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Company Information

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Himatsingka Seide Ltd.

Mar 01
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VOLUME : 14717
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161.80
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178.95
Mar 01
156.80 +1.30 (+ 0.84 %)
 
VOLUME : 197456
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161.80
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178.90
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Market Cap. ( ₹ ) 1543.81 Cr. P/BV 1.14 Book Value ( ₹ ) 138.13
52 Week High/Low ( ₹ ) 179/43 FV/ML 5/1 P/E(X) 116.54
Bookclosure 29/09/2020 TTM EPS ( ₹ ) -16.23 Div Yield (%) 0.32
DIRECTOR'S REPORT
You can view full text of the latest Director's Report for the company.
Year End :2018-03 

BOARDS' REPORT

The Directors are pleased to present the Thirty Third Annual Report on the operations and performance of your Company, together with audited financial statements and auditors ‘report for the year ended March 31, 2018.

1. Performance Review for FY18 and Outlook

The financial highlights for the year under review are given below:

(Rs, Lacs)

Particulars

Standalone

Consolidated

2017-18

2016-17

Change %

2017-18

2016-17

Change %

Revenue from Operations

160,803

139,807

15.02

224,906

213,841

5.17

Other Income

3,551

4,192

-15.28

1,763

1,319

33.66

Total Revenue

164,354

143,999

14.13

226,669

215,160

5.35

EBITDA

41,994

35,155

19.45

46,623

39,089

19.27

EBITDA Margin (%)

26.12

25.15

-

20.73

18.28

-

EBIT

36,465

30,855

18.18

39,428

33,288

18.45

Profit before exceptional items

29,360

24,490

19.88

29,048

23,936

21.36

Profit before tax

29,360

24,490

19.88

29,048

23,936

21.36

Tax Expense

8,755

6,805

28.64

8,884

5,725

55.18

Profit after tax

20,605

17,684

16.52

20,164

18,210

10.73

During FY18, Consolidated Total Revenue increased by 0.53% % to Rs, 2,26,669 Lacs and Consolidated EBITDA grew by 4.86 % to Rs, 46,623 Lacs. The increase in EBITDA was driven mainly by growth in Revenues, optimization of costs and increase in operational efficiencies across the Group.

During the year, the Company made significant progress on various initiatives across its businesses. The key achievements of FY18 are as follows:

- First full year of operations of the integrated Sheeting facility after completion of its brownfield expansion. The operating parameters and utilization levels were stable through the year.

- Successfully commissioned the new Greenfield cotton Spinning facility during Q4 FY18. The plant has an installed capacity of 211,584 spindles and is the world's largest plant under one roof. This project facilitates the Group's backward integration initiatives.

- Concluded the acquisition of the home portfolio from the Global Brands Group. This initiative is in line with the Group's focus on augmenting revenue streams from brands.

- Commenced construction of the greenfield integrated Terry Towel project during Q4 FY18. This project will help augment the Group's home textile manufacturing portfolio.

- The Group consolidated and enhanced revenue streams from its brand portfolio. Revenues from brands stood at Rs, 1,610 Crores compared to Rs, 1,100 Crores in FY17.

Subsidiary and Associate Companies

As on March 31, 2018, the Company had the following subsidiaries and associate companies:

Subsidiaries

- HimatsingkaWovens Private Limited,

- Himatsingka Holdings NA Inc,

- Himatsingka America Inc.,

- Himatsingka Europe Limited,

- Giuseppe BelloraSrl.

- Himatsingka Singapore Pte. Limited,

- Twill & Oxford LLC.

Associate Company

- Himatsingka Energy Private Limited

As required under section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements which form a part of the Annual Report.

The consolidated financial statements presented by the Company includes the financial results of its subsidiary companies. Further, a statement containing the salient features of the financial statements of its subsidiaries in form AOC-1 is annexed to this report as Annexure 1.

Pursuant to section 136 of the Companies Act, 2013, the audited financial statements of the subsidiaries are available on the Company's website at http://www.himatsingka.com/financial-information.html. The Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are kept for inspection at the registered office of the Company and that of the respective subsidiary companies. The Company will make available separate audited and unaudited financial statements of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining it.

As required under Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has drafted a policy for determining material subsidiaries. The policy has been disclosed on the Company's website and can be found at http://www.himatsingka.com/corporate-governance.html

Research and Development

Research and development continues to provide valuable support to our business and has helped us to keep pace with dynamic market conditions. We continue to give in-house research and innovation the highest priority.

Environment, Safety, Energy conservation and Technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce / treat waste and increase energy efficiencies. We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements and ensure eco-friendly production and best in class employee safety standards.

2. Dividend

Your Directors in their meeting held on May 25, 2018, have recommended a final dividend of 50% (' 2.50 per equity share) for the financial year ended March 31, 2018, subject to approval by the shareholders at the ensuing Annual General Meeting.

3. Transfer to Reserves

During the year the Company has not transferred any amount to reserves.

4. Extract of Annual Return

Pursuant to Section 134 read with Section 92(3) of the companies Act, 2013, the requirement of including the extract of Annual Return (Form MGT 9) as an annexure in the Board's Report has been done away with as per notification of Section 36 of the Companies (Amendment) Act, 2017. In this regard the extract of Annual Return is disclosed on the Company's website and can be found at http://www.himatsingka.com/anual-report.html.

5. Number of meetings of the Board

The details of the meetings of the Board and the details of the attendance of the Directors in the meetings are provided in the Corporate Governance Report appearing elsewhere in the Annual Report.

6. Directors' Responsibility Statement

As required by the provisions of Section 134(3)(c) of the Companies Act, 2013 we, the Directors of Himatsingka Seide Limited, confirm the following:

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

(b) the directors 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 and loss of the company for that period;

(c) the directors have taken proper and sufficient care 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) the directors have prepared the annual accounts on a going concern basis; and

(e) the directors, have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and are operating effectively;

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

7. Declaration by Independent Directors

The Company has received from each of its independent Directors, the declaration as stipulated under Section 149(7) of the Companies Act, 2013, confirming that the Director meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013.

8. Nomination and Remuneration Policy

The Company has formed a Nomination and Remuneration Committee as required under Section 178 of the Companies Act, 2013. The Committee has formulated a policy as required under Section 178(3) of Companies Act, 2013 stipulating the criteria for determining qualifications, positive attributes and independence of a director and also the criteria relating to the remuneration for the directors, key managerial personnel and other employees and their performance evaluation. Pursuant to the proviso of sub-section (4) of Section 178 of the Companies Act, 2013, the aforesaid policy is available on the Company's website at http://www.himatsingka.com/ corporate-governance.html.

9. Auditors and Auditors' Report Statutory Audit

The report of Statutory Auditors M/s BSR and Co., LLP, Chartered Accountants, for FY 2017-18 (appearing elsewhere in the Annual Report) does not have any qualification, reservation or adverse remarks.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereafter, M/s. BSR and Co., LLP, Chartered Accountants, were appointed as statutory auditors of the Company and are to hold office until the conclusion of the 37th Annual General Meeting of the Company, subject to ratification by the Members at every Annual General Meeting till the 37th Annual General Meeting of the Company.

The requirement relating to ratification of Auditors by the members of the Company at every AGM has been dispensed with by the Companies Amendment Act, 2017 vide Notification No. S.O. 1833(E) dated May 07, 2018. Pursuant to the said amendment, during the five-year term of appointment / re-appointment of Statutory Auditors, ratification of the appointment / re-appointment by the members in the Annual General Meeting is not required. Accordingly, business item of ratification of re-appointment of Statutory Auditors is not included in the Notice dated August 09, 2018, calling 33rd Annual General Meeting of the Company.

Secretarial Audit

The Company had appointed Mr. Vivek Bhat, Company Secretary in Practice, Bengaluru, to conduct the secretarial audit as required under Section 204 of the Companies Act, 2013. The Secretarial Audit Report given by Mr. Vivek Bhat is appended as Annexure 2 to the Board's Report.

In the above mentioned report, Mr. Vivek Bhat has made the following comment:

"The Company could not spend the eligible profit on Corporate Social Responsibility measures. However, the Company has constituted the CSR Committee and its constitution was as per the regulation."

Board's Response to Comments of Secretarial Auditor

During the year, the Company registered the "Himatsingka Foundation" t rust to undertake various CSR activities including rural development, education and other community development programs. The Company is preparing a detailed plan for the implementation for various programs on a sustainable basis and hence was unable to spend the required amounts in FY18.

As per the provisions, the total amount to be spent by the Company on CSR activities for the FY 2017-18 was ' 368.59 Lacs. During the year, an amount of '61.83 Lacs was spent by the Company.

Cost Auditors

Since the Company's export revenue, in foreign exchange, for the financial year 2017-2018 was greater than 75% (seventy five percent) of the total revenue of the Company, the Company falls within the exemption specified in Clause 4(3) of The Companies (Cost Records and Audit) Rules, 2014. In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan and Doddaballapur.

10. Particulars of Loans, Guarantees, Investments and Securities made

The particulars of loans made, guarantees given, investments made and securities provided as per the provisions of Section 186 of the Companies Act, 2013 and the relevant rules made thereunder are given in the notes to the standalone financial statements.

11. Particulars of Contracts or arrangements with related parties

All transactions entered into by the Company with its related parties are at arm's length and in the ordinary course of business. However, the list of material related party transactions as per the Company's policy on related party transactions, as required under rule 8(2) of Companies(Account) Rules, 2014, is annexed to the Board's Report as Annexure 3.

The Company has also formulated a policy on dealing with Related Parties Transactions as required under Regulation 23 of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015. The same is available in the Company's website at http://www. himatsingka.com/corporate-governance.html.

12. Other Significant Events

Scheme of Arrangement between the Company and Himatsingka Wovens Private Limited: Himatsingka Wovens Private Limited ("HWPL"), a wholly owned subsidiary of the Company and conducts the retail business in India. The Company wishes to demerge the retail business into the Company and retain the real estate assets in HWPL. The Scheme of Arrangement is subject to the approval of the Shareholders and forms part of the notice of the ensuing 33rd Annual General Meeting of the Company.

13. Material changes

Himatsingka America Inc., a wholly owned subsidiary of Himatsingka Seide Limited concluded the acquisition of the home portfolio from the Global Brands Group Holding Limited on May 18, 2018. The acquired home portfolio includes the exclusive license rights to the famous and iconic Tommy Hilfiger Home brand, the Copper Fit brand and other brands.

14. Conservation of energy, Technology absorption & Foreign exchange

The details of conservation of energy, technology absorption and foreign exchange are annexed to the Board's Report as Annexure 4.

15. Risk Management

The Company has developed and implemented a comprehensive R isk Management Policy and framework to counter and mitigate t he various risks encountered by the Company. In terms of the provisions of Section 134 of the Companies Act, 2013 a Risk Management Report is set out in this Annual Report.

16. Board Committees

The details pertaining to the composition of Board Committees are included in the Corporate Governance report, which is part of this report.

The details of the composition of CSR Committee, the CSR Policy and the CSR spending have been elaborated in the Annexure 5 to this report.

17. Board Performance Evaluation

The Company has, during the year, conducted an evaluation of the Board as a whole, its committees and the individual Directors including the Independent Directors as stipulated in the Nomination and Remuneration Policy adopted by the Company. The evaluation was carried out through different evaluation forms which covered among others the evaluation of the composition of the Board/ committee, its effectiveness, activities, governance, and with respect to the Chairman and the individual Directors, their participation, integrity, independence, knowledge, impact and influence on the Board.

The Independent Directors of the Company also convened a separate meeting and evaluated the performance of the Board, the Non Independent Directors and the Chairman.

18. Directors and Key Managerial Personnel

In accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company, Mr. V Vasudevan, Executive Director, retires by rotation and being eligible, offers himself for re-appointment. His re-appointment will be placed as one of the agenda items in the ensuing Annual General Meeting.

In accordance with the provisions of the Companies Act, 2013, the Board appointed Mr. Ashutosh Halbe as the Interim Chief Financial Officer of the Company w.e.f. July 5, 2017. Subsequently the Board at its meeting held on July 26, 2017 approved the appointment of Mr. K. P. Rangaraj, as the President Finance and Group Chief Financial Officer w.e.f., August 2, 2017.

Retirements and Resignations

- Mr. Berjis Desai resigned as Director with effect from May 23, 2017

- Mr. Aditya Himatsingka resigned as Executive Director with effect from May 23, 2017

- Mr. Ashutosh Halbe resigned as Interim Chief Financial Officer with effect from August 2, 2017 and continued to serve as Chief Financial Officer of North American operations.

Your Directors wish to place on record their deep appreciation for the outstanding contributions and services rendered by Mr. Berjis Desai and Mr. Aditya Himatsingka during their tenure.

19. Vigil Mechanism

As a vigilant organization, the Company takes adequate measures to ensure the highest standards of transparency, professionalism, integrity and compliance in its conduct of business.

It is Company's endeavor to provide its employees a secure working environment and therefore the Company has established a "Whistle Blower Policy" as required under the Companies Act, 2013. The same is also available on the Company's website.

Mr. Ashok Sharma, Company Secretary, has been designated as the Chief Compliance Officer under the policy and employees may report any lapse or suspected lapse of integrity and or compliance of any nature, financial or otherwise to him. In exceptional cases, where the Whistle Blower is not satisfied with the outcome of the investigation and or the decision, she/he may make a direct appeal to the Chairman of the Audit Committee, whose contact details are part of the Whistle Blower Policy.

During the year, no complaints were received under this mechanism.

a) Details of Directors ‘remuneration

Director

DIN

Sitting fees

Salaries and Perks

Commission

Total

Ratio (x)

% Change

Mr. D K Himatsingka

00139516

Nil

1 78.75

650.00

828.75

688.56:1

80.79

Mr. Shrikant Himatsingka

00122103

Nil

1 74.62

650.00

824.62

685.12:1

83.70

M r. Vasudeva n Veera rag hva n

07521742

Nil

114.43

84.41

198.84

165.20:1

29.81

Dr. KRS Murthy

00167877

2.40

Nil

12.00

14.40

11.96:1

22.03

Mr. Rajiv KhaitanA

00071487

2.20

Nil

12.00

14.20

11.80:1

21.37

Ms. Sangeeta Kulkarni

01690333

2.10

Nil

12.00

14.10

11.71:1

24.78

Mr. Berjis M Desai*

00153675

0.30

Nil

Nil

0.30

0.25:1

-97.12

Mr.Aditya Himatsingka#

00138970

Nil

11.78

Nil

11.78

9.78:1

-93.74

* up to May 23,2017 # up to May 23,2017 "Paid to Khaitan & Co., LLP.

In the remuneration mentioned above, the sitting fees, salaries and perquisites form the fixed component of the total remuneration and the commission is a variable component linked to the performance of the Company.

KMP

Designation

Total Remuneration (Rs,l Lacs)

%age increase over FY17

Mr. Ashutosh Halbe (From 7/17 to 8/17)

Interim CFO

Nil

Nil

Mr. K P Rangaraj (From August 2, 2017)

President - Finance and Group CFO

95.05

N.A.

Mr. Ashok Sharma

SVP& CFO (Strategic Finance) & Company Secretary

88.89

24.91

c) The percentage increase in median remuneration of the employees is 4.46%

d) The number of permanent employees in the rolls of the Company is 3,898

e) The average increase in the salaries of employees other than managerial personnel during the year was 6.49% and the average increase of the remuneration of managerial personnel was 53.49%. The increase in the remuneration of managerial personnel is in correlation to their individual performance and to the performance of the Company.

f) The key parameters for the variable component of remuneration availed by the directors are the amount of responsibilities taken, performance of the business and the specific contribution made by the director to the overall performance of the Company.

g) During the year, there were no employees whose remuneration was higher than that of the highest paid director.

h) It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company

i) Information as per Rule 5(2) of the Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

21. Investor Education and Protection Fund

Pursuant to the applicable provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('the Rules'), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends of Rs, 2,08,023. Further, 2,17,224 corresponding shares were transferred as per the requirements of the IEPF rules. The details are provided in the Shareholder information section of this Annual Report and are also available on our website at www.himatsingka.com.

22. Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will find a detailed report on corporate governance as part of this Annual Report. The corporate governance Report along with Auditor's Certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report as Annexure 6.

23. Insurance

The Company's assets are prone to risks / peril. The major risks / peril are adequately insured.

24. Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of the Companies Act, 2013.

25. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to provide a safe work environment to all its employees. Hence, it does not tolerate any discrimination and/ or harassment in any form. The Company has in place a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as per the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,2013. The Company has not received any complaint during the year.

26. Dividend Distribution Policy

The Board of Directors of the Company have adopted a Dividend Distribution Policy as required under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016. The policy is attached as Annexure 7.

27. Business Responsibility Reporting

As per SEBI Listing Regulations, a Business Responsibility Report is attached and forms part of this Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the continuous efforts made by all employees in ensuring a commendable operational performance. Your Directors also wish to thank the Group's Customers, Suppliers, Shareholders, Bankers and other Stakeholders including the Central and the State Governments for their continued support.

For and on behalf of the Board

Place: Bengaluru D.K. Himatsingka

Date: August 9, 2018 (Executive Chairman)