Your Directors have pleasure in presenting the 49th AnnualReport on the business operations and financial performance of the Company along with theStandalone and Consolidated Audited Balance Sheet and Statement of Profit & Loss forthe year ended 31st March 2021.
(Rs. in Crores)
|Particulars ||Consolidated ||Standalone |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Revenue from operations ||2435.36 ||2173.63 ||1689.49 ||1754.77 |
|Profit before Financial Charges Depreciation Tax & ||414.39 ||340.40 ||284.67 ||268.37 |
|Exceptional Item || || || || |
|Exceptional Item ||- ||11.99 ||- ||11.99 |
|Profit before Financial Charges Depreciation & Tax ||414.39 ||328.41 ||284.67 ||256.38 |
|Less: Financial Charges ||17.68 ||13.00 ||8.68 ||8.14 |
|Cash Profit ||396.71 ||315.41 ||275.99 ||248.24 |
|Less: Depreciation ||72.87 ||59.04 ||32.53 ||33.09 |
|Profit before Tax ||323.84 ||256.37 ||243.46 ||215.15 |
|Add/(Less): Income Tax Earlier year's tax ||(84.18) ||(66.77) ||(60.81) ||(54.23) |
|Add/(Less): Deferred Tax ||0.49 ||4.69 ||(1.50) ||4.59 |
|Profit after Tax ||240.15 ||194.29 ||181.15 ||165.51 |
|Other Comprehensive Income ||18.81 ||(3.07) ||2.10 ||(4.33) |
|Total Comprehensive Income for the year ||258.96 ||191.22 ||183.25 ||161.18 |
During the current year Net Revenue of the Company on standalonebasis decreased from Rs. 1755 Crores to
Rs. 1690 Crores. The Annual turnover decreased as the first two monthsof the year were completely washed out due to lock down caused by COVID 19. Sales startedpicking slowly from June 2020. For next three quarters the Company substantially increasedthe sales over corresponding quarters. Despite lower sales the Profit after tax for thecurrent year increased by more than 9% to Rs. 181 Crores as against the profit after taxof
Rs. 166 Crores of last year. This was possible due to control on costssome of which have become permanent. The profit would have been much higher but for lossof sale during lockdown period.
On Consolidated basis the Overall Revenue increased from Rs. 2174crores to Rs. 2435 Crores. This was possible because of substantial increase in sales inOverseas Subsidiaries in Australia and Spain. The Consolidated profit after tax alsoincreased from Rs. 194 Crores to Rs. 240 Crores.
PRESENT STATUS & FUTURE OUTLOOK
During the year the sale of Mattresses dropped only by 5% despitelosing sale during the lockdown period of first two months of the year and slow ramp upthereafter. The Company has increased its share in the domestic mattress market. Thecompany continues to retain its leadership position in Mattress and Foam Products.
During the year the prices of critical raw materials like Polyol andTDI increased substantially. The Price of these two critical raw material were more thandouble in the last quarter when compared with the price in the beginning of the year.
Second wave of Covid 19 has come with more severity in year 2021-22.This has resulted in lock down in most parts of the Country. This has adversely impactedthe sales of April and May 2021. It is not known when the situation will normalize. YourCompany is using innovative techniques like Sleepwell@Home Aggressive Online Marketingfocus on selling products which are good for health etc.
Company is now selling all its products treated with Neem Fresche whichmeans immunity from various respiratory problems caused by Dust Mites Bacteria &Fungi.
The Company has increased its Market share by selling low pricemattresses. This has caused shift from unorganized market to organized market. The Companyhas also increased its market penetration and lot of Multi Brand Outlets have beenconverted to Exclusive Branded Outlets of Sleepwell.Company also maintains its leadershipposition in Foam Market both in Furniture and B2B segment. It continues to innovate foamsfor newer applications.
The Company has also started exports to US markets from India andSpain. It expects to make substantial exports to US markets from India as well as from itssubsidiary in Spain.
Board of Directors do not recommend any dividend for the year 2020-21.The entire profit is being ploughed back in the business.
As on 31 March 2021 the Company has Five subsidiaries and two stepsdown subsidiaries. As required under the provisions of Section 129 of the Companies Act2013 read with Companies (Accounts) Rule 2013 a statement containing salient featuresof the financial statements of subsidiaries is provided in the prescribed format AOC-1 asAnnexure-A of the Board Report.
The Company has one 100% subsidiary Joyce Foam Pty. Ltd (Joyce Foam)Australia. Joyce Foam is the largest producer of Foam in Australia and supplies itshigh-quality Foam to Global Mattresses and Furnishing Companies. Joyce Foam recorded aturnover of 81.08 Million Australian Dollars (AUD) in 2020-21 as compared with 66.17Million AUD in 2019-20 and has posted post tax profit of AUD 4.83 Million in 2020-21 asagainst AUD 4.01 Million in 2019-20 recording a growth of about 20%.
Joyce Foam Pty Ltd has one wholly own subsidiary Joyce W C NSW Pty Ltd.
In addition the Company has one more wholly owned overseas subsidiaryInternational Foam Technologies Spain S.L.U. and a step down subsidiary InterplaspS.L.U. Spain. International Foam Technologies Spain S.L.U. recorded a turnover of 39.75Million Euro in 2020-21 as compared with 6.48 Million Euro in 2019-20 and has postedpost tax profit of Euro 4.09 Million in 2020-21 as against Euro 0.69 Million in 2019-20recording a growth of about 493%.
Staqo World Private Limited (Staqo) is a wholly owned subsidiary formedduring last financial year this company has started its business of InformationTechnology with negligible business at its first year. During this year the companystarted getting orders from India and overseas countries and achieved a turnover of Rs.13.36 crores with profit after tax of Rs. 2.91 Crores.
Your Company has two other wholly owned subsidiaries as under:
1) Divya Software Solutions Private Limited
2) Sleepwell Enterprises Private Limited.
In accordance with Regulation 16 of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) none of the subsidiaries is a material non-listed subsidiary. The Companyhas formulated a policy for determining material subsidiaries. The policy has beenuploaded on the website of the Company at http:// www.sheelafoam.com.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Section 136 of the Companies Act 2013 and theapplicable Accounting Standard on the Consolidated Financial Statements your Directorshave attached the consolidated financial statements of the Company which form a part ofthe Annual Report.
The financial statements including consolidated financial statementsand the audited accounts of each of the subsidiary are available on the Company'swebsite www. sheelafoam.com
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the directorswould like to state that: a) In the preparation of the annual accounts the applicableaccounting standards have been followed. b) The directors have selected such accountingpolicies and applied them consistently and made judgements and estimates that werereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit or loss of the Company for theyear under review. c) The directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
d) The directors have prepared the annual accounts on a going concernbasis. e) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and f) The directors had devised proper system to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
In accordance with SEBI Regulations a separate report on CorporateGovernance is given in Annexure-B along with the Auditors' Certificate on itscompliance. The Auditors' Certificate does not contain any qualification reservationand adverse remark.
RELATED PARTIES TRANSACTIONS
The particulars of Contracts or arrangements with related parties inthe prescribed form are attached as
The Company has formulated a Risk Management Policy duly reviewed bythe Board of Directors. The policy includes risk identification analysis andprioritization of risk and development of risk mitigation plans. The Company hasconstituted a Risk Management Committee to look into the risk involved with the Companyand its mitigation.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate Internal Financial controls withreference to financial statements. During the year such controls were tested and noreportable material weakness in the design or operations were observed. The report on theInternal Financial Control issued by M/s. S. P. Chopra & Co. Chartered AccountantsStatutory Auditors of the Company in view of the provisions under the Companies Act 2013is given in their audit report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL _KMP_
As per the provisions of the Companies Act 2013 Mr. Rakesh Chaharwill retire by rotation at the ensuing Annual General Meeting (AGM) of the Company andbeing eligible seeks re-appointment. The Board has recommended his reappointment.
As required under the provisions of Section 203 of the Companies Act2013 the Key Managerial Personnel namely Chairman and Managing Director ExecutiveDirectors Chief Financial Officer and Company Secretary continue to hold that office ason the date of this report.
The term of Statutory Auditors M/s. S.P. Chopra & Co. CharteredAccountants will end at ensuing 49th Annual General Meeting (AGM).
The Board on recommendation of the Audit Committee recommended forthe approval of members the appointment of M/s MSKA and Associates CharteredAccountants Firm Registration Number 105047W as the Auditors of the Company for a periodof five (5) years from the conclusion of 49th Annual General Meeting of theCompany till the conclusion of 54th Annual General Meeting to be held in 2026.Appropriate resolution seeking your approval to the appointment of the Statutory Auditorsis appearing in the notice convening the 49th AGM.
The Company has received letter from the Auditors to the effect thatthe appointment if made would be within the prescribed limits under Section 141 of theCompanies Act 2013 and that they are not disqualified for appointment.
There is no adverse observation of Auditors' on financialstatements of the company. The Auditors' Report read with the relevant notes toaccounts are self-explanatory and therefore does not require further explanation.
CONSOLIDATED FEES PAID TO STATUTORY AUDITORS
Detail of total fees for all services paid by the listed entity and itssubsidiaries on a consolidated basis to the statutory auditor and all entities in thenetwork firm/ network entity of which the statutory auditor is a part as mentioned inNote 38 of Consolidated Financial Statement published through annual reports for theFinancial Year 2021-21 are as below:-
(Rs. In Lakhs)
|Particulars ||Year ended 31 March2021 ||Year ended 31 March2020 |
|Audit Fees ||29.44 ||29.44 |
|Certification Work ||3.54 ||3.50 |
|Reimbursement of expenses ||0.83 ||2.90 |
|Total ||33.81 ||35.84 |
As per section 148 read with Companies (Audit and Auditors) Rule 2014M/s Mahesh Singh & Co Cost Accountants are appointed to conduct the cost records ofthe Company for the Financial Year 2021-22 by the Board of Directors and it seeksratification of remuneration from the members of company at ensuing Annual GeneralMeeting.
The company has engaged M/s S. S. Kothari Mehta & Co. CharteredAccountants as Internal Auditor to conduct internal audit for the year 2021-22. TheInternal Auditor will report to Board of Directors. The internal audit will help companyto review the operational efficiency and assessing the internal controls. It also reviewsthe safeguarding of assets of the Company.
The company has engaged M/s AVA Associates Company Secretaries asSecretarial Auditor to conduct Secretarial audit for the year 2020-21. The report onsecretarial audit is annexed as Annexure-D to the Board's Report. The reportdoes not contain any qualification reservation or adverse remark.
CORPORATE SOCIAL RESPONSIBILITY_CSR_
In terms of Companies Act 2013 your company has to undertakeCorporate Social Responsibility programme. The disclosure as per Rule 9 of the Companies(Corporate Social Responsibility Policy) Rule 2014 is attached as
The composition of Audit Committee is provided in the CorporateGovernance Report that forms part of this Annual Report.
The Company has established a vigil mechanism through a Whistle BlowerPolicy. The Company can oversee the genuine concerns expressed by the employees and otherDirectors. The Company has also provided adequate safeguards against victimization ofemployees and Directors who may express their concerns pursuant to this policy. The policyis uploaded on the website of the Company at http://www.sheelafoam.com.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE_PREVENTION PROHIBITION AND REDRESSAL_ ACT 2013
The Company has in place an Anti-Sexual Harassment policy in line withthe requirements of sexual harassment of women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal system has been set up to redress complaints receivedregarding sexual harassment.
MEETINGS OF THE BOARD
During the year 5 meetings of the Board of Directors were held.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 form part of the FinancialStatements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNING AND OUTGO
A. Following measures were taken by company for energy conservation inthe year:
Following measures were taken by company for energy conservation in theyear: 20-21
1) Installed 376 KWp solar power plant at GreaterNoidaunittoreducetheelectricityconsumption from power distribution company It helps togenerate app. 60% of our total demand through solar power.
2) Replaced 10 nos. of electric hoist with hydraulic power pack atfoaming crane it results into increasing the efficiency of the machine and saving ofelectricity.
3) Increased use of Screw compressors for compressed air with variablefrequency drives instead of starter to increase the efficiency and saving of electricity.
4) Conducted third party energy audits to identify the potentialopportunities for energy saving and further optimization in energy consumption. This is anongoing process that the Company will continue across all manufacturing locations.
5) Replaced conventional MH and street lights with 100% energyefficient LED lights across all the units with LDRLux Time switch and motion sensorbased control system.
6) Optimization of running time of AC on the basis of ambienttemperature condition inside the UPS room.
7) Replaced old Air conditioner with energy efficient new generationAir conditioner with non-CFC gases lead to reduction in power consumption as well asnothing to harm Ozone layer.
8) Increasing the use of Variable Frequency drives instead of startersfor the electric motors to reduce the electricity consumption and to increase theefficiency.
B. The expenses incurred on Research and Development have been includedin respective expense heads.
C. The Company has introduced new process to reduce the consumption ofenergy and upgraded technology whenever required.
D. The earnings from exports were Rs. 21.33 crores (Previous Year Rs.16.43) and payments in foreign exchange were Rs. 141.81 crores (Previous Year
Rs. 131.04 crores).
Your Company has entered into agreements with Bombay Stock ExchangeLimited (BSE) and National Stock Exchange of India Limited (NSE) in compliance withRegulation 109 of the SEBI LODR Regulations 2015.
PARTICULARS OF EMPLOYEES
The information as required under Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in Annexure-F to the Board's Report.
MANAGEMENT'S DISCUSSION AND ANALYSIS
In terms of provisions of Regulation 34 of the Listing Regulations theManagement's discussion and analysis is set out in this Annual Report.
The Company has not accepted any deposits within the meaning of Section73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return as provided under Sub Section 3 of Section 92is annexed as Annexure-G.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by regulators orcourts or tribunals impacting the going concern status and Company's operations infuture.
BOARD EVALUATION MECHANISM
Pursuant to the provisions of Companies Act 2013 and the ListingRegulations the Board has carried out annual performance evaluation of its ownperformance those of directors individually and of various committees.
The performance of individual directors was evaluated on parameterssuch as number of meetings attended contribution in the growth and formulating thestrategy of the Company independence of judgement safeguarding the interest of theCompany and minority shareholders time devoted apart from attending the meetings of theCompany active participation in long term strategic planning ability to contribute byintroducing best practices to address business challenges and risk etc. The directorsexpressed their satisfaction with the evaluation process.
BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report/Sustainability Report is annexed as Annexure-H.
DIVIDEND DISTRIBUTION POLICY
The company has adopted Dividend Distribution Policy and there is nochange in policy during the year. As per SEBI (Listing Obligations and DisclosureRequirements)_ Regulations 2015 the policy is hosted at our web site atwww.sheelafoam.com and is also attached as Annexure-I.
Your Directors wish to express and place on record their thanks to theCompany's Distributors Dealers and Business Associates for their excellent effortand the customers for their continued patronage of the Company's products. YourDirectors also wish to place on record their appreciation for the devoted services of theExecutive Staff and workers of the Company at all levels enabling the Company to achievethe excellent performance during the year.
Your Directors also appreciate the valuable co-operation and continuedsupport received from Company's bankers and all the government agencies anddepartments.
The Directors also express their sincere thanks to all the Shareholdersfor the continued support and trust they have reposed in the Management.
| ||By Order and on behalf of the |
| ||Board of Sheela Foam Limited |
|Place: Noida ||(Rahul Gautam) |
|Date : May 29 2021 ||Chairman and Managing Director |