Salona Cotspin Ltd.
|BSE: 590056||Sector: Industrials|
|NSE: SALONA||ISIN Code: INE498E01010|
|BSE 15:12 | 16 Jan||147.25||
|NSE 15:27 | 16 Jan||146.00||
|Mkt Cap.(Rs cr)||77|
|Mkt Cap.(Rs cr)||77.45|
Salona Cotspin Ltd. (SALONA) - Director Report
Company director report
Your Directors have great pleasure in presenting their Twenty-Second Annual Reporttogether with Audited financial statements of the Company for the year ended 31stMarch 2016.
The above Profit is proposed to be appropriated as stated below:-
Your Directors are pleased to recommend a dividend of 7.5% for the year ended 31stMarch 2016 subject to the approval of members. The total outgo in the form of dividendincluding corporate dividend tax will be to the extent of Rs. 47.50 Lacs.
REVIEW OF OPERATIONS:
During the year under review your Company has recorded aturn over of Rs. 9871.75 Lakhsas against Rs.10180.32 Lakhs in the previous year on account of decrease in raw materialand finished goods prices in worldwide.The Export sales turn over increased to Rs. 2725.40Lakhs from Rs.2299.79 Lakhs in the previous year. The export turnover in trading divisionincreased to Rs.1083.78 Lakhs from Rs. 201.05 Lakhs. The mill has produced Knitted fabricsof 23.12 Lakhs Kgs. as against 21.48 Lakhs Kgs. in last year. The yarn production is 42.54Lakhs Kgs as against 42.94 Lakhs Kgs. in last year on account of increase in average countproduction.
During the year the green energy generated 52.92 Lakhs units (net) as against 67.84Lakhs units in previous year through Wind Electric Generator. Due to energy evacuationback out imposed by the TANGEDCO during the year the steep fall in export of windelectricity. The Wind electricity was captively consumed by use in the TextileMill.Company consumed major portion of green energy in order to reduce carbon footprints
The overall performance should be considered as satisfactory.
OUT LOOK FOR THE IMMEDIATE FUTURE:
Though the textile industry in spinning sector witnessed a crises of mismatch by steepfall in yarn prices the Company has earned Profit during this year. Your Company continuesto pursue cost reduction and better efficiency in production; implementing R&D measureto reduce consumption of energy hence it is optimistic to perform better in the comingyears with stability in the prices of raw materials and finished goods.
EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There are no material changes and commitments affecting the financial position of theCompany subsequent to the end of the financial year.
The Company has not accepted nor holds any public deposits within meaning of Section 73to 76 of the Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014 duringthe year under review.
Corporate Governance Management Discussion and Analysis and a certificate from theAuditors of the Company regarding compliance of condition of Corporate Governance isfurnished in Annexure.
EXTRACT OF ANNUAL RETURN:
As required under Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return as on31st March 2016 in MGT 9 is given which form part of this Annual Report is enclosedas Annexure I.
DIRECTORS AND MANAGERIAL PERSONNEL:
Sri. Shyamlal Agarwala (DIN : 00003055) was re-appointed as Managing Director of theCompany for a period of five years with effect from 1st April 2015 by passing necessaryspecial resolutions at the 21st Annual General Meeting of the Company held on 23rdSeptember 2015. Based on the recommendations of the Audit Committee and the Nomination andRemuneration committee of the Board the Board of Directors approved enhancement ofremuneration payable to Sri. Shyamlal Agarwala with effect from 1st July 2016 and for theremaining tenure of office till 31st March 2020. The enhancement of remuneration payableto Sri. Shyamlal Agarwala requires approval of Shareholders of the Company by a SpecialResolution as per text contained in the Notice convening the ensuing Annual GeneralMeeting.
The Tenure of office of Shri Manoj Kumar Jhajharia (DIN 00003076) as Joint ManagingDirector will expire on 30th June 2016. The Nomination and Remuneration committee attheir meetings held on 26thMay 2016 recommended for re-appointment of Sri Manoj KumarJhajharia as Joint Managing Director of the Company for a further period Five years onenhanced remuneration with effect from 1st July 2016. Hence the Board of Directors attheir meeting held on 27thMay 2016 re-appointed Shri Manoj Kumar Jhajharia asJointManaging Director for further period of five years on enhanced remuneration. Suchappointment and payment of remuneration are subject to approval of shareholders in theensuing Annual General Meeting.
KEY MANAGERIAL PERSONNEL
The Company has appointed the following persons as Key Managerial Personnel during theyear.
The Audit Committee comprises of
1. Sri G.V.S. Desikan - Chairman (Non-Executive Independent Director)
2. Sri Dhiresh Jayasi - Member (Non-Executive Independent Director)
3. Sri Manoj Kumar Jhajharia - Member (Joint Managing Director)
The Board has implemented the suggestions made by the Audit Committee from time totime.
EVALUATION OF BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the Listingagreement the Board has carried out an evaluation of its own performance based on thespecific duties obligation and the execution of the same the Directors individually aswell as the evaluation of the working of its Audit Nomination and Remuneration and otherCommittees the performance evaluation of the Independent Directors Chairman and ManagingDirector. The Board expressed their satisfaction with the execution process.
The Board of Directors met Four times during this financial Year on the followingdays:
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees governed under the provisions ofSection 186 of the Companies Act 2013. The details of the Investments made by the Companyare given in the notes to the financial statements.
ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a vigil mechanism for Directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of theCompanys code of conduct or ethics. The policy has been posted in the website of theCompany viz. www.salonagroup.com
POLICY ON NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors have framed a policy setting out the framework for payment ofremuneration to Directors Key Managerial Personnel and Senior Management Personnel of theCompany. The policy is explained as part of the Corporate Governance Report.
The Committee ensures that:
a. The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully.
b. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks and
c. Remuneration to Directors Key Managerial Personnel and Senior Management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarms length basis and in the ordinary course of business and that the provisions ofSection 188 of the Companies Act 2013 are complied. Further no materially significantrelated party transactions made by the Company with Promoters Key Managerial Personnel orother designated persons which may have potential conflict with interest of the Company atlarge. Hence reporting under AOC-2 is not required. Approval of Audit Committee wasobtained for transactions of repetitive nature on annual basis. All related partytransactions
are placed before the Audit Committee and Board of Directors for their review. Thepolicy on Related Party transactions is available in the website
SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status and the Companys operation in future.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 134(3) (c) of the Companies Act 2013 yourDirectors confirm:
a) that in the preparation of annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) that your Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at the end of thefinancial year and of the Profit of the Company for that period;
c) that your Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the Assets of the Company and for preventing and detecting fraud andother irregularities;
d) that your Directors had prepared the annual accounts on a going concern basis.
e) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
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.
The present Auditors of the Company M/s. VKS Aiyer & Co. Chartered AccountantsCoimbatore were appointed for a term of three years pursuant to the resolution passed bythe members at the Annual General Meeting held on 29th September 2014. A resolutionratifying their appointment in terms of Section 139 is also placed before the shareholdersfor their approval at the ensuing Annual General Meeting.
Pursuant to provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedSri S.R. BaalajiB.Com. F.C.S Practicing Company Secretary to undertake the SecretarialAudit of the Company. The report is annexed herewith as Annexure - II
No adverse qualifications/comments have been made in the said report by the PracticingCompany Secretary.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors on therecommendation of Audit Committee has appointed Sri B. Venkateswar Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2016 - 2017.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit which monitors andevaluates the efficiency and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. The scope and authority of the Internal Audit function is defined in theInternal Audit Manual.
To maintain its objectivity and independence the Internal Audit function reports tothe Chairman of the Audit Committee and to the Chairman and Managing Director of theCompany.
Based on the report of internal audit function corrective action are taken in therespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
STATEMENT ON RISK MANAGEMENT POLICY
Pursuant to Section 134(3) (n) of the Companies Act 2013 and Clause 49 of the Listingagreement the Company has constituted a Risk Management Committee. The Committee hasdeveloped a Risk Management Policy and implemented the same. The details of the Committeeand its terms of reference are set out in the Corporate Governance report forming part ofthe Boards report.
At present the Company has not identified any element of risk which may be a threat forthe existence of the Company.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Company has constituted Corporate Social Responsibility (CSR) Committee which shallrecommend to the Board the activities to be undertaken by the Company as specified inSchedule VII recommend the amount of expenditure to be incurred on such activities andmonitor the CSR Policy of the Company. The CSR Committee constituted by the Boardconsisted of the following Directors with effect from 13th November 2014.
1. G.V.S. Desikan - Chairman
2. Shyamlal Agarwala - Member
3. Manoj Kumar Jhajharia - Member
The Company has partially spent the amount stipulated under the requirements of theAct. The amount spent on CSR activities during the year 2015-16 is Rs. 78119/-. Theamount remaining unspent namely
Rs. 292801/- (pertaining to 2014-15) and Rs. 925236(pertaining to 2015-16) will bespent during the year 2016-17. The Company is in the process of identifying eligibleprojects after which the unspent amount will be deployed for the said purpose. The detailsof the Corporate Social Responsibility activities / expenditure is given as AnnexureIII.
The particulars required to be included in terms of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 on Conservation ofEnergy etc. is enclosed as Annexure IV.
No employee of the Company was in receipt of remuneration of Rs.60 Lakhs per annum ormore and no employee of the Company employed for the part of the financial year 2016 wasin receipt of remuneration of Rs. Five Lakhs per month or more.
The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors report for the year ended 31st March 2016 is enclosed as AnnexureV.
None of the employees listed in the said Annexure is a relative of any Director of theCompany. None of the employees hold (by himself or along with his spouse and dependentchildren) more than two percent of the equity shares of the Company.
The Industrial relations continued to remain cordial during the period and theBoardplaces its appreciation for the services rendered by the staff and employees of theCompany.
During the year under review the Reserves and Surplus representing credit balance inthe Profit and Loss Account stood at Rs.1908.53 Lacs (Rs.1729.15 Lacs credit balance inthe previous year). The Company met all financial commitments to the Bankers on account ofTerm Loan and Working Capital Credit.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company sends periodical letters to all shareholders whose dividends are unclaimedso as to ensure that they receive their rightful dues. Efforts are also made inco-ordination with the Registrar to locate the shareholders who have not claimed theirdues.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their independence laid down in section 149(6).
The equity shares of the Company are listed and traded in the Stock Exchanges ofChennai Ahmadabad and Calcutta and the Company has paid the annual listing fees toAhmedabad Stock Exchanges for the financial year 2015-16.
The Equity Shares of the Company are permitted for trading in BSE Indonext segment -under group "S" of Bombay Stock Exchange Limited and subsequentlywithdrawn on 24th June 2014 due to exit option and de-recognition to the stock exchanges.
The NSE has admitted the Securities of our Company for dealings on the NationalStock Exchange (Capital Market Segment) with effect from 9th August 2010 and thisagreement discontinued due to de-recognition of Madras Stock Exchange on 21st November2014.
Members have option to hold their shares in dematerialized form through the NationalSecurities Depositary Limited (NSDL) and Central Depositary Services (India) Limited(CDSL). The ISIN of the Company is INE498E01010.
The Directors wish to place on record their gratitude to State Bank of India UnionBank of India Oriental Bank of Commerce and The Catholic Syrian Bank Limited for theirfinancial assistance. Your Directors also take this opportunity to express theirappreciation of the co-operation extended by the employees and the Shareholders fortheir appreciation of the managements efforts expressed at the general meetings ofthe Company.
The Board dedicates its prayers to invoke the blessing of Lord Vishnu Goddess LakshmiLord Shiva and Goddess Sakthi for the continued prosperity of the Company and all itsstakeholders.