Your Directors have pleasure in presenting Twenty Eighth Annual Report for thefinancial year 2018-19 along withAudited Balance Sheet and the Statement of Profit andLoss Account for the year ended on March 31 2019.
The financial performance of your Company for the year ended March 31 2019 issummarized below:
| || ||(Rs. in lakhs) |
|Particulars ||Year Ended March 31 2019 ||Year Ended March 31 2018 |
|Income from operations ||3737.95 ||4383.75 |
|Profit\(Loss) before Finance Cost & Depreciation ||(49.98) ||(270.63) |
|Less:- Finance Cost ||14.60 ||1.14 |
|Less:- Depreciation ||74.64 ||76.28 |
|Profit\(Loss) Before tax ||(139.22) ||(348.05) |
|Tax Expenses ||- ||29.89 |
|Deferred Tax Expense / Credit ||(36.91) ||- |
|Add: Prior year Tax Adjustments ||- ||- |
|Profit\(Loss) for the year ||(102.31) ||(377.94) |
In view of losses your Directors do not recommend any Dividend for the year underreview.
No amount has been proposed to carry to Reserves.
PRODUCTS & BUSINESS
The Company's main business is of manufacturing adhesive tapes and plastic ropes.
|a Revenue ||The Total Turnover of the Company is Rs. 373795673/- in current year and Rs. 438374426/- in previous year indicating decline by 14.73% due to high competition. |
| ||The Company's Export Turnover also decreased to Rs. 980.92 Lacs compared to previous year export turnover of Rs. 1290.41 Lacs indicating a decrement by 23.98% |
| ||The Company has incurred a Loss of Rs. 10231167/- compared to Loss of Rs. 37793564/ - in the previous year. The Company is expecting better performance in coming years. |
|b Market environment ||Market in the year 2018-2019 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 e-commerce industry in the country. |
| ||The overall market for adhesives & sealants is expected to have a high growth in the country. |
CODE OF CONDUCT
All Board Members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year 2018-
19. 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 2018-2019.
Sandeep Arora DIN: 00176939
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. Manish Nanda (DIN: 03245943) was appointed as an Independent Non-ExecutiveDirector of the Company to hold office for a period up to five (5) consecutive years tillthe conclusion of the forthcoming 28th AGM of the Company. An Independent Director canhold office for a term up to five (5) consecutive years on the Board of a Company and maybe re-appointed for another term up to five (5) consecutive years with the approval ofMembers of the Company by way of Special Resolution.
The Board of Directors at its meeting held on 13th August 2019 on the recommendationof the Nomination and Remuneration
Committee appointed him subject to approval of Members of the Company for another termup to five (5) consecutive years with effect from 27th September 2019 till the conclusionof 32nd Annual General Meeting to be held in the year 2024. The Board recommends theSpecial Resolution as set out in Notice calling AGM.
The Independent Directors of your Company have submitted a declaration confirmingthateach 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 Company had appointed Mr. Dinesh Modi Member of Institute of Company Secretariesof India as the Company Secretary and Key Managerial Personnel (KMP) of the Company witheffect from 26th October 2018. However Mr. Dinesh Modi resigned from the post w.e.f.31st December 2018.
Thereafter Ms. Meena Dodmani Member of Institute of Company Secretaries of India wasbeen appointed as Company Secretary and KMP with effect from 1st January 2019.
Mr. Shivcharan Girker Chief Financial Officer of the Company resigned with effect from25 th May 2019 and Mr. Ajeet Singh was appointed as Chief Financial Officer and KMP ofthe Company with effect from 25th May 2019.
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 2018-19 six 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 year ended March 31 2019 theapplicable accounting standards have been followed and there are no material departuresfrom the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2019 and of the Loss ofthe Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern' basis;
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 have devised proper systems to ensure compliance with the provisionsof all applicable laws and that 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.
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. Rohan Agrawal &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 29thAGM of the Company to be heldin the year 2020.
Pursuant to the Notification issued by Ministry of Corporate Affairs on 7th May 2018amending section 139 of the Companies Act 2013 the mandatory requirement forratification of appointment of Auditors by the Members at every AGM has been omitted andhence your Company has not proposed ratification of appointment of M/s. Rohan Agrawal& Co Chartered
Accountant at the forthcoming AGM.
Auditors Emphasis/Remarks/Observations in the Audit Report:
(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 itis not 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 NPAhence it is not feasible for the management to reconcile the same. The management isfollowing up with SBI.
Qualification (iii) & (iv) The matters are under dispute and are pending beforethe different courts.
Qualification (v) Continuous follow up are going on and the same in settlementprocess hence not treated as Bad
(b) With regards to Key Audit Matters in the Auditors Report your Directors states asunder:-
Matter (i) The matters are under dispute and are pending before thedifferent courts.
Matter (ii) The Company has advanced monies for development of relatedproducts
Matters (iii) & (iv) - The Company is in process of identifying variousopportunities to generate funds for growth and expansions (c) With regards to remark inthe Point no. 8 of Annexure A to Auditors Report your Directors state that the matter ispending under Debt Recovery 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 conductSecretarial Audit for the financial year 2017-18. The Secretarial Audit Report given bythe SecretarialAuditor is annexed to this Board Report as Annexure II.
As regards the observations made in Secretarial Audit Report the Directors state thatthe Company has appointed Company Secretary and Compliance Officer w.e.f. 26 th October2018.
The maintenance of Cost Records has not been specified by the Central Government undersection (1) of Section 148 of the Act in respect of the activites carried out by theCompany.
During the year the Company has not accepted any Deposits from the Public and Companyhas neither taken any loan from Directors.
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 Corporate Guarantees of Rs. 38262938/- inearlier 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 Year2018-19 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 2019.
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.
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 has 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.Further during the year under review there were no cases filed pursuant to the SexualHarassment of 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.
Regulators or Courts or Tribunals which impact the going concern 3. Nosignificantstatus and Company's operations in future.
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 |
Dated: 13th August 2019