present constitution of the committee is as follows:

^ Mr. Vinayak Vishwanath Kamath has been appointed as a Member of the Committee w.e.f. 25th  March 2016 in place of Mr. Rahul Manek who has resigned from the directorship of the Company w.e.f. 17th March, 2016.

^^ Ms. Namrata Chotrani has been appointed as a Member of the Committee w.e.f. 10th March 2016 in place of Mr. Rubin Chheda who has resigned from the directorship of the Company w.e.f. 16th February, 2016

^^^ Mr. Abhijit Dan has been appointed as Secretary to the Committee w.e.f. 4rd May 2015 in place of Mr. Joydev Sengupta who has resigned from the Company as CS & Head-Legal w.e.f. 31st March 2015

In respect of Company’s contribution towards Corporate Social Responsibility activities for the financial year 2015-16 your Company intend to donate an Ambulance near vicinity of Panpur Factory of the Company as decided in the Board and CSR Committee meetings dated 25th March 2016. A provision of Rs. 8,50,00/- (calculated pursuant to provisions of section 135(5) of the Companies Act, 2013) has been made during the year under report for purchase of the Ambulance under promotion of healthcare including preventive health care. Your Company is in the process of identification of registered society / Trust / Public Body etc. to which the Ambulance will be donated to the extent possible in terms of the contemplation expressed in the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules 2014.      

Business Risk Management

Your Company monitors its major risks and concerns at regular intervals through effective Internal Control System. Your Company has constituted a Risk Management Committee which has been entrusted, inter alia, with the responsibility of overseeing and approving the Company’s risk management framework. The risk management framework works at various levels across the organization. The Company has a robust Organizational structure for managing and reporting on risks. The Risk Management Committee is also empowered to review and recommend to the Board the modifications to the Risk Management Policy.  

Vigil Mechanism and Whistle Blower Policy

In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standard of professionalism, honesty, integrity and ethical behavior the Company has adopted a comprehensive Vigil Mechanism Policy. 

Directors and Key Managerial Personnel

At the 33rd Annual General Meeting of the Company held on 29th September, 2014, the Company has appointed existing Independent Directors, viz. Dr. Indra Nath Chatterjee, Prof. Amar Nath Sadhu and Prof. Ashoke Kumar Dutta as Independent Directors under the Companies Act, 2013 for a period of 5 consecutive years from the conclusion of the 33rd Annual General Meeting. The said Directors are not liable to retire by rotation. All Independent Directors have given the declaration that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act in accordance with the provision of the Companies Act, 2013.

The Board of Directors of the Company (“the Board”) in its meeting dated 10th March 2016 has on recommendation of the Nomination and Remuneration Committee of the Board, subject to the approval of the members of the Company at the ensuing Annual General Meeting, re-appointed Mr. Siddhartha Roy Burman as Chairman & Managing Director (“Whole-time Key Managerial Personnel”) and Ms. Tanusree Roy Burman as Whole-time Director of the Company for a period of 3 years with effect from 1st  April 2016 till 31st  March 2019.

Mr. Rubin Chheda and Mr. Rahul Manek, have resigned from the directorship of the Company w.e.f. 16 February 2016 and 17 March 2016 respectively due to their non-association with the  Reliance Alternative Investment Fund –Private Equity Scheme –I of which they were representatives.

Ms. Namrata Chotrani (w.e.f. 10th March 2016) and Mr. Vinayak Vishwanath Kamath(w.e.f. 25th March 2016) have been appointed as nominee directors representing Reliance Alternative Investment Fund –Private Equity Scheme –I in replacement of Mr. Chheda and Mr.  Manek respectively.

Mr. Abhijit Dan has been appointed as Company Secretary & Head - Legal w.e.f. 4 May 2015 in terms of Section 203 of the Companies Act, 2013.

Meetings

For the Financial Year 2015-16, five meetings of the Board of Directors were held viz on 23rd May   2015, 31st July 2015, 17th November 2015, 10th March 2016 and 25th March 2016.

Composition of the Audit Committee

The present Composition of the Audit Committee is as under:

^^^^ Ms. Namrata Chotrani has been appointed as a Member to the Committee w.e.f. 10th March 2016 in place of Mr. Rubin Chheda who has resigned from the directorship of the Company w.e.f. 16 February, 2016

^^ Mr. Vinayak Vishwanath Kamath has been appointed as a Member to the Committee w.e.f. 25th  March 2016 in place of Mr. Rahul Manek who has resigned from the directorship of the Company w.e.f. 17 March, 2016.

^Mr. Abhijit Dan has been appointed as Secretary to the Committee w.e.f. 4th May 2015

Extract of Annual Return

The extract of the Annual return in the format MGT-9 for the Financial Year 2015-2016 has been enclosed with this report as Annexure “ A  ”.

Particulars of contracts and arrangement with Related Parties

During the year under report all the Transactions with the Related Parties as defined in the Companies Act, 2013 and rules framed thereunder were in the ordinary course of business and on Arm’s Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013, in Form AOC – 2 is not applicable.

Secretarial Auditor

The Board has appointed Ms. BKG & Company, Practicing Company Secretary to conduct the Secretarial Audit for the Financial Year 2015-2016. The Secretarial Audit Report for the Financial Year ended March 31st, 2016 is annexed herewith, marked as Annexure-“ B” to this report. The Secretarial Audit Report for the financial Year ended March 31, 2016 does not contain any qualification, reservation or adverse remark.

Directors Responsibility Statement

In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

a)        in the preparation of the annual accounts for the financial year ended 31st March 2016, 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 as at 31st March 2016 and of the profit of the Company for the year ended on that date;

c)   the Directors had 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)   the Directors had prepared the annual accounts on a going concern basis; and

e)   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 during the financial year ended 31st March 2016

Statutory Auditor and Auditors’ Report

Ms. Deloitte, Haskins & Sells (Firm Registration No-302009E, Chartered Accountants) have been appointed as Statutory Auditors of the Company at the Annual General Meeting of the Company held on 29th September, 2014 for a period of 4 years till the Financial Year 2017-2018 which has been ratified by the members in the last Annual General Meeting held on 24th September 2015.  They have confirmed their eligibility to the effect that ratification for their appointment, if made, in the ensuing Annual General Meeting would be within the prescribed limits mentioned in the Act and they are not disqualified for such ratification.

The Members are requested to ratify the appointment of the Statutory Auditors as aforesaid and fix their remuneration.

The Auditors’ Report does not contain any qualification, reservation or adverse remarks.

Cost Auditor

Although the Company is not coming under the purview of compulsory cost audit as per the Companies Act, 2013 your Company has continued with the service of the Cost Auditor for the Financial Year 2015-2016 and for the succeeding Financial Year.

Particulars of Loans, Investments, Guarantees etc.

In the Financial Year 2015-16, the Company has not made any investment, have not given any loans, have not provided any guarantees, have not provided any security in connection with any loan, have not acquired securities by way of subscription, purchase or otherwise in excess of the thresholds provided in Section 186 of the Companies Act, 2013.

Conservation of Energy, Technology absorption and Foreign exchange earnings and outgo

A) Conservation of energy

Energy conservation is an ongoing process in the Company through investments in the latest energy efficient technologies to conserve energy at all locations, plants and sites of the Company. As a part of your Company’s endeavor towards conservation of energy and prevention of energy wastage, constant steps are taken in order to conserve energy on an ongoing basis. In Manufacturing Unit at Panpur, the Factory Building has been designed by using Energy Conservation methods like use of Translucent Roofing Sheet which permit natural light inside the premises thereby reducing the need of electrical lights to a negligible level during  daytime, use of Turbo Vents and Ridge Vents and latest insulating materials for the roof and side panels for reducing the internal heat and thus keeping the temperature at a moderate level even during peak summer without use of air-conditioning. During the year under review, your Company has taken various steps to optimize the consumption of electricity by reducing operational losses as much as possible. Also through installation of Light Emitting Diode (LED) at various locations your Company has saved a considerable expenditure towards consumption of Electricity during the year under report.  Capital Investment of Rs. 22.17 lakhs has been made during the year for purchase of LED for the purpose of energy conservation / savings. Presently your Company is not using any alternate source of energy.

 (B) Technology absorption

No specific technology was absorbed, adapted or innovated and no separate expenditure was incurred on Research and Development during the year under report. No technology was imported during last five years. However, your Company, which is present in the retail segment, understands the importance of continuous improvement of the product line and development initiatives and thus continued to carry out various design development and improvement activities not only to keep itself abreast with the market but also to stay ahead of the times.

 (C) Foreign exchange earnings and outgo

The details of foreign earnings and outgo are as follows:

                                                                                                                                      Amount in Rs.

Particulars of Employees and related disclosures

Information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 has been enclosed with this report as Annexure “C”.

Disclosures under the Sexual Harassment of women at work place (Prevention, Prohibition & Redressal) Act, 2013

No case relating to the above has been filed during the year under report.

Nomination and Remuneration Policy

A Nomination and Remuneration Policy has been formulated pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Rules thereto stating therein the Company’s policy on Directors' appointment and remuneration by the Nomination and Remuneration Committee and approved by the Board of Directors of the Company.

Fraud Reporting

During the year under review, no fraud has been reported by auditors under sub-section (12) of section 143 of the Companies Act, 2013.

Acknowledgement

Your Directors would like to express their sincere appreciation for the assistance and cooperation received from the financial institution, banks, government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed service by the executives, staffs and workers of the Company.

For on behalf of the Board of Directors                                                  Place: Kolkata

                                                                                                               Date: 22nd July, 2016

Siddhartha Roy Burman

(Chairman and Managing Director)

Operations and State of Companys  Affairs Operations During the financial year ended 31 st March 2016 your company recorded a gross turnover of Rs. 534.52 Crores in comparison to gross turnover of Rs. 460.15 crores during the financial year ended 31st March 2015. The net profit of your Company for the financial year ended 31st March 2016 stood at Rs. 25.24 crores in comparison to loss of Rs. 18.66 crores during last financial year ended 31st March 2015. Your Companys turnover during the year recorded a growth of 16.16 % compared to the financial year ended 31st March 2015. Your Board is happy to inform that during the year under report performance of your Company exceeded the budgeted figures. As informed in the last Annual Report several corrective measures have taken like cost reduction initiative, liquidating inventory level through various incentives, optimizing  the capacity of  Panpur and Kasba Factories etc. Your Company has opened 79 retail outlets including 53 BOs/EBOs, 17 FRMs and 9 COOs during this period. In the Non Retail segment your Company has added 71 new distributors during the year making the total numbers of distributors across the country crossing 500. During the year under report your Company has taken initiative to renovate its existing COOs / BOs / EBOs to match them with the ultra-look and d?r of the new outlets. Keeping in mind the potential of western zone in which your Company has not penetrated substantially; your Company has opened a new store at Vile Parle, Mumbai, on a test basis during the year under report. Your Company has collaborated with Brands like Pantaloons; Reliance Footprints; Globus etc.to increase its presence in the retail segment. Your Company has opened various mega EBOs during this period including EBO at Raja Bazar Patna. Manufacturing  During the year under report, 85.77 lakh pairs of footwear have been produced in Panpur Factory  as against 53.04 lakh pairs in the last financial year, resulting an overall productive growth of 55% considering both the Factories. During the year, various new footwear items were introduced in PVC/DIP, Stuck-on and Hawaii (both Premium and Fabricated) categories. PVC injection molding process has been introduced in Panpur Factory resulting increase in supply corresponding to demand for trendy and designer footwear. In the category of Premium and Fabricated Hawaii of higher product value, the Company has produced 12.81 lakh pairs during the year under report.  In order to strengthen its position in the organized footwear market in India, your Company has been continuously improving its collection of various range of footwear across all categories men, women and children. It has also been introducing new varieties of footwear which are trendy, stylish and also affordable. Supply Chain Management Your Company has standardized new and old footwear accessories line bearing in mind the present market trend and demand. During the year under report, stock corrections have been made by way of numerous strategies like salesmans incentives, discount and extra margin to dealers and Distributors for slow/non-moving stocks. Your Company has attained optimal inventory control through steady supply of products by proper Vendor Management and regulation of ordering system. Improved Quality Control has also been achieved through more control on major components and raw materials which are essential (e.g.- Sole, Insole, Adhesive, Uppers etc.) to make footwear / accessories and increased involvement  into the production process of each and every vendor. The gross margin has been improved considerably through better vendor negotiations, effective process controls, proper merchandising and innovative Product Development. Customers and Stakeholders satisfaction has been ensured through improved quality control, faster delivery and speedy order fulfilment.  Brand and Marketing During the year 2015-16, there has been considerable focus on all aspects of Brand Marketing, such as Television, In-store, E-commerce and Social Media marketing, including Sponsorship in Sporting events. Retail consumer schemes such as Milega Much More and Great Loot offer - scratch card schemes have helped the Company reach out to both its existing customers as well as attract new customers. Successful TV brand campaign, Walk Your Talk, not only gave brand Khadims the desired exposure but also helped to boost sales during the festive season. It helped to showcase the brand in the National Television channels. There has been noticeable growth in the e-commerce sector with the help of renowned online marketplace management services. In addition to Flipkart and Snapdeal, brand Khadims now enjoys a presence in Amazon and Jabong, and many other online players like eBay, Paytm, Shopclues, Indiarush, Limeroad, Voonik and RediffShopping, contributing to wider customer reach and sales, especially in areas without our retail presence. Social media branding activities by empanelled digital agency has also resulted in wider exposure and awareness of the brand. The Companys association and sponsorship of team KKR in IPL 2016 and subsequent in-store activity has given an incredible boost to the brands image as well. In the Distribution sector, the Company continues to provide our channel partners with marketing collaterals for improved sales. The website of the Company has been revamped in order to provide better edge and service to the stakeholders and customers. Finance During the year, with an improved and efficient working capital management aided by a significant growth in cash profits, the Company managed to keep its debt levels lower than the previous year and hence achieved major savings in terms of interest expenditure. Interest rate cuts by the RBI ensured that the average working capital cost also came down by almost 40 basis points. Further, the Company did not have to raise any new funds from the bankers to meet its short / long term requirements. Internal Audit & Internal Control Systems In discharging the various audit functions the Internal Audit Department of your Company, like earlier years, has correspondingly focused on review of existing Internal Controls both on financial and operational functions and ensured controls are in practice. Moreover, enhancement of controls with implementation of the same, wherever needed, has also been carried out. The Internal Audit and Internal Control System of your Company have been set and designed adequately in different functions of operations as an ongoing practice considering the type of business and the level of operations to prevent any loss or misappropriation. Under the existing system, cases of deviations from the pre-set Rules or otherwise become identified and rectified on time. All significant observations with the corrective actions of Internal Audit have been reported quarterly before the Audit Committee of the Board of Directors for their knowledge, valued guidance and direction. Human Resource Management Your Company recognizes Human Resource as the most important element of the business which will deliver the expected business goals, thus it considers each employee as a talent and focuses on development and retention of the talent through various HR interventions. Most of the employees have grown with the Company and has been consistently delivering. There has been a focus on the people processes to deliver the best of services to our esteemed customers. Your Company is professionally managed by group of experienced and competent senior leadership team, which continuously drives to achieve the business goals. Your Company wishes to express its appreciation to all the employees for their outstanding contribution to the business. Company introduced the incentive plan for the frontline employees to boost the productivity. Your Company is focused on introducing the most contemporary Human Resource practices and to recruit, retain and develop the highest quality people with diverse background. Information Technology Your Company has successfully implemented Microsoft Dynamics AX as its core application.  Online physical stock taking process in Factories has been implemented without hampering normal operations. Towards supply Chain optimization, a specialized and renowned group was engaged and accordingly the applications of the Company have been streamlined to generate automatic rationing, automatic norm suggestion, Phase-out suggestion, Dynamic Buffer Management, Trend Management etc. Your Company has replaced its existing system of Attendance through Machine in all the COOs by application software namely Retail Management System (RMS).  

Conservation of Energy, Technology absorption and Foreign exchange earnings and outgo A) Conservation of energy Energy conservation is an ongoing process in the Company through investments in the latest energy efficient technologies to conserve energy at all locations, plants and sites of the Company. As a part of your Company’s endeavor towards conservation of energy and prevention of energy wastage, constant steps are taken in order to conserve energy on an ongoing basis. In Manufacturing Unit at Panpur, the Factory Building has been designed by using Energy Conservation methods like use of Translucent Roofing Sheet which permit natural light inside the premises thereby reducing the need of electrical lights to a negligible level during  daytime, use of Turbo Vents and Ridge Vents and latest insulating materials for the roof and side panels for reducing the internal heat and thus keeping the temperature at a moderate level even during peak summer without use of air-conditioning. During the year under review, your Company has taken various steps to optimize the consumption of electricity by reducing operational losses as much as possible. Also through installation of Light Emitting Diode (LED) at various locations your Company has saved a considerable expenditure towards consumption of Electricity during the year under report.  Capital Investment of Rs. 22.17 lakhs has been made during the year for purchase of LED for the purpose of energy conservation / savings. Presently your Company is not using any alternate source of energy.

 (B) Technology absorption No specific technology was absorbed, adapted or innovated and no separate expenditure was incurred on Research and Development during the year under report. No technology was imported during last five years. However, your Company, which is present in the retail segment, understands the importance of continuous improvement of the product line and development initiatives and thus continued to carry out various design development and improvement activities not only to keep itself abreast with the market but also to stay ahead of the times.

(C) Foreign exchange earnings and outgo       The details of foreign earnings and outgo are as follows:                                                                                              Amount in Rs. Sl. Particulars 2015-16 (a) Value of import on CIF basis                                 Raw material, components & spare parts      6,80,05,797   Finished footwear      9,46,71,396   Capital Goods - including Moulds      3,57,75,929 (b)  Foreign exchange Earning      1,86,83,198 (c) Foreign exchange outgo        12,24,616 (d) Others NIL  

Directors Responsibility Statement In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that: a)        in the preparation of the annual accounts for the financial year ended 31st March 2016, 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 as at 31st March 2016 and of the profit of the Company for the year ended on that date; c)   the Directors had 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)   the Directors had prepared the annual accounts on a going concern basis; and e)   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 during the financial year ended 31st March 2016