Your Directors have pleasure in presenting 29th Annual Report for thefinancial year 2019-20 along with Audited Balance Sheet and the Statement of Profit andLoss Account for the year ended on March 31 2020.
The financial performance of your Company for the year ended March 31 2020 issummarized below:
| || ||(Rs. in lakhs) |
|Particulars ||Year Ended March 31 2020 ||Year Ended March 31 2019 |
|Income from operations ||3214.64 ||3737.95 |
|Profit\(Loss) before Finance Cost & Depreciation ||(139.37) ||(49.98) |
|Add: Finance Cost ||39.29 ||14.60 |
|Add: Depreciation ||75.30 ||74.64 |
|Profit\(Loss) Before tax ||(253.96) ||(139.22) |
|Tax Expenses || || |
|Deferred Tax Expense / Credit ||(66.28) ||(36.91) |
|Profit\(Loss) for the year ||(187.68) ||(102.31) |
In view of losses your Directors do not recommend any Dividend for the year underreview.
All the unclaimed / unpaid dividends lying with the Company are transferred to InvestorEducation Protection Fund.
No amount has been proposed to carry to Reserves.
PRODUCTS & BUSINESS
The Company's main business is of manufacturing speciality adhesive tapes and plasticropes.
|a ||Revenue ||The Total Turnover of the Company is Rs. 321463783/- in current year and Rs. 373795673/- in previous year indicating decline by 14.00% due to high competition and sluggish market condition. |
| || ||The Company's Export Turnover also decreased to Rs. 543.35 Lacs compared to previous year export turnover of Rs. 980.92 Lacs indicating a decrement by 44.60% |
| || ||The Company has incurred a Loss of Rs. 18848091/- compared to Loss of Rs. 10231167/- in the previous year. |
|b ||Market environment ||Market in the year 2019-2020 was encouraging but slow. |
| || ||Slow growth of the Indian Economy could impact the performance of the Company The rise in e-business could positively affects the growth as BOPP adhesives are beneficial and used for packaging of boxes. |
| || ||The Indian Adhesives and sealants market is expected to grow significantly at the highest CAGR of 11.17% during the forecast period (2019-2024) |
|c ||Future Prospects ||The increasing electronic operations in India are likely to act as an opportunity in the forecast period. |
| || ||Company is expected to progress due to increasing demand from the packaging industry and the growth of automative production in the Country. |
| || ||The overall market for adhesives & sealants is expected to have a high growth in the country. |
| || ||Due to COVID pandemic and its impact on economy the Management is expecting sluggish market conditions in coming years. |
CODE OF CONDUCT
All Board Members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year 2019-
20. A declaration to this effect as required under regulation 26(3) read with ScheduleV (D) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015("Listing Regulations") from the Managing Director of the Company is givenbelow to this report.
A Declaration signed by the Managing Director is given below:
I hereby confirm that:
The Company has obtained from all the members of the Board and senior managementaffirmation that they have complied with Code of Conduct and ethics for the Director andSenior Management in respect of the Financial Year 2019-20.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
In accordance with the provisions of the Companies Act 2013 ("the Act") andthe Articles of Association of the Company Mrs. Mridu Arora Director (DIN: 07260461) isliable to retire by rotation and being eligible offers herself for re-appointment at theensuing Annual General Meeting.
Mr. Nitin Rane (DIN: 07237310) was appointed as an Independent Non-Executive Directorof the Company to hold office for a period up to five (5) consecutive years till theconclusion of the forthcoming 29th AGM of the Company. An Independent Directorcan hold office for a term up to five (5) consecutive years on the Board of a Company andmay be re-appointed for another term up to five (5) consecutive years with the approvalof Members of the Company by way of Special Resolution.
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee appointed him subject to approval of Members of the Company for another term upto five (5) consecutive years with effect from December 26 2020 till the conclusion of 34thAnnual General Meeting to be held in the year 2025. The Board recommends the SpecialResolution as set out in Notice calling AGM.
The Independent Directors of your Company have submitted a declaration confirming thateach of them meets the criteria of independence as laid down under Section 149(6) of theAct and Regulation 16(1)(b) of the Listing Regulations and there has been no change in thecircumstances which may affect their status as Independent Director during the year.
The existing tenure of Mr. Sandeep Arora as the Managing Director of the Companyexpired on May 31 2020. Mr. Sandeep Arora is been associated with the day to day affairsof the Company. The Board of Directors the recommendation of the Nomination andRemuneration Committee has re-appointed Mr. Sandeep Arora as Managing Director of theCompany for a further period of three years with effect from June 01 2020 on the termsand condition as set out in notice calling 29th Annual General Meeting. TheBoard recommends special resolution for your approval.
The Composition of the Board and KMP as on date is as under:
|(1) ||Mr. Sandeep M. Arora ||Managing Director (KMP) |
|(2) ||Mrs. Mridu Arora ||Non-executive Director |
|(3) ||Mr. Manish Nanda ||Non-executive Independent Director |
|(4) ||Mr. Nitin Rane ||Non-executive Independent Director |
|(5) ||Mr. Ajeet Singh ||Chief Financial Officer (KMP) |
|(6) ||Ms. Meena Dodmani ||Company Secretary (KMP) |
The following policies of the Company are put up on the Website of the Company at theweblink http://www.sonal.co.in/ financial-info/default.php a) Policy for selectionof Directors and determining Directors independence; and b) Remuneration Policy forDirectors Key Managerial Personnel and other employees.
VARIOUS COMMITTEES OF THE BOARD AND THEIR COMPOSITIONS
|A] ||Audit Committee ||Mr. Manish Nanda - Chairman |
| || ||Mr. Nitin Rane |
| || ||Mr. Sandeep Arora |
|B] ||Nomination Remuneration Committee ||Mr. Manish Nanda - Chairman |
| || ||Mr. Nitin Rane |
| || ||Mrs. Mridu Arora |
|C] ||Stakeholder Relationship Committee ||Mr. Manish Nanda - Chairman |
| || ||Mrs. Mridu Arora |
| || ||Mr. Sandeep Arora |
NUMBER OF MEETINGS OF THE BOARD
During the FY 2019-20 Five meetings of the Board of Directors were held.
The Board of Directors has carried out an Annual Performance Evaluation for all BoardMembers as well as the working of the Board and its Committees pursuant to the provisionof Act and Listing Regulations. The performance of the Board was evaluated by the Boardafter seeking inputs from all the Directors on the basis of the criteria such as the Boardcomposition and structure effectiveness of Board processes information and functioningetc.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual Directors on the basis of the criteria such as thecontribution of the individual Director to the Board and Committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
In a separate meeting of Independent Directors performance of non-independentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated. The same was discussed in the Board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual Directors was also discussed.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that: a) in the preparation of the annual accounts for the yearended March 31 2020 the applicable accounting standards have been followed and there areno material departures from the same; b) the Directors have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31
2020 and of the Profit / Loss of the Company for the year ended on that date; c) theDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d) the Directorshave prepared the annual accounts on a going concern' basis; e) the Directors havelaid down internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and are operating effectively; and f) the Directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems are adequate and operating effectively.
EXTRACT OF ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and Administration) 2014 is furnished in Annexure Iand is attached to this Report. Same is disclosed on the Company's website at the http://www.sonal.co.in
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.
At the 25th Annual General Meeting held on September 30 2016 M/s. RohanAgrawal & Co Chartered Accountant (ICAI
Membership No. 123127) were appointed as the Statutory Auditor of the Company to holdoffice for a term on 5 years till the conclusion of the 29th Annual GeneralMeeting of the Company to be held in the year 2020.
In view of above the existing tenure of M/s. Rohan Agrawal & Co will expire at theensuing 29th Annual General Meeting.
Pursuant to Section 139 of the Companies Act 2013 M/s. Rohan Agrawal & Co being aIndividual (Proprietary firm) will not be eligible for re-appointment. The Board ofDirectors of the Company on recommendation of Audit Committee has recommended theappointment of M/s. M C Asawa & CO Chartered Accountant (Firm Registration No:008041C) as the Statutory Auditor of the Company for a period of fiveyears from theconclusion of this 29 th Annual General Meeting till the conclusion of the 34thAnnual General Meeting to be held in the year 2025.
The Company has received from M/s. M C Asawa & CO a certificate to the effect thattheir proposed appointment if made will be in accordance with section 141 of theCompanies Act 2013. The Board recommends their appointment as stated in the notice.
Auditors Emphasis/Remarks/Observations in the Audit Report for the year ended31.03.2020:
(a) With regards to Qualified Opinion (Basis of Qualified Opinion) in theAuditorsReport your Directors states as under:-
Qualification (i) The bank has not disclosed the details of interest and hence it isnot feasible for the management to estimate the impact. The management is following upwith SBI.
Qualification (ii) The bank has not provided the Bank statements owing to NPA hence itis not feasible for the management to reconcile the same. The management is following upwith SBI.
Qualification (iii) & (iv) The matters are under dispute and are pending before thedifferent courts.
Qualification (v) Continuous follow up are going on and the same in settlement processhence not treated as Bad
(b) With regards to Key Audit Matters in the Auditors Report your Directors states asunder:-
Matter (i) - The matter is pending before High Court and / or Debt Recovery Tribunal
Matter (ii) & (iii) - The Company is in process of identifying variousopportunities to generate funds for growth and expansions.
(c) With regards to remark in the Point no. 8 of Annexure A to Auditors Report yourDirectors state that the matter is pending under Debt Recover Tribunal.
Reporting of Frauds
During the year under review the Auditors have not reported any instance of fraudcommitted in the Company by its Officers or Employees to the Audit Committee under section143 (12) of the Companies Act 2013.
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Prashant Diwan Company Secretary in Whole-Time
Practice to conduct Secretarial Audit for the financial year 2019-20. The SecretarialAudit Report given by the Secretarial Auditor is annexed to this Board Report as AnnexureII. The Secretarial Audit Report in unqualified.
The cost records as prescribed under sub-section (1) of section 148 of the CompaniesAct 2013 are maintained.
During the year the Company has not accepted any Deposits from the Public. The Companyhas taken a loan from Mr Sandeep Arora Managing Director and Mr Nitin RaneDirector of the Company amounting to Rs. 19240000/- & Rs. 2000000/-respectively. The Company has taken a declaration from both the Directors that the amountsare given out of their own funds and not acquired from others.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDEDUNDER SECTION 186 OF THE COMPANIES ACT 2013
The Company has not given any loans or made any investments in other bodies corporateduring the year. However the Company had given Corporate Guarantees of Rs. 38262938/-in earlier years which is within limit specified under section 186 of the Act.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All Related Parties Transactions entered by the Company during the Financial Year2019-20 were in the ordinary course of business and on an arm's length pricing basis. Thedetails of Related Parties Transactions are given in Note 34 in Notes to Accounts of theFinancial Statements for the year ended March 31 2020.
The Related Party Transactions policy as approved by the Board of Directors isdisclosed on the Company's website at the web link http://www.sonal.co.in/financial-info/SAL-RELATED-PARTY-TRSC.pdf.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
Your Company does not have any Subsidiary Joint Venture and Associate Company. TheCompany is Associate of Sonal Impex Limited.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in AnnexureIII to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Act read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith as Annexure IV to this Report. Howeveras per the provisions of Section 136 of the Act the Annual Report is being sent to allMembers of the Company. During the year under review none of the employees of the Companywas in receipt of remuneration aggregating Rs. 10200000/- or more per annum ifemployed throughout the year or Rs. 850000/- or more per month in case employed forpart of the year. Hence there are no particulars to be annexed to this report as requiredunder sub-rules 2 and 3 of Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
The Company is committed to good Corporate Governance in line with Listing Regulation.However since the Net worth and paid up capital of the Company is below Rs. 25 Crores andRs. 10 Crores respectively the Regulation 27 and Para C D and E of Schedule V of theListing Regulations are not applicable and hence Corporate Governance Report does notforms part of the Annual Report.
MANAGEMENT DISCUSSIONS AND ANALYSIS
Pursuant to Regulation 34 read with Schedule V of the Listing Regulations a brief noteon Management Discussions and Analysis of the results for the year under review is givenin Annexure V which forms part of the Directors' Report.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)
The provisions of Section 135 of the Act regarding Corporate Social Responsibility arenot applicable to the Company as the Company is not falling under the said parameters.
The Vigil Mechanism of the Company which also incorporates a Whistle Blower Policy interms of the Listing Regulations includes an Ethics & Compliance Task Forcecomprising Senior Executives of the Company. Protected disclosures can be made by aWhistle Blower through an e-mail or dedicated telephone line or a letter to the TaskForce or to the Chairman of the Audit Committee.
Your Company hereby affirms that no Director/ employee have been denied access to theChairman of the Audit Committee and that no complaints were received during the year.
The Policy on vigil mechanism and whistle blower policy is available on the Company'swebsite at web link http://www.sonal. co.in/financial-info/SAL-VIGIL-MECHANISM.pdf.
The applicable Secretarial Standards i.e. SS-1 and SS-2 relating to Meetings ofBoard of Directors' and General Meeting' respectively as issued by the Institute ofCompany Secretaries of India (ICSI) have been duly complied by your Company.
The Company has complied and constituted Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 exceptfor appointment of a Member in the Committee who is amongst NGO/associations. Furtherduring the year under review there were no cases filed pursuant to the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. No material changes and commitments affecting the financial position of the Companyoccurred between the end of the Financial Year to which this financial statements relateon the date of this report except that the Account of the Company is declared NonPerforming Asset by State Bank of India and the said loan has been now assigned to ASREC(India) Limited.
2. The Company does not have any Risk Management Policy as the element of riskthreatening the Company's existence is very minimal. the Regulators or Courts or Tribunalswhich impact the going concern 3. No significant status and Company's operations infuture.
Your Directors take this opportunity to thank all employees of the Company for theirhard work dedication and commitment and appreciate the co-operation received from theBankers and other Government authorities during the year under review.
For and on behalf of the Board
| ||Mridu Arora ||Sandeep Arora |
| ||Director ||Managing Director |
| ||DIN: 07260461 ||DIN: 00176939 |
|Place: Khopoli || || |
|Dated: 24.11.2020 || || |