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Liberty Shoes

BSE: 526596|NSE: LIBERTSHOE|ISIN: INE557B01019|SECTOR: Leather Products
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Directors Report Year End : Mar '16    Mar 15

Dear Shareholders,

The Directors have pleasure in presenting the 30th Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31stMarch, 2016. In addition to the Audited Financial Statements for the financial year ended 31st March, 2016, your Company has also presented its consolidated financial statements after considering the Audited.

-Annual results of its overseas wholly owned subsidiary Liberty Foot Fashion Middle East FZE in accordance with the requirements of the applicable Accounting Standards and provisions of the Listing Agreement/Regulations with the Stock Exchanges.

Financial Highlights (Standalone):

The highlights of the financial statements are as under:-

(Rs. In Lakh

Particulars

2015-16

2014-15

Gross Sales

47,065.86

54,646.16

Less: Excise Duty

1,817.75

2,257.15

Net Sales

45,248.11

52,389.01

Add: Other Income

202.62

228.30

Revenue from Operations and Other Income

45,416.53

52,617.31

Profit before Depreciation, Finance Costs and Tax (EBITDA)

4,344.89

4,420.43

Less: Finance Costs

1,639.21

1,606.68

Less: Depreciation & Amortization

1,349.79

1,242.38

Profit Before Exceptional Items (PBT)

1,355.89

1,571.37

Less: Exceptional Items

117.69

71.34

Profit Before Tax Expense

1,238.20

1,500.03

Less: Tax Expenses

217.47

(206.17)

Net Profit for the year (NP)

1,020.73

1,706.20

Proposed Dividend (Including Provision for Corporate Dividend Tax)

-

307.93

Review of the operations of the Company:

During the financial year ended 31st March 2016, your Company has recorded a turnover of Rs.47,066 Lakh as against Rs.54,646 Lakh during the corresponding previous year. The Net Profit of your Company, for the year under consideration, remained at Rs.1, 020.74 Lakh as against Rs.1 and 706.20 Lakh during the corresponding previous year. The Net Profit of your Company for the financial year ended 31 st March, 2016 is after considering effect of Exceptional items of Rs.117.68 Lakh (Previous year Rs.71.35 Lakh) (as per details mentioned in notes note 2.26 of the notes to Financial Statements of the Company attached with this Annual Report).

Your Company, on consolidation basis with its wholly owned subsidiary Company Liberty Foot Fashion Middle East FZE, Dubai, recorded a turnover of Rs.47,066 Lakh and achieved a Consolidated Net profits of Rs.1,005.53 Lakh as the WOS has not yet commenced its operations.

Your Company performance for the current financial year ended 31st March, 2016 in terms of its overall turnover and profitability has witnessed decline as against the previous year but has registered growth of around 20% in Sales at the Company Owned Company Operated (COCO) showrooms, whereas same stores sales, your Company has witnessed around 11% growth. This shows the satisfaction level of the customers in Liberty Brand. Your Company''s institutional Sales segments, being major contributor in sales of the Company, could not succeed in bagging repetitive big institutional orders which has majorly impacted the top line of the Company. For the respective last 2 years, your Company has executed this Institutional orders worth Rs.50 Crores in each year. The exports, due to slow down in global economies & steep fall in oil prices world over, has also impacted your Company''s performance in overseas market and witnessed declining trend during the year under consideration.

The Commodity prices and inflation of India during the year consideration remained under control but due to poor consecutive monsoon and drought in major states of the Country deprived the people living in rural areas from using their available resources for spending on footwear which has adversely affected the Company''s performance on the domestic front.

Your Directors are concerned with the Company''s performance during the year under consideration and believing that this phase would be temporary and with all round measures for efficiency improvements will results in improved performance in future.

Your Company, to regain its earlier position amongst the organized footwear players, has been continuously focusing by improving its collections in categories for Men, Women and Children by providing good quality products with latest and advanced designs at inspirational prices to cater the customers'' value for money products. Your Company, as its pursuit of retail expansion, has been very conservative in opening of new retail stores during the year and kept focusing on same stores growth by improving efficiency in terms of replenishment and feed the stores afresh with latest merchandise. Your Company, in order to expand its retail network, has been focusing on tier -1 and tier-

2 cities of India which will improve its reach to the untapped market and hope that focus on same stores growth with selective expansions will give better results for the Company in the years to come.

As informed earlier, the respective arrangements with M/s. Liberty Enterprises (LE) and Liberty Group Marketing Division (LGMD), the two partnership firms in which few directors are interested, through which rights to use their manufacturing facilities and intangible assets of the said firms against minimum guaranteed annual fees, were available with the Company until 31st March, 2015. Your Company had entered in to Memorandum of Understanding with M/s Liberty Enterprises (LE) & M/s Liberty Group Marketing Division (LGMD) for purchase or otherwise takeover the Footwear Business (including, amongst others, the Sub Brands and Distribution Networks) of the said Firms and were proposed to be completed by 31st March, 2016 subject to the approval of the shareholders and the requisite statutory approvals required, if any. However, due to some technical and legal issues, the same could not be consummated till 31 st march 2016 and considering the enduring benefits and requirements of the business of the Company, the earlier arrangements have been again renewed afresh for further period of 1 year i.e till 31st March, 2017 on the same terms and conditions including fees. Your directors are in talks with the concerned partners/ person for acquisition of the assets of the above partnership firms before the end of the existing arrangements subject to shareholders and statutory approvals wherever required.

Your Directors are pleased to inform you that your Company has been awarded with Make in India awards 2015 for excellence in Leather Footwear during the year under consideration besides receiving of recognitions by leading business and industrial magazines/news papers.

Credit Rating:

During the year under review, Care Analysis and Research Limited (CARE), the leading rating agency has re-affirmed its rating CARE A (-) pronounced as CARE A Minus for the Long Term banking facilities and CARE A2 ( ) pronounced as CARE A (Two Plus) for Short Term banking facilities sanctioned to the Company.

Subsidiary Company & Consolidated financial statement:

Liberty Foot Fashion Middle East FZE (LFF), Dubai (Wholly Owned Overseas Subsidiary)

The Wholly Owned Overseas Subsidiary of the Company M/s Liberty Foot Fashion Middle East FZE (LFF), Dubai has not yet started its operation and has incurred nominal routine expenses during the year under consideration which has been accounted while consolidating its financial statements with the Company. Your Company till 31st March, 2016 has invested a sum of Rs.302.42 Lakh (Previous Year Rs.302.42 Lakh) in LFF as its capital contribution. The financial results of LFF have been consolidated with the Company in compliance with Accounting Standards-21 of the Accounting Standards issued by the Institute of Chartered Accountants of India.

In accordance with Section 129 of the Companies Act, 2013 consolidated financial statements of the Company and its subsidiary Company is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 129 of the Companies Act, 2013.

The consolidated financial statements disclose the assets, liabilities, income, expenses and other details of the Company and its subsidiary.

Pursuant to provisions of first proviso of Section 129(3) of the Companies Act, a statement containing salient features of the financial statements of the Company''s wholly owned subsidiary are given in Annexure I in Form AOC-1 and the same forms part of this report.

Pursuant to the third proviso to Section 136 (1) of the Companies Act, 2013, the financial Statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of wholly owned subsidiary, are available on the website of the Company at www.libertyshoes.com. The annual accounts of the wholly owned subsidiary and the related information will be made available to any member of the Company/its wholly owned subsidiary seeking such information and are available for inspection by any member of the Company/ its wholly owned subsidiary at the Registered Office of the Company.

Appropriations:

Dividend

Your Directors, considering the financial requirement to the Company, have not recommended any dividend for the financial year ended 31st March 2016.

Transfer to Reserves

Your Directors proposed to transfer Rs.600.00 Lakh (Previous Year Rs.600.00 Lakh) to the General Reserves out of the profits available with the Company for appropriations. Accordingly, an amount of Rs.420.74 Lakh (Previous Year Rs.138.94 Lakh) has been proposed to be retained in the Profit & Loss Account of the Company.

Employees Stock Option Scheme(s)

During the year ended 31 st March, 2016, your Company has not floated any scheme in relation to Employees Stock Option(s) and no such further plans have been initiated at present in this regard.

Nomination and Remuneration Policy

Your Board of Directors, on the recommendation of the Nomination and Remuneration Committee, framed and adopted a policy for selection, appointment and remuneration of Directors and Senior Management Personnel. The contents of the Policy and evaluation criteria have been stated in the Corporate Governance Report. The above Nomination and Remuneration Policy is set out in Annexure-II of this Report. The Policy is also available on the website of the Company i.e. www.libertyshoes.com.

Policy on Prevention of Insider Trading

Your Company has adopted a code of Conduct for Prevention of Insider Trading with a view to regulate trading in Equity Shares of the Company by the Directors and designated employees of the Company. The said Code of Conduct is available on the website of the Company at www.libertyshoes.com. The Code requires pre-clearance for dealing in Company''s shares and prohibits purchase or sale of shares in your Company by the Directors and designated employees, while they are in possession of unpublished price sensitive information and also during the period when the Trading Window remains closed.

Familiarization Program

In order to encourage active participation of Independent Directors and in order to understand the business environment, your Company has been familiarizing the Independent Directors on its Board with detailed presentations by its business functional heads on the Company operations, strategic business plans, new products and technologies, including significant aspects of the Industry and its future outlook. Once appointed, the Non Executive & independent Directors undergo the familiarization program of the Company. The Non executive & independent Directors are also provided with financial results, internal audit findings and other specific documents as sought from time to time. They are also made aware of the various policies and code of conduct and business ethics adopted by the Board. Details of familiarization programs extended to the Non Executive & Independent Directors during the year under consideration are disclosed on the Company website at www.libertyshoes.com.

Risk Management Policy & Risk Management

The Management of the Company has always been consciously reviewing its business operations in accordance with set rules and procedure and if any deviation or risk is found, remedial and effective steps are being taken to minimize the deviation and risk. In line with the provisions of Section 134 (3) (n) of the Companies Act, 2013, the Company has developed a Risk Management Policy to build and establish the process and procedure for Identifying, assessing, quantifying, minimized, mitigating and managing the associated risk at early stage. Policy is aimed to develop an approach to make assessment and management of the risks in financial, operational and project based areas in timely manner. The main objectives of the Risk Management Policy is inter-alia, to ensure that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed, to protect the brand value through strategic control and operational policies and to enable compliance with appropriate regulations wherever applicable, through the adoption of best practices. The Board of Directors of the Company assesses several types of risks which include Business Environment Risks, Strategic Business Risks, and Operational Risks etc. The Board of Directors periodically reviews and evaluates the risk management system of the Company so that the management controls the risks through properly defined networks. Head of the Departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and Audit Committee. No risks threatening the existence of the organization have been identified. However there are other risks against which adequate mitigation plans are prepared.

The Risk Management policy is available on the Company''s website of the Company at http://investor.libertyshoes.com/doc/Risk_ Management Policy.

Whistle Blower Policy (Vigil Mechanism)

As per the provisions of Section 177 (9) & (10) of the Companies Act, 2013 read with Regulation 22 of Listing Regulations, your Company has an effective mechanism of reporting illegal or unethical behavior. The Company has a Whistle Blower Policy (vigil mechanism) wherein the directors, employees, consultants and contractors are free to report violations of laws, rules and regulations or unethical conducts, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy to the nodal officer. The mechanism followed is appropriately communicated within the Company across all levels and has been posted on the Notice Board of the Company. The confidentiality of those reporting violations etc. is maintained and they are not subjected to any discriminatory practice. The concern can be reported by sending an e-mail message at the dedicated address viz.

ethicscounsellors@libertyshoes.com . Individuals can also raise their concerns directly to the CEO or the Chairman of the Audit Committee of the Company. Any allegation falling within the scope of the concerns are identified, investigated and dealt with appropriately. The Audit Committee periodically reviews the functioning of this mechanism. The Vigil mechanism established in the Company provides adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism. During the year, no personnel of the Company was denied access to the Audit Committee. The details of establishment of Vigil mechanism/ Whistle Blower Policy of the Company are available at the website of the Company viz. www.libertyshoes.com.

Buy Back of Equity Shares:

Your Company has not undertaken any exercise to buy back its Equity Shares from the shareholders during the year under review.

Public Deposit(s):

The Company has not accepted/renewed any public deposits and as such, no amount on account of principal or interest on deposits from public was outstanding as on date of the balance sheet.

Board of Directors and Key Managerial Personnel:

Retirement by rotation of the Directors

Sh. Adeesh Kumar Gupta & Sh. Ashok Kumar, Directors of the Company will retire by rotation at the 30th Annual General Meeting in pursuance of the provisions of Section 152 of the Companies Act, 2013 and being eligible have offered themselves for the re-appointment at the 30th Annual General Meeting.

Appointment(s) and Cessation of office of Directors

(a) Appointment /Re-appointment of Directors

During the year under consideration, there is no appointment/re appointment of any Director in the Company. Pursuant to the recommendation of Nomination and Remuneration Committee, your Board of Directors, considering experience, qualification and valuable contribution in the Company, in their meeting held on 30th May, 2016 approved, subject to members'' approval, re appointment of Sh. Adeesh Kumar Gupta as Executive Director of the Company i.e. 1st October, 2016 for a further period of 2 years on the same terms and conditions including minimum remuneration, payable to him for the position of Executive Director. The previous tenure of 5 years of Sh. Adeesh Kumar Gupta will expire on 30th September, 2016 which was approved by the members in their 25th Annual General Meeting held on 28th September, 2011. Accordingly, necessary resolution is being placed for the approval of the members at the 30th Annual General Meeting of the Company.

A brief profile along with necessary details of Director seeking their re-appointment has been provided in the Annexure-A of the Annexure to the Notice of the 30th Annual General Meeting as required under the provisions of Regulation 36 (3) of Listing Regulations.

(b) Cessation of Directors

During the year under consideration, Sh. Adarsh Gupta, Executive Director of the Company, due to his pre-occupation, has resigned from the position of Executive Director of the Company i.e. 18th August, 2015. The Board members acknowledged the valuable services rendered by Sh. Adarsh Gupta during his tenure as Executive Director of the Company and expressed its appreciation and gratitude for the same. Sh. Adarsh Gupta served the Company for more than 25 years in different capacities with his valuable knowledge and rich experience. He belongs to the promoter group of the Company.

Key Managerial Personnel

The following persons are the Key Managerial Personnel (KMPs) of the

Company as per the provisions of the Companies Act, 2013 -

Sh. Adesh Kumar Gupta - CEO & Executive Director

Sh. Shammi Bansal - Executive Director

Sh. Sunil Bansal - Executive Director

Sh. Adeesh Kumar Gupta - Executive Director

Sh. Ashok Kumar - Executive Director

Sh. Munish Kakra - CFO & Company Secretary

Committees of the Board

The Company''s Board has constituted the following Committees:

1. Audit Committee

2. Management Committee

3. Stakeholders Relationship Committee

4. Nomination and Remuneration Committee

5. Corporate Social Responsibility Committee

The detail of terms of reference of the Committees, Committee composition, meetings held during the year and attendance at the meetings of the Committees are provided in the Corporate Governance Report.

Number of meetings of the board

Five meetings of the board were held during the year. The detail of the composition, board meetings held during the year and attendance at the meetings are provided in Corporate Governance Report. The maximum time gap between two meetings did not exceed 120 days.

Annual Evaluation of Directors and Board as a whole

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations the Board is required to monitor and review the Board evaluation framework. In line with the Corporate Governance Guidelines, the Annual Performance Evaluation is conducted for all members as well as the working of the Board and its Committees. This evaluation is with specific focus on the performance and effective functioning of the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The evaluation process also considers the time spent by each of the Board Members, core competencies, personal characteristics, accomplishment of specific responsibilities and expertise. In addition, the Chairman is also evaluated on the key aspects of his role. The Board evaluation is conducted through questionnaire having qualitative parameters and feedback based on ratings. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The outcome of the Board evaluation for the financial year under consideration was discussed by the Nomination and Remuneration

Committee and Board at their meeting held on 31st March, 2016, excluding the director being evaluated.

In lines with the provisions of Companies Act, 2013 and Listing Regulation, separate meeting of the Independent Directors of the Company was held on 31st March, 2016 in the absence of no independent director and members of management to evaluate the performance of the non-Independent Directors and Board as a whole of the Company.

Attributes, Qualifications & Independence of Directors and their appointment

The criteria for determining qualifications, positive attributes and independence of Directors in terms of the Act and the Rules there under, both in respect of Independent Directors and other Directors as applicable, has been approved by the Nomination and Remuneration Committee during the financial year 2014-15. The Policy of the Company also provides that Non-Independent Independent Directors be drawn from amongst eminent professionals with experience in business/finance/ law/public administration & enterprises. The Board Diversity Policy of the Company requires the Board to have balance of skills, experience and diversity of perspectives appropriate to the Company. Directors are appointed/re-appointed with the approval of the Members for a shorter period say, two to five years only. All Directors, other than Independent Directors, are liable to retire by rotation and are eligible for re-election in terms of the provisions of Articles of Association. The Independent Directors of your Company have confirmed that they meet the criteria of independence as prescribed under section 149 of the Companies, Act, 2013 and Regulation 16 of Listing Regulations.

The Nomination and Remuneration Policy as approved by the Board of Directors of the Company has been attached to this report and also accessible on the website of the Company at www.libertyshoes.com

Events Subsequent to the Date of Financial Statements

As per the provisions of Section 134(3) (1) of the Companies Act, 2013, no material changes or commitments affecting the financial position have occurred between the end of financial year of the Company to which the financial statements relates to the date of the report.

The Ministry of Corporate Affairs, Government of India vide its Notification dated February 16, 2015 has issued the Companies (Indian Accounting Standards) Rules, 2015 which lays down a roadmap of Companies for implementation of Indian Accounting Standards (Ind AS). Every listed Company and their holding and subsidiary Companies (other than banking Companies, insurance Companies and non-banking financial Companies) are required to comply with Ind AS in preparation of their financial statements for accounting periods beginning on or after April 1, 2016, with the comparatives for the periods ending March 31, 2016. The provisions of above Rules will be applicable on your Company i.e. April 1, 2017 considering the Net worth of your Company as on March 31, 2014 is less than Rs.500 Crores. Your Company will adopt the In AS for accounting periods beginning on or after April 1, 2017 in preparation of its financial statements for the said periods. Further, since the provisions of said Rules is not applicable on overseas subsidiaries, therefore the overseas wholly owned subsidiary of your Company M/s Liberty Foot Fashion Middle East FZE in Dubai is not required to comply with In AS in preparation of their financial statements.

Change in the nature of Business, if any

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

Internal financial control systems and their adequacy

Liberty''s internal financial controls are adequate and operate effectively and ensure orderly and efficient conduct of its business including adherence to its policies, safeguard its assets, prevent and detect frauds and errors, maintain accuracy and completeness of its accounting records and further enable it in timely preparation of reliable financial information. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

The Company has in place an independent Internal Audit Department which is responsible for assessing and improving the effectiveness of internal financial control and governance. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

Declaration by Independent Directors

The Company has received necessary declarations from each independent director under Section 149(7) of the Companies Act, 2013, that she/he meets the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and Regulation 16 of th e SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.

Directors'' Responsibility statement

Pursuant to Section 134 (3) (c) of the Companies Act, 2013, yours Directors, based on the representations received from the management, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. 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;

iii. 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;

iv. They have prepared the annual accounts on a going concern basis;

v. They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2015-16.

Audit Committee and their Recommendations/ Observations

Your Board has a duly constituted Audit Committee in terms of Section 177 of the Companies Act, 2013 read with the Rules framed there under and Regulation 18 of the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015. The term of reference of the Audit Committee has been approved by the Board. The details pertaining to composition of Audit Committee, no. of meetings held during the year under review, brief term of reference and other details have been included in the Corporate Governance Report, which forms part of this report. The recommendations/observations of the Audit Committee placed before the Board during the financial year ended 31st March, 2016 in respect of matters pertaining to the financial management or any other matter related thereto, were considered and duly accepted by the Board of Directors of the Company.

Statutory Auditors and their Report

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed there under, M/s Pardeep Tayal & Co., Chartered Accountants (Registration No. 002733N), were appointed as the Statutory Auditors of the Company from the conclusion of the Twenty Eight (28th) Annual General Meeting held on 29th September, 2014 till the conclusion of the Thirty First (31st) Annual General Meeting of the Company to be held in the year 2017, subject to the ratification of their appointment by the Members of the Company in their every Annual General Meeting. A resolution to that effect forms part of notice of the 30th Annual General Meeting sent along with this Annual Report.

Auditors'' Report

Your Company''s Directors have examined the Statutory Auditors'' Report on Annual Accounts of the Company for the financial year ended 31st March, 2016. There are no reservations, qualification or adverse remark made by the Statutory Auditors in their Report and their clarifications, wherever necessary, have been included in the Notes to the Accounts section as mentioned elsewhere in this Annual Report.

Secretarial Auditors and their Report

Your Directors have appointed M/s Sanjay Grover & Associates, a Practicing Company Secretaries, in accordance with the provisions of Section 204 read with Section 179 of the Companies Act, 2013 and rule 8 of the Companies (Meetings of Board and its Powers), Rules, 2014 for the financial year 2015-16 for conducting the Audit of secretarial records of the Company and issue their report.

The Secretarial Audit Report in respect of secretarial records of the Company for the Financial Year ended March 31, 2016 has been submitted by M/s Sanjay Grover & Associates and taken on record by the Board of Directors of the Company. The Report of the Secretarial Audit in Form MR-3 for the financial Year ended 31st March, 2016 is enclosed to the Report. The Board members have examined the above said report and observed that there is no reservation, qualification and adverse remark made by the Secretarial Auditors.

Internal Auditors and their Report

Your Directors have appointed M/s Rakesh Kanwar & Co. Karnal, Haryana, Chartered Accountants, in accordance with terms of the provisions of Section 138 read with Section 179 of the Companies Act, 2013 and rule 8 of the Companies (Meetings of Board and its Powers), Rules, 2014 and rule 13 of the Companies (Accounts) Rules, 2014 for the financial year 2015-16 for conducting the Audit of the books of accounts and Internal Control system of the Company and to issue their report.

The Internal Audit Report in respect of books of accounts and Internal Control system of the Company for the Financial Year ended March 31, 2016 has been submitted by M/s Rakesh Kanwar & Co. Karnal, Haryana, Chartered Accountants which has been duly considered and requisite actions were taken by Audit Committee and reports thereon were also taken on record by the Board of Directors of the Company. The Board members have examined the above said report and observed that there is no reservation, qualification and adverse remark made by the Internal Auditors.

Particulars of Loans, Advances, Guarantees and Investments

The Company has not granted any loan, guarantee or made any investments during the year ended 31st March, 2016 under Section 186 of the Companies Act, 2013 and Rule made there under. Pursuant to Section 186 (4) read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), disclosure on particulars relating to Loans, advances and investments are provided as part of the financial statements.

Significant and material orders

During the year under consideration, 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.

Transactions with Related Parties

During the year 2015-16, all transactions entered by the Company with related Parties as defined under the Companies Act, 2013, Rules made there under, were in the Ordinary Course of Business and at Arm''s Length basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors. During the year under consideration, all related party transactions, non repetitive in nature for which omnibus approval was granted, are placed before the Audit Committee for its approval. Your Company does not have a material unlisted subsidiary as defined under Regulation 16 (1)

(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

There were no materially significant transactions with related parties during the financial year 2015-16 which were in conflict with interest of the Company. Your Company during the year, did not have any related party transactions which required prior approval of the Shareholders. However, the Company has been undertaking transactions for last so many years in respect of payment of Royalty/ Franchise fees to few of the related parties after obtaining the prior approval of shareholders and Central Government under the provisions of the Companies Act, 1956. All the related party transactions have been disclosed in the Notes to financial statements as required under AS-18 of Accounting Standard.

In line with the provisions of the Companies Act, 2013 and the Listing Regulations, the Board had approved and adopted policies on Related Party Transactions which has been uploaded on the Company''s website www.libertyshoes.com under the investor relations section.

Particulars of Employees

The information required under 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 given in Annexure III and the same forms part of this report.

During the financial year 2015-16, no employee, whether employed for whole or part of the year, was drawing remuneration exceeding the limits mentioned under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Extract of Annual Return

As provided under Section 92(3) of the Companies Act, 2013, the extract of annual return is given in Annexure IV in the prescribed Form MGT-9, which forms part of this report.

Corporate Social Responsibility (CSR)

Your Company has been involved in social initiatives for last three decades and engaged in various activities in the field of education, primary healthcare, communities, ecology and environment etc. It believes in long lasting impact towards creating a just, equitable, humane and sustainable society. In Liberty, CSR initiatives were being undertaken, long before the provisions of the Companies Act, 2013 and with the implementation of new provisions of Section 135 of the Companies Act, 2013, Liberty is committed to further strengthen its effort and activities by demonstrating care for the community through its focus on education and development of skills, health and wellness including treatment for poor, needy & uninsured people, environment sustainability including promoting of green initiatives and Improvement of the living conditions of inhabitants and support to disaster relief efforts etc. The various CSR initiatives undertaken by your Company during the year under consideration are as under:-

1. Promoting Education and Skill development

Liberty has identified schools and institutions around its Plant/Offices and made contributions/sponsorships for providing education to children who can''t afford it. It has sponsored quality education and healthcare, providing of balanced nutrition to under privileged children for their holistic development so that they can lead better life and can contribute to the society as responsible citizens etc. In addition to this, it has provided free of cost footwear to various school/institutions for distribution amongst the children/students who can''t afford it.

2. Promoting Preventive and other Health Care

Liberty has provided free of cost/ concessional medical aids and testing facilities to the poor and needy people by making its suitable contribution to Hospital etc. at Karnal.

3. Rural Development

With due permission of State Government Liberty has adopted village/rural areas in Karnal for their development and uplifting the life of the villagers residing there by fulfilling the necessary and essential requirements of survival including providing of working conditions and opportunities for gainful, employment of women and skill development. It has also contributed in the Karnal Vikas Nidhi Scheme initiated by State Government for the development of Karnal and its rural areas and villages like to undertake all work related to improvement of society, promotion of communal and societal harmony and brotherhood, to create awareness and addressing social evils, promotion and progress of agriculture and animal husbandry, promotion of small scale industries, to take up programs in which science and technology have major role, minimizing unemployment among youth of weaker section of society, women empowerment etc.

4. Promoting of Sports

Liberty has made contribution to registered Sports Associations at Karnal which provides training to youth/young athletes of Haryana to prepare and make them ready to participate in National Games/ Olympics.

5. Environmental sustainability

Liberty is ensuring environmental sustainability, conservation of natural resources, animal welfare and maintaining of quality of soil, air and water through plantation and installation of solar plants at our Plants/ Offices. Besides this the Company has also donated free of cost footwear to World Wild life Fund (WWF) for the protection of wild animals in India.

6. Other CSR activities and initiatives:

Liberty has contributed for the promotion of religious activities by contributing to temples/Pooja/various registered Kalyankari Sabhas and societies and also contributed to the Association incorporated with the objective of development of trade to which your Company belongs.

During the year under consideration the Company has complied with the provisions of Companies Act, 2013 by making the required contribution on the activities as stated in Schedule VII of the Act. The annual report on Corporate Social Responsibility activities as required under Sections 134 and Section 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Rule 9 of the Companies (Accounts) Rules, 2014 is provided in Annexure V of this report. The policy is also available on the website of the Company at www.libertyshoes.com.

Disclosure under the Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013

Your Company has always believed in providing a safe and harassment free workplace for every individual working in Liberty''s premises through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee which is responsible for redressed of complaints related to sexual harassment and follows the guidelines provided in the policy. The said Committee has its presence at corporate office as well as at plants.

During the year ended 31st March, 2016 the Committee did not receive any complaint pertaining to sexual harassment.

Corporate Governance and Ethics

Your Company believes in adopting best practices of corporate governance. Corporate Governance principles are enshrined in the spirit of Liberty, which form the core values of Liberty. These guiding principles are also articulated through the Company''s Code of Conduct, Corporate Governance guidelines, Charter of various Sub-Committees and disclosure policy.

As per regulation 34 of the Listing Regulations, a separate section on corporate governance practices followed by your Company, together with a certificate from Statutory Auditors M/s Pardeep Tayal & Co., Chartered Accountants, on compliance with corporate governance norms under the Listing Regulations, is given at page no. 39 to page no. 57 of this Annual report.

Management Discussion and Analysis Report

In terms of Regulation 34 of the Listing Regulations, the Management Discussion and Analysis report on your Company''s performance, industry trends and other material changes with respect to your Company and its wholly owned subsidiary, wherever applicable, are presented at page no. 59 to page no. 61 of this Annual report. The Management Disclosure and Analysis Report provides a consolidated prospective of economic, social and environmental aspects material to our strategy and our ability to create and sustain value to our key stakeholders.

Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and outgo:

Information in accordance with the provisions of Section 134 (1) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 in relation to conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo is given in the Annexure VI, which forms part of this report.

Outstanding Share Capital and its Listing:

Your Company has outstanding Share Capital of Rs.17,04,00,000/ (Previous Year Rs.17,04,00,000/-) consisting of 1,70,40,000 (Previous Year 1,70,40,000) Equity Shares of Rs.10/- each and these Equity Shares are presently listed and available for trading at National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE).

Acknowledgments and Appreciation:

Your Directors take this opportunity to place on record their sincere appreciation for the consistent cooperation and support received from the shareholders, Bankers, Channel Partners and the Government Authorities.

Your Directors also place on record their deep appreciation to the employees at all levels for their hard work and dedication.

For and on behalf of the Board of Directors

Adesh Kumar Gupta Chairman of the Meeting DIN: 00143192

Place: Gurugram, Haryana Dated: Monday, 30th May, 2016

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