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Schablona India Ltd.

BSE: 507894 Sector: Consumer
NSE: N.A. ISIN Code: INE024C01026
BSE LIVE 10:57 | 16 Aug 24.80 -1.30
(-4.98%)
OPEN

27.40

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27.40

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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 27.40
PREVIOUS CLOSE 26.10
VOLUME 440
52-Week high 30.45
52-Week low 13.48
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 25.50
Sell Qty 100.00
OPEN 27.40
CLOSE 26.10
VOLUME 440
52-Week high 30.45
52-Week low 13.48
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 25.50
Sell Qty 100.00

Schablona India Ltd. (SCHABLONAINDIA) - Director Report

Company director report

To the Members

Your Directors have pleasure in presenting their Thirty-Second Annual Report togetherwith the Financial Statements of the Company for the year ended 31st March 2016.

FINANCIAL SUMMARY OR HIGHLIGHTS

(Rs. in Lacs)

PARTICULARS 31.03.2016 31.03.2015
Gross Sales 2425.09 4567.84
Less: Excise Duty 110.58 180.72
Net Sales 2314.51 4387.12
Gross Loss for the year under review 524.07 351.33
Add: Depreciation for the year 50.47 52.22
Loss for the year before tax 574.54 403.55
Less: Deferred Tax Assets - 58.24
Less: Tax for earlier year 2.46 -
Loss after Tax 572.08 345.31
Less: Balance brought forward from earlier years 73.27 450.33
Surplus/(Deficit) carried to Balance Sheet (498.81) 105.02*

* After adjustment of Rs. 31.75 lacs on account of depreciation in terms of Schedule IIof the Companies Act 2013 the balance of surplus in Statement of Profit and Loss was Rs.73.27 lacs as on 31st March 2015.

OPERATIONS

During the year under review net sales decreased to Rs. 2314.51 lacs as compared toRs. 4387.12 lacs in the previous year.

Transfer Division has registered de-growth to an extent of 47.78% driven primarily bythe setting up of captive decal plants by decal users.

In the Decorated Tile Division the de-growth was to an extent of 46.28% due tounfavourable trends against third fired decorated tiles.

The performance of your Company was adversely affected mainly on the account of thefollowing reasons:

• Evolution of Digital Printing on Basic Tiles against Screen Printing inDecorative Tiles. The proliferation of Digital Printing on Tiles and other medium likeGlass Resin Steel Aluminium and Sand Blasting competed against our Designer Tiles alsoaffected our business. Most of the units in the un-organized sector have had to close downowing to this sudden change in trends. Even organized units are shifting to alternativesof printing which may be a small reprieve but cannot compensate for the lost market inceramic tiles segment.

• Setting up of Captive Decal Plants by Decal Users.

• Copying of our products by local suppliers.

• Rising cost of inputs energy and transportation have also affected thefinancials of the Company.

• Design Obsolescence in designer tiles.

• This sector poses threats primarily at the entry level bulk selling productsthus impacting topline.

• Disruptive technological changes resulted in unfavourable trends against thirdfired decorated tiles.

All these above reasons collectively resulted in adverse business scenario and therebythe Company's loss gradually accumulated at Rs.498.81 lacs as at the end of financial yearended 31st March 2016.

To overcome these difficult situations constant efforts are being made by the Companyto equip itself with new range of products by launching them periodically and in synergywith the trends which is expected to bring increased revenue and profits in the Company.

Further your Company is also focusing on Creative Concepts in Decorated / OrnamentedTiles and Decals in order to increase its market share and taking various initiatives toequip our Design Development Department to meet the requirement by different methods forfacing challenges by Decal users engaging in manufacture of decorative tiles themselves.

MARKET AND FUTURE PROSPECTS

Ceramic Transfer Sheets (Decals)

Setting up of Captive Decal Plant by Decal Users affected our business adversely.Despite that good responses from buyers in higher segment for Quality Decals are expectedto receive which may not increase the volume but may show some positivity in thebottom-line. Your Company is expected to maintain its hold on premium segment of Transfermarket through its precious metal base specialised Decals with Schablona's edge ondesigning.

Decorated Tiles

Digitally printed Highlighters Motifs and Murals dominated the mass market leavinglittle scope for decorated tiles in that segment. Fortunately our move towards CreativeConcepts in Decorated / Ornamented Tiles by means of different methods to feed the betterend market is expected to gain greater acceptance and the vertical is also expected toshow a growth during current financial year onwards.

Trading

Competition with Mainstream Tiles Giants affected this segment adversely forcing us tomove towards trading of better end conceptualised tiles by different methods of CuttingWater-Jet third fired tiles Sand Basting PVD etc. with better realisation.

Revival Strategy

• Your Company is responding to the aforesaid challenges by undertaking variousinitiatives for improving the financials of your Company by adding new customers andincreasing share of Decal consumption of each buyer and also making efforts to reach outto small buyers for its products.

• The Transfer division is facing major challenges from captive manufacturingfacilities put up by major crockery manufacturing unit but constant efforts are beingmade by turning to its core competency of bringing out creative designs and presenting tothese manufacturers and thereby trying to retrieve the share back.

• With the launch of big Wall Tile range a growth in the Trading vertical isexpected to be achieved. Efforts are being made for addition of new independent dealersfor improving sales of our manufacturing verticals. The brand "Keraspana" iscontinuously gaining acceptance and the trading vertical continues to grow but there ishuge pressure on margins. This division is significantly contributing for betterutilization of decorative tile manufacturing facility.

• A High end Product range "Shapes" has been introduced which is basedon the various cutting involved by water-jet and Linear using Glazed Vitrified Tiles (GVT)and other value added Tiles. The focus of selling will be specifically through the"Schablona Plus" counters.

• Designer Tiles being a fashion product design obsolescence is a burning issuefor this business. Your Company is continuously organizing itself to go mostly for made toorder manufacturing to combat this problem and making constant efforts to strengthen itsforecasting methods to be closer and in sync with market changes.

• Your Company is taking effective steps for making improvement in efficiencycost cutting and price adjustments where ever possible.

• Management seeks to ensure that there exists in place adequate internal controlsystems to constantly ensure steps being taken by the Management to improve the turnoverand financials of your Company.

SIGNIFICANT MATERIAL CHANGES

Your Company booked accumulated losses as at the end of financial year 2015-2016 atRs.498.81 lacs for the reasons mentioned aforesaid resulting in erosion of more thanfifty percent of its peak net worth during the immediately preceding four financial yearsthereby falling within the definition of 'Potentially Sick Company' in terms of Section 23of the Sick Industrial Companies (Special Provisions) Act 1985 (SICA).

DIVIDEND

In view of losses for the year your Directors do not recommend any dividend on equityshares for the year under review.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

The Company is required to transfer dividends which have remain unpaid/ unclaimed for aperiod of seven years to the IEPF established by the Central Government. Accordingly theamount of unpaid/ unclaimed dividend for the financial year ended 31st March 2009 is duefor transfer to IEPF on or after 3rd September 2016.

PUBLIC DEPOSIT

Your Company has not accepted any fixed deposits within the meaning of Section 73 ofthe Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary Joint venture or Associate Company.

AUDITORS Statutory Auditor

M/s. A. K. Maheshwari & Associates Chartered Accountants Statutory Auditors ofthe Company having Firm Registration No. 500106N were appointed as Statutory Auditorsfor a term of 4 (four) consecutive years at the 30th Annual General Meeting (AGM) held on16th September 2014 to hold office till the conclusion of the 34th AGM of the Companysubject to ratification of their appointment at every AGM in terms of the first provisoto Section 139 of the Companies Act 2013 read with Rule 3(7) of Companies (Audit andAuditors) Rules 2014.

In this regard the Company has received a letter from the Auditors conforming that theyare eligible for appointment as Auditors of the Company under Section 139 of the CompaniesAct 2013 and meet the criteria for appointment specified under Section 141 of the saidAct.

Based on the recommendations by the Audit Committee the Board of Directors recommendthe ratification of appointment of M/s. A. K. Maheshwari & Associates CharteredAccountants Statutory Auditors of the Company by the Shareholders at the ensuing AGM.

All the items on which comments have been made by the Auditors in their report to theMembers are self-explanatory as explained by way of notes to the accounts and does notcontain any qualification reservation or adverse remark therefore needs no furtherexplanation by the Board in terms of Section 134(3)(f)(i) of the Companies Act 2013.

Secretarial Auditor

Your Board appointed M/s. Drolia & Company Practicing Company Secretaries havingCertificate of Practice No. 1362 as Secretarial Auditors on such remuneration as may bedetermined by the Board for the financial year ended 31st March 2016 to undertake theSecretarial Audit of the Company pursuant to the provisions of Section 204 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time.

The Secretarial Audit Report for the financial year 2015-16 in terms of Section 204(1)of the Companies Act 2013 submitted by the said Auditors forming part of this Reportis marked as 'Annexure A'. The said Report does not contain any qualificationreservation or adverse remark therefore no need for any explanation/s by the Board interms of Section 134(3)(f)(ii) of the Companies Act 2013.

NUMBER OF BOARD MEETINGS

During the year 4 (four) Board Meetings were convened and held. Details of suchmeetings are given in the Corporate Governance Report forming part of this Report.

RISK MANAGEMENT

The Company has in place mechanism to inform Board Members about the Risk Assessmentand Minimization procedures which is periodically reviewed to ensure that risk iscontrolled by the Executive Management.

Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are given in the Management Discussion and Analysis which forms partof this Report.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal control systems which commensurate with thesize scale and complexity of the operations of the Company.

RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties during the financial year 2015-16 were onarm's length basis and were in the ordinary course of business. Further there were nomaterially significant related party transactions during the year under review made by theCompany with Promoters Directors Key Managerial Personnel or other designated personswhich may have potential conflict with the interest of the Company at large. Accordinglythe disclosure of related party transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not required. Related Party Transactions Policy asapproved by the Board has been uploaded on the Company's website www.schablona.in at theweb link: http://www.schablona.in/admin/images SIL%20Related%20Party%20Transaction%20Policy.pdf

EVALUATION OF PERFORMANCE OF BOARD ITS COMMITTEE AND OF DIRECTORS

Pursuant to the provisions of Companies Act 2013 the Board has carried out an annualperformance evaluation of its own performance the performance of individual Directors aswell as the evaluation of working of its Committees on the various parameters andcriteria's governing their performance in form of circulation of Questionnaire among theMembers of the Board and the same was taken on record. The criteria's for evaluation ofthe performance has been mentioned in the Corporate Governance Report forming part of thisReport.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under sub-section (3) of Section 92 of theCompanies Act 2013 in Form MGT-9 in terms of Section 134(3)(a) of the Companies Act2013 forms part of this Report and is marked as

'Annexure B'.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed hereto and formspart of this report and marked as 'Annexure C'.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independenceas stipulated under Section 149(6) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations).

DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments

In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. N.Goenka Non-Executive Non Independent Director retires by rotation and being eligibleoffers himself for re-appointment.

Mr. Vinod Kumar Karwa Non-Executive Independent Director was appointed as anAdditional Director by the Board at its meeting held on 23rd July 2015 and was appointedas an independent director for a term of 5 (five) consecutive years at the 31st AnnualGeneral Meeting of the Company held on 16th September 2015 not liable to retire byrotation.

Resignations

Mr. R.K. Borar Independent Director of the Company resigned from the Directorship ofthe Company w.e.f. 18th July 2015.

The Board placed on record its appreciation for the valued contribution made by him inthe various deliberations discussions and guidance during his association with theCompany.

NOMINATION AND REMUNERATION POLICY

The Company's Policy on Director's and Key Managerial Personnel appointment andremuneration including criteria's for determining qualifications positive attributesindependence of Directors and other related matters as provided under Section 178(3) ofthe Companies Act 2013 and Listing Regulations is available on the Company's websitewww.schablona.in at the web link:http://www.schablona.in/admin/images/N%20%20R%20POLICY-AR.pdf

DIRECTORS RESPONSIBILITY STATEMENT

As required by Section 134(3)(c) of the Companies Act 2013 the Board of Directors ofthe Company hereby state and confirm that:-

(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 and ofthe 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 this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the 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; and

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

COMMITTEES OF THE BOARD

Your Company has duly constituted the following Committees required under the CompaniesAct 2013 read with applicable Rules made thereunder and the Listing Regulations:

• Audit Committee

• Share Transfer Committee

• Stakeholders Relationship Committee

• Nomination and Remuneration Committee

The Board of Directors of the Company has formed Audit Committee with all Non-ExecutiveDirectors wherein Independent Directors form the majority consisting of Mr. Vinod KumarKarwa Independent Director as the Chairman Ms. Abha Kabra Independent Director and Mr.N. Goenka Non-Independent Director as other Members of the Committee as on 31st March2016. All recommendations made by the Audit Committee were accepted by the Board. Moredetails on the Committee have been provided in the Corporate Governance Report formingpart of this Report.

VIGIL MECHANISM

Your Company has formulated a Policy "Whistle Blower Policy/Vigil Mechanismpursuant to Section 177 of the Companies Act 2013 read with Regulation 22 of the ListingRegulations which provides a mechanism for its employees Directors and other stakeholdersof the Company to report concerns about unethical behaviour actual or suspected fraud orviolation of Company's code of conduct. The details of such Policy is explained in theCorporate Governance Report and has been uploaded on the Company's websitewww.schablona.in at the web link: http://www.schablona.in/admin/images/Mechanism%20and%20Whistle%20Blower%20Policy.pdf

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT

A report on Corporate Governance along with Management Discussion and Analysis Reportin terms of Listing Regulations is annexed hereto and forms an integral part of thisReport.

PARTICULARS OF EMPLOYEES

Information required as per Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed hereto as 'Annexure D' forming part of this Report.

During the year under review there were no managerial personnel/employee whoseinformation required to be provided under Rule 5 sub-rule 2 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

As per the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 ('Act') and Rules made thereunder your Company hasadopted a Policy for prevention of sexual harassment at work place and has constituted anInternal Complaints Committee. During the year the Company has not received anycomplaints on sexual harassment under the said Act.

OTHER DISCLOSURES

I. No loans guarantees and investments under Section 186 of the Companies Act 2013were made by the Company during the year under review hence disclosure in terms ofSection 134(3)(g) of the Companies Act 2013 does not arise.

II. No issue of equity shares were made during the year under review with respect todifferential rights Employee Stock Options Sweat Equity shares Buy-back of shares andBonus Issue under Companies (Share Capital and Debentures) Rules 2014.

III. No Corporate Social Responsibility (CSR) initiatives have been undertaken by theCompany as Section 135 of the Companies Act 2013 on CSR is not applicable.

IV. Business Responsibility Report as per Regulation 34(f) of the Listing Regulationsdescribing the initiatives taken by Company from an environmental social and governanceperspective is not applicable to the Company as per SEBI's Notification No.SEBI/LAD-NRO/GN/2015-16/27dated 22 December 2015.

V. There were no significant material orders passed by the Regulators / Courts duringthe financial year 2015-16 which would impact the going concern status of the Company andits future operations.

ACKNOWLEDGEMENT

Your Directors acknowledge with sincere gratitude the co-operation and assistanceextended by the Central and State Governments Financial Institutions Banks CustomersDealers Vendors and Employees of the Company.

For and on behalf of the Board
Place : Noida N. Goenka
Date : 21st May 2016 Chairman