Your Directors have pleasure in presenting the 45th Annual Report on thebusiness operations and financial performance of the Company along with the ConsolidatedAudited Balance Sheet and Statement of Profit & Loss for the year ended 31 March2017.
(Rs. in Crores)
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Total Revenue-Net ||1750.00 ||1550.00 ||1445.86 ||1265.05 |
|Profit before Financial Charges Depreciation & Tax ||217.12 ||192.85 ||186.14 ||161.80 |
|Less : Financial Charges ||9.87 ||11.67 ||6.31 ||6.77 |
|Cash Profit ||207.25 ||181.18 ||179.84 ||155.03 |
|Less : Depreciation ||30.39 ||29.27 ||23.58 ||22.77 |
|Profit before Tax ||176.86 ||151.91 ||156.25 ||132.26 |
|Add/(Less) : Income Tax- current year ||(52.48) ||(47.45) ||(46.56) ||(41.15) |
|Add/(Less): Deferred Tax - current year ||0.46 ||0.25 ||0.79 ||(0.96) |
|Profit after Tax ||124.84 ||104.71 ||110.48 ||90.15 |
|Balance Surplus carried to Balance Sheet ||124.84 ||104.71 ||110.48 ||90.15 |
During the current year Net Revenue of the Company on standalone basis increased fromRs. 1265 Crores to Rs. 1446 Crores registering a growth of 14.3% over last year. TheProfit after tax for the current year increased by 22.6% to Rs. 110 Crores as against theprofit after tax of Rs. 90 Crores of last year.
present status & future outlook
Your Company is the largest manufacturer of Mattresses and has a market shares of 23%of total organized market. It is also the largest Foam manufacturing Company of theCountry producing more than two times of its nearest competitor. The market share of theCompany is increasing every year.
The Company registered a growth of more than 14% in turnover and more than 22% inprofits despite demonetisation and unusual spurt in major raw material(TDI) prices.
70% of the Indian Mattress market is unaddressable as the usage in this segment is ofCotton Rugs etc. as sleeping surface. Of the balance 30% the organized market is 10% andunorganized market is 20%. The
Mattress Market is growing by around 10%. With the introduction of GST increase indisposable income increasing awareness about quality sleep and rapid improvement ininfrastructure the share of organized market is expected to increase at a faster rate.
The Per Capita Foam Consumption in India is less than 150 grams whereas in Australiawhere the subsidiary of the company has the largest market share the per capita FoamConsumption is more than 6 times. This provides great opportunity to the company toincrease its Foam production as the consumption rate improves.
The Company is also expanding its distributor and dealer network to increase thepenetration. The focus is on increasing Exclusive Brand Outlets (EBO) as well as MultiBrand Outlets (MBO) in new territories.
Board of Directors do not recommend any dividend for the year 2016-17. The entireprofits are being ploughed back in the business.
As on 31 March 2017 the Company has three subsidiaries and one step down subsidiary.As required under the provisions of Section 129 of the Companies Act 2013 read withCompanies (Accounts) Rule 2013 a statement containing salient features of the financialstatements of subsidiaries is provided in the prescribed format AOC-1 as Annexure-A ofthe Board Report.
The Company has one 100% subsidiary in Australia Joyce Foam Pty. Limited Joyce Foam isthe largest producer of Foam in Australia and supplies its high quality Foam to GlobalMattresses and Furnishing Companies. Joyce recorded a turnover of 61.76 Million AustralianDollars (AUD) in 2016-17 as compared with 58.60 Million AUD in 2015-16 recording agrowth of more than 5% and has posted healthy pretax profit of 4.3 Million AUD in 2016-17as against 3.8 Million AUD in 2015-16 an increase of around 13%. Joyce Foam deploys mostmodern technology -Variable Pressure Foaming (VPF) for producing best quality of Foam.Since full scale introduction of VPF technology the revenues and profitability of companyhave improved.
Joyce Foam Pty Ltd has one wholly own subsidiary Joyce W C NSW Pty Limited
The Company has two other wholly owned subsidiaries as under:
1) Divya Software Solutions Private Limited since 2014-15 and
2) Sleepwell Enterprises Private Limited since this year.
In accordance with Regulation 16 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) none ofthe subsidiaries is a material non-listed subsidiary. The Company has formulated a policyfor determining material subsidiaries. The policy has been uploaded on the website of theCompany at http://www.sheelafoam.com .
consolidated financial statements
In accordance with Section 136 of the Companies Act 2013 and the Accounting Standard21 on the Consolidated Financial Statements your Directors have attached the consolidatedfinancial statements of the Company which form a part of the Annual Report.
The financial statements including consolidated financial statements and the auditedaccounts of each of the subsidiary are available on the Company's websitewww.sheelafoam.com
directors' responsibility statement
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed.
b) The directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that were reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit or loss of the Company for the year under review.
c) The directors have 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 have prepared the annual accounts 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 had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
In accordance with SEBI Regulations a separate report on Corporate Governance is givenin Annexure-B along with the Auditors' Certificate on its compliance in Annexure-Bto the Board's Report. The Auditors' Certificate does not contain any qualificationreservation and adverse remark.
related parties transactions
The particulars of Contracts or arrangements with related parties in the prescribedform are annexed as Annexure-C
The Company has formulated a Risk Management Policy duly reviewed by the Board ofDirectors. The policy includes risk identification analysis and prioritisation of riskand development of risk mitigation plans.
internal financial controls
The Company has in place adequate Internal Financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operations were observed. The report on the InternalFinancial Control issued by M/s. S.P. Chopra & Co. Chartered Accountants StatutoryAuditors of the Company in view of the provisions under the Companies Act 2013 is givenelsewhere in this report.
directors and key managerial personnel (kmp)
During the year Mrs. Sheela Gautam Director (Chairperson) resigned from thedirectorship.
As per the provisions of the Companies Act 2013 Ms. Namita Gautam will retire byrotation at the ensuing Annual General Meeting (AGM) of the Company and being eligibleseek re-appointment. The Board has recommended her reappointment.
The Board has subject to the approval of the Shareholders re-appointed Mr. RahulGautam Managing Director Ms. Namita Gautam Mr. Rakesh Chahar Mr. Tushaar GautamWhole-time Directors of the Company for a period of 5 years effective from April 1 2017.
The Board also recommended the appointment of following independent Directors who wereappointed as Additional Director by the Board of Directors and whose term shall be expireat the ensuing Annual General Meeting:
1) Mr. Vijay Kumar Chopra
2) Mr. Som Mittal
3) Mr. Ravindra Dhariwal
4) Mr. Anil Tandon
As required under the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel namely Chairman and Managing Director Executive Director ChiefFinancial Officer and Company Secretary continue to hold that office as on the date ofthis report.
M/s. S.P. Chopra & Co. Chartered Accountants were reappointed for 5 years in theAnnual General Meeting held on 2016 subject to ratification at every AGM. The Company hasreceived letter from the Auditors to the effect that the ratification if made would bewithin the prescribed limits under Section 141 of the Companies Act 2013 and that theyare not disqualified for reappointment.
The Board recommends the ratification of the appointment M/s. S.P. Chopra & Co asStatutory Auditors for Financial Year 2017-18 for the audit of the Company.
There is no adverse observation of Auditors' on financial statements of the company.The Auditors' Report read with the relevant notes to accounts are self-explanatory andtherefore do not require further explanation.
As per section 148 read with Companies (Audit and Auditors) Rule 2014 M/s Mahesh Singh& Co Cost Accountants are appointed to conduct the cost records of the Company forthe Financial Year 2017-18 by the Board of Directors and seeking ratification ofremuneration from the members of company at ensuing Annual General Meeting.
The company has engaged M/s S. S. Kothari Mehta & Co. Chartered Accountants asInternal Auditor to conduct internal audit for the year 2017-18. The Internal Auditor willreport to Board of Directors. The internal audit will help company to review theoperational efficiency
and assessing the internal controls. It also reviews the safeguarding of assets of theCompany.
The company has engaged M/s AVA Associates Company Secretaries as Secretarial Auditorto conduct Secretarial audit for the year 2016-17. The report on secretarial audit isannexed as Annexure D to the Board's Report. The report does not contain anyqualification reservation or adverse remark.
corporate social responsibility(csr)
In terms of Companies Act 2013 your company is to undertake Corporate SocialResponsibility programme. The disclosure as per Rule 9 of the Companies (Corporate SocialResponsibility Policy) Rule 2014 is annexed as Annexure-E
The composition of Audit Committee is provided in the Corporate Governance Report thatforms part of this Annual Report.
The Company has established a vigil mechanism through a Whistle Blower policy and theAudit Committee oversees the genuine concerns expressed by the employees and otherDirectors. The Company has also provided adequate safeguards against victimisation ofemployees and Directors who may express their concerns pursuant to this policy. The policyis uploaded on the website of the Company at http://www.sheelafoam.com .
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 sexual harassment of women at Work place (Prevention Prohibition and Redressal) Act2013. The Internal Complaint Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. During the period under review no complaint wasreceived by the ICC.
meetings of the board
During the year 9 meetings of the Board of Directors were held.
particulars of loans guarantees or investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 forms part of the Financial Statements.
conservation of energy technology absorption and foreign exchange earning and outgo
A. Following measures were taken by company for energy conservation in the year:
1) Used LED light in all new areas covered in Greater Noida for VertiVac Machine and inHyderabad for New Foaming Machine. Further started systematic replacement of conventionallight fixtures with energy efficient LED lights in all existing plants.
2) Introduced sky light which provides natural cool light inside the building.
3) Application of heat resistive paint on roof sheeting which help reducing the insidetemperature hence reduction in cooling requirement.
4) I n steam boiler at Saily plant Optimized the steam pressure and reduced it by 1.5bar which helped reducing the diesel consumption by approximately 20%.
5) One Looper machine at Talwara modified to dispense the peeled rolls without stoppingit hence reduction in energy lost during start/ stop of machine.
B. The expenses incurred on Research and Development have been included in respectiveexpense heads.
C. The Company has perfected the technology of producing foam and is continuouslyinnovating new products/techniques to improve the quality of its product. It had alsostarted compression of some grades of foam resulting in savings on freight. Further it hascommissioned Vertivac Variable Pressure Foaming Machine for better grade foam at reducedcost.
D. The details of earnings from exports and payments in foreign exchange are given inthe Notes to the Accounts of the Company.
Your Company has entered into Listing Agreements with BSE Limited and National StockExchange of India Limited in compliance with Regulation 109 of the Listing Regulations.
particulars of employees
The information as required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in Annexure-F to the Board's Report.
The particulars of employees drawing remuneration in excess of limits set out in theRule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in Annexure-G to the Board's Report. However as per the provisions ofSection 136 of the Companies Act 2013 the Annual Report is being sent to all the membersof the Company excluding the aforesaid information. The said information is available forinspection by the members at the registered office of the Company up to the date of theensuing Annual General Meeting. Any member interested in obtaining such particulars maywrite to the Company Secretary at the registered office of the Company.
management's discussion and analysis
In terms of provisions of Regulation 34 of the Listing Regulations the Management'sdiscussion and analysis is set out in this Annual Report.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
extract of annual return
Extract of Annual Return as provided under Sub Section 3 of Section 92 is annexed asAnnexure-H.
significant and material orders
There are no significant and material orders passed by regulators or courts ortribunals impacting the going concern status and Company's operations in future.
board evaluation mechanism
Pursuant to the provisions of Companies Act 2013 and the Listing Regulations theBoard has carried out annual performance evaluation of its own performance those ofdirectors individually and of various committees.
The performance of individual directors was evaluated on parameters such as number ofmeetings attended contribution in the growth and formulating the strategy of the Companyindependence of judgement safeguarding the interest of the Company and minorityshareholders time devoted apart from attending the meetings of the Company activeparticipation in long term strategic planning ability to contribute by introducing bestpractices to address business challenges and risk etc. The directors expressed theirsatisfaction with the evaluation process.
policy on directors appointment and remuneration
The policy is unloaded on company site www.sheelafoam.com .
business responsibility report
Business Responsibility Report is annexed as Annexure-I.
Your Directors wish to express and place on record their thanks to the Company'sDistributors Dealers and Business Associates for their excellent effort and the customersfor their continued patronage of the Company's products. Your Directors also wish to placeon record their appreciation for the devoted services of the Executive Staff and workersof the Company at all levels enabling the Company to achieve the excellent performanceduring the year.
Your Directors also appreciate the valuable co-operation and continued support receivedfrom Company's bankers and all the government agencies and departments.
The Directors also express their sincere thanks to all the Shareholders for thecontinued support and trust they have reposed in the Management.
|By Order and on behalf of the Board || |
| ||of Sheela Foam Limited |
|Place: Delhi ||(Rahul Gautam) |
|Dated: 10 May 2017 ||Chairman and Managing Director |