The Directors have pleasure in presenting their 21ST Annual Report and
Audited Accounts for the year ended 31st March 2015.
1. FINANCIAL RESULTS :
Profit Before Taxation (976,383) 11,97,224
Current Tax - Current Year (4,00,000) --
Previous Year 369942
Deferred 7,34,519 1,25,000
MAT Credit - -
Profit After Taxation 641,864 702282
Balance brought forward from previous year 60118537 59416225
The Company has actively engaged in manufacturing of Socks and actively
finding out the venues of e- commerce in the Fashions Industry.
No Dividend Recommended for the financial year.
The total turnover of the Company was Rs. 24.90 crores (previous year -
Rs. 25.80 crores ). The loss before exceptional items and taxation was
4. DIVISIONAL PERFORMANCE
The Company operates in only one Business Operations
The Company has increased its Authorized Capital of the Company during
the financial year and also allotted 29,00,000 shares of Rs.5/- each at
a premium of Rs.5/- each.
6. INTERNAL CONTROL SYSTEMS
Your Company has in place a robust Internal and Financial control
systems which assists the Board and Management to fulfill business
objectives, safeguards the shareholders'' interest, financial
transactions and company''s assets. The primary objective of our
internal control framework is to ensure that internal controls are
established, properly documented, maintained and adhered to in each
functional department for ensuring orderly and efficient conduct of
business which includes proper use and protection of the Company''s
resources, accuracy in financial reporting, compliance with the
statutes, timely feedback on achievement of operational and strategic
goals. The Company''s internal control system, supported by SAP ERP
implemented a few years ago, is driven by well defined policies and
procedures across its business divisions. In addition the Company is
ISO 9001:2008 compliant which provides added comfort to our business
partners and regulatory bodies.
The Company has an Internal Audit function which provides the Audit
Committee and the Board of Doctors an independent, objective and
assurance of the adequacy, efficiency and effectiveness of the
Organization s risk management, internal and financial control and
corporate governance processes. The Audit Committee/Board approved
annual audit plan prepared in consultation with business heads and
inputs obtained from the Company''s statutory auditors ensures coverage
of significant areas of operations with a risk based approach in order
to conduct the audit in an efficient and timely manner. Process reviews
for critical functions at all locations are performed in accordance
with the audit plan. The function also assesses opportunities for
improvement in business processes, systems and controls; provides
recommendations to the Senior Management.
The Audit Committee of the Board of Directors regularly meets to review
the significant audit findings action taken thereon, adequacy of
internal and financial controls and implementation of various
comprehensive policies. During the year, the Audit Committee met six
times to review the reports submitted by the Internal Audit Department.
The Audit Committee also regularly meets the Company''s Statutory
Auditors to ascertain their views on the business, adequacy of the
internal control systems in the Company and their observations on the
There are no outstanding public deposits at the beginning of the year
under review. The Company has not accepted any public deposits during
the year under review. The Board of Directors of the Company will
consider accepting fresh public deposits at the appropriate time, in
view of the regulatory changes under the Companies Act 2013.
The Company has paid up to date the Tax Liabilities.
The Company has no subsidiaries during the Financial year.
13.HUMAN RESOURCES/INDUSTRIAL RELATIONS :
The Manufacturing units has cortinued so maintain cordiel industrial
relation, with low absenteeism while maintaining output levels.
Programswere conducted to improve the competency levels of workmen.
The Unit has its commitment to reuniting emplovee performance b,
conducting employee of the Month awards to recognise exceptional
performances by employees and inculcating a commitment to perform
beyond the regular roles and responsibilities.
Various programmes have been conducted during the year covering Safety
Awareness, Alteration Authority Job Safety Analysis (JSA), Hazard
Identification, Risk Assessment, Risk Control (HIRARC). In addition
internal / External Safety Audits; Safety Committee Meetings on regular
basis; Job Study Analysis; HIRA / HAAZOP studies, SQC ; First Aid
Training; Fire & Safety aspects and Emergency Rescue methods, have
helpe o strengthen the overall safety and disaster management processes
in the Hyderabad Factory.
Preventive Health Check-ups
As part of preventive healthcare, the Factory organized series of free
medical check-ups, consisting of Diabetes, Cardiology, Orthopedic and
General Medical Check up, to all the employees.
As part of enhanced security of the Unit and other assets of the,
compound walls have been reinforced, height raised and fencing of
barbed wire & concertina coils provided. Other measures include CC TV
monitoring at Key areas especially magazines relaying of patrolling
route, erection of watch towers and construction of additional Security
Check posts, installation of tower flood lights for better night
illumination, installation of guard monitoring systems for effective
patrolling checks. Communication systems from magazines, watch towers
through land lines have been streamlined. As such over the years
considerable additions and precautions have been added to strengthen
the Security of the Factory.
The Company believes in fair employment practices and is committed to
provide an environment that ensures that every employee is treated with
dignity and respect and afforded equitable treatment. The Company has a
large proportion of women on the workforce and has adopted a Policy in
line with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules there
under. The Company has not received complaints in this regard, during
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not provided any Loans, Guarantees or Investments
during the Financial year,
15. OUTLOOK FORTHE CURRENT YEAR, OPPORTUNITIES ANDTHREATS Overview of
The merchandise exports from India have remained stagnant between US $
302 to US $ 314 billion in the last three financial years. India''s
share is a mere 2% in Global trade, where as that of China is around
11.7% (2013). The Foreign Trade Policy 2015-2020 announced in April
2015 has set a target of 3.5% by 2020-21 for India.
In the last two/three years, the exporting units were big beneficiaries
of Indian rupee depreciation. Since mid 2014, the rupee has been
strengthening against Several Currencies, resulting in erosion of both
realisation and profit for exporters. This is one cause for the
deceleration in exports since mid 2014.
In Foreign Trade Policy 2015-2020 announced in April 2015, a new scheme
named MEIS (Merchandise Exports From India Scheme) has been introduced
where by the exporters will get incentive of 2% of FOB value in respect
of merchandise falling under ITC (HS) code 61 - Knitted Apparels
(including socks) exported to United Kingdom and United States of
America etc (but not Switzerland and Gulf countries). This scheme is in
substitution of earlier MLFP scheme (market linked focal product) which
was off and on introduced and withdrawn.
Industry Structure and Development
The Indian textile industry, including hosiery and clothing, is one of
the leading sectors of the Indian economy and contributes significantly
to the country''s industrial output (14%). It employs 35 million people
in direct employment and earns much needed foreign currency with 17% of
India''s exports coming from Textiles and Garments. Overall, it
contributes around 5% to India''s GDP.
Textiles and apparel exported from India consume mainly indigenous
inputs and are, therefore, big earners of net foreign exchange. This
helps the country reduce its current account deficit.
Value of socks manufactured in India is estimated around 3000 crores
per annum. Many major socks manufacturers in India are supplying their
socks in the domestic market as licensees of international brands.
Only a few supply under their own brand name.
Your Company is well poised to seize opportunities available in the
sock knitting industry on account of its state-of-the-art production
facilities, technical expertise, good quality culture and emphasis on
product innovation and growth potential.
Your Company is meeting international quality norms of comfort,
stretch, sizing, skin care and other parameters essential for inner
wear intimate apparel. They also meet the fashion demands in terms of
design, different knits and multiple shades. The socks manufactured by
your Company are sold in Supermarket Chains and upper end Retail
The growing young middle-class population is a source of great
potential and provides immense opportunities to spurt growth in the
sock industry in the future.
For duty drawback on export shipments, cap per unit was raised
upwards (more than double, say 2.25-2.50 Your Company is knitting super
sophisticated design socks for a reputed international brand selling
socks in big outlets at high prices. This gives great goodwill to your
Company, as the name of your Company is mentioned on the band rolls of
the socks of that brand.
All major overseas customers of your Company insist on social audits to
be carried out in the factory at least once in two years, by the
internationally acclaimed Business Social Compliance Initiative
Agencies. Such audits cover compensation to employees, health, safety,
environment and management practices. New customers also insist on such
audits to be conducted, before they start the business. The compliance
of such audits to International Standards, brings healthy and ethical
culture in working and creates goodwill of the Company among its
clients. Your Company has successfully complied with many such audits
and has thus ensured continuance of business with major clients for
Your Company derives about 91% of its revenue from the export market.
Economic slowdown or decline in demand in the country of buyer of your
Company''s products will have adverse impact on the working of the
In the international market, countries like Turkey have developed an
edge over the Indian manufacturers due to reduced freight cost and much
reduced delivery time. Besides, Turkey enjoys exemption of 10.6% custom
duty in relation with EU countries. This has posed a threat to the
Indian socks suppliers and may pressurise them to reduce prices and
thereby squeeze their margins. Even Bangladesh enjoys exemption in
import duty by virtue of its being a less developed country and exports
goods at prices which Indian socks suppliers cannot compete.
The major challenge that the textile, apparel and hosiery industry
faces is of ever increasing production costs arising out of rising
wages, power and other overheads.
Rupee has become strong against several foreign currencies from mid
2014. This has already adversely impacted the topline and bottom line
of the exporting units, when compared with their last two/three years''
16 . DIRECTORS
During the year, Mrs. Sangeeta Sethia, was appointed as Additional
Director of the Company in order to comply the requirements of Women
Director she is proposed to be appointed as Director liable to retire
Mrs. Sangeeta Sethia holds a Degree in Commerce, from Osmania
In accordance with the provisions of the Companies Act 2013 and the
Articles of Association of the Company Mr. Prabhat Sethia retires by
rotation at the 21st Annual General Meeting of the Company and is
eligible for reappointment.
The number and details of the meetings of the Board and other
Committees are furnished in the Corporate Governance Report.
The Independent Directors have furnished declaration of independence
under Section 149 of the Companies Act 2013.
Familiarization Programme for Independent Directors
The Company familiarizes its Independent Directors with the Company,
their roles, rights, responsibilities in the Company, nature of the
industry in which the Company operates, business model of the Company,
etc. through various programmes on a continuing basis. The
Familiarisation programme for Independent Directors is disclosed on the
Separate Meeting of Independent Directors
A separate meeting of Independent Directors of the Company, without the
attendance of Non- Independent Directors and members of management, was
held on 30th March, 2015, as required under Schedule IV to the
Companies Act, 2013 (Code for Independent Directors) and Clause 49 of
the Listing Agreement. At the Meeting, the Independent Directors:
* Reviewed the performance of Non-Independent Directors and the Board
as a whole;
* Reviewed the performance of the Chairman of the Company, taking into
account the views of Executive Director and Non-Executive Directors;
* Assessed the quality, quantity and timeliness of flow of information
between the Company management and the Board that is necessary for the
Board to effectively and reasonably perform their duties.
All the Independent Directors attended the Meeting of Independent
Directors Board & Directors'' Evaluation
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of
the Listing Agreement, the Board, its Committees and the Directors have
carried out annual evaluation / annual performance evaluation, covering
various aspects of the Board''s functioning such as adequacy of the
composition of the Board and its Committees, Board culture, execution
and performance of specific duties, obligations and governance The
performance evaluation of the Independent Directors was carried out by
the entire Board.
The Criteria for performance evaluation are follows:
Role & Accountability
* Understanding the nature and role of Independent Directors''position.
* Understanding of risks associated with the business.
* Application of knowledge for rendering advice to management for
resolution of business issues.
* Offer constructive challenge to management strategies and proposals.
* Active engagement with the management and attentiveness to progress
of decisions taken.
* Non-partisan appraisal of issues.
* Own recommendations given professionally without tending to majority
or popular views.
Leadership & Initiative
* Heading Board Sub-committees.
* Driving any function or identified initiative based on domain
knowledge and experience.
* Commitment to role & fiduciary responsibilities as a Board member.
* Attendance and active participation.
* Proactive, strategic and lateral thinking.
Directors'' Appointment and Remuneration Policy
The Nomination and Remuneration Committee is responsible for developing
competency requirements for the Board based on the industry and
strategy of the Company and formulates the criteria for determining
qualifications, positive attributes and independence of Directors in
terms of provisions of Section 178 (3) of the Act and Clause 49 of the
Listing Agreement. The Board has, on the recommendations of the
Nomination & Remuneration Committee framed a policy for remuneration of
the Directors and Key Managerial Personnel. The objective of the
Company''s remuneration policy is to attract, motivate and retain
qualified and expert individuals that the company needs in order to
achieve its strategic and operational objectives, whilst acknowledging
the societal context around remuneration and recognizing the interests
of Company''s stakeholders.
The Non-Executive Directors (NED) are remunerated by way of Sitting Fee
for each meeting attended by them and an annual commission on the
profits of the Company. Commission to respective non-executive
directors is determined on the basis of an objective criteria discussed
and agreed upon by the Committee Members unanimously. NEDs are
reimbursed any out of pocket expenses incurred by them in connection
with the attendance of the Company''s Meetings.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under Section 197 (12) of the Act read with
Rule 5 of The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, is annexed as Annexure B. The information
required under Rule 5 (2) and (3) of The Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is provided in the
Annexure forming part of the Report.
None of the employees listed in the said Annexure is related to any
Director of the Company.
17. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings 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 C''.
18. INFORMATION ON STOCK EXCHANGES
The Equity shares of the Company are listed on BSE Limited and the
Listing Fees have been paid to them up- to-date.
19. CORPORATE GOVERNANCE
A detailed report on the subject forms part of this report. The
Statutory Auditors of the Company have examined the Company''s
compliance and have certified the same as required under the SEBI
Guidelines. Such certificate is reproduced in this Annual Report.
20. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134 of the Companies Act 2013:
(a) that in the preparation of the annual accounts/financial statements
for the financial year ended 31st March 2015, the applicable accounting
standards had been followed along with proper explanation relating to
material departures, if any;
(b) that the accounting policies as mentioned in the financial
statements were selected and applied consistently and reasonable and
prudent judgments and estimates were made 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) that proper and sufficient care had 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;
(d) that the annual accounts were prepared on a going concern basis;
(e) that proper internal financial controls were in place and that such
internal financial controls are adequate and were operating
(f) that proper systems to ensure compliance with the provisions of all
applicable laws were in place and that such systems were adequate and
Statutory / Financial Audit
M/s N G Rao and Associates, Chartered Accountants retire at the ensuing
Annual General Meeting and are eligible for re-appointment. The Company
has received confirmation that their appointment will be within the
limits prescribed under Section 141 of the Companies Act, 1956.
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. Vinod Sakaram, a
Company Secretaries in Practice to undertake the Secretarial Audit of
the Company. The Report of the Secretarial Audit Report is annexed
herewith as ''Annexure D''.
There was no qualification, reservation or adverse remark or disclaimer
in the auditors report or the secretarial audit report.
22. CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with Section 135 of the Companies Act 2013 and other
applicable provisions, the Company has constituted Corporate Social
Responsibility Committee consisting of Mr.D.P.Kelkar, Chairman of the
Committee (Independent Director), Mr.Subhash Kelkar (Non Executive
Director and Mr.Sanjay Bora (Independent Director) as the Members of
the Committee. The Committee met once during the year and laid down the
policy on Corporate Social Responsibility stating therein the
objectives, implementation and other issues pertaining to the
achievement of the CSR objectives of the Company.
The erstwhile Lubricants Division which was demerged from the Company,
was the major profit generating Division. The remaining businesses of
the Company do not have eligible profit on aggregate basis during the
last three financial years. Filatex Fashions Ltd. (FFL) to whom the
Lubricants Division was transferred, has undertaken to incur the CSR
expenditure, treating the profits of the erstwhile Lubricants Division
as that of GOLILfor CSR purposes. In view of these circumstances, and
based on legal advice, the CSR Committee concurred that the Company
would not incur mandatory CSR expenditure. The Company, however, makes
reasonable contributions to CSR purposes.
The CSR Policy of the Company is displayed on the website of the
Company. The Annual Report on CSR activities is annexed herewith as
23. VIGIL MECHANISM / WHISTLE BLOWER POLICY
In terms of the requirements of the Companies Act 2013 and Clause 49 of
the Listing Agreement, the Company has a vigil mechanism to deal with
instance of fraud and mismanagement, if any. The details of the vigil
mechanism are displayed on the website of the Company. The Audit
Committee reviews the functioning of the vigil / whistle blower
mechanism from time to time. There were no allegations / disclosures/
concerns received during the year under review in terms of the vigil
mechanism established by the Company.
24. RELATED PARTY TRANSACTIONS
All related party transactions / arrangements that were entered into
during the financial year were on an arm''s length basis and were in the
ordinary course of business. There are no materially significant
related party transactions made by the Company with Promoters,
Directors, Key Managerial Personnel which may have a potential conflict
with the interest of the Company at large.
All related party transactions / arrangements are placed before the
Audit Committee for prior approval, supported by a statement from the
Management as to the adherence of arm''s length basis and being the
ordinary course of business.
The policy on Related Party Transactions as approved by the Board is
displayed on the Company''s website. None of the Directors has any
pecuniary relationships or transactions vis-a-vis the Company.
Details of the transactions are provided in Form AOC-2 which is annexed
as Annexure - F.
25. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23
and AS 27 issued by the Institute of Chartered Accountants of India
form part of this Annual Report.
26.SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations. Pursuant to a complaint filed before the
Competition Commission of India (CCI) by Coal India Limited, CCI had
vide their Order dated 16th April 2012 held that the Company had, along
with a few other explosive manufacturers, contravened the provisions of
Section 3of the Competition Act 2002. The CCI had on that basis imposed
a penalty on the Company of Rs.29.84crores. The Company has filed an
Appeal before the Competition Appellate Tribunal (COMPAT) and the
COMPAT had vide its Order dated 18th April 2013, reduced to Rs.2.89
crores; and a further Civil Appeal in the Supreme Court of India and
the matter is subjudice. Based on expert legal advice, the Company
believes that it has a good case and expects a favourable decision in
27. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as ''Annexure G''
Your Directors would like to express their appreciation for the
assistance and co-operation received from the financial institutions,
banks, Government of India and various State Government authorities and
agencies, customers, vendors and members during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services of all employees of the
For and on behalf of the Board of Directors
Place : Hyderabad Prabhat Sethia
Date -.September 02, 2015 Managing Director