TO THE SHAREHOLDERS
SUNIL INDUSTRIES LIMITED
Your Directors have great pleasure in presenting 41st Annual Report alongwith the Audited Balance Sheet and Profit And Loss Account for the year ended on 31stMarch 2017
1) FINANCIAL RESULTS
The financial Results are briefly indicated below:
| || |
(Amt in Rs.)
|PARTICULARS ||For the year ended on |
| ||31st March 2017 ||31st March 2016 |
|Total Income ||1435478702 ||2411989245 |
|Total Expenditure ||1414123674 ||2373181795 |
|Net Profit/(Loss) before Tax ||21355028 ||38807450 |
|Provision for Tax ||5929458 ||13618.587 |
|Net Profit/(Loss) after Tax ||15425570 ||25188863 |
|Profit/(Loss) b/f previous year ||82158182 ||56969319 |
|Balance c/f to Balance Sheet ||97583752 ||82158182 |
2) TRANSFER TO RESERVES
There are no transfers to any specific reserves during the Financial year.
3) REVIEW OF OPERATIONS
During the year ended 31st March 2017 your Company reported total Incomeof Rs. 1435478702 which in comparison to previous year's figures have reduced byapproximately 40 % this is mainly due to cost escalation of Raw materials and overallimpact of the economy on textile sector. The Net Profit after tax is Rs. 15425570 ascompared to Rs. 25188863 in previous year marking a reduction of approximately 39 %which is primarily due less turnover and increase of Taxes.
In order to conserve the reserves for a sustainable future your Company do notrecommend dividend for the financial year 2016-17.
5) FUTURE PROSPECTS
The future for the Indian textile industry looks promising buoyed by both strongdomestic consumption as well as export demand. With consumerism and disposable income onthe rise the retail sector has experienced a rapid growth in the past decade. Increasedpenetration of organized retail favorable demographics and rising income levels arelikely to drive demand for textiles. India is the world's second largest exporter oftextiles and clothing. Rising government focus and favorable policies is leading to growthin the textiles and clothing industry.
The Indian cotton textile industry is expected to showcase a stable growth inFY2017-18 supported by stable input prices healthy capacity utilisation and steadydomestic demand.
6) THE CHANGE IN THE NATURE OF BUSINESS IF ANY;
There is no change in the nature of business of the Company.
7) TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND.
The provisions of Section 125(2) of the Companies Act 2013 do not apply as there is nounpaid dividends pending of the Company.
8) CONSERVATION OF ENERGY-TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE ETC.
The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is Annexure A toDirector's Report.
9) STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICYOF THE COMPANY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed and also discussed at the meetings of the Audit Committee andthe Board of Directors of the Company.
The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of its operations. These are routinely tested and certified byStatutory as well as Internal Auditors. Significant audit observations and follow upactions thereon are reported to the Audit Committee.
10) INTERNAL CONTROL SYSTEM
The Company's internal controls system has been established on values of integrity andoperational excellence and it supports the vision of the Company "To be the mostsustainable and competitive Company in our industry". The Company's internal controlsystems are commensurate with the nature of its business and the size and complexity ofits operations. These are routinely tested and certified by Statutory as well as InternalAuditors. Significant audit observations and follow up actions thereon are reported to theAudit Committee.
11) DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES
The Company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135 of the Companies Act 2013 and hence itis not required to formulate policy on corporate social responsibility.
12) PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES
The particulars of investment made under Section 186 of the Companies Act 2013 havebeen disclosed in the financial statements in Note 11 of the Financial Statement.
The particulars of loans made under Section 186 of the Companies Act 2013 have beendisclosed in the financial statements in Note 12 and Note 16 of the Financial Statement.
The Company has given not given any loans falling under section 185 and 186 of theCompanies Act 2013 nor has it provided any Corporate Bank guarantee.
13) PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the Listing Regulations. There are no materially significant related partytransactions made by the Company with Promoters Directors or Key Managerial Personneletc. which may have potential conflict with the interest of the Company at large or whichwarrants the approval of the shareholders. Accordingly transactions are being reported inForm AOC-2 i.e Annexure B in terms of Section 134 Companies (Accounts) Rules ofthe Act read with Rule 8 of the 2014. However the details of the transactions withRelated Party are provided in the Company's financial statements in accordance with theAccounting Standards as applicable to the Company.
All Related Party Transactions are presented to the Audit Committee and the Board andwherever forecasted Omnibus approval is obtained for the transactions which are foreseenand repetitive in nature. A statement of all related party transactions is presentedbefore the Audit Committee on a quarterly basis specifying the nature value and termsand conditions of the transactions.
The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website at www.sunilgroup.com
14) POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
The Company has zero tolerance towards sexual harassment at the workplace and towardsthis end has adopted a policy in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.All employees (permanent contractual temporary trainees) are covered under the saidpolicy. An Internal Complaints Committee has also been set up to redress complaintsreceived on sexual harassment. During the financial year under review the Company has notreceived any complaints of sexual harassment from any of the employees of the Company.
15) EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The auditor's report does not contain any qualifications reservations or adverseremarks but secretarial Audit Report contains qualifications pursuant to Section 203 ofCompanies Act 2013 towards appointment of Company Secretary and regulations 31 (2) 47(1)a & b of Listing Obligation and Disclosure Requirements Regulations 2015 forDematerialization of Promoters shareholding and Publishing of notice of Board Meeting& Financial Results. The Company hereby informs that it has already initiated theprocess of finding a suitable candidate for the post of Company Secretary and shall makeappointment when it finds the desired candidate. The Promoters being distant relatives ofeach other are scattered all over and hence it is very difficult to convert eachpromoter's physical holding into demat however the company is in the process forconversion of the same as per regulations 31 (2) of LODR. The yearly/ quarterly resultsand notice of Board Meeting are duly hosted on the website of the Company atwww.Sunilgroup.com and is easily accessible in public domain at the Website of BSE Limitedat http://www.bseindia.com/stock-share-price/ sunil-industries-ltd/suniltx/521232/ hencethe company does not publish the said results in the requisite newspapers as applicable asper Regulation 47(1) a & b of Listing Obligation and Disclosure RequirementsRegulations 2015 . However in coming years the company shall go for publishing of resultsand notice of Board Meeting as required.
The Report of the secretarial auditor in MR-3 is given as an annexure which forms partof this report.
16) ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and Administration) Rules 2014 is furnished as AnnexureC to Director's Report
17) NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the financial year the Board had met Four (4) times on 27thMay 2016; 13th August 2016; 14th November 2016 and 14thFebruary 2017.
18) DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 The Board of Directors of theCompany hereby confirm:
(i) That in the preparation of the annual accounts the applicable accounting standardshave been followed and there has been no material departure.
(ii) That the selected accounting policies were applied consistently and the Directorsmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and that of the profitof the Company for the year ended on that date.
(iii) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
(iv) That the annual accounts have been prepared on a going concern basis.
(v) The Board has laid down internal financial controls to be followed by the companyand that such internal financial controls are adequate and were operating effectively.
(vi) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Company has neither accepted nor renewed any deposits during the year under review.
20) PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Name of the directors ||Ratio to median Remuneration |
| ||Non-executive directors |
|Mr. Rohit Gadia ||Nil |
|Mr. Mohd. Iqbal ||Nil |
|Mrs. Shruti Saraf ||Nil |
|Executive directors || |
|Mr. Vinod Lath ||5.50 |
|Mr. Pradeep Roongta ||5.50 |
|Mr. Ramesh Khanna ||2.94 |
b. The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the financial year:
|Directors Chief Executive Officer Chief Financial Officer and Company Secretary ||% increase in remuneration in the financial year |
|Mr. Rohit Gadia ||Nil |
|Mr. Mohd. Iqbal ||Nil |
|Mrs. Shruti Saraf ||Nil |
|Mr. Vinod Lath ||100 |
|Mr. Pradeep Roongta ||100 |
|Mr. Ramesh Khanna ||38.27 |
c. The median remuneration for the year 2016-17 is Rs. 218400/-
d. The percentage increase in the median remuneration of employees in the financialyear: 8 %
e. The number of permanent employees on the rolls of Company: 34
f. The explanation on the relationship between average increase in remuneration andCompany Perfromance:
On an average employees received an annual increase of 8 %
The increase in remuneration is in line with the market trends prevalent in theEconomy. In order to ensure that remuneration reflects Company performance theperformance pay is also linked to organisation performance apart from an individual'sperformance.
g. Comparison of the remuneration of the key managerial personnel against theperformance of the Company:
|Aggregate remuneration of key managerial personnel (KMP) in FY 17 ||3042137 |
|Revenue ||1431434400 |
|Remuneration of KMPs (as a % of revenue) ||0.21% |
|Profit before Tax (PBT) ||21355028 |
|Remuneration of KMP (as a % of PBT) ||14.25% |
h. Variations in the market capitalisation 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 |
|Market Capitalisation ||143430000 ||88586240 ||61.91% |
|Price Earnings Ratio ||9.31 ||3.52 ||164.49% |
i. Percentage increase over 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:
|Particulars ||March 31 2017 ||IPO ||% Change |
|Market Price (BSE) ||34.15 ||30.00 ||13.83% |
j. 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 point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 8 %
There Increase in the managerial remuneration for the relevant year as compared toprevious year is 82.81%.
k. Comparison of each remuneration of the key managerial personnel against theperformance of the Company:
| ||Mr. Vinod Lath ||Mr. Pradeep Roongta ||Mr. Ramesh Khanna |
| ||(Managing Director) ||(Whole-Time Director & CFO) ||(Whole-Time Director) |
|Remuneration in FY 2017 ||1200000 ||1200000 ||642000 |
| ||Revenue : 1431434400 || || |
|Remuneration as % of revenue ||0.08 ||0.08 ||0.05 |
| ||Profit before Tax (PBT): 21355028 || || |
|Remuneration as % of Profit before Tax ||5.62 ||5.62 ||3.00 |
l. The key parameters for any variable component of remuneration availed by thedirectors:
There are no variable components of remuneration provided to the Directors
m. 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:
n. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Nomination and Remuneration Committee of the Company has affirmed at its meetingheld on 14TH February 2017 that the remuneration is as per the remuneration policy of theCompany. The policy is available on the company's website: www.sunilgroup.com.
o. The statement containing particulars of employees as required under section 197(12)of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. In terms of section 136 of the Act the said annexureis open for inspection at the Registered Office of the Company.
Any shareholder interested in obtaining a copy of the same may write to the ComplianceOfficer.
The Board of Directors of the Company is duly constituted as per the applicableprovisions of the Companies Act 2013 and that of the Listing Obligations and DisclosureRequirements Regulations 2015.
Mr. Mohd Iqbal resigned from the office of Directorship with effect from 03rd June2017. Your Directors place their appreciation for the work done by her during her tenure.
Mr. Ramesh Khanna is liable to retire by rotation in this 41st Annual General Meetingand being eligible he has offered himself for reappointment as Director.
22) ATTRIBUTES QUALIFICATIONS & INDEPENDENCE OF DIRECTORS THEIR APPOINTMENT ANDREMUNERATION
The Nomination & Remuneration Committee of Directors have approved a Policy forSelection Appointment and Remuneration of Directors which inter-alia requires thatcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors KMP and senior management employees and the Directors appointed shall be ofhigh integrity with relevant expertise and experience so as to have diverse Board and ThePolicy also lays down the positive attributes/ criteria while recommending the candidaturefor the appointment as Director.
23) DECLARATION OF INDEPENDENT DIRECTORS
Tour Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of Section149 of the Companies Act 2013 read with the Schedules and Rules issued thereunder as wellas Regulation 16(1)(b) of Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force).
24) FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The familiarization programme aims to provide Independent Directors with the Textileindustry scenario the socioeconomic environment in which the Company operates thebusiness model the operational and financial performance of the Company significantdevelopments so as to enable them to take well informed decisions in a timely manner. Thefamiliarization programme also seeks to update the Directors on the rolesresponsibilities rights and duties under the Act and other statutes. The policy onCompany's familiarization programme for Independent Directors is posted on Company'swebsite at www.sunilgroup.com along with the Familiarization programme for F.Y 2016-17along with the hours spent on the Programme.
25) STATUTORY AUDITORS
P R Agarwal & Awasthi Chartered Accountants Mumbai registered with the Instituteof Chartered Accountants of India vide firm registration no 117940W are proposed to beappointed as Statutory Auditors in place of retiring Auditors M/ s V. K Beswal &Associates at the Annual General Meeting to be held on Tuesday 26th September 2017 forthe period of three (5) years. i.e. upto the Annual General Meeting to be held in year2022 subject to ratification by the shareholders of the Company at each Annual GeneralMeeting thereafter.
The Company has received letter from them to the effect that their appointment ifmade would be within the prescribed limits under Section 141(3)(g) of the Companies Act2013 and that they are not disqualified from appointment. The Company acknowledges andplaces its appreciation towards the retiring Auditors of the Company.
The resolution for their appointment is put forward for your approval in the ensuingAnnual General Meeting.
26) COST AUDITOR
M/s Shanker Chaudhary & Co Cost Accountant are appointed as Cost Accountants incompliance of Section 148(1) read with Section 139 of the Companies Act 2013 to auditCost records maintained by the Company for the financial year ended 31st March 2017. Theresolution for ratification of remuneration paid to them is put forward for your approvalin compliance of Section 148 read with Companies (Audit and Auditors) Rules 2014.
27) INTERNAL AUDITORS
The company has appointed H. Mehta & Co. Chartered Accountants Mumbai asinternal auditor of the company for financial year 2017-18.
28) SECRETARIAL AUDITOR
The Company has appointed Mr. Hemant Shetye Partner of M/s HS Associates CompanySecretaries as Secretarial Auditors of the Company to carry out the Secretarial Audit forthe Financial Year 2016-17 and to issue Secretarial Audit Report as per the prescribedformat under rules in terms of Section 204(1) of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The reportof secretarial Auditor is appended to this report as Annexure D to Director's Report.
29) MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
The Management's Discussion and Analysis Report for the year under review asstipulated under regulation 34 (3) and Part B of schedule V of the SEBI (ListingObligation and Disclosure Requirement) Regulation 2015 is annexed to this Annual Report
30) CORPORATE GOVERNANCE
The Company is committed towards maintaining the highest standards of CorporateGovernance and adhering to the Corporate Governance requirements as set out by Securitiesand Exchange Board of India. The Report on Corporate Governance as stipulated underregulation 34 (3) and Part C of schedule V of the SEBI (Listing Obligation and DisclosureRequirement) Regulation 2015 forms part of the Annual Report. The Certificate from thepracticing Company Secretary confirming compliance with the conditions of CorporateGovernance as stipulated under regulation 34 (3) and Part E of schedule V of the SEBI(Listing Obligation and Disclosure Requirement) Regulation 2015 is also published in thisAnnual Report
31) SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have any subsidiary joint venture or associate company andtherefore provision with respect to Section 129 of the Companies Act 2013 are notapplicable to the Company.
32) REPORT ON CORPORATE GOVERNANCE
The Report on Corporate Governance as stipulated under regulation 34 (3) and Part C ofschedule V of the SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015prepared by HS Associates Company Secretaries forms part of the Annual Report and isannexed hereto as Annexure E.
33) DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM
The Audit Committee consists of the following members
Mr. Rohit Gadia Chairman
Mr. Mohd Iqbal- Member
Mr. Pradeep Roongta Member
The above composition of the Audit Committee consists of independent directors viz.Mr. Rohit Gadia and Mr. Mohd Iqbal who form the majority.
The Company has established a vigil mechanism policy to oversee the genuine concernsexpressed by the employees and other Directors. The Company has also provided adequatesafeguards against victimization of employees and Directors who express their concerns.The Company has also provided direct access to chairman of Audit committee on reportingissues concerning the interests of co-employees and the Company. The Vigil MechanismPolicy is available at the website of the company: www.sunilgroup.com
34) ANNUAL EVALUATION BY THE BOARD
In compliance with the Companies Act 2013 and Regulation 17 of the ListingRegulations the performance evaluation of the Board and its Committees were carried outduring the year under review. More details on the same are given in the CorporateGovernance Report.
The evaluation framework for assessing the performance of Directors comprises of thefollowing key areas:
i. Attendance of Board Meetings and Board Committee Meetings
ii. Quality of contribution to Board deliberations
iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance
iv. Providing perspectives and feedback going beyond information provided by themanagement
v. Commitment to shareholder and other stakeholder interests
vi. The evaluation involves Self-Evaluation by the Board Member and subsequentlyassessment by the Board of Directors. A member of the Board will not participate in thediscussion of his / her evaluation.
35) MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There have being no material changes and commitments affecting the financial positionof the Company occurred during the financial year.
36) THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTSOR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the year there has been no significant material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and company's operations infuture. However the company had received Inspection notice from the Office of RegionalDirector Western Region (Registrar of Companies) pursuant to section 206(5)/207 ofCompanies Act 2013 on 05th July 2016 to which it has suitably replied. In contentionwith the same inspection process it received a preliminary observation letter on 18thJuly 2017 to which the Company duly replied on 25th July 2017 with the necessaryinformation. Since there was no specific order was passed the said Authority theManagement it is unable ascertain the material impact on going concern status of theCompany and its operations in future.
37) COMMITTEES OF THE BOARD
As per the applicable provisions of the Companies Act 2013 and as per CorporateGovernance provisions as per Listing Obligations & Disclosure requirements (LODR)Regulations 2015 the company has three Committees of the Board.
There are currently three Committees of the Board as follows:
Nomination and Remuneration Committee
Stakeholders' Relationship Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Corporate Governance Report" forms a partof this Annual Report in Annexure E
The Company seeks to Promote Highest levels of ethical standards in the normal businesstransaction guided by the value system. The SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 mandates formulation of certain policies for ListedCompanies. The Policies are reviewed periodically by the Board and are updated based onthe need and compliance as per the applicable laws and rules and amended from time totime. The policies are available on the website of the Company at www.sunilgroup.com
39) OTHER DISCLOSURES
The company does not have any Employees Stock Option Scheme in force and henceparticulars are not furnished as the same are not applicable.
Pursuant to Regulation 27 of (Listing Obligation and Disclosure Requirements)Regulations 2015 report on Corporate Governance is given in Annexure E
40) CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operation include global and domestic demand and supply conditionsaffecting selling prices of Raw Materials Finished Goods input availability and priceschanges in government regulations tax laws economic developments within and outside thecountry and other various other factors.
Your Company wishes to sincerely thank all the customers commercial banks financialinstitution creditors etc. for their continuing support and co-operation.
Your Directors express their appreciation for the dedicated and sincere servicesrendered by the employees of the company and also sincerely thank the shareholders for theconfidence reposed by them in the company and from the continued support and co-operationextended by them
| ||ON BEHALF OF THE BOARD |
| ||FOR SUNIL INDUSTRIES LIMITED |
| ||SD/- |
|DATE : 14th AUGUST 2017 ||VINOD LATH |
|PLACE : DOMBIVLI ||MANAGING DIRECTOR & CHAIRMAN |
| ||DIN NO: 00064774 |