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Salona Cotspin Ltd.

BSE: 590056 Sector: Industrials
BSE 00:00 | 13 Jul 80.00 -2.65






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OPEN 82.65
52-Week high 214.80
52-Week low 54.25
P/E 19.75
Mkt Cap.(Rs cr) 42
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 82.65
CLOSE 82.65
52-Week high 214.80
52-Week low 54.25
P/E 19.75
Mkt Cap.(Rs cr) 42
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Salona Cotspin Ltd. (SALONA) - Director Report

Company director report


The Members

Your Directors have great pleasure in presenting their Twenty-Third Annual Reporttogether with Audited financial statements of the Company for the year ended 31stMarch 2017.

Details ( Rupees in Lacs )
31.03.2017 31.03.2016
Sales and Other operating Receipts 12140.88 10025.82
Other Income 12.23 14.35
Total 12153.11 10040.17
Gross Profit before interest depreciation and tax 871.18 885.24
Less: Interest 230.68 277.35
Profit/(Loss) after interest but before depreciation and tax 640.50 607.89
Less: Depreciation 363.22 334.97
PROFIT BEFORE TAX 277.28 272.92
Less: Taxes -56.99 46.04
NET PROFIT AFTER TAX 334.27 226.88
Add: Opening Surplus 1908.53 1729.15
Total Profit available for appropriation 2242.80 1956.03


The above Profit is proposed to be appropriated as stated below:-
Proposed Dividends & Tax on Dividend -- 47.50
Surplus carried over to Balance sheet 2242.80 1908.53


Your Directors are pleased to recommend a dividend of Rs.0.60 per share for the yearended 31st March 2017 subject to the approval of members. The total outgo inthe form of dividend including corporate dividend tax will be to the extent of Rs.38.00Lakhs.


During the year under review production of cotton yarn was 41.95 Lakhs Kgs as against42.54 Lakhs Kgs in the preceding year. The turnover increased to Rs.11993.09 Lakhs asagainst Rs.9871.75 Lakhs in the previous period inspite of decrease in yarn productionand higher volume of sales from traded goods. This is due to the fact that the sellingprice realised for yarn declined more than the decline in purchase price of cottoncausing erosion of gross profit margin. The Sales turnover includes Export Sales ofRs.4547.41 Lakhs as against Rs.2725.40 Lakhs in the previous year. During the year theexport turnover of traded goods increased to Rs.2467.44 Lakhs from Rs.1083.78 Lakhs.

During the year the green energy generated was 85.64 Lakhs units (net) of windelectricity as against 52.92 Lakhs units in the previous year. The production of WindElectricity improved significantly due to better Wind velocity and repatriation throughState Grid.

By captive consumption the Wind Electricity contributed for reduction in power costand contributed to the profits of the textile mill. Hence the overall performance of theCompany should be considered as Satisfactory.

Your director are pleased to inform you that the Company has made entry into BrandedGarment Business. It has launched its brand under the name of "NEWRIE LONDON".The brand will cover entire outer wear of teens girls and women western casual wear.Initial response to the range has been quite positive from channel partners and consumers.The garment team is making efforts to create Pan India presence.


The Spinning segment of the textile industry continues to witness the paradox ofmis-match of prices of cotton (raw material) and prices of yarn (finished goods). Henceyour Company will focus on improving production of Value Added Textile Products. Thecontribution from branded garments is likely to expand with more and more marketingoutlets created by the Company. Hence your Directors are optimistic of continued goodperformance subject to the equality maintained between the prices of raw material andselling price for yarn.


There are no material changes and commitments affecting the financial position of theCompany subsequent to the end of the financial year.


The Company has not accepted nor holds any public deposits within meaning of Section 73to 76 of the Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014 duringthe year under review.


Corporate Governance Management Discussion and Analysis and a certificate from theAuditors of the Company regarding compliance of condition of Corporate Governance isfurnished in Annexure.


As required under Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return as on31st March 2017 in MGT 9 is given which form part of this Annual Report is enclosedasAnnexure I.


Key Managerial Personnel of the company are as follows

Name of the Persons Designation
Sri Shyamlal Agarwala Managing Director
Sri Manoj Kumar Jhajharia Joint Managing Director
Sri M.S. Selvaraj Chief Financial Officer
Sri K.B. Sajith Company Secretary


The Audit Committee comprises of

1. Sri G.V.S. Desikan – Chairman (Non-Executive Independent Director)

2. Sri Dhiresh Jayasi – Member (Non-Executive Independent Director)

3. Sri Manoj Kumar Jhajharia – Member (Joint Managing Director)

The Board has implemented the suggestions made by the Audit Committee from time totime.


Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10)SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an evaluation of its own performance based on the specific duties obligation and theexecution of the same the directors individually as well as the evaluation of the workingof its Audit Nomination and Remuneration and other Committees the performance evaluationof the Independent Directors Chairman and Managing Director. The Board expressed itssatisfaction with the execution process.


The Board of Directors met Four times during this financial Year on the followingdays:

1) 27th May 2016 2) 12thAugust 2016
3) 11thNovember 2016 4) 13thFebruary 2017


The Company has not given any loans or guarantees governed under the provisions ofSection 186 of the Companies Act 2013. The details of the Investments made by the Companyare given in the notes to the financial statements.


The Company has established a vigil mechanism for directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's code of conduct or ethics. The policy has been posted in the website of theCompany viz.


The Board of Directors have framed a policy setting out the framework for payment ofremuneration to Directors Key Managerial Personnel and Senior Management Personnel of theCompany. The policy is explained as part of the Corporate Governance Report.

The Committee ensures that:

a. The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully.

b. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks and

c. Remuneration to Directors Key Managerial Personnel and Senior Management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.


All related party transactions that were entered into during the financial year were onarm's length basis and in the ordinary course of business and that the provisions ofSection 188 of the Companies Act 2013 are complied. Further no materially significantrelated party transactions made by the Company with Promoters Key Managerial Personnel orother designated persons which may have potential conflict with interest of the Company atlarge. Hence reporting in Form AOC-2 is not required. Approval of Audit Committee wasobtained for transactions of repetitive nature on annual basis. All related partytransactions are placed before the Audit Committee and Board of Directors for theirreview. The policy on Related Party transactions is available in the website


There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status and the Company's operation in future.


Pursuant to the provisions of Section 134(3) (c) of the Companies Act 2013 yourDirectors confirm:

a) that in the preparation of annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures; b) that yourDirectors had 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 the end of the financial year and of theProfit of the Company for that period;

c) that your 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) that your 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.


The present Auditors viz. VKS Aiyer & Co Chartered Accountants Coimbatore havebeen rendering services to the Company as Statutory Auditors from its inception. Section139 of the Companies Act 2013 provides for compulsory rotation of Statutory Auditors of aCompany where the firm of Auditors have served the Company for more than 10 yearsexisting companies are required to comply with this provision for rotation of Auditorswithin a period of three years from the date of commencement of Companies Act 2013 viz.on or before 31st March 2017. Accordingly the Company is required to ensure rotation ofAuditors by appointing a new firm of Chartered Accountants for a period of five years atthe ensuing Annual General Meeting who will audit the accounts of the Company for thecurrent financial year which commenced on 1st April 2017.

At the recommendation of the Audit Committee the Board of Directors have proposed theappointment of M/s. Gopalaiyer and Subramanian Chartered Accountants Coimbatore (FirmRegistration No. 000960S) Coimbatore as the Statutory Auditors to the Company subject toapproval of shareholders at the ensuring Annual General Meeting of the Company. Thecompany also has received a Certificate from the proposed Auditors confirming theireligibility for appointment in terms of the provisions of Section 141 of the CompaniesAct 2013. The Board recommend their appointment as Statutory Auditors to the Company.

The Board wish to place on record their appreciation of the services rendered by M/s.VKS Aiyer & Co Chartered Accountants Coimbatore as Statutory Auditors to the Companyand look forward to their association with the Company in any other capacity for theircontinued guidance which will be beneficial to the Company.


Pursuant to provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedSri S.R. BaalajiB.Com. F.C.S Practicing Company Secretary to undertake the SecretarialAudit of the Company. The report is annexed herewith as Annexure - II

No adverse qualifications/comments have been made in the said report by the PracticingCompany Secretary.


Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors on therecommendation of Audit Committee has appointed Sri B. Venkateswar Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2017 – 2018.


The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit which monitors andevaluates the efficiency and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. The scope and authority of the Internal Audit function is defined in theInternal Audit Manual.

To maintain its objectivity and independence the Internal Audit function reports tothe Chairman of the Audit Committee and to the Chairman and Managing Director of theCompany.

Based on the report of internal audit function corrective action are taken in therespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.


Pursuant to Section 134(3) (n) of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has constituted a RiskManagement Committee. The Committee has developed a Risk Management Policy and implementedthe same. The details of the Committee and its terms of reference are set out in theCorporate Governance report forming part of the Board's report.

At present the Company has not identified any element of risk which may be a threat forthe existence of the Company.


The Company has constituted Corporate Social Responsibility (CSR) Committee which shallrecommend to the Board the activities to be undertaken by the Company as specified inSchedule VII recommend the amount of expenditure to be incurred on such activities andmonitor the CSR Policy of the Company. The CSR Committee constituted by the Boardconsisted of the following Directors with effect from 13th November 2014

1. G.V.S. Desikan - Chairman 2. Shyamlal Agarwala - Member 3. Manoj Kumar Jhajharia -Member

The Company has partially spent the amount stipulated under the requirements of theAct. The amount spent on CSR activities during the year 2016-17 is Rs. 14600./-. Theamount remaining unspent namely Rs. 151762/- (pertaining to 2014-15) and Rs.859804(pertaining to 2015-16) will be spent during the year 2017-18. The Company is inthe process of identifying eligible projects after which the unspent amount will bedeployed for the said purpose. The details of the Corporate Social Responsibilityactivities / expenditure is given as Annexure III.


The particulars required to be included in terms of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 on Conservation ofEnergy etc. is enclosed as

Annexure IV.

No employee of the Company was in receipt of remuneration of Rs.60 Lakhs per annum ormore and no employee of the Company employed for the part of the financial year 2017 wasin receipt of remuneration of Rs. Five Lakhs per month or more.

The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors report for the year ended 31st March 2017 is enclosed as AnnexureV.

None of the employees listed in the said Annexure is a relative of any Director of theCompany. None of the employees hold (by himself or along with his spouse and dependentchildren) more than two percent of the equity shares of the Company.


The Industrial relations continued to remain cordial during the period and theBoardplaces its appreciation for the services rendered by the staff and employees of theCompany.


During the year under review the Reserves and Surplus stood at Rs.2257.80 Lakhs(Rs.1923.52 Lakhs credit balance in the previous year). The Company met all financialcommitments to the Bankers on account of Term Loan and Working Capital Credit.


The Company sends periodical letters to all shareholders whose dividends are unclaimedso as to ensure that they receive their rightful dues. Efforts are also made inco-ordination with the Registrar to locate the shareholders who have not claimed theirdues.


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).


The equity shares of the Company are listed and traded in National Stock Exchange ofIndia Limited (NSE) and Calcutta Stock Exchange.

The Equity Shares of the Company are permitted for trading in BSE Indonext segment– under group "S" of Bombay Stock Exchange Limited and subsequentlywithdrawn on 24th June 2014 due to exit option and de-recognition to the stockexchanges.

The Company has entered listing agreement with National Stock exchange on 8thJune 2016.

The shares of the company were listed on Ahmedabad Stock Exchange however theAhmedabad Stock exchange has been closed under exit policy vide their letter dated17.01.2017.

As the Securities of the Company are listed with National Stock Exchange and frequentlytraded in both National Stock Exchange and Bombay Stock Exchange having nationwide tradingterminals and the investors have access to trade and deal in company's shares across thecountry listing on Calcutta Stock Exchange is not providing any significant tangibleadvantage to the shareholders of the company. Hence the Board of directors passed aresolution at the Board meeting held on 13.02.2017 and applied for voluntary delisting ofequity shares from Calcutta Stock Exchange without giving exit opportunity to the existingshareholders. This is for providing better services to the investors through thenationwide Stock Exchange terminal and continue its listing only with National StockExchange and also continue the trading permission already given by the Bombay StockExchange

Members have option to hold their shares in dematerialized form through the NationalSecurities Depositary Limited (NSDL) and Central Depositary Services (India) Limited(CDSL). The ISIN of the Company is INE498E01010.


The Directors wish to place on record their gratitude to State Bank of India UnionBank of India Oriental Bank of Commerce and The Catholic Syrian Bank Limited for theirfinancial assistance. Your Directors also take this opportunity to express theirappreciation of the co-operation extended by the employees and the Shareholders' for theirappreciation of the managements' efforts expressed at the general meetings of the Company.

The Board dedicates its prayers to invoke the blessing of Lord Vishnu Goddess LakshmiLord Shiva and Goddess Sakthi for the continued prosperity of the Company and all itsstakeholders.

Place : Coimbatore

Date : 15th May 2017