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Hanung Toys & Textiles Ltd.

58888:hanun  |  IND:Others - Not Mentioned  |  ISIN code:INE648H01013  |  SECT:General

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You can view full text of the Director's Report for Hanung Toys & Textiles Ltd.
Director Report
Mar2014   Mar 2015
Dear Members,
The Directors present the 25th Annual Report of the Company together
with the standalone and consolidated audited statements of Financial
Accounts of the year ended March 31, 2015.

FINANCIAL HIGHLIGHTS:

The following table gives the financial highlights of your company on a
standalone basis according to the Indian Generally Accepted accounting
Principles (GAAP)

FINANCIAL RESULT (STANDALONE)                          (in Lacs)

Particulars                                 2014-15     2013-14

Net Sale & other Income                       13642       50054

Profit / (Loss) Before Interest, 
Depreciation & Tax                           (93314)     (36237)

Financial Overheads                           27173       23062

Depreciation                                   6236        4480

Net Profit/(Loss) Before Tax                (126723)     (63779)

Provision for Tax                                --          --

- Current                                        --          --

- Deferred                                       --      (11963)

- Tax for earlier years                          --       (2237) 

Net Profit/(Loss) after Tax                 (126723)     (49578) 

Appropriations

Proposed Dividends                              Nil         Nil

Provision for Tax for Dividends                 Nil         Nil

Surplus carried forwards to Balance Sheet   (126723)     (49578)

Transfer to General Reserve                      --

Net Surplus carried forwards to Balance Sheet    --

FINANCIAL RESULTS (Consolidated)

The following table gives the financial highlights of your company on a
consolidated basis according to the Indian Generally Accepted
Accounting Principles (GAAP).

                                                        (in Lacs)
Particulars                                 2014-15      2013-14

Net Sale & other Income                       13642        50080

Profit / (Loss) Before Interest, 
Depreciation & Tax                           (91363)      (35326)

Financial Overheads                           27174        23063

Depreciation                                   6237         4482

Net Profit/(Loss) Before Tax                (124774)      (62871)

Provision for Tax                                --           --

- Current                                        --           --

- Deferred                                       --       (11963)

- Tax for earlier years                          --        (2237) 

Net Profit/(Loss) after tax before
Minority interest                           (124774)      (48670) 

Minority interest in income/(loss)               --            4 

Net Profit /(Loss) after Tax & 
Minority Interest                           (124774)      (48666)

Appropriations

Proposed Dividends                                -

Provision for Tax for dividends                   -

Surplus carried forwards to Balance Sheet   (124774)      (48666)

Transfer to General Reserve                       -

Net Surplus carried forwards to Balance Sheet     -

Erosion of Net Worth and reference to the Board for Industrial and
Financial Reconstruction (BIFR)

The operating results have been adversely affected due to adverse
market conditions, non receipt of Tuff''s subsidy and blockage of
substantial funds in slow/ non moving stocks and debtors. The Company
faced severe liquidity crunch and huge scarcity in the working capital
funds. In order to partially mitigate the working capital fund scarcity
and arrest the further deterioration in the quality of stocks, the
Company affected disposal of stocks of slow moving / non moving fabrics
and finished goods at market prices, which in most of the cases was
well below the cost, resulting in losses. The Company settled its old
debtors by allowing their pending debit notes, quality discount and /or
taking the material back, which further contributed losses to the
Company.

On accumulated losses of the Company exceeding the entire net worth,
the Company made a reference with the Board for Industrial and
Financial Reconstruction in terms of the provisions of section 15(1) of
Sick Industrial Companies (Special Provision) Act 1985, which has since
been registered by the Hon''ble BIFR as case No. 54/2015.

OVERVIEW AND REVIEW OF OPERATIONS

The Indian Toys and Textiles Industry witnessed challenging times as a
results of low growth led by issues such as high fiscal deficit, high
inflation and worsening current account balance. The slowdown in the
global growth aggravated the sluggishness in the economy.  Apart from
the un-favorable demand supply scenario the industry has been also
reeling under the pressure of rising manufacturing cost.

The gross sales and other income for the financial year under review
were Rs. 13642 lacs as against Rs. 50054 lacs for the previous
financial year. During the Year under review the Company has incurred
Losses after Tax of Rs 126723 lacs as against the Losses of Rs.  49578
lacs for the previous year.

The Loss of the company has increased due to increase in finance cost
and increase in depreciation due to change in method as prescribed by
the Companies Act 2013 during the year. The Company expects to improve
its working in the next financial year.

DIVIDEND

The Board of Directors has decided not to recommend any dividend due to
non availability of profit during the year.

CORPORATE DEBT RESTRUCTURING

The Company had approached it''s lead banker and lender, i.e., Punjab
National Bank for restructuring of its debt under CDR mechanism, and
accordingly, the lead banker referred the matter to CDR Empowered Group
on 31st July, 2013. The case of the Company was admitted under CDR on
26th September, 2013, and the CDR scheme was discussed in CDR EG
meeting held on 21.04.2014, and was approved in the meeting held on
23rd May, 2014 and the same was informed to the Company on 16th June,
2014.

The main features of CDR scheme are as below:

1.  Cutoff date is 1st April 2013.

2.  Moratorium period will be 2 years and repayment in 8 years.

3.  Rate of interest on term loan is reduced to 11% p.a.

4.  Rate of interest on working capital and FITL (Funded interest Term
Loan) is reduced to 10.50%p.a.

5.  Waiver of all liquidity damages and penal interest and penal
charges etc.

6.  Promoter''s contribution Rs.83.68 crores to be brought in within one
year.

7.  Conversion of interest for initial 24 month into FITL (Funded
interest Term Loan) with repayment period of 6 years.

BUSINESS

The Company''s main operations consist of Manufacturing of Soft Toys and
Home Furnishings.

EMPLOYEE STRENGTH

The total numbers of permanents employees on the rolls of the company
was 448 as on March 31, 2015,

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of 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, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said Rules are provided in the
Annexure-B forming part of the Annual Report.

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-A forming part of the Annual
Report.

Having regard to the provisions of Section 136(1) read with its
relevant provisions 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.

CORPORATE GOVERNANCE

Your Company is fully compliant with the Corporate Governance
guidelines, as laid out in Clause-49 of the Listing Agreement with the
Stock Exchanges. The report on Corporate Governance forms part of the
Annual Report.

The 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 forms part
to the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard (AS) 21 on Consolidated
Financial Statements, the audited consolidated financial statement is
provided in the Annual Report.

SUBSIDIARIES

Pursuant to section 129(3) of the Companies Act, 2013 read with Rule 5
of the Companies (Accounts) Rules, 2014, the statement containing
salient features of the financial statements of the Company''s
subsidiaries (in Form AOC-1) is attached to the financial statement.

The Annual Accounts of the subsidiary companies and the related
detailed information are available at any time to shareholder of the
parent company and subsidiary companies and to statutory authorities.
On request, these documents will be made available for inspection at
the Company''s Corporate office.

DIRECTORS

Mr. Abhishek Monu Kaushik was appointed as an additional director
(Independent) on 9th April 2015 and Mrs. Deepika Gera appointed as an
Additional Director (Independent) on 30th June 2015. These Directors
will hold the office till the date of forthcoming Annual General
Meeting. A Notice in writing has been received from Members signifying
their intention to propose the appointment of Mr. Abhishek Monu Kaushik
and Mrs. Deepika Gera as a Director under independent Director category
at the Annual General Meeting to hold office for 5 consecutive years
with effect from their appointment without being subject to retirement
by rotation.

During the Year Mr. C.S. Batra ceased to be Director with effect from
25th Nov. 2014 and Mr. R.K. Pandey, ceased to be Director with effect
from 22nd June 2015, The Directors wish to place on record the valuable
guidance and services rendered by the independent Directors during
their tenure as Independent director of the Company.

Mr. Umesh Dhal ceased to be C.F.O with effect from 21st May 2015
Pursuant to Rule 895 (iii) of the Companies (Accounts) Rules 2014 It is
reported that other than the above there have been no changes in the
Directors or Key Managerial Personnel during the Year.

STATUTORY AUDITOR

M/s Ravindra Sharma & Associates, New Delhi has been appointed as
Statutory Auditor in place of M/s AMRG & Associates New Delhi under
section 139 (8) of the Companies Act 2013. M/s AMRG & Associates has
resigned during the year and M/s Ravindra Sharma & Associates, New
Delhi appointed to fill the casual vacancy caused by M/s AMRG &
Associates New Delhi.

M/s Ravindra Sharma & Associates, New Delhi, the Statutory Auditor have
confirmed their eligibility to the effect that their reappointment
would be within the prescribed limits under the Companies Act 2013 and
that they are not disqualified for reappointment.

The Report of the Statutory Auditors for the year ended 31st March 2015
does not contain any qualification, reservation or adverse remark.

AUDITORS QUALIFICATION SYSTEM ON ACCOUNTS

Notice to the accounts, as referred in the auditor''s report, are self-
explanatory and consistently followed and therefore do not call to any
further comments and explanations.

COST AUDITOR

In terms of the provisions of The Companies Act, The Board of Directors
of your company have on the recommendation of the Audit Committee,
Appointed M/s Chandra Sharma & Co. Vaishali, Ghaziabad as Cost Auditor
to conduct the cost audit of your company for the financial year ending
31st March 2016 subject to the approval of the Central Government.

The Audit Committee has received a certificate from the Cost Auditor
certifying their independence and arm''s length relationship with the
company.

COMPLIANCE UNDER COMPANIES ACT, 2013

Pursuant to Section 134 of the Companies Act, 2013 read with the
Companies (Accounts) Rules, 2014, your Company complied with the
compliance requirements and the detail of compliances under Companies
Act, 2013 are enumerated below:

EXTRACT OF ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act 2013 read with
Rules 12(1) of Companies (Management and Administration) Rules 2014 an
extract of the Annual Return in Form MGT-9 is attached herewith as
Annexure-E.

BOARD MEETING HELD DURING THE YEAR

During the year, 17 meetings of the Board of Directors were held.  The
details of the meetings are furnished in the Corporate Governance
Report which is attached as Annexure-C to this Report.

DIRECTORS'' RESPONSIBILTY STATEMENT

To The best of our knowledge and belief and according to the
information and explanation obtained by us, your Directors make the
following statements in the terms of section 134(3)(c) of the Companies
Act, 2013:

1.  in the preparation of the annual financial statements for the year
ended March 31, 2015, the applicable Accounting Standards had been
followed along with proper explanation relating to material departures.

2.  for the financial year ended March 31, 2015, such accounting
policies as mentioned in the Notes to the financial statements have
been applied consistently and judgments and estimates that are
reasonable and prudent have been made so as to give a true and fair
view of the state of affairs of the Company and of the Profit and Loss
of the Company for the year ended March 31, 2015.

3.  that proper and sufficient care has 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.

4.  the annual financial statements have been prepared on a going
concern basis.

5.  that proper internal financial controls were followed by the
Company and that such internal financial controls are adequate and were
operating effectively.

6.  that proper systems to ensure compliance with the provisions of all
applicable laws were in place and that such systems were adequate and
operating effectively.

SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act, 2013 read
with Rule 9 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules 2014, your Company engaged the services of
M/s NG & Associates, New Delhi Company Secretary in practice to conduct
the Secretarial Audit of the Company for the financial year ended on
31st March 2015. The Secretarial Audit Report (in Form MR-3) is
attached as Annexure-D to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis Report, highlighting the
Performance and Prospects of the Company''s energy and environment
segments including details if subsidiaries catering to the respective
business, is attached.

LISTING OF STOCK EXCHANGES

The company''s equity shares are listed on two stock exchanges- National
Stock Exchange of India Ltd (NSE), and Bombay Stock Exchange Ltd (BSE).

PUBLIC DEPOSITS

The Company had no unpaid / unclaimed deposit(s) as on March 31, 2015.
During the year under review, your Company did not accept any deposits
within the meaning of provisions of Chapter V – Acceptance of Deposits
by Companies of the Companies Act, 2013 read with the Companies
(Acceptance of Deposits) Rules, 2014.It has not accepted any fixed
deposits during the year.

CODE OF CONDUCT COMPLIANCE

Pursuant to clause 49 of the Listing agreement entered with the Bombay
Stock Exchange Limited and the National Stock Exchange of India
Limited, the declaration signed by the Managing Director affirming
compliance with the code of Conduct by the Director''s and senior
management personnel, for the financial year 2014-2015 is annexed and
forms part of the Directors and Corporate Governance Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The particulars prescribed under Section 134 of the Companies Act, 2013
read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating
to Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo are furnished in Annexure A to this Report.

CAUTIONARY STATEMENT

Statements made in the Report, including those stated under the caption
"Management Discussion and Analysis" describing the Company''s plans,
projections and explanations may constitute "forwards looking
statement" within the meaning of applicable laws and regulations.
Actual results may differ materially from those either expressed or
implied.

REGISTRAR AND SHARE TRANSFER AGENT

M/s Karvy Computershare Private Limited, Hyderabad, is the Registrar
and Share Transfer Agent of the Company. Details of the depository
system and listing shares are given in a part of the "Additional
Shareholders Information", which forms a part of the Corporate
Governance Report and is attached with the Annual Accounts.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere thanks to
the Company''s clients, vendors, investors, and bankers for their
continued support to the Company during the year. The Directors wish to
place on record their appreciation of the contributions made by
employees at all levels.

We thank the Government of India, State Government and other Government
agencies for their support and look forward to their continued support
in future.

                                              By order of the Board

                               For Hanung Toys and Textiles Limited

Place : Noida                                    Ashok Kumar Bansal

Date  : August 14, 2015              Chairman-cum-Managing Director

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