Your Directors have pleasure in presenting their Eighty-first (81st) Annual Report ofthe Company together with the audited financial statements for the financial year ended31st March 2019.
1. FINANCIAL PERFORMANCE
There was no improvement in the business scenario of the Textile Industry and itcontinues to remain challenging. The revenue from operations for the year 2018-19 was `3846 lacs as compared to ` 8271 lacs in previous year a decline of 53.50 %.
The loss before Prior period Exceptional item and Tax was ` 2146 lacs against theprevious year loss of ` 609 lacs.
The net loss for the year was ` 1726 lacs against the previous year net loss of ` 818lacs.
The Board of Directors of your Company do not recommend any dividend for the FinancialYear ended 31st March 2019 considering the loss during the year and brought forwardlosses.
India's cotton production in the current season 2018-2019 is likely to be 315 lacbales. The exports are estimated to be 46 lakh bales.
The FOB value of the exports during the Year under review was nil against Rs 170 lacsin the previous year.
5. ANALYSIS AND REVIEW
India's textiles sector is one of the oldest in Indian economy dating back severalcenturies. The Indian textiles industry is extremely varied with the hand-spun andhand-woven textiles sectors at one end of the spectrum while the capital intensivesophisticated mills sector at the other end of the spectrum. The Indian textile industryhas the capacity to produce a wide variety of products suitable for different marketsegments both within India and across the world. The Indian textile industry contributesabout 14 % to industrial production. 4% to country's gross domestic production 17% tocountry's export earnings. It provides direct employment to over 35 million people.
6. OPPORTUNITIES AND CHALLENGES
The Indian textile industry is set for strong growth buoyed by both strong domesticconsumption as well as export demand. However to get maximum advantage of the vastpotential of this vibrant industry it is very important for the Government and Industryto work towards addressing key challenges including obsolete machinery and technologypower shortage illicit markets labour related concerns and lack of qualityinfrastructure in non-metropolitan cities.
7. PRESENT STATUS OF THE UNIT
Company has closed dyeing Sizing Weaving and Finishing section of the Denim due tohigh operating cost and other adverse factors which resulted in EBIDTA loss.
8. EXPANSION AND MODERNISATION
In view 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 in accordance with 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 2019 prepared in accordance withthe applicable Accounting Standard is annexed to the financial statement which formspart of the Annual Report.
The Company's properties including its Building Plant & Machineries and Stocksamong others continue to be adequately insured against fire flood earthquake explosiveand other 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 proper recording of financials andmonitoring of operational effectiveness and efficient 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 adequacy of InternalControl System. Based on their report corrective actions are taken by the concerneddepartments and thereby strengthen the Controls. Significant audit observations correctivemeasures and actions thereon are presented to the Audit Committee of the Board.
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 there are no deposits pending with the Company as on the BalanceSheet closure date.
14. SHARE CAPITAL
There has been no change in the Company's Issued Subscribed and Paid-up Equity andPreference Share Capital in between the end of financial year 31st March 2018 and 31stMarch 2019. On 31st March 2019 the Equity Share Capital stood at ` 3303.30 Lacsdivided in to 33033000 Equity Shares of ` 10 each and Preference Share Capital stood at `975 Lacs divided in to 975000 0.01% Cumulative Redeemable Non-convertible PreferenceShares of ` 100 each.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri B. K. Hurkat Shri M. H. Shah and Mrs. N. Singh are Non-Executive Directorsdesignated as Independent Directors on the Board of Directors ('the Board') of theCompany. As per the Companies Act 2013 ('the Act') every listed company should have therequisite number of Independent Directors on the Board. The present term of office ofShri B. K. Hurkat Shri M. H. Shah and Mrs. Nisha Singh expires by efflux of time on28th August 2019 9th February 2020 and 10th February 2020 respectively. The Boardrecommends the re-appointment of Shri B. K. Hurkat Shri M. H. Shah and Mrs. N. Singh asan Independent Directors of the Company not liable to retire by rotation to hold officefor a fresh term of five (5) consecutive years with effect from their respective date ofappointment.
Necessary resolutions for obtaining approval of the Members in respect of the aboveappointments have been incorporated in the notice of the forthcoming Annual GeneralMeeting.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement. The terms and conditions of appointment of the IndependentDirectors are incorporated on the website of the Company at http:// www.somatextiles.com.
As per the requirement under the Listing Agreement particulars of Directors seekingre-appointment at the ensuing Annual General Meeting form part of the Notice of theMeeting.
At the forthcoming 81st Annual General Meeting (AGM) of the Company Shri S. K. Somany(DIN: 00001131) retires by rotation and being eligible offers himself for re-appointmentin accordance with the provisions of the Companies Act 2013 ("the Act") andArticles of Association of the Company. The Board recommends his reappointment.
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.
None of the Directors are disqualified from being appointed or holding office asDirectors as stipulated under Section 164(2) of the Companies Act 2013.
Independent Directors hold office for a fixed term of five years and are not liable toretire by rotation.
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 Act 2013read with the Companies (Corporate Social Responsibilities Policy) Rules 2014. Thereforethe Annual Report on Corporate Social Responsibility initiatives as required under thesaid act is not applicable to the Company. In view thereof the Annual Report on CSRactivities 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 pursuant to Section 186 of the Companies Act 2013during the financial year ended 31st March 2019.
19. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY
Your Company has formulated a Policy on 'Related Party Transactions' dealing with thereview and approval of related party transactions which is also available on theCompany'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 ordinary course of business and onarm's length.
Further no material contract/ arrangement/ transaction with related parties wereentered during the financial year under review in accordance with policy of the Companyon materiality 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-2is not applicable to your Company. However members may refer to the notes to thefinancial statements which sets out disclosure on related parties and transactionsentered into with them pursuant to Accounting Standards.
20. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock Exchanges:-
(a) BSE Limited (BSE).
Address: Phiroze Jeejeebhoy Towers Dalal Street Mumbai-400001 (b) National StockExchange of India Limited (NSE).
Address: Exchange Plaza Bandra Kurla Complex Bandra (East) Mumbai-400051.
(i) Listing fees have been paid to the Stock Exchanges for the year 2019-20.
(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No.CSEA/ID/223/2008 dated 16th April 2008 confirmed the delisting of Company's Shares fromthe official List of their exchange. However Equity Shares have been allowed to be tradedunder the "Permitted Category" on the Exchange considering the interest ofGeneral Investors in the Company.
(i) NSE - SOMATEX (ii) BSE - 521034 (iii) CSE - 29067.
De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.
21. 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.
22. 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 own performance and that of its Committees and Individual Directors. Feedback wassought by way of a structured questionnaire covering various aspect of Board'sfunctioning such as adequacy of the Composition of the Board and its Committee Boardculture execution and performance of specific duties obligations and governance. Themanner in which the evaluation has been carried out has been provided in the CorporateGovernance Report forming part of Board's Report.
23. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Four (4) Board Meetings were held the details of which are given inthe Report on Corporate Governance that forms part of the Board's Report.
The maximum interval between the two meetings did not exceeded 120 days as prescribedin the Companies Act 2013 and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015.
24. AUDIT COMMITTEE
The Audit Committee comprises of 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 member of the Committee.Thus the composition is in conformity with the requirements of section 134(3) and section177(8) of the Companies Act 2013 read with the provisions of SEBI (LODR) Regulations2015.
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.
25. 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 in conflict with the Code of conduct values principles and beliefs ofthe Company. 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 Board's Report and are also available on the Company's website;www.somatextiles.com/home.php/ investors/policies.
26. REMUNERATION POLICY
The Board has on recommendation of the Nomination & Remuneration Committee frameda 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 Nomination & Remuneration Policy is stated in the CorporateGovernance Report. The Policy is also available on the website of the Company i.e.http://www.somatextiles.com.
27. 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 Company's StatutoryAuditors confirming compliance with the requirements of SEBI Listing Regulations formspart of the Annual Report.
28. 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 setof good practices by the Corporate Sector. These guidelines are expected to serve as abench mark for the Corporate Sector and also help them in achieving the highest Standardof Corporate Governance. Guidelines are reviewed by the Management from time to time toensure the adherence of the same voluntarily commensurate with the requirements bestsuited to your Company gradually in phases.
29. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review as stipulated under SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 is presented byvirtue of an Annexure forming part of the Directors' Report.
30. 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 on the basis of information andexplanation obtained from the operating management hereby states and confirms: -
(a) that in the preparation of attached Annual Accounts for the Financial Year ended31st March 2019 the applicable Accounting Standards have been followed along with properexplanation relating to material departures wherever applicable;
(b) that they have selected the Accounting Policies described in notes to accountswhich have been consistently applied except where otherwise stated and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as on 31st March 2019 and of the loss of the Company for theyear ended on that date;
(c) that they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and
(d) that they have prepared the attached Annual Accounts 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 anystatutory modification(s)/ re-enactment(s)/ amendment(s) thereof for the time being inforce) the Members at the Seventy 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 Meeting until theconclusion of the 84th Annual General Meeting subject to the ratification at the AnnualGeneral Meeting in each of the subsequent years during the aforementioned term of theirappointment.
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 2013pertaining to the requirement of annual ratification of appointment of Auditors by Membersis omitted.
Accordingly as per the Companies (Amendment) Act 2017 ratification of theappointment of Statutory Auditors during their period of appointment will not beconsidered.
32. 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 outSecretarial Audit for the year ended 31st March 2020 pursuant to the provisions ofSection 204 of the Companies Act 2013 read with the corresponding rules framedthereunder.
33. 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 is attached to thisReport.
34. SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors for the financial yearended 31st March 2019 in the prescribed form MR-3 is annexed herewith as Annexure tothis Report and forms an integral part of this Report. There are no qualificationsreservations and adverse remarks made by the Secretarial Auditors in their Report.
35. INDUSTRIAL RELATIONS
Industrial relations in your Company during the year under review continued to becordial and harmonious.
36. 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.
Pursuant to provisions of Section 141 read with Section 148 and rules made thereunderyour Directors 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 theCost Accounts in respect of manufacturing of Textile for the Financial Year ending March31 2020 on a remuneration fixed by the Board and has recommended their remuneration tothe Shareholders for their ratification at the ensuing Annual General Meeting (AGM).Accordingly 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.
37. DEPOSITORY SYSTEMS
The Company's Shares are currently traded in dematerialized form as per the SEBIdirectives and the Company has entered in to 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 on March 31 2019 32519462 Equity Shares are held in dematerialized form andrepresent 98.45% of the Company's total paid up Capital.
38. 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 harassment free workplace for employees. Sexual harassmentcases are dealt as per the Company's Policy on 'Prevention of Sexual Harassment'. InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy.
No sexual harassment complaint was received during the year under review.
39. 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 ofCompanies Act 2013 is enclosed as AOC-1 in the Annexure.
40. PARTICULARS OF EMPLOYEES
None of the employees of the Company was in receipt of remuneration for the year orpart of the year under review in excess of the amount of remuneration prescribed underSection 197 of the Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended upto date.
The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration) Rules 2014 is annexed and forms a part of thisReport.
41. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134(3)(a) of the Companies Act 2013 theExtract of Annual Return in form no. MGT-9 for the financial year ended 31st March 2019made 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.
42. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is primarily engaged in the business of processing of Bottom Weights andShirting.
Information on conservation of energy technology absorption foreign exchange earningsand outgo required to be disclosed pursuant to Section 134(3)(m) of the Companies Act2013 read with rule 8(3) of the Companies (Accounts) Rules 2014 as amended is given inthe Annexure and forms part of this Report.
43. RISK MANAGEMENT
The Company has in place 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 on constant basis.
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 a properdefined framework and major risks are properly and systematically addressed throughmitigation actions on continuing basis.
44. 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 is not applicable to the Companyfor the financial year 2018-19 as per the SEBI Notification dated 22nd December 2015 andFrequently Asked Questions issued by SEBI on SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 dated 29th January 2016.
45. 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 theactual results which could be different from what the Directors envisage in terms offuture performance and outlook.
46. 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 orotherwise;
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 orTribunals which 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 customers vendors stock exchange and members during theperiod 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 : 30th May 2019 ||Chairman |