Your Directors have pleasure in presenting the 30th Annual Report of theCompany together with Audited Accounts for the year ended 31st March 2020.
1. Financial Highlights :
(' in lakhs)
|Particulars ||Year Ending 31.03.2020 ||Year Ending 31.03.2019 |
|Revenue from operation ||19999.24 ||19442.74 |
|Other Income ||170.88 ||123.17 |
|Profit before Depreciation and Interest ||1330.02 ||1242.55 |
|Less: Interest - finance cost ||732.43 ||561.57 |
|Depreciation ||338.88 ||326.38 |
|Profit Before Exceptional items and Tax ||258.71 ||354.59 |
|Exceptional items ||- ||- |
|Provision for Tax ||81.59 ||64.53 |
|Profit after Tax ||177.11 ||290.06 |
|Other comprehensive income net of tax. ||3.07 ||(0.52) |
|Total comprehensive income for the year ||180.18 ||289.54 |
2. Summary of Operations & State of Company Affairs:
The turnover of the company for the year ended 31st March 2020 was '19999.24 lakhs against ' 19442.74 lakhs in the previous year. During the year the companymade sales of ' 18241.41 lakhs against ' 17917.47 lakhs in the previous year Job workreceipts of ' 817.82 lakhs against ' 479.06 lakhs in the previous year and during the yearthe company has made an operating profit before tax of ' 258.71 lakhs against ' 354.59lakhs in the previous year. The company's sales is increased by 1.81% and job work salesis increased by 70.71% as compared to the previous financial year.
Sharat Industries Limited is one of the very few companies in India which has all 4divisions located within a 5 kilometer radius. All the divisions work together to ensurethat there is continuous production throughout the year despite pre-existing seasonalityin the business in general. This results in high quality produce due to quick processingand reduced logistics. The Company has invested significantly in the capex of its farm andprocessing divisions in recent years to further boost the production capacity.
The shortfall in market demand during the year and price fluctuations were the keyfactors for inappreciable profits. The company is exploring alternate markets to increaseexport volume and lower operating costs. The directors are confident that the performanceof the company will improve in the years to come.
3. Share Capital:
The Authorized share capital of the company as on 31st March 2020 stood at500000000/- divided into 30000000 equity shares of ' 10/- each and 2000000redeemable preference shares of ' 100/- each.
The paid-up share capital of the company as on 31st March 2020 is220125000 comprising of 22012500 of ' 10/- each. During the year under review thecompany has not issued any shares.
In order to retain the profits to strengthen the capital base and improve the liquidityof the company no dividend has been recommended by the Board for the financial Year ended31st March 2020.
5. Transfer to Reserves:
The Board of Directors of your company has decided not to transfer any amount to theReserves for the Year under review.
6. Listing of Shares:
The Equity shares of the Company have been listed on the Bombay Stock Exchange (BSE).The Company has paid applicable listing fees to the stock exchange within stipulated time.
7. Change in Nature of Business:
The company continues to be an integrated Aqua Culture company with Hatchery Culturefeed and Shrimp Processing & Exports business and during the year the company has notchanged its business.
8. Material Changes and Commitments:
There have been no material changes and commitments which affect the financialposition of the company that have occurred between the end of the financial year to thedate of this Report.
9. Company Response to COVID-19:
In March 2020 the COVID pandemic increased rapidly causing Governments of mostcountries to enforce a lockdown of all activities. Heeding to the various guidelinesissued in India by the Central and State Governments and abroad by various agencies on theCovid-19 pandemic all establishments offices & factories of the Company had to downoperations from 25th March 2020. Your Company immediately took severalmeasures to ensure health and safety of its workers and other employees and thereaftersteps were taken to ensure business continuity of essential services including securityand its operations. As the situation is unprecedented while the lockdown is graduallylifting The Company is closely monitoring the situation as it evolves in the future. Thecompany has resumed its activities gradually in line with guidelines issued by the Stateand Central Government authorities.
10. Internal Control Systems and its Adequacy:
In accordance with Section 134(5) of the Act the Company has Internal FinancialControl Policies by means of policies & procedures commensurate with the size andnature of its operations. The Company's policies procedures & standards are developedto uphold internal controls across the organisation. These controls ensure thattransactions are authorised recorded and reported correctly and assets are safeguardedand protected against loss from unauthorised use or disposition. In addition there areoperational controls and fraud-risk controls covering the entire spectrum of internalfinancial controls. The controls were tested during the year and no material weakness
exists. The Audit Committee of the Board periodically reviews the internal audit plansand observations/recommendations of Internal and Statutory Auditors. In accordance withRule 8(5) (viii) of Companies (Accounts) Rules 2014 it is hereby confirmed that theInternal Financial Controls are adequate with reference to the financial statements.
11. Extract of Annual Return:
Pursuant to section 92(3) the Companies Act2013 and rule 12(1) of the companies(Management and Administration) Rules 2014as amended an extract of Annual Return inprescribed form MGT 9 is annexed as Annexure II. The Annual return forming part of theAnnual report of the company is available in the Company's websitewww.sharatindustries.com
12. Details of Subsidiary/Joint Ventures/ Associate Companies:
There are no Subsidiary/ Joint venture/ Associate companies.
13. Performance and Financial Position of Each of the Subsidiaries Associates andJoint Venture Companies Included in the Consolidated Financial Statement:
Not applicable as there are no Subsidiary/ Joint venture/ Associate companies.
14. Statutory Auditors:
M/s A R Krishnan & Associates Chartered Accountants Chennai (Firm RegistrationNo:009805S) were appointed by Share holders in the 27th Annual General Meetingfor a period of 5 years from the conclusion of 27th Annual general Meeting tothe conclusion of 32nd Annual General Meeting.
15. Auditors' Report Observations and Replies:
The Statutory Auditors report for the Financial Year 2019-2020 does not contain anyqualification reservation or adverse remark that needs the response of the Board ofDirectors.
16. Changes in Directors and Key Managerial Personnel:
Resignation of Mr. M.B.R Prasad Independent Director (DIN: 00074642) and Mr. VeerajuManda (DIN: 03164917) Independent Director.
Mr. M.B.R. Prasad and Mr. Veeraju Manda resigned from the Board with effect from29.09.2019 due to their professional preoccupation.
Appointment of Mr Ch. Kishore Kumar (DIN: 00849345) and Mr. K Sreeram Reddy (Din:08600893) as Additional Directors in the capacity of Non Executive Independent Directors.
Mr C. Kishore Kumar and Mr. K Sreeram Reddy were appointed as Additional Director incapacity of Non Executive Independent Director with effect from 12th November2020.
Chief Financial Officer
During the Financial Year Mr. Vivekananda Gupta was the Chief Financial Officer of theCompany. Mr. Vivekananda Gupta resigned from the position of the Chief Financial Officerof the Company with effect from 20th February 2020. Subsequently to fill upthe casual vacancy caused by resignation of Mr. Vivekananda Gupta the Chief FinancialOfficer of the Company Mr. B. Durga Prasad was appointed as the Chief Financial Officerof the Company with effect from 26th June 2020.
Company Secretary & Compliance Officer
During the Financial Year Mrs. C Rubavathy was the Company Secretary and ComplianceOfficer of the Company. Mrs. C. Rubavathy resigned from the position of the CompanySecretary and Compliance Officer on 30th September 2020. Mr. B. Vignesh Ramwas appointed as the Company Secretary and Compliance Officer of the Company with effectfrom 1st October 2020.
17. Declaration from Independent Directors:
The Board of Directors has received declarations from all the Independent Directors ofthe Company confirming that they meet with criteria of Independence as prescribed bothunder sub-section (6) of Section 149 of the Companies Act 2013 and under Regulation16(1)(b) read with Regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations"). The IndependentDirectors have also complied with the Code of Conduct prescribed in Schedule IV to theAct.
In accordance with Companies (Appointment & Qualification of Directors) FifthAmendment Rules 2019 Company has received declarations from Independent Directorsconfirming that they have registered with the Independent Directors Data Bank throughIndian Institute of Corporate Affairs.
Information on familiarization program to Independent Directors is provided in theCorporate Governance Report section of this Annual Report.
18. Directors' Responsibility Statement:
The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 & 134 (5) of the Companies Act 2013 shall state that
(i) that the financial statements for the year ended 31st March 2020 havebeen prepared in conformity with Indian Accounting Standards (Ind AS) and requirements ofthe Act and that of guidelines issued by SEBI to the extent applicable to the Companyalong with proper explanation relating to material departures;
(ii) 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 as at 31st March 2020 and ofthe profit of the company for the year ended on that date ;
(iii) The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
(iv) The directors had prepared the annual accounts on a going concern basis;
(v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
19. No. of Meetings of the Board:
During the Financial Year under review the Board of Directors of the Company met Fivetimes during the Financial Year 2019 - 2020 on 17th May 2020 27thMay 2020 12th August2020 12th November 2020 and 10thFebruary 2020. The details of which are given in Corporate Governance Section of thisAnnual Report. The gap between any two Meetings was within the period prescribed in theAct and SEBI LODR.
20. Audit Committee:
In Accordance with Section 177 of the Companies Act 2013 the composition of Auditcommittee comprises of Mr. Veerraju Mandan and Mr MBR Prasad as its members till29.09.2019 and Mrs Durga Thota as its Chairperson.
A detailed note on the composition of the Board and Committees along with otherdisclosures are provided in the Corporate Governance Report Section of this Annual Report
21. Vigil Mechanism/ Whistle - Blower Policy:
In pursuant to the provisions of Section 177(9) & (10) of the Companies Act2013 aVigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.sharatindustries.com.
22. Risk Management:
In line with the requirements of Section 134(3)(n) of the Companies Act 2013 theCompany has devised a Risk Management Policy which lays down the framework to defineassess monitor and mitigate the business operational financial and other risks that arecommensurate with the nature and size of the business of the Company.
23. Conservation of Energy Technology Absorption and Foreign Exchange Earnings and outgo:
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
(i) Conservation of energy
|(i) the steps taken or impact on conservation of energy ||The Company plans to upgrade from 11 KVA to 33 KVA power supply. This will enable better efficiency in operations and lower power costs. |
|(ii) The steps taken by the company for utilizing alternate sources of energy ||The company intends to explore Solar power options through own investment or Power Purchase Agreement. |
|(iii) the capital investment on energy conservation equipment ||By upgrading to 33 KVA power lines and investing in new refrigeration machinery for processing plant the company intends to lower power consumption and also have better equipment efficiency. |
(b) Technology absorption
|(i) The efforts made towards technology absorption ||NA |
|(ii) the benefits derived like product improvement cost reduction product development or import substitution ||NA |
|(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- ||NA |
|(a) the details of technology imported ||NA |
|(b) the year of import; ||NA |
|(c) whether the technology been fully absorbed ||NA |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof ||NA |
|(iv) the expenditure incurred on Research and Development ||NA |
(c) Foreign Exchange Earnings and out go:
During the Financial Year 2019-2020 total Earnings were ' 988760128 and Outgo was '28263042.
24. Corporate Social Responsibility (CSR):
The company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135(1) of the Companies Act 2013 and henceit is not required to formulate policy on corporate social responsibility.
25. Corporate Governance:
In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) a Compliance report on Corporate Governance as per Schedule Vof the Listing Regulations along with a Certificate
of Compliance from the Practicing Company Secretary forms part of this report. Annexure- VI
The Company has neither accepted nor renewed any deposits from the shareholders orpublic during the financial year 2019-2020 under review.
27. Particulars of Employees:
During the Financial Year under review there were no employees drawing salary more than' 500000/- per month.
28. Managerial Remuneration:
Details of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (Annexure V)
29. Particulars of Loans Guarantees or Investments under Section 186 Details of Loans:
|Date of making loan ||Details of Borrower ||Amount ||Purpose for which the loan is to be utilized by the recipient ||Time period for which it is given ||Date of BR ||Date of SR (if reqd) ||Rate of Interest ||Security |
| || || || ||NIL || || || || |
Details of Investments:-
|Date of investment ||Details of Investee ||Amount ||Purpose for which the proceeds from investment is proposed to be utilized by the recipient ||Date of BR ||Date of SR (if reqd) ||Expected rate of return ||Rate of Interest ||Security |
| || || || |
| || || || |
Details of Guarantee / Security Provided:
|Date of providing security/ guarantee ||Details of recipient ||Amount ||Purpose security/ guarantee is proposed to be utilized by the recipient ||Date of BR ||Date of SR (if any) ||Commission ||Rate of Interest ||Security |
| || || || ||NIL || || || || |
30. Particulars of Contracts or Arrangements with Related Parties:
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto shall be disclosedin Form No. AOC-2. As Annexure III
31. Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedSri. D.S. Venkatanarasimhan practicing Company secretary and report given by them isannexed with the report as Annexure - I.
32. Internal Audit:
In terms of Section 138 of the Companies Act 2013 and the relevant rules the companyappointed M/s. SSRG & Associates (FRN:016752S) Chartered Accountants as the internalauditors of the company. The internal auditor directly reports to the audit committee.
33. Management Discussion and Analysis Report:
The Directors comments on Management Discussion and Analysis which forms a part ofthis report are restricted to the areas which are relevant to the current scenario of theCompany and outlook is annexed and forms part of this Annual Report
34. No Significant and Material Orders were Passed by the Regulators or Courts orTribunals Impacting the going Concern Status and Company's Operations in Future:
During the financial year under review the Company has not received any orders Noticesfrom Regulators/Courts/Tribunal impacting the going concern status and future operationsof the Company.
35. Obligation of Company Under the Sexual Harassment of Women at Work Place(Prevention Prohibition and Redressal) Act 2013:
To prevent sexual harassment of women at work place a new act termed the SexualHarassment of Women at Workplace
(Prevention Prohibition and Redressal) Act 2013 has been notified on 9thDecember 2013 and every company is required to set up an Internal Complaints Committee tolook into complaints relating to sexual harassment at work place of any women employee.
Your Company has adopted a policy for prevention of Sexual Harassment of Women atworkplace and has set up a Committee for implementation of said policy. During the yearyour Company has not received any complaint of harassment.
36. Mechanism for Board Evaluation:
Regulation 17(10) of SEBI (LODR)
Regulations2015 states that the Board shall monitor and review the Board evaluationframework. The Companies Act 2013 states that a formal Annual Evaluation needs to be madeby the Board of its own performance and that of its committees and individual Directors.
Schedule IV of the Companies Act 2013 states that the performance evaluation of theindependent directors shall be done by the Entire Board of Directors excluding thedirector being evaluated.
The Directors evaluation was broadly based on the parameters such as understanding ofthe Company's vision and objective skills knowledge and experience participation andattendance in Board/Committee meetings; governance and contribution to strategy;interpersonal skills etc.
The Board has carried out the annual performance evaluation of its Directors individualperformance as well as the evaluation of the working of its Committees. A structuredquestionnaire was prepared covering various aspects of the Board's functioning such asadequacy of the composition of the Board and its Committees Board Culture execution andperformance of specific duties obligations and governance.
A meeting of the Independent Directors was also held which reviewed the performance ofNon- Independent Directors Chairman and the quality quantity and timelines of flow ofinformation between the Company management and Board.
The relations between the management and the staff were very cordial throughout theyear. Your Directors take this opportunity to record their appreciation for theco-operation and loyal services rendered by the employees.
38. Code of Conduct:
The Company has postulated a Code of Conduct for the Board of Directors and SeniorManagement Personnel and the Code of Conduct is available on the website of the Company.The Board of Directors and the Senior Management Personnel have affirmed compliance withthe Code of Conduct as on 31st March 2020. As required under Regulation 34 (3)read with Schedule V
(d) of SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015 adeclaration from Mr. S.Prasad Reddy Managing Director of the Company to this effect isannexed to the Report on Corporate Governance which forms part of the Annual Report.
Your Directors gratefully acknowledge with thanks the constructive guidance andco-operation extended by MPEDA FEDERAL BANK LIMITED Government of India Government ofAndhra Pradesh Tamil Nadu and also to employees at all levels suppliers dealers andcustomers for their strong support.
Your Directors also thank the shareholders for their continued confidence and trustplaced by them with the Company.
| || ||FOR AND BEHALF OF BOARD |
| ||S. Prasad Reddy ||S. Sharat Reddy |
|Place: Nellore ||Managing Director ||Executive Director |
|Date : 12th November 2020 ||DIN:00069094 ||DIN:02929724 |