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Alok Industries Ltd.

BSE: 521070 | NSE: ALOKINDS | Series: NA | ISIN: INE270A01029 | SECTOR: Textiles - Weaving

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Annual Report

For Year :
2018 2016 2015 2013 2012 2011 2010 2009 2008

Director’s Report

This Report was discussed in a meeting held with the Key Management persons and thereafter taken on record by the Resolution Professional. Accordingly, Report for the year ended 31st March, 2018 is as under.

1. FINANCIAL RESULTS:

(Rs.in crore)

Particulars

Standalone

Consolidated

31.03.2018

31.03.2017

31.03.2018

31.03.2017

Revenue from operations

5381.95

8326.07

5562.08

8919.42

Operating Profit/ (Loss) before Interest, Depreciation and Taxes

(12993.75)

(1839.83)

(13311.20)

(1390.37)

Profit/ Loss Before Tax (after exceptional items)

(18204.43)

(5625.98)

(18567.15)

(5392.88)

Tax Expenses (including Deferred Tax)

11.19

(2123.56)

10.43

(2320.85)

Minority Interest and Share in Profit of Associates

0.00

0.00

(0.48)

(11.11)

Profit after Tax

(18206.82)

(3502.67)

(18578.06)

(3083.14)

2. COMPANY’S PERFORMANCE:

The total sales of the Company for the year under review amounted to Rs.5381.95 crores (including exports with incentives of Rs.922.82 crores).

The loss before tax was Rs.18204.43 crores mainly due to sub-optimum level of manufacturing operations, lower profitability, provision for doubtful debts and advances, higher interest burden and depreciation.

The Company was facing a financial crunch since early 2014, which led to the initiation of the corporate insolvency resolution process. The Company also took a conscious call to cease its trading business which further resulted in reduction in revenues.

A detailed analysis of financial results is given in the “Management Discussion and Analysis Report”, which forms part of this Report.

3. DIVIDEND:

There is no recommendation of dividend.

4. TRANSFER TO RESERVES:

In view of the losses, for the year under review, your Company has not transferred any amount to General Reserves.

5. SHARE CAPITAL:

The paid up Equity Share Capital as on 31st March, 2017 was Rs.13,773,178,950 comprising of 1,377,317,895 Equity Shares of Rs.10/- each. During the year under review, the Company has not issued any further shares to the members or general public.

6. EMPLOYEE STOCK OPTION SCHEME (ESOS):

During the year under review, the Company has not granted any stock options and hence the details of the shares issued under Employee Stock Option Scheme (ESOS) and also the disclosures in compliance with Section 62 of the Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 do not form part of this report. The earlier options granted to the employees lapsed during the financial year 2016-17 and the necessary disclosures had been provided in the Annual Report as at 31.03.2017. All the options granted to the employees of the Company in the past have been exercised or lapsed and there are no options outstanding as on date that can be exercised in the future.

7. FINANCE AND ACCOUNTS:

During the year under review, the Company availed an interim finance of Rs.150.00 crores, in terms of the Code, after commencement of the CIR process and a short term loan of Rs. 20.00 crores, prior to commencement of the CIR process for working capital. Out of the said loans the Company has repaid Rs.50.00 crores of interim finance, in line with the terms and conditions of the loan, as on 31.03.2018.

As mandated by the Ministry of Corporate Affairs, the Financial Statements for the year ended 31.03.2018 has been prepared in accordance with the Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to give a true and fair view of the state of affairs and profits and cash flows of the Company for the year ended March 31, 2018.

8. DEPOSITS

During the year under review, the Company has not accepted any deposit or renewed any Deposit within the meaning of Section 73 of the Companies Act, 2013 and the rules made thereunder.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

10. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with the relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and forms an integral part of this Report.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries/Associate Companies/ Joint Ventures is given in Form AOC-1 and forms an integral part of this Report.

11. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with the Section 135 of the Companies Act, 2013, comprising of 3 Directors including an Independent Director. Since the powers of the Board are suspended, the CSR Committee has not met during this period.

For the current financial year 2017-18, as the average profits for the last three years is negative, the Company does not have to spend any amount on CSR.

Financial year

Net profit/loss (Rupees in crores)

2015-2016

(4205.95)

2016-2017

(3502.49)

2017-2018

(18206.82)

Average profit/loss of last three financial year: (8638.42) crores

Further, due to paucity of funds, the company has also not been able to spend the amount required to be spent in FY 16-17 and FY 17-18 on CSR activities based on the results of the company for FY 2014-15.

The Company’s Policy on Corporate Social Responsibility has formally been put in place in the year 2014-15 and the Policy can be reached at our website www.alokind.com

12. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year, employee relations at all the Units remained cordial. This motivated work force has helped your Company to move along in spite of adversities. Most of the workforce at the plants and offices and senior management team, to their credit, has remained with the company in these trying times.

13. RISK MANAGEMENT

The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.

Pursuant to commencement of the CIR Process, the powers of the board of directors stand suspended and are exercised by the interim resolution professional or resolution professional, as the case may be, in accordance with the provisions of the Code. Accordingly, the Risk Management Committee as well as the Audit Committee has not met after 18 July 2017.

14. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Audit Committee. During the CIR process, the Chief Financial Officer (“CFO”) has been mandated by the Resolution Professional to evaluate the Internal Audit reports and ensure corrective actions. The Internal Audit is outsourced to external firms of Chartered Accountants and they evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. The Company has in place adequate internal financial controls with reference to financial statements and other matters.

15. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy to report genuine concerns or grievances for redressal. The Whistle Blower Policy has been posted on the website of the Company viz, www.alokind.com. Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee until 18 July 2017 and to the Resolution Professional thereafter and that no complaints were received during the year.

16. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

As on 31.03.2018, the Company had 9 subsidiaries (direct or step down), and was joint venture partner in two companies as under. Further Alok Infrastructure Limited divested its entire stake in its two joint ventures Ashford Infotech Private Limited and Alspun Infrastructure Limited during the year.

Subsidiaries of Alok Industries Limited

1. Alok Infrastructure Limited

2. Alok International Inc. (incorporated in the state of New York, USA)

3. Alok International (Middle East) FZE (incorporated in Dubai)

4. Alok Singapore PTE Limited (incorporated in Singapore)

5. Alok Worldwide Limited (incorporated in the British Virgin islands)

Step-down subsidiaries of Alok Industries Limited

1. Alok Industries International Limited (incorporated in the British Virgin Islands)

2. Grabal Alok International Limited (incorporated in the British Virgin Islands)

3. Grabal Alok (UK) Limited (incorporated in UK) (under liquidation w.e.f. 10th July, 2017)

4. Mileta, a.s.(incorporated in the Czech Republic)

Joint Ventures

1. New City of Bombay Manufacturing Mills Limited

2. Aurangabad Textiles and Apparel Parks Limited

Associates

Nil

During the year under review, one subsidiary company, Alok Global Trading (Middle East) FZE was voluntarily liquidated.

Alok Infrastructure Limited divested its entire stake in the equity and preference capital of two joint venture companies, namely, Ashford Infotech Private Limited and Alspun Infrastructure Limited during the financial year ending 31st March 2018.

Alok Infrastructure Limited has been admitted under the Corporate Insolvency Resolution Process in terms of the Insolvency and Bankruptcy Code 2016 on 24 October 2018.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC- 1 is attached to the Financial Statements. The separate audited financial statements in respect of each of the subsidiary shall be kept open for inspection at the Registered Office of the Company. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. The separate audited financial statements in respect of each of the subsidiary are also available on the website of the Company at www.alokind.com.

The Company has framed a policy for determining material subsidiaries, which has been uploaded on company’s website at www.alokind.com. In terms of the policy, none of the subsidiaries of the company was determined to be a material subsidiary by the Board of Directors in the previous years.

17. DIRECTORS AND KEY MANGERIAL PERSONNEL:

I. Appointments

During the year IFCI Limited nominated Mr. Suneet Shukla as the Nominee Director on the Board of the Company effective from 15th May, 2017 in place of Mr. Sachikanta Mishra.

II. Resignations

During the year, the Nomination of Mr. Sachikanta Mishra on the Board of the Company was withdrawn by IFCI Limited effective from 15th May, 2017. Further, IDBI Bank Limited withdrew nomination of Mr. Rajiv Kumar on the Board of the Company effective from 5th August, 2017.

Further, Mrs. Thankom Mathew, Independent Woman Director, citing other commitments, stepped down as the Director of the Company, effective from 1st December, 2017.

LIC of India has also withdrawn their nomination of Mr. Pradeep Kumar Rath on the Board of the Company effective from 9th May, 2018. Further, Mr. Atanu Sen nominated by State Bank of India on the Board of the Company has also tendered his resignation effective from 4th July, 2018.

III. Directors Retiring by Rotation

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Surendra B. Jiwrajka, Mr. Tulsi Tejwani and Mr. Senthilkumar M.A. will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for re-appointment. In accordance with the provisions of the Act, none of the Independent Directors are liable to retire by rotation.

IV. Key Managerial Personnel

The following are the Key Managerial Personnel of the Company during the financial year under review:

(1) Mr. Ashok B Jiwrajka - Executive Director & CE (Home Textiles),

(2) Mr. Dilip B. Jiwrajka - Managing Director & CE (Apparel Fabrics),

(3) Mr. Surendra B. Jiwrajka - Joint Managing Director & CE (Polyester),

(4) Mr. Senthilkumar M. A. - Executive Director & CEO (Processing),

(5) Mr. Tulsi Tejwani - Executive Director & CEO (Weaving)

(6) Mr. Sunil O. Khandelwal - Chief Financial Officer,

(7) Mr. K.H. Gopal - Company Secretary.

There is no change in the Key Managerial Personnel of the Company during the year under review.

18. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

As stated above, as the powers of the Board of Directors stood suspended post 18 July 2017, the Board met only once during the year under review and the details of which are given in the Corporate Governance Report forming part of this Annual Report. During the financial year ended 31 March, 2018, one Board Meeting was held on 30 May, 2017. The attendance of each of the Director was as under:

Sr. No

Names of the Directors who attended

1.

Mr. Surinder Kumar Bhoan

2.

Mr. Keshav D. Hodavdekar

3.

Mr. Ashok B. Jiwrajka

4.

Mr. Dilip B. Jiwrajka

5.

Mr. Senthilkumar M. A.

6.

Mr. Tulsi Tejwani

7.

Mr. Suneet Shukla

8.

Mr. Atanu Sen

9.

Mr. Pradeep Kumar Rath

10.

Mr. Rajeev Kumar

Names of the Directors who were granted Leave of Absence

1.

Mr. Surendra B. Jiwrajka

2.

Mrs. Thankom T. Mathew

19. COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

(1) Audit Committee;

(2) Remuneration and Nomination Committee;

(3) Stakeholders’ Relationship Committee;

(4) Corporate Social Responsibility Committee.

The details of the Committees along with their composition, number of meetings held and attendance at the meetings are provided in the Corporate Governance Report.

20. DIRECTORS’ EVALUATION:

In terms of SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2018, a company undergoing CIR process is not required to comply with the requirement of conducting evaluation of the independent directors. Therefore, subsequent to commencement of the CIR process the evaluation of the independent directors of the Company was not required to be carried out under the provisions of the Regulation 17(10) SEBI LODR Regulations. Further, in accordance with Rule 8(4) of Companies (Accounts) Rules, 2014, the board of directors of a company are required to evaluate its own performance and that of its committees and individual directors. However pursuant to commencement of the CIR process of the Company, the powers of the board of directors stand suspended and are exercised by the interim resolution professional or the resolution professional, as the case may be, in accordance with the provisions of the Code.

21. REMUNERATION POLICY

The Board on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The Remuneration Policy is explained in the Corporate Governance Report and is also available on the Company’s website at www.alokind.com.

22. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTOR(S):

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization program for the Independent Directors to familiarize them with their role, rights and Responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization program are explained in the Corporate Governance Report and are also available on the Company’s website at www.alokind.com.

23. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the provisions of Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

24. MANAGEMENT OPINION ON THE QUALIFICATIONS/EMPHASIS OF MATTERS/NOTES GIVEN BY AUDITORS: Auditors’ Qualification:

As per Ind AS 36 on Impairments of assets, the Holding Company is required to determine impairment in respect of fixed assets as per the methodology prescribed under the said Standard. However the Management of the Holding Company has not done impairment testing for the reasons explained in note no. 7 of the Financial Results. In the absence of any working for impairment of the fixed assets as per Ind AS 36, the impact of impairment, if any, on the Consolidated Financial Results is not ascertainable.

Management opinion:

The Company’s current level of operations, at about 30% of the capacity, may not be an indication of the future performance of the Company. A Resolution Plan for revival of the Company is under consideration of the Adjudicating Authority. Therefore, until a resolution plan has been implemented, reliable projections of availability of future cash flows of the Company supporting the carrying value of Property, Plant and Equipment cannot be determined, hence are not available. Accordingly Impairment testing under Ind AS has not been performed while presenting these results.

Auditors’ Qualification:

As mentioned in note no. 4 of the Financial Results, the Holding Company continued to recognize deferred tax assets upto March 31, 2017, Rs. 1423.11 crore. Considering the pending NCLT approval for resolution plan and absence of probable certainty and convincing evidence for taxable income in future, as required by the Ind AS - 12, we are unable to ascertain the extent to which these deferred tax assets can be utilized.

Management opinion:

The net deferred tax assets as on 31 March 2018 are Rs. 1423.11 crores (Previous Year Rs. 1423.11 crores). The Resolution Plan for the Company is under consideration of the Adjudicating Authority. Reliable projections of future taxable income, therefore, shall be available only when the Resolution Plan is implemented. Accordingly, deferred tax assets for the current period and the Financial Year are presently not recognised and the net deferred tax assets as at the end of the previous financial year have been carried forward. Since the company has continued to operate as a going concern in terms of the Code and expects that a resolution plan will be eventually admitted, based on the past normal level of operations of the company, the company expects that post implementation of the resolution plan, sufficient taxable income will be available for availing the deferred tax benefit.

Auditors’ Qualification:

The Consolidated Financial Results include the Unaudited Financial Results of two subsidiaries whose Ind AS Financial Statements reflect total assets of Rs. 380.37 crores as at 31st March, 2018, total revenue of Rs. 182.10 crores, net cash outflows amounting to Rs. 0.57 crores, net loss after tax of Rs. 464.61 Crores, and total comprehensive loss amounting to Rs. 464.61 crores for the year ended on that date, as considered in the Ind AS Consolidated Financial Statements. Our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on such Unaudited Ind AS Financial Statements. We are not in a position to comment on the consequential impact, if any, arising out of subsequent audit of these entities, on the Consolidated Financial Results. Our opinion on the Consolidated Financial Results is modified in respect of our reliance on the Ind AS financial statements/ financial information certified by the Management. The audit report on the Ind AS Consolidated Financial Results for the period ended 31st March, 2017 was also qualified in respect of this matter.

Management opinion:

The two subsidiaries Alok International Inc. (parent company, Alok Industries Limited) and Mileta a.s. (parent company, Alok Infrastructure Limited) are incorporated in the United States of America (US) and the Czech Republic (Czech) respectively. The US subsidiary has not carried out any activity during the year 2017-18 under review. Since this company is effectively a defunct company, management is of the view that the audited financial statements of this step-down subsidiary will not materially differ from the unaudited versions and hence may be relied upon. The Czech step-down subsidiary, an integrated textile company, while being operational and profit making too, is not a material subsidiary. For the year under review, the Czech subsidiary had a resource crunch causing a delay beyond August 2018 for finalization of its accounts, which is permissible, being an unlisted entity. The management had to therefore consider the unaudited numbers for the purpose of consolidation. Since the Czech company is not a material subsidiary, the management is of the opinion that the unaudited financial statements of the Czech step-down subsidiary may also be relied upon.

Material Uncertainty Related to Going Concern

As mentioned in note no. 34 of the standalone Ind AS financial statements, the Company incurred a total comprehensive loss of Rs. 18,206.82 crores during the year ended March 31, 2018 and, as of that date, the Company’s current liabilities exceeded its total assets by Rs. 15,200.53 crores. As stated in note no. 32 of the standalone Ind AS financial statements, these events or conditions, along with other matters as set forth in note no. 33 of the standalone Ind AS financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Management opinion

Members are requested to refer to the opening paragraphs and the section on Revival Plan of the company in this regard.

Emphasis of Matters

[Also refer point (x) of ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT]

On the basis of the facts mentioned in note no. 35 of the standalone Ind AS financial statements, we are unable to comment on the possible impact on standalone Ind AS financial statements, related disclosures and our reporting thereon, if any, regarding the said transactions until the final conclusion of the matter. Our opinion is not modified in respect of this matter.

Management opinion

Attention of members is invited to note no. 35 of the Notes to Accounts of the standalone Ind AS financial statements where details have been provided. The decision of the Adjudicating Authority is awaited.

Point (iv) - ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT

In our opinion and according to information and explanations given to us, the Company has complied with provisions of Section 185 and 186 of the Act in respect of loans, investments, guarantees and securities except for the following non-compliances:

(a) The company has not taken prior approval from public financial institutions before giving loans to the subsidiaries during the year, as required under sub-section 5 of Section 186.

(b) The company has not charged any interest on the loan given to the subsidiaries during the year ended March 31, 2018, sub-section 7 of Section 186.

Management opinion

The amounts extended by the Company to Alok Infrastructure Limited, its wholly owned subsidiary, were largely to meet its critical running expenses. Further, substantial portion of the assets of Alok Infrastructure Limited have been collatarized to secure the loans availed by the Company and therefore Alok Infrastructure was not in a position to monetize some of its assets to meet its running expenses. Besides, the Company though had leased the premises of Alok Infrastructure Limited for its corporate office but due to severe cash shortage the companies agreed that Alok Infrastructure will not charge lease rent. Accordingly, in the opinion of the management, the waiver of the lease rental more than offsets the interest that the company would have received on the loans granted during the year.

Basis of Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified as at March 31, 2018:

1. On the basis of the facts mentioned in note no. 35 of the standalone Ind AS financial statements, we are unable to comment on the possible impact on standalone Ind AS financial statements, related disclosures and our reporting thereon, if any, regarding the said transactions until the final conclusion of the matter.

2. The Company’s internal financial controls over obtaining certain bank balance confirmations were not operating effectively, which could potentially result in affecting the expenses such as interest, bank charges etc. and bank balances in the books of the Company.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management opinion

1. Attention of members is invited to note no. 35 of the Notes to Accounts of the standalone Ind AS financial statements where details have been provided. The decision of the Adjudicating Authority is awaited.

2. Since the company is under CIR process, all its major accounts are under the Trust and Retention arrangements which are directly under the control of the banks. Very few bank accounts have any transactions and in some of these, there has been difficulty in obtaining bank balance confirmations for all the months during the year. Further the company is accruing interest based on the claims filed by the Banks and admitted by the Resolution Professional under the CIR process. Accordingly, in the opinion of the management, non-availability of some of the bank statements / balance confirmations from Banks has no material impact on the financial statements of the company.

25. DIRECTORS’ RESPONSIBILITY STATEMENT / Statement by the Chief Financial Officer (CFO) and taken on record by the Resolution Professional.

To the best of knowledge and beliefs and according to the information and explanations obtained by the CFO of the Company, the CFO makes the following statement in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the Annual Accounts for the year ended 31st March, 2018, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(b) the CFO 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, 2018 and of the profit /loss of the Company for the year ended on that date;

(c) that the CFO has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis in terms of the code;

(e) that the CFO had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) that the CFO had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

26. RELATED PARTY TRANSACTIONS:

All transactions, as certified by the CFO of the Company, entered with Related Parties for the year under review until 18 July 2017 were on arm’s length basis and in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the Rules made thereunder and the SEBI LODR Regulations. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Post 18th July 2017, in terms of the provisions of the Code, the nature of the related party transactions was approved by the CoC and the CFO and the Chief Compliance Officer of the company have confirmed to the Resolution Professional that only approved transactions have been entered into post the admission under CIR Process. Accordingly, since disclosure in form AOC- 2 is required to be made only of the related party transactions or arrangements that were not at arm’s length basis or the material related party transactions that were at arm’s length basis in accordance with the Section 188 of the Companies Act, 2013, the disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, the details of the transactions with Related Party are provided in the Company’s financial statements in accordance with the Accounting Standards.

All Related Party Transactions prior to the commencement of the CIR Process were authorized by the Audit Committee/ Board, as applicable for approval and thereafter by the Resolution Professional who in turn, was authorized by the CoC.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz. www.alokind.com. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company except remuneration and sitting fees.

27. SIGNIFICANT OR MATERIAL ORDERS THAT WERE PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

(a) Pursuant to an application made by State Bank of India, the Adjudicating Authority vide its order dated 18 July, 2017, initiated CIR process of the Company in accordance with the provisions of the Code. The Adjudicating Authority appointed Mr. Ajay Joshi as the Interim Resolution Professional (IRP) for the CIR process who was later confirmed as Resolution Professional by the Committee of Creditors on 16 August, 2017. In terms of Section 23 of the Code read with Section 25 of the Code, the powers of the Board of Directors stand suspended and the management of the affairs of the Company vests in the Resolution Professional (RP) of the Company i.e. Mr. Ajay Joshi. .

(b) Pursuant to the Order of the Adjudicating Authority and in light of the Ordinance dated 6 June 2018, meetings of the CoC were convened by the RP on 18 June 2018 and 20 June, 2018, the CoC approved the Resolution Plan with the requisite assenting majority votes (72.192%) and the RP filed an application with the Adjudicating Authority for approval of the Resolution Plan.

(c) The Resolution Plan is pending adjudication before the Hon’ble NCLT.

(d) Further, a financial creditor of the Company, has filed an application before the Hon’ble National Company Law Appellate Tribunal, Delhi, challenging the Order under which the Resolution Plan was re-voted by the CoC and was approved with the requisite majority of assenting votes. The aforesaid application is reserved for order by the Hon’ble National Company Law Appellate Tribunal, Delhi.

28. AUDITORS:

A. STATUTORY AUDITORS

M/s NBS & Co., Chartered Accountants, Mumbai (Firm Registration No. 110100W) and M/s Shah Gupta & Co, Chartered Accountants (Firm Registration No.109574W) were appointed as the Joint Statutory Auditors of the Company at the Annual General Meeting held on 24th September, 2016 for a term of 5 consecutive years. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.

The Report given by the Auditors on the Financial Statement of the Company is part of this Annual Report.

B. COST AUDIT / COST AUDITORS

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company is required to maintain Cost Records and is also required to have the Cost Records audited every year.

M/s. B.J.D. Nanabhoy & Co, Cost Accountants, Mumbai (Reg No. FRN-000011) carried out the cost audit for applicable business during the year. Section 148 of The Companies Act 2013 read with Rule 6 of the Companies (Cost Records and Audit) Rules, 2014 requires that the appointment of the Cost Auditor to be made within 180 days of the commencement of every Financial Year and accordingly, the Resolution Professional has appointed them as Cost Auditors for the financial year 2018-19.

The remuneration payable to the Cost Auditors is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Members’ ratification of the remuneration payable to M/s. B.J.D. Nanabhoy & Co, Cost Auditors is included in the Notice convening the Annual General Meeting.

C. SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Virendra G Bhatt, a Practicing Company Secretary, to conduct the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report in MR-3 is annexed as Annexure 5 and forms an integral part of this Report. The remarks contained in the Secretarial Audit report have been discussed in the Managements Opinion on the Emphasis of matters/ notes given by auditors section which forms part of this report.

29. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS:

The Corporate Governance Report and Management Discussion & Analysis, which form part of this Report, are set out as separate Annexures together with the Certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated in Schedule V of Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

The information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134 of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure 2 and forms an integral part of this Report.

31. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure 1 and forms an integral part of this Report.

32. PARTICULARS OF EMPLOYEES:

Disclosures relating to remuneration and other details as 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 are annexed as Annexure 4.

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) 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(1) of the Companies Act, 2013, 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.

Except, Mr. Ashok Jiwrajka, Mr. Dilip Jiwrajka and Mr. Surendra Jiwrajka and their sons, Mr. Alok Jiwrajka, Mr. Varun Jiwrajka and Mr. Niraj Jiwrajka respectively, who are related to each other, none of the employees listed in the said Annexure is a relative of any Director of the Company. Further, during the financial year under review, Mr. Ashok Jiwrajka, Mr. Dilip Jiwrajka and Mr. Surendra Jiwrajka each held (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company.

33. ENVIRONMENT:

The Company is conscious of the importance of environmentally clean and safe operations. The Company’s policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

34. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

The Company has zero tolerance for sexual harassment at workplace and has formulated and implemented a policy on prevention of sexual harassment at the workplace with a mechanism of lodging complaints in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder.

The Company’s Internal Complaints Committee (ICC) is formed and its details are declared across the organizations. All ICC members are trained by subject experts on handling the investigations and proceedings as defined in the policy. During the year under review, no complaints were reported to the ICC.

35. GENERAL

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to acceptance of deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees’ Stock Option Scheme referred to in this Report.

4. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

5. Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from any of its subsidiaries.

6. No fraud has been reported by the Auditors to the Audit Committee or the Board or the Resolution Professional.

36. CAUTIONARY STATEMENT

Statements in this Directors’ Report and Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company’s operations include raw material availability and its prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

37. ACKNOWLEDGEMENT

The Board / Resolution Professional together with the Key Managerial Persons expresses their sincere thanks to all the employees, customers, suppliers, investors, lenders, regulatory and government authorities and stock exchanges for their cooperation and support and look forward to their continued support in future.

Sunil O. Khandelwal K. H. Gopal

Chief Financial Officer Company Secretary

Taken on record

Ajay Joshi

Mumbai, 28th November, 2018 Resolution Professional

Director’s Report