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Sarla Performance Fibers Ltd.

BSE: 526885 Sector: Industrials
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OPEN 42.35
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P/E 8.63
Mkt Cap.(Rs cr) 347
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OPEN 42.35
CLOSE 41.90
52-Week high 82.40
52-Week low 41.30
P/E 8.63
Mkt Cap.(Rs cr) 347
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sarla Performance Fibers Ltd. (SARLAPOLY) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twenty Fourth Annual Report on the businessoperations together with the Audited Financial Statements for the financial year ended31st March 2017 and on the state of affairs of the Company as on the date of this report.

Corporate Overview

Sarla Performance Fibers Limited ( Your Company ) is engaged in the business ofSpecialty Yarn from Last 23 Years having with 2 Manufacturing Plants at Silvassa UT ofDadra & Nagar Haveli and 1 Dyeing Plant at Vapi Gujarat and Wholly Owned Subsidiaries(WOS) at British Virgin Islands (BVI) and United States of America (USA) with Group sCorporate Office situated at Mumbai.


The highlights of the performance of the Company for the year ended March 31 2017 issummarized below:

Particulars Financial Year ended March 31 2017 Financial Year ended March 31 2016
Sales & Operations 27367.21 25594.13
Less: Excise Duty (1413.17) (1250.39)
Net Sales 25954.04 24343.73
Add: Other Income 2026.98 2181.88
TOTAL INCOME 27981.02 26525.61
Profit Before Interest Depreciation & Tax 7446.35 7197.69
Less: Finance Cost 579.11 508.07
Less: Depreciation & amortization 1243.55 1014.40
PROFIT BEFORE TAX 5623.69 5675.21
Less: Provision for Taxation
- Current (707.40) (1207.10)
- Deferred (772.60) 202.27
- Earlier Years
- MAT credit Entitlement
NET PROFIT AFTER TAX 4143.69 4265.83
Balance bought forward 8816.77 6836.62
Excess provision for Dividend distribution tax written back 42.49 269.59
Effect of Change in Method of Depreciation
- Proposed Dividend 918.53 208.75
- Interim Dividend Paid 668.02
- Dividend Tax 186.99 178.49
- Transfer to General Reserve 1500.00


Operations: During the year under review the sales of the Company were Rs.27367.21 Lacs as against Rs. 25594.13 Lacs in 2015-16 witnessing an increase of 6.93 %.The FOB value of exports stood at Rs. 14635.78 Lacs compared to Rs 15193.24 Lacs in2015-16.

Profitability: The profit before Depreciation Interest & Tax was Rs. 7446.35Lacs as compared to Rs. 7197.69 Lacs in the previous year after providing fordepreciation of Rs. 1243.55 Lacs (Previous Year Rs. 1014.40 Lacs) & provision fortaxation of Rs. 707.40 Lacs (Previous Year Rs. 1207.10 Lacs) there was a net profit of

Rs. 4143.69 Lacs as compared to Rs. 4265.83 Lacs in the Previous Year.


This section of the Directors' Report has been included in adherence to the spiritenunciated in the Code of Corporate Governance approved by the Securities and ExchangeBoard of India. Statements in this Management and Discussion Analysis describing theCompany s objectives projections estimates and expectations may constitute forwardlooking statements within the meaning of applicable laws and regulations. Although theexpectations are based on reasonable assumptions the actual results might differ.

A. Business Overview

Economy: Global economy growth continued to stagnate following slow trades lowinvestments and policy uncertainties in advanced economies. Major global events during theyear included United Kingdom s decision to leave the European Union and the outcome ofpresidential elections in United States of America both the events are expected to havelong-term effects on the global economy. Global growth in 2016 was estimated at 3.1% andis projected to rise to 3.5% in 2017. Growth in emerging markets and developing economiesis expected to pick up in 2017 on the back of fiscal stimulus measures in developedeconomies and narrowing of divergence between commodity exporters and importers. The mainfactors that could possibly weigh on the medium-term growth prospects across many emergingmarkets and developing economies are weak investments below par levels of productivitycoupled with heightened policy uncertainty and protectionist pressures.

India emerged as a bright spot in an otherwise subdued world economy when it overtookChina in 2015-16 as the fastest- growing major economy in the world. Though India sfundamentals still remain strong the recent demonetization initiative undertaken by theIndian Government is expected to lowered India s GDP growth from 7.6% in FY16 to 7.1% inFY17. The IMF mentioned that this cash shortage and slowed private consumption would onlybe a temporary disruption and the otherwise healthy economy will return to familiarterritories post the predicted slowdown in FY17. The Indian Government s decisive policymovement towards ensuring fiscal consolidation and pegging back inflation will help itmaintain economic stability in the years ahead. The cut in interest rates by the IndianCentral bank during FY 18 remains another potential positive growth driver.

Business Overview: Sarla Performance Fibers Limited is a leading exporter ofRegular as well as High Tenacity Polyester and Nylon Yarns. It started operations 23 yearsago as a commodity manufacturer of Man Made Fiber but transformed into a high value addedyarn maker in the past decade. It has an installed capacity of 11900 tons per annum formanufacturing yarns in Silvassa and 3200 tons per annum for a Dyeing unit at Vapi. Itsstate of the art 30 tons per day POY plant in Walterboro South Carolina in the US isoperating at 30% plus capacity. The company exports to 45 countries.

SPFL also owns Wind Power Capacity of 14.75 MW in totality located in different statsie. 6 MW is in the state of Maharashtra 5.75 MW in the states of Gujarat and 3 MW in thestate of Madhya Pradesh. Our plant load factor for the fiscal year 2017 was about 23%.

Customer Segments and Growth: The Company's customer segments can be divided intofour parts:

1) Innerwear Narrow Fabrics Hosiery and Sportswear.

2) Threads.

3) Industrial Yarn.

4) Regular Yarn.

Turnover Break Up (Customer Segment-wise)
Segments FY 2016-17 (% of Total Sales) FY 2015-16 (% of Total Sales)
Innerwear Narrow Fabrics Hosiery and Sportswear 37.50 35.35
Threads 32.45 31.80
Industrial Yarns 12.45 11.45
Regular Yarns 17.60 21.40
100.00 100.00
Turnover Break Up (Geographical)
South North & Central America 17.60 27.53
Middle East & Europe 40.25 35.34
Africa 3.82 3.99
Asia Pacific 38.33 33.14
100.00 100.00

In all we export to over 45 countries and to 105 customers. Our customer concentrationis well distributed and no single customer exceeds more than 10% of our revenue.

B. Opportunities and Threats:.

The Indian Textile Industry is one of the leading textile industries in the world. Itis one of the key sectors of India s manufacturing segment as it contributes significantlyto the economy in terms of employment generation and foreign exchange revenue.

The Indian textiles industry is one of the oldest industries of the country.The textileindustry has two broad segments. First the unorganized sector consisting of handloomhandicrafts and sericulture and the second is the organised sector consisting of spinningweaving knitting garments and home textiles segment. The industry has a majorcontribution to the national economy in terms of direct and indirect employment generationand net foreign exchange earnings. The sector contributes 14% to industrial production 4%to India s Gross Domestic Product (GDP) and 15% to the country s export earnings. It isthe second largest employment provider in the country employing nearly 51 million peopledirectly and 68 million people indirectly in 2015-16. Exports have been a core feature ofIndia s textile sector.

The Indian textiles export market estimated at $18 billion is expected to grow at aCAGR of 4% as compared to the global CAGR of 3% over 2016-26

One of the positive factors in recent time is the increasing gap between cotton andpolyester prices. Though there was a glut in cotton and prices had fallen due tooversupply and less offtake from China the synthetic fiber prices also fell following theslump in crude oil and its derivatives. We believe the demand for synthetic fiber willcontinue to outpace that of cotton due to the inherent price advantage and qualityimprovements.

One of our big market is the NAFTA and CAFTA market comprising of North Americancustomers. Due to the growing preference for locally sourced products the demand forsynthetic yarn in this geography is increasing by 5-6% p.a. We are beneficiaries of thisdue to our direct presence in South Carolina US through our manufacturing facility.Moreover there are substantial cost advantage of manufacturing in the US making usreasonably cost competitive vis a vis suppliers from China ASEAN and India.

We also have a strong opportunity for growth in the nylon yarn segment with nylon 66production to ramp up this year.

C. Outlook: The prospects for outsourcing of polyester/nylon yarns remain healthy.This is because of 1) Increased capacity in India and US locations and 2) Stable INR vsUSD.

While we remain optimistic about future growth We expect margin to remain flat atconsolidated level in FY18 due to increase in operating expenditure interest cost anddepreciation on account of the new facility at US.

D. Financial Performance: (Rs. in Lacs)
Item 2016-2017 2015-2016 % increase
Raw Material Cost& Purchase of Stock in trade 11625.57 11726.96 -0.86%
Expenditure 8909.10 7600.95 17.21%
EBIDTA 7446.35 7197.69 3.45%
Interest Cost and Debt 579.11 508.08 13.98%
Fixed Assets (Gross Block) 27690.32 20075.28 37.93%
Net Current Assets 3552.55 6716.81 -47.11%
Working Capital Finance 8186.50 9233.57 -11.34%
Cash & Bank Balances 7213.03 9868.45 -26.91%

Raw Material Cost: The Raw Material prices mostly remain stable during F.Y. 2016-17due to stable crude oil prices.

Expenditure: the increase in expenditure is mostly due to increase in consumptionof stores and packing material due to increase in operations.

Interest Cost: The increase in interest cost is due to increase in loans taken forsetup of Windmills.

Fixed Assets: The total increase in Gross Block of Fixed assets was for Rs.7621.30 lacs out of which Rs. 3024.62 Lacs is attributable to increase in capacity ofwind mill by 4.5 MW in the State of Gujarat Rs. 3102.44 Lacs toward Purchase of Land atSilvassa and Balance toward purchase of Plant and Machinery.

Net Current Assets and Cash & Cash Equivalents: The Decrease in Net CurrentAssets is majorly due to decrease in fixed deposits which are utilised for the purpose ofincurring capital expenditure for Wind Mills and Other Plant & Machineries.

E. Risk and Concerns

Raw material sourcing: We source 51% of our RM requirements (nylon and polyesterchips/fiber) from India and 49 % from imports. For our RM sources we have multiplesuppliers. Last year the price of our major RM POY ranged between Rs 50 to 85 per kg andthat of Nylon yarn ranged between Rs 150 to 225per kg.

Interest Rates: The Company s average gross interest cost in the last yearincreased by 13.98%. The company's present Debt Equity

Ratio is 0.54. The long term Debt equity Ratio is 0.64. Interest costs are 2.06% oftotal revenue.

Exchange Rate: 54% per cent of company revenue is in foreign currency (Dollar Euro& GBP) and balance is in INR. Also we import 22.19% per cent of turnover (82.22% ofwhich consists of raw material purchases) creating a natural hedge to that extent. Apartfrom this from time to time forward cover is taken to hedge exposure in foreign currency.For FY17 our average forward cover was for 3 months of our revenue.

Inflation: The Company does not cater to retail customers. Its sales are to thebusiness segment and hence it has been able to pass on inflationary pressures. It does notexpect any major impact due to current high level of inflation.

F. Internal Control System and Their Adequacy: The Company has in place reasonableinternal control system both from the business process and regulatory compliance point ofview. The system is reviewed and updated on regular basis. The company is continuouslyupgrading its internal control systems by measures such as strengthening of InformationTechnology infrastructure and use of external management consultant services.

G. Human Resources/Industrial Relations: The Company has always valued and nurturedits human resources nonetheless globalization high growth of the Indian economy inrecent times and its ambitious growth targets have made talent attraction and retentionamongst the biggest challenges the company faces today.

The company has in place a good appraisal system to motivate all the employees. Thecompany believes in continuous development for all its employees and for that company isplanning to frame a program wherein all the employees will be provided training intorelated areas of skill development.

H. Capital Expansion and Investment:

Last year we incurred a CAPEX of Rs. 7621.30 Lac which includes addition in Wind millof Rs. 3024.62 Lacs Rs. 3102.44 towards purchase of Land. For fiscal 2017 we envisageCAPEX of Rs. 1200.00 Lacs in textile segment.

I. Value Added Statement (Rs. in Lacs)
Particulars 2016-17 2015-16 2014-15 2013-14 2012-13
Income from Production/Operations 25954.04 24871.70 27229.95 24365.14 23668.86
Add : Other Income 2026.98 2181.88 1146.98 783.89 78.50
CORPORATE OUTPUT 27981.02 27053.58 28376.94 25149.03 23747.36
Less : Cost of Raw Materials Consumed 10852.68 11095.02 12023.68 12718.59 11584.96
Less : Cost of Traded Goods 57.07 1159.90 2962.63 1307.76 1173.39
Less : Other Manufacturing Expenses 5964.82 4847.21 4792.65 4192.62 4066.11
Less : Administrative & Other Expenses 2022.55 1922.64 2173.37 1760.33 2543.43
EQUALS GROSS VALUE ADDED 9083.90 8028.81 6424.61 5169.72 4379.47
Less : Depreciation &Amortization 1243.55 1014.40 913.55 935.98 802.72
Less : Extra Ordinary/Prior Period Items
EQUALS NET VALUE ADDED 7840.35 7014.41 5511.06 4233.75 3576.75
To Personnel 921.73 831.09 778.28 619.19 494.13
To Taxes (including tax on proposed div.) 1666.99 1587.87 1383.90 1087.74 791.17
To Creditors (via interest) 579.11 508.07 514.48 388.89 431.08
To Investors (via dividend) 918.53 876.78 668.02 521.27 417.02
To The Company (via retained earnings) 3753.99 3210.60 2166.38 1616.66 1443.35
7840.35 7014.41 5511.06 4233.75 3576.75


Based on the Company s performance the Directors are pleased to recommend which issubject to approval of the members at the forthcoming AGM a dividend of Rs. 1.10 per share(110 %) on the face value of Re 1/- each for the financial year ended 31st March 2017[Previous Year Rs 1.05 per share (105%)] The dividend payout will aggregate Rs. 918.53Lacs (Previous year: Rs. 876.78 lacs) and the tax on distributed profits payable by theCompany would amount to Rs. 186.99 Lacs (Previous year Rs. 178.49 lacs).The dividend shallbe paid to members whose names appear in the Register of Members as on 22nd September2017.


The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in 'AnnexureA' to this Report.


Pursuant to Section 173 of the Companies Act 2013 the Board Meetings are to be held atleast four times in a year and the gap between two Board Meetings should not be more than120 days.

During 2016-17 the Board met Four (4) times ie. on 30th May 2016 11th August 201627th October 2016 and 13th February 2017 and in no case the gap between two BoardMeetings was more than 120 days.

The meetings of the Board are generally held in Mumbai where Company's Corporate Officeis situated unless otherwise decided by the Board. The minutes of the meetings arefinalized by the Chairman and confirmed by the Board.

A detailed agenda with notes to agenda of the meeting is being prepared and is beingprovided to the Directors. The details about attendance of directors at board meetings aregiven in the Corporate Governance Report.


The paid up Equity Share Capital as on 31st March 2017 was Rs. 835.03 Lacs. During theyear under review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity. There is no change in Share capital of the Companyduring this year.

Except Mr. Madhusudan Jhunjhunwala Mr. Krishnakumar Jhunjhunwala and Ms. NehaJhunjhunwala None of the Directors of the Company held shares of the Company.


Cash and cash equivalent as at 31st March 2017 was Rs. 7213.03 Lacs. The was adecrease of 26.91% majorly due to decrease in fixed deposits which are used for thepurpose of incurring CAPEX.

Your Company prepares its financial statements in compliance with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.The financial statements have been prepared on historical cost basis. The estimates andjudgements relating to the financial statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of transactions and reasonablypresent the Company s state of affairs profit and cash flow for the year ended 31stMarch 2017.


The Company has not accepted any Deposit covered under Section 73 of the Companies Act2013 and The Companies (Acceptance of Deposit) Rules 2014.


Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements. Theinterest free loans have been given to wholly owned subsidiary of the company's forbusiness purposes.


As required u/s 135 of the Companies Act 2013 the Board in its meeting held onSeptember 30 2014 formulated CSR Committee for formulating the CSR Policy andimplementing the Corporate Social Responsibility (CSR) activities of the Company.

The CSR Committee had met on 27th October 2016. The Company was required to make CSRcontribution aggregating to 2% of average net profits of preceding three financial years.The Committee earmarked Rs. 87.03 Lacs towards company's CSR activities for financial yearunder review. However the Committee was by then in process of identifying areas where itcould contribute money. Hence the company could not contribute to CSR in time the fullamount required. Efforts would be made to contribute more in the coming years as we feelthe sense of social security. The CSR Policy is available on the Company Website

The Annual Report on CSR activities is attached with this report as

'Annexure B'.


The Company has an Internal Control System commensurate with the size of itsoperations. The Internal Audit Department monitors and evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company and its subsidiaries.Based on the report significant audit observations and corrective actions thereon areregularly presented to the Audit Committee of the Board.

The Company's Internal Auditor also monitors and evaluates the internal control systemand submits Quarterly Reports which are placed before the Audit Committee of the Board.


The Company has a Whistle Blower Policy to deal with instance of fraud andmismanagement. The Policy is available Company website at

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2016-17

No of complaints received: Nil
No of complaints disposed off: Nil


The Company will make available the Annual Accounts of the subsidiary Companies to anyMember of the Company who may be interested in obtaining the same.

No Company has become or ceased to be a Subsidiary during the year under consideration.

The Company is not having any Holding Company or Joint Venture or any AssociatesCompany.

The Company does not have any Indian Company as Subsidiary. There are two wholly ownedoverseas subsidiaries viz. Sarla Overseas Holdings Ltd (BVI) and Sarlaflex Inc. (USA) andone Step down subsidiary viz. Sarla Europe (LDA) as on 31st March 2016. There has been nomaterial change in the nature of the business of the subsidiaries. The Policy fordetermining material subsidiaries as approved may be accessed on the Company's website

Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on Company website

The salient features of the financial statements of the subsidiaries in pursuance ofSection 129 (3) of the Companies Act 2013 read with Rule 5 of The Companies (Accounts)Rules 2014 are given herein below in prescribed form AOC-1: (Rs. in Lacs)

Name of the Subsidiary Sarla Overseas Holdings Ltd (SOHL) Sarlaflex Inc Sarla Europe LDA (Subsidiary of SOHL)
Reporting period for the subsidiary April to March April to March April to March
Reporting Currency USD USD EURO
Conversion Rate 67.09 67.09 73.61
Number of Shares 435000 989000 3
Share Capital 196.99 596.49 3.18
Reserve and Surplus 5765.11 (3625.91) (25.59)
Total Assets 6385.77 17335.21 251.78
Total Liabilities (Including Reserves) 6385.77 17335.21 251.78
Investments 554.82 5915.95
Turnover 4404.77 3428.05 250.07
Profit before Taxation 1297.31 (1146.62) 53.83
Provision for Taxation 13.65
Profit after Taxation 1297.31 (1146.62) 40.18
Proposed Dividend 211.31
% of shareholding 100% 100% 60%
Country British Virgin Island United States of America Portugal


The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued by the Institute ofChartered Accountants of India form part of this Annual Report.

The audited financial statements for the year ended 31st March 2017 for each of thecompany's subsidiary are available on the company website


In terms of Provisions of The Section 152 (6) of The Companies Act 2012 Ms. Neha K.Jhunjhunwala Director retire by rotation of the further coming Annual General Meeting andbeing eligible offers herself for re-appointment. The profile of Director seekingreappointment present to Regulation 36 of the SEBI (LODR) Regulation 2015 is included inthe Annual Report.

No Director or Key Managerial Personnel was appointed or has resigned during the yearunder consideration.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 of SEBI (Listing obligation and Disclosure Requirement) Regulations 2015.


Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Disclosure

Requirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance the directors individually as well as the evaluation ofthe working of its Audit Committee CSR Committee Nomination & RemunerationCommittee Risk Management Committee and Stakeholder Relationship Committee. The manner inwhich the evaluation has been carried out has been explained in the Corporate GovernanceReport.


The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel's and Senior Management of theCompany. This Policy also lays down criteria for selection independence and appointmentof Board Members. The details of this policy are briefly explained in the CorporateGovernance Report.

Particulars of Employees drawing remuneration exceeding Rs. 8.50 Lacs per month or Rs.1.02 Crores per annum:

During the year under review there was no employee drawing remuneration in excess ofwhat is prescribed under Rule 5 (2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

Information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees:

1. The Ratio of the remuneration paid to each Director to the median remuneration ofthe employees of the Company during the year under consideration:

Name of Director Remuneration Paid Median Remuneration Ratio
Mr. Madhusudan S. 13200000 147312 89.60x
Executive Director)
Mr.Krishnakumar 14700000 147312 99.78x
M. Jhunjhunwala
(Managing Director)

Independent directors are paid sitting fees for attending board meetings which are notconsidered.

2. The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary in the financial year:

Name of Director Remuneration paid Percentage Increase in current financial year
Mr. Madhusudan S. 13200000 22.22%
Jhunjhunwala (Chairman Whole-time Director)
Mr.Krishnakumar M. 14700000 22.50%
Jhunjhunwala (Managing Director)
Mr. Mahendra Sheth (CFO & Company Secretary) 4349075 27.60%

3. The Average percentage increase in the median remuneration of employees in thefinancial year: 7-10%

4. The number of permanent employees on the rolls of company: 167.

5. Average percentage increase in salaries of non-managerial employees was 7-10 % ascompared to average percentage increase in managerial remuneration which was 10-15 %

6. Comparison of remuneration of the Key Managerial Personnel against the performanceof the Company:

i) Change in sales of the Company: 6.93% increase

ii) Change in the PAT of the Company: -2.86% decrease

iii) Change in the remuneration of

Mr. Madhusudan Jhunjhunwala

Mr. Krishnakumar Jhunjhunwala and

Mr. Mahendra Sheth (KMPs) (As Mentioned in Sr. No. 2)

Name of Director Remuneration paid Percentage Increase in current financial year
Mr. Madhusudan S. 13200000 22.22%
Jhunjhunwala (Chairman
Whole-time Director)
Mr.Krishnakumar M. 14700000 22.50%
(Managing Director)
Mr. Mahendra Sheth 4349075 27.60%
(CFO & Company Secretary)

7. Increase in the remuneration paid to the Executive Directors (As mentioned above)Three is no Increase in sitting fees paid to the Independent Directors and Non ExecutiveDirectors:

8. Variations in the market capitalisation* 2016 - Rs. 527.32 Cr 2017 - Rs. 492.67 Cr

9. Price Earning Ratio* as on 31st March 2017: 11.89 Price Earning Ratio* as on 31stMarch 2016: 12.36

10. Percentage Increase in market quotation in the shares of the Company in comparisonto the rate at which the Company came out with the last public issue: Not Applicable.

11. Percentage increase over decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last publicoffer: Not Applicable

The Board affirms that the remuneration paid is as per the Remuneration Policy of theCompany.

Neither Managing Director nor Whole Time Director of the Company receives anyremuneration or commission from any Subsidiary of the Company.

*Market Capitalisation and Price Earnings Ratio are calculated based on the Stock Priceon BSE Ltd.


To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134(3)c of the Companies Act 2013:

a. that in the preparation of annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same;

b. that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of the Company for that year;

c. that the Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual accounts have been prepared on a 'going concern' basis.

e. that the Directors have laid down internal financial controls and such internalfinancial controls are adequate and operating effectively

f. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively


All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business except one transactiondetails of which is mentioned in Form AOC-2 attached as Annexure C of this Report. Thereare no materially significant related party transactions made by the Company withPromoters Directors or Key Managerial Personnel which may have a potential conflict withthe interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee and also the Boardfor approval. The particulars of contracts or arrangements with related parties referredto in subsection 1 of Section 188 of the Companies Act 2013 are furnished in Form AOC-2in 'Annexure C' to this report.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website



Sundarlal Desai & Kanodia (Firm Registration Number - 110560W) CharteredAccountants Mumbai were appointed as the Statutory Auditors of the Company on yearlybasis in compliance with the provisions of the Companies Act 1956 till the commencementof the new Companies Act 2013. Consequently in compliance with Section 139(2) of theAct Sundarlal Desai & Kanodia Chartered Accountants were appointed as theStatutory Auditors of the Company at the 21st AGM held on 27th September 2014 to holdoffice for a period of 3 years.

Pursuant to this Sundarlal Desai & Kanodia Chartered Accountants shall holdoffice till the conclusion of Twenty Fourth AGM of the Company and in view of thecompletion of the term of 3 years are not further eligible to be re-appointed as theStatutory Auditors of the Company in the ensuing AGM of the Company. The Board ofDirectors based on the recommendation of the Audit Committee has recommended appointmentof CNK & Associates LLP Chartered Accountants Mumbai (ICAI Firm Registration No.101961W) as the Statutory Auditors of the Company for a term of five consecutive yearsfrom the conclusion of Twenty Fourth AGM of the Meeting scheduled to be held in the year2017 till the conclusion of the Twenty Nineth Annual General Meeting to be held in theyear 2022 for the approval of the shareholders subject to the ratification of theirappointment by the shareholders of the Company at every AGM held thereafter. The Companyhas received written consent and certificate of eligibility pursuant to the provisions ofSections 139 141 and other applicable provisions of the Act and rules framed thereunder(including any statutory modification or re-enactment thereof for the time being in force)from CNK & Associates LLP Chartered Accountants. Further CNK & Associates LLPChartered Accountants have confirmed that they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India as required under theSEBI Listing Regulations.


There is no Audit qualification in the standalone financial statements by the StatutoryAuditors for the year under review.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed CS Ajit Sathe- Proprietor of M/s A. Y Sathe & Co. Company Secretaries inPractice (Registration No.:FCS2899/COP738) to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report is annexed herewith as Annexure D .

The Secretarial Auditor has made following observations.

I) Under the Companies Act 2013:

The Company has not spent full amounts due during financial year 2016-17 i.e. 2% ofaverage net profit of last three financial years towards Corporate Social Responsibilityactivities pursuant to Section 135 of the Companies Act 2013.

The Company has continued to give interest free loans to its wholly owned subsidiarycompany during the financial year 2016-17.

Board's Reply to Secretarial Auditors' observations.

I) Under the Companies Act 2013:

The Committee formed for CSR Purpose was in process of identifying areas where it couldcontribute money and therefore full amount could not be contributed towards CSRobjectives.

As a part of project funding the Company had agreed to give interest free loan to itswholly owned subsidiary and the said commitment continuous to make the project financiallyviable. Even provisions under FEMA Regulations permit giving of interest free loans towholly owned subsidiary Company.


Pursuant to the provisions of Section 148 of the Companies Act 2013 read with Rule 4of the Companies (Cost Records and Audit) Rules 2014 and Rule 14 of the Companies (Auditand Auditors) Rules 2014 and pursuant to the recommendations by the Audit Committee inthat behalf M/s. B.F. Modi & Associates Vapi Cost

Accountants (Membership Number: 6955) was appointed as Cost Auditors of the Companyfor carrying out the Audit of Cost Records of Company maintained for the financial yearfrom 1st April 2016 to 31st March 2017.



The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report.


The details pertaining to Vigil Mechanism are included in the Corporate GovernanceReport which forms part of this report.


In compliance with the provisions of Schedule II of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Report on the Corporate Governance isannexed and forms an integral part of this Report. The requisite certificate from theStatutory Auditors of the Company confirming compliance with the conditions of CorporateGovernance is attached to the report of Corporate Governance.


The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure E .


There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.


The employees' relation at all levels and at all units continued to be cordial duringthe year.


Your Directors wish to place on record their appreciation of the dedicated efforts byemployees at all levels. The Directors also wish to place on record their word of sincereappreciation to the bankers the investors the vendors the customers and all otherbusiness associates for their continued support.

Place: Mumbai Chairman and Whole Time Director
Date: 27th May 2017 DIN: 00097254