You are here » Home » Companies » Company Overview » Sarla Performance Fibers Ltd

Sarla Performance Fibers Ltd.

BSE: 526885 Sector: Industrials
BSE 00:00 | 06 May 29.55 -0.20






NSE 00:00 | 06 May 29.60 -0.15






OPEN 30.40
VOLUME 31276
52-Week high 32.85
52-Week low 12.85
P/E 11.77
Mkt Cap.(Rs cr) 247
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 30.40
CLOSE 29.75
VOLUME 31276
52-Week high 32.85
52-Week low 12.85
P/E 11.77
Mkt Cap.(Rs cr) 247
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

The Board of Directors takes immense pleasure in presenting the Twenty SixthAnnual Report on the Audited Financial Statements of Sarla Performance Fibers Limited forthe financial year ended 31st March 2019.


Sarla Performance Fibers Limited ( Your Company / the Company ) is engaged inthe business of Specialty Yarn for the past 25 years and has 2 Manufacturing Plants atSilvassa UT of Dadra & Nagar Haveli and a Dyeing Plant at Vapi Gujarat. It also hasWholly Owned Subsidiaries (WOS) at British Virgin Islands (BVI) and United States ofAmerica (USA) and the Group s Corporate Office is situated at Mumbai.


The Company s financial performance for the year ended 31st March 2019 is summarisedbelow: (Rs. in Lacs)




2018-19 2017-18 2018-19 2017-18
Sales & Operations 31632 27647 32430 30413
Add: Other Income 1809 2585 1757 2046
Total Income 33441 30232 34187 32459
Profit Before Interest Depreciation & Tax 6408 7868 6859 7288
Less: Finance Cost 727 618 807 734
Less: Depreciation & Amortization 1448 1317 2205 2015
Profit Before Tax 4233 5933 3847 4538
Less: Provision for Taxation
- Current 961 1505 971 1511
- Deferred 321 363 323 566
- Earlier Years (0.15) 182 (0.15) 182
- MAT credit Entitlement - (145) - (145)
Net Profit After Tax 2951 4028 2553 2425
Net Comprehensive Income for the Year 2942 4017 2355 2425
Balance bought forward 15851 12753 13428 11941
Profit for the Year 2951 4028 2536 2417
Re measurement of Net defined benefit plans (net of tax) (9) (11) (9) (11)
Dividend for the year 420 919 412 919


Operations: During the financial year under review the sales of the Company onstandalone basis were Rs. 31632 Lakhs as against Rs. 27647 Lakhs in financial year2017-18 witnessing a increase of 14.41% The FOB value of exports stood at Rs. 18385 Lakhscompared to Rs. 14689 Lakhs in 2017-18.

Profitability: The profit before Depreciation Interest & Tax was Rs. 6407Lakhs as compared to Rs. 7868 Lakhs in the previous year after providing fordepreciation of Rs. 1448 Lakhs (Previous Year Rs.1317 Lakhs) & provision fortaxation of Rs. 961 Lakhs (Previous Year Rs. 1505 Lakhs) there was a net profit of Rs.2951 Lakhs as compared to Rs. 4028 Lakhs in the Previous Year.

A. Business & Economic Overview:

Global and India Economy: In 2018 the global economy began its journey on a firmfooting with estimated global economic growth of 3.6% (Source: World Economic Outlook byInternational Monetary Fund (IMF)). During the second half of 2018 this rate ofdevelopment gradually declined owing to impending US-China trade dispute and someslowdown across developed markets. Emerging and developing markets of Asia maintainedtheir steady progress at 6.4% during 2018. However it s important to note that India seconomy expanded at 7.1% in 2018 vis-a-vis 6.7% in 2017 whereas China s growthdeteriorated from 6.9% in 2017 to 6.6% in 2018 (Source: IMF). Sub-Saharan Africa s economyalso sustained a steady rise of 3% during the year

India continues to be one of the fastest growing major economies in the world and isexpected to be among the world s top three economic powers in the next 10-15 years. TheIndian economy is expected to improve and close the year 2019 with a GDP growth of 7.3%(Source: IMF). Sustained real GDP growth of over 6% since FY91 has led to a fundamentaltransformation of India s economy. Today India is the world s seventh largest economy inreal terms backed by strong demand positive consumption pattern and rising disposableincome. In PPP terms the economy is expected to be among the top five global economies by2020.

India Textile Industry: India s textiles industry is among the oldest industries inthe country dating back several centuries.

It is one of the largest contributors to the economy accounting for ~4% of the GDP. Itis the second largest contributor towards employment generation after agricultureemploys more than 45 million people. owing to its labor-intensive nature. The industryis characterised by its robust vertical integration in almost all the sub-sectors.

The textiles and apparel industry constitutes ~15% of the total exports of the country.India is the second largest producer and exporter of textiles after China and fourthlargest producer and exporter of apparel after China Bangladesh and Vietnam.

The mitigation of the repercussions of currency fluctuation remains a challenge for theindustry. Exports have been a core feature of India s textile sector. Indian textiles andapparel exports were estimated at $39 billion and is expected to grow at a CAGR of 7.5%over the next decade to reach $76 billion by 2028. The fundamental strength of India stextile industry is its strong production base with a wide range of fibres and yarns thatinclude natural fibres like cotton jute silk and wool; and synthetic and manmade fibressuch as polyester viscose nylon and acrylic.


Indian Operations

The Company exports to 40 countries and. is a leading exporter of Regular as well asHigh Tenacity Polyester and Nylon Yarns. It started operations 25 years ago as a commoditymanufacturer of Man-Made Fiber but has transformed itself into a high value-added yarnmaker 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.

The Company During this Financial Year has commissioned the Nylon POY Project atSilvassa Plant with a capacity of 20 Tons per day. This product will be used as ImportSubstitute and will ensure continuous supply of Partially Oriented Yarn (POY) for furtherprocess. The Company s emphasis this year will be to focus on niche end user applicationsin India higher value-added yarns to leading global apparel brands and companies.

SPFL also owns Wind Power Capacity of 14.75 MW in totality located in different statesi.e. 6 MW is in the state of Maharashtra 5.75 MW in the state of Gujarat and 3 MW in thestate of Madhya Pradesh. Our plant load factor for the fiscal year 2019was about 20-21%.

Overseas Operations

The Operations of the US Subsidiary was shut down in December 2017 due to LowerCapacity Utilisation and since then the Management has undertaken an extensive exerciseeven taking help from external consultant to find right Strategic/ Financial Partner. Weare optimistic to find solution in coming months. The Company has started exploringvarious options for its US Plant to make it profitable which includes entering intopartnership/strategic alliance.


The Company s customer segments can be divided into four parts:

1) Innerwear Narrow Fabrics Hosiery and Sportswear.

2) Threads.

3) Industrial Yarns.

4) Regular Yarns.

Turnover Break Up (Customer Segment-wise)

Segments FY 2018-19 FY 2017-18
(% of Total Sales) (% of Total Sales)
Innerwear Narrow Fabrics Hosiery and Sportswear 40.30 38.30
Threads 31.50 32.50
Industrial Yarns 15.35 13.10
Regular Yarns 12.85 15.90
100.00 100.00
Turnover Break Up (Geographical)
Regions FY 2018-19 FY 2017-18
(% of Export Sales) (% of Export Sales)
South North & Central America 22.45 24.84
Middle East & Europe 39.71 37.40
Africa 2.67 2.30
Asia Pacific 35.17 35.46
100.00 100.00

In all we export to over 40 countries and to 95 customers. Our customer concentrationis well distributed and no single customer exceeds more than 10% of our revenue.

B. Opportunities and Threats:

The Indian textiles industry is among the oldest in the country. It is projected toreach USD 230 billion by 2020 from around USD 120 billion. Currently the domestictextiles industry contributes 10% to the manufacturing output of the country generatesabout 4% to its GDP and employs more than 45 million people. Importantly the sectorcontributes 15% to the export earnings of India

Exports have been a core feature of India s textile sector. The Indian textiles exportmarket estimated at $18 billion is expected to grow at a CAGR of 4% compared to theglobal 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 off take from China the synthetic fiber prices also fell followingthe slump in crude oil and its derivatives. We believe the demand for synthetic fiberwill continue 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. Upon restarting our operationsin US we will be the direct beneficiaries of this due to our presence in South CarolinaUS. Moreover there are substantial cost advantage of manufacturing in the US making usreasonably cost competitive vis a vis suppliers from China ASEAN and India.

C. Outlook:

The prospects of polyester/nylon yarns remain healthy due to increase in demand.

D. Financial Performance:

(Rs. in Lacs)

Item 2018-19 2017-18 % increase
Raw Material Cost & Purchase of Stock in trade 17346 13751 26.14%
Employee Benefit and Other Expenditure 9665 8614 12.19%
EBIDTA 6408 7868 -18.54%
Finance Cost 727 618 17.58%
Fixed Assets (Gross Block) 22400 19183 16.76%
Net Current Assets 6421 6080 5.65%
Working Capital Finance 8452 6446 31.12%
Cash & Bank Balances 4973 4191 18.68%

(Note: standalone performance comparison Rupees in lacs)

Raw Material Cost: The Raw Material prices increased in the year 2018-19 due tocontinuous increase in Partially Oriented Yarn (POY) and Chips. The Major reason forincrease in prices of Raw Material is increase in price of Crude oil.

Expenditure: The increase in Expenditure is due to Increased Manpower for NewCapacity of Nylon POY and High Tenacity Yarn at Dadra and also includes expenditure ofTrial Runs.

Interest Cost: The interest cost increased mainly due to increase in USD LIBOR.

Fixed Assets: The increase in fixed assets of Rs. 3217 Lakhs is due to Setup ofNylon POY Unit and Expansion and up gradation of existing Plant & Machinery.

Net Current Assets and Cash & Cash Equivalents:

The Increase in Net Current assets is due to Increase in Debtors and incase in FixedDeposits with banks.

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.

In 2018-19 the price of our major RM POY ranged between Rs 76 to 140 per kg and thatof Nylon yarn ranged between Rs 180 to 400 per kg.

Interest Rates: The Company s average gross interest cost in the 2018-19increased by 17.60%. The Company's present Debt Equity Ratio is 0.44. The long-term Debtequity Ratio is 0.18. Interest costs are 2.04% of total revenue.

Exchange Rate: 58% per cent of company revenue is in foreign currency (DollarEuro & GBP) and balance is in INR. Also we import 27.98% per cent of turnover (84.36%of which consists of raw material purchases) creating a natural hedge to that extent.Apart from this from time to time forward cover is taken to hedge exposure in foreigncurrency. For FY19 our average forward cover was for 3 months of our revenue.

Inflation: As we cater to Major Manufacturers of Sewing Threads Hosiery Knitwears etc the inflationary pressures is passed over a period of time.

F. Internal Control System and Their Adequacy:

The Company has in place reasonable internal control system both from the businessprocess and regulatory compliance point of view.

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 nurtured its human resources nonethelessglobalization high growth of the Indian economy in recent times and its ambitious growthtargets have made talent attraction and retention amongst the biggest challenges theCompany 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 the Companyis planning to frame a program wherein all the employees will be provided training intorelated areas of skill development.

H. Capital Expansion and Investment:

In 2018-19 we incurred a CAPEX of Rs. 3217 lakhs towards New Nylon Poy Plant andExpansion and upgradation of Plant &Machinery. For F.Y. 2019-20 we envisage amount ofCAPEX to the tune of about 2000.00 Lakhs

I. Value Added Statement

(Rs. in Lacs)

Particulars 2018-19 2017-18 2016-17 2015-16 2014-15
Income from Production / Operations 31632 27647 25954.04 24871.70 27229.95
Add : Other Income 1809 2585 2026.98 2181.88 1146.98
CORPORATE OUTPUT 33441 30232 27981.02 27053.58 28376.94
Less : Cost of Raw Materials Consumed 17346 13751 10852.68 11095.02 12023.68
Less : Cost of Traded Goods - - 57.07 1159.90 2962.63
Less : Other Manufacturing Expenses 6119 5435 5964.82 4847.21 4792.65
Less : Administrative & Other Expenses 2395 2171 2022.55 1922.64 2173.37
EQUALS GROSS VALUE ADDED 7557 8875 9083.90 8028.81 6424.61
Less : Depreciation & Amortization 1448 1317 1243.55 1014.40 913.55
Less : Extra Ordinary / Prior Period Items - -
EQUALS NET VALUE ADDED 6109 7558 7840.35 7014.41 5511.06
To Personnel 1150 1008 921.73 831.09 778.28
To Taxes (including tax on proposed div.) 1281 1905 1666.99 1587.87 1383.90
To Creditors (via interest) 727 618 579.11 508.07 514.48
To Investors (via dividend) 420 919 918.53 876.78 668.02
To The Company (via retained earnings) 2531 3108 3753.99 3210.60 2166.38
6109 7558 7840.35 7014.41 5511.06


Keeping in view the continued good performance future fund requirements of the Companyand for rewarding shareholders your directors are pleased to recommend a dividend @ 110 %i.e. Rs. 1.1 per fully paid-up equity share of face value of Re. 1 each [Excluding theShare upon which the Promoter / Member have waived / forgone / his / her / their right toreceive the Dividend by him / her / them for the financial year ended 31st March 2019.The dividend shall be paid to members whose names appear in the Register of Members as on20th September 2019.

Amount if any proposed to transfer to reserves

The Company has made no transfer to reserves during FY 2018-19

Share Capital:

The paid-up Equity Share Capital as on 31st March 2019 is Rs. 83503000/-. Duringthe year under review the Company has not issued shares on rights basis Equity Shareswith differential voting rights nor granted stock options nor sweat equity or bonusshares.

As on 31st March 2019 none of the Directors of the Company held shares of the Companyexcept:

Mr. Madhusudan Jhunjhunwala - Chairman

Mr. Krishnakumar Jhunjhunwala - Managing Director

Ms. Neha Jhunjhunwala - Director


The Company has not accepted any Deposit covered under Section 73 of the Companies Act2013 and the Companies (Acceptance of Deposit) Rules 2014 during the year under review.Hence the requirement for furnishing of details relating to deposits covered underChapter V of the Act or the details of deposits which are not in compliance with theChapter V of the Act is not applicable.

Credit Rating:

Acuite Ratings and Research Ltd (Formerly Known as SMERA Ratings Limited) havereaffirmed the Company s long-term borrowings rating to SMERA A and reaffirmed theshort-term borrowing rating as SMERA A1 .

These ratings are considered to have high degree of safety regarding timely servicingof financial obligations and carry very low credit risk.

Management Discussion & Analysis:

Management s Discussion and Analysis Report for the year under review as stipulatedunder the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ( Listing Regulations ) is presented in a separatesection forming part of the Annual Report.

Consolidated Financial Statement:

In accordance with the provisions of the Companies Act 2013 ( the Act ) and Ind AS 110- Consolidated Financial Statement read with Ind AS - 28 Investments in Associates and IndAS 31 - Interests in Joint Ventures the audited consolidated financial statement isprovided in the Annual Report.

Subsidiaries Joint Ventures and Associate Companies:

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 2019 which is asubsidiary of Sarla Overseas Holdings Ltd (BVI). There has been no material change in thenature of the business of the subsidiaries. The Policy for determining materialsubsidiaries as approved may be accessed on the Company s website at

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company at the link:

The Company will make available the Financial Statements of the Subsidiary Companiesto any Member 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.

A statement containing the salient features of the financial statement of subsidiary /associate / joint venture companies as per Section 129(3) of the Companies Act 2013 readwith Rule 5 of the Companies (Accounts) Rules 2014 is provided herein below inprescribed 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 68.89 68.89 69.89
Number of Shares 435000 989000 3000
Share Capital 196.99 596.50 3.17
Reserve and Surplus 5385.36 (8322.43) 19.08
Total Assets 8330.23 15236.65 332.53
Total Liabilities (including reserves) 8133.24 14640.15 329.63
Investments - 6311.02 -
Turnover 4.384.03 - 368.41
Profit before Taxation 689.30 (762.14) 0.66
Provision for Taxation 12.15 - 0.17
Profit after Taxation 677.75 (762.14) 0.44
Proposed Dividend - - -
% of shareholding 100% 100% 60%
Country British Virgin Island United States of America Portugal

Secretarial Standards:

The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto Meetings of the Board of Directors and General Meetings respectively have been dulyfollowed by the Company.

Directors Responsibility Statement:

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 read with Section 134(5) of the Companies Act 2013:

a. that in the preparation of annual accounts for the year ended 31st March 2019the applicable accounting standards had been followed along with proper explanationrelating to material departures for the same;

b. that they had selected such accounting policies and 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 as at 31st March 2019 and of the profit andloss of the Company for that year;

c. that the Directors had taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d. that the Directors had prepared the annual accounts on a 'going concern'basis

e. that the Directors had laid down internal financial controls and suchinternal financial controls are adequate and operating effectively.

f. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and such systems are adequate and operating effectively.

Corporate Governance:

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.

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 2018-19:

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

Internal Control Systems and Their Adequacy:

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 Audit Department also monitors and evaluates the internalcontrol system and submits Quarterly Reports which are placed before the Audit Committeeof the Board.

Risk Management:

The Risk Management Policy of the Company is available on the Company Website


In terms of provisions of the Section 152(6) of the Companies Act 2013 Mr. MadhusudanJhunjhunwala Director retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself/ herself for re-appointment. The profile of Director seekingreappointment pursuant to Regulation 36 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is included in the Annual Report.

Mr. Jigar Shah Independent Director (DIN: 00191165) has ceased to be an IndependentDirector of the Company with effect from 22nd March 2019. The Board places on record itsappreciation towards valuable contribution made by Mr. Jigar Shah during his tenure asDirector of the Company.

No Director was appointed during the year under 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 the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Board Meetings:

During the financial year 2018-19 4 (Four) Board Meetings were held and the gapbetween two Board Meetings did not exceed 120 days. The details of the attendance ofDirectors at the Board Meetings are mentioned in the report on Corporate Governanceannexed hereto..

Annual evaluation of Board its Committees and individual Directors:

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 and 19 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Audit Committee CSR Committee Nomination& Remuneration Committee Risk Management Committee and Stakeholder RelationshipCommittee. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.

Particulars of contracts or arrangements with Related Party Transactions:

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. There are no materiallysignificant related party transactions made by the Company with Promoters Directors orKey Managerial Personnel which may have a potential conflict with the interest of theCompany at large.

All Related Party Transactions are placed at the meetings of Audit Committee and alsoat the Board meeting for approval. The particulars of contracts or arrangements withrelated parties referred to in sub-section 1 of Section 188 of the Companies Act 2013 arefurnished in Form AOC-2 in Annexure A 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 at thelink:

Members may refer to Note No. 45 to the Standalone Financial Statement which sets outrelated party disclosures pursuant to Ind AS.

Significant and Material Orders passed by the Regulators or Courts

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

Material changes and commitments if any affecting financial position have occurredbetween the end of the financial year of the Company and date of this report.

No material changes and commitments which could affect the Company s financial positionhave occurred between the end of the financial year of the Company and date of thisreport.

Corporate Social Responsibility:

In accordance with the provisions of Section 135 of the Act and Rules framed thereunder the Company has a Corporate Social Responsibility ( CSR ) Committee of Directorscomprising of

Mr. Madhusudan Jhunjhunwala Chairman;

Mr. Parantap Dave Member and

Ms. Shreya Desai Member.

The CSR Committee had met on 14th August 2018 as required under Section 135 of theCompanies Act 2013 during the year the Company undertook CSR initiatives which ismainly focused on promoting education health and public hygiene. In this connection theCompany during the year under consideration spent an amount of Rs. 37.99 Lakhs as againstan amount of Rs. 110.10 Lakhs required to be spent. A detailed list of the CSR expendituremade is annexed herewith as Annexure B . The shortfall is mainly due to the factthat some of the projects sanctioned are taking time for completion and hence entireamount on those Projects has not been spent.

The CSR Policy is available on the Company Website at

Auditors and Auditors Report

Statutory Auditors:

CNK & Associates LLP Chartered Accountants Mumbai (ICAI Firm Registration No.101961W) were appointed as the Statutory Auditors of the Company for a term of fiveconsecutive years at the Twenty Fourth AGM of the Company held on 29th September 2017.They have confirmed that they are not disqualified from continuing as Auditors of theCompany.

In terms of the Companies (Amendment) Act 2017 and vide notification no S.O.1833(E)dt. 7.5.2018 the Ministry of Corporate affairs have done away with the requirement ofratification of the appointment of auditors at each subsequent annual general meeting bydeleting the 1st Proviso to the sub-section (1) of Section 139 of the Companies act 2013.Accordingly the same is now required to be put up to the members for ratification.

CNK & Associates LLP Chartered Accountants have confirmed that they continue tobe eligible under Section 141 of the Companies Act 2013 and the Rules framed thereunderfor continuing as Auditors of the Company.

The Notes on financial statement referred to in the Auditors Report areself-explanatory and do not call for any further comments. The Auditors Report containmodified opinion the details of which are given as under:

1) As on 31st March 2019 the company has an exposure to its Wholly ownedSubsidiary Sarlaflex Inc. of Rs. 596 lakhs towards investment in equity and towardsunsecured loan of Rs. 7860 lakhs. The Company also has indirect exposure in SarlaflexInc. by way of unsecured loans amounting to Rs. 5903 lakhs through its wholly ownedsubsidiary Sarla Overseas Holdings Limited.

Sarlaflex Inc has suspended manufacturing operations since December 2017 and has anegative net worth as on 31st March 2019. These conditions raise substantial doubt aboutits ability to continue as a going concern.

In the absence of any impairment testing by management during the year we are unableto comment on the impact if any on standalone annual financial results.

Board s Reply to Statutory Auditors Modified Opinion:

1) The Auditors in their report on financial statements have modified theiropinion in respect of not testing for impairment of investment / assets of the company swholly owned subsidiary Sarlaflex. Inc. Regarding the exposure to the Wholly OwnedSubsidiary Sarlaflex inc the management is confident that with the recent trade sanctionsbeing imposed in the US the operations of the Subsidiary will be profitable. TheManagement is also monitoring the situation on the continuous basis and is confident thatthere would be no need for an impairment at this stage.

Details in respect of frauds reported by auditors pursuant to section 143(12) of theCompanies Act 2013:

There have been no instances of fraud reported by abovementioned Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment during FY 2018-19.

Cost Auditor:

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 Cost Accountants (Membership Number: 6955)Vapi was appointed as Cost Auditors of the Company for carrying out the Audit of CostRecords of Company maintained for the financial year from 1st April 2018 to 31st March2019. They would be required to submit the reports by 29th September 2019.

As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in a general meeting for their ratification.Accordingly a Resolution seeking Member s ratification for the remuneration payable toM/s. B.F. Modi & Associates Cost Auditors for FY 2019-2020 is included at Item No. 8of the Notice convening the Annual General Meeting.

As per requirements of Section 148 of the Companies Act 2013 read with Companies (CostRecords and Audit) Rules 2014 the Company is required to maintain cost records andaccordingly such accounts are made and records has been maintained in respect of theapplicable products for the year ended 31.03.2019.

Secretarial Auditor:

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.: FCS 2899 / COP 738) to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report is annexed herewith as Annexure C .

The Secretarial Auditor has made following qualifications / adverse remarks:

A) Under the Companies Act 2013:

1) The Company has not appointed Internal Auditor for the financial year 2018-19 asrequired under Section 138 of the Companies Act 2013.

2) The Company has continued to give Interest Free Loans to its wholly ownedSubsidiaries during the financial year 2018-19.

3) The Company had transferred unpaid / unclaimed dividend for the financial year2010-2011 along with the shares on which dividend was declared to IEPF on 25th January2019. However the Company did not publish newspaper advertisement regarding transfer ofshares to IEPF authority as required under Rule 6(3)(a) of Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016.

4) The Company has filed all forms and returns as required under Companies Act2013 with the Registrar of Companies within the prescribed time except for certain formswhich were filed beyond the prescribed time and the relevant additional filing fees wereduly paid by the Company.

B) Under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:

1) The Company has delayed by two days in submitting Statement of InvestorsComplaints for the quarter ended 30th September 2018 to National Stock Exchange of IndiaLimited (NSE) as required under Regulation 13(3) of SEBI (LODR) Regulations 2015.

2) As on 31st March 2019 on account of resignation by One Independent Directorwith effect from 22nd March 2019 the Company did not have requisite number ofIndependent Directors on its Board as required under Regulation 17(1)(b) of SEBI (LODR)Regulations 2015.

Board s Reply to Secretarial Auditors qualifications / adverse remarks:

A) Under the Companies Act 2013:

a) The Company have formed Internal Audit Department which is headed by aChartered Accountant.

b) As a part of project funding the Company had agreed to give interest freeloan to its wholly owned subsidiary and the said commitment continuous to make the projectfinancially viable. And Even provisions under FEMA Regulations permit giving of interestfree loans to wholly owned subsidiary Company

c) The Procedure for Transfer of Shares to IEPF was carried out by Our ShareTransfer Agent and they have only sent Notices and other Reminders to shareholders beforetransfer of their shares to IEPF.

d) Whereever required Late Fees are paid to MCA however said forms are acceptedby MCA and no other discrepancy have arose.

B) Under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:

a) The Delay occurred on account of some technical issues and the same wassubmitted later and requisite fees are also paid.

b) As per Companies Act 2013 the Company is granted time for appointment ofAdditional Director upto 90 Days from the Date of Resignation or immediately succeedingBoard Meeting whichever is earlier. The Company have appointed New Independent DirectorMr. Paulo Manuel Ferreira Moura De Castro (DIN: 08459844) was appointed on 23rd May 2019ie Succeeding Board Meeting.

In terms of Section 204 of the Companies Act 2013 on the recommendation of the AuditCommittee the Board of Directors has appointed CS Ajit Sathe- Proprietor of M/s A. YSathe & Co. Company Secretaries in Practice (Registration No.: FCS 2899/COP 738) toundertake the Secretarial Audit of the Company for the financial year 2019-20.

Audit Committee:

The Audit Committee comprises two Independent Directors namely Mr. Parantap Dave(Chairman) and Ms. Shreya Desai and Mr. Madhusudan Jhunjhunwala Whole-time Director.During the year all the recommendations made by the Audit Committee were accepted by theBoard.

Corporate Social Responsibility (CSR) Committee:

The CSR Committee comprises Mr. Madhusudan Jhunjhunwala (Chairman) Mr. Parantap Daveand Ms. Shreya Desai.

Vigil Mechanism:

The Company has established Vigil Mechanism and a Whistle-blower policy in accordancewith provisions of the Act and Listing Regulations. The Vigil Mechanism and whistle-blowerpolicy is out on the Company s website and can be accessed at:

Particulars of Loans given Investments made Guarantees given and securities provided:

Particulars of Loans given Investments made Guarantees given and securities providedalong with purpose for which the loan or guarantee or security is proposed to be utilisedby the recipient are provided in Note No.47 of the Standalone financial statements.

Conservation of Energy Technology Absorption and Foreign Exchange earnings &outgo:

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013read with Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as AnnexureD to this Report.

Extract of the Annual Return:

The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed as Annexure-E and forms anintegral part of this Report.

Particulars of Employees and related Disclosures:

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

Information required pursuant to Section 197 (12) 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 remunerationof the employees of the Company for the financial year 2018-19:

Name of Director Remuneration Paid Median Remuneration Ratio
Mr. Madhusudan S. Jhunjhunwala (Chairman Wholetime Director) 13800000 178800 77.18x
Mr. Krishnakumar M. Jhunjhunwala (Managing Director) 13800000 178800 77.18x

Independent directors are paid sitting fees for attending Board Meetings which are notconsidered.

2. The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary in the financial year 2018-19:

Name of Director Remuneration paid Increase in current financial year
Mr. Madhusudan S. Jhunjhunwala (Chairman Whole-time Director) 13800000 NIL
Mr. Krishnakumar M. Jhunjhunwala (Managing Director) 13800000 NIL
Mr. Mahendra Sheth (Chief Financial Officer & Company Secretary) 5163192 12.16%

3. The percentage increase in the median remuneration of employees in the financialyear:


4. The number of permanent employees on the rolls of company: 255

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

6. The Board affirms that the remuneration paid is as per the Remuneration Policyof the Company.

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


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.

Cautionary Statement:

Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company s objectives projections estimates and expectations mayconstitute forward looking statements within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed or impliedin the statement depending on the circumstances.

Place: Mumbai Chairman and Whole Time Director
Date: 13th August 2019 DIN: 00097254