Your Directors are pleased to present the 23rd Annual Report on the businessand operations of the Company together with Audited financial statements for the financialyear ended March 31 2017.
The Company's financial performance for the year ended March 31 2017 is summarizedbelow:
|Particulars ||2016-17 |
|Gross Sales/ Income from Operations ||13333.06 ||11736.54 |
|Other Income ||134.53 ||164.28 |
|Total Revenue ||13467.59 ||11900.82 |
|Profit/(loss) before tax (after exceptional items) ||(354.82) ||915.95 |
|Current Tax ||- ||- |
|Deffered Tax Reversal / (Provision) ||(144.18) ||(182.51) |
|Net profit/ (loss) for the year ||(210.64) ||*1098.46 |
The figures of the previous year are restated as required under Indian AccountingStandards (IND AS) applicable to the Company
The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 12016 pursuant to the notification of Companies (Indian Accounting Standard) Rules 2015issued by the Ministry of Corporate Affairs. Previous years' figures have been restatedand audited by M/s Mahendra N. Shah & Co. Chartered Accountants the StatutoryAuditors of the Company.
During the financial year 2016-17 the Company has achieved total revenue fromoperations of Rs 13467.59 lakhs as compared to the previous year's figure of Rs. 11900.82lakhs thereby registered increase in revenue by 13.17% as compared to previous year. TheEarnings before Finance Cost Taxes Depreciation and Amortisation (EBIDTA) of the Companyduring the year stood at Rs. 1532.58 lakhs. The Company has registered net loss of Rs.210.64 lakhs for the financial year ended on March 31 2017.
The performance of the Company during the year 2016-17 has improved by 13% over theprevious year which was attributed due to effective utilization of available resourcesmarketing research & development activities reduction of cost utilization ofqualitative raw materials and effective planning by the management within the overallexisting framework available with the Company. Further as a part of action towards thereduction of cost and to achieve efficiency in the production your company had shiftedits plant located at Ambaliyara to Moti-Bhoyan which has resulted into economy in cost andquality of products and to utilize the capacity at the optimum level. Further during theyear your
company has been recertified for ISO-9001-2015 and FSSC 22000 upon recertificationaudits carried out by external agencies which is one of the achievements towards futuredevelopment of business to get reputed customers which will enable to achieve the highergrowth of the Company. In addition to this one eight color Rotogravure machine wasinstalled and commissioned which would be used for production of flexible laminates. YourDirectors expect the better performance of the Company during the current year.
Considering the loss for the year under review and accumulated loss of the earlieryears your Directors do not recommend any dividend for the financial year 2016-17 and noamount has been transferred to the General Reserves.
The paid up Share Capital of the Company as at March 31 2017 stood at Rs. 3842.70lakhs. During the year under review the Company has not issued any shares withdifferential voting rights as to dividend voting or otherwise nor has granted any stockoptions or sweat equity. As on March 31 2017 none of the Directors of the Company holdany instruments convertible into Equity shares of the Company.
Shree Rama (Mauritius) Limited was incorporated as wholly owned subsidiary inMauritius. The current status of the Company is Defunct.
The Company does not have Deposits as contemplated under chapter V of theCompanies Act 2013. Further the Company has not invited or accepted any such depositsduring the year ended March 31 2017.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return in form MGT-9 for the year ended March 31 2017 pursuantto section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies (Managementand Administration) Rules 2014 is annexed herewith as Annexure A' as a partto this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review pursuant to the provisions of Section 196 and 197 of theCompanies Act 2013 and rules made thereunder and upon the recommendation of Nominationand Remuneration Committee Shri Hemal R Shah (DIN: 07338419) was reappointed as WholeTime Director for the period of two years with effect from November 27 2016 subject tothe approval of members at the ensuing Annual general meeting.
Shri Hemal J. Sadiwala has resigned with effect from March 10 2017 as CompanySecretary & Compliance Officer of the Company.
Your Company has received declarations from all the Independent Directors confirmingthat they meet with the criteria of independence as prescribed under sub-section (6) ofSection 149 of the Companies Act 2013 and under Regulation 16(1 )(b) of SEBI (ListingObligation and Disclosure Requirement) Regulation 2015 and there has been no change inthe circumstances which may affect their status as Independent Director during the year.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Shri Mittal K Patel Director retires by rotation atthe forthcoming Annual General Meeting and being eligible offers himself forre-appointment. The Board recommends his re-appointment for the consideration of theMembers of the Company at the ensuing Annual General Meeting.
During the year none of the Non-Executive Directors of the Company had pecuniaryrelationship or transactions with the Company.
Pursuant to section 203 of the Companies Act 2013 the Whole-Time Key ManagerialPersonnel of the Company as on March 31 2017 are as under:
|1. Shri Shailesh K. Desai ||Managing Director |
|2. Shri Hemal R. Shah ||Whole Time Director |
|3. Shri Krunal G. Shah ||Chief Financial Officer |
The details of KMPs are provided in the Corporate Governance Report as required underSEBI (LODR) Regulation 2015
NUMBER OF MEETINGS OF THE BOARD:
During the Financial Year ended on March 31 2017 the Board met five times thedetails of which are given in the Corporate Governance Report that forms part of thisAnnual Report. The intervening gap between any two meetings was not more than one hundredand twenty days.
COMMITTEES OF BOARD
The Company has following Committees of the Board as on March 31 2017 pursuant toapplicable provisions of the Companies Act 2013 and its rules made there under and incompliance with SEBI (LODR) Regulation 2015:
(i) Audit Committee
(ii) Nomination and Remuneration Committee
(iii) Stakeholders Relationship Committee
(iv) Corporate Social Responsibility Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings and other information are provided in the Corporate GovernanceReport.
Pursuant to the provisions of the Companies Act 2013 and as per the corporategovernance requirements as prescribed under SEBI (LODR) Regulations 2015 the Board ofDirectors had carried out the performance evaluation of its own performance IndependentDirectors as well as evaluation of working of its Board committees. A structuredquestionnaire was prepared after taking into consideration the various aspects ofcomposition of the Board and its Committees the Board's functioning 'experienceculture execution and performance of specific duties obligations and governance.Further Independent Directors of the Company had also carried out the performanceevaluation of Non-Independent Directors and the Board as whole and also reviewed theperformance of the Chairman of the Company. The Nomination and Remuneration Committee ofthe Company had also carried out performance evaluation of every Director's performance.The Board of Directors expressed its satisfaction with the evaluation process.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors to the best oftheir knowledge and belief and according to the information and explanations obtained bythem state that:
a) in the preparation of the annual accounts for the year ended on March 31 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departure
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 for the year ended on March 31 2017 andof loss of the Company for that period.
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared 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 are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and there were no material contractsor arrangement or transactions entered into in terms of section 188 of the Companies Act2013 and in terms of SEBI (LODR) Regulations 2015. Accordingly applicable disclosure ofrelated party transactions as per section 134(3)(h) of the Companies Act 2013 in formAOC-2 is not provided. Further the disclosures in compliance with Para A of Schedule V ofRegulation 34 (3) of SEBI (LODR) Regulation 2015 is provided in the notes to theAccounts. The related party transactions as required to be disclosed under IndianAccounting Standards (IND AS 24) are set out in the notes to the financial statements.
All Related Party Transactions are placed before the Audit Committee and also beforethe Board for approval ratification and noting. Prior omnibus approval has been obtainedfor Related Party Transactions which are of repetitive nature and / or entered in theOrdinary Course of Business and are at Arm's Length basis and a statement giving detailsof all Related Party Transactions are placed before the Audit Committee and the Board forreview and noting on a quarterly basis.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company viz. www.srmtl.com. None of the Directors has anypecuniary relationship or transactions vis-a-vis the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY
During the year the Company has not given any loans or provided guarantee or securityin connection with a loan to other body corporate or person or made investments under theprovisions of Section 186 of the Companies Act 2013 hence the details are not provided.
INTERNAL FINANCIAL CONTROL SYSTEM
The Company's internal control system is commensurate with its size scale andcomplexities of its operations. Your Company has an effective internal control andrisk-mitigation system which are constantly reviewed assessed and strengthened with new/revised standard operating procedures considering the existing system and future planningas envisaged. The internal audit is entrusted to M/s Ramesh C Sharma CharteredAccountants and the scope of the internal audit are reviewed and revised as required toassess the risks and business processes besides benchmarking controls with best practicesin the industry.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Company has a robust Management Information System which is an integral part ofthe control mechanism.
The Audit Committee Statutory Auditors and the business heads are quarterly apprisedof the internal audit findings and corrective actions taken. Audit plays a key role inproviding assurance to the Board of Directors. The significant audit observations andcorrective actions taken by the management are presented to the Audit Committee of theBoard. To maintain its objectivity and independence the Internal Audit function reportsto the Chairman of the Audit Committee.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The statement showing particulars with respect to the conservation of energytechnology absorption and foreign exchange earnings and outgo stipulated under Section134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules2014 is annexed herewith as Annexure B as a part to this Report.
PARTICULARS OF EMPLOYEES
The Company has continued to maintain harmonious and cordial relations with itsofficers supervisors and workers enabling the Company to maintain the pace of growth.Training is imparted to employees at all levels and covers both technical and behavioralaspects.
The details of managerial remuneration as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed herewith as Annexure C asa part to this Report. There was no employee drawing an annual salary of Rs. 102 Lakhs ormore where employed for full year or monthly salary of Rs. 8.50 Lakhs or more whereemployed for part of the year and therefore no information pursuant to the provisions ofRule 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is required to be given.
NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed Nomination and Remuneration Policy as per therecommendation of the Nomination and Remuneration Committee pursuant to the provisions ofSection 178 of the Companies Act 2013 read with the Rules made thereunder as well as SEBI(LODR) Regulations 2015
The salient features of the said policy are as under.
Criteria for the Appointment and Removal of Directors and Key Managerial Personnel
The Committee shall identify and ascertain the integrity qualificationexpertise and experience
of the person for appointment as Director KMP or at Senior Management level andrecommend his / her appointment as per Company's Policy.
He/she has not attained the age of seventy years.
Appointment or reappointment of any person as Executive Chairman ManagingDirector or Executive Director shall not be exceeding period of five years at a time.
An Independent Director shall hold office for a term up to three/fiveconsecutive years on the Board of the Company and will be eligible for re-appointment onpassing a special resolution by the members of the Company.
No Independent Director shall hold office for more than two consecutive terms ofup to maximum of 3/5 years each but such Independent Director shall be eligible forappointment after expiry of 3 years of ceasing to become an Independent Director.
Remuneration to Directors/Key Managerial Personnel /Senior Management Personnel
Remuneration to Managing Director / Whole-time Directors etc. shall be governedas per provisions of the Companies Act 2013 and rules made there under or any otherenactment for the time being in force and the approvals obtained from the members of theCompany. The Committee shall make such recommendations to the Board of Directors as itmay consider appropriate with regard to remuneration to Managing Director / Whole-TimeDirectors.
The remuneration to Key Managerial Personnel and Senior Management shall consistof fixed pay which include monthly remuneration employer's contribution to ProvidentFund etc. as decided from to time as per Company's Policy and in accordance with theprovisions of the Companies Act 2013.
Committee may decide for Incentive pay based on the balance between performanceof the Company and performance of the Key Managerial Personnel and Senior Management tobe decided annually or at such intervals as may be considered appropriate.
The Non-Executive / Independent Directors may receive sitting fees and suchother remuneration as permissible under the provisions of Companies Act 2013.
Any remuneration paid to Non- Executive / Independent Directors for servicesrendered which are of professional in nature shall not be considered as part of theremuneration if such Services are rendered by him in his capacity as a professional and inthe opinion of the Committee he possesses the requisite qualification for the practice ofthat profession.
AUDITORS & AUDITORS' REPORT
Pursuant to the provisions of Section 139 of the Companies Act 2013 and Rules madethereunder the term of office of M/s. Mahendra N. Shah & Co. Chartered Accountantsas the Statutory Auditors of the Company will expire from the conclusion of ensuing AnnualGeneral Meeting of the Company and as per the provisions of Section 139 of the CompaniesAct 2013 and rules made thereunder they are ineligible to be re-appointed as StatutoryAuditors for the financial year 2017-18 onwards pursuant to the provisions of CompaniesAct 2013.
The Board of Directors places on record its appreciation to the services rendered byM/s. Mahendra N. Shah & Co. Chartered Accountants as the Statutory Auditors of theCompany.
The Board of Directors of the Company has recommended the appointment of M/s ChandulalM. Shah &
Co. Chartered Accountants Ahmedabad (Firm Registration Number 101698W) as theStatutory Auditors of the Company for the period of five years from the conclusion of 23rdAnnual General Meeting till the conclusion of 28th Annual General Meeting(subject ratification by the members at every Annual General Meeting to be held during thesaid period) pursuant to Section 139 of the Companies Act 2013 subject to the approvalof the Members The Company has received a letter from M/s Chandulal M. Shah & Co.Chartered Accountants Ahmedabad to the effect that their appointment if made would bewithin the prescribed limits under Section 141 of the Companies Act 2013 read with rulesmade thereunder and that they are not disqualified for such appointment. Accordingly theBoard recommends the resolution in relation to appointment of Statutory Auditors for theapproval by the shareholders of the Company.
During the year under review there are no instances of frauds that are reportable bythe auditors under section 143 (12) the Companies Act 2013 and its rules made thereunder.
The Statutory auditors of the company has made certain observations in the audit reportand qualified the report during the year under review. In this regard the board clarifiesthe same as under:
Boards' Comments on Auditors Emphasis:
1. Regarding the non- provision of interest on borrowings in form of Loans anddebentures:
The management has already initiated settlement with the lenders of the loan anddebentures as per the Scheme of Arrangement and Compromise. The lenders specified in thescheme have given their consent for settlement as per the terms of the scheme and in theopinion of the management the amount of dues payable to lenders have been specified underthe definition of Settled Debt under clause (n) of Part 1 of the schemetherefore no further liability on account of interest will arise. In case the scheme isnot approved or approved with different terms the company will give necessary accountingeffect on final ascertainment of the same.
2. Regarding Non-consolidation of accounts of Shree Rama (Mauritius) Limited (WOS):
In respect of the investment made in Shree Rama (Mauritius) Limited its wholly ownedsubsidiary (WOS) the resident directors & key managerial personnel of the said WOShad resigned in the year 2005-06 and audited accounts for the year ended 30thSeptember 2003 and onwards could not be prepared and provided. Its present status is shownas 'defunct' under respective laws. The company has accordingly provided for diminution inthe value of investments in the earlier years.
In view of the above it was not possible to prepare consolidated financial statementsas required by Ind AS 110 issued by ICAI and other provisions of the Companies Act 2013.
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Samdani Shah & Kabra Practicing Company Secretaries to undertake theSecretarial Audit of the Company for the financial year 2016-17. The Secretarial Auditreport is annexed herewith as Annexure D as a part to this Report.
There are some observations made by the Secretarial Auditor in their report for whichthe Board of Directors hereby give its comments/ explanation as under:
(i) Regarding Non-consolidation of accounts of Shree Rama (Mauritius) Limited (WOS):
In respect of the investment made in Shree Rama (Mauritius) Limited its wholly ownedsubsidiary (WOS) the resident directors & key managerial personnel of the said WOShad resigned in the
year 2005-06 and audited accounts for the year ended 30th September 2003 andonwards could not be prepared and provided. Its present status is shown as 'defunct' underrespective laws. The company has accordingly provided for diminution in the value ofinvestments in the earlier years.
In view of the above it was not possible to prepare consolidated financial statementsas required by Ind AS 110 issued by ICAI and other provisions of the Companies Act 2013.
ii) Regarding pending of redemption of 666666 15% Cumulative Preference Shares:
The Composite Scheme of Compromise and Arrangement with its lenders and Shareholdersu/s 391 of the Companies Act 1956 filed with Hon'ble High Court of Gujarat is pendingbefore higher bench and matter of redemption of preference shares along with dividend etc.is also covered in the scheme. The Board is of the view that the said matter will besorted out on final outcome of the scheme.
iii) Regarding non reversal of provision of dividend and non-transfer of the saidamount to IEPF:
In the Scheme of Compromise and Arrangement the issue of waiver of unpaid dividend onpreference shares is also covered. The Board is of the view that the said matter will besorted out on final outcome of the scheme.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board has constituted the Corporate Social Responsibility (CSR) Committee and hasframed a CSR Policy as required under the provisions of the Companies Act 2013. TheAnnual Report on CSR activities is annexed herewith as Annexure- E as apart to this Report. The CSR policy is available on the website of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on operations of the Company as requiredunder Regulation 34(3) read with Para B of Schedule V of SEBI (LODR) Regulations 2015 isprovided in a separate section and forms an integral part of this Report.
The report on Corporate Governance as stipulated under Regulation 34 (3) read with ParaB of Schedule V of SEBI (LODR) Regulation 2015 forms an integral part of this Report. Therequisite certificate from the Statutory Auditor of the Company confirming compliance withthe conditions of corporate governance is attached to the report on Corporate Governance.
The assets of the Company are adequately insured to take care of any unforeseencircumstances.
MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of theCompany occurred between the end of the financial year of the Company to which thefinancial statements relate and the date of the report.
Risk management is embedded in your Company's operating framework. The objective of therisk management is to minimize the impact of risks identified and taking advance actionsto mitigate it. The
Company's approach to addressing the business risk is comprehensive and includesperiodic review of such risks and a framework for mitigating controls and reportingmechanism of such risks. The risk management framework is reviewed periodically by theBoard of Directors for its effectiveness and compliances.
Discussion on risks and concerns are covered in the Management Discussion and AnalysisReport which forms part of this Report.
Your Company has framed a Vigil Mechanism to report genuine concerns or grievances ofall Directors and employees. It provides for adequate safeguards against victimization ofpersons who use such mechanism. The Vigil Mechanism Policy has been posted on the websiteof the Company.
CODE OF CONDUCT
The Board of Directors has adopted the code of Conduct for the Director and seniormanagement and the same has been placed on the Company's website. All the Board membersand the senior management have affirmed compliance with the Code of conduct for the yearunder review.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
The appeal under the Scheme of Compromise and Arrangement under section 391 of theCompanies Act 1956 already admitted by larger bench of Hon'ble High Court of Gujarat ispending before the Hon'ble Court.
As per the requirement under the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 read with rules made there under your company hasalso formulated a policy on prevention of sexual harassment at workplace with a mechanismof lodging complaints. During the year under review no complaints were reported.
Your Directors wish to place on record their appreciation for the contribution made bythe employees at all levels but for whose hard work and support your Company'sachievements would not have been possible. Your Directors also wish to thank itscustomers dealers agents suppliers Government investors and bankers for theircontinued support and faith reposed in the Company.
| ||For and on behalf of the Board |
|Place : Moti Bhoyan ||Shailesh Desai |
|Date : May 18 2017 ||Chairman |