Your Directors have pleasure in presenting their 26thAnnual Report together with theAudited Financial Statements of the Company for the Year ended March 31 2017.
| || ||(Rs. in Lacs) |
|Particulars ||March 31 2017 ||March 31 2016 |
|Receipt from Operations ||9958.53 ||7973.31 |
|Profit before depreciation & taxes ||2178.51 ||1866.25 |
|Less: Depreciation ||124.60 ||123.66 |
|Profit Before Tax ||2053.91 ||1742.59 |
|Less: Provision for: || || |
|(a) Income Tax ||730.56 ||627.44 |
|(b) Deferred Tax ||(16.95) ||(14.81) |
|Profit after tax ||1340.30 ||1129.96 |
|Add: Balance brought forward from last year ||4122.82 ||2992.86 |
|Profit available for appropriation ||5463.12 ||4122.82 |
|Adjustment for Depreciation ||- ||- |
|Balance carried to Balance sheet ||5463.12 ||4122.82 |
The company does not propose to transfer any amount to the General Reserves. An amountof Rs. 5463.12 lacs is proposed to be retained in the statement of Profit & Loss.
Your Company reported a top-line growth of 24.90% over the Previous Year. The GrossRevenue from operations stood at Rs. 9958.53 lacs compared with Rs.7973.31lacs in thePrevious Year. The Operating Profit before tax stood at Rs. 2053.91 lacs as againstRs.1742.59 lacs in the Previous Year. The Net Profit for the year stood at Rs.1340.30 lacsagainst Rs.1129.96 lacs reported in the Previous Year.
The company continues to retain and reinforce its market leadership in Leather andNon-Leather footwear and accessories with distribution network comprising of exclusivestores wholesalers and dealers.
Your Directors does not recommend any dividend for the year under review. Thedirector's foresee to make further expansions in business and for this the profits areploughed back.
The paid up equity capital as on March 31 2017 was Rs.2515.50 lacs. During the yearunder review the company has not issued any shares with differential voting rights norgranted stock options nor sweat equity during the year under review. As on March 31 2017none of the Directors of the company hold instruments convertible into equity shares ofthe Company.
FINANCE AND ACCOUNTS:
Cash and cash equivalents as at March 31 2017 was Rs. 575.08 lacs. The estimates andjudgments relating to the Financial Statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of transactions and reasonablypresent the Company's state of affairs profits and cash flows for the year ended March31 2017. The company continues to focus on judicious management of its working capitalreceivables and inventories. Other working capital parameters were kept under strict checkthrough continuous monitoring.
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. The details of the investments made by company aregiven in the notes to the financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Your Company has an effective internal control and risk-mitigation system which areconstantly assessed and strengthened with new/ revised standard operating procedures. TheCompany's internal control system is commensurate with its size scale and complexities ofits operations. The internal audit is entrusted to Messrs R. B. Roy &Co. CharteredAccountants. The main thrust of internal audit is to test and review controls appraisalof risks and business processes besides benchmarking controls with best practices in theindustry.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Company has a robust Management Information System which is an integral part ofthe control mechanism.
The Audit Committee of the Board of Directors and the Business Heads are periodicallyapprised of the internal audit findings and corrective actions taken. Audit plays a keyrole in providing assurance to the Board of Directors. Significant audit observations andcorrective actions taken by the management are presented to the Audit Committee of theBoard. To maintain its objectivity and independence the Internal Audit function reportsto the Chairman of the Audit Committee.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As part of its initiatives under "corporate social responsibility" (CSR) thecompany has contributed funds for the schemes for promotion of education vocationaltraining livelihood enhancement projects & sanitation. The contributions in thisregard have been made to the registered trust which is undertaking these schemes. Theseprojects are in accordance with Schedule VII of the Companies Act 2013 and the Company'sCSR policy.
The Annual Report as required under the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 on CSR activities is annexed herewith as: Annexure A and forms anintegral part of this Report. Apart from the CSR activities under the Companies Act 2013
CONSERVATION OF ENERGY:
a) Company ensures that the operations are conducted in the manner whereby optimumutilization and maximum possible savings of energy is achieved.
b) No specific investment has been made in reduction in energy consumption.
c) As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.
d) Since the Company does not fall under the list of industries which should furnishthis information in Form A annexed to the aforesaid Rules the question of furnishing thesame does not arise.
The Company doesn't have any in-house R & D Facility. The Company has not importedany technology during the year under review.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENT RELATE AND THE DATE OF REPORT
Management does not perceive any material changes occurred subsequent to the close offinancial year as on 31.03.2017 and before the date of Report dated 27.05.2017 affectingfinancial position of the company in any substantial manner.
FOREIGN EXCHANGE EARNINGS AND OUT-GO:
During the period under review there was no foreign exchange earnings or out flow.
The Company takes pride in the commitment competence and dedication of its employeesin all areas of the business. The Company has a structured induction process at alllocations and management development programs to upgrade skills of managers. Objectiveappraisal systems based on key result areas (KRAs) are in place for senior managementstaff.
The Company is committed to nurturing enhancing and retaining its top talent throughsuperior learning and organizational development. This is a part of our Corporate HRfunction and is a critical pillar to support the organization's growth and itssustainability in the long run.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the Company and its future operations.
There is no change in the composition of the Board of Directors during the period underreview.
Director Sri Sumanta Dey (DIN 00647680) retires by rotation and being eligible offershimself for re-appointment. Sri Sumanta Dey was appointed as Non-Executive Directorliable to retirement by rotation in the last A.G.M. in September 2016. The Board nowrecommends the re-appointment of Sri Sumanta Dey as Non-Executive Director.
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 there is nochange in their status of independence. A formal letter of appointment to IndependentDirectors as provided in Companies Act 2013 has been issued.
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a structured questionnaire was preparedafter taking into consideration the various aspects of the Board's functioningcomposition of the Board and its Committees culture execution and performance ofspecific duties obligations and governance.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non- Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
The Board has on the recommendation of the Appointment & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the year five Board Meetings and four Audit Committee Meetings were convened andheld. The details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.
DIRECTOR'S RESPONSIBILITY STATEMENT:
To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act 2013:
i) In the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
ii) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31.03.2017 and of the profit orloss of the Company for the year ended on that day.
iii) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
iv) The directors had prepared the annual accounts on a going concern basis.
v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively. and
vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
RELATED PARTY TRANSACTIONS:
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 and the Rules made there under are not attracted. Thusdisclosure in form AOC-2 in terms of Section 134 of the Companies Act 2013 is notrequired. Further there are no material related party transactions during the year underreview with the Promoters Directors or Key Managerial Personnel. The policy on RelatedParty Transactions as approved by the Board of Directors has been uploaded on the websiteof the Company and can be viewed at http://www.sreeleathers.com/SL/Relatedparty.pdf.
The Company does not have any subsidiary.
CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings/behavior of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as "Code ofBusiness Conduct" which forms an Appendix to the Code. The Code has been posted onthe Company's website www.sreeleathers.com.
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. The Code gives guidance through examples on the expectedbehavior from an employee in a given situation and the reporting structure.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. All Management Staff were given appropriate training in this regard.
VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company(www.sreeleathers.com).
PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Company Secretary is thecompliance officer who is responsible for implementation of the Code.
All Directors and the designated employees have confirmed compliance with the Code.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:
The Company has in place an Anti-harassment policy in line with the requirements of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Internal Complaint Committee are set up at shop floor level to redress complaints receivedregularly and are monitored by women line supervisorswho directly report to the ManagingDirector. All employees (permanent contractual temporary trainees) arecovered under thepolicy. There was no compliant received from any employee during the financial year2016-17 and hence no complaint is outstanding as on 31.03.2017 for redressal.
AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT:
Pursuant to the provisions of Section 139 of the Companies Act 2013 and Rules madethereunder the term of office M/s. K.Rungta & Co Chartered Accountants (ICAI FirmRegistration No. 321068E) as the Statutory Auditors of the Company will conclude from theclose of ensuing Annual General Meeting of the Company. The Board of Directors places onrecord its appreciation to the services rendered by K.Rungta & Co as the StatutoryAuditors of the Company.
Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/ s. Chanani & Associates Chartered Accountants (ICAIFirm Registration No. 325425E) as the Statutory Auditors of the Company pursuant toSection 139 of the Companies Act 2013.
Accordingly the Board recommends the resolution in relation to appointment ofStatutory Auditors for the approval by the shareholders of the Company.
The observation made in the Auditors' Report read together with relevant notes thereonare self explanatory and hence do not call for any further comments under Section 134 ofthe Companies Act 2013.
As required under section 204 (1) of the Companies Act 2013 the Company has obtained asecretarial audit report. The Secretarial Audit Report read together with relevant notesthereon are self explanatory and hence do not call for any further comments.
Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed SA & Associates a firm of Company Secretaries in practice to undertake theSecretarial Audit of the Company. The Secretarial Audit report is annexed herewith as"Annexure B"
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed as Annexure - C and forms anintegral part of this Report.
PARTICULARS OF EMPLOYEES:
The information required under section 197(12) of the Companies Act 2013 and the rulesmade thereunder as amended has been given in the annexure appended hereto and form partof this report. The company does not have any employees who were employed throughout theyear and were in receipt of remuneration of more than Rs. 102.00 lacs per annum oremployed for part of the year and were in receipt of remuneration of more than Rs. 8.50lacs per month.
EMPLOYEE STOCK OPTION:
The company has not given any employee stock option scheme during the financial year2016- 17. Previous year: Nil
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
a) The ratio of remuneration of each director to the median employee's remuneration forthe financial year and such other details as prescribed is as given below:
|Name ||Ratio |
|Satya Brata Dey (Managing Director) ||33.60: 1 |
|Sujay Bhattacherjee (Chief Financial Officer) ||1.90: 1 |
|Bijoy Kumar Roy (Company Secretary) ||1.76:1 |
For this purpose Sitting fees paid to the Directors have not been considered asremuneration.
b) The % increase in the remuneration of each Director Chief Financial Officer ChiefExecutive Officer Company Secretary or Manager if any in the financial year:
|Satya Brata Dey (Managing Director) ||150% |
|Bijoy Kumar Roy (Company Secretary) ||-10.78% |
|Sujay Bhattacharya (Chief Financial Officer) ||-11.67% |
c) The % increase in the median remuneration of employees in the financial year: 1.73%.
d) The number of permanent employees on the rolls of company: 48
e) The explanation on the relationship between average increase in remuneration andcompany performance; The Company's PAT has grown from Rs. 1129.96 lacs to Rs. 1340.30 lacsan increase of 18.61% against which the average increase in remuneration is 1.73% andthis increase is aligned with the Compensation Policy of the company.
f) Comparison of the remuneration of the Director and Key Managerial Personnel againstthe performance of the company: The increase in remuneration to the Directors keymanagerial persons as well as employees of the company are based on a annual reviewmechanism which takes care of the individual performance of the employee as well as theoverall growth of the company.
g) Variations in the market capitalization of the company price earnings ratio as atthe closing date of the current financial year and previous financial year.
|Particulars ||March 31 2017 ||March 31 2016 ||% Change |
|Ordinary Shares || || || |
|Market Capitalization (Rs. In Crs) ||305.76 ||313.68 ||-2.52 |
|Price Earning Ratio ||22.80 ||27.77 ||-17.90 |
h) Percentage increase or decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last publicoffer:
|Market Price as on March 31 2017 ||Rs.121.55 |
|Price at the time of public issue of 1810200 equity shares made in the fiscal 1997 - 1998. ||Rs. 10.00 |
|% increase of market price over the price at the time of public issue ||1115.50% |
Note: Closing share price of ordinary shares at NSE Ltd. has been used for the abovetable.
i) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and any exceptionalcircumstances for increase in the managerial remuneration: Average increase inremuneration is 1.73% for Employees other than Managerial Personnel -10.78% for Sri BijoyKumar Roy Company Secretary& -11.67% for Sri Sujay Bhattacherjee Chief FinancialOfficer of the company.
j) The key parameters for any variable component of remuneration availed by thedirectors: There is no variable component for any director key managerial personnel aswell as any employee of the company during the financial year.
k) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year: Not Applicable.
l) Affirmation that the remuneration is as per the remuneration policy of the company:The remuneration for Managing Director KMP and rest of employees is as per theremuneration policy of the company.
m) Comparison of each remuneration of the key managerial personnel (KMP) against theperformance of the company:
|Key Managerial Personnel ||Sri Satyabrata Dey Managing Director ||Sri Sujay Bhattacherjee Chief Financial Officer ||Sri Bijoy Kumar Roy Company Secretary |
|Remuneration in Fiscal 2017 (in lacs) ||60.00 ||3.40 ||3.15 |
|Revenue (in lacs) || ||9958.53 || |
|Remuneration as % of revenue ||0.60 ||0.03 ||0.03 |
|Profit/(loss) before Tax (in lacs) || ||2053.91 || |
|Remuneration (as % of PBT) ||2.92 ||0.16 ||0.15 |
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS:
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the Company's Auditorsconfirming compliance forms an integral part of this Report.
The Management Discussion and Analysis Report on the operations of the Company asrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isprovided in a separate section and forms an integral part of this Report.
Statements in the Management Discussion and Analysis Report describing the estimatesexpectations or predictions may be 'forward-looking statements' within the meaning ofapplicable laws and regulations. Actual results could differ materially from thoseexpressed or implied. Important factors that would make a difference to the Company'soperations include demand-supply conditions material prices changes in GovernmentRegulations tax regimes economic developments within the Country and outside the Countryand other factors such as litigation and labor negotiations.
Your Directors wish to place on record their appreciation for the contribution made bythe employees at all levels but for whose hard work and support your Company'sachievements would not have been possible. Your Directors also wish to thank itscustomers dealers agents suppliers investors and bankers for their continued supportand faith reposed in the Company.
| ||For and on behalf of the Board of Directors |
|Kolkata ||Satya Brata Dey |
|May 27 2017 ||Managing Director |