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Sarla Performance Fibers Ltd.

BSE: 526885 Sector: Industrials
BSE 15:40 | 22 Jan 67.50 2.95






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OPEN 66.45
VOLUME 96425
52-Week high 82.40
52-Week low 41.55
P/E 12.34
Mkt Cap.(Rs cr) 564
Buy Price 67.70
Buy Qty 1700.00
Sell Price 0.00
Sell Qty 0.00
OPEN 66.45
CLOSE 64.55
VOLUME 96425
52-Week high 82.40
52-Week low 41.55
P/E 12.34
Mkt Cap.(Rs cr) 564
Buy Price 67.70
Buy Qty 1700.00
Sell Price 0.00
Sell Qty 0.00

Sarla Performance Fibers Ltd. (SARLAPOLY) - Director Report

Company director report

Directors Report

Dear Members

Your Directors are pleased to present the Twenty Third Annual Report on the businessoperations together with the Audited Financial Statements for the financial year ended31st March 2016 and on the state of affairs of the Company as on the date of this report.

Corporate Overview

Sarla Performance Fibers Limited (Your Company) is engaged in the business of SpecialtyYarn for Last 22 Years having 25 Manufacturing Plants at Silvassa UT of Dadra & NagarHaveli and 1 Dyeing Plant at Vapi Gujarat and Wholly Owned Subsidiaries (WOS) at BritishVirgin Islands (BVI) and United States of America (USA) with Group s Corporate Officesituated at Mumbai.


The highlights of the performance of the Company for the year ended March 31 2016 issummarized below:

(Rs. in Lacs)
Particulars Financial Year ended March 31 2016 Financial Year ended March 31 2015
Sales & Operations 25594.13 27762.72
Less: Excise Duty (1250.39) (1069.91)
Net Sales 24343.73 26692.80
Add: Other Income 2181.88 1146.98
TOTAL INCOME 26525.61 27839.79
Profit Before Interest Depreciation & Tax 7197.69 5646.31
Less: Finance Cost 508.07 514.48
Less: Depreciation &amortization 1014.40 913.55
PROFIT BEFORE TAX 5675.21 4218.28
Less: Provision for Taxation
- Current (1207.10) (1283.60)
- Deferred 202.27 33.26
- Earlier Years
- MAT credit Entitlement
NET PROFIT AFTER TAX 4265.83 2967.94
Balance bought forward 6836.62 6143.42
Excess provision for Dividend distribution tax written back 269.59 88.59
Effect of Change in Method of Depreciation 61.74
- Proposed Dividend 208.75 668.02
- Interim Dividend Paid 668.02
- Dividend Tax 178.49 133.56
- Transfer to General Reserve 1500.00 1500.00


Operations: During the year under review the sales of the Company were Rs.25594.13 Lacs as against Rs. 27762.73 Lacs in 2014-15 a slight decline of 7.81 %. The FOBvalue of exports Rs. 15193.24 Lacs compared to Rs 15693.58 Lacs.

Profitability: The profit before Depreciation Interest & Tax was Rs. 7197.69Lacs as compared to Rs. 5646.31 Lacs In Previous year after providing for depreciationof Rs. 1014.40 Lacs (Previous Year Rs. 913.55 Lacs) & provision for taxation of Rs.1207.10 Lacs (Previous Year Rs. 1283.60 Lacs) there was a net profit of Rs. 4265.83Lacs as compared to Rs. 2967.94 Lacs in the Previous Year.


This section of the Directors' Report has been included in adherence to the spiritenunciated in the Code of Corporate Governance approved by the Securities and ExchangeBoard of India. Statements in this Management and Discussion Analysis describing theCompany s objectives projections estimates and expectations may constitute forwardlooking statements within the meaning of applicable laws and regulations. Although theexpectations are based on reasonable assumptions the actual results might differ.

A. Business Overview

Economy: The Global economy disappointed in terms of growth with deceleration ofactivities in key emerging and developing economies like China Brazil Russiaovershadowing a modest recovery in major high income countries. The deceleration wasaccompanied by declines in commodity prices subdued global trade bouts of financialmarket volatility and weakening capital flows. India was a notable exception growing at7.6% as per Central Statistical Office (CSO) estimates despite declines in exports.Inflation has come down however industrial activity and consumption have not beenbuoyant.

Three key transitions will influence the global outlook for growth pace of rebalancingin China commodity prices and monetary policy actions in the US and other majoreconomies. For India though the long term prospects for continued growth remainundiminished actual pace will depend on revival in private investment and ruralconsumption strengthening of banks balance sheets and Continued implementation ofeconomic reforms.

Business Overview: Sarla Performance Fibers Limited is a leading exporter ofRegular as well as High Tenacity Polyester and Nylon Yarns. It started operations 22 yearsago as a commodity manufacturer of Man Made Fiber but transformed into a high value addedyarn maker in the past decade. It has an installed capacity of 11900 tons per annum formanufacturing yarns in Silvassa and 3200 tons per annum for a Dyeing unit at Vapi. Itsstate of the art 30 tons per day POY plant in Walterboro South Carolina in the US is nowfully stabilized and operating at 30% plus capacity. The company s emphasis this year willbe to focus on increased capacity utilization at its US plant enhance the proportion ofniche end user applications in India higher value added yarns to leading global apparelbrands and companies. The company exports to 45 countries.

SPFL also owns Wind Power Capacity of 10.25 MW in totality out of which 6 MW islocated in the state of Maharashtra 1.25 MW is located in the state of Gujarat and 3 MWis located in the state of Madhya Pradesh. Our plant load factor for the fiscal year 2016was about 23%.

Customer Segments and Growth: The Company's customer segments can be divided intothree parts:

1) Commodity Yarn. 2) Industrial Yarn. 3) Performance Yarn.

Turnover Break Up (Customer Segment-wise)

FY 2015-16 FY 2014-15
Segments (% of Total Sales) (% of Total Sales)
Commodity Yarn 17.96 17.76
Industrial Yarn 45.05 43.54
Performance Yarn 36.99 38.70
100.00 100.00

Turnover Break Up (Geographical)

FY 2015-16 FY 2014-15
Regions (% of Export Sales) (% of Export Sales)
South North & Central America 27.53 18.27
Middle East & Europe 35.34 38.20
Africa 3.99 6.35
Asia Pacific 33.14 37.18
100.00 100.00

In all we export to over 45 countries and to 127 customers. Our customer concentrationis well distributed and no single customer exceeds more than 10% of our revenue.

B. Opportunities and Threats:.

The Indian Textile Industry is one of the leading textile industries in the world. Itis one of the key sectors of India s manufacturing segment as it contributes significantlyto the economy in terms of employment generation and foreign exchange revenue.

Indian Textile and Apparel industry contributes about 14% to industrial production 5%to GDP and 17% to country s export earnings.

The domestic textile and apparel industry in India is estimated to Discontent is thefirst necessity of progress. reach US$ 223 billion by 2021 from US$ 108 billion in2015. The fundamental strength of this industry flows from its strong production base ofwide range of fibres and yarns ranging from natural fibres to man-made fibres.

The future for the Indian textile industry looks promising buoyed by strong domesticconsumption. The Government has introduced the Amended Technology Upgradation Fund Scheme(ATUFS) to give a further boost for technology investment in the textile industry. TheATUFS targets employment generation exports conversion of existing looms tobetter-quality technology looms and improved quality of processing industry. The ATUFS isexpected to act as a catalyst to the Government s Make in India campaign for the textilesector. Approval has also been given for 24 new textile parks which will further createemployment opportunities and investments. The long awaited National Textile policy to beannounced shortly will further accelerate growth in this sector.

One of the positive factors in recent time is the increasing gap between cotton andpolyester prices. Though there was a glut in cotton and prices had fallen due tooversupply and less offtake from China the synthetic fiber prices also fell following theslump in crude oil and its derivatives. We believe the demand for synthetic fiber willcontinue to outpace that of cotton due to the inherent price advantage and qualityimprovements.

One of our big market is the NAFTA and CAFTA market comprising of North Americancustomers. Due to the growing preference for locally sourced products the demand forsynthetic yarn in this geography is increasing by 5-6% p.a. We are beneficiaries of thisdue to our direct presence in South Carolina USA through our manufacturing facility.Moreover there are substantial cost advantage of manufacturing in the USA making usreasonably cost competitive vis a vis suppliers from China ASEAN and India.

We also have a strong opportunity for growth in the nylon yarn segment with nylon 66production to ramp up this year.

C. Outlook: The prospects for outsourcing of polyester/nylon yarns remain healthy.This is because of 1) Increased capacity in India and US locations and 2) Stable INR vsUSD.

While we remain optimistic about future growth We expect margin to remain flat atconsolidated level in FY17 due to increase in operating expenditure interest cost anddepreciation on account of the new facility at US. The full reflection of the US plantwill be felt in FY18.

D. Financial Performance: (Rs. in Lacs)
Item 2015-2016 2014-2015 % increase
Raw Material Cost& Purchase of Stock in trade 12254.93 14986.31 -18.23%
Expenditure 7600.95 7744.32 -1.85%
EBIDTA 7197.69 5646.31 27.48%
Interest Cost and Debt 508.08 514.48 -1.24%
Fixed Assets (Gross Block) 20075.28 16430.91 22.18%
Net Current Assets 6716.81 5767.21 16.46%
Working Capital Finance 9233.57 10086.86 -8.46%
Cash & Bank Balances 9868.45 8552.91 15.38%

Raw Material Cost: The cost of Raw Material decreased due to decrease in purchaseprice of raw materials. Our total raw material cost decreased by 7.72% last year.

Expenditure: It reduced by 1.85% due to better negotiation.

Interest Cost: The interest cost decreased by 1.24 % due to better management ofworking capital and better negotiation with banker.

Fixed Assets: The increase in Gross Block of Fixed Asset of Rs. 2356.48 Lacs isdue to installation of 2 new wind mill with capacity of 1.5 MW each in the state of MadhyaPradesh and Balance is due to normal upgradation of Plant & Machinery.

Net Current Assets: Net Current Assets have increased due to better management ofworking capital.

Cash and Bank Balances: The increase in cash and bank balances is due to increasein term deposits with banks.

Love dies only when growth stops.

E. Risk and Concerns

Raw material sourcing: We source 44% of our RM requirements (nylon and polyesterchips/fiber) from India and 56 % from imports. For our RM sources we have multiplesuppliers. Last year the price of our major RM POY ranged between Rs 65 to 85 per kg andthat of Nylon yarn ranged between Rs 175 to 220 per kg.

Interest Rates: The Company's average gross interest cost in the last yeardecreased by 1.24 %. The company's present Debt Equity Ratio is 0.64. The long term Debtequity Ratio is 0.58. Interest costs are 1.91% of total revenue.

Exchange Rate: 55% per cent of company revenue is in foreign currency (Dollar Euro& GBP) and balance is in INR. Also we import 30.28% per cent of turnover (78.80% ofwhich consists of raw material purchases) creating a natural hedge to that extent. Apartfrom this from time to time forward cover is taken to hedge exposure in foreign currency.For FY16 our average forward cover was for 3 months of our revenue.

Inflation: The Company does not cater to retail customers. Its sales are to thebusiness segment and hence it has been able to pass on inflationary pressures. It does notexpect any major impact due to current high level of inflation.

F. Internal Control System and Their Adequacy: The company has in place reasonableinternal control system both from the business process and regulatory compliance point ofview. The system is reviewed and updated on regular basis. The company is continuouslyupgrading its internal control systems by measures such as strengthening of InformationTechnology infrastructure and use of external management consultant services.

G. Human Resources/Industrial Relations: The Company has always valued and nurturedits human resources nonetheless globalization high growth of the Indian economy inrecent times and its ambitious growth targets have made talent attraction and retentionamongst the biggest challenges the company faces today.

The company has in place a good appraisal system to motivate all the employees. Thecompany believes in continuous development for all its employees and for that company isplanning to frame a program wherein all the employees will be provided training intorelated areas of skill development.

H. Capital Expansion and Investment:

a. Last year we incurred a CAPEX of Rs. 3689.51 Lac which includes addition in Windmill of Rs. 2356.49 Lacs. For F.Y. 2016-17 we envisage CAPEX of Rs. 800.00 Lacs intextile segment and CAPEX of Rs. 1500.00 Lacs in Wind Mills.

I. Value Added Statement (Rs. in Lacs)
Particulars 2015-16 2014-15 2013-14 2012-13 2011-12
Income from Production/Operations 24871.70 27229.95 24365.14 23668.86 18979.62
Add : Other Income 2181.88 1146.98 783.89 78.50 144.26
CORPORATE OUTPUT 27053.58 28376.94 25149.03 23747.36 19123.88
Less : Cost of Raw Materials Consumed 11095.02 12023.68 12718.59 11584.96 10118.67
Less : Cost of Traded Goods 1159.90 2962.63 1307.76 1173.39 770.05
Less : Other Manufacturing Expenses 4847.21 4792.65 4192.62 4066.11 3588.94
Less : Administrative & Other Expenses 1922.64 2173.37 1760.33 2543.43 1705.23
EQUALS GROSS VALUE ADDED 8028.81 6424.61 5169.72 4379.47 2940.99
Less : Depreciation &Amortization 1014.40 913.55 935.98 802.72 704.15
Less : Extra Ordinary/Prior Period Items
EQUALS NET VALUE ADDED 7014.41 5511.06 4233.75 3576.75 2236.84
To Personnel 831.09 778.28 619.19 494.13 417.46
To Taxes (including tax on proposed div.) 1587.87 1383.90 1087.74 791.17 521.86
To Creditors (via interest) 508.07 514.48 388.89 431.08 269.69
To Investors (via dividend) 876.78 668.02 521.27 417.02 347.52
To The Company (via retained earnings) 3210.60 2166.38 1616.66 1443.35 680.30
7014.41 5511.06 4233.75 3576.75 2236.83


Based on the Company's performance the Company have paid an interim dividend of Rs.0.80 per share (80 %) on the face value of Re. 1/- each further looking at goodperformance of the Company the Directors are pleased to recommend which is subject toapproval of the members at the forthcoming AGM a final dividend of Rs. 0.25 per share (25%) on the face value of Re 1/- each for the financial year ended 31st March 2016[Previous Year Rs 8.00 per share (80%)] The dividend payout will aggregate Rs. 208.75Lacs (Previous year: Rs. 668.02 lacs) and the tax on distributed profits payable by theCompany would amount to Rs. 178.50 Lacs (Previous year Rs. 133.56 lacs).The dividend shallbe paid to members whose names appear in the Register of Members as on 23rd September2016.

Growth begins when we begin to accept our own weakness.


The Company proposes to transfer of an amount of Rs 1500 Lacs to General Reserves(Previous year Rs. 1500 Lacs).


The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in 'AnnexureA' to this Report.


Pursuant to Section 173 of the Companies Act 2013 the Board Meetings are to be held atleast four times in a year and the gap between two Board Meetings should not be more than120 days.

During 2015-16 the Board met Seven (7) times on 14th May 2015 29th May 2015 1stAugust 2015 12th August 2015 31st October 2015 22nd January 2016 and 12th March2016 and in no case the gap between two Board Meetings was more than 120 days.

The meetings of the Board are generally held in Mumbai where Company's Corporate Officeis situated unless otherwise decided by the Board. The minutes of the meetings arefinalized by the Chairman and confirmed by the Board.

A detailed agenda of the meeting is being prepared and is being provided to theDirectors. The details about attendance of directors at board meetings are given in theCorporate Governance Report.


The paid up Equity Share Capital as on 31st March 2016 was Rs. 835.03 Lacs. During theyear under review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity. During the year the Company have split its equityshares of face value of Rs. 10 each to Re. 1 each w.e.f 29th October 2015.

Except Mr. Madhusudan Jhunjhunwala Mr. Krishnakumar Jhunjhunwala and Ms. NehaJhunjhunwala None of the Directors of the Company held shares of the Company.


Cash and cash equivalent as at 31st March 2016 was Rs. 9868.44 Lacs. There was asignificant increase of 15.38% in Cash and Cash equivalent in the F.Y. 2015-16 whichmainly due to the increase in fixed deposits.

Your Company prepares its financial statements in compliance with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.The financial statements have been prepared on historical cost basis. The estimates andjudgements relating to the financial statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of transactions and reasonablypresent the Company's state of affairs profit and cash flow for the year ended 31stMarch 2016.


The Company has not accepted any Deposit covered under Section 73 of the Companies Act2013 and The Companies (Acceptance of Deposit) Rules 2014


Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements. Theinterest free loans have been given to wholly owned subsidiary of the company's forbusiness purposes.


As required u/s 135 of the Companies Act 2013 the Board in its meeting held onSeptember 30 2014 formulated CSR Committee for formulating the CSR Policy andimplementing the Corporate Social Responsibility (CSR) activities of the Company.

The CSR Committee had met on 31st October 2015. The Company was required to make CSRcontribution aggregating to 2% of average net profits of preceding three financial years.The Committee earmarked Rs. 92.96 Lacs towards company's CSR activities for financial yearunder review. However the Committee was by then in process of identifying areas where itcould contribute money. Hence the company could not contribute to CSR in time the fullamount required. Efforts would be made to contribute more in the coming years as we feelthe sense of social security. The CSR Policy is available on the Company Website

The Annual Report on CSR activities is attached with this report as

'Annexure B'.


The Company has an Internal Control System commensurate with the size of itsoperations. The Internal Audit Department monitors and evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company and its subsidiaries.Based on the report significant audit observations and corrective actions thereon areregularly presented to the Audit Committee of the Board.

The Company's Internal Auditor also monitors and evaluates the internal control systemand submits Quarterly Reports which are placed before the Audit Committee of the Board.


The Company has a Whistle Blower Policy to deal with instance of fraud andmismanagement. The Policy is available Company website at

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-16

No of complaints received: Nil

No of complaints disposed off: Nil


The Company will make available the Annual Accounts of the subsidiary Companies to anyMember of the Company who may be interested in obtaining the same.

No Company has become or ceased to be a Subsidiary during the year under consideration.

The Company is not having any Holding Company or Joint Venture or any AssociatesCompany.

The Company does not have any Indian Company as Subsidiary. There are two wholly ownedoverseas subsidiaries viz. Sarla Overseas Holdings Ltd (BVI) and Sarlaflex Inc. (USA) andone Step down subsidiary viz. Sarla Europe (LDA) as on 31st March 2016. There has been nomaterial change in the nature of the business of the subsidiaries. The Policy fordetermining material subsidiaries as approved may be accessed on the Company's website

Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on Company website

The salient features of the financial statements of the subsidiaries in pursuance ofSection 129 (3) of the Companies Act 2013 read with Rule 5 of The Companies (Accounts)Rules 2014 are given herein below in prescribed form AOC-1: (Rs. in Lacs)

Name of the Subsidiary Sarla Overseas Holdings Ltd (SOHL) Sarlaflex Inc Sarla Europe LDA (Subsidiary of SOHL)
Reporting period for the subsidiary April to March April to March April to March
Reporting Currency USD USD EURO
Conversion Rate 66.33 66.33 75.09
Number of Shares 435000 989000 3
Share Capital 196.99 596.49 3.18
Reserve and Surplus 6244.89 (2726.31) (69.98)
Total Assets 8030.50 17823.85 241.34
Total Liabilities 1588.62 19953.67 308.15
Investments 6051.89
Turnover 4098.60 5194.35 284.44
Profit before Taxation 1517.31 (775.14) 40.70
Provision for Taxation 16.48 860.30 16.48
Profit after Taxation 1500.83 85.15 24.22
Proposed Dividend 1331.38
% of shareholding 100% 100% 60%
Country British Virgin Island United States of America Portugal


The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued by the Institute ofChartered Accountants of India form part of this Annual Report.

The audited financial statements for the year ended 31st March 2016 for each of thecompany's subsidiary are available on the company website


On the recommendation of Nomination and Remuneration Committee Board of Directors hadre-appointed Shri Krishnakumar Jhunjhunwala as Managing Director of the Company for aperiod of five years effective from 1st October 2014 to 30th September 2019 and approvedvariation in remuneration for the period of five years. The said appointment is confirmedby Shareholders in Annual General Meeting of the company held on 28th September 2015.

Pursuant to provisions of Section 196(3)(a) of the Companies Act 2013 continuation ofappointment of Shri Madhusudan Jhunjhunwala as Whole Time Director of the Company wasconsented by the members at the Annual General Meeting held on 27th September 2014 forhis remaining term upto 31st July 2015. Thereafter at the Board Meeting held on 1stAugust 2015 on the recommendation of Nomination and Remuneration Committee he wasre-appointed for a period of Five years from 1st August 2015 to 31st July 2020. The saidappointment is confirmed by Shareholders in Annual General Meeting of the company held on28th September 2015.

During the year under review in compliance of provisions of Section

149 of the Companies Act 2013 and Clause 49 of the Listing Agreement the Board ofDirectors on 31st March 2015 appointed women director viz. Ms. Neha Jhunjhunwala asAdditional (non-executive non-independent) Director of the Company who is liable toretire by rotation. She holds office till the conclusion of the ensuing Annual GeneralMeeting. A notice has been received from a member of the Company proposing her candidaturefor the post of Director. In view of the same she offers herself for re-appointment atthe forthcoming Annual General Meeting.

Other than this No Director or Key Managerial Personnel was appointed or has resignedduring the year under consideration.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement.


Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Audit Committee CSR Committee Nomination& Remuneration Committee Risk Management Committee and Stakeholder RelationshipCommittee. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.


The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel's and Senior Management of theCompany. This Policy also lays down criteria for selection independence and appointmentof Board Members. The details of this policy are briefly explained in the CorporateGovernance Report.

Particulars of Employees drawing remuneration exceeding Rs. 5 Lacs per month or Rs. 60Lacs per annum:

During the year under review there was no employee drawing remuneration in excess ofwhat is prescribed under Rule 5 (2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

Information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees:

1. The Ratio of the remuneration paid to each Director to the median remuneration ofthe employees of the Company during the year under consideration:

Name of Director Remuneration Paid Median Remuneration Ratio
Mr. Madhusudan S. Jhunjhunwala 10800000 126000 85.71x
(Chairman Executive Director)
Mr.Krishnakumar 12000000 126000 95.23x
M. Jhunjhunwala
(Managing Director)

Independent directors are paid sitting fees for attending board meetings which are notconsidered.

2. The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary in the financial year:

Name of Director Remuneration paid Percentage Increase in current financial year
Mr. Madhusudan S. 10800000 35.00%
Jhunjhunwala (Chairman
Whole-time Director)
Mr.Krishnakumar M. 12000000 25.00%
(Managing Director)
Mr. Mahendra Sheth 3408270 145.00%
(CFO & Company Secretary)

3. The Average percentage increase in the median remuneration of employees in thefinancial year: 7-10%

4. The number of permanent employees on the rolls of company: 182.

5. Average percentage increase in salaries of non-managerial employees was 7-10 % ascompared to average percentage increase in managerial remuneration which was 10-15 %

6. Comparison of remuneration of the Key Managerial Personnel against the performanceof the Company: i) Change in sales of the Company: -7.81% increase ii) Change in the PATof the Company: 30.43% increase iii) Change in the remuneration of Mr. MadhusudanJhunjhunwala Mr. Krishnakumar Jhunjhunwala and Mr. Mahendra Sheth (KMPs) (As Mentioned inSr. No. 2)

Name of Director Remuneration paid Percentage Increase in current financial year
Mr. Madhusudan S. 10800000 35.00%
Jhunjhunwala (Chairman
Whole-time Director)
Mr.Krishnakumar M. 12000000 25.00%
(Managing Director)
Mr. Mahendra Sheth 3408270 145.00%
(CFO & Company Secretary)

7. Increase in the remuneration paid to the Executive Directors (As mentioned above)

Three is no Increase in sitting fees paid to the Independent Directors and NonExecutive Directors:

8. Variations in the market capitalisation* 2015 - Rs. 309.13 Cr 2016 - Rs. 527.32 Cr

9. Price Earning Ratio* as on 31st March 2016: 12.36 Price Earning Ratio* as on 31stMarch 2015: 9.43

10. Percentage Increase in market quotation in the shares of the Company in comparisonto the rate at which the Company came out with the last public issue: Not Applicable.

11. Percentage increase over decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last publicoffer: Not Applicable

The Board affirms that the remuneration paid is as per the Remuneration Policy of theCompany.

Neither Managing Director nor Whole Time Director of the Company receives anyremuneration or commission from any Subsidiary of the Company.

*Market Capitalisation and Price Earnings Ratio are calculated based on the Stock Priceon BSE Ltd.


To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134(3)c of the Companies Act 2013:

a. that in the preparation of annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same;

b. that they have 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 and of theprofits of the Company for that year;

c. that the Directors have taken proper and sufficient care for 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. that the annual accounts have been prepared on a 'going concern' basis.

e. that the Directors have laid down internal financial controls and such internalfinancial controls are adequate and operating effectively

f. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively


All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business except one transactiondetails of which is mentioned in Form AOC-2 attached as Annexure C of this Report. Thereare no materially significant related party transactions made by the Company withPromoters Directors or Key Managerial Personnel which may have a potential conflict withthe interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee and also the Boardfor approval. The particulars of contracts or arrangements with related parties referredto in subsection 1 of Section 188 of the Companies Act 2013 are furnished in Form AOC-2in 'Annexure C' to this report.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website



The Members at the Twenty-first Annual General Meeting approved the appointment of M/s.Sundarlal Desai &Kanodia Chartered Accountants (Firm Registration No. 110560W) asStatutory Auditors of the Company pursuant to the provisions of Section 139 of theCompanies Act 2013 and the rules framed thereunder to hold office for a period of 3 yearstill the conclusion of the Twenty Forth Annual General Meeting of the Company subject toratification of their appointment at every AGM.

M/s. Sundarlal Desai &Kanodia have confirmed that they continue to be eligibleunder Section 141 of the Companies Act 2013 and the Rules framed thereunder forcontinuing as Auditors of the Company. As required by the Companies Act 2013 the Membersare requested to ratify their appointment as Auditors for the FY 2016-2017.


There is no Audit qualification in the standalone financial statements by the StatutoryAuditors for the year under review.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed CS Ajit Sathe- Proprietor of M/s A. Y Sathe & Co. Company Secretaries inPractice (Registration No.:FCS2899/COP738) to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report is annexed herewith as Annexure D .

The Secretarial Auditor has made following observations.

I) Under the Companies Act 2013:

The Company has not spent full amounts due during financial year 2015-16 2% ofaverage net profit of last three financial years towards Corporate SocialResponsibilities activities pursuant to Section 135 of the Companies Act 2013.

Board's Reply to Secretarial Auditors' observations.

I) Under the Companies Act 2013:

The Committee formed for CSR Purpose was in process of identifying areas where it couldcontribute money and therefore full amount could not be contributed towards CSRobjectives.


Pursuant to the provisions of Section 148 of the Companies Act 2013 read with Rule 4of the Companies (Cost Records and Audit) Rules 2014 and Rule 14 of the Companies (Auditand Auditors) Rules 2014 and pursuant to the recommendations by the Audit Committee inthat behalf Ashwini Kumar Gupta & Co. Cost Accountants Aurangabad (Membership No.34097) was appointed as Cost Auditors of the Company for carrying out the Audit of CostRecords of Company maintained for the financial year from 1st April 2015 to 31st March2016 by circular resolution dated 25th September 2015.


Place: Mumbai

Date: 11th August 2016