Your Directors are pleased to present 31st Directors' Report on the businessand operations of your Company along with the audited financial statements for the yearended 31st March 2016.
FINANCIAL RESULTS AND PERFORMANCE
The salient features of the Companys financial results during the year are asunder:
| || ||(Rs. in Lacs) |
|PARTICULARS ||Forthe yearended 31.03.2016 ||Forthe yearended 31.03.2015 |
|Sales / Revenue from Operations ||4679.14 ||6047.09 |
|Profit /(Loss) before Interest || || |
|Depreciation & Tax ||4114.05 ||(74.82) |
|Less: Interest ||1.93 ||4.28 |
|Profit /(Loss) before Depreciation & Tax ||4112.12 ||(79.10) |
|Less: Depreciation ||392.73 ||417.83 |
|Profit/(Loss) before Tax ||3719.39 ||(496.93) |
|Less - Provision for Taxes (including Deferred) ||1319.54 ||(18.13) |
|Profit/(Loss) After Tax ||2399.85 ||(478.80) |
|Paid Up Share Capital ||2900.00 ||2900.00 |
|AdjustedNet Worth of the Company ||(2.16) ||(2402.01) |
|EPS (In Rs. ) Basic & Diluted ||8.28 ||(1.65) |
During the financial year under review -
- The turnover of your company stood at Rs. 4679.14 Lacs in financial year ended on 3T March 2016 as against Rs. 6047.09 Lacs in financial year ended on 31stMarch 2015 thereby registering a decrease by 22.62%.
- PBIDT increased to Rs. 4114.05 Lacs from Rs. (74.82) Lacs in the previous year.
- Interest cost decreased to Rs. 1.93 Lacs from Rs. 4.28 Lacs in the previous year.
Considering the accumulated losses the Board of Directors does not recommend anydividend for the year 31st March2016
The Company has not accepted or renewed any deposit from public during the year underreview.
The paid up equity share capital of the Company as on 31st March 2016 stoodat Rs. 2900.00 Lacs. During the year under review the Company has neither issued shareswith differential voting rights nor granted any stock options / sweat equity. Except Dr.R. B. Baheti Chairman who is holding 42 shares in the Company none of the otherDirectors of the Company hold shares or any other securities of the Company as on the dateof this report.
MATERIAL CHANGES FROM END OF FINANCIAL YEAR TO DATE OF REPORT
There are no material change and commitment affecting the financial position of theCompany which has occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of this report other than those disclosed inthe financial statements.
CHANGE IN NATURE OF BUSINESS
During the year under review the Company has not changed its nature of Business.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
MR. AMAN AGRAWAL AND MS. PRACHI DESHPANDE RETIRING DIRECTORS.
In accordance with the provisions of section 152 of the Companies Act 2013 and Articleof Association of the Company Mr. Aman Agrawal and Ms. Prachi Deshpande Directors of theCompany are liable for retire by rotation at the ensuing Annual General Meeting and beingeligible offer themselves for re-appointment. The Board recommends their re-appointment.
Brief profile of retiring directors is given in the notice of Annual General Meeting
CESSATION (MR. K. N. GARG - DIRECTOR)
Mr. K. N. Garg has resigned from the directorship of the Company w.e.f. 018tOctober 2015. The Board placed on record its deep appreciation for the valuable servicesrendered by Mr. Garg during his tenure as Director of the Company.
APPOINTMENT (MR. YUDHVIR SINGH JAIN - NOMINEE DIRECTOR)
The Board of Directors approved and noted the appointment of Mr. Yudhvir Singh Jain asa Director (Nominee of - BIFR) of the Company. His appointment as a Director is beingsubmitted to the shareholders seeking their approval in the ensuing Annual GeneralMeeting. A brief profile of Mr. Yudhvir Singh Jain is also given in the explanatorystatement as annexed with the notice of Annual General Meeting.
Except above there is no change in the Board of Directors of the Company.
KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel (KMP) ofthe Company:
01. Mr.PrashantAgrawal : Managing Director
02. Mr.MukeshMaheshwari : Chief Financial Officer
03. Mr. Deepesh Kumar Nayak : Company Secretary
DECLARATION FROM INDEPENDENT DIRECTORS
The Independent Directors Mr. A. Arumugham Mr. T. N. Anand Reddy and Mr. John Mathewhave submitted their declaration to the Board that they fulfill the criteria as stipulatedin Section 149(6) of the Companies Act 2013 so as to qualify themselves to beappointed/continued as Independent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 your Directors would like tostate:
(a) that in the preparation of the annual financial statements for the year ended 31stMarch 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and judgments and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at 31st March 2016 and of the profit of the Company for theyear ended on that date;
(c) that proper and sufficient care has been taken for the 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 portannual financial statements have been prepared on a going concernbasis;
(e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and
(1) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
Pursuant to the provisions ofthe Companies Act 2013 and SEBI (Listing Obligation andDisclosure Requirements)
Regulations 2015 the Board has carried out an annual performance evaluation of itsown performance the directors individually as well as the evaluation of the working ofits Committees
A separate exercise was carried out to evaluate the performance of directorsindividually including Chairman of the Board who were evaluated on parameters such aslevel of engagement and contribution independence of judgment safeguarding the interestof the Company and its minority shareholders etc. The Performance evaluation oftheIndependent Directors was carried out by the entire Board. The performance evaluation ofthe Chairman and Non-executive Independent Directors was also carried out by theIndependent Directors at their separate meeting. The Directors expressed theirsatisfaction with the evaluation. The details of programme(s) for familiarization ofIndependent Directors with the Company their roles rights responsibility in theCompany nature of industry in which the Company operates business model of the Companyand related matters are hosted on the website www.stitextile.net ofthe Company.
The Board has framed a policy setting out the criteria for review of responsibilitiesof the directors positive attributes independence of a director and policy relating toremuneration for Directors Key Managerial Personnel and other employees in accordancewith the provisions of Section 178 ofthe Act.
M/s. V.K. Beswal & Associates Chartered Accountants Mumbai having FirmRegistration Number 101083W were appointed as Statutory Auditors for a period of 5 yearsin the 30th Annual General Meeting held in the year 2015 and are eligible forreappointment. However their appointment is subject to ratification by members at ensuingAnnual General Meeting ofthe Company.
M/s. V.K. Beswal & Associates Chartered Accountants Mumbai have providednecessary certificate to the Company under section 139 (1) read with section 141 of theCompanies Act 2013.
The statutory auditors have not reported any incident of fraud under section 143(12) ofthe Companies Act 2013 to the Audit Committee of the Company during the year underreview.
Statutory Auditors Report: The Auditors' Report to the Shareholders for the yearunder review does not contain any qualification.
As per requirements of Section 204(1) of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed M/s Rao Saklecha & Co. Practicing Company SecretaryIndore (C.P. No. 6434) to conduct Secretarial Audit of the compliance of applicablestatutory provisions and adherence to good corporate governance practice by the Company.
Secretarial Auditors Report: The report of the Secretarial Auditor for thefinancial year 2015-16 is annexed to this report as Annexure -1. The management commentson the remarks and observations made by secretarial auditor in their report are as under:
Para V (II) of Secretarial Audit Report:
In compliance of the provisions of erstwhile Clause 41 of the Listing Agreement (nowRegulation 31 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations2015) the Company had called the meeting of the Board of Directors on 10thNovember 2015 at Mumbai for approving the un-audited financial results for the quarterended on 3 0th September 2015 along with other routing businesses. Howeverdue to non-availability of quorum the meeting was postponed and later it was held on 11thDecember 2015 in which the said results were approved and thereafter submitted to theexchanges.
As per requirements of Section 138(1) of the Companies Act 2013 read with rule 13 ofthe Companies (Accounts) Rules 2014 the Board of Directors of the Company appointed M/sFadnis & Gupte Chartered Accountants Indore as Internal Auditor of the Company toconduct Internal Audit of business processes financial reporting & controlscompliance with applicable laws regulations etc.
The Ministry of Corporate Affairs (MCA) vide Notification dated 31stDecember 2014 made amendment in the Companies (Cost Records and Audit) Rules 2014through Companies (Cost Records and Audit) Amendment Rules 2014. As per said amendmentrules our Company is exempted from the requirement to conduct Cost Audit. Therefore theCompany had not appointed CostAuditor for financial year 2015-16.
CEO / CFO CERTIFICATION
In terms of Regulation 17 of the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 a Compliance Certificate duly signed by the Managing Director and ChiefFinancial Officer of the Company on the financial statements and internal controlsrelating to financial reporting has been obtained and annexed with the corporategovernance report.
During the year under review two resolutions were passed through postal ballot underSection 110 of the Companies Act 2013 for obtaining approval of members for relatedparty transactions and alteration in article of association of the Company.
The Company followed the procedure as prescribed under the Companies (Management andAdministration) Rules 2014 and Members were provided the facility to cast their votesthrough electronic voting as well as through postal ballot. The Board appointed M/s RaoSaklecha & Company Practicing Company Secretary Indore as the Scrutinizer forconducting the postal ballot voting process. The scrutinizer submitted his report to theChairman after the completion of the scrutiny of the postal ballot as well as e-voting.The result of the postal ballot via postal ballot forms and e-voting facility was declaredon IS01 February 2016 and communicated to the stock exchanges and displayed onthe Companys website www.stitextile.net. The results were also published in the twonewspapers as stipulated.
INDUSTRIAL RELATIONS AND CORPORATE GOVERNANCE
The company provides a congenial and friendly atmosphere to its employees to maintaincordial relations and motivate them to develop their full potential. Industrial Relationsthroughout the year were very peaceful & cordial.
To upgrade human skills and improve their efficiencies the Company continuouslyorganizes workshops on different management areas and also deputes employees to externalworkshop and seminars.
Your directors are also committed to good corporate governance as a policy. As perRegulation 34(3) read with schedule V of the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 a detailed report on Corporate Governance is given in theannexure which forms part of this report as Annexure IL The requisite certificate from theAuditors of the Company confirming compliance with the conditions of corporate governanceis annexed with the report on corporate governance.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The informations on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed and marked as Annexure- HI. EXTRACT OF ANNUAL RETURN
The extracts of Annual Return (MGT - 9) pursuant to the provisions of Section 92 readwith Rule 12 of the Companies (Management and Administration) Rules 2014 is furnished in Annexure- IV to this Report. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large.
As per provisions of sub-section (1) of Section 188 read with the Companies (Meeting ofBoard and its Powers) Rules 2014 and further amendment thereof the Company has obtainedthe prior omnibus approval of Audit Committee Board of Directors and Shareholders for allmaterial related parties transactions.
Further the statement giving details of all related party transactions entered intopursuant to the omnibus approval so granted has been placed before the Audit Committee andthe Board of Directors for review on quarterly basis. Pursuant to clause (h) ofsub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 particulars of contracts or arrangements with related party (ies) are given in theprescribed Form AOC - 2 is annexed and marked as Annexure - V.
The policy on Related Party Transactions as approved by the Board is hosted on theCompanys website www.stitextile.net.
MEETING OF BOARD OF DIRECTORS
During the year under review 05 (Five) Board Meetings were convened and held on 15thMay 2015 14th August 2015 SO01 September 201511thDecember 2015 and IS* February 2016. The details in respect of attendance of directorssitting fees etc. are given in the Corporate Governance Report.
The intervening gap between the above said meetings was within the timelines asstipulated under the Companies Act 2013 and Regulation 17 of the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015.
COMMITTEES OF THE BOARD
The Board of Directors has the following mandatory Committees:
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders Relationship Committee; and
4. Corporate Social Responsibility Committee.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee consists of the following members:
01. Mr. A. Arumugham : Chairman Independent Director
02. Mr. T. N. Anand Reddy : Member Independent Director
03. Mr. John Mathew : Member Independent Director There are no qualifications andobservations raised by Audit Committee which required any comments from the Board orManagement of the Company.
The details of other committees of the Board are given in the Corporate GovernanceReport which forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
In compliance with the requirements of Section 13 5 of the Companies Act 2013 theCompany has constituted CSR Committee which is responsible for fulfilling the CSR objectives. The Composition of committee is as under:
Mr. A. Arumugham Independent Director Chairman Dr. R. B. Baheti Non-executive DirectorMember
Ms.PrachiDeshpande Non-executive Director Member As the Company has no average netprofit during the immediately preceding last three financial years the provisions ofsection 135 of the Companies Act 2013 with respect to contribution for CSR activitieswere not applicable to the Company during the financial year under review.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the directors and designated employees of theCompany. The Code requires preclearance for dealing in the Companys shares andprohibits the purchase or sale of Companys shares by the Directors and thedesignated employees while in possession of unpublished price sensitive informations inrelation to the Company and during the period when the Trading Window is closed. The Boardis responsible for implementation of the Code.
All directors and the designated employees have confirmed compliance with the Code.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the company has not given any such loan and madeinvestment which are covered under the provisions of sections 185 and 186 of the CompaniesAct 2013.
However the Company has provided corporate guarantee in connection with creditfacilities availed by holding company from banks. The terms and conditions of theguarantee so given are not prejudicial to the interest of the Company and in line with theprovisions of the act.
HOLDING SUBSIDIARY JOINT VENTRES ASSOCIATES COMPANIES.
During the year under review the Board of Directors considered and approved the saleof Investment of 12000000 (One Crore Twenty Lacs) equity shares of STI Sanoh IndiaLimited (the Joint Venture Company) to Sanoh Industrial Company Limited Japan.Accordingly the Joint Venture Agreement with Sanoh Industrial Company Limited Japanstand cancelled.
Your Company continues to be the Subsidiary of Bombay Rayon Fashions Limited (BRFL).
The Company does not have any subsidiary.
The Company has in place a mechanism to inform Board Members about the risk assessmentand minimization procedures and periodical review to ensure that executive managementcontrols risks by means of a properly defined frame work. As required under Regulation 17of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 the Companyhas formulated a Policy on Risk Management.
The Company has appropriate Internal Control System for business processes financialreporting & controls compliance with applicable laws regulations etc. The InternalControl System of the Company is designed to prevent operational risks through a frameworkof internal controls and processes. Our internal control system ensures that all businesstransactions are recorded in a timely manner the financial records are completeresources are utilized effectively and our assets are safeguarded. We have developedrobust policies procedures checks and balances to bring in discipline in day-to-dayfunctions for accurately and timely compilation of data.
In addition the Audit Committee has appointed M/s Fadnis & Gupte CharteredAccountants Indore as the Internal Auditors of the company. The Internal Audit conductson monthly basis and the reports of auditor is placed before the Audit Committee in itsnext meeting. The internal audit ensures safeguarding the assets of the Company review ofoperational efficiency effectiveness of systems and processes and assessing the internalcontrol strengths in all areas. Further Internal Auditors observations and findings arediscussed with the concerned departments head and suitable corrective actions are taken asper the directions of Audit Committee on an ongoing basis to improve efficiency inoperation.
CASH FLOW ANALYSIS
In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 the Cash Flow Statement forms part of annualreport.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
In order to prevent sexual harassment of women at work place a new act the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 hasbeen notified on 9th December 2013.Asper said act company is required to setup an Internal Complaints Committee (ICC) to look into complaints relating to sexualharassment at work place of any women employee. Accordingly the Company has adopted apolicy for prevention of Sexual Harassment of Women at workplace and has set up anInternal Complaints Committee for implementation of said policy.
There were no incidences of sexual harassment reported during the year under review.
WHISTLE BLOWER POLICY
In compliance of the requirements of Section 177 of the Companies Act 2013 and as ameasure of good corporate governance practice the Board has formulated a Whistle BlowerPolicy. The policy comprehensively provides an opportunity for any employee / director ofthe Company to raise any issue concerning breaches of law accounting policies or any actresulting in financial or reputation loss and misuse of office or suspected or actualfraud. The policy provides for adequate safeguard against victimization of employees anddirectors who avail of vigil mechanism and also provide for direct access to the AuditCommittee.
POLICIES AS PER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS2015
As per requirements of provisions of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 the Company has adopted die following policies:
Policy for Preservation of Documents. (Regulation 9)
Policy for Determination and Disclosure of Material Events. (Regulation30(4)(ii))
Archival Policy (Regulation 30(8))
Policy on Material Related Party Transactions. (Regulation 23)
STATUS OF THE CASE AT BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR).
The Company had declared as a Sick Industrial Undertaking under Section 3(l)(o) of theSick Industrial Companies (Special Provisions) Act 1985 (SICA) vide summary ofproceedings of the hearing held on 23rd January 2006 against referenceregistration No. 743/2002 dated 30111 December 2002. The Honble BIFRBench has appointed State Bank of India as Operating Agency to prepare DraftRehabilitation Scheme.
The Honble BIFR Bench vide order dated T' November 2010 while accepting thereport of operating agency observed that the Company is liable to pay all the outstandingdues of GUJCOT and directed the Company to prepare Draft Rehabilitation Scheme (DRS)taking into account the liability towards GUJCOT.
The Company filed an appeal against the said BIFR order. On 29fh April 2013the AAIFR passed its order and remanded the case to BIFR with a direction to hear matteron the points raised in appeal before AAIFR.
The last hearing at the BIFR was on 25th March 2015 however the same wasnot heard as the bench did not function on the said date. No further date of hearing hasbeen notified till date.
BUSINESS RESPON SIBILIT Y REPORT
The Business Responsibility Reporting as required by Regulation 34(2)(f) of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 is not applicableto your Company for the financial year ending 31st March 2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS OF THE COMPANY
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
The details as required pursuant to Section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company is given in Annexure-VI.
There is no employee in the Company whose particulars are required to be given underRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report on the operations of the Company asrequired under Regulation 34(2)(e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 has been given separately and forms part of this report asAnnexure - VH.
Statements in the Boards Report describing the Companys objectivesexpectations or forecasts may be forward-looking within the meaning of applicablesecurities laws and regulations. Actual results may differ materially from those expressedin the statement. Important factors that could influence the Companys operationsinclude global and domestic demand and supply conditions affecting selling prices offinished goods input availability and prices changes in government regulations taxlaws economic developments within the country and other factors such as litigation andindustrial relations.
APPRECIATIONS AND ACKNOWLEDGEMENTS
The board would like to place on record its deep appreciation to the financialinstitutions banks business partners central and state government authorities stockexchanges and clients for their support and co-operation during the year.
We would also like to place on record our sincere appreciation for the commitmentdedication and hard work put in by every employee of the Company. We are also deeplygrateful for the confidence and faith expressed by the shareholders in the Company.
Your Directors would also like to take this opportunity to acknowledge the excellentsupport given by Bombay Rayon Fashions Limited the Holding Company of your company inproviding the financial assistance and excellent management support and guidance at alllevels of business. This has enabled the Company to run its business smoothly andeffectively for the accomplishment of its objectives.
| ||For and on behalf of the Board of |
| ||STI India Limited |
|Place: Indore (M.P.) ||Dr. R.B. Baheti |
|Date: 10th May 2016 ||Chairman |
| ||DIN: 00008202 |