Your Directors have pleasure in presenting the 34th Annual Report together with theCompany's Audited Financial Statements for the financial year ended 31st March 2017.
The financial performance of the Company during the year ended 31st March 2017 hasbeen summarized below:
| || |
(Figures in H Lakhs)
|Particulars ||Current Year ||Previous Year |
| ||2016 17 ||2015 16 |
|Gross Sales/Turnover ||34653 ||35396 |
|Net Sales/Turnover ||34653 ||35369 |
|Profit before Interest Depreciation and Tax ||2958 ||3181 |
|Interest ||715 ||915 |
|Depreciation ||812 ||811 |
|Profit Before Tax ||1431 ||1456 |
|Less: Provision for tax ||425 ||400 |
|Deferred Tax Liability ||62 ||95 |
|Profit After Tax ||944 ||961 |
|Add: Profit brought forward from last year ||1051 ||1033 |
|Amount available for appropriation ||1995 ||1994 |
|Appropriations: || || |
|Transfer to || || |
|(a) General Reserve ||1000 ||500 |
|(b) Preference Shares Redemption Reserve ||- ||385 |
|(c) Dividend on Equity Shares ||- ||25 |
|(d) Dividend on Preference Shares ||- ||23 |
|(e) Dividend distribution tax ||- ||10 |
|Balance Carried forward to Balance Sheet ||995 ||1051 |
Note : The above figures are extracted from the Financial Statements as per IndianGenerally Accepted Accounting Principles (GAAP).
Details of Operations
The Financial Year 2016-17 was marked by several obstacles many of which were thedirect result of the headwinds we faced from the end markets we serve. This unique set ofcircumstances presented an opportunity to usher in necessary adjustments foremost amongthem was pro actively rebalancing the product mix of the Company so as to ensure steadyearnings.
Despite fluctuating raw material prices and the cash crunch caused by thedemonetization initiative we delivered a solid performance in Financial Year 2016-17. Astrong growth in sales came about as a result of helpful currency exchange rates and farsighted de-risking strategies. Operations were broadly effected with the following :
Average input (raw material) cost increased to H92.74 From H87.70 in the previous year.
Average yarn realization increased to H141.36 from H137.75 in the previous year.
Contributions for operations fallen to H48.62 per kg. from H50.05 in the previous year
Highlights of the Company's Affairs
The highlights of the Company's performance are as under: Revenue from operations forthe FY 2016-17 is H34653 lakhs as compared to H35396 Lakhs in the previous year. Exportsare H4025 Lakhs compared to H3055 Lakhs in the previous year.
Production quantities decreased to H24889 MTS as against H25795 in the previous year.
Profit Before Tax for the FY 2016-17 is H1431 Lakhs as compared to H1456 Lakhs in theprevious year. Profit after Tax is H944 Lakhs as against H961 Lakhs in the previous year.
During the year under review your company has incurred H594 Lakhs towards the capitalexpenditure. The Company also spent H631 Lakhs towards civil structures of expansionproject undertaken at Kalwakurthy unit.
A note on the future outlook of your Company is presented under Management Discussionand Analysis which forms part of this Report.
Transfer to Reserves
The Company has proposed to transfer H1000 Lakhs to the general reserve for thefinancial year ended 31st March 2017.
Your Directors have recommended the payment of Dividend on the Cumulative RedeemablePreference Shares as per the terms and conditions of the Issue for the Financial Year2016-17. The said Dividend will absorb a sum of H4130000/-. The corporate dividend taxwill be H840771/-.
Also your Directors have recommended the payment of Dividend on the Equity Shares at15% (i.e.) H1.50
per share of H10/- each to Non-promoter equity shareholders of the Company for the year2016-17. The dividend will absorb a sum of H1897035/- and the dividend tax will beH386192/-.
During the year under review the Company has not accepted any deposits during theFinancial Year 2016-17 in pursuance of Chapter V Companies (Acceptance of Deposits) Rules2014.
Disclosures under the Companies Act 2013. Extract of Annual Return
The Extract of Annual Return prepared in Form MGT-9 as per the provisions of Section 92of the Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 shall be placed as Annexure I to this Report before theboard.
Number of Meetings of the Board of Directors
Four (4) Board Meetings & Audit Committee Meetings were held during the FinancialYear 2016-17 as below:
1. 23rd May 2016
2. 8th August 2016
3. 10th November 2016
4. 8th February 2017
The Meetings of the following Committee's held on the respective dates as mentionedbelow:
1. CSR Committee Meeting 23rd May 2016.
2. Stakeholders Relationship Committee Meeting 8th February 2017.
For details pertaining to attendance of Directors for the said Meetings please referto the Corporate Governance Report which forms part of this report.
Changes in Share Capital
There was no change in the share capital of the Company during the financial year underreview.
Directors Responsibility Statement
Pursuant to the requirements under Section 134 of the Companies Act 2013 with respectto the Directors' Responsibility Statement the Board of Directors of the Company herebyconfirms:
(a) that in the preparation of the annual accounts for the Financial Year ended 31stMarch 2017 the applicable accounting standards have been followed; (b) that thedirectors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2017 and Profit and LossStatement of the Company for that period; (c) that the directors have taken proper andsucient care for the maintenance of adequate accounting records in accordance with theprovisions of Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (d) that the directors haveprepared the annual accounts for the financial year ended 31st March 2017 on a goingconcern basis; (e) that the directors have laid down internal controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively; (f) that the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively;
Statement on Declaration given by Independent Directors under Sub-Section (6) ofSection 149 of the Companies Act 2013.
The Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149 (7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in Sub-Section (6) of section 149 of Companies Act 2013.
Related Party Transactions
All the related party transactions are entered on arms length basis and are incompliance with the applicable provisions and listing regulations. There are no materiallysignificant related party transactions made by the Company with promoters Directors orKey Managerial Personnel etc. which may have potential conflict with the interest of theCompany at large. Thus disclosure pertaining to Related Party transactions in FormAOC-2 is not required.
The disclosure with respect to transactions with Related parties in compliance withAccounting Standard 18 is disclosed in notes forming part of financial statements annexedto this report.
The Company has adopted a related party transactions policy and the policy as approvedby the board is uploaded on the Company's website www.suryalata.com
Particulars of Loans Guarantees and Investments :
During the year under review the Company has not granted any loans neither providedguarantees nor made any investments covered in the register maintained under section 186of the Companies Act 2013.
Particulars of Employees
The details pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 (1)of the Companies (Appointment and Remuneration Of Managerial Personnel) Rules 2014 shallbe placed as Annexure II before the board .
Further during the year under review none of the employees are receiving remunerationas set out in Rule 5(2) Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
Details of Directors and Key Managerial Personnel's appointed or resigned during theyear:
There was no change in Directors of the Company during the Financial year under review.However there was change in Company Secretary of the Company. Smt. Prameela Rani Mekahas submitted her resignation w.e.f. 31st May 2016. The Company has appointed Sri DeepeshKumar Pipalwa as Whole time Company Secretary of the Company with effect from 1st June2016.
In accordance with the provisions of the Companies Act 2013 and in terms of Articlesof Association of the Company Smt. Madhavi Agarwal Whole Time Director of the Company isliable to retire by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment.
Committees of the Board:
Currently the Board has four Committees:
1. The Audit Committee
2. The Nomination and Remuneration Committee
3. Corporate Social Responsibility Committee
4. Stakeholders Relationship Committee
The Audit Committee consists of Sri R Surender Reddy Chairman Sri R S Agarwal Memberand Sri K R Suresh Reddy Member. All the recommendations made by the Audit Committee wereaccepted by the Board.
Nomination and Remuneration Committee.
The Nomination and Remuneration Committee consists of Sri K R Suresh Reddy ChairmanSri K Lakshmikanth Reddy Member and Sri R. S. Agarwal Member.
Policy on directors' appointment and remuneration and other details:
The Company follows a policy on remuneration of directors and other senior managerialpersonnel's. The Policy is recommended by the Nomination and Remuneration Committee andapproved by the Board. More details of the same is given in the Corporate GovernanceReport.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee consists of Sri R Surender ReddyChairman Sri Vithaldas Agarwal Member and Sri Mahender Kumar Agarwal Member. Thispolicy encompasses the Company's philosophy for giving back to society as a corporatecitizen and lays down the guidelines and mechanism for undertaking socially usefulprogrammes for the welfare & sustainable development of the community at large istitled as the
Suryalata Spinning Mills Limited Corporate Social Responsibility Policy.
The core theme of the Company's CSR policy is giving back to the society from which itdraws its resources by extending helping hand to the needy and the under privileged.
Corporate Social Responsibility is the commitment of business to contribute forsustainable economic development. It is the contribution of the corporate sector forphilanthropic causes like education health water environment and community welfare. Inalignment with vision of the company through its CSR initiatives will continue toenhance value creation in the society through its services conduct & initiatives soas to promote sustained growth of the society in fulfillment of its role as a SociallyResponsible Corporate with environmental concern.
The Report on Corporate Social Responsibility as per Rule 8 of (Corporate SocialResponsibility Policy) Rules 2014 is prepared and the same shall be placed as AnnexureIII before the board.
Stakeholders Relationship Committee
Stakeholders Relationship Committee consists of Sri K R Suresh Reddy Chairman SriVithaldas Agarwal Member and Sri Mahender Kumar Agarwal Member.
The Scope of the committee shall include considering and resolving the grievances ofthe security holders of the company which may arise due to any of the reasons cited in theStakeholders Relationship Committee of the company.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and Rules madethereunder the term of oce of M/s. Brahmayya & Co. Chartered Accountants as theStatutory Auditors of the Company will conclude from the close of ensuing Annual GeneralMeeting of the Company. The Board of Directors places on record its appreciation to theservices rendered by M/s. Brahmayya & Co. Chartered Accountants as theStatutory Auditors of the Company. Subject to the approval of the Members the Board ofDirectors of the Company has recommended the appointment of M/s. K S Rao & Co.Chartered Accountants (ICAI Firm Registration Number 003109S) as the Statutory Auditors ofthe Company pursuant to Section 139 of the Companies Act 2013. Accordingly the Boardrecommends the resolution in relation to appointment of Statutory Auditors for theapproval by the shareholders of the Company.
The Auditor's Report to the Shareholders for the year under review does not contain anyqualification or adverse remark.
The Board has appointed M/s. KLB & Associates a firm of practicing CompanySecretaries Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of theCompany for the Financial Year ended 31st March 2017 in compliance with the provisions ofSection 204 of the Companies Act 2013.
The report of the Secretarial Audit Report by M/s. KLB & Associates in Form MR-3shall be placed as Annexure IV before the board.
The Board of Directors have appointed M/s. Aruna Prasad & Co. Cost AuditorsChennai for conducting the cost audit of the Company for the financial year 2017-18 incompliance to the provisions of Section 148 of the Companies Act 2013 read with Companies(Cost Records and Audit Rules) 2014 on the recommendations made by the Audit Committeeand has recommended her remuneration for the ratification of Members at the ensuing AnnualGeneral Meeting.
Vigil Mechanism/Whistle Blower Policy
The Board of Directors of the Company have adopted Whistle Blower Policy. This policyis formulated to provide an opportunity to employees and an avenue to raise concerns andto access in good faith the Audit Committee to the highest possible standards of ethicalmoral and legal business conduct and its commitment to open communication in case theyobserve unethical and improper practices or any other wrongful conduct in the Company toprovide necessary safeguards for protection of employees from reprisals or victimizationand to prohibit managerial personnel from taking any adverse personnel action againstthose employees. The Policy on vigil mechanism/whistle blower policy may be accessed onthe Company's website www. suryalata.com
Details of adequacy of internal financial controls
The company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.
A detailed Report on Corporate Governance is enclosed as Annexure V ManagementDiscussion and Analysis Report and the Certificate from the Auditors of your Companyregarding compliance of conditions of Corporate Governance as stipulated under Schedule Vof SEBI (LODR) Regulations 2015 forms part of this Report.
Change in the Nature of Business
There has been no change in the nature of business of the Company during the financialyear under review.
The details of significant material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
No significant or material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and company's operations in future during the yearunder review.
Material changes and Commitments if any affecting the financial position of theCompany.
There were no material changes and commitments in the business operations of theCompany from the Financial Year ended 31st March 2017 to the date of signing of theDirector's Report.
Conservation of energy technology absorption foreign exchange earnings and outgo.
The information with respect to Conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Rule 8 ofCompanies (Accounts) Rules 2014 are provided in the Annexure VI to this Report.
Risk Management Policy
The Company has policy for identifying risk and established controls to effectivelymanage the risk. Further the company has laid down various steps to mitigate theidentified risk. The audit committee has additional oversight in the area of financialrisks and controls. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis.
Declaration with the compliance with the code of conduct by Members of the board andSenior Management personnel.
The Company has complied with the requirements about code of conduct for Board membersand Sr. Management Personnel.
The said policy is available on the website of the Company www.suryalata.com
Mechanism for Board Evaluation
The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the schedule IV ofthe Companies Act 2013 and the corporate governance requirements as prescribed bySecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
The Directors evaluation was broadly based on the parameters such as understanding ofthe Company's vision and objective skills knowledge and experience participation andattendance in Board/ Committee meetings; governance and contribution to strategy;interpersonal skills etc.
The Board has carried out the annual performance evaluation of its own performance theDirectors individually as well as evaluation of the working of its Board Committees. Astructured questionnaire was prepared covering various aspects of the Board's functioningsuch as adequacy of the composition of the Board and its Committees Board Cultureexecution and performance of specific duties obligations and governance.
A meeting of the Independent Directors was also held which reviewed performance ofnon-independent directors performance of the board as a whole and performance of thechairman after taking in to account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.
Disclosure pertaining to sexual harassment of women at workplace.
During the Financial year ended 31st March 2017 the Company has neither received anycomplaints nor there are any pending complaints pertaining to sexual harassment.
The Board of Directors places on record its gratitude to IDBI Bank Limited State Bankof India Insurance Companies and Government Authorities for their assistance andco-operation. The Board also acknowledges the support of the shareholders of the Company.The Board also places on record their deep sense of appreciation for the committedservices of all the employees of the Company.
| ||For and on behalf of the Board || |
| ||For Suryalata Spinning Mills Limited || |
| ||Vithaldas Agarwal ||Mahender Kumar Agarwal |
|Place : Secunderabad ||Managing Director ||Joint Managing Director |
|Date : 19th May 2017 ||DIN 00012774 ||DIN 00012807 |