Digjam Ltd Merged Directors Report

TO THE SHAREHOLDERS

We present herewith our Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2014.

(Note: Other income in previous year includes gain of Rs.16,37.59 lacs from sale of certain surplus properties)

The Directors do not recommend any dividend.

REVIEW OF KEY BUSINESS MATTERS

The business environment remained very challenging as the Indian economy continued to underperform and GDP growth rate weakened to an estimated 4.8%, with yet greater weakness in the industrial sector, consumer durables and capital goods. Inflation remained on the higher side affecting interest rate policies. India remained somewhat vulnerable on the macroeconomic front, with significant current account and fiscal deficits depreciating the rupee. While steps taken by the Government narrowed CAD down to 2.2% of GDP, the economy remains constrained by slow growth, contracting manufacturing, weak investment and reduced private consumption. The deceleration of economic growth can be argued to have bottomed out, but return to growth of 8-9% could take longer depending on the speed and effectiveness of implementation of economic policies and measures. Global growth in 2014-15 is however expected to see a recovery from the period of recessions and weaknesses, with GDP growth going up to 3.3% from the 2.4% seen last year, with the advanced economies, particularly the US, leading the recovery. Growth in the Euro area has been hesitant. Although growth in developing countries was relatively weak, at an estimated 4.8 percent, it has been firming in recent months, partly reflecting the growth in high-income countries.

The global woollen textiles markets, particularly in Europe, remained depressed despite a mild improvement in global growth. The demand for woollen fabrics was also affected by competition from non-woollen materials and weather conditions in several markets in the latter part of the year. Mergers and corporate restructuring at major customers in the US also led to rescheduling of shipments and deferring of substantial orders. Improvement in the economy in general, particularly in the US, UK and Europe would augur well for exports of woollen fabrics.

Despite these overall depressed conditions, the Company’s achieved 11% higher sales at Rs.146 crores against Rs.132 crores last year, while volumes were 7.7% higher, reflecting higher realisation. Domestic volumes were 20% higher than last year but exports dropped by about 10%. Costs increased due to persistent inflation, increases in energy and fuel costs, and volatility in wool prices. The Company continues to take steps to broaden its markets and the year witnessed material progress in strengthening quality and development of new fabric structures and finishes, which have all been well received by the market. The Company continuously takes measures to improve operations, trim overheads and discretionary spend, and strengthen liquidity. The proceeds from disposal of a portion of property not affecting operations, which netted a gain of Rs. 16,38 lacs in the previous year was used to trim debts, thus lowering finance costs.

DIRECTORS

In terms of Section 149, 152 and any other applicable provisions of the Companies Act, 2013, effective from 1st April, 2014, Independent Directors are not to be included in the total number of directors of the Company for the purpose of determining the directors liable to retire by rotation. Accordingly, Smt. Meenakshi Bangur retires at the forthcoming Annual General Meeting and being eligible offers herself for re-appointment.

Sri A C Mukherjee retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for appointment as Independent Director of the Company in terms of Section 149 and other applicable provisions of the Companies Act, 2013.

Sri G. Momen, Sri S. Ragothaman and Sri Bharat Anand, Directors, whose present term of office is liable to determination by retirement of Directors by rotation under the applicable provisions of the Companies Act, 1956, being eligible, offer themselves for appointment, in terms of Section 149 and other applicable provisions of the Companies Act, 2013, as Independent Directors of the Company. Necessary notices have been received from members proposing them as candidates for the office of Directors of the Company.

STATUTORY INFORMATION AND OTHER MATTERS

Our report on Corporate Governance along with Auditors’ certificate on compliance, and the Managements’ Discussion & Analysis Report, as required under Clause 49 of the Listing Agreement, and information required under Section 217(1)(e) of the Companies Act, 1956 ("Act") read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, all form part of this report and are annexed hereto. Section 217(2A) of the Act is not applicable as there were no relevant employees during the year. The Company has not invited/accepted any Fixed Deposits and there are none outstanding on March 31, 2014. Relations with employees were cordial and we record our appreciation of the contribution made by employees during the year.

The Managing Director & Chief Executive Officer and the Chief Financial Officer have certified as per the requirements of Clause 49(V) of the Listing Agreement, which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care, pursuant to Section 217(2AA) of the Act, the Directors indicate that (i) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanations relating to material departures; (ii) 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 of the Company for the year; (iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the directors had prepared the annual accounts on a going concern basis.

Pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 notified on December 9, 2013, the Company has set up a Committee to look into complaints under the said Act. The Company has not received any complaints relating to sexual harassment at work place from any woman employee during the year.

The Company, having regard to its size and scope, is generally compliant with relevant guidelines on Corporate Social Responsibility (CSR), even though not presently applicable to the Company. The Board has also constituted a committee to mentor and monitor CSR activities. Small steps have been always taken by the Company for social and inclusive development in its local area; however given the relatively small size and geographical spread it has not been practical to undertake directly any significant projects outside these. The Company has accordingly adopted a policy to support external bodies including relevant bodies, NGOs or Government Relief Funds selected by the Board, including through financial contribution to them, with greater participation in the areas of health and social welfare, efforts toward reducing child mortality, promotion of education & socially responsible behaviour, and employment enhancing vocational skills.

AUDITORS’ OBSERVATIONS

The observations of the Auditors regarding advances towards building are explained in the Note No. 12 to the Accounts; necessary legal steps have been initiated by the Company to get possession of the said building/recovery of amounts paid along with interest, and the advances are considered good. After close of the year, NSE has advised the Company, based on recommendation of the Qualified Audit Review Committee of SEBI, to suitably rectify the qualification in this regard. Considering that the matter is sub-judice, the Company will take appropriate steps based on professional/legal advice.

AUDITORS

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, retire and, being eligible, offer themselves for re-election. They are proposed to be appointed to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the third consecutive Annual General Meeting of the Company thereafter (i.e. for a term of three consecutive years).

The Company had appointed M/s N. D. Birla & Co., Cost Accountants, Ahmedabad to audit the cost accounts of the Company pursuant to Section 233B of the Act. The Cost Audit Report for the year ended March 31, 2013 had been e-filed in the XBRL format by the Cost Auditor on September 8, 2013, which is well within the due date of September 27, 2013.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.