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Stylam Industries Ltd.

BSE: 526951 Sector: Others
NSE: N.A. ISIN Code: INE239C01012
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OPEN 734.90
PREVIOUS CLOSE 720.70
VOLUME 6582
52-Week high 854.90
52-Week low 380.00
P/E 32.09
Mkt Cap.(Rs cr) 585
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 734.90
CLOSE 720.70
VOLUME 6582
52-Week high 854.90
52-Week low 380.00
P/E 32.09
Mkt Cap.(Rs cr) 585
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Stylam Industries Ltd. (STYLAMINDUS) - Director Report

Company director report

(Including Management Discussion & Analysis)

Your Directors are pleased to present the 25th Annual Report together with auditedaccounts for the year ended March 31 2016.

ECONOMIC ENVIORMENT

The trend of slowdown in global growth continued during the year. The below parperformance of global economy was reflected in a continued growth deceleration in mostemerging and developing economies driven by low commodity prices weaker capital inflowsand subdued global trade. However this trend reversed somewhat towards the end of theyear and commodity prices once again firmed up. This scenario threw up a mixed bag ofreactions in the global economic activity and performance.

Against this global backdrop the growth in India stayed fairly resilient. India wasthe fastest growing large economy with a stable currency that performed better than mostother emerging market currencies. The domestic macro-economic conditions also remainedstable. A significant drop in commodity costs led by crude oil and other interventionsresulted in lower consumer inflation which allowed easing of interest rates in theeconomy.

There are enough reasons to now look forward towards the next financial year withcautious confidence. Reserve Bank of Indias Consumer Confidence Survey of March 2016showed improvement in consu mer sentiments. This is largely due to improved perceptions onoverall economic conditions and income. Other lead and coincident indicators also point toa better future. RBIs industrial outlook survey suggests that business expectations forthe first quarter of 2016-17 continue to be positive.

While the fiscal policies of the government are being focused around growing ruraleconomy and improving public infrastructure passing of reforms like GST could givefurther impetus to India's economic agenda.

HIGHLIGHTS OF PERFORMANCE

During the year under review against the backdrop of challenging business environmentthe company has recorded income of Rs.250.05 crores as compared to Rs. 214.45 crores inthe previous year with a corresponding profit before tax of Rs.19.68 crores as compared toRs.12.15 crore which is up by 62% as over the previous year. The company had coupled withhigh level of modernization concentrated efforts of both Management and dedicatedemployees; the whole hearted supports of Banks suppliers and customers attained theselevels of performance. The earnings per equity share (of face value of Rs.10/-) for theyear increased to Rs.16.60 from Rs.12.84 for the previous year.

Domestic

To build awareness of the products Company has invested in various connect programmesas a result of which the company has registered an impressive growth of about 47.20% invalue as compared to the previous year in the Domestic Market. The companys focus is onPan India presence through Regional distribution channels distributors dealers.

Exports

Despite a gloomy Global outlook our exports registered a growth of around 8.10% invalue compared to the previous year primarily through consolidation in the existingmarket. The export constitutes 72.88 % of total income. The company has showcased itsproducts in major exhibitions in strategically important markets.

FINANCIAL RESULTS

2015-16 2014-15
Profit before finance cost depreciation and amortization expenses and tax expenses 30.79 23.04
Less: a) Finance Cost 6.46 4.93
b) Depreciation and amortization expenses 4.65 4.20
Profit before tax 19.68 13.91
Provision for taxation 7.53 4.52
Profit for the year 12.15 9.39
Add: Balance brought forward from previous year 36.73 27.34
Balance carried to Balance sheet 48.88 36.73

Dividend

In view of the expansion and investment strategies of the Company your directors donot recommend any dividend for the year under review.

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March 2016 was Rs. 7.32 crores dividedinto 7361200 Nos of equity shares of face value of Rs.10/- each.

A) Issue of equity shares with differential rights

The Company did not issue equity shares with differential rights during the financialyear 2015-16.

B) Issue of sweat equity shares

The Company did not issue sweat equity shares during the financial year 2015-16.

C) Issue of employee stock options

The Company did not issue stock options during the financial year 2015-16.

D) Provision of money by company for purchase of its own shares by employees or bytrustees for the benefit of employees

The Company does not have a scheme for purchase of its own shares by employees or bytrustees for the benefit of employees.

DEPOSITS

During the year under review the Company did not accept any deposits from the publicwithin the ambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Pursuant to Section 186 of the Companies Act 2013 company has not directly orindirectly

a) given any loan to any person or other body corporate other than usual advancesenvisaged in a contract of supply of materials if any

b) given any guarantee or provide security in connection with a loan to any other bodycorporate or person and

c) acquired by way of subscription purchase or otherwise the securities of any otherbody corporate exceeding sixty percent of its paid-up share capital free reserve andsecurities premium account or one hundred percent of its free reserves and securitiespremium account whichever is more.

MATERIAL CHANGES AND COMMITMENTS

There has been no material changes which have occurred subsequent to the close of thefinancial year of the Company to which the Balance Sheet relates and the date of thereport such as

• Settlement of tax liabilities;

• Operation of patent rights;

• Depression in market value of investments;

• Institution of cases by or against the company;

• Destruction of any assets or disposal of a substantial part of undertaking;

• Changes in capital structure; and

• Material changes concerning purchase of raw material and sale of the product.

AUDITORS

Statutory Auditors and their Report

M/s Sunil K Sood & Co. Chartered Accountants (Registration No7564) had beenappointed as Statutory Auditors of the Company for a period of five years at the AnnualGeneral Meeting held on September 30 2014. and shall hold office for a period of fiveyears. However as per first provision of Section 139(1) of the Companies Act 2013 theappointment of auditors has to be ratified by the members at every annual general meeting.

The company has received a letter from the auditors confirming that they are eligiblefor re-appointment as auditors of the Company under Section 139 of the Companies Act 2013and meet the criteria for appointment specified in Section 141 of the Companies Act 2013.

Board of Directors of the Company proposes to ratify the appointment of M/s Sunil KSood & Co Chartered Accountants as Statutory Auditors of the company for the year2017.

The comments on statement of accounts referred to in the report of the auditors areself explanatory. The Auditors Report does not contain any qualification reservation oradverse remark.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 (as amended) the company has appointed M/s C.L.Bansal& Associates Cost Accountants as the Cost Auditor of the Company for audit of thecost records maintained by the Company for the financial year 201617. A resolutionregarding ratification of remuneration of Cost Auditor is being sought from the Members ofthe Company at ensuing Annual General Meeting.

Secretarial Auditors & their Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s Sanjiv Goel & Co. Practicing Company Secretaries to undertakeSecretarial Audit of the Company. The Secretarial Audit Report in Form MR-3 for thefinancial year ended March 31 2016 is annexed herewith as Annexure -.1. The SecretarialAudit Report does not contain any qualification reservation or adverse remark.

FRAUD REPORTING

During the year under review no fraud was reported by the Auditors of the Company tothe Audit Committee or the Board of directors.

CORPORATE GOVERNACE

Transparency is the cornerstone of the Companys philoso phy and all requirements ofCorporate Governance are adhered to both in letter and spirit.

All the Committees of the Board of Directors meets at regular intervals as required interms of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. YourBoard of Directors has taken all necessary steps to ensure compliance with all statutoryand listing requirements. The Directors and key managerial personnel of your Company havecomplied with the approved Code of Ethics for Board of Directors an d Senior Executives ofthe Company.

The Report on Corporate Governance as required under the Listing Agreement forms partof and is annexed herewith marked as Annexure II The Auditors Certificate on compliancewith Corporate Governance requirements is also attached to this Report.

BUSINESS EXCELLENCE AND QUALITY INITIATITIVES

The company continues to be guided by the philosophy of business excellence to achievesustainable growth. Customer-focused culture towards building long-term customersrelationships is the key agenda of the Management.

The company follows the principles of total quality management. The company continuesto be certified under ISO 9001: 2000 certifications for complete range of laminatesmanufactured.

OCCUPATIONAL HEALTY SAFETY & ENVIORMENT

Your Company has effectively deployed policies on Safety Occupational Health &Environment at all locations. It continually focus on improving the effectiveness ofsystem processes.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the requirements of Section 135 of Companies Act 2013 your Companyhas constituted a Corporate Social Responsibility Committee.

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed hereto as Annexure III

During the year the Company has invested significant time and resources in laying downa strong foundation for CSR activities like programme identification monitoring mechanismand creation of enabling infrastructure to scale up existing / new projects. The Companyhas also put in place institutional arrangements for further expansion to newergeographical locations. Preference was given to allocate and spend higher amount onactivities pertaining to local area and areas around the Companys factor ies. Howeverbeing early years in implementation of CSR the Company has faced practical problems inutilising its identified areas of spent. Lack of co-ordination and consensus amongst thebeneficiaries local villagers gram panchayats and other related agencies to carry outthe identified projects by the Company has contributed to the delay and utilisation ofentire amount of CSR spent.

As a result of these there was a shortfall in the total CSR spent from its totalobligations of at least 2% of the average net profits made during the three immediatelypreceding financial years.

The initiatives taken by the Company will certainly help in deploying larger fundsacross social sectors and achieve rapid scale in utilising its full CSR budget in thecoming financial years. The Company remains committed to the cause of CSR and will takenecessary steps to fulfill its CSR obligations during the coming financial years. TheCompany is however committed to the cause of CSR and will take necessary steps to fulfillits CSR obligations during the coming financial years.

INTERNAL CONTROL

The Company has proper and adequate system of internal controls. The external auditfirm has been appointed as internal auditors to conduct regular audits that are performedas per the annual Audit Plan. The Internal Audit team conducts its audits which arecarried out at factory branches and corporate offices with the objective to evaluate andcontinuously improve the effectiveness of internal controls and governance processes.Additional areas if any identified during the year are taken up as special assignments.The audit findings are reviewed by the Audit Committee of Directors and corrective actionas deemed necessary is taken. Company also has laid down procedures and authority levelswith suitable checks and balances encompassing the entire operations of the Company.

OUTLOOK

The global economic climate continues to be volatile uncertain and prone togeo-political risks. Weak consumer sentiment and low commodity prices are expected toaffect global growth adversely. For India 2016 will be a key year for consolidating itsrecovery and accelerating its growth. Despite challenging global headwinds a stable macroperformance will help India to remain an attractive investment destination. Howeverexecution of the reforms agenda and commencing the investment cycle will be keydeterminants of Indias economic performance on a longterm basis.

The process of softening of interest rate has already started and it is expected thatwith the inflation under control it will continue its southward journey. Further theforecast of good monsoon during the current year is also expected to give a much neededimpetus to manufacturing which would consequently increase consumption. The industry andinfrastructural sectors are expected to benefit out of this.

Roll out of Goods and Services Tax regime from April 2017 is a key need of the hour toremove cascading incidence of tax simplifying tax compliance environment and enhancingease of doing business. With the introduction of GST supply chain inefficiencies will bereduced Inter-state trade will become easy and the market will be integrated at thenational level.

The government with proactive initiatives like Make in India Smart Cities and SwachhBharat Abhiyan among others will drive the industrial momentum.

In Export the Company has presence in more than 60 countries and in Domestic; theCompanys pan -India distribution network ensures easy availability of products in almostevery part of India.

During the year under review your Company has commenced commercial production of theengineered wood flooring under the brand name Walkon.

The company is in process of expanding manufacturing capacity to manufacture additional4 million laminate sheets per annum. With respect to the said project civil constructionwork is already under progress the installation of machineries for the new productionlines in under progress and is expected to complete by the mid of this financial year.

To consolidate in domestic market the company is planning to install machinery toproduce laminates for the commodity market.

The approval for raising funds for the ongoing and proposed expansion is covered underresolution No 5.

IT/ BPO Project

In view of the emerging demand from IT Sector the management has undertaken toconstruct building at Panchkula Technology Park Haryana having built-up areas of20697.200 sq. mtrs. The project is near to completion and the building is expected to beoperational by first half of this fiscal. In view of the growing business and demand ofoffice space the management has decided to use one-fifth of the space for corporateaffairs and design spaces. However the balance will be monetized during the year forwhich the efforts have been initiated. This will bring down the debt-equity ratio of thecompany significantly.

The Companys outlook remains favorable and Directors are confident of achievingsignificantly better results in the coming years.

BRAND VISIBILITY

During the year under review the company has conducted various connect initiativeslike Architects meet Distributors meet Dealers meet to drive brand visibility anddemand generation. This year also the company budgeted an amount on Branding activitiesto attract new customers to create bigger footprint to enable expansion into new markets.

CREDIT RATING

CARE has carried out a credit rating assessment of the company for both short term andlong term exposures in compliance with BASEL II norms implemented by RBI. The rating ofthe company has improved to one notch point to Triple B+ for long-term bank facilities atCARE BBB+ and assigned A Three rating on the short term bank facilities at CARE A3.

INSURANCE

The companys properties in eluding building plant machineries etc and stocks areadequately insured against risks.

Opportunities and Threats

High potential and growing demand from both domestic as well as international marketFuture expected growth in the Real Estate market and increase in Per Capita Income of acommon person. However the company deals into Fragmented Industry Competitive Industry:transitioning from highly unorganized to organized sector Price Sensitive Market andCompetition from China.

The company has strategies in place to tap the potential. The company has advantage ofhaving quality of product network widely spread product range. It is fully prepared tomeet the challenge of competition leveraging its competitive strengths of qualitytechnology and product range.

Risk Analysis and Mitigants

Risk Factors Risk Mitigants
Industry Risk A downturn in user industries could adversely affect growth > oreign direct investment in Indias real estate sector is expected to grow from US$ 4 billion to US$ 25 billion in 10 years.

> Positive Growth Drivers

> Increasing shift in consumer preference from unbranded to branded good

Marketing Risk Inability to address customer needs may diminish market share > Global Presence

> High Quality manufacturing Assets

> Good Market Position

> Accepted quality & Price model

Quality risk > The company has installed world class technology

> The company is ISO 9001 certified

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

In accordance with the provisions of the Companies Act 2013 read with the Companies(Meeting of Board and its Powers) Rules 2014 and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 every listed Company is required to have aVigil Mechanism for the Directors and employees to report their genuine concerns andgrievances. Your Company has a Whistle Blower Policy in place and the same is alsoavailable on companys website.

EXTRACT OF THE ANNUAL REPORT

The extract of the Annual Return in Form No. MGT 9 (Attached as Annexure IV) forms partof the Boards report.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement the Board has carried out an Annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsAudit Nomination and Remuneration Committees. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.

POLICY ON NOMINATION AND REMUNERATION

The contents of Nomination and Remuneration Policy of the Company prepared inaccordance with the provisions of Section 178 of the Companies Act 2013 and Clause 49(IV) of the Listing Agreements are provided in the Corporate Governance Report.

MEETINGS

During the year under review four Board Meetings and four Audit Committee Meetings wereconvened and held the details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.

The details of constitution of the Board and its Committees are given in the CorporateGovernance Report.

COMPLIANCE WITH CODE OF ETHICS FOR BOARD OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENTPERSONNEL

All Directors and Senior Management Personnel have affirmed Compliance with the Code ofEthics for Board of Directors and Senior Executives. A Declaration to that effect isattached with the Corporate Governance Report.

LISTING

The equity shares continue to be listed on BSE Limited (BSE). The company has paidannual listing fee for the financial year 2016-17.

PARTICULATRS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered during the financial year were in theordinary course of business and on an arms length basis. There were no materiallysignificant related party transactions entered into by the Company with PromotersDirectors Key Managerial Personnel or other persons which may have a potential conflictwith the interest of the Company.

All related party transactions are placed before the Audit Committee for approval.Prior omnibus approval is also obtained from the Audit Committee for the related partytransactions which are of repetitive nature which can be foreseen and accordingly therequired disclosures are made to the Audit Committee on quarterly basis in terms of theapproval of the Committee.

The policy on materiality of related party transactions and also on dealing withrelated party transactions as approved by the Audit Committee and the Board of Directorsis uploaded on the website of the company.

Since all related party transactions entered into by the Company were in the ordinarycourse of business and were on an arms length basis Form AOC 2 is not applicable to theCompany

DETAIL OF SINGIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OT TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN FUTURE

There are no significant material orders passed by the Regulators/Courts which wouldimpact the Going Concern status of the Company and its future Operations.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNINS AND OUTGO

Information pursuant to Clause (m) of Sub-Section (3) of Section 134 of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith asAnnexure V.

HUMAN RESOURCES

The company recognizes that the purpose of Human Resources is to be a catalyst andchange agent.

Over the years there has been a paradigm shift in the approach adopted by EmployeeRelations through different initiatives in various capacities. We drive sustainable growthand have been instrumental in bringing in thought leadership in building strong employeerelations. The Company is focused on building a high performance culture with a growthmindset. Developing and strengthening capabilities for all employees remained Companys anongoing priority. The Company maintains momentum on building speed and simplification inways of working.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is Not Applicable as no employee is in receipt of remuneration in excess of the limitsprescribed under this Section.

DISCLOSURES UNDER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013

During the year under review no case was filed under the Sexual Harassment of Women atWorkplace (Prevention Prohibition & Redressal) Act 2013.

CEO AND CFO CERTIFICATION

Pursuant to Clause 49 of the Listing Agreement the CEO and CFO certification isattached with the annual report. The Managing Director and CEO and the Chief FinancialOfficer also provide quarterly certification on financial results while placing thefinancial results before the Board in terms of Clause 41 of the Listing Agreement.

DIRECTORS RESPONSIBILITY STATEMENT

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

a. That in the preparation of the annual financial statements the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures if any;

b. That the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;

c. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

d. That the Directors have prepared the annual accounts on a going concern basis; and

e. That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and

f. That systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

FORWARD LOOKING STATEMENT

Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Companys objectives projections estimates andexpectations may constitute forward looking statements within the meaning of applicablelaws and regulations. Although the expectations are based on reasonable assumptions theactual results might differ.

ACKNOWLEDGMENT

The Board place on record their deep appreciation to employees at all levels for theirhard work dedication and commitment.

The Board also wishes to place on record its appreciation for the support andcooperation the Company has been receiving from its suppliers redistribution stockistsretailers and others associated with the Company as its trading partners.

The Directors also take this opportunity to thank all Investors Clients VendorsBanks Government and Regulatory Authorities and Stock Exchanges for their continuedsupport.

On behalf of the Board
Date: 12th August 2016 Jagdish Gupta
Place: Chandigarh Managing Director