COTTAGE ANNUAL REPORT ENGLISH

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BOARD OF DIRECTORS

CHAIRMANShri Anant Kumar Singh(w.e.f.12.06.2017)

Mrs. Rashmi Verma(28.01.2016 to11.05.2017)

MANAGING DIRECTORShri Pramod Nagpal

DIRECTORSShri Shantmanu(w.e.f.12.06.2017)

Shri Alok Kumar (w.e.f. 21.04.2016 to 11.05.2017)

Dr. K. Gopal(21.04.2016 to 16.08.2016)

CHIEF VIGILANCE OFFICERShri Rajesh Kumar

COMPANY SECRETARYShri Ashok Kinra

REGISTERED OFFICE & HEAD OFFICE Jawahar Vyapar BhavanJanpathNew Delhi – 110 001CIN U74899DL1976GOI008069

STATUTORY AUDITORSM/s.S.C. Vasudeva & Co.Chartered AccountantsNew Delhi, Hyderabad & Patna

BRANCH AUDITORSM/s. Anand Jain & AssociatesChartered AccountantsMumbai

M/s. S.N.Kollur & Co.Chartered AccountantsBengaluru

M/s. Venkatesh & Co., Chartered AccountantsChennai

M/s. Sumanta & Co.Chartered AccountantsKolkata

BANKERSState Bank of IndiaBank of BarodaIndusInd BankAxis BankICICI BankOriental Bank of CommerceCentral Bank of India Canara BankDevelopment Credit Bank (DCB)IDBI Bank

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stI have great pleasure in welcoming you to the 41 Annual General Meeting of

Central Cottage Industries Corporation of India Ltd (CCIC).

The Handicrafts Sector provides employment to a vast segment of craft

persons in rural & semi urban areas and generates substantial foreign

exchange for the country, while preserving its cultural heritage. Handicrafts

have great potential, as they hold the key for sustaining not only the existing

set of millions of artisans spread over length and breadth of the country, but

also for the increasingly large number of new entrants in the crafts activity.

Presently, handicrafts contribute substantially to employment generation

and exports. The Handicraft sector has, however, suffered due to its being

unorganized, with the additional constraints of lack of education, low capital,

poor exposure to new technologies, absence of market intelligence, and a

poor institutional framework. The sector is estimated to employ 68.86 lakh artisans.

The Handloom sector has a unique place in our economy. This sector has been sustained by transferring

skills from one generation to another. The strength of the sector lies in its uniqueness, flexibility of

production, openness to innovations, adaptability to the supplier’s requirement and the wealth of its

tradition. Adoption of modern techniques and economic liberalization, however, has had a serious impact

on the handloom sector. Competition from powerloom and mill sector, availability of cheaper imported

fabrics, changing consumer preferences and alternative employment opportunities have threatened the

vibrancy of the handloom sector. Due to various policy initiatives and scheme interventions like cluster

approach, aggressive marketing initiative and social welfare measures, the handloom sector has shown

positive growth and the income level of weavers has improved. The sector provides employment to 43.31

lakh persons engaged on about 23.77 lakh handlooms. During 2015-16 production in Handloom sector

was 3678 million sq. meters.

Your Corporation is committed to providing market platform to primary producer, artisans and craft persons

who are the backbone of CCIC. CCIC has sourced more than 92% of its products directly from artisans,

craft persons, weavers and members of clusters of Office of DC(Handicrafts) and DC(Handlooms), CCIC

is a fair payment organization and is committed to making fair and timely payments to artisans.

Your Corporation is also committed to improve purchase efficiency, cost reduction and higher turnover. The

Corporation has entered into a Memorandum of Understanding with Ministry of Textiles whereby a

turnover target of ̀ 9500 lakh has been fixed for 2017-18. Steps have been taken to improve merchandise

mix, focus on quality and niche products, brand building and holding thematic exhibitions.

Your Corporation recognizes importance of good Corporate Governance which leads to commitment to

values, ethical business conduct and transparency and to meet these objectives, we are constantly and

firmly following the principles of good Corporate Governance.

CCIC is committed to fulfilling its obligations in terms of the guidelines on Corporate Social Responsibility

(CSR) notified by the Department of Public Enterprises. During the year CCIC undertook CSR activities in

CHAIRMAN’S MESSAGE

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terms of the guidelines on Corporate Social Responsibility (CSR) notified by the Department of Public

Enterprises and paid an amount of ` 2.00 lakhs towards contribution to "Swachh Bharat Kosh" of Central

Government.

Your Corporation continues to emphasize on use of Hindi for official work and to ensure implementing of

official language policy of Government of India. Consolation prize has been awarded to Mumbai branch of

CCIC for the year 2016-17 for excellent implementation of official language.

On behalf of the corporation, I would like to express my gratitude to the Ministry of Textiles and various

other ministries of Government of India such as Ministry of Commerce, Ministry of Corporate Affairs,

Ministry of DONER, Ministry of External Affairs, Ministry of Tourism and various other ministries of State

Government in Bihar, Karnataka, Maharashtra, Tamilnadu, Telangana, Uttar Pradesh, West Bengal,

Department of Public Enterprises, Development Commissioner of Handicrafts, Development

Commissioner of Handlooms, Export Promotion Council for Handicraft and Handloom, National Centre for

Design and Product Development, National Institute of Fashion Technology for their continued assistance,

support and guidance. The Directors are also grateful to the Comptroller and Auditor General of India,

Statutory Auditors, Internal Auditors, its Bankers, State Trading Corporation of India Ltd. and HHEC of

India Ltd. for the active help and cooperation extended by them. In addition to that I would like to express

my gratitude to all the stakeholders and sincere thanks to employees for their unwavering commitment to

achieving a high level of excellence in the delivery of our product to our customers and reaffirm our

commitment to excellence to achieve higher growth rate.

I also take this opportunity to thank the esteemed customers, artisans and craftsmen for the trust and

confidence reposed by them in the Corporation.

With best wishes.

sd/-

(Anant Kumar Singh)

Chairman

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stYour Directors have pleasure in presenting, the 41 Annual Report on the business and operations of the Corporation and

stAudited Statement of Accounts for year ended 31 March, 2017, together with Auditors’ Report.

The Members:

Presentation of the Annual Report

DIRECTOR’S REPORT

(`in lakh )Summary of Financial Results Turnover 2016-17 2015-16

Sales – Domestic 8255.62 8215.85

Sales – Exports 341.45 288.20

Services / Others 166.41 88.39

Total Turnover (Gross) 8763.48 8592.44

Less : Trade Discount 13.96 15.06

Excise duty paid 5.52 2.36

Net Turnover 8744.00 8575.02

Gross Profit & Other Income

Trading Profit 4122.57 4075.00

Int. & Misc. Income 460.89 476.13

Total 4583.46 4551.13

Overheads

Employees Benefit Expense 2754.23 2694.09

Other Expenses 1765.98 1654.73

Corporate Social Responsibility Expenditure 2.00 2.00

Finance costs 4.29 4.09

Depreciation & Amortization 97.32 97.36

Total Gross overheads 4623.82 4452.27

Profit (+) / Loss (-) before Exceptional Items, (40.36) 98.86Prior Period Adjustments &Tax

Prior Period (income)/ Expense 0.47 5.17

Exceptional items (-)income/ (+)Expense (54.70) 0.19

Profit (+) / Loss (-) Before Tax 13.87 93.50

Less: Deferred tax - prov./ (write Back)- Prov/(Write Back) (5.96) (32.37)

Provision for Tax (Current year) 14.60 90.24

Provision for Tax (earlier years) (3.09) 14.53

Profit (+) / Loss (-) After Tax 8.32 21.10

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Equity 1085.00 1085.00

Inventories 1816.53 1221.22

Trade Receivables (Net of provisions) 133.10 86.90

Trade Receivables (excluding Ministry of 95.00 79.48External Affairs) (Net of provisions)

Loan funds 80.00 80.00

Reserves & Surplus

Reserves 427.37 427.37

Surplus 415.13 406.81

Deferred Govt. Grant 281.74 290.81

Ratio Analysis ( % )

Trading Profit : Gross Turnover 47.04 47.43

Overheads : Gross Turnover 52.76 51.82

Trade Receivables(net) : Gross Turnover 1.52 1.01

Inventories : Sales 21.13 14.36

(` in lakh )

The Income Tax Assessments have been completed upto the Assessment year 2014-15.

Performance during the year

( a ) Turnover

The gross turnover of the Corporation for the year under report was ` 8763.48 lakh as against` 8,592.44 lakh in the previous year i.e. 2015-16 showing increase of 1.99% over the previous year.

(b) Exports

The total exports of the Corporation during the year 2016-17 were ` 341.45 lakh as compared to` 288.20 lakh in the previous year.

(c) Foreign exchange earnings / Outgo

Total foreign exchange earnings and outgo during the year were as follows:-

Foreign exchange earnings by way of exports and sales in India for which money was realized in foreign currency

Foreign exchange outgo 8.16

3201.35 (` in lakh )

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(d) Profitability

The Gross income during the year 2016-17 increased from 4551.13 lakh in the previous year to4583.46 lakh. The overheads of the Corporation increased from 4452.27 lakh in the previous year

to 4623.82 lakh in the current year. The current year ended with a pre-tax profit of 13.87 lakh as against corresponding profit of 93.50 lakh in the previous year.

Dividend

The Directors are pleased to recommend a dividend of 2.50 lakh which is @ 30% of the post tax profit of 8.32 lakhs and 0.23% Paid-up Share capital of 10.85 crore and 0.13 % of Net worth for the year 2016-17.

Design Development, Marketing and Exhibitions

CCIC continuously endeavors to develop new designs. During the F.Y.2016-17, 655 numbers of new designs were developed. Special initiatives were taken during the year to enhance the sales including online sales. 526 nos. of additional products were showcased on the website of CCIC during 2016-17. 34 nos. of new corporate Customers were also added during the F.Y.2016-17 to whom sales of` 1 lakh and above was made during the year.

During the year 2016-17, 65 theme based exhibitions were organized in and outside emporia, whereby new range of products were displayed to expand the patronage of Corporation. CCIC also participated in 4 (four) overseas fairs sponsored by DC(Handlooms)/ DC(Handicrafts) at Hong Kong, Italy, Malaysia and Germany

Merchandise Procurement System

CCIC procures merchandise from handicraft and handloom clusters and a large number of artisans, craftsmen, weavers, etc. spread throughout the country and also from National Awardees, State Awardees, MSME enterprises, Women organizations, minority and weaker sections etc. The retail prices and quality of products of CCIC are considered a benchmark in the trade. CCIC procured 92.53% of total procurement directly from artisans in F.Y.2016-17 as against 89.39% in F.Y.2015-16, thereby registering an increase of 3.14% over the previous year. All efforts are made for payment to artisans as per the prescribed timelines of the company and CCIC made timely payment to artisans as per the prescribed timeline fixed in respect for direct purchase in 92.27% cases (nos. of invoices paid) during the year.

Two Common Facility Centers (CFCs) in Cholapur and Ramnagar in Varanasi

CCIC set up 2 Common Facility Centers (CFCs) in Cholapur and Ramnagar in Varanasi for the benefit of weavers in January, 2015.

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stTill 31 March, 2017, CCIC has facilitated 2014 weavers providing information and services on various schemes through CFCs operated by it in Cholapur and Ramnagar. Further CCIC has awarded work to 264 weavers associated with CFC’s in Varanasi and placed orders for handloom items such as sarees, dress material and Dupattas worth 389.41 lakhs for marketing through CCIC emporia.

In the above CFCs, two Common Service Centres (CSC) have also been set up through CSCe-governance Services India Ltd. for providing various services such as Recharge services, Passport Registration services, Banking services, Travelling & Ticketing, PAN card, Aadhar Card services etc.

Management Discussion & Analysis Report

In terms of Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by the Department of Public Enterprises, Govt. of India, a Management Discussion & Analysis Report is placed at Annexure – I which forms the part of the Annual Report of the Company.

Change in Board of Directors

The following changes have taken place in the Board of Directors since previous Director’s Report:-

1. Shri Anant Kumar Singh, Secretary, Ministry of Textiles has been appointed as Acting Chairman on the Board of CCIC, vide office order no.1/31/2011-CCIC dated 12/06/2017 issued by Ministry of Textiles.

2. Shri Shantmanu, Development Commissioner (Handicrafts) has been appointed as Govt. Nominee Director on the Board of CCIC, vide office order no.1/31/2011-CCIC dated 12/06/2017 issued by Ministry of Textiles.

3. Mrs. Rashmi Verma ceased to be as Acting Chairperson on the Board of CCIC w.e.f.11/05/2017 (AN) in terms of office order no.1/2/2014-CCIC dated 22/06/2017 issued by Ministry of Textiles.

4. Shri Alok Kumar ceased to be as Director on the Board of CCIC w.e.f. 11/05/2017 (AN) in terms of office order no.1/2/2014-HHEC/CCIC dated 26/05/2017 issued by Ministry of Textiles.

Numbers of Board Meetings held & dates

During the Financial Year 2016-17, Board of Directors met four times and the interval between any Board meetings did not exceed 120 days. The dates of the meetings were:-

(1) 17.06.2016 (2) 14.09.2016 (3) 08.12.2016 (4) 28.02.2017

The last AGM was held on 08.12.2016.

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Policy on Director’s appointment and remuneration

CCIC being a Government Company, the terms and conditions of appointment and remuneration of its Whole-time Functional Director is determined through Ministry of Textiles, the administrative ministry of the company. Official Directors are appointed by Ministry of Textiles, Government of India. The eligibility criterion for appointment of Independent Directors is laid down by the Department of Public Enterprises of the Government of India.

The Part-time Official Directors are Government Nominees hence, remuneration is not paid to them by the company. No sitting fee was paid to any Director during the Financial Year 2016-17. The pay scale of Managing Director (Full time Functional Director) is ̀ 65,000 - 75,000.

Annual evaluation of the performance of the Board, its Committes and Individual Directors

CCIC, being a Government Company, is exempted from the requirements in this regard in terms of notification dated 05.06.2015 issued by the Ministry of Corporate Affairs, Government of India.

Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed:-

(i) that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed.

(ii) that the Directors have selected such Accounting Policies and applied them consistently and made judgement 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) that the Directors have taken proper and sufficient care for the maintenance of adequate Accounting Records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on a “going concern” basis.

(v) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Declaration by Independent Directors

There being no Independent Director, a 'nil' declaration is applicable in this regard.

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Manpower Strength and Industrial Relations

stAs on 31 March, 2017 the Corporation had strength of 277 employees as compared to 285 as on

st 31 March, 2016. The relations between the management and the employees remained cordial during the year.

Committee on Sexual Harassment

Your company is fully committed to take appropriate measures against Sexual Harassment of Women at Workplace as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

No sexual harassment complaints were received during the year 2016-17. One complaint pertaining to earlier years is being enquired into by ICC.

Official Language Policy

During the year the Company continued to pursue vigorously the implementation of Official Language Policy of the Government. Employees were encouraged to carry out their official work in Hindi and liberal incentives for such work were given. Official Language Fortnight Celebrations and Hindi Workshops & Seminars were organized. Certificate and cash prizes were awarded in various competitions to encourage the employees. Consolation prize has been awarded to Mumbai branch of CCIC for the year 2016-17 for excellent implementation of official language.

Vigilance Activities

The following vigilance functions are performed in the Corporation:

(i) Creating consciousness of the vigilance requirements among the employees as part of preventive vigilance campaign and systems improvement;

(ii) Investigation and follow up of complaints received from various agencies/sources;

(iii) In addition to investigation of complaints and handling departmental enquiries having vigilance angle, the Vigilance Division also maintained constant liaison with various agencies viz CVC, CBI etc. for ensuring preventive vigilance & providing details/ inputs to regulatory agencies as per statutory requirements;

(iv) Implementation of CVC’s directives; and

(v) Vigilance Division also conducted inspection of Branch Offices of the Company thereby bringing out areas for corrective/ preventive measures.

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Corporate Social Responsibility

During the year, CCIC undertook CSR activities in terms of the guidelines on Corporate Social Responsibility (CSR) notified by the Department of Public Enterprises.CCIC paid an amount of 2.00 lakh towards contribution to "Swachh Bharat Kosh" of Central Government under Corporate

Social Responsibility Policy.

As per the Companies (Corporate Social Responsibility Policy) Rules, 2014, an Annual Report on corporation's CSR activities in prescribed format is placed at Annexure - II.

Corporate Governance

CCIC is committed and dedicated to good adoption of good corporate governance practices, aiming for transparency, accountability, performance and committed values.

A report on the Corporate Governance (Annexure – III) for the year 2016-17 in terms of Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by Department of Public Enterprises vide its order no.18(18)/2005-GM dated 14.05.2010 supported by a certificate from Company Secretary in practice confirming the compliance forms part of this report.

CCIC complies with DPE guidelines for Corporate Governance for Central Public Sector Enterprises (CPSEs) except 4.1 of the DPE guidelines for Corporate Governance regarding number of Independent Directors on the Board. Action in this regard is being taken by the Ministry of Textiles and the appointment of requisite number of Independent Directors is in process.

Related Party Transactions

During the year, there have been no materially significant related party transactions that may have potential conflict with the interest of the company at large. The details of “Related Party Disclosures” are being disclosed in Notes forming part of Accounts in the Annual Accounts.

Extract of Annual Return

Pursuant to section 92(3) of the Companies Act, 2013 (‘the Act’) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is attached as Annexure IV.

Statement containing salient features of financialstatements of subsidiaries

CCIC does not have any subsidiary or holding company.

Risk Management Policy

The Company’s management systems, structures, processes, standards, code of conduct and behaviours together form the system that governs its conduct of business and manages associated risks.

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Significant and material orders passed by the regulators

During the year under review, no significant and/ or material orders were passed by the regulators or courts or tribunals impacting the going concern status and company’s operations.

Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 2013.

Internal financial controls

CCIC has in place a well-established and efficient mechanism for internal financial controls. CCIC has a well-defined delegation of powers (DOP), which lays down the financial powers available to various levels of company's executives. The DOP helps facilitate faster and prudent commercial decision making by executives at various levels.

CCIC engaged professional firm of Chartered Accountants to formulate the Internal Financial Control Manual of CCIC in compliance to guidelines of the ICAI and the Companies Act, 2013 and test the same during the year. The Internal Financial Control Manual covered various aspects including risk and control matrix.

CCIC has outside professional Chartered Accountant firms which conduct internal audit of company's corporate office as well as branches and suggests various preventive and corrective steps. The audit observations are periodically reviewed necessary directions are issued wherever required.

Deposits

CCIC has not accepted any deposits from Public. Therefore, the requirement of Chapter V of the Companies Act, 2013 is not applicable to it.

Particulars of Loans, Guarantees or Investments under section 186

During the year, the Corporation has not provided/ given any loans, guarantees or made any investment as specified under section 186 of the Companies Act, 2013.

Public Procurement Policy

In pursuance of the Public Procurement Policy for Micro & Small Enterprises (MSEs) order, 2012 rd

(dated 23 March, 2012) notified by Ministry of Micro, Small and Medium Enterprises, the Corporation had set an annual target of making a minimum 20% of its procurement of goods and services from MSEs, including 4 % from MSEs owned by SC or ST entrepreneurs.

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During the year 2016-17, the Corporation made procurement worth 34.90% of total value of annual procurement made by CCIC of goods produced and services rendered by MSEs including SC/ST entrepreneurs. Efforts are on to increase procurement from MSEs.

Material Changes and Commitment AffectingFinancial Position of the Company

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2017 and the date of the Directors’ Report i.e. 28/09/2017.

Conservation of Energy, Technology Absorption etc.

The information required to be disclosed in accordance with the Companies (Accounts) Rules, 2014 is 'nil' as the CCIC is mainly engaged in trading activities.

Comments of CAG

The Comptroller and Auditor General of India (CAG) have decided not to conduct the supplementary audit of the financial statements of Central Cottage Industries Corporation of India Limited for the year ended 31 March, 2017 under section 143(6)(a) of the Companies Act, 2013.

Statutory Auditors

M/s. S.C. Vasudeva & Co., Chartered Accountants, New Delhi were appointed as Statutory Auditors of the Corporation for the year 2016-17 by the Comptroller & Auditor General of India.

(i) Auditors’ Report

Statutory Auditors Report, along with replies of the management, is placed at Annexure-V and form part of this report.

(ii) Composition of Audit Committee

In compliance to DPE guidelines, the Audit committee of CCIC could not be constituted since Independent Directors are yet to be appointed on the Board of CCIC.

Right to Information

In order to promote transparency and accountability, an appropriate mechanism has been set up in the Corporation to provide information to the citizens under the provisions of Right to Information (RTI) Act, 2005. For this purpose, the Corporation has, in line with the RTI Act, nominated Central Public Information Officers at New Delhi and Public Information Officer at Branch Offices across the Country. Appellate Authority has also been nominated for considering the appeals of information seekers against the orders of Public Information Officers.

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Code of Conduct

As per the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by Department of Public Enterprises, a detailed Code of Conduct for Board Members and Senior Management Personnel has been laid down and hosted on the website of the company. All Board Members and Senior Management Personnel, to whom the said code is applicable, have

staffirmed compliance of the same for the year ended 31 March, 2017.

Acknowledgement

The Board of Directors would like to express their gratitude to the Ministry of Textiles and various other ministries of Government of India such as Ministry of Commerce, Ministry of Corporate Affairs, Ministry of DONER, Ministry of External Affairs, Ministry of Tourism and various other ministries of State Government in Bihar, Karnataka, Maharashtra, Tamilnadu, Telangana, Uttar Pradesh, West Bengal, Department of Public Enterprises, Development Commissioner of Handicrafts, Development Commissioner of Handlooms, Export Promotion Council for Handicraft and Handloom, National Centre for Design and Product Development, National Institute of Fashion Technology for their continued assistance, support and guidance. The Directors are also grateful to the Comptroller and Auditor General of India, Statutory Auditors, Internal Auditors, its Bankers, State Trading Corporation of India Ltd. and HHEC of India Ltd. for the active help and cooperation extended by them.

The Directors also take this opportunity to thank the esteemed customers, artisans and craftsmen for the trust and confidence reposed by them in the Corporation.

The Board of Directors wish to place on record their deep appreciation of the employees of the Corporation at all levels, without which it would not have been possible for the Corporation to maintain its pace of development.

For and on behalf of Board of Directors

Place: New Delhi

Dated: 28/09/2017

sd/-(Pramod Nagpal)Managing Director

DIN 06885370

sd/-(Shantmanu)

DirectorDIN 06640820

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measures, the handloom sector has shown positive growth and the income level of weavers has

improved. The sector provides employment to 43.31 lakh persons engaged on about 23.77 lakh

handlooms. During 2015-16 production in Handloom sector was 3678 million sq. meters.

CCIC’S Performance

The Corporation achieved a turnover of the order of ` 8763.48 lakh during 2016-17 with a Gross

income of ̀ 4583.46 lakh. The Profit/Loss before Tax (PBT) during the year amounted to ̀ 13.87 lakh.

Performance during the year

(a) Turnover

The gross turnover of the Corporation for the year 2016-17 is ` 8763.48 lakh as compared to

` 8592.44 lakh in the last year i.e. 2015-16 showing increase of 1.99% over the previous year.

(b) Exports

The total exports of the Corporation during the year 2016-17 were ` 341.45 lakh as compared to

` 288.20 lakh in the previous year.

(c) Profitability

The Gross income during the year 2016-17 increased from ` 4551.13 lakh in the previous year to

` 4583.46 lakh. The overheads of the Corporation increased from ̀ 4452.27 lakh in the previous year

to ` 4623.82 lakh in the current year. The current year ended with a pre-tax profit of ` 13.87 lakh as

against corresponding profit of ̀ 93.50 lakh in the previous year.

Internal Controls and Procedures

CCIC has a system of internal controls which ensures compliance with statutory requirements,

regulations and various policies and guidelines of the Corporation. The systems are being reviewed

with a view to strengthen internal controls wherever required. Besides, Statutory Audit and Audit by

the C&AG, regular and exhaustive internal audits are conducted through firm of Chartered

Accountants to ensure that a proper system of check and balances is in place in the Corporation to

take care that all its assets are safeguarded and protected against any possible loss and all the

transactions are authorized, recorded and reported properly.

Internal Audit is conducted as per the Accounting Standards, Internal Audit Manual, duly approved by

Board of Directors and Rules/policies formulated by the Corporation from time to time. The

observations/recommendations made by the auditing agencies are complied timely.

The Corporation has a well-defined Delegation of Powers (DoP) in place, which lays down the powers

for different managerial level to facilitate faster commercial decisions. The systems and procedures

laid down by the Corporation ensure maximum transparency in all commercial deals. CCIC has a

well-formulated Internal Financial Control manual with risk control matrix in accordance with the

Guidelines of ICAI and Companies Act, 2013. The Corporation has a full-fledged Vigilance Division to

oversee that the guidelines of the Government and the rules/ procedures of the company are strictly

adhered to/ implemented in all matters.

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Mission / Vision of CCIC

To be a premier organization in Developing, Promotion and Marketing of Quality Indian Handloom

and Handicraft Products.

Objectives of CCIC

i) To produce, procure and sell quality handicrafts and handloom products and to develop

markets for these products in India and abroad.

ii) To continue to improve the quality of Indian Handicrafts and to upgrade and produce new

designs.

iii) To strengthen and expand the marketing network of the organization.

iv) To generate adequate returns on Net Worth.

v) To manage trading activities so as to optimize sales and earnings and reduce expenditure.

The Indian Handicraft and Handloom Industry has an overwhelming presence in the economic life of

the country. It plays a pivotal role through its contribution in the field of Indian Art & Culture,

employment generation and the export earnings of the country.

Handicrafts

The Handicraft sector provides employment to a vast segment of craft persons in rural & semi urban

areas and generates substantial foreign exchange for the country, while preserving its cultural

heritage. Handicrafts have great potential, as they hold the key for sustaining not only the existing set

of millions of artisans spread over length and breadth of the country, but also for the increasingly large

number of new entrants in the crafts activity. Presently, handicrafts contribute substantially to

employment generation and exports. The Handicraft sector has, however, suffered due to its being

unorganized, with the additional constraints of lack of education, low capital, poor exposure to new

technologies, absence of market intelligence and a poor institutional framework. The sector is

estimated to employ 68.86 lakh artisans.

Handlooms

The Handloom sector has a unique place in our economy. This sector has been sustained by

transferring skills from one generation to another. The strength of the sector lies in its uniqueness,

flexibility of production, openness to innovations, adaptability to the supplier’s requirement and the

wealth of its tradition. Adoption of modern techniques and economic liberalization, however, has had

a serious impact on the handloom sector. Competition from powerloom and mill sector, availability of

cheaper imported fabrics, changing consumer preferences and alternative employment

opportunities have threatened the vibrancy of the handloom sector. Due to various policy initiatives

and scheme interventions like cluster approach, aggressive marketing initiative and social welfare

Annexure – I to the Directors Report’

MANAGEMENT DISCUSSION & ANALYSIS REPORT

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Cautionary Statement

Certain statements contained in this Annual Report may constitute forward-looking statements within

the meaning of applicable laws and regulations. These statements are based on management's

views and assumptions at the time information was prepared and involve known and unknown risks

and uncertainties that could cause actual results or performance to differ materially from those

expressed or implied in such statements as discussed more fully elsewhere in this Annual Report.

The Corporation expressly disclaims any obligation or undertaking to release publicly any updates or

revisions to any forward looking statements contained herein to reflect any change in the

Corporation's expectations with regard thereto or any change in events, conditions or circumstances

on which any such statement is based.

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1. A brief outline of the Company's CSR Policy, including overview of projects or programs

proposed to be undertaken and a reference to web-link to the CSR Policy and projects or

programs.

· CCIC's CSR activities are essentially guided by project based holistic approach in line with the

guidelines issued in this regard by the Department of Public Enterprises and Ministry of

Corporate Affairs of the Government of India. Since inception of CSR initiative, CCIC has all

along been integrating its business goals with societal issues focusing on long term social and

environmental consequences. With this objective CCIC has been directing its CSR initiatives to

use of renewable resources like solar energy, providing sanitation facilities, encouraging girl

student education by providing scholarships to girl students of artisans/weavers of clusters

associated with CCIC. However, during F.Y. 2015-16 and F.Y. 2016-17, CCIC deposited an

amount of `2.00 lakhs each year towards contribution to "Swachh Bharat Kosh" of Central

Government, under the CSR Head.

2. The Composition of the CSR Committee:

a) Chairperson

b) Managing Director

3. Average net profit (before Tax) of the company for the last three financial years

` 99.03 lakhs

4. Prescribed CSR expenditure (two percent of the amount as in item 3 above).

`1.98 lakhs

5. Details of CSR spend during the financial year

a. Total amount spent for the financial year;

` 2.00 Lakhs

b. Amount unspent, if any;

Nil

Annexure – II to the Director's Report

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

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sd/-(Pramod Nagpal)

Managing DirectorDIN 06885370

sd/-(Anant Kumar Singh)

ChairmanDIN 07302904

6. In case the company has failed to spend the two percent of the average net profit of the last three

financial years or any part of thereof, the company shall provide the reason for not spending the

amount in its Board Report.

· N.A.

7. A responsibility statement of the CSR Committee that the implementation and monitoring of

CSR Policy, is in compliance with CSR objectives and Policy of the company.

· It is confirmed that implementation and monitoring of CSR policy is in compliance with CSR

objectives and guidelines issued by DPE in this regard.

(1) (2) (3) (4) (5) (6) (7) (8)

Sl. CSR Projects or Sector in Projects or Project wise Amount spent on the Cumulative Amount spent:

No. activity Identified which the programs (1) outlay (budget) projects or programs Expenditure Direct or through

project is Local area or Project or upto to the implementingcovered other (2) Specify programs Direct Exp. Overheads reporting agency

the State and wise on projects period

district where or programs.

projects or

programs was

undertaken

1. Swachh Bharat Kosh, 2.00 2.00 -- 2.00 Direct

Govt. of India

c. Manner in which the amount spent during the financial year is detailed below:

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1. Company’s philosophy on Code of Corporate Governance :

CCIC continues to focus on ethical business conduct, transparency and commitment of values. The ultimate objective of the Corporate Governance at CCIC is to enhance credibility in the long term.

2. Board of Directors:

i) Composition of Board :

CCIC, being a Government Company, appointment/ nomination of all the Directors is done by the President of India, through the Ministry of Textiles. Articles of Association of CCIC stipulate that the number of Directors shall not be less than two and more than nine. As on

st 31 March, 2017, there were three Directors on Board comprising two part-time Official Directors as Government Nominee Directors and a Managing Director as Functional Director.

The composition of the Board of Directors, numbers of the meetings held, attendance of the Directors at Board meetings and last Annual General Meeting and the number of Directorship and Chairmanship/Membership of Committees in other companies in respect of each Director is given here-in-below :

Annexure – III to the Director’s Report

REPORT ON CORPORATE GOVERNANCE

Sl. No. meetings of BOD meetings attended by held in the tenure of Directorship

held in a year attended by Directors tenure of concerned the Directors Director in the

financial year2016-17

1. Mrs. Rashmi Verma, IASChairperson Chairperson

2. Shri Pramod Nagpal 4 4 Attended as 4 1

Managing Director Member

3. Shri Alok Kumar, IAS 4 4 Yes 4 2

Director

4. Dr. K Gopal, IAS 4 - - 1 6

Director

Name / Total number of Number of Whether AGM No. of meetings No. of other of Director

4 3 Attended as 4 1

Category

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ii. Brief Resume of the Directors Appointed since last Annual General Meeting

Name/Category of Director Shri Anant Kumar Singh, IASChairperson

Date of Birth & Age 06/03/1959, 58 yrs.

Date of Appointment 12/06/2017

Qualification B.Sc.(Hons), M.Sc., M.Phil, Ph.D, LL.B.

Directorship held in other companies -

Membership/Chairmanship of -Committee across all public companies

Name/Category of DirectorDirector

Date of Birth & Age 28/12/1965, 52 yrs.

Date of Appointment 12/06/2017

Qualification B.E. (Mech. Engg.)

Directorship held in other companies Two (2)- The HHEC of India Ltd.- The Cotton Corporation of India Ltd.

Membership/Chairmanship of -Committee across all public companies

Shri Shantmanu, IAS

(A)

(B)

iii. Numbers of Board meetings held & dates

During the Financial Year 2016-17, the Board of Directors met four times and the interval between any Board meetings did not exceed 120 days. The dates of the meetings were:-

(1) 17.06.2016 (2) 14.09.2016 (3) 08.12.2016 ( 4) 28.02.2017

The last AGM was held on 08.12.2016.

3. Audit Committee:

i) Terms of Reference

The Audit Committee of CCIC could not be constituted in the absence of sufficient numbers of Independent Directors on the Board of CCIC.

ii) Composition of Audit Committee : NIL

iii) Meetings and attendance during the year: N.A.

4. Remuneration Committee

In view of the non-appointment of Independent Director on the Board of CCIC, Remuneration Committee has not been constituted.

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CCIC being a Government Company, terms and conditions of appointment and remuneration of whole-time Functional Director is determined by the Government through the Administrative Ministry, Ministry of Textiles. Non-executive part-time Official Directors (Government Nominees and Independent Directors) do not draw any remuneration.

Remuneration of whole-time Functional Director for the year ended 31/03/2017 is as under:-

5. The Board of Directors reviews the status on compliances of Statutory dues on quarterly basis and accordingly, the Corporation has neither made any non-compliance, nor are any penalties, strictures imposed on the Company by any statutory authority on any matter related to any guidelines issued by Government, during the last three years.

6. Code of Conduct for Members of the Board and Senior Management

CCIC is committed to conducting business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations. A code of conduct was adopted by the Board for Board Members and Senior Executives in line with the model code of conduct for Board Members and Senior Management stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by Department of Public Enterprises. A copy of the code has been placed on the CCIC’s website: www.thecottage.in.

All the Members of the Board and other Key Executives have confirmed compliance with the Code of Conduct for the year under review. The declaration signed by the Managing Director is :

“I hereby confirm that the Company has obtained from the members of the Board and Key Executives affirmation that they have complied with the Code of Conduct for Directors and Senior Management during the financial year 2016-17”.

7. Compliance Officer :

The Company Secretary has been nominated as the Compliance Officer. The Company Secretary is primarily responsible to ensure compliance with applicable statutory requirements and is the interface between the management and the regulatory authorities for governance matters.

(` in lakh)

S.No. Particulars Shri Pramod Nagpal

Managing Director

1. Salary including DA 17.66

2. Other benefits/ allowances paid 6.11

3. Performance Incentive -

4. Contribution to PF and other fund 2.12

Grand Total 25.89

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8. General Body Meetings :

(i) Date, Time and Venue of last three AGM’s

Date Time Venue

08.12.2016 4.00 P.M. Ministry of Textiles, Udyog Bhawan,New Delhi – 110 001

06.10.2015 3.00 P.M. Jawahar Vyapar Bhawan, Janpath,New Delhi – 110 001

30.09.2014 4.00 P.M. -do-

(ii) No special resolution was passed in previous three AGM’s and the Current AGM is thscheduled to be held on Friday the 29 September, 2017 at 3.30 p.m. at Udyog Bhawan,

Ministry of Textiles, New Delhi.

9. Disclosures :

(i) During the year, there have been no materially significant related party transactions that may have potential conflict with the interest of the company at large. The details of “Related Party Disclosures” are being disclosed in Notes forming part of Accounts in the Annual Accounts.

(ii) The Company follows Accounting Standards issued by the Institute of Chartered Accountants of India and in the preparation of financial statements, the Company has not adopted a treatment different from that prescribed in any Accounting Standard.

(iii) Board Members and Senior Management Personnel affirmed compliance with the Code of stConduct of the company for the financial year ending on 31 March, 2017.

(iv) CCIC has requested Ministry of Textiles to appoint Independent Directors on the Board of the Company and compliance of provisions of atleast four numbers of meetings of Audit Committee shall be adhered to after appointment of Independent Directors on the Board and constitution of Audit Committee.

10. Means of Communication:

CCIC’s financial results are displayed on the website www.thecottage.in. All other official news releases are also displayed on the website.

11. Whistle Blower policy:

The Company has a Vigil Mechanism and Whistle Blower Policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. The reportable matters may be disclosed to the Audit Committee. Employees may also report to the Chairman of the Audit Committee.

12. Financial Calendar :

st stThe Company’s financial year is from 1 April, 2016 to 31 March, 2017.

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13. Shareholding Pattern:

stAs on 31 March, 2017

stAs on 31 March, 2016

Sl. Name & Address of No. of Amount TotalShareholders shares per share Amount

1. The President of India 10,84,998 100/- 10,84,99,800/-

2. Shri Puneet Agarwal 1 ` 100/- ` 100/-Nominee of President of India

3. Shri PramodNagpal 1 ` 100/- ` 100/-Nominee of President of India

TOTAL 10,85,000 ` 10,85,00,000/-

` `

Sl. Name & Address of No. of Amount TotalShareholders shares per share Amount

1. The President of India

2. Shri A.M. ReddyNominee of President of India 1 ` 100/- ` 100/-

3. Shri Pramod NagpalNominee of President of India 1 ` 100/- ` 100/-

TOTAL 10,85,000 ` 10,85,00,000/-

10,84,998 ` 100/- ` 10,84,99,800/-

14. Address for correspondence:

Central Cottage Industries Corporation of India Ltd.Jawahar Vyapar Bhawan, Janpath,New Delhi – 110 001Phone No. 011-23323825, 23326790Fax No. 011-23328354E-Mail :[email protected] : U74899DL1976GOI008069

15. Guidelines on Corporate Governance by DPE

In May 2010, the Department of Public Enterprises has notified mandatory Guidelines on Corporate Governance, 2010 for Central Public Sector Enterprises (CPSEs). The Board of Directors of CCIC has adopted these guidelines as the policy on Corporate Governance.

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Form No. MGT-9

EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31/03/2017

[Pursuant to section 92 (3) of the Companies Act, 2013 and rule12 (1) of the

Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i. CIN U74899DL1976GOI008069

ii. Registration Date 04/02/1976

iii. Name of the Company Central Cottage Industries Corporation of

India Ltd.

iv. Category/Sub-Category of the Company -

v. Address of the Registered office and contact details Jawahar Vyapar Bhawan, Janpath,

New Delhi–110001

vi. Whether listed company No

vii. Name, Address and Contact details N A

of Registrar and Transfer Agent, if any

Annexure – IV to the Director’s Report

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turn over of the company shall be stated:-

Sr. No. Name and Description of NIC Code of the % to total turnover

main products/ services Product/ service of the company

1. Trading of Handicraft and - 100%

Handloom products

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No. Name And Address CIN/GLN Holding/ Subsidiary %of shares Applicable

of The Company /Associate held Section

1. NA - - - -

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IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i.Category-wise Share Holding

Category of No. of Shares held at the No. of Shares held at the % Change

Share holders beginning of the year end of the year the yearduring

Demat Physical Total % of TotalShares Shares

A. Promoter

1) Indian

a) Individual/ HUF - 2 2 - - - - - -

b) Central Govt - 10,84,998 10,84,998 100% - - - 100% Nil

c) State Govt(s) - -

d) Bodies Corp - -

e) Banks / FI - -

f) Any Other - -

Sub-total(A)(1):- - 10,85,000 10,85,000 100% - - - 100% Nil

2) Foreign Nil Nil Nil Nil Nil Nil Nil Nil Nil

g) NRIs-Individuals

h) Other-Individuals

i) Bodies Corp.

j) Banks / FI

k) Any Other….

Sub-total(A)(2):-

B. Public Shareholding Nil Nil Nil Nil Nil Nil Nil Nil Nil

1. Institutions

a) Mutual Funds

b) Banks / FI

c) Central Govt

d) State Govt(s)

e) Venture Capital Funds

f) Insurance Companies

g) FIIs

h) Foreign Venture Capital Funds

i) Others (specify)

Sub-total (B)(1)

Demat Physical Total % of Total

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2. Non Institutions

a) Bodies Corp.

(i) Indian

(ii)Overseas

b) Individuals

(i) Individual shareholders holding nominal share capital upto Rs. 1 lakh

(ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh

c) Others(Specify)

Sub-total(B)(2)

Total Public Nil Nil Nil Nil Nil Nil Nil Nil Nil Shareholding (B)=(B)(1)+ (B)(2)

C. Shares held by Custodian for Nil Nil Nil Nil Nil Nil Nil Nil Nil GDRs & ADRs

Grand Total Nil 10,85,00010,85,000 100% - - - 100% Nil (A+B+C)

ii.Shareholding of Promoters

Sr. Shareholder’s Shareholding at the beginning Shareholding at the end

No. Name of the year of the year

No. of % of total

Shares Shares of Pledged / Shares Shares Pledged / in share

the company encumbered of the encumbered holding

to total company to total during

shares shares the year

1. The President of India 10,85,000 100% Nil 10,85,000 100% Nil Nil

Total 10,85,000 100 Nil 10,85,000

% of Shares No. of % of total% of Shares% change

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iii. Change in Promoters’ Shareholding (please specify, if there is no change)

Sr. Shareholding at the Cumulative Shareholding

No. beginning of the year during the yearNo. of % of total

of the company of the company

At the beginning of the year 10,85,000 100% 10,85,000 100%

Date wise Increase / Decrease - - - -in Promoters Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/ sweat equity etc):

At the End of the year 10,85,000 100% 10,85,000 100%

Shares Shares No. of Shares % of total Shares

iv. Shareholding Pattern of top ten Shareholding (other than Directors, Promoters and Holders of GDRs

and ADRs):


No. beginning of the year during the year

For Each of Top 10 No. of % of total

Shareholders of the company of the company

Shri Puneet Agarwal, Joint Secretary, Ministry of Textiles

(Nominee of President of India)

At the beginning of the year 0 0 1 0

Date wise Increase / Decrease 1 0 0 0in Promoters Share holdingduring the year specifying thereasons for increase / decrease(e.g. allotment / transfer /bonus/ sweat equity etc):

At the End of the year 1 0 1 0

Shri A.M. Reddy, Joint Secretary, Ministry of Textiles

(Nominee of President of India)


Date wise Increase / Decrease -1 0 0 0in Promoters Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc):



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v. Shareholding of Directors and Key Managerial Personnel:


No. beginning of the year during the year

For Each of the Directors No. of % of total

and KMP of the company of the company

1. Shri Pramod Nagpal, Managing Director (Nominee of President of India)


Date wise Increase / Decrease 0 0 0 0

in Promoters Share holding

during the year specifying the

reasons for increase / decrease

(e.g. allotment / transfer /

bonus/ sweat equity etc):


2. Shri Ashok Kinra, Company Secretary

At the beginning of the year Nil Nil Nil Nil

Date wise Increase / Decrease Nil Nil Nil Nil






At the End of the year Nil Nil Nil Nil

3. Mrs. Meera Somani, GM (Finance)

At the beginning of the year Nil Nil Nil Nil

Date wise Increase / Decrease Nil Nil Nil Nil






At the End of the year Nil Nil Nil Nil


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V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment.

Secured Loans

excluding Loans Indebtedness

deposits

Indebtedness at the beginning of Nil 80 Nil 80

the financial year

i) Principal Amount 80 80

ii) Interest due but not paid - -

iii) Interest accrued but not due - -

Total (i+ii+iii) Nil 80 Nil 80

Change in Indebtedness during Nil Nil Nil Nil

the financial year

- Addition

- Reduction

Net Change Nil Nil Nil Nil

Indebtedness at the end of Nil Nil

the financial year

i) Principal Amount 80 80

ii) Interest due but not paid - -

iii) Interest accrued but not due - -

Total (i+ii+iii) Nil 80 Nil 80

Unsecured Deposits Total

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A. Remuneration to Managing Director, Whole-time Directors and/or Manager

REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

S. Particulars of Remuneration Name of MD/WTD/ Manager Total AmountNo. MD WTD Manager

1. Gross salary

(a) Salary as per provisions 23,62,156/- - - -contained in section 17 (1) of the Income-taxAct,1961(b) Value of perquisites u/s 8,940/- - - -17 (2) Income-tax Act, 1961

(c) Profits in lieu of salary - - - -under section 17 (3) Income- tax Act,1961

2. Stock Option - - - -

3. Sweat Equity - - - -

4. Commission - - - -

- as% of profit

- others, specify…

5. Others, please specify 2,12,224/- - - -

6. Total (A) 25,83,320/- - - -

Ceiling as per the Act NA

Mr. Pramod Nagpal

B. Remuneration to other Directors:

S. Particulars of Remuneration Name of MD/WTD/ Manager Total AmountNo.

Independent Directors

• Fee for attending board committee meetings

• Commission

• Others, please specify Nil Nil Nil Nil Nil

Total (1) Nil Nil Nil Nil Nil

Other Non-Excutive Remuneration Nil Nil Nil Nil Nil

• Fee for attending board committee meetings

• Commission

• Others, please specify

Total (2) Nil Nil Nil Nil Nil

Total (B) = (1+2) Nil Nil Nil Nil Nil

Total Managerial Remuneration

Overall Ceiling as per the Act

Nil Nil Nil Nil Nil

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C. Remuneration to Key Managerial Personnel Other Than MD/Manager/WTD

S. Particulars of Remuneration Key Managerial Personnel

CEO CompanySecretary

1. Gross salary Shri Ashok Kinra

(a) Salary as per provisions contained in - 16,60,309/- - -section17(1)of the Income-tax Act,1961

(b) Value of perquisites u/s17(2) - 28,140/- - -Income-tax Act,1961

(c) Profits in lieu of salary under section - NIL - -17(3) of Income-tax Act,1961

2. Stock Option - - - -

3. Sweat Equity - - - -

4. Commission -

- as%of profit- others, specify… - - - -

5. Others, please specify - 1,72,421/- - -

6. Total - 18,60,870/- - -

No.

CFO Total

Type Section of the

companies Act description Punishment/Compounding [RD/NCLT/Court] If any(give details)

fees imposed

A. Company NIL

Penalty

Punishment

Compounding

B. Directors NIL

Penalty

Punishment

Compounding

C. Other Officers In Default NIL

Penalty

Punishment

Compounding

Brief Details of Penalty/ Authority Appeal made.

II. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES:

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AUDIT QUALIFICATIONS OF STATUTORY AUDITORS FOR THE YEAR 2016-17 AND MANAGEMENT REPLIES THEREON .

ParaNo.

2.a)

2.b)

The Company has not provided us for the purpose of our audit, the reconciliation in respect of the balances payable to and/or recoverable in respect of Trade Receivables, Trade Payables, Advance from Customers vis-a-vis the balances appearing as per balance confirmation certificates received from them with regard to Mumbai Branch and in certain cases with regard to Delhi. In the absence of any alternative procedures, which we are unable to perform, therefore we are unable to quantify the impact of the adjustments, if any, arising from reconciliation of account balances on the financial statements.

(i) The Company has not provided us for the purpose of our audit, the supporting evidence in respect of ownership of Land at Jawahar Vyapar Bhawan (JVB), New Delhi, for which company has paid Rs.17.61 lacs, to determine whether the same is on freehold basis or leasehold basis; and in case, the same is on leasehold basis, the relevant lease deed and the period of lease so as to provide amortization charge for the year.

(ii) Fixed Assets includes an amount of Rs.926.86 lacs, expended by the company towards construction of Building at Jawahar Vyapar Bhawan (JVB), New Delhi (land referred to in (i) above). The company is depreciating the same over the useful life of 60 years as prescribed in Schedule II to the Companies Act, 2013 and has provided Rs.16.40 lacs during the year towards depreciation in this regard. However, in the absence of the necessary supporting evidence regarding the aspect mentioned in (i) above, we are unable to comment on the correctness or otherwise regarding the depreciation charge for the year and the accumulated depreciation of Rs.359.87 Lacs as at the end of the year. (Please refer 4(ii) of Note 34 of the financial statements).

Annexure – V to the Director’s Report

Audit Qualification Management Reply

Mumbai Branch - Noted for compliance. Delhi Branch - Out of balance confirmations received from various vendors, debtors and customers, 17 parties reported mismatch vis-a-vis balance appearing in the books of Account of the Company. The balance in respect of 8 parties have been reconciled in the current financial year and adjustment of Rs1.06 lakhs has been debited to appropriate account head during F.Y.17-18. The remaining 9 accounts will be reconciled after details required from parties are received for which mails have been sent to them.

Adequate disclosure has been made in Para 4(ii) referred to under note No.34 forming part of Accounts.

MAIN REPORT - Basis for Qualified opinion

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ANNEXURE A TO MAIN REPORT

1.c) According to information and explanations given to us and on the basis of our examination of the records of the company the title deeds of immovable properties are held in the name of the company except the following:

Management Reply

Serial Particulars Gross Block as Net Block as Remarks

No on 31.03.2017on 31.03.2017

1. Leasehold Land at ` 17,61,405/- ` 17,61,405/- Title deed

Jawahar Vyapar not executed

Bhawan (JVB),

New Delhi

2. Building at ` 9,26,85,836/- ` 566,98,543/- Title deed

Jawahar Vyapar not executed

Bhawan (JVB),

New Delhi

3. Residential Flats ` 5,39,500/- ` 2,26,720/- Khatha

at Banglore extract is not

in name of

Company

(Sale deed is

in name of

Company)


7.(a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service tax, Duty of Customs, Value Added Tax, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts except professional tax payable amounting to Rs.0.17 lakh in respect of Hyderabad branch was outstanding as at March 31, 2017 for a period of more than six months from the date they became payable.


Noted for necessary action.

The professional tax amounting to Rs. 0.17 lakh in respect of Hyderabad branch has been deposited in September' 2017.

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ANNEXURE B OF MAIN REPORT (QUALIFIED OPINION)

According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Company’s internal financial controls over financial reporting as at March 31, 2017:

a) The Company’s internal financial controls with respect to obtaining customer/vendor confirmations, in certain cases, and their reconciliation with books of accounts at regular intervals were not operating effectively, which could potentially result in misstatement of receivables/payables.

Noted for remedial action.

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To

The Members

CENTRAL COTTAGE INDUSTRIES CORPORATION OF INDIA LTD

I have examined all relevant records of Central Cottage Industries Corporation of India Ltd (the Corporation) for the purpose of certifying of the conditions of the Corporate Governance as per the Department of Public enterprises Guidelines on Corporate Governance for CPSEs vide Order

stNo. 18(18) 2005-GM dated 14.05.2010 for the Financial Year ended 31 March 2017. I have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of certification.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedure and implementations thereof. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

On the basis of my examination of the records produced, explanations and information furnished, I certify that the Company complied with the conditions as stipulated in DPE guidelines on Corporate Governance for CPSEs.

For D.S. AssociatesCompany Secretaries

sd/-Dhawal Kant SinghProp.C.P. NO. : 7347 Date: 13/09/2017Place: New Delhi

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE

FINANCIAL STATEMENTS OF CENTRAL COTTAGE INDUSTRIES

CORPORATION OF INDIA LIMITED FOR THE YEAR ENDED 31 MARCH 2017.

The preparation of financial statements of Central Cottage Industries

Corporation of India Limited for the year ended 31 March 2017 in accordance with the

financial reporting framework prescribed under the Companies Act, (Act) 2013 is the

responsibility of the management of the company. The statutory auditor appointed by

the Comptroller and Auditor General of India under Section 139(5) of the Act is

responsible for expressing opinion on the financial statements' under section 143 of

the Act based on independent audit in accordance with the standards on auditing

prescribed under section 143(10) of the Act. This is stated to have been done by them

vide their Audit Report dated 04 August, 2017.

I, on behalf of the Comptroller and Auditor General of India, have decided not to

conduct the supplementary audit of the financial statements of Central Cottage

Industries Corporation of India Limited for the year ended 31 March, 2017 under

section 143(6)(a) of the Act.

Place : DelhiDate : 12.9.2017

For and on the behalf of theComptroller & Auditor General of India

(Nandana Munshi)Director General of Commercial Audit

& Ex-officio Member, Audit Board-II,New Delhi

sd/-

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INDEPENDENT AUDITOR’S REPORT

A. Report on the Financial Statements

We have audited the accompanying financial statements of Central Cottage Industries Corporation of India Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Incorporated in these financial statements are the accounts of Head Office at Delhi, branches at Varanasi, Patna and Hyderabad audited by us and of four Branches at Chennai, Bangalore, Mumbai & Kolkata audited by branch auditors as appointed under Section 139 of the Companies Act, 2013 by the Comptroller and Auditor - General of India.

B. Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules 2016.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

C. Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act and the Rules made there under, including the accounting standards and matters which are required to be included in the audit report.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s

TO THE MEMBERS OFCENTRAL COTTAGE INDUSTRIES CORPORATION OF INDIA LIMITED

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judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their report is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

D. Basis for Qualified Opinion

a. The Company has not provided us for the purpose of our audit, the reconciliation in respect of the balances payable to and/or recoverable in respect of Trade Receivables, Trade Payables, Advance from Customers vis-a-vis the balances appearing as per balance confirmation certificates received from them with regard to Mumbai Branch and in certain cases with regard to Delhi. In the absence of any alternative procedures, which we are unable to perform, therefore we are unable to quantify the impact of the adjustments, if any, arising from reconciliation of account balances on the financial statements.

b. (i) The Company has not provided us for the purpose of our audit, the supporting evidence in respect of ownership of Land at Jawahar Vyapar Bhawan (JVB), New Delhi, for which company has paid Rs.17.61 Lacs, to determine whether the same is on freehold basis or leasehold basis; and in case, the same is on leasehold basis, the relevant lease deed and the period of lease so as to provide amortization charge for the year.

(ii) Fixed Assets includes an amount of Rs.926.86 lacs, expended by the company towards construction of Building at Jawahar Vyapar Bhawan (JVB) , New Delhi (land referred to in (i) above). The company is depreciating the same over the useful life of 60 years as prescribed in Schedule II to the Companies Act ,2013 and has provided Rs. 16.40 Lacs during the year towards depreciation in this regard. However, in the absence of the necessary supporting evidence regarding the aspect mentioned in (i) above, we are unable to comment on the correctness or otherwise regarding the depreciation charge for the year and the accumulated depreciation of Rs359.87 Lacs as at the end of the year. (Please refer 4(ii) of Note 34 of the financial statements)

E. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India ,of the state of affairs of the Company as at 31st March, 2017 and its profits and its cash flows for the year ended on that date.

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F. Emphasis of Matter

We draw attention to Note no.34 Para 1(IV) of the Financial Statements which describes the uncertainty related to the outcome of the lawsuit filed against the Company by the landlord of premises of Mumbai branch showroom at CSM Marg, for which litigation is still pending in the Court. Our opinion is not qualified in respect of this matter.

G. Other Matter

We did not audit the accounts of four Branches {Chennai, Bangalore, Mumbai & Kolkata} included in the financial statements of the company whose financial statements reflect total assets of `1023.13 Lacs as at 31st March, 2017 and total revenues of 1652.12 Lacs for the year ended on that date. These financial statements have been audited by other auditors whose reports have been furnished to us by the management, and our opinion on the financial statements of the Company for the year then ended to the extent they relate to the financial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualified in respect of this matter.

H. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure-A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, based on our audit and on the consideration of report on financial statements and the other financial information of the Branches audited by other auditors, as mentioned in the ‘other matter’ paragraph, we report, to the extent applicable, that:

a. Except for the matters described above in the Para D(a) & D(b) of the Basis for Qualified Opinion paragraph, we have sought and, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us.

c. The reports on the accounts of the branch offices of the Company audited under section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing report.

d. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not audited by us.

e. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f. The matter described in the Para D (i.e. Basis for Qualified Opinion) and Para F (i.e. Emphasis of Matter) paragraph above, in our opinion, may have been an adverse effect on the functioning of the Company.

`

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g. Being a Government Company, pursuant to notification no. GSR 463 (E) dated 5th June, 2015 of the Government of India, provisions of sub section (2) of section 164 of the Companies Act, 2013 is not applicable to the Company.

h. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

i. With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in “Annexure- B”.

j. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Please refer Para 1 of Note No 34 to the financial statements.

b. The Company did not have any long-term contracts for which there were any material foreseeable losses as certified by the management.

c. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

d. The Company has provided requisite disclosure in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer note.34 Para-10 (xi)of financial statements.

3. As required by section 143(5) of the companies Act, 2013, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the accounts and financial statements of the Company. (Annexure C).

For S.C. Vasudeva & Co.Chartered AccountantsFirm Reg. No: 000235N

Place: New DelhiDated: 04, August, 2017

(Ramesh Chander Luthra)PartnerMembership No.081052

sd/-

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ANNEXURE-A TO INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph (1) under Section-H on Other Legal and Regulatory Requirements’ of the Independent Auditors’ Report of even date to the members of Central Cottage Industries Corporation of India Limited on the financial statements for the year ended March 31, 2017.

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us, the fixed assets of the Company have been physically verified by the management at reasonable intervals. No material discrepancies were noticed on such verification as compared to the book records.

(c) According to information and explanations given to us and on the basis of our examination of the records of the company the title deeds of immovable properties are held in the name of the company except the following:

SerialNo. on 31.03.2017 on 31.03.2017

` `

1. Leasehold Land at 17,61,405/- 17,61,405/- Title deed Jawahar Vyapar Bhawan not executed(JVB), New Delhi

2. Building at Jawahar 9,26,85,836/- 5,66,98,543/- Title deedVyapar Bhawan not executed(JVB), New Delhi

3. Residential Flats at 5,39,500/- 2,26,729/- Khatha extract Bangalore is not in name

of Company(Sale deed isin name ofCompany)

Particulars Gross Block as Net Block as Remarks

2. (a) The Management has conducted physical verification of inventory during the year and in our opinion the frequency of physical verification is reasonable.

(b) The Company is maintaining proper records of inventory. As per the information and explanations provided to us by the Management, the discrepancies observed on physical verification of inventory were not material and the same has been properly dealt with in the books of account.

3. The company has not granted any secured or unsecured loan to any company, firm or other parties listed in the register maintained under section 189 of the Companies Act, 2013.

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4. As explained to us and according to the information and explanation given to us, the company has not made any transactions during the year which are covered under section 185 and 186 of the Act, with respect to the loans and investments made.

5. According to the information and explanations given to us, the company has not accepted any deposits from the public, during the year under audit. Therefore, directives issued by Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under are not applicable to the company.

6. The provisions of the clause 3(vi) of the order are not applicable to the company.

7. (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service tax, Duty of Customs, Value Added Tax, cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts except professional tax payable amounting to Rs.0.17/- lakhs in respect of Hyderabad branch was outstanding as at March 31, 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of income tax, sales tax, service tax, duty of customs or value added tax which have not been deposited on account of any dispute except as given under:

Name of the

Statute Dues Amount which it is pending

(Rs. in relates

lacs)

Delhi VAT Act VAT matters 0.55 1984-85 The Addl. commissioner of Sales Tax(Appeals)

Delhi VAT Act VAT matters 0.25 1984-85 The Add. commissioner of Sales Tax(Appeals)





Delhi VAT Act VAT matters 0.04 2001-02 Dy Commissioner Sales Tax (Appeals)

The Income Tax Income Tax 45.15 2006-07 ITATAct 1961 matter (Net

of income tax deposited

`.131.20 lakhs)

Nature of Disputed Period to Forum where Dispute

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8. According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to any financial institution, bank or Government. The Company does not have any debenture holders.

9. The company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the order is not applicable.

10. According to the information and explanations given to us, no fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the year under audit.

11. Since the provisions of section 197 of The Companies Act, 2013 are not applicable to government companies vide notification no. GSR 463(E) dated 05.06.2015, therefore paragraph 3 (xi) of the Order is not applicable.

12. According to the information and explanation given to us, the company is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are not applicable.

13. According to the information and explanations given to us, and based on our examination of the records of the company, transactions with the related parties are in compliance with section 188 of the Companies Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards. We are further informed that the provisions of section 177 of the Companies Act 2013 are not applicable to the company.

14. According to the information and explanations given to us, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore the provisions of paragraph 3(xiv) of the Order are not applicable.

15. According to information and explanations given to us, and based on our examination of the records of the company, the company has not entered into any non-cash transactions with directors or person connected with him. Accordingly, provisions of paragraph 3 (xv) of the Order are not applicable.

16. According to the information and explanations given to us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.



sd/-

For S.C.Vasudeva & Co.Chartered AccountantsFirm Regn. No. 000235N

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ANNEXURE-B TO INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph 2 (i) under Section-H on Other Legal and Regulatory Requirements’ of the Independent Auditors’ Report of even date to the members of Central Cottage Industries Corporation of India Limited on the financial statements for the year ended March 31, 2017

Report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Central Cottage Industries Corporation of India Limited (“the Company”), as of March 31, 2017, in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

An audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting.

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Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Company’s internal financial controls over financial reporting as at March 31, 2017:

a) The Company’s internal financial controls with respect to obtaining customer/vendor confirmations, in certain cases, and their reconciliation with books of accounts at regular intervals were not operating effectively, which could potentially result in misstatement of receivables/payables.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company’s internal financial controls over financial reporting were operating effectively as ofMarch 31, 2017.

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Explanatory paragraph

We have considered the material weakness, identified and reported above, in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2017 financial statements of the Company and these material weaknesses have affected our opinion on the financial statements of the company and we have issued a qualified opinion on the financial statements.




sd/-

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ANNEXURE-C TO INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph 3 under Section-H on Other Legal and Regulatory Requirements’ of the Independent Auditors’ Report of even date to the members of Central Cottage Industries Corporation of India Limited on the financial statements for the year ended March 31, 2017.

1. Directions indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Central Cottage Industries Corporation of India Limited for the year 2016-17 issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013

Directions Our Report Action Taken Impact on

Account & Financial

Statements

theS. No.

Whether the Company has clear title/lease deeds for free hold and lease hold respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available?

1. Title deeds in respect of premisesat Jawahar Vyapar Bhawan (JVB),

New Delhi valuing `17.61 Lacs

(Land) & ` 926.86 Lacs (Building)

are pending execution. (Please refer 4 (ii) of Note 34 of the financial statements) . The company owns a residential flat at Bangalore, with a sale deed in the name of the company; however the Khata extract is not in the name of the company.

No Action is required

Cannot be ascertained

Whether there are any cases of waiver / write off of debts / loans / interest etc., if yes, the reasons there for and the amount involved.

Yes. The company has written off

Bad Debts of ` 2,55,506 during the

year 2016-17 as a general trade practice.

Amount debited to Profit and Loss Account

Net Profit is reduced by

` 2,55,506

2.

Whether proper records are maintained for inventories lying with third parties and assets received as gift from Govt. or other authorities.

Proper records are being maintained with regard to inventories lying with third parties. As per the information and explanation received from management of the company, no assets are received as Gift from Govt./ any other authorities. However, In the absence of any external confirmation to this effect obtained by the Company, it is not possible for us to verify whether the company has received any asset as gift from Govt. or other authorities.

No Action is required

Cannot be ascertained

3.

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sd/-

2. Sub-Directions indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Central Cottage Industries Corporation of India Limited for the year 2016-17 issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013.

NIL

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Particulars Note As at 31 March, 2017 As at 31 March, 2016No. ` `

EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share Capital 3 10,85,00,000 10,85,00,000

(b) Reserves and surplus 4 8,42,50,347 8,34,18,219

19,27,50,347 19,19,18,219

2 Deferred Government Grant 5 2,81,74,178 2,90,80,674

3 Non-current liabilities

(a) Long term borrowings 6 80,00,000 80,00,000

(b) Other Long term Liabilities 7 21,48,225 19,15,616

(c) Long term provisions 8 23,37,85,492 24,03,01,353

24,39,33,717 25,02,16,969

4 Current liabilities

(a) Trade payables 9 22,59,41,528 16,80,86,585

(b) Other Current Liabilities 10 8,26,76,841 8,21,69,715

(c ) Short-term provisions 11 20,69,10,659 20,71,89,712

51,55,29,028 45,74,46,012

TOTAL (1+2+3+4) 98,03,87,270 92,86,61,874

ASSETS

5 Non-current assets

(a) Property , Plant and Equipment 12

(i) Tangible assets 11,16,89,909 11,63,92,294

(ii) Intangible assets 29,52,099 40,21,965

(iii) Capital work-in-progress 32,744 1,97,970

Total (i+ii+iii) 11,46,74,752 12,06,12,229

CIN:U74899DL1976GOI008069Balance Sheet as at 31 March 2017

CENTRAL COTTAGE INDUSTRIES CORPORATION OF INDIA LTD.JAWAHAR VYAPAR BHAWAN, 1 TOLSTOY MARG, NEW DELHI

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(b) Non Current Investments 13 90,12,795 92,39,806

(c) Deferred tax assets (net) 14 11,14,87,873 11,08,92,006

(d) Long term loans and advances 15 6,33,01,089 5,72,27,054

(e) Other non-current assets 16 5,69,389 4,59,415

29,90,45,898 29,84,30,510

6 Current assets

(a) Inventories 17 18,16,53,451 12,21,22,324

(b) Trade receivables 18 1,33,10,037 86,90,463

(c) Cash and Cash Equivalents 19 45,74,11,091 48,03,54,012

(d) Short-term loans and advances 20 2,34,16,414 1,44,01,537

(e) Other current assets 21 55,50,379 46,63,028

68,13,41,372 63,02,31,364

TOTAL (5+6) 98,03,87,270 92,86,61,874

Corporate information 1

Significant accounting policies 2

The accompanying notes form part 1-34 of the financial statements

Particulars Note As at 31 March, 2017 As at 31 March, 2016No. ` `

sd/-(Ashok Kinra)

Company Secretary


sd/-(Meera Somani)

General Manager(Finance)

As per our separate report of even date attached

For S.C. Vasudeva & Co.Chartered AccountantsFirms Regn. No. 000235N

sd/-(Ramesh Chander Luthra)

PartnerMembership No.081052

For and on behalf of the Board of Directors


DIN 06885370

sd/-(Shantmanu)


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CIN:U74899DL1976GOI008069Statement of Profit and Loss for The Year Ended on 31 March 2017


Particulars Note For the Year ended stNo. 31 March 2017

` `

For the Year ended st31 March 2016

INCOME:

I. Revenue from operations 22 87,49,53,168 85,77,37,746

Less: Excise duty paid 5,52,268 2,35,959

Net Revenue from operations 87,44,00,900 85,75,01,787

II. Other Income 23 4,60,89,427 4,76,13,366

III. Total Revenue (I+II) 92,04,90,327 90,51,15,153

IV EXPENSES:

Cost of materials consumed 24 98,18,975 1,09,57,751

Purchases of Stock-in trade and services 25 51,32,95,697 46,15,75,030

Changes in inventories of finished goods 26 (6,09,71,426) (2,25,31,240)

Employee benefits expense 27 27,54,22,879 26,94,09,751

Finance costs 28 4,29,138 4,09,132

Depreciation and amortization expense 12&13 97,31,750 97,35,945

Other Expenses 29 17,65,98,792 16,54,72,973

Corporate social responsibility expenditure 2,00,000 2,00,000(Refer note 34(7))

Total expenses 92,45,25,805 89,52,29,342

V Profit/(Loss) before exceptional, prior (40,35,478) 98,85,811 period adjustments and extra-ordinaryitems and tax (III-IV)

VI Prior period adjustments (Net) (+) 30 (47,220) (5,16,965)Income/(-) expenses

VII Profit/(Loss) before Exceptional, (40,82,698) 93,68,846 Extraordinary items and tax (V - VI)

VIII Exceptional items(+)Income/Expenses(-) 31 54,69,976 (19,208)

IX Profit before tax (VII - VIII) 13,87,278 93,49,638

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X Tax expense:

-Current tax 14,60,000 90,24,000

-Deferred tax (5,95,867) (32,36,549)

Adjustment for earlier years (3,08,983) 14,52,473

XI Profit for the year from continuing

operations after tax (IX-X)

XII Earnings per equity share: 33

No of shares used in computing earnings per share 10,85,000 10,85,000

Face value of each share `100

(1) Basic 0.77 1.94

(2) Diluted 0.77 1.94

Corporate information 1

Significant accounting policies 2

The accompanying notes form part 1-34 of the financial statements

8,32,128 21,09,714

Particulars Note For the Year ended stNo. 31 March 2017

` `

For the Year ended st31 March 2016

sd/-(Ashok Kinra)

Company Secretary


DIN 06885370


sd/-(Meera Somani)







sd/-(Shantmanu)


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CENTRAL COTTAGE INDUSTRIES CORPORATION OF INDIA LTD.

JAWAHAR VYAPAR BHAWAN, 1 TOLSTOY MARG, NEW DELHI

NOTE-3- SHARE CAPITAL

1 Share Capital

Particulars As at 31st March 2017 As at 31st March 2016

Number of share Amount in Number of share Amount in

Authorised

Equity Shares of face Value of 100 each 12,00,000 12,00,00,000 12,00,000 12,00,00,000

Issued, Subscribed & Paid up

Equity Shares of face Value of 100 each 10,85,000 10,85,00,000 10,85,000 10,85,00,000

Total 10,85,000 10,85,00,000 10,85,000 10,85,00,000

` `

`

`

a) Reconciliation of number of equity shares outstanding at the beginning and at the end of the year

CIN:U74899DL1976GOI008069 Notes on Financial Statements for the year ended 31st March 2017

Particulars As at 31st March 2017 As at 31st March 2016

Number of share Amount in Number of share Amount in ` `

Equity Shares outstanding at the 10,85,000 10,85,00,000 10,85,000 10,85,00,000

beginning of the year

Equity Shares issued during the year - - - -

Equity Shares outstanding at the end of the year 10,85,000 10,85,00,000 10,85,000 10,85,00,000

b) Terms/rights attached to equity shares

The company has one class of shares referred to Equity Shares having par value of Rs.100/- each. Each Shareholder is entitled to one vote per share.

c ) Shares held by holding company or ultimate holding company or subsidiaries or associates of the

holding company or the holding company.

There is no holding or ultimate holding company of the company

d) Aggregate number of bonus shares issued, share issued for consideration other than cash and shares

bought back during the period of five years immediately preceding the reporting date.

There are no bonus shares issued, share issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.

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Name of Shareholder As at 31st March 2017 As at 31st March 2016

No. of Shares held % of Holding No. of Shares held % of Holding

The President of India and his nominees 10,85,000 100 10,85,000 100

f) Terms of securities convertble into equity/ preference shares.

There are no securities convertible into equity/preference shares

e ) Details of equity share held by shareholders holding more than 5% shares of the aggregate shares in

the company

A General Reserves

Opening Balance 4,27,37,472 4,27,37,472

Add/Less:Changes during the year

Closing Balance 4,27,37,472 4,27,37,472

B Surplus

Opening balance 4,06,80,747 3,96,15,743

(+) Net Profit/(Loss) for the current year 8,32,128 21,09,714

(-) Proposed Dividends - (8,68,000)

(-) CorporateDividend tax thereon - (1,76,710)

Closing Balance 4,15,12,875 4,06,80,747

Total(A+B) 8,42,50,347 8,34,18,219

Note- 4 - Reserves & Surplus

As at 2017 As at 2016 `

Particulars st st 31 March 31 March

`

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Gross amount brought forward 6,28,71,102 6,28,94,467

(-) Written back during the year for assets

written off or adjusted - (87,365)

(+) Addition during the year - 6,28,71,102 64,000 6,28,71,102

Less: Proportionate depreciation transferred

to P&L A/C

Opening Balance 3,37,90,428 3,29,53,871

(-) Written back during the year for assets - (84,595)written off or adjusted

(+) Addition during the year 9,06,496 3,46,96,924 9,21,152 3,37,90,428

Closing Balance 2,81,74,178 2,90,80,674

Note-5 - Deferred Govt. Grant

UNSECURED

Loan from Govt. 80,00,000 80,00,000

Total 80,00,000 80,00,000

Note-6 - Long Term Borrowings

Note - 7 - Other Long term Liabilities

OthersOther payable(Capital expenses) 1,97,000 1,97,000 Security deposit/earnest money/ retention money 19,32,416 16,96,584 Others 18,809 22,032

Total 21,48,225 19,15,616

As at 2017 As at 2016 `

Particularsst st 31 March 31 March

` ` `

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Provision for employee benefits

Gratuity ( Partly funded) 3,48,78,460 4,04,94,204

Leave Encashment (unfunded) 5,73,83,375 4,95,46,449

Post retirement Medical benefits(Unfunded) 2,06,05,316 2,97,76,076

Long service award liability(Unfunded) 36,62,279 33,25,525

Post retirement settlement allowance(Unfunded) 3,03,427 11,68,32,857 2,06,464 12,33,48,718

Others

Rent 4,19,42,469 4,19,42,469

Expenses(Rates&taxes, Maint chg,etc) 7,50,10,166 11,69,52,635 7,50,10,166 11,69,52,635

Total 23,37,85,492 24,03,01,353

Note - 9 - Trade Payable

Micro,Small and Medium Enterprises (Refer Note 32) 32,64,731 36,17,130

Others 22,26,76,797 16,44,69,455

Total 22,59,41,528 16,80,86,585

Capital Creditors - 2,03,070

Advance received from customers 90,42,570 96,84,973

Security deposit/earnest money/ retention money 99,79,873 90,54,680

Statutory dues payable 47,25,136 35,06,659

Others payable 5,89,29,262 5,97,20,333

Total 8,26,76,841 8,21,69,715

Note - 10 - Other Current liabilities

Note - 8 - Long Term Provisions

As at 2017 As at 2016 `


` ` `

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Note - 11 - Short Term Provisions

Provision for employee benefits

Gratuity ( Partly funded) 41,06,125 16,98,168

Leave Encashment (unfunded) 46,33,272 1,02,27,282

Post retirement Medical benefits(Unfunded) 10,95,217 11,01,799

Long service award liability(Unfunded) 2,80,297 3,01,200

Post retirement settlement allowance(Unfunded) 13,890 1,01,28,801 37,127 1,33,65,576

Other Provision

Rent 19,53,20,287 18,99,73,663

Other Expenses(Rates&taxes, Maint chg,etc) 14,61,571 5,54,567

Proposed dividend - 8,68,000

Corporate dividend tax - 1,76,710

Income Tax - 22,51,196

Total 20,69,10,659 20,71,89,712

As at 2017 As at 2016 `


` ` `

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` ` ` ` ` ` ` ` ` `

As on Additions Sale/Adj. Total Upto During the W/back Total As on As on 01-4-2016 during the during as on 31-3-2016 year during the as on 31-3-2017 31-3-2016

year the year 31-3-2017 year 31-3-2017

DESCRIPTION OF ASSETS GROSS BLOCK AMORTISATION/DEPRECIATION NET BLOCK

Leasehold Land:

-Chennai 44,09,131 - - 44,09,131 22,545 4,504 - 27,049 43,82,082 43,86,586

-JVB 17,61,405 - - 17,61,405 - - - - 17,61,405 17,61,405

Building 10,73,56,670 - - 10,73,56,670 3,55,43,537 18,79,393 - 3,74,22,930 6,99,33,740 7,18,13,133

Residential flats 5,39,500 - - 5,39,500 3,05,191 7,580 - 3,12,771 2,26,729 2,34,309

Sheds 6,214 - - 6,214 6,214 - - 6,214

Renovation of Leased Premises 29,87,822 - - 29,87,822 25,58,217 2,18,229 - 27,76,446 2,11,376 4,29,605

Air Conditioning plant 2,41,32,666 - - 2,41,32,666 39,68,418 15,92,214 - 55,60,632 1,85,72,034 2,01,64,248

Plant & Machinery 93,44,579 - - 93,44,579 47,47,530 7,11,205 - 54,58,735 38,85,844 45,97,049

Furniture, Fixtures & Fittings 4,05,27,420 3,89,679 - 4,09,17,099 3,53,79,451 9,11,019 - 3,62,90,470 46,26,629 51,47,969

Vehicles 20,16,380 4,68,918 6,05,931 18,79,367 10,61,647 1,91,541 6,05,931 6,47,257 12,32,110 9,54,733

Air Conditioners,water coolers office and other equipments 1,55,03,811 11,76,599 52,950 1,66,27,460 1,15,67,214 13,81,908 45,400 1,29,03,722 37,23,738 39,36,597

Computers 2,70,23,823 17,02,407 - 2,87,26,230 2,40,57,163 15,34,845 - 2,55,92,008 31,34,222 29,66,660

Total of Tangible Assets 23,56,09,421 37,37,603 6,58,881 23,86,88,143 11,92,17,127 84,32,438 6,51,331 12,69,98,234 11,16,89,909 11,63,92,294

Previous Year Tangible Assets 23,55,26,606 42,90,401 42,07,586 23,56,09,421 11,48,37,127 85,22,743 41,42,743 11,92,17,127 11,63,92,294 12,06,89,479

Intangible Assets (Website) 11,89,380 28,750 - 12,18,130 10,97,830 31,294 - 11,29,124 89,006 91,550

Intangible Assets (Software) 54,71,734 - - 54,71,734 15,41,319 10,67,322 - 26,08,641 28,63,093 39,30,415

Total of Intangible Assets 66,61,114 28,750 - 66,89,864 26,39,149 10,98,616 - 37,37,765 29,52,099 40,21,965

Previous Year Intangible Assets 65,10,731 1,50,383 - 66,61,114 15,44,977 10,94,172 - 26,39,149 40,21,965 49,65,754 (Website)

Capital work in Progress 1,97,970 32,744 1,97,970 32,744 - - - - 32,744 1,97,970

Capital W.I.P(Previous year) 3,32,361 1,97,970 3,32,361 1,97,970 - - - - 1,97,970 3,32,361

Grand Total (Current Year) 24,24,68,505 37,99,097 8,56,851 24,54,10,751 12,18,56,276 95,31,054 6,51,331 13,07,35,999 11,46,74,752 12,06,12,229

Grand Total(Previous Year) 24,23,69,698 46,38,754 45,39,947 24,24,68,505 11,63,82,104 96,16,915 41,42,743 12,18,56,276 12,06,12,229 12,59,87,594

Note:1. Residential flat includes 2500 being the cost of shares as under:

25 Shares @ `100 each in Express apartments Flat owners Coop. Society Ltd. - Cost ` 2500

Note:2. Depreciation includes ` 26315 charged to prior period adjustments

`

Note - 12 - Property, Plant & Equipments

G R O S S B L O C K D E P R E C I A T I O N N E T B L O K

As on Additions Sale/Adj. Total Upto During the W/back Total As on As onDESCRIPTION 01-4-2016 during during the as on 31-3-2016 year during the as on 31-3-2017 31-3-2016

year the year year 31-3-2017 year 31-3-2017

Land-Freehold 10,47,030 10,47,030 10,47,030 10,47,030

Land-Leasehold 1,43,341 - - 1,43,341 52,413 1,448 - 53,861 89,480 90,928

Building 1,14,73,197 - - 1,14,73,197 45,65,417 1,95,756 - 47,61,173 67,12,024 69,07,780

Residential Flats 18,26,592 - - 18,26,592 6,32,524 29,807 - 6,62,331 11,64,261 11,94,068

Industrial Sheds 8,31,656 - - 8,31,656 8,31,656 - - 8,31,656 - -

TOTAL 1,53,21,816 - - 1,53,21,816 60,82,010 2,27,011 - 63,09,021 90,12,795 92,39,806

Previous year 1,53,21,816 - - 1,53,21,816 58,36,391 2,45,619 - 60,82,010 92,39,806 94,85,425

- - - - - -

Note - 13- Non-Current InvestmentsInvestment Property

Note:1. Residential flat includes 1000 being the cost of shares as under:

1 Share @ `1000 in Golf green multistoried apartment Association - Cost 1000

`

`

Notes on Financial Statements for the year ended 31st March 2017

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Note - 14 - Deferred Tax Assets(Net)

As at 2017 As at 2016 `


`

Deferred Tax liability(A)

Relating to Fixed Assets 1,37,47,921 1,41,85,865

Deferred Tax Assets

Relating to employee benefits 3,65,43,751 3,79,93,183

Disallowances under Income tax Act 8,86,92,043 8,70,84,688

Total Deferred Tax Assets(B) 12,52,35,794 12,50,77,871

Net Deferred tax assets(B-A) 11,14,87,873 11,08,92,006

Note - 15 - Long Term Loans and Advances

Secured, considered good

Advances to employees # * 10,55,259 11,38,303

Unsecured, considered good

Security Deposits 1,53,81,322 1,53,43,513

Balance with Government Authorities** 99,99,678 1,00,14,335

Income Tax (Net of Provision) 2,32,12,993 1,69,87,407

Income tax paid against demand contested 1,31,20,000 1,31,20,000

Others

-Advances To employees* 5,21,386 6,20,789

-Advances To others 10,451 2,707

Unsecured, considered Doubtful

Security Deposits 16,450 16,450

Other Advances 7,61,757 7,85,328

7,78,207 8,01,778

Less: Provision for doubtful advances 7,78,207 8,01,778

Total 6,33,01,089 5,72,27,054

#Against vehicle & household equipments

*Advances due from officers 4,24,039 5,99,928

** Includes amount recoverable from ESIC ` 99,99,678

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Note - 16 - Other Non Current Assets

As at 2017 As at 2016 `

Particulars st st 31 March 31 March

` ` `

Unsecured Considered Good

Prepaid Expenses 23,625 4,938

Interest Accrued but not due 5,45,764 4,54,477

Doubtful

Other receivables 2,83,332 2,83,332

Less: Provision for doubtful debts 2,83,332 2,83,332

Total 5,69,389 4,59,415

Note - 17 - Inventories

(at cost or net realisable value, whichever is lower)

Raw Materials 32,18,378 34,73,198

Less:Provision for unconfirmed stock with 2,58,083 29,60,295 1,85,918 32,87,280fabricators

*Stock -in -Trade 18,79,50,605 12,69,79,179

Less:Provision for obsolescence 1,02,88,264 17,76,62,341 89,54,940 11,80,24,239(Outright purchases)

Stock- in -trade in transit - 1,64,407

Finished Goods-Under inspection 5,34,961 1,91,713

Packing & other material 4,95,854 4,54,685

Total 18,16,53,451 12,21,22,324

* Includes stock -in- trade other purchases of ` 8,58,06,897( Previous Year ` 2,85,85,605)

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Note - 18 - Trade Receivables

Outstanding for a period exceeding six monthsfrom the date they are due for payment:

Unsecured, considered good 10,76,800 15,54,833

Unsecured, considered doubtful 47,34,305 47,44,213

Less: Provision for doubtful receivables 47,34,305 47,44,213

10,76,800 15,54,833

Other trade receivables

Unsecured, considered good 1,22,33,237 71,35,630

Total 1,33,10,037 86,90,463

Note - 19 - Cash and Bank Balances

Cash & Cash Equivalents

Balances with Banks

-In current account 98,11,465 1,32,84,812

-In term deposit account with maturity of 23,50,000 48,75,000

less than three months

Cheques, drafts on hand 1,81,557 69,950

Cash on hand 6,96,750 8,26,734

Credit Cards under collection 12,87,351 7,38,548

Other Bank Balances

In term deposit account with maturity more 4,58,968 4,29,027 than 12 months(Kept as security against Bank Guarantee)

-In term deposit account with maturity of more 42,96,25,000 44,71,29,941

than 3 months and upto 12 months

- Pledged with banks against overdraft limit 1,30,00,000 44,26,25,000 1,30,00,000 46,01,29,941

Total 45,74,11,091 48,03,54,012

As at 2017 As at 2016 `


` ` `

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Note - 20 - Short-term loans and advances

Secured, considered good

Advances to employees # * 9,75,247 9,64,070

Unsecured, considered good

Advances to employees * 18,43,354 20,98,688

Security Deposit 8,76,866 10,31,643

Balance with Government Authorities 2,54,690 1,36,231

Amt. recoverable from CCIC Employees

Group Gratuity Trust 15,96,995 9,26,447

Other Advances 1,78,69,262 92,44,458

Unsecured, considered doubtful

OtherAdvances 29,93,551 26,96,137

Less: Provision for doubtful Advances 29,93,551 26,96,137

Total 2,34,16,414 1,44,01,537

#Against Vehicle & Household equipments

*Advances due from officers 8,95,291 11,65,114

Note - 21 - Other current Assets

Unsecured Considered Good

Other Receivables 3,95,657 4,52,898

Interest accrued but not due 49,93,059 40,67,036

Others 1,61,663 1,43,094

Total 55,50,379 46,63,028

As at 2017 As at 2016 `


`

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Operating Revenue

Sale of products 85,97,07,354 85,04,04,399

Less:

Trade Discount 13,95,595 85,83,11,759 15,06,010 84,88,98,389

Sale of services(Works contract)

- Interior decoration 46,45,734 4,25,997

- Packing including shipping and gift wrapping 1,04,30,862 74,81,383

- Tailoring 2,06,170 1,52,82,766 56,710 79,64,090

Other Operating revenues

- Duty draw back 4,54,143 2,15,267

- Licence Fee 9,04,500 13,58,643 6,60,000 8,75,267

Total 87,49,53,168 85,77,37,746

Note - 23 - Other Income

a) Interest income 3,45,49,388 3,72,59,964

b) Difference in exchange 4,68,981 7,18,134

c) Other Non Operating Income

- Misc.Receipts 33,74,174 13,11,401

- Rent 5,35,360 4,28,360

- License fee (others) 7,78,888 8,40,503

- Deferred Govt.Grants written back 9,06,496 9,20,095

- Excess provision written back 77,034 26,11,860

- Unclaimed credit balances written back 53,82,361 33,20,791

- Insurance Claim 16,745 2,02,258

Total 4,60,89,427 4,76,13,366

Note - 22 - Revenue from operations

Particulars For the March 31, 2017 March 31, 2016

` ` ` `

Year ended Year endedFor the

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Note - 24 - Cost of Material consumed

Opening stocks(Fabrics) 34,73,198 48,44,524

Add:-Purchases(Fabrics) 53,03,380 46,74,064

87,76,578 95,18,588

Less:Closing stocks(Fabrics) 32,18,378 55,58,200 34,73,198 60,45,390

Add:Fabrication, freight & other expenses 42,60,775 49,12,361

Total 98,18,975 1,09,57,751

Note - 25 - Purchase of Stock-in-trade and services (Works contract)

a) Purchase of Stock-in Trade

Cost of goods purchased 50,08,04,897 45,11,86,893

Add: Cartage, freight inward and Other Expenses 44,48,346 50,52,53,243 49,55,751 45,61,42,644

b) Purchase of Services (Works Contract)

-Interior decoration 6,91,410 76,323

-Packing including shipping and gift wrapping exp 71,86,192 53,12,084

-Tailoring 1,64,852 80,42,454 43,979 54,32,386

Total 51,32,95,697 46,15,75,030

Note - 26 - Changes in inventories of Stock-in-Trade

Stock-in-trade

Opening stocks 12,69,79,179 10,44,47,939

less:Closing stocks 18,79,50,605 12,69,79,179

Depletion/Accreation(-) in inventories (6,09,71,426) (2,25,31,240)

Note - 27 - Employee benefit expenses

Salaries, allowances & bonus 22,68,38,768 21,86,99,902

Contribution to P.F&E.P.S and Gratuity 2,53,46,180 2,75,29,025

Less: Amount towards PF contribution on

leave encashment recovered - 2,53,46,180 73,79,707 2,01,49,318

Staff welfare expenses 2,32,37,931 3,05,60,531

Total 27,54,22,879 26,94,09,751

Interest to bank 2,08,028 2,29,554

Interest Expenses(Others) 1,758 1,578

Interest on Income tax 2,19,352 1,78,000

Total 4,29,138 4,09,132


` ` ` `


Note - 28 - Finance Cost

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Note - 29 - Other expenses

Rent 4,49,58,650 4,30,70,449

Rates & taxes 98,41,869 69,46,251

Electricity & water charges 1,82,86,982 1,89,93,304

Printing & stationery 19,78,763 23,59,989

Computerisation expenses 55,69,929 46,34,294

Communication expenses 24,62,873 21,02,770

Repairs renewals & maint.:

-A.C.plant 1,09,565 81,665

-Building 49,14,428 58,51,951

-Others 54,92,608 1,05,16,601 60,43,503 1,19,77,119

Travelling & conveyance 28,92,175 21,19,568

Vehicle maintenance 5,58,864 6,50,789

Insurance 12,33,793 8,65,984

Auditor's remuneration :

-Audit fee(Current Year) 6,55,580 4,51,475

-Audit fee(Previous Year) 1,665 -

-Tax Audit Fee(Current Year) 2,58,830 1,74,728

-Tax Audit Fee(Previous Year) 648 -

-IFC Audit Fee(Previous Year) 57,500 -

-Reimbursement of expenses 60,938 10,35,161 1,59,648 7,85,851

Professional security and other maintenance expenses 2,75,09,849 2,57,44,317

Legal & professional charges 51,65,934 52,69,325

Advt. & publicity 41,87,631 41,63,295

Exhibition & Sales promotion,samples&Display 2,03,04,734 75,71,044

2,44,92,365 1,17,34,339

Less:Grant received/receivable from Govt. 1,27,73,626 1,17,18,739 35,49,913 81,84,426

Design Development Project Expenses 43,72,761 66,34,603

Less:Grant received/receivable from Govt. 43,72,761 - 66,34,603 -

Discount on sales 1,93,37,452 1,80,31,386


` ` ` `


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Discount on credit cards 49,79,212 45,93,981

License Fees & Commission on sales 6,25,679 13,38,007

Sales tax/turnover tax paid 40,919 9,615

Stock shortages(approval goods) 16,47,625 11,34,855

Provision for doubtful debts and advances 2,63,935 6,12,958

Bad debts written off 2,55,506 2,06,697

Amt written back earlier now paid 35,315 3,976

Other trade expenses 45,71,142 46,85,256

Miscellaneous expenses 11,11,825 11,51,806

Total 17,65,98,792 16,54,72,973

Note - 30 - Prior Period Adjustments

Income

Sale of products - (98,308)

Interest Income - 4,301

Deferred Govt.Grants Written Back - 3,827

Total - (90,180)

Expenditure

Purchases 2,82,183 357

Salary & allowances 1,000 17,774

Electricity & Water Charges - 2,32,567

Communication expenses - 730

Repair& maint.(Others) - 197

Travelling & Conveyance - (9,780)

Miscellaneous expenses 4,073 -

Professional security and other maintenance expenses (2,87,851) -

Legal & Professional charges - 14,189

Depreciation 26,315 1,26,589

Other trade expenses 21,500 44,162

Total 47,220 4,26,785

Net income(+)/Expense(-) (47,220) (5,16,965)



` `

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Note - 31 - Exceptional Items

Excess provision for employee benefits written back 91,77,342 -

Interest paid on Litigation (37,33,926) -

Fixed Assets written Off (6,367) (50,354)

Profit/Loss(-) on sale of fixed assets 32,927 95,091

Loss Due to theft & flood - (63,945)

Total Income(+)/Expenses(-) 54,69,976 (19,208)

Note - 32

The information regarding payables to Micro,Small and Medium Enterprises as defined under the Micro,Small and Medium Enterprises Development Act,2006 has been determined to the extent such parties have been identified on the basis of

information available with the company and relied upon by the auditors. Further company has paid interest of ` 1758/- to

MSME during the current year.

Note - 33

Earnings per Equity Share-Basic

A. Profit After Tax(PAT) 8,32,128 21,09,714

B. Weighted average No. Of Equity Shares 10,85,000 10,85,000

EPS- Basic (A/B) 0.77 1.94

Face value in ` 100.00 100.00

Earnings per Equity Share-Diluted

C. Profit After Tax(PAT) 8,32,128 21,09,714

D. Weighted average No. Of Equity Shares 10,85,000 10,85,000

EPS- Diluted (C/D) 0.77 1.94

Face value in ` 100.00 100.00



` `

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CIN:U74899DL1976GOI008069Notes to the Financial Statements for the Year Ended March 31, 2017

1. CORPORATE INFORMATION

Central Cottage Industries Corporation of India Ltd. (CCIC) is a Government of India Undertaking under Ministry of Textiles. CCIC is engaged in retail sales of high quality handicraft and handloom products procured from artisans, weavers and craftsmen allacross India through its Showrooms situated at Delhi, Mumbai, Kolkatta, Bengaluru, Chennai, Hyderabad, Varanasi and Patna. It also provides services like packing & shipping, gift wrapping, tailoring and interior decoration to its customers.

2. SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of accounting and preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention and in accordance with the Accounting Standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the other relevant provisions of the said Act.

b) Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Property, Plant and Equipment

Property, Plant and equipment are stated at historical cost less accumulated depreciation. Cost of acquisition is worked out on the basis of direct costs and direct overheads.

d) Intangible Assets

Intangible Assets are capitalized at acquisition cost and directly attributable cost for bringing the assets ready for its intended use.

e) Investment Property

Investment Property is accounted in accordance with Accounting Standard (AS) 13 Accounting for Investments & Cost Model as prescribed in Accounting Standard (AS) 10 Property, Plant & Equipment. The same is stated at cost of acquisition less accumulated depreciation. Cost of acquisition is worked out on the basis of direct costs and direct overheads.

f) Depreciation and Amortization

i) Depreciation on Property, Plant and Equipment is charged on straight-line method over the useful life of assets as specified in schedule II of the Companies Act, 2013. Intangible assets are amortised over their respective individual estimated useful lives on a straight line basis, from the date they are available for use. Where useful life is not

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ascertainable, the period is taken as five years. Individual assets costing up to Rs.5000/- are fully depreciated in the year of acquisition.

ii) Leasehold land is being amortized over the lease period. Depreciation on Property, Plant and Equipment where the historical cost has undergone a change due to revision in costs or price adjustment is provided prospectively over the residual useful life of the Asset. Depreciation on accretion to rented premises, which are in the nature of Capital Expenditure, is provided over the residual lease period of the premises. Where lease period is not ascertainable, the period is taken as five years.

iii) Depreciation on Investment Property is provided on straight line method at rates calculated on the basis of the useful life of the respective asset as prescribed under Part C of Schedule II to the Companies Act, 2013

g) Inventories

i) Finished stocks are valued at lower of cost or net realizable value. Cost is measured in terms of retail method by marking down from sale value of the inventory, the average percentage of gross margin for the year for each department. The net realizable value in respect of markdown stocks is measured after reducing the discount from normal selling price. The net realizable value in respect of damaged stocks is taken as Nil.

ii) Cost of raw material stocks and other stores is determined with reference to invoice value and inward expenses.

iii) Packing material is valued at cost.

iv) Inventories of raw material / finished stocks and other stores are taken on the basis of physical count as verified at the end of the financial year after adjusting discrepancies - shortages / excesses found as compared to book records. However, stocks held by fabricators, processors, printers, tailors and sent to customers on approval, pending sales, are taken on the basis of material issue forms/approval memos.

v) A provision for obsolescence in respect of finished stocks aged more than three years and markdown stocks is made @ 50% of the cost of such stocks. The Unconfirmed raw material stock lying with fabricators and tailors is provided for at 100 % to the extent considered unrealizable.

h) Trade receivables

The Company has considered debts exceeding three years as doubtful, in addition to those debts which are considered doubtful regardless of their age. A provision for doubtful debts @ 100% is made for all such debts.

i) Loans & Advances and Liabilities

i) Provision is made in respect of advances recoverable in cash or in kind or for value to be received, considered doubtful of recovery.

ii) Credit balances remaining unclaimed for more than three years except creditors for approval goods are written back on expiry of three years.

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j) Grants

I. Deferred Govt. Grants

Grants for depreciable fixed assets are kept in Deferred Govt. grant account and proportionate amount equal to depreciation on such assets is transferred to Profit & Loss Account every year.

II. Revenue grants

i) Revenue Grants are depicted in the profit & loss account as a deduction from the related expense.

ii) Unspent grants are grouped under the head current liabilities.

iii) Grants receivable are grouped under the head Loans & Advances.

iv) The interest on unspent portion of grants which is refundable and about which there is no stipulation of charging interest in the terms and conditions of the grant is being credited to income on receipt of said interest.

k) Revenue Recognition

i) Revenue is recognized to the extent that it is probable that economic benefits will flow to the company and the revenue can be reliably measured.

ii) Revenue from sale of goods is recognized when substantial risks and rewards of ownership are transferred to the buyer. Sales reflected net of applicable taxes and returns. Rebate and discount are separately charged to expenses.

Exports are accounted for on clearance of goods by the Customs Authorities.

iii) Revenue from cost plus contracts of Interior decoration services/projects is recognized with reference to the recoverable costs incurred during the period plus the fee earned, measured by the proportion that costs incurred up to the reporting date bear to the estimated total costs of the contract.

iv) Other operational revenue represents income earned from activities incidental to the business and is recognised when right to receive the income is established.

v) Interest income is accrued at the contracted interest rates.

l) Purchases

i) Purchases other than from Concessionaires & on approval - after inspection and acceptance and are disclosed net of returns if any.

ii) Purchases from Concessionaires & on approval (other than those ordered under outright purchases) at the time sales of such goods are affected. The Central Sales Tax / VAT on such purchases is accounted for in the period bill is received.

m) Insurance Claims

Insurance claims are accounted for at the time the same are admitted by the Insurance Company as payable.

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n) Foreign Currency Transactions

i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between reporting currency and foreign currency at the date of transaction.

ii) Foreign currency monetary items are reported using the closing rate. Exchange difference arising on the settlement of the monetary items or on reporting the same at the closing rate as at the balance sheet date are recognised as income or expense in the period in which they arise.

o) Employee Benefits

i) Defined Contribution Plans - The Company’s contribution to provident fund, pension scheme, etc. are considered as defined contribution plans and are charged as an expense as it falls due based on the amount of contribution required to be made and when services are rendered by the employees.

ii) Defined benefit plans - The Employees gratuity fund Scheme managed by Life Insurance Corporation of India (LIC) is a defined benefit plan. The liability for gratuity is provided on actuarial basis. The present value of company's obligation is determined on the basis of actuarial valuation carried out by an independent actuary at the end of the year on Projected Unit Credit Method and the fair value of plan assets is reduced from the gross obligation under the scheme to recognise the obligation on net basis. Acturial gains and losses are recognised in the statement of profit and loss.

iii) Long-term employee benefits - Liability for leave encashment, employee medical benefits to regular & retired employees, long service award and amount payable to employees on retirement for settlement to home town is recognized on the basis of actuarial valuation carried out by independent actuary at the end of the financial year in accordance with accounting standard AS-15 (Revised). Acturial gains and losses are recognised in the statement of profit and loss.

iv) Short-term employee benefits - All employee benefits due wholly within twelve months of rendering or services are classified as short term employee benefits. Benefits like salaries, wages, leave salary, contribution to Provident Fund/ etc paid or payable during the reporting period are recognized in the period in which the employee renders the related service.

p) Taxes on Income

i) Provision for Income Tax is made in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred tax charge or credit on account of timing difference between taxable income and accounting income is recognized using current tax rates and tax laws enacted or subsequently enacted by the Balance Sheet date. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets supported by convincing evidence. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each balance sheet date to reassess realization.

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q) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. The contingent liability is disclosed in notes where there is a possible obligation arising from past events existing at the Balance Sheet date and which has a possibility of future outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

r) Impairment of Assets

In compliance to Accounting Standard AS-28 Impairment of Assets of ICAI, at each Balance Sheet date, the company reviews the carrying amounts of its Fixed Assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and necessary entries to recognize such impairment loss (including reversal) are passed in the books of Account.

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NOTE No. 34 - NOTES ON ACCOUNTS

1 Contingent Liabilities: 31-3-2017

` `

I. Claims against the Company not

acknowledged as debts in respect of:

a) ESI 1,30,389 1,26,004

b) Sales tax 02,218 2,02,218

c) Income tax (net of ` 1,31,20,000 deposited against demand) 45,15,650 45,15,650

II. Other monies for which Company is

contingently liable:

a) Suit filed against the company by the landlords of

Mumbai Branch CSM premises for payment

mesne profits contested:

- Showroom premises w.e.f. 15-8-2000 to

30.3.2010 (date of vacation) 22,44,13,137 22,44,13,137

- First floor premises w.e.f. 10-8-2000 to Quantum not

ascertainable ascertainable

- First floor premises prior to 10-8-2000. 7,14,50,787 6,82,32,387

b) Suit filed against the company by Nil 1,00,000

Ex-employees/creditors contested.

c) Claim against the company by franchisee (M. Tex Exports) Nil 46,07,216

contested (net of amount withheld by Company)

d) Proportionate Share of capital items demanded by STC 36,78,662 -

III. Capital commitments remaining to be executed: Nil Nil

31-3-2016

2,

31.3.2017. Quantum not

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Particulars 2016-17 2015-16st

Balance as on 1 April 4,30,06,718 3,98,94,968

Provision made during the year 36,22,500 36,06,750

Amount paid against the provision during the year 4,95,000 4,95,000

(including TDS on provision `3,15,000 (prev. year `3,15,000)stBalance as on 31 March 4,61,34,218 4,30,06,718

Amount in ( )`

The above provisions are made totally without prejudice to the contentions taken up by CCIC in its defense in the suits or other legal proceedings and that only adhoc provision is being made in order not to be in a position of being unable to pay any quantified amount of mesne profits if ordered by the Court in the event of CCIC losing the suit/legal proceedings.

V. A case of embezzlement was detected in July 1979 by fictitiously debiting purchases account and crediting consignors account relating to the year 1972-73 to 1979-80. Total amount involved in the embezzlement worked out to `11.35 lakh of which ` 7.98 lakh relates to the period after the formation of the Company. The case was filed by CBI against the accused employees which was decided by the Court against the accused employees from whom` 2,27,950 was recovered and deposited in the Court. The court ordered refund to CCIC. The surviving accused employees have filed appeal in the High Court and the matter is sub-judice. The refund can be released after decision of the appeal.

IV.

a) Consequent to judgement of Hon’ble Supreme Court, CCIC vacated the Mumbai Showroom premises at Ground Floor, Narang House, Chhatrapati Shivaji Maharaj Marg to landlords on 30th March’2010. The landlords have also claimed payment of Mesne profits at higher rate in the suit filed for which the Mumbai Small Causes Court has ordered enquiry for determination of mesne profits under Order 20 Rule 12 of CPC. Pending decision of the Court, CCIC has made provision on ad-hoc basis of` 13,18,69,446 (prev. year ̀ 13,18,69,446)

The claims of the Landlord over and above the provision made in the books of accounts are being shown as contingent liability. As per the legal opinion there can be no reasonable time frame in which the matter shall be finalized. There is no expected reimbursement on this account to the company.

st b) CCIC is also in occupation of 2500 sq ft. on the 1 Floor in the same building and its writ

petition against the order of Appellate court of Bombay small cause court is pending in the High Court for its claim of tenancy rights in respect of that area.

The landlord in this case has also filed writ petition before the High Court for :

• Eviction from the premises.

• Rent @ ` 5 lakh PM w.e.f 10-08-97 to 9-08-2000 along with interest @18% p.a. till the date of payment. (shown as contingent liability)

• Mesne profits w.e.f 10-08-2000

The High court has vide its interim order directed CCIC to pay ̀ 15,000 p.m. in the court which CCIC is paying to the Court. Pending decision of the Court, CCIC has made provision on ad-hoc basis as under :-

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2 Long term provisions (Note No.8)

The employment benefits valuations of Gratuity, leave encashment, Post retirement medical benefits, long Service award and settlement to home town are valued by acturary in accordance with Accounting Standard -15 – (Revised) Employee Benefits. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The following table summarizes the component of the various employee benefits and the components of net benefit expenses recognized in the profit and loss account.

Defined Benefit Plan

GRATUITY (PARTLY FUNDED)Amount in ( )`

A Changes in present value of obligation As on

31-03-2017 31-03-2016

i. Present value of obligation as at the beginning of the year 12,81,38,408 12,75,25,718

ii. Interest cost 96,61,636 1,02,02,057

iii. Past service cost - -

iv. Current service cost 41,06,125 16,98,168

v. Curtailment / Settlement cost - -

vi. Benefits paid by LIC (-)97,39,697 (-)1,36,18,394

vii Actuarial (gain) / loss on obligation (-)26,49,679 23,30,859

viii. Present value of obligation as at the end of the year 12,95,16,793 12,81,38,408

B Changes in fair value of plan assets

i. Fair value of plan assets as at the beginning of the year 8,59,46,036 8,49,67,538

ii. Return on plan assets 70,90,548 70,28,156

iii. Contributions 72,04,548 75,68,736

iv. Benefits paid (-)97,39,697 (-)1,36,18,394

v. Actuarial gain / (loss) on obligation 30,773 -

vi. Fair value of plan assets as at the end of the year 9,05,32,208 8,59,46,036

C The amounts to be recognized in the balance sheet

i. The present value of obligation as at the end of the year 12,95,16,793 12,81,38,408

ii. Fair value of plan assets at the end of the year 9,05,32,208 8,59,46,036

iii. Funded status (-)3,89,84,585 (-)4,21,92,372

iv. Net assets / (liability) recognized in balance sheet (-)3,89,84,585 (-)4,21,92,372

As on

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A Changes in present value of obligation As on

31-03-2017 31-03-2016


ii. Interest cost 47,81,898 46,83,129

iii. Past service cost - -

iv. Current service cost 29,12,019 28,73,738

v. Net Benefits paid (-)1,32,02,480 (-)1,29,45,964

vi Actuarial (gain) / loss on obligation 77,51,479 66,23,712

vii. Present value of obligation as at the end of the year 6,20,16,647 5,97,73,731

B The amounts to be recognized in the balance sheet

i. The present value of obligation as at the end of the year 6,20,16,647 5,97,73,731

ii. Funded status - -

iii. Net assets / (liability) recognized (-)6,20,16,647 (-)5,97,73,731

C Expenses recognized in the statement of profit and loss

i. Current service cost 29,12,019 28,73,738

ii. Past service cost - -

iii. Interest cost 47,81,898 46,83,129

iv. Net actuarial gain/(loss) recognized in the year 77,51,479 66,23,712

v. Expenses recognized in the statement of profit and loss 1,54,45,396 1,41,80,579

As on

LEAVE ENCASHMENT (NON FUNDED) Amount in ( )`

Amount in ( )`

D Expenses recognized in the statement of profit and loss31-03-2017 31-03-2016

i. Current service cost 41,06,125 16,98,168

ii. Past service cost - -

iii. Interest cost 96,61,636 1,02,02,057

iv. Expected return on plan assets (-)70,90,548 (-)70,28,156

v. Curtailment / settlement cost - -

vi. Net actuarial gain / (loss) recognized in the year (-)26,80,452 23,30,859

vii. Expenses recognized in the statement of profit and loss (actuarial) 39,96,761 72,02,928

viii. Expenses paid directly by the company to Ex-employees (unfunded). 1,19,776 -

ix. Total expenses recognized in the P & L Account. 41,16,537 72,02,928

As on As on

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Changes in present value of obligation As on

31-03-2017 31-03-2016


ii. Expenses/(-)income recognized in the statement of profitand loss(actuarial) (-)91,77,342 98,80,763

iii. Present value of obligation as at the end of the year 2,17,00,533 3,08,77,875

As on

MEDICAL BENEFITS (NON FUNDED) Amount in (`)


31-03-2017 31-03-2016

i. Present value of obligation as at the beginning of the year 36,26,725 37,56,664

ii. Expenses/(-)income recognized in the statement of 3,15,851 (-)1,29,939profit and loss(actuarial)

iii. Present value of obligation as at the end of the year 39,42,576 36,26,725

As on

LONG SERVICE AWARD (NON FUNDED) Amount in (`)


31-03-2017 31-03-2016

i. Present value of obligation as at the beginning of the year 2,43,591 2,46,588

ii. Expenses/(-) Income recognized in the statement of 73,726 (-)2,997profit and loss(actuarial)

iii. Present value of obligation as at the end of the year 3,17,317 2,43,591

As on

SETTLEMENT TO HOME TOWN (NON FUNDED) Amount in ( )`

The principal assumptions used in determining employee benefit are given below:

Particulars For all employee Gratuity (funded)benefits except

gratuity (non-funded)

2016-17 2015-16 2016-17 2015-16

Discount rate 7.54% 8% 7.54% 8%

Rate of return on plan assets (acturial) N.A N.A 8.25% 8.35-9.01%

Salary escalation rate

- For medical benefits 4% 4%

- for all other benefits. 5.50% 5% 5.50% 5%

Age (Years) Attrition rate Attrition rate

Up to 30 years 3% 3% 1% to 3 % 1% to 3 %

31 to 44 years 2% 2% depending depending

Above 44 years 1% 1% on age on age

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The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factor. The above information is certified by the Actuary.

Defined Contribution Plan

Contribution to defined contribution plan recognized as expense for the year are as under:

2016-17 2015-16

Employer’s Contribution to Provident Fund ` 1,73,02,380 1,62,82,452

Employer's Contribution to Pension Scheme ̀ 39,27,263 ̀ 40,43,645

`

3 (i) Long term provisions (Note No.8)

(a) Other provisions includes an amount of ` 4,19,42,469 provided in 2006-07 towards rent in

respect of premises at ‘A’ Barracks, Janpath, New Delhi demanded by the Directorate of

Estates, owner of the building for the period 16.3.99 to 11.10.2001. The matter is being

contested by the Company through Ministry of Textiles.

(b) Other provisions includes ̀ 7,50,10,166 (prev. year ` 7,50,10,166) being proportionate share

of property tax in respect of premises at JVB, New Delhi for the period 1999-2000 to 2008-09.

Against this provision, STC has intimated the estimated liability of ` 6,04,06,648 as on

30.4.2017. No adjustment is made in the books of accounts for the current year pending

determination of final liability.

(ii) Short term provisions (Note No.11)

An amount of ` 20,70,900 p.a. (prev. year ` 20,70,900 p.a.) has been provided as rent in

respect of Bharat Nagar, New Delhi premises allotted to CCIC pending fixation of rent.

Cumulative provision of rent up to 31.3.2017 ` 1,69,52,075 (prev. year ` 1,48,81,175).

4. Property, plant and equipments and Investment property (Note No.12 & 13)

i) The break up of cost of land and building thereof is not available in respect of Residential flats

at Kolkata and Bangalore Cost ` 8,71,692 (previous year ̀ 8,71,692) (excluding ̀ 3,500 being

cost of shares). In view of this, depreciation in respect of these properties has been provided

on the total cost. Appropriate adjustments shall be carried out on receipt of necessary

information.

ii) The documents in respect of premises in JVB, New Delhi have not been executed in favour of

the Company. A provision of ` 1,97,000 (previous year `1,97,000) has been made towards

estimated liability in respect of stamp duty in the financial year 2003-04. Any change of duty

shall be adjusted in the year the premises are registered in the name of Company.

CCIC has been allotted space in JVB on proportionate cost basis including cost of land, which

Amount in ( )`

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has been capitalized in the schedule of Property, Plant and Equipments under the head Land -

lease hold JVB for ` (previous year `17,61,405) and Building for `

(previous year ` 9,26,85,836). The proportionate share of land has been intimated by STC

along with the intended lease to be executed between STC and CCIC. The proposed lease is

silent about the period of lease. CCIC has taken up the matter with L&DO for execution of

separate lease deed for CCIC’s portion of land, on the basis of legal opinion in the matter.

Pending execution of lease deed as to determine type of lease, the amortisation has not been

charged on land in accordance with Accounting Standard - 10 - Property, Plant and Equipments.

17,61,405 9,26,85,836

5. Inventories (Note No.17)

A Inventories with Third parties.

The inventories of finished goods includes damaged stock at selling price 2,26,805 valued at

`Nil (prev. year selling price ` 2,26,805 cost ` Nil) lying with consignees/ others, out of which

`Nil (prev. year ̀ Nil) is unconfirmed.

The inventories of raw material stocks include ` 7,43,038 (previous year ` 8,74,346) lying with

fabricators and tailors, out of which `4,72,922 (prev. year `3,39,444) is unconfirmed. A net

provision of ` 2,58,083 (prev. year `1,85,918) after deducting security deposit lying with the

company considered to be unrealizable cost of this inventory has been made upto end of the

current year. A provision of ` 3,17,000 for shortages of goods obtained on approval basis was

made on the basis of average shortages of last three years during the F.Y. 2015-16 in the books of New Delhi showroom.

B Inventories held on consignment/approval basis

Goods held by the Company on consignment / approval basis as per physical verification as a

bailee - ` 7,80,30,927 (prev. year `18,78,49,895) which is mostly unconfirmed subject to

reconciliation where confirmation have been received.

C Own inventories

i). The shortages and excesses noticed during physical verification of finished stocks as compared to book records are under:-

`

Shortages

( ) ( ) excess (+) ( )

2016-2017 39,12,339 27,22,956 (-)11,89,383

2015-2016 13,25,755 8,16,787 (-)5,08,968*

Excess Net Shortages (-)/

` ` `

Raw material stock Shortages(-)/excesses(+) (-)`2,83,646 (prev. year shortages `3,75,711)

Amount in ( )`

* The net shortages/excess amount for the F.Y.2015-16 does not includes Net shortages/ excess in respect of New Delhi showroom as the difference between the physical count and

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book record was not ascertained and was subject to reconciliation. A provision of 1,83,000 has

been made in the financial year 2015-16 based on average net shortages/excess found during physical verification of last three years.

ii). The stocks found damaged on the basis of physical verification on close of the financial year

Selling price ` Cost price ` (prev. year selling price `43,13,660 Cost price

`20,73,792) has been taken at NIL value as per the Accounting Policy as the extent of damage

and the net realizable value is not determinable.

iii) The Stock of finished goods includes inventories of `59,33,308 (Previous year `31,10,642)

procured out of `80 lakhs sanctioned by the office of DC(HC)as CORPUS FUND to meet the

working capital requirement for sourcing of handloom products from Varanasi Handloom, Mega Cluster under the Comprehensive Handloom Cluster Development Scheme (CHCDS)

`

32,43,334 15,24,061

6. Long term loans and advances (Note No.15)

Long term advances includes ̀ 99,99,678 recovered by ESIC on 3.8.2006 towards ESI liability determined by them on estimated basis for the period 2-10-1988 to 31-12-1995 contested by the Company. The court ordered Ministry of Labour to decide the issue of applicability of ESI provision on the Company from 2-10-1988 to 30-9-2004 within three months. The matter is pending with the Ministry of Labour. CCIC has filed petition in high Court claiming the refund.

The Company has been granted exemption from applicability of ESI Act on yearly basis from1-10-2004 to 30-9-2011 and from 19-07-2013 onwards on yearly basis which was valid upto18-7-2015. None of the regular employees of the Company come under the salary ceiling of covered employee under ESI act w.e.f. 1-10-2011 and hence the exemption has been granted by Govt. as per section (2) (a)(b) of ESI act 1948 read with rule 50 of ESI(central) rules 1950 on 1-4-2015.

7. Corporate Social responsibility Expenditure

The company has contributed an amount of ̀ 2,00,000/- in Swachh Bharat Kosh, of Government of India, towards corporate social responsibility in accordance with Department of Public Enterprises guidelines. The Company is not required to make any expenditure towards corporate social responsibility as per the provisions of The Companies Act, 2013.

8. Operating Lease (Note No.29)

The operating lease payments are recognized as an expense in the Profit and Loss account on accrual basis over the lease term.

The Company has taken the store premises at Kolkatta branch under operating leases which is non- cancelable and the initial period of the lease ranges for ten years with lease rentals increasing by 25% after every five years. Upon expiry, the same can be renewed on mutual terms and conditions as agreed to between lessor and lessee.

Future minimum leases payments under non- 2016-17 2015-16operating leases

i) Not later than one year 2,12,220 2,12,220

ii) Later than one year but not later than five years 2,29,905 4,42,125

iii) Later than five years - -

Total rent recognized in the statement of profit and loss. 2,12,220 2,12,220

cancellable

Amount in ( )`

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The Company has also taken various showroom premises under cancelable operating leases for a period generally ranging from one year to ten years which are cancellable after giving one month to six month notice. In few cases the leases can be renewed by mutual consent .In few cases, the agreements are pending for execution.

The lease payments are recognized under the head rent in note no 29.

9. Exceptional Items (Note No.31)

Exceptional Items include an amount of Rs.91,77,342 written back towards actuarial provision of Post Retirement Medical Benefit liability no longer required, as determined by the Actuary for the Financial Year 2016-17.

10. Other information

i. In the opinion of the Board, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

ii. The company has entered into an agreement with Bihar Museum, Patna for operating a showroom in their premises. The profits shall be shared equally between both the parties but there is no agreement to share the losses. During the current year the Patna Branch has incurred losses and therefore the same has not been shared with Bihar Museum.

iii. The disclosure of Trade payables under current liabilities in respect of Micro, Small and Medium enterprises liabilities is based on the information made available by the parties to the company under the Micro, Small and Medium Enterprises Development Act 2006 and is as under:

iv. The value-wise information regarding opening and closing stocks, purchases & Sales of finished goods and raw material consumption is disclosed in Annexure-1 attached.

Particulars

a) The principal amount and the interest due thereon remaining Principal Principal unpaid to any MSME supplier as at the end of accounting year. 32,51,287 36,05,444

Int. 13,444 Int. 11,686

b) The amount of interest paid by the buyer under MSMED Act, Nil Nil 2006 along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year.

c) The amount of interest due and payable for the period 1,758 1,578(where the principal has been paid but interest under the MSMED Act, 2006 not paid).

d) The amount of interest accrued and remaining unpaid 13,444 11,686at the end of accounting year.

e) The amount of further interest due and payable even in the Nil Nilsucceeding year, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23.

31-3-2017 31-3-2016

Amount in (`)

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v. The Sales of products for the year under note no. 22 - Revenue from operations have been stated at Gross Value and the discount allowed to select customers and on reduction sale has been disclosed separately under other expenses (note no. 29).

Particulars 31-3-2017 31-3-2016

a) Earnings in foreign exchange classified under the following heads:

i) Export of goods calculated on FOB basis. 3,72,36,286 3,05,90,470

ii) Sales in India for which money is received in foreign currency. 28,28,99,103 27,38,16,000

b) Expenditure in foreign Currency (Others) 8,16,241 3,17,194

Amount in (`)vi.

vii. Segment Reporting

The Company is engaged in business of trading Handicrafts & Handloom products (including related interior decorator service) which in context of Accounting Standard-17 is considered as the only (reportable) business segment.

viii. Related party disclosure as per AS - 18 issued by ICAI

a) Key Management Personnel:

i) Mr. Pramod Nagpal (Managing Director)

ii) Mrs Rashmi Verma (Chairperson )

iii) Mr. Ashok Kinra (Company Secretary)

iv) Mr. Vineet Gupta (GM Finance retd. on 31-01-2017)

v) Mrs. Meera Somani ( AGM Finance, w.e.f. 01-02-2017)

b) Nature and amount of transactions:Amount in ( )`

Managerial remuneration: 2016-17 2015-16

Mr. Pramod Nagpal (Managing Director) 23,76,736 21,91,847

Mrs Rashmi Verma (Chairperson ) Nil Nil

Mr. Ashok Kinra (Company Secretary) 17,25,049 16,24,204

Mr. Vineet Gupta (GM Finance retired on 31-01-2017) 26,62,472 16,13,784

Mrs. Meera Somani (AGM Finance, w.e.f. 01-02-2017) 2,38,528 N/A

ix. Impairment of Assets

There is no impairment of any asset as per AS-28 - Impairment of Assets issued by ICAI and thus no impairment loss is required to be recognized in the financial statements, either at the beginning of the year or at the Balance Sheet date.

x. Proposed Dividend

During the Previous Financial year proposed dividend and related dividend distribution tax are recognised as a provision in the year to which they relate irrespective of when they are declared.

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From the current financial year 2016-17 onwards, the proposed dividend and related dividend distribution tax shall be recognised as a liability in the year in which it is approved by the shareholders in the Annual General Meeting. The proposed dividend to be declared for the F.y.2016-17 is subject to the approval of the shareholders of the company at the Annual general meeting and is not recognised as liability as at the balance sheet date. The details is as under:-

Particulars 2016-17 2015-16

Proposed Dividend 2,50,000 8,68,000

Dividend Distribution Tax 50,900 1,76,710

Amount in (`)

xi Disclosure on Specified Bank Notes

During the year the Company had Specified Bank Notes (SBN’s) or other Denomination Notes as defined in MCA Notification G.S.R 338(E) dated. 31st March 2017. The details of SBN’s held and transacted during the period from 8th November, 2016 to 30th December, 2016 are as follows :-

SBNs Other TOTALdenomination notes

Amount Amount Amount

Closing cash in hand as on 08.11.2016 8,21,500 1,57,975 9,79,475

Add: Withdrawal from Bank Accounts NIL NIL NIL

Add: Receipts for permitted transactions NIL 1,41,39,981 1,41,39,981

Less : Paid for permitted transactions NIL 16,24,647 16,24,647

Less: Deposited in bank accounts 8,21,500 1,21,25,927 1,29,47,427

Closing bal. as at 30-12-2016 NIL 5,47,382 5,47,382

Amount in ( )`

xii. Previous year figures have been recast/regrouped and reclassified to make them comparable with those of current year, wherever necessary.

sd/-(Ashok Kinra)

Company Secretary


DIN 06885370

Place: New DelhiDated: th

4 August, 2017

sd/-(Meera Somani)


As Per our separate Report of even date For S.C.Vasudeva & Co.Chartered AccountantsFirms Regn. No. 000235N




sd/-(Shantmanu)

Director / ChairmanDIN 06640820

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Details referred to in Note 34 para 10(iv)attached to and forming part of the Balance sheet as at 31.03.2017

1. Finished Goods

ANNEXURE-1

Department Opening Stock at Cost Purchases at cost Closing stock at Cost Sales at S. P.

` ` ` ` ` ` ` `01.04.16 01.04.15 2016-17 2015-16 31.03.17 31.03.16 2016-17 2015-16

HANDICRAFTS

Art Objects 2,08,49,336 1,74,88,302 5,61,83,027 5,30,70,538 2,54,27,836 2,08,49,336 11,28,29,285 11,06,30,472

Brass 60,76,915 51,83,803 2,16,30,146 2,41,31,171 54,59,451 60,76,915 4,71,49,750 4,91,79,361

Crafts 18,66,740 23,15,380 1,12,58,511 82,55,354 29,35,639 18,66,740 1,97,54,140 1,83,57,720

Furniture 85,74,303 72,25,702 2,12,08,069 1,13,16,856 99,91,357 85,74,303 4,39,18,839 2,19,59,269

Jewellery 53,45,551 37,53,292 1,72,67,496 1,55,90,438 64,41,592 53,45,551 3,01,65,854 2,80,01,090

Lamps 3,67,092 1,32,155 7,88,765 7,03,417 6,74,365 3,67,092 11,32,353 11,10,770

Metal 86,14,996 78,52,534 4,06,31,994 3,43,69,359 1,13,47,210 86,14,996 6,20,08,352 5,51,04,523

Pottery 40,48,986 44,93,416 1,66,27,586 1,49,31,451 72,76,083 40,48,986 3,16,07,849 3,36,79,346

Rugs/Carpets 57,29,561 13,78,958 2,59,70,891 1,47,09,029 2,07,31,680 57,29,561 2,68,67,820 2,60,00,136

Toys 11,41,091 6,90,854 39,99,942 33,57,636 16,44,239 11,41,091 68,40,173 57,90,395

Wood 2,06,07,921 1,32,62,179 5,79,28,545 6,71,68,433 2,92,90,493 2,06,07,921 10,73,45,356 12,85,07,865

SUB-TOTAL 8,32,22,492 6,37,76,575 27,34,94,972 24,76,03,682 12,12,19,945 8,32,22,492 48,96,19,771 47,83,20,947

HANDLOOMS

Accessories 31,54,060 27,83,924 1,05,87,637 1,03,40,515 50,51,995 31,54,060 2,56,77,122 2,76,80,457

Bed-Spread 56,62,861 40,22,169 1,30,76,640 1,08,67,003 82,34,309 56,62,861 2,04,49,468 1,87,95,986

Children's Wear 11,36,542 13,31,675 9,24,899 9,56,052 15,35,911 11,36,542 28,13,836 33,19,902

Dress Fabrics 57,72,080 64,64,768 1,75,91,376 1,05,81,001 64,77,035 57,72,080 2,58,26,829 1,93,66,956

Furnishing 8,14,317 6,64,448 35,12,246 16,63,523 15,02,451 8,14,317 54,43,211 29,80,383

Herbal & Perfumes 24,55,382 19,61,369 2,14,16,355 2,06,09,057 38,89,459 24,55,382 3,70,35,475 3,64,80,698

Jute Product 34,452 75,415 12,38,158 9,64,385 2,65,510 34,452 17,41,763 16,68,738

Khadi - - 75,888 - - - 13,22,114 -

Men's wear 43,54,804 37,98,765 30,25,524 30,12,527 53,26,892 43,54,804 2,36,09,412 2,13,77,145

Sarees 85,95,530 80,38,815 3,07,16,121 2,14,97,342 1,34,06,356 85,95,530 3,49,44,184 3,65,11,380

Shawl 35,55,793 43,79,219 3,28,96,637 2,87,46,678 1,04,32,649 35,55,793 5,87,45,186 6,71,76,433

Table Lenin 32,50,977 21,60,336 65,13,386 62,63,935 50,02,105 32,50,977 1,01,77,524 1,10,62,067

Women's wear 51,52,889 47,45,293 74,47,527 77,61,159 56,05,988 51,52,889 1,44,41,670 1,77,44,087

Less: Provision for shortages -1,83,000 - - - - -1,83,000 - -

SUB-TOTAL 4,37,56,687 4,04,26,196 14,90,22,394 12,32,63,177 6,67,30,660 4,37,56,687 26,22,27,794 26,41,64,232

"Business Through Associates" - - 7,79,37,694 7,95,47,105 - - 10,68,57,517 10,62,69,901

Misc. Items/Handicrafts exports - 2,45,168 3,49,837 7,72,929 - - 10,02,272 16,49,319

SUB-TOTAL - 2,45,168 7,82,87,531 8,03,20,034 - - 10,78,59,789 10,79,19,220

GRAND TOTAL 12,69,79,179 10,44,47,939 50,08,04,897 45,11,86,893 18,79,50,605 12,69,79,179 85,97,07,354 85,04,04,399

Fabrics 34,73,198 48,44,524 53,03,380 46,74,064 32,18,378 34,73,198 55,58,200 60,45,390

2. Raw Material Opening Stock at Cost Purchases at cost Closing stock at Cost Consumption

` ` ` ` ` ` ` `01.04.16 01.04.15 2016-17 2015-16 31.03.17 31.03.16 2016-17 2015-16

Cottage

89


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 13,87,278 93,49,638

Adjustments for:

-Depreciation and Amortization Expenses 97,58,065 98,62,534

-Provision/(Reversal) for doubtful 2,63,935 6,12,958 debts and advances

-Bad debts written off 2,55,506 2,06,697

-Excess Provision written back (91,77,342) - (Exceptional Items)

-Old &Unclaimed amount written back(net) (53,82,361) (33,20,791)

-Interest paid 4,29,138 4,09,132

-Interest received (3,45,49,388) (3,72,59,965)

-Loss /(Profit)on sale/Write off of fixed assets (26,560) (36,712)

-Deferred Grants written back (9,06,496) (9,23,922)

-Provision/(Reversal) For unconfirmed stock 72,165 (48,456)

-Provision/(Reversal) for obsolescence of stock 13,33,324 19,28,226

Operating profit before working capital changes (3,65,42,736) (1,92,20,661)

Adjustments for:

-Decrease/(increase) in Inventories (6,09,36,616) (2,14,29,443)

-Decrease/(increase) in trade receivables (48,65,172) 29,13,001

-Decrease/(increase) in loans & advances (96,52,779) (6,75,498)

-Decrease/(increase) in current Assets 19,985 1,08,445

-Increase/(decrease) in trade payables 5,94,75,425 2,20,05,751

-Increase/(decrease) in other current liabilites 45,01,614 (17,59,549)

-Increase/(decrease) in other provisions 56,76,631 1,44,33,416

Cash generated from operations (4,23,23,648) (36,24,538)

Income tax (net) (91,10,486) (23,71,394)

Net cash flow from/ (used in) operating activities (5,14,34,134) (59,95,932)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (35,39,633) (39,58,040)

Purchase of Intangible assets (28,750) (1,50,383)

Capital W.I.P (32,744) (1,97,970)

CIN:U74899DL1976GOI008069

Cash Flow Statement for the year ended 31.3.2017

Particulars Note For the March 31, 2017 March 31, 2016

Year ended Year endedNo.

For the

Amount in (`)

Cottage

90

Amount in (`)

Grant received against assets - 64,000

Interest received 3,35,32,078 3,66,71,211

Sale of fixed Asset 34,110 1,01,555

Net cash inflows/(Used) from investing activities 2,99,65,061 3,25,30,373

CASH FLOWS FROM FINANCING ACTIVITIES

Increase/(decrease) in bank overdraft - (32,46,441)

Dividend & Corporate Dividend tax thereon (10,44,710) (22,47,084)

Long term loan received From Govt. - 80,00,000

Interest paid (4,29,138) (4,09,132)

Net cash inflows/(Used) from financing activities (14,73,848) 20,97,343

Net Increase/(decrease) in cash and Cash equivalent (2,29,42,921) 2,86,31,784 during the year

Cash & Cash equivalent at the beginning of the year 48,03,54,012 45,17,22,228 19Cash & Cash equivalent at the end of the year 45,74,11,091 48,03,54,012

Notes to the Cash flow statement:

1 Cash & cash equivalents means cash & bank balances (refer Note-19 Cash and bank balances)

2 Previous year figures have been recast/regrouped and reclassified to make them comparable withthose of current year, wherever necessary

Corporate information 1Significant accounting policies 2

The accompanying notes form part of the financial statements





DIN 06885370



sd/-(Shantmanu)


sd/-(Ashok Kinra)

Company Secretary


sd/-(Meera Somani)


Particulars Note For the March 31, 2017 March 31, 2016

Year ended Year endedNo.

For the

COTTAGE ANNUAL REPORT ENGLISH

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