Your Directors have pleasure in presenting Twenty Sixth Annual Report for the financialyear 2016-2017 along with Audited Balance Sheet and the Statement of Profit and LossAccount for the year ended on March 31 2017.
The financial performance of your Company for the year ended March 31 2017 issummarized below:
(Rs. in Lakhs)
|Particulars ||Year Ended March 31 2017 ||Year Ended March 31 2016 |
|Income from operations ||2711.53 ||2444.27 |
|Profit/(Loss) before Finance Cost & Depreciation ||(360.79) ||(269.73) |
|Less:- Finance Cost ||3.38 ||25.57 |
|Less:- Depreciation ||76.23 ||75.14 |
|Profit/(Loss) Before tax ||(440.40) ||(370.44) |
|Less: Tax Expenses ||(106.11) ||(107.04) |
|Add : Prior year Tax Adjustments ||14.57 ||- |
|Profit/(Loss) for the year ||(348.86) ||(263.40) |
In view of losses your Directors do not recommend any Dividend for the year underreview. RESERVES
There is no amount to be proposed to carry to Reserves.
PRODUCTS & BUSINESS
The Company's main business is of manufacturing adhesive tapes and plastic ropes.
|a Revenue || The income earned from operation is Rs. 271153160/- in current year (previous year operation income was Rs. 244427026/-) indicating rise of 10.93% |
| || The Company's Export Turnover also increased to Rs. 1209.70 Lacs compared to previous year export turnover of Rs. 891.60 Lacs indicating a increment by 35.68% |
| || However due to high cost of materials and other manufacturing selling & Administration expenses the Company has incurred a Loss of Rs. 34885896/- (previous year Loss of Rs. 26340390/-) |
|b Market environment ||Market in the year 2016-2017 was slow but encouraging and Growing. |
|c Future Prospects ||"Make in India" initiative by the Government of India is projected to boost demand for packaging tape in India during 2016-2025 |
CODE OF CONDUCT
All Board Members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year 201617. A declaration to this effect as required underregulation 26(3) read with Schedule V (D) of the SEBI (Listing Obligation and DisclosureRequirements) Regulation 2015 ("Listing Regulations") from the ManagingDirector of the Company is given below 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 2016-2017.
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.
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 2017. Mr. Sandeep Arora is been associated with the day to day affairsof the Company. The Board of Directors at its meeting held on May 30 2017 hasre-appointed Mr. Sandeep Arora as Managing Director of the Company for a further period ofthree years with effect from June 01 2017 on the terms and condition as set out in noticecalling 26th Annual General Meeting. The Board recommends special resolutionfor your approval.
The Composition of the Board and KMP as on date is as under:
|(1) Mr. Sandeep M. Arora ||- Chairman & 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. Shivcharan Girker ||- Chief Financial Officer (KMP) |
The details of programmes for familiarisation of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are put upon the website of the Company.
The following policies of the Company are put up on the website of the Company
a) Policy for selection of Directors and determining Directors independence; and
b) Remuneration Policy for Directors 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 2016-17 seven meetings of the Board of Directors were held.
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual Directors pursuant to the provision of Act and ListingRegulations. The performance of the Board was evaluated by the Board after seeking inputsfrom all the Directors on the basis of the criteria such as the Board composition andstructure effectiveness of Board processes information and functioning etc.
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 taking into account the views of executive Directors and nonexecutiveDirectors. 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 2017 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 2017 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 I andis 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 Annual General Meeting held on September 30 2015 M/s. Rohan Agrawal & CoChartered Accountant were appointed as the Statutory Auditor of the Company to holdoffice till the conclusion of the 29th AGM of the Company to be held in theyear 2020. Pursuant to Section 139 of the Act the appointment of the auditors shall beplaced for ratification at every Annual General Meeting. Accordingly the appointment ofM/s. Rohan Agrawal & Co. is placed for ratification by the members at the ensuingAnnual General Meeting. The Company has received from M/s. Rohan Agrawal & Co acertificate to the effect that their proposed ratification if made will be in accordancewith Section 141 of the Act. The Board recommends the ratification of appointment ofstatutory auditors for the financial year 2017-2018. The members are requested to appointM/s. Rohan Agrawal & Co Chartered Accountant and authorize the Board to fix theirremuneration.
Auditors Emphasis/Remarks/Observations in the Audit Report:
(a) With regards to Qualified Opinion (Basis of Qualified Opinion) in the AuditorsReport your Directors like to state as under:-
Qualification (i) & (ii) - Due to non-availability of statements from theBank the Management is unable to ascertain & provide the interest and unable toreconcile the Bank balance.
Qualification (iii) - The disputed matters of respective creditors over qualityissues are being pursued in the respective court as regards to winding up petitions andreplied to the Winding up Notices by the Advocate of the Company as the case may be.
Qualification (iv) - Your Company has received the Notice issued by State Bankof India to your Company purportedly under Section 13(2) of the Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act2002("SARFAESI ACT") calling upon your Company to discharge the alleged outstandingliability. Your Company has challenged the legality and validity of this notice and is inconsultation with its legal advisors to take appropriate steps as may be advised by thelegal advisors to protect your Company's interests.
Qualification (v) - Your Company has challenged the legality and validity of theaction taken by the Bank and is in consultation with its legal advisors to takeappropriate steps as may be advised by the legal advisors.
Qualification (vi) - The Management is pursuing all amenities to settle allpending matters with debtors and creditors.
(b) With regards to Emphasis of Matter in the Auditors Report your Directors like tostate as under:-
Qualification (i) - The matter is pending before High Court and / or DebtRecovery Tribunal
Qualification (ii) & (iii) - The Company is in process of identifyingvarious opportunities to generate funds for growth and expansions.
The Board of Directors had appointed Mr. Prashant Diwan Company Secretary inwhole-Time Practice to conduct Secretarial Audit for the financial year 2016-17. TheSecretarial Audit Report for the financial year ended March 31 2017 is annexed herewithmarked as Annexure II to this Report. As regards the observations made in SecretarialAudit Report the Directors state as under:-
The Company is in process of appointing a suitable candidate for the post of CompanySecretary.
Your Company has not accepted any Deposits from the Public during the year.
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 transactions entered by the Company with the related parties during the financialyear 2016-17 were in the ordinary course of business and on an arm's length pricing basis.Suitable disclosures as required under AS-18 have been made in Note 2.13 in Notes toAccounts of the Financial Statements for the year ended March 31 2017.
The Related Party Transactions policy as approved by the Board of Directors isdisclosed on the Company's website at the web linkhttp://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 inAnnexure III 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. However as perthe provisions of Section 136 of the Act the Annual Report is being sent to all membersof the Company. During the year under review none of the employees of the Company was inreceipt of remuneration aggregating Rs. 10200000/- or more per annum if employedthroughout the year or Rs. 850000/- or more per month in case employed for part of theyear. Hence there are no particulars to be annexed to this report as required undersub-rules 2 and 3 of Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) 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 not formpart 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 RESPONSIBILITYSTATEMENT (CSR)
Your Directors state that the provisions of Section 135 of the Act regarding theprovisions Corporate Social Responsibility is not applicable to the Company as the Companyis 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 weblink http://www.sona !. co.in/financial-info/SAL-VIGIL-MECHANISM.pdf.
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.
2. The Company does not have any Risk Management Policy as the element of riskthreatening the Company's existence is very minimal.
3. 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.
4. Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
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
| ||Sandeep Arora |
|Place: Khopoli ||Chairman & Managing Director |
|Dated: 11th August 2017 ||DIN: 00176939 |