SDF Industries Ltd.
|BSE: 507518||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE543D01015|
|BSE 05:30 | 01 Jan||SDF Industries Ltd|
|NSE 05:30 | 01 Jan||SDF Industries Ltd|
|BSE: 507518||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE543D01015|
|BSE 05:30 | 01 Jan||SDF Industries Ltd|
|NSE 05:30 | 01 Jan||SDF Industries Ltd|
Your directors have pleasure in presenting their 32nd Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended 31stMarch 2022.
Company's financial performance for the year under review along with previous year'sfigures are given hereunder:
The fortune of liquor companies in India especially in Kerala depends a lot on thegovernment policies. It is to be noted that the yearly rate contract tender of themonopoly procurer of Kerala namely viz Kerala State Beverages (M&M) CorporationLimited is yet to finalize the tender for 2022-2023 which was to be over by the end ofFebruary 2022. While such becoming the case it is becoming increasingly difficult tomarket and succeed in the present circumstances.
Further the operations of your company were seriously affected due to COVID-19pandemic. During the year under review your Company continued to operate below its normalrated capacity resulting in a lower turnover during the year. On account of severe workingcapital constraints due to lower demand by bottling clients the Company could notoperate at its normal full capacity. The COVID-19 pandemic and lockdowns implementedresulted in closure of the manufacturing unit for several months. The main income of thecompany is generated from the bottling of IMFL. The bottling parties has also reducedtheir production due to closure of government go downs and shops.
The gross revenue from operations of your Company during the year under review was Rs437.84 Lakhs as against Rs. 538.03 Lakhs for the previous financial year. The company hadincurred a loss of Rs 166.29 Lakhs for the year under review as against a loss of Rs221.49 Lakhs in the previous financial year.
However the Board hopes that in the years to come the Company would be able toachieve better results. Liquor being a state subject is highly dependent on the policiesof state government. The management is expecting that favorable policies for the liquorindustries will be implemented by the Government of Kerala.
Once such a policy is operational and the annual tender is finalized management ishoping for an increase in the bottling operations which will result in generation ofadequate income to meet the expenses. Further the management is also attempting todiversify the business to a more profitable segment. Also the Company's management areexamining available options to further increase sales/income from operations.
The Board wishes to thank the managers and employees for their hard work and sincereefforts in running the company in a least expensive endeavor to contain the losses tominimum under a very trying circumstances.
The Company has not transferred any amount to its reserves during the year underreview. However the current year loss of Rs. 166.29 Lakhs has been added to theaccumulated losses and the balance carried forward losses of Rs.1502.08 Lakhs has beenshown under the Other Equity in the Balance Sheet.
Due to accumulated losses the company is not able to declare any dividend.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
There is no amount required to be transferred to Investor Education and Protection Fundin accordance with the relevant provisions of the Companies Act 2013 and rules madethereunder.
The paid up Equity Share Capital as on 31st March 2022 was Rs.116873000/-. During the year under review the Company has not issued any shares.
The Annual Return of the Company for the financial year 2021-22 as required underSection 92(3) of the Companies Act 2013 is available on the website of the Company andcan be accessed on the Company's website @www.sdfil.com
BOARD AND COMMITTEE MEETINGS
During the year under review Six Meetings of the Board of Directors Five Meetings ofthe Audit Committee One Meeting of the Nomination and Remuneration Committee and OneMeeting of the Stakeholders Relationship Committee were held. Further details of the samehave been enumerated in the Corporate Governance Report annexed herewith.
STATEMENT ON COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively. The Company has duly complied with Secretarial Standards issued by theInstitute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) andGeneral Meetings (SS-2).
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the Requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that: (a) In thepreparation of the annual accounts the applicable accounting standards had been followed;
(b) The directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe loss of the company for that period; (c) The directors had taken proper and sufficientcare for the maintenance of adequate accounting records in accordance with the provisionsof this Act for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities; (d) The directors had prepared the annual accounts on agoing concern basis; (e) The internal financial controls to be followed by the companywere laid down and such internal financial controls were adequate and were operatingeffectively. (f) The directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143 (12) OF THECOMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.
There have been no frauds reported by the Auditors pursuant to Section 143(12) of theCompanies Act 2013.
DECLARATION BY INDEPENDENT DIRECTORS
All the independent Directors have submitted their disclosures to the Board that theyfulfil all the requirements as stipulated in Section 149(6) of the Companies Act 2013 andRegulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 so as to qualify themselves to be appointed as Independent Directors under theprovisions of the Companies Act 2013 and the relevant rules. Based on the confirmation /disclosures received from the Directors and on evaluation of the relationships disclosedMr. Ranjiit Taunk and Mr. G.Sudhakaran Nair Non-Executive Directors are Independent
STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY EXPERTISE ANDEXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THEYEAR
Board of Directors have evaluated the Independent Directors appointed/ re-appointedduring the year 2021-22 and opined that the integrity expertise and experience (includingproficiency) of the Independent Directors is satisfactory.
In compliance with the requirements of the Listing Regulations the Company has put inplace a familiarization programme for the Independent Directors to familiarize them withtheir roles rights and responsibilities as Independent Directors the working of theCompany nature of the industry in which the Company operates business model and so on.The same is also available on the Company website athttp://sdfil.com/INDEPENDENT%20DIRECTORS%20APPOINTMENT/Familiarization%20Programme%20-%202021-2022.pdf.
NOMINATION AND REMUNERATION POLICY OF DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHEREMPLOYEES
In adherence of section 178 of the Companies Act 2013 and in terms of Regulation 19(4)of the SEBI Listing Regulations the Board of Directors of the Company approved a policyon directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder section 178(3) of the Act based on the recommendations of the Nomination andRemuneration Committee.
The Company's Policy relating to appointment of Directors Directors' qualificationspositive attributes
Independence of Directors and other related matters as provided under Section 178(3) ofthe Companies Act 2013 is furnished in Annexure No.1- and forms part of this Report andcan also be accessed on the Company's website athttp://sdfil.com/POLICIES%20&%20CODES/Nomination%20and%20Remuneration%20Policy.pdf.
COMMENTS ON AUDITOR'S REPORT
The auditors have made following observations in their report.
1. We draw attention to the statement of profit and loss account which shows that thecompany has incurred net loss of Rs.166.30 lacs during the year 2021-22 and has negativenet worth of Rs.7.56 lacs. Further the company financial position shows that there is acontinuous decline in turnover negative working capital disposal of fixed assets andother operational difficulties. These conditions along with other matters reported in thisreport indicate the existence of material uncertainty that may cast significant doubts onthe company's ability continue as a going concern in accordance with SA 570 (Revised) ofICAI. However with the infusion of further capital into the business increase ofproductivity and effective management of overall affairs the management is of the viewthat there is a possibility of revival of business and hence going concern basis ofaccounting is appropriate.
2. Non-Payment of Reinstatement fees to BSE Ltd. :- The company has not paidreinstatement fees to BSE Limited and non-payment/non-compliance will lead to compulsorydelisting from Stock Exchange.
3. Emphasis of Matter: - Regarding Provision of Interest on Turnover Tax Liability
(i) Note No. 31 to the Ind AS financial statements which states that no provision hasbeen made in the accounts towards interest payable on turnover tax liability ofRs.37514634/- relating to earlier years for the reasons stated therein. As per theworkings provided by the Management interest on Turnover Tax (TOT) for the period 2005-06to 2009-10 comes around Rs. 2.81 Crs. As a result net loss has been understated to theextent of Rs.2.81 Crs as also the net worth of the company.
(ii) Note No. 27 to the Ind AS financial statements Claims against the companynot acknowledged as debt' in respect of law suits for Rs.1.7619730/- filed beforevarious authorities the outcome of which is uncertain
Management's Reply on the auditor's observations are as follows:
1. The business of the company is severely affected for past few years due to severalunprecedent factors. Floods that occurred in Kerala in two consecutive years affected thesales and transportation. Then the COVID-19 pandemic and lockdowns implemented resultedin closure of the manufacturing unit for several months. The main income of the company isgenerated from the bottling of IMFL. The bottling parties has also reduced theirproduction due to closure of government go downs and shops.
The management is expecting that favorable policies for the liquor industries will beimplemented by the Government of Kerala. Once such a policy is operational and the annualtender is finalized management is hoping for an increase in the bottling operations whichwill result in generation of adequate income to meet the expenses. Further the managementis also attempting to diversify the business to a more profitable segment. Also theCompany's management are examining available options to further increase sales/income fromoperations. Barring unforeseen circumstances beyond the control of the Company the Boardis confident about the Company's ability to continue as a going concern.
2. The company due to its financial constraints has requested BSE to allow some moretime for complying with the fee requirements.
3. (i) The company being a sick company since 2000 up to 2017 was provided with along-term repayment scheme by the Hon'ble BIFR. The company had included a prayer tosettle the Turnover dues in its Draft
Rehabilitation Scheme which was submitted by the Operational Agency to BIFR. Thecompany had waited for the final verdict of BIFR before which the act was repealed. Theliabilities of third parties are also included in these dues and the disputes are pendingwith various forums. The company had applied for settlement under the Amnesty Schemerolled out by the government from time to time where ever possible. The amnesty schemeprovided by the government every year contains more and more reliefs and interest waivers.Company hopes that entire interest will be waived as a relief hence the management didnot provide for provision of ToT interest in the books. The company could not settle thedues due to lack to funds. The company will settle the dues through amnesty schemes asdone in the earlier years as and when the business of the company is revived.
(ii) The Company is contesting these demands and the management based on advise of itslegal advisors believes that its position will likely be upheld in the appellate process.The management believes that the ultimate outcome of these proceedings will not have amaterial adverse effect on the Company's financial position and results of operations.
M/s. GGA & Associates Chartered Accountants having Firm Registration No. 009663Swere appointed as statutory auditors for a period of 5 consecutive years at the 27thannual general meeting of the Company held on 27th September 2017 subject toratification by the shareholders at every annual general meeting. Consequent to theamendments made in the provisions of Section 139 of the Companies Act 2013 the membersat their 28th Annual General Meeting has approved to continue the appointment of M/s. GGA& Associates Chartered Accountants as statutory auditors for a period of 5consecutive years till the conclusion of the 32nd Annual General Meeting to be held in theyear 2022 without ratification at every subsequent Annual General Meeting and is eligiblefor reappointment. The Company has received confirmation from the Auditors to the effectthat their appointment if made will be in accordance with the limits specified under theCompanies Act 2013 and the firm satisfies the criteria specified in Section 141 of theCompanies Act 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014. TheBoard is of the opinion that continuation of M/s. GGA & Associates as StatutoryAuditors will be in the best interests of the Company and therefore the members arerequested to consider their re-appointment as Statutory Auditors of the Company for aterm of five years from the conclusion of the ensuing Annual General Meeting till theAnnual General Meeting to be held in the calendar year 2027 at such remuneration mutuallyagreed and approved by the Board.
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed Mr. V.S. Subash M.Com LLB FCS M/s. JMACS Associates to undertake theSecretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure - 2.
With reference to the observations made by the Secretarial Auditor in his report theDirectors wish to state that the (a) The Company could not pay the listing fee dues due toits severe financial crisis
(b) With regard to suspension of trading of securities the company is taking allnecessary steps for revocation of suspension
(c) DEMAT of promoters' shares are under progress
(d) The company had been filing reports statements documents filings etc throughemail as the electronic platform provided through BSE Limited on its Listing CentrePortal was not available to the company. However BSE has fully activated the listingcentre portal to the company from July 07th 2022 (e) There is an Outstandingliability of the contractor amounting to Rs 4590913/-towards the EPF dues of theContract labourers for the work undertaken on behalf of the company. The company due tofinancial crisis was not able to pay the dues to the contractor.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013:
There were no loans guarantees or investments made by the Company under section 186 ofthe Companies Act 2013 during the period under review and hence the said provision is notapplicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All transactions entered into during the financial year 31st March 2022 withRelated Parties as defined under the Companies Act 2013 and Regulation 23 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 were in the ordinary course ofbusiness and on an arm's length basis. During the year the Company had not entered intoany transaction referred to in Section 188(1) of the Companies Act with related partieswhich could be considered material. Accordingly the disclosure of Related PartyTransactions as required under Section 134(3) of the Companies Act in Form AOC-2 is notapplicable. Attention of Members is drawn to the disclosures of transactions with relatedparties set out in Notes to Accounts - Note 29 forming part of the financial statements.However it is to be noted that this venture is advantageous to your company as itcontributes profitability.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
No material changes and commitments affecting the financial position of the Companyhave occurred between March 31 2022 and the date of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption ForeignExchange Earnings and outgo as required under section 134 (3) (m) of the Companies Act2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 is furnished in Annexure- 3 and is attached to this report.
RISK MANAGEMENT POLICY
Your Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. Your Company periodically assessesrisks in the internal and external environment along with the cost of treating risks andincorporates risk treatment plans in its strategy business and operational plans. As onthe date of this report the Company does not foresee any critical risk which threatensits existence. Your Company through its risk management policy strives to contain impactand likelihood of the risks within the risk appetite as agreed from time to time with theBoard of Directors.
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES
The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.
ANNUAL PERFORMANCE EVALUATION
The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent Directors) which includes criteriafor performance evaluation of the Non-executive Directors and Executive Directors. Theevaluation process inter alia considers attendance of Directors at Board and committeemeetings acquaintance with business communicating inter se board members effectiveparticipation domain knowledge compliance with code of conduct vision and strategyetc which is in compliance with applicable laws regulations and guidelines.
The Board carried out annual performance evaluation of the Board Board Committees andIndividual Directors and Chairman. The Independent Directors at their separate meetingsalso evaluated the performance of non-independent directors and the Board as a whole basedon various criteria. The Chairman of the respective Board Committees shared the report onevaluation with the respective Committee members. The performance of each Committee wasevaluated by the Board based on report on evaluation received from respective BoardCommittees. The reports on performance evaluation of the Individual Directors werereviewed by the Chairman of the Board. The Board and the Independent Directors were of theunanimous view that performance of the Board of Directors as a whole was satisfactory.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in the nature of business of the Company during the financial yearended 31st March 2022.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Director liable to retirement by rotation:
Pursuant to the provisions of Section 152 of the Companies Act 2013 Ms. K.V.Vinaya(DIN: 08492445) who retires by rotation at the ensuing Annual General Meeting beingeligible offers herself for re-appointment. The Board recommends her re-appointment in theforthcoming Annual General Meeting.
Re-Appointment of Whole-Time Director
The Shareholders of the Company at their Thirtieth Annual General Meeting held onDecember 29 2020 appointed had Mr. Vinoo P. Stephen (DIN: 08876495) as Whole-timeDirector cum CFO of the Company for a term of two years upto September 30 2022 liable toretire by rotation. On recommendation of the Nomination and Remuneration Committee andapproval of the audit committee the Board of Directors has approved reappointment of Mr.Vinoo P. Stephen as Whole-time Director cum CFO liable to retire by rotation for afurther period of 5 (Five) years from October 1st 2022. The terms and conditions of hisappointment are subject to the approval of Shareholders in the ensuing Annual GeneralMeeting. The Board recommends the re-appointment of Whole-time Director cum CFO.
Resignation of Independent Director
Ms. Sheethal Jayandra Mehta (DIN: 08237102) resigned from the board with effect from 01stApril 2022 due to personal reasons. The Board places on record its appreciation for theinvaluable contributions made by her during her tenure as a Director of the Company
Resignation of Additional Director (Non executive Independent)
On recommendation of Nomination and Remuneration Committee the Board appointed Mr.Anilkumar Pillai (Holding DIN: 07881622) as an Additional Director (Non executiveIndependent) with effect from 30th June 2022 with an intention to appoint himas an Independent Director for a period of 5 years after seeking approval from the membersin the ensuing AGM. However due to personal reasons he resigned from the Board witheffect from 22nd August 2022. The Board places on record its appreciation forthe contributions made by him during his tenure as a Director of the Company
Other than the above there were no change in the Board of Directors of the Company.
Key Managerial Personnel
Key Managerial Personnel of the Company as required pursuant to Section 2(51) and 203of the Companies Act 2013 are of Mr. K.V Viswamohan Chairman and Whole-time DirectorMr. Vinoo P Stephen Whole-time Director cum Chief Financial Officer and Ms. AnupamaRadhakrishnan Company Secretary.
SUBSIDIARIES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary or Associate Company.
The Company has neither accepted nor renewed any deposits within the meaning ofSchedule V of the Companies Act 2013 and rules framed thereunder during the year underreview. There was no deposit remaining unpaid or unclaimed as at the end of the year.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE
There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and company's operation in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Your Company has in place an adequate internal financial control framework withreference to financial and operating controls. During Financial Year 2021-2022 suchcontrols were tested and no reportable material weakness in the design or operation wasobserved.
The Directors have in the Directors Responsibility Statement confirmed the same to thiseffect and a report of Auditors pursuant to Section 143(3)(i) of the Companies Act 2013certifying the adequacy of Internal Financial Controls is annexed with the Auditorsreport.
DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY ANDBANKRUPTCY CODE 2016 DURING THE YEAR
No applications have been made and no proceedings are pending against the Company underthe Insolvency and Bankruptcy Code 2016.
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIMESETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIALINSTITUTIONS ALONG WITH THE REASONS THEREOF.
The disclosure under this clause is not applicable as the Company has not undertakenany one-time settlement with the banks or financial institutions.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The requisite details relating to ratio of remuneration percentage increase inremuneration etc. as stipulated under Section 197(12) and Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed as Annexure- 4 to this Report.
The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 does not apply to the Company as there were no employeeswho are in receipt of remuneration in the aggregate at the rate of not less than RupeesOne Crore Two Lakh if employed throughout the year or Rupees Eight Lakh and Fifty Thousandper month if employed for part of the year.
Audit Committee of the Company meets the requirements of Section 177 of the CompaniesAct 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The details of the composition of the Audit Committee as required underthe provisions of Section 177(8) of the Companies Act 2013 are given in the CorporateGovernance Report which forms part of this annual report.
The Board accepted the recommendations of the Audit Committee whenever made by theCommittee during the year.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company has been denied access to the AuditCommittee.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has in place an Anti -harassment policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. Internal Complaint Committee has been setup to redress complaints received regardingsexual harassment. There was no complaint received during the financial year 2021-22 andhence no complaint is outstanding as on 31.03.2022 for redressal.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
The Management Discussion and Analysis Report and the Report on Corporate Governanceas required under Regulation 34(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report.
As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate section on Corporate Governance practices followed by theCompany together with a certificate from the
Company's Auditors confirming compliance forms an integral part of this Report.
DISCLOSURE OF MAINTENANCE OF COST RECORDS AS SPECIFIED BY THE CENTRAL GOVERNMENT UNDERSUBSECTION (1) OF SECTION 148 OF THE COMPANIES ACT 2013
The Central Government has not prescribed the maintenance of cost records under Section148(1) of the Companies Act 2013.
The Board of Directors express their appreciation for the contribution made by theemployees customers and bankers for the support extended by them during the year underreview. We also would like to thank our bottling partners for their faith in us withcontinued patronage
For and on behalf of the Board