TO THE SHAREHOLDERS
The Board of Directors of your Company is pleased to present the 40th Annual Report onthe business of the Company along with summary of financial statements for the year ended31st March 2020. The report is prepared in accordance with the provisions of theCompanies Act 2013.
During the year under review performance of your company is as under:
| ||31.03.2020 ||31.03.2019 |
|Particulars ||(Rs in lakhs) ||(Rs in lakhs) |
|Profit before finance costs and depreciation ||744.51 ||688.53 |
|Finance costs ||631.67 ||494.35 |
|Depreciation ||239.98 ||126.29 |
|Profit / (loss) before taxation ||(127.14) ||67.89 |
|Less: Current tax (MAT) ||- ||2.34 |
|MAT Credit Entitlement ||- ||(2.34) |
|Deferred tax ||29.97 ||55.34 |
|Profit/(Loss) after tax ||(97.17) ||12.55 |
|Add: Other comprehensive income || || |
|Remeasurement of post employment benefit obligations ||(11.13) ||2.00 |
|Gain on fair valuation of investments ||(0.83) ||(0.41) |
|Income tax relating to these items ||2.98 ||(0.10) |
|Total other comprehensive income for the year ||(8.98) ||1.49 |
|Total comprehensive income / (loss) for the year ||(106.15) ||14.04 |
|Earnings per share Basic / Diluted ||(2.26) ||0.29 |
The Company is unable to declare any Dividend on account of losses.
Review of Operations
During the year the company has made a turnover of Rs. 14366.49(in lakhs) as againstRs. 15986.23(in lakhs) in the previous year. The Company has incurred a loss of Rs.106.15Lakhs during the current year as compared to Net Profit of Rs.14.04 Lakhs last year.
Management's Discussion and Analysis
As per the Regulation 34(1) (e) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the report on "Management Discussion andAnalysis" forms an integral part of Annual Report as Annexure-I
Company has not accepted any deposits from public.
Directors and Key Managerial Personnel
Pursuant to the provisions of Section 152 of the Companies Act 2013 Smt C.Renukaretire by rotation and being eligible offers herself for reappointment and the resolutionis placed before the Shareholders for approval.
A brief resume expertise shareholding in the company and details of other entities inwhich the Director is interested as stipulated under Regulation 36(3)(a) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and as per Secretarial Standardis provided in the Notice attached.
The tenure of Smt. P. Umayal Chairman cum Managing Director and Sri P. PalaniappanManaging Director expired on 18th of December 2019. The shareholders at their meeting heldon 24th September 2019 approved their reappointment as Chairman cum Managing Director andManaging Director for a period of three years effective from 19.12.2019 to 18.12.2022.
The Shareholders at their meeting held on 24th September 2019 approved thereappointment of independent Directors Sri A.Alagappan Sri S.Ravichasndran and SriPL.Subbiah for a second term of five consecutive years from 10th December 2019 to 9thDecember 2024.
Sri A.Arunkumar Non Executive Director resigned from the Board with effect from 30thApril 2019 due to his personal reason
Smt Sujatha Sivakumar was appointed as an Additional Director of the Company witheffect from 14th August 2019. She was appointed as Non Executive Independent Director inthe Annual General Meeting held on 24th September 2019.
Smt Shantha Radhakrishnan Non Executive Independent Director retired due to personalreasons on expiry of her term of appointment from the Board with effect from 10th December2019.
All the Directors of the Company have confirmed that they are not disqualified frombeing appointed as directors in terms of Section 184(1) and Rule 9(1) of the CompaniesAct 2013.
Pursuant to Regulation 34(3) and Schedule V para Clause (10)(i) of SEBI( ListingObligation and Disclosure Requirements) Regulations 2015 Certificate of NonDisqualification of Directors is received from the Practicing Company Secretary Sri M.R.LNarasimha is attached as Annexure-VII
Declaration by Independent Directors
The Company has received necessary declaration from each independent director 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 SEBI LODR.
During the year all the independent Directors were present in meeting of IndependentDirectors. The Independent Directors assessed the quality quantity and timeliness of flowof information between the management and the Board and expressed that the Current flow ofinformation and contents were adequate for the Board to effectively perform its duties.
The Company had conducted various sessions during the financial year to familiarize allthe Directors including the Independent Directors with the updates of Company theirrules responsibilities in the Company and the technology and the risk management systemsof the Company. Further the Directors are encouraged to attend the training programmesbeing organized by various regulators/ bodies/institutions on above matters.
Number of Board Meetings and Committee Meetings
The Board met five (5) times during the financial year on 15th April 2019 24th May2019 14th August 2019 14th November 2019 and 8th February 2020.
The Company's Auditors M/S.V.V.Soundararajan & CO. Chartered Accountants Salemhold office for a term of five years (5) commencing from the financial year 2017-2022 tillthe conclusion of the Annual General Meeting to be held in the year 2022.
The Auditors' Report for the year 2019-20 does not contain any qualificationreservation or adverse remark. The auditors' report is enclosed with the financialstatements in the Annual Report.
As required under Section 204 of the Act and Rules made there under Sri M.R.L.Narasimha Practising Company Secretary was appointed to conduct the Secretarial Audit ofthe Company for the financial year 2019-20. The Secretarial Audit Report for the financialyear 2019-20 forms part of the Annual Report as Annexure-VIII to the Board's Report.
Section 148 of the Companies Act 2013 pertaining to audit of Cost Records isapplicable to the Company. Based on the recommendation of the Audit CommitteeMr.B.Venkateswar Cost Accountant was appointed as Cost Auditor of the Company for thefinancial year 2020-2021 and the remuneration payable to Cost Auditor is placed before theShareholders for ratification.
The Company has re-appointed Mr. H. Venugopal as the Internal Auditor of the Companyfor a further period of one year for the financial year 2020-2021. The scope of workincludes review of process for safeguarding the assets of the Company review ofoperational efficiency effectiveness of system and processes and assessing the strengthand weaknesses of internal control. Internal Auditor reports are placed before the AuditCommittee on a regular basis for taking suitable action for improvement whereverrequired.
Subsidiaries Joint Ventures and Associates
The Company does not have any Subsidiary Joint venture or Associate Company.
Corporate Social Responsibility
Corporate Social Responsibility is not presently applicable as the Company does notsatisfy the conditions laid down in Section 135 with regard to net worth turnover and netprofits.
Material Changes and Commitments
There have been no material changes and commitments between the end of financial year(March 31 2020) and the date of the report affecting the financial position of theCompany.
Adequacy of Internal Financial Controls and Internal Control System
The Company has in place adequacy internal financial controls with reference tofinancial statements. During the year under review such controls were tested and noreportable material weakness in the design or operation was observed.
Company has established adequate Internal Control procedures commensurate with thenature of its business and size of its operations and for ensuring the orderly andefficient conduct of its business for safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information. No fraud was reported duringthe financial year.
The Company has appointed Internal Auditor to observe the Internal controls whetherthe work flow of organization is being done through the approved policies of the Company.In every quarter during the approval of financial statements Internal Auditors willpresent the Internal Audit Report and Management Comments on the Internal Auditobservation.
Particulars of Loan Guarantees and Investments under Section 186 - Details of Loan
|Sl. No ||Period of making Loan ||Details of Lender ||Amount in Rs. ||Purpose for which the loan is to be utilized by the recipient ||Time period for which it is given ||Date of BR ||Rate of interest |
|1. ||01.04.2019 to 31.03.2020 ||Supreme Yarn Spinners Ltd Door No.181 'VASANTHAM' 4th Cross Street New Fairlands Salem 636 016 ||43815000 ||Inter Corporate Loan ||Repayable on Demand ||24.05.2019 14.08.2019 14.11.2019 08.02.2020 ||12% |
|2. ||01.04.2019 to 31.03.2020 ||Raja Yarn Private Ltd Door No.181 'VASANTHAM' 4th Cross Street New Fairlands Salem 636 016 ||111054500 ||Inter Corporate Loan ||Repayable on Demand ||24.05.2019 14.08.2019 14.11.2019 08.02.2020 ||5.25% |
Investment made under Section 186 of the Companies Act 2016
Investment made by the Company is within the limits specified under Section 186 of theCompanies Act 2013.
Significant & Material orders
No Significant and Materials orders have been passed by any Regulator or Court orTribunal which can have an impact on the going concern status and the Company's operationsin future.
Disclosure as required under Section 22 of Sexual Harassment of Workmen at Workplace(Prevention Prohibition and Redressal) Act 2013
As per the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has constituted an Internal ComplaintsCommittee. During the Financial Year 2019-2020 no compliant was received before thecommittee.
Conservation of Energy Technology Absorption Exports and Foreign Exchange earningsand outgo.
The information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure - II
As per the new Regulation 27(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Corporate Governance Report together with theCertificate from the Company's Auditors confirming the compliance of conditions onCorporate Governance is given in Annexure-III
Extract of Annual Return
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and administration) Rules 2014 in format MGT - 9 for theFinancial Year 2019-2020 is enclosed with this report. The Annual return shall beavailable on Company's website http.www.sncmindia.com- Annexure -IV
Contracts or Arrangements with Related Parties
Transactions entered with related parties have been explained in Form AOC - 2 -Annexure- V annexed with this report and forms part of this Report. Further policy on dealingwith Related Party transactions has been uploaded on the Company's websitehttp.www.sncmindia.com.
Vigil Mechanism/Whistle Blower Policy
In pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished.
The Vigil Mechanism Policy has been uploaded on the website of the Company athttp.www.sncmindia.com. The main objective of this policy is to ensure sustainablebusiness growth with stability and to promote a pro-active approach in reportingevaluating and resolving risks associated with the business. In order to achieve the keyobjective the policy establishes a structure and disciplined approach to risk managementin order to guide decisions on risk related issues.
Audit Committee is in existence in accordance with the provisions of Section 177 of theCompanies Act 2013. The details relating to the composition meetings and functions ofthe Committee are given in Corporate Governance Report. The Board has acceptedrecommendations of Audit Committee hence no disclosure required under Section 177(8) ofthe Companies Act 2013.
Risk Management Policy
As per the Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board members were informed about risk assessment and minimizationprocedures after which the Board formally adopted steps for framing implementing andmonitoring the risk management plan for the company. All the results and evaluation hasbeen communicated.
The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc. as provided by theguidance Note on Board Evaluation issued by the Securities and Exchange Board of India onJanuary 5 2017
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the Composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as contribution of the individualdirector to the board and committee meetings like preparation on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.
Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed the policy on director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters as required under sub-section (3) of Section 178 of the Companies Act 2013 whichhave been outlined in Nomination & Remuneration policy forming part of this Report.
The details of Remuneration to Directors are given in Annexure-VI DirectorsResponsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourdirectors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards hasbeen followed along with proper explanation relating to material departures;
(b) the Directors had 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 at the end of the financial year and ofthe profit and loss of the company for that period;
(c) 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;
(d) the directors had prepared the annual accounts on a going concern basis;
(e) have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively;
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Particulars of Employees
The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 does not apply to the Company as there were no employeeswho are in receipt of remuneration in aggregate of more than Rs.10200000/- if employedthroughout the year or Rs.850000/- per month if employed for part of the year.
Details of top 10 employees based on their salary are disclosed in Annexure-IX.
The Equity Shares of the Company are listed in BSE Limited and the Company has dulypaid the Annual listing fees for the year 2020-2021
M/s. Cameo Corporate Services Limited Chennai is the Registrar for providingdepository services through National Securities Depository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL) for holding Shares in Electronic mode (De-mat)of our Shareholders and also is the Registrar for Share Transfer Services for physicalsegment.
Your Directors wish to place on record their deep sense of appreciation for thetremendous support from the Bankers M/s. Indian Overseas Bank the shareholders and allour suppliers and customers. The Board also wishes to place on record their appreciationfor the contribution made by the employees at all levels.
| ||For and on behalf of the Board of Directors |
| ||P.Umayal |
| ||Chairman cum Managing Director. |
|Salem ||Din .00110260. |
|29th June 2020. || |