Your Directors have pleasure in presenting the Thirty Eighth Annual Report togetherwith Audited Financial Statements of the Company for the year ended 31 March 2019.
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(र in lakhs)
|FINANCIAL RESULTS ||Financial ||Year |
| ||2018-19 ||2017-18 |
|Profit before Interest and Depreciation ||4302.01 ||4736.03 |
|Less: Interest ||2165.31 ||1927.62 |
|Profit before Depreciation ||2136.70 ||2808.41 |
|Less: Depreciation ||1336.21 ||1343.64 |
|Profit before Tax ||800.49 ||1464.77 |
|Less : Provision for Income Tax || || |
|- Current Tax ||162.94 ||345.00 |
|- Deferred tax Liability (Net) ||(32.74) ||(12.53) |
|Profit after Tax ||670.29 ||1132.30 |
|Add : Other comprehensive income/(Loss) ||(30.93) ||9.97 |
|Total comprehensive income/(Loss) for the year ||639.36 ||1142.27 |
Your Directors are glad to recommend payment of Dividend @ Rs. 1.10/- per equity shareof Rs.10/- each (@ 11% of the paid up capital) (Last year Rs. 1.60/- per share of Rs. 10/-each). The dividend on equity shares together with distribution tax on corporate dividendwill absorb Rs. 171.90 lakhs (Rs. 250.02 lakhs).
REVIEW OF OPERATIONS
During the year under review the spinning unit produced 10482.15 tonnes (10763.93tonnes) of yarn. The spinning unit sold 9868.55 tonnes (10180.08 tonnes) of yarn and outof which exports accounted for 1505.77 tonnes (1964.61 tonnes). Further during the yearunder review the Company sold 3318.23 tonnes (3226.80 tonnes) of waste cotton of whichexports accounted for 392.95 tonnes (711.56 tonnes).
The Wind Mills with aggregate installed capacity of 18.145 MW generated 212.62 lakhunits of Wind Electricity as against 230.87 lakh units in the last year. The entire powergenerated by Wind Mills was utilized for captive consumption at the textile mills.
The performance of the spinning unit in terms of profitability was better compare tolast year and due to less demand in the second half yarn stock level has increased. Andwind generated almost equal compare to last year its support to maintain theprofitability.
The company's non-spinning technical textile division overall performance in respect ofrevenue almost equal to last year in respect of profitability was reduced high materialand operational cost. The overall sales turnover of the Company from all divisionsaggregated to Rs.35111.33 Lakhs (Rs.35551.51 Lakhs) of which exports including merchantexports amounted to Rs.5690.11 Lakhs (Rs.7301.75 Lakhs) the exports contributing 16.21%(20.53%) of the overall sales of the Company.
PROSPECTS FOR THE CURRENT YEAR
The prospects for the spinning division appear to be stable and strategic shift tohigher counts expect reasonable margin. The contribution from windmill also expects tocontinue in the present level. The contribution from lamination coating and garments arelikely to improve in the coming years.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF
There are no material changes and commitments affecting the financial position of theCompany subsequent to the end of the Financial Year.
TRANSFER TO RESERVES
During the year under review the Company has not transferred any amount to GeneralReserves.
CHANGE IN THE NATURE OF BUSINESS
There was no change in the nature of principal business of the Company during thefinancial year ended 31st March 2019.
During the year under review the Company has not made any fresh issue of shares.
TRANSFER OF UNCLAIMED DIVIDEND / SHARES TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has transferred unclaimed dividend of Rs.526521/- to the InvestorEducation and Protection Fund and also transferred 9783 equity shares of Rs.10/- each tothe account of Investor Education and Protection Fund during the year under review.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2019 pursuant to the sub-section (3)of Section 92 of the Companies Act 2013 i.e. Form MGT - 9 is available at theweblink:www.shivatex.in.
During the year under review Four Board Meetings of the Company were conducted. Thedetails of the same have been given in the Corporate Governance Report under Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 formingpart of this Report.
During the year under review your Company has complied with all the applicableSecretarial Standards issued by the Institute of Company Secretaries of India from time totime.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 134 (5) of the Companies Act 2013 your Directors confirmthat: a) Your Directors have followed in the preparation of the annual accounts theapplicable accounting standards with proper explanation relating to material departures;b) Your Directors have selected such accounting policies and applied 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 at the end of the financial year and of theprofit and loss of the Company for that period; c) Your Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) Your Directors have prepared the annualaccounts on a going concern basis; e) Your Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and f) Your Directors have devised proper systemto ensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
During the period under review Sri A Dhananjayan (DIN : 08043947) and Sri D SatishKrishnan (DIN : 00052973) were inducted in to the Board on 29.05.2019. Sri S V KandasamiDirector (DIN 00002470) is required to retire by rotation at the ensuing Annual GeneralMeeting he is eligible and seeks re-appointment. He has also got the approval of membersof the Company in the Annual General Meeting held on 24th September 2018 for continuationof office of Director after crossing the age of 75 years. Sri K N V Ramani (DIN 00007931)and Sri S Marusamy (DIN 00610091) Independent Directors of the Company were re-appointedfor a second term of five consecutive years effective from 25.08.2019 till 24.08.2024.Suitable resolutions along with explanatory statement and justification for theirre-appointment as an Independent Directors have been set out in the Notice to the members.Sri S V Arumugam resigned from the Board with effect from 09.11.2018. Sri K N V RamaniSri C S K Prabhu Sri S Palaniswami Dr K R Thillainathan and Sri S Marusamy wereappointed as Independent Directors at the Thirty Third Annual General Meeting of theCompany for a period of five consecutive years effective from 25.08.2014 to 24.08.2019 andtheir first tenure of office of the said Independent Directors will ends on 24.08.2019.Sri C S K Prabhu Sri S Palaniswami and Dr K R Thillainathan Independent Directors of theCompany have expressed their unwillingness for seeking re-appointment.
The Board placed its sincere appreciation on record for the valuable contributions madeby Sri S V Arumugam who was associated with the Company for a continuous period of 38years as an active member of the Board and guided the growth of the Company to its presentstatus as a prominent and key player in the domestic yarn segment. His vision andprofessional approach has always been of great support to the Board.
The Board also recorded the valuable contributions and guidance rendered by Sri C S KPrabhu Sri S Palaniswami and Dr K R Thillainathan during their tenure of office as anIndependent Directors of the Company.
DECLARATION OF INDEPENDENT DIRECTORS
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013.
EVALUATION OF BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 IndependentDirectors at their meeting without participation of non-Independent Directors andmanagement considered and evaluated the Boards' performance performance of the Chairmanand Managing Director.
The Board has carried out an annual evaluation of its own performance and performanceof the individual Directors as well as the Committees of Directors.
KEY MANAGERIAL PERSONNEL
The Company has not appointed any Key Managerial Personnel during the year underreview.
The Audit Committee comprises of
1. Sri K N V Ramani - Chairman (Non- Executive Independent Director)
2. Sri C S K Prabhu - Member (Non- Executive Independent Director)
3. Sri S K Sundararaman - Member (Managing Director) and
4. Sri S Palaniswami - Member (Non- Executive Independent Director) The Board hasimplemented the suggestions made by the Audit Committee from time to time.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees governed under the provisions ofSection 186 of the Companies Act 2013. The details of the investments made by Company aregiven in the notes to the financial statements.
ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a Vigil Mechanism for Directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's code of conduct or ethics. The policy has been posted in the website of theCompany viz. www.shivatex.in.
POLICY ON NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors have framed a policy setting out the framework for payment ofRemuneration to Directors Key Managerial Personnel and Senior Management Personnel of theCompany. The policy is explained as part of the Corporate Governance Report. The Committeeensures that:
1. The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully
2. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks and
3. Remuneration to Directors Key Managerial Personnel and Senior Management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year in theordinary course of business were on arm's length basis. Hence provisions of Section 188 ofthe Companies Act 2013 are not attracted. Further no materially significant related partytransactions were made by the Company with Promoters Key Managerial Personnel or otherdesignated persons which may have potential conflict with interest of the company atlarge. Hence reporting under Form AOC-2 is not required. Approval of Audit Committee wasobtained for transactions of repetitive nature on annual basis. All related partytransactions are placed before the Audit Committee and Board of Directors for theirreview. The policy on Related Party Transactions is available in the websitewww.shivatex.in.
The Company has no subsidiary during the year under review.
The Company has not accepted any public deposits within the meaning of Section 73 to 76of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014during the year under review.
In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 your Company is committed to the principles of good Corporate Governanceand continues to adhere good corporate governance practices consistently.
A separate section is given on Corporate Governance Management Discussion and Analysisalong with a certificate from the Practicing Company regarding compliance with conditionsof Corporate Governance as stipulated under Regulation 34(3) read with Schedule V of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which forms partof this Annual Report.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status and the Company's operation in future.
As per Section 139 of the Companies Act 2013 M/s Deloittee Haskin & Sells LLPChartered Accountants were appointed as Auditors for a term of 5 years in the 36th AnnualGeneral Meeting held on 25th December 2017 and will hold office up to 41st Annual GeneralMeeting without further ratification every year as per the provisions of Companies(Amendment) Act 2017.
Pursuant to provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedMr. R Dhanasekaran Practicing Company Secretary to undertake the Secretarial Audit of theCompany. The report is attached herewith as
No adverse qualifications/comments have been made in the said report by the PracticingCompany Secretary.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors on therecommendation of Audit Committee have appointed Sri M Nagarajan Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2019 - 2020 with remuneration. As required under the Companies Act 2013 a resolutionseeking members' approval for the remuneration payable to the Cost Auditor forms part ofthe Notice convening Annual General Meeting.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit Department which monitorsand evaluates the efficiency and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. The scope and authority of the Internal Audit function is defined in theInternal Audit Manual. To maintain its objectivity and independence the Internal Auditfunction reports to the Chairman of the Audit Committee and to the Chairman & ManagingDirector.
Based on the report of internal audit function corrective actions are taken in therespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
The Company has appointed M/s. B.M Associates as Internal Auditor to conduct theinternal audits of the Company.
STATEMENT ON RISK MANAGEMENT POLICY
Pursuant to section 134(3) (n) of the Companies Act 2013 and Regulation 21 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasconstituted a Risk Management Committee. The Committee has developed a Risk ManagementPolicy and implemented the same. The details of the Committee and its terms of referenceare set out in the Corporate Governance Report forming part of the Boards Report. Atpresent the Company has not identified any element of risk which may threat the existenceof the Company.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Company has constituted Corporate Social Responsibility Committee (CSR) whichshall recommend to the Board the activities to be undertaken by the Company as specifiedin Schedule VII of the Companies Act 2013 recommend the amount of expenditure to beincurred on such activities and monitor the CSR policy of the Company. The company haspartially spent the amount stipulated under the requirements of the Act.
Corporate Social Responsibility Committee constituted by the Board with effect from21.05.2014 comprised of the following Directors.
|1. Sri S V Alagappan ||- Chairman |
|2. Sri S K Sundararaman ||- Managing Director |
|3. Dr K R Thillainathan ||- Independent Director |
The CSR activities and its related particulars is enclosed as Annexure II
I. Conservation of Energy and others -
The particulars required to be included in terms of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 for the year ended31st March 2019 relating to Conservation of Energy etc. is enclosed as Annexure III
II. Remuneration of Directors and other details
The information required under Section 197(12) of the Companies Act 2013 read withCompanies Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended 31st March 2019 is provided as AnnexureIV to this report.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
During the year under review the human relations continued to be very cordial. TheBoard of Directors wishes to acknowledge the contribution of the employees at all levelsof the organization.
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 redresscomplaints for sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy. The Company has not received any complaints fordisposal during the year.
Your Directors acknowledge with gratitude the timely assistance and help extended bythe Bankers for having provided the required bank facilities. Your Directors wish to placeon record their appreciation of the contributions made by the employees at all levels forthe continued good performance of your company.
| ||By Order of the Board |
| ||S V ALAGAPPAN |
|Coimbatore ||CHAIRMAN |
|29th May 2019 || |
| ||(DIN 00002450) |