Your Directors have pleasure in presenting the 36th Annual Report of theCompany together with audited accounts of the Company for the financial year ended 31stMarch 2018.
Financial results for the year under review are summarized below:
|Particulars ||2017-18 ||2016-17 |
| ||(Rs. in Lakhs) ||(Rs. in Lakhs) |
|Income from operations ||25522.14 ||23741.92 |
|Other Income ||254.98 ||419.37 |
|Profit before Interest and Depreciation ||3971.86 ||4227.80 |
|Less: Interest ||601.85 ||541.74 |
|Profit/(Loss) before Depreciation ||3370.01 ||3686.06 |
|Less: Depreciation ||1717.55 ||1658.26 |
|Profit/(Loss) before Tax ||1652.46 ||2027.80 |
|Less: Exceptional item ||- ||- |
|(Add)/Less: Provision for Taxes ||231.48 ||570.62 |
|Profit/(Loss) after Tax ||1420.98 ||1457.18 |
Your Directors recommend a dividend of Rs. 2.50 per equity share of Rs.10/- each forthe financial year ended 31st March 2018 which if approved at the forthcomingAnnual General Meeting will be paid to those equity shareholders whose names appear inthe Register of Members as on 19th July 2018 in respect of shares held inphysical form and in respect of shares held in dematerialized form the dividend shall bepaid on the basis of the beneficial ownership as per the details furnished by theDepositories for this purpose at the end of business hours on 19th July 2018.
SEGMENT WISE PERFORMANCE
Due to lower margins to the textile mills during the implementation pace of GST theoff take of machineries by the mills was restricted which affected the performance of thisdivision.
The total revenue of this division during 2017-18 was Rs. 1822.95 Lakhs. Profit BeforeTax was Rs. 864.48 Lakhs compared to Rs. 1005.54 Lakhs during the previous year.
Mismatch of cotton and yarn prices coupled with GST implementation and shortage andhigh cost of labour have affected the margins. The Company has increased the production ofmicro modal yarn in which margins were better. However the advantage of captive wind powerhas helped the division to earn reasonable profits.
This division earned a Profit Before Tax of Rs. 1636.33 Lakhs compared to Rs. 1479.63Lakhs during the previous year.
Lower demand of the capital goods manufacturers by OEMs resulted into lower turnoverand margins. Competition from various manufacturers in gear boxes have affected the pickup of gear boxes sales. This division incurred a Loss of Rs. 239.06 Lakhs as against theProfit Before Tax of Rs. 90.98 Lakhs during the previous year.
The Company has directly exported its products valued at Rs. 1051.77 Lakhs in 2017-18.Exports through merchant exports were Rs. 2896.31 Lakhs. As the Company is required tofulfill Export obligation to the extent of Rs. 11855 Lakhs before 31st March2019 efforts have been taken to increase the exports substantially during the currentyear.
As the economy is inching back to normalcy after the initial glitches in theimplementation of GST the performance of the Company is expected to improve in thecurrent year. However the production of cotton the major raw material for spinningdepends up on the timely rains and remunerative prices to the farmers and hence there maybe price volatility which in turn may impact the performance of your Company. Throughpolicy measures of the Government in partnership with industry the Textile market isexpected to reach US $ 300 Billions by the year 2025 and create an additional 35 millionjobs. Apart from Central Government schemes some State Governments have also launchedtheir textile policies under which several incentives are provided for investment intextile sector.
Sri. Ravi Sam Director (DIN 00007465) retires by rotation at the ensuing AnnualGeneral Meeting being eligible offers himself for re-appointment.
Industrial relations are cordial and your Directors appreciate the co-operationextended by the employees.
Your Company's shares are listed in BSE Limited. The listing fee to the BSE has beenduly paid. The Madras Stock Exchange is in the process of winding up and the Company hasnot received any Bill for the listing fee. The shares are regularly traded in BSE Limitedand were not suspended at any time during the year.
The Statutory Auditors M/s. Subbachar & Srinivasan Chartered Accountants wereappointed as Statutory Auditors for a term of five years commencing from the financialyear 2016-17 who will retire at the conclusion of the Annual General Meeting to be held inthe year 2021 and the shareholders have authorized the Board to fix the remunerationpayable to the auditors from time to time.
The first proviso to Section 139 of the Companies Act 2013 which mandated theratification of the appointment of Statutory Auditors at every subsequent Annual GeneralMeeting has been omitted by the Companies (Amendment) Act 2017 and the same was notifiedvide notification dated 07th May 2018. Hence ratification of the appointmentof Statutory Auditors is not placed to the shareholders. The auditors M/s. Subbachar& Srinivasan Chartered Accountants have confirmed their eligibility for continuingas Statutory Auditors of the Company.
Pursuant to provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors on therecommendation of the Audit Committee has appointed Sri. G. Sivagurunathan CostAccountant as the Cost Auditor of the Company for the financial year 2018-19.
Pursuant to provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshas appointed Sri. M.R.L.Narasimha Practising Company Secretary to undertake theSecretarial Audit of the Company for the financial year 2018-19.
The secretarial audit report for the financial year 2017-18 is enclosed as Annexure2.
Extract of the annual return as per the provisions of the Companies Act 2013 isenclosed as Annexure 1.
The details of the meetings of the Board and Committees and attendance of directors aregiven in the Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
In compliance of Section 134 of the Companies Act 2013 the Directors of your Companyconfirm that:
a. in the preparation of the annual accounts the applicable accounting standards hadbeen 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. 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
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Independent Directors have met all the criteria of an Independent Director and theyhave given a declaration to the effect that they have met all the criteria of anindependent director as prescribed in Section 149 of the Companies Act 2013 and the SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015.
The salient features of the Nomination and remuneration Policy is enclosed to thisannual report. Directors are eligible to get only sitting fee for attending the Board orCommittee or other meetings of Directors. Outstation directors are entitled to getreimbursement of out of pocket expenses incurred by them in connection with attending ofthe Board or Committee or other meetings.
There is no qualification reservation or adverse remarks by the Statutory Auditors intheir audit report or Practising Company Secretary in his secretarial audit report. Theauditors have not reported any fraud to the Audit Committee or to the Board during theyear 2017-18.
Company has not provided any loans guarantees security under Section 186 of theCompanies Act 2013 during the year under review. However the Company has made aninvestment of Rs. 11.38 Crores for the purchase of 25000 equity shares of M/s. LakshmiMachine Works Limited.
All the transactions entered by the Company during the financial year 2017-18 with therelated parties are in the ordinary course of business and at Arm's length. The details ofmaterial related party transactions are given in form AOC -2 as annexure 3.
Board of Directors has decided to transfer Rs. 150 Lakhs out of profits for the year2017-2018 to General Reserve.
There is no material change and commitment which have occurred between the end of thefinancial year and to the date of the report which affect the financial position of theCompany.
(A) Conservation of Energy
|i. the steps taken or impact of conservation of energy ||Energy efficient motors and replacement of tube lights with LED bulbs are in progress to reduce energy consumption. |
|ii. the steps taken by the Company for utilizing alternate source of energy ||The Company has utilized 65.76% of its energy requirements through wind power. |
|iii. the Capital investment on energy conservation equipments ||Rs. 7.78 Lakhs. |
(B) Technology absorption
|i. Efforts made towards technology absorption. ||Compact spinning system and injection slub attachments have been installed at a cost of Rs. 426.85 Lakhs |
|ii. Benefits derived like product improvement cost reduction product development import substitution etc. ||Better quality yarn produced from compact spinning can be used in high speed air jet looms. Injection slub yarn is a new product. |
|iii. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year) ||- |
|(a) Details of technology imported. ||- |
|(b) Year of import. ||- |
|(c) Whether the technology been fully absorbed? ||- |
|(d) If not fully absorbed areas where this has not taken place reasons there for and future plans of action. ||- |
|iv. The expenditure incurred on Research & Development. ||- |
(C) Foreign exchange earnings and out go
The Foreign Exchange earnings and outgo during the year under review were as follows:
|Foreign Exchange Earned ||: Rs. 1043.26 Lakhs |
|Foreign Exchange Outgo || |
|Raw Material imports ||: Rs. 128.27 Lakhs |
|Stores and Spares imports (including advances) ||: Rs. 85.49 Lakhs |
|Capital Imports ||: Rs. 396.66 Lakhs |
|Others ||: Rs. 11.52 Lakhs |
| ||: Rs. 621.94 Lakhs |
The Company has established a risk management frame work to identify evaluate thebusiness risks and opportunities. The main object of the framework is to minimise theadverse impact of the risks by taking effective mitigating measures to retain the businessadvantages. The identified risks and mitigation measures are reviewed by the concernedHeads and all the risks identified and mitigation measures are placed before the Board.Board is of the opinion that there is no risk which affects the existence of the Company.
The CSR Committee consists of three directors out of which two are independentdirectors. The Board has approved the CSR Policy and the same is posted in the website ofthe Company http://www.supersales.co.in/policies.html. As per the policy Company can spentthe amount required to be spent under Corporate Social Responsibility to any of theProjects or activities covered under Schedule VII (as amended from time to time) based onthe recommendation of the CSR Committee and approved by the Board. The amount can be spentany where in India however preference shall be given for the geographical locations wherethe Company's operations are located. The amount required to be spent under CSR activitiesmay be spent by the Company itself or contributing to any trust which is havingestablished track record as recommended by the CSR Committee and approved by the Board.The CSR Committee shall periodically review and monitor the expenditure made on variousprojects or activities as approved by the Board. The Company has spent the entire amountrequired to be spent during the financial year 2017-18. Annual Report on CSR activities isenclosed as Annexure 4.
DISCLOSURE UNDER RULE 8
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 the Board has carried out annualevaluation of its own performance that of its committees and individual directors for thefinancial year 2017-18. The Chairman of the Board has sent a list of criteria as approvedby the Nomination and Remuneration Committee for evaluation of the Board's performancethat of its committees and individual directors to all the Directors. Each Director hasevaluated based on the criteria and communicated the results of the evaluation to theChairman. There is no change in the nature of business. There is no appointment ofDirector Key Managerial Personnel during the year and there is no change in the KeyManagerial Personnel.
There is no addition or cessation of Subsidiaries Joint ventures or Associates duringthe year 2017-18. The Company has not accepted or holds any deposit from the public ordirectors or shareholders. There is no significant material order passed by the regulatorsor courts or tribunals which affects the going concern status or operations in future.
The Company has established adequate internal control system which is commensurate withits nature and volume of operations. All the independent directors are in the first termof appointment. There is no resignation of the Directors during the year 2017-18.
The Composition of the Audit committee is given in the Corporate Governance Report.Board has accepted all the recommendations made by the Audit Committee during the year2017-18. The Company has complied with the applicable secretarial standards.
The financial results of the Company have been prepared in accordance with theCompanies (Indian Accounting Standards) Rules 2015 (Ind AS) prescribed under Section 133of the Companies Act 2013 and other recognised accounting practices and policies to theextent applicable in accordance with the recognition and measurement principles laid downin Ind AS 34 Interim Financial Reporting. Beginning April 1 2017 the Company has for thefirst time adopted Ind AS with a transition date of April 1 2016.
Particulars pursuant to Section 197(12) and the relevant rules are given in the Annexure5. VIGIL MECHANISM
The Company has established vigil mechanism and adopted whistle blower policy whichprotects persons who uses the mechanism from victimization and allows direct access to theChairman of the Audit Committee if required. The Policy is posted in the website of theCompany.
Based on the recommendation of the Nomination and Remuneration Committee the Board hasapproved the Remuneration Policy of the Company for selection and appointment ofDirectors senior management personnel their remuneration succession plans Boarddiversity. The salient features of same is enclosed as Annexure 6 to this report.Weblink to access the policy is http:// www.supersales.co.in/policies.html.
A certificate from the Statutory Auditors of the Company regarding compliance of theconditions of Corporate Governance is enclosed as Annexure 7.
Information pursuant to Rule 5 of the Companies (Appointment and Remuneration ofManagerial personnel) Rules 2014
In terms of Rule 5 of the Companies (Appointment and Remuneration of Managerialpersonnel) Rules 2014 the Company has no employee drawing salary exceeding Rs. 102 Lakhsper annum or Rs. 8.50 Lakhs per month during the year under review. No employee has drawnremuneration in excess of the remuneration drawn by the Managing Director and holds byhimself or along with his spouse and dependent children not less than two percent ofequity share capital of the Company.
List of top 10 employees based on salary drawn is enclosed as Annexure 8.
Company is not paying any commission to the directors and whole time director/ManagingDirector.
Disclosures under the Sexual Harassment of women at work place (Prevention Prohibitionand Redressal) Act 2013
Company has not received any complaint under the Sexual Harassment of women at workplace (Prevention Prohibition and Redressal) Act 2013 during the year 2017-18.
In line with the requirement of SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 Management Discussion and Analysis Report Corporate Governance ReportRelated Party disclosures are made part of the Annual Report.
A certificate from CEO/CFO interalia confirming the correctness of the financialstatements is also made part of the Annual Report.
The Directors place on record their sincere thanks to all the Principals for theirwhole hearted cooperation and to the bankers of the Company for their financialassistance. Directors also wish to thank the customers for their support and confidencereposed in the Company and to the employees at all levels for their cooperation anddedication.
| ||For and on behalf of the Board |
| ||(Sd.) SANJAY JAYAVARTHANAVELU |
|Coimbatore ||Chairman |
|29th May 2018 ||DIN 00004505 |