Your Directors have pleasure in presenting their Eighty-third (83rd) AnnualReport of the Company together with the audited financial statementsforthe 31 financialyear ended st March 2021.
1. FINANCIAL PERFORMANCE
There was no improvement in the business scenario of the Textile Industry and itcontinued to remain challenging. The revenue from operations for the year 2020-21 was Rs1283 lacs as compared to Rs 2587 lacs in the previous year a decline of 50.41 %. Theloss before the Prior period Exceptional item and Tax was Rs 1914 lacs against theprevious year loss of Rs 1572 lacs.
The net loss for the year was Rs 2156 lacs against the previous year net loss of Rs 611lacs.
The Board of Directors of your Company have not recommended any dividend for theFinancial Year ended 31st March 2021 considering the loss during the year andbrought forward losses.
India's cotton production in the current season 2020-21 is likely to be 371 lac bales.The exports are estimated to be 75 lakh bales.
The FOB value of the exports during the Year under review was Nil against zero exportin the previous year.
5. ANALYSIS AND REVIEW
India's textiles sector is one of the oldest industries in the Indian economy datingback to several centuries.
The industry is extremely varied with hand-spun and hand-woven textiles sectors at oneend of the spectrum while the capital-intensive sophisticated mills' sector on the otherend. The decentralized power looms/ hosiery and knitting sector forms the largestcomponent in the textiles sector. The close linkage of the textiles industry toagriculture (for raw materials such as cotton) and the ancient culture and traditions ofthe country in terms of textiles makes it unique in comparison to other industries in thecountry. India's textiles industry can produce a wide variety of products suitable fordifferent market segments both within India and across the world.
6. OPPORTUNITIES AND CHALLENGES
The future for the Indian textile industry looks promising. The Indian textile industryhas vast potential for growth buoyed by strong domestic consumption as well as exportdemand. However to get maximum advantage of the vast potential of this vibrant industrythe Government and Industry need to work towards addressing key challenges includingobsolete machinery and technology threats to the handloom sector power shortage illicitmarkets labour-related concerns raw materials shortage.
7. PRESENT STATUS OF THE UNIT
The company is processing suiting and shirting.
8. EXPANSION AND MODERNISATION
Because of financial constraint company did not go for modernization.
9. CONSOLIDATED FINANCIAL STATEMENT
As required by Regulation 33 of the SEBI (LODR) Regulations 2015 the ConsolidatedAudited Financial Statements have been prepared following the requirements underAccounting Standard AS-21 on "Consolidated Financial Statements" read with AS-23on the "Accounting for Investment in Associates" read with the provisions ofCompanies Act 2013 are provided forming part of the Annual Report.
10. CASH FLOW STATEMENT
In compliance with the requirement of Section 34 of the SEBI (LODR) Regulations 2015the Cash Flow Statement for the year ended 31st March 2021 prepared followingthe applicable Accounting Standard is annexed to the financial statement which formspart of the Annual Report.
The Company's properties including its Building Plant & Machinery and Stocks amongothers continue to be adequately insured against fireflood earthquake explosive andother such risks as considered to be prudent and necessary.
12. INTERNAL FINANCIAL CONTROL
The Company has in place internal financial control systems commensurate with the sizenature and complexity of its operations ensuring the proper recording of financialsandmonitoring of operationaleffectivenessandefficient conduct of its business includingadherence to the Company's policies safeguarding of its assets prevention and detectionof frauds and errors accuracy and completeness of accounting records and compliance ofvarious applicable regulatory and statutory requirements.
The Internal Auditor monitors and evaluates the efficiency and their report correctiveactions are undertaken by the concerned departments and thereby strengthen the Controls.
Significant audit observations corrective measures and actions thereon are presented tothe Audit Committee of the
During the year such controls were tested and no reportable material weaknesses wereobserved.
The Audit Committee comprises the majority of Independent Directors in terms of theapplicable provisions of the Companies Act 2013 and SEBI (LODR) Regulations 2015.
13. FIXED DEPOSITS
Your Company has not accepted any deposit from the Public/Members under Section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposit) Rules 2014 duringthe year under review and no deposits are pending with the Company as on the Balance Sheetclosure date.
14. SHARE CAPITAL
There has been no change in the Company's Issued Subscribed and Paid-up Equity andPreference Share Capital between the end of the financial year 31st March 2020and 31st March 2021. On 31st March 2021 the Equity Share Capitalstood at Rs 3303.30 Lacs divided into 33033000 Equity Shares of Rs 10 each and PreferenceShare Capital stood at Rs 975 Lacs divided into 975000 0.01% Cumulative RedeemableNon-convertible Preference Shares of
Rs 100 each.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL Re-appointment
Shri S. B. Bhat (Shri Bhat) who is also a whole-time Director designated as ExecutiveDirector of the Company.
The term of Office of Shri Bhat (DIN: 00650380) as a Whole-time Director designatedas Executive Director of the Company will end owing to efflux of time from the close ofbusiness on 17 th January 2022.
According to Section 196 and 197 read with Schedule V and other relevant provisions ofthe Act and based on the recommendation of the Nomination and Remuneration Committee theBoard of Directors has considered and recommends the re-appointment of Shri S. B. Bhat asWhole-time Director for a further term of three years effective from "18thJanuary 2022 well in advance to seek Shareholders approval at the forthcoming AGM of theCompany. An appropriate resolution to this effect is being proposed to the Members ofthe Company at the forthcoming 83 rd AGM.
At the forthcoming 83rd Annual General Meeting (AGM) of the Company Shri S.K. Somany (DIN: 00001131) retires by rotation and being eligible offers himself forre-appointment under the provisions of the Companies Act 2013 ("the
Act") and Articles of Association of the Company. The Board recommends hisre-appointment.
Brief resume nature of expertise and details of directorship held in other companiesof Shri S. K. Somany proposed to be appointed is given in the Notice of the EnsuingGeneral Meeting (AGM) as stated under Secretarial Standard 2 and Regulation 36 of theSEBI (LODR) Regulations 2015.
Independent Directors hold office for a fixed term of five years and are not liable toretire by rotation.
None of the Directors is disqualified from being appointed or holding office asDirectors as stipulated under Section
164(2) of the Companies Act 2013.
16. DECLARATION OF INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of the SEBI(LODR) Regulations 2015.
17. CORPORATE SOCIAL RESPONSIBILITY
The Company does not fall within the ambit of Section 135 of the Companies Act2013 read with the Companies (Corporate Social Responsibilities Policy) Rules 2014.Therefore the Annual Report on Corporate Social Responsibility initiatives as requiredunder the said act does not apply to the Company. In view thereof the Annual Report onCSR activities is not annexed.
18. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
The Company has not provided any loan to any person or body corporate or given anyguarantee or provided security in connection with such loan or made any investment in thesecurities of any Body Corporate under Section 186 of the
Companies Act 2013 during the financial year ended 31st March 2021.
19. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY
The Policy on Related Party Transaction' dealing with the review and approval ofrelated party transactions was amended in line with the requirements of SEBI (ListingObligations and Disclosure Requirements) (Amendment) Regulations 2018. The policy isavailable on the Company's website at the web link: www.somatextiles.com/home.php/investors/policies.
All contracts/ arrangements/ transactions entered into by the Company during thefinancial year with related parties as defined under Section 188 of the Companies Act2013 and the relevant rules made thereunder were in the ordinary course of business andon arm's length.
Further no material contract/ arrangement/ transaction with related parties wereentered during the financial year under review under the policy of the Company onmateriality of related party transactions. Accordingly the disclosure of related partytransactions as required under Section 134(3)(h) of the Companies Act 2013 in form AOC-2does not apply to your Company. However members may refer to the notes to the financialstatements which sets out disclosure on related parties and transactions entered intowith them according to Accounting Standards.
20. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock Exchanges:- (a) BSELimited (BSE).
Address: Phiroze Jeejeebhoy Towers Dalal Street Mumbai400001 (b) National StockExchange of India Limited (NSE).
Address: Exchange Plaza Bandra Kurla Complex Bandra (East) Mumbai400051.
(i) Listing fees have been paid to the Stock Exchanges for the year 2021-22.
(ii) Your Company has applied for delisting its security(Equity Shares)from BombayStock Exchange(BSE). Permission from BSE is awaited.
(iii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No.CSEA/ID/223/2008 dated 16th April 2008 confirmed the delisting of theCompany's Shares from the official List of their exchange. However Equity Shares havebeen allowed to be traded under the "Permitted Category" on the Exchangeconsidering the interest of General Investors in the Company.
(i) NSE - SOMATEX (ii) BSE - 521034 (iii) CSE - 29067. De-mat ISIN Number in NSDL& CDSL ISIN INE 314C01013.
21. DELISTING FROM STOCK EXCHANGE
The Company vide its application dated 31st March 2021 applied forVoluntary Delisting of its Equity Shares from BSE Limited in terms of Regulation 6 (a) andRegulation 7 of SEBI (Delisting of Equity Shares) Regulations 2009 as approved by theBoard of Directors of the Company at its meeting held on 30th March 2021.However confirmation/ approval for the same from BSE Limited is awaited.
22. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The Auditors Report and Secretarial Auditors Report do not contain any reservationqualification or adverse remark and therefore need no explanations or comments from theBoard of Directors.
23. BOARD'S EVALUATION OF THE PERFORMANCE
In compliance with the Companies Act 2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof its performance and that of its Committees and Individual Directors. Feedback wassought by way of a structured questionnaire covering various aspect of the Board'sfunctioning such as adequacy of the composition of the Board and its Committee Boardculture execution and performance of specific duties obligations and governance. How theevaluation has been carried out has been provided in the
Corporate Governance Report forming part of the Board's Report.
24. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Five (5) Board Meetings were held the details of which are given inthe Report on Corporate Governance which forms part of the Board's Report.
The maximum interval between the two meetings did not exceed 120 days as prescribed inthe Companies Act 2013 and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. However due to COVID-19 pandemic and as per relaxation given by SEBIvide there Circular No. SEBI/HO/CFD/CMD1/CIR/ P/2020/38 dated March 19 2020 the gapbetween two Board Meetings held on 7th February 2020 and 30th June2020 was more than 120 days.
25. AUDIT COMMITTEE
The Audit Committee comprises Four (4) members Majority of them are IndependentDirectors namely; Shri B. K. Hurkat Chairman Shri M. H. Shah and Mrs N. Singh and ShriS. K. Somany a Non-Independent & Promoter Director as other members of the Committee.Thus the composition conforms with the requirements of section 134(3) and section 177(8)of the Companies Act 2013 read with the provisions of SEBI (LODR) Regulations 2015.
Four (4) Meetings of the Audit Committee were held during the year under review thedetails of which are given in the Report on Corporate Governance forming part of thisReport. The Board of Directors accepted all recommendations of the Audit Committee in thereporting period.
26. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has in place a Whistle Blower Policy as a part of Vigil Mechanism toprovide appropriate avenues to the Directors employees and other stakeholders of theCompany to bring to the attention of the Management any issue which is perceived to be inviolation of or conflict with the Code of conduct values principles and beliefs of theCompany. The established Vigil Mechanism helps to report concerns about any unethicalconduct financial malpractices or any unhealthy practice prevalent in the Company.
The said Vigil Mechanism provides for adequate safeguards against victimization ofpersons who use such mechanism and also provides for direct excess to the Chairman of theAudit Committee.
The details of this Policy is explained in the Corporate Governance Report forming partof the Board's Report and are also available on the Company's website;www.somatextiles.com/home.php/ investors/policies.
27. REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration including criteria for determining qualifications positive attributesindependence of Directors and other matters as per section 178 and Clause 49(IV)(B) ofListing Agreement. The salient features of the Company's Nomination and RemunerationPolicy are stated in the Corporate Governance Report. The Policy is available on thewebsite of the Company viz. www.somatextiles.com.
28. CORPORATE GOVERNANCE
Your Company upholds the Standards of Governance and is compliant with the provisionsof Corporate Governance as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (listing Regulations).
A Report on Corporate Governance as well as the certificate from the Company'sStatutory compliance with the requirements of SEBI Listing Regulations forms part of theAnnual Report.
29. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs Government of India had issued a set of VoluntaryGuidelines 2009 on Corporate
Governance in December 2009 for voluntary adoption of a set of good practices by theCorporate Sector. These guidelines are expected to serve as a benchmark for the CorporateSector and also help them in achieving the highest standard of Corporate Governance.Guidelines are reviewed by the Management from time to time to ensure the adherence of thesame voluntarily commensurate with the requirements best suited to your Company graduallyin phases.
30. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review as stipulated under SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 is presented underan Annexure forming part of the Directors' Report.
31. DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act 2013 the Board of Directors ofyour Company to the best of their knowledge and belief and based on information andexplanation obtained from the operating management hereby states and confirms:
(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31stMarch 2021 the applicable Accounting Standards have been followed along with properexplanation relating to material departures wherever applicable; (b) that they haveselected the Accounting Policies described in notes to accounts which have beenconsistently applied except where otherwise stated and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as on 31 st March 2021 and of the loss of the Company for the yearended on that date;
(c) that they have taken proper and sufficient care for the provisions of the CompaniesAct 2013 for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities; and (d) that they have prepared the attached AnnualAccounts on a going concern' basis.
(e) that they had laid down internal financial controls to be followed by the Companyand that such internal controls are adequate and were operating effectively.
(f) that they had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
In compliance with the provisions of Section 139 and other applicable provisions of theCompanies Act 2013 and the
Companies (Audit and Auditors) Rules 2014 (including any statutory modification(s)/re-enactment(s)/ amendment(s) thereof for the time being in force) the Members at theSeventy-ninth (79th) Annual General Meeting held on 25th August2017 had appointed M/s. A. K. Ostwal& Co. Chartered Accountants (ICAI RegistrationNo. 107200W) as the Statutory Auditors of the Company to hold office for a term of five(5) consecutive years from the conclusion of the 79th Annual General Meetinguntil the conclusion of the 84th Annual General Meeting subject to theratification at the Annual General Meeting in each of the subsequent years during theaforementioned term of their appointment.
However with the Notification dated May 7 2018 issued by the Ministry of CorporateAffairs (MCA') the first proviso to section 139(1) of the Companies Act 2013about the requirement of annual ratification of the appointment of Auditors by Members isomitted.
Accordingly as per the Companies (Amendment) Act 2017 ratification of theappointment of Statutory Auditors during their period of appointment will not beconsidered.
33. SECRETARIAL AUDITOR
The Board has appointed M/s. Drolia& Company Company Secretaries Kolkata inpractice having Certificate of
Practice No. 1362 as the Secretarial Auditor to carry out Secretarial Audit for theyear ending 31st March 2022 according to the provisions of Section 204 of theCompanies Act 2013 read with the corresponding rules framed thereunder.
34. MANAGERIAL REMUNERATION
Details of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required according to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached to thisReport.
35. SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors for the financial yearended 31st March 2021 in the prescribed form MR-3 is annexed herewith asAnnexure to this Report and forms an integral part of this Report.
There are no qualifications reservations and adverse remarks made by the SecretarialAuditors in their Report.
36. INDUSTRIAL RELATIONS
Industrial relations in your Company during the year under review continued to becordial and harmonious.
37. COST AUDITORS
As per the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records & Audit) Amendment Rules 2014 the cost records maintained bythe Company in respect of its products are required to be audited.
Under provisions of Section 141 read with Section 148 and rules made thereunder yourDirectors on the recommendation of the Audit Committee appointed M/s. N. D. Birla &Co. Cost Accountants as Cost Auditors of the Company to conduct the Audit of the CostAccounts in respect of manufacturing of Textile for the Financial Year ending March 312022 on a remuneration fixed by the Board and has recommended their remuneration to theShareholders for their ratification at the ensuing Annual General Meeting (AGM).Accordingly a requisite resolution seeking Members' ratification for payment ofremuneration to M/s N. D. Birla & Co. Cost Accountants is included in the Notice ofthe ensuing AGM.
38. DEPOSITORY SYSTEMS
The Company's shares are currently traded in dematerialized form as per the SEBIdirectives and the Company has entered into agreements with the following Depositoriesi.e. National Securities Depository Limited (NSDL) and Central Depository Services (India)Limited (CDSL) for trading in dematerialized form.
Members are therefore advised to avail of the services either of the depositories todematerialize their physical shares if any held by them for trading in Company's sharessmoothly and conveniently.
As of March 31 2021 32528654 Equity Shares are held in dematerialized form andrepresent 98.47% of the Company's total paid-up Capital.
39. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
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 to ensure a harassment-free workplace for employees. Sexualharassment cases are dealt with as per the Company's Policy on Prevention of SexualHarassment. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy.
No sexual harassment complaint was received during the year under review.
40. ACCOUNTS OF THE SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
The statement containing the silent features of the financial statement of thecompany's associate companies under the first proviso to sub-section (3) of section 129 ofCompaniesAct 2013 is enclosed as AOC-1 in the Annexure.
41. PARTICULARS OF EMPLOYEES
None of the employees of the Company received remuneration for the year or part of theyear under review in excess of the amount of remuneration prescribed under Section 197 ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended up to date. The informationrequired under Section 197 of the Act read with Rule 5(1) of the Companies (Appointmentand Remuneration) Rules 2014 is annexed and forms a part of this Report.
42. EXTRACT OF ANNUAL RETURN
Under the provisions of Section 134(3)(a) of the Companies Act 2013 the Extract ofAnnual Return in form no. MGT-9 for the financial year ended 31st March 2021made under the provisions of Section 92(3) of the Companies Act 2013 read with Rule 12of the Companies (Management and Administration) Rules 2014 is attached which formsparts of the Board's Report.
43. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is primarily engaged in the business of Processing Shirtings
Information on conservation of energy technology absorption foreign exchange earningsand outgo required to be disclosed under Section 134(3)(m) of the Companies Act 2013read with rule 8(3) of the Companies (Accounts) Rules 2014 as amended is given in theAnnexure and forms part of this Report.
44. RISK MANAGEMENT
The Company has in place a mechanism to inform Board Members about the Risk Assessmentand Risk Minimization procedures which are periodically reviewed to ensure that risks anduncertainties are systematically identified prioritized and initiated constantly.
The risk management procedure is reviewed by the Audit Committee from time to time toensure that the executive management controls the risks and uncertainties through aproperly defined and systematically addressed through mitigation actions continuingly.
45. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as per Regulation 34(2)(f) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 describing the initiatives taken by themfrom an environmental social and governance perspective does not apply to the Companyfor the financial year 2020-21 as per the SEBI Notification dated 22nd December2015 and Frequently Asked Questions issued by SEBI on SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 dated 29th January 2016.
46. CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion & Analysisdescribing Company's objectives expectations or forecasts may be forward-looking withinthe meaning of applicable securities laws and regulations.
Many factors may affect the actual results which could be different from what theDirectors envisage in terms of future performance and outlook.
47. OTHER DISCLOSURES/REPORTING:
Your Directors state that no disclosure and/or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
Issue of equity shares with differential rights as to dividend voting or otherwise;
Issue of shares (including sweat equity shares) to employees of the Companyunder any scheme;
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future;
Your Directors place on record their sincere thanks and appreciation for the continuingsupport and assistance received from the financial institutions banks government as wellas non-government authorities exchange and members during the period under review.
Your Company takes pride in all of its dedicated officers employees and workers whohave been wholeheartedly supporting and sincerely contributing their best for the successand growth of your Company as well as maintaining harmonious relations throughout theCompany.
| ||On behalf of the Board |
|Place: Ahmedabad ||(S. K. SOMANY) |
|Date: 14th June 2021 ||Chairman |