Your Directors are pleased to present 12th Annual Report along with the auditedfinancial statements for the Financial Year ended March 312020.
(Rs. In Lakhs)
|Particulars ||2019-20 ||2018-19 |
|Total Revenue ||38251.80 ||53206.14 |
|Profit before Interest Depreciation and Tax ||3251.97 ||3772.61 |
|Less : Interest ||1822.00 ||1830.53 |
|Depreciation ||1317.36 ||1453.22 |
|Profit before Tax ||112.61 ||488.86 |
|Less : Provision for Current Taxation ||98.18 ||112.12 |
|Provision for Deferred Taxation ||(10.98) ||(1.80) |
|Profit after Tax adjustment ||25.41 ||378.55 |
|Excess/(Short) provision for taxation in earlier year ||- ||5.56 |
|Net Profit ||25.41 ||372.99 |
|Add : Balance brought forward from previous year ||1883.96 ||1568.18 |
|Depreciation on Fixed Assets Revaluation ||29.99 ||33.81 |
|Amount available for Appropriation ||1939.35 ||1974.98 |
|Less: Dividend paid during the year ||89.30 ||75.63 |
|Tax on Dividend ||18.18 ||15.40 |
|Balance Carried to Balance Sheet ||1831.87 ||1883.96 |
During the year under review your Company has achieved turnover of Rs.38251.80 lakh asagainst Rs.53206.14 lakh in the previous year approx. 28% lower as compared to previousfinancial year. Reduction in the revenue is mainly due to reduction in trading turnoverfrom Rs. 23074.40 lakh to Rs. 11249.52 lakh even domestic sale was marginally down byapprox. 8% and export sale was down by 17% due to adverse market condition and COVID 19which effected the last quarter of the year. Further the prices of synthetic yarns hascorrected by an average 10% -15% as compared to last year average hence even the volume inmanufacturing sale has increased / remained flat as compared to last year but due to theeffect of the reduction in prices the growth in sale is not visible.
Earnings before Interest Depreciation and Tax (EBIDTA) during the year under reviewwas Rs.3251.97 lakh (8.50%) as compared to Rs.3772.62 lakh(7.09%) in the previous year.Profitability has been affected mainly on account of reduction in volume even afterimproved EBIDTA margins. Profit before tax for the financial year under review wasRs.112.61 lakh decreased from Rs.488.86 lakh for the previous year. Your Company hasearned a Net Profit after tax of Rs.25.41 lakh decreased from Rs.372.99 lakh compared toprevious year.
INDIAN ACCOUNTING STANDARD
As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on March 312020 has been prepared in accordance with the Indian AccountingStandards (IND AS) notified under Section 133 of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014. The estimates and judgments relating to the FinancialStatements are made on a prudent basis so as to reflect in a true and fair manner theform and substance of transactions and reasonably present the Company's state of affairsprofits and cash flows for the year ended March 312020.
The Board of Directors has recommended a dividend of Rs.0.25/-(i.e.2.5%) per equityshare of Rs.10/- each on the paid-up equity share capital of company amounting to Rs.44.65 lakh. The dividend payment is subject to approval of members at the ensuing AnnualGeneral Meeting.
Fairdeal Filaments Limited (Transferor Company) merged with the Company pursuant to theorder of The National Company Law Tribunal dated 10/05/2019.
The authorized share capital of the company is Rs.320000000/-divided into32000000 equity shares of Rs.10/- each (Merging therein authorized share capital ofRs.200000000/-divided into 20000000 equity shares of Rs.10/- each of FairdealFilaments Limited with the authorized share capital of the company) pursuant to the Schemeof Merger w.e.f. 01/06/2019. Appointed date of the Scheme is 01/04/2018.
During the year under review the Company has allotted 6724240 fully paid equityshares of Rs.10/- each to the shareholders of Fairdeal Filaments Limited on 17/06/2019 and16000 Shares of Rs.10/- each held by Fairdeal Filaments Limited in the Company arecancelled.
Your Company has neither accepted nor renewed any deposits within the meaning of theCompanies (Acceptance of Deposits) Rules 2014.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 152 of the Companies Act 2013 and in accordancewith provisions of Articles of Association of the Company Shri Arvind R. Shah (DIN00010483) Director of the Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment. Your Directors recommendhis re-appointment.
Shri Vaibhav Jayantbhai Mehta appointed as an Additional (Independent) Director of theCompany with effect from June 17 2019 to hold office up to the date of 11th AnnualGeneral Meeting. At the 11th Annual General Meeting held on September 30 2019 he wasappointed as an Independent Director not liable to retire by rotation for a period of 5years w.e.f. October 1 2019 to September 30 2024.
At the 11th Annual General Meeting of the company held on September 30 2019 theshareholders have appointed:
Shri Dhirajlal Raichand Shah as an Executive Chairman of the Company for a threeyears term commencing from October 12019 till September 30 2022
Shri Arvind Raichand Shah as a Managing Director of the Company for a threeyears term commencing from October 12019 till September 30 2022
Shri Nitin R. Shah as a Whole Time Director of the Company for a period of threeyears commencing from October 12019 till September 30 2022.
Shri Jayantilal Raichand Shah has been appointed as "Head-Accounts &Legal" of the Company to hold office or place of profit with effect from 1st October2019 at the 11th Annual General Meeting held on September 30 2019.
Shri Satish Hargovinddas Shah was appointed as a Chief Financial Officer (CFO) of theCompany w.e.f. 1st October 2019 by the Board of Directors at their meeting held onSeptember 9 2019.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence prescribed under the Act and theListing Regulations.
NOMINATION AND REMUNERATION POLICY:
The Board of Directors of the Company has adopted on recommendation of the Nominationand Remuneration Committee a Policy for Selection and Appointment of Directors SeniorManagement and their Remuneration.
A brief detail of the policy is given in the Corporate Governance Report section.
PARTICULARS OF EMPLOYEES
The Disclosure required under Section 197(12) of the Companies Act 2013 read with theRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed as 'Annexure-1' and forms an integral part of this Report.
A statement comprising the names of top 10 employees in terms of remuneration drawn interms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed as 'Annexure-2' and forms an integral part of this report. ThisAnnexure-2 is not being sent along with this annual report to the members of the companyin line with the provision of Section 136 of the Companies Act 2013. Members who areinterested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The aforesaid Annexure is also available for inspectionby Members at the Registered Office of the Company 21 days before and up to the date ofthe ensuing Annual General Meeting during the business hours on working days.
There were no employees whose remuneration was in excess of the limits in pursuance ofsection 197(12) of the Companies Act 2013 read with Rule 5(2) of The Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your Company does not have any Subsidiary Joint Venture/ Company or Associate Company.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under section 134(3)(m) of the Companies Act
2013 read with Rule 8(3) of the Companies (Accounts) Rules
2014 the particulars relating to conservation of energy Technology Absorption andforeign exchange earnings and outgo is appended as an 'Annexure-3' to the Board's Report.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3) (c) & 134 (5) of the Companies Act 2013:
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments 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 profit and loss of the company for that period;
c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Shri Bhairav H.Shukla Practicing Company Secretary (CP: 5820) Surat has been appointed as theSecretarial Auditors to conduct the Secretarial Audit of the Company the SecretarialAudit Report for the financial year ended March 312020 is annexed herewith as'Annexure-4'. The report is self-explanatory and does not call for any further explanation/ comments as required under Section 134(3)(f) of the Companies Act 2013.
The Company has complied with the applicable Secretarial Standards issued by theinstitute of Company Secretaries of India.
STATUTORY AUDITORS AND AUDITOR'S REPORT
Pursuant to provisions of Section 139 of the Act and the Rules made thereunder theCompany at its 11th Annual General Meeting re-appointed M/s. RASESH SHAH & ASSOCIATESChartered Accountants (Firm Registration No. 108671W) as the Statutory Auditors of theCompany for a period of 5 years from the conclusion of 11th AGM until the conclusion of16th AGM of the Company.
The requirement to place the matter relating to such appointment for ratification byMembers at every Annual General Meeting has been done away with pursuant to amendment inthe Companies Act.
The Notes on financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer.
No fraud has been reported by the Auditors to the Audit Committee or the Board.
The Board of Directors on the recommendation of Audit Committee approved theappointment of M/s. Kannaujiya & Co. Cost Accountants Surat as the Cost Auditors ofthe company for the year 2020-21 at a remuneration of Rs.30000/- plus taxes as applicableand out of pocket expenses. The remuneration of the Cost Auditors is proposed to beratified by the members at the ensuing Annual General Meeting.
The company has made and maintained books of account and records pursuant to the rulesmade by the Central Government for the maintenance of cost records under section 148(1) ofthe Companies Act 2013.
The Cost Audit Report for the year ended on 31st March 2020 will be submitted by M/s.Kannaujiya & Co. Cost Accountants Surat to the Board of Directors of the company.After consideration and examination by the Board of Directors the company will furnishcost audit report to Central Government in prescribed form.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Employee relations throughout the year were harmonious. Your company treats its humanresources as its important asset contributing to the all-round growth of your company.Industrial relations have continued to be cordial at all levels of the organization duringthe year under review.
INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY:
Your company is conscious about the need to line up modern management practices. Thecompany is using RAMCO ERP software since more than decades. The company has alsoimplemented BI tools to add further values and to make the information flow more dynamicto top and mid management levels. The company has an internal control system commensuratewith its size and nature of its business which covers areas such as optimum utilization ofresources accurate and prompt recording of transactions safeguarding of assetsadherence to applicable accounting standards and policies review of IT and other systemscompliance with prevalent statutes management policies and procedures. These are aimed atgiving the Audit Committee a reasonable assurance on the reliability of financialreporting and statutory & regulatory compliances effectiveness and efficiency of yourCompany's operations. The Internal Financial Control Systems are reviewed periodically andrevised to keep in tune with the changing business environment.
Statutory Auditors of the company has conducted audit of internal financial controlsystem over financial reporting and operating effectiveness of such controls. Separateaudit report on internal financial control is annexed to Auditors Report and forming partof this report.
Audit Committee presently consists of three Directors. The composition of AuditCommittee is as follows.
|Name of Directors ||Category ||Position |
|Rajendra Kundanlal Desai ||Non-Promoter/Independent/Non-Executive Director ||Chairman |
|Richa Manoj Goyal ||Non-Promoter/Independent/Non-Executive Director ||Member |
|Dhirajlal Raichand Shah ||Promoter/Executive Director ||Member |
There are no instances where the Board has not accepted any recommendation of the AuditCommittee.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
In pursuance of the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns or grievancesabout unethical behaviour actual or suspected fraud or violation of the company's code ofconduct or ethics policy has been established. The Vigil Mechanism Policy has beenuploaded on the website of the Company.
BUSINESS RISK MANAGEMENT
The Company has laid down a Risk Management Policy and identified threat of such eventswhich if occur may adversely affect either or value to shareholders ability of
Company to achieve objectives ability to implement business strategies. Such inherentrisks are categorized into Strategic risk Operating risk and Regulatory risk. ManagingDirector and other Director of the Company in consultation with Audit Committee willreview from time to time the risk and suggest steps to be taken to control and mitigatethe same through a properly defined framework. It may be noted that none of the identifiedrisks is of a nature which would threaten the existence of the Company. We consistentlyand periodically review our systems and policies in order to establish sound riskmanagement and internal control systems.
EXTRACT OF ANNUAL RETURN:
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 and rule 12(1)of the Companies
(Management and Administration) Rules 2014 as amended w.e.f. 28.08.2020 extract ofthe Annual Return of the company in Form No. MGT-9 is placed on the website(www.shahlon.com) of the company. Web link for accessing extract of the Annual Return ofthe company is https://www.shahlon.com/reports/disclosure/Extract%20 of%20Annual%20ReturnMGT-9 31.03.2020.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
During the year under review the company has not advanced any loans given anyguarantees or provided any security or made any investments covered under the provisionsof section 185 and 186 of the Companies Act 2013. The company has complied with theprovisions of the Companies Act 2013 with respect to Investments made guarantee givenand security provided in previous years. Necessary disclosure has been made in the notesto the financial statements.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All related party transactions that were entered into during the financial year were inthe ordinary course of business and were on arm's length basis. All related partytransactions for the year are placed before the Audit Committee as well as before theBoard for approval. The transactions entered into with related parties are reviewed on aquarterly basis by the Audit Committee. There were no materially significant related partytransactions which could have potential conflict with interest of the company at large.
Members may refer Note no.25 to the Financial Statements which sets out related partydisclosures pursuant to Ind AS.
EVALUATION OF THE BOARD'S PERFORMANCE
The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent Directors) which include criteriafor performance evaluation of Non-executive Directors and Executive Directors. Theexercise was carried out through a structured evaluation process covering various aspectsof the Boards functioning such as composition of the Board & committees experience& competencies performance of specific duties & obligations governance issuesetc. Separate exercise was carried out to evaluate the performance of individual Directorsincluding the Board Chairman who were evaluated on parameters such as attendancecontribution at the meetings and otherwise independent judgment safeguarding of minorityshareholders interest etc.
The evaluation of the Independent Directors was carried out by the entire Board andthat of the Chairman and the Non-Independent Directors were carried out by the IndependentDirectors.
The Directors were satisfied with the evaluation results which reflected the overallengagement of the Board and its Committees with the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
Hon'ble National Company Law Tribunal Ahmedabad Bench (NCLT) vide its order dated 10thMay 2019 has approved the Scheme of Amalgamation of Fairdeal Filaments Limited("FFL" or "Transferor Company") with Shahlon Silk Industries Limited("SSIL" or "Transferee Company") and their respective Shareholders andCreditors under Sections 230 - 232 and other applicable provisions of the Companies Act2013. Except above there are no other significant and material orders passed by theRegulators or Courts or tribunals which would impact the going concern status of theCompany and its future operations.
MATERIAL CHANGES AFFECTING THE COMPANY
There was no operating or business activity from March 23 2020 till April 26 2020 dueto outbreak of COVID-19 pandemic and announcement of lockdown by the Government. With thelifting of the partial lockdown restrictions the Company has restarted its operations atmanufacturing plants at lower capacities in gradual manner from April 27 2020. Despite ofall the limitations and the factors beyond the control of the Company it has made and isin the process of making all possible efforts to bring the operations of the Company backto its normal. All the processes are being reviewed to curtail costs and minimisewastages.
The Company has availed moratorium facility for 6 months from March'20 to August'20 forrepayment of term loan instalments and interest and working capital interest. The companyhas also availed emergency credit line of Rs. 1000 Lakhs to meet temporary liquiditymismatch arising out of COVID-19 from Cosmos Bank.
The part of the property (land area admeasuring 22619 sq. mtrs. and part of 1constructed factory premises) owned by the Company situated at land bearing Block no. 7475 76 and 81 at Village: Karanj Taluka: Mandvi Dist.: Surat is under compulsoryacquisition by Government of India for Vadodara-Mumbai Express Highway. The Company hasrealised Rs. 18.50 crore from the said property. The proceeds would be used to reduce debtto the tune of Rs. 12.50 crore and the remaining Rs. 6 crore would be used for workingcapital. Operations of the Company will not be adversely affected since the activitiescarried out at the said location is not material in the context of the completemanufacturing set up of the Company and these can be easily transferred to otherlocations. Moreover the Company has sufficient manufacturing space available in existingset up at other locations.
Except above there have been no other material changes and commitments affecting thefinancial position of the Company between the end of the financial year and date of thisreport. There has been no change in the nature of business of the Company.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at work place and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. The company has also complied with provisions relating to the constitution ofInternal Complaints Committee under the said Act.
During the year under review the company has not received any complaints on sexualharassment and hence no complaints remain pending as of 31 March 2020.
TRANSFER TO RESERVES
During the year under review the Company has not transferred any amount to Reserves.
A separate report on Corporate Governance pursuant to Regulation 34(3) of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 read with Part C of Schedule V thereof along with a certificate from Shri BhairavH. Shukla Practicing Company Secretary (CP: 5820) Surat regarding compliance of theconditions of Corporate Governance are annexed to this Report as 'Annexure- 5'.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34(2)(e) of Listing Regulations 2015 Management Discussion andAnalysis Report is given in 'Annexure- 6' to this Report.
Your Directors express their grateful appreciation for the assistance and co-operationreceived from the Banks Financial Institutions Government Authorities CustomersSuppliers and Shareholders during the year under review. Your Directors also wish to placeon record their deep sense of appreciation for committed services of employees of theCompany at all the levels.
|For and on ||behalf of the Board of Directors |
|Place : Surat ||Dhirajlal. R. Shah |
|Date : 12.11.2020 ||Chairman |