Your directors have pleasure in presenting the 46 th Annual Reporttogether with the Audited Accounts for the year ended March 312020 (the year).
|1 Performance highlights ||2019 - 20 ||2018 - 19 |
|Revenue from Operations || |
(Rupees in Lakhs)
|Direct exports ||217 ||362 |
|Merchandise exports ||211 ||136 |
|Domestic Sales ||18573 ||20332 |
|Wind Turbine Generator Power sold to third party ||116 ||120 |
|Sub Total ||19117 ||20950 |
|Other income ||105 ||144 |
|Total Revenue from Operations ||19222 ||21094 |
|Gross profit [Profit before interest depreciation & Tax] ||2046 ||2388 |
|Cash profit [Profit before depreciation & Tax] ||1214 ||1562 |
|Profit before tax [PBT] ||276 ||547 |
|Less : Provision for Current Tax ||131 ||362 |
|Provision for Deferred Tax ||(83) ||(263) |
|Profit after tax [PAT] ||227 ||448 |
Due to Covid 19 pandemic in India it has become necessary to preserveresources and with a view to conserve and improve the resources of the company yourDirectors have not recommended any dividend for the year ended 31.03.2020
3 MANAGEMENT DISCUSSION AND ANALYSIS
Core business of the company is manufacture and sale of cotton yarn.The management discussion and analysis given below discusses the key issues of theIndustry with specific reference to the cotton yarn spinning sector.
1. Details of significant changes on following ratios (i.e changes if25 % or more as compared to immediately previous financial year)
| ||19-20 ||18-19 ||change ||change% |
|a. Debtors turnover ratio ||4.96 ||6.10 ||(1.14) ||(18.75%) |
|b. Inventory turnover ratio ||3.48 ||4.59 ||(1.11) ||(24.23%) |
|c. Interest coverage ratio ||2.46 ||2.89 ||(0.43) ||(14.92%) |
|d. Current ratio ||1.05 ||1.01 ||0.04 ||4.33% |
|e. Debt equity ratio* ||0.32 ||0.21 ||0.11 ||50.31% |
|f. Operating profit margin % ||10.70% ||11.40% ||(0.70%) || |
|g. Net profit margin % ||1.19% ||2.14% ||(0.95%) || |
* Debt Equity ratio change is more than 25% due to availment of freshterm loan from the bank.
2. Details of any change in Return on net worth as compared to theimmediately previous financial year along with a detailed explanation thereof
| ||19-20 ||18-19 ||change% |
|Return on net worth ||2.43% ||4.82% ||(2.39%) |
There is decrease in Return on net worth when compared toprevious year as stated above due to decrease in revenue from operations resulting indecrease in net profit during the year
a) INDUSTRY PERFORMANCE
It has been a water shed year that will go down in the annals of globalhistory for the COVID 19 pandemic outbreak and its impact on the social economic andpolitical environment of the world. Despite the turbulance in the spinning industry andthe whole supply chain and its environment and various challenges your company was ableto sail through the financial year 2019-20 with a near satisfactory performancedemonstrating its resilence .
The indian economy exhibited signs of a slow down during the early partof the year with GDP growth declining to 4.8 percent in H1 of 2019-20 bogged down withmuted demand in core sectors. Signs of revival were evident from November 2019 to January2020which however could not sustain due to the pandemic outbreak and the resultantlockdown which brought all economic activity to a standstill halt situation.
The overall performance for fiscal 2019-20 will be weighed down by thetepid volumes and weak earnings seen in the first half of the fiscal. This is the likelyscenario even though the industry has gradually recovered from the slowdown.
According to corporate sector ratings the Indian cotton spinningindustry's performance has been severely constrained and is being adversely impacted bythe demand slowdown unfavourable raw material prices and rising funding requirements.
While export volumes have seen some uptick in recent months asagainst the sharp de-growth witnessed between May-September 2019 they remain lower thanthe levels seen in the preceding fiscal.
The other findings include the likelihood of cotton prices to remainbelow the minimum support price level till March 2021 on expectations of a bumper cropproduction in cotton year 2020 (India's cotton year starts in October and ends inSeptember) yarn prices and contribution levels continuing to tread lower than the 2019-20levels even though yarn prices have started moving up; increase in working capital debtlevels by ~15 per cent year on year reflecting the inventory build-up amid shortfall inearnings; and limited capacity additions envisaged over the next 12 months.
Industry spinners are likely to register a revenue de-growth of around6 per cent with both volumes and realisations having come under pressure in H1 FY20-21.Key reasons for the same are weak export demand amid increasing competition from otherproducing countries and sluggishness in domestic consumption levels.
Higher domestic raw material costs with Indian cotton prices tradingat a premium to international cotton also contributed to the loss of exportcompetitiveness. Buoyed by the improvement in exports witnessed since October 2019 thesurvey indicates that the industry pins its hopes on a continued gradual recovery incotton yarn exports over the coming quarters aided by the softening of domestic cottonprices.
While most industry participants expect operating profitability tocontract by around 300 bps in the current fiscal some respondents anticipate highercorrection reflective of the difficult times being faced by the sector.
The fall so far has been steeper for companies which had stocked andcarried over higher-cost cotton in the current fiscal. While the domestic cotton priceshave reduced from July 2019 the decline in yarn prices has been sharper resulting incontribution levels adjusted for cotton stock held falling in Q2 FY20-21.
Cotton and yarn prices are likely to remain range-bound at around?110-115/Kg and ?195-205/Kg respectively in H2 FY20-21. As a result the spinners expectaverage contribution levels for the fiscal to be at ? 80/Kg (with contribution likely toimprove to around X 82-85/Kg in H2 FY2020 as against FY2019 levels of X95/Kg)
The survey findings also highlight that the working-capital debt levelsof spinners have increased because of a pile-up in yarn stocks and some elongation in thereceivables cycle owing to the tepid demand conditions.
Many Industry players expect average utilisation of fund-based limitsto be at around 90% in FY20-21 higher from the 75 per cent levels seen in the lastfiscal. On the back of these adverse developments coupled with average capacityutilisation levels in the industry falling by around 500 bps to 82 per cent in H1 FY20-21a vast majority of the companies have indicated that no capacity expansion is beingplanned over the next 12months.
The credit profile of spinners has weakened in the recent quarterswith earnings from operations and liquidity position facing pressures in H1 FY20-21 amidrising debt levels. The scenario is similar to FY 201112 when cotton prices fell sharplyresulting in high inventory losses and tight cash flows for spinners. The impact ondebt-coverage metrics and liquidity is expected to be more adverse for leveraged companiesthat have undertaken a sizeable debt-funded capital expansion in recent years and havehigher repayments scheduled.
Future Outlook :
In the Last month of FY 19-20 the covid 19 pandemic developed rapidlyin to a global crisis forcing government to enforce lock downs of all economic activitiesacross the country. For the company the focus immediately shifted to ensuring the healthand the well being of all the employees and on minimising disruption of sales andservices for all our customers. From the centralised model consisting of work places setin one centralised location the switch to work from home wherever possible for employeeswas deployed. As of 31 st mar 2020 work from home was enabled to close to 50% of officeemployees to work remotely and securely .This response has reinforced customer confidencein Sambandam spinning mills Ltd. and many of them have expressed their appreciation andgratitude for keeping their business running under most challenging conditions.
Although there are uncertainties due to the pandemic and the momentumlost in the last quarter of the FY 19-20 the strong balance sheet position sustainedprofitability and inherent resilience of the business model position has enabled thecompany and the company has got enough strength to navigate the challenges ahead andretain market share.
Indian cotton yarn industry is likely to witness a decline in revenueand moderation in profit margins in the short-term due to weak demand and shutting ofmanufacturing units following the COVID-19 pandemic.
Following shutdown of manufacturing units and weak downstream demand inboth domestic and export markets expected in the near-term the cotton yarn industry isstaring at extremely challenging next two quarters.
The Indian cotton spinning industry which was already facing multipleheadwinds such as low demand unfavourable duty structure and fluctuating cotton fibreprices is now confronted with yet another challenge in the form of COVID-19 pandemic.Indian cotton fibre prices remained firm especially in the first quarter of FY20-21contrary to the international cotton prices which made domestic cotton yarn spinners lessattractive in the export market.
The demand for textile products abroad and domestic sales have comedown to a grinding halt due to the panic situation created by the COVID-19 outbreak. Dueto the lockdown all sorts of textile-related factories are closed and it is tough toguess when those will be allowed to open. Workers have been running here and there amidall sorts of confusion. The business community is scared on account of cash crunch supplychain disturbance and manpower-related issues.
Volumes may come down but will not disappear. Once life is back tonormal people are expected to shop as a feel-good element after months of lockdown anddepression. All machinery manufacturers have also suspended operations. Neither are theyin a position to manufacture machines nor are customers in a position to accept delivery.Even after machinery manufacturing starts customers will take a couple of months toaccept the delivery. Some of the new challenges are safety lack of supply and demand inaddition to liquidity crunch.
The industry may take a much longer time to recover after the lockdown.It may take a minimum of four to six months to see businesses back to normal as estimatesof direct losses are difficult to make now and it is also tough to foresee the issues thatwill crop up later.
The Clothing Manufacturers Association of India (CMAI) which foreseesan economic disaster said most apparel companies in the country would face a drop of 30per cent in their sales and profitability and the industry would see an unemploymentlevel of 10-15 per cent. If the pandemic continues working capital shortage will notpermit companies to pay taxes repay bank loans and other statutory dues it said.
Trade bodies across India including the Tiruppur Exporters'Association (TEA) The Cotton Textiles Export Promotion Council of India (TEXPROCIL) andthe Confederation of Indian Textile Industry (CITI) have requested the government forurgent policy intervention for the textile and apparel sector by offering a reliefpackage moratorium on loan repayments for the next fiscal and exempting all raw materialsand intermediaries from anti-dumping duty and basic customs duty.
b) COMPANY'S PERFORMANCE
During the year the company has purchased plant and machinery from theother company KSML and thereby created capacity expansion to the extent of27000 spindlesand it shall be functioning as Unit IV of SSML.
In Spite of rough market condition as narrated in industry scenarioyour company is able to overcome the challenges posed by competitive forces during theyear. Thus during the year under review your Company's turnover was to Rs.191.20 croresas against Rs.209.50 crores recorded in the previous year. Your Company's performance wasreasonable when compared to other companies operating in same geographical location .
Your Company's Wind Turbine Generators (WTGs) recorded generation ofelectric power of the value of Rs.1148.98 lakhs during the year. Additionally the companyhas ventured in for purchasing the electricity from the open market through powerexchanges at competitive rates.
Bank interest rates remained high during the year However managementhas exercised strict control on inventory and thus could maintain the interest costs.
In spite of many challenges company is focused on value creation suchas improving the sale per spindle better product mix focus on internal costs and use ofnon conventional power such as wind energy power and widening market foot print byimproving product mix.
c) RISKS AND CONCERNS
Your Company has devised risk management policy which involvesidentification of the risks associated with the business risks as well as the financialrisks its evaluation monitoring reporting and mitigation measures. Audit Committee andthe Board of Directors of the Company refined the risk management policy of the Company sothat the management controls the risk through properly defined frame work. Heads ofdepartments are responsible for implementation of the risk management system as may beapplicable to their respective areas of functioning and report to the Board and the AuditCommittee. Details of the risk management mechanism and key risks faced by the Company areenumerated in the risk management policy.
Also the company had implemented risk mitigation actions in many areasthat were identified during the year. In the current year's review these and otherprospective risks were evaluated and some more were added to the list for action. Due tothe COVID 19 pandemic additional risks due to the pandemic have also been identified andmeasures have been put in place to mitigate them like thermal screening of all employeeson a daily basis and detailed safety health and sanitation protocols at all locations toprevent spread of infection.
Risk Management Policy adopted pursuant to the provisions of Section134 (3) (n) of the Companies Act 2013 is hosted on the website of the Company under theweb link http://www.sambandam.com
d) ENVIRONMENT PROTECTION HEALTH AND SAFETY (EHS)
EHS continues to receive the highest priority in all operational andfunctional areas at all locations of your Company. Systematic process safety analysisaudits periodic safety inspections are carried out by expert agencies and suitablecontrol measures adopted for ensuring safe operations at the site. Various processes asrequired for Pollution Control and Environmental Protection are strictly adhered to.
e) INTERNAL CONTROL AND SYSTEMS
Your Company has in place well established internal control procedurescovering various areas such as procurement of raw materials production planning qualitycontrol maintenance planning marketing cost control and debt servicing. Steps are takenwithout loss of time to correct if any weakness is observed.
Your Company is certified ISO 9001 ISO 14001 and ISO 45001 for thesystems. Further your Company's laboratory is also certified by NABL on Global OrganicTextile Standard Better Cotton Initiative and others as displayed on the cover page ofthis Annual Report.
f) HUMAN RESOURCES MANAGEMENT
The commitment and drive of the team of people in the company hasenabled it to make many improvements over the years. Continued investment in training anddevelopment programmes across functions has enabled identification of potential leaders.These people can be developed for future strategic roles and participation in the growthof the company.
Succession planning for senior and critical positions has become anarea of focus for the company. The senior management with the help of the Board will workon identifying key resources internally for some roles and also work on bringing inexpertise from outside for others.
Our people are our strength and they have stood with the companythrough many ups and downs. This has again been evidenced during this current pandemicperiod when the company had to put in place many restrictions and implement protocols forsafety. The participation and ownership of our people in working with local governments asalso within the company to ensure health and safety has been satisfactory. This hasenabled us to effectively manage operations under the current restricted conditions.
The Company continues to create a favourable environment at work place.Your Company has formulated and implemented various welfare measures for the employees.The Company also recognizes the importance of training and consequently deputes its workforce in various work related courses/seminars including important issues like TotalQuality Management (TQM) behavioural skills soft skills etc. Because of these labourwelfare and improvement measures your Company is able to attract and retain well trainedand dedicated workforce.
g) DISCLOSURE AS PER THE SEXUAL HARASSMENT OFWOMEN AT WORK PLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace andhas adopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder. TheCompany has a Committee for addressing issues related to women and during the financialyear 2019-20 there were no complaints received on sexual harassment.
h) COST AUDIT
Audit Committee at the Audit Committee Meeting held on 28th June 2020have recommended the appointment of M/s.K.M.Krishnamurthy & Co. (Firm Reg No 102198Cost Accountants for audit of cost accounts of the Company. In accordance with theprovisions of the Companies Act 2013 and the Rules framed there under Cost Audit for theCompany is applicable for the financial year commencing from 1st April 2020. Onthe recommendation of the Audit Committee Board of Directors of the Company at theirmeeting held on 28.06.2020 approved the appointment of M/s.K.M.Krishnamurthy & Co.Firm Reg. No 102198 Salem for audit of Cost Accounts of the Company for the year 2020-21and the resolution for ratification of the remuneration payable to the Cost Auditor forthe year 2020-21 is placed before the members for ratification at the 46thAnnual General Meeting of the Company scheduled to be held on 23.09.2020.
In view of the Company maintaining the cost records and the statutoryrequirement for the cost audit of such records your directors decided to continue theCost Audit for the year 2020-21. The Cost Auditor has submited to the Board of Directorshis report for the year 2019-20 after duly certifying the cost records. Cost Audit Reportfor the year 2019-20 is submitted to mCa in XBRL format in time.
i) BOARD MEETINGS :
During the year under review Five board meetings were held and theintervening gap between any two board meetings did not exceed 120 days. Dates of the boardmeetings and details of directors' attendance at the meetings are furnished in theCorporate Governance report at Annexure - VIII.
Company's policy on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under section 178(3) of the Act are covered under Nominationand Remuneration Policy and it is available in the web-link of the Company http://www.sambandam.com.Further information about elements of remuneration package of individual directors isprovided in the extract of Annual Return as provided under Section 92(3) of the Act inprescribed form MGT-9 annexed with this report and forms part of this Report.
During the year Independent Director Mr. Kameshwar Bhat and Mr.S.Gnanasekaran were reappointed as Independent Director not liable to retire byrotation and to hold office for a second term of five consecutive years effective from11.08.2019 to 10.08.2024.
i. As per Rule 8(5)(iiia) of companies rule -Directors Report - astatement regarding opinion of the Board with regard to integrity expertise andexperience of the independent directors as appointed above is stated below .
ii. The Board is of the Opinion is that Mr.S.Gnansekaran (IndependentDirector) is fully seasoned and fully calibered experienced professional and is a man ofintegrity. He is a fellow member of ICSI and has served in various senior positions in thecorporate sector. He has over five decades of vast experience in the corporate professionincluding experience of more than three decades in Finance and accounts. Generaladministration public relations etc.
iii. The Board is of the Opinion is that Mr.Kameshwar Bhat (IndependentDirector) is a seasoned and fully calibered experienced professional and is a man ofintegrity. He is financial consultant and partner in KMB associates LLP. He has over 25years of experience in banking financial services and retail operational management. Heretired in the position of Assistant General Manager of Karnataka Bank Ltd.
iv. During the year Independent Director Dr.R.Ramarathnam (DIN02175098) has resigned from the board with effect from 11.08.2019. As per the resignationletter submitted by Non-Executive Independent Director Dr. R. Ramarathnam to the Companythe reason for his resignation from the Board is only due to his other pre-occupiedbusiness affairs. The Board appreciates his valuable service during his tenure.
Declaration by Independent Directors
Independent directors of the Company have submitted a declaration thateach of them meets the criteria of independence as provided in Sub-Section (6) of Section149 of the Act. Further there has been no change in the circumstances which may affecttheir status as Independent director during the year.
Declaration on adherence to the Code of Conduct.
As provided under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all the Board members and senior management personnel ofthe Company have confirmed adherence to the Code of Conduct of Sambandam Spinnning MillsLtd. Limited for the financial year ended March 312020.
k) DIRECTORS' RESPONSIBILITY STATEMENT AS PERSECTION 134(5) OF THE COMPANIES ACT 2013
Pursuant to the requirement of Section 134(5) of the Act and based onthe representations received from the management the directors hereby confirm that:
in the preparation of the annual accounts for the financial year2019-20 the applicable accounting standards Ind AS have been followed and there are nomaterial departures;
they have selected such accounting policies and applied themconsistently and made judgments 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 of the Company for the financial year;
they have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accounting records in accordancewith the provisions of the Act. They confirm that there are adequate systems and controlsfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls to be followedby the Company and that such internal financial controls are adequate and operatingproperly; and
they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
l) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THEREGULATORS
During the year under review no significant material orders were passedby the Regulators or Courts or Tribunals impacting the going concern status and theoperations of the Company.
m) PARTICULARS OF EMPLOYEES - information pursuant to Rule 5 (2) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014
None of the employees or directors of the Company has drawnremuneration exceeding Rs.8.5 lakhs per month or Rs.102 lakhs per annum during the year.
Statistical Disclosures pursuant to Rule 5 of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 with subsequent amendments theretois annexed with this report and forms part of this report.
n) Related Party Transactions :
Transactions entered with related parties have been explained in FormAOC -2 annexed with this report and forms part of this report. Further Policy on dealingwith Related Party Transactions has been uploaded on the Company's website under the weblink: http://www.sambandam.com.
During the year ordinary resolutions were passed through postal balloton 15.02.2020 in accordance with provisions of SEBI (LODR) Regulations 2015 forpurchase of plant and machinery from company Kandagiri spinning mills ltd and to take onlease the land and building from the same company.
o) BOARD EVALUATION
In accordance with the provisions of Companies Act 2013 and SEBI(LODR) Regulations 2015 read with Guidelines on Board Evaluation issued by SEBIvide its Circular dt. January 5 2017 In the separate meeting of the Independentdirectors performance of non-independent directors performance of the board as a wholeand performance of the Chairman was evaluated taking into account the views of executivedirectors and non-executive directors.
The same was discussed and noted by the Board at the next Board Meetingfollowed the meeting of the Independent directors. Further Board carried out an annualevaluation of its own performance Board committees and individual directors pursuant tothe provisions of Companies Act 2013 and SEBI (LODR) Regulations 2015 read withGuidelines on Board Evaluation issued by SEBI vide its Circular dt. January 5 2017.
The performance of the Board was evaluated by the Board after seekinginputs from all the directors on the basis of criteria such as the Board Composition andstructure effectiveness of the Board processes information and functioning etc. Theperformance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc. The Independent Directors were evaluated withoutthe presence of the director getting evaluated.
Outcome of evaluation process
Based on inputs received from the members it emerged that the Boardhad a good mix of competency experience qualifications and diversity. Each Board membercontributed in his/her own manner to the collective wisdom of the Board keeping in mindhis/her own background and experience. The necessary disclosures under SEBI Regulationsgiven hereunder:
(i) Previous year's observations and action taken
The following actions were taken based on previous year's observations
(a) Funds were made available for the effective functioning of theCompany.
(b) Employees were Recruited in key areas like HR Marketing FinanceProduction and other operational areas of the Company and provided adequate training.
Current year Observations and proposed actions based on current yearobservation
(ii) The following actions required to be taken based on current year'sobservations
To start running Unit IV and make it operational
p) FAMILIARIZATION PROGRAMME OF THE INDEPENDENTDIRECTORS
The Company has formulated a familiarisation programme for IndependentDirectors with the objective of making them familiar with their role rights andresponsibilities nature of the industry business model and compliance management. Thedetails of the programme have been uploaded on the Company's website www.sambandam.com.
(i) All the Independent Directors have given the declarations pursuantto Section 149(7) of the Act affirming that they meet the criteria of independence asprovided in Sub Section (6).
(ii) In the opinion of the Board all the Independent Directors fulfillthe conditions for being appointed as Independent Director as specified in the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
(iii) No Independent Director has resigned from the Directorship of theCompany before the expiry of the term of appointment during the financial year ended March312020.
(iv) All Independent Directors have registered under theIndependent Director's Databank as maintained by Indian Institute of CorporateAffairs and the details are furnished hereunder :
|Following are the details of deposits covered under Chapter V of the Companies Act 2013: ||Share holders ||Directors ||Total |
|i. Deposits Accepted during the year (2019-20) ||34.45 ||172.50 ||206.95 |
|ii. Deposits remaining unpaid or unclaimed as at the end of the year ||Nil ||- ||- |
|iii. Any default in repayment of deposits or payment of interest thereon during the year ||Nil || || |
|iv. Total Deposits outstanding at the end of the year ||564.16 ||304.50 ||868.66 |
Company has duly complied with the provisions of Section 73 of theCompanies Act 2013 read with relevant rules with respect to fixed deposits.
r) INDUSTRY ASSOCIATIONS
Sri S. Dinakaran Joint Managing Director of the Company is a member ofthe Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL) Mumbai andas director in Confederation of Indian Textile Industry ( CITI ) Delhi. By virtue of theoffices he holds Sri S. Dinakaran has been representing to the Industries and FinanceMinistries at the appropriate time to get relief to the ailing Textile Industry.
s) REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE ASSOCIATECOMPANIES There are two associate Companies -
SPMM Health Care Services Pvt. Ltd. - 49.75% investment in theshare capital of that Company
This Company has recorded total revenue of Rs. 445.70 Lakhs andprofit after tax (PAT) of Rs. 6.22 Lakhs during the year ended 31.3.2020 as againstRs. 457.27 Lakhs Revenue and Rs. 24.65 Lakhs PAT recorded in the previous year 2018-19.
Salem IVF Centre Pvt. Ltd. - 26.88% investment in the share capitalof that Company.
This Company has recorded a revenue of Rs. 307.15 lakhs and aprofit of Rs. 1.03 lakhs during the year as against the revenue of Rs. 231.63 lakhsand loss Rs. 35.94 lakhs the previous Year 2018 - 2019.
Highlights of performance of Associate Companies
SPMM Health Care Services Pvt Ltd. There is a marginal decrease inrevenue by 2.52 % on operations during 19-20 when compared to 18-19. Accordingly Profitafter tax has also decreased and this is due to increase in operational expenditure in19-20 when compared to 18-19.
Salem IVF Centre Pvt Ltd. revenue from operations has increased by 32.61% from operations during 19- 20 when compared to 18-19.and the company has earned aprofit during the year due to increase in revenue.
t) CHANGES OR COMMITMENTS AFTER THE YEAR END ON31.3.2020
Because of the pandemic Covid 19 prevailed across the country thecompany had to temporarily suspend its manufacturing and other operations for two months(from last week of March 2020 till third week of May 2020) due to government directive oncovid 19 pandemic and therefore revenue generation by sales has become NIL during thisperiod . Based on RBI circular to Banks on 27.3.2020 for supporting the companies in termsof credit availability our company bankers have lent a temporary loan to our companytitled as Covid 19 loan repayable on demand . The company has received atemporary loan ( Covid 19 loan) from the company's bankers to the tune of Rs 4.37 croresexclusively for mitigating the expenditure of payment to creditors and fixed expenses ofthe company during the April to June 2020 (Lock down period ) and this has become materialin terms of repayment comitment required by the company to the bankers .This materialchange of NIL revenue and commitment to the bankers on repayment of loan shall impact thefinancial position of the Company between the close of the financial year on 31.3.2020 andthe date of this report.
u) Information pursuant to section 197 (12) of theAct read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration ofManagerial personnel) Rules 2014 :
(i) Ratio of the remuneration of each Director Company SecretaryChief Financial Officer and Chief Technical Officer to the median remuneration of theemployees of the Company; AND
(ii) Percentage increase in their remuneration in 2019-20 as comparedto the previous year (2018-19): (Median Remuneration : Rs.120000 in 2019-20)
|Name of whole-time || |
Remuneration in 2019-20 Rs. lakhs
Remuneration in 2018-19*** Rs. lakhs
% increase in 2019-20
Ratio to Median Remn.
Ratio of 2019-20 Remuneration to
|Directors and KMP ||Revenue ||Net Profit |
|Mr. S.Devarajan Chairman and Managing Dir ||84.00 ector ||66.00 ||27.27% ||68.86 ||0.44% ||30.47% |
|Mr. S.Jegarajan Joint Managing Director ||81.00 ||63.30 ||27.96% ||66.40 ||0.42% ||29.38% |
|Mr. S.Dinakaran Joint Managing Director ||54.00 ||36.60 ||47.54% ||44.27 ||0.28% ||19.59% |
|Mr. S.Natarajan Company Secretary ||13.00 ||12.00 ||8.3% ||10.66 ||0.07% ||4.72% |
|Mr. P.Boopalan Chief Financial Officer ||20.00 ||NA** ||NA ||16.39 ||0.10% ||7.26% |
|Mr. D.Niranjan Kumar Chief Marketing Officer ||27.00 ||22.50 ||20% ||22.13 ||0.14% ||9.79% |
|Mr. J.Sakthivel Chief Technical Officer ||27.00 ||22.50 ||20% ||22.13 ||0.14% ||9.79% |
*** The remuneration in FY 18-19 first six months was with oldremuneration and second six months was with changed remuneration
** CFO joined from June 2019 and figs for 18-19 is Not applicablePercentage increase in the remuneration of all employees in 2019-20 : 7.10 %
|Name of Non-executive Directors ||# Sitting fees in 2019-20 Rs. lakhs ||# Sitting fees in 2018-19 Rs. lakhs |
|Mr. D.Sudharsan - ||0.50 ||0.55 |
|Name of Independent Directors ||# Sitting fees in 2019-20 Rs. lakhs ||# Sitting fees in 2018-19 Rs. lakhs |
|Dr. R.Ramarathnam ||0.40** ||2.35 |
|Dr. V.Sekar ||4.15 ||3.00 |
|Mr. D.Balasundaram ||3.90 ||2.35 |
|Mr. S.Gnanashekaran ||4.15 ||3.00 |
|Mr. Kameshwar M Bhat ||4.15 ||3.00 |
|Smt. Annapoorani Venugopalan ||0.90 ||0.25 |
** Dr.R.Ramarathnam Independent Director resigned from the board w.e.f11.08.2019 # Only sitting fees is payable to Non-executive and Independent Directors forthe meetings of the Committee or of the Board attended by them.
(a) Variation in the sitting fees paid to Directors depends on theirattendance at the Board / Committee Meetings.
(iii) Number of permanent employees on the rolls of the Company : 976
(iv) No variable component of the remuneration availed by any director.
At the 44th Annual General Meeting held on 11.08.2018 M/s R.Sundararajan & Associates Chartered Accountants were reappointed as statutoryAuditors of the Company from the financial year 2018-2019 to 2021-2022. Statutory AuditorsM/s R. Sundararajan & Associates Chartered Accountants have confirmed theireligibility and willingness to continue their office. On the recommendation of the AuditCommittee Board is placing the resolution for the remuneration payable to the statutoryAuditors for the FY 2020-21 before the members' for approval.
5 Particulars of Loans Guarantees or Investmentsunder Section 186 of the Companies Act 2013
Details of loans guarantees and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in note 50 to the notes tothe financial statements.
6 VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an established vigil mechanism for Directors /Employees to report concerns about unethical behavior actual or suspected fraud orviolation of the code of conduct or ethics policy. It also provides for adequatesafeguards against victimization of directors/ employees who avail of the mechanism. TheCompany affirms that no personnel have been denied access to the audit committee. TheCompany has formulated a Policy on Vigil Mechanism and has established a mechanism thatany personnel may raise Reportable Matter after becoming aware of the same. All suspectedviolations and Reportable Matters are reported to an Independent Director and chairman ofthe Audit Committee at his e- mail id KAMESHWARMBHAT@GMAIL.COM The keydirections/actions are informed to the Managing Director of the Company.
The Company has adopted Whistle Blower Policy in line with theprovisions of Section 177(9) of the Companies Act 2013 which can be accessed on theCompany's Website under the web link http://www.sambandam.com
7 AUDIT COMMITTEE :
Details of Composition of Audit committee are covered under corporategovernance report annexed with this report and forms part of this report. Further duringthis year all the recommendations of the Audit committee have been accepted by the Board.
8 REPORTS OF STATUTORY AUDITORS AND SECRETARIALAUDITORS
Reports of the Statutory Auditors and the Secretarial Auditors for theyear under review are free from any qualification reservation or adverse remark ordisclaimer. Secretarial Audit Report in Form MR-3 is attached which forms part of thisreport - refer Annexure VI. It also confirms that none of the directors of the board ofdirectors on the board of the company have been debarred or disqualified from beingappointed or continuing as the directors of the companies by the board /MCA or any suchstatutory authority.
Applicable Secretarial standards ie SS1 and SS2 relating toMeeting of the board of directors and General meetingrespectively have been duly complied with by the company.
9 EXTRACT OF ANNUAL RETURN
Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of theCompanies Act 2013 is also attached which forms part of this report - refer Annexure VII.
10 TRANSFER OF UNPAID AND UNCLAIMED DIVIDENDAMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT :
Pursuant to the provisions of section 124 of the Companies Act 2013which came in to effect from 07.09.2016 the declared dividends which remained unpaid orunclaimed for a period of consecutive seven years has to be transferred by the company tothe Investor Education and Protection Fund (IEPF) established by the Central Government.During the year 2019-20 transfer of Unclaimed final Dividend of the year 2011-12 was notapplicable since no dividend was declared for the financial year 11-12.
However shareholders are requested to take note that as per IEPFrules the company is required to transfer unpaid dividend and underlying shares also inrespect of which final dividend was not claimed /paid of the year 13-14 to IEPFauthority. Shareholders who have not claimed their dividend of the year 13- 14 can writeto the Company or Registrar and transfer agent M/s Cameo Corporate Services Limited at'Subramanian Building' No.1 Club House Road Chennai - 600 002 who are the Registrarsand Share Transfer Agents (RTA) of the Company for further details and for claimingunclaimed dividend lying unpaid. In case no valid claim is received the shares in respectof which the dividend are lying unpaid /unclaimed will be transferred to IEPF authority onthe due date Further in terms of rule 6(3) of the IEPF rules statement containing thedetails of shareholders who have not claimed dividend for previous years and his folionumber /DP-ID /client ID is made available on company's website www.sambandam.com forinformation and necessary action by shareholder. In case the concerned shareholder wishto claim the shares after transfer to IEPF an application has to be made to the IEPFauthority in form IEPF- 5 online and submit the hard copy of such form IEPF -5 along withnecessary documents to the company as prescribed under the rules and the same is availableat IEPF website (ie) www.iepf .gov.in.
|Dividend year ||Date of declaration of dividend ||Due date for transfer to IEPF |
|12-13 ||Dividend not declared ||Not applicable |
|13-14 ||28.09.2014 ||27.10.2021 |
|14-15 ||27.09.2015 ||26.10.2022 |
|15-16 ||06.08.2016 ||05.09.2023 |
|16-17 ||12.08.2017 ||11.09.2024 |
|17-18 ||11.08.2018 ||10.08.2025 |
|18-19 ||11.08.2019 ||10.08.2026 |
11 Annexures to this Board Report
The following are the annexures to this report
1. Statement containing salient features of the financial statement ofassociate company (Form AOC - 1) in Annexure - I
2. Form AOC - 2 in Annexure - II
3. CMD / CFO Certification in Annexure - III
4. Conservation of energy technology absorption Research anddevelopment and foreign exchange earnings and outgo in Annexure - IV
5. Details of CSR Expenditure in Annexure - V
6. Secretarial Audit Report (Form MR-3) in Annexure - VI
7. Extract of Annual Report (Form MGT-9) in Annexure - VII
8. Corporate Governance Report in Annexure - VIII
12 CAUTIONARY NOTE
Statements in the Board's report and the management discussion andanalysis describing the Company's objectives expectations or predictions may be forwardlooking within the meaning of applicable securities laws and regulations. Actual resultsmay differ materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother related factors such as litigation and industrial relations
Your directors thank the Company's customers vendors and investors fortheir continued support during the year. Your directors place on record their appreciationfor the contribution made by the employees at all levels. Your Company's consistent growthhas been made possible by the hard work solidarity cooperation and support of themanagement team.
Your directors thank State Bank of India Karnataka Bank LimitedCanara Bank Axis Bank Limited Catholic Syrian Bank and the State and Central Governmentdepartments for their support and look forward to their continued support in future.
| ||S. Devarajan |
|Salem ||Chairman & Managing Director |
|June 28 2020 ||DIN :00001910 |