WELSPUN SYNTEx LIMITED
Your Directors are pleased to present the Thirty-Second Annual Report together withAudited Statement of Accounts of the Company for the year ended 31st March2015.
I. FINANCIAL RESULTS
| ||2014-15 ||2013-14 |
|Gross Profit before Depreciation & Finance Expenses ||8687.32 ||6303.31 |
|Less: Finance Expenses ||2391.64 ||2389.65 |
|Depreciation ||2020.22 ||1911.04 |
|Profit/(Loss) before tax ||4275.46 ||2002.62 |
|Less Current Tax Current year ||906.49 ||430.27 |
|- Earlier period ||- ||33.59 |
|Add - MAT credit entitlement ||(906.49) ||(430.27) |
|Add/(Less) -Fringe Benefit Tax ||- ||- |
|Profit/ (Loss) after tax ||4275.46 ||1969.03 |
The Board of Directors has recommended accumulated dividend subject to approval ofbanks of
- Rs 30611750 on already redeemed 8% Redeemable Cumulative Preference Shares;
- Rs 3787397 on already converted 6% Optionally Convertible Cumulative preferenceshares into Equity shares
During the year under review Net sales and services and Gross Profit before Interestand Depreciation were ofRs 834.86 Crores and Rs 86.87 Crores respectively as compared toRs 896.38 Crores and Rs 63.03 Crores respectively for the previous year. Net sales andservices of the Company have been reduced by 6.86 % but net profit has increased by 117%over the previous year. Exports during the financial year 2014-15 were ofRs 185 Crores ascompared to Rs 214 Crores during the previous year. Turnover of the Company is reduced dueto reduction in price of raw materials and finished goods following slash in price ofcrude oil. Concentration on high margin products development of new products andproduction of BCF yarn coupled with reduction in prices of raw materials following slashin price of crude oil has increased profitability of the Company.
The Company has received in house R & D recognition for Rakholi and Palghar R &D Centers from Department of Scientific & Industrial Research.
India Rating & Research vide their letter dated May 13 2015 has assigned a Longterm issuer rating and working capital facilities of IND A-; outlook stable.
The Company proposes to double its existing BCF manufacturing capacity increasecapacity of Dyeing vessel install Nylon mother yarn line add laboratory equipment etc.at an estimated project cost of Rs 70 Crores which is proposed to be financed by way ofinternal accruals of Rs 23 Crores and term loan of Rs 47 Crores. Approvals of Banks forthe term loan have been received. Implementation of the project is commenced and is likelyto be completed by the end of 30th April 2016.
V. DIRECTORS RESPONSIBILITY STATEMENT
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year 31stMarch 2015 and of the profit and company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
VI. DISCLOSURE AS REQUIRED UNDER THE COMPANIES ACT 2013:
a. Mr. Atul Desai Mr. M. K. Tandon Ms. Mala Todarwal and Mr. K. H. Viswanathan theindependent directors have given declaration that they met the criteria of independentdirectors as provided in sub section 6 of Section 149 of the Companies act 2013.
b. Nomination and Remuneration committee (NRC) at their meeting held on 29th May 2014approved and recommended policy relating to criteria for determining qualificationspositive attributes and independence of directors the remuneration for the directors keymanagerial personnel and other employees; the Board of directors approved the said policyas recommended by NRC at its meeting held on 29th May 2014.
c. NRC at their meeting held on 21st January 2015 laid down criteria for theevaluation of Board of directors. Evaluation of directors consisted of two parts i.e.quantitative data and qualitative data. The instruments was so designed that only tickswas required with no provision for descriptions name of the directors who has evaluatedis not disclosed. Evaluation took place in March 2015 and the same was discussed by theBoard of directors and took remedial action at its meeting held on 30th March2015 (Rules 8 (4) under Chapter 9 of the Companies (Accounts) Rules 2014) d. CSRactivities is attached- Refer Annexure A
e. Meeting of Board of directors were conducted four times during the financial year2014-15.
f. The Company is a subsidiary of Krishiraj Trading Limited.
g. Ratio of remuneration of Mr. B A Kale to the median employeesremuneration and other details as may be prescribed Section 197 (12)
(i) the ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year; 124.66
(ii) the percentage increase in remuneration of Chief Financial Officer: 15% Company
(iii) the percentage increase in the median remuneration of employees in the financialyear: 0%
(iv) the number of permanent employees on the rolls of company: 1535
(v) the explanation on the relationship between average increase in remuneration andcompany performance:
- Increase in remuneration is largely based on performance of individuals.
(vi) comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:
- Commission to ED and incentives to some of the executives besides fixed salary aredirectly related to performance of the Company
| ||31/03/2014 ||31/03/2015 ||Variation |
|Market ||30.10 ||134.79 ||104.69 |
|capitalization || || || |
|(Rs in lacs) || || || |
|P/E ratio ||1.53 ||3.15 ||1.62 |
|Market price ||7.67 ||34.35 ||26.68 |
|per share || || || |
|(in Rs ) || || || |
|EPS (in Rs ) ||5.02 ||10.90 ||5.88 |
| ||Public Offer price on issue of shares on preferential basis as on 7-12-2012 ||Market price as on 31/03/2015 || |
| ||Rs 13.48 per share ||Rs 34.35 || |
(viii) average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration - Averageincrease in remuneration of employees other than managerial personnel 10% and keymanagerial persons - 12.50% (ix) comparison of the each remuneration of the Key ManagerialPersonnel against the performance of the company - Commission @ 2.50% on net Profit toexecutive director and Incentives to some of KMP is directly based on performance of theCompany (x) the key parameters for any variable component of remuneration availed by thedirectors- 2.5% commission on Profits calculated under section 197 of the Companies act2013 to Executive director besides fixed remuneration
(xi) the ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year- nil; and (xii) Affirmation that the remuneration is as per theremuneration policy of the company. h. Mr. B. A. Kale executive director of the Companyhas not received any remuneration from Krishiraj Trading Limited the holding company.
i. Details in respect of adequacy of internal financial controls with reference tothe Financial Statements.
Internal financial controls are adequate and were operating effectively. The Companyperiodically reviews the internal controls to align it with the changing business needsand to improve governance and enhance compliance with evolving regulation.
j. Details of arrangement entered into with Welspun Wintex Limited under section 189 (related party) is mentioned in form AOC-2 as mentioned below under Rule 8 (2) of the
Companies (Accounts) Rules 2014
Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by thecompany with Related parties referred to in subsection (1) of section 188 of the CompaniesAct 2013 including Certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basisNo such transaction
2. Details of material contracts or arrangement or transactions at arms lengthbasis
(a) Name(s) of the related party and nature of relationship
- Welspun Wintex Limited
(b) Nature of contracts/arrangements/transactions
- Purchase of POY
(c) Duration of the contracts / arrangements/transactions
- 01.04.2014 TO 30.06.2014
(d) Salient terms of the contracts or arrangements or transactions including the valueif any:
- Rs 255.12 Lacs
(e) Date(s) of approval by the Board if any:
- Board meeting dated 01.08.2014
(f) Amount paid as advances if any:
A. Particulars of loans guarantees or investments under section
The Company has not made investment nor given loan nor provide any guarantee forrepayment of loan under section 186 of the act B.
Details of establishment of vigil mechanism for directors and employees
Clause 49(II) (F) of listing agreement.
The Company has a Whistle Blower Policy and Vigil Mechanism for its directors andemployees and no personnel have been denied access to the Audit Committee.
VII. Conservation of energy technology absorption and foreign exchangeearnings andoutgo The details of conservation of energy technology absorption foreign exchangeearnings and outgo are as follows:
A) Conservation of energy:
(i) the steps taken or impact on conservation of energy; nil (ii) the steps taken bythe company for utilizing alternate sources of energy;
The Company has availed power partly from alternative source by entering into agreementwith Daksha Infrastructure Pvt Ltd on open access basis and saved the amount of Rs 50.56Lacs (iii) the capital investment on energy conservation equipments;
(B) Technology absorption:
- The Company has not entered into technical collaboration and as such notapplicable. The Research and Development capital/revenue expenditure during FY 2014-15 is Rs760.52 Lacs.
(C) Foreign exchange earnings and Outgo:
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.
FOB value of export Rs 17292.07 lacs CIF value of imports Rs 19108.65lacs
VIII. DIRECTORS/ KEY MANAGERIAL PERSONNEL (KMP)
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. B. A. Kale and Mr. R. R. Mandawewala the directors of theCompany retire by rotation at the 32nd Annual General Meeting and being eligible hasoffered themselves for reappointment.
Mr. Abhishek Mandawewala has been appointed as an additional director w.e.f. 31.07.2015and whole time director w.e.f. independent 01.08.2015 Mr. K. H. Viswanathan has beenappointed as an additional Independent director with effect from 31.07.2015. Board hasrecommended re-appointment of the aforesaid retiring directors appointment of Mr. K. H.Viswanathan as an independent director and Mr. Abhishek Mandawewala as a director/wholetime director.
Mr. Bhaskar Sen Sr. Vice President (Accounts and Commercial) is appointed as a CFO bythe Board of Directors at its meeting held on 1st August 2014.
Ix. AUDIT COMMITTEE
The Audit Committee consists of the following 5 Non-Executive Directors
|a. ||Mr. Atul Desai ||- Chairman |
|b. ||Mr. M. K.Tandon ||- Member independent |
|c. ||Ms. Mala Todarwal ||- Member independent |
|d. ||Mr. K. H. Viswanathan (w.e.f. 31.07.2015) ||- Member independent |
|e. ||Mr. R. R. Mandawewala (w.e.f. 14.05.2015) - Member || |
The Company has not accepted any deposit within the meaning of the Chapter V toCompanies Act 2013 Further no amount on account of principal or interest on deposit wasoutstanding as at the end of the year under report.
Your Companys Auditors M/s. MGB & Co Chartered Accountants werere-appointed for the period of three years till the conclusion of 34th Annual Generalmeeting. Members are requested to ratify their appointment from the conclusion of 32ndAnnual General Meeting to the conclusion of 33rd Annual General Meeting.
xII. CORPORATE GOVERNANCE
A separate report on Corporate Governance is annexed hereto as a part of this Report.Management Discussion and Analysis Statement is separately given in the Annual Report. Acertificate from the Auditors of the Company regarding compliance of conditions ofCorporate Governance as prescribed under Clause 49 of the Listing Agreement is attached tothis report.
xIII. AUDITORS REPORT
Please refer to Auditors Observations/ qualifications and in relation thereto theBoard of directors state as under: Auditors have qualified report under paraBasis for qualified opinion drawing attention to Note no. 29 ofnotes to the accounts and state that the Company is in the process of executing documentto transfer Land to the name of the Company. The Company is in possession of Land withoutany interference for more than 12 years. In view of the above the Board is of the viewthat no adjustment to the amounts as mentioned in note no. 29 is necessary
xIV. SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by Mr. A. L. Makhija a company secretary in practiceis herewith annexed.
xV. RISK MANAGEMENT POLICY
Board of Directors at their meeting held on 29th January 2015 considered andapproved risk management policy and identified the major risk in price volatility in keyraw materials.
xVI. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTOR (CLAUSE 49 OF LISTING AGREEMENT)
The details of familiarization program (for independent directors) is disclosed on theCompany's website and a web link thereto ishttp://www.welspunsyntex.com/userfiles/file/WSL policy.pdf
xVII. CODE OF CONDUCT
The Company has Code of Conduct for Board members and senior management personnel. Acopy of the Code has been put on the Companys website for information of all themembers of the Board and management personnel. All Board members and senior managementpersonnel have affirmed compliance of the same.
xVIII. PARTICULARS OF EMPLOYEES
Details of the every employee of the Company as required pursuant to Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is herewithattached.
Your Directors take this opportunity to express gratitude for valuable assistance andco-operation extended to the Company by Financial Institutions Commercial Banks and otherauthorities. Your directors also wish to place on record their sincere appreciation of thededicated services hard work solidarity and profuse support by all the employees of theCompany.
| ||FOR AND ON BEHALF OF THE BOARD OF DIRECTORS |
|B. A. Kale ||R. R. Mandawewala |
|Executive Director ||Director |
|Mumbai || |
|Date: 31st July 2015 || |