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Cravatex

BSE: 509472|ISIN: INE145E01017|SECTOR: Trading
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Directors Report Year End : Mar '18    Mar 16

To The Members of Cravatex Limited

The Directors present the audited Financial Statements of the Company including audited Balance Sheet and the Statement of Profit and Loss together with their Report for the year ended March 31, 2018.

Current Year

Previous Year

Rupees in Lacs

Rupees in Lacs

FINANCIAL HIGHLIGHTS

Earnings before Finance Cost, Depreciation and Taxation

230.51

145.80

Less : Finance Cost

103.80

955.14

Less : Depreciation

94.74

311.60

Profit (Loss) before Exceptional Item

31.97

(1,120.94)

Exceptional Item:

Add : Profit on Sale of Undertaking

_

460.74

Profit (Loss) before Tax

31.97

(660.20)

Tax Expense

Deferred Tax Asset / (Liability)

8.06

345.02

Excess Tax Provision for Earlier years

2.15

Profit (Loss) after Taxation

42.18

(315.18)

Other Comprehensive Income / (Loss)

25.49

(16.40)

Total Comprehensive Income / (Loss)

67.67

(331.58)

STATEMENT OF COMPANY AFFAIRS

The total revenue from operations of the Company for the year under review was Rs.74.08 lacs as against Rs. 15697.36 lacs in previous year, while the profit before finance cost, depreciation and taxation stood at Rs.230.51 lacs as against Rs. 145.80 lacs for the previous year. Profit after tax for the year was Rs.42.18 lacs as against the loss of Rs 315.18 lacs for the previous year. The total comprehensive income for the year was Rs.67.67 lacs as against total comprehensive loss of Rs.331.58 for the previous year. The figures for the financial year 2017-18 are not comparable with the figures for the financial year 2016-17 as the Company had sold its Fila and Fitness business under slump sale basis to Cravatex Brands Limited, a subsidiary of the Company in the financial year 2016-17.

DIVIDEND

The Directors are pleased to recommend dividend of 4% (at the rate of Rs.0.40 per share of Rs.10/- each) on 90,00,000 Non Convertible Cumulative Redeemable Preference Shares allotted on 12/04/2016 for the period ended 2016-17 and for financial year ended 2017-18, which would be tax-free in the hands of the Members.

The Directors are also pleased to recommend dividend of 10% (at the rate of Rs. 1/- per equity share of Rs. 10/- each) for the financial year 2017-18, which would be tax-free in the hands of the Members.

EQUITY SHARE CAPITAL

The total issued, subscribed and paid up equity share capital of the Company as on March 31, 2018 was Rs.2,58,41,600/- divided into 25,84,160 equity shares of Rs. 10/- each (listed on BSE).

PREFERENCE SHARES

The Company has issued 90,00,000 4% Non Convertible Cumulative Redeemable Preference shares of Rs. 10/- each (unlisted) on private placement basis.

TRANSFER TO RESERVES

The Company has not transferred any amount to the general reserves.

FIXED DEPOSITS

The Company does not have any fixed deposits as on March 31, 2018 and accordingly, there were no unclaimed deposits as on that date.

INSURANCE

The fixed assets of the Company have been adequately insured.

DIRECTORS & KMP

Mr. Rajesh Batra (DIN 00020764) is retiring by rotation and, being eligible, offer himself for re-appointment.

There are no appointment/cessation of the Key Managerial Persons (KMP) during the financial year ended March 31, 2018.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDIT COMMITTEE

The details pertaining to the composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

SUBSIDIARY

(I) CRAVATEX BRANDS LTD (CBL)

The financial year 2017-18 witnessed a trailing impact of demonetisation. Initial glitches of GST implementation also played its part in slowing down the purchases by customers. Although these government initiatives were expected to benefit all in the medium to long term, the organised sector had to struggle to recover from the setback in the short term. The branded goods sector was among the worst hit due to deferred purchases by end customers and the wholesalers. CBL registered a turnover of Rs.11338 lacs and recorded a loss of Rs.1394 lacs before finance cost, depreciation and taxation with total comprehensive loss after tax at Rs.2100 lacs. Negative profitability was mainly on account of lower sales.

Sales were subdued in the early part of the financial year on account of the slow down due to demonetisation and the uncertainty on GST implementation. The worst affected were the sector of multi brand dealers. The market began settling down in the second half of the year, although margins remained under pressure. The company has taken corrective steps to increase its presence in large format organised retail, as well as rationalising its product mix and improve operational efficiency. The impact of these steps will be seen in the coming years.

Wellness sales grew at a slower pace than expected due to a slow down in the real estate sector. The whole market was impacted due to the revised GST rate of 28% which was prescribed for this sector. The rate was subsequently reduced to 18%. The sector also felt the impact of demonetisation and RERA. Against this backdrop, the division still performed profitably.

After a short disruption due to demonetisation and GST glitches, the domestic consumer goods industry is showing signs of recovery. With induction of new personnel at the top and middle level operating team, marketing initiatives, improved operations and innovative products, CBL is expected to perform better in the ensuing year.

(II) BB (UK) Limited (BBUK)

BBUK has completed its seventh year of operations. Apart from operating FILA license in UK, Ireland, Middle East and Africa, it provides sourcing services to overseas FILA licensees. During the FY 2017-18 the company’s performance had been extremely good. In INR terms the turnover grew from INR 108,26 lacs to INR 242,06 lacs recording an increase of over 123% and profit before tax from INR 201 lacs to INR 1001 lacs over previous year. Major sales revenue came from expansion in sourcing services to FILA licensees. The company has been successful in garnering the business on account of its efficiency and quality of services.

The overall improved outlook in both the subsidiaries augurs well for the company.

The salient features of the financial statement of the subsidiary is set out in the prescribed Form AOC-1, which forms part of the annual report.

The annual accounts of the subsidiaries will also be kept open for inspection for the Members at the Registered Office of the Company during the Company’s business hours on any working day upto and including the date of the Annual General Meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c ) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

CORPORATE GOVERNANCE

Your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance in terms of Regulation 4(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been complied with. A separate report on Corporate Governance is being incorporated as a part of the Annual Report along with a Certificate from a Practicing Company Secretary.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms a part of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required pursuant to Section 134(3)(m) of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, is given in Annexure I to this Report.

CONSOLIDATED ACCOUNTS

The Company had adopted the Indian Accounting Standards (IND AS) from April 1, 2017, and accordingly, the consolidated financial statements have been prepared in accordance with the recognition and measurement principles in IND AS Interim Financial Reporting and those prescribed under the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles issued by the Institute of Chartered Accountants of India.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the annual return in Form MGT-9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is included in this report as Annexure II and forms a part of this report.

PARTICULARS OF THE EMPLOYEES

The Information required under Section 197(12) of the Companies Act, 2013 read with rules made thereunder is included as Annexure IV and forms part of this report.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Regulation 4(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a structured questionnaire was prepared after taking into consideration the various aspects of the Board functioning, composition and the Board and its committee, culture, execution and performance of specific duties, obligations and governance.

The performance evaluation of the Independent Directors was completed. The performance of the Chairman and Non-Independent Directors were carried out by the Independent Directors. The Board of Directors have expressed their satisfaction with the evaluation process.

NUMBER OF BOARD MEEETINGS

The Company held 4 (four) Board Meetings during the Financial Year 2017 - 18. These were on May 25, 2017, September 8, 2017, November 30, 2017 and February 12, 2018.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees and investments, if any, covered under section 186 of the Companies Act, 2013 are given in the notes to the financial statement.

WHISTLE BLOWER POLICY

The Company has a whistle blower policy for reporting genuine concerns or grievances. The whistle blower policy has been posted on the website of the Company

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of the Companies Act, 2013 and Regulation 19 of the SEBI (LODR) Regulations, 2015, the Remuneration Policy has been formulated and adopted by the Board. The details are as follows:

PURPOSE OF THE POLICY

(a) To provide guidelines to the Board while identifying persons for appointment as directors / for positions in senior management

(b) To identify and evaluate the suitability of persons for recommending them to the Board for their appointment as directors including managing directors and executive directors, as also persons who may be appointed in senior management positions.

(c) To recommend to the Board the Remuneration payable to the Directors, Key Managerial Personnel and Senior Management. The terms of remuneration shall be based keeping in view various aspects including qualifications, experience, performance, commitment, leadership skills, etc.

(d) To devise plans from time to time to motivate, retain and promote talent so as to ensure long term continuity of such personnel and in the process creating competitive advantage for the Company.

ROLE OF THE COMMITTEE

(a) To identify persons who are suitable for appointment as directors.

(b) To recommend the remuneration policy for the directors, KMP and senior management.

(c) To formulate the criteria for evaluation of Independent Directors and the Board;

(d) To devise a policy on Board diversity.

(e) To disclose the remuneration policy and the evaluation criteria in its Annual Report.

(f) To recommend Board about the appointment and removal of directors.

(g) While formulating such a policy the Committee shall ensure that:

— the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

— relationship of remuneration to performance is clear and meets appropriate performance benchmarks.

RELATED PARTY TRANSACTIONS

All transaction entered with related parties were on arms length basis in the ordinary course of business and that the provisions of section 188 of the Companies Act, 2013 were not attracted. Hence, disclosure under Form AOC - 2 is not required. Further there are no material related party transactions during the year under review with the Promoters, Key Managerial Persons and Senior Management Personnel. The Company has developed a related party transactions framework through standard operating procedures for the purpose of identification and monitoring of such transactions. All related party transactions are placed before the audit committee and Board for approval.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

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

CORPORATE SOCIAL RESPONSIBILITY

Since the company has reported average losses in the 3 immediately preceding financial years and not being the specified class of company the provisions of Section 135 of the Companies Act, 2013 were not applicable to the Company.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company had appointed M/s. Hemanshu Kapadia & Associates, Practising Company Secretary, to conduct the Secretarial Audit for the financial year 2017-18. The secretarial audit report is included as Annexure V and forms a part of this report.

INTERNAL CONTROL SYSTEMS

Objective evaluation of adequacy and efficiency of internal controls and systems are done by qualified audit firm and monitored closely by the top management. Present control systems are considered as adequate for the size of business.

RISK MANAGEMENT

The risks that the Company is exposed to and the measures taken by the Company to tackle the same are as follows:

Sr. No.

Risk Description

Key Risk Matrix

Mitigation Measure

1

Destruction of properties and assets due to fire etc

Loss of assets resulting in financial loss.

Comprehensive insurance is taken and monitored from time to time for adequacy.

2

Loss of income from office premises

Fall in rentals in the market, Premises falling vacant

A duy registered Leave and License is contracted with reputed Licensee.

AUDITORS’ REPORT

There are no qualifications, reservation, adverse remark or disclaimer made by the Auditors and do not call for any explanation or comment under Section 134(1 )(f) of the Companies Act, 2013.

STATUTORY AUDITORS

M/s. GPS and Associates, Chartered Accountants, Mumbai (Firm Regd. No. 121344W) were appointed as the Statutory Auditors of the Company in the 65th Annual General Meeting of the Company to hold office for a period of 5 years from the conclusion of the 65th Annual General Meeting until the conclusion of the 70th Annual General Meeting subject to ratification of their appointment at every Annual General Meeting of the Company.

Pursuant to the Companies (Amendment) Act, 2017, the provision related to ratification of appointment of Auditors by Members at every Annual General Meeting has been done away with. Accordingly, the proposal for ratification of appointment of Statutory Auditor is not forming part of the Notice convening Annual General Meeting of the Company. The said Statutory Auditor shall hold office until the conclusion of the 70th Annual General Meeting.

PREVENTION OF SEXUAL HARASSMENT

The Company is committed to provide a safe and conducive work environment to all women employees. The Company strives hard to ensure that all women employees are treated with dignity and respect, and are committed to providing a work environment free of sexual harassment. Pursuant to the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013 and rules made thereunder, the Company has a Policy for prevention of Sexual Harassment in the Company. This policy is applicable to all categories of employees of the Company, including permanent management, temporary staff, trainees and employees on contract at its workplace.

During the financial year 2017-18, there were no cases reported under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013.

TRANSFER OF UNCLAIMED SHARES TO IEPF

Section 124(6) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 and General Circular No.12/2017 dated October 16, 2017, stipulated that shares on which dividend has not been paid or claimed for 7 consecutive years or more are to be transferred to the Investor Education and Protection Fund (IEPF), a Fund constituted by the Government of India under Section 125 of the Companies Act, 2013. Accordingly, the Company had sent individual notices to the respective shareholders at their latest available address in the records of Company and Depositories providing the details of shares which are due for transfer requesting them to claim their unpaid dividends on or before November 28, 2017 and avoid the transfer of their shares to IEPF. The Company had also published a newspaper notice in business standard in english and in sakal in Marathi on November 16, 2017 to this effect. In case where no valid claim was received on or before November 28, 2017, the Company would take necessary steps to issue duplicate share certificate (for the shares held in physical mode) and issue delivery instruction slip (for the shares held in demat mode) and transfer the shares to IEPF account. Accordingly, 35,094 Equity Shares of the Company have been transferred to the Investor Education and Protection Fund (IEPF) for the financial year 2009-10 in accordance with Section 125 of the Companies Act, 2013 read with the rules made thereunder.

ACKNOWLEDGEMENT

Your directors wish to place on record their appreciation for the efforts, hard work, dedication and commitment put by employees at all levels as also for the valuable support extended by the Members, Bankers and other business associates.

For and on behalf of the Board of Directors

Rajesh Batra

Chairman & Managing Director

Place : Mumbai

Dated : May 25, 2018

CIN : L93010MH1951PLC008546

Registered Office:

Sahas, 4th Floor, 414/2, Veer Savarkar Marg,

Prabhadevi, Mumbai-400 025.

Tel. No.: 91 22 66667474

E-mail: investors@cravatex.com

Website: www.cravatex.com

Source : Dion Global Solutions Limited
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