To the Members
Your Directors have pleasure in presenting the Forty Third Annual Report of the Companyfor the year ended 31st March 2016.
1 FINANCIAL SUMMARY/HIGHLIGHTS OPERATIONS STATE OF AFFAIRS:
(Rs in Crores)
|Particulars ||2015-2016 ||2014-2015 |
|Gross Income ||3068.87 ||2857.10 |
|Profit Before Interest and Depreciation ||242.11 ||226.82 |
|Finance Charges ||96.43 ||109.00 |
|Gross Profit ||145.68 ||117.82 |
|Provision for Depreciation ||60.67 ||56.04 |
|Net Profit Before Tax ||85.01 ||61.78 |
|Provision for Tax ||22.96 ||7.69 |
|Net Profit After Tax ||62.05 ||54.09 |
|Balance of Profit brought forward ||377.40 ||334.58 |
|Balance available for appropriation ||439.45 ||388.67 |
|Proposed Dividend on Equity Shares ||4.38 ||4.38 |
|Tax on proposed Dividend ||0.89 ||0.89 |
|Transfer to General Reserve ||6.00 ||6.00 |
|Surplus carried to Balance Sheet ||428.17 ||377.40 |
In the fiscal year under review the revenue from operations of your Company is Rs 3068.87crore as compared to Rs 2857.10 crores last year register an increase of 7.41%. TheProfit Before Tax stood at Rs 85.01 crores as compared to Rs 61.78 croreslast year registering an increase of 37.60%.
During the year under review Lighting Division continued to innovate and expandproduct portfolio through its wide range of LED products. With its Luminaire range of LEDcompany expand its market share considerably. During the year lighting division surpassedall the past records and achieved new milestone making it today the second largestlighting Company of the country commanding a market share in excess of 25%.
To provide new dimensions to Lighting Division company has appointed Chief ExecutiveOfficer (CEO) Lighting Operations of the Company during the year. His illustrious trackrecord and value system brings multi fold revenue growth cost leadership and significantperformance improvement in companys lighting operations in time to come.
The performance of the division during the year shows good growth. Revenue fromoperation of the division increased to Rs 1413.26 crores as compared to Rs 1149.54crores last year an increase of 22.94% over the previous year. The higher sales havepartly been accounted by new products and geographical expansion. The turnover of lightingdivision in the total turnover of the company has increased to 46% from 40%.
We became the first lighting company in India to introduce energy-efficient lightingsolutions. Today Surya ranked as one of the most respected and trusted brand in India forits Lighting products. Surya offers wide range of LED products ranging from 0.5w to 25wLamps Down-lighters LED Panels LED Street lights & LED Hi-bays for IndoorCommercial and Industrial Lighting sectors which are produced in-house after extensive
R&D at its Noida based laboratory to suit Indian conditions. Many new products suchas High Beam Angle LED Lamps Color Change LED Lamps New Range Down lighters LED Torchwith Dry Cell Battery Rechargeable etc. will also be introduced in near future to cater tothe growing demand of the customers. This gives Surya an edge over its competitors.
The LED products add a great amount of colour & class as well as complimenting theexisting range of our products which include CFL Tube Light GLS Luminaries andAccessories High Mast Lighting Systems Lighting Poles etc.
During the year under review Company has been awarded orders amounted to Rs 155crores (approx.) for supply of LED Bulbs Street Lights and other lighting products fromEnergy Efficiency Services Limited (EESL) and other Public Sector Undertakings includingNTPC & BPCL which includes orders for supply of 8.6 million LED Bulbs under DomesticEfficient Lighting Programme (DELP). Company had successfully executed orders within thetime lines of the respective orders.
Company Lighting Division is not limited to Lighting Products only but also includesFans Home appliance and Consumer Durables in its segment. The acceptance of the brandSurya fans Home Appliances and Consumer Durables was overwhelming amongst distributorsretailers as well as customers. During the year under review Company achieved a sales of Rs130 crores through Fans and a sales of Rs 30 crores from Home AppliancesBusiness. Turning energy into happiness Surya added value added and premium range of fanssuch as Plated fans Kids fans Under-lite fans Ventura Metallica all in premium Platedfinish and even fans with LED in more than 15 designs during the year. Further Suryaventured into Room Coolers on an experiment basis and sold decent quantity totallyagainst advance payment.
With government initiatives like building smart cities across India and structuralshift in the lighting industry towards LEDs the company is poised to grow by leaps andbounds in years to come.
Steel Industry has witnessed a subdued environment world-wide from past several yearsand especially in India due to lack of activity in infrastructure sector and wide demandsupply gap due to fallen prices of inventory and the impact has been visible on ourless than expectedRs growth numbers.
However Steel sector reflects positive signs of revival during the year globally. InIndia Steel consumption significantly depends on the overall performance of the economy(GDP) and more specifically on investments made in fixed assets such as housinginfrastructure like railways ports roads airports etc. Anticipated increase in GDPwill result in higher consumption and demand of steel products.
Bad times are good times. One can either learn to accept them and wait for them to end;or can challenge ones abilities to perform despite them. As a company that initiatedits Steel business close to four decades ago we at Surya Roshni Limited clearly believein a simple fact: that each downturn is followed by an upturn and vice-versa. Thereforesuccessful businesses are those which concentrate their energies and resources to build astronger foundation for creating long term value; and not merely worry about theuncontrollable factors or the short-term challenges.
During the year in spite of lack of Institutional / Government tenders CompanysSteel division reflects positive signs of revival as volume increased by 16% during theyear while the average selling prices lower by about 18% due to reduction in
steel prices. The revenue from operations of the divisions stood at Rs 1655.60crores as compared to Rs 1707.56 crores in the last financial year despite toughcompetition and squeezed margins in the market.
Surya is a leader in the steel tube industry in India with products for agricultureinfrastructure oil & gas and construction sectors. Company products are approved byAPI (American Petroleum Institute) for oil & gas sector. During the year company atits Bahadurgarh plant also started manufacturing Square and Rectangular Section (hollow)pipes Door frames etc. which are used for civil structures furniture transmission towerand has many other applications as well.
Operating in a cyclical industry such as steel it was important for us to invest andto explore opportunities at the right time. To achieve economy of scales particularly inlogistics Company had decided to make direct investment of Rs 66 crore (approx.)for setting up manufacturing unit for M.S. Black and GI Pipes at an installed capacity of7500 M.T per month at Hindupur Dist. Ananthapuramu Andhra Pradesh to cater South IndiaSteel Tube market.
Upbeat by Government policies at the centre and in particular its recent decision toincrease Import duty and Safe-guard duty by fixing Minimum Import Prices (MIP) for steelwill further boost sentiments of steel pipe sector in a big way. Government programs suchas Development of 100 Smart Cities Skill India Renewal and Revival of road / railinfrastructure projects will further provide a big boost to the Companys SteelDivision in times to come.
The Indian Lighting Market is currently around Rs 15000 Crore in size and isexpected to grow at a CAGR of 17% to over Rs 28500 Crore by FY 2020. Our industryis in the middle of a transformation creating disruption and therefore opportunities forgrowth. The growth drivers are:
Increasing population - expected to increase by around 8 Crore till 2020
Urbanization where access to electricity and per capita usage of light is high.
Government initiatives in the migration to more energy- efficient & greentechnologies like LED Development of Smart Cities and Make in India.
Surya has ranked as one of the most respected and trusted brands in India for lightingproducts. At Surya the excellence of its wide-ranging solutions is founded on a strategicmechanism of backward integration unmatched corporate governance and excellent managementskills. Whats more a world class manufacturing infrastructure with fullyintegrated plants in Kashipur (Uttarakhand) and Malanpur near Gwalior (M.P) complementedby a state-of-the-art R & D center at Noida add credibility to the brandsstature as being synonymous to lighting.
Indias LED Lighting forecast is to reach Rs 10000 Crores market by 2020.Government initiatives to replace incandescent bulbs with LED bulbs increasing energydemand supply gap declining prices are the factors driving the growth of LED lighting inIndia. Street lighting application accounts for majority of the market revenues in IndianLED lighting market. Visionaries at Surya Group had visualized the crucial importance ofLED lighting long before and commenced preparations in this direction. The group startedin-house production of LED products and presently manufactures almost all the productsbacked by strategic marketing initiatives and a strong trade channel.
Surya has registered a CAGR of 25% in LED / Lighting as compared to the Indian lightingmarket CAGR of 17%. LED market is growing at a high speed of 60% whereas Surya hasregistered 300% growth with wide range of products launched. Its LED product portfolio hasboth indoor and outdoor luminaires. Apart from these now-a-days LED Lamps are fastreplacing the conventional Lamps (incandescent). Keeping this in mind Surya Roshni hascome out with LED Lamps. They are energy efficient and environment friendly as well aspower savers. The LED lamps save up to 85% energy and have a long life-span of 25000hours. Suryas LED product offerings include LED Candle Lamps LED Colored Lamps LEDLamps Down-lighters and LED Street Light Fittings. The present product portfolio in bothLED-based and Conventional products gives us a competitive advantage and One-Stop solutionto our customers.
We want customers to think of Surya when they think of Lighting and to do so we willremain at the forefront of LED technological development and will continue to innovate inpremium LED lamp and Luminaire ranges. Furthermore we will aggressively drive cost-downsin Conventional as well as LED range to reach the critical retail price points that willdrive the required volume to realize further economies of scale. We will continue to befirst in the market with high quality light at the best possible price points.
We continue to shift our mindset and behavior to build a deeply embedded culture ofgrowth and performance. This mindset will make us the fastest and the best in theindustry.
Our Brand Strength Pan India presence and a Committed Team we are confident to achieveour goals of being dominant Lighting Player in India.
LUMINAIRE BUSINESS GROUP ("LBG")
India is poised to emerge as the largest market for lighting systems based on LEDs(light-emitting diodes) thanks to our Prime Minister Shri Narendra Modi ledgovernments UJALA (Unnat Jyoti by Affordable LEDs for All) Scheme for replacing allin-efficient bulbs with energy efficient lamps. With India selling 770 million LED bulbsevery day the country will soon become the LED capital of the World.
Today 12% of all LED lighting systems sold in the world is consumed in India. Most ofthe lighting needs in domestic and public sectors are met by in-efficient incandescent orCFL bulbs. The UJALA Scheme aims at replacing about 77 crore in-efficient bulbs in thecountry with LEDs.
LED business is the order of the day and Surya LBG has added a host of LED products inits product portfolio. Surya present LED share is around 70% of the total lightingturnover in the luminaire segment. LBG is well equipped to meet the challenges of LEDtechnology and the ever increasing customer expectations. The complete range of productsincluding LED products helps us in providing the much desired total lighting solution. Themost advanced Surya R&D centre ensures that highly efficient and top quality productsare delivered.
Our country wide dealer network is our strength and this helps us to be present inevery nook and corner of India and provide after sales supports to the clients.
Current Financial Year 2016 -17 is a promising year for LBG with major focus on LEDbusiness EPC business and major government and industrial segment. LBG is well poised toregister a healthy growth both in top line as well as bottom line.
RESEARCH AND DEVELOPMENT CENTRE
Surya being the leader of Lighting Industry in India has conclusively embarked uponbringing a revolution in the world
of lighting by setting up Surya Technology & Research Centre (STIC) at Noida astate of the art lighting laboratory & research centre. It is a jewel in the crown ofSurya. STIC houses the most advanced photometric laboratory in India with a High speedautomatic Mirror Gonio-Photometer from LMT Germany --- the best equipment available formeasurement of light sources luminaires & optical design of lighting systems.
For the last few years STIC Noida has focused on research of LED Luminaries and hascreated a wide portfolio of products for both indoor & outdoor applications.
Since all LED systems comprise of electronics design in its core with thermal opticaland mechanical design STIC has adequately invested in expert human resource andequipment's for design and testing. STIC has computer aided design (CAD) facilities withadvanced software's for thermal and mechanical simulations. Luminaires testing facilitiesunder extreme Thermal Mechanical Environmental conditions and all kinds of Electrical& Safety parameters including surge conditions are available at STIC. Recently somenew and advanced equipment's like temperature regulated ovens and high surge generatorsare added to the already existing list of test equipment's.
STIC has been recognized as an R & D Centre by DSIR (Department of Scientific &Industrial Research Ministry of Science & Technology) and also it has been listed asone of the best testing laboratories in India by BEE (Bureau of Energy Efficiency) forthe measurement complying BIS Standard / International Standard of LED Lighting systems.Further Photometric Laboratory and Testing is NABL accredited. Last but not least STIC isa Green Building with LEED Platinum certification and process of accreditation is inprocess.
With all this Surya is proliferating with the Research Design & Development ofthe most energy efficient safe reliable & environment-friendly lighting products andproviding guidance and direction towards evolving into a "Green India".
Saving energy is the mantra for today as the nation requires power for development andenergy saved is energy generated. Energy efficient fans are the order of day today. Suryais the name reckoned for energy efficient domestic and commercial fan solution market.
2015-2016 was the good year for fans sales as company which has launched Surya Fans 2years back achieved a sales of Rs 130 crores during the year. The acceptance of thebrand Surya fans was good amongst distributors retailers as well as customers.
Company who initially started with standard and economy segment in Ceiling fans andcomplete range of table wall pedestal and exhaust fans and encouraged by the successand demand in the market company added value added and premium range of fans such asPlated fans Kids fans Under- lite fans Ventura Metallica all in premium Plated finishand even fans with LED in more than 15 designs. Surya Fans with LED is controlled byremote. Wherein the customer can keep the Fan or LED at off or on mode and can alsocontrol the speed of fan with remote. Another favorite are Fans with under lightChandelier option with speed ON/OFF and light controlled by remote. These will give ushigher turnover premium image in the market and higher contribution and help us inincreasing the contribution by 2 % in current year.
Surya also introduced new models of Energy Efficient and BEE Five star rated fans whichhas enabled us to participate in government tenders DGS&D and CSD in coming years.Company set a separate target of '60 crores for government business in the year 2016-2017.This is besides Rs 200 Crore target set for trade sales. Surya fans are designedto perfection and attractively styled keeping in mind the requirements of the modern-dayhomes based on findings of consumer research and insights.
HOME APPLIANCES AND CONSUMER DURABLES
Surya Home Appliances which launched 15 month back have achieved a sales of Rs 30crores. During the year Surya ventured into Room Coolers on an experiment basis and solddecent quantity totally against advance payment. This was after launch of Water Heaterswhere we successfully sold 28000 water heaters in first year only. New models of MixerIrons and some kitchen appliances also were introduced during the year.
Surya Home Appliances and consumer durables are accepted with great enthusiasm by thetrade and company plans to get Rs 70 crore turnover from water heaters and Coolersegments and Rs 30 crores form Kitchen appliances and Irons in year 20162017.
India has become the global pipe manufacturing hub primarily due to the benefits of itslower cost high quality and geographical advantages. The global accreditations andcertifications that the Indian companies possess have made them preferred suppliers formany leading oil and gas companies in the world and particularly those in Middle EastNorth America and Europe. Since. the global economy returned to sustained growth thedomestic pipe industry is expected to accelerate into high growth trajectory.
Our demand forecasting is derived from several upcoming pipeline projects expected inIndia and other countries along with the normal demand for replacement of existing pipelines. With demand for steel pipes such as seamless pipes HSAW LSAW pipes is on a riseand steel sector will once again regain its old glory.
Surya the largest GI pipe manufacturer in India understands in-depth the needs of itscustomers which guide it in adapting its technology to suit their new requirements andthus producing W- 104" Dia- pipes for agriculture household and Oil & Gassector. It produces API pipes for India and for exports and currently introduced sectionpipes in Steel Range to increase the product basket to achieve higher market share.
Surya also a leading manufacturer of ERW pipes which are used in water transportationOil & gas construction fire- fighting irrigation and water industry. It alsomanufactures CR sheets which are used in electrical automobile furniture and homeappliances.
In spite of sale of Surya products at premium in South India Surya Roshni Steelmanufacturing facilities have been largely concentrated in the northern and central India.Due to heavier logistics cost occurred in selling Company products in Southern India andto achieve economy of scales Company is now setting sights to expand its reach tosouthern markets by making direct investment of Rs 66 crore (approx.) for settingup manufacturing unit for M.S. Black and GI Pipes at an installed capacity of 7500 M.T permonth at Hindupur Dist. Ananthapuramu Andhra Pradesh.The project would not only enable usto offer high value products to key sectors but also would enable us further expand itsshare in the southern India markets.
Further In order to meet the growing demand of Large Diameter Pipes (SAWH) the grouphas set up Surya Global Steel Tubes Limited (an associate company) situated in west coastof India at Anjar near Bhuj in the state of Gujarat near International sea port Mundra& Kandla. It is engaged in manufacturing of
Spiral Welded Pipes and ERW pipes and due to its world-class machines and strategiclocation in close proximity to Kandla and Mundra Port it majorly caters to the exportbusiness of the Group and exports to over 25 countries across the Globe. It is rightlyrecognized as "Jewel in the Crown of Surya Roshni" as even in subduedenvironment it achieved a double digit growth both Top line and Bottom line during theyear. Company had invested an amount of Rs 50 crore in its Associate Companycomprising 26.99% of its total share capital.
Furthermore our commitment to deliver world class products to our clients/customers inthe shortest- time lag enabled us to establish presence all concerns of India andglobally.
The increased emphasis and thrust given by the Government on infrastructure and hosingsectors and in particular improving water management and urban amenities steel pipes haveemerged as the most reliable cost efficient and durable option which will again benefitthe pipe industry. Mention must be made of the several initiatives taken by the Indiangovernment and in particular its recent decision to increase Import duty and Safe-guardduty by fixing Minimum Import Prices (MIP) for steel will further boost sentiments ofsteel pipe sector as a whole.
2 EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
As per the provisions of Section 134(3)(l) of the Companies Act 2013 no materialchanges or commitment affecting the financial position have been occurred between the endof the financial year of the Company to which the financial statements relates to the dateof the report.
3 CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in the nature of business of the Company during the year underreview.
The Board considering the Companys performance and financial position for theyear under review recommended payment of dividend of Re. 1.00 per equity share of Rs 10/-each on the Rs 438312500 Equity Share Capital of the Company for the year ended31st March 2016 subject to the approval of the members at the ensuing Annual GeneralMeeting.
Together with Corporate tax on dividend the total outflow on account of equitydividend will be Rs 5.34 crores.
The dividend on equity shares if approved at the Annual General Meeting will bepayable to those shareholders whose names appear on the Companys register of memberson 09th September 2016. In respect of shares held in dematerialised form the dividendshall be payable on the basis of beneficial ownership as at the end of 05th September2016 as per the details furnished by National Securities Depository Ltd./ CentralDepository Services (India) Ltd. for the purpose as on that date.
5 BOARD MEETINGS
Under the Law the Board of Directors must meet at least once in a calendar quarter andfour times a year with a maximum time gap of 120 days between any two meetings toconsider amongst other business the quarterly performance of the company and financialresults.
During the last financial year our Board met four times on 30th May 2015; 13thAugust 2015; 6th November 2015 and 10th February 2016.
6 DIRECTORS AND KEY MANANGERIAL PERSONNEL
As per Article 101 of the Articles of Association of the Company Shri Mukesh Tripathiretire by rotation and being eligible offer himself for reappointment.
Change in Directorship
During the year under review Sh. Rajeev Kumar Sinha has been substituted as a NomineeDirector of IDBI Bank Ltd w. e. f 22nd August 2015 in place of Sh. Dev Dutt Das on theBoard of the company. Your Directors welcome Sh. Rajeev Kumar Sinha and at the same timeplaced on record the high sense of appreciation for the wise counsel and valuable servicesrendered by Sh. Dev Dutt Das during his tenure on the Board.
During the year under review Shri Utkarsh Dwivedi wholetime director has resignedfrom the board of the Company w.e.f 25th December 2015. Your Directors placed on recordthe high sense of appreciation for the wise counsel and valuable services rendered by himduring his tenure on the Board.
Appointment of Woman Director
During the year under review shareholders in its 42nd Annual General Meeting of theCompany held on 11th September 2015 at Prakash Nagar Sankhol Bahadurgarh - 124507(Haryana) approved the appointment of Dr. Salila Tiwari as Director (Woman) of the Companyw.e.f 31st March 2015 liable to retire by rotation as per the provisions of Section 152of the Companies Act 2013 and in compliance of Clause 49(II)(A) of Corporate Governanceof the Listing agreement read with SEBI Circular dated 15th September 2014.
Appointment of Key Managerial Personnel (KMPs)
To provide new dimensions to Lighting Division company has appointed Mr. RamanjitSingh as Chief Executive Officer (CEO) Lighting Operations of the Company during the year.His illustrious track record and value system brings multi fold revenue growth costleadership and significant performance improvement in companys lighting operationsin time to come. Further as per the provisions of section 203 of the Companies Act 2013following additional official as named below is appointed (identified) as Key Managerialpersonnel of the Company during the year under review.
Name of the official(s) Key Managerial Personnel (KMPs)
Sh. Ramanjit Singh C.E.O - Lighting Operations
7. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
FAMILARISE PROGRAMME FOR INDEPENDENT DIRECTORS
In view of the provisions of Regulation 25(7) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Companies Act 2013 a familiariseprogramme for Independent Directors was organised during the year to make them aware ofSEBI & Corporate Laws and recent developments. A detailed familiarisation programmewas presented by Corporate Professionals a leading firm of Corporate law Consultantswhich was keenly participated by every Independent Director on the Board of the Companyand express happiness over the same. The detailed familiarisation programme forIndependent Directors was uploaded on the website of the company at the following link: http://www.surya.co.in/2015/downloads/SEBI_CorporateLaw.ppt
8. COMPOSITION OF AUDIT & OTHER COMMITTEES
The Audit Committee comprises of four Directors. The names along with categories of themembers at the meeting was as follows :
|Names of the Members ||Director Identification No. ||Category |
|Sh. K. K. Narula ||00098124 ||Chairman; Independent - Director |
|Sh.Tara Sankar Bhattacharya ||00157305 ||Member; Independent - Director |
|Sh. Utpal K Mukhopadhyay ||02766045 ||Member; Independent - Director |
|Sh. Mukesh Tripathi ||01951272 ||Member; Non Independent - Director |
All members of audit committee are financially literate and Shri K K Narula Shri T SBhattacharya and Shri U K Mukhopadhyay have accounting and related financial managementexpertise. Audit Committee as formed above meet the criteria as provided in Regulation 18read with Part C of Schedule II of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and also meet the provisions of Section 177 of the Companies Act 2013.
The Audit Committee is responsible for overseeing of the companys financialreporting process reviewing the quarterly/ half-yearly/ annual financial statementsreviewing with the management on the financial statements and adequacy of internal auditfunction recommending the appointment / reappointment of statutory auditors and fixationof audit fees along with reviewing and monitoring the auditors independence andperformance reviewing the significant internal audit findings / related partytransactions reviewing the Management Discussion and Analysis of financial condition andresult of operation. Matters to be included in Directors Responsibility Statementform part of the Board Report compliance with listing and other legal requirementsrelating to financial statements scrutiny of inter-corporate loans and investmentsvaluation of undertaking or assets of the company. The Committee acts as a link betweenthe management external and internal auditors and the Board of Directors of the Company.The Committee discussed with the external auditors their audit methodology audit planningand significant observations / suggestions made by them. The Committee also discussedmajor issues related to risk management and compliances and review the functioning ofWhistle Blower mechanism.
As per Rule 6A of the Companies (Meeting of Board and its Powers) Rules 2014 and incompliance to regulation 23(3) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 committee to recommend to grant Omnibus approval for proposed relatedparty transactions which are foreseen and for unforeseen transactions as per the framedspecified criteria on an annual basis
In addition the Committee has discharged such other role/ function as envisaged underPart C of Schedule II of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (referred to asRs Listing RegulationsRs with the Stock Exchange) and theprovisions of Section 177(4) of the Companies Act 2013.Audit Committee of the Companydischarged its role and duties with great commitment and further any recommendations madeby the Audit committee within the terms of its reference is considered and approved by theBoard accordingly. No recommendation of the Audit Committee is turned down during the yearunder review.
Nomination and Remuneration Committee
The composition of the Committee is as follows:
|Name of the Member ||DIN ||Position ||Category |
|Shri K K Narula ||00098124 ||Chairman ||Non-Executive Independent |
|Shri Ravinder Kumar Narang ||02318041 ||Member ||Non-Executive Independent |
|Shri Mukesh Tripathi ||01951272 ||Member ||Non-Executive Non-Independent |
The Nomination and Remuneration Committee is responsible for-
Appointment of the directors and key managerial personnel of the Company and
Fixation of the remuneration of the directors key managerial personnel(KMPs) and one level below the KMPs.
In addition the Committee discharged such other role/function as envisaged underRegulation 19 read with Part D clause A of Schedule II of SEBI (Listing Obligations andDislosure Requirements) Regulations 2015 and as per the provisions of Section 178 of theCompanies Act 2013.
Remuneration Policy as framed by the Committee and approved by the Board keeping inview the provisions of Section 178 of the Companies Act 2013 and Regulation 19 read withPart D clause A of Schedule II of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The policy inter alia provides for the following :
a. attract recruit and retain good and exceptional talent;
b. list down the criteria for determining the qualifications positive attributes andindependence of the directors of the Company;
c. ensure that the remuneration of the directors key managerial personnel and otheremployees is performance driven motivates them recognizes their merits and achievementsand promotes excellence in their performance;
d. ensure a transparent nomination process for directors with the diversity of thoughtexperience knowledge perspective excellence in their performance;
e. fulfil the Companys objectives and goals including in relation to goodcorporate governance transparency and sustained long term value creation for itsstakeholders.
As per the provisions of section 178(2) of the Companies Act 2013 and Clause VII &VIII of Schedule IV of the Act read with SEBI (Listing Obligations and DisclosureRequirements) 2015 Nomination and Remuneration committee carried out annual performanceevaluation of Directors according to their roles and duties on the Board of theCompany and in particular considered the following aspects -
a. The skills relevant experience expertise and personal qualities that will bestcomplement the position;
b. Potential conflicts of interest and independence;
c. Detailed background information and performance track record;
d. the ability to exercise sound business judgment;
e. availability to attend Board and Committee meetings; and
f. appropriate experience and/or professional qualifications.
Stakeholder's Relationship Committee Composition / Name of members and chairperson
The Committee headed by Shri K K Narula (Non-executive - Independent Director) has themandate to review and redress stakeholder grievances. The Composition of the committee isas follows:
|Name of the Member ||DIN ||Position ||Category |
|Shri K K Narula ||00098124 ||Chairman ||Non-Executive Independent |
|Shri Ravinder Kumar Narang ||02318041 ||Member ||Non-Executive Independent |
|Shri Raju Bista ||01299297 ||Member ||ExecutiveNon- Independent |
9. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
As per the provisions of Section 177(9) & (10) of the Companies Act 2013 Companypromotes ethical behaviour in all its business activities and has put in place a mechanismof reporting illegal or unethical behaviour. The Company has a Whistle Blower Policy(Vigil mechanism) wherein the directors and employees are free to report violations oflaws rules regulations or unethical conduct actual or suspected fraud or violation ofthe companys code of conduct or ethics policy to the nodal officer. Theconfidentiality of those reporting violations is maintained and they are not subjected toany discriminatory practice. The Company will oversee the mechanism through the AuditCommittee and no personnel have been denied access to the Audit Committee. The WhistleBlower policy of the Company may be assessed on the website of the company at thefollowing link: http://www.surya.co.in/2015/downloads/whistle-blower-policy.pdf
10. DIRECTOR'S RESPONSIBILITY STATEMENT
In pursuance of section 134 (5) of the Companies Act 2013
The Board of Directors of the Company confirm:
i. that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanations relating to material departures;
ii. that the Directors had 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 of the Company for that period;
iii. that the Directors had 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;
iv. that the Directors had prepared the annual accounts on a "going concern"basis;
v. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
vi. the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
11 INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE ASSOCIATECOMPANY
Company has a non-listed Indian Associate Company named as Surya Global Steel TubesLimited and an amount of Rs 500000000 is invested in the said company as on 31stMarch 2016.
Surya Global Steel Tubes Limited has grown in leaps & bounds within India as wellas overseas. In a span of 6 years the company almost doubled its volume in the domesticfront signifying care & ambition of the company with regard to serving its domesticcustomers. Due to the world class facilities available at its Anjar Plant near BhujGujarat exports got additional boost due to cost efficiencies and logistical advantages.Company not only better equipped to maintain the market share in domestic markets butalso serving critical requirements of High End markets like USA Europe Australia at thesame time.
Statement containing salient features of the financial statement of associate companyin Form AOC - 1 form part of the Annual Report. Pursuant to general circular no. 04/2016dated 27th April 2016 issued by Ministry of Corporate Affairs (MCA)Consolidation of Financial statements is not required for the Financial Year 2015-16.Further during the year under review no company have become / ceased to be our subsidiary/ Associate Company.
12 EXTRACT OF ANNUAL RETURN
As per the provisions of section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as per Annexure - 1 forms part of this Board Report.
13 AUDITORS AND AUDIT REPORT STATUTORY AUDITORS
The Statutory Auditors M/s Sastry K. Anandam & Company Chartered Accountants(Firm Registration no-000179N) hold office till the conclusion of the ensuing AnnualGeneral Meeting and are recommended for re-appointment for a period of one year i.e. fromthe conclusion of the ensuing Annual General Meeting to the conclusion of the next AnnualGeneral Meeting. The Certificate from the auditors have been received to the effect thattheir re-appointment if made would be in accordance with the conditions as specifiedunder section 139(1) of the Companies Act 2013 and they are not disqualified forre-appointment.
The Notes on financial statement referred to in the AuditorsRs Report areself-explanatory and do not call for any further comments. The AuditorsRs Report does notcontain any qualification reservation or adverse remarks.
The Board has appointed M/s R J Goel & Company (a Cost auditor firm) as CostAuditors for conducting the audit of the cost records of the Company for the financialyear 2015-16.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed Messrs S G S Associates a firm of Company Secretaries in Practice to conductSecretarial Audit of the Company for the financial year 2015-16. The Secretarial AuditReport for the financial year ended March 31 2016 is annexed herewith and marked as AnnexureII to this report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
14 CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
Information on Conservation of Energy technology absorption foreign exchangeearnings and outgo is required to be given pursuant to the provisions of section 134 ofthe Companies Act 2013 read with the Companies (Accounts) Rules 2014 is annexed heretoand marked as Annexure - III and form part of this report.
15 DETAILS RELATING TO DEPOSITS COVERING THE FOLLOWING
|(a) Accepted during the year : ||NIL |
|(b) Remained unpaid or unclaimed : as at the end of the year ||NIL |
|(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved || |
|i. at the beginning of the year : ||NIL |
|ii. maximum during the year : ||NIL |
|iii. at the end of the year : ||NIL |
|(d) Details of deposits which are not in compliance : with the requirements of Chapter V of the Act ||NIL |
As per the provisions of Section 74(1)(b) of the Companies Act 2013 Company hadmade pre- payments re-payments or outstanding unclaimed deposits on or before 31st March2015 to all the public depositor of the Company.
At the close of the year 56 depositors aggregating to Rs 23.15 lakhs to whom chequeswere issued but not cleared. Since then cheques aggregating to Rs 2.20 lakh have beenclaimed.
16 SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:
There are no significant material orders passed by the regulators / Courts / Tribunalswhich impact the going concern status of the Company and its future operations during theyear
17 INTERNAL FINANCIAL CONTROLS
SURYA Internal financial controls are adequate and operate effectively and ensuresorderly and efficient conduct of its business including adherence to its policiessafeguard its assets prevent and detect frauds and errors maintain accuracy andcompleteness of its accounting records and further enable it in timely preparation ofreliable financial information. During the year such controls were tested and noreportable material weakness in the design or operation were observed.
The company has in place a strong and independent Internal Audit Department responsiblefor assessing and improving the effectiveness of internal financial control andgovernance. To maintain its objectivity and independence the Internal Audit functionreports to the Chairman of the Audit Committee.
18 PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
As per the provisions of section 186(4) read with Rule 11 of the Companies (Meetings ofBoard and its Powers) Rules 2014 Company has not granted any loan Guarantee or securityprovided or made any investments during the year under review.
However as per the provisions of Section 186 of the Companies Act 2013 read withRegulation of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015members of the Company through Special Resolution passed in its 41st Annual GeneralMeeting of the Company held on 5th September 2014 at Prakash Nagar Sankhol Bahadurgarh -124507 (Haryana) have accorded their assent that Company continue to provide financialsupport by way of providing guarantee(s) to Banks to the extent of Rs 135 Crore in regardto financial support provided by banks to Surya Global Steel Tubes Limited (an AssociateCompany) till the repayment of said loans by Surya Global steel Tubes Limited. During theyear the Term loan has been repaid by the Associate Company Surya Global Steel TubesLimited and thus the guarantee provided by the company to the Bankers in respect ofAssociate ceased to exist.
19 RISK MANAGEMENT POLICY
In line with the provisions of Section 134(3)(n) of the Companies Act 2013 andRegulation 17(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Company have developed a Risk Management Policy for ensuring sustainable businessexpansion with stability and to promote an upbeat approach towards risk mitigation andminimization. The main objectives of the Risk Management Policy are:
To ensure that all the current and future material risk exposures of the Companyare identified assessed quantified appropriately mitigated minimized and managed.;
To protect brand value through strategic control and operational policies;
To establish a framework for the Companys risk management process and toensure company- wide implementation;
To ensure systematic and uniform assessment of risks related with differentfunctions of the Company;
To enable compliance with appropriate regulations wherever applicable throughthe adoption of best practices.
Board assess several types of risks which the company is exposed to from time to timewhich include the following:
A. Financial Risks: These risks are related to flux and movement of money andcapital in the Company. This will include cash flow working capital and cost of funds.
B. Technology Risks: Businesses of Surya Roshni is subject to frequent andrevolutionary technological changes as new products are being developed in this segment.This also leads to risk of obsolescence of machinery as well as inventory.
C. Business Competition: Both Steel and Lighting divisions of Surya face stiffcompetition from established companies as well as new entrants in the market in terms ofpricing and penetration in markets.
D. Operational Risks: These risks are related to business operationsidentification of vendors service delivery of vendors realisation from debtors andbusiness activity disruptions.
E. Risk of Forex Fluctuation: Imports and Exports of material constitute integralpart of Suryas operations. Frequent and steep fluctuations may impact theprofitability of the Company.
F. Human Resources Risk: These risks relate to availability of adequate talent forrunning the business operations. It also includes establishment and understanding of rolesand responsibilities of key personnel.
G. Risk of Labour Unrest: Industrial relations should be and remain cordial atworks in order to achieve desired production at plants.
H. Regulatory & Compliance Risks: Risks due to inadequate compliance ofregulations and contractual obligations are covered here. Changes in Regulatory frameworkmay also adversely affect business plans.
At Surya the Risk Management is being integrated with setting of Business Strategies.Risk management is managing all material risks in an appropriate manner by designing andimplementation of policies and systems around major business processes and assigning rolesand responsibilities to process owners. Major steps in the Framework are as under :
a. Planning & Strategizing
b. Identification of Major Risks
c. Assessment of Risks and Assignment of Responsibilities
d. Development of Mitigation Plans
e. Monitoring & Reporting
The Board of the Company periodically review and evaluate the risk management system ofthe Company so that the management controls the risks through properly defined network.Head of Departments shall be responsible for implementation of the risk management systemas may be applicable to their respective areas of functioning and report to the Board andAudit Committee.
No risks threatening the existence of the organization have been identified. Howeverthere are other risks against which adequate mitigation plans are prepared.
20 CORPORATE SOCIAL RESPONSIBILITY POLICY
To attain Companys Corporate Social Responsibility objective Board hasconstituted Corporate Social Responsibility Committee (referred to as "CSRCommittee") as per the provisions of Section 135 of the Companies Act 2013.
Composition / Category / name of members and chairperson
The Corporate Social Committee comprises of four Directors. The names along withcategories of the members at the meeting was as follows:
|Name of the Member ||DIN ||Category |
|Shri Jai Prakash Agarwal ||00041119 ||Member |
|Shri Raju Bista ||01299297 ||Member |
|Shri K K Narula ||00098124 ||Chairman |
|Shri Mukesh Tripathi ||01951272 ||Member |
During the last financial year four CSR Committee meetings were held on 30th May 2015; 13th August 2015 ; 6th November 2015 and 10th February 2016.
To attain the objectives of Corporate Social Responsibility in a professional andintegrated manner CSR Committee framed the Corporate Social Responsibility Policy of theCompany (referred to as "CSR Policy").
"Surya Roshni Limited CSR Policy" framed as per the provisions of Section135 and Schedule VII of the Companies Act 2013 describes and contains theCompanys philosophy for delivering its responsibility as a corporate citizen andlays down the guidelines process and mechanisms for undertaking socially usefulprogrammes for welfare and sustainable development of the community at large. The keyobjective is to eradicating hunger poverty and malnutrition; Promoting health care;making available safe drinking water & Sanitation; Promoting education; enhancingvocational skills & livelihood enhancement projects; Women empowerment; Promoting ofhome and hostels for women and orphans; Reducing inequality faced by socially andeconomically backward groups; Animal welfare /animal care; Promoting Art & Culture;Contribution to Prime Minister Relief Fund; Rural development projects; and addressingenvironmental issues.
Company discharged its responsibilities through Surya Foundation a social NGOestablished in 1992 with established track record of more than 22 years to undertake CSRrelated activities and further is an eligible implementing agency in accordance with theprovisions of section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014.
The CSR projects or programs or activities undertaken by the Company as per theCompanys CSR Policy in India only which includes Adarsh Gram Yojana NaturopathyHealth Camps. The Company prefer to take up projects for spending the amount earmarked forCSR at local areas and regions where the Company operates.
During the year under review Company spends Rs 134.86 lakhs on corporate socialactivities being two percent of the average net profits of the company made during thethree immediately preceding financial years.
All expenses and contributions for CSR activities are made after approval from theChairman of the CSR Committee which are placed before the CSR committee. The Chairmanensures that the expenses/contribution made are in compliance with the CSR Policy.
Company had spent during the year an amount of Rs 134.86 lakhs on corporate socialactivities being not less than two percent of the average net profits of the company madeduring the three immediately preceding financial years as required under the provisions ofSection 135(5) of the Companies Act 2013. No amount was left unspent during the yearunder review on corporate social responsibility activities. Annual Report on CSRactivities is annexed as Annexure IV to the Boards Report.
21 RELATED PARTY TRANSACTIONS
Particulars of contracts or arrangements or transactions at arms length basiswith Related parties referred to in Section 188(1) in Form AOC- 2 is provided in ANNEXURE- V to the Boards Report.
As per the requirements of section 188 of the Companies Act 2013 read with Rule 15 ofthe Companies (Meetings of Board and its Powers) Rules 2014 read with Rule 6A of theCompanies (Meeting of Board and its Powers) Rules 2014 and Regulation 23 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 Board has framed Policy onMateriality of Related Party Transactions and also on dealing with Related PartyTransaction to ensure the proper approval and reporting of transactions between theCompany and its Related Parties.
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on arms lengthbasis . During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.
The policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Companys website at thefollowing link http://www.surya.co.in/2015/downloads/RPT-Policy.pdf
Your Directors draw attention of the members to Note No. 32.1 to the financialstatement which sets out related party disclosures.
22 ANNUAL EVALUATION OF DIRECTORS AND BOARD AS A WHOLE
Pursuant to the provisions of Section 178 of the Companies Act 2013 and Clause VII& VIII of Schedule IV of the Act and Regulation 17(10) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 referred to as the "ListingAgreement" Nomination and Remuneration Committee ("the Committee") hasformulated "Nomination and Remuneration Policy" for Directors Key ManagerialPersonnel (KMPs) and other employees and further the "Performance Evaluation Policyhas been devised for performance evaluation of Independent Directors Board Committeesand other Individual Directors.
On the basis of the recommendation received from Nomination and Remuneration Committeein regard to performance evaluation of Non- executive Directors including the chairman of
the Company and the Board as a whole Independent directors at its meeting review the -
Evaluation of the Performance of the Non - Independent Directors and the Boardas a Whole.
Evaluation of the performance of the Board Committees including Audit CommitteeNomination and Remuneration Committee Corporate Social Responsibility Committee andStakeholders Relationship Committee.
Evaluation of the Performance of the Chairman of the Company taking into accountthe views of Executives and Non-Executive Directors.
Evaluation of the quality content and timelines of flow of information betweenthe Management and the Board that is necessary for the Board to effectively and reasonablyperform its duties.
A separate exercise was carried out to evaluate the performance of individualIndependent Directors by the Nomination and Remuneration Committee and submit itsrecommendation to the Board.
The performance evaluation as carried out by the Nomination and Remuneration committeeand Independent Directors at their respective meetings were based on Feed - back formreceived from Directors. Feed-back form carried a structured questionnaire prepared aftertaking into consideration various aspects of the Boards functioning and submit theirreport accordingly.
The Board on the basis of the report submitted by the Nomination and Remunerationcommittee and Independent Directors in regard to performance evaluation of IndependentDirectors Board Committee and other Individual directors evaluate its own performanceand of its committees and of the Independent Directors as per the provisions Section134(3)(p) and Clause VIII of Schedule IV of the Companies Act 2013. Directors expresseddeep satisfaction with the entire performance evaluation process.
23 PARTICULARS OF EMPLOYEES :
The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided on request. In terms of Section 136 of the Act theReport and Accounts are being sent to the Members and others entitled thereto excludingthe information on employeesRs particulars which is available for inspection by theMembers at the Registered office of the Company during business hours on all working daysof the Company up to the date of the ensuing Annual General Meeting. If any member isinterested in obtaining the copy thereof such Member may write to the Company Secretaryin this regard.
24 LISTING WITH STOCK EXCHANGES:
The equity shares of the company were listed on the following Stock Exchanges duringthe financial year 2015-16:
|The Stock Exchange Mumbai |
Rotunda Building Dalal Street
|The National Stock Exchange of India Ltd. |
|Fort Mumbai - 400 001. ||Exchange Plaza Bandra- |
| ||Kurla Complex Bandra |
| ||Mumbai - 400 051. |
|Stock Code ||National Stock Exchange ||Bombay Stock Exchange ||ISIN |
|Equity Shares- Symbol / Code ||SURYAROSNI ||500336(Dema- terialised) 336 (Physical) ||INE335A01012 |
The company has paid the Annual Listing Fees to both the Stock Exchanges for theFinancial Year 2015-16 and 2016-17.
25 CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
Company has taken adequate steps to adhere to all the stipulations laid down inRegulations 17 to 27 read with Schedules of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 "Listing Agreement". A report on CorporateGovernance is provided in Annexure - VI and form part of this Report.
Certificate from the Statutory Auditors of the company confirming the compliance withthe conditions of Corporate Governance as stipulated under Regulations read with Schedulesof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is attached tothis report.
Company believes that its Members are among its most important stakeholders.Accordingly your Companys operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive assets and resource base and nurturing overall corporatereputation. Your Company is also committed in creating values for its other stakeholdersby ensuing that its corporate actions positively impact the socio-economic andenvironmental dimensions and contribute to sustainable growth and development.
The Company recognises and embraces the importance of a diverse Board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill industrial experience age ethnicity gender which will help us toretain our competitive advantage. The Board as recommended by Nomination and RemunerationCommittee has adopted the Board Diversity Policy which set out the approach to diversityof the Board of Directors.
Your Directors state that during the year under review there was no cases filedpursuant to Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015referred to as the Listing Agreement with the Stock Exchanges the compliance certificatefrom Chairman Managing Director and Executive Director & Group CFO is given as Annexure- VII to the report.
The Board places on record their appreciation for the continued support from FinancialInstitutions Bankers Central and State Government Bodies Legal Advisers ConsultantsDealers Retailers other Business Constituents and Investing Public.
The Board also wish to place on record once again their appreciation for thecontribution made by the workers staff and executives at all levels to the continuedgrowth and prosperity of the Company. The overall industrial relations remained cordial atall the establishments.
| ||for and on behalf of the Board of Directors |
| ||J P AGARWAL |
|Place : New Delhi ||CHAIRMAN |
|Dated : 27 th May 2016 ||DIN - 00041119 |