To the Members of SAFFRON INDUSTRIES LIMITED
Your Directors have pleasure in presenting their Twenty Third Annual Report and AuditedStatement of Accounts for the year ended 31st March 2016.
| ||(RUPEES) |
|SALES AND OTHER INCOME ||368971487 |
|Profit/(Loss) before Finance Cost & ||27343905 |
|Depreciation || |
|Less : Finance Cost ||31727 |
|Depreciation ||13824864 |
| ||-13856591 |
|Profit/(Loss) Before Tax and Exceptional ||13487314 |
|items || |
|Less : Tax Expenses - Current Tax ||NIL |
|Less : Prior Period Expenses ||-2327318 |
|Profit/(Loss) after Tax ||11159996 |
|Prior year adjustments -Income Tax ||-22273 |
|Profit/(Loss) for the year ||11137723 |
|Add: Profit/(Loss) Balance brought forward || |
|from pervious year Balance Sheet ||(157055951) |
|Balance carried forward ||(145918228) |
REVIEW OF OPERATIONS :
During the year under review the Sales Turnover of your company was Rs. 36.81 Crore asagainst Sales Turnover of Rs. 50.45 Crore in the previous financial year. The high costand scarce availability of raw material in the market continued this year also resultinginto reduction in sales turnover during the period under review as compare to the lastyear. However in absence of heavy finance cost the company has earned Rs. 1.13 Crore asprofit for the year under review as compared to profit for the previous year Rs. 98.39Lac.
Your company is using various efforts to reduce the overall cost by planning for betterprospects of the company using various new avenues to avail the low cost raw material andby trying for better price gains for its products in the market.
In this scenario of high material cost market you will appreciate the hardship thecompany is facing. The market factors like rough and uneven market conditions high costof raw materials and decline in profitability are not in favor of the Paper Industry. Itis less expected that the market environment for the Industry to remain favorable in theyear to come.
NO CHANGE IN NATURE OF BUSINESS:
There is no any change in the nature of business carried on by the company during theyear under review.
Due to inadequate profits the Directors have not recommended any dividend for the yearunder review.
AMOUNTS TRANSFERRED TO RESERVES:
The Board of Directors of the Company has decided to carry Rs. 11137723/- to itsreserves.
NO CHANGE IN SHARE CAPITAL :
There was no any change (i.e. increase or decrease) in the Authorised IssuedSubscribed or Paid up Share Capital of the company during the year under review.
INFORMATION ABOUT SUBSIDIARY/JV/ASSOCIATE COMPANY:
Company does not have any Subsidiary Joint Venture or Associate Company as definedunder Companies Act 2013.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND :
The provisions of Section 125 (2) of the Companies Act 2013 do not apply as there wasno dividend declared and paid last year.
MATERIAL CHANGES AND COMMITMENTS :
Except change in Directorship as mentioned in this Report No material changes andcommitments affecting the financial position of the Company occurred between 31stMarch 2016 and the date of this Report.
EXTRACT OF ANNUAL RETURN:
The extracts of Annual Return pursuant to the provision of Section 134 (3) (a) of theCompanies Act 2013 is furnished in Annexure -B.
MEETINGS OF BOARD OF DIRECTORS :
During the financial year 2015-16 the company held 10 board meetings of Board ofDirectors as per Section 173 of the Companies act 2013 which is summarized in Report onCorporate Governance below (Annexure-E to this Report).
DIRECTORS' RESPONSIBILITY STATEMENT:
As required by section 134 (5) of the Companies Act 2013 the Director hereby state :
i) That the preparation of the annual accounts for the financial year ended on 31stMarch 2016 the applicable accounting standards have been followed and that there were nomaterial departures;
ii) That they had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year 31stMarch 2016 and of the profits of the Company for the year under review;
iii) That they 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;
iv) That they had prepared the annual accounts for the year ended 31st March2016 on a going concern basis;
v) That they had laid down internal financial controls to be followed by the Companyand such internal financial control are adequate and were operating effectively;
vi) That they had devised proper systems to ensure compliance with the provision of allapplicable laws and that systems were adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT :
M/s. Khatri & Iyer Chartered Accountants Nagpur retire at the conclusion of theensuing Annual General Meeting and are eligible for reappointment for a period commencingfrom the conclusion of this Annual General Meeting till the conclusion of next AnnualGeneral Meeting in respect of Financial Year 2016-17.
There is no qualification or adverse remarks in the Auditors Report which requireany clarification/explanation. The Notes on financial statements are self-explanatory andneeds no further explanation.
LOANS GUARANTEES AND INVESTMENT:
There were no loans guarantees or investment made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provision is notapplicable.
RELATED PARY TRANSACTIONS:
All related party transactions that were entered into during the financial year were onan arms length basis and were in the ordinary course of business (except transactionmentioned in the Form AOC-2 in Annexure-F). There are no materially significant relatedparty transactions made by the Company with Promoters Directors or other designatedpersons which may have a potential conflict with the interest of the Company at large andApproval of the Board of Directors was obtained wherever required. Further all thenecessary details of tractions entered with the related parties are attached herewith inForm No. AOC-2 for your kind perusal and information.(Annexure-F)
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO :
The information and details relating to conservation of energy technology absorptionand foreign exchange outgo is mentioned in the Annexure-A to this Report.
RISK MANAGEMENT POLICY :
Periodic assessment to identify the risk areas are carried out and management isbriefed on the risks in advance to enable the company to control risk through a properlydefined plan. The risk are classified as financial risks operational risks and marketrisks. The risks are taken into account while preparing the annual business plan for theyear. The Board is also periodically informed of the business risks and the actions takento manage them. The company has formulated a policy for Risk management with the followingobjective:
a) Provide an overview of the principles of risk management
b) Explain approach adopted by the Company for risk management
c) Define the organisational structure for effective risk management
d) Develop a risk culture that encourages all employees to identify risksand associated opportunities and to respond to them with effective actions.
e) Identify assess and mange existing and new risks in a planned and coordinatedmanner with minimum disruption and cost to protect and preserve Companys humanphysical and financial assets.
Shri Vinod Maheshwari (DIN-00340953) who retires by rotation and being eligible offerhimself for re-appointment.
Shri Vinay Pansari (DIN- -01904296) and Shri Anantrai Rawell (DIN-02559329)Independent Directors of the company tendered their resignation from the Directorship witheffect from 29th August 2015.
Shri Nimish V. Maheshwari Managing Director (DIN-00340881) has tendered hisresignation and the Board of Directors has accepted in its meeting held on 20thJuly 2016 his resignation with effect from 15 th July 2016.
Shri Manoj Rameshwar Sinha (DIN-07564967) President (Operations) of the company wasappointed as Whole Time Director of the Company with effect from 12th July 2016by the Board of Directors in its meeting held on 12th July 2016. Theappointment of Shri Manoj Sinha is subject to approval of members in the 23rdannual general meeting.
Smt. Manjulika A. Bajpai (DIN-07143934) Woman Director of the company was appointed asIndependent Director in the Board Meeting held on 9th November 2015 to fill upthe casual vacancy caused by the resignation of Independent Director Shri Vinay Pansari(DIN- -01904296). The tenure of office of Smt. Manjulika Bajpai Independent Directorshall be upto the conclusion of 26th Annual General Meeting of the company tobe held in the calendar year 2019.
The company has not accepted deposits during the year.
CORPORATE SOCIAL RESPONSIBILITY:
The Company does not meet the criteria of Section 135 of Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) rules 2014 so there is norequirement to constitute Corporate Social Responsibility Committee.
Pursuant to the provisions of the Companies Ac 2013 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Audit Nomination & Remuneration andCompliance Committee.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Boards functioning such asadequacy of the composition of the Board and its Committees Board culture execution andperformance of specific duties Obligations and governance.
A separate exercise was carried out to evaluate the performance of individual Directorswho were evaluated on parameters such as level of engagement and contributionindependence of judgement safeguarding the interest of the company and its minorityshareholder etc. the performance evaluation of the Independent Directors was carried outby the entire Board. The performance evaluation of the Chairman and the Non IndependentDirector was carried out by the Independent Director who also reviewed the performance ofthe Secretarial Department.
INDEPENDENT DIRETORS AND DECLARATION:
Smt. Manjulika A. Bajpai (DIN-07143934) was appointed as Independent Director of thecompany to fill up the casual vacancy caused by the resignation of Shri Vinay Pansari(DIN- - 01904296) effective from 29th August 2015 upto the conclusion of 26thAnnual General Meeting
for the Financial Year 2018-19 to fulfil the requirements of Section 149 of theCompanies Act 2013 and applicable rules/schedules there under.
The Board of Directors of the Company hereby confirms that all the Independent directorduly appointed by the Company have given the declaration and meets the criteria ofindependence as provided under section 149 (6) of the Companies Act 2013.
NOMINATION AND REMUNERATION COMMITTEE AND POLICY :
As per Section 178(1) of the Companies Act 2013 the Companys Nomination andRemuneration Committee. The Composition and meeting details of the Committee are includedin the Annexure-E to this Report
The companys approved policy relating to appointment of Directorsqualifications Independent Directors and matter related there with as provided underSection 178 (3) and (4) of the Companies Act 2013 is attached herewith inAnnexure-D.
The Company has already constituted an Audit Committee of its Board of Directors withspecified terms of reference. Smt. Manjulika Bajpai is the Chairman of the AuditCommittee. Shri Vinod Maheshwari and Shri Manoj Sinha are the other members of the AuditCommittee.
The composition and meeting details of the Audit Committee are mentioned and includedin the Annexure- E to this Report.
As provided in Section 177 of the Companies Act 2013 additional powers were vestedwith the Audit Committee at the Board Meeting held on 10th August 2015.
M/s Siddharth Sipani & Associates Practicing Company Secretaries Nagpur wereappointed as Secretarial Auditor and their report on Secretarial Audit in Form MR 3 underSection 204 of the Companies Act 2013 for the financial year 2015-16 is attached asAnnexure-C and forms part of this report.
The clarifications/explanation on the qualifications/adverse remarks in the SecretarialAuditors Report is as under :
1) The company is trying to appoint suitable personnel shortly as the Key ManagerialPersonnel as applicable under Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015
2) More than half of the Promoters shareholding is in Dematerialized form the companyis taking steps to dematerialize the rest of physical shareholding of Promoters shortly.
3) The company is arranging to pay the NSDL and CDSL annual fees/charges shortly.
4) The company is taking steps to file the required eforms soon with the Registrar ofComapanies.
5) The company has filed the EPF return and paid the EPF dues regularly during the yearunder review. The notices received from EPF department under section 7A and 14B of therelevant Act are being heard and answered/replied by the company by following appropriateprocedures.
6) Due to continuous heavy losses incurred during last few years the company has beendeclared as Sick Company by Board for Industrial and Financial Reconstruction under theprovision of Sick Industrial Companies (Special Provisions) Act 1985. The company isputting its efforts to come over the past losses although adverse high cost conditionsprevailing in the market.
The relevant provisions of new Companies Act 2013 in respect of appointment of CostAuditors were not applicable to the company; hence no appointment of Cost Auditor was madefor the Financial Year 2015-16.
As per Section 177(9) and (10) of the Companies Act 2013 and as per the Clause 49 ofthe Listing Agreement the company has established Vigil Mechanism for directors andemployees to report genuine concerns and made provision of direct aces to the chairpersonof the Audit Committee. Company has formulated the resent policy for establishing thevigil mechanism/Whistle Blower Policy to safeguard the interest of its stakeholdersDirectors and employees to freely communicate and address to the company their genuineconcerns in relation to any illegal or unethical practice being carried out in thecompany. The Vigil Mechanism or Whistle Blower Policy is mentioned asAnnexure-G to this report.
a. Buy back of Securities
The company has not bought back any of its securities during the year under review.
b. Sweat Equity
The company has not issued any Sweat Equity Shares during the year under review.
c. Bonus Shares
No Bonus Shares were issued during the year under review.
d. Employees Stock Option Plan
The company has not provided any Stock Option Scheme to the employees.
ORDER OF COURT:
There is no any Order from Court Regulators Tribunals passed during the year underreview impacting the going concern status and companys operation in further.However the Hon. BIFR has declared the company as Sick under the provisionsof the Sick Industrial Company (Special Provisions) Act 1985 vide its order dated13/09/2013.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
During the period under review there was adequate internal control procedurecommensurate with the size of the company and nature of the business.
DEMATERIALISATION OF SHAREHOLDING:
The Company has already established electronic connectivity with both the depositoriesviz. National Depository Securities Limited (NSDL) and Central Depository Services (India)Limited (CDSL) through its Registrar and Transfer Agent M/s. Adroit Corporate ServicesPvt. Ltd. As such the shares of the Company are available for dematerialisation with boththe Depositories.
LISTING OF SECURITIES:
The shares of the Company are presently listed on the Stock Exchange Mumbai and theStock Exchange Ahmedabad.
A report on corporate governance including Auditors' Certificate on compliance with theconditions of corporate governance under Clause 49 of Listing Agreement Clause 34 (3)read with Schedule V of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is appended to this report as Annexure"E".
PERSONNEL AND RELATED INFORMATION:
None of the employees has received salary of Rs. 60 Lac per annum or Rs. 5.00 Lac permonth or more during the financial year 2015-16. Accordingly no particulars of employeesare to be given pursuant to the provision of Section 197 of the Companies Act 2013 readwith respective rules.
Since the company has no any subsidiary or holding company no particulars are requiredto be given pursuant to the provisions of Section 197 (14) of the Companies Act 2013.
Information regarding conservation of energy technology absorption and foreignexchange earnings and outgo is given in the statement annexed hereto (AnnexureA) and forms part of this report.
Your Directors are pleased to place on record their sincere gratitude to the GovernmentAuthorities Suppliers Customers and Shareholders for their continued support andco-operation extended to the Company during the year.
Your Directors also express their deep appreciation for the sincere and devotedservices rendered during the year by the workers staff and executives at all levels ofoperations of the Company.
| ||For and on behalf of the Board |
|Place : Nagpur ||Vinod Maheshwari |
|Date : August 13 2016 ||Chairman |
ANNEXURE A' TO THE DIRECTORS' REPORT
Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo.1) CONSERVATION OF ENERGY :
The basic philosophy of the Company is to achieve economy in operations at all levelsand ensure optimum use of resources and minimisation of energy wastes. This objective isachieved through a proper & continuous system of monitoring and maintenance adopted bythe Company. The Cogeneration Power Plant is contributing consistently in bringing downthe energy costs of the Company with minimal wastes and is also ensuring supply of power& steam to the Paper Plant thus enabling the company to achieve its optimum productioncapacity. Due to increase in required connected load at the Plant we have taken analternative power source from Maharashtra State Electricity Distribution Company Ltd.(MSEDCL) power grid during the year 2015-16.
Total Energy Consumption and energy conservation per unit of production is given below:
|A) POWER CONSUMPTION ||2015-2016 ||2014-2015 |
|ELECTRICITY : || || |
|From *M.S.E.D.C.L : || || |
|Units (in KWH)- ||536760 ||- |
|Own Generation : || || |
|Units (in KWH)- ||1.36.02.665 ||19625720 |
|Total Units Consumed (in KWH)- ||14139425 ||19625720 |
|Total Amount (in Rs. lacs) ||664.96 ||887.13 |
|Rate per Unit (in Rs.) ||4.88 ||4.52 |
B) CONSUMPTION PER UNIT OF PRODUCTION
|Machine Production (MT) ||12905 ||18124 |
|Electricity (KWH/MT) ||1096 ||1082 |
|Finished Production (MT) ||12318 ||17286 |
|Electricity (KWH/MT) ||1148 ||1135 |
*M.S.E.D.C.L. -Maharashtra State Electricity Distribution Company Ltd.
2) TECHNOLOGY ABSORPTION: RESEARCH AND DEVELOPMENT
The technology used for the existing project is fully indigenous. The productiondepartment of the Company is constantly engaged in the process of evaluating new ways andbetter methods to improve the performance quality and cost effectiveness of its products.
Great emphasis is given on upgradation of technology as suggested by the ProductionDepartment. The Company does not have a separate Research and Development activity.
3) FOREIGN EXCHANGE EARNING AND OUTGO :
There was no any income earned or expenditure made in foreign exchange during the yearunder review.
| ||For and on behalf of the Board |
|Place : Nagpur ||Vinod Maheshwari |
|Date : August 13 2016 ||Chairman |