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Your Directors have pleasure in presenting the Twenty Eighth Annual Report of K–LIFESTYLE & INDUSTRIES LTD. along with the Audited Statements of Accounts for the Financial Year ended 31st March, 2015.
During the year under review, the performance of the Company was affected on– account of heavy burden of Finance Cost and Depreciation.
During the year, the Revenue from operations of Company has substantially increased to Rs. 73768.87 Lacs as against Rs. 69032.30 Lacs in respect of the previous Financial Year ended 31st March, 2014. The Company has earned during the year Net Loss of Rs. 20,597.83 Lacs as against Net Loss of Rs. 23677.52 Lacs in the previous Financial year ended 31st March, 2014. However, there is no cash loss during the year, the loss is due to heavy burden of Finance Cost and Depreciation
The Company has incurred Substantial losses due to markets resulting in poor sales.
The company experienced that the efficiency of plant and machineries, especially Spinning Machines have gone down and set up an in house Expert Group to suggest measures for Technology up gradation and Modernization. As per their recommendations, old machines including Ring Frames, requiring expenditure towards repairs and maintenance consuming high power with low out put have been identified and shifted to workshop/godowns for appropriate action.
Further, the Company after incurring huge losses and eroding its net worth completely had made an application to be registered as a Sick Company with Board for Industrial and Financial Reconstruction vide a Resolution passed by the Board of Directors on 12th February, 2015. The Company has been registered as a Sick Company.
In view of Loss of the Current year, your Directors are unable to recommend any dividend on the equity shares for the year under review.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Mr. S. P. Jolly and Mr. Dileep Kapre, have resigned w.e.f. 25th March, 2015 and Mr. Kulwinder Kumar Nayyar and Mr. Farindra Bihari Bhuneshwar Rai have resigned from the Company w.e.f. 26th March, 2015, 28th March, 2015 respectively.
The Board of Directors of the Company had appointed Ms. Manasi Indrajit Wadkar (DIN: 05309693), Mr. Jaiprakash Misha (DIN: 07190590) and Mr. Pravinkumar Parekh (DIN: 06894568) as Additional Directors w.e.f. 7th November, 2014, 23rd March, 2015 and 24th March, 2015 respectively. Pursuant to the provisions of Section 161 of the Companies Act, 2013, they shall hold office upto the date of ensuing Annual General Meeting. The Notice pursuant to Section 160 of the Companies Act, 2013, has been received from the Members proposing their candidature for appointment as Directors of the Company.
All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Act and Clause 49 of the Listing Agreement entered into with the Stock Exchanges. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Rules made there under and are independent of the management.
Further, as required under Section 203(1) of the Companies Act, 2013, Company has appointed Mr. Rajendra Pathak as a Chief Financial Officer designated as a Key Managerial Personnel of the Company
Mr. Dinesh Kumar has resigned as a Company Secretary of the Company w.e.f. 6th August, 2014.
Further, Ms. Nitika Datt was appointed as a Company Secretary of the Company w.e.f. 4th November, 2014.
ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OF DIRECTORS:
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.
The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors.
The Board's functioning was evaluated on various aspects, including inter alia degree of fulfillment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.
Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including setting the strategic agenda of the Board, encouraging active engagement by all Board members and motivating and providing guidance to the Managing Director.
Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole.
The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors. The Chairman of the Board provided feedback to the Directors on an individual basis, as appropriate. Significant highlights, learning and action points with respect to the evaluation were presented to the Board.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The Directors are happy to state that the relations between the Company and its Employee remained cordial throughout the year. The Directors acknowledge and express their appreciation for the contributions made by the employees at all levels. Focused attention was given for knowledge updating and application of new technologies available to reduce costs and to meet the business challenges.
None of the employees drew remuneration of Rs. 60,00,000/– or more per annum/ Rs. 5,00,000/– or more per month during the year. This information is furnished as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Disclosures pertaining 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 provided in the Annexure C forming part of the Annual Report.
Having regard to the provisions of Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.
REPORT ON CORPORATE GOVERNANCE:
Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management) have affirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in the Corporate Governance Report is part of this Report. The Managing Director has given a certificate of compliance with the Code of Conduct, as required under Clause 49 of the Listing Agreement.
M/s. A. F. Khasgiwala, Practicing Chartered Accountants, Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under Clause 49 of the Listing Agreement. The Certificate in this regard is attached to this Report.
The Managing Director / Chief Financial Officer (CEO/CFO) certification as required under Clause 41 of the Listing Agreement is attached to this Report.
EXTRACT OF ANNUAL RETURN:
Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in form MGT.9 is annexed as Annexure A.
BOARD AND COMMITTEE MEETINGS:
A calendar of Board and Committee Meetings to be held during the year was circulated in advance to the Directors. 5 (Five) Board Meetings were convened and held during the year.
The Board has constituted an Audit Committee with Mr. Shivprasad Shrivastav as Chairman and Mr. Pravin Parekh and Mr. Jaiprakash Mishra as the Members. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
The Company has also constituted various other Committees viz. Nomination & Remuneration Committee, Stakeholder Relationship Committee, Risk Management Committee and Management and Finance Committee.
Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report is part of this Directors' Report.
The intervening gap between the Meetings was within the period prescribed under the Act and the Listing Agreement.
DIRECTORS' RESPONSIBILITY STATEMENT:
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014–15.
Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC–2, is appended as Annexure B to the Board's report.
The Board has approved the policy on Related Party Transactions and Material Subsidiary. The policies have been uploaded on the Company's website, under the web link: <http://> k–lifestyleind.com/wp/related–party–transactions/
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note 2.18(k) of the Notes to the financial statements.
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 programmers.
The details of such familiarization programmed shall be disclosed on the Company's website at the following web link: <http://> k–lifestyleind.com/wp.
RELATED PARTY TRANSACTIONS:
All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm's Length pricing basis. There were no materially significant transactions with Related Parties during the financial year 2014–15 which were in conflict with the interest of the Company. Suitable disclosures as required under AS–18 have been made in Note 2.18(i) of the Notes to the financial statements.
The Company has also adopted Related Party Transaction Policy as required under Clause 49 of the Listing Agreement.
The Board has approved the policy on Related Party Transactions and Material Subsidiary. The policies have been uploaded on the Company's website, under the web link: <http://> k–lifestyleind.com/wp/related–party–transactions
Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2015 and 5th August, 2015:
There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the Report 5th August, 2015).
CONSERVATION OF ENERGY:
a) Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilisation and maximum possible savings of energy is achieved.
b) No specific investment has been made in reduction in energy consumption.
c) As the impact of measures taken for conservation and optimum utilisation of energy are not quantitative, its impact on cost cannot be stated accurately.
d) Since the Company does not fall under the list of industries, which should furnish this information in Form A annexed to the aforesaid Rules, the question of furnishing the same does not arise.
Company's products are manufactured by using in–house know how and no outside technology is being used for manufacturing activities. Therefore no technology absorption is required. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal.
FOREIGN EXCHANGE EARNINGS AND OUT–GO:
During the period under review there was no foreign exchange earnings or out flow.
The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached to this Report.
The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Clause 49 of the Listing Agreement. It establishes various levels of accountability and overview within the Company, while vesting identified managers with responsibility for each significant risk.
The Internal Audit Department facilitates the execution of Risk Management Practices in the Company, in the areas of risk identification, assessment, monitoring, mitigation and reporting. Through this programme, each Function and Unit addresses opportunities and risks through a comprehensive approach aligned to the Company's objectives. The Company has laid down procedures to inform the Audit Committee as well as the Board of Directors about risk assessment and management procedures and status.
The Company has also constituted the Risk Management Committee to review and operate the Risk Management Policy from time to time.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE:
The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, 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 Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has not received any complaint of sexual harassment during the financial year 2014–15.
SAFETY, HEALTH AND ENVIRONMENT:
Sustained and meticulous efforts continue to be exercised by the Company at all plants of the Company, towards greener production and environment conservation. The Company perseveres in its efforts to indoctrinate safe and environmentally accountable behavior in every employee, as well as vendors, by rigid compulsory annual training and refresher courses, as well as frequent awareness programme. Mock drills of emergency preparedness are regularly conducted at all the plants showing Company's commitment towards safety, not only of its own men and plants, but also of the society at large.
Safety records, at all plants showed considerable improvement and accident statistics showed downward trend. This was made possible by strict adherence to laid down procedures and following of international guidelines. Involvement of workers in all safety matters has been encouraged by their participation in shop floor safety meetings. To achieve the goals, environment protection systems and processes are well in place. To meet the challenge of environment protection in a proactive manner, unavoidable wastes are dealt with in the most efficient and scientific way.
The health of employees and the environment in and around the Plant area have been given due care and attention. The Company continued to comply with the prescribed industrial safety environment protection and pollution control regulation at its production plant, through periodic checks of the system involved and constant monitoring to meet the standards set by the pollution control authorities, etc.
All the mills of the Company are eco–friendly and do not generate any harmful effluents. They have facilities for captive power generation as a stand–by arrangement, to meet any contingency. Safety devices have been installed wherever necessary, although both the spinning and knitting activities are known to be quite safe and free from usual hazards of water and air pollution.
INDUSTRIAL REALATIONS & HUMAN RESOURCES MANAGEMENT:
The Company is of firm belief that good Human Resource Management would ensure success through high performance. HR strategy and plans of the Company are deeply embedded with the organizational goals. In order to enhance the manpower productivity the goal is set to increase the production capacity of the various plants and rationalize the manpower through scientific study. All the operational goals of the top management emanate from the business plan. The goals of MD are shared with his subordinates who in turn share their goal with their respective subordinates and so on. Regular visits by HR team are being made to all the plants to meet the employees and also interaction meetings are conducted to get their feed back, based on which HR policies are improved continuously. The process has resulted in better employee relationship.
The Company lays due emphasis on all round development of its human resource. Hence training of the employees is aimed at systematic development of knowledge, skills, aptitude and team work. Training is designed for the development of personal skills necessary for the performance of the present job and to prepare them for future growth. Individual development is given top priority to groom high caliber manpower.
The Company has not invited/received any Fixed Deposits from the Public during the year under report. INSURANCE:
The properties / assets of your Company are adequately insured.
M/s. A. F. Khasgiwala & Co., Chartered Accountants, (Membership No. 006491, Firm Registration No. 105114W) had been appointed for a period of 3 (Three) consecutive years at the 27th Annual General Meeting of the Company held on 19th July, 2014, subject to ratification of such appointment by the Members at every subsequent Annual General Meeting.
Further, the Company has received the consent and eligibility of the Statutory Auditors under Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for continuing as the Auditors of the Company.
As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Audit Committee and the Board of Directors have recommended the ratification of the appointment of the Statutory Auditors for the Financial Year 2015–16.
The necessary resolution is being placed before the shareholders for approval.
Your Board had appointed M/s. Rakesh M. Agarwal & Co., Chartered Accountants as Internal Auditors of the Company for the Financial Year 2014–15 However, they had resigned from the Company. Therefore your Board had appointed Mr. Vinay Goyal, Chartered Accountant as an Internal Auditor of the Company for the quarter starting from 1st January 2015 to 31st March, 2015.
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Kothari Singhai & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. The Secretarial Audit Report is annexed as Annexure D.
The Directors have pleasure in recording their appreciation of the assistance, co–operation and support extended to your Company by the shareholders, all Government Authorities, Financial Institutions, Banks, Consultants, Solicitors and Customers.
For and Behalf of the Board of Directors Sd/– Sd/–
Date: 5th August, 2015