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Deepak Spinners Ltd.
|BSE: 514030||Sector: Industrials|
|NSE: DEEPAKSPIN||ISIN Code: INE272C01013|
|BSE 10:15 | 26 Feb||75.00||
|NSE 05:30 | 01 Jan||Deepak Spinners Ltd|
|Mkt Cap.(Rs cr)||54|
|Mkt Cap.(Rs cr)||53.93|
Deepak Spinners Ltd. (DEEPAKSPIN) - Director Report
Company director report
Your Directors are pleased to present their Report together with the Audited Financial Statements for the year ended 31st March 2019.
1. FINANCIAL RESULTS
(' in Lakhs)
Financial Results for the year ended 31st March 2019 have been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act 2013 ('The Act).
The Board of Directors has recommended a dividend of 15% that is Rs. 1.50 (Rupee one and paise fifty) per share of the face value of Rs. 10/- each for the approval of shareholders. The dividend will be paid when declared by the shareholders in accordance with law. The Company will pay dividend distribution tax plus applicable surcharge education cess and/ or any other cess applicable on the dividend distribution tax at the time of declaration and payment of dividend.
3. General Review
The Company has improved its net profit by judicious management of product mix despite challenging market conditions. A steady rise in raw material rates in the second quarter led to higher rates of finished goods thereby improving our profitability. It was followed by a sharp fall leading to inventory accumulation. The Company has accrued benefits after a complete retrofit of its power plant at Guna in the form of generation of additional units.
During the year approximately five crores rupees were spent on modernization upgradation and addition of plant and machinery at both the units of the Company. The construction of a labour colony in Guna was also completed. However upgradation of electricity supply from 11 KV to 66 KV at the Baddi Unit of the Company which was planned during 2018-19 could not be completed due to non-receipt of approval of the appropriate authorities. It is expected to be completed during the year.
Modernisation and technological upgradations of our assets are undertaken each year to maintain competitiveness and quality. Stringent cost control measures increased productivity and improved realisations have resulted in an increase in profitability. Barring unforeseen circumstances we expect to achieve similar results as achieved last year.
4. Internal Financial Control Systems
The Company has in place adequate Internal Financial Control System commensurate with the size scale and nature of its operations. During the year such controls were tested and no reportable material weakness in the operations was observed. The Company has appropriate policies and procedures in place for ensuring proper and efficient conduct of its business the safeguarding of its assets prevention and detection of frauds and errors the accuracy and completeness of the accounting records and timely preparation of reliable financial information. During the year under review the Company has not come across any incidence of fraud. The Company has adopted accounting policies which are in line with the applicable accounting standards and the Companies Act 2013.
Internal Audit is conducted by independent Chartered Accountants on quarterly basis. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company. Based on the reports of the Internal Auditors the respective departments undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors.
5. Statutory Auditors
Pursuant to Section 139 of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 the members of the Company in its 35th Annual General Meeting held on 31st August 2017 approved appointment of M/s. J K V S & Co. Chartered Accountants (formerly Jitendra K Agarwal & Associates) (ICAI Registration no. 318086E) as the Statutory Auditors of the Company for an initial term of 5 consecutive years from the conclusion of 35th Annual General Meeting till the conclusion of 40th Annual General Meeting of the Company.
The aforesaid appointment of the statutory auditors for a term of 5 years was made subject to the ratification of such appointment at every subsequent Annual General Meeting during their tenure. However as per the notification dated 7th May 2018 issued by Ministry of Corporate Affairs the appointment of Statutory Auditors is no more required to be ratified by members of the Company in every Annual General Meeting.
6. Auditors' Report
The Auditors' Report to the Shareholders does not contain any reservation qualification or adverse remark. During the year under review the Auditors have not reported any matter under Section 143(12) of the Companies Act 2013 therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
7. Secretarial Audit
Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Secretarial Audit was carried out by M/s. A. Arora & Co. Company Secretaries (PCS Registration no. 993) for the financial year 2018
19. The Secretarial Audit Report is annexed as 'Annexure - I' to this Report.
There has been no qualification reservation or adverse remark or disclaimer in the reports. During the year under review the Auditors have not reported any matter under Section 143(12) of the Companies Act 2013 therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.
8. Cost Audit
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Cost Records and Audit) Amendment Rules 2014 the cost records maintained by the Company in respect of its manufacturing activities are required to be audited.
The Board of Directors have on the recommendation of the Audit Committee appointed M/s Shakti K. & Associates Cost Accountants (ICWAI Registration no. 11338) as Cost Auditors of the Company to carry out cost audit of the products manufactured by the Company for the year 2019-20. The Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and rules framed there under.
The remuneration of the Cost Auditor has been approved by the Board of Directors on the recommendation of Audit Committee. As required under the Companies Act 2013 In terms of the provisions of Section 148(3) of the Companies Act 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly necessary resolution is proposed for ratification for the remuneration payable to M/s. Shakti K. & Associates Cost Auditors in the Notice convening the 37th Annual General Meeting.
9. Directors and Key Managerial Personnel :
a) i) Pursuant to Section 152 of Companies Act 2013 and Articles of Association of the Company Shri Pradip Kumar Daga (DIN 00040692) retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for reappointment. The Board recommends his re-appointment. The brief resume and other details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) read with the Secretarial Standard 2 are provided in the Notice of the 37th Annual General Meeting.
ii) Pursuant to the provisions of the Companies Act 2013 the shareholders in the 32nd Annual General Meeting of the Company held on 6th September 2014 had appointed Shri Pradeep Kumar Drolia (DIN 00291966) as an Independent Non-Executive Director to hold office with effect from 1.10.2014 for a term of five consecutive years up to 30th September 2019. Shri Drolia is eligible for re-appointment as an Independent Non-Executive Director for a second term of five consecutive years. Pursuant to the provisions of the Companies Act 2013 and based on the recommendations of the Nomination and Remuneration Committee his re-appointment is proposed at the ensuing 37th Annual General Meeting. The brief resume and other details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) read with the Secretarial Standard 2 are provided in the Notice of the 37th Annual General Meeting
iii) Pursuant to the provisions of the Companies Act 2013 the shareholders in the 33rd Annual General Meeting of the Company held on 23rd September 2015 had appointed Smt. Nilu Agrawal (DIN 03107052) as an Independent NonExecutive Director to hold office with effect from 01.04.2015 for a term of five consecutive years up to 31.03.2020. Smt. Agrawal is eligible for re-appointment as an Independent Non-Executive Director for a second term of five consecutive years with effect from 01.04.2020. Pursuant to the provisions of the Companies Act 2013 and based on the recommendations of the Nomination and Remuneration Committee her re-appointment is proposed at the ensuing 37th Annual General Meeting. The brief resume and other details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) read with the Secretarial Standard 2 are provided in the Notice of the 37th Annual General Meeting.
iv) There were no changes in Key Managerial Personnel of the Company.
b) Statement on declaration given by Independent Directors
Declarations have been received from all Independent Directors confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations).
During the year four Board Meetings were convened and held the details of which are given in the Corporate Governance Report. The intervening gap between any two consecutive meetings did not exceed the gap prescribed by the Companies Act 2013 and the Listing Regulations
d) Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carried out an annual evaluation of its own performance the Directors individually as well as of the working of its various Committees. The Board on the recommendations of the Nomination and Remuneration Committee lays down the evaluation criteria for evaluation. All the relevant factors that are material for evaluating the performance of the Committees and of the Board were discussed in detail by the Board of Directors. A structured questionnaire for evaluation of the Board and its various Committees and individual Directors was prepared and recommended to the Board by the Nomination & Remuneration Committee for doing the required evaluation after taking into consideration the inputs received from the Directors covering various aspects of the Board's functioning.
A separate exercise was carried out to evaluate the performance of individual Directors who were evaluated on parameters such as level of engagement and contribution independence of judgment safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Director being evaluated. The performance evaluation of the Chairman and non-independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.
10. Directors' Responsibility Statement
In terms of the provisions of Section 134(5) of the Companies Act 2013 your Directors confirm as under -
a) That in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
c) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) That the Directors had prepared the annual accounts on a going concern basis; and
e) That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
f) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
11. Corporate Social Responsibility
In accordance with the requirements of Section 135 of the Companies Act 2013 the Company has a Corporate Social Responsibility Committee the terms of reference and other details of which are provided in the Corporate Governance Report. The CSR Policy has been framed and posted on the website of the Company http://www.dsl-india.com/.
As required by Section 134(3)(o) of the Companies Act 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 Annual Report on CSR activities is annexed as 'Annexure - II' to form part of this report.
12. Vigil Mechanism
The Company has in place a Vigil Mechanism for Directors and employees of the Company to report genuine concerns of any wrongful conduct with respect to the Company or its business or affairs. The policy covers malpractices fraud violation of Company's policies or rules misappropriation of monies and other matters on account of which the interest of the Company is affected or is likely to be affected. The policy provides that all protected disclosures can be addressed on a confidential basis to the Vigil Officer or the Chairman Audit Committee in certain cases. The policy of Vigil Mechanism is an internal policy to make protected disclosures in good faith and to raise concerns to be appropriately dealt with.
It also provides for adequate safeguards against the victimization of employees who avail of the mechanism. Complaints received by Vigil Officer are investigated by the Vigil Officer and a report thereon is submitted to the Audit Committee. It is affirmed that no person was denied access to the Vigil Officer and the Audit Committee; and no complaints were received during the financial year 2018-19.
The Policy on Vigil Mechanism is also posted on the Company's website http://www.dsl-india.com/.
13. Risk Management Policy
Several factors such as advancements in technology prevalent geo-political environment stringent regulatory and environmental requirements have consequential impacts across the value chain of a business. The Company has an efficient Risk Management framework to identify and evaluate business risks and opportunities.The Audit Committee has been delegated the responsibility for monitoring and reviewing risk management assessment and minimization procedures.On the recommendations of Audit Committee Board of Directors has formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. The risk management procedures are reviewed by the Audit Committee and the Board of Directors on a quarterly basis at the time of review of the quarterly financial results of the Company.
14. Nomination and Remuneration Policy
The Board has on the recommendations of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors KMP and Senior Management and their remuneration. During the year there have been no changes to the Policy. The details of Company's Remuneration Policy are attached as 'Annexure-IN' and forms part of this report of the Board of Directors.
15. Related Party Transactions
All related party transactions that were entered into during the financial year were on an arm's length pricing basis and were in the ordinary course of business and do not attract the provisions of Section 188 of the Companies Act 2013
There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company and hence enclosing of Form AOC 2 is not required. Suitable disclosures as required by the Accounting Standard (Ind AS - 24 ) has been made in the notes to the Financial Statements. All related party transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for transactions which are of foreseen and repetitive nature for a period of one year. The transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis.
The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.None of the Directors has any pecuniary relationship or transaction vis-avis the Company.
16. Disclosures regarding Employees
a) The Statement of Details of Remuneration as required under Section 197 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached as 'Annexure - IV' and forms a part of this Board's Report.
b) The information required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and forming part of this report is given in separate annexure to this Report. The said annexure is not being sent along with this Report to the Members of the Company in line with the provisions of Section 136 of the Companies Act 2013. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for inspection by the Members at the Registered office of the Company twenty one days before the 37th Annual General Meeting and up to the date of the said Annual General Meeting during the business hours on working days.
c) No employee other than the Chairman and Managing Director by himself or along with his spouse and dependent children holds 2% or more of the equity shares of the Company.
d) The Company has not received any complaint under 'The Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal) Act 2013 during the year.
17. Public Deposit
During the year the Company has neither accepted nor renewed any deposits from the public and as such there are no outstanding deposits in terms of the Chapter V of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
18. Loans Guarantees and Investments
The Company has not given loans directly or indirectly to any person or other body corporate or given guarantee or provided any security in connection with a loan to any other body corporate or person. The Company has also not made any investments as per the provisions of Section 186 of the Companies Act 2013.
19. Management Discussion and Analysis Report
A report for the year under review as required under Regulation 34 and as stipulated under Part B of Schedule V of Listing Regulations is annexed herewith and forms part of this report.
20. Corporate Governance :
A report on Corporate Governance as required under Regulation 34 of SEBI 'Listing Regulations' and as stipulated in Part C of Schedule V is annexed herewith and forms part of this report. Compliance Certificate issued by Statutory Auditors of the Company regarding compliance of Corporate Governance is also annexed.
21. Extract of Annual Return
The extract of annual return in Form MGT-9 as per the provisions of Section 92 of the Companies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014 is annexed with this report as 'Annexure - V'.
22. Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo.
As required by Section 134(3)(m) of the Companies Act 2013 and Rule 8(3) of the Companies (Accounts) Rules 2014 information with regard to Conservation of energy technology absorption and foreign exchange earnings and outgo are annexed as 'Annexure - VI' to form part of this report.
23. Significant and Material Orders Passed by the Regulators or Courts
There are no significant material orders passed by the regulators / courts which would impact the going concern status of the Company and its future operations.
24. Compliance with Secretarial Standards
The Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
We express our sincere appreciation and thank our valued shareholders customers Bankers stakeholders business associates Central and State Governments and district level authorities for their continued support and encouragement to the Company.
We are pleased to record our appreciation of the efficient and loyal services rendered by each and every employee and workmen of the Company at all levels without whose whole hearted efforts the overall satisfactory performance would not have been possible.