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Arora Fibres Ltd.

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Annual Report

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Director’s Report

The Directors present the twenty second Annual Report of your Company along with the Financial Statements for the year ended 31st March, 2015. Financial Highlights: Particulars For the year ended For the year ended March 31, 2015 March 31, 2014 Rupees in lacs Rupees in lacs Revenue from operations 3551.20 6282.81 Operating Profit/ (Loss) 95.42 666.65 Extraordinary Item 302.46 0.00 Profit/ (Loss) before Tax 216.55 370.86 Provision for Tax - - Profit/ (Loss) after Tax 216.55 370.86 Balance brought forward from previous year (573.99) (944.85) Profit/ (Loss) carried to Balance Sheet (357.44) (573.99) Dividend The Directors do not propose to recommend any dividend for the year under review in view of accumulated losses. Operations: During the year under review, your Company''s revenue declined by Rs.27.32 Crores. Sales of Polyester Staple Fibres declined to Rs.35.41 crores from Rs. 42.81 crores. The Company did not carry out much of Investment activity during the year. As a result the income from Investment activity declined to Rs.0.09 crores from Rs. 20.02 crores. The Polyester Staple Fibre market is going through a volatile phase. During the first half of the year the market was favourable with good order traction. But during the second half market went into recession with drop in product prices and drying up of orders. The cost of raw materials did not decline in proportion to fall in product prices. This resulted into operating profit of just Rs.0.95 crores. The extraordinary item is reversal of Excise Duty provision due to relief granted to the Company by Finance Act 2014 which has done away with retrospective amendment of Finance Act 2012 which had imposed excise duty on the Company''s product. Material changes and commitments after the end of financial year There have been no material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year and date of the report. Particulars of loans, guarantees or investment The Company does not have any loans, guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013. Human Resource The Company continues to place significant importance on its human resources and enjoys cordial and peaceful relations at all levels. The Directors are pleased to place on record their appreciation of the services rendered by the employees at all levels. The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at workplace and matters connected therewith or incidental thereto covering all the aspects. Particulars of Employee: There is no information required to be given pursuant to section 197 read with Rule -5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Environment, Health & Safety: Your Company is committed to ensure a clean and green pollution-free environment as well as a healthy and safe work place at its plant location. In fact the Company''s business is of converting waste PET bottles into Polyster Staple Fibre. Thus the Company''s operations are beneficial to the environment. Further the Company is taking environmental friendly initiatives like, energy saving projects and waste reduction initiatives. Energy Conservation, Technology Absorption, Foreign Exchange Earnings & Outgo: The Information on conservation of energy , technology absorption and foreign exchange earning and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as Annexure A which forms the part of the report . Deposits The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet. Directors: As per the provisions of Section 149(1), 161 and other applicable provision under The Companies Act, 2013, the Board has appointed Ms. Wilma Lobo as Additional Executive Woman Director of the Company with effect from March 16, 2015. The above appointment was based on recommendation of Nomination and Remuneration Committee and subject to approval of the Shareholders of the Company at the forthcoming Annual General Meeting. The Board also appointed Mr. Navdeep Singh Khera as an Independent Director with effect from December 11, 2014. The appointment is subject to approval of the Shareholders of the Company at the forthcoming Annual General Meeting. During the year, Mr. H V Deodhar resigned as Director due to personal reasons. As per the provisions of the Companies Act, 2013 and Articles of Association, Mr. R. S. Arora is liable to retire by rotation at the Twenty Second Annual General Meeting. Mr. R.S. Arora has confirmed his eligibility and willingness to accept the office of Directorship of your Company, if appointed. In the opinion of your Directors, Mr. R.S. Arora has the requisite qualifications and experience which would be useful for your Company and would enable him to contribute effectively to your Company''s good operational performance and overall good corporate governance in his capacity as Director of your Company. It is, therefore, considered prudent that your Company should continue to avail of the services of Mr. R.S Arora as Director and the Board recommends that the proposed resolution relating to re-appointment of Mr. R.S. Arora as Director of your Company be approved. None of the Directors or Key Managerial Personnel has any pecuniary relationships or transactions vis-- vis the Company, other than salaries, commission, sitting fees. Declaration given by independent directors All Independent Directors have given declarations that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Familiarisation programme for Independent Directors The Company''s familiarization programme for Independent Directors provides orientation and training at the time of joining to enable them to understand the operations, business and other details of the Company. The Independent Directors are regularly briefed on the developments that are taking place in the Company and its operations. Number of meetings of the Board. The Board meets at regular intervals to review the Company''s businesses and discuss strategy and plans. A tentative annual calendar of the meetings is circulated to the Directors in advance to enable them to plan their schedule and to ensure effective participation. During the year, six board meetings were convened and held. The maximum interval between the meetings did not exceed the period prescribed under the Companies Act, 2013 and Listing Agreement Committees of the Board During the year, in accordance with the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has constituted or reconstituted its Committees. Currently, the Board has the following Committees: Audit Committee Nomination and Remuneration Committee Stakeholders Relationship Committee Details of the Committees along with their constitution and other details are provided in the Report on Corporate Governance. Directors Responsibility Statement: Your Directors confirm that: i) in the preparation of annual accounts, the applicable accounting standards have been followed; ii) appropriate accounting policies have been selected and applied consistently and judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as of 31st March, 2015 and of the Profit of the Company for that year; iii) proper and sufficient care has been taken 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; iv) the annual accounts have been prepared on a going concern basis; v) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Director''s appointment and remuneration The Nomination and Remuneration Committee has laid down the criteria for Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes and independence of a Director. The following attributes / criteria for selection have been laid by the Board on the recommendation of the Committee. a) Cultural fit and personal values b) Vision and Strategic Management c) Independence and impeccable reputation for integrity, deep expertise and insights and complementary skills d) Change management and influencing change The policy for appointment of Director, KMP is given in Annexure E. Annual evaluation of performance by the Board As per criteria for performance evaluation, laid down by the Nomination and Remuneration Committee, the Board has assessed its own performance, the performance of each of the Directors and the performance of its committees. The Independent Directors have assessed the performance of each of the non independent Director as provided in the Act and the Listing Agreement. Remuneration Policy: The Board has, on recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is set out in the Annexure F to this report. Related Party Transaction: All the related party transactions that were entered into during the financial year were on the arm''s length and were in ordinary course of business. All Related Party Transaction are placed before the Audit Committee as also the Board for the approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis which is for known and of repetitive nature. The transaction entered into pursuant to the omnibus approval so granted are audited and statement giving details of all the related party transactions is placed before the Audit Committee and Board of Directors for their approval on quarterly basis. As per clause (h) of Sub-Section (3) of Section 134 of Companies Act, 2013 and Rule 8(2) of Companies (Accounts) Rule 2014, the details forming transaction of all the related party transaction in form AOC 2 is annexed as AnnexureB. The policy on Related Party Transactions, as approved by the Board, is uploaded on the website of the Company. Corporate Social Responsibility The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility (CSR) are not applicable to the Company as the Company has posted losses and is still registered under BIFR. Vigil Mechanism/ Whistle Blower Policy: Your Company has adopted and disseminated its Whistle-Blower Policy to provide a secure environment and encourage employees to report unethical, unlawful or improper practices, acts or activities and to prohibit any adverse personnel action against those who report such practices in good faith. The Whistle-Blower Policy is disclosed on the website of the Company under the heading Whistle Blower Policy to deal with the instance of fraud and mismanagement, if any. Statutory Auditors: M/s. Vinay Gudi & Associates, Chartered Accountants, (Registration No.129032W) Auditors of the Company have expressed their unwillingness to continue as auditors which will be effective from the close of the ensuing Annual General Meeting. M/s. Sunil Mistry & Company, Chartered Accountants (Registration No.123435W) have conveyed that, if appointed, they would be eligible to act as Auditors of the Company. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and Rules framed thereunder, for appointment as Statutory Auditors of the Company. Your Directors on recommendation of the Audit Committee, seek approval of the Shareholders, for appointment of, M/s. M/s. Sunil Mistry & Company, (Registration No.123435W) Chartered Accountants, as the Statutory Auditors of the Company, from the conclusion of the forthcoming Annual General Meeting till the conclusion of the twenty-seventh Annual General Meeting of the Company, on such remuneration as shall be fixed by the Board of Directors, as set out in the resolution included in Notice convening the Annual General Meeting of the Company. Secretarial Auditors- In accordance with Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. V. N. Deadhar & Co.Company Secretaries, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is set out in the Annexure C to this report. Comments on auditors'' report There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Vinay Gudi & Associates, Statutory Auditors, in their Auditor''s Report. M/s. V.N Deodhar & Co., Company Secretaries havequalified their Secretarial Audit Report for non-compliance in regards to appointment of Company Secretary. In this regard the Company would like to state that the Company is under the BIFR. It is searching for the right candidate and is hopeful of appointing a Company Secretary in the near future. The Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. Extract of Annual Return The details forming part of extract of Annual Return in form MGT 9 is annexed herewith as Annexure.D Management Discussion & Analysis Report and Report on Corporate Governance a) As per Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, Corporate Governance Report and Management Discussion and Analysis Report are annexed and form part of the Directors'' report. (Annexure G & H respectively) Acknowledgements: Your Directors wish to place on record their sincere appreciation for the continuous support and co-operation received from customers, dealers, suppliers, financial institutions and others in successfully conducting the company''s business operations. Your Directors also wish to place on record their deep sense of appreciation for the commitment and dedicated service of the company''s employees. Your Directors also acknowledge with gratitude the encouragement and support extended by our valued shareholders. On behalf of the Board of Directors, R.S. ARORA Chairman Place: Mumbai Date : 30th July, 2015

Director’s Report