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AYM Syntex Ltd.

BSE: 508933 Sector: Industrials
NSE: AYMSYNTEX ISIN Code: INE193B01039
BSE LIVE 15:24 | 20 Nov 64.60 -0.20
(-0.31%)
OPEN

65.50

HIGH

65.65

LOW

63.35

NSE 15:31 | 20 Nov 64.30 -0.20
(-0.31%)
OPEN

66.05

HIGH

66.05

LOW

62.60

OPEN 65.50
PREVIOUS CLOSE 64.80
VOLUME 53327
52-Week high 101.90
52-Week low 52.55
P/E 16.31
Mkt Cap.(Rs cr) 253
Buy Price 64.35
Buy Qty 70.00
Sell Price 64.95
Sell Qty 100.00
OPEN 65.50
CLOSE 64.80
VOLUME 53327
52-Week high 101.90
52-Week low 52.55
P/E 16.31
Mkt Cap.(Rs cr) 253
Buy Price 64.35
Buy Qty 70.00
Sell Price 64.95
Sell Qty 100.00

AYM Syntex Ltd. (AYMSYNTEX) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present 34th Annual Report together withAudited Statement of Accounts of the Company for the year ended 31st March2017.

I. Financial Highlights

(Rs. in Lakhs)

2016-17 2015-16
Revenue from operations (net) 78682.11 80089.02
Other Income 393.48 292.59
Total revenue 79075.59 80381.61
EBIDTA 10042.32 10850.90
EBIDTA Margin (%) 12.70 13.50
Finance Costs 2267.05 2152.10
Depreciation and amortisation expense 3027.25 2407.30
Profit before tax 4748.02 6291.50
Current Tax 1018.10 1340.00
Deferred tax 767.75 1516.35
Earlier year Tax (33.59) -
MAT credit entitlement (1018.10) (1340.00)
Profit after taxation 4013.85 4775.15
Earning per share (Basic & Diluted) 10.23 12.17

II. Dividend

In order to conserve resources of the Company the Board has not recommended dividendon equity shares.

III. Performance and Outlook

During the year under review revenue from operations (net) at ' 79075.59 Lakhs waslittle less as compared to ' 80381.61 Lakhs for previous year. Exports during thefinancial year 2016-17 were of ' 16703 Lakhs as compared to ' 19679 Lakhs during theprevious year.

Increase in production capacity of Nylon / mono yarn led to competition in the businessresulting into erosion of the margins of profit. Raw material prices of Nylon chips havesuddenly gone up in fourth quarter and it could not be passed on fully to customers.Emergency in Turkey for three months during second quarter has hit export of the dyedyarn. Demonetisation of ' 500 and '1000 notes had slowed down volume of sales in thirdquarter. The market is slowly picking up. Raw material prices of Nylon chips have nowstarted coming down export to Turkey has now resumed and the Company is concentrating ondeveloping export markets in other countries.

The Company continuously develops new products to have better margin of products.

The Company has completed remaining part of the expansion project II at an estimatedproject cost of ' 70 crores by increasing capacity of Nylon Mother yarn on 15thMay 2016.The Company has installed three cabling machines for cabling of BCF yarn and Heatsetting machine for BCF yarn in September 2016 which was part of expansion project IV of '34.71 crores.

The Company has now undertaken expansion project at an estimated project cost of '76.50 crores for installation of spinning line texturised machinery sewing thread setup setting up of automated warehouse and constructing separate building for spinningline.

During the year your company's long term credit rating and short term credit ratinghas been reaffirmed by CARE as CARE A and CARE A1 respectively. India Rating and ResearchPrivate Limited has upgraded rating from IND A- to IND A for long term loans and forworking capital limits.

IV. Directors' Responsibility Statement

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

b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year 31stMarch 2017 and of the profit and loss of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

V. Disclosure as Required under the Companies Act 2013:

a. Mr. Atul Desai Mr. M. K. Tandon Ms. Mala Todarwal and Mr. K. H. Viswanathantheindependent directors have given declaration that they met the criteria of independentdirectors as provided in sub section 6 of Section 149 of the Companies Act 2013;

b. Policy on directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder sub-section (3) of section 178 is placed on website of the company and web linkthereto ishttp://www.aymsyntex.com/uploads/slider/nomination-and-remuneration-policy_asl-1-0152884001473234325.pdf

c. In compliance with the Act and SEBI (LODR) regulation 2015 the Board ofdirectors as per the process recommended by the Nomination and Remuneration committeehas evaluated the effectiveness of the Board its committees and individual directors andall the results were satisfactory;

d. The CSR policy of our company as approved by the Board of directors' is hosted onthe company's website and web link thereto ishttp://www.aymsyntex.com/usertiles/tile/CSR%20Policy.pdf

Disclosure as required under Rule 9 of the Companies (Corporate Social Responsibility)Rules 2014 is annexed as Annexure A;

e. Meeting of Board of directors were conducted five times during the financial year2016-17.

f. The Company is a subsidiary of Mandawewala Enterprises Limited.

g. Ratio of remuneration of Mr. B. A. Kale and Mr. Abhishek R. Mandawewala theDirectors to the median employee's remuneration and other details are as under:

i. the ratio of the remuneration of Mr. B. A. Kale Executive Director to the medianremuneration of the employees of the company for the financial year: 106.05 times

ii. the ratio of the remuneration of Mr. Abhishek R. Mandawewala the Whole TimeDirector to the median remuneration of the employees of the company for the financialyear: 68.38 times

iii. the percentage increase in remuneration of Mr. Bhaskar Sen Chief FinancialOfficer (CFO): 7% Company Secretary: 7%.

iv. the percentage increase in the median remuneration of employees in the financialyear: 11.45%

v. the number of permanent employees on the rolls of company: 1517

vi. average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

- Average increase in remuneration of employees other than managerial personnel -10.62% and managerial persons -10.26% - there is no material difference in the increase ofremuneration percentage wise in both the category.

vii. Affirmation that the remuneration is as per the remuneration policy of thecompany.

h. Mr. Abhishek R. Mandawewala Whole Time Director and Mr. B. A. Kale ExecutiveDirector of the Company have not received any remuneration from Mandawewala EnterprisesLimited the holding company.

i. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements:

Your company has designed and implemented a framework for internal finance controls andthe same are adequate and were operating effectively. The Company periodically reviews theinternal controls to align it with the changing business needs and to improve governanceand enhance compliance with evolving regulation.

j. Particulars of contracts or arrangements with related parties:

All related party transactions that were entered into during the year under report wereon an arm's length basis and were in the ordinary course of business to serve mutual needand mutual interest. There were no materially significant related party transactions madeby your company. Hence details required to be given in form AOC 2 pursuantto Section 134(3)(h) of the Companies Act 2013 is nil. The Audit Committee has given its omnibusapproval which is valid for one financial year. Your Company's policy on related partytransactions as approved by the Board is hosted on your Company's website and a weblinkthereto is https://www.avmsvntex.com/uploads/slider/related-parties-transaction-policv_asl-033440400146557Q841.pdf

The details of the related party transactions as required under Accounting Standard -18are set out in Note 35 to the financial statements forming part of this report.

k. Particulars of loans guarantees or investments under section 186:

The Company has not made investment nor given loan nor provided any guarantee forrepayment of loan under section 186 of the act during the financial year. Investments inequity shares of companies as on 31st March 2017 are of ' 16573/- as mentionedin Note number 12 of Balance sheet as at 31st March 2017 as attached.

l. Details of establishment of vigil mechanism for directors and employees as perRegulation 22 of SEBI (Listing Obligations and Disclosure Requirements) 2015:

The Company has a Whistle Blower Policy and Vigil Mechanism for its directors andemployees and no personnel have been denied access to Mr. Atul Desai Chairman of theAudit Committee.

VI. Extract of Annual Return

An extract of Annual return in Form MGT 9 of the Companies Management andAdministration Rule 2014 is annexed as Annexure B.

VII. Conservation of energy technology absorption and foreign exchange earnings andoutgo

A) Conservation of energy:

(i) the steps taken or impact on conservation of energy:

The Company has invested the amount of ' 2.42 crores in POY area utilities lightingsystem and dryer sizing at Rakholi plant and saved 8006 units per day.

(ii) the steps taken by the company for utilizing alternate sources of energy: Nil

(iii) the capital investment on energy conservation equipment's: ' 2.42 crores

(B) Technology absorption:

i. Theeffortsmadetowardstechnologyabsorption: Nil

ii. The benefits derived like product improvement cost reduction product developmentor importsubstitution: Nil

iii. In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year): Nil

iv. Research and development expenditures:

The Company has received recognition for in-house Research and Development (R&D)units at Rakholi and Palghar from the Department of Scientific and Industrial Research(DSIR) on March 24 2015. During the year the Company has incurred a total Research andDevelopment expenditure of ' 1270.99 Lakhs ('1998.41 Lakhs) including capital expenditureof ' 649.72 Lakhs ('1461.64 Lakhs). The revenue expenditure includes employee costmaterial cost power cost travelling & conveyance and other expenses. The Company hasconsidered weighted tax deduction on eligible Research and Development expenditure of'1270.99 Lakhs ('1998.41 Lakhs) under Section 35 (2AB) of the Income Tax Act 1961.

(C) Foreign Exchange Earnings and Outgo:

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.

Earning in Foreign exchange - ' 15657.85 Lakhs

Outgo in Foreign exchange - ' 21352.08 Lakhs

VIII. Directors/ Key Managerial Personnel (KMP)

Mr. B. A. Kale has resigned from the office of Executive Director with effect from 6thMay 2017. The Board has appreciated his role for improvement in performance of the companyduring his tenure.

Board has appointed Mr. Abhishek R. Mandawewala who is Whole Time Director as aManaging director & CEO with effect from 6th May 2017 for the remainingterm of his office. He now heads all functions of the Company. Board recommends hisappointment as a Managing Director & CEO for your approval.

Mr. R. R. Mandawewala being the longest in duration is liable to retire by rotation atthe 34th Annual General Meeting.

Board has recommended re-appointment of Mr. R. R. Mandawewala the retiring director.

Mr. Himanshu Dhaddha has been appointed as Chief Financial Officer (CFO) of the Companyw.e.f 8th November 2016 in place of Mr. Bhaskar Sen who has now been designatedas Sr. Vice President (Procurement)

IX. Committees of the Board of Directors

Information on the Audit committee the Nomination and Remuneration committee theStakeholders Relationship committee the Corporate Social Responsibility committeeIndependent Directors Committee and meetings of those committees held during the year isgiven in the Corporate Governance Report forming part of this Report.

X. Deposits

The Company has not accepted any deposit within the meaning of the Chapter V toCompanies Act 2013. Further no amount on account of principal or interest on deposit wasoutstanding at the end of the year under report.

XI. Auditors

Board has recommended appointment of Price Waterhouse Chartered Accountants LLP as thestatutory auditors for a period of five years from the conclusion of 34thAnnual General Meeting till the conclusion of 39th Annual General Meeting andthey have given their consent to act as auditors of the Company if appointed by you.Members are requested to consider their appointment as the Auditors of the Company for thefive years and fix their remuneration.

XII. Cost Auditor

As per section 148 and other applicable provisions if any of the Act read withCompanies (Audit and Auditors) Rules 2014 and the Companies (Cost Records and Audit)Rules 2014 the Board of Directors of your company has appointed M/s. Kiran J Mehta CostAccountants as Cost Auditors of your company for the FY 2017-18 on the recommendationsmade by the Audit committee.

Members are requested to ratify their remuneration by passing an ordinary resolution inthe Annual General Meeting.

XIII. Corporate Governance

A separate report on Corporate Governance is annexed hereto as a part of this Report.Management Discussion and Analysis Statement is separately given in the Annual Report. Acertificate from the auditors of the Company regarding compliance of conditions ofCorporate Governance as prescribed under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is attached to this report.

XIV. Auditors' Report

There is no qualified opinion in the Auditors' Report.

We refer to para i (c) of Annexure A of Independent Auditor's Report and state that theCompany is in the process of executing document to transfer freehold land in respect oftwo plots of ' 20.04 Lakhs in name of the Company. The Company is in possession of landwithout any interference for more than 12 years. Further in respect of documents of titledeeds of six residential flats aggregating to ' 10.41 Lakhs we clarify that the saidflats are in the name of the Company and the Company is in the process of tracing thephysical agreements of the said fats.

XV. Secretarial Audit Report

A Secretarial Audit Report given by Mr. A. L. Makhija a Company Secretary in practiceis herewith annexed as Annexure C.

XVI. Risk Management Policy

The Company has evolved risk management policy identifying primary risk and secondaryrisk. Primary risk includes manpower development product efficiency pace of developmentof new products competition; Board has not identified any risk which threatens theexistence of the Company.

XVII. Familiarization Program for Independent Director (Regulation 46 of SEBI (LODR)2015)

The details of familiarization program (for independent directors) is disclosed on theCompany's website and a web link thereto ishttp://www.avmsvntex.com/uploads/slider/familiarisation-policv_asl-0696954001465570802.pdf

XVIII. Code of Conduct

The Company has Code of Conduct for Board members and senior management personnel. Acopy of the Code has been put on the Company's website for information of all the membersof the Board and management personnel.

All Board members and senior management personnel have affirmed compliance ofthe same.

XIX. Particulars of Employees

Details of every employee of the Company as required pursuant to Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed asAnnexure D.

XX. Acknowledgement

Your Directors take this opportunity to express gratitude for valuable assistance andco-operation extended to the Company by Financial Institutions Commercial Banks and otherauthorities. Your directors also wish to place on record their sincere appreciation of thededicated services hard work solidarity and profuse support by all the employees of theCompany.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-
Rajesh R Mandawewala
Place: Mumbai Chairman
Date: 6 May 2017 DIN:00007179