Your Directors are pleased to present their Fifty Fourth Annual Report on the businessand operations of the Company and the financial results for the year ended 31st March2017.
(Figures in Rs. Lakhs)
|Particulars ||2016- 2017 ||2015- 2016 |
|Gross Profit before Interest & Depreciation ||9689.82 ||11051.98 |
|Less : Interest ||3503.29 ||3431.36 |
|: Depreciation & Amortisation expense ||3156.68 ||3132.07 |
| ||6659.97 ||6563.43 |
|Profit/(Loss) before prior year Adjustment ||3029.85 ||4488.55 |
|Exceptional Items * ||211.67 ||(44.40) |
|Profit before tax for the year ||3241.52 ||4444.15 |
|LESS : Provision for Income Tax for the year ||718.00 ||949.00 |
|LESS : Deferred tax liability ||336.82 ||490.00 |
|Profit / (Loss) after tax ||2186.70 ||3005.15 |
|ADD : Profit brought forward from last year ||11277.36 ||9055.62 |
|Total ||13464.06 ||12060.77 |
|Dividend on Preference Share Capital ||- ||60.00 |
|Dividend on Equity Share Capital ||- ||300.10 |
|Corporate Dividend Tax ||- ||73.31 |
|Transferred to General Reserve ||200.00 ||350.00 |
|Profit transferred to Balance Sheet ||13264.06 ||11277.36 |
|Total ||13464.06 ||12060.77 |
Exceptional item of the current year includes Insurance claim for loss of profit ofH197.29 Lakhs received from New India Assurance Co. Ltd. and H14.38 Lakhs trial runexpenses which were written off earlier now written back and capitalised.
During the year under review the turnover at H761.92 Crores registered a marginalincrease over the previous year. The net profit after tax at H21.87 Crores shows a declineof 27% compared to the previous year.
The disruptive effect of demonetisation in the third quarter of previous year resultedin a loss of turnover and consequently lower production and less profitable operations.The fall out of demonetisation lasted until first two months in the fourth quarter ofprevious year. Yarn production declined by 15% and fabric production by 5%. Though yarnrealisation improved over the previous year it was more than offset by the increase inraw material prices. The fabric realisation remained more or less stagnant over the years.The strengthening of the rupee increase in coal prices and the unremunerative realisationin the third party power sales have also impacted the results. In garment operations therealisation has been stagnant while the fabric prices have risen.
Keeping in view of the reduced profit levels and the heavy repayments in the next yearthe Directors are pleased to recommend a Dividend of 10% i.e. H1.00 per share (previousyear H1.80 per share).
During the year under review the Company incurred capital expenditure of H32.73 Crores.
The exports during the current year at H150 Crores registered a growth of 7% over theprevious year. The growth in terms of volume is however 15%. The Company continued itsdominance in the export markets in the fiercely competitive international markets. Thisgrowth in exports has been achieved during the year when Brexit negatively impacted theEuropean business sentiments also leading to volatile exchange rates. The Company howeversaw an opportunity in this crisis to quickly realign its focus to meet the changingdemands of the customers. This proactive approach has helped the Company to strengthen theexisting relationships with its key customers. The Company also could consolidate itsposition by supplying fabric to various garment manufacturing countries like NicaraguaLesotho Egypt Madagascar Tanzania Cambodia Indonesia Vietnam China Sri Lanka andBangladesh.
The Company expects the challenging times in the export market to continue in futurealso. The galloping cotton prices and the strengthening rupee are also expected to posechallenges for the exports. The Company has also to contend with neighbouring countrieswhich are more advantageously placed regarding bilateral trade agreements. However theCompany is confident of its ability to stick to its basic strengths while continuing itsexcellence in fabric innovation and developing high end products and its success inbuilding long lasting relationships with its clientele.
Sri Paritosh K. Agarwal (DIN No. 00008738) will retire at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment.
During the year Sri H.L. Ralhan (DIN : 00018362) Director & Chief Executive (DenimDivision) has resigned from the Company. The Board wishes to place on record itsappreciation of the valuable services rendered by Sri H.L. Ralhan.
Further details about the above Directors are given in the Corporate Governance Reportas well as in the Notice of the ensuing Annual General Meeting being sent to theshareholders along with the Annual Report.
Evaluation of the Boards Performance
In compliance with the Companies Act 2013 and as per the latest Listing Regulationsthe performance evaluation of the
Board and of its Committees was carried out during the year under review. More detailson the same are given in the Corporate Governance Report.
Familiarisation Program for Independent Directors
The Company has formulated a familiarisation program for the
Independent Directors to provide insights into the Company to enable the IndependentDirectors to understand its business in depth and contribute significantly to the Company.The details of such program are available in the Companys website www.suryalakshmi.com
Nomination & Remuneration Policy
The company follows a policy on remuneration of Directors and
Senior Management Employees. The policy is approved by the Nomination &Remuneration Committee and the Board. More details on the same is given in the CorporateGovernance Report.
Directors Responsibility Statement
Your Directors state that:
(a) in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;
(b) 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 and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis; and
(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.
(f) the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Disclosures Under the Companies Act 2013
i) Extract of Annual Return:
The details forming part of the extract of the annual return is enclosed in Annexure -1.
ii) Number of Board Meetings:
The Board of Directors met four times during the year 2016-2017. The details of theboard meetings and the attendance of the Directors are provided in the CorporateGovernance Report.
iii) Changes in Share Capital:
There is no change in the share capital.
iv) Composition of Audit Committee:
The Board has constituted the Audit Committee which comprises of Sri R. Surender Reddyas the Chairman and Sri R.S. Agarwal Sri Navrang Lal Tibrewal and Sri A. Mallikarjun asthe members. More details on the committee are given in the Corporate Governance Report.
v) Related Party Transactions:
All the related party transactions are entered into on arms length basis and arein compliance with the applicable provisions of the Companies Act 2013 and the ListingRegulations.
There are no materially significant related party transactions made by the company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the company at large. Thus disclosure in Form AOC-2 is not required.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseeable and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee and the Board on a quarterly basis specifying the nature value and terms andconditions of the transactions. The Related Party Transactions Policy as approved by theBoard is uploaded on the companys website at the web link:http://www.suryalakshmi.com/ policyonrelated.html
vi) No Loans/Guarantees / Investments under Section 186 of the Companies Act 2013have been made during the year.
As per the latest Listing Regulations on Corporate Governance Management Discussionand Analysis Report forms part of the Annual Report (Annexure - 6).
The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the Listing Regulations. A separate section on corporategovernance under the Listing Regulations along with a certificate from the auditorsconfirming the compliance is annexed and forms part of the Annual Report (Annexure - 2).
Corporate Social Responsibility Policy
At Suryalakshmi a major concern has been the sincere effort by the Company torecognise the role played by the Society at large the environment and its human resourcesin its sustainability and growth and to strive to discharge its social responsibility as acorporate citizen. To this end the Company has always tried to strike a fine balance ofeconomic environmental and social commitments.
The sustainable stewardship mantra is not limited to philanthropy but encompassesholistic community development and other initiatives to strengthen businesssustainability.
The core areas for Suryalakshmis Corporate Social Responsibility (CSR) Programmesfor this year have been health care environment and education. Details of the projects /activities implemented by the Company are furnished in a separate Annexure-3 to thisreport.
The Company constituted a Committee of CSR consisting of Sri L.N. Agarwal Sri ParitoshK. Agarwal and Sri R. Surender Reddy with Sri L.N. Agarwal as Chairman.
The Company could not spend the planned amounts on the CSR activities in view ofcertain pending approvals from the local authorities. Steps are being taken to obtain thesame at the earliest and complete the commitments.
The Company has instituted a proper mechanism for identifying and establishing controlsto effectively manage different kinds of risks viz. Trend Related Risks Raw MaterialRisks Brand / Technology Risks Operational Quality Risks Human Resources RisksRegulatory Risks and Financial Risks.
A Committee headed by Sri Paritosh K. Agarwal Managing Director periodically reviewsthe risks and take steps to mitigate identified risks.
Whistle Blower Policy
The Company has in place a Whistle Blower policy for vigil mechanism for Directors andemployees to report to the management about unethical behavior fraud violation ofCompanys Code of Conduct. None of the Personnel has been denied access to the auditcommittee.
Declaration About Compliance with the Code of Conduct by Members of The Board and Sr.Management Personnel.
The Company has complied with the requirements about Code of Conduct for Board membersand Sr. Management Personnel.
Disclosure Under the Sexual Harassment of Women at workplace (Prevention ProhibitionAnd Redressal) Act 2013.
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013.
Internal Complaints Committee has been set up to redress complaints received regardingsexual harassment. All employees (permanent contractual temporary and trained) arecovered under the Policy.
The following is a summary of sexual harassment complaints received and disposed offduring each Calender year:
a) No. of Complaints received - NIL
b) No. of Complaints disposed off - NIL
I. Auditors and Their Report:-
As the members are aware M/s. Brahamayya & Co. Chartered Accountants Hyderabad(ICAI Firm Regn. No.000513S) have been the Companys Statutory Auditors for severalyears. In accordance with the provisions of the Companies Act 2013 the Company isrequired to appoint a new firm of Auditors for a term of five consecutive years from theconclusion of the ensuing Annual General Meeting.
Accordingly the Company proposes to appoint M/s. K.S.Rao & Co. CharteredAccountants Hyderabad (ICAI Firm Regn. No.003109S) in place of M/s. Brahmayya & Co.as its Statutory Auditors. The Board wishes to place on record its appreciation of theservices rendered by M/s. Brahmayya & Co. Chartered Accountants in its longassociation with the Company.
M/s. K.S.Rao & Co. Chartered Accountants have expressed their willingness to beappointed as the Statutory Auditors of the company and furnished the certificate of theireligibility and consent for the same under Section 141 of the Companies Act 2013 and therules framed thereunder. In terms of the Listing Regulations the Auditors have confirmedthat they hold a valid certificate issued by the Peer Review Board of the ICAI. The Boardbased on the recommendation of the Audit Committee recommends the appointment of M/s.K.S.Rao & Co. Chartered Accountants as the Statutory Auditors of the company.
The Auditors Report to the Shareholders for the year under review does notcontain any qualification.
Ii. Cost Auditor and Cost Audit Report
Pursuant to section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee appointed Ms. Aruna Prasad Cost Accountant as theCost Auditors of the company for the Year 2017-18 and has recommended her remuneration tothe Shareholders for their ratification at the ensuing Annual General Meeting. Ms. ArunaPrasad has confirmed that her appointment is within the prescribed limits and alsocertified that they are free from any disqualifications.
Iii. Secretarial Auditor and Secretarial Audit Report
The Board had appointed Mr. K.V.Chalama Reddy Company Secretary in Whole-time Practice(M.No.13951) to carry out Secretarial Audit under the provisions of Section 204 of theCompanies Act 2013 for the financial year 2017-18. The report of the Secretarial Auditoris annexed to this report as Annexure -4.
Internal Control Systems & their adequacy
Your Company has an effective and adequate internal control systems in placecommensurate with the size and complexity of the organisation. Internal and operationalaudit is carried by M/s. K.Vijaya Raghavan & Associates LLP a reputed firm ofChartered Accountants. The Internal Audit system is designed to meet the statutoryrequirements as well as ensure proper implementation of management and accountingcontrols.
The internal auditors submit their report to the Managing Director and also to theAudit Committee which reviews the report and ensures that the Audit observations areattended to by the Management.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
Information on conservation of energy technology absorption foreign exchange earningsand out go required to be given pursuant to provision of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 is annexed here to markedAnnexure 5 and forms part of this report.
The Company has not accepted any deposits from the public during the year under review.
Periodic Training programmes for developing a skilled workforce personalitydevelopment programmes yoga camps etc. encouragement of employee participation indistrict / state level sports events are regularly undertaken.
An integrated woman focused program trains unskilled women to undertake skilled jobs atits units.
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 theemployees of the Company will be provided upon request. In terms of Section 136 of theAct the Report and Accounts are being sent to the members and others entitled theretoexcluding the information on employees particulars which is available for inspectionby the members at the Registered Office of the Company during business hours on workingdays of the Company upto the date of the ensuing Annual General Meeting. If any member isinterested in obtaining a copy thereof such member may write to the Company Secretary inthis regard.
The Board of Directors are pleased to place on record their appreciation of thecooperation and support extended by All India Financial Institutions Banks and variousState and Central
The Board also wishes to place on record its appreciation of the valuable servicesrendered by the employees of the Company.
| ||for and on behalf of the Board |
|Date : 13th May 2017 ||L.N. Agarwal |
|Place : Secunderabad ||Chairman & Managing Director |